APPLIED OPTOELECTRONICS, INC. Fair Value Disclosure
NOTE J—FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table presents a summary of the Company’s financial instruments measured at fair value on a recurring basis as of December 31, 2025 (in thousands):
| Quoted prices | Significant | |||||||||||||||
| in active | other | |||||||||||||||
| markets for | observable | Significant | ||||||||||||||
| identical | remaining | unobservable | ||||||||||||||
| assets (Level 1) | inputs (Level 2) | inputs (Level 3) | Total | |||||||||||||
| Assets: | ||||||||||||||||
| Cash and cash equivalents | $ | 206,140 | $ | — | $ | — | $ | 206,140 | ||||||||
| Restricted cash | 9,895 | — | — | 9,895 | ||||||||||||
| Total assets | $ | 216,035 | $ | — | $ | — | $ | 216,035 | ||||||||
| Liabilities: | ||||||||||||||||
| Bank acceptance payable | — | $ | 33,363 | — | $ | 33,363 | ||||||||||
| Convertible senior notes | — | 145,231 | — | 145,231 | ||||||||||||
| Total liabilities | $ | — | $ | 178,594 | $ | — | $ | 178,594 | ||||||||
The following table presents a summary of the Company’s financial instruments measured at fair value on a recurring basis as of December 31, 2024(in thousands):
| Quoted prices | Significant | |||||||||||||||
| in active | other | |||||||||||||||
| markets for | observable | Significant | ||||||||||||||
| identical | remaining | unobservable | ||||||||||||||
| assets (Level 1) | inputs (Level 2) | inputs (Level 3) | Total | |||||||||||||
| Assets: | ||||||||||||||||
| Cash and cash equivalents | $ | 67,428 | $ | — | $ | — | $ | 67,428 | ||||||||
| Restricted cash | 11,705 | — | — | 11,705 | ||||||||||||
| Note receivable | — | — | — | — | ||||||||||||
| Total assets | $ | 79,133 | $ | — | $ | — | $ | 79,133 | ||||||||
| Liabilities: | ||||||||||||||||
| Bank acceptance payable | — | $ | 19,259 | — | $ | 19,259 | ||||||||||
| Convertible senior notes | — | 148,625 | — | 148,625 | ||||||||||||
| Total liabilities | $ | — | $ | 167,884 | $ | — | $ | 167,884 | ||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Feb 27, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 28, 2020 | |
| 2018 | Feb 26, 2019 | |
| 2017 | Feb 28, 2018 | |
| 2016 | Mar 9, 2017 | |
| 2015 | Mar 14, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.