MaxLinear, Inc. Announces Third Quarter 2016 Financial Results

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⁽¹⁾ We adopted ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting in the second quarter of 2016, and included excess tax benefits in the provision for income taxes instead of in additional paid-in capital. As a result, when computing diluted EPS using the treasury stock method, fewer hypothetical shares can be repurchased resulting in a greater number of incremental shares being issued upon the exercise of share-based payment awards. The impact of adoption for the three months ended September 30, 2016 was a reduction to the provision for income taxes and increase to net income of $0.9 million and increases to basic earnings per share of $0.01 and diluted earnings per share of $0.01. Diluted earnings per share for the three months ended September 30, 2016 was also impacted by an increase of 833,000 shares in the number of incremental shares used in computing diluted EPS.


MAXLINEAR, INC.
UNAUDITED GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)

	Nine Months Ended
	September 30, 2016⁽¹⁾			September 30, 2015 ⁽²⁾
Net revenue	$	300,696		$	201,411
Cost of net revenue	121,109			101,748
Gross profit	179,587			99,663
Operating expenses:
Research and development	73,710			62,765
Selling, general and administrative	47,734			60,021
IPR&D impairment losses	1,300			—
Restructuring charges	2,106			11,814
Total operating expenses	124,850			134,600
Income (loss) from operations	54,737			(34,937		)
Interest income	426			168
Other income (expense), net	(64		)	351
Income (loss) before income taxes	55,099			(34,418		)
Provision (benefit) for income taxes	2,155			(631		)
Net income (loss)	$	52,944		$	(33,787	)
Net income (loss) per share:
Basic	$	0.83		$	(0.67	)
Diluted	$	0.79		$	(0.67	)
Shares used to compute net income (loss) per share:
Basic	63,454			50,528
Diluted	67,354			50,528

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⁽¹⁾ We adopted ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting in the second quarter of 2016, and included excess tax benefits in the provision for income taxes instead of additional paid-in capital. As a result, when computing diluted EPS using the treasury stock method, fewer hypothetical shares can be repurchased resulting in a greater number of incremental shares being issued upon the exercise of share-based payment awards. The impact of adoption for the nine months ended September 30, 2016 was a reduction to the provision for income taxes and increase to net income of $6.0 million and increase to basic earnings per share of $0.09 and diluted earnings per share of $0.08. Diluted earnings per share for the nine months ended September 30, 2016 was also impacted by an increase of 856,000 shares in the number of incremental shares used in computing diluted EPS.

⁽²⁾ Includes five months of Entropic operations.


MAXLINEAR, INC.
UNAUDITED GAAP CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

	Three Months Ended
	September 30, 2016			June 30, 2016			September 30, 2015
Operating Activities
Net income	$	9,679		22,584			1,582
Adjustments to reconcile net income to cash provided by operating activities:
Amortization and depreciation	8,808			4,163			17,296
Impairment of IPR&D assets	1,300			—			—
Provision for losses on accounts receivable	87			—			—
Provision for inventory reserves	—			(29		)	—
Amortization (reduction in) of investment premiums, net	12			(66		)	57
Amortization of inventory step-up	2,653			336			958
Stock-based compensation	6,264			5,102			5,032
Deferred income taxes	82			(100		)	251
(Gain) loss on disposal of property and equipment	—			48			(39		)
(Gain) loss on sale of available-for-sale securities	—			(50		)	21
(Gain) loss on foreign currency	112			(170		)	—
Excess tax benefits on stock-based awards	(928		)	(3,549		)	—
Change in fair value of contingent consideration	99			24			9
Impairment of long-lived assets	—			—			153
Impairment of leases	—			—			568
Changes in operating assets and liabilities:
Accounts receivable	(5,419		)	(3,300		)	(205		)
Inventory	(454		)	4,425			1,581
Prepaid expenses and other assets	440			1,611			(2,684		)
Accounts payable, accrued expenses and other current liabilities	(2,470		)	1,887			(9,256		)
Accrued compensation	(183		)	309			3,342
Deferred revenue and deferred profit	(504		)	(725		)	3
Accrued price protection liability	(1,158		)	(173		)	3,925
Other long-term liabilities	(5		)	18			(513		)
Net cash provided by operating activities	18,415			32,345			22,081
Investing Activities
Purchases of property and equipment	(2,118		)	(1,488		)	(20		)
Purchases of intangible assets	—			(390		)	(100		)
Cash used in acquisition, net of cash acquired	(80,000		)	(21,000		)	—
Purchases of available-for-sale securities	(32,986		)	(9,504		)	(25,712		)
Maturities of available-for-sale securities	7,700			70,711			4,400
Net cash provided by (used in) investing activities	(107,404		)	38,329			(21,432		)
Financing Activities
Net proceeds from issuance of common stock	165			2,558			2,891
Minimum tax withholding paid on behalf of employees for restricted stock units	(2,591		)	(2,501		)	(1,367		)
Net cash provided by (used in) financing activities	(2,426		)	57			1,524
Effect of exchange rate changes on cash and cash equivalents	(91		)	11			(755		)
Increase (decrease) in cash and cash equivalents	(91,506		)	70,742			1,418
Cash and cash equivalents at beginning of period	147,582			76,840			56,731
Cash and cash equivalents at end of period	$	56,076		$	147,582		$	58,149

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