What changed in this filing

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Item 1. Financial Statements

2024-02-07 compared with 2023-11-07 · 191 added, 157 removed, 722 unchanged (33% of the section changed)

3 unchanged sentences

(Unaudited, in thousands except par value per share)

September 30,

2023 June 30,

37 unchanged sentences

issued and outstanding:

none at September 30, 2023 and June 30, 2023

none at December 31, 2023 and June 30, 2023

Common shares, par value $ 0.002 per share:

1 unchanged sentence

issued and outstanding:

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

35,205 shares and 28,051 shares, respectively at December 31, 2023 and 34,811 shares and 27,654 shares, respectively at June 30, 2023

Treasury shares at cost:

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

7,154 shares at December 31, 2023 and 7,157 shares at June 30, 2023

( 79,343 ) ( 79,365 )

7 unchanged sentences

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(Unaudited, in thousands except per share data)

Three Months Ended September 30,

Three Months Ended December 31, Six Months Ended December 31,

2023 2022 2023 2022

Revenue $ 165,285 $ 188,760 $ 345,918 $ 397,236

5 unchanged sentences

Total operating expenses 45,135 44,256 86,679 89,850

Operating income 9,381 25,534

Operating income (loss) ( 1,134 ) 8,785 8,247 34,319

Other income (loss), net ( 472 ) ( 903 ) ( 446 ) ( 919 )

Interest income (expense), net 274 ( 397 ) 503 ( 1,005 )

Net income before income taxes 9,636 24,910

Net income (loss) before income taxes ( 1,332 ) 7,485 8,304 32,395

Income tax expense 894 1,659 2,032 3,033

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

Net income (loss) before income (loss) from equity method investment ( 2,226 ) 5,826 6,272 29,362

Equity method investment income (loss) from equity investee ( 697 ) 511 ( 3,409 ) 3,013

Net income $ 5,786 $ 26,038

Net income per common share

Net income (loss) $ ( 2,923 ) $ 6,337 $ 2,863 $ 32,375

Net income (loss) per common share

Basic $ ( 0.10 ) $ 0.23 $ 0.10 $ 1.18

Diluted $ ( 0.10 ) $ 0.21 $ 0.10 $ 1.10

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

Weighted average number of common shares used to compute net income (loss) per share

Basic 27,939 27,511 27,816 27,451

2 unchanged sentences

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited, in thousands)

Three Months Ended September 30,

Net income $ 5,786 $ 26,038

Other comprehensive income, net of tax

Three Months Ended December 31, Six Months Ended December 31,

2023 2022 2023 2022

Net income (loss) $ ( 2,923 ) $ 6,337 $ 2,863 $ 32,375

Other comprehensive income (loss), net of tax

Foreign currency translation adjustment ( 419 ) ( 9,077 ) ( 5,826 ) ( 13,984 )

Comprehensive income

Comprehensive income (loss)

$ ( 3,342 ) $ ( 2,740 ) $ ( 2,963 ) $ 18,391

3 unchanged sentences

(Unaudited, in thousands)

Common Shares Treasury Shares

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

Common Shares Treasury Shares Additional Paid-In Capital Accumulated Other Comprehensive Loss

Retained Earnings Total Shareholders' Equity

Balance, September 30, 2022 34,018 $ 68 ( 6,617 ) $ ( 65,996 ) $ 299,196 $ ( 3,827 ) $ 656,028 $ 885,469

Exercise of common stock options and release of restricted stock units 33 — — — — — — —

Reissuance of treasury stock upon exercise of common stock options and release of RSUs — — 1 6 — — ( 6 ) —

Withholding tax on restricted stock units ( 7 ) — — — ( 226 ) — — ( 226 )

Issuance of shares under ESPP 137 — — — 4,080 — — 4,080

Share-based compensation — — — — 13,091 — — 13,091

Net income — — — — — — 6,337 6,337

Foreign currency translation adjustment, net of tax — — — — — ( 9,077 ) — ( 9,077 )

Balance, December 31, 2022 34,181 $ 68 ( 6,616 ) $ ( 65,990 ) $ 316,141 $ ( 12,904 ) $ 662,359 $ 899,674

Common Shares Treasury Shares Additional Paid-In Capital Accumulated Other Comprehensive Loss

Retained Earnings Total Shareholders' Equity

Balance, June 30, 2022 33,988 $ 68 ( 6,617 ) $ ( 66,000 ) $ 288,951 $ 1,080 $ 629,994 $ 854,093

2 unchanged sentences

Withholding tax on restricted stock units ( 16 ) — — — ( 596 ) — — ( 596 )

Issuance of shares under ESPP 137 — — — 4,080 — — 4,080

Share-based compensation — — — — 23,687 — — 23,687

1 unchanged sentence

Foreign currency translation adjustment, net of tax — — — — — ( 13,984 ) — ( 13,984 )

Balance, December 31, 2022 34,181 $ 68 ( 6,616 ) $ ( 65,990 ) $ 316,141 $ ( 12,904 ) $ 662,359 $ 899,674

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(Unaudited, in thousands)

Common Shares Treasury Shares Additional Paid-In Capital Accumulated Other Comprehensive Loss

Retained Earnings Total Shareholders' Equity

Balance, September 30, 2023 34,903 $ 70 ( 7,157 ) $ ( 79,365 ) $ 330,015 $ ( 13,518 ) $ 648,077 $ 885,279

Common Shares Treasury Shares

Additional Paid-In Capital Accumulated Other Comprehensive Loss

Exercise of common stock options and release of restricted stock units 134 — — — 726 — — 726

Reissuance of treasury stock upon exercise of common stock options and release of RSUs — — 3 22 — — ( 22 ) —

Withholding tax on restricted stock units ( 9 ) — — — ( 219 ) — — ( 219 )

Issuance of shares under ESPP 177 — — — 3,423 — — 3,423

Share-based compensation — — — — 8,691 — — 8,691

— — — — — — ( 2,923 ) ( 2,923 )

Foreign currency translation adjustment, net of tax — — — — — ( 419 ) — ( 419 )

Balance, December 31, 2023 35,205 $ 70 ( 7,154 ) $ ( 79,343 ) $ 342,636 $ ( 13,937 ) $ 645,132 $ 894,558

Common Shares Treasury Shares Additional Paid-In Capital Accumulated Other Comprehensive Loss

Retained Earnings Total Shareholders' Equity

1 unchanged sentence

Exercise of common stock options and release of restricted stock units 238 — — — 1,172 — — 1,172

Reissuance of treasury stock upon exercise of common stock options and release of RSUs — — 3 22 — — ( 22 ) —

Withholding tax on restricted stock units ( 21 ) — — — ( 602 ) — — ( 602 )

Issuance of shares under ESPP 177 — — — 3,423 — — 3,423

Share-based compensation — — — — 9,609 — — 9,609

1 unchanged sentence

Foreign currency translation adjustment, net of tax — — — — — ( 5,826 ) — ( 5,826 )

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

Balance, December 31, 2023 $ 35,205 $ 70 $ ( 7,154 ) $ ( 79,343 ) $ 342,636 $ ( 13,937 ) $ 645,132 $ 894,558

See accompanying notes to these condensed consolidated financial statements.

2 unchanged sentences

(Unaudited, in thousands)

Three Months Ended September 30,

Six Months Ended December 31,

Cash flows from operating activities

$ 2,863 $ 32,375

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

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

Depreciation and amortization 26,524 20,156

12 unchanged sentences

Accrued and other liabilities ( 15,233 ) ( 13,165 )

Net cash provided by operating activities 13,823 36,675

Net cash provided by (used in) operating activities ( 9,628 ) 37,015

Cash flows from investing activities

Purchases of property and equipment ( 22,030 ) ( 68,593 )

Proceeds from sale of property and equipment 150 27

Government grant related to equipment 449 631

2 unchanged sentences

Withholding tax on restricted stock units ( 602 ) ( 596 )

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

Proceeds from exercise of stock options and ESPP 4,595 4,099

Proceeds from borrowings — 8,632

3 unchanged sentences

Effect of exchange rate changes on cash, cash equivalents and restricted cash 80 ( 164 )

Net increase (decrease) in cash, cash equivalents and restricted cash ( 1,821 ) 1,746

Net decrease in cash, cash equivalents and restricted cash ( 33,125 ) ( 26,558 )

Cash, cash equivalents and restricted cash at beginning of period 195,603 314,651

21 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 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.

Operating results for the six months ended December 31, 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.

1 unchanged sentence

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”).

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

Prior to December 1, 2021, the JV Company was accounted for 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 September 30, 2023, the percentage of outstanding JV equity interest beneficially owned by the Company was reduced to 42.2 %.

As of December 31, 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.

40 unchanged sentences

License and Development Revenue Recognition

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.

In February 2023, the Company entered into a license agreement with a customer, pursuant to which the Company agreed to license its proprietary Silicon Carbide (SiC) technology to the customer and engineering and development services for 24 months 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 September 30, 2023, the Company recorded $ 5.6 million of license and development revenue.

The Company uses the input method to measure progress, which method represents a faithful depiction of the transfer of services.

During the three and six months ended December 31, 2023, the Company recorded license and development revenue of $ 5.5 million and $ 11.1 million, respectively.

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.

As of December 31, 2023, the Company had recorded $ 21.1 million of license and development revenue.

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

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

As of December 31, 2023 and June 30, 2023, the amount of restricted cash was $ 0.2 million and $ 0.4 million, respectively.

Equity method investment

3 unchanged sentences

Since the Company is unable to obtain accurate financial information from the JV Company in a timely manner, the Company records its share of earnings or losses of such affiliate on a one quarter lag.

The Company discloses and recognizes intervening events at the JV Company in the lag period that could materially affect our consolidated financial statements, if applicable.

The Company discloses and recognizes intervening events at the JV Company in the lag period that could materially affect its consolidated financial statements, if applicable.

The Company records its interest in the net earnings of the equity method investee, along with adjustments for unrealized profits or losses on intra-entity transactions and amortization of basis differences, within earnings or loss from equity interests in the Consolidated Statements of Income.

24 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 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.

As a result of

such grants, during the three and six months ended December 31, 2023, the Company reduced property, plant and equipment by $ 0.4 million and $ 0.4 million, respectively.

During the three and six months ended December 31, 2022, the Company reduced property, plant and equipment by $ 0.3 million and $ 0.6 million, and operating expenses by $ 0.1 million and $ 0.1 million, respectively.

Accounting for income taxes

6 unchanged sentences

While the final tax outcome of these matters may differ from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

The Company is subject to income tax expense or benefit based upon pre-tax income or loss reported in the consolidated statements of income (loss) and the provisions of currently enacted tax laws.

The parent company is incorporated under the laws of Bermuda and is subject to Bermuda law with respect to taxation.

Under current Bermuda law, the Company is not subject to any income or capital gains taxes in Bermuda.

In recent months, the Government of Bermuda announced that it has enacted the Corporate Income Tax Act 2023, potentially imposing a 15% corporate income tax (CIT) that would be taken into account in calculating the effective tax rate of Bermuda businesses under the Organization for Economic Cooperation and Development’s global minimum tax rules, that will be effective for tax years beginning on or after January 1, 2025.

The Company is closely analyzing the recently enacted Corporate Income Tax Act 2023 and the related potential tax and financial statement consequences.

The new Bermudian CIT may subject us to additional income taxes, which may adversely affect our results of operations.

Significant management judgment is also required in determining whether deferred tax assets will be realized in full or in part.

3 unchanged sentences

The Financial Accounting Standards Board (FASB), issued guidance which clarifies the accounting for income taxes by prescribing a minimum probability threshold that a tax position must meet before a financial statement benefit is recognized.

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The minimum threshold is defined as a tax position that is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position.

5 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

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.

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.

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

8 unchanged sentences

Recently Adopted Accounting Standards

In September 2022, the FASB issued ASU No.

2022-04, "Liabilities - Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations".

This ASU was issued in response to requests from financial statement users for increased transparency surrounding the use of supplier finance programs.

The amendments in ASU 2022-04 require that a buyer in a supplier finance program disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude.

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

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

Recently Issued Accounting Standards not yet adopted

In November 2023, the FASB issued ASU No.

2023-07, “ Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures ”, which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

This ASU also expands disclosure requirements to enable users of financial statements to better understand the entity’s measurement and assessment of segment performance and resource allocation.

This guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact of the ASU on its disclosures within the Consolidated Financial Statements.

In December 2023, the FASB issued ASU No.

2023-09, “ Income Taxes (Topic 740) – Improvements to Income Tax Disclosures ”, which enhances the transparency, effectiveness and comparability of income tax disclosures by requiring consistent categories and greater disaggregation of information related to income tax rate reconciliations and the jurisdictions in which income taxes are paid.

This guidance is effective for annual periods beginning after December 15, 2024 with early adoption permitted.

The Company is currently evaluating the impact of the ASU on its income tax disclosures within the Consolidated Financial Statements.

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 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 %.

During the three and six months ended December 31, 2023, the Company recorded a $ 0.7 million loss and $ 3.4 million loss of its equity share of the JV Company, respectively, using lag reporting.

During the three and six months ended December 31, 2022, the Company recorded $ 0.5 million and $ 3.0 million of its equity in income of the JV Company, respectively, using lag reporting.

As of December 31, 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 September 30, 2023, the Company owned 42.2 % equity interest in the JV Company, which, by definition, is a related party to the Company.

As of December 31, 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 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.

Due to the right of offset of receivables and payables with the JV Company, as of December 31, 2023, AOS recorded the net amount of $ 13.0 million as payable related to equity investee, net, in the Condensed Consolidated Balance Sheet.

The purchases by AOS for the three and six months ended December 31, 2023 were $ 28.6 million and $ 58.4 million, respectively, and the sales by AOS for the three and six months ended December 31, 2023 were $ 3.0 million and $ 3.7 million, respectively.

The purchases by AOS for the three and six months ended December 31, 2022 were $ 39.8 million and $ 85.9 million, respectively, and the sales by AOS for the three and six months ended December 31, 2022 were $ 13.8 million and $ 30.4 million, respectively.

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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,

Net Income (Loss) Per Common Share

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

Three Months Ended December 31, Six Months Ended December 31,

2023 2022 2023 2022

(in thousands, except per share data)

Net income (loss)

$ ( 2,923 ) $ 6,337 $ 2,863 $ 32,375

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

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

27,939 27,511 27,816 27,451

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

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

27,939 27,511 27,816 27,451

1 unchanged sentence

Stock options, RSUs and ESPP shares — 2,065 2,014 2,048

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

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

27,939 29,576 29,830 29,499

Net income per share:

Net income (loss) per share:

Basic $ ( 0.10 ) $ 0.23 $ 0.10 $ 1.18

Diluted $ ( 0.10 ) $ 0.21 $ 0.10 $ 1.10

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)

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 December 31, Six Months Ended December 31,

2023 2022 2023 2022

(in thousands) (in thousands)

Employee stock options and RSUs 1,984 118 90 361

ESPP 1,229 218 324 220

Total potential dilutive securities 3,213 336 414 581

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 September 30,

Three Months Ended December 31, Six Months Ended December 31,

Percentage of revenue 2023 2022 2023 2022

2 unchanged sentences

Customer D * 14.6 % * 12.8 %

September 30,

2023 June 30,

9 unchanged sentences

Accounts receivable, net:

September 30,

2023 June 30,

4 unchanged sentences

Accounts receivable, net $ 31,923 $ 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,

8 unchanged sentences

573,416 554,613

accumulated depreciation ( 284,069 ) ( 272,503 )

accumulated depreciation and amortization ( 296,504 ) ( 272,503 )

276,912 282,110

2 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 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.

As of December 31, 2023, $ 10.0 million were from Customer A, $ 9.2 million were from Customer B, and $ 12.7 million were from other customers.

As of June 30, 2023, $ 13.5 million were from Customer A, $ 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:

Three Months Ended September 30,

Six Months Ended December 31,

(in thousands)

6 unchanged sentences

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

Three Months Ended September 30,

Six Months Ended December 31,

(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 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.

As of December 31, 2023, $ 14.0 million were from Customer A, $ 6.0 million were from Customer B, and $ 11.9 million were from other customers.

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

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

6 unchanged sentences

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.

As of December 31, 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 September 30, 2023, there was no outstanding balance for this loan.

As of December 31, 2023, there was no outstanding balance and this loan expired.

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.

2 unchanged sentences

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.

As of December 31, 2023, there was no outstanding balance and this loan expired.

Accounts Receivable Factoring Agreement

8 unchanged sentences

Other terms remain the same.

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.

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

As of December 31, 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 $ 14.8 million as of September 30, 2023.

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

The financing arrangement is secured by this equipment and other equipment which had the carrying amount of $ 14.4 million as of December 31, 2023.

As of December 31, 2023, the outstanding balance of this debt financing was $ 10.4 million.

Long-term bank borrowings

9 unchanged sentences

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

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

As of December 31, 2023, Jireh was in compliance with these covenants and the outstanding balance of this loan wa s $ 33.8 million.

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

26 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended September 30,

Three Months Ended December 31, Six Months Ended December 31,

2023 2022 2023 2022

Operating leases:

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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,

December 31, 2023 June 30,

Operating Leases :

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

Three Months Ended September 30,

Six Months Ended December 31,

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

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Operating lease right-of-use assets obtained in exchange for lease obligations $ 3,588 $ 2,210

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

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

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

21 unchanged sentences

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

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.

As of December 31, 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, 178,349 shares with a weighted average repurchase price of $ 9.94 per share, were reissued at an average price of $ 4.69 per share pursuant to option exercises and vested restricted share units (“RSU”).

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

As of December 31, 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 three months ended September 30, 2023:

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

Number of Restricted Stock

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Forfeited ( 24,601 ) $ 34.88

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

Nonvested at December 31, 2023 1,399,898 $ 32.22 1.34 $ 36,481,342

Market-based Restricted Stock Units ( “ MSU ” )

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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.

The Company recorded $ 1.2 million of expenses for the three months ended December 31, 2023, and a negative $ 5.1 million of expenses for the six months ended December 31, 2023 due to a $ 6.4 million of reversal of the prior recognized expenses.

The Company recorded $ 2.1 million and $ 4.1 million of expenses for the three and six months ended December 31, 2022, respectively.

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

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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

On August 31, 2020, the Compensation Committee of the Board approved a modification of the terms of MSU to (i) extend the

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

January 1, 2023.

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 $ 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:

The Company recorded $ 0.3 million and $ 0.6 million of expenses for MSUs during the three and six months ended December 31, 2023, respectively, and $ 2.8 million and $ 3.3 million of expenses for MSUs during the three and six months ended December 31, 2022.

The following table summarizes the Company's MSUs activities for the six months ended December 31, 2023:

Number of Performance-based Restricted Stock

6 unchanged sentences

Granted — $ —

Vested ( 275,000 ) $ 5.17

Forfeited — $ —

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

Nonvested at December 31, 2023 1,833,000 $ 28.96 3.37 $ 47,767,980

Performance-based Restricted Stock Units (“PRSUs”)

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

The Company recorded approximately $ 0.4 million and $ 1.6 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:

The Company recorded approximately $ 0.8 million and $ 1.2 million of e xpens e for these PRSUs during the three and six months ended December 31, 2023, respectively, and $ 1.1 million and $ 2.7 million and for the three and six months ended December 31, 2022, respectively.

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

Number of Performance-based Restricted Stock

7 unchanged sentences

Forfeited — $ —

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

Nonvested at December 31, 2023 526,714 $ 32.19 1.29 $ 13,726,167

Stock Options

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:

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

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

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Weighted Average

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Exercised ( 157,500 ) $ 7.45 $ 1,732,188

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

Outstanding at December 31, 2023 161,875 $ 7.61 0.25 $ 2,987,294

Options vested and expected to vest 161,875 $ 7.61 0.25 $ 2,987,294

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

Exercisable at December 31, 2023 161,875 $ 7.61 0.25 $ 2,987,294

Employee Share Purchase Plan (“ESPP”)

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

Three Months Ended September 30,

Six Months Ended December 31,

Volatility rate 64.0 %

4 unchanged sentences

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

Three Months Ended September 30,

(in thousands)

Three Months Ended December 31, Six Months Ended December 31,

2023 2022 2023 2022

(in thousands) (in thousands)

Cost of goods sold $ 1,504 $ 1,748 $ 1,716 $ 3,536

2 unchanged sentences

$ 8,691 $ 13,091 $ 9,609 $ 23,687

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.

As of December 31, 2023, total unrecognized compensation cost under the Company's equity plans was $ 48.7 million, which is expected to be recognized over a weighted-average period of 2.5 years.

The Company recognized income tax expense of approximately $ 0.9 million and $ 1.7 million for the three months ended December 31, 2023 and 2022, respectively.

The income tax expense of $ 0.9 million for the three months ended December 31, 2023 included a $ 0.1 million discrete tax expense.

The income tax expense of $ 1.7 million for the three months ended December 31, 2022 included a $ 0.1 million discrete tax expense.

Excluding the discrete income tax items, the income tax expense for the three months ended December 31, 2023 and 2022 was $ 0.8 million and $ 1.6 million, respectively, and the effective tax rate for the three months ended December 31, 2023 and 2022 was ( 41.2 )% and 20.2 %, 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 as well as from reporting pretax book loss of $ 2.0 million for the three months ended December 31, 2023 as compared to $ 8.0 million of pretax book income for the three months ended December 31, 2022.

The Company recognized income tax expense of approximately $ 2.0 million and $ 3.0 million for the six months ended December 31, 2023 and 2022, respectively.

The income tax expense of $ 2.0 million for the six months ended December 31, 2023 included a $ 0.1 million discrete tax expense.

The income tax expense of $ 3.0 million for the six months ended December 31, 2022

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

included a $ 0.1 million discrete tax expense.

Excluding the discrete income tax items, income tax expense for the six months ended December 31, 2023 and 2022 was $ 1.9 million and $ 2.9 million, respectively, and the effective tax rate for the six months ended December 31, 2023 and 2022 was 39.2 % and 8.2 %, 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 as well as from reporting pretax book income of $ 4.9 million for the six months ended December 31, 2023 as compared to $ 35.4 million of pretax book income for the six months ended December 31, 2022.

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 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.

As of December 31, 2023, the gross amount of unrecognized tax benefits was approximately $ 9.5 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

17 unchanged sentences

The CAMT is currently not applicable to the Company.

Altera Litigation

On July 27, 2015, in Altera Corp.

Commissioner, the U.S.

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

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

Administrative Procedures Act.

In June 2019, a panel of the Ninth Circuit of the U.S.

Court of Appeals reversed this decision.

In July 2019, Altera petitioned U.S.

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

The petition was subsequently denied by the Ninth Circuit.

Altera appealed the case to the U.S.

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

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

Court of Appeals for the Ninth Circuit’s decision.

AOS has not recorded any benefit related to the Altera Corporation Tax Court decision in any period through December 2022.

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

Bermuda Corporate Income Tax for Tax Years Beginning in 2025

The Company is subject to income tax expense or benefit based upon pre-tax income or loss reported in the consolidated statements of income (loss) and the provisions of currently enacted tax laws.

The parent company is incorporated under the laws of

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Bermuda and is subject to Bermuda law with respect to taxation.

Under current Bermuda law, the Company is not subject to any income or capital gains taxes in Bermuda.

The Company is closely analyzing the recently enacted Corporate Income Tax Act 2023 and the related potential tax and financial statement consequences.

The new Bermudian CIT may subject us to additional income taxes, which may adversely affect our results of operations.

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Segment and Geographic Information

9 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 September 30,

(in thousands)

Three Months Ended December 31, Six Months Ended December 31,

2023 2022 2023 2022

(in thousands) (in thousands)

Hong Kong $ 124,081 $ 159,301 $ 265,287 $ 331,597

5 unchanged sentences

The following is a summary of revenue by product type:

Three Months Ended September 30,

(in thousands)

Three Months Ended December 31, Six Months Ended December 31,

2023 2022 2023 2022

(in thousands) (in thousands)

Power discrete $ 108,780 $ 137,582 $ 230,280 $ 282,155

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 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.

As of December 31, 2023 and June 30, 2023, the Company had approximately $ 99.5 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 December 31, 2023 and June 30, 2023, the Company had approximately $ 11.4 million and $ 9.7 million, respectively, of capital commitments for the purchase of property and equipment.

Other Commitments

6 unchanged sentences

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

The Company is cooperating fully with federal authorities in the investigation, including responding to requests for documents, information and interviews from DOJ in connection with the investigation.

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

The Company has been cooperating fully with federal authorities in the investigation, including responding to requests for documents, information and interviews from DOJ in connection with the investigation.

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

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

Given the case is in 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.

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

On January 19, 2024, DOJ informed the Company that it has closed such investigation without any charges.

The Company intends to continue cooperating with the DOC in the ongoing civil investigation.

DOC has not informed the Company of any specific timeline or schedule under which DOC will complete its review.

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 September 30, 2023 and June 30, 2023.

The Company has not historically paid or recorded any material indemnifications, and no accrual was made at December 31, 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