Himax Technologies, Inc. — Interim / Quarterly Report 2007

May 9, 2007

6-K 1 dp05612_6k.htm Unassociated Document Licensed to: DPW Document Created using EDGARizer 4.0.0.0 Copyright 2007 EDGARfilings, Ltd., an IEC company. All rights reserved EDGARfilings.com

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 May, 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 first quarter results” dated May 10,

1. | | 99.2 | Himax first quarter results conference call transcript dated May 10,
2. |

SIGNATURES

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

| HIMAX

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

Date: May 10th, 200 7

Exhibit 99.1

HIMAX REPORTS FIRST QUARTER 2007 RESULTS

Tainan, Taiwan, May 10, 2007 - Himax Technologies, Inc. (“Himax” or ”Company”) (NASDAQ: HIMX) today reported financial results for the first quarter ended March 31, 2007.

Net revenue for the first quarter of 2007 was $184.9 million, compared to $174.9 million for the first quarter of 2006, and $220.9 million in the fourth quarter of 2006. Net income for the first quarter of 2007 was $18.0 million, or $0.09 per diluted share, compared to net income of $21.9 million, or $0.12 per diluted share in the first quarter of 2006, and $31.1 million, or $0.16 per diluted share in the fourth quarter of 2006. Share-based compensation was $1.5 million, $1.1 million and $1.5 million in the first quarter of 2007, the first quarter of 2006 and the fourth quarter of 2006, respectively.

Gross margin in the first quarter of 2007 was 19.5%, as compared to 21.5% in the first quarter of 2006, and 18.9% in the fourth quarter of 2006. Operating margin was 9.1% in the first quarter of 2007, as compared to 13.5% in the first quarter of 2006, and 10.1% in the fourth quarter of 2006.

Excluding share-based compensation, gross margin was 19.5% in the first quarter of 2007, 21.5% in the first quarter of 2006, and 18.9% in the fourth quarter of 2006, with an operating margin of 10.4%, 14.1%, and 10.8%, respectively.

A reconciliation of our gross margin and operating margin excluding share-based compensation and acquisition-related charges, a non-GAAP financial measure, to GAAP gross margin and GAAP operating margin, 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 that our revenues, gross margin and EPS were all inline with our previous guidance. The decline in revenue reflects the traditionally seasonal lower demand and fewer working days in the holiday month of February. Revenue from large panel display drivers were lower sequentially, inline with expectations. Revenue from small- and medium-sized display drivers was up strongly on a sequential basis, primarily due to better sales in both mobile phone and consumer electronic product segments, share gains at certain first tier Japanese customers and the acquisition of Wisepal.”

Max Chan, Chief Financial Officer of Himax, said, “Our gross margin increased to 19.5% from 18.9% a quarter ago, due to our continued efforts to diversify our product mix and lower our costs. Small- and medium-sized driver ICs, which typically enjoy a higher gross margin, accounted for approximately 16% of our revenue in the period, up from approximately 11% of our revenue a quarter ago. Our income before tax and minority interest declined primarily due to a lower revenue base. We expect our effective tax rate for 2007 to be around 0% based on which we have recorded net tax benefit or expense of zero in the first quarter.”

Looking forward, Mr. Wu added, “For the second quarter of 2007, we expect overall revenue will improve approximately 17% to 20% compared to the first quarter of 2007. We expect demand for our large panel drivers will increase as our customers raise fab utilization to fulfill increasing

1

demand for all large panel products across the board. We also expect sales of our small- and medium-sized drivers to remain healthy as several of our design-in projects have begun mass production . We expect our gross margin to remain flat or decline slightly compared to the first quarter 2007, with diluted GAAP EPS is expected to be in the range of $0.10 to $0.11.”

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

Investor Conference Call / Webcast Details

The Company’s management will review detailed first quarter 2007 results on Wednesday, May 9, 2007 at 7:00 PM EDT (7:00 AM, Thursday May 10, 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 238293.

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 LCD TV chipset solutions and LCOS microdisplays. 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.

Contacts:

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

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 F-1 dated March 13, 2006, 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 –

2

| Himax

Technologies, Inc.
Unaudited
Condensed Consolidated Statements of Income
(These
interim financials do not fully comply with US GAAP because they
omit all
interim disclosure required by US GAAP.)
(Figures
in Thousands of U.S. Dollars, Except Per Share
Data)
	Three
Months Ended
March 31,			Three
Months Ended
December 31,
	200 7	200 6		200 6
Revenues
Revenues
from third parties, net	$ 75,836	$	65,427	$	90,947
Revenues
from related parties, net	109,055		109,432		129,932
	184,891		174,859		220,879
Costs
and expenses:
Cost
of revenues	148,830		137,298		179,214
Research
and development	14,800		10,902		13,883
General
and administrative	3,000		2,058		3,180
Sales
and marketing	1,501		1,007		2,280
Total
costs and expenses	168,131		151,265		198,557
Operating
income	16,760		23,594		22,322
Non
operating income (loss):
Interest
income	1,382		205		1,812
Foreign
exchange losses, net	(490	)	(232	)	(209	)
Interest
expense	---		(284	)	---
Other
income,
net	42		55		61
	934		(256	)	1,664
Income
before income taxes and minority interest	17,694		23,338		23,986
Income
tax expense (benefit)	---		1,491		(6,937	)
Incom e before
minority interest	17,694		21,847		30,923
Minority
interest, net of tax	325		92		178
Net
income	$ 18,019	$	21,939	$	31,101
Basic
earnings per ordinary share and ADS	$ 0.09	$	0.12	$	0. 16
Diluted
earnings per ordinary share and ADS	$ 0.09	$	0.12	$	0. 16
Basic
Weighted Average Outstanding Shares	195,761		178,575		198,154
Diluted
Weighted Average Outstanding Shares	195,968		1 8 2,271		199,419

3

| Himax

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

| The amount of share-based compensation included in applicable costs and expenses categories is summarized as follows: | Three Months Ended March 31, — 200 7 | 200 6 | Three Months Ended December 31, — 2006 | | --- | --- | --- | --- | | Share-based compensation | | | | | Cost of revenues | $ 25 | $ 24 | $ 25 | | Research and development | 1,187 | 8 64 | 1,161 | | General and administrative | 151 | 105 | 151 | | Sales and marketing | 156 | 145 | 156 | | Total | $ 1,519 | $ 1,1 38 | $ 1 ,493 |

4

| Himax

Technologies, Inc.
Unaudited
Condensed Consolidated Balance
Sheets
( Figures
i n T housands
of U . S . D ollars)
	Mar 3 1 ,	Dec 3 1 ,		Mar
31,
	200 7	200 6		2006
Assets
Current
assets:
Cash
and cash
equivalents	$ 111,838	$	109,753	$	31,247
Marketable
securities available-for-sale	12,783		8,828		3,150
Restricted
cash equivalents and marketable securities	106		108		14,558
Accounts
receivable, less allowance for doubtful
accounts, sales returns and discounts	108,147		112,363		73,178
Accounts
receivable from related parties , less allowance for doubtful
accounts, sales returns and discounts	105,740		117,254		71,540
Inventories	119,379		101,341		99,539
Deferred
income taxes	7,401		7,362		9,645
Prepaid
expenses and other current assets	10,276		10,343		10,328
Total
current assets	$ 475,670	$	467,352	$	313,185
Property
and
equipment, net	45,767		38,895	$	25,943
Deferred
income taxes	11,964		11,405		145
Intangible
assets, net	35,865		393		74
Investments
in
non-marketable securities	817		817		1,813
Refundable
deposits	618		550		488
	95,031		52,060		28,463
Total
assets	$ 570,701	$	519,412	$	341,648
Liabilities ,
minority
interest and stockholders’ equity
Current
liabilities:
Short-term
debt	$ ---	$	---	$	38,577
Accounts
payable	121,459		120,407		85,489
Income
tax
payable	12,150		12,284		15,915
Other
accrued
expenses and other current liabilities	17,183		21,398		12,16 7
Total
current liabilities	$ 150,792	$	154,089	$	152,14 8
Minority
interest	$ 1,980	$	1,396	$	609
Stockholders’
equity:
Ordinary
share, US$0.0001 par value, 500,000,000 shares authorized	20		19		18
Additional
paid-in capital	257,678		221,666		9 9,570
Accumulated
other comprehensive income (loss)	(305	)	(275	)	3 7
Unappropriated
earnings	160,536		142,517		89,26 6
Total
stockholders’ equity	$ 417,929	$	363,927	$	188,89 1
Total
liabilities ,
minority interest and stockholders’ equity	$ 570,701	$	519,412	$	341,648

5

| Himax

Technologies, Inc.
Unaudited
Condensed Consolidated Statements of Cash Flows
(Figures
in Thousands of U.S. Dollars)
	Three
Months Ended
March 31,			Three
Months Ended December
31,
	2007	2006		2006
Cash
flows from operating activities:
Net
income	$ 18,019	$	21,939	$	31,101
Adjustments
to
reconcile net income to net cash provided by
operating
activities:
Depreciation
and amortization	2,026		1,218		1,680
Write-off
of
in-process research and development	700		---		---
Share-based
compensation expenses	1,519		1,138		1,493
Minority
interest, net of tax	(325	)	(92	)	(178	)
Loss
on disposal of property and equipment	35		31		---
Gain
on
sale of subsidiary shares and investments in non-marketable securities,
net	(21	)	(43	)	(49	)
Gain
on
sale of marketable securities, net	(30	)	(15	)	(12	)
Deferred
income taxes	---		(679	)	(7,332	)
Inventories
write downs	3,118		756		2,050
Changes
in
operating assets and liabilities:
Accounts
receivable	6,084		6,998		(10,488	)
Accounts
receivable from related parties	11,514		(1,879	)	(45,667	)
Inventories	(20,803	)	4,708		7,527
Prepaid
expenses and other current assets	(85	)	1,801		4,125
Accounts
payable	416		(20,312	)	13,578
Income
tax payable	---		2,333		457
Other
accrued expenses and other current liabilities	(6,290	)	(1,746	)	3,067
Net
cash provided by operating activities	15,877		16,156		1,352
Cash
flows from investing activities:
Purchase
of
property and equipment	(6,483	)	(3,886	)	(4,187	)
Purchase
of
available-for-sales marketable securities	(17,581	)	---		(12,678	)
Sales
and
maturities of available-for-sale marketable securities	13,639		878		7,940
Cash
acquired
in acquisition	6,197		---		17
Proceeds
from
sale of subsidiary shares and investments in non-marketable securities
by
Himax Technologies Limited	34		124		1,537
Purchase
of
subsidiary shares from minority interest	(17	)	(23	)	(602	)
Refund
from
(increase in) refundable deposits	(16	)	223		63
Release
(pledge) of restricted cash equivalents and marketable
securities	2		(505	)	(75	)
Net
cash used in investing activities	(4,225	)	(3,189	)	(7,985	)

6

| Himax

Technologies, Inc.
Unaudited
Condensed Consolidated Statements of Cash Flows
(Figures
in Thousands of U.S. Dollars)
	Three
Months Ended
March 31,			Three
Months Ended
December 31,
	2007	2006		2006
Cash
flows from financing activities:
Proceeds
from
initial public offering, net of issuance costs	$ ---	$	---	$	(392	)
Proceeds
from
issuance of new shares by subsidiaries	1,217		---		---
Acquisition
of
ordinary shares for retirement	(10,841	)	---		(38,835	)
Proceeds
from
borrowing of short-term debt	---		11,303		---
Repayment
of
long-term debt	---		(89	)	---
Net
cash provided by (used in) financing activities	(9,624	)	11,214		(39,227	)
Effect
of
exchange rate changes on cash and cash equivalents	57		(20	)	19
Net
increase (decrease) in cash and cash equivalents	2,085		24,161		(45,841	)
Cash
and cash equivalents at beginning of period	109,753		7,086		155,594
Cash
and cash equivalents at end of period	$ 111,838	$	31,247	$	109,753
Supplemental
disclosures of cash flow information:
Cash
paid during the period for:
Interest	$ ---	$	283	$	---
Income
taxes	$ 17	$	15	$	110
Supplemental
disclosures of non-cash investing and financing
activities:
Payable
for purchase of equipment and construction in progress	$ 1,384	$	893	$	2,721
Fair
value of
common stocks issued by Himax Display, Inc. in the acquisition
of
Integrated Microdisplays Limited	$ ---	$	---	$	538
Fair
value of
ordinary shares issued by Himax Technologies, Inc. in the acquisition
of
Wisepal Technologies, Inc.	$ 45,031	$	---	$	---

7

| Himax

Technologies, Inc.
Unaudited
Supplemental Data – Reconciliation Schedule
(Figures
in Thousands of U.S. Dollars, Except Per Share
Data)
Gross
Margin and Operating Margin Excluding Share-based Compensation
and
Acquisition-Related Charges:
	Three
Months Ended
March 31,		Three
Months Ended
December 31,
	200 7	200 6	200 6
Revenues	$ 184,891	$ 174,859	$ 220,879
Gross
profit	36,061	37,561	41,665
Add:
Share-based compensation – Cost of revenues	25	24	25
Gross
profit
excluding share-based compensation	36,086	37,585	41,690
Gross
margin
excluding share-based compensation	19.5 %	21.5 %	18.9 %
Operating
income	16,760	23,594	22,322
Add:
Share-based compensation	1,519	1,138	1 ,493
Operating
income excluding share-based compensation	18,279	24,732	23,815
Add:
Acquisition-related charges – In-process R&D write off	700	---	---
Add:
Acquisition-related charges – Intangible assets
amortization	187	---	---
Operating
income excluding share-based compensation and
acquisition-related charges	19,166	24,732	23,815
Operating
margin excluding share-based compensation and
acquisition-related charges	10.4 %	14.1 %	10.8 %

• 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

| Diluted Earnings Per Share Excluding Share-based Compensation and

Acquisition-Related Charges:
	Three
Months Ended
March 31,
	200 7
Diluted
GAAP
EPS	$ 0.09
Add:
Estimated
share-based compensation per diluted share	$ 0.01
Add:
Estimated
acquisition-related charges per diluted share	$ ---
Diluted
non
GAAP EPS excluding share-based compensation and acquisition-related
charges	$ 0.10
Numbers
do not
add up due to rounding

8

Exhibit 99.2

| LIVE CALL INFORMATION | REPLAY INFORMATION | | --- | --- | | Thursday, May 10, 2007 7AM Taiwan Wednesday, May 9, 2007 7PM NYC Listener Call Number: 1-201-689-8560 | Accessible 2 hours after the call through noon on Thursday, May 17, 2007 Taiwan Replay Number: 1-201-612-7415 Account number: 3055 Conference ID number: 238293 |

Operator Intro: Welcome to Himax Technologies first 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 Thursday, May 17, 2007 in Taiwan. The replay dial-in number is 1-201-612-7415 with account number 3055 and conference ID number 238293. The replay will also be accessible at www.himax.com.tw.

David

Thank you operator. Welcome everyone to Himax’s first 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 F-1 dated March 13, 2006, 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.

1

Mr. Jordan Wu

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

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

We closed the Wisepal acquisition on Feb 1 st, 2007 and therefore we are reporting the first quarter results on a consolidated basis today.

Our first quarter revenues, gross margin and EPS were all in line with our previous guidance.

Our first quarter net revenue was 184.9 million, representing a 6% growth year over year, and a 16% decline quarter over quarter. The decline in revenue reflects the traditionally seasonal lower demand and fewer working days in the holiday month of February. Moreover, demand for large panel driver IC decreased as a result of large panel maker’s decision to lower fab utilization for better inventory control.

In terms of customer mix, revenues from related parties were $109.1 million, about 59% of total revenue in the first quarter. Revenues from unrelated parties were $75.8 million, or 41% of total revenue.

Revenues from large panel display drivers were down 22% sequentially and accounted for approximately 82% of our total revenues in the first quarter. Demand for both IT and TV related drivers declined with TV demand showing more significant seasonality.

Revenues from small- and medium-sized display drivers grew 25% sequentially. This is primarily due to better sales in both mobile phone and consumer electronic products, share gains at certain first tier Japanese customers, and acquisition of Wisepal. Small- and medium-sized revenue accounted for about 16% of our total revenues. This is up from about 11% in the fourth quarter of last year.

2

Our gross margin was 19.5% in the first quarter of 2007, up 60 basis points from the previous quarter. Despite the tough pricing environment, we are pleased that we were able to improve our gross margin as we continued to diversify product mix and lower our cost.

Our GAAP operating margin declined sequentially from 10.1% to 9.1% primarily due to lower revenue base in the first quarter. Also, the expense of acquisition-related charges negatively impacted our operating margin. Excluding share-based compensation and acquisition-related charges, our non-GAAP operating margin decreased sequentially from 10.8% to 10.4%. Max will provide more information on the Wisepal acquisition-related charges.

Our first quarter GAAP income before tax and minority interest came in at $17.7 million as compared to $24.0 million in the previous quarter. The decline is due primarily to lower revenue. Excluding share-based compensation and acquisition-related charges, our non-GAAP income before tax and minority interest was $20.1 million, as compared to $25.5 million in the previous quarter.

Our GAAP net income came in at $18.0 million as compared to $31.1 million in the previous quarter. EPS was $0.09, as compared to $0.16 in the previous quarter. On top of lower revenue, the sequential decline was primarily due to tax benefits of $6.9 million recorded in the fourth quarter of 2006. We estimated our 2007 effective tax rate to be around 0%, and therefore we recorded net tax benefit or expense of zero in the first quarter.

Excluding share-based compensation and acquisition-related charges, our non-GAAP net income was $20.4 million, as compared to $32.6 million in the fourth quarter. Non-GAAP EPS was $0.10 as compared to $0.16 in the previous quarter.

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

We expect sales to improve in the second quarter. Demand for our large panel drivers is expected to increase as our customers are raising fab utilization to fulfill increasing demand for all large panel products across the board. Also, we expect sales of our small- and medium-sized drivers to remain healthy as several of our design-in projects have begun mass production .

3

Overall, we expect revenue to grow 17-20% sequentially in the second quarter. G ross margin is expected to remain flat or decline slightly . D iluted GAAP EPS is expected to improve to $0. 1 0 to $0. 1 1 as a result of higher revenue , while n on-GAAP EPS would be $0. 11 to $ 0 . 1 2 excl uding share-based compensation and amortization on acquisition-related intangibles.

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

4

Mr. Max Chan

Thank you , Jordan .

Before getting into the first quarter financials, I want to not e that when discussing comparisons between the fourth quarter 06 and the first quarter 07, there were a few updates to the fourth quarter financials . Changes are primarily due to higher estimated tax exemption and reclassifications in certain accounts. The se were filed as a 6K with SEC today US time. Revenues remain $220. 9 million for the fourth quarter 2006. Net income is updated to $0.1 6 per share for the fourth quarter 2006 as compared to $0.15 per share presented previously on February 13 th , 2007 .

Now let me move on to the detailed Q1 review.

N et revenues in the f irst quarter were $ 18 4 . 9 million, representing a year-on-year growth of 6 % and a sequential decline of 16 %.

The gross margin had increased to 19. 5 % from 1 8.9 % a quarter ago . Our gross m arg in improved sequentially primarily because our small- and medium-sized driver ICs, which typically enjoyed higher gross margin s , accounted for a higher percentage of our sales. Small- and medium-sized panel drivers accounted for approximately 1 6 % of our re venue in the period , up from approximately 11 % a quarter ago.

Our GAAP operating expense was $1 9. 3 million in the first quarter, flat as compared to the previous quarter .

We had identified 3 intangible assets from the Wisepal acquisition – Core/develop ed Technology, In-process R&D and Customer Relations. In-Process R&D was valued at approx imately $0. 7 million and was written off as a one-time charge. Core/developed Technology and Customer Relations will be amortized over useful life of 7 years. Amortiza tion on these two intangible assets will be approximately $ 1 million per annum.

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Our non-GAAP operating expense , excluding share-based compensation and acquisition-related charges was approximately $ 1 6 . 9 million in the first quarter, down from approx imat ely $ 1 7 . 9 million in previous quarter . Share-base d compensation w as approximately $1. 5 million, and acquisition - related charge s w ere approximately $0.9 million. We have provided detailed breakdown for these charges at the end of the press release.

Capital expenditure for the first quarter was approximately $6.5 million, mainly for the purchase of software, equipments and property relating to our headquarters.

The acquisition of Wisepal has increased our headcount by approximately 5 0 on Feb. 1. Our total h eadcount became approximately 9 50 a t the end of the first quarter .

Jordan provided our 2Q07 outlook earlier. We are basing that guidance on approximately 198.0 million diluted weighted average outstanding shares. For 2Q07, s hare-based compensation is ex p ected to be approximately $1.5 million and acquisition-related charges are expected to be approximately $0.3 million.

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

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