Entropic Communications 8-K Regulation FD Disclosure

Exhibit 99.1

ENTROPIC COMMUNICATIONS, INC.

Non-GAAP Supplemental Financial Information

(Unaudited; in thousands, except percentage data)

The following table sets forth certain non-GAAP financial measures used in calculating Entropic’s non-GAAP net income (loss) for the periods presented. Such non-GAAP financial measures are based upon Entropic’s unaudited consolidated statements of operations for the periods presented and give effect to certain adjustments identified in the table. Such adjustments include the addition of RF Magic Inc.’s non-GAAP financial results as if the acquisition of RF Magic had occurred at the beginning of each period presented. The presentation of such non-GAAP financial 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. In addition, investors should not rely on the results of prior periods as an indication of Entropic’s future performance.

				2006															2007
	FY 2005			Q1			Q2			Q3			Q4			FY 2006			Q1			Q2			Q3			Q4			FY 2007
	(unaudited)			(unaudited)															(unaudited)
NET REVENUES:
GAAP net revenues	$	3,719		$	7,276		$	7,181		$	10,466		$	16,548		$	41,471		$	20,026		$	26,207		$	36,144		$	40,168		$	122,545
Add: RF Magic net revenues (pre-acquisition)		14,485			3,825			4,637			8,811			8,910			26,183			9,218			5,806			—			—			15,024
Non-GAAP net revenues	$	18,204		$	11,101		$	11,818		$	19,277		$	25,458		$	67,654		$	29,244		$	32,013		$	36,144		$	40,168		$	137,569
COST OF NET REVENUES:
GAAP cost of net revenues	$	1,979		$	5,091		$	5,552		$	7,743		$	12,713		$	31,099		$	14,531		$	17,961		$	21,999		$	21,705		$	76,196
Add: RF Magic non-GAAP cost of net revenues (pre-acquisition) (a)		6,035			1,812			2,083			3,068			3,614			10,577			2,818			2,613			—			—			5,431
Less:
Stock-based compensation expense		—			—			—			—			—			—			—			3			85			71			159
Amortization of developed technology		—			—			—			—			—			—			—			—			1,240			1,240			2,480
Amortization of inventory step-up		—			—			—			—			—			—			—			—			2,062			687			2,749
Non-GAAP cost of net revenues	$	8,014		$	6,903		$	7,635		$	10,811		$	16,327		$	41,676		$	17,349		$	20,571		$	18,612		$	19,707		$	76,239
GROSS PROFIT:
GAAP gross profit	$	1,740		$	2,185		$	1,629		$	2,723		$	3,835		$	10,372		$	5,495		$	8,246		$	14,145		$	18,463		$	46,349
Add:
RF Magic non-GAAP gross profit (pre-acquisition) (a)		8,450			2,013			2,554			5,743			5,296			15,606			6,400			3,193			—			—			9,593
Stock-based compensation expense		—			—			—			—			—			—			—			3			85			71			159
Amortization of developed technology		—			—			—			—			—			—			—			—			1,240			1,240			2,480
Amortization of inventory step-up		—			—			—			—			—			—			—			—			2,062			687			2,749
Non-GAAP gross profit	$	10,190		$	4,198		$	4,183		$	8,466		$	9,131		$	25,978		$	11,895		$	11,442		$	17,532		$	20,461		$	61,330
GAAP gross margin		46.8	%		30.0	%		22.7	%		26.0	%		23.2	%		25.0	%		27.4	%		31.5	%		39.1	%		46.0	%		37.8	%
Non-GAAP gross margin		56.0	%		37.8	%		35.4	%		43.9	%		35.9	%		38.4	%		40.7	%		35.7	%		48.5	%		50.9	%		44.6	%
OPERATING EXPENSES:
GAAP operating expenses	$	13,667		$	3,815		$	4,529		$	4,262		$	5,299		$	17,905		$	6,457		$	31,631		$	19,208		$	21,050		$	78,346
Add: RF Magic non-GAAP operating expenses (pre-acquisition) (a)		13,798			3,933			3,989			4,101			4,678			16,701			5,392			5,737			—			—			11,129
Less:
Stock-based compensation expense		26			2			22			50			148			222			140			728			2,869			2,622			6,359
Amortization of purchased intangibles		—			—			—			—			—			—			—			42			1,296			1,296			2,635
Write-off of acquired in-process research and development		—			—			—			—			—			—			—			21,400			—			—			21,400
Non-GAAP operating expenses	$	27,439		$	7,746		$	8,496		$	8,313		$	9,829		$	34,384		$	11,709		$	15,198		$	15,043		$	17,132		$	59,081
OTHER INCOME (EXPENSE), NET:
GAAP other income (expense), net and cumulative effect of change in accounting principle	$	(269	)	$	186		$	207		$	98		$	(9	)	$	482		$	(150	)	$	(337	)	$	(1,583	)	$	2,101		$	31
Add:
Loss (gain) on fair value of preferred stock warrant liabilities		(28	)		(3	)		20			157			227			401			271			340			1,395			(2,180	)		(173	)
RF Magic other income (expense), net (pre-acquisition)		99			—			(19	)		(23	)		(199	)		(241	)		(180	)		(209	)		—			—			(389	)
Non-GAAP other income (expense), net and cumulative effect of change in accounting principle	$	(198	)	$	183		$	208		$	232		$	19		$	642		$	(59	)	$	(206	)	$	(188	)	$	(79	)	$	(531	)
INCOME TAX PROVISION:
GAAP income tax provision	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Add: RF Magic income tax provision (pre-acquisition)		(49	)		(11	)		(12	)		(11	)		(15	)		(49	)		(21	)		(9	)		—			—			(30	)
Non-GAAP income tax provision	$	(49	)	$	(11	)	$	(12	)	$	(11	)	$	(15	)	$	(49	)	$	(21	)	$	(9	)	$	—		$	—		$	(30	)
ACCRETION OF REDEEMABLE CONVERTIBLE PREFERRED STOCK:
GAAP accretion of redeemable convertible preferred stock	$	(89	)	$	(32	)	$	(31	)	$	(32	)	$	(31	)	$	(126	)	$	(32	)	$	(31	)	$	(32	)	$	(23	)	$	(118	)
RESEARCH AND DEVELOPMENT EXPENSE:
GAAP research and development	$	9,574		$	2,540		$	2,841		$	2,771		$	3,449		$	11,601		$	4,190		$	6,699		$	11,923		$	12,423		$	35,235
Add: RF Magic non-GAAP research and development (pre-acquisition) (a)		9,824			2,614			2,673			2,730			3,128			11,145			3,241			3,485			—			—			6,726
Less: stock-based compensation expense		—			1			14			33			66			114			53			397			1,476			1,215			3,141
Non-GAAP research and development	$	19,398		$	5,153		$	5,500		$	5,468		$	6,511		$	22,632		$	7,378		$	9,787		$	10,447		$	11,208		$	38,820
SALES AND MARKETING EXPENSE:
GAAP sales and marketing	$	2,247		$	763		$	1,190		$	987		$	1,172		$	4,112		$	1,500		$	1,859		$	3,283		$	3,706		$	10,348
Add: RF Magic non-GAAP sales and marketing (pre-acquisition) (a)		2,107			869			831			934			1,032			3,666			1,157			1,252			—			—			2,409
Less: stock-based compensation expense		6			1			7			13			35			56			65			145			475			489			1,174
Non-GAAP sales and marketing	$	4,348		$	1,631		$	2,014		$	1,908		$	2,169		$	7,722		$	2,592		$	2,966		$	2,808		$	3,217		$	11,583
GENERAL AND ADMINISTRATIVE EXPENSE:
GAAP general and administrative	$	1,846		$	512		$	498		$	504		$	678		$	2,192		$	767		$	1,631		$	2,706		$	3,625		$	8,729
Add: RF Magic non-GAAP general and administrative (pre-acquisition) (a)		1,867			450			485			437			518			1,890			994			1,000			—			—			1,994
Less: stock-based compensation expense		20			—			1			4			47			52			22			186			918			918			2,044
Non-GAAP general and administrative	$	3,693		$	962		$	982		$	937		$	1,149		$	4,030		$	1,739		$	2,445		$	1,788		$	2,707		$	8,679

(a) Excludes RF Magic stock-based compensation expenses (pre-acquisition)