FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934


For the month of November, 2007

Commission File Number: 000-51847

Himax Technologies, Inc.
(Translation of registrant’s name into English)

No.26, Zih Lian Road, Fonghua Village,
Sinshih Township, Tainan County 744,
Taiwan, Republic of China
(Address of principal executive offices)


Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F
X
 
Form 40-F
 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes
   
No
X

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes
   
No
X

Indicate by check mark whether by furnishing the information contained in this Form, the Registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:

Yes
   
No
X

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A
 


 
Himax Technologies, Inc.

INDEX TO EXHIBITS

Exhibit
 
   
99.1
Press release entitled, “Himax reports third quarter 2007 results” dated November 2, 2007.
   
99.2
Himax third quarter 2007 results conference call transcript dated November 2, 2007.
 
2

 
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 
HIMAX TECHNOLOGIES, INC.
 
       
   
 
       
 
By:
/s/ Max Chan
 
   
Name: Max Chan
 
   
Title: Chief Financial Officer
 

Date: November 1, 2007


3

 
Exhibit 99.1
 
 
 
HIMAX REPORTS THIRD QUARTER 2007 RESULTS

 
Ÿ
Third quarter 2007 revenue increased to $243.3 million - record high since inception
 
Ÿ
Third quarter 2007 gross margin increased to 22.5% - marks fourth consecutive quarter of improvement
 
Ÿ
Fourth quarter 2007 revenue expected to grow around mid-single digits, with gross margin to remain flat, and EPS to be in the range of $0.16 to $0.17

Board Authorizes $40 Million Share Buyback Program


Tainan, Taiwan, November 2, 2007 - Himax Technologies, Inc. (“Himax” or ”Company”)
(NASDAQ: HIMX) today reported financial results for the third quarter ended September 30, 2007.

Net revenue for the third quarter of 2007 was $243.3 million, representing 37.4% growth year-over-year and 9.2% growth sequentially.

Gross margin was 22.5% in the third quarter of 2007, up 510 basis points year-over-year and 210 basis points sequentially.

Operating margin was 8.2% in the third quarter of 2007. Operating income was $19.9 million, up from $0.8 million in the same period last year, and down from $24.9 million in the previous quarter.

Net income for the third quarter of 2007 was $21.8 million, up from $2.6 million in the same period last year, and down from $26.8 million in the previous quarter. The decline is primarily due to the grant of 2007 annual restricted share units at the end of September. This represents earnings per share of $0.11 per basic and diluted share, compared to $0.01 per basic and diluted share in the third quarter of 2006, and $0.14 per basic and diluted share in the second quarter of 2007.

Excluding share-based compensation and acquisition-related charges, non-GAAP operating margin was 14.9% in the third quarter of 2007. Non-GAAP operating income was $36.2 million, up from $12.2 million in the same period last year, and up from $28.1 million in the previous quarter.

Non-GAAP net income was $38.0 million, up from $14.1 million in the same period last year, and up from $30.0 million in the previous quarter. This represents earnings per share of $0.19 per basic and diluted share, compared to $0.07 per basic and diluted share in the third quarter of 2006, and $0.15 per basic and diluted share in the second quarter of 2007.

Share-based compensation was $15.7 million, compared to $11.5 million in the third quarter of 2006, and $1.5 million in the second quarter of 2007.  Acquisition-related charges were $0.6 million, compared to $0 in the third quarter of 2006 and $1.6 million in the second quarter of 2007.

A reconciliation of our gross margin, operating margin and diluted EPS excluding share-based compensation and acquisition-related charges, a non-GAAP financial measure, to GAAP gross margin, GAAP operating margin and diluted GAAP EPS, our most comparable GAAP figure, is set out in the attached reconciliation schedule.
 
1

 
Jordan Wu, President and Chief Executive Officer of Himax, commented, “We are pleased with the third quarter results as we achieved record high revenues. We were able to improve our gross margin for the fourth consecutive quarter, resulting in a seven fold increase in our year-over-year GAAP net income. Separately, on October 12, we announced plans to spin-off our TV and monitor chipset operation which will be named Himax Media Solutions, Inc., a wholly-owned subsidiary of Himax Taiwan upon its establishment. Himax Media Solutions, Inc. will be focusing on expanding market share in the global TV and monitor chipset market opportunity. We have identified certain strategic investors and plan to invite them to partner with us in the future. We believe this new company structure will allow us to better focus our resources for the global TV and monitor chipset market opportunity.”

Mr. Wu added, “On November 1st, our board approved a share repurchase program that authorizes the Company to repurchase up to $40 million worth of the Company's American Depository Receipts. The program does not obligate Himax to acquire any particular amount of ADRs and may be modified or suspended at any time at the Company's sole discretion. With the repurchase program, we reaffirm our confidence and optimism in the long term future of the company. This also demonstrates our commitment to deliver value to our shareholders.”

Max Chan, Chief Financial Officer of Himax, said, “We made our 2007 annual restricted share units grant of approximately $26.4 million at the end of September. Approximately 54.5%, or $14.4 million was paid out in cash, and vested and expensed immediately. The remainder of the grant will be vested in three equal installments over the next three years. Total share-based compensation accrued in the third quarter, including expenses from legacy grants amounted to $15.7 million, or $0.08 per diluted share.”

Looking forward, Mr. Wu added, “We expect revenue to grow around mid-single digit in the fourth quarter and gross margin to remain flat.  We expect diluted GAAP EPS to be in the range of $0.16 to $0.17.  ”

Investor Conference Call / Webcast Details
The Company’s management will review detailed third quarter 2007 results on Thursday, November 1, 2007 at 7:00 PM EDT (7:00 AM, Friday, November 2, 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 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 258193.

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 television semiconductor solutions, as well as LCOS products  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; and Irvine, California, USA.

Contacts:
Max Chan
Chief Financial Officer
Himax Technologies, Inc.
+886-2-3393-0877 Ext. 22300
max_chan@himax.com.tw
Jackson Ko/Jessie Wang
Investor Relations
Himax Technologies, Inc.
+886-2-3393-0877
Ext. 22240/22618
jackson_ko@himax.com.tw
jessie_wang@himax.com.tw
In the U.S.
David Pasquale
The Ruth Group
+1-646-536-7006
dpasquale@theruthgroup.com
 
2


 
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 20-F dated June 22, 2007, 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.

Tables Attached –

3


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 September 30,
   
Three
Months
Ended June
30,
 
   
2007
   
2006
   
2007
 
Revenues
                 
   Revenues from third parties, net
   
$91,960
     
$88,878
     
$102,276
 
   Revenues from related parties, net
   
151,377
     
88,227
     
120,607
 
     
243,337
     
177,105
     
222,883
 
                         
Costs and expenses:
                       
   Cost of revenues
   
188,626
     
146,287
     
177,452
 
   Research and development
   
26,171
     
24,267
     
15,328
 
   General and administrative
   
4,891
     
3,190
     
3,222
 
   Sales and marketing
   
3,758
     
2,586
     
1,995
 
Total costs and expenses
   
223,446
     
176,330
     
197,997
 
                         
Operating income
   
19,891
     
775
     
24,886
 
                         
Non operating income (loss):
                       
Interest income
   
1,429
     
2,000
     
1,514
 
Foreign exchange gains (losses), net
    (29 )     (1,298 )    
36
 
Other income, net
   
166
     
59
     
159
 
     
1,566
     
761
     
1,709
 
Income before income taxes and minority interest
   
21,457
     
1,536
     
26,595
 
Income tax benefit
   
---
      (1,246 )    
---
 
Income before minority interest
   
21,457
     
2,782
     
26,595
 
Minority interest, net of tax
   
316
      (157 )    
247
 
Net income
   
$21,773
     
$2,625
     
$26,842
 
                         
Basic earnings per ordinary share and ADS
   
$0.11
     
$0.01
     
$0.14
 
Diluted earnings per ordinary share and ADS
   
$0.11
     
$0.01
     
$0.14
 
                         
Basic Weighted Average Outstanding Shares
   
197,690
     
197,110
     
197,656
 
Diluted Weighted Average Outstanding Shares
   
197,733
     
199,729
     
198,013
 

4


Himax Technologies, Inc.
Unaudited Supplemental Financial Information
(Figures in Thousands of U.S. Dollars)

The amount of share-based compensation included in applicable costs and expenses categories is summarized as follows:
 
Three Months
Ended September 30,
   
Three
Months
Ended
June
 30,
 
   
2007
   
2006
   
2007
 
Share-based compensation
                 
          Cost of revenues
   
$355
     
$208
     
$25
 
          Research and development
   
11,795
     
8,963
     
1,201
 
          General and administrative
   
1,718
     
1,090
     
151
 
          Sales and marketing
   
1,842
     
1,195
     
156
 
Total
   
$15,710
     
$11,456
     
$1,533
 
                         
The amount of acquisition-related charges
included in applicable expenses categories is
summarized as follows:
                       
                         
       Research and development
   
$250
     
$---
     
$1,234
 
   Sales and marketing
   
304
     
---
     
408
 
Total
   
$554
     
$---
     
$1,642
 
                         
                         


5

 
Himax Technologies, Inc.
Unaudited Condensed Consolidated Statements of Income
(Figures in Thousands of U.S. Dollars, Except Per Share Data)

   
Nine Months Ended
 
   
September 30,
 
   
2007
   
2006
 
Revenues
           
   Revenues from third parties, net
   
$270,072
     
$238,939
 
   Revenues from related parties, net
   
381,039
     
284,700
 
     
651,111
     
523,639
 
                 
Costs and expenses:
               
   Cost of revenues
   
514,908
     
422,351
 
   Research and development
   
56,299
     
46,772
 
   General and administrative
   
11,113
     
6,582
 
   Sales and marketing
   
7,254
     
4,690
 
Total costs and expenses
   
589,574
     
480,395
 
                 
Operating income
   
61,537
     
43,244
 
                 
Non operating income (loss):
               
Interest income
   
4,325
     
4,048
 
Impairment loss on an investment
   
---
      (1,500 )
Foreign exchange losses, net
    (483 )     (132 )
Interest expense
   
---
      (311 )
Other income, net
   
367
     
172
 
     
4,209
     
2,277
 
Income before income taxes and minority interest
   
65,746
     
45,521
 
Income tax expense
   
---
     
1,491
 
Income before minority interest
   
65,746
     
44,030
 
Minority interest, net of tax
   
888
     
59
 
Net income
   
$66,634
     
$44,089
 
                 
Basic earnings per ordinary share and ADS
   
$0.34
     
$0.23
 
Diluted earnings per ordinary share and ADS
   
$0.34
     
$0.23
 
                 
Basic Weighted Average Outstanding Shares
   
197,671
     
190,484
 
Diluted Weighted Average Outstanding Shares
   
197,834
     
193,698
 

6

 
Himax Technologies, Inc.
Unaudited Supplemental Financial Information
(Figures in Thousands of U.S. Dollars)

The amount of share-based compensation included in applicable costs and expenses categories is summarized as follows:
 
Nine Months Ended
 September 30,
 
   
2007
   
2006
 
Share-based compensation
           
          Cost of revenues
   
$405
     
$250
 
          Research and development
   
14,183
     
10,645
 
          General and administrative
   
2,020
     
1,293
 
          Sales and marketing
   
2,154
     
1,469
 
Total
   
$18,762
     
$13,657
 
                 
The amount of acquisition-related charges included in applicable expenses categories is summarized as follows:
               
                 
       Research and development
   
$2,273
     
$---
 
   Sales and marketing
   
810
     
---
 
Total
   
$3,083
     
$---
 
                 
                 


7

 
Himax Technologies, Inc.
Unaudited Condensed Consolidated Balance Sheets
(Figures in Thousands of U.S. Dollars, Except Per Share Data)

   
September30,
   
June30,
   
December 31,
 
   
2007
   
2007
   
2006
 
Assets
                 
Current assets:
                 
Cash and cash equivalents
   
$119,246
     
$137,508
     
$109,753
 
Marketable securities available-for-sale
   
16,109
     
13,327
     
8,828
 
Restricted cash equivalents
   
171
     
171
     
108
 
Accounts receivable, less allowance for doubtful accounts, sales returns and discounts
   
101,467
     
116,812
     
112,767
 
Accounts receivable from related parties, less allowance for doubtful accounts, sales returns and discounts
   
178,099
     
137,602
     
116,850
 
Inventories
   
125,983
     
125,146
     
101,341
 
Deferred income taxes
   
6,829
     
6,829
     
6,744
 
Prepaid expenses and other current assets
   
12,903
     
10,113
     
10,324
 
Total current assets
   
$560,807
     
$547,508
     
$466,715
 
Property, plant and equipment, net
   
46,070
     
45,801
     
38,895
 
Deferred income taxes
   
12,842
     
12,842
     
11,405
 
Intangible assets, net
   
33,711
     
34,273
     
393
 
Investments in non-marketable securities
   
2,584
     
1,857
     
817
 
Refundable deposits and prepaid pension costs
   
612
     
593
     
569
 
     
95,819
     
95,366
     
52,079
 
Total assets
   
$656,626
     
$642,874
     
$518,794
 
                         
Liabilities, minority interest and stockholders’ equity
                       
Current liabilities:
                       
Accounts payable
   
$160,269
     
$171,218
     
$120,407
 
Income tax payable
   
7,333
     
7,333
     
11,666
 
Dividends payable
   
39,710
     
---
     
---
 
Other accrued expenses and other current liabilities
   
15,738
     
16,023
     
21,206
 
Total current liabilities
   
$223,050
     
$194,574
     
$153,279
 
Accrued pension liability
   
$196
     
$196
     
$192
 
Total liabilities
   
$223,246
     
$194,770
     
$153,471
 
Minority interest
   
$3,084
     
$1,715
     
$1,396
 
Stockholders’ equity:
                       
Ordinary share, US$0.0001 par value, 198,548,799, 197,661,063, and 193,600,302 shares issued and outstanding at September 30, 2007, June 30, 2007 and December 31, 2006, respectively
   
20
     
20
     
19
 
Additional paid-in capital
   
260,980
     
259,189
     
221,666
 
Accumulated other comprehensive loss
    (146 )     (198 )     (275 )
Unappropriated earnings
   
169,442
     
187,378
     
142,517
 
Total stockholders’ equity
   
$430,296
     
$446,389
     
$363,927
 
Total liabilities, minority interest and stockholders’ equity
   
$656,626
     
$642,874
     
$518,794
 
                         
 
8

 
Himax Technologies, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(Figures in Thousands of U.S. Dollars)

   
Three Months
Ended September 30,
   
Three
Months
Ended 
June 30,
 
   
2007
   
2006
   
2007
 
                   
Cash flows from operating activities:
                 
Net income
   
$21,773
     
$2,625
     
$26,842
 
Adjustments to reconcile net income to net cash provided
by operating activities:
                       
  Depreciation and amortization
   
4,179
     
1,119
     
2,587
 
  Write-off of in-process research and development
   
---
     
---
     
900
 
  Share-based compensation expenses
   
1,284
     
11,456
     
1,533
 
  Minority interest, net of tax
    (316 )    
157
      (247 )
  Loss (gain) on disposal of property, plant and equipment
    (16 )    
---
     
204
 
  Gain on sale of subsidiary shares and investments in
  non-marketable securities, net
    (112 )     (11 )     (125 )
  Gain on sale of marketable securities, net
    (31 )     (12 )     (23 )
  Deferred income taxes
   
---
     
132
      (727 )
  Inventories write downs
   
3,264
     
469
     
5,103
 
Changes in operating assets and liabilities:
                       
  Accounts receivable
   
15,850
      (14,772 )     (8,661 )
  Accounts receivable from related parties
    (40,994 )     (5,096 )     (31,856 )
  Inventories
    (4,032 )     (7,838 )     (10,868 )
  Prepaid expenses and other current assets
    (4,390 )     (2,530 )    
486
 
  Accounts payable
    (10,949 )    
8,815
     
49,753
 
  Income tax payable
   
---
      (1,075 )     (4,333 )
  Other accrued expenses and other current liabilities
    (114 )    
3,477
     
4,071
 
Net cash provided by (used in) operating activities
    (14,604 )     (3,084 )    
34,639
 
                         
Cash flows from investing activities:
                       
Purchase of property, plant and equipment
    (2,500 )     (5,691 )     (6,877 )
Proceeds from sale of property, plant and equipment
   
3
     
---
     
3
 
Purchase of available-for-sales marketable securities
    (12,144 )     (10,608 )     (11,723 )
Sales and maturities of available-for-sale marketable securities
   
9,404
     
8,480
     
11,258
 
Proceeds from sale of subsidiary shares and investments in non-marketable securities by Himax Technologies Limited
   
144
     
27
     
131
 
Purchase of investments in non-marketable securities
    (750 )     (1,410 )     (1,040 )
Purchase of subsidiary shares from minority interest
    (112 )     (64 )     (46 )
Refund from (increase in) refundable deposits
    (15 )     (92 )    
76
 
Release (pledge) of restricted cash equivalents
   
---
     
424
      (91 )
Net cash used in investing activities
    (5,970 )     (8,934 )     (8,309 )
                         
   

9


Himax Technologies, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(Figures in Thousands of U.S. Dollars)

   
Three Months
Ended September 30,
   
Three
Months
Ended 
June 30,
 
   
2007
   
2006
   
2007
 
Cash flows from financing activities:
                 
Proceeds from issuance of new shares by subsidiaries
   
$2,290
     
$655
     
$---
 
Acquisition of ordinary shares for retirement
   
---
     
---
      (625 )
Net cash provided by (used in) financing activities
   
2,290
     
655
      (625 )
Effect of exchange rate changes on cash and cash equivalents
   
22
     
73
      (35 )
Net increase (decrease) in cash and cash equivalents
    (18,262 )     (11,290 )    
25,670
 
Cash and cash equivalents at beginning of period
   
137,508
     
166,884
     
111,838
 
Cash and cash equivalents at end of period
   
$119,246
     
$155,594
     
$137,508
 
                         
Supplemental disclosures of cash flow information:
                       
   Cash paid during the period for income taxes
   
$24
     
$21
     
$4,706
 
Supplemental disclosures of non-cash investing and financing activities:
                       
   Payable for purchase of equipment and construction in progress
   
$6
      $(1,750 )     $(4,473 )
Dividends payable
   
$39,710
     
$---
     
$---
 
                         
                         


10

 
Himax Technologies, Inc.
Unaudited Supplemental Data – Reconciliation Schedule
(Figures in Thousands of U.S. Dollars)
 
Gross Margin and Operating Margin Excluding Share-based Compensation and Acquisition-Related Charges:

   
Three Months
Ended September 30,
   
Three
Months
Ended
June 30,
 
   
2007
   
2006
   
2007
 
Revenues
   
$243,337
     
$177,105
     
$222,883
 
                         
Gross profit
   
54,711
     
30,818
     
45,431
 
Add: Share-based compensation – Cost of revenues
   
355
     
208
     
25
 
Gross profit excluding share-based compensation
   
55,066
     
31,026
     
45,456
 
Gross margin excluding share-based compensation
    22.6 %     17.5 %     20.4 %
                         
Operating income
   
19,891
     
775
     
24,886
 
Add: Share-based compensation
   
15,710
     
11,456
     
1,533
 
Operating income excluding share-based compensation
   
35,601
     
12,231
     
26,419
 
Add: Acquisition-related charges – In-process R&D write off
   
---
     
---
     
900
 
 – Intangible assets amortization
   
554
     
---
     
742
 
Operating income excluding share-based compensation
and acquisition-related charges
   
36,155
     
12,231
     
28,061
 
Operating margin excluding share-based compensation
and acquisition-related charges
    14.9 %     6.9 %     12.6 %
Net income excluding share-based compensation and acquisition-related charges
   
38,037
     
14,081
     
30,017
 
Net margin excluding share-based compensation and acquisition-related charges
    15.6 %     8.0 %     13.5 %
                         
 
*  Gross margin excluding share-based compensation equals gross profit excluding share-based compensation divided by revenues
*  Operating margin excluding share-based compensation and acquisition-related charges equals operating income excluding share-based compensation and acquisition-related charges divided by revenues
*  Net margin excluding share-based compensation and acquisition-related charges equals net income excluding share-based compensation and acquisition-related charges divided by revenues

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Himax Technologies, Inc.
Unaudited Supplemental Data – Reconciliation Schedule
(Figures in Thousands of U.S. Dollars)
 
Gross Margin and Operating Margin Excluding Share-based Compensation and Acquisition-Related Charges:

   
Nine Months
Ended September 30,
 
   
2007
   
2006
 
Revenues
   
$651,111
     
$523,639
 
                 
Gross profit
   
136,203
     
101,288
 
Add: Share-based compensation – Cost of revenues
   
405
     
250
 
Gross profit excluding share-based compensation
   
136,608
     
101,538
 
Gross margin excluding share-based compensation
    21.0 %     19.4 %
                 
Operating income
   
61,537
     
43,244
 
Add: Share-based compensation
   
18,762
     
13,657
 
Operating income excluding share-based compensation
   
80,299
     
56,901
 
Add: Acquisition-related charges – In-process R&D write off
   
1,600
     
---
 
 – Intangible assets amortization
   
1,483
     
---
 
Operating income excluding share-based compensation
and acquisition-related charges
   
83,382
     
56,901
 
Operating margin excluding share-based compensation
and acquisition-related charges
    12.8 %     10.9 %
Net income excluding share-based compensation and acquisition-related charges
   
88,479
     
57,746
 
Net margin excluding share-based compensation and acquisition-related charges
    13.6 %     11.0 %

*  Gross margin excluding share-based compensation equals gross profit excluding share-based compensation divided by revenues
*  Operating margin excluding share-based compensation and acquisition-related charges equals operating income excluding share-based compensation and acquisition-related charges divided by revenues
*  Net margin excluding share-based compensation and acquisition-related charges equals net income excluding share-based compensation and acquisition-related charges divided by revenues


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Himax Technologies, Inc.
Unaudited Supplemental Data – Reconciliation Schedule
 

Diluted Earnings Per Share Excluding Share-based Compensation and Acquisition-Related Charges:
 

   
Three Months Ended
September 30,
 2007
   
Nine Months Ended
September 30,
2007
 
Diluted GAAP EPS
   
$0.11
     
$0.34
 
                 
Add: Estimated share-based compensation per diluted share
   
$0.08
     
$0.09
 
Add: Estimated acquisition-related charges
   
$ ---
     
$0.02
 
Diluted non-GAAP EPS excluding share-based compensation and acquisition-related charges
   
$0.19
     
$0.45
 
                 
Numbers do not add up due to rounding
               


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Exhibit 99.2
 
LIVE CALL INFORMATION
REPLAY INFORMATION
Friday, November 2, 2007  7AM Taiwan
Thursday, November  1, 2007 7PM NYC
CEO / CFO Number: 1-201-689-8561
Listener Call Number: 1-201-689-8560
 
 
Accessible 2 hours after the call through
noon on Friday, November 9, 2007 Taiwan
Replay Number: 1-201-612-7415
Account number: 3055
Conference ID number: 258193

Operator Intro: Welcome to Himax Technologies third quarter 2007 results Conference Call.  At this time, all participants are in a listen-only mode.  Later we will conduct a question and answer session.  At that time, if you have a question, you will need to press the star 1 on your push button phone.  The call is scheduled for one hour.

As a reminder, this conference is being recorded today.  A replay will be available 2 hours after the call today, through noon on Friday, November 9, 2007 in Taiwan.  The replay dial-in number is 1-201-612-7415 with account number 3055 and conference ID number 258193.  The replay will also be accessible at www.himax.com.tw.


David
 
Thank you operator. Welcome everyone to Himax’s third quarter 2007 earnings call.  Joining us from the company are Mr. Jordan Wu, President and Chief Executive Officer, and Mr. Max Chan, Chief Financial Officer.  After the company’s prepared comments we will have time for any questions.

If you have not yet received a copy of today’s results release, please call The Ruth Group at 646-536-7003.  Or you can get a copy off of Himax’s website.

Before we begin the formal remarks, the Company’s attorneys advise that certain statements in this conference call, 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 conference call.

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; 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 20-F dated June 22, 2007, as amended.

The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

At this time, I would now like to turn the call over to Mr. Jordan Wu.  Please go ahead, sir.
 
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Mr. Jordan Wu

 
Thank you David and thank you everyone for joining us on today’s call.

I will now start with a brief highlight of Himax’s performance during the third quarter of 2007 and discuss the outlook for the fourth quarter of 2007.  Max, our CFO, will then provide further details on our financial performance.

Our third quarter revenues came in within our guidance. At the same time, both gross margin and EPS were able to beat our guidance. This was another strong quarter for us.

In the third quarter, we achieved record high net revenues of $243.3 million, representing a 37.4% growth year-over-year and a 9.2% growth sequentially. The increase in revenue was primarily due to increase in demand for large applications products, especially TV, as we enter the strong season in the second half of the year.

Revenues from large panel display drivers were up 29.1% from the same period last year, or up 10.0% sequentially and accounted for approximately 82.9% of our total revenues in the third quarter.  Customers maintained high level of fab utilization to meet high demands for all of TV, monitor and notebook panels as holiday season approaches.

Revenues from small- and medium-sized display drivers grew 118.5% year-over-year and grew 2.6% sequentially. Small- and medium-sized revenue accounted for about 14.2% of our total revenues. While demand for handset in the third quarter was strong, capacity constrained at the panel maker’s level limited our handset shipments.

Our gross margin was 22.5% in the third quarter of 2007, up 510 basis points year-over-year and 210 basis points sequentially. We are pleased that we were able to improve our gross margin for the fourth consecutive quarter.  This positive trend showed the results of our continued efforts in diversifying our product offering and supplier base.

Our GAAP operating income was $19.9 million, up almost twenty-five folds from approximately $800 thousand in the same period last year, and down from $24.9 million in the previous quarter.
 
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The year-over-year increase was a result of achieving record high quarterly revenue, improving gross margin from a historical low level in the same period last year, and maintaining our operating expense at a relatively stable level. The sequential decline is primarily due to granting of our 2007 RSUs at the end of September.

Our GAAP net income came in at $21.8 million, up seven folds from $2.6 million in the same period last year, and down from $26.8 million in the previous quarter. EPS was $0.11, as compared to $0.01 in the same period last year and $0.14 in the previous quarter.

Excluding share-based compensation and acquisition-related charges, we achieved a record-high non-GAAP operating income of $36.2 million, up significantly from $12.2 million in the same period last year, and up from $28.1 million in the previous quarter. Also, we posted a record-high non-GAAP net income of $38.0 million, up considerably from $14.1 million in the same period last year, and up from $30.0 million in the previous quarter. Non-GAAP EPS of $0.19, also a record-high, was up from $0.07 in the same period last year and up from $0.15 in the previous quarter.

We made a 2007 annual RSU grant of approximately $26.4 million of which approximately 54.5% was paid out in cash and vested and expensed immediately. The remainder of the 2007 grant will be paid in restricted share units, which will be vested in three equal installments over the next three years, resulting in a maximum of approximately 1.5% dilution to our total shares outstanding. Max will provide more details on the 2007 RSU grant.

On October 12, we announced plans to spin-off our TV and monitor chipset operation, which will be named Himax Media Solutions, Inc., a wholly-owned subsidiary of Himax Taiwan upon its establishment. Himax Media Solutions, Inc. will be focusing on expanding market share in the global TV and monitor chipset market opportunity. We have identified certain strategic investors and have planned to invite them to partner with us in the future. We’ve already had a good working relationship with these partners, with our chips designed into several of their LCD TV and monitor projects. We believe this new company structure will allow us to better focus our resources for the global TV and monitor chipset market opportunity.

On November 1,our board approved a stock repurchase program that authorizes the Company to repurchase up to $40 million worth of the Company's American Depository Receipts, or ADRs,
 
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in the open market or through privately negotiated transactions, depending on prevailing market conditions and other factors. The program does not obligate Himax to acquire any particular amount of ADRs and may be modified or suspended at any time at the Company's sole discretion. With the repurchase program, we reaffirm our confidence and optimism in the long term future of the company. This also demonstrates our commitment to deliver value to our shareholders.

Now let me talk about our guidance for the fourth quarter of 2007.

We expect revenue growth for large application to decelerate as we approach seasonal downturn in the second half of the fourth quarter. However, we are excited about the outlook for our small- and medium-sized product segment as shipments of our new generation products to previously designed-in customers are either being ramped at present or expected to ramp up in the next quarter and onward.

Overall, we expect revenue to grow around mid-single digit in the fourth quarter and gross margin to remain flat.  We expect diluted GAAP EPS to be in the range of $0.16 to $0.17.

Now let me turn over to Max Chan, our CFO, for some financial details.
 

Mr. Max Chan

Thank you, Jordan.

Our net revenues in the third quarter were $243.3 million, representing a year-over-year growth of 37.4% and a sequential growth of 9.2%.

Our gross margin increased to 22.5% from 20.4% a quarter ago, primarily due to product mix change.

Our GAAP operating expenses were $34.8 million in the third quarter, up from $20.5 million in the previous quarter, primarily due to the annual grant of 2007 RSUs at the end of September.
 
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Our non-GAAP operating expenses, excluding share-based compensation and acquisition-related charges were approximately $18.9 million in the third quarter, slightly increased from approximately $17.4 million in the previous quarter. In the third quarter, share-based compensation was approximately $15.7 million, and acquisition-related charges were approximately $0.6 million.

The fair value of our 2007 annual RSU grant was around $26.4 million, of which approximately 54.5% or $14.4 million was paid out in cash, and vested and expensed immediately. The remainder of the grant will be vested in three equal installments over the next three years. Total share-based compensation accrued in the third quarter, including expenses from legacy grants amounted to $15.7 million, or $0.08 per diluted share.

Our net cash used in operating activities was approximately $14.6 million, down from approximately $34.6 million provided for in the previous quarter. The decline was primarily due to the cash payout of 2007 RSU grant and significant increase in sales in the third quarter.

On August 15, we announced that the board of directors declared a dividend of US$0.20 per ordinary share of the company, or approximately $40 million. The dividend was paid out on October 30, 2007 to shareholders of record on October 5th.

Capital expenditure for the third quarter was approximately $2.5 million, mainly for the purchase of software, equipments and subsequent payments relating to the earlier construction of our headquarters.

Our total headcount remained literally unchanged at around 1,050 at the end of the third quarter.

Jordan provided our 4Q07 outlook earlier. We are basing that guidance on approximately 199.5  million diluted weighted average outstanding shares.


Operator, that concludes our prepared remarks.  We can now take any questions.
 
 
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