What changed in this filing

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Item 1. Financial Statements

2020-11-06 compared with 2020-05-11 · 292 added, 380 removed, 525 unchanged (56% of the section changed)

3 unchanged sentences

(Unaudited, in thousands except par value per share)

September 30,

Current assets:

30 unchanged sentences

issued and outstanding:

none at March 31, 2020 and June 30, 2019

none at September 30, 2020 and June 30, 2020

Common shares, par value $0.002 per share:

1 unchanged sentence

issued and outstanding:

31,715 shares and 25,076 shares, respectively at March 31, 2020 and 31,163 shares and 24,517 shares, respectively at June 30, 2019

Treasury shares at cost, 6,639 shares at March 31, 2020 and 6,646 shares at June 30, 2019

32,021 shares and 25,383 shares, respectively at September 30, 2020 and 31,944 shares and 25,305 shares, respectively at June 30, 2020

Treasury shares at cost:

6,638 shares at September 30, 2020 and 6,639 shares at June 30, 2020

Additional paid-in capital

1 unchanged sentence

Retained earnings

Total Alpha and Omega Semiconductor Limited shareholder's equity

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

1 unchanged sentence

(Unaudited, in thousands except par value per share)

Total Alpha and Omega Semiconductor Limited shareholder's equity

Noncontrolling interest

4 unchanged sentences

(Unaudited, in thousands except per share data)

Three Months Ended March 31,

Nine Months Ended March 31,

Three Months Ended September 30,

Cost of goods sold

2 unchanged sentences

Selling, general and administrative

Impairment of privately-held investment

Total operating expenses

Operating loss

Operating income (loss)

Interest expense and other income (loss), net

Loss before income taxes

Income tax expense (benefit)

Net loss including noncontrolling interest

Income (loss) before income taxes

Income tax expense

Net income (loss) including noncontrolling interest

Net loss attributable to noncontrolling interest

Net loss attributable to Alpha and Omega Semiconductor Limited

Net loss per common share attributable to Alpha and Omega Semiconductor Limited

Weighted average number of common shares attributable to Alpha and Omega Semiconductor Limited used to compute net loss per share

Net income attributable to Alpha and Omega Semiconductor Limited

Net income per common share attributable to Alpha and Omega Semiconductor Limited

Weighted average number of common shares attributable to Alpha and Omega Semiconductor Limited used to compute net income per share

See accompanying notes to these condensed consolidated financial statements.

2 unchanged sentences

(Unaudited, in thousands)

Three Months Ended March 31,

Nine Months Ended March 31,

Net loss including noncontrolling interest

Other comprehensive income, net of tax

Three Months Ended September 30,

Net income (loss) including noncontrolling interest

Other comprehensive income (loss), net of tax

Foreign currency translation adjustment

Comprehensive loss

Comprehensive income (loss)

Noncontrolling interest

7 unchanged sentences

Additional Paid-In Capital

Accumulated Other Comprehensive Loss

Retained Earnings

Total AOS Shareholders' Equity

Noncontrolling Interest

Balance, December 31, 2019

Reissuance of treasury stock upon exercise of common stock options and release of restricted stock units

Withholding tax on restricted stock units

Share-based compensation

Cumulative translation adjustment

Balance, March 31, 2020

Common Shares

Treasury Stock

Additional Paid-In Capital

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Income (Loss)

Retained Earnings

2 unchanged sentences

Balance, June 30, 2020

Exercise of common stock options and release of RSUs

Reissuance of treasury stock upon exercise of common stock options and release of restricted stock units

Withholding tax on restricted stock units

Issuance of shares under ESPP

Share-based compensation

Cumulative translation adjustment

Balance, March 31, 2020

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited, in thousands)

Common Shares

Treasury Stock

Additional Paid-In Capital

Accumulated Other Comprehensive Income (Loss)

Retained Earnings

Total AOS Shareholders' Equity

Noncontrolling Interest

Balance, December 31, 2018

Exercise of common stock options and release of RSUs

Reissuance of treasury stock upon exercise of common stock options and release of RSUs

Withholding tax on restricted stock units

Share-based compensation

Restricted stock units settlement in connection with service

Net income (loss)

Cumulative translation adjustment

Balance, March 31, 2019

Balance, September 30, 2020

Common Shares

6 unchanged sentences

Balance, June 30, 2019

Exercise of common stock options and release of restricted stock units

Reissuance of treasury stock upon exercise of common stock options and release of restricted stock units

Withholding tax on restricted stock units

Issuance of shares under ESPP

Repurchase of common shares under shares repurchase program

Share-based compensation

Impact on retained earnings related to ASC 606 adoption

Net income (loss)

Cumulative translation adjustment

Contributions from noncontrolling interest

Balance, March 31, 2019

Balance, September 30, 2019

See accompanying notes to these condensed consolidated financial statements.

2 unchanged sentences

(Unaudited, in thousands)

Nine Months Ended March 31,

Three Months Ended September 30,

Cash flows from operating activities

Net loss including noncontrolling interest

Adjustments to reconcile net loss to net cash provided by operating activities:

Net income (loss) including noncontrolling interest

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation and amortization

1 unchanged sentence

Deferred income taxes, net

Gain on disposal of property and equipment

Impairment of privately-held investment

Loss on disposal of property and equipment

Changes in assets and liabilities:

4 unchanged sentences

Accrued and other liabilities

Net cash provided by operating activities

Net cash provided by (used in) operating activities

Cash flows from investing activities

1 unchanged sentence

Purchases of property and equipment in JV Company

Purchase of intangible assets

Proceeds from sale of property and equipment

Government grant related to equipment in JV Company

Net cash used in investing activities

Cash flows from financing activities

Proceeds from investment by noncontrolling interest

Withholding tax on restricted stock units

Proceeds from exercise of stock options and ESPP

Payment for repurchases of common shares

Proceeds from borrowings

1 unchanged sentence

Principal payments on finance leases

Net cash provided by financing activities

Net cash used in financing activities

Effect of exchange rate changes on cash, cash equivalents and restricted cash

Net increase (decrease) in cash, cash equivalents and restricted cash

Net decrease in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of period

1 unchanged sentence

Supplemental disclosures of non-cash investing and financing information:

Property and equipment purchased but not yet paid (fiscal year 2019 amount is presented as revised, see Note 1)

Property and equipment purchased but not yet paid

See accompanying notes to these condensed consolidated financial statements.

3 unchanged sentences

Alpha and Omega Semiconductor Limited and its subsidiaries (the “Company”, "AOS", "we" or "us") design, develop and supply a broad range of power semiconductors.

The Company's portfolio of products targets high-volume applications, including personal computers, flat panel TVs, LED lighting, smart phones, battery packs, quick chargers, home appliances, consumer and industrial motor controls and power supplies for TVs, computers, servers and telecommunications equipment.

The Company's portfolio of products targets high-volume applications, including personal and portable computers, graphic cards, flat panel TVs, home appliances, smart phones, battery packs, quick chargers, home appliances, consumer and industrial motor controls and power supplies for TVs, computers, servers and telecommunications equipment.

The Company conducts its operations primarily in the United States of America (“USA”), Hong Kong, China, and South Korea.

7 unchanged sentences

In the opinion of management, all adjustments (consisting of normal recurring adjustments and accruals) considered necessary for a fair presentation of the results of operations for the periods presented have been included in the interim periods.

Operating results for the nine months ended March 31, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2020 or any other interim period.

The condensed consolidated balance sheet at June 30, 2019 is derived from the audited financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2019 .

During the nine months ended March 31, 2020, the Company corrected the corresponding amount for the nine months ended March 31, 2019 of property and equipment purchased but not yet paid in the supplemental disclosures of non-cash investing and financing information by decreasing the amount by $ 18.1 million from $ 50.8 million to $ 32.7 million .

This disclosure change had no effect on the consolidated statements of operations and cash flows for the nine months ended March 31, 2019 .

In addition, the Company recorded the out-of-period adjustments for its headquarters' lease renewal.

See Note 6, Leases, for details.

The impact of the adjustments on the previously issued consolidated financial statements was insignificant.

Operating results for the three months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2021 or any other interim period.

The condensed consolidated balance sheets at June 30, 2020 is derived from the audited financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2020 .

Joint Venture

On March 29, 2016, the Company entered into a joint venture contract (the “JV Agreement”) with two investment funds owned by the Municipality of Chongqing (the “Chongqing Funds”), pursuant to which the Company and the Chongqing Funds formed a joint venture, (the “JV Company”), for the purpose of constructing and operating a power semiconductor packaging, testing and 12-inch wafer fabrication facility in the Liangjiang New Area of Chongqing, China (the “JV Transaction”).

The fab is being built in phases.

As of September 30, 2020 , the Company owns 51 % , and the Chongqing Funds own 49 % of the equity interest in the JV Company.

The Joint Venture is accounted under the provisions of the consolidation guidance since the Company has controlling financial interest.

If both parties agree that the termination of the JV Company is the best interest of each party or the JV Company is bankrupt or insolvent where either party may terminate early, after paying the debts of the JV Company, the remaining assets of the JV Company shall be paid to the Chongqing Funds to cover the principal of its total paid-in contributions plus interest at 10 % simple annual rate prior to distributing the balance of the JV Company's assets to the Company.

The JV Company has reached its targeted production of assembly and testing and is currently ramping up its Phase I of the 12-inch wafer fabrication.

Certain Significant Risks and Uncertainties Related to Outbreak of Coronavirus Disease 2019 (“COVID-19”)

The Company operates in a dynamic industry and, accordingly, can be affected by a variety of factors.

For example, any of the following areas could have a negative effect on the Company in terms of its future financial position, results of operations or cash flows:

the general state of the U.S., China and world economies;

the highly cyclical nature of the industries the Company serves;

the loss of any of its larger customers;

restrictions on the Company’s ability to sell to foreign customers due to trade laws, regulations and requirements;

disruptions of the supply chain of components needed for our products;

ability to obtain additional financing;

inability to meet certain debt covenants;

fundamental changes in the technology underlying the Company’s products;

the hiring, training and retention of key employees;

successful and timely completion of product design efforts;

and new product design introductions by competitors.

On March 11, 2020, the World Health Organization characterized the outbreak of the coronavirus disease known as COVID-19 as a global pandemic and recommended containment and mitigation measures.

On March 13, 2020, the United States declared a national emergency concerning the outbreak, and several states and municipalities have declared public health emergencies.

Along with these declarations, there have been extraordinary and wide-ranging actions taken by international, federal, state and local public health and governmental authorities to contain and combat the outbreak and spread of COVID-19 in regions across the United States and the world where the Company has operations, including quarantines, and “stay-at-home” orders, closure of all business not deemed "essential", practice of social distancing when engaging in essential activities and similar mandates for many individuals to substantially restrict daily activities and for many businesses to curtail or cease normal operations.

In response to these steps, the Company took proactive, aggressive actions from the earliest signs of the COVID-19 outbreak in China to adopt policies and protocols at its locations around the world, including social distancing guidelines, working from home, limiting the number of employees attending meetings, reducing the number of people in our sites at any one time, and suspending employee

The COVID-19 pandemic has had and continues to have a negative impact on business and economic activities across the globe.

As a result of the COVID-19 pandemic and the global economic downturn and changing consumer behaviors due to various restrictions imposed by governments, the Company has experienced shifting market trends, including an increasing demand in the markets for notebooks, PCs and gaming devices and decreasing demand for mobile phone and industrial products, as more consumers are staying at and working from home.

While the Company has recently benefited from the increasing demand of PC related products, there is no guarantee that this trend will continue, and such increasing demand may discontinue or decline as government authorities relax COVID-19 related restrictions.

Furthermore, as the COVID-19 pandemic continues and global economic downturn and high unemployment persists, consumer spending may slow down substantially, in which case the Company may experience a significant decline of customer orders for its products, including those designed for PC-related applications, and such decline will adversely affect its financial conditions and results of operations.

The extent to which the COVID-19 pandemic may impact the Company's business will depend on future

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As the COVID-19 pandemic reached the U.S.

and federal and state authorities imposed “stay-at-home” orders, the Company has taken similar proactive and aggressive actions in California, Oregon and Texas where the Company has business activities in order to protect the health and safety of its employees.

The Company has considered the economic implications of the COVID-19 pandemic in making critical and significant accounting estimates.

COVID-19 has had a negative impact on business activity across the globe.

As a result of COVID-19, the Company has experienced a decline in the demand for its products, as customers reduce orders in response to a slowdown in consumer spending and shifting market trends.

The Company expects declining demand in categories such as smartphones, power supply and industrial as business activity decelerates across the globe.

These declines might be partially offset by increasing demand in the markets for notebooks, PCs and gaming devices as more consumers are staying and working from home.

The extent to which the COVID-19 pandemic may impact the Company's business will depend on future developments which are uncertain and cannot be predicted with confidence, such as the duration of the outbreak, travel restrictions governmental mandates issued to mitigate the spread of the disease, business closures, economic disruptions, and the effectiveness of actions taken to contain and treat the virus.

developments which are uncertain, such as the duration of the outbreak, travel restrictions, governmental mandates issued to mitigate the spread of the disease, business closures, economic disruptions, and the effectiveness of actions taken to contain and treat the virus.

Accordingly, the COVID-19 pandemic may have a negative impact on the Company's sales and results of operations, the size and duration of which is difficult to predict.

The Company will continue to actively monitor the situation and may take further actions altering its business operations that the Company determines are in the best interests of its employees, customers, partners, suppliers, and stakeholders, or as required by federal, state, or local authorities.

On July 1, 2019, the Company adopted Topic 842, Leases, using the modified retrospective method.

Results for reporting periods beginning after July 1, 2019 were presented under Topic 842, while prior period amounts were not adjusted and continue to be reported on a historical basis as permitted under Topic 840.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S.

GAAP requires the Company to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses.

To the extent there are material differences between these estimates and actual results, the Company's condensed consolidated financial statements will be affected.

On an ongoing basis, the Company evaluates the estimates, judgments and assumptions including those related to stock rotation returns, price adjustments, allowance for doubtful accounts, inventory reserves, warranty accrual, income taxes, leases, share-based compensation, recoverability of and useful lives for property, plant and equipment and intangible assets, as well as economic implications of the COVID-19 pandemic.

The Company determines if an arrangement is a lease at inception.

1 unchanged sentence

Finance leases are included in property, plant and equipment, finance lease liabilities and long-term finance leases liabilities on the condensed consolidated balance sheets.

The Company elected the practical expedient permitted under the transition guidance, which allowed the Company to carryforward its historical lease classifications, make an assessment on whether a contract was or contains a lease, and determine initial direct costs for any leases that existed prior to July 1, 2019.

The Company elected to combine its lease and non-lease components as a single lease component for all asset classes.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date.

5 unchanged sentences

The Company does not record leases on the condensed consolidated balance sheet with a term of one year or less.

See Note 6 for further details.

Revenue recognition

7 unchanged sentences

Packaging and testing services revenue is recognized upon shipment of serviced products to the customer.

Joint Venture

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In March 2016, the Company executed an agreement with two strategic investment funds owned by the Municipality of Chongqing, China (the "Chongqing Funds") to form a joint venture, (the "JV Company"), for a new state-of-the-art power semiconductor packaging, testing and wafer fabrication facility in Liangjiang New Area of Chongqing (the "Joint Venture").

As of March 31, 2020 , the Company owns 51 % , and the Chongqing Funds own 49 % of the equity interest in the JV Company.

The Joint Venture is accounted for under the provisions of the consolidation guidance since the Company has a controlling financial interest.

The JV Company has continued ramping up its production of assembly and testing during the nine months ended March 31, 2020 .

In July 2019, we commenced limited mass production at the 12-inch wafer fabrication facility, and continued ramping up production during the nine months ended March 31, 2020 .

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S.

GAAP requires the Company to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses.

To the extent there are material differences between these estimates and actual results, the Company's condensed consolidated financial statements will be affected.

On an ongoing basis, the Company evaluates the estimates, judgments and assumptions including those related to stock rotation returns, price adjustments, allowance for doubtful accounts, inventory reserves, warranty accrual, income taxes, leases, share-based compensation, recoverability of and useful lives for property, plant and equipment and intangible assets , as well as economic implications of the COVID-19 pandemic.

Share-based Compensation Expense

The Company maintains an equity-settled, share-based compensation plan to grant restricted share units and stock options.

The Company recognizes expense related to share-based compensation awards that are ultimately expected to vest based on estimated fair values on the date of grant.

The fair value of restricted share units is based on the market value of the Company's common share on the date of grant.

The fair value of restricted share units is based on the fair value of the Company's common share on the date of grant.

For restricted stock awards subject to market conditions, the fair value of each restricted stock award is estimated at the date of grant using the Monte-Carlo pricing model.

The fair value of stock options is estimated on the date of grant using the Black-Scholes option valuation model.

Share-based compensation expense is recognized on the accelerated attribution basis, net of estimated forfeitures, over the requisite service period of the award, which generally equals the vesting period.

Share-based compensation expense is recognized on the accelerated attribution basis over the requisite service period of the award, which generally equals the vesting period.

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Restricted Cash

1 unchanged sentence

In addition, the Company maintains restricted cash in connection with cash balances temporarily restricted for regular business operations including the possibility of a dispute with a vendor.

These balances have been excluded from the Company’s cash and cash equivalents balance and are classified as restricted cash in the Company’s consolidated balance sheets.

As of March 31, 2020 and June 30, 2019, the amount of restricted cash was $ 4.3 million and $ 2.4 million , respectively.

These balances have been excluded from the Company’s cash and cash equivalents balance and are classified as restricted cash in the Company’s condensed consolidated balance sheets.

As of September 30, 2020 and June 30, 2020, the amount of restricted cash was $ 4.3 million and $ 4.2 million , respectively.

Fair Value of Financial Instruments

3 unchanged sentences

The carrying value of the company's debt is considered a reasonable estimate of fair value which is estimated by considering the current rates available to the Company for debt of the same remaining maturities, structure and terms of the debts.

Impairment of Privately-held Investment

During fiscal year 2017, the Company purchased shares of common stock in a privately-held company at a total investment cost of $ 0.6 million .

The Company made the investment because it viewed the privately-held company as having strategic technology and a business that would complement the Company's technological capabilities and help create an opportunity for the Company to sell its products.

The Company accounted for the investment on a cost basis.

During the quarter ended March 31, 2020, the Company recorded an impairment charge of $ 0.6 million in connection with this investment as the Company concluded the impairment to be other-than-temporary.

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Government Grant s

Government Grants

The Company occasionally receives government grants that provide financial assistance for certain eligible expenditures in China.

These grants include tax credits, credit for property, plant and equipment in a particular geographical location, employment credits, research and development credits, as well as business expansion credits.

These grants include reimbursements on interest expense on bank borrowings, payroll tax credits, credit for property, plant and equipment in a particular geographical location, employment credits, as well as business expansion credits.

Government grants are not recognized until there is reasonable assurance that the Company will comply with the conditions attaching to it, and that the grant will be received.

The Company records such grants either as a reduction of the related expense or a reduction of the cost of the related asset, or as other income.

During the three and nine months ended March 31, 2020, the Company reduced interest expense by $ 0.7 million and $ 4.1 million , property, plant and equipment by $ 0 and $ 1.3 million , and operating expenses by $ 1.8 million and $ 2.0 million , respectively.

During the three and nine months ended March 31, 2019, the Company reduced interest expense by $ 0.1 million each.

The Company records such grants either as a reduction of the related expense, a reduction of the cost of the related asset, or as other income depending upon the nature of the grant.

As a result of such grants, during the three months ended September 30, 2020, the Company reduced interest expense and operating expenses by $ 0.8 million and $ 1.9 million , respectively.

During the three months ended September 30, 2019, the Company reduced interest expense by $ 2.3 million.

Long-lived Assets

The Company evaluates its long-lived assets for impairment whenever events or changes indicate that the carrying amount of such assets may not be recoverable.

Due to the COVID-19 pandemic, the Company assessed the changes in circumstances that occurred during the March 2020 quarter.

These factors included continued operating losses, a decrease in the Company's share price in February and March of 2020, which reduced its market capitalization, expectation of lower business growth for the coming quarters, increased and prolonged economic and regulatory uncertainty in the global economies, and the expectation of higher supply chain costs and increased competition.

Therefore, the Company performed a recoverability test by comparing the sum of the estimated undiscounted future cash flows of its long-lived assets to their carrying amount as of March 31 2020.

Due to the COVID-19 pandemic, the Company assessed the changes in circumstances that occurred since the March 2020 quarter.

These factors included operating losses, a decrease in the Company's share price in February and March of 2020, which reduced its market capitalization, expectation of lower business growth for the coming quarters, increased and prolonged economic and regulatory uncertainty in the global economies, and the expectation of higher supply chain costs and increased competition.

Therefore, the Company performed a recoverability test by comparing the sum of the estimated undiscounted future cash flows of its long-lived assets to their carrying amount as of June 30, 2020.

Some of the more significant assumptions used in the estimated future cash flows include net sales, cost of goods sold, operating expenses, working capital, capital expenditures, income tax rates, and long-term growth rates that appropriately reflects the risks inherent in the future cash flow stream.

2 unchanged sentences

The result of the recoverability test indicated that the sum of the expected future cash flows (undiscounted and without interest charges) was greater than the carrying amount of the long-lived assets.

Therefore, the Company concluded that the carrying amount of the long-lived assets is recoverable.

Therefore, the Company concluded that the carrying amount of the long-lived assets is recoverable as of June 30, 2020.

As of September 30, 2020, the Company performed a qualitative assessment and concluded that indicators of potential impairment did not exit.

Therefore, there was no impairment of long-lived assets as of September 30, 2020.

Comprehensive Income (Loss)

2 unchanged sentences

Total comprehensive income (loss) is presented in the condensed consolidated statements of comprehensive income (loss).

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Recent Accounting Pronouncements

Recently Issued Accounting Standards not yet adopted

In January 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

In August 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which, among other things, provides guidance on how to account for contracts on an entity’s own equity.

This ASU simplifies the accounting for certain financial instruments with characteristics of liabilities and equity.

Specifically, the ASU eliminated the need for the Company to assess whether a contract on the entity’s own equity (1) permits settlement in unregistered shares, (2) whether counterparty rights rank higher shareholder’s rights, and (3) whether collateral is required.

In addition, the ASU requires incremental disclosure related to contracts on the entity’s own equity and clarifies the treatment of certain financial instruments accounted for under this ASU on earnings per share.

For public business entities, the ASU is effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years.

The Company does not expect the adoption of this guidance will have a material impact on its consolidated financial position, results of operations or cash flows.

This ASU may be applied on a full retrospective of modified retrospective basis.

This ASU is effective January 1, 2022 and interim periods presented.

Early adoption of the ASU is permitted by the Company effective January 1, 2021.

The Company is in the process of assessing the adoption of the ASU on the Company’s financial statements.

In January 2020, the FASB issued ASU No.

2020-01, “Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323, and Topic 815.” The ASU is based on a consensus of the Emerging Issues Task Force and is expected to increase comparability in accounting for these transactions.

3 unchanged sentences

The Company does not expect the adoption of this guidance will have a material impact on its consolidated financial position, results of operations or cash flows.

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

In December 2019, the FASB issued ASU No.

2019-12 “Income Taxes (Topic 740):

3 unchanged sentences

Depending on the amendment, adoption may be applied on a retrospective, modified retrospective or prospective basis.

We are currently evaluating the impacts of adoption of the new guidance to our consolidated financial statements.

The Company is currently evaluating the impacts of adoption of the new guidance to its consolidated financial statements.

Recently Adopted Accounting Standards

In August 2018, the FASB issued ASU 2018-15 “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40):

2 unchanged sentences

The accounting for the service element of a hosting arrangement that is a service contract is not affected by these amendments.

ASU 2018-15 is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2019.

Early adoption is permitted.

The Company is currently assessing the impact that adoption of this guidance will have on its consolidated financial statements.

ASU 2018-15 had no material impact on the Company's consolidated financial statements.

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820):

3 unchanged sentences

All other amendments should be applied retrospectively to all periods presented upon their effective date.

2018-13 is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2019.

The Company does not expect the adoption of this guidance will have a material impact on its consolidated financial position, results of operations or cash flows.

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses ("ASU 2016-13").

This accounting standard update changes the accounting for recognizing impairments of financial assets.

Under the update, credit losses for certain types of financial instruments will be estimated based on expected losses.

The update also modifies the impairment models for available-for-sale debt securities and for purchased financial assets with credit deterioration since their origination.

This update is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.

The Company is currently evaluating the impact of this accounting standard update on its Consolidated Financial Statements.

Recently Adopted Accounting Standards

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842).

This guidance requires a dual approach for lessee accounting under which a lessee accounts for leases as finance leases or operating leases.

Both finance and operating leases result in the lessee recognizing a right-of-use asset and a corresponding liability on its balance sheet, with differing methodology for income statement recognition.

The Company adopted this standard as of July 1, 2019, using the modified retrospective transition method and recorded a cumulative-effect balance sheet adjustment.

As a result of adopting ASU 2016-02 on July 1, 2019, the Company recognized operating lease right-of-use assets and corresponding operating lease liabilities of approximately $ 21 million each from existing leases on the Company's condensed consolidated balance sheet.

See Note 6 for further details.

In June 2018, the FASB issued ASU 2018-07, "Compensation -Stock Compensation:

Improvement to Nonemployees Share-Based Payment Accounting ("ASU 2018-07"), which expands the scope of Topic 718 to include all share-based payment transactions for acquiring goods and services from nonemployees.

ASU 2018-07 specifies that Topic 718 applies to all share-based payment transactions in which the grantor acquires goods and services to be used or consumed in its own operations by issuing share-based payment awards.

ASU 2018-07 also clarifies that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under ASC 606.

ASU 2018-13 had no material impact on the Company's consolidated financial statements.

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Net Loss Per Common Share Attributable to Alpha and Omega Semiconductor Limited

The following table presents the calculation of basic and diluted net loss per share attributable to common shareholders:

Three Months Ended March 31,

Nine Months Ended March 31,

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326).

Topic 326 adds to U.S.

GAAP the current expected credit loss ("CECL") model, a measurement model based on expected losses rather than incurred losses.

Under this new standard, an entity recognizes its estimate of expected credit losses as an allowance.

The new standard is also intended to reduce the complexity of U.S.

GAAP by decreasing the number of credit loss models that entities use to account for debt instruments.

The new guidance significantly changes the accounting for credit losses.

The Company adopted ASU 2016-13 using the modified-retrospective approach in the first quarter of fiscal 2021 with no impact to its condensed consolidated financial statements.

The adoption of Topic 326 did not significantly change the Company's approach to the valuation of trade receivables.

The Company determines whether there is an expected loss on its accounts receivable by reviewing all available data, including its customers' latest available financial statements, their credit standing and historical collection experience, as well as current and future market and economic conditions.

As of September 30, 2020 and June 30, 2020, the allowance for credit losses on the Company's trade receivables remained immaterial.

Net Income Per Common Share Attributable to Alpha and Omega Semiconductor Limited

The following table presents the calculation of basic and diluted net income per share attributable to common shareholders:

Three Months Ended September 30,

(in thousands, except per share data)

Net loss attributable to Alpha and Omega Semiconductor Limited

Weighted average number of common shares used to compute basic net loss per share

Net income attributable to Alpha and Omega Semiconductor Limited

Weighted average number of common shares used to compute basic net income per share

Effect of potentially dilutive securities:

Stock options, RSUs and ESPP shares

Weighted average number of common shares used to compute diluted net loss per share

Net loss per share attributable to Alpha and Omega Semiconductor Limited:

The following potential dilutive securities were excluded from the computation of diluted net loss per share as their effect would have been anti-dilutive:

Three Months Ended March 31,

Nine Months Ended March 31,

(in thousands)

Weighted average number of common shares used to compute diluted net income per share

Net income per share attributable to Alpha and Omega Semiconductor Limited:

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following potential dilutive securities were excluded from the computation of diluted net income per share as their effect would have been anti-dilutive:

Three Months Ended September 30,

(in thousands)

1 unchanged sentence

Total potential dilutive securities

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Concentration of Credit Risk and Significant Customers

2 unchanged sentences

Credit sales, which are mainly on credit terms of 30 to 60 days , are only made to customers who meet the Company's credit requirements, while sales to new customers or customers with low credit ratings are usually made on an advance payment basis.

The Company considers its trade accounts receivable to be of good credit quality because its key distributors and direct customers have long-standing business relationships with the Company and the Company has not experienced any significant write-offs of accounts receivable in the past.

The Company closely monitors the aging of accounts receivable from its distributors and direct customers, and regularly reviews their financial positions, when available.

The Company closely monitors the aging of accounts receivable from its distributors and direct customers, and regularly reviews their financial positions, where available.

In the past, the Company shipped its product indirectly to Huawei and its affiliates (collectively, “Huawei”) through distributors.

4 unchanged sentences

The Company has not shipped any products to Huawei after December 31, 2019.

Summarized below are individual customers whose revenue or accounts receivable balances were more than 10% of the respective total consolidated amounts:

Three Months Ended March 31,

Nine Months Ended March 31,

Summarized below are individual customers whose revenue or accounts receivable balances were 10% or higher than the respective total consolidated amounts:

Three Months Ended September 30,

Percentage of revenue

September 30,

Percentage of accounts receivable

4 unchanged sentences

Accounts receivable, net

September 30,

(in thousands)

3 unchanged sentences

Accounts receivable, net

September 30,

(in thousands)

3 unchanged sentences

Other current assets

September 30,

(in thousands)

6 unchanged sentences

Customs deposit

Lease financing cost

Interest receivable

Payroll tax receivable

Other receivables

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

1 unchanged sentence

Pr operty, plant and equipment, net:

September 30,

(in thousands)

Manufacturing machinery and facility equipment

Manufacturing machinery and equipment

Equipment and tooling

7 unchanged sentences

Intangible assets, net:

September 30,

(in thousands)

3 unchanged sentences

Intangible assets, net

Intangible assets of patents and technology rights are primarily related to a license agreement that the Company entered into with STMicroelectronics International N.V.

(“STMicro”) on September 5, 2017, pursuant to which STMicro granted the Company a world-wide, royalty-free and fully-paid license to use its technologies to develop, market and distribute certain digital multi-phase controller products.

As of March 31, 2020 , the Company recorded $ 16.2 million of intangible assets related to STMicro.

The Company begins amortizing such license fees when the technology has met the Company's qualification and is ready for its intended use in production.

Estimated future minimum amortization expense of intangible assets is as follows (in thousands):

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Year ending June 30,

2021 (Remaining)

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Other long-term assets:

September 30,

(in thousands)

1 unchanged sentence

Investment in a privately held company

Lease financing costs

Customs deposit

2 unchanged sentences

Accrued liabilities:

September 30,

(in thousands)

5 unchanged sentences

Accrued facilities related expenses

Accrued financing lease costs

Accrued property, plant and equipment

Customer deposit

Other accrued expenses

Customer deposit

The activities in the warranty accrual, included in accrued liabilities, are as follows:

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Nine Months Ended March 31,

Three Months Ended September 30,

(in thousands)

2 unchanged sentences

The activities in the stock rotation accrual, included in accrued liabilities, are as follows:

Nine Months Ended March 31,

Three Months Ended September 30,

(in thousands)

1 unchanged sentence

Ending balance

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Other long-term liabilities:

September 30,

(in thousands)

1 unchanged sentence

Computer software liabilities

Deferred payroll taxes

Other long-term liabilities

* Customer deposits are from Customer A and Customer B for securing future product shipments from the Company.

The Company reclassified $ 2.0 million of the customer deposit to short term accrued liabilities during the nine months ended March 31, 2020 since the repayment of this amount is due within a year.

The Company reclassified $ 2.0 million of the customer deposit to short term accrued liabilities during the three months ended September 30, 2020 since the repayment of this amount is due within a year.

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

2 unchanged sentences

Short-term borrowings

On April 15, 2020, the JV Company entered into a one-year loan agreement with China Everbright Bank in China to borrow a maximum of Chinese Renminbi (RMB) 100 million (approximately $ 14.3 million based on the currency exchange rate between RMB and U.S.

Dollar on April 15, 2020), in the amount in RMB or USD.

Interest payments are due on the 20th of each month, and the entire principal is due on April 16, 2021.

The loan consists of RMB 20 million for working capital borrowing in Chinese yuan and RMB 80 million for borrowing in US dollars that is collateralized by eligible accounts receivable.

During the three months ended June 30, 2020, the JV Company borrowed RMB 20 million , or $ 2.8 million based on the currency exchange rate between RMB and U.S.

Dollar, at a fixed interest rate of 5.1375 % per annum under the working capital loan.

The JV Company also borrowed $ 7.1 million and $ 1.9 million at a fixed interest rate of 2.7 % and 2.8 % per annum, respectively, during the same period under the accounts receivable collateralized loan.

During the three months ended September 30, 2020, the JV Company repaid $ 9.0 million and borrowed $ 11.3 million at a fixed interest rate of 2.7 % per annum under the accounts receivable collateralized loan.

As of September 30, 2020, the total outstanding balance under the loan was $ 14.2 million.

In October 2019, the Company's subsidiary in China entered into a line of credit facility with Bank of Communications Limited in China.

This line of credit matures on February 14, 2021 and is based on the China Base Rate multiplied by 1.05 , or 4.99 % on October 31, 2019.

The purpose of the credit facility was to provide short-term borrowings.

The Company could borrow up to approximately Chinese Renminbi (RMB) 60.0 million or $ 8.5 million based on the currency exchange rate between the RMB and the U.S.

The purpose of the credit facility is to provide short-term borrowings.

The Company could borrow up to approximately RMB 60.0 million or $ 8.5 million based on the currency exchange rate between the RMB and the U.S.

Dollar on October 31, 2019.

As of March 31, 2020 , there was no outstanding balance under the loan.

As of September 30, 2020 , there was no outstanding balance under the loan.

On September 23, 2019, the JV Company entered into a short-term revolving loan agreement with China Everbright bank in China.

The JV Company can borrow up to RMB 50.0 million , or $ 7.1 million based on the currency exchange rate between RMB and U.S.

Dollar on September 23, 2019, at varying interest rates, with either RMB or USD.

Interest payments with the entire principal are due no later than 90 days from each borrowing date.

The loan expired in April 2019.

In January and February 2020, the JV Company borrowed $ 1.6 million and $ 5.5 million , respectively, under this loan.

Interest payments with the entire principal were due on April 7, 2020 and May 3, 2020.

As of March 31, 2020 , the total outstanding balance under the loan was $ 7.1 million .

On March 21, 2019, the JV Company entered into a one-year loan agreement with China Everbright Bank in China to provide a loan for RMB 20 million , or $ 3.0 million based on the currency exchange rate between RMB and U.S.

Dollar on March 31, 2019, at a fixed interest rate of 5.44 % per annum.

Interest payments are due monthly with the entire principal due on March 21, 2020.

The loan expired in April 2019.

As of March 31, 2020 , there was no outstanding balance under the loan.

Dollar on September 23, 2019, at varying interest rates, in RMB or USD.

Interest payments with the entire principal were due no later than 90 days from each borrowing date.

As of September 30, 2020, there was no outstanding balance under the loan.

On November 29 and December 4, 2018, the JV Company entered into two, one-year loan agreements with China Merchant Bank and Chongqing LiangJiang New District China Merchants Group Limited Company in China to provide loans for RMB 80 million and RMB 20 million , respectively, or $ 14.5 million in total based on the currency exchange rate between RMB and U.S.

2 unchanged sentences

Interest payments are due monthly and quarterly with the entire principal due not later than January 21, 2021.

As of March 31, 2020 , the outstanding balance under the loan was $ 14.1 million .

As of September 30, 2020 , there was no outstanding balance under the loan.

On November 16, 2018, the Company's subsidiary in China entered into a line of credit facility with Industrial and Commercial Bank of China, which expired on September 30, 2019.

3 unchanged sentences

In October 2019, this line of credit was renewed with the same terms and a maturity date of September 30, 2020.

As of March 31, 2020 , there was no outstanding balance under the line of credit.

On September 30, 2020 , there was no outstanding balance under the line of credit and the line of credit expired.

Accounts Receivable Factoring Agreement

1 unchanged sentence

This factoring agreement allows the Borrower to borrow up to 70 % of the net amount of its eligible accounts receivable of the Borrower with a maximum amount of $ 30.0 million .

The interest rate is based on one month LIBOR plus 1.75 % per annum.

This agreement, with certain financial covenants required, has no expiration date.

The interest rate is based on one month London Interbank Offered Rate ("LIBOR") plus 1.75 % per annum.

The Company is the guarantor for this agreement.

1 unchanged sentence

In addition, any cash held in the restricted bank account controlled by HSBC has a legal right of offset against the borrowing.

The Borrower was in compliance with these covenants as of March 31, 2020 .

During the three months ended March 31, 2020, the Company borrowed $ 8.0 million and repaid this amount in full.

As of March 31, 2020 , there was no outstanding balance and the Company had unused credit of approximately $ 30.0 million .

Credit Facilities

On May 9, 2018 (the “Effective Date”), the JV Company entered into a lease finance agreement and a security agreement (the “Agreements”) with YinHai Leasing Company and The Export-Import Bank of China (the “Lenders”).

Pursuant to the Agreements, the Lenders agreed to provide an aggregate of RMB 400.0 million , or $ 62.8 million based on the currency

This agreement, with certain financial covenants required, has no expiration date.

The Borrower was in compliance with these covenants as of September 30, 2020 .

During the three months ended September 30, 2020, the Company borrowed $ 29.7 million and repaid this amount in full.

As of September 30, 2020 , there was no outstanding balance and the Company had unused credit of approximately $ 30.0 million .

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

exchange rate between RMB and U.S.

Credit Facilities

On May 9, 2018 (the “Effective Date”), the JV Company entered into a lease finance agreement and a security agreement (the “Agreements”) with YinHai Leasing Company and China Import/Export Bank (the “Lenders”).

Pursuant to the Agreements, the Lenders agreed to provide an aggregate of RMB 400.0 million , or $ 62.8 million based on the currency exchange rate between RMB and U.S.

Dollar on the Effective Date, of financing to the JV Company (the “Lease Financing”).

7 unchanged sentences

The Agreements include certain customary closing conditions, including the payment of deposit by the JV Company.

As of March 31, 2020 , the outstanding balance under the Agreement was 325.0 million RMB (equivalent of $ 45.8 million based on the currency exchange rate as of March 31, 2020 ), which was recorded under short-term and long-term finance lease liabilities.

On June 28, 2020, the parties entered into a modification to this agreement, pursuant to which the interest rate was changed to be the five-year loan prime rate in China plus 0.8125 % , or 5.4625 % .

Other terms of this agreement remain the same.

As of September 30, 2020 , the outstanding balance of the Lease Financing of 271.0 million RMB (equivalent of $ 39.8 million based on the currency exchange rate as of September 30, 2020 ) was recorded under short-term and long-term finance lease liabilities.

See future minimum lease payment table for finance lease liabilities in Note 6.

Long-term debt

On April 26, 2020, the JV Company entered into a loan agreement with China Development Bank, Agricultural Bank of China, China Merchants Bank and Chongqing Rural Commercial Bank (collectively, "the Banks") in the aggregate principal amount of RMB 250 million (approximately $ 35.7 million based on the currency exchange rate between RMB and U.S.

Dollar on April 26, 2020).

The obligation under the loan agreement is secured by certain assets of the JV Company.

Beginning December 18, 2020, the JV Company is required to make consecutive semi-annual payments of principal until December 8, 2024.

Interest payment is due on March 20, June 20, September 20 and December 20 of each year based on China one-year loan prime rate ("LPR") plus 1.3 % .

The JV Company drew down RMB 250 million (approximately $ 35.3 million based on the currency exchange rate between RMB and U.S.

Dollar on June 30, 2020) in April 2020.

As of September 30, 2020, the outstanding balance of the loan was $ 36.7 million .

In December 2019, the JV Company entered into a loan agreement with China Development Bank in the amount of $ 24.0 million .

1 unchanged sentence

Beginning December 18, 2020, the JV Company will make consecutive semi-annual payments of principal until December 8, 2024.

The interest is accrued based on the London Interbank Offered Rate ("LIBOR") rate plus 2.8 % .

The interest is accrued based on the LIBOR rate plus 2.8 % .

The interest is required to be paid on March 21 and September 21 each year.

As of March 31, 2020 , the outstanding balance of the loan was $ 24.0 million .

As of September 30, 2020 , the outstanding balance of the loan was $ 24.0 million .

On March 12, 2019, the JV Company entered into a loan agreement with The Export-Import Bank of China in the aggregate principal amount of RMB 200 million (approximately $ 29.8 million based on currency exchange rate between RMB and U.S.

7 unchanged sentences

This loan is secured by the buildings and certain equipment owned by the JV Company.

As a condition of the loan arrangement, RMB 14 million (approximately $ 2.0 million ) of cash is held as restricted cash by the JV Company as a compensating balance at the bank until the principal is paid.

In October 2019, the Company repaid RMB 3.0 million .

As of March 31, 2020 , the outstanding balance of the loan was RMB 197 million (equivalent of $ 27.8 million based on the currency exchange rate as of March 31, 2020 ).

As a condition of the loan arrangement, 14 million RMB (approximately $ 2.0 million ) of cash is held as restricted cash by the JV Company as a compensating balance at the bank until the principal is paid.

On June 24, 2020, a modification of this loan was signed, pursuant to which the interest rate was changed to be based on the five-year loan prime rate in China plus 0.74 % , or 5.39 % .

Other terms of this loan remain the same.

During the three months ended December 31, 2019, the JV Company paid 6.0 million RMB

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

under this agreement.

As of September 30, 2020 , the outstanding balance of the loan was 194 million RMB (equivalent of $ 28.5 million based on the currency exchange rate as of September 30, 2020 ).

On May 1, 2018, Jireh Semiconductor Incorporated ("Jireh"), a wholly-owned subsidiary of the Company, entered into a loan agreement with a financial institution (the "Bank") that provided a term loan in the amount of $ 17.8 million .

4 unchanged sentences

The loan agreement contains customary restrictive covenants and includes certain financial covenants that require the Company to maintain, on a consolidated basis, specified financial ratios.

The Company was in compliance with these covenants as of March 31, 2020 .

As of March 31, 2020 , the outstanding balance of the term loan was $ 16.2 million .

The Company was in compliance with these covenants as of September 30, 2020 .

As of September 30, 2020 , the outstanding balance of the term loan was $ 15.7 million .

On August 15, 2017, Jireh entered into a credit agreement with the Bank that provided a term loan in an amount up to $ 30.0 million for the purpose of purchasing certain equipment for the Company's fabrication facility located in Oregon.

4 unchanged sentences

The loan accrues interest based on an adjusted LIBOR as defined in the credit agreement, plus a specified applicable margin in the range of 1.75 % to 2.25 % , based on the outstanding balance of the loan.

The credit agreement contains customary restrictive covenants and includes certain

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

financial covenants that require the Company to maintain, on a consolidated basis, specified financial ratios and fixed charge coverage ratio.

The Company was in compliance with these covenants as of March 31, 2020 .

As of March 31, 2020 , the outstanding balance of the term loan was $ 18.6 million .

The credit agreement contains customary restrictive covenants and includes certain financial covenants that require the Company to maintain, on a consolidated basis, specified financial ratios and fixed charge coverage ratio.

The Company was in compliance with these covenants as of September 30, 2020 .

As of September 30, 2020 , the outstanding balance of the term loan was $ 14.9 million .

Maturities of short-term debt and long-term debt were as follows (in thousands):

9 unchanged sentences

Total debt, less debt issuance costs

Under Topic 842, the Company evaluates contracts for lease accounting at contract inception and assesses lease classification at the lease commencement date.

Operating leases are included in operating lease right-of-use ("ROU") assets, operating lease liabilities and operating lease liabilities - long-term on the Company's consolidated balance sheets.

Finance leases are included in property, plant and equipment, finance lease liabilities and finance lease liabilities-long-term on the consolidated balance sheets.

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company evaluates contracts for lease accounting at contract inception and assesses lease classification at the lease commencement date.

Operating leases are included in operating lease right-of-use ("ROU") assets, operating lease liabilities and operating lease liabilities - long-term on the Company's condensed consolidated balance sheets.

Finance leases are included in property, plant and equipment, finance lease liabilities and finance lease liabilities-long-term on the condensed consolidated balance sheets.

The Company recognizes a ROU asset and corresponding lease obligation liability at the lease commencement date where the lease obligation liability is measured at the present value of the minimum lease payments.

7 unchanged sentences

See Note 5 - Bank Borrowings for details.

The Company does not record leases on the condensed consolidated balance sheet with a term of one year or less.

The components of the Company’s operating and finance lease expenses are as follows for the period presented (in thousands):

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Nine Months Ended March 31, 2020

The Company does not record leases on the condensed consolidated balance sheets with a term of one year or less.

The components of the Company’s operating and finance lease expenses are as follows for the periods presented (in thousands):

Three Months Ended September 30,

Operating Leases:

6 unchanged sentences

Total lease expenses

Supplemental balance sheet information related to the Company’s operating and finance leases is as follows (in thousands, except lease term and discount rate):

March 31, 2020

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Supplemental balance sheets information related to the Company’s operating and finance leases is as follows (in thousands, except lease term and discount rate):

September 30,

Operating Leases :

11 unchanged sentences

Supplemental cash flow information related to the Company’s operating and finance lease is as follows (in thousands):

Nine Months Ended March 31, 2020

Three Months Ended September 30,

Cash paid from amounts included in the measurement of lease liabilities:

2 unchanged sentences

Financing cash flows from finance lease

Non-cash increase in right-of-use operating lease assets *

* This relates to the Company's headquarters' office lease renewal in September 2019.

See below for details.

Future minimum lease payments are as follows as of March 31, 2020 (in thousands):

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Future minimum lease payments are as follows as of September 30, 2020 (in thousands):

Operating Leases

4 unchanged sentences

Total lease liabilities

Prior to the adoption of the new lease standard, future minimum lease payments as of June 30, 2019 were as follows (in thousands):

Year ending June 30,

Operating Leases

Finance Leases

Total minimum lease payments

Less amount representing interest

Total lease liabilities

In September 2019, the Company modified its headquarters' office lease located in Sunnyvale, California for an additional 10 -year term extension from its original scheduled expiration date in April 2020.

During the three months ended March 31, 2020, the Company discovered that the operating lease right-of-use assets and operating lease liabilities relating to this lease were each understated by approximately $ 16.0 million , which was considered immaterial to previously issued quarterly reports on Form 10-Q as of September 30, 2019 and December 31, 2019.

The impact of the correction on the previously issued consolidated statements of operations and cash flows was insignificant.

Non-cash disclosure of the increase in right-of-use operating lease assets for the both three months ended September 2019 and six months ended December 2019 was increased from $ 0 to $ 16.0 million .

The impact of the correction on the respective balance sheets was as follows (in thousands):

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2019

December 31, 2019

Amounts as reported

Amounts as corrected

Amounts as reported

Amounts as corrected

Operating lease right-of-use assets

Operating lease liabilities - Short-term

Total current liabilities

Operating lease liabilities - Long-term

Total liabilities

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Shareholders' Equity and Share-based Compensation

Share Repurchase

In September 2017, the Board of Directors approved a new repurchase program (the “Repurchase Program”) that allowed the Company to repurchase its common shares from the open market pursuant to a pre-established Rule 10b5-1 trading plan or through privately negotiated transactions up to an aggregate of $ 30.0 million .

In September 2017, the Board of Directors approved a repurchase program (the “Repurchase Program”) that allowed the Company to repurchase its common shares from the open market pursuant to a pre-established Rule 10b5-1 trading plan or through privately negotiated transactions up to an aggregate of $ 30.0 million .

The amount and timing of any repurchases under the Repurchase Program depend on a number of factors, including but not limited to, the trading price, volume and availability of the Company's common shares.

Shares repurchased under this program are accounted for as treasury shares and the total cost of shares repurchased is recorded as a reduction of shareholders' equity.

From time to time, treasury shares may be reissued as part of the Company's stock-based compensation programs.

From time to time, treasury shares may be reissued as part of the Company's share-based compensation programs.

Gains on re-issuance of treasury stock are credited to additional paid-in capital;

1 unchanged sentence

Any remaining balance of the losses is charged to retained earnings.

During the nine months ended March 31, 2020 , the Company did not repurchase any shares from the open market.

Since the inception of the program, the Company repurchased an aggregate of 6,784,648 shares from the open market for a total cost of $ 67.3 million , at an average price of $ 9.92 per share, excluding fees and related expenses.

During the three months ended September 30, 2020 , the Company did not repurchase any shares pursuant to the Repurchase Program.

Since the inception of the program, the Company repurchased an aggregate of 6,784,648 shares for a total cost of $ 67.3 million , at an average price of $ 9.92 per share, excluding fees and related expenses.

No repurchased shares have been retired.

Of the 6,784,648 repurchased shares, 145,428 shares with a weighted average repurchase price of $ 10.32 per share, were reissued at an average price of $ 5.30 per share pursuant to option exercises and vested restricted share units.

As of March 31, 2020 , approximately $ 13.4 million remained available under the Repurchase Program.

Of the 6,784,648 repurchased shares, 146,928 shares with a weighted average repurchase price of $ 10.30 per share, were reissued at an average price of $ 5.25 per share pursuant to option exercises and vested restricted share units ("RSU").

As of September 30, 2020 , approximately $ 13.4 million remained available under the Repurchase Program.

Time-based Restricted Stock Units ("TRSU")

The following table summarizes the Company's TRSU activities for the nine months ended March 31, 2020 :

The following table summarizes the Company's TRSU activities for the three months ended September 30, 2020 :

Number of Restricted Stock

5 unchanged sentences

Nonvested at June 30, 2020

Nonvested at March 31, 2020

Nonvested at September 30, 2020

Market-based Restricted Stock Units ("MSUs")

2 unchanged sentences

The MSUs vest in four equal annual installments after the end of each performance period.

The Company estimated the grant date fair values of its MSUs with derived service periods of 4.5 to 7.5 years using a Monte-Carlo simulation model with the following assumptions:

Risk-free interest rate of 2.7 % , expected term of 3.5 years, expected volatility of 38.8 % and dividend yield of 0 % .

The Company recorded approximately $ 0.1 million and $ 0.4 million of expenses for these MSUs during the three and nine months ended March 31, 2020 , respectively, and approximately $ 0.1 million and $ 0.5 million during the three and nine months ended March 31, 2019 , respectively.

The Company estimated the grant date fair values of its MSUs using a Monte-Carlo simulation model.

On August 31, 2020, the Compensation Committee of the Board approved a modification of the terms of MSU to extend the performance period through December 31, 2022 and change the commencement date for the four-year time-based service period January 1, 2023.

The fair value of these MSUs was recalculated to reflect the change as of August 31, 2020 and the unrecognized compensation amount was adjusted to reflect the increase in fair value.

The incremental expenses for the three months ended September 30, 2020 was immaterial.

The Company recorded approximately $ 0.2 million and $ 0.2 million of expenses for MSUs during the three months ended September 30, 2020 and 2019, respectively.

Performance-based Restricted Stock Units ("PRSUs")

The Company granted performance-based RSUs (“PRSUs”) to certain personnel.

In March each year since year 2017, The Company granted performance-based RSUs (“PRSUs”) to certain personnel.

The number of shares to be earned under the PRSUs is determined based on the level of attainment of predetermined financial goals.

The PRSUs vest in four equal annual installments from the first anniversary date after the grant date if certain predetermined financial goals were met.

The Company recorded approximately $ 0.4 million and $ 1.1 million of expense for these PRSUs during the three and nine months ended March 31,

The PRSUs vest in four equal annual installments from the first anniversary date after the grant date if certain predetermined financial

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2020 , respectively, and approximately $ 0.8 million and $ 2.2 million during the three and nine months ended March 31, 2019 , respectively.

The following table summarizes the Company's PRSUs activities for the nine months ended March 31, 2020 :

goals were met.

The Company recorded approximately $ 0.4 million and $ 0.2 million of expense for these PRSUs during the three months ended September 30, 2020 and 2019, respectively.

During the three months ended June 30, 2019, the Company announced an incentive program.

Under this program, each participant’s award is denominated in stock and subject to achievement of certain objective goals within certain timelines.

In June 2020, the Company believed it was most likely that predetermined goal measures would be met.

Therefore, started June 2020 quarter the Company recorded $ 0.6 million of non-cash compensation expense each quarter for these awards.

The expense was reported in the other current liabilities line on the condensed consolidated balance sheets as the amount of bonus is to be settled in variable number of RSU’s at the completion of the objective goals.

Such non-cash compensation expense was recorded as part of share-based compensation expense in the condensed consolidated statements of operations.

In September 2020, the Company granted RSUs total valued at $ 1.0 million to participants, which were fully vest immediately due to achievement of certain objective measures.

The following table summarizes the Company's PRSUs activities for the three months ended September 30, 2020 :

Number of Performance-based Restricted Stock

6 unchanged sentences

Nonvested at June 30, 2020

Nonvested at March 31, 2020

Nonvested at September 30, 2020

Stock Options

The Company did not grant any stock options during the three and nine months ended March 31, 2020 and 2019.

The number of options expected to vest is the result of applying the pre-vesting forfeiture rate assumption to total outstanding options.

The following table summarizes the Company's stock option activities for the nine months ended March 31, 2020 :

The Company did not grant any stock options during the three months ended September 30, 2020 and 2019.

The following table summarizes the Company's stock option activities for the three months ended September 30, 2020 :

Exercise Price

2 unchanged sentences

Outstanding at June 30, 2020

Canceled or forfeited

Outstanding at March 31, 2020

Outstanding at September 30, 2020

Options vested and expected to vest

Exercisable at March 31, 2020

Exercisable at September 30, 2020

Employee Share Purchase Plan ("ESPP")

The assumptions used to estimate the fair values of common shares issued under the ESPP were as follows:

Nine Months Ended March 31,

Three Months Ended September 30,

Volatility rate

2 unchanged sentences

Dividend yield

Share-based Compensation Expense

T he total share-based compensation expense recognized in the condensed consolidated statements of operations for the periods presented was as follows:

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended March 31,

Nine Months Ended March 31,

(in thousands)

Share-based Compensation Expense

T he total share-based compensation expense recognized in the condensed consolidated statements of operations for the periods presented was as follows:

Three Months Ended September 30,

(in thousands)

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Selling, general and administrative

As of March 31, 2020 , total unrecognized compensation cost under the Company's equity plans was $ 10.6 million , which is expected to be recognized over a weighted-average period of 2.2 years.

The Company recognized income tax benefit of approximately $ 1.0 million and income tax expense of $ 0.6 million for the three months ended March 31, 2020 and 2019 , respectively.

The income tax benefit of $ 1.0 million for the three months ended March 31, 2020 included a $ 1.3 million discrete tax benefit, $ 1.1 million of which related to re-measuring the tax benefit of net operating losses that can be carried back to prior years following the passage of the "U.S.

Coronavirus Aid, Relief and Economic Security Act” (“CARES Act”), and $ 0.2 million of which primarily related to a prior year reserve release.

The income tax expenses of $ 0.6 million for the three months ended March 31, 2019 included a $ 0.2 million discrete tax benefit principally related to a prior year reserve release.

Excluding the discrete income tax items, the effective tax rate for the three months ended March 31, 2020 and 2019 was ( 2.3 )% and ( 14.8 )% , respectively.

The changes in the tax expense between the periods resulted primarily from the discrete tax benefit resulting from the tax law changes resulting from the CARES Act as well as changes in the mix of earnings in various geographic jurisdictions between the current year and the same period of last year.

The Company recognized income tax benefit of approximately $ 0.04 million and income tax expense of $ 1.9 million for the nine months ended March 31, 2020 and 2019, respectively.

The income tax benefit of $ 0.04 million for the nine months ended March 31, 2020 included a $ 1.3 million discrete tax benefit, $ 1.1 million of which related to remeasuring the tax benefit of net operating losses that can be carried back to prior years following the passage of the U.S.

CARES Act, and $ 0.2 million of which related to a prior year reserve release.

The income tax expense of $ 1.9 million for the nine months ended March 31, 2019 included a $ 0.1 million discrete tax benefit principally related to a prior year reserve release.

Excluding the discrete income tax items, the effective tax rate for the nine months ended March 31, 2020 and 2019 was ( 7.4 )% and ( 19.2 )% , respectively.

As of September 30, 2020 , total unrecognized compensation cost under the Company's equity plans was $ 13.1 million , which is expected to be recognized over a weighted-average period of 2.5 years.

The Company recognized income tax expense of approximately $ 1.0 million and $ 0.4 million for the three months ended September 30, 2020 and 2019 , respectively.

The income tax expense of $ 1.0 million for the three months ended September 30, 2020 included a $ 0.03 million discrete tax benefit.

The income tax expense of $ 0.4 million for the three months ended September 30, 2019 included a $ 0.02 million discrete tax expense.

Excluding the discrete income tax items, the effective tax rate for the three months ended September 30, 2020 and 2019 was 10.7 % and ( 27.3 )% , respectively.

The changes in the effective tax rate and tax expense between the periods resulted primarily from the Company reporting pretax book income of $ 9.8 million for the three months ended September 30, 2020 vs.

a pretax book loss of $ 1.4 million for the three months ended September 30, 2019.

The Company files its income tax returns in the United States and in various foreign jurisdictions.

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These assessments can require considerable estimates and judgments.

As of March 31, 2020 , the gross amount of unrecognized tax benefits was approximately $ 7.2 million , of which $ 4.2 million , if recognized, would reduce the effective income tax rate in future periods.

As of September 30, 2020, the gross amount of unrecognized tax benefits was approximately $ 7.2 million , of which $ 4.3 million , if recognized, would reduce the effective income tax rate in future periods.

If the Company's estimate of income tax liabilities proves to be less than the ultimate assessment, then a further charge to expense would be required.

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The Company does not anticipate any material changes to its uncertain tax positions during the next twelve months.

Coronavirus Aid, Relief and Economic Security Act” (“CARES Act”), Enacted March 27, 2020

On March 27, 2020, the United States enacted the Coronavirus Aid, Relief and Economic Security Act (“the CARES Act”), which made the changes to existing U.S.

tax laws, including, but not limited to, (1) allowing U.S.

federal net operating losses originated in the 2018, 2019 or 2020 tax years to be carried back five years to recover taxes paid based upon taxable income in the prior five years, (2) eliminating the 80% of taxable income limitation on net operating losses for the 2018, 2019 and 2020 tax years (the 80% limitation will be reinstated for tax years after 2020), (3) accelerating the refund of prior year alternative minimum tax credits, (4) modifying the bonus depreciation for qualified improvement property and (5) modifying the limitation on deductible interest expense.

As a result of the ability to carryback net operating losses from the June 2018 and June 2019 years to the June 2015 to June 2017 tax years, net operating losses which were previously tax-effected using the current 21% U.S.

federal tax rate were

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

revalued to the U.S.

tax rates in effect for the June 2015 to June 2017 tax years due to the ability of receiving tax refunds for the taxes paid in these years.

Accordingly, we reported a discrete tax benefit of $ 1.1 million in the quarter ended March 31, 2020 related to the re-measurement of the net operating losses that could be realized via the new net operating loss carryback provisions.

On July 27, 2015, in Altera Corp.

1 unchanged sentence

Tax Court issued an opinion related to the treatment of stock-based compensation expense in an intercompany cost-sharing arrangement.

In the July 2015 ruling, the Tax Court concluded

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

that the sharing of the cost of employee stock compensation in a company’s cost-sharing arrangement was invalid under the U.S.

In the July 2015 ruling, the Tax Court concluded that the sharing of the cost of employee stock compensation in a company’s cost-sharing arrangement was invalid under the U.S.

Administrative Procedures Act.

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Court of Appeals for the Ninth Circuit to hold an en banc rehearing of the case.

In November 2019 the en banc rehearing petition was denied, and Altera has asked the Supreme Court for a judicial review.

Due to the uncertainty surrounding the status of the current regulations and questions related to the scope of potential benefits, the Company has not recorded any benefit as of March 31, 2020.

The Company will continue to monitor ongoing developments and potential impacts to its financial statements.

The petition was subsequently denied by the Ninth Circuit.

Altera appealed the case to the U.S.

Supreme Court in February 2020, but the U.S.

Supreme Court declined to hear the case in June 2020, leaving intact the U.S.

Court of Appeals for the Ninth Circuit’s decision.

AOS has no t recorded any benefit related to the Altera Corporation Tax Court decision in any period through September 2020.

The Company will continue to monitor ongoing developments and potential impact to its financial statements.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Segment and Geographic Information

8 unchanged sentences

The revenue by geographical location in the following tables is based on the country or region in which the products were shipped to:

Three Months Ended March 31,

Nine Months Ended March 31,

(in thousands)

Three Months Ended September 30,

(in thousands)

2 unchanged sentences

The following is a summary of revenue by product type:

Three Months Ended March 31,

Nine Months Ended March 31,

(in thousands)

Three Months Ended September 30,

(in thousands)

2 unchanged sentences

Long-lived assets, net consisting of property, plant and equipment and land use rights, by geographical area are as follows:

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30,

(in thousands)

5 unchanged sentences

Purchase Commitments

As of March 31, 2020 and June 30, 2019 , the Company had approximately $ 57.2 million and $ 59.5 million , respectively, of outstanding purchase commitments primarily for purchases of semiconductor raw materials, wafers, spare parts and packaging and testing services, and approximately $ 23.1 million and $ 33.8 million , respectively, of capital commitments for the purchase of property and equipment and EPC construction.

As of September 30, 2020 and June 30, 2020 , the Company had approximately $ 44.4 million and $ 43.9 million , respectively, of outstanding purchase commitments primarily for purchases of semiconductor raw materials, wafers, spare parts, packaging and testing services and others.

As of September 30, 2020 and June 30, 2020 , the Company had approximately $ 19.8 million and $ 18.0 million , primarily for the JV Company, respectively, of capital commitments for the purchase of property and equipment.

Other Commitments

See Note 5 and Note 6 of the Notes to the Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q for descriptions of commitments including bank borrowings and leases.

See Note 1, Note 5 and Note 6 of the Notes to the Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q for descriptions of commitments including Joint Venture, bank borrowings and leases.

Contingencies and Indemnities

2 unchanged sentences

Irrespective of the validity of such claims, the Company could incur significant costs in the defense of such claims and suffer adverse effects on its operations.

As previously disclosed in the Company's Form 10-Q for the quarter ended December 31, 2019, the U.S.

In December 2019, the U.S.

Department of Justice ("DOJ") commenced an investigation into the Company's compliance with export control regulations relating to its business transactions with Huawei and its affiliates (“Huawei”), which were added to the “Entity List” maintained by the Department of Commerce (“DOC”) on May 16, 2019.

1 unchanged sentence

The Company has maintained an export control compliance program and has been committed to comply fully with all applicable laws and regulations.

In connection with this investigation, DOC requested the Company to suspend shipments of its products to Huawei, and the Company complied with such request, and the Company has not shipped any product to Huawei after December 31, 2019.

The Company is currently working with DOC to resolve this issue.

Given the case is in relatively early stages and still ongoing, the Company cannot estimate the reasonably possible loss or range of loss that may occur.

Given the case is in still ongoing and neither DOJ nor DOC have provided the Company with any clear indication of the timing and schedule for the investigation, the Company cannot estimate the reasonably possible loss or range of loss that may occur.

Also, the Company is unable to predict the duration, scope, result or related costs of the investigation, although the Company expects to incur additional professional fees as a result of this matter.

In addition, the Company is unable to predict, if any, further action that may be taken by the government in connection with the investigation, or what, if any, penalties, sanctions or remedial actions may be sought.

In addition, the Company is unable to predict what, if any, further action that may be taken by the government in connection with the investigation, or what, if any, penalties, sanctions or remedial actions may be sought.

On March 19, 2020, Darryl Gray, a stockholder of the Company (the “Plaintiff”), filed a putative class action complaint in the United States District Court for the Southern District of New York (the “Gray Action”), alleging that the Company and its management members made material misstatements or omissions regarding the Company’s business and operations, including its export control practices relating to business transactions with Huawei and its affiliate.

The Gray Action asserts claims under Section 10(b) of the Exchange Act against the Company, its Chief Executive Officer and Chief Financial Officer (collectively, the Defendants”), as well as claims under Section 20(a) of the Exchange Act against the Chief Executive Officer and Chief Financial Officer.

Among other remedies, the actions seek to recover compensatory damages and other damages and attorney’s fees and costs.

On March 20, 2020, the court issued a summons to the Defendants.

On March 25, 2020, the court scheduled a conference for July 1, 2020 to consider any motions for appointment of lead plaintiff and lead counsel.

The Company believes the claims in the Gray Action are without merit and intends to vigorously defend this litigation.

Among other remedies, the Gray Action seeks to recover compensatory and other damages as well as attorney’s fees and costs.

On May 18, 2020, Plaintiff moved for an order appointing him as Lead Plaintiff pursuant to Section 21D of the Exchange Act and approving Glancy Prongay & Murray LLP as Lead Counsel for the putative class (the “Motion”).

On July 1, 2020, the Court entered an order granting the Motion and requiring that:

(i) Lead Plaintiff file an amended complaint or designate the current complaint as operative within sixty days;

(ii) Defendants answer the complaint or otherwise move within sixty days of such filing or designation;

(iii) Lead Plaintiff file an opposition, if any, within forty-five days;

and (iv) Defendants file a reply, if any, forty-five days thereafter.

On August 28, 2020, Plaintiff filed an amended complaint asserting the same claims against the Defendants, and adding the Company’s Executive Vice President of Product Line as a defendant on both claims.

On October 27, 2020, the Defendants moved to dismiss the action in its entirety.

The Company believes the claims in the Gray Action are

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

without merit and intends to vigorously defend this litigation.

Given the case is in its early stages and still on going, the Company cannot estimate the reasonably possible loss or range of loss that may occur.

3 unchanged sentences

In these circumstances, payment by the Company is customarily conditioned on the other party making a claim pursuant to the procedures specified in the particular contract, which procedures typically allow the Company to challenge the other party's claim.

Further, the Company's obligations under these agreements may be limited in time and/or amount, and in some

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

instances, the Company may have recourse against third parties for certain payments made by it under these agreements.

The Company has not historically paid or recorded any material indemnifications, and no accrual was made at March 31, 2020 and June 30, 2019 .

Further, the Company's obligations under these agreements may be limited in time and/or amount, and in some instances, the Company may have recourse against third parties for certain payments made by it under these agreements.

The Company has not historically paid or recorded any material indemnifications, and no accrual was made at September 30, 2020 and June 30, 2020 .

The Company has agreed to indemnify its directors and certain employees as permitted by law and pursuant to its Bye-laws, and has entered into indemnification agreements with its directors and executive officers.

3 unchanged sentences

In addition, the Company may not be able to maintain such insurance coverage in the future.

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Subsequent Events

On April 15, 2020, the JV Company entered into a one-year loan agreement with China Everbright Bank in China to provide a loan of a maximum of RMB 100 million (approximately $ 14.3 million based on the currency exchange rate between RMB and U.S.

Dollar on April 15, 2020).

In April 2020, the JV Company borrowed RMB 20 million , or $ 2.8 million based on the currency exchange rate between RMB and U.S.

Dollar on April 16, 2020, at a fixed interest rate of 5.1375 % per annum.

Interest payments are due on the 20th of each month, and the entire principal is due on April 16, 2021.

On April 26, 2020, the JV Company entered into a loan agreement with China Development Bank, Agricultural Bank of China, China Merchants Bank and Chongqing Rural Commercial Bank (collectively, "the Banks") in the aggregate principal amount of RMB 250 million , (approximately $ 35.7 million based on the currency exchange rate between RMB and U.S.

Dollar on April 26, 2020).

The obligation under the loan agreement is secured by certain assets of the JV Company.

Beginning December 18, 2020, the JV Company is required to make consecutive semi-annual payments of principal until December 8, 2024.

Interest payment is due on March 20, June 20, September 20 and December 20 of each year based on China one-year loan prime rate ("LPR") plus 1.3 % .

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements