425

On April 30, 2015, Knowles Corporation presented the information on the following slides.

 

Knowles to Acquire
Audience
Knowles will be uniquely positioned to optimize the audio signal
path to enhance performance and enable new applications
April 30, 2015
Filed by: Knowles Corporation
pursuant to Rule 425
under the Securities Act of 1933, as amended, and
deemed filed pursuant to Rule 14d-2
under the Securities Exchange Act of 1934, as amended
Subject Company: Audience, Inc.
Commission File No. 001-35528

Transaction Overview
2
Transaction
Rationale
•
Provides analog & digital signal processing, algorithm and software expertise
•
Broadens intelligent audio offerings
•
Uniquely positions Knowles in the audio signal path
Acquisition
Consideration
•
$5.00
/
share
comprised
of
$2.50
in
cash
and
$2.50
in
Knowles
stock;
subject to a collar
•
Enterprise value of approximately $85 million, net of estimated cash of $44
million at March 31, 2015
Financial
Impact
•
Expands available market and improves gross margin 
•
Approximately $25 million in annualized cost savings
•
Expected to be accretive by Q4 of 2016 (on a non-GAAP basis)
•
Expected closing in Q3 2015, subject to regulatory and other approvals

Compelling Strategic Rationale
*IDC and Gartner
Technology
•
World-leading engineering talent and IP focused on audio processing solutions
•
Expands Knowles’
capabilities in intelligent audio solutions
Product
Portfolio
•
Highly complementary product and technology portfolios
•
Enables delivery of end-to-end acoustic solutions
Mics
Signal
Processing
Speakers
Market
Expansion
•
Accelerates time-to-market for smart mics and other intelligent solutions
•
Expands TAM for next-generation intelligent audio solutions / algorithm
development
•
Increases $ content with higher-margin products in existing markets
3

Business Overview
Key Technologies
4
Advanced voice processing
Context aware processing
Always-on sensing
Mobile device system integration
Software engineering
JOINT CUSTOMERS
Source:
Company
filings,
Investor
presentation
•
Founded in 2000
•
Headquartered in Mountain View, CA
•
CY2014 revenue: $113mm
•
CY2014 non-GAAP gross margin: 52%
•
Leading intelligent voice and audio solutions provider
•
Sold 500+ million advanced voice processors
•
195 U.S. patents issued and pending
•
300+ employees–significant R&D / SW algo talent

Innovative Technology Drives Differentiated Solutions
5
2000
2015+
2010
Pace of acoustic features
growing exponentially
in recent years
Microphones
Speakers & Receivers
High Performance
Solutions
Integration
Embedded Software +
Hardware Modules
Knowles’
technology stems
from 500+ patents
Audio $ Content
Feb . ’14 Analyst Day
Knowles Acoustic
Subsystems enable smart
audio optimization
device

Competitive Differentiation
6
Source: Knowles Management
Acoustic
Expertise
Electro-Mechanical
Integration
MEMS/ASIC
Design
+
Audio Signal
Processing
Expands Knowles’
existing
expertise in intelligent audio
and signal processing
solutions through Audience’s
strong engineering team and
robust patent portfolio
Analog and Digital Signal Processing
MEMS/ASIC Design
Applications Expertise
Acoustic Innovation
Proprietary Manufacturing Techniques
Mechanical/Industrial Design
Product Portfolio Breadth
ACOUSTIC
COMPANY
SEMICONDUCTOR
COMPANY

Intelligent Audio System
Integrated Speaker Box
Microphones
Receivers
Speakers
Concert
Recording
AudioZoom
Stereo
Capture/Playback
Multi-Mic Noise
Reduction
5.1 Surround Sound
Capture / Playback
Low Power,
Always
Listening
Gesture
Recognition
Active Noise
Cancellation
Playback
Optimization
Hardware / Software System
Future Knowles Products
Enabling better performance and new applications
7
Strong acoustics core enables relevant audio solutions
Own Voice
Pick-up

Source: Knowles Management
+
Acquisition opens up >$500 million market opportunity in audio signal path
Combined Company Accelerates New Market Opportunities
MEMS & transducers
Mechanical integration & design
Core acoustics
Algorithms (voice, motion)
Analog & digital design
System integration
$100
$100
$200
8
Application Processor 
or Cloud
Audio Signal Processing
Speakers
Mic
Audio algorithms
•
Better sensors
(microphone & speaker)
•
Smarter sensors
(microphone & speaker)
•
Smart integrated audio
(speaker, microphone, algos)
•
Lower power always-on
(voice wake, motion wake)
•
Hearables
(e.g., own voice pick-up)
•
IoT
(e.g., audio-enable home,
ultrasonic)
•
Multi-sensory processing
(contextual awareness)
Mobile-centric
Beyond mobile
+

Revenue Growth
7%
Increases
New products and markets
Gross Margin
39%
Increases
Target value-added solutions
R&D* (% of sales)
7-9%
Increases
Continue to drive intelligent
audio solutions
SG&A* (% of sales)
8-10%
Neutral
Operating Margin*
22%
Neutral
CapEx (% of sales)
7%
Neutral
Free Cash Flow (% of sales)
12%
Neutral
With Audience
Mid Term Financial Model
9
Commentary
Source: Knowles Management
*Gross margin, R&D, SG&A and operating margin measures are non-GAAP
Existing Mid-Term Financial Model

Forward Looking Statements
This communication contains certain statements regarding business strategies, market potential, future financial performance,
future
action,
results
and
other
statements
that
do
not
directly
relate
to
any
historical
or
current
fact
which
are
“forward-looking”
statements within the meaning of the safe harbor provisions of the Securities Act of 1933, as amended, the Securities
Exchange
Act
of
1934,
as
amended,
and
the
Private
Securities
Litigation
Reform
Act
of
1995.
The
words
“believe,”
“expect,”
“anticipate,”
“project,”
“estimate,”
“budget,”
“continue,”
“could,”
“intend,”
“may,”
“plan,”
“potential,”
“predict,”
“seek,”
“should,”
“will,”
“would,”
“expect,”
“objective,”
“forecast,”
“goal,”
“guidance,”
“outlook,”
“effort,”
“target”
and similar expressions, among
others, generally identify forward-looking statements, which speak only as of the date the statements were made.  The matters
discussed in these forward-looking statements are based on current plans, expectations, forecasts and assumptions and are
subject to risks, uncertainties and other factors that could cause actual outcomes or results to differ materially from those
projected, anticipated or implied in these forward-looking statements. Where, in any forward-looking statement, an expectation
or belief as to future results or events is expressed, such expectation or belief is based on the current plans and expectations
of
management
and
expressed
in
good
faith
and
believed
to
have
a
reasonable
basis,
but
there
can
be
no
assurance
that
the
expectation or belief will be achieved or accomplished. Many factors that could cause actual results or events to differ
materially
from
those
anticipated
include
those
matters
described
under
the
sections
entitled
“Risk
Factors”
and
“Management’s
Discussion
and
Analysis
of
Financial
Condition
and
Results
of
Operations”
of
Knowles’
and
Audience’s
Annual
Reports on Form 10-K for the year ended December 31, 2014, subsequent Reports on Forms 10-Q and 8-K and other filings
Knowles and Audience make with the SEC.  Any forward-looking statement speaks of as of the date on which it is made and
neither Knowles nor Audience assume any obligation to update or revise any forward-looking statements whether as a result of
new
information,
future
events,
or
otherwise,
except
as
required
by
applicable
law.
Risks
and
uncertainties
that
could
cause
results
to
differ
from
expectations
include:
uncertainties
as
to
the
timing
of
the
tender
offer
and
the
proposed
merger;
uncertainties as to how many of the holders of shares of common stock of Audience will tender their shares into the tender
offer; the possibility that various closing conditions for the tender offer or the proposed merger may not be satisfied or waived,
including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the tender offer or
the proposed merger; the effects of disruption from the tender offer or the proposed merger making it more difficult for Knowles
or Audience to maintain relationships with employees (including potential difficulties in employee retention), collaboration
parties,
other
business
partners
or
governmental
entities;
legal
proceedings
that
may
be
instituted
against
Knowles,
Audience
and others following announcement of the business combination; other business effects, including the effects of industrial,
economic
or
political
conditions
outside
of
Knowles’
or
Audience’s
control;
transaction
costs;
actual
or
contingent
liabilities;
and
other risks and uncertainties discussed in this communication and other documents filed with the SEC by Knowles or
Audience,
as
well
as
the
Schedule
TO
to
be
filed
with
the
SEC
by
Orange
Subsidiary,
Inc.
Neither
Knowles
nor
Audience
undertake any obligation to update any forward-looking statements as a result of new information, future developments or
otherwise, except as expressly required by law.
10

Additional Information & Where to Find It
11
The exchange offer for the outstanding common stock of Audience has not yet commenced. This announcement is neither an
offer to purchase nor a solicitation of an offer to sell shares of Audience. Audience’s stockholders are urged to read the relevant
exchange
offer
documents
when
they
become
available
because
they
will
contain
important
information
that
stockholders
should
consider before making any decision regarding tendering their shares. At the time the offer is commenced, Knowles will file
exchange offer materials with the U.S. Securities and Exchange Commission and Audience will file a
Solicitation/Recommendation
Statement
with
respect
to
the
offer.
The
exchange
offer
materials
(including
a
Prospectus
and
certain other offer documents) and the Solicitation/Recommendation Statement will contain important information, which should
be read carefully before any decision is made with respect to the exchange offer. The Prospectus and certain other offer
documents,
as
well
as
the
Solicitation/Recommendation
Statement,
will
be
made
available
to
all
stockholders
of
Audience
at
no
expense to them. The exchange offer materials and the Solicitation/Recommendation Statement will be made available for free
at
the
SEC’s
web
site
at
www.sec.gov.
Free
copies
of
the
Offer
to
Purchase,
the
related
Letter
of
Transmittal
and
certain
other
offering documents will be made available by Audience free of charge on Audience’s website at audience.com under the
heading “Investors”
of Audience’s website.
Interests of Certain Persons in the Offer and the Merger
Knowles will be, and certain other persons may be, soliciting Audience stockholders to tender their shares into the exchange
offer. The directors and executive officers of Knowles and the directors and executive officers of Audience may be deemed to be
participants in Knowles’
solicitation of Audience’s stockholders to tender their shares into the exchange offer. Investors and
stockholders may obtain more detailed information regarding the names, affiliations and interests of the directors and officers of
Knowles and Audience in the exchange offer by reading the Prospectus and certain other offer documents, as well as the
Solicitation/Recommendation Statement, when they become available.