Monolithic Power Systems Announces Results for the Second

Monolithic Power Systems Announces Results for the Second Quarter Ended June 30, 2016

Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share amounts)

	Three Months Ended June 30,						Six Months Ended June 30,
		2016			2015			2016			2015
Revenue	$	94,079		$	81,416		$	178,591		$	154,954
Cost of revenue		43,153			37,287			82,155			71,142
Gross profit		50,926			44,129			96,436			83,812
Operating expenses:
Research and development		17,876			15,743			35,197			31,781
Selling, general and administrative		21,531			17,964			39,299			35,482
Litigation expense (benefit), net		(8	)		311			37			581
Total operating expenses		39,399			34,018			74,533			67,844
Income from operations		11,527			10,111			21,903			15,968
Interest and other income, net		597			235			1,140			877
Income before income taxes		12,124			10,346			23,043			16,845
Income tax provision		926			2,447			1,270			2,983
Net income	$	11,198		$	7,899		$	21,773		$	13,862

Net income per share:
Basic	$	0.28		$	0.20		$	0.54		$	0.35
Diluted	$	0.27		$	0.19		$	0.52		$	0.34
Weighted-average shares outstanding:
Basic		40,387			39,570			40,208			39,337
Diluted		41,716			40,745			41,681			40,670

Cash dividends declared per common share	$	0.20		$	0.20		$	0.40		$	0.40

SUPPLEMENTAL FINANCIAL INFORMATION
STOCK-BASED COMPENSATION EXPENSE
(Unaudited, in thousands)
	Three Months Ended June 30,						Six Months Ended June 30,
		2016			2015			2016			2015
Cost of revenue	$	380		$	284		$	814		$	526
Research and development		3,318			2,503			7,016			5,123
Selling, general and administrative		8,049			6,710			12,896			13,067
Total stock-based compensation expense	$	11,747		$	9,497		$	20,726		$	18,716

RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME
(Unaudited, in thousands, except per share amounts)
	Three Months Ended June 30,						Six Months Ended June 30,
		2016			2015			2016			2015
Net income	$	11,198		$	7,899		$	21,773		$	13,862
Net income as a percentage of revenue		11.9	%		9.7	%		12.2	%		8.9	%

Adjustments to reconcile net income to non-GAAP net income:
Stock-based compensation expense		11,747			9,497			20,726			18,716
Amortization of acquisition-related intangible assets		513			367			1,026			733
Deferred compensation plan expense (income)		(3	)		69			(147	)		109
Tax effect		(903	)		926			(2,079	)		253
Non-GAAP net income	$	22,552		$	18,758		$	41,299		$	33,673
Non-GAAP net income as a percentage of revenue		24.0	%		23.0	%		23.1	%		21.7	%

Non-GAAP net income per share:
Basic	$	0.56		$	0.47		$	1.03		$	0.86
Diluted	$	0.54		$	0.46		$	0.99		$	0.83

Shares used in the calculation of non-GAAP net income per share:
Basic		40,387			39,570			40,208			39,337
Diluted		41,716			40,745			41,681			40,670

RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN
(Unaudited, in thousands)
	Three Months Ended June 30,						Six Months Ended June 30,
		2016			2015			2016			2015
Gross profit	$	50,926		$	44,129		$	96,436		$	83,812
Gross margin		54.1	%		54.2	%		54.0	%		54.1	%

Adjustments to reconcile gross profit to non-GAAP gross profit:
Stock-based compensation expense		380			284			814			526
Amortization of acquisition-related intangible assets		513			367			1,026			733
Non-GAAP gross profit	$	51,819		$	44,780		$	98,276		$	85,071
Non-GAAP gross margin		55.1	%		55.0	%		55.0	%		54.9	%

RECONCILIATION OF OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES
(Unaudited, in thousands)
	Three Months Ended June 30,						Six Months Ended June 30,
		2016			2015			2016			2015
Total operating expenses	$	39,399		$	34,018		$	74,533		$	67,844

Adjustments to reconcile total operating expenses to non-GAAP total operating expenses:
Stock-based compensation expense		(11,367	)		(9,213	)		(19,912	)		(18,190	)
Deferred compensation plan income (expense)		(304	)		146			(461	)		(20	)
Non-GAAP operating expenses	$	27,728		$	24,951		$	54,160		$	49,634


RECONCILIATION OF OPERATING INCOME TO NON-GAAP OPERATING INCOME
(Unaudited, in thousands)
	Three Months Ended June 30,						Six Months Ended June 30,
		2016			2015			2016			2015
Total operating income	$	11,527		$	10,111		$	21,903		$	15,968
Operating income as a percentage of revenue		12.3	%		12.4	%		12.3	%		10.3	%

Adjustments to reconcile total operating income to non-GAAP total operating income:
Stock-based compensation expense		11,747			9,497			20,726			18,716
Amortization of acquisition-related intangible assets		513			367			1,026			733
Deferred compensation plan expense (income)		304			(146	)		461			20
Non-GAAP operating income	$	24,091		$	19,829		$	44,116		$	35,437
Non-GAAP operating income as a percentage of revenue		25.6	%		24.4	%		24.7	%		22.9	%


RECONCILIATION OF OTHER INCOME TO NON-GAAP OTHER INCOME
(Unaudited, in thousands)
	Three Months Ended June 30,						Six Months Ended June 30,
		2016			2015			2016			2015
Total interest and other income, net	$	597		$	235		$	1,140		$	877

Adjustments to reconcile interest and other income to non-GAAP interest and other income:
Deferred compensation plan expense (income)		(307	)		215			(608	)		89
Non-GAAP interest and other income, net	$	290		$	450		$	532		$	966

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