Current Report Filing (8-k)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

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FORM 8-K

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CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): November 6, 2014

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ENTROPIC COMMUNICATIONS, INC.

(Exact Name of Registrant as Specified in Its Charter)

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Delaware	001-33844	33-0947630
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

6350 Sequence Drive

San Diego, CA 92121

(Address of Principal Executive Offices and Zip Code)

(858) 768-3600

(Registrant's Telephone Number, Including Area Code)

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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):



o	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On November 10, 2014, Entropic Communications, Inc., a Delaware corporation, issued a press release announcing, among other things, its financial results for the three and nine months ended September 30, 2014. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K. The information in this Item 2.02 and Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any registration statement or other document filed with the Securities and Exchange Commission, whether filed before or after the date hereof, and regardless of any general incorporation language in any such filing.

Item 2.05. Costs Associated with Exit or Disposal Activities.

On November 6, 2014, the Company’s Board of Directors (the “Board”) approved the implementation of a corporate restructuring plan to pull in the time for the Company to achieve profitability.

The restructuring plan will include discontinuing the development of new set-top box system-on-a-chip (“STB SoC”) products, and the closure of several global facilities, including facilities located in Shanghai, China, Belfast, Northern Ireland and San Jose, California which were primarily involved in the development of STB SoC products. The Company expects that approximately 200 positions will be eliminated in connection with the restructuring plan, representing about 40% of its work force as of November 10, 2014.

The Company estimates that it will incur total pre-tax restructuring charges of between $9.0 million and $11.0 million relating to these actions, consisting of (i) cash charges of between $5.5 million and $6.5 million in severance and retention costs and between $0.5 million and $1.0 million in facilities abandonment and contract termination costs, and (ii) non-cash charges of between $3.0 million and $3.5 million in asset impairment charges. The Company commenced implementation of these actions on November 10, 2014 and expects the implementation to be substantially completed by December 31, 2014.

The timing and costs of the restructuring plan may vary from the Company's current estimates based on many factors, including the finalization of timetables for the transition of functions, consultations with employees, and the statutory severance requirements of particular legal jurisdictions impacted. The Company may incur other material charges not currently anticipated due to events that may occur as a result of, or associated with, the restructuring plan and related activities. To the extent required by applicable rules, the Company may file one or more amendments to this Current Report on Form 8-K or include such disclosure in a future Quarterly Report on Form 10-Q or Annual Report on Form 10-K as details of the restructuring plan are refined and estimates of costs and charges are finalized.

Item 2.06. Material Impairments.

The information disclosed in Item 2.05 of this Current Report on Form 8-K is incorporated by reference to this Item 2.06.

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On November 6, 2014, Patrick Henry, the President and Chief Executive Officer of the Company was terminated without cause by the Board, effective November 10, 2014. Concurrent with such termination, Mr. Henry resigned from the Board and the number of authorized directors was reduced from seven to six. In connection with his termination without cause, Mr. Henry will receive the applicable severance benefits provided in the Amended and Restated Executive Employment Agreement dated December 7, 2009, as amended, between the Company and Mr. Henry.

On November 6, 2014, Theodore Tewksbury, Ph.D., age 57, was appointed as the Company’s President and Chief Executive Officer, effective November 10, 2014. Dr. Tewksbury will serve in such capacity on an interim basis until a successor is identified and appointed.

Dr. Tewksbury has served on the Company’s Board of Directors since September 2010. Prior to joining the Company, from September 2013 to November 2014, Dr. Tewksbury served as an independent consultant to various private equity firms and technology companies. From 2008 to August 2013, Dr. Tewksbury served as President and Chief Executive Officer of Integrated Device Technology Inc. (“IDT”), a publicly traded, mixed signal semiconductor solutions company. Prior to joining IDT, he served as the President and Chief Operating Officer of AMI Semiconductor, a mixed signal semiconductor company, from 2006 to 2008. Prior to that, Dr. Tewksbury served as managing director at Maxim Integrated Products, Inc., a designer, manufacturer and seller of high-performance semiconductor products, from 2000 to 2006. Dr. Tewksbury holds a B.S., an M.S. and a Ph.D. in Electrical Engineering from the Massachusetts Institute of Technology.

In connection with his appointment as the Company’s interim President and Chief Executive Officer, Dr. Tewksbury will be paid an annualized base salary of $425,000. In addition, Dr. Tewksbury has been granted an option to purchase 100,000 shares of the Company’s Common Stock. As long as Dr. Tewksbury remains employed by the Company, the stock option award will vest over a six month period, 50% on February 10, 2015 and the remainder in three equal monthly installments thereafter, such that the option will be fully vested on May 10, 2015. Dr. Tewksbury will be eligible for full acceleration of the stock option award in the event his employment is terminated following a change of control of the Company or if he is involuntarily terminated without cause by the Company or if mutually agreed with the Company in connection with his voluntary resignation. Dr. Tewksbury will have six months following termination of his employment to exercise his vested stock options. In addition, Dr. Tewksbury will be reimbursed for his commuting expenses up to $5,000 per month during his term as interim President and Chief Executive Officer. Upon the effective date of his appointment as President and Chief Executive Officer, Dr. Tewksbury became eligible to participate in other Company-sponsored benefits, such as health insurance plans, the Company’s Employee Stock Purchase Plan and its 401(k) Plan. Dr. Tewksbury will continue to vest in the equity awards previously granted to him in connection with his service as a director. He will remain on the Board, but will no longer serve as a member of its Compensation Committee. Dr. Tewksbury’s cash compensation for service as a director will be pro-rated to the date he was appointed as interim President and Chief Executive Officer, and his separate cash compensation for Board service will be suspended while he is serving in such capacity.

The Company expects to enter into a letter agreement with Dr. Tewksbury incorporating the foregoing compensation arrangements. A copy of such letter agreement will be filed as an exhibit to Entropic’s Annual Report on Form 10-K for the year ending December 31, 2014.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

Number Description

99.1 Press Release of Entropic Communications, Inc. dated November 10, 2014.

Forward-Looking Statements

Statements in this Current Report on Form 8-K that are not strictly historical are “forward-looking” and involve a high degree of risk and uncertainty, including, but not limited to, the Company's expectations for future profitability and the timing of the return to profitability, the costs and expenses that the Company anticipates will result from the restructuring plan and the expected benefits that the Company anticipates will result from the restructuring plan, all of which are prospective. Such statements are only predictions, and actual events or results may differ materially from those projected in such forward-looking statements. Factors that could cause or contribute to the differences include, but are not limited to, the Company's ability to successfully implement its restructuring plan to leverage synergies and optimize its resources; the impact of the restructuring plan on the Company's business, including a potential adverse effect on revenues and the Company's other financial results; unanticipated charges not currently contemplated that may occur as a result of the restructuring plan; the Company's ability to continue to attract and retain key engineering and management employees, and risks and other uncertainties more fully described in the Company's filings with the Securities and Exchange Commission, including, but not limited to, the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2014. These forward-looking statements speak only as of the date hereof, and the Company expressly disclaims any intent or obligation to update these forward-looking statements.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereto duly authorized.



			ENTROPIC COMMUNICATIONS, INC.

Dated:	November 10, 2014	By:	/s/ Lance W. Bridges
			Lance W. Bridges, Esq. Senior Vice President and General Counsel

EXHIBIT INDEX



Number	Description
99.1	Press Release of Entropic Communications, Inc. dated November 10, 2014.



	Exhibit 99.1

Entropic Reports Third Quarter 2014 Results

Company Announces Strategy to Refocus on Core Capabilities, Implements Restructuring Plan

Fourth Quarter Actions to Target Annualized Cost Savings of $44 Million

Exploration of Strategic Alternatives to Enhance Shareholder Value is Ongoing

Conference Call to be Webcast Today at 5:30 a.m. Pacific Time

SAN DIEGO, November 10, 2014 - Entropic (NASDAQ: ENTR), a world leader in semiconductor solutions for the connected home, today reported its third quarter results for the period ended September 30, 2014. Entropic reported third quarter net revenues of $43.2 million. This compares to net revenues of $50.2 million in the second quarter of 2014, and $56.4 million in the third quarter of 2013.

In accordance with U.S. generally accepted accounting principles (GAAP), the Company's third quarter net loss was $27.6 million, or $(0.31) per share (basic and diluted). This compares with GAAP net loss of $21.8 million, or $(0.24) per share (basic and diluted) in the second quarter of 2014, and GAAP net loss of $11.9 million, or $(0.13) per share (basic and diluted) in the third quarter of 2013. Third quarter GAAP net loss for 2014 includes charges of $9.6 million in connection with the refocused strategy and restructuring plan.

Non-GAAP net loss in the third quarter was $10.0 million, or $(0.11) per share (basic and diluted), compared to non-GAAP net loss of $10.4 million, or $(0.12) per share (basic and diluted) in the second quarter of 2014, and non-GAAP net loss of $5.6 million, or $(0.06) (basic and diluted), in the third quarter of 2013.



	Three Months Ended
(In millions, except per share data)	September 30, 2014			June 30, 2014			September 30, 2013
Net revenues	$	43.2		$	50.2		$	56.4
GAAP net loss	$	(27.6	)	$	(21.8	)	$	(11.9	)
GAAP net loss per share (basic and diluted)	$	(0.31	)	$	(0.24	)	$	(0.13	)
Non-GAAP net loss ¹	$	(10.0	)	$	(10.4	)	$	(5.6	)
Non-GAAP net loss per share¹ (basic and diluted)	$	(0.11	)	$	(0.12	)	$	(0.06	)

1. Please refer to “Non-GAAP Financial Measures” below and the financial statements portion of this press release for an explanation of the non-GAAP financial measures contained in the table above and a reconciliation of such measures to the comparable GAAP financial measures.

Refocused Strategy and Restructuring Plan

Entropic also announced its strategy to refocus on its core Connectivity businesses, which include MoCA® (Multimedia over Coax Alliance), direct broadcast satellite outdoor unit (DBS ODU) and broadband access. Entropic will continue to pursue design wins for all set-top box system-on-a-chip (SoC) products in production or already commercialized and will continue to invest to support those programs, but the Company will discontinue all new set-top box SoC product development. Entropic believes the set-top box SoC business will contribute meaningful revenue for the next three years or more, based on design wins currently in the pipeline and the products it has already brought to market.

“Entropic is refocusing on its core radio frequency, analog/mixed signal and digital signal processing technologies in order to pull in time to profitability while effectively addressing longer term growth trends in connectivity," said interim President and CEO Dr. Ted Tewksbury. "While we will not be developing new set-top box SoCs, we will continue to invest in existing SoC products and support ongoing customer programs.”

To advance its refocused strategy, Entropic is implementing a restructuring plan that it expects to substantially complete within the current quarter. The restructuring plan is expected to result in a workforce reduction of approximately 200 positions, constituting approximately 40 percent of Entropic's global workforce and includes closing facilities in Shanghai, China, Belfast, Northern Ireland and San Jose, California.

As a result of the restructuring plan, beginning in the first quarter of 2015, Entropic expects to realize approximately $11 million in non-GAAP quarterly savings, primarily in operating expenses, with annualized non-GAAP savings projected at $44 million.

Entropic estimates it will incur pre-tax GAAP charges of between $9.0 million and $11.0 million in connection with the restructuring plan, the majority of which will be recorded during the fourth quarter of 2014.

The Company is continuing to actively explore strategic alternatives to enhance shareholder value.

Dr. Tewksbury continued, “With our refocused strategy and restructuring plan, we are targeting to reach non-GAAP profitability next quarter. We are continuing to explore strategic alternatives, and remain focused on product innovation, operational excellence, and enhancing shareholder value.”

For More Information

Entropic management will be holding a conference call today, November 10, 2014 at 5:30 a.m. Pacific Time/8:30 a.m. Eastern Time to discuss today’s announcement, and to provide guidance for the fourth quarter of fiscal 2014.

Interested parties may access the conference call via any of the following:

Teleconference: 888-713-4209

Access Code: 83800594

Web Broadcast: http://events.entropic.com/

Replay: 888-286-8010

Replay Passcode: 78521479

About Entropic

Entropic™ (Nasdaq:ENTR) is a world leader in semiconductor solutions for the connected home. The Company transforms how traditional HDTV broadcast and IP-based streaming video content is seamlessly, reliably, and securely delivered, processed, and distributed into and throughout the home. Entropic's next-generation Set-top Box (STB) System-on-a-Chip (SoC) and Connectivity solutions enable Pay-TV operators to offer consumers more captivating whole-home entertainment experiences by transforming the way digital entertainment is delivered, connected and consumed - in the home and on the go. For more information, please visit Entropic at: www.entropic.com, read our blog Entropic Topics, or get social with us at @Entropic_News, or on Facebook, Google+, YouTube and LinkedIn.

Non-GAAP Financial Measures

This press release and the accompanying tables contain the following non-GAAP financial measures: net loss and net loss per share. These non-GAAP financial measures exclude the effects on the Statement of Operations of all forms of stock-based compensation, transaction and integration costs, amortization of intangible assets, losses related to equity method investment, impairment of investment, the impact of fair value adjustments related to contingent consideration payable in the acquisition of PLX Technology assets, the deferred tax asset valuation allowance, the cash tax difference, IP litigation costs, asset impairment charges and restructuring charges.

Management uses these non-GAAP financial measures to manage the Company's business, including setting operating budgets and executive compensation plans. These non-GAAP measures are also used to (i) supplement the financial results and forecasts reported to the Company's board of directors, (ii) evaluate the Company's operating performance, (iii) compare the Company's performance to internal forecasts, and (iv) manage the Company's business and benchmarking performance internally. The non-GAAP measures have been made available to stockholders consistently in the past to provide transparency on how management manages the Company's operating performance. Management believes that these non-GAAP operating measures are useful to investors, when used as a supplement to GAAP measures, in evaluating the Company's ongoing operational performance.

The non-GAAP financial measures disclosed by the Company should not be considered in isolation or a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements should be carefully evaluated. The non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.

Forward-Looking Statements

Statements in this press release that are not strictly historical in nature constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements regarding our refocused strategy and restructuring plan, our financial position (including the anticipated savings from the restructuring plan, and the ongoing contribution of revenue from the set-top box SOC business), our design wins and engineering and operational efficiencies and our ability to drive future revenue growth and reach profitability. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause Entropic's actual results to be materially different from historical results or from any results expressed or implied by such forward-looking statements. These factors include, but are not limited to, risks associated with our restructuring activities, our ability to retain key employees, risks related to our evaluation of strategic alternatives, our dependence on a limited number of supply chain partners for the manufacture of our products and other factors that could affect our ability to meet customer demand; our dependence on a limited number of customers and, ultimately, service providers for a substantial portion of our revenues; the ability of our customers or the service providers who purchase their products to successfully compete and continue to grow in their markets; the continued development of the market for High Definition (HD) video and other multi-media content delivery and networking solutions; risks associated with competing against larger and more established companies and our ability to compete successfully in the connected home entertainment market; risks associated with timely development and introduction of new or enhanced products including those associated with IP Video delivery; risks related to international operations; risks related to intellectual property, including third party licensing or patent infringement claims; and other factors discussed in the "Risk Factors" section of Entropic's Quarterly Report on Form 10-Q for the quarter ended September 30, 2014. All forward-looking statements are qualified in their entirety by this cautionary statement. Entropic is providing this information as of the date of this release and does not undertake any obligation to update any forward-looking statements contained in this release as a result of new information, future events or otherwise.

Investor Contact:

Debra Hart

+1 858.768.3852

debra.hart@entropic.com

Media/Industry Analyst Contact:

Chris Fallon

+ 1 858.768.3827

chris.fallon@entropic.com

# # #

ENTROPIC COMMUNICATIONS, INC.

GAAP Condensed Consolidated Statements of Operations

(In thousands, except for per share information)



	Three Months Ended									Nine Months Ended
	September 30, 2014			June 30, 2014			September 30, 2013			September 30, 2014			September 30, 2013
	(unaudited)			(unaudited)			(unaudited)			(unaudited)			(unaudited)

Net revenues	$	43,178		$	50,200		$	56,376		$	149,033		$	201,445
Cost of net revenues	20,609			26,662			28,863			76,864			104,837
Gross profit	22,569			23,538			27,513			72,169			96,608
Operating expenses:
Research and development	29,073			31,216			28,510			95,555			84,914
Sales and marketing	5,923			5,878			6,137			19,246			18,609
General and administrative	5,435			6,121			5,751			17,688			17,290
Amortization of intangibles	256			290			443			989			1,868
Restructuring charges	2,186			1,796			(69		)	3,982			1,694
Impairment of assets	7,386			—			—			7,386			—
Total operating expenses	50,259			45,301			40,772			144,846			124,375
Loss from operations	(27,690		)	(21,763		)	(13,259		)	(72,677		)	(27,767		)
Loss related to equity method investment	—			—			—			—			(1,115		)
Impairment of investment	—			—			—			—			(4,780		)
Other income, net	176			192			464			449			1,147
Loss before income taxes	(27,514		)	(21,571		)	(12,795		)	(72,228		)	(32,515		)
Income tax provision (benefit)	123			278			(860		)	511			21,737
Net loss	$	(27,637	)	$	(21,849	)	$	(11,935	)	$	(72,739	)	$	(54,252	)

Net loss per share - basic and diluted	$	(0.31	)	$	(0.24	)	$	(0.13	)	$	(0.81	)	$	(0.60	)
Weighted average number of shares used to compute net loss per share - basic and diluted	89,293			89,566			91,069			89,520			90,225

ENTROPIC COMMUNICATIONS, INC.

GAAP Condensed Consolidated Balance Sheets

(In thousands)



	September 30, 2014		June 30, 2014		December 31, 2013
	(unaudited)		(unaudited)		(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	10,350	$	11,054	$	16,298
Marketable securities	78,331		73,835		71,922
Accounts receivable	29,435		30,879		30,204
Inventory	14,492		13,907		13,503
Deferred tax assets, current	51		51		51
Prepaid expenses and other current assets	14,056		17,797		18,739
Total current assets	146,715		147,523		150,717
Property and equipment, net	23,502		19,454		17,994
Long-term marketable securities	18,817		36,005		69,534
Intangible assets, net	36,561		41,159		47,326
Goodwill	4,688		4,688		4,688
Other long-term assets	3,815		5,734		5,001
Total assets	$	234,098	$	254,563	$	295,260
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	11,411	$	10,522	$	8,601
Accrued expenses and other current liabilities	7,055		6,380		6,318
Accrued payroll and benefits	9,933		8,525		7,077
Total current liabilities	28,399		25,427		21,996
Deferred rent	6,277		1,991		1,751
Other long-term liabilities	2,069		2,060		1,688
Stockholders' equity	197,353		225,085		269,825
Total liabilities and stockholders' equity	$	234,098	$	254,563	$	295,260

ENTROPIC COMMUNICATIONS, INC.

Unaudited Reconciliation of Non-GAAP Adjustments

(In thousands, except for per share information)

This press release contains the following non-GAAP financial measures: net loss income and net loss per share. The presentation of such measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. Our non-GAAP net loss and net loss per share exclude the items listed below.

The following table sets forth such non-GAAP measures for the applicable periods as well as the reconciliation of such measures to the directly comparable GAAP measures for the periods shown.



	Three Months Ended									Nine Months Ended
	September 30, 2014			June 30, 2014			September 30, 2013			September 30, 2014			September 30, 2013
	(unaudited)			(unaudited)			(unaudited)			(unaudited)			(unaudited)
GAAP net loss	$	(27,637	)	$	(21,849	)	$	(11,935	)	$	(72,739	)	$	(54,252	)
Non-GAAP adjustments:
Stock-based compensation:
Cost of net revenues	116			88			227			371			658
Research and development	2,898			3,535			2,766			9,635			6,730
Sales and marketing	633			772			510			1,967			1,324
General and administrative	955			1,167			1,089			3,059			3,109
Total stock-based compensation	4,602			5,562			4,592			15,032			11,821
Amortization of intangible assets:
Cost of net revenues	2,717			2,717			2,425			8,151			6,881
Operating expenses	256			290			443			989			1,868
Transaction and integration costs	—			—			—			—			244
Loss related to equity method investment	—			—			—			—			1,115
Impairment of investment	—			—			—			—			4,780
Adjustments to the fair value of PLX acquisition contingent consideration	—			—			—			—			(131		)
Cash tax difference ⁽¹⁾	(103		)	134			(1,093		)	(82		)	(5,464		)
Deferred tax asset valuation allowance	—			—			—			—			26,695
Impairment of assets	7,386			—			—			7,386			—
IP litigation costs ⁽²⁾	590			935			—			1,546			—
Restructuring charges ⁽³⁾	2,186			1,796			(69		)	3,982			1,694
Total of non-GAAP adjustments	17,634			11,434			6,298			37,004			49,503
Non-GAAP net loss income	$	(10,003	)	$	(10,415	)	$	(5,637	)	$	(35,735	)	$	(4,749	)
Weighted average shares (basic)	89,293			89,566			91,069			89,520			90,225
Adjustment for dilutive shares	—			—			—			—			—
Weighted average shares (diluted)	89,293			89,566			91,069			89,520			90,225
GAAP net loss per share (basic and diluted)	$	(0.31	)	$	(0.24	)	$	(0.13	)	$	(0.81	)	$	(0.60	)
Non-GAAP adjustments detailed above	0.20			0.12			0.07			0.41			0.55
Non-GAAP net loss per share (diluted)	$	(0.11	)	$	(0.12	)	$	(0.06	)	$	(0.40	)	$	(0.05	)

(1) Non-GAAP net loss per share is calculated using the cash tax rate of (2)%, (1)%, and (4)% for the three month periods ended September 30, 2014, June 30, 2014 and September 30, 2013, respectively, and (2)% and (12)% for the nine month periods ended September 30, 2014 and 2013, respectively. The estimated cash tax rate is the estimated tax payable on our projected tax returns as a percentage of estimated annual non-GAAP pre-tax net loss. We use an estimated cash tax rate to adjust for the historical variation in the effective book tax rate associated with the valuation allowance adjustments, the utilization of research and development tax credits, and the utilization of loss carryforwards which currently have an overall effect of reducing taxes payable. We believe that the cash tax rate provides a more transparent view of our operating results. The effective tax rate used for the purposes of calculating GAAP net loss was 0%, (1)%, and 7% for the three month periods ended September 30, 2014, June 30, 2014 and September 30, 2013, respectively, and (1)% and (67)% for the nine month periods ended September 30, 2014 and 2013, respectively.

(2) While litigation may arise in the ordinary course of our business, we nevertheless consider the 2014 IP litigation to be an unusual, non-recurring and unplanned activity and therefore exclude this charge when presenting non-GAAP financial measures.

(3) In June 2014, we announced a corporate restructuring plan to accelerate our path to profitability. The restructuring plan includes the closures and consolidations of several global facilities including facilities located in Austin, Texas; India; Taiwan and Israel. We expect that approximately 150 positions will be eliminated in connection with the restructuring plan, representing about 23% of our work force. We recorded restructuring charges of $2.8 million and $4.6 million during the three and nine months ended September 30, 2014. We expect to incur a total restructuring charge of approximately $6.0 million of which approximately $5.4 million is expected to be cash expenditures.

In June 2013, we incurred a restructuring charge of $1.8 million pursuant to a plan to rebalance our operations in an attempt to leverage synergies from our acquisitions and refine our business operations. This plan resulted in a reduction of our personnel by 66 employees, or approximately 10% of our work force.

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