MAXLINEAR, INC 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure and Procedures We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our periodic reports filed with the SEC is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and no evaluation of controls and procedures can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. As required by Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, prior to filing this Form 10-K, we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this Form 10-K. Based on their evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Form 10-K. Management’s Annual Report on Internal Controls over Financial Reporting Our management, including our principal executive officer and principal financial officer, is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our management, including our principal executive officer and principal financial officer, evaluated the effectiveness of our internal control over financial reporting based on criteria established in the Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based upon that evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2023. The effectiveness of our internal control over financial reporting as of December 31, 2023 has been audited by Grant Thornton LLP, an independent registered public accounting firm, and Grant Thornton LLP has issued a report on our internal control over financial reporting, which is included herein. 72 Changes in Internal Control over Financial Reporting An evaluation was performed under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, to determine whether any change in our internal control over financial reporting occurred during the fiscal quarter ended December 31, 2023 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15 of the Exchange Act, as amended, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 73 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Stockholders MaxLinear, Inc. Opinion on internal control over financial reporting We have audited the internal control over financial reporting of MaxLinear, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2023, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2023, and our report dated January 31, 2024 expressed an unqualified opinion on those financial statements. Basis for opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting (“Management’s Report”). Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and limitations of internal control over financial reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Grant Thornton LLP Newport Beach, California January 31, 2024 74 ITEM 9B. OTHER INFORMATION Securities Trading Plans of Directors and Executive Officers During our last fiscal quarter, no director or officer, as defined in Rule 16a-1(f), adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” each as defined in Regulation S-K Item 408. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTION Not applicable. 75 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The information required by Item 10 with respect to our directors and executive officers will be either (i) included in an amendment to this Annual Report on Form 10-K or (ii) incorporated by reference to our Definitive Proxy Statement to be filed in connection with our 2024 Annual Meeting of Stockholders, or the 2024 Proxy Statement. Such amendment in the 2024 Proxy Statement will be filed with the SEC no later than 120 days after December 31, 2023. Item 405 of Regulation S-K calls for disclosure of any known late filing or failure by an insider to file a report required by Section 16(a) of the Exchange Act. This information will be contained under the caption “Related Person Transactions and Section 16(a) Beneficial Ownership Reporting Compliance” in either an amendment to this Annual Report on Form 10-K or the 2024 Proxy Statement and is incorporated herein by reference. Code of Conduct We have adopted a code of ethics and employee conduct that applies to our board of directors and all of our employees, including our chief executive officer and principal financial officer. Our code of conduct is available at our website by visiting www.maxlinear.com and clicking through “Investors,” “Corporate Governance,” “Governance,” “Governance Documents,” and “Code of Conduct.” When required by the rules of the Nasdaq Stock Market LLC, or Nasdaq, or the SEC, we will disclose any future amendment to, or waiver of, any provision of the code of conduct for our chief executive officer and principal financial officer or any member or members of our board of directors on our website within four business days following the date of such amendment or waiver. The information required by Item 10 with respect to our audit committee is incorporated by reference from the information set forth under the caption “Corporate Governance and Board of Directors — Board Committees” in either an amendment to this Annual Report on Form 10-K or the 2024 Proxy Statement. ITEM 11. EXECUTIVE COMPENSATION The information required by Item 11 is incorporated by reference from the information set forth under the captions “Compensation of Non-Employee Directors” and “Executive Compensation” in either an amendment to this Annual Report on Form 10-K or our 2024 Proxy Statement. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information required by Item 12 is incorporated by reference from the information set forth under the captions “Executive Compensation — Equity Compensation Plan Information” and “Security Ownership” in either an amendment to this Annual Report on Form 10-K or our 2024 Proxy Statement. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The information required by Item 13 is incorporated by reference from the information set forth under the captions “Corporate Governance and Board of Directors — Director Independence” and “Related Person Transactions and Section 16(a) Beneficial Ownership Reporting Compliance” in either an amendment to this Annual Report on Form 10-K or our 2024 Proxy Statement. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The information required by Item 14 is incorporated by reference from the information set forth under the caption “Proposal Number 3 — Ratification of Appointment of Independent Registered Public Accounting Firm” in either an amendment to this Annual Report on Form 10-K or our 2024 Proxy Statement. 76 PART IV — FINANCIAL INFORMATION ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES a) Documents filed as part of the report 1. Financial Statements Our consolidated financial statements are attached hereto and listed on the Index to Consolidated Financial Statements of this Annual Report on Form 10-K. 2. Financial Statement Schedules Schedule II. Valuation and Qualifying Accounts —Years ended December 31, 2023, 2022 and 2021 All other schedules are omitted as the required information is inapplicable, or the information is presented in the financial statements or related notes. SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS (in thousands): Classification Balance at beginning of year Additions (deductions) charged to expenses Other Additions (Deductions) Balance at end of year Allowance for credit losses (previously, allowance for doubtful accounts) 2023 $ — $ — $ — $ — $ — 2022 — — — — — 2021 — — — — — Warranty reserves 2023 $ 473 $ 301 $ — $ (490) $ 284 2022 774 358 — (659) 473 2021 700 514 — (440) 774 Valuation allowance for deferred tax assets 2023 $ 66,273 $ 8,019 $ — $ — $ 74,292 2022 68,151 4,169 — (6,047) 66,273 2021 71,811 (3,660) — — 68,151 77 3. Exhibits Exhibit Number Exhibit Title 2.1 Asset Purchase Agreement, dated as of April 5, 2020, by and among MaxLinear, Inc., a Delaware corporation, Intel Corporation, a Delaware corporation, and MaxLinear Asia Singapore Private Limited, a wholly-owned subsidiary of MaxLinear (incorporated by reference to Exhibit 2.1 to the Registrant's Current Report on Form 8-K filed on April 6, 2020 (File No. 001-34666)). 2.2 Agreement and Plan of Merger, dated as of May 5, 2022, by and among MaxLinear, Inc., Silicon Motion Technology Corporation and Shark Merger Sub (incorporated by reference to Exhibit 2.1 to the Registrant's Current Report on Form 8-K filed on May 5, 2022). 3.1 Registrant’s Amended and Restated Certificate of Incorporation, as filed with the Secretary of State of the State of Delaware on March 29, 2010 (incorporated by reference to Exhibit 3.5 of the Registrant’s Registration Statement on Form S-1 and all amendments thereto (File No. 333-162947)). 3.2 Registrant’s Certificate of Retirement (incorporated by reference to Exhibit 3.1 of Registrant’s Form 8-A/A filed on July 30, 2017). 3.3 Registrant’s Amended and Restated Bylaws, as amended to date (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on November 17, 2022 (File No. 001-34666)). 3.4 Registrant’s Certificate of Amendment to the Fifth Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of the Registrant’s Quarterly Report on Form 10-Q filed on July 27, 2023 (File No. 001-34666)). 4.1 Specimen common stock certificate of Registrant (incorporated by reference to Exhibit 4.1 of the Registrant’s Amendment No. 1 on Form 8-A filed on March 30, 2017 (File No. 001-34666)). +4.2 Description of the registrant ’ s securities registered pursuant to Section 12 of the Securities Exchange Act of 1934. +10.1 Form of Director and Executive Officer Indemnification Agreement (incorporated by reference to Exhibit 10.1 of the Registrant’s Registration Statement on Form S-1 and all amendments thereto (File No. 333-162947)). +10.2 Form of Director and Controlling Person Indemnification Agreement (incorporated by reference to Exhibit 10.2 of the Registrant’s Registration Statement on Form S-1 and all amendments thereto (File No. 333-162947)). +10.3 2010 Equity Incentive Plan, as amended on December 13, 2018 (incorporated by reference to Exhibit 10.3 of the Registrant’s Current Report on Form 8-K filed on December 19, 2018 (File No. 001-34666)). +10.4 Form of Agreement under the 2010 Equity Incentive (incorporated by reference to Exhibit 10.7 of the Registrant’s Quarterly Report on Form 10-Q filed on July 28, 2011 (File No. 001-34666)). +10.5 2010 Employee Stock Purchase Plan, as amended (incorporated by reference to Exhibit 10.8 of the Registrant’s Current Report on Form 8-K filed on August 15, 2016 (File No. 001-34666)). +10.6 Form of Change in Control Agreement for Executive Officers (incorporated herein by reference to Exhibit 10.13 of the Registrant's Annual Report on Form 10-K filed on February 17, 2016). *†10.7 Intellectual Property License Agreement, dated June 18, 2009, between the Registrant and Intel Corporation. +10.8 Employment Offer Letter, dated November 9, 2012, between the Registrant and Will Torgerson (incorporated by reference to Exhibit 10.17 of the Registrant’s Annual Report on Form 10-K filed on February 6, 2013 (File No. 001-34666)). 10.9 Lease Agreement, dated December 17, 2013, between Registrant and The Campus Carlsbad, LLC (incorporated by reference to Exhibit 10.26 of the Registrant’s Annual Report on Form 10-K filed on February 7, 2014 (File No. 001-34666)). 10.10 First Amendment to Lease, dated May 6, 2015, between Registrant, on the one hand, and Brookwood CB I, LLC and Brookwood CB II, LLC, as tenants in common and successors-in-interest to The Campus Carlsbad, LLC, on the other hand (incorporated by reference to Exhibit 10.1 of Registrant’s Quarterly Report on Form 10-Q filed on August 10, 2015 (File No. 333-34666)). 10.11 Lease Agreement, dated November 11, 2015, between Registrant and The Northwestern Mutual Life Insurance Company (incorporated herein by reference to Exhibit 10.33 of the Registrant’s Annual Report on Form 10-K filed on February 17, 2016). +10.12 Employment Promotion Letter, dated February 11, 2016, between the Registrant and Connie Kwong (incorporated herein by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 10-Q filed on May 9, 2016). 78 Exhibit Number Exhibit Title +10.13 Employment Offer Letter, dated June 7, 2018, between the Registrant and Steven Litchfield (incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 10-Q filed on August 7, 2018 (File No. 001-34666)). +10.14 Form of Change in Control Agreement for Chief Executive Officer and Chief Financial Officer, as amended (incorporated herein by reference to Exhibit 10.1 of the Registrant's Form 8-K filed on December 19, 2018 (File No. 001-34666)). +10.15 Form of Change in Control Agreement for Executive Officers, as amended (incorporated herein by reference to Exhibit 10.2 of the Registrant's Form 8-K filed on December 19, 2018 (File No. 001-34666)). +10.16 Executive Incentive Bonus Plan, as amended on December 13, 2018 (incorporated by reference to Exhibit 10.4 of the Registrant’s Current Report on Form 8-K filed on December 19, 2018 (File No. 001-34666)). +*†10.17 Form of Restricted Stock Unit Award Agreement for Performance-Based Awards under the 2010 Equity Incentive Plan . 10.18 Credit Agreement, dated as of June 23, 2021, by and among MaxLinear, Inc., the lenders from time to time party thereto, and Wells Fargo Bank, National Association, as administrative agent and collateral agent (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on June 24, 2021 ). 10.19 Security Agreement, dated as of June 23, 2021, by and among MaxLinear, Inc., the subsidiary guarantors from time to time party thereto, and Wells Fargo Bank, National Association, as collateral agent (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on June 24, 2021) +10.20 Employment Offer Letter, dated April 26, 2022, between the Registrant and Michelle M. Sayer (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 10-Q filed on July 27, 2022). 10.21 Commitment Letter, dated as of May 5, 2022, by and among MaxLinear, Inc., Wells Fargo Bank, N.A., and Wells Fargo Securities, LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on May 5, 2022) . 10.22 Amended and Restated Commitment Letter, dated as of June 17, 2022, by and among MaxLinear, Inc., Wells Fargo Bank, N.A., Wells Fargo Securities, LLC, Bank of Montreal, BMO Capital Markets Corp., Citizens Bank, N.A., Truist Bank and Trust Securities, Inc. (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on June 21, 2022) 10.23 Second Amended and Restated Commitment Letter by and among MaxLinear, Inc., Wells Fargo Bank, N.A., Wells Fargo Securities, LLC, Bank of Montreal, BMO Capital Markets Corp., Citizens Bank, N.A., Truist Bank, and Truist Securities, Inc. dated as of October 24, 2022 (incorporated by reference to Exhibit 10.32 to the Registrant's Annual Report on Form 10-K filed on February 1, 2023) . 10.24 Amendment No. 1 to Credit Agreement, date as of June 29, 2023, by and among MaxLinear, Inc., the lenders from time to time party thereto, and Wells Fargo Bank, National Association, as administrative agent and collateral agent (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on July 27, 2023 (File No. 001-34666)). *21.1 Subsidiaries of the Registrant. *23.1 Consent of Independent Registered Public Accounting Firm. *24.1 Power of Attorney (included on the signature page of this Form 10-K). *31.1 Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *31.2 Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. #*32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. +*97.1 Compensation Recovery Policy, as adopted on August 9, 2023. 101.INS XBRL Instance Document - the instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document. 101.SCH XBRL Taxonomy Extension Schema Document 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF XBRL Taxonomy Extension Definition Linkbase Document 101.LAB XBRL Taxonomy Extension Label Linkbase Document 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) 79 * Filed herewith. # In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 33-8238 and 34-47986, Final Rule: Management’s Reports on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports, the certifications furnished pursuant to this item will not be deemed “filed” for purposes of Section 18 of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference. + Indicates a management contract or compensatory plan. † Certain portions of this exhibit have been redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K. The Registrant agrees to furnish supplementally an unredacted copy of the exhibit to the Securities and Exchange Commission upon its request. (b) Exhibits The exhibits filed as part of this report are listed in Item 15(a)(3) of this Form 10-K. (c) Schedules The financial statement schedule required by Regulation S-X and Item 8 of this form is listed in Item 15(a)(2) of this Form 10-K. 80 SIGNATURES Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. MAXLINEAR, INC. (Registrant) By: /s/ KISHORE SEENDRIPU, Ph.D. Kishore Seendripu, Ph.D. President and Chief Executive Officer Date: January 31, 2024 (Principal Executive Officer) 81 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Kishore Seendripu, Ph.D. and Steven Litchfield, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, to sign any and all amendments (including post-effective amendments) to this Annual Report on Form 10-K and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto each of said attorneys-in-fact and agents, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-facts and agents, or his substitute or substitutes, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated: Signature Title Date /s/ KISHORE SEENDRIPU, Ph.D. President, Chief Executive Officer, and Director January 31, 2024 Kishore Seendripu, Ph.D. (Principal Executive Officer) /s/ STEVEN G. LITCHFIELD Chief Financial Officer and Chief Corporate Strategy Officer January 31, 2024 Steven G. Litchfield (Principal Financial Officer) /s/ CONNIE KWONG Corporate Controller January 31, 2024 Connie Kwong (Principal Accounting Officer) /s/ THOMAS E. PARDUN Lead Director January 31, 2024 Thomas E. Pardun /s/ DANIEL A. ARTUSI Director January 31, 2024 Daniel A. Artusi /s/ CAROLYN D. BEAVER Director January 31, 2024 Carolyn D. Beaver /s/ GREGORY P. DOUGHERTY Director January 31, 2024 Gregory P. Dougherty /s/ TSU-JAE KING LIU, Ph.D. Director January 31, 2024 Tsu-Jae King Liu, Ph.D. /s/ ALBERT J. MOYER Director January 31, 2024 Albert J. Moyer /s/ THEODORE TEWKSBURY, Ph.D. Director January 31, 2024 Theodore Tewksbury, Ph.D. 82 MaxLinear, Inc. Index to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm (PCAOB ID Number 248 ) 84 Consolidated Balance Sheets 86 Consolidated Statements of Operations 87 Consolidated Statements of Comprehensive Income (Loss) 88 Consolidated Statements of Stockholders’ Equity 89 Consolidated Statements of Cash Flows 90 Notes to Consolidated Financial Statements 91 83 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Stockholders MaxLinear, Inc. Opinion on the financial statements We have audited the accompanying consolidated balance sheets of MaxLinear, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and financial statement schedule included under Item 15(a) (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated January 31, 2024 expressed an unqualified opinion. Basis for opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical audit matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Realizability of deferred tax assets As discussed in Note 1 to the financial statements, management records valuation allowances to reduce deferred tax assets when a judgment is made, that is considered more likely than not, that a tax benefit will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences will become deductible. The Company assesses the need for a valuation allowance by evaluating both positive and negative evidence that may exist. We identified the realizability of deferred tax assets as a critical audit matter. The principal consideration for our determination that the realizability of deferred tax assets as a critical audit matter is that the forecast of future taxable income is an accounting estimate subject to a high level of estimation. There is inherent uncertainty and subjectivity related to management’s judgments and assumptions regarding the Company’s international tax structure and transfer pricing agreements, determination of the taxable income by jurisdiction and the impacts of the Tax Act on future taxable income, which are complex in nature and require significant auditor judgment. 84 Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. With the assistance of engagement team members possessing specialized skill in income tax matters, our audit procedures related to the realizability of deferred tax assets included the following, among others: • Reviewing management’s application of the rules under the Tax Act with a focus on Global Intangible Low-Taxed Income and the ordering rules and its expected impact on estimated future taxable income; • Comparing the scheduled reversals of deferred tax liabilities to the underlying financial and tax accounting records; • Comparing the forecast of future taxable income to the following: ◦ Prior year actual results by jurisdiction to evaluate the reasonableness of significant changes contemplated for the following year; ◦ Forecasts of future information used in other areas, to evaluate completeness and consistency • Reviewing the Company’s transfer pricing assumptions, including royalty rates and cost-plus markups, applied by the Company and its non-US subsidiaries; and • Testing the design and operating effectiveness of management’s internal controls over the completeness and accuracy of the forecast of future taxable income and the proper application of relevant tax law to support the realizability of deferred tax assets. /s/ Grant Thornton LLP We have served as the Company’s auditor since 2016. Newport Beach, California January 31, 2024 85 MAXLINEAR, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except par value amounts) December 31, 2023 December 31, 2022 Assets Current assets: Cash and cash equivalents $ 187,288 $ 187,353 Short-term restricted cash 1,051 982 Short-term investments — 18,529 Accounts receivable, net 170,619 170,971 Inventory 99,908 160,544 Prepaid expenses and other current assets 29,159 24,745 Total current assets 488,025 563,124 Long-term restricted cash 17 22 Property and equipment, net 66,431 79,018 Leased right-of-use assets 31,264 28,515 Intangible assets, net 73,630 109,316 Goodwill 318,588 306,739 Deferred tax assets 69,493 66,491 Other long-term assets 32,809 26,800 Total assets $ 1,080,257 $ 1,180,025 Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 21,551 $ 68,576 Accrued price protection liability 71,684 113,274 Accrued expenses and other current liabilities 98,468 100,155 Accrued compensation 30,426 59,081 Total current liabilities 222,129 341,086 Long-term lease liabilities 26,243 23,353 Long-term debt 122,375 121,757 Other long-term liabilities 23,245 17,444 Total liabilities 393,992 503,640 Commitments and contingencies Stockholders’ equity: Preferred stock, $ 0.0001 par value; 25,000 shares authorized, no shares issued or outstanding — — Common stock, $ 0.0001 par value; 550,000 shares authorized; 81,818 shares issued and outstanding at December 31, 2023 and 78,745 shares issued and outstanding December 31, 2022 8 8 Additional paid-in capital 808,575 722,778 Accumulated other comprehensive loss ( 3,791 ) ( 1,021 ) Accumulated deficit ( 118,527 ) ( 45,380 ) Total stockholders’ equity 686,265 676,385 Total liabilities and stockholders’ equity $ 1,080,257 $ 1,180,025 See accompanying notes. 86 MAXLINEAR, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) Year Ended December 31, 2023 2022 2021 Net revenue $ 693,263 $ 1,120,252 $ 892,398 Cost of net revenue 307,600 470,483 396,566 Gross profit 385,663 649,769 495,832 Operating expenses: Research and development 269,504 296,442 278,440 Selling, general and administrative 132,156 168,008 149,943 Impairment losses 2,438 2,811 — Restructuring charges 19,786 2,265 2,204 Total operating expenses 423,884 469,526 430,587 Income (loss) from operations ( 38,221 ) 180,243 65,245 Interest income 6,053 245 78 Interest expense ( 10,702 ) ( 9,768 ) ( 12,996 ) Loss on extinguishment of debt — — ( 5,221 ) Other income (expense), net ( 20,940 ) 3,478 764 Total other income (expense), net ( 25,589 ) ( 6,045 ) ( 17,375 ) Income (loss) before income taxes ( 63,810 ) 174,198 47,870 Income tax provision 9,337 49,158 5,901 Net income (loss) $ ( 73,147 ) $ 125,040 $ 41,969 Net income (loss) per share: Basic $ ( 0.91 ) $ 1.60 $ 0.55 Diluted $ ( 0.91 ) $ 1.55 $ 0.53 Shares used to compute net income (loss) per share: Basic 80,719 78,039 76,037 Diluted 80,719 80,852 79,679 See accompanying notes. 87 MAXLINEAR, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands) Year Ended December 31, 2023 2022 2021 Net income (loss) $ ( 73,147 ) $ 125,040 $ 41,969 Other comprehensive income (loss), net of tax: Foreign currency translation adjustments, net of tax benefit of $ 95 in 2023, expense of $ 184 in 2022 and expense of $ 0 in 2021 121 ( 5,201 ) ( 242 ) Net actuarial gain (loss) on pension and other defined benefit plans, net of tax benefit of $ 85 in 2023, $ 0 in 2022 and $ 0 in 2021 ( 206 ) 2,055 932 Reclassification adjustments of unrealized gain (loss) on pension and other defined benefit plans, net of tax benefit of $ 1,107 in 2023, $ 0 in 2022 and $ 0 in 2021 ( 2,685 ) — — Other comprehensive income (loss) ( 2,770 ) ( 3,146 ) 690 Total comprehensive income (loss) $ ( 75,917 ) $ 121,894 $ 42,659 See accompanying notes. 88 MAXLINEAR, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands) Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders’ Equity Shares Amount Balance at December 31, 2020 74,536 $ 7 $ 602,064 $ 1,435 $ ( 212,389 ) $ 391,117 Common stock issued pursuant to equity awards, net 2,501 1 14,613 — — 14,614 Repurchase of common stock ( 455 ) — ( 23,548 ) — — ( 23,548 ) Employee stock purchase plan 196 — 4,998 — — 4,998 Stock-based compensation — — 59,358 — — 59,358 Other comprehensive income — — — 690 — 690 Net income — — — — 41,969 41,969 Balance at December 31, 2021 76,778 8 657,485 2,125 ( 170,420 ) 489,198 Common stock issued pursuant to equity awards, net 2,391 — 10,252 — — 10,252 Repurchase of common stock ( 564 ) — ( 31,511 ) — — ( 31,511 ) Employee stock purchase plan 140 — 4,684 — — 4,684 Stock-based compensation — — 81,868 — — 81,868 Other comprehensive loss — — — ( 3,146 ) — ( 3,146 ) Net income — — — — 125,040 125,040 Balance at December 31, 2022 78,745 8 722,778 ( 1,021 ) ( 45,380 ) 676,385 Common stock issued pursuant to equity awards, net 2,841 — 26,237 — — 26,237 Employee stock purchase plan 232 — 4,379 — — 4,379 Stock-based compensation — — 55,181 — — 55,181 Other comprehensive loss — — — ( 2,770 ) — ( 2,770 ) Net loss — — — — ( 73,147 ) ( 73,147 ) Balance at December 31, 2023 81,818 $ 8 $ 808,575 $ ( 3,791 ) $ ( 118,527 ) $ 686,265 See accompanying notes. 89 MAXLINEAR, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year Ended December 31, 2023 2022 2021 Operating Activities Net income (loss) $ ( 73,147 ) $ 125,040 $ 41,969 Adjustments to reconcile net income (loss) to cash provided by operating activities: Amortization and depreciation 71,516 80,731 91,792 Impairment losses 2,438 2,811 — Amortization of debt issuance costs and accretion of discounts 2,561 1,975 3,000 Stock-based compensation 55,176 81,704 59,358 Deferred income taxes ( 4,452 ) 23,454 ( 3,235 ) Loss on disposal of property and equipment 2,057 170 533 Gain on sale of investments ( 434 ) ( 3,375 ) — Unrealized holding loss on investments 1,765 1,476 — Impairment of leasehold improvements — — 226 Impairment of leased right-of-use assets — 462 429 (Gain) loss on settlement of pension ( 1,008 ) — — Loss on extinguishment of debt — — 5,221 (Gain) loss on foreign currency 2,475 ( 1,829 ) 634 Excess tax benefits on stock-based awards ( 253 ) ( 9,921 ) ( 7,415 ) Changes in operating assets and liabilities, net of effects of acquisitions: Accounts receivable, net 1,406 ( 50,875 ) ( 51,690 ) Inventory 60,636 ( 28,841 ) ( 33,689 ) Prepaid expenses and other assets ( 9,328 ) 1,789 24,186 Leased right-of-use assets — — 72 Accounts payable, accrued expenses and other current liabilities ( 29,431 ) 65,815 12,771 Accrued compensation 9,708 42,003 33,595 Accrued price protection liability ( 41,562 ) 73,574 ( 7,320 ) Lease liabilities ( 11,671 ) ( 11,440 ) ( 9,905 ) Other long-term liabilities 4,920 ( 5,997 ) 7,701 Net cash provided by operating activities 43,372 388,726 168,233 Investing Activities Purchases of property and equipment ( 13,454 ) ( 41,253 ) ( 39,176 ) Purchases of intangible assets ( 6,355 ) ( 11,184 ) ( 7,581 ) Cash used in acquisitions, net of cash acquired ( 13,324 ) — ( 40,000 ) Proceeds loaned under notes receivable — ( 10,000 ) — Purchases of long-term investments — ( 29,325 ) ( 5,000 ) Sale of trading securities 17,198 — — Net cash used in investing activities ( 15,935 ) ( 91,762 ) ( 91,757 ) Financing Activities Proceeds from the issuance of debt — — 350,000 Payment of debt issuance cost ( 18,325 ) — ( 4,173 ) Repayment of debt — ( 185,000 ) ( 409,813 ) Net proceeds from issuance of common stock 4,559 5,006 8,780 Minimum tax withholding paid on behalf of employees for restricted stock units ( 12,590 ) ( 28,896 ) ( 13,149 ) Repurchase of common stock — ( 31,511 ) ( 23,548 ) Net cash used in financing activities ( 26,356 ) ( 240,401 ) ( 91,903 ) Effect of exchange rate changes on cash and cash equivalents ( 1,082 ) 56 ( 2,869 ) Increase (decrease) in cash, cash equivalents and restricted cash ( 1 ) 56,619 ( 18,296 ) Cash, cash equivalents and restricted cash at beginning of period 188,357 131,738 150,034 Cash, cash equivalents and restricted cash at end of period $ 188,356 $ 188,357 $ 131,738 Supplemental disclosures of cash flow information: Cash paid for interest $ 9,481 $ 9,078 $ 11,034 Cash paid for income taxes $ 28,645 $ 23,829 $ 3,839 Cash received for dividend income on investments $ 716 $ — $ — Supplemental disclosures of non-cash activities: Issuance of shares for payment of bonuses $ 38,648 $ 38,826 $ 23,981 See accompanying notes. 90 MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Organization and Summary of Significant Accounting Policies Description of Business MaxLinear, Inc. was incorporated in Delaware in September 2003. MaxLinear, Inc., together with its directly and indirectly wholly-owned subsidiaries, collectively referred to as MaxLinear, or the Company, is a provider of communications systems-on-chip, or SoC, solutions used in broadband, mobile and wireline infrastructure, data center, and industrial and multi-market applications. MaxLinear is a fabless integrated circuit design company whose products integrate all or substantial portions of a high-speed communication system, including radio frequency, or RF, high-performance analog, mixed-signal, digital signal processing, security engines, data compression and networking layers, and power management. MaxLinear’s customers include electronics distributors, module makers, original equipment manufacturers, or OEMs, and original design manufacturers, or ODMs, who incorporate the Company’s products in a wide range of electronic devices. Examples of such devices include broadband modems compliant with Data Over Cable Service Interface Specifications, or DOCSIS, Passive Optical Network, or PON, and DSL; Wi-Fi and wireline routers for home networking; radio transceivers and modems for 4G/5G base-station and backhaul infrastructure; optical transceivers targeting hyperscale data centers; as well as power management and interface products used in these and many other markets. Basis of Presentation and Principles of Consolidation The consolidated financial statements include the accounts of MaxLinear, Inc. and its directly and indirectly wholly- owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP. All intercompany transactions and investments have been eliminated in consolidation. The functional currency of certain foreign subsidiaries is the local currency. Accordingly, assets and liabilities of these foreign subsidiaries are translated at the current exchange rate at the balance sheet date and historical rates for equity. Revenue and expense components are translated at weighted average exchange rates in effect during the period. Gains and losses resulting from foreign currency translation are included as a component of stockholders’ equity. Foreign currency transaction gains and losses are included in the results of operations, and to date, have not been material. Use of Estimates and Significant Risks and Uncertainties The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes to the consolidated financial statements. Actual results could differ from those estimates. Business Combinations The Company applies the provisions of ASC 805, Business Combinations , in accounting for its acquisitions. It requires the Company to recognize separately from goodwill the assets acquired and the liabilities assumed, at the acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the acquisition date fair values of the net assets acquired and the liabilities assumed. While the Company uses its best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, its estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the consolidated statements of operations. Costs to exit or restructure certain activities of an acquired company or the Company’s internal operations are accounted for as termination and exit costs pursuant to ASC 420, Exit or Disposal Cost Obligations , and are accounted for separately from the business combination. A liability for costs associated with an exit or disposal activity is recognized and measured at its fair value in the consolidated statements of operations in the period in which the liability is incurred. For a given acquisition, the Company may identify certain pre-acquisition contingencies as of the acquisition date and may extend its review, evaluation, and adjustment of these pre-acquisition contingencies throughout the measurement period in order to obtain sufficient information to assess whether the Company includes these contingencies as a part of the fair value estimates of assets acquired and liabilities assumed and, if so, to determine their estimated amounts. A pre-acquisition 91 MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS contingency (non-income tax related) is only recognized as an asset or a liability if: (i) it is probable that an asset existed or a liability had been incurred at the acquisition date and (ii) the amount of the asset or liability can be reasonably estimated. Subsequent to the measurement period, changes in estimates of such contingencies will affect earnings and could have a material effect on the Company's results of operations and financial position. In addition, uncertain tax positions and tax-related valuation allowances assumed, if any, in connection with a business combination are initially estimated as of the acquisition date. The Company re-evaluates these items quarterly based upon facts and circumstances that existed as of the acquisition date with any adjustments to the preliminary estimates being recorded to goodwill if identified within the measurement period. Subsequent to the end of the measurement period or final determination of the estimated value of the tax allowance or contingency, whichever comes first, changes to these uncertain tax positions and tax related valuation allowances will affect the income tax provision (benefit) in the consolidated statements of operations and could have a material impact on the results of operations and financial position. Cash and Cash Equivalents The Company considers all liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash equivalents are recorded at cost, which approximates market value. Accounts Receivable The Company performs ongoing credit evaluations of its customers and assesses each customer’s credit worthiness. The Company monitors collections and payments from its customers and maintains an allowance for doubtful accounts, which is based upon applying an expected credit loss rate to receivables based on the historical loss rate from similar high risk customers adjusted for current conditions, including any specific customer collection issues identified, and forecasts of economic conditions. Delinquent account balances are written off after management has determined that the likelihood of collection is remote. The allowance for credit losses as of December 31, 2023 and 2022 and the activity in this account, including the current-period provision for expected credit losses for the years ended December 31, 2023, 2022, and 2021, were not material. Inventory The Company assesses the recoverability of its inventory based on assumptions about demand and market conditions. Forecasted demand is determined based on historical sales and expected future sales. Inventory is stated at the lower of cost or net realizable value. Cost is computed using standard cost, which approximates actual cost on a first-in, first-out basis and net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The Company reduces its inventory to the lower of its cost or net realizable value on a part-by-part basis to account for obsolescence or lack of marketability. Reductions are calculated as the difference between the cost of inventory and its net realizable value based upon assumptions about future demand, market conditions and costs. Once established, these adjustments are considered permanent and are not revised until the related inventory is sold or disposed of. Fair Value of Financial Instruments The carrying amount of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses and compensation are considered to be representative of their respective fair values because of the short-term nature of these accounts. Property and Equipment Property and equipment is carried at cost and depreciated over the estimated useful lives of the assets, ranging from two to five years , using the straight-line method. Leasehold improvements are stated at cost and amortized over the shorter of the estimated useful lives of the assets or the lease term. Production Masks Production masks with alternative future uses or discernible future benefits are capitalized and amortized over their estimated useful lives of two to five years . To determine if a production mask has alternative future uses or benefits, the Company evaluates risks associated with developing new technologies and capabilities, and the related risks associated with entering new markets. Production masks that do not meet the criteria for capitalization are expensed as research and development costs. 92 MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Goodwill and Intangible Assets Goodwill is the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations accounted for under the acquisition method. Intangible assets represent purchased intangible assets including developed technology, in-process research and development, or IPR&D, technologies acquired or licensed from other companies, customer relationships, non-compete covenants, backlog, and trademarks and tradenames. Purchased finite-lived intangible assets are capitalized and amortized over their estimated useful lives. Technologies acquired or licensed from other companies, customer relationships, non-compete covenants, backlog, and trademarks and tradenames are capitalized and amortized over the lesser of the terms of the agreement, or estimated useful life. The Company capitalizes IPR&D projects acquired as part of a business combination. On completion of each project, IPR&D assets are reclassified to developed technology and amortized over their estimated useful lives. Impairment of Goodwill and Long-Lived Assets Goodwill is not amortized but is tested for impairment using either a qualitative assessment, and/or quantitative assessment, which is based on comparing the fair value of a reporting unit with its carrying amount. If the carrying amount of a reporting unit exceeds its fair value, a goodwill impairment loss is recorded. The Company tests by reporting unit, goodwill and other indefinite-lived intangible assets for impairment as of October 31 each year or more frequently if it believes indicators of impairment exist. During development, IPR&D is not subject to amortization and is tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. The Company reviews indefinite-lived intangible assets for impairment using a qualitative assessment, followed by a quantitative assessment, as needed, each year as of October 31, the date of its annual goodwill impairment review, or whenever events or changes in circumstances indicate the carrying value may not be recoverable. Recoverability of indefinite-lived intangible assets is measured by comparing the carrying amount of the asset to its fair value. In certain cases, the Company utilizes the relief-from-royalty method when appropriate, and a fair value will be obtained based on analysis over the costs saved by owning the right instead of leasing it. Once an IPR&D project is complete, it becomes a finite-lived intangible asset and is evaluated for impairment both immediately prior to its change in classification and thereafter in accordance with the Company’s policy for long-lived assets. The Company regularly reviews the carrying amount of its long-lived assets subject to depreciation and amortization, as well as the useful lives, to determine whether indicators of impairment may exist which warrant adjustments to carrying values or estimated useful lives. An impairment loss would be recognized when the sum of the expected future undiscounted net cash flows is less than the carrying amount of the asset. Should impairment exist, the impairment loss would be measured based on the excess of the carrying amount of the asset over the asset’s fair value. During the years 2023, 2022, and 2021, the Company recorded impairment of intangible assets of $ 2.4 million, $ 2.8 million and $ 0 , respectively. Refer to Goodwill and Intangible Assets, Note 5 for more information. Revenue Recognition The Company’s revenue is primarily generated from sales of the Company’s integrated circuits to electronics distributors, module makers, OEMs, and ODMs under individual customer purchase orders, some of which have underlying master sales agreements that specify terms governing the product sales. The Company recognizes such revenue at the point in time when control of the products is transferred to the customer at the estimated net consideration for which collection is probable, taking into account the customer’s rights to price protection, other pricing credits, unit rebates, and rights to return unsold product. Transfer of control occurs either when products are shipped to or received by the distributor or direct customer, based on the terms of the specific agreement with the customer, if the Company has a present right to payment and transfer of legal title and the risks and rewards of ownership to the customer has occurred. For most of the Company's product sales, transfer of control occurs upon shipment to the distributor or direct customer. In assessing whether collection of consideration from a customer is probable, the Company considers the customer’s ability and intention to pay that amount of consideration when it is due. Payment of invoices is due as specified in the underlying customer agreement, typically 30 days from the invoice date, which occurs on the date of transfer of control of the products to the customer. Since payment terms are less than a year, the Company has elected the practical expedient and does not assess whether a customer contract has a significant financing component. A five-step approach is applied in the recognition of revenue: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance 93 MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS obligations in the contract, and (5) recognize revenue when the Company satisfies a performance obligation. Customer purchase orders plus the underlying master sales agreements are considered to be contracts with the customer for purposes of applying the five-step approach. Pricing adjustments and estimates of returns under contractual stock rotation rights are treated as variable consideration for purposes of determining the transaction price, and are estimated at the time control transfers using the expected value method based on the Company’s analysis of actual price adjustment claims by distributors and historical product return rates, and then reassessed at the end of each reporting period. The Company also considers whether any variable consideration is constrained, since such amounts for which it is probable that a significant reversal will occur when the contingency is subsequently resolved are required to be excluded from revenues. Price adjustments are finalized at the time the products are sold through to the end customer and the distributor or end customer submits a claim to reduce the sale price to a pre-approved net price. Stock rotation allowances are capped at a fixed percentage of the Company’s sales to a distributor for a period of time, up to six months , as specified in the individual distributor contract. If the Company’s current estimates of such credits and rights are materially inaccurate, it may result in adjustments that affect future revenues and gross profits. Returns under the Company’s general assurance warranty of products for a period of one to three years have not been material and warranty-related services are not considered a separate performance obligation under the customer contracts. Most of the Company’s customers resell the Company’s product as part of their product and thus are tax-exempt; however, to the extent the Company collects and remits taxes on product sales from customers, it has elected to exclude from the measurement of transaction price such taxes. Each distinct promise to transfer products is considered to be an identified performance obligation for which revenue is recognized upon transfer of control of the products to the customer. Although customers may place orders for products to be delivered on multiple dates that may be in different quarterly reporting periods, all of the orders are scheduled within one year from the order date. The Company has opted to not disclose the portion of revenues allocated to partially unsatisfied performance obligations, which represent products to be shipped within 12 months under open customer purchase orders, at the end of the current reporting period. The Company has also elected to record sales commissions when incurred, as the period over which the sales commission asset that would have been recognized is less than one year . Customer contract liabilities consist primarily of obligations to deliver rebates to customers in the form of units of products which are included in accrued expenses and other current liabilities in the consolidated balance sheets. Other obligations to customers, which are included in accrued price protection liability in the consolidated balance sheets, consist of estimates of price protection rights offered to the Company’s end customer on products sold by the Company to the end customer’s contract manufacturer at a standard price that are later incorporated into the end customers’ product. The Company’s price adjustments included in accrued expenses and other current liabilities are discounts and rebates expected to be claimed by the Company’s distributors upon sell-through of the products to their customers, which are initially sold by the Company to the distributors at a standard price. Also included in accrued expenses and other current liabilities are amounts expected to be returned by distributors under stock rotation rights. The Company also records a right of return asset, consisting of amounts representing the products the Company expects to receive from customers in returns, which is included in inventory in the consolidated balance sheets, and is typically settled within six months of transfer of control to the customer, or the period over which stock rotation rights are based. Upon lapse of the time period for stock rotations, or the contractual end to price protection and rebate programs, which is approximately one to two years , and when the Company believes unclaimed amounts are no longer subject to payment and will not be paid, any remaining asset or liability is derecognized by an offsetting entry to cost of net revenue and net revenue. For additional disclosures regarding contract liabilities and other obligations to customers, see Note 12. The Company assesses customer accounts receivable and contract assets for impairment in accordance with ASC 310-10-35. Warranty The Company generally provides a warranty on its products for a period of one to three years . The Company makes estimates of product return rates and expected costs to replace the products under warranty at the time revenue is recognized based on historical warranty experience and any known product warranty issues. If actual return rates and/or replacement costs differ significantly from these estimates, adjustments to recognize additional warranty expenses in cost of net revenue may be required in future periods. As of December 31, 2023 and 2022, the Company has warranty reserves of $ 0.3 million and $ 0.5 million, respectively, based on the Company’s estimates. 94 MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Segment Information The Company operates under one segment as it has developed, marketed and sold primarily only one class of similar products, radio-frequency, high-performance analog and mixed-signal communications system-on-chip solutions for the connected home, wired and wireless infrastructure markets and industrial and multi-market applications. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is its Chief Executive Officer. The Company’s Chief Executive Officer reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. The Company has one business activity and there are no segment managers who are held accountable for operations, operating results and plans for products or components below the consolidated unit level. Accordingly, the Company reports under a single operating segment. Stock-based Compensation The Company measures the cost of employee services received in exchange for equity incentive awards, including restricted stock units, employee stock purchase rights and stock options based on the grant date fair value of the award. The Company calculates the fair value of restricted stock units and performance-based restricted stock units based on the fair market value of the Company’s common stock on the grant date. Stock-based compensation expense is then determined based on the number of restricted stock units that are expected to vest; for performance-based restricted stock units, this is the number of units that are expected to vest during the performance period if it is probable that the Company will achieve the performance metrics specified in the underlying award agreement. The Company uses the Black-Scholes valuation model to calculate the fair value of stock options and employee stock purchase rights granted to employees. Stock-based compensation expense is recognized over the period during which the employee is required to provide services in exchange for the award, which is usually the vesting period. The Company recognizes compensation expense over the vesting period using the straight-line method and classifies these amounts in the consolidated statements of operations based on the department to which the related employee reports. Research and Development Costs incurred in connection with the development of the Company’s technology and future products are charged to research and development expense as incurred. 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. The Company also obtains research and development funding grants from governments in certain jurisdictions in which it operates. Both of these types of income are reflected as a credit to research and development expense when such income has been earned and any contingencies associated with retaining such income have been resolved. During the years ended December 31, 2023, 2022, and 2021, the Company recognized income from jointly funded research and development projects of $ 0 , $ 23.3 million, and $ 0 , respectively. While the Company retains ownership and rights to the underlying technology developed under the joint development projects, the Company may be required to repay all or a portion of the funds provided by the other parties under certain conditions, and defers such funds as liabilities until the repayment conditions have been resolved (Note 15). Leases The Company’s leases primarily consist of facility leases which are classified as operating leases. The Company assesses whether an arrangement contains a lease at inception. The Company recognizes a lease liability to make contractual payments under all leases with terms greater than twelve months and a corresponding right-of-use asset, representing its right to use the underlying asset for the lease term. The lease liability is initially measured at the present value of the lease payments over the lease term using the collateralized incremental borrowing rate when the implicit rate is unknown. Options to extend or terminate a lease are included in the lease term when it is reasonably certain that the Company will exercise such an option. The right-of-use asset is initially measured as the contractual lease liability plus any initial direct costs and prepaid lease payments made, less any lease incentives. Upon adoption of ASC 842 on January 1, 2019, the carrying value of lease-related restructuring liabilities for certain restructured leases existing at that date was offset against the related right-of-use assets. Lease expense is recognized on a straight-line basis over the lease term. Upon adoption of ASC 842, the Company elected certain practical expedients and accordingly has (1) carried forward its prior assessments of (a) whether existing contracts on the January 1, 2019 adoption date contain leases, (b) classification of leases as operating or financing and (c) initial direct costs for existing leases and (2) considered hindsight in determining the 95 MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS lease term and assessing impairment of the right-of-use-asset. In addition, the Company used a portfolio approach for its facility leases when making judgments and estimates, such as the discount rate. Leased right-of-use assets are subject to impairment testing as a long-lived asset at the asset-group level. The Company monitors its long-lived assets for indicators of impairment. As the Company’s leased right-of-use assets primarily relate to facility leases, early abandonment of all or part of a facility as part of a restructuring plan is typically an indicator of impairment. If impairment indicators are present, the Company tests whether the carrying amount of the leased right-of-use asset is recoverable including consideration of sublease income, and if not recoverable, measures impairment loss for the right-of-use asset or asset group. Pension and Other Defined Benefit Retirement Obligations The costs of pension and certain other defined benefit employee retirement benefits are required to be recognized based upon actuarial valuations. The related net retirement benefit obligation is recognized as the excess of the projected benefit obligation over the fair value of the plan assets. In measuring the retirement benefit obligation, the discount rate, expected long-term rate of return on plan assets, and long-term rate of salary increase are the most significant assumptions. Retirement benefit costs primarily represent the increase in the actuarial present value of the retirement benefit obligation. Income Taxes The Company provides for income taxes utilizing the asset and liability approach of accounting for income taxes. Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. Deferred taxes are presented net as noncurrent. The provision for income taxes generally represents income taxes paid or payable for the current year plus the change in deferred taxes during the year. Deferred taxes result from the differences between the financial and tax bases of the Company’s assets and liabilities and are adjusted for changes in tax rates and tax laws when changes are enacted. Valuation allowances are recorded to reduce deferred tax assets when a judgment is made that is considered more likely than not that a tax benefit will not be realized. A decision to record a valuation allowance results in an increase in income tax expense or a decrease in income tax benefit. If the valuation allowance is released in a future period, income tax expense will be reduced accordingly. The calculation of tax liabilities involves dealing with uncertainties in the application of complex global tax regulations. The impact of an uncertain income tax position is recognized at the largest amount that is “more likely than not” to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. If the estimate of tax liabilities proves to be less than the ultimate assessment, a further charge to expense would result. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company continually assesses the need for a valuation allowance on the deferred tax asset by evaluating both positive and negative evidence that may exist. Any adjustment to the net deferred tax asset valuation allowance would be recorded in the consolidated statement of operations for the period that the adjustment is determined to be required. On December 22, 2017, the Tax Cuts and Jobs Act, or the Tax Act, was enacted into U.S. tax law. In 2018, the Company made an accounting policy election to treat Global Intangible Low Taxed Income in accordance with the Tax Act as a period cost. Comprehensive Income (Loss) Comprehensive income (loss) is defined as the change in equity (net assets) of a business entity during a period from transactions and other events and circumstances from non-owner sources. Other comprehensive income (loss) includes certain changes in equity that are excluded from net income (loss), net of tax, such as foreign currency translation gains and losses and changes in fair value of projected benefit obligations for defined benefit plans. Litigation and Settlement Costs Legal costs are expensed as incurred. The Company is involved in disputes, litigation and other legal actions in the ordinary course of business. The Company continually evaluates uncertainties associated with litigation and records a charge equal to at least the minimum estimated liability for a loss contingency when both of the following conditions are met: (i) 96 MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS information available prior to issuance of the financial statements indicates that it is probable that an asset had been impaired or a liability had been incurred at the date of the financial statements and (ii) the loss or range of loss can be reasonably estimated. Recently Adopted Accounting Pronouncements In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , to provide specific guidance to eliminate diversity in practice on how to recognize and measure acquired contract assets and contract liabilities from revenue contracts from customers in a business combination consistent with revenue contracts with customers not acquired in an acquisition. The amendments in this update provide that the acquirer should consider the terms of the acquired contracts, such as timing of payment, identify each performance obligation in the contracts, and allocate the total transaction price to each identified performance obligation on a relative standalone selling price basis as of contract inception (that is, the date the acquiree entered into the contracts) or contract modification to determine what should be recorded at the acquisition date. These amendments were effective for the Company in 2023. The impact of the adoption of the amendments in this update was not material to the Company’s consolidated financial position and results of operations, since there were no customer contracts assumed in a business combination in 2023. Recently Issued Not Yet Adopted Accounting Pronouncements In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures , to require enhanced income tax disclosures to provide information to assess how an entity’s operations and related tax risks, tax planning, and operational opportunities affect its tax rate and prospects for future cash flows. The amendments in this update provide that a business entity disclose (1) a tabular income tax rate reconciliation, using both percentages and amounts, (2) separate disclosure of any individual reconciling items that are equal to or greater than 5% of the amount computed by multiplying the income (loss) from continuing operations before income taxes by the applicable statutory income tax rate, and disaggregation of certain items that are significant and (3) amount of income taxes paid (net of refunds received) disaggregated by federal, state and foreign jurisdictions, including separate disclosure of any individual jurisdictions greater than 5% of total income taxes paid. These amendments are effective for the Company for annual periods in 2025, applied prospectively, with early adoption and retrospective application permitted. The Company intends to adopt the amendments in this update prospectively in 2025. The impact of the adoption of the amendments in this update is not expected to be material to the Company’s consolidated financial position and results of operations, since the amendments require only enhancement of existing income tax disclosures in the footnotes to the Company’s consolidated financial statements. In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures , to require enhanced disclosures that include reportable segment expenses. The amendments in this update provide that a business entity disclose significant segment expenses, segment profit or loss (after significant segment expenses), and allows reporting of additional measures of a segments profit or loss if used in assessing segment performance. Such disclosures apply to entities with a single reportable segment. These amendments are effective for the Company for annual periods in 2024 and interim periods in 2025, retrospectively to all prior periods using the significant segment expense categories identified and disclosed in the period of adoption. The impact of the adoption of the amendments in this update is not expected to be material to the Company’s consolidated financial position and results of operations, since the requirements impact only segment reporting disclosures in the footnotes to the Company’s consolidated financial statements. 2. Net Income (Loss) Per Share Basic earnings per share, or EPS, is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted EPS is computed by dividing net income (loss) by the weighted-average number of common shares outstanding for the period and the weighted-average number of dilutive common stock equivalents outstanding for the period determined using the treasury-stock method. For purposes of this calculation, common stock options and restricted stock units are considered to be common stock equivalents and are only included in the calculation of diluted EPS when their effect is dilutive. In periods in which the Company has a net loss, dilutive common stock equivalents are excluded from the calculation of diluted EPS. 97 MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The table below presents the computation of basic and diluted EPS: Year Ended December 31, 2023 2022 2021 (in thousands, except per share amounts) Numerator: Net income (loss) $ ( 73,147 ) $ 125,040 $ 41,969 Denominator: Weighted average common shares outstanding—basic 80,719 78,039 76,037 Dilutive common stock equivalents — 2,813 3,642 Weighted average common shares outstanding—diluted 80,719 80,852 79,679 Net income (loss) per share: Basic $ ( 0.91 ) $ 1.60 $ 0.55 Diluted $ ( 0.91 ) $ 1.55 $ 0.53 For each of the years ended December 31, 2023, 2022, and 2021, the Company excluded common stock equivalents for outstanding stock-based awards, which represented potentially dilutive securities of 4.9 million for 2023, 1.8 million for 2022, and 0.07 million for 2021 from the calculation of diluted net income (loss) per share due to their anti-dilutive nature. 3. Business Combinations 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 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. 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 year ended December 31, 2023. 98 MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Acquisition of Company Y On January 17, 2023, the Company completed its acquisition of a business, or Company Y, pursuant to a Purchase and Sale Agreement, or the Purchase Agreement. The transaction consideration included $ 9.8 million in cash. In addition, Company Y stockholders may receive up to an additional $ 2.6 million in potential contingent consideration, subject to the acquired business satisfying certain personnel objectives by June 17, 2024. Company Y is headquartered in Bangalore, India and operates as a provider of engineering design services. Acquisition Consideration The following table summarizes the fair value of purchase price consideration to acquire Company Y (in thousands): Description Amount Fair value of purchase consideration: Cash $ 9,824 Contingent consideration (1) 2,600 Total purchase price $ 12,424 _________________ (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. Purchase Price Allocation An allocation of purchase price as of the January 17, 2023 acquisition closing date based upon an estimate of the fair value of the assets acquired and the liabilities assumed by the Company in the acquisition primarily includes $ 2.0 million in net operating liabilities, with $ 11.8 million in goodwill. Assumptions in the Allocations of Purchase Price Management prepared the purchase price allocations for Company Y 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 an acquired workforce and contingent consideration. Certain stockholders that are employees of Company Y were not required to remain employed in order to receive the contingent consideration; accordingly, the fair value of the contingent consideration was accounted for as a portion of the purchase consideration. Estimates of fair value require management to make significant estimates and assumptions. The goodwill recognized is attributable primarily to the acquired workforce. 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 $ 11.8 million as of December 31, 2023. The Company does not expect to deduct any of the acquired goodwill for tax purposes. 4. Restructuring Activity From time to time, the Company approves and implements restructuring plans as a result of internal resource alignment and cost saving measures. Such restructuring plans may include terminating employees, vacating certain leased facilities, and cancellation of contracts. During the year ended December 31, 2023, the Company entered into plans of restructuring to reduce its workforce. 99 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 operations: Year Ended December 31, 2023 2022 2021 (in thousands) Employee separation expenses $ 17,897 $ 1,795 $ 1,273 Lease related charges 42 462 608 Other 1,847 8 323 $ 19,786 $ 2,265 $ 2,204 Restructuring charges for the year ended December 31, 2023 included $ 17.9 million in employee severance-related charges associated with reductions in the workforce and $ 1.8 million in other charges related to abandonment of contracts used by the terminated employees. Lease related charges for the year ended December 31, 2022 included the impairment of leased right-of-use assets of $ 0.5 million related to exiting a redundant facility. Lease related charges for the year ended December 31, 2021 included the impairment of leased right-of-use assets and leasehold improvements of $ 0.4 million and $ 0.2 million, respectively. The following table presents a roll-forward of the Company’s restructuring liability for the years ended December 31, 2023 and 2022. The restructuring liability is included in accrued expenses and other current liabilities and other long-term liabilities in the consolidated balance sheets. Employee Separation Expenses Lease Related Charges Other Total (in thousands) Liability as of December 31, 2021 $ — $ 444 $ — $ 444 Restructuring charges 1,795 462 8 2,265 Cash payments ( 824 ) ( 273 ) — ( 1,097 ) Non-cash charges and adjustments — ( 530 ) — ( 530 ) Liability as of December 31, 2022 971 103 8 1,082 Restructuring charges 17,897 42 1,847 19,786 Cash payments ( 11,388 ) ( 142 ) ( 265 ) ( 11,795 ) Non-cash charges and adjustments ( 97 ) ( 5 ) ( 670 ) ( 772 ) Liability as of December 31, 2023 7,383 ( 2 ) 920 8,301 Less: current portion as of December 31, 2023 ( 7,383 ) 2 ( 920 ) ( 8,301 ) Long-term portion as of December 31, 2023 $ — $ — $ — $ — 5. Goodwill and Intangible Assets Goodwill Goodwill arises from the acquisition method of accounting for business combinations and represents the excess of the purchase price over the fair value of the net assets and other identifiable intangible assets acquired. 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). 100 MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table presents the changes in the carrying amount of goodwill for the periods indicated: Year Ended December 31, 2023 2022 (in thousands) Beginning balance $ 306,739 $ 306,668 Acquisitions (Note 3) 11,849 71 Ending balance $ 318,588 $ 306,739 The Company performs an annual goodwill impairment assessment on October 31 st each year, using a quantitative assessment comparing the fair value of each reporting unit, which the Company has determined to be the entity itself, with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recorded. As a result of the Company’s impairment assessment, no goodwill impairment was recognized as of October 31, 2023. In addition to its annual review, the Company performs a test of impairment when indicators of impairment are present. During the years ended December 31, 2023, 2022, and 2021, there were no indications of impairment of the Company’s goodwill balances. Acquired Intangibles Finite-lived Intangible Assets The following table sets forth the Company’s finite-lived intangible assets resulting from business acquisitions and other purchases, which are amortized over their estimated useful lives: December 31, 2023 December 31, 2022 Weighted Average Useful Life (in Years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Value Accumulated Amortization Net Carrying Amount (in thousands) Licensed technology 7.0 $ 20,133 $ ( 1,431 ) $ 18,702 $ 21,764 $ ( 580 ) $ 21,184 Developed technology 7.0 311,261 ( 263,635 ) 47,626 311,261 ( 228,532 ) 82,729 Trademarks and trade names 6.2 14,800 ( 14,276 ) 524 14,800 ( 13,461 ) 1,339 Customer relationships 5.0 128,800 ( 126,347 ) 2,453 128,800 ( 124,807 ) 3,993 Backlog 5.3 500 ( 500 ) — 500 ( 429 ) 71 Patents 7.0 4,780 ( 455 ) 4,325 — — — 6.1 $ 480,274 $ ( 406,644 ) $ 73,630 $ 477,125 $ ( 367,809 ) $ 109,316 The following table sets forth amortization expense associated with finite-lived intangible assets, which is included in the consolidated statements of operations as follows: Year Ended December 31, 2023 2022 2021 (in thousands) Cost of net revenue $ 35,952 $ 39,638 $ 43,078 Research and development 2 4 4 Selling, general and administrative 2,881 11,955 23,625 $ 38,835 $ 51,597 $ 66,707 Amortization of finite-lived intangible assets in cost of net revenue in the consolidated statements of operations results primarily from acquired developed technology. 101 MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table sets forth the activity related to finite-lived intangible assets: Year Ended December 31, 2023 2022 (in thousands) Beginning balance $ 109,316 $ 149,940 Additions 6,355 11,184 Transfers to developed technology from IPR&D — 2,600 Amortization ( 38,835 ) ( 51,597 ) Impairment losses ( 2,438 ) ( 2,811 ) Ending balance $ 73,630 $ 109,316 The Company regularly reviews the carrying amount of its long-lived assets subject to depreciation and amortization, as well as the related useful lives, to determine whether indicators of impairment may exist that warrant adjustments to carrying values or estimated useful lives. An impairment loss is recognized when the sum of the expected future undiscounted net cash flows is less than the carrying amount of the asset. 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 year ended December 31, 2023 and 2022, the Company recognized impairment losses related to finite-lived intangible assets of $ 2.4 million and $ 2.8 million respectively, which was attributable to certain acquired licensed technology. During the year ended December 31, 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 December 31, 2023: Amount (in thousands) 2024 $ 24,120 2025 14,862 2026 13,753 2027 9,905 2028 4,567 Thereafter 6,423 Total $ 73,630 6. Financial Instruments The composition of financial instruments is as follows: December 31, 2022 Net Unrealized Cost Gains Losses Fair Value (in thousands) Assets Marketable equity investments $ 20,005 $ — $ ( 1,476 ) $ 18,529 December 31, 2023 December 31, 2022 (in thousands) Liabilities Contingent consideration (Note 3) $ 2,462 $ 2,941 At December 31, 2023, the Company did not hold any marketable equity investments. The Company sold its marketable investment positions in December 2023. Prior to the sale, unrealized gains and losses on such investments representing stock 102 MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS price fluctuations in the underlying securities held were recorded to other income (expense), net in the consolidated statement of operations. The Company evaluated securities for other-than-temporary impairment on a quarterly basis. Impairment was evaluated considering numerous factors, and their relative significance varied depending on the situation. Factors considered include the length of time and extent to which fair value was less than the cost basis, the financial condition and near-term prospects of the issuer; including changes in the financial condition of any underlying collateral of the security; any downgrades of the security by analysts or rating agencies; nonpayment of any scheduled interest, or the reduction or elimination of dividends; as well as our intent and ability to hold the security in order to allow for an anticipated recovery in fair value. The fair value of the Company’s financial instruments is the amount that would be received in an asset sale or paid to transfer a liability in an orderly transaction between unaffiliated market participants and is recorded using a hierarchical disclosure framework based upon the level of subjectivity of the inputs used in measuring assets and liabilities. The levels are described below: Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data. Level 3: Unobservable inputs are used when little or no market data is available. The Company classifies its financial instruments within Level 1 or Level 2 of the fair value hierarchy on the basis of valuations using quoted market prices or alternate pricing sources and models utilizing market observable inputs, respectively. The marketable equity investments held by the Company were valued on the basis of quoted market prices and are therefore classified as Level 1. The contingent consideration liability as of December 31, 2023 is associated with the Company’s acquisition of 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. The contingent consideration as it relates to Company X was subject to the acquired business’s satisfaction of certain financial and personnel objectives by March 31, 2023, while the contingent consideration as it relates to Company Y is subject to the acquired business’s satisfaction of certain personnel objectives by June 17, 2024. The financial and personnel objectives of Company X were achieved by March 31, 2023 and contingent consideration for Company X of $ 3.0 million was paid during the year ended December 2023. The fair value of the contingent consideration is based on (1) applying the Monte Carlo simulation method, with underlying forecast mathematics based on Geometric Brownian motion in a risk-neutral framework, to forecast achievement of the acquired business’ financial objectives under various possible contingent consideration events and (2) a probability based methodology using management’s inputs and assumptions to forecast achievement of the acquired business’ personnel objectives which 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. The following summarizes the level in the fair value hierarchy for each financial instrument: Fair Value Measurements at December 31, 2023 Balance at December 31, 2023 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) (in thousands) Liabilities Contingent consideration $ 2,462 $ — $ — $ 2,462 103 MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Fair Value Measurements at December 31, 2022 Balance at December 31, 2022 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) (in thousands) Assets Marketable equity securities $ 18,529 $ 18,529 $ — $ — Liabilities Contingent consideration $ 2,941 $ — $ — $ 2,941 The following summarizes the activity in Level 3 financial instruments: Year Ended December 31, 2023 2022 (in thousands) Contingent consideration Beginning balance $ 2,941 $ 2,700 Acquisitions (1) (Note 3) 2,200 — Payments ( 3,000 ) — Accretion of discount (1) 321 241 Ending balance $ 2,462 $ 2,941 ____________________ (1) These changes to the balance associated with the estimated fair value of contingent consideration for the year ended December 31, 2023 were due to the addition of contingent consideration associated with the acquisition of Company Y and accretion of discounts on contingent consideration. There were no transfers between Level 1, Level 2 or Level 3 fair value hierarchy categories of financial instruments in the years ended December 31, 2023, 2022 and 2021. Financial Instruments Not Recorded at Fair Value on a Recurring Basis Some of the Company’s financial instruments are recorded at amounts that approximate fair value due to their liquid or short-term nature or by election on investments in privately-held entities as described below. Such financial assets and financial liabilities include cash and cash equivalents, restricted cash, net receivables, investments in privately-held entities, certain other assets, accounts payable, accrued price protection liability, accrued expenses, accrued compensation costs, and other current liabilities. The Company’s long-term debt is not recorded at fair value on a recurring basis, but is measured at fair value for disclosure purposes (Note 8). Included in other long-term assets are investments in privately held entities of $ 11.8 million and $ 11.8 million as of December 31, 2023 and December 31, 2022, 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. 104 MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7. Balance Sheet Details Cash, cash equivalents and restricted cash consist of the following: December 31, 2023 December 31, 2022 (in thousands) Cash and cash equivalents $ 187,288 $ 187,353 Short-term restricted cash 1,051 982 Long-term restricted cash 17 22 Total cash, cash equivalents and restricted cash $ 188,356 $ 188,357 As of December 31, 2023 and December 31, 2022, cash and cash equivalents included money market funds of approximately $ 78.1 million and $ 0.4 million, respectively. As of December 31, 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. Inventory consists of the following: December 31, 2023 December 31, 2022 (in thousands) Work-in-process $ 60,368 $ 97,840 Finished goods 39,540 62,704 $ 99,908 $ 160,544 Inventory decreased $ 60.6 million from $ 160.5 million as of December 31, 2022 to $ 99.9 million as of December 31, 2023, as the Company’s management lowered inventory levels due to reduced supply chain constraints and decreased customer demand for certain products. Property and equipment, net consists of the following: Useful Life (in Years) December 31, 2023 December 31, 2022 (in thousands) Furniture and fixtures 5 $ 3,995 $ 3,924 Machinery and equipment 3 - 5 76,732 74,258 Masks and production equipment 2 - 5 54,240 50,970 Software 3 11,427 10,111 Leasehold improvements 1 - 5 35,867 34,236 Construction in progress N/A 348 7,602 182,609 181,101 Less: accumulated depreciation and amortization ( 116,178 ) ( 102,083 ) $ 66,431 $ 79,018 Depreciation expense for the years ended December 31, 2023, 2022, and 2021 was $ 23.8 million, $ 20.3 million and $ 17.7 million, respectively. In March 2022, the Company entered into a note receivable with a supplier for $ 10.0 million, which is included in other long-term assets in the consolidated balance sheet as of December 31, 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 per year were due annually by March 31, in years 2024 through 2027. 105 MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Accrued price protection liability consists of the following activity: Year Ended December 31, 2023 2022 (in thousands) Beginning balance $ 113,274 $ 40,509 Charged as a reduction of revenue 62,644 180,538 Payments ( 104,234 ) ( 107,773 ) Ending balance $ 71,684 $ 113,274 The reason for the significant decrease in price protection liability from approximately $ 113.3 million as of December 31, 2022 to approximately $ 71.7 million as of December 31, 2023, was due to a significant decrease in revenues from customers with such price protection rights from 2022 to 2023, which decreased the corresponding price protection accruals to such customers. Accrued expenses and other current liabilities consist of the following: December 31, 2023 December 31, 2022 (in thousands) Accrued technology license payments $ 3,843 $ 7,402 Accrued professional fees 3,736 4,072 Accrued engineering and production costs 2,861 2,560 Accrued restructuring 8,301 1,082 Accrued royalty 603 1,662 Short-term lease liabilities 9,132 10,489 Accrued customer credits 3,984 304 Income tax liability 521 8,895 Customer contract liabilities 1,597 1,072 Accrued obligations to customers for price adjustments 54,837 52,392 Accrued obligations to customers for stock rotation rights 349 605 Contingent consideration – current portion 2,462 2,941 Other 6,242 6,679 $ 98,468 $ 100,155 The following table summarizes the change in balances of accumulated other comprehensive income (loss) by component: Cumulative Translation Adjustments Pension and Other Defined Benefit Plan Obligation Total (in thousands) Balance at December 31, 2021 $ 21 $ 2,104 $ 2,125 Other comprehensive income (loss) before reclassifications, net of tax ( 5,201 ) 2,055 ( 3,146 ) Balance at December 31, 2022 ( 5,180 ) 4,159 ( 1,021 ) Other comprehensive income (loss) before reclassifications, net of tax 121 ( 206 ) ( 85 ) Reclassification adjustments of unrealized gain (loss) on pension and other defined benefit plans, net of tax — ( 2,685 ) ( 2,685 ) Net current period other comprehensive income (loss) 121 ( 2,891 ) ( 2,770 ) Balance at December 31, 2023 $ ( 5,059 ) $ 1,268 $ ( 3,791 ) 106 MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 8. Debt Debt The carrying amount of the Company’s long-term debt consists of the following: December 31, 2023 December 31, 2022 (in thousands) Principal balance: Initial term loan under June 23, 2021 credit agreement $ 125,000 $ 125,000 Total principal balance 125,000 125,000 Less: Unamortized debt discount ( 571 ) ( 695 ) Unamortized debt issuance costs ( 2,054 ) ( 2,548 ) Net carrying amount of long-term debt 122,375 121,757 Less: current portion of long-term debt — — Long-term debt, non-current portion $ 122,375 $ 121,757 As of December 31, 2023 and December 31, 2022, the weighted average effective interest rate on aggregate debt was approximately 7.6 % and 3.8 %, respectively. During the years ended December 31, 2023, 2022 and 2021, the Company recognized total amortization of debt discount and debt issuance costs of $ 0.6 million, $ 0.6 million, and $ 1.3 million, respectively, to interest expense. The approximate aggregate fair value of the term loans outstanding as of December 31, 2023 and December 31, 2022 was $ 135.7 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 (Note 6). As of December 31, 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 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. 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 (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 December 31, 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. 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. 107 MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 %. 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 was amended on June 29, 2023 to implement a benchmark replacement. 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 December 31, 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. 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. 108 MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 9. Stock-Based Compensation Common Stock Each share of common stock is entitled to one vote per share and holders of the common stock vote as a single class of stock on any matter that is submitted to a vote of stockholders. Employee Stock-Based Compensation Plans At December 31, 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. 2010 Equity Incentive Plan The 2010 Plan, as amended, provides for the grant of incentive stock options, non-statutory stock options, restricted stock awards, restricted stock unit awards, stock appreciation rights, performance-based stock awards, and other forms of equity compensation, or collectively, stock awards. The number of shares of common stock reserved for issuance will automatically increase on the first day of each fiscal year, equal to the lesser of: 2,583,311 shares of the Company’s common stock; four percent ( 4 %) of the outstanding shares of the Company’s common stock on the last day of the immediately preceding fiscal year; or such lesser amount as the Company’s board of directors may determine. Options granted will generally vest over a period of four years and the term can be from seven to ten years . The plan expires in August 2026, unless terminated earlier by action of the board of directors. Awards granted under the 2010 Plan, as amended, are subject to a compensation recovery policy adopted by the Company on August 9, 2023, or the Policy, that applies to certain incentive-based compensation that is received on or after October 2, 2023. The Policy requires the Company to recover certain excess incentive-based compensation from current and former executive officers if the Company is required to prepare an accounting restatement due to a material noncompliance of the Company with any financial reporting requirement under the securities laws or as otherwise described in the Policy and paid during the three completed fiscal years immediately preceding the trigger date, as defined in the Policy. Recoverable compensation is defined in the Policy but generally includes any incentive-based compensation that was granted, earned or vested based wholly or in part upon attainment of any financial reporting measure, to the extent the amount actually received exceeds the amount that would have been received if the incentive-based compensation had been determined based on the restated financial statements. To date, there has been no recovery or repayment of compensation from executive officers pursuant to the Policy, or any prior compensation recovery policy of the Company which it replaced, including the executive compensation clawback policy adopted by the Company on December 13, 2018, which applies to compensation that was received prior to October 2, 2023. As of December 31, 2023, the number of shares of common stock available for future issuance under the 2010 Plan was 15,081,087 shares. 2010 Employee Stock Purchase Plan The ESPP authorizes the issuance of shares of the Company’s common stock pursuant to purchase rights granted to the Company’s employees. The number of shares of the Company’s common stock reserved for issuance will automatically increase on the first day of each fiscal year, equal to the least of: 968,741 shares of the Company’s common stock; one and a quarter percent ( 1.25 %) of the outstanding shares of the Company’s common stock on the first day of the fiscal year; or such lesser amount as may be determined by the Company’s board of directors or a committee appointed by the Company’s board of directors to administer the ESPP. The ESPP is implemented through a series of offerings of purchase rights to eligible employees. Under the ESPP, the Company may specify offerings with a duration of not more than 27 months, and may specify shorter purchase periods within each offering. Each offering will have one or more purchase dates on which shares of the Company’s common stock will be purchased for employees participating in the offering. An offering may be terminated under certain circumstances. Generally, all eligible employees, including executive officers, employed by the Company may participate in the ESPP and may contribute up to 15 % of their earnings for the purchase of the Company’s common stock under the ESPP. Unless otherwise determined by the Company’s board of directors, common stock will be purchased for accounts of employees participating in the ESPP at a price per share equal to the lower of (a) 85 % of the fair market value of a share of the Company’s common stock on the first date of an offering or (b) 85 % of the fair market value of a share of the Company’s common stock on the date of purchase. As of December 31, 2023, the number of shares of common stock available for future issuance under the ESPP was 5,658,561 shares. 109 MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Employee Incentive Bonus The Company’s Executive Incentive Bonus Plan permits the settlement of awards under the plan in any combination of cash or shares of its common stock. The Company settles a majority of bonus awards for its employees, including executives, in shares of common stock under the 2010 Equity Incentive Plan. When bonus awards are settled in common stock issued under the 2010 Equity Incentive Plan, the number of shares issuable to plan participants is determined based on the closing price of the Company’s common stock as determined in trading on the applicable stock exchange on a date approved by the Board of Directors. In connection with the Company’s bonus programs, in February 2023 and February 2022, the Company issued 0.9 million and 0.5 million freely-tradable (subject to certain restrictions for affiliates) shares, respectively, of the Company’s common stock in settlement of bonus awards to employees, including executives, for the 2023 and 2022 performance periods. At December 31, 2023, the Company has an accrual of $ 11.5 million for bonus awards for employees for achievement in the 2023 performance period, which the Company intends to settle primarily in shares of its common stock, unless otherwise required to be settled in cash due to local laws or agreements. The Company’s compensation committee retains discretion to effect payment in cash, stock, or a combination of cash and stock. Stock-Based Compensation The Company recognizes stock-based compensation in the consolidated statements of operations, based on the department to which the related employee reports, as follows: Year Ended December 31, 2023 2022 2021 (in thousands) Cost of net revenue $ 763 $ 734 $ 620 Research and development 44,189 40,635 30,364 Selling, general and administrative 10,224 40,335 28,374 $ 55,176 $ 81,704 $ 59,358 The total unrecognized compensation cost related to unvested restricted stock units as of December 31, 2023 was $ 135.7 million, and the weighted average period over which these equity awards are expected to vest is 2.34 years. The total unrecognized compensation cost related to unvested performance-based restricted stock units as of December 31, 2023 was $ 0 as a result of revised estimates of performance achievement levels as of that date, and the weighted average period over which these equity awards are expected to vest is 1.14 years. Actual levels of future performance for the unvested periods may differ from current estimates. There was no unrecognized compensation cost related to unvested stock options as of December 31, 2023. Restricted Stock Units A summary of the Company’s restricted stock unit activity is as follows: Number of Shares (in thousands) Weighted-Average Grant-Date Fair Value per Share Outstanding at December 31, 2022 6,080 $ 35.01 Granted 3,135 37.93 Vested ( 2,958 ) 34.07 Canceled ( 625 ) 38.71 Outstanding at December 31, 2023 5,632 $ 36.72 Performance-Based Restricted Stock Units Performance-based restricted stock units are eligible to vest at the end of each year-long performance period, as defined in the underlying agreement, in a three-year performance period based on the Company’s annual growth rate in net sales and non-GAAP diluted earnings per share (subject to certain adjustments) over baseline results relative to the growth rates for a peer group of companies for the same metrics and periods. 110 MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the performance-based restricted stock units granted to date, 60 % of each performance-based award is subject to the net sales metric for the performance period and 40 % is subject to the non-GAAP diluted earnings per share metric for the performance period. 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 December 31, 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: Number of Shares (in thousands) Weighted-Average Grant-Date Fair Value per Share Outstanding at December 31, 2022 1,950 $ 34.07 Granted (1) 1,039 32.66 Vested ( 248 ) 22.03 Canceled ( 88 ) 41.75 Outstanding at December 31, 2023 2,653 $ 34.38 ________________ (1) Number of shares granted is based on the maximum percentage achievable in the performance-based restricted stock unit award. Employee Stock Purchase Rights and Stock Options Employee Stock Purchase Rights During the year ended December 31, 2023, there were 231,794 shares of common stock purchased under the ESPP at a weighted average price of $ 18.89 . During the year ended December 31, 2022, there were 139,758 shares of common stock purchased under the ESPP at a weighted average price of $ 33.52 . 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: Year Ended December 31, 2023 2022 2021 Weighted-average grant date fair value per share $ 6.35 - 11.97 $ 11.97 - 14.25 $ 10.85 - 18.82 Risk-free interest rate 4.54 - 5.41 % 1.54 - 4.54 % 0.04 % - 0.06 % Dividend yield — % — % — % Expected life (in years) 0.50 0.50 0.50 Volatility 59.78 - 70.46 % 59.78 - 69.74 % 43.83 - 61.1 % The risk-free interest rate assumption was based on rates for United States (U.S.) Treasury zero-coupon bonds with maturities similar to those of the expected term of the award being valued. The assumed dividend yield was based on the Company’s expectation of not paying dividends in the foreseeable future. The expected term is the duration of the offering period for each grant date. In addition, the estimated volatility incorporates the historical volatility over the expected term based on the Company’s daily closing stock prices. 111 MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Stock Options A summary of the Company’s stock options activity is as follows: Number of Options (in thousands) Weighted-Average Exercise Price Weighted-Average Contractual Term (in years) Aggregate Intrinsic Value (in thousands) Outstanding at December 31, 2022 393 $ 17.22 Exercised ( 15 ) 15.30 Canceled ( 3 ) ( 19.62 ) Outstanding at December 31, 2023 375 $ 17.29 1.52 $ 1,583 Vested and expected to vest at December 31, 2023 375 $ 17.29 1.52 $ 1,583 Exercisable at December 31, 2023 375 $ 17.29 1.52 $ 1,583 No stock options were granted by the Company during the years ended December 31, 2023 and 2022. The intrinsic value of stock options exercised during 2023, 2022, and 2021 was $ 0.2 million, $ 0.9 million, and $ 9.8 million, respectively. Cash received from exercise of stock options was $ 0.2 million, $ 0.3 million and $ 4.2 million during the years ended December 31, 2023, 2022, and 2021, respectively. The tax benefit from stock options exercised was $ 0.4 million, $ 1.2 million and $ 14.4 million during the years ended December 31, 2023, 2022, and 2021, respectively. 10. Income Taxes The domestic and international components of income (loss) before income taxes are presented as follows: Year Ended December 31, 2023 2022 2021 (in thousands) Domestic $ ( 85,032 ) $ 19,228 $ ( 31,975 ) Foreign 21,222 154,970 79,845 Income (loss) before income taxes $ ( 63,810 ) $ 174,198 $ 47,870 The income tax provision consists of the following: Year Ended December 31, 2023 2022 2021 (in thousands) Current: Federal $ 3,827 $ 12,002 $ 498 State 65 237 84 Foreign 9,896 13,432 7,630 Total current 13,788 25,671 8,212 Deferred: Federal ( 371 ) 32,317 5,108 State ( 4,942 ) ( 3,686 ) ( 4,506 ) Foreign ( 6,910 ) ( 3,490 ) 484 Change in valuation allowance 7,772 ( 1,654 ) ( 3,397 ) Total deferred ( 4,451 ) 23,487 ( 2,311 ) Total income tax provision $ 9,337 $ 49,158 $ 5,901 112 MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The actual income tax provision differs from the amount computed using the federal statutory rate as follows: Year Ended December 31, 2023 2022 2021 (in thousands) Provision (benefit) at statutory rate $ ( 13,288 ) $ 36,582 $ 10,071 State income taxes (net of federal benefit) 7 187 62 Research and development credits ( 10,066 ) ( 10,146 ) ( 10,441 ) Foreign rate differential ( 375 ) ( 21,629 ) ( 10,063 ) Stock compensation 2,213 6,186 4,029 Foreign income inclusion 27,678 27,971 14,119 Provision to return ( 4,741 ) 6,236 ( 263 ) Uncertain tax positions 1,272 2,551 1,072 Permanent and other ( 377 ) 1,101 726 Foreign unremitted earnings ( 758 ) ( 490 ) ( 59 ) Transaction costs — 5 45 Foreign tax credits — 2,224 — Attribute expirations — 34 — Valuation allowance 7,772 ( 1,654 ) ( 3,397 ) Total income tax provision $ 9,337 $ 49,158 $ 5,901 The components of the deferred income tax assets are as follows: December 31, 2023 2022 (in thousands) Deferred tax assets: Net operating loss carryforwards $ 29,860 $ 30,225 Research and development credits 78,246 73,965 Foreign tax credits 71 — Accrued expenses and other 13,106 10,271 Lease obligation 2,942 1,961 Accrued compensation 3,447 6,919 Stock-based compensation 11,203 9,976 Intangible assets 8,967 5,582 147,842 138,899 Less valuation allowance ( 74,292 ) ( 66,273 ) 73,550 72,626 Deferred tax liabilities: Fixed assets ( 966 ) ( 4,350 ) Leased right-of-use assets ( 2,839 ) ( 1,784 ) Pension liability ( 371 ) ( 1,569 ) Net deferred tax assets $ 69,374 $ 64,923 At December 31, 2023, the Company had federal, state and foreign tax net operating loss carryforwards of approximately $ 100.2 million, $ 77.8 million and $ 49.5 million, respectively. The federal and state tax loss carryforwards will begin to expire in 2025 and 2030, and foreign tax loss will not expire, unless previously utilized. 113 MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS At December 31, 2023, the Company had federal, state and foreign tax credit carryforwards of approximately $ 29.6 million, $ 106.3 million and $ 3.2 million, respectively. The federal, state and foreign tax credit carryforwards will begin to expire in 2024, 2030 and 2026, respectively, unless previously utilized. The Company also has foreign incentive deductions of approximately $ 7.2 million that do not expire. 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. The Company records a valuation allowance to reduce its deferred taxes to the amount it believes is more likely than not to be realized. In making such determination, the Company considers all available positive and negative evidence quarterly, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies, and recent financial performance. Forming a conclusion that a valuation allowance is not required is difficult when there is negative evidence such as cumulative losses in recent years. Based upon the Company’s review of all positive and negative evidence, the Company continues to have a valuation allowance on its state deferred tax assets, certain of its federal deferred tax assets, and certain foreign deferred tax assets in jurisdictions where the Company has cumulative losses or otherwise is not expected to utilize certain tax attributes. 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 $ 9.3 million in the year ended December 31, 2023, an income tax provision of $ 49.2 million in the year ended December 31, 2022, and an income tax provision of $ 5.9 million in the year ended December 31, 2021. The difference between the Company’s effective tax rate and the 21.0% United States federal statutory rate for the year ended December 31, 2023 primarily related to the mix of pre-tax income among jurisdictions, permanent tax items including tax credits and 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 our effective tax rate and the 21.0% U.S. federal statutory rate for the year ended December 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 research and development credits. The permanent tax item related to global intangible low-taxed income, or GILTI, 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 our effective tax rate and the 21.0% U.S. federal statutory rate for the year ended year ended December 31, 2021 resulted primarily from a tax on GILTI, and non-deductible foreign stock-based compensation, offset by a benefit related to research and development tax credits, foreign earnings taxed at rates other than the federal statutory rate and the effect of a release of valuation allowance against certain Singapore deferred tax assets pertaining to usage of net operating losses. Income tax positions must meet a more-likely-than-not threshold to be recognized. Income tax positions that previously failed to meet the more-likely-than-not threshold are recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not threshold are de-recognized in the first financial reporting period in which that threshold is no longer met. The Company records potential penalties and interest accrued related to unrecognized tax benefits within the consolidated statements of operations as income tax expense. At December 31, 2023, the Company’s unrecognized tax benefits totaled $ 68.6 million, $ 58.5 million of which, if recognized at a time when the valuation allowance no longer exists, would affect the effective tax rate. The unrecognized tax benefits are not expected to materially change in next 12 months. At December 31, 2023, the Company had accrued approximately $ 0.3 million of interest and penalties. The total amounts of interest and penalties recognized for the years ended December 31, 2023, 2022 and 2021 were not material. 114 MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table summarizes the changes to the unrecognized tax benefits during 2023, 2022 and 2021: (in thousands) Balance as of December 31, 2020 $ 63,765 Additions based on tax positions related to the current year 3,366 Additions related to acquisitions 241 Decreases based on tax positions of prior year ( 1,688 ) Balance as of December 31, 2021 65,684 Additions based on tax positions related to the current year 3,431 Decreases based on tax positions of prior year ( 1,981 ) Balance as of December 31, 2022 67,134 Additions based on tax positions related to the current year 3,032 Decreases based on tax positions of prior year ( 1,528 ) Balance as of December 31, 2023 $ 68,638 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 December 31, 2023, the statutes of limitations for the assessment of federal, state, and foreign income taxes are closed for the years before 2020, 2019, and 2017, 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 years ended December 31, 2023 and 2022 at the incentive rate. Due to the valuation allowance release in 2021 and the Company’s use of loss carryforwards, the Company recorded a tax benefit in the year ended December 31, 2021 at the incentive rate, net of any expected tax payable. Without the incentive rate, deferred taxes and the valuation allowance release would have provided an overall tax benefit, net of any current period payable. 11. Concentration of Credit Risk, Significant Customers and Geographic Information Concentration of Credit Risk Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents and accounts receivable. Collateral is generally not required for customer receivables. The Company limits its exposure to credit loss by placing its cash with high credit quality financial institutions. At times, such deposits may be in excess of insured limits. The Company has not experienced any losses on its deposits of cash and cash equivalents. Significant Customers The Company markets its products and services to manufacturers of a wide range of electronic devices (Note 1). The Company sells its products both directly to end-customers and through third-party distributors, both of which are referred to as the Company’s customers (Note 12). The Company makes periodic evaluations of the credit worthiness of its customers. Customers comprising 10% or greater of net revenues for each of the periods presented are as follows: Year Ended December 31, 2023 2022 2021 Percentage of total net revenue Customer A * 21 % 15 % Customer B 10 % 10 % 11 % ____________________________ * Represents less than 10% of the net revenues for the period presented. 115 MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table presents balances that are 10% or greater of accounts receivable, based on the Company’s billings to its customers. December 31, 2023 2022 Percentage of gross accounts receivable Customer C 33 % 12 % Customer D 24 % 28 % Customer E * 11 % ____________________________ * Represents less than 10% of the gross accounts receivable as of the respective period end. Significant Suppliers Suppliers comprising greater than 10% or greater of total inventory purchases are as follows: Year Ended December 31, 2023 2022 2021 Vendor A 23 % 25 % 38 % Vendor B 23 % 26 % 22 % Vendor C 10 % 12 % 12 % Geographic Information The Company’s consolidated net revenues by geographic area based on ship-to location are as follows (in thousands): Year Ended December 31, 2023 2022 2021 Amount % of total net revenue Amount % of total net revenue Amount % of total net revenue Asia $ 521,433 75 % $ 915,024 82 % $ 736,808 83 % Europe 124,556 18 % 142,494 13 % 106,428 12 % United States 36,955 5 % 40,077 4 % 35,978 4 % Rest of world 10,319 2 % 22,657 2 % 13,184 1 % Total $ 693,263 100 % $ 1,120,252 100 % $ 892,398 100 % The products shipped to individual countries or territories representing greater than 10% of net revenue for each of the periods presented are as follows: Year Ended December 31, 2023 2022 2021 Percentage of total net revenue Hong Kong 37 % 43 % 40 % China 11 % 16 % 12 % Vietnam * * 13 % ____________________________ * Represents less than 10% of total 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, mainland China, Taiwan, and Vietnam, the Company 116 MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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): December 31, 2023 2022 Amount % of total Amount % of total United States $ 337,696 69 % $ 368,882 70 % Singapore 113,248 23 % 109,613 21 % Rest of world 38,969 8 % 45,093 9 % Total $ 489,913 100 % $ 523,588 100 % 12. Revenue from Contracts with Customers Revenue by Market The table below presents disaggregated net revenues by market (in thousands): Year Ended December 31, 2023 2022 2021 Broadband $ 203,519 $ 493,232 $ 492,482 % of net revenue 29 % 44 % 55 % Connectivity 138,228 303,925 149,285 % of net revenue 20 % 27 % 17 % Infrastructure 177,083 136,274 119,421 % of net revenue 26 % 12 % 13 % Industrial and multi-market 174,433 186,821 131,210 % of net revenue 25 % 17 % 15 % Total net revenue $ 693,263 $ 1,120,252 $ 892,398 Revenues from sales through the Company’s distributors accounted for 50 %, 46 % and 47 % of net revenue for the years ended December 31, 2023, 2022, and 2021, respectively. Contract Liabilities As of December 31, 2023 and 2022, customer contract liabilities were approximately $ 1.6 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 years ended December 31, 2023, 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 years ended December 31, 2023, 2022, and 2021, respectively. Obligations to Customers for Price Adjustments and Returns and Assets for Right-of-Returns As of December 31, 2023 and December 31, 2022, obligations to customers consisting of estimates of price protection rights offered to the Company’s end customers totaled $ 71.7 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 December 31, 2023 were $ 54.8 million and $ 0.3 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 or decrease in revenue in the years ended December 31, 117 MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 2023, 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 December 31, 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 December 31, 2023 and December 31, 2022, there were no impairment losses recorded on customer accounts receivable. 13. Leases Operating Leases Operating lease arrangements primarily consist of office leases expiring in various years through 2029. 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. 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 December 31, 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 3.9 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 December 31, 2023: Operating Leases (in thousands) 2024 $ 10,769 2025 10,726 2026 8,104 2027 5,766 2028 2,479 Thereafter 1,596 Total minimum payments 39,440 Less: imputed interest ( 4,065 ) Total lease liabilities 35,375 Less: short-term lease liabilities ( 9,132 ) Long-term lease liabilities $ 26,243 Operating lease cost was $ 10.8 million, $ 10.4 million, and $ 9.4 million for the years ended December 31, 2023, 2022, and 2021, respectively. Short-term lease costs for each of the years ended December 31, 2023, 2022, and 2021, respectively, were not material. There were $ 12.3 million, $ 12.0 million, and $ 13.2 million of right-of-use assets obtained in exchange for new lease liabilities for the years ended December 31, 2023, 2022, and 2021, respectively. 14. Employee Retirement Plans Defined Contribution Plan 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 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. 118 MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Pension and Other Defined Benefit Retirement Obligations The Company maintains certain defined benefit retirement plans, including a pension plan, in foreign jurisdictions. During the year ended December 31, 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 December 31, 2023 and December 31, 2022, the defined benefit obligation was $ 1.4 million and $ 1.7 million, respectively. The benefit is based on a formula applied to eligible employee earnings. Net periodic benefit costs were $ 0.5 million, $ 0.3 million, and $ 0.5 million respectively for the years ended December 31, 2023, 2022, and 2021 respectively, and were recorded to research and development expenses in the consolidated statements of operations. Benefit Obligation and Plan Assets for Pension Benefit Plans The vested benefit obligation for a defined-benefit pension or other retirement plan is the actuarial present value of the vested benefits to which the employee is currently entitled based on the employee’s expected date of separation or retirement. December 31, 2023 December 31, 2022 (in thousands) Changes in projected benefit obligation: Projected benefit obligation, beginning of period $ 6,573 $ 9,733 Service cost 233 289 Interest cost 247 79 Actuarial (gain) loss 284 ( 2,817 ) Benefits paid and settlements ( 6,060 ) ( 124 ) Currency exchange rate changes 106 ( 587 ) Projected benefit obligation, end of period 1,383 6,573 Changes in fair value of plan assets: Fair value of plan assets, beginning of period 4,895 5,198 Actual return on plan assets ( 194 ) ( 24 ) Employer contributions 3,245 — Plan settlements ( 8,162 ) — Currency exchange rate changes 216 ( 279 ) Fair value of plan assets, end of period — 4,895 Net unfunded status $ 1,383 $ 1,678 Amounts recognized in the Consolidated Balance Sheets Other long-term liabilities $ 1,383 $ 1,678 Accumulated other comprehensive (income) loss, before tax $ 4,083 $ ( 2,837 ) Changes in actuarial gains and losses in the projected benefit obligation are primarily driven by discount rate movement. The Company uses the corridor approach to amortize actuarial gains and losses. Under this approach, net actuarial gains or losses in excess of 10% of the larger of the projected benefit obligation or the fair value of plan assets are amortized on a straight-line basis. As of December 31, 2023 and December 31, 2022, all plans had accumulated benefit obligations and projected benefit obligations in excess of plan assets. As of December 31, 2023 and December 31, 2022, the accumulated benefit obligations were $ 1.1 million and $ 6.3 million for the pension plans. 119 MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2023 December 31, 2022 (in thousands) Plans with accumulated benefit obligation in excess of plan assets Accumulated benefit obligation $ 1,145 $ 6,258 Plan assets $ — $ 4,895 Plans with projected benefit obligation in excess of plan assets Projected benefit obligation $ 1,383 $ 6,573 Plan assets $ — $ 4,895 Assumptions for Pension Benefit Plans December 31, 2023 December 31, 2022 (in thousands) Weighted average actuarial assumptions used to determine benefit obligations Discount rate 3.5 % - 3.9 % 3.5 % - 3.9 % Rate of compensation increase 3.0 % - 3.8 % 3.0 % - 3.8 % Weighted average actuarial assumptions used to determine costs Discount rate 3.5 % - 3.9 % 3.5 %- 3.9 % Expected long-term rate of return on plan assets — % — % Rate of compensation increase 3.0 % - 3.8 % 3.0 % - 3.8 % The Company establishes the discount rate for each pension plan by analyzing current market long-term bond rates and matching the bond maturity with the average duration of the pension liabilities. The Company establishes the long-term expected rate of return by developing a forward-looking, long-term return assumption for each pension fund asset class, taking into account factors such as the expected real return for the specific asset class and inflation. A single, long-term rate of return is then calculated as the weighted average of the target asset allocation percentages and the long-term return assumption for each asset class. Pension Plan Assets The plan assets were $ 0 as of December 31, 2023, since all assets were transferred to the third party life insurance and pension provider that is funding and administering future benefit payments for substantially all of the employees in the plan. Prior to the transfer, pension assets were held in liquid cash and cash equivalents. 120 MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Estimated Future Benefit Payments for Pension Benefit Plans At December 31, 2023, the estimated benefit payments over the next five years and beyond are as follows: Estimated Future Benefit Payments (in thousands) 2024 $ 59 2025 60 2026 46 2027 46 2028 32 Thereafter 63 $ 306 15. Commitments and Contingencies Inventory Purchase and Other Contractual Obligations As of December 31, 2023, future minimum payments under inventory purchase and other obligations are as follows: Inventory Purchase Obligations Other Obligations Total 2024 $ 28,754 $ 32,563 $ 61,317 2025 10,231 29,405 39,636 2026 — 18,567 18,567 2027 — 3,673 3,673 Total minimum payments $ 38,985 $ 84,208 $ 123,193 Other obligations consist of contractual payments due for software licenses. Jointly Funded Research and Development 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 $ 15.0 million received from the other parties as of December 31, 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 years ended December 31, 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. 121 MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MaxLinear believes that it properly terminated the Merger Agreement. 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. , No. 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 will vigorously defend its position. On December 20, 2023, the Court appointed the lead plaintiffs, who are expected to file an amended complaint by February 15, 2024. Defendants expect to answer or move to dismiss by March 29, 2024. Comcast Litigation On December 1, 2023, MaxLinear filed claims against Comcast Management, LLC and Comcast Cable Communications, LLC, or together, Comcast, in the United States District Court for the Southern District of New York. MaxLinear alleges that in 2020, MaxLinear shared its proprietary design and know-how for a full-duplex, or FDX, amplifier with Comcast in the hope of securing future business with Comcast. MaxLinear shared its design and know-how on several occasions, all pursuant to a non-disclosure agreement between MaxLinear and Comcast, with the expectation that Comcast would keep the information confidential. Comcast needed this technology in order to effectively compete with fiber-optic internet providers. Instead of engaging MaxLinear to develop the FDX amplifier, Comcast shared MaxLinear’s proprietary designs with MaxLinear’s direct competitor. Comcast then worked with MaxLinear’s competitor to develop the FDX-amplifier technology. MaxLinear brought claims for trade secret misappropriation, unfair competition, and breach of the parties’ non-disclosure agreement, and it sought an unspecified amount of compensatory damages, punitive damages, pre-judgment and post-judgment interest, costs, expenses, and attorney fees as well as an injunction against Comcast’s use or disclosure of MaxLinear’s trade secrets. Dish Litigation On February 10, 2023, Entropic Communications, LLC, or Entropic, filed claims for patent infringement against Dish Network Corporation, Dish Network LLC, Dish Network Service, LLC, and Dish Network California Service Corporation, or together, Dish,. At that time, MaxLinear was not a party to the action. On September 21, 2023, Dish Network California Service Corporation, or Dish California, filed four counterclaims against MaxLinear in the United States District Court for the Central District of California. The four claims are declaratory judgment, breach of contract, fraud and negligent misrepresentation, and civil conspiracy. Dish California alleges that when MaxLinear assigned certain patents to Entropic, MaxLinear violated its obligations owed to the Multimedia over Coax Alliance, or MoCA, under MoCA’s Intellectual Property Rights, or IPR, Policy. Dish California alleges that MaxLinear also allegedly violated the MoCA IPR Policy by failing to offer Dish California a fair, reasonable, and nondiscriminatory, or FRAND, license for these patents. Dish California seeks an unspecified amount of compensatory damages, disgorgement, attorneys’ fees, experts’ fees, and costs. Cox Litigations On October 6, 2023, Cox Communications, Inc., CoxCom, LLC, and Cox Communications California, LLC, or together, Cox, filed claims in two separate actions against MaxLinear in the United States District Court for the Central District of California. In the first action, in response to Entropic suing Cox for patent infringement, Cox filed counterclaims alleging that when MaxLinear assigned certain patents to Entropic, MaxLinear violated its obligations under MoCA’s IPR Policy by assigning these patents and by failing to offer Cox a FRAND license for these patents. Cox amended its counterclaims on January 9, 2024 and is asserting claims of breach of contract, unjust enrichment, and declaratory judgment against MaxLinear. Cox seeks an unspecified amount of compensatory damages, equitable relief, attorneys’ fees, expenses, and costs. 122 MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In the second action, in response to Entropic suing Cox for patent infringement, Cox filed counterclaims against MaxLinear. Cox alleges that MaxLinear granted CableLabs a non-exclusive, royalty-free license to all patents essential for compliance with DOCSIS specifications. It further alleges that MaxLinear breached this agreement when MaxLinear assigned certain patents to Entropic. Cox amended its counterclaims on January 9, 2024 and is asserting claims for breach of contract, unjust enrichment, and declaratory judgment. Cox seeks an unspecified amount of compensatory damages, equitable relief, attorneys’ fees, expenses, and costs. The Company records a provision for contingent losses when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. As of December 31, 2023, no material loss contingencies have been accrued for litigation and other legal claims in the consolidated financial statements, since the Company’s management currently does not believe that the ultimate outcome of any of the matters described above is probable. An unfavorable outcome of these matters may be reasonably possible in excess of recorded amounts; however, a reasonable estimate of the amount or range of such loss cannot be made at this time. Other Matters From time to time, the Company is subject to threats of litigation or actual litigation in the ordinary course of business as described in “ Item 3 — Legal Proceedings ,” some of which may be material. Results of litigation and claims are inherently unpredictable. Regardless of the outcome, litigation and claims can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources, and other factors. 16. Stock Repurchases On February 23, 2021, the Company’s board of directors authorized a plan to repurchase up to $ 100 million of the Company’s common stock over a period ending February 16, 2024. The amount and timing of repurchases are subject to a variety of factors including liquidity, share price, market conditions, and legal requirements. Any purchases will be funded from available working capital and may be effected through open market purchases, block transactions, and privately negotiated transactions. The share repurchase program does not obligate the Company to make any repurchases and may be modified, suspended, or terminated by the Company at any time without prior notice. 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 year ended December 31, 2023, the Company did no t repurchase any shares of its common stock under the repurchase program. During the year ended December 31, 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. During the year ended December 31, 2021, the Company repurchased 454,372 shares of its common stock at a weighted average price of $ 51.7998 per share at an aggregate value of approximately $ 23.5 million under the repurchase program. As of December 31, 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. 123