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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 27, 2004
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)
1
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
- -----------------------------------------------------------------
On October 27, 2004, Diodes Incorporated issued a press
release announcing third quarter 2004 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.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(C) EXHIBITS
Exhibit 99.1 - Press Release dated October 27, 2004
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 27, 2004 DIODES INCORPORATED
By /s/ Carl C. Wertz
CARL C. WERTZ
Chief Financial Officer
EXHIBIT INDEX
EXHIBIT DESCRIPTION
NUMBER
99.1 Press Release dated October 27, 2004
2
Diodes Incorporated
FOR IMMEDIATE RELEASE
DIODES INCORPORATED REPORTS RECORD THIRD QUARTER 2004 EARNINGS
o 41% YEAR-OVER-YEAR REVENUE INCREASE IS 6TH CONSECUTIVE RECORD QUARTER
o SALES OF NEW PRODUCTS ABOVE 14% OF TOTAL REVENUE, A RECORD HIGH
WESTLAKE VILLAGE, CALIFORNIA, OCTOBER 27, 2004 - Diodes Incorporated (NASDAQ:
DIOD), a leading manufacturer and supplier of high quality discrete
semiconductors, today reported record financial results for the third quarter
ended September 30, 2004.
THIRD QUARTER HIGHLIGHTS:
Net income increases 182.6% to a record $7.2 million, or $0.47 per share, up
from $2.6 million, or $0.18 per share, in 3Q 2003
Revenue increases 41.2% year-over-year and 5.0% sequentially to a record
$49.4 million
Gross margin improves 190 basis points sequentially to 33.9%
Expanded distribution agreement with Arrow Electronics into Southern Europe
Revenues for the third quarter of 2004 were a record $49.4 million, a sequential
increase of 5.0% from the second quarter of 2004, and an increase of 41.2% from
the third quarter of 2003. Net income for the quarter increased 182.6% to a
record $7.2 million, compared to $2.6 million for the three months ended
September 30, 2003, and rose 18.3% sequentially. Diluted earnings per share were
$0.47 for the third quarter of 2004, compared with $0.18 for the third quarter
of 2003 and $0.40 for the second quarter of 2004.
Revenues for the first nine months of 2004 increased 41.0% to $137.8 million,
compared to $97.8 million in the same period last year. Net income for the first
nine months of 2004 increased 173.7% to $18.2 million or 13.2% of sales,
compared to $6.7 million or 6.8% of sales in the same period last year. Diluted
earnings per share were $1.18 for the first nine months of 2004, compared to
$0.47 for the same period last year.
Commenting on the quarter, C.H. Chen, President and CEO of Diodes Incorporated,
said, "We are extremely pleased to report the sixth consecutive quarter of
record sales third consecutive quarter of record profitability. Once again
Diodes outperformed not just the discrete semiconductor segment but also the
overall industry and achieved the highest sales of new products in the Company's
history. Our continued focus on industry leading manufacturing efficiency and
fiscal discipline translated into excellent margin performance and positive cash
flows during the quarter."
END MARKETS
"Revenue growth in the third fiscal quarter was attributable to significantly
increased demand for our products from end-users across the consumer electronics
and computer industries," said Mark King, Vice President of Sales and Marketing.
"Our next-generation sub-miniature devices are being rapidly adopted for
applications including digital audio players, set-top boxes, cell phones and
notebook computers. Geographically, demand remained high in both Asia and North
America, which accounted for 58% and 40% of total revenues, respectively."
Sales in Europe were seasonally soft at 2.3% of total revenue during the
quarter. However, Diodes' is continuing to win new accounts and expand its
footprint in the European market, signing a distribution agreement with one of
the largest distributors of electronic components in Southern Europe, Silverstar
Srl, an Arrow Electronics Company.
"We believe that this agreement will help us to gain new customers and increase
Diodes' brand recognition in the European automotive, communications and
industrial end-markets," said King. "During the third quarter, we won two
significant European contracts - one in the communication industry and one in
the automotive industry - both of which have the potential to become important
customers for us over time."
NEW PRODUCTS AND DESIGN WINS
"Our proven ability to deliver value-added and cost-effective products led to
multiple design wins at over sixty new or existing accounts. We are very pleased
to announce that sales of new products increased to 14.2% of total revenue in
the third quarter, up from 11.7% last quarter and 13.5% in the third quarter of
2003," commented Mr. Chen.
"The surge in new product sales reflects the popularity of the breakthrough
products we have introduced over the past few years - including Powermite(R)3,
PowerDI(TM)123, SOT563, and our customized arrays. Just a few days ago, we
launched our new, patent-pending PowerDI(TM)5 high-current density packaging,
which broadens our line of next-generation devices to encompass high voltage and
high amperage capabilities."
"The most notable design wins for the quarter included six new wins on a high
volume digital audio player, our first significant PowerDI(TM)123 in a digital
still camera, key array wins in notebook and set-top box as well as another win
in our proprietary QSBT40 device. In Europe, we made our first production
shipments on a custom array design win, announced in the fourth quarter, at a
major industrial account."
OPERATING EFFICIENCIES
Gross profit for the third quarter of 2004 increased to $16.7 million, or 33.9%
of sales, compared to $15.0 million, or 32.0% of sales, in the second quarter of
2004 and $9.2 million, or 26.2%, in the third quarter of 2003. The improvement
in gross margin was due to an improved product mix, new product revenue
expansion and manufacturing cost efficiencies.
For the quarter, SG&A expenses were $6.2 million, or 12.5% of sales, as compared
to $5.1 million, or 14.6% of sales, in the comparable quarter last year.
Research and development expenses climbed to $942,000, or 1.9% of revenue, from
$612,000, or 1.8%, in the third quarter of 2003, as the Company continues to
invest in enhancing current product features and developing new products.
Operating income for the third quarter increased 204.8% to $9.6 million, or
19.5% of sales, compared to $3.2 million, or 9.0%, for the third quarter of
2003.
Capital expenditures for the current quarter were $8.1 million and $18.3 million
year to date. Depreciation expense for the quarter was $3.4 million. As the
strong market demand continues, planned capital expenditures will be in the
range of $20-22 million for the full year.
At September 30, 2004, Diodes had $16.7 million in cash, $44.3 million in
working capital and $13.1 million in term debt. For the first nine months of
2004, shareholder equity increased 32.3% to $94.6 million. Cash flow from
operations was $7.0 million for the quarter and $20.8 million for the first nine
months of 2004.
BUSINESS OUTLOOK
"Entering the fourth quarter, we anticipate that the pace of top-line growth
will moderate from the levels experienced in the past several record quarters.
Coming off six consecutive record revenue quarters as well as the significant
gross margin expansion this past quarter, we expect fourth quarter revenues and
gross margins to be similar or slightly below those of the third quarter, and we
are confident about our ability to continue to outperform the discrete market
due to our focus on product innovation, manufacturing excellence and continued
geographic expansion," Chen concluded.
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 60 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-9001:2000 corporate sales, marketing,
engineering and logistics headquarters is located in Southern California. For
further information, including SEC filings, visit the Company's website at
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 carl_wertz@diodes.com
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
DIODES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------------------------- ------------------------------------------
2003 2004 2003 2004
-------------------- ------------------- ------------------ --------------------
NET SALES $ 34,941,000 $ 49,353,000 $ 97,703,000 $ 137,795,000
COST OF GOODS SOLD 25,779,000 32,607,000 72,734,000 93,271,000
-------------------- ------------------- ------------------ --------------------
Gross profit 9,162,000 16,746,000 24,969,000 44,524,000
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 5,089,000 6,171,000 14,097,000 18,079,000
RESEARCH AND DEVELOPMENT EXPENSES 612,000 942,000 1,358,000 2,505,000
LOSS (GAIN) ON SALE OF FIXED ASSETS 300,000 (1,000) 244,000 14,000
-------------------- ------------------- ------------------ --------------------
Total operating expenses 6,001,000 7,112,000 15,699,000 20,598,000
Income from operations 3,161,000 9,634,000 9,270,000 23,926,000
OTHER INCOME (EXPENSE)
Interest income 2,000 3,000 11,000 13,000
Interest expense (211,000) (163,000) (683,000) (500,000)
Other 126,000 91,000 29,000 (33,000)
-------------------- ------------------- ------------------ --------------------
(83,000) (69,000) (643,000) (520,000)
Income before income taxes and minority
interest 3,078,000 9,565,000 8,627,000 23,406,000
INCOME TAX BENEFIT (PROVISION) (416,000) (2,134,000) (1,684,000) (4,678,000)
-------------------- ------------------- ------------------ --------------------
Income before minority interest 2,662,000 7,431,000 6,943,000 18,728,000
MINORITY INTEREST IN JOINT VENTURE EARNINGS (99,000) (189,000) (285,000) (507,000)
-------------------- ------------------- ------------------ --------------------
NET INCOME $ 2,563,000 $ 7,242,000 $ 6,658,000 $ 18,221,000
==================== =================== ================== ====================
EARNINGS PER SHARE
Basic $ 0.20 $ 0.54 $ 0.53 $ 1.38
Diluted $ 0.18 $ 0.47 $ 0.47 $ 1.18
==================== =================== ================== ====================
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 12,813,492 13,355,775 12,655,481 13,239,681
Diluted 14,546,256 15,367,449 14,253,707 15,391,103
==================== =================== ================== ====================
The accompanying notes are an integral part of these
financial statements.
DIODES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
ASSETS
DECEMBER 31, SEPTEMBER 30,
2003 2004
------------------- -------------------
(UNAUDITED)
CURRENT ASSETS
Cash and cash equivalents $ 12,847,000 $ 16,701,000
Accounts receivable
Customers 27,010,000 36,780,000
Related parties 3,938,000 4,951,000
------------------- -------------------
30,948,000 41,731,000
Less: Allowance for doubtful receivables 375,000 391,000
------------------- -------------------
30,573,000 41,340,000
Inventories 16,164,000 21,408,000
Deferred income taxes, current 5,547,000 5,704,000
Prepaid expenses and other current assets 2,256,000 1,750,000
Prepaid income taxes 446,000 716,000
------------------- -------------------
Total current assets 67,833,000 87,619,000
PROPERTY, PLANT AND EQUIPMENT, at cost, net
of accumulated depreciation and amortization 47,893,000 56,722,000
DEFERRED INCOME TAXES, non-current 1,816,000 654,000
OTHER ASSETS
Goodwill 5,090,000 5,090,000
Other 1,163,000 1,636,000
------------------- -------------------
TOTAL ASSETS $ 123,795,000 $ 151,721,000
=================== ===================
The accompanying notes are an integral part of these
financial statements.
DIODES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
DECEMBER 31, SEPTEMBER 30,
2003 2004
------------------ ------------------
(UNAUDITED)
CURRENT LIABILITIES
Line of credit $ 8,488,000 $ 6,518,000
Accounts payable
Trade 14,029,000 18,190,000
Related parties 3,453,000 3,013,000
Accrued liabilities 8,715,000 11,224,000
Current portion of long-term debt
Related party 2,500,000 2,500,000
Other 3,333,000 1,846,000
Current portion of capital lease obligations 161,000 164,000
------------------ ------------------
Total current liabilities 40,679,000 43,455,000
LONG-TERM DEBT, net of current portion
Related party 3,750,000 1,875,000
Other 3,000,000 6,833,000
CAPITAL LEASE OBLIGATIONS, net of current portion 2,334,000 2,206,000
MINORITY INTEREST IN JOINT VENTURE 2,582,000 2,789,000
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; 14,627,284 and 15,036,980
shares issued at December 31, 2003
and September 30, 2004, respectively 6,502,000 6,771,000
Additional paid-in capital 11,192,000 15,834,000
Retained earnings 55,779,000 74,000,000
------------------ ------------------
73,473,000 96,605,000
Less:
Treasury stock - 1,613,508 shares of common stock, at cost 1,782,000 1,782,000
Accumulated other comprehensive loss (gain) 241,000 260,000
------------------ ------------------
2,023,000 2,042,000
Total stockholders' equity 71,450,000 94,563,000
------------------ ------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 123,795,000 $ 151,721,000
================== ==================
The accompanying notes are an integral part of these
financial statements.