What changed in this filing

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Item 1. Financial Statements

2022-04-27 compared with 2021-10-27 · 316 added, 466 removed, 489 unchanged (62% of the section changed)

3 unchanged sentences

in thousands, except par value amounts)

September 30,

2022 December 31,

2 unchanged sentences

Short-term restricted cash 105 105

Short-term investments 19,051 —

Accounts receivable, net 125,693 119,724

16 unchanged sentences

Accrued compensation 30,679 56,642

Current portion of long-term debt — —

Total current liabilities 234,795 207,395

9 unchanged sentences

550,000 shares authorized;

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

77,375 shares issued and outstanding at March 31, 2022 and 76,778 shares issued and outstanding December 31, 2021

Additional paid-in capital 663,622 657,485

5 unchanged sentences

MAXLINEAR, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

CONSOLIDATED STATEMENTS OF INCOME

in thousands, except per share data)

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

2021 2020 2021 2020

Three Months Ended March 31,

Net revenue $ 263,927 $ 209,359

4 unchanged sentences

Selling, general and administrative 40,577 36,469

Impairment losses — — — 86

Restructuring charges — 2,166

Total operating expenses 106,463 101,801

Income (loss) from operations 23,786 ( 34,575 ) 35,908 ( 77,484 )

Income from operations 48,127 9,918

Interest income 31 —

Interest expense ( 2,349 ) ( 4,206 )

Loss on extinguishment of debt — — ( 5,221 ) —

Other income (expense), net ( 770 ) ( 104 )

Total other income (expense), net ( 3,088 ) ( 4,310 )

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 )

Net income (loss) per share:

Income before income taxes 45,039 5,608

Income tax provision 11,453 1,806

Net income $ 33,586 $ 3,802

Net income per share:

Basic $ 0.44 $ 0.05

Diluted $ 0.42 $ 0.05

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

Shares used to compute net income per share:

Basic 77,192 74,852

4 unchanged sentences

in thousands)

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

2021 2020 2021 2020

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

Other comprehensive income (loss), net of tax:

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

Three Months Ended March 31,

Net income $ 33,586 $ 3,802

Other comprehensive loss, net of tax:

Foreign currency translation adjustments, net of tax expense of $ 2 and $ 376 for the three months ended March 31, 2022 and 2021, respectively

( 1,075 ) ( 989 )

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

Total comprehensive income (loss) $ 8,966 $ ( 35,885 ) $ 12,869 $ ( 73,484 )

Other comprehensive loss ( 1,075 ) ( 989 )

Total comprehensive income $ 32,511 $ 2,813

See accompanying notes.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FISCAL QUARTERS ENDED SEPTEMBER 30, 2021

FISCAL QUARTER ENDED MARCH 31, 2022

in thousands)

13 unchanged sentences

Balance at March 31, 2022 77,375 $ 8 $ 663,622 $ 1,050 $ ( 136,834 ) $ 527,846

Common stock issued pursuant to equity awards, net 1,098 — ( 338 ) — — ( 338 )

Repurchase of common stock ( 120 ) — ( 4,464 ) ( 4,464 )

Employee stock purchase plan 113 — 2,635 — — 2,635

Stock-based compensation — — 13,966 — — 13,966

Other comprehensive income — — — 357 — 357

Net income — — — — 733 733

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 SEPTEMBER 30, 2020

FISCAL QUARTER 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.

2 unchanged sentences

in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Operating Activities

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

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

Net income $ 33,586 $ 3,802

Adjustments to reconcile net income to cash provided by operating activities:

Amortization and depreciation 23,880 22,325

Impairment losses — 86

Inventory fair value adjustments — 14,445

Amortization of debt issuance costs and accretion of discounts 486 844

2 unchanged sentences

Loss on disposal of property and equipment 159 368

Unrealized holding loss on investments 954 —

Impairment of leasehold improvements — 226

Impairment of leased right-of-use assets — 429

Loss on extinguishment of debt 5,221 —

Loss on foreign currency 384 375

(Gain) loss on foreign currency ( 316 ) 21

Excess tax benefits on stock-based awards ( 7,120 ) ( 1,809 )

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

Changes in operating assets and liabilities:

Accounts receivable ( 5,969 ) ( 20,079 )

7 unchanged sentences

Other long-term liabilities ( 2,918 ) 454

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

Net cash provided by operating activities 134,166 40,272

Investing Activities

1 unchanged sentence

Purchases of intangible assets ( 4,637 ) ( 1,112 )

Cash used in acquisitions, net of cash acquired ( 35,000 ) ( 160,000 )

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

Proceeds loaned under notes receivable ( 10,000 ) —

Purchases of investments ( 23,325 ) ( 5,000 )

Net cash used in investing activities ( 42,762 ) ( 12,264 )

Financing Activities

Proceeds from the issuance of debt 350,000 175,000

Payment of debt issuance cost ( 4,144 ) ( 2,696 )

Repayment of debt ( 20,000 ) ( 20,000 )

2 unchanged sentences

Repurchase of common stock ( 26,297 ) ( 2,673 )

Net cash provided by (used in) financing activities ( 56,897 ) 174,682

Net cash used in financing activities ( 70,659 ) ( 28,817 )

Effect of exchange rate changes on cash and cash equivalents ( 230 ) ( 32 )

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

Increase (decrease) in cash, cash equivalents and restricted cash 20,515 ( 841 )

Cash, cash equivalents and restricted cash at beginning of period 131,738 150,034

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, 2021 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 2, 2022, or the Annual Report.

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.

Interim results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2022.

The functional currency of certain foreign subsidiaries is the local currency.

Accordingly, assets and liabilities of these foreign subsidiaries are translated at the current exchange rate at the balance sheet date and historical rates for equity.

Revenue and expense components are translated at weighted average exchange rates in effect during the period.

Gains and losses resulting from foreign currency translation are included as a component of stockholders’ equity.

Foreign currency transaction gains and losses are included in the results of operations, and to date, have not been material.

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.

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 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.

The preparation of consolidated 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 of the consolidated financial statements.

Actual results could differ from those estimates.

During the COVID-19 global pandemic, which is still ongoing, various restrictions were put in place causing a temporary decline in demand for certain items such as automobiles.

As restrictions began easing across the world, 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 supply shortage impacting the Company’s industry.

Some chip manufacturers are estimating this supply shortage may continue into 2023.

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 which may continue into 2023.

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.

While these chip manufacturers are working to increase capacity in the future, and the Company is continuing to work closely with its 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 which may continue into 2023.

Global supply shortages, and uncertainty in customer demand and the worldwide economy in general

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

has continued as a result of the COVID-19 pandemic, and may be further exacerbated by the impacts of high inflation, 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 $ 152.3 million of cash and cash equivalents at March 31, 2022 will be sufficient to fund its projected operating requirements for at least the next twelve months.

A material adverse impact from the global semiconductor supply 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 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.

1 unchanged sentence

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 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.

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 27, 2022, 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 the global supply shortage.

Summary of Significant Accounting Policies

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 nine months ended September 30, 2021.

Recently Adopted 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 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 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.

There have been no other significant changes to the Company’s significant accounting policies during the three months ended March 31, 2022.

Recently Issued Accounting Pronouncements

In October 2021, 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 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.

2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , to provide specific guidance to eliminate diversity in practice on how to recognize and measure acquired contract assets and contract liabilities from revenue contracts from customers in a business combination consistent with revenue contracts with customers not acquired in an acquisition.

The amendments in this update provide that the acquirer should consider the terms of the acquired contracts, such as timing of payment, identify each performance obligation in the contracts, and allocate the total transaction price to each identified performance obligation on a relative standalone selling price basis as of contract inception (that is, the date the acquiree entered into the contracts) or contract modification to determine what should be recorded at the acquisition date.

These amendments are effective for the Company beginning with fiscal year 2023.

The impact of the adoption of the amendments in this update will depend on the magnitude of any customer contracts assumed in a business combination in 2023 and beyond.

Net Income (Loss) Per Share

6 unchanged sentences

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

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

2021 2020 2021 2020

Three Months Ended March 31,

(in thousands, except per share amounts)

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

Net income $ 33,586 $ 3,802

Weighted average common shares outstanding—basic 77,192 74,852

1 unchanged sentence

Weighted average common shares outstanding—diluted 80,641 78,283

Net income (loss) per share:

Net income per share:

Basic $ 0.44 $ 0.05

Diluted $ 0.42 $ 0.05

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.

For the three months ended March 31, 2022 and 2021, the Company excluded common stock equivalents for outstanding stock-based awards, which represented potentially dilutive securities of 0.9 million and 0.1 million, respectively, from the calculation of diluted net income per share due to their anti-dilutive nature.

Business Combinations

Acquisition of the Wi-Fi 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 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 Wi-Fi and Broadband assets business develops a broad portfolio of connected home products, including Wi-Fi, 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 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.

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 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 in January 2021.

Acquisition Consideration

The following table summarizes the fair value of purchase price consideration to acquire the Wi-Fi and Broadband assets business (in thousands):

Description Amount

Fair value of purchase consideration:

Cash $ 150,000

Purchase Price Allocation

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

Fair value of consideration transferred:

Cash $ 150,000

Purchase price allocation:

Inventory $ 67,100

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 )

Other long-term liabilities ( 8,197 )

Identifiable net assets acquired 126,604

Goodwill 23,396

Total purchase price $ 150,000

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

Finite-lived intangible assets:

Developed technology 7 $ 43,200

Customer-related intangible 5 6,800

Product backlog 0.58 800

Indefinite-lived intangible assets:

IPR&D N/A 7,200

Total identifiable intangible assets acquired $ 58,000

Acquisition of NanoSemi, Inc.

On September 9, 2020, the Company completed its acquisition of NanoSemi, Inc.

or NanoSemi, pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) with NanoSemi, dated September 9, 2020.

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

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.

In connection with the acquisition, MaxLinear agreed to provide the NanoSemi stockholders with certain registration rights with respect to the shares of MaxLinear common stock they received in the acquisition.

NanoSemi is an industry-leading provider of intellectual property that utilizes patented machine learning techniques to improve signal integrity and power efficiency in systems-on-chip, or SoCs, application-specific integrated circuits, or ASICs, and field-programmable gate arrays, or FPGAs, used in next-generation communication and artificial intelligence systems.

Its technology enables higher throughput connections for 5G, Wi-Fi, and WiGig smartphones and base stations while simultaneously reducing energy consumption.

Acquisition of Company X

On December 8, 2021, the Company completed its acquisition of a business, or Company X, pursuant to a Purchase and Sale Agreement (the “Purchase Agreement”).

The initial closing transaction consideration consisted of $ 5.0 million in cash.

In addition, their stockholders may receive up to an additional $ 3.0 million in potential contingent consideration, subject to the acquired business satisfying certain financial and personnel objectives by March 31, 2023.

Company X is headquartered in Chennai, India and operates as a Wi-Fi solutions and service provider.

Acquisition Consideration

The following table summarizes the fair value of purchase price consideration to acquire NanoSemi (in thousands):

The following table summarizes the fair value of purchase price consideration to acquire Company X (in thousands):

Description Amount

Fair value of purchase consideration:

Cash $ 10,000

Common stock issued (1)

Deferred payments (2)

Contingent consideration (1)

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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 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.

(1) 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 $ 3.0 million in payments subject to the acquired business’s satisfying certain financial and personnel objectives by March 31, 2023 under the Purchase 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.

MAXLINEAR, INC.

1 unchanged sentence

Purchase Price Allocation

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

Purchase price allocation:

Accounts receivable $ 175

Prepaid expenses and other current assets 879

Property and equipment 177

Leased right-of-use assets 1,805

Identifiable intangible assets 19,900

Accounts payable ( 602 )

Accrued expenses and other current liabilities ( 323 )

Accrued compensation ( 223 )

Long-term lease liabilities ( 1,546 )

Other long-term liabilities ( 164 )

Identifiable net assets acquired 20,078

Goodwill 41,102

Total purchase price $ 61,180

An allocation of purchase price as of the December 8, 2021 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 primarily includes $ 4.4 million in identifiable intangible assets and $ 0.6 million in net operating liabilities, with $ 3.9 million in goodwill.

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

1 unchanged sentence

Finite-lived intangible assets:

Developed technology 7 $ 17,500

Trademarks and tradenames 7 1,000

Customer-related intangible 5 900

Product backlog 5.33 500

Licensed technology 3 $ 4,400

Total identifiable intangible assets acquired $ 4,400

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 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.

Management prepared the purchase price allocations for Company X 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 and contingent consideration.

Certain stockholders that are employees of Company X were not required to remain employed in order to receive the contingent consideration;

accordingly, the fair value of the contingent consideration was accounted for as a portion of the purchase consideration.

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

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.

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

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

There were minor adjustments to amounts of property and equipment that resulted in a change in the preliminary purchase price allocation reflected as of March 31, 2022 compared to the preliminary purchase price allocation as of December 31, 2021 for Company X.

These adjustments resulted in a decrease of $ 0.05 million in net operating liabilities and corresponding increase in goodwill.

The fair value of the identified intangible assets acquired from Company X 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.

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

More specifically, the fair value of the developed technology, IPR&D and backlog assets was determined using the multi-period excess earnings method, or MPEEM.

More specifically, the fair value of the licensed technology was determined using the multi-period excess earnings method, or MPEEM.

MPEEM is an income approach to fair value measurement attributable to a specific intangible asset being valued from the asset grouping’s overall cash-flow stream.

MPEEM isolates the expected future discounted cash-flow stream to its net present value.

Significant factors considered in the calculation of the developed technology and IPR&D intangible assets were the risks inherent in the development process, including the likelihood of achieving technological success and market acceptance.

Each project was analyzed to determine the unique technological innovations, the existence and reliance on core technology, the existence of any alternative future use or current technological feasibility and the complexity, cost, and time to complete the remaining development.

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 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.

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.

Future cash flows were estimated based on forecasted revenue and costs, taking into account expected future contracts and remaining contract terms.

The licensed technology began amortization immediately upon the closing of the transaction.

In connection with the acquisition of Company X, 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 Wi-Fi and Broadband assets business and NanoSemi was $ 23.4 million and $ 41.1 million, respectively.

Goodwill recorded in connection with Company X was $ 3.9 million as of March 31, 2022.

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

2 unchanged sentences

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,

2021 2020 2021 2020

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Three Months Ended March 31,

(in thousands)

1 unchanged sentence

Lease related charges — 608

Other — 34 323 215

$ — $ 3,280 $ 2,204 $ 3,833

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 nine months ended September 30, 2021.

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.

The following table presents a roll-forward of the Company’s restructuring liability for the three months ended March 31, 2022.

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

2 unchanged sentences

Liability as of December 31, 2021 $ — $ 444 $ — $ 444

Restructuring charges 1,273 608 323 2,204

Cash payments — ( 78 ) — ( 78 )

Reimbursement from Intel ( 2,711 ) — — ( 2,711 )

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

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.

Liability as of March 31, 2022 — 366 — 366

current portion as of March 31, 2022 — ( 295 ) — ( 295 )

Long-term portion as of March 31, 2022 $ — $ 71 $ — $ 71

Goodwill and Intangible Assets

1 unchanged sentence

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 nine months ended September 30, 2021, there were no changes in the carrying value of goodwill.

During the three months ended March 31, 2022, there was an increase in the carrying value of goodwill of $ 0.05 million related to minor adjustments to amounts of property and equipment in the purchase price allocation for Company X.

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

During the three months ended March 31, 2022 and 2021, 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:

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

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

6 unchanged sentences

6.2 $ 475,048 $ ( 337,495 ) $ 137,553 $ 470,411 $ ( 320,471 ) $ 149,940

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,

2021 2020 2021 2020

(in thousands) (in thousands)

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

Three Months Ended March 31,

(in thousands)

Cost of net revenue $ 10,847 $ 10,765

2 unchanged sentences

$ 17,024 $ 16,836

Amortization of finite-lived intangible assets in cost of net revenue in the consolidated statements of operations results primarily from acquired developed technology.

Amortization of finite-lived intangible assets in cost of net revenue in the consolidated statements of income results primarily from acquired developed technology.

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 $ 149,940 $ 200,066

Acquisitions (Note 3) — 81,100

Additions 4,637 1,112

Amortization ( 17,024 ) ( 16,836 )

Impairment losses — ( 86 )

Ending balance $ 137,553 $ 184,342

2 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 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.

During each of the three months ended March 31, 2022 and 2021, no impairment losses related to finite-lived intangible assets were recognized.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The following table presents future amortization of the Company’s finite-lived intangible assets at March 31, 2022:

(in thousands)

4 unchanged sentences

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 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

As of each of March 31, 2022 and December 31, 2021, IPR&D was $ 2.6 million.

There were no changes in the balance of indefinite-lived intangible assets in the three months ended March 31, 2022 and 2021.

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, 2021 and 2020, no indicators of impairment were identified and, as a result, no IPR&D impairment losses were recorded.

During the three months ended March 31, 2022 and 2021, 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:

March 31, 2022

Gross Unrealized

Cost Gains Losses Fair Value

(in thousands)

Marketable equity investments $ 20,005 $ — $ ( 954 ) $ 19,051

March 31, 2022

(in thousands)

Contingent consideration (Note 3) $ 2,768

December 31, 2021

(in thousands)

Contingent consideration (Note 3) 2,700

At March 31, 2022, the Company held marketable equity investments with an aggregate fair value of $ 19.1 million that were in an unrealized loss position for less than 12 months.

The gross unrealized losses of $ 1.0 million as of March 31, 2022 represents stock price fluctuations in the underlying securities held, and were recorded to other income (expense), net in the consolidated statement of income.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company evaluates securities for other-than-temporary impairment on a quarterly basis.

Impairment is evaluated considering numerous factors, and their relative significance varies depending on the situation.

Factors considered include the length of time and extent to which fair value has been less than the cost basis, the financial condition and near-term prospects of the issuer;

including changes in the financial condition of any underlying collateral of the security;

any downgrades of the security by analysts or rating agencies;

nonpayment of any scheduled interest, or the reduction or elimination of dividends;

as well as our intent and ability to hold the security in order to allow for an anticipated recovery in fair value.

The fair values 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 instruments within Level 1 or Level 2 of the fair value hierarchy on the basis of valuations using quoted market prices or alternate pricing sources and models utilizing market observable inputs, respectively The marketable equity investment held by the Company has been valued on the basis of quoted market prices and is therefore classified as Level 1.

The contingent consideration liability is associated with the Company’s acquisition of Company X (Note 3) and is classified as a Level 3 financial instrument that is subject to the acquired business’s satisfaction of certain financial and personnel objectives by March 31, 2023, under the Purchase Agreement.

The fair value of the contingent consideration is based on (1) applying the Monte Carlo simulation method, with underlying forecast mathematics based on Geometric Brownian motion in a risk-neutral framework, to forecast achievement of the acquired business’ financial objectives under various possible contingent consideration events and (2) a probability based methodology using management’s inputs and assumptions to forecast achievement of the acquired business’ personnel objectives which combined may result in up to $ 3.0 million in total payments to the acquired business.

Key inputs in the valuation include forecasted revenue, revenue volatility, discount rate and discount term as it relates to the financial objectives and probability of achievement, discount term and discount rate as it relates to the personnel objectives.

Fair Value Measurements at March 31, 2022

Balance at March 31, 2022 Quoted Prices

Identical Assets

(Level 1) Significant

(Level 2) Significant

(in thousands)

Marketable equity securities $ 19,051 $ 19,051 $ — $ —

Contingent consideration $ 2,768 $ — $ — $ 2,768

Fair Value Measurements at December 31, 2021

Balance at December 31, 2021 Quoted Prices

Identical Assets

(Level 1) Significant

(Level 2) Significant

(in thousands)

Contingent consideration 2,700 — — 2,700

$ 2,700 $ — $ — $ 2,700

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following summarizes the activity in Level 3 financial instruments:

Three Months Ended March 31,

Contingent Consideration

Beginning balance

Accretion of discount (1)

Ending balance

_____________________

(1) Changes to the balance associated with the estimated fair value of contingent consideration for the three months ended March 31, 2022 were primarily due to accretion of the related discount.

For the three months ended March 31, 2022, there were no transfers between Level 1, Level 2, or Level 3 financial instruments.

Financial Instruments Not Recorded at Fair Value on a Recurring Basis

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:

1 unchanged sentence

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).

Included in other long-term assets are investments in privately held entities of $ 8.3 million and $ 5.0 million as of March 31, 2022 and December 31, 2021, respectively.

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

Given that fair values for such investments are not readily determinable, the Company is electing to measure these investments 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.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

2022 December 31,

(in thousands)

Principal balance:

Initial term loan under June 23, 2021 credit agreement $ 290,000 $ 310,000

Total principal balance 290,000 310,000

Unamortized debt discount ( 787 ) ( 816 )

Unamortized debt issuance costs ( 2,915 ) ( 3,031 )

Net carrying amount of long-term debt 286,298 306,153

current portion of long-term debt — —

Long-term debt, non-current portion $ 286,298 $ 306,153

As of March 31, 2022 and December 31, 2021, the weighted average effective interest rate on debt was approximately 2.8 % and 3.2 %, respectively.

During each of the three months ended March 31, 2022 and 2021, the Company recognized total amortization of debt discount and debt issuance costs of $ 0.1 million and $ 0.5 million, respectively, to interest expense.

The approximate aggregate fair value of the term loans outstanding as of March 31, 2022 and December 31, 2021 was $ 291.4 million and $ 311.0 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, 2022, the outstanding principal balance of $ 290.0 million is due in full on June 23, 2028, upon maturity of the loan.

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 “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.

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 March 31, 2022, 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.

Incremental loans are subject to certain additional conditions, including obtaining additional commitments from the lenders then party to the June 23, 2021 Credit Agreement or new lenders.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

effect and (z) an adjusted LIBOR rate determined on the basis of a one-month interest period plus 1.00 %, in each case, plus an applicable margin of 1.25 % or (ii) an adjusted LIBOR rate, subject to a floor of 0.50 %, plus an applicable margin of 2.25 %.

Loans under the Revolving Facility initially bear interest, at a per annum rate equal to either (i) a base rate (as calculated above) plus an applicable margin of 0.00 %, or (ii) an adjusted LIBOR rate (as calculated above) plus an applicable margin of 1.00 %.

Following delivery of financial statements for the Company’s fiscal quarter ending June 30, 2021, the applicable margin for loans under the Revolving Facility will range from 0.00 % to 0.75 % in the case of base rate loans and 1.00 % to 1.75 % in the case of LIBOR rate loans, in each case, depending on the Company’s secured net leverage ratio as of the most recently ended fiscal quarter.

The Company is required to pay commitment fees ranging from 0.175 % to 0.25 % per annum on the daily undrawn commitments under the Revolving Facility, depending on the Company’s secured net leverage ratio as of the most recently ended fiscal quarter.

Commencing on September 30, 2021, the Initial Term Loan under the June 23, 2021 Credit Agreement will amortize in equal quarterly installments equal to 0.25 % of the original principal amount of the Initial Term Loan under the June 23, 2021 Credit Agreement, with the balance payable on the maturity date.

The June 23, 2021 Credit Agreement contains customary provisions specifying alternative interest rate calculations to be employed at such time as LIBOR ceases to be available as a benchmark for establishing the interest rate on floating interest rate borrowings.

The Company is required to make mandatory prepayments of the outstanding principal amount of term loans under the June 23, 2021 Credit Agreement with the net cash proceeds from the disposition of certain assets and the receipt of insurance proceeds upon certain casualty and condemnation events, in each case, to the extent not reinvested within a specified time period, from excess cash flow beyond stated threshold amounts, and from the incurrence of certain indebtedness.

The Company has the right to prepay its term loans under the June 23, 2021 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 following the closing date of the June 23, 2021 Credit Agreement.

The Initial Term Loan under the June 23, 2021 Credit Agreement will mature on June 23, 2028, at which time all outstanding principal and accrued and unpaid interest on the Initial Term Loan under the June 23, 2021 Credit Agreement must be repaid.

The Revolving Facility will mature on June 23, 2026, at which time all outstanding principal and accrued and unpaid interest under the Revolving Facility must be repaid.

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

The Company’s obligations under the June 23, 2021 Credit Agreement are required to be guaranteed by certain of its domestic subsidiaries meeting materiality thresholds set forth in the June 23, 2021 Credit Agreement.

Such obligations, including the guaranties, are secured by substantially all of the assets of the Company and the subsidiary guarantors pursuant to a Security Agreement, dated as of June 23, 2021, by and among the Company, the subsidiary guarantors from time to time party thereto, and Wells Fargo Bank, National Association, as collateral agent.

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 date.

As of March 31, 2022, 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.

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.

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.

The issuance date fair value of the liability component of the debt in the amount of $ 350.2 million was determined using a discounted cash flow analysis, in which the projected interest and principal payments were discounted back to the issuance date of the term loan at a market interest rate for nonconvertible debt of 3.4 %, which represents a Level 2 fair value measurement.

The debt discount of $ 0.9 million and debt issuance costs of $ 2.9 million associated with the Initial Term Loan under the June 23, 2021 Credit Agreement are being amortized to interest expense using the effective interest method over its seven-year term.

Debt issuance costs of $ 0.4 million associated with the Revolving Facility are being amortized to interest expense over its five-year term.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Balance Sheet Details

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

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

(in thousands)

3 unchanged sentences

Total cash, cash equivalents and restricted cash $ 152,253 $ 131,738

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.

As of March 31, 2022 and December 31, 2021, cash and cash equivalents included money market funds of approximately $ 0 and $ 20.4 million, respectively.

As of March 31, 2022 and December 31, 2021, the Company had restricted cash of approximately $ 1.1 million and $ 1.2 million, respectively.

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

Inventory consists of the following:

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

(in thousands)

2 unchanged sentences

$ 139,041 $ 131,703

Prepaid and other current assets consist of the following:

September 30, 2021 December 31, 2020

(in thousands)

Prepaid expenses $ 9,986 $ 7,674

Other receivables — 32,762

Other current assets 4,549 6,985

$ 14,535 $ 47,421

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) September 30, 2021 December 31, 2020

(in Years) March 31, 2022 December 31, 2021

(in thousands)

11 unchanged sentences

$ 60,022 $ 60,924

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.

Depreciation expense for the three months ended March 31, 2022 and 2021 was $ 4.8 million and $ 3.7 million, respectively.

In March 2022, the Company entered into a note receivable with a supplier for $ 10.0 million, which is included in other long-term assets on the consolidated balance sheet.

Repayments of $ 2.0 million per year is due annually by March 31, in years 2024 through 2027;

provided that certain production utilization targets for the prior year are met.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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)

1 unchanged sentence

Charged as a reduction of revenue 41,473 24,423

Reversal of unclaimed rebates — ( 159 )

Payments ( 13,633 ) ( 17,160 )

1 unchanged sentence

Accrued expenses and other current liabilities consist of the following:

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

(in thousands)

Deferred purchase price payments $ — $ 34,484

Payables under transition services agreement — 17,420

Accrued technology license payments $ 5,988 $ 7,337

11 unchanged sentences

$ 75,553 $ 57,268

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 ( 1,075 ) — ( 1,075 )

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

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Debt and Interest Rate Swap

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

September 30,

2021 December 31,

(in thousands)

Principal balance:

Initial term loan under June 23, 2021 credit agreement $ 330,000 $ —

Initial term loan under May 12, 2017 credit agreement — 212,000

Incremental term loan under May 12, 2017 credit agreement, as amended — 157,812

Total principal balance 330,000 369,812

Unamortized debt discount ( 840 ) ( 1,767 )

Unamortized debt issuance costs ( 3,133 ) ( 4,453 )

Net carrying amount of long-term debt 326,027 363,592

current portion of long-term debt — —

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

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)

2021 (3 months) $ —

Thereafter 330,000

Total principal payments due 330,000

current portion —

Long-term debt principal, non-current portion $ 330,000

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

The proceeds of the Initial Term Loan under the

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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

Incremental loans are subject to certain additional conditions, including obtaining additional commitments from the lenders then party to the June 23, 2021 Credit Agreement or new lenders.

Under the June 23, 2021 Credit Agreement, the Initial Term Loan bears interest, at the Company’s option, at a per annum 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-month interest period plus 1.00 %, in each case, plus an applicable margin of 1.25 % or (ii) an adjusted LIBOR rate, subject to a floor of 0.50 %, plus an applicable margin of 2.25 %.

The Revolving Facility will mature on June 23, 2026, at which time all outstanding principal and accrued and unpaid interest under the Revolving Facility must be repaid.

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

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

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.

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.

Debt issuance costs of $ 0.4 million associated with the Revolving Facility are being amortized to interest expense over its five-year term.

Initial Term Loan under May 12, 2017 Credit Agreement

On May 12, 2017, the Company entered into the May 12, 2017 Credit Agreement in connection with the acquisition of Exar Corporation.

The May 12, 2017 Credit Agreement provided for an initial secured term B loan facility, or the “Initial Term Loan under the May 12, 2017 Credit Agreement,” in an aggregate principal amount of $ 425.0 million.

The May 12, 2017 Credit Agreement permitted the Company to request incremental loans in an aggregate principal amount not to exceed the sum of an amount equal to $ 160.0 million, plus the amount of certain voluntary prepayments, plus an unlimited amount that is subject to pro forma compliance with certain secured leverage ratio and total leverage ratio tests.

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

Loans under the May 12, 2017 Credit Agreement bore 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.

Commencing on September 30, 2017, the Initial Term Loan under the May 12, 2017 Credit Agreement amortized in equal quarterly installments equal to 0.25 % of the original principal amount of the Initial Term Loan under the May 12, 2017 Credit Agreement, with the balance payable on the maturity date.

The Initial Term Loan under the May 12, 2017 Credit Agreement had a term of seven years and was scheduled to mature on May 12, 2024, at which time all outstanding principal and accrued and unpaid interest on the Initial Term Loan under the May 12, 2017 Credit Agreement was due.

The Company was required to make mandatory prepayments of the outstanding principal amount of term loans under the May 12, 2017 Credit Agreement with the net cash proceeds from the disposition of certain assets and the receipt of insurance proceeds upon certain casualty and condemnation events, in each case, to the extent not reinvested within a specified time period, from excess cash flow beyond stated threshold amounts, and from the incurrence of certain indebtedness.

The Company had the right to prepay its term loans under the May 12, 2017 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.

On June 23, 2021, the Company exercised its right to prepay the Initial Term Loan under the May 12, 2017 Credit Agreement and repaid the outstanding principal amount of the Initial Term Loan under the May 12, 2017 Credit Agreement, plus accrued and unpaid interest in full with the proceeds of the Initial Term Loan under the June 23, 2021 Credit Agreement.

Incremental Term Loan under May 12, 2017 Credit Agreement, As Amended

In connection with the acquisition of the Wi-Fi and Broadband assets business, on July 31, 2020, the Company entered into an incremental term loan agreement with certain lenders that amended the May 12, 2017 Credit Agreement and provided for a secured incremental term loan facility in an aggregate principal amount of $ 350.0 million (the “Incremental Term Loan”).

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, 2020, and (iii) 3.75 % of the original aggregate principal amount of the Incremental Term Loan on the last day of each of the

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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, 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 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 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.

Balance at March 31, 2022 $ ( 1,054 ) $ 2,104 $ 1,050

Stock-Based Compensation

Employee Stock-Based Compensation Plans

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

At March 31, 2022, 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, 2021.

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.

There have been no material changes to the terms of the Company’s equity incentive plans during the three months ended March 31, 2022.

As of March 31, 2022, the number of shares of common stock available for future issuance under the 2010 Plan was 16,641,362 shares.

As of March 31, 2022, the number of shares of common stock available for future issuance under the ESPP was 5,061,372 shares.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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 applicable stock exchange, on a date approved by the Board of Directors.

In connection with the Company’s bonus programs, in February 2022, 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 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.

At March 31, 2022, the Company has an accrual of $ 9.0 million for bonus awards for employees for year-to-date achievement in the 2022 performance period.

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

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Stock-Based Compensation

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,

2021 2020 2021 2020

(in thousands) (in thousands)

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

Three Months Ended March 31,

(in thousands)

Cost of net revenue $ 163 $ 169

1 unchanged sentence

Selling, general and administrative 8,715 5,624

Restructuring expense — 596 — 596

$ 18,554 $ 12,955

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.

The total unrecognized compensation cost related to unvested restricted stock units as of March 31, 2022 was $ 117.0 million, and the weighted average period over which these equity awards are expected to vest is 2.50 years.

The total unrecognized compensation cost related to unvested performance-based restricted stock units as of March 31, 2022 was $ 32.4 million, and the weighted average period over which these equity awards are expected to vest is 1.37 years.

The total unrecognized compensation cost related to unvested stock options as of March 31, 2022 was $ 0.2 million, and the weighted average period over which these equity awards are expected to vest is 0.26 years.

Restricted Stock Units

6 unchanged sentences

Canceled ( 108 ) 25.66

Outstanding at September 30, 2021 5,429 $ 24.20

Outstanding at March 31, 2022 5,897 $ 31.05

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, 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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of March 31, 2022, 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:

4 unchanged sentences

Canceled ( 1 ) 35.57

Outstanding at September 30, 2021 2,005 $ 19.80

Outstanding at March 31, 2022 1,679 $ 33.05

________________

2 unchanged sentences

Employee Stock Purchase Rights

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 .

During the three months ended March 31, 2022 and 2021 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 $ 18.82 $ 8.66

13 unchanged sentences

Exercised ( 6 ) 13.42

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.

Outstanding at March 31, 2022 411 $ 17.10 3.07 $ 16,947

Vested and expected to vest at March 31, 2022 411 $ 17.10 3.07 $ 16,947

Exercisable at March 31, 2022 383 $ 17.00 3.04 $ 15,831

No stock options were granted by the Company during the three months ended March 31, 2022.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 intrinsic value of stock options exercised was $ 0.3 million and $ 2.3 million in the three months ended March 31, 2022 and 2021, respectively.

Cash received from exercise of stock options was $ 0.1 million and $ 1.3 million during the three months ended March 31, 2022 and 2021, respectively.

The tax benefit from stock options exercised was $ 0.4 million and $ 2.7 million during the three months ended March 31, 2022 and 2021, 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 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.

The Company recorded an income tax provision of $ 11.5 million in the three months ended March 31, 2022 and an income tax provision of $ 1.8 million in the three months ended March 31, 2021.

The difference between the Company’s effective tax rate and the 21.0% U.S.

federal statutory rate for the three months ended March 31, 2022 primarily related to the mix of pre-tax income among jurisdictions, permanent tax items including a tax on global intangible low-taxed income, stock based compensation, excess tax benefits related to stock-based compensation, release of uncertain tax positions under ASC 740-10, and release of the valuation allowance on certain federal R&D credits.

The permanent tax item related to global intangible low-taxed income also reflects recent legislative changes requiring the capitalization of research and experimentation costs, as well as limitations on the creditability of certain foreign income taxes.

The difference between the Company’s effective tax rate and the 21.0% U.S.

federal statutory rate for the three months ended March 31, 2021 primarily related to the mix of pre-tax income among jurisdictions, permanent tax items including the tax on global intangible low-taxed income, 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.

1 unchanged sentence

Previously recognized tax positions that no longer meet the more-likely-than-not threshold are derecognized in the first financial reporting period in which that threshold is no longer met.

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, 2021, the Company’s unrecognized tax benefits increased by $ 0.6 million.

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

During the three months ended March 31, 2022, the Company’s unrecognized tax benefits increased by $ 2.2 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, 2021 were approximately $ 0.4 million and $ 0.04 million, respectively.

Accrued interest and penalties associated with uncertain tax positions as of March 31, 2022 were approximately $ 0.5 million and $ 0.03 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 March 31, 2022, the statutes of limitations for the assessment of federal, state, and foreign income taxes are closed for the years before 2018, 2017, and 2016, 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 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.

The Company’s subsidiary in Singapore operates under certain tax incentives in Singapore, which are generally effective 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 provision (benefit) in the nine months ended September 30, 2021 and 2020.

The Company recorded a tax provision in the three months ended March 31, 2022 at the incentive rate.

In the three months ended March 31, 2021, due to 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.

Concentration of Credit Risk, Significant Customers and Geographic Information

6 unchanged sentences

The Company markets its products and services to manufacturers of a wide range of electronic devices (Note 1).

The Company sells its products both directly to customers and through third-party distributors, both of which are referred to as the Company’s customers (Note 12).

The Company sells its products both directly to end-customers and through third-party distributors, both of which are referred to as the Company’s customers (Note 12).

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

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,

2021 2020 2021 2020

Three Months Ended March 31,

Percentage of total net revenue

2 unchanged sentences

Customer C (distributor) 10 % 11 %

Customer D (distributor) 10 % * * *

____________________________

* Represents less than 10% of total net revenue for the respective period.

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 B (direct) 12 % 14 %

Customer D (distributor) 11 % *

Customer E (direct) 10 % *

Customer F (distributor) * 13 %

Customer C (distributor) 16 % *

Customer D (direct) 10 % 17 %

____________________________

4 unchanged sentences

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

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

2021 2020 2021 2020

Three Months Ended March 31,

Vendor A 27 % 45 %

1 unchanged sentence

Vendor C 12 % 11 %

Vendor D * * * 12 %

* 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,

2021 2020 2021 2020

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 $ 211,665 80 % $ 171,160 82 %

3 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 September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

Percentage of total net revenue

2 unchanged sentences

Vietnam 13 % 12 %

____________________________

* Represents less than 10% of total revenue for the respective period.

The determination of which country a particular sale is allocated to is based on the destination of the product shipment.

1 unchanged sentence

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):

September 30, December 31,

March 31, December 31,

Amount % of total Amount % of total

3 unchanged sentences

Total $ 539,807 100 % $ 547,401 100 %

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,

2021 2020 2021 2020 (1)

Three Months Ended March 31,

Broadband $ 134,556 $ 124,190

7 unchanged sentences

Total net revenue $ 263,927 $ 209,359

_______________

(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 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 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.

Revenues from sales through the Company’s distributors accounted for 47 % and 44 % of net revenue for the three months ended March 31, 2022 and 2021, respectively.

Contract Liabilities

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 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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of March 31, 2022 and December 31, 2021, customer contract liabilities were approximately $ 1.1 million and $ 1.0 million, respectively, and consisted primarily of advanced payments received for which performance obligations have not been completed.

Revenue recognized in each of the three months ended March 31, 2022 and 2021 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, 2022 and 2021.

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

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.

As of March 31, 2022 and December 31, 2021, obligations to customers consisting of estimates of price protection rights offered to the Company’s end customers totaled $ 68.3 million and $ 40.5 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, 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.

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, 2022 were $ 29.2 million and $ 2.5 million, respectively, and as of December 31, 2021 were $ 6.7 million and $ 2.8 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, 2022 and 2021 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, 2022 and December 31, 2021, 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 $ 0.9 million and $ 1.1 million, respectively.

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

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

As of March 31, 2022 and December 31, 2021, there were no impairment losses recorded on customer accounts receivable.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 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:

As of March 31, 2022 and December 31, 2021, the weighted average discount rate for operating leases was 3.5 % and 3.6 %, respectively, and the weighted average remaining lease term for operating leases was 4.5 years and 4.6 years, respectively, 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 March 31, 2022:

Operating Leases

4 unchanged sentences

imputed interest ( 3,207 )

unrealized translation loss ( 385 )

Total lease liabilities 38,796

1 unchanged sentence

Long-term lease liabilities $ 30,208

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 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.

Operating lease cost was $ 2.5 million for each of the three months ended March 31, 2022 and 2021, respectively.

Short-term lease costs for the three months ended March 31, 2022 and 2021 were not material.

There were $ 8.0 million right-of-use assets obtained in exchange for new lease liabilities for the three months ended March 31, 2022.

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

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

In connection with a 2020 acquisition, the Company assumed an obligation of $ 7.9 million associated with certain defined benefit retirement plans, including a pension plan.

As of March 31, 2022 and December 31, 2021, the defined benefit obligation was $ 4.5 million and $ 4.5 million, respectively.

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

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.

Net periodic benefit costs were $ 0.1 million and $ 0.1 million for the three months ended March 31, 2022 and 2021 and were recorded to research and development expenses in the consolidated statements of income.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Commitments and Contingencies

Inventory Purchase and Other Contractual Obligations

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

As of March 31, 2022, future minimum payments under inventory purchase and other obligations are as follows:

Inventory Purchase Obligations Other Obligations Total

5 unchanged sentences

Other obligations consist of contractual payments due for software licenses.

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 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.

From time to time, the Company enters 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, certain funds received from the other parties of $ 3.0 million have been deferred 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.

The Company de-recognizes the liabilities when the contingencies associated with the repayment conditions have been resolved.

During the three months ended March 31, 2022, the Company recognized $ 3.8 million in previously deferred amounts from other parties due to resolution of such repayment conditions.

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.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Stock Repurchases

3 unchanged sentences

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 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.

During the three months ended March 31, 2022, the Company repurchased 440,449 shares of its common stock at a weighted average price of $ 59.6755 per share at an aggregate value of approximately $ 26.3 million under the repurchase program.

At March 31, 2022, the aggregate value of common stock repurchased under the program was approximately $ 49.8 million and approximately $ 50.2 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