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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-K
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended April 30, 2006
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 For the transition period fromto
 Commission file number: 0-29939
 OMNIVISION TECHNOLOGIES, INC.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    77-0401990(State or other jurisdiction
    
    (I.R.S. Employerof incorporation or organization)
    
    Identification Number)
 1341 Orleans Drive, Sunnyvale, CA 94089-1136
(Address of principal executive offices) (Zip Code)
 Registrants telephone number, including area code: (408) 542-3000
 
 Securities registered pursuant to Section 12(b) of the Act:
 Name of each exchangeTitle of each class
    
    on which registeredNone
    
    None
 Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 par value
 
 o þ
 o þ
 þ o
 o
  o þ o
 o þ
   
 DOCUMENTS INCORPORATED BY REFERENCE




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##### 



OMNIVISION TECHNOLOGIES, INC.
 INDEX TO
 ANNUAL REPORT ON FORM 10-K
 FOR YEAR ENDED APRIL 30, 2006
 PART I
    
    
    3Item 1. Business
    
    
    3Item 1A. Risk Factors
    
    
    15Item 1B. Unresolved Staff Comments
    
    
    29Item 2. Properties
    
    
    29Item 3. Legal Proceedings
    
    
    29Item 4. Submission of Matters to a Vote of Security Holders
    
    
    30PART II
    
    
    31Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    31Item 6. Selected Financial Data
    
    
    32Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    33Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    51Item 8. Financial Statements and Supplementary Data
    
    
    52Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    85Item 9A. Controls and Procedures
    
    
    85Item 9B. Other Information
    
    
    86PART III
    
    
    87Item 10. Directors and Executive Officers of the Registrant
    
    
    87Item 11. Executive Compensation
    
    
    87Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
    
    
    87Item 13. Certain Relationships and Related Transactions
    
    
    87Item 14. Principal Accounting Fees and Services
    
    
    87PART IV
    
    
    88Item 15. Exhibits and Financial Statement Schedules
    
    
    88Signatures
    
    
    91EXHIBIT 21.1EXHIBIT 23.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32
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PART I
 
 ITEM 1. BUSINESS
 The following information should be read in conjunction with our audited consolidated
financial statements and the notes thereto included in Item 8 of this Annual Report on Form 10-K.
The following discussion contains forward-looking statements, within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which involve
risks and uncertainties. Forward-looking statements generally include words such as may, will,
plans, seeks, expects, anticipates, outlook, intends, believes and words of similar
import as well as the negative of those terms. In addition, any statements that refer to
expectations, projections or other characterizations of future events or circumstances, including
any underlying assumptions, are forward-looking statements. All forward-looking statements included
in this Annual Report on Form 10-K, including, but not limited to, statements regarding the
expansion of our testing capabilities, future trends and opportunities in certain markets, the
penetration of new mass-market applications, our future position as a leader in our industry, the
development and introduction of new products, the development of proprietary intellectual property,
the establishment of partnerships with other companies, the extent of future sales outside of the
United States, the increase of competition in our industry, the continued importance of the camera
cell phone market to our business, the continued reduction of average selling prices of our
products, the quarterly variation in customers orders, the extent of certain future expenses, our
effective tax rate for fiscal 2007, and the sufficiency of our available cash, cash equivalents and
short-term investments are based on current expectations and are subject to important factors that
could cause actual results to differ materially from those projected in the forward-looking
statements. Such important factors include, but are not limited to, those set forth under the
caption Item 1A. Risk Factors, beginning on page 15 of this Annual Report and elsewhere in this
Annual Report and in other documents we file with the U.S. Securities and Exchange Commission. All
subsequent written and oral forward-looking statements by or attributable to us or persons acting
on our behalf are expressly qualified in their entirety by such factors.
 OmniVision is a registered trademark of OmniVision Technologies, Inc. CameraChip, OmniPixel,
OmniPixel2, OmniQSP, VarioPixel and VarioPixel2 are trademarks of OmniVision Technologies, Inc.
Wavefront Coded is a registered trademark of CDM Optics, Inc., a wholly-owned subsidiary of
OmniVision Technologies, Inc. Wavefront Coding is a trademark of CDM Optics, Inc.
 Corporate Information
  Overview
  3




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Products and Technology
  2.2μ x 2.2μ
 1 4
   4




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Joint Venture with TSMC
   Consolidation of Variable Interest Entities,
 Industry Background
 Image Sensor Technologies
  5




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CMOS Sensors versus CCD Sensors
  Market Opportunity
  Our Solution
  High Image Quality and Resolution.
 Lower Cost.
 Smaller Size and Lower Power Consumption.
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Accelerated Time to Market.
 Streamlined Manufacturing and Production.
 Ease of Use
 Strategy
  Maintain and Extend Technology Leadership.
 Leverage Expertise Across Multiple Mass-Market Applications.
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Further Develop Close Customer Relationships.
 Continue to Develop Our Proprietary Technology to Maintain Competitive Advantage.
 Increase Our Market Presence.
 8




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Products
  Product Features
 CMOS CameraChip image sensors
    
    Black and white or colorResolutions
    
    Low resolutionMedium resolutionHigh resolutionOutput signal
    
    Analog for television, digital for computers
and other digital devicesOperating voltage
    
    5 volt, 3 volt, 2.7 volt or 1.8 voltOptical lens/array size
    
    1/18, 1/7, 1/6, 1/5, 1/4, 1/3 or 1/2 inch formatInterface chips
    
    For connecting to computers and other devicesSoftware drivers:   Standard operating systems
    
    Windows, Linux and Mac OS  Embedded systems
    
    Symbian, Palm OS, Windows Embedded and Windows CE
   Customers
    Sales and Marketing
  9




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Product Design
 Mixed Analog/Digital Circuit and CMOS Image Sensor Design
  Advanced Image Processing
  Single Chip Semiconductor Design
   Research and Development
  10




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Intellectual Property
   Manufacturing
 Wafer Fabrication
  Color Filter Application
  Wafer Probe Testing
  Assembly
  11




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Final Testing
     Product Quality Assurance
   Competition
  
    
    CMOS Image Sensor Manufacturers. Image sensor manufacturers using CMOS technology
include a number of well established companies such as Avago, Canon, Cypress, ESS,
Fujitsu, Kodak, MagnaChip, Micron, Matsushita, Samsung, Sharp, Sony, STMicroelectronics
and Toshiba. In addition, we compete with a large number of smaller CMOS manufacturers
including Foveon, PixArt and Pixelplus.
    
    CCD Image Sensor Manufacturers. Image sensor manufacturers using CCD technology
include a number of well-established companies, particularly vertically integrated
camcorder and high-resolution digital still camera manufacturers. Our main competition
from CCD manufacturers comes from Fuji, Matsushita, NEC, Sharp, Sony, Sanyo and Toshiba.
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Backlog
  Employees
  Financial Information About Geographic Areas
  Executive Officers and Directors of the Registrant
  Name
    
    Age
    
    PositionShaw Hong
    
    
    68
    
    
    Chief Executive Officer, President and DirectorRaymond Wu
    
    
    51
    
    
    Executive Vice President and DirectorPeter V. Leigh
    
    
    61
    
    
    Vice President of Finance and Chief Financial OfficerXinping He
    
    
    43
    
    
    Senior Vice President of EngineeringY. Vicky Chou
    
    
    43
    
    
    Vice President of Legal and General CounselDr. John T. Yue
    
    
    59
    
    
    Vice President of Quality and ReliabilityJoseph Jeng
    
    
    57
    
    
    DirectorDwight Steffensen
    
    
    62
    
    
    DirectorDr. Andrew Wang
    
    
    69
    
    
    Director
 Shaw Hong
 Raymond Wu
 Peter V. Leigh
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Xinping He
 Y. Vicky Chou
 Dr. John T. Yue
 Joseph Jeng
 Dwight Steffensen
 Dr. Andrew Wang
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ITEM 1A. RISK FACTORS
 This Annual Report on Form 10-K, including Managements Discussion and Analysis of Financial
Condition and Results of Operations, contains forward-looking statements. These forward-looking
statements are subject to substantial risks and uncertainties that could cause our future business,
financial condition or results of operations to differ materially from our historical results or
currently anticipated results, including those set forth below.
 Risks Related to Our Business
 We face intense competition in our markets from more established CMOS and CCD image sensor
manufacturers, and if we are unable to compete successfully we may not be able to maintain or
grow our business.
    Sales of our image-sensor products for camera cell phones account for a large portion of our
revenues from digital applications on an annual basis, and any decline in sales to the camera
cell phone market or failure of this market to continue to grow as expected could adversely
affect our results of operations.
 15
    Table of Contents    Our future success depends on the timely development, introduction, marketing and selling of new
CMOS image sensors, which we might not be able to achieve.
  
    
    accurate prediction of market requirements and evolving standards, including
pixel resolution, output interface standards, power requirements, optical lens size,
input standards and operating systems for personal computers and other platforms;
    
    development of advanced technologies and capabilities;
    
    definition, timely completion and introduction of new CMOS image sensors that
satisfy customer requirements;
    
    development of products that maintain a technological advantage over the
products of our competitors, including our advantages with respect to the functionality
and pixel capability of our image-sensor products and our proprietary testing processes;
and
    
    market acceptance of the new products.
  Failure to obtain design wins could cause our market share and revenues to decline and could
impair our ability to grow our business.
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We depend on a limited number of third party wafer foundries, which reduces our ability to
control our manufacturing process.
   
    
    reduced control over delivery schedules, quality assurance, manufacturing
yields and production costs;
    
    lack of guaranteed production capacity or product supply;
    
    unavailability of, or delayed access to, next generation or key process technologies; and
    
    financial difficulties or disruptions in the operations of third party
foundries due to causes beyond our control.
  We rely on a joint venture company for color filter application and on third party service
providers for packaging services, which reduces our control over delivery schedules, product
quality and cost, and could adversely affect our ability to deliver products to customers.
  17
    Table of Contents    Declines in our average selling prices may result in declines in our revenues and gross margins.
  Changes in accounting rules for stock-based compensation will adversely affect our reported
operating results, and may adversely affect our stock price and our competitiveness in the
employee marketplace.
 Share-Based Payment,
 Problems with wafer manufacturing and/or back-end processing yields could result in higher
product costs and could impair our ability to meet customer demand for our products.
  If we do not forecast customer demand correctly, our business could be impaired and our stock
price may decline.
 18
    Table of Contents    We depend on the increased acceptance of mass-market image sensor applications to grow our
business and increase our revenues.
   Our lengthy manufacturing, packaging and assembly cycle, in addition to our customers design
cycle, may result in uncertainty and delays in generating revenues.
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Our ability to deliver products that meet customer demand is dependent upon our ability to meet
new and changing requirements for color filter application and sensor packaging.
  The high level of complexity and integration of our products increases the risk of latent
defects, which could damage customer relationships and increase our costs.
  Historically, our revenues have been dependent upon a few key customers, the loss of one or more
of which could significantly reduce our revenues.
  Our customers experience fluctuating product cycles and seasonality, which could cause our
results of operations to fluctuate from period to period.
  Fluctuations in our quarterly operating results make it difficult to predict our future
performance and may result in volatility in the market price of our common stock.
  
    
    the volume and mix of our product sales;
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
    
    competitive pricing pressures;
    
    our ability to accurately forecast demand for our products;
    
    our ability to achieve acceptable wafer manufacturing or back-end processing yields;
    
    our gain or loss of a large customer;
    
    our ability to manage our product transitions;
    
    the availability of production capacities at the semiconductor foundries that
manufacture our products or components of our products;
    
    the growth of the market for products and applications using CMOS image sensors;
    
    the timing and size of orders from our customers;
    
    the volume of our product returns;
    
    the seasonal nature of customer demand for our products;
    
    the deferral of customer orders in anticipation of new products, product designs or enhancements;
    
    the announcement and introduction of products and technologies by our competitors; and
    
    the level of our operating expenses.
   We may be required to record a significant charge to earnings if our goodwill or amortizable
intangible assets become impaired.
  We maintain a backlog of customer orders that is subject to cancellation or delay in delivery
schedules, and any cancellation or delay may result in lower than anticipated revenues.
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If we are unable to maintain processes and procedures to sustain effective internal control over
our financial reporting, our ability to provide reliable and timely financial reports could be
harmed and this could have a material adverse effect on our stock price.
    Corporate governance regulations have recently increased our compliance costs and could further
increase our expenses if changes occur within our business.
  There are risks associated with our operations in China.
  
    
    difficulties in staffing and managing foreign operations, particularly in
attracting and retaining personnel qualified to design, sell and support CMOS image
sensors;
    
    difficulties in coordinating our operations in China with those in California;
    
    diversion of management attention;
    
    difficulties in maintaining uniform standards, controls, procedures and
policies across our global operations, including inventory management and financial
consolidation;
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
    
    political and economic instability, which could have an adverse impact on
foreign exchange rates in Asia and could impair our ability to conduct our business in
China; and
    
    inadequacy of the local infrastructure to support our needs.
 We may experience integration or other problems with potential future acquisitions, which could
have an adverse effect on our business or results of operations. New acquisitions could dilute
the interests of existing stockholders, and the announcement of new acquisitions could result in
a decline in the price of our common stock.
  
    
    difficulty in realizing the potential technological benefits of the
transaction;
    
    difficulty in integrating the technology, operations or work force of the
acquired business with our existing business;
    
    unanticipated expenses related to technology integration;
    
    disruption of our ongoing business;
    
    difficulty in realizing the potential financial or strategic benefits of the transaction;
    
    difficulty in maintaining uniform standards, controls, procedures and policies;
    
    possible impairment of relationships with employees, customers, suppliers and
strategic partners as a result of integration of new businesses and management personnel;
    
    reductions in our future operating results from amortization of intangible assets
    
    impairment of resulting goodwill; and
    
    potential unknown or unexpected liabilities associated with acquired businesses.
  We may never achieve the anticipated benefits from our joint venture with TSMC.
  We may not achieve the anticipated benefits of our alliances with, and strategic investments in,
third parties.
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Changes in our relationships with our joint ventures and/or companies in which we hold less than
a majority interest could change the way we account for such interests in the future.
  We may be unable to adequately protect our intellectual property, and therefore we may lose some
of our competitive advantage.
  24




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Litigation regarding intellectual property could divert management attention, be costly to defend
and prevent us from using or selling the challenged technology.
  
    
    ceasing the sale or use of products or services that incorporate the
infringed intellectual property;
    
    obtaining from the holder of the infringed intellectual property a license to
sell or use the relevant technology, which license may not be available on acceptable
terms, if at all; or
    
    redesigning those products or services that incorporate the disputed
intellectual property, which could result in substantial unanticipated development
expenses and delay and prevent us from selling the products until the redesign is
completed, if at all.
  We have been named as a defendant in certain litigation that could have a material adverse impact
on our operating results and financial condition.
 Legal Proceedings
 If we do not effectively manage our growth, our ability to increase our revenues and improve our
earnings could be adversely affected.
  
    
    significantly improve our operational, financial and accounting systems;
    
    train and manage our existing employee base;
    
    attract and retain qualified personnel with relevant experience; and
    
    effectively manage accounts receivable and inventory.
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Our future tax rates could be higher than we anticipate if the proportion of future operating
income generated outside the U.S. by our foreign subsidiaries is less than we expect.
   Our sales through distributors increase the complexity of our business, which may increase our
operating costs and may reduce our ability to forecast revenues.
  
    
    manage a more complex supply chain;
    
    manage the level of inventory at each distributor;
    
    provide for credits, return rights and price protection;
    
    estimate the impact of credits, return rights, price protection and unsold inventory at distributors; and
    
    monitor the financial condition and creditworthiness of our distributors.
  We face foreign business, political and economic risks, because a majority of our products and
those of our customers are manufactured and sold outside of the United States.
   
    
    longer payment cycles;
    
    the adverse effects of tariffs, duties, price controls or other restrictions that impair trade;
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
    
    decreased visibility as to future demand;
    
    difficulties in accounts receivable collections; and
    
    burdens of complying with a wide variety of foreign laws and labor practices.
  Our business could be harmed if we lose the services of one or more members of our senior
management team, or if we are unable to attract and retain qualified personnel.
   We need to continue to upgrade our enterprise resource planning and other management information
systems.
  Our operations may be impaired as a result of disasters, business interruptions or similar
events.
  Acts of war and terrorist acts may seriously harm our business and revenue, costs and expenses
and financial condition.
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Risks Related to the Securities Markets and Ownership of Our Common Stock
 Provisions in our charter documents and Delaware law, as well as our stockholders rights plan,
could prevent or delay a change in control of our company and may reduce the market price of our
common stock.
  
    
    adjusting the price, rights, preferences, privileges and restrictions of
preferred stock without stockholder approval;
    
    providing for a classified board of directors with staggered, three year
terms;
    
    requiring supermajority voting to amend some provisions in our certificate of
incorporation and bylaws;
    
    limiting the persons who may call special meetings of stockholders; and
    
    prohibiting stockholder actions by written consent.
  Our stock has been and will likely continue to be subject to substantial price and volume
fluctuations due to a number of factors, many of which are beyond our control, that may prevent
our stockholders from selling our common stock at a profit.
  
    
    actual or anticipated fluctuations in our operating results;
    
    changes in expectations as to our future financial performance;
    
    changes in financial estimates of securities analysts;
    
    release of lock-up or other transfer restrictions on our outstanding shares
of common stock or sales of additional shares of common stock;
    
    sales or the perception in the market of possible sales of shares of our
common stock by our directors, officers, employees or principal stockholders;
    
    changes in market valuations of other technology companies; and
    
    announcements by us or our competitors of significant technical innovations,
design wins, contracts, standards or acquisitions.
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ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
  
 ITEM 3. LEGAL PROCEEDINGS
  McKee v. OmniVision Technologies, Inc., et. al.,
Civil Action No. 01CV 10775 In re Initial Public Offering
Securities Litigation, 21 MC 92
 In re OmniVision
Technologies, Inc.,
 Gantt
v. Winn Torriani v. Hong
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Hackl v.
Hong
 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
 Price Range of Common Stock
  High
    
    LowFiscal 2006:First quarter
    
    $
    16.29
    
    
    $
    13.36Second quarter
    
    
    14.95
    
    
    
    11.81Third quarter
    
    
    25.23
    
    
    
    12.81Fourth quarter
    
    
    31.02
    
    
    
    23.99Fiscal 2005:First quarter
    
    $
    25.47
    
    
    $
    11.02Second quarter
    
    
    16.05
    
    
    
    9.02Third quarter
    
    
    19.73
    
    
    
    15.61Fourth quarter
    
    
    20.36
    
    
    
    13.52
  Dividend Policy
  Repurchase of Our Common Stock
 Capital Resources
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ITEM 6. SELECTED FINANCIAL DATA
 Year Ended April 30,2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002(in thousands, except per share data)Consolidated Statement of Operations data:Revenues
    
    $
    491,926
    
    
    $
    388,062
    
    
    $
    318,123
    
    
    $
    108,998
    
    
    $
    46,518Cost of revenues
    
    
    310,250
    
    
    
    231,508
    
    
    
    194,106
    
    
    
    66,904
    
    
    
    25,983Gross profit
    
    
    181,676
    
    
    
    156,554
    
    
    
    124,017
    
    
    
    42,094
    
    
    
    20,535Operating expenses:Research, development and related
    
    
    40,572
    
    
    
    25,494
    
    
    
    15,568
    
    
    
    11,700
    
    
    
    7,986Selling, general and administrative
    
    
    35,320
    
    
    
    29,012
    
    
    
    22,387
    
    
    
    11,032
    
    
    
    11,800Litigation settlement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,500Total operating expenses
    
    
    75,892
    
    
    
    54,506
    
    
    
    37,955
    
    
    
    22,732
    
    
    
    23,286Income (loss) from operations
    
    
    105,784
    
    
    
    102,048
    
    
    
    86,062
    
    
    
    19,362
    
    
    
    (2,751
    )Interest income, net
    
    
    8,949
    
    
    
    4,218
    
    
    
    1,696
    
    
    
    802
    
    
    
    1,477Other income (expense), net
    
    
    933
    
    
    
    (173
    )
    
    
    1,250
    
    
    
    
    
    
    
    Income (loss) before income taxes and minority interest
    
    
    115,666
    
    
    
    106,093
    
    
    
    89,008
    
    
    
    20,164
    
    
    
    (1,274
    )Provision for income taxes
    
    
    23,133
    
    
    
    29,706
    
    
    
    30,263
    
    
    
    4,840
    
    
    
    Minority interest
    
    
    3,385
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income (loss), net
    
    $
    89,148
    
    
    $
    76,387
    
    
    $
    58,745
    
    
    $
    15,324
    
    
    $
    (1,274
    )Net income (loss) per share:Basic (1)
    
    $
    1.64
    
    
    $
    1.35
    
    
    $
    1.11
    
    
    $
    0.34
    
    
    $
    (0.03
    )Diluted(1)
    
    $
    1.56
    
    
    $
    1.24
    
    
    $
    0.98
    
    
    $
    0.31
    
    
    $
    (0.03
    )Shares used in computing net income (loss) per share:Basic (1)
    
    
    54,268
    
    
    
    56,688
    
    
    
    52,856
    
    
    
    45,357
    
    
    
    43,724Diluted (1)
    
    
    56,958
    
    
    
    61,566
    
    
    
    59,688
    
    
    
    50,200
    
    
    
    43,724
 
 (1)
    
    Amounts have been retroactively restated for a 2-for-1 stock split, which was
effective on February 17, 2004. April 30,2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002(in thousands)Consolidated Balance Sheet data:Cash and cash equivalents (2)
    
    $
    240,227
    
    
    $
    170,457
    
    
    $
    114,653
    
    
    $
    39,288
    
    
    $
    55,803Restricted cash
    
    
    
    
    
    
    
    
    
    
    1,072
    
    
    
    
    
    
    
    Working capital
    
    
    363,252
    
    
    
    342,755
    
    
    
    271,919
    
    
    
    80,864
    
    
    
    65,067Total assets
    
    
    577,269
    
    
    
    479,833
    
    
    
    345,836
    
    
    
    117,953
    
    
    
    82,341Total current liabilities
    
    
    123,008
    
    
    
    78,073
    
    
    
    45,823
    
    
    
    21,410
    
    
    
    10,822Retained earnings (accumulated deficit)
    
    
    216,111
    
    
    
    126,963
    
    
    
    50,576
    
    
    
    (8,169
    )
    
    
    (23,493
    )Total stockholders equity
    
    
    422,807
    
    
    
    390,098
    
    
    
    300,013
    
    
    
    96,543
    
    
    
    71,519
 
 (2)
    
    Prior year balances reclassified to conform to current period presentation. See
Note 1 to the Consolidated Financial Statements included in this Annual Report on Form 10-K. 
 32




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ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 The following information should be read in conjunction with our audited consolidated
financial statements and the notes thereto included in Item 8 of this Annual Report on Form 10-K .
The following discussion contains forward-looking statements, within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which involve
risks and uncertainties. Forward-looking statements generally include words such as may, will,
plans, seeks, expects, anticipates, outlook, intends, believes and words of similar
import as well as the negative of those terms. In addition, any statements that refer to
expectations, projections or other characterizations of future events or circumstances, including
any underlying assumptions, are forward-looking statements. All forward-looking statements included
in this Annual Report on Form 10-K , including, but not limited to, statements regarding the
expansion of our testing capabilities, future trends and opportunities in certain markets, the
penetration of new mass-market applications, our future position as a leader in our industry, the
development and introduction of new products, the development of proprietary intellectual property,
the establishment of partnerships with other companies, the extent of future sales outside of the
United States, the increase of competition in our industry, the continued importance of the camera
cell phone market to our business, the continued reduction of average selling prices of our
products, the quarterly variation in customers orders, the extent of certain future expenses, our
effective tax rate for fiscal 2007, and the sufficiency of our available cash, cash equivalents and
short-term investments are based on current expectations and are subject to important factors that
could cause actual results to differ materially from those projected in the forward-looking
statements. Such important factors include, but are not limited to, those set forth under the
caption Item 1A. Risk Factors, beginning on page 15 of this Annual Report and elsewhere in this
Annual Report and in other documents we file with the U.S. Securities and Exchange Commission. All
subsequent written and oral forward-looking statements by or attributable to us or persons acting
on our behalf are expressly qualified in their entirety by such factors.
 Overview
   Products and Technology
   33




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##### Table of Contents



ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS  (Continued)
 1 4
   Joint Venture with TSMC
    34




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##### Table of Contents



ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS  (Continued)
 Joint Venture with PSC
  Acquisition of CDM
  Capital Resources
   The Current Economic and Market Environment
   35




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##### Table of Contents



ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS  (Continued)
        36




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##### Table of Contents



ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS  (Continued)
        37




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##### Table of Contents



ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS  (Continued)
     Sources of Revenues
 Critical Accounting Policies and EstimatesRevenue Recognition
 Critical Accounting Policies and Estimates
  Revenue Recognition
  38




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##### Table of Contents



ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS  (Continued)
     Allowance for Doubtful Accounts
  Allowance for Sales Returns and Warranties
  39




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ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS  (Continued)
 Excess and Obsolete Inventory and Effect on Gross Margin
    Valuation of Long Lived Assets
  
    
    operating losses;
    
    significant negative industry trends;
    
    significant underutilization of the assets; and
    
    significant changes in how we use the assets or our plans for their use.
 Accounting for Income Taxes
   40




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##### Table of Contents



ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  (Continued)
 Litigation and Contingencies
 Legal Proceedings
    Results of Operations
  Fiscal Year Ended April 30,2006
    
    
    2005
    
    
    2004Revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of revenues
    
    
    63.1
    
    
    
    59.7
    
    
    
    61.0Gross margin
    
    
    36.9
    
    
    
    40.3
    
    
    
    39.0Operating expenses:Research, development and related
    
    
    8.2
    
    
    
    6.5
    
    
    
    4.9Selling, general and administrative
    
    
    7.2
    
    
    
    7.5
    
    
    
    7.0Total operating expenses
    
    
    15.4
    
    
    
    14.0
    
    
    
    11.9Income from operations
    
    
    21.5
    
    
    
    26.3
    
    
    
    27.1Interest income
    
    
    1.8
    
    
    
    1.1
    
    
    
    0.5Other income, net
    
    
    0.2
    
    
    
    
    
    
    
    0.4Income before income taxes and minority interest
    
    
    23.5
    
    
    
    27.4
    
    
    
    28.0Provision for income taxes
    
    
    4.7
    
    
    
    7.7
    
    
    
    9.5Minority interest
    
    
    0.7
    
    
    
    
    
    
    
    Net income
    
    
    18.1
    %
    
    
    19.7
    %
    
    
    18.5
    %
 Revenues
  41




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##### Table of Contents



ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  (Continued)
  Revenues from Sales to OEMs and VARs as Compared to Distributors
  Fiscal Year Ended April 30,2006
    
    
    2005
    
    
    2004OEMs and VARs
    
    
    68.9
    %
    
    
    79.4
    %
    
    
    75.3
    %Distributors
    
    
    31.1
    %
    
    
    20.6
    %
    
    
    24.7
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
 OEMs and VARs.
 Distributors.
 Revenues from Domestic Sales as Compared to Foreign Sales
  Fiscal Year Ended April 30,2006
    
    
    2005
    
    
    2004Domestic sales
    
    
    1.0
    %
    
    
    0.8
    %
    
    
    1.2
    %Foreign sales
    
    
    99.0
    %
    
    
    99.2
    %
    
    
    98.8
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
  42




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##### Table of Contents



ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  (Continued)
 Gross Profit
 Comparison of Fiscal 2006 and Fiscal 2005
    Comparison of Fiscal 2005 and Fiscal 2004
  Research, Development and Related
  Comparison of Fiscal 2006 and Fiscal 2005
  43




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##### Table of Contents



ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  (Continued)
 Comparison of Fiscal 2005 and Fiscal 2004
  Selling, General and Administrative
  Comparison of Fiscal 2006 and Fiscal 2005
  Comparison of Fiscal 2005 and Fiscal 2004
  Interest Income, Net
  Other Income (Loss), Net
  44




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##### Table of Contents



ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  (Continued)
  Provision for Income Taxes
  Minority Interest
  Liquidity and Capital Resources
  Liquidity
    45




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##### Table of Contents



ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  (Continued)
  Cash Flows From Operating Activities
   Cash Flows From Investing Activities
   46




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##### Table of Contents



ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  (Continued)
  Cash and
    
    Short-termCash Equivalents
    
    InvestmentsAs Reported
    
    Revised
    
    As Reported
    
    RevisedApril 30, 2005
    
    $
    204,057
    
    
    $
    170,457
    
    
    $
    90,658
    
    
    $
    124,258April 30, 2004
    
    $
    124,653
    
    
    $
    114,653
    
    
    $
    90,558
    
    
    $
    100,558
  Cash Flow ActivityAs Reported
    
    RevisedFiscal 2005:Purchases of short-term investments
    
    $
    (148,233
    )
    
    $
    (194,533
    )Proceeds from sales or maturities of short-term investments
    
    $
    148,350
    
    
    $
    171,050Net increase in cash and cash equivalents
    
    $
    79,404
    
    
    $
    55,804Cash and cash equivalents at beginning of period
    
    $
    124,653
    
    
    $
    114,653Cash and cash equivalents at end of period
    
    $
    204,057
    
    
    $
    170,457Fiscal 2004:Purchases of short-term investments
    
    $
    (169,829
    )
    
    $
    (179,829
    )Proceeds from sales or maturities of short-term investments
    
    $
    100,646
    
    
    $
    100,646Net increase in cash and cash equivalents
    
    $
    85,365
    
    
    $
    75,365Cash and cash equivalents at end of period
    
    $
    124,653
    
    
    $
    114,653
 Cash Flows From Financing Activities
   Capital Resources
  47




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ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  (Continued)
   Risk Factors.
 Contractual Obligations and Commercial Commitments
  GreaterLess than
    
    
    1-3
    
    
    3-5
    
    
    than 5Total
    
    
    1 Year
    
    
    Years
    
    
    Years
    
    
    YearsContractual obligations:Operating leases
    
    $
    23,084
    
    
    $
    7,859
    
    
    $
    12,525
    
    
    $
    2,700
    
    
    $
    Noncancelable production orders
    
    
    76,409
    
    
    
    76,409
    
    
    
    
    
    
    
    
    
    
    
    Total contractual obligations
    
    
    99,493
    
    
    
    84,268
    
    
    
    12,525
    
    
    
    2,700
    
    
    
    Other commercial commitments:Investment in China
    
    
    10,300
    1
    
    
    10,300
    
    
    
    
    
    
    
    
    
    
    
    Joint venture with TSMC
    
    
    6,500
    2
    
    
    6,500
    
    
    
    
    
    
    
    
    
    
    
    Equipment and technology
purchase from Dai Nippon
    
    
    3,100
    3
    
    
    3,100
    
    
    
    
    
    
    
    
    
    
    
    Total commercial commitments
    
    
    19,900
    
    
    
    19,900
    
    
    
    
    
    
    
    
    
    
    
    Total contractual
obligations and commercial
commitments
    
    $
    119,393
    
    
    $
    104,168
    
    
    $
    12,525
    
    
    $
    2,700
    
    
    $
    
 
 1
    
    Represents the remaining $10.3 million of registered capital for our subsidiary, HWSC.
We established this subsidiary as part of our efforts to increase capacity and reduce costs
for testing our image-sensor products. Under an agreement with the Chinese government, the
date by which the remaining $10.3 million of registered capital must be funded is now January
17, 2007.2
    
    On August 12, 2005, our wholly-owned subsidiary, OmniVision International Holding
Ltd., entered into an Amended and Restated Shareholders Agreement, or the Amended VisEra
Agreement, with Taiwan Semiconductor Manufacturing Co., Ltd., or TSMC, VisEra Technologies
Company, Ltd., or VisEra, and VisEra Holding Company, or VisEra Cayman. In order to provide
greater financial and fiscal flexibility to VisEra, in connection with the Amended VisEra
Agreement, the parties formed VisEra Cayman, a company incorporated in the Cayman Islands.
VisEra will become a wholly-owned subsidiary of VisEra Cayman and VisEra Cayman will complete
the transactions contemplated by the Amended VisEra Agreement. The Amended VisEra Agreement
amended and restated the original Shareholders Agreement that the parties entered into on
October 29, 2003, pursuant to which the Company and TSMC agreed to form VisEra, a joint
venture in Taiwan, for the purposes of providing manufacturing services and automated final
testing services related to CMOS image sensors. In November 2003, pursuant to the terms of the
original Shareholders Agreement, we contributed $1.5 million in cash to VisEra and granted a
non-exclusive license to certain of our manufacturing and automated final testing technologies
and patents. In September 2005, we contributed a further $7.5 million to VisEra Cayman. In
November 2005, pursuant to the Amended VisEra Agreement, we contributed an additional $9.5
million in cash to VisEra Cayman. As a result of our step acquisition, and in accordance with the provisions of FIN
 46, we consolidated the results of VisEra beginning in the fiscal quarter ended October 31, 2005. See Note 4 in our consolidated financial statements.Under the terms of the Amended VisEra Agreement, the parties reaffirmed their respective
commitments to VisEra, and expanded the scope of and made certain modifications to the original
Shareholders Agreement. In 48




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##### Table of Contents



ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  (Continued)
 
 particular, the parties agreed to raise the total capital committed to the joint venture from
$50 million to $68 million, which commitments may be made in the form of cash or asset
contributions. The parties have equal interests in VisEra and VisEra Cayman. To date we have
contributed $18.5 million to VisEra and VisEra Cayman. A minimum of an additional $6.5 million
in cash or asset contributions will be made by each of the parties, with the remaining $15.0
million to be made by additional investors, additional contributions by the parties, or a
combination thereof, provided that the parties have and will maintain equal interests in VisEra
Cayman. At a future date yet to be determined, we expect to contribute approximately $20.5
million of assets to the joint venture, including technology, plant and equipment currently
owned by us or to be purchased with funds for existing commercial commitments. To the extent,
if any, that the value of the assets contributed exceeds the value of our commitment, we will
receive cash from VisEra Cayman.Pursuant to the terms of the Amended VisEra Agreement, VisEra Cayman used approximately $11.8
million of the $18.0 million increase in the total capital commitment for the acquisition of
approximately 29.6% of the issued shares of XinTec, of which we own separately and directly
approximately 7.8%.All other material terms of the original Shareholders Agreement remain in effect.3
    
    In May 2006, VisEra purchased certain equipment and intellectual property from Dai
Nippon Printing Co., Ltd. for approximately $3.1 million. See Note 19. Other Financial Arrangements
  Recent Accounting Pronouncements
 Share-Based Payment, Accounting for Stock
Appreciation Rights and Other Variable Stock Option or Award Plans an interpretation of APB
Opinions No. 15 and 25,
 Shared-Based Payment,
 49




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##### Table of Contents



ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  (Continued)
  Practical Accommodation to the Application
of Grant Date as Defined in FAS 123(R)
 Transition Election Related to Accounting
for the Tax Effects of Share-Based Payment Awards
 The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain Investments
 Accounting for Certain Hybrid InstrumentsAn
Amendment of FASB Statements No. 133 and No. 144,
 50




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##### Table of Contents



ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Foreign Currency Exchange Risk
      Market Interest Rate Risk
  51




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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 OMNIVISION TECHNOLOGIES, INC.
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 PageReport of Independent Registered Public Accounting Firm
    
    
    53Consolidated Balance Sheets
    
    
    55Consolidated Statements of Income
    
    
    56Consolidated Statements of Stockholders Equity and Comprehensive Income
    
    
    57Consolidated Statements of Cash Flows
    
    
    58Notes to Consolidated Financial Statements
    
    
    59Supplementary Data
    
    
    85
 52




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
   Consolidated Financial statements and financial statement schedule
 
 Internal control over financial reporting
 Internal Control  Integrated Framework Internal Control  Integrated Framework
  53




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/s/ PRICEWATERHOUSECOOPERS LLP
 
 54




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##### Table of Contents



OMNIVISION TECHNOLOGIES, INC.
 
 CONSOLIDATED BALANCE SHEETS
 (In thousands, except share and per share data)
 April 30,2006
    
    
    2005ASSETSCurrent assets:Cash and cash equivalents
    
    $
    240,227
    
    
    $
    170,457Short-term investments
    
    
    114,278
    
    
    
    124,258Accounts receivable, net of allowances for doubtful accounts and sales returns
    
    
    65,916
    
    
    
    59,740Inventories
    
    
    54,973
    
    
    
    58,429Refundable and deferred income taxes
    
    
    1,708
    
    
    
    5,402Prepaid expenses and other current assets
    
    
    9,158
    
    
    
    2,542Total current assets
    
    
    486,260
    
    
    
    420,828Property, plant and equipment, net
    
    
    38,010
    
    
    
    19,342Long-term investments
    
    
    18,673
    
    
    
    6,814Goodwill
    
    
    4,892
    
    
    
    4,892Intangibles, net
    
    
    26,245
    
    
    
    26,414Other non-current assets
    
    
    3,189
    
    
    
    1,543Total assets
    
    $
    577,269
    
    
    $
    479,833LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    42,770
    
    
    $
    26,081Accrued expenses and other current liabilities
    
    
    21,351
    
    
    
    14,196Accrued income taxes payable
    
    
    52,406
    
    
    
    32,313Deferred income
    
    
    6,329
    
    
    
    5,483Current portion of capital lease obligations
    
    
    152
    
    
    
    Total current liabilities
    
    
    123,008
    
    
    
    78,073Long-term liabilities:Capital lease obligations, less current portion
    
    
    308
    
    
    
    Deferred tax liabilities
    
    
    4,033
    
    
    
    9,347Total long-term liabilities
    
    
    4,341
    
    
    
    9,347Total liabilities
    
    
    127,349
    
    
    
    87,420Commitments and contingencies (Note 17)Minority interest
    
    
    27,113
    
    
    
    2,315Stockholders equity:Common stock, $0.001 par value; 100,000,000 shares authorized; 53,873,625 and
57,634,341 shares issued and outstanding at April 30, 2006 and 2005, respectively
    
    
    60
    
    
    
    58Additional paid-in capital
    
    
    285,112
    
    
    
    263,102Accumulated other comprehensive income (loss)
    
    
    1,092
    
    
    
    (25
    )Treasury stock, 5,870,000 shares at April 30, 2006 and zero shares at April 30, 2005
    
    
    (79,568
    )
    
    
    Retained earnings
    
    
    216,111
    
    
    
    126,963Total stockholders equity
    
    
    422,807
    
    
    
    390,098Total liabilities, minority interest and stockholders equity
    
    $
    577,269
    
    
    $
    479,833
  55




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OMNIVISION TECHNOLOGIES, INC.
 
 CONSOLIDATED STATEMENTS OF INCOME
 (in thousands, except per share amounts)
 Year Ended April 30,2006
    
    
    2005
    
    
    2004Revenues
    
    $
    491,926
    
    
    $
    388,062
    
    
    $
    318,123Cost of revenues
    
    
    310,250
    
    
    
    231,508
    
    
    
    194,106Gross profit
    
    
    181,676
    
    
    
    156,554
    
    
    
    124,017Operating expenses:Research, development and related
    
    
    40,572
    
    
    
    25,494
    
    
    
    15,568Selling, general and administrative
    
    
    35,320
    
    
    
    29,012
    
    
    
    22,387Total operating expenses
    
    
    75,892
    
    
    
    54,506
    
    
    
    37,955Income from operations
    
    
    105,784
    
    
    
    102,048
    
    
    
    86,062Interest income, net
    
    
    8,949
    
    
    
    4,218
    
    
    
    1,696Other income (loss), net
    
    
    933
    
    
    
    (173
    )
    
    
    1,250Income before income taxes and minority interest
    
    
    115,666
    
    
    
    106,093
    
    
    
    89,008Provision for income taxes
    
    
    23,133
    
    
    
    29,706
    
    
    
    30,263Minority interest
    
    
    3,385
    
    
    
    
    
    
    
    Net income
    
    $
    89,148
    
    
    $
    76,387
    
    
    $
    58,745Net income per share:Basic
    
    $
    1.64
    
    
    $
    1.35
    
    
    $
    1.11Diluted
    
    $
    1.56
    
    
    $
    1.24
    
    
    $
    0.98Shares used in computing net income per share:Basic
    
    
    54,268
    
    
    
    56,688
    
    
    
    52,856Diluted
    
    
    56,958
    
    
    
    61,566
    
    
    
    59,688
  56




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OMNIVISION TECHNOLOGIES, INC.
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY AND COMPREHENSIVE INCOME
 (in thousands, except share data)
 Accumulated
    
    
    
    
    
    
    RetainedAdditional
    
    
    Other
    
    
    
    
    
    
    EarningsCommon Stock
    
    
    Deferred
    
    
    Paid-in
    
    
    Comprehensive
    
    
    Treasury
    
    
    (Accumulated
    
    
    
    
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Compensation
    
    
    Capital
    
    
    Income (Loss)
    
    
    Stock
    
    
    Deficit)
    
    
    Total
    
    
    IncomeBalance at May 1, 2003
    
    
    46,805,816
    
    
    $
    47
    
    
    $
    (159
    )
    
    $
    104,824
    
    
    $
    
    
    
    $
    
    
    
    $
    (8,169
    )
    
    $
    96,543
    
    
    $
    15,324Exercise of stock options
    
    
    2,824,297
    
    
    
    3
    
    
    
    
    
    
    
    11,970
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,973Employee stock purchase plan
    
    
    395,554
    
    
    
    
    
    
    
    
    
    
    
    1,345
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,345Grant of fully-vested options
to non-employees
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    963
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    963Tax benefits from stock
options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,294
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,294Secondary public offering of
common stock
    
    
    6,186,452
    
    
    
    6
    
    
    
    
    
    
    
    113,009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    113,015Amortization of deferred
compensation
    
    
    
    
    
    
    
    
    
    
    139
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    139Translation loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5
    )
    
    
    
    
    
    
    
    
    
    
    (5
    )
    
    $
    (5
    )Unrealized gain on available-
for-sale securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    58,745
    
    
    
    58,745
    
    
    
    58,745Balance at April 30, 2004
    
    
    56,212,119
    
    
    
    56
    
    
    
    (20
    )
    
    
    249,405
    
    
    
    (4
    )
    
    
    
    
    
    
    50,576
    
    
    
    300,013
    
    
    $
    58,741Exercise of stock options
    
    
    934,326
    
    
    
    1
    
    
    
    
    
    
    
    3,835
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,836Employee stock purchase plan
    
    
    119,690
    
    
    
    
    
    
    
    
    
    
    
    1,564
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,564Grant of fully-vested options
to non-employees
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    938
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    938Tax benefits from stock
options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,104
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,104Shares issued for CDM Optics
acquisition
    
    
    368,206
    
    
    
    1
    
    
    
    
    
    
    
    5,256
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,257Amortization of deferred
compensation
    
    
    
    
    
    
    
    
    
    
    20
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20Translation gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    $
    1Unrealized loss on available-
for-sale securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22
    )
    
    
    
    
    
    
    
    
    
    
    (22
    )
    
    
    (22
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    76,387
    
    
    
    76,387
    
    
    
    76,387Balance at April 30, 2005
    
    
    57,634,341
    
    
    
    58
    
    
    
    
    
    
    
    263,102
    
    
    
    (25
    )
    
    
    
    
    
    
    126,963
    
    
    
    390,098
    
    
    $
    76,366Exercise of stock options
    
    
    1,992,887
    
    
    
    2
    
    
    
    
    
    
    
    17,584
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,586Employee stock purchase plan
    
    
    116,397
    
    
    
    
    
    
    
    
    
    
    
    1,565
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,565Purchase of stock for treasury
    
    
    (5,870,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (79,568
    )
    
    
    
    
    
    
    (79,568
    )Grant of fully-vested options
to non-employees
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6Tax benefits from stock
options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,855
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,855Translation gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,142
    
    
    
    
    
    
    
    
    
    
    
    1,142
    
    
    $
    1,142Unrealized loss on available-
for-sale securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25
    )
    
    
    
    
    
    
    
    
    
    
    (25
    )
    
    
    (25
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    89,148
    
    
    
    89,148
    
    
    
    89,148Balance at April 30, 2006
    
    
    53,873,625
    
    
    $
    60
    
    
    $
    
    
    
    $
    285,112
    
    
    $
    1,092
    
    
    $
    (79,568
    )
    
    $
    216,111
    
    
    $
    422,807
    
    
    $
    90,265
  57




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##### Table of Contents



OMNIVISION TECHNOLOGIES, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands)
 Year Ended April 30,2006
    
    
    2005
    
    
    2004Cash flows from operating activities:Net income
    
    $
    89,148
    
    
    $
    76,387
    
    
    $
    58,745Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation and amortization
    
    
    10,598
    
    
    
    3,037
    
    
    
    1,952Stock-based compensation
    
    
    6
    
    
    
    958
    
    
    
    1,102Tax benefits from stock option exercises
    
    
    2,855
    
    
    
    2,104
    
    
    
    17,294Minority interest in net loss of consolidated affiliates
    
    
    3,385
    
    
    
    
    
    
    
    Equity investment (gain) loss, net
    
    
    (847
    )
    
    
    149
    
    
    
    Loss on disposal of fixed assets
    
    
    19
    
    
    
    96
    
    
    
    Changes in assets and liabilities, net of acquisitions:Accounts receivable, net
    
    
    (6,049
    )
    
    
    (5,870
    )
    
    
    (34,380
    )Inventories
    
    
    3,414
    
    
    
    (16,374
    )
    
    
    (25,160
    )Refundable and deferred income taxes
    
    
    3,709
    
    
    
    1,391
    
    
    
    1,124Prepaid expenses and other current assets
    
    
    (6,713
    )
    
    
    (161
    )
    
    
    (1,415
    )Accounts payable
    
    
    15,449
    
    
    
    (1,939
    )
    
    
    15,395Accrued expenses and other current liabilities
    
    
    6,577
    
    
    
    1,362
    
    
    
    2,976Accrued income taxes payable
    
    
    19,784
    
    
    
    31,019
    
    
    
    87Deferred income
    
    
    846
    
    
    
    (3,402
    )
    
    
    5,955Deferred tax liabilities
    
    
    (5,314
    )
    
    
    
    
    
    
    Net cash provided by operating activities
    
    
    136,867
    
    
    
    88,757
    
    
    
    43,675Cash flows from investing activities:Restricted cash
    
    
    
    
    
    
    1,072
    
    
    
    (1,072
    )Purchases of short-term investments
    
    
    (184,372
    )
    
    
    (194,533
    )
    
    
    (179,829
    )Proceeds from sales or maturities of short-term investments
    
    
    194,322
    
    
    
    171,050
    
    
    
    100,646Purchases of property, plant and equipment, net of sales
    
    
    (22,655
    )
    
    
    (1,483
    )
    
    
    (10,118
    )Proceeds from consolidation of VisEra, net of cash payments
    
    
    13,792
    
    
    
    
    
    
    
    Payment for acquisition of CDM Optics, Inc., net of cash acquired
    
    
    
    
    
    
    (13,528
    )
    
    
    Consolidation of Silicon Optronics, Inc.
    
    
    
    
    
    
    2,662
    
    
    
    Additional investment made in Silicon Optronics, Inc.
    
    
    
    
    
    
    (2,078
    )
    
    
    Purchases of long-term investments
    
    
    (12,471
    )
    
    
    
    
    
    
    (4,265
    )Purchases of intangible assets
    
    
    (5,500
    )
    
    
    (1,460
    )
    
    
    Net cash used in investing activities
    
    
    (16,884
    )
    
    
    (38,298
    )
    
    
    (94,638
    )Cash flows from financing activities:Proceeds from short-term borrowings of consolidated affiliate
    
    
    3,981
    
    
    
    
    
    
    
    Repayment of short-term borrowings of consolidated affiliate
    
    
    (3,981
    )
    
    
    
    
    
    
    Payment of capital lease obligations
    
    
    (27
    )
    
    
    
    
    
    
    Cash contribution by minority shareholder
    
    
    9,500
    
    
    
    
    
    
    
    Proceeds from issuance of common stock, net
    
    
    
    
    
    
    
    
    
    
    113,015Proceeds from exercise of stock options and employee stock
purchase plan
    
    
    19,151
    
    
    
    5,400
    
    
    
    13,318Payments for repurchases of common stock
    
    
    (79,568
    )
    
    
    
    
    
    
    Net cash provided by (used in) financing activities
    
    
    (50,944
    )
    
    
    5,400
    
    
    
    126,333Effect of exchange rate changes on cash and cash equivalents
    
    
    731
    
    
    
    (55
    )
    
    
    (5
    )Net increase in cash and cash equivalents
    
    
    69,770
    
    
    
    55,804
    
    
    
    75,365Cash and cash equivalents at beginning of period
    
    
    170,457
    
    
    
    114,653
    
    
    
    39,288Cash and cash equivalents at end of period
    
    $
    240,227
    
    
    $
    170,457
    
    
    $
    114,653Supplemental cash flow information:Taxes paid
    
    $
    2,474
    
    
    $
    310
    
    
    $
    13,810Interest paid
    
    $
    20
    
    
    $
    
    
    
    $
    Supplemental schedule of non-cash investing and financing activities:Capital lease obligation to finance capital equipment
    
    $
    393
    
    
    $
    
    
    
    $
    Shares issued for CDM Optics, Inc. acquisition
    
    $
    
    
    
    $
    5,257
    
    
    $
    Escrow shares to be issued in connection with CDM Optics, Inc.
acquisition
    
    $
    
    
    
    $
    2,095
    
    
    $
    
  58




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##### Table of Contents



OMNIVISION TECHNOLOGIES, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 For the Years Ended April 30, 2006, 2005 and 2004
 Note 1  OmniVision and Summary of Its Significant Accounting Policies
 The Company
 TM
  Reclassifications
  Cash and
    
    Short-termCash Equivalents
    
    InvestmentsAs Reported
    
    Revised
    
    As Reported
    
    RevisedApril 30, 2005
    
    $
    204,057
    
    
    $
    170,457
    
    
    $
    90,658
    
    
    $
    124,258April 30, 2004
    
    $
    124,653
    
    
    $
    114,653
    
    
    $
    90,558
    
    
    $
    100,558
  Cash Flows ActivityAs Reported
    
    RevisedFiscal 2005:Purchases of short-term investments
    
    $
    (148,233
    )
    
    $
    (194,533
    )Proceeds from sales or maturities of short-term investments
    
    $
    148,350
    
    
    $
    171,050Net increase in cash and cash equivalents
    
    $
    79,404
    
    
    $
    55,804Cash and cash equivalents at beginning of period
    
    $
    124,653
    
    
    $
    114,653Cash and cash equivalents at end of period
    
    $
    204,057
    
    
    $
    170,457Fiscal 2004:Purchases of short-term investments
    
    $
    (169,829
    )
    
    $
    (179,829
    )Proceeds from sales or maturities of short-term investments
    
    $
    100,646
    
    
    $
    100,646Net increase in cash and cash equivalents
    
    $
    85,365
    
    
    $
    75,365Cash and cash equivalents at end of period
    
    $
    124,653
    
    
    $
    114,653
 Use of Estimates
  59




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##### Table of Contents



OMNIVISION TECHNOLOGIES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
For the Years Ended April 30, 2006, 2005 and 2004
  Principles of Consolidation
  Foreign Currency Translation
   Cash and Cash Equivalents
   Restricted Cash
  Short-Term Investments
  60




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##### Table of Contents



OMNIVISION TECHNOLOGIES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
For the Years Ended April 30, 2006, 2005 and 2004
  Accounts Receivable
  Fair Value of Financial Instruments
  Property, Plant and Equipment
  Buildings
    
    40 yearsBuilding/leasehold improvements
    
    Shorter of 20 years or life of leaseMachinery and equipment
    
    310 yearsFurniture and fixtures
    
    37 years
  Long-Lived Assets
  Inventories
   61




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##### Table of Contents



OMNIVISION TECHNOLOGIES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
For the Years Ended April 30, 2006, 2005 and 2004
  Goodwill
  Intangible Assets Other than Goodwill
  Warranty for Defective Products
  Land Use Right Acquired in China
  Treasury Stock
  Revenue Recognition
  62




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##### Table of Contents



OMNIVISION TECHNOLOGIES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
For the Years Ended April 30, 2006, 2005 and 2004
    Research, Development and Related
 Accounting for
Research and Development Costs,
 Income Taxes
  63




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##### Table of Contents



OMNIVISION TECHNOLOGIES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
For the Years Ended April 30, 2006, 2005 and 2004
 Stock-Based Compensation
 Accounting for Stock Issued to Employees Accounting for Certain Transactions Involving Stock Compensation Accounting for
Stock-Based Compensation Accounting for Stock-Based
CompensationTransition and DisclosureAn Amendment of FASB Statement No. 123
 Year Ended April 30,2006
    
    
    2005
    
    
    2004Net income, as reported
    
    $
    89,148
    
    
    $
    76,387
    
    
    $
    58,745Add:     Stock-based employee compensation expense included
in reported net income, net of related tax effects
    
    
    
    
    
    
    14
    
    
    
    561Deduct: Total stock-based employee compensation
determined under fair value based method for all
awards, net of related tax effects
    
    
    19,164
    
    
    
    24,422
    
    
    
    16,645As adjusted net income
    
    $
    69,984
    
    
    $
    51,979
    
    
    $
    42,661Net income per share  Basic:As reported
    
    $
    1.64
    
    
    $
    1.35
    
    
    $
    1.11As adjusted
    
    $
    1.29
    
    
    $
    0.92
    
    
    $
    0.81Net income per share  Diluted:As reported
    
    $
    1.56
    
    
    $
    1.24
    
    
    $
    0.98As adjusted
    
    $
    1.29
    
    
    $
    0.92
    
    
    $
    0.80Shares used in computing net income per share  Basic:As reported
    
    
    54,268
    
    
    
    56,688
    
    
    
    52,856As adjusted
    
    
    54,268
    
    
    
    56,688
    
    
    
    52,856Shares used in computing net income per share  Diluted:As reported
    
    
    56,958
    
    
    
    61,566
    
    
    
    59,688As adjusted
    
    
    54,268
    
    
    
    56,688
    
    
    
    53,005
 Accounting for Equity Instruments
that are Offered to Other than Employees for Acquiring or in Conjunction with Selling Goods or
Services
 Comprehensive Income (loss)
  64




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##### Table of Contents



OMNIVISION TECHNOLOGIES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
For the Years Ended April 30, 2006, 2005 and 2004
  Basic and Diluted Net Income (Loss) Per Share
 Earnings
per Share,
 Minority Interest
  Recent Accounting Pronouncements
 Share-Based Payment, Accounting for Stock Appreciation Rights and
Other Variable Stock Option or Award Plans an interpretation of APB Opinions No. 15 and 25,
 Shared-Based Payment,
 65




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##### Table of Contents



OMNIVISION TECHNOLOGIES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
For the Years Ended April 30, 2006, 2005 and 2004
  Practical Accommodation to the Application
of Grant Date as Defined in FAS 123(R)
 Transition Election Related to Accounting
for the Tax Effects of Share-Based Payment Awards
 The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain Investments
 Accounting for Certain Hybrid InstrumentsAn
Amendment of FASB Statements No. 133 and No. 144
 66




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##### Table of Contents



OMNIVISION TECHNOLOGIES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
For the Years Ended April 30, 2006, 2005 and 2004
 Note 2  Short-Term Investments
  As of April 30, 2006Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueMunicipal bonds and notes
    
    $
    95,445
    
    
    $
    
    
    
    $
    (39
    )
    
    $
    95,406Commercial paper
    
    
    18,900
    
    
    
    
    
    
    
    (28
    )
    
    
    18,872$
    114,345
    
    
    $
    
    
    
    $
    (67
    )
    
    $
    114,278Contractual maturity dates, less than one year
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    36,648Contractual maturity dates, one year to 34 years(1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    77,630$
    114,278
 As of April 30, 2005Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueU.S. government debt securities
    
    $
    34,662
    
    
    $
    
    
    
    $
    (20
    )
    
    $
    34,642Municipal bonds and notes
    
    
    75,150
    
    
    
    
    
    
    
    
    
    
    
    75,150Commercial paper
    
    
    14,482
    
    
    
    
    
    
    
    (16
    )
    
    
    14,466$
    124,294
    
    
    $
    
    
    
    $
    (36
    )
    
    $
    124,258Contractual maturity dates, less than one year
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    49,108Contractual maturity dates, one year to 30 years(1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75,150$
    124,258
 
 (1)
    
    Represents auction rate securities, which have a maturity date of up to thirty
years with the interest rate being reset principally up to every 35 days and variable rate
demand notes, which have a final maturity date of up to thirty-four years but whose interest
rate is reset at varying intervals typically between 1 and 7 days. 67




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##### Table of Contents



OMNIVISION TECHNOLOGIES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
For the Years Ended April 30, 2006, 2005 and 2004
 Note 3 Balance Sheet Accounts
 April 30,2006
    
    
    2005(in thousands)Cash and cash equivalents:Cash
    
    $
    8,597
    
    
    $
    31,564Money market funds and certificates of deposit
    
    
    197,030
    
    
    
    123,976Commercial paper
    
    
    34,600
    
    
    
    14,917$
    240,227
    
    
    $
    170,457Accounts receivable:Accounts receivable
    
    $
    73,412
    
    
    $
    66,270Less: Allowance for doubtful accounts
    
    
    (1,067
    )
    
    
    (1,237
    )Allowance for sales returns
    
    
    (6,429
    )
    
    
    (5,293
    )$
    65,916
    
    
    $
    59,740Inventories:Work in progress
    
    $
    34,310
    
    
    $
    26,957Finished goods
    
    
    20,663
    
    
    
    31,472$
    54,973
    
    
    $
    58,429Prepaid expenses and other current assets:Prepaid expenses
    
    $
    2,758
    
    
    $
    1,971Deposits and other
    
    
    4,556
    
    
    
    540Interest receivable
    
    
    1,844
    
    
    
    31$
    9,158
    
    
    $
    2,542Property, plant and equipment, net:Buildings and land use right
    
    $
    7,163
    
    
    $
    7,013Buildings/leasehold improvements
    
    
    2,702
    
    
    
    1,909Machinery and equipment
    
    
    34,185
    
    
    
    15,654Furniture and fixtures
    
    
    713
    
    
    
    250Software
    
    
    2,280
    
    
    
    1,866Construction in progress
    
    
    3,248
    
    
    
    1850,291
    
    
    
    26,710Less: Accumulated depreciation and amortization
    
    
    (12,281
    )
    
    
    (7,368
    )$
    38,010
    
    
    $
    19,342Accrued expenses and other current liabilities:Employee compensation
    
    $
    5,301
    
    
    $
    2,937Third party commissions
    
    
    1,876
    
    
    
    2,555Acquisition costs
    
    
    2,095
    
    
    
    2,095Professional services
    
    
    2,494
    
    
    
    1,359Noncancelable purchase commitments
    
    
    2,627
    
    
    
    Other
    
    
    6,958
    
    
    
    5,250$
    21,351
    
    
    $
    14,196
 Note 4  Long-Term Investments
  April 30,2006
    
    
    2005ImPac
    
    $
    2,130
    
    
    $
    2,116XinTec
    
    
    16,543
    
    
    
    2,845VisEra
    
    
    
    
    
    
    1,853Total
    
    $
    18,673
    
    
    $
    6,814
 68




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##### Table of Contents



OMNIVISION TECHNOLOGIES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
For the Years Ended April 30, 2006, 2005 and 2004
 ImPac Technology Co., Ltd.
  XinTec, Inc.
   Year Ended April 30,2006
    
    2005
    
    2004Operating data:Revenues
    
    $
    62,536
    
    
    $
    38,934
    
    
    $
    38,357Gross profit
    
    
    11,214
    
    
    
    2,326
    
    
    
    6,160Income (loss) from operations
    
    
    5,440
    
    
    
    (2,655
    )
    
    
    2,765Net income (loss)
    
    
    4,250
    
    
    
    (3,108
    )
    
    
    2,196
 April 30,2006
    
    2005Balance sheet data:Current assets
    
    $
    37,617
    
    
    $
    29,667Long-term assets
    
    
    52,025
    
    
    
    47,750Current liabilities
    
    
    20,522
    
    
    
    8,862Long-term liabilities
    
    
    17,093
    
    
    
    22,262
  Silicon Optronics, Inc.
  69




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##### Table of Contents



OMNIVISION TECHNOLOGIES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
For the Years Ended April 30, 2006, 2005 and 2004
  VisEra Technologies Company, Ltd.
   Consolidation of Variable Interest Entities
   70




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##### Table of Contents



OMNIVISION TECHNOLOGIES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
For the Years Ended April 30, 2006, 2005 and 2004
 Note 5 Acquisition of CDM Optics, Inc.
    Business Combinations, Goodwill and Other Intangible Assets,
 FairValuePurchase consideration:Cash
    
    $
    13,000OmniVision common stock
    
    
    7,352Acquisition costs
    
    
    729Total purchase consideration
    
    $
    21,081
 Fair
    
    
    AmortizationValue
    
    
    PeriodAllocation:Current assets, net
    
    $
    339Property, plant and equipment
    
    
    97Core technology
    
    
    17,800
    
    
    5 yearsPatents
    
    
    5,800
    
    
    5 yearsTrademarks and tradenames
    
    
    1,400
    
    
    5 yearsCustomer contracts and related relationships
    
    
    100
    
    
    3 yearsGoodwill
    
    
    4,892Deferred tax liability
    
    
    (9,347
    )Total
    
    $
    21,081
  71




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OMNIVISION TECHNOLOGIES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
For the Years Ended April 30, 2006, 2005 and 2004
     Year Ended April 30,2005
    
    
    2004Revenues
    
    $
    390,159
    
    
    $
    320,229Net income
    
    $
    72,638
    
    
    $
    55,673Net income per common share  basic
    
    $
    1.27
    
    
    $
    1.05Net income per common share  diluted
    
    $
    1.17
    
    
    $
    0.92
 Note 6 Intangible Assets
   Accumulated
    
    
    Net BookCost
    
    
    Amortization
    
    
    ValueCore technology
    
    $
    17,800
    
    
    $
    3,560
    
    
    $
    14,240Patents and licenses
    
    
    11,260
    
    
    
    1,865
    
    
    
    9,395Other intangible assets
    
    
    1,525
    
    
    
    102
    
    
    
    1,423Trademarks and tradenames
    
    
    1,400
    
    
    
    280
    
    
    
    1,120Customer relationships
    
    
    100
    
    
    
    33
    
    
    
    67Intangible assets, net
    
    $
    32,085
    
    
    $
    5,840
    
    
    $
    26,245
 72




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OMNIVISION TECHNOLOGIES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
For the Years Ended April 30, 2006, 2005 and 2004
  Accumulated
    
    
    Net BookCost
    
    
    Amortization
    
    
    ValueCore technology
    
    $
    17,800
    
    
    $
    
    
    
    $
    17,800Patents and licenses
    
    
    7,260
    
    
    
    146
    
    
    
    7,114Trademarks and tradenames
    
    
    1,400
    
    
    
    
    
    
    
    1,400Customer relationships
    
    
    100
    
    
    
    
    
    
    
    100Intangible assets, net
    
    $
    26,560
    
    
    $
    146
    
    
    $
    26,414
  Years Ended April 30,2007
    
    $
    6,4302008
    
    
    6,4302009
    
    
    6,3972010
    
    
    6,2512011
    
    
    737Thereafter
    
    
    Total
    
    $
    26,245
 Note 7  Credit Facilities of Consolidated Affiliates
  Note 8  Capital Lease Obligations
  73




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OMNIVISION TECHNOLOGIES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
For the Years Ended April 30, 2006, 2005 and 2004
 Note 9 Income Taxes
  Year Ended April 30,2006
    
    
    2005
    
    
    2004Current:Federal
    
    $
    13,761
    
    
    $
    16,764
    
    
    $
    28,195State
    
    
    3
    
    
    
    1
    
    
    
    Foreign
    
    
    11,351
    
    
    
    11,591
    
    
    
    1,095Total current
    
    
    25,115
    
    
    
    28,356
    
    
    
    29,290Deferred:Federal
    
    
    (939
    )
    
    
    1,879
    
    
    
    (448
    )State
    
    
    (914
    )
    
    
    (529
    )
    
    
    1,421Foreign
    
    
    (129
    )
    
    
    
    
    
    
    Total deferred
    
    
    (1,982
    )
    
    
    1,350
    
    
    
    973Total provision
    
    $
    23,133
    
    
    $
    29,706
    
    
    $
    30,263
  Year Ended April 30,2006
    
    
    2005
    
    
    2004United States
    
    $
    3,375
    
    
    $
    19,563
    
    
    $
    49,276International
    
    
    112,291
    
    
    
    86,530
    
    
    
    39,732Total
    
    $
    115,666
    
    
    $
    106,093
    
    
    $
    89,008
  Year Ended April 30,2006
    
    
    2005
    
    
    2004Statutory federal income tax
    
    $
    40,483
    
    
    $
    37,133
    
    
    $
    31,153State income tax benefit, net of federal tax benefits
    
    
    (592
    )
    
    
    (343
    )
    
    
    924Amortization of stock compensation
    
    
    (34
    )
    
    
    7
    
    
    
    385Foreign rate differential
    
    
    (16,196
    )
    
    
    (5,786
    )
    
    
    (1,469
    )Tax credits
    
    
    (907
    )
    
    
    (1,235
    )
    
    
    (1,220
    )Other
    
    
    379
    
    
    
    (70
    )
    
    
    490Tax provision
    
    $
    23,133
    
    
    $
    29,706
    
    
    $
    30,263
  74




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OMNIVISION TECHNOLOGIES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
For the Years Ended April 30, 2006, 2005 and 2004
  April 30,2006
    
    
    2005Net operating loss carryforwards
    
    $
    512
    
    
    $
    292Tax credits
    
    
    9,528
    
    
    
    1,842Reserves
    
    
    3,159
    
    
    
    3,392Fixed assets
    
    
    499
    
    
    
    385Intangible assets
    
    
    (7,261
    )
    
    
    (9,149
    )Accruals and other
    
    
    681
    
    
    
    1,0547,118
    
    
    
    (2,184
    )Valuation allowance
    
    
    (9,264
    )
    
    
    (1,761
    )Net deferred tax liabilities
    
    $
    (2,146
    )
    
    $
    (3,945
    )
   Accounting for
Contingencies.
 Note 10  Net Income Per Share
   Earnings Per Share,
 75




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##### Table of Contents



OMNIVISION TECHNOLOGIES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
For the Years Ended April 30, 2006, 2005 and 2004
  Year Ended April 30,2006
    
    
    2005
    
    
    2004Basic:Numerator:Net income
    
    $
    89,148
    
    
    $
    76,387
    
    
    $
    58,745Denominator:Weighted average shares
    
    
    54,268
    
    
    
    56,691
    
    
    
    52,914Weighted average unvested common stock subject to
repurchase
    
    
    
    
    
    
    (3
    )
    
    
    (58
    )Weighted average common shares for net income per share
    
    
    54,268
    
    
    
    56,688
    
    
    
    52,856Basic net income per share
    
    $
    1.64
    
    
    $
    1.35
    
    
    $
    1.11Diluted:Numerator:Net income
    
    $
    89,148
    
    
    $
    76,387
    
    
    $
    58,745Dilutive effect of SOI consolidation
    
    
    (47
    )
    
    
    
    
    
    
    Net income for diluted computation
    
    $
    89,101
    
    
    $
    76,387
    
    
    $
    58,745Denominator:Denominator for basic net income per share
    
    
    54,268
    
    
    
    56,688
    
    
    
    52,856Weighted average effect of dilutive securities:Common stock options
    
    
    2,690
    
    
    
    4,875
    
    
    
    6,774Unvested common stock subject to repurchase
    
    
    
    
    
    
    3
    
    
    
    58Weighted average common shares for diluted net income
per share
    
    
    56,958
    
    
    
    61,566
    
    
    
    59,688Diluted net income per share
    
    $
    1.56
    
    
    $
    1.24
    
    
    $
    0.98
 Note 11 Stockholder Rights Plan
  Note 12  Common Stock
    76




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OMNIVISION TECHNOLOGIES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
For the Years Ended April 30, 2006, 2005 and 2004
   Note 13 Employee Stock Purchase and Stock Option Plans
 2000 Employee Stock Purchase Plan
  1995 Stock Option Plan
   2000 Stock Plan
  77




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OMNIVISION TECHNOLOGIES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
For the Years Ended April 30, 2006, 2005 and 2004
  2000 Director Option Plan
   Options outstandingWeightedOptions
    
    
    
    
    
    
    
    
    
    
    AverageAvailable For
    
    
    
    
    
    
    
    
    
    
    Price PerGrant
    
    
    Number of Shares
    
    
    Price Per Share
    
    
    ShareBalance at May 1, 2003
    
    
    1,788,688
    
    
    
    7,308,738
    
    
    
    
    
    
    $
    4.54Replenished
    
    
    2,925,362
    
    
    
    
    
    
    
    
    
    
    
    Granted
    
    
    (3,848,600
    )
    
    
    3,848,600
    
    
    $
    16.40  $29.19
    
    
    
    18.14Exercised
    
    
    
    
    
    
    (2,824,297
    )
    
    
    0.15  21.11
    
    
    
    4.24Canceled
    
    
    795,711
    
    
    
    (795,711
    )
    
    
    0.38  26.88
    
    
    
    14.74Balance at April 30, 2004
    
    
    1,661,161
    
    
    
    7,537,330
    
    
    
    
    
    
    
    10.51Replenished
    
    
    3,140,530
    
    
    
    
    
    
    
    
    
    
    
    Granted
    
    
    (3,984,050
    )
    
    
    3,984,050
    
    
    
    11.21  23.44
    
    
    
    19.58Exercised
    
    
    
    
    
    
    (934,326
    )
    
    
    0.15  16.40
    
    
    
    4.11Canceled
    
    
    840,827
    
    
    
    (840,827
    )
    
    
    1.42  26.88
    
    
    
    16.87Balance at April 30, 2005
    
    
    1,658,468
    
    
    
    9,746,227
    
    
    
    
    
    
    
    14.28Replenished
    
    
    3,144,086
    
    
    
    
    
    
    
    
    
    
    
    Granted
    
    
    (1,931,169
    )
    
    
    1,931,169
    
    
    
    13.25  28.56
    
    
    
    18.22Exercised
    
    
    
    
    
    
    (1,992,887
    )
    
    
    0.13  26.88
    
    
    
    8.83Canceled
    
    
    721,302
    
    
    
    (721,302
    )
    
    $
    2.25  $26.88
    
    
    
    15.83Expired  1995 Stock Option Plan
    
    
    (551,500
    )
    
    
    
    
    
    
    
    
    
    
    Balance at April 30, 2006
    
    
    3,041,187
    
    
    
    8,963,207
    
    
    
    
    
    
    $
    16.22
 78




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##### Table of Contents



OMNIVISION TECHNOLOGIES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
For the Years Ended April 30, 2006, 2005 and 2004
  Options Outstanding
    
    Options ExercisableWeightedNumber
    
    Average
    
    Weighted
    
    Number
    
    WeightedOutstanding at
    
    Remaining
    
    Average
    
    Exercisable at
    
    AverageExercise Prices
    
    April 30, 2006
    
    Contractual Life
    
    Exercise Price
    
    April 30, 2006
    
    Exercise Price$0.15  $6.01
    
    
    1,588,026
    
    
    
    5.32
    
    
    $
    4.82
    
    
    
    1,450,057
    
    
    $
    4.71$6.50  $14.60
    
    
    1,710,176
    
    
    
    8.68
    
    
    
    13.12
    
    
    
    946,021
    
    
    
    13.47$15.76  $15.76
    
    
    249,500
    
    
    
    9.05
    
    
    
    15.76
    
    
    
    62,000
    
    
    
    15.76$16.40  $16.40
    
    
    1,913,487
    
    
    
    7.11
    
    
    
    16.40
    
    
    
    1,224,205
    
    
    
    16.40$17.27  $23.24
    
    
    884,859
    
    
    
    8.74
    
    
    
    19.02
    
    
    
    222,015
    
    
    
    20.02$23.44  $29.19
    
    
    2,617,159
    
    
    
    8.46
    
    
    
    24.13
    
    
    
    864,031
    
    
    
    23.79$0.15  $29.19
    
    
    8,963,207
    
    
    
    7.70
    
    
    $
    16.22
    
    
    
    4,768,329
    
    
    $
    13.76
 Fair Value Disclosures
   Employee Stock Option
    
    
    Employee Stock PurchasePlans Year Ended April 30,
    
    
    Plan Year Ended April 30,2006
    
    
    2005
    
    
    2004
    
    
    2006
    
    
    2005
    
    
    2004Risk-free interest rate
    
    
    4.1
    %
    
    
    3.2
    %
    
    
    1.7
    %
    
    
    4.0
    %
    
    
    2.3
    %
    
    
    1.5
    %Expected term of options (in years)
    
    
    3.5
    
    
    
    3.4
    
    
    
    3.5
    
    
    
    0.5
    
    
    
    0.5
    
    
    
    0.5Expected volatility
    
    
    79
    %
    
    
    123
    %
    
    
    130
    %
    
    
    46
    %
    
    
    65
    %
    
    
    130
    %Expected dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
  Note 14  Treasury Stock
  79




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OMNIVISION TECHNOLOGIES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
For the Years Ended April 30, 2006, 2005 and 2004
 Note 15 Risks and Uncertainties
    Year Ended April 30,2006
    
    
    2005
    
    
    2004Percentage of revenues:Customer A
    
    
    15
    %
    
    
    19
    %
    
    
    
    *Customer B
    
    
    14
    %
    
    
    11
    %
    
    
    17
    %Customer C
    
    
    12
    %
    
    
    16
    %
    
    
    
    *
 
 *
    
    Less than ten percent.  April 30,2006
    
    
    2005Percentage of accounts receivable, net:Customer A
    
    
    20
    %
    
    
    22
    %Customer B
    
    
    18
    %
    
    
    17
    %Customer C
    
    
    17
    %
    
    
    11
    %
 
 *
    
    Less than ten percent.  Note 16 Segment and Geographic Information
  80




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OMNIVISION TECHNOLOGIES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
For the Years Ended April 30, 2006, 2005 and 2004
  Year Ended April 30,2006
    
    
    2005
    
    
    2004OEMs and VARs
    
    
    68.9
    %
    
    
    79.4
    %
    
    
    75.3
    %Distributors
    
    
    31.1
    
    
    
    20.6
    
    
    
    24.7Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
  Year Ended April 30,2006
    
    
    2005
    
    
    2004Hong Kong
    
    $
    188,928
    
    
    $
    148,022
    
    
    $
    103,437Taiwan
    
    
    97,467
    
    
    
    72,977
    
    
    
    68,665Japan
    
    
    57,422
    
    
    
    69,393
    
    
    
    21,641China
    
    
    98,774
    
    
    
    58,975
    
    
    
    74,041South Korea
    
    
    40,037
    
    
    
    27,998
    
    
    
    40,230United States
    
    
    4,771
    
    
    
    3,049
    
    
    
    3,932All other
    
    
    4,527
    
    
    
    7,648
    
    
    
    6,177Total
    
    $
    491,926
    
    
    $
    388,062
    
    
    $
    318,123
  April 30,2006
    
    
    2005Taiwan
    
    $
    40,637
    
    
    $
    8,401China
    
    
    17,146
    
    
    
    16,640United States
    
    
    1,633
    
    
    
    2,277All other
    
    
    456
    
    
    
    352$
    59,872
    
    
    $
    27,670
 Note 17 Commitments and Contingencies
 Commitments
   81




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OMNIVISION TECHNOLOGIES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
For the Years Ended April 30, 2006, 2005 and 2004
   Years Ended April 30,2007
    
    $
    7,8592008
    
    
    6,7042009
    
    
    5,8212010
    
    
    2,7002011
    
    
    Thereafter
    
    
    Total
    
    $
    23,084
  Litigation
  McKee v. OmniVision Technologies, Inc., et. al.,
Civil Action No. 01CV 10775 In re Initial Public Offering Securities Litigation, 21 MC 92
 In
re OmniVision Technologies, Inc.,
 82




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OMNIVISION TECHNOLOGIES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
For the Years Ended April 30, 2006, 2005 and 2004
  Gantt
v. Winn Torriani v. Hong
 Hackl v.
Hong
 Note 18  Related Party Transactions
   83




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OMNIVISION TECHNOLOGIES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
For the Years Ended April 30, 2006, 2005 and 2004
  Year Ended April 30,2006
    
    2005
    
    2004SOI transactions with:ImPac:Purchases of manufacturing services
    
    $
    5,700
    
    
    $
    3,770
    
    
    $
    Balance payable at year end
    
    
    447
    
    
    
    1,171
    
    
    
    PSC:Purchases of wafers
    
    
    6,770
    
    
    
    4,334
    
    
    
    Rent and other services
    
    
    45
    
    
    
    493
    
    
    
    Balance payable at year end
    
    
    612
    
    
    
    658
    
    
    
    VisEra:Purchases of manufacturing services
    
    
    50
    
    
    
    188
    
    
    
    Balance payable at year end
    
    
    
    
    
    
    143
    
    
    
    VisEra transactions with:ImPac:Purchases of manufacturing services
    
    
    12,420
    
    
    
    6,677
    
    
    
    1,913Balance payable at year end
    
    
    1,367
    
    
    
    889
    
    
    
    688TSMC:Purchases of manufacturing services
    
    
    21,516
    
    
    
    17,681
    
    
    
    143Rent, utilities and other services
    
    
    1,832
    
    
    
    856
    
    
    
    371Balance payable at year end
    
    
    2,414
    
    
    
    2,230
    
    
    
    143XinTec:Purchases of manufacturing services
    
    
    32,138
    
    
    
    23,214
    
    
    
    8,822Balance payable at year end
    
    $
    6,987
    
    
    $
    3,513
    
    
    $
    5,580
  Note 19 Subsequent Event
  84




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Supplementary Data (Unaudited)
 Three Months EndedJuly 31,
    
    
    Oct. 31,
    
    
    Jan. 31,
    
    
    April 30,2005
    
    
    2005
    
    
    2006
    
    
    2006(in thousands, except per share data)Revenues
    
    $
    95,994
    
    
    $
    126,820
    
    
    $
    137,283
    
    
    $
    131,829Cost of revenues
    
    
    64,065
    
    
    
    80,997
    
    
    
    81,922
    
    
    
    83,266Gross profit
    
    
    31,929
    
    
    
    45,823
    
    
    
    55,361
    
    
    
    48,563Net income
    
    $
    14,382
    
    
    $
    22,597
    
    
    $
    29,636
    
    
    $
    22,533Net income per share:Basic
    
    $
    0.25
    
    
    $
    0.42
    
    
    $
    0.56
    
    
    $
    0.42Diluted
    
    $
    0.25
    
    
    $
    0.41
    
    
    $
    0.53
    
    
    $
    0.39Shares used in computing per share amounts:Basic
    
    
    57,178
    
    
    
    53,807
    
    
    
    52,576
    
    
    
    53,529Diluted
    
    
    58,194
    
    
    
    55,486
    
    
    
    55,547
    
    
    
    57,229
 Three Months EndedJuly 31,
    
    
    Oct. 31,
    
    
    Jan. 31,
    
    
    April 30,2004
    
    
    2004
    
    
    2005
    
    
    2005(in thousands, except per share data)Revenues
    
    $
    98,807
    
    
    $
    84,436
    
    
    $
    101,833
    
    
    $
    102,986Cost of revenues
    
    
    59,068
    
    
    
    46,213
    
    
    
    60,370
    
    
    
    65,857Gross profit
    
    
    39,739
    
    
    
    38,223
    
    
    
    41,463
    
    
    
    37,129Net income
    
    $
    19,852
    
    
    $
    17,794
    
    
    $
    21,083
    
    
    $
    17,658Net income per share:Basic
    
    $
    0.35
    
    
    $
    0.32
    
    
    $
    0.37
    
    
    $
    0.31Diluted
    
    $
    0.32
    
    
    $
    0.28
    
    
    $
    0.33
    
    
    $
    0.30Shares used in computing per share amounts:Basic
    
    
    56,315
    
    
    
    56,485
    
    
    
    56,710
    
    
    
    57,251Diluted
    
    
    61,131
    
    
    
    63,031
    
    
    
    63,457
    
    
    
    59,819
 
 ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Managements Report on Internal Control over Financial Reporting
  85




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##### Table of Contents



Changes in Internal Control over Financial Reporting
  
 ITEM 9B. OTHER INFORMATION
  86




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##### Table of Contents



PART III
 
 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 Proposal 1  Election of Directors and Corporate Governance Section
1 6(a) Beneficial Ownership Reporting Compliance Business Executive Officers and Directors of the Registrant
 
 ITEM 11. EXECUTIVE COMPENSATION
 Executive Compensation and Other Matters Report of the Compensation Committee of
the Board of Directors
 
 ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
 Security Ownership of Certain Beneficial Owners and Management Equity Compensation
Plan Information
 
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 Related Party Transactions
 
 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
 Proposal Two  Ratification of Appointment of Independent Registered Public Accounting
Firm
 87




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##### Table of Contents



PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
  Item 8Financial Statements and Supplementary Data.
 Schedule IIValuation and Qualifying Accounts for the Years Ended April 30, 2006,
2005 and 2004.
  ExhibitNumber
    
    
    
    Description+2.1
    
    
    (8)
    
    Agreement and Plan of Merger by and among the Registrant, Ski-Jump
Acquisition Corp, R.C. Mercure, Jr., W. Thomas Cathy, Jr. and Edward
Dowski, Jr., CDM Optics, Inc., and R.C. Mercure, Jr., a
representative of the CDM securityholders3.1
    
    
    (1)
    
    Restated Certificate of Incorporation3.2
    
    
    (1)
    
    Bylaws of the Registrant4.1
    
    
    (1)
    
    Specimen Common Stock Certificate4.2
    
    
    (1)
    
    Amended and Restated Registration Rights Agreement, dated as of May
20, 1998, by and among the Registrant and certain stockholders of
the Registrant4.3
    
    
    (3)
    
    Preferred Stock Rights Agreement, dated August 21, 2001, between the
Registrant and Equiserve Trust Company, N.A., including the
Certificate of Designation, the form of Rights Certificate and
Summary of Rights attached thereto as Exhibits A, B and C,
respectively4.4
    
    
    (6)
    
    Amendment to Preferred Stock Rights Agreement, dated August 21,
2001, between the Registrant and EquiServe Trust Company, N.A.,
effective June 7, 20044.5
    
    
    (8)
    
    Registration Rights Agreement dated April 19, 2005, by and among the
Registrant and former holders of CDM Optics, Inc. securities10.1
    
    
    (1)
    
    Form of Indemnification Agreement between the Registrant and each of
its directors and officers10.2
    
    
    (1)
    
    2000 Stock Plan and form of option agreement10.3
    
    
    (1)
    
    2000 Employee Stock Purchase Plan and form of subscription agreement10.4
    
    
    (1)
    
    2000 Director Stock Option Plan and form of option agreement10.5
    
    
    (4)
    
    Lease Agreement between the Registrant and Caribbean/Geneva
Investors and Crossman Partners, L.P., dated March 14, 2003, for the
premises at 1341 Orleans Drive, Sunnyvale, California 94089-1136*10.6
    
    
    (1)
    
    Non-exclusive Distributor Agreement between the Registrant and World
Peace Industrial Co., Ltd. dated January 1, 199810.7
    
    
    (2)
    
    Agreement on Construction of Complete Municipal Facilities, Shanghai
Songjiang Export Processing Zone between OmniView Technology
International Ltd. and Shanghai Songjiang Export Processing Zone
Administrative Committee dated December 28, 200010.8
    
    
    (2)
    
    Shanghai Songjiang Export Processing Zone Administrative Committee
Official Reply to the Feasibility Study Report and Articles of
Association of Foreign Solely-funded Omni View Electronics
(Shanghai) Co., Ltd. dated December 19, 200010.9
    
    
    (2)
    
    Contract on the Transfer of Shanghai State-owned Land Use Right
between OmniView Technology International Ltd. and Shanghai
Songjiang District Building and Land Administrative Bureau dated
December 28, 200010.10
    (b)
    
    (5)
    
    Letter of Comfort, dated October 29, 2003, by and between the
Registrant and Taiwan Semiconductor Manufacturing Company10.11
    
    
    (7)
    
    Executive Officer Profit Sharing/Bonus Plan10.12
    
    
    (9)
    
    Amended and Restated Shareholders Agreement dated August 12, 2005,
by and between the Registrant, Taiwan Semiconductor Manufacturing
Company and certain other parties21.1
    
    
    
    
    Subsidiaries of the Registrant
 88




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##### Table of Contents



ExhibitNumber
    
    
    
    Description23.1
    
    
    
    
    Consent of Independent Registered Public Accounting Firm24.1
    
    
    
    
    Power of Attorney (included on page 91)31.1
    
    
    
    
    Certification of Chief Executive Officer pursuant to Section 302 of
Sarbanes-Oxley Act of 2002.31.2
    
    
    
    
    Certification of Chief Financial Officer pursuant to Section 302 of
Sarbanes-Oxley Act of 2002.32
    
    
    
    
    Certification of Chief Executive Officer and Chief Financial Officer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Portions of this agreement have been omitted pursuant to a request for confidential treatment
and the omitted portions have been filed separately with the Securities and Exchange
Commission.+
    
    Schedules, exhibits and similar attachments to the Merger Agreement, as described therein,
have been omitted pursuant to Item 6.01(b)(2) of Regulation S-K. The registrant will furnish
supplementally a copy of any omitted schedule, exhibit or similar attachment to the Securities
and Exchange Commission upon its request.(1)
    
    Incorporated by reference to exhibits filed with Registrants Registration Statement
on Form S-1 (File No. 333-31926) as declared effective by the Securities and Exchange
Commission on July 13, 2000.(2)
    
    Incorporated by reference to exhibits filed with Registrants Quarterly Report on
Form 10-Q for the quarter ended January 31, 2001.(3)
    
    Incorporated by reference to exhibits filed with Registrants Registration Statement
on Form 8-A (Reg. No. 000-29939) as declared effective by the Securities and Exchange
Commission on September 12, 2001.(4)
    
    Incorporated by reference to exhibits filed with Registrants Annual Report on Form
10-K for the fiscal year ended April 30, 2003.(5)
    
    Incorporated by reference to exhibits filed with Registrants Quarterly Report on
Form 10-Q for the quarter ended October 31, 2003.(6)
    
    Incorporated by reference to exhibits filed with Registrants Quarterly Report on
Form 10-Q for the quarter ended July 31, 2004.(7)
    
    Incorporated by reference to exhibits filed with Registrants Current Report on Form
8-K filed with the Securities and Exchange Commission March 31, 2005.(8)
    
    Incorporated by reference to exhibits filed with Registrants Current Report on Form
8-K filed with the Securities and Exchange Commission April 25, 2005.(9)
    
    Incorporated by reference to an exhibit filed with Registrants Quarterly Report on
Form 10-Q for the quarter ended July 31, 2005. 89




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##### Table of Contents



SCHEDULE II
 OMNIVISION TECHNOLOGIES, INC.
 VALUATION AND QUALIFYING ACCOUNTS
 For the Years Ended April 30, 2006, 2005, and 2004
(In thousands)
 Balance at
    
    
    Additions
    
    
    Write-offsBeginning of
    
    
    and Charges
    
    
    and
    
    
    Balance atDescription
    
    Year
    
    
    to Expenses
    
    
    Deductions
    
    
    End of YearAllowance for doubtful accounts receivable:Fiscal year ended April 30, 2006
    
    $
    1,237
    
    
    $
    (81
    )
    
    $
    89
    
    
    $
    1,067Fiscal year ended April 30, 2005
    
    $
    1,780
    
    
    $
    (543
    )
    
    $
    
    
    
    $
    1,237Fiscal year ended April 30, 2004
    
    $
    915
    
    
    $
    1,700
    
    
    $
    835
    
    
    $
    1,780Deferred tax valuation allowance:Fiscal year ended April 30, 2006
    
    $
    1,761
    
    
    $
    7,503
    
    
    $
    
    
    
    $
    9,264Fiscal year ended April 30, 2005
    
    $
    1,260
    
    
    $
    501
    
    
    $
    
    
    
    $
    1,761Fiscal year ended April 30, 2004
    
    $
    
    
    
    $
    1,260
    
    
    $
    
    
    
    $
    1,260Allowance for sales returns:Fiscal year ended April 30, 2006
    
    $
    5,293
    
    
    $
    2,303
    
    
    $
    1,167
    
    
    $
    6,429Fiscal year ended April 30, 2005
    
    $
    3,301
    
    
    $
    6,224
    
    
    $
    4,232
    
    
    $
    5,293Fiscal year ended April 30, 2004
    
    $
    1,140
    
    
    $
    4,372
    
    
    $
    2,211
    
    
    $
    3,301
 90




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##### Table of Contents



SIGNATURES
 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
 OMNIVISION TECHNOLOGIES, INC.By:
    
    /s/Shaw HongShaw HongPresident and Chief Executive Officer
  POWER OF ATTORNEY
  Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report
has been signed below by the following persons on behalf of the Registrant and in the capacities
and on the dates indicated:
 Signature
    
    Title
    
    Date/s/Shaw Hong

Shaw Hong
    
    Chief Executive Officer, President
and Director (Principal Executive
Officer)
    
    July 14, 2006/s/Peter V. Leigh

Peter V. Leigh
    
    Vice President of Finance and Chief
Financial Officer (Principal
Financial and Accounting Officer)
    
    July 14, 2006/s/Raymond Wu
    
    Executive Vice President and Director
    
    July 14, 2006Raymond Wu/s/Joseph Jeng
    
    Director
    
    July 14, 2006Joseph Jeng/s/Dwight Steffensen
    
    Director
    
    July 14, 2006Dwight Steffensen/s/Andrew Wang
    
    Director
    
    July 14, 2006Andrew Wang
 91




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    
    
    Description+2.1
    
    
    (8)
    
    Agreement and Plan of Merger by and among the Registrant, Ski-Jump
Acquisition Corp, R.C. Mercure, Jr., W. Thomas Cathy, Jr. and
Edward Dowski, Jr., CDM Optics, Inc., and R.C. Mercure, Jr., a
representative of the CDM securityholders3.1
    
    
    (1)
    
    Restated Certificate of Incorporation3.2
    
    
    (1)
    
    Bylaws of the Registrant4.1
    
    
    (1)
    
    Specimen Common Stock Certificate4.2
    
    
    (1)
    
    Amended and Restated Registration Rights Agreement, dated as of May
20, 1998, by and among the Registrant and certain stockholders of
the Registrant4.3
    
    
    (3)
    
    Preferred Stock Rights Agreement, dated August 21, 2001, between
the Registrant and Equiserve Trust Company, N.A., including the
Certificate of Designation, the form of Rights Certificate and
Summary of Rights attached thereto as Exhibits A, B and C,
respectively4.4
    
    
    (6)
    
    Amendment to Preferred Stock Rights Agreement, dated August 21,
2001, between the Registrant and EquiServe Trust Company, N.A.,
effective June 7, 20044.5
    
    
    (8)
    
    Registration Rights Agreement dated April 19, 2005, by and among
the Registrant and former holders of CDM Optics, Inc. securities10.1
    
    
    (1)
    
    Form of Indemnification Agreement between the Registrant and each
of its directors and officers10.2
    
    
    (1)
    
    2000 Stock Plan and form of option agreement10.3
    
    
    (1)
    
    2000 Employee Stock Purchase Plan and form of subscription agreement10.4
    
    
    (1)
    
    2000 Director Stock Option Plan and form of option agreement10.5
    
    
    (4)
    
    Lease Agreement between the Registrant and Caribbean/Geneva
Investors and Crossman Partners, L.P., dated March 14, 2003, for
the premises at 1341 Orleans Drive, Sunnyvale, California
94089-1136*10.6
    
    
    (1)
    
    Non-exclusive Distributor Agreement between the Registrant and
World Peace Industrial Co., Ltd. dated January 1, 199810.7
    
    
    (2)
    
    Agreement on Construction of Complete Municipal Facilities,
Shanghai Songjiang Export Processing Zone between OmniView
Technology International Ltd. and Shanghai Songjiang Export
Processing Zone Administrative Committee dated December 28, 200010.8
    
    
    (2)
    
    Shanghai Songjiang Export Processing Zone Administrative Committee
Official Reply to the Feasibility Study Report and Articles of
Association of Foreign Solely-funded Omni View Electronics
(Shanghai) Co., Ltd. dated December 19, 200010.9
    
    
    (2)
    
    Contract on the Transfer of Shanghai State-owned Land Use Right
between OmniView Technology International Ltd. and Shanghai
Songjiang District Building and Land Administrative Bureau dated
December 28, 2000*10.10
    (b)
    
    (5)
    
    Letter of Comfort, dated October 29, 2003, by and between the
Registrant and Taiwan Semiconductor Manufacturing Company10.11
    
    
    (7)
    
    Executive Officer Profit Sharing/Bonus Plan10.12
    
    
    (9)
    
    Amended and Restated Shareholders Agreement dated August 12, 2005,
by and between the Registrant, Taiwan Semiconductor Manufacturing
Company and certain other parties21.1
    
    
    
    
    Subsidiaries of the Registrant23.1
    
    
    
    
    Consent of Independent Registered Public Accounting Firm24.1
    
    
    
    
    Power of Attorney (included on page 91)31.1
    
    
    
    
    Certification of Chief Executive Officer pursuant to Section 302 of
Sarbanes-Oxley Act of 200231.2
    
    
    
    
    Certification of Chief Financial Officer pursuant to Section 302 of
Sarbanes-Oxley Act of 200232
    
    
    
    
    Certification of Chief Executive Officer and Chief Financial
Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
 
 *
    
    Portions of this agreement have been omitted pursuant to a request for confidential treatment
and the omitted portions have been filed separately with the Securities and Exchange
Commission.




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##### Table of Contents



+
    
    Schedules, exhibits and similar attachments to the Merger Agreement, as described therein,
have been omitted pursuant to Item 6.01(b)(2) of Regulation S-K. The registrant will furnish
supplementally a copy of any omitted schedule, exhibit or similar attachment to the Securities
and Exchange Commission upon its request.(1)
    
    Incorporated by reference to exhibits filed with Registrants Registration Statement
on Form S-1 (File No. 333-31926) as declared effective by the Securities and Exchange
Commission on July 13, 2000.(2)
    
    Incorporated by reference to exhibits filed with Registrants Quarterly Report on
Form 10-Q for the quarter ended January 31, 2001.(3)
    
    Incorporated by reference to exhibits filed with Registrants Registration Statement
on Form 8-A (Reg. No. 000-29939) as declared effective by the Securities and Exchange
Commission on September 12, 2001.(4)
    
    Incorporated by reference to exhibits filed with Registrants Annual Report on Form
10-K for the fiscal year ended April 30, 2003.(5)
    
    Incorporated by reference to exhibits filed with Registrants Quarterly Report on
Form 10-Q for the quarter ended October 31, 2003.(6)
    
    Incorporated by reference to exhibits filed with Registrants Quarterly Report on
Form 10-Q for the quarter ended July 31, 2004.(7)
    
    Incorporated by reference to exhibits filed with Registrants Current Report on Form
8-K filed with the Securities and Exchange Commission March 31, 2005.(8)
    
    Incorporated by reference to exhibits filed with Registrants Current Report on Form
8-K filed with the Securities and Exchange Commission April 25, 2005.(9)
    
    Incorporated by reference to an exhibit filed with Registrants Quarterly Report on
Form 10-Q for the quarter ended July 31, 2005.