Monolithic Power Systems Announces Results for the Fourth

Monolithic Power Systems Announces Results for the Fourth Quarter and Year Ended December 31, 2016

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

	Three Months Ended December 31,						Year Ended December 31,
		2016			2015			2016			2015
Revenue	$	103,618		$	86,918		$	388,665		$	333,067
Cost of revenue		47,107			40,001			177,792			152,898
Gross profit		56,511			46,917			210,873			180,169
Operating expenses:
Research and development		17,974			16,734			73,643			65,787
Selling, general and administrative		21,316			18,107			83,012			72,312
Litigation expense (benefit), net		(321	)		283			(229	)		1,000
Total operating expenses		38,969			35,124			156,426			139,099
Income from operations		17,542			11,793			54,447			41,070
Interest and other income, net		897			550			2,817			1,421
Income before income taxes		18,439			12,343			57,264			42,491
Income tax provision		1,866			2,233			4,544			7,319
Net income	$	16,573		$	10,110		$	52,720		$	35,172

Net income per share:
Basic	$	0.41		$	0.26		$	1.30		$	0.89
Diluted	$	0.39		$	0.24		$	1.26		$	0.86
Weighted-average shares outstanding:
Basic		40,739			39,615			40,436			39,470
Diluted		42,404			41,445			41,915			40,869

Cash dividends declared per common share	$	0.20		$	0.20		$	0.80		$	0.80

SUPPLEMENTAL FINANCIAL INFORMATION
STOCK-BASED COMPENSATION EXPENSE
(Unaudited, in thousands)
	Three Months Ended December 31,						Year Ended December 31,
		2016			2015			2016			2015
Cost of revenue	$	358		$	336		$	1,575		$	1,166
Research and development		3,039			3,102			14,041			11,156
Selling, general and administrative		7,350			8,934			29,373			29,241
Total stock-based compensation expense	$	10,747		$	12,372		$	44,989		$	41,563

RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME
(Unaudited, in thousands, except per share amounts)
	Three Months Ended December 31,						Year Ended December 31,
		2016			2015			2016			2015
Net income	$	16,573		$	10,110		$	52,720		$	35,172
Net income as a percentage of revenue		16.0	%		11.6	%		13.6	%		10.6	%

Adjustments to reconcile net income to non-GAAP net income:
Stock-based compensation expense		10,747			12,372			44,989			41,563
Change in fair value of contingent consideration		-			(2,507	)		-			(2,507	)
Amortization of acquisition-related intangible assets		512			512			2,051			1,759
Deferred compensation plan expense (income)		29			98			(188	)		175
Tax effect		(364	)		522			(3,265	)		1,058
Non-GAAP net income	$	27,497		$	21,107		$	96,307		$	77,220
Non-GAAP net income as a percentage of revenue		26.5	%		24.3	%		24.8	%		23.2	%

Non-GAAP net income per share:
Basic	$	0.67		$	0.53		$	2.38		$	1.96
Diluted	$	0.65		$	0.51		$	2.30		$	1.89

Shares used in the calculation of non-GAAP net income per share:
Basic		40,739			39,615			40,436			39,470
Diluted		42,404			41,445			41,915			40,869

RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN
(Unaudited, in thousands)
	Three Months Ended December 31,						Year Ended December 31,
		2016			2015			2016			2015
Gross profit	$	56,511		$	46,917		$	210,873		$	180,169
Gross margin		54.5	%		54.0	%		54.3	%		54.1	%

Adjustments to reconcile gross profit to non-GAAP gross profit:
Stock-based compensation expense		358			336			1,575			1,166
Amortization of acquisition-related intangible assets		512			512			2,051			1,759
Non-GAAP gross profit	$	57,381		$	47,765		$	214,499		$	183,094
Non-GAAP gross margin		55.4	%		55.0	%		55.2	%		55.0	%

RECONCILIATION OF OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES
(Unaudited, in thousands)
	Three Months Ended December 31,						Year Ended December 31,
		2016			2015			2016			2015
Total operating expenses	$	38,969		$	35,124		$	156,426		$	139,099

Adjustments to reconcile total operating expenses to non-GAAP total operating expenses:
Stock-based compensation expense		(10,389	)		(12,036	)		(43,414	)		(40,397	)
Change in fair value of contingent consideration		-			2,507			-			2,507
Deferred compensation plan income (expense)		(189	)		(290	)		(1,069	)		200
Non-GAAP operating expenses	$	28,391		$	25,305		$	111,943		$	101,409


RECONCILIATION OF OPERATING INCOME TO NON-GAAP OPERATING INCOME
(Unaudited, in thousands)
	Three Months Ended December 31,						Year Ended December 31,
		2016			2015			2016			2015
Total operating income	$	17,542		$	11,793		$	54,447		$	41,070
Operating income as a percentage of revenue		16.9	%		13.6	%		14.0	%		12.3	%

Adjustments to reconcile total operating income to non-GAAP total operating income:
Stock-based compensation expense		10,747			12,372			44,989			41,563
Change in fair value of contingent consideration		-			(2,507	)		-			(2,507	)
Amortization of acquisition-related intangible assets		512			512			2,051			1,759
Deferred compensation plan expense (income)		189			290			1,069			(200	)
Non-GAAP operating income	$	28,990		$	22,460		$	102,556		$	81,685
Non-GAAP operating income as a percentage of revenue		28.0	%		25.8	%		26.4	%		24.5	%


RECONCILIATION OF OTHER INCOME TO NON-GAAP OTHER INCOME
(Unaudited, in thousands)
	Three Months Ended December 31,						Year Ended December 31,
		2016			2015			2016			2015
Total interest and other income, net	$	897		$	550		$	2,817		$	1,421

Adjustments to reconcile interest and other income to non-GAAP interest and other income:
Deferred compensation plan expense (income)		(160	)		(192	)		(1,257	)		375
Non-GAAP interest and other income, net	$	737		$	358		$	1,560		$	1,796

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