AOS(AOSL) - 2020 Q1 - Quarterly Report

Product Development - The company introduced 55 new products during the three months ended September 30, 2019, contributing to a total portfolio of approximately 2,100 products[100]. - The company continues to invest in research and development to develop new technologies and products critical to long-term success[118]. Financial Performance - Total revenue for the three months ended September 30, 2019, was $117.8 million, an increase of$2.7 million, or 2.4%, compared to $115.1 million for the same quarter last year[128]. - Cost of goods sold was$90.9 million for the three months ended September 30, 2019, an increase of $8.4 million, or 10.2$82.5 million for the same quarter last year[129]. - Gross profit decreased to $26.9 million, representing a gross margin of 22.9$12.4 million, an increase of $1.0 million, or 8.6$11.4 million for the same quarter last year[130]. - Selling, general and administrative expenses decreased to $15.2 million, a reduction of$5.2 million, or 25.4%, compared to $20.4 million for the same quarter last year[132]. - Interest income and other income (loss), net was$(998,000), a decrease of $1.3 million, or 480.9$262,000 for the same period last year[133]. - Income tax expense for the three months ended September 30, 2019, was approximately $410,000, compared to$560,000 for the same period in 2018, a decrease of 26.8%[135]. - The effective tax rate for the three months ended September 30, 2019, was estimated at (27.3)%, compared to (159.8)% for the same period in 2018[135]. Operating Expenses - The company is incurring increased operating expenses due to costs associated with ramping up production activities and developing its new digital power business[106]. - The company expects selling, general and administrative expenses to fluctuate in the near future due to cost control measures and reduced pre-production costs[119]. Joint Ventures and Market Position - The company recorded a net loss of $2.9 million attributable to noncontrolling interest in the joint venture company during the September 2019 quarter[102]. - The company anticipates that the joint venture will deliver significant cost savings and enhance market positions in China in the long term[102]. Production and Manufacturing - The company expects to ramp up production at the 12-inch wafer fabrication facility gradually, which commenced limited mass production in July 2019[102]. - The company expects average selling prices of existing products to decline in the future, consistent with historical trends in the industry[109]. Cash Flow and Financing - The net cash used in operating activities for the three months ended September 30, 2019 was$1.2 million, resulting from a net loss of $1.9 million[153]. - The net cash used in investing activities for the three months ended September 30, 2019 was$15.8 million, primarily for purchases of property and equipment[155]. - The net cash used in financing activities for the three months ended September 30, 2019 was $1.1 million, primarily due to repayments of borrowings[157]. - As of September 30, 2019, the company had$105.4 million in cash, cash equivalents, and restricted cash[151]. - The company continues to finance operations and capital expenditures primarily through funds generated from operations and borrowing under various debt agreements[136]. Debt and Obligations - As of September 30, 2019, the outstanding balance of the short-term loan from China Everbright Bank was $0.8 million[137]. - The outstanding balance of the one-year loan from China Everbright Bank was 20 million RMB, equivalent to$2.8 million as of September 30, 2019[138]. - The total outstanding balance of loans from China Merchant Bank was 80 million RMB and 20 million RMB, totaling approximately $14 million as of September 30, 2019[139]. - The outstanding balance of the lease financing agreement was approximately$51.1 million as of September 30, 2019[142]. - The outstanding balance of the loan from The Export-Import Bank of China was 190 million RMB, equivalent to $26.7 million as of September 30, 2019[144]. - The outstanding balance of the term loan from Jireh was$16.6 million as of September 30, 2019[145]. Market Risks and Changes - There have been no material changes in market risks previously disclosed in the Annual Report for the year ended June 30, 2019[164]. - There were no material changes in contractual obligations from those disclosed in the Annual Report for the fiscal year ended June 30, 2019[161]. - Recent accounting pronouncements and their expected effects on operations and financial condition are detailed in the Quarterly Report[162].