SAN JOSE, Calif., Feb. 12 /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 quarter and year ended December 31, 2008.

    The results for the year ended December 31, 2008 are as follows:
     --   Net revenues of $160.5 million, compared to $134.0 million for the
          year ended December 31, 2007, an increase of 19.8%
     --   Gross margin of 61.9%, compared to 63.6% for the year ended December
          31, 2007
     --   GAAP operating expenses of $76.8 million, including $70.1 million
          for research and development and selling, general and administrative
          expenses, which includes $12.8 million for stock-based compensation
          and $6.7 million for patent litigation expenses
     --   Non-GAAP(1) operating expenses of $64.0 million, excluding $12.8
          million for stock-based compensation
     --   GAAP net income of $24.2 million, with GAAP EPS of $0.67 per diluted
          share
     --   Non-GAAP(1) net income of $32.3 million, or $0.90 per diluted share,
          excluding stock-based compensation and related tax effects

    The results for the quarter ended December 31, 2008 are as follows:
     --   Net revenues of $34.7 million, down 9.8% from $38.5 million in the
          fourth quarter of 2007 and down 29.0% sequentially from $48.9
          million in the third quarter of 2008
     --   Gross margin of 58.0%, compared to 63.9% in the fourth quarter of
          2007 and 62.8% in the third quarter of 2008
     --   GAAP operating expenses of $17.9 million, including $17.3 million
          for research and development and selling, general and administrative
          expenses, which includes $3.6 million for stock-based compensation,
          and $0.6 million for patent litigation expenses
     --   Non-GAAP(1) operating expenses of $14.3 million, excluding $3.6
          million for stock-based compensation
     --   GAAP net income of $3.2 million, with GAAP EPS of $0.09 per diluted
          share
     --   Non-GAAP(1) net income of $5.5 million, or $0.16 per diluted share,
          excluding stock-based compensation and related tax effects

'2008 was another outstanding year for MPS despite the unfavorable operating environment,' said Michael Hsing, chief executive officer and founder of MPS. 'Our history has proven that we have the right strategies combined with excellent execution. We will continue to have a lean and adaptive operation, focus on developing superior leading edge products, and expand our regional sales. We believe this recession is a business opportunity for MPS. As long as we continue to execute on our strategies, we will be a much stronger company once the economy recovers,' said Mr. Hsing.

Business Outlook

The following are MPS' financial targets for the first quarter ending March 31, 2009:

     --   Revenues in the range of $24 million to $29 million, reflecting the
          drop in general worldwide demand and lack of visibility for the
          first quarter of the year
     --   Gross margin below the lower end of the company's target range of
          60% to 63%
     --   Research and development and selling, general and administrative
          expenses between $16.0 million and $17.3 million. Non-GAAP(1)
          research and development and selling, general and administrative
          expenses between $12.5 million and $13.5 million. This excludes an
          estimate of stock-based compensation expense in the range of $3.5
          million to $3.8 million.
     --   Litigation expense in the range of $1.5 million to $2.0 million

(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 and non-GAAP operating expenses for the quarter and year ended December 31, 2008 and 2007 exclude the effect of stock-based compensation expense and a patent litigation settlement amount and their related tax effects, and include a reversal of our 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 quarter and year ended December 31, 2008 results at 2:00 p.m. PT / 5:00 p.m. ET today, February 12, 2009.