HIMX Himax Technologies Inc

TAINAN, Taiwan, Aug. 9 /PRNewswire-FirstCall/ -- Himax Technologies, Inc. ("Himax" or "Company")(NASDAQ:HIMX) today reported financial results for the second quarter ended June 30, 2006. Net revenue for the second quarter of 2006 was $171.7 million, a 53.8% increase as compared to $111.6 million for the second quarter of 2005, and a 1.8% decrease as compared to $174.9 million in the first quarter of 2006. Net income for the second quarter of 2006 was $19.5 million, or $0.10 per diluted share, representing a 49.4% increase compared to net income of $13.1 million, or $0.07 per diluted share in the second quarter of 2005, and an 11.0% decrease compared to $21.9 million, or $0.12 per diluted share in the first quarter of 2006. Share-based compensation was $1.1 million, $1.5 million and $1.1 million in the second quarter of 2006, the second quarter of 2005 and the first quarter of 2006, respectively. Gross margin in the second quarter of 2006 was 19.2%, as compared to 22.8% in the second quarter of 2005, and 21.5% in the first quarter of 2006. Operating margin was 11.0% in the second quarter of 2006, as compared to 12.8% in the second quarter of 2005, and 13.5% in the first quarter of 2006. Excluding share-based compensation, gross margin was 19.2% in the second quarter of 2006, 22.8% in the second quarter of 2005, and 21.5% in the first quarter of 2006, with an operating margin of 11.6% 14.1%, and 14.1%, respectively. A reconciliation of our gross margin and operating margin excluding share-based compensation, a non-GAAP financial measure, to GAAP gross margin and GAAP operating margin, our most comparable GAAP figure, is set out in the attached reconciliation schedule. Jordan Wu, President and Chief Executive Officer of Himax, commented, "The second quarter was a challenging one for panel and component manufacturers alike. We achieve revenues which was in line with prior guidance notwithstanding the negative business environment. Notably, while our revenue from related parties declined in the quarter due to short-term inventory adjustments, our revenue from non-affiliate parties increased. Overall, we think our more diversified customer mix puts us in a stronger position now than before." Max Chan, Chief Financial Officer of Himax, said, "Our operating income for the second quarter increased 32.4% to $18.9 million from $14.3 million for the same period a year ago and decreased 20.0% compared to $23.6 million in the first quarter 2006. This primarily reflects the above average price pressure facing the industry. Due to the difficult market conditions in the second quarter, our blended gross margin came in at the low-end of our historical range." Looking forward, Mr. Wu added, "We expect the business environment in the third quarter of 2006 will be slightly better than the second quarter of 2006. Overall, we expect net revenue in the third quarter of 2006 to grow in the range of mid to high single digit rate as compared to the second quarter of 2006. Our Non-GAAP diluted EPS, excluding share-based compensation is expected to be at a similar level as that of the second quarter. We expect diluted GAAP EPS to be in the range of $0.03 to $0.04. This includes a charge of share-based compensation of approximately $12 to $14 million, or $0.06 to $0.07 per diluted share. The expected increase in share-based compensation is due to new grants of restricted share units, which is expected to occur at the end of September 2006." A reconciliation of our diluted EPS excluding share-based compensation, a non-GAAP financial measure, to diluted GAAP EPS, our most comparable GAAP figure, is set out in the attached reconciliation schedule. Investor Conference Call / Webcast Details The Company's management will review detailed second quarter 2006 results on Wednesday, August 9, 2006 at 7:00 PM EST (7:00 AM, August 10, Taiwan time). The conference call-in number is +1-201-689-8560 (international) and +1-877-407-0784 (U.S. domestic). A live webcast of the conference call will be available on the Company's website at http://www.himax.com.tw/. The playback will be available beginning two hours after the conclusion of the conference call and will be accessible by dialing +1-201-612-7415 (international) and 1-877-660-6853 (U.S. domestic). The account number to access the replay is 3055 and the confirmation ID number is 207865. 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 digital cameras, mobile gaming devices and car navigation displays. In addition, the Company is expanding its product offering to include LCD TV chipset solutions and LCOS microdisplays. Based in Tainan, Taiwan, the Company has regional offices in Hsinchu and Taipei, Taiwan; Suzhou and Shenzhen, China; Yokohama, Japan and Anyangsi Kyungkido, South Korea. Contacts: Max Chan Jackson Ko Chief Financial Officer Investor Relations Himax Technologies, Inc. Himax Technologies, Inc. +886-2-3393-0877 +886-2-3393-0877 Ext. 22300 Ext. 22240 In the U.S. David Pasquale The Ruth Group 646-536-7006 Forward-Looking Statements: Certain statements in this press release, including statements regarding expected future financial results and industry growth, are forward-looking statements that involve a number of risks and uncertainties that could cause actual events or results to differ materially from those described in this press release. Factors that could cause actual results to differ include general business and economic conditions and the state of the semiconductor industry; level of competition; demand for end-use applications products; reliance on a small group of principal customers; continued success in technological innovations; development of alternative flat panel display technologies; ability to develop and protect our intellectual property; pricing pressures including declines in average selling prices; changes in customer order patterns; shortages in supply of key components; changes in environmental laws and regulations; exchange rate fluctuations; regulatory approvals for further investments in our subsidiaries; and other risks described from time to time in the Company's SEC filings, including its Form F-1 dated March 13, 2006, as amended. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. 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.) (Figures in Thousands of U.S. Dollars, Except Per Share Data) Three Months Three Months Ended Ended June 30, Mar 31, 2006 2005 2006 Revenues Revenues from third parties, net $84,634 $42,790 $65,427 Revenues from related parties, net 87,041 68,843 109,432 171,675 111,633 174,859 Costs and expenses: Cost of revenues 138,766 86,214 137,298 Research and development 11,603 8,896 10,902 General and administrative 1,334 1,392 2,058 Sales and marketing 1,097 873 1,007 Total costs and expenses 152,800 97,375 151,265 Operating income 18,875 14,258 23,594 Non operating income (loss): Interest income 1,843 48 205 Impairment loss on an investment (1,500) --- --- Foreign exchange gains (losses), net 1,398 676 (232) Interest expense (27) --- (284) Other income, net 58 87 55 1,772 811 (256) Income before income taxes and minority interest 20,647 15,069 23,338 Income tax expense 1,246 2,047 1,491 Income before minority interest 19,401 13,022 21,847 Minority interest, net of tax 124 47 92 Net income $19,525 $13,069 $21,939 Basic earnings per ordinary share and ADS $0.10 $0.07 $0.12 Diluted earnings per ordinary share and ADS $0.10 $0.07 $0.12 Basic Weighted Average Outstanding Shares 195,535 175,660 178,575 Diluted Weighted Average Outstanding Shares 198,512 180,464 182,271 Himax Technologies, Inc. Unaudited Supplemental Financial Information (Figures in Thousands of U.S. Dollars) Three Months Three Months Ended Ended June 30, Mar 31, The amount of share-based compensation included in applicable costs and expenses categories is summarized as follows: 2006 2005 2006 Share-based compensation Cost of revenues $18 $33 $24 Research and development 818 1,126 864 General and administrative 98 166 105 Sales and marketing 129 203 145 Total $1,063 $1,528 $1,138 Himax Technologies, Inc. Unaudited Condensed Consolidated Statements of Income (Figures in Thousands of U.S. Dollars, Except Per Share Data) Six Months Ended June 30, 2006 2005 Revenues Revenues from third parties, net $150,061 $73,041 Revenues from related parties, net 196,473 135,009 346,534 208,050 Costs and expenses: Cost of revenues 276,064 161,241 Research and development 22,505 17,087 General and administrative 3,392 2,579 Sales and marketing 2,104 1,691 Total costs and expenses 304,065 182,598 Operating income 42,469 25,452 Non operating income (loss): Interest income 2,048 50 Impairment loss on an investment (1,500) --- Foreign exchange gains, net 1,166 484 Interest expense (311) (7) Other income, net 113 131 1,516 658 Income before income taxes and minority interest 43,985 26,110 Income tax expense 2,737 3,008 Income before minority interest 41,248 23,102 Minority interest, net of tax 216 100 Net income $41,464 $23,202 Basic earnings per ordinary share and ADS $0.22 $0.13 Diluted earnings per ordinary share and ADS $0.22 $0.13 Himax Technologies, Inc. Unaudited Condensed Consolidated Balance Sheets (Figures in Thousands of U.S. Dollars) Jun 30, Mar 31, Dec 31, 2006 2006 2005 Assets Current assets: Cash and cash equivalents $166,884 $31,247 $7,086 Marketable securities available-for-sale 1,930 3,150 3,989 Restricted cash equivalents and marketable securities 395 14,558 14,053 Accounts receivable, less allowance for sales returns and discounts 86,907 73,178 80,158 Accounts receivable from related parties 66,434 71,540 69,688 Inventories 99,605 99,539 105,004 Deferred income taxes 11,331 9,645 8,965 Prepaid expenses and other current assets 16,142 10,328 11,113 Total current assets $449,628 $313,185 $300,056 Property and equipment, net 29,128 25,943 24,426 Deferred income taxes 135 145 151 Intangible assets, net 68 74 81 Investments in non-marketable securities 313 1,813 1,813 Refundable deposits 511 488 712 30,155 28,463 27,183 Total assets $479,783 $341,648 $327,239 Liabilities and stockholders' equity Current liabilities: Short-term debt $--- $38,577 $27,274 Current portion of long-term debt --- --- 89 Accounts payable 98,015 85,489 105,801 Income tax payable 12,858 15,915 13,625 Other accrued expenses and other current liabilities 11,985 12,167 13,995 Total current liabilities $122,858 $152,148 $160,784 Minority interest $449 $609 $624 Stockholders' equity: Ordinary share, US$0.0001 par value, 500,000,000 shares authorized 19 18 18 Additional paid-in capital 247,653 99,570 98,450 Accumulated other comprehensive income 13 37 36 Unappropriated earnings 108,791 89,266 67,327 Total stockholders' equity $356,476 $188,891 $165,831 Total liabilities and stockholders' equity $479,783 $341,648 $327,239 Himax Technologies, Inc. Unaudited Condensed Consolidated Statements of Cash Flows (Figures in Thousands of U.S. Dollars) Three Months Three Months Ended Ended June 30, March 31, 2006 2005 2006 Cash flows from operating activities: Net income $19,525 $13,069 $21,939 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,204 892 1,218 Share-based compensation expenses 1,063 1,528 1,138 Minority interest, net of tax (124) (47) (92) Loss on disposal of property and equipment 5 --- 31 Gain on sale of marketable securities, net (55) (80) (58) Impairment loss on an investment 1,500 --- --- Deferred income taxes (1,677) (749) (679) Changes in operating assets and liabilities: Accounts receivable (13,672) (15,520) 6,998 Accounts receivable from related parties 5,076 (4,633) (1,879) Inventories (4,009) 1,972 5,464 Prepaid expenses and other current assets (2,838) (1,823) 1,801 Accounts payable 12,525 18,716 (20,312) Income tax payable (3,056) 1,764 2,333 Other accrued expenses and other current liability (195) 678 (1,746) Net cash provided by operating activities 15,272 15,767 16,156 Cash flows from investing activities: Purchase of land, property and equipment (4,065) (1,060) (3,886) Purchase of available-for-sales marketable securities (8,625) (13,801) --- Sales and maturities of available-for-sale marketable securities 9,830 19,785 878 Proceeds from sale of subsidiary shares by Himax Technologies Limited 55 --- 124 Purchase of subsidiary shares from minority interest (84) (11) (23) Return of (increase in) refundable deposits (23) (336) 223 Release (pledge) of restricted cash equivalents and marketable securities 14,101 42 (505) Net cash provided by (used in) investing activities 11,189 4,619 (3,189) Himax Technologies, Inc. Unaudited Condensed Consolidated Statements of Cash Flows (Figures in Thousands of U.S. Dollars) Three Months Three Months Ended Ended June 30, March 31, 2006 2005 2006 Cash flows from financing activities: Proceeds from issuance of ordinary shares 147,813 --- --- Proceeds from borrowing of short-term debt --- --- 11,303 Repayment of short-term debt (38,577) --- --- Repayment of long-term debt --- (46) (89) Net cash provided by (used in) financing activities 109,236 (46) 11,214 Effect of exchange rate changes on cash and cash equivalents (60) --- (20) Net increase in cash and cash equivalents 135,637 20,340 24,161 Cash and cash equivalents at beginning of period 31,247 7,822 7,086 Cash and cash equivalents at end of period $166,884 $28,162 $31,247 Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $28 $--- $283 Income taxes $5,549 $1,090 $15 Supplemental disclosures of non-cash investing and financing activities: Increase (decrease) in payable for purchase of equipment and construction in progress $(18) $(191) $893 Himax Technologies, Inc. Unaudited Supplemental Data - Reconciliation Schedule (Figures in Thousands of U.S. Dollars, Except Per Share Data) Gross Margin and Operating Margin Excluding Share-based Compensation: Three Months Three Months Ended Ended June 30, Mar 31, 2006 2005 2006 Revenues $171,675 $111,633 $174,859 Gross profit 32,909 25,419 37,561 Add: Share-based compensation - Cost of revenues 18 33 24 Gross profit excluding share-based compensation 32,927 25,452 37,585 Gross margin excluding share-based compensation 19.2 % 22.8 % 21.5 % Operating income 18,875 14,258 23,594 Add: Share-based compensation 1,063 1,528 1,138 Operating income excluding share-based compensation 19,938 15,786 24,732 Operating margin excluding share-based compensation 11.6 % 14.1 % 14.1 % * Gross margin excluding share-based compensation equals gross profit excluding share-based compensation divided by revenues * Operating margin excluding share-based compensation equals operating income excluding share-based compensation divided by revenues Diluted Earnings Per Share Excluding Share-based Compensation: Three Months Ended June 30, 2006 Diluted GAAP EPS $0.10 Add: Estimated share-based compensation per diluted share $0.01 Diluted non GAAP EPS excluding share-based compensation $0.10 Numbers do not add up due to rounding DATASOURCE: Himax Technologies, Inc. CONTACT: Max Chan, Chief Financial Officer, +886-2-3393-0877 Ext. 22300, , or Jackson Ko, Investor Relations, +886-2-3393-0877 Ext. 22240, , both of Himax Technologies, Inc.; or In the U.S.: David Pasquale of The Ruth Group, +1-646-536-7006, , for Himax Technologies, Inc. Web site: http://himax.com.tw/

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