Greetings, and welcome to the Himax Technologies' Fourth Quarter 2013 Earnings Conference Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. John Mattio, Senior Vice President of MZ Group and Investor Relations for Himax Technologies. Thank you, Mr. Mattio. You may begin.

Thank you, operator. Welcome, everyone, to Himax's fourth quarter and full year 2013 earnings call. Joining us from the company are Mr. Jordan Wu, President and Chief Executive Officer, and Ms. Jackie Chang, Chief Financial Officer. After the company's prepared comments we have allocated time for questions in a Q&A session. If you have not yet received a copy of today's results release, please call MZ Group at 212-301-7130, or access the press release on financial portals like Bloomberg, Yahoo or Google, or you can download a copy from Himax's website at www.himax.com.tw. Before we begin with the formal remarks, I would like to remind everyone that some of the statements on 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 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 and products, the uncertainty of continued success in technological innovations and other operational and market challenges 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, 2012 filed with SEC as amended. Except for the company's full year 2012 financials, which were provided on the company's 20-F filed with the SEC, the financial information included in this conference call is unaudited and consolidated and prepared in accordance with U.S. GAAP. Such financial information is generated internally and has not been subjected to the same review and scrutiny including internal auditing procedures and audit by independent auditors, to which the company subjects its annual consolidated financial statements and may vary materially from the audited consolidated financial information for the same period. 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. Jordan, the floor is yours.

Thank you, John, and thank you everyone for being with us for today's call. In today's earnings call, in addition to reporting our performance in the fourth quarter, I will also summarize our results for 2013 and highlight key milestones we achieved last year. I will then provide our outlook for the first quarter of 2014 and outline our product areas of focus of this year. Our CFO, Jackie Chang, will then provide additional details on our financial performance. Our 2013 fourth quarter revenues, gross margin, GAAP and non-GAAP earnings per diluted ADS, all met or exceeded our guidance for the quarter. For the fourth quarter, we reported net revenues of $195.2 million, with a gross margin of 25.1%. Fourth quarter GAAP earnings per diluted ADS were $0.092 and non-GAAP earnings per diluted ADS were $0.097, both results falling at top end of our guided range. Our fourth quarter revenues of $195.2 million, represented a 2.4% increase from the fourth quarter of 2012, and 1.3% sequential increase from the third quarter of 2013. Fourth quarter revenues exceeded our guidance, driven by better than expected driver IC sales in smartphone and tablet applications mainly for Chinese and Korean markets and also non-driver products. Revenues from large panel display drivers were $46.8 million, down 39.7% from a year ago and down 18.9% sequentially. Large panel driver IC accounted for 24% of our total revenues for the fourth quarter, compared to 40.7% a year ago and 29.9% in the last quarter. On the back of the soft global demands for T.V., laptops and monitors, our large panel driver IC revenues from Innolux, declined, while those from other customers increased. Sales for small and medium-sized drivers came in at $113 million, up 32.3% from the same period last year and up 12.4%, sequentially. Driver…

Thank you, Jordan. I will now provide additional details for our fourth quarter financial results. Our GAAP operating expenses were $29.6 million in Q4 2013, up 17.6% from a year ago and down 13.6% from the previous quarter. The sequential decrease was primarily the result of the difference in RSU charges as Jordan pointed out earlier. In accordance with our protocol, we grant annual RSUs to our staff at the end of September each year, which given all other things equal, leads to higher third quarter GAAP operating expenses, compared to the other quarters of the year. Excluding RSU expenses, operating expenses increased from the previous year and last quarter as we previously guided, due to higher salary expenses for additional headcount, annual pay raises and certain new product tape-outs during the quarter. GAAP operating income for the fourth quarter of 2013 was $19.4 million, or 9.9% of sales, up 0.9% year-over-year and 34.3%, sequentially. Non-GAAP net income in the fourth quarter was $16.6 million, or $0.097 per diluted ADS, representing a growth of 5.7% year-over-year and the decline of 14%, sequentially. Non-GAAP EPS per diluted ADS grew 4.9% from the same period last year and declined 14.3% over the previous quarter. I will go through 2013 full year financial results and balance sheet analysis a bit later after Jordan's 2013 full year business review.

Thank you, Jackie. We are happy that 2013 was another successful year for Himax. Small and medium-sized driver IC, our largest source of sales delivered the strongest growth. Our leading position in the business enabled us to take advantage of the robust global demand for smartphone and tablet, as well as the industry trend toward higher resolution displays. For large panel display driver business, we continued to expand our sales through Chinese customers and penetrate into non-China customers. We also had a terrific year in our non-driver businesses, where we maintained our strong growth momentum and made exciting progress, including new product launches and major customer design wins. Some of our non-driver products have already garnered interest by marquee and globally recognized end customers. Our revenue totaled $770.7 million in 2013 representing a 4.5% increase over 2012. Notably, our customer diversification improved substantially as sales to non-Innolux customers grew 23% year-over-year while those to Innolux declined 31%. Innolux accounted for between 15% to 20% of our total sales toward the year-end. Our small and medium-sized drivers grew 26.4% and represented 53.9% of our total revenues. Excluding feature phone, our small-and-medium sized drivers sales grew 38.6% year-over-year. We are among the leading suppliers to panel makers across Taiwan, Korea, China and Japan covering the vast majority of leading smartphone-end customers in both, China and international markets. The strong growth momentum of the small and medium-sized driver business will continue into this year driven by smartphone, tablet and automotive displays. The phenomenal smartphone market growth naturally invited intense competition in the driver IC space, especially in the lower-end segments. However, our technology and cost competiveness, on the back of the industry trend toward higher panel resolution, have enabled us to achieve a decent gross margin improvement last year. Revenues from large panel…

Thanks, again, Jordan. In terms of 2013 full year performance, our GAAP operating expenses were $117.5 million for the year, up $14 million or 13.5% compared to last year. We reported early last year that we intended to expand our R&D expenses to capture the increasing business opportunities following several years of stable R&D spending. GAAP operating income was $74.3 million, represented a 10.9% increase versus 2012. Non-GAAP net income for 2013 was $71 million, or 41.4 cents per diluted ADS, up from $60.3 million, or 35.3 cents per diluted ADS for 2012. Non-GAAP net income and Non-GAAP EPS per diluted ADS grew 17.8% and 17.1% year-over-year, respectively. Our cash, cash equivalents and marketable securities were $128.1 million at the end of December, down from $138.9 million at the same time last year and slightly down from $133.9 million a quarter ago. On top of the above cash position, restricted cash was $108.4 million at the end of the quarter. The restricted cash is mainly used to guarantee the company's short-term loan for the same amount. We continue to maintain a very strong balance sheet and we remind investors that we remain a debt-free company. Inventories as of December 31, 2013 were $177.4 million, up from $116.7 million a year ago and up from $159.6 million a quarter ago. The higher inventory was prepared for expected first quarter sales growth of driver ICs for all panel sizes, CMOS image sensor and a few other non-driver products. We expect that inventory level to come down by the end of the first quarter as a result of overall inventory control and expected increasing shipments. Accounts receivable at the end of December 2013 were $200.7 million as compared to $209 million a year ago and $202.2 million last quarter. Day sales outstanding was…

Thank you, again, Jackie. Following a successful transformation in 2012, we delivered strong operational and financial results in 2013. While the business from Innolux, which stopped being a related party since June 19th last year, when it disposed of all its equity holdings in Himax, declined by 31%. Sales from other customers actually were up by 23% during last year. We are therefore still were able to achieve top line growth for the whole year. This accomplishment illustrates the successful execution of our long-term strategy to diversify our customer base and product portfolio. Looking into 2014, we are seeing strong fundamentals across all our business segments and we are positive about our full year outlook for continued revenue and earnings growth. Large panel driver IC remains one of our major business segments. We have maintained a leading position in China, which is now the world's leading market for display capacity expansion. Additionally, we expect a few major non-China panel customers to contribute to our sales significantly in 2014. On the technology front, we remain a market leader in providing state-of-the-art large panel driver IC solutions. For example, we are leading the market in the development of solutions to combat the thermal issues, which are common in customers 4K panel projects. We expect some growth for large panel drivers in first quarter of 2014 from sales to both, the existing and new customers. We believe the main growth engine for large panel driver market this year will come from 4K TV, where we are a market leader. This strong first quarter outlook demonstrates that our past efforts are coming to fruition starting this year. We expect to resume the revenue growth of large panel driver business in 2014. We expect continued sales growth of both, smartphone and tablet markets in 2014,…