Monolithic Power Systems, Inc.
Feb 3, 2011
PDF

Monolithic Power Systems Announces Results for the Quarter and Year Ended December 31, 2010

SAN JOSE, Calif., Feb. 3, 2011 /PRNewswire via COMTEX/ --

Monolithic Power Systems (MPS) (Nasdaq: MPWR), a leading fabless manufacturer of high-performance analog and mixed-signal semiconductors, today announced financial results for the quarter and year ended December 31, 2010.

The results for the quarter ended December 31, 2010 are as follows:

The results for the year ended December 31, 2010 are as follows:

"2010 was a growth year for MPS, and 2011 is a transitional year. We are now focused on our ongoing efforts to diversify into new markets, and improve our internal systems", said Michael Hsing, CEO of MPS. "And by the end of 2011, we will be better positioned for the future."

Business Outlook

The following are MPS' financial targets for the first quarter ending March 31, 2011:

(1) Non-GAAP net income, non-GAAP earnings, non-GAAP operating expenses and non-GAAP research and development and selling, general and administrative expense differ from net income, earnings, operating expenses, and research and development and selling, general and administrative expense determined in accordance with GAAP (Generally Accepted Accounting Principles in the United States). Non-GAAP net income for the quarter and year ended December 31, 2010 and 2009 excludes the effect of stock-based compensation expense and its related tax effect. Non-GAAP net income for the year ended December 31, 2009 also excludes a litigation provision reversal and its related tax effect. Non-GAAP operating expenses for the quarter and year ended December 31, 2010 and 2009 exclude the effect of stock-based compensation expense. Non-GAAP operating expenses for the year ended December 31, 2009 also excludes a litigation provision reversal. Projected non-GAAP research and development and selling, general and administrative 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. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. 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 financials measures used by MPS.

Conference Call

MPS plans to conduct an investor teleconference covering its quarter ended December 31, 2010 results at 2:00 p.m. PT / 5:00 p.m. ET today, February 3, 2011. 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 617-801-6888, code number 20214306. 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 forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, including, among other things, (i) projected revenues, gross margin, GAAP and non-GAAP research and development and selling, general and administrative expenses, stock-based compensation expense, litigation expense and non-GAAP tax rate for the quarter ending March 31, 2011, (ii) our outlook for the long term prospects of the company, including the prospects of our new product families, (iii) our ability to penetrate new markets and expand our market share, (iv) our expected pricing practices in 2011, (v) the seasonality of our business, (vi) our ability to reduce our manufacturing costs, and (vii) statements of the assumptions underlying or relating to any statement described in (i), (ii), (iii), (iv), (v) or (vi). 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 within the past 18 months, being different than expected; competition generally and the increasingly competitive nature of our industry; any market disruptions or interruptions in MPS' schedule of new product release development; adverse changes in production and testing efficiency of our products; adverse changes in government regulations in foreign countries where MPS has offices or operations; the effect of catastrophic events; adequate supply of our products from our third-party manufacturer; the risks, uncertainties and costs of litigation in which the Company is 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; difficulty in predicting or budgeting for future customer demand and channel inventories, expenses and financial contingencies; and other important risk factors identified in MPS' SEC filings, including, but not limited to, its Form 10-Q filed on November 3, 2010.

The forward-looking statements in this press release 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, Inc.

Monolithic Power Systems, Inc. (MPS) develops and markets proprietary, advanced analog and mixed-signal semiconductors. The company combines advanced process technology with its highly experienced analog designers to produce high-performance power management integrated circuits (ICs) for DC to DC converters, LED drivers, Cold Cathode Fluorescent Lamp (CCFL) backlight controllers, Class D audio amplifiers, and Linear ICs. MPS products are used extensively in computing and network communications products, LCD monitors and TVs, and a wide variety of consumer and portable electronics products. MPS partners with world-class manufacturing organizations to deliver top quality, ultra-compact, high-performance solutions through the most productive, cost-efficient channels. Founded in 1997 and headquartered in San Jose, California, the company has expanded its global presence with sales offices in Taiwan, China, Korea, Japan, and Europe, which operate under MPS International, Ltd.

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.

Consolidated Balance Sheets

(Unaudited, in thousands, except par value and share amounts)


December 31,


2010

2009

ASSETS



Current assets:



Cash and cash equivalents

$ 48,010

$ 46,717

Short-term investments

129,709

118,914

Accounts receivable, net of allowances of $0 in both 2010 and 2009

18,347

15,521

Inventories

25,789

19,616

Deferred income tax assets, net - current

204

5

Prepaid expenses and other current assets

2,314

2,726

Total current assets

224,373

203,499

Property and equipment, net

37,262

17,968

Long-term investments

19,180

19,445

Deferred income tax assets, net - long-term

39

175

Other assets

749

734

Total assets

$ 281,603

$ 241,821




LIABILITIES AND STOCKHOLDERS' EQUITY



Current liabilities:



Accounts payable

$ 8,979

$ 7,787

Accrued compensation and related benefits

8,792

8,454

Accrued liabilities

11,199

7,681

Total current liabilities

28,970

23,922




Non-current income tax liability

5,015

4,915

Other long-term liabilities

723

27

Total liabilities

34,708

28,864

Stockholders' equity:



Common stock, $0.001 par value, $35 and $35 in 2010 and 2009, respectively; shares authorized:
150,000,000; shares issued and outstanding: 35,063,033 and 35,165,316 in 2010 and 2009, respectively

178,269

175,518

Retained earnings

66,647

37,085

Accumulated other comprehensive income

1,979

354

Total stockholders' equity

246,895

212,957

Total liabilities and stockholders' equity

$ 281,603

$ 241,821

Consolidated Statement of Operations

(Unaudited, in thousands, except per share amounts)


Three months ended December 31,

Year ended December 31,


2010

2009

2010

2009











Revenue

$ 47,057

$ 46,547

$ 218,840

$ 165,008

Cost of revenue*

23,316

19,208

97,383

67,330






Gross profit

23,741

27,339

121,457

97,678

Operating expenses:





Research and development*

10,256

10,366

44,372

38,295

Selling, general and administrative*

8,865

10,185

41,169

36,752

Litigation expense

659

2,367

5,418

9,457

Litigation provision reversal, net

-

-

-

(6,356)






Total operating expenses

19,780

22,918

90,959

78,148






Income from operations

3,961

4,421

30,498

19,530

Other income (expense):





Interest and other income

231

220

1,156

1,047

Interest and other expense

(71)

(74)

(234)

(429)






Total other income, net

160

146

922

618






Income before income taxes

4,121

4,567

31,420

20,148

Income tax provision (benefit)

540

(87)

1,857

474






Net income

$ 3,581

$ 4,654

$ 29,563

$ 19,674

Basic net income per share

$ 0.10

$ 0.13

$ 0.83

$ 0.57

Diluted net income per share

$ 0.10

$ 0.12

$ 0.78

$ 0.54






Weighted average common shares
outstanding

35,420

34,987

35,830

34,310

Stock options

1,309

2,418

1,996

2,324

Diluted weighted-average common
equivalent shares outstanding

36,729

37,405

37,826

36,634






* Stock-based compensation has been included in the following line items:





Cost of revenue

$ 128

$ 29

$ 393

$ 246

Research and development

1,365

1,752

6,742

6,408

Selling, general and administrative

1,592

2,399

9,675

7,957

Total

$ 3,085

$ 4,180

$ 16,810

$ 14,611







Three months ended December 31,

Year ended December 31,


2010

2009

2010

2009






RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME

(in thousands, except per share amounts)






Net income

$ 3,581

$ 4,654

$ 29,563

$ 19,674

Net income as a percentage of revenue

7.61%

10.00%

13.51%

11.92%






Adjustments to reconcile net income to non-GAAP net income





Stock-based compensation

$ 3,085

$ 4,180

$ 16,810

$ 14,611

Litigation provision reversal, net

-

-

-

(6,356)

Tax effect

(0)

(1,180)

(1,760)

(3,076)

Non-GAAP net income

$ 6,666

$ 7,654

$ 44,613

$ 24,853

Non-GAAP net income as a percentage
of revenue

14.2%

16.4%

20.4%

15.1%






Non-GAAP earnings per share, excluding stock-based compensation and related tax effects:





Basic

$ 0.19

$ 0.22

$ 1.25

$ 0.72

Diluted

$ 0.18

$ 0.20

$ 1.18

$ 0.68






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





Basic

35,420

34,987

35,830

34,310

Diluted

36,729

37,405

37,826

36,634

RECONCILIATION OF OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES

(in thousands, except per share amounts)






Total operating expenses

$ 19,780

$ 22,918

$ 90,959

$ 78,148











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





Stock-based compensation

$ (2,957)

$ (4,151)

$ (16,417)

$ (14,365)

Litigation provision reversal, net

-

-

-

6,356

Non-GAAP operating expenses

$ 16,823

$ 18,767

$ 74,542

$ 70,139

RECONCILIATION OF OPERATING INCOME TO NON-GAAP OPERATING INCOME

(in thousands, except per share amounts)






Total operating income

$ 3,961

$ 4,421

$ 30,498

$ 19,530

Operating income as a percentage
of revenue

8.4%

9.5%

13.9%

11.8%






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





Stock-based compensation

$ 2,957

$ 4,151

$ 16,417

$ 14,365

Litigation provision reversal, net

-

-

-

(6,356)

Non-GAAP operating income

$ 6,918

$ 8,572

$ 46,915

$ 27,539

Non-GAAP operating income as a percentage of revenue

14.7%

18.4%

21.4%

16.7%

2011 First Quarter Outlook

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

(in thousands)





Three months ended March 31, 2011


Low

High

R&D and SG&A

$ 19,100

$ 20,500




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



Stock-based compensation

(2,800)

(3,200)

Non-GAAP R&D and SG&A

$ 16,300

$ 17,300

SOURCE Monolithic Power Systems, Inc.