What changed in this filing

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Item 1. Financial Statements

2022-07-27 compared with 2022-04-27 · 272 added, 200 removed, 605 unchanged (44% of the section changed)

37 unchanged sentences

550,000 shares authorized;

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

78,333 shares issued and outstanding at June 30, 2022 and 76,778 shares issued and outstanding December 31, 2021

Additional paid-in capital 677,395 657,485

Accumulated other comprehensive income 1,050 2,125

Accumulated other comprehensive income (loss) ( 2,938 ) 2,125

Accumulated deficit ( 104,868 ) ( 170,420 )

5 unchanged sentences

in thousands, except per share data)

Three Months Ended March 31,

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

2022 2021 2022 2021

Net revenue $ 280,009 $ 205,376 $ 543,936 $ 414,735

9 unchanged sentences

Interest expense ( 2,416 ) ( 3,741 ) ( 4,765 ) ( 7,947 )

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

Other income (expense), net 7,179 ( 537 ) 6,409 ( 641 )

Total other income (expense), net 4,845 ( 9,481 ) 1,757 ( 13,791 )

Income before income taxes 45,039 5,608

Income tax provision 11,453 1,806

Income (loss) before income taxes 43,852 ( 7,277 ) 88,891 ( 1,669 )

Income tax provision (benefit) 11,886 ( 8,010 ) 23,339 ( 6,204 )

Net income $ 31,966 $ 733 $ 65,552 $ 4,535

9 unchanged sentences

in thousands)

Three Months Ended March 31,

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

2022 2021 2022 2021

Net income $ 31,966 $ 733 $ 65,552 $ 4,535

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

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments, net of tax benefit of $ 61 and $ 59 for the three and six months ended June 30, 2022, respectively, and net of tax expense of $ 607 and $ 231 for the three and six months ended June 30, 2021, respectively

( 3,988 ) 357 ( 5,063 ) ( 632 )

Other comprehensive loss ( 1,075 ) ( 989 )

Other comprehensive income (loss) ( 3,988 ) 357 ( 5,063 ) ( 632 )

Total comprehensive income $ 27,978 $ 1,090 $ 60,489 $ 3,903

2 unchanged sentences

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FISCAL QUARTER ENDED MARCH 31, 2022

FISCAL QUARTERS ENDED JUNE 30, 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 999 — 310 — — 310

Minimum tax withholding on common stock issued — — ( 3,698 ) — — ( 3,698 )

Repurchase of common stock ( 124 ) — ( 5,214 ) — — ( 5,214 )

Employee stock purchase plan 83 — 2,911 — — 2,911

Stock-based compensation — — 19,464 — — 19,464

Other comprehensive loss — — — ( 3,988 ) — ( 3,988 )

Net income — — — — 31,966 31,966

Balance at June 30, 2022 78,333 $ 8 $ 677,395 $ ( 2,938 ) $ ( 104,868 ) $ 569,597

See accompanying notes.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FISCAL QUARTER ENDED MARCH 31, 2021

FISCAL QUARTERS ENDED JUNE 30, 2021

in thousands)

13 unchanged sentences

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

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

See accompanying notes.

2 unchanged sentences

in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Operating Activities

6 unchanged sentences

Loss on disposal of property and equipment 164 388

Unrealized holding loss on investments 954 —

Unrealized holding gain on investments ( 3,859 ) —

Impairment of leasehold improvements — 226

Impairment of leased right-of-use assets 462 429

Loss on extinguishment of debt — 5,221

(Gain) loss on foreign currency ( 2,675 ) 408

14 unchanged sentences

Purchases of intangible assets ( 5,204 ) ( 1,112 )

Cash used in acquisitions, net of cash acquired — ( 27,500 )

Proceeds loaned under notes receivable ( 10,000 ) —

2 unchanged sentences

Financing Activities

Proceeds from the issuance of debt — 350,000

Payment of debt issuance cost — ( 4,127 )

Repayment of debt ( 60,000 ) ( 369,813 )

34 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 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.

Interim results for the six months ended June 30, 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.

11 unchanged sentences

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

Global supply shortages, and uncertainty in customer demand and the worldwide economy in general has continued as a result of the COVID-19 pandemic, and may be further exacerbated by the impacts of high inflation, and the

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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 also believes that its $ 212.4 million of cash and cash equivalents at June 30, 2022 will be sufficient to fund its projected operating requirements for at least the next twelve months.

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 April 27, 2022, the issuance date of this Quarterly Report on Form 10-Q.

The Company is not aware of any specific event or circumstance that would require an update to its estimates or adjustments to the carrying value of its assets and liabilities as of July 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.

1 unchanged sentence

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

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

There have been no other significant changes to the Company’s significant accounting policies during the six months ended June 30, 2022.

Recently Issued Accounting Pronouncements

13 unchanged sentences

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

Three Months Ended March 31,

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

2022 2021 2022 2021

(in thousands, except per share amounts)

6 unchanged sentences

Diluted $ 0.40 $ 0.01 $ 0.81 $ 0.06

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.

For the three months ended June 30, 2022 and 2021, the Company excluded common stock equivalents for outstanding stock-based awards, which represented potentially dilutive securities of 1.0 million and 0.04 million, respectively, from the calculation of diluted net income per share due to their anti-dilutive nature.

For the six months ended June 30, 2022 and 2021, the Company excluded common stock equivalents for outstanding stock-based awards, which represented potentially dilutive securities of 1.0 million and 0.1 million, respectively, from the calculation of diluted net income per share due to their anti-dilutive nature.

Business Combinations

Silicon Motion Merger

On May 5, 2022, MaxLinear entered into an agreement and plan of merger, or the Merger Agreement, with Silicon Motion Technology Corporation, or Silicon Motion, an exempted company with limited liability incorporated under the Law of the Cayman Islands, pursuant to which, subject to the terms and conditions thereof, MaxLinear agreed to acquire Silicon Motion pursuant to a statutory merger of Shark Merger Sub, a wholly-owned subsidiary of MaxLinear, with and into Silicon Motion, with Silicon Motion surviving the merger as a wholly-owned subsidiary of MaxLinear.

Silicon Motion is a provider of NAND flash controllers for solid state drives, or SSDs, and other solid state storage devices.

Under the terms of the Merger Agreement, the transaction consideration will consist of $ 93.54 in cash and 0.388 shares of MaxLinear stock for each Silicon Motion American Depositary Share, or ADS, and $ 23.385 in cash and 0.097 shares of MaxLinear common stock for each Silicon Motion ordinary share not represented by an ADS.

Upon closing of the transaction, the current MaxLinear stockholders will own approximately 86 % of the combined company and former Silicon Motion securityholders will own approximately 14 % of the combined company.

Based on the closing price of MaxLinear shares on May 4, 2022, the implied value of the total transaction consideration for Silicon Motion is approximately $ 4.3 billion.

MaxLinear may fund up to $ 3.5 billion of cash consideration with cash on hand and fully committed debt financing from Wells Fargo Bank, N.A., or Wells Fargo Bank, and other lenders as described below.

MaxLinear will also assume Silicon Motion’s vested and unvested employee stock-based compensation awards.

The merger is not subject to any financing conditions but is pending satisfaction of customary closing conditions, including Silicon Motion shareholders’ approval and regulatory approval in the People’s Republic of China, or China.

On June 27, 2022, the Hart-Scott-Rodino Antitrust Improvements Act of 1976, or HSR, waiting period expired with respect to the pending merger.

On July 13, 2022, the registration statement on Form S-4 was declared effective by the SEC.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On June 17, 2022, MaxLinear entered into an amended and restated commitment letter with Wells Fargo Bank and other lenders pursuant to which, subject to the terms and conditions set forth therein, the lenders have committed to provide (i) a senior secured term B loan facility in an aggregate principal amount of up to $ 2.7375 billion (ii) a senior secured term A loan facility in an aggregate principal amount of up to $ 512.5 million and (iii) a senior secured revolving credit facility in an aggregate principal amount of up to $ 250.0 million, which we collectively refer to as the Senior Secured Credit Facilities.

The funding of the Senior Secured Credit Facilities is contingent on the satisfaction of customary conditions, including (i) the execution and delivery of definitive documentation with respect to credit facilities in accordance with the terms in the amended and restated commitment letter, and (ii) the consummation of the acquisition by MaxLinear of Silicon Motion in accordance with the Merger Agreement.

A portion of the proceeds from the Senior Secured Credit Facilities will be used to repay existing debt (Note 8) in full.

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”).

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

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

11 unchanged sentences

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Purchase Price Allocation

6 unchanged sentences

Assumptions in the Allocations of Purchase Price

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.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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;

3 unchanged sentences

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 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.

There were minor adjustments to various assets and liabilities that resulted in a change in the purchase price allocation reflected as of June 30, 2022 compared to the preliminary purchase price allocation as of December 31, 2021 for Company X.

These adjustments resulted in a decrease of $ 0.07 million in net operating assets and corresponding increase in goodwill.

The fair value of the identified intangible assets acquired from Company X was estimated using an income approach.

8 unchanged sentences

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

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

Goodwill recorded in connection with Company X was $ 3.9 million as of June 30, 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.

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,

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

2022 2021 2022 2021

(in thousands)

1 unchanged sentence

Lease related charges 462 — 462 608

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.

Other — 18 — 323

$ 462 $ 38 $ 462 $ 2,204

Lease related charges for the six months ended June 30, 2022 included the impairment of leased right-of-use assets of approximately $ 0.5 million related to exiting a redundant facility.

Lease related charges for the six months ended June 30, 2021 included the impairment of leased right-of-use assets and leasehold improvements of approximately $ 0.4 million and $ 0.2 million, respectively, related to exiting a redundant facility.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents a roll-forward of the Company’s restructuring liability for the six months ended June 30, 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 — 462 — 462

Cash payments — ( 170 ) — ( 170 )

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

Non-cash charges and adjustments — ( 462 ) — ( 462 )

Liability as of June 30, 2022 — 274 — 274

current portion as of June 30, 2022 — ( 256 ) — ( 256 )

Long-term portion as of June 30, 2022 $ — $ 18 $ — $ 18

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 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.

During the six months ended June 30, 2022, there was an increase in the carrying value of goodwill of $ 0.07 million related to minor adjustments to assets and liabilities 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 months ended March 31, 2022 and 2021, there were no indications of impairment of the Company’s goodwill balances.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During the three and six months ended June 30, 2022 and 2021, there were no indications of impairment of the Company’s goodwill balances.

Acquired Intangibles

1 unchanged sentence

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

March 31, 2022 December 31, 2021

June 30, 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 $ 478,215 $ ( 350,287 ) $ 127,928 $ 470,411 $ ( 320,471 ) $ 149,940

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Three Months Ended March 31,

(in thousands)

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

2022 2021 2022 2021

(in thousands) (in thousands)

Cost of net revenue $ 9,865 $ 10,762 $ 20,712 $ 21,527

4 unchanged sentences

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

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands)

1 unchanged sentence

Additions 5,204 1,112

Transfers to developed technology from IPR&D 2,600 —

Amortization ( 29,816 ) ( 33,414 )

3 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 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 March 31, 2022:

During each of the three and six months ended June 30, 2022 and 2021, no impairment losses related to finite-lived intangible assets were recognized.

The following table presents future amortization of the Company’s finite-lived intangible assets at June 30, 2022:

(in thousands)

2 unchanged sentences

Total $ 127,928

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Indefinite-lived Intangible Assets

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

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.

Indefinite-lived intangible assets consist 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:

Six Months Ended June 30,

(in thousands)

Beginning balance $ 2,600 $ 2,600

Transfers to developed technology from IPR&D ( 2,600 ) —

Ending balance $ — $ 2,600

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 months ended March 31, 2022 and 2021, no indicators of impairment were identified and, as a result, no IPR&D impairment losses were recorded.

During the three and six months ended June 30, 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

June 30, 2022

Net Unrealized

Cost Gains Losses Fair Value

1 unchanged sentence

Marketable equity investments $ 20,005 $ 3,859 $ — $ 23,864

March 31, 2022

June 30, 2022

(in thousands)

3 unchanged sentences

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.

At June 30, 2022, the Company held marketable equity investments with an aggregate fair value of $ 23.9 million that were in an unrealized gain position for less than 12 months.

The net unrealized gain of $ 3.9 million as of June 30, 2022 represents stock price fluctuations in the underlying securities held, and was recorded to other income (expense), net in the consolidated statement of income.

MAXLINEAR, INC.

16 unchanged sentences

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

Fair Value Measurements at June 30, 2022

Balance at June 30, 2022 Quoted Prices

Identical Assets

11 unchanged sentences

Contingent consideration $ 2,700 $ — $ — $ 2,700

$ 2,700 $ — $ — $ 2,700

MAXLINEAR, INC.

1 unchanged sentence

The following summarizes the activity in Level 3 financial instruments:

Three Months Ended March 31,

Six Months Ended June 30,

Contingent Consideration

3 unchanged sentences

_____________________

(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.

(1) Changes to the balance associated with the estimated fair value of contingent consideration for the six months ended June 30, 2022 were primarily due to accretion of the related discount.

For the six months ended June 30, 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

3 unchanged sentences

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

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.

Included in other long-term assets are investments in privately held entities of $ 13.3 million and $ 5.0 million as of June 30, 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:

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

(in thousands)

3 unchanged sentences

Total cash, cash equivalents and restricted cash $ 212,419 $ 131,738

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.

As of June 30, 2022 and December 31, 2021, cash and cash equivalents included money market funds of approximately $ 0.4 million and $ 20.4 million, respectively.

As of June 30, 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.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Inventory consists of the following:

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

(in thousands)

3 unchanged sentences

Property and equipment, net consists of the following:

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

(in Years) June 30, 2022 December 31, 2021

(in thousands)

11 unchanged sentences

$ 64,136 $ 60,924

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

Depreciation expense for the three months ended June 30, 2022 and 2021 was $ 4.8 million and $ 3.6 million, respectively.

Depreciation expense for the six months ended June 30, 2022 and 2021 was $ 9.6 million and $ 7.3 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

Repayments of $ 2.0 million per year are due annually by March 31, in years 2024 through 2027, provided that certain production utilization targets for the prior year are met.

Accrued price protection liability consists of the following activity:

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands)

3 unchanged sentences

Ending balance $ 110,553 $ 54,717

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accrued expenses and other current liabilities consist of the following:

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

(in thousands)

10 unchanged sentences

Accrued obligations to customers for stock rotation rights 1,186 2,847

Contingent consideration 2,824 —

Other 6,364 9,205

4 unchanged sentences

Balance at December 31, 2021 $ 21 $ 2,104 $ 2,125

Other comprehensive income (loss) before reclassifications, net of tax ( 1,075 ) — ( 1,075 )

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

Other comprehensive loss before reclassifications, net of tax ( 5,063 ) — ( 5,063 )

Balance at June 30, 2022 $ ( 5,042 ) $ 2,104 $ ( 2,938 )

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 $ 250,000 $ 310,000

Total principal balance 250,000 310,000

Unamortized debt discount ( 756 ) ( 816 )

Unamortized debt issuance costs ( 2,794 ) ( 3,031 )

Net carrying amount of long-term debt 246,450 306,153

current portion of long-term debt — —

Long-term debt, non-current portion $ 246,450 $ 306,153

As of June 30, 2022 and December 31, 2021, the weighted average effective interest rate on debt was approximately 3.0 % and 3.2 %, respectively.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During the three months ended June 30, 2022 and 2021, 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 the six months ended June 30, 2022 and 2021, the Company recognized total amortization of debt discount and debt issuance costs of $ 0.3 million and $ 1.0 million, respectively, to interest expense.

The approximate aggregate fair value of the term loans outstanding as of June 30, 2022 and December 31, 2021 was $ 275.0 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 June 30, 2022, the outstanding principal balance of $ 250.0 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, or 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.

1, dated July 31, 2020 and (ii) to pay fees and expenses incurred in connection therewith.

As of June 30, 2022, the Revolving Facility was undrawn.

Under the amended and restated commitment letter with Wells Fargo Bank and other lenders entered into in connection with the pending merger with Silicon Motion (Note 3), the Company expects to repay the remaining outstanding term loans under this agreement upon closing of the merger.

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 %.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 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 June 30, 2022, the Company was in compliance with such covenants.

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.

Stock-Based Compensation

Employee Stock-Based Compensation Plans

At March 31, 2022, the Company had stock-based compensation awards outstanding under the following plans:

At June 30, 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 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.

There have been no material changes to the terms of the Company’s equity incentive plans during the six months ended June 30, 2022.

As of June 30, 2022, the number of shares of common stock available for future issuance under the 2010 Plan was 15,651,631 shares.

As of June 30, 2022, the number of shares of common stock available for future issuance under the ESPP was 4,977,968 shares.

MAXLINEAR, INC.

1 unchanged sentence

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.

The Company mostly settles 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 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 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.

At June 30, 2022, the Company has an accrual of $ 19.0 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.

1 unchanged sentence

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)

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

2022 2021 2022 2021

(in thousands) (in thousands)

Cost of net revenue $ 162 $ 148 $ 325 $ 317

2 unchanged sentences

$ 19,469 $ 13,966 $ 38,023 $ 26,921

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.

The total unrecognized compensation cost related to unvested restricted stock units as of June 30, 2022 was $ 112.8 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 June 30, 2022 was $ 28.8 million, and the weighted average period over which these equity awards are expected to vest is 1.12 years.

The total unrecognized compensation cost related to unvested stock options as of June 30, 2022 was $ 0.01 million, and the weighted average period over which these equity awards are expected to vest is 0.02 years.

Restricted Stock Units

6 unchanged sentences

Canceled ( 214 ) 29.06

Outstanding at March 31, 2022 5,897 $ 31.05

Outstanding at June 30, 2022 4,902 $ 33.00

Performance-Based Restricted Stock Units

4 unchanged sentences

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.

As of June 30, 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 ( 4 ) 35.73

Outstanding at March 31, 2022 1,679 $ 33.05

Outstanding at June 30, 2022 1,676 $ 33.04

________________

2 unchanged sentences

Employee Stock Purchase Rights

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:

Three Months Ended March 31,

During the six months ended June 30, 2022 and 2021 there were 83,404 and 113,510 shares, respectively, of common stock purchased under the ESPP at a weighted average price of $ 34.92 and $ 23.21 , respectively.

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

Three Months Ended June 30,

Weighted-average grant date fair value per share $ 14.25 $ 10.85

13 unchanged sentences

Exercised ( 18 ) 14.47

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.

Outstanding at June 30, 2022 399 $ 17.16 2.89 $ 16,449

Vested and expected to vest at June 30, 2022 399 $ 17.16 2.89 $ 16,449

Exercisable at June 30, 2022 392 $ 17.14 2.89 $ 16,170

No stock options were granted by the Company during the six months ended June 30, 2022.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 intrinsic value of stock options exercised was $ 0.4 million and $ 6.7 million in the three months ended June 30, 2022 and 2021, respectively.

The intrinsic value of stock options exercised was $ 0.7 million and $ 9 million in the six months ended June 30, 2022 and 2021, respectively.

Cash received from exercise of stock options was $ 0.1 million and $ 2.6 million during the three months ended June 30, 2022 and 2021, respectively.

Cash received from exercise of stock options was $ 0.2 million and $ 3.9 million during the six months ended June 30, 2022 and 2021, respectively.

The tax benefit from stock options exercised was $ 0.6 million and $ 10.6 million during the three months ended June 30, 2022 and 2021, respectively.

The tax benefit from stock options exercised was $ 1.0 million and $ 13.3 million during the six months ended June 30, 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 $ 11.5 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 Company recorded an income tax provision of $ 11.9 million in the three months ended June 30, 2022 and an income tax benefit of $ 8.0 million in the three months ended June 30, 2021.

The Company recorded an income tax provision of $ 23.3 million in the six months ended June 30, 2022 and an income tax benefit of $ 6.2 million in the six months ended June 30, 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.

federal statutory rate for the six months ended June 30, 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 research and development 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.

federal statutory rate for the six months ended June 30, 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.

2 unchanged sentences

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.

During the six months ended June 30, 2022, the Company’s unrecognized tax benefits increased by $ 4.4 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 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.

Accrued interest and

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

penalties associated with uncertain tax positions as of June 30, 2022 were approximately $ 0.4 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 June 30, 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.

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.

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.

The Company recorded a tax provision in the six months ended June 30, 2022 at the incentive rate.

In the six months ended June 30, 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

9 unchanged sentences

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

Three Months Ended March 31,

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

2022 2021 2022 2021

Percentage of total net revenue

1 unchanged sentence

Customer B (direct) 11 % 11 % 11 % 12 %

Customer C (distributor) 10 % 11 %

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

March 31, December 31,

June 30, December 31,

Percentage of gross accounts receivable

8 unchanged sentences

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

Three Months Ended March 31,

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

2022 2021 2022 2021

Vendor A 30 % 38 % 29 % 41 %

3 unchanged sentences

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

Three Months Ended March 31,

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

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

2022 2021 2022 2021

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

Asia $ 227,655 81 % $ 169,088 82 % $ 439,320 81 % $ 340,248 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 March 31,

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

2022 2021 2022 2021

Percentage of total net revenue

2 unchanged sentences

Vietnam * 14 % * 13 %

____________________________

* Represents less than 10% of the net 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.

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

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

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

March 31, December 31,

June 30, December 31,

Amount % of total Amount % of total

8 unchanged sentences

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

Three Months Ended March 31,

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

2022 2021 2022 2021

Broadband $ 139,098 $ 112,765 $ 273,654 $ 236,955

7 unchanged sentences

Total net revenue $ 280,009 $ 205,376 $ 543,936 $ 414,735

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.

Revenues from sales through the Company’s distributors accounted for 45 % and 45 % of net revenue for the three months ended June 30, 2022 and 2021, respectively.

Revenues from sales through the Company’s distributors accounted for 46 % and 45 % of net revenue for the six months ended June 30, 2022 and 2021, respectively.

Contract Liabilities

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.

As of June 30, 2022 and December 31, 2021, customer contract liabilities were approximately $ 1.3 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 and six months ended June 30, 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 six months ended June 30, 2022 and 2021.

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

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.

As of June 30, 2022 and December 31, 2021, obligations to customers consisting of estimates of price protection rights offered to the Company’s end customers totaled $ 110.6 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 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.

Other obligations to customers representing estimates of price adjustments to be claimed by distributors upon sell-through of their inventory to their end customer and estimates of stock rotation returns to be claimed by distributors on products sold as of June 30, 2022 were $ 39.3 million and $ 1.2 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 and six months ended June 30, 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 June 30, 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 $ 0.4 million and $ 1.1 million, respectively.

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

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

As of June 30, 2022 and December 31, 2021, there were no impairment losses recorded on customer accounts receivable.

Operating Leases

Operating lease arrangements primarily consist of office leases expiring in various years through 2028.

These leases have original terms of approximately 2 to 8 years and some contain options to extend the lease up to 5 years or terminate the lease, which are included in right-of-use assets and lease liabilities when the Company is reasonably certain it will renew the underlying leases.

These leases have original terms of approximately 2 to 8 years and some contain options to extend the lease up to 5 years or terminate the lease,

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

which are included in right-of-use assets and lease liabilities when the Company is reasonably certain it will renew the underlying leases.

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 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:

As of June 30, 2022 and December 31, 2021, the weighted average discount rate for operating leases was 3.6 % and 3.6 %, respectively, and the weighted average remaining lease term for operating leases was 4.2 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 June 30, 2022:

Operating Leases

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imputed interest ( 2,920 )

unrealized translation loss ( 385 )

Total lease liabilities 39,040

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Long-term lease liabilities $ 27,838

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.

Operating lease cost was $ 2.3 million and $ 2.3 million for the three months ended June 30, 2022 and 2021, respectively.

Operating lease cost was $ 4.8 million and $ 4.8 million for the six months ended June 30, 2022 and 2021, respectively.

Short-term lease costs for the three and six months ended June 30, 2022 and 2021 were not material.

There were $ 4.1 million and $ 0 of right-of-use assets obtained in exchange for new lease liabilities for the three months ended June 30, 2022 and 2021, respectively.

There were $ 11.9 million and $ 5.2 million of right-of-use assets obtained in exchange for new lease liabilities for the six months ended June 30, 2022 and 2021, respectively.

Employee Defined Benefit Retirement Plans

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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.

As of June 30, 2022 and December 31, 2021, the defined benefit obligation was $ 4.3 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 $ 0.1 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.

Net periodic benefit costs were $ 0.1 million and $ 0.1 million for the three months ended June 30, 2022 and 2021 and were recorded to research and development expenses in the consolidated statements of income.

Net periodic benefit costs were $ 0.2 million and $ 0.2 million for the six months ended June 30, 2022 and 2021 and were recorded to research and development expenses in the consolidated statements of income.

MAXLINEAR, INC.

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Inventory Purchase and Other Contractual Obligations

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

As of June 30, 2022, future minimum payments under inventory purchase and other obligations are as follows:

Inventory Purchase Obligations Other Obligations Total

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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.

During the three and six months ended June 30, 2022, the Company recognized $ 0 and $ 3.8 million in previously deferred amounts from other parties due to resolution of such repayment conditions.

Other Matters

From time to time, the Company is subject to threats of litigation or actual litigation in the ordinary course of business, some of which may be material.

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.

The Company is not currently a party to any pending legal proceedings that, if determined adversely to the Company’s interests, would, in management's opinion, 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.

The results of any litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources, and other factors.

Stock Repurchases

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

During the three 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.

The share repurchase program has been temporarily suspended since July 2022 due to the Company’s pending merger with Silicon Motion.

During the three months ended June 30, 2022, the Company repurchased 124,000 shares of its common stock at a weighted average price of $ 42.0213 per share at an aggregate value of approximately $ 5.2 million under the repurchase program.

During the six months ended June 30, 2022, the Company repurchased 564,449 shares of its common stock at a weighted average price of $ 55.7972 per share at an aggregate value of approximately $ 31.5 million under the repurchase program.

At June 30, 2022, the aggregate value of common stock repurchased under the program was approximately $ 55.0 million and approximately $ 45.0 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