10-KPeriod: FY2009

MONOLITHIC POWER SYSTEMS INC Annual Report, Year Ended Dec 31, 2009

Filed February 16, 2010For Securities:MPWR

Summary

Monolithic Power Systems, Inc. (MPWR) reported its 2009 annual results, showcasing resilience and growth in a challenging economic environment. The company experienced a modest revenue increase, driven primarily by its DC to DC converter product family, which continues to be the largest contributor to sales. Despite facing industry-wide price pressures and increased R&D investments for future product development, MPWR maintained a strong gross profit margin. The company's operational focus remains on its highly integrated, power-efficient semiconductor solutions for the computing, consumer electronics, and communications markets. A significant portion of revenue (84%) is derived from Asia, highlighting the company's strong presence in this key market. MPWR is actively managing its legal proceedings, particularly with O2Micro, which presents ongoing risks and expenses. The company also noted the illiquidity of its auction-rate securities, though it has taken steps to mitigate potential losses.

Financial Highlights

27 data points
Beta

Revenue

$165.01M

59.2% Gross Margin

Net Income

$19.67M

11.9% Net Margin

EPS (Diluted)

$0.54

Cash & Equivalents

$46.72M

Free Cash Flow

$21.81M

Financial Statements
Beta
Revenue$165.01M
Cost of Revenue$67.33M
Gross Profit$97.68M
R&D Expenses$38.30M
SG&A Expenses$36.75M
Operating Expenses$78.15M
Operating Income$19.53M
Net Income$19.67M
EPS (Basic)$0.57
EPS (Diluted)$0.54
Shares Outstanding (Basic)34.31M
Shares Outstanding (Diluted)36.63M

Key Highlights

  • 1Revenue increased by 2.8% to $165.0 million in 2009, driven by strong performance in DC to DC converter products.
  • 2Gross profit margin remained healthy at 59.2%, though slightly down from 61.9% in 2008, reflecting industry price pressures.
  • 3Research and Development (R&D) expenses increased to 23.2% of revenue, indicating continued investment in new product development.
  • 484% of revenue was generated from customers in Asia, demonstrating a significant geographic concentration.
  • 5The company reported $46.7 million in cash and cash equivalents and $118.9 million in short-term investments, indicating a strong liquidity position.
  • 6Ongoing litigation, particularly with O2Micro, continues to incur significant legal expenses.
  • 7The company has $35.6 million invested in government-backed student loan auction-rate securities, which became illiquid in 2008; impairment charges were recorded.

Frequently Asked Questions

In 2009, Monolithic Power Systems, Inc. (MPWR) reported a revenue of $165.0 million, a modest increase of 2.8% compared to $160.5 million in 2008. This growth was primarily fueled by an 7.1% increase in sales of their DC to DC converter products.

Key risks identified include ongoing litigation, particularly with O2Micro, which results in significant legal expenses and potential adverse outcomes. The company also faces risks associated with the cyclical nature of the semiconductor industry, increased competition, dependence on key personnel, and the illiquidity and potential value decline of its auction-rate securities.

MPWR has $35.6 million invested in government-backed student loan auction-rate securities that became illiquid in 2008. The company has recorded impairment charges and has a UBS put right to sell a portion of these securities. While they intend to hold the remaining securities, the valuation is subject to market conditions and potential future declines in value.

MPWR plans to achieve revenue growth by continuing to introduce new products within its existing families and expanding into new product categories. The company also aims to grow by entering new market segments, gaining market share, diversifying its customer base, and securing manufacturing capacity.