UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

——————————————

FORM 8-K

——————————————

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): July 30, 2014

——————————————

ENTROPIC COMMUNICATIONS, INC.

(Exact Name of Registrant as Specified in Its Charter)

——————————————

Delaware	001-33844	33-0947630
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

6290 Sequence Drive

San Diego, CA 92121

(Address of Principal Executive Offices and Zip Code)

(858) 768-3600

(Registrant's Telephone Number, Including Area Code)

——————————————

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

---

Item 2.02.    Results of Operations and Financial Condition.

On July 30, 2014, Entropic Communications, Inc., a Delaware corporation, issued a press release announcing, among other things, its financial results for the three and six months ended June 30, 2014. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K. The information in this Item 2.02 and Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any registration statement or other document filed with the Securities and Exchange Commission, whether filed before or after the date hereof, and regardless of any general incorporation language in any such filing.

Item 9.01.    Financial Statements and Exhibits.

(d) Exhibits

Number    Description

99.1    Press Release of Entropic Communications, Inc. dated July 30, 2014.

---

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereto duly authorized.

			ENTROPIC COMMUNICATIONS, INC.
Dated:	July 30, 2014	By:	/s/ Lance W. Bridges
			Lance W. Bridges, Esq. Senior Vice President and General Counsel

---

EXHIBIT INDEX

Number	Description
99.1	Press Release of Entropic Communications, Inc. dated July 30, 2014.

---

	Exhibit 99.1

Entropic Reports Second Quarter 2014 Results

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

SAN DIEGO, July 30, 2014 - Entropic (NASDAQ: ENTR), a world leader in semiconductor solutions for the connected home, today reported its second quarter results for the period ended June 30, 2014. Entropic reported second quarter net revenues of $50.2 million. This compares to net revenues of $55.7 million in the first quarter of 2014, and $70.6 million in the second quarter of 2013.

In accordance with U.S. generally accepted accounting principles (GAAP), the Company's second quarter net loss was $21.8 million, or $(0.24) per share (basic and diluted). This compares with GAAP net loss of $23.3 million, or $(0.26) per share (basic and diluted) in the first quarter of 2014, and GAAP net loss of $39.9 million, or $(0.44) per share (basic and diluted) in the second quarter of 2013.

Non-GAAP net loss in the second quarter was $10.4 million, or $(0.12) per share (basic and diluted), compared to non-GAAP net loss of $15.3 million, or $(0.17) per share (basic and diluted) in the first quarter of 2014, and non-GAAP net income of $0.6 million, or $0.01 (basic and diluted), in the second quarter of 2013.

“We are actively taking steps to improve our overall financial position while we work to ramp existing design-wins and pursue new designs that will drive future revenue growth,” said Patrick Henry, president and chief executive officer, Entropic. “In early June, we implemented a plan to lower our operating expenses and drive deeper engineering and operational efficiencies in order to accelerate our path to profitability. We believe these actions, coupled with a healthy design-win pipeline and strong product roadmap, will allow us to transition the company to the next stage of growth.”

		Three Months Ended
(In millions, except per share data)		June 30, 2014				March 31, 2014				June 30, 2013
Net revenues		$	50.2			$	55.7			$	70.6
GAAP net loss		$	(21.8	)		$	(23.3	)		$	(39.9	)
GAAP net loss per share (basic and diluted)		$	(0.24	)		$	(0.26	)		$	(0.44	)
Non-GAAP net (loss) income1		$	(10.4	)		$	(15.3	)		$	0.6
Non-GAAP net (loss) income per share1 (diluted)		$	(0.12	)		$	(0.17	)		$	0.01

1. Please refer to “Non-GAAP Financial Measures” below and the financial statements portion of this press release for an explanation of the non-GAAP financial measures contained in the table above and a reconciliation of such measures to the comparable GAAP financial measures.

---

RECENT HIGHLIGHTS

Corporate News

•	On June 9, 2014, Entropic Announced its Plan to Sharpen its Engineering and R&D Resource Focus and Consolidate Global Offices to Improve Efficiencies and Reduce Costs

 

Awards and Milestones

•	Entropic’s EN2810, its Second-generation, Single-chip Multimedia over Coax Alliance (MoCA®) 2.0 System Solution, Received a 2014 Cable Spotlight Product of the Year Award from Cable.TMCnet.com, a TMC Sponsored Cable Technology Website

Technology Innovation

•	Entropic Unveiled its EN5500-series, which is Recognized as the Industry's Lowest Power, Smallest Size and Highest Performance Digital Channel Stacking Switch (dCSS) Integrated Circuits (ICs) for the Worldwide Direct Broadcast Satellite Market

New Designs

•	Inverto Developed its Unicable II Digital Satellite Outdoor Unit Products Featuring Entropic's EN5520, which is Part of Entropic’s Advanced Second-Generation dCSS Product Family

New Partnerships    

•	Entropic and Cryptography Research, the Security Division of Rambus (NASDAQ:RMBS) Signed a Patent License Agreement Allowing for the Use of the Cryptography Research Side-channel Attack Countermeasures in Entropic's ICs

•	Entropic Selected OmniPhy’s High-Speed Physical Interface Solution for its Next-Generation Set-top Box System-on-a-Chip Designs

•	Entropic Licensed Excellicon’s Constraints Products to Develop a Robust, Efficient Timing Constraint Development Methodology for its Build Flow

For More Information

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

Teleconference:         888-680-0890

Access Code:        68776322

Web Broadcast:         http://events.entropic.com/

Replay:             888-286-8010

Replay Passcode:    37340882

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.

---

Non-GAAP Financial Measures

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

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

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

Forward-Looking Statements

Statements in this press release that are not strictly historical in nature constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.  Such statements include, but are not limited to, statements regarding our financial position, our design wins and engineering and operational efficiencies and our ability to drive future revenue growth and accelerate our path to profitability. 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; and other factors discussed in the "Risk Factors" section of Entropic's Quarterly Report on Form 10-Q for the quarter ended March 31, 2014.  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.

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

# # #

---

ENTROPIC COMMUNICATIONS, INC.

GAAP Condensed Consolidated Statements of Operations

(In thousands, except for per share information)

	Three Months Ended												Six Months Ended
	June 30, 2014				March 31, 2014				June 30, 2013				June 30, 2014				June 30, 2013
	(unaudited)				(unaudited)				(unaudited)				(unaudited)				(unaudited)
Net revenues	$	50,200			$	55,655			$	70,612			$	105,855			$	145,069
Cost of net revenues	26,662				29,593				36,356				56,255				75,974
Gross profit	23,538				26,062				34,256				49,600				69,095
Operating expenses:
Research and development	31,216				35,266				28,334				66,482				56,404
Sales and marketing	5,878				7,445				6,017				13,323				12,472
General and administrative	6,121				6,132				5,456				12,253				11,539
Amortization of intangibles	290				443				495				733				1,425
Restructuring charges	1,796				—				1,763				1,796				1,763
Total operating expenses	45,301				49,286				42,065				94,587				83,603
Loss from operations	(21,763		)		(23,224		)		(7,809		)		(44,987		)		(14,508		)
Loss related to equity method investment	—				—				(335		)		—				(1,115		)
Impairment of investment	—				—				(4,780		)		—				(4,780		)
Other income, net	192				81				255				273				683
Loss before income taxes	(21,571		)		(23,143		)		(12,669		)		(44,714		)		(19,720		)
Income tax provision	278				110				27,244				388				22,597
Net loss	$	(21,849	)		$	(23,253	)		$	(39,913	)		$	(45,102	)		$	(42,317	)
Net loss per share - basic and diluted	$	(0.24	)		$	(0.26	)		$	(0.44	)		$	(0.50	)		$	(0.47	)
Weighted average number of shares used to compute net loss per share - basic and diluted	89,566				89,705				90,281				89,635				89,795

---

ENTROPIC COMMUNICATIONS, INC.

GAAP Condensed Consolidated Balance Sheets

(In thousands)

	June 30, 2014				March 31, 2014				December 31, 2013
	(unaudited)				(unaudited)				(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	11,054			$	11,453			$	16,298
Marketable securities	73,835				94,821				71,922
Accounts receivable	30,879				33,726				30,204
Inventory	13,907				14,479				13,503
Deferred tax assets, current	51				51				51
Prepaid expenses and other current assets	17,797				18,706				18,739
Total current assets	147,523				173,236				150,717
Property and equipment, net	19,454				18,174				17,994
Long-term marketable securities	36,005				30,740				69,534
Intangible assets, net	41,159				44,166				47,326
Goodwill	4,688				4,688				4,688
Other long-term assets	5,734				4,767				5,001
Total assets	$	254,563			$	275,771			$	295,260
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	10,522			$	15,225			$	8,601
Accrued expenses and other current liabilities	6,380				5,711				6,318
Accrued payroll and benefits	8,525				8,489				7,077
Total current liabilities	25,427				29,425				21,996
Deferred rent	1,991				1,858				1,751
Other long-term liabilities	2,060				1,848				1,688
Stockholders' equity	225,085				242,640				269,825
Total liabilities and stockholders' equity	$	254,563			$	275,771			$	295,260

---

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 (loss) income and net (loss) 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 (loss) income and net (loss) 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												Six Months Ended
	June 30, 2014				March 31, 2014				June 30, 2013				June 30, 2014				June 30, 2013
	(unaudited)				(unaudited)				(unaudited)				(unaudited)				(unaudited)
GAAP net loss	$	(21,849	)		$	(23,253	)		$	(39,913	)		$	(45,102	)		$	(42,317	)
Non-GAAP adjustments:
Stock-based compensation:
Cost of net revenues	88				167				230				255				431
Research and development	3,535				3,202				1,975				6,737				3,964
Sales and marketing	772				562				516				1,334				814
General and administrative	1,167				937				1,054				2,104				2,020
Total stock-based compensation	5,562				4,868				3,775				10,430				7,229
Amortization of intangible assets:
Cost of net revenues	2,717				2,717				2,228				5,434				4,456
Operating expenses	290				443				495				733				1,425
Transaction and integration costs	—				—				244				—				244
Loss related to equity method investment	—				—				335				—				1,115
Impairment of investment	—				—				4,780				—				4,780
Adjustments to the fair value of PLX acquisition contingent consideration	—				—				(143		)		—				(131		)
Income tax effects of pre-tax adjustments	—				—				2,591				—				—
Cash tax difference (1)	134				(113		)		(2,274		)		21				(4,371		)
Deferred tax asset valuation allowance	—				—				26,695				—				26,695
IP litigation costs (2)	935				21				—				956				—
Restructuring charges (3)	1,796				—				1,763				1,796				1,763
Total of non-GAAP adjustments	11,434				7,936				40,489				19,370				43,205
Non-GAAP net (loss) income	$	(10,415	)		$	(15,317	)		$	576			$	(25,732	)		$	888
Weighted average shares (basic)	89,566				89,705				90,281				89,635				89,795
Adjustment for dilutive shares	—				—				2,152				—				2,500
Weighted average shares (diluted)	89,566				89,705				92,433				89,635				92,295
GAAP net loss per share (basic and diluted)	$	(0.24	)		$	(0.26	)		$	(0.44	)		$	(0.50	)		$	(0.47	)
Non-GAAP adjustments detailed above	0.12				0.09				0.45				0.21				0.48
Non-GAAP net (loss) income per share (diluted)	$	(0.12	)		$	(0.17	)		$	0.01			$	(0.29	)		$	0.01

(1)    Non-GAAP net (loss) income per share is calculated using the cash tax rate of (1)%, (1)%, and 29% for the three month periods ended June 30, 2014, March 31, 2014 and June 30, 2013, respectively, and (1)% and 24% for the six month periods ended June 30, 2014 and 2013, respectively. The estimated cash tax rate is the estimated tax payable on our projected tax returns as a percentage of estimated annual non-GAAP pre-tax net income (loss). We use an estimated cash tax rate to adjust for the historical variation in the effective book tax rate associated with the valuation allowance adjustments, the utilization of research and development tax credits, and the utilization of loss carryforwards which currently have an overall effect of reducing taxes payable. We believe that the cash tax rate provides a more transparent view of our operating results. The effective tax rate used for the purposes of calculating GAAP net loss was (1)%, 0%, and (215)% for the three month periods ended June 30, 2014, March 31, 2014 and June 30, 2013, respectively, and (1)% and (115)% for the six month periods ended June 30, 2014 and 2013, respectively.

(2)    While litigation may arise in the ordinary course of our business, we nevertheless consider the current IP litigation to be an unusual, non-recurring and unplanned activity and therefore exclude this charge when presenting non-GAAP financial measures.

(3)    In June 2014, we announced a corporate restructuring plan to accelerate our path to profitability. The restructuring plan includes the closures and consolidations of several global facilities including facilities located in Austin, Texas; India; Taiwan and Israel. We expect that approximately 150 positions will be eliminated in connection with the restructuring plan, representing about 23% of our work force. We recorded restructuring charges of $1.8 million during the three months ended June 30, 2014. We expect to incur a total restructuring charge of approximately $6.4 million, the majority of which is expected to be cash expenditures.

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 work force.