MaxLinear, Inc. Announces Fourth Quarter 2016 Financial Results

MaxLinear, Inc. Announces Fourth Quarter 2016 Financial Results and the Acquisition of Marvell's G.hn Business

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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 December 31, 2016 was a reduction to the provision for income taxes and increase to net income of $2.2 million and increases to basic earnings per share of $0.04 and diluted earnings per share of $0.03. Diluted earnings per share for the three months ended December 31, 2016 was also impacted by an increase of 814,000 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)

	Year Ended
	December 31, 2016⁽¹⁾		December 31, 2015⁽²⁾
Net revenue	$	387,832	$	300,360
Cost of net revenue	157,842		144,937
Gross profit	229,990		155,423
Operating expenses:
Research and development	97,745		85,405
Selling, general and administrative	64,454		77,981
IPR&D impairment losses	1,300		21,600
Restructuring charges	3,432		14,086
Total operating expenses	166,931		199,072
Income (loss) from operations	63,059		(43,649		)
Interest income	572		275
Other income (expense), net	59		468
Income (loss) before income taxes	63,690		(42,906		)
Provision (benefit) for income taxes	2,398		(575		)
Net income (loss)	$	61,292	$	(42,331	)
Net income (loss) per share:
Basic	$	0.96	$	(0.79	)
Diluted	$	0.91	$	(0.79	)
Shares used to compute net income (loss) per share:
Basic	63,781		53,378
Diluted	67,653		53,378

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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 year ended December 31, 2016 was a reduction to the provision for income taxes and increase to net income of $8.3 million and increase to basic earnings per share of $0.13 and diluted earnings per share of $0.12. Diluted earnings per share for the year ended December 31, 2016 was also impacted by an increase of 846,000 shares in the number of incremental shares used in computing diluted EPS.

⁽²⁾ Includes eight months of Entropic operations.

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

	Three Months Ended
	December 31, 2016			September 30, 2016			December 31, 2015
Operating Activities
Net income (loss)	$	8,348		9,679			(8,544		)
Adjustments to reconcile net income to cash provided by operating activities:
Amortization and depreciation	7,960			8,808			9,479
Impairment of IPR&D assets	—			1,300			21,600
Provision for losses on accounts receivable	—			87			178
Amortization of investment premiums, net	74			12			293
Amortization of inventory step-up	2,652			2,653			—
Stock-based compensation	5,290			6,264			4,216
Deferred income taxes	(114		)	82			(197		)
Loss on disposal of property and equipment	318			—			113
Gain on sale of available-for-sale securities	—			—			(42		)
(Gain) loss on foreign currency	(282		)	112			—
Excess tax benefits on stock-based awards	(2,249		)	(928		)	—
Change in fair value of contingent consideration	11			99			253
Impairment of leases	388			—			2,002
Changes in operating assets and liabilities:
Accounts receivable	(815		)	(5,419		)	(811		)
Inventory	2,882			(454		)	3,822
Prepaid expenses and other assets	767			440			3,795
Accounts payable, accrued expenses and other current liabilities	752			(2,470		)	(13,211		)
Accrued compensation	2,252			(183		)	475
Deferred revenue and deferred profit	697			(504		)	(72		)
Accrued price protection liability	(1,936		)	(1,158		)	322
Other long-term liabilities	608			(5		)	887
Net cash provided by operating activities	27,603			18,415			24,558
Investing Activities
Purchases of property and equipment	(1,684		)	(2,118		)	(1,516		)
Cash used in acquisition, net of cash acquired	—			(80,000		)	—
Purchases of available-for-sale securities	(10,044		)	(32,986		)	(27,697		)
Maturities of available-for-sale securities	10,185			7,700			11,521
Net cash used in investing activities	(1,543		)	(107,404		)	(17,692		)
Financing Activities
Net proceeds from issuance of common stock	2,199			165			3,604
Minimum tax withholding paid on behalf of employees for restricted stock units	(1,132		)	(2,591		)	(613		)
Net cash provided by (used in) financing activities	1,067			(2,426		)	2,991
Effect of exchange rate changes on cash and cash equivalents	(307		)	(91		)	(50		)
Increase (decrease) in cash and cash equivalents	26,820			(91,506		)	9,807
Cash and cash equivalents at beginning of period	56,076			147,582			58,149
Cash and cash equivalents at end of period	$	82,896		$	56,076		$	67,956

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