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

Previously Reported Non-GAAP EPS of $0.14 Remains Unchanged

PLANO, Texas--()--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 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.

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  
 
 

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
 
             
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  
 
               
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 )
 
Transaction costs 332 (116 )
 
Retention costs 132 (46 )
 
Amortization of acquisition related intangible assets 1,101 (198 )
 
Employee award costs 253 7,613 (2,368 )
 
Others 1,478
 
Amortization of acquisition related intangible assets 1,866 (388 )
 
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.

           
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
 
               
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 )
 
Transaction costs 1,493 (522 )
 
Retention costs 132 (46 )
 
Amortization of acquisition related intangible assets 1,101 (198 )
 
Employee award costs 253 7,613 (2,368 )
 
Others 6,037
 
Retention costs 83 (13 )
 
Amortization of acquisition related intangible assets 7,496 (1,529 )
 
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.

           
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  
 
 

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       Twelve Months Ended
December 31, 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
 
       
DIODES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS

(in thousands, except share data)

 
December 31, December 31,
2015 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, December 31,
2015 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  
 

Contacts

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

Contacts

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