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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
APRIL 28, 2005
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)
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
- -----------------------------------------------------------------
On April 28, 2005, Diodes Incorporated issued a press release
announcing first quarter 2005 earnings. A copy of the press release is attached
as Exhibit 99.1.
During the investor conference call on April 28, 2005, Carl
Wertz, the Company's Chief Financial Officer made the following additional
comments:
a. Operating expenses for the second quarter of 2005 should
be in line with first quarter 2005 expenses, except for
higher costs in the first quarter of 2005 associated with
Sarbanes-Oxley 404 compliance.
b. Depending upon profit mix in the various tax
jurisdictions, consolidated tax rates for the remainder of
2005 are expected to be in the 16-20% range.
c. Sales to Lite-On Semiconductor Corporation (the Company's
largest shareholder at 32% ) in the first quarter of
2005, as a percentage of total sales, were in the low-to-
mid teens.
d. Capacity utilization at the wafer fab for the first
quarter of 2005 was low-to-mid-80%, and low 90% at the
manufacturing facilities in China.
During the investor conference call on April 28, 2005, Mark
King, the Company's Vice President of Sales and Marketing made the following
additional comment:
a. North American design wins contributed to approximately 28% of Asian sales
revenues in the first quarter of 2005. b. European sales, as a percentage of
total sales, are still expected to be in the 3-5% range towards the later part
of 2005.
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 April 28, 2005
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: April 28, 2005 DIODES INCORPORATED
By /s/ Carl C. Wertz
CARL C. WERTZ
Chief Financial Officer
EXHIBIT INDEX
EXHIBIT DESCRIPTION
NUMBER
99.1 Press Release dated April 28, 2005
Exhibit 99.1
Diodes Incorporated
FOR IMMEDIATE RELEASE
Diodes Incorporated Reports First Quarter 2005 Earnings
o Revenues up 17% year-over-year
o Earnings per share increases 49% to $0.46 per share
Westlake Village, California, April 28, 2005 - Diodes Incorporated (Nasdaq:
DIOD), a leading manufacturer and supplier of high quality discrete
semiconductors, today reported financial results for the first quarter of 2005
ended March 31, 2005.
First Quarter Highlights:
>> Revenues increased 17.3% year-over-year and 1.5% sequentially to
$48.6 million
>> Gross margin improved 330 basis points to 34.1%
>> Operating income increased 40.4% to $9.1 million
>> Net income increased 49.1% to $7.2 million, or $0.46 per share, up from
1Q04 of $4.9 million, or $0.32 per share
Revenues for the first quarter of 2005 were $48.6 million, an increase of 17.3%
from the first quarter of 2004, and a sequential increase of 1.5% from the
fourth quarter of 2004. Net income for the quarter increased 49.1% to $7.2
million, compared to $4.9 million for the three months ended March 31, 2004.
Diluted earnings per share were $0.46 for the first quarter of 2005, as compared
to $0.32 for the same period last year.
Commenting on the quarter, C.H. Chen, President and CEO of Diodes Incorporated,
said, "We are very pleased to start this fiscal year with a successful quarter
marked by revenue growth and continued strong profitability. During the first
three months of 2005, Diodes enjoyed robust demand for its next-generation
devices and our design wins and market share were at record levels. As a result
of the Company's ongoing research and development efforts, we continued to enjoy
strong uptake on our higher-margin products, which reinforces Diodes' status as
an innovation leader in the discrete category in all end-user markets."
"During the quarter we focused on operating efficiencies and achieved higher
operating and net income margins compared to the prior-year quarter. We
continued to generate positive cash flows, and have a solid balance sheet to
support future growth initiatives. Despite a softer industry environment, Diodes
continues to outperform the discrete semiconductor industry and we believe that
this trend will continue through 2005."
End Markets
"Diodes' end-equipment markets remained in line with the previous quarter, with
consumer electronics and computer accounting for about 68% of our business
during the first quarter of 2005. Sales growth was primarily driven by
accelerating demand for our products in digital audio players, set-top boxes,
LCD panels and notebook computers," commented Mark King, Vice President of Sales
and Marketing.
"While demand in Europe was flat, we continue to strengthen our sale capability
in this market and signed a distribution agreement with Rutronik Electronic
Components. This notably augments Diodes' opportunities in the large European
market and enhances the network we established in Southern Europe through
Silverstar Srl, an Arrow Electronics company, in September 2004," said Mr. King.
New Products and Design Wins
"Just last week, we introduced the new DFN 1006-2 and DFN 1006-3 packages using
QFN (Quad Flat No-Lead) technology. The new QFN platform is an ideal choice for
space-constrained applications such as mobile phones, PDAs, portable media and
entertainment devices, digital cameras and camcorders, notebook computers, and
wireless equipment. The ultra-compact package requires only 40% of the PCB area
of the already sub-miniature SOD-523 packages, while maintaining the power
dissipation of packages almost 10 times their size," said Mr. Chen. "And we
continued to expand the line of products based on our breakthrough
PowerDI(TM)123 Compact Power Package to include a series of 1-Watt Zener devices
and a series of 2-Ampere Schottky devices. Our new products have been key to
enabling Diodes to enter new accounts, expand our margins, and position our
company as the first name our customers think of for discrete semiconductor
solutions."
"The success of our product development initiatives was validated by design wins
at 54 accounts in various markets from a broad range of end-equipment users. We
had strong design activity for our SOT563 array and SOD523 product lines in the
first quarter. We also generated the first meaningful revenue from
PowerDI(TM)123. In addition, sales of new products were 15.7% of total sales,
compared to a record high of 16.2% in the previous quarter. This apparent
decline was due to continued sales of the Powermite3 line and some Zener lines
that have now been in the market for over three years, and therefore, are no
longer classified as new product revenues," Mr. Chen continued.
Additional Financial Highlights
Gross profit for the first quarter of 2005 was $16.6 million compared to $16.2
million in the fourth quarter of 2004, and increased 30.2% over the $12.8
million in the first quarter of 2004. Gross margin for the quarter increased to
34.1% compared to 33.9% of sales for the fourth quarter of 2004. Compared to the
prior-year quarter, gross margin increased 330 basis points from 30.8% due to an
improved product mix, new product revenue expansion and manufacturing cost
efficiencies.
For the quarter, SG&A expenses were $6.7 million, or 13.8% of sales, as compared
to $5.5 million, or 13.2% of sales, in the comparable quarter last year.
Sequentially, SG&A expenses increased by $1.3 million over the fourth quarter of
2004. This reflects $0.7 million in one-time reductions to Asia sales
commissions and royalty expenses recorded in the fourth quarter, and increased
professional fees associated with Sarbanes-Oxley implementation, upgrades to the
Company's ERP system, and a donation in support of Tsunami relief in the first
quarter of 2005.
Research and development expenses rose 18.0% to $0.9 million, or 1.9% of
revenue, from $0.8 million, or 1.8% of revenue, in the first quarter of 2004, as
the Company continues to invest in enhancing current product features and
developing new products.
Operating income for the first quarter increased 40.4% to $9.1 million, or 18.7%
of sales, compared to $6.5 million, or 15.7% of sales, for the first quarter of
2004. Other expense for the first quarter was $0.2 million compared to $0.3
million in the year-ago quarter, due primarily to lower currency exchange losses
and reduced interest expense.
Capital expenditures for the current quarter were $2.1 million and depreciation
expense was $3.8 million.
At March 31, 2005, Diodes had $27.9 million in cash, $61.3 million in working
capital, $11.6 million in term debt, and $33.2 million in availability under its
bank credit facilities. For the first quarter, the Company generated cash flow
from operations of $11.0 million, and shareholders' equity increased 7.9% to
$121.0 million.
Business outlook
"Entering the second quarter, shipments and orders for delivery continue to show
strength with a book-to-bill ratio slightly above one. However, given a somewhat
uncertain industry outlook, we forecast that our second quarter revenue and
gross margin will be comparable to the first quarter. Given our continued
progress in shifting our sales mix and expanding market share, we feel confident
that we will continue to outperform the discrete semiconductor market in 2005,"
Chen concluded.
Conference Call
Diodes Incorporated will hold its fourth quarter conference call for all
interested persons at 8 a.m. Pacific Time (11 a.m. Eastern Time) 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, serving the communications,
computer, 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
and logistics headquarters is located in Southern California. For further
information, 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, including, but not limited to, any forecast of revenues or gross
margin. 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: Carl Wertz, Chief Financial Officer, Diodes Incorporated
(805) 446-4800 e-mail: carl_wertz@diodes.com
or
Crocker Coulson, President, CCG Investor Relations,
(818) 789-0100, e-mail: crocker.coulson@ccgir.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
March 31,
------------------------------------------
2004 2005
------------------- -------------------
Net sales $ 41,435,000 $ 48,600,000
Cost of goods sold 28,685,000 32,004,000
------------------- -------------------
Gross profit 12,750,000 16,596,000
Selling, general and administrative
expenses 5,476,000 6,692,000
Research and development expenses 763,000 900,000
Loss (gain) on sale of fixed assets 23,000 (105,000)
------------------- -------------------
Total operating expenses 6,262,000 7,487,000
Income from operations 6,488,000 9,109,000
Other income (expense)
Interest expense, net (182,000) (154,000)
Other (147,000) (34,000)
------------------- -------------------
(329,000) (188,000)
Income before income taxes and minority
interest 6,159,000 8,921,000
Income tax provision (1,160,000) (1,442,000)
------------------- -------------------
Income before minority interest 4,999,000 7,479,000
Minority interest in joint venture earnings (143,000) (239,000)
------------------- -------------------
Net income $ 4,856,000 $ 7,240,000
=================== ===================
Earnings per share
Basic $ 0.37 $ 0.51
Diluted $ 0.32 $ 0.46
=================== ===================
Weighted average shares outstanding
Basic 13,096,836 14,217,910
Diluted 15,286,416 15,683,348
=================== ===================
The accompanying notes are an integral part of
these financial statements.
DIODES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
ASSETS
December 31, March 31,
2004 2005
------------------- -------------------
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 18,970,000 $ 27,922,000
Accounts receivable
Customers 38,682,000 40,310,000
Related parties 5,526,000 4,522,000
------------------- -------------------
44,208,000 44,832,000
Less: Allowance for doubtful receivables 432,000 451,000
------------------- -------------------
43,776,000 44,381,000
Inventories 22,238,000 21,227,000
Deferred income taxes, current 2,453,000 2,419,000
Prepaid expenses and other current assets 4,243,000 3,802,000
Prepaid income taxes 406,000 376,000
------------------- -------------------
Total current assets 92,086,000 100,127,000
PROPERTY, PLANT AND EQUIPMENT, at cost, net
of accumulated depreciation and amortization 60,857,000 58,884,000
DEFERRED INCOME TAXES, non-current 7,970,000 7,689,000
OTHER ASSETS
Goodwill 5,090,000 5,090,000
Other 1,798,000 895,000
------------------- -------------------
TOTAL ASSETS $ 167,801,000 $ 172,685,000
=================== ===================
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, March 31,
2004 2005
------------------ ------------------
(Unaudited)
CURRENT LIABILITIES
Line of credit $ 6,167,000 $ 4,135,000
Accounts payable
Trade 17,274,000 15,940,000
Related parties 3,936,000 5,834,000
Accrued liabilities 11,459,000 8,942,000
Current portion of long-term debt
Related party 2,500,000 2,500,000
Other 1,014,000 4,391,000
Current portion of capital lease obligations 165,000 135,000
------------------ ------------------
Total current liabilities 42,515,000 41,877,000
LONG-TERM DEBT, net of current portion
Related party 1,250,000 625,000
Other 6,583,000 4,127,000
CAPITAL LEASE OBLIGATIONS, net of current portion 2,172,000 1,707,000
MINORITY INTEREST IN JOINT VENTURE 3,133,000 3,371,000
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; 15,763,266 and 15,892,591
shares issued at December 31, 2004
and March 31, 2005, respectively 7,260,000 7,346,000
Additional paid-in capital 24,765,000 26,247,000
Retained earnings 81,330,000 88,570,000
------------------ ------------------
113,355,000 122,163,000
Less:
Treasury stock - 1,613,508 shares of common stock, at cost 1,782,000 1,782,000
Accumulated other comprehensive gain (575,000) (597,000)
------------------ ------------------
1,207,000 1,185,000
Total stockholders' equity 112,148,000 120,978,000
------------------ ------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 167,801,000 $ 172,685,000
================== ==================
The accompanying notes are an integral part of
these financial statements.