Monolithic Power Systems, Inc.
Jul 31, 2008
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Monolithic Power Systems Announces Record Second Quarter and First Half 2008 Results

SAN JOSE, Calif., July 31 /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 three and six months ended June 30, 2008.

The results for the quarter ended June 30, 2008 are as follows:

The results for the six months ended June 30, 2008 are as follows:

"MPS set an all-time record for revenue in the second quarter," said Michael Hsing, chief executive officer and founder of MPS, "and we are pleased with the continued success of the execution of our strategies."

Business Outlook

The following are MPS' financial targets for the third quarter ending September 30, 2008:

(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 and six months ended June 30, 2008 and 2007 excludes the effect of stock-based compensation expense and a patent litigation settlement amount and their related tax effects, and includes a reversal of the lease write-off that was recorded previously. Non- GAAP operating expenses for the quarter and six months ended June 30, 2008 and 2007 exclude the effect of stock-based compensation expense and a patent litigation settlement amount, and include a reversal of the 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 second quarter and first half 2008 results at 2:00 p.m. PT / 5:00 p.m. ET today, July 31, 2008. 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 48865373. 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 expense and litigation expense for the three months ending September 30, 2008. 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; 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 May 14, 2008.

The forward-looking statements in this press release represent MPS' targets, 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)


                                                   June 30,       December 31,
                                                     2008              2007
    ASSETS
    Current assets:
      Cash and cash equivalents                    $75,595           $83,114
      Short-term investments                         4,735            27,765
      Accounts receivable, net of
       allowances of $0 in 2008 and $227 in 2007    13,033             8,239
      Inventories                                   24,120            17,487
      Deferred income tax asset-current                 76                72
      Prepaid expenses and other current
       assets                                        4,794             4,733
      Restricted cash                                7,360             7,350
        Total current assets                       129,713           148,760
    Property and equipment, net                     14,606            14,175
    Long-term investments                           39,140                 -
    Deferred income tax asset-long term                776               776
    Other assets                                       614               539
    Restricted assets                                8,608             8,340
        Total assets                              $193,457          $172,590

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
      Accounts payable                             $12,626            $6,154
      Accrued compensation and related
       benefits                                      7,488             8,299
      Accrued liabilities                           17,325            14,959
        Total current liabilities                   37,439            29,412

    Deferred rent                                      107               237
    Non-current income tax liability                 5,319             5,318
    Other long term liabilities                          -                86
        Total liabilities                           42,865            35,053
    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: 33,669,624 and
       33,454,595 in 2008 and 2007,
       respectively                                145,896           143,890
      Deferred stock compensation                        -                (3)
      Retained earnings (accumulated
       deficit)                                      3,720            (6,815)
      Accumulated other comprehensive
       income                                          976               465
        Total stockholders' equity                 150,592           137,537
        Total liabilities and stockholders'
         equity                                   $193,457          $172,590



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


                            Three months ended         Six months ended
                           June 30,     June 30,     June 30,     June 30,
                             2008         2007         2008         2007
                                      (as restated)            (as restated)

    Revenue                $41,502      $30,833      $76,911      $55,329
    Cost of revenue*        15,375       11,248       28,419       20,211

        Gross profit        26,127       19,585       48,492       35,118
    Operating expenses:
      Research and
       development*          8,602        6,428       16,174       12,360
      Selling, general
       and administrative*   8,912        7,119       17,640       13,316
      Lease abandonment          -         (496)           -         (496)
      Patent litigation
       settlement                -        9,800            -        9,800
      Provision for
       litigation expense    4,294        4,028        5,030        6,875
        Total operating
         expenses           21,808       26,879       38,844       41,855
    Income (loss) from
     operations              4,319       (7,294)       9,648       (6,737)
    Other income (expense):
    Interest and other income  810        1,169        2,244        2,176
    Interest and other
     expense                  (112)         (22)        (118)         (29)
        Total other income,
         net                   698        1,147        2,126        2,147
    Income (loss) before
     income taxes            5,017       (6,147)      11,774       (4,590)
    Income tax provision       417          219        1,239        2,105
    Net income (loss)       $4,600      $(6,366)     $10,535      $(6,695)
    Basic net income (loss)
     per share               $0.14       $(0.20)       $0.32       $(0.22)
    Diluted net income
     (loss) per share        $0.13       $(0.20)       $0.29       $(0.22)
    Weighted average common
     shares outstanding     33,229       31,382       33,287       30,929
    Stock options and
     restricted stock        3,003            -        2,804            -
    Diluted weighted-average
     common equivalent
     shares outstanding     36,232       31,382       36,091       30,929

    *Stock-based
     compensation has
     been included in the
     following line items:
      Cost of revenue         $128         $113         $173         $224
      Research and
       development           1,396          952        2,603        2,053
      Selling, general
       and administrative    1,819        1,440        3,354        2,548
        Total               $3,343       $2,505       $6,130       $4,825



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

    Net income (loss)       $4,600      $(6,366)     $10,535      $(6,695)

    Adjustments to reconcile
     net income to non-GAAP
     net income
      Stock-based
       compensation         $3,343       $2,505       $6,130       $4,825
      Patent litigation
       settlement                -        9,800            -        9,800
      Reversal of lease
       write-off                 -         (540)           -         (540)
      Tax effect              (837)      (1,186)      (1,924)        (618)
      Non-GAAP net income   $7,106       $4,214      $14,741       $6,773

    Non-GAAP earnings per
     share, excluding
     stock-based
     compensation and
     related tax effects:
      Basic                  $0.21        $0.13        $0.44        $0.22
      Diluted                $0.20        $0.12        $0.41        $0.20

    Shares used in the
     calculation of
     non-GAAP earnings
     per share:
      Basic                 33,229       31,382       33,287       30,929
      Diluted               36,232       34,656       36,091       34,230



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

    Total operating
     expenses              $21,808      $26,879      $38,844      $41,855

    Adjustments to
     reconcile total
     operating expenses
     to non-GAAP total
     operating expenses
      Stock-based
       compensation        $(3,215)     $(2,392)     $(5,957)     $(4,601)
      Patent litigation
       settlement                -       (9,800)           -       (9,800)
      Reversal of lease
       write-off                 -          496            -          496
      Non-GAAP total
       operating expenses  $18,593      $15,183      $32,887      $27,950



                          2008 Third Quarter Outlook

    RECONCILIATION OF R&D AND SG&A EXPENSES TO NON-GAAP R&D AND SG&A EXPENSES
                                 (in thousands)

                                                       Three months ended
                                                       September 30, 2008
                                                     Low               High
    R&D and SG&A                                   $18,200           $19,600

    Adjustments to reconcile R&D and SG&A
     to non-GAAP R&D and SG&A
        Stock-based compensation                    (3,200)           (3,600)
        Non-GAAP R&D and SG&A                      $15,000           $16,000

SOURCE Monolithic Power Systems, Inc.

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

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