Market Overview

Himax Technologies, Inc. Reports Second Quarter 2018 Financial Results and Provides Third Quarter 2018 Guidance

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Company Meets Q2 2018 Revenue, Gross Margin Guidance, Exceeds EPS Guidance

Provides Q3 2018 Guidance Revenue to be around Flat Sequentially, Gross Margin to be around 22.5%, IFRS Loss per ADS to be around 1.0 Cent and non-IFRS Earnings per ADS to be around 1.5 Cents

  • Q2 revenue increased 11.4% QoQ to $181.4M, came in at the mid-point of the Company's guidance
  • Product sales: large driver ICs, 33.4% of revenue, up 2.2% QoQ; small and medium-sized driver ICs, 49.2% of revenue, up 24.5% QoQ; non-driver products, 17.4% of revenue, down 1.1% QoQ
  • Q2 IFRS gross margin was 23%, up 50 bps sequentially due to improved product mix
  • Q2 IFRS profit was $2.0M, or 1.2 cents per diluted ADS, up from loss of $2.8M, or 1.6 cents per diluted ADS in Q1 2018
  • Expect 2H18 WLO shipment to increase significantly over 1H18
  • Company is in partnership with leading smartphone names to enable their 3D sensing by providing optics, projector or total solution, depending on their needs and in-house capabilities; projects cover all types of 3D sensing technologies including structured light, ASC and ToF  
  • Company remains positive on its long term business outlook

TAINAN, Taiwan, Aug. 09, 2018 (GLOBE NEWSWIRE) -- Himax Technologies, Inc. (NASDAQ:HIMX) ("Himax" or "Company"), a leading supplier and fabless manufacturer of display drivers and other semiconductor products, announced its financial results for the second quarter ended June 30, 2018.

"The Company's second quarter 2018 revenues and gross margin met our guidance while IFRS earnings per diluted ADS exceeded guidance. The anticipated sequential growth in revenue was mainly driven by accelerating TDDI shipment in the smartphone sector and further growth in the automotive sector in the small and medium-sized display driver business. Furthermore, our WLO business in the non-driver IC business rebounded as anticipated. Shipment volume increased and WLO capacity utilization improved subsequently," said Mr. Jordan Wu, President and Chief Executive Officer of Himax.

"Looking into the third quarter, we expect our large display driver IC business will grow sequentially benefiting from Chinese panel customers' capacity expansion and the ramping of new fabs. Our small and medium-sized business is likely to decline as our growth in the automotive segment will be offset by the significant decline of smartphone sales. The soft smartphone sales was caused by our limited TDDI shipment due to the constraint of industry pervasive capacity shortage issue and the traditional discrete driver IC is being replaced quickly by TDDI and AMOLED. To capture the TDDI opportunity, we have been working very hard to source and qualify additional foundry capacity. We expect the addition of new foundry capacity for TDDI will start mass production toward early fourth quarter and will substantially grow our TDDI revenue starting from Q4 2018."

"For the non-driver areas, we expect the WLO shipment for the second half of 2018 will increase significantly versus the first half. As to our 3D sensing business, we are in partnership with several leading smartphone names to enable their 3D sensing by providing optics, projector or total solution, depending on customer's needs and their in-house capabilities. The projects we are involved in cover all three types of 3D sensing technologies, namely structured light, active stereo camera (ASC), and to a lesser extent, time-of-flight (ToF). 3D sensing for Android smartphone market is still at a nascent stage with very limited adoption in 2018.  We expect the market adoption will pick up starting 2019. With our comprehensive technology coverage, proven manufacturing expertise, new solutions roadmap and alliances with leading AP platform providers, we believe we are best positioned to be the partner of choice for Android smartphone makers in their 3D sensing projects," said Mr. Jordan Wu.

Second Quarter 2018 Financial Results

The second quarter revenues of $181.4 million represented an increase of 11.4% sequentially and an increase of 19.5% year-over-year. Gross margin was 23.0%, up 0.5% sequentially.  IFRS earnings per diluted ADS were 1.2 cents, better than the guidance range of 0.0 to 1.0 cent per diluted ADS.

Revenue from large display drivers was $60.6 million, up 2.2% sequentially, and up 16.3% year-over-year, driven by increasing 4K TV penetration and Chinese panel customers' ramping of new LCD fabs. Large panel driver ICs accounted for 33.4% of the company's total revenues for the second quarter, compared to 36.4% in the first quarter of 2018 and 34.4% a year ago.

Revenue for small and medium-sized display drivers came in at $89.3 million, up 24.5% sequentially and up 27.5% year-over-year. The driver ICs for small and medium-sized applications accounted for 49.2% of total sales for the second quarter, as compared to 44.0% in the first quarter of 2018 and 46.1% a year ago. Sales into smartphones were up 54.3% sequentially and up 42.5% year-over-year. The growth was driven by accelerating TDDI shipments and the anticipated smartphone makers' inventory replenishment for new product launches.

Driver IC revenue for automotive applications recorded another historical quarter, up 15% sequentially and more than 35% year-over-year. The quarterly revenue reached $28.7 million, accounting for more than 19% of our driver IC revenue. Himax is happy with the strong momentum in this space.

Revenues from non-driver businesses were $31.5 million, down 1.1% sequentially but up 6.4% versus last year. Non-driver products accounted for 17.4% of total revenues, as compared to 19.6% in the first quarter of 2018 and 19.5% a year ago. The sequential decline was mainly due to reduced NRE income. The year-over-year increase was driven mainly by WLO shipment. The Company expects WLO shipment to continue to rebound strongly in the second half.

IFRS gross margin for the second quarter was 23.0%, up 50 basis points from 22.5% in the first quarter of 2018 but down 80 basis points from the same period last year. The sequential increase was due mainly to improved product mix.

IFRS operating expenses were $41.3 million in the second quarter of 2018, up 3.6% from the preceding quarter and up 11.3% from a year ago. The year-over-year increase was primarily the result of rising R&D expenses in the areas of 3D sensing, WLO, TDDI, and high-end TV, as well as annual merit increase.

IFRS operating margin for the second quarter of 2018 was 0.3%, up from -0.6% in the same period last year and up from -2.0% in the prior quarter. The sequential and the year-over-year increase was both a result of revenue increase but offset by increased operating expenses.

Second quarter non-IFRS operating income was $0.8 million, or 0.5% of sales, up from -0.3% for the same period last year and up from -1.8% a quarter ago.

IFRS profit for the second quarter was $2.0 million, or 1.2 cents per diluted ADS, compared to IFRS loss of $2.8 million, or 1.6 cents per diluted ADS, in the previous quarter and IFRS loss of $0.7 million, or 0.4 cents per diluted ADS, a year ago. The sequential increase was a result of higher sales and better gross margin.

Second quarter non-IFRS profit was $2.3 million, or 1.3 cents per diluted ADS, compared to a loss of $2.6 million, or 1.5 cents per diluted ADS last quarter and a loss of $0.3 million, or 0.2 cents per diluted ADS the same period last year.

Balance Sheet and Cash Flow

Himax had $126.7 million of cash, cash equivalents and other financial assets as of the end of June 2018, compared to $185.9 million at the same time last year and $151.9 million a quarter ago. The cash position dropped $25.2 million due primarily to (1) capex of $17.7 million, (2) cash outflow of $2.8 million from operations, and (3) Emza investment of $3.5 million. On top of the above cash position, restricted cash was $147.0 million at the end of the quarter, as compared to $147.0 million in the preceding quarter and $107.2 million a year ago. The restricted cash is mainly used to guarantee the Company's short-term borrowings for the same amount.

Himax's inventories as of June 30, 2018 were $142.1 million, down from $148.0 million a quarter ago and down from $147.7 million at the same time last year. Account receivables at the end of June 2018 were $176.3 million as compared to $164.5 million a year ago and $166.6 million last quarter. DSO was 93 days at the end of June 2018, as compared to 97 days a year ago and 92 days at end of the last quarter.

Net cash outflow from operating activities for the second quarter was $2.8 million as compared to an outflow of $1.2 million for the same period last year and an inflow of $2.3 million last quarter.

Capital expenditures were $17.7 million in the second quarter of 2018 versus $11.7 million a year ago and $18.6 million last quarter. The second quarter capex consisted mainly of ongoing payments for the new building's construction, WLO capacity expansion and installation of active alignment equipment to support the Company's 3D sensing business. Other capex, primarily for design tools and R&D related equipment for the Company's traditional IC design business, is around $2.5 million during the quarter.

Share Buyback Update

As of June 30, 2018, Himax had 172.1 million ADS outstanding, unchanged from last quarter. On a fully diluted basis, the total ADS outstanding are 172.5 million.

Fiscal Year 2017 Dividend Declaration

During the second quarter, the Company declared an annual cash dividend of 10 cents per ADS, totaling $17.2 million, which has been paid out on July 31. The Company's dividend is determined primarily by the prior year's profitability. Himax's decision to pay out 61.7% of last year's net profit demonstrated its continued support for the shareholder base and strong confidence in the near term outlook for the Company's newly increased capex and the overall long-term growth prospects.

2018 Investor Outreach and Conferences

Ms. Jackie Chang, CFO, Ms. Ophelia Lin, internal IR Deputy Director, Mr. Ken Liu, internal IR, and Mr. Greg Falesnik, Himax's US-based IR, will maintain corporate access for shareholders and attend future investor conferences. If you are interested in speaking with the management, please contact Himax's US or Taiwan-based investor relations contact at the numbers below.

Q3 2018 Outlook

Comparing to the second quarter revenues, Himax expects single digit growth for large driver ICs; mid single digit decline for small and medium-sized driver IC and around 15% growth for its non-driver IC business.

Display Driver IC Market
LDDIC
Large display driver IC business recorded low-single-digit growth in the second quarter due mainly to the Company's Chinese panel customers' ongoing capacity expansion, a more favorable product mix driven by the market's 4K TV demands and shipment to a new panel customer who recently started ramping up their first fab. Looking into the third quarter, while the Chinese domestic market is relatively slow for reasons such as weak currency, the western markets, especially in the US, remain robust. Himax sees a single digit growth for the third quarter as the Company continues to benefit from Chinese panel customers' capacity expansion and ramping of new fabs. However, foundry capacity shortage remains an issue. While Himax is making good progress in adding new capacity into its pool, the ultimate ramping schedule will depend on how fast its panel customers can go through their customer qualification, something all the Company's major customers are working very hard on.

Looking into the future, with the 2020 Tokyo Olympics approaching and more Gen 10.5 fabs coming online to enable very large screen 8K TVs, many TV manufacturers are rushing to introduce consumer-grade super high end products with 8K resolution. Capitalizing on the Company's 4K TV success, Himax is strongly positioned for this emerging market opportunity.

SMDDIC
The trend for full-screen, 18:9 display is already fully in place for smartphone with phone makers now aggressively adopting such screens for their 2018 and 2019 models even for mid-end and entry-level products. Himax's comprehensive TDDI product portfolio positions it well to support this trend. Himax is pleased that both its FHD+ and HD+ TDDI ICs enjoyed significant growth during Q2, with revenue and shipment volume both more than tripled during the quarter, despite being able to fulfill just a fraction of orders amid the severe foundry capacity shortage. Capped by the very limited capacity, its Q3 TDDI shipment will likely see some 10% decline from that of the second quarter. TDDI's foundry capacity shortage is even more challenging than that of the large display driver IC. To capture the TDDI opportunity, the Company has been working very hard to source and qualify additional foundry capacity. The Company is on track to complete the porting of its existing products into another foundry vendor and start mass production toward early fourth quarter. Himax expects the addition of the new foundry capacity will substantially grow its TDDI revenue starting from Q4 with further growth expected throughout 2019. In parallel, to further widen its reach, the Company is working on new designs based on additional foundry partners' processes which, however, will only be ready next year. The Company expects TDDI penetration will reach 40% in 2019 which represents an enormous growth opportunity for Himax. TDDI has more than double the ASP of the traditional driver IC with better margins. It will change Himax's product mix for smartphone display driver IC and make a very significant contribution to its growth going forward. Looking into the third quarter, sales for smartphones are likely to decline around 40% sequentially as the TDDI shipment is constrained by capacity shortage and the traditional discrete driver IC is being quickly replaced by TDDI and AMOLED.

In automotive segment, the Company continued to have new projects going into mass production which were design-wins of the prior years. During the second quarter, sales into automotive sector already accounted for more than 19% of its total driver IC sales and close to 16% of its total revenues. On top of the world's first TDDI projects for automotives during the first quarter, Himax's team further successfully added AMOLED design-wins during the second quarter. The Company has achieved a distant number one market share position thanks to its superior product quality, service and stable delivery. Q3 revenue in this segment is set to grow around 20% sequentially.

For third quarter small and medium-sized driver IC business, the company expects revenue to decline mid single digit sequentially.

Non-Driver Product Categories
The non-driver IC business segment has been the Company's most exciting growth area and a differentiator for Himax in the past few years.

3D Sensing Solutions
Since the Company announced 3D sensing as one of Himax's long term growth initiatives in 2017, 3D sensing, led by Apple's iPhone X, is gradually becoming a new industry trend as major Android smartphone makers beginning to integrate it into flagship models, although most of such projects are still in development stage. Leading Android smartphone makers are exploring various 3D sensing technologies, namely structured light, active stereo camera (ASC) and, to a lesser extent, time-of-flight (ToF), trying to strike a good balance of cost, specifications and application. More software players are entering the ecosystem to develop 3D sensing applications beyond the existing applications, namely facial recognition, online payment and camera performance enhancement. Being a leading player in the 3D sensing space, Himax is in partnership with several leading smartphone names to enable their 3D sensing by providing optics, projector or total solution, depending on the customer's needs and their in-house capabilities. The projects Himax is involved in cover all the three types of 3D sensing technologies mentioned above. These efforts will facilitate a broader adoption of 3D sensing on Android smartphone starting 2019. The Company's goal is to ensure that the smartphones backed by Himax 3D sensing technology will deliver the industry's highest standard in all of 3D depth accuracy, indoor/outdoor sensitivity, power consumption, size, data security and eye safety.

SLiM™, Himax's structured light 3D sensing hardware total solution which the Company jointly announced with Qualcomm in last August, targets premium smartphone market. The Qualcomm/Himax solution brings together Qualcomm's industry leading 3D algorithm with Himax's cutting-edge design and manufacturing capabilities in optics, NIR sensors, and ASIC, as well as the Company's unique know-how in 3D sensing system integration. It is by far the highest quality 3D sensing total solution available for the Android market right now. At present, Himax is working with customers who are targeting to bring new 3D sensing applications to smartphone, on top of facial unlock and online payment. The Company is now targeting the end of the year or early 2019 for shipment to the customers for their product launch in first half 2019, although the actual shipment date will ultimately be dictated by end customers. Another noteworthy update is that its SLiM™ total solution can work on Qualcomm's high end mobile platforms now, as opposed to being limited to only the premium Snapdragon platform when Himax first launched the technology, thereby lowering the total cost barrier of 3D sensing.

The Company's ASC 3D sensing solution, targeting mass market smartphone models, achieved a significant milestone during the second quarter. While structured light 3D sensing offers outstanding depth precision for its complex projector design, ASC 3D sensing can also enable facial recognition with a simpler projector. While it is somehow constrained by its limited depth precision, it is a lower cost alternative for face authentication and enjoys better software readiness since it is building on the existing dual camera ecosystem. Himax is working with top tier smartphone makers and leading platform partners concurrently on multiple projects. Early shipment is targeted to begin toward the end of the year with major ramp in 2019, although the actual shipment date will ultimately be dictated by end customers. The Company expects more design-wins in the coming months. It appears that ASC 3D sensing, with its cost advantage and the existing dual camera ecosystem, has a better chance of accelerating 3D sensing adoption for facial recognition on Android smartphone market during 2019.

WLO
As anticipated, the shipment volume to the Company's WLO customer for the second quarter was a lot higher versus that of the first quarter and its WLO capacity utilization improved subsequently. Himax expects the shipment for the second half to increase significantly versus that of the first half. The overall 2018 shipment will increase considerably year-over-year. Meanwhile, the Company is encouraged by the progress of its new R&D projects with the said customer for their next generation products centering around its exceptional design know-how and mass production expertise in WLO technology. Himax is very excited about the significant growth opportunities of these projects.

While 3D sensing is the top priority of the Company's WLO business at present, Himax also has engineering collaboration with select world-class technology leaders to develop wave-guide for AR glasses and micro displays using its advanced WLO technology. Himax expects to kick off new R&D projects during the third quarter.   

CAPEX
The Company announced the increase of the Phase I capital expenditure budget, which is on top of its regular capex for the IC design business, from $80 million to $105 million in early 2018. The majority of the Phase I investment is going to land and building, new equipment for the WLO anchor customer, and an initial capacity of 2 million units per month for 3D sensing. Of the $105 million budget, $33 million has been paid out in 2017, followed by $17.5 million made in the first quarter 2018 and another $15.2 million in the second quarter. The payment for the remaining $39.3 million is to be made throughout the rest of 2018. With the anticipation of broader 3D sensing adoption in 2019, Himax expects to further expand production capacity towards the end of the second half. Kick-off timing and amount of the Phase II investment is still being evaluated, depending on the customers' projected volume and timetable.

As the Company mentioned in the previous earnings calls, the capex budget will be funded through its internal resources and banking facilities. Himax has more than sufficient banking facilities with favorable cost for such capex budget and will start to draw down some of them in Q3 2018.

CMOS Image Sensor
Himax has been working with an industry leading fingerprint solution provider to develop an under-display optical fingerprint product in the last two years, targeting smartphones using OLED displays. Himax provides a customized low-power image sensor in the solution. The Company is pleased to announce that the solution has entered into mass production with a major Android smartphone OEM for their new flagship model with shipment expected in the coming months. The CMOS image sensor used in the solution will have a notably higher ASP than the Company's traditional display driver IC products.

On other CMOS image sensor business update, Himax continues to make great progress with its two machine vision sensor product lines, namely, near infrared ("NIR") sensor and Always-on-Sensor ("AoSTM"). NIR sensor is a critical part for both of our structured light and ASC 3D sensing solutions. The Company expects significant growth in its CMOS image sensor business as 3D sensing shipment gets started. On the AoSTM product line, the acquisition of Emza enables Himax to be uniquely positioned to provide ultra-low power imaging sensing solutions, leveraging Himax's industry leading super low power CIS design and Emza's unique AI-based computer vision algorithm. Himax is pleased with the status of engagement with leading players in areas such as connected home, smart building and security, all of which new frontiers for Himax.

For traditional human vision segments, the Company sees strong demands in laptop and increasing shipment for multimedia applications such as car recorders, surveillance, drones, home appliances, and consumer electronics, among others.

LCOS
Himax's main focus areas are AR goggle devices and head-up-displays (HUD) for automotives. While AR will take a few years to fully realize its market potential, the Company has seen many companies, be the top name multinationals or new start-ups, invest heavily to develop the ecosystem -- applications, software, operating system, system electronics, and optics. Himax is slated to kick off another AR goggle project with tailor-made micro display for a tier-1 tech name during the third quarter. In addition, the Company continues to make great progress in developing high-end holographic head-up display for automotives. Timing for such revenue contribution would be 2019 the earliest.

For non-driver IC business, the Company expects revenue to increase around 15% sequentially in the third quarter driven by WLO shipment. 

Third Quarter 2018 Guidance
The Company is providing the following financial guidance for the third quarter of 2018:

Net Revenue: To be around flat sequentially  
Gross Margin: To be around 22.5%, depending on final product mix
IFRS EPS: To be around -1.0 cent per diluted ADS  
Non-IFRS EPS(1): To be around 1.5 cents per diluted ADS  
(1) Non-IFRS EPS excludes share-based compensation and acquisition-related charges  

As the Company has done in the past, its third quarter IFRS earnings per diluted ADS guidance has taken into account its expected 2018 grant of restricted share units, or RSUs, to the team at the end of September. The 2018 RSUs, subject to its Board approval, is now assumed to be around $4.5 million, almost all of which, or 2.1 cents per diluted ADS, will be vested and expensed immediately on September 30th, the grant date. In comparison, the 2017 RSUs totaled $6.5 million, out of which $6.1 million was vested immediately. The grant of RSUs would lead to higher third quarter IFRS operating expenses compared to the other quarters of the year.

The Company's bottom line has been substantially affected by the drastic increase of R&D expenses since some two years ago when Himax decided to enter into a number of new areas, something the Company brought up to the market's attention repeatedly before. However, the Company believes its operation will start to be out of the trough starting from the third quarter, initially driven by the anticipated ramping of the new foundry for the TDDI product line and, thereafter, shipment of 3D sensing products in next year. 3D sensing, in particular, will represent a paradigm shift in the Company's business when it starts to achieve a broader market adoption.

HIMAX TECHNOLOGIES SECOND QUARTER 2018 EARNINGS CONFERENCE CALL

DATE: Thursday, August 9, 2018
TIME: U.S.       8:00 a.m. EDT
  Taiwan  8:00 p.m.
DIAL IN: U.S. +1 (866) 444-9147
  INTERNATIONAL +1 (678) 509-7569
CONFERENCE ID: 7399640
WEBCAST: https://edge.media-server.com/m6/p/hzg3keuv
   

A replay of the call will be available beginning two hours after the call through 11:30 a.m. US EDT on August 16, 2018 (11:30 p.m. Taiwan time, August 16, 2018) on www.himax.com.tw and by telephone at +1 (855) 859-2056 (US Domestic) or +1 (404) 537-3406  (International). The conference ID number is 7399640. This call is being webcast by Nasdaq and can be accessed by clicking on this link or Himax's website, where the webcast can be accessed through August 8, 2019.

About Himax Technologies, Inc.

Himax Technologies, Inc. (NASDAQ:HIMX) is a fabless semiconductor solution provider dedicated to display imaging processing technologies. Himax is a worldwide market leader in display driver ICs and timing controllers used in TVs, laptops, monitors, mobile phones, tablets, digital cameras, car navigation, virtual reality (VR) devices and many other consumer electronics devices. Additionally, Himax designs and provides controllers for touch sensor displays, in-cell Touch and Display Driver Integration (TDDI) single-chip solutions, LED driver ICs, power management ICs, scaler products for monitors and projectors, tailor-made video processing IC solutions, silicon IPs and LCOS micro-displays for augmented reality (AR) devices and heads-up displays (HUD) for automotive. The Company also offers digital camera solutions, including CMOS image sensors and wafer level optics for AR devices, 3D sensing and machine vision, which are used in a wide variety of applications such as mobile phone, tablet, laptop, TV, PC camera, automobile, security, medical devices and Internet of Things. Founded in 2001 and headquartered in Tainan, Taiwan, Himax currently employs around 2,200 people from three Taiwan-based offices in Tainan, Hsinchu and Taipei and country offices in China, Korea, Japan, Israel and the US. Himax has 2,997 patents granted and 442 patents pending approval worldwide as of June 30, 2018. Himax has retained its position as the leading display imaging processing semiconductor solution provider to consumer electronics brands worldwide.

http://www.himax.com.tw

Forward Looking Statements

Factors that could cause actual events or results to differ materially include, but not limited to, general business and economic conditions and the state of the semiconductor industry; market acceptance and competitiveness of the driver and non-driver products developed by the Company; demand for end-use applications products; reliance on a small group of principal customers; the uncertainty of continued success in technological innovations; our ability to develop and protect our intellectual property; pricing pressures including declines in average selling prices; changes in customer order patterns; changes in estimated full-year effective tax rate; shortages in supply of key components; changes in environmental laws and regulations; exchange rate fluctuations; regulatory approvals for further investments in our subsidiaries; our ability to collect accounts receivable and manage inventory and other risks described from time to time in the Company's SEC filings, including those risks identified in the section entitled "Risk Factors" in its Form 20-F for the year ended December 31, 2017 filed with the SEC, as may be amended.

Company Contacts:

Jackie Chang, CFO
Himax Technologies, Inc.
Tel: +886-2-2370-3999 Ext.22300
Or
US Tel: +1-949-585-9838 Ext.252
Fax: +886-2-2314-0877
Email: jackie_chang@himax.com.tw
www.himax.com.tw

Ophelia Lin, Investor Relations
Himax Technologies, Inc.
Tel: +886-2-2370-3999 Ext.22202
Fax: +886-2-2314-0877
Email: ophelia_lin@himax.com.tw
 www.himax.com.tw

Ken Liu, Investor Relations
Himax Technologies, Inc.
Tel: +886-2-2370-3999 Ext.22513
Fax: +886-2-2314-0877
Email: ken_liu@himax.com.tw
www.himax.com.tw

Investor Relations - US Representative
Greg Falesnik, Managing Director
MZ North America
Tel: +1-212-301-7130
Email: greg.falesnik@mzgroup.us
www.mzgroup.us

-Financial Tables-

Himax Technologies, Inc.
Unaudited Condensed Consolidated Statements of Profit or Loss
(These interim financials do not fully comply with IFRS because they omit all interim disclosure required by IFRS)
(Amounts in Thousands of U.S. Dollars, Except Share and Per Share Data)
 
   

Three Months
Ended
June 30,
  Three Months
Ended

March 31,
    2018       2017       2018  
           
Revenues $   181,365     $   151,730     $   162,851  
           
Costs and expenses:          
Cost of revenues   139,571       115,556       126,254  
Research and development   30,444       27,923       30,040  
General and administrative   5,632       4,521       4,906  
Sales and marketing   5,218       4,647       4,895  
Total costs and expenses     180,865         152,647         166,095  
           
Operating income (loss)     500         (917 )       (3,244 )
           
Non operating income (loss):          
Interest income   672       619       549  
Changes in fair value of financial assets at fair value through profit or loss   (25 )     37       1  
Share of losses of associates   (1,099 )     (697 )     (844 )
Foreign currency exchange gains (losses), net   242       (23 )     (258 )
Finance costs   (265 )     (190 )     (252 )
Other income (loss), net   1,677       (41 )     4  
    1,202       (295 )     (800 )
Profit (loss) before income taxes   1,702       (1,212 )     (4,044 )
Income tax expense (benefit)   306       (179 )     (728 )
Profit (loss) for the period   1,396       (1,033 )     (3,316 )
Loss attributable to noncontrolling interests   650       353       487  
Profit (loss) attributable to Himax Technologies, Inc. stockholders $   2,046     $   (680 )   $   (2,829 )
           
Basic earnings (loss) per ADS attributable to Himax Technologies, Inc. stockholders $   0.012     $   (0.004 )   $   (0.016 )
Diluted earnings (loss) per ADS attributable to Himax Technologies, Inc. stockholders $   0.012     $   (0.004 )   $   (0.016 )
           
Basic Weighted Average Outstanding ADS   172,499       172,399       172,499  
Diluted Weighted Average Outstanding ADS   172,539       172,462       172,536  
                       


   
Himax Technologies, Inc.  
Unaudited Condensed Consolidated Statements of Profit or Loss  
(Amounts in Thousands of U.S. Dollars, Except Share and Per Share Data)  
   
    Six  Months
Ended
June 30,
        2018       2017  
           
Revenues     $   344,216     $   306,940  
           
Costs and expenses:          
Cost of revenues       265,825       234,865  
Research and development       60,484       53,256  
General and administrative       10,538       9,122  
Sales and marketing       10,113       9,016  
Total costs and expenses         346,960         306,259  
           
Operating income (loss)         (2,744 )       681  
           
Non operating income (loss):          
Interest income       1,221       1,162  
Changes in fair value of financial assets at fair value through profit or loss       (24 )     107  
Share of losses of associates       (1,943 )     (831 )
Foreign currency exchange losses, net       (16 )     (1,149 )
Finance costs       (517 )     (404 )
Other income, net       1,681       7  
        402       (1,108 )
Loss before income taxes       (2,342 )     (427 )
Income tax benefit       (422 )     (57 )
Loss for the period       (1,920 )     (370 )
Loss attributable to noncontrolling interests       1,137       906  
Profit (loss) attributable to Himax Technologies, Inc. stockholders     $ (783 )   $   536  
           
Basic earnings (loss) per ADS attributable to Himax Technologies, Inc. stockholders     $   (0.005 )   $   0.003  
Diluted earnings (loss) per ADS attributable to Himax Technologies, Inc. stockholders     $   (0.005 )   $   0.003  
           
Basic Weighted Average Outstanding ADS         172,499         172,399  
Diluted Weighted Average Outstanding ADS         172,538         172,444  
                   


 
Himax Technologies, Inc.
Unaudited Supplemental Financial Information  
(Amounts in Thousands of U.S. Dollars)
       
The amount of share-based compensation included in applicable statements of profit or loss categories is summarized as follows:  
Three Months
Ended
June 30,
  Three Months
Ended March 31,
    2018       2017       2018  
Share-based compensation          
Cost of revenues $ 12     $ 25     $ 12  
Research and development   58       139       57  
General and administrative   9       37       9  
Sales and marketing   14       30       13  
Income tax benefit   (13 )     (38 )     (12 )
Total $ 80     $ 193     $ 79  
           
The amount of acquisition-related charges included in applicable statements of profit or loss categories is summarized as follows:          
           
Acquisition-related charges          
Research and development $ 246     $ 246     $ 246  
Income tax benefit   (71 )       (98 )     (71 )
Total $ 175     $ 148     $ 175  
           


Himax Technologies, Inc.
Unaudited Supplemental Financial Information  
(Amounts in Thousands of U.S. Dollars)
   
The amount of share-based compensation included in applicable statements of profit or loss categories is summarized as follows:     Six Months
Ended
June 30,

        2018       2017  
Share-based compensation          
Cost of revenues     $ 24     $ 50  
Research and development       115       278  
General and administrative       18       75  
Sales and marketing       27       58  
Income tax benefit       (25 )     (74 )
Total     $ 159     $ 387  
           
The amount of acquisition-related charges included in applicable statements of profit or loss categories is summarized as follows:        
           
Acquisition-related charges          
Research and development     $ 492     $ 492  
Income tax benefit         (142 )     (197 )
Total     $ 350     $ 295  
           


 
Himax Technologies, Inc.
IFRS Unaudited Condensed Consolidated Statements of Financial Position
(Amounts in Thousands of U.S. Dollars)
 
    June 30, 2018   March 31, 2018   June 30, 2017
Assets            
Current assets:            
Cash and cash equivalents   $   114,480     $   139,806     $   177,206  
Financial assets at amortized cost       12,154         11,753         5,306  
Financial assets at fair value through profit or loss       66         361         3,357  
Accounts receivable, net       176,286         166,603         164,516  
Inventories       142,077         147,962         147,680  
Income taxes receivable       45         45         41  
Restricted deposit       147,000         147,000         107,201  
Other receivable from related parties       2,803         3,515         4,150  
Other current assets       18,743         19,609         12,288  
Total current assets       613,654         636,654         621,745  
Financial assets at fair value through profit or loss       1,574         1,600         10,562  
Financial assets at fair value through other
  comprehensive income
      802         1,522         1,680  
Equity method investments       9,964         9,905         4,055  
Property, plant and equipment, net       106,041         95,953         53,852  
Deferred tax assets       7,834         8,199         7,882  
Goodwill       28,138         28,138         28,138  
Other intangible assets, net       13,525         3,027         3,340  
Restricted deposit       460         481         460  
Other non-current assets       3,660         8,579         4,684  
        171,998         157,404         114,653  
Total assets   $   785,652     $   794,058     $   736,398  
Liabilities and Equity        
Current liabilities:            
Short-term borrowings   $   147,000     $   147,000     $   107,000  
Financial liability at amortized cost       5,003         4,920         -  
Accounts payable       128,862         134,970         113,670  
Income taxes payable       1,872         4,920         8,304  
Other payable to related party       2,200         1,900         -  
Other current liabilities       58,113         44,701         72,335  
Total current liabilities       343,050         338,411         301,309  
Financial liability at amortized cost       -         -         4,678  
Net defined benefit liabilities       1,125         1,178         1,113  
Deferred tax liabilities       2,795         106         1,368  
Other non-current liabilities       2,888         3,672         1,436  
        6,808         4,956         8,595  
Total liabilities       349,858         343,367         309,904  
Equity            
Ordinary shares       107,010         107,010         107,010  
Additional paid-in capital       106,644         104,533         103,913  
Treasury shares       (8,878 )       (8,878 )       (9,020 )
Accumulated other comprehensive income       (1,497 )       (322 )       (1,025 )
Retained earnings       235,410         250,574         226,065  
Equity attributable to owners of Himax Technologies, Inc.       438,689         452,917         426,943  
Noncontrolling interests       (2,895 )       (2,226 )       (449 )
Total equity       435,794         450,691         426,494  
Total liabilities and equity   $   785,652     $   794,058     $   736,398  
                         


 

Himax Technologies, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(Amounts in Thousands of U.S. Dollars)
    Three Months
Ended
June 30,
  Three
Months
Ended
March 31,
      2018       2017       2018  
             
Cash flows from operating activities:            
Profit (loss) for the period   $   1,396     $   (1,033 )   $   (3,316 )
Adjustments for:            
Depreciation and amortization       5,180         3,471         5,098  
Bad debt expense       190         -         -  
Share-based compensation expenses       93         232         91  
Gain on re-measurement of the pre-existing relationships in a business combination       (1,662 )       -         -  
Changes in fair value of financial assets at fair value through profit or loss       25         (37 )       (1 )
Interest income       (672 )       (619 )       (549 )
Finance costs       265         190         252  
Income tax expense (benefit)       306         (179 )       (728 )
Share of losses of associates       1,099         697         844  
Inventories write downs       3,567         2,487         2,954  
Foreign currency exchange losses (gains) of financial assets        340         -          (222 )
        10,127         5,209         4,423  
Changes in:            
Accounts receivable       (9,872 )       4,621         22,171  
Inventories       2,318         (1,907 )       (15,716 )
Other receivable from related parties        (8 )       -          (15 )
Other current assets       1,205         1,611         (1,672 )
Accounts payable       (6,108 )       (2,271 )       (4,963 )
Accounts payable to related party       -         (1,098 )       -  
Other payable to related party       300         -         (300 )
Net defined benefit liabilities       (53 )       (2 )       26  
Other current liabilities       1,318         100         (1,629 )
Other non-current liabilities       167         (509 )       (7 )
Cash generated from operating activities       (606 )       5,754         2,318  
Interest received       1,014         1,110         166  
Interest paid       (182 )       (113 )       (170 )
Income tax paid       (3,032 )       (7,986 )       (37 )
Net cash provided by (used in) operating activities       (2,806 )       (1,235 )       2,277  
             
Cash flows from investing activities:            
Acquisitions of property, plant and equipment       (17,745 )       (11,701 )       (18,550 )
Acquisitions of intangible assets       (109 )       (218 )       (94 )
Acquisitions of financial assets at amortized cost       (1,135 )       (303 )       (1,897 )
Proceeds from disposals of financial assets at amortized cost       303         298         754  
Acquisitions of financial assets at fair value through profit or loss       (7,445 )       (15,676 )       (4,330 )
Proceeds from disposals of financial assets at fair value through profit or loss       7,693         16,199         26,506  
Acquisition of business       -         -          (700 )
Acquisition of a subsidiary, net of cash used       (3,301 )       -         -  
Acquisition of equity method investments       -         (2,230 )       -  
Decrease (increase) in refundable deposits     6       284       (1 )
Releases (pledges) of restricted deposit       21         (115 )       (11 )
 


 

Himax Technologies, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(Amounts in Thousands of U.S. Dollars)
    Three Months
Ended
June 30,
  Three Months
Ended
March 31,
      2018       2017       2018  
Cash paid for loan made to related parties   $   (530 )   $   -     $   (250 )
Cash received from loan made to related party       -         1,500         -  
Income tax paid for disposal of financial assets at fair value through profit or loss       -         -          (2,187 )
Net cash used in investing activities       (22,242 )       (11,962 )       (760 )
             
Cash flows from financing activities:            
Proceeds from issuance of new shares by subsidiary        -         -         11  
Acquisitions of noncontrolling interests       -         (1 )       -  
Proceeds from short-term borrowings       27,000         27,000         -  
Repayments of short-term borrowings       (27,000 )       (27,000 )       -  
Net cash provided by (used in) financing activities       -         (1 )       11  
Effect of foreign currency exchange rate changes on cash and cash equivalents       (278 )       59         255  
Net increase (decrease) in cash and cash equivalents       (25,326 )       (13,139 )       1,783  
Cash and cash equivalents at beginning of period       139,806         190,345         138,023  
Cash and cash equivalents at end of period   $   114,480     $   177,206     $   139,806  
             


 

Himax Technologies, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(Amounts in Thousands of U.S. Dollars)
        Six Months
Ended
June 30,

          2018       2017  
             
Cash flows from operating activities:            
Loss for the period       $   (1,920 )   $   (370 )
Adjustments for:            
Depreciation and amortization           10,278         6,910  
Bad debt expense           190         -  
Share-based compensation expenses           184         461  
Gain on disposals of property, plant and equipment           -         (28 )
Gain on re-measurement of the pre-existing relationships in a business combination           (1,662 )       -  
Changes in fair value of financial assets at fair value through profit or loss           24         (107 )
Interest income           (1,221 )       (1,162 )
Finance costs           517         404  
Income tax benefit           (422 )       (57 )
Share of losses of associates           1,943         831  
Inventories write downs           6,521         5,534  
Foreign currency exchange losses of financial assets           118         -  
            14,550         12,416  
Changes in:            
Accounts receivable           12,299         28,094  
Inventories           (13,398 )       (3,466 )
Other receivable from related parties           (23 )       -  
Other current assets           (467 )       733  
Accounts payable           (11,071 )       (28,599 )
Accounts payable to related party           -         (576 )
Net defined benefit liabilities           (27 )       39  
Other current liabilities           (311 )       2,727  
Other non-current liabilities           160         (14 )
Cash generated from operating activities           1,712         11,354  
Interest received           1,180         1,160  
Interest paid           (352 )       (250 )
Income tax paid           (3,069 )       (8,039 )
Net cash provided by (used in) operating activities           (529 )       4,225  
             
Cash flows from investing activities:            
Acquisitions of property, plant and equipment         (36,295 )     (13,699 )
Proceeds from disposals of property, plant and equipment         -       28  
Acquisitions of intangible assets         (203 )     (229 )
Acquisitions of financial assets at amortized cost         (3,032 )     (757 )
Proceeds from disposals of financial assets at amortized cost         1,057       744  
Acquisitions of financial assets at fair value through profit or loss         (11,775 )     (20,323 )
Proceeds from disposals of financial assets at fair value through profit or loss         34,199       22,273  
Acquisition of business         (700 )     -  
Acquisition of a subsidiary, net of cash used         (3,301 )     -  
Acquisition of equity method investments         -       (2,230 )
Decrease (increase) in refundable deposits         5       (26 )
Releases (pledges) of restricted deposit         10       (337 )
 


 
Himax Technologies, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(Amounts in Thousands of U.S. Dollars)
        Six Months
Ended
June 30,

          2018       2017  
Cash paid for loan made to related parties       $ (780 )   $ -  
Cash received from loan made to related party         -       3,000  
Income tax paid for disposal of financial assets at fair value through profit or loss         (2,187 )     -  
Net cash used in investing activities         (23,002 )     (11,556 )
             
Cash flows from financing activities:            
Proceeds from issuance of new shares by subsidiary         11       -  
Proceeds from disposals of subsidiary shares to noncontrolling interests by Himax Imaging, Inc.         -       4  
Acquisitions of noncontrolling interests         -       (1 )
Release of restricted deposit         -       31,000  
Proceeds from short-term borrowings         27,000       54,161  
Repayments of short-term borrowings         (27,000 )     (85,161 )
Net cash provided by financing activities         11       3  
Effect of foreign currency exchange rate changes on cash and cash equivalents         (23 )     82  
Net decrease in cash and cash equivalents         (23,543 )     (7,246 )
Cash and cash equivalents at beginning of period         138,023       184,452  
Cash and cash equivalents at end of period       $   114,480     $   177,206  
             


Himax Technologies, Inc.
Non-IFRS Unaudited Supplemental Data – Reconciliation Schedule
(Amounts in Thousands of U.S. Dollars)
 
Gross Margin, Operating Margin and Net Margin Excluding Share-Based Compensation and Acquisition-Related Charges:
  Three Months
Ended
June 30,
  Three
Months
Ended
March 31,
     2018        2017        2018  
Revenues $ 181,365     $ 151,730     $ 162,851  
Gross profit   41,794       36,174       36,597  
Add: Share-based compensation – cost of revenues   12       25       12  
Gross profit excluding share-based compensation   41,806       36,199       36,609  
Gross margin excluding share-based compensation   23.1 %     23.9 %     22.5 %
Operating income (loss)   500       (917 )     (3,244 )
Add: Share-based compensation   93       231       91  
Operating income (loss) excluding share-based compensation   593       (686 )     (3,153 )
Add: Acquisition-related charges –intangible assets amortization   246       246       246  
Operating income (loss) excluding share-based compensation and acquisition-related charges   839       (440 )     (2,907 )
Operating margin excluding share-based compensation and acquisition-related charges   0.5 %     (0.3 %)     (1.8 %)
Profit (loss) attributable to Himax Technologies, Inc. stockholders   2,046       (680 )     (2,829 )
Add: Share-based compensation, net of tax   80       193       79  
Add: Acquisition-related charges, net of tax   175       148       175  
Profit (loss) attributable to Himax Technologies, Inc. stockholders excluding share-based compensation and acquisition-related charges   2,301       (339 )     (2,575 )
Net margin attributable to Himax Technologies, Inc. stockholders excluding share-based compensation and acquisition-related charges   1.3 %     (0.2 %)     (1.6 %)
           
*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 (loss) excluding share-based compensation and acquisition-related charges divided by revenues
*Net margin attributable to Himax Technologies, Inc. stockholders excluding share-based compensation and acquisition-related charges equals profit (loss) attributable to Himax Technologies, Inc. stockholders excluding share-based compensation and acquisition-related charges divided by revenues


 
Himax Technologies, Inc.
Non-IFRS Unaudited Supplemental Data – Reconciliation Schedule
(Amounts in Thousands of U.S. Dollars)
 
Gross Margin, Operating Margin and Net Margin Excluding Share-Based Compensation and Acquisition-Related Charges:
    Six Months
Ended
June 30,
         2018        2017  
Revenues     $ 344,216     $ 306,940  
Gross profit       78,391       72,075  
Add: Share-based compensation – cost of revenues       24       50  
Gross profit excluding share-based compensation       78,415       72,125  
Gross margin excluding share-based compensation       22.8 %     23.5 %
Operating income (loss)       (2,744 )     681  
Add: Share-based compensation       184       461  
Operating income (loss) excluding share-based compensation       (2,560 )     1,142  
Add: Acquisition-related charges –intangible assets amortization       492       492  
Operating income (loss) excluding share-based compensation and acquisition-related charges       (2,068 )     1,634  
Operating margin excluding share-based compensation and acquisition-related charges       (0.6 %)     0.5 %
Profit (loss) attributable to Himax Technologies, Inc. stockholders       (783 )     536  
Add: Share-based compensation, net of tax       159       387  
Add: Acquisition-related charges, net of tax       350       295  
Profit (loss) attributable to Himax Technologies, Inc. stockholders excluding share-based compensation and acquisition-related charges       (274 )     1,218  
Net margin attributable to Himax Technologies, Inc. stockholders excluding share-based compensation and acquisition-related charges       (0.1 %)     0.4 %
           
*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 (loss) excluding share-based compensation and acquisition-related charges divided by revenues
*Net margin attributable to Himax Technologies, Inc. stockholders excluding share-based compensation and acquisition-related charges equals profit (loss) attributable to Himax Technologies, Inc. stockholders excluding share-based compensation and acquisition-related charges divided by revenues


Diluted Earnings (Loss) Per ADS Attributable to Himax Technologies, Inc. Stockholders Excluding Share-based Compensation and Acquisition-Related Charges: (Amounts in U.S. Dollars)  
 

 
Three Months
Ended
June 30,
  Six Months
Ended
June 30,
    2018     2018  
Diluted IFRS earnings (loss) per ADS attributable to Himax Technologies, Inc. stockholders $ 0.012     ($0.005 )
Add: Share-based compensation per ADS $ 0.000     $0.001  
Add: Acquisition-related charges per ADS $ 0.001     $0.002  
       
Diluted non-IFRS earnings (loss) per ADS attributable to Himax Technologies, Inc. stockholders excluding share-based compensation and acquisition-related charges $ 0.013     ($0.002 )
       

Numbers do not add up due to rounding

 
Himax Technologies, Inc.
Reconciliation of unaudited condensed consolidated statement of financial position as of June 30, 2017
(Amounts in Thousands of U.S. Dollars)
             
U.S. GAAP   Effect of Transition to IFRS   IFRS    
Items   Amount   Recognition
Difference
  Presentation
Difference
  Amount   Items   Note
Assets                   Assets    
Current assets:                   Current assets:    
Cash and cash equivalents   $ 177,206   $ -     $ -     $ 177,206   Cash and cash equivalents    
Investments in marketable securities available-for-sale     8,663     -        (8,663 )      -     A-1
    -     -       5,306       5,306   Financial assets at amortized cost   A-1
     -     -       3,357       3,357   Financial assets at fair value through profit or loss   A-1
Accounts receivable, less allowance for doubtful accounts, sales returns and discounts     163,243     -       1,273       164,516   Accounts receivable, net   B
Inventories     147,680     -       -       147,680   Inventories    
    -     -       41       41   Income taxes receivable    
Restricted cash, cash equivalents and marketable securities     107,201     -       -       107,201   Restricted deposit    
Other receivables from related parties     4,150     -       -       4,150   Other receivable from related parties    
Prepaid expenses and other current assets     12,329      -       (41 )     12,288   Other current assets    
Total current assets     620,472       -        1,273       621,745   Total current assets    
Investment in non-marketable equity securities      12,242     -       (12,242 )     -       A-2
     -     -       10,562       10,562   Financial assets at fair value through profit or loss   A-2
   
-
    -       1,680      
1,680
  Financial assets at fair value through other comprehensive income   A-2
Equity method investments     4,055     -       -       4,055   Equity method investments    
Property, plant and equipment, net     57,813     -       (3,961 )     53,852   Property, plant and equipment, net   C
Deferred tax assets     6,671     (56 )     1,267       7,882   Deferred tax assets   D,F
Goodwill     28,138     -       -       28,138   Goodwill    
Other intangible assets, net     2,675     -       665       3,340   Other intangible assets, net   C
Restricted marketable securities     460     -       -       460   Restricted deposit    
Other assets       1,478       (90 )       3,296         4,684   Other non-current assets   C,F
      113,532       (146 )       1,267       114,653        
Total assets   $ 734,004   $   (146 )   $   2,540     $ 736,398   Total assets    

(Continued)

 
Himax Technologies, Inc.
Reconciliation of unaudited condensed consolidated statement of financial position as of June 30, 2017
(Amounts in Thousands of U.S. Dollars)
             
U.S. GAAP   Effect of Transition to IFRS   IFRS    
Items   Amount   Recognition
Difference
  Presentation
Difference
  Amount   Items   Note
Liabilities, Redeemable noncontrolling interest and Equity                   Liabilities and Equity    
Current liabilities:                   Current liabilities:    
Short-term debt   $ 107,000     $ -     $ -     $ 107,000     Short-term borrowings    
Accounts payable     113,670       -       -       113,670     Accounts payable    
Income taxes payable     7,778       -       526       8,304     Income taxes payable   E
Other accrued expenses and other current liabilities     71,062        -       1,273       72,335     Other current liabilities   B
Total current liabilities       299,510       -       1,799       301,309     Total current liabilities    
    -       4,678       -       4,678     Financial liability at amortized cost   A-3
    -       (15 )     1,128       1,113     Net defined benefit liabilities   F
    -       -       1,368       1,368     Deferred tax liabilities   D
Other liabilities       3,191         -         (1,755 )       1,436     Other non-current liabilities   D,E,F
        3,191         4,663         741         8,595          
Total liabilities       302,701         4,663         2,540         309,904     Total liabilities    
Redeemable noncontrolling interest       3,656         (3,656 )       -         -       A-3
Equity                   Equity    
Himax Technologies, Inc. stockholders' equity:                   Himax Technologies, Inc. stockholders' equity:    
Ordinary shares     107,010       -       -       107,010     Ordinary shares    
Additional paid-in capital     106,837       (2,924 )     -       103,913     Additional paid-in capital   G
Treasury shares     (9,020 )     -       -       (9,020 )   Treasury shares    
Accumulated other comprehensive loss     (2,041
)
    1,016        -       (1,025
)
  Accumulated other comprehensive income   F
Unappropriated retained earnings      225,312         753         -       226,065     Retained earnings    
Himax Technologies, Inc. stockholders' equity     428,098       (1,155 )    

  -
      426,943     Equity attributable to owners of Himax Technologies, Inc.   H
Noncontrolling interests       (451 )       2         -         (449 )   Noncontrolling interests   F
Total equity      427,647         (1,153 )       -       426,494     Total equity    
Total liabilities, redeemable noncontrolling interest and equity   $ 734,004     $ (146 )   $ 2,540     $ 736,398     Total liabilities and equity    

(Concluded)

 

 
Himax Technologies, Inc.
Reconciliation of unaudited condensed consolidated statement of profit or loss for the three months ended June 30, 2017
(Amounts in Thousands of U.S. Dollars)
 
U.S. GAAP   Effect of Transition to IFRS   IFRS
   
Items   Amount   Recognition
Difference
  Presentation
Difference
  Amount   Items   Note
Revenues   $ 151,730     $ -     $ -     $ 151,730     Revenues    
                             
Costs and expenses:                       Costs and expenses:    
Cost of revenues     115,556       -       -       115,556     Cost of revenues    
Research and development     27,921       2       -       27,923     Research and development   G
General and administrative     4,552       (31 )     -       4,521     General and administrative   G
Sales and marketing     4,641         6         -         4,647     Sales and marketing   G
Total costs and expenses       152,670         (23 )       -         152,647     Total costs and expenses    
                         
Operating loss       (940 )       23         -         (917 )   Operating loss    
                         
Non operating income (loss):                   Non operating income (loss):    
Interest income     619       -       -       619     Interest income    
Gain on sale of securities, net      37        -       -       37     Changes in fair value of financial assets at fair value through profit or loss    
Equity in losses of equity method investees      (697 )     -       -       (697 )   Share of losses of associates    
Foreign currency exchange losses, net     (27 )     4       -       (23 )   Foreign currency exchange losses, net   F
Interest expense     (113 )     (77 )     -       (190 )   Finance costs   A-3
Other losses, net       (41 )       -         -         (41 )   Other losses, net    
        (222 )       (73 )       -         (295 )        
Loss before income taxes     (1,162 )     (50 )     -       (1,212 )   Loss before income taxes    
Income tax benefit       (179 )       -         -         (179 )   Income tax benefit   F
Net loss     (983 )     (50 )     -       (1,033 )   Loss for the period    
Net loss attributable to noncontrolling interests     354        (1 )     -       353     Loss attributable to noncontrolling interests   F
Net loss attributable to Himax Technologies, Inc. stockholders   $ (629 )   $ (51 )   $ -     $ (680 )   Loss attributable to Himax Technologies, Inc. stockholders    
Basic loss per ADS attributable to Himax Technologies, Inc. stockholders   $ (0.004 )           $ (0.004 )   Basic loss per ADS attributable to Himax Technologies, Inc. stockholders    
Diluted loss per ADS attributable to Himax Technologies, Inc. stockholders   $ (0.004 )           $ (0.004 )   Diluted loss per ADS attributable to Himax Technologies, Inc. stockholders    
Basic Weighted Average Outstanding ADS     172,399               172,399     Basic Weighted Average Outstanding ADS    
Diluted Weighted Average Outstanding ADS     172,462               172,462     Diluted Weighted Average Outstanding ADS    

 

 
Himax Technologies, Inc.
Reconciliation of unaudited condensed consolidated statement of profit or loss for the six months ended June 30, 2017
(Amounts in Thousands of U.S. Dollars)
 
U.S. GAAP   Effect of Transition to IFRS   IFRS    
Items   Amount   Recognition
Difference
    Presentation
Difference
    Amount   Items   Note
Revenues   $ 306,940     $ -     $ -     $ 306,940     Revenues    
                         
Costs and expenses:                   Costs and expenses:    
Cost of revenues     234,865       -       -       234,865     Cost of revenues    
Research and development     53,252       4       -       53,256     Research and development   G
General and administrative     9,185       (63 )     -       9,122     General and administrative   G
Sales and marketing       9,005         11         -         9,016     Sales and marketing   G
Total costs and expenses     306,307       (48 )       -        306,259     Total costs and expenses    
                         
Operating income       633         48         -         681     Operating income    
                         
Non operating income (loss):                   Non operating income (loss):    
Interest income     1,162       -       -       1,162     Interest income    


Gain on sale of securities, net
    107         -         -      
 107
    Changes in fair value of financial assets at fair value through profit or loss    
Equity in losses of equity method investees     (831 )     -       -       (831 )   Share of losses of associates    
Foreign currency exchange losses, net     (1,060 )     (89 )     -       (1,149 )   Foreign currency exchange losses, net   F
Interest expense     (250 )     (154 )     -       (404 )   Finance costs   A-3
Other income, net       7         -         -         7     Other income, net    
        (865 )       (243 )       -         (1,108 )        
Loss before income taxes     (232 )     (195 )     -       (427 )   Loss before income taxes    
Income tax benefit       (58 )       1         -         (57 )   Income tax benefit   F
Net loss     (174 )     (196 )     -       (370 )   Loss for the period    
Net loss attributable to noncontrolling interests     908       (2 )      -       906     Loss attributable to noncontrolling interests   F
Net income attributable to Himax Technologies, Inc. stockholders   $ 734     $ (198 )   $  -     $ 536     Profit attributable to Himax Technologies, Inc. stockholders    
Basic earnings per ADS attributable to Himax Technologies, Inc. stockholders   $ 0.004             $ 0.003     Basic earnings per ADS attributable to Himax Technologies, Inc. stockholders    
Diluted earnings per ADS attributable to Himax Technologies, Inc. stockholders   $ 0.004             $ 0.003     Diluted earnings per ADS attributable to Himax Technologies, Inc. stockholders    
Basic Weighted Average Outstanding ADS     172,399               172,399     Basic Weighted Average Outstanding ADS    
Diluted Weighted Average Outstanding ADS     172,444               172,444     Diluted Weighted Average Outstanding ADS    


Notes to the reconciliation of the main differences:

A) Financial instruments

Under U.S. GAAP, investment securities consist of investments in marketable securities and investments in non-marketable equity securities. All of our investments in marketable securities are classified as available-for-sale securities and are reported at fair value. Investments in non-marketable equity securities in which we do not have the ability to exercise significant influence over the operating and financial policies of the investee are stated at cost.

Under IFRS, IFRS 9 Financial Instruments includes guidance on the classification and measurement of financial instruments, a new expected credit loss model for calculating impairment on financial assets, and the new general hedge accounting requirements. It is effective for annual reporting periods beginning on January 1, 2018. To better reflect the presentation of the consolidated statements of financial position as of June 30, 2018, we reclassified comparative period information as follows:

A-1)  

As of June 30, 2017, we had $8,663 thousand reported as investments in marketable securities available-for-sale under U.S. GAAP, that were reclassified to financial assets at amortized cost and financial assets at fair value through profit or loss-current, at amounts of $5,306 thousand and $3,357 thousand, respectively, under IFRS.

A-2)        

As of June 30, 2017, we had $12,242 thousand reported as investment in non-marketable equity securities under U.S. GAAP, that were reclassified to financial assets at fair value through profit or loss-noncurrent and financial assets at fair value through other comprehensive income at amounts of $10,562 thousand and $1,680 thousand, respectively, under IFRS.

A-3)        

Under U.S. GAAP, we recognized redeemable convertible preferred shares which were issued to a non-controlling shareholder by Himax Display Inc., a consolidated subsidiary, as temporary equity. The redeemable convertible preferred shares were presented as redeemable noncontrolling interest and recognized at fair value.

Under IFRS, we recognized the above-mentioned redeemable convertible preferred shares as financial liability at amortized cost using effective interest method.

As of June 30, 2017, we had $3,656 thousand reported as redeemable noncontrolling interest under U.S. GAAP, that were reclassified to financial liability at amortized cost-noncurrent and recognized interest expense (finance costs) using effective interest method which decreased the retained earnings by $1,022 thousand. After the above adjustments, we had $4,678 thousand reported as financial liability at amortized cost-noncurrent under IFRS.

For the six months and three months ended June 30, 2017, interest expense (finance costs) was adjusted for an increase of $154 thousand and $77 thousand, respectively.

B) Allowance of sales returns and discounts

Under U.S. GAAP, allowance of sales returns and discounts were recognized as a reduction in revenue in the year the related revenue is recognized based on historical experience. The corresponding allowance of sales returns and discounts was presented as a reduction in accounts receivable.

Under IFRS, the allowance of sales returns and discounts is a present obligation with uncertain timing and an amount that arises from past events and is therefore reclassified as provisions. 

As of June 30, 2017, the amounts reclassified from allowance of sales returns and discounts to provisions was $1,273 thousand.

C) Property, plant and equipment, net

Under U.S. GAAP, property, plant, and equipment typically consist of software and long-lived tangible assets used to create and distribute an entity's products.

Under IFRS, property, plant and equipment are tangible items. Certain software that is not an integral part of the related hardware and prepayment for equipment not shipped to the factory are reclassified out from property, plant and equipment as they do not meet the definition of property, plant and equipment.

As of June 30, 2017, property, plant and equipment, net of $3,961 thousand were reclassified to other intangible assets, net and other non-current assets at amounts of $665 thousand and $3,296 thousand, respectively.

D) Deferred tax assets and liabilities

Under U.S. GAAP, for a particular tax-paying component of an entity and within a particular tax jurisdiction, all current / non-current deferred tax liabilities and assets are offset and presented as a single amount.

Under IFRS, deferred tax liabilities and assets are offset only if the entity has a legally enforceable right to offset current tax liabilities and assets.  

As of June 30, 2017, the amounts reclassified from deferred tax assets to deferred tax liabilities was $1,267 thousand.

E) Income taxes payable

Under U.S. GAAP, income taxes payable are classified as current if cash payment is expected within 12 months; if not, the amount is classified as noncurrent.

Under IFRS, income taxes payable are classified as current unless an unconditional right to defer payment for a period greater than twelve months exists.

As of June 30, 2017, the amounts reclassified from other liabilities to income taxes payable was $526 thousand.

F) Employee benefits

Under U.S. GAAP, actuarial gains and losses arising in the period are recognized immediately in OCI and amortized from accumulated OCI into the profit or loss over the employees' remaining service period.

Under IFRS, remeasurements of the net defined benefit liability (asset) are recognized in OCI and are not reclassified to profit or loss in a subsequent period.

As of June 30, 2017, net defined benefit assets included in other assets, net defined benefit liabilities, deferred tax assets and remeasurements of the net defined benefit liability or asset related to components of accumulated other comprehensive income were adjusted for a decrease of $90 thousand, $15 thousand, $56 thousand and an increase of $1,016 thousand, respectively.

G) Share-Based Compensation

Under U.S. GAAP, we recognized compensation expense by straight-line method and recognized excess tax benefits from share-based payments.

Under IFRS, we recognized compensation expense by graded vesting and there is no requirement of recognizing excess tax benefits under IFRS.

For the six months and three months ended June 30, 2017, operating expense for share-based compensation was adjusted for a decrease of $48 thousand and $23 thousand, respectively.

H) Reconciliation of equity attributable to Himax from U.S. GAAP to IFRS summarized below:

      June 30,
2017
  Note
Equity attributable to Himax under U.S. GAAP     $   428,098      
           
Financial liability at amortized cost         (1,022 )   A-3
Employee benefits         (133 )   F
          (1,155 )    
Equity attributable to Himax under IFRS     $   426,943      
               

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