What changed in this filing

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Item 1. Financial Statements

2021-04-28 compared with 2020-11-05 · 271 added, 502 removed, 598 unchanged (56% of the section changed)

3 unchanged sentences

in thousands, except par value amounts)

September 30,

2021 December 31,

31 unchanged sentences

550,000 shares authorized;

74,153 shares issued and outstanding at September 30, 2020 and 71,931 shares issued and outstanding December 31, 2019

75,378 shares issued and outstanding at March 31, 2021 and 74,536 shares issued and outstanding December 31, 2020

Additional paid-in capital 628,911 602,064

584,968 529,596

Accumulated other comprehensive loss ( 450 ) ( 887 )

Accumulated other comprehensive income 446 1,435

Accumulated deficit ( 208,587 ) ( 212,389 )

( 187,717 ) ( 113,796 )

Total stockholders’ equity 420,778 391,117

4 unchanged sentences

in thousands, except per share data)

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

Net revenue $ 209,359 $ 62,027

7 unchanged sentences

Total operating expenses 101,801 50,896

Loss from operations ( 34,575 ) ( 3,334 ) ( 77,484 ) ( 14,131 )

Income (loss) from operations 9,918 ( 20,134 )

Interest income — 225

2 unchanged sentences

Total interest and other income (expense), net ( 4,310 ) ( 2,071 )

Loss before income taxes ( 38,836 ) ( 4,740 ) ( 86,049 ) ( 21,695 )

Income tax benefit ( 2,191 ) ( 26 ) ( 12,128 ) ( 9,901 )

Net loss $ ( 36,645 ) $ ( 4,714 ) $ ( 73,921 ) $ ( 11,794 )

Net loss per share:

Income (loss) before income taxes 5,608 ( 22,205 )

Income tax provision (benefit) 1,806 ( 6,736 )

Net income (loss) $ 3,802 $ ( 15,469 )

Net income (loss) per share:

Basic $ 0.05 $ ( 0.21 )

Diluted $ 0.05 $ ( 0.21 )

Shares used to compute net loss per share:

Shares used to compute net income (loss) per share:

Basic 74,852 72,039

4 unchanged sentences

in thousands)

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Net loss $ ( 36,645 ) $ ( 4,714 ) $ ( 73,921 ) $ ( 11,794 )

Three Months Ended March 31,

Net income (loss) $ 3,802 $ ( 15,469 )

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments, net of tax expense of $ 0 and $ 23 for the three and nine months ended September 30, 2020, respectively, and net of tax benefit of $ 26 and $ 41 for the three and nine months ended September 30, 2019, respectively

700 ( 600 ) 415 ( 167 )

Unrealized gain (loss) on interest rate swap, net of tax expense of $ 17 and $ 6 for the three and nine months ended September 30, 2020, respectively, and net of tax benefit of $ 44 and $ 338 for the three and nine months ended September 30, 2019, respectively

Foreign currency translation adjustments, net of tax expense of $ 376 and tax benefit of $ 9 for the three months ended March 31, 2021 and 2020, respectively

( 989 ) ( 580 )

Unrealized gain (loss) on interest rate swap, net of tax expense of $ — and tax benefit of $ 41 for the three months ended March 31, 2021 and 2020, respectively

Other comprehensive income (loss) ( 989 ) ( 733 )

Total comprehensive loss $ ( 35,885 ) $ ( 5,476 ) $ ( 73,484 ) $ ( 13,234 )

Total comprehensive income (loss) $ 2,813 $ ( 16,202 )

See accompanying notes.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FISCAL QUARTERS ENDED SEPTEMBER 30, 2020

THREE MONTHS ENDED MARCH 31, 2021

in thousands)

2 unchanged sentences

Comprehensive

Loss Accumulated

Income Accumulated

Deficit Total

3 unchanged sentences

Common stock issued pursuant to equity awards, net 917 1 16,565 — — 16,566

Repurchase of common stock ( 75 ) — ( 2,673 ) — — ( 2,673 )

Stock-based compensation — — 12,955 — — 12,955

Other comprehensive loss — — — ( 989 ) — ( 989 )

Net loss — — — — ( 15,469 ) ( 15,469 )

Net income — — — — 3,802 3,802

Balance at March 31, 2021 75,378 $ 8 $ 628,911 $ 446 $ ( 208,587 ) $ 420,778

Common stock issued pursuant to equity awards, net 597 — 989 — — 989

Employee stock purchase plan 161 — 2,141 — — 2,141

Stock-based compensation — — 12,085 — — 12,085

Other comprehensive income — — — 410 — 410

Net loss — — — — ( 21,807 ) ( 21,807 )

Balance at June 30, 2020 73,103 7 554,250 ( 1,210 ) ( 151,072 ) 401,975

Common stock issued pursuant to equity awards, net 246 — ( 507 ) — — ( 507 )

Common stock issued for merger, net 804 — 17,080 — — 17,080

Stock-based compensation — — 14,145 — — 14,145

Other comprehensive income — — — 760 — 760

Net loss — — — — ( 36,645 ) ( 36,645 )

Balance at September 30, 2020 74,153 $ 7 $ 584,968 $ ( 450 ) $ ( 187,717 ) $ 396,808

See accompanying notes.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FISCAL QUARTERS ENDED SEPTEMBER 30, 2019

THREE MONTHS ENDED MARCH 31, 2020

in thousands)

2 unchanged sentences

Comprehensive

Income (Loss) Accumulated

Loss Accumulated

Deficit Total

4 unchanged sentences

Stock-based compensation — — 6,827 — — 6,827

Cumulative effect of adoption of new accounting principle — — — — ( 268 ) ( 268 )

Other comprehensive income — — — 25 — 25

Net loss — — — — ( 4,851 ) ( 4,851 )

Balance at March 31, 2019 70,532 7 506,649 297 ( 98,749 ) 408,204

Common stock issued pursuant to equity awards, net 544 — ( 4,405 ) — — ( 4,405 )

Employee stock purchase plan 142 — 2,302 — — 2,302

Stock-based compensation — — 8,207 — — 8,207

Other comprehensive loss — — — ( 733 ) — ( 733 )

Net loss — — — — ( 15,469 ) ( 15,469 )

Balance at June 30, 2019 71,218 7 512,753 ( 406 ) ( 100,978 ) 411,376

Common stock issued pursuant to equity awards, net 331 — ( 908 ) — — ( 908 )

Stock-based compensation — — 8,359 — — 8,359

Other comprehensive loss — — — ( 762 ) — ( 762 )

Net loss — — — — ( 4,714 ) ( 4,714 )

Balance at September 30, 2019 71,549 $ 7 $ 520,204 $ ( 1,168 ) $ ( 105,692 ) $ 413,351

Balance at March 31, 2020 72,345 $ 7 $ 539,035 $ ( 1,620 ) $ ( 129,265 ) $ 408,157

See accompanying notes.

2 unchanged sentences

in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Operating Activities

Net loss $ ( 73,921 ) $ ( 11,794 )

Adjustments to reconcile net loss to cash provided by (used in) operating activities:

Net income (loss) $ 3,802 $ ( 15,469 )

Adjustments to reconcile net income (loss) to cash provided by operating activities:

Amortization and depreciation 22,325 16,733

Impairment losses — 86

Amortization of inventory step-up 14,445 —

Amortization of debt issuance costs and accretion of discount on debt and leases 844 410

4 unchanged sentences

Impairment of leased right-of-use assets 429 44

Gain on extinguishment of lease liabilities — ( 2,880 )

Loss on foreign currency 375 330

Excess tax benefits on stock-based awards ( 530 ) ( 3,872 )

(Gain) loss on foreign currency 21 ( 246 )

Excess tax (benefits) deficiencies on stock-based awards ( 1,809 ) 94

Changes in operating assets and liabilities, net of effects of acquisitions:

8 unchanged sentences

Other long-term liabilities 454 ( 446 )

Net cash provided by (used in) operating activities ( 676 ) 50,241

Net cash provided by operating activities 40,272 6,648

Investing Activities

Purchases of property and equipment ( 6,152 ) ( 1,035 )

Purchase of intangibles ( 388 ) ( 86 )

Cash used in acquisitions, net of cash acquired ( 160,000 ) —

Purchases of intangible assets ( 1,112 ) —

Purchases of long-term investments ( 5,000 ) —

Net cash used in investing activities ( 12,264 ) ( 1,035 )

Financing Activities

Proceeds from the issuance of debt 175,000 —

Payment of debt issuance cost ( 2,696 ) —

Repayment of debt ( 20,000 ) —

1 unchanged sentence

Minimum tax withholding paid on behalf of employees for restricted stock units ( 7,442 ) ( 475 )

Repurchase of common stock ( 2,673 ) —

Net cash provided by (used in) financing activities ( 28,817 ) 13

15 unchanged sentences

was incorporated in Delaware in September 2003.

MaxLinear, Inc., together with its wholly owned subsidiaries, collectively referred to as MaxLinear, or the Company, is a provider of radio-frequency, or RF, analog, digital, and mixed-signal communications system-on-chip solutions for access and connectivity, wired and wireless infrastructure, and industrial and multi-market applications.

MaxLinear’s customers include electronics distributors, module makers, original equipment manufacturers, or OEMs, and original design manufacturers, or ODMs, who incorporate the Company’s products in a wide range of electronic devices, including cable DOCSIS broadband modems and gateways, wireline connectivity devices for in-home networking applications, RF transceivers and modems for wireless carrier access and backhaul infrastructure, fiber-optic modules for data center, metro, and long-haul transport networks, video set-top boxes and gateways, hybrid analog and digital televisions, direct broadcast satellite outdoor and indoor units, and power management and interface products used in these and a range of other markets.

The Company is a fabless integrated circuit design company whose products integrate all or a substantial portion of a broadband communication system.

MaxLinear, Inc., together with its wholly owned subsidiaries, collectively referred to as MaxLinear, or the Company, is a provider of communications systems-on-chip (SoC) solutions used in broadband, mobile and wireline infrastructure, data center, and industrial and multi-market applications.

MaxLinear is a fabless integrated circuit design company whose products integrate all or substantial portions of a high-speed communication system, including radio frequency (RF), high-performance analog, mixed-signal, digital signal processing, security engines, data compression and networking layers, and power management.

Wi-Fi and wireline routers for home networking;

radio transceivers and modems for 4G/5G base-station and backhaul infrastructure;

fiber-optic modules for data center, metro, and long-haul transport networks;

as well as power management and interface products used in these and many other markets.

Basis of Presentation and Principles of Consolidation

6 unchanged sentences

The accompanying unaudited consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and related notes thereto for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K filed by the Company with the Securities and Exchange Commission, or the SEC, on February 11, 2021, or the Annual Report.

Interim results for the nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2020.

Interim results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2021.

Use of Estimates and Significant Risks and Uncertainties

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited consolidated financial statements and accompanying notes to unaudited consolidated financial statements.

In the nine months ended September 30, 2020, the Company’s revenues were impacted by the novel coronavirus disease, or COVID-19, pandemic.

Last year, the Company’s revenues were impacted by the novel coronavirus disease, or COVID-19, pandemic.

In particular, the Company experienced some negative impact to its revenue and gross profits in the first half of 2020 due to several industry-wide dynamics related to COVID-19 including supply constraints as well as customer requests to temporarily delay shipments.

Although we have benefited from increased demand for certain of our products from the work-from-home environment in the quarter ended September 30, 2020, heightened volatility and uncertainty in customer demand and the worldwide economy in general has continued, and the Company may experience increased volatility in its sales and revenues in the near future.

Although the Company has benefited from increased demand for certain of our products from the work-from-home environment in the second half of 2020 and the first quarter of 2021, a sudden increase in demand for electronics containing semiconductor chips and stockpiling of chips by certain firms in China blacklisted by the U.S.

has exacerbated bottlenecks in the supply chain, resulting in a global semiconductor chip shortage impacting the Company’s industry.

Some chip manufacturers are estimating this supply shortage may continue into 2022.

While these chip manufacturers are working to increase capacity in the future, and the Company is continuing to work closely with our suppliers and customers to minimize the potential adverse impacts of the supply shortage, such shortage may have a near-term impact on the Company’s ability to meet increased demand on certain products and have a negative impact on its operating results beginning in the second quarter of 2021 which may continue into 2022.

Heightened volatility, global supply shortages, and uncertainty in customer demand and the worldwide economy in general has continued, and the Company may experience increased volatility in its sales and revenues in the near future.

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

The Company also believes that its $ 96.7 million of cash and cash equivalents at September 30, 2020 will be sufficient to fund its projected operating requirements for at least the next twelve months.

A material adverse impact from COVID-19 could result in a need to raise additional capital or incur additional indebtedness to fund strategic initiatives or operating activities, particularly if the Company pursues additional acquisitions.

The Company’s future capital requirements will depend on many factors, including the Company’s efforts to integrate the acquired WiFi and Broadband assets business and NanoSemi (Note 3), changes in revenue, the expansion of engineering, sales and marketing activities, the timing and extent of expansion into new

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

territories, the timing of introductions of new products and enhancements to existing products, the continuing market acceptance of the Company’s products and potential material investments in, or acquisitions of, complementary businesses, services or technologies.

The Company also believes that its $ 149.2 million of cash and cash equivalents at March 31, 2021 will be sufficient to fund its projected operating requirements for at least the next twelve months.

A material adverse impact from COVID-19 and the global semiconductor chip shortage could result in a need to raise additional capital or incur additional indebtedness to fund strategic initiatives or operating activities, particularly if the Company pursues additional acquisitions.

The Company’s future capital requirements will depend on many factors, including the Company’s efforts to complete the integration of the acquired WiFi and Broadband assets business and NanoSemi, Inc.

(Note 3), changes in revenue, the expansion of engineering, sales and marketing activities, the timing and extent of expansion into new territories, the timing of introductions of new products and enhancements to existing products, the continuing market acceptance of the Company’s products and potential material investments in, or acquisitions of, complementary businesses, services or technologies.

Additional funds may not be available on terms favorable to the Company or at all.

If the Company is unable to raise additional funds when needed, it may not be able to sustain its operations or execute its strategic plans.

The Company is not aware of any specific event or circumstance that would require an update to its estimates or adjustments to the carrying value of its assets and liabilities as of November 5, 2020, the issuance date of this Quarterly Report on Form 10-Q.

The Company is not aware of any specific event or circumstance that would require an update to its estimates or adjustments to the carrying value of its assets and liabilities as of April 28, 2021, the issuance date of this Quarterly Report on Form 10-Q.

Actual results could differ from those estimates, particularly if the Company experiences material impacts from COVID-19.

1 unchanged sentence

Refer to the Company’s Annual Report for a summary of significant accounting policies.

On January 1, 2020, the Company adopted ASC Topic 326, Measurement of Credit Losses on Financial Instruments , or ASC 326, and accordingly, modified its policy on accounting for allowance for doubtful accounts on trade accounts receivable as stated below.

As described under “Recently Adopted Accounting Pronouncements,” section below, the impact of adopting ASC 326 for the Company was not material.

There have been no other significant changes to the Company’s significant accounting policies during the nine months ended September 30, 2020.

During the three months ended September 30, 2020, the Company acquired two businesses (Note 3) that are accounted for as business combinations.

In connection with the July 31, 2020 acquisition of the WiFi and Broadband assets business (Note 3), the Company assumed an obligation of $ 7.9 million of the WiFi and Broadband assets business associated with certain defined benefit retirement plans, including a pension plan.

Below are the Company’s accounting policies with respect to business combinations and pension and other defined benefit retirement obligations.

Accounts Receivable

The Company performs ongoing credit evaluations of its customers and assesses each customer’s credit worthiness.

The Company monitors collections and payments from its customers and maintains an allowance for doubtful accounts based upon applying an expected credit loss rate to receivables based on the historical loss rate from similar high risk customers adjusted for current conditions, including any specific customer collection issues identified, and forecasts of economic conditions.

Delinquent account balances are written off after management has determined that the likelihood of collection is remote.

The allowance for credit losses as of September 30, 2020 and the activity in this account, including the current-period provision for expected credit losses for the nine months ended September 30, 2020, were not material.

Business Combinations

The Company applies the provisions of ASC 805, Business Combinations , in accounting for its acquisitions.

It requires the Company to recognize separately from goodwill the assets acquired and the liabilities assumed, at the acquisition date fair values.

Goodwill as of the acquisition date is measured as the excess of consideration transferred over the acquisition date fair values of the net assets acquired and the liabilities assumed.

While the Company uses its best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, its estimates are inherently uncertain and subject to refinement.

As a result, during the measurement period, which may be up to one year from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill.

Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the consolidated statements of operations.

Costs to exit or restructure certain activities of an acquired company or the Company’s internal operations are accounted for as termination and exit costs pursuant to ASC 420, Exit or Disposal Cost Obligations , and are accounted for separately from the business combination.

A liability for costs associated with an exit or disposal activity is recognized and measured at its fair value in the consolidated statements of operations in the period in which the liability is incurred.

When estimating the fair value of facility restructuring activities, assumptions are applied regarding estimated sub-lease payments to be received, which can differ materially from actual results.

This may require the Company to revise its initial estimates which may materially affect the results of operations and financial position in the period the revision is made.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For a given acquisition, the Company may identify certain pre-acquisition contingencies as of the acquisition date and may extend its review and evaluation of these pre-acquisition contingencies throughout the measurement period in order to obtain sufficient information to assess whether the Company includes these contingencies as a part of the fair value estimates of assets acquired and liabilities assumed and, if so, to determine their estimated amounts.

If the Company cannot reasonably determine the fair value of a pre-acquisition contingency (non-income tax related) by the end of the measurement period, which is generally the case given the nature of such matters, the Company will recognize an asset or a liability for such pre-acquisition contingency if:

(i) it is probable that an asset existed or a liability had been incurred at the acquisition date and (ii) the amount of the asset or liability can be reasonably estimated.

Subsequent to the measurement period, changes in estimates of such contingencies will affect earnings and could have a material effect on the Company's results of operations and financial position.

In addition, uncertain tax positions and tax-related valuation allowances assumed, if any, in connection with a business combination are initially estimated as of the acquisition date.

The Company re-evaluates these items quarterly based upon facts and circumstances that existed as of the acquisition date with any adjustments to the preliminary estimates being recorded to goodwill if identified within the measurement period.

Subsequent to the end of the measurement period or final determination of the estimated value of the tax allowance or contingency, whichever comes first, changes to these uncertain tax positions and tax related valuation allowances will affect the income tax provision (benefit) in the consolidated statements of operations and could have a material impact on the results of operations and financial position.

Pension and Other Defined Benefit Retirement Obligations

The costs of pension and certain other defined benefit employee retirement benefits are required to be recognized based upon actuarial valuations.

The related net retirement benefit obligation is recognized as the excess of the projected benefit obligation over the fair value of the plan assets.

In measuring the retirement benefit obligation, the discount rate and long-term rate of salary increase are the most significant assumptions.

Retirement benefit costs primarily represent the increase in the actuarial present value of the retirement benefit obligation.

The most significant assumptions in determining retirement benefit costs are the discount rate, expected long-term rate of return on plan assets, and long-term rate of salary increase.

There have been no other significant changes to the Company’s significant accounting policies during the three months ended March 31, 2021.

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments , to replace the incurred loss methodology with an expected credit loss model that requires consideration of a broader range of information to estimate credit losses over the lifetime of the asset, including current conditions and reasonable and supportable forecasts in addition to historical loss information, to determine expected credit losses.

Pooling of assets with similar risk characteristics and the use of a loss model are also required.

Also, in April 2019, the FASB issued ASU No.

2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, to clarify the inclusion of recoveries of trade receivables previously written off when estimating an allowance for credit losses.

The amendments in this update are effective for the Company beginning with fiscal year 2020, including interim periods.

The adoption of the amendments in this update as of January 1, 2020 did not have a material impact on the Company’s accounts receivable, net and accumulated deficit, as well as its results of operations for the three months ended March 31, 2020.

The adoption is also not expected to have a material impact on the Company’s consolidated financial position and results of operations as of and for the year ending December 31, 2020.

In January 2017, the FASB issued ASU No.

2017-04, Intangibles—Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment , to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test.

An entity no longer will determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if the reporting unit had been acquired in a business combination.

Instead, under the amendments in this update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount.

The Board also eliminated the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test.

The amendments in this update are effective for the Company beginning with fiscal year 2020, including interim periods.

The Company performs its annual goodwill testing as of October 31, or more frequently if there are indicators of impairment.

The application of the amendments in this update is not expected to have a material impact on the Company’s consolidated financial position and results of operations as of and for the year ending December 31, 2020.

In August 2018, the FASB issued ASU No.

2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework—

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Changes to the Disclosure Requirements for Fair Value Measurement , to improve the fair value measurement reporting of financial instruments.

The amendments in this update require, among other things, added disclosure of the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements.

The amendments in this update eliminate, among other things, disclosure of the reasons for and amounts of transfers between Level 1 and Level 2 for assets and liabilities that are measured at fair value on a recurring basis and an entity's valuation processes for Level 3 fair value measurements.

The amendments in this update are effective for the Company beginning with fiscal year 2020.

Retrospective application is required for all amendments in this update except the added disclosures, which should be applied prospectively.

The adoption of the amendments in this update in the quarter ended March 31, 2020 did not have a material impact on the Company’s consolidated financial position and results of operations as of and for the three months ended March 31, 2020 and is also not expected to have a material impact on the Company’s consolidated financial position and results of operations as of and for the year ending December 31, 2020.

In August 2018, the FASB issued ASU No.

2018-15, Intangibles–Goodwill and Other—Internal-Use Software (Subtopic 350-40):

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract , to provide additional guidance on the accounting for costs of implementing cloud computing arrangements that are service contracts.

The amendments in this update require the capitalization of implementation costs during the application development stage of such hosting arrangements and amortization of the expense over the term of the arrangement including any option to extend reasonably certain to be exercised or option to terminate reasonably certain not to be exercised.

Capitalized implementation costs and amortization thereof are also required to be classified in the same line item in the statements of financial position, operations and cash flows associated with the hosting service fees.

The amendments in this update are effective for the Company beginning with fiscal year 2020.

The Company selected prospective application to all implementation costs incurred after the adoption date.

The adoption of the amendments in this update did not have a material impact on the Company’s property and equipment, net and results of operations as of and for the three months ended March 31, 2020 and is also not expected to have a material impact on the Company’s consolidated financial position and results of operations as of and for the year ending December 31, 2020.

In March 2020, the FASB issued ASU No.

2020-04 Reference Rate Reform (Topic 848)—Facilitation of the Effects of Reference Rate Reform on Financial Reporting , that provides optional relief to applying reference rate reform to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (LIBOR), which will be discontinued by the end of 2021.

The amendments in this update are effective immediately and may be applied through December 31, 2022.

The Company's LIBOR interest rate swap expires in October 2020 and will not be impacted by reference rate reform.

Therefore, the adoption of the amendments in this update did not have a material impact on the Company’s accumulated other comprehensive loss or its results of operations as of and for the three months ended June 30, 2020, and is also not expected to have a material impact on the Company's consolidated financial position and results of operations as of and for the year ending December 31, 2020.

In May 2020, the SEC issued a final rule that amends the financial statement requirements for business acquisitions and related pro forma financial information.

The rule modifies the significance tests to replace total assets with aggregate worldwide market value of common equity in the investment test and to include a revenue component in the income test while requiring the use of absolute value to calculate average net income for the last five fiscal years.

The rule improves the presentation of pro forma financial information by replacing pro forma adjustments with transaction accounting adjustments and adds the optional disclosure of management’s adjustments related to synergies and dis-synergies.

The rule also reduces the number of acquiree annual financial statement periods required to a maximum of the two most recent fiscal years.

The final rule is effective for the Company beginning with fiscal year 2021, with early application permitted;

all applicable aspects of the rule are required to be applied upon adoption.

The Company has early adopted the rule in its filings related to the acquisition of the WiFi and Broadband assets business.

The adoption of the rule is not expected to have an impact on the Company’s consolidated financial position and results of operations as of and for the year ending December 31, 2020.

Recently Issued Accounting Pronouncements

In December 2019, the FASB issued ASU No.

2019-12 Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes , to remove certain exceptions and improve consistency of application, including, among other things, requiring that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date.

The amendments in this update will be effective for the Company beginning with fiscal year 2021, with early adoption permitted.

2019-12 Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes , to remove certain exceptions related to the approach for intraperiod tax allocation, recognition of deferred tax liabilities for outside basis differences and requiring that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date.

The amendments in this update are effective for the Company beginning with fiscal year 2021.

Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis.

The adoption of

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

the amendments in this update is not expected to have a material impact on the Company’s consolidated financial position and results of operations.

The adoption of the amendments in this update did not have a material impact on the Company’s consolidated financial position and results of operations as of and for the three months ended March 31, 2021, and is also not expected to have a material impact on the Company’s financial position and results of operations as of and for the year ending December 31, 2021.

In October 2020, the FASB issued ASU No.

2020-10 Codification Improvements , to make incremental improvements to GAAP and address stakeholder suggestions, including, among other things, clarifying that the requirement to provide comparative information in the financial statements extends to the corresponding disclosures section.

The amendments in this update are effective for the Company beginning with fiscal year 2021.

The amendments in this update should be applied retrospectively and at the beginning of the period that includes the adoption date.

The adoption of the amendments in this update did not have a material impact on the Company’s financial disclosures as of and for the three months ended March 31, 2021, and is also not expected to have a material impact on the Company's financial disclosures for the year ending December 31, 2021.

Net Income (Loss) Per Share

3 unchanged sentences

In periods in which the Company has a net loss, dilutive common stock equivalents are excluded from the calculation of diluted EPS.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The table below presents the computation of basic and diluted EPS:

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

(in thousands, except per share amounts)

Net loss $ ( 36,645 ) $ ( 4,714 ) $ ( 73,921 ) $ ( 11,794 )

Net income (loss) $ 3,802 $ ( 15,469 )

Weighted average common shares outstanding—basic 74,852 72,039

1 unchanged sentence

Weighted average common shares outstanding—diluted 78,283 72,039

Net loss per share:

Net income (loss) per share:

Basic $ 0.05 $ ( 0.21 )

Diluted $ 0.05 $ ( 0.21 )

For the three and nine months ended September 30, 2020 and 2019, the Company incurred net losses and accordingly excluded common stock equivalents for outstanding stock-based awards, which represented all potentially dilutive securities, of 3.5 million and 3.1 million for the 2020 periods, respectively, and 2.4 million and 2.6 million for the 2019 periods, respectively, from the calculation of diluted net loss per share due to their anti-dilutive nature.

For the three months ended March 31, 2021 and 2020, the Company excluded common stock equivalents for outstanding stock-based awards, which represented potentially dilutive securities of 0.1 million and 3.3 million, respectively, from the calculation of diluted net income (loss) per share due to their anti-dilutive nature.

Business Combinations

Acquisition of the WiFi and Broadband assets business

On July 31, 2020, the Company and certain of its designated subsidiaries completed their acquisition of the Home Gateway Platform Division, which the Company refers to as the WiFi and Broadband assets business, pursuant to an Asset Purchase Agreement with Intel Corporation, or Intel, dated April 5, 2020 (the “Asset Purchase Agreement”), and related agreements.

The Company paid cash consideration of $ 150.0 million for the purchase of certain assets of the WiFi and Broadband assets business, and assumed certain liabilities related to specified employment matters.

On July 31, 2020, the Company and certain of its designated subsidiaries completed their acquisition of the Home Gateway Platform Division, which the Company refers to as the Wi-Fi and Broadband assets business, pursuant to an Asset Purchase Agreement with Intel Corporation, or Intel, dated April 5, 2020 (the “Asset Purchase Agreement”), and related agreements.

The Company paid cash consideration of $ 150.0 million for the purchase of certain assets of the Wi-Fi and Broadband assets business, and assumed certain liabilities related to specified employment matters.

The transaction was funded with a portion of the net proceeds from a secured incremental term loan with an aggregate principal amount of $ 175.0 million (Note 8).

The WiFi and Broadband assets business develops a broad portfolio of connected home products, including WiFi, Ethernet and Broadband Gateway Processor SoCs, which enables the Company to strengthen its existing connected home portfolio by bringing together a complete, scalable, and complementary platform of connectivity and access solutions to address its customers’ needs across target end-markets.

The Wi-Fi and Broadband assets business develops a broad portfolio of connected home products, including WiFi, Ethernet and Broadband Gateway Processor SoCs, which enables the Company to strengthen its existing connected home portfolio by bringing together a complete, scalable, and complementary platform of connectivity and access solutions to address its customers’ needs across target end-markets.

The acquired assets and assumed liabilities, together with the employees who joined the Company and its subsidiaries as a result of the transaction, represent a business as defined in ASC 805, Business Combinations.

The Company is integrating the acquired assets and rehired employees into the Company’s existing business.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Asset Purchase Agreement also contains customary representations, warranties and covenants, including indemnification provisions set forth therein.

Pursuant to the Purchase Agreement, Intel has retained, and will be obligated to indemnify MaxLinear for, certain liabilities, including but not limited to those relating to the Home Gateway Platform Division for pre-closing taxes and specified employment matters, and MaxLinear has assumed, and will indemnify Intel for, certain liabilities, including but not limited to those relating to the Home Gateway Platform Division and the Transferred Assets for certain pre-closing and post-closing actions, events and periods (including certain product-related liabilities for products sold prior to the Closing for up to a $ 25.0 million cap), and specified employment matters.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In connection with the transaction, the Company and Intel have entered into as of the closing certain other ancillary agreements, including (i) an intellectual property matters agreement, pursuant to which Intel will grant to the Company a license to certain intellectual property rights for use by the Company in connection with the acquired assets and the Company will grant back to Intel a license to the intellectual property rights in the acquired assets, (ii) a supply agreement, pursuant to which Intel will manufacture and fabricate certain products for the Company that are part of the acquired assets, (iii) an ethernet network controller services agreement, pursuant to which the Company will provide Intel with certain development services with respect to certain Intel ethernet network controller products, (iv) a transition services agreement, pursuant to which Intel will provide certain services on a transitional basis for up to a 12-month period after the closing, the scope of which includes services relating to real estate and facilities, information technology, and supply chain, procurement, sales operations, and engineering support, and (v) a side letter regarding the delayed transfer of certain inventory.

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Cash $ 150,000

Preliminary Purchase Price Allocation

The following is an allocation of purchase price as of the July 31, 2020 acquisition closing date based upon a preliminary estimate of the fair value of the assets acquired and the liabilities assumed by the Company in the acquisition (in thousands):

Purchase Price Allocation

The following is an allocation of purchase price as of the July 31, 2020 acquisition closing date based upon an estimate of the fair value of the assets acquired and the liabilities assumed by the Company in the acquisition (in thousands):

Description Amount

Preliminary purchase price allocation:

Fair value of consideration transferred:

Cash $ 150,000

Purchase price allocation:

Inventory $ 67,100

Property and equipment, net 17,641

Property and equipment 17,641

Identifiable intangible assets 58,000

Deferred tax assets 457

Accrued expenses ( 68 )

Accrued price protection liability ( 413 )

Accrued compensation ( 7,916 )

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Total purchase price $ 150,000

The fair value of inventories acquired with the WiFi and Broadband assets business included an acquisition accounting fair market value step-up of $ 32.9 million.

The Company recognized $ 14.4 million in amortization of inventory step-up in cost of sales in the consolidated statements of operations for the three and nine months ended September 30, 2020.

The following is a summary of identifiable intangible assets acquired and the related expected lives for the finite-lived intangible assets (in thousands):

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following is a summary of identifiable intangible assets acquired and the related expected lives for the finite-lived intangible assets (in thousands):

Category Estimated Life in Years Fair Value

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The initial closing transaction consideration consisted of $ 10.0 million in cash and 804,163 shares of MaxLinear’s common stock.

In addition, the NanoSemi securityholders will receive $ 35.0 million in deferred cash payments payable in 2021, and certain NanoSemi securityholders may also receive up to an additional $ 35.0 million in potential contingent consideration, subject to the acquired business’s satisfying certain financial objectives from July 1, 2020 through December 31, 2022.

In addition, the NanoSemi stockholders will receive $ 35.0 million in deferred cash payments payable in 2021, and certain NanoSemi stockholders may also receive up to an additional $ 35.0 million in potential contingent consideration, subject to the acquired business’s satisfying certain financial objectives from July 1, 2020 through December 31, 2022.

As of March 31, 2021, the Company has made $ 20 million of $ 35.0 million in deferred cash payments.

The stock consideration was issued in reliance on exemptions from the registration requirements of the Securities Act of 1933, as amended.

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(1) The fair value of common stock issued in the merger is based on 804,163 shares issued on the September 9, 2020 acquisition date at the closing price of the Company’s common stock of $ 21.24 per share.

(2) The fair value of the deferred payments was determined by discounting to present value payments totaling $ 35.0 million expected to be made to NanoSemi securityholders throughout 2021.

(3) The fair value of contingent consideration is based on applying the Monte Carlo simulation method to forecast achievement under various contingent consideration events which may result in up to $ 35.0 million in payments subject to the acquired business’s satisfying certain financial objectives from July 1, 2020 through December 31, 2022, under the Merger Agreement.

Key inputs in the valuation include forecasted revenue, revenue volatility and discount rate.

Underlying forecast mathematics were based on Geometric Brownian Motion in a risk-neutral framework and discounted back to the applicable period in which the accumulative thresholds were achieved at discount rates commensurate with the risk and expected payout term of the contingent consideration.

(2) The fair value of the deferred payments was determined by discounting to present value payments totaling $ 35.0 million expected to be made to NanoSemi stockholders throughout 2021.

(3) The fair value of contingent consideration is zero as the applicable financial objectives from July 1, 2020 through December 31, 2022 are not expected to be met based on the Company’s forecast.

MAXLINEAR, INC.

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Description Amount

Preliminary purchase price allocation:

Accounts receivable, net $ 175

Purchase price allocation:

Accounts receivable $ 175

Prepaid expenses and other current assets 879

Property and equipment, net 177

Property and equipment 177

Leased right-of-use assets 1,805

Intangible assets, net 30,300

Identifiable intangible assets 19,900

Accounts payable ( 602 )

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Assumptions in the Allocations of Purchase Price

Management prepared the purchase price allocations for the WiFi and Broadband assets business and NanoSemi, and in doing so considered or relied in part upon reports of a third party valuation expert to calculate the fair value of certain acquired assets, which primarily included identifiable intangible assets, inventory, and property and equipment, and the portions of the purchase consideration for NanoSemi expected to be paid to NanoSemi securityholders in the future, as described above.

Certain NanoSemi securityholders that are employees are not required to remain employed in order to receive the deferred payments and contingent consideration;

Management prepared the purchase price allocations for the Wi-Fi and Broadband assets business and NanoSemi, and in doing so considered or relied in part upon reports of a third party valuation expert to calculate the fair value of certain acquired assets, which primarily included identifiable intangible assets, inventory, and property and equipment, and the portions of the purchase consideration for NanoSemi expected to be paid to NanoSemi stockholders in the future, as described above.

Certain NanoSemi stockholders that are employees are not required to remain employed in order to receive the deferred payments and contingent consideration;

accordingly, the fair value of the deferred payments and contingent consideration have been accounted for as a portion of the purchase consideration.

Estimates of fair value require management to make significant estimates and assumptions which are preliminary and subject to change upon finalization of the valuation analysis.

The goodwill recognized is attributable primarily to the acquired workforce, expected synergies, and other benefits that MaxLinear believes will result from integrating the operations of the WiFi and Broadband assets business and NanoSemi with the operations of MaxLinear.

The goodwill recognized is attributable primarily to the acquired workforce, expected synergies, and other benefits that MaxLinear believes will result from integrating the operations of the Wi-Fi and Broadband assets business and NanoSemi with the operations of MaxLinear.

Certain liabilities included in the purchase price allocations are based on management’s best estimates of the amounts to be paid or settled and based on information available at the time the purchase price allocations were prepared.

Updates to and/or completion of the valuations of certain assets acquired and liabilities assumed and our evaluation of certain income tax positions may result in changes to the recorded amounts of assets and liabilities, with corresponding adjustments to goodwill amounts in subsequent periods.

We expect to complete the purchase price allocations within 12 months of the respective acquisition dates.

There have been no adjustments between the preliminary purchase price allocations reflected as of December 31, 2020 and March 31, 2021.

Updates to the valuations of certain assets acquired and liabilities assumed and our evaluation of certain income tax positions may result in changes to the recorded

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The fair value of the identified intangible assets acquired from the WiFi and Broadband assets business and NanoSemi was estimated using an income approach.

amounts of assets and liabilities, with corresponding adjustments to goodwill amounts in subsequent periods.

We expect to complete the purchase price allocations within 12 months of the respective acquisition dates.

The fair value of the identified intangible assets acquired from the Wi-Fi and Broadband assets business and NanoSemi was estimated using an income approach.

Under the income approach, an intangible asset’s fair value is equal to the present value of future economic benefits to be derived from ownership of the asset.

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If any of the projects are abandoned, the Company will be required to impair the related IPR&D asset.

In connection with the acquisition of the WiFi and Broadband assets business, the Company has assumed liabilities which primarily consist of accrued employee compensation and benefits in jurisdictions where such transfer is required either by law or by work council agreement.

In connection with the acquisition of the Wi-Fi and Broadband assets business, the Company has assumed liabilities which primarily consist of accrued employee compensation and benefits in jurisdictions where such transfer is required either by law or by work council agreement.

In connection with the acquisition of NanoSemi, the Company assumed certain operating liabilities.

The liabilities assumed in these acquisitions are included in the respective purchase price allocations above.

Goodwill recorded in connection with the WiFi and Broadband assets business and NanoSemi was $ 23.4 million and $ 40.8 million, respectively.

Goodwill recorded in connection with the Wi-Fi and Broadband assets business and NanoSemi was $ 23.4 million and $ 41.1 million, respectively.

The Company does not expect to deduct any of the acquired goodwill for tax purposes.

Proforma Combined Financial Information

The following table presents unaudited pro forma combined financial information for each of the periods presented, as if the acquisitions of the WiFi and Broadband assets business and NanoSemi had occurred at the beginning of fiscal year 2019:

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

(in thousands)

Net revenue – proforma combined $ 219,419 $ 181,438 $ 508,449 $ 541,067

Net income (loss) – proforma combined $ ( 17,324 ) $ ( 23,470 ) $ ( 103,108 ) $ ( 126,340 )

The following adjustments were included in the unaudited pro forma combined net revenues:

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

(in thousands)

Net revenue $ 156,633 $ 80,020 $ 283,880 $ 247,162

Net revenue – acquired businesses 62,786 101,418 224,569 293,905

Net revenues – proforma combined $ 219,419 $ 181,438 $ 508,449 $ 541,067

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following adjustments were included in the unaudited pro forma combined net loss:

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

(in thousands)

Net loss $ ( 36,645 ) $ ( 4,714 ) $ ( 73,921 ) $ ( 11,794 )

Results of operations – acquired businesses ( 3,875 ) ( 22,075 ) ( 63,882 ) ( 75,994 )

Proforma adjustments

Depreciation of property and equipment 2,101 934 4,358 948

Amortization of intangible assets 1,615 3,923 10,119 11,369

Amortization of inventory step-up 14,445 — 14,445 ( 32,945 )

Acquisition and integration expenses 7,471 — 12,803 ( 12,803 )

Interest expense ( 571 ) ( 2,120 ) ( 6,202 ) ( 6,488 )

Other expense 82 324 1,867 2,287

Income taxes 762 258 14 ( 920 )

Net loss – proforma combined $ ( 14,615 ) $ ( 23,470 ) $ ( 100,399 ) $ ( 126,340 )

Net loss per share – proforma combined:

Basic $ ( 0.20 ) $ ( 0.33 ) $ ( 1.37 ) $ ( 1.77 )

Diluted $ ( 0.20 ) $ ( 0.33 ) $ ( 1.37 ) $ ( 1.77 )

Shares used to compute net loss per share – proforma combined:

Basic 74,023 72,170 73,472 71,557

Diluted 74,023 72,170 73,472 71,557

The pro forma combined financial information for the three months ended September 30, 2020 includes aggregate non-recurring adjustments of $ 0.4 million consisting of amortization of intangible assets for which the related assets have useful lives of less than one year.

The pro forma combined financial information for the nine months ended September 30, 2020 includes aggregate non-recurring adjustments of $ 34.5 million consisting of amortization of inventory step-up and intangible assets of $ 32.9 million and $ 1.6 million, respectively, for which the related assets have useful lives of less than one year.

The pro forma combined financial information is presented for illustrative purposes only and is not necessarily indicative of the consolidated results of operations of the consolidated business had the acquisitions actually occurred at the beginning of fiscal year 2019 or of the results of future operations of the consolidated business.

The unaudited pro forma financial information does not reflect any operating efficiencies and cost saving that may be realized from the integration of the acquisitions in the Company's unaudited consolidated statements of operations.

For the three and nine months ended September 30, 2020, $ 82.5 million of revenue and $ 41.8 million of gross profit, excluding $ 15.8 million of amortization of acquired intangible assets and the inventory fair-value step-up of the WiFi and Broadband assets business and NanoSemi since the acquisition date, are included in the Company's consolidated statements of operations.

Acquisition and integration-related costs of $ 7.5 million and $ 12.8 million related to the acquisitions of the WiFi and Broadband assets business and NanoSemi were included in selling, general, and administrative expenses in the Company's statements of operations for the three and nine months ended September 30, 2020, respectively.

Restructuring Activity

From time to time, the Company approves and implements restructuring plans as a result of internal resource alignment and cost saving measures.

Such restructuring plans include vacating certain leased facilities, terminating employees, and cancellation of contracts.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Such restructuring plans include terminating employees, vacating certain leased facilities, and cancellation of contracts.

The following table presents the activity related to the restructuring plans, which is included in restructuring charges in the consolidated statements of operations:

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

(in thousands)

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$ 2,166 $ 489

Lease related charges for the three and nine months ended September 30, 2020 included the impairment of leased right-of-use assets of $ 1.5 million related to a reduction in expected cash inflows from subleases.

Lease-related charges for the nine months ended September 30, 2019 related to exiting certain facilities and included the impairment of right-of-use assets of $ 2.2 million and leasehold improvements of $ 1.4 million, partially offset by a gain on the extinguishment of lease liabilities of $ 2.9 million following the release from such liability by the landlord.

The following table presents a roll-forward of the Company's restructuring liability for the nine months ended September 30, 2020.

Lease related charges for the three months ended March 31, 2021 included the impairment of leased right-of-use assets and leasehold improvements of $ 0.4 million and $ 0.2 million, respectively, related to exiting a redundant facility.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents a roll-forward of the Company’s restructuring liability for the three months ended March 31, 2021.

The restructuring liability is included in accrued expenses and other current liabilities and other long-term liabilities in the consolidated balance sheets.

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Cash payments ( 1,659 ) ( 83 ) ( 7 ) ( 1,749 )

Reimbursement from Intel ( 2,337 ) — — ( 2,337 )

Non-cash charges and adjustments — ( 547 ) ( 301 ) ( 848 )

Liability as of September 30, 2020 5,251 771 5 6,027

current portion as of September 30, 2020 ( 5,251 ) ( 340 ) ( 5 ) ( 5,596 )

Long-term portion as of September 30, 2020 $ — $ 431 $ — $ 431

As of September 30, 2020, the remaining employee separation balance primarily consists of reduction in force costs that will be reimbursed by Intel and other severance payments, and remaining lease related charges primarily consist of common area maintenance obligations.

Liability as of March 31, 2021 531 698 — 1,229

current portion as of March 31, 2021 ( 531 ) ( 379 ) — ( 910 )

Long-term portion as of March 31, 2021 $ — $ 319 $ — $ 319

As of March 31, 2021, the remaining lease related charges primarily consist of common area maintenance obligations.

The Company does not expect to incur additional material costs related to current restructuring plans.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Goodwill and Intangible Assets

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The fair values of net tangible assets and intangible assets acquired are based upon preliminary valuations and the Company’s estimates and assumptions are subject to change within the measurement period (potentially up to one year from the acquisition date).

The following table presents the changes in the carrying amount of goodwill for the periods indicated:

Nine Months Ended September 30,

(in thousands)

Beginning balance $ 238,330 $ 238,330

Acquisitions (Note 3) 64,246 —

Ending balance $ 302,576 $ 238,330

The Company performs an annual goodwill impairment assessment on October 31st each year, which effective in 2020, compares the fair value of each reporting unit, which the Company has determined to be the entity itself, with its carrying amount, including goodwill.

If the fair value of a reporting unit exceeds the carrying amount, the goodwill of the reporting unit is considered not impaired.

During the three months ended March 31, 2021, there were no changes in the carrying value of goodwill.

The Company performs an annual goodwill impairment assessment on October 31st each year, using a quantitative assessment comparing the fair value of each reporting unit, which the Company has determined to be the entity itself, with its carrying amount, including goodwill.

If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recorded.

In addition to its annual review, the Company performs a test of impairment when indicators of impairment are present.

During the three and nine months ended September 30, 2020 and 2019, no goodwill impairment was recognized.

During the three months ended March 31, 2021 and 2020, there were no indications of impairment of the Company’s goodwill balances.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Acquired Intangibles

Finite-lived Intangible Assets

The following table sets forth the Company’s finite-lived intangible assets resulting from business acquisitions and other purchases:

September 30, 2020 December 31, 2019

The following table sets forth the Company’s finite-lived intangible assets resulting from business acquisitions and other purchases, which are amortized over their estimated useful lives:

March 31, 2021 December 31, 2020

(in Years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Value Accumulated Amortization Net Carrying Amount

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6.2 $ 456,042 $ ( 271,700 ) $ 184,342 $ 454,930 $ ( 254,864 ) $ 200,066

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table sets forth amortization expense associated with finite-lived intangible assets, which is included in the consolidated statements of operations as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

(in thousands) (in thousands)

Three Months Ended March 31,

(in thousands)

Cost of net revenue $ 10,765 $ 8,591

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The following table sets forth the activity related to finite-lived intangible assets:

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

Beginning balance $ 200,066 $ 187,971

Acquisitions (Note 3) 81,100 —

Additions 1,112 —

Transfers to developed technology from IPR&D — 1,500

Amortization ( 16,836 ) ( 14,315 )

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Should impairment exist, the impairment loss is measured based on the excess of the carrying amount of the asset over the asset’s fair value.

During the three and nine months ended September 30, 2020, the Company recognized impairment losses related to finite-lived intangible assets of $ 0 and $ 0.1 million, respectively.

During the three and nine months ended September 30, 2019, no impairment losses related to finite-lived intangible assets were recognized.

The following table presents future amortization of the Company’s finite-lived intangible assets at September 30, 2020:

During the three months ended March 31, 2021 and 2020, the Company recognized impairment losses related to finite-lived intangible assets of $ 0 and $ 0.1 million, respectively.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents future amortization of the Company’s finite-lived intangible assets at March 31, 2021:

(in thousands)

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Total $ 184,342

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Indefinite-lived Intangible Assets

Indefinite-lived intangible assets consisted entirely of acquired in-process research and development technology, or IPR&D.

The following table sets forth the Company’s activities related to the indefinite-lived intangible assets:

Nine Months Ended September 30,

(in thousands)

Beginning balance $ — $ 4,400

Acquisitions (Note 3) 7,200 —

Transfers to developed technology from IPR&D — ( 1,500 )

Ending balance $ 7,200 $ 2,900

There was no activity related to the Company’s indefinite-lived intangible assets during the three months ended March 31, 2021 and 2020.

The Company performs its annual assessment of indefinite-lived intangible assets on October 31 each year or more frequently if events or changes in circumstances indicate that the asset might be impaired utilizing a qualitative test as a precursor to the quantitative test comparing the fair value of the assets with their carrying amount.

Based on the qualitative test, if it is more likely than not that indicators of impairment exists, the Company proceeds to perform a quantitative analysis.

During the three and nine months ended September 30, 2020 and 2019, no indicators of impairment were identified and, as a result, no IPR&D impairment losses were recorded.

During three months ended March 31, 2021 and 2020, no indicators of impairment were identified and, as a result, no IPR&D impairment losses were recorded.

Financial Instruments

The composition of financial instruments is as follows:

September 30, 2020 December 31, 2019

(in thousands)

Interest rate swap $ 8 $ 37

The fair value of the Company’s financial instrument is the amount that would be received in an asset sale or paid to transfer a liability in an orderly transaction between unaffiliated market participants and is recorded using a hierarchical disclosure framework based upon the level of subjectivity of the inputs used in measuring assets and liabilities.

The levels are described below:

Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities.

Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.

Unobservable inputs are used when little or no market data is available.

The Company classifies its financial instrument within Level 2 of the fair value hierarchy on the basis of models utilizing market observable inputs.

The interest rate swap has been valued on the basis of valuations provided by third-party pricing services, as derived from standard valuation or pricing models.

Market-based observable inputs for the interest rate swap include one-month LIBOR-based yield curves over the term of the swap.

The Company reviews third-party pricing provider models, key inputs and assumptions and understands the pricing processes at its third-party providers in determining the overall reasonableness of the fair value of its Level 2 financial instruments.

The Company also considers the risk of nonperformance by assessing the swap counterparty’s credit risk in the estimate of fair value of the interest rate swap.

As of September 30, 2020 and December 31, 2019, the Company has not made any adjustments to the valuations obtained from its third-party pricing providers.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents a summary of the Company’s financial instruments that are measured on a recurring basis:

Fair Value Measurements

Balance Quoted Prices

in Active Markets for Identical Assets

(Level 1) Significant Other

Observable Inputs

(Level 2) Significant

(in thousands)

Interest rate swap, September 30, 2020 $ 8 $ — $ 8 $ —

Interest rate swap, December 31, 2019 $ 37 $ — $ 37 $ —

The following table summarizes activity for the interest rate swap:

Nine Months Ended

September 30,

2020 September 30,

(in thousands)

Interest rate swap asset (liability)

Beginning balance $ ( 37 ) $ 1,623

Unrealized gain (loss) recognized in other comprehensive income (loss) 29 ( 1,611 )

Ending balance $ ( 8 ) $ 12

There were no transfers between Level 1, Level 2 or Level 3 financial instruments in the nine months ended September 30, 2020 and 2019.

Financial Instruments Not Recorded at Fair Value on a Recurring Basis

Some of the Company’s financial instruments are not measured at fair value on a recurring basis but are recorded at amounts that approximate fair value due to their liquid or short-term nature.

The Company currently does not have any financial instruments measured at fair value on a recurring basis.

Some of the Company’s financial instruments are recorded at amounts that approximate fair value due to their liquid or short-term nature or by election on investments in privately-held entities (Note 7).

Such financial assets and financial liabilities include:

cash and cash equivalents, restricted cash, net receivables, certain other assets, accounts payable, accrued price protection liability, accrued expenses, accrued compensation costs, and other current liabilities.

cash and cash equivalents, restricted cash, net receivables, investments in privately-held entities, certain other assets, accounts payable, accrued price protection liability, accrued expenses, accrued compensation costs, and other current liabilities.

The Company’s long-term debt is not recorded at fair value on a recurring basis, but is measured at fair value for disclosure purposes (Note 8).

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Cash, cash equivalents and restricted cash consist of the following:

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

(in thousands)

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Total cash, cash equivalents and restricted cash $ 149,193 $ 150,034

As of September 30, 2020 and December 31, 2019, cash and cash equivalents included money market funds of approximately $ 21.4 million and $ 20.4 million, respectively.

As of September 30, 2020 and December 31, 2019, the Company has restricted cash of approximately $ 0.2 million and $ 0.4 million, respectively.

As of March 31, 2021 and December 31, 2020, cash and cash equivalents included money market funds of approximately $ 20.4 million.

As of March 31, 2021 and December 31, 2020, the Company has restricted cash of approximately $ 1.1 million.

The cash is restricted in connection with guarantees for certain import duties and office leases.

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Inventory consists of the following:

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

(in thousands)

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Prepaid and other current assets consist of the following:

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

(in thousands)

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$ 17,096 $ 47,421

As of September 30, 2020, other receivables of $ 29.0 million consist of amounts due from Intel of $ 24.7 million for amounts collected on the Company’s behalf from customers on sales of the Company’s products under the transition services agreement and of $ 4.2 million for reimbursement of certain severance-related costs pursuant to the Asset Purchase Agreement (Note 3).

As of March 31, 2021, other receivables of $ 4.5 million consists primarily of amounts due from Intel for reimbursement of certain employee-related costs pursuant to the Asset Purchase Agreement (Note 3).

As of December 31, 2020, other receivables of $ 32.8 million consist of amounts due from Intel of $ 28.4 million for amounts collected on the Company’s behalf from customers on sales of the Company’s products under the transition services agreement and of $ 4.4 million for reimbursement of certain severance-related costs pursuant to the Asset Purchase Agreement.

Property and equipment, net consists of the following:

(in Years) September 30, 2020 December 31, 2019

(in Years) March 31, 2021 December 31, 2020

(in thousands)

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$ 40,787 $ 39,470

Depreciation expense for the three months ended September 30, 2020 and 2019 was $ 3.6 million and $ 1.7 million, respectively.

Depreciation expense for the nine months ended September 30, 2020 and 2019 was $ 6.9 million and $ 5.6 million, respectively.

Depreciation expense for the three months ended March 31, 2021 and 2020 was $ 3.7 million and $ 1.6 million, respectively.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Included in other long-term assets, long-term investments were $ 5.0 million as of March 31, 2021 and consist of an investment in a privately held entity.

The Company does not have the ability to exercise significant influence or control over such entity and has accounted for the investment as a financial instrument.

Given that there is not a readily determinable fair value, the Company is electing to measure such investment at cost, less any impairment, and adjust the carrying value to fair value if any observable price changes for similar investments in the same entity are identified.

Accrued price protection liability consists of the following activity:

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

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Charged as a reduction of revenue 24,423 1,399

Reversal of unclaimed rebates ( 159 ) ( 719 )

Payments ( 17,160 ) ( 5,932 )

Ending balance $ 55,029 $ 8,024

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accrued expenses and other current liabilities consist of the following:

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

(in thousands)

Deferred purchase price payments $ 14,794 $ 34,484

Payables under transition services agreement 1,662 $ 17,420

Accrued technology license payments 4,950 5,821

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Short-term lease liabilities 9,456 8,144

Current portion of debt 7,785 —

Accrued customer credits 809 1,135

5 unchanged sentences

$ 77,755 $ 105,842

As of March 31, 2021, payables under transition services agreement of $ 1.7 million primarily consists of amounts due to Intel for expenses incurred under the transition services agreement (Note 3).

As of December 31, 2020, payables under transition services agreement of $ 17.4 million consist of amounts due to Intel of approximately $ 9.1 million for purchases of inventory and $ 8.3 million for other operating expenses incurred under the transition services agreement.

The following table summarizes the change in balances of accumulated other comprehensive income (loss) by component:

Cumulative Translation Adjustments Interest Rate Hedge Total

Cumulative Translation Adjustments Pension and Other Defined Benefit Plan Obligation Total

(in thousands)

Balance at December 31, 2020 $ 263 $ 1,172 $ 1,435

Current period other comprehensive income (loss) 415 22 437

Balance at September 30, 2020 $ ( 332 ) $ ( 118 ) $ ( 450 )

Other comprehensive income (loss) before reclassifications, net of tax ( 989 ) — ( 989 )

Balance at March 31, 2021 $ ( 726 ) $ 1,172 $ 446

MAXLINEAR, INC.

2 unchanged sentences

The carrying amount of the Company’s long-term debt consists of the following:

September 30,

2021 December 31,

9 unchanged sentences

Long-term debt, non-current portion $ 344,116 $ 363,592

As of September 30, 2020 and December 31, 2019, the weighted average effective interest rate on the total debt was approximately 4.3 % and 4.9 %, respectively.

During each of the three months ended September 30, 2020 and 2019, the Company recognized total amortization of debt discount and debt issuance costs of $ 0.5 million and $ 0.3 million, respectively, to interest expense.

During each of the nine months ended September 30, 2020 and 2019, the Company recognized total amortization of debt discount and debt issuance costs of $ 1.0 million and $ 0.9 million, respectively, to interest expense.

The approximate fair value of the term loans as of September 30, 2020 and December 31, 2019 was $ 390.6 million and $ 214.6 million, respectively, which was estimated on the basis of inputs that are observable in the market and which is considered a Level 2 measurement method in the fair value hierarchy.

As of September 30, 2020, future payments of principal are as follows:

As of March 31, 2021 and December 31, 2020, the weighted average effective interest rate on aggregate debt was approximately 3.7 % and 4.4 %, respectively.

During each of the three months ended March 31, 2021 and 2020, the Company recognized total amortization of debt discount and debt issuance costs of $ 0.5 million and $ 0.3 million, respectively, to interest expense.

The approximate aggregate fair value of the term loans as of March 31, 2021 and December 31, 2020 was $ 351.8 million and $ 376.1 million, respectively, which was estimated on the basis of inputs that are observable in the market and which is considered a Level 2 measurement method in the fair value hierarchy.

As of March 31, 2021, aggregate future payments of principal are as follows:

(in thousands)

6 unchanged sentences

The credit agreement provided for an initial secured term B loan facility, or the “Initial Term Loan,” in an aggregate principal amount of $ 425.0 million.

The credit agreement permits the Company to request incremental loans in an aggregate principal amount not to exceed the sum of $ 160.0 million (subject to adjustments for any voluntary prepayments), plus an unlimited amount that is subject to pro forma compliance with certain secured leverage ratio

Incremental loans are subject to certain additional conditions, including obtaining additional commitments from the lenders then party to the credit agreement or new lenders.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

and total leverage ratio tests.

Incremental loans are subject to certain additional conditions, including obtaining additional commitments from the lenders then party to the credit agreement or new lenders.

Loans under the Initial Term Loan bear interest, at the Company’s option, at a rate equal to either (i) a base rate equal to the highest of (x) the federal funds rate, plus 0.50% , (y) the prime rate then in effect and (z) an adjusted LIBOR rate determined on the basis of a one- three- or six-month interest period, plus 1.0% or (ii) an adjusted LIBOR rate, subject to a floor of 0.75% , in each case, plus an applicable margin of 2.50 % in the case of LIBOR rate loans and 1.50 % in the case of base rate loans.

4 unchanged sentences

The Company has the right to prepay its term loans under the credit agreement, in whole or in part, at any time without premium or penalty, subject to certain limitations and a 1.0% soft call premium applicable during the first six months of the loan term.

The Company exercised its right to prepay and made aggregate prepayments of principal of $ 213.0 million from origination of the Initial Term Loan through September 30, 2020.

The Company exercised its right to prepay and made aggregate prepayments of principal of $ 213.0 million from origination of the Initial Term Loan through March 31, 2021.

The Company’s obligations under the credit agreement are required to be guaranteed by certain of its domestic subsidiaries meeting materiality thresholds set forth in the credit agreement.

1 unchanged sentence

The credit agreement contains customary affirmative and negative covenants, including covenants limiting the ability of the Company and its restricted subsidiaries to, among other things, incur debt, grant liens, undergo certain fundamental changes, make investments, make certain restricted payments, and sell assets, in each case, subject to limitations and exceptions.

As of September 30, 2020, the Company was in compliance with such covenants.

As of March 31, 2021, the Company was in compliance with such covenants.

The credit agreement also contains customary events of default that include, among other things, certain payment defaults, cross defaults to other indebtedness, covenant defaults, change in control defaults, judgment defaults, and bankruptcy and insolvency defaults.

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The Incremental Term Loan is subject to a financial covenant of 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 ending after July 31, 2020.

During any period during which the Company (i) fails to maintain a public corporate rating from S&P that is equal to or higher than BB- and a public corporate rating from Moody's that is equal to or higher than Ba3 or (ii) fails to maintain a total leverage ratio of 3.0 to 1 or less, the applicable margin will

As of March 31, 2021, the Company was in compliance with such covenants.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

increase to 4.75% in the case of LIBOR Rate loans and 3.75% in the case of Base Rate loans.

As of September 30, 2020, the Company was in compliance with such covenants.

Commencing on July 31, 2020, the Incremental Term Loan 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.

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 has a term of three years and will mature on July 31, 2023, at which time all outstanding principal and accrued and unpaid interest on the Incremental Term Loan is due.

The Company is also required to pay fees customary for a credit facility of this size and type.

The Company has made aggregate payments of principal of $ 37.2 million to date through March 31, 2021.

The debt is carried at its principal amount, net of unamortized debt discount and issuance costs, and is not adjusted to fair value each period.

2 unchanged sentences

Interest Rate Swap

In November 2017, the Company entered into a fixed-for-floating interest rate swap with an amortizing notional amount to swap a substantial portion of variable rate LIBOR interest payments under its initial term loan for fixed interest payments bearing an interest rate of 1.74685 %.

The Company's outstanding initial term loan is still subject to a 2.5 % fixed applicable margin during the term of the loan.

The interest rate swap is designated as a cash flow hedge of a portion of floating rate interest payments on the initial term loan and effectively fixed the interest rate on a substantial portion of the Company’s long-term debt at approximately 4.25 % until the expiration of the swap in October 2020.

Accordingly, the Company applied cash flow hedge accounting to the interest rate swap and it is recorded at fair value as an asset or liability and the effective portion of changes in the fair value of the interest rate swap, as measured quarterly, are reported in other comprehensive income (loss).

As of September 30, 2020 and December 31, 2019, the fair value of the interest rate swap was a $ 0.01 million and $ 0.04 million liability (Note 6), respectively, and is included in other current liabilities in the consolidated balance sheets.

The increase in fair value related to the interest rate swap liability included in other comprehensive income (loss) for the three and nine months ended September 30, 2020 was $ 0.1 million and $ 0.03 million, respectively.

The decrease in fair value related to the interest rate swap liability included in other comprehensive income (loss) for the three and nine months ended September 30, 2019 was $ 0.2 million and $ 1.6 million, respectively.

The interest rate swap expires in October 2020 and the total $ 0.01 million of unrealized loss before taxes recorded in accumulated other comprehensive income at September 30, 2020 is expected to be recorded against interest expense in the fourth quarter of 2020, upon expiration of the interest rate swap.

The interest rate swap was designated as a cash flow hedge of a portion of floating rate interest payments on the initial term loan and effectively fixed the interest rate on a substantial portion of the Company’s long-term debt at approximately 4.25 % until the expiration of the swap in October 2020.

Accordingly, the Company applied cash flow hedge accounting to the interest rate swap and it was recorded at fair value as an asset or liability and the effective portion of changes in the fair value of the interest rate swap, as measured quarterly, were reported in other comprehensive income (loss) until expiration of the swap.

The decrease in fair value related to the interest rate swap liability included in other comprehensive income (loss) for the three months ended March 31, 2020 was $ 0.2 million.

Stock-Based Compensation

Employee Stock-Based Benefit Plans

At September 30, 2020, the Company had stock-based compensation awards outstanding under the following plans:

Employee Stock-Based Compensation Plans

At March 31, 2021, the Company had stock-based compensation awards outstanding under the following plans:

the 2010 Equity Incentive Plan, as amended, or 2010 Plan, and the 2010 Employee Stock Purchase Plan, or ESPP.

Refer to the Company’s Annual Report for a summary of the Company's stock-based compensation and equity plans as of December 31, 2019.

There have been no material changes to the terms of the Company's equity incentive plans during the nine months ended September 30, 2020.

As of September 30, 2020, the number of shares of common stock available for future issuance under the 2010 Plan was 15,096,411 shares.

As of September 30, 2020, the number of shares of common stock available for future issuance under the ESPP was 3,490,155 shares.

Refer to the Company’s Annual Report for a summary of its stock-based compensation and equity plans as of December 31, 2020.

There have been no material changes to the terms of the Company’s equity incentive plans during the three months ended March 31, 2021.

As of March 31, 2021, the number of shares of common stock available for future issuance under the 2010 Plan was 16,575,503 shares.

As of March 31, 2021, the number of shares of common stock available for future issuance under the ESPP was 4,297,394 shares.

Employee Incentive Bonus

The Company settles a majority of bonus awards for its employees, including executives, in shares of common stock under the 2010 Equity Incentive Plan.

When bonus awards are settled in common stock issued under the 2010 Equity Incentive Plan, the number of shares issuable to plan participants is determined based on the closing price of the Company’s common stock as determined in trading on the New York Stock Exchange on a date approved by the Board of Directors.

In connection with the Company’s bonus programs, in February 2021, the Company issued 0.5 million freely-tradable shares of the Company’s common stock in settlement of bonus awards to employees, including executives, for the 2020 performance period.

At March 31, 2021, the Company has an accrual of $ 7.2 million for bonus awards for employees for year-to-date achievement in the 2021 performance period.

The Company’s compensation committee retains discretion to effect payment in cash, stock, or a combination of cash and stock.

MAXLINEAR, INC.

2 unchanged sentences

The Company recognizes stock-based compensation in the consolidated statements of operations, based on the department to which the related employee reports, as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

(in thousands) (in thousands)

Three Months Ended March 31,

(in thousands)

Cost of net revenue $ 169 $ 148

1 unchanged sentence

Selling, general and administrative 5,624 2,933

Restructuring 596 — 596 —

$ 12,955 $ 6,827

The total unrecognized compensation cost related to unvested restricted stock units and restricted stock awards as of September 30, 2020 was $ 86.0 million, and the weighted average period over which these equity awards are expected to vest is 2.96 years.

The total unrecognized compensation cost related to unvested performance-based restricted stock units as of September 30, 2020 was $ 14.9 million, and the weighted average period over which these equity awards are expected to vest is 1.65 years.

The total unrecognized compensation cost related to unvested stock options as of September 30, 2020 was $ 1.2 million, and the weighted average period over which these equity awards are expected to vest is 1.72 years.

The total unrecognized compensation cost related to unvested restricted stock units and restricted stock awards as of March 31, 2021 was $ 72.0 million, and the weighted average period over which these equity awards are expected to vest is 2.68 years.

The total unrecognized compensation cost related to unvested performance-based restricted stock units as of March 31, 2021 was $ 9.4 million, and the weighted average period over which these equity awards are expected to vest is 1.40 years.

The total unrecognized compensation cost related to unvested stock options as of March 31, 2021 was $ 0.9 million, and the weighted average period over which these equity awards are expected to vest is 1.26 years.

Restricted Stock Units

6 unchanged sentences

Canceled ( 139 ) 21.34

Outstanding at September 30, 2020 5,896 $ 19.85

Outstanding at March 31, 2021 5,693 $ 20.42

Performance-Based Restricted Stock Units

2 unchanged sentences

The maximum percentage for a particular metric is 250 % of the target number of units subject to the award related to that metric, however, vesting of the performance stock units is capped at 30 % and 100 %, respectively, of the target number of units subject to the award in years one and two, respectively, of the three-year performance period.

As of September 30, 2020, the Company believes that it is probable that the Company will achieve certain performance metrics specified in the respective award agreements based on its expected revenue and non-GAAP diluted EPS results over the performance periods and calculated growth rates relative to its peers’ expected results based on data available, as defined in the respective award agreements.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of March 31, 2021, the Company believes that it is probable that it will achieve certain performance metrics specified in the respective award agreements based on its expected revenue and non-GAAP diluted EPS results over the performance periods and calculated growth rates relative to its peers’ expected results based on data available, as defined in the respective award agreements.

A summary of the Company’s performance-based restricted stock unit activity is as follows:

3 unchanged sentences

Vested ( 281 ) 16.74

Canceled ( 118 ) 15.98

Outstanding at September 30, 2020 1,722 $ 13.97

________________

(1) Number of shares granted is based on the maximum percentage achievable in the performance-based restricted stock unit award.

Outstanding at March 31, 2021 1,441 $ 13.54

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Employee Stock Purchase Rights and Stock Options

Employee Stock Purchase Rights

During the nine months ended September 30, 2020, there were 161,171 shares of common stock purchased under the ESPP at a weighted average price of $ 13.29 .

During the three months ended March 31, 2021 and 2020, there were no shares of common stock purchased under the ESPP.

The fair values of employee stock purchase rights were estimated using the Black-Scholes option pricing model at their respective grant date using the following assumptions:

Nine Months Ended September 30,

Three Months Ended March 31,

Weighted-average grant date fair value per share $ 8.66 $ 5.48

13 unchanged sentences

Exercised ( 96 ) 13.56

Canceled ( 34 ) 18.89

Outstanding at September 30, 2020 896 $ 14.64 2.78 $ 7,811

Vested and expected to vest at September 30, 2020 896 $ 14.64 2.75 $ 7,810

Exercisable at September 30, 2020 739 $ 13.82 2.34 $ 7,064

No stock options were granted by the Company during the nine months ended September 30, 2020.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The intrinsic value of stock options exercised was $ 0.2 million and $ 1.4 million in the three months ended September 30, 2020 and 2019, respectively.

The intrinsic value of stock options exercised was $ 3.4 million and $ 21.5 million in the nine months ended September 30, 2020 and 2019, respectively.

Cash received from exercise of stock options was $ 0.6 million and $ 0.3 million during the three months ended September 30, 2020 and 2019, respectively.

Cash received from exercise of stock options was $ 3.3 million and $ 4.0 million during the nine months ended September 30, 2020 and 2019, respectively.

The tax benefit from stock options exercised was $ 0.4 million and $ 0.2 million during the three months ended September 30, 2020 and 2019, respectively.

The tax benefit from stock options exercised was $ 3.6 million and $ 19.5 million during the nine months ended September 30, 2020 and 2019, respectively.

Employee Incentive Bonus

The Company settles a majority of bonus awards for its employees, including executives, in shares of common stock under the 2010 Equity Incentive Plan.

In connection with the Company’s bonus programs, in March 2020, the Company issued 0.2 million freely-tradable shares of the Company’s common stock in settlement of bonus awards to employees, including executives, for the 2019 performance period.

At September 30, 2020, the Company has an accrual of $ 16.5 million for bonus awards for employees for year-to-date achievement in the 2020 performance period.

The Company’s compensation committee retains discretion to effect payment in cash, stock, or a combination of cash and stock.

Outstanding at March 31, 2021 701 $ 14.82 2.75 $ 13,509

Vested and expected to vest at March 31, 2021 701 $ 14.82 2.75 $ 13,509

Exercisable at March 31, 2021 589 $ 14.13 2.44 $ 11,758

No stock options were granted by the Company during the three months ended March 31, 2021.

The intrinsic value of stock options exercised was $ 2.3 million and $ 0.3 million in the three months ended March 31, 2021 and 2020, respectively.

Cash received from exercise of stock options was $ 1.3 million and $ 0.5 million during the three months ended March 31, 2021 and 2020, respectively.

The tax benefit from stock options exercised was $ 2.7 million and $ 0.3 million during the three months ended March 31, 2021 and 2020, respectively.

The provision for income taxes primarily relates to projected federal, state, and foreign income taxes.

1 unchanged sentence

In addition, the tax effects of certain significant or unusual items are recognized discretely in the quarter during which they occur and can be a source of variability in the effective tax rates from quarter to quarter.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company utilizes the asset and liability method of accounting for income taxes, under which deferred taxes are determined based on temporary differences between the financial statement and tax basis of assets and liabilities using tax rates expected to be in effect during the years in which the temporary differences reverse.

4 unchanged sentences

The Company does not incur expense or benefit in certain tax free jurisdictions in which it operates.

The Company recorded an income tax benefit of $ 2.2 million in the three months ended September 30, 2020 and an income tax benefit of $ 0.03 million in the three months ended September 30, 2019.

The Company recorded an income tax benefit of $ 12.1 million in the nine months ended September 30, 2020 and an income tax benefit of $ 9.9 million in the nine months ended September 30, 2019.

The income tax benefit in the three and nine months ended September 30, 2020 and 2019, each primarily related to the mix of pre-tax income among jurisdictions, excess tax benefits related to stock-based compensation, and release of certain reserves for uncertain tax positions under ASC 740-10.

Also included in income tax benefit for the nine months ended September 30, 2020 was a tax benefit related to the Coronavirus Aid, Relief and Economic Security Act, or CARES Act, enacted effective March 27, 2020, and a tax provision related to a change in judgment regarding the final outcome of the Altera tax case discussed below.

The CARES Act tax benefit relates to the Company’s ability to carry back its 2019 net operating loss, originally valued at a 21 % federal tax rate, to offset income taxes paid in prior periods at the 35 % federal tax rate in effect at that time.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company recorded an income tax provision of $ 1.8 million in the three months ended March 31, 2021 and an income tax benefit of $ 6.7 million in the three months ended March 31, 2020.

The income tax provision in the three months ended March 31, 2021 and 2020, each primarily related to the mix of pre-tax income among jurisdictions, permanent tax items including the global minimum tax and stock based compensation, excess tax benefits related to stock-based compensation, and release of certain reserves for uncertain tax positions under ASC 740-10.

Income tax positions must meet a more-likely-than-not threshold to be recognized.

2 unchanged sentences

The Company records potential penalties and interest accrued related to unrecognized tax benefits within the consolidated statements of operations as income tax expense.

During the nine months ended September 30, 2020, the Company’s unrecognized tax benefits increased by $ 0.1 million.

During the three months ended March 31, 2021, the Company’s unrecognized tax benefits increased by $ 0.3 million.

The Company does not expect its unrecognized tax benefits to change significantly over the next 12 months.

Accrued interest and penalties associated with uncertain tax positions as of September 30, 2020 were approximately $ 0.6 million and $ 0.1 million, respectively.

Accrued interest and penalties associated with uncertain tax positions as of March 31, 2021 were approximately $ 0.5 million and $ 0.04 million, respectively.

The Company is subject to federal and state income tax in the United States and is also subject to income tax in certain other foreign tax jurisdictions.

At September 30, 2020, the statutes of limitations for the assessment of federal, state, and foreign income taxes are closed for the years before 2016, 2015, and 2014, respectively.

At March 31, 2021, the statutes of limitations for the assessment of federal, state, and foreign income taxes are closed for the years before 2017, 2016, and 2015, respectively.

The Company’s subsidiary in Singapore operates under certain tax incentives in Singapore, which are generally effective through March 2022 and may be extended through March 2027, and are conditional upon meeting certain employment and investment thresholds in Singapore.

Under the incentives, qualifying income derived from certain sales of the Company’s integrated circuits is taxed at a concessionary rate over the incentive period, and there are reduced Singapore withholding taxes on certain intercompany royalties during the incentive period.

Primarily because of the Company's Singapore net operating losses and a full valuation allowance in Singapore, the incentives did not have a material impact on the Company's income tax benefit in the nine months ended September 30, 2020 and 2019.

On March 27, 2020, the U.S.

government enacted the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, a $2 trillion relief package comprising a combination of tax provisions and other stimulus measures.

The CARES Act broadly provides entities tax payment relief and significant business incentives and makes certain technical corrections to the 2017 Tax Cuts and Jobs Act, or the Tax Act.

The tax relief measures for entities include a five-year net operating loss carry back, increases interest expense deduction limits, acceleration of alternative minimum tax credit refunds, payroll tax relief, and a technical correction to allow accelerated deductions for qualified improvement property.

The Act also provides other non-income tax benefits, including federal funding for a range of stabilization measures and emergency funding to assist those impacted by the COVID-19 pandemic.

Similar legislation is being enacted in other jurisdictions in which the Company operates.

ASC Topic 740, Income Taxes , requires the effect of changes in tax rates and laws on deferred tax balances to be recognized in the period in which new legislation is enacted.

The enactment of the CARES Act and similar legislation in other jurisdictions in which the Company operates was not material to the Company’s income tax benefit for the nine months ended September 30, 2020 and is not expected to have a material impact on its consolidated financial position and results of operations as of and for the full year ending December 31, 2020.

On July 27, 2015, the US Tax Court decided on behalf of Altera Corporation, or Altera US, that certain 2003 Internal Revenue Service, or IRS regulations underpinning the transfer pricing between related parties for shared costs were invalid.

The case involved the cost-sharing arrangement, or CSA entered into by Altera US with an international subsidiary.

Pursuant to the terms of the CSA, the parties agreed to share the risks and costs of research and development, or R&D activities, including granted stock options and other stock-based compensation, or SBC, to certain of its employees responsible for conducting the R&D activities.

In allocating the costs to be shared pursuant to that CSA, Altera US included the cash compensation of its employees engaged in R&D in the shared cost pool but excluded their SBC.

The IRS had imposed transfer pricing adjustments in each of the tax years 2004 through 2007 on the basis of Altera US’ failure to include SBC costs in its CSA cost pool.

On June 7, 2019, in a 2-1 ruling, a panel of the Ninth Circuit Court of Appeals reversed the Tax Court’s holding and upheld a 2003 IRS regulation that requires participants in a CSA to share SBC costs.

After the Ninth Circuit Court’s reversal, Altera filed a petition for en banc review of the decision by Ninth Circuit judges.

The petition was denied, and the taxpayer decided to appeal to the Supreme Court.

On June 22, 2020, the Supreme Court of the United States announced that it was denying the petition for certiorari and will not review an appeals court decision in the case of Altera Corporation & Subsidiaries v.

Commissioner (Altera v.

The announcement represented new information that the Company considered in its second quarter tax provision for the six months ended June 30, 2020.

The evaluation of this ruling for all open tax periods was not material to the Company’s income tax benefit for the nine months ended September 30, 2020 and is not expected to have a material impact on its consolidated financial position and results of operations as of and for the year ending December 31, 2020.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Concentration of Credit Risk, Significant Customers and Revenue by Geographic Region

Primarily because of the Company’s Singapore net operating losses and a full valuation allowance in Singapore, the incentives did not have a material impact on the Company’s income tax provision in the three months ended March 31, 2021 and 2020.

Concentration of Credit Risk, Significant Customers and Geographic Information

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents and accounts receivable.

7 unchanged sentences

The Company makes periodic evaluations of the credit worthiness of its customers.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Customers comprising greater than 10% of net revenues for each of the periods presented are as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

Percentage of total net revenue

6 unchanged sentences

The following table presents balances that are 10% or greater of accounts receivable, based on the Company’s billings to its customers.

September 30, December 31,

March 31, December 31,

Percentage of gross accounts receivable

Customer E (distributor) 13 % *

Customer F (direct) 13 % *

Customer G (distributor) * 10 %

Customer C (distributor) 11 % 13 %

Customer E (direct) 10 % *

Customer B (direct) * 17 %

____________________________

2 unchanged sentences

Suppliers comprising greater than 10% of total inventory purchases are as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

Vendor A 45 % *

3 unchanged sentences

Vendor E * 19 %

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

* Represents less than 10% of the inventory purchases for the respective period.

Geographic Information

The Company’s consolidated net revenues by geographic area based on ship-to location are as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Amount % of total net revenue Amount % of total net revenue Amount % of total net revenue Amount % of total net revenue

Three Months Ended March 31,

Amount % of total net revenue Amount % of total net revenue

Asia $ 171,160 82 % $ 52,035 84 %

2 unchanged sentences

Total $ 209,359 100 % $ 62,027 100 %

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The products shipped to individual countries or territories representing greater than 10% of net revenue for each of the periods presented are as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

Percentage of total net revenue

Hong Kong 37 % 50 %

China 21 % * 16 % 15 %

Taiwan * 17 % * *

Vietnam 12 % *

____________________________

2 unchanged sentences

No other individual country accounted for more than 10% of net revenue during these periods.

Although a large percentage of the Company’s products is shipped to Asia, and in particular, Hong Kong and China, the Company believes that a significant number of the systems designed by customers and incorporating the Company’s semiconductor products are subsequently sold outside Asia to Europe, Middle East, and Africa, or EMEA markets and North American markets.

Although a large percentage of the Company’s products is shipped to Asia, and in particular, Hong Kong, China and Vietnam, the Company believes that a significant number of the systems designed by customers and incorporating the Company’s semiconductor products are subsequently sold outside Asia to Europe, Middle East, and Africa, or EMEA markets and North American markets.

Long-lived assets, which consists of property and equipment, net, leased right-of-use assets, intangible assets, net, and goodwill by geographic area are as follows (in thousands):

September 30, December 31,

March 31, December 31,

Amount % of total Amount % of total

3 unchanged sentences

Total $ 559,560 100 % $ 571,450 100 %

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Revenue from Contracts with Customers

1 unchanged sentence

The table below presents disaggregated net revenues by market (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

2021 2020 (1)

Connected home $ 37,816 $ 40,443 $ 99,138 $ 122,468

Broadband $ 124,190 $ 26,638

% of net revenue 59 % 43 %

Broadband and WiFi 82,274 — 82,274 —

Connectivity 27,449 5,616

% of net revenue 13 % 9 %

4 unchanged sentences

Total net revenue $ 209,359 $ 62,027

Revenues from sales through the Company’s distributors accounted for 46 % and 60 % of net revenue for the three months ended September 30, 2020 and 2019, respectively.

Revenues from sales through the Company’s distributors accounted for 54 % and 50 % of net revenue for the nine months ended September 30, 2020 and 2019, respectively.

_______________

(1) The Company’s net revenue by market categories were revised during the fourth quarter of 2020 to align with changing end-market conditions, the Company’s current business priorities, as well as spending requirements and growth opportunities in the

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

four categories.

The broadband category includes the Company’s prior connected home category plus the SoC business from the Wi-Fi and Broadband assets business, but excludes wired connectivity.

The infrastructure category remains unchanged.

Industrial and multi-market includes the previously reported revenue plus component revenues from the Wi-Fi and Broadband assets business.

The Company’s connectivity category includes primarily its MoCA/G.hn products and Wi-Fi and Ethernet revenues from the Wi-Fi and Broadband assets business.

The 2020 amounts were adjusted to reflect the change in market categories.

Revenues from sales through the Company’s distributors accounted for 44 % and 61 % of net revenue for the three months ended March 31, 2021 and 2020, respectively.

Contract Liabilities

As of September 30, 2020 and December 31, 2019, customer contract liabilities consist of estimates of obligations to deliver rebates to customers in the form of units of products and were approximately $ 0.01 million and $ 0.1 million.

Revenue recognized in each of the three and nine months ended September 30, 2020 and 2019 that was included in the contract liability balance as of the beginning of each of those respective periods was immaterial.

There were no material changes in the contract liabilities balance during the three and nine months ended September 30, 2020 and 2019.

As of March 31, 2021, customer contract liabilities consisted of advanced payments received for which performance obligations have not been completed and estimates of obligations to deliver rebates to customers in the form of units of products and were approximately $ 1.8 million.

As of December 31, 2020, customer contract liabilities consisted of estimates of obligations to deliver rebates to customers in the form of units of products and were approximately $ 0.03 million.

Revenue recognized in each of the three months ended March 31, 2021 and 2020 that was included in the contract liability balance as of the beginning of each of those respective periods was immaterial.

There were no material changes in the contract liabilities balance during the three months ended March 31, 2021 and 2020.

Obligations to Customers for Price Adjustments and Returns and Assets for Right-of-Returns

As of September 30, 2020 and December 31, 2019, obligations to customers consisting of estimates of price protection rights offered to the Company’s end customers totaled $ 18.0 million and $ 12.6 million, respectively, and are included in accrued price protection liability in the consolidated balance sheets.

As of March 31, 2021 and December 31, 2020, obligations to customers consisting of estimates of price protection rights offered to the Company’s end customers totaled $ 55.0 million and $ 47.8 million, respectively, and are included in accrued price protection liability in the consolidated balance sheets.

For activity in this account, including amounts included in net revenue, refer to Note 7.

Other obligations to customers representing estimates of price adjustments to be claimed by distributors upon sell-through of their inventory to their end customer and estimates of stock rotation returns to be claimed by distributors on products sold as of September 30, 2020 were $ 12.1 million and $ 1.6 million, respectively, and as of December 31, 2019 were $ 8.4 million and $ 1.4 million, respectively, and are included in accrued expenses and other current liabilities in the consolidated balance sheets (Note 7).

The increase in revenue in the three and nine months ended September 30, 2020 and 2019 from net changes in transaction prices for amounts included in obligations to customers for price adjustments as of the beginning of those respective periods was not material.

As of September 30, 2020 and December 31, 2019, right of return assets under customer contracts representing the estimates of product inventory the Company expects to receive from customers in stock rotation returns were approximately $ 0.7 million and $ 0.3 million, respectively.

Other obligations to customers representing estimates of price adjustments to be claimed by distributors upon sell-through of their inventory to their end customer and estimates of stock rotation returns to be claimed by distributors on products sold as of March 31, 2021 were $ 19.3 million and $ 2.6 million, respectively, and as of December 31, 2020 were $ 10.3 million and $ 2.0 million, respectively, and are included in accrued expenses and other current liabilities in the consolidated balance sheets (Note 7).

The increase in revenue in the three months ended March 31, 2021 and 2020 from net changes in transaction prices for amounts included in obligations to customers for price adjustments as of the beginning of those respective periods was not material.

As of March 31, 2021 and December 31, 2020, right of return assets under customer contracts representing the estimates of product inventory the Company expects to receive from customers in stock rotation returns were approximately $ 1.0 million and $ 0.6 million, respectively.

Right of return assets are included in inventory in the consolidated balance sheets.

As of September 30, 2020 and December 31, 2019, there were no impairment losses recorded on customer accounts receivable.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of March 31, 2021 and December 31, 2020, there were no impairment losses recorded on customer accounts receivable.

Operating Leases

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Since the implicit rate of such leases is unknown and the Company is not reasonably certain to renew its leases, the Company has elected to apply a collateralized incremental borrowing rate to facility leases on the original lease term in calculating the present value of future lease payments.

As of September 30, 2020 and December 31, 2019, the weighted average discount rate for operating leases was 4.5 % and 5.0 %, respectively, and the weighted average remaining lease term for operating leases was 3.1 years and 2.9 years, respectively.

The table below presents aggregate future minimum payments due under leases, reconciled to total lease liabilities included in the consolidated balance sheet as of September 30, 2020:

As of March 31, 2021 and December 31, 2020, the weighted average discount rate for operating leases was 3.9 % and 4.0 %, respectively, and the weighted average remaining lease term for operating leases was 4.6 years as of the end of each of these periods.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The table below presents aggregate future minimum payments due under leases, reconciled to total lease liabilities included in the consolidated balance sheet as of March 31, 2021:

Operating Leases

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Long-term lease liabilities $ 22,419

Operating lease cost was $ 1.4 million and $ 0.8 million for the three months ended September 30, 2020 and 2019, respectively.

Operating lease cost was $ 3.2 million and $ 2.6 million for the nine months ended September 30, 2020 and 2019, respectively.

Short-term lease costs for the three and nine months ended September 30, 2020 and 2019 were not material.

There were $ 5.2 million right-of-use assets obtained in exchange for new lease liabilities for each of the three and nine months ended September 30, 2020.

There were $ 0 and $ 0.5 million right-of-use assets obtained in exchange for new lease liabilities for the three and nine months ended September 30, 2019, respectively.

Operating lease cost was $ 2.5 million and $ 0.9 million for the three months ended March 31, 2021 and 2020, respectively.

Short-term lease costs for the three months ended March 31, 2021 and 2020 were not material.

There were $ 5.2 million right-of-use assets obtained in exchange for new lease liabilities for the three months ended March 31, 2021.

There were no right-of-use assets obtained in exchange for new lease liabilities for the three months ended March 31, 2020.

The Company has subleased a facility that it ceased using in connection with a restructuring plan (Note 4).

Such sublease expires in 2021.

As of September 30, 2020, future minimum rental income under non-cancelable subleases is as follows:

(in thousands)

2020 (3 months) $ 36

Total minimum rental income $ 108

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Total sublease income related to leased facilities the Company ceased using in connection with a restructuring plan for the three months ended September 30, 2020 and 2019 was approximately $ 0.1 million and $ 1.1 million, respectively.

Total sublease income related to leased facilities the Company ceased using in connection with a restructuring plan for the nine months ended September 30, 2020 and 2019 was approximately $ 0.4 million and $ 2.4 million, respectively (Note 4).

Such sublease expires in 2021, and future minimum rental income under the sublease is $ 0.04 million.

Total sublease income related to leased facilities the Company ceased using in connection with a restructuring plan for the three months ended March 31, 2021 and 2020 was approximately $ 0.04 million and $ 0.2 million, respectively (Note 4).

Employee Defined Benefit Retirement Plans

Pension and Other Defined Benefit Retirement Obligations

In connection with the July 31, 2020 acquisition of the Wi-Fi and Broadband assets business (Note 3), the Company assumed an obligation of $ 7.9 million of the Wi-Fi and Broadband assets business associated with certain defined benefit retirement plans, including a pension plan.

As of March 31, 2021 and December 31, 2020, the defined benefit obligation was $ 6.2 million and $ 6.4 million, respectively.

The benefit is based on a formula applied to eligible employee earnings.

Net periodic benefit costs were $ 0.1 million for the three and nine months ended September 30, 2020 and were recorded to research and development expenses in the consolidated statements of operations.

Net periodic benefit costs were $ 0.1 million for the three months ended March 31, 2021 and were recorded to research and development expenses in the consolidated statements of operations.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Commitments and Contingencies

Inventory Purchase and Other Contractual Obligations

As of September 30, 2020, future minimum payments under inventory purchase and other obligations are as follows:

As of March 31, 2021, future minimum payments under inventory purchase and other obligations are as follows:

Inventory Purchase Obligations Other Obligations Total

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Other obligations consist of deferred payments related to the NanoSemi merger (Note 3) and contractual payments due for software licenses.

Our inventory purchase obligations and other obligations increased by $ 75.1 million to $ 97.7 million as of September 30, 2020, from $ 22.6 million as of December 31, 2019 primarily as a result of increased orders of software licenses and inventory placed with our vendors during the period, which is due in part to our 2020 acquisitions (Note 3).

Our inventory purchase obligations and other obligations increased by $ 66.1 million to $ 187.8 million as of March 31, 2021, from $ 121.7 million as of December 31, 2020 primarily as a result of increased orders of software licenses and inventory placed with our vendors during the period (Note 3).

Other Matters

1 unchanged sentence

The Company believes that there are no currently pending litigation matters that, if determined adversely to the Company’s interests, would have a material effect on the Company’s financial position, results of operations, or cash flows or that would not be covered by the Company’s existing liability insurance.

Stock Repurchases

On February 23, 2021, the Company’s board of directors authorized a plan to repurchase up to $ 100 million of the Company’s common stock over a period ending February 16, 2024.

The amount and timing of repurchases are subject to a variety of factors including liquidity, share price, market conditions, and legal requirements.

Any purchases will be funded from available working capital and may be effected through open market purchases, block transactions, and privately negotiated transactions.

The share repurchase program does not obligate the Company to make any repurchases and may be modified, suspended, or terminated by the Company at any time without prior notice.

During the three months ended March 31, 2021, the Company repurchased 75,000 shares of its common stock at a weighted average price of $ 35.6157 per share, an aggregate value of approximately $ 2.7 million, under the repurchase program.

At March 31, 2021, the aggregate value of common stock repurchased under the program was approximately $ 2.7 million and approximately $ 97.3 million remained available for repurchase under the program.

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 1. Financial Statements