News Column

Alpha and Omega Semiconductor Reports Financial Results for the Fiscal Second Quarter of 2014 Ended December 31, 2013

February 5, 2014

SUNNYVALE, Calif. , Feb. 5, 2014 (GLOBE NEWSWIRE) -- Alpha and Omega Semiconductor Limited ("AOS") (Nasdaq:AOSL), today reported financial results for the fiscal second quarter of 2014 ended December 31, 2013 . The results for the fiscal second quarter of 2014 ended December 31, 2013 were as follows: GAAP Financial Comparison Quarterly (in millions except percentage and per share data) (unaudited) Q2 FY2014 Q1 FY2014 Q2 FY2013 Revenue $ 76.3 $ 84.1 $ 89.4 Gross Margin 17.9% 20.4% 23.0% Operating Income $ 1.3 $ 1.4 $ 4.9 Net Income $ 0.2 $ 0.3 $ 3.7 Earnings Per Share - Diluted $ 0.01 $ 0.01 $ 0.14 On a non-GAAP basis excluding the effect of the share-based compensation charges in each of the periods presented, the results were as set forth below (see detailed reconciliation included at the end of this press release). Non-GAAP Financial Comparison Quarterly (in millions except percentage and per share data) (unaudited) Q2 FY2014 Q1 FY2014 Q2 FY2013 Revenue $ 76.3 $ 84.1 $ 89.4 Gross Margin 18.0% 20.6% 23.2% Operating Income $ 1.4 $ 2.6 $ 5.8 Net Income $ 0.3 $ 1.5 $ 4.6 Earnings Per Share - Diluted $ 0.01 $ 0.06 $ 0.18 Dr. Mike Chang , Chairman and Chief Executive Officer of AOS, stated: "I am pleased to report that we have achieved better bottom-line results than expected by street forecasts. The December quarter represented a stabilizing finish to a very challenging year for both the PC industry and for AOS." "Entering into calendar year 2014, we are accelerating our new account penetration with added strength and renewed focus. Along with the sales expansion, we are determined to maintain operational and financial discipline to achieve operating profitability for calendar year 2014." Today AOS also announced that its Board of Directors has decided to end the CEO search and asked Dr. Mike Chang to continue serving as the CEO. As the Company has implemented a recovery plan to accelerate market and revenue diversification and achieve operational profitability, the Board concluded that it is in the best interests of our shareholders for Dr. Chang to continue to lead the company in executing the recovery plan. Recent News Highlights - For more information, please visit http://www.aosmd.com/ Jan 30, 2014 - Alpha and Omega Semiconductor Announces Changes to Board of Directors Oct 18, 2013 - Alpha and Omega Semiconductor Introduces a New Family of High Performance Common-Drain MOSFETs Business Outlook for Fiscal Q3 Ending March 31, 2014 The following statements are based on management's current expectations. These statements are forward-looking, and actual results may differ materially. AOS undertakes no obligation to update these statements. Revenue is expected to be between $73 million and $ 77 million . GAAP gross margin is expected to be in the range of 17%, plus or minus 1%. GAAP operating expense is expected to be in the range of $15.5 million , plus or minus $1 million . Tax expense is expected to be approximately $1.0 million to $1.2 million . The above projections on GAAP gross margin and GAAP operating expense include estimated share-based compensation expense of $1.0 million to $1.2 million . Conference Call and Webcast AOS plans to conduct an investor teleconference and live webcast to discuss the financial results for the fiscal second quarter of 2014 ended December 31, 2013 today, February 5, 2014 at 2:00 p.m. PST / 5:00 p.m. EST . To participate in the live call, analysts and investors should dial 877-312-8797 (or 253-237-1194 if outside the U.S.). To access the live webcast and the subsequent replay of the conference call, which will be available for seven days after the live call, go to the "Events & Presentations" section of the company's investor relations website, http://investor.aosmd.com . Forward Looking Statements This press release contains forward-looking statements that are based on current expectations, estimates, forecasts and projections of future performance based on management's judgment, beliefs, current trends, and anticipated product performance. These forward looking statements include, without limitation, projected amount of revenues, gross margin, operating expenses, operating income, tax expenses, net income, and share-based compensation expenses, expectation with respect to our ability and strategy to develop new products, expand our sales, revenue and profitability, our ability to reduce cost and improve profitability, the execution of our recovery plan, and other information under the section entitled "Business Outlook for Fiscal Q3 Ending March 31, 2014 ". Forward looking statements involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These factors include, but are not limited to, the decline of the PC industry and our ability to respond to such decline, our ability to introduce or develop new and enhanced products that achieve market acceptance, the actual product performance in volume production, the quality and reliability of our product, our ability to achieve design wins, the general business and economic conditions, the state of semiconductor industry and seasonality of our markets, our ability to maintain factory utilization at a desirable level, and other risks as described in our SEC filings, including our Annual Report on Form 10-K for the fiscal year ended June 30, 2013 filed on August 30 , 2013. Other unknown or unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in the forward-looking statements. Although we believe that the expectations reflected in the forward looking statements are reasonable, we cannot guarantee future results, level of activity, performance, or achievements. You should not place undue reliance on these forward-looking statements. All information provided in this press release is as of today's date, unless otherwise stated, and AOS undertakes no duty to update such information, except as required under applicable law. Use of Non-GAAP Financial Measures To supplement our unaudited consolidated financial statements presented on a basis consistent with U.S. GAAP, we disclose certain non-GAAP financial measures, including non-GAAP gross profit, gross margin, operating income, net income and diluted earnings per share ("EPS"). These supplemental measures exclude share-based compensation expenses. We believe that non-GAAP financial measures can provide useful information to both management and investors by excluding certain non-cash expenses that are not indicative of our core operating results. In addition, our management uses non-GAAP measures to compare our performance relative to forecasts and to benchmark our performance externally against competitors. Our use of non-GAAP financial measures has certain limitations in that the non-GAAP financial measures we use may not be directly comparable to those reported by other companies. For example, the term used in this press release, non-GAAP net income, does not have a standardized meaning. Other companies may use the same or similarly named measures, but exclude different items, which may not provide investors with a comparable view of our performance in relation to other companies. We seek to compensate for this limitation by providing a detailed reconciliation of the non-GAAP financial measures to the most directly comparable U.S. GAAP measures in the tables attached to this press release. Investors are encouraged to review the related U.S. GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable U.S. GAAP financial measures. About Alpha and Omega Semiconductor Alpha and Omega Semiconductor Limited , or AOS, is a designer, developer and global supplier of a broad range of power semiconductors, including a wide portfolio of Power MOSFET, IGBT and Power IC products. AOS has developed extensive intellectual property and technical knowledge that encompasses the latest advancements in the power semiconductor industry, which enables us to introduce innovative products to address the increasingly complex power requirements of advanced electronics. AOS differentiates itself by integrating its Discrete and IC semiconductor process technology, product design, and advanced packaging know-how to develop high performance power management solutions. AOS's portfolio of products targets high-volume applications, including portable computers, flat panel TVs, LED lighting, smartphones, battery packs, consumer and industrial motor controls and power supplies for TVs, computers, servers and telecommunications equipment. For more information, please visit http://www.aosmd.com/ . For investor relations, please contact So-Yeon Jeong at investors@aosmd.com . The following consolidated financial statements are prepared in accordance with U.S. GAAP. Alpha and Omega Semiconductor Limited Condensed Consolidated Statements of Operations (in thousands, except percentages and per share amounts) (unaudited) Three Months Ended Six Months Ended December 31, September 30, December 31, December 31, December 31, 2013 2013 2012 2013 2012 Revenue $ 76,265 $ 84,121 $ 89,448 $ 160,386 $ 185,209 Cost of goods sold 62,646 66,970 68,854 129,616 139,082 Gross profit 13,619 17,151 20,594 30,770 46,127 Gross margin 17.9% 20.4% 23.0% 19.2% 24.9% Operating expenses Research and development 4,972 6,847 6,866 11,819 13,799 Selling, general and administrative 7,309 8,940 8,838 16,249 17,619 Total operating expenses 12,281 15,787 15,704 28,068 31,418 Operating income 1,338 1,364 4,890 2,702 14,709 Interest income 14 24 20 38 37 Interest expense (69) (79) (107) (148) (189) Income before income taxes 1,283 1,309 4,803 2,592 14,557 Income tax expense 1,123 1,002 1,085 2,125 2,897 Net income $ 160 $ 307 $ 3,718 $ 467 $ 11,660 Net income per share Basic $ 0.01 $ 0.01 $ 0.15 $ 0.02 $ 0.46 Diluted $ 0.01 $ 0.01 $ 0.14 $ 0.02 $ 0.45 Weighted average number of common shares used to compute net income per share Basic 25,846 25,684 25,292 25,765 25,165 Diluted 26,462 26,309 26,101 26,385 25,992 Alpha and Omega Semiconductor Limited Condensed Consolidated Balance Sheets (in thousands, except par value per share) (unaudited) December 31, 2013 June 30, 2013 ASSETS Current assets: Cash and cash equivalents $ 102,533 $ 92,406 Restricted cash 206 204 Accounts receivable, net 39,002 38,298 Inventories 62,767 68,339 Deferred income tax assets 2,191 3,030 Other current assets 3,376 3,578 Total current assets 210,075 205,855 Property, plant and equipment, net 127,508 138,111 Intangible assets, net 296 496 Goodwill 269 269 Deferred income tax assets 10,766 10,823 Other long-term assets 1,261 767 Total assets $ 350,175 $ 356,321 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short term debt $ 3,107 $ 3,821 Accounts payable 25,779 31,738 Accrued liabilities 15,372 14,571 Income taxes payable 1,506 1,472 Deferred margin 611 622 Capital leases 695 1,267 Total current liabilities 47,070 53,491 Long-term debt 12,143 13,571 Income taxes payable - long term 3,371 3,692 Deferred income tax liabilities 2,214 2,613 Capital leases - long term 100 195 Deferred rent 1,227 1,308 Total liabilities 66,125 74,870 Shareholders' equity: Preferred shares, par value $0.002 per share: Authorized: 10,000 shares: Issued and outstanding: none at December 31, 2013 and June 30, 2013 Common shares, par value $0.002 per share: Authorized: 50,000 shares: Issued and outstanding: 26,178 shares and 25,955 shares at December 31, 2013 and 25,882 shares and 25,656 shares at June 30, 2013 52 51 Treasury shares at cost: 223 shares at December 31, 2013 and 226 shares at June 30, 2013 (2,013) (2,054) Additional paid-in capital 170,434 168,352 Accumulated other comprehensive income 1,006 957 Retained earnings 114,571 114,145 Total shareholders' equity 284,050 281,451 Total liabilities and shareholders' equity $ 350,175 $ 356,321 Alpha and Omega Semiconductor Limited Reconciliation of Gross Profit to Non-GAAP Gross Profit (in thousands) (unaudited) Three Months Ended Six Months Ended December 31, September 30, December 31, December 31, December 31, 2013 2013 2012 2013 2012 U.S. GAAP gross profit $ 13,619 $ 17,151 $ 20,594 $ 30,770 $ 46,127 Share-based compensation: Cost of goods sold 142 196 141 338 339 Non-GAAP gross profit $ 13,761 $ 17,347 $ 20,735 $ 31,108 $ 46,466 Non-GAAP gross margin 18.0% 20.6% 23.2% 19.4% 25.1% Alpha and Omega Semiconductor Limited Reconciliation of Operating Income to Non-GAAP Operating Income (in thousands) (unaudited) Three Months Ended Six Months Ended December 31, September 30, December 31, December 31, December 31, 2013 2013 2012 2013 2012 U.S. GAAP operating income $ 1,338 $ 1,364 $ 4,890 $ 2,702 $ 14,709 Share-based compensation: Cost of goods sold 142 196 141 338 339 Research and development (32) 295 278 263 671 Selling, general and administrative (5) 718 494 713 1,344 Total share-based compensation 105 1,209 913 1,314 2,354 Non-GAAP operating income $ 1,443 $ 2,573 $ 5,803 $ 4,016 $ 17,063 Alpha and Omega Semiconductor Limited Reconciliation of Net Income to Non-GAAP Net Income (in thousands, except per share amounts) (unaudited) Three Months Ended Six Months Ended December 31, September 30, December 31, December 31, December 31, 2013 2013 2012 2013 2012 U.S. GAAP net income $ 160 $ 307 $ 3,718 $ 467 $ 11,660 Share-based compensation: Cost of goods sold 142 196 141 338 339 Research and development (32) 295 278 263 671 Selling, general and administrative (5) 718 494 713 1,344 Total share-based compensation 105 1,209 913 1,314 2,354 Non-GAAP net income $ 265 $ 1,516 $ 4,631 $ 1,781 $ 14,014 Non-GAAP diluted net income per share $ 0.01 $ 0.06 $ 0.18 $ 0.07 $ 0.54 Weighted-average number of common shares used in computing non-GAAP net income per share Diluted shares 26,462 26,309 26,101 26,385 25,992 CONTACT: Alpha and Omega Semiconductor Limited Investor Relations So-Yeon Jeong 408-789-3172 investors@aosmd.com Source: Alpha and Omega Semiconductor


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