MaxLinear, Inc. (NYSE:MXL), a provider of highly integrated,
radio-frequency (RF) and mixed-signal integrated circuits for
broadband communications applications, today announced preliminary,
unaudited financial results for the fourth quarter and fiscal year
ended December 31, 2011.
Management Commentary
“2011 was an exciting year for MaxLinear, one in which we made
significant progress in redefining our scope and execution
capabilities despite very challenging business conditions. We were
able to introduce new product lines to offset declines in some of
our legacy product lines. Most notably, we have firmly established
a new growth platform in the form of Cable and made investments to
set the stage for future growth in exciting platforms such as
hybrid TV, new terrestrial set-top technologies, and other
forthcoming product applications,” commented Kishore Seendripu,
Ph.D, Chairman and CEO. “We are excited about our prospects and are
focused on executing on growth initiatives that we believe should
result in long-term and meaningful operating leverage for the
business going forward.”
Generally Accepted Accounting Principles (GAAP)
Results
Net revenue for the fourth quarter of 2011 was $19.3 million, an
increase of 9 percent compared to the third quarter of 2011 and an
increase of 22 percent compared to the fourth quarter of 2010.
Gross profit in the fourth quarter of 2011 was 61 percent of
revenue, compared to 64 percent in the third quarter of 2011 and 66
percent in the fourth quarter of 2010. Loss from operations in the
fourth quarter of 2011 was 22 percent of revenue, compared to 18
percent in the third quarter of 2011 and compared to a 7 percent
loss as a percent of revenue in the fourth quarter of 2010.
Net loss for the fourth quarter of 2011 was $4.7 million, or
$0.14 per share (diluted), compared with $11.4 million, or $0.35
per share (diluted), for the third quarter of 2011 and net income
of $5.7 million, or $0.17 per share (diluted), for the fourth
quarter of 2010. Included in the previously reported GAAP operating
results for the third quarter of 2011 was an $8.2 million charge
associated with the establishment of a valuation allowance related
to federal deferred tax assets. Included in the previously reported
GAAP operating results for the fourth quarter of 2010 was a
one-time tax benefit of $6.7 million associated with the release of
a valuation allowance related to federal deferred tax assets.
GAAP operating results for the fourth quarter of fiscal 2011
also include a $0.8 million reserve based upon management’s current
estimate of potential exposure for penalties arising from the
internal export compliance review initiated by the audit committee
and further described below. Management expects to have
substantially more information concerning the export compliance
review following completion of the audit committee’s review. As a
result, the reserve included in MaxLinear’s audited financial
statements could differ materially from the amount included in
these preliminary financial results.
For the fiscal year 2011, net revenue was $71.9 million,
representing an increase of 5 percent compared to $68.7 million in
fiscal 2010. Gross profit was 63 percent of revenue for fiscal
2011, compared to 69 percent for fiscal 2010. For the fiscal year
2011, loss from operations was 21 percent of revenue, compared to
income from operations of 5 percent of revenue in fiscal 2010. Net
loss attributable to common stockholders for fiscal 2011 was $22.0
million, or $0.68 per share (diluted), compared to net income
attributable to common stockholders of $8.9 million, or $0.30 per
share (diluted), in fiscal 2010. As noted above, 2011 results
included an $8.2 million charge associated with the establishment
of a valuation allowance related to federal deferred tax assets,
and 2010 included a one-time tax benefit of $6.7 million associated
with the release of a valuation allowance related to federal
deferred tax assets, for a year-over-year tax related impact of
$14.9 million.
Cash, cash equivalents and short and long-term investments
totaled $85.7 million at December 31, 2011, compared to $94.5
million at December 31, 2010. Cash flow used in operations totaled
$1.8 million in the fourth quarter of 2011 and $7.0 million for the
full year of 2011.
Non-GAAP Results
Non-GAAP gross profit in the fourth quarter of 2011 was 61
percent of revenue, compared to 64 percent in the third quarter of
2011 and 66 percent in the fourth quarter of 2010. Non-GAAP loss
from operations in the fourth quarter of 2011 was 6 percent of
revenue, consistent with the third quarter of 2011 and compared to
income from operations of 1 percent in the fourth quarter of
2010.
Non-GAAP net loss for the fourth quarter of 2011 was $1.5
million, or $0.05 per share (diluted), consistent with the third
quarter of 2011, and compared to non-GAAP net income of $0.2
million, or $0.01 per share (diluted), for the fourth quarter of
2010.
For the fiscal year 2011, non-GAAP gross profit was 63 percent
of revenue, compared to 69 percent for fiscal 2010. For the fiscal
year 2011, non-GAAP loss from operations was 5 percent of revenue,
compared with non-GAAP income from operations of 11 percent of
revenue in fiscal 2010. Non-GAAP net loss attributable to common
stockholders for fiscal 2011 was $3.7 million, or $0.11 per share
(diluted), compared to non-GAAP net income attributable to common
stockholders of $7.9 million, or $0.24 per share (diluted), in
fiscal 2010.
Export Compliance Review
In the first quarter of 2012, we discovered that we may have
been involved in facilitating shipments of foreign produced
products to Iran. While the underlying shipments of the foreign
produced products may have been lawful, our actions may have
violated applicable sanctions/export control laws. Upon discovering
these potential sanctions/export controls issues, our audit
committee promptly retained outside counsel to conduct a thorough
internal review of these potential violations and our export
compliance. That review is on-going. We have made voluntary initial
filings with the Office of Foreign Assets Control of the United
States Department of the Treasury and with the Bureau of Industry
and Security of the United States Department of Commerce, notifying
these regulatory agencies that we are conducting a review of these
export control matters and that we will submit any supplemental
Voluntary Self Disclosures once our internal review is complete.
Our preliminary, unaudited operating results for the fourth quarter
of fiscal 2011 include a reserve of $0.8 million relating to
estimated civil penalties associated with the potential violations
of United States export control laws involving Iran. Management has
based its current reserve estimates on information available as of
the date of this announcement. Management will reevaluate this
reserve following completion of the audit committee’s review, and
the reserve in our audited financial statements could differ
materially from the current reserve.
Conference Call Details
MaxLinear will host its fourth quarter 2011 financial results
conference call today, February 7, 2012 at 1:30 p.m. Pacific Time
(4:30 p.m. Eastern Time). To access this call, dial US toll free:
1-877-941-2068 / US toll: 1-480-629-9712 with conference ID:
4409590. A live webcast of the conference call will be accessible
from the investor relations section of the MaxLinear website and
will be archived and available after the call at
http://investors.maxlinear.com until February 11, 2012. A replay of
the conference call will also be available until February 11, 2012
by dialing toll free 1-800-406-7325 or 1-303-590-3030 and
referencing passcode: 4509590.
Cautionary Note Concerning Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Forward-looking statements include, among others,
statements concerning our future financial performance and trends
and growth opportunities in specific product markets such as cable
and hybrid TV as well as new markets we may seek to address through
new product introductions. In addition, our statements concerning
the audit committee’s export compliance review, including
management’s estimates of potential liabilities associated with the
export control review, constitute forward-looking statements. These
forward-looking statements involve known and unknown risks,
uncertainties, and other factors that may cause actual results to
be materially different from any future results expressed or
implied by the forward-looking statements. Forward-looking
statements are based on management’s current, preliminary
expectations and are subject to various risks and uncertainties.
Risks and uncertainties affecting our business and operating
results, include, among others, intense competition in our
industry; uncertainties concerning how end user markets for our
products will develop, including end user markets for the cable and
hybrid television applications of our products as well as end user
markets for products currently in development; our ability to
continue to develop and introduce new and enhanced products on a
timely basis and achieve market acceptance of those products; our
dependence on a limited number of customers for a substantial
portion of our revenues; the timing and development of the global
transition from analog to digital television; our lack of long-term
supply contracts and dependence on limited sources of supply; and
potential decreases in average selling prices for our products.
Forward looking statements associated with our export control
compliance review include uncertainties concerning the timing and
outcome of the review; the potential for the assessment of civil
penalties materially in excess of those estimated in the reserve we
have disclosed today; the risk of criminal prosecution, fines, and
penalties; the risk that assessed penalties could have a material
adverse effect on our operating results and financial condition;
the risk that the review and any associated enforcement proceedings
could result in substantial management distraction and expense; and
the risk of stockholder litigation. The results we are providing
today are preliminary and unaudited and are subject to the
completion of our export compliance review and conclusion of the
audit of our financial statements, and could differ materially from
the results disclosed today. In addition to these risks and
uncertainties, investors should review the risks and uncertainties
contained in our filings with the Securities and Exchange
Commission (SEC), including our most recent Quarterly Report on
Form 10-Q. Additional risks, uncertainties, and other information
will be contained in our Annual Report on Form 10-K for the year
ended December 31, 2011.
Use of Non-GAAP Financial Measures
To supplement our unaudited condensed consolidated financial
statements presented on a basis consistent with GAAP, we disclose
certain non-GAAP financial measures, including non-GAAP net income
(loss), income (loss) from operations, gross profit, and earnings
(loss) per share. These supplemental measures exclude the effects
of (i) stock-based compensation expense and its related tax effect,
if any; (ii) expenses associated with our acquisition of MoCA®
(Multimedia over Coax Alliance) Physical Layer IP and connectivity
related software IP licenses; (iii) the valuation allowance on
federal deferred tax assets; (iv) the correction of an error
related to the tax treatment of deferred revenue for the year ended
December 31, 2009 and 2008, and (v) estimated fines and penalties
related to export compliance matters. In addition, our 2010
non-GAAP results include the assumed conversion of all outstanding
shares of preferred stock into shares of common stock using the
as-if converted method. These non-GAAP measures are not in
accordance with and do not serve as an alternative for GAAP. We
believe that these non-GAAP measures have limitations in that they
do not reflect all of the amounts associated with our GAAP results
of operations. These non-GAAP measures should only be viewed in
conjunction with corresponding GAAP measures. We compensate for the
limitations of non-GAAP financial measures by relying upon GAAP
results to gain a complete picture of our performance.
We believe that non-GAAP financial measures can provide useful
information to both management and investors by excluding certain
non-cash and other one-time expenses that are not indicative of our
core operating results. Among other uses, our management uses
non-GAAP measures to compare our performance relative to forecasts
and strategic plans and to benchmark our performance externally
against competitors. In addition, management's cash incentive
compensation will be determined in part using these non-GAAP
measures because we believe non-GAAP measures better reflect our
core operating performance.
The following are explanations of each type of adjustment that
we incorporate into non-GAAP financial measures:
Stock-based compensation expense relates to equity incentive
awards granted to our employees, directors, and consultants. Our
equity incentive plans are important components of our employee
incentive compensation arrangements and are reflected as expenses
in our GAAP results. Stock-based compensation expense has been and
will continue to be a significant recurring expense for MaxLinear.
While we include the dilutive impact of such equity awards in
weighted average shares outstanding, the expense associated with
stock-based awards reflects a non-cash charge that we exclude from
non-GAAP net income. In addition, we exclude the related tax effect
of stock-based compensation expense, if any, from non-GAAP net
income.
Expenses incurred in relation to the purchase of certain new
market related IP licenses and estimated fines and penalties
related to export compliance matters are non-recurring; therefore,
we do not believe these are indicative of our core operating
performance.
The provision for income taxes for the twelve months ended
December 31, 2011 includes a valuation allowance related to federal
deferred tax assets. The recording of the valuation allowance is
non-cash; therefore, we do not believe this is indicative of our
core operating performance. The provision for income taxes for the
twelve months ended December 31, 2010 includes the correction
of an error related to the tax treatment of deferred revenue for
the years ended December 31, 2009 and 2008 of $0.3 million and
the release of $6.7 million of the valuation allowance related to
federal deferred tax assets. The correction of the error is an
out-of-period adjustment, and the release of the valuation
allowance is a non-cash benefit; therefore, these are not
indicative of our core operating performance.
The shares used to compute non-GAAP basic and diluted net income
per share for the twelve months ended December 31, 2010 include the
assumed conversion of all outstanding shares of preferred stock
into shares of common stock using the as-if converted method as of
the beginning of each period presented or the date of issuance, if
later. In March 2010, in connection with the closing of our initial
public offering, all of our outstanding preferred stock was
converted into shares of our Class B common stock.
Reconciliations of non-GAAP measures disclosed in this press
release appear below.
About MaxLinear, Inc.
MaxLinear, Inc. is a provider of integrated, radio-frequency
(RF) and mixed-signal semiconductor solutions for broadband
communications applications. MaxLinear is located in Carlsbad,
California, and its address on the Internet is
www.maxlinear.com.
MXL is MaxLinear’s registered trademark. Other trademarks
appearing herein are the property of their respective owners.
MAXLINEAR, INC. UNAUDITED GAAP CONDENSED
CONSOLIDATED BALANCE SHEETS (in thousands)
December 31, December 31, 2011 2010
Assets Current assets: Cash and cash equivalents $
28,026 $ 21,563 Short-term investments, available-for-sale 47,156
72,923 Accounts receivable 10,421 3,047 Inventory 8,082 7,425
Deferred income taxes, prepaid expenses
and other current assets
1,394 4,232 Total current assets 95,079 109,190
Property and equipment, net 5,494 4,535 Long-term investments,
available-for-sale 10,554 - Intangible assets 1,021 980 Deferred
income taxes and other long-term assets 228 4,213
Total assets $ 112,376 $ 118,918
Liabilities and stockholders’
equity Current liabilities $ 18,494 $ 13,746 Other long-term
liabilities 855 257 Capital lease obligations, net of current
portion 2 18 Total stockholders’ equity 93,025
104,897 Total liabilities and stockholders’ equity $ 112,376 $
118,918
MAXLINEAR, INC.
UNAUDITED GAAP CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (in thousands, except per share data)
Three Months Ended December 31, September 30,
December 31, 2011 2011 2010 Net
revenue $ 19,296 $ 17,639 $ 15,865 Cost of net revenue 7,573
6,307 5,444 Gross profit 11,723
11,332 10,421 Operating expenses: Research and development 10,179
9,456 7,426 Selling, general and administrative 5,849
5,033 4,071 Total operating expenses
16,028 14,489 11,497 Loss
from operations (4,305 ) (3,157 ) (1,076 ) Interest income 58 63
105 Interest expense (31 ) (32 ) (7 ) Other expense, net
(131 ) (35 ) (29 ) Loss before income taxes (4,409 )
(3,161 ) (1,007 ) Provision (benefit) for income taxes 283
8,227 (6,669 ) Net income (loss)
(4,692 ) (11,388 ) 5,662 Net income (loss) per
share: Basic $ (0.14 ) $ (0.35 ) $ 0.18 Diluted $ (0.14 ) $
(0.35 ) $ 0.17 Shares used to compute net income (loss) per
share: Basic 33,056 32,743
31,618 Diluted 33,056 32,743
33,979
MAXLINEAR, INC.
UNAUDITED GAAP CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (in thousands, except per share data)
Twelve Months Ended December 31, December 31,
2011 2010 Net revenue $ 71,937 $ 68,701 Cost
of net revenue 26,616 21,560 Gross
profit 45,321 47,141 Operating expenses: Research and development
40,156 27,725 Selling, general and administrative 20,178
15,912 Total operating expenses 60,334
43,637 Income (loss) from operations (15,013 )
3,504 Interest income 292 326 Interest expense (69 ) (29 ) Other
expense, net (241 ) (58 ) Income (loss) before income
taxes (15,031 ) 3,743 Provision (benefit) for income taxes
6,993 (6,371 ) Net income (loss) (22,024 ) 10,114 Net
income allocable to preferred stockholders -
(1,215 ) Net income (loss) attributable to common stockholders $
(22,024 ) $ 8,899 Net income (loss) per share attributable
to common stockholders: Basic $ (0.68 ) $ 0.33 Diluted $
(0.68 ) $ 0.30
Shares used to compute net income (loss)
per share attributable to common stockholders:
Basic 32,573 26,743 Diluted
32,573 29,478
MAXLINEAR, INC. UNAUDITED RECONCILIATION OF NON-GAAP
ADJUSTMENTS (in thousands, except per share data)
Three Months Ended December 31, September 30,
December 31, 2011 2011 2010 GAAP
net income (loss) $ (4,692 ) $ (11,388 ) $ 5,662 Stock-based
compensation: Cost of net revenue 16 15 24 Research and development
1,420 1,308 815 Selling, general and administrative 726
846 399 Total stock-based
compensation 2,162 2,169 1,238 Acquisition of technology licenses
275 - - Estimated export compliance fines and penalties 750 - -
Income taxes* - 7,701 (6,669 )
Non-GAAP net income (loss) $ (1,505 ) $ (1,518 ) $ 231
Shares used in computing non-GAAP basic net income (loss) per share
33,056 32,743 31,618
Shares used in computing non-GAAP diluted net income (loss) per
share 33,056 32,743 33,979
Non-GAAP basic net income (loss) per share $ (0.05 ) $ (0.05
) $ 0.01 Non-GAAP diluted net income (loss) per share $
(0.05 ) $ (0.05 ) $ 0.01
* Income taxes for the three months ended
September 30, 2011 illustrate the financial results without the
effects of the recording of the valuation allowance related to
federal deferred tax assets. Income taxes for the three months
ended December 31, 2010 illustrate the financial results without
the effects of the release of the valuation allowance related to
federal deferred tax assets.
MAXLINEAR, INC. UNAUDITED
RECONCILIATION OF NON-GAAP ADJUSTMENTS (in thousands, except
per share data) Twelve Months Ended December
31, December 31, 2011 2010 GAAP net
income (loss) $ (22,024 ) $ 10,114 Stock-based compensation: Cost
of net revenue 54 80 Research and development 4,434 2,589 Selling,
general and administrative 2,880 1,546
Total stock-based compensation 7,368 4,215 Acquisition of
technology licenses 3,573 - Estimated export compliance fines and
penalties 750 - Income taxes* 6,668 (6,383 )
Non-GAAP net income (loss) $ (3,665 ) $ 7,946 Shares used in
computing GAAP basic net income (loss) per share 32,573 26,743
Weighted average effect of the assumed conversion of convertible
preferred stock from date of issuance - 3,263
Shares used in computing non-GAAP basic net income (loss)
per share 32,573 30,006 Shares used in
computing GAAP diluted net income (loss) per share 32,573 29,478
Weighted average effect of the assumed conversion of convertible
preferred stock from date of issuance - 3,263
Shares used in computing non-GAAP diluted net income (loss)
per share 32,573 32,741 Non-GAAP basic
net income (loss) per share $ (0.11 ) $ 0.26 Non-GAAP
diluted net income (loss) per share $ (0.11 ) $ 0.24
* Income taxes for the twelve months ended
December 31, 2011 illustrate the financial results without the
effects of the recording of the valuation allowance related to
federal deferred tax assets. Income taxes for the twelve months
ended December 31, 2010 illustrate the financial results without
the effects of the release of the valuation allowance related to
federal deferred tax assets and the correction of an error related
to the tax treatment of deferred revenue for the years ended
December 31, 2009 and 2008.
MAXLINEAR, INC. UNAUDITED
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
Three Months Ended December 31, September 30,
December 31, 2011 2011 2010 GAAP
gross profit as a % of revenue 60.8 % 64.2 % 65.7 % Stock-based
compensation: Cost of net revenue 0.1 % 0.1 % 0.2 % Non-GAAP gross
profit as a % of revenue 60.9 % 64.3 % 65.9 % GAAP loss from
operations as a % of revenue (22.3 )% (17.9 )% (6.8 )% Stock-based
compensation: Cost of net revenue 0.1 % 0.1 % 0.2 % Research and
development 7.4 % 7.4 % 5.1 % Selling, general and administrative
3.8 % 4.8 % 2.5 % Acquisition of technology licenses 1.4 % - -
Estimated export compliance fines and penalties 3.9 % - -
Non-GAAP income (loss) from operations as a % of revenue
(5.7 )% (5.6 )% 1.0 %
MAXLINEAR, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
MEASURES Twelve Months Ended December 31,
December 31, 2011 2010 GAAP gross
profit as a % of revenue 63.0 % 68.6 % Stock-based compensation:
Cost of net revenue 0.1 % 0.1 % Non-GAAP gross profit as a % of
revenue 63.1 % 68.7 % GAAP income (loss) from operations as
a % of revenue (20.9 )% 5.1 % Stock-based compensation: Cost of net
revenue 0.1 % 0.1 % Research and development 6.2 % 3.8 % Selling,
general and administrative 4.0 % 2.3 % Acquisition of technology
licenses 5.0 % - Estimated export compliance fines and penalties
1.0 % - Non-GAAP income (loss) from operations as a % of
revenue (4.6 )% 11.3 %
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