Entropic Reports Third Quarter 2013 Results

Entropic Reports Third Quarter 2013 Results

Conference Call to be Webcast Today at 1:30 p.m. Pacific Time

SAN DIEGO, Oct. 29, 2013 (GLOBE NEWSWIRE) -- Entropic (Nasdaq:ENTR), a world
leader in semiconductor solutions for the connected home, today reported its
third quarter results for the period ended September 30, 2013. Entropic
reported third quarter net revenues of $56.4 million. This compares to net
revenues of $70.6 million in the second quarter of 2013, and $89.8 million in
the third quarter of 2012.

In accordance with U.S. generally accepted accounting principles (GAAP), the
Company's third quarter net loss was $11.9 million, or $(0.13) per share
(basic and diluted). This compares with GAAP net loss of $39.9 million, or
$(0.44) per share (basic and diluted) in the second quarter of 2013, and net
income of $0.4 million, or $0.00 per share (diluted) in the third quarter of
2012. Included in the GAAP operating results for the second quarter of 2013 is
a charge of $26.7 million, or $0.30 per share (diluted), associated with the
establishment of a valuation allowance related to federal deferred tax assets.

Non-GAAP net loss in the third quarter was $5.6 million, or $(0.06) per share
(diluted), compared to non-GAAP net income of $0.6 million, or $0.01 per share
(diluted) in the second quarter of 2013, and non-GAAP net income of $7.7
million, or $0.09 per share (diluted), in the third quarter of 2012.

"Entropic delivered revenue near the higher end of the guided range for the
third quarter," said Patrick Henry, Entropic's president and chief executive
officer. "We continue to drive innovation across our businesses and have made
significant progress toward our long-term goals by developing new products and
winning key tier-one designs. We are focused on optimizing the connected home
entertainment experience and we are confident that Entropic has the right
strategy in place to address core operator needs, produce high-volume
design-wins and create significant value for shareholders."

                       
                       Three Months Ended
(In millions, except    September30, 2013  June30, 2013  September30, 2012
per share data)
Net revenues            $ 56.4              $ 70.6         $ 89.8
GAAP net (loss) income  $ (11.9)            $ (39.9)       $ 0.4
GAAP net (loss) income
per share (basic and    $ (0.13)            $ (0.44)       $ 0.00
diluted)
Non-GAAP net (loss)     $ (5.6)             $ 0.6          $ 7.7
income^1
Non-GAAP net (loss)
income per share^1      $ (0.06)            $ 0.01         $ 0.09
(diluted)
1. Please refer to "Non-GAAP Financial Measures" below and the financial
statements portion of this press release for an explanation of the non-GAAP
financial measures contained in the table above and a reconciliation of such
measures to the comparable GAAP financial measures.


RECENT HIGHLIGHTS

Corporate Activities

  *Stock Repurchase Program: Entropic announced a $30 million stock
    repurchase program, which reflected the Board's ongoing commitment to
    maximizing shareholder value and continued confidence in Entropic's
    long-term strategic direction.
    
  *Executive Hires: Entropic appointed Matthew Rhodes as senior vice
    president, Global Marketing to oversee the development, execution and
    communication of the Company's overall product vision, strategy and
    roadmap across all market segments, worldwide.

New Design Wins

Entropic announced new design wins across the following product lines:

  *Set-Top Box (STB) System-on-a-Chip (SoC) Product Line:

    *Jupiter Telecommunications Co., Ltd. (J:COM), the largest multiple
      system operator in Japan, unveiled its first IP-based Video-on-Demand
      (VOD) STB using an Entropic-powered PIXELA solution.
    *Telefonica Czech Republic deployed a new interactive Eagle Kingdom
      Technologies (EKT) IP-STB featuring Entropic's STB SoC.
    *LG CNS, the leading IT services company in South Korea, selected
      Entropic's Verimatrix-certified, high-performance hybrid STB SoC to
      deliver a secure and powerful TV viewing experience.

  *Discrete Multimedia over Coax Alliance (MoCA^®) Product Line:

    *Entropic announced its EN2510 is powering the Actiontec WCB3000, the
      latest MoCA-to-Wi-Fi^® network adapter in Actiontec's Whole Home
      Wireless portfolio.

  *Direct Broadcast Satellite Outdoor Unit (DBS ODU) Product Line:

    *Entropic and Wistron NeWeb Corporation (WNC) delivered DBS ODU systems
      for use at Sky Italia and Canal Digital.
    *Entropic and Prime extended their reach in the Brazilian DBS ODU market
      by deploying a new Low Noise Block (LNB) solution at a leading Brazilian
      satellite operator.

  *Broadband Access:

    *Jiuzhou integrated Entropic's c.LINK^® 1.1 Ethernet-over-Coax (EoC)
      solution into its High Definition (HD) STBs.

Partnerships

  *Alticast: Entropic and Alticast demonstrated Reference Design Kit (RDK)
    STB solutions at multiple trade events in Q3 2013, which highlighted
    Alticast's proven RDK integration expertise on Entropic's powerful SoC
    platform.
    
  *Irdeto: Entropic announced its EN75xx family of highly-integrated HD STB
    SoC solutions support Irdeto Media Protection.
    
  *OmniPhy: OmniPhy announced its Video Display IP Group shipped a new
    Silicon Intellectual Property platform to Entropic to supportHDMI 2.0 TX
    and RX standards for the Ultra-High-Definition (UHD) market.

For More Information

Entropic management will be holding a conference call today, October 29, 2013
at 1:30 p.m. Pacific Time/4:30 p.m. Eastern Time to discuss the Company's
results for the third quarter of fiscal 2013, and to provide guidance for the
fourth quarter. You may access the conference call via any of the following:

Teleconference: 888-713-4199
                
Access Code:     66149967
                
Web Broadcast:  http://events.entropic.com/
                
Replay:         888-286-8010
                
Replay Passcode: 54001616

About Entropic

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

The Entropic logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=4255

Non-GAAP Financial Measures

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

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

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

Forward-Looking Statements

Statements in this press release that are not strictly historical in nature
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements include, but are
not limited to, statements regarding our progress toward our long-term goals
and our implementation of the right strategy and the objectives and outcome of
that strategy.Such forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause Entropic's actual
results to be materially different from historical results or from any results
expressed or implied by such forward-looking statements. These factors
include, but are not limited to, our dependence on a limited number of supply
chain partners for the manufacture of our products and other factors that
could affect our ability to meet customer demand; our dependence on a limited
number of customers and, ultimately, service providers for a substantial
portion of our revenues; risks associated with adverse U.S. and international
economic conditions; the ability of our customers or the service providers who
purchase their products to successfully compete and continue to grow in their
markets; the continued development of the market for High Definition (HD)
video and other multi-media content delivery and networking solutions; risks
associated with competing against larger and more established companies and
our ability to compete successfully in the connected home entertainment
market; risks associated with timely development and introduction of new or
enhanced products including those associated with IP Video delivery; risks
related to international operations; risks related to intellectual property,
including third party licensing or patent infringement claims; risks
associated with the Trident Microsystems, PLX Technology and Mobius
Semiconductor acquisitions including their integration into Entropic's
existing operations; and other factors discussed in the "Risk Factors" section
of Entropic's Quarterly Report on Form 10-Q for the quarter ended June 30,
2013. All forward-looking statements are qualified in their entirety by this
cautionary statement. Entropic is providing this information as of the date of
this release and does not undertake any obligation to update any
forward-looking statements contained in this release as a result of new
information, future events or otherwise.

Copyright © 2013 Entropic. All rights reserved. All other product or company
names mentioned are used for identification purposes only and may be
trademarks of their respective owners.




ENTROPIC COMMUNICATIONS, INC.
GAAP Condensed Consolidated Statements of Operations
(In thousands, except for per share information)
                                                              
                  Three Months Ended                  Nine Months Ended
                  September   June 30,    September   September   September
                   30, 2013    2013        30, 2012    30, 2013    30, 2012
                  (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
                                                              
Net revenues       $56,376   $70,612   $89,825   $201,445  $231,980
Cost of net        28,863     36,356     45,778     104,837    111,886
revenues
Gross profit       27,513     34,256     44,047     96,608     120,094
Operating                                                      
expenses:
Research and       28,510     28,334     28,072     84,914     69,214
development
Sales and          6,137      6,017      6,966      18,609     18,986
marketing
General and        5,751      5,456      5,718      17,290     19,592
administrative
Amortization of    443        495        930        1,868      1,645
intangibles
Restructuring      (69)       1,763      --         1,694      --
charges
Total operating    40,772     42,065     41,686     124,375    109,437
expenses
(Loss) income from (13,259)   (7,809)    2,361      (27,767)   10,657
operations
Loss related to
equity method      --         (335)      (799)      (1,115)    (2,536)
investment
Impairment of      --         (4,780)    --         (4,780)    --
investment
Other income, net  464        255        31         1,147      567
(Loss) income
before income      (12,795)   (12,669)   1,593      (32,515)   8,688
taxes
Income tax
(benefit)          (860)      27,244     1,185      21,737     4,214
provision
Net (loss) income  $(11,935) $(39,913) $408      $(54,252) $4,474
                                                              
Net (loss) income
per share - basic  $(0.13)   $(0.44)   $0.00     $(0.60)   $0.05
and diluted
Weighted average
number of shares
used to compute    91,069     90,281     88,399     90,225     87,913
net income per
share - basic
Weighted average
number of shares
used to compute    91,069     90,281     90,885     90,225     89,918
net income per
share - diluted




ENTROPIC COMMUNICATIONS, INC.
GAAP Condensed Consolidated Balance Sheets
(In thousands)
                                                               
                                        September 30 June 30,    December 31,
                                        2013         2013        2012
                                        (unaudited)  (unaudited) 
ASSETS                                                          
Current assets:                                                 
Cash and cash equivalents                $27,901    $14,349   $17,206
Marketable securities                    59,549      91,334     79,981
Accounts receivable                      40,797      45,452     41,847
Inventory                                15,116      15,323     26,395
Deferred tax assets, current             13          --         7,157
Prepaid expenses and other current       17,405      15,323     11,988
assets
Total current assets                     160,781     181,781    184,574
Property and equipment, net              17,928      18,992     17,629
Long-term marketable securities          73,894      60,118     71,748
Intangible assets, net                   50,487      53,355     46,997
Deferred tax assets, long-term           --          661        19,255
Goodwill                                 4,688       4,688      4,664
Other long-term assets                   6,356       3,483      8,683
Total assets                             $314,134   $323,078  $353,550
                                                               
LIABILITIES AND STOCKHOLDERS' EQUITY                            
Current liabilities:                                            
Accounts payable                         $14,956    $14,910   $11,380
Accrued expenses and other current       7,158       8,273      8,067
liabilities
Accrued payroll and benefits             8,156       9,223      9,474
Total current liabilities                30,270      32,406     28,921
Deferred rent                            2,178       2,244      683
Other long-term liabilities              1,586       1,511      1,281
Stockholders' equity                     280,100     286,917    322,665
Total liabilities and stockholders'      $314,134   $323,078  $353,550
equity




ENTROPIC COMMUNICATIONS, INC.
Unaudited Reconciliation of Non-GAAP Adjustments
(In thousands, except for per share information)
                                                                  
This press release contains the following non-GAAP financial measures: net income
and net income per share.The presentation of such measures is not intended to be
considered in isolation or as a substitute for, or superior to, the financial
information prepared and presented in accordance with GAAP.Our non-GAAP net income
and net income per share exclude the items listed below.
                                                                  
The following table sets forth such non-GAAP measures for the applicable periods as
well as the reconciliation of such measures to the directly comparable GAAP measures
for the periods shown.
                                                                  
              Three Months Ended                        Nine Months Ended
              September 30, June 30, 2013 September 30, September 30, September 30,
               2013                        2012          2013          2012
              (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
                                                                  
GAAP net       $(11,935)   $(39,913)   $408        $(54,252)   $4,474
(loss) income
Non-GAAP                                                           
adjustments:
Stock-based                                                        
compensation:
Cost of net    227          230          217          658          567
revenues
Research and   2,766        1,975        2,030        6,730        5,554
development
Sales and      510          516          675          1,324        1,679
marketing
General and    1,089        1,054        1,283        3,109        3,182
administrative
Total
stock-based    4,592        3,775        4,205        11,821       10,982
compensation
Amortization
of intangible                                                      
assets:
Cost of net    2,425        2,228        2,025        6,881        3,802
revenues
Operating      443          495          930          1,868        1,645
expenses
Transaction
and            --           244          183          244          4,484
integration
costs
Loss related
to equity      --           335          799          1,115        2,536
method
investment
Impairment of  --           4,780        --           4,780        --
investment
Adjustments to
the fair value
of PLX         --           (143)        230          (131)        230
acquisition
contingent
consideration
Income tax
effects of     --           2,591        (2,930)      --           (8,288)
pre-tax
adjustments
Cash tax
difference ^   (1,093)      (2,274)      1,899        (5,464)      6,357
(1)
Deferred tax
asset          --           26,695       --           26,695       --
valuation
allowance
Restructuring  (69)         1,763        --           1,694        --
charges ^ (2)
Total of
non-GAAP       6,298        40,489       7,341        49,503       21,748
adjustments
Non-GAAP net   $(5,637)    $576        $7,749      $(4,749)    $26,222
(loss) income
                                                                  
Weighted
average shares 91,069       90,281       88,399       90,225       87,913
(basic)
Adjustment for
dilutive       --           2,152        2,486        --           2,005
shares
Weighted
average shares 91,069       92,433       90,885       90,225       89,918
(diluted)
                                                                  
GAAP net
(loss) income  $(0.13)     $(0.44)     $0.00       $(0.60)     $0.05
per share
(basic)
Non-GAAP
adjustments    0.07         0.45         0.09         0.55         0.24
detailed above
Non-GAAP net
(loss) income  $(0.06)     $0.01       $0.09       $(0.05)     $0.29
per share
(diluted)
                                                                  
(1) The Company's non-GAAP net (loss) income per share is calculated using the cash
tax rate of (4)%, 29%, and 22% for the three month periods ended September 30, 2013,
June 30, 2013, and September 30, 2012, respectively.The Company's non-GAAP net
(loss) income per share is calculated using the cash tax rate of (12)% and 19% for
the nine month periods ended September 30, 2013 and 2012, respectively.The
estimated cash tax rate is the estimated tax payable on the Company's projected tax
returns as a percentage of estimated annual non-GAAP pre-tax net income.The Company
uses an estimated cash tax rate to adjust for the historical variation in the
effective book tax rate associated with the reversal of valuation allowances, the
utilization of research and development tax credits, and the utilization of loss
carryforwards which currently have an overall effect of reducing taxes payable.The
Company believes that the cash tax rate provides a more transparent view of its
operating results.The Company's effective tax rate used for the purposes of
calculating GAAP net (loss) income for the three month periods ended September 30,
2013, June 30, 2013, and September 30, 2012 was approximately 7%, (215)%, and 74%,
respectively.The Company's effective tax rate used for the purposes of calculating
GAAP net (loss) income for the nine month periods ended September 30, 2013 and
September 30, 2012 was approximately (67)% and 49%, respectively.
                                                                  
(2) In June, 2013, we incurred a restructuring charge of $1.8 million pursuant to a
plan to rebalance our operations in an attempt to leverage synergies from our
acquisitions and refine our business operations. This plan resulted in a reduction
of our personnel by 66 employees, or approximately 10% of our workforce.

CONTACT: Investor Contact:
         Debra Hart
         +1 858.768.3852
         debra.hart@entropic.com
        
         Media/Industry Analyst Contact:
         Chris Fallon
         + 1 858.768.3827
         chris.fallon@entropic.com

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