Alpha and Omega Semiconductor Reports Financial Results for the

Alpha and Omega Semiconductor Reports Financial Results for the Fiscal Third Quarter of 2020 Ended March 31, 2020

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 for our historical performance, including non-GAAP gross profit, gross margin, operating income (loss), net loss attributable to noncontrolling interest, net income (loss) and diluted earnings per share ("EPS"). These supplemental measures exclude share-based compensation expenses, production ramp up costs and re-production expenses related to the JV Company, as well as legal costs related to government investigation and impairment of privately-held investment. We also disclose certain non-GAAP financial measures in our guidance for the next quarter, including non-GAAP gross margin, operating expenses and loss attributable to noncontrolling interest. These forecast supplemental measures exclude estimated pre-production expenses and production ramp-up costs relating to our JV Company, estimated share-based compensation expenses and legal costs related to investigation case. We believe that these historical and forecast non-GAAP financial measures can provide useful information to both management and investors by excluding certain items and expenses that are not indicative of our core operating results or do not reflect our normal business operations. 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 terms used in this press release, such as non-GAAP net income (loss) or non-GAAP operating expenses, do 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. In addition, we included amount of income tax effect of non-GAAP adjustments in the non-GAAP net income of reconciliation table for all periods presented as the management believes that such non-GAAP presentation provides useful information to investors, even though the amounts are not significant. We seek to compensate for the limitation of our non-GAAP presentation by providing a detailed reconciliation of the non-GAAP financial measures to the most directly comparable U.S. GAAP measures both in the text in this press release and in the tables attached hereto. 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, IPM, TVS, HVIC, GaN/SiC, Power IC and Digital Power 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’ portfolio of products targets high-volume applications, including portable computers, flat-panel TVs, LED lighting, smart phones, battery packs, consumer and industrial motor controls and power supplies for TVs, computers, servers, and telecommunications equipment. For more information, please visit www.aosmd.com.

The following unaudited 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									Nine Months Ended
	March 31, 2020			December 31, 2019			March 31, 2019			March 31, 2020			March 31, 2019

Revenue	$	106,852		$	117,860		$	109,067		$	342,514		$	339,064
Cost of goods sold	84,393			93,454			83,438			268,717			251,322
Gross profit	22,459			24,406			25,629			73,797			87,742
Gross margin	21.0		%	20.7		%	23.5		%	21.5		%	25.9		%

Operating expenses:
Research and development	13,569			12,147			11,417			38,084			35,401
Selling, general and administrative	16,909			15,629			17,947			47,723			58,403
Impairment of privately-held investment	600			—			—			600			—
Total operating expenses	31,078			27,776			29,364			86,407			93,804
Operating loss	(8,619		)	(3,370		)	(3,735		)	(12,610		)	(6,062		)

Interest expense and other income (loss), net	(2,282		)	(635		)	(1,595		)	(3,744		)	(4,455		)
Loss before income taxes	(10,901		)	(4,005		)	(5,330		)	(16,354		)	(10,517		)

Income tax expense (benefit)	(1,015		)	568			625			(37		)	1,886
Net loss including noncontrolling interest	(9,886		)	(4,573		)	(5,955		)	(16,317		)	(12,403		)
Net loss attributable to noncontrolling interest	(3,391		)	(3,568		)	(4,400		)	(9,826		)	(11,719		)
Net loss attributable to Alpha and Omega Semiconductor Limited	$	(6,495	)	$	(1,005	)	$	(1,555	)	$	(6,491	)	$	(684	)

Net loss per common share attributable to Alpha and Omega Semiconductor Limited
Basic	$	(0.26	)	$	(0.04	)	$	(0.06	)	$	(0.26	)	$	(0.03	)
Diluted	$	(0.26	)	$	(0.04	)	$	(0.06	)	$	(0.26	)	$	(0.03	)

Weighted average number of common shares attributable to Alpha and Omega Semiconductor Limited used to compute net loss per share
Basic	24,894			24,701			24,084			24,711			23,938
Diluted	24,894			24,701			24,084			24,711			23,938

Alpha and Omega Semiconductor Limited
Condensed Consolidated Balance Sheets
(in thousands, except par value per share)
(unaudited)
	March 31, 2020			June 30, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	110,223		$	121,893
Restricted cash	2,325			364
Accounts receivable, net	17,470			24,296
Inventories	127,395			111,643
Other current assets	34,518			37,102
Total current assets	291,931			295,298
Property, plant and equipment, net	412,318			409,737
Operating lease right-of-use assets, net	32,739			—
Intangible assets, net	16,798			16,882
Deferred income tax assets	4,755			4,822
Restricted cash - long-term	1,973			2,038
Other long-term assets	6,781			10,617
Total assets	$	767,295		$	739,394
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	87,973		$	94,384
Accrued liabilities	50,572			44,075
Income taxes payable	419			1,541
Short-term debt	32,812			26,609
Finance lease liabilities	15,219			11,355
Operating lease liabilities	3,839			—
Total current liabilities	190,834			177,964
Long-term debt	74,205			59,380
Income taxes payable - long-term	859			993
Deferred income tax liabilities	485			466
Finance lease liabilities - long-term	30,579			43,381
Operating lease liabilities - long-term	30,248			—
Other long-term liabilities	10,356			13,921
Total liabilities	337,566			296,105
Equity:
Preferred shares, par value $0.002 per share:
Authorized: 10,000 shares; issued and outstanding: none at March 31, 2020 and June 30, 2019	—			—
Common shares, par value $0.002 per share:
Authorized: 100,000 shares; issued and outstanding: 31,715 shares and 25,076 shares, respectively at March 31, 2020 and 31,163 shares and 24,517 shares, respectively at June 30, 2019	63			62
Treasury shares at cost, 6,639 shares at March 31, 2020 and 6,646 shares at June 30, 2019	(66,184		)	(66,240		)
Additional paid-in capital	242,470			234,410
Accumulated other comprehensive loss	(5,408		)	(2,693		)
Retained earnings	118,938			125,485
Total Alpha and Omega Semiconductor Limited shareholder's equity	289,879			291,024
Noncontrolling interest	139,850			152,265
Total equity	429,729			443,289
Total liabilities and equity	$	767,295		$	739,394

Supplemental disclosures of financial information:
(in thousands)

	As of March 31, 2020							As of June 30, 2019
	AOS		CQJV			Consolidated		AOS		CQJV			Consolidated
Cash and cash equivalents	$	99,523	$	10,700		$	110,223	$	100,733	$	21,160		$	121,893
Bank borrowings liabilities	$	34,793	$	118,790	*	$	153,583	$	41,048	$	99,865	*	$	140,913
Inventory	$	95,237	$	32,158		$	127,395	$	93,852	$	17,791		$	111,643
Property, plant and equipment, net	$	159,517	$	252,801		$	412,318	$	148,497	$	261,240		$	409,737
Total assets	$	378,422	$	388,873		$	767,295	$	375,004	$	364,390		$	739,394
Total equity	$	336,512	$	93,217		$	429,729	$	325,240	$	118,049		$	443,289
* AOS is not a guarantor of CQJV's (Chongqing Joint Venture) debts.

	Three Months Ended March 31, 2020								Three Months Ended December 31, 2019								Three Months Ended March 31, 2019
	AOS		CQJV				Consolidated		AOS		CQJV				Consolidated		AOS		CQJV				Consolidated
Net cash provided by (used in) operating activities	$	29,545	$	(15,233	)		$	14,312	$	12,470	$	(3,532	)		$	8,938	$	9,540	$	(17,465	)		$	(7,925	)
Purchase of property and equipment, net of government grant	$	13,063	$	3,720			$	16,783	$	12,062	$	3,307			$	15,369	$	8,184	$	15,786			$	23,970
EBITDAS	$	6,487	$	(1,095	)	**	$	8,783	$	12,538	$	(2,214	)	**	$	13,892	$	13,535	$	(6,093	)	**	$	11,842
** CQJV EBITDAS includes amounts attributable to noncontrolling interest.

Alpha and Omega Semiconductor Limited
Reconciliation of Condensed Consolidated GAAP Financial Measures to Non-GAAP Financial Measures
(in thousands, except percentages and per share data)
(unaudited)

	Three Months Ended									Nine Months Ended
	March 31, 2020			December 31, 2019			March 31, 2019			March 31, 2020			March 31, 2019

GAAP gross profit	$	22,459		$	24,406		$	25,629		$	73,797		$	87,742
Share-based compensation	357			404			494			1,197			1,532
Production ramp up costs related to joint venture	6,552			8,486			3,350			21,029			7,983
Non-GAAP gross profit	$	29,368		$	33,296		$	29,473		$	96,023		$	97,257
Non-GAAP gross margin as a % of revenue	27.5		%	28.3		%	27.0		%	28.0		%	28.7		%

GAAP operating loss	$	(8,619	)	$	(3,370	)	$	(3,735	)	$	(12,610	)	$	(6,062	)
Share-based compensation	2,876			2,487			3,112			7,732			10,659
Pre-production expenses related to joint venture	—			—			3,584			—			11,945
Production ramp up costs related to joint venture	6,552			8,486			3,350			21,029			7,983
Legal costs related to government investigation	2,133			—			—			2,133			—
Impairment of privately-held investment	600			—			—			600			—
Non-GAAP operating income	$	3,542		$	7,603		$	6,311		$	18,884		$	24,525
Non-GAAP operating margin as a % of revenue	3.3		%	6.5		%	5.8		%	5.5		%	7.2		%

GAAP net loss attributable to AOS	$	(6,495	)	$	(1,005	)	$	(1,555	)	$	(6,491	)	$	(684	)
Share-based compensation	2,876			2,487			3,112			7,732			10,659
Pre-production expenses related to joint venture	—			—			2,215			—			7,335
Production ramp up costs related to joint venture	3,764			4,294			1,705			11,156			4,199
Legal costs related to government investigation	2,133			—			—			2,133			—
Impairment of privately-held investment	600			—			—			600			—
Income tax effect of non-GAAP adjustments	0			(2		)	(17		)	(7		)	(30		)
Non-GAAP net income attributable to AOS	$	2,878		$	5,774		$	5,460		$	15,123		$	21,479
Non-GAAP net margin attributable to AOS as a % of revenue	2.7		%	4.9		%	5.0		%	4.4		%	6.3		%

GAAP net loss attributable to AOS	$	(6,495	)	$	(1,005	)	$	(1,555	)	$	(6,491	)	$	(684	)
Share-based compensation	2,876			2,487			3,112			7,732			10,659
Amortization and depreciation	11,784			10,850			8,010			33,538			24,159
Interest expense, net	1,633			992			1,650			2,405			4,738
Income tax expense (income)	(1,015		)	568			625			(37		)	1,886
EBITDAS	$	8,783		$	13,892		$	11,842		$	37,147		$	40,758

GAAP diluted net loss per share attributable to AOS	$	(0.26	)	$	(0.04	)	$	(0.06	)	$	(0.26	)	$	(0.03	)
Share-based compensation	0.11			0.10			0.12			0.30			0.43
Pre-production expenses related to joint venture	—			—			0.09			—			0.30
Production ramp up costs related to joint venture	0.15			0.17			0.07			0.44			0.17
Legal costs related to government investigation	0.09			—			—			0.09			—
Impairment of privately-held investment	0.02			—			—			0.02			—
Income tax effect of non-GAAP adjustments	0.00			0.00			0.00			0.00			0.00
Non-GAAP diluted net income per share attributable to AOS	$	0.11		$	0.23		$	0.22		$	0.59		$	0.87


Shares used to compute GAAP diluted net income per share	24,894			24,701			24,084			24,711			23,938
Shares used to compute Non-GAAP diluted net income per share	25,889			25,594			24,769			25,538			24,598

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