What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-11-05 compared with 2021-05-07 · 218 added, 263 removed, 651 unchanged (42% of the section changed)

3 unchanged sentences

(Unaudited, in thousands except par value per share)

September 30,

2021 June 30,

33 unchanged sentences

issued and outstanding:

none at March 31, 2021 and June 30, 2020

none at September 30, 2021 and June 30, 2021

Common shares, par value $ 0.002 per share:

1 unchanged sentence

issued and outstanding:

32,710 shares and 26,085 shares, respectively at March 31, 2021 and 31,944 shares and 25,305 shares, respectively at June 30, 2020

32,996 shares and 26,373 shares, respectively at September 30, 2021 and 32,975 shares and 26,350 shares, respectively at June 30, 2021

Treasury shares at cost:

6,625 shares at March 31, 2021 and 6,639 shares at June 30, 2020

6,623 shares at September 30, 2021 and 6,625 shares at June 30, 2021

( 66,052 ) ( 66,064 )

Additional paid-in capital 264,321 259,993

Accumulated other comprehensive income (loss) 996 ( 5,127 )

Accumulated other comprehensive income 2,229 2,315

Retained earnings 200,307 176,895

7 unchanged sentences

(Unaudited, in thousands except per share data)

Three Months Ended March 31, Nine Months Ended March 31,

2021 2020 2021 2020

Three Months Ended September 30,

Revenue $ 187,035 $ 151,551

4 unchanged sentences

Selling, general and administrative 21,806 17,505

Impairment of privately-held investment — 600 — 600

Total operating expenses 39,618 32,196

Operating income (loss) 17,796 ( 8,619 ) 41,713 ( 12,610 )

Operating income 24,949 10,327

Interest expense and other income (loss), net ( 2,192 ) ( 549 )

Income (loss) before income taxes 15,981 ( 10,901 ) 38,968 ( 16,354 )

Income tax expense (benefit) 1,014 ( 1,015 ) 2,694 ( 37 )

Net income (loss) including noncontrolling interest 14,967 ( 9,886 ) 36,274 ( 16,317 )

Income before income taxes 22,757 9,778

Income tax expense 1,320 1,011

Net income including noncontrolling interest 21,437 8,767

Net loss attributable to noncontrolling interest ( 1,987 ) ( 807 )

Net income (loss) attributable to Alpha and Omega Semiconductor Limited $ 16,100 $ ( 6,495 ) $ 38,577 $ ( 6,491 )

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

Net income attributable to Alpha and Omega Semiconductor Limited $ 23,424 $ 9,574

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

Basic $ 0.89 $ 0.38

Diluted $ 0.85 $ 0.36

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

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

Basic 26,365 25,340

4 unchanged sentences

(Unaudited, in thousands)

Three Months Ended March 31, Nine Months Ended March 31,

2021 2020 2021 2020

Net income (loss) including noncontrolling interest $ 14,967 $ ( 9,886 ) $ 36,274 $ ( 16,317 )

Three Months Ended September 30,

Net income including noncontrolling interest $ 21,437 $ 8,767

Other comprehensive income (loss), net of tax

Foreign currency translation adjustment ( 100 ) 5,703

Comprehensive income (loss) 14,168 ( 12,094 ) 47,992 ( 21,621 )

Comprehensive income 21,337 14,470

Noncontrolling interest ( 2,001 ) 1,915

Comprehensive income (loss) attributable to Alpha and Omega Semiconductor Limited $ 15,615 $ ( 7,664 ) $ 44,700 $ ( 9,206 )

Comprehensive income attributable to Alpha and Omega Semiconductor Limited $ 23,338 $ 12,555

See accompanying notes to these condensed consolidated financial statements.

7 unchanged sentences

Total AOS Shareholders' Equity Noncontrolling Interest Total Equity

Balance, December 31, 2020 $ 65 $ ( 66,097 ) $ 254,980 $ 1,481 $ 141,289 $ 331,718 $ 142,938 $ 474,656

Exercise of common stock options and release of restricted stock units — — 129 — — 129 — 129

Reissuance of treasury stock upon exercise of common stock options and release of restricted stock units — 33 — — ( 33 ) — — —

Withholding tax on restricted stock units — — ( 5,200 ) — — ( 5,200 ) — ( 5,200 )

Share-based compensation — — 3,025 — — 3,025 — 3,025

Net income (loss) — — — — 16,100 16,100 ( 1,133 ) 14,967

Cumulative translation adjustment — — — ( 485 ) — ( 485 ) ( 314 ) ( 799 )

Balance, March 31, 2021 $ 65 $ ( 66,064 ) $ 252,934 $ 996 $ 157,356 $ 345,287 $ 141,491 $ 486,778

Common Shares Treasury Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings Total AOS Shareholders' Equity Noncontrolling Interest Total Equity

Balance, June 30, 2020 $ 64 $ ( 66,184 ) $ 246,103 $ ( 5,127 ) $ 118,833 $ 293,689 $ 138,199 $ 431,888

Exercise of common stock options and release of restricted stock units — — 1,624 — — 1,624 — 1,624

Reissuance of treasury stock upon exercise of common stock options and release of restricted stock units — 120 — — ( 54 ) 66 — 66

Reissuance of treasury stock upon exercise of common stock options and release of RSUs — 13 — — ( 13 ) — — —

Withholding tax on restricted stock units — — ( 412 ) — — ( 412 ) — ( 412 )

Issuance of shares under ESPP 1 — 1,635 — — 1,636 — 1,636

Share-based compensation — — 2,276 — — 2,276 — 2,276

Restricted stock units settlement in connection with service — — 1,000 — — 1,000 — 1,000

Net income (loss) — — — — 38,577 38,577 ( 2,303 ) 36,274

Cumulative translation adjustment — — — 6,123 — 6,123 5,595 11,718

Balance, March 31, 2021 $ 65 $ ( 66,064 ) $ 252,934 $ 996 $ 157,356 $ 345,287 $ 141,491 $ 486,778

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 Total Equity

Balance, December 30, 2019 $ 63 $ ( 66,227 ) $ 240,797 $ ( 4,239 ) $ 125,476 $ 295,870 $ 144,280 $ 440,150

Reissuance of treasury stock upon exercise of common stock options and release of restricted stock units — 43 — — ( 43 ) — — —

Withholding tax on restricted stock units — — ( 1,203 ) — — ( 1,203 ) — ( 1,203 )

Share-based compensation — — 2,876 — — 2,876 — 2,876

Net loss — — — — ( 6,495 ) ( 6,495 ) ( 3,391 ) ( 9,886 )

Cumulative translation adjustment — — — ( 1,169 ) — ( 1,169 ) ( 1,039 ) ( 2,208 )

Balance, March 31, 2020 $ 63 $ ( 66,184 ) $ 242,470 $ ( 5,408 ) $ 118,938 $ 289,879 $ 139,850 $ 429,729

Net income (loss) including noncontrolling interest — — — — 9,574 9,574 ( 807 ) 8,767

Foreign currency translation adjustment — — — 2,981 — 2,981 2,722 5,703

Balance, September 30, 2020 $ 64 $ ( 66,171 ) $ 248,967 $ ( 2,146 ) $ 128,394 $ 309,108 $ 140,114 $ 449,222

Common Shares Treasury Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings Total AOS Shareholders' Equity Noncontrolling Interest Total Equity

Balance, June 30, 2021 $ 66 $ ( 66,064 ) $ 259,993 $ 2,315 $ 176,895 $ 373,205 $ 143,120 $ 516,325

Exercise of common stock options and release of RSUs — — 26 — — 26 — 26

Reissuance of treasury stock upon exercise of common stock options and release of restricted stock units — 56 — — ( 56 ) — — —

Reissuance of treasury stock upon exercise of common stock options and release of RSUs — 12 — — ( 12 ) — — —

Withholding tax on restricted stock units — — ( 174 ) — — ( 174 ) — ( 174 )

Issuance of shares under ESPP 1 — 1,700 — — 1,701 — 1,701

Share-based compensation — — 4,502 — — 4,502 — 4,502

Net loss — — — — ( 6,491 ) ( 6,491 ) ( 9,826 ) ( 16,317 )

Cumulative translation adjustment

— — — ( 2,715 ) — ( 2,715 ) ( 2,589 ) ( 5,304 )

Balance, March 31, 2020 $ 63 $ ( 66,184 ) $ 242,470 $ ( 5,408 ) $ 118,938 $ 289,879 $ 139,850 $ 429,729

Net income (loss) including noncontrolling interest — — — — 23,424 23,424 ( 1,987 ) 21,437

Foreign currency translation adjustment — — — ( 86 ) — ( 86 ) ( 14 ) ( 100 )

Balance, September 30, 2021 $ 66 $ ( 66,052 ) $ 264,321 $ 2,229 $ 200,307 $ 400,871 $ 141,119 $ 541,990

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 income (loss) including noncontrolling interest $ 36,274 $ ( 16,317 )

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

Net income including noncontrolling interest $ 21,437 $ 8,767

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

Depreciation and amortization 13,722 12,489

1 unchanged sentence

Deferred income taxes, net 638 17

(Gain) loss on disposal of property and equipment 40 ( 206 )

Impairment of privately-held investment — 600

Loss on disposal of property and equipment 28 47

Changes in operating assets and liabilities:

9 unchanged sentences

Purchases of property and equipment in JV Company ( 8,351 ) ( 3,393 )

Proceeds from sale of property and equipment 10 295

Government grant related to equipment 1,082 —

2 unchanged sentences

Withholding tax on restricted stock units ( 174 ) ( 412 )

Proceeds from exercise of stock options and ESPP 3,326 1,727

Proceeds from borrowings 7,550 11,300

1 unchanged sentence

Principal payments on finance leases ( 4,176 ) ( 3,989 )

Net cash provided by (used in) financing activities ( 16,323 ) 16,494

Net cash used in financing activities ( 6,535 ) ( 4,186 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 11 ) 1,997

19 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 three and nine months ended March 31, 2021 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 sheet 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.

Operating results for the three months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2022 or any other interim period.

The consolidated balance sheet at June 30, 2021 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, 2021.

Reclassification

The Company has reclassified certain amounts previously reported in its financial statements to conform to the current presentation.

These reclassifications did not have a material impact on our consolidated financial statements.

These reclassifications did not have a material impact on our condensed consolidated financial statements.

Joint Venture

1 unchanged sentence

The Fab is being built in phases.

As of March 31, 2021, the Company owned 51 %, and the Chongqing Funds owned 49 % of the equity interest in the JV Company.

As of September 30, 2021, the Company owned 51 %, and the Chongqing Funds owned 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 in assembly and testing and is currently ramping up its Phase I of the 12-inch wafer fabrication.

The JV Company has reached its targeted production in assembly and testing and completed the ramp on its Phase I of the 12-inch wafer fabrication.

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

1 unchanged sentence

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

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

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 and consumer behaviors change.

discontinue or decline as government authorities relax and terminate COVID-19 related restrictions and consumer behaviors change.

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 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 full extent of the future impact of the COVID-19 pandemic on the Company’s operational and financial performance is currently uncertain and will depend on many factors outside the Company’s control, including, without limitation, the timing, extent, trajectory and duration of the pandemic;

the availability, distribution and effectiveness of vaccines;

the spread of new variants of COVID-19;

the continued or renewed imposition of protective public safety measures;

the continuing disruption of global supply chain affecting the semiconductor industry;

and the impact of the pandemic on the global economy and demand for consumer products.

Use of Estimates

5 unchanged sentences

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

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

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

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.

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

Revenue recognition

5 unchanged sentences

and (5) recognition of revenue when, or as, a performance obligation is satisfied.

The Company recognizes revenue when product is shipped to the customer, net of estimated stock rotation returns and price adjustments to certain distributors.

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

The Company recognizes product revenue at a point in time when product is shipped to the customer, net of estimated stock rotation returns and price adjustments that it expects to provide to certain distributors.

The Company presents revenue net of sales taxes and any similar assessments.

Our standard payment terms range from 30 to 90 days.

The Company sells its products primarily to distributors, who in turn sell the products globally to various end customers.

The Company allows stock rotation returns from certain distributors.

Stock rotation returns are governed by contract and are limited to a specified percentage of the monetary value of products purchased by distributors during a specified period.

The Company records an allowance for stock rotation returns based on historical returns and individual distributor agreements.

The Company also provides special pricing to certain distributors, primarily based on volume, to encourage resale of the Company’s products.

Allowance for price adjustments is recorded against accounts receivable and the provision for stock rotation rights is included in accrued liabilities on the condensed consolidated balance sheets.

The Company’s performance obligations relate to contracts with a duration of less than one year.

The Company elected to apply the practical expedient provided in ASC 606, “Revenue from Contracts with Customers”.

Therefore, the Company is not

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

required to disclose the aggregate amount of transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period.

The Company recognizes the incremental direct costs of obtaining a contract, which consist of sales commissions, when control over the products they relate to transfers to the customer.

Applying the practical expedient, the Company recognizes commissions as expense when incurred, as the amortization period of the commission asset the Company would have otherwise recognized is less than one year.

Packaging and testing services revenue is recognized at a point in time upon shipment of serviced products to the customer.

Share-based Compensation Expense

3 unchanged sentences

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

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

on the date of grant using the Black-Scholes option valuation 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 over the requisite service period of the award, which generally equals the vesting period.

The Employee Share Purchase Plan (the “ESPP”) is accounted for at fair value on the date of grant using the Black-Scholes option valuation model.

Restricted Cash

2 unchanged sentences

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 March 31, 2021 and June 30, 2020, the amount of restricted cash was $ 2.4 million and $ 4.2 million, respectively.

As of September 30, 2021 and June 30, 2021, the amount of restricted cash was $ 2.5 million and $ 2.4 million, respectively.

Fair Value of Financial Instruments

8 unchanged sentences

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 and nine months ended March 31, 2021, the Company reduced interest expense by $ 0.7 million and $ 2.2 million, property, plant and equipment by nil and $ 0.1 million, and operating expenses by $ 0.0 million and $ 3.7 million, respectively.

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 nil and $ 1.3 million, and operating expenses by $ 1.8 million and $ 2.0 million, respectively.

As a result of such grants, during the three months ended September 30, 2021, the Company reduced the carrying value of property, plant and equipment by $ 1.1 million.

During the three months ended September 30, 2020, the Company reduced interest expense by $ 0.8 million , and operating expenses by $ 1.9 million, respectively.

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 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.

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

These factors included continued operating losses, a decrease in the

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

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

The Company selected the assumptions used in the financial forecasts by referencing to historical data, supplemented by current and anticipated market conditions, estimated product growth rates and management's plans.

1 unchanged sentence

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 was recoverable as of June 30, 2020.

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Therefore, the Company concluded that the carrying amount of the long-lived assets is recoverable as of June 30, 2021.

Comprehensive Income (Loss)

12 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.

Recently Adopted Accounting Standards

In January 2020, the FASB issued ASU No.

2 unchanged sentences

Among other topics, the amendments clarify that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting.

For public business entities, the amendments in the ASU are effective for fiscal years beginning after December 15, 2020, 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.

ASU 2020-01 had no material impact on the Company's consolidated financial statements.

In December 2019, the FASB issued ASU No.

1 unchanged sentence

Simplifying the Accounting for Income Taxes ("ASU 2019-12") by removing certain exceptions to the general principles.

The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020.

Early adoption of the amendments is permitted.

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

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):

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract".

These amendments align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contact with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license).

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

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):

Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement ("ASU 2018-13”).

ASU 2018-13 amends existing fair value measurement disclosure requirements by adding, changing, or removing certain disclosures.

The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption.

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

The Company adopted ASU 2019-12 as of July 1, 2021.

ASU 2019-12 had no material impact on the Company's consolidated financial statements.

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 March 31, 2021, the allowance for credit losses on the Company's trade receivables remained immaterial.

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

Three Months Ended March 31, Nine Months Ended March 31,

2021 2020 2021 2020

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 income (loss) attributable to Alpha and Omega Semiconductor Limited $ 16,100 $ ( 6,495 ) $ 38,577 $ ( 6,491 )

Net income attributable to Alpha and Omega Semiconductor Limited $ 23,424 $ 9,574

Weighted average number of common shares used to compute basic net income per share 26,365 25,340

3 unchanged sentences

Weighted average number of common shares used to compute diluted net income per share 27,638 26,314

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

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

Basic $ 0.89 $ 0.38

Diluted $ 0.85 $ 0.36

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

Three Months Ended March 31, Nine Months Ended March 31,

2021 2020 2021 2020

(in thousands) (in thousands)

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)

Employee stock options and RSUs 510 124

ESPP — 627 89 782

Total potential dilutive securities 543 357

5 unchanged sentences

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

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

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Typically, the Company sold its products to distributors who then sold to original design manufacturers (“ODMs”) that incorporated our products into end applications that were then shipped to Huawei.

While distributor point of sale reports summarize distributor sales to ODMs, the Company must make certain assumptions and estimates in order to determine the amount of revenues attributed to indirect shipment to Huawei.

During the fiscal year ended June 30, 2019, the estimated revenues attributed to indirect shipments to Huawei were approximately 2 % of total revenues.

During the period from May 2019 to December 2019, estimated revenues earned by the Company from shipments indirectly made to Huawei were in the range of $ 11 million to $ 13 million.

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 10% or higher than the respective total consolidated amounts:

Three Months Ended March 31, Nine Months Ended March 31,

Three Months Ended September 30,

Percentage of revenue 2021 2020

1 unchanged sentence

Customer B 36.6 % 33.1 %

September 30,

2021 June 30,

3 unchanged sentences

Customer C 18.2 % 21.9 %

Customer E * 20.1 %

Customer F * 10.4 %

Customer G * 10.3 %

Customer H * 10.9 %

* Less than 10%

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

2 unchanged sentences

Accounts receivable, net:

September 30,

2021 June 30,

4 unchanged sentences

Accounts receivable, net $ 39,317 $ 35,789

September 30,

2021 June 30,

5 unchanged sentences

Other current assets:

September 30,

2021 June 30,

6 unchanged sentences

Prepaid income tax 2,233 2,221

Interest receivable 2,206 2,207

Customs deposit 561 270

4 unchanged sentences

Property, plant and equipment, net:

September 30,

2021 June 30,

14 unchanged sentences

Intangible assets, net:

September 30,

2021 June 30,

14 unchanged sentences

Other long-term assets:

September 30,

2021 June 30,

8 unchanged sentences

Accrued liabilities:

September 30,

2021 June 30,

12 unchanged sentences

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

Nine Months Ended March 31,

Three Months Ended September 30,

(in thousands)

4 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)

6 unchanged sentences

Other long-term liabilities:

September 30,

2021 June 30,

(in thousands)

Customer deposits $ 33,000 * $ 8,000 *

Computer software liabilities 483 1,897

Equipment liabilities 1,354 —

Deferred payroll taxes $ 1,219 $ 1,219

Customer deposits 72,592 42,000

Other 454 904

Other long-term liabilities $ 74,265 $ 44,123

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

Customer deposits are payments received from customers for securing future product shipments.

As of September 30, 2021, $ 57.0 million were from Customer A and Customer B, and $ 15.6 million were from other customers.

As of June 30, 2021, $ 42.0 million were from Customer A and Customer B.

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

2 unchanged sentences

Short-term borrowings

On June 29, 2021, the JV Company entered into a one-year loan agreement with China CITIC Bank in China to borrow a maximum of $ 7.7 million.

Interest payments are due on the 20th of each quarter commencing on September 20, 2021, and the entire principal is due on June 29, 2022.

As of September 30, 2021, the outstanding balance of this loan was $ 7.7 million at an interest rate of 3.49 % per annum.

On April 19, 2021, the JV Company entered into a loan agreement with China Everbright Bank in China to borrow a maximum of Chinese Renminbi (“RMB” 100 million.

The borrowing can be in RMB or U.S.

Dollar (“USD”).

The loan consists of RMB 50 million for working capital borrowings in Chinese yuan and RMB 50 million for borrowing in USD.

The loan is collateralized by eligible accounts receivable.

On April 19, 2021, the JV Company borrowed RMB 50.0 million, or $ 7.7 million based on the currency exchange rate between RMB and USD on April 19, 2021, at an interest rate of 5.1 % per annum.

The interest payments are due quarterly with the entire principal due no later than May 19, 2022.

On June 16, 2021 and June 24, 2021, the JV Company borrowed $ 4.2 million and $ 3.5 million at interest rate of 2.7 % per annum, and repaid in full during the quarter ended September 30, 2021.

On August 17, 2021 and September 22, 2021, the JV Company also borrowed $ 4.2 million and $ 3.4 million at interest rate of 2.7 % per annum, with principal due on November 9, 2021 and December 12, 2021, respectively.

As of September 30, 2021, the total outstanding balance of these loans was $ 15.3 million.

On November 13, 2020, the JV Company entered into a one-year loan agreement with China Merchant Bank in China.

The JV Company can borrow up to Chinese Renminbi ("RMB") 50.0 million, or $ 7.6 million, based on the currency exchange rate between RMB and U.S.

The JV Company can borrow up to RMB 50.0 million, or $ 7.6 million, based on the currency exchange rate between RMB and U.S.

Dollar on November 13, 2020.

2 unchanged sentences

During the three months ended December 31, 2020, the JV Company borrowed RMB 50.0 million, or $ 7.6 million, at a n interest rate of 5.25 % per annum.

As of March 31, 2021, the outstanding balance of this loan was $ 7.6 million.

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 RMB 100.0 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 March 31, 2021, the JV Company borrow ed $ 11.9 million at a fixed interest rat e of 2.7 % per an num and repaid 12.1 million.

As of March 31, 2021, the total outstanding balance under the loan w as $ 14.9 million w hich included RMB 20 million or $ 3.0 million borrowed during the three months ended June 30, 2020.

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

As of September 30, 2021, the outstanding balance of this loan was $ 7.7 million .

On 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.

2 unchanged sentences

Dollar on October 31, 2019.

In October 2020, this line of credit was renewed with the same terms and a maturity date of April 21, 2022.

As of March 31, 2021, 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.

Dollar on December 31, 2018, at varying interest rates.

On January 20, 2020, the JV Company renewed the loan agreements with the same terms.

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

As of March 31, 2021, there was no outstanding b alance 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.

In September 2021, this line of credit was renewed with maximum borrowings up to RMB 140.0 million with the same terms and a maturity date of September 18, 2022.

As of September 30, 2021, 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.

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

1 unchanged sentence

Dollar on November 16, 2018.

In December 2020, this line of credit was renewed with the same terms and a maturity date of December 31, 2021.

As of March 31, 2021, there was no outsta nding balance under the loan.

The RMB 72.0 million consists of RMB 27.0 million for trade borrowings with a maturity date of December 31, 2021, and RMB 45.0 million for working capital borrowings or trade borrowings with a maturity date of September 13, 2022.

As of September 30, 2021, there was no outsta nding balance under the loan.

Accounts Receivable Factoring Agreement

6 unchanged sentences

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

The Borrower was in compliance with these covenants as of March 31, 2021.

During the three and nine months ended March 31, 2021, the Company borro wed $ 10.0 million and $ 46.7 million, respectively, and repaid each amount in full.

As of March 31, 2021, there was no outstanding balance and the Company had unused credit of approximately $ 30.0 million.

On August 11, 2021, the Borrower signed an agreement with HSBC to decrease the borrowing maximum amount to $ 8.0 million with certain financial covenants required.

Other terms remain the same.

As of September 30, 2021, the Borrower was in compliance with these covenants.

As of September 30, 2021, there was no outstanding balance and the Company had unused credit of approxim ately $ 8.0 million.

Credit Facilities

14 unchanged sentences

Other terms of this agreement remain the same.

As of March 31, 2021, the outstanding balance of the Lease Financ ing of 217.0 million RMB (equivalent of $ 33.1 million based on the currency exchange rate as of March 31, 2021) was recorded under short-term and long-term finance lea se liabilities.

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

As of September 30, 2021, the outstanding balance of the Lease Financ ing of 163.0 million R MB (equivalent of $ 25.2 million based on the currency exchange rate as of September 30, 2021) was recorded under short-term and long-term finance lea se liabilities on balance sheets and summarized in the future minimum lease payment table for finance lease liabilities in Note 6.

Long-term debt

On August 18, 2021, Jireh entered into a term loan agreement with a financial institution (the "Bank") in an amount up to $ 45.0 million for the purpose of expanding and upgrading the Company’s fabrication facility located in Oregon.

The obligation under the loan agreement is secured by substantially all assets of Jireh and guaranteed by the Company.

The agreement has a 5.5 year term and matures on February 16, 2027.

Jireh is required to make consecutive quarterly payments of principal and interest.

The loan accrues interest based on adjusted LIBOR plus the applicable margin based on the outstanding balance of the loan.

This agreement contains customary restrictive covenants and includes certain financial covenants that require the Company to maintain.

As of September 30, 2021, there was no outsta nding balance under the loan.

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.

1 unchanged sentence

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.

The obligation under the loan agreement is secured by certain assets of the JV Company with a carrying value of $ 111.7 million as of September 30, 2021.

The JV Company is required to make consecutive semi-annual payments of principal until December 8, 2024.

Interest payments are due on March 20, June 20, September 20 and December 20 of each year based o n the LPR pl us 1.3 %.

1 unchanged sentence

Dollar on June 30, 2020) in April 2020.

As of March 31, 2021, the outstanding balance of the loan was $ 35.8 million.

As of September 30, 2021, the outstanding balance of the loan was $ 34.1 million.

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

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

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

The obligation under the loan agreement is secured by certain assets of the JV Company with a carrying value of $ 111.7 million as of September 30, 2021.

The JV Company is required to make consecutive semi-annual payments of principal until December 8, 2024.

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, 2021, the outstanding balance of the loan was $ 21.6 million.

As of September 30, 2021, the outstanding balance of the loan was $ 19.2 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 200.0 million (approximately $ 29.8 million based on currency exchange rate between RMB and U.S.

6 unchanged sentences

The principal payments are required to be paid every 6 months over the term of loan commencing in October 2019.

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

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.

As of March 31, 2021, the outstanding balance of the loan was 189 million R MB (equivalent of $ 28.8 million based on th e currency exchange rate as of March 31, 2021).

This loan is secured by the buildings and certain equipment owned by the JV Company with a carrying value of $ 88.1 million as of September 30, 2021.

As a condition of the loan arrangement, 14.0 million RMB (approximately $ 2.0

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

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.

As of September 30, 2021, the outstanding balance of the loan was 184.0 million R MB (equivalent of $ 28.5 million based on th e currency exchange rate as of September 30, 2021).

On May 1, 2018, Jireh entered into a loan agreement with the Bank that provided a term loan in the amount of $ 17.8 million.

The obligation under the loan agreement is secured by certain real estate assets of Jireh and guaranteed by the Company.

3 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, 2021.

As of March 31, 2021, the outstanding balance of the term loa n was $ 15.3 million.

In August 2021, Jireh signed an amendment of this loan with the Bank to modify the financial covenants requirement to align with the new term loan agreement entered into on August 18, 2021 discussed above.

The amendment was accounted for as a debt modification and no gain or loss was recognized.

The Company was in compliance with these covenants as of September 30, 2021.

As of September 30, 2021, the outstanding balance of the term loa n was $ 14.8 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.

5 unchanged sentences

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 March 31, 2021.

As of March 31, 2021, the outstanding balance of the term loan was $ 11.2 million.

The amendment was accounted for as a debt modification and no gain or loss was recognized.

The Company was in compliance with these covenants as of September 30, 2021.

As of September 30, 2021, the outstanding balance of the term loan was $ 7.5 million.

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

4 unchanged sentences

Total principal, less debt issuance costs $ 133,946

Short-term Debt Long-term Debt

Short-term Debt Long-term Debt Total

Principal amount $ 58,359 $ 76,409 $ 134,768

17 unchanged sentences

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

Nine Months Ended March 31,

Three Months Ended September 30,

Operating leases:

10 unchanged sentences

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,

2021 June 30,

12 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,

Three Months Ended September 30,

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

4 unchanged sentences

Operating lease right-of-use assets obtained in exchange for lease obligations $ 164 $ 137

Future minimum lease payments are as follows as of March 31, 2021 (in thousands):

Future minimum lease payments are as follows as of September 30, 2021 (in thousands):

Year ending June 30, Operating Leases Finance Leases

1 unchanged sentence

2023 6,132 13,050

2023 5,547 12,848

Thereafter 18,849 —

13 unchanged sentences

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

During the nine months ended March 31, 2021, the Company did no t repurchase any shares pursuant to the Repurchase Program.

During the three months ended September 30, 2021, the Company did no t 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.

1 unchanged sentence

Of the 6,784,648 repurchased shares, 161,145 shares with a weighted average repurchase price of $ 10.13 per share, were reissued at an average price of $ 5.19 per share pursuant to option exercises and vested restricted share units (“RSU”).

As of March 31, 2021, approximately $ 13.4 million remained available under the Repurchase Program.

As of September 30, 2021, approximately $ 13.4 million remained available under the Re purchase Program.

Time-based Restric ted Stock Units ( “ TRSU ” )

The following table summarizes the Company's TRSU activities for the nine months ended March 31, 2021:

The following table summarizes the Company's TRSU activities for the three months ended September 30, 2021:

Number of Restricted Stock

7 unchanged sentences

Forfeited ( 25,125 ) $ 22.29

Nonvested at March 31, 2021 1,062,977 $ 21.00 1.90 $ 34,759,348

Market-based Restricted Stock Units ("MSUs")

During the quarter ended September 30, 2018, the Company granted 1.3 million market-based restricted stock units ("MSUs") to certain personnel.

Nonvested at September 30, 2021 1,052,046 $ 22.01 1.56 $ 33,002,683

Market-based Restricted Stock Units ( “ MSU ” )

During the quarter ended September 30, 2018, the Company granted 1.3 million MSUs to certain personnel.

The number of shares to be earned at the end of performance period is determined based on the Company’s achievement of specified stock prices and revenue thresholds during the performance period from January 1, 2019 to December 31, 2021 as well as the recipients remaining in continuous service with the Company through such period.

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

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

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

1 unchanged sentence

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 and nine months ended March 31, 2021 were immaterial.

The Company recorded approximatel y $ 0.3 million and $ 0.9 million of expenses for MSUs during the three and nine months ended March 31, 2021, respectively, and approximately $ 0.1 million and $ 0.4 million during the three and nine months ended March 31, 2020, respectively.

The Company recorded approximatel y $ 0.4 million and $ 0.2 million of expenses for MSUs during the three months ended September 30, 2021 and 2020, respectively.

Performance-based Restricted Stock Units (“PRSUs”)

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

In March each year since year 2017, the Company granted 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

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 approximatel y $ 1.0 million and $ 0.4 million of expens e for these PRSUs during the three months ended September 30, 2021 and 2020, respectively.

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

goals were met.

The Company recorded approximatel y $ 0.5 million and $ 1.3 million of expens e for these PRSUs during the three and nine months ended March 31, 2021, respectively, and approximately $ 0.4 million and $ 1.1 million during the three and nine months ended March 31, 2020, respectively.

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

3 unchanged sentences

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

During the three and nine months ended March 31, 2021, the Company recorded $ 0.8 million and $ 2.2 million such non-cash compensation expense, respectively.

As of March 31, 2021, the Company granted RSUs valued at $ 2.0 million to participants, which were fully vested due to achievement of certain objective measures.

The following table summarizes the Company's PRSUs activities for the nine months ended March 31, 2021:

As of September 30, 2021 and June 30, 2021, the Company recorded $ 0.2 million and $ 0.1 million such expenses in the other current liabilities, respectively.

During the three months ended September 30, 2021 and 2020 , the Company recorded $ 0.1 million and $ 0.6 million such non-cash compensation expense, respectively.

As of September 30, 2021, the Company granted RSUs valued at $ 3.6 million to p articipants, which were fully vested due to achievement of certain objective measures.

The following table summarizes the Company’s PRSUs activities for the three months ended September 30, 2021:

Number of Performance-based Restricted Stock

5 unchanged sentences

Nonvested at June 30, 2021 353,824 $ 22.69 1.74 $ 10,752,711

Granted 165,500 $ 36.27

Vested ( 148,211 ) $ 14.24

Forfeited ( 250 ) $ 16.22

Nonvested at March 31, 2021 354,199 $ 22.68 1.99 $ 11,582,307

Nonvested at September 31, 2021 353,574 $ 22.69 1.48 $ 11,091,616

Stock Options

The Company did no t grant any stock options during the three and nine months ended March 31, 2021 and 2020.

The following table summarizes the Company's stock option activities for the nine months ended March 31, 2021:

The Company did no t grant any stock options during the three months ended September 30, 2021 and 2020.

The following table summarizes the Company's stock option activities for the three months ended September 30, 2021:

Weighted Average

3 unchanged sentences

Outstanding at June 30, 2021 487,875 $ 7.99 2.32 $ 10,928,653

Exercised ( 150,289 ) $ 11.24

Outstanding at March 31, 2021 493,689 $ 8.05 2.54 $ 12,170,703

Outstanding at September 30, 2021 487,875 $ 7.99 2.07 $ 11,406,770

Options vested and expected to vest 487,875 $ 7.99 2.07 $ 11,406,770

Exercisable at March 31, 2021 493,689 $ 8.05 2.54 $ 12,170,703

Exercisable at September 30, 2021 487,875 $ 7.99 2.07 $ 11,406,770

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 End September 30,

Volatility rate 68.5 %

6 unchanged sentences

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 March 31, Nine Months Ended March 31,

2021 2020 2021 2020

(in thousands) (in thousands)

Three Months Ended September 30,

(in thousands)

Cost of goods sold $ 569 $ 385

2 unchanged sentences

$ 4,635 $ 2,876

As of March 31, 2021, total unrecognized compensation cost under the Company's equity plans w as $ 30.6 million, which is expected to be recognized over a weighted-average period of 2.3 years.

The Company recognized income tax expense of approximately $ 1.0 million and income tax benefit of approximately $ 1.0 million for the three months ended March 31, 2021 and 2020, respectively.

The income tax expense of $ 1.0 million for the three months ended March 31, 2021 included immaterial discrete tax.

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 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.

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

Excluding the discrete income tax items, the effective tax rate for the three months ended March 31, 2021 and 2020 was 6.3 % and ( 2.3 )%, respectively.

The changes in the effective tax rate and tax expense between the periods resulted primarily from the Company reporting pretax book income of $ 16.0 million for the three months ended March 31, 2021 as compared to a pretax book loss of $ 10.9 million for the three months ended March 31, 2020.

The Company recognized income tax expense of approximately $ 2.7 million and income tax benefit of approximately $ 0.04 million for the nine months ended March 31, 2021 and 2020, respectively.

The income tax expense of $ 2.7 million for the nine months ended March 31, 2021 included a $ 0.04 million discrete tax benefit.

The income tax benefit of $ 0.04 million for the nine months ended March 31, 2020 included a $ 1.30 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.

Excluding the discrete income tax items, the effective tax rate for the nine months ended March 31, 2021 and 2020 was 7.0 % and ( 7.4 )%, respectively.

The changes in the effective tax rate and tax expense between the periods resulted primarily from the Company reporting pretax book income of $ 39.0 million for the nine months ended March 31, 2021 as compared to a pretax book loss of $ 16.4 million for the nine months ended March 31, 2020.

As of September 30, 2021, total unrecognized compensation cost under the Company's equity plans w as $ 24.5 million, which is expected to be recognized over a weighted-average period of 1.9 years.

The Company recognized income tax expense of approximately $ 1.3 million and $ 1.0 million for the three months ended September 30, 2021 and 2020, respectively.

The income tax expense of $ 1.3 million for the three months ended September 30, 2021 included a $ 0.09 million discrete tax expense.

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

Excluding the discrete income tax items, the effective tax rate for the three months ended September 30, 2021 and 2020 was 5.4 % and 10.7 %, respectively.

The changes in the effective tax rate and tax expense between the periods resulted primarily from the Company reporting pretax book income of $ 22.8 million for the three months ended September 30, 2021 as compared to a pretax book income of $ 9.8 million for the three months ended September 30, 2020.

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

5 unchanged sentences

These assessments can require considerable estimates and judgments.

As of March 31, 2021, 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.

As of September 30, 2021, the gross amount of unrecognized tax benefits was approximately $ 7.7 million, of which $ 4.7 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.

1 unchanged sentence

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

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 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, the Company 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.

Consolidated Appropriations Act, 2021” (“CAA 2021”), Enacted December 27, 2020

8 unchanged sentences

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.

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Administrative Procedures Act.

8 unchanged sentences

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 March 2021.

AOS has not recorded any benefit related to the Altera Corporation Tax Court decision in any period through September 2021.

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

11 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,

2021 2020 2021 2020

(in thousands) (in thousands)

Three Months Ended September 30,

(in thousands)

Hong Kong $ 148,655 $ 125,508

4 unchanged sentences

$ 187,035 $ 151,551

During the three months ended September 30, 2021, the Company corrected an immaterial error to reduce revenues in Hong Kong by $ 1.1 million, to increase the revenues in China and South Korea by $ 54,000 and $ 1.0 million, respectively, for the three months ended September 30, 2020.

The following is a summary of revenue by product type:

Three Months Ended March 31, Nine Months Ended March 31,

2021 2020 2021 2020

(in thousands) (in thousands)

Three Months Ended September 30,

(in thousands)

Power discrete $ 130,688 $ 119,375

2 unchanged sentences

$ 187,035 $ 151,551

* Certain products were reclassified from power discrete to Power IC.

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

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

September 30,

2021 June 30,

4 unchanged sentences

$ 474,716 $ 471,637

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Commitments and Contingencies

Purchase Commitments

As of March 31, 2021 and June 30, 2020, the Company had approxim ately $ 66.1 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 March 31, 2021 and June 30, 2020, the Company had approximately $ 52.2 million and $ 18.0 million, primarily for the JV Company, respectively, of capital commitments for the purchase of property and equipment.

As of September 30, 2021 and June 30, 2021, the Company had approximately $ 86.7 million and $ 81.8 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, 2021 and June 30, 2021, the Company had approximately $ 128.2 million and $ 90.0 million, primarily for the Jireh and JV Company, respectively, of capital commitments for the purchase of property and equip ment.

Other Commitments

8 unchanged sentences

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 (see Note 3).

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

3 unchanged sentences

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.

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

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Financial Officer.

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

7 unchanged sentences

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

Plaintiff filed his opposition on December 11,

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2020 and Defendants filed their reply brief on January 25, 2021.

The Company believes the claims in the Gray Action are 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.

Plaintiff filed his opposition on December 11, 2020 and Defendants filed their reply brief on January 25, 2021.

On September 27, 2021, the Court entered an opinion and order granting Defendants’ motion and dismissing the amended complaint in its entirety.

In so doing, the Court found, among other things, that Plaintiff failed adequately to allege that any of AOS’s indirect sales to Huawei were illegal, and therefore none of the Company’s statements regarding its positive performance or its efforts to contend with a difficult geopolitical climate and trade tensions could plausibly be seen as “inaccurate, incomplete, or misleading.” The Court’s order allowed Plaintiff an opportunity to file a second amended complaint by October 27, 2021, attempting to cure the various deficiencies, barring which the matter would be dismissed with prejudice.

As of that date, however, no such filing was made and the Company anticipates that the matter will be dismissed with prejudice.

The Company is a party to a variety of agreements that it has contracted with various third parties.

3 unchanged sentences

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 March 31, 2021 and June 30, 2020.

The Company has not historically paid or recorded any material indemnifications, and no accrual was made at September 30, 2021 and June 30, 2021.

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.

4 unchanged sentences

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