x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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77-0466789
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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Title of each class
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Name of each exchange on which registered
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Common Stock, $0.001 Par Value
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The NASDAQ Global Select Market
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*
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Excludes 15,658,623 shares of the registrant’s common stock held by executive officers, directors and stockholders whose ownership exceeds 5% (“affiliates”) of the Common Stock outstanding at June 30, 2010. Exclusion of such shares should not be construed to indicate that any such person possesses the power, direct or indirect, to direct or cause the direction of the management or policies of the registrant or that such person is controlled by or under common control with the registrant.
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Page
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PART I
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Item 1.
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Business
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5 |
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Executive Officers of the Registrant
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10
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Item 1A
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Risk Factors
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10
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Item 1B
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Unresolved Staff Comments
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21
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Item 2.
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Properties
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21
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Item 3.
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Legal Proceedings
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21 |
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PART II
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Item 5.
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Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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22 |
Item 6.
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Selected Financial Data
|
24 |
Item 7.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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25 |
Item 7A.
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Quantitative and Qualitative Disclosures About Market Risk
|
35 |
Item 8.
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Financial Statements and Supplementary Data
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36 |
Item 9.
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
66 |
Item 9A.
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Controls and Procedures
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66 |
Item 9B.
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Other Information
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67 |
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PART III
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Item 10.
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Directors, Executive Officers and Corporate Governance
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67 |
Item 11.
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Executive Compensation
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67 |
Item 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
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67 |
Item 13.
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Certain Relationships and Related Transactions, and Director Independence
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67
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Item 14.
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Principal Accounting Fees and Services
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67 |
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PART IV
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Item 15.
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Exhibits, Financial Statement Schedules
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68 |
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Signatures
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72 |
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•
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the above-average industry growth of product and market areas that we have targeted,
|
|
•
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our plan to introduce additional new products within our existing product families as well as in new product categories and families,
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•
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our belief that we will continue to incur significant legal expenses that vary with the level of activity in each of our legal proceedings
,
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|
•
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the impact of our outstanding litigation and changing market conditions on the revenue we derive from our CCFL product line,
|
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•
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the effect of auction-rate securities on our liquidity and capital resources,
|
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•
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the application of our products in the computer, consumer electronics, and communications markets continuing to account for a majority of our revenue,
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•
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estimates of our future liquidity requirements,
|
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•
|
the cyclical nature of the semiconductor industry,
|
|
•
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protection of our proprietary technology,
|
|
•
|
near term business outlook for 2011
,
|
|
•
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the factors that we believe will impact our ability to achieve revenue growth,
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•
|
the outcome of the IRS audit of our tax return for the tax years ended December 31, 2006 and 2007
,
|
|
•
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the percentage of our total revenue from various market segments, and
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|
•
|
the factors that differentiate us from our competitors.
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Application
|
WLED Lighting Illumination
(non-backlight)
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LCD Backlight (Inverters or WLED)
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DC to DC Converters
(Buck &
Boost)
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µP Reset & Supervisory
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Audio
Amplifiers
|
AC/DC
Offline
|
Chargers
(Switching & Linear)
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Current Limit Switches
|
Computing
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||||||||
Computers and PDA devices
|
X
|
X
|
X
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X
|
X
|
X
|
X
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|
LCD Monitors
|
X
|
X
|
X
|
X
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||||
Disk Drives/ Storage Networks
|
X
|
X
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||||||
Consumer Electronics
|
X
|
|||||||
LCD TV Displays
|
X
|
X
|
X
|
X
|
X
|
|||
Plasma TV Displays
|
X
|
X
|
X
|
X
|
X
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|||
Set Top Boxes
|
X
|
X
|
X
|
X
|
X
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|||
Blu-Ray & DVD Players
|
X
|
X
|
X
|
X
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||||
Digital Still Cameras
|
X
|
X
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X
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X
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||||
Commercial & Industrial Bulb & CFL Replacement
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X
|
X
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||||||
GPS and Infotainment systems
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X
|
X
|
X
|
X
|
X
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|||
Communications
|
X
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|||||||
Cellular Handsets
|
X
|
X
|
X
|
X
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||||
Networking Infrastructure
|
X
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X
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X
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|||||
VOIP
|
X
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X
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||||||
Wireless Access Points
|
X
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X
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Revenue | |||||||||||||
Year ended December 31, | |||||||||||||
Customer |
2010
|
2009
|
2008 | ||||||||||
A
|
14 | % | 13 | % | 20 | % | |||||||
B | * | 10 | % | 10 | % | ||||||||
C | * | 10 | % | * | |||||||||
D | * | * | * |
Name
|
Age
|
Position
|
Michael R. Hsing
|
51
|
President, Chief Executive Officer, and Director
|
Meera P. Rao
|
50
|
CFO and Principal Financial and Accounting Officer
|
Deming Xiao
|
48
|
President of MPS Asia Operations
|
Maurice Sciammas
|
51
|
Senior Vice President of Worldwide Sales and Marketing
|
Paul Ueunten
|
56
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Senior Vice President of Engineering
|
Saria Tseng
|
40
|
Vice President, General Counsel
|
|
•
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our results of operations and financial performance;
|
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•
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general economic, industry and global market conditions;
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•
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whether our forward guidance meets the expectations of our investors;
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•
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the depth and liquidity of the market for our common stock;
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•
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developments generally affecting the semiconductor industry;
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•
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commencement of or developments relating to our involvement in litigation;
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•
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investor perceptions of us and our business strategies;
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•
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changes in securities analysts’ expectations or our failure to meet those expectations;
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•
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actions by institutional or other large stockholders;
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•
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terrorist acts or acts of war;
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•
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actual or anticipated fluctuations in our results of operations;
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•
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developments with respect to intellectual property rights;
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•
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announcements of technological innovations or significant contracts by us or our competitors;
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•
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introduction of new products by us or our competitors;
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•
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our sale of common stock or other securities in the future;
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•
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conditions and trends in technology industries;
|
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•
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changes in market valuation or earnings of our competitors;
|
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•
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our ability to develop new products, enter new market segments, gain market share, manage litigation risk, diversify our customer base and successfully secure manufacturing capacity;
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•
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our ability to increase our gross margins; and
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•
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changes in the estimation of the future size and growth rate of our markets.
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•
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a deterioration in general demand for electronic products as a result of worldwide financial crises and associated macro-economic slowdowns;
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•
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a deterioration in business conditions at our distributors, value-added resellers and/or end-customers;
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•
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adverse general economic conditions in the countries where our products are sold or used;
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•
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the timing of developments and related expenses in our litigation matters;
|
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•
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the possibility of additional lost business as a result of customer and prospective customer concerns about adverse outcomes in our litigations or about being litigation targets;
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•
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continued dependence on our turns business (orders received and shipped within the same fiscal quarter);
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•
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increases in assembly costs due to commodity price increases, such as the price of gold;
|
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•
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the timing of new product introductions by us and our competitors;
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•
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the acceptance of our new products in the marketplace;
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•
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our ability to develop new process technologies and achieve volume production;
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•
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our ability to meet customer product demand in a timely manner;
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•
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the scheduling, rescheduling, or cancellation of orders by our customers;
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•
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the cyclical nature of demand for our customers’ products;
|
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•
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an increase in stock rotation reserves;
|
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•
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our ability to manage our inventory levels, including the levels of inventory held by our distributors;
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•
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inventory levels and product obsolescence;
|
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•
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seasonality and variability in the computer, consumer electronics, and communications markets;
|
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•
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the availability of adequate manufacturing capacity from our outside suppliers;
|
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•
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increases in prices for finished wafers due to general capacity shortages;
|
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•
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the potential loss of future business resulting from current capacity issues;
|
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•
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changes in manufacturing yields; and
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•
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movements in exchange rates, interest rates or tax rates.
|
|
·
|
our sales, which because of our turns business (i.e., orders received and shipped within the same fiscal quarter), is difficult to accurately forecast;
|
|
·
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consumer electronic sales, which has experienced and may continue to experience a downturn as a result of the worldwide economic crisis;
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·
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our competition, which could adversely impact our selling prices and our potential sales;
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·
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our manufacturing costs, including our ability to negotiate with our vendors and our ability to efficiently run our test facility in China;
|
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·
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manufacturing capacity constraints; and
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·
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our operating expenses, including general and administrative expenses, selling and marketing expenses, stock-based compensation expenses, litigation expenses, which we expect to be significant due to the litigation in which we are involved, and research and development expenses relating to products that will not be introduced and will not generate revenue until later periods, if at all.
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•
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changes in, or impositions of, legislative or regulatory requirements, including tax laws in the United States and in the countries in which we manufacture or sell our products;
|
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•
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trade restrictions, including restrictions imposed by the United States government on trading with parties in foreign countries;
|
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•
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currency exchange rate fluctuations impacting intra-company transactions;
|
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•
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transportation delays;
|
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•
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changes in tax regulations in China that may impact our tax status in Chengdu;
|
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•
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multi-tiered distribution channels that lack visibility to end customer pricing and purchase patterns;
|
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•
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international political relationships and threats of war;
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•
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terrorism and threats of terrorism;
|
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•
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epidemics and illnesses;
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•
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work stoppages and infrastructure problems due to adverse weather conditions or natural disasters;
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•
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work stoppages related to employee dissatisfaction;
|
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•
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economic and political instability;
|
|
•
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changes in import/export regulations, tariffs, and freight rates;
|
|
•
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longer accounts receivable collection cycles and difficulties in collecting accounts receivables;
|
|
•
|
enforcing contracts generally; and
|
|
•
|
less effective protection of intellectual property and contractual arrangements.
|
|
§
|
the costs and expense associated with such activities;
|
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§
|
the availability of modern foundries to be developed, acquired, leased or otherwise made available to us or our third-party suppliers;
|
|
§
|
the ability of foundries and our third-party suppliers to obtain the advanced equipment used in the production of our products;
|
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§
|
delays in bringing new foundry operations online to meet increased product demand; and
|
|
§
|
unforeseen environmental, engineering or manufacturing qualification problems relating to existing or new foundry facilities.
|
|
•
|
timely and efficient completion of process design and device structure improvements;
|
|
•
|
timely and efficient implementation of manufacturing, assembly, and test processes;
|
|
•
|
the ability to secure and effectively utilize fabrication capacity in different geometries;
|
|
•
|
product performance;
|
|
•
|
product availability;
|
|
•
|
the quality and reliability of the product; and
|
|
•
|
effective marketing, sales and service.
|
|
•
|
inability to maintain appropriate and acceptable manufacturing controls; and
|
|
•
|
higher than anticipated overhead and other costs of operation.
|
|
•
|
our customers usually complete an in-depth technical evaluation of our products before they place a purchase order;
|
|
•
|
the commercial adoption of our products by OEMs and ODMs is typically limited during the initial release of their product to evaluate product performance and consumer demand;
|
|
•
|
our products must be designed into a customer’s product or system; and
|
|
•
|
the development and commercial introduction of our customers’ products incorporating new technologies frequently are delayed.
|
|
§
|
unexpected losses of key employees or customers of the acquired companies or businesses;
|
|
§
|
conforming the acquired company’s standards, processes, procedures and controls with our operations;
|
|
§
|
coordinating new product and process development;
|
|
§
|
hiring additional management and other critical personnel;
|
|
§
|
increasing the scope, geographic diversity and complexity of our operations;
|
|
§
|
difficulties in consolidating facilities and transferring processes and know-how;
|
|
§
|
other difficulties in the assimilation of acquired operations, technologies or products;
|
|
§
|
diversion of management’s attention from other business concerns; and
|
|
§
|
adverse effects on existing business relationships with customers.
|
2010
|
High
|
Low
|
||||||
Fourth Quarter ended December 31, 2010
|
$ | 18.52 | $ | 14.75 | ||||
Third Quarter ended September 30, 2010
|
$ | 19.90 | $ | 15.46 | ||||
Second Quarter ended June 30, 2010
|
$ | 25.34 | $ | 17.34 | ||||
First Quarter ended March 31, 2010
|
$ | 24.50 | $ | 18.40 | ||||
2009
|
||||||||
Fourth Quarter ended December 31, 2009
|
$ | 24.75 | $ | 18.93 | ||||
Third Quarter ended September 30, 2009
|
$ | 25.26 | $ | 20.80 | ||||
Second Quarter ended June 30, 2009
|
$ | 23.40 | $ | 14.92 | ||||
First Quarter ended March 31, 2009
|
$ | 16.90 | $ | 10.67 |
2010 Calendar Year |
Shares
Repurchased
|
Average
Price per
Share
|
Value
(in thousands)
|
|||||||||
August
|
983,189 | $ | 17.29 | $ | 16,998 | |||||||
November
|
916,600 | $ | 15.85 | $ | 14,529 | |||||||
Total Shares Repurchased | 1,899,789 | $ | 31,527 |
2008 Calendar Year |
Shares
Repurchased
|
Average
Price per
Share
|
Value
(in thousands)
|
|||||||||
February
|
27,500 | $ | 16.88 | $ | 464 | |||||||
March
|
527,332 | $ | 17.12 | $ | 9,028 | |||||||
April | 201,863 | $ | 20.03 | $ | 4,043 | |||||||
May | 100 | $ | 21.98 | $ | 2 | |||||||
June | 18,000 | $ | 21.66 | $ | 390 | |||||||
July | 14,155 | $ | 21.86 | $ | 309 | |||||||
August | 100 | $ | 22.03 | $ | 2 | |||||||
September | 307,355 | $ | 18.82 | $ | 5,784 | |||||||
October | 333,700 | $ | 15.05 | $ | 5,021 | |||||||
Total Shares Repurchased | 1,430,105 | $ | 25,043 |
Year ended December 31,
|
||||||||||||||||||||
2010
|
2009
|
2008
|
2007
|
2006
|
||||||||||||||||
(in thousands, except per share amounts)
|
||||||||||||||||||||
Revenue
|
$ | 218,840 | $ | 165,008 | $ | 160,511 | $ | 134,004 | $ | 105,015 | ||||||||||
Cost of revenue, including stock-based compensation*
|
97,383 | 67,330 | 61,184 | 48,781 | 38,107 | |||||||||||||||
Gross profit
|
121,457 | 97,678 | 99,327 | 85,223 | 66,908 | |||||||||||||||
Operating expenses:
|
||||||||||||||||||||
Research and development, including stock-based compensation*
|
44,372 | 38,295 | 34,850 | 27,342 | 22,301 | |||||||||||||||
Selling, general and administrative, including stock-based compensation*
|
41,169 | 36,752 | 35,256 | 29,537 | 27,594 | |||||||||||||||
Lease abandonment
|
- | - | - | (496 | ) | 1,218 | ||||||||||||||
Litigation expense
|
5,418 | 9,457 | 6,714 | 9,370 | 11,560 | |||||||||||||||
Patent litigation settlement (provision reversal)
|
- | (6,356 | ) | - | 9,800 | 3,000 | ||||||||||||||
Total operating expenses
|
90,959 | 78,148 | 76,820 | 75,553 | 65,673 | |||||||||||||||
Income from operations
|
30,498 | 19,530 | 22,507 | 9,670 | 1,235 | |||||||||||||||
Other income (expense):
|
||||||||||||||||||||
Interest and other income
|
1,156 | 1,047 | 3,587 | 4,741 | 2,637 | |||||||||||||||
Other expense
|
(234 | ) | (429 | ) | (652 | ) | (139 | ) | (273 | ) | ||||||||||
Total other income, net
|
922 | 618 | 2,935 | 4,602 | 2,364 | |||||||||||||||
Income before income taxes
|
31,420 | 20,148 | 25,442 | 14,272 | 3,599 | |||||||||||||||
Income tax provision
|
1,857 | 474 | 1,216 | 2,692 | 6,024 | |||||||||||||||
Net income (loss)
|
29,563 | 19,674 | 24,226 | 11,580 | (2,425 | ) | ||||||||||||||
Basic income (loss) per share
|
$ | 0.83 | $ | 0.57 | $ | 0.72 | $ | 0.37 | $ | (0.08 | ) | |||||||||
Diluted income (loss) per share
|
$ | 0.78 | $ | 0.54 | $ | 0.67 | $ | 0.33 | $ | (0.08 | ) | |||||||||
Weighted-average common shares outstanding
|
35,830 | 34,310 | 33,509 | 31,703 | 29,502 | |||||||||||||||
Stock options, restricted stock and warrants
|
1,996 | 2,324 | 2,611 | 3,387 | - | |||||||||||||||
Diluted weighted-average common equivalent shares outstanding
|
37,826 | 36,634 | 36,120 | 35,090 | 29,502 | |||||||||||||||
* Stock-based compensation has been included in the following line items:
|
||||||||||||||||||||
Cost of revenue
|
$ | 393 | $ | 246 | $ | 344 | $ | 539 | $ | 539 | ||||||||||
Research and development
|
6,742 | 6,408 | 5,821 | 4,625 | 5,236 | |||||||||||||||
Selling, general and administrative
|
9,675 | 7,957 | 6,993 | 6,064 | 5,749 | |||||||||||||||
Total
|
$ | 16,810 | $ | 14,611 | $ | 13,158 | $ | 11,228 | $ | 11,524 |
As of December 31,
|
||||||||||||||||||||
2010
|
2009
|
2008
|
2007
|
2006
|
||||||||||||||||
(in thousands)
|
||||||||||||||||||||
Cash and cash equivalents
|
$ | 48,010 | $ | 46,717 | $ | 83,266 | $ | 83,114 | $ | 50,816 | ||||||||||
Short-term investments
|
129,709 | 118,914 | 21,922 | 27,765 | 27,674 | |||||||||||||||
Long-term investments
|
19,180 | 19,445 | 37,425 | - | - | |||||||||||||||
Restricted cash
|
- | - | 7,360 | 7,350 | - | |||||||||||||||
Working capital
|
195,403 | 179,577 | 117,365 | 119,348 | 77,111 | |||||||||||||||
Restricted assets
|
- | - | 7 | 8,340 | 8,309 | |||||||||||||||
Total assets
|
281,603 | 241,821 | 195,299 | 172,590 | 117,327 | |||||||||||||||
Common stock
|
178,269 | 175,518 | 147,298 | 143,890 | 113,168 | |||||||||||||||
Total stockholders' equity
|
246,895 | 212,957 | 164,645 | 137,537 | 95,025 |
|
(1)
|
Our price is fixed and determinable at the date of sale. We do not offer special payment terms, price protection or price adjustments to distributors where we recognize revenue upon shipment
|
|
(2)
|
Our distributors are obligated to pay us and this obligation is not contingent on the resale of our products
|
|
(3)
|
The distributor’s obligation is unchanged in the event of theft or physical destruction or damage to the products
|
|
(4)
|
Our distributors have stand-alone economic substance apart from our relationship
|
|
(5)
|
We do not have any obligations for future performance to directly bring about the resale of our products by the distributor
|
|
(6)
|
The amount of future returns can be reasonably estimated. We have the ability and the information necessary to track inventory sold to and held at our distributors. We maintain a history of returns and have the ability to estimate the stock rotation returns on a quarterly basis.
|
|
·
|
Level 1: Quoted prices in active markets for identical assets;
|
|
·
|
Level 2: Significant other observable inputs; and
|
|
·
|
Level 3: Significant unobservable inputs.
|
Year ended December 31,
|
||||||||||||||||||||||||
2010
|
2009
|
2008
|
||||||||||||||||||||||
(in thousands, except percentages)
|
||||||||||||||||||||||||
Revenue
|
$ | 218,840 | 100.0 | % | $ | 165,008 | 100.0 | % | $ | 160,511 | 100.0 | % | ||||||||||||
Cost of revenue
|
97,383 | 44.5 | 67,330 | 40.8 | 61,184 | 38.1 | ||||||||||||||||||
Gross profit
|
121,457 | 55.5 | 97,678 | 59.2 | 99,327 | 61.9 | ||||||||||||||||||
Operating expenses:
|
||||||||||||||||||||||||
Research and development
|
44,372 | 20.3 | 38,295 | 23.3 | 34,850 | 21.7 | ||||||||||||||||||
Selling, general and administrative
|
41,169 | 18.8 | 36,752 | 22.3 | 35,256 | 22.0 | ||||||||||||||||||
Litigation expense
|
5,418 | 2.5 | 9,457 | 5.7 | 6,714 | 4.2 | ||||||||||||||||||
Patent litigation settlement (provision reversal)
|
- | - | (6,356 | ) | (3.9 | ) | - | - | ||||||||||||||||
Total operating expenses
|
90,959 | 41.6 | 78,148 | 47.4 | 76,820 | 47.9 | ||||||||||||||||||
Income from operations
|
30,498 | 13.9 | 19,530 | 11.8 | 22,507 | 14.0 | ||||||||||||||||||
Interest and other income
|
1,156 | 0.6 | 1,047 | 0.6 | 3,587 | 2.2 | ||||||||||||||||||
Other expense
|
(234 | ) | (0.1 | ) | (429 | ) | (0.2 | ) | (652 | ) | (0.4 | ) | ||||||||||||
Total other income, net
|
922 | 0.5 | 618 | 0.4 | 2,935 | 1.8 | ||||||||||||||||||
|
||||||||||||||||||||||||
Income before income taxes
|
31,420 | 14.4 | 20,148 | 12.2 | 25,442 | 15.9 | ||||||||||||||||||
Income tax provision
|
1,857 | 0.9 | 474 | 0.3 | 1,216 | 0.8 | ||||||||||||||||||
Net income
|
$ | 29,563 | 13.5 | % | $ | 19,674 | 11.9 | % | $ | 24,226 | 15.1 | % |
Year ended December 31, | Percent Change | ||||||||||||||||||||||||||||
Product Family | 2010 |
% of Revenue
|
2009
|
% of
Revenue
|
2008
|
% of
Revenue
|
2010 to 2009
Change
|
2009 to 2008
Change
|
|||||||||||||||||||||
DC to DC Converters
|
$ | 183,051 | 83.7 | % | $ | 123,581 | 74.9 | % | $ | 115,373 | 71.9 | % | 48.1% | 7.1% | |||||||||||||||
Lighting Control Products
|
28,554 | 13.0 | % | 27,836 | 16.9 | % | 32,308 | 20.1 | % | 2.6% | (13.8%) | ||||||||||||||||||
Audio Amplifiers
|
7,235 | 3.3 | % | 13,591 | 8.2 | % | 12,830 | 8.0 | % | (46.8%) | 5.9% | ||||||||||||||||||
Total | $ | 218,840 | 100.0 | % | $ | 165,008 | 100.0 | % | $ | 160,511 | 100.00 | % |
Year ended December 31, |
Percentage Change
|
|||||||||||||||||||
2010
|
2009
|
2008
|
2010
to
2009
|
2009
to 2008
|
||||||||||||||||
(in thousands, except percentages)
|
||||||||||||||||||||
Revenue
|
$ | 218,840 | $ | 165,008 | $ | 160,511 | 32.6 | % | 2.8 | % | ||||||||||
Research and development ("R&D"), excluding
stock-based compensation
|
37,630 | 31,887 | 29,029 | 18.0 | % | 9.8 | % | |||||||||||||
R&D stock-based compensation
|
6,742 | 6,408 | 5,821 | 5.2 | % | 10.1 | % | |||||||||||||
Total R&D
|
$ | 44,372 | $ | 38,295 | $ | 34,850 | 15.9 | % | 9.9 | % | ||||||||||
R&D as a percentage of net revenue
|
20.3 | % | 23.2 | % | 21.7 | % |
Year ended December 31, |
Percentage Change
|
|||||||||||||||||||
2010
|
2009
|
2008
|
2010 to 2009
|
2009 to 2008
|
||||||||||||||||
(in thousands, except percentages)
|
||||||||||||||||||||
Revenue
|
$ | 218,840 | $ | 165,008 | $ | 160,511 | 32.6 | % | 2.8 | % | ||||||||||
Selling, general and administrative ("SG&A"), excluding stock-based compensation
|
31,494 | 28,795 | 28,263 | 9.4 | % | 1.9 | % | |||||||||||||
SG&A stock-based compensation
|
9,675 | 7,957 | 6,993 | 21.6 | % | 13.8 | % | |||||||||||||
Total SG&A
|
$ | 41,169 | $ | 36,752 | $ | 35,256 | 12.0 | % | 4.2 | % | ||||||||||
SG&A as a percentage of net revenue
|
18.8 | % | 22.3 | % | 22.0 | % |
Year ended December 31,
|
Percentage Change
|
|||||||||||||||||||
2010
|
2009
|
2008
|
2010 to 2009
|
2009 to 2008
|
||||||||||||||||
(in thousands, except percentages)
|
||||||||||||||||||||
Revenue
|
$ | 218,840 | $ | 165,008 | $ | 160,511 | 32.6 | % | 2.8 | % | ||||||||||
Litigation expense
|
5,418 | 9,457 | 6,714 | (42.7 | %) | 40.9 | % | |||||||||||||
Litigation expense as a percentage of net revenue
|
2.5 | % | 5.7 | % | 4.2 | % |
Year ended December 31, |
Percentage Change
|
|||||||||||||||||||
2010
|
2009
|
2008
|
2010 to 2009
|
2009 to 2008
|
||||||||||||||||
(in thousands, except percentages)
|
||||||||||||||||||||
Revenue
|
$ | 218,840 | $ | 165,008 | $ | 160,511 | 32.6 | % | 2.8 | % | ||||||||||
Patent litigation settlement (provision reversal)
|
- | (6,356 | ) | - | ||||||||||||||||
Patent litigation settlement (provision reversal)
as a percentage of net revenue
|
0.0 | % | (3.9 | %) | 0.0 | % |
|
1.
|
The decline in the fair value of these securities is not attributable to adverse conditions specifically related to these securities or to specific conditions in an industry or in a geographic area;
|
|
2.
|
Management possesses both the intent and ability to hold these securities for a period of time sufficient to allow for any anticipated recovery in fair value;
|
|
3.
|
Management believes that it is more likely than not that the Company will not have to sell these securities before recovery of its cost basis;
|
|
4.
|
Except for the credit loss of $70,000 recognized in year ended December 31, 2009 for the Company’s holdings in auction rate securities described below, the Company does not believe that there is any additional credit loss associated with other auction-rate securities because the Company expects to recover the entire amortized cost basis;
|
|
5.
|
The majority of the securities remain AAA rated, with $8.6 million of the auction rate securities having been downgraded by Moody’s to A3-Baa3 during the year ended December 31, 2009, and there have been no downgrades during the year ended December 31, 2010; and
|
|
6.
|
All scheduled interest payments have been made pursuant to the reset terms and conditions.
|
2010 Calendar Year |
Shares
Repurchased
|
Average
Price per
Share
|
Value
(in thousands)
|
|||||||||
August
|
983,189 | $ | 17.29 | $ | 16,998 | |||||||
November
|
916,600 | $ | 15.85 | $ | 14,529 | |||||||
Total Shares Repurchased | 1,899,789 | $ | 31,527 |
Payments by Period
|
||||||||||||||||||||||||||||
Total
|
2011
|
2012
|
2013
|
2014
|
2015
|
Thereafter
|
||||||||||||||||||||||
Operating leases
|
$ | 2,413 | $ | 1,665 | $ | 574 | $ | 174 | $ | - | $ | - | $ | - | ||||||||||||||
Outstanding purchase commitments
|
$ | 14,379 | $ | 14,379 | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||
$ | 16,792 | $ | 16,044 | $ | 574 | $ | 174 | $ | - | $ | - | $ | - |
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
Page
|
|
Reports of Independent Registered Public Accounting Firm
|
37
|
Consolidated Balance Sheets
|
39
|
Consolidated Statements of Operations
|
40
|
Consolidated Statements of Stockholders’ Equity
|
41
|
Consolidated Statements of Cash Flows
|
42
|
Notes to Consolidated Financial Statements
|
43
|
December 31,
|
||||||||
2010
|
2009
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 48,010 | $ | 46,717 | ||||
Short-term investments
|
129,709 | 118,914 | ||||||
Accounts receivable, net of allowances of $0 in both 2010 and 2009
|
18,347 | 15,521 | ||||||
Inventories
|
25,789 | 19,616 | ||||||
Deferred income tax assets, net - current
|
204 | 5 | ||||||
Prepaid expenses and other current assets
|
2,314 | 2,726 | ||||||
Total current assets
|
224,373 | 203,499 | ||||||
Property and equipment, net
|
37,262 | 17,968 | ||||||
Long-term investments
|
19,180 | 19,445 | ||||||
Deferred income tax assets, net - long-term
|
39 | 175 | ||||||
Other assets
|
749 | 734 | ||||||
Total assets
|
$ | 281,603 | $ | 241,821 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$ | 8,979 | $ | 7,787 | ||||
Accrued compensation and related benefits
|
8,792 | 8,454 | ||||||
Accrued liabilities
|
11,199 | 7,681 | ||||||
Total current liabilities
|
28,970 | 23,922 | ||||||
Non-current income tax liability
|
5,015 | 4,915 | ||||||
Other long-term liabilities
|
723 | 27 | ||||||
Total liabilities
|
34,708 | 28,864 | ||||||
Stockholders' equity:
|
||||||||
Common stock, $0.001 par value, $35 and $35 in 2010 and 2009, respectively;
shares authorized: 150,000,000; shares issued and outstanding: 35,063,033
and 35,165,316 in 2010 and 2009, respectively
|
178,269 | 175,518 | ||||||
Retained earnings
|
66,647 | 37,085 | ||||||
Accumulated other comprehensive income
|
1,979 | 354 | ||||||
Total stockholders’ equity
|
246,895 | 212,957 | ||||||
Total liabilities and stockholders’ equity
|
$ | 281,603 | $ | 241,821 |
Year Ended December 31,
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
Revenue
|
$ | 218,840 | $ | 165,008 | $ | 160,511 | ||||||
Cost of revenue
|
97,383 | 67,330 | 61,184 | |||||||||
Gross profit
|
121,457 | 97,678 | 99,327 | |||||||||
Operating expenses:
|
||||||||||||
Research and development
|
44,372 | 38,295 | 34,850 | |||||||||
Selling, general and administrative
|
41,169 | 36,752 | 35,256 | |||||||||
Litigation expense
|
5,418 | 9,457 | 6,714 | |||||||||
Litigation provision reversal, net
|
- | (6,356 | ) | - | ||||||||
Total operating expenses
|
90,959 | 78,148 | 76,820 | |||||||||
Income from operations
|
30,498 | 19,530 | 22,507 | |||||||||
Other income (expense):
|
||||||||||||
Interest and other income
|
1,156 | 1,047 | 3,587 | |||||||||
Other expense
|
(234 | ) | (429 | ) | (652 | ) | ||||||
Total other income, net
|
922 | 618 | 2,935 | |||||||||
Income before income taxes
|
31,420 | 20,148 | 25,442 | |||||||||
Income tax provision
|
1,857 | 474 | 1,216 | |||||||||
Net income
|
$ | 29,563 | $ | 19,674 | $ | 24,226 | ||||||
Basic income per share
|
$ | 0.83 | $ | 0.57 | $ | 0.72 | ||||||
Diluted income per share
|
$ | 0.78 | $ | 0.54 | $ | 0.67 | ||||||
Weighted-average common shares outstanding
|
35,830 | 34,310 | 33,509 | |||||||||
Stock options and restricted stock
|
1,996 | 2,324 | 2,611 | |||||||||
Diluted weighted-average common equivalent shares outstanding
|
37,826 | 36,634 | 36,120 |
Common Stock
|
Deferred
Stock
|
Retained Earnings
(Accumulated
|
Accumulated Other
Comprehensive
|
Total
Stockholders’
|
||||||||||||||||||||
Shares
|
Amount
|
Compensation
|
Deficit)
|
Income (Loss)
|
Equity
|
|||||||||||||||||||
Balance as of December 31, 2007
|
33,454,595 | $ | 143,890 | $ | (3 | ) | $ | (6,815 | ) | $ | 465 | $ | 137,537 | |||||||||||
Components of comprehensive loss:
|
||||||||||||||||||||||||
Net income
|
24,226 | 24,226 | ||||||||||||||||||||||
Impairment of Auction Rate Securities
|
(1,400 | ) | (1,400 | ) | ||||||||||||||||||||
Unrealized gains
|
(1 | ) | (1 | ) | ||||||||||||||||||||
Foreign exchange gain
|
872 | 872 | ||||||||||||||||||||||
Total comprehensive income
|
23,697 | |||||||||||||||||||||||
Exercise of stock options, including net excess tax benefit of $765
|
1,417,585 | 13,480 | 13,480 | |||||||||||||||||||||
Repurchase of common shares
|
(1,430,105 | ) | (25,043 | ) | (25,043 | ) | ||||||||||||||||||
Shares purchased through ESPP
|
125,207 | 1,778 | 1,778 | |||||||||||||||||||||
Stock-based compensation expense, net of forfeitures
|
13,151 | 3 | 13,154 | |||||||||||||||||||||
Compensation expense for non-employee stock options
|
42 | 42 | ||||||||||||||||||||||
Release of restricted stock upon vesting
|
79,539 | - | - | |||||||||||||||||||||
Balance as of December 31, 2008
|
33,646,821 | $ | 147,298 | $ | - | $ | 17,411 | $ | (64 | ) | $ | 164,645 | ||||||||||||
Components of comprehensive income:
|
||||||||||||||||||||||||
Net income
|
19,674 | 19,674 | ||||||||||||||||||||||
Impairment of Auction Rate Securities
|
340 | 340 | ||||||||||||||||||||||
Unrealized losses
|
(109 | ) | (109 | ) | ||||||||||||||||||||
Foreign exchange gain
|
187 | 187 | ||||||||||||||||||||||
Total comprehensive income
|
20,092 | |||||||||||||||||||||||
Exercise of stock options, including net excess tax benefit of $643
|
1,217,272 | 11,824 | 11,824 | |||||||||||||||||||||
Shares purchased through ESPP
|
161,026 | 1,794 | 1,794 | |||||||||||||||||||||
Stock-based compensation expense, net of forfeitures
|
14,484 | 14,484 | ||||||||||||||||||||||
Compensation expense for non-employee stock options
|
118 | 118 | ||||||||||||||||||||||
Release of restricted stock upon vesting
|
140,197 | - | - | |||||||||||||||||||||
Balance as of December 31, 2009
|
35,165,316 | $ | 175,518 | $ | - | $ | 37,085 | $ | 354 | $ | 212,957 | |||||||||||||
Components of comprehensive income:
|
||||||||||||||||||||||||
Net income
|
29,563 | 29,563 | ||||||||||||||||||||||
Impairment of Auction Rate Securities
|
160 | 160 | ||||||||||||||||||||||
Unrealized losses
|
104 | 104 | ||||||||||||||||||||||
Foreign exchange gain
|
1,361 | 1,361 | ||||||||||||||||||||||
Total comprehensive income
|
31,188 | |||||||||||||||||||||||
Exercise of stock options, including net excess tax benefit of $1,256
|
1,452,245 | 15,597 | 15,597 | |||||||||||||||||||||
Repurchase of common shares
|
(1,899,789 | ) | (31,527 | ) | (31,527 | ) | ||||||||||||||||||
Shares purchased through ESPP
|
114,387 | 1,885 | 1,885 | |||||||||||||||||||||
Stock-based compensation expense, net of forfeitures
|
16,803 | 16,803 | ||||||||||||||||||||||
Compensation expense for non-employee stock options
|
(7 | ) | (7 | ) | ||||||||||||||||||||
Release of restricted stock upon vesting
|
230,874 | - | - | |||||||||||||||||||||
Balance as of December 31, 2010
|
35,063,033 | $ | 178,269 | $ | - | $ | 66,647 | $ | 1,979 | $ | 246,895 |
Year Ended December 31,
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
Cash flows from operating activities:
|
||||||||||||
Net income
|
$ | 29,563 | $ | 19,674 | $ | 24,226 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||||||
Depreciation and amortization
|
8,016 | 6,573 | 5,725 | |||||||||
Loss on disposal of property and equipment
|
1 | 17 | 5 | |||||||||
Amortization and realized gain (loss) on debt instruments
|
688 | 380 | (36 | ) | ||||||||
Deferred income tax assets
|
(56 | ) | (84 | ) | 710 | |||||||
Credit loss on auction-rate securities
|
- | 70 | - | |||||||||
Tax benefit from stock option transactions
|
3,349 | 2,288 | 2,110 | |||||||||
Excess tax benefit from stock option transactions
|
(1,256 | ) | (643 | ) | (765 | ) | ||||||
Stock-based compensation
|
16,810 | 14,611 | 13,158 | |||||||||
Changes in operating assets and liabilities:
|
||||||||||||
Accounts receivable
|
(2,826 | ) | (6,406 | ) | (876 | ) | ||||||
Inventories
|
(6,184 | ) | (737 | ) | (1,356 | ) | ||||||
Prepaid expenses and other assets
|
378 | (101 | ) | 2,242 | ||||||||
Accounts payable
|
1,155 | 2,699 | (1,382 | ) | ||||||||
Accrued and long-term liabilities
|
556 | (5,633 | ) | (1,816 | ) | |||||||
Accrued income taxes payable and noncurrent tax liabilities
|
(1,995 | ) | (1,492 | ) | (1,897 | ) | ||||||
Accrued compensation and related benefits
|
295 | 548 | (458 | ) | ||||||||
Net cash provided by operating activities
|
48,494 | 31,764 | 39,590 | |||||||||
Cash flows from investing activities:
|
||||||||||||
Property and equipment purchases
|
(22,779 | ) | (9,954 | ) | (5,233 | ) | ||||||
Purchase of intangible assets
|
- | (310 | ) | - | ||||||||
Purchase of short-term investments
|
(208,621 | ) | (159,917 | ) | (36,608 | ) | ||||||
Proceeds from sale of short-term investments
|
197,243 | 80,586 | 30,985 | |||||||||
Proceeds from sale of long-term investments
|
425 | 100 | 725 | |||||||||
Changes in restricted assets
|
(19 | ) | 7,367 | 8,566 | ||||||||
Net cash used in investing activities
|
(33,751 | ) | (82,128 | ) | (29,615 | ) | ||||||
Cash flows from financing activities:
|
||||||||||||
Proceeds from issuance of common stock
|
14,339 | 11,181 | 12,715 | |||||||||
Proceeds from employee stock purchase plan
|
1,885 | 1,794 | 1,778 | |||||||||
Repurchase of common stock
|
(31,527 | ) | - | (25,043 | ) | |||||||
Excess tax benefits from stock option transactions
|
1,256 | 643 | 765 | |||||||||
Net cash provided by (used in) financing activities
|
(14,047 | ) | 13,618 | (9,785 | ) | |||||||
Effect of change in exchange rates
|
597 | 197 | (38 | ) | ||||||||
Net increase (decrease) in cash and cash equivalents
|
1,293 | (36,549 | ) | 152 | ||||||||
Cash and cash equivalents, beginning of period
|
46,717 | 83,266 | 83,114 | |||||||||
Cash and cash equivalents, end of period
|
$ | 48,010 | $ | 46,717 | $ | 83,266 | ||||||
Supplemental disclosures for cash flow information:
|
||||||||||||
Cash paid (received) for taxes
|
$ | 35 | $ | 321 | $ | (2,482 | ) | |||||
Supplemental disclosures of non-cash investing and financing activities:
|
||||||||||||
Liability accrued for equipment purchases
|
$ | 4,264 | $ | 663 | $ | 228 | ||||||
Unrealized loss on auction-rate securities
|
$ | (104 | ) | $ | (340 | ) | $ | 1,400 | ||||
Temporary impairment of auction-rate securities
|
$ | (160 | ) | $ | 70 | $ | (1,250 | ) | ||||
Other-than-temporary impairment of short-term investments
|
$ | - | $ | 525 | $ | - | ||||||
Value of auction-rate security put right
|
$ | - | $ | (525 | ) | $ | 1,250 |
|
·
|
Level 1: Quoted prices in active markets for identical assets;
|
|
·
|
Level 2: Valuations based on observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities or quoted prices in markets that are not active; and
|
|
·
|
Level 3: Significant unobservable inputs.
|
|
(1)
|
The Company’s price is fixed and determinable at the date of sale. The Company does not offer special payment terms, price protection or price adjustments to distributors where the Company recognizes revenue upon shipment
|
|
(2)
|
The Company’s distributors are obligated to pay the Company and this obligation is not contingent on the resale of the Company’s products
|
|
(3)
|
The distributor’s obligation is unchanged in the event of theft or physical destruction or damage to the products
|
|
(4)
|
The Company’s distributors have stand-alone economic substance apart from the Company’s relationship
|
|
(5)
|
The Company does not have any obligations for future performance to directly bring about the resale of the Company’s products by the distributor
|
|
(6)
|
The amount of future returns can be reasonably estimated. The Company has the ability and the information necessary to track inventory sold to and held at its distributors. The Company maintains a history of returns and has the ability to estimate the stock rotation returns on a quarterly basis.
|
Years Ended December 31,
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
Net income
|
$ | 29,563 | $ | 19,674 | $ | 24,226 | ||||||
Other comprehensive income (loss):
|
||||||||||||
Change in value of temporary impairment of auction-rate securities
|
160 | 340 | (1,400 | ) | ||||||||
Unrealized gain (loss) on available-for-sale securities
|
104 | (109 | ) | (1 | ) | |||||||
Foreign currency translation adjustments
|
1,361 | 187 | 872 | |||||||||
Comprehensive income
|
$ | 31,188 | $ | 20,092 | $ | 23,697 |
Adjusted Cost and Estimated
Fair Market Value as of December 31,
|
||||||||
2010
|
2009
|
|||||||
Cash, Cash Equivalents and Investments
|
||||||||
Cash in Banks
|
$ | 48,010 | $ | 44,717 | ||||
Government Agencies / Treasuries
|
117,302 | 104,064 | ||||||
Commercial Paper / Corporate Notes
|
12,407 | - | ||||||
Auction-Rate Securities backed by Student-Loan Notes
|
19,180 | 35,570 | ||||||
Put Right
|
- | 725 | ||||||
Total Cash, Cash Equivalents and Investments
|
$ | 196,899 | $ | 185,076 | ||||
Reported as:
|
||||||||
Cash and Cash Equivalents
|
$ | 48,010 | $ | 46,717 | ||||
Short-term Available-for-Sale Investments
|
129,709 | 102,064 | ||||||
Short-term Trading Investments
|
- | 16,850 | ||||||
Long-term Available-for-Sale Investments
|
19,180 | 19,445 | ||||||
Total Cash, Cash Equivalents and Investments
|
$ | 196,899 | $ | 185,076 |
2010
|
2009
|
|||||||
Less than 1 year
|
$ | 100,637 | $ | 73,566 | ||||
1 - 5 years
|
29,072 | 20,053 | ||||||
Greater than 5 years
|
19,180 | 44,740 | ||||||
$ | 148,889 | $ | 138,359 |
Fair Value Measurements at December 31, 2010 Using
|
||||||||||||||||
Quoted Prices in Active Markets for Identical Assets
|
Significant Other Observable Inputs
|
Significant Unobservable
Inputs
|
||||||||||||||
Total
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
US Treasury and US Government Agency Bonds
|
$ | 117,302 | $ | 117,302 | $ | - | $ | - | ||||||||
Commercial Paper / Corporates
|
12,407 | - | 12,407 | - | ||||||||||||
Long-term available-for-sale auction-rate securities
|
19,180 | - | - | 19,180 | ||||||||||||
$ | 148,889 | $ | 117,302 | $ | 12,407 | $ | 19,180 |
Fair Value Measurements at December 31, 2009 Using
|
||||||||||||||||
Quoted Prices in Active Markets for Identical Assets
|
Significant Other Observable Inputs
|
Significant Unobservable
Inputs
|
||||||||||||||
Total
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
US Treasury and US Government Agency Bonds
|
$ | 104,064 | $ | 104,064 | $ | - | $ | - | ||||||||
Long-term available-for-sale auction-rate securities
|
19,445 | - | - | 19,445 | ||||||||||||
Short-term trading auction-rate securities
|
16,125 | - | - | 16,125 | ||||||||||||
Put right
|
725 | - | - | 725 | ||||||||||||
$ | 140,359 | $ | 104,064 | $ | - | $ | 36,295 |
Auction-Rate Securities
|
Put Right
|
Total
|
||||||||||
Beginning balances as of January 1, 2009
|
$ | 36,175 | $ | 1,250 | $ | 37,425 | ||||||
Sales and Settlement
|
(1,400 | ) | - | (1,400 | ) | |||||||
Unrealized Gain
|
270 | - | 270 | |||||||||
Gain (loss) from UBS auction rate securities and put right
|
525 | (525 | ) | - | ||||||||
Ending balances at December 31, 2009
|
$ | 35,570 | $ | 725 | $ | 36,295 | ||||||
Sales and Settlement
|
(17,275 | ) | - | (17,275 | ) | |||||||
Unrealized Gain
|
160 | - | 160 | |||||||||
Gain (loss) from UBS auction rate securities and put right
|
725 | (725 | ) | - | ||||||||
Ending balances at December 31, 2010
|
$ | 19,180 | $ | - | $ | 19,180 |
|
·
|
The decline in the fair value of these securities is not largely attributable to adverse conditions specifically related to these securities or to specific conditions in an industry or in a geographic area;
|
|
·
|
Management possesses both the intent and ability to hold these securities for a period of time sufficient to allow for any anticipated recovery in fair value;
|
|
·
|
Management believes that it is more likely than not that the Company will not have to sell these securities before recovery of its cost basis;
|
|
·
|
Except for the credit loss of $70,000 recognized during the year ended December 31, 2009 for the Company’s holdings in auction rate securities described below, the Company does not believe that there is any additional credit loss associated with other auction-rate securities because the Company expects to recover the entire amortized cost basis;
|
|
·
|
The majority of the securities remain AAA rated, with $8.6 million of the auction rate securities having been downgraded by Moody’s to A3-Baa3, during the year ended December 31, 2009 and there have been no downgrades during the year ended December 31, 2010; and
|
|
·
|
All scheduled interest payments have been made pursuant to the reset terms and conditions.
|
December 31, 2009
|
March 31, 2010
|
June 30, 2010
|
September 30, 2010
|
December 31, 2010
|
|
Time-to-Liquidity
|
24 months
|
24 months
|
24 months
|
24 months
|
24 months
|
Expected Return (Based on the
2-year treasury rate, plus a
contractual penalty rate)
|
2.4%
|
2.4%
|
2.7%
|
2.2%
|
2.9%
|
Discount Rate (Based on the
2-year LIBOR, the cost of
debt and a liquidity risk
premium)
|
5.2% - 10.0%, depending on the credit-rating of the security
|
4.6% - 9.4%, depending on the credit-rating of the security
|
3.8% - 8.6%, depending on the credit-rating of the security
|
3.2% - 8.0%, depending on the credit-rating of the security
|
4.1% - 8.9%, depending on the credit-rating of the security
|
December 31,
2010
|
December 31,
2009
|
|||||||
Work in progress
|
$ | 11,559 | $ | 11,082 | ||||
Finished goods
|
14,230 | 8,534 | ||||||
Total inventories
|
$ | 25,789 | $ | 19,616 |
December 31,
|
||||||||
2010
|
2009
|
|||||||
Computers, software and equipment
|
$ | 48,123 | $ | 33,716 | ||||
Leasehold improvements
|
2,302 | 4,894 | ||||||
Vehicles
|
944 | 657 | ||||||
Building
|
15,074 | 459 | ||||||
Furniture and fixtures
|
735 | 355 | ||||||
Total
|
67,178 | 40,081 | ||||||
Less accumulated depreciation and amortization
|
(29,916 | ) | (22,113 | ) | ||||
Property and equipment, net
|
$ | 37,262 | $ | 17,968 |
December 31,
2010
|
December 31,
2009
|
|||||||
Deferred revenue and customer prepayments
|
$ | 3,200 | $ | 2,109 | ||||
Legal expenses and settlement costs
|
844 | 2,940 | ||||||
Stock rotation reserve
|
811 | 864 | ||||||
Warranty
|
764 | 294 | ||||||
Chengdu building construction cost
|
3,633 | - | ||||||
Other
|
1,947 | 1,474 | ||||||
Total accrued liabilities
|
$ | 11,199 | $ | 7,681 |
Available for Grant as of December 31, 2009 | 2,023,943 | |||
2010 Additions to Plan
|
1,758,265 | |||
2010 Grants
|
(1,304,740 | ) | ||
2010 Cancellations
|
477,139 | |||
Available for Grants as of December 31, 2010
|
2,954,607 |
Stock Options
|
Weighted
Average
Exercise
Price
|
Weighted
Average Remaining
Contractual Term (Years)
|
Aggregate
Intrinsic
Value
|
|||||||||||||
Outstanding at December 31, 2007 (3,722,936 options exercisable at a weighted-average exercise price of $6.94 per share)
|
7,442,806 | $ | 10.50 | 6.64 | $ | 81,762,963 | ||||||||||
Options granted (weighted-average fair value of $6.08 per share)
|
2,566,290 | $ | 17.10 | |||||||||||||
Options exercised
|
(1,417,585 | ) | $ | 8.97 | ||||||||||||
Options forfeited and expired
|
(394,874 | ) | $ | 14.72 | ||||||||||||
Outstanding at December 31, 2008 (3,766,630 options exercisable at a weighted-average exercise price of $8.26 per share)
|
8,196,637 | $ | 12.62 | 5.91 | $ | 20,193,958 | ||||||||||
Options granted (weighted-average fair value of $8.42 per share)
|
706,000 | $ | 17.52 | |||||||||||||
Options exercised
|
(1,217,272 | ) | $ | 9.19 | ||||||||||||
Options forfeited and expired
|
(274,451 | ) | $ | 17.27 | ||||||||||||
Outstanding at December 31, 2009 (4,112,763 options exercisable at a weighted-average exercise price of $10.93 per share)
|
7,410,914 | $ | 13.48 | 5.04 | $ | 77,918,848 | ||||||||||
Options granted (weighted-average fair value of $8.95 per share)
|
370,500 | $ | 19.92 | |||||||||||||
Options exercised
|
(1,452,245 | ) | $ | 9.87 | ||||||||||||
Options forfeited and expired
|
(494,051 | ) | $ | 15.67 | ||||||||||||
Outstanding at December 31, 2010
|
5,835,118 | $ | 14.61 | 4.30 | $ | 19,035,591 | ||||||||||
Options exercisable at December 31, 2010 and expected to become exercisable
|
5,584,241 | $ | 14.46 | 4.27 | $ | 18,802,775 | ||||||||||
Options vested and exercisable at December 31, 2010
|
4,264,268 | $ | 13.33 | 4.02 | $ | 17,725,853 |
Options Outstanding
|
Options Exercisable
|
||||||||||||||||||||
Range of
Exercises
Prices
|
Number
of Options
Outstanding
as if
12/31/2010
|
Weighted
Average
Remaining
Contractual
Life (Years)
|
Weighted
Average
Exercise
Price
|
Number
of Options
Exercisable
as of
12/31/2010
|
Weighted
Average
Exercise
Price
|
||||||||||||||||
$0.08 - $5.00 | 689,212 | 2.90 | $ | 3.63 | 689,212 | $ | 3.63 | ||||||||||||||
$7.50 - $10.37 | 591,598 | 4.08 | $ | 8.73 | 576,098 | $ | 8.69 | ||||||||||||||
$10.58 - $12.99 | 609,745 | 3.79 | $ | 12.20 | 590,780 | $ | 12.22 | ||||||||||||||
$13.01 - $15.08 | 668,229 | 4.78 | $ | 13.62 | 426,485 | $ | 13.79 | ||||||||||||||
$15.18 - $15.64 | 364,288 | 4.15 | $ | 15.60 | 250,300 | $ | 15.62 | ||||||||||||||
$15.74 - $15.74 | 610,000 | 4.82 | $ | 15.74 | 330,415 | $ | 15.74 | ||||||||||||||
$16.00 - $17.93 | 597,906 | 4.34 | $ | 16.53 | 457,334 | $ | 16.47 | ||||||||||||||
$17.98 - $19.91 | 602,265 | 4.40 | $ | 18.76 | 435,576 | $ | 18.61 | ||||||||||||||
$20.06 - $22.26 | 617,375 | 5.08 | $ | 21.12 | 242,253 | $ | 21.39 | ||||||||||||||
$22.47 - $25.84 | 484,500 | 4.83 | $ | 23.76 | 265,815 | $ | 23.79 | ||||||||||||||
5,835,118 | 4,264,268 |
Year ended December 31,
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
Expected term (years)
|
4.1 | 4.1 | 4.1 | |||||||||
Expected volatility
|
55.9 | % | 60.7 | % | 40.1 | % | ||||||
Risk-free interest rate
|
1.8 | % | 1.8 | % | 2.6 | % | ||||||
Dividend yield
|
- | - | - |
Restricted
Stock Awards
|
Weighted
Average
Grant Date
Fair Value
Per Share
|
Weighted
Average
Remaining Recognition
Period (Years)
|
||||||||||
Outstanding at December 31, 2007
|
175,539 | $ | 10.86 | 1.31 | ||||||||
Awards released
|
(88,576 | ) | 10.53 | |||||||||
Awards forfeited
|
(16,586 | ) | 9.62 | |||||||||
Outstanding at December 31, 2008
|
70,377 | $ | 11.55 | 0.48 | ||||||||
Awards released
|
(57,577 | ) | 11.29 | |||||||||
Awards forfeited
|
(6,250 | ) | 8.64 | |||||||||
Outstanding at December 31, 2009
|
6,550 | $ | 16.62 | 0.14 | ||||||||
Awards released
|
(6,550 | ) | 16.62 | |||||||||
Outstanding at December 31, 2010
|
- | $ | - | - |
Restricted
Stock
Units
|
Weighted
Average
Grant Date
Fair Value
Per Share
|
Weighted
Average
Remaining
Recognition
Period (Years)
|
||||||||||
Outstanding at December 31, 2007
|
182,500 | $ | 15.37 | 1.91 | ||||||||
Awards granted
|
311,627 | 18.48 | ||||||||||
Awards released
|
(96,125 | ) | 15.39 | |||||||||
Awards forfeited
|
(8,359 | ) | 15.98 | |||||||||
Outstanding at December 31, 2008
|
389,643 | $ | 18.11 | 2.72 | ||||||||
Awards granted
|
54,200 | 20.93 | ||||||||||
Awards released
|
(146,447 | ) | 18.11 | |||||||||
Awards forfeited
|
(7,500 | ) | 16.66 | |||||||||
Outstanding at December 31, 2009
|
289,896 | $ | 18.67 | 2.22 | ||||||||
Awards granted
|
934,240 | 20.05 | ||||||||||
Awards released
|
(230,874 | ) | 19.24 | |||||||||
Awards forfeited
|
(33,088 | ) | 18.38 | |||||||||
Outstanding at December 31, 2010
|
960,174 | $ | 19.88 | 2.91 |
Available Shares as of December 31, 2009 | 2,553,012 | |||
2010 Additions to Plan
|
703,306 | |||
2010 Purchases
|
(114,387 | ) | ||
Available Shares as of December 31, 2010
|
3,141,931 |
Year ended December 31,
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
Expected term (years)
|
0.5 | 0.5 | 0.5 | |||||||||
Expected volatility
|
39.5 | % | 79.8 | % | 48.3 | % | ||||||
Risk-free interest rate
|
0.2 | % | 0.4 | % | 2.0 | % | ||||||
Dividend yield
|
- | - | - |
Year ended December 31,
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
Stock Options
|
1,952,379 | 2,897,202 | 3,241,066 |
2010
|
2009
|
2008
|
||||||||||
United States
|
$ | 2,770 | $ | 6,303 | $ | 5,540 | ||||||
International
|
28,650 | 13,845 | 19,902 | |||||||||
Consolidated
|
$ | 31,420 | $ | 20,148 | $ | 25,442 |
Year ended December 31,
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
Current:
|
||||||||||||
Federal
|
$ | 1,369 | $ | 344 | $ | (643 | ) | |||||
State
|
15 | 70 | 67 | |||||||||
Foreign
|
534 | 147 | 1,082 | |||||||||
Deferred:
|
||||||||||||
Federal
|
(1,415 | ) | 315 | (1,245 | ) | |||||||
State
|
(848 | ) | (688 | ) | (490 | ) | ||||||
Foreign
|
(61 | ) | (85 | ) | (47 | ) | ||||||
Valuation allowance
|
2,263 | 371 | 2,492 | |||||||||
Income tax provision
|
$ | 1,857 | $ | 474 | $ | 1,216 |
December 31,
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
U.S. statutory federal tax rate
|
34.0 | % | 34.0 | % | 34.0 | % | ||||||
State taxes, net of federal benefit
|
0.0 | 0.1 | 0.6 | |||||||||
Research and development credits
|
(2.9 | ) | (0.9 | ) | (2.7 | ) | ||||||
Stock compensation
|
5.6 | 8.6 | 6.3 | |||||||||
Foreign income taxed at lower rates
|
(35.6 | ) | (33.3 | ) | (35.7 | ) | ||||||
Subpart F / Inventory transfer
|
- | - | 0.3 | |||||||||
Decrease of prior year FIN 48 liabilities
|
- | - | (4.4 | ) | ||||||||
Change in valuation allowance on federal timing differences
|
4.3 | (6.0 | ) | 5.2 | ||||||||
Litigation reserves & Other
|
0.5 | (0.1 | ) | 1.2 | ||||||||
Effective tax rate
|
5.9 | % | 2.4 | % | 4.8 | % |
December 31,
|
||||||||
2010
|
2009
|
|||||||
Deferred tax assets:
|
||||||||
Research tax credits
|
$ | 6,772 | $ | 5,982 | ||||
Stock compensation
|
7,223 | 6,249 | ||||||
Other costs not currently deductible
|
2,290 | 1,592 | ||||||
Depreciation and amortization
|
769 | 969 | ||||||
Total deferred tax assets
|
17,054 | 14,792 | ||||||
Valuation allowance
|
(16,815 | ) | (14,614 | ) | ||||
Net deferred tax assets
|
$ | 239 | $ | 178 |
Balance at January 1, 2008
|
$
|
7,910
|
||
Gross increases for tax positions of prior year
|
96
|
|||
Gross increases for tax position of current year
|
1,794
|
|||
Reductions for prior year tax positions
|
(1,245)
|
|||
Reduction due to statutes expiring
|
(2)
|
|||
Balance at December 31, 2008
|
8,553
|
|||
Gross increases for tax positions of prior year
|
-
|
|||
Gross increases for tax position of current year
|
1,080
|
|||
Reductions for prior year tax positions
|
-
|
|||
Settlement
|
(615)
|
|||
Reduction due to statutes expiring
|
(12)
|
|||
Balance at December 31, 2009
|
9,006
|
|||
Gross increases for tax positions of prior year
|
-
|
|||
Gross increases for tax position of current year
|
983
|
|||
Reductions for prior year tax positions
|
-
|
|||
Settlement
|
(883)
|
|||
Reduction due to statutes expiring
|
-
|
|||
Balance at December 31, 2010
|
$
|
9,106
|
Payments by Period
|
||||||||||||||||||||||||||||
Total
|
2011
|
2012
|
2013
|
2014
|
2015
|
Thereafter
|
||||||||||||||||||||||
Operating leases
|
$ | 2,413 | $ | 1,665 | $ | 574 | $ | 174 | $ | - | $ | - | $ | - | ||||||||||||||
Outstanding purchase commitments
|
$ | 14,379 | $ | 14,379 | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||
$ | 16,792 | $ | 16,044 | $ | 574 | $ | 174 | $ | - | $ | - | $ | - |
2010
|
2009
|
2008
|
||||||||||
Balance at beginning of year
|
$ | 294 | $ | 764 | $ | 1,025 | ||||||
Warranty costs
|
(107 | ) | (137 | ) | (109 | ) | ||||||
Reserve adjustments and unused warranty provision
|
(224 | ) | (728 | ) | (724 | ) | ||||||
Warranty provision for product sales
|
801 | 395 | 572 | |||||||||
Balance at end of year
|
$ | 764 | $ | 294 | $ | 764 |
Revenue
|
Accounts Receivable, Net
|
||||||||||||||||||||
Year ended December 31,
|
as of December 31,
|
||||||||||||||||||||
Customers
|
2010
|
2009
|
2008
|
2010
|
2009
|
||||||||||||||||
A | 14 | % | 13 | % | 20 | % | 12 | % | * | ||||||||||||
B | * | 10 | % | 10 | % | * | * | ||||||||||||||
C | * | 10 | % | * | * | * | |||||||||||||||
D | * | * | * | 20 | % | 15 | % |
Year ended December 31,
|
||||||||||||||||||||||||
Product Family
|
2010
|
% of Revenue
|
2009
|
% of Revenue
|
2008
|
% of Revenue
|
||||||||||||||||||
DC to DC Converters
|
$ | 183,051 | 83.7 | % | $ | 123,581 | 74.9 | % | $ | 115,373 | 71.9 | % | ||||||||||||
Lighting Control Products
|
28,554 | 13.0 | % | 27,836 | 16.9 | % | 32,308 | 20.1 | % | |||||||||||||||
Audio Amplifiers
|
7,235 | 3.3 | % | 13,591 | 8.2 | % | 12,830 | 8.0 | % | |||||||||||||||
Total
|
$ | 218,840 | 100.0 | % | $ | 165,008 | 100.0 | % | $ | 160,511 | 100.0 | % |
2010 Calendar Year |
Shares
Repurchased
|
Average
Price per
Share
|
Value
(in thousands)
|
|||||||||
August
|
983,189 | $ | 17.29 | $ | 16,998 | |||||||
November
|
916,600 | $ | 15.85 | $ | 14,529 | |||||||
Total Shares Repurchased | 1,899,789 | $ | 31,527 |
2008 Calendar Year |
Shares
Repurchased
|
Average
Price per
Share
|
Value
(in thousands)
|
|||||||||
February
|
27,500 | $ | 16.88 | $ | 464 | |||||||
March
|
527,332 | $ | 17.12 | $ | 9,028 | |||||||
April | 201,863 | $ | 20.03 | $ | 4,043 | |||||||
May | 100 | $ | 21.98 | $ | 2 | |||||||
June | 18,000 | $ | 21.66 | $ | 390 | |||||||
July | 14,155 | $ | 21.86 | $ | 309 | |||||||
August | 100 | $ | 22.03 | $ | 2 | |||||||
September | 307,355 | $ | 18.82 | $ | 5,784 | |||||||
October | 333,700 | $ | 15.05 | $ | 5,021 | |||||||
Total Shares Repurchased | 1,430,105 | $ | 25,043 |
Three months ended
|
||||||||||||||||
March 31,
2010
|
June 30,
2010
|
September 30,
2010
|
December 31,
2010
|
|||||||||||||
Revenue
|
$ | 50,250 | $ | 55,690 | $ | 65,843 | $ | 47,057 | ||||||||
Cost of revenue*
|
20,954 | 23,256 | 29,857 | 23,316 | ||||||||||||
Gross profit
|
29,296 | 32,434 | 35,986 | 23,741 | ||||||||||||
Operating expenses:
|
||||||||||||||||
Research and development*
|
11,040 | 11,785 | 11,291 | 10,256 | ||||||||||||
Selling, general and administrative*
|
10,393 | 11,615 | 10,296 | 8,865 | ||||||||||||
Litigation expense
|
1,567 | 2,228 | 964 | 659 | ||||||||||||
Total operating expenses
|
23,000 | 25,628 | 22,551 | 19,780 | ||||||||||||
Income from operations
|
6,296 | 6,806 | 13,435 | 3,961 | ||||||||||||
Other income (expense):
|
||||||||||||||||
Interest and other income
|
347 | 338 | 240 | 231 | ||||||||||||
Interest and other expense
|
- | (4 | ) | (159 | ) | (71 | ) | |||||||||
Total other income, net
|
347 | 334 | 81 | 160 | ||||||||||||
Income before income taxes
|
6,643 | 7,140 | 13,516 | 4,121 | ||||||||||||
Income tax provision
|
287 | 733 | 297 | 540 | ||||||||||||
Net income
|
$ | 6,356 | $ | 6,407 | $ | 13,219 | $ | 3,581 | ||||||||
Basic net income per share
|
$ | 0.18 | $ | 0.18 | $ | 0.37 | $ | 0.10 | ||||||||
Diluted net income per share
|
$ | 0.17 | $ | 0.17 | $ | 0.35 | $ | 0.10 | ||||||||
Weighted average common shares outstanding
|
35,421 | 36,291 | 36,185 | 35,420 | ||||||||||||
Stock options and restricted stock
|
2,362 | 2,064 | 1,542 | 1,309 | ||||||||||||
Diluted weighted-average common equivalent shares outstanding
|
37,783 | 38,355 | 37,727 | 36,729 | ||||||||||||
* Stock-based compensation has been included in the following line items:
|
||||||||||||||||
Cost of revenue
|
$ | 79 | $ | 116 | $ | 70 | $ | 128 | ||||||||
Research and development
|
1,735 | 1,995 | 1,647 | 1,365 | ||||||||||||
Selling, general and administrative
|
2,210 | 3,428 | 2,445 | 1,592 | ||||||||||||
Total
|
$ | 4,024 | $ | 5,539 | $ | 4,162 | $ | 3,085 |
Three months ended
|
||||||||||||||||
March 31,
2009
|
June 30,
2009
|
September 30,
2009
|
December 31,
2009
|
|||||||||||||
Revenue
|
$ | 29,322 | $ | 41,173 | $ | 47,966 | $ | 46,547 | ||||||||
Cost of revenue*
|
12,431 | 16,823 | 18,868 | 19,208 | ||||||||||||
Gross profit
|
16,891 | 24,350 | 29,098 | 27,339 | ||||||||||||
Operating expenses:
|
||||||||||||||||
Research and development*
|
8,117 | 9,732 | 10,080 | 10,366 | ||||||||||||
Selling, general and administrative*
|
7,808 | 9,321 | 9,438 | 10,185 | ||||||||||||
Litigation expense
|
2,046 | 2,233 | 2,811 | 2,367 | ||||||||||||
Litigation provision reversal, net
|
- | - | (6,356 | ) | - | |||||||||||
Total operating expenses
|
17,971 | 21,286 | 15,973 | 22,918 | ||||||||||||
Income (loss) from operations
|
(1,080 | ) | 3,064 | 13,125 | 4,421 | |||||||||||
Other income (expense):
|
||||||||||||||||
Interest and other income
|
385 | 281 | 161 | 220 | ||||||||||||
Interest and other expense
|
(94 | ) | (185 | ) | (76 | ) | (74 | ) | ||||||||
Total other income, net
|
291 | 96 | 85 | 146 | ||||||||||||
Income (loss) before income taxes
|
(789 | ) | 3,160 | 13,210 | 4,567 | |||||||||||
Income tax provision (benefit)
|
(61 | ) | (26 | ) | 648 | (87 | ) | |||||||||
Net income (loss)
|
$ | (728 | ) | $ | 3,186 | $ | 12,562 | $ | 4,654 | |||||||
Basic net income (loss) per share
|
$ | (0.02 | ) | $ | 0.09 | $ | 0.36 | $ | 0.13 | |||||||
Diluted net income (loss) per share
|
$ | (0.02 | ) | $ | 0.09 | $ | 0.34 | $ | 0.12 | |||||||
Weighted average common shares outstanding
|
33,696 | 34,070 | 34,552 | 34,987 | ||||||||||||
Stock options and restricted stock
|
- | 2,319 | 2,695 | 2,418 | ||||||||||||
Diluted weighted-average common equivalent shares outstanding
|
33,696 | 36,389 | 37,247 | 37,405 | ||||||||||||
* Stock-based compensation has been included in the following line items:
|
||||||||||||||||
Cost of revenue
|
$ | 81 | $ | 67 | $ | 69 | $ | 29 | ||||||||
Research and development
|
1,560 | 1,687 | 1,409 | 1,752 | ||||||||||||
Selling, general and administrative
|
1,772 | 2,098 | 1,688 | 2,399 | ||||||||||||
Total
|
$ | 3,413 | $ | 3,852 | $ | 3,166 | $ | 4,180 |
Exhibit
Number
|
Description
|
|
3.1 (1)
|
Amended and Restated Certificate of Incorporation.
|
|
3.2 (2)
|
Amended and Restated Bylaws.
|
|
10.1+ (3)
|
Registrant’s 1998 Stock Plan and form of option agreement.
|
|
10.2+ (4)
|
Registrant’s Amended 2004 Equity Incentive Plan and form of option agreement.
|
|
10.3+ (5)
|
Registrant’s 2004 Employee Stock Purchase Plan and form of subscription agreement.
|
|
10.4+ (6)
|
Form of Directors’ and Officers’ Indemnification Agreement.
|
|
10.5† (7)
|
Foundry Agreement between the Registrant and Advanced Semiconductor Manufacturing Corp. of Shanghai, dated August 14, 2001.
|
|
10.6 (8)
|
Office Lease, First Amendment to Office Lease, and Second Amendment to Office Lease between the Registrant and Boccardo Corporation, dated May 6, 2002, October 30, 2003, and May 6, 2004, respectively.
|
|
10.7+ (9)
|
Employment Agreement with Michael Hsing and Amendment thereof.
|
|
10.8+ (10)
|
Employment Agreement with Maurice Sciammas and Amendment thereof.
|
|
10.9+ (11)
|
Employment Agreement with Jim Moyer.
|
|
10.10+ (12)
|
Employment Agreement with Deming Xiao and Amendment thereof.
|
|
10.11+ (13)
|
Employment Agreement with Paul Ueunten and Amendment thereof.
|
|
10.12 (14)
|
Distribution Agreement with Asian Information Technology Inc. Ltd., dated March 1, 2004.
|
|
10.13 (15)
|
Business Purchase Agreement with Uppertech Hong Kong Ltd., dated March 1, 2004.
|
Exhibit
Number
|
Description
|
10.14† (16)
|
Investment and Cooperation Contract, dated August 19, 2004.
|
|
10.15† (17)
|
Patent License Agreement, dated May 1, 2004.
|
|
10.16† (18)
|
Settlement Agreement with Linear Technology Corporation.
|
|
10.17+ (19)
|
Employment Agreement with C. Richard Neely, Jr. and Amendment thereof
|
|
10.18 (20)
|
Settlement Agreement with Microsemi Corporation.
|
|
10.19 (21)
|
Settlement Agreement with Micrel Corporation.
|
|
10.20+ (22)
|
Employment Agreement with Adriana Chiocchi and Amendment thereof.
|
|
10.21+ (23)
|
Form of Performance Unit Agreement.
|
|
10.22 (24)
|
Sublease Agreement between the Registrant and FedEx Freight West, Inc. and Brokaw Interests dated June 13, 2006.
|
|
10.23+ (25)
|
Letter Agreement with Victor Lee.
|
|
10.24 (26)
|
Sublease Agreement between the Registrant and Anchor Bay Technologies for the property located at 983 University Avenue, Building A, Los Gatos, CA 95032 dated May 14, 2007.
|
|
10.25+ (27)
|
Letter Agreement with Douglas McBurnie.
|
|
10.26+ (28)
|
Letter Agreement with Karen A. Smith Bogart.
|
|
10.27 (29)
|
Settlement Agreement with Taiwan Sumida Electronics.
|
|
10.28+ (30)
|
Registrant’s Employee Bonus Plan, as amended effective March 6, 2008.
|
|
10.29 (32)
|
Lease Agreement between the Registrant and Brokaw Interests, dated October 23, 2008
|
|
10.30 (33)
|
Form of Restricted Stock Award Agreement
|
|
10.31+ (36)
|
Termination Agreement between the Company and Adriana Chiocchi, dated December 15, 2009
|
|
10.32+ (35)
|
Letter Agreement with Jeff Zhou
|
|
10.33
|
Employment Agreement with Meera P. Rao and Amendment thereof
|
Exhibit
Number
|
Description
|
14.1 (31)
|
Code of Ethics.
|
|
21.1 (34)
|
Subsidiaries of Monolithic Power Systems, Inc.
|
|
23.1
|
Consent of Independent Registered Public Accounting Firm.
|
|
24.1
|
Power of Attorney (included on Signature page to this Form 10-K).
|
|
31.01
|
Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
31.02
|
Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
32.01*
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
+
|
Management contract or compensatory plan or arrangement.
|
†
|
Confidential treatment requested for portions of this agreement, which portions have been omitted and filed separately with the Securities and Exchange Commission
|
*
|
This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.
|
(1)
|
Incorporated by reference to Exhibit 3.2 of the Registrant’s Form S-1 Registration Statement (Registration No. 333-117327), declared effective by the Securities and Exchange Commission on November 18, 2004.
|
(2)
|
Incorporated by reference to Exhibit 3.4 of the Registrant’s Form S-1 Registration Statement (Registration No. 333-117327), declared effective by the Securities and Exchange Commission on November 18, 2004.
|
(3)
|
Incorporated by reference to Exhibit 10.1 of the Registrant’s Form S-1 Registration Statement (Registration No. 333-117327), declared effective by the Securities and Exchange Commission on November 18, 2004.
|
(4)
|
Incorporated by reference to Exhibit 10.2 of the Registrant’s Form S-1 Registration Statement (Registration No. 333-117327), declared effective by the Securities and Exchange Commission on November 18, 2004 and to exhibits 9.01(c)(1) and (2) to the Registrant’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 7, 2004.
|
(5)
|
Incorporated by reference to Exhibit 10.3 of the Registrant’s Form S-1 Registration Statement (Registration No. 333-117327), declared effective by the Securities and Exchange Commission on November 18, 2004.
|
(6)
|
Incorporated by reference to Exhibit 10.4 of the Registrant’s Form S-1 Registration Statement (Registration No. 333-117327), declared effective by the Securities and Exchange Commission on November 18, 2004.
|
(7)
|
Incorporated by reference to Exhibit 10.5 of the Registrant’s Form S-1 Registration Statement (Registration No. 333-117327), declared effective by the Securities and Exchange Commission on November 18, 2004.
|
(8)
|
Incorporated by reference to Exhibit 10.6 of the Registrant’s Form S-1 Registration Statement (Registration No. 333-117327), declared effective by the Securities and Exchange Commission on November 18, 2004.
|
(9)
|
Incorporated by reference to Exhibit 10.7 of the Registrant’s current report on Form 8-K filed with the Securities and Exchange Commission on March 11, 2008 and Exhibit 10.1 of the Registrant’s current report on Form 8-K filed with the Securities and Exchange Commission on December 19, 2008.
|
(10)
|
Incorporated by reference to Exhibit 10.8 of the Registrant’s current report on Form 8-K filed with the Securities and Exchange Commission on March 11, 2008 and Exhibit 10.3 of the Registrant’s current report on Form 8-K filed with the Securities and Exchange Commission on December 19, 2008.
|
(11)
|
Incorporated by reference to Exhibit 10.9 of the Registrant’s Form S-1 Registration Statement (Registration No. 333-117327), declared effective by the Securities and Exchange Commission on November 18, 2004.
|
(12)
|
Incorporated by reference to Exhibit 10.10 of the Registrant’s current report on Form 8-K filed with the Securities and Exchange Commission on March 11, 2008 and Exhibit 10.4 of the Registrant’s current report on Form 8-K filed with the Securities and Exchange Commission on December 19, 2008.
|
(13)
|
Incorporated by reference to Exhibit 10.11 of the Registrant’s current report on Form 8-K filed with the Securities and Exchange Commission on March 11, 2008 and Exhibit 10.6 of the Registrant’s current report on Form 8-K filed with the Securities and Exchange Commission on December 19, 2008.
|
(14)
|
Incorporated by reference to Exhibit 10.11 of the Registrant’s Form S-1 Registration Statement (Registration No. 333-117327), declared effective by the Securities and Exchange Commission on November 18, 2004.
|
(15)
|
Incorporated by reference to Exhibit 10.12 of the Registrant’s Form S-1 Registration Statement (Registration No. 333-117327), declared effective by the Securities and Exchange Commission on November 18, 2004.
|
(16)
|
Incorporated by reference to Exhibit 10.13 of the Registrant’s Form S-1 Registration Statement (Registration No. 333-117327), declared effective by the Securities and Exchange Commission on November 18, 2004.
|
(17)
|
Incorporated by reference to Exhibit 10.14 of the Registrant’s Form S-1 Registration Statement (Registration No. 333-117327), declared effective by the Securities and Exchange Commission on November 18, 2004.
|
(18)
|
Incorporated by reference to Exhibit 10.1 of the Registrant’s quarterly report on Form 10-Q, filed with the Securities and Exchange Commission on March 13, 2006.
|
(19)
|
Incorporated by reference to Exhibit 10.17 of the Registrant’s current report on Form 8-K filed with the Securities and Exchange Commission on March 11, 2008 and Exhibit 10.2 of the Registrant’s current report on Form 8-K filed with the Securities and Exchange Commission on December 19, 2008.
|
(20)
|
Incorporated by reference to Exhibit 10.18 of the Registrant’s annual report on Form 10-K, filed with the Securities and Exchange Commission on March 28, 2006.
|
(21)
|
Incorporated by reference to Exhibit 10.1 of the Registrant’s current report on Form 8-K filed with the Securities and Exchange Commission on September 22, 2006.
|
(22)
|
Incorporated by reference to Exhibit 10.20 of the Registrant’s current report on Form 8-K filed with the Securities and Exchange Commission on March 11, 2008 and Exhibit 10.5 of the Registrant’s current report on Form 8-K filed with the Securities and Exchange Commission on December 19, 2008.
|
(23)
|
Incorporated by reference to Exhibit 10.1 of the Registrant’s current report on Form 8-K filed with the Securities and Exchange Commission on November 1, 2006.
|
(24)
|
Incorporated by reference to Exhibit 99.1 of the Registrant’s current report on Form 8-K filed with the Securities and Exchange Commission on June 16, 2006.
|
(25)
|
Incorporated by reference to Exhibit 10.1 of the Registrant’s current report on Form 8-K filed with the Securities and Exchange Commission on September 14, 2006.
|
(26)
|
Incorporated by reference to Exhibit 10 of the Registrant’s current report on Form 8-K filed with the Securities and Exchange Commission on May 17, 2007
|
(27)
|
Incorporated by reference to Exhibit 10.1 of the Registrant’s current report on Form 8-K filed with the Securities and Exchange Commission on May 25, 2007
|
(28)
|
Incorporated by reference to Exhibit 10.2 of the Registrant’s current report on Form 8-K filed with the Securities and Exchange Commission on May 25, 2007
|
(29)
|
Incorporated by reference to Exhibit 10.5 of the Registrant’s quarterly report on Form 10-Q filed with the Securities and Exchange Commission on August 1, 2007.
|
(3
0
)
|
Incorporated by reference to Exhibit 10.31 of the Registrant’s annual report on Form 10-K filed with the Securities and Exchange Commission on March 11, 2008.
|
(31)
|
Incorporated by reference to Exhibit 14.1 of the Registrant’s annual report on Form 10-K filed with the Securities and Exchange Commission on March 16, 2007.
|
(32)
|
Incorporated by reference to Exhibit 10 of the Registrant’s current report on Form 8-K filed with the Securities and Exchange Commission on October 24, 2008.
|
(33)
|
Incorporated by reference to Exhibit 10.1 of the Registrant’s current report on Form 8-K filed with the Securities and Exchange Commission on February 15, 2008.
|
(34)
|
Incorporated by reference to Exhibit 21.1 of the Registrant’s annual report on Form 10-K filed with the Securities and Exchange Commission on February 27, 2009
.
|
(35)
|
Incorporated by reference to Exhibit 10.1 of the Registrant’s current report on Form 8-K filed with the Securities and Exchange Commission on February 2, 2010
.
|
(36)
|
Incorporated by reference to Exhibit 10.31 of the Registrant’s annual report on Form 10-K filed with the Securities and Exchange Commission on February 16, 2010
.
|
MONOLITHIC POWER SYSTEMS, INC.
|
|||
Date: March 4, 2011
|
By:
|
/s/ MICHAEL R. HSING | |
Michael R. Hsing
President and Chief Executive Officer
|
/s/ MICHAEL R. HSING
|
President, Chief Executive Officer,
and Director (Principal Executive Officer)
|
|
Michael R. Hsing | ||
/s/ MEERA P. RAO
|
Chief Financial Officer (Principal Financial and Accounting Officer and Duly Authorized Officer)
|
|
Meera P. Rao | ||
/s/ KAREN A. SMITH BOGART
|
Director
|
|
Karen A. Smith Bogart | ||
/s/ HERBERT CHANG
|
Director
|
|
Herbert Chang | ||
/s/ VICTOR K. LEE
|
Director
|
|
Victor K. Lee | ||
/s/ DOUGLAS MCBURNIE
|
Director
|
|
Douglas McBurnie | ||
/s/ JAMES C. MOYER
|
Director
|
|
James C. Moyer | ||
/s/ UMESH PADVAL
|
Director
|
|
Umesh Padval | ||
/s/ JEFF ZHOU
|
Director
|
|
Jeff Zhou |
|
(i)
|
The Company shall cause the fair market value of the LLC Equity (the "FMV") to be determined by appraisal;
|
|
(ii)
|
The Executive (or his estate) shall have the right to purchase the unvested interest in the LLC Equity from the Company for a cash price equal to the FMV of the LLC Equity multiplied by the unvested percentage; and
|
|
(iii)
|
If the Executive (or his estate) does not elect to purchase the unvested interest in the LLC Equity, then the Company shall purchase, and the Executive (or his estate) shall sell, his vested interest in the LLC Equity for a cash price equal to the FMV of the LLC Equity multiplied by the vested percentage.
|
DEMING XIAO | MONOLITHIC POWER SYSTEMS, INC. | ||
/s/ Deming Xiao
|
/s/ Michael Hsing |
|
|
Signature
|
Signature | ||
Deming Xiao
|
Michael Hsing | ||
Print Name
|
Print Name | ||
President & CEO | |||
Print Title
|
MEERA RAO
|
MONOLITHIC POWER SYSTEMS, INC.
|
|||
/s/ Meera Rao
|
/s/ Michael Hsing
|
|||
Signature
|
Signature
|
|||
Meera Rao
|
Michael Hsing
|
|||
Print Name
|
Print Name
|
|||
President and CEO
|
||||
Print Title
|
Date: March 4, 2011 | ||||
|
/s/ MICHAEL R. HSING
|
|||
|
Michael R. Hsing
Chief Executive Officer
|
Date: March 4, 2011 | ||||
|
/s/ MEERA P. RAO
|
|||
|
Meera P. Rao
Chief Financial Officer
|
Date: March 4, 2011 | ||||
|
/s/ MICHAEL R. HSING
|
|||
|
Michael R. Hsing
Chief Executive Officer
|
Date: March 4, 2011 | ||||
|
/s/ MEERA P. RAO
|
|||
|
Meera P. Rao
Chief Financial Officer
|