Delaware
|
95-2039518
|
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
|
incorporation
or organization)
|
Identification
Number)
|
3050
East Hillcrest Drive
|
||
Westlake
Village, California
|
91362
|
|
(Address
of principal executive offices)
|
(Zip
code)
|
December
31,
2004 |
September
30,
2005 |
||||||
CURRENT
ASSETS
|
(unaudited)
|
||||||
Cash
and equivalents
|
$
|
18,970,000
|
$
|
74,213,000
|
|||
Short-term
investments
|
—
|
30,002,000
|
|||||
Total
cash and short-term investments
|
18,970,000
|
104,215,000
|
|||||
Accounts
receivable
|
|||||||
Customers
|
38,682,000
|
44,112,000
|
|||||
Related
parties
|
5,526,000
|
5,282,000
|
|||||
44,208,000
|
49,394,000
|
||||||
Less:
Allowance for doubtful receivables
|
(432,000
|
)
|
(475,000
|
)
|
|||
43,776,000
|
48,919,000
|
||||||
Inventories
|
22,238,000
|
26,420,000
|
|||||
Deferred
income taxes, current
|
2,453,000
|
2,434,000
|
|||||
Prepaid
expenses and other current assets
|
4,243,000
|
4,373,000
|
|||||
Prepaid
income taxes
|
406,000
|
1,397,000
|
|||||
Total
Current assets
|
92,086,000
|
187,758,000
|
|||||
PROPERTY,
PLANT AND EQUIPMENT, at
cost, net
|
|||||||
of
accumulated depreciation and amortization
|
60,857,000
|
64,880,000
|
|||||
DEFERRED
INCOME TAXES, non
current
|
7,970,000
|
6,459,000
|
|||||
OTHER
ASSETS
|
|||||||
Goodwill
|
5,090,000
|
5,090,000
|
|||||
Other
|
1,798,000
|
380,000
|
|||||
TOTAL
ASSETS
|
$
|
167,801,000
|
$
|
264,567,000
|
December
31,
2004 |
September
30,
2005 |
||||||
|
(unaudited)
|
||||||
CURRENT
LIABILITIES
|
|||||||
Line
of Credit
|
$
|
6,167,000
|
$
|
—
|
|||
Accounts
Payable
|
|||||||
Trade
|
17,274,000
|
21,467,000
|
|||||
Related
parties
|
3,936,000
|
7,428,000
|
|||||
Accrued
liabilities
|
11,459,000
|
14,038,000
|
|||||
Current
portion of long-term debt
|
|||||||
Related
party
|
2,500,000
|
1,875,000
|
|||||
Other
|
1,014,000
|
7,395,000
|
|||||
Current
portion of capital lease obligations
|
165,000
|
137,000
|
|||||
Total
current liabilities
|
42,515,000
|
52,340,000
|
|||||
LONG-TERM
DEBT, net
of current portion
|
|||||||
Related
party
|
1,250,000
|
—
|
|||||
Other
|
6,583,000
|
4,711,000
|
|||||
CAPITAL
LEASE OBLIGATIONS,
net of current portion
|
2,172,000
|
1,648,000
|
|||||
MINORITY
INTEREST IN JOINT VENTURE
|
3,133,000
|
3,935,000
|
|||||
STOCKHOLDERS'
EQUITY
|
|||||||
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 18,032,382
|
|||||||
shares
issued at December 31, 2004
|
|||||||
and
September 30, 2005, respectively
|
10,509,000
|
12,022,000
|
|||||
Additional
paid-in capital
|
21,516,000
|
87,720,000
|
|||||
Retained
earnings
|
81,330,000
|
104,619,000
|
|||||
113,355,000
|
204,361,000
|
||||||
Less:
|
|||||||
Treasury
stock - 1,613,508 shares of common stock, at cost
|
(1,782,000
|
)
|
(1,782,000
|
)
|
|||
Accumulated
other comprehensive gain (loss)
|
575,000
|
(646,000
|
)
|
||||
(1,207,000
|
)
|
(2,428,000
|
)
|
||||
Total
stockholders' equity
|
112,148,000
|
201,933,000
|
|||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
167,801,000
|
$
|
264,567,000
|
|
Three
Months Ended
September 30, |
Nine
Months
Ended September 30, |
|||||||||||
2004
|
2005
|
2004
|
2005
|
||||||||||
Net
sales
|
$
|
49,353,000
|
$
|
54,200,000
|
$
|
137,795,000
|
$
|
153,398,000
|
|||||
Cost
of goods sold
|
32,607,000
|
35,323,000
|
93,271,000
|
100,428,000
|
|||||||||
Gross
profit
|
16,746,000
|
18,877,000
|
44,524,000
|
52,970,000
|
|||||||||
Selling,
general and administrative expenses
|
6,171,000
|
7,581,000
|
18,079,000
|
21,469,000
|
|||||||||
Research
and development expenses
|
942,000
|
938,000
|
2,505,000
|
2,688,000
|
|||||||||
Loss
(gain) on disposal of fixed assets
|
(1,000
|
)
|
—
|
14,000
|
(105,000
|
)
|
|||||||
Total
operating expenses
|
7,112,000
|
8,519,000
|
20,598,000
|
24,052,000
|
|||||||||
Income
from operations
|
9,634,000
|
10,358,000
|
23,926,000
|
28,918,000
|
|||||||||
Other
income (expense)
|
|||||||||||||
Interest
income
|
3,000
|
23,000
|
13,000
|
66,000
|
|||||||||
Interest
expense
|
(163,000
|
)
|
(188,000
|
)
|
(500,000
|
)
|
(465,000
|
)
|
|||||
Other
|
91,000
|
116,000
|
(33,000
|
)
|
95,000
|
||||||||
(69,000
|
)
|
(49,000
|
)
|
(520,000
|
)
|
(304,000
|
)
|
||||||
Income
before income taxes and minority interest
|
9,565,000
|
10,309,000
|
23,406,000
|
28,614,000
|
|||||||||
Income
tax provision
|
(2,134,000
|
)
|
(1,621,000
|
)
|
(4,678,000
|
)
|
(4,523,000
|
)
|
|||||
Income
before minority interest
|
7,431,000
|
8,688,000
|
18,728,000
|
24,091,000
|
|||||||||
Minority
interest in joint veture earnings
|
(189,000
|
)
|
(305,000
|
)
|
(507,000
|
)
|
(802,000
|
)
|
|||||
Net
income
|
$
|
7,242,000
|
$
|
8,383,000
|
$
|
18,221,000
|
$
|
23,289,000
|
|||||
Earnings
per share
|
|||||||||||||
Basic
|
$
|
0.54
|
$
|
0.57
|
$
|
1.38
|
$
|
1.61
|
|||||
Diluted
|
$
|
0.47
|
$
|
0.51
|
$
|
1.18
|
$
|
1.43
|
|||||
Number
of shares used in computation
|
|||||||||||||
Basic
|
13,355,775
|
14,673,490
|
13,239,681
|
14,439,242
|
|||||||||
Diluted
|
15,367,449
|
16,487,676
|
15,391,103
|
16,229,863
|
|
Nine
Months Ended
September 30, |
||||||
2004
|
2005
|
||||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|||||||
Net
income
|
$
|
18,221,000
|
$
|
23,289,000
|
|||
Adjustments
to reconcile net income to net cash
|
|||||||
provided
by operating activities:
|
|||||||
Depreciation
and amortization
|
9,542,000
|
11,887,000
|
|||||
Minority
interest earnings
|
507,000
|
802,000
|
|||||
Share
grant expense
|
—
|
856,000
|
|||||
Loss
(gain) on disposal of property, plant and equipment
|
14,000
|
(105,000
|
)
|
||||
Changes
in operating assets:
|
|||||||
Accounts
receivable
|
(10,962,000
|
)
|
(5,338,000
|
)
|
|||
Inventories
|
(5,244,000
|
)
|
(4,182,000
|
)
|
|||
Prepaid
expenses and others
|
137,000
|
297,000
|
|||||
Deferred
income taxes
|
3,089,000
|
1,530,000
|
|||||
Changes
in operating liabilities:
|
|||||||
Accounts
payable
|
3,721,000
|
7,685,000
|
|||||
Accrued
liabilities
|
2,075,000
|
1,567,000
|
|||||
Income
tax payable
|
—
|
2,138,000
|
|||||
Net
cash provided by operating activities
|
21,100,000
|
40,426,000
|
|||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|||||||
Purchase
of property, plant and equipment
|
(18,392,000
|
)
|
(14,260,000
|
)
|
|||
Proceeds
from sale of property, plant and equipment
|
68,000
|
—
|
|||||
Purchase
of short-term investments
|
—
|
(30,002,000
|
)
|
||||
Net
cash used by investing activities
|
(18,324,000
|
)
|
(44,262,000
|
)
|
|||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|||||||
Repayments
of line of credit, net
|
(1,970,000
|
)
|
(3,167,000
|
)
|
|||
Net
proceeds from the issuance of common stock
|
2,647,000
|
63,565,000
|
|||||
Proceeds
from long-term debt
|
3,833,000
|
4,509,000
|
|||||
Repayments
of long-term debts
|
(3,362,000
|
)
|
(4,875,000
|
)
|
|||
Repayments
of capital lease obligations
|
(125,000
|
)
|
(107,000
|
)
|
|||
Management
incentive reimbursement from LSC
|
375,000
|
375,000
|
|||||
Dividend
to minority shareholders
|
(300,000
|
)
|
—
|
||||
Net
cash provided by financing activities
|
1,098,000
|
60,300,000
|
|||||
EFFECT
OF EXCHANGE RATE CHANGES ON CASH AND CASH
EQUIVALENTS
|
(20,000
|
)
|
(1,221,000
|
)
|
|||
INCREASE
IN CASH AND EQUIVALENTS
|
3,854,000
|
55,243,000
|
|||||
CASH,
BEGINNING OF PERIOD
|
12,847,000
|
18,970,000
|
|||||
CASH,
END OF PERIOD
|
$
|
16,701,000
|
$
|
74,213,000
|
|
Nine
Months Ended
September 30, |
||||||
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION
|
2004
|
2005
|
|||||
Cash
paid during the year for:
|
|||||||
Interest
|
$
|
501,000
|
$
|
456,000
|
|||
Income
taxes
|
$
|
2,347,000
|
$
|
2,049,000
|
|||
Non-cash
activities:
|
|||||||
Tax
benefits related to stock options to paid-in capital
|
$
|
2,084,000
|
$
|
3,116,000
|
December
31,
2004 |
September
30,
2005 |
||||||
Finished
goods
|
$
|
13,118,000
|
$
|
14,836,000
|
|||
Work-in-progress
|
2,025,000
|
3,198,000
|
|||||
Raw
materials
|
9,240,000
|
10,464,000
|
|||||
24,383,000
|
28,498,000
|
||||||
Less:
Reserves
|
(2,145,000
|
)
|
(2,078,000
|
)
|
|||
Net
inventory
|
$
|
22,238,000
|
$
|
26,420,000
|
For
the three months ended September 30 (in
000’s except per share data),
|
|||||||||||||||||||
Amounts
Per Share
|
Amounts
Per Share
|
||||||||||||||||||
2004
|
Basic
|
Diluted
|
2005
|
Basic
|
Diluted
|
||||||||||||||
Net
income
|
$
|
7,242
|
$
|
0.54
|
$
|
0.47
|
$
|
8,383
|
$
|
0.57
|
$
|
0.51
|
|||||||
Additional
compensation for fair value
of stock options, net
of tax effect
|
(474
|
)
|
(0.03
|
)
|
(0.03
|
)
|
(824
|
)
|
(0.05
|
)
|
(0.05
|
)
|
|||||||
Proforma
net income
|
$
|
6,768
|
$
|
0.51
|
$
|
0.44
|
$
|
7,559
|
$
|
0.52
|
$
|
0.46
|
For
the nine months ended September 30 (in 000’s except per share
data),
|
|||||||||||||||||||
Amounts
Per Share
|
Amounts
Per Share
|
||||||||||||||||||
2004
|
Basic
|
Diluted
|
2005
|
Basic
|
Diluted
|
||||||||||||||
Net
income
|
$
|
18,221
|
$
|
1.38
|
$
|
1.18
|
$
|
23,289
|
$
|
1.61
|
$
|
1.44
|
|||||||
Additional
compensation for fair value
of stock options, net
of tax effect
|
(1,076
|
)
|
(0.09
|
)
|
(0.07
|
)
|
(1,907
|
)
|
(0.13
|
)
|
(0.12
|
)
|
|||||||
Proforma
net income
|
$
|
17,145
|
$
|
1.29
|
$
|
1.11
|
$
|
21,382
|
$
|
1.48
|
$
|
1.32
|
Three
Months Ended September
30, 2004 |
Revenue
|
%
of Total Revenue |
|||||
United
States
|
$
|
15,546,000
|
31.5
|
%
|
|||
Taiwan
|
$
|
12,877,000
|
26.1
|
%
|
|||
China
|
$
|
11,842,000
|
24.0
|
%
|
|||
All
Others
|
$
|
9,088,000
|
18.4
|
%
|
|||
Total
|
$
|
49,353,000
|
100.0
|
%
|
|||
Three
Months Ended September
30, 2005 |
Revenue
|
%
of Total Revenue |
|||||
China
|
$
|
17,318,000
|
32.0
|
%
|
|||
Taiwan
|
$
|
16,383,000
|
30.2
|
%
|
|||
United
States
|
$
|
13,377,000
|
24.7
|
%
|
|||
All
Others
|
$
|
7,122,000
|
13.1
|
%
|
|||
Total
|
$
|
54,200,000
|
100.0
|
%
|
|||
Nine
Months Ended September
30, 2004 |
Revenue
|
%
of Total Revenue |
|||||
United
States
|
$
|
41,106,000
|
29.8
|
%
|
|||
Taiwan
|
$
|
36,332,000
|
26.4
|
%
|
|||
China
|
$
|
31,003,000
|
22.5
|
%
|
|||
All
Others
|
$
|
29,354,000
|
21.3
|
%
|
|||
Total
|
$
|
137,795,000
|
100.0
|
%
|
|||
Nine
Months Ended September
30, 2005 |
Revenue
|
%
of Total
Revenue |
|||||
Taiwan
|
$
|
49,989,000
|
32.6
|
%
|
|||
China
|
$
|
42,853,000
|
27.9
|
%
|
|||
United
States
|
$
|
38,534,000
|
25.1
|
%
|
|||
All
Others
|
$
|
22,022,000
|
14.4
|
%
|
|||
Total
|
$
|
153,398,000
|
100.0
|
%
|
Three
Months Ended September
30, 2004 |
Far
East
|
North
America
|
Consolidated
Segments
|
|||||||
Total
sales
|
$
|
48,706,000
|
$
|
24,888,000
|
$
|
73,594,000
|
||||
Inter-company
sales
|
(20,136,000
|
)
|
(4,105,000
|
)
|
(24,241,000
|
)
|
||||
Net
sales
|
$
|
28,570,000
|
$
|
20,783,000
|
$
|
49,353,000
|
||||
|
||||||||||
Property,
plant and equipment
|
$
|
44,408,000
|
$
|
12,314,000
|
$
|
56,722,000
|
||||
Assets
|
$
|
106,539,000
|
$
|
45,182,000
|
$
|
151,721,000
|
||||
Three
Months Ended
September 30, 2005 |
Far
East
|
North
America
|
Consolidated
Segments
|
|||||||
Total
sales
|
$
|
62,622,000
|
$
|
23,229,000
|
$
|
85,851,000
|
||||
Inter-company
sales
|
(26,460,000
|
)
|
(5,191,000
|
)
|
(31,651,000
|
)
|
||||
Net
sales
|
$
|
36,162,000
|
$
|
18,038,000
|
$
|
54,200,000
|
||||
|
||||||||||
Property,
plant and equipment
|
$
|
53,601,000
|
$
|
11,279,000
|
$
|
64,880,000
|
||||
Assets
|
$
|
155,330,000
|
$
|
109,237,000
|
$
|
264,567,000
|
Nine
Months Ended
September 30, 2004 |
Far
East
|
North
America
|
Consolidated
Segments
|
|||||||
Total
sales
|
$
|
135,158,000
|
$
|
70,315,000
|
$
|
205,473,000
|
||||
Inter-company
sales
|
(55,207,000
|
)
|
(12,471,000
|
)
|
(67,678,000
|
)
|
||||
Net
sales
|
$
|
79,951,000
|
$
|
57,844,000
|
$
|
137,795,000
|
||||
|
||||||||||
Property,
plant and equipment
|
$
|
44,278,000
|
$
|
12,314,000
|
$
|
56,592,000
|
||||
Assets
|
$
|
106,539,000
|
$
|
45,182,000
|
$
|
151,721,000
|
||||
Nine
Months Ended
September 30, 2005 |
Far
East
|
North
America
|
Consolidated
Segments
|
|||||||
Total
sales
|
$
|
171,425,000
|
$
|
66,153,000
|
$
|
237,578,000
|
||||
Inter-company
sales
|
(71,108,000
|
)
|
(13,072,000
|
)
|
(84,180,000
|
)
|
||||
Net
sales
|
$
|
100,317,000
|
$
|
53,081,000
|
$
|
153,398,000
|
||||
|
||||||||||
Property,
plant and equipment
|
$
|
53,601,000
|
$
|
11,279,000
|
$
|
64,880,000
|
||||
Assets
|
$
|
155,330,000
|
$
|
109,237,000
|
$
|
264,567,000
|
· |
expanding
our manufacturing capacity, including establishing integrated
state-of-the-art packaging and testing facilities in Asia, in 1998
and
2004, and acquiring a wafer foundry in the United States in
2000;
|
· |
expanding
our sales and marketing organization in Asia in order to address
the shift
of manufacturing of electronics products from the United States
to
Asia;
|
· |
establishing
our sales and marketing organization in Europe commencing in
2002; and
|
· |
expanding
the number of our field application engineers to design our products
into
specific end-user applications.
|
· |
the
condition of the economy in general and of the semiconductor industry
in
particular;
|
· |
our
customers’ adjustments in their order
levels;
|
· |
changes
in our pricing policies or the pricing policies of our competitors
or
suppliers;
|
· |
the
termination of key supplier
relationships;
|
· |
the
rate of introduction to, and acceptance of new products by, our
customers;
|
· |
our
ability to compete effectively with our current and future
competitors;
|
· |
our
ability to enter into and renew key corporate and strategic relationships
with our customers, vendors and strategic
alliances;
|
· |
changes
in foreign currency exchange rates;
|
· |
a
major disruption of our information technology
infrastructure; and
|
· |
unforeseen
catastrophic events, such as armed conflict, terrorism, fires,
typhoons
and earthquakes.
|
|
Percent
of Net Sales
Three months ended September 30, |
Percentage
Dollar Increase
(Decrease)
|
||||||||
2004
|
2005
|
'04
to '05
|
||||||||
Net
sales
|
100.0
|
%
|
100.0
|
%
|
9.8
|
%
|
||||
Cost
of goods sold
|
(66.1
|
)
|
(65.2
|
)
|
8.3
|
|||||
Gross
profit
|
33.9
|
34.8
|
12.7
|
|||||||
Operating
expenses
|
(14.4
|
)
|
(15.7
|
)
|
19.8
|
|||||
Operating
income
|
19.5
|
19.1
|
7.5
|
|||||||
Interest
expense, net
|
(0.3
|
)
|
(0.3
|
)
|
3.1
|
|||||
Other
income
|
0.2
|
0.2
|
27.5
|
|||||||
Income
before taxes and minority interest
|
19.4
|
19.0
|
7.8
|
|||||||
Income
tax benefit (provision)
|
(4.3
|
)
|
(3.0
|
)
|
(24.0
|
)
|
||||
Income
before minority interest
|
15.1
|
16.0
|
16.9
|
|||||||
Minority
interest
|
(0.4
|
)
|
(0.5
|
)
|
61.4
|
|||||
Net
income
|
14.7
|
15.5
|
15.8
|
2004
|
2005
|
|
Net
sales
|
$
49,353,000
|
$
54,200,000
|
2004
|
2005
|
|
Cost
of goods sold
|
$
32,607,000
|
$
35,323,000
|
Gross
profit
|
$
16,746,000
|
$
18,877,000
|
Gross
profit margin percentage
|
33.9%
|
34.8%
|
2004
|
2005
|
|
Selling,
general and administrative expenses
(“SG&A”)
|
$
6,171,000
|
$
7,581,000
|
2004
|
2005
|
|
Research
and development expenses (“R&D”)
|
$
942,000
|
$
938,000
|
2004
|
2005
|
|
Interest
expense, net
|
$
160,000
|
$
165,000
|
2004
|
2005
|
|
Other
income
|
$
91,000
|
$
116,000
|
2004
|
2005
|
|
Income
tax provision
|
$
2,134,000
|
$
1,621,000
|
2004
|
2005
|
|
Minority
interest in joint venture earnings
|
$
189,000
|
$
305,000
|
|
Percent
of Net Sales
Nine months ended September 30, |
Percentage
Dollar
Increase (Decrease) |
|
|||||||
2004
|
2005
|
'04
to '05
|
||||||||
Net
sales
|
100.0
|
%
|
100.0
|
%
|
11.3
|
%
|
||||
Cost
of goods sold
|
(67.7
|
)
|
(65.5
|
)
|
7.7
|
|||||
Gross
profit
|
32.3
|
34.5
|
19.0
|
|||||||
Operating
expenses
|
(14.9
|
)
|
(15.6
|
)
|
16.8
|
|||||
Operating
income
|
17.4
|
18.9
|
20.9
|
|||||||
Interest
expense, net
|
(0.4
|
)
|
(0.3
|
)
|
(18.1
|
)
|
||||
Other
income (expense)
|
(0.0
|
)
|
0.1
|
(387.9
|
)
|
|||||
Income
before taxes and minority interest
|
17.0
|
18.7
|
22.3
|
|||||||
Income
tax benefit (provision)
|
(3.4
|
)
|
(3.0
|
)
|
(3.3
|
)
|
||||
Income
before minority interest
|
13.6
|
15.7
|
28.6
|
|||||||
Minority
interest
|
(0.4
|
)
|
(0.5
|
)
|
58.2
|
|||||
Net
income
|
13.2
|
15.2
|
27.8
|
2004
|
2005
|
|
Net
sales
|
$
137,795,000
|
$
153,398,000
|
2004
|
2005
|
|
Cost
of goods sold
|
$
93,271,000
|
$
100,428,000
|
Gross
profit
|
$
44,524,000
|
$
52,970,000
|
Gross
profit margin percentage
|
32.3%
|
34.5%
|
2004
|
2005
|
|
SG&A
|
$
18,079,000
|
$
21,469,000
|
2004
|
2005
|
|
R&D
|
$
2,505,000
|
$
2,688,000
|
2004
|
2005
|
|
Interest
expense, net
|
$
487,000
|
$
399,000
|
2004
|
2005
|
|
Other
income (expense)
|
$
(33,000)
|
$
95,000
|
2004
|
2005
|
|
Income
tax provision
|
$
4,678,000
|
$
4,523,000
|
2004
|
2005
|
|
Minority
interest in joint venture earnings
|
$
507,000
|
$
802,000
|
Ø |
pay
substantial damages for past, present and future use of the infringing
technology;
|
Ø |
cease
the manufacture, use or sale of infringing
products;
|
Ø |
discontinue
the use of infringing technology;
|
Ø |
expend
significant resources to develop non-infringing
technology;
|
Ø |
pay
substantial damages to our customers or end users to discontinue
use or
replace infringing technology with non-infringing
technology;
|
Ø |
license
technology from the third party claiming infringement, which license
may
not be available on commercially reasonable terms, or at
all; or
|
Ø |
relinquish
intellectual property rights associated with one or more of our
patent
claims, if such claims are held invalid or otherwise
unenforceable
|
Ø |
difficulties
associated with owning a manufacturing business, including, but
not
limited to, the maintenance and management of manufacturing facilities,
equipment, employees and inventories and limitations on the flexibility
of
controlling overhead;
|
Ø |
difficulties
in continuing expansion of our operations in Asia and Europe, because
of
the distance from our U.S. headquarters and differing regulatory
and
cultural environments;
|
Ø |
the
need for skills and techniques that are outside our traditional
core
expertise;
|
Ø |
less
flexibility in shifting manufacturing or supply sources from one
region to
another;
|
Ø |
even
when independent suppliers offer lower prices, we would continue
to
acquire wafers from our captive manufacturing facility, which may
result
in us having higher costs than our
competitors;
|
Ø |
difficulties
developing and implementing a successful research and development
team; and
|
Ø |
difficulties
developing, and gaining market acceptance of, our proprietary
technology.
|
Ø |
unexpected
losses of key employees or customers of the acquired
company;
|
Ø |
bringing
the acquired company’s standards, processes, procedures and controls into
conformance with our operations;
|
Ø |
coordinating
our new product and process
development;
|
Ø |
hiring
additional management and other critical
personnel;
|
Ø |
increasing
the scope, geographic diversity and complexity of our
operations;
|
Ø |
difficulties
in consolidating facilities and transferring processes and
know-how;
|
Ø |
difficulties
in reducing costs of the acquired entity’s
business;
|
Ø |
diversion
of management’s attention from the management of our
business; and
|
Ø |
adverse
effects on existing business relationships with
customers.
|
Ø |
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;
|
Ø |
compliance
with trade or other laws in a variety of
jurisdictions;
|
Ø |
trade
restrictions, transportation delays, work stoppages, and economic
and
political instability;
|
Ø |
changes
in import/export regulations, tariffs and freight
rates;
|
Ø |
difficulties
in collecting receivables and enforcing
contracts;
|
Ø |
currency
exchange rate fluctuations;
|
Ø |
restrictions
on the transfer of funds from foreign subsidiaries to the United
States;
|
Ø |
the
possibility of international conflict, particularly between or
among China
and Taiwan and the United States;
|
Ø |
legal
regulatory, political and cultural differences among the countries
in
which we do business; and
|
Ø |
longer
customer payment terms.
|
Ø |
general
economic conditions in the countries where we sell our
products;
|
Ø |
seasonality
and variability in the computing and communications market and
our other
end markets;
|
Ø |
the
timing of our and our competitors’ new product
introductions;
|
Ø |
product
obsolescence;
|
Ø |
the
scheduling, rescheduling and cancellation of large orders by our
customers;
|
Ø |
the
cyclical nature of demand for our customers’
products;
|
Ø |
our
ability to develop new process technologies and achieve volume
production
at our fabrication facilities;
|
Ø |
changes
in manufacturing yields;
|
Ø |
adverse
movements in exchange rates, interest rates or tax
rates; and
|
Ø |
the
availability of adequate supply commitments from our outside suppliers
or
subcontractors.
|
Ø |
use
a significant portion of our available
cash;
|
Ø |
issue
equity securities, which would dilute current stockholders’ percentage
ownership;
|
Ø |
incur
substantial debt;
|
Ø |
incur
or assume contingent liabilities, known or
unknown;
|
Ø |
incur
amortization expenses related to
intangibles; and
|
Ø |
incur
large, immediate accounting
write-offs.
|
3.1 |
Certificate
of Incorporation, as amended (incorporated by reference to Exhibit
3.1 of
Amendment No.
1 to the Company's Registration Statement on Form S-3 (File No.
333-127833) filed on September
8, 2005).
|
3.2 |
Amended
Bylaws of the Company dated August 14, 1987 (incorporated by reference
to
Exhibit to
Form 10-K filed with the Commission for fiscal year ended April
30,
1988).
|
10.1* |
Employment
Agreement dated as of August 29, 2005, between the Company and
Keh-Shew Lu
(incorporated
by reference to Exhibit 10.1 of the Company's Current Report on
Form 8-K
filed onSeptember
2, 2005).
|
10.2* |
Employment
Agreement dated as of August 29, 2005, between the Company and
Mark A.
King (incorporated
by reference to Exhibit 10.2 of the Company's Current Report on
Form 8-K
filed onSeptember
2, 2005).
|
10.3* |
Employment
Agreement dated as of August 29, 2005, between the Company and
Joseph Liu
(incorporated
by reference to Exhibit 10.3 of the Company's Current Report on
Form 8-K
filed on September
2, 2005).
|
10.4* |
Employment
Agreement dated as of August 29, 2005, between the Company and
Carl C.
Wertz (incorporated
by reference to Exhibit 10.4 of the Company's Current Report on
Form 8-K
filed onSeptember
2, 2005).
|
10.5* |
Form
of Indemnification Agreement between the Company and its directors
and
executive officers (incorporated
by reference to Exhibit 10.5 of the Company's Current Report on
Form 8-K
filed on September
2, 2005).
|
10.6 |
Second
Amendment to Amended and Restated Credit Agreement dated as of
August 29,
2005,between
Diodes Incorporated and Union Bank of California, N.A. (incorporated
by
reference to Exhibit
10.59 of the Company's Current Report on Form 8-K filed on September
2,
2005).
|
10.7 |
Covenant
Agreement dated as of August 29, 2005, between FabTech, Inc. and
Union
Bank of California,
N.A. (incorporated by reference to Exhibit 10.60 of the Company's
Current
Report on Form
8-K filed on September 2, 2005).
|
10.8 |
Revolving
Note dated as of August 29, 2005, of Diodes Incorporated payable
to Union
Bank of California,
N.A. (incorporated by reference to Exhibit 10.61 of the Company's
Current
Report on Form
8-K filed on September 2, 2005).
|
10.9 |
Term
Note dated as of August 29, 2005, of FabTech, Inc. payable to Union
Bank
of California, N.A.
(incorporated by reference to Exhibit 10.62 of the Company's Current
Report on Form 8-K filed
on September 2, 2005).
|
10.10 |
Security
Agreement dated as of February 27, 2003, between the Company and
Union
Bank of California,
N.A. (incorporated by reference to Exhibit 10.63 of the Company's
Current
Report on Form
8-K filed on September 2, 2005).
|
10.11 |
Security
Agreement dated as of February 27, 2003, between FabTech, Inc.
and Union
Bank of California,
N.A. (incorporated by reference to Exhibit 10.64 of the Company's
Current
Report on Form
8-K filed on September 2, 2005).
|
10.12 |
Continuing
Guaranty dated as of December 1, 2000, between the Company and
Union Bank
of California,
N.A. (incorporated by reference to Exhibit 10.65 of the Company's
Current
Report on Form
8-K filed on September 2, 2005).
|
10.13 |
Continuing
Guaranty dated as of December 1, 2000, between FabTech, Inc. and
Union
Bank ofCalifornia,
N.A. (incorporated by reference to Exhibit 10.66 of the Company's
Current
Report on Form
8-K filed on September 2, 2005).
|
11 |
Computation
of Earnings Per Share
|
31.1 |
Certification
Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|
31.2 |
Certification
Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|
32.1
|
Certification
Pursuant to 18 U.S.C. 1350 Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
|
32.2
|
Certification
Pursuant to 18 U.S.C. 1350 Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
|
By:
/s/ Carl C. Wertz
CARL
C. WERTZ
Chief
Financial Officer, Treasurer and Secretary
(Duly
Authorized Officer and Principal Financial and
Chief
Accounting Officer)
|
November
9, 2005
|
3.1 |
Certificate
of Incorporation, as amended (incorporated by reference to Exhibit
3.1 of
Amendment No.
1 to the Company's Registration Statement on Form S-3 (File No.
333-127833) filed on September
8, 2005).
|
3.2 |
Amended
Bylaws of the Company dated August 14, 1987 (incorporated by reference
to
Exhibit 3 to
Form 10-K filed with the Commission for fiscal year ended April
30,
1988).
|
10.1* |
Employment
Agreement dated as of August 29, 2005, between the Company and
Keh-Shew Lu
(incorporated
by reference to Exhibit 10.1 of the Company's Current Report on
Form 8-K
filed on September
2, 2005).
|
10.2* |
Employment
Agreement dated as of August 29, 2005, between the Company and
Mark A.
King (incorporated
by reference to Exhibit 10.2 of the Company's Current Report on
Form 8-K
filed on September
2, 2005).
|
10.3* |
Employment
Agreement dated as of August 29, 2005, between the Company and
Joseph Liu
(incorporated
by reference to Exhibit 10.3 of the Company's Current Report on
Form 8-K
filed on September
2, 2005).
|
10.4* |
Employment
Agreement dated as of August 29, 2005, between the Company and
Carl C.
Wertz (incorporated
by reference to Exhibit 10.4 of the Company's Current Report on
Form 8-K
filed on September
2, 2005).
|
10.5* |
Form
of Indemnification Agreement between the Company and its directors
and
executive officers (incorporated
by reference to Exhibit 10.5 of the Company's Current Report on
Form 8-K
filed on September
2, 2005).
|
10.6 |
Second
Amendment to Amended and Restated Credit Agreement dated as of
August 29,
2005, between
Diodes Incorporated and Union Bank of California, N.A. (incorporated
by
reference to Exhibit
10.59 of the Company's Current Report on Form 8-K filed on September
2,
2005).
|
10.7 |
Covenant
Agreement dated as of August 29, 2005, between FabTech, Inc. and
Union
Bank of California,
N.A. (incorporated by reference to Exhibit 10.60 of the Company's
Current
Report on Form
8-K filed on September 2, 2005).
|
10.8 |
Revolving
Note dated as of August 29, 2005, of Diodes Incorporated payable
to Union
Bank of California,
N.A. (incorporated by reference to Exhibit 10.61 of the Company's
Current
Report on Form
8-K filed on September 2, 2005).
|
10.9 |
Term
Note dated as of August 29, 2005, of FabTech, Inc. payable to Union
Bank
of California, N.A.
(incorporated by reference to Exhibit 10.62 of the Company's Current
Report on Form 8-K filed
on September 2, 2005).
|
10.10 |
Security
Agreement dated as of February 27, 2003, between the Company and
Union
Bank of California,
N.A. (incorporated by reference to Exhibit 10.63 of the Company's
Current
Report on Form
8-K filed on September 2, 2005).
|
10.11 |
Security
Agreement dated as of February 27, 2003, between FabTech, Inc.
and Union
Bank of California,
N.A. (incorporated by reference to Exhibit 10.64 of the Company's
Current
Report on Form
8-K filed on September 2, 2005).
|
10.12 |
Continuing
Guaranty dated as of December 1, 2000, between the Company and
Union Bank
of California,
N.A. (incorporated by reference to Exhibit 10.65 of the Company's
Current
Report on Form
8-K filed on September 2, 2005).
|
10.13 |
Continuing
Guaranty dated as of December 1, 2000, between FabTech, Inc. and
Union
Bank of California,
N.A. (incorporated by reference to Exhibit 10.66 of the Company's
Current
Report on Form
8-K filed on September 2, 2005).
|
11 |
Computation
of Earnings Per Share
|
31.1 |
Certification
Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|
31.2 |
Certification
Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|
32.1
|
Certification
Pursuant to 18 U.S.C. 1350 Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
|
32.2
|
Certification
Pursuant to 18 U.S.C. 1350 Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
|
|
Three
Months Ended
September 30, |
Nine
Months Ended
September 30, |
|||||||||||
2004
|
2005
|
2004
|
2005
|
||||||||||
BASIC
|
|||||||||||||
Weighted
average number of common
|
|||||||||||||
shares
outstanding used in computing
|
|||||||||||||
basic
earnings per share
|
13,355,775
|
14,673,490
|
13,239,681
|
14,439,242
|
|||||||||
Net
Income
|
$
|
7,242,000
|
$
|
8,383,000
|
$
|
18,221,000
|
$
|
23,289,000
|
|||||
Basic
earnings per share
|
$
|
0.54
|
$
|
0.57
|
$
|
1.38
|
$
|
1.61
|
|||||
DILUTED
|
|||||||||||||
Weighted
average number of common
|
|||||||||||||
shares
outstanding used in computing
|
|||||||||||||
basic
earnings per share
|
13,355,775
|
14,673,490
|
13,239,681
|
14,439,242
|
|||||||||
Assumed
exercise of stock options
|
2,011,674
|
1,814,186
|
2,151,422
|
1,790,621
|
|||||||||
15,367,449
|
16,487,676
|
15,391,103
|
16,229,863
|
||||||||||
Net
Income
|
$
|
7,242,000
|
$
|
8,383,000
|
$
|
18,221,000
|
$
|
23,289,000
|
|||||
Basic
earnings per share
|
$
|
0.47
|
$
|
0.51
|
$
|
1.18
|
$
|
1.43
|