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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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☑ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended June 30, 2019
OR
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| |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Transition Period From to
Commission file number: 001-34666
MaxLinear Inc.
(Exact name of Registrant as specified in its charter)
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| | | | |
Delaware | | 14-1896129 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
| | | |
5966 La Place Court, Suite 100, | Carlsbad | California | | 92008 |
(Address of principal executive offices) | | (Zip Code) |
(760) 692-0711
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act: |
| | |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common stock | MXL | New York Stock Exchange |
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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| | | | | | | | | | |
Large accelerated filer | | ☑ | | Accelerated filer | | ☐ | | Emerging growth company | | ☐ |
Non-accelerated filer | | ☐ | | Smaller reporting company | | ☐ | | | |
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☑ No ☐
As of July 18, 2019, the registrant had 71,220,363 shares of common stock, par value $0.0001, outstanding.
MAXLINEAR, INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
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| | Page |
Part I | | |
Item 1. | | |
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| | |
| | |
| | |
| | |
Item 2. | | |
Item 3. | | |
Item 4. | | |
Part II | | |
Item 1. | | |
Item 1A. | | |
Item 2. | | |
Item 3. | | |
Item 4. | | |
Item 5. | | |
Item 6. | | |
| | |
PART I — FINANCIAL INFORMATION
| |
ITEM 1. | FINANCIAL STATEMENTS |
MAXLINEAR, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited; in thousands, except par value amounts) |
| | | | | | | |
| June 30, 2019 | | December 31, 2018 |
Assets | | | |
Current assets: | | | |
Cash and cash equivalents | $ | 66,629 |
| | $ | 73,142 |
|
Short-term restricted cash | 344 |
| | 645 |
|
Accounts receivable, net | 56,618 |
| | 59,491 |
|
Inventory | 42,875 |
| | 41,738 |
|
Prepaid expenses and other current assets | 6,184 |
| | 5,595 |
|
Total current assets | 172,650 |
| | 180,611 |
|
Long-term restricted cash | 65 |
| | 404 |
|
Property and equipment, net | 15,738 |
| | 18,404 |
|
Leased right-of-use assets | 20,624 |
| | — |
|
Intangible assets, net | 216,342 |
| | 244,900 |
|
Goodwill | 238,330 |
| | 238,330 |
|
Deferred tax assets | 62,667 |
| | 51,518 |
|
Other long-term assets | 2,744 |
| | 4,664 |
|
Total assets | $ | 729,160 |
| | $ | 738,831 |
|
Liabilities and stockholders’ equity | | | |
Current liabilities: | | | |
Accounts payable | $ | 16,995 |
| | $ | 15,588 |
|
Accrued price protection liability | 11,294 |
| | 16,454 |
|
Accrued expenses and other current liabilities | 30,300 |
| | 23,520 |
|
Accrued compensation | 8,329 |
| | 15,005 |
|
Total current liabilities | 66,918 |
| | 70,567 |
|
Long-term lease liabilities | 16,515 |
| | 4,097 |
|
Long-term debt | 226,335 |
| | 255,757 |
|
Other long-term liabilities | 8,016 |
| | 8,474 |
|
Total liabilities | 317,784 |
| | 338,895 |
|
| | | |
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 | 7 |
| | 7 |
|
Additional paid-in capital | 512,753 |
| | 493,287 |
|
Accumulated other comprehensive income (loss) | (406 | ) | | 272 |
|
Accumulated deficit | (100,978 | ) | | (93,630 | ) |
Total stockholders’ equity | 411,376 |
| | 399,936 |
|
Total liabilities and stockholders’ equity | $ | 729,160 |
| | $ | 738,831 |
|
See accompanying notes.
MAXLINEAR, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited; in thousands, except per share data)
|
| | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2019 | | 2018 | | 2019 | | 2018 |
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 | $ | (0.03 | ) | | $ | (0.21 | ) | | $ | (0.10 | ) | | $ | (0.18 | ) |
Diluted | $ | (0.03 | ) | | $ | (0.21 | ) | | $ | (0.10 | ) | | $ | (0.18 | ) |
Shares used to compute net loss per share: | | | | | | | |
Basic | 70,917 |
| | 68,335 |
| | 70,445 |
| | 68,008 |
|
Diluted | 70,917 |
| | 68,335 |
| | 70,445 |
| | 68,008 |
|
See accompanying notes.
MAXLINEAR, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited; in thousands)
|
| | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2019 | | 2018 | | 2019 | | 2018 |
Net 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 | ) |
See accompanying notes.
MAXLINEAR, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
THREE AND SIX MONTHS ENDED JUNE 30, 2019
(unaudited; in thousands)
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| | | | | | | | | | | | | | | | | | | | | | | |
| | Common Stock | | Additional Paid-In Capital | | Accumulated Other Comprehensive Income (Loss) | | Accumulated Deficit | | Total Stockholders’ Equity |
| | Shares | | Amount | | | | |
Balance at December 31, 2018 | | 69,551 |
| | $ | 7 |
| | $ | 493,287 |
| | $ | 272 |
| | $ | (93,630 | ) | | $ | 399,936 |
|
Common stock issued pursuant to equity awards, net | | 981 |
| | — |
| | 5,615 |
| | — |
| | — |
| | 5,615 |
|
Stock-based compensation | | — |
| | — |
| | 7,747 |
| | — |
| | — |
| | 7,747 |
|
Cumulative effect of adoption of new accounting principle | | — |
| | — |
| | — |
| | — |
| | (268 | ) | | (268 | ) |
Other comprehensive income | | — |
| | — |
| | — |
| | 25 |
| | — |
| | 25 |
|
Net loss | | — |
| | — |
| | — |
| | — |
| | (4,851 | ) | | (4,851 | ) |
Balance at March 31, 2019 | | 70,532 |
| | 7 |
| | 506,649 |
| | 297 |
| | (98,749 | ) | | 408,204 |
|
Common stock issued pursuant to equity awards, net | | 544 |
| | — |
| | (4,405 | ) | | — |
| | — |
| | (4,405 | ) |
Employee stock purchase plan | | 142 |
| | — |
| | 2,302 |
| | — |
| | — |
| | 2,302 |
|
Stock-based compensation | | — |
| | — |
| | 8,207 |
| | — |
| | — |
| | 8,207 |
|
Other comprehensive loss | | — |
| | — |
| | — |
| | (703 | ) | | — |
| | (703 | ) |
Net loss | | — |
| | — |
| | — |
| | — |
| | (2,229 | ) | | (2,229 | ) |
Balance at June 30, 2019 | | 71,218 |
| | $ | 7 |
| | $ | 512,753 |
| | $ | (406 | ) | | $ | (100,978 | ) | | $ | 411,376 |
|
See accompanying notes.
MAXLINEAR, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
THREE AND SIX MONTHS ENDED JUNE 30, 2018
(unaudited; in thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | Common Stock | | Additional Paid-In Capital | | Accumulated Other Comprehensive Income | | Accumulated Deficit | | Total Stockholders’ Equity |
| | Shares | | Amount | | | | |
Balance at December 31, 2017 | | 67,400 |
| | $ | 7 |
| | $ | 455,497 |
| | $ | 1,039 |
| | $ | (69,119 | ) | | $ | 387,424 |
|
Common stock issued pursuant to equity awards, net | | 691 |
| | — |
| | 5,586 |
| | — |
| | — |
| | 5,586 |
|
Stock-based compensation | | — |
| | — |
| | 8,473 |
| | — |
| | — |
| | 8,473 |
|
Cumulative effect of adoption of new accounting principles | | — |
| | — |
| | — |
| | — |
| | 1,529 |
| | 1,529 |
|
Other comprehensive income | | — |
| | — |
| | — |
| | 1,589 |
| | — |
| | 1,589 |
|
Net income | | — |
| | — |
| | — |
| | — |
| | 1,847 |
| | 1,847 |
|
Balance at March 31, 2018 | | 68,091 |
| | 7 |
| | 469,556 |
| | 2,628 |
| | (65,743 | ) | | 406,448 |
|
Common stock issued pursuant to equity awards, net | | 365 |
| | — |
| | (863 | ) | | — |
| | — |
| | (863 | ) |
Employee stock purchase plan | | 152 |
| | — |
| | 2,451 |
| | — |
| | — |
| | 2,451 |
|
Stock-based compensation | | — |
| | — |
| | 7,309 |
| | — |
| | — |
| | 7,309 |
|
Cumulative effect of adoption of new accounting principles | | — |
| | — |
| | — |
| | — |
| | 2 |
| | 2 |
|
Other comprehensive loss | | — |
| | — |
| | — |
| | (1,004 | ) | | — |
| | (1,004 | ) |
Net loss | | — |
| | — |
| | — |
| | — |
| | (14,422 | ) | | (14,422 | ) |
Balance at June 30, 2018 | | 68,608 |
| | $ | 7 |
| | $ | 478,453 |
| | $ | 1,624 |
| | $ | (80,163 | ) | | $ | 399,921 |
|
See accompanying notes.
MAXLINEAR, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited; in thousands) |
| | | | | | | |
| Six Months Ended June 30, |
2019 | | 2018 |
Operating Activities | | | |
Net loss | $ | (7,080 | ) | | $ | (12,575 | ) |
Adjustments to reconcile net loss to cash provided by operating activities: | | | |
Amortization and depreciation | 33,509 |
| | 40,135 |
|
Amortization of debt issuance costs and accretion of discount on debt and leases | 793 |
| | 574 |
|
Stock-based compensation | 15,954 |
| | 15,782 |
|
Deferred income taxes | (11,076 | ) | | (3,621 | ) |
Loss on disposal of property and equipment | 46 |
| | — |
|
Impairment of leasehold improvements | 1,442 |
| | 700 |
|
Impairment of long-lived assets | 2,182 |
| | — |
|
Gain on extinguishment of lease liabilities | (2,880 | ) | | — |
|
(Gain) loss on foreign currency | 513 |
| | (357 | ) |
Excess tax benefits on stock-based awards | (3,811 | ) | | (1,115 | ) |
Changes in operating assets and liabilities: | | | |
Accounts receivable | 2,880 |
| | (17,554 | ) |
Inventory | (1,137 | ) | | 9,096 |
|
Prepaid expenses and other assets | (44 | ) | | 3,216 |
|
Leased right-of-use assets | 1,626 |
| | — |
|
Accounts payable, accrued expenses and other current liabilities | 4,882 |
| | 11,119 |
|
Accrued compensation | 684 |
| | 3,903 |
|
Deferred revenue and deferred profit | — |
| | (138 | ) |
Accrued price protection liability | (5,160 | ) | | (1,491 | ) |
Lease liabilities | (4,304 | ) | | — |
|
Other long-term liabilities | (530 | ) | | 121 |
|
Net cash provided by operating activities | 28,489 |
| | 47,795 |
|
| | | |
Investing Activities | | | |
Purchases of property and equipment | (2,679 | ) | | (4,804 | ) |
Net cash used in investing activities | (2,679 | ) | | (4,804 | ) |
| | | |
Financing Activities | | | |
Repayment of debt | (30,000 | ) | | (43,000 | ) |
Net proceeds from issuance of common stock | 5,933 |
| | 4,016 |
|
Minimum tax withholding paid on behalf of employees for restricted stock units | (9,827 | ) | | (3,839 | ) |
Net cash used in financing activities | (33,894 | ) | | (42,823 | ) |
Effect of exchange rate changes on cash and cash equivalents | 931 |
| | 535 |
|
Increase (decrease) in cash, cash equivalents and restricted cash | (7,153 | ) | | 703 |
|
Cash, cash equivalents and restricted cash at beginning of period | 74,191 |
| | 74,412 |
|
Cash, cash equivalents and restricted cash at end of period | $ | 67,038 |
| | $ | 75,115 |
|
| | | |
Supplemental disclosures of cash flow information: | | | |
Cash paid for interest | $ | 6,184 |
| | $ | 7,145 |
|
Cash paid for income taxes | $ | 2,217 |
| | $ | 1,093 |
|
| | | |
Supplemental disclosures of non-cash activities: | | | |
Issuance of shares for payment of bonuses | $ | 7,406 |
| | $ | 6,997 |
|
See accompanying notes.
|
| | |
| MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) | |
1. 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.
|
| | |
| MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) | |
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.
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| MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) | |
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
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| MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) | |
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.
2. 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:
|
| | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2019 | | 2018 | | 2019 | | 2018 |
| (in thousands, except per share amounts) |
Numerator: | | | | | | | |
Net loss | $ | (2,229 | ) | | $ | (14,422 | ) | | $ | (7,080 | ) | | $ | (12,575 | ) |
Denominator: | | | | | | | |
Weighted average common shares outstanding—basic | 70,917 |
| | 68,335 |
| | 70,445 |
| | 68,008 |
|
Dilutive common stock equivalents | — |
| | — |
| | — |
| | — |
|
Weighted average common shares outstanding—diluted | 70,917 |
| | 68,335 |
| | 70,445 |
| | 68,008 |
|
Net loss per share: | | | | | | | |
Basic | $ | (0.03 | ) | | $ | (0.21 | ) | | $ | (0.10 | ) | | $ | (0.18 | ) |
Diluted | $ | (0.03 | ) | | $ | (0.21 | ) | | $ | (0.10 | ) | | $ | (0.18 | ) |
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.
3. 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.
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| MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) | |
The following table presents the activity related to the restructuring plans, which is included in restructuring charges in the consolidated statements of operations: |
| | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2019 | | 2018 | | 2019 | | 2018 |
| (in thousands) | | | | |
Employee separation expenses | $ | 402 |
| | $ | 271 |
| | $ | 874 |
| | $ | 271 |
|
Lease related charges | (44 | ) | | 1,594 |
| | 1,301 |
| | 1,594 |
|
Other | 58 |
| | — |
| | 158 |
| | — |
|
| $ | 416 |
| | $ | 1,865 |
| | $ | 2,333 |
| | $ | 1,865 |
|
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.
|
| | | | | | | | | | | | | | | |
| Employee Separation Expenses | | Lease Related Charges | | Other | | Total |
| (in thousands) |
Liability as of December 31, 2018 | $ | 409 |
| | $ | 1,490 |
| | $ | 47 |
| | $ | 1,946 |
|
Restructuring charges | 874 |
| | 1,301 |
| | 158 |
| | 2,333 |
|
Transfer to right-of-use asset | — |
| | (299 | ) | | — |
| | (299 | ) |
Cash payments | (1,195 | ) | | (1,589 | ) | | (134 | ) | | (2,918 | ) |
Non-cash charges | — |
| | 24 |
| | (41 | ) | | (17 | ) |
Liability as of June 30, 2019 | $ | 88 |
| | $ | 927 |
| | $ | 30 |
| | $ | 1,045 |
|
Remaining lease related charges as of June 30, 2019 primarily consist of common area maintenance obligations.
4. 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.
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| MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) | |
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:
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 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 | 3.7 | | $ | 2,070 |
| | $ | (1,378 | ) | | $ | 692 |
| | $ | 2,070 |
| | $ | (1,130 | ) | | $ | 940 |
|
Developed technology | 6.9 | | 240,461 |
| | (91,533 | ) | | 148,928 |
| | 238,961 |
| | (74,630 | ) | | 164,331 |
|
Trademarks and trade names | 6.1 | | 13,800 |
| | (5,381 | ) | | 8,419 |
| | 13,800 |
| | (4,252 | ) | | 9,548 |
|
Customer relationships | 4.6 | | 121,100 |
| | (65,747 | ) | | 55,353 |
| | 121,100 |
| | (55,647 | ) | | 65,453 |
|
Non-compete covenants | 3.0 | | 1,100 |
| | (1,050 | ) | | 50 |
| | 1,100 |
| | (872 | ) | | 228 |
|
| 6.1 | | $ | 378,531 |
| | $ | (165,089 | ) | | $ | 213,442 |
| | $ | 377,031 |
| | $ | (136,531 | ) | | $ | 240,500 |
|
The following table sets forth amortization expense associated with finite-lived intangible assets, which is included in the consolidated statements of operations as follows:
|
| | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2019 | | 2018 | | 2019 | | 2018 |
| (in thousands) | | (in thousands) |
Cost of net revenue | $ | 8,488 |
| | $ | 8,978 |
| | $ | 16,922 |
| | $ | 17,956 |
|
Research and development | 12 |
| | 42 |
| | 46 |
| | 84 |
|
Selling, general and administrative | 5,792 |
| | 7,994 |
| | 11,590 |
| | 15,988 |
|
| $ | 14,292 |
| | $ | 17,014 |
| | $ | 28,558 |
| | $ | 34,028 |
|
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:
|
| | | | | | | |
| Six Months Ended June 30, |
| 2019 | | 2018 |
| (in thousands) |
Beginning balance | $ | 240,500 |
| | $ | 310,645 |
|
Transfers to developed technology from IPR&D | 1,500 |
| | — |
|
Amortization | (28,558 | ) | | (34,028 | ) |
Ending balance | $ | 213,442 |
| | $ | 276,617 |
|
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.
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| MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) | |
The following table presents future amortization of the Company’s finite-lived intangible assets at June 30, 2019:
|
| | | |
| Amount |
| (in thousands) |
2019 (6 months) | $ | 28,423 |
|
2020 | 56,168 |
|
2021 | 55,385 |
|
2022 | 37,855 |
|
2023 | 25,660 |
|
Thereafter | 9,951 |
|
Total | $ | 213,442 |
|
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: |
| | | | | | | |
| Six Months Ended June 30, |
| 2019 | | 2018 |
| (in thousands) |
Beginning balance | $ | 4,400 |
| | $ | 4,400 |
|
Transfers to developed technology from IPR&D | (1,500 | ) | | — |
|
Ending balance | $ | 2,900 |
| | $ | 4,400 |
|
The Company performs its annual assessment of indefinite-lived intangible assets on October 31 each year or more frequently if events or changes in circumstances indicate that the asset might be impaired utilizing a qualitative test as a precursor to the quantitative test comparing the fair value of the assets with their carrying amount. Based on the qualitative test, if it is more likely than not that indicators of impairment exists, the Company proceeds to perform a quantitative analysis. During the three and six months ended June 30, 2019 and 2018, no indicators of impairment were identified and, as a result, no IPR&D impairment losses were recorded.
5. Financial Instruments
The composition of financial instruments is as follows:
|
| | | | | | | |
| June 30, 2019 | | December 31, 2018 |
| (in thousands) |
Assets | | | |
Interest rate swap | $ | 218 |
| | $ | 1,623 |
|
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.
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| MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) | |
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: |
| | | | | | | | | | | | | | | |
| | | 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 | $ | 218 |
| | $ | — |
| | $ | 218 |
| | $ | — |
|
Interest rate swap, December 31, 2018 | $ | 1,623 |
| | $ | — |
| | $ | 1,623 |
| | $ | — |
|
The following table summarizes activity for the interest rate swap: |
| | | | | | | |
| Six Months Ended |
| June 30, 2019 | | June 30, 2018 |
| (in thousands) |
Interest rate swap asset | | | |
Beginning balance | $ | 1,623 |
| | $ | 734 |
|
Unrealized gain (loss) recognized in other comprehensive income (loss) | (1,405 | ) | | 1,728 |
|
Ending balance | $ | 218 |
| | $ | 2,462 |
|
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).
6. Balance Sheet Details
Cash, cash equivalents and restricted cash consist of the following:
|
| | | | | | | |
| June 30, 2019 | | December 31, 2018 |
| (in thousands) |
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 |
|
|
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| MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) | |
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:
|
| | | | | | | |
| June 30, 2019 | | December 31, 2018 |
| (in thousands) |
Work-in-process | $ | 14,786 |
| | $ | 17,618 |
|
Finished goods | 28,089 |
| | 24,120 |
|
| $ | 42,875 |
| | $ | 41,738 |
|
Property and equipment, net consists of the following:
|
| | | | | | | | | |
| Useful Life (in Years) | | June 30, 2019 | | December 31, 2018 |
| | | (in thousands) |
Furniture and fixtures | 5 | | $ | 2,207 |
| | $ | 2,020 |
|
Machinery and equipment | 3-5 | | 35,123 |
| | 34,225 |
|
Masks and production equipment | 2-5 | | 12,713 |
| | 12,645 |
|
Software | 3 | | 5,658 |
| | 5,675 |
|
Leasehold improvements | 1-5 | | 16,208 |
| | 17,493 |
|
Construction in progress | N/A | | 299 |
| | 133 |
|
| | | 72,208 |
| | 72,191 |
|
Less accumulated depreciation and amortization | | | (56,470 | ) | | (53,787 | ) |
| | | $ | 15,738 |
| | $ | 18,404 |
|
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:
|
| | | | | | | |
| Six Months Ended June 30, |
| 2019 | | 2018 |
| (in thousands) |
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 |
|
|
| | |
| MAXLINEAR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) | |
Accrued expenses and other current liabilities consist of the following:
|
| | | | | | | |
| June 30, 2019 | | December 31, 2018 |
| (in thousands) |
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 |
|
Accrued obligations to customers for price adjustments | 7,062 |
| | 7,558 |
|
Accrued obligations to customers for stock rotation rights | 1,440 |
| | 1,494 |
|
Other | 420 |
| | 995 |
|
| $ | 30,300 |
| | $ | 23,520 |
|
The following table summarizes the change in balances of accumulated other comprehensive income (loss) by component: |
| | | | | | | | | | | |
| Cumulative Translation Adjustments | | Interest Rate Hedge | | Total |
| (in thousands) |
Balance at December 31, 2018 | $ | (907 | ) | | $ | 1,179 |
| | $ | 272 |
|
Current period other comprehensive income (loss) | 433 |
| | (1,111 | ) | | (678 | ) |
Balance at June 30, 2019 | $ | (474 | ) | |