What changed in this filing

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Item 1. Financial Statements

2023-10-25 compared with 2023-07-27 · 230 added, 218 removed, 686 unchanged (40% of the section changed)

3 unchanged sentences

(in thousands, except par value amounts)

September 30,

2023 December 31,

33 unchanged sentences

550,000 shares authorized;

80,930 shares issued and outstanding at June 30, 2023 and 78,745 shares issued and outstanding December 31, 2022

81,561 shares issued and outstanding at September 30, 2023 and 78,745 shares issued and outstanding December 31, 2022

Additional paid-in capital 790,634 722,778

7 unchanged sentences

in thousands, except per share data)

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

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

2023 2022 2023 2022

26 unchanged sentences

in thousands)

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

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

2023 2022 2023 2022

1 unchanged sentence

Other comprehensive loss, net of tax:

Foreign currency translation adjustments, net of tax benefit of $ 94 and $ 165 for the three and six months ended June 30, 2023, respectively, and net of tax benefit of $ 61 and $ 59 for the three and six months ended June 30, 2022, respectively

Foreign currency translation adjustments, net of tax benefit of $ 64 and $ 229 for the three and nine months ended September 30, 2023, respectively, and net of tax benefit of $ 187 and $ 184 for the three and nine months ended September 30, 2022, respectively

( 1,855 ) ( 2,378 ) ( 3,125 ) ( 7,441 )

Other comprehensive loss ( 1,078 ) ( 3,988 ) ( 1,270 ) ( 5,063 )

Reclassification adjustments of unrealized gain (loss) on pension and other defined benefit plans ( 3,792 ) — ( 3,792 ) —

Total comprehensive income (loss) $ ( 45,476 ) $ 26,030 $ ( 41,564 ) $ 86,519

2 unchanged sentences

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

FISCAL QUARTERS ENDED JUNE 30, 2023

FISCAL QUARTERS ENDED SEPTEMBER 30, 2023

in thousands)

18 unchanged sentences

Balance at June 30, 2023 80,930 8 788,528 ( 2,291 ) ( 40,198 ) 746,047

Common stock issued pursuant to equity awards, net 631 — ( 3,017 ) — — ( 3,017 )

Stock-based compensation — — 5,123 — — 5,123

Other comprehensive loss — — — ( 5,647 ) — ( 5,647 )

Net loss — — — — ( 39,829 ) ( 39,829 )

Balance at September 30, 2023 81,561 $ 8 $ 790,634 $ ( 7,938 ) $ ( 80,027 ) $ 702,677

MAXLINEAR, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

FISCAL QUARTERS ENDED JUNE 30, 2022

FISCAL QUARTERS ENDED SEPTEMBER 30, 2022

in thousands)

21 unchanged sentences

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

Common stock issued pursuant to equity awards, net 232 — ( 56 ) — — ( 56 )

Stock-based compensation — — 20,310 — — 20,310

Other comprehensive loss — — — ( 2,378 ) — ( 2,378 )

Net income — — — — 28,408 28,408

Balance at September 30, 2022 78,565 $ 8 $ 697,649 $ ( 5,316 ) $ ( 76,460 ) $ 615,881

See accompanying notes.

2 unchanged sentences

in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Operating Activities

Net income $ 5,182 $ 65,552

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

Net income (loss) $ ( 34,647 ) $ 93,960

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

Amortization and depreciation 54,923 61,906

4 unchanged sentences

Loss on disposal of property and equipment 2,057 167

Unrealized holding gain on investments ( 1,959 ) ( 3,859 )

Unrealized holding loss on investments 3,917 1,418

Impairment of leased right-of-use assets — 462

(Gain) loss on settlement of pension ( 1,008 ) —

(Gain) loss on foreign currency 140 ( 3,245 )

18 unchanged sentences

Financing Activities

Payment of debt commitment fees ( 18,325 ) —

Repayment of debt — ( 135,000 )

4 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents ( 1,861 ) ( 2,400 )

Increase in cash, cash equivalents and restricted cash 37,286 80,681

Increase (decrease) in cash, cash equivalents and restricted cash ( 205 ) 50,755

Cash, cash equivalents and restricted cash at beginning of period 188,357 131,738

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, 2022 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 1, 2023, or the Annual Report.

Interim results for the six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2023.

Interim results for the nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2023.

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

6 unchanged sentences

Actual results could differ from those estimates.

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 26, 2023, the issuance date of this Quarterly Report on Form 10-Q.

The Company is not aware of any specific event or circumstance that would require an update to its estimates or adjustments to the carrying value of its assets and liabilities as of October 25, 2023, the issuance date of this Quarterly Report on Form 10-Q.

Actual results could differ from those estimates.

1 unchanged sentence

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

There have been no significant changes to the Company’s significant accounting policies during the six months ended June 30, 2023.

There have been no significant changes to the Company’s significant accounting policies during the nine months ended September 30, 2023.

MAXLINEAR, INC.

13 unchanged sentences

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

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

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

2023 2022 2023 2022

7 unchanged sentences

Diluted $ ( 0.49 ) $ 0.35 $ ( 0.43 ) $ 1.17

For the three months ended June 30, 2023 and 2022, the Company excluded common stock equivalents for outstanding stock-based awards, which represented potentially dilutive securities of 5.4 million and 1.0 million, respectively, from the calculation of diluted net income (loss) per share due to their anti-dilutive nature.

For the six months ended June 30, 2023 and 2022, the Company excluded common stock equivalents for outstanding stock-based awards, which represented potentially dilutive securities of 3.2 million and 1.0 million, respectively, from the calculation of diluted net income (loss) per share due to their anti-dilutive nature.

For the three months ended September 30, 2023 and 2022, the Company excluded common stock equivalents for outstanding stock-based awards, which represented potentially dilutive securities of 4.9 million and 2.5 million, respectively, from the calculation of diluted net income (loss) per share due to their anti-dilutive nature.

For the nine months ended September 30, 2023 and 2022, the Company excluded common stock equivalents for outstanding stock-based awards, which represented potentially dilutive securities of 4.8 million and 1.5 million, respectively, from the calculation of diluted net income (loss) per share due to their anti-dilutive nature.

MAXLINEAR, INC.

1 unchanged sentence

Business Combinations

Silicon Motion Merger

Terminated 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 laws of the Cayman Islands, pursuant to which, among other things and subject to the terms and conditions thereof, MaxLinear agreed to acquire Silicon Motion pursuant to a statutory merger, under the laws of the Cayman Islands, 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.

On July 26, 2023, MaxLinear provided notice to Silicon Motion that it has terminated the Merger Agreement and MaxLinear is relieved of its obligations to close because, among other reasons, (i) certain conditions to closing set forth in the Merger Agreement are not satisfied and are incapable of being satisfied, (ii) Silicon Motion has suffered a Material Adverse Effect that is continuing, (iii) Silicon Motion is in material breach of representations, warranties, covenants, and agreements in the Merger Agreement that give rise to the right of the Company to terminate, and (iv) in any event, the First Extended Outside Date has passed and was not automatically extended because certain conditions in Article 6 of the Merger Agreement were not satisfied or waived as of May 5, 2023.

Under the terms of the Merger Agreement, MaxLinear is not required to pay a break-up fee or other fee as a result of the termination of the Merger Agreement.

On July 26, 2023, MaxLinear terminated the Merger Agreement and notified Silicon Motion that MaxLinear was relieved of its obligations to close because, among other reasons, (i) certain conditions to closing set forth in the Merger Agreement were not satisfied and were incapable of being satisfied, (ii) Silicon Motion had suffered a Material Adverse Effect that was continuing, (iii) Silicon Motion was in material breach of representations, warranties, covenants, and agreements in the Merger Agreement that gave rise to the right of the Company to terminate, and (iv) in any event, the First Extended Outside Date had passed and was not automatically extended because certain conditions in Article 6 of the Merger Agreement were not satisfied or waived as of May 5, 2023.

For these same reasons, under the terms of the Merger Agreement, MaxLinear was not required to pay a break-up fee or other fee to Silicon Motion as a result of the termination of the Merger Agreement.

Undefined capitalized terms in this paragraph have the same meaning as in the Merger Agreement.

Under the terms of the Merger Agreement, the transaction consideration consisted of $ 93.54 in cash and 0.388 shares of MaxLinear common stock for each Silicon Motion American Depositary Share, or ADS, (other than ADSs representing certain customary excluded shares) and $ 23.385 in cash and 0.097 shares of MaxLinear common stock for each Silicon Motion ordinary share not represented by an ADS (other than certain customary excluded shares), in each case, with cash in lieu of any fractional shares of MaxLinear common stock as set forth in the Merger Agreement.

Upon closing of the terminated transaction, the current MaxLinear stockholders were expected to own approximately 86 % of the combined company and former Silicon Motion securityholders were expected to 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 was approximately $ 3.8 billion.

MaxLinear could have funded up to $ 3.1 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, which financing commitments were terminated upon termination of the Merger Agreement.

Under the terms of the Merger Agreement, MaxLinear was required to assume Silicon Motion’s vested and unvested employee stock-based compensation awards.

The merger was not subject to any financing conditions but was pending satisfaction of customary closing conditions, including the expiration or termination of the applicable waiting period under the Hart-Scott Rodino Antitrust Improvements Act of 1976, or HSR Act.

On July 26, 2023, regulatory approval was received from the State Administration for Market Regulations, or SAMR, in China.

Under the Merger Agreement, under certain circumstances, we could have been required to pay Silicon Motion a termination fee of $ 160 million if the Merger Agreement is terminated by MaxLinear or Silicon Motion as a result of a court or other competent authority issuing an order pursuant to regulatory law permanently prohibiting the consummation of the merger, or the merger is not consummated by the Outside Date, which, under the terms of the Merger Agreement, would have been automatically extended to August 7, 2023, if, as of May 5, 2023, all conditions to close were met, other than certain exceptions related to regulatory matters.

On June 27, 2022, the HSR Act waiting period expired with respect to the previously pending merger;

however, since the merger was not consummated by June 27, 2023, MaxLinear and Silicon Motion re-filed under the HSR Act on June 28, 2023.

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

On August 31, 2022, the Silicon Motion securityholders approved the merger at the extraordinary general meeting.

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 committed to provide (i) a senior secured term B loan facility in an aggregate principal amount of up to $ 2.7375 billion, or the Term B Loan Facility, (ii) a senior secured term A loan facility in an aggregate principal amount of up to $ 512.5 million, or the Term A Loan Facility 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 was 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 could have been used to repay existing debt (Note 8) in full.

On October 24, 2022, MaxLinear entered into a second amended and restated commitment letter with Wells Fargo Bank and other lenders, which allowed for additional commitments in respect of the Term A Loan Facility to be effected by way of the joinder of additional commitment parties to the second amended and restated commitment letter, and allowed for an increase in the Term Loan A Loan Facility on a dollar-for-dollar basis by a corresponding decrease in the amount of the Term Loan B facility.

In connection with the termination of the merger agreement, the second amended and restated commitment letter with Wells Fargo Bank and other lenders was terminated.

On August 16, 2023, Silicon Motion delivered to MaxLinear a notice, which Silicon Motion publicly disclosed, that it was purporting to terminate the Merger Agreement and that Silicon Motion would be commencing an arbitration to seek damages from MaxLinear arising from MaxLinear's alleged breaches of the Merger Agreement.

On October 5, 2023, Silicon Motion filed a Notice of Arbitration with the Singapore International Arbitration Centre alleging that MaxLinear breached the Merger Agreement.

See Note 15 for more information on legal matters related to the termination of the Merger Agreement.

The second amended and restated commitment letter dated October 24, 2022 with Wells Fargo Bank, N.A., or Wells Fargo Bank, and other lenders, and related financing commitments for the previously pending (now terminated) merger were also terminated upon termination of the Merger Agreement.

As a result of the termination of the financing, the Company was required to pay to Wells Fargo Bank a ticking fee of $ 18.3 million, which is included in other income (expense), net in the three months ended September 30, 2023.

Acquisition of Company Y

11 unchanged sentences

(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 $ 2.6 million in payments subject to the acquired business’s satisfying certain financial and personnel objectives by June 17, 2024 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.

Key inputs in

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

the valuation include forecasted revenue, revenue volatility and discount rate.

Purchase Price Allocation

7 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.

Goodwill recorded in connection with Company Y was $ 11.7 million as of June 30, 2023.

Goodwill recorded in connection with Company Y was $ 11.7 million as of September 30, 2023.

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

1 unchanged sentence

During the three months ended March 31, 2023, the Company entered into a plan of restructuring to reduce its workforce as a result of internal resource alignment and cost saving measures.

The Company incurred additional costs in the three months ended June 30, 2023 related to this plan of restructuring due to statutory requirements in the jurisdictions in which the terminated employees were employed.

The Company’s management does not expect to incur additional costs associated with this plan of restructuring.

Costs associated with this plan of restructuring for the nine months ended September 30, 2023 are included in the table below.

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

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

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

2023 2022 2023 2022

4 unchanged sentences

$ 54 $ 631 $ 9,138 $ 1,093

The following table presents a roll-forward of the Company’s restructuring liability for the six months ended June 30, 2023.

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, 2023.

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

5 unchanged sentences

Non-cash charges and adjustments ( 9 ) 29 ( 47 ) ( 27 )

Liability as of June 30, 2023 5,456 51 ( 18 ) 5,489

current portion as of June 30, 2023 ( 5,456 ) ( 51 ) 18 ( 5,489 )

Long-term portion as of June 30, 2023 $ — $ — $ — $ —

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Liability as of September 30, 2023 1,725 32 ( 25 ) 1,732

current portion as of September 30, 2023 ( 1,725 ) ( 32 ) 25 ( 1,732 )

Long-term portion as of September 30, 2023 $ — $ — $ — $ —

Goodwill and Intangible Assets

2 unchanged sentences

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

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands)

3 unchanged sentences

Ending balance $ 318,456 $ 306,739

During the six months ended June 30, 2023, there was an increase in the carrying value of goodwill of $ 11.7 million related to the acquisition of Company Y.

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 six months ended June 30, 2023 and 2022, there were no indications of impairment of the Company’s goodwill balances.

During the nine months ended September 30, 2023 and 2022, there were no indications of impairment of the Company’s goodwill balances.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

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

7 unchanged sentences

6.1 $ 480,116 $ ( 397,473 ) $ 82,643 $ 477,125 $ ( 367,809 ) $ 109,316

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

2023 2022 2023 2022

6 unchanged sentences

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

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands)

9 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 months ended June 30, 2023 and 2022, no impairment losses related to finite-lived intangible assets were recognized.

During the six months ended June 30, 2023 and 2022, impairment losses related to finite-lived intangible assets of $ 2.4 million and $ 0 , respectively, were recognized.

During the three months ended September 30, 2023 and 2022, no impairment losses related to finite-lived intangible assets were recognized.

During the nine months ended September

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

30, 2023 and 2022, impairment losses related to finite-lived intangible assets of $ 2.4 million and $ 0 , respectively, were recognized.

The impairment loss was attributable to certain purchased licensed technology.

The following table presents future amortization of the Company’s finite-lived intangible assets at June 30, 2023:

The following table presents future amortization of the Company’s finite-lived intangible assets at September 30, 2023:

(in thousands)

2 unchanged sentences

Total $ 82,643

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Financial Instruments

The composition of financial instruments is as follows:

June 30, 2023

September 30, 2023

Net Unrealized

7 unchanged sentences

Marketable equity investments $ 20,005 $ — $ ( 1,476 ) $ 18,529

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Fair Value Fair Value

2 unchanged sentences

$ 2,690 2,941

At June 30, 2023, the Company held marketable equity investments with an aggregate fair value of $ 20.5 million that were in an unrealized gain position.

The net unrealized gain of $ 0.5 million as of June 30, 2023 represents stock price fluctuations in the underlying securities held, and was recorded to other income (expense), net in the consolidated statement of operations.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

At September 30, 2023, the Company held marketable equity investments with an aggregate fair value of $ 14.6 million that were in an unrealized loss position.

The net unrealized loss of $ 5.4 million as of September 30, 2023 represents stock price fluctuations in the underlying securities held.

Unrealized gains and losses on such investments are recorded to other income (expense), net in the consolidated statement of operations.

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

12 unchanged sentences

The marketable equity investments held by the Company have been valued on the basis of quoted market prices and is therefore classified as Level 1.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The contingent consideration liability as of June 30, 2023 is associated with the Company’s acquisitions of Company X in December 2021 and Company Y in January 2023 (Note 3) and the contingent consideration liability as of December 31, 2022 is associated with the Company’s acquisition of Company X.

The contingent consideration liability as of September 30, 2023 is associated with the Company’s acquisitions of Company X in December 2021 and Company Y in January 2023 (Note 3) and the contingent consideration liability as of December 31, 2022 is associated with the Company’s acquisition of Company X.

The contingent consideration liability is classified as a Level 3 financial instrument.

1 unchanged sentence

The financial and personnel objectives of Company X were achieved by March 31, 2023 and contingent consideration for Company X of $ 2.7 million was paid in April 2023 with the remaining $ 0.3 million to be paid in December 2023.

The fair value of 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, if applicable, 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 resulted in total payments up to $ 3.0 million to Company X and may result in total payments up to $ 2.6 million to Company Y.

The fair value of 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, if applicable, 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 included an assumption of total payments up to $ 3.0 million to Company X and an assumption of total payments up to $ 2.6 million to Company Y.

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 June 30, 2023

Balance at June 30, 2023 Quoted Prices

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fair Value Measurements at September 30, 2023

Balance at September 30, 2023 Quoted Prices

Identical Assets

12 unchanged sentences

Contingent consideration $ 2,941 $ — $ — $ 2,941

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following summarizes the activity in Level 3 financial instruments:

Six Months Ended June 30,

Nine Months Ended September 30,

Contingent Consideration

7 unchanged sentences

_____________________

(1) These changes to the balance associated with the estimated fair value of contingent consideration for the six months ended June 30, 2023 were due to the addition of contingent consideration associated with the acquisition of Company Y and accretion of discounts on contingent consideration.

For the six months ended June 30, 2023, there were no transfers between Level 1, Level 2, or Level 3 financial instruments.

(1) These changes to the balance associated with the estimated fair value of contingent consideration for the nine months ended September 30, 2023 were due to the addition of contingent consideration associated with the acquisition of Company Y and accretion of discounts on contingent consideration.

For the nine months ended September 30, 2023, 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

2 unchanged sentences

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

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 $ 11.8 million as of June 30, 2023 and December 31, 2022.

Included in other long-term assets are investments in privately held entities of $ 11.8 million as of September 30, 2023 and December 31, 2022.

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.

2 unchanged sentences

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

(in thousands)

3 unchanged sentences

Total cash, cash equivalents and restricted cash $ 188,152 $ 188,357

As of June 30, 2023 and December 31, 2022, cash and cash equivalents included money market funds of approximately $ 76.1 million and $ 0.4 million, respectively.

As of June 30, 2023 and December 31, 2022, the Company had restricted cash of approximately $ 1.1 million and $ 1.0 million, respectively.

As of September 30, 2023 and December 31, 2022, cash and cash equivalents included money market funds of approximately $ 77.1 million and $ 0.4 million, respectively.

As of September 30, 2023 and December 31, 2022, the Company had restricted cash of approximately $ 1.1 million and $ 1.0 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:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

(in thousands)

3 unchanged sentences

Property and equipment, net consists of the following:

(in Years) June 30, 2023 December 31, 2022

(in Years) September 30, 2023 December 31, 2022

(in thousands)

11 unchanged sentences

$ 69,484 $ 79,018

Depreciation expense for the three months ended June 30, 2023 and 2022 was $ 6.5 million and $ 4.8 million, respectively.

Depreciation expense for the six months ended June 30, 2023 and 2022 was $ 12.9 million and $ 9.6 million, respectively.

In March 2022, the Company entered into a note receivable with a supplier for $ 10.0 million, of which $ 2.0 million and $ 8.0 million are included in prepaid expenses and other current assets and other long-term assets, respectively, on the consolidated balance sheet as of June 30, 2023, and $ 10.0 million is included in other long-term assets as of December 31, 2022.

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

Depreciation expense for the three months ended September 30, 2023 and 2022 was $ 5.6 million and $ 5.1 million, respectively.

Depreciation expense for the nine months ended September 30, 2023 and 2022 was $ 18.5 million and $ 14.7 million, respectively.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 as of September 30, 2023 and December 31, 2022, respectively.

In September 2023, the terms of this note receivable were renegotiated, and the first initial repayment of $ 1.5 million is now due by March 31, 2025, and annual repayments of $ 1.7 million per year are due annually thereafter by March 31, from 2026 through 2030, provided that certain production utilization targets for the prior year are met.

Previously, repayments of $ 2.0 million were due annually by March 31, 2024 through 2027.

Accrued price protection liability consists of the following activity:

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands)

3 unchanged sentences

Ending balance $ 71,643 $ 116,591

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accrued expenses and other current liabilities consist of the following:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

(in thousands)

18 unchanged sentences

Other comprehensive loss before reclassifications, net of tax ( 3,125 ) ( 3,792 ) ( 6,917 )

Balance at June 30, 2023 $ ( 6,450 ) $ 4,159 $ ( 2,291 )

Balance at September 30, 2023 $ ( 8,305 ) $ 367 $ ( 7,938 )

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

September 30,

2023 December 31,

8 unchanged sentences

Long-term debt, non-current portion $ 122,219 $ 121,757

As of June 30, 2023 and December 31, 2022, the weighted average effective interest rate on debt was approximately 7.2 % and 3.8 %, respectively.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During the three months ended June 30, 2023 and 2022, the Company recognized total amortization of debt discount and debt issuance costs of $ 0.2 million and $ 0.2 million, respectively, to interest expense.

During the six months ended June 30, 2023 and 2022, the Company recognized total amortization of debt discount and debt issuance costs of $ 0.3 million and $ 0.3 million

The approximate aggregate fair value of the term loans outstanding as of June 30, 2023 and December 31, 2022 was $ 137.9 million and $ 137.4 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, 2023, the outstanding principal balance of $ 125.0 million is due in full on June 23, 2028, upon maturity of the loan.

As of September 30, 2023 and December 31, 2022, the weighted average effective interest rate on debt was approximately 7.4 % and 3.8 %, respectively.

During the three months ended September 30, 2023 and 2022, the Company recognized total amortization of debt discount and debt issuance costs of $ 0.2 million and $ 0.2 million, respectively, to interest expense.

During the nine months ended September 30, 2023 and 2022, the Company recognized total amortization of debt discount and debt issuance costs of $ 0.5 million and $ 0.4 million

The approximate aggregate fair value of the term loans outstanding as of September 30, 2023 and December 31, 2022 was $ 136.7 million and $ 137.4 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, 2023, the outstanding principal balance of $ 125.0 million is due in full on June 23, 2028, upon maturity of the loan.

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

3 unchanged sentences

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

As of June 30, 2023, the Revolving Facility was undrawn.

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

As of September 30, 2023, the Revolving Facility was undrawn.

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

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

7 unchanged sentences

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

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 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.

5 unchanged sentences

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 June 30, 2023, the Company was in compliance with such covenants.

As of September 30, 2023, 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.

1 unchanged sentence

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 issuance date fair value of the liability component of the debt in the amount of $ 350.2 million was

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

2 unchanged sentences

Employee Stock-Based Compensation Plans

At June 30, 2023, the Company had stock-based compensation awards outstanding under the following plans:

At September 30, 2023, 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, 2022.

There have been no material changes to the terms of the Company’s equity incentive plans during the six months ended June 30, 2023.

As of June 30, 2023, the number of shares of common stock available for future issuance under the 2010 Plan was 15,831,248 shares.

As of June 30, 2023, the number of shares of common stock available for future issuance under the ESPP was 5,749,724 shares.

There have been no material changes to the terms of the Company’s equity incentive plans during the nine months ended September 30, 2023.

As of September 30, 2023, the number of shares of common stock available for future issuance under the 2010 Plan was 15,250,925 shares.

As of September 30, 2023, the number of shares of common stock available for future issuance under the ESPP was 5,749,724 shares.

Employee Incentive Bonus

1 unchanged sentence

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 2023, the Company issued 0.9 million freely-tradable (subject to certain restrictions for affiliates) shares of the Company’s common stock in settlement of bonus awards to employees, including executives, for the

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2022 performance period.

At June 30, 2023, the Company has an accrual of $ 5.1 million for bonus awards for employees for year-to-date achievement in the 2023 performance period.

At September 30, 2023, the Company has an accrual of $ 8.4 million for bonus awards for employees for year-to-date achievement in the 2023 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 operations, based on the department to which the related employee reports, as follows:

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

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

2023 2022 2023 2022

4 unchanged sentences

$ 5,118 $ 20,131 $ 38,763 $ 58,154

The total unrecognized compensation cost related to unvested restricted stock units as of June 30, 2023 was $ 168.5 million, and the weighted average period over which these equity awards are expected to vest is 2.73 years.

The total unrecognized compensation cost related to unvested performance-based restricted stock units as of June 30, 2023 was $ 9.5 million, and the weighted average period over which these equity awards are expected to vest is 1.62 years.

There was no unrecognized compensation cost related to unvested stock options as of June 30, 2023.

The total unrecognized compensation cost related to unvested restricted stock units as of September 30, 2023 was $ 152.4 million, and the weighted average period over which these equity awards are expected to vest is 2.54 years.

The total unrecognized compensation cost related to unvested performance-based restricted stock units as of September 30, 2023 was $ 0.1 million, and the weighted average period over which these equity awards are expected to vest is 1.39 years.

There was no unrecognized compensation cost related to unvested stock options as of September 30, 2023.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Restricted Stock Units

6 unchanged sentences

Canceled ( 470 ) 38.44

Outstanding at June 30, 2023 6,671 $ 36.55

Outstanding at September 30, 2023 5,876 $ 36.91

Performance-Based Restricted Stock Units

2 unchanged sentences

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

As of June 30, 2023, 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 September 30, 2023, achievement to date under the performance metrics specified in the respective award agreements are 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.

To the extent any prior achievement levels are no longer probable, any compensation expense recorded is adjusted to the revised achievement levels.

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

4 unchanged sentences

Canceled ( 88 ) 41.75

Outstanding at June 30, 2023 2,753 $ 34.64

Outstanding at September 30, 2023 2,653 $ 34.38

________________

2 unchanged sentences

Employee Stock Purchase Rights

During the six months ended June 30, 2023 and 2022, there were 140,631 and 83,404 shares of common stock purchased under the ESPP at a weighted average price of $ 21.25 and $ 34.92 , 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:

Six Months Ended June 30,

During the nine months ended September 30, 2023 and 2022, there were 140,631 and 83,404 shares of common stock purchased under the ESPP at a weighted average price of $ 21.25 and $ 34.92 , respectively.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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,

Weighted-average grant date fair value per share $ 7.56 - $ 11.97

16 unchanged sentences

Exercised ( 15 ) 15.30

Outstanding at June 30, 2023 383 $ 17.33 1.99 $ 5,442

Vested and expected to vest at June 30, 2023 383 $ 17.33 1.99 $ 5,442

Exercisable at June 30, 2023 383 $ 17.33 1.99 $ 5,442

No stock options were granted by the Company during the six months ended June 30, 2023.

The intrinsic value of stock options exercised was $ 0.1 million and $ 0.4 million in the three months ended June 30, 2023 and 2022, respectively.

Outstanding at September 30, 2023 378 $ 17.30 1.76 $ 1,781

Vested and expected to vest at September 30, 2023 378 $ 17.30 1.76 $ 1,781

Exercisable at September 30, 2023 378 $ 17.30 1.76 $ 1,781

No stock options were granted by the Company during the nine months ended September 30, 2023.

The intrinsic value of stock options exercised was $ 47.0 thousand and $ 0.1 million in the three months ended September 30, 2023 and 2022, respectively.

The intrinsic value of stock options exercised was $ 0.2 million and $ 0.9 million in the nine months ended September 30, 2023 and 2022, respectively.

Cash received from exercise of stock options was $ 0.1 million and $ 0.1 million during the three months ended September 30, 2023 and 2022, respectively.

Cash received from exercise of stock options was $ 0.2 million and $ 0.3 million during the nine months ended September 30, 2023 and 2022, respectively.

The tax benefit from stock options exercised was $ 0.1 million and $ 0.2 million during the three months ended September 30, 2023 and 2022, respectively.

The tax benefit from stock options exercised was $ 0.4 million and $ 1.2 million during the nine months ended September 30, 2023 and 2022, respectively.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The intrinsic value of stock options exercised was $ 0.2 million and $ 0.7 million in the six months ended June 30, 2023 and 2022, respectively.

Cash received from exercise of stock options was $ 0.1 million and $ 0.1 million during the three months ended June 30, 2023 and 2022, respectively.

Cash received from exercise of stock options was $ 0.1 million and $ 0.2 million during the six months ended June 30, 2023 and 2022, respectively.

The tax benefit from stock options exercised was $ 0.1 million and $ 0.6 million during the three months ended June 30, 2023 and 2022, respectively.

The tax benefit from stock options exercised was $ 0.3 million and $ 1.0 million during the six months ended June 30, 2023 and 2022, respectively.

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

1 unchanged sentence

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

For the six months ended June 30, 2023, the Company’s annual effective tax rate results in significant variation in the customary relationship between income tax expense and pre-tax income in interim periods.

The Company is using the actual effective tax rate for the six months ended June 30, 2023 as the best estimate of the annual effective tax rate.

For the nine months ended September 30, 2023, the Company’s annual effective tax rate results in significant variation in the customary relationship between income tax expense and pre-tax income in interim periods.

The Company is using the actual effective tax rate for the nine months ended September 30, 2023 as the best estimate of the annual effective tax rate.

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

4 unchanged sentences

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

The Company recorded an income tax benefit of $ 0.4 million in the three months ended June 30, 2023 and an income tax provision of $ 11.9 million in the three months ended June 30, 2022.

The Company recorded an income tax provision of $ 15.2 million in the six months ended June 30, 2023 and an income tax provision of $ 23.3 million in the six months ended June 30, 2022.

The Company recorded an income tax benefit of $ 1.7 million in the three months ended September 30, 2023 and an income tax provision of $ 16.2 million in the three months ended September 30, 2022.

The Company recorded an income tax provision of $ 13.5 million in the nine months ended September 30, 2023 and an income tax provision of $ 39.5 million in the nine months ended September 30, 2022.

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

federal statutory rate for the six months ended June 30, 2023 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, and release of uncertain tax positions under ASC 740-10.

federal statutory rate for the nine months ended September 30, 2023 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, and release of uncertain tax positions under ASC 740-10.

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 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.

federal statutory rate for the nine months ended September 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.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

2 unchanged sentences

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

During the six months ended June 30, 2023, the Company’s unrecognized tax benefits increased by $ 0.8 million.

During the nine months ended September 30, 2023, the Company’s unrecognized tax benefits increased by $ 1.2 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 June 30, 2023 were approximately $ 0.3 million and $ 0.01 million, respectively.

Accrued interest and penalties associated with uncertain tax positions as of September 30, 2023 were approximately $ 0.3 million and $ 0.01 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, 2023, the statutes of limitations for the assessment of federal, state, and foreign income taxes are closed for the years before 2019, 2018, and 2017, respectively.

At September 30, 2023, the statutes of limitations for the assessment of federal, state, and foreign income taxes are closed for the years before 2019, 2018, and 2017, respectively.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 six months ended June 30, 2023 and 2022 at the incentive rate.

The Company recorded a tax provision in the nine months ended September 30, 2023 and 2022 at the incentive rate.

Concentration of Credit Risk, Significant Customers and Geographic Information

9 unchanged sentences

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

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

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

2023 2022 2023 2022

5 unchanged sentences

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

June 30, December 31,

September 30, December 31,

Percentage of gross accounts receivable

3 unchanged sentences

Customer F 17 % *

Customer G 11 % *

____________________________

4 unchanged sentences

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

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

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

2023 2022 2023 2022

7 unchanged sentences

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

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

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

2023 2022 2023 2022

6 unchanged sentences

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

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

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

2023 2022 2023 2022

2 unchanged sentences

China * 14 % 12 % 16 %

Germany 10 % * * *

Taiwan, ROC 10 % * * *

____________________________

2 unchanged sentences

No other individual country accounted for 10% or greater of net revenue during these periods.

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

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Although a large percentage of the Company’s products is shipped to Asia, and in particular, Hong Kong, mainland China, and Taiwan, 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 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):

June 30, December 31,

September 30, December 31,

Amount % of total Amount % of total

3 unchanged sentences

Total $ 503,230 100 % $ 523,588 100 %

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Revenue from Contracts with Customers

1 unchanged sentence

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

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

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

2023 2022 2023 2022

8 unchanged sentences

Total net revenue $ 135,530 $ 285,730 $ 567,910 $ 829,666

Revenues from sales through the Company’s distributors accounted for 53 % and 45 % of net revenue for the three months ended June 30, 2023 and 2022, respectively.

Revenues from sales through the Company’s distributors accounted for 47 % and 46 % of net revenue for the six months ended June 30, 2023 and 2022, respectively.

Revenues from sales through the Company’s distributors accounted for 46 % and 41 % of net revenue for the three months ended September 30, 2023 and 2022, respectively.

Revenues from sales through the Company’s distributors accounted for 47 % and 44 % of net revenue for the nine months ended September 30, 2023 and 2022, respectively.

Contract Liabilities

As of June 30, 2023 and December 31, 2022, customer contract liabilities were approximately $ 1.8 million and $ 1.1 million, respectively, and consisted primarily of advanced payments received for which performance obligations have not been completed.

Revenue recognized in each of the six months ended June 30, 2023 and 2022 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, 2023 and 2022.

As of September 30, 2023 and December 31, 2022, customer contract liabilities were approximately $ 1.4 million and $ 1.1 million, respectively, and consisted primarily of advanced payments received for which performance obligations have not been completed.

Revenue recognized in each of the nine months ended September 30, 2023 and 2022 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 nine months ended September 30, 2023 and 2022.

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

As of June 30, 2023 and December 31, 2022, obligations to customers consisting of estimates of price protection rights offered to the Company’s end customers totaled $ 80.1 million and $ 113.3 million, respectively, and are included in accrued price protection liability in the consolidated balance sheets.

As of September 30, 2023 and December 31, 2022, obligations to customers consisting of estimates of price protection rights offered to the Company’s end customers totaled $ 71.6 million and $ 113.3 million, respectively, and are included in accrued price protection liability in the consolidated balance sheets.

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

Other obligations to customers representing estimates of price adjustments to be claimed by distributors upon sell-through of their inventory to their end customer and estimates of stock rotation returns to be claimed by distributors on products sold as of June 30, 2023 were $ 50.2 million and $ 0.6 million, respectively, and as of December 31, 2022 were $ 52.4 million and $ 0.6 million, respectively, and are included in accrued expenses and other current liabilities in the consolidated balance sheets (Note 7).

The increase in revenue in each of the six months ended June 30, 2023 and 2022 from net

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, 2023 were $ 45.3 million and $ 0.8 million, respectively, and as of December 31, 2022 were $ 52.4 million and $ 0.6 million, respectively, and are included in accrued expenses and other current liabilities in the consolidated balance sheets (Note 7).

The increase in revenue in each of the nine months ended September 30, 2023 and 2022 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, 2023 and December 31, 2022, 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 $ 0.2 million and $ 0.2 million, respectively.

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

As of September 30, 2023 and December 31, 2022, there were no impairment losses recorded on customer accounts receivable.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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, 2023 and December 31, 2022, 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 $ 0.1 million and $ 0.2 million, respectively.

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

As of June 30, 2023 and December 31, 2022, there were no impairment losses recorded on customer accounts receivable.

Operating Leases

2 unchanged sentences

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

As of June 30, 2023 and December 31, 2022, the weighted average discount rate for operating leases was 4.6 % and 3.4 %, respectively, and the weighted average remaining lease term for operating leases was 4.3 years and 3.9 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, 2023:

As of September 30, 2023 and December 31, 2022, the weighted average discount rate for operating leases was 4.6 % and 3.4 %, respectively, and the weighted average remaining lease term for operating leases was 4.1 years and 3.9 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 September 30, 2023:

Operating Leases

4 unchanged sentences

imputed interest ( 4,452 )

unrealized translation loss —

Total lease liabilities 36,766

1 unchanged sentence

Long-term lease liabilities $ 28,017

Operating lease cost was $ 2.5 million and $ 2.3 million for the three months ended June 30, 2023 and 2022, respectively.

Operating lease cost was $ 5.4 million and $ 4.8 million for the six months ended June 30, 2023 and 2022, respectively.

Short-term lease costs for the three and six months ended June 30, 2023 and 2022 were not material.

There were $ 12.0 million and $ 4.1 million of right-of-use assets obtained in exchange for new lease liabilities for the three months ended June 30, 2023 and 2022, respectively.

There were $ 12.2 million and $ 11.9 million of right-of-use assets obtained in exchange for new lease liabilities for the six months ended June 30, 2023 and 2022, respectively.

Operating lease cost was $ 2.7 million and $ 2.9 million for the three months ended September 30, 2023 and 2022, respectively.

Operating lease cost was $ 8.0 million and $ 7.7 million for the nine months ended September 30, 2023 and 2022, respectively.

Short-term lease costs for the three and nine months ended September 30, 2023 and 2022 were not material.

There were $ 0 and $ 0.1 million of right-of-use assets obtained in exchange for new lease liabilities for the three months ended September 30, 2023 and 2022, respectively.

There were $ 12.2 million and $ 11.7 million of right-of-use assets obtained in exchange for new lease liabilities for the nine months ended September 30, 2023 and 2022, respectively.

Employee Retirement Plans

1 unchanged sentence

The Company has a 401(k) defined contribution retirement plan (the 401(k) Plan) covering all eligible employees.

Participants may voluntarily contribute on a pre-tax basis an amount not to exceed a maximum contribution amount pursuant to

Participants may voluntarily contribute on a pre-tax basis an amount not to exceed a maximum contribution amount pursuant to Section 401(k) of the Internal Revenue Code.

The Company is not required to contribute, nor has it contributed, to the 401(k) Plan for any of the periods presented.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Section 401(k) of the Internal Revenue Code.

The Company is not required to contribute, nor has it contributed, to the 401(k) Plan for any of the periods presented.

Pension and Other Defined Benefit Retirement Obligations

The Company maintains defined benefit retirement plans, including a pension plan, in certain foreign jurisdictions.

As of June 30, 2023 and December 31, 2022, the defined benefit obligation was $ 1.1 million and $ 1.7 million, respectively.

During the three months ended September 30, 2023, the Company paid approximately $ 3.2 million to a third party life insurance and pension provider to fund and administer future benefit payments for substantially all of the employees in one of the Company’s defined benefit retirement plans and recorded a gain on partial settlement of such pension plan of approximately $ 1.0 million.

As of September 30, 2023, the net defined benefit obligation, primarily related to other defined benefit plans, was $ 0.9 million.

As of December 31, 2022, the net defined benefit obligation was $ 1.7 million.

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 June 30, 2023 and 2022, respectively, and were recorded to research and development expenses in the consolidated statements of operations.

Net periodic benefit costs were $ 0.1 million and $ 0.2 million for the six months ended June 30, 2023 and 2022, 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 September 30, 2023 and 2022, respectively, and were recorded to research and development expenses in the consolidated statements of operations.

Net periodic benefit costs were $ 0.2 million and $ 0.2 million for the nine months ended September 30, 2023 and 2022, respectively, and were recorded to research and development expenses in the consolidated statements of operations.

Commitments and Contingencies

Inventory Purchase and Other Contractual Obligations

As of June 30, 2023, future minimum payments under inventory purchase and other obligations are as follows:

As of September 30, 2023, future minimum payments under inventory purchase and other obligations are as follows:

Inventory Purchase Obligations Other Obligations Total

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2026 — 18,567 18,567

2027 — 3,673 3,673

Total minimum payments $ 41,164 $ 87,846 $ 129,010

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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, funds of $ 10.0 million received from the other parties as of June 30, 2023 have been deferred in other long-term liabilities.

As the Company may be required to repay all or a portion of the funds provided by the other parties under certain conditions, funds of $ 10.0 million received from the other parties as of September 30, 2023 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 de-recognizes the liabilities when the contingencies associated with the repayment conditions have been resolved.

During the six months ended June 30, 2023 and 2022, the Company recognized $ 0 and $ 3.8 million, respectively, in previously deferred amounts from other parties due to resolution of such repayment conditions.

Bell Semiconductor Litigation

On August 11, 2022, Bell Semiconductor LLC, or Bell Semiconductor, filed suit against MaxLinear in the Southern District of California alleging infringement of U.S.

6,436,807 and 7,007,259, and requested monetary damages and a permanent injunction as relief.

On August 26, 2022, Bell Semiconductor filed suit against MaxLinear in the Southern District of California alleging infringement of U.S.

7,149,989 and 7,260,803, and requested monetary damages and a permanent injunction as relief.

On October 7, 2022 Bell Semiconductor filed suit against MaxLinear in the Southern District of California alleging infringement of U.S.

7,396,760, and requested monetary damages and a permanent injunction as relief.

Specifically, on October 13, 2022, Bell Semiconductor also filed suit against MaxLinear before the U.S.

International Trade Commission alleging infringement of U.S.

This was instituted by the Commission as Investigation No.

337-TA-1342 on November 23, 2022.

Bell Semiconductor requested as relief a limited exclusion order and cease and desist order.

During the nine months ended September 30, 2023 and 2022, the Company recognized $ 0 and $ 3.8 million, respectively, in previously deferred amounts from other parties due to resolution of such repayment conditions.

Dispute with Silicon Motion

As disclosed in Note 3, on July 26, 2023, MaxLinear terminated the Merger Agreement on multiple grounds.

On August 16, 2023, Silicon Motion delivered to MaxLinear a notice, which Silicon Motion publicly disclosed, that it was purporting to terminate the Merger Agreement and that Silicon Motion would be commencing an arbitration before the Singapore International Arbitration Centre to seek damages from MaxLinear arising from MaxLinear’s alleged breaches of the Merger Agreement.

Silicon Motion’s position is that MaxLinear’s Willful and Material Breaches (as such term is defined in the Merger Agreement) of the Merger Agreement prevented the Merger from being completed by August 7, 2023 and that MaxLinear is consequently liable for substantial monetary damages in excess of the termination fee as provided in the Merger Agreement.

On October 5, 2023, Silicon Motion filed a Notice of Arbitration with the Singapore International Arbitration Centre alleging that MaxLinear breached the Merger Agreement.

Silicon Motion seeks payment of the termination fee, additional damages, fees, and costs.

The arbitration will be confidential.

MAXLINEAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On March 10, 2023, Bell Semiconductor and MaxLinear entered into a Settlement and Patent License Agreement, or the Settlement Agreement, in settlement and release of all claims above.

The amount of the settlement was not material.

The Settlement Agreement also grants MaxLinear and its affiliates, a license of certain listed patents with respected to certain licensed products for a term that continues until the expiration of the last surviving claim of such licensed patents.

MaxLinear believes that it properly terminated the Merger Agreement and that Silicon Motion’s claims to the contrary are without merit.

MaxLinear remains confident in its decision and will vigorously defend its right to terminate the Silicon Motion transaction without penalty.

Class Action Complaint

On August 31, 2023, a Silicon Motion stockholder filed a putative class action complaint in the United States District Court for the Southern District of California captioned Water Island Event-Driven Fund v.

MaxLinear, Inc.

23-cv-01607 (S.D.

Cal.), against MaxLinear and certain of its current officers.

The complaint includes two claims:

(1) an alleged violation of Section 10(b) of the Securities Exchange Act of 1934, or the “Exchange Act”, and Rule 10b-5 promulgated thereunder;

and (2) an alleged violation of Section 20(a) of the Exchange Act.

The complaint alleges that the defendants made false and misleading statements and/or omitted material facts that MaxLinear had a duty to disclose, concerning the Company’s ability and intention to timely close the merger with Silicon Motion, including that:

(i) MaxLinear had allegedly decided it would not consummate the merger because the economic circumstances surrounding the merger had materially changed, including a material downturn in the semiconductor industry and rising interest rates;

(ii) MaxLinear had allegedly determined to unilaterally terminate the merger in the event the merger was approved by SAMR;

(iii) MaxLinear had allegedly intended to argue that certain conditions in Article 6 of the Merger Agreement had not been satisfied as required by May 5, 2023 as a basis to terminate the merger;

and (iv) as a result, MaxLinear had allegedly materially misrepresented the viability of the merger, the purported benefits of the merger, and the likelihood that the merger would be consummated.

The complaint seeks compensatory damages, including interest, costs and expenses and such other equitable or injunctive relief that the court deems appropriate.

MaxLinear believes that complaint’s claims are without merit and will vigorously defend its position.

Other Matters

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

However, as of June 30, 2023, no material loss contingencies have been accrued for such matters in the Company’s financial statements.

However, as of September 30, 2023, no material loss contingencies have been accrued for such matters in the Company’s 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.

The share repurchase program has been temporarily suspended since July 2022 due to the Company’s previously pending merger with Silicon Motion (Note 3).

During the six months ended June 30, 2023, the Company did no t repurchase any shares of its common stock under the repurchase program.

At June 30, 2023, 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.

The share repurchase program has been temporarily suspended since July 2022 due to the Company’s previously pending (now terminated) merger with Silicon Motion (Note 3).

During the nine months ended September 30, 2023, the Company did no t repurchase any shares of its common stock under the repurchase program.

At September 30, 2023, 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.

Subsequent Events

On July 26, 2023, the Company provided notice to Silicon Motion that it has terminated the Merger Agreement (Note 3) and the Company is relieved of its obligations to close because, among other reasons, (i) certain conditions to closing set forth in the Merger Agreement are not satisfied and are incapable of being satisfied, (ii) Silicon Motion has suffered a Material Adverse Effect that is continuing, (iii) Silicon Motion is in material breach of representations, warranties, covenants, and agreements in the Merger Agreement that give rise to the right of the Company to terminate, and (iv) in any event, the First Extended Outside Date has passed and was not automatically extended because certain conditions in Article 6 of the Merger Agreement were not satisfied or waived as of May 5, 2023.

Under the terms of the Merger Agreement, MaxLinear is not required to pay a break-up fee or other fee as a result of the termination of the Merger Agreement.

Undefined capitalized terms in this paragraph have the same meaning as in the Merger Agreement.

In connection with the termination of the merger agreement, the second amended and restated commitment letter with Wells Fargo Bank and other lenders (Note 8) was terminated.

In October 2023, the Company initiated a reduction of its workforce to align its operational needs with the changes in macroeconomic conditions and the demand environment, while continuing to support its long-term business strategy by reducing its operating expenses.

The Company’s management is currently evaluating the timing and full impact of the workforce reduction on the Company’s business, financial condition and results of operations for the year ending December 31, 2023.

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