Diodes Inc. Reports Fourth Quarter & Fiscal 2008 Financial Results
Diodes Inc. reported financial results for the fourth quarter and fiscal year ended December 31, 2008. For the fiscal year 2008, revenue increased 8% to a record $432.8 million, compared to $401.2 million for fiscal 2007. Gross profit was $132.5 million, or 30.6% of revenue, compared to $130.4 million, or 32.5% of revenue, last year.
GAAP net income was $39.0 million, or $0.91 per diluted share, compared to $59.7 million, or $1.41 per diluted share, in 2007. Non-GAAP net income, which excluded a $22.8 million gain related to the repurchase of convertible notes, $4.0 million of net share-based compensation, $17.5 million in non-cash acquisition related charges and adjustments and $4.1 million in restructuring charges in 2008, was $44.8 million, or $1.04 per share, compared to $64.9 million, or $1.50 per share, in the prior year.
Revenue for the fourth quarter of 2008 was $87.1 million, compared to $134.0 million in the third quarter of 2008 and $107.6 million in the fourth quarter of 2007. The decline in revenue was primarily due to the decrease in demand caused by the continued deterioration of the global economic environment. Additionally, revenue was reduced by approximately $1.7 million as part of the company’s strategic effort to consolidate Asian distributors.
Gross profit for the fourth quarter of 2008 was $22.9 million, or 26.3% of revenue, compared to $38.1 million, or 28.4% of revenue, in the third quarter. The decrease in gross margin was primarily due to lower capacity utilization in the company’s packaging and manufacturing operations due to weaker global demand.
Dr. Keh-Shew Lu, President and CEO of Diodes Inc., commented, "In further response to the weakness in the global economy, we continued to make incremental changes to the organizational structure in order to maximize efficiencies, reduce costs and conserve cash. We have implemented in the fourth quarter a number of cost savings initiatives that included, among other things, the shut-down of our 4-inch fab line in Oldham, U.K., a 30% headcount reduction in our Kansas City wafer fab along with the realignment of our product development and wafer fabrication organizations, mandatory time-off, a reduction of authorizations for capital expenditures to a maintenance level and the implementation of strict controls over discretionary spending. Moving forward, we are taking a number of additional cost saving measures, including further headcount reductions across our entire organization, temporary site shut-downs, compensation and hiring freezes, additional mandatory time-off, accelerating the integration of the Zetex products into our manufacturing facilities, continued reduction of manufacturing process and raw material costs, and the consolidation of wafer output."
Fourth quarter GAAP net income was $14.6 million, or $0.35 per diluted share, which included a $22.8 million gain related to the repurchase of convertible notes and a $4.1 million restructuring charge related to headcount reductions.
Net income computed on a non-GAAP basis for the fourth quarter of 2008, which excluded the gain on the convertible notes, restructuring charges and $1.1 million in Zetex purchase price accounting was $1.7 million, or $0.04 per share. As noted last quarter, Diodes changed its policy regarding SFAS 123R net stock option expenses, which the Company now includes in non-GAAP net income. SFAS 123R stock option expense was $0.7 million in the fourth quarter.
As of December 31, 2008, Diodes had approximately $103.5 million in total cash, $320.6 million of par-value auction rate securities, which will be converted to cash on June 30, 2010 under the UBS settlement ($289 million market value in long-term investments) and $401 million in long-term debt (including the convertible notes).
