QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
☑ | Accelerated filer | ☐ | Emerging growth company | ☐ | ||||||
Non-accelerated filer | ☐ | Smaller reporting company | ☐ |
Page | ||
Part I | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Part II | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
ITEM 1. | FINANCIAL STATEMENTS |
June 30, 2019 | December 31, 2018 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | $ | |||||
Short-term restricted cash | |||||||
Accounts receivable, net | |||||||
Inventory | |||||||
Prepaid expenses and other current assets | |||||||
Total current assets | |||||||
Long-term restricted cash | |||||||
Property and equipment, net | |||||||
Leased right-of-use assets | |||||||
Intangible assets, net | |||||||
Goodwill | |||||||
Deferred tax assets | |||||||
Other long-term assets | |||||||
Total assets | $ | $ | |||||
Liabilities and stockholders’ equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | $ | |||||
Accrued price protection liability | |||||||
Accrued expenses and other current liabilities | |||||||
Accrued compensation | |||||||
Total current liabilities | |||||||
Long-term lease liabilities | |||||||
Long-term debt | |||||||
Other long-term liabilities | |||||||
Total liabilities | |||||||
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, 71,218 shares issued and outstanding at June 30, 2019 and 550,000 shares authorized, 69,551 shares issued and outstanding December 31, 2018, respectively | |||||||
Additional paid-in capital | |||||||
Accumulated other comprehensive income (loss) | ( | ) | |||||
Accumulated deficit | ( | ) | ( | ) | |||
Total stockholders’ equity | |||||||
Total liabilities and stockholders’ equity | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net revenue | $ | $ | $ | $ | |||||||||||
Cost of net revenue | |||||||||||||||
Gross profit | |||||||||||||||
Operating expenses: | |||||||||||||||
Research and development | |||||||||||||||
Selling, general and administrative | |||||||||||||||
Restructuring charges | |||||||||||||||
Total operating expenses | |||||||||||||||
Income (loss) from operations | ( | ) | ( | ) | ( | ) | |||||||||
Interest income | |||||||||||||||
Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Other income (expense), net | ( | ) | ( | ) | |||||||||||
Total interest and other income (expense), net | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Income tax provision (benefit) | ( | ) | ( | ) | |||||||||||
Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Net loss per share: | |||||||||||||||
Basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Shares used to compute net loss per share: | |||||||||||||||
Basic | |||||||||||||||
Diluted |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Other comprehensive income (loss), net of tax: | |||||||||||||||
Foreign currency translation adjustments, net of tax benefit of $14 and $15 for the three and six months ended June 30, 2019, respectively and net of tax benefit of $128 and $157 for the three and six months ended June 30, 2018, respectively | ( | ) | ( | ) | ( | ) | |||||||||
Unrealized gain (loss) on interest rate swap, net of tax benefit of $164 and $294 for the three and six months ended June 30, 2019 and tax expense of $175 and $363 for the three and six months ended June 30, 2018, respectively | ( | ) | ( | ) | |||||||||||
Other comprehensive income (loss) | ( | ) | ( | ) | ( | ) | |||||||||
Total comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) |
Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Stockholders’ Equity | |||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||
Balance at December 31, 2018 | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||
Common stock issued pursuant to equity awards, net | — | — | — | ||||||||||||||||||||
Stock-based compensation | — | — | — | — | |||||||||||||||||||
Cumulative effect of adoption of new accounting principle | — | — | — | — | ( | ) | ( | ) | |||||||||||||||
Other comprehensive income | — | — | — | — | |||||||||||||||||||
Net loss | — | — | — | — | ( | ) | ( | ) | |||||||||||||||
Balance at March 31, 2019 | ( | ) | |||||||||||||||||||||
Common stock issued pursuant to equity awards, net | — | ( | ) | — | — | ( | ) | ||||||||||||||||
Employee stock purchase plan | — | — | — | ||||||||||||||||||||
Stock-based compensation | — | — | — | — | |||||||||||||||||||
Other comprehensive loss | — | — | — | ( | ) | — | ( | ) | |||||||||||||||
Net loss | — | — | — | — | ( | ) | ( | ) | |||||||||||||||
Balance at June 30, 2019 | $ | $ | $ | ( | ) | $ | ( | ) | $ |
Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Total Stockholders’ Equity | |||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||
Balance at December 31, 2017 | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||
Common stock issued pursuant to equity awards, net | — | — | — | ||||||||||||||||||||
Stock-based compensation | — | — | — | — | |||||||||||||||||||
Cumulative effect of adoption of new accounting principles | — | — | — | — | |||||||||||||||||||
Other comprehensive income | — | — | — | — | |||||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||
Balance at March 31, 2018 | ( | ) | |||||||||||||||||||||
Common stock issued pursuant to equity awards, net | — | ( | ) | — | — | ( | ) | ||||||||||||||||
Employee stock purchase plan | — | — | — | ||||||||||||||||||||
Stock-based compensation | — | — | — | — | |||||||||||||||||||
Cumulative effect of adoption of new accounting principles | — | — | — | — | |||||||||||||||||||
Other comprehensive loss | — | — | — | ( | ) | — | ( | ) | |||||||||||||||
Net loss | — | — | — | — | ( | ) | ( | ) | |||||||||||||||
Balance at June 30, 2018 | $ | $ | $ | $ | ( | ) | $ |
Six Months Ended June 30, | |||||||
2019 | 2018 | ||||||
Operating Activities | |||||||
Net loss | $ | ( | ) | $ | ( | ) | |
Adjustments to reconcile net loss to cash provided by operating activities: | |||||||
Amortization and depreciation | |||||||
Amortization of debt issuance costs and accretion of discount on debt and leases | |||||||
Stock-based compensation | |||||||
Deferred income taxes | ( | ) | ( | ) | |||
Loss on disposal of property and equipment | |||||||
Impairment of leasehold improvements | |||||||
Impairment of long-lived assets | |||||||
Gain on extinguishment of lease liabilities | ( | ) | |||||
(Gain) loss on foreign currency | ( | ) | |||||
Excess tax benefits on stock-based awards | ( | ) | ( | ) | |||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | ( | ) | |||||
Inventory | ( | ) | |||||
Prepaid expenses and other assets | ( | ) | |||||
Leased right-of-use assets | |||||||
Accounts payable, accrued expenses and other current liabilities | |||||||
Accrued compensation | |||||||
Deferred revenue and deferred profit | ( | ) | |||||
Accrued price protection liability | ( | ) | ( | ) | |||
Lease liabilities | ( | ) | |||||
Other long-term liabilities | ( | ) | |||||
Net cash provided by operating activities | |||||||
Investing Activities | |||||||
Purchases of property and equipment | ( | ) | ( | ) | |||
Net cash used in investing activities | ( | ) | ( | ) | |||
Financing Activities | |||||||
Repayment of debt | ( | ) | ( | ) | |||
Net proceeds from issuance of common stock | |||||||
Minimum tax withholding paid on behalf of employees for restricted stock units | ( | ) | ( | ) | |||
Net cash used in financing activities | ( | ) | ( | ) | |||
Effect of exchange rate changes on cash and cash equivalents | |||||||
Increase (decrease) in cash, cash equivalents and restricted cash | ( | ) | |||||
Cash, cash equivalents and restricted cash at beginning of period | |||||||
Cash, cash equivalents and restricted cash at end of period | $ | $ | |||||
Supplemental disclosures of cash flow information: | |||||||
Cash paid for interest | $ | $ | |||||
Cash paid for income taxes | $ | $ | |||||
Supplemental disclosures of non-cash activities: | |||||||
Issuance of shares for payment of bonuses | $ | $ |
MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) |
MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) |
MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) |
MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(in thousands, except per share amounts) | |||||||||||||||
Numerator: | |||||||||||||||
Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Denominator: | |||||||||||||||
Weighted average common shares outstanding—basic | |||||||||||||||
Dilutive common stock equivalents | |||||||||||||||
Weighted average common shares outstanding—diluted | |||||||||||||||
Net loss per share: | |||||||||||||||
Basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) |
MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(in thousands) | |||||||||||||||
Employee separation expenses | $ | $ | $ | $ | |||||||||||
Lease related charges | ( | ) | |||||||||||||
Other | |||||||||||||||
$ | $ | $ | $ |
Employee Separation Expenses | Lease Related Charges | Other | Total | ||||||||||||
(in thousands) | |||||||||||||||
Liability as of December 31, 2018 | $ | $ | $ | $ | |||||||||||
Restructuring charges | |||||||||||||||
Transfer to right-of-use asset | ( | ) | ( | ) | |||||||||||
Cash payments | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Non-cash charges | ( | ) | ( | ) | |||||||||||
Liability as of June 30, 2019 | $ | $ | $ | $ |
MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) |
June 30, 2019 | December 31, 2018 | ||||||||||||||||||||||||
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 | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | |||||||||||||||
Developed technology | ( | ) | ( | ) | |||||||||||||||||||||
Trademarks and trade names | ( | ) | ( | ) | |||||||||||||||||||||
Customer relationships | ( | ) | ( | ) | |||||||||||||||||||||
Non-compete covenants | ( | ) | ( | ) | |||||||||||||||||||||
$ | $ | ( | ) | $ | $ | $ | ( | ) | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(in thousands) | (in thousands) | ||||||||||||||
Cost of net revenue | $ | $ | $ | $ | |||||||||||
Research and development | |||||||||||||||
Selling, general and administrative | |||||||||||||||
$ | $ | $ | $ |
Six Months Ended June 30, | |||||||
2019 | 2018 | ||||||
(in thousands) | |||||||
Beginning balance | $ | $ | |||||
Transfers to developed technology from IPR&D | |||||||
Amortization | ( | ) | ( | ) | |||
Ending balance | $ | $ |
MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) |
Amount | |||
(in thousands) | |||
2019 (6 months) | $ | ||
2020 | |||
2021 | |||
2022 | |||
2023 | |||
Thereafter | |||
Total | $ |
Six Months Ended June 30, | |||||||
2019 | 2018 | ||||||
(in thousands) | |||||||
Beginning balance | $ | $ | |||||
Transfers to developed technology from IPR&D | ( | ) | |||||
Ending balance | $ | $ |
June 30, 2019 | December 31, 2018 | ||||||
(in thousands) | |||||||
Assets | |||||||
Interest rate swap | $ | $ |
MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) |
Fair Value Measurements | |||||||||||||||
Balance | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
(in thousands) | |||||||||||||||
Assets | |||||||||||||||
Interest rate swap, June 30, 2019 | $ | $ | $ | $ | |||||||||||
Interest rate swap, December 31, 2018 | $ | $ | $ | $ |
Six Months Ended | |||||||
June 30, 2019 | June 30, 2018 | ||||||
(in thousands) | |||||||
Interest rate swap asset | |||||||
Beginning balance | $ | $ | |||||
Unrealized gain (loss) recognized in other comprehensive income (loss) | ( | ) | |||||
Ending balance | $ | $ |
June 30, 2019 | December 31, 2018 | ||||||
(in thousands) | |||||||
Cash and cash equivalents | $ | $ | |||||
Short-term restricted cash | |||||||
Long-term restricted cash | |||||||
Total cash, cash equivalents and restricted cash | $ | $ |
MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) |
June 30, 2019 | December 31, 2018 | ||||||
(in thousands) | |||||||
Work-in-process | $ | $ | |||||
Finished goods | |||||||
$ | $ |
Useful Life (in Years) | June 30, 2019 | December 31, 2018 | |||||||
(in thousands) | |||||||||
Furniture and fixtures | $ | $ | |||||||
Machinery and equipment | 3-5 | ||||||||
Masks and production equipment | 2-5 | ||||||||
Software | |||||||||
Leasehold improvements | 1-5 | ||||||||
Construction in progress | N/A | ||||||||
Less accumulated depreciation and amortization | ( | ) | ( | ) | |||||
$ | $ |
Six Months Ended June 30, | |||||||
2019 | 2018 | ||||||
(in thousands) | |||||||
Beginning balance | $ | $ | |||||
Charged as a reduction of revenue | |||||||
Reversal of unclaimed rebates | ( | ) | ( | ) | |||
Payments | ( | ) | ( | ) | |||
Ending balance | $ | $ |
MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) |
June 30, 2019 | December 31, 2018 | ||||||
(in thousands) | |||||||
Accrued technology license payments | $ | $ | |||||
Accrued professional fees | |||||||
Accrued engineering and production costs | |||||||
Accrued restructuring | |||||||
Accrued royalty | |||||||
Short-term lease liabilities | |||||||
Accrued customer credits | |||||||
Income tax liability | |||||||
Customer contract liabilities | |||||||
Accrued obligations to customers for price adjustments | |||||||
Accrued obligations to customers for stock rotation rights | |||||||
Other | |||||||
$ | $ |
Cumulative Translation Adjustments | Interest Rate Hedge | Total | |||||||||
(in thousands) | |||||||||||
Balance at December 31, 2018 | $ | ( | ) | $ | $ | ||||||
Current period other comprehensive income (loss) | ( | ) | ( | ) | |||||||
Balance at June 30, 2019 | $ | ( | ) | $ | $ | ( | ) |
June 30, 2019 | December 31, 2018 | ||||||
(in thousands) | |||||||
Principal | $ | $ | |||||
Less: | |||||||
Unamortized debt discount | ( | ) | ( | ) | |||
Unamortized debt issuance costs | ( | ) | ( | ) | |||
Net carrying amount of long-term debt | |||||||
Less: current portion of long-term debt | |||||||
Long-term debt, non-current portion | $ | $ |
MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) |
MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(in thousands) | (in thousands) | ||||||||||||||
Cost of net revenue | $ | $ | $ | $ | |||||||||||
Research and development | |||||||||||||||
Selling, general and administrative | |||||||||||||||
$ | $ | $ | $ |
MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) |
Number of Shares (in thousands) | Weighted-Average Grant-Date Fair Value per Share | |||||
Outstanding at December 31, 2018 | $ | |||||
Granted | ||||||
Vested | ( | ) | ||||
Canceled | ( | ) | ||||
Outstanding at June 30, 2019 |
Number of Shares (in thousands) | Weighted-Average Grant-Date Fair Value per Share | |||||
Outstanding at December 31, 2018 | $ | |||||
Granted(1) | ||||||
Outstanding at June 30, 2019 |
MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) |
Six Months Ended June 30, | |||||||
2019 | 2018 | ||||||
Weighted-average grant date fair value per share | $ | $ | |||||
Risk-free interest rate | % | % | |||||
Dividend yield | % | % | |||||
Expected life (in years) | |||||||
Volatility | % | % |
Number of Options (in thousands) | Weighted-Average Exercise Price | Weighted-Average Contractual Term (in years) | Aggregate Intrinsic Value (in thousands) | |||||||||
Outstanding at December 31, 2018 | $ | |||||||||||
Exercised | ( | ) | ||||||||||
Canceled | ( | ) | ||||||||||
Outstanding at June 30, 2019 | $ | $ | ||||||||||
Vested and expected to vest at June 30, 2019 | $ | $ | ||||||||||
Exercisable at June 30, 2019 | $ | $ |
MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) |
MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||
Percentage of total net revenue | |||||||||||
Customer A | % | % | % | % |
June 30, | December 31, | |||
2019 | 2018 | |||
Percentage of gross accounts receivable | ||||
Customer B | * | % |
* | Represents less than 10% of the gross accounts receivable as of the respective period end. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||
Vendor A | % | % | % | % | |||||||
Vendor B | % | % | % | % | |||||||
Vendor C | % | % | % | % | |||||||
Vendor D | % | % | % | % |
MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||||||
Amount | % of total net revenue | Amount | % of total net revenue | Amount | % of total net revenue | Amount | % of total net revenue | ||||||||||||||||||||
Asia | $ | % | $ | % | $ | % | $ | % | |||||||||||||||||||
United States | % | % | % | % | |||||||||||||||||||||||
Rest of world | % | % | % | % | |||||||||||||||||||||||
Total | $ | % | $ | % | $ | % | $ | % |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||
Percentage of total net revenue | |||||||||||
China | % | % | % | % |
June 30, | December 31, | |||||||||||||
2019 | 2018(1) | |||||||||||||
Amount | % of total | Amount | % of total | |||||||||||
United States | $ | % | $ | % | ||||||||||
Singapore | % | % | ||||||||||||
Rest of world | % | % | ||||||||||||
Total | $ | % | $ | % |
MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Connected home | $ | $ | $ | $ | |||||||||||
% of net revenue | % | % | % | % | |||||||||||
Infrastructure | |||||||||||||||
% of net revenue | % | % | % | % | |||||||||||
Industrial and multi-market | |||||||||||||||
% of net revenue | % | % | % | % | |||||||||||
Total net revenue | $ | $ | $ | $ |
MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) |
Operating Leases | |||
(in thousands) | |||
2019 (6 months) | $ | ||
2020 | |||
2021 | |||
2022 | |||
2023 | |||
Thereafter | |||
Total minimum payments | |||
Less: imputed interest | ( | ) | |
Less: unrealized translation loss | ( | ) | |
Total lease liabilities | |||
Less: short-term lease liabilities | ( | ) | |
Long-term lease liabilities | $ |
Amount | |||
(in thousands) | |||
2019 (6 months) | $ | ||
2020 | |||
2021 | |||
2022 | |||
2023 | |||
Thereafter | |||
Total minimum rental income | $ |
MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) |
Inventory Purchase Obligations | Other Obligations | Total | |||||||||
2019 (6 months) | $ | $ | $ | ||||||||
2020 | |||||||||||
2021 | |||||||||||
2022 | |||||||||||
2023 | |||||||||||
Thereafter | |||||||||||
Total minimum payments | $ | $ | $ |
ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||
Net revenue | 100 | % | 100 | % | 100 | % | 100 | % | |||
Cost of net revenue | 47 | 45 | 47 | 44 | |||||||
Gross profit | 53 | 55 | 53 | 56 | |||||||
Operating expenses: | |||||||||||
Research and development | 29 | 30 | 31 | 29 | |||||||
Selling, general and administrative | 27 | 24 | 27 | 24 | |||||||
Restructuring charges | 1 | 2 | 1 | 1 | |||||||
Total operating expenses | 57 | 56 | 59 | 54 | |||||||
Income (loss) from operations | (4 | ) | (1 | ) | (6 | ) | 2 | ||||
Total interest and other income (expense), net | (3 | ) | (3 | ) | (4 | ) | (3 | ) | |||
Loss before income taxes | (7 | ) | (3 | ) | (10 | ) | (2 | ) | |||
Income tax provision (benefit) | (4 | ) | 11 | (6 | ) | 4 | |||||
Net loss | (3 | )% | (14 | )% | (4 | )% | (6 | )% |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
2019 | 2018 | $ Change | % Change | 2019 | 2018 | $ Change | % Change | ||||||||||||||||||||||
(dollars in thousands) | (dollars in thousands) | ||||||||||||||||||||||||||||
Connected home | $ | 38,593 | $ | 56,517 | $ | (17,924 | ) | (32 | )% | $ | 82,025 | $ | 122,175 | $ | (40,150 | ) | (33 | )% | |||||||||||
% of net revenue | 47 | % | 56 | % | 49 | % | 58 | % | |||||||||||||||||||||
Infrastructure | 22,571 | 19,485 | 3,086 | 16 | % | 44,673 | 39,975 | 4,698 | 12 | % | |||||||||||||||||||
% of net revenue | 27 | % | 19 | % | 27 | % | 19 | % | |||||||||||||||||||||
Industrial and multi-market | 21,343 | 25,531 | (4,188 | ) | (16 | )% | 40,444 | 50,210 | (9,766 | ) | (19 | )% | |||||||||||||||||
% of net revenue | 26 | % | 25 | % | 24 | % | 24 | % | |||||||||||||||||||||
Total net revenue | $ | 82,507 | $ | 101,533 | $ | (19,026 | ) | (19 | %) | $ | 167,142 | $ | 212,360 | $ | (45,218 | ) | (21 | )% |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
2019 | 2018 | $ Change | % Change | 2019 | 2018 | $ Change | % Change | ||||||||||||||||||||||
(dollars in thousands) | (dollars in thousands) | ||||||||||||||||||||||||||||
Cost of net revenue | $ | 38,427 | $ | 45,203 | $ | (6,776 | ) | (15 | )% | $ | 77,985 | $ | 93,362 | $ | (15,377 | ) | (16 | )% | |||||||||||
% of net revenue | 47 | % | 45 | % | 47 | % | 44 | % | |||||||||||||||||||||
Gross profit | 44,080 | 56,330 | (12,250 | ) | (22 | )% | 89,157 | 118,998 | (29,841 | ) | (25 | )% | |||||||||||||||||
% of net revenue | 53 | % | 55 | % | 53 | % | 56 | % |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||
2019 | 2018 | $ Change | % Change | 2019 | 2018 | $ Change | % Change | |||||||||||||||||||||
(dollars in thousands) | (dollars in thousands) | |||||||||||||||||||||||||||
Research and development | $ | 24,304 | $ | 30,211 | (5,907 | ) | (20 | )% | $ | 51,703 | $ | 61,332 | $ | (9,629 | ) | (16 | )% | |||||||||||
% of net revenue | 29 | % | 30 | % | 31 | % | 29 | % |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||
2019 | 2018 | $ Change | % Change | 2019 | 2018 | $ Change | % Change | |||||||||||||||||||||
(dollars in thousands) | (dollars in thousands) | |||||||||||||||||||||||||||
Selling, general and administrative | $ | 22,327 | $ | 24,501 | (2,174 | ) | (9 | )% | $ | 45,918 | $ | 51,618 | $ | (5,700 | ) | (11 | )% | |||||||||||
% of net revenue | 27 | % | 24 | % | 27 | % | 24 | % |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||
2019 | 2018 | $ Change | % Change | 2019 | 2018 | $ Change | % Change | ||||||||||||||||||||
(dollars in thousands) | (dollars in thousands) | ||||||||||||||||||||||||||
Restructuring charges | $ | 416 | $ | 1,865 | (1,449 | ) | (78 | )% | $ | 2,333 | $ | 1,865 | $ | 468 | 25% | ||||||||||||
% of net revenue | 1 | % | 2 | % | 1 | % | 1 | % |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||
2019 | 2018 | $ Change | % Change | 2019 | 2018 | $ Change | % Change | ||||||||||||||||||||
(dollars in thousands) | (dollars in thousands) | ||||||||||||||||||||||||||
Interest and other income (expense), net | $ | (2,675 | ) | $ | (2,950 | ) | 275 | (9 | )% | $ | (6,158 | ) | $ | (7,397 | ) | 1,239 | (17 | )% | |||||||||
% of net revenue | (3 | )% | (3 | )% | (4 | )% | (3 | )% |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||
2019 | 2018 | $ Change | % Change | 2019 | 2018 | $ Change | % Change | ||||||||||||||||||||
(dollars in thousands) | (dollars in thousands) | ||||||||||||||||||||||||||
Income tax provision (benefit) | $ | (3,413 | ) | $ | 11,225 | (14,638 | ) | (130 | )% | $ | (9,875 | ) | $ | 9,361 | (19,236 | ) | (205 | )% |
June 30, | December 31, | ||||||
2019 | 2018 | ||||||
(in thousands) | |||||||
Working capital | $ | 105,732 | $ | 110,044 | |||
Cash and cash equivalents | $ | 66,629 | $ | 73,142 | |||
Short-term restricted cash | 344 | 645 | |||||
Long-term restricted cash | 65 | 404 | |||||
Total cash, cash equivalents and restricted cash | $ | 67,038 | $ | 74,191 |
Six Months Ended June 30, | |||||||
2019 | 2018 | ||||||
(in thousands) | |||||||
Net cash provided by operating activities | $ | 28,489 | $ | 47,795 | |||
Net cash used in investing activities | (2,679 | ) | (4,804 | ) | |||
Net cash used in financing activities | (33,894 | ) | (42,823 | ) | |||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 931 | 535 | |||||
Increase (decrease) in cash, cash equivalents and restricted cash | $ | (7,153 | ) | $ | 703 |
Payments due | |||||||||||||||
Total | Less than 1 year | 1-3 years | 3-5 years | ||||||||||||
(in thousands) | |||||||||||||||
Long-term debt obligations | $ | 232,000 | $ | — | $ | — | $ | 232,000 | |||||||
Operating lease obligations | 26,915 | 4,403 | 17,567 | 4,945 | |||||||||||
Inventory purchase obligations | 65,001 | 65,001 | — | — | |||||||||||
Other obligations | 10,338 | 4,049 | 5,417 | 872 | |||||||||||
Total | $ | 334,254 | $ | 73,453 | $ | 22,984 | $ | 237,817 |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4. | CONTROLS AND PROCEDURES |
ITEM 1. | LEGAL PROCEEDINGS |
ITEM 1A. | RISK FACTORS |
• | substantially all of our sales to date have been made on a purchase order basis, which permits our customers to cancel, change or delay product purchase commitments with little or no notice to us and without penalty; |
• | some of our customers have sought or are seeking relationships with current or potential competitors which may affect their purchasing decisions; |
• | service provider and OEM consolidation across cable, satellite, and fiber markets could result in significant changes to our customers’ technology development and deployment priorities and roadmaps, which could affect our ability to forecast demand accurately and could lead to increased volatility in our business; and |
• | technological changes in our markets could lead to substantial volatility in our revenues based on product transitions, and particularly in our broadband markets, we face risks based on changes in the way consumers are accessing and using broadband and cable services, which could affect operator demand for our products. |
• | recruit, hire, train and manage additional qualified engineers for our research and development activities, especially in the positions of design engineering, product and test engineering and applications engineering; |
• | add sales personnel and expand customer engineering support offices; |
• | implement and improve our administrative, financial and operational systems, procedures and controls; and |
• | enhance our information technology support for enterprise resource planning and design engineering by adapting and expanding our systems and tool capabilities, and properly training new hires as to their use. |
• | cease the manufacture, use or sale of the infringing products, processes or technology; |
• | pay substantial damages for infringement; |
• | expend significant resources to develop non-infringing products, processes or technology; |
• | license technology from the third-party claiming infringement, which license may not be available on commercially reasonable terms, or at all; |
• | cross-license our technology to a competitor to resolve an infringement claim, which could weaken our ability to compete with that competitor; or |
• | pay substantial damages to our customers or end users to discontinue their use of or to replace infringing technology sold to them with non-infringing technology. |
• | any of our present or future patents or patent claims will not lapse or be invalidated, circumvented, challenged or abandoned; |
• | our intellectual property rights will provide competitive advantages to us; |
• | our ability to assert our intellectual property rights against potential competitors or to settle current or future disputes will not be limited by our agreements with third parties; |
• | any of our pending or future patent applications will be issued or have the coverage originally sought; |
• | our intellectual property rights will be enforced in jurisdictions where competition may be intense or where legal protection may be weak; |
• | any of the trademarks, copyrights, trade secrets or other intellectual property rights that we presently employ in our business will not lapse or be invalidated, circumvented, challenged or abandoned; or |
• | we will not lose the ability to assert our intellectual property rights against or to license our technology to others and collect royalties or other payments. |
• | failure by us, our customers, or their end customers to qualify a selected supplier; |
• | capacity shortages during periods of high demand; |
• | reduced control over delivery schedules and quality; |
• | shortages of materials; |
• | misappropriation of our intellectual property; |
• | limited warranties on wafers or products supplied to us; and |
• | potential increases in prices. |
• | changes in end-user demand for the products manufactured and sold by our customers; |
• | the receipt, reduction or cancellation of significant orders by customers; |
• | fluctuations in the levels of component inventories held by our customers; |
• | the gain or loss of significant customers; |
• | market acceptance of our products and our customers’ products; |
• | our ability to develop, introduce, and market new products and technologies on a timely basis; |
• | the timing and extent of product development costs; |
• | new product announcements and introductions by us or our competitors; |
• | incurrence of research and development and related new product expenditures; |
• | seasonality or cyclical fluctuations in our markets; |
• | trade-related government actions, by the United States, China or other countries, that impose barriers or restrictions that would impact our ability to sell or ship products to customers; |
• | currency fluctuations; |
• | fluctuations in IC manufacturing yields; |
• | significant warranty claims, including those not covered by our suppliers; |
• | changes in our product mix or customer mix; |
• | intellectual property disputes; |
• | loss of key personnel or the shortage of available skilled workers; |
• | impairment of long-lived assets, including masks and production equipment; and |
• | the effects of competitive pricing pressures, including decreases in average selling prices of our products. |
• | changes in political, regulatory, legal or economic conditions; |
• | restrictive governmental actions, such as restrictions on the transfer or repatriation of funds and foreign investments and trade protection measures, including export duties and quotas and customs duties and tariffs; |
• | disruptions of capital and trading markets; |
• | changes in import or export licensing requirements; |
• | transportation delays; |
• | civil disturbances or political instability; |
• | geopolitical turmoil, including terrorism, war or political or military coups; |
• | public health emergencies; |
• | differing employment practices and labor standards; |
• | limitations on our ability under local laws to protect our intellectual property; |
• | local business and cultural factors that differ from our customary standards and practices; |
• | nationalization and expropriation; |
• | changes in tax laws; |
• | currency fluctuations relating to our international operating activities; and |
• | difficulty in obtaining distribution and support. |
• | authorize our Board of Directors to issue, without further action by the stockholders, up to 25,000,000 shares of undesignated preferred stock; |
• | require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent; |
• | specify that special meetings of our stockholders can be called only by our Board of Directors, our Chairman of the Board of Directors, or our President; |
• | establish an advance notice procedure for stockholder approvals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to our Board of Directors; |
• | establish that our Board of Directors is divided into three classes, Class I, Class II and Class III, with each class serving staggered terms; |
• | provide that our directors may be removed only for cause; |
• | provide that vacancies on our Board of Directors may be filled only by a majority of directors then in office, even though less than a quorum; |
• | specify that no stockholder is permitted to cumulate votes at any election of directors; and |
• | require supermajority votes of the holders of our common stock to amend specified provisions of our charter documents. |
• | actual or anticipated fluctuations in our financial condition and operating results; |
• | overall conditions in the semiconductor market; |
• | addition or loss of significant customers; |
• | changes in laws or regulations applicable to our products; |
• | actual or anticipated changes in our growth rate relative to our competitors; |
• | announcements of technological innovations by us or our competitors; |
• | announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures, or capital commitments; |
• | additions or departures of key personnel; |
• | competition from existing products or new products that may emerge; |
• | issuance of new or updated research or reports by securities analysts; |
• | fluctuations in the valuation of companies perceived by investors to be comparable to us; |
• | disputes or other developments related to proprietary rights, including patents, litigation matters, and our ability to obtain intellectual property protection for our technologies; |
• | acquisitions, if applicable, may not be accretive and may cause dilution to our earnings per shares; |
• | announcement or expectation of additional financing efforts; |
• | sales of our common stock by us or our stockholders; and |
• | general economic and market conditions. |
• | issuances of equity securities dilutive to our existing stockholders; |
• | substantial cash payments; |
• | the incurrence of substantial debt and assumption of unknown liabilities; |
• | large one-time write-offs; |
• | amortization expenses related to intangible assets; |
• | a limitation on our ability to use our net operating loss carryforwards; |
• | the diversion of management's time and attention from operating our business to acquisition integration challenges; |
• | stockholder or other litigation relating to the transaction; |
• | adverse tax consequences; and |
• | the potential loss of key employees, customers and suppliers of the acquired businesses. |
• | failure to successfully further develop the acquired products or technology; |
• | conforming the acquired company’s standards, policies, processes, procedures and controls with our operations; |
• | coordinating new product and process development, especially with respect to highly complex technologies; |
• | loss of key employees or customers of the acquired company; |
• | hiring additional management and other critical personnel; |
• | in the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political and regulatory risks associated with specific countries; |
• | increasing the scope, geographic diversity and complexity of our operations; |
• | consolidation of facilities, integration of the acquired company’s accounting, human resource and other administrative functions and coordination of product, engineering and sales and marketing functions; |
• | the geographic distance between the companies; |
• | liability for activities of the acquired company before the acquisition, including patent and trademark infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities; and |
• | litigation or other claims in connection with the acquired company, including claims for terminated employees, customers, former stockholders or other third parties. |
• | our ability to obtain any necessary financing in the future for working capital, capital expenditures, debt service requirements, or other purposes may be limited or financing may be unavailable; |
• | a substantial portion of our cash flows must be dedicated to the payment of principal and interest on our indebtedness and other obligations and will not be available for use in our business; |
• | our level of indebtedness could limit our flexibility in planning for, or reacting to, changes in our business and the markets in which we operate; |
• | our high degree of indebtedness will make us more vulnerable to changes in general economic conditions and/or a downturn in our business, thereby making it more difficult for us to satisfy our obligations; |
• | we are subject to a fixed rate of interest as a result of entering into a fixed-for-floating interest rate swap agreement in November 2017 to hedge against the potential that the interest rates applicable to our term loan will increase. Our interest rate under the term loan varies based on a fixed margin over either an adjusted LIBOR or an adjusted base rate. Interest rates, including LIBOR, have recently increased and may continue to increase in future periods. However, interest rate trends are inherently difficult to predict and interest rates may significantly increase or decrease over a short period of time. If interest rates were to decrease substantially, we would pay higher interest expense than market and, as a result, could seek to terminate or modify the terms of the swap prior to its maturity which could result in termination or other fees and the fair value of our interest rate swap may also decrease substantially; and |
• | we are also still subject to variable interest rate risk on the principal balance in excess of the notional amount of the interest rate swap because our interest rate under the term loan varies based on a fixed margin over either an adjusted LIBOR or an adjusted base rate. Interest rates, including LIBOR, have recently increased and may continue to increase in future periods. If we are unable to make anticipated prepayments of our indebtedness causing the unhedged portion of our indebtedness to substantially increase at the same time that interest rates were to increase substantially, it would adversely affect our operating results and could affect our ability to service the term loan indebtedness. |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
ITEM 4. | MINE SAFETY DISCLOSURES |
ITEM 5. | OTHER INFORMATION |
ITEM 6. | EXHIBITS |
Exhibit Number | Exhibit Title | |
+10.1(**) | ||
31.1 | ||
31.2 | ||
32.1(*) | ||
101.INS | XBRL Instance 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 |
+ | Indicates a management contract or compensatory plan. |
(*) | 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. |
(**) | Portions of this exhibit have been omitted pursuant to Item 601(b)(10) of Regulation S-K. The Company agrees to furnish to the Securities and Exchange Commission a copy of any omitted portions of the exhibit upon request. |
MAXLINEAR, INC. | |||||||
(Registrant) | |||||||
Date: | July 25, 2019 | By: | /s/ Steven G. Litchfield | ||||
Steven G. Litchfield | |||||||
Chief Financial Officer and Chief Corporate Strategy Officer (Principal Financial Officer and Duly Authorized Officer) |
I. | NOTICE OF RESTRICTED STOCK UNIT GRANT |
Grant Number | ||||
Date of Grant | ||||
Maximum Number of Restricted Stock Units | ||||
Target Number of Restricted Stock Units |
Level* | Company’s Position in the Revenue Ranking Group | Target Number of Restricted Stock Units that Become Revenue Eligible Restricted Stock Units** |
1 | Below 25th percentile | 0% |
2 | 25th percentile | 50% |
3 | 50th percentile | 100% |
4 | 75th percentile | 250% |
Level* | Company’s Position in the EPS Ranking Group | Target Number of Restricted Stock Units that Become EPS Eligible Restricted Stock Units** |
1 | Below 25th percentile | 0% |
2 | 25th percentile | 50% |
3 | 50th percentile | 100% |
4 | 75th percentile | 250% |
1. | If a company stops trading publicly and is delisted or goes bankrupt, the company will be removed from the Benchmark Companies. |
2. | The Compensation Committee retains discretion to make any adjustments to the Benchmark Companies as it deems appropriate to reflect unintended and unforeseen circumstances occurring with respect to the Benchmark Companies. |
1. | I have reviewed this Form 10-Q of MaxLinear, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: | July 25, 2019 | /s/ Kishore Seendripu, Ph.D. | |
Kishore Seendripu, Ph.D. | |||
President and Chief Executive Officer | |||
(Principal Executive Officer) |
1. | I have reviewed this Form 10-Q of MaxLinear, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: | July 25, 2019 | /s/ Steven G. Litchfield | |
Steven G. Litchfield | |||
Chief Financial Officer and Chief Corporate Strategy Officer | |||
(Principal Financial Officer) |
Date: | July 25, 2019 | By: | /s/ Kishore Seendripu, Ph.D. | |
Name: | Kishore Seendripu, Ph.D. | |||
Title: | President and Chief Executive Officer |
Date: | July 25, 2019 | By: | /s/ Steven G. Litchfield | |
Name: | Steven G. Litchfield | |||
Title: | Chief Financial Officer and Chief Corporate Strategy Officer |
Consolidated Balance Sheet (Parenthetical) - $ / shares shares in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (usd per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (shares) | 25,000 | 25,000 |
Preferred stock, shares issued (shares) | 0 | 0 |
Preferred stock, shares outstanding (shares) | 0 | 0 |
Common stock, par value (usd per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (shares) | 550,000 | 550,000 |
Common stock, shares issued (shares) | 71,218 | 69,551 |
Common stock, shares outstanding (shares) | 71,218 | 69,551 |
Consolidated Statement of Operations - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Income Statement [Abstract] | ||||
Net revenue | $ 82,507 | $ 101,533 | $ 167,142 | $ 212,360 |
Cost of net revenue | 38,427 | 45,203 | 77,985 | 93,362 |
Gross profit | 44,080 | 56,330 | 89,157 | 118,998 |
Operating expenses: | ||||
Research and development | 24,304 | 30,211 | 51,703 | 61,332 |
Selling, general and administrative | 22,327 | 24,501 | 45,918 | 51,618 |
Restructuring charges | 416 | 1,865 | 2,333 | 1,865 |
Total operating expenses | 47,047 | 56,577 | 99,954 | 114,815 |
Income (loss) from operations | (2,967) | (247) | (10,797) | 4,183 |
Interest income | 192 | 19 | 339 | 37 |
Interest expense | (2,853) | (3,694) | (5,828) | (7,588) |
Other income (expense), net | (14) | 725 | (669) | 154 |
Total interest and other income (expense), net | (2,675) | (2,950) | (6,158) | (7,397) |
Loss before income taxes | (5,642) | (3,197) | (16,955) | (3,214) |
Income tax provision (benefit) | (3,413) | 11,225 | (9,875) | 9,361 |
Net loss | $ (2,229) | $ (14,422) | $ (7,080) | $ (12,575) |
Net loss per share: | ||||
Basic (usd per share) | $ (0.03) | $ (0.21) | $ (0.10) | $ (0.18) |
Diluted (usd per share) | $ (0.03) | $ (0.21) | $ (0.10) | $ (0.18) |
Shares used to compute net loss per share: | ||||
Basic (shares) | 70,917 | 68,335 | 70,445 | 68,008 |
Diluted (shares) | 70,917 | 68,335 | 70,445 | 68,008 |
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ (2,229) | $ (14,422) | $ (7,080) | $ (12,575) |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency translation adjustments, net of tax benefit of $14 and $15 for the three and six months ended June 30, 2019, respectively and net of tax benefit of $128 and $157 for the three and six months ended June 30, 2018, respectively | (80) | (1,173) | 433 | (780) |
Unrealized gain (loss) on interest rate swap, net of tax benefit of $164 and $294 for the three and six months ended June 30, 2019 and tax expense of $175 and $363 for the three and six months ended June 30, 2018, respectively | (623) | 169 | (1,111) | 1,365 |
Other comprehensive income (loss) | (703) | (1,004) | (678) | 585 |
Total comprehensive loss | $ (2,932) | $ (15,426) | $ (7,758) | $ (11,990) |
Consolidated Statement of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
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Statement of Comprehensive Income [Abstract] | ||||
Foreign currency translation adjustment, tax (expense) benefit | $ 14 | $ 128 | $ 15 | $ 157 |
Unrealized gain(loss) on interest rate swap, tax (expense) benefit | $ 164 | $ (175) | $ 294 | $ (363) |
Organization and Summary of Significant Accounting Policies |
6 Months Ended |
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Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Summary of Significant Accounting Policies | Organization and Summary of Significant Accounting Policies Description of Business MaxLinear, Inc. was incorporated in Delaware in September 2003. MaxLinear, Inc., together with its wholly owned subsidiaries, collectively referred to as MaxLinear, or the Company, is a provider of radio-frequency, or RF, high-performance analog, and mixed-signal communications system-on-chip solutions for the connected home, wired and wireless infrastructure, and industrial and multi-market applications. 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, including cable DOCSIS broadband modems and gateways, wireline connectivity devices for in-home networking applications, RF transceivers and modems for wireless carrier access and backhaul infrastructure, fiber-optic modules for data center, metro, and long-haul transport networks, video set-top boxes and gateways, hybrid analog and digital televisions, direct broadcast satellite outdoor and indoor units, and power management and interface products used in these and a range of other markets. The Company is a fabless integrated circuit design company whose products integrate all or a substantial portion of a broadband communication system. Basis of Presentation and Principles of Consolidation The accompanying unaudited consolidated financial statements include the accounts of MaxLinear, Inc. and its wholly owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by GAAP for complete financial statements. All intercompany transactions and investments have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform with the current period presentation. Such reclassifications include the separate presentation of long-term lease liabilities on the consolidated balance sheets. In the opinion of management, the Company’s unaudited consolidated interim financial statements contain adjustments, including normal recurring accruals necessary to present fairly the Company’s consolidated financial position, results of operations, comprehensive income (loss), stockholders’ equity, and cash flows. The consolidated balance sheet as of December 31, 2018 was derived from the Company’s audited consolidated financial statements at that date. The accompanying unaudited consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and related notes thereto for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K filed by the Company with the Securities and Exchange Commission, or the SEC, on February 5, 2019, or the Annual Report. Interim results for the three and six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2019. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited consolidated financial statements and accompanying notes to unaudited consolidated financial statements. Actual results could differ from those estimates. Summary of Significant Accounting Policies Refer to the Company’s Annual Report for a summary of significant accounting policies. On January 1, 2019, the Company adopted Financial Accounting Standards Board, or FASB, Accounting Standards Codification Topic 842, Leases, or ASC 842, using the modified retrospective transition method with a cumulative effect adjustment to accumulated deficit as of January 1, 2019, and accordingly, modified its policy on accounting for leases as stated below. As described under “Recently Adopted Accounting Pronouncements,” below, the primary impact of adopting ASC 842 for the Company was the recognition in the consolidated balance sheet of certain lease-related assets and liabilities for operating leases with terms longer than 12 months. Such amounts were not previously accounted for in the Company's consolidated balance sheets. There have been no other material changes to the Company's significant accounting policies during the six months ended June 30, 2019. 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 since 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 liability for certain restructured leases existing at that date, has been offset against the related right-of-use asset. Lease expense is recognized on a straight-line basis over the lease term. On January 1, 2019, the Company adopted ASC 842 using the modified retrospective transition method with a cumulative adjustment to accumulated deficit at the beginning of the period of adoption. Upon adoption, 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 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 (Note 12). 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 relate to facility leases, early abandonment of all or part of 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. Impairment charges on leased right-of-use assets are included in restructuring charges in the statement of operations (Note 3). Recently Adopted Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The amendments in this update require a lessee to recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset. For leases less than twelve months, an entity is permitted to make an accounting policy election by class of underlying asset not to recognize right-of-use assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. The Company made this election. Also, in July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, to provide an additional transition method. An entity can elect not to present comparative financial information under Topic 842 if it recognizes a cumulative-effect adjustment to retained earnings upon adoption. The Company also made this election. Further, in January 2019, the FASB issued ASU 2019-01, Leases (Topic 842): Codification Improvements, which clarified that post-adoption interim transition disclosures normally required in the year of adoption for the effect of a change in accounting principle on an entity’s financial statements are not required for the adoption of ASC 842. The amendments in these updates are effective for the Company for fiscal years beginning with 2019, including interim periods within those years, with early adoption permitted. The Company has completed its assessment of the impact of the adoption of ASC 842. Upon adoption, the Company recognized approximately $24.8 million of right-of-use assets and a net increase of $25.1 million in lease-related liabilities at January 1, 2019. Also, the impact of the adoption of ASC 842 on the Company’s accumulated deficit and deferred tax assets at January 1, 2019 was not material. Lastly, the impact of the adoption of ASC 842 on the Company's consolidated results of operations for the year ending December 31, 2019 is not expected to be material. In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases, to clarify on how to apply certain aspects of the new lease accounting standard. The amendments in this update, among other things, better articulates the requirement for a lessee’s reassessment of lease classification as of the effective date of a modification, clarifies that a change to an index or rate for variable lease payments does not constitute a resolution of a contingency that would result in the remeasurement of lease payments, and requires entities that apply Topic 842 retrospectively to each reporting period and do not adopt the practical expedients to write off any prior unamortized initial direct costs that do not meet the definition under Topic 842 to equity. The amendments in this update have the same effective date and transition requirements as the new lease standard summarized above. The Company has disclosed the impact of adoption of Topic 842 on the Company’s consolidated financial position and results of operations as stated above. In July 2018, the FASB issued ASU No. 2018-09, Codification Improvements, to clarify the Codification and prevent unintended application of the guidance. An amendment to ASC 718-740, Compensation—Stock Compensation—Income Taxes, clarifies that excess tax benefits should be recognized in the period in which the amount of the deduction is determined. The transition and effective date guidance is based on the facts and circumstances of each amendment. The amendment identified above became effective for the Company beginning with fiscal year 2019. The adoption of the amendments in this update in the three months ended March 31, 2019 did not have a material impact on the Company's consolidated financial position and results of operations. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815), which is intended to improve accounting for hedging activities by expanding and refining hedge accounting for both nonfinancial and financial risk components and aligning the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The amendments in this update became effective for the Company beginning with fiscal year 2019. The amendments in this update were required to be applied prospectively. The adoption of the amendments in this update in the three months ended March 31, 2019 did not have a material impact on the Company's consolidated financial statements. Recently Issued Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, to replace the incurred loss methodology with an expected credit loss model that requires consideration of a broader range of information to estimate credit losses over the lifetime of the asset. An entity with trade receivables will be required to use historical loss information, current conditions, and reasonable and supportable forecasts to determine expected credit losses. Pooling of assets with similar risk characteristics and the use of a loss model are also required. Also, in April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, to clarify the inclusion of recoveries of trade receivables previously written off when estimating an allowance for credit losses. The amendments in this update are effective for the Company beginning with fiscal year 2020, including interim periods, with early adoption permitted as of the fiscal years beginning after December 31, 2018, including interim periods within those fiscal years. The adoption of the amendments in this update is not expected to have a material impact on the Company’s consolidated financial position and results of operations. In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. An entity no longer will determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if the reporting unit had been acquired in a business combination. Instead, under the amendments in this update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. The Board also eliminated the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. The amendments in this update are effective for the Company beginning with fiscal year 2020, including interim periods, with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The adoption of the amendments in this update is not expected to have a material impact on the Company’s consolidated financial position and results of operations. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework— Changes to the Disclosure Requirements for Fair Value Measurement, to improve the fair value measurement reporting of financial instruments. The amendments in this update require, among other things, added disclosure of the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The amendments in this update eliminate, among other things, disclosure of the reasons for and amounts of transfers between Level 1 and Level 2 for assets and liabilities that are measured at fair value on a recurring basis and an entity's valuation processes for Level 3 fair value measurements. The amendments in this update will be effective for the Company beginning with fiscal year 2020, with early adoption permitted. Retrospective application is required for all amendments in this update except the added disclosures, which should be applied prospectively. The adoption of the amendments in this update is not expected to have a material impact on the Company’s consolidated financial position and results of operations. In August 2018, the FASB issued ASU No. 2018-15, Intangibles- Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, to provide additional guidance on the accounting for costs of implementing cloud computing arrangements that are service contracts. The amendments in this update require the capitalization of implementation costs during the application development stage of such hosting arrangements and amortization of the expense over the term of the arrangement including any option to extend reasonably certain to be exercised or option to terminate reasonably certain not to be exercised. Capitalized implementation costs and amortization thereof are also required to be classified in the same line item in the statements of financial position, operations and cash flows associated with the hosting service fees. The amendments in this update will be effective for the Company beginning with fiscal year 2020, with early adoption permitted. Entities may select retrospective or prospective application to all implementation costs incurred after the adoption date. The adoption of the amendments in this update is not expected to have a material impact on the Company’s consolidated financial position and results of operations.
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Net Income (Loss) Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income (Loss) Per Share | Net Income (Loss) Per Share Basic earnings per share, or EPS, is calculated by dividing net income or 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 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, restricted stock units and restricted stock awards 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. The table below presents the computation of basic and diluted EPS:
For the three and six months ended June 30, 2019 and 2018, the Company incurred net losses and accordingly excluded common stock equivalents for outstanding stock-based awards, which represented all potentially dilutive securities, of 2.5 million and 2.7 million for the 2019 periods, respectively, and 3.6 million and 3.7 million for the 2018 periods, respectively, from the calculation of diluted net loss per share due to their anti-dilutive nature.
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Restructuring Activity |
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Restructuring Activity | Restructuring Activity From time to time, the Company approves and implements restructuring plans as a result of acquisitions, internal resource alignment, and cost saving measures. Such restructuring plans include vacating certain leased facilities, terminating employees, and cancellation of contracts. The following table presents the activity related to the restructuring plans, which is included in restructuring charges in the consolidated statements of operations:
Lease related charges were related to exiting certain facilities. Lease-related charges for the six months ended June 30, 2019 includes the impairment of long-lived assets (right-of-use assets) of $2.2 million and leasehold improvements of $1.4 million. These lease-related charges were partially offset by a gain on the extinguishment of lease liabilities of $2.9 million for the six months ended June 30, 2019, following the release from such liability by the landlord. The Company does not expect to incur additional material costs related to current restructuring plans. Lease related charges for the three and six months ended June 30, 2018 included impairment of leasehold improvements of $0.7 million. The following table presents a roll-forward of the Company's restructuring liability for the six months ended June 30, 2019. The restructuring liability is included in accrued expenses and other current liabilities in the consolidated balance sheets.
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Goodwill and Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | 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). During the three and six months ended June 30, 2019, there were no changes in the carrying amount of goodwill. The Company performs an annual goodwill impairment assessment on October 31st each year, using a two-step quantitative assessment. Step one is the identification of potential impairment. This involves 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 fair value of a reporting unit exceeds the carrying amount, the goodwill of the reporting unit is considered not impaired and the second step of the impairment test is unnecessary. If the carrying amount of a reporting unit exceeds its fair value, the second step of the impairment test is performed to measure the amount of impairment loss, if any. In addition to its annual review, the Company performs a test of impairment when indicators of impairment are present. During the three and six months ended June 30, 2019 and 2018, no indications of impairment of the Company's goodwill balances were identified and, as a result, no goodwill impairment was recognized. 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:
The following table sets forth amortization expense associated with finite-lived intangible assets, which is included in the consolidated statements of operations as follows:
Amortization of finite-lived intangible assets in cost of net revenue in the consolidated statements of operations results primarily from acquired developed technology. The following table sets forth the activity related to finite-lived intangible assets:
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 three and six months ended June 30, 2019 and 2018, 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 June 30, 2019:
Indefinite-lived Intangible Assets Indefinite-lived intangible assets consist entirely of acquired in-process research and development technology, or IPR&D. The following table sets forth the Company’s activities related to the indefinite-lived intangible assets:
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Financial Instruments |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments | Financial Instruments The composition of financial instruments is as follows:
The fair value of the Company’s financial instrument 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 instrument within Level 2 of the fair value hierarchy on the basis of models utilizing market observable inputs. The interest rate swap has been valued on the basis of valuations provided by third-party pricing services, as derived from standard valuation or pricing models. Market-based observable inputs for the interest rate swap include one month LIBOR-based yield curves over the term of the swap. The Company reviews third-party pricing provider models, key inputs and assumptions and understands the pricing processes at its third-party providers in determining the overall reasonableness of the fair value of its Level 2 financial instruments. The Company also considers the risk of nonperformance by assessing the swap counterparty's credit risk in the estimate of fair value of the interest rate swap. As of June 30, 2019 and December 31, 2018, the Company has not made any adjustments to the valuations obtained from its third-party pricing providers. The following table presents a summary of the Company’s financial instruments that are measured on a recurring basis:
The following table summarizes activity for the interest rate swap:
There were no transfers between Level 1, Level 2 or Level 3 financial instruments in the six months ended June 30, 2019 and 2018. Financial Instruments Not Recorded at Fair Value on a Recurring Basis Some of the Company’s financial instruments are not measured at fair value on a recurring basis but are recorded at amounts that approximate fair value due to their liquid or short-term nature. Such financial assets and financial liabilities include: cash and cash equivalents, restricted cash, net receivables, 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 7).
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Balance Sheet Details |
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Balance Sheet Related Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance Sheet Details | Balance Sheet Details Cash, cash equivalents and restricted cash consist of the following:
As of June 30, 2019 and December 31, 2018, cash and cash equivalents included $20.1 million and $0 of money market funds, respectively. As of June 30, 2019 and December 31, 2018, the Company has restricted cash of $0.4 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:
Property and equipment, net consists of the following:
Depreciation expense for the three months ended June 30, 2019 and 2018 was $1.9 million and $3.0 million, respectively. Depreciation expense for the six months ended June 30, 2019 and 2018 was $4.0 million and $6.1 million, respectively. Accrued price protection liability consists of the following activity:
Accrued expenses and other current liabilities consist of the following:
The following table summarizes the change in balances of accumulated other comprehensive income (loss) by component:
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Debt and Interest Rate Swap |
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt and Interest Rate Swap | Debt and Interest Rate Swap Debt The carrying amount of the Company's long-term debt consists of the following:
On May 12, 2017, the Company entered into a credit agreement with certain lenders and a collateral agent in connection with the acquisition of Exar Corporation. The credit agreement provides for an initial secured term B loan facility, or the “Initial Term Loan,” in an aggregate principal amount of $425.0 million. The credit agreement permits the Company to request incremental loans in an aggregate principal amount not to exceed the sum of $160.0 million (subject to adjustments for any voluntary prepayments), plus an unlimited amount that is subject to pro forma compliance with certain secured leverage ratio and total leverage ratio tests. Incremental loans are subject to certain additional conditions, including obtaining additional commitments from the lenders then party to the credit agreement or new lenders. Loans under the credit agreement bear interest, at the Company’s option, at a 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- three- or six-month interest period, plus 1.0% or (ii) an adjusted LIBOR rate, subject to a floor of 0.75%, in each case, plus an applicable margin of 2.50% in the case of LIBOR rate loans and 1.50% in the case of base rate loans. Commencing on September 30, 2017, the Initial Term Loan amortizes in equal quarterly installments equal to 0.25% of the original principal amount of the Initial Term Loan, with the balance payable on the maturity date. The Initial Term Loan has a term of seven years and will mature on May 12, 2024, at which time all outstanding principal and accrued and unpaid interest on the Initial Term Loan is due. The Company is also required to pay fees customary for a credit facility of this size and type. The Company is required to make mandatory prepayments of the outstanding principal amount of term loans under the 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 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 of the loan term. The Company exercised its right to prepay and made aggregate prepayments of principal of $193.0 million from origination through June 30, 2019. The Company’s obligations under the credit agreement are required to be guaranteed by certain of its domestic subsidiaries meeting materiality thresholds set forth in the 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 with the collateral agent. The 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. As of June 30, 2019, the Company was in compliance with such covenants. The 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 credit agreement, and may exercise certain other rights and remedies provided for under the credit agreement, the other loan documents and applicable law. As of June 30, 2019 and December 31, 2018, the weighted average effective interest rate payable on the long-term debt was approximately 4.9% and 4.6%, respectively. 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 $398.5 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 4.6%, which represents a Level 3 fair value measurement. The debt discount of $2.1 million and debt issuance costs of $6.0 million are being amortized to interest expense using the effective interest method from the issuance date through the contractual maturity date of the term loan of May 12, 2024. During both the three months ended June 30, 2019 and 2018, the Company recognized total amortization of debt discount and debt issuance costs of $0.3 million to interest expense. During the six months ended June 30, 2019 and 2018, the Company recognized total amortization of debt discount and debt issuance costs of $0.6 million to interest expense. The approximate fair value of the term loan as of June 30, 2019 and December 31, 2018 was $241.2 million and $268.1 million, respectively, which was estimated on the basis of inputs that are observable in the market and which is considered a Level 2 measurement method in the fair value hierarchy. As of June 30, 2019 and December 31, 2018, the remaining principal balance on the term loan was $232.0 million and $262.0 million, respectively. The remaining principal balance is due on May 12, 2024 at the maturity date on the term loan. Interest Rate Swap In November 2017, the Company entered into a fixed-for-floating interest rate swap with an amortizing notional amount to swap a substantial portion of variable rate LIBOR interest payments under its term loans for fixed interest payments bearing an interest rate of 1.74685%. The Company's outstanding debt is still subject to a 2.5% fixed applicable margin during the term of the loan. The interest rate swap is designated as a cash flow hedge of a portion of floating rate interest payments on long-term debt and effectively fixes the interest rate on a substantial portion of the Company’s long-term debt at approximately 4.25%. Accordingly, the Company applies cash flow hedge accounting to the interest rate swap and it is recorded at fair value as an asset or liability and the effective portion of changes in the fair value of the interest rate swap, as measured quarterly, are reported in other comprehensive income (loss). As of June 30, 2019 and December 31, 2018, the fair value of the interest rate swap asset was $0.2 million and $1.6 million (Note 5), respectively, and is included in other long-term assets in the consolidated balance sheets. The decrease in fair value related to the interest rate swap asset included in other comprehensive income for the three and six months ended June 30, 2019 was $0.8 million and $1.4 million, respectively. The increase in fair value related to the interest rate swap asset included in other comprehensive income for the three and six months ended June 30, 2018 was $0.3 million and $1.7 million, respectively. The interest rate swap expires in October 2020 and the total $0.2 million of unrealized gain recorded in accumulated other comprehensive income at June 30, 2019 is not expected to be recorded against interest expense over the next twelve months.
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Stock-Based Compensation and Employee Benefit Plans |
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Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation and Employee Benefit Plans | Stock-Based Compensation and Employee Benefit Plans Employee Stock-Based Benefit Plans At June 30, 2019, the Company had stock-based compensation awards outstanding under the following plans: the 2004 Stock Plan, the 2010 Equity Incentive Plan, as amended, or 2010 Plan, the 2010 Employee Stock Purchase Plan, or ESPP. Refer to the Company’s Annual Report for a summary of the Company's stock-based compensation and equity plans as of December 31, 2018. There have been no material changes to the terms of the Company's equity incentive plans during the six months ended June 30, 2019. All current stock awards are issued under the 2010 Plan and ESPP. As of June 30, 2019, the number of shares of common stock available for future issuance under the 2010 Plan and awards outstanding under the 2004 Plan was 14,262,280 shares and 89,933 shares, respectively. As of June 30, 2019, the number of shares of common stock available for future issuance under the ESPP was 2,858,240 shares. 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:
The total unrecognized compensation cost related to unvested restricted stock units and restricted stock awards as of June 30, 2019 was $60.4 million, and the weighted average period over which these equity awards are expected to vest is 2.81 years. The total unrecognized compensation cost related to performance stock units as of June 30, 2019 was $7.3 million, and the weighted average period over which these equity awards are expected to vest is 2.07 years. The total unrecognized compensation cost related to unvested stock options as of June 30, 2019 was $3.0 million, and the weighted average period over which these equity awards are expected to vest is 2.62 years. Restricted Stock Units The Company calculates the fair value of restricted stock units based on the fair market value of the Company's common stock on the grant date. Stock based compensation is recognized over the vesting period using the straight-line method. A summary of the Company’s restricted stock unit activity is as follows:
Performance-Based Restricted Stock Units The Company calculates the fair value of performance-based restricted stock units based upon 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 performance-based restricted stock 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 award agreement. Performance-based restricted stock units are eligible to vest at the end of each fiscal year 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 a multiple of four times the related results for the fourth quarter of 2018 relative to the growth rates for a peer group of companies for the same metrics and periods. For the performance-based restricted stock units granted in 2019, 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 June 30, 2019, the Company believes that it is probable that the Company will achieve performance metrics specified in the award agreement based on its expected revenue and non-GAAP diluted EPS results over the performance period and calculated growth rates relative to its peers’ expected results based on data available, as defined in the award agreement. A summary of the Company’s performance-based restricted stock unit activity is as follows:
(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 The Company uses the Black-Scholes valuation model to calculate the grant-date fair value of employee stock purchase rights and stock options. Stock based compensation expense is recognized over the vesting period using the straight-line method. Employee Stock Purchase Rights During the six months ended June 30, 2019, there were 142,013 shares of common stock purchased under the ESPP at a weighted average price of $16.21. 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:
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. Stock Options A summary of the Company’s stock options activity is as follows:
No stock options were granted by the Company during the six months ended June 30, 2019. The intrinsic value of stock options exercised was $10.3 million and $1.8 million in the three months ended June 30, 2019 and 2018, respectively. The intrinsic value of stock options exercised was $20.2 million and $3.9 million in the six months ended June 30, 2019 and 2018, respectively. Cash received from exercise of stock options was $1.0 million and $0.2 million during the three months ended June 30, 2019 and 2018, respectively. Cash received from exercise of stock options was $3.6 million and $1.2 million during the six months ended June 30, 2019 and 2018, respectively. The tax benefit from stock options exercised was $10.3 million and $0.4 million during the three months ended June 30, 2019 and 2018, respectively. The tax benefit from stock options exercised was $19.3 million and $2.5 million during the six months ended June 30, 2019 and 2018, respectively. Employee Incentive Bonus 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 New York Stock Exchange on a date approved by the Board of Directors. In connection with the Company's bonus programs, in February 2019, the Company issued 0.3 million freely-tradable shares of the Company's common stock in settlement of bonus awards to employees, including executives, for the 2018 performance period. At June 30, 2019, the Company has an accrual of $2.4 million for bonus awards for employees for year-to-date achievement in the 2019 performance period. The Company's compensation committee retains discretion to effect payment in cash, stock, or a combination of cash and stock.
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Income Taxes |
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Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The provision for income taxes primarily relates to projected federal, state, and foreign income taxes. To determine the quarterly provision for income taxes, the Company uses an estimated annual effective tax rate, which is generally based on expected annual income and statutory tax rates in the various jurisdictions in which the Company operates. In addition, the tax effects of certain significant or unusual items are recognized discretely in the quarter during which they occur and can be a source of variability in the effective tax rates from quarter to quarter. 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 taxes, 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 benefit of $3.4 million in the three months ended June 30, 2019 and an income tax provision of $11.2 million for the three months ended June 30, 2018. The Company recorded an income tax benefit of $9.9 million in the six months ended June 30, 2019 and an income tax provision of $9.4 million for the six months ended June 30, 2018. The income tax provision (benefit) in the three and six months ended June 30, 2019 and 2018, each primarily relates to the mix of pre-tax income among jurisdictions, discrete tax benefits related to stock-based compensation, and release of uncertain tax positions under ASC 740-10. 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 derecognized 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. During the six months ended June 30, 2019, the Company's unrecognized tax benefits increased by $0.4 million. The Company does not expect its unrecognized tax benefits to change significantly over the next 12 months. Accrued interest and penalties associated with uncertain tax positions as of June 30, 2019 were approximately $0.7 million and $0.1 million, respectively. The Company is subject to federal and state income tax in the United States and is also subject to income tax in certain other foreign tax jurisdictions. At June 30, 2019, the statutes of limitations for the assessment of federal, state, and foreign income taxes are closed for the years before 2015, 2014 and 2011, respectively. The Company is under a routine compliance review by the Inland Revenue Authority of Singapore for its 2016 and 2017 tax years. The Company does not expect these reviews to have a material effect on its consolidated financial position or results of operations. In addition, the examination by the California Franchise Tax Board for the 2014 and 2015 tax years was closed during the quarter ended March 31, 2019 without any adjustments. The Company's subsidiary in Singapore operates under certain tax incentives in Singapore, which are generally effective through March 2022, 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. Primarily because of the Company's Singapore net operating losses and a full valuation allowance in Singapore, the incentives did not have a material impact on the Company's income tax benefit in the three and six months ended June 30, 2019.
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Concentration of Credit Risk, Significant Customers and Geographic Information |
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Risks and Uncertainties [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Concentration of Credit Risk, Significant Customers and Geographic Information | Concentration of Credit Risk, Significant Customers and Revenue by Geographic Region 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 makes periodic evaluations of the credit worthiness of its customers. Customers comprising greater than 10% of net revenues for each of the periods presented are as follows:
Balances that are 10% or greater of accounts receivable, based on the Company's billings to the contract manufacturer customers, are as follows:
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Significant Suppliers Suppliers comprising greater than 10% of total inventory purchases are as follows:
Geographic Information The Company's consolidated net revenues by geographic area based on ship-to location are as follows (in thousands):
The products shipped to individual countries representing greater than 10% of net revenue for each of the periods presented are as follows:
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, China, the Company believes that a significant number of the systems designed by customers and incorporating the Company’s semiconductor products are subsequently sold outside Asia to Europe, Middle East, and Africa, or EMEA 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):
_____________ (1) Amounts do not include leased right-of-use assets in the prior period due to the adoption of ASC 842 under the modified retrospective method with a cumulative effect adjustment to accumulated deficit as of January 1, 2019.
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Revenue from Contracts with Customers |
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Revenue from Contracts with Customers [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contracts with Customers | Revenue from Contracts with Customers Revenue by Market The table below presents disaggregated net revenues by market (in thousands):
Revenues from sales through the Company’s distributors accounted for 49% and 38% of net revenue for the three months ended June 30, 2019 and 2018, respectively. Revenues from sales through the Company’s distributors accounted for 45% and 39% of net revenue for the six months ended June 30, 2019 and 2018, respectively. Contract Liabilities As of June 30, 2019 and December 31, 2018, customer contract liabilities consist of estimates of obligations to deliver rebates to customers in the form of units of products and were approximately $0.1 million. Revenue recognized in the three and six months ended June 30, 2019 that was included in the contract liability balance as of December 31, 2018 was immaterial. There were no material changes in the contract liabilities balance during the three and six months ended June 30, 2019. Obligations to Customers for Price Adjustments and Returns and Assets for Right-of-Returns As of June 30, 2019 and December 31, 2018, obligations to customers consisting of estimates of price protection rights offered to the Company's end customers totaled $11.3 million and $16.5 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 6. Other obligations to customers representing estimates of price adjustments to be claimed by distributors upon sell-through of their inventory to their end customer and estimates of stock rotation returns to be claimed by distributors on products sold as of June 30, 2019 were $7.1 million and $1.4 million, respectively, and as of December 31, 2018 were $7.6 million and $1.5 million, respectively, and are included in accrued expenses and other current liabilities in the consolidated balance sheets (Note 6). The increase in revenue from net changes in transaction prices for amounts included in obligations to customers for price adjustments as of December 31, 2018 was not material. As of June 30, 2019 and December 31, 2018, 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 $0.3 million. Right of return assets are included in inventory in the consolidated balance sheets (Note 6). As of June 30, 2019, there were no impairment losses recorded on customer accounts receivable.
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Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases of Lessee Disclosure | Leases The Company primarily leases office facilities under operating lease arrangements expiring at various years through 2023. These leases often have original terms of 3 to 5 years and 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 June 30, 2019, the weighted average discount rate for operating leases was 5.0% and the weighted average remaining lease term for operating leases was 3.1 years. The table below presents aggregate future minimum payments due under leases for the next five years and beyond, reconciled to total lease liabilities included in the consolidated balance sheet as of June 30, 2019:
Operating lease cost was $0.8 million and $1.1 million for the three months ended June 30, 2019 and 2018, respectively. Operating lease cost was $1.7 million and $2.3 million for the six months ended June 30, 2019 and 2018, respectively. Short-term lease costs for the three and six months ended June 30, 2019 were not material. There were $0.5 million of right-of-use assets obtained in exchange for new lease liabilities for the three and six months ended June 30, 2019. The Company has subleased certain facilities that it ceased using in connection with prior years' restructuring plans (Note 3). Such subleases expire at various years through fiscal 2023. As of June 30, 2019, future minimum rental income under non-cancelable subleases is as follows:
Total sublease income related to leased facilities the Company ceased using in connection with a restructuring plan for the three months ended June 30, 2019 and 2018 was approximately $1.0 million and $0.6 million, respectively (Note 3). Total sublease income related to leased facilities the Company ceased using in connection with a restructuring plan for the six months ended June 30, 2019 and 2018 was approximately $1.6 million and $0.9 million, respectively (Note 3).
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Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Inventory Purchase and Other Contractual Obligations As of June 30, 2019, future minimum payments under inventory purchase and other obligations are as follows:
Other obligations consist of contractual payments due for software licenses. CrestaTech Litigation As disclosed in the Annual Report, the Company was a defendant in patent litigation originally filed by CrestaTech Technology Corporation, or CrestaTech. On January 21, 2014, CrestaTech filed a complaint for patent infringement against the Company in the United States District Court of Delaware, or District Court Litigation, alleging that the Company infringed U.S. Patent Nos. 7,075,585, or the '585 Patent and 7,265,792, or the '792 Patent. In addition to asking for compensatory damages, CrestaTech alleged willful infringement and sought a permanent injunction. CrestaTech also named Sharp Corporation, Sharp Electronics Corp. and VIZIO, Inc. as defendants based upon their alleged use of the Company's television tuners. Following the litigation history described in the Company's prior filings on Form 10-K and Form 10-Q, the District Court dismissed the District Court Litigation in April 2018. While the successor plaintiff following a Chapter 7 bankruptcy proceeding of CrestaTech below has suggested that the dismissal may have been in error, it has taken no action to re-instate the case. In the related bankruptcy proceeding, the plaintiff stated that it “no longer has any valid patent claims that it is asserting in any of the proceedings purchased through the Sale Agreement,” which includes the District Court Litigation against the Company. In re Cresta Technology Corporation, Case No. 16-50808 (N.D. Cal. Bank. 2016) at Dkt. No. 270. At this time, the Company cannot predict whether the District Court litigation will be re-instated. In addition, outside the District Court Litigation, the Company and the successor to CrestaTech are continuing to dispute certain matters relating to the ‘585 Patent through the inter parties review (IPR) and appeal process. Any re-instatement of the District Court Litigation, material expenses associated with the IPR and appeal process, or other costs arising from the dispute between the parties could adversely affect the Company's operating results. Trango Systems, Inc. Litigation On or about August 2, 2016, Trango Systems, Inc., or Trango, filed a complaint in the Superior Court of California, County of San Diego, Central Division, against defendants Broadcom Corporation, Inc., or Broadcom, and the Company, collectively, Defendants. Trango is a purchaser that alleges various fraud, breach of contract, and interference with economic relations claims in connection with the discontinuance of a chip line the Company acquired from Broadcom in 2016. For additional information regarding this lawsuit, see Part I, Item 3, “Legal Proceedings” included in the Company's Annual Report. The parties entered into a settlement agreement and on June 6, 2019 the case was dismissed with prejudice. The terms of the settlement are confidential, and the settlement did not have a material adverse effect on the Company’s financial position, results of operations, or cash flows. Other Matters In addition, from time to time, the Company is subject to threats of litigation or actual litigation in the ordinary course of business, some of which may be material. Other than the CrestaTech litigation described above, the Company believes that there are no other currently pending litigation matters that, if determined adversely to the Company's interests, would have a material effect on the Company's financial position, results of operations, or cash flows or that would not be covered by the Company's existing liability insurance.
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Organization and Summary of Significant Accounting Policies (Policies) |
6 Months Ended |
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Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | MaxLinear, Inc. was incorporated in Delaware in September 2003. MaxLinear, Inc., together with its wholly owned subsidiaries, collectively referred to as MaxLinear, or the Company, is a provider of radio-frequency, or RF, high-performance analog, and mixed-signal communications system-on-chip solutions for the connected home, wired and wireless infrastructure, and industrial and multi-market applications. 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, including cable DOCSIS broadband modems and gateways, wireline connectivity devices for in-home networking applications, RF transceivers and modems for wireless carrier access and backhaul infrastructure, fiber-optic modules for data center, metro, and long-haul transport networks, video set-top boxes and gateways, hybrid analog and digital televisions, direct broadcast satellite outdoor and indoor units, and power management and interface products used in these and a range of other markets. The Company is a fabless integrated circuit design company whose products integrate all or a substantial portion of a broadband communication system.
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Basis of Presentation and Principles of Consolidation | The accompanying unaudited consolidated financial statements include the accounts of MaxLinear, Inc. and its wholly owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by GAAP for complete financial statements. All intercompany transactions and investments have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform with the current period presentation. Such reclassifications include the separate presentation of long-term lease liabilities on the consolidated balance sheets. In the opinion of management, the Company’s unaudited consolidated interim financial statements contain adjustments, including normal recurring accruals necessary to present fairly the Company’s consolidated financial position, results of operations, comprehensive income (loss), stockholders’ equity, and cash flows. The consolidated balance sheet as of December 31, 2018 was derived from the Company’s audited consolidated financial statements at that date. The accompanying unaudited consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and related notes thereto for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K filed by the Company with the Securities and Exchange Commission, or the SEC, on February 5, 2019, or the Annual Report. Interim results for the three and six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2019.
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Use of Estimates | The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited consolidated financial statements and accompanying notes to unaudited consolidated financial statements. Actual results could differ from those estimates.
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Significant Accounting Policies | Refer to the Company’s Annual Report for a summary of significant accounting policies. On January 1, 2019, the Company adopted Financial Accounting Standards Board, or FASB, Accounting Standards Codification Topic 842, Leases, or ASC 842, using the modified retrospective transition method with a cumulative effect adjustment to accumulated deficit as of January 1, 2019, and accordingly, modified its policy on accounting for leases as stated below. As described under “Recently Adopted Accounting Pronouncements,” below, the primary impact of adopting ASC 842 for the Company was the recognition in the consolidated balance sheet of certain lease-related assets and liabilities for operating leases with terms longer than 12 months. Such amounts were not previously accounted for in the Company's consolidated balance sheets. There have been no other material changes to the Company's significant accounting policies during the six months ended June 30, 2019. 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 since 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 liability for certain restructured leases existing at that date, has been offset against the related right-of-use asset. Lease expense is recognized on a straight-line basis over the lease term. On January 1, 2019, the Company adopted ASC 842 using the modified retrospective transition method with a cumulative adjustment to accumulated deficit at the beginning of the period of adoption. Upon adoption, 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 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 (Note 12). 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 relate to facility leases, early abandonment of all or part of 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. Impairment charges on leased right-of-use assets are included in restructuring charges in the statement of operations (Note 3).
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Recently Adopted Accounting Pronouncements | In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The amendments in this update require a lessee to recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset. For leases less than twelve months, an entity is permitted to make an accounting policy election by class of underlying asset not to recognize right-of-use assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. The Company made this election. Also, in July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, to provide an additional transition method. An entity can elect not to present comparative financial information under Topic 842 if it recognizes a cumulative-effect adjustment to retained earnings upon adoption. The Company also made this election. Further, in January 2019, the FASB issued ASU 2019-01, Leases (Topic 842): Codification Improvements, which clarified that post-adoption interim transition disclosures normally required in the year of adoption for the effect of a change in accounting principle on an entity’s financial statements are not required for the adoption of ASC 842. The amendments in these updates are effective for the Company for fiscal years beginning with 2019, including interim periods within those years, with early adoption permitted. The Company has completed its assessment of the impact of the adoption of ASC 842. Upon adoption, the Company recognized approximately $24.8 million of right-of-use assets and a net increase of $25.1 million in lease-related liabilities at January 1, 2019. Also, the impact of the adoption of ASC 842 on the Company’s accumulated deficit and deferred tax assets at January 1, 2019 was not material. Lastly, the impact of the adoption of ASC 842 on the Company's consolidated results of operations for the year ending December 31, 2019 is not expected to be material. In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases, to clarify on how to apply certain aspects of the new lease accounting standard. The amendments in this update, among other things, better articulates the requirement for a lessee’s reassessment of lease classification as of the effective date of a modification, clarifies that a change to an index or rate for variable lease payments does not constitute a resolution of a contingency that would result in the remeasurement of lease payments, and requires entities that apply Topic 842 retrospectively to each reporting period and do not adopt the practical expedients to write off any prior unamortized initial direct costs that do not meet the definition under Topic 842 to equity. The amendments in this update have the same effective date and transition requirements as the new lease standard summarized above. The Company has disclosed the impact of adoption of Topic 842 on the Company’s consolidated financial position and results of operations as stated above. In July 2018, the FASB issued ASU No. 2018-09, Codification Improvements, to clarify the Codification and prevent unintended application of the guidance. An amendment to ASC 718-740, Compensation—Stock Compensation—Income Taxes, clarifies that excess tax benefits should be recognized in the period in which the amount of the deduction is determined. The transition and effective date guidance is based on the facts and circumstances of each amendment. The amendment identified above became effective for the Company beginning with fiscal year 2019. The adoption of the amendments in this update in the three months ended March 31, 2019 did not have a material impact on the Company's consolidated financial position and results of operations. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815), which is intended to improve accounting for hedging activities by expanding and refining hedge accounting for both nonfinancial and financial risk components and aligning the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The amendments in this update became effective for the Company beginning with fiscal year 2019. The amendments in this update were required to be applied prospectively. The adoption of the amendments in this update in the three months ended March 31, 2019 did not have a material impact on the Company's consolidated financial statements.
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Recently Issued Accounting Pronouncements | In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, to replace the incurred loss methodology with an expected credit loss model that requires consideration of a broader range of information to estimate credit losses over the lifetime of the asset. An entity with trade receivables will be required to use historical loss information, current conditions, and reasonable and supportable forecasts to determine expected credit losses. Pooling of assets with similar risk characteristics and the use of a loss model are also required. Also, in April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, to clarify the inclusion of recoveries of trade receivables previously written off when estimating an allowance for credit losses. The amendments in this update are effective for the Company beginning with fiscal year 2020, including interim periods, with early adoption permitted as of the fiscal years beginning after December 31, 2018, including interim periods within those fiscal years. The adoption of the amendments in this update is not expected to have a material impact on the Company’s consolidated financial position and results of operations. In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. An entity no longer will determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if the reporting unit had been acquired in a business combination. Instead, under the amendments in this update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. The Board also eliminated the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. The amendments in this update are effective for the Company beginning with fiscal year 2020, including interim periods, with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The adoption of the amendments in this update is not expected to have a material impact on the Company’s consolidated financial position and results of operations. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework— Changes to the Disclosure Requirements for Fair Value Measurement, to improve the fair value measurement reporting of financial instruments. The amendments in this update require, among other things, added disclosure of the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The amendments in this update eliminate, among other things, disclosure of the reasons for and amounts of transfers between Level 1 and Level 2 for assets and liabilities that are measured at fair value on a recurring basis and an entity's valuation processes for Level 3 fair value measurements. The amendments in this update will be effective for the Company beginning with fiscal year 2020, with early adoption permitted. Retrospective application is required for all amendments in this update except the added disclosures, which should be applied prospectively. The adoption of the amendments in this update is not expected to have a material impact on the Company’s consolidated financial position and results of operations. In August 2018, the FASB issued ASU No. 2018-15, Intangibles- Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, to provide additional guidance on the accounting for costs of implementing cloud computing arrangements that are service contracts. The amendments in this update require the capitalization of implementation costs during the application development stage of such hosting arrangements and amortization of the expense over the term of the arrangement including any option to extend reasonably certain to be exercised or option to terminate reasonably certain not to be exercised. Capitalized implementation costs and amortization thereof are also required to be classified in the same line item in the statements of financial position, operations and cash flows associated with the hosting service fees. The amendments in this update will be effective for the Company beginning with fiscal year 2020, with early adoption permitted. Entities may select retrospective or prospective application to all implementation costs incurred after the adoption date. The adoption of the amendments in this update is not expected to have a material impact on the Company’s consolidated financial position and results of operations.
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Net Income (Loss) Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Basic and Diluted Earnings Per Share | The table below presents the computation of basic and diluted EPS:
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Restructuring Activity (Tables) |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Costs | The following table presents the activity related to the restructuring plans, which is included in restructuring charges in the consolidated statements of operations:
Lease related charges were related to exiting certain facilities. Lease-related charges for the six months ended June 30, 2019 includes the impairment of long-lived assets (right-of-use assets) of $2.2 million and leasehold improvements of $1.4 million. These lease-related charges were partially offset by a gain on the extinguishment of lease liabilities of $2.9 million for the six months ended June 30, 2019, following the release from such liability by the landlord. The Company does not expect to incur additional material costs related to current restructuring plans. |
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Schedule of Restructuring Reserve by Type of Cost | The following table presents a roll-forward of the Company's restructuring liability for the six months ended June 30, 2019. The restructuring liability is included in accrued expenses and other current liabilities in the consolidated balance sheets.
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Goodwill and Intangibles Assets (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Acquired Finite-Lived Intangible Assets by Major Class | The following table sets forth the Company’s finite-lived intangible assets resulting from business acquisitions and other purchases:
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Finite-lived Intangible Assets Amortization Expense | The following table sets forth amortization expense associated with finite-lived intangible assets, which is included in the consolidated statements of operations as follows:
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Schedule of Finite-Lived Intangible Assets | The following table sets forth the activity related to finite-lived intangible assets:
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The following table presents future amortization of the Company’s finite-lived intangible assets at June 30, 2019:
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Schedule of Indefinite-Lived Intangible Assets | Indefinite-lived intangible assets consist entirely of acquired in-process research and development technology, or IPR&D. The following table sets forth the Company’s activities related to the indefinite-lived intangible assets:
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Financial Instruments (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, by Balance Sheet Grouping | The composition of financial instruments is as follows:
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Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The following table presents a summary of the Company’s financial instruments that are measured on a recurring basis:
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Derivative Instruments and Hedging Activities Disclosure | The following table summarizes activity for the interest rate swap:
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Balance Sheet Details (Tables) |
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Balance Sheet Related Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash, Cash Equivalents and Investments | Cash, cash equivalents and restricted cash consist of the following:
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Inventory | Inventory consists of the following:
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Property and Equipment | Property and equipment, net consists of the following:
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Price Protection Liability | Accrued price protection liability consists of the following activity:
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Accrued Expenses | Accrued expenses and other current liabilities consist of the following:
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Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block] | The following table summarizes the change in balances of accumulated other comprehensive income (loss) by component:
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Debt and Interest Rate Swap (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt | The carrying amount of the Company's long-term debt consists of the following:
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Stock-Based Compensation and Employee Benefit Plans (Tables) |
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
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Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity | A summary of the Company’s restricted stock unit activity is as follows:
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Share-based Payment Arrangement, Performance Shares, Outstanding Activity [Table Text Block] | A summary of the Company’s performance-based restricted stock unit activity is as follows:
(1) Number of shares granted is based on the maximum percentage achievable in the performance-based restricted stock unit award.
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Schedule of Share-based Payment Award, Employee Stock Purchase Plan, Valuation Assumptions | 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:
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Share-based Compensation, Stock Options, Activity |
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Concentration of Credit Risk, Significant Customers and Geographic Information (Tables) |
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risks and Uncertainties [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedules of Concentration of Risk, by Risk Factor | Customers comprising greater than 10% of net revenues for each of the periods presented are as follows:
Balances that are 10% or greater of accounts receivable, based on the Company's billings to the contract manufacturer customers, are as follows:
____________________________
Significant Suppliers Suppliers comprising greater than 10% of total inventory purchases are as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from External Customers by Geographic Areas | The Company's consolidated net revenues by geographic area based on ship-to location are as follows (in thousands):
The products shipped to individual countries representing greater than 10% of net revenue for each of the periods presented are as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-lived Assets by Geographic Areas | 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):
_____________ (1) Amounts do not include leased right-of-use assets in the prior period due to the adoption of ASC 842 under the modified retrospective method with a cumulative effect adjustment to accumulated deficit as of January 1, 2019.
|
Revenue from Contracts with Customers (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contracts with Customers [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from External Customers by Products and Services | The table below presents disaggregated net revenues by market (in thousands):
|
Leases (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lessee, Operating Lease, Liability, Maturity | The table below presents aggregate future minimum payments due under leases for the next five years and beyond, reconciled to total lease liabilities included in the consolidated balance sheet as of June 30, 2019:
|
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Future Minimum Payments Under Operating Leases | The Company has subleased certain facilities that it ceased using in connection with prior years' restructuring plans (Note 3). Such subleases expire at various years through fiscal 2023. As of June 30, 2019, future minimum rental income under non-cancelable subleases is as follows:
|
Commitments and Contingencies (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Future Minimum Payments Under Other Obligations | As of June 30, 2019, future minimum payments under inventory purchase and other obligations are as follows:
|
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Future Minimum Payments Under Inventory Purchase Obligations | As of June 30, 2019, future minimum payments under inventory purchase and other obligations are as follows:
|
Organization and Summary of Significant Accounting Policies (Details Textuals) $ in Millions |
Jan. 01, 2019
USD ($)
|
---|---|
Assets [Member] | |
New Accounting Pronouncement, Early Adoption [Line Items] | |
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification | $ 24.8 |
Liability [Member] | |
New Accounting Pronouncement, Early Adoption [Line Items] | |
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification | $ 25.1 |
Net Income (Loss) Per Share (Details 1) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2019 |
Mar. 31, 2019 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Numerator: | ||||||
Net income (loss) | $ (2,229) | $ (4,851) | $ (14,422) | $ 1,847 | $ (7,080) | $ (12,575) |
Denominator: | ||||||
Weighted average common shares outstanding—basic (shares) | 70,917 | 68,335 | 70,445 | 68,008 | ||
Dilutive common stock equivalents (shares) | 0 | 0 | 0 | 0 | ||
Weighted average common shares outstanding-diluted (shares) | 70,917 | 68,335 | 70,445 | 68,008 | ||
Net loss per share: | ||||||
Basic (usd per share) | $ (0.03) | $ (0.21) | $ (0.10) | $ (0.18) | ||
Diluted (usd per share) | $ (0.03) | $ (0.21) | $ (0.10) | $ (0.18) |
Net Income (Loss) Per Share (Details Textuals) - shares shares in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Earnings Per Share [Abstract] | ||||
Common stock equivalents excluded from the calculation of diluted net income (loss) (shares) | 2.5 | 3.6 | 2.7 | 3.7 |
Restructuring Activity (Details 1) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | $ 416 | $ 1,865 | $ 2,333 | $ 1,865 |
One-time Termination Benefits [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | 402 | 271 | 874 | 271 |
Facility Closing [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | (44) | 1,594 | 1,301 | 1,594 |
Other Restructuring [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | $ 58 | $ 0 | $ 158 | $ 0 |
Restructuring Activities (Details Textuals) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Impairment of long-lived assets | $ 2,182 | $ 2,200 | $ 0 | |
Restructuring charges | 416 | $ 1,865 | 2,333 | 1,865 |
Impairment of leasehold improvements | 1,442 | 700 | 1,400 | 700 |
Gain on extinguishment of lease liabilities | (2,880) | (2,900) | 0 | |
Operating Leases, Rent Expense, Sublease Rentals | $ 1,000 | $ 600 | $ 1,600 | $ 900 |
Goodwill and Intangibles Assets (Details 1) - USD ($) |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2019 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill, Period Increase (Decrease) | $ 0 | $ 0 |
Goodwill impairment | $ 0 | $ 0 |
Goodwill and Intangibles Assets (Details 3) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Finite-lived Intangible Assets [Roll Forward] | ||||
Beginning balance | $ 240,500 | $ 310,645 | ||
Intangible Assets, Transfer from IPRD to Developed Tech | 1,500 | 0 | ||
Amortization | $ (14,292) | $ (17,014) | (28,558) | (34,028) |
Ending balance | $ 213,442 | $ 276,617 | $ 213,442 | $ 276,617 |
Goodwill and Intangibles Assets (Details 4) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
2019 (6 months) | $ 28,423 | |||
2020 | 56,168 | |||
2021 | 55,385 | |||
2022 | 37,855 | |||
2023 | 25,660 | |||
Thereafter | 9,951 | |||
Net Carrying Amount | $ 213,442 | $ 240,500 | $ 276,617 | $ 310,645 |
Goodwill and Intangibles Assets (Details Textuals) - USD ($) |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Goodwill, Period Increase (Decrease) | $ 0 | $ 0 | |
Goodwill impairment | 0 | 0 | |
Impairment of Intangible Assets, Finite-lived | 0 | 0 | |
Other Indefinite-lived Intangible Assets, Beginning | 4,400,000 | $ 4,400,000 | |
Intangible Assets, Transfer from IPRD to Developed Tech | (1,500,000) | 0 | |
Other Indefinite-lived Intangible Assets, Ending | 2,900,000 | 2,900,000 | $ 4,400,000 |
Impairment of Intangible Assets, Indefinite-lived (Excluding Goodwill) | $ 0 | $ 0 |
Financial Instruments (Details 1) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Derivative Asset | $ 218 | $ 1,623 | $ 2,462 | $ 734 |
Fair Value, Recurring [Member] | Estimate of Fair Value Measurement [Member] | Derivative Financial Instruments, Assets [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Derivative Asset | $ 218 | $ 1,623 |
Financial Instruments (Details 3) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Fair Value Disclosures [Abstract] | ||||
Fair Value, Assets, Level 2 to Level 1 Transfers, Amount | $ 0 | $ 0 | $ 0 | $ 0 |
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||
Derivative Asset | 1,623,000 | 734,000 | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Inputs Reconciliation, Gain (Loss) Included in Other Comprehensive Income (Loss) | (800,000) | 300,000 | (1,405,000) | 1,728,000 |
Derivative Asset | $ 218,000 | $ 2,462,000 | $ 218,000 | $ 2,462,000 |
Financial Instruments - Additional Information (Details Textuals) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Fair Value Disclosures [Abstract] | ||||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Inputs Reconciliation, Gain (Loss) Included in Other Comprehensive Income (Loss) | $ (800,000) | $ 300,000 | $ (1,405,000) | $ 1,728,000 |
Fair Value, Assets, Level 2 to Level 1 Transfers, Amount | $ 0 | $ 0 | $ 0 | $ 0 |
Balance Sheet Details - Cash and Investments (Details 1) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|---|---|
Balance Sheet Related Disclosures [Abstract] | ||||
Cash and cash equivalents | $ 66,629 | $ 73,142 | ||
Short-term restricted cash | 344 | 645 | ||
Long-term restricted cash | 65 | 404 | ||
Total cash, cash equivalents and restricted cash | 67,038 | 74,191 | $ 75,115 | $ 74,412 |
Money Market Funds, at Carrying Value | 20,100 | 0 | ||
Restricted cash | $ 400 | $ 1,000 |
Balance Sheet Details - Inventory (Details 2) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Balance Sheet Related Disclosures [Abstract] | ||
Work-in-process | $ 14,786 | $ 17,618 |
Finished goods | 28,089 | 24,120 |
Inventory | $ 42,875 | $ 41,738 |
Balance Sheet Details- Accrued Price Protection Liability (Details 5) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Accrued Price Protection Rebate Activity [Roll Forward] | ||
Beginning balance | $ 16,454 | $ 21,571 |
Charged as a reduction of revenue | 14,880 | 20,136 |
Reversal of unclaimed rebates | (719) | (2,408) |
Payments | (19,321) | (19,219) |
Ending balance | $ 11,294 | $ 20,080 |
Balance Sheet Details - Accrued Expenses (Details 6) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Capitalized Contract Cost [Line Items] | ||
Accrued technology license payments | $ 4,500 | $ 4,500 |
Accrued professional fees | 757 | 1,270 |
Accrued engineering and production costs | 929 | 646 |
Accrued restructuring | 1,045 | 1,946 |
Accrued royalty | 1,054 | 980 |
Short-term lease liabilities | 8,333 | 1,214 |
Accrued customer credits | 557 | 1,204 |
Income tax liability | 4,132 | 1,642 |
Customer contract liabilities | 71 | 71 |
Other | 420 | 995 |
Total | 30,300 | 23,520 |
Reduction in Transaction Price [Member] | ||
Capitalized Contract Cost [Line Items] | ||
Accrued obligations to customers | 7,062 | 7,558 |
Sales Returns and Allowances [Member] | ||
Capitalized Contract Cost [Line Items] | ||
Accrued obligations to customers for stock rotation rights | $ 1,440 | $ 1,494 |
Stock-Based Compensation and Employee Benefit Plans - Expense by Type (Details 1) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based Payment Arrangement, Expense | $ 8,207 | $ 7,309 | $ 15,954 | $ 15,782 |
Cost of net revenue | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based Payment Arrangement, Expense | 147 | 120 | 277 | 226 |
Research and development | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based Payment Arrangement, Expense | 4,222 | 4,454 | 8,435 | 8,828 |
Selling, general and administrative | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based Payment Arrangement, Expense | $ 3,838 | $ 2,735 | $ 7,242 | $ 6,728 |
Income Taxes - Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Valuation Allowance [Line Items] | ||||
Income tax provision (benefit) | $ (3,413) | $ 11,225 | $ (9,875) | $ 9,361 |
Unrecognized Tax Benefits, Period Increase (Decrease) | 400 | |||
Unrecognized Tax Benefits, Interest on Income Taxes Accrued | 700 | 700 | ||
Unrecognized Tax Benefits, Income Tax Penalties Accrued | $ 100 | $ 100 |
Commitments and Contingencies (Details 1) $ in Thousands |
Jun. 30, 2019
USD ($)
|
---|---|
Other Obligations | |
2019 (6 months) | $ 4,049 |
2020 | 4,574 |
2021 | 843 |
2022 | 425 |
2023 | 447 |
Thereafter | 0 |
Total minimum payments | 10,338 |
Total | |
2019 (6 months) | 69,050 |
2019 | 4,574 |
2020 | 843 |
2021 | 425 |
2022 | 447 |
Thereafter | 0 |
Total minimum payments | 75,339 |
Inventories [Member] | |
Inventory Purchase Obligations | |
2019 (6 months) | 65,001 |
2020 | 0 |
2021 | 0 |
2022 | 0 |
2023 | 0 |
Thereafter | 0 |
Total minimum payments | $ 65,001 |
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