What changed in this filing

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Item 1. Financial Statements

2023-11-07 compared with 2023-05-08 · 192 added, 250 removed, 687 unchanged (39% of the section changed)

3 unchanged sentences

(Unaudited, in thousands except par value per share)

September 30,

2023 June 30,

13 unchanged sentences

Total assets $ 1,206,367 $ 1,199,737

LIABILITIES AND EQUITY

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

17 unchanged sentences

Commitments and contingencies (Note 12)

Shareholders' Equity:

Preferred shares, par value $ 0.002 per share:

1 unchanged sentence

issued and outstanding:

none at March 31, 2023 and June 30, 2022

none at September 30, 2023 and June 30, 2023

Common shares, par value $ 0.002 per share:

1 unchanged sentence

issued and outstanding:

34,575 shares and 27,858 shares, respectively at March 31, 2023 and 33,988 shares and 27,371 shares, respectively at June 30, 2022

34,903 shares and 27,746 shares, respectively at September 30, 2023 and 34,811 shares and 27,654 shares, respectively at June 30, 2023

Treasury shares at cost:

6,717 shares at March 31, 2023 and 6,617 shares at June 30, 2022

7,157 shares at September 30, 2023 and 7,157 shares at June 30, 2023

( 79,365 ) ( 79,365 )

Additional paid-in capital 330,015 329,034

Accumulated other comprehensive income (loss) ( 9,156 ) 1,080

Accumulated other comprehensive loss

( 13,518 ) ( 8,111 )

Retained earnings 648,077 642,291

Total equity 887,258 854,093

Total liabilities and equity $ 1,253,307 $ 1,298,629

Total shareholders' equity 885,279 883,919

Total liabilities and shareholders' equity $ 1,206,367 $ 1,199,737

See accompanying notes to these condensed consolidated financial statements.

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited, in thousands except per share data)

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

2023 2022 2023 2022

Three Months Ended September 30,

Revenue $ 180,633 $ 208,476

5 unchanged sentences

Total operating expenses 41,544 45,594

Operating income (loss) ( 14,402 ) 31,232 19,917 83,898

Operating income 9,381 25,534

Other income (loss), net 26 ( 16 )

Interest income (expense), net 229 ( 608 )

Gain on deconsolidation of the JV Company — — — 399,093

Gain (loss) on changes of equity interest in the JV Company, net — 4,501 — ( 3,140 )

Net income (loss) before income taxes ( 14,910 ) 35,688 17,485 477,546

Net income before income taxes 9,636 24,910

Income tax expense 1,138 1,374

Net income (loss) before income (loss) from equity method investment ( 17,427 ) 32,786 11,935 439,228

Net income before income (loss) from equity method investment 8,498 23,536

Equity method investment income (loss) from equity investee ( 2,712 ) 2,502

Net income (loss) ( 18,907 ) 31,650 13,468 438,092

Net loss attributable to noncontrolling interest — — — 20

Net income (loss) attributable to Alpha and Omega Semiconductor Limited $ ( 18,907 ) $ 31,650 $ 13,468 $ 438,072

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

Net income $ 5,786 $ 26,038

Net income per common share

Basic $ 0.21 $ 0.95

Diluted $ 0.19 $ 0.88

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 used to compute net income per share

Basic 27,693 27,391

2 unchanged sentences

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited, in thousands)

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

2023 2022 2023 2022

Net income (loss) including noncontrolling interest $ ( 18,907 ) $ 31,650 $ 13,468 $ 438,092

Other comprehensive income (loss), net of tax

Three Months Ended September 30,

Net income $ 5,786 $ 26,038

Other comprehensive income, net of tax

Foreign currency translation adjustment ( 5,407 ) ( 4,907 )

Cumulative translation adjustment removal due to deconsolidation of the JV Company — ( 3,642 )

Comprehensive income (loss) ( 15,159 ) 31,812 3,232 436,099

Noncontrolling interest — — ( 1,080 )

Comprehensive income (loss) attributable to Alpha and Omega Semiconductor Limited $ ( 15,159 ) $ 31,812 $ 3,232 $ 437,179

Comprehensive income

$ 379 $ 21,131

See accompanying notes to these condensed consolidated financial statements.

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(Unaudited, in thousands)

Common Shares

Treasury Stock

Additional Paid-In Capital

Accumulated Other Comprehensive Income Retained Earnings

Total AOS Shareholders' Equity Noncontrolling Interest Total Equity

Balance, December 31, 2021 $ 67 $ ( 66,046 ) $ 275,410 $ 1,260 $ 583,299 $ 793,990 $ — $ 793,990

Exercise of common stock options and release of restricted stock units — — 558 — — 558 — 558

Reissuance of treasury stock upon exercise of common stock options and release of RSUs — 40 — — ( 40 ) — — —

Withholding tax on restricted stock units — — ( 7,732 ) — — ( 7,732 ) — ( 7,732 )

Share-based compensation — — 8,273 — — 8,273 — 8,273

Net income including noncontrolling interest — — — — 31,650 31,650 — 31,650

Foreign currency translation adjustment — — — 162 — 162 — 162

Balance, March 31, 2022 $ 67 $ ( 66,006 ) $ 276,509 $ 1,422 $ 614,909 $ 826,901 $ — $ 826,901

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

Common Shares Treasury Shares

Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings Total Shareholders' Equity

Balance, June 30, 2022 $ 68 $ ( 66,000 ) $ 288,951 $ 1,080 $ 629,994 $ 854,093

2 unchanged sentences

Withholding tax on restricted stock units — — ( 370 ) — — ( 370 )

Issuance of shares under ESPP 1 — 2,422 — — 2,423 — 2,423

Share-based compensation — — 10,596 — — 10,596

Restricted stock units settlement in connection with service — — 400 — — 400 — 400

Net income including noncontrolling interest through December 1, 2021 — — — — 438,072 438,072 20 438,092

Foreign currency translation adjustment — — — 900 — 900 749 1,649

Deconsolidation of noncontrolling interest — — — ( 1,793 ) — ( 1,793 ) ( 143,889 ) ( 145,682 )

Balance, March 31, 2022 $ 67 $ ( 66,006 ) $ 276,509 $ 1,422 $ 614,909 $ 826,901 $ — $ 826,901

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 31, 2022 $ 68 $ ( 65,990 ) $ 316,141 $ ( 12,904 ) $ 662,359 $ 899,674 $ — $ 899,674

Exercise of common stock options and release of restricted stock units 1 — 531 — — 532 — 532

Reissuance of treasury stock upon exercise of common stock options and release of RSUs — 50 — — ( 50 ) — — —

Withholding tax on restricted stock units — — ( 5,556 ) — — ( 5,556 ) — ( 5,556 )

Repurchase of common shares under shares repurchase program — ( 2,665 ) — — — ( 2,665 ) — ( 2,665 )

Share-based compensation — — 10,432 — — 10,432 — 10,432

Net loss — — — — ( 18,907 ) ( 18,907 ) — ( 18,907 )

Net income — — — — 26,038 26,038

Foreign currency translation adjustment, net of tax — — — ( 4,907 ) — ( 4,907 )

Balance, March 31, 2023 $ 69 $ ( 68,605 ) $ 321,548 $ ( 9,156 ) $ 643,402 $ 887,258 $ — $ 887,258

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

Balance, September 30, 2022 $ 68 $ ( 65,996 ) $ 299,196 $ ( 3,827 ) $ 656,028 $ 885,469

Common Shares Treasury Shares

Additional Paid-In Capital Accumulated Other Comprehensive Loss

Retained Earnings Total Shareholders' Equity

Balance, June 30, 2023 $ 70 $ ( 79,365 ) $ 329,034 $ ( 8,111 ) $ 642,291 $ 883,919

Exercise of common stock options and release of restricted stock units — — 446 — — 446

Reissuance of treasury stock upon exercise of common stock options and release of RSUs — 60 — — ( 60 ) — — —

Withholding tax on restricted stock units — — ( 383 ) — — ( 383 )

Issuance of shares under ESPP — — 4,080 — — 4,080 — 4,080

Repurchase of common shares under shares repurchase program — ( 2,665 ) — — — ( 2,665 ) — ( 2,665 )

Share-based compensation — — 918 — — 918

1 unchanged sentence

Foreign currency translation adjustment, net of tax — — — ( 5,407 ) — ( 5,407 )

Balance, March 31, 2023 $ 69 $ ( 68,605 ) $ 321,548 $ ( 9,156 ) $ 643,402 $ 887,258 $ — $ 887,258

Balance, September 30, 2023 $ 70 $ ( 79,365 ) $ 330,015 $ ( 13,518 ) $ 648,077 $ 885,279

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 including noncontrolling interest through December 1, 2021 13,468 $ 438,092

$ 5,786 $ 26,038

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

Gain on deconsolidation of the JV Company — ( 399,093 )

Loss on changes of equity interest in the JV Company, net — 3,140

Deferred income tax on deconsolidation and changes of equity interest in the JV Company — 29,973

Depreciation and amortization 12,951 9,352

10 unchanged sentences

Income taxes payable ( 802 ) 471

Income taxes payable on deconsolidation and changes of equity interest in the JV Company — 3,490

Increase in deferred revenue 1,109 —

2 unchanged sentences

Cash flows from investing activities

Proceeds from sale of equity interest in the JV Company — 26,347

Deconsolidation of cash and cash equivalents of the JV Company — ( 20,734 )

Purchases of property and equipment ( 12,510 ) ( 40,260 )

Proceeds from sale of property and equipment 27 9

Government grant related to equipment — 286

2 unchanged sentences

Withholding tax on restricted stock units ( 383 ) ( 370 )

Proceeds from exercise of stock options and ESPP 4,631 3,282

Payment for repurchases of common shares ( 2,665 ) —

Proceeds from exercise of stock options and release of restricted stock 446 19

Proceeds from borrowings — 8,632

8 unchanged sentences

Property and equipment purchased but not yet paid $ 3,560 $ 19,360

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

2023 March 31,

Reconciliation of cash, cash equivalents, and restricted cash:

17 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, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2023 or any other interim period.

Operating results for the three months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2024 or any other interim period.

The consolidated balance sheet at June 30, 2023 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, 2023.

Reclassification

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

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”).

As of December 1, 2021, the Company owned 50.9 %, and the Chongqing Funds owned 49.1 %, of the equity interest in the JV Company.

The Joint Venture was accounted under the provisions of the consolidation guidance since the Company had controlling financial interest until December 1, 2021.

Prior to December 1, 2021, the JV Company was accounted under the provisions of the consolidation guidance since the Company had controlling financial interest.

As of December 2, 2021, the Company ceased having control over the JV Company.

1 unchanged sentence

Subsequently, the Company has accounted for its investment in the JV Company using the equity method of accounting.

As of March 31, 2023, the percentage of outstanding JV equity interest beneficially owned by the Company was reduced to 42.2 %.

As of September 30, 2023, the percentage of outstanding JV equity interest beneficially owned by the Company was reduced to 42.2 %.

Such reduction reflects (i) the sale by the Company of approximately 2.1 % of the outstanding JV equity interest which resulted in the deconsolidation of the JV Company, (ii) additional sale by the Company of approximately 1.1 % of outstanding JV equity interest in December 2021, (iii) the adoption of an employee equity incentive plan and the issuance of additional equity interest equivalent to 3.99 % of the JV Company to investors in exchange for cash in December 2021, and (iv) issuance of additional equity interest of JV to investors in January 2022.

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

During the first half of calendar year 2022, the Company's operations were negatively impacted by China’s zero-Covid policy that resulted in factory shutdowns and supply chain shortages, including the temporary suspension of its factory operations in Shanghai from April to June 2022.

In December 2022, the Chinese government issued new guidelines easing some of its strict zero-COVID policies, including the relaxation of testing requirements and travel restrictions.

The change of

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

COVID-policy and reopening of commercial activities resulted in a significant increase of COVID infections in China, which may adversely affect the Company’s operations in China.

During the three months ended March 31, 2023, as China and other parts of the world in which we conduct our business have ended pandemic restriction have largely returned to normal.

In general, our business operations are no longer affected by the COVID-19 pandemic.

Use of Estimates

1 unchanged sentence

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 the economic implications of the COVID-19 pandemic.

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

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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, 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 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.

The Company uses an estimate of its incremental borrowing rate based on the information available at the lease commencement date.

The Company determined its incremental borrowing rate based on the information available at the lease commencement date.

The operating lease ROU assets also include any lease payments made and exclude lease incentives.

2 unchanged sentences

Variable lease payments are expensed as incurred and are not included within the operating lease ROU asset and lease liability calculation.

The Company does not record leases on the Condensed Consolidated Balance Sheet with a term of one year or less.

The Company does not record leases on the 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.

6 unchanged sentences

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

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 recognizes product revenue at a point in time when product is shipped to the customer, as determined by the agreed upon shipping terms, 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.

3 unchanged sentences

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 records an allowance for stock rotation returns based on historical returns, current expectations, 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.

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

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

3 unchanged sentences

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.

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

License and Development Revenue Recognition

In February 2023, the Company entered into a license agreement with a customer to license the Company’s proprietary SiC technology and to provide 24-month engineering and development services for a total fee of $ 45 million, consisting of an upfront fee of $ 18 million paid to the Company in March 2023, and the remaining amount to be paid upon the achievement of specified engineering services and product milestones.

The license and development fee is determined to be one performance obligation and is recognized over the 24 months when the Company performs the engineering and development services.

In February 2023, the Company entered into a license agreement with a customer to license the Company’s proprietary Silicon Carbide (SiC) technology and to provide 24-months of engineering and development services for a total fee of $ 45 million, consisting of an upfront fee of $ 18 million and $ 6.8 million paid to the Company in March 2023 and July 2023, respectively, with the remaining amount to be paid upon the achievement of specified engineering services and product milestones.

The license and development fee is determined to be one performance obligation and is recognized over the 24 months during which the Company performs the engineering and development services.

The Company uses the input method to measure progression, representing a faithful depiction of the transfer of services.

During the three months ended March 31, 2023, the Company recorded $ 3.6 million of license and development revenue.

The amount of contract liability is recorded as deferred revenue on the balance sheets.

During the three months ended September 30, 2023, the Company recorded $ 5.6 million of license and development revenue.

The amount of contract liability is recorded as deferred revenue on the consolidated balance sheets.

As of September 30, 2023, the Company had recorded $ 15.6 million of

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

license and development revenue.

In addition, the Company also entered an accompanying supply agreement to provide limited wafer supply to the customer.

Material right to the customer is presented due to the commitment of limited wafer supply after the development period;

however, deemed to be insignificant to the transaction price.

Share-based Compensation Expense

9 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, 2023 and June 30, 2022, the amount of restricted cash was $ 0.2 million and $ 0.3 million, respectively.

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of September 30, 2023 and June 30, 2023, the amount of restricted cash was $ 0.2 million and $ 0.4 million, respectively.

Equity method investment

18 unchanged sentences

If actual market conditions are more favorable than expected and the products that have previously been written down are sold, our gross margin would be favorably impacted.

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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, 2023, the Company reduced property, plant and equipment by nil and $ 0.6 million, and operating expenses by $ 0.0 million and $ 0.1 million, respectively.

During the three and nine months ended March 31, 2022, the Company reduced interest expense by nil and $ 0.9 million, property, plant and equipment by nil and $ 1.2 million, and operating expenses by $ 0.0 million and $ 0.2 million, respectively.

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As a result of such grants, during the three months ended September 30, 2022, the Company reduced property, plant and equipment by $ 0.3 million.

During the three months ended September 30, 2023, the Company did not receive any grants.

Accounting for income taxes

18 unchanged sentences

The Company regularly assesses the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes.

To the extent that the final tax outcome of these matters is different from the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made.

To the extent that

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

the final tax outcome of these matters is different from the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made.

The provision for income taxes includes the impact of changes to reserves, as well as the related net interest and penalties.

2 unchanged sentences

When evaluating long-lived assets, if the Company concludes that the estimated undiscounted cash flows attributable to the assets are less than their carrying value, the Company recognizes an impairment loss based on the excess of the carrying amount of the assets over their respective fair values, which could adversely affect its results of operations.

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Comprehensive Income

3 unchanged sentences

Recent Accounting Pronouncements

Recently Issued Accounting Standards not yet adopted

Recently Adopted Accounting Standards

In September 2022, the FASB issued ASU No.

4 unchanged sentences

The amendments in this ASU do not affect the recognition, measurement, or financial statement presentation of obligations covered by supplier finance programs.

The amendments in this ASU are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023.

Early adoption is permitted.

The Company is currently evaluating the impact of adopting this guidance.

Recently Adopted Accounting Standards

In November 2021, the FASB issued Accounting Standards Update (ASU) No.

2021-10, Government Assistance (Topic 832):

Disclosures by Business Entities about Government Assistance.

This ASU requires business entities to make annual disclosures about transactions with a government they account for by analogizing to a grant or contribution accounting model under ASC 958-605.

The adoption of ASU 2020-06 had no impact on the Company's Consolidated Financial Statements.

In August 2020, the FASB issued 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 than 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.

The adoption of ASU 2020-06 had no impact on the Company's Consolidated Financial Statements.

Recently Issued Accounting Standards not yet adopted

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

13 unchanged sentences

The Company accounts for its investment in the JV Company as an equity method investment and reports its equity in earnings or loss of the JV Company on a three-month lag due to an inability to timely obtain financial information of the JV Company.

During the three and nine months ended March 31, 2023, the Company recorded a $ 1.5 million in loss and a $ 1.5 million income of its equity share of the JV Company, respectively, using lag reporting.

As of March 31, 2023, the percentage of outstanding JV equity interest beneficially owned by the Company was 42.2 %.

During the three months ended September 30, 2023 and 2022, the Company recorded a $ 2.7 million loss and $ 2.5 million income of its equity share of the JV Company, respectively, using lag reporting.

As of September 30, 2023, the percentage of outstanding JV equity interest beneficially owned by the Company was 42.2 %.

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

1 unchanged sentence

Related Party Transactions

As of March 31, 2023, the Company owned 42.2 % equity interest in the JV Company, which, by definition, is a related party to the Company.

As of September 30, 2023, the Company owned 42.2 % equity interest in the JV Company, which, by definition, is a related party to the Company.

The JV Company supplies 12-inch wafers and provides assembly and testing services to AOS.

AOS previously sold 8-inch wafers to the JV Company for further assembly and testing services until January 1, 2023, when it changed to consign the 8-inch wafers to the JV Company.

Due to the right of offset of receivables and payables with the JV Company, as of March 31, 2023, AOS recorded the net amount of $ 18.4 million presented as payable related to equity investee, net, in the Condensed Consolidated Balance Sheet.

The purchases by AOS for the three and nine months ended March 31, 2023 were $ 20.2 million and $ 106.1 million, respectively, and the sales by AOS for the three and nine months ended March 31, 2023 were $ 4.0 million and $ 34.4 million, respectively.

The purchases by AOS for the three and nine months ended March 31, 2022 were $ 45.8 million and $ 61.4 million, respectively, and the sales by AOS for the three and nine months ended March 31, 2022 were $ 14.2 million and $ 18.4 million, respectively.

Due to the right of offset of receivables and payables with the JV Company, as of September 30, 2023, AOS recorded the net amount of $ 20.1 million presented as payable related to equity investee, net, in the Condensed Consolidated Balance Sheet.

The purchases by AOS for the three months ended September 30, 2023 and 2022 were $ 29.8 million and $ 46.1 million, respectively, and the sales by AOS for the three months ended September 30, 2023 and 2022 were $ 0.8 million and $ 16.6 million, respectively.

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,

2023 2022 2023 2022

Net Income Per Common Share

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 $ ( 18,907 ) $ 31,650 $ 13,468 $ 438,072

Weighted average number of common shares used to compute basic net income (loss) per share 27,710 26,829 27,537 26,596

$ 5,786 $ 26,038

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

27,693 27,391

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

27,693 27,391

Effect of potentially dilutive securities:

Stock options, RSUs and ESPP shares 2,093 2,032

Weighted average number of common shares used to compute diluted net income (loss) per share 27,710 28,423 29,576 28,116

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

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

29,786 29,423

Net income per share:

Basic $ 0.21 $ 0.95

Diluted $ 0.19 $ 0.88

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,

2023 2022 2023 2022

(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 63 605

ESPP 767 19 279 27

Total potential dilutive securities 233 828

8 unchanged sentences

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 2023 2022

1 unchanged sentence

Customer B 46.6 % 38.6 %

Customer C 17.9 % * 14.1 % *

Customer D * 11.2 %

September 30,

2023 June 30,

9 unchanged sentences

Accounts receivable, net:

September 30,

2023 June 30,

4 unchanged sentences

Accounts receivable, net $ 34,403 $ 22,420

September 30,

2023 June 30,

5 unchanged sentences

Other current assets:

September 30,

2023 June 30,

12 unchanged sentences

Property, plant and equipment, net:

September 30,

2023 June 30,

1 unchanged sentence

Land $ 4,877 $ 4,877

Building 26,243 16,691

Building and building improvements 26,834 26,478

Manufacturing machinery and equipment 404,548 398,757

9 unchanged sentences

Intangible assets, net:

September 30,

2023 June 30,

13 unchanged sentences

Other long-term assets:

September 30,

2023 June 30,

9 unchanged sentences

Accrued liabilities:

September 30,

2023 June 30,

12 unchanged sentences

Short-term customer deposits are payments received from customers for securing future product shipments.

As of March 31, 2023, $ 12.5 million were from Customer A and $ 10.2 million were from Customer B, and $ 20.6 million were from other customers.

As of September 30, 2023, $ 12.5 million were from Customer A and $ 9.2 million were from Customer B, and $ 14.0 million were from other customers.

As of June 30, 2023, $ 13.5 million were from Customer A and $ 9.2 million were from Customer B, and $ 15.4 million were from other customers.

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)

6 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)

4 unchanged sentences

Other long-term liabilities:

September 30,

2023 June 30,

4 unchanged sentences

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

As of March 31, 2023, $ 22.0 million were from Customer A and $ 13.7 million were from Customer B, and $ 16.2 million were from other customers.

As of September 30, 2023, $ 17.0 million were from Customer A and $ 10.7 million were from Customer B, and $ 12.7 million were from other customers.

As of June 30, 2023, $ 21.0 million were from Customer A and $ 11.7 million were from Customer B, and $ 13.7 million were from other customers.

3 unchanged sentences

Short-term borrowings

In September 2023, one of the Company's subsidiaries in China entered into a line of credit facility with China Construction Bank.

The purpose of the credit facility is to provide working capital borrowings.

The Company could borrow up to approximately RMB 50 million or $ 6.8 million based on currency exchange rate between RMB and U.S.

Dollar on September 30, 2023 with a maturity date of September 8, 2025.

As of September 30, 2023, there was no outstanding balance for this loan.

In January 2023, one of the Company's subsidiaries in China entered into a line of credit facility with Bank of Communications Limited in China.

2 unchanged sentences

Dollar on January 31, 2023 with a maturity date of December 1, 2023.

As of March 31, 2023, there was no outstanding balance for this loan.

As of September 30, 2023, there was no outstanding balance for this loan.

In September 2022, one of the Company's subsidiaries 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 working capital borrowings.

The Company could borrow up to approximately RMB 72.0 million, or $ 10.3 million based on currency exchange rate between RMB and U.S.

Dollar on September 20, 2022, with a maturity date of September 30, 2023.

As of September 30, 2023, there was no outstanding balance and this loan expired.

Accounts Receivable Factoring Agreement

6 unchanged sentences

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

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.

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

Other terms remain the same.

As of March 31, 2023, the Borrower was in compliance with these covenants.

As of March 31, 2023, there was no outstanding balance and the Company had unused credit of approximately $ 8.0 million.

As of September 30, 2023, the Borrower was in compliance with these covenants.

As of September 30, 2023, there was no outstanding balance and the Company had unused credit of approximately $ 8.0 million.

Debt financing

12 unchanged sentences

The purchase price of this hardware was $ 0.2 million.

The financing arrangement is secured by this equipment and other equipment which had the carrying amount of $ 13.1 million as of March 31, 2023.

As of March 31, 2023, the outstanding balance of this debt financing was $ 12.5 million.

The financing arrangement is secured by this equipment and other equipment which had the carrying amount of $ 14.8 million as of September 30, 2023.

As of September 30, 2023, the outstanding balance of this debt financing was $ 11.0 million.

Long-term bank borrowings

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 obligation

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

3 unchanged sentences

Jireh drew down $ 45.0 million on February 16, 2022 with the first payment of principal beginning in October 2022.

As of March 31, 2023, Jireh was in compliance with these covenants and the outstanding balance of this loan was $ 40.5 million.

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.

The loan has a five-year term.

Beginning June 1, 2018, Jireh made consecutive monthly payments of principal and interest to the Bank.

The outstanding principal accrues interest at a fixed rate of 5.04 % per annum on the basis of a 360-day

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

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 March 31, 2023.

As of March 31, 2023, the outstanding balance of the term loa n was $ 13.5 million.

The Company paid this loan in full on May 1, 2023.

As of September 30, 2023, Jireh was in compliance with these covenants and the outstanding balance of this loan wa s $ 36.0 million.

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

1 unchanged sentence

2024 (Remaining)

Thereafter 536

Total principal 47,036

19 unchanged sentences

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

In addition, the finance lease related to the RMB 400.0 million of lease financing of the JV Company with YinHai Leasing Company and The Export-Import Bank of China was not included in the Company’s unaudited Condensed Consolidated Balance Sheet at March 31, 2023 due to the deconsolidation of the JV Company on December 2, 2021.

The Company does not record leases on the Condensed Consolidated Balance Sheets with a term of one year or less.

The Company’s unaudited Condensed Consolidated Statements of Income for the nine months ended March 31, 2022 include the JV Company's results for the period preceding the deconsolidation on December 2, 2021.

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

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

2023 2022 2023 2022

Three Months Ended September 30,

Operating leases:

8 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,

2023 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 $ 3,588 $ 1,924

Future minimum lease payments are as follows as of March 31, 2023 (in thousands):

Future minimum lease payments are as follows as of September 30, 2023 (in thousands):

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

21 unchanged sentences

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

During the three months ended March 31, 2023, the Company repurchased an aggregate of 106,863 shares from the open market, for a total cost of $ 2.7 million, excluding fees and related expenses, at an average price of $ 24.9 per share.

Since the inception of the program, the Company repurchased an aggregate of 6,891,511 shares for a total cost of $ 70.0 million, at an average price of $ 10.16 per share, excluding fees and related expenses.

As of September 30, 2023, the Company had repurchased an aggregate of 7,332,780 shares for a total cost of $ 81.1 million, at an average price of $ 11.01 per share, excluding fees and related expenses.

No repurchased shares have been retired.

Of the 7,332,780 repurchased shares, 175,599 shares with a weighted average repurchase price of $ 9.97 per share, were reissued at an average price of $ 4.76 per share pursuant to option exercises and vested restricted share units (“RSU”).

As of March 31, 2023, approximately $ 10.8 million remained available under the Repurchase Program.

As of September 30, 2023, no remaining amount was available under the share repurchase program, which has been terminated.

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

The following table summarizes the Company's TRSU activities for the nine months ended March 31, 2023:

The following table summarizes the Company's TRSU activities for the three months ended September 30, 2023:

Number of Restricted Stock

7 unchanged sentences

Forfeited ( 14,501 ) $ 33.55

Nonvested at March 31, 2023 1,341,395 $ 32.96 1.89 $ 36,150,595

Nonvested at September 30, 2023 1,402,709 $ 32.53 1.57 $ 41,856,837

Market-based Restricted Stock Units ( “ MSU ” )

In December 2021, the Company granted 1.0 million market-based restricted stock units ("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, 2022 to December 31, 2024 as well as the recipients remaining in continuous service with the Company through such period.

The number of shares to be earned at the end of performance period was determined based on the Company’s achievement of specified stock prices and revenue thresholds during the performance period from January 1, 2022 to December 31, 2024 as well as the recipients remaining in continuous service with the Company through such period.

The MSU vests in four equal annual installments after the end of performance period.

The Company estimated the grant date fair values of its MSU with derived service periods of 4.1 to 7.1 years using a Monte-Carlo simulation model with the following assumptions:

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

On September 19, 2023, the Compensation Committee of the Board approved a modification of the terms of MSUs to extend the performance period through December 31, 2025, changed the commencement date for the four-year time-based service period January 1, 2025, and reduced the achievement of specified stock prices and revenue thresholds.

The fair value of these MSUs was revalued to reflect the change using a Monte-Carlo simulation model with the following assumptions:

risk-free interest rate of 4.94 %, expected term of 2.28 years, expected volatility of 61.38 % and dividend yield of 0 %.

The Company recorded $ 2.1 million and $ 6.2 million of expenses for these MSUs during the three and nine months ended March 31, 2023, respectively, and $ 2.0 million and $ 2.5 million of expenses during the three and nine months ended March 31, 2022.

The Company recognizes the total compensation cost of the modified MSUs beginning on the modification date over the remaining requisite service periods.

During the three months ended September 30, 2023 and 2022, the Company recorded approximately negative $ 6.3 million due to a $ 6.4 million of reversal of the prior recognized expenses, and $ 2.0 million of expenses for MSUs, respectively.

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

2 unchanged sentences

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 (i) extend the performance period through December 31, 2022 and (ii) change the commencement date for the four-year time-based service period to 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 Company recorded $ 0.3 million and $ 3.6 million of

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

expenses for MSUs during the three and nine months ended March 31, 2023, respectively, and $ 0.4 million and $ 1.2 million of expenses for MSUs during the three and nine months ended March 31, 2022, respectively.

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 Company recorded $ 0.3 million and $ 0.6 million of expenses for MSUs during the three months ended September 30, 2023 and 2022, respectively.

The following table summarizes the Company's MSUs activities for the three months ended September 30, 2023:

Number of Performance-based Restricted Stock

Units Weighted Average

Grant Date Fair

Value Per Share Weighted Average

Contractual Term

(Years) Aggregate Intrinsic Value

Nonvested at June 30, 2023 2,108,000 $ 25.86 2.96 $ 69,142,400

Granted — $ —

Forfeited — $ —

Nonvested at September 30, 2023 2,108,000 $ 25.86 3.18 $ 62,902,720

Performance-based Restricted Stock Units (“PRSUs”)

2 unchanged sentences

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 $ 1.4 million and $ 4.1 million of e xpens e for these PRSUs during the three and nine months ended March 31, 2023, respectively, and approximately $ 1.0 million and $ 3.0 million during the three and nine months ended March 31, 2022.

The following table summarizes the Company’s PRSUs activities for the nine months ended March 31, 2023:

The Company recorded approximately $ 0.4 million and $ 1.6 million of e xpens e for these PRSUs during the three months ended September 30, 2023, and 2022 respectively.

The following table summarizes the Company’s PRSUs activities for the three months ended September 30, 2023:

Number of Performance-based Restricted Stock

6 unchanged sentences

Granted — $ —

Vested ( 116,132 ) $ 30.54

Forfeited — $ —

Nonvested at March 31, 2023 526,714 $ 32.19 2.03 $ 14,194,942

Nonvested at September 30, 2023 526,714 $ 32.19 1.52 $ 15,717,146

Stock Options

The Company did no t grant any stock options during the nine months ended March 31, 2023 and 2022.

The following table summarizes the Company's stock option activities for the nine months ended March 31, 2023:

The Company did no t grant any stock options during the three months ended September 30, 2023 and 2022.

The following table summarizes the Company's stock option activities for the three months ended September 30, 2023:

Weighted Average

4 unchanged sentences

Exercised ( 60,000 ) $ 7.44 $ 1,342,961

Outstanding at March 31, 2023 324,375 $ 7.55 0.96 $ 6,292,088

Outstanding at September 30, 2023 259,375 $ 7.55 0.47 $ 5,782,281

Options vested and expected to vest 259,375 $ 7.55 0.47 $ 5,782,281

Exercisable at March 31, 2023 324,375 $ 7.55 0.96 $ 6,292,088

Exercisable at September 30, 2023 259,375 $ 7.55 0.47 $ 5,782,281

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 64.0 %

2 unchanged sentences

Dividend yield 0 %

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Share-based Compensation Expense

On September 8, 2022, the Compensation Committee of the Board approved modifications to the terms of equity awards granted to a former officer who was a board member of the Company.

The modifications waived the four-year time based service performance of his MSU allowing continuing vesting of his TRSU and PRSU according to the original awards' vesting schedule after his termination as a board member.

The incremental expenses for these equity shares resulting from the modification were $ 3.9 million.

During the three and nine months ended March 31, 2023, the Company recorded nil and $ 3.1 million, respectively, net of reversal of prior recorded expenses, of shared-based compensation for these equity shares.

The total share-based compensation expense recognized in the Condensed Consolidated Statements of Income for the periods presented was as follows:

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

2023 2022 2023 2022

(in thousands) (in thousands)

Three Months Ended September 30,

(in thousands)

Cost of goods sold $ 212 $ 1,788

2 unchanged sentences

$ 918 $ 10,596

As of March 31, 2023, total unrecognized compensation cost under the Company's equity plans was $ 77.5 million, which is expected to be recognized over a weighted-average period of 2.8 years.

The Company recognized income tax expense of approximately $ 2.5 million and $ 2.9 million for the three months ended March 31, 2023 and 2022, respectively.

The income tax expense of $ 2.5 million for the three months ended March 31, 2023 included a $ 0.03 million discrete tax expense.

The income tax expense of $ 2.9 million for the three months ended March 31, 2022 included a $ 0.7 million discrete tax expense related to the Company’s $ 4.5 million of gain related to the revaluation of the Company's equity interest in a joint venture.

Excluding the discrete income tax items, the income tax expense for the three months ended March 31, 2023 and 2022 was $ 2.5 million and $ 2.2 million, respectively, and the effective tax rate for the three months ended March 31, 2023 and 2022 was ( 15.2 )% and 7.4 %, respectively.

Excluding the effects of the discrete tax expense recorded in the three months ended March 31, 2023 and 2022, the changes in the tax expense and effective tax rate between the periods resulted primarily from changes in the mix of earnings in various geographic jurisdictions between the current year and the same period of last year as well as from reporting pretax book loss of $ 16.4 million for the three months ended March 31, 2023 as compared to $ 30.0 million of pretax book income (excluding the $ 4.5 million of gain related ot the revaluation of the Company's equity interest in a joint venture) for the three months ended March 31, 2022.

The Company recognized income tax expense of approximately $ 5.6 million and $ 38.3 million for the nine months ended March 31, 2023 and 2022, respectively.

The income tax expense of $ 5.6 million for the nine months ended March 31, 2023 included a $ 0.1 million discrete tax expense.

The income tax expense of $ 38.3 million for the nine months ended March 31, 2022 included a $ 33.5 million discrete tax expense related to the Company’s $ 396.0 million of income from the sale of equity interest in a joint venture and the related deconsolidation gain as the Company switches from the consolidation method of accounting to the equity method of accounting related to this investment and no longer asserts permanent reinvestment related to the Company’s investment in the joint venture as well as $ 0.1 million for other discrete income tax items.

Excluding the discrete income tax items, income tax expense for the nine months ended March 31, 2023 and 2022 was $ 5.4 million and $ 4.7 million, respectively, and the effective tax rate for the nine months ended March 31, 2023 and 2022 was 28.4 % and 6.0 %, respectively.

Excluding the effects of the discrete tax expense recorded in the nine months ended March 31, 2023 and 2022, the changes in the tax expense and effective tax rate between the periods resulted primarily from changes in the mix of earnings in various geographic jurisdictions between the current year and the same period of last year as well as from the Company reporting a pretax book income of $ 19.0 million for the nine months ended March 31, 2023 as compared to pretax book income of $ 80.4 million of pretax book income (excluding the $ 396.0 million of income from the sale of equity interest in a joint venture and the related deconsolidation gain) for the nine months ended March 31, 2022.

As of September 30, 2023, total unrecognized compensation cost under the Company's equity plans was $ 53.2 million, which is expected to be recognized over a weighted-average period of 2.7 years.

The Company recognized income tax expense of approximately $ 1.1 million and $ 1.4 million for the three months ended September 30, 2023 and 2022, respectively.

The income tax expense of $ 1.1 million for the three months ended September 30, 2023 included a $ 0.05 million discrete tax expense.

The income tax expense of $ 1.4 million for the three months ended September 30, 2022 included a $ 0.07 million discrete tax expense.

Excluding the discrete income tax items, the income tax expense for the three months ended September 31, 2023 and 2022 was $ 1.1 million and $ 1.3 million, respectively, and the effective tax rate for the three months ended September 31, 2023 and 2022 was 15.7 % and 4.8 %, respectively.

The changes in the tax expense and effective tax rate between the periods resulted primarily from changes in the mix of earnings in various geographic jurisdictions between the current year and the same period of last year.

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

2 unchanged sentences

The tax years 2017 to 2023 remain open to examination by foreign tax authorities.

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company's income tax returns are subject to examinations by the Internal Revenue Service and other tax authorities in various jurisdictions.

1 unchanged sentence

These assessments can require considerable estimates and judgments.

As of March 31, 2023, the gross amount of unrecognized tax benefits was approximately $ 8.7 million, of which $ 5.7 million, if recognized, would reduce the effective income tax rate in future periods.

As of September 30, 2023, the gross amount of unrecognized tax benefits was approximately $ 9.4 million, of which $ 6.3 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.

1 unchanged sentence

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

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Tax Cuts and Jobs Act", Enacted December 22, 2017

On December 22, 2017, the United States enacted tax reform legislation through the Tax Cuts and Jobs Act (“the Tax Act”), which significantly changes the existing U.S.

tax laws, including, but not limited to, (1) a reduction in the corporate tax rate from 35% to 21%, (2) a shift from a worldwide tax system to a territorial system, (3) eliminating the corporate alternative minimum tax (AMT) and changing how existing AMT credits can be realized, (4) bonus depreciation that will allow for full expensing of qualified property, (5) creating a new limitation on deductible interest expense and (6) changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017.

The Company is not currently subject to the Base Erosion and Anti-Abuse (BEAT) tax, which is a tax imposed on certain entities who make payments to their non U.S.

affiliates, where such payments reduce the U.S.

The BEAT tax is imposed at a rate of 10% on Adjusted Taxable Income, excluding certain payments to foreign related entities.

It is an incremental tax over and above the corporate income tax and is recorded as a period cost.

It is possible that this tax could be applicable in future periods, which would cause an increase to the effective tax rate and cash taxes.

“The Chip and Science Act of 2022”, Enacted August 2, 2022

39 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,

2023 2022 2023 2022

(in thousands) (in thousands)

Three Months Ended September 30,

(in thousands)

Hong Kong $ 141,206 $ 172,296

4 unchanged sentences

$ 180,633 $ 208,476

The Company has classified certain amounts previously reported in revenue of power discrete and power IC to conform to the current presentation.

The following is a summary of revenue by product type:

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

2023 2022 2023 2022

(in thousands) (in thousands)

Three Months Ended September 30,

(in thousands)

Power discrete $ 121,500 $ 144,573

6 unchanged sentences

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

September 30,

2023 June 30,

8 unchanged sentences

Purchase Commitments

As of March 31, 2023 and June 30, 2022, the Company had approximately $ 120.6 million and $ 89.9 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, 2023 and June 30, 2022, the Company had approximately $ 11.9 million and $ 63.4 million, respectively, of capital commitments for the purchase of property and equipment.

As of September 30, 2023 and June 30, 2023, the Company had approximately $ 107.9 million and $ 127.5 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, 2023 and June 30, 2023, the Company had approximately $ 13.9 million and $ 9.7 million, respectively, of capital commitments for the purchase of property and equipment.

Other Commitments

10 unchanged sentences

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

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.

Given the case is in still ongoing and neither DOJ nor DOC has 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.

5 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, 2023 and June 30, 2022.

The Company has not historically paid or recorded any material indemnifications, and no accrual was made at September 30, 2023 and June 30, 2023.

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