TAINAN, Taiwan, Aug. 9, 2010 (GLOBE NEWSWIRE) -- Himax Technologies, Inc. ("Himax" or "Company") (Nasdaq:HIMX) today reported financial results for the second quarter ended June 30, 2010.

For the second quarter of 2010, Himax reported net revenues of $187.7 million, representing a 1.5% increase from $184.9 million in the second quarter of 2009, and a 7.0% increase from $175.5 million in the first quarter of 2010. Gross margin was 20.4% in the second quarter of 2010, down 40 basis points year-over-year, and up 60 basis points, sequentially. Operating income in the second quarter was $13.0 million, compared to $14.8 million for the same period last year and $10.1 million in the previous quarter.

Net income attributable to Himax stockholders for the second quarter of 2010 was $12.0 million or $0.07 per diluted ADS, down from $15.4 million or $0.08 per diluted ADS in the second quarter of 2009, and up from $9.1 million or $0.05 per diluted ADS in the first quarter of 2010.

Excluding share-based compensation and acquisition-related charges, non-GAAP operating income for the second quarter of 2010 was $15.4 million, down from $17.7 million in the same period last year, and up from $12.5 million in the previous quarter.

Non-GAAP net income attributable to Himax stockholders for the second quarter of 2010 was $14.0 million or $0.08 per diluted ADS, down from $17.9 million or $0.10 per diluted ADS in the second quarter of 2009, and up from $11.2 million or $0.06 per diluted ADS in the first quarter of 2010.

Reconciliation of gross margin, operating margin, net margin and diluted EPS excluding share-based compensation and acquisition-related charges, a non-GAAP financial measure, to GAAP gross margin, GAAP operating margin, GAAP net margin and diluted GAAP EPS, most comparable GAAP figure, is set out in the attached reconciliation schedule.

Numbers for shares outstanding and relevant information in the financial statements of the Company's common stocks are retroactively adjusted for all periods presented to reflect the effect of the recapitalization plan approved by the Company's stockholders in the general meeting on August 6, 2009. The recapitalization plan led to change in par value of the stock and doubled the total share count, with ADS ratio changing to one ADS representing two common stocks.

Jordan Wu, President and Chief Executive Officer of Himax, commented, "Revenue from small- and medium-sized applications experienced a record-level $65.7 million in the second quarter 2010, up 74.9% from the same period last year and up 42.0%, sequentially. Most notably, our display driver revenue for handset applications recorded 84.6% year-over-year growth. We believe our strength in the market is primarily due to our complete product lineup, coupled with our strategic marketing and solid execution. We will continue to drive growth and increase our market share."

Mr. Wu continued, "In the first half of 2010, we have already shipped more LCOS panels than we delivered in the full year 2009. We are confident that we are well positioned to capitalize on the emerging pico-projector industry, which we believe is still in the early stage of a long-term product life cycle. Moreover, thanks to the ramp-up of WLED drivers for notebooks and TV applications, revenues from our analog ICs line more than doubled in the first half of 2010, both sequentially and year-over-year. We expect this momentum to continue, with increased penetration of white LED back-light in TFT-LCD panels and the growing adoption of our white LED drivers."

Mr. Wu continued, "We achieved another important milestone in July 2010 with the commencement of small-volume shipment of our 2D to 3D chip to a major TV brand. Our real-time 2D to 3D conversion solutions, suitable for all types of 3D displays, has received overwhelming interest from customers since we introduced this technology in February. Customers are keen to incorporate our solutions into a number of 3D-ready displays to capitalize on the early-adopter advantages in the 3D era. While our design-in and sales activities have been intensive, our near-term shipments are constrained by the limited availability of 3D panels. We expect the supply shortage to ease in the next few quarters."

Mr. Wu continued, "In our CMOS image sensor product line, on top of shipment for handsets, we started small volume shipments of notebook PC applications to one of the world's top notebook brands. The adoption by this world-class brand validates our product and technology competitiveness. With the sampling of our next generation CMOS image sensors, we are on track to be awarded with more design-in projects for a wider range of customers."

Mr. Wu added, "We are seeing softening demand since June with talks of end product sell-through noticeably slowing down and customers getting cautious on inventory levels. Over the past ten days, in particular, we have seen our customers significantly cut back their forecasts for August and September. While we are actively talking to our customers, we have not yet come to a conclusion as to whether this is a short-term over-reaction or if it has long-term implications. We are uncertain if this is specific to Himax or this is an industry-wide phenomenon."

Mr. Wu continued, "Despite recent concerns over excess inventory and weakening demand industry-wide, we have seen our gross margin improve since the beginning of the year. We expect this trend to continue due to better product mix, and solid execution of our price strategies and cost reduction measures. In particular, we are pleased to see improved gross margins for some of our major non-driver products. Take our LCOS pico-projector product line for example, with increased shipment and higher capacity utilization, gross margin and gross profit continue to grow. We believe similar economies of scale are taking place in some of our other non-driver product lines, which will eventually be growth drivers of both our top line revenue and bottom line profit in the not too distant future."

Mr. Wu added, "For the third quarter 2010, we expect revenues to decline by 13% to 18%, gross margin to increase by 1-2 percentage points, and GAAP earnings per ADS to be in the range of $0-0.02. Our third quarter GAAP earnings per ADS guidance takes into account our 2010 grant of restricted share units, or RSUs, at the end of September. The 2010 RSUs, subject to Himax' Board approval, is assumed to be valued in the range of $9 to $10 million, of which approximately 60% will be vested and expensed immediately on the grant date. Excluding share-based compensation and acquisition-related charges, our third quarter 2010 non-GAAP earnings per ADS guidance is $0.04-0.06."

Investor Conference Call / Webcast Details

The Company's management will review detailed second quarter 2010 results on Monday, August 9, 2010 at 7:00 PM EDT (7:00 AM, Tuesday, August 10, Taiwan time). The conference dial-in numbers are +1-201-689-8471 (international) and +1-877-407-4018 (U.S. domestic). A live webcast of the conference call will be available on the Company's website at www.himax.com.tw . The playback will be available beginning two hours after the call through noon Taiwan time on Tuesday, August 17, 2010 (midnight U.S. Eastern Daylight Time) at www.himax.com.tw and by telephone at +1 858-384-5517 (international) or +1-877-870-5176 (U.S. domestic). The conference ID number is 353643.

About Himax Technologies, Inc.

Himax Technologies, Inc. designs, develops, and markets semiconductors that are critical components of flat panel displays. The Company's principal products are display drivers for large-sized TFT-LCD panels, which are used in desktop monitors, notebook computers and televisions, and display drivers for small- and medium-sized TFT-LCD panels, which are used in mobile handsets and consumer electronics products such as netbook computers, digital cameras, mobile gaming devices, portable DVD players, digital photo frame and car navigation displays. In addition, the Company is expanding its product offerings to include timing controllers, LCD TV and monitor chipset solutions, LCOS projector solutions, power management ICs, CMOS Image Sensors, Infinitely Color Technology and 2D to 3D conversion solutions. Based in Tainan, Taiwan, the Company has regional offices in Hsinchu and Taipei, Taiwan; Ninbo, Foshan, Fuqing, Beijing, Shanghai, Suzhou and Shenzhen, China; Yokohama and Matsusaka, Japan; Cheonan-si, Chungcheongnam-do, South Korea; and Irvine California, USA.

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 US 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 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,
   20 10  20 09  20 10
Revenues      
Revenues from third parties, net $ 94,939 $ 63,348 $ 70,940
Revenues from related parties, net  92,768  121,579  104,558
   187,707  184,927  175,498
       
Costs and expenses:      
Cost of revenues  149,388  146,539  140,773
Research and development  18,341  17,576  17,808
General and administrative  4,197  3,885  4,043
Sales and marketing  2,752  2,126  2,749
Total costs and expenses  174,678  170,126  165,373
       
Operating income  13,029  14,801  10,125
       
Non operating income (loss):      
Interest income  169  284  104
Equity in losses of equity method investees  (106) --  (59)
Foreign exchange gains (losses), net  53  1,006  (11)
Other income, net  67  17  88
   183  1,307  122
Earnings before income tax es  13,212  16,108  10,247
Income tax expense  2,174  1,717  2,049
Net income  11,038  14,391  8,198
Net loss attributable to noncontrolling interests  930  1,032  940
Net income attributable to Himax stockholders $ 11,968 $ 15,423 $ 9,138
       
Basic earnings per ordinary share attributable to Himax stockholders $ 0.03 $ 0.04 $ 0.03
Diluted earnings per ordinary share attributable to Himax stockholders $ 0.03 $ 0.04 $ 0.03
Basic earnings per ADS attributable to Himax stockholders $ 0.07 $ 0.08 $ 0.05
Diluted earnings per ADS attributable to Himax stockholders $ 0.07 $ 0.08 $ 0.05
       
Basic Weighted Average Outstanding O rdinary Shares  355,426 371,984  357,557
Diluted Weighted Average Outstanding O rdinary Shares  358,011 373,602  359,102
 
Himax Technologies, Inc. Unaudited Condensed Consolidated Statements of Income (Amounts in Thousands of U.S. Dollars, Except Per Share Data)
     
  Six Months Ended
  June 3 0 ,
  20 10 200 9
Revenues    
Revenues from third parties, net $ 165,879 $ 107,721
Revenues from related parties, net 197,326 202,862
  363,205 310,583
     
Costs and expenses:    
Cost of revenues 290,161 245,980
Research and development 36,149 32,825
General and administrative 8,240 7,479
Sales and marketing 5,501 4,675
Total costs and expenses 340,051 290,959
     
Operating income 23,154 19,624
     
Non operating income (loss):    
Interest income 273 566
Equity in losses of equity method investees (165) --
Foreign exchange gains (losses), net 42 (409)
Other income (loss), net 155 (121)
  305 36
Earnings before income taxes 23,459 19,660
Income tax expense 4,223 1,966
Net income 19,236 17,694
Net loss attributable to the noncontrolling interests 1,870 2,098
Net income attributable to Himax stockholders $ 21,106 $ 19,792
     
Basic earnings per ordinary share attributable to Himax stockholders $0. 06 $0. 05
Diluted earnings per ordinary share attributable to Himax stockholders $0. 06 $0. 05
Basic earnings per ADS attributable to Himax stockholders $0. 12 $0. 11
Diluted earnings per ADS attributable to Himax stockholders $0. 12 $0. 11
     
Basic Weighted Average Outstanding Shares 356,486 374,859
Diluted Weighted Average Outstanding Shares 358,517 375,139
 
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,
  20 10 20 09 20 10
Share-based compensation      
Cost of revenues $ 21 $ 13 $ 22
Research and development  1,375  1,807  1,374
General and administrative  228  271  229
Sales and marketing  218  260  218
Income tax benefit  (131)  (295)  (187)
Total $ 1,711 $ 2,056 $ 1,656
       
The amount of acquisition-related charges included in applicable statements of income categories is summarized as follows:      
       
Acquisition-related charges      
Research and development $ 258 $ 258 $ 259
Sales and marketing  290  290  289
Income tax benefit  (200)  (162)  (139)
Total $ 348 $ 386 $ 409
 
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 3 0 ,
  20 10 200 9
Share-based compensation    
Cost of revenues $ 43 $ 26
Research and development  2,749  3,590
General and administrative  457  543
Sales and marketing  436  534
Income tax benefit  (318)  (396)
Total $ 3,367 $ 4,297
     
The amount of acquisition-related charges included in applicable statements of income categories is summarized as follows:    
     
Research and development $ 517 $ 516
Sales and marketing  579  580
Income tax benefit  (339)  (324)
Total $ 757 $ 772
 
Himax Technologies, Inc. Unaudited Condensed Consolidated Balance Sheets (Amounts in Thousands of U.S. Dollars, Except Per Share Data)
       
  June 3 0 , 2 010 March 3 1 , 2 010 December 3 1 , 200 9
Assets      
Current assets:      
Cash and cash equivalents $ 153,967 $ 155,932 $ 110,924
Investments in marketable securities available-for-sale  3,900  5,198  10,730
Accounts receivable, less allowance for doubtful accounts, sales returns and discounts 97,499  71,354 64,496
Accounts receivable from related parties, less allowance for sales returns and discounts  118,746  129,519  138,172
Inventories  79,261  65,401  67,768
Deferred income taxes  15,873  17,590  17,491
Prepaid expenses and other current assets  12,657  13,753  14,216
Total current assets $ 481,903 $ 458,747 $ 423,797
       
Investments in non-marketable equity securities  12,643  11,619  11,619
Equity method investments  1,318  1,430  586
Property , plant and equipment, net  50,544  50,783  51,586
Deferred income taxes  23,426  24,695  24,548
Goodwill  26,846  26,846  26,846
Intangible assets, net  7,773  8,322  8,872
Other assets  2,440  2,541  2,594
   124,990  126,236  126,651
Total assets $ 606,893 $ 584,983 $ 550,448
       
Liabilities and E quity      
Current liabilities:      
Accounts payable $ 134,266 $ 115,916 $ 88,079
Income taxes payable  7,661  16,495  14,147
Dividend payable  44,188 -- --
Other accrued expenses and other current liabilities 19,413 16,017 18,425
  Total current liabilities $ 205,528 $ 148,428 $ 120,651
Other liabilities  4,642  5,605  5,725
  Total liabilities 210,170 154,033 126,376
       
Equity      
Himax s tockholders' equity:      
Ordinary shares, US$0.3 par value, 1,000,000,000 shares authorized; 353,502,962 shares, 355,531,454 shares, and 358,012,184 shares issued and outstanding at June 30, 2010, March 31, 2010, and December 31, 2009, respectively $ 106,051 $ 106,659 $ 107,404
Additional paid-in capital  101,623  102,123  102,924
Accumulated other comprehensive income (loss)  (32)  35  4
Unappropriated retained earnings 186,039 218,259 209,121
Himax stockholders' equity $ 393,681 $ 427,076 $ 419,453
Noncontrolling interests  3,042  3,874  4,619
Total equity $ 396,723 $ 430,950 $ 424,072
Total liabilities and equity $ 606,893 $ 584,983 $ 550,448
 
Himax Technologies, Inc. Unaudited Condensed Consolidated Statements of Cash Flows ( Amounts in T housands of U . S . D ollars)
       
  Three Months Ended June 30, Three Months Ended March 31,
  20 10 20 09 20 10
       
Cash flows from operating activities:      
Net income $ 11,038 $ 14,391 $ 8,198
Adjustments to reconcile net income to net cash provided by (used in) operating activities:      
Depreciation and amortization  3,463  3,530  3,522
Reversal for allowance for doubtful accounts --  (129) --
Share-based compensation expenses  1,842  2,351  1,843
Equity in losses of equity method investees  106 --  59
Gain on disposal of property and equipment --  (12) --
Gain on disposal of marketable securities, net  (19) --  (59)
Deferred income tax expense (benefit)  2,639  (1,604)  (375)
Inventories write downs  1,371  3,223  2,864
Changes in operating assets and liabilities:      
Accounts receivable  (25,211)  (12,439)  (6,858)
Accounts receivable from related parties  9,827  (54,097)  8,656
Inventories (15,230)  (22,770) (498)
Prepaid expenses and other current assets  1,098  (3,571)  462
Accounts payable  18,352  73,419  27,837
Income taxes payable  (8,844)  (5,166)  2,354
Other accrued expenses and other current liabilities  2,464  2,263  (2,199)
Other liabilities  (602) -- --
Net cash provided by (used in) operating activities  2,294  (611)  45,806
       
Cash flows from investing activities:      
Purchase of property and equipment  (1,720)  (2,870)  (2,388)
Proceeds from disposal of property and equipment --  1 --
Purchase of available-for-sale marketable securities  (4,257)  (5,147)  (5,577)
Disposal of available-for-sale marketable securities  5,514  6,693  11,190
Proceeds from disposal of subsidiary shares to noncontrolling interests by Himax Technologies Limited 94 333 418
Purchase of non-marketable equity securities (1,024) -- --
Purchase of equity method investments -- (351) (897)
Purchase of subsidiary shares from noncontrolling interests  (109)  (33)  (38)
Decrease (increase) in other assets  72  (38)  69
Net cash provided by ( used in ) investing activities  (1,430)  (1,412)  2,777
 
Himax Technologies, Inc. Unaudited Condensed Consolidated Statements of Cash Flows ( Amounts in T housands of U . S . D ollars)
       
  Three Months Ended June 3 0 , Three Months Ended  March 3 1 ,
  2010 2009 2010
Cash flows from financing activities:      
Distribution of cash dividends $ -- $ (55,496) $ ---
Proceeds from issuance of new shares by subsidiaries  76  55  65
Payments to acquire ordinary shares for retirement  (2,903)  (6,458)  (3,642)
Proceeds from borrowing of short-term debt  160,000 -- --
Repayment of short-term debt  (160,000) -- --
Net cash used in financing activities  (2,827)  (61,899)  (3,577)
Effect of foreign currency exchange rate change s on cash and cash equivalents  (2)   4  2 
Net increase (decrease) in cash and cash equivalents  (1,965) (63,918)  45,008
Cash and cash equivalents at beginning of period  155,932 200,678  110,924
Cash and cash equivalents at end of period $ 153,967 $ 136,760 $ 155,932
       
Supplemental disclosures of cash flow information:      
Cash paid during the period for:      
Interest expense $ 5 $ -- $ --
Income taxes $ 8,196 $ 7,608 $ 47
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 June 30, Three Months Ended March 31,
   20 10  20 09  20 10
Revenues $ 187,707 $ 184,927 $ 175,498
       
Gross profit  38,319  38,388  34,725
Add: Share-based compensation – Cost of revenues  21  13  22
Gross profit excluding share-based compensation  38,340  38,401  34,747
Gross margin excluding share-based compensation  20.4%  20.8%  19.8%
       
Operating income  13,029  14,801  10,125
Add: Share-based compensation  1,842  2,351  1,843
Operating income excluding share-based compensation  14,871  17,152  11,968
Add: Acquisition-related charges –Intangible assets amortization  548  548  548
Operating income excluding share-based compensation and acquisition-related charges  15,419  17,700  12,516
Operating margin excluding share-based compensation and acquisition-related charges  8.2%  9.6%  7.1%
Net income attributable to Himax stockholders  11,968  15,423  9,138
Add: Share-based compensation, net of tax  1,711  2,056  1,656
Add: Acquisition-related charges, net of tax  348  386  409
Net income attributable to Himax stockholders excluding share-based compensation and acquisition-related charges  14,027  17,865  11,203
Net margin attributable to Himax stockholders excluding share-based compensation and acquisition-related charges  7.5%  9.7%  6.4%
       
*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:
     
  Six Months Ended June 30,
   20 10  200 9
Revenues $363,205 $310,583
     
Gross profit 73,044 64,603
Add: Share-based compensation – Cost of revenues 43 26
Gross profit excluding share-based compensation 73,087 64,629
Gross margin excluding share-based compensation 20.1% 20.8%
         
Operating income 23,154 19,624
Add: Share-based compensation 3,685 4,693
Operating income excluding share-based compensation 26,839 24,317
Add: Acquisition-related charges –Intangible assets amortization 1,096 1,096
Operating income excluding share-based compensation and acquisition-related charges 27,935 25,413
Operating margin excluding share-based compensation and acquisition-related charges 7.7% 8.2%
Net income attributable to Himax stockholders 21,106 19,792
Add: Share-based compensation, net of tax 3,367 4,297
Add: Acquisition-related charges, net of tax 757 772
Net income attributable to Himax stockholders excluding share-based compensation and acquisition-related charges 25,230 24,861
Net margin attributable to Himax stockholders excluding share-based compensation and acquisition-related charges 6.9% 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 June 30, 20 10 Six Months Ended June 30, 20 10
Diluted GAAP EPS attributable to Himax stockholders $0.03 $0.06
Add: Share-based compensation per diluted share $-- $0.01
Add: Acquisition-related charges per diluted share $-- $--
     
Diluted non GAAP EPS attributable to Himax stockholders excluding share-based compensation and acquisition-related charges $0.04 $0.07
     
Numbers do not add up due to rounding
CONTACT:  Himax Technologies, Inc.          Max Chan, Chief Financial Officer            +886-2-2370-3999 Ext. 22300            max_chan@himax.com.tw          Investor Relations          Jessie Wang            +886-2-2370-3999 Ext. 22618             jessie_wang@himax.com.tw          Jessica Huang            +886-2-2370-3999 Ext. 22513            jessica_huang@himax.com.tw          The Ruth Group          In the U.S.          Joseph Villalta          +1-646-536-7003          jvillalta@theruthgroup.com