Plano, Texas – February 8, 2012 – 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 fiscal year and fourth quarter ended December 31, 2011. 

Year 2011 Highlights

• Revenue increased to a record $635.3 million, an increase of 3.6 percent over the $612.9 million in 2010;
• Gross profit was $193.7 million compared to $224.9 million in 2010;
• Gross margin was 30.5 percent compared to 36.7 percent in 2010;
• GAAP net income was $50.7 million, or $1.09 per diluted share, compared to $76.7 million, or $1.68 per diluted share in 2010; achieved 21 consecutive years of profitability;
• Non-GAAP adjusted net income was $58.0 million, or $1.24 per diluted share, compared to $82.9 million, or $1.82 per diluted share in 2010;
• Excluding $8.9 million of share-based compensation expense, both GAAP and non-GAAP adjusted net income would have increased by $0.19 per diluted share, the same amount per diluted share by which share-based compensation affected GAAP and non-GAAP adjusted net income in 2010;
• Achieved $61.7 million cash flow from operations. Excluding certain tax accounting adjustments related to the Convertible Senior Notes’ retirement, adjusted cash flow from operations was $77 million. Net cash flow was a negative ($141.4) due to the retirement of the Convertible Senior Notes; and
• Free cash flow was negative ($19.3) million. Excluding certain tax accounting adjustments related to the Convertible Senior Notes’ retirement, adjusted free cash flow was negative ($4) million. 

Fourth Quarter Highlights

• Revenue was $143.3 million, a decrease of 12.5 percent over the $163.8 million in the fourth quarter of 2010, and a decrease of 10.8 percent from the $160.6 million in the third quarter of 2011;
• Gross profit was $35.5 million, compared to $62.6 million in the fourth quarter of 2010 and $45.2 million in the third quarter of 2011;
• Gross profit margin was 24.8 percent, compared to 38.3 percent in the fourth quarter 2010 and 28.1 percent in the third quarter of 2011;
• GAAP net income was $3.1 million, or $0.07 per diluted share, compared to fourth quarter 2010 of $24.0 million, or $0.52 per diluted share, and third quarter 2011 of $10.0 million, or $0.21 per diluted share;
• Non-GAAP adjusted net income was $4.0 million, or $0.09 per diluted share, compared to fourth quarter 2010 of $25.3 million, or $0.55 per diluted share, and third quarter 2011 of $12.1 million, or $0.26 per diluted share;
• Excluding $2.4 million of share-based compensation expense, both GAAP and non-GAAP adjusted net income would have increased by $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 fourth quarter 2010;
• Achieved negative ($3.4) million cash flow from operations and $4.6 million net cash flow. Excluding certain tax accounting adjustments related to the Convertible Senior Notes’ retirement, adjusted cash flow from operations was $12 million; and
• Free cash flow was negative ($14.5) million. Excluding certain tax accounting adjustments related to the Convertible Senior Notes’ retirement, adjusted free cash flow was $0.5 million.  

Commenting on the results, Dr. Keh-Shew Lu, President and Chief Executive Officer of Diodes Incorporated, stated, “I am very pleased to report that Diodes continued its growth during 2011 and achieved record revenue for the full year despite ongoing uncertainty in the global economy. This year also represented our 21st consecutive year of profitability, which underscores the success of our profitable growth strategy. The broad market weakness that began in late second quarter continued to impact all of our market segments throughout the fourth quarter, but past design win momentum and new product initiatives enabled further market share gains. Although productivity and manufacturing efficiencies in our Shanghai facility have recovered to prior levels, gross margin continues to be negatively impacted by the effects of the market softness, including increased pricing pressure, continued sales of lower margin commodity products and less than maximum utilization of manufacturing capacity, despite the increase in our finished goods inventory in advance of the Chinese New Year.”

“We are closely monitoring the market environment during the first quarter of 2012 and are continuing to delay capital investments, except for new product expansion and copper wire conversion. We have also slowed the pace of the building construction of our Chengdu facility and expect completion by the end of the second quarter of 2012. Increasing capacity at our Chengdu facility above the current pilot line level will depend upon market requirements and improvements in demand. In addition, we plan to maintain our operating expense controls. Overall, I believe we are better positioned than we were coming out of the 2009 downturn, which sets the stage for growth in 2012 as the market improves.”

Business Outlook

Dr. Lu concluded, “The first quarter is typically a seasonally down quarter for our business. However, we expect revenue to be better than the normal seasonal pattern due to improved distributor order rates in North America and Europe as well as the ramping of new projects for our products used in smartphones and tablets. As such, for the first quarter of 2012, we expect revenue to range between $138 million and $148 million, or flat plus or minus $5 million sequentially. We expect gross margin to be 25 percent, plus or minus 2.0 percent. Operating expenses are expected to remain approximately flat with fourth quarter on a dollar basis. We expect our income tax rate to range between 17 and 23 percent, and shares used to calculate GAAP EPS for the first quarter are anticipated to be approximately 47.2 million.”

Fiscal 2011

For the fiscal year 2011, revenue increased to a record $635.3 million, an increase of 3.6 percent over the $612.9 million in 2010. Gross profit was $193.7 million, or 30.5 percent of revenue, compared to $224.9 million, or 36.7 percent of revenue, in the prior year. GAAP net income was $50.7 million, or $1.09 per diluted share, compared to $76.7 million, or $1.68 per diluted share in 2010.

Non-GAAP adjusted net income for 2011 was $58.0 million, or $1.24 per diluted share, which excluded, net of tax, $3.9 million of non-cash interest expense related to the amortization of debt discount on the Convertible Senior Notes and $3.3 million of non-cash acquisition related intangible asset amortization costs, compared to non-GAAP adjusted net income of $82.9 million, or $1.82 per diluted share, in the prior year. 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):

See the tables below for further details of the reconciliation.

Included in fiscal 2011 GAAP and non-GAAP adjusted net income was approximately $8.9 million, net of tax, non-cash share-based compensation expense. Excluding this expense, both GAAP and non-GAAP adjusted diluted EPS would have increased by an additional $0.19 per diluted share, the same amount per diluted share by which share-based compensation affected GAAP and non-GAAP adjusted net income in 2010. 

EBITDA, which represents earnings before net interest expense, income tax provision, depreciation and amortization, for fiscal 2011 was $130.5 million, compared to $156.4 million for fiscal 2010. For a reconciliation of GAAP net income to EBITDA (non-GAAP), see table below. 

For the year ended December 31, 2011, net cash provided by operating activities was $61.7 million. In accordance with US GAAP, certain tax items that relate to the retirement of Convertible Senior Notes in the amount of negative $15 million have been recorded in cash flow from operations. Excluding these adjustments, adjusted cash flow from operations was $77 million. Net cash flow was a negative ($141.4) million due to the retirement of the Convertible Senior Notes. Free cash flow was a negative ($19.3) million, which was also negatively impacted $15 million by certain tax accounting adjustments related to the Convertible Senior Notes.

Fourth Quarter 2011

Revenue for the fourth quarter of 2011 was $143.3 million, a decrease of 12.5 percent over the $163.8 million in the fourth quarter of 2010, and a decrease of 10.8 percent from the $160.6 million in the third quarter of 2011. The decrease in revenue was due to a general market weakness across all market segments, including consumer, computing and communications markets. 

Gross profit for the fourth quarter of 2011 was $35.5 million, or 24.8 percent of revenue, compared to $62.6 million, or 38.3 percent, in the fourth quarter of 2010 and $45.2 million, or 28.1 percent of revenue, in the third quarter 2011. The decline in gross profit margin was due primarily to a weak pricing environment and a sustained shift in product mix to lower margin products in an effort to maintain capacity utilization at the Company's wafer fabs and Shanghai packaging facilities.

Fourth quarter 2011 GAAP net income was $3.1 million, or $0.07 per diluted share, compared to GAAP net income of $24.0 million, or $0.52 per diluted share, in the fourth quarter of 2010 and GAAP net income of $10.0 million, or $0.21 per diluted share, in the third quarter of 2011.

Non-GAAP adjusted net income for the fourth quarter of 2011 was $4.0 million, or $0.09 per diluted share, which excluded, net of tax, $0.9 million of non-cash acquisition related intangible asset amortization costs, compared to non-GAAP adjusted net income of $25.3 million, or $0.55 per diluted share, in the fourth quarter of 2010 and non-GAAP adjusted net income of $12.1 million, or $0.26 per diluted share, in the third quarter of 2011. 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):

Included in fourth quarter 2011 GAAP and non-GAAP adjusted net income was approximately $2.4 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 share, the same amount per diluted share by which share-based compensation affected GAAP and non-GAAP adjusted net income in fourth quarter 2010.

EBITDA, which represents earnings before net interest expense, income tax, depreciation and amortization, for the fourth quarter of 2011 was $19.7 million, compared to $46.7 million for the fourth quarter of 2010 and $29.2 million for the third quarter of 2011. For a reconciliation of GAAP net income to EBITDA (non-GAAP), see the table below.

For the fourth quarter of 2011, net cash provided by operating activities was a negative ($3.4) million cash flow from operations and $4.6 million net cash flow. Excluding certain tax accounting adjustments related to the Convertible Senior Notes’ retirement, adjusted cash flow from operations was $12 million. Free cash flow was negative ($14.5) million, which was also negatively impacted $15 million by certain tax accounting adjustments related to the Convertible Senior Notes.

As of December 31, 2011, Diodes had approximately $130 million in cash and cash equivalents and working capital was approximately $317 million.

Conference Call

Diodes will host a conference call on Wednesday, February 8, 2012 at 4:00 p.m. Central Time (5:00 p.m. Eastern Time) to discuss its fiscal 2011 and fourth quarter financial results. Investors and analysts may join the conference call by dialing 1-800-435-1398 and providing the confirmation code 59035950. International callers may join the teleconference by dialing 1-617-614-4078 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 Monday, February 13, 2012 at midnight Central Time. The replay number is 1-888-286-8010 with a pass code of 28767212. 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 fifteen 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, 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. The Company's 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. The Company's wafer fabrication facilities are located in Kansas City, Missouri and Manchester, with two manufacturing facilities located in Shanghai, China, another in Neuhaus, and two joint venture facilities located in Chengdu, China. Additional engineering, sales, warehouse, and logistics offices are located in Fort Worth, Texas; Taipei; Hong Kong; Manchester; and Munich, Germany, with support offices located throughout the world. For further information, including SEC filings, visit the Company's 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: gross margin continues to be negatively impacted by the effects of the market softness, including increased pricing pressure, continued sales of lower margin commodity products and less than maximum utilization of manufacturing capacity, despite the increase in our finished goods inventory in advance of the Chinese New Year; we are closely monitoring the market environment during the first quarter of 2012 and are continuing to delay capital investments, except for new product expansion and copper wire conversion; we have also slowed the pace of the building construction of our Chengdu facility and expect completion by the end of the second quarter of 2012; increasing capacity at our Chengdu facility above the current pilot line level will depend upon market requirements and improvements in demand; in addition, we plan to maintain our operating expense controls; overall, I believe we are better positioned than we were coming out of the 2009 downturn, which sets the stage for growth in 2012 as the market improves; the first quarter is typically a seasonally down quarter for our business; however, we expect revenue to be slightly better than the normal seasonal pattern due to improved distributor order rates in North America and Europe as well as the ramping of new projects for our products used in smartphones and tablets; as such, for the first quarter of 2012, we expect revenue to range between $138 million and $148 million, or flat plus or minus $5 million sequentially; we expect gross margin to be 25 percent, plus or minus 2.0 percent; operating expenses are expected to remain approximately flat with fourth quarter on a dollar basis; and we expect our income tax rate to range between 17 and 23 percent, and shares used to calculate GAAP EPS for the first quarter are anticipated to be approximately 47.2 million. Potential risks and uncertainties include, but are not limited to, such factors as: 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 and our joint venture prospects; unfavourable 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 the Company's 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 emailed to: diodes-fin@diodes.com.

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Company Contact:
Diodes Incorporated
Laura Mehrl
Director of Investor Relations
P: 972-987-3959
E: laura_mehrl@diodes.com 

Investor Relations Contact:
Shelton Group
Leanne Sievers
EVP, Investor Relations
P: 949-224-3874
E: lsievers@sheltongroup.com