HIMX Himax Technologies Inc

TAINAN, Taiwan, Feb. 12 /PRNewswire-FirstCall/ -- Himax Technologies, Inc. ("Himax" or "Company") (NASDAQ:HIMX) today reported financial results for the fourth quarter and full year ended December 31, 2006. Net revenue for the fourth quarter of 2006 was $220.9 million, compared to $177.3 million for the fourth quarter of 2005, and $177.1 million in the third quarter of 2006. Net income for the fourth quarter of 2006 was $29.4 million, or $0.15 per diluted share, compared to net income of $17.0 million, or $0.09 per diluted share in the fourth quarter of 2005, and $4.6 million, or $0.02 per diluted share in the third quarter of 2006. Share-based compensation was $1.5 million, $4.1 million and $11.5 million in the fourth quarter of 2006, the fourth quarter of 2005 and the third quarter of 2006, respectively. Gross margin in the fourth quarter of 2006 was 18.9%, as compared to 21.2% in the fourth quarter of 2005, and 17.4% in the third quarter of 2006. Operating margin was 10.3% in the fourth quarter of 2006, as compared to 10.8% in the fourth quarter of 2005, and 1.5% in the third quarter of 2006. Excluding share-based compensation, gross margin was 18.9% in the fourth quarter of 2006, 21.3% in the fourth quarter of 2005, and 17.5% in the third quarter of 2006, with an operating margin of 11.0%, 13.1%, and 8.0%, 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, "We are pleased with our fourth quarter results, as our revenue and net income were both record highs since our inception. 2006 was also a remarkable year for Himax. Our revenue of 2006 increased 37.8% compared to the prior year, despite a challenging environment faced by the TFT LCD industry. Moreover, we continued to gain market share. According to iSuppli, our world wide market share for large application in 2006 was approximately 19.6% in 2006, a significant improvement from 15.9% in 2005." Max Chan, Chief Financial Officer of Himax, said, "Our gross margin increased to 18.9% from 17.4% a quarter ago. We were able to achieve cost reductions which more than offset the pricing pressure that we faced in the quarter. Furthermore, small- and medium-sized driver ICs, which typically enjoy a higher gross margin, accounted for approximately 11% of our revenue in the period, up from approximately 9% of our revenue a quarter ago. Total share-based compensation accrued in the fourth quarter was approximately $1.5 million, or $0.01 per diluted share, as compared to $11.5 million, or $0.06 in the third quarter." Looking forward, Mr. Wu added, "For the first quarter of 2007, we expect overall revenue will decline approximately 16% to 18% compared to the fourth quarter of 2006. We expect demand for PC-related and TV panels to decline significantly due to seasonality and customers' control on capacity utilization. However, we expect small- and medium-sized demand will continue to grow as we are adding new customers and products. We expect our gross margin to remain flat; diluted GAAP EPS is expected to decline to the range of $0.08 to $0.09." In the first quarter of 2007, Himax announced closing of Wisepal acquisition. Starting the first quarter the company will be reporting our result on a consolidated basis, including Wisepal. Mr. Wu commented, "We are very pleased with the progress of integration of both companies so far, and we believe this acquisition will greatly strengthen our position in the small- and medium-sized applications." Separately, Himax has completed the share buyback program which the company announced to the market on November 2nd. Since then, a total of approximately 10 million of the company's American Depository Shares have been repurchased from the open market. The repurchased ADSs and their underlying ordinary shares have been cancelled, thereby reducing approximately 5% of the Company's issued and outstanding shares. 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 fourth quarter 2006 results on Monday, February 12, 2007 at 6:00 PM EST (7:00 AM, February 13, 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 228265. 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 Ext. 22300 +886-2-3393-0877 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 Ended Three Months September Ended December 31, 30, 2006 2005 2006 Revenues Revenues from third parties, net $91,920 $78,696 $89,044 Revenues from related parties, net 128,959 98,638 88,061 220,879 177,334 177,105 Costs and expenses: Cost of revenues 179,214 139,664 146,287 Research and development 13,642 13,957 22,685 General and administrative 3,108 2,556 3,027 Sales and marketing 2,150 2,018 2,364 Total costs and expenses 198,114 158,195 174,363 Operating income 22,765 19,139 2,742 Non operating income (loss): Interest income 1,812 323 2,000 Impairment loss on an investment --- (129) --- Foreign exchange gains (losses), net 356 135 (1,298) Interest expense --- (114) --- Other income (loss), net 61 (92) 59 2,229 123 761 Income before income taxes and minority interest 24,994 19,262 3,503 Income tax (benefit) expense (4,211) 2,313 (1,246) Income before minority interest 29,205 16,949 4,749 Minority interest, net of tax 183 31 (157) Net income $29,388 $16,980 $4,592 Basic earnings per ordinary share and ADS $0.15 $0.10 $0.02 Diluted earnings per ordinary share and ADS $0.15 $0.09 $0.02 Basic Weighted Average Outstanding Shares 198,147 176,854 197,110 Diluted Weighted Average Outstanding Shares 199,518 180,707 199,729 Himax Technologies, Inc. Unaudited Supplemental Financial Information (Figures in Thousands of U.S. Dollars) Three Months Three Months Ended September Ended December 31, 30, 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 $25 $89 $208 Research and development 1,161 3,033 8,963 General and administrative 151 380 1,090 Sales and marketing 156 628 1,195 Total $1,493 $4,130 $11,456 Himax Technologies, Inc. Unaudited Condensed Consolidated Statements of Income (Figures in Thousands of U.S. Dollars, Except Per Share Data) Twelve Months Ended December 31, 2006 2005 Revenues Revenues from third parties, net $331,025 $217,420 Revenues from related parties, net 413,493 322,784 744,518 540,204 Costs and expenses: Cost of revenues 601,565 419,380 Research and development 58,832 41,278 General and administrative 9,527 6,784 Sales and marketing 6,618 4,762 Total costs and expenses 676,542 472,204 Operating income 67,976 68,000 Non operating income (loss): Interest income 5,860 580 Impairment loss on an investment (1,500) (129) Foreign exchange gains, net 224 1,808 Interest expense (311) (125) Other income, net 233 124 4,506 2,258 Income before income taxes and minority interest 72,482 70,258 Income tax (benefit) expense (2,720) 8,923 Income before minority interest 75,202 61,335 Minority interest, net of tax 242 223 Net income $75,444 $61,558 Basic earnings per ordinary share and ADS $0.39 $0.35 Diluted earnings per ordinary share and ADS $0.39 $0.34 Himax Technologies, Inc. Unaudited Condensed Consolidated Balance Sheets (Figures in Thousands of U.S. Dollars) Dec 31, Sep 30, Dec 31, 2006 2006 2005 Assets Current assets: Cash and cash equivalents $109,753 $155,594 $7,086 Marketable securities available-for-sale 8,828 4,072 3,989 Restricted cash equivalents and marketable securities 108 31 14,053 Accounts receivable, less allowance for sales returns and discounts 113,521 101,660 80,158 Accounts receivable from related parties 116,096 71,530 69,688 Inventories 101,341 106,977 105,004 Deferred income taxes 6,721 11,202 8,965 Prepaid expenses and other current assets 10,404 20,622 11,113 Total current assets $466,772 $471,688 $300,056 Property and equipment, net 41,918 34,946 24,426 Deferred income taxes 11,454 134 151 Intangible assets, net 393 61 81 Investments in non-marketable securities 817 1,723 1,813 Refundable deposits 550 603 712 55,132 37,467 27,183 Total assets $521,904 $509,155 $327,239 Liabilities, minority interest and stockholders' equity Current liabilities: Short-term debt $--- $--- $27,274 Current portion of long-term debt --- --- 89 Accounts payable 120,407 106,829 105,801 Income tax payable 14,385 11,783 13,625 Other accrued expenses and other current liabilities 21,274 16,029 13,995 Total current liabilities $156,066 $134,641 $160,784 Other liabilities 191 --- --- Total liabilities $156,257 $134,641 $160,784 Minority interest $1,397 $1,054 $624 Stockholders' equity: Ordinary share, US$0.0001 par value, 500,000,000 shares authorized 19 19 18 Additional paid-in capital 221,666 260,031 98,450 Accumulated other comprehensive income (207) 27 36 Unappropriated earnings 142,772 113,383 67,327 Total stockholders' equity $364,250 $373,460 $165,831 Total liabilities, minority interest and stockholders' equity $521,904 $509,155 $327,239 Himax Technologies, Inc. Unaudited Condensed Consolidated Statements of Cash Flows (Figures in Thousands of U.S. Dollars) Three Months Ended Three Months September Ended December 31, 30, 2006 2005 2006 Cash flows from operating activities: Net income $29,388 $16,980 $4,592 Adjustments to reconcile net income to net cash provided (used in) by operating activities: Depreciation and amortization 1,869 942 1,119 Share-based compensation expenses 1,493 4,130 11,456 Minority interest, net of tax (183) (31) 157 Gain on sale of marketable securities, net (61) 89 (23) Impairment loss on an investment --- 129 --- Deferred income taxes (6,842) (2,110) 132 Inventories write down 2,691 708 469 Changes in operating assets and liabilities: Accounts receivable (11,840) (24,561) (14,772) Accounts receivable from related parties (44,346) (6,663) (5,096) Inventories 6,885 (27,581) (7,838) Prepaid expenses and other current assets 6,285 (5,768) (4,497) Accounts payable 13,563 (1,731) 8,815 Income tax payable 2,601 4,485 (1,075) Other accrued expenses and other current liabilities 1,327 3,690 3,477 Net cash provided by (used in) operating activities 2,830 (37,292) (3,084) Cash flows from investing activities: Purchase of land, property and equipment (5,628) (1,746) (5,691) Purchase of available-for-sales marketable securities (12,678) --- (10,608) Sales and maturities of available-for-sale marketable securities 7,940 1,442 8,480 Proceeds from sale of subsidiary shares by Himax Technologies Limited 937 51 27 Purchase of investments in non-marketable securities --- --- (1,410) Purchase of subsidiary shares from minority interest (37) (457) (64) Return of (increase in) refundable deposits 62 (364) (92) Release (pledge) of restricted cash equivalents and marketable securities (74) (13,614) 424 Net cash used in investing activities (9,478) (14,688) (8,934) Himax Technologies, Inc. Unaudited Condensed Consolidated Statements of Cash Flows (Figures in Thousands of U.S. Dollars) Three Months Ended Three Months September Ended December 31, 30, 2006 2005 2006 Cash flows from financing activities: Proceeds from issuance of ordinary shares (393) (14,487) --- Proceeds from issuance of new shares by subsidiaries --- 866 655 Shares buyback for canceling (38,835) --- --- Proceeds from short-term debt --- 27,274 --- Repayment of long-term debt --- (42) --- Net cash provided (used in) by financing activities (39,228) 13,611 655 Effect of exchange rate changes on cash and cash equivalents 15 4 73 Net decrease in cash and cash equivalents (45,861) (38,365) (11,290) Cash and cash equivalents at beginning of period 155,594 45,451 166,884 Cash received from the acquisition of subsidiary 20 --- --- Cash and cash equivalents at end of period $109,753 $7,086 $155,594 Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $--- $114 $--- Income taxes $18 $13 $21 Supplemental disclosures of non-cash investing and financing activities: Increase (Decrease) in payable for purchase of equipment and construction in progress $4,481 $(768) $(1,750) Himax Technologies, Inc. Unaudited Condensed Consolidated Statements of Cash Flows (Figures in Thousands of U.S. Dollars) Twelve Months Ended December 31, 2006 2005 Cash flows from operating activities: Net income $75,444 $61,558 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 5,410 3,613 Share-based compensation expenses 15,150 8,613 Minority interest, net of tax (242) (223) Loss (gain) on disposal of property and equipment 36 (19) Gain on sale of marketable securities, net (197) (105) Impairment loss on an investment 1,500 129 Deferred income taxes (9,066) (3,371) Inventories write down 9,417 927 Changes in operating assets and liabilities: Accounts receivable (33,286) (53,297) Accounts receivable from related parties (46,245) (30,403) Inventories (5,755) (51,839) Prepaid expenses and other current assets 751 (6,413) Accounts payable 14,591 67,152 Income tax payable 803 10,852 Other accrued expenses and other current liabilities 2,863 5,290 Net cash provided by operating activities 31,174 12,464 Cash flows from investing activities: Purchase of land, property and equipment (19,270) (14,733) Purchase of available-for-sales marketable securities (31,911) (38,048) Sales and maturities of available-for-sale marketable securities 27,128 42,028 Proceeds from sale of subsidiary shares by Himax Technologies Limited 1,143 51 Purchase of investments in non-marketable securities (1,410) --- Purchase of subsidiary shares from minority interest (208) (523) Return of (increase in) refundable deposits 170 (414) Release (pledge) of restricted cash equivalents and marketable securities 13,946 (13,724) Net cash used in investing activities (10,412) (25,363) Himax Technologies, Inc. Unaudited Condensed Consolidated Statements of Cash Flows (Figures in Thousands of U.S. Dollars) Twelve Months Ended December 31, 2006 2005 Cash flows from financing activities: Distribution of special cash dividends --- (13,558) Proceeds from issuance of ordinary shares 147,407 --- Proceeds from issuance of new shares by subsidiaries 668 866 Shares buyback for canceling (38,835) --- Proceeds from borrowing of short-term debt 11,303 27,274 Repayment of short-term debt (38,577) --- Repayment of long-term debt (89) (178) Net cash provided by financing activities 81,877 14,404 Effect of exchange rate changes on cash and cash equivalents 8 4 Net increase in cash and cash equivalents 102,647 1,509 Cash and cash equivalents at beginning of period 7,086 5,577 Cash received from the acquisition of subsidiary 20 --- Cash and cash equivalents at end of period $109,753 $7,086 Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $311 $125 Income taxes $5,603 $1,130 Supplemental disclosures of non-cash investing and financing activities: Increase (Decrease) in payable for purchase of equipment and construction in progress $3,606 $(2,285) 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 Ended Three Months September Ended December 31, 30, 2006 2005 2006 Revenues $220,879 $177,334 $177,105 Gross profit 41,665 37,670 30,818 Add: Share-based compensation - Cost of revenues 25 89 208 Gross profit excluding share-based compensation 41,690 37,759 31,026 Gross margin excluding share-based compensation 18.9 % 21.3 % 17.5 % Operating income 22,765 19,139 2,742 Add: Share-based compensation 1,493 4,130 11,456 Operating income excluding share-based compensation 24,258 23,269 14,198 Operating margin excluding share-based compensation 11.0 % 13.1 % 8.0 % *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 December 31, 2006 Diluted GAAP EPS $0.15 Add: Estimated share-based compensation per diluted share $0.01 Diluted non GAAP EPS excluding share-based compensation $0.16 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, Web site: http://www.himax.com.tw/

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