1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
DECEMBER 1, 2000
Date of Report (Date of Earliest Event Reported)
DIODES INCORPORATED
(Exact name of registrant as specified in its charter)
DELAWARE 1-5740 95-2039518
(State or other (Commission File Number) (I.R.S. Employer
Jurisdiction of Identification Number)
Incorporation)
3050 EAST HILLCREST DRIVE
WESTLAKE VILLAGE, CALIFORNIA 91362
(Address of principal executive offices) (Zip Code)
(805) 446-4800
(Registrant's telephone number, including area code)
2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On December 1, 2000 Diodes, Inc. (the "Company") purchased all of the
outstanding capital stock of FabTech, Inc. (FabTech), pursuant to a Stock
Purchase Agreement dated November 28, 2000. FabTech operates a 5-inch silicon
wafer foundry near Kansas City, Missouri.
The acquisition is accounted for using the purchase method of accounting,
whereby the assets and liabilities acquired are recorded at their estimated fair
values. The terms of the stock purchase required an initial cash payment of
approximately $5,150,000, including acquisition costs, and a potential earnout
of up to $30 million based upon FabTech attaining certain earnings targets over
the four year period immediately following the purchase. Additionally, as a
condition to the purchase agreement, certain officers and management of FabTech
will receive a total of $2,475,000. Of this amount, $975,000 was accrued by
FabTech as incentive compensation for services rendered prior to the
acquisition. The remaining $1,500,000 will be accrued ratably over 4 years
following the acquisition, subject to the continued employment with the Company.
The amount of cash paid to the seller at closing has been reduced by $975,000,
and any portion of the $1,500,000 contingent liability paid by the Company in
the future will be reimbursed by the seller.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS
FABTECH, INC.
(A WHOLLY-OWNED SUBSIDIARY OF VISHAYLITE-ON POWER SEMICONDUCTOR CORPORATION)
YEARS ENDED DECEMBER 31, 1999 AND 1998
WITH REPORT OF INDEPENDENT AUDITORS
3
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholder
FabTech, Inc.
We have audited the accompanying balance sheets of FabTech, Inc. (the Company),
a wholly-owned subsidiary of Vishay Lite-On Power Semiconductor Corporation, as
of December 31, 1999 and 1998, and the related statements of operations and
accumulated deficit, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of FabTech, Inc. at December 31,
1999 and 1998, and the results of its operations and its cash flows for the
years then ended in conformity with accounting principles generally accepted in
the United States.
As described in Note 1 to the financial statements, in 1999 the Company changed
its method of accounting for the costs of start-up activities.
/s/ Ernst & Young LLP
Ernst & Young, LLP
Kansas City, Missouri
January 15, 2000
4
FabTech, Inc.
(a wholly-owned subsidiary of Vishay
Lite-On Power Semiconductor Corporation)
Balance Sheets
DECEMBER 31,
1999 1998
----------------------------
ASSETS
Current assets:
Cash $ 621,375 $ 378,026
Accounts receivable from affiliates (Notes 3 and 6) 1,860,469 1,083,610
Trade accounts receivable, net (Note 6) 1,195,091 1,397,286
Inventory (Note 2) 3,966,374 2,816,366
Prepaid expenses 70,060 92,397
Other current assets 354,189 369,009
----------------------------
Total current assets 8,067,558 6,136,694
Property and equipment:
Production equipment 6,880,751 6,262,422
Office furniture and equipment 210,818 203,426
Construction in process 930,308 190,439
Leasehold improvements 326,403 326,403
----------------------------
8,348,280 6,982,690
Less accumulated depreciation and amortization (2,945,945) (1,874,806)
----------------------------
5,402,335 5,107,884
Other assets, net 29,988 309,081
----------------------------
Total assets $ 13,499,881 $ 11,553,659
============================
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DECEMBER 31,
1999 1998
----------------------------
LIABILITIES AND STOCKHOLDER'S DEFICIT
Current liabilities:
Notes payable to banks (Note 5) $ 3,410,000 $ 10,620,000
Notes payable to parent (Note 6) 10,770,000 2,270,000
Notes payable to affiliates (Note 6) 571,000 164,392
Accounts payable 1,547,203 1,117,570
Accounts payable to parent 446,085 446,000
Accrued interest payable (Note 6) 1,069,454 1,087,798
Accrued payroll, taxes and compensated absences 314,345 164,072
Other accrued expenses 553,385 232,803
----------------------------
Total current liabilities 18,681,472 16,102,635
Long-term debt payable to affiliate (Note 6) 1,929,000 2,335,608
Stockholder's deficit:
Series A noncumulative convertible preferred
stock, $.0001 par value, 4,000,000 shares
authorized, issued and outstanding, aggregate
liquidation value of $4,000,000 plus accrued
but unpaid dividends (Note 10) 400 400
Common stock, $.0001 par value:
Authorized shares - 10,000,000
Issued shares - 1,000 -- --
Additional paid-in capital 3,999,700 3,999,700
Accumulated deficit (11,110,691) (10,884,684)
----------------------------
Total stockholder's deficit (7,110,591) (6,884,584)
----------------------------
Total liabilities and stockholder's deficit $ 13,499,881 $ 11,553,659
============================
See accompanying notes.
6
FabTech, Inc.
(a wholly-owned subsidiary of Vishay
Lite-On Power Semiconductor Corporation)
Statements of Operations and Accumulated Deficit
YEAR ENDED DECEMBER 31,
1999 1998
----------------------------
Sales (Note 8) $ 22,829,104 $ 17,367,161
Cost of goods sold 19,899,284 16,642,614
----------------------------
Gross profit 2,929,820 724,547
Selling, general and administrative expenses 1,718,453 1,825,368
----------------------------
Operating profit (loss) 1,211,367 (1,100,821)
Other expense:
Interest expense (1,143,108) (1,066,230)
Other (35,177) (66,149)
----------------------------
Income (loss) before income taxes and cumulative
effect of change in accounting principle (Note 4) 33,082 (2,233,200)
Provision for income taxes (Note 4) -- --
----------------------------
Income (loss) before cumulative effect of change
in accounting principle 33,082 (2,233,200)
Cumulative effect of change in accounting principle (259,089) --
----------------------------
Net loss (226,007) (2,233,200)
Accumulated deficit at beginning of year (10,884,684) (8,651,484)
----------------------------
Accumulated deficit at end of year $(11,110,691) $(10,884,684)
============================
See accompanying notes.
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FabTech, Inc.
(a wholly-owned subsidiary of Vishay
Lite-On Power Semiconductor Corporation)
Statements of Cash Flows
YEAR ENDED DECEMBER 31
1999 1998
---------------------------
OPERATING ACTIVITIES
Net income (loss) before cumulative effect of change in
accounting principle $ 33,082 $ (2,233,200)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Cumulative effect of change in accounting principle (259,089) --
Depreciation and amortization 1,350,232 1,110,675
Provision for doubtful accounts 2,043 10,410
Inventory reserve 79,243 --
Changes in operating assets and liabilities:
Accounts receivable from affiliates (776,859) (37,997)
Trade accounts receivable 200,152 (1,187,448)
Other current assets 14,820 13,248
Inventory (1,229,251) (409,214)
Prepaid expenses 22,337 213,288
Accounts payable 429,633 576,713
Accounts payable to parent 85 --
Accrued payroll, taxes and compensated absences 150,273 (17,124)
Accrued interest payable (18,344) 540,646
Accrued expenses 320,582 (328,684)
Other -- (96,439)
---------------------------
Net cash provided by (used in) operating activities 318,939 (1,845,126)
INVESTING ACTIVITIES
Purchase of property and equipment (1,365,590) (634,716)
---------------------------
Net cash used in investing activities (1,365,590) (634,716)
FINANCING ACTIVITIES
Borrowings on notes payable to banks -- 12,220,000
Payments on notes payable to banks (7,210,000) (9,410,000)
Borrowings on notes payable to parent 8,500,000 --
---------------------------
Net cash provided by financing activities 1,290,000 2,810,000
---------------------------
Net increase in cash 243,349 330,158
Cash at beginning of year 378,026 47,868
---------------------------
Cash at end of year $ 621,375 $ 378,026
===========================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for interest $ 1,161,452 $ 622,023
===========================
See accompanying notes
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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND NATURE OF BUSINESS
FabTech, Inc. (the Company) was incorporated in the state of Delaware on October
16, 1995. The Company is a wholly-owned subsidiary of Vishay Lite-On Power
Semiconductor Corporation (Vishay Lite-On), a Taiwan corporation. Vishay Lite-On
is a 65%-owned subsidiary of Vishay Intertechnology. The Company is engaged in
the manufacture and distribution of computer chips both domestically and
internationally. A significant percentage of the Company's sales is made to its
affiliates (see Note 8).
INVENTORY
Inventory is stated at the lower of cost, determined under the first-in,
first-out (FIFO) method, or market.
OTHER ASSETS
Other assets include a technology agreement which has been capitalized and is
being amortized over its contractual life of five years using the straight-line
method.
At December 31, 1998, other assets also included costs incurred during the
organization and start-up of the Company which had been capitalized and were
being amortized over five years using the straight-line method. However, in
April 1998, the American Institute of Certified Public Accountants issued
Statement of Position (SOP) 98-5, "Reporting the Costs of Start-Up Activities,"
requiring that the costs related to start-up activities be expensed as incurred.
The Company adopted the provisions of SOP 98-5 in its financial statements for
the year ended December 31, 1999. The effect of the adoption of SOP 98-5 was to
record a charge for the cumulative effect of an accounting change of $259,089,
representing the remaining amount of unamortized organization and start-up costs
as of December 31, 1998.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Depreciation is provided using the
straight-line method over the estimated useful lives of the related assets which
generally range from three to 10 years. For income tax purposes, depreciation is
computed using the modified accelerated cost recovery system.
INCOME TAXES
The Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes." Under SFAS
No. 109, the liability method is used in accounting for income taxes, whereby
deferred tax assets and liabilities are determined based on differences between
financial reporting and tax bases of assets and liabilities and are measured
using the enacted tax rates and laws that will be in effect when the differences
are expected to reverse.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
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2. INVENTORY
Inventory consists of the following at December 31:
1999 1998
----------------------------
Raw materials $1,462,385 $ 956,716
Work-in-process 2,134,684 1,561,465
Finished goods 32,031 60,937
Supplies 337,274 237,248
----------------------------
$3,966,374 $2,816,366
============================
3. ACCOUNTS RECEIVABLE FROM AFFILIATES
Accounts receivable from affiliates consist of the following at December 31:
1999 1998
----------------------------
Vishay Lite-On $ 569,102 $ 820,909
Vishay Europe 4,872 --
Siliconix, Inc. 41,874 --
Diodes, Inc. 1,244,621 262,701
----------------------------
$1,860,469 $1,083,610
============================
4. INCOME TAXES
At December 31, 1999, the Company had net operating loss carryforwards available
to offset future taxable income of approximately $9,888,000 which expire in
varying amounts through 2014. The Company's utilization of certain carryforwards
may be limited to specific amounts each year. SFAS No. 109 requires that a
valuation allowance be recorded against tax assets which may not be realized.
Accordingly, due to the uncertain nature of their ultimate realization based on
past performance and expiration dates, the Company has established a full
valuation allowance against these carryforward benefits, as well as other
deferred tax assets at December 31, 1999 and 1998, and will recognize the
benefits only as reassessment demonstrates they are realizable. Realization is
entirely dependent on future earnings. While the need for this valuation
allowance is subject to periodic review, if the allowance is reduced, the tax
benefits of the carryforwards will be recorded in future operations as a
reduction of the Company's income tax expense.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amount of assets and liabilities for financial reporting
purposes and the amounts used for income taxes purposes. Significant components
of the Company's deferred tax assets and liabilities are as follows:
1999 1998
---------------------------
Current deferred tax assets:
Accrued interest payable to affiliates $ 393,400 $ 387,000
Accrued expenses and other 55,600 42,000
---------------------------
449,000 429,000
Noncurrent deferred tax asset:
Net operating loss carryforwards 3,708,000 3,646,000
---------------------------
4,157,000 4,075,000
Valuation allowance (4,157,000) (4,075,000)
---------------------------
Net deferred tax assets $ -- $ --
===========================
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5. NOTES PAYABLE TO BANKS
At December 31, 1999, the Company has four lines of credit with Citibank
providing for maximum borrowings of $4.0 million: $1.0 million expiring on
February 18, 2000; $1.0 million expiring on May 11, 2000; $1.0 million expiring
on September 17, 2000; and $1.0 million expiring on November 6, 2000. These
lines of credit bear interest at LIBOR plus 0.5% (6.61% at December 31, 1999)
and are secured by standby letters of credit issued by Vishay Lite-On.
Borrowings under these lines of credit amounted to $3,410,000 at December 31,
1999. At December 31, 1998, the Company had available lines of credit totaling
$12,000,000 which bore interest at 5.75%. Borrowings under these lines of credit
totaled $10,620,000 at December 31, 1998.
6. NOTES PAYABLE TO AFFILIATES
The Company has an unsecured revolving credit commitment from Vishay Lite-On.
Borrowings outstanding under this agreement, totaling $10.77 million at December
31, 1999 and $2.27 million at December 31, 1998, bear interest at Vishay
Lite-On's incremental borrowing rate (6.5% on $8.5 million and 7.5% on $2.27
million at December 31, 1999). The revolving credit commitment has no stated
expiration date, and all borrowings thereunder are payable on demand. The loan
agreement initially required that accrued interest be payable on demand but no
later than December 31, 1998. However, Vishay Lite-On and the Company have
amended this agreement to allow payment of interest to occur at an unspecified
future date. Accrued interest totaled approximately $988,000 and $508,000 at
December 31, 1999 and 1998, respectively.
The Company has a note payable to Diodes, Inc. of $2.5 million at December 31,
1999 and 1998 which bears interest at the incremental borrowing rate of Diodes,
Inc. (7.6% at December 31, 1999). Except under certain circumstances, as
described below, all principal and interest under the note is due upon maturity
in February 2001. Additionally, the note is secured by all accounts receivable,
chattel paper and contract rights. Accrued interest totaled approximately
$61,000 and $524,000 at December 31, 1999 and 1998, respectively.
In connection with the issuance of the note payable to Diodes, Inc., the Company
entered into a production agreement with Diodes, Inc. Pursuant to the terms of
this agreement, Diodes, Inc. agreed to purchase the lower of one-third of the
wafer production or 5,000 wafers per month from the Company at a fair market
value, as defined. The actual quantities purchased by Diodes, Inc. can be
modified upon the mutual consent of the Company and Diodes, Inc. Upon reaching a
specified purchase volume for each wafer purchased by Diodes, Inc., $10 shall be
credited first against accrued interest and then the principal outstanding under
the note payable. However, the credit amount will not begin until the sales
level to Diodes, Inc. reaches the required level as provided in the production
agreement. At December 31, 1999, the Company has classified all of the accrued
interest and $571,000 of the principal amount of the note as current
representing the amount of interest and principal the Company expects to pay for
wafers purchased by Diodes, Inc. during the year ended December 31, 2000 under
the production agreement.
7. LEASE COMMITMENT
The Company leases its manufacturing and office facilities under an operating
lease which expires on December 31, 2000. Rent expense related to the lease
amounted to $1,089,840 and $769,680 for the years ended December 31, 1999 and
1998, respectively.
The Company entered into an operating lease for a nitrogen generator on June 1,
1998. Rent expense was $243,648 and $130,780 for 1999 and 1998, respectively.
The lease will expire June 1, 2008 with the option to renew for an additional
five years.
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8. RELATED-PARTY TRANSACTIONS
In addition to the related-party transactions previously described, the Company
has engaged in several related-party transactions during the years ended
December 31, 1999 and 1998 as described below:
1999 1998
--------------------------
Sales to Vishay Lite-On $5,810,060 $6,859,412
Sales to Siliconix, Inc. 275,029 --
Sales to Vishay Europe 19,542 --
Sales to Diodes, Inc. 6,251,492 1,332,544
Interest expense to Vishay Lite-On 544,416 202,804
Interest expense to Diodes, Inc. 195,268 202,489
Standby letter of credit costs 31,510 53,443
Management fees to Vishay Lite-On 22,651 --
9. DEFINED CONTRIBUTION PLAN
The Company sponsors a 401(k) savings plan under which substantially all
employees over 18 years of age who have completed three months of service are
eligible for participation. Employees may contribute up to 16% of their annual
compensation subject to annual Internal Revenue Code maximum limitations. The
Company can make discretionary contributions up to 40% of the first 5% of each
employee's contribution. Matching contributions of $69,517 and $53,511 were made
and charged to operations in 1999 and 1998, respectively.
10. NONCUMULATIVE CONVERTIBLE PREFERRED STOCK
The Company issued 4,000,000 shares of $.0001 noncumulative convertible
preferred stock in connection with the acquisition of the Company by Vishay
Lite-On in 1995. At the option of its holder, each share of preferred stock is
convertible into common stock of the Company based on a conversion price as
defined. At December 31, 1999, each share of preferred stock would be
convertible into one share of common stock. Under certain circumstances as
defined, including an underwritten public offering of the Company's securities,
the preferred stock will be automatically converted to common stock.
Additionally, dividends of $.08 per share are noncumulative and, accordingly,
are payable only when and if declared. Holders of each share of Series A
preferred stock issued and outstanding shall be entitled to the number of votes
equal to the number of shares of common stock into which such shares of Series A
preferred stock could be converted at the record date.
11. YEAR 2000 (UNAUDITED)
The Company completed an assessment and made appropriate modifications to its
operations and products for year 2000 compliance considerations. The year 2000
project cost was minimal and the issue has resulted in no disruption in the
Company's business to date. The Company believes that the year 2000 issue will
not pose future significant operational problems to its computer systems,
customers, vendors or products. However, if third parties are unable to meet
their obligations to the Company because of third-party year 2000 compliance
issues, the year 2000 issue could have a material impact on the operations of
the Company.
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(b) PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
The following unaudited pro forma combined condensed financial statements of
Diodes, Inc. and Subsidiaries (collectively "Diodes") give effect to the
acquisition of FabTech by Diodes using the purchase method of accounting. Under
the purchase method of accounting, the purchase price is allocated to the assets
acquired and liabilities assumed based on their estimated fair values. The
estimated fair values of the assets and liabilities of FabTech have been
combined with the recorded values of the assets and liabilities of Diodes in the
unaudited combined condensed financial statements. The unaudited pro forma
combined condensed balance sheet gives effect to the purchase as if it had
occurred on December 31, 1999. The unaudited pro proforma combined condensed
statement of operations for the year ended December 31, 1999 and nine months
ended September 30, 2000, give effect to the acquisition as if it had occurred
on January 1, 1999.
The unaudited pro forma combined condensed financial statements are presented
for illustrative purposes only. They do not purport to represent the financial
position or results of operations as of any future date or for any future
period. The unaudited pro forma combined condensed financial statements and
related notes should be read in conjunction with the historical financial
statements of Diodes included in its: (a) Annual Report on Form 10-K for the
year ended December 31, 1999 and (b) Quarterly Reports on Form 10-Q for the
quarters ended September 30, 2000, June 30, 2000 and March 31, 2000 (unaudited),
as well as the historical financial statements of FabTech and related notes
included in this report.
The unaudited pro forma adjustments have been applied to the financial
information derived from the financial statements of Diodes and FabTech to
account for the acquisition as a purchase. Accordingly, the assets acquired and
liabilities assumed are reflected at their estimated fair values.
The unaudited pro forma financial information has been prepared based on the
assumptions described in the related notes and includes assumptions relating to
the allocation of the consideration paid for the assets of FabTech based on the
estimates of their fair values. In the opinion of management of Diodes, all
adjustments necessary to present fairly such unaudited pro forma financial
information have been made, based on the terms and structure of the acquisition.
13
DIODES INCORPORATED AND SUBSIDIARIES
PRO FORMA COMBINED CONDENSED BALANCE SHEET (UNAUDITED)
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
Historical
-------------------------- Pro forma Pro forma
Diodes FabTech Adjustments Balances
----------- ------------ ----------- ------------
ASSETS
CURRENT ASSETS
Cash $ 3,557,000 $ 621,000 $ -- $ 4,178,000
Accounts receivable, net 15,055,000 3,056,000 (1,245,000)(a) 16,866,000
Inventories 16,575,000 3,966,000 -- 20,541,000
Deferred income taxes 1,700,000 -- 1,494,000 (c) 3,194,000
Prepaid expenses and other current assets 762,000 424,000 -- 1,186,000
----------- ------------ ----------- ------------
Total current assets 37,649,000 8,067,000 249,000 45,965,000
PROPERTY, PLANT AND EQUIPMENT, net 20,909,000 5,402,000 6,600,000 (d) 32,911,000
ADVANCES TO RELATED PARTY 2,561,000 -- (2,561,000)(e) --
DEFERRED INCOME TAXES 146,000 -- 2,943,000 (c)
(2,475,000)(d) 614,000
OTHER ASSETS, net 1,142,000 30,000 4,393,000 (f) 5,565,000
----------- ------------ ----------- ------------
Total assets $62,407,000 $ 13,499,000 $ 9,149,000 $ 85,055,000
=========== ============ =========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Line of credit $ 3,237,000 $ 3,410,000 $ 5,150,000 (g) $ 11,797,000
Notes payable to related parties -- 11,341,000 (571,000)(e) 10,770,000
Accounts payable and accrued liabilities 15,319,000 3,930,000 (61,000)(e)
(1,245,000)(a)
975,000 (h) 18,918,000
Income taxes payable 878,000 -- -- 878,000
Current portion of long-term debt 2,312,000 -- -- 2,312,000
----------- ------------ ----------- ------------
Total current liabilities 21,746,000 18,681,000 4,248,000 44,675,000
DEFERRED COMPENSATION 57,000 -- -- 57,000
LONG-TERM DEBT, net of current portion 4,672,000 -- -- 4,672,000
LONG-TERM DEBT TO RELATED PARTY -- 1,929,000 (1,929,000)(e) --
MINORITY INTEREST 959,000 -- -- 959,000
STOCKHOLDERS' EQUITY (DEFICIT) 34,973,000 (7,111,000) 6,830,000 (i) 34,692,000
----------- ------------ ----------- ------------
Total liabilities and stockholders' equity $62,407,000 $ 13,499,000 $ 9,149,000 $ 85,055,000
=========== ============ =========== ============
The accompanying notes are an integral part of these proforma condensed
financial statements.
14
DIODES INCORPORATED AND SUBSIDIARIES
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME (UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1999
- --------------------------------------------------------------------------------
Historical
---------------------------- Pro forma Pro forma
Diodes FabTech Adjustments Balances
------------ ------------ ----------- ------------
NET SALES $ 79,251,000 $ 22,829,000 $(6,251,000)(b) $ 95,829,000
COST OF GOODS SOLD 58,303,000 19,899,000 (6,251,000)(b)
648,000 (j) 72,599,000
------------ ------------ ----------- ------------
Gross profit 20,948,000 2,930,000 (648,000) 23,230,000
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 13,670,000 1,719,000 220,000 (k)
375,000 (l) 15,984,000
------------ ------------ ----------- ------------
Income from operations 7,278,000 1,211,000 (1,243,000) 7,246,000
OTHER INCOME (EXPENSES) (110,000) (1,178,000) (386,000)(m) (1,674,000)
------------ ------------ ----------- ------------
Income before income taxes
and minority interest 7,168,000 33,000 (1,629,000) 5,572,000
INCOME TAX PROVISION (1,380,000) -- 528,000 (n)
(14,000)(o) (866,000)
------------ ------------ ----------- ------------
Income before minority interest 5,788,000 33,000 (1,115,000) 4,706,000
MINORITY INTEREST IN
JOINT VENTURE (219,000) -- -- (219,000)
------------ ------------ ----------- ------------
NET INCOME (p) $ 5,569,000 $ 33,000 $(1,115,000) $ 4,487,000
============ ============ =========== ============
EARNINGS PER SHARE
Basic $ 0.73 $ 0.59
============ ============
Diluted $ 0.68 $ 0.55
============ ============
The accompanying notes are an integral part of these proforma condensed
financial statements.
15
DIODES INCORPORATED AND SUBSIDIARIES
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
- --------------------------------------------------------------------------------
Historical
---------------------------- Pro forma Pro forma
Diodes FabTech Adjustments Balances
------------ ------------ ----------- -------------
NET SALES $ 92,369,000 $ 22,194,000 $(6,000,000)(b) $ 108,563,000
COST OF GOODS SOLD 62,322,000 18,520,000 (6,000,000)(b)
486,000 (j) 75,328,000
------------ ------------ ----------- -------------
Gross profit 30,047,000 3,674,000 (486,000) 33,235,000
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 14,862,000 1,584,000 165,000 (k)
281,000 (l) 16,892,000
------------ ------------ ----------- -------------
Income from operations 15,185,000 2,090,000 (932,000) 16,343,000
OTHER INCOME (EXPENSES) (416,000) (961,000) (290,000)(m) (1,667,000)
------------ ------------ ----------- -------------
Income before income taxes
and minority interest 14,769,000 1,129,000 (1,222,000) 14,676,000
INCOME TAX PROVISION (2,197,000) (16,000) 396,000 (n)
(407,000)(o) (2,224,000)
------------ ------------ ----------- -------------
Income before minority interest 12,572,000 1,113,000 (1,233,000) 12,452,000
MINORITY INTEREST IN
JOINT VENTURE (462,000) -- -- (462,000)
------------ ------------ ----------- -------------
NET INCOME $ 12,110,000 $ 1,113,000 $(1,233,000) $ 11,990,000
============ ============ =========== =============
EARNINGS PER SHARE
Basic $ 1.50 $ 1.49
============ =============
Diluted $ 1.31 $ 1.29
============ =============
The accompanying notes are an integral part of these proforma condensed
financial statements.
16
DIODES INCORPORATED AND SUBSIDIARIES
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The total consideration paid for FabTech including expenses incurred in
connection with the acquisition, was $5,150,000 in cash. An earnout provision of
up to $30 million in additional potential purchase price is excluded from the
proforma adjustment.
NOTE 2 - PRO FORMA ADJUSTMENTS
Estimates of fair values of the assets and liabilities of FabTech have
been combined with those of Diodes in the unaudited pro forma combined condensed
financial statements. Pro forma adjustments for the combined condensed
statements of income and the combined condensed balance sheet include the
following:
(a) To eliminate intercompany trade receivables and payables.
(b) To eliminate intercompany sales and purchases.
(c) To allocate purchase price of deferred tax assets.
(d) To record the property, plant and equipment of FabTech at estimated
fair value, along with related deferred tax liabilities of 37.5%.
(e) To eliminate intercompany advances totaling $2,561,000, including
$61,000 of accrued interest.
(f) To record purchase price in excess of fair value (goodwill).
(g) To reflect bank borrowing to execute the purchase of FabTech.
(h) To record obligation to officers and management.
(i) To reflect increase in net assets to fair value.
(j) To record adjustment to depreciation expense based on fair market
value of property and equipment and estimated remaining useful
lives of 7 years using straight-line depreciation method.
(k) To record the amortization of goodwill assuming straight-line
amortization method over 20 years.
(l) To record the vested interest of the $1,500,000 guaranteed
compensation commitment.
(m) To record interest expense on bank borrowing used to execute the
purchase of FabTech, at the rate of 7.5% per annum.
(n) To record the income tax impact of pro forma adjustments at 37.5%.
(o) To adjust income tax provision, as historically reported, to 37.5%
of pre-tax income.
(p) For the purpose of this proforma financial statement, historical
net income of FabTech for the year ended December 31, 1999 excludes
an expense of $259,000 for the cumulative effect of a change in
accounting principle.
NOTE 3 - PRO FORMA INCOME PER COMMON SHARE
Basic and diluted pro forma earnings per share are computed using the
weighted average number of Diodes common shares and common share equivalents
outstanding during the period, adjusted for a three-for-two stock split in July
2000. There were no additional shares issued in connection with the purchase of
FabTech.
NOTE 4 - CONFORMING AND RECLASSIFICATION ADJUSTMENTS
There were no adjustments required to conform the accounting policies of
FabTech with those of Diodes.
17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: February 9, 2001 DIODES INCORPORATED
By /s/ Carl Wertz
CARL WERTZ
Chief Financial Officer