OmniVision Reports Financial Results For the First Quarter of Fiscal 2013

SANTA CLARA, Calif., Aug. 30, 2012 /PRNewswire/ -- OmniVision Technologies, Inc. (Nasdaq: OVTI), a leading developer of advanced digital imaging solutions, today reported financial results for the first quarter of fiscal 2013 that ended on July 31, 2012.

Revenues for the first quarter of fiscal 2013 were $258.1 million, as compared to $218.5 million in the fourth quarter of fiscal 2012, and $276.1 million in the first quarter of fiscal 2012. GAAP net income in the first quarter of fiscal 2013 was $2.3 million, or $0.04 per diluted share, as compared to net income of $2.7 million, or $0.05 per diluted share in the fourth quarter of fiscal 2012, and $42.0 million, or $0.68 per diluted share in the first quarter of fiscal 2012. GAAP net income in the first quarter of fiscal 2013 included a benefit from income taxes of $2.5 million.

Non-GAAP net income in the first quarter of fiscal 2013 was $11.6 million, or $0.21 per diluted share. Non-GAAP net income in the fourth quarter of fiscal 2012 was $10.9 million, or $0.20 per diluted share. Non-GAAP net income in the first quarter of fiscal 2012 was $47.2 million, or $0.76 per diluted share. Non-GAAP net income excludes stock-based compensation expenses and the related tax effects. Please refer to the attached schedule for a reconciliation of GAAP net income to non-GAAP net income for the three months ended July 31, 2012, July 31, 2011 and April 30, 2012.

GAAP gross margin for the first quarter of fiscal 2013 was 19.1%, as compared to 22.5% for the fourth quarter of fiscal 2012 and 31.7% for the first quarter of fiscal 2012. The sequential decrease in first quarter gross margin reflected an increase in shipment of advanced products that had high manufacturing costs. We expect this trend to continue into at least the second quarter of fiscal 2013.

The Company ended the period with cash, cash equivalents and short-term investments totaling $236.6 million, a decrease of $94.4 million from the previous quarter. The decrease reflects a continued build-up of inventory to support the forecasted sequential increase in revenues.

"For the third consecutive quarter, we reported revenues that exceeded the high-end of our guidance, and we anticipate another sequential increase in our second-quarter revenues," said Shaw Hong, chief executive officer of OmniVision Technologies, Inc. "While we are successful in rebuilding revenues momentum, our gross margins remain under pressure as a result of our current cost structure. We continue to take actions that we believe will lead to margin expansion over time."

Outlook

Based on current trends, the Company expects revenues for the second quarter of fiscal 2013 will be in the range of $355 million to $390 million and GAAP net income per share will be between $0.06 and $0.22 per diluted share. Excluding the estimated expense and related tax effects associated with stock-based compensation, the Company expects its non-GAAP net income per share will be between $0.21 and $0.37 per diluted share. Refer to the table below for a reconciliation of GAAP to non-GAAP net income.

Conference Call

OmniVision Technologies, Inc. will host a conference call today at 5:00 p.m. Eastern time to discuss these results further. This conference call can be accessed via a webcast at www.ovt.com. The call can also be accessed by dialing 866-383-7989 (domestic) or 617-597-5328 (international) and entering passcode 54269243.

A replay of the call will remain available at www.ovt.com for approximately twelve months. A replay of the call will also be available for one week beginning approximately one hour after the conclusion of the call. To access the replay, dial 888-286-8010 (domestic) or 617-801-6888 (international) and enter passcode 16278266.

About OmniVision

OmniVision Technologies, Inc. is a leading developer of advanced digital imaging solutions. Its CameraChip™ and CameraCubeChip™ products using CameraCubeChip™, OmniBSI™, OmniBSI+™, OmniBSI-2™, OmniPixel®, OmniPixel2™, OmniPixel3™ and OmniPixel3-HS™ technologies are highly integrated, single-chip CMOS image sensors for consumer and commercial applications including mobile phones, notebooks, tablets and webcams, entertainment devices, security and surveillance systems, digital still and video cameras, automotive and medical imaging systems. Additional information is available at www.ovt.com.

Safe Harbor Statement

Certain statements in this press release, including statements relating to our expectations regarding revenues and earnings per share for the three months ending October 31, 2012 are forward-looking statements. These forward-looking statements are based on management's current expectations, and certain factors could cause actual results to differ materially from those in the forward-looking statements. These factors include, without limitation, our ability to maintain and increase sales to current key customers and end-users of our products; fluctuations of wafer manufacturing costs, manufacturing yields, manufacturing capacity and other manufacturing processes and the impact on gross margins; the potential loss or reduction of orders from one or more key customers or distributors; the continued growth and development of current markets and the emergence of new markets in which the Company sells, or may sell, its products; fluctuations in sales mix and average selling prices; our ability to timely complete the product development cycle for new sensors; the Company's ability to obtain design wins from various image sensor device manufacturers including manufacturers of mobile phones, tablets and other entertainment devices, laptops and personal computers, digital still cameras and automobile manufacturers; competition in current and emerging markets for image sensor products, including pricing pressures that could result from competition; the impact of general economic conditions on orders from the end-user customers of our products; the Company's ability to accurately forecast customer demand for its products; the market acceptance of products into which the Company's products are designed; the development, production, introduction and marketing of new products and technology; the acceptance of the Company's products in such current and new markets; the Company's strategic investments and relationships, and other risks detailed from time to time in the Company's Securities and Exchange Commission filings and reports, including, but not limited to, the Company's most recent Annual Report on Form 10-K and recent Quarterly Reports on Form 10-Q. The Company expressly disclaims any obligation to update information contained in any forward-looking statement.

Use of Non-GAAP Financial Information

To supplement the reader's overall understanding of both its reported results presented in accordance with U.S. generally accepted accounting principles ("GAAP") and its outlook, the Company also presents non-GAAP measures of net income and net income per share which are adjusted from results based on GAAP. In particular, the Company excludes stock-based compensation expenses and related tax effects. The non-GAAP financial measures which the Company discloses also exclude the effects of stock-based compensation on the number of basic and diluted common shares used in calculating non-GAAP basic and diluted net income per share. The Company provides these non-GAAP financial measures to enhance an investor's overall understanding of its current financial performance and to assess its prospects for the future. These non-GAAP financial measures reflect an additional way of viewing aspects of the Company's operations that, when viewed with its GAAP results and the accompanying reconciliations to the corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting the Company's business. The economic basis for the Company's decision to use non-GAAP financial measures is that the adjustments to net income did not reflect the on-going relative strength of the Company's performance. The Company's objective is to minimize any confusion in the financial markets by providing non-GAAP net income and non-GAAP net income per share measurements and disclosing the related components. These non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the financial measures prepared in accordance with GAAP.

The Company uses non-GAAP financial measures for internal management purposes to conduct and evaluate its business, when publicly providing its business outlook and to facilitate period-to-period comparisons. The Company views non-GAAP net income per share as a primary indicator of the profitability of its underlying business. In addition, because stock-based compensation is a non-cash expense and is offset in full by a credit to paid-in capital, it has no effect on total stockholders' equity. As the calculation of non-GAAP financial measures differs between companies, the non-GAAP financial measures used by the Company may not be comparable to similarly titled measures used by other companies. Other than stock-based compensation and related tax effects, these differences may cause the Company's non-GAAP measures to not be directly comparable to other companies' non-GAAP measures. Although these non-GAAP financial measures adjust cost, expenses and basic and diluted share items to exclude the accounting treatment of stock-based compensation, they should not be viewed as a non-GAAP presentation reflecting the elimination of the underlying stock-based compensation programs. Thus, the Company's non-GAAP presentations are not intended to present, and should not be used, as a basis for assessing what its operating results might be if it were to eliminate its stock-based compensation programs. The Company compensates for these limitations by providing full disclosure of the net income and net income per share on a basis prepared in accordance with GAAP to enable investors to consider net income and net income per share determined under GAAP as well as on an adjusted basis, and perform their own analysis, as appropriate. As a result of the foregoing limitations, the Company does not use, nor does the Company intend to use, the non-GAAP financial measures when assessing the Company's performance against that of other companies.

Estimating stock-based compensation expense and the related tax effects for a future period is subject to inherent risks and uncertainties, including but not limited to the price of the Company's stock, stock market volatility, expected option life, risk-free interest rates, and the number of option exercises and sales during the quarter.

OMNIVISION TECHNOLOGIES, INC.


RECONCILIATION OF GUIDANCE FOR GAAP NET INCOME PER DILUTED SHARE

TO PROJECTED NON-GAAP NET INCOME PER DILUTED SHARE

(unaudited)



Three Months Ending October 31, 2012


GAAP

Range of Estimates


Non-GAAP

Range of Estimates


From

To

Adjustment

From

To

Net income per share

$   0.06

$   0.22

       $  0.15   (1)

$   0.21

$   0.37







(1) Reflects estimated adjustment for expense and related tax effects associated with stock-based compensation.

 

OMNIVISION TECHNOLOGIES, INC


CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

(unaudited)



July 31,

April 30,


2012

2012

ASSETS



Current assets:



      Cash and cash equivalents

$ 191,786

$ 290,492

      Short-term investments

44,779

40,515

      Accounts receivable, net of allowances for doubtful accounts and sales returns

142,687

107,793

      Inventories

403,201

291,340

      Prepaid and deferred income taxes

2,075

4,083

      Prepaid expenses and other current assets

22,554

8,542

            Total current assets

807,082

742,765

Property, plant and equipment, net

151,905

144,792

Long-term investments

119,198

128,940

Goodwill       

10,227

10,227

Intangibles, net

65,823

69,028

Other long-term assets

19,138

7,205

                  Total assets

$ 1,173,373

$ 1,102,957

LIABILITIES AND STOCKHOLDERS' EQUITY



Current liabilities:



      Accounts payable

$ 222,185

$ 159,860

      Accrued expenses and other current liabilities

36,192

35,416

      Income tax payable     

987

      Deferred revenues, less cost of revenues     

10,053

10,115

      Current portion of long-term debt

2,383

3,146

            Total current liabilities

270,813

209,524

Long-term liabilities:



      Long-term income taxes payable

84,310

88,159

      Non-current portion of long-term debt

39,071

39,337

      Other long-term liabilities

5,157

5,058

            Total long-term liabilities

128,538

132,554

            Total liabilities

399,351

342,078




Stockholders' equity:



            Common stock, $0.001 par value; 100,000 shares authorized; 74,098 shares issued and 53,499 outstanding at July 31, 2012 and 72,964 shares issued and 52,365 outstanding at April 30, 2012, respectively

74

73

            Additional paid-in capital

587,736

575,935

            Accumulated other comprehensive income

1,984

2,970

            Treasury stock, 20,599 at July 31, 2012 and April 30, 2012, respectively

(278,683)

(278,683)

            Retained earnings

462,911

460,584

                  Total stockholders' equity

774,022

760,879

                  Total liabilities and stockholders' equity

$ 1,173,373

$ 1,102,957

 

OMNIVISION TECHNOLOGIES, INC.


CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

(unaudited)



Three Months Ended


July 31,


2012

2011

Revenues

$ 258,064

$ 276,071

Cost of revenues

208,849

188,678

      Gross profit

49,215

87,393




Operating expenses:



      Research, development and related

28,848

28,345

      Selling, general and administrative

18,728

16,103

      Amortization of acquired patent portfolio

2,321

2,321

            Total operating expenses

49,897

46,769




Income (loss) from operations

(682)

40,624

Equity in earnings of investees, net

1,140

1,017

Interest expense, net

(758)

(222)

Other income (expense), net

94

(250)

Income (loss) before income taxes

(206)

41,169




Benefit from income taxes

(2,533)

(803)

               Net income

$     2,327

$   41,972




Net income per share:



      Basic

$        0.04

$        0.72

      Diluted     

$        0.04

$        0.68




Shares used in computing net income per share:



      Basic

52,830

58,650

      Diluted     

52,865

61,409

 

OMNIVISION TECHNOLOGIES, INC.


RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME

(in thousands, except per share amounts)

(unaudited)



Three Months Ended


Three Months Ended


July 31,


April 30,


2012

2011


2012

GAAP net income

$ 2,327

$ 41,972


$ 2,681

Add:





      Stock-based compensation in cost of revenues

1,060

464


930

      Stock-based compensation in research, development and related expenses

4,752

2,604


3,891

      Stock-based compensation in selling, general and administrative expenses

3,716

2,217


3,154

(Increase) decrease in provision for income taxes without the effect of stock-based compensation

(294)

(70)


210

Non-GAAP net income

$ 11,561

$ 47,187


$ 10,866






GAAP provision for (benefit from) income taxes

$ (2,533)

$ (803)


$ 1,000

(Increase) decrease in provision for income taxes without the effect of stock-based compensation

(294)

(70)


210

Non-GAAP provision for (benefit from) income taxes

$ (2,239)

$ (733)


$    790






Non-GAAP net income per share:





      Basic

$     0.22

$     0.80


$   0.21

      Diluted

$     0.21

$     0.76


$   0.20






Shares used in computing non-GAAP net income per share:





      Basic

52,830

58,650


52,334

      Diluted

55,186

62,332


54,751

SOURCE OmniVision Technologies, Inc.



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