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

Company Meets Q1 2018 Revenue Guidance, Exceeds Gross Margin and EPS Guidance

Provides Q2 2018 Guidance Revenue to Increase around 9% to 14% Sequentially, Gross Margin to be around 23% and IFRS EPS to be 0.0 to 1.0 Cent

TAINAN, Taiwan, May 10, 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 first quarter ended March 31, 2018.

“The Company’s first quarter 2018 revenues came in at the high end of our guidance while gross margin and IFRS loss per diluted ADS were both better than guidance. The anticipated sequential decline in revenue was mainly due to lower sales in the smartphone segment in the small and medium-sized display driver business reflecting seasonality and the overall weak smartphone market, as well as the much reduced WLO shipment in the non-driver businesses per the anchor customer’s demand forecast. Despite the decline in the first quarter of 2018, Himax expects a solid rebound in the second quarter overall and sequential growth across all three major product categories,” said Mr. Jordan Wu, President and Chief Executive Officer of Himax.

“Going into the second quarter, while our large display driver IC business will continue benefiting from Chinese panel customers’ ongoing capacity expansion and in-cell TDDI shipment for smartphone in the small and medium display driver IC business will benefit from the new model launches, the growth in both segments would be somewhat offset  by the foundry capacity shortage issue. We are working very hard to source and qualify additional foundry capacity in addition to securing more capacity from the existing foundries. As to automotive segment, we continue to have new projects going into mass production which were design-wins of the prior years.”

“For the non-driver areas, we are optimistic that WLO shipment to the anchor customer for the second quarter will rise from that of the first quarter per customer’s forecast. SLiM™, our structured light based 3D sensing total solution, which we announced jointly with Qualcomm for Android-based smartphone last August is ready for mass production. The Qualcomm/Himax solution is by far the highest quality 3D sensing total solution available for the Android market right now. However, because each smartphone maker’s design and requirement for facial recognition and online payment are somewhat different and therefore the integration of structured light 3D sensing technologies into end products, typically flagship or premium models, is taking longer than we anticipated. We are now targeting the end of the year for shipment to customers for their smartphones’ sales in the first quarter of next year. As to the active stereoscopic camera (ASC) 3D sensing solution plan that we unveiled in the last earnings call, the joint development with an industry leading AP platform player is well under way. The ASC 3D sensing solution, a lower cost alternative to structured light 3D sensing solution for its relatively simple projector, is targeting more mass market smartphone models for facial recognition. Our goal is to have ASC 3D sensing solution ready for mass production by the end of this year. Overall, we believe the 3D sensing adoption on Android smartphone in 2018 would be limited but foresee the market demands will increase substantially starting 2019. With our leading technologies, proven manufacturing expertise, new solution roadmap and alliance with leading AP providers, we believe we are well positioned to be the partner of choice for Android smartphone makers in their 3D sensing projects.”

“Last but not the least, we are pleased to report an emerging optical fingerprint opportunity for the non-driver CMOS image sensor business. Combining the leading fingerprint solution design of our partner and a low-power CMOS image sensor with superior sensitivity which we fully customized for this purpose, a number of design-in projects are already ongoing and we expect more to come,” added Mr. Wu. “Along with the new smartphone designs featuring edge-to-edge displays, structured light 3D sensing and ASC 3D sensing, both for facial recognition, as well as under-display optical sensor for fingerprint authentication are three new approaches for phone unlock and online payment to replace the traditional home button with capacitive fingerprint technology. Himax is uniquely positioned in that we offer critical technologies in all of the three solutions and are already a key player by forming different collaboration partnerships for each of the three alternatives. They represent immense revenue opportunities with much higher ASP and gross margin versus our mainstream display driver IC business.”

First Quarter 2018 Financial Results

The first quarter revenues of $162.9 million represented a decrease of 10.1% sequentially and an increase of 4.9% year-over-year. Gross margin was 22.5%, 50 basis points higher than guidance, but down 210 basis points sequentially. IFRS loss per diluted ADS was 1.6 cents, better than the guidance range of 2.0 to 3.0 cents.

Revenue from large display drivers was $59.3 million, up 1.6% sequentially and up 0.1% year-over-year. Large panel driver ICs accounted for 36.4% of Himax’s total revenues for the first quarter, compared to 32.3% in the fourth quarter of 2017 and 38.2% a year ago. The first quarter is traditionally the bottom of the year because it has fewer working days due to Chinese New Year. Against seasonality, the Company’s large panel driver business grew low-single-digit sequentially, driven by increasing 4K TV penetration and Chinese panel customers’ ramping of new LCD fabs.

Revenue for small and medium-sized display drivers came in at $71.7 million, down 11.8% sequentially and up 7.6% year-over-year, due to seasonality and the overall weak smartphone market. The product segment accounted for 44.0% of total sales for the first quarter, as compared to 44.9% in the fourth quarter of 2017 and 42.9% a year ago. Sales into smartphones were down 23.0% sequentially and declined 5.4% year-over-year. The Company’s TDDI shipment in Q1 was still hindered by customers’ high inventory despite its numerous design-wins for HD+ and FHD+ projects with top tier customers. However, Himax expects the shipment of its TDDI chips to accelerate starting the second quarter, but the volume would be somewhat offset by foundry capacity constraint that the industry is facing right now.

Small and medium-sized driver IC sales for automotive application recorded another historical quarter. Revenue, against seasonality, went up 1% sequentially and close to 40% year-over-year. The quarterly revenue is now close to $25 million, reaching almost 20% of the total driver IC revenues. Driver IC sales for tablets were down 9.2% sequentially but up 2.4% year-over-year due to weak overall market demand in this product segment.

Revenues from non-driver businesses were $31.9 million, down 23.2% sequentially but up 8.5% versus last year. Non-driver products accounted for 19.6% of total revenues, as compared to 22.8% in the last quarter and 18.9% a year ago. The sequential decline was mainly due to lower than expected WLO shipment, offset by higher NRE income. The year-over-year increase was driven mainly by the WLO product shipment to a leading customer and, to a lesser extent, rising sales of timing controllers, CMOS image sensors and NRE income. Himax expects WLO shipment to increase in the second quarter and rebound strongly in the second half.

IFRS gross margin for the first quarter was 22.5%, down 210 basis points from the last quarter and down 60 basis points from the same period last year. The sequential margin decline was due mainly to the reduced order from its WLO anchor customer, resulting in higher depreciation and overhead charges on a per unit basis.

IFRS operating expenses were $39.8 million in the first quarter, down 1.1% from the preceding quarter but up 16.1% from a year ago. The significant 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. In addition, NT dollar appreciation against the US dollar caused the company’s salary expense to increase around $1.2 million as Himax pays the bulk of its employee salaries in NT dollars.

IFRS operating margin for the first quarter was -2.0%, down from 1.0% for the same period last year and 2.4% in the previous quarter. The sequential decline was a result of lower sales and lower gross margin. The year-over-year decrease was caused by lower gross margin and higher expenses.

First quarter non-IFRS operating loss was $2.9 million or -1.8% of sales, down from 1.3% for the same period last year and down from 2.6% a quarter ago. The sequential decline was a result of lower sales and lower gross margin and the year-over-year decrease was caused by lower gross margin and higher expenses.

IFRS loss for the first quarter was $2.8 million, or 1.6 cents per diluted ADS, compared to profit of $23.5 million, or 13.6 cents per diluted ADS, in the previous quarter and profit of $1.2 million, or 0.7 cents per diluted ADS, a year ago. The sequential decline was a result of lower sales and lower gross margin. An investment gain of $20.7 million in the last quarter for disposal of a direct investment in September 2017 also caused the first quarter profit to decline. The year-over-year decrease was caused by higher expenses.

First quarter non-IFRS loss was $2.6 million, or 1.5 cents per diluted ADS, compared to non-IFRS profit of $23.8 million, or 13.8 cents per diluted ADS last quarter and non-IFRS profit of $1.6 million, or 1.0 cent in the same period last year.

Balance Sheet and Cash Flow

Himax had $151.9 million of cash, cash equivalents and other financial assets as of the end of March 2018, compared to $199.5 million at the same time last year and $148.9 million a quarter ago. On top of the above cash position, restricted cash was $147.0 million at the end of the quarter, unchanged from $147.0 million in the preceding quarter and up from $107.4 million a year ago. The restricted cash is mainly used to guarantee the Company’s short-term borrowings for the same amount. Himax continues to maintain a very strong balance sheet and remain a debt-free company.

Himax’s inventories as of March 31, 2018 were $148.0 million, down from $148.3 million a year ago and up from $135.2 million a quarter ago. Accounts receivable at the end of March 2018 were $166.6 million as compared to $169.1 million a year ago and $188.8 million last quarter. DSO was 92 days at the end of March 2018, as compared to 98 days a year ago and 101 days at end of the last quarter.

Net cash inflow from operating activities for the first quarter was $2.3 million as compared to an inflow of $5.5 million for the same period last year and an inflow of $8.3 million for the last quarter. The decrease in operating cash flow is mainly due to lower net profit.

Capital expenditures were $18.6 million in the first quarter of 2018 versus $2.0 million a year ago and $15.5 million in the last quarter. The first quarter’s capital expenditure consisted mainly of ongoing payments for the new building’s construction, WLO capacity expansion and installation of active alignment equipment to support Himax’s 3D sensing business. Other CAPEX, primarily for the investment of design tools and R&D related equipment for its traditional IC design business, is around $1 million during the quarter.

Share Buyback Update

As of March 31, 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.

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.

Business Updates

Himax expects a solid rebound in the second quarter overall and sequential growth across all three major product categories.

Display Driver IC Market
Large display driver IC business recorded low-single-digit growth in the first quarter against seasonality due mainly to Himax’s Chinese panel customers’ capacity expansion and the market’s increasing 4K TV demands. As many of the Company’s panel customers continue to ramp new fabs and run the existing capacity at high utilization, Himax would likely see continued growth in the second quarter, on the back of the first quarter’s performance. Himax remains the market leader in the large panel driver IC business in China and will be a major beneficiary from China’s ongoing capacity expansion. In the last earnings call, Himax highlighted that the whole industry is going through a capacity shortage of 8” foundry where the vast majority of large panel driver ICs are fabricated. Himax was not able to fulfill some orders due to tight foundry capacity during the first quarter. While the capacity shortage continued into the second quarter when Himax still cannot fulfill all the orders, the Company has successfully added a 12” fab into the pool of its foundry capacity to ease the shortage issue. Himax expects to make small volume shipment for TV related driver IC products from this fab starting the second quarter. However, the ultimate ramping schedule will depend on how fast Himax’s panel customers can go through their customer qualification, something all the Company’s major customers are working very hard on. With the 2020 Tokyo Olympics approaching, TV makers are rushing to develop super high end products with 8K resolution. Himax has recently secured another 8K TV design win for a major panel maker and expects more to come in the next few quarters. The Company expects a low-single-digit sequential revenue growth for large display driver ICs, a double-digit growth year-over-year.

Despite the first quarter decline in smartphone display driver IC sales due to soft market demand and seasonality, Himax sees smartphone makers starting to replenish inventory in the second quarter in preparation for the launch of new phones, which will benefit its second quarter business. Overall, Himax is expecting a strong sequential growth for its smartphone business and its HD+ and FHD+ TDDI shipment are set to ramp up in Q2 as the Company indicated. TDDI represents a new source of revenue for Himax with higher ASP and better margin than the traditional driver IC, hence the Company expects the acceleration of TDDI shipment will lead to improvement of its small and medium panel driver IC product mix and contribute to overall sales growth in 2018. Moreover, its new generation FHD+ TDDI with chip on film (COF) package have secured design wins from leading Chinese smartphone brands with mass production expected in the latter half of this year. TDDI with COF package for LCD displays can enable super-slim bezel design for premium smartphone models at a much lower cost than having similar form factor using OLED displays. Similar to the situation in the large display driver IC, the TDDI market is also facing a foundry capacity shortage issue. While trying to get as much capacity as it can from the existing foundries, Himax is working very hard to source and qualify additional foundry capacity for its TDDI ICs.

As to automotive segment, Himax continues to have new projects going into mass production which were design-wins of the prior years. In the first quarter, sales into automotive sector have accounted for more than 15% of its total revenues and it achieved a very significant milestone to gain the world’s first TDDI design-wins for automotive application with mass production target of late 2019 to 2020. Q2 revenue in this segment is set to grow around 20% sequentially and around 50% year-over-year. Himax has engaged all of the major automotive panel manufacturers worldwide for long-term partnerships and secured many of their key projects pipelined for the next few years.

Going into the second quarter, due to customers’ new launches of smartphones, increasing TDDI shipment and the fast growing automotive display driver sales, Himax expects small and medium-sized driver IC revenue to be up around 20% both sequentially and year-over-year.

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

New Technologies Needed for Edge-to-Edge Display
3D sensing total solution is primarily targeting the Android based smartphone at present. Nowadays new smartphone designs feature edge-to-edge displays, removing home button and minimizing border area to provide better viewing experience. Along with the new design, three new approaches of biometric authentication for phone unlock and online payments are emerging to replace the traditional home button with capacitive fingerprint technology. These three new solutions for the Android smartphones are: structured light 3D sensing and active stereoscopic camera (ASC) 3D sensing, both for facial recognition, as well as under-display optical sensor for fingerprint authentication.

Naturally, all of these three solutions have advantages and challenges. Himax thinks all three can fulfill different demands and can therefore co-exist in the market place. Structured light 3D sensing offers outstanding depth precision but the cost is the highest for its complex projector design and manufacturing. ASC is a lower cost alternative to structured light 3D for its relatively simple projector and the fact that it is built on the existing dual camera ecosystem. It is, however, constrained by more limited depth precision. Under-display fingerprint, with a similar cost to the ASC solution, is the closest alternative to the prevailing capacitive type fingerprint which is already familiar to the consumer. However, under-display fingerprint is limited to a single function of authentication without the possibility for other applications such as gesture sensing, photo enhancement or AR as can be achieved by the two 3D sensing approaches. Himax enjoys a unique position in that it offers critical technologies in all of the three solutions and are already a key player by forming different collaboration partnerships for each of the three alternatives. They represent immense revenue opportunities with much higher ASP and gross margin versus Himax’s mainstream display driver IC business.

Structured Light 3D Sensing
SLiM™, Himax’s structured light based 3D sensing total solution, which it announced jointly with Qualcomm last August, brings together Qualcomm’s industry leading 3D algorithm with Himax’s cutting-edge design and manufacturing capabilities in optics and NIR sensors as well as its unique know-how in 3D sensing system integration. The majority of the key technologies inside the SLiMTM solution is developed and supplied by Himax itself. These critical technologies include, on the projector end, DOE and collimator utilizing its world leading WLO technology, a tailor-made laser driver IC, and high precision active alignment for the projector assembly; and on the receiver end, a high efficiency near-infrared CMOS image sensor. Last but not least, Himax also developed an ASIC by incorporating Qualcomm’s algorithm for 3D depth decoding. The fact that all of these critical elements are developed in-house puts Himax in a unique leading position. It represents a very high barrier of entry for any potential competition and a much higher ASP and better profit margin for Himax.

The Qualcomm/Himax solution is by far the highest quality 3D sensing total solution available for the Android market right now. It has the industry’s best performance in all of 3D depth accuracy, indoor/outdoor sensitivity, power consumption and dimensions. It has passed the toughest eye safety standards with a proprietary glass broken detection mechanism to safeguard the user from any potential harm. The Company is pleased to report that the Himax SLiMTM solution is now ready for mass production. It has delivered production ready samples to select smartphone makers as well as their preferred facial recognition and secure online payment ecosystem partners for their development into end products, typically flagship or premium models. As each smartphone maker’s design and requirement are somewhat different, such developments are taking longer than we anticipated. Himax is now targeting the end of the year for shipment to customers for their smartphones’ sales in the first quarter of next year.

Right now, Himax SLiMTM solution is only available on Qualcomm Snapdragon premium mobile platforms. Equipped with the ASIC for 3D depth decoding that Himax has developed, Himax can extend the solution to more mid- to high-end platforms. This initiative will make the SLiMTM solution more affordable for smartphone makers as the price differential among different application processor platforms can be very significant. With 3D depth decoding handled by the ASIC, the smartphone’s AP can be freed up for other applications and lower end platforms with less computing power can be adopted for structured light 3D sensing.

Active Stereoscopic Camera 3D Sensing
Himax unveiled its plan for a lower cost 3D sensing solution with ASC technology in the last earnings call, targeting more mass market smartphone models for facial recognition. The Company is pleased to report that the joint development with an industry leading AP platform player is well under way. The collaboration leverages its WLO and DOE expertise, as well as active alignment manufacturing know-how and high sensitivity NIR sensors. The Company’s target is to have ASC 3D sensing solution ready for mass production by the end of this year. Given the cost benefit, it has attracted a lot of interest from potential smartphone customers. While lower cost compared to structure light 3D, ASC will still represent a much higher ASP and better gross margin potential for Himax.

Himax believes the 3D sensing adoption on Android smartphone in 2018 would be limited but foresee the market demands will increase substantially starting 2019. With its leading technologies, proven manufacturing expertise, new solution roadmap and alliance with leading AP providers, Himax believes it is well positioned to be the partner of choice for Android smartphone makers in their 3D sensing projects.

Optical Fingerprint 
Optical fingerprint is an emerging opportunity for Himax. 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. A number of design-in projects are already ongoing and Himax expects more to come. Combining the leading fingerprint solution design of its partner and a low-power CMOS image sensor with superior sensitivity which Himax fully customized for this purpose, this optical fingerprint solution is able to deliver outstanding performance even under extreme conditions such as ultra-low light or direct bright sunlight, or when the finger is very cold or dry. Similar to 3D sensing, optical fingerprint is new and complex with a high barrier of entry. Again, the CMOS image sensor used in the solution will have a much higher ASP and better margin than the Company’s traditional display driver IC products.

WLO
In the last earnings call, Himax reported that the Company’s WLO anchor customer had lowered its volume for the first quarter. After the earnings call, the customer made a further order reduction. The much reduced shipment negatively impacted Himax’s Q1 gross margin as lower utilization of its WLO fab led to much higher equipment depreciation and factory overhead on a per unit basis. Judging by the customer’s forecast, Himax is optimistic that the shipment for the second quarter will rise from that of the first quarter and expect the volume to be significantly higher in the second half. Meanwhile, Himax is very encouraged by the progress of its new R&D projects with the said customer for their future generation products centering around its exceptional design know-how and mass production expertise in WLO technology.

CAPEX
Himax announced the increase of the Phase I capital expenditure budget from $80 million to $105 million in the last earnings call. The Phase I is being executed as scheduled. Since February, the Company has been moving in equipment and some manufacturing related staff to the new building and started tuning the manufacturing process and conducting production trial run for its 3D sensing solutions. Himax has already achieved pretty satisfactory production yields in the internal pilot production. Of the $105 million budget, $33 million has been paid out in 2017 and another $17.5 million in the first quarter 2018. The payment for the remaining $54.5 million is to be made throughout the rest of 2018.

As Himax mentioned in the previous earnings calls, the CAPEX budget for Phases I will be funded through Himax’s internal resources and banking facilities, if so needed.

CMOS Image Sensor
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 of its SLiMTM and ASC 3D sensing solutions. The Company’s NIR sensors’ overall performance, measured primarily by way of quantum efficiency, is far ahead of those of its peers for 3D sensing. On the AoS product line, Himax announced the full acquisition of Emza in March. With the acquisition, Himax is now uniquely positioned to provide ultra low power imaging sensing solutions, complete with Himax’s industry leading super low power CIS design and Emza’s unique AI-based computer vision algorithm. This will also help Himax enter into markets beyond consumer electronics, such as connected homes, smart buildings and security.

For the traditional human vision segments, Himax sees strong demands in laptops and increasing shipments 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, Himax 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. The Company continues to have active engineering activities with several tier-1 tech names with ambition to bring next generation smart glasses to the market. In addition, Himax continues to make great progress in developing high-end head-up display for automotives. Himax and its partners together have secured a few design wins. Timing for such revenue contribution would be 2019 the earliest. Himax believes LCOS represents a significant long term growth opportunity for the Company.

For non-driver IC business, Himax expects a low-single-digit revenue growth sequentially in the second quarter, and around 10% growth year-over-year. 

Second Quarter 2018 Guidance

The Company is providing the following financial guidance for the second quarter of 2018: 
Net Revenue:  To increase 9% to 14% sequentially, representing a double-digit year-over-year growth 
Gross Margin: To be around 23% sequentially, depending on final product mix 
IFRS EPS: 0.0 to 1.0 cent per diluted ADS
   

Beginning January 1, 2018, Himax adopted International Financial Reporting Standards ("IFRS") issued by the International Accounting Standard Board ("IASB") to prepare its consolidated financial statements. The Company doesn’t expect the transition from US GAAP to IFRS to have any significant impact on its financial results.

HIMAX TECHNOLOGIES FIRST QUARTER 2018 EARNINGS CONFERENCE CALL

DATE: Thursday, May 10, 2018
TIME:  U.S.8:00 a.m. EDT
  Taiwan8:00 p.m.
DIAL IN: U.S. +1 (866) 444-9147
  INTERNATIONAL +1 (678) 509-7569
CONFERENCE ID:  5288328 
WEBCAST:  https://edge.media-server.com/m6/p/wifc44z6 
    

A replay of the call will be available beginning two hours after the call through 10:59 a.m. US EDT on May 17th, 2018 (10:59 p.m. Taiwan time, May 17th, 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 5288328. 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 May 10, 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 head-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 2,150 people from three Taiwan-based offices in Tainan, Hsinchu and Taipei and country offices in China, Korea, Japan and the US. Himax has 2,999 patents granted and 439 patents pending approval worldwide as of March 31th, 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 March 31,		 Three Months
Ended
December 31,
 2018 2017  2017
      
Revenues$  162,851  $  155,210  $  181,081 
      
Costs and expenses:     
Cost of revenues 126,254   119,309   136,499 
Research and development 30,040   25,333   29,387 
General and administrative 4,906   4,601   5,401 
Sales and marketing 4,895   4,369   5,515 
Total costs and expenses   166,095     153,612     176,802 
      
Operating income (loss)   (3,244)    1,598     4,279 
      
Non operating income (loss):     
Interest income 549   543   554 
Changes in fair value of financial assets at fair value through profit or loss 1   70   23,064 
Share of losses of associates (844)  (134)  (483)
Foreign currency exchange losses, net (258)  (1,126)  (322)
Finance costs (252)  (214)  (250)
Other income, net 4   48   10 
  (800)  (813)  22,573 
Profit (loss) before income taxes (4,044)  785   26,852 
Income tax expense (benefit) (728)  122   3,989 
Profit (loss) for the period (3,316)  663   22,863 
Loss attributable to noncontrolling interests 487   553   681 
Profit (loss) attributable to Himax Technologies, Inc. stockholders$  (2,829) $  1,216  $  23,544 
      
Basic earnings (loss) per ADS attributable to Himax Technologies, Inc. stockholders$  (0.016) $  0.007  $  0.136 
Diluted earnings (loss) per ADS attributable to Himax Technologies, Inc. stockholders$  (0.016) $  0.007  $  0.136 
      
Basic Weighted Average Outstanding ADS   172,499     172,399     172,499 
Diluted Weighted Average Outstanding ADS   172,536     172,424     172,518 
            


 
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 March 31,		 Three
Months
Ended
December
 2018 2017 31, 2017
Share-based compensation     
Cost of revenues$12  $25  $24 
Research and development 57   139   40 
General and administrative 9   38   14 
Sales and marketing 13   28   15 
Income tax benefit (12)  (36)  (13)
Total$79  $194  $80 
      
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  $247 
Income tax benefit (71)  (99)  (99)
Total$175  $147  $148 
      


 
Himax Technologies, Inc.
IFRS Unaudited Condensed Consolidated Statements of Financial Position
(Amounts in Thousands of U.S. Dollars)
 
  March 31,
2018		 December 31,
2017		 March 31,
2017
Assets      
Current assets:      
Cash and cash equivalents $139,806  $138,023  $190,345 
Financial assets at amortized cost  11,753   10,358   5,220 
Financial assets at fair value through profit or loss  361   521   3,891 
Accounts receivable, net  166,603   188,774   169,093 
Inventories  147,962   135,200   148,260 
Income taxes receivable  45   53   41 
Restricted deposit  147,000   147,000   107,414 
Other receivable from related parties  3,515   3,250   5,650 
Other current assets  19,609   39,442   14,753 
Total current assets    636,654     662,621     644,667 
Financial assets at fair value through profit or loss  1,600   1,600   10,562 
Financial assets at fair value through other
  comprehensive income		  1,522   1,522   1,680 
Equity method investments  9,905   10,739   2,235 
Property, plant and equipment, net  95,953   84,575   46,517 
Deferred tax assets  8,199   7,713   7,811 
Goodwill  28,138   28,138   28,138 
Other intangible assets, net  3,027   2,899   3,461 
Restricted deposit  481   470   132 
Other non-current assets  8,579   2,916   2,370 
     157,404     140,572     102,906 
   Total assets $  794,058  $  803,193  $  747,573 
Liabilities and Equity    
Current liabilities:      
Short-term borrowings $147,000  $147,000  $107,000 
Financial liability at amortized cost  4,920   4,837   - 
Accounts payable  134,970   139,933   115,941 
Accounts payable to related party  -   -   1,098 
Income taxes payable  4,920   7,285   16,158 
Other payable to related party  1,900   2,200   - 
Other current liabilities  44,701   42,471   29,936 
Total current liabilities     338,411     343,726     270,133 
Financial liability at amortized cost  -   -   4,601 
Net defined benefit liabilities  1,178   1,152   1,115 
Deferred tax liabilities  106   111   1,348 
Other non-current liabilities  3,672   4,616   1,945 
     4,956     5,879     9,009 
   Total liabilities    343,367     349,605     279,142 
Equity      
Ordinary shares  107,010   107,010   107,010 
Additional paid-in capital  104,533   104,427   103,689 
Treasury shares  (8,878)  (8,878)  (9,020)
Accumulated other comprehensive loss  (322)  (446)  (1,186)
Retained earnings  250,574   253,210   268,032 
Equity attributable to owners of Himax Technologies, Inc.    452,917     455,323     468,525 
Noncontrolling interests  (2,226)  (1,735)  (94)
Total equity    450,691     453,588     468,431 
Total liabilities and equity $  794,058  $  803,193  $  747,573 
             


 
Himax Technologies, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(Amounts in Thousands of U.S. Dollars)
  Three Months
Ended March 31,		 Three
Months
Ended
December
31,
  2018 2017 2017
       
Cash flows from operating activities:      
Profit (loss) for the period $(3,316) $663  $22,863 
Adjustments for:      
Depreciation and amortization  5,098   3,439   5,098 
Bad debt expense  -   -   155 
Share-based compensation expenses  91   229   93 
Gain on disposals of property, plant and equipment  -   (28)  (1)
Changes in fair value of financial assets at fair value through profit or loss  (1)  (70)  (23,064)
Interest income  (549)  (543)  (554)
Finance costs  252   214   250 
Income tax expense (benefit)  (728)  122   3,989 
Share of losses of associates  844   134   483 
Inventories write downs  2,954   3,047   3,418 
Foreign currency exchange gains of financial assets  (222)  -   - 
   4,423   7,207   12,730 
Changes in:      
Accounts receivable  22,171   23,473   (5,901)
Inventories  (15,716)  (1,559)  (8,506)
Other receivable from related parties  (15)  -   - 
Other current assets  (1,672)  (878)  (346)
Accounts payable  (4,963)  (26,328)  14,380 
Accounts payable to related party  -   522   - 
Other payable to related party  (300)  -   850 
Net defined benefit liabilities  26   41   (52)
Other current liabilities  (1,629)  2,627   (4,709)
Other non-current liabilities  (7)  495   (590)
Cash generated from operating activities  2,318   5,600   7,856 
Interest received  166   50   883 
Interest paid  (170)  (137)  (170)
Income tax paid  (37)  (53)  (273)
Net cash provided by operating activities   2,277   5,460   8,296 
       
Cash flows from investing activities:      
Acquisitions of property, plant and equipment  (18,550)  (1,998)  (15,537)
Proceeds from disposal of property, plant and equipment  -   28   87 
Acquisitions of intangible assets  (94)  (11)  (175)
Acquisitions of financial assets at amortized cost  (1,897)  (454)  (756)
Proceeds from disposal of financial assets at amortized cost  754   446   - 
Acquisitions of financial assets at fair value through profit or loss  (4,330)  (4,647)  (4,934)
Proceeds from disposal of financial assets at fair value through profit or loss  26,506   6,074   15,088 
Acquisition of business  (700)  -   - 
Acquisitions of equity method investments  -   -   (6,945)
Increase in refundable deposits  (1)  (310)  (82)
Releases (pledges) of restricted deposit  (11)  (222)  195 
 


 
Himax Technologies, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(Amounts in Thousands of U.S. Dollars)
  Three Months
Ended March 31,		 Three
Months
Ended
December
31,
  2018 2017 2017
Cash paid for loan made to related parties $(250) $-  $(1,750)
Cash received from loan made to related party  -   1,500   2,650 
Income tax paid for disposal of financial assets at fair value through profit or loss  (2,187)  -   - 
Net cash provided by (used in) investing activities  (760)  406   (12,159)
       
Cash flows from financing activities:      
Proceeds from issuance of new shares by subsidiary  11   -   105 
Proceeds from disposals of subsidiary shares to noncontrolling interests by Himax Imaging, Inc.  -   4   - 
Release of restricted deposit  -   31,000   - 
Proceeds from short-term borrowings  -   27,161   27,000 
Repayments of short-term borrowings  -   (58,161)  (27,000)
Net cash provided by financing activities  11   4   105 
Effect of foreign currency exchange rate changes on cash and cash equivalents  255   23   299 
Net increase (decrease) in cash and cash equivalents  1,783   5,893   (3,459)
Cash and cash equivalents at beginning of period  138,023   184,452   141,482 
Cash and cash equivalents at end of period $  139,806  $  190,345  $  138,023 
       


 
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 March 31,		 Three
Months
Ended
December
31,
 2018 2017 2017
Revenues$162,851  $155,210  $181,081 
Gross profit 36,597   35,901   44,582 
Add: Share-based compensation – cost of revenues 12   25   24 
Gross profit excluding share-based compensation 36,609   35,926   44,606 
Gross margin excluding share-based compensation 22.5%   23.1%   24.6% 
Operating income (loss) (3,244)   1,598   4,279 
Add: Share-based compensation 91   230   93 
Operating income (loss) excluding share-based compensation (3,153)   1,828   4,372 
Add: Acquisition-related charges –intangible assets amortization 246   246   247 
Operating income (loss) excluding share-based compensation and acquisition-related charges (2,907)   2,074   4,619 
Operating margin excluding share-based compensation and acquisition-related charges (1.8%)   1.3%   2.6% 
Profit (loss) attributable to Himax Technologies, Inc. stockholders (2,829)   1,216   23,544 
Add: Share-based compensation, net of tax 79   194   80 
Add: Acquisition-related charges, net of tax 175   147   148 
Profit (loss) attributable to Himax Technologies, Inc. stockholders excluding share-based compensation and acquisition-related charges (2,575)   1,557   23,772 
Net margin attributable to Himax Technologies, Inc. stockholders excluding share-based compensation and acquisition-related charges (1.6%)   1.0%   13.1% 
      
*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 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 March 31,
   2018
Diluted IFRS loss per ADS attributable to Himax Technologies, Inc. stockholders  ($0.016)
Add: Share-based compensation per ADS  $0.000
Add: Acquisition-related charges per ADS  $0.001
    
Diluted non-IFRS loss per ADS attributable to Himax Technologies, Inc. stockholders excluding share-based compensation and acquisition-related charges  ($0.015)
    

Numbers do not add up due to rounding

 
 
Himax Technologies, Inc.
Reconciliation of unaudited condensed consolidated Statement of Financial Position as of December 31, 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 $138,023 $-  $-  $138,023 Cash and cash equivalents  
Investments in marketable securities available-for-sale  10,879  -   (10,879)  - － A-1
－  -  -   10,358   10,358 Financial assets at amortized cost A-1
－    -    -     521     521 Financial assets at fair value through profit or loss A-1
Accounts receivable, less allowance for doubtful accounts, sales returns and discounts   187,571    -     1,203     188,774 Accounts receivable, net B
Inventories  135,200  -   -   135,200 Inventories  
－  -  -   53   53 Income taxes receivable  
Restricted cash, cash equivalents and marketable securities    147,000   -     -     147,000 Restricted deposit  
Other receivables from related parties  3,250  -   -   3,250 Other receivable from related parties  
Prepaid expenses and other current assets    39,495    -     (53)    39,442 Other current assets  
Total current assets    661,418    -     1,203     662,621 Total current assets  
Investment in non-marketable equity securities    3,122    -     (3,122)    - － A-2
－    -    -     1,600     1,600 Financial assets at fair value through profit or loss A-2
－    -    -     1,522     1,522 Financial assets at fair value through other comprehensive income A-2
Equity method investments  10,739  -   -   10,739 Equity method investments  
Property, plant and equipment, net  86,673  -   (2,098)  84,575 Property, plant and equipment, net C
Deferred tax assets  7,688  (54)  79   7,713 Deferred tax assets D,F
Goodwill  28,138  -   -   28,138 Goodwill  
Other intangible assets, net  2,179  -   720   2,899 Other intangible assets, net C
Restricted marketable securities  470  -   -   470 Restricted deposit  
Other assets    1,628    (90)    1,378     2,916 Other non-current assets C,F
     140,637    (144)    79     140,572    
Total assets $  802,055 $  (144) $  1,282  $  803,193 Total assets  

(Continued)

 
 
Himax Technologies, Inc.
Reconciliation of unaudited condensed consolidated Statement of Financial Position as of December 31, 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 $147,000  $-  $-  $147,000  Short term borrowings  
－  -   4,837   -   4,837  Financial liability at amortized cost A-3
Accounts payable  139,933   -   -   139,933  Accounts payable  
Income taxes payable  6,798   -   487   7,285  Income taxes payable E
Other payable to related party  2,200   -   -   2,200  Accounts payable to related party  
Other accrued expenses and other current liabilities    41,268     -     1,203     42,471  Other current liabilities B
Total current liabilities    337,199     4,837     1,690     343,726  Total current liabilities  
－  -   -   1,152   1,152  Net defined benefit liabilities F
－  -   -   111   111  Deferred tax liabilities D
Other liabilities    6,287     -     (1,671)    4,616  Other non-current liabilities D,E,F
     6,287     -     (408)    5,879     
Total liabilities    343,486     4,837     1,282     349,605  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  107,400   (2,973)  -   104,427  Additional paid-in capital G
Treasury shares  (8,878)  -   -   (8,878) Treasury shares  
Accumulated other comprehensive loss  (1,430)  984   -   (446) Accumulated other comprehensive loss F
Unappropriated retained earnings    252,546     664     -     253,210  Retained earnings  
Himax Technologies, Inc. stockholders’ equity    456,648     (1,325)    -     455,323  Equity attributable to owners of Himax Technologies, Inc. H
Noncontrolling interests    (1,735)    -     -     (1,735) Noncontrolling interests  
Total equity    454,913     (1,325)    -     453,588  Total equity  
Total liabilities, redeemable noncontrolling interest and equity $  802,055  $  (144) $  1,282  $  803,193  Total liabilities and equity  

(Concluded)

 
 
Himax Technologies, Inc.
Reconciliation of unaudited condensed consolidated statement of profit or loss for the twelve months ended December 31, 2017
(Amounts in Thousands of U.S. Dollars)
 
U.S. GAAP Effect of Transition to IFRS I F R S  
Items Amount Recognition
Difference		 Presentation
Difference		 Amount Items Note
Revenues $685,167  $-  $- $685,167  Revenues  
              
Costs and expenses:          Costs and expenses:  
Cost of revenues  518,142   -   -  518,142  Cost of revenues  
Research and development  117,757   (95)  -  117,662  Research and development F,G
General and administrative  20,614   (153)  -  20,461  General and administrative F,G
Sales and marketing    20,504     39     -    20,543  Sales and marketing F,G
Total costs and expenses    677,017     (209)    -    676,808  Total costs and expenses  
              
Operating income    8,150     209     -    8,359  Operating income  
              
Non operating income (loss):          Non operating income (loss):  
Interest income  2,225   -   -  2,225  Interest income  
Gain on sale of securities, net  23,226   -   -  23,226  Changes in fair value of financial assets at fair value through profit or loss  
Equity in losses of equity method investees    (1,200)    -     -    (1,200) Share of losses of associates  
Foreign currency exchange losses, net  (1,517)  (142)  -  (1,659) Foreign currency exchange losses, net F
Interest expense  (565)  (313)  -  (878) Finance costs A-3
Other income, net    19     -     -    19  Other income, net  
     22,188     (455)    -    21,733     
Earnings before income taxes  30,338   (246)  -  30,092  Profit before income taxes  
Income tax expense    4,520     34             -    4,554  Income tax expense F
Net income  25,818   (280)  -  25,538  Profit for the period  
Net loss attributable to noncontrolling interests    2,149     (7)    -    2,142  Loss attributable to noncontrolling interests F
Net income attributable to Himax Technologies, Inc. stockholders $  27,967  $  (287) $  - $  27,680  Profit attributable to Himax Technologies, Inc. stockholders  
              
Basic earnings per ADS attributable to Himax Technologies, Inc. stockholders $  0.162       $  0.161  Basic earnings per ADS attributable to Himax Technologies, Inc. stockholders  
Diluted earnings per ADS attributable to Himax Technologies, Inc. stockholders $  0.162       $  0.161  Diluted earnings per ADS attributable to Himax Technologies, Inc. stockholders  
Basic Weighted Average Outstanding ADS    172,425          172,425  Basic Weighted Average Outstanding ADS  
Diluted Weighted Average Outstanding ADS    172,452          172,452  Diluted Weighted Average Outstanding ADS  
                  

 

 
Himax Technologies, Inc.
Reconciliation of unaudited condensed consolidated statement of profit or loss for the three months ended December 31, 2017
(Amounts in Thousands of U.S. Dollars)
 
U.S. GAAP Effect of Transition to IFRS I F R S  
Items Amount Recognition
Difference		 Presentation
Difference		 Amount Items Note
Revenues $181,081  $-  $- $181,081  Revenues  
             
Costs and expenses:         Costs and expenses:  
Cost of revenues  136,499   -   -  136,499  Cost of revenues  
Research and development  29,516   (129)  -  29,387  Research and development F,G
General and administrative  5,413   (12)  -  5,401  General and administrative F,G
Sales and marketing    5,532     (17)    -    5,515  Sales and marketing F,G
Total costs and expenses    176,960     (158)    -    176,802  Total costs and expenses  
             
Operating income    4,121     158     -    4,279  Operating income  
             
Non operating income (loss):         Non operating income (loss):  
Interest income  554   -   -  554  Interest income  
Gain on sale of securities, net  23,064   -   -  23,064  Changes in fair value of financial assets at fair value through profit or loss  
Equity in losses of equity method investees    (483)    -     -    (483) Share of losses of associates  
Foreign currency exchange losses, net  (277)  (45)            -  (322) Foreign currency exchange losses, net F
Interest expense  (170)  (80)  -  (250) Finance costs A-3
Other income, net    10     -     -    10  Other income, net  
     22,698     (125)    -    22,573     
Earnings before income taxes  26,819   33   -  26,852  Profit before income taxes  
Income tax expense    3,957     32     -    3,989  Income tax expense F
Net income  22,862   1   -  22,863  Profit for the period  
Net loss attributable to noncontrolling interests    687     (6)    -    681  Loss attributable to noncontrolling interests F
Net income attributable to Himax Technologies, Inc. stockholders $  23,549  $  (5) $  - $  23,544  Profit attributable to Himax Technologies, Inc. stockholders  
             
Basic earnings per ADS attributable to Himax Technologies, Inc. stockholders $  0.137      $  0.136  Basic earnings per ADS attributable to Himax Technologies, Inc. stockholders  
Diluted earnings per ADS attributable to Himax Technologies, Inc. stockholders $  0.137      $  0.136  Diluted earnings per ADS attributable to Himax Technologies, Inc. stockholders  
Basic Weighted Average Outstanding ADS    172,499         172,499  Basic Weighted Average Outstanding ADS  
Diluted Weighted Average Outstanding ADS    172,518         172,518  Diluted Weighted Average Outstanding ADS  
                 

 

 
Himax Technologies, Inc.
Reconciliation of unaudited condensed consolidated Statement of Financial Position as of March 31, 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 $190,345 $-  $-  $190,345 Cash and cash equivalents  
Investments in marketable securities available-for-sale    9,111    -     (9,111)    - － A-1
－  -  -   5,220   5,220 Financial assets at amortized cost A-1
－  -  -   3,891   3,891 Financial assets at fair value through profit or loss A-1
Accounts receivable, less allowance for doubtful accounts, sales returns and discounts    167,681    -     1,412     169,093 Accounts receivable, net B
Inventories  148,260  -   -   148,260 Inventories  
－  -  -   41   41 Income taxes receivable  
Restricted cash, cash equivalents and marketable securities    107,414    -     -     107,414 Restricted deposit  
Other receivables from related parties  5,650  -   -   5,650 Other receivable from related parties  
Prepaid expenses and other current assets    14,794    -     (41)    14,753 Other current assets  
Total current assets    643,255    -     1,412     644,667 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  2,235  -   -   2,235 Equity method investments  
Property, plant and equipment, net  47,738  -   (1,221)  46,517 Property, plant and equipment, net C
Deferred tax assets  6,597  (57)  1,271   7,811 Deferred tax assets D,F
Goodwill  28,138  -   -   28,138 Goodwill  
Other intangible assets, net  2,922  -   539   3,461 Other intangible assets, net C
Restricted marketable securities  132  -   -   132 Restricted deposit  
Other assets    1,778    (90)    682     2,370 Other non-current assets C,F
     101,782    (147)    1,271     102,906    
Total assets $  745,037 $  (147) $  2,683  $  747,573 Total assets  

(Continued)

 
 
Himax Technologies, Inc.
Reconciliation of unaudited condensed consolidated Statement of Financial Position as of March 31, 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  115,941   -   -   115,941  Accounts payable  
Accounts payable to related party  1,098   -   -   1,098  Accounts payable to related party  
Income taxes payable  15,632   -   526   16,158  Income taxes payable E
Other accrued expenses and other current liabilities    28,524     -     1,412     29,936  Other current liabilities B
Total current liabilities    268,195     -     1,938     270,133  Total current liabilities  
－  -   4,601   -   4,601  Financial liability at amortized cost A-3
－  -   (17)  1,132   1,115  Net defined benefit liabilities F
－  -   -   1,348   1,348  Deferred tax liabilities D
Other liabilities    3,680     -     (1,735)    1,945  Other non-current liabilities D,E,F
     3,680     4,584     745     9,009     
Total liabilities    271,875     4,584     2,683     279,142  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  106,591   (2,902)  -   103,689  Additional paid-in capital G
Treasury shares  (9,020)  -   -   (9,020) Treasury shares  
Accumulated other comprehensive loss  (2,207)  1,021   -   (1,186) Accumulated other comprehensive loss F
Unappropriated retained earnings    267,228     804     -     268,032  Retained earnings  
Himax Technologies, Inc. stockholders’ equity    469,602     (1,077)    -     468,525  Equity attributable to owners of Himax Technologies, Inc. H
Noncontrolling interests    (96)    2     -     (94) Noncontrolling interests F
Total equity    469,506     (1,075)    -     468,431  Total equity  
Total liabilities, redeemable noncontrolling interest and equity $  745,037  $  (147) $  2,683  $  747,573  Total liabilities and equity  

(Concluded)

 
 
Himax Technologies, Inc.
Reconciliation of unaudited condensed consolidated statement of profit or loss for the three months ended March 31, 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 $155,210  $-  $- $155,210  Revenues  
             
Costs and expenses:         Costs and expenses:  
Cost of revenues  119,309   -   -  119,309  Cost of revenues  
Research and development  25,331   2   -  25,333  Research and development G
General and administrative  4,633   (32)  -  4,601  General and administrative G
Sales and marketing    4,364     5     -    4,369  Sales and marketing G
Total costs and expenses    153,637     (25)    -    153,612  Total costs and expenses  
             
Operating income    1,573     25     -    1,598  Operating income  
             
Non operating income (loss):         Non operating income (loss):  
Interest income  543   -   -  543  Interest income  
Gain on sale of securities, net  70   -   -  70  Changes in fair value of financial assets at fair value through profit or loss  
                    
Equity in losses of equity method investees    (134)    -     -    (134) Share of losses of associates  
Foreign currency exchange losses, net  (1,033)  (93)  -  (1,126) Foreign currency exchange losses, net F
Interest expense  (137)  (77)  -  (214) Finance costs A-3
Other income, net    48     -     -    48  Other income, net  
     (643)    (170)              -    (813)    
Earnings before income taxes  930   (145)  -  785  Profit before income taxes  
Income tax expense    121     1     -    122  Income tax expense F
Net income  809   (146)  -  663  Profit for the period  
Net loss attributable to noncontrolling interests    554     (1)    -    553  Loss attributable to noncontrolling interests F
Net income attributable to Himax Technologies, Inc. stockholders $  1,363  $  (147) $  - $  1,216  Profit attributable to Himax Technologies, Inc. stockholders  
                 
Basic earnings per ADS attributable to Himax Technologies, Inc. stockholders $  0.008      $  0.007  Basic earnings per ADS attributable to Himax Technologies, Inc. stockholders  
Diluted earnings per ADS attributable to Himax Technologies, Inc. stockholders $  0.008      $  0.007  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    172,424         172,424  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 March 31, 2018, we reclassified comparative period information as follows:

A-1)

As of December 31, 2017, we had $10,879 thousand reported as investment 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 $10,358 thousand and $521 thousand, respectively, under IFRS.

As of March 31, 2017, we had $9,111 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 $5,220 thousand and $3,891 thousand, respectively, under IFRS.

A-2)    

As of December 31, 2017, we had $3,122 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 $1,600 thousand and $1,522 thousand, respectively, under IFRS.

As of March 31, 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 December 31, 2017, we had $3,656 thousand reported as redeemable noncontrolling interest under U.S. GAAP, that were reclassified to financial liability at amortized cost-current and recognized interest expense (finance costs) using effective interest method which decreased the retained earnings by $1,181 thousand. After the above adjustments, we had $4,837 thousand reported as financial liability at amortized cost-current under IFRS.

For the twelve months and three months ended December 31, 2017, interest expense (finance costs) was adjusted for an increase of $313 thousand and $80 thousand, respectively.

As of March 31, 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 $945 thousand. After the above adjustments, we had $4,601 thousand reported as financial liability at amortized cost-noncurrent under IFRS.

For the three months ended March 31, 2017, interest expense (finance costs) was adjusted for an increase of $77 thousand.

B) Allowance of sales returns and discounts

Under U.S. GAAP, allowance for 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 for sales returns and discounts was presented as a reduction in accounts receivable.

Under IFRS, the allowance for 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 December 31, 2017 and March 31, 2017, the amounts reclassified from allowance for sales returns and discounts to provisions were $1,203 thousand and $1,412 thousand, respectively.

C) Property, plant and equipment, net

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

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 December 31, 2017, property, plant and equipment, net of $2,098 thousand were reclassified to other intangible assets, net and other non-current assets at amounts of $720 thousand and $1,378 thousand, respectively.

As of March 31, 2017, property, plant and equipment, net of $1,221 thousand were reclassified to other intangible assets, net and other non-current assets at amounts of $539 thousand and $682 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 December 31, 2017 and March 31, 2017, the amounts reclassified from deferred tax assets to deferred tax liabilities were $79 thousand and $1,271 thousand, respectively.

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 tax payables are classified as current unless an unconditional right to defer payment for a period greater than twelve months exists.

As of December 31, 2017 and March 31, 2017, the amounts reclassified from other liabilities to income tax payables were $487 thousand and $526 thousand, respectively.

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 December 31, 2017, net defined benefit assets included in other assets, 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, $54 thousand and an increase of $984 thousand, respectively.

For the twelve months and three months ended December 31, 2017, operating expense for employee benefits was adjusted for a decrease of $108 thousand.

As of March 31, 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, $17 thousand, $57 thousand and an increase of $1,021 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 twelve months and three months ended December 31, 2017, operating expense for share-based compensation was adjusted for a decrease of $101 thousand and $50 thousand, respectively.

For the three months ended March 31, 2017, operating expense for share-based compensation was adjusted for a decrease of $25 thousand.  

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

 December 31,
2017		 March 31,
2017		 Note
Equity attributable to Himax under U.S. GAAP$456,648  $469,602   
      
Financial liability at amortized cost (1,181)  (945) A-3
Employee benefits (144)  (132) F
  (1,325)  (1,077)  
Equity attributable to Himax under IFRS$455,323  $468,525   

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