Edgar Filing: ENTROPIC COMMUNICATIONS INC

425

SILICON SOLUTIONS

FOR CONNECTED HOME

ENTERTAINMENT

Filed by Entropic Communications, Inc.

Pursuant to Rule 425 under the Securities Act of 1933

and deemed filed pursuant to Rule 14a-12

under the Securities Exchange Act of 1934

Subject Company: Entropic Communications, Inc.

Commission File No.: 001-33844

February

3, 2015

Forward Looking Statements

These slides and the accompanying oral presentation contain forward-looking statements and information. The use of words such as

“may,”

“might,”

“will,”

“should,”

“expect,”

“plan,”

“anticipate,”

“believe,”

“estimate,”

“project,”

“intend,”

“future,”

“potential”

or “continue,”

and other similar expressions, are intended to identify forward looking statements. All of these forward-looking statements are based

on estimates and assumptions by our management that, although we

believe to be reasonable, are inherently uncertain. Forward-

looking statements involve risks and uncertainties, including, but not limited to, economic, competitive, governmental and technological

factors outside of our control, that may cause our business, industry, strategy or actual results to differ materially from the forward-

looking

statements.

These

risks

and

uncertainties

may

include

those

discussed

under

the

heading

“Risk

Factors”

the

Company’s

most recent registration statement on Form 10K on file with the Securities and Exchange Commission, and other factors which may not

be known to us. Any forward-looking statement speaks only as of its date. We undertake no obligation to publicly update or revise any

forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.

Regulation G Reconciliation

During the course of this presentation, we may refer to historical and forward-looking non-GAAP financial measures. A reconciliation of

historical non-GAAP financial measures with the most directly comparable GAAP financial measures can be found on our web site at

www.entropic.com in the “Investor Relations”

section. We have not provided a reconciliation of forward-looking non-GAAP financial

measures due to the difficulty in forecasting and quantifying the amounts that would be required to be included in the comparable

GAAP measure that are dependent upon future market conditions and valuations.

SAFE HARBOR

STATEMENTS

FOR ADDITIONAL INFO

Where You Can Find Additional Information

In connection with Entropic’s pending acquisition by MaxLinear, MaxLinear will file a registration statement on Form S-4 containing a joint proxy

statement/prospectus of Entropic and MaxLinear and other documents concerning the proposed acquisition with the Securities and Exchange

Commission (the "SEC"). ENTROPIC URGES INVESTORS TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND THESE OTHER

MATERIALS CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT

ENTROPIC, MAXLINEAR AND THE PROPOSED TRANSACTION. Investors may obtain free copies of the proxy statement/prospectus (when

available) and other documents filed by Entropic and MaxLinear with the SEC at the SEC’s website at www.sec.gov. Free copies of the joint proxy

statement/prospectus (when available) and Entropic’s other SEC filings are also available on Entropic’s website at http://www.entropic.com/.

Entropic, MaxLinear and their respective directors, executive officers, certain members of management and certain employees may be deemed,

under SEC rules, to be participants in the solicitation of proxies with respect to the proposed transaction. Information regarding Entropic’s officers

and directors is included in Entropic’s Definitive Proxy Statement on Schedule 14A filed with the SEC on April 3, 2014 with respect to its 2014 Annual

Meeting of Stockholders. This document is available free of charge at the SEC’s website at www.sec.gov or by going to Entropic’s Investors page on

its corporate website at http://www.entropic.com/. Information regarding MaxLinear’s officers and directors is included in MaxLinear’s Definitive Proxy

Statement on Schedule 14A filed with the SEC on April 17, 2014 with respect to its 2014 Annual Meeting of Stockholders. This document is available

free of charge at the SEC’s website at www.sec.gov or by going to MaxLinear’s Investors page on its corporate website at www.MaxLinear.com.

Additional information regarding the persons who may, under the rules of the SEC, be deemed participants in the solicitation of proxies in connection

with the proposed merger, and a description of their direct and indirect interests in the proposed merger, which may differ from the interests of

Entropic stockholders or MaxLinear stockholders generally, will be set forth in the joint proxy statement/prospectus when it is filed with the SEC.

CONNECTED HOME

ENTERTAINMENT

SILICON SOLUTIONS

transforming the way digital entertainment is

DELIVERED,

CONNECTED

and

CONSUMED…

at home and on the go

Note: All financial information is non-GAAP

FABLESS SEMICONDUCTOR

COMPANY

•

Founded 2001, IPO 2007

•

$43M Revenue, $106M Cash, $0 Debt (4Q14)

•

1,500+ Patents Issued and Pending

POST-RESTRUCTURING

ENTROPIC

(Plan Completion: 1Q15)

•

$40M Quarterly Break-even Revenue

•

1Q15 Profitability

•

>$100M Cash Balance Target

RENEWED FOCUS

•

Pursue long-term large market opportunity in Connectivity

•

Support existing STB SoC design wins in 3+ years time horizon

•

No new STB SoC development

PENDING ACQUISITION

•

Entropic to be Acquired by Maxlinear

NASDAQ:

ENTR

OVERVIEW OF ACQUISITION

Acquisition

Value

Pro Forma

Ownership

Closing

Conditions and

Timing

Estimated

Synergies and

EPS Accretion

Merger

Consideration

–

$3.01

per

Entropic

based

MaxLinear’s

closing

price

2/2/15

–

Approximately

$287M

equity

value

and

$181M

enterprise

value

–

MaxLinear

shareholders

will

own

65%

and

Entropic

shareholders

will

own

35%

pro

forma

common

outstanding

–

Dr.

Ted

Tewksbury

will

join

MaxLinear’s

Board

Directors

–

$20M of

estimated

cost

synergies

first

full

calendar

year

post-close

–

Expected

immediately

accretive

non-GAAP

EPS

–

Closing

conditions

include

approval

MaxLinear

and

Entropic

shareholders

well

customary

regulatory

approvals

–

Expected

2015

–

$1.20 in cash and 0.2200 shares of MXL common stock per ENTR share

–

MaxLinear will assume outstanding and unvested options and RSUs

STRATEGIC RATIONALE

Strengthens and deepens analog / mixed-signal and RF engineering

expertise with complementary teams

Strengthens IP position with extensive patent portfolio

Financially compelling: scale, synergies and non-GAAP EPS accretion

Enhances position in connected home with MoCA and adds leading

signal processing technology for infrastructure markets

Greatly increases relevance to tier-1 customers

EXPANDS REACH FROM THE CLOUD, INTO AND

THROUGHOUT THE CONNECTED HOME

COMBINED CAPABILITIES

Full Spectrum

Capture

Mixed-Signal

Home

Networking

Cable Infrastructure

Optical Datacom &

Telecom Network

Wideband

OFDM/OFDMA

Modem

High Speed MAC

H/W & S/W

High Speed MAC

Hi-Frequency RF

(0-to-90GHz)

Gigabit QoS

Wireless

Infrastructure

Direct Broadcast Satellite Outdoor Unit Single-Cable Solutions /

Broadband Access Solutions

MoCA

Silicon and Software Solutions for Operators & Retail

Set-Top Box System-on-a-Chip Solutions

KEY

DIFFERENTIATORS

Entropic’s differentiated analog/mixed-signal technology and DSP

revolutionizes the way industry defines new system solutions by

delivering ultra-low power to Full-Band Capture applications

DELIVER

CONNECT

CONSUME

As the founder of MoCA, Entropic’s market leadership and RF proficiency

combined with a full systems approach provides unmatched and proven

in-home connectivity experiences

Entropic’s superior software and open architecture domain

expertise ensures a full system advantage across its video

SoC product roadmap

ECOSYSTEM &

INDUSTRY PARTNERS

Develop Technology for

SERVICE PROVIDERS

Sell System Solutions to

OEMS/ODMS

Have the Right Relationships & Industry

PARTNERS

WHAT MOVES

THE MARKET

ADVANCED SERVICES

OTT APPLICATIONS

DIGITAL CONTENT

CONNECTED DEVICES

MORE . . .

DBS ODU

MoCA

Access

MoCA

STB SoC

MoCA

STB SoC

MoCA

STB SoC

ABUNDANT CONTENT OPPORTUNITY

LARGE MARKET OPPORTUNITY

Adding

BROADBAND

access longer term

•

MoCA DISCRETE

–

Wireless extension and Over-the-Top

–

More connected devices and services

•

DBS ODU

–

Transition to digital CSS

–

Efficient channel capture and delivery

•

BROADBAND ACCESS

–

High-speed broadband –

drive to 1Gbps

•

VIDEO SOC

–

Bandwidth reclamation with HD-DTA

–

Hybrid IP Set-top boxes

2015

2018

$1.1B

$800M

REVENUE

$43.2

$42.6

$45.5

in millions

GROSS MARGINS

58.8%

56%

53%

OPERATING EXPENSE

$35.4

$29.9

$20.5

in millions

OPERATING MARGIN

(23%)

(15%)

CASH

$107

$106

$103

in millions

3Q14

1Q15E

(Guidance Midpoint)

(1) Actual

results

and

guidance

are

non-GAAP

and

last

provided

Company

February

2015

FINANCIAL

HIGHLIGHTS

(Non-GAAP)

4Q14

DIFFERENTIATED CORE COMPENTENCIES

STRONG CUSTOMER AND PARTNER RELATIONSHIPS

INTERSECTING PARADIGM SHIFT

LARGE AND RAPIDLY GROWING MARKET

STRONG LEADERSHIP AND INNOVATION CAPABILITY

POSITIONED TO

WIN

WWW.ENTROPIC.COM

GAAP to Non-GAAP

RECONCILIATIONS

Q1 '13

Q2 '13

Q3 '13

Q4 '13

2013

Q1 '14

Q2 '14

Q3 '14

Q4 '14

2014

GAAP Gross Profit

34.8

34.3

27.5

27.8

124.4

26.1

23.5

22.6

21.1

93.3

Stock-based Compensation

0.2

0.9

0.2

0.1

0.4

Amortization of Developed Technology

2.2

2.4

2.7

9.6

2.7

10.9

Non-GAAP Gross Profit

37.2

36.7

30.1

30.7

134.9

29.0

26.3

25.4

23.9

104.6

GAAP Gross Margin

46.7%

48.6%

48.8%

48.0%

46.9%

46.8%

52.3%

49.5%

48.7%

Non-GAAP Gross Margin

49.9%

52.0%

53.5%

53.0%

52.0%

52.1%

52.4%

58.8%

56.0%

54.6%

GAAP Research and Development Expense

28.1

28.3

28.5

29.6

114.5

35.3

31.2

29.1

21.7

117.2

Stock-Based Compensation

(2.0)

(2.8)

(3.1)

(9.8)

(3.2)

(3.5)

(2.9)

(1.1)

(10.7)

Non-GAAP Research and Development Expense

26.1

26.3

25.7

26.5

104.7

32.1

27.7

26.2

20.6

106.5

GAAP Sales, General and Administrative Expense

12.5

11.5

11.9

11.4

47.3

13.6

12.0

11.4

10.7

47.6

Stock-Based Compensation

(1.3)

(1.6)

(1.7)

(6.1)

(1.5)

(1.9)

(1.6)

(6.6)

Transaction and due diligence costs

(0.2)

IP litigation costs

(0.9)

(0.6)

0.2

(1.4)

Non-GAAP Sales, General and Administrative Expense

11.2

9.7

10.3

9.7

41.0

12.1

9.2

9.3

39.6

GAAP Operating Margin

(6.7)

(7.8)

(13.3)

(13.7)

(41.4)

(23.2)

(21.8)

(27.7)

(25.2)

(97.9)

Amortization of Intangible Assets

3.2

2.7

2.9

3.2

11.9

3.2

3.0

12.1

Stock-Based Compensation

3.5

3.8

4.6

5.0

16.8

4.9

5.6

4.6

2.7

17.8

Due Diligence-Related Costs

0.2

IP litigation costs

0.9

0.6

(0.2)

1.4

Restructuring Charge

1.8

(0.1)

1.7

1.8

2.2

8.4

12.4

Impairment of Assets

7.4

5.3

12.7

Non-GAAP Operating Margin

0.7

(5.9)

(5.5)

(10.8)

(15.1)

(10.5)

(9.9)

(6.0)

(41.5)

GAAP Operating Margin

-9.0%

-11.0%

-23.6%

-16.0%

-41.7%

-43.4%

-64.1%

-59.3%

-51.1%

Non-GAAP Operating Margin

0.0%

1.0%

-10.5%

-9.6%

-4.2%

-27.1%

-20.9%

-22.9%

-26.1%

-29.0%

Note: Amounts may not reconcile exactly due to rounding differences

Operating Model ($M)