(1) We adopted ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting in the second quarter of 2016, and included excess tax benefits in the provision for income taxes instead of additional paid-in capital.  As a result, when computing diluted EPS using the treasury stock method, fewer hypothetical shares can be repurchased resulting in a greater number of incremental shares being issued upon the exercise of share-based payment awards. The impact of adoption for the six months ended June 30, 2016 was a reduction to the provision for income taxes and increase to net income of $5.1 million and increase to basic earnings per share of $0.08 and diluted earnings per share of $0.06.  Diluted earnings per share for the six months ended June 30, 2016 was also impacted by an increase of 868,000 shares in the number of incremental shares used in computing diluted EPS.

⁽²⁾ Includes two months of Entropic operations.

MAXLINEAR, INC.
UNAUDITED GAAP CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
	Three Months Ended
	June 30, 2016				March 31, 2016				June 30, 2015
Operating Activities
Net income (loss)	$	22,584			$	20,681			$	(30,647	)
Adjustments to reconcile net income (loss) to cash provided by operating activities:
Amortization and depreciation	4,163				5,772				12,227
Provision for inventory reserves	(29		)		38				—
Amortization (reduction in) of investment premiums, net	(66		)		149				55
Amortization of inventory step-up	336				—				13,286
Stock-based compensation	5,102				5,109				6,301
Deferred income taxes	(100		)		233				(1,960		)
Loss on disposal of property and equipment	48				—				—
Gain on sale of available-for-sale securities	(50		)		—				—
(Gain) loss on foreign currency	(170		)		124				—
Excess tax benefits on stock based awards	(3,549		)		(1,565		)		—
Change in fair value of contingent consideration	24				86				51
Impairment of leases	—				—				5,593
Changes in operating assets and liabilities:
Accounts receivable	(3,300		)		1,359				8,319
Inventory	4,425				2,984				(9,659		)
Prepaid and other assets	1,611				(2,416		)		3,800
Accounts payable, accrued expenses and other current liabilities	1,887				3,080				(2,581		)
Accrued compensation	309				3,231				(371		)
Deferred revenue and deferred profit	(725		)		2,457				502
Accrued price protection liability	(173		)		(1,583		)		(372		)
Other long-term liabilities	18				(785		)		90
Net cash provided by operating activities	32,345				38,954				4,634
Investing Activities
Purchases of property and equipment	(1,488		)		(3,222		)		(436		)
Purchases of intangible assets	(390		)		—				—
Cash used in acquisition, net of cash acquired	(21,000		)		—				(3,615		)
Purchases of available-for-sale securities	(9,504		)		(37,773		)		(3,815		)
Maturities of available-for-sale securities	70,711				10,300				36,918
Net cash provided by (used in) investing activities	38,329				(30,695		)		29,052
Financing Activities
Repurchases of common stock	—				(3		)		(101		)
Net proceeds from issuance of common stock	2,558				1,727				3,207
Minimum tax withholding paid on behalf of employees for restricted stock units	(2,501		)		(1,092		)		(2,896		)
Equity issuance costs	—				—				(8		)
Net cash provided by financing activities	57				632				202
Effect of exchange rate changes on cash and cash equivalents	11				(7		)		74
Increase in cash and cash equivalents	70,742				8,884				33,962
Cash and cash equivalents at beginning of period	76,840				67,956				22,769
Cash and cash equivalents at end of period	$	147,582			$	76,840			$	56,731

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