February 5, 2014

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

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 EndedSix Months Ended
 December 31,September 30,December 31,December 31,December 31,
 20132013201220132012
           
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, 2013June 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 EndedSix Months Ended
 December 31,September 30,December 31,December 31,December 31,
 20132013201220132012
           
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 margin18.0%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 EndedSix Months Ended
 December 31,September 30,December 31,December 31,December 31,
 20132013201220132012
           
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 EndedSix Months Ended
 December 31,September 30,December 31,December 31,December 31,
 20132013201220132012
           
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


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