What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2020-11-05 compared with 2020-07-23 · 145 added, 156 removed, 603 unchanged (33% of the section changed)

9 unchanged sentences

Before you decide whether to invest in our securities, you should carefully consider the risk factors discussed in our Annual Report on Form 10-K, which we filed with the SEC on February 5, 2020, or the Annual Report, together with all of the other information included in this Quarterly Report on Form 10-Q, and in our other public filings, which could materially affect our business, financial condition or future results.

Risks Relating to the Proposed Acquisition of the Home Gateway Platform Division of Intel Corporation

If the acquisition is completed, our actual financial and operating results could differ materially from any expectations or guidance provided by us concerning future results, including (without limitation) expectations or guidance with respect to the financial impact of any cost savings and other potential synergies.

We currently expect to realize material synergies as a result of our proposed acquisition of the Home Gateway Platform Division of Intel Corporation, or Intel, which we refer to as the WiFi and Broadband assets business and as a result, we currently believe that the acquisition will be accretive to our free cash-flow and non-GAAP earnings per share, excluding upfront non-recurring charges, transaction related expenses, and the amortization of purchased intangible assets and step-up to fair value of inventory as well as depreciation of step-up to fair value of fixed assets.

The expectations and guidance we have provided with respect to the potential financial impact of the acquisition are subject to numerous assumptions, however, including assumptions derived from our diligence efforts concerning the status of and prospects for the WiFi and Broadband assets business, which we do not currently control, and assumptions relating to the near-term prospects for the semiconductor industry generally and the markets for the WiFi and Broadband assets business’s products in particular.

The integration of the WiFi and Broadband assets business may present substantial incremental challenges that could materially and adversely affect our ability to realize the currently anticipated financial, operational, and strategic benefits of the acquisition.

Risks Relating to our Acquisitions

Our actual financial and operating results could differ materially from any expectations or guidance provided by us concerning future results, including (without limitation) expectations or guidance with respect to the financial impact of any cost savings and other potential synergies.

We currently expect to realize material synergies as a result of our acquisitions of the Home Gateway Platform Division of Intel Corporation, or Intel, which we refer to as the WiFi and Broadband assets business and NanoSemi, Inc., or NanoSemi, and as a result, we currently believe that the acquisitions will, in aggregate, be accretive to our free cash-flow and non-GAAP earnings per share, excluding upfront non-recurring charges, transaction related expenses, and the amortization of purchased intangible assets and step-up to fair value of inventory.

The expectations and guidance we have provided with respect to the potential financial impact of the acquisitions are subject to numerous assumptions, however, including assumptions derived from our diligence efforts concerning the status of and prospects for the acquired businesses and assumptions relating to the near-term prospects for the semiconductor industry generally and the markets for the products of the acquired businesses in particular.

The integration of the acquired businesses may present substantial incremental challenges that could materially and adversely affect our ability to realize the currently anticipated financial, operational, and strategic benefits of the acquisitions.

Additional assumptions that could affect currently anticipated results relate to numerous matters, including (without limitation) the following:

• projections of the WiFi and Broadband assets business’s future revenues;

• the anticipated financial performance of WiFi and Broadband assets business’s products and products currently in development;

• anticipated cost savings and other synergies associated with the acquisition, including potential revenue synergies;

• our expected capital structure after the acquisition;

• the amount of goodwill and intangibles that will result from the acquisition;

• certain other purchase accounting adjustments that we expect to record in our financial statements in connection with the acquisition;

• acquisition costs, including restructuring charges and transactions costs payable to our financial, legal, and accounting advisors;

• our ability to maintain, develop, and deepen relationships with customers of the WiFi and Broadband assets business;

• other financial and strategic risks of the WiFi and Broadband assets business acquisition, including the possible impact of reduced liquidity of MaxLinear resulting from deal-related cash outlays, the credit risk associated from the potential debt facility described below, and continued uncertainty arising from the COVID-19 pandemic.

We cannot provide any assurances with respect to the accuracy of our assumptions, including our assumptions with respect to future revenues or revenue growth rates, if any, of the WiFi and Broadband assets business, and we cannot provide assurances with respect to our ability to realize the cost savings that we currently anticipate.

Risks and uncertainties that could cause our actual results to differ materially from currently anticipated results include, but are not limited to, risks relating to our ability to integrate the WiFi and Broadband assets business successfully;

currently unanticipated incremental costs that we may incur in connection with integrating the WiFi and Broadband assets business into MaxLinear’s;

risks relating to our ability to realize incremental revenues from the acquisition in the amounts that we currently anticipate;

risks relating to the willingness of the WiFi and Broadband assets business’s customers and other partners to continue to conduct business with MaxLinear;

and numerous risks and uncertainties that affect the semiconductor industry generally and the markets for our products and those of the WiFi and Broadband assets business specifically.

We believe the continuing pandemic enhances certain of these risks and presents additional uncertainty in our ability to achieve the financial and strategic objectives of the acquisition.

Any failure to integrate the WiFi and Broadband assets business successfully and to realize the financial benefits we currently anticipate from the acquisition would have a material adverse impact on our future operating results and financial condition and could materially and adversely affect the trading price or trading volume of our common stock.

Failure to integrate the WiFi and Broadband assets business with our business and operations successfully in the expected time-frame or otherwise may adversely affect MaxLinear’s operating results and financial condition if the acquisition is completed.

The success of the proposed acquisition of the WiFi and Broadband assets business will depend, in substantial part, on our ability to integrate the acquired business with MaxLinear and to realize fully the anticipated benefits and potential synergies from the integration, including, among others, currently expected cost savings from duplicative functions;

• projections of the acquired businesses’ future revenues;

• the anticipated financial performance of products of the acquired businesses and products currently in development;

• anticipated cost savings and other synergies associated with the acquisitions, including potential revenue synergies;

• our capital structure after the acquisitions;

• the amount of goodwill and intangibles that resulted from the acquisitions;

• certain other purchase accounting adjustments that we recorded in our financial statements in connection with the acquisitions;

• acquisition costs, including restructuring charges and transactions costs to our financial, legal, and accounting advisors;

• our ability to maintain, develop, and deepen relationships with customers of the acquired businesses;

• other financial and strategic risks of the acquisitions, including the possible impact of reduced liquidity of MaxLinear resulting from deal-related cash outlays, the credit risk associated from the potential debt facility described below, and continued uncertainty arising from the COVID-19 pandemic.

We cannot provide any assurances with respect to the accuracy of our assumptions, including our assumptions with respect to future revenues or revenue growth rates, if any, of the acquired businesses, and we cannot provide assurances with respect to our ability to realize the cost savings that we currently anticipate.

Risks and uncertainties that could cause our actual results to differ materially from currently anticipated results include, but are not limited to, risks relating to our ability to successfully complete the integration of the acquired businesses;

currently unanticipated incremental costs that we may incur in connection with completing the integration of the acquired businesses into MaxLinear’s;

risks relating to our ability to realize incremental revenues from the acquisitions in the amounts that we currently anticipate;

risks relating to the willingness of the customers and other partners of the acquired businesses to continue to conduct business with MaxLinear;

and numerous risks and uncertainties that affect the semiconductor industry generally and the markets for our products and those of the acquired businesses specifically.

We believe the continuing pandemic enhances certain of these risks and presents additional uncertainty in our ability to achieve the financial and strategic objectives of the acquisitions.

Any failure to integrate the acquired businesses successfully and to realize the financial benefits we currently anticipate from the acquisitions would have a material adverse impact on our future operating results and financial condition and could materially and adversely affect the trading price or trading volume of our common stock.

Failure to integrate the acquired businesses with our business and operations successfully in the expected time-frame or otherwise may adversely affect MaxLinear’s operating results and financial condition.

The success of the acquisitions of the WiFi and Broadband assets business and NanoSemi will depend, in substantial part, on our ability to integrate the acquired businesses with MaxLinear and to realize fully the anticipated benefits and potential synergies from the integration, including, among others, currently expected cost savings from duplicative functions;

potential operational efficiencies in our respective supply chains and in research and development investments;

and potential revenue growth resulting from the addition of the WiFi and Broadband assets business’s product portfolio.

Following the acquisition, certain of the acquired products will be supplied to us under the terms of a supply agreement with Intel.

While we believe this supply agreement mitigates certain near-term integration risks, we will also rely on Intel as a source of supply for these products.

Accordingly, this relationship will present similar supply risks as exist with respect to our other products as a fabless semiconductor company dependent on specific foundry relationships.

and potential revenue growth resulting from the addition of the product portfolio of the acquired businesses.

Certain of the acquired products of the WiFi and Broadband assets business are supplied to us under the terms of a supply agreement with Intel.

While we believe this supply agreement mitigates certain near-term integration risks, we also rely on Intel as a source of supply for these products.

Accordingly, this relationship presents similar supply risks as exist with respect to our other products as a fabless semiconductor company dependent on specific foundry relationships.

See the Risk Factor entitled “ We rely on a limited number of third parties to manufacture, assemble, and test our products, and the failure to manage our relationships with our third-party contractors successfully, or impacts from natural disasters, public health crises, or other labor stoppages in the regions where such contractors operate, could adversely affect our ability to market and sell our products.

” We expect that the integration will be complex and time consuming and will require substantial management time and attention, which may divert attention and resources from other important areas, including our existing businesses.

We may face significant challenges in consolidating our operations with the WiFi and Broadband assets business and addressing the different corporate cultures of MaxLinear and the WiFi and Broadband assets business.

Furthermore, the WiFi and Broadband assets business also operates in jurisdictions materially affected by the COVID-19 pandemic, which enhances integration risks, in particular risks relating to our ability to hire and retain key employees at a time when engagement is difficult, as described in more detail under the Risk Factor entitled “ We may have difficulty motivating and retaining key personnel in light of the acquisition.

” We expect that the completion of the integration of two acquired businesses will be complex and time consuming and will require substantial management time and attention, which may divert attention and resources from other important areas, including our existing businesses.

We may face significant challenges in consolidating our operations with the acquired businesses and addressing the different corporate cultures of MaxLinear and the acquired businesses.

Furthermore, the acquired businesses also operate in jurisdictions materially affected by the COVID-19 pandemic, which enhances integration risks, in particular risks relating to our ability to retain key employees at a time when engagement is difficult, as described in more detail under the Risk Factor entitled “ We may have difficulty motivating and retaining key personnel in light of the acquisitions.

” Additional unanticipated costs may be incurred in the course of integrating our respective businesses.

If the businesses are not successfully integrated, the anticipated benefits of the acquisition may not be realized fully or at all or may take longer to realize than

If the businesses are not successfully integrated, the anticipated benefits of the acquisitions may not be realized fully or at all or may take longer to realize than expected.

In such a case, we would expect our operating results and financial condition to be materially and adversely affected, which could also have a material and adverse effect on the trading price or trading volume of our common stock.

Our business relationships, including customer relationships, and those of the WiFi and Broadband assets business may be subject to disruption due to uncertainty associated with the acquisition.

In response to the announcement of the acquisition, customers, vendors, licensors, and other third parties with whom we or the WiFi and Broadband assets business do business or otherwise have relationships may experience uncertainty associated with the acquisition, and this uncertainty could materially affect their decisions with respect to existing or future business relationships with MaxLinear or the WiFi and Broadband assets business while the acquisition is pending or with MaxLinear after the acquisition is completed.

As a result, we are in many instances unable to evaluate the impact of the acquisition on certain assumed contract rights and obligations, including intellectual property rights.

These business relationships may be subject to disruption as customers and others may elect to delay or defer purchase or design-win decisions or switch to other suppliers due to the uncertainty about the direction of our offerings, any perceived unwillingness on our part to support existing WiFi and Broadband assets business products after the acquisition is completed, or any general perceptions by customers or other third parties that impute operational or business challenges to us arising from the acquisition.

Our business relationships, including customer relationships, and those of the acquired businesses may be subject to disruption due to uncertainty associated with the acquisitions.

In response to the announcement of the acquisitions, customers, vendors, licensors, and other third parties with whom we or the acquired businesses do business or otherwise have relationships may experience uncertainty associated with the acquisitions, and this uncertainty could materially affect their decisions with respect to existing or future business relationships with MaxLinear.

As a result, we are in many instances unable to evaluate the impact of the acquisitions on certain assumed contract rights and obligations, including intellectual property rights.

These business relationships may be subject to disruption as customers and others may elect to delay or defer purchase or design-win decisions or switch to other suppliers due to the uncertainty about the direction of our offerings, any perceived unwillingness on our part to support existing products of the acquired businesses, or any general perceptions by customers or other third parties that impute operational or business challenges to us arising from the acquisitions.

In addition, customers or other third parties may attempt to negotiate changes in existing business relationships, which may result in additional obligations imposed on us.

These disruptions could have a material adverse effect on our business, operating results, and financial condition while the acquisition is pending or after it is completed.

The adverse effect of any such disruptions could be exacerbated by a delay in the completion of the acquisition for any reason, including delays associated with obtaining regulatory approvals, or termination of the merger agreement.

These disruptions could have a material adverse effect on our business, operating results, and financial condition.

Any loss of customers, customer products, design win opportunities, or other important strategic relationships could have a material adverse effect on our business, operating results, and financial condition and could have a material and adverse effect on the trading price or trading volume of our common stock.

We may have difficulty motivating and retaining key personnel in light of the acquisition.

Uncertainty about the effect of the pending acquisition on key employees may have an adverse effect on MaxLinear or the WiFi and Broadband assets business.

Employee retention may be particularly challenging as our and the WiFi and Broadband assets business’s employees may experience frustrations during the integration process and uncertainty about their future roles with us following completion of the acquisition.

Furthermore, the WiFi and Broadband assets business also operates in jurisdictions materially affected by the COVID-19 pandemic.

In particular, the Intel division has major engineering, development, and other personnel whom we expect to become our employees in Germany, Austria, Israel, India, Singapore, Taiwan, Hong Kong, and China.

Attempting to complete and integrate an acquisition of assets and new personnel around the world will be substantially complicated by continuing restrictions on travel and social distancing.

We are taking various steps to mitigate these risks, but we cannot predict whether or to what extent the pandemic may adversely affect the timing of completion of the acquisition or our ability to retain employees and successfully integrate the acquired business.

MaxLinear must be successful at retaining and motivating key employees in order for the benefits of the transaction to be fully realized.

If key employees depart, we may incur significant costs in identifying, hiring, and retaining replacements, which could substantially reduce or delay our ability to realize the anticipated benefits of the acquisition and could have a material adverse effect on our business, operating results, and financial condition.

If the proposed acquisition is not completed, we will have incurred substantial costs that may adversely affect our operating results and financial condition as well as the market price of our common stock.

If the acquisition is not completed, the price of our common stock may decline to the extent that such market price reflects a market assumption that the acquisition will be completed.

In addition, we have incurred and will incur substantial costs in connection with the proposed acquisition.

These costs are primarily associated with the fees of our financial advisors, accountants, and legal counsel and, with limited exceptions relating to a portion of our financial advisor fees, will be payable regardless of whether the acquisition is completed.

In addition, we have diverted significant management resources in an effort to complete the acquisition.

If the acquisition is not completed, we will have received little or no benefit in respect of such costs incurred.

Furthermore, if the acquisition is not completed, we may experience negative reactions from the financial markets and our suppliers, customers, customer prospects, and employees.

Any of these factors could have an adverse effect on our business, operating results, and financial condition or on the trading price of our common stock.

In connection with the acquisition of the WiFi and Broadband assets business, we will incur approximately $140.0 million of incremental secured term loan indebtedness, adding to our existing $212.0 million of indebtedness outstanding from a prior acquisition.

Such indebtedness will adversely affect our operating results and cash-flows as we satisfy our underlying interest and principal payment obligations and will contain financial and operational covenants that could adversely affect our operational freedom or ability to pursue strategic transactions that we would otherwise consider to be in the best interests of stockholders, including obtaining additional indebtedness to finance such transactions.

As previously disclosed, MaxLinear will finance the acquisition of the WiFi and Broadband assets business in part with an incremental secured term loan facility in an aggregate principal amount of approximately $140.0 million.

The incremental term loan facility will be secured by a first priority security interest in MaxLinear’s assets, subject to certain customary exceptions, as well as pledges of our equity interests in certain subsidiaries.

We may have difficulty motivating and retaining key personnel in light of the acquisitions.

Uncertainty about the effect of the acquisitions on key employees may have an adverse effect on MaxLinear or the acquired businesses.

Employee retention may be particularly challenging as our employees may experience frustrations during the integration process and uncertainty about their future roles with us following completion of integration of the acquired businesses, which also operate in jurisdictions materially affected by the COVID-19 pandemic.

In particular, the WiFi and Broadband assets business has major engineering, development, and other personnel in Germany, Austria, Israel, India, Singapore, Taiwan, Hong Kong, and China and NanoSemi has engineering and development personnel in Boston, Massachusetts.

Attempting to complete the integration of these acquired businesses and new personnel around the world has been and will continue to be substantially complicated by continuing restrictions on travel and social distancing.

We are taking various steps to mitigate these risks, but we cannot predict whether or to what extent the pandemic may adversely affect our ability to retain employees and successfully integrate the acquired businesses.

MaxLinear must be successful at retaining and motivating key employees in order for the benefits of the transactions to be fully realized.

If key employees depart, we may incur significant costs in identifying, hiring, and retaining replacements, which could substantially reduce or delay our ability to realize the anticipated benefits of the acquisitions, which could have a material adverse effect on our business, operating results, and financial condition.

We have incurred approximately $175.0 million of incremental secured term loan indebtedness, primarily to fund our $150.0 million acquisition of the WiFi and Broadband assets business, bringing our aggregate indebtedness to $387.0 million at September 30, 2020.

Such indebtedness adversely affects our operating results and cash-flows as we satisfy our underlying interest and principal payment obligations and contains financial and operational covenants that could adversely affect our operational freedom or ability to pursue strategic transactions that we would otherwise consider to be in the best interests of stockholders, including obtaining additional indebtedness to finance such transactions.

MaxLinear financed the $150.0 million acquisition of the WiFi and Broadband assets business in part with an incremental secured term loan facility in an aggregate principal amount of approximately $175.0 million, bringing our aggregate indebtedness to $387.0 million at September 30, 2020.

The incremental term loan has a three-year term expiring in July 2023 and bears interest, at our option, at either an Adjusted LIBOR plus a fixed applicable margin of 4.25% per annum or an Adjusted Base Rate plus a fixed applicable margin of 3.25% per annum.

The incremental term loan of $175.0 million amortizes in quarterly installments of principal equal to (i) 1.25% of the original aggregate principal amount of the incremental term loan on the last day of each of the first through fourth full fiscal quarters of the Company after July 31, 2020, (ii) 2.50% of the original aggregate principal amount of the Incremental Term Loan on the last day of each of the fifth through eighth full fiscal quarters of the Company after July 31, 2020, and (iii) 3.75% of the original aggregate principal amount of the incremental term loan on the last day of each of the ninth through the eleventh full fiscal quarters of the Company after July 31, 2020.

The incremental term loan facility is secured by a first priority security interest in MaxLinear’s assets, subject to certain customary exceptions, as well as pledges of our equity interests in certain subsidiaries.

We have previously only carried long term debt on our balance sheet from one acquisition.

We have prepaid a substantial portion of the total principal of such debt and have financed the remainder of our operations principally through working capital generated from operations as well as sales and issuances of our equity securities.

MaxLinear previously financed the acquisition of Exar in part with a secured term loan facility in an aggregate principal amount of approximately $425.0 million, of which $212.0 million remained outstanding as of June 30, 2020.

In November 2017, to hedge most of our existing interest rate risk, we entered into a fixed-for-floating interest rate swap agreement with an amortizing notional amount to swap a substantial portion of our variable rate LIBOR interest payments under the outstanding term loans for fixed interest payments bearing an interest rate of 1.74685%.

Our outstanding debt is still subject to a 2.5% fixed applicable margin during the term of the loan.

As a result of entering the swap, the interest rate on a substantial portion of our long-term debt is effectively fixed at approximately 4.25% until the swap expires in October 2020.

We have prepaid a substantial portion of the total principal of debt from the prior acquisition and have financed the remainder of our operations principally

through working capital generated from operations as well as sales and issuances of our equity securities.

MaxLinear previously financed the acquisition of Exar in part with a secured initial term loan facility in an aggregate principal amount of approximately $425.0 million, of which $212.0 million remained outstanding as of September 30, 2020.

The outstanding principal on the initial term loan is due at maturity on May 12, 2024.

Our outstanding initial term loan debt is subject to a Adjusted LIBOR plus a 2.5% fixed applicable margin during the remainder of the term of the loan.

The existing term loan facility is secured by a first priority security interest in MaxLinear’s assets, subject to certain customary exceptions, as well as pledges of our equity interests in certain subsidiaries.

Incurring material incremental indebtedness will adversely affect our operating expenses through increased interest payment obligations and will adversely affect our ability to use cash generated from operations as we repay interest and principal under the term loans.

In addition, the incremental term loan provisions will include financial covenants including an initial maximum total net leverage ratio of 3.5 to 1 which decreases to 3.0 to 1 beginning with the sixth full fiscal quarter after the closing of the acquisition and operational covenants that may adversely affect our ability to engage in certain activities, including certain financing and acquisition transactions, stock repurchases, guarantees, and similar transactions, without obtaining the consent of the lenders, which may or may not be forthcoming.

The existing secured term loan is currently only subject to operational covenants.

Our material incremental indebtedness adversely affects our operating expenses through increased interest payment obligations and adversely affects our ability to use cash generated from operations as we repay interest and principal under the term loans.

In addition, the incremental term loan provisions include financial covenants such as an initial maximum total net leverage ratio of 3.5 to 1 which decreases to 3.0 to 1 beginning with the sixth full fiscal quarter after July 31, 2020, a requirement to maintain certain public corporate debt ratings, and operational covenants that may adversely affect our ability to engage in certain activities, including certain financing and acquisition transactions, stock repurchases, guarantees, and similar transactions, without obtaining the consent of the lenders, which may or may not be forthcoming.

The initial secured term loan is only subject to operational covenants.

Lastly, our borrowing costs can be affected by periodic credit ratings from independent rating agencies.

1 unchanged sentence

Accordingly, outstanding indebtedness could adversely affect our operational freedom or ability to pursue strategic transactions that we would otherwise consider to be in the best interests of stockholders, including obtaining additional indebtedness to finance such transactions.

Specifically, our combined indebtedness could have important consequences to investors in our common stock, including the following:

• we will be subject to substantial variable interest rate risk because our interest rate under the incremental term loan will vary based on a fixed margin of 4.25% per annum over an adjusted LIBOR rate or 3.25% per annum over an adjusted base rate.

Specifically, our combined indebtedness has important consequences to investors in our common stock, including the following:

• we are subject to substantial variable interest rate risk because our interest rate under the incremental term loan varies based on a fixed margin of 4.25% per annum over an adjusted LIBOR rate or 3.25% per annum over an adjusted base rate and our interest rate under the initial term loan varies based on a fixed margin of 2.5% over an adjusted LIBOR rate.

If interest rates were to increase substantially, it would adversely affect our operating results and could affect our ability to service the term loan indebtedness;

• although we are currently subject to a fixed rate of interest on a substantial portion of the existing secured term loan as a result of entering into a fixed-for-floating interest rate swap agreement in November 2017 to hedge against the potential that the interest rates applicable to our initial term loan will increase, such swap expires in October 2020.

Our interest rate under the initial term loan also varies based on a fixed margin over either an adjusted LIBOR or an adjusted base rate.

Interest rates have significantly decreased recently over a short period of time and we are paying higher interest expense than market on the swap through its expiration in October 2020;

• a portion of our cash flows will be dedicated to the payment of interest and when applicable, principal, on our indebtedness and other obligations and will not be available for use in our business;

• a portion of our cash flows is dedicated to the payment of interest and when applicable, principal, on our indebtedness and other obligations and will not be available for use in our business;

• our level of indebtedness could limit our flexibility in planning for, or reacting to, changes in our business and the markets in which we operate;

2 unchanged sentences

Subject to customary cure rights, any default would permit the holders of the indebtedness to accelerate repayment of this debt and could cause defaults under other indebtedness that we have, any of which could have a material adverse effect on the trading price of our common stock.

We expect to incur substantial expenses related to the integration of MaxLinear and the WiFi and Broadband assets business.

We expect to incur substantial expenses in connection with integrating the operations of MaxLinear and the WiFi and Broadband assets business.

We expect to incur substantial expenses related to the integration of MaxLinear and the acquired businesses.

We expect to incur substantial expenses in connection with completion of the integration of the operations of MaxLinear and the acquired businesses.

We expect operational integration to require substantial management attention.

2 unchanged sentences

These expenses could, particularly in the near term, reduce the savings that we expect to achieve from the elimination of duplicative expenses and the realization of economies of scale and cost savings related to the integration of the businesses.

These integration expenses may result in MaxLinear’s taking significant charges against earnings following the completion of the acquisition.

We expect to record additional goodwill and other intangible assets in connection with the acquisition of the WiFi and Broadband assets business.

These integration expenses may result in MaxLinear’s taking significant charges against earnings.

We have recorded additional goodwill and other intangible assets in connection with the acquired businesses.

Goodwill and other acquired intangible assets could become impaired and adversely affect our future operating results.

We expect that the acquisition of the WiFi and Broadband assets business will be accounted for as a business combination under the acquisition method of accounting by MaxLinear in accordance with accounting principles generally accepted in the United States.

The acquisitions of the WiFi and Broadband assets business and NanoSemi are accounted for as business combinations under the acquisition method of accounting by MaxLinear in accordance with accounting principles generally accepted in the United States.

Under the acquisition method of accounting, the assets and liabilities of acquired businesses are recorded, as of completion, at their respective fair values and added to our assets and liabilities.

Our reported financial condition and results of operations after completion of the acquisition will reflect the acquired business’s balances and results but will not be restated retroactively to reflect the historical financial position or results of operations of acquired businesses for periods prior to the acquisition.

Our reported financial condition and results of operations reflect the balances and results of the acquired businesses but are not restated retroactively to reflect the historical financial position or results of operations of acquired businesses for periods prior to the acquisitions.

As a result, comparisons of future results against prior period results will be more difficult for investors.

6 unchanged sentences

Any such impairment charges relating to goodwill or other intangible assets could have a material impact on our operating results in future periods, and the announcement of a material impairment could have an adverse effect on the trading price and trading volume of our common stock.

As of June 30, 2020, our balance sheet reflected goodwill of $238.3 million and other intangible assets of $159.4 million and we expect those balances to increase with the acquisition of the WiFi and Broadband assets business.

As of September 30, 2020, our balance sheet reflected goodwill of $302.6 million and other intangible assets of $232.1 million.

Consequently, we could recognize material impairment charges in the future.

In addition to our pending acquisition of the WiFi and Broadband assets business, we may, from time to time, make additional business acquisitions or investments, which involve significant risks.

We have completed acquisitions in prior years and intend to acquire the WiFi and Broadband assets business in 2020.

In addition to our acquisitions of the WiFi and Broadband assets business and NanoSemi, we may, from time to time, make additional business acquisitions or investments, which involve significant risks.

We have completed multiple acquisitions in the past three years.

We may also enter into alliances or make investments in other businesses to complement our existing product offerings, augment our market coverage or enhance our technological capabilities.

16 unchanged sentences

• coordinating new product and process development, especially with respect to highly complex technologies;

• loss of key employees or customers of the acquired company;

• loss of key employees or customers of the acquired business;

• hiring additional management and other critical personnel;

1 unchanged sentence

• increasing the scope, geographic diversity and complexity of our operations;

• consolidation of facilities, integration of the acquired company’s accounting, human resource and other administrative functions and coordination of product, engineering and sales and marketing functions;

• the geographic distance between the companies;

• liability for activities of the acquired company before the acquisition, including patent and trademark infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities;

• litigation or other claims in connection with the acquired company, including claims for terminated employees, customers, former stockholders or other third parties.

• consolidation of facilities, integration of the acquired businesses' accounting, human resource and other administrative functions and coordination of product, engineering and sales and marketing functions;

• the geographic distance between the businesses;

• liability for activities of the acquired businesses before the acquisition, including patent and trademark infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities;

• litigation or other claims in connection with the acquired businesses, including claims for terminated employees, customers, former stockholders or other third parties.

We have in the past been and may in the future be party to ligation related to acquisitions.

5 unchanged sentences

On March 11, 2020, the World Health Organization declared a global pandemic regarding COVID-19.

The COVID-19 pandemic has reached all of the countries and states in which we operate, including in California where our headquarters and central engineering team are located, as well as Spain, India, Singapore, Taiwan, Canada, France, Japan and South Korea, where additional engineering, sales, and administrative personnel are located.

The COVID-19 pandemic has reached all of the countries and states in which we operate, including in California where our headquarters and central engineering team are located, as well as Spain, India, Singapore, Taiwan, Canada, France, Japan, South Korea, Hong Kong, Israel, Germany and Austria, where additional engineering, sales, and administrative personnel are located.

In many of these jurisdictions, local authorities have instituted stay-at-home or shelter-in-place orders.

To protect the health and safety of our employees, we adopted social distancing policies including suspending employee travel and implementing remote work arrangements for substantially all of our workforce worldwide, which currently remain in place including in California, where the rate of confirmed COVID-19 infections is currently on the rise.

In addition, we have experienced some impact to our net revenue and

gross profits in the first half of 2020 due to several industry-wide dynamics related to COVID-19, including supply constraints described above, as well as certain customer push-out requests.

Further, global financial markets reacted negatively to the COVID-19 pandemic’s impacts causing significant declines in the stock price and market capitalization of many companies across all industries, although some have recently recovered.

Heightened volatility and uncertainty in customer demand and the worldwide economy in general has continued as a result of the COVID-19 pandemic, and we may experience decreased sales and revenues in the near future.

We believe such impact may in particular affect our sales of high performance analog products in our industrial and multi-market business and may impact the rest of our business to some degree.

However, the magnitude of such impact on our business and its duration is uncertain and cannot be reasonably estimated at this time.

As of September 30, 2020, some of our workforce have returned to the office at reduced capacity adhering to local health authority guidelines.

While we have experienced some negative impact to our net revenue and gross profits in the first half of 2020 due to several industry-wide dynamics related to COVID-19, including supply constraints described above, as well as certain customer push-out requests, we are currently benefiting from the work-from-home environment that is driving an increase in demand for certain of our products.

Heightened volatility and uncertainty in customer demand and the worldwide economy in general has continued as a result of the COVID-19 pandemic, and we may experience increased volatility in sales and revenues in the near future.

However, the magnitude of such volatility on our business and its duration is uncertain and cannot be reasonably estimated at this time.

Other areas of our business which could be disrupted or subject to negative impacts may include, but may not be limited to, the following:

2 unchanged sentences

• Disruptions in product shipments from travel and shipping restrictions imposed in response to local outbreaks;

• Slow down in the pace of closing our proposed acquisition or integration thereof resulting from remote work arrangements and/or governmental closures beyond our control;

• Slow down in the pace of integration of our acquisitions resulting from remote work arrangements and/or governmental closures beyond our control;

• Reduced ability to accurately predict our future revenue and budget future expenses;

3 unchanged sentences

• Material impairment of our assets, if recoverability thereof becomes a concern;

• Decreased availability of capital or access thereto, including from relief funds made available by the Coronavirus Aid, Relief, and Economic Security (CARES) Act in the United States and from other jurisdictions in which we operate;

• Decreased availability of capital or access thereto in the United States and from other jurisdictions in which we operate;

• Increased data security risks from remote working arrangements of our employees and those of our customers and vendors.

7 unchanged sentences

Large semiconductor companies resulting from industry consolidation could enjoy substantial market power, which they could exert through, among other things, aggressive pricing that could adversely affect our customer relationships and revenues.

In addition, we expect the internal resources of large, integrated

original equipment manufacturers, or OEMs, may continue to enter our markets.

In addition, we expect the internal resources of large, integrated original equipment manufacturers, or OEMs, may continue to enter our markets.

Increased competition could result in price pressure, reduced profitability and loss of market share, any of which could materially and adversely affect our business, revenue, revenue growth rates, if any, and operating results.

6 unchanged sentences

If we cannot offer an attractive solution for applications where our competitors offer more fully integrated products, we may lose significant market share to our competitors.

Certain of our competitors have fully-integrated tuner/demodulator/video processing solutions targeting high-performance cable, satellite, or DTV applications, and thereby potentially provide customers with smaller and cheaper solutions.

Certain of our competitors have fully-integrated tuner/demodulator/video processing solutions targeting high-performance cable, satellite, or DTV applications, and thereby

potentially provide customers with smaller and cheaper solutions.

Some of our targeted customers for our optical interconnect solutions are module makers who are vertically integrated, where we compete with internally supplied components, and we compete with much larger analog and mixed-signal catalog competitors in the multi-market high-performance analog markets.

6 unchanged sentences

We depend on a limited number of customers, that have undergone or are undergoing consolidation and who themselves are dependent on a consolidating set of service provider customers, for a substantial portion of our revenue, and the loss of, or a significant reduction in orders from one or more of our major customers could have a material adverse effect on our revenue and operating results.

For the three months ended June 30, 2020, one of our distributor customers accounted for 16% of our net revenue and one of our direct customers accounted for 10% of our net revenue, and our ten largest customers collectively accounted for 71% of our net revenue, of which distributor customers accounted for 50% of our net revenue.

For the six months ended June 30, 2020, one of our distributor customers accounted for 17% of our net revenue and one of our direct customers accounted for 10% of our net revenue, and our ten largest customers collectively accounted for 68% of our net revenue, of which distributor customers accounted for 48% of our net revenue.

In the three months ended September 30, 2020, our top two customers, accounted for 29% of our net revenue, and our ten largest customers collectively accounted for 71% of our net revenue, of which distributor customers accounted for 31% of our net revenue.

In the nine months ended September 30, 2020, our top two customers, accounted for 25% of our net revenue, of which a distributor customer accounted for 11% of our net revenue, and our ten largest customers collectively accounted for 65% of our net revenue, of which distributor customers accounted for 36% of our net revenue.

We expect that our operating results for the foreseeable future will continue to show a substantial but declining percentage of sales dependent on a relatively small number of customers and on the ability of these customers to sell products that incorporate our RF receivers or RF receiver SoCs, digital STB video SoCs, DBS ODU receiver SOCs, and MoCA®, G.hn connectivity solutions and high-performance analog solutions.

14 unchanged sentences

Our agreements with certain of these distributors provide protection against price reduction on their inventories of our products.

The loss of certain distributors could have a material adverse effect on our business and results of operations, and price reductions associated with their inventories of our products could have a substantial adverse effect on our operating results in the event of a dramatic decline in selling prices for these products.

loss of certain distributors could have a material adverse effect on our business and results of operations, and price reductions associated with their inventories of our products could have a substantial adverse effect on our operating results in the event of a dramatic decline in selling prices for these products.

In addition, the current situation relating to trade with China and governmental and regulatory concerns relating to specific Chinese companies remain fluid and unpredictable.

Our current and future operating results could be materially and adversely affected by limitations on our ability to sell to one or more Chinese customers and by tariffs and other trade barriers that may be implemented by governmental authorities.

A significant portion of our revenue is attributable to demand for our products in markets for connected home solutions, and development delays and consolidation trends among cable and satellite Pay-TV and broadband operators could adversely affect our future revenues and operating results.

For the three months ended June 30, 2020 and 2019, revenue directly attributable to connected home applications accounted for approximately 45% and 47% of our net revenue, respectively.

For the six months ended June 30, 2020 and 2019, revenue directly attributable to connected home applications accounted for approximately 48% and 49% of our net revenue, respectively.

A significant, but declining portion of our revenue is attributable to demand for our products in markets for connected home solutions, and development delays and consolidation trends among cable and satellite Pay-TV and broadband operators could adversely affect our future revenues and operating results.

For the three months ended September 30, 2020 and 2019, revenue directly attributable to connected home applications accounted for approximately 24% and 51% of our net revenue, respectively.

For the nine months ended September 30, 2020 and 2019, revenue directly attributable to connected home applications accounted for approximately 35% and 50% of our net revenue, respectively.

Delays in the development of, or unexpected developments in the connected home markets could have an adverse effect on order activity by original equipment manufacturers in these markets and, as a result, on our business, revenue, operating results and financial condition.

1 unchanged sentence

If we fail to penetrate new applications and markets, our revenue, revenue growth rate, if any, and financial condition could be materially and adversely affected.

We sell most of our products to manufacturers of cable broadband voice and data modems and gateways, pay-TV set-top boxes and gateways into cable and satellite operator markets, satellite outdoor units or LNB’s, optical modules for long-haul and metro telecommunications markets, and RF transceivers and modem solutions for wireless infrastructure markets.

We have expanded our product offerings to include power management and interface technologies which are ubiquitous functions in new and existing markets such as wireless and wireline communications infrastructure, broadband access, industrial, enterprise network, and automotive applications.

Our future revenue growth, if any, will depend in part on our ability to further penetrate into, and expand beyond, these markets with analog and mixed-signal solutions targeting the markets for high-speed optical interconnects for data center, metro, and long-haul optical modules, telecommunications wireless infrastructure, and cable DOCSIS 3.1 network infrastructure products.

We sell a significant portion of our products to manufacturers of cable broadband voice and data modems and gateways, pay-TV set-top boxes and gateways into cable and satellite operator markets, satellite outdoor units or LNB’s, optical modules for long-haul and metro telecommunications markets, and RF transceivers and modem solutions for wireless infrastructure markets.

We have expanded our product offerings to include broadband data access, power management and interface technologies which are ubiquitous functions in new and existing markets such as wireless and wireline communications infrastructure, broadband access, industrial, enterprise network, and automotive applications.

Our future revenue growth, if any, will depend in part on our ability to further penetrate into, and expand beyond, these markets with analog, digital and mixed-signal solutions targeting the markets for high-speed optical interconnects for data center, metro, and long-haul optical modules, telecommunications wireless infrastructure, and cable DOCSIS 3.1 network infrastructure products.

Each of these markets presents distinct and substantial risks.

If any of these markets do not develop as we currently anticipate, or if we are unable to penetrate them successfully, it could materially and adversely affect our revenue and revenue growth rate, if any.

Broadband data modems and gateways and pay-TV and satellite set-top boxes and video gateways continue to represent our largest North American and European revenue generator.

The North American and European pay-TV market is dominated

by only a few OEMs, including Technicolor, Commscope Holding Company, Inc., Hitron Technologies, Inc., Compal Broadband Networks, Humax Co., Ltd., and Samsung Electronics Co., Ltd.

Broadband data modems and gateways and pay-TV and satellite set-top boxes and video gateways continue to represent a significant North American and European revenue generator.

The North American and European pay-TV market is dominated by only a few OEMs, including Technicolor, Commscope Holding Company, Inc., Hitron Technologies, Inc., Compal Broadband Networks, Humax Co., Ltd., and Samsung Electronics Co., Ltd.

These OEMs are large multinational corporations with substantial negotiating power relative to us and are undergoing significant consolidation.

7 unchanged sentences

Many of our products originated with our research and development efforts, which we believe have provided us with a significant competitive advantage.

For the three months ended June 30, 2020 and 2019, our research and development expense was $28.0 million and $24.3 million, respectively.

For the six months ended June 30, 2020 and 2019, our research and development expense was $53.7 million and $51.7 million, respectively.

We monitor such expenditures as part of our strategy of devoting focused research and development efforts on the development of innovative and sustainable product platforms.

For the three months ended September 30, 2020 and 2019, our research and development expense was $55.8 million and $23.2 million, respectively.

For the nine months ended September 30, 2020 and 2019, our research and development expense was $109.5 million and $74.9 million, respectively.

We monitor such expenditures as part of our strategy of devoting focused research and development efforts on the

development of innovative and sustainable product platforms.

We are committed to investing in new product development internally in order to stay competitive in our markets and plan to maintain research and development and design capabilities for new solutions in advanced semiconductor process nodes such as 28nm and 16nm and beyond.

1 unchanged sentence

In addition, we cannot assure you that the technologies that are the focus of our research and development expenditures will become commercially successful.

We have experienced a recent decline in net revenues.

We experienced a decline in net revenues in our recent past but are currently benefiting from an uptick in demand for certain products due to the work-from-home environment caused by the COVID-19 pandemic.

A significant variance in our operating results or rates of growth, if any, could lead to substantial volatility in our stock price.

To the extent we return to growth, we may not sustain our growth rate, and we may not be able to manage future growth effectively.

We have experienced a recent decline in net revenues due to anticipated declines from legacy product shipments used in satellite, terrestrial, and video SoC applications, as well as a slowdown in the cable market owing to the market transition from DOCSIS 3.0 to DOCSIS 3.1 and related customer inventory reductions, and macro environment and trade issues, including industry-wide dynamics pertaining to the COVID-19 pandemic.

We may not sustain our current growth rate, and we may not be able to manage future growth effectively.

We experienced a decline in net revenues due to anticipated declines from legacy product shipments used in satellite, terrestrial, and video SoC applications, as well as a slowdown in the cable market owing to the market transition from DOCSIS 3.0 to DOCSIS 3.1 and related customer inventory reductions, and macro environment and trade issues, including industry-wide dynamics pertaining to the COVID-19 pandemic.

Our net revenue decreased from approximately $385.0 million in 2018 to $317.2 million in 2019.

In addition, our net revenue decreased from $167.1 million in the six months ended June 30, 2019 to $127.2 million in the six months ended June 30, 2020.

However, our net revenue increased from $247.2 million in the nine months ended September 30, 2019 to $283.9 million in the nine months ended September 30, 2020, as we are currently benefiting from the work-from-home environment that is driving an increase in demand for certain of our products, particularly those from our acquisition of the WiFi and Broadband assets business.

The COVID-19 pandemic could result in increased volatility in our sales and revenues.

You should not rely on our operating results for any prior quarterly or annual periods as an indication of our future operating performance.

Please refer to the Risk Factor entitled “ Our operating results are subject to substantial quarterly and annual fluctuations and may fluctuate significantly due to a number of factors that could adversely affect our business and our stock price ” for a discussion of factors contributing to variances in our operating results or rates of growth.

If we are unable to return to revenue growth and maintain adequate revenue growth, our financial results could suffer and our stock price could decline.

To return to growth and manage any future growth successfully, we believe we must effectively, among other things:

If we are unable to sustain adequate revenue growth, our financial results could suffer and our stock price could decline.

To sustain and manage any future growth successfully, we believe we must effectively, among other things:

• successfully develop new products and penetrate new applications and markets;

3 unchanged sentences

• enhance our information technology support for enterprise resource planning and design engineering by adapting and expanding our systems and tool capabilities, and properly training new hires as to their use.

If we are unable to return to and manage our growth effectively, we may not be able to take advantage of market opportunities or develop new products and we may fail to satisfy customer requirements, maintain product quality, execute our business plan, or respond to competitive pressures.

If we are unable to sustain and manage our growth effectively, we may not be able to take advantage of market opportunities or develop new products and we may fail to satisfy customer requirements, maintain product quality, execute our business plan, or respond to competitive pressures.

The complexity of our products could result in unforeseen delays or expenses caused by undetected defects or bugs, which could reduce the market acceptance of our new products, damage our reputation with current or prospective customers and adversely affect our operating costs.

4 unchanged sentences

If any of these problems are not found until after we have commenced commercial production of a new product, we may be required to incur additional development costs and product recall, repair or replacement costs, and our operating costs could be adversely affected.

These problems may also result in warranty or product liability claims against us by our customers or others that may require us to make significant expenditures to defend these claims or pay damage awards.

These problems may also result in warranty or product liability claims against us by our customers or others that may require us to

make significant expenditures to defend these claims or pay damage awards.

In the event of a warranty claim, we may also incur costs if we compensate the affected customer.

44 unchanged sentences

As a result, we rely on third-party foundry wafer fabrication, including sole sourcing for many components or products.

Currently, the majority of our products are manufactured by Global Foundries, Semiconductor Manufacturing International Corporation, or SMIC, Taiwan Semiconductor Manufacturing Corp, or TSMC, and

United Microelectronics Corporation, or UMC, at foundries located in Taiwan, Singapore, and China.

Currently, the majority of our products are manufactured by Global Foundries, Semiconductor Manufacturing International Corporation, or SMIC, Taiwan Semiconductor Manufacturing Corp, or TSMC, and United Microelectronics Corporation, or UMC, at foundries located in Taiwan, Singapore, and China.

We also use third-party contractors for all of our assembly and test operations.

8 unchanged sentences

The ability and willingness of our third-party contractors to perform is largely outside our control.

If one or more of our contract manufacturers or other outsourcers fails to perform its obligations in a timely manner or at satisfactory quality levels, our ability to bring products to market and our reputation could suffer.

If one or more of our contract manufacturers or other outsourcers fails to perform its obligations in a timely manner or at satisfactory quality levels,

our ability to bring products to market and our reputation could suffer.

For example, in the event that manufacturing capacity is reduced or eliminated at one or more facilities, including as a response to the recent worldwide decline in the semiconductor industry, manufacturing could be disrupted, we could have difficulties fulfilling our customer orders and our net revenue could decline.

45 unchanged sentences

We currently sell a large portion of our products to customers through our distributors, who maintain their own inventories of our products.

Sales to distributors accounted for approximately 64% and 49% of our net revenue in the three months ended June 30, 2020 and 2019, respectively.

Sales to distributors accounted for approximately 63% and 45% of our net revenue in the six months ended June 30, 2020 and 2019, respectively.

Sales to distributors accounted for approximately 46% and 60% of our net revenue in the three months ended September 30, 2020 and 2019, respectively.

Sales to distributors accounted for approximately 54% and 50% of our net revenue in the nine months ended September 30, 2020 and 2019, respectively.

Upon shipment of product to these distributors, title to the inventory transfers to the distributor and the distributor is invoiced, generally with 30 to 60 day terms.

9 unchanged sentences

In addition, our customers can cancel purchase orders or defer the shipments of our products under certain circumstances.

Our products are manufactured using a silicon foundry according to our estimates of customer demand, which requires us to make separate demand forecast assumptions for every customer, each of which may introduce significant variability into our aggregate estimate.

significant variability into our aggregate estimate.

We have limited visibility into future customer demand and the product mix that our customers will require, which could adversely affect our revenue forecasts and operating margins.

16 unchanged sentences

The cost and operational consequences of implementing further data protection measures either as a response to specific breaches or as a result of evolving risks could be significant.

In addition, our inability to use or access our information systems at critical points in time

could adversely affect the timely and efficient operation of our business.

In addition, our inability to use or access our information systems at critical points in time could adversely affect the timely and efficient operation of our business.

Any delayed sales, significant costs or lost customers resulting from these technology failures could adversely affect our business, operations and financial results.

10 unchanged sentences

We generally place orders for products with some of our suppliers approximately four to five months prior to the anticipated delivery date, with order volumes based on our forecasts of demand from our customers.

Accordingly, if we inaccurately forecast demand for our products, we may be unable to obtain adequate and cost-effective foundry or assembly capacity from our third-party contractors to meet our customers’ delivery requirements, or we may accumulate excess inventories.

Accordingly, if we inaccurately forecast demand for our products, we may be

unable to obtain adequate and cost-effective foundry or assembly capacity from our third-party contractors to meet our customers’ delivery requirements, or we may accumulate excess inventories.

On occasion, we have been unable to adequately respond to unexpected increases in customer purchase orders and therefore were unable to benefit from this incremental demand.

17 unchanged sentences

In addition, we have not entered into non-compete agreements with members of our senior management team.

We are fortunate that many members of

our executive management team have long tenures with us, but from time to time we also have been required to recruit new executive officers.

We are fortunate that many members of our executive management team have long tenures with us, but from time to time we also have been required to recruit new executive officers.

With respect to executive officer recruitment and retention, we need to ensure that our executive compensation programs provide sufficient recruitment and retention incentives as well as incentives to achieve our long-term strategic business and financial objectives.

8 unchanged sentences

Despite these uncertainties, we devote substantial resources, including design, engineering, sales, marketing and management efforts, to qualifying our products with customers in anticipation of sales.

If we are unsuccessful or delayed in qualifying any of our products with a customer, sales of this product to the customer may be precluded or delayed, which may result in a decrease in our revenue and cause our business to suffer.

are unsuccessful or delayed in qualifying any of our products with a customer, sales of this product to the customer may be precluded or delayed, which may result in a decrease in our revenue and cause our business to suffer.

Winning business is subject to lengthy competitive selection processes that require us to incur significant expenditures.

52 unchanged sentences

Open source software is typically freely accessible, usable and modifiable.

Certain open source software licenses require a user who intends to distribute the open source software as a component of the user’s software to disclose publicly part

or all of the source code to the user’s software.

Certain open source software licenses require a user who intends to distribute the open source software as a component of the user’s software to disclose publicly part or all of the source code to the user’s software.

In addition, certain open source software licenses require the user of such software to make any derivative works of the open source code available to others on unfavorable terms or at no cost.

8 unchanged sentences

The ability of these third-party vendors to successfully provide reliable and high quality services is subject to technical and operational uncertainties that are beyond our control.

While we may be entitled to damages if our vendors fail to perform under their agreements with us, our agreements with these vendors limit the amount of damages we may receive.

be entitled to damages if our vendors fail to perform under their agreements with us, our agreements with these vendors limit the amount of damages we may receive.

In addition, we do not know whether we will be able to collect on any award of damages or that these damages would be sufficient to cover the actual costs we would incur as a result of any vendor’s failure to perform under its agreement with us.

24 unchanged sentences

Realization of our deferred tax assets is dependent primarily upon future taxable income in the applicable jurisdiction.

Based upon our review of all positive and negative evidence, we concluded that a full valuation allowance should continue to be recorded against our state and certain federal and foreign net deferred tax assets at June 30, 2020.

On a periodic basis we evaluate our deferred tax assets for realizability.

4 unchanged sentences

If we fail to satisfy the conditions for receipt of these tax incentives, or to the extent U.S.

or other tax authorities challenge our operation under these favorable tax incentive programs or our intercompany transfer pricing agreements, our taxable income could be taxed at higher federal or foreign statutory rates and our income tax liability and expense could materially increase beyond our projections.

or other tax authorities challenge our operation under these favorable tax incentive programs or

our intercompany transfer pricing agreements, our taxable income could be taxed at higher federal or foreign statutory rates and our income tax liability and expense could materially increase beyond our projections.

Each of our Singapore tax incentives is separate and distinct from the others, and may be granted, withheld, extended, modified, truncated, complied with or terminated independently without any effect on the other incentives.

15 unchanged sentences

We sell our products throughout the world.

Products shipped to Asia accounted for 83% of our net revenue in the three months ended June 30, 2020 and 2019.

Products shipped to Asia accounted for 83% and 84% of our net revenue in the six months ended June 30, 2020 and 2019, respectively.

In addition, approximately 52% of our employees are located outside of the United States as of June 30, 2020.

The majority of our products are manufactured, assembled and tested in Asia, and all of

our major distributors are located in Asia.

Products shipped to Asia accounted for 82% and 85% of net revenue during the three months ended September 30, 2020 and 2019, respectively.

Products shipped to Asia accounted for 82% and 84% of our net revenue in the nine months ended September 30, 2020 and 2019, respectively.

In addition, as of September 30, 2020, approximately 73% of our employees are located outside of the United States.

The majority of our products are manufactured, assembled and tested in Asia, and all of our major distributors are located in Asia.

Multiple factors relating to our international operations and to particular countries in which we operate could have a material adverse effect on our business, financial condition and results of operations.

25 unchanged sentences

In May 2019 and subsequently, we ceased business operations that were prohibited with entities affiliated with Huawei Technologies Co., Ltd., or Huawei and certain other entities, when the Bureau of Industry and Security at the U.S.

Department of Commerce, or BIS, amended the Export Administration Regulations to add such entities to the Entity List for acting contrary to the national security or foreign policy interests of the United States.

Department of Commerce, or BIS, amended the Export Administration Regulations, or EAR, to add such entities to the Restricted Entity List for acting contrary to the national security or foreign policy interests of the United States.

In September 2020, we further ceased business operations that were prohibited with additional entities affiliated with Huawei when the BIS again amended the EAR to add such entities to the Restricted Entity List.

Similarly, we ceased business operations with entities affiliated with ZTE Corp.

3 unchanged sentences

Although we have not had significant sales to ZTE and certain other entities, we did have increasing sales to Huawei in the past year, and we believe the imposition of governmental prohibitions on selling our products to Huawei will adversely affect our revenues and operating results in the near term.

We cannot provide assurances that similar disruptions of distribution arrangements in the future or the imposition of governmental prohibitions on selling our

products to particular customers will not also adversely affect our revenues and operating results.

We cannot provide assurances that similar disruptions of distribution arrangements in the future or the imposition of governmental prohibitions on selling our products to particular customers will not also adversely affect our revenues and operating results.

Loss of a key distributor or customer under similar circumstances could have an adverse effect on our business, revenues and operating results.

10 unchanged sentences

Some OEM and ODMs in our industry have already implemented short-term price adjustments to offset such tariffs and transitioned their production and supply chain to locations outside of China.

We believe that increases in tariffs on imported goods or the failure to resolve current international trade disputes could have a material adverse effect on our business and operating results.

that increases in tariffs on imported goods or the failure to resolve current international trade disputes could have a material adverse effect on our business and operating results.

Our business is subject to various governmental regulations, and compliance with these regulations may cause us to incur significant expenses.

11 unchanged sentences

In recent years, there has been a substantial focus by regulators in the United States and Europe on the business practices of major Chinese technology companies such as Huawei and ZTE.

ZTE is our current customer, but in May 2019 and subsequent months, we ceased prohibited business operations with Huawei and its affiliates and certain other restricted entities.

ZTE is our current customer, but in May 2019 and subsequent months, and again in September 2020 with additional affiliated entities, we ceased prohibited business operations with Huawei and its affiliates and certain other restricted entities.

While we intend to continue to conduct our businesses in compliance with all applicable laws, including laws relating to export controls and anti-corruption, it is possible that the nature of our business and customers could result in a review of our relationships and practices by regulatory authorities.

15 unchanged sentences

Moreover, effective internal controls, particularly those related to revenue recognition, are necessary for us to produce reliable financial reports and are important to helping prevent financial fraud.

Any of these possible outcomes could result in an adverse reaction in the financial marketplace due to a loss of investor confidence in the reliability of our consolidated financial statements and could result in investigations or sanctions by the SEC, the New York Stock Exchange, or NYSE, or other regulatory authorities or in stockholder litigation.

Stock Exchange, or NYSE, or other regulatory authorities or in stockholder litigation.

Any of these factors ultimately could harm our business and could negatively impact the market price of our securities.

22 unchanged sentences

We use our cash and cash equivalents for general corporate purposes, including working capital and for repayment of outstanding long-term debt.

We currently have plans to use a portion of these assets to acquire the WiFi and Broadband assets business.

We used a portion of these assets to acquire the WiFi and Broadband assets business and NanoSemi in the third quarter of 2020.

We may also, in the future, use a portion of our assets to acquire other complementary businesses, products, services or technologies.

31 unchanged sentences

• disputes or other developments related to proprietary rights, including patents, litigation matters, and our ability to obtain intellectual property protection for our technologies;

• acquisitions, if applicable, may not be accretive and may cause dilution to our earnings per shares;

• acquisitions may not be accretive and may cause dilution to our earnings per shares;

• announcement or expectation of additional financing efforts;

14 unchanged sentences

Sales of a substantial number of shares of our common stock in the public market, or the perception that these sales might occur, could depress the market price of our common stock and could impair our ability to raise capital through the sale of additional equity securities.

As of June 30, 2020, we had approximately 73.1 million shares of common stock outstanding.

As of September 30, 2020, we had approximately 74.2 million shares of common stock outstanding.

All shares of common stock are freely tradable without restrictions or further registration under the Securities Act of 1933, as amended, or the Securities Act, unless held by our “affiliates,” as that term is defined under Rule 144 of the Securities Act.

Our Executive Incentive Bonus Plan permits the settlement of awards under the plan in the form of shares of our common stock.

We have issued shares of our common stock to settle such bonus awards for our employees, including

executives, for the 2014 to 2019 performance periods, and we intend to continue this practice in the foreseeable future.

We have issued shares of our common stock to settle such bonus awards for our employees, including executives, for the 2014 to 2019 performance periods, and we intend to continue this practice in the foreseeable future.

We issued 0.2 million shares of our common stock for the 2019 performance period in March 2020.

12 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors