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Himax Technologies, Inc. Reports Second Quarter 2012 Financial Results

http://www.himax.com.tw

About Non-GAAP Financial Measures

To supplement the unaudited consolidated statement of income and comprehensive income presented in accordance with GAAP, the Company is also providing non-GAAP measures of income before income tax expenses, net income, net income attributable to us and basic and diluted earnings per share for the six months ended June 30, 2012 and 2011, which are adjusted from results based on GAAP to exclude the non-cash transactions. The non-GAAP financial measures are provided to enhance the investors' overall understanding of our current performance in on-going core operations as well as the prospects for the future. These measures should be considered in addition to results prepared and presented in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. The Company uses both GAAP and non-GAAP information in evaluating our operating business results internally and therefore deems it important to provide all of this information to investors. The non-GAAP adjustments include share based compensations and acquisition related charges.

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, 2011 filed with the SEC, as may be amended.

– FINANCIAL TABLES –

Himax Technologies, Inc.
Unaudited Condensed Consolidated Statements of Income
(These interim financials do not fully comply with US GAAP because they omit all interim disclosure required by US GAAP)
(Amounts in Thousands of U.S. Dollars, Except Per Share Data)
       
       
       
  Three Months Ended June 30, Three Months Ended March 31,
  2012 2011 2012
Revenues      
  Revenues from third parties, net $126,164 $92,450 $103,473
  Revenues from related parties, net 63,346 68,129 63,220
  189,510 160,579 166,693
       
Costs and expenses:      
 Cost of revenues 145,794 130,682 128,577
 Research and development  15,717 19,294 16,699
 General and administrative  4,066 3,745 3,689
 Sales and marketing  3,728 3,447 3,264
Total costs and expenses 169,305 157,168 152,229
       
Operating income 20,205 3,411 14,464
       
Non operating income (loss):      
Interest income  100  130  85
Equity in losses of equity method investees  (12)  (112)  (72)
Foreign exchange gains (losses), net  185  (100)  (341)
Interest expense  (97)  (102)  (99)
Other income (loss), net  (17)  478  209
   159  294  (218)
Earnings before income taxes   20,364  3,705  14,246
Income tax expense   5,447  926  3,205
Net income   14,917  2,779  11,041
Net loss attributable to noncontrolling interests  188  845  272
Net income attributable to Himax stockholders $15,105 $3,624 $11,313
       
Basic earnings per ordinary share attributable to Himax stockholders  $ 0.044  $ 0.010  $ 0.033
Diluted earnings per ordinary share attributable to Himax stockholders  $ 0.044  $ 0.010  $ 0.033
Basic earnings per ADS attributable to Himax stockholders  $ 0.089  $ 0.020  $ 0.066
Diluted earnings per ADS attributable to Himax stockholders  $ 0.089  $ 0.020  $ 0.066
       
Basic Weighted Average Outstanding ADS 170,283 177,315 172,017
Diluted Weighted Average Outstanding ADS 170,586 178,069 172,017
 
 
Himax Technologies, Inc.
Unaudited Condensed Consolidated Statements of Income
(Amounts in Thousands of U.S. Dollars, Except Per Share Data)
     
  Six Months Ended June 30,
  2012 2011
Revenues    
  Revenues from third parties, net $229,637 $166,543
  Revenues from related parties, net 126,566 135,129
  356,203 301,672
     
Costs and expenses:    
 Cost of revenues 274,371 243,465
 Research and development  32,416 39,084
 General and administrative  7,755 8,026
 Sales and marketing  6,992 5,144
Total costs and expenses 321,534 295,719
     
Operating income 34,669 5,953
     
Non operating income (loss):    
Interest income  185  270
Equity in losses of equity method investees  (84)  (193)
Foreign exchange gains (losses), net  (156)  17
Interest expense  (196)  (199)
Other income, net  192  244
   (59)  139
Earnings before income taxes   34,610  6,092
Income tax expense   8,652  1,523
Net income   25,958  4,569
Net loss attributable to noncontrolling interests  460  1,778
Net income attributable to Himax stockholders $26,418 $6,347
     
Basic earnings per ordinary share attributable to Himax stockholders  $ 0.077  $ 0.018
Diluted earnings per ordinary share attributable to Himax stockholders  $ 0.077  $ 0.018
Basic earnings per ADS attributable to Himax stockholders  $ 0.154  $ 0.036
Diluted earnings per ADS attributable to Himax stockholders  $ 0.154  $ 0.036
     
Basic Weighted Average Outstanding ADS 171,150 177,316
Diluted Weighted Average Outstanding ADS 171,255 178,000
 
 
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 June 30, Three Months Ended March 31,
  2012 2011 2012
Share-based compensation      
 Cost of revenues $6 $11 $5
 Research and development  366  866  373
 General and administrative  62  143  62
 Sales and marketing  76  139  77
 Income tax benefit  (87)  (177)  (86)
Total $423 $982 $431
       
The amount of acquisition-related charges included in applicable statements of income categories is summarized as follows:      
       
Acquisition-related charges      
 Research and development $240 $258 $241
 Sales and marketing  290  290  289
 Income tax benefit  (125)  (125)  (125)
Total $405 $423 $405
 
 
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: Six Months Ended June 30,
  2012 2011
Share-based compensation    
 Cost of revenues $11 $22
 Research and development  739  1,735
 General and administrative  124  285
 Sales and marketing  153  279
 Income tax benefit  (173)  (355)
Total $854 $1,966
     
The amount of acquisition-related charges included in applicable statements of income categories is summarized as follows:    
     
Acquisition-related charges    
 Research and development $481 $516
 Sales and marketing  579  579
 Income tax benefit  (250)  (250)
Total $810 $845
 
 
Himax Technologies, Inc.
GAAP Unaudited Condensed Consolidated Balance Sheets
(Amounts in Thousands of U.S. Dollars, Except Per Share Data)
       
  June 30, 2012 March 31, 2012 December 31, 2011
Assets      
Current assets:      
Cash and cash equivalents $102,992 $101,912 $106,164
Restricted cash and cash equivalents  63,000  84,200  84,200
Investments in marketable securities available-for-sale  167  169  165
Accounts receivable, less allowance for doubtful accounts, sales returns and discounts   129,045  103,089  101,280
Accounts receivable from related parties, less allowance for sales returns and discounts   83,832  85,916  79,833
Inventories   139,158  118,515  112,985
Deferred income taxes   16,432  16,638  16,217
Prepaid expenses and other current assets   15,108  15,535  14,865
Total current assets $549,734 $525,974 $515,709
       
Investment securities, including securities measured at fair value $24,619 $24,658 $24,506
Equity method investments 322 378 439
Property, plant and equipment, net 54,173 55,873 57,150
Deferred income taxes  13,830 14,003 13,649
Goodwill 26,846 26,846 26,846
Intangible assets, net 3,431 3,962 4,494
Other assets 2,434 2,371 2,185
  125,655 128,091 129,269
Total assets $675,389 $654,065 $644,978
       
Liabilities and Equity      
Current liabilities:      
Short-term debt  $63,000 $84,200 $84,200
Accounts payable  159,407 134,931 134,353
Income taxes payable  12,753 7,786 3,644
Other accrued expenses and other current liabilities 31,082 21,547 23,163
Total current liabilities  $266,242 $248,464 $245,360
Other liabilities 5,018 5,112 4,560
Total liabilities $271,260 $253,576 $249,920
       
Equity      
Himax stockholders' equity:      
Ordinary shares, US$0.3 par value, 1,000,000,000 shares authorized; 356,699,482 shares issued and 339,047,694, 340,255,988 and 349,279,556 outstanding at June 30, 2012, March 31, 2012, and December 31, 2011, respectively $107,010 $107,010 $107,010
Additional paid-in capital  104,580 103,971 103,051
Treasury shares, at cost (17,651,788 ordinary shares, 16,443,494 ordinary shares and 7,419,926 ordinary shares at June 30, 2012, March 31, 2012, and December 31, 2011, respectively)  (12,213)  (11,066)  (4,502)
Accumulated other comprehensive income   137  276  166
Unappropriated retained earnings 203,450 199,025 187,712
Himax stockholders' equity $402,964 $399,216 $393,437
Noncontrolling interests 1,165 1,273 1,621
Total equity $404,129 $400,489 $395,058
Total liabilities and equity $675,389 $654,065 $644,978
 
 
Himax Technologies, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows 
(Amounts in Thousands of U.S. Dollars)
     
  Three Months Ended June 30, Three Months Ended March 31,
  2012 2011 2012
       
Cash flows from operating activities:      
Net income  $14,917 $2,779 $11,041
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization  3,165  3,172  3,313
Share-based compensation expenses  510  1,159  517
Gain on disposal of equity method investment  ---   (313)  --- 
Loss (gain) on disposal of marketable securities, net  11  (194)  (7)
Unrealized loss (gain) on conversion option  62  144  (152)
Interest income from amortization of discount on investment in corporate bonds  (41)  (41)  (42)
Equity in losses of equity method investees  12  112  72
Deferred income tax expense (benefit)  257  (983)  (906)
Inventories write downs  4,115  1,804  2,617
Changes in operating assets and liabilities:      
Accounts receivable  (25,956)  (9,264)  (1,809)
Accounts receivable from related parties  2,077  (3,244)  (6,079)
Inventories  (24,758)  3,903  (8,147)
Prepaid expenses and other current assets  424  (100)  (670)
Accounts payable  24,476  1,704  578
Income taxes payable  4,967  (3,912)  4,142
Other accrued expenses and other current liabilities  (1,066)  683  (1,531)
Other liabilities  36  (906)  669
Net cash provided by (used in) operating activities   3,208  (3,497)  3,606
       
Cash flows from investing activities:      
Purchase of property and equipment  (1,009)  (8,674)  (1,606)
Purchase of available-for-sale marketable securities  (5,526)  (2,840)  (6,247)
Disposal of available-for-sale marketable securities  5,515  9,501  6,254
Purchase of investment securities  ------   ------   (3)
Release (pledge)of restricted cash equivalents and marketable securities  2  (4)  (4)
Increase in other assets  (132)  (32)  (24)
Net cash used in investing activities  (1,150)  (2,049)  (1,630)
 
 
Himax Technologies, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows 
(Amounts in Thousands of U.S. Dollars)
       
  Three Months Ended June 30, Three Months Ended March 31,
  2012 2011 2012
Cash flows from financing activities:      
Proceeds from issuance of new shares by subsidiaries $86 $10  $ (3)
Payments to repurchase ordinary shares   (1,147)  (67)  (6,564)
Proceeds from disposal of subsidiary shares to noncontrolling interests by Himax Technologies Limited  97  ---   --- 
Proceeds from disposal of subsidiary shares to noncontrolling interests by Himax Imaging, Inc.  1  ---   332
Purchase of subsidiary shares from noncontrolling  (3)  (67)  (1)
interests      
Release of restricted cash equivalents and marketable securities (for borrowing of short-term debt)  21,200  ---   --- 
Repayment of short-term debt  (21,200)  ---   --- 
Net cash used in financing activities  (966)  (124)  (6,236)
Effect of foreign currency exchange rate changes on cash and cash equivalents  (12)  38  8
Net increase (decrease) in cash and cash equivalents  1,080  (5,632)  (4,252)
Cash and cash equivalents at beginning of period  101,912  109,519  106,164
Cash and cash equivalents at end of period $102,992 $103,887 $101,912
       
Supplemental disclosures of cash flow information:      
 Cash paid during the period for:      
Interest expense $97 $79 $99
Income taxes $123 $5,979 $63
Supplemental disclosures of non-cash financing activities:      
Dividend Payable $10,680 $21,227  $ ---
 
 
Himax Technologies, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows 
(Amounts in Thousands of U.S. Dollars)
     
  Six Months Ended June 30,
  2012 2011
     
Cash flows from operating activities:    
Net income  $25,958 $4,569
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization  6,478  6,451
Share-based compensation expenses  1,027  2,321
Gain on disposal of equity method investment  ---   (313)
Loss (gain) on disposal of marketable securities, net  4  (387)
Unrealized loss (gain) on conversion option  (90)  604
Interest income from amortization of discount on investment in corporate bonds  (83)  (89)
Equity in losses of equity method investees  84  193
Deferred income tax expense   (649)  (741)
Inventories write downs  6,732  4,568
Changes in operating assets and liabilities:    
Accounts receivable  (27,765)  (12,150)
Accounts receivable from related parties  (4,002)  9,045
Inventories  (32,905)  (10,930)
Prepaid expenses and other current assets  (246)  (425)
Accounts payable  25,054  9,848
Income taxes payable  9,109  (3,860)
Other accrued expenses and other current liabilities  (2,597)  941
Other liabilities  705  (917)
Net cash provided by operating activities   6,814  8,728
     
Cash flows from investing activities:    
Purchase of property and equipment  (2,615)  (10,525)
Purchase of available-for-sale marketable securities  (11,773)  (8,854)
Disposal of available-for-sale marketable securities  11,769  17,234
Purchase of investment securities  (3)  ---- 
Release (pledge)of restricted cash equivalents and marketable securities  (2)  998
Increase in other assets  (156)  (31)
Net cash used in investing activities  (2,780)  (1,178)
 
 
Himax Technologies, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows 
(Amounts in Thousands of U.S. Dollars)
     
  Six Months Ended June 30,
  2012 2011
Cash flows from financing activities:    
Proceeds from issuance of new shares by subsidiaries $83 $31
Payments to repurchase ordinary shares   (7,711)  (67)
Proceeds from disposal of subsidiary shares to noncontrolling interests by Himax Technologies Limited  97  --- 
Proceeds from disposal of subsidiary shares to noncontrolling interests by Himax Imaging, Inc.  333  --- 
Purchase of subsidiary shares from noncontrolling interests  (4)  (528)
Release of restricted cash equivalents and marketable securities (for borrowing of short-term debt)  21,200  --- 
Repayment of short-term debt  (21,200)  --- 
Net cash used in financing activities  (7,202)  (564)
Effect of foreign currency exchange rate changes on cash and cash equivalents  (4)  59
Net increase (decrease) in cash and cash equivalents  (3,172)  7,045
Cash and cash equivalents at beginning of period  106,164  96,842
Cash and cash equivalents at end of period $102,992 $103,887
     
Supplemental disclosures of cash flow information:    
 Cash paid during the period for:    
Interest expense $196 $176
Income taxes $186 $6,185
Supplemental disclosures of non-cash financing activities:    
Dividend Payable $10,680 $21,227
 
 
Himax Technologies, Inc.
Non-GAAP 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 June 30, Three Months Ended March 31,
  2012 2011 2012
Revenues $189,510 $160,579 $166,693
       
Gross profit 43,716 29,897 38,116
Add: Share-based compensation – Cost of revenues 6 11 5
Gross profit excluding share-based compensation 43,722 29,908 38,121
Gross margin excluding share-based compensation 23.1% 18.6% 22.9%
       
Operating income  20,205 3,411 14,464
Add: Share-based compensation 510 1,159 517
Operating income excluding share-based compensation 20,715 4,570 14,981
Add: Acquisition-related charges –Intangible assets amortization 530 548 530
Operating income excluding share-based compensation and acquisition-related charges 21,245 5,118 15,511
Operating margin excluding share-based compensation and acquisition-related charges 11.2% 3.2% 9.3%
Net income attributable to Himax stockholders 15,105 3,624 11,313
Add: Share-based compensation, net of tax 423 982 431
Add: Acquisition-related charges, net of tax 405 423 405
Net income attributable to Himax stockholders excluding share-based compensation and acquisition-related charges 15,933 5,029 12,149
Net margin attributable to Himax stockholders excluding share-based compensation and acquisition-related charges 8.4% 3.1% 7.3%
       
*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.
Non-GAAP 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:
     
  Six Months Ended June 30,
  2012 2011
Revenues $356,203 $301,672
     
Gross profit 81,832 58,207
Add: Share-based compensation – Cost of revenues 11 22
Gross profit excluding share-based compensation 81,843 58,229
Gross margin excluding share-based compensation 23.0% 19.3%
     
Operating income  34,669 5,953
Add: Share-based compensation 1,027 2,321
Operating income excluding share-based compensation 35,696 8,274
Add: Acquisition-related charges –Intangible assets amortization 1,060 1,095
Operating income excluding share-based compensation and acquisition-related charges 36,756 9,369
Operating margin excluding share-based compensation and acquisition-related charges 10.3% 3.1%
Net income attributable to Himax stockholders 26,418 6,347
Add: Share-based compensation, net of tax 854 1,966
Add: Acquisition-related charges, net of tax 810 845
Net income attributable to Himax stockholders excluding share-based compensation and acquisition-related charges 28,082 9,158
Net margin attributable to Himax stockholders excluding share-based compensation and acquisition-related charges 7.9% 3.0%
     
*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 ADS Attributable to Himax stockholders Excluding Share-based Compensation and Acquisition-Related Charges:
     
  Three Months Ended June 30, Six Months Ended June 30,
  2012 2012
Diluted GAAP earning per ADS attributable to Himax stockholders  $ 0.089  $ 0.154
Add: Share-based compensation per ADS  $ 0.002  $ 0.005
Add: Acquisition-related charges per ADS  $ 0.002  $ 0.005
     
Diluted non-GAAP earning per ADS attributable to Himax stockholders excluding share-based compensation and acquisition-related charges  $ 0.093  $ 0.164
Numbers do not add up due to rounding
CONTACT:  Contact For the Company 
          Jackie Chang, CFO
          Himax Technologies, Inc.
          Tel: 886-2-2370-3999 Ext.22300
          Fax: 886-2-2314-0877
          Email: jackie_chang@himax.com.tw 
          www.himax.com.tw 

          Penny Lin, Investor Relations 
          Himax Technologies, Inc.
          Tel: 886-2-2370-3999 Ext.22320
          Fax: 886-2-2314-0877
          Email: penny_lin@himax.com.tw 
          www.himax.com.tw 

          Investor Relations - US Representative 
          MZ North America
          John Mattio, SVP
          Tel: +1-212-301-7130
          Email: john.mattio@mzgroup.us
          www.mz-ir.com

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