10-QPeriod: Q2 FY2009

MONOLITHIC POWER SYSTEMS INC Quarterly Report for Q2 Ended Jun 30, 2009

Filed July 30, 2009For Securities:MPWR

Summary

Monolithic Power Systems, Inc. (MPWR) reported its Q2 2009 financial results, showing a slight year-over-year decrease in revenue for both the quarter and year-to-date, primarily attributed to a slowdown in general demand for electronic products stemming from the global financial crisis. Despite revenue pressures, the company maintained profitability. The balance sheet reflects an increase in cash and short-term investments, bolstered by proceeds from stock issuances and option exercises. A significant portion of the report details ongoing litigation with O2Micro, Inc., where some claims have been dismissed, reducing the scope of the ongoing legal battle. The company's investment portfolio includes illiquid auction-rate securities, with ongoing efforts to manage and assess their value and potential recovery.

Key Highlights

  • 1Revenue for the three months ended June 30, 2009, was $41.17 million, a slight decrease of 0.8% from $41.50 million in the prior year period.
  • 2Net income for the quarter was $3.19 million, or $0.09 per diluted share, compared to $4.60 million, or $0.13 per diluted share, in the same quarter last year.
  • 3As of June 30, 2009, the company had $56.8 million in cash and cash equivalents and $62.0 million in short-term investments.
  • 4Significant progress was made in the O2Micro litigation, with claims related to the '519 patent family dismissed in both the ITC Investigation and the Northern District of California court.
  • 5The company is actively managing its investments in auction-rate securities, which have faced liquidity challenges, recognizing both temporary and other-than-temporary impairments.
  • 6Research and Development (R&D) expenses increased year-over-year, reflecting continued investment in new product development.
  • 7Provision for litigation expense decreased significantly compared to the prior year's second quarter.

Frequently Asked Questions

Revenue for the three months ended June 30, 2009, was $41.17 million, which was a slight decrease of 0.8% compared to $41.50 million in the same period of the prior year. This was primarily due to a decrease in lighting control product sales, offset by increases in DC to DC converters and audio amplifiers.

Significant developments occurred in the O2Micro litigation. Claims related to the '519 patent family were dismissed by both the International Trade Commission and the Northern District of California court. This leaves only the '382 patent as the remaining issue in both legal proceedings.

The company holds auction-rate securities that have experienced liquidity issues. As of June 30, 2009, $36.8 million (net of impairment charges) were classified as long-term investments. While some have been sold or have a put right with UBS, a significant portion remains illiquid. The company has recognized both temporary and other-than-temporary impairments on these investments and continues to monitor their value and liquidity.

Research and Development (R&D) expenses increased by 13.1% to $9.7 million, primarily due to increased personnel and new product introduction costs. Selling, General, and Administrative (SG&A) expenses increased by 4.6% to $9.3 million, mainly due to higher stock-based compensation. The provision for litigation expense decreased significantly by 48.0% to $2.2 million.