þ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2011 |
Or |
o |
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from to . |
Delaware | 95-2039518 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification Number) | |
4949 Hedgcoxe Road, Suite 200 | ||
Plano, Texas | 75024 | |
(Address of principal executive offices) | (Zip code) |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o |
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32 | ||||||||
33 | ||||||||
35 | ||||||||
EX-10.1 | ||||||||
EX-10.2 | ||||||||
EX-10.3 | ||||||||
EX-31.1 | ||||||||
EX-31.2 | ||||||||
EX-32.1 | ||||||||
EX-32.2 | ||||||||
EX-101 INSTANCE DOCUMENT | ||||||||
EX-101 SCHEMA DOCUMENT | ||||||||
EX-101 CALCULATION LINKBASE DOCUMENT | ||||||||
EX-101 LABELS LINKBASE DOCUMENT | ||||||||
EX-101 PRESENTATION LINKBASE DOCUMENT | ||||||||
EX-101 DEFINITION LINKBASE DOCUMENT |
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
(Unaudited) | ||||||||
CURRENT ASSETS
|
||||||||
Cash and cash equivalents
|
$ | 124,897 | $ | 270,901 | ||||
Accounts receivable, net
|
139,391 | 129,207 | ||||||
Inventories
|
139,074 | 120,689 | ||||||
Deferred income taxes, current
|
8,488 | 8,276 | ||||||
Prepaid expenses and other
|
17,450 | 11,679 | ||||||
|
||||||||
Total current assets
|
429,300 | 540,752 | ||||||
|
||||||||
|
||||||||
PROPERTY, PLANT AND EQUIPMENT, net
|
231,863 | 200,745 | ||||||
|
||||||||
DEFERRED INCOME TAXES, non-current
|
1,812 | 1,574 | ||||||
|
||||||||
OTHER ASSETS
|
||||||||
Goodwill
|
67,770 | 68,949 | ||||||
Intangible assets, net
|
25,317 | 28,770 | ||||||
Other
|
17,667 | 5,760 | ||||||
|
||||||||
Total assets
|
$ | 773,729 | $ | 846,550 | ||||
|
- 3 -
- 4 -
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
NET SALES
|
$ | 160,577 | $ | 163,120 | $ | 491,938 | $ | 449,120 | ||||||||
|
||||||||||||||||
COST OF GOODS SOLD
|
115,383 | 102,143 | 333,736 | 286,893 | ||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Gross profit
|
45,194 | 60,977 | 158,202 | 162,227 | ||||||||||||
|
||||||||||||||||
OPERATING EXPENSES
|
||||||||||||||||
Selling, general and administrative
|
23,404 | 22,837 | 67,389 | 65,678 | ||||||||||||
Research and development
|
7,304 | 7,212 | 20,355 | 20,403 | ||||||||||||
Other operating expenses
|
1,120 | 1,098 | 3,408 | 3,448 | ||||||||||||
|
||||||||||||||||
Total operating expenses
|
31,828 | 31,147 | 91,152 | 89,529 | ||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Income from operations
|
13,366 | 29,830 | 67,050 | 72,698 | ||||||||||||
|
||||||||||||||||
OTHER INCOME (EXPENSES)
|
(2,300 | ) | (2,415 | ) | (7,444 | ) | (5,694 | ) | ||||||||
|
||||||||||||||||
|
||||||||||||||||
Income before income taxes and noncontrolling interest
|
11,066 | 27,415 | 59,606 | 67,004 | ||||||||||||
|
||||||||||||||||
INCOME TAX PROVISION
|
359 | 5,346 | 9,912 | 11,705 | ||||||||||||
|
||||||||||||||||
|
||||||||||||||||
NET INCOME
|
10,707 | 22,069 | 49,694 | 55,299 | ||||||||||||
|
||||||||||||||||
Less: NET INCOME attributable to noncontrolling interest
|
(750 | ) | (907 | ) | (2,072 | ) | (2,532 | ) | ||||||||
|
||||||||||||||||
|
||||||||||||||||
NET INCOME attributable to common stockholders
|
$ | 9,957 | $ | 21,162 | $ | 47,622 | $ | 52,767 | ||||||||
|
||||||||||||||||
|
||||||||||||||||
EARNINGS PER SHARE attributable to common stockholders
|
||||||||||||||||
Basic
|
$ | 0.22 | $ | 0.48 | $ | 1.05 | $ | 1.20 | ||||||||
|
||||||||||||||||
Diluted
|
$ | 0.21 | $ | 0.46 | $ | 1.02 | $ | 1.16 | ||||||||
|
||||||||||||||||
|
||||||||||||||||
Number of shares used in computation
|
||||||||||||||||
Basic
|
45,603 | 44,346 | 45,252 | 44,031 | ||||||||||||
|
||||||||||||||||
Diluted
|
47,093 | 45,673 | 46,875 | 45,418 | ||||||||||||
|
- 5 -
Nine Months Ended | ||||||||
September 30, | ||||||||
2011 | 2010 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
$ | 65,053 | $ | 90,046 | ||||
|
||||||||
|
||||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Purchases of investments
|
(13,482 | ) | | |||||
Proceeds from sale of short-term investments
|
| 296,600 | ||||||
Purchases of property, plant and equipment
|
(69,802 | ) | (66,342 | ) | ||||
Proceeds from sale of property, plant and equipment
|
19 | 2,141 | ||||||
Other
|
64 | (384 | ) | |||||
|
||||||||
Net cash provided by (used in) investing activities
|
(83,201 | ) | 232,015 | |||||
|
||||||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Advances on line of credit
|
10,000 | 3,762 | ||||||
Repayments on lines of credit
|
(10,000 | ) | (303,192 | ) | ||||
Net proceeds from issuance of common stock
|
3,352 | 2,763 | ||||||
Repayments of long-term debt
|
(134,369 | ) | (1,062 | ) | ||||
Other
|
282 | (902 | ) | |||||
|
||||||||
Net cash used in financing activities
|
(130,735 | ) | (298,631 | ) | ||||
|
||||||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
|
2,879 | (1,576 | ) | |||||
|
||||||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
(146,004 | ) | 21,854 | |||||
CASH AND CASH EQUIVALENTS, beginning of period
|
270,901 | 241,953 | ||||||
|
||||||||
CASH AND CASH EQUIVALENTS, end of period
|
$ | 124,897 | $ | 263,807 | ||||
|
||||||||
|
||||||||
SUPPLEMENTAL CASH FLOW INFORMATION:
|
||||||||
Non-cash financing activities:
|
||||||||
Property, plant and equipment purchased on accounts payable
|
$ | (4,075 | ) | $ | (5,828 | ) |
- 6 -
- 7 -
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net income
|
$ | 10,707 | $ | 22,069 | $ | 49,694 | $ | 55,299 | ||||||||
|
||||||||||||||||
Translation adjustment
|
(6,852 | ) | 7,361 | (621 | ) | (3,552 | ) | |||||||||
|
||||||||||||||||
Unrealized gain/(loss) on defined benefit plan, net of tax
|
(3,783 | ) | 1,802 | 1,347 | (4,068 | ) | ||||||||||
|
||||||||||||||||
|
||||||||||||||||
Comprehensive income
|
72 | 31,232 | 50,420 | 47,679 | ||||||||||||
|
||||||||||||||||
Less: Comprehensive income attributable to noncontrolling interest
|
(750 | ) | (907 | ) | (2,072 | ) | (2,532 | ) | ||||||||
|
||||||||||||||||
|
||||||||||||||||
Total comprehensive income (loss) attributable to common
stockholders
|
$ | (678 | ) | $ | 30,325 | $ | 48,348 | $ | 45,147 | |||||||
|
- 8 -
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
Raw materials
|
$ | 67,920 | $ | 60,402 | ||||
Work-in-progress
|
21,666 | 22,288 | ||||||
Finished goods
|
49,488 | 37,999 | ||||||
|
||||||||
Total
|
$ | 139,074 | $ | 120,689 | ||||
|
- 9 -
Balance at December 31, 2010
|
$ | 68,949 | ||
Currency exchange and other
|
(1,179 | ) | ||
|
||||
Balance at September 30, 2011
|
$ | 67,770 | ||
|
- 10 -
Changes in Fair Values for Items | ||||||||||||||||||||||||
Measured at Fair Value Pursuant to | ||||||||||||||||||||||||
Fair Value Measurements | Election of the Fair Value Option | |||||||||||||||||||||||
Quoted | Total | |||||||||||||||||||||||
Prices in | Changes in | |||||||||||||||||||||||
Active | Significant | Fair Values | ||||||||||||||||||||||
Markets for | Other | Significant | Included in | |||||||||||||||||||||
Identical | Observable | Unobservable | Current- | |||||||||||||||||||||
Fair Value | Assets | Inputs | Inputs | Other Gains | Period | |||||||||||||||||||
Description | Estimate | (Level 1) | (Level 2) | (Level 3) | and (Losses) | Earnings | ||||||||||||||||||
Securities carried
at fair value *
|
$ | 12,148 | $ | 12,148 | $ | | $ | | $ | (1,334 | ) | $ | (1,334 | ) |
(*) | Represents investments that would otherwise be accounted for under the equity method of accounting. |
- 11 -
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Cost of sales
|
$ | 112 | $ | 87 | $ | 287 | $ | 262 | ||||||||
Selling and administrative expense
|
3,259 | 2,824 | 9,088 | 8,510 | ||||||||||||
Research and development expense
|
272 | 355 | 735 | 1,008 | ||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Total share-based compensation
expense
|
$ | 3,643 | $ | 3,266 | $ | 10,110 | $ | 9,780 | ||||||||
|
Weighted | ||||||||||||||||
Weighted | Average | |||||||||||||||
Average | Remaining | Aggregate | ||||||||||||||
Exercise | Contractual | Intrinsic | ||||||||||||||
Stock Options | Shares (000) | Price | Term (yrs) | Value ($000) | ||||||||||||
Outstanding at January 1, 2011
|
3,707 | $ | 14.14 | 5 | $ | 47,891 | ||||||||||
Granted
|
385 | 29.07 | ||||||||||||||
Exercised
|
(482 | ) | 7.04 | 11,007 | ||||||||||||
Forfeited or expired
|
(6 | ) | 21.69 | |||||||||||||
Outstanding at September 30,
2011
|
3,604 | $ | 16.67 | 5 | $ | 14,475 | ||||||||||
|
||||||||||||||||
Exercisable at September 30,
2011
|
2,633 | $ | 14.50 | 4 | $ | 13,789 | ||||||||||
|
- 12 -
Weighted- | ||||||||||||
Average | Aggregate | |||||||||||
Grant-Date | Intrinsic | |||||||||||
Share Grants | Shares (000) | Fair Value | Value ($000) | |||||||||
Nonvested at January 1, 2011
|
774 | $ | 16.16 | $ | 12,479 | |||||||
Granted
|
367 | 27.55 | ||||||||||
Vested
|
(362 | ) | 20.1 | 7,267 | ||||||||
Forfeited
|
(35 | ) | 19.74 | |||||||||
|
||||||||||||
Nonvested at September 30, 2011
|
744 | $ | 19.83 | $ | 14,742 | |||||||
|
Three Months Ended | North | |||||||||||||||
September 30, 2011 | Asia | America | Europe | Consolidated | ||||||||||||
Total sales
|
$ | 145,562 | $ | 34,559 | $ | 47,155 | $ | 227,276 | ||||||||
Inter-company sales
|
(25,674 | ) | (15,111 | ) | (25,914 | ) | (66,699 | ) | ||||||||
|
||||||||||||||||
Net sales
|
$ | 119,888 | $ | 19,448 | $ | 21,241 | $ | 160,577 | ||||||||
|
Three Months Ended | ||||||||||||||||
September 30, 2010 | Asia | North America | Europe | Consolidated | ||||||||||||
Total sales
|
$ | 133,116 | $ | 42,769 | $ | 45,129 | $ | 221,014 | ||||||||
Inter-company sales
|
(15,961 | ) | (14,898 | ) | (27,035 | ) | (57,894 | ) | ||||||||
|
||||||||||||||||
Net sales
|
$ | 117,155 | $ | 27,871 | $ | 18,094 | $ | 163,120 | ||||||||
|
- 13 -
Net Sales | ||||||||||||||||
for the Three Months | Percentage of | |||||||||||||||
Ended September 30, | Net Sales | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
China
|
$ | 57,804 | $ | 49,944 | 36 | % | 31 | % | ||||||||
Taiwan
|
32,171 | 36,035 | 20 | % | 22 | % | ||||||||||
United States
|
22,733 | 41,641 | 14 | % | 26 | % | ||||||||||
Korea
|
9,200 | 9,681 | 6 | % | 6 | % | ||||||||||
England
|
7,906 | 6,757 | 5 | % | 4 | % | ||||||||||
Germany
|
7,555 | 7,260 | 5 | % | 4 | % | ||||||||||
Singapore
|
6,744 | 7,079 | 4 | % | 4 | % | ||||||||||
All Others (1)
|
16,464 | 4,723 | 10 | % | 3 | % | ||||||||||
|
||||||||||||||||
Total
|
$ | 160,577 | $ | 163,120 | 100 | % | 100 | % | ||||||||
|
Net Sales | ||||||||||||||||
for the Nine Months | Percentage of | |||||||||||||||
Ended September 30, | Net Sales | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
China
|
$ | 158,370 | $ | 138,901 | 32 | % | 31 | % | ||||||||
Taiwan
|
106,432 | 103,841 | 22 | % | 23 | % | ||||||||||
United States
|
79,190 | 103,430 | 16 | % | 23 | % | ||||||||||
Korea
|
29,389 | 26,569 | 6 | % | 6 | % | ||||||||||
England
|
25,134 | 13,432 | 5 | % | 3 | % | ||||||||||
Germany
|
25,011 | 24,412 | 5 | % | 5 | % | ||||||||||
Singapore
|
18,333 | 18,448 | 4 | % | 4 | % | ||||||||||
All Others (1)
|
50,079 | 20,087 | 10 | % | 4 | % | ||||||||||
|
||||||||||||||||
Total
|
$ | 491,938 | $ | 449,120 | 100 | % | 100 | % | ||||||||
|
(1) | Represents countries with less than 3% of the total revenues each. |
- 14 -
Liability | Liability | Liability | Equity | ||||||||||
Component | Component | Component | Component | ||||||||||
Principal | Net Carrying | Unamortized | Carrying | ||||||||||
Amount | Amount | Discount | Amount | ||||||||||
$ | 236 | $ | 236 | $ | | $ | 35,515 |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Notes contractual interest expense
|
$ | 755 | $ | 769 | $ | 2,266 | $ | 2,321 | ||||||||
Amortization of debt discount
|
2,021 | 2,006 | 6,032 | 5,713 | ||||||||||||
Amortization of debt issuance costs
|
137 | 138 | 412 | 412 | ||||||||||||
|
||||||||||||||||
Total
|
$ | 2,913 | $ | 2,913 | $ | 8,710 | $ | 8,446 | ||||||||
|
- 15 -
Defined Benefit Plan | ||||
Change in benefit obligation:
|
||||
Balance at December 31, 2010
|
$ | 118,505 | ||
Service cost
|
242 | |||
Interest cost
|
4,613 | |||
Actuarial gain
|
(7,696 | ) | ||
Benefits paid
|
(2,943 | ) | ||
Currency changes
|
(388 | ) | ||
|
||||
Benefit obligation at September 30, 2011
|
$ | 112,333 | ||
|
||||
Change in plan assets:
|
||||
Fair value of plan assets at December 31, 2010
|
$ | 93,642 | ||
Actual return on plan assets
|
(2,136 | ) | ||
Employer contribution
|
1,534 | |||
Benefits paid
|
(2,943 | ) | ||
Currency changes
|
(343 | ) | ||
|
||||
Fair value of plan assets at September 30, 2011
|
$ | 89,754 | ||
|
||||
Underfunded status at September 30, 2011
|
$ | (22,579 | ) | |
|
Discount rate
|
5.4 | % | ||
Expected long-term return on plan assets
|
6.6 | % |
- 16 -
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net sales
|
$ | 894 | $ | 1,457 | $ | 1,846 | $ | 5,983 | ||||||||
Purchases
|
$ | 11,730 | $ | 11,073 | $ | 30,224 | $ | 31,961 |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net sales
|
$ | 5,898 | $ | 4,235 | $ | 7,102 | $ | 11,977 | ||||||||
Purchases
|
$ | 3,222 | $ | 3,059 | $ | 9,102 | $ | 8,232 |
- 17 -
September 30, | ||||
2011 | ||||
Accounts receivable
|
||||
LSC
|
$ | 706 | ||
Keylink
|
6,320 | |||
|
||||
|
$ | 7,026 | ||
|
||||
|
||||
Accounts payable
|
||||
LSC
|
$ | 7,843 | ||
Eris
|
6,408 | |||
Keylink
|
7,412 | |||
|
||||
|
$ | 21,663 | ||
|
- 18 -
- 19 -
- 20 -
- 21 -
- 22 -
- 23 -
- 24 -
- 25 -
- 26 -
- 27 -
- 28 -
- 29 -
- 30 -
Net sales for the three months ended September 30, 2011 was $161 million, a decrease of
$3 million, or 2%, over the same period last year, and a sequential decrease of 5% compared
to the $170 million in the second quarter of 2011;
Net sales for the nine months ended September 30, 2011 was $492 million, an increase of
$43 million, or 10%, over the same period last year;
Gross profit for the three months ended September 30, 2011 was $45 million, a decrease
of $16 million, or 26%, over the same period last year, and a sequential decrease of 20%
compared to the $56 million in the second quarter of 2011;
Gross profit for the nine months ended September 30, 2011 was $158 million, a decrease
of $4 million, or 2%, over the same period last year;
Gross profit margin for the three months ended September 30, 2011 was 28%, a decrease of
9% over the same period last year, and a sequential decrease of 5% compared to the second
quarter of 2011;
Gross profit margin for the nine months ended September 30, 2011 was 32%, a decrease of
4% over the same period last year;
Net income attributable to common stockholders for the three months ended September 30,
2011 was $10 million, or $0.21 per diluted share, compared to the same period last year,
which was $21 million, or $0.46 per diluted share, and second quarter of 2011 net income of
$18 million, or $0.38 per diluted share; and
Net income attributable to common stockholders for the nine months ended September 30,
2011 was $48 million, or $1.02 per diluted share, compared to the same period last year,
which was $53 million, or $1.16 per diluted share.
Table of Contents
Net sales for the nine months ended September 30, 2011 was $492 million compared to $449
million in the same period last year. This increase in net sales mainly reflects the
increase in demand for our products in most geographic regions during the first six months
of 2011, partially offset by the decrease in sales during the third quarter of 2011
compared to third quarter of 2011.
Our gross profit margin was 32% for the nine months ended September 30, 2011, compared
to 36% in the same period last year. Our gross margin percentage decreased over the same
period last year due to a shift in product mix to lower margin products and lower equipment
utilization due to training replacement operators as a result of the previously disclosed
China labor shortages. In addition, during the third quarter of 2011 gross profit margin
was also impacted by reduction in subcontractor activity and increase in gold prices.
Future gross profit margins will depend primarily on market prices, our product mix,
manufacturing cost savings, and the demand for our products.
For the nine months ended September 30, 2011, our capital expenditures, excluding
capital expenditures related to our investment agreement with the Management Committee of
the Chengdu Hi-Tech Industrial Development Zone (the CDHT), were approximately 12% of our
net sales, which is at the high end of our historical 10% to 12% of net sales model. For
2011, we expect capital expenditures, excluding capital expenditures related to our
investment agreement, to be at the low end of our historical model.
For the nine months ended September 30, 2011 and 2010, the percentage of our net sales
derived from our Asian subsidiaries was 74%. In the near future, we expect our percentage
of net sales to the Asian market to remain approximately the same. In addition, Europe
accounted for approximately 14% of our revenues for the nine months ended September 30,
2011, compared to 11% in the same period last year.
As of September 30, 2011, we had invested approximately $342 million in our Asian
manufacturing facilities. For the nine months ended September 30, 2011, we invested
approximately $61 million in these manufacturing facilities, and we expect to continue to
invest in our manufacturing facilities, although the amount to be invested will depend on
product demand and new product developments.
For the nine months ended September 30, 2011, our original equipment manufacturers
(OEM) and electronic manufacturing services (EMS) customers together accounted for
approximately 46% of our net sales, while our global network of distributors accounted for
approximately 54% of our net sales.
Table of Contents
Percent of Net Sales
Percentage Dollar
Three Months Ended
Increase
September 30,
(Decrease)
2011
2010
10 to 11
100
%
100
%
(2
)
(72
)
(63
)
13
28
37
(26
)
(20
)
(19
)
2
8
18
(55
)
(1
)
(1
)
(5
)
7
17
(60
)
3
(93
)
7
14
(51
)
(1
)
(1
)
(17
)
6
13
(53
)
2011
2010
$
160,577
$
163,120
2011
2010
$
115,383
$
102,143
$
45,194
$
60,977
28.1
%
37.4
%
Table of Contents
2011
2010
$
31,828
$
31,147
2011
2010
$
2,300
$
2,415
2011
2010
$
359
$
5,346
Table of Contents
Percent of Net Sales
Percentage Dollar
Nine Months Ended September
30,
Increase (Decrease)
2011
2010
10 to 11
100
%
100
%
10
(68
)
(64
)
16
32
36
(2
)
(19
)
(20
)
2
13
16
(8
)
(1
)
(1
)
(8
)
12
15
(11
)
2
2
(15
)
10
13
(10
)
(1
)
(18
)
10
12
(10
)
2011
2010
$
491,938
$
449,120
2011
2010
$
333,736
$
286,893
$
158,202
$
162,227
32.2
%
36.1
%
Table of Contents
2011
2010
$
91,152
$
89,529
2011
2010
$
7,444
$
5,694
2011
2010
$
9,912
$
11,705
Table of Contents
Table of Contents
Nine Months Ended September 30,
2011
2010
Change
$
65,053
$
90,046
$
(24,993
)
(83,201
)
232,015
(315,216
)
(130,735
)
(298,631
)
167,896
2,879
(1,576
)
4,455
$
(146,004
)
$
21,854
$
(167,858
)
Table of Contents
Table of Contents
Ø
The success of our business depends on the strength of the global economy and the
stability of the financial markets, and any weaknesses in these areas may have a material
adverse effect on our revenues, results of operations and financial condition.
Ø
During times of difficult market conditions, our fixed costs combined with lower
revenues may have a negative impact on our business, results of operations and financial
condition.
Ø
Downturns in the highly cyclical semiconductor industry or changes in end-market demand
could adversely affect our results of operations and financial condition.
Ø
The semiconductor business is highly competitive, and increased competition may harm our
business, results of operations and financial condition.
Ø
A related party is our largest external supplier and the loss of this supplier could
harm our business, results of operations and financial condition.
Ø
Delays in initiation of production at facilities, implementing new production
techniques or resolving problems associated with technical equipment malfunctions could
adversely affect our manufacturing efficiencies, results of operations and financial
condition.
Ø
We are and will continue to be under continuous pressure from our customers and
competitors to reduce the price of our products, which could adversely affect our growth
and profit margins.
Ø
Our customers require our products to undergo a lengthy and expensive qualification
process without any assurance of product sales, which could adversely affect our revenues,
results of operations and financial condition.
Ø
Our customer orders are subject to cancellation or modification usually with no penalty.
High volumes of order cancellation or reductions in quantities ordered could adversely
affect our results of operations and financial condition.
Ø
Production at our manufacturing facilities could be disrupted for a variety of reasons,
which could prevent us from producing enough of our products to maintain our sales and
satisfy our customers demands and could adversely affect our results of operations and
financial condition.
Ø
New technologies could result in the development of new products by our competitors and
a decrease in demand for our products, and we may not be able to develop new products to
satisfy changes in demand, which would adversely affect our net sales, market share,
results of operations and financial condition.
Ø
We may be adversely affected by any disruption in our information technology systems,
which could adversely affect our cash flows, results of operations and financial condition.
Ø
We may be subject to claims of infringement of third-party intellectual property rights
or demands that we license third-party technology, which could result in significant
expense and reduction in our intellectual property rights.
Ø
We depend on third-party suppliers for timely deliveries of raw materials, parts and
equipment, as well as finished products from other manufacturers, and our reputation with
customers, results of operations and financial condition could be adversely affected if we
are unable to obtain adequate supplies in a timely manner.
Ø
If we do not succeed in continuing to vertically integrate our business, we will not
realize the cost and other efficiencies we anticipate, which could adversely affect our
ability to compete, profit margins, results of operations and financial condition.
Ø
Part of our growth strategy involves identifying and acquiring companies with
complementary product lines or customers. We may be unable to identify suitable acquisition
candidates or consummate desired acquisitions and, if we do make any acquisitions, we may
be unable to successfully integrate any acquired companies with our operations, which could
adversely affect our business, results of operations and financial condition.
Ø
We are subject to many environmental laws and regulations that could result in
significant expenses and could adversely affect our business, results of operations and
financial condition.
Table of Contents
Ø
Our products may be found to be defective and, as a result, product liability claims may
be asserted against us, which may harm our business, reputation with our customers, results
of operations and financial condition.
Ø
We may fail to attract or retain the qualified technical, sales, marketing and
management personnel required to operate our business successfully, which could adversely
affect on our business, results of operations and financial condition.
Ø
We may not be able to maintain our growth or achieve future growth and such growth may
place a strain on our management and on our systems and resources, which could adversely
affect our business, results of operations and financial condition.
Ø
Obsolete inventories as a result of changes in demand for our products and change in
life cycles of our products could adversely affect our business, results of operations and
financial condition.
Ø
If OEMs do not design our products into their applications, a portion of our net sales may be adversely affected.
Ø
We are subject to interest rate risk that could have an adverse effect on our cost of working capital and interest expenses.
Ø
Restrictions in our credit facilities may limit our business and financial activities,
including our ability to obtain additional capital in the future.
Ø
The value of our defined benefit plan assets and liabilities is based on estimates and
assumptions, which may prove inaccurate and the actual amount of expenses recorded in the
consolidated financial statements could differ materially from the assumptions used.
Ø
Due to fluctuations in the U.K.s equity markets and bond markets, changes in actuarial
assumptions for our defined benefit plan could increase the volatility of the plans asset
value, require us to increase cash contributions to the plan and have a negative impact on
our results of operations and financial condition.
Ø
In 2010, we established a joint venture to build a semiconductor facility in Chengdu,
Peoples Republic of China. We are required to contribute at least $47.5 million to the
joint venture during the first three years with additional contributions thereafter, as
well as a substantial amount of time and resources to establish and operate the joint
venture. Any failure to meet any such requirements, delays or unforeseen circumstances may
cause us to incur penalties or require us to contribute additional expenses or resources
and, as a result, could have an adverse effect on our operating efficiencies, results of
operations and financial conditions.
Ø
Certain of our customers and suppliers require us to comply with their codes of
conducts, which may include certain restrictions that may substantially increase the cost
of our business as well as have an adverse effect on our operating efficiencies, results of
operations and financial condition.
Ø
There are risks associated with previous and future acquisitions. We may ultimately not
be successful in overcoming these risks or any other problems encountered in connection
with acquisitions.
Ø
If we fail to maintain an effective system of internal controls or discover material
weaknesses in our internal control over financial reporting, we may not be able to report
our financial results accurately or detect fraud, which could harm our business and the
trading price of our Common Stock.
Ø
Terrorist attacks, or threats or occurrences of other terrorist activities, whether in
the United States or internationally, may affect the markets in which our Common Stock
trades, the markets in which we operate, and our results of operations and financial
condition.
Ø
Our international operations subject us to risks that could adversely affect our
operations.
Ø
We have significant operations and assets in China, Taiwan, Hong Kong and U.K. and, as
a result, will be subject to risks inherent in doing business in those jurisdictions, which
may adversely affect our financial performance.
Ø
A slowdown in the Chinese economy could limit the growth in demand for electronic
devices containing our products, which would have a material adverse effect on our
business, results of operations and prospects.
Ø
Economic regulation in China could materially and adversely affect our business, results
of operations and prospects.
Table of Contents
Ø
We could be adversely affected by violations of the United States Foreign Corrupt
Practices Act and similar worldwide anti-bribery laws.
Ø
We are subject to foreign currency risk as a result of our international operations.
Ø
The Peoples Republic of China is experiencing rapid social, political and economic
change, which has increased labor costs and other related costs that could make doing
business in China less advantageous than in prior years. Increased labor costs in China
could adversely affect our business, results of operations and financial condition.
Ø
We may not continue to receive preferential tax treatment in Asia, thereby increasing
our income tax expense and reducing our net income.
Ø
The distribution of any earnings of our foreign subsidiaries to the United States may
be subject to U.S. income taxes, thus reducing our net income.
Ø
Variations in our quarterly operating results may cause our stock price to be volatile.
Ø
We may enter into future acquisitions and take certain actions in connection with such
acquisitions that could adversely affect the price of our Common Stock.
Ø
Our directors, executive officers and significant stockholders hold a substantial
portion of our Common Stock, which may lead to conflicts with other stockholders over
corporate transactions and other corporate matters.
Ø
We were formed in 1959, and our early corporate records are incomplete. As a result, we
may have difficulty in assessing and defending against claims relating to rights to our
Common Stock purporting to arise during periods for which our records are incomplete.
Ø
Non-cash tender offers, debt equity swaps or equity exchanges to consummate our business
activities are likely to have the effect of diluting the ownership interest of existing
stockholders, including qualified stockholders who receive shares of our Common Stock in
such business activities.
Ø
The repurchase rights and the increased conversion rate triggered by a make-whole
fundamental change could discourage a potential acquirer.
Ø
Anti-takeover effects of certain provisions of Delaware law and our Certificate of
Incorporation and Bylaws, may hinder a take-over attempt.
Ø
Section 203 of Delaware General Corporation Law may deter a take-over attempt.
Ø
Our Certificate of Incorporation and Bylaw Provisions may deter a take-over attempt.
Table of Contents
- 31 -
recorded, processed, summarized and reported within the time period specified in
the Commissions rules and forms; and
accumulated and communicated to our management, including the Chief Executive
Officer and the Chief Financial Officer, to allow timely decisions required
disclosure.
Table of Contents
- 32 -
- 33 -
- 34 -
Table of Contents
Exhibit
Filed
Number
Description
Form
Date of First Filing
Number
Herewith
Certificate of Incorporation, as amended
S-3
September 8, 2005
3.1
Amended By-laws of the Company dated July 19, 2007
8-K
July 23, 2007
3.1
Form of Certificate for Common Stock, par value
$0.66 2/3 per share
S-3
August 25, 2005
4.1
Form of 2.25% Convertible Senior Notes due 2026
S-3
October 4, 2006
4.1
Form of Indenture for the 2.25% Convertible Senior
Notes due 2026
S-3
October 4, 2006
4.3
First Floor of the Accommodation Building
Agreement, dated June 1, 2011, between Shanghai
Kai Hong Technology Company Limited and Shanghai
Ding Hong Electronic Company Limited.
10-Q
10.1
X
Third Floor of the Dormitory Building Lease
Agreement, dated July 1, 2011, between Shanghai
Kai Hong Technology Company Limited and Shanghai
Ding Hong Electronic Company Limited.
10-Q
10.2
X
Third Supplemental Agreement to the Factory
Building Lease Agreement, dated May 16, 2011,
between Shanghai Kai Hong Technology Company
Limited and Shanghai Yuan Hao Electronic Company
Limited.
10-Q
10.3
X
Certification Pursuant to Rule 13a-14(a) of the
Securities Exchange Act of 1934, adopted pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.
X
Certification Pursuant to Rule 13a-14(a) of the
Securities Exchange Act of 1934, adopted pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.
X
Certification Pursuant to 18 U.S.C. adopted
pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
X
Certification Pursuant to 18 U.S.C. adopted
pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
X
XBRL Instance Document
XBRL Taxonomy Extension Schema
XBRL Taxonomy Extension Calculation Linkbase
XBRL Taxonomy Extension Labels Linkbase
XBRL Taxonomy Extension Presentation Linkbase
XBRL Taxonomy Extension Definition Linkbase
Table of Contents
*
A certification furnished pursuant to Item 601 of the Regulation
S-K will not be deemed filed for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended (the Exchange Act),
or otherwise subject to the liability of that section. Such
certification will not be deemed to be incorporated by reference
into any filing under the Securities Act of 1933, as amended, or
the Exchange Act, except to the extent that the registrant
specifically incorporates it by reference.
**
Pursuant to Rule 406T of Regulation S-T, these interactive data
files are deemed not filed or part of a registration statement or
prospectus for purposes of Sections 11 or 12 of the Securities Act
of 1933 or Section 18 of the Securities Exchange Act of 1934 and
otherwise are not subject to liability.
Table of Contents
- 35 -
By:
/s/ Richard D. White
November 9, 2011
RICHARD D. WHITE
Chief Financial Officer, Treasurer and Secretary
(Duly Authorized Officer and Principal Financial and
Chief Accounting Officer)
- 1 -
- 2 -
- 3 -
(1) | sub-lease the First Floor or exchange the use of the First Floor with any third party without Ding Hongs prior written consent. | ||
(2) | alter the structure of the First Floor or damage the Accommodation Building without Ding Hongs prior written consent. | ||
(3) | change the lease purpose stipulated by the competent authorities without Ding Hongs consent. | ||
(4) | do anything unlawful within the First Floor Lease area. |
- 4 -
- 5 -
- 6 -
- 7 -
Shanghai Kai Hong Technology Co., Ltd.
|
||||
By | /s/ Justin Kong | |||
Authorized Representative | ||||
Date: | ||||
Shanghai Ding Hong Electronic Co., Ltd.
|
||||
By | /s/Jian Ya Xing | |||
Authorized Representative | ||||
Date: |
- 8 -
- 9 -
- 1 -
- 2 -
- 3 -
(1) | sub-lease the Third Floor or exchange the use of the Third Floor with any third party without Ding Hongs prior written consent. | ||
(2) | alter the structure of the Third Floor or damage the Dormitory Building without Ding Hongs prior written consent. | ||
(3) | change the lease purpose stipulated by the competent authorities without Ding Hongs consent. | ||
(4) | do anything unlawful within the Third Floor Lease area. |
- 4 -
- 5 -
- 6 -
- 7 -
Shanghai Kai Hong Technology Co., Ltd.
|
||||
By | /s/ Justin Kong | |||
Authorized Representative | ||||
Date: | ||||
Shanghai Ding Hong Electronic Co., Ltd.
|
||||
By | /s/ Jian Ya Xing | |||
Authorized Representative | ||||
Date: | ||||
- 8 -
- 9 -
- 1 -
- 2 -
- 3 -
Shanghai Kai Hong Technology Co., Ltd. | Shanghai Yuan Hao Electronic Co., Ltd. | |||||||||
|
||||||||||
By
|
/s/ Justin Kong | By | /s/ Jian Ya Xing | |||||||
|
|
|
||||||||
|
Date: | Date: |
- 4 -
/s/ Keh-Shew Lu | ||||
Keh-Shew Lu | ||||
President and Chief Executive Officer
Date: November 9, 2011 |
/s/ Richard D. White | ||||
Richard D. White | ||||
Chief Financial Officer
Date: November 9, 2011 |
Very truly yours,
|
||||
/s/ Keh-Shew Lu | ||||
Keh-Shew Lu | ||||
President and Chief Executive Officer
Date: November 9, 2011 |
||||
/s/ Richard D. White | ||||
Richard D. White | ||||
Chief Financial Officer
Date: November 9, 2011 |
||||