Diodes Incorporated Reports Third Quarter 2013 Financial Results

  Diodes Incorporated Reports Third Quarter 2013 Financial Results

          Achieves Record Revenue with Continued Margin Improvement

Business Wire

PLANO, Texas -- November 12, 2013

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 reported its financial
results for the third quarter ended September 30, 2013.

Third Quarter Highlights

  *Revenue was $224.5 million, an increase of 4.7 percent from the $214.4
    million in the second quarter 2013, and an increase of 34.7 percent from
    the $166.6 million in the third quarter 2012;
  *Gross profit was $69.6 million, compared to $61.3 million in the second
    quarter of 2013, that included a $3.7 million inventory valuation
    adjustment related to the BCD acquisition, and $43.6 million in the third
    quarter of 2012;
  *Gross profit margin was 31.0 percent, compared to 28.6 percent in the
    second quarter of 2013 and 26.2 percent in the third quarter of 2012;
  *GAAP net income was $13.6 million, or $0.28 per diluted share, compared to
    second quarter 2013 of $8.6 million, or $0.18 per diluted share, and third
    quarter 2012 of $8.6 million, or $0.18 per diluted share;
  *Non-GAAP adjusted net income was $15.8 million, or $0.33 per diluted
    share, compared to $15.5 million, or $0.33 per diluted share, in second
    quarter 2013 and $9.5 million, or $0.20 per diluted share, in third
    quarter 2012;
  *Excluding $2.3 million, net of tax, share-based compensation expense, GAAP
    and non-GAAP adjusted net income would have increased by $0.05 per diluted
    share; and
  *Achieved $16.7 million cash flow from operations and $9.6 million of free
    cash flow. Net cash flow was $(9.3) million, primarily due to the $22
    million purchase of short-term investments and a $7 million pay down on a
    revolver.

Commenting on the results, Dr. Keh-Shew Lu, President and Chief Executive
Officer, stated, “Our third quarter was highlighted by the continued
achievement of record quarterly revenue, increased market share gains, and
solid operational performance across our business. Our past design win
momentum and strength in the TV market and at certain major OEM customers were
able to offset the continued weakness in the PC market. We also further
improved our gross margin through our cost reduction efforts and improved BCD
wafer fab loadings. Additionally, we reduced our operating expenses on a
dollar basis, and as a percentage of revenue, demonstrating further progress
towards achieving our target model of 20 percent of revenue.

“These achievements are even more notable when considering the weakness of the
U.S. dollar relative to most of the currencies where we have operations, in
particular the British Pound and the Euro. Our improved operational
efficiencies and cost reductions were able to mostly offset this currency
impact and allowed us to exceed our operational expectations for the quarter.

“As we look to the fourth quarter, it is shaping up to be weaker than our
normal seasonality due to a broad based market weakness, especially the
continued weakness in the PC market. However, we believe we are well
positioned in the coming year to benefit from ongoing operational improvements
as we leverage our broadened product portfolio and additional cost savings
from transferring BCD products into our packaging facilities, and eventually
off-loading our analog foundry wafer loadings into BCD’s wafer fabs.”

Third Quarter 2013

Revenue for the third quarter 2013 was $224.5 million, an increase of 4.7
percent over the $214.4 million in the second quarter 2013 and 34.7 percent
from the $166.6 million in the third quarter 2012. Revenue was up sequentially
primarily due to continued ramping of past design wins and strength at certain
major OEM customers.

Gross profit for the third quarter 2013 was $69.6 million, or 31.0 percent of
revenue, compared to the second quarter 2013 of $61.3 million, or 28.6 percent
of revenue, which included a $3.7 million inventory valuation adjustment
related to the BCD acquisition, and compared to the third quarter 2012 of
$43.6 million, or 26.2 percent of revenue. Gross profit margin improved as a
result of the Company’s cost reduction efforts and improved BCD wafer fab
loadings.

Third quarter 2013 GAAP net income was $13.6 million, or $0.28 per diluted
share, compared to second quarter 2013 GAAP net income of $8.6 million, or
$0.18 per diluted share, and third quarter 2012 GAAP net income of $8.6
million, or $0.18 per diluted share.

Third quarter 2013 non-GAAP adjusted net income was $15.8 million, or $0.33
per diluted share, which excluded, net of tax, $1.5 million of non-cash
amortization of intangible asset costs and $0.7 million of acquisition-related
employee retention accruals. This compares to non-GAAP adjusted net income of
$15.5 million, or $0.33 per diluted share, in the second quarter 2013 and $9.5
million, or $0.20 per diluted share, in the third quarter 2012.

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

                                                          Three Months Ended
                                                            September 30, 2013
GAAP net income                                             $       13,619
                                                            
GAAP diluted earnings per share                             $       0.28
                                                            
Adjustments to reconcile net income to adjusted net
income:
                                                            
Retention costs                                                     693
                                                            
Amortization of acquisition related intangible assets              1,500
                                                            
Non-GAAP adjusted net income                                $       15,812
                                                            
Non-GAAP adjusted diluted earnings per share                $       0.33
                                                                    

(See the reconciliation tables of net income to adjusted net income near the
end of the release for further details.)

Included in third quarter 2013 GAAP and non-GAAP adjusted net income was
approximately $2.3 million, net of tax, non-cash share-based compensation
expense. Excluding share based compensation expense, both GAAP and non-GAAP
adjusted diluted EPS would have increased by an additional $0.05 per diluted
share, the same amount per diluted share by which share-based compensation
affected GAAP and non-GAAP adjusted net income in the second quarter 2013 and
the third quarter 2012.

EBITDA, which represents earnings before net interest expense, income tax,
depreciation and amortization, for the third quarter 2013 was $36.7 million,
compared to $30.2 million for the second quarter 2013 and $24.8 million for
the third quarter 2012. For a reconciliation of GAAP net income to EBITDA
(non-GAAP), see the table near the end of the release for further details.

As of September 30, 2013, the Company had approximately $204 million in cash
and cash equivalents and approximately $22 million in short-term investments.
Working capital was approximately $489 million.

Business Outlook

Dr. Lu concluded, “For the fourth quarter of 2013, we expect revenue to range
between $205 million and $220 million, or down 2 to 9 percent sequentially. We
expect gross margin to be 28.0 percent, plus or minus 2 percent. Operating
expenses are expected to be approximately 22.7 percent, plus or minus 1
percent. We expect our income tax rate to range between 18 and 24 percent, and
shares used to calculate EPS for the fourth quarter are anticipated to be
approximately 48.2 million.”

Conference Call

Diodes will host a conference call on Tuesday, November 12, 2013 at 4:00 p.m.
Central Time (5:00 p.m. Eastern Time) to discuss its third quarter financial
results. Investors and analysts may join the conference call by dialing
1-866-788-0544 and providing the confirmation code 30041226. International
callers may join the teleconference by dialing 1-857-350-1682 and enter the
same confirmation code at the prompt. A telephone replay of the call will be
made available approximately two hours after the call and will remain
available until Tuesday, November 19, 2013 at midnight Central Time. The
replay number is 1-888-286-8010 with a pass code of 26611483. International
callers should dial 1-617-801-6888 and enter the same pass code at the prompt.
Additionally, this conference call will be broadcast live over the Internet
and can be accessed by all interested parties on the Investors section of
Diodes' website at http://www.diodes.com. To listen to the live call, please
go to the Investors section of Diodes’ website and click on the conference
call link at least 15 minutes prior to the start of the call to register,
download and install any necessary audio software. For those unable to
participate during the live broadcast, a replay will be available shortly
after the call on Diodes' website for approximately 60 days.

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 and analog semiconductor markets. Diodes serves the consumer
electronics, computing, communications, industrial, and automotive markets.
Diodes' products include diodes, rectifiers, transistors, MOSFETs, protection
devices, functional 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, logistics center, and
Americas' sales office are located in Plano, Texas. Design, marketing, and
engineering centers are located in Plano; San Jose, California; Taipei,
Taiwan; Manchester, England; and Neuhaus, Germany. Diodes’ wafer fabrication
facilities are located in Kansas City, Missouri and Manchester, with four
manufacturing facilities located in Shanghai, China, and two joint venture
facilities located in Chengdu, China, as well as manufacturing facilities
located in Neuhaus and Taipei. Additional engineering, sales, warehouse, and
logistics offices are located in Fort Worth, Texas; Taipei; Hong Kong;
Manchester; Shanghai; Shenzhen, China; Seongnam-si, South Korea; Suwon, South
Korea; Tokyo, Japan; and Munich, Germany, with support offices throughout the
world. For further information, including SEC filings, visit Diodes’ website
at http://www.diodes.com.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of
1995: Any statements set forth above that are not historical facts are
forward-looking statements that involve risks and uncertainties that could
cause actual results to differ materially from those in the forward-looking
statements. Such statements include statements regarding our expectation that:
we reduced our operating expenses on a dollar basis, and as a percentage of
revenue, demonstrating further progress towards achieving our target model of
20 percent of revenue; as we look to the fourth quarter, it is shaping up to
be weaker than our normal seasonality due to a broad based market weakness,
especially the continued weakness in the PC market; however, we believe we are
well positioned in the coming year to benefit from ongoing operational
improvements as we leverage our broadened product portfolio and additional
cost savings from transferring BCD products into our packaging facilities, and
eventually off-loading our analog foundry wafer loadings into BCD’s wafer
fabs; for the fourth quarter of 2013, we expect revenue to range between $205
million and $220 million, or down 2 to 9 percent sequentially; we expect gross
margin to be 28.0 percent, plus or minus 2 percent; operating expenses are
expected to be approximately 22.7 percent, plus or minus 1 percent; and we
expect our income tax rate to range between 18 and 24 percent, and shares used
to calculate EPS for the fourth quarter are anticipated to be approximately
48.2 million. Potential risks and uncertainties include, but are not limited
to, such factors as: the risk that BCD’s business will not be integrated
successfully into Diodes’; the risk that the expected benefits of the
acquisition may not be realized; the risk that BCD’s standards, procedures and
controls will not be brought into conformance within Diodes’ operations;
difficulties coordinating Diodes’ and BCD’s new product and process
development, hiring additional management and other critical personnel, and
increasing the scope, geographic diversity and complexity of Diodes’
operations; difficulties in consolidating facilities and transferring
processes and know-how; the diversion of our management’s attention from the
management of our business; 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; and
other information 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.

                                               
DIODES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share data)
                                                     
                   Three Months Ended                Nine Months Ended
                   September 30,                     September 30,
                   2013          2012              2013          2012
NET SALES          $ 224,510       $ 166,617         $ 615,853       $ 470,519
                                                                     
COST OF GOODS       154,951       123,012         438,818       352,180 
SOLD
                                                                     
Gross profit         69,559          43,605            177,035         118,339
                                                                     
OPERATING
EXPENSES
Selling,
general and          33,810          25,796            99,266          72,702
administrative
Research and         13,611          9,084             35,836          24,466
development
Amortization
of acquisition
related              1,871           1,203             6,075           3,401
intangible
assets
Restructuring        -               -                 1,535           -
Gain on sale        5             -               47            (3,556  )
of assets
Total
operating           49,297        36,083          142,759       97,013  
expenses
                                                                     
Income from          20,262          7,522             34,276          21,326
operations
                                                                     
OTHER INCOME
(EXPENSES)
Interest             576             234               979             584
income
Interest             (1,638  )       (212    )         (4,150  )       (569    )
expense
Other               (1,706  )      1,901           1,201         2,846   
Total other
income               (2,768  )       1,923             (1,970  )       2,861
(expenses)
                                                                     
Income before
income taxes
and                  17,494          9,445             32,306          24,187
noncontrolling
interest
                                                                     
INCOME TAX          3,604         509             11,653        1,983   
PROVISION
                                                                     
NET INCOME           13,890          8,936             20,653          22,204
                                                                     
Less: NET
INCOME
attributable        (271    )      (383    )        (325    )      (2,127  )
to
noncontrolling
interest
                                                                     
NET INCOME
attributable       $ 13,619       $ 8,553          $ 20,328       $ 20,077  
to common
stockholders
                                                                     
EARNINGS PER
SHARE
attributable
to common
stockholders
Basic              $ 0.29         $ 0.19           $ 0.44         $ 0.44    
Diluted            $ 0.28         $ 0.18           $ 0.43         $ 0.43    
                                                                     
Number of
shares used in
computation
Basic               46,605        45,997          46,260        45,702  
Diluted             48,023        46,995          47,584        46,901  
                                                                               
Note: Throughout this release, we refer to “net income attributable to common
stockholders” as “net income.”


                                                            
DIODES INCORPORATED AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME
(in thousands, except per share data)
(unaudited)

For the three months ended September 30, 2013:
                                                                      
                 Cost                    Other
                 of        Operating     Income        Income Tax     Net
                 Goods     Expenses      (Expense)     Provision      Income
                 Sold
                                                                      
Per-GAAP                                                              $ 13,619
                                                                      
Earnings per
share
(Per-GAAP)
Diluted                                                               $ 0.28
                                                                      
Adjustments to
reconcile net
income to
adjusted net
income:
                                                                      
Retention        -         815           -             (122)            693
costs
                                                                      
Amortization
of acquisition
related          -         1,871         -             (371)           1,500
intangible
assets
                                                                      
Adjusted                                                              $ 15,812
(Non-GAAP)
                                                                      
Diluted shares
used in
computing                                                              48,023
earnings per
share
                                                                      
Adjusted
earnings per
share
(Non-GAAP)
Diluted                                                               $ 0.33
                                                                      

Note: Included in GAAP and non-GAAP adjusted net income was approximately $2.3
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 $0.05 per share.

                                                           
DIODES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME – Cont.
(in thousands, except per share data)
(unaudited)

For the three months ended September 30, 2012:
                                                                    
                         Operating     Other         Income Tax
                         Expenses      Income        Provision      Net Income
                                       (Expense)
                                                                    
Per-GAAP                                                            $   8,553
                                                                    
Earnings per share
(Per-GAAP)
Diluted                                                             $   0.18
                                                                    
Adjustments to
reconcile net income
to adjusted net
income:
                                                                    
Amortization of
acquisition related      1,203         -             (301)             902
intangible assets
                                                                    
Adjusted (Non-GAAP)                                                 $   9,455
                                                                    
Diluted shares used
in computing                                                           46,995
earnings per share
                                                                    
Adjusted earnings
per share (Non-GAAP)
Diluted                                                             $   0.20
                                                                    

Note: Included in GAAP and non-GAAP adjusted net income was approximately $2.3
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 $0.05 per share.

                                                           
DIODES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME – Cont.
(in thousands, except per share data)
(unaudited)

For the nine months ended September 30, 2013:
                                                                      
                  Cost                    Other         Income
                  of        Operating     Income        Tax           Net
                  Goods     Expenses      (Expense)     Provision     Income
                  Sold
                                                                      
Per-GAAP                                                              $ 20,328
                                                                      
Earnings per
share
(Per-GAAP)
Diluted                                                               $ 0.43
                                                                      
Adjustments
to reconcile
net income to
adjusted net
income:
                                                                      
Inventory         5,484     -             -             (823    )       4,661
valuations
                                                                      
Acquisition       -         600           -             110             710
costs
                                                                      
Retention         -         2,115         -             (317    )       1,798
costs
                                                                      
Restructuring     -         1,533         -             (406    )       1,127
costs
                                                                      
Amortization
of
acquisition       -         6,075         -             (1,285  )       4,790
related
intangible
assets
                                                                      
Tax expense
related to        -         -             -             5,447          5,447
tax audit
                                                                      
Adjusted                                                              $ 38,862
(Non-GAAP)
                                                                      
Diluted
shares used
in computing                                                           47,584
earnings per
share
                                                                      
Adjusted
earnings per
share
(Non-GAAP)
Diluted                                                               $ 0.82
                                                                      

Note: Included in GAAP and non-GAAP adjusted net income was approximately $6.5
million, net of tax, non-cash share-based compensation expense. Excluding this
expense, both GAAP and non-GAAP adjusted diluted earnings per share would have
improved by $0.14 per share.

                                                           
DIODES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME – Cont.
(in thousands, except per share data)
(unaudited)

For the nine months ended September 30, 2012:
                                                                    
                         Operating     Other         Income Tax
                         Expenses      Income        Provision      Net Income
                                       (Expense)
                                                                    
Per-GAAP                                                            $ 20,077 
                                                                    
Earnings per share
(Per-GAAP)
Diluted                                                             $ 0.43   
                                                                    
Adjustments to
reconcile net income
to adjusted net
income:
                                                                    
Amortization of
acquisition related      2,198         -             (549   )         1,649
intangible assets
                                                                    
Gain on sale of          (3,452  )     -             735             (2,717 )
assets
                                                                    
Adjusted (Non-GAAP)                                                 $ 19,009 
                                                                    
Diluted shares used
in computing                                                         46,901 
earnings per share
                                                                    
Adjusted earnings
per share (Non-GAAP)
Diluted                                                             $ 0.41   
                                                                    

Note: Included in GAAP and non-GAAP adjusted net income was approximately $6.9
million, net of tax, non-cash share-based compensation expense. Excluding this
expense, both GAAP and non-GAAP adjusted diluted earnings per share would have
improved by $0.15 per share.

ADJUSTED NET INCOME (Non-GAAP)

This measure consists of generally accepted accounting principles (“GAAP”) net
income, which is then adjusted solely for the purpose of adjusting for
inventory valuations, restructuring costs, acquisition costs, retention costs,
amortization of acquisition related intangible assets, tax payments related to
tax audit and gain on sale of assets, as discussed below. Excluding inventory
valuations, restructuring costs, acquisition costs, retention costs, tax
payments related to tax audit and gain on sale of assets provides investors
with a better depiction of the Company’s operating results and provides a more
informed baseline for modeling future earnings expectations. Excluding the
amortization of acquisition related intangible assets allows for comparison of
the Company’s current and historic operating performance. The Company excludes
the above listed items to evaluate the Company’s operating performance, to
develop budgets, to determine incentive compensation awards and to manage cash
expenditures. Presentation of the above non-GAAP measures allows investors to
review the Company’s results of operations from the same viewpoint as the
Company’s management and Board of Directors. The Company has historically
provided similar non-GAAP financial measures to provide investors an enhanced
understanding of its operations, facilitate investors’ analyses and
comparisons of its current and past results of operations and provide insight
into the prospects of its future performance. The Company also believes the
non-GAAP measures are useful to investors because they provide additional
information that research analysts use to evaluate semiconductor companies.
This non-GAAP measure 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 measures used by other companies.
For example, we do not adjust for any amounts attributable to noncontrolling
interest. The Company recommends a review of net income on both a GAAP basis
and non-GAAP basis be performed to get a comprehensive view of the Company’s
results. The Company provides a reconciliation of GAAP net income to non-GAAP
adjusted net income.

Detail of non-GAAP adjustments:

Inventory valuations – The Company excluded cost incurred for inventory
valuations. The Company adjusted the inventory acquired from the BCD
Semiconductor Manufacturing Limited (“BCD”) acquisition to account for the
reasonable profit allowance for the selling effort on finished goods inventory
and the reasonable profit allowance for the completing and selling effort on
the work–in-progress inventory. This non-cash adjustment to inventory is not
recurring in nature. The Company believes the exclusion of inventory
valuations provides investors an enhanced view of certain costs the Company
may incur from time to time and facilitates comparisons with the results of
other periods that may not reflect such costs.

Restructuring costs – The Company has recorded restructuring charges to reduce
its cost structure in order to enhance operating effectiveness and improve
profitability. These restructuring activities related to our UK development
team and the closure of our New York sales office. These restructuring charges
are excluded from management’s assessment of the Company’s operating
performance. The Company believes the exclusion of the restructuring charges
provides investors an enhanced view of the cost structure of the Company’s
operations and facilitates comparisons with the results of other periods that
may not reflect such charges or may reflect different levels of such charges.

Acquisition costs – The Company excluded costs associated with acquiring BCD,
which consisted of advisory, legal and other professional and consulting fees.
These costs were expensed in the first quarter of 2013 as that was when the
costs were incurred and services were received of which, the corresponding tax
adjustments were made for the non-deductible portions of these expenses. The
Company believes the exclusion of the acquisition related costs provides
investors an enhanced view of certain costs the Company may incur from time to
time and facilitates comparisons with the results of other periods that may
not reflect such costs.

Retention costs – The Company excluded costs accrued within operating expenses
in regard to the $5 million employee retention plan in connection with the BCD
acquisition. The retention payments are payable at the 12, 18 and 24 month
anniversaries of the acquisition with the majority of the cost occurring in
the second 12 months. Although these retention costs will be recurring every
quarter until the final retention payment has been made, they are not part of
the employees normal annual salaries and therefore being excluded. The Company
believes the exclusion of retention costs provides investors an enhanced view
of certain costs the Company may incur from time to time and facilitates
comparisons with the results of other periods that may not reflect such costs.

Amortization of acquisition related intangible assets – The Company excluded
the amortization of its acquisition related intangible assets including
developed technologies and customer relationships. The fair value of the
acquisition related intangible assets, which was allocated to the assets
through purchase accounting, is amortized using straight-line methods which
approximate the proportion of future cash flows estimated to be generated each
period over the estimated useful lives of the applicable assets. The Company
believes the exclusion of the amortization expense of acquisition related
assets is appropriate as a significant portion of the purchase price for its
acquisitions was allocated to the intangible assets that have short lives and
exclusion of the amortization expense allows comparisons of operating results
that are consistent over time for both the Company’s newly acquired and
long-held businesses. In addition, the Company excluded the amortization
expense as there is significant variability and unpredictability across other
companies with respect to this expense.

Tax expense related to tax audit – The Company excluded additional tax expense
in regard to a tax audit of the China tax authorities. The China government
audited the Company’s High and New Technology Enterprise (“HNTE”) status for
the years 2009 through 2011 and determined there was an underpayment for the
tax year 2011. The Company has been approved for the HNTE status for 2012
through 2014. Given that 2011 is an isolated occurrence, the additional tax
and any penalties and interest associated with the audit are being excluded.
The Company believes the exclusion of tax expense related to tax audit
provides investors an enhanced view of certain costs the Company may incur
from time to time and facilitates comparisons with the results of other
periods that may not reflect such costs.

Gain on sale of assets – The Company excluded the gain recorded for the sale
of assets. During the second quarter 2012, the Company sold an intangible
asset located in Europe and this gain was excluded from management’s
assessment of the Company’s core operating performance as this long-lived
asset was a non-core intellectual asset. The Company believes the exclusion of
the gain on sale of assets provides investors an enhanced view of a gain the
Company may incur from time to time and facilitates comparisons with results
of other periods that may not reflect such gains.

Adjusted Earnings per Share (Non-GAAP) - This non-GAAP financial measure is
the portion of the Company’s GAAP net income assigned to each share of stock,
excluding inventory valuations, restructuring costs, acquisition costs,
retention costs, amortization of acquisition related intangible assets, tax
payments related to tax audit and gain on sale of assets, as discussed above.
Excluding inventory valuations, restructuring costs, acquisition costs,
retention costs, tax payments related to tax audit and gain on sale of assets
provides investors with a better depiction of the Company’s operating results
and provides a more informed baseline for modeling future earnings
expectations. Excluding the amortization of acquisition related intangible
assets allows for comparison of the Company’s current and historic operating
performance, as described in further detail above. This non-GAAP measure
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 measures used by other companies. For example, we do not
adjust for any amounts attributable to noncontrolling interest. The Company
recommends a review of diluted earnings per share on both a GAAP basis and
non-GAAP basis be performed to obtain a comprehensive view of the Company’s
results. Information on how these share calculations are made is included in
the reconciliation tables provided.

CASH FLOW ITEMS

Free cash flow (FCF) (Non-GAAP)

FCF for the Third quarter of 2013 is a non-GAAP financial measure, which is
calculated by taking cash flow from operations less capital expenditures. For
the Third quarter of 2013, the amount was $9.6 million ($16.7 million less (-)
($7.1 million). FCF represents the cash and cash equivalents that we are able
to generate after taking into account cash outlays required to maintain or
expand property, plant and equipment. FCF is important because it allows us to
pursue opportunities to develop new products, make acquisitions and reduce
debt.

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
                                  September 30,
                                  2013       2012
                                               
Net income (per-GAAP)             $ 13,619     $ 8,553
Plus:
Interest expense, net               1,062        (22    )
Income tax provision                3,604        509
Depreciation and amortization      18,459      15,758 
EBITDA (Non-GAAP)                 $ 36,744     $ 24,798 
                                               
                                               
                                  Nine Months Ended
                                  September 30,
                                  2013         2012
                                               
Net income (per-GAAP)             $ 20,328     $ 20,077
Plus:
Interest expense, net               3,171        (15    )
Income tax provision                11,653       1,983
Depreciation and amortization      54,894      47,121 
EBITDA (Non-GAAP)                 $ 90,046     $ 69,166 
                                                        

                                                    
DIODES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS

ASSETS
(in thousands)
                                                         
                                       September 30,     December 31,
                                       2013              2012
CURRENT ASSETS                         (unaudited)
Cash and cash equivalents              $  204,214        $   157,121
Short-term investments                    21,690             -
Accounts receivable, net                  191,792            152,073
Inventories                               194,320            153,293
Deferred income taxes, current            11,508             9,995
Prepaid expenses and other               48,741            18,928
Total current assets                     672,265           491,410
                                                         
                                                         
PROPERTY, PLANT AND EQUIPMENT, net        328,802            243,296
                                                         
DEFERRED INCOME TAXES, non current        32,234             36,819
                                                         
OTHER ASSETS
Goodwill                                  89,330             87,359
Intangible assets, net                    55,284             44,337
Other                                    24,205            16,842
Total assets                           $  1,202,120      $   920,063
                                                             

                                                             
DIODES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS

LIABILITIES AND EQUITY
(in thousands, except share data)
                                                                  
                                                September 30,     December 31,
                                                2013              2012
CURRENT LIABILITIES                             (unaudited)
Lines of credit                                 $ 5,499           $  7,629
Accounts payable                                  106,622            64,072
Accrued liabilities                               69,893             41,139
Income tax payable                               1,322            678     
Total current liabilities                        183,336          113,518 
                                                                  
LONG-TERM DEBT, net of current portion            202,115            44,131
OTHER LONG-TERM LIABILITIES                      63,332           41,974  
Total liabilities                                448,783          199,623 
                                                                  
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;
46,639,997 and 46,010,815 issued and
outstanding at September 30, 2013 and
December 31, 2012, respectively                   31,093             30,674
Additional paid-in capital                        292,505            280,571
Retained earnings                                 420,124            399,796
Accumulated other comprehensive loss             (32,807   )       (33,856 )
Total Diodes Incorporated stockholders'          710,915          677,185 
equity
Noncontrolling interest                          42,422           43,255  
Total equity                                      753,337            720,440
Total liabilities and equity                    $ 1,202,120      $  920,063 

Contact:

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
 
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