Monolithic Power Systems, Inc.
Apr 29, 2010
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Monolithic Power Systems Announces Results for the Quarter Ended March 31, 2010

SAN JOSE, Calif., April 29, 2010 /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 ended March 31, 2010.

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

"MPS had unprecedented growth in what is historically our weakest quarter," said Michael Hsing, CEO of MPS. "I am very proud of the MPS team, as we quickly reacted to a strong market and were able to grow revenues to over $50 million in our first fiscal quarter."

Business Outlook

The following are MPS' financial targets for the second quarter ending June 30, 2010:

(1) Non-GAAP net income, non-GAAP operating expenses and non-GAAP research and development and selling, general and administrative expense differ from net income, 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 ended March 31, 2010 and 2009 excludes the effect of stock-based compensation expense and their related tax effects. Non-GAAP operating expenses for the quarter ended March 31, 2010 and 2009 exclude the effect of stock-based compensation expense. Projected non-GAAP research and development and selling, general and administrative expenses exclude the effect of stock-based compensation expense. A schedule reconciling these amounts 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 March 31, 2010 results at 2:00 p.m. PT / 5:00 p.m. ET today, April 29, 2010. 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 12024973. 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, regarding, among other things, (i) targeted revenues, revenue growth rates, gross margin, GAAP and non-GAAP research and development and selling, general and administrative expenses, stock-based compensation expense and litigation expense for the quarter ending June 30, 2010, (ii) our outlook for the long term prospects of the company, (iii) our ability to accelerate our revenue and net income growth rates, (iv) our ability to penetrate new markets and expand our market share, (v) our expected pricing practices in 2010, (vi) the seasonality of our business, (vii) our ability to reduce our manufacturing costs, and (viii) statements of the assumptions underlying or relating to any statement described in (i), (ii), (iii), (iv), (v), (vi) or (vii). 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 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, the risks, uncertainties and costs of litigation in which the company is involved; the outcome of any upcoming trials, hearings, motions, and appeals; any market disruptions or interruptions in MPS' schedule of new product release development; adverse changes in production and testing efficiency; adverse changes in government regulations in foreign countries where MPS has offices; acceptance of, or demand for, MPS' products, in particular the new products launched within the past 18 months, being lower than expected; competition generally and the increasingly competitive nature of our industry; the effect of catastrophic events; the adverse impact on MPS' financial performance if its tax and litigation provisions are inadequate; difficulty in predicting or budgeting for future expenses and financial contingencies; and other important risk factors identified in MPS' SEC filings, including, but not limited to, its Form 10-K filed on February 16, 2010.

The forward-looking statements in this press release represent MPS' targets and current expectations, 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)
                                                 March 31,    December 31,
                                                    2010           2009
                                                ----------   -------------
    ASSETS
    Current assets:
      Cash and cash equivalents                     $48,865         $46,717
      Short-term investments                        126,724         118,914
      Accounts receivable, net of allowances
       of $0 in both 2010 and 2009                   24,541          15,521
      Inventories                                    14,550          19,616
      Deferred income tax assets, net -
       current                                            5               5
      Prepaid expenses and other current
       assets                                         2,491           2,726
        Total current assets                        217,176         203,499
                                                    -------         -------
    Property and equipment, net                      21,696          17,968
    Long-term investments                            19,555          19,445
    Deferred income tax assets, net -
     long-term                                          175             175
    Other assets                                        713             734
        Total assets                               $259,315        $241,821
                                                   ========        ========

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
      Accounts payable                              $11,681          $7,787
      Accrued compensation and related
       benefits                                       6,481           8,454
      Accrued liabilities                             7,293           7,681
        Total current liabilities                    25,455          23,922
                                                     ------          ------

    Non-current income tax liability                  4,915           4,915
    Other long-term liabilities                          58              27
          Total liabilities                          30,428          28,864
                                                     ------          ------
    Stockholders' equity:
      Common stock, $0.001 par value, $36 and
       $35 in 2010 and 2009, respectively;
       shares authorized: 150,000,000; shares
       issued and outstanding: 35,755,150 and
       35,165,316 in 2010 and 2009,
       respectively                                 184,860         175,518
      Retained earnings                              43,440          37,085
      Accumulated other comprehensive income            587             354
        Total stockholders' equity                  228,887         212,957
                                                    -------         -------
        Total liabilities and stockholders'
         equity                                    $259,315        $241,821
                                                   ========        ========



                   Consolidated Income Statements
         (Unaudited, in thousands, except per share amounts)
                                                 Three months ended
                                                     March 31,
                                                -------------------
                                                   2010       2009
                                                   ----       ----


      Revenue                                   $50,250    $29,322
      Cost of revenue*                           20,954     12,431
                                                 ------     ------

           Gross profit                          29,296     16,891
                                                 ------     ------
      Operating expenses:
        Research and development*                11,040      8,117
        Selling, general and administrative*     10,393      7,808
        Litigation expense                        1,567      2,046

           Total operating expenses              23,000     17,971
                                                 ------     ------

      Income (loss) from operations               6,296     (1,080)
      Other income (expense):
        Interest and other income                   347        385
        Interest and other expense                    -        (94)

           Total other income, net                  347        291
                                                    ---        ---

      Income (loss) before income taxes           6,643       (789)
      Income tax provision (benefit)                287        (61)


      Net income (loss)                          $6,356      $(728)
                                                 ======      =====
      Basic net income (loss) per share           $0.18     $(0.02)
                                                  =====     ======
      Diluted net income (loss) per share         $0.17     $(0.02)
                                                  =====     ======

      Weighted average common shares
       outstanding                               35,421     33,696
      Stock options                               2,362          -
                                                  -----        ---
      Diluted weighted-average common
       equivalent shares outstanding             37,783     33,696
                                                 ======     ======

    * Stock-based compensation has been included
     in the following line items:
        Cost of revenue                             $79        $81
        Research and development                  1,735      1,560
        Selling, general and administrative       2,210      1,772
            Total                                $4,024     $3,413
                                                 ======     ======

         RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME
              (in thousands, except per share amounts)

    Net income                                   $6,356      $(728)
                                                 ======      =====

    Adjustments to reconcile net income to non-GAAP net
     income
        Stock-based compensation                 $4,024     $3,413
        Tax effect                                 (513)      (389)
        Non-GAAP net income                      $9,867     $2,296
                                                 ------     ------

    Non-GAAP earnings per share, excluding stock-based
     compensation and related tax effects:
        Basic                                     $0.28      $0.07
        Diluted                                   $0.26      $0.06

    Shares used in the calculation of non-GAAP earnings
     per share:
        Basic                                    35,421     33,696
        Diluted                                  37,783     35,420


          RECONCILIATION OF OPERATING EXPENSES TO NON-GAAP
                          OPERATING EXPENSES
              (in thousands, except per share amounts)

    Total operating expenses                    $23,000    $17,971
                                                =======    =======

    Adjustments to reconcile total operating expenses to
     non-GAAP total operating expenses
        Stock-based compensation                $(3,945)   $(3,332)
        Non-GAAP total operating expenses       $19,055    $14,639
                                                -------    -------



                           2010 Second Quarter Outlook
        RECONCILIATION OF R&D AND SG&A EXPENSES TO NON-GAAP R&D AND SG&A
                                     EXPENSES
                    (in thousands, except per share amounts)

                                                             Three months
                                                            ended June 30,
                                                                 2010
                                                           Low      High
    R&D and SG&A                                         $22,500   $25,000
                                                         =======   =======

    Adjustments to reconcile R&D and SG&A to non-GAAP
     R&D and SG&A
        Stock-based compensation                          (5,000)   (5,500)
        Non-GAAP R&D and SG&A                            $17,500   $19,500
                                                         -------   -------




SOURCE Monolithic Power Systems, Inc.