(1) We adopted ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting in the second quarter of 2016, and included excess tax benefits in the provision for income taxes instead of in additional paid-in capital. As a result, when computing diluted EPS using the treasury stock method, fewer hypothetical shares can be repurchased resulting in a greater number of incremental shares being issued upon the exercise of share-based payment awards. The impact of adoption for the three months ended September 30, 2016 was a reduction to the provision for income taxes and increase to net income of $0.9 million and increases to basic earnings per share of $0.01 and diluted earnings per share of $0.01. Diluted earnings per share for the three months ended September 30, 2016 was also impacted by an increase of 833,000 shares in the number of incremental shares used in computing diluted EPS.
MAXLINEAR, INC. | |||||||
UNAUDITED GAAP CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
(in thousands, except per share data) | |||||||
Nine Months Ended | |||||||
September 30, 2016(1) | September 30, 2015 (2) | ||||||
Net revenue | $ | 300,696 | $ | 201,411 | |||
Cost of net revenue | 121,109 | 101,748 | |||||
Gross profit | 179,587 | 99,663 | |||||
Operating expenses: | |||||||
Research and development | 73,710 | 62,765 | |||||
Selling, general and administrative | 47,734 | 60,021 | |||||
IPR&D impairment losses | 1,300 | — | |||||
Restructuring charges | 2,106 | 11,814 | |||||
Total operating expenses | 124,850 | 134,600 | |||||
Income (loss) from operations | 54,737 | (34,937 | ) | ||||
Interest income | 426 | 168 | |||||
Other income (expense), net | (64 | ) | 351 | ||||
Income (loss) before income taxes | 55,099 | (34,418 | ) | ||||
Provision (benefit) for income taxes | 2,155 | (631 | ) | ||||
Net income (loss) | $ | 52,944 | $ | (33,787 | ) | ||
Net income (loss) per share: | |||||||
Basic | $ | 0.83 | $ | (0.67 | ) | ||
Diluted | $ | 0.79 | $ | (0.67 | ) | ||
Shares used to compute net income (loss) per share: | |||||||
Basic | 63,454 | 50,528 | |||||
Diluted | 67,354 | 50,528 |
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(1) We adopted ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting in the second quarter of 2016, and included excess tax benefits in the provision for income taxes instead of additional paid-in capital. As a result, when computing diluted EPS using the treasury stock method, fewer hypothetical shares can be repurchased resulting in a greater number of incremental shares being issued upon the exercise of share-based payment awards. The impact of adoption for the nine months ended September 30, 2016 was a reduction to the provision for income taxes and increase to net income of $6.0 million and increase to basic earnings per share of $0.09 and diluted earnings per share of $0.08. Diluted earnings per share for the nine months ended September 30, 2016 was also impacted by an increase of 856,000 shares in the number of incremental shares used in computing diluted EPS.
(2) Includes five months of Entropic operations.
MAXLINEAR, INC. | |||||||||||
UNAUDITED GAAP CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
(in thousands) | |||||||||||
Three Months Ended | |||||||||||
September 30, 2016 | June 30, 2016 | September 30, 2015 | |||||||||
Operating Activities | |||||||||||
Net income | $ | 9,679 | 22,584 | 1,582 | |||||||
Adjustments to reconcile net income to cash provided by operating activities: | |||||||||||
Amortization and depreciation | 8,808 | 4,163 | 17,296 | ||||||||
Impairment of IPR&D assets | 1,300 | — | — | ||||||||
Provision for losses on accounts receivable | 87 | — | — | ||||||||
Provision for inventory reserves | — | (29 | ) | — | |||||||
Amortization (reduction in) of investment premiums, net | 12 | (66 | ) | 57 | |||||||
Amortization of inventory step-up | 2,653 | 336 | 958 | ||||||||
Stock-based compensation | 6,264 | 5,102 | 5,032 | ||||||||
Deferred income taxes | 82 | (100 | ) | 251 | |||||||
(Gain) loss on disposal of property and equipment | — | 48 | (39 | ) | |||||||
(Gain) loss on sale of available-for-sale securities | — | (50 | ) | 21 | |||||||
(Gain) loss on foreign currency | 112 | (170 | ) | — | |||||||
Excess tax benefits on stock-based awards | (928 | ) | (3,549 | ) | — | ||||||
Change in fair value of contingent consideration
| 99 | 24 | 9 | ||||||||
Impairment of long-lived assets | — | — | 153 | ||||||||
Impairment of leases | — | — | 568 | ||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | (5,419 | ) | (3,300 | ) | (205 | ) | |||||
Inventory | (454 | ) | 4,425 | 1,581 | |||||||
Prepaid expenses and other assets | 440 | 1,611 | (2,684 | ) | |||||||
Accounts payable, accrued expenses and other current liabilities | (2,470 | ) | 1,887 | (9,256 | ) | ||||||
Accrued compensation | (183 | ) | 309 | 3,342 | |||||||
Deferred revenue and deferred profit | (504 | ) | (725 | ) | 3 | ||||||
Accrued price protection liability | (1,158 | ) | (173 | ) | 3,925 | ||||||
Other long-term liabilities | (5 | ) | 18 | (513 | ) | ||||||
Net cash provided by operating activities | 18,415 | 32,345 | 22,081 | ||||||||
Investing Activities | |||||||||||
Purchases of property and equipment | (2,118 | ) | (1,488 | ) | (20 | ) | |||||
Purchases of intangible assets | — | (390 | ) | (100 | ) | ||||||
Cash used in acquisition, net of cash acquired | (80,000 | ) | (21,000 | ) | — | ||||||
Purchases of available-for-sale securities | (32,986 | ) | (9,504 | ) | (25,712 | ) | |||||
Maturities of available-for-sale securities | 7,700 | 70,711 | 4,400 | ||||||||
Net cash provided by (used in) investing activities | (107,404 | ) | 38,329 | (21,432 | ) | ||||||
Financing Activities | |||||||||||
Net proceeds from issuance of common stock | 165 | 2,558 | 2,891 | ||||||||
Minimum tax withholding paid on behalf of employees for restricted stock units | (2,591 | ) | (2,501 | ) | (1,367 | ) | |||||
Net cash provided by (used in) financing activities | (2,426 | ) | 57 | 1,524 | |||||||
Effect of exchange rate changes on cash and cash equivalents | (91 | ) | 11 | (755 | ) | ||||||
Increase (decrease) in cash and cash equivalents | (91,506 | ) | 70,742 | 1,418 | |||||||
Cash and cash equivalents at beginning of period | 147,582 | 76,840 | 56,731 | ||||||||
Cash and cash equivalents at end of period | $ | 56,076 | $ | 147,582 | $ | 58,149 |