10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2014

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 incorporation or organization)	(I.R.S. Employer Identification Number)

4949 Hedgcoxe Road, Suite 200 Plano, Texas	75024
(Address of principal executive offices)	(Zip code)

(972) 987-3900

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No   ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No   ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨     No  x

The number of shares of the registrant’s Common Stock outstanding as of August 4, 2014 was 47,565,351.

Table of Contents

	Page
Part I – Financial Information	-1-
Item 1 – Financial Statements	-1-
Consolidated Condensed Balance Sheets as of June 30, 2014 and December 31, 2013	-1-
Consolidated Condensed Statements of Operations for the Three and Six Months Ended June 30, 2014 and 2013	-3-
Consolidated Condensed Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2014 and 2013	-4-
Consolidated Condensed Statements of Cash Flows for the Six Months Ended June 30, 2014 and 2013	-5-
Notes to Consolidated Condensed Financial Statements	-6-
Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations	-17-
Item 3 – Quantitative and Qualitative Disclosures About Market Risk	-27-
Item 4 – Controls and Procedures	-27-
Part II – Other Information	-28-
Item 1 – Legal Proceedings	-28-
Item 1A – Risk Factors	-28-
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds	-29-
Item 3 – Defaults Upon Senior Securities	-29-
Item 4 – Mine Safety Disclosures	-29-
Item 5 – Other Information	-29-
Item 6 – Exhibits	-30-
Signature	-31-

PART I—FINANCIAL INFORMATION

Item 1—Financial Statements

DIODES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

(In thousands)

ASSETS

	June 30,		December 31,
	2014		2013
	(Unaudited)
CURRENT ASSETS
Cash and cash equivalents	$	235,465	$	196,635
Short-term investments		17,656		22,922
Accounts receivable, net		187,839		192,267
Inventories		182,781		180,396
Deferred income taxes, current		9,823		10,513
Prepaid expenses and other		54,628		47,352
Total current assets		688,192		650,085
PROPERTY, PLANT AND EQUIPMENT, net		312,542		322,013
DEFERRED INCOME TAXES, non-current		22,360		28,237
OTHER ASSETS
Goodwill		85,960		84,714
Intangible assets, net		49,976		53,571
Other		26,705		23,638
Total assets	$	1,185,735	$	1,162,258

The accompanying notes are an integral part of these consolidated condensed financial statements.

-1-

DIODES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS (continued)

LIABILITIES AND EQUITY

(In thousands, except share data)

	June 30,			December 31,
	2014			2013
	(Unaudited)
CURRENT LIABILITIES
Lines of credit	$	2,487		$	5,814
Accounts payable		101,050			89,212
Accrued liabilities		63,134			60,684
Income tax payable		1,241			1,206
Total current liabilities		167,912			156,916
LONG-TERM DEBT, net of current portion		162,702			182,799
OTHER LONG-TERM LIABILITIES		74,324			78,866
Total liabilities		404,938			418,581
COMMITMENTS AND CONTINGENCIES (See Note H)
EQUITY
Diodes Incorporated 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; 47,078,198 and 46,680,973 issued and outstanding at June 30, 2014 and December 31, 2013, respectively		31,387			31,120
Additional paid-in capital		298,920			289,668
Retained earnings		453,915			426,328
Accumulated other comprehensive loss		(45,070	)		(44,374	)
Total Diodes Incorporated stockholders' equity		739,152			702,742
Noncontrolling interest		41,645			40,935
Total equity		780,797			743,677
Total liabilities and equity	$	1,185,735		$	1,162,258

The accompanying notes are an integral part of these consolidated condensed financial statements.

-2-

DIODES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
NET SALES	$	223,217		$	214,379		$	433,203		$	391,343
COST OF GOODS SOLD		152,913			153,086			301,318			283,867
Gross profit		70,304			61,293			131,885			107,476
OPERATING EXPENSES
Selling, general and administrative		33,291			35,080			65,621			65,456
Research and development		12,781			12,145			25,701			22,225
Other operating expenses		1,089			3,830			3,077			5,781
Total operating expenses		47,161			51,055			94,399			93,462
Income from operations		23,143			10,238			37,486			14,014
OTHER INCOME (EXPENSES)		359			277			(991	)		798
Income before income taxes and noncontrolling interest		23,502			10,515			36,495			14,812
INCOME TAX PROVISION		5,651			1,475			8,198			8,049
NET INCOME		17,851			9,040			28,297			6,763
Less: NET INCOME attributable to noncontrolling interest		(466	)		(405	)		(710	)		(54	)
NET INCOME attributable to common stockholders	$	17,385		$	8,635		$	27,587		$	6,709
EARNINGS PER SHARE attributable to common stockholders
Basic	$	0.37		$	0.19		$	0.59		$	0.15
Diluted	$	0.36		$	0.18		$	0.57		$	0.14
Number of shares used in computation
Basic		46,889			46,148			46,794			46,085
Diluted		48,423			47,507			48,223			47,383

The accompanying notes are an integral part of these consolidated condensed financial statements.

-3-

DIODES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(In thousands)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
Net income	$	17,851		$	9,040		$	28,297		$	6,763
Translation adjustment		3,712			(859	)		(145	)		(8,395	)
Unrealized gain (loss) on defined benefit plan, net of tax		(1,816	)		2,659			(550	)		1,181
Comprehensive income (loss)		19,747			10,840			27,602			(451	)
Less: Comprehensive income attributable to noncontrolling interest		(466	)		(405	)		(710	)		(54	)
Total comprehensive income (loss) attributable to common stockholders	$	19,281		$	10,435		$	26,892		$	(505	)

The accompanying notes are an integral part of these consolidated condensed financial statements.

-4-

DIODES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	Six Months Ended
	June 30,
	2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES	$	80,066		$	61,173
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition, net of cash acquired		-			(124,916	)
Purchases of property, plant and equipment		(23,668	)		(23,751	)
Proceeds from sales of property, plant and equipment		1,428			51
Proceeds from maturity of short-term investments		5,380			-
Purchases of equity securities		(1,842	)		-
Proceeds from sale of equity securities		-			7,458
Other		1,280			(3,799	)
Net cash used by investing activities		(17,422	)		(144,957	)
CASH FLOWS FROM FINANCING ACTIVITIES
Advances on lines of credit		4,335			4,963
Repayments on lines of credit		(7,622	)		(25,711	)
Borrowings of long-term debt		-			181,002
Repayments of long-term debt		(20,710	)		(15,536	)
Net proceeds from issuance of common stock		2,913			1,366
Other		(147	)		(2,844	)
Net cash provided by (used by) financing activities		(21,231	)		143,240
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		(2,583	)		(3,031	)
INCREASE IN CASH AND CASH EQUIVALENTS		38,830			56,425
CASH AND CASH EQUIVALENTS, beginning of period		196,635			157,121
CASH AND CASH EQUIVALENTS, end of period	$	235,465		$	213,546
SUPPLEMENTAL CASH FLOW INFORMATION:
Non-cash financing activities:
Property, plant and equipment purchased on accounts payable	$	(1,968	)	$	(330	)
Acquisition:
Fair value of assets acquired	$	-		$	247,012
Liabilities assumed		-			(92,277	)
Cash acquired		-			(29,819	)
Net assets acquired	$	-		$	124,916

The accompanying notes are an integral part of these consolidated condensed financial statements.

-5-

DIODES INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited)

NOTE A – Nature of Operations, Basis of Presentation and Recently Issued Accounting Pronouncements

Nature of Operations

Diodes Incorporated, together with its subsidiaries (collectively, the “Company”), is a leading global manufacturer and supplier of high-quality, application specific standard products within the broad discrete, logic and analog semiconductor markets, serving the consumer electronics, computing, communications, industrial and automotive markets throughout Asia, North America and Europe.

Basis of Presentation

The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S.”) (“GAAP”) for interim financial information and with the instructions to Form 10-Q. They do not include all information and footnotes necessary for a fair presentation of financial position, results of operations and cash flows in conformity with U.S. GAAP for complete financial statements. These consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. All significant intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, all adjustments (consisting of normal recurring adjustments and accruals) considered necessary for a fair presentation of the results of operations for the period presented have been included in the interim period. Operating results for the three and six months ended June 30, 2014 are not necessarily indicative of the results that may be expected for other interim periods or the year ending December 31, 2014. The consolidated condensed financial data at December 31, 2013 is derived from audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, filed on February 27, 2014.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. As permitted under U.S. GAAP, interim accounting for certain expenses, including income taxes, are based on full year forecasts. For interim financial reporting purposes, income taxes are recorded based upon estimated annual effective income tax rates taking into consideration discrete items occurring in a quarter.

Certain prior year’s balances have been reclassified to conform to the current financial statement presentation.

Recently Issued Accounting Pronouncements

In April 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. Under ASU 2014-08, only disposals that represent a strategic shift that has (or will have) a major effect on the entity’s results and operations would qualify as discontinued operations, which could include a disposal of a major geographical area, a major line of business, a major equity method investment, or other major parts of an entity. ASU 2014-08 also expands the disclosure requirements for disposals of operations to include more information about assets, liabilities, income and expenses and requires entities to disclose information about disposals of individually significant components. ASU 2014-08 is effective in the first quarter of 2015, with early adoption permitted and could impact the Company’s consolidated financial results in the event of a transaction as described above.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606).  ASU 2014-09 is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract.  ASU 2014-09 is effective in the first quarter of 2017, with early adoption not permitted and requires either a retrospective or a modified retrospective approach to adoption.  The Company has not yet selected a transition method and is currently evaluating the effect that the updated standard will have on its consolidated financial statements and related disclosures.

-6-

NOTE B – Earnings Per Share

Basic earnings per share is calculated by dividing net income attributable to common stockholders by the weighted-average number of shares of Common Stock outstanding during the period. Diluted earnings per share is calculated similarly but includes potential dilution from the exercise of stock options and stock awards, except when the effect would be anti-dilutive.

The computation of basic and diluted earnings per common share is as follows (in thousands, except per share data):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
BASIC
Weighted average number of common shares outstanding   used in computing basic earnings per share		46,889		46,148		46,794		46,085
Net income attributable to common stockholders	$	17,385	$	8,635	$	27,587	$	6,709
Earnings per share attributable to common stockholders	$	0.37	$	0.19	$	0.59	$	0.15
DILUTED
Weighted average number of common shares outstanding   used in computing basic earnings per share		46,889		46,148		46,794		46,085
Add:  Dilutive effect of stock options and stock awards outstanding		1,534		1,359		1,429		1,298
		48,423		47,507		48,223		47,383
Net income attributable to common stockholders	$	17,385	$	8,635	$	27,587	$	6,709
Earnings per share attributable to common stockholders	$	0.36	$	0.18	$	0.57	$	0.14

NOTE C – Inventories

Inventories stated at the lower of cost or market value are as follows (in thousands):

	June 30,		December 31,
	2014		2013
Raw materials	$	71,197	$	69,878
Work-in-progress		46,540		43,031
Finished goods		65,044		67,487
Total	$	182,781	$	180,396

NOTE D – Goodwill and Intangible Assets

Changes in goodwill are as follows (in thousands):

Balance at December 31, 2013	$	84,714
Translation adjustment		1,246
Balance at June 30, 2014	$	85,960

-7-

Intangible assets are as follows (in thousands):

	June 30,			December 31,
	2014			2013
Intangible assets subject to amortization:
Gross carrying amount	$	86,929		$	86,925
Accumulated amortization		(36,220	)		(32,245	)
Translation adjustment		(6,710	)		(7,000	)
Total		43,999			47,680
Intangible assets with indefinite lives:
Gross carrying amount		6,403			6,403
Translation adjustment		(426	)		(512	)
Total		5,977			5,891
Total intangible assets, net	$	49,976		$	53,571

Amortization expense related to intangible assets subject to amortization was approximately $2 million for both the three months ended June 30, 2014 and 2013, and approximately $4 million for both the six months ended June 30, 2014 and 2013.

NOTE E – Income Tax Provision

Income tax expense of approximately $6 million and $1 million was recorded for the three months ended June 30, 2014 and 2013, respectively, and income tax expense of approximately $8 million was recorded for both the six months ended June 30, 2014 and 2013. This resulted in an effective tax rate of 22% for the six months ended June 30, 2014, as compared to 54% in the same period last year and compared to 38% for the full year of 2013.   The effective tax rate for the six months ended June 30, 2014 includes a $2 million benefit for discrete items, primarily resulting from the conclusion of a tax audit.  The effective tax rate for the six months ended June 30, 2013 includes a $6 million charge for discrete items during the period, primarily resulting from a tax audit by the China tax authorities. The estimated annual tax rate for 2014 is expected to be approximately 28%, excluding discrete items.  The Company’s effective tax rates for the six months ended June 30, 2014 and 2013, excluding discrete items, were lower than the U.S. statutory tax rate of 35%, principally from the impact of income in lower-taxed jurisdictions.

For the three months ended June 30, 2014, the Company reported domestic and foreign pre-tax income of approximately $1 million and $23 million, respectively. For the six months ended June 30, 2014, the Company reported domestic and foreign pre-tax income of approximately $4 million and $32 million, respectively. Funds repatriated from foreign subsidiaries to the U.S. may be subject to federal and state income taxes. The Company intends to permanently reinvest overseas all of its earnings from its foreign subsidiaries, except to the extent such undistributed earnings have previously been subject to US tax; accordingly, deferred U.S. taxes are not recorded on undistributed foreign earnings.

The impact of tax holidays decreased the Company’s tax expense by approximately $1 million and $2 million for the six months ended June 30, 2014 and 2013, respectively. The benefit of the tax holidays on both basic and diluted earnings per share for the six months ended June 30, 2014 was approximately $0.03. The benefit of the tax holidays on both basic and diluted earnings per share for the six months ended June 30, 2013 was approximately $0.04.

The Company files income tax returns in the U.S. federal jurisdiction and in various state and foreign jurisdictions. The Company is no longer subject to U.S. federal income tax examinations by tax authorities for tax years before 2007, or for the 2010 tax year.  With respect to state and local jurisdictions and countries outside of the U.S., with limited exceptions, the Company is no longer subject to income tax audits for years before 2006. Although the outcome of tax audits is always uncertain, the Company believes that adequate amounts of tax, interest and penalties, if any, have been provided for in the Company’s reserve for any adjustments that may result from tax audits. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in interest expense. As of June 30, 2014, the gross amount of unrecognized tax benefits was approximately $21 million.

It is reasonably possible that the amount of the unrecognized benefit with respect to certain of the Company’s unrecognized tax positions will significantly increase or decrease within the next 12 months. At this time, an estimate of the range of the reasonably possible outcomes cannot be made.

-8-

NOTE F – Share-Based Compensation

The following table shows the total compensation expensed for share-based compensation plans, including stock options and share grants, recognized in the statements of operations (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
Cost of sales	$	107	$	126	$	203	$	249
Selling and administrative expense		2,979		2,877		5,829		5,720
Research and development expense		305		301		578		591
Total share-based compensation expense	$	3,391	$	3,304	$	6,610	$	6,560

Stock Options. Stock options generally vest in equal annual installments over a four-year period and expire eight years after the grant date, and expense was estimated on the date of grant using the Black-Scholes-Merton option pricing model.

The total net cash proceeds received from stock option exercises during the six months ended June 30, 2014 was approximately $3 million. Stock option expense was approximately $1 million for both the three months ended June 30, 2014 and 2013, and $2 million for both the six months ended June 30, 2014 and 2013.

A summary of the stock option grants is as follows:

Stock Options	Shares (000)			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (yrs)		Aggregate Intrinsic Value ($000)
Outstanding at January 1, 2014		3,126		$	18.93		4	$	17,461
Granted		176			27.92
Exercised		(304	)		9.66				5,422
Forfeited or expired		(2	)		29.21
Outstanding at June 30, 2014		2,996		$	20.39		4	$	25,754
Exercisable at June 30, 2014		2,406		$	19.43		3	$	22,967

The aggregate intrinsic value in the table above is before applicable income taxes and represents the amount option holders would have received if all options had been exercised on the last business day of the period indicated, based on the Company’s closing stock price.

As of June 30, 2014, total unrecognized share-based compensation expense related to unvested stock options, net of forfeitures, was approximately $7 million, before income taxes, and is expected to be recognized over a weighted average period of approximately 3 years.

Share Grants. Restricted stock awards and restricted stock units generally vest in equal annual installments over a four-year period.

Share grant expense for the three months ended June 30, 2014 and 2013 was approximately $3 million and $2 million, respectively, and share grant expense for both the six months ended June 30, 2014 and 2013 was approximately $5 million.

-9-

A summary of the Company’s non-vested share grants is as follows:

Share Grants	Shares (000)			Weighted Average Grant-Date Fair Value		Aggregate Intrinsic Value ($000)
Non-vested at January 1, 2014		1,131		$	22.35	$	26,656
Granted		234			27.46
Vested		(95	)		22.42		2,606
Forfeited		(12	)		21.81
Non-vested at June 30, 2014		1,258		$	23.32	$	30,650

As of June 30, 2014, total unrecognized share-based compensation expense related to non-vested stock awards, net of forfeitures, was approximately $20 million, before income taxes, and is expected to be recognized over a weighted average period of approximately 3 years.

-10-

NOTE G – Segment Information and Enterprise-Wide Disclosure

For financial reporting purposes, the Company operates in a single segment, standard semiconductor products, through the Company’s various manufacturing and distribution facilities. The Company aggregates its products because the products are similar and have similar economic characteristics, and the products are similar in production process and share the same customer type.

The Company’s primary operations include the domestic operations in Asia, North America and Europe.

Revenues are attributed to geographic areas based on the location of subsidiaries producing the revenues (in thousands):

Three Months Ended	Asia			North America			Europe			Consolidated
June 30, 2014
Total sales	$	200,955		$	38,304		$	47,383		$	286,642
Inter-company sales		(25,518	)		(15,650	)		(22,257	)		(63,425	)
Net sales	$	175,437		$	22,654		$	25,126		$	223,217
Three Months Ended	Asia			North America			Europe			Consolidated
June 30, 2013
Total sales	$	195,735		$	37,253		$	39,993		$	272,981
Inter-company sales		(18,873	)		(18,657	)		(21,072	)		(58,602	)
Net sales	$	176,862		$	18,596		$	18,921		$	214,379
As of and for the Six Months Ended	Asia			North America			Europe			Consolidated
June 30, 2014
Total sales	$	390,322		$	75,089		$	88,929		$	554,340
Inter-company sales		(48,802	)		(30,387	)		(41,948	)		(121,137	)
Net sales	$	341,520		$	44,702		$	46,981		$	433,203
Property, plant and equipment, net	$	262,186		$	28,016		$	22,340		$	312,542
Total assets	$	866,715		$	130,085		$	188,935		$	1,185,735
As of and for the Six Months Ended	Asia			North America			Europe			Consolidated
June 30, 2013
Total sales	$	352,535		$	72,061		$	77,630		$	502,226
Inter-company sales		(34,896	)		(35,424	)		(40,563	)		(110,883	)
Net sales	$	317,639		$	36,637		$	37,067		$	391,343
Property, plant and equipment, net	$	277,608		$	30,579		$	23,100		$	331,287
Total assets	$	837,332		$	150,733		$	183,509		$	1,171,574

-11-

Geographic Information

Revenues were derived from (shipped to) customers located in the following countries (in thousands):

	Net Sales
	for the Three Months				Percentage of
	Ended June 30,				Net Sales
	2014		2013		2014			2013
China	$	139,703	$	139,113		63	%		65	%
United States		21,765		16,604		10	%		8	%
Germany		16,372		12,263		7	%		6	%
Korea		14,110		16,119		6	%		8	%
Singapore		12,498		12,784		6	%		6	%
Taiwan		6,698		6,763		3	%		3	%
All Others (1)		12,071		10,733		5	%		5	%
Total	$	223,217	$	214,379		100	%		100	%
	Net Sales
	for the Six Months				Percentage of
	Ended June 30,				Net Sales
	2014		2013		2014			2013
China	$	267,160	$	246,757		62	%		63	%
United States		41,406		34,021		10	%		9	%
Korea		34,235		31,566		8	%		8	%
Germany		31,199		23,291		7	%		6	%
Singapore		22,116		21,719		5	%		6	%
Taiwan		13,581		11,916		3	%		3	%
All Others (1)		23,506		22,073		5	%		6	%
Total	$	433,203	$	391,343		100	%		100	%

⁽¹⁾ Represents countries with less than 3% of the total revenues each.

NOTE H – Commitments and Contingencies

Purchase commitments – As of June 30, 2014, the Company had approximately $17 million in non-cancelable purchase contracts related to capital expenditures, primarily for manufacturing equipment in China.

Contingencies – From time to time, the Company may be involved in a variety of legal matters that arise in the normal course of business. Based on information available, the Company evaluates the likelihood of potential outcomes. The Company records the appropriate liability when it is considered probable and the amount is reasonably estimable. In addition, the Company does not accrue for estimated legal fees and other directly related costs as they are expensed as incurred.

The Company is currently a party to a purported stockholder derivative action in the United States District Court for the District of Delaware, entitled Scherer v. Keh-Shew Lu, Civil Action No. 1:13-cv-00358-UNA (D. Del. filed Mar. 5, 2013), on behalf of the Company against its directors, in which plaintiff alleges that (a) the Board approved awards of stock options to Dr. Keh-Shew Lu, our President and Chief Executive Officer, in 2009, 2010, 2011 and 2012 that exceeded the limitation on the number of shares of the Company’s Common Stock that may be purchased upon the exercise of options granted to any person in any given year under the Company’s 2001 Omnibus Equity Incentive Plan as amended by the stockholders on May 28, 2009; (b) the Company’s disclosures in its 2010, 2011 and 2012 proxy statements regarding the limitation on the number of shares of the Company’s Common Stock that may be purchased upon the exercise of options granted to any person in any given year under the Company’s 2001 Omnibus Equity Incentive Plan as amended by the stockholders on May 28, 2009 were inaccurate; and (c) the Company’s disclosures in its 2010, 2011 and 2012 proxy statements that the grants of stock options to Dr. Lu in 2009, 2010, 2011 and 2012 complied with the terms of the Company’s 2001 Omnibus Equity Incentive Plan as amended by the stockholders on May 28, 2009 were incorrect. The Compensation Committee reviewed the grants of stock options to Dr. Lu in 2009, 2010, 2011 and 2012 (each such annual grant, an “Option Grant”), and approved a Confirmation Agreement, dated April 1, 2013, in which the Company and Dr. Lu agreed and confirmed that Dr. Lu will assert no claim that any Option Grant in 2009, 2010, 2011 or 2012 provided for the purchase of more than 100,000 shares of the Company’s Common Stock, and that each Option Grant document be deemed amended to reflect the foregoing 100,000 share

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limitation. On April 3, 2013, defendants and the Company filed answers to the complaint. On May 8, 2013, defendants filed a motion for judgment on the pleadings dismissing the action on the ground that the claims are moot. On June 24, 2013, the Court approved the parties’ stipulation providing for the withdrawal of the motion for judgment on the pleadings and the dismissal of the action as moot upon the filing and adjudication of plaintiff’s motion for an award of attorney’s fees and costs. On July 29, 2013, plaintiff filed a motion for an award of attorneys’ fees and costs. On September 20, 2013, the Company filed its opposition to plaintiff’s motion. On October 11, 2013, plaintiff filed her reply in further support of her motion. No hearing date has been set for this motion.

The Company is also currently a party to a putative securities class action in the United States District Court for the Eastern District of Texas, entitled Local 731 I.B. of T. Excavators and Pavers Pension Trust Fund v. Diodes, Inc., Civil Action No. 6:13-cv-00247 (E.D. Tex. filed Mar. 15, 2013), (the “Class Action”) against the Company, Dr. Lu and Richard D. White. In this action, plaintiff purportedly on behalf of a class of investors who purchased the Company’s Common Stock between February 9, 2011 and June 9, 2011, alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Securities and Exchange Commission Rule 10b-5 promulgated thereunder by making allegedly misleading public statements during the class period regarding the labor market in China and its impact on the Company’s business and prospects. On June 14, 2013, the Court entered an order appointing Local 731 I.B. of T. Excavators and Pavers Pension Trust Fund as lead plaintiff and approved lead plaintiff’s selection of Robbins Geller Rudman & Dowd as lead plaintiff’s counsel and the Ward & Smith Law Firm as lead plaintiff’s liaison counsel. On August 1, 2013, lead plaintiff filed an amended complaint reiterating the same claims for relief against the same defendants as asserted in the original complaint. On September 16, 2013, defendants filed a motion to dismiss the amended complaint. Lead plaintiff’s opposition to defendants’ motion to dismiss was filed on October 31, 2013. No hearing date has been set for this motion. Pursuant to the Private Securities Litigation Reform Act of 1995, all discovery and other proceedings are stayed pending a ruling on any motion to dismiss. The defendants intend to defend this action vigorously.

On February 20, 2014, a purported stockholder derivative action was filed in the United States District Court for the Eastern District of Texas, entitled Persson v. Keh-Shew Lu, Case No. 4:14-cv-00108-RC-ALM (E.D. Tex. filed Feb. 20, 2014), on behalf of the Company against its directors, in which plaintiff alleges that the directors breached their fiduciary duties by allowing the Company to make allegedly misleading public statements in 2011 regarding the labor market in China and its impact on the Company’s business and prospects, by failing to maintain internal controls and by selling shares of Diodes stock while allegedly in possession of material nonpublic information regarding the labor market in China and its impact on the Company’s business and prospects. The complaint does not seek any damages or other relief from the Company. On March 3, 2014, defendants accepted service of the complaint in this action. On April 2, 2014, this action was transferred to the judge presiding over the Class Action. On April 3, 2014, the Court granted defendants’ unopposed motion to extend their time to respond to the complaint to May 28, 2014. On April 17, 2014, the Court granted the parties’ unopposed motion to stay this action until such time that the Court rules on defendants’ motion to dismiss in the Class Action. The defendants intend to defend the action vigorously.

NOTE I – Employee Benefit Plans

Defined Benefit Plan

The Company has a contributory defined benefit plan that covers certain employees in the United Kingdom (“U.K.”). The net pension and supplemental retirement benefit obligations and the related periodic costs are based on, among other things, assumptions regarding the discount rate, estimated return on plan assets and mortality rates. These obligations and related periodic costs are measured using actuarial techniques and assumptions. The projected unit credit method is the actuarial cost method used to compute the pension liabilities and related expenses.

Net periodic benefit costs associated with the defined benefit plan were approximately $0 million for both the three months ended June 30, 2014 and 2013, and $1 million and $0 million for the six months ended June 30, 2014 and 2013, respectively.

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The following tables set forth the benefit obligation, the fair value of plan assets, and the funded status of the Company’s plan (in thousands):

	Defined Benefit Plan
Change in benefit obligation:
Balance at December 31, 2013	$	149,316
Service cost		167
Interest cost		3,436
Actuarial loss		1,447
Benefits paid		(2,308	)
Settlements		-
Currency changes		4,919
Benefit obligation at June 30, 2014	$	156,977
Change in plan assets:
Fair value of plan assets at December 31, 2013	$	116,568
Actual return on plan assets		3,851
Employer contribution		334
Benefits paid		(2,308	)
Currency changes		3,834
Fair value of plan assets at June 30, 2014	$	122,279
Underfunded status at June 30, 2014	$	(34,698	)

Based on an actuarial study performed as of June 30, 2014, the plan is underfunded and a liability is reflected in the Company’s consolidated financial statements as a long-term liability. The weighted-average discount rate assumption used to determine benefit obligations as of June 30, 2014 was 4.5%.

The following weighted-average assumptions were used to determine net periodic benefit costs for the six months ended June 30, 2014:

Discount rate	4.6	%
Expected long-term return on plan assets	5.9	%

During the second quarter of 2012, the Company adopted a payment plan with the trustees of the defined benefit plan, in which the Company will pay approximately ₤2 million British Pound Sterling (“GBP”) (approximately $3 million based on a USD:GBP exchange rate of 1.6:1) every year from 2012 through 2019. As part of the required pension review, which occurs every three years under the United Kingdom pension regulations, the Company is currently in discussions with the trustees regarding future contributions for the pension scheme.

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The Company also has pension plans in Asia for which the benefit obligation, fair value of the plan assets and the funded status amounts are deemed immaterial and therefore, are not included in the figures or assumptions above.

Deferred Compensation

The Company maintains a Non-Qualified Deferred Compensation Plan (the “Deferred Compensation Plan”) for executive officers, key employees and members of the Board of Directors (the “Board”). The Deferred Compensation Plan allows eligible participants to defer the receipt of eligible compensation, including equity awards, until designated future dates. The Company offsets its obligations under the Deferred Compensation Plan by investing in the actual underlying investments. These investments are classified as trading securities and are carried at fair value. At June 30, 2014, these investments totaled approximately $4 million. All gains and losses in these investments are materially offset by corresponding gains and losses in the Deferred Compensation Plan liabilities.

NOTE J – Related Parties

The Company conducts business with three related companies: Lite-On Semiconductor Corporation and its subsidiaries and affiliates (collectively, “LSC”), Keylink International (B.V.I.) Inc. and its subsidiaries and affiliates (collectively, “Keylink”) and Nuvoton Technology Corporation and its subsidiaries and affiliates (collectively, “Nuvoton”). LSC owned approximately 18% of the Company’s outstanding Common Stock as of June 30, 2014. Keylink is the Company’s 5% joint venture partner in two of the Company’s Shanghai manufacturing facilities. A member of the Company’s Board of Directors who is also the Company’s President and Chief Executive Officer is a member of the Board of Directors of Nuvoton.  In addition, another member of the Company’s Board of Directors is a Supervisor of the Board of Directors of Nuvoton.

The Audit Committee of the Company’s Board reviews all related party arrangements for potential conflict of interest situations on an ongoing basis, in accordance with such procedures as the Audit Committee may adopt from time to time.

Lite-On Semiconductor Corporation – The Company sells products to LSC and purchases semiconductor products from LSC for subsequent sale, making LSC one of the Company’s largest suppliers.

Net sales to, and purchases from, LSC are as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
Net sales	$	164	$	296	$	279	$	399
Purchases	$	8,374	$	9,650	$	15,712	$	17,159

Keylink International (B.V.I.) Inc. – The Company sells products to Keylink and purchases semiconductor products for subsequent sale. In addition, two of the Company’s subsidiaries in China lease their manufacturing facilities from, and subcontract a portion of their manufacturing process (including, but not limited to, metal plating and environmental services) to Keylink. The Company also pays a consulting fee to Keylink. The aggregate amounts for these services for both the three months ended June 30, 2014 and 2013 were approximately $5 million.  The aggregate amounts for these services for both the six months ended June 30, 2014 and 2013 were approximately $9 million.

Net sales to, and purchases from, Keylink are as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
Net sales	$	2,116	$	1,561	$	4,380	$	5,209
Purchases	$	2,070	$	2,138	$	3,716	$	3,666

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Nuvoton Technology Corporation – The Company purchases wafers from Nuvoton that it uses in the production of finished goods.  

Net purchases from Nuvoton are as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
Purchases	$	3,237	$	3,248	$	6,573	$	5,095

Accounts receivable from, and accounts payable to, LSC, Keylink and Nuvoton are as follows (in thousands):

	June 30,		December 31,
	2014		2013
Accounts receivable
LSC	$	155	$	140
Keylink		3,400		4,927
	$	3,555	$	5,067
Accounts payable
LSC	$	5,919	$	5,670
Keylink		6,230		6,505
Nuvoton		1,154		770
	$	13,303	$	12,945

NOTE K – Subsequent Event

Zetex (Chengdu) Electronics Co., Ltd (“ZCEL”) was established in 1995; in which one of the Company’s subsidiaries became a 33% equity owner of ZCEL.  The Company has historically treated the investment under the equity method of accounting.  On July 7, 2014, the Company increased its equity ownership in ZCEL to 95% when it paid $4 million for an additional 62% of equity.    

The Company purchased the additional equity from a subsidiary of our joint venture partner, Chengdu Ya Guang Electric Company Limited, with whom the Company established a semiconductor manufacturing facility for surface-mounted component production, assembly and test in Chengdu, China and who owns 5% of the joint venture.

The Company acquired the additional equity in ZCEL to secure local plating services for its joint venture manufacturing facility in Chengdu, China where the Company can have its plating services completed locally.  The Company intends to account for the additional equity purchase as a business combination achieved in stages and will consolidate ZCEL as of July 1, 2014, which is not materially different from July 7, 2014.

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Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations

Except for the historical information contained herein, the matters addressed in this Item 2 constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended and as identified under the heading “Cautionary Statement for Purposes of the “Safe Harbor” Provision of the Private Securities Litigation Reform Act of 1995” herein. Such forward-looking statements are subject to a variety of risks and uncertainties, including those discussed below under the heading “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q, that could cause actual results to differ materially from those anticipated by the Company’s management. The Private Securities Litigation Reform Act of 1995 (the “Act”) provides certain “safe harbor” provisions for forward-looking statements. All forward-looking statements made in this Quarterly Report on Form 10-Q are made pursuant to the Act. The Company undertakes no obligation to publicly release the results of any revisions to its forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unexpected events. Unless the context otherwise requires, the words “Diodes,” the “Company,” “we,” “us” and “our” refer to Diodes Incorporated and its subsidiaries.

This management’s discussion should be read in conjunction with the management’s discussion included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013, previously filed with Securities and Exchange Commission. (Amounts are rounded to the nearest million).

Highlights

— Net sales for the three months ended June 30, 2014 was approximately $223 million, an increase of $9 million, or 4%, over the same period last year, and a sequential increase of 6% compared to the $210 million in the first quarter of 2014;

— Net sales for the six months ended June 30, 2014 was approximately $433 million, an increase of $42 million, or 11%, over the same period last year;

— Gross profit for the three months ended June 30, 2014 was approximately $70 million, an increase of $9 million, or 15%, over the same period last year, and a sequential increase of 14% compared to the $62 million in the first quarter of 2014;

— Gross profit for the six months ended June 30, 2014 was approximately $132 million, an increase of $24 million, or 23%, over the same period last year;

— Gross profit margin for the three months ended June 30, 2014 was 32%, compared to 29% in the same period last year, and 29% in the first quarter of 2014;

— Gross profit margin for the six months ended June 30, 2014 was 30%, compared to 27% in the same period last year;

— Net income attributable to common stockholders for the three months ended June 30, 2014 was approximately $17 million, or $0.36 per diluted share, compared to net income attributable to common stockholders of $9 million, or $0.18 per diluted share, in the same period last year, and net income attributable to common stockholders of $10 million, or $0.21 per diluted share, in the first quarter of 2014;

— Net income attributable to common stockholders for the six months ended June 30, 2014 was approximately $28 million, or $0.57 per diluted share, compared to net income attributable to common stockholders of $7 million, or $0.14 per diluted share, in the same period last year; and

— Cash flows from operating activities was approximately $80 million for the six months ended June 30, 2014.

Overview

We are a leading global manufacturer and supplier of high-quality, application specific standard products within the broad discrete, logic and analog semiconductor markets, serving the consumer electronics, computing, communications, industrial and automotive markets. Our products are sold primarily throughout Asia, North America and Europe.

We design, manufacture and market semiconductors for diverse end-use applications. Semiconductors, which provide electronic signal amplification and switching functions, are basic building-block electronic components that are incorporated into almost every electronic device. We believe that our focus on application-specific standard products utilizing innovative, highly efficient packaging and cost-effective process technologies, coupled with our collaborative, customer-focused product development, provides us with a meaningful competitive advantage relative to other semiconductor companies.

First Two Quarters of 2014

For the first quarter of 2014, revenue was essentially flat despite the Chinese New Year slowdown due to shipping inventory that we had strategically built-up during the fourth quarter of 2013. Most notably, gross margin improved by 50 basis points

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sequentially and 320 basis points year-over-year as a result of improved wafer fabrication performance, especially at BCD Fab 2 where the ramp-up is going smoothly, combined with an overall improvement in product mix. Also during the quarter, we improved our balance sheet by reducing long-term debt by approximately $17 million, which followed a reduction of almost $20 million last quarter. We generated approximately $46 million of cash flow from operations while reducing inventory and capital expenditure spending. During the first quarter, we experienced a rebound in Europe after a soft fourth quarter of 2013, while North America also showed some strength. Our strongest end-markets in the quarter were the automotive and industrial markets, largely offset by the computing and communications end-markets.

For the second quarter of 2014, financial results were at the upper end of our guidance.  Revenue grew over 6% sequentially and gross profit reached a quarterly record reflecting our improved product mix and increased capacity utilization.  Our achievement of 32% gross margin was the highest level since the second quarter of 2011. During the quarter, North America and Europe were stronger than expected, which contributed to further gains in industrial end-markets.  These regions have solid product mix distribution due to the end-markets and customers we serve in these geographies. Our strongest end-market in the quarter was industrial primarily due to strength in North America and Europe, as well as communications as a result of continued gains in smartphones and smartphone chargers.  In addition, we had a strong quarter in automotive and better than expected results in computing.

Business Outlook

Our strong second quarter results demonstrate the leverage in our operating model, and we expect to generate increased profits and cash as revenue continues to grow. For the third quarter of 2014, we expect revenue to increase to a range of $228 million and $238 million, or up 2.1% to 6.6% sequentially. We expect gross margin to be 31.8%, plus or minus 2%. Operating expenses are expected to be approximately 21.0% of revenue, plus or minus 1%. We expect our income tax rate to be 22%, plus or minus 3%, and shares used to calculate diluted earnings per share for the second quarter are anticipated to be approximately 48.8 million.

Factors Relevant to Our Results of Operations

The following has affected, and, we believe, will continue to affect, our results of operations:

— Net sales for the six months ended June 30, 2014 was $433 million, compared to $391 million in the same period last year. This increase in net sales mainly reflects the inclusion of 6 months of BCD revenue in 2014 compared to 4 months in 2013, an increase in units sold and an increase in average selling price (“ASP”).

— Our gross profit margin was 30% for the six months ended June 30, 2014, compared to 27% in the same period last year. Our gross margin percentage increased over the same period last year due primarily to improved wafer fabrication performance and improved product mix. Future gross profit margins will depend primarily on market prices, our product mix, manufacturing cost savings, and the demand for our products. For the six months ended June 30, 2014 and 2013, the percentage of our net sales derived from our Asian subsidiaries was approximately 79% and 81%, respectively. Europe accounted for approximately 11% of our revenues for the six months ended June 30, 2014, compared to 10% in the same period last year. In addition, North America accounted for approximately 10% of our revenues for the six months ended June 30, 2014, compared to 9% in the same period last year.

— Since inception, we have invested over $500 million in our manufacturing facilities in Asia, including costs for acquisitions. For the six months ended June 30, 2014, we invested approximately $12 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, among other factors, product demand and new product developments.

— For the six months ended June 30, 2014, our OEM and electronic manufacturing services (“EMS”) customers together accounted for approximately 32% of our net sales, while our global network of distributors accounted for approximately 68% of our net sales. Compared to prior years, the percentage of net sales to our global network of distributors has increased mainly due to acquisitions in which the majority of the net sales of the acquired companies are to distributors.

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Results of Operations for the Three Months Ended June 30, 2014 and 2013

The following table sets forth the percentage that certain items in the statements of operations bear to net sales and the percentage dollar increase (decrease) of such items from period to period.

	Percent of  Net Sales						Percentage Dollar
	Three Months Ended June 30,						Increase (Decrease)
	2014			2013			'13 to '14
Net sales		100	%		100	%		4
Cost of goods sold		(68	)		(71	)		-
Gross profit		32			29			15
Operating expenses		(22	)		(24	)		(8	)
Income from operations		10			5			127
Other income (expense)		-			-			(3	)
Income before income taxes and noncontrolling interest		10			5			124
Income tax provision		(3	)		(1	)		283
Net income (loss)		8			4			98
Net income (loss) attributable to noncontrolling interest		-			-			15
Net income (loss) attributable to common stockholders		8			4			101

The following discussion explains in greater detail our consolidated operating results and financial condition for the three months ended June 30, 2014, compared to the three months ended June 30, 2013. This discussion should be read in conjunction with the consolidated condensed financial statements and notes thereto appearing elsewhere in this quarterly report (in thousands).

	2014		2013
Net Sales	$	223,217	$	214,379

Net sales increased approximately $9 million for the three months ended June 30, 2014, compared to the same period last year. The 4% increase in net sales represented a 2% decrease in units sold and a 6% increase in ASP. The revenue increase for the three months ended June 30, 2014 was mainly attributable to increased revenue in our end-markets in North America and Europe, which tend to have higher ASP.

	2014			2013
Cost of goods sold	$	152,913		$	153,086
Gross profit	$	70,304		$	61,293
Gross profit margin		31.5	%		28.6	%

Cost of goods sold remained relatively flat for the three months ended June 30, 2014, compared to the same period last year. As a percent of sales, cost of goods sold decreased to 68% for the three months ended June 30, 2014, compared to 71% in the same period last year, and average unit cost (“AUP”) increased by 2%.

For the three months ended June 30, 2014, gross profit increased by approximately $9 million, or 15%, compared to the same period last year. Gross margin increased to 32% for the three months ended June 30, 2014, compared to 29% for the same period last year. This increase is mainly due to improved wafer fabrication performance and improved product mix.

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	2014		2013
Operating expenses	$	47,161	$	51,055

Operating expenses for the three months ended June 30, 2014 decreased approximately $4 million compared to the same period last year. Of the components within operating expenses, selling, general and administrative expenses (“SG&A”) decreased approximately $2 million, research and development expenses (“R&D”) increased approximately $1 million, and other operating expenses decreased approximately $2 million. SG&A, as a percentage of sales, was 15% for the three months ended June 30, 2014, compared to 17% for the same period last year. R&D, as a percentage of sales, was 6% for both the three months ended June 30, 2014 and 2013. SG&A for the three months ended June 30, 2014 decreased due primarily to a reduction in salary and wages, which included a reduction in retention bonuses in connection with the BCD acquisition.  R&D for the three months ended June 30, 2014 increased due primarily to an increase in salary and wages due to an increase in headcount.  Also included in other operating expenses was a gain on sale of assets of $1 million for the three months ended June 30, 2014 and a restructuring charge of $2 million for the three months ended June 30, 2013.

	2014		2013
Other income	$	359	$	277

Other income for the three months ended June 30, 2014 was primarily due to interest income and gain on securities carried at fair value, substantially offset by interest expense and foreign currency losses. Other income for the three months ended June 30, 2013 was primarily due to foreign currency gains and interest income, substantially offset by interest expense.

	2014		2013
Income tax provision	$	5,651	$	1,475

We recognized income tax expense of approximately $6 million for the three months ended June 30, 2014 and $1 million for the three months ended June 30, 2013. The effective tax rate is 24% for the three months ended June 30, 2014, compared to 14% in the same period last year.   The increase in income taxes for 2014 compared to 2013 is a result of increased earnings in higher tax jurisdictions.  Our effective tax rates for the three months ended June 30, 2014 and 2013, excluding discrete items, were lower than the U.S. statutory tax rate of 35%, principally as a result of income in lower-taxed jurisdictions.

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Results of Operations for the Six Months Ended June 30, 2014 and 2013

The following table sets forth the percentage that certain items in the statements of operations bear to net sales and the percentage dollar increase (decrease) of such items from period to period.

	Percent of  Net Sales						Percentage Dollar
	Six Months Ended June 30,						Increase (Decrease)
	2014			2013			'13 to '14
Net sales		100	%		100	%		11
Cost of goods sold		(70	)		(73	)		6
Gross profit		30			27			23
Operating expenses		(22	)		(23	)		1
Income from operations		8			4			168
Other income (expense)		-			-			(236	)
Income before income taxes and noncontrolling interest		8			4			146
Income tax provision		(2	)		(2	)		2
Net income (loss)		6			2			318
Net income (loss) attributable to noncontrolling interest		-			-			1,215
Net income (loss) attributable to common stockholders		6			2			311

The following discussion explains in greater detail our consolidated operating results and financial condition for the six months ended June 30, 2014, compared to the six months ended June 30, 2013. This discussion should be read in conjunction with the consolidated condensed financial statements and notes thereto appearing elsewhere in this quarterly report (in thousands).

	2014		2013
Net Sales	$	433,203	$	391,343

Net sales increased approximately $42 million for the six months ended June 30, 2014, compared to the same period last year. The 11% increase in net sales represented an approximately 5% increase in ASP and a 5% increase in units sold. The revenue increase for the six months ended June 30, 2014 was mainly attributable to increased revenue in our-end markets in North America and Europe, which tend to have higher ASP and the inclusion of BCD revenue for the full six months compared to four months in 2013.

	2014			2013
Cost of goods sold	$	301,318		$	283,867
Gross profit	$	131,885		$	107,476
Gross profit margin		30.4	%		27.5	%

Cost of goods sold increased approximately $17 million, or 6%, for the six months ended June 30, 2014, compared to the same period last year. As a percent of sales, cost of goods sold decreased to 70% for the six months ended June 30, 2014, compared to 73% in the same period last year, and AUP decreased by 1%.

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For the six months ended June 30, 2014, gross profit increased by approximately $24 million, or 23%, compared to the same period last year. Gross margin increased to 30% for the six months ended June 30, 2014, compared to 27% for the same period last year. This increase is mainly due to improved wafer fabrication performance and improved product mix.

	2014		2013
Operating expenses	$	94,399	$	93,462

Operating expenses for the six months ended June 30, 2014 increased approximately $1 million compared to the same period last year. Of the components within operating expenses, SG&A remained relatively flat, and R&D increased approximately $3 million. SG&A, as a percentage of sales, decreased to 15% for the six months ended June 30, 2014, compared to 17% in the same period last year, and R&D, as a percentage of sales, remained relatively flat at 6% for the six months ended June 30, 2014, compared to the same period last year. SG&A for the six months ended June 30, 2014 had increased salary and wages due to the acquisition of BCD in 2013, offset by reduction in professional fees.  R&D for the six months ended June 30, 2014 increased due primarily to an increase in salary and wages due to increase in headcount and the acquisition of BCD in 2013.  Also included in other operating expenses was a gain on sale of assets of $1 million for the six months ended June 30, 2014 and a restructuring charge of $2 million for the six months ended June 30, 2013.  

	2014			2013
Other income (expense)	$	(991	)	$	798

Other expense for the six months ended June 30, 2014 was $1 million and other income for the six months ended June 30, 2013 was $1 million. Other expense for the six months ended June 30, 2014 was primarily due to interest expense and foreign currency losses, partially offset by interest income and gain on securities carried at fair value.  Other income for the six months ended June 30, 2013 was primarily due to foreign currency gains and interest income, partially offset by interest expense.

	2014		2013
Income tax provision	$	8,198	$	8,049

We recognized income tax expense of approximately $8 million for both the six months ended June 30, 2014 and 2013. The estimated effective tax rate is approximately 22% for the six months ended June 30, 2014, compared to approximately 54% in the same period last year. Income tax expense for the six months ended June 30, 2013 was impacted by $5 million additional tax expense in regard to a tax audit by the China tax authorities, which is treated as a discrete item. Our effective tax rates for the six months ended June 30, 2014 and 2013, excluding discrete items, were lower than the U.S. statutory tax rate of 35%, principally from the impact of income in lower-taxed jurisdictions.

Financial Condition

Liquidity and Capital Resources

Our primary sources of liquidity are cash and cash equivalents, funds from operations and, if necessary, borrowings under our credit facilities. We currently have a U.S. credit agreement consisting of a $300 million revolving senior credit facility (the “Revolver”), which includes a $10 million swing line sublimit, a $10 million letter of credit sublimit, and a $20 million alternative currency sublimit. The Revolver matures on January 8, 2018, and as of June 30, 2014, $160 million was outstanding. In addition, we have foreign credit facilities with borrowing capacities of approximately $105 million with $2 million in outstanding borrowings and $6 million used for import and export guarantees and bank acceptance notes. We also have foreign long-term debt of approximately $3 million.  Our primary liquidity requirements have been to meet our inventory and capital expenditure needs and to fund on-going operations. At December 31, 2013 and June 30, 2014 our working capital was $493 million and $520 million, respectively. We expect cash generated by our operations together with existing cash, cash equivalents, short-term investments and available credit facilities to be sufficient to cover cash needs for working capital and capital expenditures for at least the next 12 months.

Capital expenditures for the six months ended June 30, 2014 and 2013 were $26 million and $21 million, respectively. For the first six months of 2014 capital expenditures were approximately 6% of our net sales, which is within our capital spending target range of 5% to 9% of net sales.

As of June 30, 2014, we had short-term investments totaling $18 million. These investments are highly liquid with maturity dates greater than three months at the date of purchase. We generally can access these investments in a relatively short amount of time but in doing so we generally forfeit all earned and future interest income.

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Discussion of Cash Flow

Cash and cash equivalents increased from $197 million at December 31, 2013 to $235 million at June 30, 2014 primarily from cash provided by operating activities, partially offset by cash used by investing activities and financing activities.

A summary of the consolidated condensed statements of cash flows is as follows (in thousands):

	Six Months Ended June 30,
	2014			2013			Change
Net cash provided by operating activities	$	80,066		$	61,173		$	18,893
Net cash used by investing activities		(17,422	)		(144,957	)		127,535
Net cash provided by (used by) financing activities		(21,231	)		143,240			(164,471	)
Effect of exchange rates on cash and cash equivalents		(2,583	)		(3,031	)		448
Net increase in cash and cash equivalents	$	38,830		$	56,425		$	(17,595	)

Operating Activities

Net cash provided by operating activities for the six months ended June 30, 2014 was $80 million, resulting primarily from $28 million of net income, $38 million in depreciation and amortization, $7 million of non-cash share-based compensation expense, a decrease in accounts receivable and an increase in liabilities, offset partially by an increase in prepaid and other assets. Net cash provided by operating activities was $61 million for the same period last year, resulting primarily from $7 million in net income, $36 million in depreciation and amortization, $7 million of non-cash share-based compensation expense and changes in assets and liabilities.

Investing Activities

Net cash used by investing activities was $17 million for the six months ended June 30, 2014, compared to net cash used by investing activities of $145 million for the same period last year. This decrease in net cash used was due primarily to approximately $125 million for the acquisition of BCD, net of cash acquired for the six months ended June 30, 2013.

Financing Activities

Net cash used by financing activities was $21 million for the six months ended June 30, 2014, compared to net cash provided by financing activities of $143 million in the same period last year. Net cash used in 2014 consisted primarily of repayments on lines of credit and long-term debt, offset partially by advances on lines of credit and proceeds from issuance of common stock. Net cash provided by in 2013 consisted primarily of $180 million drawn down on the Revolver, offset by repayments on lines of credit.

Debt Instruments

There have been no material changes to our debt instruments as disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013, filed on February 27, 2014.

Off-Balance Sheet Arrangements

We do not have any transactions, arrangements and other relationships with unconsolidated entities that will affect our liquidity or capital resources. We have no special purpose entities that provide off-balance sheet financing, liquidity or market or credit risk support, nor do we engage in leasing, swap agreements, or outsourcing of research and development services, that could expose us to liability that is not reflected on the face of our financial statements.

Contractual Obligations

There have been no material changes in any of our contractual obligations as disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013, filed on February 27, 2014.

Critical Accounting Policies

Our critical accounting policies, as described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013, relate to revenue recognition, inventories, accounting for income taxes, goodwill and other indefinite lived assets, share-based compensation, fair value measurements, defined benefit plan and contingencies. There have been no material changes to our critical

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accounting policies as disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013, filed on February 27, 2014.

Recently Issued Accounting Pronouncements

See Note A of the Notes to Consolidated Condensed Financial Statements for detailed information regarding the status of recently issued accounting pronouncements.

Available Information

Our Internet address is http://www.diodes.com. We make available, free of charge through our Internet website, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (“Exchange Act”) as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission (the “SEC”). Our website also provides access to investor financial information, including SEC filings and press releases, as well as stock quotes and information on corporate governance compliance.

Cautionary Statement for Purposes of the “Safe Harbor” Provision of the Private Securities Litigation Reform Act of 1995

Except for the historical information contained herein, the matters addressed in this Quarterly Report on Form 10-Q constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We generally identify forward-looking statements by the use of terminology such as “may,” “will,” “could,” “should,” “potential,” “continue,” “expect,” “intend,” “plan,” “estimate,” “anticipate,” “believe,” or similar phrases or the negatives of such terms. Such forward-looking statements are subject to a variety of risks and uncertainties, including those discussed under “Risks Factors” and elsewhere in this Quarterly Report on Form 10-Q that could cause actual results to differ materially from those anticipated by our management. The Private Securities Litigation Reform Act of 1995 (the “Act”) provides certain “safe harbor” provisions for forward-looking statements. All forward-looking statements made in this Quarterly Report on Form 10-Q are made pursuant to the Act.

All forward-looking statements contained in this Quarterly Report on Form 10-Q are subject to, in addition to the other matters described in this Quarterly Report on Form 10-Q, a variety of significant risks and uncertainties. The following discussion highlights some of these risks and uncertainties. Further, from time to time, information provided by us or statements made by our employees may contain forward-looking information. There can be no assurance that actual results or business conditions will not differ materially from those set forth or suggested in such forward-looking statements as a result of various factors, including those discussed below.

For more detailed discussion of these factors, see the “Risk Factors” discussion in Item 1A of the Company’s most recent Annual Report on Form 10-K as filed with the SEC and in Part II, Item 1A of this report. The forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date of this report, and the Company undertakes no obligation to update the forward-looking statements to reflect subsequent events or circumstances.

Risk Factors

RISKS RELATED TO OUR BUSINESS

· 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.

· During times of difficult market conditions, our fixed costs combined with lower revenues and lower profit margins may have a negative impact on our business, results of operations and financial condition.

· Downturns in the highly cyclical semiconductor industry and/or changes in end-market demand could adversely affect our results of operations and financial condition.

· The semiconductor business is highly competitive, and increased competition may harm our business, results of operations and financial condition.

· One of our largest external suppliers is also a related party. The loss of this supplier could harm our business, results of operations and financial condition.

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· Delays in initiation of production at facilities due to implementing new production techniques or resolving problems associated with technical equipment malfunctions could adversely affect our manufacturing efficiencies, results of operations and financial condition.

· 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.

· 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.

· Our customer orders are subject to cancellation or modification usually with no penalty. High volumes of order cancellation or reduction in quantities ordered could adversely affect our revenues, results of operations and financial condition.

· Production at our manufacturing facilities could be disrupted for a variety of reasons, including natural disasters and other extraordinary events, 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.

· 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.

· 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.

· 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, reduction in our intellectual property rights and a negative impact on our business, results of operations and financial condition.

· 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.

· 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, results of operations and financial condition.

· 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.

· We are subject to litigation risks, including securities class action litigation, which may be costly to defend and the outcome of which is uncertain and could adversely affect our business and financial condition.

· 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.

· Our products may be found to be defective and, as a result, warranty claims and product liability claims may be asserted against us, which may harm our business, reputation with our customers, results of operations and financial condition.

· We may fail to attract or retain the qualified technical, sales, marketing, finance and management personnel required to operate our business successfully, which could adversely affect our business, results of operations and financial condition.

· We may not be able to achieve future growth, and any 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.

· 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.

· If OEMs do not design our products into their applications, our net sales may be adversely affected.

· We are subject to interest rate risk that could have an adverse effect on our cost of working capital and interest expenses, which could adversely affect our business, results of operations and financial condition.

· We may have a significant amount of debt with various financial institutions worldwide. Any indebtedness could adversely affect our business, results of operations, financial condition and our ability to meet our payment obligations under such debt.

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· Restrictions in our credit facilities may limit our business and financial activities, including our ability to obtain additional capital in the future.

· Our business benefits from certain Chinese government incentives. Expiration of, or changes to, these incentives could adversely affect our results of operations and financial condition.

· We operate a global business through numerous foreign subsidiaries, and there is a risk that tax authorities will challenge our transfer pricing methodologies and/or legal entity structures, which could adversely affect our results of operations and financial condition.

· The value of our 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.

· Changes in the United Kingdom’s equity or bond markets or in actuarial assumptions for our United Kingdom defined benefit pension plan could increase the volatility of the plan’s assets and liabilities, and could require us to increase cash contributions to the plan, which could have a negative impact on our cash flows, results of operations and financial condition.

· Certain of our customers and suppliers require us to comply with their codes of conduct, 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.

· Compliance with government regulations and customer demands regarding the use of “conflict minerals” may result in increased costs and may have a negative impact on our business, results of operations and financial condition.

· 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.

· 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.

· 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.

· System security risks, data protection breaches, cyber-attacks and other related cybersecurity issues could disrupt our internal operations, and any such disruption could reduce our expected revenue, increase our expenses, damage our reputation and adversely affect our stock price.

RISKS RELATED TO OUR INTERNATIONAL OPERATIONS

· Our international operations subject us to risks that could adversely affect our operations.

· We have significant operations and assets in China, the United Kingdom, Germany, Hong Kong and Taiwan and, as a result, will be subject to risks inherent in doing business in those jurisdictions, which may adversely affect our financial performance and results of operations.

· 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.

· Economic regulation in China could materially and adversely affect our business, results of operations and prospects.

· We could be adversely affected by violations of the United States’ Foreign Corrupt Practices Act, the United Kingdom’s Bribery Act 2010 and similar worldwide anti-bribery laws.

· We are subject to foreign currency risk as a result of our international operations.

· 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.

· We may not continue to receive preferential tax treatment in Asia, thereby increasing our income tax expense and reducing our net income.

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· The distribution of any earnings of our foreign subsidiaries to the United States may be subject to United States income taxes, thus reducing our net income.

RISKS RELATED TO OUR COMMON STOCK

· Variations in our quarterly operating results may cause our stock price to be volatile.

· 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.

· 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.

· 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.

· 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.

· Anti-takeover effects of certain provisions of Delaware law and our Certificate of Incorporation and Bylaws, may hinder a take-over attempt.

· Section 203 of Delaware General Corporation Law may deter a take-over attempt.

· Certificate of Incorporation and Bylaw provisions may deter a take-over attempt.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As a multinational corporation, we are subject to certain market risks including foreign currency, interest rate, political instability, inflation and credit. We consider a variety of practices to manage these market risks. There have been no material changes to our market risks as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2013, filed on February 27, 2014.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Our Chief Executive Officer, Keh-Shew Lu, and Chief Financial Officer, Richard D. White, with the participation of the Company’s management, carried out an evaluation of the effectiveness of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(e). Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer believe that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures are effective at the reasonable assurance level to ensure that information required to be included in this report is:

· recorded, processed, summarized and reported within the time period specified in the Commission’s rules and forms; and

· accumulated and communicated to our management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions on required disclosure.

Disclosure controls and procedures, no matter how well designed and implemented, can provide only reasonable assurance of achieving an entity’s disclosure objectives. The likelihood of achieving such objectives is affected by limitations inherent in disclosure controls and procedures. These include the fact that human judgment in decision-making can be faulty and that breakdowns in internal control can occur because of human failures such as simple errors, mistakes or intentional circumvention of the established processes.

Changes in Controls over Financial Reporting

There was no change in our internal control over financial reporting, known to our Chief Executive Officer or our Chief Financial Officer, that occurred during the fiscal quarter covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings

See Note H of the Notes to Consolidated Condensed Financial Statements for detailed information regarding the status of our lawsuits.

While we intend to defend any lawsuit vigorously, we presently believe that the ultimate outcome of current pending legal proceeding will not have any material adverse effect on our financial position, cash flows or overall results of operations. Litigation is subject to inherent uncertainties, and unfavorable rulings could occur. An unfavorable ruling could include monetary damages. Were an unfavorable ruling to occur, there exists the possibility of a material adverse impact on our business or results of operations for the period in which the ruling occurs or future periods.

From time to time, the Company is involved in various routine legal proceedings incidental to the conduct of its business. The Company’s management does not believe that any of these legal proceedings will have a material adverse impact on the business, financial condition or results of operations of the Company.

Item 1A. Risk Factors

There have been no material changes from the risk factors disclosed in the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2013, filed on February 27, 2014, except for the following:

RISKS RELATED TO OUR BUSINESS

Changes in the United Kingdom’s equity or bond markets or in actuarial assumptions for our United Kingdom defined benefit pension plan could increase the volatility of the plan’s assets and liabilities, and could require us to increase cash contributions to the plan, which could have a negative impact on our cash flows, results of operations and financial condition.

Our defined benefit pension plan (the “plan”), in the United Kingdom, pays pensions to employees and former employees. The plan’s assets consist primarily of high quality, corporate bonds and stocks traded on the London Stock Exchange and are determined from time to time based on their fair market value. The plan’s obligation to pay pensions is estimated by using actuarial assumptions. To the extent that the plan’s assets are not sufficient to meet the estimated amount of the plan’s obligations, further funding of the plan will be required by the plan’s sponsoring employers, Diodes Zetex Limited and Diodes Zetex Semiconductors Limited, over an agreed deficit recovery period.

As of June 30, 2014, the estimated obligation of the plan was approximately ₤90 million GBP (approximately $150 million based on a USD:GBP exchange rate of 1.6:1) and the total assets in the plan were approximately ₤71 million GBP (approximately $118 million based on a USD:GBP exchange rate of 1.6:1). Therefore, the plan was underfunded by approximately ₤19 million GBP (approximately $32 million based on a USD:GBP exchange rate of 1.6:1). The difference between plan obligations and assets (the funded status of the plan), is a significant factor in determining the net periodic benefit costs of the plan and the ongoing funding requirements of the plan.

Any fluctuations in the United Kingdom’s equity markets and bond markets or changes in several key actuarial assumptions, including, but not limited to, changes in the plan’s discount rate applied to future benefit obligations to calculate their fair market value today or mortality rates, can (i) affect the level of plan funding; (ii) cause volatility in the net periodic pension cost; and (iii) increase our future funding requirements. In the event that the plan’s experience differs from the actuarial assumptions used by the plan, or actuarial assumptions are changed, the funding status of the plan may change (i.e. the funded status of the plan could increase or decrease). Any decrease in the funding of the plan could result in increased contributions to the plan. A significant increase in contributions required could have a negative impact on our cash flows, results of operations and financial condition.

In 2012, we adopted a payment plan with the trustees of the defined benefit plan, in which we will pay approximately ₤2 million GBP (approximately $3 million based on a USD:GBP exchange rate of 1.6:1) every year from 2012 through 2019. As part of the required pension review, which occurs every three years under the United Kingdom pension regulations, the Company is currently in discussions with the trustees regarding future contributions to the plan and expect to reach an agreement in the second half of 2014.

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If we fail to reach an agreement with the trustees, the Pension Regulator in the United Kingdom could impose contributions on Diodes Zetex Limited or Diodes Zetex Semiconductors Limited, or in limited circumstances could require financial support to be provided to the plan from entities connected or associated with Diodes Zetex Limited or Diodes Zetex Semiconductors Limited, including other companies in the group. Furthermore, Diodes Zetex Limited and Diodes Semiconductors Limited remain ultimately liable to fully fund the plan regardless of any failure to agree upon future contributions in respect of a particular actuarial valuation, i.e., if either the plan or those companies were wound up, a debt equal to each company’s share of the entire outstanding deficit at that time (calculated on a statutory conservative basis) would be owed by the relevant company. This could have a material adverse effect on our cash flows, results of operations and financial condition.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

There have been no repurchases of our Common Stock during the second quarter of 2014.

Item 3. Defaults Upon Senior Securities

There are no matters to be reported under this heading.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

There are no matters to be reported under this heading.

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Item 6. Exhibits

Number	Description	Form	Date of First Filing	ExhibitNumber	FiledHerewith
3.1	Certificate of Incorporation, as amended	10-Q	May 10, 2013	3.1
3.2	Amended By-laws of the Company as of May 21, 2012	8-K	May 24, 2012	3.1
4.1	Form of Certificate for Common Stock, par value $0.66 2/3 per share	S-3	August 25, 2005	4.1
31.1	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
31.2	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
32.1*	Certification Pursuant to 18 U.S.C. adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				X
32.2*	Certification Pursuant to 18 U.S.C. adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				X
101.INS	XBRL Instance Document				X
101.SCH	XBRL Taxonomy Extension Schema				X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase				X
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document				X
101.LAB	XBRL Taxonomy Extension Labels Linkbase				X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase				X

* 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.

PLEASE NOTE: It is inappropriate for investors to assume the accuracy of any covenants, representations or warranties that may be contained in agreements or other documents filed as exhibits to this Quarterly Report on Form 10-Q. In certain instances the disclosure schedules to such agreements or documents contain information that modifies, qualifies and creates exceptions to the representations, warranties and covenants. Moreover, some of the representations and warranties may not be complete or accurate as of a particular date because they are subject to a contractual standard of materiality that is different from those generally applicable to stockholders and/or were used for the purpose of allocating risk among the parties rather than establishing certain matters as facts. Accordingly, you should not rely on the representations and warranties as characterizations of the actual state of facts at the time they were made or otherwise.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

DIODES INCORPORATED (Registrant)

By: /s/ Richard D. White	August 8, 2014
RICHARD D. WHITE
Chief Financial Officer, Secretary, and Treasurer
(Principal Financial and Accounting Officer)

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EX-31

Exhibit 31.1

CERTIFICATION

PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a),

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Keh-Shew Lu, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Diodes Incorporated;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Keh-Shew Lu

Keh-Shew Lu

Chief Executive Officer

Date: August 8, 2014

EX-31

Exhibit 31.2

CERTIFICATION

PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a),

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Richard D. White, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Diodes Incorporated;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Richard D. White

Richard D. White

Chief Financial Officer

Date: August 8, 2014

EX-32

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

The undersigned hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge, the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2014 of Diodes Incorporated (the “Company”) fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in such periodic report fairly presents, in all material respects, the financial condition and results of operations of the Company as of, and for, the periods presented in such report.

Very truly yours,

/s/ Keh-Shew Lu

Keh-Shew Lu

Chief Executive Officer

Date: August 8, 2014

A signed original of this written statement required by Section 906 has been provided to Diodes Incorporated and will be furnished to the Securities and Exchange Commission or its staff upon request.

EX-32

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

The undersigned hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge, the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2014 of Diodes Incorporated (the “Company”) fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in such periodic report fairly presents, in all material respects, the financial condition and results of operations of the Company as of, and for, the periods presented in such report.

Very truly yours,

/s/ Richard D. White

Richard D. White

Chief Financial Officer

Date: August 8, 2014

A signed original of this written statement required by Section 906 has been provided to Diodes Incorporated and will be furnished to the Securities and Exchange Commission or its staff upon request.

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Commitments and Contingencies - Additional Information (Details) (USD $) In Millions, except Share data, unless otherwise specified	6 Months Ended
	Jun. 30, 2014
Commitments And Contingencies [Line Items]
Purchase Commitments	$ 17
Stockholder Derivative Action 1
Commitments And Contingencies [Line Items]
Loss Contingency, Name of Defendant	Keh-Shew Lu
Loss Contingency, Lawsuit Filing Date	Mar. 5, 2013
Loss Contingency, Name of Plaintiff	Scherer
Loss Contingency, Allegations	plaintiff alleges that (a) the Board approved awards of stock options to Dr. Keh-Shew Lu, our President and Chief Executive Officer, in 2009, 2010, 2011 and 2012 that exceeded the limitation on the number of shares of the Company’s Common Stock that may be purchased upon the exercise of options granted to any person in any given year under the Company’s 2001 Omnibus Equity Incentive Plan as amended by the stockholders on May 28, 2009; (b) the Company’s disclosures in its 2010, 2011 and 2012 proxy statements regarding the limitation on the number of shares of the Company’s Common Stock that may be purchased upon the exercise of options granted to any person in any given year under the Company’s 2001 Omnibus Equity Incentive Plan as amended by the stockholders on May 28, 2009 were inaccurate; and (c) the Company’s disclosures in its 2010, 2011 and 2012 proxy statements that the grants of stock options to Dr. Lu in 2009, 2010, 2011 and 2012 complied with the terms of the Company’s 2001 Omnibus Equity Incentive Plan as amended by the stockholders on May 28, 2009 were incorrect.
Number of shares as a settlement alternative	100,000
Putative Securities Class Action
Commitments And Contingencies [Line Items]
Loss Contingency, Name of Defendant	Diodes, Inc.
Loss Contingency, Lawsuit Filing Date	Mar. 15, 2013
Loss Contingency, Name of Plaintiff	Local 731 I.B. of T. Excavators and Pavers Pension Trust Fund
Loss Contingency, Allegations	alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Securities and Exchange Commission Rule 10b-5 promulgated thereunder by making allegedly misleading public statements during the class period regarding the labor market in China and its impact on the Company’s business and prospects.
Stockholder Derivative Action 2
Commitments And Contingencies [Line Items]
Loss Contingency, Name of Defendant	Keh-Shew Lu
Loss Contingency, Lawsuit Filing Date	February 20, 2014
Loss Contingency, Name of Plaintiff	Persson
Loss Contingency, Allegations	on behalf of the Company against its directors, in which plaintiff alleges that the directors breached their fiduciary duties by allowing the Company to make allegedly misleading public statements in 2011 regarding the labor market in China and its impact on the Company’s business and prospects, by failing to maintain internal controls and by selling shares of Diodes stock while allegedly in possession of material nonpublic information regarding the labor market in China and its impact on the Company’s business and prospects.

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Subsequent Event - Additional Information (Details) (USD $) In Millions, unless otherwise specified		0 Months Ended
	Jun. 30, 2014 ZCEL	Jul. 07, 2014 ZCEL Subsequent Event	Jun. 30, 2014 Chengdu Ya Guang Electric Company Limited
Subsequent Event [Line Items]
Equity ownership percentage	33.00%	95.00%	5.00%
Increase in additional ownership percentage		62.00%
Cash paid for additional ownership		$ 4

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Share-Based Compensation - Additional Information (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Cash proceeds received from stock option exercises			$ 3
Stock Option Expense	1	1	2	2
Restricted Stock Expense	3	2	5	5
Stock Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Method of Measuring Cost of Award			Expense was estimated on the date of grant using the Black-Scholes-Merton option pricing model
Share Based Compensation Arrangement By Share Based Payment Award Description			Stock options generally vest in equal annual installments over a four-year period and expire eight years after the grant date
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period			4 years
Share-based compensation arrangement by share-based payment award expiration period after the grant date			8 years
Unrecognized share-based compensation expense related to unvested stock awards, net of forfeitures	7		7
Unrecognized share-based compensation expense, weighted average recognition period			3 years
Restricted Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period			4 years
Unrecognized share-based compensation expense related to unvested stock awards, net of forfeitures	$ 20		$ 20
Unrecognized share-based compensation expense, weighted average recognition period			3 years

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Related Parties (Tables)

6 Months Ended

Jun. 30, 2014

Schedule of Account Receivable and Payable of Related Party Transactions

Accounts receivable from, and accounts payable to, LSC, Keylink and Nuvoton are as follows (in thousands):

	June 30,		December 31,
	2014		2013
Accounts receivable
LSC	$	155	$	140
Keylink		3,400		4,927
	$	3,555	$	5,067
Accounts payable
LSC	$	5,919	$	5,670
Keylink		6,230		6,505
Nuvoton		1,154		770
	$	13,303	$	12,945

Lite On Semiconductor

Schedule Net Sales and Purchases of Related Party Transactions

Net sales to, and purchases from, LSC are as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
Net sales	$	164	$	296	$	279	$	399
Purchases	$	8,374	$	9,650	$	15,712	$	17,159

Keylink

Schedule Net Sales and Purchases of Related Party Transactions

Net sales to, and purchases from, Keylink are as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
Net sales	$	2,116	$	1,561	$	4,380	$	5,209
Purchases	$	2,070	$	2,138	$	3,716	$	3,666

Nuvoton

Schedule Net Sales and Purchases of Related Party Transactions

Net purchases from Nuvoton are as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
Purchases	$	3,237	$	3,248	$	6,573	$	5,095

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Employee Benefit Plans - Schedule of Assumptions Used (Details)	6 Months Ended
	Jun. 30, 2014
Defined benefit plan, Weighted average assumptions used in calculating net periodic benefit cost [Abstract]
Discount rate	4.60%
Expected long-term return on plan assets	5.90%

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Segment Information and Enterprise-Wide Disclosure - Schedule of Revenue by Countries (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2014		Jun. 30, 2013		Jun. 30, 2014		Jun. 30, 2013
Segment Reporting Revenue Reconciling Item [Line Items]
NET SALES	$ 223,217		$ 214,379		$ 433,203		$ 391,343
Percentage of net sales	100.00%		100.00%		100.00%		100.00%
China
Segment Reporting Revenue Reconciling Item [Line Items]
NET SALES	139,703		139,113		267,160		246,757
Percentage of net sales	63.00%		65.00%		62.00%		63.00%
United States
Segment Reporting Revenue Reconciling Item [Line Items]
NET SALES	21,765		16,604		41,406		34,021
Percentage of net sales	10.00%		8.00%		10.00%		9.00%
Germany
Segment Reporting Revenue Reconciling Item [Line Items]
NET SALES	16,372		12,263		31,199		23,291
Percentage of net sales	7.00%		6.00%		7.00%		6.00%
Korea
Segment Reporting Revenue Reconciling Item [Line Items]
NET SALES	14,110		16,119		34,235		31,566
Percentage of net sales	6.00%		8.00%		8.00%		8.00%
Singapore
Segment Reporting Revenue Reconciling Item [Line Items]
NET SALES	12,498		12,784		22,116		21,719
Percentage of net sales	6.00%		6.00%		5.00%		6.00%
Taiwan
Segment Reporting Revenue Reconciling Item [Line Items]
NET SALES	6,698		6,763		13,581		11,916
Percentage of net sales	3.00%		3.00%		3.00%		3.00%
All Others
Segment Reporting Revenue Reconciling Item [Line Items]
NET SALES	$ 12,071	[1]	$ 10,733	[1]	$ 23,506	[1]	$ 22,073	[1]
Percentage of net sales	5.00%	[1]	5.00%	[1]	5.00%	[1]	6.00%	[1]

[1] Represents countries with less than 3% of the total revenues each.

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Inventories

6 Months Ended

Jun. 30, 2014

Inventories

NOTE C – Inventories

Inventories stated at the lower of cost or market value are as follows (in thousands):

	June 30,		December 31,
	2014		2013
Raw materials	$	71,197	$	69,878
Work-in-progress		46,540		43,031
Finished goods		65,044		67,487
Total	$	182,781	$	180,396

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Related Parties - Additional Information (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Lite On Semiconductor
Related Party Transaction [Line Items]
Related Party ownership of common stock	18.00%		18.00%
Related Party Transaction, Description of Transaction			LSC owned approximately 18% of the Company’s outstanding Common Stock as of June 30, 2014.
Keylink
Related Party Transaction [Line Items]
Related Party ownership of common stock	5.00%		5.00%
Related Party Transaction, Description of Transaction			Keylink is the Company’s 5% joint venture partner in two of the Company’s Shanghai manufacturing facilities.
Related Party Transaction Consulting Fees From Transactions With Related Party	$ 5	$ 5	$ 9	$ 9
Nuvoton
Related Party Transaction [Line Items]
Related Party Transaction, Description of Transaction			A member of the Company’s Board of Directors who is also the Company’s President and Chief Executive Officer is a member of the Board of Directors of Nuvoton. In addition, another member of the Company’s Board of Directors is a Supervisor of the Board of Directors of Nuvoton.

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Goodwill and Intangible Assets (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Goodwill
Goodwill beginning balance	$ 84,714
Translation adjustment	1,246
Goodwill ending balance	85,960	84,714
Finite-Lived Intangible Assets, Net
Gross carrying amount	86,929	86,925
Accumulated amortization	(36,220)	(32,245)
Translation adjustment	(6,710)	(7,000)
Total	43,999	47,680
Intangible assets with indefinite lives
Gross carrying amount	6,403	6,403
Translation adjustment	(426)	(512)
Total	5,977	5,891
Total intangible assets, net	$ 49,976	$ 53,571

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Inventories (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Inventory [Line Items]
Raw materials	$ 71,197	$ 69,878
Work-in-progress	46,540	43,031
Finished goods	65,044	67,487
Total	$ 182,781	$ 180,396

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Related Parties - Schedule Net Sales and Purchases of Related Party Transactions (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Lite On Semiconductor
Related Party Transaction [Line Items]
Revenue from related parties	$ 164	$ 296	$ 279	$ 399
Purchases from related parties	8,374	9,650	15,712	17,159
Keylink
Related Party Transaction [Line Items]
Revenue from related parties	2,116	1,561	4,380	5,209
Purchases from related parties	2,070	2,138	3,716	3,666
Nuvoton
Related Party Transaction [Line Items]
Purchases from related parties	$ 3,237	$ 3,248	$ 6,573	$ 5,095

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Goodwill and Intangible Assets - Additional Information (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Schedule Of Intangible Assets And Goodwill [Line Items]
Amortization of Intangible Assets	$ 2	$ 2	$ 4	$ 4

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Income Tax Provision - Additional Information (Details) (USD $)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Income Tax Provisions [Line Items]
Income tax expense	$ 5,651,000	$ 1,475,000	$ 8,198,000	$ 8,049,000
Effective tax rate			22.00%	54.00%	38.00%
Estimated Annual Income Tax Rate			28.00%
Charges for Discrete Items			2,000,000	6,000,000
U.S. statutory tax rate			35.00%	35.00%
Domestic pre-tax income	1,000,000		4,000,000
Foreign pre-tax income	23,000,000		32,000,000
Tax holidays			1,000,000	2,000,000
Tax holidays basic EPS			$ 0.03	$ 0.04
Tax holidays diluted EPS			$ 0.03	$ 0.04
Unrecognized tax benefits	$ 21,000,000		$ 21,000,000
Significant Change in Unrecognized Tax Benefits, Nature of Event			It is reasonably possible that the amount of the unrecognized benefit with respect to certain of the Company’s unrecognized tax positions will significantly increase or decrease within the next 12 months.
Significant Change in Unrecognized Tax Benefits is Reasonably Possible, Estimated Range Not Possible			At this time, an estimate of the range of the reasonably possible outcomes cannot be made.

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Earnings Per Share

6 Months Ended

Jun. 30, 2014

Earnings Per Share

NOTE B – Earnings Per Share

Basic earnings per share is calculated by dividing net income attributable to common stockholders by the weighted-average number of shares of Common Stock outstanding during the period. Diluted earnings per share is calculated similarly but includes potential dilution from the exercise of stock options and stock awards, except when the effect would be anti-dilutive.

The computation of basic and diluted earnings per common share is as follows (in thousands, except per share data):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
BASIC
Weighted average number of common shares outstanding   used in computing basic earnings per share		46,889		46,148		46,794		46,085
Net income attributable to common stockholders	$	17,385	$	8,635	$	27,587	$	6,709
Earnings per share attributable to common stockholders	$	0.37	$	0.19	$	0.59	$	0.15
DILUTED
Weighted average number of common shares outstanding   used in computing basic earnings per share		46,889		46,148		46,794		46,085
Add:  Dilutive effect of stock options and stock awards outstanding		1,534		1,359		1,429		1,298
		48,423		47,507		48,223		47,383
Net income attributable to common stockholders	$	17,385	$	8,635	$	27,587	$	6,709
Earnings per share attributable to common stockholders	$	0.36	$	0.18	$	0.57	$	0.14

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Share-Based Compensation - Schedule of Share-Based Compensation Expense (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total share-based compensation expense	$ 3,391	$ 3,304	$ 6,610	$ 6,560
Cost of Sales
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total share-based compensation expense	107	126	203	249
Selling and Administrative Expense
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total share-based compensation expense	2,979	2,877	5,829	5,720
Research and Development Expense
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total share-based compensation expense	$ 305	$ 301	$ 578	$ 591

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Employee Benefit Plans - Additional Information (Details) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014 USD ($)	Jun. 30, 2013 USD ($)	Jun. 30, 2014 USD ($)	Jun. 30, 2013 USD ($)	Jun. 30, 2012 USD ($)	Jun. 30, 2012 GBP (£)	Jun. 30, 2014 Pension Plan, Defined Benefit	Jun. 30, 2012 Pension Plan, Defined Benefit
Employee Benefit Plans Additional Information [Abstract]
Defined Benefit Plans, General Information			The Company has a contributory defined benefit plan that covers certain employees in the United Kingdom (“U.K.”). The net pension and supplemental retirement benefit obligations and the related periodic costs are based on, among other things, assumptions regarding the discount rate, estimated return on plan assets and mortality rates. These obligations and related periodic costs are measured using actuarial techniques and assumptions.
Defined Benefit Plan, Pension, Method to Determine Vested Benefit Obligation			The projected unit credit method is the actuarial cost method used to compute the pension liabilities and related expenses.
Net period benefit costs	$ 0	$ 0	$ 1	$ 0
Deferred Compensation Plan Assets	4		4
Deferred Compensation Arrangements, Overall, Description			The Company maintains a Non-Qualified Deferred Compensation Plan (the “Deferred Compensation Plan”) for executive officers, key employees and members of the Board of Directors (the “Board”). The Deferred Compensation Plan allows eligible participants to defer the receipt of eligible compensation, including equity awards, until designated future dates. The Company offsets its obligations under the Deferred Compensation Plan by investing in the actual underlying investments. These investments are classified as trading securities and are carried at fair value. At June 30, 2014, these investments totaled approximately $4 million. All gains and losses in these investments are materially offset by corresponding gains and losses in the Deferred Compensation Plan liabilities.
Change in Plan Assets [Roll Forward]
Weighted average discount rate benefit obligations							4.50%
Estimated Future Pension Benefit Payments [Abstract]
Defined Benefit Plan, Estimated Future Employer Contributions in Current Fiscal Year, Description			During the second quarter of 2012, the Company adopted a payment plan with the trustees of the defined benefit plan, in which the Company will pay approximately ₤2 million British Pound Sterling (“GBP”) (approximately $3 million based on a USD:GBP exchange rate of 1.6:1) every year from 2012 through 2019. As part of the required pension review, which occurs every three years under the United Kingdom pension regulations, the Company is currently in discussions with the trustees regarding future contributions for the pension scheme.
Defined Benefit Plan, Expected Future Benefit Payments						2
Defined Benefit Plan, Expected Future Benefit Payments in Year One					3
Defined Benefit Plan, Expected Future Benefit Payments in Year Two					3
Defined Benefit Plan, Expected Future Benefit Payments in Year Three					3
Defined Benefit Plan, Expected Future Benefit Payments in Year Four					3
Defined Benefit Plan, Expected Future Benefit Payments in Year Five					3
Defined Benefit Plan, Expected Future Benefit Payments in Three Fiscal Years Thereafter					$ 3
USD:GBP exchange rate								0.625

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CONSOLIDATED CONDENSED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
CURRENT ASSETS
Cash and cash equivalents	$ 235,465	$ 196,635
Short-term investments	17,656	22,922
Accounts receivable, net	187,839	192,267
Inventories	182,781	180,396
Deferred income taxes, current	9,823	10,513
Prepaid expenses and other	54,628	47,352
Total current assets	688,192	650,085
PROPERTY, PLANT AND EQUIPMENT, net	312,542	322,013
DEFERRED INCOME TAXES, non-current	22,360	28,237
OTHER ASSETS
Goodwill	85,960	84,714
Intangible assets, net	49,976	53,571
Other	26,705	23,638
Total assets	1,185,735	1,162,258
CURRENT LIABILITIES
Lines of credit	2,487	5,814
Accounts payable	101,050	89,212
Accrued liabilities	63,134	60,684
Income tax payable	1,241	1,206
Total current liabilities	167,912	156,916
LONG-TERM DEBT, net of current portion	162,702	182,799
OTHER LONG-TERM LIABILITIES	74,324	78,866
Total liabilities	404,938	418,581
COMMITMENTS AND CONTINGENCIES (See Note H)
Diodes Incorporated 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; 47,078,198 and 46,680,973 issued and outstanding at June 30, 2014 and December 31, 2013, respectively	31,387	31,120
Additional paid-in capital	298,920	289,668
Retained earnings	453,915	426,328
Accumulated other comprehensive loss	(45,070)	(44,374)
Total Diodes Incorporated stockholders' equity	739,152	702,742
Noncontrolling interest	41,645	40,935
Total equity	780,797	743,677
Total liabilities and equity	$ 1,185,735	$ 1,162,258

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Related Parties - Schedule of Account Receivable and Payable of Related Party Transactions (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Related Party Transaction [Line Items]
Accounts receivable	$ 3,555	$ 5,067
Accounts payable	13,303	12,945
Lite On Semiconductor
Related Party Transaction [Line Items]
Accounts receivable	155	140
Accounts payable	5,919	5,670
Keylink
Related Party Transaction [Line Items]
Accounts receivable	3,400	4,927
Accounts payable	6,230	6,505
Nuvoton
Related Party Transaction [Line Items]
Accounts payable	$ 1,154	$ 770

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CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Net cash provided by operating activities	$ 80,066	$ 61,173
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition, net of cash acquired		(124,916)
Purchases of property, plant and equipment	(23,668)	(23,751)
Proceeds from sales of property, plant and equipment	1,428	51
Proceeds from maturity of short-term investments	5,380
Purchases of equity securities	(1,842)
Proceeds from sale of equity securities		7,458
Other	1,280	(3,799)
Net cash used by investing activities	(17,422)	(144,957)
CASH FLOWS FROM FINANCING ACTIVITIES
Advances on lines of credit	4,335	4,963
Repayments on lines of credit	(7,622)	(25,711)
Borrowings of long-term debt		181,002
Repayments of long-term debt	(20,710)	(15,536)
Net proceeds from issuance of common stock	2,913	1,366
Other	(147)	(2,844)
Net cash provided by (used by) financing activities	(21,231)	143,240
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	(2,583)	(3,031)
INCREASE IN CASH AND CASH EQUIVALENTS	38,830	56,425
CASH AND CASH EQUIVALENTS, beginning of period	196,635	157,121
CASH AND CASH EQUIVALENTS, end of period	235,465	213,546
Non-cash financing activities:
Property, plant and equipment purchased on accounts payable	(1,968)	(330)
Acquisition:
Fair value of assets acquired		247,012
Liabilities assumed		(92,277)
Cash acquired		(29,819)
Net assets acquired		$ 124,916

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Share-Based Compensation - Schedule Of Nonvested Restricted Stock Units Activity (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	6 Months Ended
	Jun. 30, 2014
Summary of the status of non vested share grants [Roll Forward]
Beginning balance nonvested	1,131
Granted	234
Vested	(95)
Forfeited	(12)
Ending balance nonvested	1,258
Weighted-Average Grant-Date Fair Value and Aggregate Intrinsic Value [Roll Forward]
Beginning balance nonvested	$ 22.35
Granted	$ 27.46
Vested	$ 22.42
Forfeited	$ 21.81
Ending balance nonvested	$ 23.32
Beginning balance nonvested	$ 26,656
Vested	2,606
Ending balance nonvested	$ 30,650

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Share-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2014

Schedule of Share-Based Compensation Expense

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
Cost of sales	$	107	$	126	$	203	$	249
Selling and administrative expense		2,979		2,877		5,829		5,720
Research and development expense		305		301		578		591
Total share-based compensation expense	$	3,391	$	3,304	$	6,610	$	6,560

Schedule of Share Based Compensation Stock Options Activity

Stock Options	Shares (000)			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (yrs)		Aggregate Intrinsic Value ($000)
Outstanding at January 1, 2014		3,126		$	18.93		4	$	17,461
Granted		176			27.92
Exercised		(304	)		9.66				5,422
Forfeited or expired		(2	)		29.21
Outstanding at June 30, 2014		2,996		$	20.39		4	$	25,754
Exercisable at June 30, 2014		2,406		$	19.43		3	$	22,967

Schedule Of Nonvested Restricted Stock Units Activity

Share Grants	Shares (000)			Weighted Average Grant-Date Fair Value		Aggregate Intrinsic Value ($000)
Non-vested at January 1, 2014		1,131		$	22.35	$	26,656
Granted		234			27.46
Vested		(95	)		22.42		2,606
Forfeited		(12	)		21.81
Non-vested at June 30, 2014		1,258		$	23.32	$	30,650

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Segment Information and Enterprise-Wide Disclosure - Schedule of Revenues from External Customers and Long Lived Assets by Geographical Areas (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Segment Reporting Revenue Reconciling Item [Line Items]
Total sales	$ 286,642	$ 272,981	$ 554,340	$ 502,226
Inter-company sales	(63,425)	(58,602)	(121,137)	(110,883)
NET SALES	223,217	214,379	433,203	391,343
PROPERTY, PLANT AND EQUIPMENT, net	312,542	331,287	312,542	331,287	322,013
Total assets	1,185,735	1,171,574	1,185,735	1,171,574	1,162,258
Asia
Segment Reporting Revenue Reconciling Item [Line Items]
Total sales	200,955	195,735	390,322	352,535
Inter-company sales	(25,518)	(18,873)	(48,802)	(34,896)
NET SALES	175,437	176,862	341,520	317,639
PROPERTY, PLANT AND EQUIPMENT, net	262,186	277,608	262,186	277,608
Total assets	866,715	837,332	866,715	837,332
North America
Segment Reporting Revenue Reconciling Item [Line Items]
Total sales	38,304	37,253	75,089	72,061
Inter-company sales	(15,650)	(18,657)	(30,387)	(35,424)
NET SALES	22,654	18,596	44,702	36,637
PROPERTY, PLANT AND EQUIPMENT, net	28,016	30,579	28,016	30,579
Total assets	130,085	150,733	130,085	150,733
Europe
Segment Reporting Revenue Reconciling Item [Line Items]
Total sales	47,383	39,993	88,929	77,630
Inter-company sales	(22,257)	(21,072)	(41,948)	(40,563)
NET SALES	25,126	18,921	46,981	37,067
PROPERTY, PLANT AND EQUIPMENT, net	22,340	23,100	22,340	23,100
Total assets	$ 188,935	$ 183,509	$ 188,935	$ 183,509

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Employee Benefit Plans (Tables)

6 Months Ended

Jun. 30, 2014

Schedule of Changes in Fair Value of Plan Assets

The following tables set forth the benefit obligation, the fair value of plan assets, and the funded status of the Company’s plan (in thousands):

	Defined Benefit Plan
Change in benefit obligation:
Balance at December 31, 2013	$	149,316
Service cost		167
Interest cost		3,436
Actuarial loss		1,447
Benefits paid		(2,308	)
Settlements		-
Currency changes		4,919
Benefit obligation at June 30, 2014	$	156,977
Change in plan assets:
Fair value of plan assets at December 31, 2013	$	116,568
Actual return on plan assets		3,851
Employer contribution		334
Benefits paid		(2,308	)
Currency changes		3,834
Fair value of plan assets at June 30, 2014	$	122,279
Underfunded status at June 30, 2014	$	(34,698	)

Schedule of Assumptions Used

The following weighted-average assumptions were used to determine net periodic benefit costs for the six months ended June 30, 2014:

Discount rate	4.6	%
Expected long-term return on plan assets	5.9	%

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Nature of Operations, Basis of Presentation and Recently Issued Accounting Pronouncements

6 Months Ended

Jun. 30, 2014

Nature of Operations, Basis of Presentation and Recently Issued Accounting Pronouncements

NOTE A – Nature of Operations, Basis of Presentation and Recently Issued Accounting Pronouncements

Nature of Operations

Diodes Incorporated, together with its subsidiaries (collectively, the “Company”), is a leading global manufacturer and supplier of high-quality, application specific standard products within the broad discrete, logic and analog semiconductor markets, serving the consumer electronics, computing, communications, industrial and automotive markets throughout Asia, North America and Europe.

Basis of Presentation

The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S.”) (“GAAP”) for interim financial information and with the instructions to Form 10-Q. They do not include all information and footnotes necessary for a fair presentation of financial position, results of operations and cash flows in conformity with U.S. GAAP for complete financial statements. These consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. All significant intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, all adjustments (consisting of normal recurring adjustments and accruals) considered necessary for a fair presentation of the results of operations for the period presented have been included in the interim period. Operating results for the three and six months ended June 30, 2014 are not necessarily indicative of the results that may be expected for other interim periods or the year ending December 31, 2014. The consolidated condensed financial data at December 31, 2013 is derived from audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, filed on February 27, 2014.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. As permitted under U.S. GAAP, interim accounting for certain expenses, including income taxes, are based on full year forecasts. For interim financial reporting purposes, income taxes are recorded based upon estimated annual effective income tax rates taking into consideration discrete items occurring in a quarter.

Certain prior year’s balances have been reclassified to conform to the current financial statement presentation.

Recently Issued Accounting Pronouncements

In April 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. Under ASU 2014-08, only disposals that represent a strategic shift that has (or will have) a major effect on the entity’s results and operations would qualify as discontinued operations, which could include a disposal of a major geographical area, a major line of business, a major equity method investment, or other major parts of an entity. ASU 2014-08 also expands the disclosure requirements for disposals of operations to include more information about assets, liabilities, income and expenses and requires entities to disclose information about disposals of individually significant components. ASU 2014-08 is effective in the first quarter of 2015, with early adoption permitted and could impact the Company’s consolidated financial results in the event of a transaction as described above.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606).  ASU 2014-09 is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract.  ASU 2014-09 is effective in the first quarter of 2017, with early adoption not permitted and requires either a retrospective or a modified retrospective approach to adoption.  The Company has not yet selected a transition method and is currently evaluating the effect that the updated standard will have on its consolidated financial statements and related disclosures.

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CONSOLIDATED CONDENSED BALANCE SHEETS (Parentheticals) (USD $)	Jun. 30, 2014	Dec. 31, 2013
Preferred stock par value	$ 1.00	$ 1.00
Preferred stock shares authorized	1,000,000	1,000,000
Preferred stock shares issued	0	0
Preferred stock shares outstanding	0	0
Common stock par value	$ 0.666	$ 0.666
Common stock shares authorized	70,000,000	70,000,000
Common stock shares issued	47,078,198	46,680,973
Common stock shares outstanding	47,078,198	46,680,973

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Subsequent Event

6 Months Ended

Jun. 30, 2014

Subsequent Event

Zetex (Chengdu) Electronics Co., Ltd (“ZCEL”) was established in 1995; in which one of the Company’s subsidiaries became a 33% equity owner of ZCEL.  The Company has historically treated the investment under the equity method of accounting.  On July 7, 2014, the Company increased its equity ownership in ZCEL to 95% when it paid $4 million for an additional 62% of equity.    

The Company purchased the additional equity from a subsidiary of our joint venture partner, Chengdu Ya Guang Electric Company Limited, with whom the Company established a semiconductor manufacturing facility for surface-mounted component production, assembly and test in Chengdu, China and who owns 5% of the joint venture.

The Company acquired the additional equity in ZCEL to secure local plating services for its joint venture manufacturing facility in Chengdu, China where the Company can have its plating services completed locally.  The Company intends to account for the additional equity purchase as a business combination achieved in stages and will consolidate ZCEL as of July 1, 2014, which is not materially different from July 7, 2014.

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Document and Entity Information	6 Months Ended
	Jun. 30, 2014	Aug. 04, 2014
Document And Entity Information [Line Items]
Document type	10-Q
Document period end date	Jun. 30, 2014
Amendment flag	false
Entity registrant name	DIODES INC /DEL/
Entity central index key	0000029002
Current fiscal year end date	--12-31
Entity filer category	Large Accelerated Filer
Entity common stock shares outstanding		47,565,351
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2

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Nature of Operations, Basis of Presentation and Recently Issued Accounting Pronouncements (Policies)

6 Months Ended

Jun. 30, 2014

Nature of Operations

Nature of Operations

Diodes Incorporated, together with its subsidiaries (collectively, the “Company”), is a leading global manufacturer and supplier of high-quality, application specific standard products within the broad discrete, logic and analog semiconductor markets, serving the consumer electronics, computing, communications, industrial and automotive markets throughout Asia, North America and Europe.

Basis of Presentation

Basis of Presentation

The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S.”) (“GAAP”) for interim financial information and with the instructions to Form 10-Q. They do not include all information and footnotes necessary for a fair presentation of financial position, results of operations and cash flows in conformity with U.S. GAAP for complete financial statements. These consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. All significant intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, all adjustments (consisting of normal recurring adjustments and accruals) considered necessary for a fair presentation of the results of operations for the period presented have been included in the interim period. Operating results for the three and six months ended June 30, 2014 are not necessarily indicative of the results that may be expected for other interim periods or the year ending December 31, 2014. The consolidated condensed financial data at December 31, 2013 is derived from audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, filed on February 27, 2014.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. As permitted under U.S. GAAP, interim accounting for certain expenses, including income taxes, are based on full year forecasts. For interim financial reporting purposes, income taxes are recorded based upon estimated annual effective income tax rates taking into consideration discrete items occurring in a quarter.

Certain prior year’s balances have been reclassified to conform to the current financial statement presentation.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

In April 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. Under ASU 2014-08, only disposals that represent a strategic shift that has (or will have) a major effect on the entity’s results and operations would qualify as discontinued operations, which could include a disposal of a major geographical area, a major line of business, a major equity method investment, or other major parts of an entity. ASU 2014-08 also expands the disclosure requirements for disposals of operations to include more information about assets, liabilities, income and expenses and requires entities to disclose information about disposals of individually significant components. ASU 2014-08 is effective in the first quarter of 2015, with early adoption permitted and could impact the Company’s consolidated financial results in the event of a transaction as described above.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606).  ASU 2014-09 is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract.  ASU 2014-09 is effective in the first quarter of 2017, with early adoption not permitted and requires either a retrospective or a modified retrospective approach to adoption.  The Company has not yet selected a transition method and is currently evaluating the effect that the updated standard will have on its consolidated financial statements and related disclosures.

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CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
NET SALES	$ 223,217	$ 214,379	$ 433,203	$ 391,343
COST OF GOODS SOLD	152,913	153,086	301,318	283,867
Gross profit	70,304	61,293	131,885	107,476
OPERATING EXPENSES
Selling, general and administrative	33,291	35,080	65,621	65,456
Research and development	12,781	12,145	25,701	22,225
Other operating expenses	1,089	3,830	3,077	5,781
Total operating expenses	47,161	51,055	94,399	93,462
Income from operations	23,143	10,238	37,486	14,014
OTHER INCOME (EXPENSES)	359	277	(991)	798
Income before income taxes and noncontrolling interest	23,502	10,515	36,495	14,812
INCOME TAX PROVISION	5,651	1,475	8,198	8,049
NET INCOME	17,851	9,040	28,297	6,763
Less: NET INCOME attributable to noncontrolling interest	(466)	(405)	(710)	(54)
NET INCOME attributable to common stockholders	$ 17,385	$ 8,635	$ 27,587	$ 6,709
EARNINGS PER SHARE attributable to common stockholders
Basic	$ 0.37	$ 0.19	$ 0.59	$ 0.15
Diluted	$ 0.36	$ 0.18	$ 0.57	$ 0.14
Number of shares used in computation
Basic	46,889	46,148	46,794	46,085
Diluted	48,423	47,507	48,223	47,383

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Share-Based Compensation

6 Months Ended

Jun. 30, 2014

Share-Based Compensation

NOTE F – Share-Based Compensation

The following table shows the total compensation expensed for share-based compensation plans, including stock options and share grants, recognized in the statements of operations (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
Cost of sales	$	107	$	126	$	203	$	249
Selling and administrative expense		2,979		2,877		5,829		5,720
Research and development expense		305		301		578		591
Total share-based compensation expense	$	3,391	$	3,304	$	6,610	$	6,560

Stock Options. Stock options generally vest in equal annual installments over a four-year period and expire eight years after the grant date, and expense was estimated on the date of grant using the Black-Scholes-Merton option pricing model.

The total net cash proceeds received from stock option exercises during the six months ended June 30, 2014 was approximately $3 million. Stock option expense was approximately $1 million for both the three months ended June 30, 2014 and 2013, and $2 million for both the six months ended June 30, 2014 and 2013.

A summary of the stock option grants is as follows:

Stock Options	Shares (000)			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (yrs)		Aggregate Intrinsic Value ($000)
Outstanding at January 1, 2014		3,126		$	18.93		4	$	17,461
Granted		176			27.92
Exercised		(304	)		9.66				5,422
Forfeited or expired		(2	)		29.21
Outstanding at June 30, 2014		2,996		$	20.39		4	$	25,754
Exercisable at June 30, 2014		2,406		$	19.43		3	$	22,967

The aggregate intrinsic value in the table above is before applicable income taxes and represents the amount option holders would have received if all options had been exercised on the last business day of the period indicated, based on the Company’s closing stock price.

As of June 30, 2014, total unrecognized share-based compensation expense related to unvested stock options, net of forfeitures, was approximately $7 million, before income taxes, and is expected to be recognized over a weighted average period of approximately 3 years.

Share Grants. Restricted stock awards and restricted stock units generally vest in equal annual installments over a four-year period.

Share grant expense for the three months ended June 30, 2014 and 2013 was approximately $3 million and $2 million, respectively, and share grant expense for both the six months ended June 30, 2014 and 2013 was approximately $5 million.

A summary of the Company’s non-vested share grants is as follows:

Share Grants	Shares (000)			Weighted Average Grant-Date Fair Value		Aggregate Intrinsic Value ($000)
Non-vested at January 1, 2014		1,131		$	22.35	$	26,656
Granted		234			27.46
Vested		(95	)		22.42		2,606
Forfeited		(12	)		21.81
Non-vested at June 30, 2014		1,258		$	23.32	$	30,650

As of June 30, 2014, total unrecognized share-based compensation expense related to non-vested stock awards, net of forfeitures, was approximately $20 million, before income taxes, and is expected to be recognized over a weighted average period of approximately 3 years.

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Income Tax Provision

6 Months Ended

Jun. 30, 2014

Income Tax Provision

NOTE E – Income Tax Provision

Income tax expense of approximately $6 million and $1 million was recorded for the three months ended June 30, 2014 and 2013, respectively, and income tax expense of approximately $8 million was recorded for both the six months ended June 30, 2014 and 2013. This resulted in an effective tax rate of 22% for the six months ended June 30, 2014, as compared to 54% in the same period last year and compared to 38% for the full year of 2013.   The effective tax rate for the six months ended June 30, 2014 includes a $2 million benefit for discrete items, primarily resulting from the conclusion of a tax audit.  The effective tax rate for the six months ended June 30, 2013 includes a $6 million charge for discrete items during the period, primarily resulting from a tax audit by the China tax authorities. The estimated annual tax rate for 2014 is expected to be approximately 28%, excluding discrete items.  The Company’s effective tax rates for the six months ended June 30, 2014 and 2013, excluding discrete items, were lower than the U.S. statutory tax rate of 35%, principally from the impact of income in lower-taxed jurisdictions.

For the three months ended June 30, 2014, the Company reported domestic and foreign pre-tax income of approximately $1 million and $23 million, respectively. For the six months ended June 30, 2014, the Company reported domestic and foreign pre-tax income of approximately $4 million and $32 million, respectively. Funds repatriated from foreign subsidiaries to the U.S. may be subject to federal and state income taxes. The Company intends to permanently reinvest overseas all of its earnings from its foreign subsidiaries, except to the extent such undistributed earnings have previously been subject to US tax; accordingly, deferred U.S. taxes are not recorded on undistributed foreign earnings.

The impact of tax holidays decreased the Company’s tax expense by approximately $1 million and $2 million for the six months ended June 30, 2014 and 2013, respectively. The benefit of the tax holidays on both basic and diluted earnings per share for the six months ended June 30, 2014 was approximately $0.03. The benefit of the tax holidays on both basic and diluted earnings per share for the six months ended June 30, 2013 was approximately $0.04.

The Company files income tax returns in the U.S. federal jurisdiction and in various state and foreign jurisdictions. The Company is no longer subject to U.S. federal income tax examinations by tax authorities for tax years before 2007, or for the 2010 tax year.  With respect to state and local jurisdictions and countries outside of the U.S., with limited exceptions, the Company is no longer subject to income tax audits for years before 2006. Although the outcome of tax audits is always uncertain, the Company believes that adequate amounts of tax, interest and penalties, if any, have been provided for in the Company’s reserve for any adjustments that may result from tax audits. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in interest expense. As of June 30, 2014, the gross amount of unrecognized tax benefits was approximately $21 million.

It is reasonably possible that the amount of the unrecognized benefit with respect to certain of the Company’s unrecognized tax positions will significantly increase or decrease within the next 12 months. At this time, an estimate of the range of the reasonably possible outcomes cannot be made.

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Segment Information and Enterprise-Wide Disclosure (Tables)

6 Months Ended

Jun. 30, 2014

Schedule of Revenues from External Customers and Long Lived Assets by Geographical Areas

Revenues are attributed to geographic areas based on the location of subsidiaries producing the revenues (in thousands):

Three Months Ended	Asia			North America			Europe			Consolidated
June 30, 2014
Total sales	$	200,955		$	38,304		$	47,383		$	286,642
Inter-company sales		(25,518	)		(15,650	)		(22,257	)		(63,425	)
Net sales	$	175,437		$	22,654		$	25,126		$	223,217
Three Months Ended	Asia			North America			Europe			Consolidated
June 30, 2013
Total sales	$	195,735		$	37,253		$	39,993		$	272,981
Inter-company sales		(18,873	)		(18,657	)		(21,072	)		(58,602	)
Net sales	$	176,862		$	18,596		$	18,921		$	214,379
As of and for the Six Months Ended	Asia			North America			Europe			Consolidated
June 30, 2014
Total sales	$	390,322		$	75,089		$	88,929		$	554,340
Inter-company sales		(48,802	)		(30,387	)		(41,948	)		(121,137	)
Net sales	$	341,520		$	44,702		$	46,981		$	433,203
Property, plant and equipment, net	$	262,186		$	28,016		$	22,340		$	312,542
Total assets	$	866,715		$	130,085		$	188,935		$	1,185,735
As of and for the Six Months Ended	Asia			North America			Europe			Consolidated
June 30, 2013
Total sales	$	352,535		$	72,061		$	77,630		$	502,226
Inter-company sales		(34,896	)		(35,424	)		(40,563	)		(110,883	)
Net sales	$	317,639		$	36,637		$	37,067		$	391,343
Property, plant and equipment, net	$	277,608		$	30,579		$	23,100		$	331,287
Total assets	$	837,332		$	150,733		$	183,509		$	1,171,574

Schedule of Revenue by Countries

Revenues were derived from (shipped to) customers located in the following countries (in thousands):

	Net Sales
	for the Three Months				Percentage of
	Ended June 30,				Net Sales
	2014		2013		2014			2013
China	$	139,703	$	139,113		63	%		65	%
United States		21,765		16,604		10	%		8	%
Germany		16,372		12,263		7	%		6	%
Korea		14,110		16,119		6	%		8	%
Singapore		12,498		12,784		6	%		6	%
Taiwan		6,698		6,763		3	%		3	%
All Others (1)		12,071		10,733		5	%		5	%
Total	$	223,217	$	214,379		100	%		100	%
	Net Sales
	for the Six Months				Percentage of
	Ended June 30,				Net Sales
	2014		2013		2014			2013
China	$	267,160	$	246,757		62	%		63	%
United States		41,406		34,021		10	%		9	%
Korea		34,235		31,566		8	%		8	%
Germany		31,199		23,291		7	%		6	%
Singapore		22,116		21,719		5	%		6	%
Taiwan		13,581		11,916		3	%		3	%
All Others (1)		23,506		22,073		5	%		6	%
Total	$	433,203	$	391,343		100	%		100	%

⁽¹⁾ Represents countries with less than 3% of the total revenues each.

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2014

Schedule of Earnings Per Share, Basic and Diluted

The computation of basic and diluted earnings per common share is as follows (in thousands, except per share data):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
BASIC
Weighted average number of common shares outstanding   used in computing basic earnings per share		46,889		46,148		46,794		46,085
Net income attributable to common stockholders	$	17,385	$	8,635	$	27,587	$	6,709
Earnings per share attributable to common stockholders	$	0.37	$	0.19	$	0.59	$	0.15
DILUTED
Weighted average number of common shares outstanding   used in computing basic earnings per share		46,889		46,148		46,794		46,085
Add:  Dilutive effect of stock options and stock awards outstanding		1,534		1,359		1,429		1,298
		48,423		47,507		48,223		47,383
Net income attributable to common stockholders	$	17,385	$	8,635	$	27,587	$	6,709
Earnings per share attributable to common stockholders	$	0.36	$	0.18	$	0.57	$	0.14

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Employee Benefit Plans

6 Months Ended

Jun. 30, 2014

Employee Benefit Plans

NOTE I – Employee Benefit Plans

Defined Benefit Plan

The Company has a contributory defined benefit plan that covers certain employees in the United Kingdom (“U.K.”). The net pension and supplemental retirement benefit obligations and the related periodic costs are based on, among other things, assumptions regarding the discount rate, estimated return on plan assets and mortality rates. These obligations and related periodic costs are measured using actuarial techniques and assumptions. The projected unit credit method is the actuarial cost method used to compute the pension liabilities and related expenses.

Net periodic benefit costs associated with the defined benefit plan were approximately $0 million for both the three months ended June 30, 2014 and 2013, and $1 million and $0 million for the six months ended June 30, 2014 and 2013, respectively.

The following tables set forth the benefit obligation, the fair value of plan assets, and the funded status of the Company’s plan (in thousands):

	Defined Benefit Plan
Change in benefit obligation:
Balance at December 31, 2013	$	149,316
Service cost		167
Interest cost		3,436
Actuarial loss		1,447
Benefits paid		(2,308	)
Settlements		-
Currency changes		4,919
Benefit obligation at June 30, 2014	$	156,977
Change in plan assets:
Fair value of plan assets at December 31, 2013	$	116,568
Actual return on plan assets		3,851
Employer contribution		334
Benefits paid		(2,308	)
Currency changes		3,834
Fair value of plan assets at June 30, 2014	$	122,279
Underfunded status at June 30, 2014	$	(34,698	)

Based on an actuarial study performed as of June 30, 2014, the plan is underfunded and a liability is reflected in the Company’s consolidated financial statements as a long-term liability. The weighted-average discount rate assumption used to determine benefit obligations as of June 30, 2014 was 4.5%.

The following weighted-average assumptions were used to determine net periodic benefit costs for the six months ended June 30, 2014:

Discount rate	4.6	%
Expected long-term return on plan assets	5.9	%

During the second quarter of 2012, the Company adopted a payment plan with the trustees of the defined benefit plan, in which the Company will pay approximately ₤2 million British Pound Sterling (“GBP”) (approximately $3 million based on a USD:GBP exchange rate of 1.6:1) every year from 2012 through 2019. As part of the required pension review, which occurs every three years under the United Kingdom pension regulations, the Company is currently in discussions with the trustees regarding future contributions for the pension scheme.

The Company also has pension plans in Asia for which the benefit obligation, fair value of the plan assets and the funded status amounts are deemed immaterial and therefore, are not included in the figures or assumptions above.

Deferred Compensation

The Company maintains a Non-Qualified Deferred Compensation Plan (the “Deferred Compensation Plan”) for executive officers, key employees and members of the Board of Directors (the “Board”). The Deferred Compensation Plan allows eligible participants to defer the receipt of eligible compensation, including equity awards, until designated future dates. The Company offsets its obligations under the Deferred Compensation Plan by investing in the actual underlying investments. These investments are classified as trading securities and are carried at fair value. At June 30, 2014, these investments totaled approximately $4 million. All gains and losses in these investments are materially offset by corresponding gains and losses in the Deferred Compensation Plan liabilities.

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Segment Information and Enterprise-Wide Disclosure

6 Months Ended

Jun. 30, 2014

Segment Information and Enterprise-Wide Disclosure

NOTE G – Segment Information and Enterprise-Wide Disclosure

For financial reporting purposes, the Company operates in a single segment, standard semiconductor products, through the Company’s various manufacturing and distribution facilities. The Company aggregates its products because the products are similar and have similar economic characteristics, and the products are similar in production process and share the same customer type.

The Company’s primary operations include the domestic operations in Asia, North America and Europe.

Revenues are attributed to geographic areas based on the location of subsidiaries producing the revenues (in thousands):

Three Months Ended	Asia			North America			Europe			Consolidated
June 30, 2014
Total sales	$	200,955		$	38,304		$	47,383		$	286,642
Inter-company sales		(25,518	)		(15,650	)		(22,257	)		(63,425	)
Net sales	$	175,437		$	22,654		$	25,126		$	223,217
Three Months Ended	Asia			North America			Europe			Consolidated
June 30, 2013
Total sales	$	195,735		$	37,253		$	39,993		$	272,981
Inter-company sales		(18,873	)		(18,657	)		(21,072	)		(58,602	)
Net sales	$	176,862		$	18,596		$	18,921		$	214,379
As of and for the Six Months Ended	Asia			North America			Europe			Consolidated
June 30, 2014
Total sales	$	390,322		$	75,089		$	88,929		$	554,340
Inter-company sales		(48,802	)		(30,387	)		(41,948	)		(121,137	)
Net sales	$	341,520		$	44,702		$	46,981		$	433,203
Property, plant and equipment, net	$	262,186		$	28,016		$	22,340		$	312,542
Total assets	$	866,715		$	130,085		$	188,935		$	1,185,735
As of and for the Six Months Ended	Asia			North America			Europe			Consolidated
June 30, 2013
Total sales	$	352,535		$	72,061		$	77,630		$	502,226
Inter-company sales		(34,896	)		(35,424	)		(40,563	)		(110,883	)
Net sales	$	317,639		$	36,637		$	37,067		$	391,343
Property, plant and equipment, net	$	277,608		$	30,579		$	23,100		$	331,287
Total assets	$	837,332		$	150,733		$	183,509		$	1,171,574

Geographic Information

Revenues were derived from (shipped to) customers located in the following countries (in thousands):

	Net Sales
	for the Three Months				Percentage of
	Ended June 30,				Net Sales
	2014		2013		2014			2013
China	$	139,703	$	139,113		63	%		65	%
United States		21,765		16,604		10	%		8	%
Germany		16,372		12,263		7	%		6	%
Korea		14,110		16,119		6	%		8	%
Singapore		12,498		12,784		6	%		6	%
Taiwan		6,698		6,763		3	%		3	%
All Others (1)		12,071		10,733		5	%		5	%
Total	$	223,217	$	214,379		100	%		100	%
	Net Sales
	for the Six Months				Percentage of
	Ended June 30,				Net Sales
	2014		2013		2014			2013
China	$	267,160	$	246,757		62	%		63	%
United States		41,406		34,021		10	%		9	%
Korea		34,235		31,566		8	%		8	%
Germany		31,199		23,291		7	%		6	%
Singapore		22,116		21,719		5	%		6	%
Taiwan		13,581		11,916		3	%		3	%
All Others (1)		23,506		22,073		5	%		6	%
Total	$	433,203	$	391,343		100	%		100	%

⁽¹⁾ Represents countries with less than 3% of the total revenues each.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2014

Commitments and Contingencies

NOTE H – Commitments and Contingencies

Purchase commitments – As of June 30, 2014, the Company had approximately $17 million in non-cancelable purchase contracts related to capital expenditures, primarily for manufacturing equipment in China.

Contingencies – From time to time, the Company may be involved in a variety of legal matters that arise in the normal course of business. Based on information available, the Company evaluates the likelihood of potential outcomes. The Company records the appropriate liability when it is considered probable and the amount is reasonably estimable. In addition, the Company does not accrue for estimated legal fees and other directly related costs as they are expensed as incurred.

The Company is currently a party to a purported stockholder derivative action in the United States District Court for the District of Delaware, entitled Scherer v. Keh-Shew Lu, Civil Action No. 1:13-cv-00358-UNA (D. Del. filed Mar. 5, 2013), on behalf of the Company against its directors, in which plaintiff alleges that (a) the Board approved awards of stock options to Dr. Keh-Shew Lu, our President and Chief Executive Officer, in 2009, 2010, 2011 and 2012 that exceeded the limitation on the number of shares of the Company’s Common Stock that may be purchased upon the exercise of options granted to any person in any given year under the Company’s 2001 Omnibus Equity Incentive Plan as amended by the stockholders on May 28, 2009; (b) the Company’s disclosures in its 2010, 2011 and 2012 proxy statements regarding the limitation on the number of shares of the Company’s Common Stock that may be purchased upon the exercise of options granted to any person in any given year under the Company’s 2001 Omnibus Equity Incentive Plan as amended by the stockholders on May 28, 2009 were inaccurate; and (c) the Company’s disclosures in its 2010, 2011 and 2012 proxy statements that the grants of stock options to Dr. Lu in 2009, 2010, 2011 and 2012 complied with the terms of the Company’s 2001 Omnibus Equity Incentive Plan as amended by the stockholders on May 28, 2009 were incorrect. The Compensation Committee reviewed the grants of stock options to Dr. Lu in 2009, 2010, 2011 and 2012 (each such annual grant, an “Option Grant”), and approved a Confirmation Agreement, dated April 1, 2013, in which the Company and Dr. Lu agreed and confirmed that Dr. Lu will assert no claim that any Option Grant in 2009, 2010, 2011 or 2012 provided for the purchase of more than 100,000 shares of the Company’s Common Stock, and that each Option Grant document be deemed amended to reflect the foregoing 100,000 share limitation. On April 3, 2013, defendants and the Company filed answers to the complaint. On May 8, 2013, defendants filed a motion for judgment on the pleadings dismissing the action on the ground that the claims are moot. On June 24, 2013, the Court approved the parties’ stipulation providing for the withdrawal of the motion for judgment on the pleadings and the dismissal of the action as moot upon the filing and adjudication of plaintiff’s motion for an award of attorney’s fees and costs. On July 29, 2013, plaintiff filed a motion for an award of attorneys’ fees and costs. On September 20, 2013, the Company filed its opposition to plaintiff’s motion. On October 11, 2013, plaintiff filed her reply in further support of her motion. No hearing date has been set for this motion.

The Company is also currently a party to a putative securities class action in the United States District Court for the Eastern District of Texas, entitled Local 731 I.B. of T. Excavators and Pavers Pension Trust Fund v. Diodes, Inc., Civil Action No. 6:13-cv-00247 (E.D. Tex. filed Mar. 15, 2013), (the “Class Action”) against the Company, Dr. Lu and Richard D. White. In this action, plaintiff purportedly on behalf of a class of investors who purchased the Company’s Common Stock between February 9, 2011 and June 9, 2011, alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Securities and Exchange Commission Rule 10b-5 promulgated thereunder by making allegedly misleading public statements during the class period regarding the labor market in China and its impact on the Company’s business and prospects. On June 14, 2013, the Court entered an order appointing Local 731 I.B. of T. Excavators and Pavers Pension Trust Fund as lead plaintiff and approved lead plaintiff’s selection of Robbins Geller Rudman & Dowd as lead plaintiff’s counsel and the Ward & Smith Law Firm as lead plaintiff’s liaison counsel. On August 1, 2013, lead plaintiff filed an amended complaint reiterating the same claims for relief against the same defendants as asserted in the original complaint. On September 16, 2013, defendants filed a motion to dismiss the amended complaint. Lead plaintiff’s opposition to defendants’ motion to dismiss was filed on October 31, 2013. No hearing date has been set for this motion. Pursuant to the Private Securities Litigation Reform Act of 1995, all discovery and other proceedings are stayed pending a ruling on any motion to dismiss. The defendants intend to defend this action vigorously.

On February 20, 2014, a purported stockholder derivative action was filed in the United States District Court for the Eastern District of Texas, entitled Persson v. Keh-Shew Lu, Case No. 4:14-cv-00108-RC-ALM (E.D. Tex. filed Feb. 20, 2014), on behalf of the Company against its directors, in which plaintiff alleges that the directors breached their fiduciary duties by allowing the Company to make allegedly misleading public statements in 2011 regarding the labor market in China and its impact on the Company’s business and prospects, by failing to maintain internal controls and by selling shares of Diodes stock while allegedly in possession of material nonpublic information regarding the labor market in China and its impact on the Company’s business and prospects. The complaint does not seek any damages or other relief from the Company. On March 3, 2014, defendants accepted service of the complaint in this action. On April 2, 2014, this action was transferred to the judge presiding over the Class Action. On April 3, 2014, the Court granted defendants’ unopposed motion to extend their time to respond to the complaint to May 28, 2014. On April 17, 2014, the Court granted the parties’ unopposed motion to stay this action until such time that the Court rules on defendants’ motion to dismiss in the Class Action. The defendants intend to defend the action vigorously.

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Related Parties

6 Months Ended

Jun. 30, 2014

Related Parties

NOTE J – Related Parties

The Company conducts business with three related companies: Lite-On Semiconductor Corporation and its subsidiaries and affiliates (collectively, “LSC”), Keylink International (B.V.I.) Inc. and its subsidiaries and affiliates (collectively, “Keylink”) and Nuvoton Technology Corporation and its subsidiaries and affiliates (collectively, “Nuvoton”). LSC owned approximately 18% of the Company’s outstanding Common Stock as of June 30, 2014. Keylink is the Company’s 5% joint venture partner in two of the Company’s Shanghai manufacturing facilities. A member of the Company’s Board of Directors who is also the Company’s President and Chief Executive Officer is a member of the Board of Directors of Nuvoton.  In addition, another member of the Company’s Board of Directors is a Supervisor of the Board of Directors of Nuvoton.

The Audit Committee of the Company’s Board reviews all related party arrangements for potential conflict of interest situations on an ongoing basis, in accordance with such procedures as the Audit Committee may adopt from time to time.

Lite-On Semiconductor Corporation – The Company sells products to LSC and purchases semiconductor products from LSC for subsequent sale, making LSC one of the Company’s largest suppliers.

Net sales to, and purchases from, LSC are as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
Net sales	$	164	$	296	$	279	$	399
Purchases	$	8,374	$	9,650	$	15,712	$	17,159

Keylink International (B.V.I.) Inc. – The Company sells products to Keylink and purchases semiconductor products for subsequent sale. In addition, two of the Company’s subsidiaries in China lease their manufacturing facilities from, and subcontract a portion of their manufacturing process (including, but not limited to, metal plating and environmental services) to Keylink. The Company also pays a consulting fee to Keylink. The aggregate amounts for these services for both the three months ended June 30, 2014 and 2013 were approximately $5 million.  The aggregate amounts for these services for both the six months ended June 30, 2014 and 2013 were approximately $9 million.

Net sales to, and purchases from, Keylink are as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
Net sales	$	2,116	$	1,561	$	4,380	$	5,209
Purchases	$	2,070	$	2,138	$	3,716	$	3,666

Nuvoton Technology Corporation – The Company purchases wafers from Nuvoton that it uses in the production of finished goods.  

Net purchases from Nuvoton are as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
Purchases	$	3,237	$	3,248	$	6,573	$	5,095

Accounts receivable from, and accounts payable to, LSC, Keylink and Nuvoton are as follows (in thousands):

	June 30,		December 31,
	2014		2013
Accounts receivable
LSC	$	155	$	140
Keylink		3,400		4,927
	$	3,555	$	5,067
Accounts payable
LSC	$	5,919	$	5,670
Keylink		6,230		6,505
Nuvoton		1,154		770
	$	13,303	$	12,945

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Share-Based Compensation - Schedule of Share Based Compensation Stock Options Activity (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Stock Options, Shares:
Outstanding Beginning Shares	3,126
Granted Shares	176
Exercised Shares	(304)
Forfeited or Expired Shares	(2)
Outstanding Ending Shares	2,996	3,126
Shares Exercisable	2,406
Weighted Average Exercise Price:
Outstanding Beginning Weighted Average Exercise Price	$ 18.93
Granted Weighted Average Exercise Price	$ 27.92
Exercised Weighted Average Exercise Price	$ 9.66
Forfeited or Expired Weighted Average Exercise Price	$ 29.21
Outstanding Ending Weighted Average Exercise Price	$ 20.39	$ 18.93
Exercisable Weighted Average Exercise Price	$ 19.43
Weighted Average Remaining Contractual Term:
Outstanding Beginning Weighted Average Remaining Contractual Term	4 years	4 years
Outstanding Ending Weighted Average Remaining Contractual Term	4 years	4 years
Exercisable Weighted Average Remaining Contractual Term	3 years
Aggregate Intrinsic Value :
Outstanding Beginning Intrinsic Value	$ 17,461
Exercised Intrinsic Value	5,422
Outstanding Ending Intrinsic Value	25,754	17,461
Exercisable Intrinsic Value	$ 22,967

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Goodwill and Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2014

Schedule of Intangible Assets and Goodwill

Changes in goodwill are as follows (in thousands):

Balance at December 31, 2013	$	84,714
Translation adjustment		1,246
Balance at June 30, 2014	$	85,960

Intangible assets are as follows (in thousands):

	June 30,			December 31,
	2014			2013
Intangible assets subject to amortization:
Gross carrying amount	$	86,929		$	86,925
Accumulated amortization		(36,220	)		(32,245	)
Translation adjustment		(6,710	)		(7,000	)
Total		43,999			47,680
Intangible assets with indefinite lives:
Gross carrying amount		6,403			6,403
Translation adjustment		(426	)		(512	)
Total		5,977			5,891
Total intangible assets, net	$	49,976		$	53,571

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Earnings Per Share - Additional Information (Details)	6 Months Ended
	Jun. 30, 2014
Earnings Per Share [Line Items]
Earnings per share reconciliation disclosure	Basic earnings per share is calculated by dividing net income attributable to common stockholders by the weighted-average number of shares of Common Stock outstanding during the period. Diluted earnings per share is calculated similarly but includes potential dilution from the exercise of stock options and stock awards, except when the effect would be anti-dilutive.

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Employee Benefit Plans - Schedule of Changes in Fair Value of Plan Assets (Details) (Pension Plan, Defined Benefit, USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014
Pension Plan, Defined Benefit
Change in Benefit Obligation [Roll Forward]
Benefit obligation - beginning	$ 149,316
Service cost	167
Interest cost	3,436
Actuarial gain	1,447
Benefits paid	(2,308)
Settlements	0
Currency changes	4,919
Benefit obligation - ending	156,977
Change in Plan Assets [Roll Forward]
Fair value of plan assets - beginning	116,568
Actual return	3,851
Employer contribution	334
Benefits paid	(2,308)
Currency changes	3,834
Fair value of plan assets - ending	122,279
Funded status	$ (34,698)

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CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Net income	$ 17,851	$ 9,040	$ 28,297	$ 6,763
Translation adjustment	3,712	(859)	(145)	(8,395)
Unrealized gain (loss) on defined benefit plan, net of tax	(1,816)	2,659	(550)	1,181
Comprehensive income (loss)	19,747	10,840	27,602	(451)
Less: Comprehensive income attributable to noncontrolling interest	(466)	(405)	(710)	(54)
Total comprehensive income (loss) attributable to common stockholders	$ 19,281	$ 10,435	$ 26,892	$ (505)

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Goodwill and Intangible Assets

6 Months Ended

Jun. 30, 2014

Goodwill and Intangible Assets

NOTE D – Goodwill and Intangible Assets

Changes in goodwill are as follows (in thousands):

Balance at December 31, 2013	$	84,714
Translation adjustment		1,246
Balance at June 30, 2014	$	85,960

Intangible assets are as follows (in thousands):

	June 30,			December 31,
	2014			2013
Intangible assets subject to amortization:
Gross carrying amount	$	86,929		$	86,925
Accumulated amortization		(36,220	)		(32,245	)
Translation adjustment		(6,710	)		(7,000	)
Total		43,999			47,680
Intangible assets with indefinite lives:
Gross carrying amount		6,403			6,403
Translation adjustment		(426	)		(512	)
Total		5,977			5,891
Total intangible assets, net	$	49,976		$	53,571

Amortization expense related to intangible assets subject to amortization was approximately $2 million for both the three months ended June 30, 2014 and 2013, and approximately $4 million for both the six months ended June 30, 2014 and 2013.

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Earnings Per Share (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
BASIC
Weighted average number of common shares outstanding used in computing basic earnings per share	46,889	46,148	46,794	46,085
Net income attributable to common stockholders	$ 17,385	$ 8,635	$ 27,587	$ 6,709
Earnings per share attributable to common stockholders	$ 0.37	$ 0.19	$ 0.59	$ 0.15
DILUTED
Weighted average number of common shares outstanding used in computing basic earnings per share	46,889	46,148	46,794	46,085
Add: Dilutive effect of stock options and stock awards outstanding	1,534	1,359	1,429	1,298
Diluted shares	48,423	47,507	48,223	47,383
Net income attributable to common stockholders	$ 17,385	$ 8,635	$ 27,587	$ 6,709
Earnings per share attributable to common stockholders	$ 0.36	$ 0.18	$ 0.57	$ 0.14

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Segment Information and Enterprise-Wide Disclosure - Schedule of Revenue by Countries (Parenthetical) (Details)	3 Months Ended				6 Months Ended
	Jun. 30, 2014		Jun. 30, 2013		Jun. 30, 2014		Jun. 30, 2013
Segment Reporting Revenue Reconciling Item [Line Items]
Sales revenue net percentage	100.00%		100.00%		100.00%		100.00%
All Others
Segment Reporting Revenue Reconciling Item [Line Items]
Sales revenue net percentage	5.00%	[1]	5.00%	[1]	5.00%	[1]	6.00%	[1]
All Others | Maximum
Segment Reporting Revenue Reconciling Item [Line Items]
Sales revenue net percentage					3.00%

[1] Represents countries with less than 3% of the total revenues each.

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Inventories (Tables)

6 Months Ended

Jun. 30, 2014

Schedule Of Inventory Current

Inventories stated at the lower of cost or market value are as follows (in thousands):

	June 30,		December 31,
	2014		2013
Raw materials	$	71,197	$	69,878
Work-in-progress		46,540		43,031
Finished goods		65,044		67,487
Total	$	182,781	$	180,396