Table of Contents

		Per Share				Total
Public offering price		$	35.750			$	89,375,000
Underwriting discounts and commissions		$	1.832			$	4,580,000
Proceeds, before expenses, to us		$	33.918			$	59,356,500
Proceeds, before expenses, to the selling stockholder		$	33.918			$	25,438,500

A.G. Edwards	C.E. Unterberg, Towbin	Raymond James

---

Table of Contents

---

Prospectus summary			1
Risk factors			7
Special note regarding forward-looking statements			21
Industry data			21
Use of proceeds			22
Market price of common stock			22
Dividend policy			22
Capitalization			23
Selected historical consolidated financial data			24
Management’s discussion and analysis of financial condition and results of operations			26
Business			46
Management			57
Certain relationships and related party transactions			62
Principal and selling stockholders			65
Description of capital stock			67
Material U.S. tax consequences to non-U.S. Holders			69
Underwriting			72
Notice to investors			75
Legal matters			78
Experts			78
Where you can find additional information			78
Incorporation of certain documents by reference			78
Index to historical consolidated financial statements			F-1

---

Table of Contents

---

Table of Contents

---

Table of Contents

---

Table of Contents

•	continue rapidly introducing innovative discrete semiconductor products;
•	expand our available market opportunities;
•	maintain intense customer focus;
•	enhance cost competitiveness; and
•	pursue selective strategic acquisitions.

---

Table of Contents

Common stock offered by us		1,750,000 shares
Common stock offered by the selling stockholder		750,000 shares
Common stock to be outstanding after this offering(1)		16,404,274 shares
Use of proceeds after expenses		We estimate that the net proceeds to us from this offering will be approximately $58.5 million, or approximately $71.3 million if the underwriters exercise their overallotment option in full. We intend to use the net proceeds of this offering for working capital and other general corporate purposes, including acquisitions. We will not receive any of the proceeds from the sale of shares of common stock offered by the selling stockholder. See “Use of proceeds.”
Nasdaq National Market symbol		DIOD

•	2,787,249 shares of common stock issuable after the completion of this offering upon the exercise of outstanding stock options under our stock incentive plans at a weighted average exercise price of $15.69 per share;
•	208,542 shares of common stock issuable upon vesting of outstanding restricted stock awards;
•	111,905 shares of common stock available for future grants under our stock incentive plans; and
•	1,613,508 shares of common stock held by us as treasury stock.

(1)	As of September 16, 2005, we had 16,267,782 shares issued of which (a) 14,654,274 shares were outstanding and (b) 1,613,508 were held as treasury stock, which were issued but not outstanding.

---

Table of Contents

---

Table of Contents

•	on an actual basis; and
•	on an as adjusted basis to give effect to the issuance of 1,750,000 shares of common stock in this offering.

		As of June 30, 2005
Consolidated balance sheet data:		Actual				As adjusted
		(unaudited, in thousands)
Cash and cash equivalents		$	33,014			$	91,551
Working capital			66,451				124,988
Total assets			186,380				244,917
Current portion of long-term debt			6,891				6,891
Long-term debt, net of current portion			3,877				3,877
Total liabilities			53,387				53,387
Total stockholders’ equity			132,993				191,530

(1)	Adjusted for the effect of 3-for-2 stock splits in July 2000 and November 2003.
(2)	EBITDA represents earnings before net interest expense, income tax provision, depreciation and amortization. Our management believes EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties in evaluating companies in our industry. In addition, our management believes that EBITDA is useful in evaluating our operating performance compared to that of other companies in our industry because the calculation of EBITDA generally eliminates the effects of financing and income taxes and the accounting effects of capital spending, which items may vary for different companies for reasons unrelated to overall operating performance. As a result, our management uses EBITDA as a measure to evaluate the performance of our business. However, EBITDA is not a recognized measurement under generally accepted accounting principles, or GAAP, and when analyzing our operating performance, investors should use EBITDA in addition to, and not as an alternative for, income from operations and net income, each as determined in accordance with GAAP. Because not all companies use identical calculations, our presentation of EBITDA may not be comparable to similarly titled measures of other companies. Furthermore, EBITDA is not intended to be a measure of free cash flow for our management’s discretionary use, as it does not consider certain cash requirements such as a tax and debt service payments.

																							Six months ended
			Year ended December 31,																				June 30,
Reconciliation of net income to EBITDA:			2000				2001				2002				2003				2004				2004				2005
																							(unaudited)
			(in thousands)
Net income			$	14,895			$	124			$	5,802			$	10,095			$	25,551			$	10,980			$	14,905
plus:
	Interest expense, net			940				2,074				1,183				860				637				327				234
	Income tax provision (benefit)			2,496				(1,769)				1,729				2,460				6,514				2,543				2,903
	Depreciation and amortization			5,003				8,670				9,747				11,073				13,173				6,145				7,813
EBITDA			$	23,334			$	9,099			$	18,461			$	24,488			$	45,875			$	19,995			$	25,855

---

Table of Contents

---

Table of Contents

---

Table of Contents

---

Table of Contents

•	pay substantial damages for past, present and future use of the infringing technology;
•	cease the manufacture, use or sale of infringing products;
•	discontinue the use of infringing technology;
•	expend significant resources to develop non-infringing technology;
•	pay substantial damages to our customers or end users to discontinue use or replace infringing technology with non-infringing technology;
•	license technology from the third party claiming infringement, which license may not be available on commercially reasonable terms, or at all; or
•	relinquish intellectual property rights associated with one or more of our patent claims, if such claims are held invalid or otherwise unenforceable.

---

Table of Contents

•	difficulties associated with owning a manufacturing business, including, but not limited to, the maintenance and management of manufacturing facilities, equipment, employees and inventories and limitations on the flexibility of controlling overhead;
•	difficulties in continuing expansion of our operations in Asia and Europe, because of the distance from our U.S. headquarters and differing regulatory and cultural environments;
•	the need for skills and techniques that are outside our traditional core expertise;
•	less flexibility in shifting manufacturing or supply sources from one region to another;
•	even when independent suppliers offer lower prices, we would continue to acquire wafers from our captive manufacturing facility, which may result in us having higher costs than our competitors;
•	difficulties developing and implementing a successful research and development team; and
•	difficulties developing, and gaining market acceptance of, our proprietary technology.

---

Table of Contents

•	unexpected losses of key employees or customers of the acquired company;
•	bringing the acquired company’s standards, processes, procedures and controls into conformance with our operations;
•	coordinating our new product and process development;
•	hiring additional management and other critical personnel;
•	increasing the scope, geographic diversity and complexity of our operations;
•	difficulties in consolidating facilities and transferring processes and know-how;
•	difficulties in reducing costs of the acquired entity’s business;
•	diversion of management’s attention from the management of our business; and
•	adverse effects on existing business relationships with customers.

---

Table of Contents

---

Table of Contents

---

Table of Contents

•	changes in, or impositions of, legislative or regulatory requirements, including tax laws in the United States and in the countries in which we manufacture or sell our products;
•	compliance with trade or other laws in a variety of jurisdictions;
•	trade restrictions, transportation delays, work stoppages, and economic and political instability;
•	changes in import/export regulations, tariffs and freight rates;

---

Table of Contents

•	difficulties in collecting receivables and enforcing contracts;
•	currency exchange rate fluctuations;
•	restrictions on the transfer of funds from foreign subsidiaries to the United States;
•	the possibility of international conflict, particularly between or among China and Taiwan and the United States;
•	legal regulatory, political and cultural differences among the countries in which we do business; and
•	longer customer payment terms.

---

Table of Contents

---

Table of Contents

•	general economic conditions in the countries where we sell our products;
•	seasonality and variability in the computing and communications market and our other end markets;
•	the timing of our and our competitors’ new product introductions;
•	product obsolescence;
•	the scheduling, rescheduling and cancellation of large orders by our customers;
•	the cyclical nature of demand for our customers’ products;
•	our ability to develop new process technologies and achieve volume production at our fabrication facilities;
•	changes in manufacturing yields;
•	adverse movements in exchange rates, interest rates or tax rates; and
•	the availability of adequate supply commitments from our outside suppliers or subcontractors.

---

Table of Contents

•	use a significant portion of our available cash;
•	issue equity securities, which would dilute current stockholders’ percentage ownership;
•	incur substantial debt;
•	incur or assume contingent liabilities, known or unknown;
•	incur amortization expenses related to intangibles; and
•	incur large, immediate accounting write-offs.

---

Table of Contents

---

Table of Contents

---

Table of Contents

		Common stock price
		High				Low
Year ended December 31, 2003
First quarter		$	8.40			$	6.25
Second quarter			14.63				7.01
Third quarter			16.60				11.79
Fourth quarter			21.75				13.41
Year ended December 31, 2004
First quarter		$	26.96			$	18.93
Second quarter			25.25				20.15
Third quarter			26.20				16.15
Fourth quarter			29.66				21.50
Year ending December 31, 2005
First quarter		$	27.86			$	19.07
Second quarter			33.85				24.70
Third quarter (through September 22, 2005)			39.60				30.80

---

Table of Contents

•	on an actual basis; and
•	on an as adjusted basis to give effect to the issuance of 1,750,000 shares of common stock by us in this offering, resulting in estimated proceeds of $58.5 million, after deducting underwriting discounts and commissions and the estimated offering expenses payable by us.

					As of
					June 30, 2005
					Actual				As adjusted
					(in thousands, except share
					and per share data,
					unaudited)
Cash and cash equivalents					$	33,014			$	91,551
Long-term debt, including current portion					$	10,768			$	10,768
Stockholders’ equity:
	Preferred stock, par value $1.00 per share, 1,000,000 shares authorized, no shares issued and outstanding, actual and as adjusted					—				—
	Common stock, par value $0.662/3 per share, 30,000,000 shares authorized, 16,185,552 shares issued, actual; 30,000,000 shares authorized, 17,935,552 shares issued, as adjusted					10,791				11,958
	Additional paid-in capital					26,946				84,316
	Retained earnings					96,235				96,235
Less: Treasury stock— 1,613,508 shares of common stock, at cost						1,782				1,782
Less: Accumulated other comprehensive income						(803	)			(803	)
		Total stockholders’ equity				132,993				191,530
			Total capitalization		$	176,775			$	293,849

•	2,409,922 shares of common stock issuable after the completion of this offering upon the exercise of outstanding stock options under our stock incentive plans at a weighted average exercise price of $11.78 per share;
•	208,542 shares of common stock issuable upon vesting of outstanding restricted stock awards; and
•	571,462 shares of common stock available for future grants under our stock incentive plans.

---

Table of Contents

																								Six months
				Year ended December 31,																				ended June 30,
				2000				2001				2002				2003				2004				2004				2005
																								(unaudited)
				(in thousands, except per share data)
Consolidated statement of income data:
Net sales				$	116,079			$	93,210			$	115,821			$	136,905			$	185,703			$	88,442			$	99,198
Cost of goods sold					78,652				79,031				89,111				100,377				124,968				60,664				65,105
	Gross profit				37,427				14,179				26,710				36,528				60,735				27,778				34,093
Operating expenses:
	Selling, general and administrative				18,814				13,711				16,228				19,586				23,503				11,908				13,888
	Research and development				141				592				1,472				2,049				3,422				1,562				1,750
	Impairment of fixed assets				—				—				—				1,000				—				—				—
	Loss (gain) on sale of fixed assets				—				8				43				37				14				15				(105	)
		Total operating expenses			18,955				14,311				17,743				22,672				26,939				13,485				15,533
	Income (loss) from operations				18,472				(132	)			8,967				13,856				33,796				14,293				18,560
Interest expense, net					940				2,074				1,183				860				637				327				234
Other income (expense)					501				785				67				(5	)			(418	)			(124	)			(21	)
Income (loss) before taxes and minority interest					18,033				(1,421	)			7,851				12,991				32,741				13,842				18,305
Income tax benefit (provision)					(2,496	)			1,769				(1,729	)			(2,460	)			(6,514	)			(2,543	)			(2,903	)
Minority interest in earnings of joint venture					(642	)			(224	)			(320	)			(436	)			(676	)			(319	)			(497	)
Net income				$	14,895			$	124			$	5,802			$	10,095			$	25,551			$	10,980			$	14,905
Earnings per share(1):
	Basic			$	1.23			$	0.01			$	0.47			$	0.79			$	1.91			$	0.83			$	1.04
	Diluted			$	1.08			$	0.01			$	0.44			$	0.70			$	1.65			$	0.72			$	0.93
Number of shares used in computation(1):
	Basic				12,107				12,216				12,277				12,731				13,404				13,181				14,319
	Diluted				13,833				13,322				13,297				14,406				15,471				15,306				16,071
Consolidated statement of cash flows data:
Cash flow from operating activities					10,208				14,938				19,990				18,821				29,300				13,781				24,138
Cash used in investing activities					(21,389	)			(8,477	)			(6,774	)			(15,289	)			(26,133	)			(10,245	)			(6,845	)
Cash flow from (used in) financing activities					12,100				(2,485	)			(13,995	)			1,862				2,163				(1,890	)			(3,477	)
Other data:
EBITDA(2)				$	23,334			$	9,099			$	18,461			$	24,488			$	45,875			$	19,995			$	25,855

---

Table of Contents

		As of December 31,																				As of June 30,
Consolidated balance sheet data:		2000				2001				2002				2003				2004				2004				2005
																						(unaudited)
		(in thousands)
Cash and cash equivalents		$	4,476			$	8,103			$	7,284			$	12,847			$	18,970			$	14,586			$	33,014
Working capital			17,291				19,798				20,830				27,154				49,571				33,083				66,451
Total assets			112,950				103,258				105,010				123,795				167,801				143,033				186,380
Current portion of long-term debt			14,860				8,333				5,833				5,833				3,514				4,167				6,891
Long-term debt, net of current portion			15,997				21,164				12,583				6,750				7,833				5,500				3,877
Total liabilities			61,697				52,134				47,331				52,345				55,653				56,707				53,387
Total stockholders’ equity			51,253				51,124				57,679				71,450				112,148				86,326				132,993

(1)	Adjusted for the effect of 3-for-2 stock splits in July 2000 and November 2003.
(2)	EBITDA represents earnings before net interest expense, income tax provision, depreciation and amortization. Our management believes EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties in evaluating companies in our industry. In addition, our management believes that EBITDA is useful in evaluating our operating performance compared to that of other companies in our industry because the calculation of EBITDA generally eliminates the effects of financing and income taxes and the accounting effects of capital spending, which items may vary for different companies for reasons unrelated to overall operating performance. As a result, our management uses EBITDA as a measure to evaluate the performance of our business. However, EBITDA is not a recognized measurement under GAAP, and when analyzing our operating performance, investors should use EBITDA in addition to, and not as an alternative for, income from operations and net income, each as determined in accordance with GAAP. Because not all companies use identical calculations, our presentation of EBITDA may not be comparable to similarly titled measures of other companies. Furthermore, EBITDA is not intended to be a measure of free cash flow for our management’s discretionary use, as it does not consider certain cash requirements such as a tax and debt service payments.

																							Six months ended
			Year ended December 31,																				June 30,
Reconciliation of net income to EBITDA:			2000				2001				2002				2003				2004				2004				2005
																							(unaudited)
			(in thousands)
Net income			$	14,895			$	124			$	5,802			$	10,095			$	25,551			$	10,980			$	14,905
plus:
	Interest expense, net			940				2,074				1,183				860				637				327				234
	Income tax provision (benefit)			2,496				(1,769)				1,729				2,460				6,514				2,543				2,903
	Depreciation and amortization			5,003				8,670				9,747				11,073				13,173				6,145				7,813
EBITDA			$	23,334			$	9,099			$	18,461			$	24,488			$	45,875			$	19,995			$	25,855

---

Table of Contents

•	expanding our manufacturing capacity, including establishing integrated state-of-the-art packaging and testing facilities in Asia, in 1998 and 2004, and acquiring a wafer foundry in the United States in 2000;
•	expanding our sales and marketing organization in Asia in order to address the shift of manufacturing of electronics products from the United States to Asia;
•	establishing our sales and marketing organization in Europe commencing in 2002; and
•	expanding the number of our field application engineers to design our products into specific end-user applications.

•	Since 1998, we have experienced increases in the demand for our products, and substantial pressure from our customers and competitors to reduce the selling price of our products. We expect future increases in net income to result primarily from increases in sales volume and improvements in product mix in order to offset reduced average selling prices of our products.
•	In 2004 and the six months ended June 30, 2005, 14.3% and 15.8%, respectively, of our net sales derived from products introduced within the last three years, which we term new products, compared to 12.1% in 2003. New products generally have gross profit margins that are higher

---

Table of Contents

	than the margins of our standard products. We expect net sales derived from new products to increase in absolute terms, although our net sales of new products as a percentage of our net sales will depend on the demand for our standard products, as well as our product mix.
•	Our gross profit margin was 34.4% in the six months ended June 30, 2005, compared to 32.7% in 2004 and 26.7% in 2003. This improvement in our gross margin was due to improvements in product mix, as well as increases in wafer and packaging yields, reductions in manufacturing costs and increases in capacity utilization. We expect only modest improvements in yields and capacity utilization in the future and, as a result, future gross profit margins will depend primarily on our product mix, as well as on the demand for our product.
•	As of June 30, 2005, we had invested approximately $83.0 million in our Asian manufacturing facilities. For the six months ended June 30, 2005, we invested approximately $6.0 million in our Asian manufacturing facilities and expect to invest an additional $9.0 to $11.0 million in these facilities for the remainder of 2005. We expect to continue to invest in our manufacturing facilities, although the amount to be invested will depend on product demand and new product developments.
•	In the six months ended June 30, 2005, the percentage of our net sales derived from our Asian subsidiaries was 64.7%, compared to 59.1% in 2004 and 55.5% in 2003. We expect our net sales to the Asian market to continue to increase as a percentage of our total net sales for the remainder of 2005 and 2006 as a result of the continuing shift of the manufacture of electronic products from the United States to Asia.
•	We have increased research and development expenses from $2.0 million, or 1.5% of net sales, in 2003 to $3.4 million, or 1.8% of net sales in 2004. We continue to seek to hire qualified engineers who fit our focus on proprietary discrete processes and packaging technologies. Our goal is to expand research and development expenses to approximately 3.0% of net sales as we bring additional proprietary devices to the market.

•	the condition of the economy in general and of the semiconductor industry in particular;
•	our customers’ adjustments in their order levels;

---

Table of Contents

•	changes in our pricing policies or the pricing policies of our competitors or suppliers;
•	the termination of key supplier relationships;
•	the rate of introduction to, and acceptance of new products by, our customers;
•	our ability to compete effectively with our current and future competitors;
•	our ability to enter into and renew key corporate and strategic relationships with our customers, vendors and strategic alliances;
•	changes in foreign currency exchange rates;
•	a major disruption of our information technology infrastructure; and
•	unforeseen catastrophic events, such as armed conflict, terrorism, fires, typhoons and earthquakes.

---

Table of Contents

---

Table of Contents

---

Table of Contents

---

Table of Contents

															Six months
															ended
			Year ended December 31,												June 30,
Consolidated statements of income data:			2002				2003				2004				2004				2005
															(unaudited)
Net sales				100.0	%			100.0	%			100.0	%			100.0	%			100.0	%
Cost of goods sold				76.9				73.3				67.3				68.6				65.6
	Gross profit			23.1				26.7				32.7				31.4				34.4
Selling, general and administrative expenses				14.0				14.3				12.7				13.5				14.0
Research and development expenses				1.3				1.5				1.8				1.8				1.8
Impairment of fixed assets				—				0.8				—				—				—
Gain on disposal of fixed assets				—				—				—				—				0.1
	Income from operations			7.7				10.1				18.2				16.2				18.7
Interest expense, net				1.0				0.6				0.3				0.4				0.2
Other (income) expense				(0.1	)			—				0.2				0.1				—
Income before taxes and minority interest				6.8				9.5				17.7				15.7				18.5
Income tax provision				1.5				1.8				3.5				2.9				2.9
Minority interest in earnings of joint venture				0.3				0.3				0.4				0.4				0.5
Net income				5.0	%			7.4	%			13.8	%			12.4	%			15.0	%

			Net sales
			six months								Percentage of
			ended June 30,								net sales
			2004				2005				2004				2005
			(dollars in thousands)
Taiwan			$	23,464			$	33,606				26.5	%			33.9	%
China				19,161				25,535				21.7				25.7
United States				25,550				25,157				28.9				25.4
Korea				8,577				5,225				9.7				5.3
Singapore				5,319				4,494				6.0				4.5
All others				6,371				5,181				7.2				5.2
	Total		$	88,442			$	99,198				100.0	%			100.0	%

---

Table of Contents

---

Table of Contents

---

Table of Contents

			Net sales year ended								Percentage of
			December 31,								net sales
Country			2003				2004				2003				2004
			(dollars in thousands)
United States			$	41,593			$	53,204				30.4	%			28.7	%
Taiwan				38,087				50,716				27.8				27.3
China				25,908				44,311				18.9				23.9
Korea				14,455				16,447				10.6				8.9
Singapore				9,032				9,407				6.6				5.1
All others				7,830				11,618				5.7				6.1
	Total		$	136,905			$	185,703				100.0	%			100.0	%

---

Table of Contents

---

Table of Contents

			Net sales year ended								Percentage of
			December 31,								net sales
Country			2002				2003				2002				2003
			(dollars in thousands)
United States			$	40,125			$	41,593				34.6	%			30.4	%
Taiwan				25,507				38,087				22.0				27.8
China				23,467				25,908				20.3				18.9
Korea				5,255				14,455				4.5				10.6
Singapore				9,496				9,032				8.2				6.6
All others				11,971				7,830				10.4				5.7
	Total		$	115,821			$	136,905				100.0	%			100.0	%

---

Table of Contents

---

Table of Contents

				Three months ended
				Mar 31,				Jun 30,				Sep 30,				Dec 31,				Mar 31,				Jun 30,				Sep 30,				Dec 31,				Mar 31,				Jun 30,
				2003				2003				2003				2003				2004				2004				2004				2004				2005				2005
				(in thousands, except per share data)
Net sales				$	29,446			$	33,316			$	34,941			$	39,202			$	41,435			$	47,017			$	49,353			$	47,898			$	48,600			$	50,598
Cost of goods sold					21,985				24,970				25,779				27,643				28,685				31,989				32,607				31,687				32,004				33,101
	Gross profit				7,461				8,346				9,162				11,559				12,750				15,028				16,746				16,211				16,596				17,497
Operating expenses:
	Selling, general and administrative expenses				4,233				4,777				5,089				5,487				5,476				6,417				6,171				5,439				6,692				7,196
	Research and development expenses				346				400				612				691				763				815				942				902				900				850
	Impairment of fixed assets				—				—				300				700				—				—				—				—				—				—
	Loss (gain) on sale of fixed assets				(88	)			32				—				93				23				(8	)			(1	)			—				(105	)			—
		Total operating expenses			4,491				5,209				6,001				6,971				6,262				7,224				7,112				6,341				7,487				8,046
	Income from operations				2,970				3,137				3,161				4,588				6,488				7,804				9,634				9,870				9,109				9,451
Interest expense, net					244				218				209				189				182				145				160				150				154				79
Other income (expense)					(89	)			(7	)			126				(35	)			(147	)			24				91				(386	)			(34	)			12
Income before taxes and minority interest					2,637				2,912				3,078				4,364				6,159				7,683				9,565				9,334				8,921				9,384
Income tax benefit (provision)					(617	)			(651	)			(416	)			(776	)			(1,160	)			(1,383	)			(2,134	)			(1,837	)			(1,442	)			(1,461	)
Minority interest in joint venture earnings					(97	)			(89	)			(99	)			(151	)			(143	)			(177	)			(189	)			(167	)			(239	)			(258	)
Net income				$	1,923			$	2,172			$	2,563			$	3,437			$	4,856			$	6,123			$	7,242			$	7,330			$	7,240			$	7,665
Earnings per share(1):
	Basic			$	0.15			$	0.17			$	0.20			$	0.27			$	0.37			$	0.46			$	0.54			$	0.53			$	0.51			$	0.53
	Diluted			$	0.14			$	0.15			$	0.18			$	0.23			$	0.32			$	0.40			$	0.47			$	0.47			$	0.46			$	0.47
Number of shares used in computation(1):
	Basic				12,472				12,678				12,813				12,954				13,097				13,265				13,356				13,897				14,218				14,419
	Diluted				13,727				14,268				14,546				14,932				15,286				15,330				15,367				15,708				15,683				16,210

(1)	Adjusted for the effect of a 3-for-2 stock split in November 2003.

---

Table of Contents

---

Table of Contents

---

Table of Contents

						Payments due by period
						Less than												More than
		Total				1 Year				1-3 Years				3-5 Years				5 Years
		(in thousands)
Long-term debt		$	11,347			$	3,514			$	7,250			$	583			$	—
Capital leases			2,777				230				460				460				1,627
Operating leases			13,498				3,461				6,420				3,617				—
Purchase obligations			2,927				2,927				—				—				—
Total obligations		$	30,549			$	10,132			$	14,130			$	4,660			$	1,627

---

Table of Contents

---

Table of Contents

---

Table of Contents

---

Table of Contents

---

Table of Contents

•	Logic devices which process data and range from complex semiconductors such as microprocessors to digital signal processors to application-specific and standard logic products. According to Gartner the combined microcomponent, logic and application-specific segments represent approximately 57.7% of total industry sales in 2004.
•	Memory devices, which store data. According to Gartner, the memory devices segment represents 21.9% of total industry sales in 2004.
•	Analog and discrete devices which interface with real world signals such as light and heat, or process electronic signals and control electronic power. According to Gartner, the combined analog

---

Table of Contents

	integrated circuits, discrete, optical and non-optical sensors segments represent approximately 20.4% of total industry sales in 2004.

			Historical								Projected												CAGR(3)
			2003				2004				2005E				2006E				2007E				’03-‘07E
			(in billions)
Logic(1)			$	108.4			$	126.9			$	137.1			$	149.6			$	162.5				10.7	%
Analog(2)				22.8				29.0				32.5				35.1				38.1				13.7
Discrete				13.5				15.8				16.5				17.4				19.1				9.1
Memory				33.5				48.0				49.2				52.4				45.5				8.0
	Total		$	178.2			$	219.9			$	235.4			$	254.4			$	265.2				10.5	%

(1)	Logic includes the following Gartner segments: microcomponent, logic and application-specific.
(2)	Analog includes the following Gartner segments: analog integrated circuits, optical and non-optical sensors.
(3)	CAGR represents compound annual growth rate.

•	Flexible, scalable and cost-effective manufacturing. Our manufacturing operations are a core element of our success and we have designed our manufacturing base to allow us to respond quickly to changes in demand trends in the end markets we serve. For example, we have structured our Shanghai assembly, test and packaging facilities to enable us to rapidly and efficiently add capacity and adjust product mix to meet shifts in customer demand and overall market trends. As a result, for the past three years we have operated our Shanghai facilities at near full capacity, while at the same time significantly expanding that capacity. Additionally, the Shanghai location of our manufacturing operations provides us with access to a highly-skilled workforce at a low overall cost base while enabling us to better serve our leading customers, many of which are located in Asia.
•	Integrated packaging expertise. We believe that we have particular expertise in designing and manufacturing innovative and proprietary packaging solutions that integrate multiple separate discrete elements into a single semiconductor product called an array. Our ability to design and manufacture highly integrated discrete semiconductor solutions provides our customers with

---

Table of Contents

	products of equivalent functionality with fewer individual parts, and at lower overall cost, than alternative products. For example, one of our leading diode array products integrates eight discrete elements into a single highly-miniaturized package that provides four times the functionality, with less than 20% of the space requirements of the previous solution. This combination of integration, functionality and miniaturization makes our products well suited for high-volume consumer applications such as the digital audio players, notebook computers and digital cameras.
•	Broad customer base and diverse end markets. Our customers include leading OEMs such as Bose Corporation, Honeywell International, Inc., LG Electronics, Inc., Logitech, Inc., Motorola, Inc., Quanta Computer, Inc., Sagem Communication, Samsung Electronics Co., Ltd. and Thompson, Inc., as well as leading EMS providers such as Celestica, Inc., Flextronics International, Ltd., Hon Hai Precision Industry Co., Ltd., Inventec Corporation, Jabil Circuit, Inc., Sanmina-SCI Corporation and Solectron Corporation. Overall, we serve over 150 direct customers and over 10,000 additional customers through our distributors, including leading distributors, such as Arrow Electronics, Inc., Avnet, Inc., Future Electronics and Yosun Industrial Corp. Our products are ultimately used in end products in a large number of markets served by our broad base of customers, which we believe makes us less dependent on either specific customers or specific end-use applications.
•	Customer focused product development. Close collaboration with our customers and a high degree of customer service are essential elements of our business. We believe focusing on dependable delivery of discrete semiconductor solutions tailored to specific end-user applications, has fostered deep customer relationships and created a key competitive advantage for us in the highly-fragmented discrete semiconductor marketplace. We believe our close relationships with our OEM and EMS customers have provided us with deeper insight into our customers’ product needs. This results in differentiation in our product designs and often provides us with insight into additional opportunities for new design wins in our customers’ products.
•	Management continuity and experience. We believe that the continuity of our management team is a critical competitive strength. The five members of our senior management team have an average of over 12 years of service at Diodes and the length of their service with us has created significant institutional insight into our markets, our customers and our operations. In June 2005, we appointed Dr. Keh-Shew Lu as President and Chief Executive Officer. Dr. Lu has served as a director of Diodes since 2001 and has 30 years of relevant industry experience. Dr. Lu began his career at Texas Instruments in 1974 and retired in 2001 as Senior Vice President and General Manager of Worldwide Analog, Mixed-Signal and Logic Products. Our Chief Financial Officer, Carl Wertz, has been employed by us since 1993 and has over 20 years of financial experience in manufacturing and distribution industries. Joseph Liu, our Senior Vice President, Operations, joined us in 1990 and has over 30 years of relevant industry experience having started his career in 1971 at Texas Instruments. Similarly, Mark King, our Senior Vice President of Sales and Marketing has been employed by us since 1991, as has Steven Ho, our Vice President of Asia Sales.

•	Continue rapidly introducing innovative discrete semiconductor products. We intend to maintain our rapid pace of new discrete product introductions, especially for high-volume, growth applications with short design cycles, such as digital audio players, notebook computers, flat panel displays, mobile handsets, digital cameras, set-top boxes and other consumer electronics and

---

Table of Contents

	computing devices. During the six months ended June 30, 2005, we introduced 122 new devices in 13 different product families and achieved new design wins with over 100 OEMs. We believe that continued introduction of new and differentiated product solutions is critically important in maintaining and extending our market share in the highly competitive discrete semiconductor marketplace.
•	Expand our available market opportunities. We intend to aggressively maximize our opportunities in the discrete semiconductor market as well as in related markets where we can apply our semiconductor design and manufacturing expertise. A key element of this is leveraging our highly integrated packaging expertise through our Application Specific Multi-Chip Circuit, or ASMCC, product platform, which consists of standard arrays, function specific arrays and end-equipment specific arrays. We intend to achieve this by:

	-	Continuing to focus on increasing packaging integration, particularly with our existing standard array and customer-specific array products, in order to achieve products with increased circuit density, reduced component count and lower overall product cost;
	-	Expanding existing products and developing new products in our function specific array lines, which combine multiple discrete semiconductor components to achieve specific common electronic device functionality at a low cost; and
	-	Developing new product lines, that we refer to as end-equipment specific arrays, which combine discrete components with logic and/or standard analog circuits to provide system-level solutions for high-volume, high-growth applications.

•	Maintain intense customer focus. We intend to strengthen and deepen our customer relationships. We believe that continued focus on customer service will increase our net sales, operating performance and overall market share. To accomplish this, we intend to continue to closely collaborate with our customers to design products that meet their specific needs. A critical element of this strategy is to continue to further reduce our design cycle time in order to quickly provide our customers with innovative products. Additionally, to support our customer focused strategy, we are continuing to expand our sales force and field application engineers personnel, particularly in Asia and Europe.
•	Enhance cost competitiveness. A key element of our success is our overall low-cost base. While we believe that our Shanghai manufacturing facilities are among the most efficient in the industry, we will continue to refine our proprietary manufacturing processes and technology to achieve additional cost efficiencies. Additionally, we intend to continue to operate our facilities at high utilization rates and to increase product yields in order to achieve meaningful economies of scale.
•	Pursue selective strategic acquisitions. As part of our strategy to expand our discrete semiconductor product offerings and to maximize our market opportunities, we may acquire discrete analog or mixed-signal technologies, product lines or companies in order to support our ASMCC product platform and enhance our standard and new product offerings.

---

Table of Contents

•	Discrete semiconductor products, including performance Schottky rectifiers; performance Schottky diodes; Zener diodes and performance Zener diodes, including tight tolerance and low operating current types; standard, fast, super-fast and ultra-fast recovery rectifiers; bridge rectifiers; switching diodes; small signal bipolar transistors; prebiased transistors; MOSFETs; and transient voltage suppressors;
•	Complex high-density diode, transistor and mixed technology arrays, in multi-pin ultra-miniature surface-mount packages, including customer specific and function specific arrays; and
•	Silicon wafers used in manufacturing these products.

		Approximate
		percentage of our
		net sales for the
		six months ended
End markets		June 30, 2005				End product applications
Computing			36%			Notebooks, flat panel monitors, motherboards, PDAs, multi-function printers, servers, network interface cards, hard disk drives
Consumer Electronics			34%			Set-top boxes, game consoles, digital audio players, digital cameras, mobile handset, flat panel display, personal medical devices
Industrial			18%			Ballast lighting, power supplies, DC-DC conversion, security/access systems, motor controls, HVAC
Communications			8%			Gateways, routers, switches, hubs, fiber optics, DSL, cable and standard modems, networking (wireless, ethernet, power/phone line)
Automotive			4%			Comfort controls, audio/video players, GPS navigation, safety, security, satellite radios, engine control, HID lighting

---

Table of Contents

---

Table of Contents

---

Table of Contents

				Approximate
Location		Use		size (sq. ft.)
Westlake Village, CA		Global headquarters			30,900
Manufacturing:
Shanghai, China (Plant 1)		Manufacturing (packaging, assembly and test), research and development, engineering			145,300
Shanghai, China (Plant 2)		Manufacturing (packaging, assembly and test) research and development, engineering			74,300
Kansas City, MO		Wafer fabrication (5”), research and development, engineering, sales and marketing			70,000
Others:
Taipei, Taiwan		Warehouse			9,000
Taipei, Taiwan		Sales and administrative offices			7,000
Shanghai, China		Regional offices			*
Shenzhen, China		Regional offices			*
Kowloon, Hong Kong		Sales, warehousing and logistics office			*
Toulouse, France		Regional sales office			*
Amherst, NH		Regional sales office			*
Lemont, IL		Regional sales office			*
Fountain Valley, CA		Regional sales office			*
Brookline, NH		Regional sales office			*

*	Less than 1,000 square feet.

---

Table of Contents

---

Table of Contents

---

Table of Contents

Name		Age				Position(s)
Dr. Keh-Shew Lu(1)			58			President, Chief Executive Officer and Director
Joseph Liu			63			Senior Vice President, Operations
Mark A. King			47			Senior Vice President, Sales and Marketing
Carl C. Wertz			51			Chief Financial Officer, Secretary and Treasurer
Steven Ho			50			Vice President, Asia Sales
Raymond Soong			63			Chairman of the Board of Directors
C.H. Chen(1)(2)(3)			62			Vice Chairman of the Board of Directors
Michael R. Giordano(1)(2)(4)			58			Director
M.K. Lu			57			Director
Dr. Shing Mao(3)(4)			70			Director
John M. Stich(1)(2)(3)(4)			63			Director

(1)	Member of our Strategic Planning Committee.
(2)	Member of our Compensation and Stock Options Committee.
(3)	Member of our Nominating Committee.
(4)	Member of our Audit Committee.

---

Table of Contents

---

Table of Contents

---

Table of Contents

•	any breach of their duty of loyalty to our company or our stockholders;
•	acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
•	unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law; and
•	any transaction from which the director derived an improper personal benefit.

---

Table of Contents

---

Table of Contents

---

Table of Contents

---

Table of Contents

---

Table of Contents

														Percent of
														outstanding
		Number of								Number of				shares
		shares				Number of				shares				beneficially
		beneficially				shares to				beneficially				owned(3)
		owned				be sold in				owned
		prior to				this				after the				Before				After
Name and address of beneficial owner(1)		offering(2)				offering				offering(2)				offering				offering
Lite-On Semiconductor Corporation(4)			4,601,458				750,000				3,851,458				31.4	%			23.5	%
Munder Capital Management			803,288				—				803,288				5.5				4.9
Raymond Soong(5)			269,100				—				269,100				1.8				1.6
C.H. Chen(5)			232,500				—				232,500				1.6				1.4
Michael R. Giordano(5)(6)			118,187				—				118,187				*				*
M.K. Lu(5)			23,000				—				23,000				*				*
Dr. Shing Mao(5)			54,000				—				54,000				*				*
John M. Stich(5)(7)			36,500				—				36,500				*				*
Dr. Keh-Shew Lu(5)			229,000				—				229,000				1.6				1.4
Joseph Liu(5)			300,000				—				300,000				2.0				1.8
Mark A. King(5)			81,000				—				81,000				*				*
Carl C. Wertz(5)			144,281				—				144,281				1.0				*
Steven Ho(5)			50,375				—				50,375				*				*
All directors and executive officers as a group (11 persons)(8)			1,537,943				—				1,537,943				9.7				8.7

*	Less than 1.0%.

(1)	The address of Lite-On Semiconductor is 9F. No. 233-2, Pao-Chiao Road, Hsin-Tien, Taipei-hsien 23115, Taiwan, R.O.C. The address of Munder Capital Management is 480 Pierce Street Birmingham, MI 48009-6063. The address of each our directors and executive officers is 3050 East Hillcrest Drive, Westlake Village, California 91362.

---

Table of Contents

(2)	The named stockholder has sole voting power and investment power with respect to the shares listed, except as indicated and subject to community property laws where applicable.
(3)	Under Rule 13d-3 of the Securities Exchange Act of 1934, or the Exchange Act, certain shares may be deemed to be beneficially owned by more than one person (if, for example, a person shares the power to vote or the power to dispose of the shares). In addition, under Rule 13d-3(d)(1) of the Exchange Act, shares which the person (or group) has the right to acquire within 60 days after September 16, 2005 are deemed to be outstanding in calculating the beneficial ownership and the percentage ownership of the person (or group) but are not deemed to be outstanding as to any other person or group. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership of voting power with respect to the number of shares of common stock actually outstanding at September 16, 2005.
(4)	Lite-On Semiconductor is a public company listed on the Taiwan Stock Exchange Corporation and a member of The Lite-On Group.
(5)	Includes the following shares of common stock that the named individual has the right to acquire within 60 days after September 16, 2005 by the exercise of vested stock options:

		Shares
		subject to
Named individual		options
Raymond Soong			236,250
C.H. Chen			192,500
Michael R. Giordano			100,500
M.K. Lu			23,000
Dr. Shing Mao			45,000
John M. Stich			35,000
Dr. Keh-Shew Lu			49,000
Joseph Liu			267,500
Mark A. King			81,000
Carl C. Wertz			139,500
Steven Ho			39,500

(6)	Includes 2,250 shares of common stock held in the name of UBS Fiduciary Trust for the investment retirement account of Mr. Giordano.
(7)	Includes 1,500 shares of common stock held in the name of Stich Family Holdings LP.
(8)	Includes 1,208,750 shares that the directors and executive officers have the right to acquire within 60 days after September 16, 2005, by the exercise of vested stock options but excludes an additional 608,500 shares that the directors and executive officers will have the right to acquire upon the exercise of stock options which will become exercisable in installments more than 60 days after September 16, 2005.

---

Table of Contents

•	30,000,000 shares are designated as common stock, each with a par value of $0.662/3; and
•	1,000,000 shares are designated as preferred stock, each with a par value of $1.00.

---

Table of Contents

•	either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder is approved by the corporation’s board of directors prior to the date the interested stockholder becomes an interested stockholder;
•	the interested stockholder acquired at least 85.0% of the voting stock of the corporation (other than stock held by directors who are also officers or by certain employee stock plans) in the transaction in which the stockholder became an interested stockholder; or
•	the business combination is approved by a majority of the board of directors and by the affirmative vote of 66.66% of the outstanding voting stock that is not owned by the interested stockholder.

---

Table of Contents

•	banks, insurance companies or other financial institutions;
•	persons subject to the alternative minimum tax;
•	tax-exempt organizations or government entities;
•	brokers or dealers in securities or currencies;
•	traders in securities that elect to use a mark-to-market method of accounting for their securities holdings;
•	certain former citizens or long-term residents of the United States;
•	certain foreign entities that are owned by U.S. persons, including “controlled foreign corporations” and “passive foreign investment companies;”
•	persons who hold our common stock as a position in a hedging transaction, “straddle,” “conversion transaction” or other risk reduction transaction;
•	persons deemed to sell our common stock under the constructive sale provisions of the Code; or
•	partnerships or entities taxable as partnerships.

---

Table of Contents

•	an individual citizen or resident of the United States;
•	a corporation or other entity taxable as a corporation created or organized in the United States or under the laws of the United States, any state or the District of Columbia;
•	an estate whose income is subject to U.S. federal income tax regardless of its source; or
•	a trust (i) whose administration is subject to the primary supervision of a U.S. court and which has one or more U.S. persons who have the authority to control all substantial decisions of the trust or (ii) which has made an election to be treated as a U.S. person.

•	the gain is effectively connected with your conduct of a U.S. trade or business (and if a tax treaty applies, such gain is attributable to your permanent establishment in the Unites States) (in either case, see the discussion below under “Income or Gain Effectively Connected with a United States Trade or Business”);

---

Table of Contents

•	you are an individual who holds our common stock as a capital asset (generally, an asset held for investment purposes) and who is present in the United States for a period or periods aggregating 183 days or more during the calendar year in which the sale or disposition occurs and certain other conditions are met; or
•	our common stock constitutes a U.S. real property interest by reason of our status as a “U.S. real property holding corporation” for U.S. federal income tax purposes at any time within the shorter of the five-year period preceding the disposition or your holding period for our common stock.

---

Table of Contents

Underwriters			Number of shares
UBS Securities LLC				1,237,500
A.G. Edwards & Sons, Inc.				375,000
C.E. Unterberg, Towbin, LLC				375,000
Raymond James & Associates, Inc.				375,000
WR Hambrecht + Co, LLC				100,000
Stanford Group Company				37,500
	Total			2,500,000

•	receipt and acceptance of the common stock by the underwriters; and
•	the underwriters’ right to reject orders in whole or in part.

---

Table of Contents

Underwriters			No exercise				Full exercise
Per share			$	1.832			$	1.832
	Total		$	4,580,000			$	5,267,000

---

Table of Contents

•	stabilizing transactions;
•	short sales;
•	purchases to cover positions created by short sales;
•	imposition of penalty bids; and
•	syndicate covering transactions.

---

Table of Contents

	(1)	to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;
	(2)	to any legal entity which has two or more of (a) an average of at least 250 employees during the last financial year; (b) a total balance sheet of more than €43,000,000 and (c) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts; or
	(3)	in any other circumstances which do not require the publication by the Issuer of a prospectus pursuant to Article 3 of the Prospectus Directive.

	(1)	this prospectus has not been submitted to the clearance procedures of the AMF;
	(2)	in compliance with the Decree, if you subscribe for shares of our common stock, you will be acting for your own account;
	(3)	the direct and indirect distribution by you to the public of your shares shall only be made in compliance with Articles L.411-1, L.411-2, L.412-1, and L.621-8 of the Monetary and Financial Code; and

---

Table of Contents

	(4)	where the exemption for placements within a “restricted circle of investors” is relied on and the number of such investors exceeds 100, you must declare that you have personal links, either of a professional or family nature, with any of the underwriters.

	(1)	made by investment firms, banks, or financial intermediaries permitted to conduct such activities in the Republic of Italy in accordance with Legislative Decree No. 385 of 1st September 1993 (“Decree No. 385”), Decree No. 58, Regulation No. 11522, and any other applicable laws and regulations; and
	(2)	in compliance with any other applicable notification requirement or limitation which may be imposed by CONSOB or the Bank of Italy.

---

Table of Contents

---

Table of Contents

•	Our annual report on Form 10-K for the fiscal year ended December 31, 2004 (as amended by the Form 10-K/A (Amendment No. 1)), including the information incorporated therein from the proxy statement for our 2005 annual meeting of stockholders;
•	Our quarterly reports on Form 10-Q for the fiscal quarters ended March 31, 2005 and June 30, 2005; and

---

Table of Contents

•	Our current reports on Form 8-K, filed on May 31, 2005 (except Item 7.01 which is furnished to, but not filed with, the SEC), July 28, 2005, September 2, 2005 and September 7, 2005.

---

Table of Contents

Consolidated Financial Statements of Diodes Incorporated
Report of Moss Adams LLP, Independent Registered Public Accounting Firm			F-3
Consolidated balance sheets as of December 31, 2003, and 2004			F-4
Consolidated statements of income for the years ended December 31, 2002, 2003, and 2004			F-6
Consolidated statements of stockholders’ equity for the years ended December 31, 2002, 2003, and 2004			F-7
Consolidated statements of cash flows for the years ended December 31, 2002, 2003, and 2004			F-8
Notes to consolidated financial statements			F-9
Unaudited Consolidated Financial Statements of Diodes Incorporated
Consolidated balance sheets as of December 31, 2004 and June 30, 2005 (unaudited)			F-28
Unaudited consolidated statements of income for the six months ended June 30, 2004 and June 30, 2005			F-30
Unaudited consolidated statements of cash flows for the six months ended June 30, 2004 and June 30, 2005			F-31
Notes to unaudited consolidated financial statements			F-33

---

Table of Contents

---

Table of Contents

---

Table of Contents

					December 31,
					2003				2004
ASSETS
CURRENT ASSETS
	Cash and cash equivalents				$	12,847,000			$	18,970,000
	Accounts receivable
		Trade customers				27,010,000				38,682,000
		Related parties				3,938,000				5,526,000
						30,948,000				44,208,000
		Allowance for doubtful accounts				(375,000	)			(432,000	)
						30,573,000				43,776,000
Inventories						16,164,000				22,238,000
Deferred income taxes, current						5,547,000				2,453,000
Prepaid expenses and other						2,256,000				4,243,000
Prepaid income taxes						446,000				406,000
			Total current assets			67,833,000				92,086,000
PROPERTY, PLANT AND EQUIPMENT, net						47,893,000				60,857,000
DEFERRED INCOME TAXES, non-current						1,816,000				7,970,000
OTHER ASSETS
	Goodwill					5,090,000				5,090,000
	Other					1,163,000				1,798,000
			Total assets		$	123,795,000			$	167,801,000

---

Table of Contents

					December 31,
					2003				2004
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
	Line of credit				$	8,488,000			$	6,167,000
	Accounts payable
		Trade				14,029,000				17,274,000
		Related parties				3,453,000				3,936,000
	Accrued liabilities					8,715,000				11,459,000
	Current portion of long-term debt
		Related party				2,500,000				2,500,000
		Others				3,333,000				1,014,000
	Current portion of capital lease obligations					161,000				165,000
			Total current liabilities			40,679,000				42,515,000
LONG-TERM DEBT, net of current portion
	Related party					3,750,000				1,250,000
	Others					3,000,000				6,583,000
CAPITAL LEASE OBLIGATIONS, net of current portion						2,334,000				2,172,000
MINORITY INTEREST IN JOINT VENTURE						2,582,000				3,133,000
STOCKHOLDERS’ EQUITY
		Preferred stock—par value $1.00 per share; 1,000,000 shares authorized; no shares issued and outstanding				—				—
		Common stock—par value $0.662/3 per share; 30,000,000 shares authorized; 14,627,284 and 15,763,266 shares issued at 2003 and 2004, respectively				9,752,000				10,509,000
		Additional paid-in capital				7,942,000				21,516,000
		Retained earnings				55,779,000				81,330,000
						73,473,000				113,355,000
Less:
		Treasury stock—1,613,508 shares of common stock, at cost				1,782,000				1,782,000
		Accumulated other comprehensive loss (gain)				241,000				(575,000	)
						2,023,000				1,207,000
			Total stockholders’ equity			71,450,000				112,148,000
			Total liabilities and stockholders’ equity		$	123,795,000			$	167,801,000

---

Table of Contents

					2002				2003				2004
NET SALES					$	115,821,000			$	136,905,000			$	185,703,000
COST OF GOODS SOLD						89,111,000				100,377,000				124,968,000
		Gross profit				26,710,000				36,528,000				60,735,000
OPERATING EXPENSES
	Selling, general and administrative					16,228,000				19,586,000				23,503,000
	Research and development					1,472,000				2,049,000				3,422,000
	Impairment of fixed assets					—				1,000,000				—
	Loss on disposal of fixed assets					43,000				37,000				14,000
			Total operating expenses			17,743,000				22,672,000				26,939,000
		Income from operations				8,967,000				13,856,000				33,796,000
OTHER INCOME (EXPENSES)
	Interest expense, net					(1,183,000	)			(860,000	)			(637,000	)
	Other					67,000				(5,000	)			(418,000	)
			Total other income (expenses)			(1,116,000	)			(865,000	)			(1,055,000	)
		Income before income taxes and minority interest				7,851,000				12,991,000				32,741,000
INCOME TAX PROVISION						(1,729,000	)			(2,460,000	)			(6,514,000	)
		Income before minority interest				6,122,000				10,531,000				26,227,000
MINORITY INTEREST IN EARNINGS OF JOINT VENTURE						(320,000	)			(436,000	)			(676,000	)
NET INCOME					$	5,802,000			$	10,095,000			$	25,551,000
EARNINGS PER SHARE
		Basic			$	0.47			$	0.79			$	1.91
		Diluted			$	0.44			$	0.70			$	1.65
	Number of shares used in computation
		Basic				12,276,899				12,730,808				13,404,276
		Diluted				13,297,490				14,406,054				15,471,438

---

Table of Contents

					Common stock
																													Accumulated
																													other
									Shares in								Common stock				Additional Paid-In				Retained				comprehensive
					Shares				Treasury				Amount				in treasury				Capital				earnings				gain (loss)				Total
BALANCE,
	December 31, 2001					13,841,496				1,613,508			$	9,228,000			$	(1,782,000	)		$	4,233,000			$	39,882,000			$	(437,000	)		$	51,124,000
	Comprehensive income, net of tax:
		Net income for the year ended December 31, 2002																								5,802,000								5,802,000
		Translation adjustments																												(40,000	)			(40,000	)
		Change in unrealized loss on derivative instruments, net of tax of $400																												(1,000	)			(1,000	)
			Total comprehensive income																															5,761,000
			Management fee from LSC																			375,000												375,000
	Exercise of stock options including $98,000 income tax benefit					97,650				—				65,000				—				354,000				—				—				419,000
BALANCE,
	December 31, 2002					13,939,146				1,613,508			$	9,293,000			$	(1,782,000	)		$	4,962,000			$	45,684,000			$	(478,000	)		$	57,679,000
	Comprehensive income, net of tax:
		Net income for the year ended December 31, 2003																								10,095,000								10,095,000
		Translation adjustments																												169,000				169,000
		Change in unrealized loss on derivative instruments, net of tax of $27,000																												68,000				68,000
			Total comprehensive income																															10,332,000
			Management fee from LSC																			286,000												286,000
	Exercise of stock options including $1,139,000 income tax benefit					688,138				—				459,000				—				2,694,000				—				—				3,153,000
BALANCE
	December 31, 2003					14,627,284				1,613,508			$	9,752,000			$	(1,782,000	)		$	7,942,000			$	55,779,000			$	(241,000	)		$	71,450,000
	Comprehensive income, net of tax:
		Net income for the year ended December 31, 2004																								25,551,000								25,551,000
		Translation adjustments																												793,000				793,000
		Change in unrealized loss on derivative instruments, net of tax of $9,000																												23,000				23,000
			Total comprehensive income																															26,367,000
			Management fee from LSC																			180,000												180,000
	Exercise of stock options including $8,514,000 income tax benefit					1,135,982				—				757,000				—				13,394,000				—				—				14,151,000
BALANCE
	December 31, 2004					15,763,266				1,613,508			$	10,509,000			$	(1,782,000	)		$	21,516,000			$	81,330,000			$	575,000			$	112,148,000

---

Table of Contents

						2002				2003				2004
CASH FLOWS FROM OPERATING ACTIVITIES
	Net income					$	5,802,000			$	10,095,000			$	25,551,000
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization					9,747,000				11,073,000				13,173,000
		Minority interest earnings					320,000				436,000				676,000
		Loss on impairment and disposal of property, plant and equipment					43,000				1,037,000				14,000
		Changes in operating assets and liabilities
			Accounts receivable				(4,779,000	)			(8,490,000	)			(13,203,000	)
			Inventories				2,139,000				(1,248,000	)			(6,074,000	)
			Prepaid expenses and other				(711,000	)			(388,000	)			(2,474,000	)
			Deferred income taxes				646,000				270,000				5,463,000
			Accounts payable				3,153,000				5,082,000				3,728,000
			Accrued liabilities				3,481,000				—				1,468,000
			Income taxes payable				149,000				954,000				978,000
				Net cash provided by operating activities			19,990,000				18,821,000				29,300,000
CASH FLOWS FROM INVESTING ACTIVITIES
	Purchases of property, plant and equipment						(6,777,000	)			(15,646,000	)			(26,201,000	)
	Proceeds from sales of property, plant and equipment						3,000				357,000				68,000
				Net cash used by investing activities			(6,774,000	)			(15,289,000	)			(26,133,000	)
CASH FLOWS FROM FINANCING ACTIVITIES
	Advances (repayments) on line of credit, net						(3,478,000	)			5,463,000				(2,321,000	)
	Net proceeds from the issuance of common stock						321,000				2,014,000				5,628,000
	Management incentive reimbursement from LSC						375,000				375,000				375,000
	Proceeds from long-term debt						—				—				3,583,000
	Repayments of long-term debt						(11,080,000	)			(5,833,000	)			(4,819,000	)
	Minority shareholder investment in subsidiary						—				—				175,000
	Repayments of capital lease obligations						(133,000	)			(157,000	)			(158,000	)
	Dividend to minority shareholder						—				—				(300,000	)
				Net cash provided (used) by financing activities			(13,995,000	)			1,862,000				2,163,000
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS							(40,000	)			169,000				793,000
INCREASE (DECREASE) IN CASH							(819,000	)			5,563,000				6,123,000
CASH, beginning of year							8,103,000				7,284,000				12,847,000
CASH, end of year						$	7,284,000			$	12,847,000			$	18,970,000
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
	Cash paid during the year for:
		Interest				$	1,229,000			$	876,000			$	683,000
		Income taxes				$	965,000			$	999,000			$	2,504,000
	Non-cash activities:
		Tax benefit related to stock options credited to paid-in capital				$	98,000			$	1,139,000			$	8,514,000
		Building acquired through capital lease obligation				$	2,785,000			$	—			$	—

---

Table of Contents

---

Table of Contents

---

Table of Contents

			Year ended December 31
			2002				2003				2004
Net income for earnings per share computation			$	5,802,000			$	10,095,000			$	25,551,000
Basic
	Weighted average number of common shares outstanding during the year			12,276,899				12,730,808				13,404,276
	Basic earnings per share		$	0.47			$	0.79			$	1.91
Diluted
	Weighted average number of common shares outstanding used in calculating basic earnings per share			12,276,899				12,730,808				13,404,276
	Add: additional shares issuable upon exercise of stock options			1,020,591				1,675,246				2,067,162
	Weighted average number of common shares used in calculating diluted earnings per share			13,297,490				14,406,054				15,471,438
	Diluted earnings per share		$	0.44			$	0.70			$	1.65

---

Table of Contents

		For the years ended December 31,
						Amounts per												Amounts per												Amounts per
						share												share												share
		2002				Basic				Diluted				2003				Basic				Diluted				2004				Basic				Diluted
Net income		$	5,802,000			$	0.47			$	0.44			$	10,095,000			$	0.79			$	0.70			$	25,551,000			$	1.91			$	1.65
Deduct: stock-based compensation expense determined under fair value method, net of tax			(1,918,000	)			(0.15	)			(0.15	)			(1,397,000	)			(0.11	)			(0.10	)			(1,642,000	)			(0.13	)			(0.10	)
Pro forma net income		$	3,884,000			$	0.32			$	0.29			$	8,698,000			$	0.68			$	0.60			$	23,909,000			$	1.78			$	1.55

		Risk-free								Expected				Expected				Expected
December 31,		interest rate				Expected life				volatility				forfeitures				dividends
2004			3.64%				5.0 years				68.36%				2.64%				0%
2003			3.31%				5.0 years				66.18%				2.77%				0%
2002			4.03%				5.0 years				75.61%				2.77%				0%

---

Table of Contents

---

Table of Contents

---

Table of Contents

---

Table of Contents

		2003				2004
Finished goods		$	9,920,000			$	13,118,000
Work-in-progress			1,818,000				2,025,000
Raw materials			6,519,000				9,240,000
			18,257,000				24,383,000
Less: reserves			(2,093,000	)			(2,145,000	)
		$	16,164,000			$	22,238,000

		2003				2004
Buildings and leasehold improvements		$	5,894,000			$	7,126,000
Construction in-progress			2,810,000				2,989,000
Machinery and equipment			74,171,000				90,151,000
			82,875,000				100,266,000
Less: Accumulated depreciation and amortization			(35,244,000	)			(39,671,000	)
			47,631,000				60,595,000
Land			262,000				262,000
		$	47,893,000			$	60,857,000

---

Table of Contents

						Outstanding at December 31,
2004
Credit Facility				Terms		2003				2004
$	7,500,000			Revolving, collateralized by all assets, variable		$	5,782,000			$	3,167,000
				interest (prime rate, approximately 5.25% at December 31, 2004) due monthly
$	5,000,000			Term loan, collateralized by all assets, variable interest			3,333,000				4,597,000
				(LIBOR + variable margin, approximately 3.80% at December 31, 2004) due monthly
$	25,000,000			Unsecured, interest at LIBOR plus margin (approximately 2.30% at December 31, 2004) due quarterly			3,000,000				6,000,000
$	8,960,000			Unsecured, variable interest plus margin (approximately 1.70% to 2.30% at December 31, 2003) due monthly			2,706,000				—
$	46,460,000						14,821,000				13,764,000

Less: Long-term debt, net of Related Party (included in table below)			(6,333,000	)			(7,597,000	)
Line of credit		$	8,488,000			$	6,167,000

		2003				2004
Note payable to LSC, a major stockholder of the Company (see Note 10), due in equal monthly installments of $208,000 plus interest beginning July 31, 2002, through June 30, 2006. The unsecured note bears interest at LIBOR plus 2.00% (approximately 4.10% at December 31, 2004) and is subordinated to the interest of the Company’s primary lender.		$	6,250,000			$	3,750,000
Term note portion of $25,000,000 China credit facility due in 2006			3,000,000				3,000,000
Note payable to U.S. bank, collateralized by all assets, due in aggregate monthly principal payments of $278,000 plus interest at 6.80% fixed by hedge contract through November 2004			3,333,000				—
Note payable to U.S. bank, collateralized by all assets, due in aggregate monthly principal payments of $83,000 plus interest at approximately 3.80% at December 31, 2004			—				4,597,000
			12,583,000				11,347,000
Less: Current portion			(5,833,000	)			(3,514,000	)
Long-term debt, net of current portion		$	6,750,000			$	7,833,000

---

Table of Contents

2005		$	3,514,000
2006			5,250,000
2007			1,000,000
2008			1,000,000
2009			583,000
		$	11,347,000

For years ending December 31,
2005		$	230,000
2006			230,000
2007			230,000
2008			230,000
2009			230,000
Thereafter			1,627,000
			2,777,000
Less: Interest			(440,000	)
Present value of minimum lease payments			2,337,000
Less: Current portion			(165,000	)
Long-term portion		$	2,172,000

---

Table of Contents

		2003				2004
Employee compensation and payroll taxes		$	4,501,000			$	5,779,000
Equipment purchases			1,875,000				2,012,000
Taxes payable			—				978,000
Sales commissions			686,000				437,000
Refunds to product distributors			334,000				219,000
Other			1,319,000				2,034,000
		$	8,715,000			$	11,459,000

			2002				2003				2004
Current tax provision
	U.S. Federal		$	—			$	1,167,000			$	4,922,000
	Foreign			1,231,000				1,183,000				4,745,000
	State			1,000				40,000				461,000
				1,232,000				2,390,000				10,128,000
Deferred tax expense (benefit)				497,000				70,000				(3,614,000	)
	Total income tax provision		$	1,729,000			$	2,460,000			$	6,514,000

---

Table of Contents

			2002								2003								2004
							Percent								Percent								Percent
							of pretax								of pretax								of pretax
			Amount				earnings				Amount				earnings				Amount				earnings
U.S. Federal tax			$	2,669,000				34.0			$	4,417,000				34.0			$	11,131,000				34.0
U.S. State franchise tax, net of U.S. Federal benefit				455,000				5.8				753,000				5.8				1,588,000				4.8
Foreign income tax rate difference				(1,409,000	)			(18.0	)			(2,808,000	)			(21.6	)			(6,629,000	)			(20.2	)
Other				14,000				0.2				98,000				0.8				424,000				1.3
	Income tax provision (benefit)		$	1,729,000				22.0			$	2,460,000				19.0			$	6,514,000				19.9

---

Table of Contents

			2003				2004
Deferred tax assets, current
	Inventory cost		$	272,000			$	364,000
	Accrued expenses and accounts receivable			566,000				702,000
	Net operating loss carryforwards, foreign tax credits and other			4,709,000				1,387,000
			$	5,547,000			$	2,453,000
Deferred tax assets, non-current
	Plant, equipment and intangible assets		$	(2,380,000	)		$	(2,632,000	)
	Net operating loss carryforwards, foreign tax credits and other			4,196,000				10,602,000
			$	1,816,000			$	7,970,000

---

Table of Contents

---

Table of Contents

		Outstanding options
						Exercise price per share
										Weighted
		Number				Range				average
Balance, December 31, 2001			3,172,641			$	0.83-15.94			$	5.85
Granted			515,550				5.69-6.38				5.72
Exercised			(97,650	)			0.83-5.55				3.28
Canceled			(5,400	)			5.55-5.69				5.62
Balance, December 31, 2002			3,585,141				0.83-15.94				5.90
Granted			502,950				10.63-13.04				13.03
Exercised			(688,141	)			0.83-15.94				2.93
Canceled			(15,325	)			5.55-15.94				7.84
Balance, December 31, 2003			3,384,625				2.22-15.94				7.56
Granted			526,900				18.32-21.85				18.35
Exercised			(1,136,725	)			2.22-15.94				4.96
Canceled			(35,600	)			5.55-18.32				13.64
Balance, December 31, 2004			2,739,200			$	2.22-21.85			$	10.63

										Weighted average
		Range of exercise				Number				remaining contractual				Weighted average
		prices				outstanding				life (yrs)				exercise price
‘93 NQO		$	2.67-15.94				631,950				4.6			$	9.42
‘93 ISO			2.22-15.94				705,400				4.9				7.45
‘01 Plan			4.77-21.85				1,401,850				8.6				12.77
Total		$	2.22-21.85				2,739,200				6.7			$	10.63

		Range of exercise				Number				Weighted average
		prices				exercisable				exercise price
‘93 NQO		$	2.67-15.94				630,300			$	9.43
‘93 ISO			2.22-15.94				668,550			$	7.53
‘01 Plan			5.55-13.04				438,350			$	8.09
Total		$	2.22-15.94				1,737,200			$	8.36

---

Table of Contents

		2002				2003				2004
Net sales		$	16,147,000			$	14,628,000			$	20,675,000
Purchases			14,292,000				18,667,000				22,368,000

---

Table of Contents

		2002				2003				2004
Net sales		$	1,885,000			$	1,484,000			$	1,677,000
Purchases			4,394,000				2,961,000				4,789,000

			2003				2004
Accounts receivable
	LSC		$	3,111,000			$	4,180,000
	Other			827,000				1,346,000
			$	3,938,000			$	5,526,000
Accounts payable
	LSC		$	2,914,000			$	3,308,000
	Other			539,000				628,000
			$	3,453,000			$	3,936,000

---

Table of Contents

			Asia				U.S.A.				Consolidated
2004
Total sales			$	185,308,000			$	92,634,000			$	277,942,000
Intercompany sales				(75,527,000	)			(16,712,000	)			(92,239,000	)
	Net sales		$	109,781,000			$	75,922,000			$	185,703,000
Assets			$	116,729,000			$	51,072,000			$	167,801,000
Property, plant & equipment, net				48,589,000				12,268,000				60,857,000
2003
Total sales			$	124,412,000			$	72,188,000			$	196,600,000
Intercompany sales				(48,378,000	)			(11,317,000	)			(59,695,000	)
	Net sales		$	76,034,000			$	60,871,000			$	136,905,000
Assets			$	82,142,000			$	41,653,000			$	123,795,000
Property, plant & equipment, net				35,941,000				11,952,000				47,893,000
2002
Total sales			$	95,081,000			$	66,338,000			$	161,419,000
Intercompany sales				(39,592,000	)			(6,006,000	)			(45,598,000	)
	Net sales		$	55,489,000			$	60,332,000			$	115,821,000
Assets			$	63,721,000			$	41,289,000			$	105,010,000
Property, plant & equipment, net				32,313,000				12,380,000				44,693,000

2005		$	3,461,000
2006			3,481,000
2007			2,939,000
2008			2,520,000
2009			1,097,000
		$	13,498,000

---

Table of Contents

				Quarter Ended
				March 31				June 30				Sept. 30				Dec. 31
Fiscal 2004
	Net sales			$	41,435,000			$	47,017,000			$	49,364,000			$	47,887,000
	Gross profit				12,750,000				15,028,000				16,746,000				16,211,000
	Net income				4,856,000				6,123,000				7,242,000				7,330,000
	Earnings per share
		Basic		$	0.37			$	0.46			$	0.54			$	0.53
		Diluted			0.32				0.40				0.47				0.47

				Quarter Ended
				March 31				June 30				Sept. 30				Dec. 31
Fiscal 2003
	Net sales			$	29,446,000			$	33,316,000			$	34,941,000			$	39,202,000
	Gross profit				7,461,000				8,346,000				9,162,000				11,559,000
	Net income				1,923,000				2,172,000				2,563,000				3,437,000
	Earnings per share
		Basic		$	0.15			$	0.17			$	0.20			$	0.27
		Diluted		$	0.14			$	0.15			$	0.18			$	0.23

				Quarter Ended
				March 31				June 30				Sept. 30				Dec. 31
Fiscal 2002
	Net sales			$	26,924,000			$	29,946,000			$	30,287,000			$	28,664,000
	Gross profit				4,345,000				7,098,000				7,862,000				7,405,000
	Net income				208,000				1,564,000				1,767,000				2,263,000
	Earnings per share
		Basic		$	0.02			$	0.13			$	0.14			$	0.18
		Diluted			0.02				0.12				0.13				0.17

---

Table of Contents

					December 31,				June 30,
					2004				2005
									(unaudited)
ASSETS
CURRENT ASSETS
	Cash and cash equivalents				$	18,970,000			$	33,014,000
	Accounts receivable
		Customers				38,682,000				43,782,000
		Related parties				5,526,000				4,599,000
						44,208,000				48,381,000
		Less: Allowance for doubtful receivables				432,000				464,000
						43,776,000				47,917,000
	Inventories					22,238,000				22,304,000
	Deferred income taxes, current					2,453,000				2,375,000
	Prepaid expenses and other current assets					4,243,000				4,160,000
	Prepaid income taxes					406,000				883,000
			Total current assets			92,086,000				110,653,000
PROPERTY, PLANT AND EQUIPMENT, at cost, net of accumulated depreciation and amortization						60,857,000				63,005,000
Deferred income taxes, non-current						7,970,000				7,309,000
OTHER ASSETS
	Goodwill					5,090,000				5,090,000
	Other					1,798,000				323,000
TOTAL ASSETS					$	167,801,000			$	186,380,000

---

Table of Contents

					December 31,				June 30,
					2004				2005
									(unaudited)
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
	Line of credit				$	6,167,000			$	—
	Accounts payable
		Trade				17,274,000				18,374,000
		Related parties				3,936,000				6,071,000
	Accrued liabilities					11,459,000				12,730,000
	Current portion of long-term debt
		Related party				2,500,000				2,500,000
		Other				1,014,000				4,391,000
	Current portion of capital lease obligations					165,000				136,000
			Total current liabilities			42,515,000				44,202,000
LONG-TERM DEBT, net of current portion
		Related party				1,250,000				—
		Other				6,583,000				3,877,000
CAPITAL LEASE OBLIGATIONS, net of current portion						2,172,000				1,678,000
MINORITY INTEREST IN JOINT VENTURE						3,133,000				3,630,000
STOCKHOLDERS’ EQUITY
	Preferred stock—par value $1.00 per share; 1,000,000 shares authorized; no shares issued and outstanding					—				—
	Common stock—par value $0.662/3 per share; 30,000,000 shares authorized; 15,763,266 and 16,185,552 shares issued at December 31, 2004 and June 30, 2005, respectively					10,509,000				10,791,000
	Additional paid-in capital					21,516,000				26,946,000
	Retained earnings					81,330,000				96,235,000
						113,355,000				133,972,000
	Less:
		Treasury stock—1,613,508 shares of common stock, at cost				1,782,000				1,782,000
		Accumulated other comprehensive income				(575,000	)			(803,000	)
						1,207,000				979,000
			Total stockholders’ equity			112,148,000				132,993,000
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY					$	167,801,000			$	186,380,000

---

Table of Contents

					Three months ended								Six months ended
					June 30,								June 30,
					2004				2005				2004				2005
NET SALES					$	47,017,000			$	50,598,000			$	88,442,000			$	99,198,000
COST OF GOODS SOLD						31,989,000				33,101,000				60,664,000				65,105,000
		Gross profit				15,028,000				17,497,000				27,778,000				34,093,000
OPERATING EXPENSES
	Selling, general and administrative expenses					6,417,000				7,196,000				11,908,000				13,888,000
	Research and development expenses					815,000				850,000				1,562,000				1,750,000
	Loss (gain) on sale of fixed assets					(8,000	)			—				15,000				(105,000	)
			Total operating expenses			7,224,000				8,046,000				13,485,000				15,533,000
		Income from operations				7,804,000				9,451,000				14,293,000				18,560,000
OTHER INCOME (EXPENSE)
	Interest income					8,000				39,000				10,000				43,000
	Interest expense					(153,000	)			(118,000	)			(337,000	)			(277,000	)
	Other					24,000				12,000				(124,000	)			(21,000	)
						(121,000	)			(67,000	)			(451,000	)			(255,000	)
		Income before income taxes and minority interest				7,683,000				9,384,000				13,842,000				18,305,000
INCOME TAX PROVISION						(1,383,000	)			(1,461,000	)			(2,543,000	)			(2,903,000	)
		Income before minority interest				6,300,000				7,923,000				11,299,000				15,402,000
MINORITY INTEREST IN JOINT VENTURE EARNINGS						(177,000	)			(258,000	)			(319,000	)			(497,000	)
NET INCOME					$	6,123,000			$	7,665,000			$	10,980,000			$	14,905,000
EARNINGS PER SHARE
		Basic			$	0.46			$	0.53			$	0.83			$	1.04
		Diluted			$	0.40			$	0.47			$	0.72			$	0.93
	Number of shares used in computation
		Basic				13,265,146				14,418,819				13,180,992				14,318,916
		Diluted				15,329,760				16,209,651				15,306,089				16,071,423

---

Table of Contents

							Six months ended June 30,
							2004				2005
CASH FLOWS FROM OPERATING ACTIVITIES
	Net income						$	10,980,000			$	14,905,000
	Adjustments to reconcile net income to net cash provided by operating activities:
			Depreciation and amortization					6,145,000				7,813,000
			Minority interest earnings					319,000				497,000
			Share grant expense					—				358,000
			Loss (gain) on sale of property, plant and equipment					15,000				(105,000	)
	Changes in operating assets:
			Accounts receivable					(6,568,000	)			(4,336,000	)
			Inventories					(3,486,000	)			(66,000	)
			Prepaid expenses and others					(66,000	)			1,558,000
				Deferred income taxes				334,000				263,000
	Changes in operating liabilities:
			Accounts payable					3,889,000				3,235,000
			Accrued liabilities					2,219,000				(1,207,000	)
				Income taxes payable				—				1,223,000
					Net cash provided by operating activities			13,781,000				24,138,000
CASH FLOWS FROM INVESTING ACTIVITIES
	Purchase of property, plant and equipment							(10,300,000	)			(6,845,000	)
	Proceeds from sale of property, plant and equipment							55,000				—
					Net cash used by investing activities			(10,245,000	)			(6,845,000	)
CASH FLOWS FROM FINANCING ACTIVITIES
	Repayments of line of credit, net							(827,000	)			(6,167,000	)
	Net proceeds from the issuance of common stock							1,868,000				2,973,000
		Repayments of long-term debt, net						(2,916,000	)			(579,000	)
	Repayments of capital lease obligations							(90,000	)			(79,000	)
	Management incentive reimbursement from LSC							375,000				375,000
	Dividend to minority shareholder							(300,000	)			—
					Net cash used by financing activities			(1,890,000	)			(3,477,000	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS								93,000				228,000
INCREASE (DECREASE) IN CASH AND EQUIVALENTS								1,739,000				14,044,000
CASH AT BEGINNING OF PERIOD								12,847,000				18,970,000
CASH AT END OF PERIOD							$	14,586,000			$	33,014,000

---

Table of Contents

				Six months ended June 30,
				2004				2005
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
	Cash paid during the period for:
		Interest		$	343,000			$	289,000
		Income taxes		$	1,592,000			$	1,627,000
	Non-cash activities:
		Tax benefit of stock options exercised credited to additional paid-in capital		$	1,755,000			$	2,201,000

---

Table of Contents

---

Table of Contents

		December 31,				June 30,
		2004				2005
Finished goods		$	13,118,000			$	13,389,000
Work-in-progress			2,025,000				2,511,000
Raw materials			9,240,000				8,558,000
			24,383,000				24,458,000
Less: Reserves			(2,145,000	)			(2,154,000	)
Net inventory		$	22,238,000			$	22,304,000

---

Table of Contents

---

Table of Contents

		For the three months ended June 30
		(in 000’s except per share data),
		Amounts per share												Amounts per share
		2004				Basic				Diluted				2005				Basic				Diluted
Net income		$	6,123			$	0.46			$	0.40			$	7,665			$	0.53			$	0.47
Additional compensation for fair value of stock options, net of tax effect			(316	)			(0.02	)			(0.02	)			(567	)			(0.04	)			(0.03	)
Pro forma net income		$	5,807			$	0.44			$	0.38			$	7,098			$	0.49			$	0.44

		For the six months ended June 30
		(in 000’s except per share data),
		Amounts Per Share												Amounts Per Share
		2004				Basic				Diluted				2005				Basic				Diluted
Net income		$	10,980			$	0.83			$	0.72			$	14,905			$	1.04			$	0.93
Additional compensation for fair value of stock options, net of tax effect			(630	)			(0.04	)			(0.04	)			(1,083	)			(0.07	)			(0.07	)
Pro forma net income		$	10,350			$	0.79			$	0.68			$	13,822			$	0.97			$	0.86

---

Table of Contents

Three Months Ended June 30, 2004		Revenue				% of Total Revenue
United States		$	13,823,000				29.4
Taiwan		$	12,434,000				26.4
China		$	10,837,000				23.0
All Others		$	9,923,000				21.2
Total		$	47,017,000				100.0

Three Months Ended June 30, 2005		Revenue				% of Total Revenue
Taiwan		$	17,042,000				33.7
United States		$	13,085,000				25.9
China		$	12,852,000				25.4
All Others		$	7,619,000				15.0
Total		$	50,598,000				100.0

Six Months Ended June 30, 2004		Revenue				% of Total Revenue
United States		$	25,550,000				28.9
Taiwan		$	23,464,000				26.5
China		$	19,161,000				21.7
All Others		$	20,267,000				22.9
Total		$	88,442,000				100.0

---

Table of Contents

Six Months Ended June 30, 2005		Revenue				% of Total Revenue
Taiwan		$	33,606,000				33.9
China		$	25,535,000				25.7
United States		$	25,157,000				25.4
All Others		$	14,900,000				15.0
Total		$	99,198,000				100.0

										Consolidated
Three Months Ended June 30, 2004		Far East				North America				Segments
Total sales		$	46,185,000			$	24,051,000			$	70,236,000
Inter-company sales			(18,733,000	)			(4,486,000	)			(23,219,000	)
Net sales		$	27,452,000			$	19,565,000			$	47,017,000
Property, plant and equipment		$	43,617,000			$	11,819,000			$	55,436,000
Assets		$	99,438,000			$	43,595,000			$	143,033,000

										Consolidated
Three Months Ended June 30, 2005		Far East				North America				Segments
Total sales		$	56,088,000			$	21,554,000			$	77,642,000
Inter-company sales			(22,815,000	)			(4,229,000	)			(27,044,000	)
Net sales		$	33,273,000			$	17,325,000			$	50,598,000
Property, plant and equipment		$	51,582,000			$	11,423,000			$	63,005,000
Assets		$	135,414,000			$	50,966,000			$	186,380,000

										Consolidated
Six Months Ended June 30, 2004		Far East				North America				Segments
Total sales		$	87,086,000			$	45,428,000			$	132,514,000
Inter-company sales			(35,695,000	)			(8,367,000	)			(44,072,000	)
Net sales		$	51,391,000			$	37,061,000			$	88,442,000
Property, plant and equipment		$	43,617,000			$	11,819,000			$	55,436,000
Assets		$	99,438,000			$	43,595,000			$	143,033,000

---

Table of Contents

											Consolidated
Six Months Ended June 30, 2005			Far East				North America				Segments
Total sales			$	108,803,000			$	42,924,000			$	151,727,000
Inter-company sales				(44,649,000	)			(7,880,000	)			(52,529,000	)
	Net sales		$	64,154,000			$	35,044,000			$	99,198,000
Property, plant and equipment			$	51,582,000			$	11,423,000			$	63,005,000
Assets			$	135,414,000			$	50,966,000			$	186,380,000

---

Table of Contents

---

Table of Contents