8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

November 30, 2006

Date of Report (date of earliest event reported)

OmniVision Technologies, Inc.

(Exact name of Registrant as specified in its charter)

Delaware	000-29939	77-0401990
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification Number)

1341 Orleans Drive
Sunnyvale, California 94089-1136

(Address of principal executive offices)

(408) 542-3000

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR 240.14a-12(b))

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 2 — Financial Information

Item 2.02 Results of Operations and Financial Condition.

     The following information is intended to be furnished under Item 2.02 of Form 8-K, “Results of Operations and Financial Condition.” This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

     On November 30, 2006, OmniVision Technologies, Inc. (the “Company”) issued a press release announcing its financial results for its second fiscal quarter ended October 31, 2006. The full text of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Section 9 — Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

     (d) Exhibits

     The following exhibit is furnished herewith:

99.1 Press Release, dated November 30, 2006, of OmniVision Technologies, Inc. announcing its financial results for its second fiscal quarter ended October 31, 2006.

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: November 30, 2006

OmniVision Technologies, Inc.
By:	/s/ SHAW HONG
	Shaw Hong
	President and Chief Executive Officer

Exhibit Index

Exhibit
Number	Description
99.1	Press Release, dated November 30, 2006, of OmniVision Technologies, Inc. announcing its financial results for its second fiscal quarter ended October 31, 2006.

EX-99.1

Exhibit 99.1

Contact Information
Investor Relations:
Steven Horwitz
OmniVision Technologies, Inc.
Ph: 408.542.3263

OMNIVISION REPORTS FINANCIAL RESULTS FOR
SECOND QUARTER OF FISCAL 2007

~ Chief Operating Officer James He Appointed to Board of Directors ~

Sunnyvale, California, November 30, 2006 — OmniVision Technologies, Inc. (Nasdaq: OVTI), a leading supplier of CMOS image sensors, today reported financial results for the quarter ended October 31, 2006, the second quarter of its 2007 fiscal year.

Revenue for the second quarter was $137.7 million, compared to $136.9 million in the first quarter of fiscal 2007, and $126.8 million in the second quarter of fiscal 2006. GAAP net income in the quarter, which reflects stock-based compensation expense under FAS 123(R) and a one-time litigation settlement expense, was $5.4 million, or $0.10 per diluted share, compared to net income of $15.9 million, or $0.28 per diluted share, in the first quarter of fiscal 2007, and net income of $22.6 million, or $0.41 per diluted share, in the prior year period.

Non-GAAP net income in the quarter, which excludes stock-based compensation expense, the litigation settlement expense and the related tax effects, was $15.7 million and earnings were $0.28 per diluted share. Refer to the attached schedule for a reconciliation of GAAP to non-GAAP net income.

Gross margin for the second quarter was 33.1% compared to 36.3% last quarter. During the quarter, the Company recognized the benefit of $1.6 million of compensation from a supplier whose product quality in previous periods did not meet the Company’s quality standards. In the prior period, gross profit included $2.2 million for similar issues. The reduction in gross margin reflects, in large part, a shift in product mix during the quarter to lower resolution VGA products together with pricing pressure.

During the quarter, the Company accrued a $3.3 million expense for its share of the probable settlement of the class-action securities litigation originally filed in mid-2004.

The Company ended the period with cash, cash equivalents and short-term investments totaling $350.0 million. Compared to the prior quarter, inventory increased $35.2 million to $103.7 million. $23.9 million of the increase reflects growth in the Company’s work in process inventory late in the quarter. The increase reflects, in part, planning for higher unit volumes in

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the third quarter and for the start-up of the additional packaging capacity that the Company owns at its chip scale packaging supplier, XinTec, and part reflects a shift in demand towards VGA, which came too late in the quarter to permit a change in wafer production schedules. The Company does not believe that the increase significantly raises the risk of obsolescence or of excess inventory.

“With unit sales at an all time high, we remain focused on our strategy of capturing, converting and processing images, and we are continuing to develop new technologies for all of our markets and to deliver higher quality solutions to our customers,” said Shaw Hong, OmniVision’s president and chief executive officer.

“We are excited to have introduced our sixth-generation 1.3 megapixel image sensor in a 1/5-inch optical format, the world’s smallest. Additionally, we continued to achieve success in our advanced business unit with the introduction of OmniVision CameraChips targeted at high-end commercial security applications, including smart systems.

“We are also pleased to welcome our Chief Operating Officer James He to our Board of Directors. James has been an extremely important contributor to the success of OmniVision, leading the company’s research and engineering efforts for many years. As we move forward, James will continue to be a key contributor to the strategic development and business operations of OmniVision,” concluded Hong.

Outlook

Based on current trends, the Company expects fiscal third quarter 2007 revenue will be in the range of $135-$145 million and earnings will be between $0.05 and $0.12 per share, on a diluted basis. Excluding the estimated expense and related tax effects associated with stock-based compensation in accordance with FAS123(R), the Company expects non-GAAP earnings will be in the range of $0.16 to $0.23 per share, on a diluted basis. Refer to the table below for a reconciliation of GAAP to non-GAAP net income.

Conference Call

OmniVision Technologies will host a conference call today to further discuss these results at 2:00 p.m. Pacific Time. This conference call may be accessed by dialing 866-383-8009 or 617-597-5342 and indicating passcode 61144399. The call can be also be accessed via a webcast at www.ovt.com.

A replay of the call will be available for 48 hours beginning approximately one hour after the call. To access this replay, dial 617-801-6888 and enter passcode 65561189. The live call can be accessed via a webcast at www.ovt.com, and the replay will remain available for approximately twelve months at www.ovt.com.

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About OmniVision

OmniVision Technologies, Inc. designs and markets high-performance semiconductor image sensors. Its OmniPixel^® and CameraChip™ products are highly integrated single-chip CMOS image sensors for mass-market consumer and commercial applications such as mobile phones, digital still cameras, security and surveillance systems, interactive video games, PCs and automotive imaging systems. Additional information is available at www.ovt.com.

Safe Harbor Statement

Certain statements in this press release, including statements relating to the Company’s expectations regarding its ability to continue to develop technology for all of the Company’s markets and deliver quality solutions to our customers, and revenue and earnings per share for the quarter ending January 31, 2007, are forward-looking statements. These forward-looking statements are based on management’s current expectations, and important factors could cause actual results to differ materially from those in the forward-looking statements. These important factors include, without limitation, competition in current and emerging markets for image sensor products, including pricing pressures; the Company’s ability to obtain design wins from various image sensor device manufacturers including manufacturers of mobile phone, digital still cameras and automobile manufacturers; wafer manufacturing yields and other manufacturing processes; the Company’s ability to accurately forecast customer demand for its products; the development, production, introduction and marketing of new products and technology; the potential loss of 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; 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 filed on Form 10-K and most recent quarterly report 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 user’s overall understanding both of our reported results and our outlook, we use a non-GAAP measure of earnings per share which excludes stock-based compensation expense under FAS 123(R), the litigation settlement expense and related tax effects to allow for a better comparison of results to those in prior periods that did not include such expenses. We believe the non-GAAP measure that excludes stock-based compensation under FAS 123(R), the litigation settlement expense and related tax effects enhances the comparability of results against prior periods. We use this non-GAAP financial measure for internal management purposes, when publicly providing our business outlook and as a means to evaluate period-to-period comparisons. In addition, because stock-based compensation expense is offset by a credit to paid-in capital, it has no effect on total stockholders’ equity, and no effect on cash flows.

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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 Company’s stock price and the number of option exercises and sales during the quarter. This non-GAAP financial measure should be considered as a supplement to, and not as a substitute for, or superior to, the financial measure prepared in accordance with GAAP.

OMNIVISION TECHNOLOGIES, INC.

RECONCILIATION OF GUIDANCE FOR GAAP EARNINGS PER SHARE
TO PROJECTED NON-GAAP EARNINGS PER SHARE
(unaudited)

	Three Months Ending January 31, 2007
	GAAP							Non-GAAP
	Range of Estimates							Range of Estimates
	From		To		Adjustment			From		To
Earnings per share	$	0.05	$	0.12	$	0.11	(1)	$	0.16	$	0.23

(1) Reflects estimated adjustment for expense and related tax effects associated with stock-based compensation in accordance with FAS123(R).

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OMNIVISION TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
(unaudited)

	October 31,			April 30,
	2006			2006
ASSETS
Current assets:
Cash and cash equivalents	$	207,035		$	240,227
Short-term investments		142,941			114,278
Accounts receivable, net		75,288			65,916
Inventories		103,693			54,973
Refundable and deferred income taxes		1,689			1,708
Prepaid expenses and other current assets		13,259			9,158
Total current assets		543,905			486,260
Property, plant and equipment, net		83,921			38,010
Long-term investments		20,301			18,673
Goodwill		7,541			4,892
Intangibles, net		25,540			26,245
Other non-current assets		4,023			3,189
Total assets	$	685,231		$	577,269
LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	78,076		$	42,770
Accrued expenses and other current liabilities		26,427			21,351
Accrued income taxes payable		63,939			52,406
Deferred income		6,849			6,329
Current portion of capital lease obligations		141			152
Total current liabilities		175,432			123,008
Long-term liabilities:
Capital lease obligations, less current portion		208			308
Deferred tax liabilities		3,071			4,033
Total long-term liabilities		3,279			4,341
Total liabilities		178,711			127,349
Minority interest		35,227			27,113
Stockholders’ equity:
Common stock, $0.001 par value; 100,000 shares authorized; 60,697 issued and 54,682 outstanding at October 31, 2006 and 59,744 shares issued and 53,874 outstanding at April 30, 2006, respectively		61			60
Additional paid-in capital		314,222			285,112
Accumulated other comprehensive income		1,451			1,092
Treasury stock, 6,015 shares and 5,870 at October 31, 2006 and April 30, 2006, respectively		(81,848	)		(79,568	)
Retained earnings		237,407			216,111
Total stockholders’ equity		471,293			422,807
Total liabilities, minority interest and stockholders’ equity	$	685,231		$	577,269

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OMNIVISION TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(unaudited)

	Three Months Ended				Six Months Ended
	October 31,				October 31,
	2006		2005		2006		2005
Revenues	$	137,656	$	126,820	$	274,531	$	222,814
Cost of revenues		92,101		80,997		179,256		145,062
Gross profit		45,555		45,823		95,275		77,752
Operating expenses:
Research, development and related		18,657		9,935		35,499		18,412
Selling, general and administrative		15,774		9,059		28,225		15,837
Litigation settlement		3,300		—		3,300		—
Total operating expenses		37,731		18,994		67,024		34,249
Income from operations		7,824		26,829		28,251		43,503
Interest income, net		3,366		2,094		6,769		4,053
Other income, net		669		36		1,646		59
Income before income taxes and minority interest		11,859		28,959		36,666		47,615
Provision for income taxes		3,907		5,791		10,531		9,523
Minority interest		2,537		571		4,839		1,113
Net income	$	5,415	$	22,597	$	21,296	$	36,979
Net income per share:
Basic	$	0.10	$	0.42	$	0.39	$	0.67
Diluted	$	0.10	$	0.41	$	0.38	$	0.65
Shares used in computing net income per share:
Basic		54,620		53,807		54,511		55,493
Diluted		55,624		55,486		55,689		57,193

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OMNIVISION TECHNOLOGIES, INC.

RECONCILIATION OF NET INCOME TO PRO FORMA NET INCOME
(in thousands, except per share data)
(unaudited)

	Three Months Ended					Six Months Ended
	October 31,					October 31,
	2006			2005		2006			2005
Net income	$	5,415		$	22,597	$	21,296		$	36,979
Add:
Stock-based compensation in cost of revenues		1,015			—		1,953			—
Stock-based compensation in research, development and other expenses		3,629			—		6,656			—
Stock-based compensation in selling, general and administrative expenses		4,178			—		6,668			—
Less:
Provision for income taxes without the effect of stock-based compensation		(674	)		—		(922	)		—
Pro forma net income after adjustment for stock-based compensation		13,563			22,597		35,651			36,979
Add:
Litigation settlement expense		3,300			—		3,300			—
Less:
Provision for income taxes without the effect of litigation settlement expense		(1,155	)		—		(1,155	)		—
Pro forma net income	$	15,708		$	22,597	$	37,796		$	36,979
Pro forma net income per share:
Diluted	$	0.28		$	0.41	$	0.67		$	0.65
Shares used in computing pro forma net income per share:
Diluted		55,710			55,486		56,490			57,193

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