Annual Report 2011

JI llIIlllH IIIII IHI II IffI I1I 11 31 oPI 12028299 EnabHng Connected Home Entertainment ANNUAL REPORT 2011 PavTV Indu.stry Iias snt .F1 fl E3.xcI.t.ic flti tre fflrrT t.i.on.at \N$tJI F1IOIE VKIhO Cflterlt 11 vidEo CrItr.C d.E\cs fl.OiE5 \itdED tIieir IJEt0rE. i.t rp id rowIh vicle .1CANfl VJiOLE ii ct 13I5IEtS rome netjcrk frq iSC.11J1 iEfl1E..t thc SE nd Ofl.31Z6d rnu scn3Cfl corist.Jr1nc iaDp.ucat.on.s 3. it...1 th ncieci i33tCr lrn3 tttVVL .r a.nct drive investment by our custuc srs in the market lead rv lii licon SnC t.bat Lint ropic OlO5iO uS dci tropics 5c1ii5imr5 betp tue nsf orrn tbe 0035 rat inf T3S.rrU0tUc1a atreaOy ton r1d in dv nd redu of mi Uions of bnmoes vjoridwirie into io bty efficient affordable a.nd oiied tctaolo finiine vcchcin 3ntr4c3pcinrnrnr network for tile di st.ri Li vii 015 FOR ENTROPIC ru iq itai content 2.011 WAS YEAR OF Eiurino 21db Pay nmciveri 10 t.0 reaiite hue prouaoers ririty RECORD ANANCIAL limO mu4 ACHIEVEMENTS AND services witti n.ew streaminri sewi or to sati.sfy consu 1iSOir tud for 1500055 to alt 3P rii.tai Owe ryjti roe anywhere CONTINUED ente.rtainnuen.t f4rn1ng upon iii rsmr sniccess vvith INNOVATION ACROSS mcdi moo PVIS and 3m nwminn Sect ye Pai ci erobraci non necte housebotds service or ovidems me nni OUR GLOBAL tile briticri Ii ow arcb tectnros to rmr.nntirr Ci istri rd oocso no PRODUCT LINES dat..a tb rouq ii out tile home On sotutio.n.s sit ett the center of lvi ti mi the on 10 43 4km welt rwttioned to continusi to bectef ft fr ow tile rnrrodncti rcri of nnrvv connected cmonsu rner devi 005 yyn.i vvtt.l cont rue aqqres.sivety .riclrccmcTk Lussc stiuSt.cie in qrreivtn opriortun 0312 o.uruuq end beyond as vve botisi ou customers 1110 iitit the increasino consurn rsr lbr.n f3r ent.erta in mont .51 nni nuul.t.nued ia detiveren to their choi rio nsf devicc On them tti 11 boliti t.i nnetabto. 01 cow in yearvvi.th stromj fine nciat Irot 110 and ha canoe sheer that prrividea sod cii foundation for future nfrout1i 201 W.ti 11 13 yiII 131 CV 10311130 tlFlClnCIOI aChI.000100n 011 130 1.1310.100 11 II II 11111 31 0001111 WinS p.altlneo.tl.i..pi and 11310 .1.111 111 311rat 1010 1.ln.ti.ttlves 131 43.31 cii Il/St 0dI 1301111 0.11 4511111 ttie \l13 tly pi0StInC1 11101111111 1/1 01 110 WE HAD OUR BEST if 11 101411 id 111113 11100 cash ucI cit $217 rnill.ion wt.n 10 Yea 050 11111.131 FULL-YEAR EVER 1idCV nO 14114 11 ha 113000 01310 1h/ CLOSNO THE YEAR 11 1V Ccii 11131 MCI 031.111 fl13 VIIj 111l 111 t11i.C 3110101111311 BY POSTNG RECORD 411101 1i..11i.1ii1i 1r..010 Stao.k Switch II tI .1111 Cl.SO 1rq .t dli ny i/P/Il 311111 We OF 10 REVENUE 11 In iT 3001000 the SCN Reac ow t1hc1111.11 Al/lean ad nj was tlnehst 11 hnth 1lon $241 MLUON 021 Ma cosine Awe n13i 111111 IMII t10S0 13100 IV i000ViltIOll Awai the 11 lv 111 114 hI ilIl II 1.01110 VI TI Ii had I.ieqo Rosiness 03111 il Ac1.Oitionailv 15111 0111300 1031011010 it0l iIiifl/Ii iixoai.s.ci.n 10110 tti.e open i.nq cit 01 13.0.111 lIft l00 111 1001.13 105.011C1111i111 10011101.1101 1o.catweOi nOd lfll4 VU Pool arid Ill 3ltiOn anstwni tOn ott.en yields onpcltn nity.. 1iI.0 t10rhitOI in ocoi.iriiI in 001 II OustIy iS 110 115 01/PliOli. in 2011... W11 51311/ 130 inoroase 11 .crriippli i.sntn in 00115n1nel 0oiTi10U il/do content 0ii l0ni...tiiOl..111 two dese ices home UI 130111 1115 tO 05010 ttletOp 01111 501 11.0.11111 11001 015111101.3 ill III 11 lii. II ndati 13 51 110111.13 11101111 11111113131 urparai.Ie.IecI 10llViOO 1.IiUdi.1IIV 511ttiI1311 the lIon 114 ti 11110131 sid 4141 ntn 1111 Id011i 10 .111 .....it.ci.i1t.ol 0.031 113 i.OtI/lat.IU 0.011 111 int.o /1 IlIOtIWOIR hitj 11111 nltullIli WhOiO..1t11111iO iIit 11 Itl 10 1111301 1013011 10 1111010 111111 video CV hIOllclCla.St.IItOillOtllitOll OOtIWCIIR5 01/nIl/ely demands OOniI1lItlf .7 01 51110011 Mo.i2 2C1 10.01111 thialI 111011 1111/1.1 Itll tlOllliIWiOth 571100 1115 i1diOlj 11.031 11 II iJI 11 11 11 111111 1ili1 1101 iIIb 11 ii IJI1l 4114 P111111111 li1 011311 ttlI11ljtlhihint 011011310 0511S h0ttlliI IIIIU 10 h..131t11.iti.ty 51101111/ 10 ill 111111131111 5.tI 11 lillaIlls alt i1i51 111 iIi.l Oacksva 1315 interopollhiilrilitv 11111 001111 13 nIiZimhl 31111111111 0005UiIi 31 THE NEW Vo PREMIERE EHIE BOXE USN ENTROPC MoCA SIHCON ARE NOW AVAftABLE AT MULI1PLE RETAIL AND ONHNE OUT ETS Ac net to Coax Adapter For Verizon HOS Subscribers verue MoCA to CREATER HDTV ANI MULTh SCREEN OPiKN Wftl DRIVE NEW tHE HOME ALL OF WH CH WILL CON1TJUE 3E KEY GF OWIH DRIVER ENTROHC UNITED STATES SEC SECURITIES AND EXCHANGE COMMISSNocessing Washington D.C 20549 Section Form 10-K APR 062012 Mark One EI ANNUAL REPORT PURSUANT TO SECTION 13 OR 15d OF THE SECURiTIES EXCHANGE ACT OF 1934 WashIngton oc For the fiscal year ended December 31 2011 405 or LI TRANSITION REPORT PURSUANT TO SECTION 13 OR 15d OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commissionfile number 001-33844 Entropic Communications Inc Exact Name of Registrant as Specified in Its Charter Delaware 33-0947630 State or Other Jurisdiction of I.R.S Employer Incorporation or Organization Identification No 6290 Sequence Drive San Diego CA 92121 Address of Principal Executive Offices Including Zip Code Registrants telephone number including area code 858 768-3600 Securities registered pursuant to Section 12b of the Act Title of Each Class Name of Each Exchange on Which Registered Common Stock par value $0.OO1 per share The NASDAQ Stock Market Securities registered pursuant to Section 12g of the Act None Indicate by check mark if the registrant is well-known seasoned issuer as defined in Rule 405 of the Securities Act Yes No E1 Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15d of the Act Yes No I1 Indicate by check mark whether the registrant has filed all reports required to be filed by Section 13 or 15d 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 has been subject to such filing requirements for the past 90 days Yes E1 No Indicate the submitted its if by check mark whether registrant has electronically and posted on corporate Web site any every Interactive Data File required to be submitted and posted 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 and post such files Yes No El Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K 229.405 of this chapter is not contained herein and will not be contained to the best of registrants knowledge in definitive proxy or information statements incorporated by reference in Part Ill of this Form 10-K or any amendment to this Form 10-K Indicate by check mark whether the registrant is large accelerated filer an accelerated filer non-accelerated filer or smaller reporting company See the definitions of large accelerated filer accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act Large accelerated filer El Accelerated filer El Non-accelerated filer El Do not check if smaller reporting company Smaller reporting company LI Indicate the is shell defined in Rule of the by check mark whether registrant company as 12b-2 Act Yes No ll As of June 30 2011 the last business day of the registrants most recently completed second fiscal quarter the aggregate market value of the registrants common stock held by non-affiliates of the registrant was $727.2 million based on the closing price of the registrants common stock on The NASDAQ Global Market of $8.89 per share on June 30 2011 There were 87213770 shares of the registrants common stock issued and outstanding as of January 31 2012 DOCUMENTS INCORPORATED BY REFERENCE from definitive Part Ill of this Annual Report on Form 10-K incorporates by reference certain information the registrants proxy statement for the registrants 2012 Annual Meeting of Stockholders to be filed within 120 days after the end of the registrants fiscal year ended December 31 2011 ENTROPIC COMMUNICATIONS INC ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED December 31 2011 TABLE OF CONTENTS Page PART Item Business Executive Officers of the Company 20 Item 1A Risk Factors 23 Item Unresolved Staff Comments 52 Item Properties 52 Item Legal Proceedings 52 Item Removed and Reserved 52 PART II Item Market for Registrants Common Equity Related Stockholder Matters and Issuer Purchases of Equity Securities 53 Item Selected Financial Data 55 Item Managements Discussion and Analysis of Financial Condition and Results of Operations 58 Item 7A Quantitative and Qualitative Disclosures about Market Risk 74 Item Financial Statements and Supplementary Data 75 Item Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 75 Item 9A Controls and Procedures 75 Item 9B Other Information 78 PART III Item 10 Directors Executive Officers and Corporate Governance 79 Item 11 Executive Compensation 79 Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 79 Item 13 Certain Relationships and Related Transactions and Director Independence 79 Item 14 Principal Accountant Fees and Services 80 PART IV Item 15 Exhibits Financial Statement Schedules 81 Signatures Entropic Entropic Communications c.LINK RF Magic and our logo are among the trademarks of Entropic Communications Inc and/or its affiliates in the United States and certain foreign countries Any other trademarks or trade

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