Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-K (Mark One) For the fiscal year ended April 1, 2012 x Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Fiscal year ended April 1, 2012 or ¨ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to Commission File Number 001-35269 INVENSENSE, INC. (Exact name of registrant as specified in its charter) Delaware 01-0789977 (State or other jurisdiction of (I.R.S. Employer Incorporation or organization) Identification No.) 1197 Borregas Avenue Sunnyvale, CA 94089 (Address of principal executive offices) (Zip code) (408) 988-7339 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which Registered Common Stock, $0.001 Par Value New York Stock Exchange LLC Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ¨ NO x Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES ¨ NO x Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x NO ¨ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES x NO ¨ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act: Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer x (Do not check if a smaller reporting company) Smaller reporting company ¨ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES ¨ NO x As of October 2, 2011, the last day of the registrant’s most recently completed second quarter; the registrant’s common stock was not publicly traded. The registrant’s common stock began trading on the New York Stock Exchange on November 16, 2011. As of April 1, 2012, the last business day of the registrant’s most recently completed fiscal year, the aggregate market value of registrant's voting and non-voting common stock held by non-affiliates was approximately $ 730.8 million, based upon the closing sale price of the common stock as reported on the New York Stock Exchange. This calculation excludes the shares of common stock held by each officer, director and holder of 5% or more of the outstanding common stock as of April 1, 2012. This calculation does not reflect a determination that such persons are affiliates for any other purposes. As of June 5, 2012, there were approximately 81,365,631 shares of the registrant's common stock, $0.001 par value, outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant’s definitive Proxy Statement for its 2012 Annual Meeting of stockholders are incorporated by reference in Part III of this Annual Report on Form 10-K where indicated. Such Proxy Statement will be filed with the Securities and Exchange Commission within 120 days of the registrant’s fiscal year ended April 1, 2012. Except with respect to information specifically incorporated by reference in this Annual Report on Form 10-K, the Proxy Statement is not deemed to be filed as part of this Annual Report on Form 10-K. Table of Contents INVENSENSE, INC. TABLE OF CONTENTS Page PART I. ITEM 1. BUSINESS 4 ITEM 1A. RISK FACTORS 18 ITEM 1B. UNRESOLVED STAFF COMMENTS 37 ITEM 2. PROPERTIES 37 ITEM 3. LEGAL PROCEEDINGS 37 ITEM 4. MINE SAFETY DISCLOSURES 37 PART II. ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 38 ITEM 6. SELECTED FINANCIAL DATA 39 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 41 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 56 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 56 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 56 ITEM 9A. CONTROLS AND PROCEDURES 56 ITEM 9B. OTHER INFORMATION 57 PART III. ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 57 ITEM 11. EXECUTIVE COMPENSATION 57 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 57 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 57 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES 57 PART IV. ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES 58 SIGNATURES 89 2 Table of Contents Special Note Regarding Forward-Looking Statements and Industry Data This Annual Report on Form 10-K, including this Management’s Discussion and Analysis of Financial Condition and Results of Operations, includes a number of forward-looking statements that involve many risks and uncertainties. Forward-looking statements are identified by the use of the words “would,” “could,” “will,” “may,” “expect,” “believe,” “should,” “anticipate,” “outlook,” “if,” “future,” “intend,” “plan,” “estimate,” “predict,” “potential,” “targets,” “seek” or “continue” and similar words and phrases, including the negatives of these terms, or other variations of these terms, that denote future events. These forward-looking statements include: our belief that certain end-markets pose significant unrealized opportunities for motion interface functionality, including large near-term opportunities in the market for handheld devices, such as smartphones and tablet devices, and in particular devices that are enabled by the Android operating system or require optical image stabilization for camera functionality; our expectations as to future sales of consumer electronics devices that could potentially integrate motion processors; our anticipation that we will experience future growth, expand our intellectual property portfolio and increase our research and development expenses; our intention to develop and introduce more highly integrated products in the future that include greater motion sensing functionality and further enhancements to on- board motion interface capabilities; our expectation that our products will remain a component of customers’ products throughout any such product’s life cycle; our ability to protect our intellectual property in the United States and abroad; our belief in the sufficiency of our cash flows to meet our needs; and our future financial and operating results. These statements reflect our current views with respect to future events and our potential financial performance and are subject to risks and uncertainties that could cause our actual results and financial position to differ materially and adversely from what is projected or implied in any forward-looking statements included in this Annual Report on Form 10-K. These factors include, but are not limited to, the risks described under Item 1A of Part I — “Risk Factors,” Item 7 of Part II — “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” elsewhere in this Annual Report on Form 10-K and those discussed in other documents we file with the SEC. We make these forward-looking statements based upon information available on the date of this Annual Report on Form 10-K, and we have no obligation (and expressly disclaim any such obligation) to update or alter any forward-looking statements, whether as a result of new information or otherwise except as otherwise required by securities regulations. As used herein, “InvenSense,” the “Company,” “we,” “our,” and similar terms refer to InvenSense, Inc., unless the context indicates otherwise. InvenSense®, AirSign®, MotionCommand®, BlurFree®, MotionTrackingTM, MotionProcessingTM, MotionProcessing UnitTM, MotionProcessorTM, DigitalMotionTM, DigitalMotion ProcessorTM, MotionFusionTM, MotionAppsTM, AirLockTM and LoPedTM are our trademarks. Trade names, trademarks and service marks of other companies appearing in this prospectus are the property of the respective holders. 3 Table of Contents PART I. Item 1. Business. Overview We are the pioneer and a global market leader in motion interface devices that detect and track an object’s motion in three-dimensional space. Our MotionTracking devices combine micro-electro-mechanical system, or MEMS, based motion sensors, such as accelerometers and gyroscopes, with mixed- signal integrated circuits (ICs) and proprietary algorithms and firmware that intelligently calibrate, process