Himax Technologies, Inc.

6-K 1 dp07452_6k.htm

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

For the month of November, 200 7

Commission File Number: 000-51847

Himax Technologies, Inc.

(Translation of registrant’s name into English)

No.26, Zih Lian Road , Fonghua Village ,

Sinshih Township , Tainan County 744,

Taiwan, Republic of China

(Address of principal executive offices)

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

Form 20-F X Form 40-F

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

Yes No X

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

Yes No X

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

Yes No X

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

Himax Technologies, Inc.

INDEX TO EXHIBITS

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

SIGNATURES

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

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

Date: November 1, 200 7

Exhibit 99.1

HIMAX REPORTS THIRD QUARTER 2007 RESULTS

Ÿ Third quarter 2007 revenue increased to $243.3 million - r ecord h igh since i nception

Ÿ Third quarter 2007 gross margin increased to 22.5% - marks fourth consecutive q uarter of i mprovement

Ÿ Fourth quarter 2007 revenue expected to grow around mid-single digit s , with gross margin to remain flat, and EPS to be in the range of $0.16 to $0.17

Board Authorizes $40 Million Share Buyback Program

Tainan, Taiwan, November 2, 2007 - Himax Technologies, Inc. (“Himax” or ”Company”)

(NASDAQ: HIMX) today reported financial results for the third quarter ended September 30, 2007.

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

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

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

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

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

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

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

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

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

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

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

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

Investor Conference Call / Webcast Details

The Company’s management will review detailed third quarter 2007 results on Thursday, November 1, 2007 at 7:00 PM EDT (7:00 AM, Friday, November 2, Taiwan time). The conference call-in number is +1-201-689-8560 (international) and +1-877-407-0784 (U.S. domestic). A live webcast of the conference call will be available on the Company’s website at www.himax.com.tw . The playback will be available beginning two hours after the conclusion of the conference call and will be accessible by dialing +1-201-612-7415 (international) and 1-877-660-6853 (U.S. domestic). The account number to access the replay is 3055 and the confirmation ID number is 258193.

About Himax Technologies, Inc.

Himax Technologies, Inc. designs, develops and markets semiconductors that are critical components of flat panel displays. The Company’s principal products are display drivers for large-sized TFT-LCD panels, which are used in desktop monitors, notebook computers and televisions, and display drivers for small- and medium-sized TFT-LCD panels, which are used in mobile handsets and consumer electronics products such as digital cameras, mobile gaming devices and car navigation displays. In addition, the Company is expanding its product offering to include television semiconductor solutions, as well as LCOS products Based in Tainan, Taiwan, the Company has regional offices in Hsinchu and Taipei, Taiwan; Suzhou and Shenzhen, China; Yokohama, Japan and Anyangsi Kyungkido, South Korea; and Irvine, California, USA.

Contacts:

Max Chan Chief Financial Officer Himax Technologies, Inc. +886-2-3393-0877 Ext. 22300 [email protected] Jackson Ko/Jessie Wang Investor Relations Himax Technologies, Inc. +886-2-3393-0877 Ext. 22240/22618 [email protected] j [email protected] In the U.S. David Pasquale The Ruth Group +1-646-536-7006 [email protected]

Forward-Looking Statements:

Certain statements in this press release, including statements regarding expected future financial results and industry growth, are forward-looking statements that involve a number of risks and uncertainties that could cause actual events or results to differ materially from those described in this press release. Factors that could cause actual results to differ include general business and economic conditions and the state of the semiconductor industry; level of competition; demand for end-use applications products; reliance on a small group of principal customers; continued success in technological innovations; development of alternative flat panel display technologies; ability to develop and protect our intellectual property; pricing pressures including declines in average selling prices; changes in customer order patterns; shortages in supply of key components; changes in environmental laws and regulations; exchange rate fluctuations; regulatory approvals for further investments in our subsidiaries; and other risks described from time to time in the Company’s SEC filings, including its Form 20-F dated June 22, 2007, as amended. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

– Tables Attached –

| Himax
Technologies, Inc. |
| --- |
| Unaudited
Condensed Consolidated Statements of Income |
| (These
interim financials do not fully comply with US GAAP because they
omit all
interim disclosure required by US GAAP.) |
| (Figures
in Thousands of U.S. Dollars, Except Per Share Data) |

200 7		200 6		200 7
Revenues
Revenues
from third parties, net	$91,960		$ 8 8 , 878		$102,276
Revenues
from related parties, net	151,377		8 8 , 227		120,607
	243,337		17 7 , 105		222,883
Costs
and expenses:
Cost
of revenues	188,626		1 46 , 287		177,452
Research
and development	26,171		2 4 , 267		15,328
General
and administrative	4,891		3 , 190		3,222
Sales
and marketing	3,758		2 , 586		1,995
Total
costs and expenses	223,446		1 7 6 , 330		197,997
Operating
income	19,891		775		24,886
Non
operating income (loss):
Interest
income	1,429		2 , 000		1,514
Foreign
exchange gains
( losses ) ,
net	(29	)	(1,298	)	36
Other
income,
net	166		5 9		159
	1,566		761		1,709
Income
before income taxes and minority interest	21,457		1,536		26,595
Income
tax benefit	---		(1,246	)	---
Incom e before
minority interest	21,457		2,782		26,595
Minority
interest, net of tax	316		(157	)	247
Net
income	$21,773		$ 2,625		$26,842
Basic
earnings per ordinary share and ADS	$0.11		$ 0. 0 1		$0.14
Diluted
earnings per ordinary share and ADS	$0.11		$ 0. 0 1		$0.14
Basic
Weighted Average Outstanding Shares	197,690		19 7 , 110		197,656
Diluted
Weighted Average Outstanding Shares	197,733		19 9 , 729		198,013

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

| The
amount of share-based compensation included in applicable costs
and
expenses categories is summarized as follows: — 200 7 | 200 6 | 200 7 | |
| --- | --- | --- | --- |
| Share-based
compensation | | | |
| Cost
of revenues | $355 | $ 20 8 | $25 |
| Research
and development | 11,795 | 8,963 | 1,201 |
| General
and administrative | 1,718 | 1,090 | 151 |
| Sales
and marketing | 1,842 | 1,195 | 156 |
| Total | $15,710 | $1 1,456 | $1,533 |
| The
amount of acquisition-related
charges included
in applicable expenses categories is summarized
as follows: | | | |
| Research
and development | $250 | $--- | $1,234 |
| Sales
and marketing | 304 | --- | 408 |
| Total | $554 | $--- | $1,642 |

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


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

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

| The
amount of share-based compensation included in applicable costs
and
expenses categories is summarized as follows: — 200 7 | 200 6 | |
| --- | --- | --- |
| Share-based
compensation | | |
| Cost
of revenues | $ 405 | $250 |
| Research
and development | 14 , 183 | 10,645 |
| General
and administrative | 2 ,0 2 0 | 1,293 |
| Sales
and marketing | 2 ,1 54 | 1,469 |
| Total | $1 8 , 762 | $13,657 |
| The
amount of acquisition-related
charges included in applicable expenses categories is summarized
as
follows: | | |
| Research
and development | $2,273 | $--- |
| Sales
and marketing | 810 | --- |
| Total | $3,083 | $--- |

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

200 7		2007		2006
Assets
Current
assets:
Cash
and cash
equivalents	$119,246		$137,508		$109,753
Marketable
securities available-for-sale	16,109		13,327		8,828
Restricted
cash equivalents	171		171		108
Accounts
receivable, less allowance for doubtful
accounts, sales returns and discounts	101,467		116,812		112,767
Accounts
receivable from related parties, less allowance for doubtful accounts,
sales returns and discounts	178,099		137,602		116,850
Inventories	125,983		125,146		101,341
Deferred
income taxes	6,829		6,829		6,744
Prepaid
expenses and other current assets	12,903		10,113		10,324
Total
current assets	$560,807		$547,508		$466,715
Property ,
plant and
equipment, net	46,070		45,801		38,895
Deferred
income taxes	12,842		12,842		11,405
Intangible
assets, net	33,711		34,273		393
Investments
in
non-marketable securities	2,584		1,857		817
Refundable
deposits and prepaid pension costs	612		593		569
	95,819		95,366		52,079
Total
assets	$656,626		$642,874		$518,794
Liabilities ,
minority
interest and stockholders’ equity
Current
liabilities:
Accounts
payable	$160,269		$171,218		$120,407
Income
tax
payable	7,333		7,333		11,666
Dividen d s
payable	39,710		---		---
Other
accrued
expenses and other current liabilities	15,738		16,023		21,206
Total
current liabilities	$223,050		$194,574		$153,279
Accrued
pension liability	$196		$196		$192
Total
liabilities	$223,246		$194,770		$153,471
Minority
interest	$3,084		$1,715		$1,396
Stockholders’
equity:
Ordinary
share, US$0.0001 par value, 198,548,799, 197,661,063, and 193,600,302
shares issued and outstanding at September 30, 2007, June 30, 2007
and
December 31, 2006, respectively	20		20		19
Additional
paid-in capital	260,980		259,189		221,666
Accumulated
other comprehensive loss	(146	)	(198	)	(275	)
Unappropriated
earnings	169,442		187,378		142,517
Total
stockholders’ equity	$430,296		$446,389		$363,927
Total
liabilities ,
minority interest and stockholders’ equity	$656,626		$642,874		$518,794

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

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

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

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

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

200 7	200 6	200 7
Revenues	$243,337	$ 177,105	$222,883
Gross
profit	54,711	30,818	45,431
Add:
Share-based compensation – Cost of revenues	355	208	25
Gross
profit
excluding share-based compensation	55,066	31,026	45,456
Gross
margin
excluding share-based compensation	22.6 %	17.5 %	20.4 %
Operating
income	19,891	775	24,886
Add:
Share-based compensation	15,710	11,456	1,533
Operating
income excluding share-based compensation	35,601	12,231	26,419
Add:
Acquisition-related charges – In-process R&D write off	---	---	900
– Intangible
assets amortization	554	---	742
Operating
income excluding share-based compensation and
acquisition-related charges	36,155	12,231	28,061
Operating
margin excluding share-based compensation and
acquisition-related charges	14.9 %	6.9 %	12.6 %
Net
income
excluding share-based compensation and acquisition-related
charges	38,037	14,081	30,017
Net
margin
excluding share-based compensation and acquisition-related
charges	15.6 %	8.0 %	13.5 %

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

200 7	200 6
Revenues	$ 651,111	$523,639
Gross
profit	136,203	101,288
Add:
Share-based compensation – Cost of revenues	405	250
Gross
profit
excluding share-based compensation	136,608	101,538
Gross
margin
excluding share-based compensation	21.0 %	19.4 %
Operating
income	61,537	43,244
Add:
Share-based compensation	18,762	13,657
Operating
income excluding share-based compensation	80,299	56,901
Add:
Acquisition-related charges – In-process R&D write off	1,600	---
– Intangible
assets amortization	1,483	---
Operating
income excluding share-based compensation and
acquisition-related charges	83,382	56,901
Operating
margin excluding share-based compensation and
acquisition-related charges	12.8 %	10.9 %
Net
income
excluding share-based compensation and acquisition-related
charges	88,479	57,746
Net
margin
excluding share-based compensation and acquisition-related
charges	13.6 %	11.0 %

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

| Himax
Technologies, Inc. |
| --- |
| Unaudited
Supplemental Data – Reconciliation Schedule |

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

| Diluted
GAAP
EPS | $ 0.11 | $0.34 |
| --- | --- | --- |
| Add:
Estimated
share-based compensation per diluted share | $0.08 | $0.09 |
| Add:
Estimated
acquisition-related charges | $ --- | $0.02 |
| Diluted
non-GAAP EPS excluding share-based compensation and acquisition-related
charges | $0.19 | $0.45 |
| Numbers
do not
add up due to rounding | | |

Exhibit 99.2

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

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

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

David

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

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

Before we begin the formal remarks, the Company’s attorneys advise that certain statements in this conference call, including statements regarding expected future financial results and industry growth, are forward-looking statements that involve a number of risks and uncertainties that could cause actual events or results to differ materially from those described in this conference call.

Factors that could cause actual results to differ include general business and economic conditions and the state of the semiconductor industry; level of competition; demand for end-use applications products; reliance on a small group of principal customers; continued success in technological innovations; ability to develop and protect our intellectual property; pricing pressures including declines in average selling prices; changes in customer order patterns; shortages in supply of key components; changes in environmental laws and regulations; exchange rate fluctuations; regulatory approvals for further investments in our subsidiaries; and other risks described from time to time in the Company’s SEC filings, including its Form 20-F dated June 22, 2007, as amended.

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

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

Mr. Jordan Wu

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

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

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

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

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

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

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

Our GAAP operating income was $19.9 million, up almost twenty-five folds from approximately $800 thousand in the same period last year, and down from $24.9 million in the previous quarter.

The year-over-year increase was a result of achieving record high quarterly revenue, improving gross margin from a historical low level in the same period last year, and maintaining our operating expense at a relatively stable level. The sequential decline is primarily due to granting of our 2007 RSUs at the end of September.

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

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

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

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

On November 1,our board approved a stock repurchase program that authorizes the Company to repurchase up to $40 million worth of the Company's American Depository Receipts, or ADRs,

in the open market or through privately negotiated transactions, depending on prevailing market conditions and other factors. The program does not obligate Himax to acquire any particular amount of ADRs and may be modified or suspended at any time at the Company's sole discretion. With the repurchase program, we reaffirm our confidence and optimism in the long term future of the company. This also demonstrates our commitment to deliver value to our shareholders.

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

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

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

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

Mr. Max Chan

Thank you , Jordan .

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

Our gross margin increased to 2 2.5 % from 20.4 % a quarter ago , primarily due to product mix change .

O u r GAAP operating expense s w ere $ 34. 8 million in the third quarter, up from $ 20.5 million in the previous quarter , primarily due to the annual grant of 2007 RSUs at the end of September.

Our non-GAAP operating expense s , excluding share-based compensation and acquisition-related charges w ere approximately $ 1 8.9 million in the third quarter, slightly increased from approx imately $ 17.4 million in the previous quarter . In the third quarter, s hare-base d compensation w as approximately $ 15.7 million, and acquisition - related charge s w ere approximatel y $ 0.6 million .

The fair value of our 200 7 annual RSU grant was around $2 6.4 million, of which approximately 54.5 % or $ 14. 4 million was paid out in cash, and vested and expensed immediately . T he remainder of the grant will be vest ed in three equal install m ents over the next three years. Total share-based compensation accrued in the third quarter, including expenses from legacy grants amounted to $ 15.7 million, or $ 0.08 per diluted share.

Our net cash used in operating activities was approximately $14.6 m illion , down from approximately $ 34. 6 million provided for in the previous quarter. Th e decline was primarily due to the cash payout of 2007 RSU grant and significant increase in sales in the third quarter.

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

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

Our total headcount remained literally unchanged at around 1 , 0 5 0 a t the end of the third quarter .

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

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

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