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OmniVision Technologies Inc. Reports Operating Results (10-K)

June 26, 2012 | About:
10qk

10qk

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OmniVision Technologies Inc. (OVTI) filed Annual Report for the period ended 2012-04-30.

Omnivision Technologies, Inc. has a market cap of $732.8 million; its shares were traded at around $12.91 with a P/E ratio of 14 and P/S ratio of 0.8.

Highlight of Business Operations:

We derive substantially all of our revenues from the sale of our image-sensor products that are used in a wide variety of consumer and commercial mass-market applications including mobile phones, notebooks and personal computers, security and surveillance cameras, DSCs, entertainment devices, automotive and medical products. Revenues decreased by 6.1% to $897.7 million in fiscal 2012 from $956.5 million in fiscal 2011. Revenues increased by 58.6% to $956.5 million in fiscal 2011 from $603.0 million in fiscal 2010. The decrease in revenues in fiscal 2012 when compared to fiscal 2011 was primarily due to a 9.6% decrease in unit sales of our image-sensor products, reflecting decreased unit shipments into the mobile phone and the notebook markets, and was partially offset by an increase in unit shipments into the entertainment market. The decrease in unit shipment in fiscal 2012, as compared to fiscal 2011, was principally attributable to a reduction in shipment of low resolution sensors, driven by the emergence of low-cost competitors that supplied image sensors to entry-level mobile phone and notebook manufacturers. In addition, we experienced significant order cutbacks from our key customers in our second and third quarters of fiscal 2012, when some of our customers' key end-user customers adjusted the demand forecast for some of their key consumer-oriented products, based on volatile market conditions and global economic environment. This reduction in orders also contributed to the decreased unit shipments. This was partially offset by a 4.3% increase in our ASPs from fiscal 2011, which was attributable to a proportionately higher quantity of 1-megapixel HD products shipped. The increase in revenues in fiscal 2011 when compared to fiscal 2010 was primarily due to a 43.1% increase in unit sales of our image-sensor products, reflecting a continuing recovery in

Our gross margin in fiscal 2012 was 27.6%, a decrease from 29.1% for fiscal 2011. The principal contributor to the year-over-year decrease in gross margin included: the sale of inventory during the second half of the fiscal year that carried higher manufacturing costs than our products sold in fiscal 2011, due to unfavorable production yields experienced by these inventory items when we introduced and manufactured them during the first half of fiscal 2012; the cost of owning the CameraCubeChip production operations was reflected in our cost of revenues since October 31, 2011; and a $2.2 million decrease in sales from previously written down products, which totaled $12.1 million, as compared to $14.3 million during the prior fiscal year. These were partially offset by: an increase in shipment of our premium VGA products, which carried higher gross margin; and a decrease in the write-down of inventories which totaled approximately $17.1 million, as compared to $18.3 million during the prior fiscal year. We expect that our gross margins will remain at a depressed level for at least the first quarter of fiscal 2013, due to the anticipated change in product mix to include a higher volume of our new OmniBSI-2 products. These products will have higher production costs when compared to our older products because of additional assembly and manufacture costs incurred by our supply chain vendors in connection with capacity expansion. We recorded approximately $2.9 million in stock-based compensation expense to cost of revenues in fiscal 2012, as compared to $2.0 million in the prior fiscal year.

Our working capital decreased by $48.8 million to $533.2 million as of April 30, 2012, as compared to $582.1 million as of April 30, 2011. Our working capital decreased as a result of: a $135.9 million decrease in cash, cash equivalents and short-term investments primarily due to approximately $100.0 million in cash used for the repurchase of the Company's common stock during the third quarter of fiscal 2012 and approximately $26.0 million in cash paid to VisEra for the acquisition of the CameraCubeChip production operations during the second quarter of fiscal 2012; a $57.3 million increase in accounts payable resulting from an increase in production activities; a $34.8 million decrease in accounts receivable, net, resulting from a decrease in revenues in our fourth quarter of fiscal 2012 as compared to the similar prior year period and faster collection; a $9.9 million increase in accrued expenses and other current liabilities; a $1.1 million decrease in prepaid expenses and other current assets; a $1.0 million increase in accrued income tax payable and a $0.9 million decrease in prepaid and deferred income taxes. These decreases in working capital were partially offset by: a $184.5 million increase in inventories, primarily caused by a build-up of OmniBSI-2 inventory at the end of fiscal 2012, and a reduction in unit sales in fiscal 2012 as compared to 2011; a $6.5 million decrease in deferred revenues, less cost of revenues and $1.2 million decrease in current portion of long-term debt.

For fiscal 2012, net cash provided by operating activities totaled approximately $8.4 million, as compared to $137.3 million for fiscal 2011. The principal components of the current year amount were: net income of approximately $65.8 million for fiscal 2012, adjustments for non-cash charges of $29.8 million in depreciation and amortization, $27.3 million in stock-based compensation, $17.1 million in write-down of inventories, $10.4 million in gains on equity investments, net, $8.6 million in benefit from acquisition of production operations from VisEra, and $0.9 million in losses on interest rate swaps; a $58.2 million increase in accounts payable; a $34.8 million decrease in accounts receivable, net; a $2.9 million decrease in prepaid and deferred income taxes; a $2.1 million decrease in prepaid expenses and other assets; and a $1.6 million increase in income tax payable. These increases were partially offset by: a $204.6 million increase in inventory; a $6.5 million decrease in deferred revenues, less cost of revenues and a $2.4 million decrease in accrued expenses and other current liabilities. The $204.6 million increase in inventories was primarily caused by a build-up of OmniBSI-2 inventory at the end of fiscal 2012 and a reduction in unit sales in fiscal 2012 as compared to 2011. The $58.2 million increase in accounts payable resulted from the purchase of inventories at the end of fiscal 2012. The $34.8 million decrease in accounts receivable, net, reflects a decrease in revenues in our fourth quarter of fiscal 2012 as compared to the similar prior year period.

For fiscal 2011, net cash provided by operating activities totaled approximately $137.3 million, as compared to $48.3 million for fiscal 2010. The principal components of the current year amount were: net income of approximately $124.5 million for fiscal 2011; adjustments for non-cash charges of $20.6 million in depreciation and amortization, $19.8 million in stock-based compensation and $18.3 million in write-down of inventories; a $18.7 million increase in accounts payable; a $5.9 million increase in deferred revenues, less cost of revenues; a $5.6 million decrease in inventories; a $5.6 million decrease in prepaid and deferred income taxes; and a $3.2 million decrease in prepaid expenses and other assets. These increases were partially offset by: a $68.4 million increase in accounts receivable, net; $13.2 million in gains on equity investments; a $2.7 million decrease in income taxes payable and a $1.0 million decrease in deferred tax liabilities. The $68.4 million increase in accounts receivable, net, reflects the increased level of revenues during the fourth quarter of fiscal 2011, as reflected in days of sales outstanding which increased to 49 days as of April 30, 2011 from 42 days as of April 30, 2010. The $5.6 million decrease in inventories resulted from an increase in sales activity during fiscal 2011. The decrease in inventories relative to fourth quarter revenues resulted in an increase in annualized inventory turns to 6.7 as of April 30, 2011 from 3.5 as of April 30, 2010. The $18.7 million increase in accounts payable reflected the increase in cost of sales associated with the substantial increase in sales activity.

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