mpwr20191018_8k.htm
false 0001280452 0001280452 2019-10-22 2019-10-22

 



 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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):   October 22, 2019

 


 

MONOLITHIC POWER SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

 

000-51026

 

77-0466789

(State or other jurisdiction of

 

(Commission

 

(I.R.S. Employer

incorporation or organization)

 

File Number)

 

Identification Number)

 

4040 Lake Washington Blvd. NE, Suite 201, Kirkland, Washington 98033

(Address of principal executive offices) (Zip Code)

 

  (425296-9956

(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:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Exchange Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per share

MPWR

The NASDAQ Global Select Market

 

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

 

Emerging growth 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.  ☐

 



 

 

 

 

Item 2.02 Results of Operations and Financial Condition.

 

On October 22, 2019, Monolithic Power Systems, Inc. (“MPS”) issued a press release regarding its financial results for the quarter ended September 30, 2019. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated by reference herein.

 

The information under this Item 2.02 of this Current Report on Form 8-K and the exhibit attached hereto are being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “1934 Act”), nor shall they be deemed incorporated by reference in any filing with the Securities and Exchange Commission under the 1934 Act or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits.

 

 

Exhibit

  

Description

 

 

 

 

 

99.1

 

Press release issued on October 22, 2019.

 

 

 

 

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, thereunto duly authorized.

 

Date: October 22, 2019

By:

/s/ T. Bernie Blegen

 

 

 

T. Bernie Blegen

 

 

 

Chief Financial Officer

 

 

ex_160601.htm

Exhibit 99.1

 

 

PRESS RELEASE

 

For Immediate Release

 

 

 

Monolithic Power Systems Announces Results

for the Third Quarter Ended September 30, 2019

 

 

KIRKLAND, WASHINGTON, October 22, 2019--Monolithic Power Systems, Inc. (MPS) (Nasdaq: MPWR), a leading company in high performance analog solutions, today announced financial results for the quarter ended September 30, 2019.

 

The financial results for the quarter ended September 30, 2019 are as follows:

 

 

Revenue was $168.8 million for the quarter ended September 30, 2019, an 11.8% increase from $151.0 million for the quarter ended June 30, 2019 and a 5.5% increase from $160.0 million for the quarter ended September 30, 2018.

 

 

 

 

GAAP gross margin was 55.2% for the quarter ended September 30, 2019, compared with 55.6% for the quarter ended September 30, 2018.

 

 

 

 

Non-GAAP (1) gross margin was 55.6% for the quarter ended September 30, 2019, excluding the impact of $0.6 million for stock-based compensation expense, compared with 56.1% for the quarter ended September 30, 2018, excluding the impact of $0.5 million for stock-based compensation expense and $0.2 million for the amortization of acquisition-related intangible assets.

 

 

 

 

GAAP operating expenses were $63.1 million for the quarter ended September 30, 2019, compared with $55.5 million for the quarter ended September 30, 2018.

 

 

 

 

Non-GAAP (1) operating expenses were $42.5 million for the quarter ended September 30, 2019, excluding $20.7 million for stock-based compensation expense, compared with $40.5 million for the quarter ended September 30, 2018, excluding $14.4 million for stock-based compensation expense and $0.7 million for deferred compensation plan expense.

 

 

 

 

GAAP operating income was $30.0 million for the quarter ended September 30, 2019, compared with $33.5 million for the quarter ended September 30, 2018.

 

 

 

 

Non-GAAP (1) operating income was $51.4 million for the quarter ended September 30, 2019, excluding $21.3 million for stock-based compensation expense, compared with $49.2 million for the quarter ended September 30, 2018, excluding $14.8 million for stock-based compensation expense, $0.2 million for the amortization of acquisition-related intangible assets and $0.7 million for deferred compensation plan expense.

 

 

 

 

GAAP interest and other income, net was $2.3 million for the quarter ended September 30, 2019, compared with $2.7 million for the quarter ended September 30, 2018.

 

 

 

 

 

Non-GAAP (1) interest and other income, net was $2.2 million for the quarter ended September 30, 2019, excluding $0.1 million for deferred compensation plan income, compared with $2.0 million for the quarter ended September 30, 2018, excluding $0.7 million for deferred compensation plan income.

 

 

 

 

GAAP income before income taxes was $32.3 million for the quarter ended September 30, 2019, compared with $36.2 million for the quarter ended September 30, 2018.

 

 

 

 

Non-GAAP (1) income before income taxes was $53.5 million for the quarter ended September 30, 2019, excluding $21.3 million for stock-based compensation expense and $0.1 million for deferred compensation plan income, compared with $51.2 million for the quarter ended September 30, 2018, excluding $14.8 million for stock-based compensation expense, $0.2 million for the amortization of acquisition-related intangible assets, and $0.1 million for deferred compensation plan income.

 

 

 

 

GAAP net income was $29.5 million and GAAP earnings per share were $0.64 per diluted share for the quarter ended September 30, 2019. Comparatively, GAAP net income was $31.6 million and GAAP earnings per share were $0.71 per diluted share for the quarter ended September 30, 2018.

 

 

 

 

Non-GAAP (1) net income was $49.5 million and non-GAAP earnings per share were $1.08 per diluted share for the quarter ended September 30, 2019, excluding stock-based compensation expense, amortization of acquisition-related intangible assets, net deferred compensation plan income and related tax effects, compared with non-GAAP net income of $47.3 million and non-GAAP earnings per share of $1.06 per diluted share for the quarter ended September 30, 2018, excluding stock-based compensation expense, amortization of acquisition-related intangible assets, net deferred compensation plan income and related tax effects.

 

The financial results for the nine months ended September 30, 2019 are as follows:

 

 

Revenue was $461.2 million for the nine months ended September 30, 2019, a 7.5% increase from $428.9 million for the nine months ended September 30, 2018.

 

 

 

 

GAAP gross margin was 55.2% for the nine months ended September 30, 2019, compared with 55.5% for the nine months ended September 30, 2018.

 

 

 

 

Non-GAAP (1) gross margin was 55.6% for the nine months ended September 30, 2019, excluding the impact of $1.8 million for stock-based compensation expense and $0.1 million for the amortization of acquisition-related intangible assets, compared with 56.0% for the nine months ended September 30, 2018, excluding the impact of $1.4 million for stock-based compensation expense and $0.6 million for the amortization of acquisition-related intangible assets.

 

 

 

 

GAAP operating expenses were $182.5 million for the nine months ended September 30, 2019, compared with $157.7 million for the nine months ended September 30, 2018.

 

 

 

 

Non-GAAP (1) operating expenses were $121.8 million for the nine months ended September 30, 2019, excluding $58.2 million for stock-based compensation expense and $2.6 million for deferred compensation plan expense, compared with $112.4 million for the nine months ended September 30, 2018, excluding $44.4 million for stock-based compensation expense and $0.9 million for deferred compensation plan expense.

 

 

 

 

GAAP operating income was $71.9 million for the nine months ended September 30, 2019, compared with $80.4 million for the nine months ended September 30, 2018.

 

 

 

 

Non-GAAP (1) operating income was $134.6 million for the nine months ended September 30, 2019, excluding $60.0 million for stock-based compensation expense, $0.1 million for the amortization of acquisition-related intangible assets and $2.6 million for deferred compensation plan expense, compared with $127.7 million for the nine months ended September 30, 2018, excluding $45.8 million for stock-based compensation expense, $0.6 million for the amortization of acquisition-related intangible assets, and $0.9 million for deferred compensation plan expense.

 

 

 

 

GAAP interest and other income, net was $7.8 million for the nine months ended September 30, 2019, compared with $5.4 million for the nine months ended September 30, 2018.

 

 

 

 

 

Non-GAAP (1) interest and other income, net was $5.2 million for the nine months ended September 30, 2019, excluding $2.6 million for deferred compensation plan income, compared with $4.4 million for the nine months ended September 30, 2018, excluding $0.9 million for deferred compensation plan income.

 

 

 

 

GAAP income before income taxes was $79.7 million for the nine months ended September 30, 2019, compared with $85.8 million for the nine months ended September 30, 2018.

 

 

 

 

Non-GAAP (1) income before income taxes was $139.8 million for the nine months ended September 30, 2019, excluding $60.0 million for stock-based compensation expense and $0.1 million for the amortization of acquisition-related intangible assets, compared with $132.2 million for the nine months ended September 30, 2018, excluding $45.8 million for stock-based compensation expense and $0.6 million for the amortization of acquisition-related intangible assets.

 

 

GAAP net income was $76.4 million and GAAP earnings per share were $1.68 per diluted share for the nine months ended September 30, 2019. Comparatively, GAAP net income was $77.6 million and GAAP earnings per share were $1.75 per diluted share for the nine months ended September 30, 2018.

 

 

 

 

Non-GAAP (1) net income was $129.3 million and non-GAAP earnings per share were $2.84 per diluted share for the nine months ended September 30, 2019, excluding stock-based compensation expense, amortization of acquisition-related intangible assets, net deferred compensation plan income and related tax effects, compared with non-GAAP net income of $122.3 million and non-GAAP earnings per share of $2.75 per diluted share for the nine months ended September 30, 2018, excluding stock-based compensation expense, amortization of acquisition-related intangible assets, net deferred compensation plan income and related tax effects.

 

The following is a summary of revenue by end market for the periods indicated (in thousands):

 

   

Three Months Ended September 30,

   

Nine Months Ended September 30,

 

End Market

 

2019

   

2018

   

2019

   

2018

 

Computing and storage

  $ 52,793     $ 47,658     $ 133,571     $ 115,584  

Automotive

    24,432       19,785       66,174       57,857  

Industrial

    28,862       24,869       72,640       61,544  

Communications

    18,778       19,158       62,928       50,442  

Consumer

    43,948       48,505       125,870       143,458  

Total

  $ 168,813     $ 159,975     $ 461,183     $ 428,885  

 

The following is a summary of revenue by product family for the periods indicated (in thousands):

 

   

Three Months Ended September 30,

   

Nine Months Ended September 30,

 

Product Family

 

2019

   

2018

   

2019

   

2018

 

DC to DC

  $ 159,723     $ 147,727     $ 432,125     $ 394,492  

Lighting Control

    9,090       12,248       29,058       34,393  

Total

  $ 168,813     $ 159,975     $ 461,183     $ 428,885  

 

“We will continue to execute and deliver the results that speak for themselves," said Michael Hsing, CEO and founder of MPS.

 

Business Outlook

 

The following are MPS’ financial targets for the fourth quarter ending December 31, 2019:

 

 

Revenue in the range of $160 million to $166 million.

 

 

GAAP gross margin between 54.8% and 55.4%. Non-GAAP (1) gross margin between 55.2% and 55.8%, which excludes an estimated impact of stock-based compensation expenses of 0.4%.

 

 

GAAP research and development (“R&D”) and selling, general and administrative (“SG&A”) expenses between $56.2 million and $60.2 million. Non-GAAP (1) R&D and SG&A expenses between $38.5 million and $40.5 million, which excludes an estimate of stock-based compensation expenses in the range of $17.7 million to $19.7 million.

 

 

Total stock-based compensation expense of $18.3 million to $20.3 million.

  

 

 

 

 

Litigation expenses ranging between $0.8 million and $1.2 million.

 

 

Interest income of $1.4 million to $1.6 million.

 

 

Fully diluted shares outstanding between 45.8 million and 46.8 million.

 

(1) Non-GAAP net income, non-GAAP earnings per share, non-GAAP gross margin, non-GAAP R&D and SG&A expenses, non-GAAP operating expenses, non-GAAP interest and other income, net, non-GAAP operating income and non-GAAP income before taxes differ from net income, earnings per share, gross margin, R&D and SG&A expenses, operating expenses, interest and other income, net, operating income and income before taxes determined in accordance with Generally Accepted Accounting Principles in the United States (GAAP). Non-GAAP net income and non-GAAP earnings per share exclude the effect of stock-based compensation expense, amortization of acquisition-related intangible assets, deferred compensation plan income/expense and related tax effects. Non-GAAP gross margin excludes the effect of stock-based compensation expense, amortization of acquisition-related intangible assets and deferred compensation plan income/expense. Non-GAAP operating expenses exclude the effect of stock-based compensation expense and deferred compensation plan income/expense. Non-GAAP interest and other income, net excludes the effect of deferred compensation plan income/expense. Non-GAAP operating income excludes the effect of stock-based compensation expense, amortization of acquisition-related intangible assets and deferred compensation plan income/expense. Non-GAAP income before taxes excludes the effect of stock-based compensation expense, amortization of acquisition-related intangible assets and deferred compensation plan income/expense. Projected non-GAAP gross margin excludes the effect of stock-based compensation expense. Projected non-GAAP R&D and SG&A expenses exclude the effect of stock-based compensation expense. These non-GAAP financial measures are not prepared in accordance with GAAP and should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. A schedule reconciling non-GAAP financial measures is included at the end of this press release. MPS utilizes both GAAP and non-GAAP financial measures to assess what it believes to be its core operating performance and to evaluate and manage its internal business and assist in making financial operating decisions. MPS believes that the inclusion of non-GAAP financial measures, together with GAAP measures, provides investors with an alternative presentation useful to investors' understanding of MPS' core operating results and trends. Additionally, MPS believes that the inclusion of non-GAAP measures, together with GAAP measures, provides investors with an additional dimension of comparability to similar companies. However, investors should be aware that non-GAAP financial measures utilized by other companies are not likely to be comparable in most cases to the non-GAAP financial measures used by MPS.  

 

Conference Call

MPS plans to conduct an investor teleconference covering its financial results at 3:00 p.m. PT / 6:00 p.m. ET, October 22, 2019. To access the conference call and the following replay of the conference call, go to http://ir.monolithicpower.com and click on the webcast link. From this site, you can listen to the teleconference, assuming that your computer system is configured properly. In addition to the webcast replay, which will be archived for all investors for one year on the MPS website, a phone replay will be available for seven days after the live call at (404) 537-3406, code number 8743388. This press release and any other information related to the call will also be posted on the website.

 

Safe Harbor Statement

This press release contains, and statements that will be made during the accompanying teleconference will contain, forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, including, among other things, (i) projected revenues, GAAP and non-GAAP gross margin, GAAP and non-GAAP R&D and SG&A expenses, stock-based compensation expenses, litigation expenses, interest and other income, and diluted shares outstanding, (ii) our outlook for the long-term prospects of the company, including our performance against our business plan, revenue growth in certain of our market segments, our continued investment into R&D, expected revenue growth, customers' acceptance of our new product offerings, the prospects of our new product development, and our expectations regarding market and industry segment trends and prospects, (iii) our ability to penetrate new markets and expand our market share, (iv) the seasonality of our business, (v) our ability to reduce our expenses, and (vi) statements of the assumptions underlying or relating to any statement described in (i), (ii), (iii), (iv), or (v). These forward-looking statements are not historical facts or guarantees of future performance or events, are based on current expectations, estimates, beliefs, assumptions, goals, and objectives, and involve significant known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from the results expressed by these statements. Readers of this press release and listeners to the accompanying conference call are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. Factors that could cause actual results to differ include, but are not limited to, our ability to attract new customers and retain existing customers; acceptance of, or demand for, MPS' products, in particular the new products launched recently, being different than expected; our ability to efficiently and effectively develop new products and receive a return on our R&D expense investment; our ability to increase market share in our targeted markets; competition generally and the increasingly competitive nature of our industry; any market disruptions or interruptions in MPS' schedule of new product development releases; adverse changes in production and testing efficiency of our products; our ability to realize the anticipated benefits of companies and products that we acquire, and our ability to effectively and efficiently integrate these acquired companies and products into our operations; our ability to manage our inventory levels; the effect of export controls, trade and economic sanctions regulations and other regulatory or contractual limitations on our ability to sell or develop our products in certain foreign markets, particularly in China; our ability to obtain governmental licenses and approvals for international trading activities or technology transfers, including export licenses; adverse changes in laws and government regulations such as tariffs on imports of foreign goods, export regulations and export classifications, including in foreign countries where MPS has offices or operations; adverse events arising from orders of governmental entities, including such orders that impact our customers, and adopting of new or amended accounting standards; the effect of catastrophic events; adequate supply of our products from our third-party manufacturing partners; the risks, uncertainties and costs of litigation in which we are involved; the outcome of any upcoming trials, hearings, motions and appeals; the adverse impact on MPS' financial performance if its tax and litigation provisions are inadequate; adverse changes or developments in the semiconductor industry generally, which is cyclical in nature, and our ability to adjust our operations to address such changes or developments; difficulty in predicting or budgeting for future customer demand and channel inventories, expenses and financial contingencies; the ongoing consolidation of companies in the semiconductor industry; and other important risk factors identified in MPS' Securities and Exchange Commission (SEC) filings, including, but not limited to, our annual report on Form 10-K filed with the SEC on March 1, 2019, and our quarterly report on Form 10-Q filed with the SEC on August 2, 2019. The forward-looking statements in this press release and statements made during the accompanying teleconference represent MPS' projections and current expectations, as of the date hereof, not predictions of actual performance. MPS assumes no obligation to update the information in this press release or in the accompanying conference call.

  

 

 

 

About Monolithic Power Systems

Monolithic Power Systems, Inc. (MPS) provides small, highly energy efficient, easy-to-use power solutions for systems found in industrial applications, telecom infrastructures, cloud computing, automotive, and consumer applications. MPS' mission is to reduce total energy consumption in its customers' systems with green, practical, compact solutions. The company was founded by Michael Hsing in 1997 and is based in the United States. MPS can be contacted through its website at www.monolithicpower.com or its support offices around the world.

 

Monolithic Power Systems, MPS, and the MPS logo are registered trademarks of Monolithic Power Systems, Inc. in the U.S. and trademarked in certain other countries.

 

Contact:

Bernie Blegen

Chief Financial Officer

Monolithic Power Systems, Inc.

408-826-0777

investors@monolithicpower.com

 

 

 

 

Monolithic Power Systems, Inc.

Condensed Consolidated Balance Sheets

(Unaudited, in thousands, except par value) 

 

   

September 30,

   

December 31,

 
   

2019

   

2018

 

ASSETS

               

Current assets:

               

Cash and cash equivalents

  $ 205,229     $ 172,704  

Short-term investments

    213,511       204,577  

Accounts receivable, net

    58,261       55,214  

Inventories

    135,634       136,384  

Other current assets

    16,660       11,931  

Total current assets

    629,295       580,810  

Property and equipment, net

    217,043       150,001  

Long-term investments

    3,264       3,241  

Goodwill

    6,571       6,571  

Deferred tax assets, net

    16,619       16,830  

Other long-term assets

    43,343       35,979  

Total assets

  $ 916,135     $ 793,432  
                 

LIABILITIES AND STOCKHOLDERS’ EQUITY

               

Current liabilities:

               

Accounts payable

  $ 30,318     $ 22,678  

Accrued compensation and related benefits

    28,724       18,799  

Other accrued liabilities

    45,984       38,962  

Total current liabilities

    105,026       80,439  

Income tax liabilities

    32,402       34,375  

Other long-term liabilities

    44,279       38,525  

Total liabilities

    181,707       153,339  

Commitments and contingencies

               

Stockholders' equity:

               

Common stock and additional paid-in capital: $0.001 par value; shares authorized: 150,000; shares issued and outstanding: 43,435 and 42,505, respectively

    528,775       450,908  

Retained earnings

    215,692       194,728  

Accumulated other comprehensive loss

    (10,039 )     (5,543 )

Total stockholders’ equity

    734,428       640,093  

Total liabilities and stockholders’ equity

  $ 916,135     $ 793,432  

 

 

 

 

Monolithic Power Systems, Inc.

Condensed Consolidated Statements of Operations

(Unaudited, in thousands, except per share amounts) 

 

   

Three Months Ended September 30,

   

Nine Months Ended September 30,

 
   

2019

   

2018

   

2019

   

2018

 

Revenue

  $ 168,813     $ 159,975     $ 461,183     $ 428,885  

Cost of revenue

    75,655       70,957       206,794       190,810  

Gross profit

    93,158       89,018       254,389       238,075  

Operating expenses:

                               

Research and development

    27,742       25,630       80,746       70,720  

Selling, general and administrative

    34,692       29,552       100,302       85,431  

Litigation expense

    692       343       1,473       1,513  

Total operating expenses

    63,126       55,525       182,521       157,664  

Income from operations

    30,032       33,493       71,868       80,411  

Interest and other income, net

    2,257       2,714       7,827       5,387  

Income before income taxes

    32,289       36,207       79,695       85,798  

Income tax expense

    2,761       4,639       3,293       8,168  

Net income

  $ 29,528     $ 31,568     $ 76,402     $ 77,630  
                                 

Net income per share:

                               

Basic

  $ 0.68     $ 0.75     $ 1.77     $ 1.84  

Diluted

  $ 0.64     $ 0.71     $ 1.68     $ 1.75  

Weighted-average shares outstanding:

                               

Basic

    43,308       42,362       43,055       42,173  

Diluted

    45,833       44,669       45,516       44,450  

 

 

 

 

SUPPLEMENTAL FINANCIAL INFORMATION 

STOCK-BASED COMPENSATION EXPENSE

(Unaudited, in thousands)

 
   

Three Months Ended September 30,

   

Nine Months Ended September 30,

 
   

2019

   

2018

   

2019

   

2018

 

Cost of revenue

  $ 641     $ 471     $ 1,834     $ 1,384  

Research and development

    4,960       3,979       14,801       12,168  

Selling, general and administrative

    15,699       10,393       43,384       32,213  

Total stock-based compensation expense

  $ 21,300     $ 14,843     $ 60,019     $ 45,765  

 

 

 

 

RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME

(Unaudited, in thousands, except per share amounts)

   

Three Months Ended September 30,

   

Nine Months Ended September 30,

 
   

2019

   

2018

   

2019

   

2018

 

Net income

  $ 29,528     $ 31,568     $ 76,402     $ 77,630  

Net income as a percentage of revenue

    17.5 %     19.7 %     16.6 %     18.1 %
                                 

Adjustments to reconcile net income to non-GAAP net income:

                               

Stock-based compensation expense

    21,300       14,843       60,019       45,765  

Amortization of acquisition-related intangible assets

    8       197       110       644  

Deferred compensation plan income

    (61 )     (66 )     (46 )     (26 )

Tax effect

    (1,254 )     800       (7,190 )     (1,746 )

Non-GAAP net income

  $ 49,521     $ 47,342     $ 129,295     $ 122,267  

Non-GAAP net income as a percentage of revenue

    29.3 %     29.6 %     28.0 %     28.5 %
                                 

Non-GAAP net income per share:

                               

Basic

  $ 1.14     $ 1.12     $ 3.00     $ 2.90  

Diluted

  $ 1.08     $ 1.06     $ 2.84     $ 2.75  
                                 

Shares used in the calculation of non-GAAP net income per share:

                               

Basic

    43,308       42,362       43,055       42,173  

Diluted

    45,833       44,669       45,516       44,450  

 

 

 

 

RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN

(Unaudited, in thousands)

   

Three Months Ended September 30,

   

Nine Months Ended September 30,

 
   

2019

   

2018

   

2019

   

2018

 

Gross profit

  $ 93,158     $ 89,018     $ 254,389     $ 238,075  

Gross margin

    55.2 %     55.6 %     55.2 %     55.5 %
                                 

Adjustments to reconcile gross profit to non-GAAP gross profit:

                         

Stock-based compensation expense

    641       471       1,834       1,384  

Deferred compensation plan expense

    25       -       25       -  

Amortization of acquisition-related intangible assets

    8       197       110       644  

Non-GAAP gross profit

  $ 93,832     $ 89,686     $ 256,358     $ 240,103  

Non-GAAP gross margin

    55.6 %     56.1 %     55.6 %     56.0 %

 

RECONCILIATION OF OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES

(Unaudited, in thousands)

   

Three Months Ended September 30,

   

Nine Months Ended September 30,

 
   

2019

   

2018

   

2019

   

2018

 

Total operating expenses

  $ 63,126     $ 55,525     $ 182,521     $ 157,664  
                                 

Adjustments to reconcile total operating expenses to non-GAAP total operating expenses:

                 

Stock-based compensation expense

    (20,659 )     (14,372 )     (58,185 )     (44,381 )

Deferred compensation plan (expense) income

    13       (650 )     (2,558 )     (923 )

Non-GAAP operating expenses

  $ 42,480     $ 40,503     $ 121,778     $ 112,360  

 

RECONCILIATION OF OPERATING INCOME TO NON-GAAP OPERATING INCOME

(Unaudited, in thousands)

   

Three Months Ended September 30,

   

Nine Months Ended September 30,

 
   

2019

   

2018

   

2019

   

2018

 

Total operating income

  $ 30,032     $ 33,493     $ 71,868     $ 80,411  
                                 

Adjustments to reconcile total operating income to non-GAAP total operating income:

           

Stock-based compensation expense

    21,300       14,843       60,019       45,765  

Amortization of acquisition-related intangible assets

    8       197       110       644  

Deferred compensation plan expense

    12       650       2,584       923  

Non-GAAP operating income

  $ 51,352     $ 49,183     $ 134,581     $ 127,743  

 

RECONCILIATION OF INTEREST AND OTHER INCOME, NET, TO NON-GAAP INTEREST AND OTHER INCOME, NET

(Unaudited, in thousands)

   

Three Months Ended September 30,

   

Nine Months Ended September 30,

 
   

2019

   

2018

   

2019

   

2018

 

Total interest and other income, net

  $ 2,257     $ 2,714     $ 7,827     $ 5,387  
                                 

Adjustments to reconcile interest and other income to non-GAAP interest and other income:

             

Deferred compensation plan income

    (74 )     (716 )     (2,630 )     (949 )

Non-GAAP interest and other income, net

  $ 2,183     $ 1,998     $ 5,197     $ 4,438  

 

RECONCILIATION OF INCOME BEFORE INCOME TAXES TO NON-GAAP INCOME BEFORE INCOME TAXES

(Unaudited, in thousands)

   

Three Months Ended September 30,

   

Nine Months Ended September 30,

 
   

2019

   

2018

   

2019

   

2018

 

Total income before income taxes

  $ 32,289     $ 36,207     $ 79,695     $ 85,798  
                                 

Adjustments to reconcile income before income taxes to non-GAAP income before income taxes:

                 

Stock-based compensation expense

    21,300       14,843       60,019       45,765  

Amortization of acquisition-related intangible assets

    8       197       110       644  

Deferred compensation plan income

    (61 )     (66 )     (46 )     (26 )

Non-GAAP income before income taxes

  $ 53,536     $ 51,181     $ 139,778     $ 132,181  

 

 

 

 

2019 FOURTH QUARTER OUTLOOK

       

RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN

(Unaudited)

   

Three Months Ending

 
   

December 31, 2019

 
   

Low

   

High

 

Gross margin

    54.8 %     55.4 %

Adjustments to reconcile gross margin to non-GAAP gross margin:

               

Stock-based compensation expense

    0.4 %     0.4 %

Non-GAAP gross margin

    55.2 %     55.8 %

 

RECONCILIATION OF R&D AND SG&A EXPENSES TO NON-GAAP R&D AND SG&A EXPENSES

(Unaudited, in thousands)

   

Three Months Ending

 
   

December 31, 2019

 
   

Low

   

High

 

R&D and SG&A expense

  $ 56,200     $ 60,200  

Adjustments to reconcile R&D and SG&A expense to non-GAAP R&D and SG&A expense:

               

Stock-based compensation expense

    (17,700 )     (19,700 )

Non-GAAP R&D and SG&A expense

  $ 38,500     $ 40,500