SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K/A

(Amendment No. 2)

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 24, 2015

 

 

DIODES INCORPORATED

(Exact name of Registrant as Specified in Its Charter)

 

 

 

Delaware		002-25577		95-2039518
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)
4949 Hedgcoxe Road, Suite 200, Plano, TX				75024
(Address of Principal Executive Offices)				(Zip Code)

Registrant’s Telephone Number, Including Area Code: (972) 987-3900

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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EXPLANATORY NOTE

This Current Report on Form 8-K/A is being filed with the Securities and Exchange Commission (the “Commission”) in order to amend the following Current Reports on Form 8-K of Diodes Incorporated (the “Company”):

 

•

Current Report on Form 8-K filed by the Company with the Commission on November 25, 2015 (the “November 25 Form 8-K”) regarding the completion of the acquisition of Pericom Semiconductor Corporation (the “Pericom acquisition”);

 

•

Current Report on Form 8-K/A filed by the Company with the Commission on February 10, 2016 (the “February 10 Form 8-K/A”) that amended the November 25 Form 8-K and provided , in accordance with Item 9.01(a)(4) of Form 8-K, the historical audited financial information and unaudited pro forma financial information required to be filed in connection with the Pericom acquisition;

 

•

Current Report on Form 8-K filed by the Company with the Commission on February 16, 2016 (the “February 16 Form 8-K”) that furnished the press release announcing the Company’s financial results at, and for the quarterly period and fiscal year ended, December 31, 2015; and

 

•

Current Report on Form 8-K filed by the Company with the Commission on February 22, 2016 (the “February 22 Form 8-K”) that furnished the transcript of the conference call that discussed the Company’s financial results at, and for the quarterly period and fiscal year ended, December 31, 2015, and the Company’s updated corporate presentation slides.

This Current Report on Form 8-K/A is also being filed in order to furnish the New Release (as defined below).

 

Item 2.02

Results of Operations and Financial Condition.

On March 11, 2016, the Company issued a press release (the “New Release”) and updated corporate presentation slides (the “New Slides”), in each case, revising its financial results at, and for the quarterly period and fiscal year ended, December 31, 2015, which financial results had been (1) announced in a press release dated February 16, 2016, (the “Old Release”) which was furnished with the February 16 Form 8-K being amended hereby, (2) discussed in a conference call held on February 16, 2016, the transcript of which (the “Transcript”) was furnished with the February 22 Form 8-K being amended hereby, and (3) included in the Company’s updated corporate presentation slides (the “Old Slides”), which were furnished with the February 22 Form 8-K being amended hereby. A copy of the New Release is attached as Exhibit 99.1, and the information contained in Exhibit 99.1 is incorporated herein by reference. A copy of the New Slides are attached as Exhibit 99.2, and the information contained in Exhibit 99.2 is incorporated herein by reference. Any and all references in the New Release and the New Slides to the Company’s business outlook are intended to be within the safe harbor provided by the Private Securities Litigation Reform Act of 1995 (the “Act”) as comprising forward looking statements within the meaning of the Act

In the New Release, the Company utilizes financial measures and terms not calculated in accordance with generally accepted accounting principles in the United States (“GAAP”) in order to provide investors with an alternative method for assessing the Company’s operating results in a manner that enables investors to more thoroughly evaluate its current performance as compared to past performance. The Company also believes these non-GAAP measures provide investors with a more informed baseline for modeling the Company’s future financial performance. Management uses these non-GAAP measures for the same purpose. The Company believes that investors should have access to the same set of tools that management uses in analyzing results. These non-GAAP measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results and may differ from similar measures used by other companies. See Exhibit 99.1 for a description and reconciliation with GAAP of the non-GAAP measures used.

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The Old Release, the Transcript and the Old Slides provided an update on the Company’s business outlook, that is intended to be within the safe harbor provided by the Act as comprising forward looking statements within the meaning of the Act, and the information in the New Release and the New Slides does not affect that forward looking business outlook.

The information furnished in this Item 2.02, including the exhibit incorporated by reference, will not be treated as “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. This information will not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or into another filing under the Exchange Act, unless that filing expressly refers to specific information in this Report.

 

Item 7.01

Regulation FD Disclosure.

The transcript of the earnings conference call (the “Transcript”) furnished as Exhibit 99.1 to the February 22 Form 8-K contained information that has been superseded by the New Release and should be read, if at all, in conjunction with the New Release. The Transcript also provided an update on the Company’s business outlook, that is intended to be within the safe harbor provided by the Act as comprising forward looking statements within the meaning of the Act and the information in the New Release and the New Slides does not affect that forward looking business outlook.

 

Item 8.01

Other Events.

The copy of the Company’s corporate presentation slides attached as Exhibit 99.2 to the February 22 Form 8-K (the “Prior Slides”) contained information that has been superseded by the New Slides attached as Exhibit 99.2 to this report and the Prior Slides should be viewed, if at all, in conjunction with the New Release and the New Slides. To the extent that the New Slides explicitly or implicitly refer to the Company’s business outlook, any such reference is intended to be within the safe harbor provided by the Act as comprising forward looking statements within the meaning of the Act.

 

Item 9.01.

Financial Statements and Exhibits.

 

(b)

Pro forma financial information.

The following pro forma financial information and related notes are filed herewith as Exhibit 99.3 and shall be deemed to amend and restate in their entirety the pro forma financial information and related notes which were filed as Exhibit 99.3 to the February 10 Form 8-K/A:

 

•

Unaudited pro forma condensed combined balance sheet as of September 30, 2015 and accompanying explanatory notes;

 

•

Unaudited pro forma condensed combined statement of operations for the twelve months ended December 31, 2014 and accompanying explanatory notes; and

 

•

Unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2015 and accompanying explanatory notes.

The unaudited pro forma condensed combined financial information is presented for informational purposes only. The pro forma data is not necessarily indicative of what the Company’s financial position or results of operations actually would have been had the Company completed the Pericom acquisition as of the dates indicated. In addition, the unaudited pro forma condensed combined financial information does not purport to project the future financial position or operating results of the consolidated company.

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(d) Exhibits

 

Exhibit No.		Description
99.1		Press release dated March 11, 2016
99.2		Updated corporate presentation slides
99.3		Unaudited pro forma financial information

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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: March 11, 2016				DIODES INCORPORATED
				By		/s/ Richard D. White
						Richard D. White
						Chief Financial Officer

EXHIBIT 99.1

Diodes Incorporated Reports Revised Fourth Quarter 2015 GAAP EPS of ($0.10)

Previously Reported Non-GAAP EPS of $0.14 Remains Unchanged

Plano, Texas—March 11, 2016—(BUSINESS WIRE)—Diodes Incorporated (NASDAQ: DIOD), a leading global manufacturer and supplier of high-quality application specific standard products within the broad discrete, logic and analog semiconductor markets, today announced a revision to its unaudited financial results for its fiscal fourth quarter and fiscal year ended December 31, 2015, as originally reported on February 16, 2016.

In March 2016, subsequent to the Company’s February 16, 2016 unaudited fiscal fourth quarter 2015 earnings release but prior to the filing of its audited Annual Report on Form 10-K for the fiscal year ended December 31, 2015, the Company revised its initial acquisition accounting related to the stock awards and change-in-control agreements for Pericom employees. The effect was to reduce amounts previously included in the purchase price of Pericom and goodwill in the balance sheet by approximately $12 million and reduce fourth quarter 2015 net income as reported under U.S. generally accepted accounting principles (“GAAP”) by approximately $5.5 million. For the fourth quarter, GAAP net income per diluted share was initially reported at $0.01 per share. GAAP net income has been revised to a net loss of $0.10 per share. Non-GAAP net income did not change, remaining at $0.14 per diluted share.

We have included a reconciliation between revised GAAP net income and non-GAAP net income in the supplemental financial data attached below. The adjustment to reconcile the previously released GAAP net income to non-GAAP net income for the affected periods is shown in the line item titled, “Employee award costs.”

The revised unaudited financial statements reflecting the changes are also attached to this press release. The Company’s previously released first quarter 2016 non-GAAP guidance is not affected by this change.

About Diodes Incorporated

Diodes Incorporated (Nasdaq: DIOD), a Standard and Poor’s SmallCap 600 and Russell 3000 Index company, is a leading global manufacturer and supplier of high-quality application specific standard products within the broad discrete, logic, analog and mixed-signal semiconductor markets. Diodes serves the consumer electronics, computing, communications, industrial, and automotive markets. Diodes’ products include diodes, rectifiers, transistors, MOSFETs, protection devices, function-specific arrays, single gate logic, amplifiers and comparators, Hall-effect and temperature sensors; power management devices, including LED drivers, AC-DC converters and controllers, DC-DC switching and linear voltage regulators, and voltage references along with special function devices, such as USB power switches, load switches, voltage supervisors, and motor controllers. Diodes’ corporate headquarters and Americas’ sales office are located in Plano, Texas and Milpitas, California. Design, marketing, and engineering centers are located in Plano; Milpitas, California; Taipei, Taiwan; Taoyuan City, Taiwan; Zhubei City, Taiwan; Manchester, England; and Neuhaus, Germany. Diodes’ wafer

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fabrication facilities are located in Kansas City, Missouri and Manchester, with an additional facility located in Shanghai, China. Diodes has assembly and test facilities located in Shanghai, Jinan, Chengdu, and Yangzhou, China, as well as in Hong Kong, Neuhaus and in Taipei. Additional engineering, sales, warehouse, and logistics offices are located in Taipei; Hong Kong; Manchester; Shanghai; Shenzhen, China; Seongnam-si, South Korea; and Munich, Germany, with support offices throughout the world.

On November 24, 2015, Diodes Incorporated acquired Pericom Semiconductor Corporation with headquarters in Milpitas, California, and with design centers and technical sales and support offices globally. Pericom enables serial connectivity with the industry’s most complete solutions for the computing, communications, consumer and embedded market segments. Pericom’s analog, digital and mixed-signal integrated circuits, along with its frequency control products are essential in the timing, switching, bridging and conditioning of high-speed signals required by today’s ever-increasing speed and bandwidth demanding applications.

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. Such statements include statements regarding our expectation that the first quarter 2016 non-GAAP guidance is not affected by this the revision to our financial results for the fourth fiscal quarter and fiscal year ended December 31, 2015. Potential risks and uncertainties include, but are not limited to, such factors as: the risk that such expectations may not be met; the risk that our disclosure controls and procedures and internal control over financial reporting may not be effective; the risk that the expected benefits of acquisitions may not be realized; the risk that we may not be able to maintain our current growth strategy or continue to maintain our current performance, costs and loadings in our manufacturing facilities; risks of domestic and foreign operations, including excessive operation costs, labor shortages, higher tax rates and our joint venture prospects; the risk of unfavorable currency exchange rates; our future guidance may be incorrect; the global economic weakness may be more severe or last longer than we currently anticipated; breaches of our information technology systems; the possibility that no shares will be repurchased; the risk that the expected benefits of share repurchases will not be realized; and other information including the “Risk Factors,” detailed from time to time in Diodes’ filings with the United States Securities and Exchange Commission.

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.

 

Company Contact:		Investor Relations Contact:
Diodes Incorporated		Shelton Group
Laura Mehrl		Leanne Sievers
Director of Investor Relations		EVP, Investor Relations
P: 972-987-3959		P: 949-224-3874
E: laura_mehrl@diodes.com		E: lsievers@sheltongroup.com

 

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The following is a summary reconciliation of GAAP net income to non-GAAP net income and per share data, net of tax (in thousands, except per share data):

 

						Three Months Ended
						December 31, 2015
GAAP net loss						$	(4,773	)
GAAP loss per share						$	(0.10	)
Adjustments to reconcile net loss to Non-GAAP net income:
M&A Activities
Pericom							9,610
Inventory adjustment			2,907
Transaction costs			216
Retention costs			86
Amortization of acquisition related intangible assets			903
Employee award costs			5,498
Others							1,478
Amortization of acquisition related intangible assets			1,478
Severance							419
Non-GAAP net income						$	6,734
Non-GAAP diluted earnings per share						$	0.14

 

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The following is a summary reconciliation of GAAP net income to non-GAAP net income and per share data, net of tax (in thousands, except per share data):

 

						Twelve Months Ended
						December 31, 2015
GAAP net income						$	24,274
GAAP diluted earnings per share						$	0.49
Adjustments to reconcile net income to Non-GAAP net income:
M&A Activities
Pericom							10,365
Inventory adjustment			2,907
Transaction costs			971
Retention costs			86
Amortization of acquisition related intangible assets			903
Employee award costs			5,498
Others							6,037
Retention costs			70
Amortization of acquisition related intangible assets			5,967
Impairment loss on long-lived assets							1,250
Severance							419
Non-GAAP net income						$	42,345
Non-GAAP diluted earnings per share						$	0.86

 

4

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DIODES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except per share data)

 

		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
		2015				2014				2015				2014
NET SALES		$	214,381			$	223,671			$	848,904			$	890,651
COST OF GOODS SOLD			160,784				153,009				600,321				613,372
Gross profit			53,597				70,662				248,583				277,279
OPERATING EXPENSES
Selling, general and administrative			40,963				34,183				139,245				133,701
Research and development			16,383				12,571				57,027				52,136
Amortization of acquisition related intangible assets			2,966				1,954				8,596				7,914
Loss (gain) on fixed assets			57				(67	)			1,613				(983	)
Total operating expenses			60,369				48,641				206,481				192,768
(Loss) income from operations			(6,772	)			22,021				42,102				84,511
OTHER INCOME (EXPENSES)
Interest income			311				312				1,006				1,470
Interest expense			(1,630	)			(843	)			(4,232	)			(4,332	)
Gain (loss) on securities carried at fair value			545				(410	)			400				1,364
Other			693				2,113				1,319				2,979
Total other expenses			(81	)			1,172				(1,507	)			1,481
(Loss) income before income taxes and noncontrolling interest			(6,853	)			23,193				40,595				85,992
INCOME TAX PROVISION			(2,097	)			5,988				14,082				20,359
NET (LOSS) INCOME			(4,756	)			17,205				26,513				65,633
Less: NET INCOME attributable to noncontrolling interest			(17	)			(540	)			(2,239	)			(1,955	)
NET (LOSS) INCOME attributable to common stockholders		$	(4,773	)		$	16,665			$	24,274			$	63,678
(LOSS) EARNINGS PER SHARE attributable to common stockholders
Basic		$	(0.10	)		$	0.35			$	0.50			$	1.35
Diluted		$	(0.10	)		$	0.34			$	0.49			$	1.31
Number of shares used in computation
Basic			48,495				47,587				48,210				47,184
Diluted			48,495				48,739				49,500				48,594

 

5

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DIODES INCORPORATED AND SUBSIDIARIES

RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME

(in thousands, except per share data)

(unaudited)

For the three months ended December 31, 2015:

 

		COGS				Operating Expenses				Income Tax Provision				Net (Loss) Income
Per-GAAP														$	(4,773	)
Loss per share (Per-GAAP)														$	(0.10	)
Adjustments to reconcile net income to Non-GAAP net income:
M&A Activities
Pericom															9,610
Inventory adjustment			3,060								(153	)			2,907
Transaction costs							332				(116	)			216
Retention costs							132				(46	)			86
Amortization of acquisition related intangible assets							1,101				(198	)			903
Employee award costs			253				7,613				(2,368	)			5,498
Others															1,478
Amortization of acquisition related intangible assets							1,866				(388	)			1,478
Severance							645				(226	)			419
Non-GAAP														$	6,734
Diluted shares used in computing earnings per share															49,518
Non-GAAP earnings per share
Diluted														$	0.14

Note: Included in GAAP and Non-GAAP net (loss) income was approximately $2.5 million, net of tax, non-cash share-based compensation expense. Excluding share-based compensation expense, both GAAP and Non-GAAP diluted earnings per share would have improved by $0.05 per share.

 

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DIODES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME – Cont.

(in thousands, except per share data)

(unaudited)

For the three months ended December 31, 2014:

 

		Operating Expenses				Income Tax Provision				Net Income
Per-GAAP										$	16,665
Earnings per share (Per-GAAP)
Diluted										$	0.34
Adjustments to reconcile net income to Non-GAAP net income:
Retention costs			125				(19	)			106
Amortization of acquisition related intangible assets			1,954				(392	)			1,562
Non-GAAP										$	18,333
Diluted shares used in computing earnings per share											48,739
Non-GAAP earnings per share
Diluted										$	0.38

 

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DIODES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME – Cont.

(in thousands, except per share data)

(unaudited)

For the twelve months ended December 31, 2015:

 

		COGS				Operating Expenses				Income Tax Provision				Net Income
Per-GAAP														$	24,274
Earnings per share (Per-GAAP)
Diluted														$	0.49
Adjustments to reconcile net income to Non-GAAP net income:
M&A Activities
Pericom															10,365
Inventory adjustment			3,060								(153	)			2,907
Transaction costs							1,493				(522	)			971
Retention costs							132				(46	)			86
Amortization of acquisition related intangible assets							1,101				(198	)			903
Employee award costs			253				7,613				(2,368	)			5,498
Others															6,037
Retention costs							83				(13	)			70
Amortization of acquisition related intangible assets							7,496				(1,529	)			5,967
Impairment loss on long-lived assets							1,470				(220	)			1,250
Severance							645				(226	)			419
Non-GAAP														$	42,345
Diluted shares used in computing earnings per share															49,500
Non-GAAP earnings per share
Diluted														$	0.86

Note: Included in GAAP and non-GAAP adjusted net income was approximately $10.1 million, net of tax, non-cash share-based compensation expense. Excluding share-based compensation expense, both GAAP and non-GAAP adjusted diluted earnings per share would have improved by $0.20 per share.

 

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DIODES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME – Cont.

(in thousands, except per share data)

(unaudited)

For the twelve months ended December 31, 2014:

 

		Operating Expenses				Income Tax Provision				Net Income
Per-GAAP										$	63,678
Earnings per share (Per-GAAP)
Diluted										$	1.31
Adjustments to reconcile net income to Non-GAAP net income:
Retention costs			1,286				(193	)			1,093
Gain on sale of assets			(1,176	)			200				(976	)
Amortization of acquisition related intangible assets			7,914				(1,627	)			6,287
Non-GAAP										$	70,082
Diluted shares used in computing earnings per share											48,594
Non-GAAP earnings per share
Diluted										$	1.44

 

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CONSOLIDATED RECONCILIATION OF NET INCOME TO EBITDA

EBITDA represents earnings before net interest expense, income tax provision, depreciation and amortization. Management believes EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties, such as financial institutions in extending credit, in evaluating companies in our industry and provides further clarity on our profitability. In addition, management uses EBITDA, along with other GAAP and non-GAAP measures, in evaluating our operating performance compared to that of other companies in our industry. The calculation of EBITDA generally eliminates the effects of financing, operating in different income tax jurisdictions, and accounting effects of capital spending, including the impact of our asset base, which can differ depending on the book value of assets and the accounting methods used to compute depreciation and amortization expense. EBITDA is not a recognized measurement under GAAP, and when analyzing our operating performance, investors should use EBITDA in addition to, and not as an alternative for, income from operations and net income, each as determined in accordance with GAAP. Because not all companies use identical calculations, our presentation of EBITDA may not be comparable to similarly titled measures used by other companies. For example, our EBITDA takes into account all net interest expense, income tax provision, depreciation and amortization without taking into account any attributable to noncontrolling interest. Furthermore, EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not consider certain cash requirements such as tax and debt service payments.

The following table provides a reconciliation of net income to EBITDA (in thousands, unaudited):

 

		Three Months Ended December 31,								Twelve Months Ended December 31,
		2015				2014				2015				2014
Net (loss) income (per-GAAP)		$	(4,773	)		$	16,665			$	24,274			$	63,678
Plus:
Interest expense, net			1,319				531				3,226				2,862
Income tax provision			(2,097	)			5,988				14,082				20,359
Depreciation and amortization			22,131				19,517				80,100				76,771
EBITDA (Non-GAAP)		$	16,580			$	42,701			$	121,682			$	163,670

 

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DIODES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

(in thousands, except share data)

 

		December 31, 2015				December 31, 2014
		(unaudited)
CURRENT ASSETS
Cash and cash equivalents		$	218,435			$	243,000
Short-term investments			64,685				11,726
Accounts receivable, net			218,496				188,248
Inventories			202,832				182,026
Prepaid expenses and other			46,103				50,510
Total current assets			750,551				675,510
PROPERTY, PLANT AND EQUIPMENT, net			439,340				309,931
DEFERRED INCOME TAXES, non-current			45,120				43,845
OTHER ASSETS
Goodwill			132,913				81,229
Intangible assets, net			196,409				45,028
Other			36,697				23,614
Total assets		$	1,601,030			$	1,179,157
		December 31, 2015				December 31, 2014
		(unaudited)
CURRENT LIABILITIES
Lines of credit		$	—			$	1,064
Accounts payable			86,463				79,390
Accrued liabilities			77,801				60,149
Income tax payable			5,117				8,381
Current portion of long-term debt			10,282				287
Total current liabilities			179,663				149,271
LONG-TERM DEBT, net of current portion			455,941				140,787
DEFERRED TAX LIABILITIES—non current			32,276				—
OTHER LONG-TERM LIABILITIES			90,153				78,932
Total liabilities			758,033				368,990
COMMITMENTS AND CONTINGENCIES
EQUITY
Diodes Incorporated stockholders’ equity
Preferred stock—par value $1.00 per share; 1,000,000 shares authorized; no shares issued or outstanding			—				—
Common stock—par value $0.66 2/3 per share; 70,000,000 shares authorized; 48,148,077 and 47,591,092 issued and outstanding at December 31, 2015 and December 31, 2014, respectively			32,404				31,729
Additional paid-in capital			344,086				314,942
Retained earnings			514,280				490,006
Treasury stock			(11,009	)			—
Accumulated other comprehensive loss			(84,416	)			(68,402	)
Total Diodes Incorporated stockholders’ equity			795,345				768,275
Noncontrolling interest			47,652				41,892
Total equity			842,997				810,167
Total liabilities and equity		$	1,601,030			$	1,179,157

 

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EXHIBIT 99.3

DIODES INCORPORATED (“DIODES”)

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

On November 24, 2015 Diodes Incorporated (“Diodes”, the “Company”, “we” or “our”) completed the acquisition (the “Acquisition”) of Pericom Semiconductor Corporation (“Pericom”) pursuant to an Agreement and Plan of Merger, dated as of September 2, 2015, as amended by Amendment No. 1 dated as of November 6, 2015, by and among Diodes, PSI Merger Sub Inc., a California corporation and an indirect wholly owned subsidiary of Diodes (“Merger Sub”) and the Company (the “Merger Agreement”). Pursuant to the Merger Agreement, Merger Sub was merged with and into the Company, with the Company continuing as the surviving corporation and an indirect wholly owned subsidiary of Diodes. The following unaudited pro forma condensed combined financial statements are based upon the historical condensed consolidated financial statements and notes thereto of Diodes (as adjusted for the Pericom acquisition).

The unaudited pro forma condensed combined balance sheet gives pro forma effect to the Pericom acquisition as if it had been completed on September 30, 2015 and combines Diodes’ September 30, 2015 unaudited consolidated balance sheet with Pericom’s unaudited consolidated balance sheet as of September 26, 2015. The unaudited pro forma condensed combined statement of operations for the twelve months ended December 31, 2014, gives pro forma effect to the transactions as if they had been completed on January 1, 2014 and combines Diodes’ audited consolidated statement of operations for the year ended December 31, 2014 and Pericom’s unaudited consolidated statement of operations for the twelve months ended December 27, 2014. The unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2015, gives pro forma effect to the transactions as if they had been completed on January 1, 2014 and combines Diodes’ unaudited condensed consolidated statement of operations for the nine months ended September 30, 2015 and Pericom’s unaudited condensed consolidated statement of operations for the nine months ended September 26, 2015.

The unaudited pro forma financial information is presented for informational purposes only. The historical condensed combined financial information has been adjusted to give effect to pro forma events that are: 1) directly attributable to the Acquisition; 2) factually supportable; and 3) with respect to the statement of income, expected to have a continuing impact on the combined results. It does not purport to indicate the results that would have actually been attained had the Acquisition occurred on the assumed dates or for the periods presented, or which may be realized in the future. The pro forma adjustments are based upon available information and certain assumptions that we believe are reasonable under the circumstances. A final determination of fair values relating to the Acquisition may differ materially from the preliminary estimates and will include management’s final valuation of the fair value of assets acquired and liabilities assumed. This final valuation will be based on the actual net assets of Pericom that existed as of the date of the completion of the Acquisition. Any adjustments to the preliminary estimated fair value amounts could have a significant impact on the unaudited pro forma condensed combined financial information contained herein, and our future results of operations and financial position.

These unaudited pro forma condensed combined financial statements should be read in conjunction with the historical consolidated financial statements and related notes contained in the annual, quarterly and other reports filed by Diodes with the United States Securities and Exchange Commission (“SEC”) and with Pericom’s historical consolidated financial statements and related notes contained in the annual, quarterly and other reports Pericom had previously filed with the SEC.

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Unaudited Pro Forma Condensed Combined Balance Sheet

As of September 30, 2015

 

		Diodes 9.30.2015				Pericom 9.26.2015				Total Pro Forma Adjustments				Pro Forma Combined
Assets
Current assets:
Cash and cash equivalents		$	188,755			$	41,544			$	(15,524	)    (9)		$	214,775
Short-term investments			24,586				78,958				—				103,544
Accounts receivable, net			202,467				26,756				—				229,223
Other receivables			—				2,727				—				2,727
Inventories			197,698				15,183				7,317	(3)			220,198
Deferred income taxes, current			11,193				3,387				—				14,580
Prepaid expenses and other			38,389				311				112	(8)			38,812
Total current assets			663,088				168,866				(8,095	)			823,859
Property, plant and equipment, net			371,036				55,947				23,777	(3)			450,760
Deferred income tax, non-current			32,259				2,594				11,519	(6)			46,372
Goodwill			79,389				—				50,270	(1)			129,659
Intangible assets, net			42,841				3,234				153,466	(3)			199,541
Investments in unconsolidated subsidiaries			—				2,289				—				2,289
Other			24,580				7,739				6,054	(3)			38,373
Total assets		$	1,213,193			$	240,669			$	236,991			$	1,690,853
Liabilities
Current liabilities:
Lines of credit and short-term debt		$	261			$	—			$	10,000	(4)		$	10,261
Accounts payable			86,388				10,763				418	(7)			97,569
Accrued liabilities			91,868				7,935				—	(5)			99,803
Income tax payable			9,106				2,207				—				11,313
Total current liabilities			187,623				20,905				10,418				218,946
Long-term debt, net of current portion			93,510				—				381,123	(4)			474,633
Industrial development subsidy			—				5,010				—				5,010
Deferred tax liabilities			—				4,756				43,190	(6)			47,946
Noncurrent tax liabilities			—				1,424				—				1,424
Other long-term liabilities			74,591				426				6,060	(5)			81,077
Total liabilities			355,724				32,521				440,791				829,036
Stockholders’ equity
Preferred stock			—				—								—
Common stock			32,394				87,206				(87,206	)    (2)			32,394
Additional paid-in capital			335,835				22,249				(17,569	)    (2)			340,515
Retained earnings			519,053				94,574				(94,906	)    (2)			518,721
Accumulated other comprehensive loss			(77,564	)			4,119				(4,119	)    (2)			(77,564	)
Total stockholders’ equity			809,718				208,148				(203,800	)			814,066
Noncontrolling interest			47,751				—				—				47,751
Total equity			857,469				208,148				(203,800	)			861,817
Total liabilities and stockholders’ equity		$	1,213,193			$	240,669			$	236,991			$	1,690,853

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Unaudited Pro Forma Condensed Combined Balance Sheet

Explanations

 

1.      Calculation of goodwill
Calculation paid:
Cash consideration for shares outstanding						$	391,123
Cash consideration for vested stock awards including taxes of $88.							7,371
Value of Diodes restricted stock awards to be issued in exchange of unvested Pericom employee stock awards.							4,680
Total consideration							403,174
Transaction costs incurred by Pericom							8,127
Total consideration including transaction costs incurred by Pericom							411,301
Historical book value of Pericom net assets							208,148
Adjustments of acquired Pericom assets and liabilities to fair value:
Inventory acquired (See note 3 below)							7,317
Depreciable property, plant and equipment acquired (See note 3 below)			15,583
Land			8,194
Total property, plant and equipment							23,777
Land use rights classified as other assets							7,277
Intangible assets acquired (See note 3 below)							153,466
Cost based investments held by Pericom (See note 3 below)							(1,223	)
Contingent liabilities							(6,060	)
Deferred taxes, net (long-term asset - $11,519; long-term liability - $43,190)							(31,671	)
Adjusted book value of Pericom’s net assets							361,031
Goodwill						$	50,270
2.      Change in capital accounts:
Eliminate Pericom historical capital accounts
Common stock		$	(87,206	)
Additional paid-in capital			(22,249	)
Retained earnings			(94,574	)
Accumulated other comprehensive loss			(4,119	)
Total Pericom historical capital accounts eliminated						$	(208,148	)
At the time of the transaction all unvested Pericom equity awards were converted to Diodes restricted stock awards. This amount is an allocation of the total fair value to the pre-acquisition period in which service was rendered by the employee and as such is included as part of the purchase price. The exchange of all Pericom equity awards for Diodes restricted stock awards will result over time in approximately 724,000 shares being issued.							4,680
The number of share issues is based on the following exchange rate:
.83 Diodes restricted stock award for each vested Pericom restricted stock award and performance based unit
Non recurring costs expensed after September 30, 2015. This includes costs, for attorney’s, tax, advice, printing, and other outside consultants and services provided.							(332	)
Total						$	(203,800	)
3.      To reflect the fair value of inventory, property, plant and equipment, land use rights, cost based investments and intangible assets acquired:
Inventory acquired (integrated circuits and frequency control products)							7,317
Depreciable property, plant and equipment acquired (personal property, real property; average weighted life 32 years			15,583
Land			8,194
Total Property, plant and equipment							23,777
Land use rights (Other assets)							7,277
Intangible assets acquired (order backlog, customer relationships, developed technology, in-process technology, trade name; average weighted life 11.6 years.)							153,466
Cost based investments held by Pericom (Other assets)							(1,223	)
Total						$	23,777

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Unaudited Pro Forma Condensed Combined Balance Sheet

Explanations (continued)

 

 

4.      Incremental debt incurred to affect the transaction.
Lines of credit and short-term debt			10,000
Long-term debt, net of current portion			381,123
Total		$	391,123
The incremental debt was funded under an amendment to our existing credit facility (the “Amendment”). The Amendment increases the Company’s existing senior credit facilities to a $400 million revolving senior credit facility (the “Revolver”), which includes a $10 million swing line sublimit, a $10 million letter of credit sublimit, and a $20 million alternative currency sublimit, and a $100 million term loan facility (the “Term Loan Facility”). The interest rate is subject to change based on Diodes consolidated leverage ratio. A 1/8 percent increase in the rate of the initial debt level of $391 million would increase Diodes annual interest expense approximately $500,000, on a pretax basis.
5.      Adjust for liabilities assumed in the transaction for uncertain tax positions and potential legal exposure.		$	6,060
6.      Deferred taxes, net (long-term asset - $11,519; long-term liability - $43,190)		$	31,671
7.      Transaction costs expensed but not paid after September 30, 2015. This includes costs, for attorney’s, tax, advice, printing, and other outside consultants and services provided.		$	418
8.      Debt issuance costs incurred after September 30, 2015, for incremental borrowings.		$	112
9.      Cash used and borrowed to affect transaction:
Debt incurred		$	391,123
Cash paid for shares outstanding			(391,123	)
Cash consideration for vested stock awards including taxes of $88.			(7,371	)
Cash paid by Diodes after September 30, 2015, for debt issuance costs			(43	)
Cash paid after September 30, 2015, for transaction costs			(8,110	)
Change in cash		$	(15,524	)

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		Unaudited Pro Forma Condensed Combined Statement of Operations Nine Months Ended
		Diodes September 30, 2015				Pericom * September 26, 2015				Pro Forma Adjustments				Pro Forma Consolidated
Net sales		$	634,522			$	93,891			$	—			$	728,413
Cost of goods sold			439,536				50,644				—				490,180
Gross profit			194,986				43,247				—				238,233
Operating expenses
Selling, general and administrative			98,282				24,082				(2,192	)    (1)(4)			120,172
Research and development			40,644				13,327				—				53,971
Amortization of acquisition related intangible assets			5,630				—				9,007	(2)			14,637
Loss (gain) on fixed assets			1,556				—				—				1,556
Total operating expenses			146,112				37,409				6,815				190,336
Income from operations			48,874				5,838				(6,815	)			47,897
Other income (expense)			(1,426	)			4,487				(8,967	)    (3)			(5,906	)
Income before income taxes and noncontrolling interest			47,448				10,325				(15,782	)			41,991
Income tax provision			16,179				1,177				(3,729	)    (5)			13,627
Equity in net income of unconsolidated affiliates			—				88				—				88
Net income			31,269				9,236				(12,053	)			28,452
Less net income attributable to noncontrolling interest			2,222				—				(856	)			1,366
Net income attributable to common stockholders		$	29,047			$	9,236			$	(11,197	)		$	27,086
Earnings per share attributable to common stockholders:
Basic		$	0.60											$	0.55
Diluted		$	0.59											$	0.54
Number of shares used in earnings per share computation:
Basic			48,144								724	(6)			48,868
Diluted			49,351								724	(6)			50,075

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Unaudited Pro Forma Condensed Combined Statement of Operations

For the Nine Months Ended September 30, 2015

Explanations

 

1.

Incremental depreciation expense and amortization related to fair value adjustments to the acquired property, plant and equipment and land use rights. The estimated depreciable life of this incremental property, plant and equipment and land use rights is approximately 28 years and based on straight line attribution method.

 

2.	Incremental amortization expense related to the fair value adjustment of the acquired intangible assets. The incremental intangible assets will be amortized over the weighted average useful lives of approximately 11.6 years.

 

3.	Interest expense computed at 3%, the current rate in effect, and amortization of debt issuance costs on the incremental borrowing to affect the transaction.

 

4.	Reverse nonrecurring transaction costs, $2,812. Includes costs for attorney’s, tax advice and other consultants.

 

5.	Tax benefit of related to the expenses directly related to the transaction resulting in an effective tax rate on the adjustments of 21%.

 

Tax benefit of incremental expenses and reversal of tax benefit on transaction costs at 34%.			(2,093	)
Reversal of deferred taxes on fair value adjustments at 17%. Rate is based on orinally rate used to record deferred tax at the acquisition date.			(1,637	)
Total			(3,729	)

 

6.	Diodes shares to be issued for replacement of Pericom equity awards.

 

*	Information for the nine months ended September 26, 2015 for Pericom was derived from Pericom’s previous filings with the Securities and Exchange Commission.

The Company has not included incremental transaction costs of approximately $8 million due to those costs being nonrecurring.

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		Unaudited Pro Forma Condensed Combined Statement of Operations
		Twelve Months Ended
		Diodes				Pericom *				Pro Forma				Pro Forma
		December 31, 2014				December 27, 2014				Adjustments				Consolidated
Net sales		$	890,651			$	129,934			$	—			$	1,020,585
Cost of goods sold			613,372				74,969				—				688,341
Gross profit			277,279				54,965				—				332,244
Operating expenses
Selling, general and administrative			133,701				29,498				827	(1)			164,026
Research and development			52,136				18,454				—				70,590
Amortization of acquisition related intangible assets			7,914				991				12,010	(2)			20,915
Loss (gain) on fixed assets			(983	)			—				—				(983	)
Total operating expenses			192,768				48,943				12,837				254,548
Income from operations			84,511				6,022				(12,837	)			77,696
Other income (expenses)
Interest income			1,470				2,733				—				4,203
Interest expense			(4,332	)			—				(12,312	)    (3)			(16,644	)
Gain on securities carried at fair value			1,364				56				—				1,420
Other			2,979				1,678				—				4,657
Total other income (expense)			1,481				4,467				(12,312	)			(6,364	)
Income before income taxes and noncontrolling interest			85,992				10,489				(25,149	)			71,332
Income tax provision			20,359				1,993				(5,137	)    (4)			17,215
Equity in net income of unconsolidated affiliates			—				176				—				176
Net income			65,633				8,672				(20,012	)			54,293
Less net income attributable to noncontrolling interest			1,955				—				(596	)			1,359
Net income attributable to common stockholders		$	63,678			$	8,672			$	(19,416	)		$	52,934
Earnings per share attributable to common stockholders:
Basic		$	1.35											$	1.10
Diluted		$	1.31											$	1.07
Number of shares used in earnings per share computation:															—
Basic			47,184								724	(5)			47,908
Diluted			48,594								724	(5)			49,318

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Unaudited Pro Forma Condensed Combined Statement of Operations

For the Twelve Months Ended December 31, 2014

Explanations

 

1.

Incremental depreciation expense and amortization related to fair value adjustments to the acquired property, plant and equipment and land use rights. The estimated depreciable life of this incremental property, plant and equipment and land use rights is approximately 28 years and based on straight line attribution method.

 

2.	Incremental amortization expense related to the fair value adjustment of the acquired intangible assets. The incremental intangible assets will be amortized over the weighted average useful lives of approximately 11.6 years.

 

3.	Interest expense computed at 3%, the current rate in effect, and amortization of debt issuance costs on the incremental borrowing to affect the transaction.

 

4.	Tax benefit of related to the expenses directly related to the transaction resulting in an effective tax rate on the adjustments of 19%.

 

Tax benefit of incremental expenses and reversal of tax benefit on transaction costs at 24%.			(2,955	)
Reversal of deferred taxes on fair value adjustments at 17%. Rate is based on orinally rate used to record deferred tax at the acquisition date.			(2,182	)
Total			(5,137	)

 

5.	Diodes shares to be issued for replacement of Pericom equity awards.

 

*	Information for the twelve months ended December 27, 2014 for Pericom was derived from Pericom’s previous filings with the Securities and Exchange Commission.

The Company has not included incremental transaction costs of approximately $8 million due to those costs being nonrecurring.