8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________

FORM 8-K

_________________________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 4, 2016

 _________________________________

Alpha and Omega Semiconductor Limited

(Exact name of registrant as specified in its charter)

Bermuda	001-34717	77-0553536
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

Clarendon House

2 Church Street

Hamilton HM 11

Bermuda

(Address of principal executive offices)

(408) 830-9742

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

The information in Item 2.02 of this Current Report, including the accompanying exhibits, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of Section 18. The information in Item 2.02 of this Current Report shall not be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language contained in such filing.

On May 4, 2016, Alpha and Omega Semiconductor Limited (the “Company”) issued a press release regarding its financial results for the fiscal third quarter of 2016 ended March 31, 2016. A copy of the press release is furnished herewith as Exhibit 99.1 and is incorporated by reference herein. On the same day, the Company is holding an investor teleconference and webcast, which includes management’s prepared remarks regarding the financial results for the fiscal third quarter of 2016. The script of such prepared remarks is furnished herewith as Exhibit 99.2 and is incorporated by reference herein.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.
99.1	Press Release dated May 4, 2016
99.2	Script of Management’s Prepared Remarks for Investor Teleconference and Webcast, dated May 4, 2016

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: May 4, 2016	Alpha and Omega Semiconductor Limited
	By:	/s/    Yifan Liang
	Name:	Yifan Liang
	Title:	Chief Financial Officer and Corporate Secretary

EX-99.1

EXHIBIT 99.1

Alpha and Omega Semiconductor Reports Financial Results for the Fiscal Third Quarter of 2016 Ended March 31, 2016

SUNNYVALE, Calif., May 04, 2016 (GLOBE NEWSWIRE) -- Alpha and Omega Semiconductor Limited (“AOS”) (NASDAQ:AOSL), today reported financial results for the fiscal third quarter of 2016 ended March 31, 2016.

The results for the fiscal third quarter of 2016 ended March 31, 2016 were as follows:

GAAP Financial Comparison
Quarterly
(in millions, except percentage and per share data)
(unaudited)
	Three Months Ended
	March 31, 2016			December 31, 2015			March 31, 2015
Revenue	$	83.0		$	79.8		$	76.9
Gross Margin	19.7		%	18.8		%	16.6		%
Operating Loss	$	—		$	(0.6	)	$	(3.4	)
Net Loss	$	(1.3	)	$	(1.6	)	$	(4.1	)
Loss Per Share - Diluted	$	(0.06	)	$	(0.07	)	$	(0.16	)

On a non-GAAP basis excluding the effect of share-based compensation expenses in each of the periods presented, impairment of long-lived assets in the quarter ended December 31, 2015, and joint venture related costs in the quarter ended March 31, 2016, 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)
	Three Months Ended
	March 31, 2016			December 31, 2015			March 31, 2015
Revenue	$	83.0		$	79.8		$	76.9
Gross Margin	19.9		%	19.0		%	16.8		%
Operating Income (Loss)	$	1.3		$	0.9		$	(2.4	)
Net Income (Loss)	$	0.1		$	(0.1	)	$	(3.2	)
Income (Loss) Per Share - Diluted	$	—		$	—		$	(0.12	)

“AOS delivered strong execution in the March quarter that typically marks the lowest season for us,” said Dr. Mike Chang, chairman and CEO of AOS.  “The revenue came in at the high end of our guidance range, and the gross margin and the bottom line exceeded the stated expectations. Our diversified product portfolio enabled us to deliver a sound performance amid challenges in the PC market, resulting in counter-seasonal growth.  We believe that the improved operating performance is evidence that our turnaround strategies are beginning to bear fruit.  We remain keenly focused on driving a more solid turnaround with full strength to achieve revenue growth and profitability.”

Business Outlook for Fiscal Q4 Ending June 30, 2016

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 $87 million and $91 million.
  
  
• GAAP gross margin is expected to be 20.0% plus or minus 1%. 
  
  
• GAAP operating expenses are expected to be in the range of $15.8 million to $17.8 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 expenses include estimated share-based compensation expense of $1.1 million to $1.3 million.

Conference Call and Webcast
AOS plans to conduct an investor teleconference and live webcast to discuss the financial results for the fiscal third quarter of 2016 ended March 31, 2016 today, May 4, 2016 at 2:00 p.m. PT / 5:00 p.m. ET.  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.  In addition, a copy of the script of prepared remarks by CEO and CFO at the investor teleconference and webcast is available prior to the call at the Company’s investor relations website.

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, statements relating to the expected new product cycle, projected amount of revenues, gross margin, operating income/(expenses), tax expenses, net income/(loss), and share-based compensation expenses, expectation with respect to improvement in profit, our recovery progress and competitive position, our ability and strategy to develop new products, expand our sales, design wins, revenue and profitability, growth in revenue and market share, seasonality fluctuation in customer demand, the execution of our business plan, and other information under the section entitled “Business Outlook for Fiscal Q4 Ending June 30, 2016”.  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, our ability to successfully operate joint venture, and other risks as described in our SEC filings, including our Annual Report on Form 10-K for the fiscal year ended June 30, 2015 filed on August 27, 2015.  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/(loss), net income/(loss) and diluted earnings (loss) per share (“EPS”).  These supplemental measures exclude share-based compensation expenses, impairment of long-lived assets and joint venture related costs.  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/(loss), 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 it 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, smart phones, 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									Nine Months Ended
	March 31,  2016			December 31,  2015			March 31,  2015			March 31,  2016			March 31,  2015
Revenue	$	82,987		$	79,825		$	76,918		$	244,251		$	246,463
Cost of goods sold	66,668			64,853			64,154			197,899			200,297
Gross profit	16,319			14,972			12,764			46,352			46,166
Gross margin	19.7		%	18.8		%	16.6		%	19.0		%	18.7		%
Operating expenses
Research and development	6,924			5,941			6,929			19,029			20,155
Selling, general and administrative	9,444			9,197			9,219			28,300			27,958
Impairment of long-lived assets	—			432			—			432			—
Total operating expenses	16,368			15,570			16,148			47,761			48,113
Operating loss	(49		)	(598		)	(3,384		)	(1,409		)	(1,947		)
Interest income and other, net	10			9			18			30			92
Interest expense	(5		)	(7		)	(41		)	(22		)	(157		)
Loss before income taxes	(44		)	(596		)	(3,407		)	(1,401		)	(2,012		)
Income tax expense	1,219			1,015			698			3,448			2,826
Net loss	$	(1,263	)	$	(1,611	)	$	(4,105	)	$	(4,849	)	$	(4,838	)
Net loss per share:
Basic	$	(0.06	)	$	(0.07	)	$	(0.16	)	$	(0.22	)	$	(0.18	)
Diluted	$	(0.06	)	$	(0.07	)	$	(0.16	)	$	(0.22	)	$	(0.18	)
Weighted average number of common shares used to compute net loss per share:
Basic	22,232			22,269			26,447			22,400			26,469
Diluted	22,232			22,269			26,447			22,400			26,469

Alpha and Omega Semiconductor Limited
Condensed Consolidated Balance Sheets
(in thousands, except par value per share)
(unaudited)
	March 31, 2016			June 30, 2015
ASSETS
Current assets:
Cash and cash equivalents	$	78,923		$	106,085
Restricted cash	347			368
Accounts receivable, net	32,036			38,781
Inventories	67,911			64,175
Deferred income tax assets	2,959			2,205
Other current assets	5,772			4,279
Total current assets	187,948			215,893
Property, plant and equipment, net	112,497			119,579
Intangible assets, net	16			17
Goodwill	269			269
Deferred income tax assets - long term	10,193			10,848
Other long-term assets	2,971			2,011
Total assets	$	313,894		$	348,617
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	47,041		$	44,083
Accrued liabilities	22,011			19,225
Income taxes payable	1,724			1,372
Deferred margin	807			716
Capital leases	255			941
Total current liabilities	71,838			66,337
Income taxes payable - long term	1,576			1,601
Deferred income tax liabilities	3,913			3,023
Capital leases - long term	45			64
Other long term liabilities	797			953
Total liabilities	78,169			71,978
Shareholders' equity:
Preferred shares, par value $0.002 per share:
Authorized: 10,000 shares, issued and outstanding: none at March 31, 2016 and June 30, 2015	—			—
Common shares, par value $0.002 per share:
Authorized: 50,000 shares, issued and outstanding: 28,039 shares and 22,360 shares, respectively at March 31, 2016 and 27,314 shares and 26,316 shares, respectively at June 30, 2015	56			55
Treasury shares at cost, 5,679 shares at March 31, 2016 and 998 shares at June 30, 2015	(50,470		)	(8,593		)
Additional paid-in capital	187,148			181,040
Accumulated other comprehensive income	772			905
Retained earnings	98,219			103,232
Total shareholders’ equity	235,725			276,639
Total liabilities and shareholders’ equity	$	313,894		$	348,617

Alpha and Omega Semiconductor Limited
Reconciliation of Gross Profit to Non-GAAP Gross Profit
(in thousands)
(unaudited)
	Three Months Ended									Nine Months Ended
	March 31,  2016			December 31,  2015			March 31,  2015			March 31,  2016			March 31,  2015
U.S. GAAP gross profit	$	16,319		$	14,972		$	12,764		$	46,352		$	46,166
Share-based compensation:
Cost of goods sold	187			157			167			475			495
Non-GAAP gross profit	$	16,506		$	15,129		$	12,931		$	46,827		$	46,661
Non-GAAP gross margin	19.9		%	19.0		%	16.8		%	19.2		%	18.9		%

Alpha and Omega Semiconductor Limited
Reconciliation of Operating Loss to Non-GAAP Operating Income (Loss)
(in thousands)
(unaudited)
	Three Months Ended									Nine Months Ended
	March 31,  2016			December 31,  2015			March 31,  2015			March 31,  2016			March 31,  2015
U.S. GAAP operating loss	$	(49	)	$	(598	)	$	(3,384	)	$	(1,409	)	$	(1,947	)
Share-based compensation:
Cost of goods sold	187			157			167			475			495
Research and development	309			264			43			766			542
Selling, general and administrative	677			664			730			1,806			2,282
Total share-based compensation	1,173			1,085			940			3,047			3,319
Joint venture related costs	180			—			—			180			—
Impairment of long-lived assets	—			432			—			432			—
Non-GAAP operating income (loss)	$	1,304		$	919		$	(2,444	)	$	2,250		$	1,372

Alpha and Omega Semiconductor Limited
Reconciliation of Net  Loss to Non-GAAP Net Income (Loss)
(in thousands, except per share amounts)
(unaudited)
	Three Months Ended									Nine Months Ended
	March 31,  2016			December 31,  2015			March 31,  2015			March 31,  2016			March 31,  2015
U.S. GAAP net loss	$	(1,263	)	$	(1,611	)	$	(4,105	)	$	(4,849	)	$	(4,838	)
Share-based compensation:
Cost of goods sold	187			157			167			475			495
Research and development	309			264			43			766			542
Selling, general and administrative	677			664			730			1,806			2,282
Total share-based compensation	1,173			1,085			940			3,047			3,319
Joint venture related costs	180			—			—			180			—
Impairment of long-lived assets	—			432			—			432			—
Non-GAAP net income (loss)	$	90		$	(94	)	$	(3,165	)	$	(1,190	)	$	(1,519	)
Non-GAAP diluted net income (loss) per share	$	—		$	—		$	(0.12	)	$	(0.05	)	$	(0.06	)
Weighted-average number of common shares used in computing non-GAAP net income (loss) per share:
Diluted shares	22,944			22,269			26,447			22,400			26,469

CONTACT: 
Alpha and Omega Semiconductor Limited
Investor Relations
So-Yeon Jeong
408-789-3172
investors@aosmd.com

EX-99.2

EXHIBIT 99.2

Alpha and Omega Semiconductor Limited

Prepared Remarks of Investor Conference Call

for the Quarter Ended March 31, 2016

May 4, 2016

So-Yeon Jeong (Moderator):

Good afternoon, everyone, and welcome to the Alpha and Omega Semiconductor’s conference call for fiscal 2016 third quarter financial results. This is So-Yeon Jeong, Investor Relations representative for the company. With me today are Dr. Mike Chang, our CEO, and Yifan Liang, our CFO. This call is being recorded and broadcasted live over the Web and can be accessed for seven days following the call via the link in the Investor Relations section of our website at www.aosmd.com.

The earnings release was distributed by globe newswire today, May 4, 2016, after the market closed. The release is also posted on the company's website. Our earnings release and this presentation include certain non-GAAP financial measures. We use non-GAAP measures because we believe they provide useful information about our operating performance that should be considered by investors in conjunction with the GAAP measures that we provide. A reconciliation of these non-GAAP measures to comparable GAAP measures is included in our earnings release.

We would like to remind you that during the course of this conference call, we will make forward-looking statements, including discussions of business outlook and financial projections. These forward-looking statements are based on management's current expectations and involve risks and uncertainties that could cause our actual results to differ materially from such expectations. For a more detailed description of these risks and uncertainties, please refer to our recent and subsequent filings with the SEC. We assume no obligations to update the information provided in today's call.

Now, I’ll turn the discussion over to Yifan, our CFO, to provide an overview of the third fiscal quarter financial results.

Page 1

Yifan Liang (Chief Financial Officer):

Thank you, So-Yeon. Good afternoon and thank you for joining us. To begin, I will discuss financial results for the quarter. Then I’ll turn the call over to Mike, our CEO, who will review the company’s business highlights and I will follow-up with our guidance for the next quarter. Finally, we’ll reserve time for questions-and-answers.

Revenue for the March quarter was $83.0 million, an increase of 4.0% quarter over quarter and an increase of 7.9% over the same quarter last year. Our new products continue to show growing momentum during our typical lower season.

In terms of product mix, MOSFET revenue was $63.5 million, up 6.9% quarter over quarter, and up 7.2% over the same quarter last year. Power IC revenue was $16.3 million, down 0.9% quarter over quarter and up 18% over the same quarter last year. Service revenue was $3 million, as compared to $4.0 million for the prior quarter and the same quarter last year.

Next, I would like to provide the segment mix report. Before I do, I should inform you that we have improved our segment tracking system during the quarter to better reflect our evolving business. This change does not affect our overall revenue, gross margin, operating margin or net margin. In the past, we classified revenue segment by customers based on the core business they are in. Our customers have diversified their business into new applications, therefore, we enhanced our tracking system using both customers and part numbers based on product applications. This more clearly delineates our revenue between the segments. To facilitate the quarter over quarter comparison, I will also provide the December quarter’s segment mix based on the new tracking system.

The March quarter’s Computing segment represented 36.4% of the total revenue, Consumer 27.1%, Power Supply and Industrial 21.9%, Communications 10.5%, Service 3.9%, and others 0.2%. Under the new segment tracking system, the December quarter’s segment mix would be: Computing 36.5%, Consumer 26.0%, Power Supply and Industrial 21.5%, Communications 10.9%, and Service 5.1%.

Page 2

Gross margin was 19.7% for the March quarter, as compared to 18.8% in the prior quarter and 16.6% for the same quarter last year. The increase in gross margin quarter over quarter was mainly driven by the new product contribution and higher factory utilization.

Operating expenses for the quarter were $16.4 million, compared to $15.6 million for the prior quarter and $16.1 million for the same quarter last year. The higher operating expenses quarter over quarter were primarily due to the higher R&D expenses. Also, the December quarter’s operating expenses were lower than normal due to the office shutdown and more vacation taken by employees during the December quarter holiday season.

Income tax expense was $1.2 million for the quarter, compared to $1.0 million for the prior quarter and $0.7 million for the same quarter last year.

Net loss for the quarter was approximately $1.3 million or 6 cents loss per share, as compared to 7 cents loss per share for the prior quarter and 16 cents loss per share for the same quarter last year. Net loss in the March quarter included $1.2 million share-based compensation charge as compared to $1.1 million in the prior quarter and $0.9 million for the same quarter last year. It also included $0.2 million expenses related to our joint venture agreement signed in the March quarter.

Non GAAP EPS was breakeven for the March quarter, compared to breakeven for the prior quarter and 12 cents loss per share for the same quarter last year.

Cash flow from operations was $2.0 million for the March quarter, compared to $16.8 million for the prior quarter and $3.0 million for the same quarter last year.

EBITDAS for the March quarter was $8.1 million compared to $7.8 million for the prior quarter and $4.3 million for the same quarter last year.

Moving on to the balance sheet.

We completed the March quarter with cash and cash equivalents balance of $78.9 million, as compared to $81.9 million at the end of last quarter and $112.9 million a year ago. During the quarter, we repurchased approximately 0.2 million shares for a total amount of $1.8 million.

Page 3

Net trade receivables were $32.0 million, as compared to $26.1 million at the end of last quarter and $31.1 million for the same quarter last year. Day Sales Outstanding for the quarter was 39 days compared to 36 days in the prior quarter.

Net inventory was $67.9 million at the quarter-end, up from $61.1 million for last quarter and from $66.3 million for the prior year. Average days in inventory were 87 days for the quarter compared to 85 days in the prior quarter.

Net Property, Plant and Equipment balance was $112.5 million, as compared to $112.1 million last quarter and $115.8 million for the prior year. Capital expenditures were $3.2 million for the quarter. Our expectation for FY2016 capital expenditure is around $20 million.

On March 29, 2016 we executed a definitive agreement with two strategic investment funds owned by the authority of Chongqing, China to form a joint venture for a new power semiconductor packaging/testing and wafer fabrication facility in Chongqing. We own 51% and the Chongqing funds own 49% of the equity interest of the joint venture. The financial results of the joint venture are expected to be consolidated with the company’s financial statements. The first phase of the construction, which is for packaging, is expected to complete in the second half of 2017. Then, we will gradually relocate assembly and test equipment that we contributed from our Shanghai facility, while establishing our Shanghai facility as a center of supply chain management, technology development, and high-value product manufacturing. The second phase of the construction for the 12” fab is expected to start later, depending on the conditions and various business factors. We expect the joint venture to provide significant cost savings for us as well as drive meaningful improvements in working capital and capital expenditures.

With that, now I would like to turn the call over to our CEO, Dr. Mike Chang, who will provide the business highlights for the quarter.

Mike Chang (Chief Executive Officer):

Thank you, Yifan!

AOS delivered strong execution in the March quarter. The revenue came in at the high end of our guidance range and the gross margin and the bottom line exceeded the stated expectations. Our diversified product portfolio enabled us to deliver solid and stable performance amid the prevailing challenges in the PC market, resulting in counter-seasonal growth.

Page 4

AOS is off to a good start in the final phase of the recovery plan with unwavering focus on accelerating diversification and returning to profitability. In the past few quarters, we successfully secured critical design ins and wins in multiple key accounts with our differentiated new products. The business pipeline continues to grow, which sets the stage for meaningful expansion of revenue opportunities. Along with the revenue growth, we expect to achieve profitability derived from the leverage in AOS business model.

Concurrently, we are creating new competitive advantages for sustainable long-term growth beyond recovery. As an example, we reached an important milestone in our strategic roadmap by forming a joint venture with Chonqing. The joint venture is designed to bring together the technological and operational capability of AOS in power semiconductor with the capital resources and regional infrastructure support of the Chongqing authority. We are excited about the prospect of further diversifying the product offerings and improving our access to customers in China where our business is growing.

Now turning to our business segments review, as Yifan mentioned earlier, we made some improvement to the segment tracking system to better reflect our evolving business.

First, Computing segment: It represented 36.4% of the total revenue, and was up 3.6% quarter over quarter against the sharp decline in PC demand in the March quarter. AOS is well positioned to capture the momentum in the forthcoming Skylake ramp and we continue to expand our market share and BOM content. We expect to maintain, if not improve, our established PC position against weak PC market.

Second, Consumer segment: The revenue marked 27.1% of the total. It increased by 8.5% sequentially. The growth was attributable mainly to the sizable product ramp with major TV customers for their high-end TVs. The leading OEMs with whom we have been strongly positioned are aggressively ramping up their high-end TV production, and AOS is successfully supporting their needs with highly efficient products and relentless dedication. We continue to strive to replicate the success with more customers in the consumer segment.

Page 5

Third, Power Supply and Industrial segment: It was 21.9% of the total revenue. Our Power Supply and Industrial business turned in its fourth consecutive quarter of sequential growth, posting 6% increase in revenue during the March quarter. The business traction from new products for quick charger applications remains intact. In addition, we saw some incremental revenue across various industrial applications. We are encouraged by the prospects and progress we are making in this business segment.

Finally, Communications segment: The revenue was 10.5% of the total, and was up 0.5% sequentially despite the low seasonality. We are steadily growing our footprint in key smartphone applications such as battery management accounts, paving the way for the ramp in the June quarter. We believe that our products provide a compelling advantage and are gaining traction. Even though this segment represents a relatively small business today, it has the potential to become an important contributor to revenues and earnings in the future. We expect this incremental new business to continue to contribute to our growth.

In summary, we are making good progress in diversifying our business and creating new competitive edge for long-term success. I am pleased that the improved operating performance for the March quarter is evidence that our growth strategies and executions are beginning to bear fruit.

Looking ahead, we expect to continue to create healthy demand by introducing differentiated products and by expanding the customer penetration. While our recovery is still tender, we remain keenly focused on driving a more solid turnaround with full strength to achieve revenue growth and profitability.

Yifan Liang: Guidance for the next quarter

As we look forward to the fourth quarter of fiscal year 2016, we expect:

· Our June quarter’s revenue to be in the range of $87 million to $91 million.

· GAAP gross margin is expected to be approximately 20.0% plus or minus 1%.

· GAAP operating expenses are expected to be in the range of $15.8 million to $17.8 million.

· Tax expenses are expected to be about $1.0 million to $1.2 million.

· Our share-based compensation should range from $1.1 million to $1.3 million.

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As per our regular practice, we are not assuming any obligations to update this information.

With that, we will open up the floor for questioning.

Closing:

This concludes our earnings call today. Thank you for your interest in AOS and we look forward to talking to you again next quarter.

Forward Looking Statements

This script 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, statements relating to projected amount of revenues, gross margin, operating expenses, operating income/(loss), tax expenses, net income/(loss), and share-based compensation expenses, statements regarding market segments; expectation with respect to improvement in profit, our recovery progress and competitive position; the progress, outlook and commencement of operation of our joint venture with Chongqing funds; our ability and strategy to develop new products, expand our sales, revenue and profitability, growth in revenue and market share, including adoption of low-voltage and power IC products and ramp up of Skylake platform; seasonality fluctuation in customer demand; the execution of our business plan, and other information regarding the future development of our business. 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, our ability to execute the joint venture successfully, and other risks as described in our SEC filings, including our Annual Report on Form 10-K for the fiscal year ended June 30, 2015 filed on August 27, 2015 and the Quarterly Reports on Form 10-Q. 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.

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