What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-10-27 compared with 2021-07-28 · 193 added, 169 removed, 762 unchanged (32% of the section changed)

3 unchanged sentences

in thousands, except par value amounts)

September 30,

2021 December 31,

32 unchanged sentences

550,000 shares authorized;

76,469 shares issued and outstanding at June 30, 2021 and 74,536 shares issued and outstanding December 31, 2020

76,735 shares issued and outstanding at September 30, 2021 and 74,536 shares issued and outstanding December 31, 2020

Additional paid-in capital 655,620 602,064

7 unchanged sentences

in thousands, except per share data)

Three Months Ended June 30, Six Months Ended June 30,

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

2021 2020 2021 2020

14 unchanged sentences

Total other income (expense), net ( 2,726 ) ( 4,261 ) ( 16,517 ) ( 8,565 )

Loss before income taxes ( 7,277 ) ( 25,008 ) ( 1,669 ) ( 47,213 )

Income tax benefit ( 8,010 ) ( 3,201 ) ( 6,204 ) ( 9,937 )

Income (loss) before income taxes 21,060 ( 38,836 ) 19,391 ( 86,049 )

Income tax provision (benefit) 11,802 ( 2,191 ) 5,598 ( 12,128 )

Net income (loss) $ 9,258 $ ( 36,645 ) $ 13,793 $ ( 73,921 )

9 unchanged sentences

in thousands)

Three Months Ended June 30, Six Months Ended June 30,

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

2021 2020 2021 2020

1 unchanged sentence

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments, net of tax expense of $ 607 and $ 231 for the three and six months ended June 30, 2021, respectively, and net of tax expense of $ 33 and $ 24 for the three and six months ended June 30, 2020, respectively

357 294 ( 632 ) ( 286 )

Unrealized gain (loss) on interest rate swap, net of tax expense of $ 30 and tax benefit of $ 11 for the three and six months ended June 30, 2020, respectively

Foreign currency translation adjustments, net of tax expense of $ 196 and $ 427 for the three and nine months ended September 30, 2021, respectively, and net of tax expense of zero and $ 23 for the three and nine months ended September 30, 2020, respectively

( 292 ) 700 ( 924 ) 415

Unrealized gain on interest rate swap, net of tax expense of $ 17 and $ 6 for the three and nine months ended September 30, 2020, respectively

Other comprehensive income (loss) ( 292 ) 760 ( 924 ) 437

3 unchanged sentences

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FISCAL QUARTERS ENDED JUNE 30, 2021

FISCAL QUARTERS ENDED SEPTEMBER 30, 2021

in thousands)

20 unchanged sentences

Balance at June 30, 2021 76,469 8 640,710 803 ( 207,854 ) 433,667

Common stock issued pursuant to equity awards, net 290 — ( 104 ) — — ( 104 )

Repurchase of common stock ( 24 ) — ( 1,008 ) — — ( 1,008 )

Stock-based compensation — — 16,022 — — 16,022

Other comprehensive loss — — — ( 292 ) — ( 292 )

Net income — — — — 9,258 9,258

Balance at September 30, 2021 76,735 $ 8 $ 655,620 $ 511 $ ( 198,596 ) $ 457,543

See accompanying notes.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FISCAL QUARTERS ENDED JUNE 30, 2020

FISCAL QUARTERS ENDED SEPTEMBER 30, 2020

in thousands)

18 unchanged sentences

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.

2 unchanged sentences

in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Operating Activities

Net income (loss) $ 13,793 $ ( 73,921 )

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

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

Amortization and depreciation 67,439 53,819

Impairment losses — 86

Inventory fair value adjustments — 14,445

Amortization of debt issuance costs and accretion of discounts 2,584 1,386

5 unchanged sentences

Loss on extinguishment of debt 5,221 —

(Gain) loss on foreign currency 408 ( 226 )

Excess tax (benefits) deficiencies on stock-based awards ( 4,631 ) ( 378 )

Loss on foreign currency 384 375

Excess tax benefits on stock-based awards ( 5,369 ) ( 530 )

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

8 unchanged sentences

Other long-term liabilities 4,449 ( 8,721 )

Net cash provided by operating activities 68,123 15,908

Net cash provided by (used in) operating activities 152,200 ( 676 )

Investing Activities

13 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents ( 1,233 ) 139

Increase (decrease) in cash, cash equivalents and restricted cash ( 18,600 ) 14,312

Increase in cash, cash equivalents and restricted cash 20,520 3,625

Cash, cash equivalents and restricted cash at beginning of period 150,034 93,117

27 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 six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2021.

Interim results for the nine months ended September 30, 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

2 unchanged sentences

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 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 half 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.

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 three quarters 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.

5 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company also believes that its $ 131.4 million of cash and cash equivalents at June 30, 2021 will be sufficient to fund its projected operating requirements for at least the next twelve months.

The Company also believes that its $ 170.6 million of cash and cash equivalents at September 30, 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 Wi-Fi 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.

The Company’s future capital requirements will depend on many factors, including 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 July 28, 2021, 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 October 27, 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.

There have been no other significant changes to the Company’s significant accounting policies during the six months ended June 30, 2021.

There have been no other significant changes to the Company’s significant accounting policies during the nine months ended September 30, 2021.

Recently Adopted Accounting Pronouncements

3 unchanged sentences

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 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 six months ended June 30, 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.

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 nine months ended September 30, 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.

2 unchanged sentences

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 six months ended June 30, 2021, and is also not expected to have a material impact on the Company's financial disclosures for the year ending December 31, 2021.

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 nine months ended September 30, 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

6 unchanged sentences

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

Three Months Ended June 30, Six Months Ended June 30,

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

2021 2020 2021 2020

7 unchanged sentences

Diluted $ 0.12 $ ( 0.50 ) $ 0.17 $ ( 1.02 )

For the three and six months ended June 30, 2021 and 2020, the Company excluded common stock equivalents for outstanding stock-based awards, which represented potentially dilutive securities of 0.04 million and 0.1 million for the 2021 periods, respectively, and 2.5 million and 2.9 million for the 2020 periods, respectively, from the calculation of diluted net income (loss) per share due to their anti-dilutive nature.

For the three and nine months ended September 30, 2021 and 2020, the Company excluded common stock equivalents for outstanding stock-based awards, which represented potentially dilutive securities of 0.08 million and 0.07 million for the 2021 periods, respectively, and 3.5 million and 3.1 million for the 2020 periods, respectively, from the calculation of diluted net income (loss) per share due to their anti-dilutive nature.

Business Combinations

5 unchanged sentences

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.

The Company has integrated the acquired assets and rehired employees into the Company’s existing business.

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.

The Company believes it does not have a material indemnification obligation as of September 30, 2021;

however, if the Company were required to make payments in satisfaction of these indemnification obligations related to breaches of representations and warranties of certain fundamental obligations which have not yet expired, it could have a material adverse effect on the Company’s business, financial condition, results of operations, and cash flows.

MAXLINEAR, INC.

1 unchanged sentence

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 granted to the Company a license to certain intellectual property rights for use by the Company in connection with the acquired assets and the Company granted back to Intel a license to the intellectual property rights in the acquired assets, (ii) a supply agreement, pursuant to which Intel manufactures and fabricates certain products for the Company that are part of the acquired assets, (iii) an ethernet network controller services agreement, pursuant to which the Company provides Intel with certain development services with respect to certain Intel ethernet network controller products, (iv) a transition services agreement, pursuant to which Intel provided certain services on a transitional basis for up to a 12-month period after the closing, the scope of which included 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.

Pursuant to the delayed inventory side letter, the Company had control and economic benefits of the inventory, but transfer of the title and possession of the inventory was delayed until the last day that Intel provided services under the transition services agreement.

Acquisition Consideration

4 unchanged sentences

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):

The following is the final 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

28 unchanged sentences

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 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 June 30, 2021, the Company has made $ 27.5 million of $ 35.0 million in deferred cash payments.

In addition, in the nine months ended September 30, 2021, the NanoSemi stockholders received $ 35.0 million in cash payments that were deferred as of the acquisition date, 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.

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

18 unchanged sentences

Purchase Price Allocation

The following is an allocation of purchase price as of the September 9, 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):

The following is the final allocation of purchase price as of the September 9, 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

22 unchanged sentences

Assumptions in the Allocations of Purchase Price

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.

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 that were initially deferred and were subsequently paid to NanoSemi stockholders in the nine months ended September 30, 2021, as described above.

Certain NanoSemi stockholders that are employees were 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 were accounted for as a portion of the purchase consideration.

Estimates of fair value require management to make significant estimates and assumptions.

1 unchanged sentence

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.

There have been no adjustments between the preliminary purchase price allocations reflected as of December 31, 2020 and the purchase price allocation reflected as of June 30, 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 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 the final purchase price allocations reflected as of September 30, 2021.

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

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

value of future economic benefits to be derived from ownership of the asset.

Indications of value are developed by discounting future net cash flows to their present value at market-based rates of return.

5 unchanged sentences

Future cash flows for each project were estimated based on forecasted revenue and costs, taking into account the expected product life cycles, market penetration, and growth rates.

Developed technology will begin amortization immediately and IPR&D will begin amortization upon the completion of each project.

Developed technology began amortization immediately upon the closing of the transaction and IPR&D will begin amortization upon the completion of each project.

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

8 unchanged sentences

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 June 30, Six Months Ended June 30,

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

2021 2020 2021 2020

4 unchanged sentences

$ — $ 3,280 $ 2,204 $ 3,833

Lease related charges for the six months ended June 30, 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.

Lease related charges for the nine months ended September 30, 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.

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.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents a roll-forward of the Company’s restructuring liability for the six months ended June 30, 2021.

The following table presents a roll-forward of the Company’s restructuring liability for the nine months ended September 30, 2021.

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

6 unchanged sentences

Non-cash charges and adjustments ( 3 ) ( 553 ) ( 301 ) ( 857 )

Liability as of June 30, 2021 252 599 — 851

current portion as of June 30, 2021 ( 252 ) ( 372 ) — ( 624 )

Long-term portion as of June 30, 2021 $ — $ 227 $ — $ 227

As of June 30, 2021, the remaining lease related charges primarily consist of common area maintenance obligations.

Liability as of September 30, 2021 — 510 — 510

current portion as of September 30, 2021 — ( 334 ) — ( 334 )

Long-term portion as of September 30, 2021 $ — $ 176 $ — $ 176

As of September 30, 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.

2 unchanged sentences

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).

During the three and six months ended June 30, 2021, there were no changes in the carrying value of goodwill.

During the three and nine months ended September 30, 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.

1 unchanged sentence

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

During the three and six months ended June 30, 2021 and 2020, there were no indications of impairment of the Company’s goodwill balances.

During the three and nine months ended September 30, 2021 and 2020, there were no indications of impairment of the Company’s goodwill balances.

MAXLINEAR, INC.

3 unchanged sentences

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:

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

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

7 unchanged sentences

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 June 30, Six Months Ended June 30,

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

2021 2020 2021 2020

6 unchanged sentences

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

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands)

Beginning balance $ 200,066 $ 187,971

Acquisitions (Note 3) — 81,100

Additions 6,616 388

5 unchanged sentences

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 six months ended June 30, 2021 and the three months ended June 30, 2020, no impairment losses related to finite-lived intangible assets were recognized.

During the six months ended June 30, 2020, the Company recognized impairment losses related to finite-lived intangible assets of $ 0.1 million.

During the three and nine months ended September 30, 2021 and the three months ended September 30, 2020, no impairment losses related to finite-lived intangible assets were recognized.

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

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents future amortization of the Company’s finite-lived intangible assets at June 30, 2021:

The following table presents future amortization of the Company’s finite-lived intangible assets at September 30, 2021:

(in thousands)

4 unchanged sentences

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

There was no activity related to the Company’s indefinite-lived intangible assets during the six months ended June 30, 2021 and 2020.

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

Nine Months Ended September 30,

(in thousands)

Beginning balance $ 7,200 $ —

Acquisitions (Note 3) — 7,200

Ending balance $ 7,200 $ 7,200

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 six months ended June 30, 2021 and 2020, no indicators of impairment were identified and, as a result, no IPR&D impairment losses were recorded.

During the three and nine months ended September 30, 2021 and 2020, no indicators of impairment were identified and, as a result, no IPR&D impairment losses were recorded.

Financial Instruments

5 unchanged sentences

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).

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Balance Sheet Details

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

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

(in thousands)

3 unchanged sentences

Total cash, cash equivalents and restricted cash $ 170,554 $ 150,034

As of June 30, 2021 and December 31, 2020, cash and cash equivalents included money market funds of approximately $ 20.4 million.

As of June 30, 2021 and December 31, 2020, the Company has restricted cash of approximately $ 1.1 million.

As of September 30, 2021 and December 31, 2020, cash and cash equivalents included money market funds of approximately $ 20.4 million.

As of September 30, 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.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Inventory consists of the following:

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

(in thousands)

3 unchanged sentences

Prepaid and other current assets consist of the following:

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

(in thousands)

3 unchanged sentences

$ 14,535 $ 47,421

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 (Note 3).

As of December 31, 2020, other receivables of $ 32.8 million consisted 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 (Note 3).

Property and equipment, net consists of the following:

(in Years) June 30, 2021 December 31, 2020

(in Years) September 30, 2021 December 31, 2020

(in thousands)

11 unchanged sentences

$ 53,022 $ 39,470

Depreciation expense for the three and six months ended June 30, 2021 was $ 3.6 million and $ 7.3 million, respectively.

Depreciation expense for the three and six months ended June 30, 2020 was $ 1.6 million and $ 3.3 million, respectively.

Depreciation expense for the three and nine months ended September 30, 2021 was $ 4.7 million and $ 12.0 million, respectively.

Depreciation expense for the three and nine months ended September 30, 2020 was $ 3.6 million and $ 6.9 million, respectively.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Included in other long-term assets, long-term investments were $ 5.0 million as of June 30, 2021 and consist of an investment in a privately held entity.

Included in other long-term assets is an investment in a privately held entity of $ 5.0 million as of September 30, 2021.

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.

1 unchanged sentence

Accrued price protection liability consists of the following activity:

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands)

5 unchanged sentences

Accrued expenses and other current liabilities consist of the following:

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

(in thousands)

14 unchanged sentences

$ 70,866 $ 105,842

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.

As of December 31, 2020, payables under transition services agreement of $ 17.4 million consisted 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:

3 unchanged sentences

Other comprehensive income (loss) before reclassifications, net of tax ( 924 ) — ( 924 )

Balance at June 30, 2021 $ ( 369 ) $ 1,172 $ 803

Balance at September 30, 2021 $ ( 661 ) $ 1,172 $ 511

MAXLINEAR, INC.

2 unchanged sentences

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

September 30,

2021 December 31,

10 unchanged sentences

Long-term debt, non-current portion $ 326,027 $ 363,592

As of June 30, 2021 and December 31, 2020, the weighted average effective interest rate on aggregate debt was approximately 3.2 % and 4.4 %, respectively.

During each of the three months ended June 30, 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.

During each of the six months ended June 30, 2021 and 2020, the Company recognized total amortization of debt discount and debt issuance costs of $ 1.0 million and $ 0.6 million, respectively, to interest expense.

The approximate aggregate fair value of the term loans outstanding as of June 30, 2021 and December 31, 2020 was $ 350.2 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 June 30, 2021, aggregate future payments of principal are as follows:

As of September 30, 2021 and December 31, 2020, the weighted average effective interest rate on aggregate debt was approximately 3.1 % and 4.4 %, respectively.

During each of the three months ended September 30, 2021 and 2020, the Company recognized total amortization of debt discount and debt issuance costs of $ 0.2 million and $ 0.5 million, respectively, to interest expense.

During each of the nine months ended September 30, 2021 and 2020, the Company recognized total amortization of debt discount and debt issuance costs of $ 1.2 million and $ 1.0 million, respectively, to interest expense.

The approximate aggregate fair value of the term loans outstanding as of September 30, 2021 and December 31, 2020 was $ 330.7 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 September 30, 2021, aggregate future payments of principal are as follows:

(in thousands)

5 unchanged sentences

Initial Term Loan and Revolving Facility under June 23, 2021 Credit Agreement

On June 23, 2021, the Company entered into a Credit Agreement (the “June 23, 2021 Credit Agreement”), by and among the Company, the lenders from time to time party thereto, and Wells Fargo Bank, National Association, as administrative agent and collateral agent, that provides for a senior secured term B loan facility, or the “Initial Term Loan under the June 23, 2021 Credit Agreement,” in an aggregate principal amount of $ 350.0 million and a senior secured revolving credit facility, or the

The proceeds of the Initial Term Loan under the

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

“Revolving Facility,” in an aggregate principal amount of up to $ 100.0 million.

The proceeds of the Initial Term Loan under the June 23, 2021 Credit Agreement were used (i) to repay in full all outstanding indebtedness under that certain Credit Agreement dated May 12, 2017, by and among the Company, MUFG Bank Ltd., as administrative agent and MUFG Union Bank, N.A., as collateral agent and the lenders from time to time party thereto (as amended by Amendment No.

June 23, 2021 Credit Agreement were used (i) to repay in full all outstanding indebtedness under that certain Credit Agreement dated May 12, 2017, by and among the Company, MUFG Bank Ltd., as administrative agent and MUFG Union Bank, N.A., as collateral agent and the lenders from time to time party thereto (as amended by Amendment No.

1, dated July 31, 2020 and as further amended, amended and restated, waived, supplemented or otherwise modified from time to time, the “May 12, 2017 Credit Agreement”) and (ii) to pay fees and expenses incurred in connection therewith.

The remaining proceeds of the Initial Term Loan under the June 23, 2021 Credit Agreement are available for general corporate purposes and the proceeds of the Revolving Facility may be used to finance the working capital needs and other general corporate purposes of the Company and its subsidiaries.

As of June 30, 2021, the Revolving Facility was undrawn.

As of September 30, 2021, the Revolving Facility was undrawn.

The June 23, 2021 Credit Agreement permits the Company to request incremental loans in an aggregate principal amount not to exceed the sum of an amount equal to the greater of (x) $ 175.0 million and (y) 100 % of consolidated EBITDA, plus the amount of certain voluntary prepayments, plus an unlimited amount that is subject to pro forma compliance with certain first lien net leverage ratio, secured net leverage ratio and total net leverage ratio tests.

14 unchanged sentences

The June 23, 2021 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 set forth in the June 23, 2021 Credit Agreement.

The Revolving Facility also prohibits the Company from having a secured net leverage ratio in excess of 3.50 :1.00 (subject to a temporary increase to 3.75 :1.00 following the consummation of certain material permitted acquisitions) as of the last day of any fiscal quarter of the Company (commencing with the fiscal quarter ending September 30, 2021) if the aggregate borrowings under the Revolving Facility exceed 1 % of the aggregate commitments thereunder (subject to certain exceptions set forth in the June 23, 2021 Credit Agreement) as of such

As of September 30, 2021, the Company was in compliance with such covenants.

The June 23, 2021 Credit Agreement

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of June 30, 2021, the Company was in compliance with such covenants.

The June 23, 2021 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.

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.

If an event of default exists, the lenders may require immediate payment of all obligations under the June 23, 2021 Credit Agreement and may exercise certain other rights and remedies provided for under the June 23, 2021 Credit Agreement , the other loan documents and applicable law.

17 unchanged sentences

The Incremental Term Loan bore interest, at the Company’s option, at an Adjusted LIBOR plus a fixed applicable margin of 4.25 % per annum or an Adjusted Base Rate plus a fixed applicable margin of 3.25 % per annum.

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

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

ninth through the eleventh full fiscal quarters of the Company after July 31, 2020.

The Incremental Term Loan had a term of three years and was scheduled to mature on July 31, 2023, at which time all outstanding principal and accrued and unpaid interest on the Incremental Term Loan was due.

On June 23, 2021, the Company exercised its right to prepay the Incremental Term Loan and repaid the outstanding principal amount of the Incremental Term Loan, plus accrued and unpaid interest in full with the proceeds of the Initial Term Loan under the June 23, 2021 Credit Agreement.

In connection with the settlement of the indebtedness under the May 12, 2017 Credit Agreement, the Company recognized an aggregate loss on debt extinguishment of $ 5.2 million consisting of unamortized debt issuance costs and discounts.

In connection with the settlement of the indebtedness under the May 12, 2017 Credit Agreement, in the nine months ended September 30, 2021, the Company recognized an aggregate loss on debt extinguishment of $ 5.2 million consisting of unamortized debt issuance costs and discounts.

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 % through the expiration of the swap in October 2020.

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 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.

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

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 then outstanding 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 and six months ended June 30, 2020 was $ 0.1 million and $ 0.05 million.

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.

Stock-Based Compensation

Employee Stock-Based Compensation Plans

At June 30, 2021, the Company had stock-based compensation awards outstanding under the following plans:

At September 30, 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 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 six months ended June 30, 2021.

As of June 30, 2021, the number of shares of common stock available for future issuance under the 2010 Plan was 15,584,343 shares.

As of June 30, 2021, the number of shares of common stock available for future issuance under the ESPP was 4,183,884 shares.

There have been no material changes to the terms of the Company’s equity incentive plans during the nine months ended September 30, 2021.

As of September 30, 2021, the number of shares of common stock available for future issuance under the 2010 Plan was 15,303,672 shares.

As of September 30, 2021, the number of shares of common stock available for future issuance under the ESPP was 4,183,884 shares.

Employee Incentive Bonus

2 unchanged sentences

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 June 30, 2021, the Company has an accrual of $ 19.3 million for bonus awards for employees for year-to-date achievement in the 2021 performance period.

At September 30, 2021, the Company has an accrual of $ 28.8 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.

3 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 June 30, Six Months Ended June 30,

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

2021 2020 2021 2020

3 unchanged sentences

Selling, general and administrative 8,179 7,350 20,354 17,202

Restructuring expense — 596 — 596

$ 16,022 $ 14,145 $ 42,943 $ 33,057

The total unrecognized compensation cost related to unvested restricted stock units as of June 30, 2021 was $ 98.9 million, and the weighted average period over which these equity awards are expected to vest is 2.81 years.

The total unrecognized compensation cost related to unvested performance-based restricted stock units as of June 30, 2021 was $ 24.7 million, and the weighted average period over which these equity awards are expected to vest is 1.41 years.

The total unrecognized compensation cost related to unvested stock options as of June 30, 2021 was $ 0.7 million, and the weighted average period over which these equity awards are expected to vest is 1.02 years.

The total unrecognized compensation cost related to unvested restricted stock units as of September 30, 2021 was $ 91.3 million, and the weighted average period over which these equity awards are expected to vest is 2.62 years.

The total unrecognized compensation cost related to unvested performance-based restricted stock units as of September 30, 2021 was $ 19.9 million, and the weighted average period over which these equity awards are expected to vest is 1.16 years.

The total unrecognized compensation cost related to unvested stock options as of September 30, 2021 was $ 0.5 million, and the weighted average period over which these equity awards are expected to vest is 0.76 years.

Restricted Stock Units

6 unchanged sentences

Canceled ( 567 ) 23.86

Outstanding at June 30, 2021 5,852 $ 23.75

Outstanding at September 30, 2021 5,429 $ 24.20

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 June 30, 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.

As of September 30, 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.

MAXLINEAR, INC.

6 unchanged sentences

Canceled ( 5 ) 35.72

Outstanding at June 30, 2021 2,010 $ 19.84

Outstanding at September 30, 2021 2,005 $ 19.80

________________

2 unchanged sentences

Employee Stock Purchase Rights

During the six months ended June 30, 2021 and 2020, there were 113,510 and 161,171 shares respectively, of common stock purchased under the ESPP.

During the nine months ended September 30, 2021, there were 113,510 shares of common stock purchased under the ESPP at a weighted average price of $ 23.21 .

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 .

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:

Six Months Ended June 30,

Nine Months Ended September 30,

Weighted-average grant date fair value per share $ 10.85 $ 6.41

13 unchanged sentences

Exercised ( 370 ) 12.00

Outstanding at June 30, 2021 437 $ 17.04 3.69 $ 11,119

Vested and expected to vest at June 30, 2021 437 $ 17.04 3.69 $ 11,119

Exercisable at June 30, 2021 346 $ 16.68 3.59 $ 8,933

No stock options were granted by the Company during the six months ended June 30, 2021.

The intrinsic value of stock options exercised was $ 6.7 million and $ 2.8 million in the three months ended June 30, 2021 and 2020, respectively.

The intrinsic value of stock options exercised was $ 9 million and $ 3.2 million in the six months ended June 30, 2021 and 2020, respectively.

Outstanding at September 30, 2021 427 $ 16.97 3.50 $ 13,799

Vested and expected to vest at September 30, 2021 427 $ 16.97 3.49 $ 13,799

Exercisable at September 30, 2021 358 $ 16.69 3.43 $ 11,646

No stock options were granted by the Company during the nine months ended September 30, 2021.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Cash received from exercise of stock options was $ 2.6 million and $ 2.2 million during the three months ended June 30, 2021 and 2020, respectively.

Cash received from exercise of stock options was $ 3.9 million and $ 2.6 million during the six months ended June 30, 2021 and 2020, respectively.

The tax benefit from stock options exercised was $ 10.6 million and $ 2.9 million during the three months ended June 30, 2021 and 2020, respectively.

The tax benefit from stock options exercised was $ 13.3 million and $ 3.2 million during the six months ended June 30, 2021 and 2020, respectively.

The intrinsic value of stock options exercised was $ 0.2 million and $ 0.2 million in the three months ended September 30, 2021 and 2020, respectively.

The intrinsic value of stock options exercised was $ 9.2 million and $ 3.4 million in the nine months ended September 30, 2021 and 2020, respectively.

Cash received from exercise of stock options was $ 0.2 million and $ 0.6 million during the three months ended September 30, 2021 and 2020, respectively.

Cash received from exercise of stock options was $ 4.0 million and $ 3.3 million during the nine months ended September 30, 2021 and 2020, respectively.

The tax benefit from stock options exercised was $ 10.0 million and $ 0.4 million during the three months ended September 30, 2021 and 2020, respectively.

The tax benefit from stock options exercised was $ 23.4 million and $ 3.6 million during the nine months ended September 30, 2021 and 2020, respectively.

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

7 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 $ 8.0 million in the three months ended June 30, 2021 and an income tax benefit of $ 3.2 million in the three months ended June 30, 2020.

The Company recorded an income tax benefit of $ 6.2 million in the six months ended June 30, 2021 and an income tax benefit of $ 9.9 million in the six months ended June 30, 2020.

The income tax benefit in the three and six months ended June 30, 2021 and 2020, each primarily relate to the mix of pre-tax income among jurisdictions, excess tax benefits related to stock-based compensation, and release of uncertain tax positions under ASC 740-10.

The Company recorded an income tax provision of $ 11.8 million in the three months ended September 30, 2021 and an income tax benefit of $ 2.2 million in the three months ended September 30, 2020.

The Company recorded an income tax provision of $ 5.6 million in the nine months ended September 30, 2021 and an income tax benefit of $ 12.1 million in the nine months ended September 30, 2020.

The difference between the Company’s effective tax rate and the 21.0% United States federal statutory rate for the three and nine months ended September 30, 2021, respectively, resulted primarily from foreign earnings taxed at rates other than the federal statutory rate, a tax on global intangible low-taxed income (“GILTI”), non-deductible foreign stock-based compensation, partially offset by a benefit related to release of uncertain tax positions under ASC 740-10.

The difference between the Company’s effective tax rate and the 21.0% United States federal statutory rate for the three and nine months ended September 30, 2020, respectively, resulted primarily from foreign earnings taxed at rates other than the federal statutory rate, a benefit related to release of uncertain tax positions under ASC 740-10, and excess tax benefits related to stock-based compensation.

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 six months ended June 30, 2021, the Company’s unrecognized tax benefits increased by $ 0.4 million.

During the nine months ended September 30, 2021, the Company’s unrecognized tax benefits increased by $ 0.6 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 June 30, 2021 were approximately $ 0.4 million and $ 0.04 million, respectively.

Accrued interest and penalties associated with uncertain tax positions as of September 30, 2021 were approximately $ 0.4 million and $ 0.04 million, respectively.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 June 30, 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.

At September 30, 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

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 six months ended June 30, 2021 and 2020.

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 (benefit) in the nine months ended September 30, 2021 and 2020.

Concentration of Credit Risk, Significant Customers and Geographic Information

9 unchanged sentences

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

Three Months Ended June 30, Six Months Ended June 30,

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

2021 2020 2021 2020

3 unchanged sentences

Customer C (distributor) * * * 11 %

Customer D (distributor) 10 % * * *

____________________________

1 unchanged sentence

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

June 30, December 31,

September 30, December 31,

Percentage of gross accounts receivable

Customer D (distributor) * 13 %

Customer B (direct) — % 17 %

Customer D (distributor) 11 % *

Customer E (direct) 10 % *

Customer F (distributor) * 13 %

____________________________

* Represents less than 10% of the gross accounts receivable as of the respective period end.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Significant Suppliers

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

Three Months Ended June 30, Six Months Ended June 30,

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

2021 2020 2021 2020

3 unchanged sentences

Vendor D * * * 12 %

Vendor E * 16 % * 17 %

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

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Geographic Information

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

Three Months Ended June 30, Six Months Ended June 30,

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

2021 2020 2021 2020

5 unchanged sentences

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 June 30, Six Months Ended June 30,

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

2021 2020 2021 2020

8 unchanged sentences

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.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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):

June 30, December 31,

September 30, December 31,

Amount % of total Amount % of total

3 unchanged sentences

Total $ 543,412 100 % $ 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 June 30, Six Months Ended June 30,

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

2021 2020 2021 2020 (1)

14 unchanged sentences

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 45 % and 64 % of net revenue for the three months ended June 30, 2021 and 2020, respectively.

Revenues from sales through the Company’s distributors accounted for 45 % and 63 % of net revenue for the six months ended June 30, 2021 and 2020, respectively.

The 2020 amounts have been retroactively adjusted above to reflect the change in market categories.

Revenues from sales through the Company’s distributors accounted for 47 % and 46 % of net revenue for the three months ended September 30, 2021 and 2020, respectively.

Revenues from sales through the Company’s distributors accounted for 46 % and 54 % of net revenue for the nine months ended September 30, 2021 and 2020, respectively.

Contract Liabilities

As of June 30, 2021, customer contract liabilities consisted primarily of advanced payments received for which performance obligations have not been completed of approximately $ 1.3 million.

As of September 30, 2021, customer contract liabilities consisted primarily of advanced payments received for which performance obligations have not been completed of approximately $ 1.0 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 and six months ended June 30, 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 and six months ended June 30, 2021 and 2020.

Revenue recognized in each of the three and nine months ended September 30, 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 and nine months ended September 30, 2021 and 2020.

MAXLINEAR, INC.

1 unchanged sentence

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

As of June 30, 2021 and December 31, 2020, obligations to customers consisting of estimates of price protection rights offered to the Company’s end customers totaled $ 54.7 million and $ 47.8 million, respectively, and are included in accrued price protection liability in the consolidated balance sheets.

As of September 30, 2021 and December 31, 2020, obligations to customers consisting of estimates of price protection rights offered to the Company’s end customers totaled $ 49.4 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 June 30, 2021 were $ 16.2 million and $ 2.8 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 and six months ended June 30, 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 June 30, 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.

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, 2021 were $ 21.5 million and $ 3.1 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 and nine months ended September 30, 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 September 30, 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 $ 1.1 million and $ 0.6 million, respectively.

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

As of June 30, 2021 and December 31, 2020, there were no impairment losses recorded on customer accounts receivable.

As of September 30, 2021 and December 31, 2020, there were no impairment losses recorded on customer accounts receivable.

Operating Leases

2 unchanged sentences

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 June 30, 2021 and December 31, 2020, the weighted average discount rate for operating leases was 3.3 % 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.

The table below presents aggregate future minimum payments due under leases, reconciled to total lease liabilities included in the consolidated balance sheet as of June 30, 2021:

As of September 30, 2021 and December 31, 2020, the weighted average discount rate for operating leases was 3.7 % and 4.0 %, respectively, and the weighted average remaining lease term for operating leases was 4.5 years as of the end of each of these periods.

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, 2021:

Operating Leases

4 unchanged sentences

imputed interest ( 2,439 )

unrealized translation loss 5

Total lease liabilities 30,471

1 unchanged sentence

Long-term lease liabilities $ 21,400

Operating lease cost was $ 2.3 million and $ 0.9 million for the three months ended June 30, 2021 and 2020, respectively.

Operating lease cost was $ 4.8 million and $ 1.8 million for the six months ended June 30, 2021 and 2020, respectively.

Operating lease cost was $ 2.3 million and $ 1.4 million for the three months ended September 30, 2021 and 2020, respectively.

Operating lease cost was $ 7.1 million and $ 3.2 million for the nine months ended September 30, 2021 and 2020, respectively.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Short-term lease costs for the three and six months ended June 30, 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 and six months ended June 30, 2021.

There were no right-of-use assets obtained in exchange for new lease liabilities for the three and six months ended June 30, 2020.

Short-term lease costs for the three and nine months ended September 30, 2021 and 2020 were not material.

There were $ 2.7 million and $ 8.0 million right-of-use assets obtained in exchange for new lease liabilities for the three and nine months ended September 30, 2021, respectively.

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.

Employee Defined Benefit Retirement Plans

1 unchanged sentence

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 June 30, 2021 and December 31, 2020, the defined benefit obligation was $ 6.3 million and $ 6.4 million, respectively.

As of September 30, 2021 and December 31, 2020, the defined benefit obligation was $ 6.3 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 and $ 0.2 million for the three and six months ended June 30, 2021, respectively, and were recorded to research and development expenses in the consolidated statements of operations.

Net periodic benefit costs were $ 0.1 million and $ 0.3 million for the three and nine months ended September 30, 2021, respectively, and were recorded to research and development expenses in the consolidated statements of operations.

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

Commitments and Contingencies

Inventory Purchase and Other Contractual Obligations

As of June 30, 2021, future minimum payments under inventory purchase and other obligations are as follows:

As of September 30, 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 contractual payments due for software licenses.

Our inventory purchase obligations and other obligations increased by $ 73.8 million to $ 195.5 million as of June 30, 2021, from $ 121.7 million as of December 31, 2020 primarily as a result of increased orders of inventory placed with our vendors during the period, partially offset by a decrease in software license obligations (Note 3).

Our inventory purchase obligations and other obligations increased by $ 72.5 million to $ 194.3 million as of September 30, 2021, from $ 121.7 million as of December 31, 2020 primarily as a result of increased orders of inventory placed with our vendors during the period, partially offset by a decrease in software license obligations.

Jointly Funded Research and Development

In the second quarter of 2021, the Company entered into a contract for a jointly funded research and development project to develop technology that may be commercialized into a product in the future.

As the Company may be required to repay all or a portion of the funds provided by the other party under certain conditions, total funds received to date from the other party of $ 3.8 million has been recorded in other long-term liabilities.

Additional amounts under the contract are tied to certain milestones and will also be recorded as a long-term liability as payment due under such milestones are received.

The Company currently expects to de-recognize the liability when the contingencies associated with the repayment conditions have been resolved.

In 2021, the Company entered into contracts for jointly funded research and development projects to develop technology that may be commercialized into a product in the future.

As the Company may be required to repay all or a portion of the funds provided by the other parties under certain conditions, total funds received to date from the other parties of $ 3.8 million have been recorded in other long-term liabilities.

Additional amounts under the contracts are tied to certain milestones and will also be recorded as a long-term liability as payment due under such milestones are received.

The Company currently expects to de-recognize the liabilities when the contingencies associated with the repayment conditions have been resolved.

Other Matters

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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 and six months ended June 30, 2021, the Company repurchased 119,900 and 194,900 shares, respectively, of its common stock at a weighted average price of $ 37.2083 and $ 36.5954 per share, respectively, at an aggregate value of approximately $ 4.5 million and $ 7.1 million, respectively, under the repurchase program.

At June 30, 2021, the aggregate value of common stock repurchased under the program was approximately $ 7.1 million and approximately $ 92.9 million remained available for repurchase under the program.

During the three and nine months ended September 30, 2021, the Company repurchased 24,200 and 219,100 shares, respectively, of its common stock at a weighted average price of $ 41.6746 and $ 37.1564 per share, respectively, at an aggregate value of approximately $ 1.0 million and $ 8.1 million, respectively, under the repurchase program.

At September 30, 2021, the aggregate value of common stock repurchased under the program was approximately $ 8.1 million and approximately $ 91.9 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