Note: Included in GAAP and non-GAAP adjusted net income was approximately $18.6 million, net of tax, non-cash share-based compensation expense. Excluding share-based compensation expense, both GAAP and non-GAAP adjusted diluted earnings per share would have improved by $0.36 per share.

ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE

The Company’s financial statements present net income and earnings per share that are calculated using accounting principles generally accepted in the United States (“GAAP”). The Company’s management makes adjustments to the GAAP measures that it feels are necessary to allow investors and other readers of the Company’s financial releases to view the Company’s operating results as viewed by the Company’s management, board of directors and research analysts in the semiconductor industry. These non-GAAP measures are not prepared in accordance with, and should not be considered alternatives or necessarily superior to, GAAP financial data and may be different from non-GAAP measures used by other companies. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures, even if they have similar names. The explanation of the adjustments made in the table above, are set forth below:

Detail of non-GAAP adjustments

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

Acquisition related costs – The Company excluded expenses associated with the acquisition of LITE-ON Semiconductor, which consisted of advisory, legal and other professional and consulting fees. These costs were expensed as they were incurred and as services were received, and in which the corresponding tax adjustments were made for the non-deductible portions of these expenses. The Company believes the exclusion of the acquisition related costs provides investors with a more accurate reflection of costs likely to be incurred in the absence of an unusual event such as an acquisition and facilitates comparisons with the results of other periods that may not reflect such costs.

LSC investments related – The Company excluded market to market adjustments and the associated tax on certain LSC equity investments. The Company has also excluded certain taxes related to integration and restructuring activities within certain Taiwan subsidiaries including LSC. The Company believes this is not reflective of the ongoing operations and exclusion of this provides investors an enhanced view of the Company’s operating results.

Gain on sale of manufacturing subsidiary – The Company excluded gains associated with the sale of a manufacturing subsidiary. The transaction closed in December 2021. The Company believes this is not reflective of the ongoing operations and exclusion of this provides investors an enhanced view of the Company’s operating results

Restructuring costs – The Company has recorded restructuring charges related to the shutdown and relocation of one of our assembly and test facilities located in Chengdu, China, restructuring at other China sites, and restructuring of select European entities. These restructuring charges are excluded from management’s assessment of the Company’s operating performance. The Company believes the exclusion of the restructuring charges provides investors an enhanced view of the cost structure of the Company’s operations and facilitates comparisons with the results of other periods that may not reflect such charges or may reflect different levels of such charges.

Board member retirement costs – The Company excluded expenses in connection with the retirement of a member of the Company’s board of directors. The Company modified that director’s unvested RSU grants to vest upon his retirement. The shares subject to the modified grants will be released to that board member as if they were vesting under the original vesting timeline. In connection with this modification the Company recorded additional expense of approximately $1.7 million.

CASH FLOW ITEMS

Free cash flow (FCF) (Non-GAAP)

FCF for the fourth quarter of 2021 is a non-GAAP financial measure, which is calculated by subtracting capital expenditures from cash flow from operations. For the fourth quarter of 2021, FCF was $22.5 million, which represents the cash and cash equivalents that we are able to generate after taking into account cash outlays required to maintain or expand property, plant and equipment. FCF is important because it allows us to pursue opportunities to develop new products, make acquisitions and reduce debt.

CONSOLIDATED RECONCILIATION OF NET INCOME TO EBITDA

EBITDA represents earnings before net interest expense, income tax provision, depreciation and amortization. Management believes EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties, such as financial institutions in extending credit, in evaluating companies in our industry and provides further clarity on our profitability. In addition, management uses EBITDA, along with other GAAP and non-GAAP measures, in evaluating our operating performance compared to that of other companies in our industry. The calculation of EBITDA generally eliminates the effects of financing, operating in different income tax jurisdictions, and accounting effects of capital spending, including the impact of our asset base, which can differ depending on the book value of assets and the accounting methods used to compute depreciation and amortization expense. EBITDA is not a recognized measurement under GAAP, and when analyzing our operating performance, investors should use EBITDA in addition to, and not as an alternative for, income from operations and net income, each as determined in accordance with GAAP. Because not all companies use identical calculations, our presentation of EBITDA may not be comparable to similarly titled measures used by other companies. For example, our EBITDA takes into account all net interest expense, income tax provision, depreciation and amortization without taking into account any amounts attributable to noncontrolling interest. Furthermore, EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not consider certain cash requirements such as tax and debt service payments.

The following table provides a reconciliation of net income to EBITDA (in thousands, unaudited):

		Three Months Ended						Twelve Months Ended
		December 31						December 31
		2021			2020			2021			2020
Net income (per-GAAP)		$	65,513		$	29,735		$	228,763		$	98,088
Plus:
Interest expense, net			405			3,532			4,352			10,596
Income tax provision			42,487			6,015			78,807			21,112
Depreciation and amortization			30,572			27,802			122,656			108,845
EBITDA (non-GAAP)		$	138,977		$	67,084		$	434,578		$	238,641

DIODES INCORPORATED AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands)
		December 31			December 31,
		2021			2020
		(unaudited)			(audited)
Assets
Current assets:
Cash and cash equivalents		$	363,599		$	268,065
Restricted Cash			3,219			52,464
Short-term investments			6,542			6,142
Accounts receivable, net of allowances of $4,324 and $3,806 at December 31, 2021 and December 31, 2020, respectively			358,496			320,061
Inventories			348,622			307,062
Prepaid expenses and other			107,194			70,193
Total current assets			1,187,672			1,023,987
Property, plant and equipment, net			582,079			530,815
Deferred income tax			21,256			57,841
Goodwill			149,890			158,331
Intangible assets, net			94,550			110,591
Other long-term assets			159,048			97,892
Total assets		$	2,194,495		$	1,979,457
Liabilities
Current liabilities:
Line of credit		$	18,068		$	140,563
Accounts payable			221,254			168,045
Accrued liabilities			184,649			160,117
Income tax payable			29,682			19,177
Current portion of long-term debt			17,381			21,860
Total current liabilities			471,034			509,762
Long-term debt, net of current portion			265,574			288,179
Deferred tax liabilities			32,230			34,598
Other long-term liabilities			122,933			130,795
Total liabilities			891,771			963,334
Commitments and contingencies
Stockholders' equity
Preferred stock - par value $1.00 per share; 1,000,000 shares authorized; no shares issued or outstanding			-			-
Common stock - par value $0.66 2/3 per share; 70,000,000 shares authorized; 45,017,774 and 44,276,194, issued and outstanding at December 31, 2021 and December 31, 2020, respectively			36,195			35,692
Additional paid-in capital			471,649			449,598
Retained earnings			1,116,809			888,046
Treasury stock, at cost, 9,272,513 shares held at December 31, 2021 and 9,259,858 shares held at December 31, 2020			(336,894	)		(335,910	)
Accumulated other comprehensive loss			(50,517	)		(73,606	)
Total stockholders' equity			1,237,242			963,820
Noncontrolling interest			65,482			52,303
Total equity			1,302,724			1,016,123
Total liabilities and stockholders' equity		$	2,194,495		$	1,979,457

« Previous Page 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8  Next Page »