SUNNYVALE, CA — August 22, 2001 — OMNIVISION Technologies, Inc. (Nasdaq: OVTI), a leader in designing, developing and marketing advanced, highly integrated CMOS image sensors used in electronic cameras and other optical imaging devices, today reported financial results for its first fiscal quarter ended July 31, 2001.
First quarter revenues were $11.2 million, a 37 percent decrease from revenues of $17.8 million reported for the same quarter of the prior fiscal year and an increase of 19 percent over revenues of $9.4 million reported in the previous quarter. The decrease from the year ago quarter was primarily due to excess customer inventory in the PC camera business and the general economic slowdown. The sequential increase in revenues is mainly due to increased demand for OMNIVISION optical imaging solutions for home entertainment/home security cameras.
Gross margin for the first fiscal quarter was 45.0 percent, up substantially from the pro-forma gross margin of 31.9 percent in the prior quarter, and 31.0 percent in the same quarter of the previous fiscal year. The gross margin improvement in the first quarter is a result of favorable product mix and improved yields on certain products, and the sale of approximately $1.1 million of product that was written off in the January quarter of fiscal year 2001. These factors may continue to influence gross margins in the future.
Expenses for research and development in the quarter increased to $1.7 million or 15.1 percent of revenues from the previous quarter of $1.5 million or 16.0 percent of revenues. Research and development expenses increased on a dollar basis primarily as a result of the Company’s product development program cycles. Selling, general and administrative expenses in the quarter increased to $3.2 million or 29.0 percent of revenues from the previous quarter of $2.6 million or 28.0 percent of revenues. The increase in selling, general and administrative expense was primarily a result of higher than normal expenses for legal fees.
Net income for the first fiscal quarter was approximately $510,000 or earnings per share of $0.02 on 24.4 million diluted shares. For the year ago first fiscal quarter, net income was $1.9 million or earnings per share of $0.11 on 17.5 million diluted shares.
The net income and earnings per share for the first fiscal quarter was the result of the favorable product mix effect on gross margin, partially offset by the higher than normal legal expenses associated with legal action resulting from infringement claims by Photobit Corporation (Photobit) and California Institute of Technology (Cal Tech). OMNIVISION believes there is no valid claim under any of Photobit’s or Cal Tech’s patents, and OMNIVISION is aggressively protecting its rights, as well as defending against any and all claims.
“The results in the first fiscal quarter reflect our continued strategy of product diversification to compensate for the softness in the PC camera manufacturing business,” stated Shaw Hong, President and Chief Executive Officer of OMNIVISION. “We anticipate the relative softness in the PC camera manufacturing business to continue for the second quarter of fiscal year 2002 as many of our PC camera manufacturing customers continue to work off their inventory levels. At the same time, we will continue our diversification efforts with applications in the handheld wireless device markets, such as cell phones and personal digital assistants (PDAs), and in the home entertainment and home security camera markets.
“It is important to note that cash flow from operations was positive and we ended the first quarter with $57.6 million in cash, equivalents and short term investments, up $3.6 million from the $54.0 million in the prior quarter,” concluded Hong.
Revenue guidance for the second fiscal quarter ending October 31, 2001 is for revenues to be relatively flat to modestly improved, in a range between $11 and $13 million. As a result of the accelerating legal process in the Photobit patent actions, higher legal expenses are expected to result in earnings per share in a range between $0.0 and $0.02. The Company is not able to give further guidance until market demand and trends become more clear.
OMNIVISION Highlights for First Fiscal Quarter 2002
OMNIVISION’s product and technology strategy is focused on developing image sensors that are lower in cost, smaller, lighter in weight, consume less power, are more reliable and more easily integrated with other circuits. We believe that these product attributes, and continued improvements in these product characteristics, are necessary in order to meet the product specifications for cameras to be attached to, or embedded in, handheld and wireless devices. Since April 30, 2001, the Company has achieved progress along these parameters.
For the mobile phone market, we have introduced the OmniStar Cam module. Combined with third-party JPEG compression chips, the OmniStar Cam offers an easy and inexpensive solution for mobile phone manufacturers to add still image applications to cell phones. The small size and lower power consumption makes the OmniStar Cam a highly integrated and cost-effective solution for 2.5G and 3G mobile phones and other portable digital devices such as personal digital assistants.
For the PC camera market we have introduced our new “dual mode” chip set for a dual mode PC camera which functions as a regular PC video camera when attached to the PC, but which can also be detached from the PC and function as a portable digital still camera. Our “dual mode” chip can make it easier and faster for our customers to design dual mode PC cameras. Our complete reference design enables rapid design cycles and can improve time-to-market for our OEM customers.
OMNIVISION believes it has designed, and is manufacturing, the most highly integrated CMOS image sensor on the market today. Our solution provides increased functionality for PCs, personal digital assistants, home entertainment and surveillance systems, and mobile phones. Our leading-edge technology and products give us a key competitive advantage, especially for handheld, battery operated devices where small size, low power consumption and low cost are gating factors for the engineers who are designing new camera-related applications.
OMNIVISION Conference Call
OMNIVISION’s first fiscal quarter conference call is scheduled for August 22, 2001 at 2:00 p.m. PDT. To listen to the call, please dial 877-817-7175 or 703-871-3599 at least 5 minutes prior to the start. Interested parties also have the opportunity to listen to the conference call live via web cast at www.streetevents.com. The web cast will be available at that address for 90 days. A replay of the call will be available through August 29, by dialing 703-925-2435, code #5454354.
About OMNIVISION
OMNIVISION Technologies, Inc. designs, develops and markets high performance, high quality and cost efficient semiconductor image sensor devices. The company’s highly integrated image sensors are used in a variety of electronic cameras and camera related products for both still picture and live video applications. OMNIVISION is able to integrate many image system functions onto a single chip instead of multi chips required to achieve the same functions by competitive image sensors. The highly integrated design allows customers to design cameras that are lower in cost, smaller, consume less power, and are more reliable than cameras using multiple chip image sensors. OMNIVISION is based in Sunnyvale, California.
OMNIVISION is traded on the Nasdaq National Market System under the symbol OVTI. More information about the Company is located on the World Wide Web at: https://www.ovt.com.
OMNIVISION is a trademark of OMNIVISION Technologies, Inc. All other trade, product, or service names referenced in this release may be trademarks or registered trademarks of their respective holders.
The foregoing press release contains forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are subject to significant risks and uncertainties. In particular, the statements relating to the Company’s second fiscal quarter results; the factors which cause revenues to fluctuate; the fluctuations of gross margins in the future; the Company’s continued defense against claims made by Photobit and CAL Tech; the anticipated continued softness of demand for the Company’s products from PC camera manufacturers; the Company’s continued efforts to diversify its customer base in the wireless, home entertainment and home security markets are forward looking statements. Factors which could cause actual results to differ materially from those described in the company’s forward looking statements include: the recent economic slowdown, particularly the rapid deterioration in PC video camera demand, may continue to reduce the Company’s revenues and earnings and harm its business; any delay in the widespread acceptance of CMOS technology or the development of new markets for the Company’s products may adversely affect the Company’s revenues, earnings and gross margins as well as its strategy to diversify its product base; failure to obtain design wins from camera manufacturers could inhibit the Company’s ability to diversify its product base; the Company may not be able to compete successfully in its current markets and in emerging markets due to intense competition; any delay in the development and introduction of new products could adversely affect the Company’s revenues, earnings and gross margins as well as its strategy to diversify its product base; declines in the Company’s average sales price may result in declines of gross margins; the Company’s dependence upon a few key customers may adversely affect the Company’s revenues, earnings and its strategy of product diversification; the Company may not effectively manage its growth which could adversely affect its ability to increase revenues and improve earnings; the Company’s reliance on a limited number of third party wafer foundries, color filter vendors and assembly vendors increases the Company’s costs and may reduce its ability to forecast revenues and earnings; the Company may be unable to achieve planned wafer manufacturing yields which could adversely affect the Company’s revenues and earnings; and the 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 quarterly reports filed in calendar year 2001. The Company disclaims any obligation to update information contained in any forward-looking statement.