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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A--AMENDMENT NO. 1 TO FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1995
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to ________.
COMMISSION FILE NUMBER: 1-5740
DIODES INCORPORATED
(Exact name of registrant as specified in its charter)
DELAWARE 95-2039518
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
3050 EAST HILLCREST DRIVE
WESTLAKE VILLAGE, CALIFORNIA 91362
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (805) 446-4800
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
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The number of shares of the registrant's Common Stock outstanding as of June
30, 1995, was 5,421,124 including 717,115 shares of treasury stock.
This amendment is being filed solely to respond to the SEC's comments on the
Company's request for confidential treatment for certain exhibits.
THIS REPORT INCLUDES A TOTAL OF 15 PAGES
THE EXHIBIT INDEX IS ON PAGE 5
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DIODES INCORPORATED
INDEX
Page
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PART II - OTHER INFORMATION
Items 6 3
Signature 4
Index to Exhibits 5
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 10.2 - Kai Hong Compensation Trade Agreement
for SOT-23 Product
Exhibit 10.3 - Kai Hong Compensation Trade Agreement
for MELF Product
(b) Reports on Form 8-K
None
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
DIODES INCORPORATED (Registrant)
/s/ Joseph Liu
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JOSEPH LIU October 25, 1995
Vice President, Secretary
and Chief Financial Officer
(Principal Financial and Accounting Officer)
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INDEX TO EXHIBITS
EXHIBIT - 10.2 Kai Hong Compensation Trade Agreement for
SOT-23 Product Page 6
EXHIBIT - 10.3 Kai Hong Compensation Trade Agreement for
MELF Product Page 11
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Exhibit 10.2, Compensation Trade Agreement for SOT-23 Product,
constitutes a fair and accurate English translation of the exhibit.
DIODES INCORPORATED (Registrant)
/s/ Joseph Liu
- --------------------------
JOSEPH LIU October 25, 1995
Vice President, Secretary
and Chief Financial Officer
(Principal Financial and Accounting Officer)
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EXHIBIT 10.2
COMPENSATION TRADE AGREEMENT FOR SOT-23 PRODUCT
(TRANSLATED FROM CHINESE)
This Agreement is made between Diodes Incorporated (hereafter referred
to as Diodes), located at 3050 East Hillcrest Drive, Westlake Village,
California 91361-3154, U.S.A. and Shanghai Kai Hong Electronics Co., Ltd.
(hereafter referred to as Kai Hong), located at No. 61 Xinnan Road, Xinqiao
Town, Songjian, Shanghai, China 201612. Owing to the market demand, the
parties hereby agree to cooperate in the production of SOT-23 products (1)
(hereafter referred to as Products) under the terms and conditions below:
I. Way of Cooperation:
1. The parties agree to set up a SOT-23 Products production line
in Shanghai. (2)
2. Diodes shall invest capital for acquisition of equipment and
Kai Hong shall invest capital for the acquisition of
equipment, for the construction of a factory building, for
technical training and for working capital. Total investment
amounts are subject to the actual cost of acquisition of
equipment, but not to exceed amount specified on the
attachment. (3)
3. Kai Hong is responsible for start up and will take charge of
management and production. The capital invested by Diodes
will be repaid by means of Products exported on compensation
trade basis.
II. Contents of Compensation Trade:
1. Diodes shall assist in securing qualified chip suppliers and
provide product specifications to entrust Kai Hong to produce
SOT-23 Products to export to Diodes. For the payment of
production to Kai Hong , Diodes shall deduct a portion to
repay Diodes' investment. (5)
2. Kai Hong guarantees to sell its monthly production of Products
to Diodes. Any excess Products shall be handled subject to
mutual negotiation, which may include domestic sale and
export. (4)
3. The fall-off and scrap parts shall be kept in good custody.
The quantity shall be confirmed by both parties before
disposal.
* CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION
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4. Kai Hong shall adopt rigid production management. Except for
reasonable production consumption if there is a loss of
finished Products and Work-In-Progress Products, Kai Hong
agrees to make up the monthly capacity under the agreement.
If there is a cost variable due to such a loss, it shall not
be included when reviewing the cost structure. Kai Hong shall
agree to take effective action to prevent such a loss within
three months of learning of it.
II. Quality Standard:
1. The chips provided by suppliers recommended by Diodes shall
comply with requirements of Kai Hong quality and production
requirements.
2. Kai Hong shall carry out the production upon the request of
Diodes. The yield for initial production will be mutually
agreed upon and a review shall be conducted once each half
year for adjustment subject to actual condition. (6)
3. The finished Products delivered to Diodes shall comply with
the quality standard and product specifications defined by
Diodes.
IV. Supply, Production, Product Packaging and Delivery Terms:
1. SUPPLY: The purchase of chips shall be of good quality and
reasonable cost under mutual agreement. During the initial
period of production, Kai Hong shall purchase chips from
qualified suppliers that have been recommended by Diodes or
smooth production. Unless supplies are interrupted due to
force majeure, Diodes shall be responsible for the
compensation of loss caused to Kai Hong during the period of
production interrupted for the labor and depreciation cost.
During the first year, Kai Hong and Diodes should jointly
develop more qualified chip suppliers. After one year of
formal production, Kai Hong shall be responsible for the
purchase of chips while Diodes may continue to help Kai Hong
secure the chips sourcing necessary for monthly production.
Mutual consent is required of both parties for a change or
increase of chip suppliers.(7)
2. PRODUCTION: Upon receipt of chips, Kai Hong shall commence
production immediately, and the production cycle shall be
about 30 days.
3. PACKAGING: 3000 pieces/reel, 5 reels/box, 12 boxes/carton
V. Means of Investment and Final Account of Production Compensation:
1. Upon the execution of this agreement, the purchase of
equipment shall be commenced based on the suppliers and
specifications confirmed between both parties. The purchase
of equipment necessary for the company shall be handled by Kai
Hong. Diodes shall remit its investment to Kai Hong's bank
account to maintain timely payment according to the equipment
payment schedule.
2. SOT-23 produced by Kai Hong shall be priced competitively for
export to Diodes (based on MMBT 3094/3906) of which a portion
is compensation expense (as reimbursement on loan and
interest) and actual remaining payment
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shall be made by Diodes to Kai Hong within 30 days by T/T in
US$. Actual export price shall be reviewed once ever half
year by both parties. (5)
3. The feasibility study of this item shall be acknowledged by
the parties with their signature affixed. The offset price
shall be adjusted when key material price has a major change
(defined as +/-3%).
4. The interest on the capital to be invested by Diodes shall be
calculated based on the actual interest rate charged by
Diodes' bank. Interest will start from the date Kai Hong
received the remittance. The quantity of product by
compensation trade will be made over 58 months. (8)
5. The freight charges from the shipment of chips to Kai Hong
will be charged to Kai Hong's account and the freight charge
occurring from the shipment of Product to Diodes from Kai
Hong will be charged to Diodes .
6. When there is significant change to the specification of
SOT-23 Products and/or related Products, the export price and
compensation expense will be changed by to mutual agreement.
7. All Product will meet Diodes quality requirements and
standards as shown on Appendix.
8. Should Kai Hong liquidate or be closed due to other cause(s)
prior to Diodes' loan and interest being fully repaid, Diodes
shall have the ownership of the equipment equivalent to the
sum not repaid and have the highest priority of debt claim
against the bank with relation to Kai Hong.
9. During the effective period of this agreement, each party
shall obtain the other party's written consent prior to
speaking with a third party regarding additional investment
plan(s) for same or similar Products. Both parties agree that
the other party shall have the right of first refusal under
the same terms and conditions.
10. The agreement shall remain valid until the end of December 31,
2000, or until the date the Products have been delivered as
previously agreed. Kai Hong agrees to give Diodes the
priority of the purchase of additional product for an
additional five years, since the expiration of this agreement,
and the selling price will be reduced from then current market
price. During the extension period, Item V.9 and V.10 herein
will remain valid while other items shall be invalid. (9)
11. During this period of agreement, if there is any dispute
between the parties, it shall be amicably settled by the
parties.
* ( ) All footnotes are herein incorporated in Attachment 1.
DIODES INCORPORATED Shanghai Kai Hong Electronics Co., Ltd.
/s/ David Lin /s/ J.Y. Xing
- -------------------------- ---------------------------------------------------
David Lin, President J. Y. Xing, Chairman of the Board and President
Date: June 9, 1995 Date: June 9, 1995
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ATTACHMENT 1
1. SOT-23 Product Content = Transistor, Switching diode, Zener diode, Schottky
diode, etc.
2. Factory Monthly Capacity Target = Minimum 10,000K units per month.
3. Total Investment = US * (**)
A. Diodes = Not to exceed US * - for acquisition of Equipment
B. 3. Kai Hong Total Investment = US * million
US * - for acquisition of equipment
US * - for the construction of a factory building
US * - for technical training
US * - for working capital
** (Total investment amounts are subject to the actual cost of acquisition of
equipment.)
4. SOT-23 Products Distribution
A. Kai Hong Guarantees Minimum * units per month
B. Excess Production Disbursement
1. Diodes has first right of refusal for excess production at
negotiated prices or
2. Domestic sale and or export subject to * each for
Kai Hong and Diodes
5. SOT-23 Transfer Price
A. Transfer Price to Diodes = US *
B. Payment Deduction to Repay Diodes' Investment = US *
C. Actual Remitted Payment to Kai Hong = *
6. Initial Production Yield = *
7. Initial Kai Hong Chip Purchases = * units per month
8. Quantity of Product for Compensation Trade = Total Diodes loan and
interest to be amortized equal to * ( *)
9. Additional Quantity Available for Purchase at End of Agreement at
December, 2000 = * units per month for * at favorable discount from
market price
* CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION
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Exhibit 10.3, Compensation Trade Agreement for MELF Product,
constitutes a fair and accurate English translation of the exhibit.
DIODES INCORPORATED (Registrant)
/s/ Joseph Liu
- ---------------------------
JOSEPH LIU October 25, 1995
Vice President, Secretary
and Chief Financial Officer
(Principal Financial and Accounting Officer)
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EXHIBIT 10.3
COMPENSATION TRADE AGREEMENT FOR MELF PRODUCT
(TRANSLATED FROM CHINESE)
This Agreement is made between Diodes Incorporated (hereafter referred
to as Diodes), located at 3050 East Hillcrest Drive, Westlake Village,
California 91361-3154, U.S.A. and Shanghai Kai Hong Electronics Co., Ltd.
(hereafter referred to as Kai Hong), located at No. 61 Xinnan Road, Xinqiao
Town, Songjian, Shanghai, China 201612. Owing to the market demand, the
parties hereby agree to cooperate in the production of MELF products (hereafter
referred to as Products) under the terms and conditions below:
I. Terms and Conditions:
1. MELF Production investment will be in two stages, as specified
in Attachment 1, Item 1.
2. To repay Diodes' Investment, Diodes shall deduct a portion for
the payment of Products to Kai Hong (See Attachment 1, Item
3B). Diodes shall purchase Product from Kai Hong as per the
agreed upon quantities.
A. Diodes shall purchase all Product produced by Kai
Hong as long as they meet specification and Quality
requirements.
B. This agreement is valid for two (2) years. Diodes
shall purchase all Kai Hong's MELF Production. (After
the expiration of this agreement, Diodes and Kai Hong
shall renegotiate the purchase agreement. Diodes has
the right of first refusal to purchase the Product
under the same terms and conditions with a third
party).
C. Within the first two (2) years, Diodes agrees to
purchase the total quantity as specified in the
Attachment 1, Item 2. For any quantities over above
this specified quantity, the price can be
re-negotiated between both parties. At this time,
each party has the right to chose a new partner.
However, Diodes has the right of first refusal under
the same terms and conditions to either retain the
partnership or purchase the Product.
D. Under this agreement, the sales price for the MELF
Product shall be as specified in Attachment 1, Item 3.
II. Technical Support
1. Diodes will provide technical support for manufacturing,
quality control, production control, and administration to
assist Kai Hong in establishing the production line. Kai Hong
agrees to reimburse all the expenses to Diodes for the actual
incurred cost. (The standard for the reimbursement to be
agreed by both parties). Kai Hong agrees to pay a one time
technical assistance fee to Diodes for the amount as specified
in the Attachment 1, Item 4, to Diodes, in U.S. currency cash,
within the first month of production.
* CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION
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2. Kai Hong agrees to purchase all chips and essential
raw materials from Diodes or it's subsidiary. Kai Hong
agrees to purchase necessary raw materials from the suppliers
that have been pre-qualified in writing by Diodes. To assure
quality, Diodes' written consent is required before Kai Hong
can make any changes on its raw material suppliers. For those
raw materials which are not available in China, Kai Hong can
purchase directly from qualified suppliers overseas or
through Diodes or it's subsidiary.
III. Payment Terms
1. Both parties agree to be treated under the same terms and
conditions for Kai Hong's payment to Diodes or it's subsidiary
for the raw material purchase, and Diodes' payment to Kai Hong
for Product.
2. Diodes and Kai Hong agree to re-evaluate the transfer prices
within the first three months of formal production, in the
event of unforeseen variables.
IV. Responsibilities
1. Under this agreement, Kai Hong agrees to sell 100% of MELF
Products to Diodes, and not to sale to any other parties. In
order not to damage Diodes profitability, Kai Hong agrees not
to negotiate with any third party, directly or through it's
subsidiary, to manufacture the same or similar Product. Kai
Hong agrees that all fall-off and scrap parts shall be kept in
good custody, and the quantity shall be confirmed by both
parties before disposal.
2. Kai Hong shall pay to Diodes a compensation amount for it's
loss which may be caused by either the Products being sold to
(or carried out) a third party or the engineering drawing,
production processes, or equipment's leak to a third party.
3. Diodes agrees to pay Kai Hong a compensation amount in the
event that Diodes fails to purchase the Minimum quantities as
specified in Attachment 1, Item 3.
4. If either Diodes or Kai Hong are required to pay a
compensation amount to the other party, the amount shall be
determined at 40% of other party's total loss.
5. Quality Standard: Both parties to define.
6. The price for raw materials which Kai Hong will purchase from
Diodes, and the price that Diodes will purchase from Kai Hong
shall be fixed as mutually agreed. Each party is responsible
for it's own Profit and Loss. However, in the event the raw
material costs or the market price for the Product changes
dramatically, the parties may re-evaluate the situation and
re-define the prices amicably.
7. If due to increased market demand, Diodes requests increased
expansion, Kai Hong shall agree in principle. If, at that
time, Kai Hong has difficulty providing the additional capital
requirement, both parties shall re-negotiate the detailed
arrangement.
8. This agreement becomes effective from the date signed by
authorized person executed hereunder.
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DIODES INCORPORATED SHANGHAI KAI HONG ELECTRONICS, LTD.
/s/ David Lin /s/ J. Y. Xing
- -------------------------- ---------------------------------------------------
David Lin, President J.Y.Xing, Chairman of the Board and President
Date: June 9, 1995 Date: June 9, 1995
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COMPENSATION TRADE AGREEMENT FOR MELF PRODUCT
ATTACHMENT 1
1. Total Investment for Compensation Trade
Total capital requirement for MELF production is U.S.*, to be invested
in two phases, both Diodes and Kai Hong will contribute U.S. *.
Phase 1 Diodes: Investment by Equipment: U.S. *
In cash: U.S. *
Kai Hong: Investment by Eqpt., Facility U.S. *
In cash: U.S. *
Phase 2 Diodes: Investment by Equipment: U.S. *
Kai Hong: Investment by Equipment: U.S. *
In cash: U.S. *
2. Quantity of Product for Compensation Trade =
Total * units of MELF Product. ( *).
3. MELF Transfer Price:
A. Transfer price to Diodes = US *
B. Payment Deduction to Repay Diodes' Investment = US *
C. Actual Remitted Payment to Kai Hong = US *
4. Technical Assistance Fee to be paid to Diodes = US *
*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION
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