Form
20-F
|
X
|
Form
40-F
|
Yes
|
No
|
X
|
Yes
|
No
|
X
|
Yes
|
No
|
X
|
Exhibit
|
|
99.1
|
Himax
Technologies, Inc. Notice of Annual General Meeting of
Members
|
99.2
|
Himax
Technologies, Inc. Proxy Statement
|
99.3
|
Himax
Technologies, Inc. 2006 Annual
Report
|
HIMAX
TECHNOLOGIES, INC.
|
|
By:
|
/s/
Max
Chan
|
Name:
Max Chan
|
|
Title:
Chief Financial Officer
|
DEPOSITARY
RECEIPTS
|
August
6, 2007
|
Issue:
|
Himax
Technologies, Inc. / Cusip 43289P106
|
Country:
|
Cayman
Islands
|
Meeting
Details:
|
Annual General
Meeting of Shareholders of Himax Technologies ,Inc. on August 22,
2007
at the Incubator of Tainan Science Park, Room B101
(International Conference Hall) No. 12, Nanke 2nd
Road, Tainan
Science Park, Tainan County, Taiwan 9:00 a.m. (Local
Time).
|
Meeting
Agenda:
|
The
Company's Notice of Meeting including the Agenda and the
Proxy Statement are
attached
|
Voting
Deadline:
|
On
or before August 17, 2007 at 3:00 PM (New York City
time)
|
ADR
Record Date:
|
June
25, 2006
|
Ordinary:
ADR ratio
|
1
Ordinary Shares: 1 ADR
|
152.
|
Subject
to Articles 153 and 154, a
printed copy of the Directors’ report, accompanied by the balance sheet
and profit and loss account, including every document required
by law to
be annexed thereto, made up to the end of the applicable financial
year
and containing a summary of the assets and liabilities of the Company
under convenient heads and a statement of income and expenditure,
together
with a copy of the Auditors’ report, shall be sent to each person entitled
thereto at least ten (10) days before the date of the general meeting
and
|
|
laid
before the Company at the annual general meeting held in accordance
with
Article 56 provided that this Article shall not require a copy
of those
documents to be sent to any person whose address the Company
is not aware
or to more than one of the joint holders of any shares or
debentures.
|
154.
|
The
requirement to send to a person referred to in Article 152 the
documents
referred to in that article or a summary financial report in accordance
with Article 153 shall be deemed satisfied where, in accordance
with all
applicable Statutes, rules and regulations, including, without
limitation,
the rules of the Designated Stock Exchange, the Company publishes
copies
of the documents referred to in Article 152 and, if applicable,
a summary
financial report complying with Article 153, on the Company’s computer
network or in any other permitted manner (including by sending
any form of
electronic communication)
|
Himax
Technologies, Inc.
|
||
By:
|
/s/ Jordan Wu | |
Name:
|
Jordan
Wu
|
|
Title:
|
Director
|
Contents
|
|
Special
Note
Regarding Forward-Looking Statements
|
3
|
Selected
Financial Data
|
4
|
Information
on
the Company
|
6
|
Business
Overview
|
8
|
Critical
Accounting Policies and Estimates
|
24
|
Operating
Results
|
28
|
Directors,
Senior Management and Employees
|
36
|
Consolidated
Financial Statements
|
43
|
Corporate
Information
|
87
|
Year
Ended
December 31,
|
||||||||||||||||||||
2002
|
2003
|
2004
|
2005
|
2006
|
||||||||||||||||
(in
thousands,
except per share data)
|
||||||||||||||||||||
Consolidated
Statements of Income Data:
|
||||||||||||||||||||
Revenues,
net
|
$ |
56,478
|
$ |
131,843
|
$ | 300,273 | $ |
540,204
|
$ |
744,518
|
||||||||||
Costs
and
expenses(1):
|
||||||||||||||||||||
Cost
of
revenues
|
45,313
|
100,102
|
235,973
|
419,380
|
601,565
|
|||||||||||||||
Research
and
development
|
7,800
|
21,077
|
24,021
|
41,278
|
60,655
|
|||||||||||||||
General
and
administrative
|
1,489
|
4,614
|
4,654
|
6,784
|
9,762
|
|||||||||||||||
Sales
and
marketing
|
884
|
2,669
|
2,742
|
4,762
|
6,970
|
|||||||||||||||
Operating
income
|
992
|
3,381
|
32,883
|
68,000
|
65,566
|
|||||||||||||||
Net
income
(loss)(2)
|
$ |
513
|
$ | (581 | ) | $ |
36,000
|
$ |
61,558
|
$ |
75,190
|
|||||||||
Earnings
(loss) per ordinary share(2) and per
|
||||||||||||||||||||
ADS(3):
|
||||||||||||||||||||
Basic
|
$ |
0.00
|
$ | (0.00 | ) | $ |
0.21
|
$ |
0.35
|
$ |
0.39
|
|||||||||
Diluted
|
$ |
0.00
|
$ | (0.00 | ) | $ |
0.21
|
$ |
0.34
|
$ |
0.39
|
|||||||||
Weighted-average
number of shares used in
|
||||||||||||||||||||
earnings
per
share computation:
|
||||||||||||||||||||
Basic
|
103,276
|
116,617
|
169,320
|
176,105
|
192,475
|
|||||||||||||||
Diluted
|
104,739
|
116,617
|
173,298
|
180,659
|
195,090
|
|||||||||||||||
Cash
dividends
declared per ordinary
|
||||||||||||||||||||
share(4)
|
$ |
0.00
|
$ |
0.00
|
$ |
0.00
|
$ |
0.08
|
$ |
0.00
|
Year
Ended
December 31,
|
||||||||||||||||||||
2002
|
2003
|
2004
|
2005
|
2006
|
||||||||||||||||
(in
thousands)
|
||||||||||||||||||||
Cost
of
revenues
|
$ |
172
|
$ |
827
|
$ |
291
|
$ |
188
|
$ |
275
|
||||||||||
Research
and
development
|
3,057
|
11,666
|
4,288
|
6,336
|
11,806
|
|||||||||||||||
General
and
administrative
|
353
|
2,124
|
721
|
848
|
1,444
|
|||||||||||||||
Sales
and
marketing
|
348
|
1,349
|
537
|
1,241
|
1,625
|
|||||||||||||||
Total
|
$ |
3,930
|
$ |
15,966
|
$ |
5,837
|
$ |
8,613
|
$ |
15,150
|
(2)
|
Under
the ROC
Statute for Upgrading Industries, we are exempt from income taxes
for
income attributable to expanded production capacity or newly developed
technologies. If we had not been exempt from paying this income
tax, net
income and basic and diluted earnings per share would have been
$29.7
million, $0.18 and $0.17, respectively, for the year ended December
31,
2004, $52.4 million, $0.30 and $0.29, respectively, for the year
ended
December 31, 2005 and $59.2 million, $0.31 and $0.30, respectively,
for
the year ended December 31, 2006. A portion of this tax exemption
expires
on March 31, 2009 and the remainder on December 31,
2010.
|
(3)
|
Each
ADS
represents one ordinary share.
|
(4)
|
In
November 2005, we distributed a special cash dividend of approximately
$0.08 per share in respect of our performance prior to our initial
public
offering. This special cash dividend should not be considered
representative of the dividends that would be paid in any future
periods
or our dividend policy.
|
As
of December
31,
|
||||||||||||||||||||
2002
|
2003
|
2004
|
2005
|
2006
|
||||||||||||||||
(in
thousands)
|
||||||||||||||||||||
Consolidated
Balance Sheet Data:
|
||||||||||||||||||||
Cash
and cash
equivalents(1)
|
$ |
2,697
|
$ |
2,529
|
$ |
5,577
|
$ |
7,086
|
$ |
109,753
|
||||||||||
Accounts
receivable, net
|
1,637
|
12,543
|
27,016
|
80,259
|
112,767
|
|||||||||||||||
Accounts
receivable from related parties, net
|
4,786
|
22,893
|
39,129
|
69,587
|
116,850
|
|||||||||||||||
Inventories
|
12,056
|
21,088
|
54,092
|
105,004
|
101,341
|
|||||||||||||||
Total
current
assets
|
26,885
|
88,245
|
144,414
|
300,056
|
466,715
|
|||||||||||||||
Total
assets
|
29,423
|
96,159
|
157,770
|
327,239
|
518,794
|
|||||||||||||||
Accounts
payable
|
5,803
|
22,901
|
38,649
|
105,801
|
120,407
|
|||||||||||||||
Total
current
liabilities
|
11,750
|
43,613
|
52,157
|
160,784
|
153,279
|
|||||||||||||||
Total
liabilities
|
11,975
|
43,870
|
52,246
|
160,784
|
153,471
|
|||||||||||||||
Ordinary
Shares
|
11
|
17
|
18
|
18
|
19
|
|||||||||||||||
Total
stockholders’ equity (5)
|
17,448
|
52,289
|
104,860
|
165,831
|
363,927
|
|||||||||||||||
Consolidated
Cash Flow Data:
|
||||||||||||||||||||
Net
cash
provided by (used in) operating activities
|
(3,884 | ) | (1,593 | ) | (8,688 | ) |
12,464
|
29,696
|
||||||||||||
Net
cash
provided by (used in) investing activities
|
(7,130 | ) | (28,915 | ) |
11,001
|
(25,363 | ) | (8,927 | ) | |||||||||||
Net
cash
provided by financing activities
|
11,644
|
30,341
|
735
|
14,404
|
81,886
|
|||||||||||||||
Effect
of
exchange rate changes on cash and
|
||||||||||||||||||||
cash
equivalents
|
–
|
–
|
–
|
4
|
12
|
|||||||||||||||
Net
increase
(decrease) in cash and
|
||||||||||||||||||||
cash
equivalents
|
630
|
(167 | ) |
3,048
|
1,509
|
102,667
|
•
|
Display
Driver. The display driver receives image data from the timing
controller and delivers precise analog voltages or currents to
create
images on the display. The two main types of display drivers for
a TFT-LCD
panel are gate drivers and source drivers. Gate drivers turn on
the
transistor within each pixel cell on the horizontal line on the
panel for
data input at each row. Source drivers receive image data from
the timing
controller and generate voltage that is applied to the liquid crystal
within each pixel cell on the vertical line on the panel for data
input at
each column. The combination determines the colors generated by
each
pixel. Typically multiple gate drivers and source drivers are installed
separately on the panel. However, for certain small- and medium-sized
applications, gate drivers and source drivers are integrated into
a single
chip due to space and cost considerations. Large-sized
panels typically have higher resolution and require more display
drivers
than small- and medium-sized
panels.
|
•
|
Timing
Controller. The timing controller receives image data and converts
the format for the source drivers’ input. The timing controller also
generates controlling signals for gate and source drivers. Typically
the
timing controller is a discrete semiconductor in large-sized TFT-LCD
panels. For certain small- and medium-sized applications, however,
the
timing controller may be integrated with display
drivers.
|
|
•
|
Scaler.
For certain displays, a scaler is installed to magnify or
shrink
image data in order for the image to fill the
panel.
|
•
|
Operational
Amplifier. An operational amplifier supplies the reference voltage to
source drivers in order to make their output voltage
uniform.
|
•
|
Television
Chipset. Television flat panel displays require chipsets that
typically contain all or some of the following components: an audio
processor, analog interfaces, digital interfaces, a video processor,
a
channel receiver and a digital television decoder. See
“-Products-Television
|
Semiconductor
Solutions-Television Chipsets” for a description of these
components.
|
•
|
Others.
Flat panel displays also require multiple general purpose
semiconductors such as memory, power converters and
inverters.
|
•
|
display
drivers and timing controllers;
|
•
|
television
semiconductor solutions; and
|
•
|
LCOS
products.
|
•
|
Resolution
and Number of Channels. Resolution refers to the number of pixels per
line multiplied by the number of lines, which determines the level
of fine
detail within an image displayed on a panel. For example, a color
display
screen with 1,024 x 768 pixels has 1,024 red columns, 1,024 green
columns
and 1,024 blue columns for a total of 3,072 columns and 768 rows.
The red,
green and blue columns are commonly referred to as “RGB.” Therefore, the
display drivers need to drive 3,072 column outputs and 768 row
outputs.
The number of display drivers required for each panel depends on
the
resolution. For example, an XGA (1,024 x 768 pixels) panel requires
eight
384 channel source drivers (1,024 x 3 = 384 x 8) and three 256
channel
gate drivers (768 = 256 x 3), while a SXGA (1,280 x 1,024 pixels)
panel
requires ten 384 channel source drivers and four 256 channel gate
drivers.
The
number of display drivers required can be reduced by using drivers
with a
higher number of channels. For example, a SXGA panel can have eight
480
channel source drivers or four 960 channel source drivers instead
of ten
384 channel source drivers. Thus, using display drivers with a
higher
number of channels can reduce the number of display drivers required
for
each panel, although display drivers with a higher number of channels
typically have higher unit
costs.
|
•
|
Color
Depth. Color depth is the number of colors that can be displayed
on a
screen, which is determined by the number of shades of a color,
also known
as grayscale, that can be shown by the panel. For example, a 6-bit
source
driver is capable of generating 26 x
26 x
26 =
218,
or 262K
colors, and similarly, an 8-bit source driver is capable of generating
16
million colors. Typically, for TFT-LCD panels currently in commercial
production, 262K and 16 million colors are supported by 6-bit and
8-bit
source drivers, respectively.
|
•
|
Operational
Voltage. A display driver operates with two voltages: the input
voltage (which enables it to receive signals from the timing controller)
and the output voltage (which, in the case of source drivers, is
applied
to liquid crystals and, in the case of gate drivers, is used to
switch on
the TFT device). Source drivers typically operate at input voltages
from
3.3 to 1.5 volts and output voltages between 10 to 18 volts. Gate
drivers
typically operate at input voltages from 3.3 to 1.5 volts and output
voltages from 10 to 45 volts. Lower input voltage saves power and
lowers
electromagnetic interference, or EMI. Output voltage may be higher
or
lower depending on the characteristics of the liquid crystal (or
diode),
in the case of source drivers, or TFT device, in the case of gate
drivers.
|
•
|
Gamma
Curve. The relationship between the light passing through a pixel
and
the voltage applied to it by the source driver is nonlinear and
is
referred to as the “gamma curve” of the source driver. Different panel
designs and manufacturing processes require source drivers with
different
gamma curves. Display drivers need to adjust the gamma curve to
fit the
pixel design. Due to the materials and processes used in manufacturing,
panels may contain certain imperfections which can be corrected
by the
gamma curve of the source driver, a process which is generally
known as
“gamma correction.” For certain types of liquid crystal, the gamma curves
for RGB cells are significantly different and thus need to be
independently corrected. Some advanced display drivers feature
three
independent gamma curves for RGB
cells.
|
•
|
Driver
Interface. Driver interface refers to the connection between the
timing controller and display drivers. Display drivers increasingly
require higher bandwidth interface technology to address the larger
data
volume necessary for video images. Panels used for higher data
transmission applications such as televisions require more advanced
interface technology. The principal types of interface technologies
are
transistor-to-transistor logic, or TTL,
reduced
|
swing
differential signaling, or RSDS, and mini low voltage differential
signaling, or mini-LVDS. Among these, RSDS and mini-LVDS were developed
as
low power, low noise and low amplitude method for high-speed data
transmission using fewer copper wires and resulting in lower EMI.
In 2005,
we introduced two new display driver interfaces: dual edge TTL,
or DETTL,
and turbo RSDS. DETTL enables the interface to function with lower
power
(below 1.8V), thus reducing power consumption. Turbo RSDS is an
upgraded
version of RSDS which increases the interface frequency from 85MHz
to
135MHz, thus reducing the bus width and panel
costs.
|
•
|
Package
Type. The assembly of display drivers typically uses TAB and COG
package types. COF and TCP are two types of TAB packages. Customers
typically determine the package type required according to their
specific
mechanical and electrical considerations. In general, display drivers
for
small-sized panels use COG package type whereas display drivers
for
large-sized panels primarily use TAB package types and to a lesser
extent
COG package types.
|
Product
|
Features
|
TFT-LCD
Source
Drivers
|
• 384
to 960
output channels
• 6-bit
(262K
colors), 8-bit (16 million colors) or 10-bit (1 billion
colors)
• one
gamma-type
driver
• three
gamma-type drivers (RGB independent gamma curve to enhance color
image)
• output
driver
voltage ranging from 4.5V to 18V
• input
logic
voltage ranging from standard 3.3V to low power 1.5V
• low
power
consumption and low EMI
• supports
TCP,
COF and COG package types
• supports
TTL,
RSDS, mini-LVDS, DETTL, turbo RSDS and customized interface
technologies
|
TFT-LCD
Gate
Drivers
|
• 192
to 400
output channels
• output
driving
voltage ranging from 10 to 45V
• input
logic
voltage ranging from standard 3.3V to low power 1.5V
• low
power
consumption
• supports
TCP,
COF and COG package types
|
Timing
Controllers
|
• product
portfolio supports a wide range of resolutions, from VGA (640 x
480
pixels) to Full HD (1,920 x 1,080 pixels)
• supports
TTL,
RSDS, mini-LVDS, DETTL, turbo RSDS and customized output interface
technologies
• input
logic
voltage ranging from standard 3.3V to low power 1.5V
• embedded
overdrive function for television applications to improve response
time
• supports
TTL,
LVDS and mini-LVDS input interface technologies
|
Product
|
Features
|
TFT-LCD
Drivers
|
• highly
integrated single chip embedded with the source driver, gate driver,
power
circuit, timing controller and memory
• product
portfolio suitable for a wide range of resolutions including QQVGA
(128 x
160 pixels), QCIF (132 x 176 pixels), QCIF+ (176 x 220 pixels),
QVGA (240
x 320 pixels), WQVGA (240 x 480 pixels) and a range of panel sizes
from
1.5 to 3.2 inches in diagonal measurement
• supports
262K
colors to 16 million colors
• input
logic
voltage ranging from standard 3.3V to low power 1.65V
• low
power
consumption and low EMI
• utilizes
die
shrink technology to reduce die size and cost
• slimmer
die
for compact module to fit smaller mobile handset designs
• application
specific integrated circuits, or ASIC, can be designed to meet
customized
requirements (e.g. drivers without memory or drivers without gate
driver
embedded on the chip)
|
LTPS
Drivers
|
• highly
integrated single chip embedded with the source driver, power circuit,
timing controller and memory
• supports
262K
colors to 16 million colors
• input
logic
voltage ranging from standard 3.3V to low power 1.65V
• utilizes
die
shrink technology to reduce die size and cost
• slimmer
die
for compact module
• ASIC
can be
designed to meet customized requirements (e.g. gate-less or multi-bank
output driver)
|
Product
|
Features
|
TFT-LCD
Source
Drivers
|
• 240
to 1200
output channels
• products
for
analog and digital interfaces
• supports
262K
colors to 16 million colors
• input
logic
voltage ranging from standard 3.3V to low power 2.5V
• low
power
consumption and low EMI
|
TFT-LCD
Gate
Drivers
|
• 96
to 800
output channels
• input
logic
voltage ranging from standard 3.3V to low power 2.5V
• output
driving
voltage ranging from 10 to 40V
|
TFT-LCD
Integrated Drivers
|
• highly
integrated single chip embedded with source driver, gate driver,
timing
controller and power circuit
• products
for
analog or digital interfaces
|
Timing
Controllers
|
• products
for
analog or digital interfaces
• supports
various resolutions from 280 x 220 pixels to 800 x 600 pixels
|
•
|
Audio
Processor/Amplifier. Demodulates, processes and amplifies sound from
television signals.
|
•
|
Analog
Interfaces. Convert analog video signals into digital video signals.
Video decoder and analog-to-digital converter (ADC) are
included.
|
•
|
Digital
Interfaces. Receive digital signals via digital receivers. Digital
visual interfaces (DVI) and high-definition multimedia interfaces
(HDMI)
are included.
|
•
|
Channel
Receiver. Demodulates input signals so that the output becomes
compressed bit stream data.
|
•
|
DTV
Decoder. Converts video and audio signals from compressed bit stream
data into regular video and audio
signals.
|
•
|
Video
Processor. Performs the scaling function that magnifies or shrinks
the image data in order to fit the panel's resolution; provides
real-time
processing for improved color and image quality; converts output
video
from an interlaced format to a progressive format in order to eliminate
jaggedness; and supports on-screen display and real-time video
format
transformation.
|
Product
|
Features
|
Analog
TV
single-chip solutions
|
• ideal
for LCD
TV, MFM TV and LCOS applications
• integrated
with video decoder and 3D comb filter to support worldwide NTSC,
PAL and
SECAM standards
• integrated
with VBI Slicer for CC, V-Chip and Teletext functions
• integrated
with TCON and Over-Drive for additional cost-down
• integrated
with high performance scaler, de-interlancer, and ADC
• built-in
HDMI
and DVI Receiver
• built-in
Himax
3rd generation video engine which supports variable dynamic video
enhancement features
• output
resolutions range from 640 x 480 up to 1920 x 1080
|
Product
|
Features
|
|
Digital
Television Tuner Modules
|
· DVB-T
tuners
for 6MHz bandwidth (for use in Taiwan), 7MHz bandwidth (for use
in
Australia) and 8MHz bandwidth (for use in Europe)
|
|
· ATSC
RF tuners
with NTSC function
|
||
· lower
power RF
tuners
|
||
Analog
Television Tuner Modules
|
· global
tuner
combining NTSC, PAL and SECAM television standards and FM radio
tuner
|
|
· low
power
off-air tuner combining NTSC and PAL television standards and
FM radio
tuner
|
||
· mobile
analog
tuner combining NTSC television standards and FM radio
tuner
|
||
· slim
design to
save space
|
Product
|
Features
|
|
LCOS
Modules
for Near-to-eye, Mini- and and Mobile-projector
Applications
|
· 640
x 360
pixels (Q720P), VGA and SVGA resolutions
|
|
· 8-bit
(16
million colors)
|
||
· high
reflectivity and greater than 100:1 contrast ratio
|
||
· low
power
consumption
|
||
LCOS
Modules
for Projection Applications
|
· WXGA
and Full
HD resolutions
|
|
· 8-bit
(16
million colors)
|
||
· high
reflectivity and greater than 1,000:1 contrast
ratio
|
·
|
Chi
Mei Optoelectronics Corp.
|
·
|
Chunghwa
Picture
Tubes
|
·
|
Funai
Electric
Co., Ltd.
|
·
|
HannStar
Display
Corporation
|
·
|
InnoLux
Display
Corporation
|
·
|
Optrex
Corporation
|
·
|
Perfect
Display
Limited
|
·
|
Samsung
Electronics Taiwan Co.,
Ltd.
|
·
|
Shanghai
SVA-NEC Liquid Crystal
Display
|
·
|
TPO
Displays
Corporation
|
·
|
Inner-Lead
Bonding: The TCP and COF assembly process
involves grinding the bumped wafers into their required thickness
and
cutting the wafers into individual dies, or chips. An inner lead
bonder
machine connects the chip to the printed circuit processed tape
and the
package is sealed with resin at high
temperatures.
|
·
|
Final
Testing: The assembled display drivers are
tested to ensure that they meet performance specifications. Testing
takes
place on specialized equipment using software customized for each
product.
|
Wafer
Fabrication
|
Gold
Bumping
|
|
Chartered
Semiconductor Manufacturing Ltd.
|
Chipbond
Technology Corporation
|
|
Lite-on
Semiconductor Corp.
|
ChipMOS
Technologies Inc.
|
|
Macronix
International Co., Ltd.
|
International
Semiconductor Technology Ltd.
|
|
Powerchip
Semiconductor Corp.
|
||
Taiwan
Semiconductor Manufacturing Company
|
||
United
Microelectronics Corporation
|
||
Vanguard
International Semiconductor Corporation
|
Processed
Tape for TAB Packaging
|
Assembly
and Testing
|
|
CASIO
Micronics Co., Ltd.
|
Chipbond
Technology Corporation
|
|
Hitachi
Cable,
Ltd.
|
ChipMOS
Technologies Inc.
|
|
Mitsui
Mining
& Smelting Co., Ltd.
|
International
Semiconductor Technology Ltd.
|
|
Samsung
Techwin Co. Ltd.
|
Siliconware
Precision Industries Co., Ltd.
|
|
Stemco.,
Ltd
|
||
Sumitomo
Metal
Mining Package Material Co., Ltd.
|
Chip
Probe Testing
|
|
Ardentec
Corporation
|
|
Chipbond
Technology Corporation
|
|
ChipMOS
Technologies Inc.
|
|
International
Semiconductor Technology Ltd.
|
|
King
Yuan
Electronics Co., Ltd
|
|
Siliconware
Precision Industries Co., Ltd.
|
·
|
customer
relations;
|
·
|
product
performance;
|
·
|
design
customization;
|
·
|
development
time;
|
·
|
product
integration;
|
·
|
technical
services;
|
·
|
manufacturing
costs;
|
·
|
supply
chain
management;
|
·
|
economies
of
scale; and
|
·
|
broad
product
portfolio.
|
·
|
our
financial
condition as of the date of grant;
|
·
|
our
financial
and operating prospects at that
time;
|
·
|
for
certain
issuances in 2001 and early 2002, the price of new shares issued
to
unrelated third parties;
|
·
|
for
certain
issuances in 2002, 2003 and 2004, an independent third-party retrospective
analysis of the historical value of our common shares, which utilized
both
a net asset based methodology and market and peer group comparables
(including average price/earnings, enterprise value/sales, enterprise
value/earnings before interest and tax, and enterprise value/earnings
before interest, tax, depreciation and amortization);
and
|
·
|
for
our
issuance of RSUs in 2005, an independent third-party analysis of
the
current and future value of our ordinary shares, which utilized
both
discounted cashflow and market value approaches, using multiples
such as
price/earnings, forward price/earnings, enterprise value/earnings
before
interest and tax, and forward enterprise value/earnings before
interest
and tax.
|
Year
|
Balance
at
Beginning
of
Year
|
Addition
|
Amounts
Utilized
|
Balance
at
End
of
Year
|
||||||||||||
(in
thousands)
|
||||||||||||||||
December
31,
2004
|
$ |
28
|
$ |
1,022
|
$ | (810 | ) | $ |
240
|
|||||||
December
31,
2005
|
$ |
240
|
$ |
398
|
$ | (457 | ) | $ |
181
|
|||||||
December
31,
2006
|
$ |
181
|
$ |
2,843
|
$ | (2,156 | ) | $ |
868
|
Year
|
Balance
at
Beginning
of
Year
|
Addition
|
Amount
Utilized
|
Balance
at
End
of
Year
|
||||||||||||
(in
thousands)
|
||||||||||||||||
December
31,
2004
|
$ |
—
|
$ |
960
|
$ |
453
|
$ |
507
|
||||||||
December
31,
2005
|
$ |
507
|
$ |
1,415
|
$ | (1,377 | ) | $ |
545
|
|||||||
December
31,
2006
|
$ |
545
|
$ |
2,101
|
$ | (2,016 | ) | $ |
630
|
Year
Ended
December
31,
|
||||||||||||
2004
|
2005
|
2006
|
||||||||||
Revenues
|
100.0 | % | 100.0 | % | 100.0 | % | ||||||
Costs
and
expenses:
|
||||||||||||
Cost
of
revenues
|
78.6
|
77.6
|
80.8
|
|||||||||
Research
and
development
|
8.0
|
7.6
|
8.1
|
|||||||||
General
and
administrative
|
1.5
|
1.3
|
1.3
|
|||||||||
Sales
and
marketing
|
0.9
|
0.9
|
0.9
|
|||||||||
Total
costs
and expenses
|
89.0
|
87.4
|
91.1
|
|||||||||
Operating
income
|
11.0
|
12.6
|
8.9
|
|||||||||
Other
non
operating income
|
0.4
|
0.5
|
0.5
|
|||||||||
Income
tax
expenses (benefit)
|
(0.6 | ) |
1.7
|
(0.7 | ) | |||||||
Net
income
|
12.0
|
11.4
|
10.1
|
·
|
Cost
of
Revenues. Cost of revenues increased 43.4% to $601.6 million in 2006
from $419.4 million in 2005. The increase in cost of revenues was
primarily due to an increase in unit shipments. As a percentage
of revenues, cost of revenues increased to 80.8% in 2006 compared
to 77.6%
in 2005, primarily as a result of a decrease in average selling
prices of
our display drivers. We were able to partially offset such declines
by
decreasing per unit costs associated with the manufacturing, assembly,
testing and delivery of our products. This is a result of our cost
reduction efforts achieved by improving designs and processes,
increasing
manufacturing yields and leveraging our scale, volume requirements
and
close relationships with semiconductor manufacturing service providers
and
suppliers, as well as our strategy of sourcing from multiple service
providers and suppliers in order to obtain better
pricing.
|
·
|
Research
and Development. Research and development expenses increased 47.0% to
$60.7 million in the 2006 from $41.3 million in the 2005, primarily
due to
the increase in share-based compensation expenses and salary expenses.
The
increase in salary expenses was due to a 27.6% increase in headcount
and
higher average salaries. The increase was also partially a result
of
increased mask costs and prototype wafer and processed tape costs
associated with an increased number of new products
introduced. The increase in share-based compensation expenses
resulted from our increase in headcount and our grant of RSUs to
certain
employees in 2006.
|
·
|
General
and Administrative. General and administrative expenses increased
44.1% to $9.8 million in 2006 from $6.8 million in 2005, primarily
due to
an increase in share-based compensation expenses and salary expenses.
The
increase in share-based compensation expenses resulted from our
grant of
RSUs to certain employees in 2006. The increase in salary
expenses was due to higher average salaries. This increase was
also partially the result of increased depreciation expense and
fees
relating to patent filings.
|
·
|
Sales
and
Marketing. Sales and marketing expenses increased 45.8% to $7.0
million in 2006 from $4.8 million in 2005, primarily due to an
increase in
salary expenses and share-based compensation expenses. The increase
in
salary expenses was due to a 44.6% increase in headcount. The increase
in
share-based compensation expenses also resulted from our increase
in
headcount and our grant of RSUs to certain employees in 2006. The
increase
in sales and marketing expenses was also partially attributable
to
increased travel expenses resulting from increased sales
activity.
|
·
|
Cost
of
Revenues. Cost of revenues increased 77.7% to $419.4 million in 2005
from $236.0 million in 2004. The increase in cost of revenues was
primarily due to an increase in unit shipments, partially offset
by a
slight decrease in per units costs associated with the manufacturing,
assembly, testing and delivery of our products. This is a result
of our
cost reduction efforts achieved by improving designs and processes,
increasing manufacturing yields and leveraging our scale, volume
requirements and close relationships with semiconductor manufacturing
service providers and suppliers, as well as our strategy of sourcing
from
multiple service providers and suppliers in order to obtain better
pricing.\
|
·
|
Research
and Development. Research and development expenses increased 72.0% to
$41.3 million in the 2005 from $24.0 million in 2004, primarily
due to the
increase in salary expenses and share-based compensation expenses.
The
increase in salary expenses was due to increased headcount and
higher
average salaries. The increase was also partially as a result of
increased
mask costs and prototype wafer and processed tape costs associated
with an
increased number of new products introduced. The increase in share-based
compensation expenses also resulted from our increase in headcount
and our
grant of RSUs to certain employees on December 30,
2005.
|
·
|
General
and Administrative. General and administrative expenses increased
45.8% to $6.8 million in 2005 from $4.7 million in 2004, primarily
due to
an increase in salary expenses. The increase in salary expenses
was due to
increased headcount and higher average salaries. The increase in
general
and administrative expenses also partially resulted from increased
costs
associated with increased management and other fees paid to our
security
company and increased fees relating to patent filings.
|
·
|
Sales
and
Marketing. Sales and marketing expenses increased 73.7% to $4.8
million in 2005 from $2.7 million in 2004, primarily due to an
increase in
salary expenses and share-based compensation expenses. The increase
in
salary expenses was due to a 76.6% increase in headcount and higher
average salaries. The increase in share-based compensation expenses
also
resulted from our increase in headcount and our grant of RSUs to
certain
employees on December 30, 2005. The increase in sales and marketing
expenses was also partially as a result of increased travel expenses
reflecting increased sales
activity.
|
Year
Ended
December 31,
|
||||||||||||
2004
|
2005
|
2006
|
||||||||||
(in
thousands)
|
||||||||||||
Net
cash
provided by (used in) operating activities
|
$ | (8,688 | ) | $ |
12,464
|
$ |
29,696
|
|||||
Net
cash
provided by (used in) investing activities
|
11,001
|
(25,363 | ) | (8,927 | ) | |||||||
Net
cash
provided by financing activities
|
735
|
14,404
|
81,886
|
|||||||||
Effect
of
exchange rate changes on cash and cash equivalents
|
¾
|
4
|
12
|
|||||||||
Net
increase
in cash
|
3,048
|
1,509
|
102,667
|
|||||||||
Cash
and cash
equivalents at beginning of period
|
2,529
|
5,577
|
7,086
|
|||||||||
Cash
and cash
equivalents at end of period
|
5,577
|
7,086
|
109,753
|
Payment
Due by
Period
|
||||||||||||||||||||
Total
|
Less
than
1
year
|
1-3
years
|
3-5
years
|
More
than
5
years
|
||||||||||||||||
(in
thousands)
|
||||||||||||||||||||
Operating
lease obligations
|
1,476
|
864
|
612
|
—
|
—
|
|||||||||||||||
Purchase
obligations(1)
|
143,164
|
143,164
|
—
|
—
|
—
|
|||||||||||||||
Other
obligations(2)
|
31,217
|
31,217
|
—
|
—
|
—
|
|||||||||||||||
Total
|
175,857
|
175,245
|
612
|
—
|
—
|
Notes:
|
(1)
|
Includes
obligations for wafer fabrication, raw materials and
supplies.
|
(2)
|
Includes
obligations under license agreements and investment obligations
required
by the ROC Investment Commission.
|
Period
|
(a)
Total
Number
of
Shares
Purchased
|
(b)
Average
Price
Paid
per
Share
|
(c)
Total
Number of
Shares
Purchased
as
Part
of
Publicly
Announced
Plans
or
Programs
|
(d)
Approximate
Dollar
Value
of
Shares
that
May
Yet
Be
Purchased
Under
the Plans
or
Programs
|
||||||||||||
November
9,
2006 to November 30, 2006
|
2,944,840
|
$ |
5.07
|
2,944,840
|
$ |
35,056,654
|
||||||||||
December
1,
2006 to December 31, 2006
|
4,940,995
|
$ |
4.96
|
7,885,835
|
$ |
10,540,210
|
||||||||||
January
1,
2007 to January 23, 2007
|
2,161,636
|
$ |
4.87
|
10,047,471
|
$ |
443
|
||||||||||
Directors
and
Executive Officers
|
Age
|
Position/Title
|
||
Dr.
Biing-Seng
Wu
|
49
|
Chairman
of
the Board
|
||
Jordan
Wu
|
46
|
President,
Chief Executive Officer and Director
|
||
Jung-Chun
Lin
|
58
|
Director
|
||
Dr.
Chun-Yen
Chang
|
69
|
Director
|
||
Yuan-Chuan
Horng
|
55
|
Director
|
||
Chih-Chung
Tsai
|
51
|
Chief
Technology Officer, Senior Vice President
|
||
Max
Chan
|
40
|
Chief
Financial Officer
|
||
Baker
Bai
|
49
|
Vice
President, Incubator System Design Center
|
||
John
Chou
|
48
|
Vice
President, Quality & Reliability Assurance & Support Design
Center
|
||
Norman
Hung
|
49
|
Vice
President, Sales and Marketing
|
Name
|
Total
RSUs
Granted
|
Ordinary
Shares
Underlying
Vested
Portion
of
RSUs
|
Ordinary
Shares
Underlying
Unvested
Portion
of
RSUs
|
|||||||||
Dr.
Biing-Seng
Wu
|
30,188
|
7,547
|
22,641
|
|||||||||
Jordan
Wu
|
71,581
|
17,895
|
53,686
|
|||||||||
Jung-Chun
Lin
|
0
|
0
|
0
|
|||||||||
Dr.
Chun-Yen
Chang
|
0
|
0
|
0
|
|||||||||
Yuan-Chuan
Horng
|
0
|
0
|
0
|
|||||||||
Chi-Chung
Tsai
|
71,581
|
17,895
|
53,686
|
|||||||||
Max
Chan
|
23,872
|
5,968
|
17,904
|
|||||||||
Baker
Bai
|
43,441
|
10,860
|
32,581
|
|||||||||
John
Chou
|
38,747
|
22,500
|
16,247
|
|||||||||
Norman
Hung
|
37,672
|
11,667
|
26,005
|
·
|
selecting
the
independent auditors and pre-approving all auditing and non-auditing
services permitted to be performed by the independent
auditors;
|
·
|
reviewing
with
the independent auditors any audit problems or difficulties and
management’s response;
|
·
|
reviewing
and
approving all proposed related party transactions, as defined in
Item 404
of Regulation SK under the Securities Act;
|
·
|
discussing
the
annual audited financial statements with management and the independent
auditors;
|
·
|
reviewing
major issues as to the adequacy of our internal controls and any
special
audit steps adopted in light of material internal control
deficiencies;
|
·
|
annually
reviewing and reassessing the adequacy of our audit committee
charter;
|
·
|
meeting
separately and periodically with management and the independent
auditors;
|
·
|
reporting
regularly to the board of directors; and
|
·
|
such
other
matters that are specifically delegated to our audit committee
by our
board of directors from time to
time.
|
·
|
reviewing
and
making recommendations to our board of directors regarding our
compensation policies and forms of compensation provided to our
directors
and officers;
|
·
|
reviewing
and
determining bonuses for our officers and other
employees;
|
·
|
reviewing
and
determining share-based compensation for our directors, officers,
employees and consultants;
|
·
|
administering
our equity incentive plans in accordance with the terms thereof;
and
|
·
|
such
other
matters that are specifically delegated to the compensation committee
by
our board of directors from time to
time.
|
·
|
identifying
and recommending to our board of directors nominees for election
or
re-election, or for appointment to fill any vacancy;
|
·
|
reviewing
annually with our board of directors the current composition of
our board
of directors in light of the characteristics of independence, age,
skills,
experience and availability of service to us;
|
·
|
reviewing
the
continued board membership of a director upon a significant change
in such
director’s principal occupation;
|
·
|
identifying
and recommending to our board of directors the names of directors
to serve
as members of the audit committee and the compensation committee,
as well
as the nominating and corporate governance committee
itself;
|
·
|
advising
the
board periodically with respect to significant developments in
the law and
practice of corporate governance as well as our compliance with
applicable
laws and regulations, and making recommendations to our board of
directors
on all matters of corporate governance and on any corrective action
to be
taken; and
|
·
|
monitoring
compliance with our code of business conduct and ethics, including
reviewing the adequacy and effectiveness of our procedures to ensure
proper compliance.
|
Function
|
Number
|
|||
Research
and
development(1)
|
615
|
|||
Engineering
and manufacturing(2)
|
125
|
|||
Sales
and
marketing(3)
|
120
|
|||
General
and
administrative
|
64
|
|||
Total
|
924
|
Notes:
|
(1)
|
Includes
semiconductor design engineers, application engineers, assembly
and
testing engineers and quality control engineers.
|
(2)
|
Includes
manufacturing personnel of Himax Display, our subsidiary focused
on design
and manufacturing of LCOS products and liquid crystal injection
services.
|
|
(3)
|
Includes
field
application engineers.
|
Name
|
Number of
Shares
Owned
|
Percentage
of Shares Owned
|
||||||
Dr.
Biing-Seng
Wu
|
31,578,765
|
15.98 | % | |||||
Jordan
Wu
|
10,906,363
|
5.52 | % | |||||
Jung-Chun
Lin
|
|
|
|
|
||||
Dr.
Chun-Yen
Chang
|
794,807
|
*
|
||||||
Yuan-Chuan
Horng
|
453,052
|
*
|
||||||
Chih-Chung
Tsai
|
2,922,012
|
1.48 | % | |||||
Max
Chan
|
61,247
|
*
|
||||||
Baker
Bai
|
2,281,364
|
1.15 | % | |||||
John
Chou
|
39,863
|
*
|
||||||
Norman
Hung
|
23,997
|
*
|
|
*
Less than
1%
|
|
None
of our
directors or executive officers has different voting rights from
other
shareholders.
|
·
|
payment
of
taxes;
|
·
|
recovery
of
prior years’ deficits, if any;
|
·
|
legal
reserve
(in an amount equal to 10% of annual net income after having deducted
the
above items until such time as its legal reserve equals the amount
of its
total paid-in capital);
|
·
|
special
reserve based on relevant laws or regulations, or retained earnings,
if
necessary;
|
·
|
dividends
for
preferred shares, if any; and
|
·
|
cash
or stock
bonus to employees (in an amount less than 10% of annual net income)
and
remuneration for directors and supervisor(s) (in an amount less
than 2% of
the annual net income); after having deducted the above items,
based on a
resolution of the board of directors; if stock bonuses are paid
to
employees, the bonus may also be appropriated to employees of subsidiaries
under the board of directors’
approval.
|
(in
thousands
of US dollars)
|
||||||||
December
31,
|
||||||||
2005
|
2006
|
|||||||
Assets
|
||||||||
Current
assets:
|
||||||||
Cash
and cash
equivalents
|
$ |
7,086
|
109,753
|
|||||
Marketable
securities available-for-sale
|
3,989
|
8,828
|
||||||
Restricted
cash equivalents and marketable securities
|
14,053
|
108
|
||||||
Accounts
receivable, less allowance for doubtful accounts,
|
||||||||
sales
returns
and discounts of $80 and $464 at
|
||||||||
December
31,
2005 and 2006, respectively
|
80,259
|
112,767
|
||||||
Accounts
receivable from related parties, less allowance for
|
||||||||
sales
returns
and discounts of $101 and $404 at
|
||||||||
December
31,
2005 and 2006, respectively
|
69,587
|
116,850
|
||||||
Inventories
|
105,004
|
101,341
|
||||||
Deferred
income taxes
|
8,965
|
6,744
|
||||||
Prepaid
expenses and other current assets
|
11,113
|
10,324
|
||||||
Total
current assets
|
300,056
|
466,715
|
||||||
Property,
plant, and equipment, net
|
24,426
|
38,895
|
||||||
Deferred
income taxes
|
151
|
11,405
|
||||||
Intangible
assets, net
|
81
|
393
|
||||||
Investments
in non-marketable securities
|
1,813
|
817
|
||||||
Refundable
deposits and prepaid pension costs
|
712
|
569
|
||||||
27,183
|
52,079
|
|||||||
Total
assets
|
$ |
327,239
|
518,794
|
(in
thousands
of US dollars,
except
share
and per share data)
|
||||||||
December
31,
|
||||||||
2005
|
2006
|
|||||||
Liabilities,
Minority Interest and Stockholders’ Equity
|
||||||||
Current
liabilities:
|
||||||||
Short-term
debt
|
$ |
27,274
|
–
|
|||||
Current
portion of long-term debt
|
89
|
–
|
||||||
Accounts
payable
|
105,801
|
120,407
|
||||||
Income
tax
payable
|
13,625
|
11,666
|
||||||
Other
accrued
expenses and other current liabilities
|
13,995
|
21,206
|
||||||
Total
current liabilities
|
160,784
|
153,279
|
||||||
Accrued
pension liabilities
|
–
|
192
|
||||||
Total
liabilities
|
160,784
|
153,471
|
||||||
Minority
interest
|
624
|
1,396
|
||||||
Stockholders’
equity:
|
||||||||
Ordinary
share, US$0.0001 par value, 500,000,000 shares authorized;
|
||||||||
182,088,880
and 193,600,302 shares issued and outstanding at
|
||||||||
December
31,
2005 and 2006, respectively
|
18
|
19
|
||||||
Additional
paid-in capital
|
98,450
|
221,666
|
||||||
Accumulated
other comprehensive income (loss)
|
36
|
(275 | ) | |||||
Unappropriated
retained earnings
|
67,327
|
142,517
|
||||||
Total
stockholders equity
|
165,831
|
363,927
|
||||||
Commitments
and contingencies
|
||||||||
Total
liabilities, minority interest and stockholders
equity
|
$ |
327,239
|
518,794
|
(in
thousands
of US dollars, except per share data)
|
||||||||||||
Year
Ended December 31,
|
||||||||||||
2004
|
2005
|
2006
|
||||||||||
Revenues
|
||||||||||||
Revenues
from
third parties, net
|
$ |
109,514
|
217,420
|
329,886
|
||||||||
Revenues
from
related parties, net
|
190,759
|
322,784
|
414,632
|
|||||||||
300,273
|
540,204
|
744,518
|
||||||||||
Costs
and expenses:
|
||||||||||||
Cost
of
revenues
|
235,973
|
419,380
|
601,565
|
|||||||||
Research
and
development
|
24,021
|
41,278
|
60,655
|
|||||||||
General
and
administrative
|
4,654
|
6,784
|
9,762
|
|||||||||
Sales
and
marketing
|
2,742
|
4,762
|
6,970
|
|||||||||
Total
costs and expenses
|
267,390
|
472,204
|
678,952
|
|||||||||
Operating
income
|
32,883
|
68,000
|
65,566
|
|||||||||
Non
operating income (loss):
|
||||||||||||
Interest
income
|
72
|
580
|
5,860
|
|
||||||||
Gain
on sale
of marketable securities, net
|
401
|
105
|
60
|
|||||||||
Other
than
temporary impairment loss on investments
|
||||||||||||
in
non-marketable securities
|
–
|
(129 | ) | (1,500 | ) | |||||||
Foreign
exchange gains (losses), net
|
847
|
1,808
|
(341 | ) | ||||||||
Interest
expense
|
(6 | ) | (125 | ) | (311 | ) | ||||||
Other
income,
net
|
5
|
19
|
173
|
|||||||||
1,319
|
2,258
|
3,941
|
||||||||||
Income
before income taxes and minority interest
|
34,202
|
70,258
|
69,507
|
|||||||||
Income
tax
expense (benefit)
|
(1,771 | ) |
8,923
|
(5,446 | ) | |||||||
Income
before minority interest
|
35,973
|
61,335
|
74,953
|
|||||||||
Minority
interest, net of tax
|
27
|
223
|
237
|
|||||||||
Net
income
|
$ |
36,000
|
61,558
|
75,190
|
||||||||
Basic
earnings
per ordinary share
|
$ |
0.21
|
0.35
|
0.39
|
||||||||
Diluted
earnings per ordinary share
|
$ |
0.21
|
0.34
|
0.39
|
(in
thousands
of US dollars, except per share data)
|
||||||||||||
Year
Ended December 31,
|
||||||||||||
2004
|
2005
|
2006
|
||||||||||
Net
income
|
$ |
36,000
|
61,558
|
75,190
|
||||||||
Other
comprehensive income:
|
||||||||||||
Unrealized
gains on securities, not subject to tax:
|
||||||||||||
Unrealized
holding gains on available-for-sale
|
||||||||||||
marketable
securities arising during the period
|
334
|
129
|
56
|
|||||||||
Reclassification
adjustment for realized gains included
|
||||||||||||
in
net
income
|
(401 | ) | (105 | ) | (60 | ) | ||||||
Foreign
currency translation adjustments, net of tax
|
||||||||||||
of
$3 and $6
in 2005 and 2006, respectively
|
–
|
5
|
24
|
|||||||||
Comprehensive
income
|
$ |
35,933
|
61,587
|
75,210
|
Ordinary
share
|
||||||||||||||||||||||||||||
Shares
|
|
Amount
|
Additional
paid-in
capital
|
Treasury
shares
|
Accumulated
other
comprehensive
Income
(loss)
|
Unappropriated
Retained
earnings
(accumulated
deficit)
|
Total
|
|||||||||||||||||||||
Balance
at January 1, 2004
|
173,185
|
$ |
17
|
56,220
|
-
|
74
|
(4,022 | ) |
52,289
|
|||||||||||||||||||
Stock
split
effected in the form of a stock dividend
|
-
|
12,651
|
-
|
-
|
(12,651 | ) |
-
|
|||||||||||||||||||||
Issuance
of
ordinary shares as employee bonus
|
7,584
|
1
|
14,829
|
-
|
-
|
-
|
14,830
|
|||||||||||||||||||||
Share-based
compensation expenses
|
-
|
-
|
1,696
|
-
|
-
|
-
|
1,696
|
|||||||||||||||||||||
Dilution
gain
from issuance of new subsidiary shares
|
-
|
-
|
112
|
-
|
-
|
-
|
112
|
|||||||||||||||||||||
Unrealized
holding loss on available-for-sale marketable securities
|
-
|
-
|
-
|
-
|
(67 | ) |
-
|
(67 | ) | |||||||||||||||||||
Net
income
|
-
|
-
|
-
|
-
|
-
|
36,000
|
36,000
|
|||||||||||||||||||||
Balance
at December 31, 2004
|
180,769
|
18
|
85,508
|
-
|
7
|
19,327
|
104,860
|
|||||||||||||||||||||
Declaration
of
special cash dividends
|
-
|
-
|
-
|
-
|
-
|
(13,558 | ) | (13,558 | ) | |||||||||||||||||||
Issuance
of
ordinary shares as employee bonus
|
990
|
-
|
8,536
|
-
|
-
|
-
|
8,536
|
|||||||||||||||||||||
Share-based
compensation expenses
|
330
|
-
|
4,184
|
-
|
-
|
-
|
4,184
|
|||||||||||||||||||||
Dilution
gain
from issuance of new subsidiary shares
|
-
|
-
|
222
|
-
|
-
|
-
|
222
|
|||||||||||||||||||||
Unrealized
holding gain on available-for-sale marketable securities
|
-
|
-
|
-
|
-
|
24
|
-
|
24
|
|||||||||||||||||||||
Foreign
currency translation adjustments
|
-
|
-
|
-
|
-
|
5
|
-
|
5
|
|||||||||||||||||||||
Net
income
|
-
|
-
|
-
|
-
|
-
|
61,558
|
61,558
|
|||||||||||||||||||||
Balance
at December 31, 2005
|
182,089
|
$ |
18
|
98,450
|
-
|
36
|
67,327
|
165,831
|
||||||||||||||||||||
Issuance
of
ordinary shares upon initial public offering, net of issuance
costs of
$8,207
|
17,290
|
2
|
147,406
|
-
|
-
|
-
|
147,408
|
|||||||||||||||||||||
Shares
acquisition
|
(7,886 | ) |
-
|
-
|
(39,460 | ) |
-
|
-
|
(39,460 | ) | ||||||||||||||||||
Shares
retirement
|
-
|
(1 | ) | (39,459 | ) |
39,460
|
-
|
-
|
-
|
|||||||||||||||||||
Share-based
compensation expenses
|
2,107
|
-
|
15,091
|
-
|
-
|
-
|
15,091
|
|||||||||||||||||||||
Dilution
gain
from issuance of new subsidiary shares
|
-
|
-
|
178
|
-
|
-
|
-
|
178
|
|||||||||||||||||||||
Adjustment
upon adoption of SFAS No. 158, net of tax of $98
|
-
|
-
|
-
|
-
|
(331 | ) |
-
|
(331 | ) | |||||||||||||||||||
Unrealized
holding loss on available-for-sale marketable securities
|
-
|
-
|
-
|
-
|
(4 | ) |
-
|
(4 | ) | |||||||||||||||||||
Foreign
currency translation adjustments
|
-
|
-
|
-
|
-
|
24
|
-
|
24
|
|||||||||||||||||||||
Net
income
|
-
|
-
|
-
|
-
|
-
|
75,190
|
75,190
|
|||||||||||||||||||||
Balance
at December 31, 2006
|
193,600
|
$ |
19
|
221,666
|
-
|
(275 | ) |
142,517
|
363,927
|
Year
Ended December 31,
|
||||||||||||
2004
|
2005
|
2006
|
||||||||||
Cash
flows from operating activities:
|
||||||||||||
Net
income
|
$ |
36,000
|
61,558
|
75,190
|
||||||||
Adjustments
to
reconcile net income to net cash provided by (used in) operating
activities:
|
||||||||||||
Depreciation
and amortization
|
2,761
|
3,613
|
5,221
|
|||||||||
Share-based
compensation expenses
|
5,837
|
8,613
|
15,150
|
|||||||||
Minority
interest, net of tax
|
(27 | ) | (223 | ) | (237 | ) | ||||||
Loss
on
disposal of property, plant, and equipment
|
69
|
-
|
36
|
|||||||||
Gain
on sales
of subsidiary shares and investment in non-marketable securities,
net
|
-
|
(19 | ) | (137 | ) | |||||||
Gain
on sale
of marketable securities, net
|
(401 | ) | (105 | ) | (60 | ) | ||||||
Impairment loss on investments in non-marketable
securities
|
-
|
129
|
1,500
|
|||||||||
Deferred
income taxes
|
(4,986 | ) | (3,371 | ) | (8,938 | ) | ||||||
Inventory
write downs
|
847
|
927
|
5,165
|
|||||||||
Changes
in
operating assets and liabilities:
|
||||||||||||
Accounts
receivable
|
(14,473 | ) | (53,242 | ) | (32,237 | ) | ||||||
Accounts
receivable from related parties
|
(16,236 | ) | (30,458 | ) | (47,263 | ) | ||||||
Inventories
|
(33,851 | ) | (51,839 | ) | (1,502 | ) | ||||||
Prepaid
expenses and other current assets
|
(3,296 | ) | (6,413 | ) |
749
|
|||||||
Accounts
payable
|
15,748
|
67,152
|
14,606
|
|||||||||
Income
tax
payable
|
(761 | ) |
10,852
|
(1,959 | ) | |||||||
Other
accrued
expenses and other current liabilities
|
4,081
|
5,290
|
4,412
|
|||||||||
Net
cash provided by (used in) operating activities
|
(8,688 | ) |
12,464
|
29,696
|
||||||||
Cash
flows from investing activities:
|
||||||||||||
Purchase
of
land, property and equipment
|
(8,046 | ) | (14,733 | ) | (17,829 | ) | ||||||
Purchase
of
available-for-sale marketable securities
|
(47,163 | ) | (38,048 | ) | (31,911 | ) | ||||||
Sales
and
maturities of available-for-sale marketable securities
|
66,312
|
42,028
|
27,128
|
|||||||||
Cash
acquired
in acquisition
|
-
|
-
|
17
|
|||||||||
Proceeds
from
sale of subsidiary shares and investment in non-marketable securities
by
Himax Technologies Limited
|
-
|
51
|
1,142
|
|||||||||
Purchase
of
investment in non-marketable securities
|
-
|
-
|
(817 | ) | ||||||||
Purchase
of
subsidiary shares from minority interest
|
-
|
(523 | ) | (773 | ) | |||||||
Refund
from
(increase in) refundable deposits
|
(137 | ) | (414 | ) |
171
|
|||||||
Release
(pledge) of restricted cash equivalents and marketable
securities
|
35
|
(13,724 | ) |
13,945
|
||||||||
Net
cash provided by (used in) investing activities
|
11,001
|
(25,363 | ) | (8,927 | ) |
Year
Ended December 31,
|
||||||||||||
2004
|
2005
|
2006
|
||||||||||
Cash
flows from financing activities:
|
||||||||||||
Distribution
of special cash dividends
|
$ |
-
|
(13,558 | ) |
-
|
|||||||
Proceeds
from
initial public offering,
net
of issuance costs
|
-
|
-
|
147,408
|
|||||||||
Proceeds
from
issuance of new shares by subsidiaries
|
803
|
866
|
676
|
|||||||||
Acquisition
of
ordinary shares for retirement
|
-
|
-
|
(38,835 | ) | ||||||||
Proceeds
from
borrowing of short-term debt
|
-
|
27,274
|
11,303
|
|||||||||
Repayment
of
short-term debt
|
-
|
-
|
(38,577 | ) | ||||||||
Repayment
of
long-term debt
|
(68 | ) | (178 | ) | (89 | ) | ||||||
Net
cash provided by financing activities
|
735
|
14,404
|
81,886
|
|||||||||
Effect
of exchange rate changes on cash and cash
equivalents
|
-
|
4
|
12
|
|||||||||
Net
increase in cash and cash equivalents
|
3,048
|
1,509
|
102,667
|
|||||||||
Cash
and cash equivalents at beginning of year
|
2,529
|
5,577
|
7,086
|
|||||||||
Cash
and cash equivalents at end of year
|
$ |
5,577
|
7,086
|
109,753
|
||||||||
Supplemental
disclosures of cash flow information:
|
||||||||||||
Cash
paid
during the year for:
|
||||||||||||
Interest
|
$ |
6
|
125
|
311
|
||||||||
Income
taxes
|
$ |
3,867
|
1,130
|
5,695
|
||||||||
Supplemental
disclosures of non-cash investing activities:
|
||||||||||||
Payable
for
purchase of equipment and construction in progress
|
$ | (71 | ) | (2,285 | ) | (1,846 | ) | |||||
Fair
value of
ordinary shares issued by Himax Display, Inc. in the acquisition
of
Integrated Microdisplays Limited
|
$ |
-
|
-
|
538
|
Before
application of
SFAS No. 158
|
SFAS
No. 158
Adjustments
|
After
application
of
SFAS No. 158
|
||||||||||
Refundable
deposits and prepaid pension costs
|
$ |
811
|
(242 | ) |
569
|
|||||||
Deferred
income taxes-noncurrent
|
11,307
|
98
|
11,405
|
|||||||||
Total
assets
|
518,938
|
(144 | ) |
518,794
|
||||||||
Accrued
pension liabilities
|
-
|
192
|
192
|
|||||||||
Minority
interest
|
1,401
|
(5 | ) |
1,396
|
||||||||
Accumulated
other comprehensive income (loss), net of tax
|
56
|
(331 | ) | (275 | ) | |||||||
Total
stockholders’ equity
|
364,258
|
(331 | ) |
363,927
|
||||||||
Total
stockholders’ equity and liabilities
|
518,938
|
(144 | ) |
518,794
|
Year
December 31,
|
||||||||||||
2004
|
2005
|
2006
|
||||||||||
Net
income (in
thousands)
|
$ |
36,000
|
61,558
|
75,190
|
||||||||
Denominator
for basic earnings per share:
|
||||||||||||
Weighted
average number of ordinary shares outstanding (in
thousands)
|
169,320
|
176,105
|
192,475
|
|||||||||
Basic
earnings
per share
|
$ |
0.21
|
0.35
|
0.39
|
Year
December 31,
|
||||||||||||
2004
|
2005
|
2006
|
||||||||||
Net
income (in thousands)
|
$ |
36,000
|
61,558
|
75,190
|
||||||||
Denominator
for diluted earnings per share:
|
||||||||||||
Weighted
average number of ordinary shares outstanding (in
thousands)
|
169,320
|
176,105
|
192,475
|
|||||||||
Nonvested
ordinary shares and RSUs (in thousands)
|
3,978
|
4,554
|
2,615
|
|||||||||
173,298
|
180,659
|
195,090
|
||||||||||
Diluted
earnings per share
|
$ |
0.21
|
0.34
|
0.39
|
December
31, 2005
|
||||||||||||||||
Amortized
|
Gross
Unrealized
|
Gross
Unrealized
|
Market
|
|||||||||||||
Cost
|
Gains
|
Losses
|
Value
|
|||||||||||||
(in
thousands)
|
||||||||||||||||
Time
deposit
with original maturities more than three months
|
$ |
152
|
-
|
-
|
152
|
|||||||||||
Open-ended
bond fund
|
3,804
|
33
|
-
|
3,837
|
||||||||||||
Total
|
$ |
3,956
|
33
|
-
|
3,989
|
December
31, 2006
|
||||||||||||||||
Amortized
|
Gross
Unrealized
|
Gross
Unrealized
|
Market
|
|||||||||||||
Cost
|
Gains
|
Losses
|
Value
|
|||||||||||||
(in
thousands)
|
||||||||||||||||
Time
deposit
with original maturities more than three months
|
$ |
522
|
-
|
-
|
522
|
|||||||||||
Open-ended
bond fund
|
8,277
|
29
|
-
|
8,306
|
||||||||||||
Total
|
$ |
8,799
|
29
|
-
|
8,828
|
Period
|
Proceeds
from
sales
|
Gross
realized
gains
|
Gross
realized
losses
|
|||||||||
(in
thousands)
|
||||||||||||
Year
ended
December 31, 2004
|
$ |
66,312
|
401
|
-
|
||||||||
Year
ended
December 31, 2005
|
$ |
42,028
|
105
|
-
|
||||||||
Year
ended
December 31, 2006
|
$ |
27,128
|
60
|
-
|
||||||||
Period
|
Balance
at beginning
of
year
|
Addition
|
Amounts
utilized
|
Balance
at
end
of year
|
||||||||||||
(in
thousands)
|
||||||||||||||||
For
the year
ended December 31, 2004
|
$ |
28
|
1,022
|
(810 | ) |
240
|
||||||||||
For
the year
ended December 31, 2005
|
$ |
240
|
398
|
(457 | ) |
181
|
||||||||||
For
the year
ended December 31, 2006
|
$ |
181
|
2,843
|
(2,156 | ) |
868
|
December
31,
|
||||||||
2005
|
2006
|
|||||||
(in
thousands)
|
||||||||
Merchandise
|
$ |
38
|
6
|
|||||
Finished
goods
|
32,192
|
44,194
|
||||||
Work
in
process
|
51,769
|
40,039
|
||||||
Raw
materials
|
20,877
|
17,048
|
||||||
Supplies
|
128
|
54
|
||||||
$ |
105,004
|
101,341
|
December
31,
|
||||||||
2005
|
2006
|
|||||||
(in
thousands)
|
||||||||
Refundable
business tax
|
$ |
7,953
|
5,994
|
|||||
Prepaid
rental, software maintenance fee and others
|
2,910
|
4,330
|
||||||
Fair
value of
foreign currency forward contract
|
250
|
-
|
||||||
$ |
11,113
|
10,324
|
December
31,
|
||||||||
2005
|
2006
|
|||||||
(in
thousands)
|
||||||||
Land
|
$ |
10,160
|
10,154
|
|||||
Building
|
-
|
12,967
|
||||||
Machinery
|
6,184
|
6,744
|
||||||
Research
and
development equipment
|
5,464
|
8,611
|
||||||
Software
|
3,590
|
5,149
|
||||||
Office
furniture and equipment
|
1,534
|
2,478
|
||||||
Others
|
3,474
|
4,150
|
||||||
30,406
|
50,253
|
|||||||
Accumulated
depreciation and amortization
|
(7,566 | ) | (12,742 | ) | ||||
Prepayment
for
purchases of equipment and software
|
798
|
1,384
|
||||||
Construction
of buildings in progress
|
788
|
-
|
||||||
$ |
24,426
|
38,895
|
December
31,
|
||||||||
2005
|
2006
|
|||||||
(in
thousands)
|
||||||||
TopSun
Optronics, Inc.
|
$ |
-
|
817
|
|||||
Jemitek
Electronic Corp.
|
313
|
-
|
||||||
LightMaster
Systems, Inc.
|
1,500
|
-
|
||||||
$ |
1,813
|
817
|
December
31,
|
||||||||
2005
|
2006
|
|||||||
(in
thousands)
|
||||||||
Accrued
payroll and related expenses
|
$ |
2,855
|
3,441
|
|||||
Accrued
commission
|
2,534
|
1,836
|
||||||
Accrued
warranty costs
|
545
|
630
|
||||||
Accrued
mask
and mold fees
|
3,039
|
3,282
|
||||||
Payable
for
purchases of equipment
|
2,471
|
4,317
|
||||||
Accrued
insurance, welfare expenses, etc.
|
2,551
|
7,700
|
||||||
$ |
13,995
|
21,206
|
Period
|
Balance
at
beginning
of
year
|
Addition
|
Amounts
utilized
|
Balance
at
end
of year
|
||||||||||||
(in
thousands)
|
||||||||||||||||
Year
ended
December 31, 2004
|
$ |
-
|
960
|
(453 | ) |
507
|
||||||||||
Year
ended
December 31, 2005
|
$ |
507
|
1,415
|
(1,377 | ) |
545
|
||||||||||
Year
ended
December 31, 2006
|
$ |
545
|
2,101
|
(2,016 | ) |
630
|
Authority
|
Total Grant
|
Execution
Period
|
Product
Description
|
|||
(in
thousands)
|
||||||
IDB
of
MOEA
|
|
NT$22,700
(US$654)
|
September
2003
to February 2005
|
Mobile
phone
TFT driver IC
|
||
SBIP
|
3,800
(US$112)
|
|
October
2004
to July
2005
|
Application
of
LCOS
|
||
DOIT
of
MOEA
|
19,500
(US$610)
|
December
2004
to November 2005
|
Multimedia
high definition TV SOC
|
|||
DOIT
of
MOEA
|
7,000
(US$214)
|
September
2005
to December 2006
|
Mobile
phone
TFT single chip SOC
|
December
31,
|
||||||||
2005
|
2006
|
|||||||
(in
thousands)
|
||||||||
Change
in
projected benefit obligation:
|
||||||||
Benefit
obligation at beginning of year
|
$ |
414
|
622
|
|||||
Service
cost
|
150
|
9
|
||||||
Interest
cost
|
13
|
22
|
||||||
Actuarial
loss
|
45
|
232
|
||||||
Benefit
obligation at end of year
|
622
|
885
|
||||||
Change
in plan
assets:
|
||||||||
Fair
value at
beginning of year
|
215
|
414
|
||||||
Actual
return
on plan assets
|
4
|
12
|
||||||
Employer
contribution
|
195
|
286
|
||||||
Fair
value at
end of year
|
414
|
712
|
||||||
Funded
status
|
$ | (208 | ) | (173 | ) | |||
Unrecognized
net actuarial loss
|
$ |
206
|
-
|
|||||
Amounts
recognized in the balance sheet consist of:
|
||||||||
Prepaid
pension costs
|
$ |
12
|
19
|
|||||
Accrued
pension liabilities
|
(14 | ) | (192 | ) | ||||
Net
amount recognized
|
$ | (2 | ) | (173 | ) |
Year
Ended
December 31,
|
||||||||||||
2004
|
|
2005
|
2006
|
|||||||||
(in
thousands)
|
||||||||||||
Service
cost
|
$ |
170
|
150
|
9
|
||||||||
Interest
cost
|
5
|
13
|
22
|
|||||||||
Expected
return on plan assets
|
(3 | ) | (6 | ) | (18 | ) | ||||||
Net
amortization and deferral
|
6
|
6
|
6
|
|||||||||
Net
periodic
pension cost
|
$ |
178
|
163
|
19
|
December
31,
|
||||||||||||
2005
|
2006
|
|||||||||||
Himax
Taiwan
|
Himax
Display
& Himax Analogic
|
Himax
Taiwan,
Himax
Display
& Himax Analogic
|
||||||||||
Discount
rate
|
3.50 | % | 3.50 | % | 2.75 | % | ||||||
Rate
of
increase in compensation levels
|
4.00 | % | 3.00 | % | 4.00 | % |
Year
Ended December
31,
|
||||||||||||||||||||
2004
|
2005
|
2006
|
||||||||||||||||||
Himax
Taiwan
|
Himax
Display
& Himax Analogic
|
Himax
Taiwan
|
Himax
Display
& Himax Analogic
|
Himax
Taiwan,
Himax
Display
& Himax Analogic
|
||||||||||||||||
Discount
rate
|
2.50 | % | 3.00 | % | 3.50 | % | 3.50 | % | 2.75 | % | ||||||||||
Rate
of
increase in compensation levels
|
4.00 | % | 1.00 | % | 4.00 | % | 3.00 | % | 4.00 | % | ||||||||||
Expected
long-term rate of return on pension assets
|
2.50 | % | 3.00 | % | 3.50 | % | 3.50 | % | 2.75 | % |
Amount
|
||
(in
thousands)
|
||
2007
|
$
|
-
|
2008
|
-
|
|
2009
|
-
|
|
2010
|
-
|
|
2011
|
-
|
|
2012
~
2016
|
114
|
Year
Ended
December 31,
|
||||||||||||
2004
|
2005
|
2006
|
||||||||||
(in
thousands)
|
||||||||||||
Cost
of
revenues
|
$ |
291
|
188
|
275
|
||||||||
Research
and
development
|
4,288
|
6,336
|
11,806
|
|||||||||
General
and
administrative
|
721
|
848
|
1,444
|
|||||||||
Sales
and
marketing
|
537
|
1,241
|
1,625
|
|||||||||
$ |
5,837
|
8,613
|
15,150
|
(a)
|
Employee
Annual Bonus Plan
|
Year
Ended
December 31,
|
||||||||||||
2004
|
2005
|
2006
|
||||||||||
(in
thousands)
|
||||||||||||
Cost
of
revenues
|
$ |
220
|
98
|
-
|
||||||||
Research
and
development
|
3,045
|
3,215
|
-
|
|||||||||
General
and
administrative
|
540
|
454
|
-
|
|||||||||
Sales
and
marketing
|
336
|
628
|
-
|
|||||||||
$ |
4,141
|
4,395
|
-
|
(b)
|
Long-term
Incentive Plan
|
Number
of
Underlying Shares for RSUs
|
Weighted
Average Grant Date Fair Value
|
|||||||
Balance
at
January 1, 2005
|
-
|
$ |
-
|
|||||
Granted
|
1,317,564
|
8.62
|
||||||
Vested
|
(329,395 | ) |
8.62
|
|||||
Balance
at
December 31, 2005
|
988,169
|
8.62
|
||||||
Granted
|
3,798,808
|
5.71
|
||||||
Vested
|
(2,106,669 | ) |
6.14
|
|||||
Forfeited
|
(172,165 | ) |
7.19
|
|||||
Balance
at
December 31, 2006
|
2,508,143
|
6.39
|
Year
Ended
December 31,
|
||||||||||||
2004
|
2005
|
2006
|
||||||||||
(in
thousands)
|
||||||||||||
Cost
of
revenues
|
$ |
-
|
62
|
264
|
||||||||
Research
and
development
|
-
|
2,080
|
11,263
|
|||||||||
General
and
administrative
|
-
|
262
|
1,392
|
|||||||||
Sales
and
marketing
|
-
|
436
|
1,554
|
|||||||||
$ |
-
|
2,840
|
14,473
|
|||||||||
(c)
|
Nonvested
Shares Issued to Employees
|
Number
of
Shares
|
Weighted
Average Grant Date Fair Value
|
|||||||
Balance
at
January 1, 2004
|
3,680,864
|
$ |
0.116
|
|||||
Forfeited
|
(484,979 | ) |
0.116
|
|||||
Balance
at
December 31, 2004
|
3,195,885
|
0.116
|
||||||
Forfeited
|
(2,487 | ) |
0.116
|
|||||
Balance
at
December 31, 2005
|
3,193,398
|
0.116
|
||||||
Vested
|
(3,193,398 | ) |
0.116
|
|||||
Balance
at
December 31, 2006
|
-
|
-
|
Number
of
Shares
|
Weighted
Average Grant Date Fair Value
|
|||||||
Balance
at
January 1, 2005
|
-
|
$ |
-
|
|||||
Granted
|
1,250,000
|
0.319
|
||||||
Forfeited
|
(445,000 | ) |
0.319
|
|||||
Balance
at
December 31, 2005
|
805,000
|
0.319
|
||||||
Forfeited
|
(36,000 | ) |
0.319
|
|||||
Balance
at
December 31, 2006
|
769,000
|
0.319
|
(d)
|
Treasury
Stock
Issued to Employees
|
Number
of
Shares
|
Weighted Average
of Excess of Grant Date Fair Value over
Employee Payment
|
|||||||
Balance
at
January 1, 2004
|
8,474,948
|
$ |
0.607
|
|||||
Forfeited
|
(1,289,280 | ) |
0.662
|
|||||
Balance
at
December 31, 2004
|
7,185,668
|
0.597
|
||||||
Vested
|
(2,706,593 | ) |
0.356
|
|||||
Balance
at
December 31, 2005
|
4,479,075
|
0.743
|
||||||
Vested
|
(4,479,075 | ) |
0.743
|
|||||
Balance
at
December 31, 2006
|
-
|
-
|
Year
Ended
December 31,
|
||||||||||||
2004
|
2005
|
2006
|
||||||||||
(in
thousands)
|
||||||||||||
Cost
of
revenues
|
$ |
71
|
28
|
11
|
||||||||
Research
and
development
|
1,113
|
916
|
414
|
|||||||||
General
and
administrative
|
181
|
132
|
52
|
|||||||||
Sales
and
marketing
|
201
|
177
|
71
|
|||||||||
$ |
1,566
|
1,253
|
548
|
(a)
|
Share
capital
|
(b)
|
Earnings
distribution
|
Date
of
capital increase
|
Tax
exemption
period
|
|||
September
1,
2003
|
April
1, 2004
~ March 31, 2009
|
|||
October
29,
2003
|
January
1,
2006 ~December 31, 2010
|
Year
Ended
December 31,
|
||||||||||||
2004
|
2005
|
2006
|
||||||||||
(in
thousands)
|
||||||||||||
Current
income
tax expense
|
$ |
3,215
|
12,294
|
3,492
|
||||||||
Deferred
income tax benefit
|
(4,986 | ) | (3,371 | ) | (8,938 | ) | ||||||
$ | (1,771 | ) |
8,923
|
(5,446 | ) |
Year
Ended
December 31,
|
||||||||||||
2004
|
2005
|
2006
|
||||||||||
(in
thousands)
|
||||||||||||
Expected
income tax expense
|
$ |
11,115
|
22,834
|
22,103
|
||||||||
Tax-exempted
income
|
(6,328 | ) | (9,189 | ) | (16,012 | ) | ||||||
Effect
of
difference between tax base of undistributed income surtax with
pre-tax
income
|
-
|
-
|
1,562
|
|||||||||
Adjustment
for
enacted change in tax laws
|
-
|
-
|
1,099
|
|||||||||
Impairment
loss on investment in non-marketable securities
|
-
|
-
|
477
|
|||||||||
Nontaxable
gains on sale of marketable securities
|
(130 | ) | (38 | ) | (67 | ) | ||||||
Increase
of
investment tax credits
|
(7,586 | ) | (10,647 | ) | (15,216 | ) | ||||||
Increase
in
valuation allowance
|
882
|
2,421
|
2,798
|
|||||||||
Non
deductible
share-based compensation expenses
|
1,897
|
2,799
|
1,002
|
|||||||||
Provision
for
uncertain tax position in connection with share-based compensation
expenses
|
-
|
124
|
526
|
|||||||||
Tax
benefit
resulting from distribution of prior year’s income
|
(1,650 | ) |
-
|
(789 | ) | |||||||
Foreign
tax
rate differential
|
41
|
83
|
(1,796 | ) | ||||||||
Others
|
(12 | ) |
536
|
(1,133 | ) | |||||||
Actual
income
tax expense (benefit)
|
$ | (1,771 | ) |
8,923
|
(5,446 | ) |
Year
Ended
December 31,
|
||||||||||||
2004
|
2005
|
2006
|
||||||||||
(in
thousands)
|
||||||||||||
Continuing
operations
|
$ | (1,771 | ) |
8,923
|
(5,446 | ) | ||||||
Charged
directly to equity
|
-
|
-
|
(98 | ) | ||||||||
Other
comprehensive income
|
-
|
3
|
3
|
|||||||||
Total
income
tax expense (benefit)
|
$ | (1,771 | ) |
8,926
|
(5,541 | ) |
December
31,
|
||||||||
2005
|
2006
|
|||||||
(in
thousands)
|
||||||||
Deferred
tax
assets:
|
||||||||
Inventory
|
$ |
643
|
1,497
|
|||||
Unrealized
foreign exchange loss
|
30
|
-
|
||||||
Capitalized
expense for tax purposes
|
145
|
85
|
||||||
Accrued
compensated absences
|
37
|
88
|
||||||
Allowance
for
sales return, discounts and warranty
|
236
|
328
|
||||||
Unused
investment tax credits
|
9,407
|
19,420
|
||||||
Unused
loss
carry-forward
|
1,851
|
3,094
|
||||||
Defined
benefit pension plan
|
-
|
98
|
||||||
Investments
in
non-marketable securities
|
42
|
-
|
||||||
Other
|
51
|
13
|
||||||
Total
gross
deferred tax assets
|
12,442
|
24,623
|
||||||
Less:
valuation allowance
|
(3,314 | ) | (6,278 | ) | ||||
Net
deferred
tax assets
|
9,128
|
18,345
|
||||||
Deferred
tax
liabilities:
|
||||||||
Unrealized
foreign exchange gain
|
5
|
125
|
||||||
Foreign
currency translation adjustments
|
3
|
6
|
||||||
Prepaid
pension cost
|
4
|
65
|
||||||
Total
gross
deferred tax liabilities
|
12
|
196
|
||||||
Net
deferred
tax assets
|
$ |
9,116
|
18,149
|
Income
tax
benefit that would be reported in the consolidated statement of
income
|
$ |
6,112
|
||
Goodwill
and
other noncurrent intangible assets
|
166
|
|||
$ |
6,278
|
December
31,
2005
|
||||||||||
BUY
|
SELL
|
Contract
amount
|
Fair
Value
|
Settlement
date
|
Maturity
amount
|
|||||
(in
thousands)
|
||||||||||
NTD
|
USD
|
$
12,000
|
$
213
|
January
25,
2006
|
NT$
400,348
|
|||||
JPY
|
USD
|
$
10,000
|
$
37
|
January
25,
2006 ~ February 22, 2006
|
JPY
1,177,925
|
(a)
|
Name
and
relationship
|
Name
of
related parties
|
Relationship
|
|
Chi
Mei
Optoelectronics Corp. (CMO)
|
Shareholder
represented on the Company’s Board of Directors; the Company’s Chairman
represented on CMO’s Board of Directors
|
|
International
Display Technology Ltd.
(ID
Tech)
|
Wholly
owned
subsidiary of CMO
|
|
Jemitek
Electronic Corp. (JEC)
|
The
Company’s
CEO represented on JEC’s Board of Directors
|
|
Chi
Mei
Corporation (CMC)
|
Major
shareholder of CMO
|
|
NEXGEN
Mediatech Inc. (NEXGEN)
|
CMC
nominated
more than half of the seats on NEXGEN’s Board of
Directors
|
|
Chi
Mei
Communication System, Inc. (CMCS)
|
CMC
nominated
more than half of the seats on CMCS’s Board of
Directors
|
|
Chi
Lin
Technology Co., Ltd.(Chi Lin Tech)
|
CMC
nominated
more than half of the seats on Chi Lin Tech’s Board of
Directors
|
|
NingBo
Chi Mei
Optoelectronics Ltd. (CMO-NingBo)
|
The
subsidiary
of CMO
|
|
Chi
Mei EL
Corporation(CMEL)
|
The
subsidiary
of CMO
|
|
TopSun
Optronics, Inc.(TopSun)
|
Chi
Lin Tech
nominated more than half of the seats on TopSun’s Board of Directors since
September 2006
|
(b)
|
Significant
transactions with related parties
|
(i)
|
Revenues
and
accounts receivable
|
Year
Ended
December 31,
|
||||||||||||
2004
|
2005
|
2006
|
||||||||||
(in
thousands)
|
||||||||||||
CMO
|
$ |
189,095
|
317,012
|
335,797
|
||||||||
CMO-NingBo
|
-
|
721
|
73,898
|
|||||||||
Chi
Lin
Tech
|
290
|
2,841
|
2,985
|
|||||||||
TopSun
|
-
|
-
|
1,136
|
|||||||||
NEXGEN
|
-
|
370
|
805
|
|||||||||
JEC
|
599
|
1,565
|
9
|
|||||||||
CMEL
|
-
|
-
|
2
|
|||||||||
ID
Tech
|
775
|
275
|
-
|
|||||||||
$ |
190,759
|
322,784
|
414,632
|
Year
Ended
December 31,
|
||||||||||||
2004
|
2005
|
2006
|
||||||||||
(in
thousands)
|
||||||||||||
Display
driver
for large-size applications
|
$ |
188,526
|
315,841
|
334,179
|
||||||||
Display
driver
for consumer electronics applications
|
41
|
6
|
482
|
|||||||||
Display
driver
for mobile handsets
|
-
|
-
|
6
|
|||||||||
Others
|
528
|
1,165
|
1,130
|
|||||||||
$ |
189,095
|
317,012
|
335,797
|
December
31,
|
||||||||
2005
|
2006
|
|||||||
(in
thousands)
|
||||||||
CMO
|
$ |
67,392
|
81,610
|
|||||
CMO-NingBo
|
721
|
33,923
|
||||||
TopSun
|
-
|
1,158
|
||||||
Chi
Lin
Tech
|
1,234
|
444
|
||||||
NEXGEN
|
221
|
117
|
||||||
CMEL
|
-
|
2
|
||||||
JEC
|
120
|
-
|
||||||
69,688
|
117,254
|
|||||||
Allowance
for
sales returns and discounts
|
(101 | ) | (404 | ) | ||||
$ |
69,587
|
116,850
|
(ii)
|
Purchases
and
accounts payable
|
Year
Ended
December 31,
|
||||||||||||
2004
|
2005
|
2006
|
||||||||||
(in
thousands)
|
||||||||||||
CMO
|
$ |
176
|
703
|
82
|
||||||||
Chi
Lin
Tech
|
-
|
31
|
7
|
|||||||||
CMC
|
-
|
9
|
-
|
|||||||||
$ |
176
|
743
|
89
|
(iii)
|
Property
transactions
|
(iv)
|
Lease
|
(v)
|
Sales
agent
|
(vi)
|
Others
|
(a)
|
As
of December
31, 2005 and 2006, amounts of outstanding letters of credit for
the
purchase machinery and equipment were $25 thousand and $146 thousand,
respectively.
|
(b)
|
As
of December
31, 2005, and 2006 the Company had entered into several contracts
for the
acquisition of equipment and computer software and the construction
of its
new headquarters. Total contract prices amounted to $8,861
thousand and $7,806 thousand, respectively. As of December 31,
2005 and 2006, the remaining commitments were $8,150 thousand and
$2,816
thousand, respectively.
|
(c)
|
The
Company
leases its office and buildings pursuant to operating lease arrangements
with unrelated third parties. The lease arrangement will expire
gradually from 2005 to 2009. As of December 31, 2005 and 2006,
deposits paid amounted
|
|
to
$371
thousand and $477 thousand, respectively, and were recorded as
refundable
deposit in the accompanying consolidated balance
sheets.
|
Duration
|
Amount
|
|||
(in
thousands)
|
||||
January
1,
2007~December 31, 2007
|
$ |
864
|
||
January
1,
2008~December 31, 2008
|
509
|
|||
January
1,
2009~December 31, 2009
|
103
|
|||
$ |
1,476
|
(d)
|
The
Company
entered into several sales agent agreements commencing from
2003. Based on these agreements, the Company shall pay
commissions at the rates ranging from 0.5% to 5% of the sales to
customers
in the specific territory or referred by agents as stipulated in
these
agreements. Total commissions incurred amounting to $2,604
thousand, $4,478 thousand and $3,788 thousand, respectively, in
2004, 2005
and 2006, respectively. The sales commission expenses were
recorded as a deduction from revenue in the accompanying consolidated
statements of income.
|
(e)
|
In
August of
2004, the Company entered into a license agreement for the use
of certain
central processing unit cores for product development. In
accordance with the agreement, the Company is required to pay an
initial
license fee based on the progress of the project development and
a royalty
based on shipments. The license fee paid and charged to
research and development expense in 2004 and 2006 was $100 thousand
and
$200 thousand, respectively. No license fee or royalty occurred
in 2005.
|
(f)
|
The
Company
from time to time is subject to claims regarding the proprietary
use of
certain technologies. Currently, the Company is not aware of
any such claims that it believes could have a material adverse
effect on
its financial position or results of
operations.
|
(g)
|
Since
Himax
Taiwan is not a listed company, it will depend on Himax Technologies,
Inc.
to meet its equity financing requirements in the future. Any
capital contribution by Himax Technologies, Inc. to Himax Taiwan
may
require the approval of the relevant ROC authorities. The
Company may not be able to obtain any such approval in the future
in a
timely manner, or at all. If Himax Taiwan is unable to receive
the equity financing it requires, its ability to grow and fund
its
operations may be materially and adversely
affected.
|
(h)
|
The
Company
has entered into several wafer fabrication or assembly and testing
service
arrangements with service providers. The Company may be
obligated to make payments for purchase orders entered into pursuant
to
these arrangements.
|
(i)
|
The
current
corporate structure of the Company was established through a
share
exchange, which became effective on October 14, 2005, between
the Company
and the former shareholders of Himax Taiwan. The ROC Investment
Commission (an agency under the administration of the ROC Ministry
of
Economic Affairs) approved the share exchange on September 7,
2005. In
connection with the application seeking approval of the share
exchange,
the Company made the following undertakings to expand its investment
in
the ROC, the approval of which was conditional upon the satisfaction
of
such undertakings: (1) Himax Taiwan must purchase three hectares
of land
in connection with the construction of its new headquarters in
Tainan,
Taiwan, (2) Himax Taiwan must increase the number of employees
in the ROC to 430 employees, 475 employees and 520 employees
by the end of
2005, 2006 and 2007, respectively, (3) Himax Taiwan must invest
no less
than NT$800.0 million ($24.4 million), NT$900.0 million ($27.6
million)
and NT$1.0 billion ($30.7 million) for research and development
in Taiwan
in 2005, 2006 and 2007, respectively, which may be satisfied
through
cash-based compensation paid to research and development personnel
but not
through non-cash share-based compensation and (4) Himax Taiwan
must submit
to the ROC Investment Commission its annual financial statements
audited
by a certified public accountant and other relevant supporting
documents
in connection with the implementation of the above-mentioned
conditions
within four months after the end of each of 2005, 2006 and
2007.
|
Year
Ended
December 31,
|
||||||||||||
2004
|
2005
|
2006
|
||||||||||
(in
thousands)
|
||||||||||||
Display
driver
ICs for large-size applications
|
$ |
258,006
|
470,631
|
645,513
|
||||||||
Display
driver
ICs for mobile handset applications
|
12,607
|
31,123
|
52,160
|
|||||||||
Display
drivers for consumer electronics applications
|
21,754
|
18,571
|
28,616
|
|||||||||
Others
|
7,906
|
19,879
|
18,229
|
|||||||||
$ |
300,273
|
540,204
|
744,518
|
Year
Ended
December 31,
|
||||||||||||
2004
|
2005
|
2006
|
||||||||||
(in
thousands)
|
||||||||||||
Taiwan
|
$ |
284,569
|
482,991
|
605,924
|
||||||||
Other
Asia
Pacific (China, Korea and Japan)
|
15,704
|
57,213
|
138,287
|
|||||||||
Europe
(Netherlands and France)
|
-
|
-
|
307
|
|||||||||
$ |
300,273
|
540,204
|
744,518
|
December
31,
|
||||||||
2005
|
2006
|
|||||||
(in
thousands)
|
||||||||
Taiwan
|
$ |
24,344
|
40,132
|
|||||
China
|
82
|
203
|
||||||
Korea
|
-
|
6
|
||||||
$ |
24,426
|
40,341
|
Year
Ended
December 31,
|
||||||||||||
2004
|
2005
|
2006
|
||||||||||
(in
thousands)
|
||||||||||||
CMO
and its
affiliates, a related party
|
$ |
189,870
|
318,008
|
409,697
|
||||||||
Chunghwa
Picture Tubes and its affiliates
|
58,430
|
87,534
|
92,561
|
|||||||||
$ |
248,300
|
405,542
|
502,258
|
December
31,
|
||||||||
2005
|
2006
|
|||||||
(in
thousands)
|
||||||||
CMO
and its
affiliates, a related party
|
$ |
68,113
|
115,535
|
|||||
Chunghwa
Picture Tubes and its affiliates
|
41,369
|
33,846
|
||||||
$ |
109,482
|
149,381
|
(a)
|
Acquisition
|
At
February 1,
2007
(Unaudited)
|
||||
(in
thousands)
|
||||
Current
assets
|
$ |
8,937
|
||
Property
and
equipment
|
1,247
|
|||
Acquired
in-process R&D
|
700
|
|||
Intangible
assets
|
7,148
|
|||
Goodwill
|
28,566
|
|||
Total
assets
acquired
|
46,598
|
|||
Current
liabilities
|
(1,349 | ) | ||
Total
liabilities assumed
|
(1,349 | ) | ||
Net
assets
acquired
|
45,249
|
(b)
|
Treasury
share
buybacks
|
December
31,
|
||||||||
2005
|
2006
|
|||||||
(in
thousands)
|
||||||||
Cash
and cash
equivalents
|
$ |
-
|
95,591
|
|||||
Other
current
assets
|
-
|
31,013
|
||||||
Investment
in
subsidiaries
|
179,564
|
238,648
|
||||||
Total
assets
|
$ |
179,564
|
365,252
|
|||||
Liabilities
|
$ |
13,733
|
1,325
|
|||||
Total
stockholders’ equity
|
165,831
|
363,927
|
||||||
Total
liabilities and stockholder’s equity
|
$ |
179,564
|
365,252
|
Year
ended
December 31,
|
||||||||||||
2004
|
2005
|
2006
|
||||||||||
(in
thousands)
|
||||||||||||
Revenues
|
$ |
-
|
-
|
-
|
||||||||
Costs
and
expenses
|
-
|
(77 | ) |
-
|
||||||||
Operating
income (loss)
|
-
|
(77 | ) |
-
|
||||||||
Equity
in
earnings from subsidiaries
|
36,000
|
61,733
|
69,435
|
|||||||||
Other
non
operating income (loss)
|
-
|
(98 | ) |
5,755
|
||||||||
Income
before income taxes
|
36,000
|
61,558
|
75,190
|
|||||||||
Income
tax
|
-
|
-
|
-
|
|||||||||
Net
Income
|
$ |
36,000
|
61,558
|
75,190
|
Year
ended
December 31,
|
||||||||||||
2004
|
2005
|
2006
|
||||||||||
(in
thousands)
|
||||||||||||
Cash
flows
from operating activities:
|
||||||||||||
Net
income
|
$ |
36,000
|
61,558
|
75,190
|
||||||||
Adjustments
to
reconcile net income to net cash provided by (used in)
operating activities:
|
||||||||||||
Equity
in
earning from subsidiaries
|
(36,000 | ) | (61,733 | ) | (69,435 | ) | ||||||
Changes
in
operating assets and liabilities:
|
||||||||||||
Increase
in other current
assets
|
-
|
-
|
(5,789 | ) | ||||||||
Increase
in other accrued expenses and
other currentliabilities
|
-
|
133
|
1,192
|
|||||||||
Net
cash provided by (used in) operating
activities
|
-
|
(42 | ) |
1,158
|
||||||||
Net
cash used in investing
activities
|
-
|
-
|
(540 | ) | ||||||||
Cash
flows
from financing activities:
|
||||||||||||
Distribution
of special cash
dividends
|
-
|
(13,558 | ) |
-
|
||||||||
Proceeds
from borrowing (repayment) of
short-termdebt
|
-
|
13,600
|
(13,600 | ) | ||||||||
Proceeds
from initial public offering,
net of issuance costs
|
-
|
-
|
147,408
|
|||||||||
Acquisition
of ordinary shares for
retirement
|
-
|
-
|
(38,835 | ) | ||||||||
Net
cash provided by financing
activities
|
-
|
42
|
94,973
|
|||||||||
Net
increase
in cash and cash equivalents
|
-
|
-
|
95,591
|
|||||||||
Cash
and cash
equivalents at beginning of year
|
-
|
-
|
-
|
|||||||||
Cash
and cash
equivalent at end of year
|
$ |
-
|
-
|
95,591
|
Corporate
Information
|
|||
Board
of Directors
Chairman
Dr.
Biing-Seng
Wu
Directors
Jordan
Wu
Jung-Chun
Lin
Dr.
Chun-Yen
Chang
Yuan-Chuan
Horng
Senior
Management
Jordan
Wu
Chief
Executive Officer
Max
Chan
Chief
Financial Officer
Chih-Chung
Tsai
Chief
Technology Officer, Senior VP
Baker
Bai
Incubator
System Design Center, VP
John
Chou
Quality
&
Reliability Assurance and Support Design Center, VP
Norman
Hong
Sales
and
Marketing, VP
Corporate
Headquarters
Himax
Technologies, Inc.
No.
26, Zih
Lian Road, Fonghua Village,
Sinshih
Township, Tainan County 74445, Taiwan
Tel:
+886-6-505-0880
Fax:+886-6-507-0000
|
Investor
Information
Shareholder
Services for American Depositary Shares (ADSs)
Deutsche
Bank
Trust Company Americas
60
Wall
Street
New
York, NY
10005
Stock
Listings
The
company’s
common stock trades on the NASDAQ National Market under the
symbol
HIMX
Independent
Auditors
KPMG
Certified
Public Accountants
Investor
Contacts
Jackson
Ko
Jessie
Wang
Investor
Relations
Himax
Technologies, Inc.
8F,
No19,
Section 1, Hang-Chou South Road, Taipei 100, Taiwan
jackson_ko@himax.com.tw
Jessie_wang@himax.com.tw
David
Pasquale
Executive
Vice
President
The
Ruth
Group
757
Third
Avenue
New
York, NY
10017
+646-536-7006
dpasquale@theruthgroup.com
|