<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to ________.
COMMISSION FILE NUMBER: 1-5740
DIODES INCORPORATED
(Exact name of registrant as specified in its charter)
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)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (805) 446-4800
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
COMMON STOCK, PAR VALUE $0.66 2/3 AMERICAN STOCK EXCHANGE
(Title of each Class) (Name of each exchange on which registered)
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ____
The number of shares of the registrant's Common Stock outstanding as of March
31, 1996, was 5,675,794 including 717,115 shares of treasury stock.
THIS REPORT INCLUDES A TOTAL OF 18 PAGES
THE EXHIBIT INDEX IS ON PAGE 17
<PAGE> 2
DIODES INCORPORATED
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1 - Consolidated Financial Statements
Consolidated Condensed Balance Sheets at March 31, 1996 and December
31, 1995 3-4
Consolidated Condensed Statements of Income for the three months
ended March 31, 1996 and March 31, 1995 5
Consolidated Condensed Statements of Cash Flows for the three months
ended March 31, 1996 and March 31, 1995 6
Notes to Consolidated Condensed Statements for the three months ended
March 31, 1996 and March 31, 1995 7
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations 8-14
PART II - OTHER INFORMATION
Items 1 through 6 15
Signature 16
Index to Exhibits 17
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1 - CONSOLIDATED FINANCIAL INFORMATION
DIODES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
(UNAUDITED)
MARCH 31, DECEMBER 31,
1996 1995
----------------- -----------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 597,000 $ 478,000
Accounts receivable
Customers 7,898,000 7,794,000
Related party -- 233,000
Other 300,000 194,000
----------------- -----------------
8,198,000 8,221,000
Less allowance for doubtful receivables 192,000 177,000
----------------- -----------------
8,006,000 8,044,000
Inventories 16,144,000 16,295,000
Deferred income taxes 893,000 893,000
Prepaid expenses and other 209,000 173,000
----------------- -----------------
Total current assets 25,849,000 25,883,000
PROPERTY, PLANT, AND EQUIPMENT, at cost, net
of accumulated depreciation and amortization 4,732,000 1,527,000
INVESTMENT IN JOINT VENTURE -- 1,878,000
OTHER ASSETS
Advances to affiliated entity 1,237,000 --
Other assets 707,000 75,000
TOTAL ASSETS $ 32,525,000 $ 29,363,000
================= =================
</TABLE>
3
<PAGE> 4
DIODES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
(UNAUDITED)
MARCH 31, DECEMBER 31,
1996 1995
----------------- -----------------
<S> <C> <C>
CURRENT LIABILITIES
Due to bank $ 7,377,000 $ 3,916,000
Accounts payable
Trade 3,858,000 5,454,000
Related party 620,000 621,000
Accrued liabilities 2,256,000 1,954,000
Income taxes payable 55,000 637,000
Current portion of long-term debt 38,000 38,000
----------------- -----------------
Total current liabilities 14,204,000 12,620,000
LONG-TERM DEBT, net of current portion 235,000 244,000
DEFERRED COMPENSATION PAYABLE -- --
MINORITY INTEREST 740,000 --
STOCKHOLDERS' EQUITY
Class A convertible preferred stock -
par value $1.00 per share;
1,000,000 shares authorized; no shares
issued and outstanding at December 31, 1995 and
March 31, 1996 -- --
Common stock - par value $0.66 2/3 per share;
9,000,000 shares authorized; 5,675,619 shares
at December 31, 1995 and 5,675,794 shares at
March 31, 1996 issued and outstanding 3,784,000 3,784,000
Additional paid-in capital 5,768,000 5,768,000
Retained earnings 9,576,000 8,729,000
----------------- -----------------
19,128,000 18,281,000
Less:
Treasury stock - 717,115 shares of common stock at
December 31, 1995 and March 31, 1996, at cost 1,782,000 1,782,000
----------------- -----------------
Total stockholders' equity 17,346,000 16,499,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 32,525,000 $ 29,363,000
================= =================
</TABLE>
4
<PAGE> 5
DIODES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------------------------
1996 1995
------------------ ------------------
<S> <C> <C>
NET SALES $ 13,206,000 $ 14,239,000
Cost of goods sold 9,493,000 10,296,000
------------------ ------------------
Gross profit 3,713,000 3,943,000
Selling, general and administrative expenses 2,457,000 2,437,000
------------------ ------------------
Income from operations 1,256,000 1,506,000
Other income (expense)
Interest income 47,000 11,000
Interest expense (123,000) (7,000)
Commissions and other 121,000 72,000
------------------ ------------------
45,000 76,000
------------------ ------------------
INCOME BEFORE INCOME TAXES 1,301,000 1,582,000
Provision for income taxes 453,000 599,000
------------------ ------------------
NET INCOME $ 848,000 $ 983,000
================== ==================
EARNINGS PER COMMON SHARE $ 0.16 $ 0.19
================== ==================
Number of shares used in computation 5,228,123 5,122,255
================== ==================
</TABLE>
5
<PAGE> 6
DIODES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------------------------
1996 1995
------------------ ------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 848,000 $ 983,000
Adjustments to reconcile net income to net cash provided
(used) by operating activities:
Depreciation and amortization 82,000 84,000
Increase in allowance for doubtful accounts 15,000 10,000
(Increase) decrease in operating assets:
Accounts receivable 23,000 (1,984,000)
Inventories 151,000 (713,000)
Prepaid expenses and other (36,000) 101,000
Other -- 2,000
(Decrease) increase in operating liabilities:
Trade accounts payable (2,418,000) (261,000)
Related party accounts payable (1,000) --
Accrued liabilities 302,000 723,000
Income taxes payable (582,000) (543,000)
Deferred compensation payable -- (14,000)
Minority interest 740,000 --
------------------ ------------------
Net cash provided (used) by operating activities (876,000) (1,612,000)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (588,000) (115,000)
Acquisition of other assets (1,869,000) --
------------------ ------------------
Net cash (used) by investing activities (2,457,000) (115,000)
CASH FLOWS FROM FINANCING ACTIVITIES
Advances (payments) on line of credit, net 3,461,000 288,000
Repayments of long-term obligations (9,000) (8,000)
------------------ ------------------
Net cash provided (used) by financing activities 3,452,000 280,000
------------------ ------------------
INCREASE (DECREASE) IN CASH $ 119,000 $ (1,447,000)
CASH AT BEGINNING OF PERIOD $ 478,000 $ 1,733,000
------------------ ------------------
CASH AT END OF PERIOD $ 597,000 $ 286,000
================== ==================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Non-Cash Investing Activities
Purchase of equipment on accounts payable $ 822,000 $ --
================== ==================
Conversion of joint venture investment to plant and
equipment $ 1,878,000 $ --
================== ==================
</TABLE>
6
<PAGE> 7
DIODES INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE A - Basis of Presentation
The accompanying unaudited consolidated, condensed financial
statements have been prepared in accordance with the instruction to Form 10-Q
and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation of the financial position and results of operations have
been included. Operating results for interim periods are not necessarily
indicative of the results that may be expected for the full year. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's annual report in Form 10-K for the calendar
year ended December 31, 1995.
The consolidated financial statements include the accounts of
the Company, its wholly-owned subsidiary, Diodes Taiwan Co., Ltd. (a foreign
subsidiary), and the accounts of the Kai Hong joint venture in which the Company
has 70% controlling interest. All significant intercompany balances and
transactions have been eliminated.
NOTE B - Income Taxes
Effective January 1, 1993, the Company adopted Financial
Accounting Standards Board's Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes." This pronouncement requires that taxes be
provided based upon the tax rate at which the items of income and expense are
expected to be settled in the Company's tax return.
SFAS No. 109 requires the recognition of deferred tax assets
and liabilities for both the expected future tax impact of differences between
the financial statement and tax basis of assets and liabilities, and for the
expected future tax benefit to be derived from tax loss carryforwards. SFAS
No. 109 additionally requires the establishment of a valuation allowance to
reflect the likelihood of realization of deferred tax assets.
Accordingly, the Company has recorded a net deferred tax asset
resulting from net deductible temporary differences in the amount of $893,000.
This deferred tax asset results primarily from inventory reserves and expense
accruals which are not currently deductible for federal income tax purposes.
7
<PAGE> 8
PART I - FINANCIAL INFORMATION
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Except for the historical information contained herein, the
matters addressed in this Item 2 constitute "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Such
forward-looking statements are subject to a variety of risks and uncertainties,
including those discussed below under the heading "Factors That May Affect
Future Results" and elsewhere in this Report on Form 10-Q, that could cause
actual results to differ materially from those anticipated by the Company's
management. The Private Securities Litigation Reform Act of 1995 (the "Act")
provides certain "safe harbor" provisions for forward-looking statements. All
forward-looking statements made on this Quarterly Report on Form 10-Q are made
pursuant to the Act.
FINANCIAL CONDITION
The Company's 7.3% decrease in net sales for the three months
ended March 31, 1996, compared to the three months ended March 31, 1995, was
primarily attributed to a decline in customer demand resulting in a decrease in
the number of units shipped. This decrease appears to be industry-wide in
light of a recent report from the Semiconductor Industry Association that
book-to-bill ratios (the dollar value of new orders scheduled versus the dollar
value of orders shipped) throughout the industry fell in early 1996, reaching a
5 year low in March. In the fourth quarter of 1995, the Company experienced a
slowing of orders, primarily due to a slow down in the personal computer and
related industries, and although the Company's book-to-bill ratio seems to be
recovering, there can be no assurance that such recovery will continue or be
maintained.
The Company believes that the slowdown throughout the industry
is primarily due to excess inventory and may remain soft for the near future as
computer and related industries, among others, work off their inventories.
Industry sources estimate that, although the 1996 growth rates will not match
those of 1995, the industry will experience moderate growth in sales and
profits.
The Company was able to increase its gross profit margin to
28.1% for the three months ended March 31, 1996 compared to 27.7% for the same
period a year ago, as pricing and product costs have remained relatively
stable. However, with decreased sales and competitive pricing, there can be no
assurance that the Company will be able to maintain these gross profit margin.
Selling, general and administrative expenses as a percentage of net sales
increased 1.5 percentage points primarily as a result of additions in personnel
and systems, as well as beginning implementation of ISO 9000 certification, all
aimed at strengthening the Company for future growth.
8
<PAGE> 9
Interest expense increased $116,000 as the Company used
approximately $1.2 million of a new $14 million credit facility to fund
advances to an affiliated entity, FabTech, Inc., and to provide additional
working capital. FabTech is wholly-owned by Lite-On Power Semiconductor
Corporation ("LPSC"), who owns approximately 40% of the Company's outstanding
stock. The Company has used approximately $2.6 million of its credit line as
equity contribution for the recently announced Kai Hong joint venture.
As a result of the 7.3% decrease in net sales and 0.8%
increase in operating expenses, primarily due to increased staffing, added
marketing efforts as well as the Company's recent commitment to become ISO 9000
certified by the end of 1996, net income and earnings per share for the three
months ended March 31, 1996 decreased approximately 13.7% and 15.8%,
respectively.
In February 1996, the Company announced an agreement with
FabTech, Inc. whereby Diodes will gain a new supply of processed wafers used in
the manufacture of several types of discrete semiconductors. The Company will
provide FabTech with approximately $2.5 million in working capital to be used
in upgrading, reconfiguring, and starting up operations at an existing wafer
fabrication facility located in the AT&T building in Lee's Summit, Missouri.
FabTech is a newly-created subsidiary of LPSC.
The Company expects to begin receiving wafers from FabTech by
the third quarter of 1996. Given current levels of pricing and demand, it is
anticipated that FabTech's production will contribute substantially to Diodes'
net sales in 1997, with further increases in subsequent years. Output from the
facility will include wafers used in the production of Schottky barrier diodes,
fast recovery epitaxial diodes (FREDs), and other widely used value-added
products. Schottky barrier diodes, currently in short supply world-wide, are
employed in the manufacture of the power supplies found in personal computers,
telecommunications devices and myriad other applications where high frequency,
low forward voltage and fast recovery are required.
In March 1996, the Company entered into the Kai Hong joint
venture for the development of additional manufacturing capacity in Shanghai.
The joint venture, originally signed as a compensation trade agreement in June
1995, allows for the manufacturing and sales of diodes and associated
electronic components. The Company will have a 70% interest in the joint
venture, will be responsible for production and management, and will receive
100% of the production, mainly in SOT-23 packaged components. The venture
parties have agreed to make significant equity contribution to the joint
venture and anticipate that a portion of the cost of developing the project
will be debt financed. The capital contribution will be made in several phases
over three years. The project will be implemented in phases according to
market demand.
In accordance with generally accepted accounting principles,
the Company has accounted for this majority owned joint venture on a
consolidated basis. During the first quarter of 1996, the Kai Hong joint
venture entity has capitalized start-up costs of approximately $650,000 which
are classified in the consolidated balance sheet as "Other assets".
9
<PAGE> 10
These alliances, among others, assist the Company in its
long-term strategic plan to enhance its ability to acquire -- in a timely
fashion and at reasonable cost -- the products that its customers need, while
maintaining profitability.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
The following table sets forth, for the periods indicated, the
percentage which certain items in the statement of income bear to net sales and
the percentage dollar increase (decrease) of such items from period to period.
<TABLE>
<CAPTION>
PERCENT OF NET SALES PERCENTAGE DOLLAR
THREE MONTHS ENDED MARCH 31, INCREASE (DECREASE)
------------------------------------ --------------------------
1996 1995 '95 TO '96
--------------- ----------------- --------------------------
<S> <C> <C> <C>
Net sales 100.0 % 100.0 % (7.3) %
Cost of goods sold (71.9) (72.3) (7.8)
--------------- ----------------- --------------------------
Gross profit 28.1 27.7 (5.8)
Operating expenses (18.6) (17.1) 0.8
--------------- ----------------- --------------------------
Income from operations 9.5 10.6 (16.6)
Interest expense, net (0.6) (0.0) 2,000.0
Other income 0.9 0.5 68.1
--------------- ----------------- --------------------------
Income before taxes 9.8 11.1 (17.8)
Income taxes 3.4 4.2 (24.4)
--------------- ----------------- --------------------------
Net income 6.4 6.9 (13.7)
=============== ================= ==========================
</TABLE>
The following discussion explains in greater detail the
consolidated operating results and financial condition of the Company. This
discussion should be read in conjunction with the consolidated financial
statements and notes thereto appearing elsewhere in this quarterly report.
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
NET SALES $ 13,206,000 $ 14,239,000
</TABLE>
The Company's 7.3% decrease in net sales for the three months
ended March 31, 1996, compared to the three months ended March 31, 1995, was
primarily attributed to a decline in customer demand resulting in a decrease in
the number of units shipped. This decrease appears to be industry-wide in
light of a recent report from the Semiconductor Industry Association that
book-to-bill ratios (the dollar value of new orders scheduled versus the dollar
value of orders shipped) throughout the industry fell in early 1996, reaching a
5 year low in March. In
10
<PAGE> 11
the fourth quarter of 1995, the Company experienced a slowing of orders,
primarily due to a slow down in the personal computer and related industries,
and although the Company's book-to-bill ratio seems to be recovering, there can
be no assurance that such recovery will continue or be maintained.
The Company believes that the slowdown is primarily due to
continued inventory pressures and may remain soft for the next few months as
computer and related industries, among others, work off their inventories.
Industry sources estimate that, although the 1996 growth rates will not match
those of 1995, the industry will experience moderate growth in sales and
profits.
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
GROSS PROFIT $ 3,713,000 $ 3,943,000
GROSS MARGIN PERCENTAGE 28.1% 27.7%
</TABLE>
The Company's gross profit for the three months ended March
31, 1996 decreased approximately $230,000 or 5.8%, primarily due to the 7.3%
decrease in net sales. The gross margin percentage increased 0.4 percentage
points primarily as a result of pricing remaining stable and product cost
slightly decreasing.
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES ("SG&A") $ 2,457,000 $ 2,437,000
</TABLE>
The Company's SG&A for the three months ended March 31, 1996
increased approximately 0.8% compared to the same period last year. This
$20,000 increase was primarily attributable to an increase in the Company's
sales and marketing efforts. The 1996 SG&A amount includes the cost of
additions in personnel and systems, as well as beginning implementation of ISO
9000 certification, all aimed at strengthening the Company for continued
growth. The total SG&A as a percentage of net sales increased from 17.1% in
1995, to 18.6% in 1996. The Company continues to manage SG&A by implementing
cost controls, but believes that the slowdown in orders is only temporary and
thus will continue to implement its plan for future growth.
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
INCOME FROM OPERATIONS $ 1,256,000 $ 1,506,000
</TABLE>
11
<PAGE> 12
The Company's fiscal 1996 comparative decrease in operating
profit of approximately $250,000, or 16.6%, is primarily the net result of the
Company's 7.3% decrease in net sales and 1.5 percentage point increase in SG&A
as a percentage of net sales.
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
INTEREST INCOME $ 47,000 $ 11,000
INTEREST EXPENSE $ 123,000 $ 7,000
</TABLE>
The Company's interest income for the three months ended March
31, 1996, increased approximately $36,000 compared to the same period last year
as the Company is advancing funds under its sourcing agreements. The Company's
interest expense for 1996 increased $116,000, primarily as a result of an
increase in the Company's usage of its new credit facility to expand the
Company's inventory and finance additional sourcing agreements, primarily
FabTech, Inc. and Kai Hong. The interest income is primarily the interest
charged to FabTech under the Company's loan agreement.
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
OTHER INCOME $ 121,000 $ 72,000
</TABLE>
The Company's other income for the three months ended March
31, 1996 increased approximately $49,000, or 68.1% compared to other income for
the same period in 1995 primarily as a result of increased commissions earned
by the Company's Taiwan subsidiary on drop shipment sales in Asia.
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
NET INCOME $ 848,000 $ 983,000
EARNINGS PER SHARE $ 0.16 $ 0.19
</TABLE>
The Company's net income for the three months ended March 31,
1996 decreased 13.7% or approximately $135,000 compared to the same period in
1995. Earnings per share decreased approximately 15.6% for the three months
ended March 31, 1996, compared to the three months ended March 31,1995.
Decreases in both net income and earnings per share are primarily attributable
to a 7.3% decrease in net sales, a 1.5 percentage point increase in SG&A as a
percentage of net sales, combined with a 0.6 percentage point increase in
interest expense as a percentage of net sales.
LIQUIDITY AND CAPITAL RESOURCES
12
<PAGE> 13
Cash used by operating activities in 1996 was $876,000,
compared to cash used by operating activities of $1.6 million as of March 31,
1995. The primary use of cash flows for the three months ended March 31, 1996
was a $1.6 million decrease in accounts payable. The ratio of the Company's
current assets to current liabilities on March 31, 1996, was 1.8 to 1 compared
to a ratio of 2.1 to 1 as of December 31, 1995.
Cash used by investing activities was $2.5 million for the
three months ended March 31, 1996, compared to $115,000 in 1995. The Company
has provided approximately $2.6 million to Kai Hong - for the construction of a
new facility for the manufacture of SOT-23s; and approximately $1.2 million to
FabTech - to be used in upgrading, reconfiguring, and starting up operations at
an existing wafer fabrication facility. The Company will have a 70% interest in
the Kai Hong joint venture, will be responsible for production and management,
and will receive 100% of the production. The venture parties have agreed to
make significant equity contributions to the joint venture and anticipate that
a portion of the cost of developing the project will be debt financed. The
capital contribution will be made in several phases over three years. Both
alliances are indicative of the Company's desire to participate in the sourcing
of advanced-technology discrete components, and to enhance its ability to
procure products in a timely fashion and at reasonable cost.
Cash provided by financing activities was $3.5 million as of
March 31, 1996, compared to cash provided of $280,000 in 1995. The Company
used its credit facility to fund the advances to FabTech and Kai Hong. The
Company anticipates it will continue to utilize such credit facility to support
its operations. The Company believes that the continued availability of this
credit facility, and new debt financing, together with internally generated
funds, will be sufficient to meet the Company's currently foreseeable operating
cash requirements. The Company's cash balance at March 31, 1996 increased
$119,000 compared to December 31, 1995 balance.
Accounts receivable increased 1.3% as the Company continues
to, through refined customer service and credit review, improve collections on
customer receivables. The Company's inventories have decreased 0.9% as the
Company's continues its commitment to provide timely delivery of product to
customers.
The Company's total working capital decreased 12.2% to $11.6
million as of March 31, 1996 from $13.3 million as of December 31, 1995,
primarily as a result of the Company's advances to FabTech and Kai Hong. The
Company believes that its working capital position will be sufficient for its
requirements for the foreseeable future.
As of March 31, 1996, the Company has no material plans or
commitments for capital expenditures other than disclosed in the Kai Hong and
FabTech agreements previously mentioned. However, to ensure that the Company
can secure reliable and cost effective sourcing to support and better position
itself for growth, the Company is continuously evaluating additional sources of
products. The Company believes its credit and financial position will provide
sufficient access to funds should an appropriate investment opportunity arise
and, thereby, assist the Company in improving customer satisfaction and in
maintaining or increasing
13
<PAGE> 14
product market penetration. The Company's debt to equity ratio increased to
0.83 at March 31, 1996 from 0.78 at December 31, 1995. The Company anticipates
this ratio may increase as the Company continues to use its credit facilities
to fund additional sourcing opportunities.
Factors That May Affect Future Results
All forward-looking statements contained in this Item 2 are
subject to, in addition to the other matters described in this Report on Form
10-Q, a variety of significant risks and uncertainties. The following
discussion highlights some of these risks and uncertainties. Further, from
time to time, information provided by the Company or statements made by its
employees may contain forward-looking information. The Company cautions the
reader that there can be no assurance that actual results or business
conditions will not differ materially from those projected or suggested in such
forward-looking statements as a result of various factors, including those
discussed below.
There are many factors that could cause the events in such
forward looking statements to not occur, including but not limited to general
or specific economic conditions, the ability and willingness of the Company's
customers to purchase products provided by the Company, the perceived absolute
or relative overall value of these products by the purchasers, including the
features, quality, and price in comparison to other competitive products, the
level of availability of products and substitutes and the ability and
willingness of purchasers to acquire new or advanced products, and pricing,
purchasing, financing, operational, advertising and promotional decisions by
intermediaries in the distribution channels which could affect the supply of or
end-user demands for the Company's products, the amount and rate of growth and
the Company's selling, general and administrative expenses, difficulties in
obtaining materials, supplies and equipment, difficulties for delays in the
development, production, testing and marketing of products including, but not
limited to, failure to ship new products and technologies when anticipated, the
failure of customers to accept these products or technologies when planned, and
defects in products, any failure of economies to develop when planned, the
acquisition of fixed assets and other assets, including inventories and
receivables, the making or incurring of any expenditures, the effects of and
changes in trade, monetary and fiscal policies, laws and regulations, other
activities of governments, agencies and similar organizations and social and
economic conditions, such as trade restriction or prohibition, inflation and
monetary fluctuation, import and other charges or taxes, the ability or
inability of the Company to obtain or hedge against foreign currency, foreign
exchange rates and fluctuations in those rates, intergovernmental disputes as
well as actions affecting frequency, use and availability, spectrum
authorizations and licensing, the costs and other effects of legal
investigations, claims and changes in those items, developments or assertions
by or against the Company relating to intellectual property rights, adaptations
of new, or changes in, accounting policies and practices in the application of
such policies and practices and the effects of changes within the Company's
organization or in compensation benefit plans, and activities of parties with
which the Company has an agreement or understanding, including any issues
affecting any investment or joint venture in which the Company has an
investment, and the amount, and the cost of financing which the Company has,
and any changes to that financing.
14
<PAGE> 15
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no matters to be reported under this heading.
ITEM 2. CHANGES IN SECURITIES
There are no matters to be reported under this heading.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
There are no matters to be reported under this heading.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There are no matters to be reported under this heading.
ITEM 5. OTHER INFORMATION
There are no matters to be reported under this heading.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 11 - Computation of Earnings Per Share
(b) Reports on Form 8-K
None
15
<PAGE> 16
SIGNATURE
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, thereunto duly authorized.
DIODES INCORPORATED (Registrant)
/s/ Joseph Liu May 13, 1996
- ---------------------------------------------
JOSEPH LIU
Vice President, Secretary
and Chief Financial Officer
(Principal Financial and Accounting Officer)
16
<PAGE> 17
INDEX TO EXHIBITS
<TABLE>
<S> <C> <C>
EXHIBIT - 11 COMPUTATION OF EARNINGS PER SHARE Page 18
</TABLE>
17
<PAGE> 1
DIODES INCORPORATED AND SUBSIDIARIES
EXHIBIT - 11
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1996 1995
<S> <C> <C>
PRIMARY
Weighted average number of common shares outstanding 4,958,596 4,626,009
Weighted average number of preferred shares outstanding 0 169,629
Assumed exercise of stock options 269,527 326,617
---------------- ---------------
5,228,123 5,122,255
Net income $ 847,529 $ 982,763
================ ===============
Primary earnings per share $ 0.16 $ 0.19
================ ===============
FULLY-DILUTED
Weighted average number of common shares outstanding 4,958,596 4,626,009
Weighted average number of preferred shares outstanding 0 169,629
Assumed exercise of stock options 261,571 324,422
---------------- ---------------
5,220,167 5,120,060
Net income $ 847,529 $ 982,763
================ ===============
Fully diluted earnings per share $ 0.16 $ 0.19
================ ===============
</TABLE>
18
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 597,000
<SECURITIES> 0
<RECEIVABLES> 8,198,000
<ALLOWANCES> 192,000
<INVENTORY> 16,144,000
<CURRENT-ASSETS> 25,849,000
<PP&E> 4,732,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 32,525,000
<CURRENT-LIABILITIES> 14,204,000
<BONDS> 0
0
0
<COMMON> 3,784,000
<OTHER-SE> 13,562,000
<TOTAL-LIABILITY-AND-EQUITY> 32,525,000
<SALES> 13,206,000
<TOTAL-REVENUES> 13,206,000
<CGS> 9,493,000
<TOTAL-COSTS> 2,457,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 192,000
<INTEREST-EXPENSE> 123,000
<INCOME-PRETAX> 1,301,000
<INCOME-TAX> 453,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 848,000
<EPS-PRIMARY> 0.16
<EPS-DILUTED> 0.16
</TABLE>
