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Himax Reports Third Quarter 2010 Financial Results

Forward-Looking Statements:

Factors that could cause actual events or results to differ materially include, but not limited to, general business and economic conditions and the state of the semiconductor industry; market acceptance and competitiveness of the driver and non-driver products developed by the Company; demand for end-use applications products; reliance on a small group of principal customers; the uncertainty of continued success in technological innovations; our ability to develop and protect our intellectual property; pricing pressures including declines in average selling prices; changes in customer order patterns; changes in estimated full-year effective tax rate; shortages in supply of key components; changes in environmental laws and regulations; exchange rate fluctuations; regulatory approvals for further investments in our subsidiaries; our ability to collect accounts receivable and manage inventory; the uncertainty of success in our Taiwan listing plan which is still under review by Taiwan regulatory authorities and subject to change due to, among other things, changes in either Taiwan or U.S. authorities' policies and Taiwan regulatory authorities' acceptance of the Company's Taiwan listing application and other risks described from time to time in the Company's SEC filings, including those risks identified in the section entitled "Risk Factors" in its Form 20-F for the year ended December 31, 2009 filed with SEC on dated June 3, 2010, as amended.

 

Himax Technologies, Inc.
Unaudited Condensed Consolidated Statements of Income
(These interim financials do not fully comply with U.S. GAAP because they omit all interim disclosure required by U.S. GAAP)
(Amounts in Thousands of U.S. Dollars, Except Per Share Data)
       
  Three Months Ended September 30, Three Months Ended June 30,
   20 10  20 09  20 10
Revenues      
 Revenues from third parties, net $ 71,064 $ 77,933 $ 94,939
 Revenues from related parties, net  67,217  125,189  92,768
   138,281  203,122  187,707
       
Costs and expenses:      
Cost of revenues  106,602  161,687  149,388
Research and development  23,267  21,772  18,341
General and administrative  4,948  4,985  4,197
Sales and marketing  4,139  3,856  2,752
Total costs and expenses  138,956  192,300  174,678
       
Operating income (loss)  (675)  10,822  13,029
       
Non operating income (loss):      
Interest income  193  110  169
Equity in losses of equity method investees  (99)  (41)  (106)
Foreign exchange gains (losses), net  (345)  7  53
Interest expense  (71)  (3)  (5)
Other income, net  173  66  72
   (149)  139  183
Earnings (loss) before income tax es  (824)  10,961  13,212
Income tax expense (benefit)  (149)  2,933  2,174
Net income (loss)  (675)  8,028  11,038
Net loss attributable to noncontrolling interests  1,122  793  930
Net income attributable to Himax stockholders $ 447 $ 8,821 $ 11,968
       
Basic earnings per ordinary share attributable to Himax stockholders $ 0.001 $ 0.024 $ 0.034
Diluted earnings per ordinary share attributable to Himax stockholders $ 0.001 $ 0.024 $ 0.033
Basic earnings per ADS attributable to Himax stockholders $ 0.003 $ 0.048 $ 0.067
Diluted earnings per ADS attributable to Himax stockholders $ 0.003 $ 0.048 $ 0.067
       
Basic Weighted Average Outstanding O rdinary Shares  352,589  367,026  355,426
Diluted Weighted Average Outstanding O rdinary Shares  353,767  368,905  358,011
 
Himax Technologies, Inc.
Unaudited Condensed Consolidated Statements of Income
(Amounts in Thousands of U.S. Dollars, Except Per Share Data)
   
  Nine Months Ended
  September 3 0 ,
  20 10 200 9
Revenues    
 Revenues from third parties, net $  236,943 $  185,654
 Revenues from related parties, net 264,543 328,051
  501,486 513,705
     
Costs and expenses:    
Cost of revenues 396,763 407,667
Research and development 59,416 54,597
General and administrative 13,188 12,464
Sales and marketing 9,640 8,531
Total costs and expenses 479,007 483,259
     
Operating income 22,479 30,446
     
Non operating income (loss):    
Interest income 466 676
Equity in losses of equity method investees (264) (41)
Foreign exchange losses, net (303) (402)
Interest expense (76) (3)
Other income (loss), net 333 (55)
  156 175
Earnings before income taxes 22,635 30,621
Income tax expense 4,074 4,899
Net income 18,561 25,722
Net loss attributable to the noncontrolling interests 2,992 2,891
Net income attributable to Himax stockholders $  21,553 $  28,613
     
Basic earnings per ordinary share attributable to Himax stockholders $0. 061 $0. 077
Diluted earnings per ordinary share attributable to Himax stockholders $0. 061 $0. 077
Basic earnings per ADS attributable to Himax stockholders $0. 121 $0. 154
Diluted earnings per ADS attributable to Himax stockholders $0. 121 $0. 154
     
Basic Weighted Average Outstanding Shares 355,172 372,219
Diluted Weighted Average Outstanding Shares 355,775 372,588
 
Himax Technologies, Inc.
Unaudited Supplemental Financial Information
(Amounts in Thousands of U.S. Dollars)
 
The amount of share-based compensation included in applicable statements of income categories is summarized as follows: Three Months Ended September 30, Three Months Ended June 30,
  20 10 20 09 20 10
Share-based compensation      
Cost of revenues $ 174 $ 216 $ 21
Research and development  5,275  6,040  1,375
General and administrative  937  1,188  228
Sales and marketing  1,040  1,149  218
Income tax benefit  (1,108)  (1,631)  (131)
Total $ 6,318 $ 6,962 $ 1,711
       
The amount of acquisition-related charges included in applicable statements of income categories is summarized as follows:      
       
Acquisition-related charges      
Research and development $ 259 $ 260 $ 258
Sales and marketing  289  288  290
Income tax benefit  (264)  (162)  (200)
Total $ 284 $ 386 $ 348
 
Himax Technologies, Inc.
Unaudited Supplemental Financial Information
(Amounts in Thousands of U.S. Dollars)
 
The amount of share-based compensation included in applicable statements of income categories is summarized as follows:   Nine Months Ended   September 3 0 ,
  20 10 200 9
Share-based compensation    
Cost of revenues $ 217 $ 242
Research and development  8,024  9,630
General and administrative  1,394  1,731
Sales and marketing  1,476  1,683
Income tax benefit  (1,426)  (2,027)
Total $ 9,685 $ 11,259
     
The amount of acquisition-related charges included in applicable statements of income categories is summarized as follows:    
     
Research and development $ 776 $ 776
Sales and marketing  868  868
Income tax benefit  (603)  (486)
Total $ 1,041 $ 1,158
 
Himax Technologies, Inc.
Unaudited Condensed Consolidated Balance Sheets
(Amounts in Thousands of U.S. Dollars, Except Per Share Data)
       
  September 3 0 , June 3 0 , December 3 1 ,
  2 010 2 010 200 9
Assets      
Current assets:      
Cash and cash equivalents $ 80,139 $ 153,967 $ 110,924
Investments in marketable securities available-for-sale  2,470  3,900  10,730
Restricted cash equivalents  44,000 -- --
Accounts receivable, less allowance for doubtful accounts, sales returns and discounts  84,803  97,499  64,496
Accounts receivable from related parties, less allowance for sales returns and discounts  97,597  118,746  138,172
Inventories  111,664  79,261  67,768
Deferred income taxes  17,900  15,873  17,491
Prepaid expenses and other current assets  11,749  12,657  14,216
Total current assets $ 450,322 $ 481,903 $ 423,797
       
Investment securities, including securities measured at fair value  19,135  12,643  11,619
Equity method investments  1,231  1,318  586
Property , plant and equipment, net  48,708  50,544  51,586
Deferred income taxes  25,121  23,426  24,548
Goodwill  26,846  26,846  26,846
Intangible assets, net  7,223  7,773  8,872
Other assets  2,460  2,440  2,594
   130,724  124,990  126,651
Total assets $ 581,046 $ 606,893 $ 550,448
       
Liabilities and E quity      
Current liabilities:      
Short-term debt $ 44,000 $ -- $ --
Accounts payable  106,350  134,266  88,079
Income taxes payable  11,681  7,661  14,147
Dividend payable --  44,188 --
Other accrued expenses and other current liabilities  20,041  19,413  18,425
Total current liabilities $ 182,072 $ 205,528 $ 120,651
Other liabilities  4,514  4,642  5,725
Total liabilities 186,586 210,170 126,376
       
Equity      
Himax s tockholders' equity:      
Ordinary shares, US$0.3 par value, 1,000,000,000 shares authorized; 353,842,764 shares, 353,502,962 shares, and 358,012,184 shares issued and outstanding at September 30, 2010, June 30, 2010, and December 31, 2009, respectively $ 106,153 $ 106,051 $ 107,404
Additional paid-in capital  99,154  101,623  102,924
Accumulated other comprehensive income (loss)  454  (32)  4
Unappropriated retained earnings 186,577 186,039 209,121
Himax stockholders' equity $ 392,338 $ 393,681 $ 419,453
Noncontrolling interests  2,122  3,042  4,619
Total equity $ 394,460 $ 396,723 $ 424,072
Total liabilities and equity $ 581,046 $ 606,893 $ 550,448
 
Himax Technologies, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
( Amounts in T housands of U . S . D ollars)
     
  Three Months Ended September 30, Three Months Ended June 30,
  20 10 20 09 20 10
       
Cash flows from operating activities:      
Net income (loss) $ (675) $ 8,028 $ 11,038
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:      
Depreciation and amortization  3,366  3,452  3,463
Bad debt expenses --  533 --
Share-based compensation expenses  1,555  2,085  1,842
Equity in losses of equity method investees  99  41  106
Loss on disposal of property and equipment  34  34 --
Gain on disposal of marketable securities, net  (21)  (52)  (19)
Valuation gain on trading securities  (62) -- --
Amortization of discount on investment securities  (18) -- --
Deferred income tax expense (benefit)  (3,850)  (263)  2,639
Inventories write downs  2,210  2,649  1,371
Changes in operating assets and liabilities:      
Accounts receivable  12,696  (11,308)  (25,211)
Accounts receivable from related parties  21,178  (6,797)  9,827
Inventories  (34,613)  (25,612)  (15,230)
Prepaid expenses and other current assets  908  1,905  1,098
Accounts payable  (27,918)  13,590  18,352
Income taxes payable  4,045  3,333  (8,844)
Other accrued expenses and other current liabilities  829  1,363  2,464
Other liabilities  (34) --  (602)
Net cash provided by (used in) operating activities  (20,271)  (7,019)  2,294
       
Cash flows from investing activities:      
Purchase of property and equipment  (1,233)  (2,365)  (1,720)
Proceeds from disposal of property and equipment --  9 --
Purchase of available-for-sale marketable securities  (9,184)  (8,896)  (4,257)
Disposal of available-for-sale marketable securities  6,340  8,454  5,514
Purchase of non-marketable equity securities  (1,000) --  (1,024)
Purchase of equity method investments --  (312) --
Purchase of trading securities  (684) -- --
Release (pledge) of restricted cash equivalents and marketable securities  (44,004)  2,101  (62)
Decrease (increase) in other assets  7  (226)  134
Net cash used in investing activities  (49,758)  (1,235)  (1,415)
 
Himax Technologies, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
( Amounts in T housands of U . S . D ollars)
     
     
  Three Months Ended September 3 0 , Three Months Ended  June 3 0 ,
  2010 2009 2010
Cash flows from financing activities:      
Distribution of cash dividends $ (44,097) $ -- $ --
Proceeds from issuance of new shares by subsidiaries  117  120  76
Payments to acquire ordinary shares for retirement  (4,210)  (14,023)  (2,903)
Proceeds from disposal of subsidiary shares to noncontrolling interests by Himax Technologies Limited  364  14  94
Purchase of subsidiary shares from noncontrolling interests --  (61)  (109)
Proceeds from borrowing of short-term debt  44,000  80,000  160,000
Repayment of short-term debt --  (80,000)  (160,000)
Net cash used in financing activities  (3,826)  (13,950)  (2,842)
Effect of foreign currency exchange rate change s on cash and cash equivalents  27   6  (2) 
Net decrease in cash and cash equivalents  (73,828) (22,198)  (1,965)
Cash and cash equivalents at beginning of period  153,967 136,760  155,932
Cash and cash equivalents at end of period $ 80,139 $ 114,562 $ 153,967
       
Supplemental disclosures of cash flow information:      
Cash paid during the period for:      
Interest expense $ -- $ 3 $ 5
Income taxes $ 45 $ 5 $ 8,196
Supplemental disclosures of non-cash financing activities:      
Dividend Payable $ -- $ -- $ 44,188
 
Himax Technologies, Inc.
Unaudited Supplemental Data – Reconciliation Schedule
(Amounts in Thousands of U.S. Dollars)
 
Gross Margin, Operating Margin and Net Margin Excluding Share-based Compensation and Acquisition-Related Charges:
  Three Months Ended September 30, Three Months Ended June 30,
   20 10  20 09  20 10
Revenues $ 138,281 $ 203,122 $ 187,707
       
Gross profit  31,679  41,435  38,319
Add: Share-based compensation – Cost of revenues  174  216  21
Gross profit excluding share-based compensation  31,853  41,651  38,340
Gross margin excluding share-based compensation  23.0%  20.5%  20.4%
       
Operating income (loss)  (675)  10,822  13,029
Add: Share-based compensation  7,426  8,593  1,842
Operating income excluding share-based compensation  6,751  19,415  14,871
Add: Acquisition-related charges –Intangible assets amortization  548  548  548
Operating income excluding share-based compensation and acquisition-related charges  7,299  19,963  15,419
Operating margin excluding share-based compensation and acquisition-related charges  5.3%  9.8%  8.2%
Net income attributable to Himax stockholders  447  8,821  11,968
Add: Share-based compensation, net of tax  6,318  6,962  1,711
Add: Acquisition-related charges, net of tax  284  386  348
Net income attributable to Himax stockholders excluding share-based compensation and acquisition-related charges  7,049  16,169  14,027
Net margin attributable to Himax stockholders excluding share-based compensation and acquisition-related charges  5.1%  8.0%  7.5%
       
*Gross margin excluding share-based compensation equals gross profit excluding share-based compensation divided by revenues
*Operating margin excluding share-based compensation and acquisition-related charges equals operating income excluding share-based compensation and acquisition-related charges divided by revenues
*Net margin attributable to Himax stockholders excluding share-based compensation and acquisition-related charges equals net income attributable to Himax stockholders excluding share-based compensation and acquisition-related charges divided by revenues
 
Himax Technologies, Inc.
Unaudited Supplemental Data – Reconciliation Schedule
(Amounts in Thousands of U.S. Dollars)
 
Gross Margin, Operating Margin and Net Margin Excluding Share-based Compensation and Acquisition-Related Charges:
  Nine Months Ended September 30,
   20 10  200 9
Revenues $501,486 $513,705
     
Gross profit 104,723 106,038
Add: Share-based compensation – Cost of revenues 217 242
Gross profit excluding share-based compensation 104,940 106,280
Gross margin excluding share-based compensation 20.9% 20.7%
         
Operating income 22,479 30,446
Add: Share-based compensation 11,111 13,286
Operating income excluding share-based compensation 33,590 43,732
Add: Acquisition-related charges –Intangible assets  amortization 1,644 1,644
Operating income excluding share-based compensation and acquisition-related charges 35,234 45,376
Operating margin excluding share-based compensation and acquisition-related charges 7.0% 8.8%
Net income attributable to Himax stockholders 21,553 28,613
Add: Share-based compensation, net of tax 9,685 11,259
Add: Acquisition-related charges, net of tax 1,041 1,158
Net income attributable to Himax stockholders excluding share-based compensation and acquisition-related charges 32,279 41,030
Net margin attributable to Himax stockholders excluding share-based compensation and acquisition-related charges 6.4% 8.0%
 
*Gross margin excluding share-based compensation equals gross profit excluding share-based compensation divided by revenues
*Operating margin excluding share-based compensation and acquisition-related charges equals operating income excluding share-based compensation and acquisition-related charges divided by revenues
*Net margin attributable to Himax stockholders excluding share-based compensation and acquisition-related charges equals net income attributable to Himax stockholders excluding share-based compensation and acquisition-related charges divided by revenues

 

Diluted Earnings Per O rdinary Share Attributable to Himax stockholders Excluding Share-based Compensation and Acquisition-Related Charges:  
    Three Months Ended September 30, Nine Months Ended September 30,
  20 10 20 10
Diluted GAAP EPS attributable to Himax stockholders $0.001 $0.061
Add: Share-based compensation per diluted share $0.018 $0.027
Add: Acquisition-related charges per diluted share $0.001 $0.003
     
Diluted non GAAP EPS attributable to Himax stockholders excluding share-based compensation and acquisition-related charges $0.020 $0.091
     
Numbers do not add up due to rounding
CONTACT: Himax Technologies, Inc.
         Investor Relations
         Jessie Wang, Ext. 22618
           jessie_wang@himax.com.tw
         Jessica Huang, Ext. 22513
           jessica_huang@himax.com.tw
         +886-2-2370-3999
         
         The Ruth Group
         In the U.S.
         Joseph Villalta
         +1-646-536-7003
         jvillalta@theruthgroup.com

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