UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
October 28, 2003
Date of Report (Date of earliest event reported)
DIODES INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 1-5740 95-2039518
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification Number)
incorporation)
3050 East Hillcrest Drive
Westlake Village, California 91362
(Address of principal executive offices) (Zip Code)
(805) 446-4800
(Registrant's telephone number, including area code)
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Item 7. Financial Statements and Exhibits.
(c) Exhibits
Exhibit 99.1 - Press Release dated October 28, 2003
Item 12. Results of Operations and Financial Condition
On October 28, 2003, Diodes Incorporated issued a press release announcing third
quarter 2003 earnings. A copy of the press release is attached as Exhibit 99.1.
The information in this Form 8-K and the Exhibits attached hereto shall not be
deemed "filed" for purposes of Section 18 of the Securities Act of 1934, nor
shall it be deemed incorporated by reference in any filing under the Securities
Act of 1933 or the Securities Exchange Act of 1984, except as shall be expressly
set forth by specific reference in such filing.
SIGNATURES
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 hereunto duly authorized.
Dated: October 28, 2003 DIODES INCORPORATED
By /s/ Carl C. Wertz
CARL C. WERTZ
Chief Financial Officer
EXHIBIT INDEX
Exhibit Description
Number
99.1 Press Release dated October 28, 2003
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Exhibit 99.1
Diodes Incorporated
FOR IMMEDIATE RELEASE
Diodes Incorporated Reports Third Quarter 2003 Results with Record Revenue
oNew product sales & strong Asian market drive 15% year-over-year revenue growth
Westlake Village, California, October 28, 2003 - Diodes Incorporated (Nasdaq:
DIOD), a leading manufacturer and supplier of high quality discrete
semiconductors, today reported financial results for the third quarter of fiscal
year 2003 ended September 30, 2003.
Third Quarter Highlights:
>> Revenue increased 15.4% year-over-year and 4.6% sequentially to a
record $34.9 million
>> Net income increased 45% to $2.6 million, or $0.26 per share, up from
$1.8 million, or $0.20 per share, in 3Q02
>> New product revenue grew to a record 13% of sales
>> Gross margin improves 120 basis points sequentially
Revenues for the third quarter of 2003 were a record $34.9 million, a sequential
increase of 4.6% from the second quarter of 2003, and an increase of 15.4% from
the third quarter of 2002. Net income for the quarter jumped 45% to $2.6
million, compared to $1.8 million for the three months ended September 30, 2002,
and rose 18% sequentially. Earnings per share were $0.26 for the third quarter
of 2003, as compared to $0.20 for the same period last year.
For the first nine months of 2003, the Company earned $6.7 million, or $0.70 per
share, on revenues of $97.8 million, as compared to net income of $3.5 million,
or $0.40 per share, on revenues of $87.2 million for the same period in 2002.
Commenting on the quarter, C.H. Chen, President and CEO of Diodes Incorporated,
said, "We are pleased with our strong third quarter results. Diodes posted
record revenue and very strong net income growth. Over the past two years we
have been targeting the fast growing advanced consumer electronics and mobile
computing markets with our higher margin, differentiated discrete products. We
have entered key accounts and gained numerous design wins in consumer
electronics and portable communications. We believe we have just begun to
benefit from the upswing in those markets."
Diodes' growth in the third quarter was driven by a combination of the strong
Asian market, which accounted for 56% of sales, up from 53% last quarter, and
demand for the Company's new next-generation products.
Gross margin for the third quarter of 2003 increased to $9.2 million or 26.2% of
sales, compared to $8.3 million or 25.0% of sales in the second quarter of this
year and $7.9 million or 26.0% in the third quarter of 2002. The increase was
due to product mix changes as well as higher selling prices from the Company's
new differentiated products, partially offset by pricing pressures on lower
margin discrete commodity products. In addition, margins were hampered by
substantially lower selling prices for wafer products.
For the quarter, SG&A expenses were $5.1 million as compared to $4.8 million in
the second quarter of 2003 and $4.3 million in the comparable quarter last year.
The Company continues to invest in expanding its sales and marketing footprint
in both Asia and Europe and is providing increased selling incentives associated
with the higher revenue. Therefore, SG&A expenses as a percentage of sales
increased to 14.6% from 14.4% in the second quarter of this year and 14.2% in
the prior-year quarter. Research and development expenses climbed to $0.6
million, or 1.8% of revenue, from $0.5 million, or 1.5%, in the second quarter
of 2003, reflecting the Company's commitment to bring proprietary technology and
advanced devices to market.
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Operating margins, impacted by a $300,000 reserve at Diodes-FabTech for excess
equipment due to production line re-engineering, decreased to 9.0% in the third
quarter, compared to 10.1% generated in the third quarter of 2002. Operating
margins for the first nine months of 2003 increased to 9.5% compared to 6.5% for
the same period last year.
Other income in the third quarter of 2003 was favorably impacted by the receipt
of a $250,000 high-technology grant at Diodes-China, partially offset by
currency losses, primarily in Taiwan. In addition, a 36% decline in long-term
debt and lower interest rates sharply reduced interest expense.
Growth in net income outpaced the rise in operating income as the Company's
effective tax rate decreased to 13.5% from 29.4% in the year-ago quarter, and
22.3% in the second quarter of 2003, as more profit was earned by the Company's
Asian subsidiaries in lower tax jurisdictions. The Company is benefiting from
its Hong Kong subsidiary, established last year, not only due to its lower tax
rates, but also as another entry point into the Asia market.
"We are pleased with the strong demand for our next-generation products," Chen
continued. "During the third quarter, sales of new products grew to represent
13% of total revenue, up from 12.5% last quarter and up from 7% in the third
quarter of 2002. This is a record high. Sales of our performance Schottky and
Zener product lines and multi-chip arrays were particularly strong during the
quarter, as these products fulfill the growing need for high efficiency, compact
essential electronic components."
"We have a pipeline of new products, which will deliver substantial improvements
in cost, performance and size, and add to our comprehensive portfolio of
industry-leading Schottky and Zener devices. To intensify our new product
development efforts, we added two more senior engineers to our team in the
quarter."
At September 30, 2003, Diodes had $9.8 million in cash and cash equivalents,
$10.6 million in long-term debt, $7.4 million outstanding on its revolving
credit line, $31.5 million in available credit facilities, and $65.7 million in
shareholders' equity.
Mr. Chen concluded, "We are excited about our prospects and believe that our
business strategy has positioned Diodes to continue to outpace the growth of the
discrete marketplace as the anticipated recovery in semiconductor demand
unfolds. Entering the fourth quarter, shipments for October have been good and
orders for November delivery in Asia remain strong while our orders in North
America and Europe have accelerated. Order cycles appear to be lengthening and
inventory at our distributors remains relatively low. We expect to see a
positive trend in revenue and earnings for the fourth quarter and will provide
more specific guidance as our order volume progresses."
Conference Call
Diodes Incorporated will hold its third quarter conference call
for all interested persons at 8 a.m. PST (11 a.m. EST) today to discuss its
results. This conference call will be broadcast live over the Internet and can
be accessed by all interested parties on the investor section of Diodes' website
at www.diodes.com. To listen to the live call, please go to the Investor section
of Diodes website and click on the Conference Call link at least fifteen minutes
prior to the start of the call to register, download, and install any necessary
audio software. For those unable to participate during the live broadcast, a
replay will be available shortly after the call on Diodes website for 90 days.
About Diodes Incorporated
Diodes Incorporated (Nasdaq: DIOD) is a leading manufacturer and supplier of
high-quality discrete semiconductor products, primarily to the communications,
computing, industrial, consumer electronics and automotive markets. The Company
operates three Far East subsidiaries, Diodes-China (QS-9000 and ISO-14001
certified) in Shanghai, Diodes-Taiwan (ISO-9000 certified) in Taipei, and
Diodes-Hong Kong. Diodes-China's manufacturing focus is on subminiature
surface-mount devices destined for wireless devices, notebook, flat panel
display, digital camera, mobile handset, set-top box, DC to DC conversion, and
automotive applications, among others. Diodes-Taiwan is our Asia-Pacific sales,
logistics and distribution center. Diodes-Hong Kong covers sales, warehouse and
logistics functions. The Company's 5" wafer foundry, Diodes-FabTech (QS-9000
certified), specializes in Schottky products and is located just outside Kansas
City, Missouri. The Company's ISO-9000 corporate sales, marketing, engineering
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and logistics headquarters is located in Southern California. For further
information, including SEC filings, visit the Company's website at
http://www.diodes.com.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of
1995: Any statements set forth above that are not historical facts are
forward-looking statements that involve risks and uncertainties that could cause
actual results to differ materially from those in the forward-looking
statements. Potential risks and uncertainties include, but are not limited to,
such factors as fluctuations in product demand, the introduction of new
products, the Company's ability to maintain customer and vendor relationships,
technological advancements, impact of competitive products and pricing, growth
in targeted markets, risks of foreign operations, and other information detailed
from time to time in the Company's filings with the United States Securities and
Exchange Commission.
Source: Diodes Incorporated
CONTACT: Crocker Coulson, Partner, CCG; (818) 789-0100
e-mail: crocker.coulson@ccgir.com or Carl Wertz, Chief Financial Officer,
Diodes, Incorporated; (805) 446-4800
Recent news releases, annual reports, and SEC filings are available at the
Company's website: http://www.diodes.com. Written requests may be sent directly
to the Company, or they may be e-mailed to: diodes-fin@diodes.com.
CONSOLIDATED CONDENSED INCOME STATEMENT and BALANCE SHEET FOLLOWS
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DIODES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------------------- -----------------------------------------
2002 2003 2002 2003
----------------- ------------------- ------------------ -------------------
Net sales $ 30,287,000 $ 34,941,000 $ 87,157,000 $ 97,785,000
Cost of goods sold 22,420,000 25,779,000 67,807,000 72,816,000
----------------- ------------------- ------------------ -------------------
Gross profit 7,867,000 9,162,000 19,350,000 24,969,000
Selling, general and administrative
expenses 4,291,000 5,089,000 12,395,000 14,097,000
Research and development expenses 459,000 612,000 1,231,000 1,358,000
Loss on sale and impairment of fixed assets 56,000 300,000 94,000 244,000
----------------- ------------------- ------------------ -------------------
Total operating expenses 4,806,000 6,001,000 13,720,000 15,699,000
Operating income 3,061,000 3,161,000 5,630,000 9,270,000
Other income (expense)
Interest expense, net (281,000) (209,000) (895,000) (672,000)
Other (159,000) 126,000 (28,000) 29,000
----------------- ------------------- ------------------ -------------------
(440,000) (83,000) (923,000) (643,000)
Income from operations before income taxes and
minority interest 2,621,000 3,078,000 4,707,000 8,627,000
Income tax benefit (provision) (771,000) (416,000) (949,000) (1,684,000)
----------------- ------------------- ------------------ -------------------
Income from operations before minority interest 1,850,000 2,662,000 3,758,000 6,943,000
Minority interest in joint venture earnings (83,000) (99,000) (219,000) (285,000)
----------------- ------------------- ------------------ -------------------
Net income $ 1,767,000 $ 2,563,000 $ 3,539,000 $ 6,658,000
================= =================== ================== ===================
Earnings per share
Basic $ 0.22 $ 0.30 $ 0.43 $ 0.79
Diluted $ 0.20 $ 0.26 $ 0.40 $ 0.70
================= =================== ================== ===================
Weighted average shares outstanding
Basic 8,190,887 8,542,328 8,177,506 8,436,987
Diluted 8,862,272 9,698,012 8,834,311 9,502,693
================= =================== ================== ===================
The accompanying notes are an integral part of
these financial statements.
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DIODES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
December 31, September 30,
2002 2003
------------------- -------------------
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 7,284,000 $ 9,783,000
Accounts receivable
Customers 19,387,000 24,150,000
Related parties 3,138,000 3,906,000
------------------- -------------------
22,525,000 28,056,000
Less: Allowance for doubtful receivables 353,000 330,000
------------------- -------------------
22,172,000 27,726,000
Inventories 14,916,000 15,270,000
Deferred income taxes, current 4,338,000 4,342,000
Prepaid expenses, income taxes and other current assets 2,228,000 2,460,000
------------------- -------------------
Total current assets 50,938,000 59,581,000
PROPERTY, PLANT AND EQUIPMENT, at cost, net
of accumulated depreciation and amortization 44,693,000 47,504,000
DEFERRED INCOME TAXES, non-current 3,205,000 2,280,000
OTHER ASSETS
Goodwill 5,090,000 5,090,000
Other 1,084,000 1,287,000
------------------- -------------------
TOTAL ASSETS $ 105,010,000 $ 115,742,000
=================== ===================
The accompanying notes are an integral part of
these financial statements.
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DIODES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31, September 30,
2002 2003
------------------ ------------------
(Unaudited)
CURRENT LIABILITIES
Line of credit $ 3,025,000 $ 7,419,000
Accounts payable
Trade 9,039,000 10,420,000
Related parties 3,361,000 3,706,000
Accrued liabilities 8,693,000 9,498,000
Current portion of long-term debt
Related party 2,500,000 2,500,000
Other 3,333,000 3,333,000
Current portion of capital lease obligations 157,000 160,000
------------------ ------------------
Total current liabilities 30,108,000 37,036,000
LONG-TERM DEBT, net of current portion
Related party 6,250,000 4,375,000
Other 6,333,000 3,833,000
CAPITAL LEASE OBLIGATIONS, net of current portion 2,495,000 2,370,000
MINORITY INTEREST IN JOINT VENTURE 2,145,000 2,431,000
STOCKHOLDERS' EQUITY
Class A convertible preferred stock - par value $1.00 per share; 1,000,000
shares authorized;
no shares issued and outstanding -- --
Common stock - par value $0.66 2/3 per share;
30,000,000 shares authorized; 9,292,764 and 9,644,261
shares issued at December 31, 2002
and September 30, 2003, respectively 6,195,000 6,428,000
Additional paid-in capital 8,060,000 8,928,000
Retained earnings 45,684,000 52,342,000
------------------ ------------------
59,939,000 67,698,000
Less:
Treasury stock - 1,075,672 shares of common stock, at cost 1,782,000 1,782,000
Accumulated other comprehensive loss 478,000 219,000
------------------ ------------------
2,260,000 2,001,000
Total stockholders' equity 57,679,000 65,697,000
------------------ ------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 105,010,000 $ 115,742,000
================== ==================
The accompanying notes are an integral part of
these financial statements.
# # #
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