Himax Reports Second Quarter 2010 Financial Results

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.