Monolithic Power Systems, Inc.
Feb 12, 2009
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Monolithic Power Systems Announces Fourth Quarter and 2008 Results

SAN JOSE, Calif., Feb. 12 /PRNewswire-FirstCall/ -- 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, 2008.

The results for the year ended December 31, 2008 are as follows:

The results for the quarter ended December 31, 2008 are as follows:

"2008 was another outstanding year for MPS despite the unfavorable operating environment," said Michael Hsing, chief executive officer and founder of MPS. "Our history has proven that we have the right strategies combined with excellent execution. We will continue to have a lean and adaptive operation, focus on developing superior leading edge products, and expand our regional sales. We believe this recession is a business opportunity for MPS. As long as we continue to execute on our strategies, we will be a much stronger company once the economy recovers," said Mr. Hsing.

Business Outlook

The following are MPS' financial targets for the first quarter ending March 31, 2009:

(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 and non-GAAP operating expenses for the quarter and year ended December 31, 2008 and 2007 exclude the effect of stock-based compensation expense and a patent litigation settlement amount and their related tax effects, and include a reversal of our lease write-off that was recorded previously. Projected non- GAAP research and development and selling, general and administrative expenses exclude the effect of stock-based compensation expense and related tax effects. A schedule reconciling these amounts is included in this news 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 a management teleconference covering its quarter and year ended December 31, 2008 results at 2:00 p.m. PT / 5:00 p.m. ET today, February 12, 2009. To access the conference call and following replay, go to http://ir.monolithicpower.com and click 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 25674790. 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 regarding targeted revenues, gross margin, GAAP and non-GAAP research and development and selling, general and administrative expenses, stock-based compensation and litigation expense for the three months ending March 31, 2009, our belief that the current recession is an opportunity for expansion, and our operational focus on a lean and adaptive operation, development of superior leading edge products, and expansion of regional sales. These 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. 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; worsening global economic conditions, further deterioration in end-customer demand, 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 being lower than expected; 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-Q filed on October 23, 2008.

The forward-looking statements in this press release represent MPS' targets or beliefs, 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 Sheet
                 (Unaudited, in thousands, except par value)

                                                          December 31,
                                                      2008           2007
    ASSETS
    Current assets:
      Cash and cash equivalents                      $83,266        $83,114
      Short-term investments                          21,922         27,765
      Accounts receivable, net of allowances
       of $0 and $227, respectively,
       in 2008 and 2007                                9,115          8,239
      Inventories                                     18,887         17,487
      Deferred income tax asset, net - current            75             72
      Prepaid expenses and other current assets        2,622          4,733
      Restricted cash                                  7,360          7,350
        Total current assets                         143,247        148,760
    Property and equipment, net                       14,163         14,175
    Long-term investments                             37,425              -
    Deferred income tax asset, net - long-term            19            776
    Other assets                                         438            539
    Restricted assets                                      7          8,340
        Total assets                                $195,299       $172,590

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
      Accounts payable                                $4,674         $6,154
      Accrued compensation and related benefits        7,848          8,299
      Accrued liabilities                             13,360         14,959
        Total current liabilities                     25,882         29,412

    Non-current income tax liability                   4,762          5,318
    Other long-term liabilities                           10            323
        Total liabilities                             30,654         35,053
    Commitments and contingencies
    Stockholders' equity:
      Common stock, $0.001 par value,
       $34 and $33 in 2008 and 2007,
       respectively; shares authorized:
       150,000,000; shares issued and
       outstanding: 33,646,821 and 33,454,595
       in 2008 and 2007, respectively                147,298        143,890
      Deferred stock compensation                          -             (3)
      Retained earnings (accumulated deficit)         17,411         (6,815)
      Accumulated other comprehensive
       income (loss)                                     (64)           465
        Total stockholders' equity                   164,645        137,537
        Total liabilities and stockholders'
         equity                                     $195,299       $172,590



                        Consolidated Income Statement
             (Unaudited, in thousands, except per share amounts)

                            Three months ended             Year ended
                         December 31, December 31, December 31, December 31,
                             2008         2007         2008         2007

    Revenue                $34,709      $38,487     $160,511     $134,004
    Cost of revenue*        14,564       13,908       61,184       48,781
        Gross profit        20,145       24,579       99,327       85,223
    Operating expenses:
    Research and
     development*            9,256        7,493       34,850       27,342
    Selling, general and
     administrative*         8,056        8,150       35,256       29,537
    Lease abandonment            -            -            -         (496)
    Patent litigation
     settlement                  -            -            -        9,800
    Provision for
     litigation expense        594        1,043        6,714        9,370
        Total operating
         expenses           17,906       16,686       76,820       75,553
    Income from operations   2,239        7,893       22,507        9,670
    Other income (expense):
      Interest and other
       income                  659        1,342        3,587        4,741
      Interest and other
       expense                (145)        (118)        (652)        (139)
        Total other income,
         net                   514        1,224        2,935        4,602
    Income before income
     taxes                   2,753        9,117       25,442       14,272
    Income tax provision
     (benefit)                (481)        (165)       1,216        2,692
    Net income              $3,234       $9,282      $24,226      $11,580
    Basic net income
     per share               $0.10        $0.28        $0.72        $0.37
    Diluted net income
     per share               $0.09        $0.26        $0.67        $0.33
    Weighted average common
     shares outstanding     33,587       32,919       33,509       31,703
    Stock options and
     restricted stock        1,599        3,216        2,611        3,387
    Diluted weighted-average
     common equivalent
     shares outstanding     35,186       36,135       36,120       35,090

    *Stock-based
     compensation has
     been included in
     the following line
     items:
      Cost of revenue          $95         $166         $344         $539
      Research and
       development           1,747        1,246        5,821        4,625
      Selling, general
       and administrative    1,852        1,768        6,993        6,064
        Total               $3,694       $3,180      $13,158      $11,228



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

    Net income              $3,234       $9,282      $24,226      $11,580

    Adjustments to
     reconcile net
     income to
     non-GAAP net
     income
      Stock-based
       compensation         $3,694       $3,180      $13,158      $11,228
      Patent litigation
       settlement                -            -            -        9,800
      Reversal of lease
       write-off                 -            -            -         (540)
      Tax effect            (1,448)      (3,239)      (5,051)      (6,346)
      Non-GAAP net income   $5,480       $9,223      $32,333      $25,722

    Non-GAAP earnings per
     share, excluding
     stock-based
     compensation and
     related tax
     effects:
      Basic                  $0.16        $0.28        $0.96        $0.81
      Diluted                $0.16        $0.26        $0.90        $0.73

    Shares used in the
     calculation of
     non-GAAP earnings
     per share:
      Basic                 33,587       32,919       33,509       31,703
      Diluted               35,186       36,135       36,120       35,090



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

    Total operating
     expenses              $17,906      $16,686      $76,820      $75,553

    Adjustments to
     reconcile total
     operating expenses
     to non-GAAP total
     operating expenses
      Stock-based
       compensation        $(3,599)     $(3,014)    $(12,814)    $(10,689)
      Patent litigation
       settlement                -            -            -       (9,800)
      Reversal of lease
       write-off                 -            -            -          496
      Non-GAAP total
       operating expenses  $14,307      $13,672      $64,006      $55,560



                            2009 First 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
                                                         March 31, 2009
                                                       Low           High
    R&D and SG&A                                     $16,000        $17,300
    Adjustments to reconcile R&D and SG&A to
     non-GAAP R&D and SG&A
      Stock-based compensation                        (3,500)        (3,800)
      Non-GAAP R&D and SG&A                          $12,500        $13,500


SOURCE Monolithic Power Systems

CONTACT:
Rick Neely,
Chief Financial Officer
of Monolithic Power Systems, Inc.,
+1-408-826-0777,
investors@monolithicpower.com

Web site: http://www.monolithicpower.com