Document and Entity Information

9 Months Ended

Mar. 31, 2012

Apr. 30, 2012

Entity Information [Line Items]

Entity Registrant Name

ALPHA & OMEGA SEMICONDUCTOR Ltd

Entity Central Index Key

0001387467

Current Fiscal Year End Date

--06-30

Entity Filer Category

Accelerated Filer

Document Type

10-Q

Document Period End Date

Mar. 31, 2012

Document Fiscal Year Focus

2012

Document Fiscal Period Focus

Q3

Amendment Flag

false

Entity Common Stock, Shares Outstanding

24,802,996

CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)

In Thousands, unless otherwise specified

Mar. 31, 2012

Jun. 30, 2011

Current assets:

Cash and cash equivalents

$ 79,344

$ 86,708

Restricted cash

79

54

Accounts receivable, net

39,008

42,503

Inventories

53,190

65,251

Deferred tax assets

1,815

1,773

Other current assets

3,229

5,056

Total current assets

176,665

201,345

Property, plant and equipment, net

157,774

127,839

Intangible assets, net

1,171

1,599

Goodwill

269

0

Deferred tax assets

8,651

9,048

Other long-term assets

821

7,607

Total assets

345,351

347,438

Current liabilities:

Bank borrowings

12,100

0

Accounts payable

38,801

64,678

Accrued liabilities

18,528

15,123

Income taxes payable

724

2,377

Deferred margin

346

495

Capital leases - current portion

15

306

Total current liabilities

70,514

82,979

Income taxes payable - long term

3,247

3,081

Deferred income tax liabilities

25

Capital leases - long term portion

115

130

Deferred rent

1,178

973

Total liabilities

75,079

87,188

Commitments and contingencies (Note 11)

Preferred shares, par value $0.002 per share:

Authorized: 10,000 shares; Issued and outstanding: none at March 31, 2012 and June 30, 2011

0

Common shares, par value $0.002 per share:

Authorized: 50,000 shares; Issued and outstanding: 24,957 shares and 24,716 shares at March 31, 2012 and 24,612 shares and 24,562 shares at June 30, 2011

49

Treasury shares at cost; 241 shares at March 31, 2012 and 50 shares at June 30, 2011

(2,267)

(693)

Additional paid-in capital

158,289

153,004

Accumulated other comprehensive income

1,028

934

Retained earnings

113,173

106,956

Total shareholders’ equity

270,272

260,250

Total liabilities and shareholders’ equity

$ 345,351

$ 347,438

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)

In Thousands, except Per Share data, unless otherwise specified

Mar. 31, 2012

Jun. 30, 2011

Common stock, par value

$ 0.002

Common stock, shares authorized

50,000

Common stock, shares issued

24,957

24,612

Common stock, shares outstanding

24,716

24,562

Preferred stock, par value

$ 0.002

Preferred stock, shares authorized

10,000

Preferred stock, shares issued

0

Preferred stock, shares outstanding

0

Treasury shares

241

50

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (USD $)

In Thousands, except Per Share data, unless otherwise specified

3 Months Ended

9 Months Ended

Mar. 31, 2012

Mar. 31, 2011

Mar. 31, 2012

Mar. 31, 2011

Revenue

$ 83,858

$ 91,074

$ 248,019

$ 264,473

Cost of goods sold

64,564

62,633

189,875

188,691

Gross profit

19,294

28,441

58,144

75,782

Operating expenses:

Research and development

6,510

7,580

23,012

20,448

Selling, general and administrative

9,028

9,523

26,144

27,761

Total operating expenses

15,538

17,103

49,156

48,209

Operating income

3,756

11,338

8,988

27,573

Interest income

21

60

85

141

Interest expense

(135)

(78)

(206)

(187)

Income on equity investment in APM

0

1,768

Gain on equity interest in APM

0

836

Income before income taxes

3,642

11,320

8,867

30,131

Income tax expense

1,038

666

2,650

1,986

Net income

$ 2,604

$ 10,654

$ 6,217

$ 28,145

Net income per share

Basic per share (in dollars per share)

$ 0.11

$ 0.44

$ 0.25

$ 1.22

Diluted per share (in dollars per share)

$ 0.10

$ 0.41

$ 0.24

$ 1.14

Weighted-average number of shares used in computing net income per share

Basic shares (in shares)

24,675

24,372

24,578

23,155

Diluted shares (in shares)

25,647

25,905

25,565

24,668

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)

In Thousands, unless otherwise specified

9 Months Ended

Mar. 31, 2012

Mar. 31, 2011

Cash flows from operating activities

Net income

$ 6,217

$ 28,145

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

Depreciation

17,897

11,068

Amortization

429

274

Allowance for doubtful accounts

643

0

Share-based compensation expense

3,971

4,216

Income on equity investment in APM

0

(1,768)

Gain on equity interest in APM

0

(836)

Loss on disposal of property and equipment

2

46

Changes in working capital:

Accounts receivable

2,853

(2,615)

Inventories

14,221

(14,278)

Other current and long term assets

3,713

348

Deferred tax assets and liabilities

354

(813)

Accounts payable

(20,329)

5,997

Account payable to APM

0

1,277

Income taxes payable

(1,488)

1,649

Accrued and other liabilities

2,342

4,621

Net cash provided by operating activities

30,825

37,331

Cash flows from investing activities

Purchase of property and equipment

(28,308)

(36,279)

Additional investment in APM before the APM acquisition

0

(1,831)

Deposit for manufacturing capacity

0

(5,000)

Restricted cash released

(25)

628

Investment in a privately held company

(100)

0

Net cash used in investing activities

(49,763)

(44,051)

Cash flows from financing activities

Proceeds from exercise of stock options

1,313

2,748

Payment for IPO related expenses

0

(610)

Payment for repurchase of common shares

(1,574)

0

Proceeds from bank borrowings

26,800

22,253

Repayments of bank borrowings

(14,698)

(24,034)

Principal payments on capital leases

(306)

(428)

Net cash provided (used in) by financing activities

11,535

(71)

Exchange gains on cash and cash equivalents

39

43

Net decrease in cash and cash equivalents

(7,364)

(6,748)

Cash and cash equivalents at beginning of period

86,708

119,001

Cash and cash equivalents at end of period

79,344

112,253

Supplemental disclosures of non cash investing and financing information:

Property and equipment purchased but not yet paid

10,867

4,751

Business Acquiree - Oregon fab [Member]

Cash flows from investing activities

Acquisition, net of cash acquired

(21,330)

0

Business Acquiree - APM [Member]

Cash flows from investing activities

Acquisition, net of cash acquired

$ 0

$ (1,569)

The Company and Its Significant Accounting Policies

The Company and Significant Accounting Policies

The Company

Alpha and Omega Semiconductor Limited and its subsidiaries (the “Company”, "AOS", "we" or "us") design, develop and supply a broad range of power semiconductors. The Company's portfolio of products targets high-volume applications, including portable computers, flat panel TVs, smart phones, battery packs, portable media players, UPS, motor control and power supplies. The Company conducts its operations primarily in the United States of America (“USA”), Hong Kong, Macau, China, Taiwan, Korea and Japan.

Basis of Preparation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions to Article 10 of Securities and Exchange Commission Regulation S-X. They do not include all information and footnotes necessary for a fair presentation of financial position, results of operations and cash flows in conformity with U.S. GAAP for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the year ended June 30, 2011. All significant intercompany balances and transactions have been eliminated in consolidation. 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 period presented have been included in the interim period. Operating results for the three and the nine months ended March 31, 2012 are not necessarily indicative of the results that may be expected for other interim periods or the year ending June 30, 2012. The condensed consolidated balance sheet at June 30, 2011 is derived from the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2011.

Use of Estimates

The preparation of our consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. To the extent there are material differences between these estimates and actual results, the Company's consolidated financial statements will be affected. On an ongoing basis, the Company evaluates the estimates, judgments and assumptions including those related to revenue recognition, inventory reserves, warranty reserve, income taxes, share-based compensation and useful lives for property and equipment and for intangible assets.

Fair Value of Financial Instruments

The fair values of the Company's cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities and short term bank borrowings approximate their carrying values due to their short-term maturities. The fair value of the Company’s capital lease obligations approximate the carrying value due to the short-term maturity of the leases.

Recent Accounting Pronouncements

In December 2011 the Financial Accounting Standards Board ("FASB") issued the Accounting Standards Update or ASU, 2011-12, Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05 that deferred the effective date for amendments to the presentation of reclassifications of items out of other comprehensive income. ASU 2011-12 was issued to allow the FASB time to redeliberate the presentation requirements for reclassifications out of accumulated other comprehensive income for annual and interim financial statements for public, private, and non-profit entities. During the redeliberation period, entities will continue to report reclassifications out of accumulated other comprehensive income using guidance in effect before ASU 2011-05 was issued. ASU 2011-05 is to be applied retrospectively and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2011. The Company does not expect the adoption of these provisions to have a material effect on its consolidated financial statements.

In September 2011, the FASB issued authoritative guidance that allows entities to first assess qualitatively whether it is necessary to perform the two-step goodwill impairment test. If any entity believes, as a result of its qualitative assessment, that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the quantitative two-step goodwill impairment test is required. An entity has the unconditional option to bypass the qualitative assessment and proceed directly to performing the first step of the goodwill impairment test. The guidance is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, with early adoption permitted. The Company does not expect the adoption of these provisions to have a significant effect on its consolidated financial statements.

In June 2011, the FASB issued authoritative guidance that amends the presentation requirements for comprehensive income in financial statements. The guidance requires entities to report components of comprehensive income either as part of a single continuous statement of comprehensive income that would combine the components of net income and other comprehensive income, or in a separate, but consecutive, statement following the statement of income. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2011 and is to be applied retrospectively. The Company does not expect the adoption of these provisions to have a significant effect on its consolidated financial statements.

Concentration of Credit Risk and Significant Customers

The Company manages its credit risk associated with exposure to distributors and direct customers on outstanding trade receivables through the application of credit approvals, credit ratings and other monitoring procedures. In some instances, the Company also obtains letters of credit from certain customers.

Credit sales, which are mainly on credit terms of 30 to 60 days, are only made to customers who meet the Company's credit policy, while sales to new customers or customers with low credit ratings are usually made on an advance payment basis. The Company's management considers the Company's financial assets to be of good credit quality because its key distributors and direct customers have long-standing business relationships with the Company and the Company has not experienced any significant bad debt write-offs of trade receivables in the past. The Company's management closely monitors the aging of receivables from its distributors and direct customers, and regularly reviews their financial positions, when available.

Summarized below are individual customers whose revenue or trade receivable balances were 10% or higher than the respective total consolidated amounts:



	Three Months Ended			Nine Months Ended
	March 31,			March 31,
Percentage of revenue	2012	2011		2012	2011
Customer A	26.4 %	26.9	%	22.3 %	31.4	%
Customer B	37.4 %	38.1	%	40.9 %	35.7	%
Customer C	14.3 %	12.9	%	14.5 %	12.3	%



	March 31, 2012		June 30, 2011
Percentage of trade receivables	March 31, 2012		June 30, 2011
Customer A	33.5	%	28.5	%
Customer B	24.0	%	32.7	%
Customer C	21.2	%	14.0	%

Segment and Geographic information

Segment and Geographic Information

The Company is organized as, and operates in, one operating segment: design, development and marketing of power semiconductor products for computing, consumer electronics, communication and industrial applications. The chief operating decision-maker is the Chief Executive Officer. The financial information presented to the Company's Chief Executive Officer is on a consolidated basis, accompanied by information about revenue by customer and geographic region, for purposes of evaluating financial performance and allocating resources. The Company has one business segment, and there are no segment managers who are held accountable for operations, operating results and plans for products or components below the consolidated unit level. Accordingly, the Company reports as a single operating segment.

The Company sells its products primarily to distributors in the Asia Pacific region, who in turn sell these products to end customers. Because the Company's distributors sell their products to end customers which may have global presence, revenue by geographical location is not necessarily representative of the geographical distribution of sales to end user markets. The revenue by geographical location in the following tables is based on the country or region to which the products were shipped:



	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2012		2011		2012		2011
	(in thousands)				(in thousands)
Hong Kong	$	65,557	$	80,391	$	193,616	$	244,863
China	14,729		6,000		43,943		7,847
Korea	2,252		3,402		6,416		7,387
United States	368		272		1,135		1,496
Other countries	952		1,009		2,909		2,880
	$	83,858	$	91,074	$	248,019	$	264,473

The following is a summary of revenue by product type:



	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2012		2011		2012		2011
	(in thousands)				(in thousands)
Power discrete	$	66,256	$	68,767	$	192,461	$	207,417
Power IC	12,756		16,179		39,036		49,081
Packaging and testing services	4,846		6,128		16,522		7,975
	$	83,858	$	91,074	$	248,019	$	264,473

The location and net book value of the Company's property, plant and equipment are as follows:



	March 31, 2012		June 30, 2011
	(in thousands)
China	$	114,152	$	116,955
United States	43,242		10,426
Other countries	380		458
	$	157,774	$	127,839

Balance Sheet Components

Accounts receivable:



	March 31, 2012			June 30, 2011
	(in thousands)
Accounts receivable	$	55,021		$	61,768
Less: Allowance for price adjustments	(15,340		)	(19,235		)
Less: Allowance for doubtful accounts	(673		)	(30		)
Accounts receivable, net	$	39,008		$	42,503

Inventories:



	March 31, 2012		June 30, 2011
	(in thousands)
Raw materials	$	28,588	$	30,713
Work in-process	18,862		20,513
Finished goods	5,740		14,025
	$	53,190	$	65,251

Property, plant and equipment:



	March 31, 2012			June 30, 2011
	(in thousands)
Land	$	4,950		$	—
Building	3,900			—
Manufacturing machinery and equipment	142,539			107,555
Equipment and tooling	9,883			9,232
Computer equipment and software	12,829			11,906
Office furniture and equipment	1,558			1,597
Leasehold improvements	21,856			15,949
	197,515			146,239
Less accumulated depreciation and amortization	(56,365		)	(38,617		)
	141,150			107,622
Equipment and construction in progress	16,624			20,217
Property, plant and equipment, net	$	157,774		$	127,839

Other long term assets:



	March 31, 2012		June 30, 2011
	(in thousands)
Prepayment for acquisition of wafer fabrication assets	$	—	$	5,000
Prepayments for property and equipment	191		2,086
Investment in a privately held company	100		—
Deposits on office leases	530		521
	$	821	$	7,607

Accrued liabilities:



	March 31, 2012		June 30, 2011
	(in thousands)
Accrued salaries and wages	$	3,368	$	2,322
Accrued vacation	1,952		1,383
Accrued bonuses	2,557		3,760
Warranty accrual	766		664
Stock rotation accrual	2,252		1,880
Accrued professional fees	661		1,101
ESPP payable	592		206
Customer deposits	260		204
Other accrued expenses	6,120		3,603
	$	18,528	$	15,123

A summary of the warranty accrual, which was included in accrued liabilities, is as follows:



	Nine Months Ended
	March 31,
	2012			2011
	(in thousands)
Beginning balance	$	664		$	1,275
Addition (deduction)	743			(57		)
Utilization	(641		)	(516		)
Ending balance	$	766		$	702

A summary of the stock rotation accrual, which was included in accrued liabilities, is as follows:



	Nine Months Ended
	March 31,
	2012			2011
	(in thousands)
Beginning balance	$	1,880		$	513
Addition	4,189			3,426
Utilization	(3,817		)	(2,061		)
Ending balance	$	2,252		$	1,878

Acquisition of Wafer Fabrication Facility

Acquisitions of Wafer Fabrication Facility

Acquisition of Wafer Fabrication Facility

On January 31, 2012, the Company completed the acquisition of certain assets, including land, building, machinery and equipment and inventories, associated with a wafer fabrication facility located in Hillsboro, Oregon ("Oregon fab") from Integrated Device Technology, Inc, ("IDT"), for a purchase price of $26.3 million in cash plus certain assumed liabilities of $0.5 million. The Company applied the related cash deposit of $5.0 million made during fiscal 2011 to the purchase price.

The acquisition was accounted for as a business combination and the financial results of operations of the acquired facility were included in the Company's consolidated statement of income from the date of acquisition. In connection with the acquisition, the Company incurred certain acquisition related expenses of approximately $0.2 million, which were recorded in general and administrative expenses in the Company's condensed consolidated statement of income.

The allocation of the total purchase consideration of $26.3 million based on the preliminary estimated fair values as of the acquisition date, is summarized in the following table (in thousands):



Land	$	4,950
Building	3,900
Machinery and equipment	15,564
Inventories	2,159
Accrued liabilities	(512		)
Goodwill	269
Total purchase consideration	$	26,330

Of the total purchase price paid at the time of acquisition, approximately $0.3 million has been allocated to goodwill. Goodwill represents the excess of the purchase price of an acquired business over the fair value of the underlying net tangible assets and is deductible for tax purposes. Among the factors that contributed to a purchase price in excess of the fair value of the net tangible assets were the synergies in improved product research and development lead time and production operations that can be leveraged to enable the Company to build an enterprise value greater than the sum of its parts.

The Company is depreciating on a straight-line basis the building over an estimated useful life of 20 years and the machinery and equipment over an estimated useful life of 3 years to 7 years.

The Company considered the additional proforma revenue and earnings disclosure as not practical given the assets acquired had been and will continue to be used primarily as a captive fabrication facility. The lack of independently substantiated standalone historical financial statements of the acquired assets requires significant estimates of their related revenues, costs and expenses for the retrospective application. It is impossible to distinguish objectively information about those estimates that would provide evidence of circumstances that existed on the dates at which those amounts would be recognized, measured, or disclosed under retrospective application or would have been available when the financial statements for that prior period were issued. Furthermore, the wafers produced by the Oregon fab for the Company are different from those of the IDT and the Company does not intend to continue to produce such wafers. Therefore, the retroactive proforma financial information would not provide meaningful information for investors.

Bank Borrowings

As of March 31, 2012, two of the Company's subsidiaries in China had revolving lines of credit that allow each of the subsidiaries to draw down, from time to time, up to 80% of the accounts receivable balance of such subsidiary, with a maximum amount for each subsidiary of RMB40 million (equivalent of $6.3 million based on the currency exchange rate as of March 31, 2012) to finance the subsidiary's working capital with a maximum of 120-day repayment term. The annual interest rate on each draw down varies and indexes to the published London Interbank Offered Rate.

As of March 31, 2012, the total outstanding balance for the lines of credit was $12.1 million. The effective interest rates for the borrowings were in the range of 4.2% to 4.3% for the nine months ended March 31, 2012. There was no outstanding balance of bank borrowings at June 30, 2011.

Shareholders' Equity and Share-based Compensation

Shares Repurchase

On October 22, 2010, the Company's board of directors authorized a $25.0 million share repurchase program. Under this repurchase program the Company may, from time to time, repurchase shares from the open market or in privately negotiated transactions, subject to supervision and oversight by the board. During the three months ended March 31, 2012, the Company did not repurchase any shares under the program. During the nine months ended March 31, 2012, the Company repurchased an aggregate of 191,170 shares from the open market for a total cost of $1.6 million, at an average price of $8.23 per share. As of March 31, 2012, the Company repurchased an aggregate of 241,170 shares for a total cost of $2.3 million, at an average price of $9.40 per share since inception of the program. Shares repurchased are accounted for as treasury shares and the total cost of shares repurchased is recorded as a reduction of shareholders' equity. No repurchased shares have been retired.

Stock Options

The following table summarizes the Company's stock option activities for the nine months ended March 31, 2012:



			Weighted		Weighted
			Average		Average Grant
	Number of		Exercise Price		Date Fair Value		Aggregate
	Options		Per Share		Per Share		Intrinsic Value
Outstanding at June 30, 2011	4,461,875		$	9.56
Options granted	37,500		9.29		$	4.47
Options exercised	(218,726	)	3.00				$	1,364,845
Options canceled or forfeited	(174,743	)	12.04
Outstanding at March 31, 2012	4,105,906		$	9.80

Information with respect to stock options outstanding and exercisable at March 31, 2012 is as follows:



	Options Outstanding				Options Vested and Exercisable
	Shares	Weighted-Average Remaining Life (years)	Weighted-Average Exercise Price		Shares	Weighted-Average Exercise Price
Total options outstanding	4,105,906	5.45	$	9.80	3,098,918	$	8.59

Options vested and expected to vest	4,018,486	5.39	$	9.71

Options expected to vest are the result of applying the pre-vesting forfeiture rate assumption to total outstanding options.

The Company estimated the fair values of stock options using the Black-Scholes option pricing model to determine the fair value of share-based awards. The assumptions used to estimate the fair value of stock options granted under the Company's Stock Incentive Plans for the nine months ended March 31, 2012 were as follows:



	Nine Months Ended
	March 31,
	2012
Volatility rate		48% - 49%
Risk-free interest rate		0.9% - 1.1%
Expected option life		5.5 years
Dividend yield		0%

Restricted Stock Units ("RSU")

The following table summarizes the Company's RSU activities for the nine months ended March 31, 2012:



	Number of Restricted Stock Units			Weighted Average Grant Date Fair Value Per Share		Weighted Average Remaining Recognition Period (Years)		Aggregate Intrinsic Value
Outstanding at June 30, 2011		213,300
Awards granted		274,700		$	9.51
Awards released		(39,760	)
Awards forfeited		(43,600	)
Outstanding at March 31, 2012		404,640					2.49	$	3,892,637

Ending vested and expected to vest		344,215					2.37	$	3,311,346

The estimated fair value of RSU is based on the market price of the Company's stock on the grant date.

Employee Stock Purchase Plan

The Employee Stock Purchase Plan (the "ESPP") was established in May 2010 upon the completion of the Company's initial public offering. The assumptions used to estimate the fair values of common shares issued under the ESPP were as follows:



	Nine Months Ended
	March 31,
	2012
Volatility rate	50%
Risk-free interest rate	0.1% - 0.3%
Expected term	1.3 years
Dividend yield	0%

The total share-based compensation expense recognized for the periods presented was allocated as follows:



	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2012		2011		2012		2011
	(in thousands)				(in thousands)
Cost of goods sold	$	171	$	190	$	385	$	486
Research and development expenses	285		391		916		1,109
Selling, general and administrative expenses	840		863		2,670		2,621

	$	1,296	$	1,444	$	3,971	$	4,216

As of March 31, 2012, total unrecognized compensation expenses of unvested awards, adjusted for estimated forfeitures was $6.2 million and is expected to be recognized over a weighted-average period of 1.8 years.

Net Income Per Share

The following table presents the calculation of basic and diluted net income per share:



	Three Months Ended March 31,				Nine Months Ended March 31,
	2012		2011		2012		2011
	(in thousands, except per share data)
Numerator:
Net income - basic and diluted	$	2,604	$	10,654	$	6,217	$	28,145

Denominator:
Basic:
Weighted average common shares used in computing basic net income per share	24,675		24,372		24,578		23,155
Diluted:
Effect of potentially dilutive securities:
Stock options, RSU and ESPP	972		1,533		987		1,513
Weighted average common shares used in computing diluted net income per share	25,647		25,905		25,565		24,668
Net income per share:
Basic	$	0.11	$	0.44	$	0.25	$	1.22
Diluted	$	0.10	$	0.41	$	0.24	$	1.14

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 March 31,		Nine Months Ended March 31,
	2012	2011	2012	2011
	(in thousands)		(in thousands)
Employee stock options and awards	2,531	1,239	2,708	1,546
ESPP to purchase common shares	233	264	373	294
Total potential dilutive securities	2,764	1,503	3,081	1,840

Comprehensive Income

The components of total comprehensive income are as follows:



	Three Months Ended March 31,				Nine Months Ended March 31,
	2012		2011		2012		2011
	(in thousands)				(in thousands)
Net income	$	2,604	$	10,654	$	6,217	$	28,145
Other comprehensive income:
Currency translation differences	69		42		94		240
Total comprehensive income	$	2,673	$	10,696	$	6,311	$	28,385

Income Taxes

The Company recognized income tax expense of approximately $1.0 million and $0.7 million for the three months ended March 31, 2012 and 2011, respectively. The Company recognized income tax expense of approximately $2.7 million and $2.0 million for the nine months ended March 31, 2012 and 2011, respectively. The estimated effective tax rate was 28.5% and 5.9% for the three months ended March 31, 2012 and 2011, respectively. The estimated effective tax rate was 29.9% and 6.6% for the nine months ended March 31, 2012 and 2011, respectively. The effective tax rates for the three and nine months ended March 31, 2012 were higher than those for same periods of last year primarily due to the changes in the mix of earnings in various geographic jurisdictions between the two periods.

The Company files federal and state income tax returns in the United States and in various foreign jurisdictions. The tax years 2001 to 2011 remain open to examination by U.S. federal and state tax authorities. The tax years 2005 to 2011 remain open to examination by various foreign tax authorities.

The Company is subject to ongoing tax examinations of our tax returns by the Internal Revenue Service and other tax authorities in various jurisdictions. The Company regularly assesses the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of its provision for income taxes. These assessments can require considerable estimates and judgments. As of March 31, 2012, the gross amount of unrecognized tax benefits was approximately $6.7 million. If the estimate of income tax liabilities proves to be less than the ultimate assessment, then a further charge to expense would be required. If events occur and the payment of these amounts ultimately proves to be unnecessary, the reversal of the liabilities would result in tax benefits being recognized in the period in which the Company determines the liabilities are no longer necessary. The Company does not anticipate any material changes to its uncertain tax positions during the next twelve months.

Commitments

Commitments and Contingencies

As of March 31, 2012 and June 30, 2011, the Company had approximately $30.3 million and $22.0 million, respectively, of outstanding purchase commitments primarily for purchases of semiconductor raw materials and wafers and approximately $1.5 million and $5.2 million capital commitments for the purchase of property and equipment, respectively.

The Company is currently not a party to any material legal proceedings. The Company had in the past, and may from time to time in the future, become involved in legal proceedings arising from the normal course of business activities. The semiconductor industry is characterized by frequent claims and litigation, including claims regarding patent and other intellectual property rights as well as improper hiring practices. Irrespective of the validity of such claims, the Company could incur significant costs in the defense thereof or could suffer adverse effects on its operations.

Guarantees

We indemnify our directors and certain employees as permitted by law, and have entered into indemnification agreements with our directors and executive officers. We have not recorded a liability associated with these indemnification arrangements, as we historically have not incurred any material costs associated with such indemnification obligations. Costs associated with such indemnification obligations may be mitigated by insurance coverage that we maintain, however, such insurance may not cover any, or may cover only a portion of, the amounts we may be required to pay. In addition, we may not be able to maintain such insurance coverage in the future.

We also have indemnification clauses in various contracts that we enter into in the normal course of business, such as indemnifications in favor of customers in respect of liabilities they may incur as a result of purchasing our products should such products infringe the intellectual property rights of a third party. We have not historically paid out any material amounts related to these indemnifications, therefore, no accrual has been made for these indemnifications.