Entropic Reports Fourth Quarter and Fiscal Year 2013 Results

Entropic Reports Fourth Quarter and Fiscal Year 2013 Results

  Fourth Quarter Revenue of $57.9 million, Annual Revenue of $259.4 million

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

SAN DIEGO, Feb. 5, 2014 (GLOBE NEWSWIRE) -- Entropic (Nasdaq:ENTR), a world
leader in semiconductor solutions for the connected home, today reported its
fourth quarter and fiscal year results for the period ended December 31, 2013.
Entropic reported fourth quarter net revenues of $57.9 million, up 3% compared
with $56.4 million in the third quarter of 2013.

In accordance with U.S. generally accepted accounting principles (GAAP), the
Company's fourth quarter net loss was $11.9 million, or $0.13 per share (basic
and diluted). This compares with GAAP net loss of $11.9 million, or $0.13 per
share (basic and diluted) in the third quarter of 2013.

Non-GAAP net loss in the fourth quarter was $5.6 million, or $0.06 per share
(diluted), compared to non-GAAP net loss of $5.6 million, or $0.06 per share
(diluted) in the third quarter of 2013.

Net revenues for the year ended December 31, 2013 were $259.4 million, a
decrease of 19% from the $321.7 million reported for the year ended December
31, 2012. Net loss computed in accordance with GAAP for the year ended
December 31, 2013 was $66.2 million, or $0.73 per share (basic and diluted),
compared with GAAP net income of $4.5 million, or $0.05 per share (diluted),
for the year ended December 31, 2012.

Non-GAAP net loss for the year ended ended December 31, 2013 was $10.4
million, or $0.11 per share (diluted), compared to non-GAAP net income of
$33.8 million, or $0.37 per share (diluted) for the year ended December 31,
2012.

"The fourth quarter played out largely as expected," said Patrick Henry,
president and chief executive officer, Entropic. "In 2014, we remain keenly
focused on successfully executing the transformation of the Company and
ramping our pipeline of design-wins to drive long-term growth for our
shareholders."

                                                   
            Three Months Ended                      Years Ended
                                                             
(In
millions,    December31, September30, December31, December31, December31,
except per   2013         2013          2012         2013         2012
share data)
Net revenues $57.9      $56.4       $89.7      $259.4     $321.7
GAAP net
(loss)       $(11.9)    $(11.9)     $—         $(66.2)    $4.5
income
GAAP net
(loss)
income per   $(0.13)    $(0.13)     $0.00     $(0.73)    $0.05
share (basic
and diluted)
Non-GAAP net
(loss)       $(5.6)     $(5.6)      $7.6       $(10.4)    $33.8
income^1
Non-GAAP net
(loss)
income per   $(0.06)    $(0.06)     $0.08      $(0.11)    $0.37
share^1
(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

Awards and Milestones

  *Awards: Entropic Received Top Honors in the 2013 Fierce Innovation Awards
    for its c.LINK^® 1.1+ Broadband Access Technology in the Last
    Mile/Edge/Access Category
  *Multimedia over Coax Alliance (MoCA^®) Milestones:

    *Entropic was First to Announce Officially-Approved MoCA 2.0 Golden Nodes
    *Wistron NeWeb Corporation (WNC) Announced it Shipped Over 10-Million
      Entropic-Based MoCA Units

Technology Innovation

  *Entropic Unveiled its Fully-Integrated Set-Top Box Solutions for Satellite
    Receivers and IP-Clients, which Integrates High-Efficiency Video Codec
    (HEVC) Decoding, MoCA 2.0, Dual DVB-S/S2 Demodulators using Full-Band
    Capture Satellite Tuning and 3D Graphics Acceleration
  *Entropic Introduced its c.LINK Broadband Access Solution to Operators in
    India to Deliver Greater Bandwidth and Improved Channel Performance With
    Lower Overall System Costs

New Deployments

  *DIRECTV: Entropic and WNC Announced the World's First Digital Channel
    Stacking Switch (dCSS) Solution Deployed by DIRECTV to Revolutionize
    Installation in Multi-Dwelling Units (MDUs) and Hotels
  *SKY: Entropic and Unitron Group Announced the Unitron Johansson
    Multi-switch, Powered by Entropic's CSS Technology Gives Sky Subscribers
    in UK and Ireland MDUs Full Access to Sky+ Services
  *Major India Direct Broadcast Satellite Operator: Entropic and Inverto
    Announced a Major Satellite Operator in India has Deployed Inverto's
    Entropic-Based Unicable Multi-Switch for Support of MDU Subscribers

New Designs

  *Novabase Digital TV Technologies and Entropic Developed the First HDMI
    IP-Set-Top Box (IP-STB) Stick with Broadcast Quality Security
  *Entropic and TVSTORM Unveiled an Android-Based IP-STB with Miracast
    Functionality
  *Entropic and Prime Electronics & Satellitics Inc. Introduced the World's
    First Single-Chip CSS Low Noise Block Solution
  *Entropic and Asheridge Communications, a Member of the International
    Teleste Group, Introduced the echoBox Wi-Fi Home Networking Hub

New Reference Designs

  *Entropic Unveiled the First MoCA 2.0 USB Bus-Powered Adapter which is a
    Small Form Factor, Low Power MoCA 2.0 Solution for OEMs to Design High
    Performance, Cost Competitive Products with Lower Overall System Costs
  *Entropic and Silicon Labs Developed the First MoCA/Silicon Tuner Reference
    Design to Bring Broadband Directly to the TV via a Single In-Home Coaxial
    Cable

New Partnerships

  *Entropic Announced it will Embed NAGRA NOCS 3 Security Into Its Portfolio
    of Advanced Platform Set-Top Box System-on-a-Chip (STB SoC) Solutions
  *Entropic Announced it Completed Integration of Cryptography Research
    CryptoFirewall™ Security Cores into its STB SoC Platform

For More Information

Entropic management will be holding a conference call today, February 5, 2014
at 1:30 p.m. Pacific Time/4:30 p.m. Eastern Time to discuss the Company's
results for the fourth quarter of fiscal 2013, and to provide guidance for the
first quarter of 2014. You may access the conference call via any of the
following:

Teleconference: 888-713-4215
Access Code:     83494932
Web Broadcast:  http://events.entropic.com/
Replay:         888-286-8010
Replay Passcode: 78808374

About Entropic

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

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 the transformation of the Company, the
ramping and impact of design-wins, and our long term growth.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 September 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© 2014 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                    Year Ended
                December 31, September   December 31, December 31, December
                 2013         30, 2013    2012         2013         31, 2012
                (unaudited)  (unaudited) (unaudited)              
                                                               
Net revenues     $57,931    $56,376   $89,698    $259,376   $321,678
Cost of net      30,137      28,863     45,789      134,974     157,675
revenues
Gross profit     27,794      27,513     43,909      124,402     164,003
Operating                                                       
expenses:
Research and     29,622      28,510     29,139      114,536     98,353
development
Sales and        6,273       6,137      6,327       24,882      25,313
marketing
General and      5,125       5,751      5,882       22,415      25,474
administrative
Amortization of  444         443        930         2,312       2,575
intangibles
Restructuring    --          (69)       897         1,694       897
charges
Total operating  41,464      40,772     43,175      165,839     152,612
expenses
(Loss) income    (13,670)    (13,259)   734         (41,437)    11,391
from operations
Loss related to
equity method    --          --         (779)       (1,115)     (3,315)
investment
Impairment of    --          --         --          (4,780)     --
investment
Other income,    435         464        34          1,582       601
net
(Loss) income
before income    (13,235)    (12,795)   (11)        (45,750)    8,677
taxes
Income tax
(benefit)        (1,333)     (860)      (57)        20,404      4,157
provision
Net (loss)       $(11,902)  $(11,935) $46        $(66,154)  $4,520
income
                                                               
Net (loss)
income per share $(0.13)    $(0.13)   $0.00      $(0.73)    $0.05
- basic and
diluted
Net (loss)
income per share $(0.13)    $(0.13)   $0.00      $(0.73)    $0.05
- diluted
Weighted average
number of shares
used to compute  91,293      91,069     88,912      90,494      88,164
net (loss)
income per share
- basic
Weighted average
number of shares
used to compute  91,293      91,069     91,710      90,494      90,364
net (loss)
income per share
- diluted


ENTROPIC COMMUNICATIONS, INC.
GAAP Condensed Consolidated Balance Sheets
(In thousands)
                                                               
                                      December 31, September 30, December 31,
                                       2013         2013          2012
                                      (unaudited)
ASSETS                                                          
Current assets:                                                 
Cash and cash equivalents              $16,298    $27,901     $17,206
Marketable securities                  71,922      59,549       79,981
Accounts receivable                    30,204      40,797       41,847
Inventory                              13,503      15,116       26,395
Deferred tax assets, current           51          13           7,157
Prepaid expenses and other current     18,739      17,405       11,988
assets
Total current assets                   150,717     160,781      184,574
Property and equipment, net            17,994      17,928       17,629
Long-term marketable securities        69,534      73,894       71,748
Intangible assets, net                 47,326      50,487       46,997
Deferred tax assets, long-term         --          --           19,255
Goodwill                               4,688       4,688        4,664
Other long-term assets                 5,001       6,356        8,683
Total assets                           $295,260   $314,134    $353,550
LIABILITIES AND STOCKHOLDERS' EQUITY                            
Current liabilities:                                            
Accounts payable                       $8,601     $14,956     $11,380
Accrued expenses and other current     6,318       7,158        8,067
liabilities
Accrued payroll and benefits           7,077       8,156        9,474
Total current liabilities              21,996      30,270       28,921
Deferred rent                          1,751       2,178        683
Other long-term liabilities            1,688       1,586        1,281
Stockholders' equity                   269,825     280,100      322,665
Total liabilities and stockholders'    $295,260   $314,134    $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                        Year Ended
              December 31,  September 30, December 31,  December    December
               2013          2013          2012          31, 2013    31, 2012
              (unaudited) (unaudited) (unaudited)            
GAAP net       $(11,902)   $(11,935)   $46         $(66,154) $4,520
(loss) income
Non-GAAP                                                         
adjustments:
Stock-based                                                      
compensation:
Cost of net    203          227          261          861        828
revenues
Research and   3,099        2,766        1,874        9,829      7,428
development
Sales and      561          510          609          1,885      2,288
marketing
General and    1,090        1,089        1,091        4,199      4,273
administrative
Total
stock-based    4,953        4,592        3,835        16,774     14,817
compensation
Amortization
of intangible                                                    
assets:
Cost of net    2,717        2,425        2,025        9,598      5,827
revenues
Operating      444          443          930          2,312      2,575
expenses
Transaction
and            --           --           61           244        4,545
integration
costs
Loss related
to equity      --           --           779          1,115      3,315
method
investment
Impairment of  --           --           --           4,780      --
investment
Adjustments to
the fair value
of PLX         --           --           201          (131)      431
acquisition
contingent
consideration
Income tax
effects of     --           --           (3,055)      --         (11,342)
pre-tax
adjustments
Cash tax
difference ^   (1,814)      (1,093)      1,848        (7,278)    8,204
(1)
Deferred tax
asset          --           --           --           26,695     --
valuation
allowance
Restructuring  --           (69)         897          1,694      897
charges ^ (2)
Total of
non-GAAP       6,300        6,298        7,521        55,803     29,269
adjustments
Non-GAAP net   $(5,602)    $(5,637)    $7,567      $(10,351) $33,789
(loss) income
                                                                
Weighted
average shares 91,293       91,069       88,912       90,494     88,164
(basic)
Adjustment for
dilutive       --           --           2,798        --         2,200
shares
Weighted
average shares 91,293       91,069       91,710       90,494     90,364
(diluted)
                                                                
GAAP net
(loss) income  $(0.13)     $(0.13)     $0.00       $(0.73)   $0.05
per share
(basic)
Non-GAAP
adjustments    0.07         0.07         0.08         0.62       0.32
detailed above
Non-GAAP net
(loss) income  $(0.06)     $(0.06)     $0.08       $(0.11)   $0.37
per share
(diluted)^


(1) The Company's non-GAAP net (loss) income per share is calculated using the
cash tax rate of (9)%, (4)%, and 13% for the three month periods ended
December 31, 2013, September 30, 2013, and December 31, 2012,
respectively.The Company's non-GAAP net (loss) income per share is calculated
using the cash tax rate of (11)% and 18% for the years ended December 31,2013
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 valuation allowances, the utilization of research and
development tax credits, and the utilization of loss carryforwards which have
had 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 December 31, September 30,
2013, and December 31, 2012 was approximately 10%, 7%, and (NM),
respectively.The Company's effective tax rate used for the purposes of
calculating GAAP net (loss) income for the years ended December 31, 2013 and
2012 was approximately (45)% and 48%, 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.In November, 2012, we incurred a restructuring charge of $0.9
million pursuant to a plan to rebalance our operations in an attempt to
leverage synergies from our acquisitions. This plan resulted in a reduction of
our personnel by 40 employees or approximately 6% 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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