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MaxLinear, Inc. Announces Second Quarter 2017 Financial Results

Second Quarter 2017 GAAP Revenue of $104.2 million, net of a $5.2 million revenue elimination under purchase accounting
GAAP Diluted Earnings per Share of $0.16 
and Non-GAAP Diluted Earnings per Share of $0.35

CARLSBAD, Calif., Aug. 08, 2017 (GLOBE NEWSWIRE) -- MaxLinear, Inc. (NYSE:MXL), a leading provider of radio-frequency, mixed-signal and high-performance analog integrated circuits for the connected home, wired and wireless infrastructure, and industrial and multi-market applications, today announced financial results for the second quarter ended June 30, 2017.

Management Commentary

“We are pleased to announce the financial results of a very exciting second quarter in 2017. In the second quarter, we delivered record GAAP revenue of $104.2 million, even after a $5.2 million revenue elimination under acquisition-related purchase price accounting. Our strong revenue results were driven by sequential growth in both our network infrastructure and connected home applications, and included initial contributions from our recent acquisitions of Marvell's G.hn wireless connectivity business, and Exar Corporation, or Exar. With the addition of the G.hn wireline connectivity assets acquired from Marvell, we are better positioned to address the needs of our connected home partners, while significantly expanding our served addressable market for connectivity solutions beyond MoCA. Exar's high-performance analog product portfolio, consisting of power management and interface solutions, is highly complementary to MaxLinear's organically developed broadband RF and mixed-signal digital SoC platform capabilities. As a result, we are uniquely positioned to address the analog and mixed-signal needs of an increasingly diverse tier-1 customer base with technology platforms spanning consumer, broadband, industrial, automotive, and network infrastructure markets. We are also pleased to have made our first prepayment of $30.0 million against our term loan of $425.0 million in July 2017,” commented Kishore Seendripu, Ph.D., Chairman and CEO.

Second Quarter Financial Highlights

GAAP basis:

The second quarter 2017 results were uniquely influenced by the acquisitions and related purchase price accounting impacts of Marvell’s G.hn business in April 2017 and Exar in May 2017, the $425.0 million term loan issuance to fund the Exar transaction, and a large non-cash income tax benefit resulting from release of the valuation allowance against our U.S. federal deferred tax assets during the three months ended June 30, 2017.

Non-GAAP basis:

Second Quarter 2017 Business Highlights

Third Quarter 2017 Business Outlook
The company expects revenue in the third quarter to be in the range of $114 million to $118 million, and also estimates the following:

Webcast and Conference Call
MaxLinear will host its second quarter financial results conference call today, August 8, 2017 at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time). To access this call, dial US toll free: 1-877-407-3109 / International: 1-201-493-6798. A live webcast of the conference call will be accessible from the investor relations section of the MaxLinear website at http://investors.maxlinear.com, and will be archived and available after the call at http://investors.maxlinear.com until August 22, 2017. A replay of the conference call will also be available until August 22, 2017 by dialing US toll free: 1-877-660-6853 / International: 1-201-612-7415 and Conference ID#: 13653123.

Cautionary Note Concerning Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, among others, statements concerning our future financial performance (including our current guidance for third quarter 2017 revenue and gross margin). These forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to be materially different from any future results expressed or implied by the forward-looking statements. Forward-looking statements are based on management’s current, preliminary expectations and are subject to various risks and uncertainties. In particular, our future operating results are substantially dependent on our assumptions about market trends and conditions and our expectations with respect to recently completed acquisitions.  With respect to recently completed acquisitions, we face particular risks associated with our ability to integrate the acquired businesses and maintain relationships with employees, customers, and vendors.  Exar’s target markets and business operations differ substantially from those of MaxLinear, and we may be unable to realize anticipated strategic, financial, and operating synergies to the same relative extent as we were able to achieve in other recent acquisitions.  In addition, our decisions with respect to all our acquisitions were based on management’s current expectations with respect to the size of the available markets and growth opportunities presented by these acquisitions, all of which are subject to material risks and uncertainties.  In connection with the acquisition of Exar, we incurred substantial acquisition-related indebtedness, which materially changed our financial profile and presents specific risks relating to our ability to service interest and principal payments and limitations on our operating flexibility based on operating covenants in the applicable term loan agreements, including (without limitation) debt covenant restrictions that limit our ability to obtain additional financing, issue guarantees, create liens, make certain restricted payments or repay certain obligations or to pursue future acquisitions.  Additional risks and uncertainties arising from our operations generally and our recently completed acquisitions include intense competition in our industry; our dependence on a limited number of customers for a substantial portion of our revenues; uncertainties concerning how end user markets for our products will develop; potential uncertainties arising from continued consolidation among cable television and satellite operators in our target markets and continued consolidation among competitors within the semiconductor industry generally; our ability to develop and introduce new and enhanced products on a timely basis and achieve market acceptance of those products, particularly as we seek to expand outside of our historic markets; potential decreases in average selling prices for our products; risks relating to intellectual property protection and the prevalence of intellectual property litigation in our industry; indemnification obligations of Exar arising from a recent divestiture; the impact on our financial condition of the incurred acquisition indebtedness and cash usage arising from the Exar transaction; our reliance on a limited number of third party manufacturers; and our lack of long-term supply contracts and dependence on limited sources of supply. In addition to these risks and uncertainties, investors should review the risks and uncertainties contained in our filings with the Securities and Exchange Commission (SEC), including our most recent Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on February 9, 2017, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, and our Current Reports on Form 8-K, as well as the information to be set forth under the caption “Risk Factors” in MaxLinear’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, which we expect to file shortly. All forward-looking statements are based on the estimates, projections and assumptions of management as of August 8, 2017, and MaxLinear is under no obligation (and expressly disclaims any such obligation) to update or revise any forward-looking statements whether as a result of new information, future events, or otherwise.

Use of Non-GAAP Financial Measures

To supplement our unaudited consolidated financial statements presented on a basis consistent with GAAP, we disclose certain non-GAAP financial measures, including non-GAAP gross margin, operating expenses, operating expenses as a percentage of revenue, pre-tax margins, effective tax rate, net income and diluted earnings per share. These supplemental measures include the gross margin impact of Exar's deferred profit eliminated in purchase price accounting and exclude the effects of (i) stock-based compensation expense; (ii) an accrual related to our performance based bonus plan for 2017, which we currently intend to settle in shares of our common stock; (iii) accruals related to our performance based bonus plan for 2016, which we settled in shares of our class A common stock in 2016 and 2017; (iv) amortization of purchased intangible assets and inventory step up; (v) depreciation of fixed assets step-up; (vi) restricted merger proceeds and contingent consideration and incentive award; (vii) acquisition and integration costs related to our recently completed acquisitions; (viii) professional fees and settlement costs related to our previously disclosed IP and commercial litigation matters; (ix) severance and other restructuring charges; and (x) non-cash income tax benefits and expenses. These non-GAAP measures are not in accordance with and do not serve as an alternative for GAAP. We believe that these non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our GAAP results of operations. These non-GAAP measures should only be viewed in conjunction with corresponding GAAP measures. We compensate for the limitations of non-GAAP financial measures by relying upon GAAP results to gain a complete picture of our performance.

We believe that non-GAAP financial measures can provide useful information to both management and investors by excluding certain non-cash and other one-time expenses that are not indicative of our core operating results. Among other uses, our management uses non-GAAP measures to compare our performance relative to forecasts and strategic plans and to benchmark our performance externally against competitors. In addition, management’s incentive compensation will be determined in part using these non-GAAP measures because we believe non-GAAP measures better reflect our core operating performance.

The following are explanations of each type of adjustment that we incorporate into non-GAAP financial measures:

Stock-based compensation expense relates to equity incentive awards granted to our employees, directors, and consultants. Our equity incentive plans are important components of our employee incentive compensation arrangements and are reflected as expenses in our GAAP results. Stock-based compensation expense has been and will continue to be a significant recurring expense for MaxLinear.

Bonuses under our executive and non-executive bonus programs have been excluded from our non-GAAP net income for all periods reported. Bonus payments for the first and second half of the 2016 performance periods were settled through the issuance of shares of Class A common stock under our equity incentive plans in August 2016 and February 2017, respectively. We currently expect that bonus awards under our fiscal 2017 program will be settled in common stock in the first quarter of fiscal 2018. While we include the dilutive impact of equity awards in weighted average shares outstanding, the expense associated with stock-based awards reflects a non-cash charge that we exclude from non-GAAP net income.

Expenses incurred in relation to acquisitions include amortization of purchased intangible assets and step-up of inventory to fair value, depreciation of step-up of property and equipment to fair value, acquisition and integration costs primarily consisting of professional and consulting fees, incentive awards, and restricted merger proceeds which represent the change in fair value of contingent consideration related to a 2014 acquisition and one-time impact on gross margin from elimination of Exar's deferred profit in purchase price accounting.

Restructuring charges incurred are related to our restructuring plans which address issues primarily relating to the integration of the Company and acquired businesses or internal operations and primarily include severance and restructuring costs related to exiting certain facilities.

Expenses incurred in relation to our intellectual property and commercial litigation include professional fees incurred.

Income tax benefits and expenses that do not affect cash income taxes payable.

Reconciliations of non-GAAP measures for the historic periods disclosed in this press release appear below. Because of the inherent uncertainty associated with our ability to project future charges, particularly related to stock-based compensation and its related tax effects as well as potential impairments, we have not provided a reconciliation for non-GAAP guidance provided for the third quarter 2017.

About MaxLinear, Inc.

MaxLinear, Inc. (NYSE:MXL) is a leading provider of radio frequency (RF) and mixed-signal and high-performance analog integrated circuits for the connected home, wired and wireless infrastructure, and industrial and multi-market applications.  MaxLinear is headquartered in Carlsbad, California. For more information, please visit www.maxlinear.com

MXL is MaxLinear’s registered trademark. Other trademarks appearing herein are the property of their respective owners.


MAXLINEAR, INC.
UNAUDITED GAAP CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
 
 Three Months Ended
 June 30, 2017 March 31, 2017 June 30, 2016
Net revenue$104,175  $88,841  $101,687 
Cost of net revenue53,071  35,917  38,774 
Gross profit51,104  52,924  62,913 
Operating expenses:     
Research and development29,015  23,878  24,037 
Selling, general and administrative31,338  18,613  16,505 
Restructuring charges6,546     
Total operating expenses66,899  42,491  40,542 
Income (loss) from operations(15,795) 10,433  22,371 
Interest income64  195  167 
Interest expense(2,201)    
Other income (expense), net(618) (144) 124 
Total interest and other income (expense), net(2,755) 51  291 
Income (loss) before income taxes(18,550) 10,484  22,662 
Income tax provision (benefit)(29,515) 2,021  78 
Net income$10,965  $8,463  $22,584 
Net income per share:     
Basic$0.17  $0.13  $0.36 
Diluted$0.16  $0.12  $0.33 
Shares used to compute net income per share:     
Basic65,889  65,238  63,470 
Diluted69,645  69,149  67,520 


MAXLINEAR, INC.
UNAUDITED GAAP CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
 
 Six Months Ended
 June 30, 2017 June 30, 2016
Net revenue$193,016  $204,372 
Cost of net revenue88,988  80,289 
Gross profit104,028  124,083 
Operating expenses:   
Research and development52,893  47,789 
Selling, general and administrative49,951  30,115 
Restructuring charges6,546  2,106 
Total operating expenses109,390  80,010 
Income (loss) from operations(5,362) 44,073 
Interest income259  337 
Interest expense(2,201)  
Other expense, net(762) (74)
Total interest and other income (expense), net(2,704) 263 
Income (loss) before income taxes(8,066) 44,336 
Income tax provision (benefit)(27,494) 1,071 
Net income$19,428  $43,265 
Net income per share:   
Basic$0.30  $0.69 
Diluted$0.28  $0.64 
Shares used to compute net income per share:   
Basic65,564  63,056 
Diluted69,398  67,110 



MAXLINEAR, INC.
UNAUDITED GAAP CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
 Three Months Ended
 June 30, 2017 March 31, 2017 June 30, 2016
Operating Activities     
Net income$10,965  8,463  $22,584 
Adjustments to reconcile net income to cash provided by (used in) operating activities:     
Amortization and depreciation18,261  6,899  4,163 
Provision for losses on accounts receivable  87   
Amortization (accretion) of investment premiums (discount), net(107) 47  (66)
Amortization of inventory step-up5,635    336 
Amortization of debt issuance costs175     
Stock-based compensation11,628  5,474  5,102 
Deferred income taxes(53,297) 155  (100)
(Gain) loss on disposal of property and equipment3  (88) 48 
(Gain) loss on sale of available-for-sale securities38    (50)
(Gain) loss on foreign currency898  (216) (170)
Excess tax benefits on stock-based awards(2,376) (914) (3,549)
Change in fair value of contingent consideration    24 
Changes in operating assets and liabilities:     
Accounts receivable(13,496) (7,436) (3,300)
Inventory(2,289) (5,102) 4,396 
Prepaid expenses and other assets4,385  825  1,611 
Accounts payable, accrued expenses and other current liabilities7,610  7,952  1,887 
Accrued compensation(1,664) 382  309 
Deferred revenue and deferred profit7,633  (307) (725)
Accrued price protection liability2,676  6,771  (173)
Other long-term liabilities(3,768) (320) 18 
Net cash provided by (used in) operating activities (1)(7,090) 22,672  32,345 
Investing Activities     
Purchases of property and equipment(1,155) (743) (1,488)
Purchases of intangible assets(5,205) (120) (390)
Cash used in acquisition, net of cash acquired(473,304)   (21,000)
Purchases of available-for-sale securities  (30,577) (9,504)
Maturities of available-for-sale securities63,761  20,785  70,711 
Net cash provided by (used in) investing activities(415,903) (10,655) 38,329 
Financing Activities     
Repurchases of common stock  (334)  
Net proceeds from issuance of common stock7,657  361  2,558 
Minimum tax withholding paid on behalf of employees for restricted stock units(3,496) (4,903) (2,501)
Proceeds from issuance of debt416,846     
Net cash provided by (used in) financing activities421,007  (4,876) 57 
Effect of exchange rate changes on cash and cash equivalents839  1,201  11 
Increase (decrease) in cash, cash equivalents and restricted cash(1,147) 8,342  70,742 
Cash, cash equivalents and restricted cash at beginning of period91,238  82,896  76,840 
Cash, cash equivalents and restricted cash at end of period$90,091  $91,238  $147,582 

_______________
(1) Net cash used in operating activities for the three months ended June 30, 2017 of $7.1 million includes the impact of payments of $18.0 million in assumed Exar pre-close liabilities and $7.6 million in aggregate transaction and cash restructuring costs.

MAXLINEAR, INC.
UNAUDITED GAAP CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
 Six Months Ended
 June 30, 2017 June 30, 2016
Operating Activities   
Net income$19,428  $43,265 
Adjustments to reconcile net income to cash provided by operating activities:   
Amortization and depreciation25,160  9,935 
Provision for losses on accounts receivable87   
Amortization (accretion) of investment premiums (discount), net(60) 83 
Amortization of inventory step-up5,635  336 
Amortization of debt issuance costs175   
Stock-based compensation17,102  10,211 
Deferred income taxes(53,142) 133 
(Gain) loss on disposal of property and equipment(85) 48 
(Gain) loss on sale of available-for-sale securities38  (50)
(Gain) loss on foreign currency682  (46)
Excess tax benefits on stock-based awards(3,290) (5,114)
Change in fair value of contingent consideration  110 
Changes in operating assets and liabilities:   
Accounts receivable(20,932) (1,941)
Inventory(7,391) 7,418 
Prepaid expenses and other assets5,210  (805)
Accounts payable, accrued expenses and other current liabilities15,562  4,967 
Accrued compensation(1,282) 3,540 
Deferred revenue and deferred profit7,326  1,732 
Accrued price protection liability9,447  (1,756)
Other long-term liabilities(4,088) (767)
Net cash provided by operating activities15,582  71,299 
Investing Activities   
Purchases of property and equipment(1,898) (4,710)
Purchases of intangible assets(5,325) (390)
Cash used in acquisition, net of cash acquired(473,304) (21,000)
Purchases of available-for-sale securities(30,577) (47,277)
Maturities of available-for-sale securities84,546  81,011 
Net cash provided by (used in) investing activities(426,558) 7,634 
Financing Activities   
Repurchases of common stock(334) (3)
Net proceeds from issuance of common stock8,018  4,285 
Minimum tax withholding paid on behalf of employees for restricted stock units(8,399) (3,593)
Proceeds from issuance of debt416,846   
Net cash provided by financing activities416,131  689 
Effect of exchange rate changes on cash and cash equivalents2,040  4 
Increase in cash, cash equivalents and restricted cash7,195  79,626 
Cash, cash equivalents and restricted cash at beginning of period82,896  67,956 
Cash, cash equivalents and restricted cash at end of period$90,091  $147,582 



MAXLINEAR, INC.
UNAUDITED GAAP CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
 
 June 30, 2017 March 31, 2017 June 30, 2016
Assets     
Current assets:     
Cash and cash equivalents(1)$87,568  $89,121  $145,804 
Short-term restricted cash(1)615  615   
Short-term investments, available-for-sale  63,637  28,899 
Accounts receivable, net82,695  57,836  44,340 
Inventory77,559  31,685  25,604 
Prepaid expenses and other current assets9,732  5,535  4,982 
Total current assets258,169  248,429  249,629 
Long-term restricted cash(1)1,908  1,502  1,778 
Property and equipment, net24,469  19,162  21,134 
Long-term investments, available-for-sale     
Intangible assets, net353,524  99,679  60,675 
Goodwill238,838  75,673  56,714 
Deferred tax assets53,878  118  96 
Other long-term assets6,841  1,534  1,886 
Total assets$937,627  $446,097  $391,912 
      
Liabilities and stockholders’ equity     
Current liabilities$110,197  $64,555  $55,620 
Long-term debt415,032     
Other long-term liabilities14,491  15,529  15,104 
Total stockholders’ equity397,907  366,013  321,188 
Total liabilities and stockholders’ equity$937,627  $446,097  $391,912 

___________________________________________
(1) Certain reclassifications for cash restricted in connection with guarantees for certain office leases have been made to prior periods to conform to the current period presentation.


MAXLINEAR, INC.
UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS
(in thousands, except per share data)
 
 Three Months Ended
 June 30, 2017 March 31, 2017 June 30, 2016
GAAP gross profit$51,104  $52,924  $62,913 
Stock-based compensation79  59  51 
Performance based equity28  42  (165)
Amortization of inventory step-up5,635    336 
Amortization of purchased intangible assets6,260  2,684  1,787 
Depreciation of fixed asset step-up112     
Deferred profit eliminated in purchase price accounting3,872     
Non-GAAP gross profit67,090  55,709  64,922 
      
GAAP R&D expenses29,015  23,878  24,037 
Stock-based compensation(4,011) (3,493) (3,136)
Incentive award compensation    (168)
Performance based equity(1,055) (954) (1,555)
Amortization of purchased intangible assets(97) (96) (148)
Depreciation of fixed asset step-up(760)    
Restricted merger proceeds and contingent consideration    (208)
Non-GAAP R&D expenses23,092  19,335  18,822 
      
GAAP SG&A expenses31,338  18,613  16,505 
Stock-based compensation(3,024) (1,922) (1,696)
Incentive award compensation    (51)
Performance based equity(482) (578) (787)
Amortization of purchased intangible assets(8,262) (1,881) (662)
Depreciation of fixed asset step-up(56)    
Acquisition and integration costs(5,609) (3,394) (1,338)
Restricted merger proceeds and contingent consideration    (24)
IP litigation costs, net(125) (105) (197)
Non-GAAP SG&A expenses13,780  10,733  11,750 
      
GAAP restructuring expenses6,546     
Restructuring charges(6,546)    
Non-GAAP restructuring expenses     
      
GAAP and non-GAAP interest and other income (expense), net(2,755) 51  291 
      
GAAP income (loss) before income taxes(18,550) 10,484  22,662 
Total non-GAAP adjustments46,013  15,208  11,979 
Non-GAAP income before income taxes27,463  25,692  34,641 
      
GAAP income tax provision (benefit)(29,515) 2,021  78 
Adjustment for non-cash tax benefits/expenses32,300  510  670 
Non-GAAP income tax provision2,785  2,531  748 
      
GAAP net income10,965  8,463  22,584 
Total non-GAAP adjustments before income taxes46,013  15,208  11,979 
Less: total tax adjustments32,300  510  670 
Non-GAAP net income$24,678  $23,161  $33,893 
      
Shares used in computing non-GAAP basic net income per share65,889  65,238  63,470 
Shares used in computing non-GAAP diluted net income per share69,645  69,149  67,520 
Non-GAAP basic net income per share$0.37  $0.36  $0.53 
Non-GAAP diluted net income per share$0.35  $0.33  $0.50 


MAXLINEAR, INC.
UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS
(in thousands, except per share data)
 
 Six Months Ended
 June 30, 2017 June 30, 2016
GAAP gross profit$104,028  $124,083 
Stock-based compensation138  94 
Performance based equity70  (64)
Amortization of inventory step-up5,635  336 
Amortization of purchased intangible assets8,944  3,369 
Depreciation of fixed asset step-up112   
Deferred profit eliminated in purchase price accounting3,872   
Non-GAAP gross profit122,799  127,818 
    
GAAP R&D expenses52,893  47,789 
Stock-based compensation(7,504) (6,199)
Incentive award compensation  (384)
Performance based equity(2,009) (2,736)
Amortization of purchased intangible assets(193) (244)
Depreciation of fixed asset step-up(760)  
Restricted merger proceeds and contingent consideration  (416)
Non-GAAP R&D expenses42,427  37,810 
    
GAAP SG&A expenses49,951  30,115 
Stock-based compensation(4,946) (3,433)
Incentive award compensation  (101)
Performance based equity(1,060) (1,382)
Amortization of purchased intangible assets(10,143) (958)
Depreciation of fixed asset step-up(56)  
Acquisition and integration costs(9,003) (1,262)
Restricted merger proceeds and contingent consideration  (110)
IP litigation costs, net(230) (659)
Non-GAAP SG&A expenses24,513  22,210 
    
GAAP restructuring expenses6,546  2,106 
Restructuring charges(6,546) (2,106)
Non-GAAP restructuring expenses   
    
GAAP and non-GAAP interest and other income (expense), net(2,704) 263 
    
GAAP income (loss) before income taxes(8,066) 44,336 
Total non-GAAP adjustments61,221  23,725 
Non-GAAP income before income taxes53,155  68,061 
    
GAAP income tax provision (benefit)(27,494) 1,071 
Adjustment for non-cash tax benefits/expenses32,810  399 
Non-GAAP income tax provision5,316  1,470 
    
GAAP net income19,428  43,265 
Total non-GAAP adjustments before income taxes61,221  23,725 
Less: total tax adjustments32,810  399 
Non-GAAP net income$47,839  $66,591 
    
Shares used in computing non-GAAP basic net income per share65,564  63,056 
Shares used in computing non-GAAP diluted net income per share69,398  67,110 
Non-GAAP basic net income per share$0.73  $1.06 
Non-GAAP diluted net income per share$0.69  $0.99 



MAXLINEAR, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
 
 Three Months Ended
 June 30, 2017 March 31, 2017 June 30, 2016
GAAP gross profit49.1% 59.6% 61.9%
Stock-based compensation0.1% 0.1% 0.1%
Performance based equity% % (0.2)%
Amortization of inventory step-up5.4% % 0.3%
Amortization of purchased intangible assets6.0% 3.0% 1.8%
Depreciation of fixed asset step-up0.1% % %
Deferred profit eliminated in purchase price accounting3.7% % %
Non-GAAP gross profit64.4% 62.7% 63.8%
         
GAAP R&D expenses27.9% 26.9% 23.6%
Stock-based compensation(3.9)% (3.9)% (3.1)%
Incentive award compensation% % (0.2)%
Performance based equity(1.0)% (1.1)% (1.5)%
Amortization of purchased intangible assets(0.1)% (0.1)% (0.1)%
Depreciation of fixed asset step-up(0.7)% % %
Restricted merger proceeds and contingent consideration% % (0.2)%
Non-GAAP R&D expenses22.2% 21.8% 18.5%
      
GAAP SG&A expenses30.1% 21.0% 16.2%
Stock-based compensation(2.9)% (2.2)% (1.7)%
Incentive award compensation% % %
Performance based equity(0.5)% (0.7)% (0.8)%
Amortization of purchased intangible assets(7.9)% (2.1)% (0.6)%
Depreciation of fixed asset step-up(0.1)% % %
Acquisition and integration costs(5.4)% (3.8)% (1.3)%
Restricted merger proceeds and contingent consideration% % %
IP litigation costs, net(0.1)% (0.1)% (0.2)%
Non-GAAP SG&A expenses13.2% 12.1% 11.6%
      
GAAP restructuring expenses6.3% % %
Restructuring charges(6.3)% % %
Non-GAAP restructuring expenses% % %
      
GAAP and non-GAAP interest and other income (expense), net(2.6)% 0.1% 0.3%
      
GAAP income (loss) before income taxes(17.8)% 11.8% 22.3%
Total non-GAAP adjustments before income taxes44.1% 17.1% 11.8%
Non-GAAP income before income taxes26.4% 28.9% 34.1%
         
GAAP income tax provision (benefit)(28.3)% 2.3% 0.1%
Adjustment for non-cash tax benefits/expenses30.9% 0.5% 0.7%
Non-GAAP income tax provision2.7% 2.8% 0.8%
         
GAAP net income10.5% 9.5% 22.2%
Total non-GAAP adjustments before income taxes44.1% 17.1% 11.8%
Less: total tax adjustments30.9% 0.5% 0.7%
Non-GAAP net income23.7% 26.1% 33.3%



MAXLINEAR, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
 
 Six Months Ended
 June 30, 2017 June 30, 2016
GAAP gross profit53.9% 60.7%
Stock-based compensation0.1% %
Performance based equity% %
Amortization of inventory step-up2.9% 0.2%
Amortization of purchased intangible assets4.6% 1.6%
Depreciation of fixed asset step-up0.1% %
Deferred profit eliminated in purchase price accounting2.0% %
Non-GAAP gross profit63.6% 62.5%
      
GAAP R&D expenses27.4% 23.3%
Stock-based compensation(3.9)% (3.0)%
Incentive award compensation% (0.2)%
Performance based equity(1.0)% (1.3)%
Amortization of purchased intangible assets(0.1)% (0.1)%
Depreciation of fixed asset step-up(0.4)% %
Restricted merger proceeds and contingent consideration% (0.2)%
Non-GAAP R&D expenses22.0% 18.5%
    
GAAP SG&A expenses25.9% 14.7%
Stock-based compensation(2.6)% (1.7)%
Performance based equity(0.5)% (0.7)%
Amortization of purchased intangible assets(5.2)% (0.4)%
Depreciation of fixed asset step-up(0.1)% %
Acquisition and integration costs(4.7)% (0.6)%
Restricted merger proceeds and contingent consideration% (0.1)%
IP litigation costs, net(0.1)% (0.3)%
Non-GAAP SG&A expenses12.7% 10.9%
    
GAAP restructuring expenses3.4% 1.0%
Restructuring charges(3.4)% (1.0)%
Non-GAAP restructuring expenses% %
      
GAAP and non-GAAP interest and other income (expense), net(1.4)% 0.1%
      
GAAP income (loss) before income taxes(4.2)% 21.7%
Total non-GAAP adjustments before income taxes31.7% 11.6%
Non-GAAP income before income taxes27.5% 33.3%
      
GAAP income tax provision (benefit)(14.2)% 0.5%
Adjustment for non-cash tax benefits/expenses16.9% 0.2%
Non-GAAP income tax provision2.8% 0.7%
      
GAAP net income10.0% 21.2%
Total non-GAAP adjustments before income taxes31.7% 11.6%
Less: total tax adjustments16.9% 0.2%
Non-GAAP net income24.8% 32.6%

 

MaxLinear, Inc. Investor Relations Contact:
Gideon Massey
Investor Relations Specialist
Tel: 949-333-0056
gmassey@maxlinear.com

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