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

December 11, 2012 | About:
Gordon Pape

10qk

18 followers
OmniVision Technologies Inc. (OVTI) filed Quarterly Report for the period ended 2012-10-31.

Omnivision Technologies, Inc. has a market cap of $807.4 million; its shares were traded at around $14.69 with a P/E ratio of 32.3 and P/S ratio of 1.

Highlight of Business Operations:

Our gross margin in the three months ended October 31, 2012 decreased to 16.6% from 30.6% for the three months ended October 31, 2011. The year-over-year decrease in gross margin reflected an increase in unit shipments of our OmniBSI-2 products, which carried higher per-unit production costs when compared to products we shipped during the three months ended October 31, 2011, because of additional assembly and manufacturing costs incurred by our supply chain vendors in connection with capacity expansion. Price erosion experienced by our older products also contributed to the decrease in gross margin. In addition, the CameraCubeChip production operations was reflected in our cost of revenues for the three months ended October 31, 2012, and not in the prior year period. In addition, we experienced a decrease in the sales of previously written-down products in the three months ended October 31, 2012, which totaled $2.8 million, as compared to $3.2 million during the same period in the prior fiscal year. We also recorded an increase in the write-down of inventories which totaled approximately $6.5 million during the three months ended October 31, 2012, as compared to $4.2 million in the similar prior year period. We recorded approximately $1.0 million in stock-based compensation expense to cost of revenues during the three months ended October 31, 2012, as compared to $0.7 million in the similar prior year period. We currently expect that our shipment mix in the third quarter of fiscal 2013 will continue to shift towards OmniBSI-2 devices. As a consequence, although we are working with our supply chain to reduce production costs, we expect that our gross margins for the third quarter of fiscal 2013 will also remain at lower levels than we have experienced historically in similar periods.

Our working capital increased to $551.5 million as of October 31, 2012, as compared to $533.2 million as of April 30, 2012. Our working capital increased as a result of: a $141.5 million increase in accounts receivable, net, resulting from a revenue increase of $171.6 million for the three months ended October 31, 2012 from the three months ended April 30, 2012; a $107.4 million increase in inventories to support the anticipated product shipments in the three months ending January 31, 2013; a $1.0 million decrease in the current portion of long-term debt; a $1.0 million decrease in income tax payable; and a $0.9 million increase in prepaid expenses and other current assets. These increases in working capital were partially offset by: a $191.4 million decrease in cash, cash equivalents and short-term investments primarily due to cash used in operating activities; a $33.7 million increase in accounts payable resulting from the purchase of inventories; a $5.0 million increase in accrued expenses and other current liabilities; and a $4.0 million increase in deferred revenues, less cost of revenues.

For the six months ended October 31, 2012, net cash used in operating activities totaled approximately $165.4 million as compared to net cash used in operating activities of approximately $5.8 million for the corresponding period in the prior year. The principal components of the current year amount were: net income of approximately $12.7 million for the six months ended October 31, 2012; adjustments for non-cash charges of $18.0 million in stock-based compensation, $17.3 million in depreciation and amortization, $11.4 million in write-down of inventories, and $9.4 million in gain on equity investments, net; a $35.4 million increase in accounts payable; a $9.9 million decrease in prepaid expenses and other assets; a $3.6 million increase in deferred revenues, less cost of revenues; and a $2.0 million decrease in prepaid and deferred income taxes. These increases were offset by: a $141.5 million increase in accounts receivable, net; a $121.0 million increase in inventories; and a $4.0 million decrease in income taxes payable. The $141.5 million increase in accounts receivable, net was caused by the increased amount of revenues recorded during the three months ended October 31, 2012 as compared to the three months ended April 30, 2012. The $121.0 million increase in inventories was primarily driven by the need to support the anticipated shipment volume in the three months ending January 31, 2013. The $35.4 million increase in accounts payable was related to the inventory buildup.

in prepaid and deferred income taxes; and a $2.3 million decrease in prepaid expenses and other current assets. These increases were partially offset by: a $155.2 million increase in inventories; a $4.1 million decrease in deferred revenues, less cost of revenues; a $3.4 million decrease in accrued expenses and other current liabilities; and a $2.0 million decrease in income taxes payable. The $155.2 million increase in inventories was primarily caused by a cutback in orders by end-user customers in the second quarter of fiscal 2012. The $52.7 million increase in accounts payable resulted from an increase in production activities. The $15.9 million decrease in accounts receivable, net, reflects the decreased amount of revenues during the three months ended October 31, 2011 as compared to the three months ended April 30, 2011.

For the six months ended October 31, 2012, our net cash used in investing activities totaled $13.9 million, as compared to net cash provided by investing activities of approximately $36.8 million for the corresponding period in the prior year, due to $207.8 million in purchases of short-term investments, $19.7 million in purchases of property, plant and equipment, net of sales, and $10.3 million in purchases and deposits for intangible and other asset, partially offset by $223.9 million in net proceeds from sales or maturities of short-term investments. For the six months ended October 31, 2011, our cash provided by investing activities totaled $36.8 million, primarily due to $96.0 million in net proceeds from sales or maturities of short-term investments, partially offset by $46.3 million in purchases of short-term investments, $11.4 million in purchases of property, plant and equipment, net of sales and $1.0 million in purchases of intangible and other assets.

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