ALPHA & OMEGA SEMICONDUCTOR LtdAOSL

ALPHA & OMEGA SEMICONDUCTOR Ltd Leases Disclosure

10-KFiled Aug 28, 20253 min read
Leases
The Company evaluates contracts for lease accounting at contract inception and assesses lease classification at the lease commencement date. Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities and operating lease liabilities - long-term on the Company's consolidated balance sheets. Finance leases are included in property, plant and equipment, finance lease liabilities and finance lease liabilities-long-term on the consolidated balance sheets. The Company recognizes a ROU asset and corresponding lease obligation liability at the lease commencement date where the lease obligation liability is measured at the present value of the minimum lease payments. As most of the leases do not provide an implicit rate, the Company uses its incremental borrowing rate at lease commencement. The Company uses an interest rate commensurate with the interest rate to borrow on a collateralized basis over a similar term with an amount equal to the lease payments. Operating leases are primarily related to offices, research and development facilities, sales and marketing facilities, and manufacturing facilities. In addition, long-term supply agreements to lease gas tank equipment and purchase industrial gases are accounted for as operating leases. Lease agreements frequently include renewal provisions and require the Company to pay real estate taxes, insurance and maintenance costs. For operating leases, the amortization of the ROU asset and the accretion of its lease obligation liability result in a single straight-line expense recognized over the lease term. The finance lease is related to the $5.1 million of a machinery lease financing with a vendor. In September 2022, the lease was amended to make a monthly payment of principal and interest as a fixed amount effective in October 2022. Other terms remain the same. The amendment was accounted for as a lease modification and no gain or loss was recognized. The Company does not record leases on the consolidated balance sheet with a term of one year or less.
The components of the Company’s operating and finance lease expenses are as follows for the years presented (in thousands):
Year Ended June 30,
20252024
Operating leases:
     Fixed rent expense$6,497 $6,268 
     Variable rent expense1,098 1,095 
Finance lease:
     Depreciation of equipment
513 513 
     Interest210 277 
Short-term leases:
     Short-term lease expenses173 161 
               Total lease expenses$8,491 $8,314 
Supplemental balance sheet information related to the Company’s operating and finance leases is as follows (in thousands, except lease term and discount rate):

June 30,  
20252024
Operating Leases:
     ROU assets associated with operating leases$21,288 $25,050 
Finance Lease:
     Property, plant and equipment, gross$5,133 $5,133 
     Accumulated depreciation(1,684)(1,171)
          Property, plant and equipment, net$3,449 $3,962 
Weighted average remaining lease term (in years)
     Operating leases5.005.54
     Finance lease2.253.25
Weighted average discount rate
     Operating leases4.88 %4.91 %
     Finance lease7.51 %7.51 %

Supplemental cash flow information related to the Company’s operating and finance leases is as follows (in thousands):

Year Ended June 30,
20252024
Cash paid from amounts included in the measurement of lease liabilities:
     Operating cash flows from operating leases$6,466 $6,330 
     Operating cash flows from finance lease$210 $277 
     Financing cash flows from finance lease$935 $867 
Non-cash investing and financing information:
     Operating lease right-of-use assets obtained in exchange for lease obligations$1,162 $5,884 

Future minimum lease payments are as follows as of June 30, 2025 (in thousands):

Operating LeasesFinance Leases
2026
$5,935 $1,144 
2027
5,011 1,144 
2028
4,419 191 
2029
4,055 — 
20303,430 — 
Thereafter1,841 — 
Total minimum lease payments24,691 2,479 
Less amount representing interest(2,788)(198)
Total lease liabilities$21,903 $2,281 

Historical Timeline

Fiscal YearFiled
2025Aug 28, 2025Showing above
2024Aug 23, 2024
2023Aug 29, 2023
2022Sep 20, 2022
2021Aug 30, 2021
2020Sep 2, 2020

About Leases Disclosures

Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.

Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.

Other Available Disclosures

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