Financial Data and Key Metrics Changes - Revenue for Q1 2021 was a record $413.1 million, an increase of 17.9% from $350.4 million in Q4 2020 [15] - Gross profit reached $138.6 million, representing 33.6% of revenue, compared to $122.7 million or 35% in Q4 2020 [16] - GAAP net income for Q1 2021 was $39.5 million or $0.87 per diluted share, up from $29.7 million or $0.59 per diluted share in Q4 2020 [19] - Non-GAAP adjusted net income was $42 million or $0.93 per diluted share, compared to $37.3 million or $0.74 per diluted share in Q4 2020 [20] - EBITDA for Q1 was $81.7 million or 19.8% of revenue, compared to $67.1 million or 19.1% in the prior quarter [22] - Cash flow from operations was $68.2 million, with free cash flow of $51 million [23] Business Line Data and Key Metrics Changes - Computing represented 30% of revenue, industrial 22%, consumer 19%, communication 17%, and automotive 12% [30] - Automotive revenue increased 18% sequentially and 61% year-over-year, driven by strong organic growth [31] - Industrial market revenue grew 13% sequentially and 25% year-over-year [36] - Computing market revenue increased 54% quarter-over-quarter and 160% year-over-year [41] Market Data and Key Metrics Changes - Asia accounted for 81% of revenue, Europe 12%, and North America 7% [30] - Distributor inventory decreased below the normal range of 11 to 14 weeks, indicating strong future demand [74] Company Strategy and Development Direction - The integration of LSC is progressing well, with facility loading reaching 70%, ahead of the original target of 50% [13][54] - The company aims to achieve $2.5 billion in revenue by 2025, focusing on content expansion and product mix improvement [68] - The strategy includes moving away from low-end commodity markets to higher-end technology products [62] Management's Comments on Operating Environment and Future Outlook - Management noted strong demand across all regions and segments, with a very strong book-to-bill ratio and backlog [71] - The company is not experiencing severe capacity constraints due to its internal manufacturing capabilities [56] - Management expects continued sequential growth in Q2 2021, with revenue guidance of approximately $434 million [26] Other Important Information - Total debt at the end of Q1 was $415 million, with cash and equivalents totaling approximately $339 million [24] - The company has begun to realize manufacturing synergies from the LSC acquisition, enhancing operational efficiency [12] Q&A Session Summary Question: Update on LSC integration and utilization rates - Management confirmed that LSC facility utilization has improved significantly and is expected to continue increasing in the coming quarters [49] Question: Impact of industry capacity constraints - Management indicated that while there are market constraints, the company has sufficient internal capacity to support growth [52][56] Question: Lead times and order dynamics - Management acknowledged that lead times are stretching but emphasized the importance of understanding true customer demand [60] Question: Competitive threats from local manufacturers - Management stated that new competitors from China primarily target low-end markets, which aligns with the company's strategy to focus on higher-end products [62] Question: Changes in manufacturing sourcing strategy - Management expressed a commitment to increasing internal manufacturing capacity while reducing reliance on external sources [66] Question: Backlog and order velocity - Management reported a strong backlog and healthy order velocity, indicating robust demand across all segments [72]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 Or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to . Commission file number: 002-25577 DIODES INCORPORATED (Exact name of registrant as specified in its charter) Delaware 95-2039518 (State or other jurisdiction of inc ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to | --- | --- | --- | |-----------------------------------------------------------------------------|------------------------------------------------------------------------ ...

Financial Data and Key Metrics Changes - The company achieved record revenue of $350.4 million in Q4 2020, a 13.2% increase on a consolidated basis and a 7.8% increase organically from $309.5 million in Q3 2020 [18] - Gross profit for Q4 was also a record at $122.7 million, with a gross margin of 35.0% on a consolidated basis [18] - GAAP net income for Q4 2020 was $29.7 million or $0.59 per diluted share, compared to $27.2 million or $0.51 per diluted share in Q3 2020 [21] - Non-GAAP adjusted net income for Q4 was $37.3 million or $0.74 per diluted share, compared to $32.8 million or $0.62 per diluted share in Q3 2020 [22] Business Line Data and Key Metrics Changes - Revenue from the automotive market grew 24% sequentially and 40% year-over-year, contributing to solid market share gains [11] - The computing segment represented 23% of revenue, with record quarterly revenue driven by Pericom products [33][45] - The industrial market saw an 18% sequential revenue increase, driven by applications in solar power inverters and smart metering systems [38] Market Data and Key Metrics Changes - In Q4, Asia accounted for 81% of revenue, Europe 11%, and North America 8% [31] - The automotive market represented 12% of total revenue, reflecting strong growth in connected driving and powertrain applications [34] - Distributor inventory weeks decreased, indicating a tightening supply chain, which is expected to normalize soon [32] Company Strategy and Development Direction - The company is focused on integrating Lite-On Semiconductor (LSC) to capitalize on synergies across end markets and product offerings [12][47] - There is an emphasis on expanding R&D to enhance product differentiation and market penetration, particularly in industrial and automotive segments [62][64] - The company aims to leverage its internal capacity and the acquisition of LSC to gain market share from competitors facing capacity constraints [51][54] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued growth, projecting Q1 2021 revenue to reach approximately $400 million, a 14% sequential increase [28] - The ongoing semiconductor supply shortage is seen as an opportunity for the company to strengthen its market position [52] - Management highlighted the importance of maintaining strong customer relationships and adapting to market dynamics to ensure long-term growth [70] Other Important Information - The company reported cash flow from operations of $60.8 million and free cash flow of $33.5 million for Q4 2020 [25] - Total inventory days decreased to approximately 114 days, indicating improved inventory management [26] - The company plans to ramp up production capacity in its Shanghai FAB and other facilities to meet growing demand [76] Q&A Session Summary Question: Timeline for sales synergies from Lite-On acquisition - Management indicated that product qualification at Lite-On's facilities is nearly complete, with expectations to ramp up production by the end of the year [49][50] Question: Benefits from Lite-On's underutilized manufacturing capacity - Management noted that the current semiconductor supply shortage benefits Diodes, allowing them to capture market share from competitors [52] Question: Visibility into second quarter and rest of the year - Management refrained from providing specific guidance beyond Q1 but indicated a positive outlook for 2021 [59] Question: Incremental R&D investment for Lite-On products - Management plans to increase R&D at Lite-On to match Diodes' levels and focus on introducing differentiated products [62][64] Question: Stickiness of new customer gains - Management believes that new opportunities created by market changes will lead to long-term customer relationships [70] Question: Gross margin expectations with increased utilization - Management expects gradual improvements in gross margins as LSC products are qualified and integrated [71][72]

Diodes Incorporated (NASDAQ:DIOD) Q3 2020 Earnings Conference Call November 9, 2020 5:00 PM ET Company Participants Leanne Sievers - President of Shelton Group, Investor Relations Keh-Shew Lu - Chairman, President & Chief Executive Officer Brett Whitmire - Chief Financial Officer Emily Yang - Vice President of Worldwide Sales & Marketing Conference Call Participants Gary Mobley - Wells Fargo Securities Shawn Harrison - Loop Capital Matt Ramsay - Cowen Tristan Gerra - Baird Operator Good afternoon, and welco ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 Or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to . Commission file number: 002-25577 DIODES INCORPORATED (Exact name of registrant as specified in its charter) Delaware 95-2039518 (State or other jurisdiction of ...

[PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This section details the company's financial statements, management's analysis, market risks, and internal controls [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section provides unaudited condensed consolidated financial statements and notes on accounting policies, key financial items [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The company's condensed consolidated balance sheets detail assets, liabilities, and equity at specific reporting dates Balance Sheet Summary | Metric | June 30, 2020 (Unaudited) ($ thousands) | December 31, 2019 ($ thousands) | | :--------------------------------------- | :-------------------------------------- | :------------------------------ | | **Assets** | | | | Cash and cash equivalents | $503,206 | $258,390 | | Total current assets | $1,126,485 | $809,959 | | Total assets | $1,937,163 | $1,639,384 | | **Liabilities** | | | | Total current liabilities | $325,335 | $285,322 | | Total liabilities | $741,536 | $486,601 | | **Equity** | | | | Total stockholders' equity | $1,143,385 | $1,106,424 | | Total equity | $1,195,627 | $1,152,783 | | Total liabilities and stockholders' equity | $1,937,163 | $1,639,384 | - Total assets increased by **$297.8 million (18.2%)** from December 31, 2019, to June 30, 2020, primarily driven by a significant increase in cash and cash equivalents[8](index=8&type=chunk) - Total liabilities increased by **$254.9 million (52.4%)** from December 31, 2019, to June 30, 2020, largely due to an increase in long-term debt[6](index=6&type=chunk) [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company's condensed consolidated statements of operations detail net sales, gross profit, and net income for the reporting periods Statements of Operations Summary | Metric | Three Months Ended June 30, 2020 ($ thousands) | Three Months Ended June 30, 2019 ($ thousands) | Six Months Ended June 30, 2020 ($ thousands) | Six Months Ended June 30, 2019 ($ thousands) | | :----------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net sales | $288,669 | $322,006 | $569,386 | $624,299 | | Gross profit | $101,492 | $121,988 | $197,334 | $234,399 | | Income from operations | $30,869 | $48,516 | $56,721 | $90,639 | | Net income attributable to common stockholders | $21,033 | $36,284 | $41,201 | $68,000 | | Basic EPS | $0.41 | $0.72 | $0.80 | $1.35 | | Diluted EPS | $0.40 | $0.70 | $0.78 | $1.32 | - Net sales decreased by **10.4%** for the three months ended June 30, 2020, and by **8.8%** for the six months ended June 30, 2020, compared to the respective prior year periods[13](index=13&type=chunk) - Diluted EPS decreased by **42.9%** for the three months ended June 30, 2020, and by **40.9%** for the six months ended June 30, 2020, compared to the respective prior year periods[13](index=13&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) The company's condensed consolidated statements of comprehensive income include net income and other comprehensive income components Statements of Comprehensive Income Summary | Metric | Three Months Ended June 30, 2020 ($ thousands) | Three Months Ended June 30, 2019 ($ thousands) | Six Months Ended June 30, 2020 ($ thousands) | Six Months Ended June 30, 2019 ($ thousands) | | :------------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net income | $21,388 | $36,703 | $41,788 | $68,439 | | Unrealized (loss) gain on defined benefit plan, net of tax | $(16,570) | $1,020 | $(6,851) | $(5,009) | | Unrealized gain (loss) on swaps and collars, net of tax | $817 | $503 | $(621) | $(3,406) | | Unrealized foreign currency gain (loss), net of tax | $6,733 | $(6,900) | $(2,881) | $(1,964) | | Total comprehensive income attributable to common stockholders | $12,013 | $30,907 | $30,848 | $57,621 | - Total comprehensive income attributable to common stockholders decreased significantly by **61.1%** for the three months ended June 30, 2020, and by **46.5%** for the six months ended June 30, 2020, primarily due to unrealized losses on defined benefit plans and foreign currency fluctuations[15](index=15&type=chunk) [Condensed Consolidated Statements of Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) The company's condensed consolidated statements of equity detail changes in common stock, retained earnings, and other equity components Statements of Equity Summary | Metric | June 30, 2020 ($ thousands) | December 31, 2019 ($ thousands) | | :------------------------------------------------------------------------------------------------- | :-------------------------- | :------------------------------ | | Common stock amount | $35,389 | $35,111 | | Additional paid-in capital | $433,989 | $427,262 | | Retained earnings | $831,159 | $789,958 | | Treasury stock at cost | $(38,660) | $(37,768) | | Accumulated other comprehensive loss | $(118,492) | $(108,139) | | Total Diodes Incorporated Stockholders' equity | $1,143,385 | $1,106,424 | | Noncontrolling interest | $52,242 | $46,359 | | Total equity | $1,195,627 | $1,152,783 | - Total stockholders' equity increased by **$36.96 million (3.3%)** from December 31, 2019, to June 30, 2020, driven by an increase in retained earnings and additional paid-in capital, partially offset by an increase in accumulated other comprehensive loss[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The company's condensed consolidated statements of cash flows categorize cash movements from operating, investing, and financing activities Statements of Cash Flows Summary | Metric | Six Months Ended June 30, 2020 ($ thousands) | Six Months Ended June 30, 2019 ($ thousands) | | :---------------------------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net cash flows provided by operating activities | $86,734 | $110,488 | | Net cash and cash equivalents used in investing activities | $(34,048) | $(82,517) | | Net cash and cash equivalents provided by (used in) financing activities | $241,784 | $(32,955) | | Net increase in cash and cash equivalents, including restricted cash | $295,114 | $(5,019) | | Cash and cash equivalents, end of period, including restricted cash | $554,621 | $236,814 | - Net cash provided by operating activities decreased by **$23.75 million (21.5%)** for the six months ended June 30, 2020, compared to the same period in 2019[21](index=21&type=chunk) - Net cash provided by financing activities significantly increased to **$241.8 million** in the first six months of 2020, compared to a net cash outflow of $33.0 million in the prior year, primarily due to increased debt facilities for the LSC acquisition[21](index=21&type=chunk)[136](index=136&type=chunk) [NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS](index=10&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section provides detailed notes explaining the significant accounting policies and specific financial statement line items [NOTE 1 – Summary of Operations and Significant Accounting Policies](index=10&type=section&id=NOTE%201%20%E2%80%93%20Summary%20of%20Operations%20and%20Significant%20Accounting%20Policies) This note outlines the company's business, significant accounting policies, and recent accounting pronouncement adoptions - **Diodes Incorporated (Nasdaq: DIOD)** is a global manufacturer and supplier of high-quality, application-specific standard products in the discrete, logic, analog, and mixed-signal semiconductor markets[28](index=28&type=chunk) - The company serves consumer electronics, computing, communications, industrial, and automotive markets with products including diodes, rectifiers, transistors, MOSFETs, and power management devices[28](index=28&type=chunk) - The company adopted ASU No. 2016-13 on January 1, 2020, regarding expected credit losses, which did not materially impact financial statements[33](index=33&type=chunk) - In Q2 2020, the company elected to apply hedge accounting expedients under ASU No. 2020-04 for reference rate reform, specifically for probability and effectiveness assessments of LIBOR-indexed cash flows[31](index=31&type=chunk) [NOTE 2 – Earnings per Share](index=11&type=section&id=NOTE%202%20%E2%80%93%20Earnings%20per%20Share) This note details the calculation of basic and diluted earnings per share, showing a decrease in EPS for the reporting periods Earnings per Share Data | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :----------------------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income attributable to common stockholders ($ thousands) | $21,033 | $36,284 | $41,201 | $68,000 | | Weighted average common shares outstanding (basic) (thousands) | 51,527 | 50,658 | 51,431 | 50,529 | | Adjusted weighted average common shares outstanding (diluted) (thousands) | 52,569 | 51,620 | 52,517 | 51,566 | | Basic EPS | $0.41 | $0.72 | $0.80 | $1.35 | | Diluted EPS | $0.40 | $0.70 | $0.78 | $1.32 | - Diluted EPS decreased by **42.9%** for the three months ended June 30, 2020 ($0.40 vs $0.70 in 2019)[35](index=35&type=chunk) - Diluted EPS decreased by **40.9%** for the six months ended June 30, 2020 ($0.78 vs $1.32 in 2019)[35](index=35&type=chunk) [NOTE 3 – Inventories](index=11&type=section&id=NOTE%203%20%E2%80%93%20Inventories) This note describes inventory valuation and presents the breakdown of finished goods, work-in-progress, and raw materials Inventory Breakdown | Inventory Category | June 30, 2020 ($ thousands) | December 31, 2019 ($ thousands) | | :----------------- | :-------------------------- | :------------------------------ | | Finished goods | $69,174 | $62,900 | | Work-in-progress | $53,457 | $55,082 | | Raw materials | $133,197 | $118,490 | | Total | $255,828 | $236,472 | - Total inventories increased by **$19.36 million (8.2%)** from December 31, 2019, to June 30, 2020[36](index=36&type=chunk) [NOTE 4 – Goodwill and Intangible Assets](index=11&type=section&id=NOTE%204%20%E2%80%93%20Goodwill%20and%20Intangible%20Assets) This note details changes in goodwill and intangible assets, including amortization expense, influenced by the Savitech acquisition Goodwill and Intangible Assets Data | Metric | June 30, 2020 ($ thousands) | December 31, 2019 ($ thousands) | | :-------------------------------- | :-------------------------- | :------------------------------ | | Goodwill | $152,140 | $141,318 | | Total intangible assets, net | $118,076 | $119,523 | | Amortization expense (3 months) | $4,021 | $4,536 | | Amortization expense (6 months) | $8,242 | $9,020 | - Goodwill increased by **$10.82 million (7.7%)** from December 31, 2019, to June 30, 2020, mainly due to the Savitech acquisition ($12.7 million)[37](index=37&type=chunk) - Amortization expense for intangible assets decreased by **11.4%** for the three months ended June 30, 2020, and by **8.6%** for the six months ended June 30, 2020, compared to the prior year periods[39](index=39&type=chunk) [NOTE 5 – Income Tax Provision](index=12&type=section&id=NOTE%205%20%E2%80%93%20Income%20Tax%20Provision) This note details the income tax provision and effective tax rates, which decreased due to lower non-U.S. withholding taxes Income Tax Provision and Effective Tax Rates | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Income tax provision ($ thousands) | $4,670 | $11,174 | $9,226 | $21,472 | | Effective tax rate | 17.9% | 23.3% | 18.1% | 23.9% | | Impact of tax holidays on tax expense ($ thousands) | $(241) | $572 | $(1,315) | $849 | | Basic EPS impact of tax holidays | $0.01 | $(0.01) | $0.03 | $(0.02) | | Diluted EPS impact of tax holidays | $0.01 | $(0.01) | $0.03 | $(0.02) | - The effective tax rate decreased from **23.3% to 17.9%** for the three months ended June 30, 2020, and from **23.9% to 18.1%** for the six months ended June 30, 2020, primarily due to lower non-U.S. withholding taxes and favorable U.S. permanent differences[40](index=40&type=chunk) - The company does not expect the CARES Act to have a material impact on its financial statements[44](index=44&type=chunk) [NOTE 6 – Share-Based Compensation](index=13&type=section&id=NOTE%206%20%E2%80%93%20Share-Based%20Compensation) This note details share-based compensation expense, including restricted stock awards and the impact of a director's RSU modification Share-Based Compensation Expense | Expense Category | Three Months Ended June 30, 2020 ($ thousands) | Three Months Ended June 30, 2019 ($ thousands) | Six Months Ended June 30, 2020 ($ thousands) | Six Months Ended June 30, 2019 ($ thousands) | | :----------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Cost of goods sold | $259 | $259 | $530 | $384 | | Selling, general and administrative | $4,309 | $4,309 | $10,426 | $7,946 | | Research and development | $730 | $730 | $1,438 | $1,445 | | Total share-based compensation expense | $5,298 | $5,298 | $12,394 | $9,775 | - Total share-based compensation expense increased by **26.8%** for the six months ended June 30, 2020, compared to the same period in 2019[45](index=45&type=chunk) - A modification to a director's unvested RSU grants in Q2 2020 resulted in an additional expense of approximately **$1.7 million**[45](index=45&type=chunk) - As of June 30, 2020, total unrecognized share-based compensation expense was approximately **$43.5 million**, to be recognized over a weighted average period of approximately 2.1 years[47](index=47&type=chunk) [NOTE 7 – Segment Information and Net Sales](index=13&type=section&id=NOTE%207%20%E2%80%93%20Segment%20Information%20and%20Net%20Sales) This note confirms the company's single operating segment and disaggregates net sales by region and customer type - The company operates in a single segment: standard semiconductor products[48](index=48&type=chunk) Net Sales by Region | Net Sales by Region | Three Months Ended June 30, 2020 ($ thousands) | Three Months Ended June 30, 2019 ($ thousands) | | :------------------ | :--------------------------------------------- | :--------------------------------------------- | | Asia | $223,056 | $239,082 | | Europe | $43,145 | $46,050 | | Americas | $22,468 | $36,874 | | Total net sales | $288,669 | $322,006 | Net Sales by Type | Net Sales by Type | Six Months Ended June 30, 2020 ($ thousands) | Six Months Ended June 30, 2019 ($ thousands) | | :---------------- | :------------------------------------------- | :------------------------------------------- | | Direct sales | $280,581 | $195,289 | | Distributor sales | $288,805 | $429,010 | | Total net sales | $569,386 | $624,299 | - Net sales from products shipped to China were **$152.4 million** for the three months ended June 30, 2020, a decrease from $160.3 million in the prior year[53](index=53&type=chunk) [NOTE 8 – Debt](index=15&type=section&id=NOTE%208%20%E2%80%93%20Debt) This note details the company's debt, including credit facilities and a significant increase in borrowing capacity for the LSC acquisition - Asia subsidiaries maintain **$165.5 million** in credit facilities, with $63.7 million outstanding and $101.4 million unused as of June 30, 2020[54](index=54&type=chunk) - A Second Amended and Restated Credit Agreement was entered into on May 29, 2020, increasing aggregate credit facilities to **$670 million** (from $500 million), including a **$340 million** acquisition draw term, **$180 million** initial term, and a **$150 million** revolver, all maturing May 29, 2023[55](index=55&type=chunk)[57](index=57&type=chunk) - The amendment resulted in a **$52.2 million** debt extinguishment and a **$0.7 million** loss on extinguishment and third-party fees[55](index=55&type=chunk) Debt Summary | Debt Type | June 30, 2020 ($ thousands) | December 31, 2019 ($ thousands) | | :--------------------------------------- | :-------------------------- | :------------------------------ | | Short-term debt | $63,668 | $13,342 | | Total long-term debt | $297,958 | $98,641 | | Less: Current portion of long-term debt | $(13,052) | $(33,105) | | Less: Unamortized debt costs | $(2,635) | $(1,135) | | Total long-term debt, net of current portion | $282,271 | $64,401 | [NOTE 9 – Commitments and Contingencies](index=16&type=section&id=NOTE%209%20%E2%80%93%20Commitments%20and%20Contingencies) This note outlines commitments for capital expenditures, wafer purchases, UK defined benefit plan liability, and legal proceedings - As of June 30, 2020, the company had **$26.8 million** in non-cancelable capital expenditure purchase contracts and a **$29.8 million** commitment for wafer purchases[61](index=61&type=chunk) - The unfunded liability for the UK defined benefit plan was approximately **$28.7 million** as of June 30, 2020[62](index=62&type=chunk) - Annual contributions of **GBP 2.0 million (approximately $2.4 million)** are scheduled from April 1, 2020, to eliminate the defined benefit plan deficit by December 31, 2028[64](index=64&type=chunk) - The company is not currently a party to any pending litigation considered material[65](index=65&type=chunk) [NOTE 10 – Derivative Financial Instruments](index=17&type=section&id=NOTE%2010%20%E2%80%93%20Derivative%20Financial%20Instruments) This note details the company's use of derivative instruments, including foreign currency forwards and interest rate swaps, to manage market risks - The company uses foreign currency forward agreements, interest rate swaps, and interest rate collars to manage foreign currency and interest rate risks[66](index=66&type=chunk)[67](index=67&type=chunk)[68](index=68&type=chunk) - As of June 30, 2020, **$93.0 million** in foreign currency forward contracts were outstanding, not designated for hedge accounting[67](index=67&type=chunk) Derivative Financial Instruments Impact | Derivative Type | Three Months Ended June 30, 2020 (Gain/Loss in OCI) ($ thousands) | Three Months Ended June 30, 2020 (Reclassified to Income) ($ thousands) | Six Months Ended June 30, 2020 (Gain/Loss in OCI) ($ thousands) | Six Months Ended June 30, 2020 (Reclassified to Income) ($ thousands) | | :-------------------------- | :---------------------------------------------------------------- | :---------------------------------------------------------------------- | :-------------------------------------------------------------- | :---------------------------------------------------------------------- | | Interest rate swaps and collars | $(180) | $(2) (Interest expense) | $(1,571) | $(73) (Interest expense) | | Cross currency swaps | $0 | $0 | $0 | $0 | | Foreign currency forward contracts (not designated) | N/A | $(391) (Foreign currency loss, net) | N/A | $(2,538) (Foreign currency loss, net) | - An estimated **$0.6 million** of net derivative gains in AOCI as of June 30, 2020, are expected to be reclassified into expense within the next 12 months[70](index=70&type=chunk) [NOTE 11 – Leases](index=19&type=section&id=NOTE%2011%20%E2%80%93%20Leases) This note details the company's lease arrangements for land, buildings, and equipment, including expenses, ROU assets, and liabilities Lease Expense Summary | Lease Expense Category | Three Months Ended June 30, 2020 ($ thousands) | Three Months Ended June 30, 2019 ($ thousands) | Six Months Ended June 30, 2020 ($ thousands) | Six Months Ended June 30, 2019 ($ thousands) | | :--------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Operating lease expense | $3,669 | $3,773 | $7,399 | $7,477 | | Finance lease expense (amortization) | $209 | $245 | $418 | $489 | | Finance lease expense (interest) | $6 | $13 | $13 | $28 | | Short-term lease expense | $122 | $98 | $216 | $134 | | Variable lease expense | $738 | $802 | $1,449 | $1,420 | | Total lease expense | $4,744 | $4,931 | $9,495 | $9,548 | Lease Balance Sheet Items | Balance Sheet Item | June 30, 2020 ($ thousands) | December 31, 2019 ($ thousands) | | :----------------------------------- | :-------------------------- | :------------------------------ | | Operating lease ROU assets | $51,739 | $57,427 | | Total operating lease liabilities | $34,350 | $40,099 | | Finance lease ROU assets, net | $627 | $1,472 | | Total finance lease liabilities | $593 | $1,041 | - Weighted average remaining lease term for operating leases is 4.2 years (4.4 years at Dec 31, 2019), and for finance leases is 0.8 years (1.3 years at Dec 31, 2019)[74](index=74&type=chunk) [NOTE 12 – Employee Benefit Plans](index=20&type=section&id=NOTE%2012%20%E2%80%93%20Employee%20Benefit%20Plans) This note describes the company's Non-Qualified Deferred Compensation Plan for executives and board members, with obligations offset by investments - The company maintains a Non-Qualified Deferred Compensation Plan for executive officers, key employees, and Board of Directors members[77](index=77&type=chunk) - Investments offsetting plan obligations totaled approximately **$11.2 million** as of June 30, 2020, down from $12.9 million at December 31, 2019[77](index=77&type=chunk) [NOTE 13 – Related Parties](index=20&type=section&id=NOTE%2013%20%E2%80%93%20Related%20Parties) This note details transactions with related parties, including LSC, Nuvoton, and Keylink, and the ongoing acquisition of LSC - LSC is the company's largest stockholder, owning approximately **15%** of outstanding Common Stock as of June 30, 2020[78](index=78&type=chunk) - The acquisition of LSC for approximately **$444.4 million** is anticipated to close in the second half of 2020, pending regulatory approval in China[78](index=78&type=chunk) Related Party Transactions (Sales and Purchases) | Related Party | Transaction Type | Three Months Ended June 30, 2020 ($ thousands) | Six Months Ended June 30, 2020 ($ thousands) | | :------------ | :--------------- | :--------------------------------------------- | :------------------------------------------- | | LSC | Net sales | $171 | $299 | | LSC | Purchases | $3,806 | $6,554 | | Nuvoton | Purchases | $2,011 | $3,655 | | Keylink | Net sales | $4,975 | $8,960 | | Keylink | Purchases | $426 | $831 | | JCP | Purchases | $291 | $447 | Related Party Balances (Accounts Receivable and Payable) | Related Party | Balance Sheet Item | June 30, 2020 ($ thousands) | December 31, 2019 ($ thousands) | | :------------ | :----------------- | :-------------------------- | :------------------------------ | | LSC | Accounts receivable | $171 | $184 | | LSC | Accounts payable | $2,799 | $2,154 | | Nuvoton | Accounts payable | $1,071 | $1,055 | | Keylink | Accounts receivable | $36,960 | $31,598 | | Keylink | Accounts payable | $32,029 | $28,244 | | JCP | Accounts payable | $326 | $173 | [NOTE 14 – Acquisitions](index=21&type=section&id=NOTE%2014%20%E2%80%93%20Acquisitions) This note details recent acquisitions, including Savitech Corporation and the GFAB wafer fabrication facility, and their impact on goodwill - On February 5, 2020, the company agreed to acquire at least **51%** of Savitech Corporation for up to approximately **$14.2 million**[83](index=83&type=chunk) - The first tranche of **$5.6 million** for Savitech, providing **33.6%** ownership, was completed on March 4, 2020[83](index=83&type=chunk) - Total purchase consideration recorded for Savitech was **$13.9 million**, including **$12.7 million** in goodwill[85](index=85&type=chunk)[86](index=86&type=chunk) - On April 1, 2019, the company acquired a wafer fabrication facility (GFAB) in Greenock, Scotland, for **$33.2 million**, recording **$0.9 million** in goodwill[87](index=87&type=chunk)[88](index=88&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes financial condition and results of operations, highlighting impacts from global slowdown, COVID-19, and the LSC acquisition [Overview](index=23&type=section&id=Overview) This overview introduces Diodes Incorporated as a global semiconductor manufacturer and highlights its competitive advantages - Diodes Incorporated is a leading global manufacturer and supplier of high-quality, application-specific standard products in the discrete, logic, analog, and mixed-signal semiconductor markets[92](index=92&type=chunk) - The company's focus on innovative packaging, cost-effective process technologies, and customer-focused product development provides a competitive advantage[92](index=92&type=chunk) [Factors Relevant to Our Results of Operations for the Three Months Ended June 30, 2020](index=23&type=section&id=Factors%20Relevant%20to%20Our%20Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20June%2030%2C%202020) This section discusses key factors influencing operating results for Q2 2020, including sales, profit, and EPS trends Key Operating Metrics | Metric | Q2 2020 ($ millions) | Q2 2019 ($ millions) | Q1 2020 ($ millions) | | :------------------- | :------------------- | :------------------- | :------------------- | | Net sales | $288.7 | $322.0 | $280.7 | | Gross profit | $101.5 | $122.0 | $95.8 | | Gross profit margin | 35.2% | 37.9% | 34.1% | | Net income | $21.0 | $36.3 | $20.2 | | Diluted EPS | $0.40 | $0.70 | $0.38 | | Cash flow from operations | $33.1 | N/A | N/A | | Net cash flow | $283.7 | N/A | N/A | - Net sales decreased by **10.3% YoY** but increased by **2.8% QoQ**[93](index=93&type=chunk) - Net income decreased by **42.1% YoY** but increased by **4.0% QoQ**[93](index=93&type=chunk) - The company benefited from growth in the computing market and serial-connectivity products despite overall net sales decrease[104](index=104&type=chunk) [Recent Developments](index=24&type=section&id=Recent%20Developments) This section highlights recent significant developments, including the LSC acquisition and the company's response to the COVID-19 pandemic [LSC Acquisition](index=24&type=section&id=LSC%20Acquisition) This section details the ongoing acquisition of Lite-On Semiconductor Corporation (LSC), including its status, consideration, and related financing - The acquisition of Lite-On Semiconductor Corporation (LSC) is expected to be completed in the second half of 2020, pending regulatory approval in China[95](index=95&type=chunk) - The aggregate consideration for LSC is approximately **$444.4 million**, subject to Taiwan dollar to US dollar exchange rate fluctuations at closing[95](index=95&type=chunk) - A **$200.0 million** draw-down under the new credit agreement was made as a partial currency hedge for the LSC acquisition[95](index=95&type=chunk) [COVID-19](index=24&type=section&id=COVID-19) This section discusses the impact of the COVID-19 pandemic on operations, including temporary facility closures and the company's liquidity - The duration and severity of COVID-19's effects on the business, financial condition, and results of operations are currently unknown[97](index=97&type=chunk) - Manufacturing facilities in China and the United Kingdom experienced temporary closures but have since resumed full production[98](index=98&type=chunk) - As of June 30, 2020, the company had **$506.9 million** in cash, cash equivalents, and short-term investments, plus **$150 million** in available revolving credit, providing adequate liquidity for at least 12 months[99](index=99&type=chunk) [Results of Operations for the Three Months Ended June 30, 2020 and 2019](index=25&type=section&id=Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20June%2030%2C%202020%20and%202019) This section analyzes operating results for Q2 2020, highlighting decreases in net sales, gross profit, and changes in expenses Q2 Operating Results as Percentage of Net Sales | Metric | Q2 2020 (% of Net Sales) | Q2 2019 (% of Net Sales) | | :----------------------------------------- | :----------------------- | :----------------------- | | Net sales | 100% | 100% | | Cost of goods sold | (65)% | (62)% | | Gross profit | 35% | 38% | | Total operating expense | 24% | 23% | | Income from operations | 11% | 15% | | Net income attributable to common stockholders | 7% | 12% | Q2 Operating Results Comparison | Metric | Q2 2020 ($ thousands) | Q2 2019 ($ thousands) | Change ($ thousands) | % Change | | :------------------------- | :-------------------- | :-------------------- | :------------------- | :------- | | Net sales | $288,669 | $322,006 | $(33,337) | (10.4%) | | Gross profit | $101,492 | $121,988 | $(20,496) | (16.8%) | | Total operating expense | $70,623 | $73,472 | $(2,849) | (3.9%) | | Interest income | $168 | $633 | $(465) | (73.5%) | | Interest expense | $(2,653) | $(2,011) | $642 | 31.9% | | Foreign currency loss, net | $(3,600) | $(496) | $3,104 | 625.8% | | Income tax provision | $4,670 | $11,174 | $(6,504) | (58.2%) | Q2 End-User Market Revenue Distribution | End-User Market | Q2 2020 (% of Total Revenue) | Q2 2019 (% of Total Revenue) | | :---------------- | :--------------------------- | :--------------------------- | | Industrial | 22.0% | 29.0% | | Communications | 22.0% | 23.0% | | Consumer | 27.0% | 22.0% | | Computing | 19.0% | 16.0% | | Automotive | 10.0% | 10.0% | - Gross profit margin decreased from **37.9% to 35.2%** due to decreased net sales and increased unit costs from lower manufacturing capacity utilization[107](index=107&type=chunk) [Results of Operations for the Six Months Ended June 30, 2020 and 2019](index=26&type=section&id=Results%20of%20Operations%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202020%20and%202019) This section analyzes operating results for H1 2020, detailing decreases in net sales, gross profit, and shifts in expenses H1 Operating Results as Percentage of Net Sales | Metric | H1 2020 (% of Net Sales) | H1 2019 (% of Net Sales) | | :----------------------------------------- | :----------------------- | :----------------------- | | Net sales | 100% | 100% | | Cost of goods sold | (65)% | (62)% | | Gross profit | 35% | 38% | | Total operating expense | 25% | 23% | | Income from operations | 10% | 15% | | Net income attributable to common stockholders | 7% | 12% | H1 Operating Results Comparison | Metric | H1 2020 ($ thousands) | H1 2019 ($ thousands) | Change ($ thousands) | % Change | | :------------------------- | :-------------------- | :-------------------- | :------------------- | :------- | | Net sales | $569,386 | $624,299 | $(54,913) | (8.8%) | | Gross profit | $197,334 | $234,399 | $(37,065) | (15.8%) | | Total operating expense | $140,613 | $143,760 | $(3,147) | (2.2%) | | Interest income | $441 | $1,508 | $(1,067) | (70.8%) | | Interest expense | $(3,898) | $(4,156) | $(258) | (6.2%) | | Foreign currency loss, net | $(3,525) | $(560) | $2,965 | 529.5% | | Income tax provision | $9,226 | $21,472 | $(12,246) | (57.0%) | H1 End-User Market Revenue Distribution | End-User Market | H1 2020 (% of Total Revenue) | H1 2019 (% of Total Revenue) | | :---------------- | :--------------------------- | :--------------------------- | | Industrial | 24.0% | 29.0% | | Communications | 22.5% | 23.0% | | Consumer | 25.0% | 22.5% | | Computing | 18.0% | 15.5% | | Automotive | 10.5% | 10.0% | - Average unit cost increased approximately **7.1%** for the six months ended June 30, 2020, partly due to manufacturing facility shutdowns during the extended Chinese New Year period[115](index=115&type=chunk) [Financial Condition](index=27&type=section&id=Financial%20Condition) This section assesses the company's financial condition, focusing on liquidity, capital resources, cash flow, and derivative instrument usage [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) This section details liquidity sources, working capital, capital expenditures, and foreign cash holdings - Primary liquidity sources are cash and cash equivalents, funds from operations, and credit facilities[119](index=119&type=chunk) - Working capital increased to **$801.2 million** at June 30, 2020, from $524.6 million at December 31, 2019[127](index=127&type=chunk) - A **$200.0 million** draw-down under the new credit agreement was made as a partial currency hedge for the anticipated LSC acquisition[127](index=127&type=chunk) - Capital expenditures for the first six months of 2020 were **$28.3 million**, approximately **5.0%** of net sales, aligning with the target range of 5% to 9%[128](index=128&type=chunk) - Foreign subsidiaries held approximately **$469.5 million** in cash, cash equivalents, and investments as of June 30, 2020, with **$9.7 million** potentially subject to non-U.S. withholding tax if distributed[129](index=129&type=chunk) [Discussion of Cash Flow](index=29&type=section&id=Discussion%20of%20Cash%20Flow) This section analyzes cash flow movements from operating, investing, and financing activities, highlighting the impact of LSC acquisition financing - Cash and cash equivalents increased from **$258.4 million to $503.2 million** at June 30, 2020, reflecting funds for the LSC acquisition[131](index=131&type=chunk) Cash Flow Summary | Cash Flow Activity | Six Months Ended June 30, 2020 ($ thousands) | Six Months Ended June 30, 2019 ($ thousands) | Change ($ thousands) | | :---------------------------------------------------------------- | :------------------------------------------- | :------------------------------------------- | :------------------- | | Net cash flows provided by operating activities | $86,734 | $110,488 | $(23,754) | | Net cash and cash equivalents used in investing activities | $(34,048) | $(82,517) | $48,469 | | Net cash and cash equivalents provided by (used in) financing activities | $241,784 | $(32,955) | $274,739 | | Net increase in cash and cash equivalents, including restricted cash | $295,114 | $(5,019) | $300,133 | - Net cash used in investing activities decreased by **$48.47 million**, primarily due to lower purchases of property, plant, and equipment and the absence of a large acquisition like GFAB in 2019[135](index=135&type=chunk) [Use of Derivative Instruments and Hedging](index=30&type=section&id=Use%20of%20Derivative%20Instruments%20and%20Hedging) This section describes the company's use of derivative instruments to manage interest rate and foreign exchange risks - The company uses interest rate swaps, foreign exchange forward contracts, and cross-currency swaps to manage interest rate and foreign exchange exposure[137](index=137&type=chunk) - Interest rate derivatives, primarily swaps and collars, are used to stabilize interest expense and manage interest rate movements[138](index=138&type=chunk) - Foreign currency forward agreements are used to preserve the economic value of foreign currency denominated monetary assets and liabilities but are not designated for hedge accounting[139](index=139&type=chunk) [Off-Balance Sheet Arrangements](index=30&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of any material off-balance sheet arrangements that would significantly impact liquidity or capital resources - The company does not have any transactions, arrangements, or relationships with unconsolidated entities that affect liquidity or capital resources[140](index=140&type=chunk) - No special purpose entities are used for off-balance sheet financing, liquidity, or market/credit risk support[140](index=140&type=chunk) [Contractual Obligations](index=31&type=section&id=Contractual%20Obligations) No material changes to contractual obligations have occurred since the Annual Report on Form 10-K for FY2019 - No material changes to contractual obligations have occurred since the Annual Report on Form 10-K for FY2019[142](index=142&type=chunk) [Critical Accounting Policies](index=31&type=section&id=Critical%20Accounting%20Policies) This section confirms consistency of critical accounting policies with prior reports and refers to Note 1 for new pronouncements - Critical accounting policies are consistent with those disclosed in the FY2019 Annual Report on Form 10-K[143](index=143&type=chunk) - New or updated accounting policies are discussed in Note 1 – Summary of Operations and Significant Accounting Policies[143](index=143&type=chunk)[144](index=144&type=chunk) [Recently Issued Accounting Pronouncements](index=31&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) Details on recently issued accounting pronouncements are available in Note 1 – Summary of Operations and Significant Accounting Policies - Details on recently issued accounting pronouncements are available in Note 1 – Summary of Operations and Significant Accounting Policies[144](index=144&type=chunk) [Available Information](index=31&type=section&id=Available%20Information) This section informs stakeholders about the availability of SEC filings and investor information on the company's website - SEC filings (10-K, 10-Q, 8-K, proxy statements) are available free of charge on the company's website (www.diodes.com)[145](index=145&type=chunk) [Cautionary Statement for Purposes of the "Safe Harbor" Provision of the Private Securities Litigation Reform Act of 1995](index=31&type=section&id=Cautionary%20Statement%20for%20Purposes%20of%20the%20%22Safe%20Harbor%22%20Provision%20of%20the%20Private%20Securities%20Litigation%20Reform%20Act%20of%201995) This section provides a cautionary statement regarding forward-looking statements, emphasizing inherent risks and non-obligation to update - The report contains forward-looking statements, identified by specific terminology, subject to risks and uncertainties that could cause actual results to differ materially[146](index=146&type=chunk) - All forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (PSLRA)[146](index=146&type=chunk) - The company undertakes no obligation to update forward-looking statements to reflect subsequent events or circumstances[148](index=148&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes to market risks have occurred since the Annual Report on Form 10-K for FY2019 - No material changes to market risks have occurred since the Annual Report on Form 10-K for FY2019[193](index=193&type=chunk) [Item 4. Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of disclosure controls and procedures and reports no material changes in internal control - As of June 30, 2020, disclosure controls and procedures were deemed effective at a reasonable assurance level[194](index=194&type=chunk) - No material changes in internal control over financial reporting occurred during the three months ended June 30, 2020[196](index=196&type=chunk) [PART II – OTHER INFORMATION](index=37&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This part covers other essential information, including legal proceedings, risk factors, equity sales, defaults, and exhibits [Item 1. Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) This section confirms the absence of material pending litigation and management's assessment of routine legal proceedings - The company is not a party to any pending litigation considered material[199](index=199&type=chunk) - Management believes the ultimate outcome of any pending legal proceeding will not have a material adverse effect on financial position, cash flows, or operating results[200](index=200&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) This section details various risk factors, including the uncertain impact of COVID-19, global economic conditions, and operational challenges - The ultimate impact of the COVID-19 pandemic cannot be estimated but may have a **material adverse effect** on the business, financial condition, and results of operations[202](index=202&type=chunk)[205](index=205&type=chunk) - Risks include changes in ordering patterns, demand for products, efficiency losses due to travel limitations, and potential increases in IT spending or healthcare costs[205](index=205&type=chunk)[207](index=207&type=chunk) - Disruptions to suppliers and customers due to quarantines, worker absenteeism, and social distancing measures could adversely impact the business[208](index=208&type=chunk) [RISKS RELATED TO OUR BUSINESS](index=32&type=section&id=RISKS%20RELATED%20TO%20OUR%20BUSINESS) This section outlines business-specific risks, including economic dependency, industry cyclicality, competition, production disruptions, and personnel - Success depends on global economy and financial market stability; weaknesses can adversely affect net sales, operating results, and financial condition[150](index=150&type=chunk) - Downturns in the highly cyclical semiconductor industry or changes in end-market demand could adversely affect operating results and financial condition[151](index=151&type=chunk) - The semiconductor business is highly competitive, and increased competition may harm business, operating results, and financial condition[151](index=151&type=chunk) - Production disruptions at manufacturing facilities due to natural disasters or technical malfunctions could prevent meeting customer demands[155](index=155&type=chunk) - Failure to attract or retain qualified personnel could adversely affect business, operating results, and financial condition[164](index=164&type=chunk) [RISKS RELATED TO OUR INTERNATIONAL OPERATIONS](index=34&type=section&id=RISKS%20RELATED%20TO%20OUR%20INTERNATIONAL%20OPERATIONS) This section details risks associated with international operations, including governmental policies, trade restrictions, Brexit, and foreign currency - International operations, particularly in China, the U.K., Germany, Hong Kong, and Taiwan, expose the company to inherent risks in those jurisdictions[178](index=178&type=chunk) - Uncertainties related to changes in governmental policies, international trading partnerships, or economic unions could have a material adverse effect[179](index=179&type=chunk) - Tariffs or other restrictions imposed by the United States Trade Representative may disrupt operations and impact profitability[180](index=180&type=chunk) - The U.K.'s exit from the European Union (Brexit) continues to have uncertain effects and could adversely impact business[181](index=181&type=chunk) - A slowdown in the Chinese economy could limit demand for electronic devices containing products, materially affecting business[181](index=181&type=chunk) - The company is subject to foreign currency risk as a result of its international operations[183](index=183&type=chunk) [RISKS RELATED TO OUR COMMON STOCK](index=35&type=section&id=RISKS%20RELATED%20TO%20OUR%20COMMON%20STOCK) This section addresses risks related to the company's common stock, including price volatility, acquisition impacts, and anti-takeover provisions - Variations in quarterly operating results may cause stock price volatility[187](index=187&type=chunk) - Future acquisitions and related actions could adversely affect the price of Common Stock[187](index=187&type=chunk) - Directors, executive officers, and significant stockholders hold a substantial portion of Common Stock, potentially leading to conflicts with other stockholders[187](index=187&type=chunk) - Anti-takeover provisions in Delaware law and the company's Certificate of Incorporation and Bylaws may hinder takeover attempts[189](index=189&type=chunk)[190](index=190&type=chunk)[191](index=191&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=38&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds to report for the period - No unregistered sales of equity securities or use of proceeds to report[210](index=210&type=chunk) [Item 3. Defaults Upon Senior Securities](index=38&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities to report for the period - No defaults upon senior securities to report[212](index=212&type=chunk) [Item 4. Mine Safety Disclosures](index=38&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine Safety Disclosures are not applicable to the company - Mine Safety Disclosures are not applicable to the company[212](index=212&type=chunk) [Item 5. Other Information](index=38&type=section&id=Item%205.%20Other%20Information) No other information to report for the period - No other information to report[212](index=212&type=chunk) [Item 6. Exhibits](index=39&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Quarterly Report, including corporate governance documents, credit agreements, and certifications - Exhibits include corporate governance documents (Certificate of Incorporation, By-laws), credit agreements, and Sarbanes-Oxley Act certifications[214](index=214&type=chunk)[215](index=215&type=chunk) - Inline XBRL documents are provided for interactive data filing[215](index=215&type=chunk)[216](index=216&type=chunk) - A cautionary note advises against relying solely on representations and warranties in exhibits, as they may be subject to contractual materiality standards and risk allocation[217](index=217&type=chunk) [SIGNATURES](index=40&type=section&id=SIGNATURES) This section confirms the official signing of the Quarterly Report on Form 10-Q by the Principal Executive and Financial Officers - The report was signed by Keh-Shew Lu, President and CEO, and Brett R. Whitmire, CFO, on August 6, 2020[220](index=220&type=chunk)

PART I – FINANCIAL INFORMATION This section encompasses the company's unaudited condensed consolidated financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Diodes Incorporated and its subsidiaries, including balance sheets, statements of operations, comprehensive income, equity, and cash flows, along with detailed notes explaining significant accounting policies, earnings per share, inventories, goodwill, intangible assets, income tax, share-based compensation, segment information, commitments, derivative instruments, leases, employee benefit plans, related party transactions, and recent acquisitions [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and equity at specific points in time Condensed Consolidated Balance Sheet Highlights (Amounts in thousands) | Metric | March 31, 2020 (Unaudited) | December 31, 2019 | | :-------------------------- | :------------------------- | :---------------- | | Total Current Assets | $796,446 | $809,959 | | Total Assets | $1,620,266 | $1,639,384 | | Total Current Liabilities | $264,117 | $285,322 | | Total Liabilities | $437,977 | $486,601 | | Total Stockholders' Equity | $1,125,029 | $1,106,424 | | Total Equity | $1,182,289 | $1,152,783 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section outlines the company's financial performance over a period, including net sales, costs, expenses, and net income Condensed Consolidated Statements of Operations Highlights (Three Months Ended March 31, Amounts in thousands, except per share data) | Metric | 2020 | 2019 | Change | % Change | | :----------------------------------------- | :---------- | :---------- | :---------- | :---------- | | Net Sales | $280,717 | $302,293 | $(21,576) | (7.1%) | | Cost of Goods Sold | $184,875 | $189,882 | $(5,007) | (2.6%) | | Gross Profit | $95,842 | $112,411 | $(16,569) | (14.7%) | | Total Operating Expense | $69,990 | $70,288 | $(298) | (0.4%) | | Income from Operations | $25,852 | $42,123 | $(16,271) | (38.6%) | | Net Income Attributable to Common Stockholders | $20,168 | $31,716 | $(11,548) | (36.4%) | | Basic EPS | $0.39 | $0.63 | $(0.24) | (38.1%) | | Diluted EPS | $0.38 | $0.62 | $(0.24) | (38.7%) | [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section reports net income and other comprehensive income items, reflecting changes in equity from non-owner sources Condensed Consolidated Statements of Comprehensive Income Highlights (Three Months Ended March 31, Amounts in thousands) | Metric | 2020 | 2019 | | :----------------------------------------------------- | :-------- | :-------- | | Net Income | $20,400 | $31,736 | | Unrealized gain (loss) on defined benefit plan, net of tax | $9,719 | $(6,029) | | Unrealized loss on swaps and collars, net of tax | $(1,438) | $(3,909) | | Unrealized foreign currency (loss) gain, net of tax | $(9,614) | $4,936 | | Comprehensive Income | $19,067 | $26,734 | | Total Comprehensive Income Attributable to Common Stockholders | $18,835 | $26,714 | [Condensed Consolidated Statements of Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) This section details changes in the company's equity accounts, including common stock, retained earnings, and noncontrolling interests Condensed Consolidated Statements of Equity Highlights (Amounts in thousands) | Metric | March 31, 2020 | December 31, 2019 | | :----------------------------------- | :------------- | :---------------- | | Common Stock | $35,289 | $35,111 | | Additional Paid-in Capital | $427,543 | $427,262 | | Retained Earnings | $810,126 | $789,958 | | Total Incorporated Stockholders' Equity | $1,125,029 | $1,106,424 | | Noncontrolling Interest | $57,260 | $46,359 | | Total Equity | $1,182,289 | $1,152,783 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes the cash inflows and outflows from operating, investing, and financing activities over a period Condensed Consolidated Statements of Cash Flows Highlights (Three Months Ended March 31, Amounts in thousands) | Metric | 2020 | 2019 | Change | | :----------------------------------------------------- | :---------- | :---------- | :---------- | | Net Cash Flows Provided by Operating Activities | $53,675 | $69,889 | $(16,214) | | Net Cash and Cash Equivalents Used in Investing Activities | $(17,558) | $(17,152) | $(406) | | Net Cash and Cash Equivalents (Used in) Provided by Financing Activities | $(21,397) | $9,627 | $(31,024) | | Effect of Exchange Rate Changes on Cash and Cash Equivalents | $(3,315) | $(1,890) | $(1,425) | | Net Increase in Cash and Cash Equivalents, Including Restricted Cash | $11,405 | $60,474 | $(49,069) | | Cash and Cash Equivalents, End of Period, Including Restricted Cash | $270,912 | $302,307 | $(31,395) | [NOTE 1 – Summary of Operations and Significant Accounting Policies](index=9&type=section&id=NOTE%201%20%E2%80%93%20Summary%20of%20Operations%20and%20Significant%20Accounting%20Policies) This note describes the company's business and outlines the significant accounting policies used in preparing the financial statements - Diodes Incorporated is a global manufacturer and supplier of high-quality, application-specific standard products in the discrete, logic, analog, and mixed-signal semiconductor markets, serving consumer electronics, computing, communications, industrial, and automotive sectors[24](index=24&type=chunk) - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP for interim financial information and Form 10-Q instructions, and should be read in conjunction with the 2019 Form 10-K[25](index=25&type=chunk) - The adoption of ASU No. 2016-13 (expected credit losses) effective January 1, 2020, did not have a material impact on the consolidated financial statements, and the company is evaluating the impact of FASB's optional guidance on reference rate reform[28](index=28&type=chunk)[29](index=29&type=chunk) [NOTE 2 – Earnings per Share](index=10&type=section&id=NOTE%202%20%E2%80%93%20Earnings%20per%20Share) This note provides details on the calculation of basic and diluted earnings per share - EPS is calculated by dividing net income attributable to common stockholders by the weighted-average number of shares outstanding, with diluted EPS including potential dilution from stock options and awards[31](index=31&type=chunk) EPS Calculation Reconciliation (Three Months Ended March 31, Amounts in thousands, except per share data) | Metric | 2020 | 2019 | | :----------------------------------------- | :------- | :------- | | Net income attributable to common stockholders | $20,168 | $31,716 | | Weighted average common shares outstanding (basic) | 51,335 | 50,398 | | Dilutive effect of stock options and stock awards outstanding | 1,087 | 1,064 | | Adjusted weighted average common shares outstanding (diluted) | 52,422 | 51,462 | | Basic EPS | $0.39 | $0.63 | | Diluted EPS | $0.38 | $0.62 | [NOTE 3 – Inventories](index=10&type=section&id=NOTE%203%20%E2%80%93%20Inventories) This note presents a breakdown of the company's inventory components, including finished goods, work-in-progress, and raw materials Inventories (Amounts in thousands) | Category | March 31, 2020 | December 31, 2019 | | :--------------- | :------------- | :---------------- | | Finished goods | $53,747 | $62,900 | | Work-in-progress | $48,684 | $55,082 | | Raw materials | $129,753 | $118,490 | | Total | $232,184 | $236,472 | [NOTE 4 – Goodwill and Intangible Assets](index=10&type=section&id=NOTE%204%20%E2%80%93%20Goodwill%20and%20Intangible%20Assets) This note details changes in goodwill and provides a breakdown of the company's intangible assets, net of amortization Changes in Goodwill (Amounts in thousands) | Metric | Amount | | :------------------------------------ | :-------- | | Balance at December 31, 2019 | $141,318 | | Savitech acquisition | $10,755 | | Foreign currency translation adjustment | $(2,407) | | Balance at March 31, 2020 | $149,666 | Intangible Assets, Net (Amounts in thousands) | Category | March 31, 2020 | December 31, 2019 | | :------------------------------------- | :------------- | :---------------- | | Intangible assets subject to amortization, total | $111,978 | $105,681 | | Intangible assets with indefinite lives, total | $9,240 | $13,842 | | Total intangible assets, net | $121,218 | $119,523 | - Amortization expense for intangible assets subject to amortization was **$4.2 million** for the three months ended March 31, 2020, a decrease from **$4.5 million** in the same period of 2019[36](index=36&type=chunk) [NOTE 5 – Income Tax Provision](index=11&type=section&id=NOTE%205%20%E2%80%93%20Income%20Tax%20Provision) This note explains the company's income tax expense, effective tax rate, and unrecognized tax benefits Income Tax Information (Three Months Ended March 31, Amounts in thousands, except percentages) | Metric | 2020 | 2019 | | :------------------------- | :-------- | :-------- | | Domestic pre-tax income | $5,268 | $12,486 | | Foreign pre-tax income | $19,688 | $29,548 | | Income tax provision | $4,556 | $10,298 | | Effective tax rate | 18.3% | 24.5% | | Impact of tax holidays on tax expense | $(1,074) | $277 | | Basic EPS impact of tax holidays | $0.02 | $(0.01) | | Diluted EPS impact of tax holidays | $0.02 | $(0.01) | - The effective tax rate decreased to **18.3%** in Q1 2020 from **24.5%** in Q1 2019, primarily due to a decrease in non-U.S. withholding taxes and a net increase in favorable U.S. permanent differences[37](index=37&type=chunk) - As of March 31, 2020, the gross amount of unrecognized tax benefits was approximately **$38.4 million**, and the company does not expect the CARES Act to have a material impact on its financial statements[39](index=39&type=chunk)[42](index=42&type=chunk) [NOTE 6 – Share-Based Compensation](index=12&type=section&id=NOTE%206%20%E2%80%93%20Share-Based%20Compensation) This note outlines the share-based compensation expense recognized and the unrecognized compensation expense related to share grants Share-Based Compensation Expense (Three Months Ended March 31, Amounts in thousands) | Line Item | 2020 | 2019 | | :------------------------------- | :------ | :------ | | Cost of goods sold | $273 | $125 | | Selling, general and administrative | $3,711 | $3,637 | | Research and development | $709 | $715 | | Total share-based compensation expense | $4,693 | $4,477 | - As of March 31, 2020, total unrecognized share-based compensation expense related to share grants was approximately **$45.4 million**, expected to be recognized over a weighted average period of approximately **2.2 years**[45](index=45&type=chunk) [NOTE 7 – Segment Information and Net Sales](index=12&type=section&id=NOTE%207%20%E2%80%93%20Segment%20Information%20and%20Net%20Sales) This note clarifies the company's operating segments and provides a breakdown of net sales by region and type - The company operates in a single segment: standard semiconductor products, with no single customer accounting for 10% or more of revenue or accounts receivable during the periods presented[46](index=46&type=chunk) Net Sales by Region (Based on Shipment, Three Months Ended March 31, Amounts in thousands) | Region | 2020 | 2019 | | :------- | :---------- | :---------- | | Asia | $210,805 | $224,289 | | Europe | $46,931 | $38,394 | | Americas | $22,981 | $39,610 | | Total | $280,717 | $302,293 | Net Sales by Type (Three Months Ended March 31, Amounts in thousands) | Type | 2020 | 2019 | | :------------ | :---------- | :---------- | | Direct sales | $99,544 | $86,358 | | Distributor sales | $181,173 | $215,935 | | Total | $280,717 | $302,293 | [NOTE 8 – Commitments and Contingencies](index=14&type=section&id=NOTE%208%20%E2%80%93%20Commitments%20and%20Contingencies) This note discloses the company's non-cancelable capital expenditure and wafer purchase commitments, as well as legal proceedings - As of March 31, 2020, the company had **$38.7 million** in non-cancelable capital expenditure commitments and **$52.5 million** in wafer purchase commitments for 2020[52](index=52&type=chunk) - The unfunded liability for the UK defined benefit plan was approximately **$14.0 million** as of March 31, 2020, with annual contributions of approximately **$2.4 million** through December 2029[53](index=53&type=chunk) - The company is involved in various legal proceedings but believes the ultimate outcome will not have a material adverse effect on its financial position, cash flows, or operating results[54](index=54&type=chunk) [NOTE 9 – Derivative Financial Instruments](index=14&type=section&id=NOTE%209%20%E2%80%93%20Derivative%20Financial%20Instruments) This note describes the company's use of derivative instruments to manage foreign currency and interest rate risks - The company uses derivative instruments (foreign currency forward agreements, interest rate swaps, and collars) to manage risks related to foreign currencies and interest rates, with some not qualifying for hedge accounting[55](index=55&type=chunk)[56](index=56&type=chunk) Interest Rate Swaps and Collars Notional Amount (Amounts in thousands) | Metric | 2020 | 2019 | | :----------------------------------- | :-------- | :-------- | | Number of Instruments | 9 | 9 | | Notional Amount | $175,000 | $200,000 | Effect of Derivative Financial Instruments on Income (Three Months Ended March 31, Amounts in thousands) | Derivative Type | 2020 (Loss) / Gain | 2019 (Loss) / Gain | | :----------------------------------- | :----------------- | :----------------- | | Interest rate swaps and collars (OCI) | $(1,390) | $(1,090) | | Interest rate swaps and collars (reclassified to interest expense) | $(71) | $(469) | | Foreign currency forward contracts (recognized in net income) | $(2,147) | $430 | [NOTE 10 – Leases](index=17&type=section&id=NOTE%2010%20%E2%80%93%20Leases) This note provides details on the company's operating and finance leases, including lease expenses, liabilities, and right-of-use assets Total Lease Expense (Three Months Ended March 31, Amounts in thousands) | Lease Type | 2020 | 2019 | | :------------------ | :------ | :------ | | Operating lease expense | $3,730 | $3,704 | | Finance lease expense | $216 | $259 | | Short-term lease expense | $94 | $36 | | Variable lease expense | $711 | $618 | | Total lease expense | $4,751 | $4,617 | Lease Liabilities and ROU Assets (Amounts in thousands) | Metric | March 31, 2020 | December 31, 2019 | | :----------------------------------- | :------------- | :---------------- | | Operating lease ROU assets | $53,933 | $57,427 | | Total operating lease liabilities | $36,346 | $40,099 | | Finance lease ROU assets, net | $836 | $1,472 | | Total finance lease liabilities | $818 | $1,041 | - Weighted average remaining lease terms are **4.3 years** for operating leases and **1.0 year** for finance leases as of March 31, 2020, with weighted average discount rates of **3.8%** for operating leases and **3.0%** for finance leases[63](index=63&type=chunk) [NOTE 11 – Employee Benefit Plans](index=18&type=section&id=NOTE%2011%20%E2%80%93%20Employee%20Benefit%20Plans) This note describes the company's non-qualified deferred compensation plan for executives and board members - The company maintains a Non-Qualified Deferred Compensation Plan for executive officers, key employees, and Board members, allowing deferral of eligible compensation, with investments offsetting these obligations totaling approximately **$10.0 million** at March 31, 2020[66](index=66&type=chunk) [NOTE 12 – Related Parties](index=18&type=section&id=NOTE%2012%20%E2%80%93%20Related%20Parties) This note details transactions and balances with related parties, including sales, purchases, and an acquisition agreement - The company conducts business with Lite-On Semiconductor Corporation (LSC), its largest stockholder, and Nuvoton Technology Corporation, with an agreement to acquire LSC for approximately **$426 million** (based on March 31, 2020 exchange rates) anticipated to close in the second half of 2020[67](index=67&type=chunk)[83](index=83&type=chunk) Net Sales to and Purchases from Related Parties (Three Months Ended March 31, Amounts in thousands) | Related Party | Type | 2020 | 2019 | | :------------ | :-------- | :------ | :------ | | LSC | Net sales | $128 | $188 | | LSC | Purchases | $2,748 | $4,412 | | Nuvoton | Purchases | $1,644 | $1,267 | | Keylink | Net sales | $3,985 | $2,815 | | Keylink | Purchases | $405 | $605 | | JCP | Purchases | $156 | $160 | Accounts Receivable from and Payable to Related Parties (Amounts in thousands) | Related Party | Type | March 31, 2020 | December 31, 2019 | | :------------ | :---------------- | :------------- | :---------------- | | LSC | Accounts receivable | $128 | $184 | | LSC | Accounts payable | $2,055 | $2,154 | | Nuvoton | Accounts payable | $875 | $1,055 | | Keylink | Accounts receivable | $25,536 | $31,598 | | Keylink | Accounts payable | $22,100 | $28,244 | | JCP | Accounts payable | $181 | $173 | [NOTE 13 – Acquisitions](index=19&type=section&id=NOTE%2013%20%E2%80%93%20Acquisitions) This note provides information on recent acquisitions, including Savitech Corporation and a wafer fabrication facility - On February 5, 2020, the company agreed to acquire at least **51%** of Savitech Corporation for up to approximately **$14.2 million**, with the first tranche of **$5.6 million** for **33.6%** ownership completed on March 4, 2020, and the second tranche contingent on revenue levels[72](index=72&type=chunk) - The Savitech acquisition, recorded as a business acquisition, aims to increase the company's integrated circuit business, with total purchase consideration recorded as **$12.9 million** and goodwill of **$10.8 million**[74](index=74&type=chunk)[75](index=75&type=chunk) - On April 1, 2019, the company acquired a wafer fabrication facility (GFAB) in Greenock, Scotland, for **$33.2 million** to increase wafer production capacity, including **$24.4 million** in property, plant, and equipment, and **$0.9 million** in goodwill[76](index=76&type=chunk)[77](index=77&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides an overview of Diodes Incorporated's business, a detailed analysis of its financial performance for the three months ended March 31, 2020, compared to the prior year, and a discussion of its financial condition, liquidity, capital resources, and recent developments, including the impact of the COVID-19 pandemic and the LSC acquisition [Overview](index=21&type=section&id=Overview) This section provides a general description of Diodes Incorporated's business, products, and competitive advantages in the semiconductor market - Diodes Incorporated is a leading global manufacturer and supplier of high-quality, application-specific standard products in the discrete, logic, analog, and mixed-signal semiconductor markets, with products sold primarily across Asia, North America, and Europe[81](index=81&type=chunk) - The company emphasizes application-specific standard products, innovative packaging, cost-effective process technologies, and customer-focused product development as key competitive advantages[81](index=81&type=chunk) [Factors Relevant to Our Results of Operations for the Three Months Ended March 31, 2020](index=21&type=section&id=Factors%20Relevant%20to%20Our%20Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202020) This section highlights key financial metrics and trends impacting the company's performance for the reported quarter Key Financial Highlights (Three Months Ended March 31, Amounts in millions, except per share data) | Metric | Q1 2020 | Q1 2019 | Q4 2019 | | :----------------- | :-------- | :-------- | :-------- | | Net Sales | $280.7 | $302.3 | $301.2 | | Gross Profit | $95.8 | $112.4 | $109.4 | | Gross Profit Margin | 34.1% | 37.2% | 36.3% | | Net Income | $20.2 | $31.7 | $47.2 | | Diluted EPS | $0.38 | $0.62 | $0.90 | | Cash Flow from Operations | $53.7 | - | - | | Net Cash Flow | $11.4 | - | - | - Net sales decreased **7.1%** YoY and **6.8%** QoQ, while gross profit margin declined to **34.1%** from **37.2%** YoY, and net income and diluted EPS also saw significant decreases compared to both Q1 2019 and Q4 2019[82](index=82&type=chunk) [Recent Developments](index=21&type=section&id=Recent%20Developments) This section discusses significant recent events, including a major acquisition, the impact of the COVID-19 pandemic, and the company's liquidity position - The acquisition of Lite-On Semiconductor Corporation (LSC) for approximately **$426 million** (as of March 31, 2020) is expected to close in the second half of 2020, pending customary closing conditions and regulatory approvals, with funding anticipated from a new bank financing arrangement[83](index=83&type=chunk) - The COVID-19 pandemic's full impact is unknown, but the company delayed manufacturing in China post-Chinese New Year and temporarily closed UK wafer fabrication facilities in Q1 2020, though both operations have since resumed full production[85](index=85&type=chunk)[87](index=87&type=chunk) - As of March 31, 2020, the company had **$272.4 million** in cash, cash equivalents, and short-term investments, plus **$250 million** in available borrowing capacity, providing adequate liquidity for at least the next 12 months[88](index=88&type=chunk) [Results of Operations for the Three Months Ended March 31, 2020 and 2019](index=22&type=section&id=Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202020%20and%202019) This section provides a comparative analysis of the company's financial performance for the current and prior year quarters - Net sales decreased by **$21.6 million (7.1%)** YoY, primarily due to the global economic slowdown caused by the COVID-19 pandemic and seasonality, though automotive and computing end markets experienced continued growth[94](index=94&type=chunk) - Cost of goods sold decreased by **$5.0 million (2.6%)** YoY, but as a percentage of sales, it increased to **65.9%** from **62.8%**, with average unit cost increasing by approximately **13.0%** due to manufacturing facility shutdowns[95](index=95&type=chunk) - Gross profit decreased by **14.7%** YoY, with gross profit margin falling to **34.1%** from **37.2%**, while operating expenses decreased slightly by **0.4%** YoY, with SG&A decreasing by **$1.5 million** and R&D increasing by **$1.5 million**[95](index=95&type=chunk)[96](index=96&type=chunk) - Interest income decreased by **68.8%** due to reduced short-term investments, while interest expense decreased by **42.0%** due to lower debt levels and interest rates[98](index=98&type=chunk) - Income tax provision decreased by **$5.7 million (55.8%)** YoY, mainly due to lower pretax income, reduced non-U.S. withholding taxes, and favorable U.S. permanent differences[99](index=99&type=chunk) [Financial Condition](index=24&type=section&id=Financial%20Condition) This section discusses the company's liquidity, capital resources, working capital, and debt structure - Primary liquidity sources are cash, cash equivalents, funds from operations, and credit facilities, with working capital increasing from **$524.6 million** at December 31, 2019, to **$532.3 million** at March 31, 2020[100](index=100&type=chunk)[104](index=104&type=chunk) - Short-term borrowings under Asia credit facilities totaled **$13.4 million** at March 31, 2020, and the U.S. Credit Facility provides up to **$250 million** revolving credit and a **$250 million** term loan, maturing October 26, 2021[101](index=101&type=chunk)[102](index=102&type=chunk) Borrowings Outstanding as of March 31, 2020 (Amounts in thousands) | Description | Amount Outstanding | | :---------------------------------------- | :----------------- | | Short-term debt: Foreign credit lines | $13,397 | | Long-term debt: Notes payable to Bank of Taiwan | $4,135 | | Long-term debt: Notes payable to CTBC Bank | $19,054 | | Long-term debt: Notes payable to East Sun Bank | $3,308 | | Long-term debt: U.S. Credit facility: Term portion | $55,375 | | Total long-term debt | $81,872 | | Total long-term debt, net of current portion | $46,011 | - Capital expenditures for Q1 2020 were **$12.6 million**, approximately **4.5%** of net sales, slightly below the target range of **5% to 9%**, with foreign subsidiaries holding approximately **$143.6 million** in cash, cash equivalents, and investments, including **$9.2 million** in China[105](index=105&type=chunk)[106](index=106&type=chunk) [Discussion of Cash Flow](index=25&type=section&id=Discussion%20of%20Cash%20Flow) This section analyzes the company's cash generation and usage across operating, investing, and financing activities - Net cash flows from operating activities decreased to **$53.7 million** in Q1 2020 from **$69.9 million** in Q1 2019, primarily due to lower net income[111](index=111&type=chunk) - Net cash used in investing activities was **$17.6 million** in Q1 2020, mainly for property, plant, and equipment purchases (**$14.2 million**) and an additional investment in Yea-Shin (**$6.1 million**)[112](index=112&type=chunk) - Net cash used in financing activities was **$21.4 million** in Q1 2020, primarily due to **$16.6 million** in net repayments of long-term debt and **$4.5 million** in taxes paid on net share settlement[113](index=113&type=chunk) [Use of Derivative Instruments and Hedging](index=26&type=section&id=Use%20of%20Derivative%20Instruments%20and%20Hedging) This section explains the company's strategies for using derivative instruments to manage financial risks - The company uses interest rate swaps and collars to stabilize interest expense and manage interest rate exposure, designating them as cash flow hedges[115](index=115&type=chunk) - Foreign currency forward agreements are used to manage foreign currency risk and preserve the economic value of foreign currency denominated assets and liabilities, but these are not designated for hedge accounting[116](index=116&type=chunk) [Off-Balance Sheet Arrangements](index=26&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of material off-balance sheet arrangements that could impact liquidity or capital resources - The company has no transactions, arrangements, or relationships with unconsolidated entities that would materially affect its liquidity or capital resources, nor does it engage in special purpose entities for off-balance sheet financing[117](index=117&type=chunk) [Contractual Obligations](index=27&type=section&id=Contractual%20Obligations) This section notes that there have been no material changes to the company's contractual obligations since the last annual report - There have been no material changes to the company's contractual obligations as disclosed in its Annual Report on Form 10-K for the fiscal year ended December 31, 2019[119](index=119&type=chunk) [Critical Accounting Policies](index=27&type=section&id=Critical%20Accounting%20Policies) This section refers to the company's key accounting policies and the judgments and estimates involved in their application - Critical accounting policies are detailed in the 2019 Form 10-K, and any new pronouncements or updates are discussed in Note 1 of this report, with management's judgments and estimates based on historical experience and available information[120](index=120&type=chunk) [Recently Issued Accounting Pronouncements](index=27&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) This section directs readers to Note 1 for information on new accounting standards - Detailed information regarding recently issued accounting pronouncements is provided in Note 1 – Summary of Operations and Significant Accounting Policies[121](index=121&type=chunk) [Available Information](index=27&type=section&id=Available%20Information) This section informs stakeholders about where to access the company's public filings and reports - The company makes its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other SEC filings available free of charge on its website, www.diodes.com[122](index=122&type=chunk) [Cautionary Statement for Purposes of the "Safe Harbor" Provision of the Private Securities Litigation Reform Act of 1995](index=27&type=section&id=Cautionary%20Statement%20for%20Purposes%20of%20the%20%22Safe%20Harbor%22%20Provision%20of%20the%20Private%20Securities%20Litigation%20Reform%20Act%20of%201995) This section provides a disclaimer regarding forward-looking statements and associated risks - This section reiterates that the report contains forward-looking statements subject to risks and uncertainties, as defined by the Private Securities Litigation Reform Act of 1995, and the company undertakes no obligation to update these statements[123](index=123&type=chunk)[125](index=125&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there have been no material changes to the company's market risks since those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2019 - No material changes to market risks have occurred since the disclosures in the Annual Report on Form 10-K for the year ended December 31, 2019[170](index=170&type=chunk) [Item 4. Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures as of March 31, 2020, based on evaluations by the CEO and CFO, and states that there were no material changes in internal control over financial reporting during the quarter - The CEO and CFO evaluated the effectiveness of disclosure controls and procedures as of March 31, 2020, and concluded they are effective at a reasonable assurance level[171](index=171&type=chunk) - No changes in internal control over financial reporting occurred during the three months ended March 31, 2020, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[173](index=173&type=chunk) PART II – OTHER INFORMATION This section covers legal proceedings, updated risk factors, equity security sales, defaults, mine safety, other information, and a list of exhibits [Item 1. Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) This section states that Diodes Incorporated is not currently a party to any material pending litigation, and while it may be involved in various legal proceedings in the normal course of business, the ultimate outcome is not expected to have a material adverse effect on its financial position, cash flows, or operating results - The company is not a party to any pending litigation considered material[176](index=176&type=chunk) - While involved in various legal proceedings in the normal course of business, the company believes the ultimate outcome will not have any material adverse effect on its consolidated financial position, cash flows, or operating results[177](index=177&type=chunk) [Item 1A. Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) This section updates the risk factors, primarily focusing on the ultimate impact of the COVID-19 pandemic, which cannot be estimated but may materially adversely affect the business, financial condition, and results of operations. It also references general business, international operations, and common stock-related risks from the previous 10-K - The ultimate impact of the COVID-19 pandemic cannot be estimated at this time, but it may have a material adverse effect on the company's business, financial condition, and results of operations[179](index=179&type=chunk) - Risks from COVID-19 include potential long-term limitations or closures of manufacturing facilities, changes in ordering patterns, demand for products, losses in efficiency due to travel restrictions, and potential financial difficulties for customers[181](index=181&type=chunk)[182](index=182&type=chunk)[184](index=184&type=chunk) - The company's financial statements reflect estimates and assumptions that could be affected by the extent and duration of the COVID-19 pandemic, impacting valuations of goodwill, long-lived assets, inventory, and tax assessments[182](index=182&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=34&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section states that there were no unregistered sales of equity securities or use of proceeds to report during the period - There were no unregistered sales of equity securities or use of proceeds to report[186](index=186&type=chunk) [Item 3. Defaults Upon Senior Securities](index=34&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section indicates that there were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities[188](index=188&type=chunk) [Item 4. Mine Safety Disclosures](index=34&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable to the company[190](index=190&type=chunk) [Item 5. Other Information](index=34&type=section&id=Item%205.%20Other%20Information) This section indicates that there is no other information to report - There is no other information to report[192](index=192&type=chunk) [Item 6. Exhibits](index=35&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including amendments to the credit agreement, certifications, and XBRL-related documents. It also includes a cautionary note regarding the accuracy of covenants, representations, or warranties in exhibit agreements - Exhibits include Consent and Amendment No. 4 and No. 5 to the Amended and Restated Credit Agreement, certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act, and Inline XBRL documents[194](index=194&type=chunk)[195](index=195&type=chunk)[196](index=196&type=chunk) - A cautionary note advises investors not to assume the accuracy of covenants, representations, or warranties in exhibit agreements, as they may be subject to contractual materiality standards and risk allocation purposes[197](index=197&type=chunk) SIGNATURES This section contains the official signatures of the registrant's President and Chief Executive Officer, Keh-Shew Lu, and Chief Financial Officer, Brett R. Whitmire, certifying the report on behalf of Diodes Incorporated - The report is signed by Keh-Shew Lu, President and Chief Executive Officer, and Brett R. Whitmire, Chief Financial Officer, on May 11, 2020[200](index=200&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 or | --- | --- | --- | |----------------------------------------------------------------|------------------------------------------------------------------------------|-----------------------------------------------------------------------| | | | | | EXCHANGE ACT OF 1934 | TRANSITION REPORT PURSUAN ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2019 Or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to . Commission file number: 002-25577 DIODES INCORPORATED (Exact name of registrant as specified in its charter) Delaware 95-2039518 (State or other jurisdiction of ...