##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
  Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    March 31,
    2011oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission File Number:
    001-33887
 Orion Energy Systems,
    Inc.
 (Exact name of Registrant as
    specified in its charter)
  Wisconsin

39-1847269(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)2210 Woodland Drive, Manitowoc, WI

54220(Address of principal executive
    offices)

(Zip Code)  (920) 892-9340
 (Registrants telephone
    number, including area code)
  Securities registered pursuant to Section 12(b) of the
    act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon stock, no par value

NYSE AMEX LLCCommon stock purchase rights

NYSE AMEX LLC   Securities registered pursuant to Section 12(g) of the
    act:
    None
  o þ
  o þ
  þ o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  Large accelerated
    filer o

Accelerated
    filer þ

Non-accelerated
    filer o(Do not check if a smaller
    reporting company)

Smaller reporting
    company o   Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE




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FORWARD-LOOKING
    STATEMENTS
  Form 10-K Form 10-K, Form 10-K. Form 10-K. Form 10-K.
  
    deterioration of market conditions, including customer capital
    expenditure budgets;
    our ability to compete and execute our growth strategy in a
    highly competitive market and our ability to respond
    successfully to market competition;
    increasing duration of customer sales cycles;
    the market acceptance of our products and services, including
    increasing customer preference to purchase our products through
    our Orion Throughput Agreements, or OTAs, rather than through
    cash purchases;
    our ability to effectively manage the credit risk associated
    with our increasing reliance on OTA contracts;
    price fluctuations, shortages or interruptions of component
    supplies and raw materials used to manufacture our products;
    loss of one or more key employees, customers or suppliers,
    including key contacts at such customers;
    our ability to effectively manage our product inventory to
    provide our products to customers on a timely basis;
    the increasing relative volume of our product sales through our
    wholesale channel;
    a reduction in the price of electricity;
    the cost to comply with, and the effects of, any current and
    future government regulations, laws and policies;
    increased competition from government subsidies and utility
    incentive programs;
    dependence on customers capital budgets for sales of
    products and services;
    our development of, and participation in, new product and
    technology offerings or applications;
    the availability of additional debt financing
    and/or
    equity capital;
    legal proceedings; and
    potential warranty claims.     2




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##### 



ORION
    ENERGY SYSTEMS, INC.
    ANNUAL REPORT ON
    FORM 10-K
    FOR THE YEAR ENDED MARCH 31, 2011
    Table of Contents
   
 PagePART IItem 1.


Business


4Item 1A


Risk Factors


18Item 1B


Unresolved Staff Comments


30Item 2


Properties


30Item 3


Legal Proceedings


30Item 4


Removed and Reserved


31PART IIItem 5


Market for Registrants Common Equity,
    Related Shareholder Matters and Issuer Purchases of Equity
    Securities


31Item 6


Selected Financial Data


34Item 7


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


36Item 7A


Quantitative and Qualitative Disclosures About
    Market Risk


56Item 8


Financial Statements and Supplementary Data


58Item 9


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


92Item 9A


Controls and Procedures


92Item 9B


Other Information


93PART IIIItem 10


Directors, Executive Officers and Corporate
    Governance


93Item 11


Executive Compensation


97Item 12


Security Ownership of Certain Beneficial Owners
    and Management and Related Shareholder Matters


118Item 13


Certain Relationships and Related Transactions,
    and Director Independence


120Item 14


Principal Accountant Fees and Services


121PART IVItem 15


Exhibits and Financial Statement Schedules


122Signatures


125EX-10.7EX-10.8EX-21.1EX-23.1EX-31.1EX-31.2EX-32.1   3




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##### Table of Contents



ITEM 1.
    BUSINESS  The following business overview is qualified in its entirety
    by the more detailed information included elsewhere or
    incorporated by reference in this Annual Report on
    Form 10-K.
    As used herein, unless otherwise expressly stated or the context
    otherwise requires, all references to Orion,
    we, us, our,
    Company and similar references are to Orion Energy
    Systems, Inc. and its consolidated subsidiaries.
  Restatement
    of Previously Issued Consolidated Financial Statements
  Form 10-K,
 
   
    
    No impact to our cash, cash equivalents, short-term investments;
    or overall cash flow; 
  
    An increase in our revenue of $2.8 million (3%) and
    $2.7 million (4%) for our full fiscal years 2011 and 2010,
    respectively; 
  
    An increase in our net income of $0.4 million (34%) and
    earnings per share of $0.02 (40%) for our full fiscal year 2011
    and a reduction in our net loss of $0.7 million (17%) and
    loss per share of $0.03 (16%) for our full fiscal year 2010; 
  
    An increase in our current assets of $3.8 million (6%) and
    total assets of $1.0 million (1%) and an increase in our
    total shareholders equity of $0.7 million (1%) for
    our fiscal year 2010 and an increase in our current assets of
    $2.7 million (4%) and total assets of $0.5 million
    (1%) and an increase in our total shareholders equity of
    $1.6 million (2%) and a decrease in our total liabilities
    of $1.1 million (5%) for our fiscal year 2011; and 
 
  
    An increase in our net cash used in operating activities of
    $2.4 million (38%), a decrease in net our cash used in
    investing activities of $2.0 million (26%) and an increase
    in our net cash provided by financing activities of
    $0.4 million (18%) for our fiscal year 2011 and an increase
    in our net cash used in operating activities of
    $2.1 million (24%) and a decrease in net our cash used in
    investing activities of $2.1 million (40%) for our fiscal
    year 2010; and 
 4




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
    An increase in our revenue, net income and earnings per share
    for the first three quarters of each of our fiscal years 2011
    and 2010 and a decrease in revenue, net income and earnings per
    share for the last quarter of fiscal year 2010 as follows (in
    thousands except per share amounts):  Revenue


Net Income (Loss)


Earnings (Loss) Per Diluted SharePreviously


As


%


Previously


As


%


Previously


AsPeriod

Reported


Restated


Change


Reported


Restated


Change


Reported


RestatedQuarter Ended June 30, 2009

$
12,628


$
13,875



9.9
%

$
(2,773
)

$
(2,080
)


25.0
%

$
(0.13
)

$
(0.10
)Quarter Ended Sept. 30, 2009


14,619



16,075



10.0
%


(1,399
)


(932
)


33.4
%

$
(0.06
)

$
(0.04
)Quarter Ended Dec. 31, 2009


19,295



20,827



7.9
%


807



754



(6.6
)%

$
0.04


$
0.03Quarter Ended March 31, 2010


18,876



17,296



(8.4
)%


(825
)


(1,215
)


(47.3
)%

$
(0.04
)

$
(0.05
)Quarter Ended June 30, 2010


14,688



16,977



15.6
%


(1,055
)


(536
)


49.2
%

$
(0.05
)

$
(0.02
)Quarter Ended Sept. 30, 2010


13,715



15,853



15.6
%


(160
)


540



437.5
%

$
(0.01
)

$
0.02Quarter Ended Dec. 31, 2010


29,671



30,056



1.3
%


644



756



17.4
%

$
0.03


$
0.03   Form 10-K Form 10-Q Form 10-K. Form 10-K,
  Overview
    Our
    Energy Management Division
  two-to-three-year
   5




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##### Table of Contents



Form 10-K,
  Cumulative fromDecember 1, 2001through March 31, 2011(In thousands, unaudited)HIF lighting systems sold(1)


2,056Total units sold (including HIF lighting systems)


2,715Customer kilowatt demand reduction(2)


639Customer kilowatt hours saved(2)(3)


15,494,020Customer electricity costs saved(4)

$
1,193,040Indirect carbon dioxide emission reductions from customers
    energy savings (tons)(5)


10,067Square footage retrofitted(6)


1,054,122     (1)
    
    HIF lighting systems includes all HIF units sold
    under the brand name Compact Modular and its
    predecessor, Illuminator.(2)
    
    A substantial majority of our HIF lighting systems, which
    generally operate at approximately 224 watts per six-lamp
    fixture, are installed in replacement of HID fixtures, which
    generally operate at approximately 465 watts per fixture in
    commercial and industrial applications. We calculate that each
    six-lamp HIF lighting system we install in replacement of an HID
    fixture generally reduces electricity consumption by
    approximately 241 watts (the difference between 465 watts and
    224 watts). In retrofit projects where we replace fixtures other
    than HID fixtures, or where we replace fixtures with products
    other than our HIF lighting systems (which other products
    generally consist of products with lamps similar to those used
    in our HIF systems, but with varying frames, ballasts or power
    packs), we generally achieve similar wattage reductions (based
    on an analysis of the operating wattages of each of our fixtures
    compared to the operating wattage of the fixtures they typically
    replace). We calculate the amount of kilowatt demand reduction
    by multiplying (i) 0.241 kilowatts per six-lamp equivalent
    unit we install by (ii) the number of units we have
    installed in the period presented, including products other than
    our HIF lighting systems (or a total of approximately
    2.25 million units).(3)
    
    We calculate the number of kilowatt hours saved on a cumulative
    basis by assuming the demand (kW) reduction for each fixture and
    assuming that each such unit has averaged 7,500 annual operating
    hours since its installation.(4)
    
    We calculate our customers electricity costs saved by
    multiplying the cumulative total customer kilowatt hours saved
    indicated in the table by $0.077 per kilowatt hour. The national
    average rate for 2010, which is the most current full year for
    which this information is available, was $0.0988 per kilowatt
    hour according to the United States Energy Information
    Administration.(5)
    
    We calculate this figure by multiplying (i) the estimated
    amount of carbon dioxide emissions that result from the
    generation of one kilowatt hour of electricity (determined using
    the Emissions and Generation Resource Integration Database, or
    EGrid, prepared by the United States Environmental Protection
    Agency, or EPA), by (ii) the number of customer kilowatt
    hours saved as indicated in the table. 6




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##### Table of Contents



(6)
    
    Based on 2.7 million total units sold, which contain a
    total of approximately 13.5 million lamps. Each lamp
    illuminates approximately 75 square feet. The majority of
    our installed fixtures contain six lamps and typically
    illuminate approximately 450 square feet.  Our
    Engineered Systems Division
    Our
    Industry
    Todays
    Electricity Market
  Growing Demand for Electricity. $
  Challenges to Capacity Expansion.
 7




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Underinvestment in Electricity Transmission and
    Distribution.
  High Electricity Costs.
  Our
    Market Opportunity
   8




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
    Forty-nine states, through legislation, regulation or
    voluntarily, have seen their utilities design and fund programs
    that promote or deliver energy efficiency. In fact, as of
    March 31, 2011, only Alaska and the District of Columbia,
    do not have some form of utility or state energy efficiency
    programs for any of their commercial or industrial customers.
    According to the ACEEE, as of June 2011, 26 states have
    implemented, or are in the process of implementing, Energy
    Efficiency Resource Standards, or EERS, or have an energy
    efficiency component to their Renewable Portfolio Standard, or
    RPS, which generally requires utilities to allocate funds to
    energy efficiency programs to meet near-term energy savings
    targets set by state governments or regulatory authorities.
    In recent years, there has also been an increasing focus on
    decoupling, a regulatory initiative designed to
    break the linkage between utility kWh sales and revenues, in
    order to remove the disincentives for utilities to promote load
    reducing initiatives. Decoupling aims to encourage utilities to
    actively promote energy efficiency by allowing utilities to
    generate revenues and returns on investment from employing
    energy management solutions. According to the Pew Center on
    Global Climate Change, 20 states had adopted or are
    considering adopting some form of decoupling for electric
    utilities.      The
    Role of Lighting
   9




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Our
    Solution
  50/50 Value Proposition.
  Multi-Facility Roll-Out Capability.
  Rapid Payback Period.
  Comprehensive Energy Management System.
  Easy Installation, Implementation and
    Maintenance. plug-and-play
  Expanded Product/Service Offerings.
  Base and Peak Load Relief for Utilities.
  Environmental Benefits.
 10




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Our
    Competitive Strengths
  Compelling Value Proposition.
  Large and Growing Customer Base.
  Systematized Sales Process.
  Innovative Technology.
  Expanded Product/Service Offerings.
  Expanded Partner Network.
 11




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Strong, Experienced Leadership Team.
  Innovative Financing Solutions.
  Efficient, Scalable Manufacturing Process.
  Our
    Growth Strategies
  Leverage Existing Customer Base.
  Target Additional Customers.
  Develop New Sources of Revenue Through Expanded
    Product/Service Offerings.
 12




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Expanded Partner Network.
  Provide Load Relief to Utilities and Grid
    Operators.
  Continue to Improve Operational
    Efficiencies.
  Products
    and Services
    Products
    The Compact Modular.
 13




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InteLite Dynamic Control Device. time-of-day,
  Apollo Solar Light Pipe.
  Renewable Energy Projects.
  Other Products.
   14




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Services
    
    comprehensive site assessment, which includes a review of the
    current lighting requirements and energy usage at the
    customers facility;
    site field verification, where we perform a test implementation
    of our energy management system at a customers facility
    upon request;
    utility incentive and government subsidy management, where we
    assist our customers in identifying, applying for and obtaining
    available utility incentives or government subsidies;
    engineering design, which involves designing a customized system
    to suit our customers facility lighting and energy
    management needs, and providing the customer with a written
    analysis of the potential energy savings and lighting and
    environmental benefits associated with the designed system;
    project management, which involves our working with the
    electrical contractor in overseeing and managing all phases of
    implementation from delivery through installation for a single
    facility or through multi-facility roll-outs tied to a defined
    project schedule;
    installation services, for our products, which we provide
    through our national network of qualified third-party
    installers; and
    recycling in connection with our retrofit installations, where
    we remove, dispose of and recycle our customers legacy
    lighting fixtures.    Our
    Customers
    American Standard International Inc.

Ecolab, Inc.

Newell Rubbermaid Inc.

SYSCO Corp.Anheuser-Busch Companies, Inc.

Gap, Inc.

OfficeMax, Inc.

Textron, Inc.Avery Dennison Corporation

General Electric Co.

PepsiAmericas Inc.

Toyota Motor Corp.Big Lots Inc.

Kraft Foods Inc.

Sealed Air Corp.

United Stationers Inc.Coca-Cola
    Enterprises Inc.

Miller Coors LLC

Sherwin-Williams Co.

U.S. Foodservice     Sales and
    Marketing
   15




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Competition
       16




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Intellectual
    Property
    
    Portions of our core HIF lighting technology (including our
    optically efficient reflector and some of our thermally
    efficient fixture I-frame constructions) are patented with
    additional patents pending.
    Our ballast assembly method is patent pending.
    Our light pipe technology and its manufacturing methods are
    patented with additional patents pending.
    Our wireless lighting control system is patent pending.
    The technology and methodology of our OTA financing program is
    patent pending.
    Our exterior lighting fixture technology is patent pending.
    Our hybrid HIF and LED lighting fixture technology is patent
    pending.      Manufacturing
    and Distribution
      Research
    and Development
   17




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Regulation
      Our
    Corporate and Other Available Information
  www.oesx.com Form 10-K, Form 10-Q, Form 8-K
  Employees
    ITEM 1A.
    RISK
    FACTORS  You should carefully consider the risk factors set forth
    below and in other reports that we file from time to time with
    the Securities and Exchange Commission and the other information
    in this Annual Report on
    Form 10-K.
    The matters discussed in the risk factors, and additional risks
    and uncertainties not currently known to us or that we currently
    deem immaterial, could have a material adverse effect on our
    business, financial condition, results of operation and future
    growth prospects and could cause the trading price of our common
    stock to decline.
  Our
    financial performance is dependent on our ability to execute on
    our growth strategy.
   18




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Increasing
    use of our OTA financing program could require us to seek
    additional debt financing and/or equity capital and expose us to
    financing risk and additional customer credit risk and impact
    our financial results.
  and/or
  and/or and/or
  Our
    inability to retain key employees or protect our partner network
    could adversely affect our operations and our ability to execute
    on our operating plan and growth strategy.
    Adverse
    conditions in the global economy and disruption of financial
    markets have negatively impacted, and could continue to
    negatively impact, our customers, suppliers and
    business.
    Adverse
    market conditions have led to increasing duration of customer
    sales cycles, limitations on customer capital budgets, closure
    of facilities and the loss of key contacts due to workforce
    reductions at existing and prospective customers.
   19




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Our
    renewable energy technologies involve many risks and
    uncertainties. Many new technologies do not become commercially
    profitable products, applications or services despite extensive
    development and commercialization efforts.
      
    Unanticipated
    and/or
    substantial delays;
    Unanticipated
    and/or
    substantially increased costs;
    Unrecoverable
    and/or
    substantially increased expenses;
    Technical, reliability, durability or quality problems,
    including potential warranty
    and/or
    product liability claims;
    Insufficiency of dedicated or budgeted funds;
    Inability to meet targeted cost or performance objectives;
    Inability to satisfy industry standards or consumer expectations
    and needs;
    Regulatory obstacles;
    Competition;
    Inability to prove the original concept;
    Lack of demand; and
    Diversion of our managements and employees focus
    and/or
    attention.    Orion
    Engineered Systems may not be able to identify suitable new
    technologies, we may invest too much in new technologies, our
    management could be distracted by new technologies and we could
    fail to develop any new products, applications or services
    successfully.
   20




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and/or
  We may
    not be able to obtain additional equity capital or debt
    financing necessary to effectively introduce and commercialize
    any new alternative renewable energy technologies identified by
    Orion Engineered Systems into our product, application and
    service offerings.
  and/or
  
    The price, volatility and trading volume and history of our
    common stock.
    Our current and future financial results and position.
    The markets view of our industry and products.
    The perception in the equity and debt markets of our ability to
    execute our business plan or achieve our operating results
    expectations.  We
    have no significant operating history in the solar photovoltaic
    or wind energy industries that can be used to evaluate our
    potential prospects for success in these
    industries.
    and/or and/or and/or
 21




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Orion
    Engineered Systems pursuit of solar photovoltaic and/or
    wind electricity generating technologies is subject to risks
    specific to the solar photovoltaic and/or wind
    industry.
  and/or and/or
  
    The market for photovoltaic and wind electricity generating
    technologies has been adversely affected by the recessionary
    economic conditions, and we cannot guarantee that demand will
    return or increase in the future.
    A variety of solar power, wind power and other renewable energy
    technologies may be currently under development by other
    companies that could result in higher or more effective product
    performance than the performance expected to be produced by any
    technology that we decide to offer.
    Our ability to generate revenue and profitability from adding
    solar photovoltaic
    and/or wind
    electricity generating technologies into our product,
    application or service offerings is dependent on consumer
    acceptance and the economic feasibility of solar
    and/or wind
    generated energy.
    A drop in the retail price of conventional energy or other
    alternate renewable energy sources may negatively impact our
    ability to generate revenue and profitability from solar
    photovoltaic
    and/or wind
    generated energy technologies.
    The reduction, elimination or expiration of government mandates
    and subsidies or economic or tax rebates, credits
    and/or
    incentives for alternative renewable energy systems would likely
    substantially reduce the demand for, and economic feasibility
    of, any solar photovoltaic
    and/or wind
    electricity generating products, applications or services and
    could materially reduce any prospects for our successfully
    introducing any new products, applications or services using
    such technologies.  We
    operate in a highly competitive industry and if we are unable to
    compete successfully our revenue and profitability will be
    adversely affected.
      Our
    success is largely dependent upon the skills, experience and
    efforts of our senior management, and the loss of their services
    could have a material adverse effect on our ability to expand
    our business or to maintain profitable operations.
   22




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The
    success of our business depends on the market acceptance of our
    energy management products and services.
    Our
    products use components and raw materials that may be subject to
    price fluctuations, shortages or interruptions of
    supply.
    We
    have made a significant investment in inventory related to our
    wireless controls product offering, which is costly and, if not
    properly managed, may result in an inability to provide our
    products on a timely basis or in unforeseen valuation
    adjustments.
   23




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We
    depend on a limited number of key suppliers.
 
   
  We
    experienced component quality problems related to certain
    suppliers in the past, and our current suppliers may not deliver
    satisfactory components in the future.
    We
    depend upon a limited number of customers in any given period to
    generate a substantial portion of our revenue.
 
   
  Product
    liability claims could adversely affect our business, results of
    operations and financial condition.
    We
    depend on our ability to develop new products and
    services.
   24




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We may
    pursue acquisitions and investments in new product lines,
    businesses or technologies that involve numerous risks, which
    could disrupt our business or adversely affect our financial
    condition and results of operations.
    Our
    inability to protect our intellectual property, or our
    involvement in damaging and disruptive intellectual property
    litigation, could adversely affect our business, results of
    operations and financial condition or result in the loss of use
    of the product or service.
         25




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We may
    face additional competition if government subsidies and utility
    incentives for renewable energy increase or if such sources of
    energy are mandated.
    If our
    information technology systems fail, or if we experience an
    interruption in their operation, then our business, results of
    operations and financial condition could be materially adversely
    affected.
  day-to-day and/or
  
    earthquake, fire, flood and other natural disasters;
    employee or other theft;
    attacks by computer viruses or hackers;
    power outages; and
    computer systems, internet, telecommunications or data network
    failure.   26




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We own
    and operate an industrial property that we purchased in 2004
    and, if any environmental contamination is discovered, we could
    be responsible for remediation of the property.
    The
    cost of compliance with environmental laws and regulations and
    any related environmental liabilities could adversely affect our
    results of operations or financial condition.
    Our
    retrofitting process frequently involves responsibility for the
    removal and disposal of components containing hazardous
    materials.
    We
    expect our quarterly revenue and operating results to fluctuate.
    If we fail to meet the expectations of market analysts or
    investors, the market price of our common stock could decline
    substantially, and we could become subject to additional
    securities litigation.
    Our
    net operating loss carryforwards may be subject to limitation
    and may be subject to a valuation adjustment if we do not
    maintain our profitability.
   27




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The
    restatement of our historical financial statements has already
    consumed, and may continue to consume, a significant amount of
    our time and resources and may have a material adverse effect on
    our business and stock price.
    We
    were unable to timely file this Annual Report on
    Form 10-K
    as required by the Securities Exchange Act of 1934 and our
    continued inability to file these reports on time could result
    in investors not having access to important information about us
    and the delisting of our common stock from the NYSE Amex
    LLC.
  Form 10-K. Form S-3
    If
    securities or industry analysts do not publish research or
    publish inaccurate or unfavorable research about our business,
    our stock price and trading volume could decline.
   28




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The
    market price of our common stock could be adversely affected by
    future sales of our common stock in the public market by our
    executive officers and directors.
    Anti-takeover
    provisions included in the Wisconsin Business Corporation Law,
    provisions in our amended and restated articles of incorporation
    or bylaws and the common share purchase rights that accompany
    shares of our common stock could delay or prevent a change of
    control of our company, which could adversely impact the value
    of our common stock and may prevent or frustrate attempts by our
    shareholders to replace or remove our current board of directors
    or management.
        We may
    fail to comply with the financial and operating covenants in our
    credit agreement, which could result in our being unable to
    borrow under the agreement and other negative
    consequences.
     29




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ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS  Form 10-K Form 10-Q
  Form 10-K,
  ITEM 2.
    PROPERTIES    ITEM 3.
    LEGAL
    PROCEEDINGS         30




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ITEM 4.
    REMOVED
    AND RESERVED  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED SHAREHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES  Price
    Range of our Common Stock
    High

LowFiscal 2010First Quarter

$
4.66


$
3.25Second Quarter

$
3.92


$
2.68Third Quarter

$
4.76


$
3.05Fourth Quarter

$
6.35


$
4.37Fiscal 2011First Quarter

$
5.43


$
2.84Second Quarter

$
3.43


$
2.10Third Quarter

$
4.14


$
3.11Fourth Quarter

$
4.94


$
3.21   Shareholders
    Dividend
    Policy
    Use of
    Proceeds from our Public Offering
  Form S-1 No. 333-145569)
     31




---



##### Table of Contents



Securities
    Authorized for Issuance under Equity Compensation
    Plans
    Equity
    Compensation Plan Information
  Number ofSecuritiesNumber of





Remaining AvailableSecurities to be





for FutureIssued Upon


Weighted Average


Issuances Under theExercise of


Exercise Price of


Equity CompensationPlan Category

Outstanding Options


Outstanding Options


Plans(1)Equity Compensation plans approved by security holders


3,658,768


$
3.83



1,577,676Equity Compensation plans not approved by security holders










Total


3,658,768


$
3.83



1,577,676     (1)
    
    Excludes shares reflected in the column titled Number of
    Securities to be Issued Upon Exercise of Outstanding
    Options.  Issuer
    Purchase of Equity Securities
    Unregistered
    Sales of Securities
   32




---



##### Table of Contents



Stock
    Price Performance Graph
    
  December 19,


March 31,


March 31,


March 31,


March 31,2007


2008


2009


2010


2011Orion Energy Systems, Inc.


$
100



$
73



$
34



$
38



$
31Russell 2000 Index


$
100



$
91



$
57



$
93



$
117NASDAQ Clean Edge Green Energy Index


$
100



$
78



$
36



$
54



$
58  33




---



##### Table of Contents



ITEM 6.
    SELECTED
    FINANCIAL DATA  Form 10-K. Form 10-K, Form 10-K.
  Fiscal Year Ended March 31,2007


2008


2009


2010


2011(As Restated)(5)(In thousands, except per share amounts)Consolidated statements of operations data:Product revenue

$
40,201


$
65,359


$
63,008


$
60,882


$
86,443Service revenue


7,982



15,328



9,626



7,191



6,015Total revenue


48,183



80,687



72,634



68,073



92,458Cost of product revenue(1)


26,511



42,127



42,235



40,063



58,251Cost of service revenue


5,976



10,335



6,801



5,266



4,499Total cost of revenue


32,487



52,462



49,036



45,329



62,750Gross profit


15,696



28,225



23,598



22,744



29,708General and administrative expenses(1)


6,162



10,200



10,451



12,836



11,431Sales and marketing expenses(1)


6,459



8,832



11,261



12,596



13,740Research and development expenses(1)


1,078



1,832



1,942



1,891



2,333Income (loss) from operations


1,997



7,361



(56
)


(4,579
)


2,204Interest expense


1,044



1,390



167



256



406Loss on sale of receivables














561



1,012Extinguishment of debt














250



Dividend and interest income


201



1,189



1,661



670



571Income (loss) before income tax


1,154



7,160



1,438



(4,476
)


1,357Income tax expense (benefit)


225



2,750



927



(1,003
)


(243
)Net income (loss)


929



4,410



511



(3,473
)


1,600Accretion of redeemable preferred stock and preferred stock
    dividends(2)


(201
)


(225
)










Conversion of preferred stock(3)


(83
)














Participation rights of preferred stock in undistributed
    earnings(4)


(205
)


(775
)










Net income (loss) attributable to common shareholders

$
440


$
3,410


$
511


$
(3,473
)

$
1,600Net income (loss) per share attributable to common shareholders:Basic

$
0.05


$
0.22


$
0.02


$
(0.16
)

$
0.07Diluted

$
0.05


$
0.19


$
0.02


$
(0.16
)

$
0.07Weighted-average shares outstanding:Basic


9,080



15,548



25,352



21,844



22,678Diluted


16,433



23,454



27,445



21,844



23,198  34




---



##### Table of Contents



As of March 31,2007

2008

2009

2010

2011(As Restated)(5)(In thousands)Consolidated balance sheet data:Cash and cash equivalents

$
285


$
78,312


$
36,163


$
23,364


$
11,560Short-term investments






2,404



6,490



1,000



1,011Total assets


33,583



130,702



103,722



104,578



114,990Long-term debt, less current maturities


10,603



4,473



3,647



3,156



4,225Temporary equity (Series C convertible redeemable preferred
    stock)


4,953















Series B convertible preferred stock


5,959















Shareholder notes receivable


(2,128
)














(193
)Shareholders equity

$
9,355


$
113,190


$
88,695


$
88,387


$
92,387  
    (1)
    
    Includes stock-based compensation expense recognized under
    Financial Accounting Standards Board Accounting Standards
    Codification Topic 718, or ASC Topic 718, as follows:  Fiscal Year Ended March 31,2009


2010


2011(In thousands)Cost of product revenue

$
269


$
222


$
187General and administrative expenses


676



539



560Sales and marketing expenses


587



691



523Research and development expenses


45



39



31Total stock-based compensation expense

$
1,577


$
1,491


$
1,301   (2)
    
    For fiscal 2007 and 2008, represents the impact attributable to
    the accretion of accumulated dividends on our Series C
    preferred stock, plus accumulated dividends on our Series A
    preferred stock prior to its conversion into common stock on
    March 31, 2007. The Series C preferred converted
    automatically into common stock on a
    one-for-one
    basis upon the closing of our IPO and our obligation to pay
    accumulated dividends was extinguished.(3)
    
    Represents the estimated fair market value of the premium paid
    to holders of Series A preferred stock upon induced
    conversion. See Managements Discussion and Analysis
    of Financial Condition and Results of Operations 
    Revenue and Expense Components  Conversion of
    Preferred Stock.(4)
    
    For fiscal 2007 and 2008, represents the impact attributable to
    the accretion of accumulated dividends on our Series C
    preferred stock, plus accumulated dividends on our Series A
    preferred stock prior to its conversion into common stock on
    March 31, 2007. The Series C preferred converted
    automatically into common stock on a
    one-for-one
    basis upon the closing of our IPO and our obligation to pay
    accumulated dividends was extinguished.(5)
    
    For fiscal 2010, represents the impact of an accounting
    restatement from operating lease treatment to sales-type capital
    lease treatment for our OTA finance contracts. See
    Note B  Restatement of Financial Statements to
    our consolidated financial statements for detailed information
    regarding the impact of the restatement on fiscal 2010. 35




---



##### Table of Contents



ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  The following discussion and analysis should be read in
    conjunction with our consolidated financial statements and
    related notes, included elsewhere in this Annual Report on
    Form 10-K.
    See also Forward-Looking Statements and
    Item 1A. Risk Factors. The information below
    has been adjusted to reflect the impact of the restatement of
    our financial results which is more fully described in
    Note B  Restatement of Financial Statements to
    the consolidated financial statements contained in this Annual
    Report on
    Form 10-K
    and under the paragraph Restatement of Previously Issued
    Consolidated Financial Statements below and does not
    reflect any subsequent information or events occurring after the
    date of the filing of our reports originally presenting the
    financial information being restated or update any disclosure
    herein to reflect the passage of time since the date of such
    filings.
  Restatement
    of Previously Issued Consolidated Financial Statements
  Form 10-K,
      
    No impact to our cash, cash equivalents, short-term investments;
    or overall cash flow; 
  
    An increase in our revenue of $2.8 million (3%) and
    $2.7 million (4%) for our full fiscal years 2011 and 2010,
    respectively; 
  
    An increase in our net income of $0.4 million (34%) and
    earnings per share of $0.02 (40%) for our full fiscal year 2011
    and a reduction in our net loss of $0.7 million (17%) and
    loss per share of $0.03 (16%) for our full fiscal year 2010; 
  
    An increase in our current assets of $3.8 million (6%) and
    total assets of $1.0 million (1%) and an increase in our
    total shareholders equity of $0.7 million (1%) for
    our fiscal year 2010 and an increase in our current assets of
    $2.7 million (4%) and total assets of $0.5 million
    (1%) and an increase in our total shareholders equity of
    $1.6 million (2%) and a decrease in our total liabilities
    of $1.1 million (5%) for our fiscal year 2011; and 
 
  
    An increase in our net cash used in operating activities of
    $2.4 million (38%), a decrease in net our cash used in
    investing activities of $2.0 million (26%) and an increase
    in our net cash provided by financing activities of
    $0.4 million (18%) for our fiscal year 2011 and an increase
    in our net cash used in operating activities of
    $2.1 million (24%) and a decrease in net our cash used in
    investing activities of $2.1 million (40%) for our fiscal
    year 2010; and 
  
    An increase in our revenue, net income and earnings per share
    for the first three quarters of each of our fiscal years 2011
    and 2010 and a decrease in revenue, net income and earnings per
    share for the last quarter of our fiscal year 2010.  Form 10-K Form 10-Q Form 10-K.
 36




---



##### Table of Contents



Form 10-K,
  Overview
      Coca-Cola
         37




---



##### Table of Contents



Revenue
    and Expense Components
  Revenue.
   38




---



##### Table of Contents



Fiscal 2012

$
432Fiscal 2013


432Fiscal 2014


431Fiscal 2015


431Fiscal 2016


431Beyond


998Total expected future discounted revenue from PPAs

$
3,155    
   
   39




---



##### Table of Contents



Contracted Revenue. 90-120 days
  Fiscal Year Ended


Fiscal Year EndedMarch 31, 2010


March 31, 2011(As Restated)Total Contracted Revenues

$
73.9


$
103.9Change in cash order backlog(1)


(0.4
)


(4.6
)Change in OTA backlog(2)


(1.5
)


(0.7
)Contracted Revenue from PPAs(3)


(1.7
)


(1.9
)PPA GAAP revenue recognized


0.0



0.4Other miscellaneous(4)


(2.2
)


(4.6
)Revenue  GAAP basis

$
68.1


$
92.5     (1)
    
    Change in backlog reflects the (increase) or decrease in cash
    orders at the end of the respective period where product
    delivery or service performance has not yet occurred. GAAP
    revenue will be recognized when the performance conditions have
    been satisfied, typically within 90 days from the end of
    the period.(2)
    
    Change in OTA backlog reflects the (increase) or decrease in OTA
    contracts at the end of the respective period where the project
    was in implementation. GAAP revenue will be recognized at the
    net present value of future cash flows upon completion of the
    installation and the customer acceptance of the technology.(3)
    
    Contracted Revenue from PPAs is subtracted to reconcile the GAAP
    revenue as recognition of GAAP revenue will occur in future
    periods.(4)
    
    Other miscellaneous includes a reduction from OTA contracted
    revenues measured at gross future cash flows and GAAP revenue
    measured at the net present value of future cash flows for
    completed OTA projects.  Backlog.
 40




---



##### Table of Contents



Cost of Revenue.
 
  Gross Margin.
  Operating Expenses.
     41




---



##### Table of Contents



out-of-pocket
        Interest Expense.
  Loss on Sale of Receivable.
  Dividend and Interest Income.
 
  Income Taxes.
 
 42




---



##### Table of Contents



Results
    of Operations
    
 Fiscal Year Ended March 31,2009


2010





2011% of





% of


%





% of


%Amount


Revenue


Amount


Revenue


Change


Amount


Revenue


Change(As Restated) (1)(Dollars in thousands)Product revenue

$
63,008



86.7
%

$
60,882



89.4
%


(3.4
)%

$
86,443



93.5
%


42.0
%Service revenue


9,626



13.3
%


7,191



10.6
%


(25.3
)%


6,015



6.5
%


(16.4
)%Total revenue


72,634



100.0
%


68,073



100.0
%


(6.3
)%


92,458



100.0
%


35.8
%Cost of product revenue


42,235



58.1
%


40,063



58.9
%


(5.1
)%


58,251



63.0
%


45.4
%Cost of service revenue


6,801



9.4
%


5,266



7.7
%


(22.6
)%


4,499



4.9
%


(14.6
)%Total cost of revenue


49,036



67.5
%


45,329



66.6
%


(7.6
)%


62,750



67.9
%


38.4
%Gross profit


23,598



32.5
%


22,744



33.4
%


(3.6
)%


29,708



32.1
%


30.6
%General and administrative expenses


10,451



14.4
%


12,836



18.9
%


22.8
%


11,431



12.4
%


(10.9
)%Sales and marketing expenses


11,261



15.5
%


12,596



18.5
%


11.9
%


13,740



14.9
%


9.1
%Research and development expenses


1,942



2.7
%


1,891



2.8
%


(2.6
)%


2,333



2.5
%


23.4
%Income (loss) from operations


(56
)


(0.1
)%


(4,579
)


(6.7
)%


NM



2,204



2.4
%


148.1
%Interest expense


(167
)


0.2
%


(256
)


(0.4
)%


(53.3
)%


(406
)


(0.4
)%


58.6
%Loss on sale of receivable







%


(561
)


(0.8
)%


NM



(1,012
)


(1.1
)%


80.4
%Extinguishment of debt







%


250



0.4
%


100.0
%







%


(100.0
)%Dividend and interest income


1,661



2.3
%


670



1.0
%


(59.7
)%


571



0.6
%


(14.8
) %Income (loss) before income tax


1,438



2.0
%


(4,476
)


(6.6
)%


(411.3
)%


1,357



1.5
%


130.3
%Income tax expense (benefit)


927



1.3
%


(1,003
)


(1.5
)%


(208.2
)%


(243
)


(0.2
)%


75.8
%Net income (loss)

$
511



0.7
%

$
(3,473
)


(5.1
)%


(779.6
)%

$
1,600



1.7
%


146.1
%  
     (1)
    
    For fiscal 2010, represents the impact of an accounting change
    from operating lease treatment to sales-type capital lease
    treatment for our OTA finance contracts. See
    Note B Restatement of Financial Statements to
    our consolidated financial statements for detailed information
    regarding the impact of the restatement on fiscal 2010.  Consolidated
  Fiscal
    2011 Compared to Fiscal 2010
  Contracted Revenue.
 43




---



##### Table of Contents



Revenue.
  Cost of Revenue and Gross Margin.
  Operating
    Expenses
  General and Administrative.
  Sales and Marketing.
  Research and Development.
  Interest Expense.
  Loss on sale of receivables.
  Dividend and Interest Income.
 44




---



##### Table of Contents



Income Taxes.
  Fiscal
    2010 Compared to Fiscal 2009
  Contracted Revenue.
  Revenue.
  Cost of Revenue and Gross Margin.
  Operating
    Expenses
  General and Administrative. start-up
  Sales and Marketing.
 45




---



##### Table of Contents



Research and Development.
  Interest Expense.
  Loss on sale of receivables.
  Extinguishment of Debt.
  Dividend and Interest Income.
  Income Taxes.
  Energy
    Management Segment
    For the Year Ended March 31,2010

2011(Dollars in thousands)Revenues

$
59, 649


$
71,866Operating income


1,203



5,754Operating Margin


2.0
%


8.0
%      46




---



##### Table of Contents



Engineered
    Systems Segment
    For the Year Ended March 31,2010


2011(Dollars in thousands)Revenues

$
8,423


$
20,592Operating (loss) income


(471
)


1,371Operating Margin


(5.6
)%


6.7
%       Corporate
    and Other
   47




---



##### Table of Contents



Quarterly
    Results of Operations
  Form 10-K.
  For the Three Months EndedJune 30,


Sept. 30,


Dec. 31,


Mar. 31,


June 30,


Sept. 30,


Dec. 31,


Mar. 31,2009


2009


2009


2010


2010


2010


2010


2011(As Restated)


(As Restated)


(As Restated)


(As Restated)


(As Restated)


(As Restated)


(As Restated)(In thousands, unaudited)Product revenue

$
11,924


$
15,219


$
18,737


$
15,002


$
15,758


$
15,086


$
28,048


$
27,551Service revenue


1,951



856



2,090



2,294



1,219



767



2,008



2,021Total revenue


13,875



16,075



20,827



17,296



16,977



15,853



30,056



29,572Cost of product revenue


8,748



10,122



11,860



9,333



10,307



9,745



19,228



18,971Cost of service revenue


1,255



632



1,568



1,811



917



498



1,674



1,410Total cost of revenue


10,003



10,754



13,428



11,144



11,224



10,243



20,902



20,381Gross profit


3,872



5,321



7,399



6,152



5,753



5,610



9,154



9,191General and administrative expenses


3,163



3,143



3,051



3,479



2,945



2,988



2,709



2,789Sales and marketing expenses


3,152



2,962



3,063



3,420



3,590



3,299



3,235



3,616Research and development expenses


419



491



404



576



610



573



614



536Income (loss) from operations


(2,862
)


(1,275
)


881



(1,323
)


(1,392
)


(1,250
)


2,596



2,250Interest expense


54



73



66



63



70



55



98



183Loss on sale of asset














561















1,012Extinguishment of debt














250















Dividend and interest income


236



147



157



130



93



153



189



136Income (loss) before income tax


(2,682
)


(1,201
)


972



(1,567
)


(1,369
)


(1,152
)


2,687



1,191Income tax expense (benefit)


(600
)


(269
)


218



(352
)


(833
)


(1,692
)


1,931



351Net income (loss)

$
(2,080
)

$
(932
)

$
754


$
(1,215
)

$
(536
)

$
540


$
756


$
840   June 30,


Sept. 30,


Dec. 31,


Mar. 31,


June 30,


Sept. 30,


Dec. 31,


Mar. 31,2009


2009


2009


2010


2010


2010


2010


2011(As Restated)


(As Restated)


(As Restated)


(As Restated)


(As Restated)


(As Restated)


(As Restated)(Unaudited)Product revenue


85.9
%


94.7
%


90.0
%


86.7
%


92.8
%


95.2
%


93.3
%


93.2
%Service revenue


14.1
%


5.3
%


10.0
%


13.3
%


7.2
%


4.8
%


6.7
%


6.8
%Total revenue


100.0
%


100.0
%


100.0
%


100.0
%


100.0
%


100.0
%


100.0
%


100
%Cost of product revenue


63.0
%


63.0
%


56.9
%


54.0
%


60.7
%


61.5
%


64.0
%


64.2
%Cost of service revenue


9.0
%


3.9
%


7.5
%


10.4
%


5.4
%


3.1
%


5.6
%


4.8
%Total cost of revenue


72.0
%


66.9
%


64.5
%


64.4
%


66.1
%


64.6
%


69.5
%


68.9
%Gross margin


28.0
%


33.1
%


35.5
%


35.6
%


33.9
%


35.4
%


30.5
%


31.1
%General and administrative expenses


22.8
%


19.6
%


14.6
%


20.1
%


17.3
%


18.8
%


9.0
%


9.4
%Sales and marketing expenses


22.8
%


18.4
%


14.7
%


19.8
%


21.1
%


20.8
%


10.8
%


12.2
%Research and development expenses


3.0
%


3.1
%


1.9
%


3.3
%


3.6
%


3.6
%


2.0
%


1.8
%Income (loss) from operations


(20.6
)%


(7.9
)%


4.2
%


(7.6
) %


(8.2
)%


(7.9
)  %


8.6
%


7.6
%Interest expense


0.4
%


0.5
%


0.3
%


0.4
%


0.4
%


0.3
%


0.3
%


0.6
%Loss on sale of asset



%



%



%


(3.2
)%



%



%



%


(3.4
)%Extinguishment of debt



%



%



%


1.4
%



%



%



%



%Dividend and interest income


1.7
%


0.9
%


0.8
%


0.7
%


0.5
%


0.9
%


0.6
%


0.4
%Income (loss) before income tax


(19.3
)%


(7.5
)%


4.7
%


(9.1
)%


(8.1
)%


(7.3
)%


8.9
%


4.0
%Income tax expense (benefit)


(4.3
)%


(1.7
)%


1.0
%


(2.1
)%


(4.9
)%


(10.7
)%


6.4
%


1.2
%Net income (loss)


(15.0
)%


(5.8
)%


3.7
%


(7.0
)%


(3.2
)%


3.4
%


2.5
%


2.8
%  48




---



##### Table of Contents



Liquidity
    and Capital Resources
  Overview
 
   
   
   
   49




---



##### Table of Contents



Cash
    Flows
    
 Fiscal Year Ended March 31,20102009


(As Restated)


2011(In thousands)Operating activities

$
3,239


$
(10,718
)

$
(8,737
)Investing activities


(17,873
)


(3,070
)


(5,702
)Financing activities


(27,515
)


989



2,635Decrease in cash and cash equivalents

$
(42,149
)

$
(12,799
)

$
(11,804
)  
  Cash Flows Related to Operating
    Activities.
 
   
 
   
 
   
 
  Cash Flows Related to Investing
    Activities.
 
 
  Cash Flows Related to Financing
    Activities.
 
 50




---



##### Table of Contents



Working
    Capital
        Indebtedness
       51




---



##### Table of Contents



and/or
      Capital
    Spending
 
   
  Contractual
    Obligations
    
 Payments Due By PeriodLess than








More thanTotal


1 Year


1-3 Years


3-5 Years


5 Years(In thousands)Bank debt obligations

$
5,362


$
1,137


$
2,168


$
1,427


$
630Cash interest payments on debt


1,019



276



292



140



311Operating lease obligations


9,325



1,748



2,284



1,797



3,496Purchase order and capital expenditure commitments(1)


14,457



11,595



2,862







Total

$
30,163


$
14,756


$
7,606


$
3,364


$
4,437  
    (1)
    
    Reflects non-cancellable purchase commitments in the amount of
    $14.4 million for certain inventory items entered into in
    order to secure better pricing and ensure materials on hand. 52




---



##### Table of Contents



Off-Balance
    Sheet Arrangements
    Inflation
    Critical
    Accounting Policies and Estimates
    Revenue Recognition.
   53




---



##### Table of Contents



Inventories. first-in,
  Allowance for Doubtful Accounts.
  Investments.
          Stock-Based Compensation. Compensation  Stock Compensation
 54




---



##### Table of Contents



Fiscal Year Ended March 31,2009

2010

2011Weighted average expected term


5.7 years



6.6 years



5.7 yearsRisk-free interest rate


3.01
%


2.68
%


2.14%Expected volatility


60
%


60
%


60%-74.8%Expected forfeiture rate


2
%


3
%


11.4%               Common Stock Warrants.
  Accounting for Income Taxes.
   55




---



##### Table of Contents



paid-in-capital
    Income
    Taxes
  Recent
    Accounting Pronouncements
    Item 7A
    Quantitative
    and Qualitative Disclosure About Market Risk    Inflation.
  Foreign Exchange Risk.
 56




---



##### Table of Contents



Interest Rate Risk.
    Commodity Price Risk. 24-month
  Credit Risk. and/or and/or
 57




---



##### 



ITEM 8.
    INDEX
    TO CONSOLIDATED FINANCIAL STATEMENTS   
 PageNumberReports of Independent Registered Public
    Accounting Firm


59Consolidated Balance Sheets


61Consolidated Statements of Operations


62Consolidated Statements of Shareholders
    Equity


63Consolidated Statements of Cash Flows


64Notes to Consolidated Financial Statements


65   58




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM            
  Internal Control  Integrated Framework
 
     
  
 59




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
     Internal Control  Integrated Framework
        Internal Control  Integrated
    Framework
 
   
     
  
 60




---



##### Table of Contents



ORION
    ENERGY SYSTEMS, INC. AND SUBSIDIARIES
  CONSOLIDATED
    BALANCE SHEETS
  March 31,2010


2011(As Restated)(In thousands, except share and per share amounts)AssetsCash and cash equivalents

$
23,364


$
11,560Short-term investments


1,000



1,011Accounts receivable, net of allowances of $382 and $436


15,991



27,618Inventories, net


25,991



29,507Deferred tax assets


1,244



947Prepaid expenses and other current assets


4,112



2,499Total current assets


71,702



73,142Property and equipment, net


28,193



30,017Patents and licenses, net


1,590



1,620Deferred tax assets


974



2,112Long-term accounts receivable


2,092



6,030Other long-term assets


27



2,069Total assets

$
104,578


$
114,990Liabilities and Shareholders EquityAccounts payable

$
7,761


$
12,479Accrued expenses


4,128



2,586Current maturities of long-term debt


562



1,137Total current liabilities


12,451



16,202Long-term debt, less current maturities


3,156



4,225Deferred revenue


186



1,777Other long-term liabilities


398



399Total liabilities


16,191



22,603Commitments and contingencies (See Note G)Shareholders equity:Preferred stock, $0.01 par value: Shares authorized:
    30,000,000 shares at March 31, 2010 and 2011; no
    shares issued and outstanding at March 31, 2010 and 2011






Common stock, no par value: Shares authorized: 200,000,000 at
    March 31, 2010 and 2011; shares issued: 29,911,203 and
    30,312,758 at March 31, 2010 and 2011; shares outstanding:
    22,442,380 and 22,893,803 at March 31, 2010 and 2011






Additional paid-in capital


122,515



124,805Treasury stock: 7,468,823 common shares at March 31, 2010
    and 7,431,897 at March 31, 2011


(32,011
)


(31,708
)Shareholder notes receivable






(193
)Retained deficit


(2,117
)


(517
)Total shareholders equity


88,387



92,387Total liabilities and shareholders equity

$
104,578


$
114,990  61




---



##### Table of Contents



ORION
    ENERGY SYSTEMS, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  Fiscal Year Ended March 31,2009


2010


2011(As Restated)(In thousands, except share and per share amounts)Product revenue

$
63,008



60,882


$
86,443Service revenue


9,626



7,191



6,015Total revenue


72,634



68,073



92,458Cost of product revenue


42,235



40,063



58,251Cost of service revenue


6,801



5,266



4,499Total cost of revenue


49,036



45,329



62,750Gross profit


23,598



22,744



29,708Operating expenses:General and administrative


10,451



12,836



11,431Sales and marketing


11,261



12,596



13,740Research and development


1,942



1,891



2,333Total operating expenses


23,654



27,323



27,504Income (loss) from operations


(56
)


(4,579
)


2,204Other income (expense):Interest expense


(167
)


(256
)


(406
)Loss on sale of OTA contract receivables






(561
)


(1,012
)Extinguishment of debt






250



Dividend and interest income


1,661



670



571Total other income (expense)


1,494



103



(847
)Income (loss) before income tax


1,438



(4,476
)


1,357Income tax expense (benefit)


927



(1,003
)


(243
)Net income (loss)

$
511


$
(3,473
)

$
1,600Basic net income (loss) per share attributable to common
    shareholders

$
0.02


$
(0.16
)

$
0.07Weighted-average common shares outstanding


25,351,839



21,844,150



22,678,411Diluted net income (loss) per share

$
0.02


$
(0.16
)

$
0.07Weighted-average common shares and share equivalents outstanding


27,445,290



21,844,150



23,198,063  62




---



##### Table of Contents



ORION
    ENERGY SYSTEMS, INC. AND SUBSIDIARIES
  STATEMENT OF SHAREHOLDERS
    EQUITY
  Shareholders EquityCommon Stock





AccumulatedAdditional





Shareholder


Other


Retained


TotalPaid-in


Treasury


Notes


Comprehensive


Earnings


ShareholdersShares


Capital


Stock


Receivable


Loss


(Deficit)


Equity(In thousands, except share amounts)Balance, March 31, 2008


26,963,408


$
114,090


$
(1,739
)

$



$
(6
)

$
845


$
113,190Issuance of stock and warrants for services


16,627



105



















105Exercise of stock options and warrants for cash


1,519,838



2,032



















2,032Tax benefit from exercise of stock options






1,103



















1,103Stock-based compensation






1,577



















1,577Treasury stock purchase


(6,971,090
)






(29,797
)














(29,797
)Net income






















511



511Unrealized loss on short-term investments


















(26
)






(26
)Comprehensive income


























485Balance, March 31, 2009


21,528,783


$
118,907


$
(31,536
)

$



$
(32
)

$
1,356


$
88,695Issuance of stock and warrants for services


11,211



48



















48Exercise of stock options and warrants for cash


1,024,113



1,989



















1,989Tax benefit from exercise of stock options






80



















80Stock-based compensation






1,491



















1,491Treasury stock purchase


(121,727
)






(475
)














(475
)Net loss (As Restated)






















(3,473
)


(3,473
)Unrealized gain on short-term investments


















32







32Comprehensive Loss (As Restated)


























(3,441
)Balance, March 31, 2010 (As Restated)


22,442,380


$
122,515


$
(32,011
)

$



$



$
(2,117
)

$
88,387Issuance of stock and warrants for services


15,475



51



















51Exercise of stock options and warrants for cash


386,080



529



















529Shares issued under Employee Stock Purchase Plan


65,776



(132
)


353



(196
)










25Tax benefit from exercise of stock options






541



















541Collection of shareholder notes receivable














3











3Stock-based compensation






1,301



















1,301Treasury stock purchase


(15,908
)






(50
)














(50
)Net income






















1,600



1,600Comprehensive income


























1,600Balance, March 31, 2011


22,893,803


$
124,805


$
(31,708
)

$
(193
)

$



$
(517
)

$
92,387  63




---



##### Table of Contents



ORION
    ENERGY SYSTEMS, INC. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF CASH
    FLOWS
  Fiscal Year Ended March 31,2009


2010


2011(As Restated)(In thousands)Operating activitiesNet income (loss)

$
511


$
(3,473
)

$
1,600Adjustments to reconcile net income (loss) to net cash provided
    by (used in) operating activities:Depreciation and amortization


1,841



2,673



2,867Stock-based compensation expense


1,577



1,491



1,301Deferred income tax (benefit) provision


145



(1,112
)


(840
)Loss (gain) on sale of assets


(31
)


546



999Change in allowance for notes and accounts receivable


144



458



54Extinguishment of debt






(139
)


Other


106



48



51Accounts receivable


5,950



(4,579
)


(11,681
)Inventories


(2,793
)


(6,409
)


(3,516
)Prepaid expenses and other assets


(2,580
)


(1,979
)


(2,748
)Accounts payable


296



(56
)


4,718Accrued expenses


(1,927
)


1,813



(1,542
)Net cash provided by (used in) operating activities


3,239



(10,718
)


(8,737
)Investing activitiesPurchase of property and equipment


(13,140
)


(5,649
)


(3,192
)Purchase of property and equipment leased to customers under PPAs






(2,651
)


(2,343
)Purchase of short-term investments


(4,113
)






(11
)Sale of short-term investments






5,522



Additions to patents and licenses


(1,121
)


(299
)


(157
)Proceeds from sales of long term assets


858







Gain on sale of long term investment


(361
)






Proceeds from disposal of equipment


4



7



1Net cash used in investing activities


(17,873
)


(3,070
)


(5,702
)Financing activitiesProceeds from issuance of long-term debt






200



3,721Proceeds from shareholder notes










3Deferred financing and offering costs










(57
)Repurchase of common stock into treasury


(29,340
)


(475
)


Payment of long-term debt


(854
)


(805
)


(2,077
)Excess benefit for deferred taxes on stock-based compensation


1,103



80



541Proceeds from issuance of common stock


1,576



1,989



504Net cash provided by (used in) financing activities


(27,515
)


989



2,635Net increase (decrease) in cash and cash equivalents


(42,149
)


(12,799
)


(11,804
)Cash and cash equivalents at beginning of period


78,312



36,163



23,364Cash and cash equivalents at end of period

$
36,163


$
23,364


$
11,560Supplemental cash flow information:Cash paid for interest

$
350


$
277


$
368Cash paid for income taxes


134



32



34Supplemental disclosure of non-cash investing and financing
    activities:Shares issued from treasury for stock note receivable

$



$



$
196Shares surrendered into treasury for stock option exercise

$
457


$



$
50Long-term note receivable received on sale of investment


297







  64




---



##### Table of Contents



ORION
    ENERGY SYSTEMS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  NOTE A 
    DESCRIPTION
    OF BUSINESS  Organization
        NOTE B 
    RESTATEMENT
    OF FINANCIAL STATEMENTS    Form 8-K,
 
   
  Form 10-K,
 65




---



##### Table of Contents



Consolidated Balance Sheet as of March 31, 2010As PreviouslyReported

Adjustments

As RestatedASSETS:Accounts receivable

$
14,617


$
1,374


$
15,991Deferred tax assets, current






1,244



1,244Prepaid expenses and other current assets


2,974



1,138



4,112Total current assets


67,946



3,756



71,702Property and equipment, net


30,500



(2,307
)


28,193Deferred tax assets, long-term


2,610



(1,636
)


974Accounts receivable, long-term


975



1,144



2,119Total assets


103,621



957



104,578LIABILITIES AND STOCKHOLDERS EQUITY:Accrued expenses


3,844



285



4,129Deferred tax liabilities, current


44



(44
)


Total current liabilities


12,211



241



12,452Retained deficit


(2,834
)


717



(2,117
)   Consolidated Statement of OperationsFiscal YearEnded March 31,As Previously

2010Reported

Adjustments

As RestatedTotal revenue

$
65,418


$
2,655


$
68,073Total cost of sales


43,894



1,435



45,329Gross Profit


21,524



1,220



22,744Operating (loss) income


(5,799
)


1,220



(4,579
)Loss on sale of receivables






(561
)


(561
)Dividend and interest income


269



401



670Income tax provision


(1,350
)


347



(1,003
)Net (loss) income


(4,190
)


717



(3,473
)Net loss per common share  basic and diluted

$
(0.19
)

$
0.03


$
(0.16
)Weighted average common shares outstanding  basic and
    diluted


21,844,150







21,844,150   66




---



##### Table of Contents



Consolidated Statement of Cash FlowsFiscal YearEnded March 31,As Previously

2010Reported

Adjustments

As RestatedCASH FLOWS FROM OPERATING ACTIVITIES:Net income (loss)

$
(4,190
)

$
717


$
(3,473
)Depreciation and amortization


3,072



(399
)


2,673Loss (gain) on sale of assets


(16
)


562



546Deferred income tax (benefit) provision


(1,425
)


313



(1,112
)Accounts receivable


(3,205
)


(1,374
)


(4,579
)Prepaid expenses and other


268



(2,247
)


(1,979
)Accrued expenses


1,529



284



1,813CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of property and equipment leased to customers under
    operating leases


(4,795
)


2,144



(2,651
)  
  NOTE C 
    SUMMARY
    OF SIGNIFICANT ACCOUNTING POLICIES  Principles
    of Consolidation
    Reclassifications
    Use of
    Estimates
    Cash
    and cash equivalents
    Short-term
    investments available for sale
 
   
  March 31, 2010Amortized


Unrealized


Unrealized





Cash and Cash


Short TermCost


Gains


Losses


Fair Value


Equivalents


InvestmentsMoney market funds

$
22,297


$



$



$
22,297


$
22,297


$
Bank certificates of deposit


1,000











1,000







1,000Total

$
23,297


$



$



$
23,297


$
22,297


$
1,000   67




---



##### Table of Contents



March 31, 2011Amortized


Unrealized


Unrealized





Cash and Cash


Short TermCost


Gains


Losses


Fair Value


Equivalents


InvestmentsMoney market funds

$
485


$



$



$
485


$
485


$
Bank certificates of deposit


1,011











1,011







1,011Total

$
1,496


$



$



$
1,496


$
485


$
1,011       Fair
    value of financial instruments
          Accounts
    receivable
  30-60 days.
 68




---



##### Table of Contents



Financing
    receivables
    Age Analysis
    as of March 31, 2011(in thousands):
  GreaterNot Past


1-90 days


than 90 days





Total sales-typeDue


past due


past due


Total past due


leasesLease balances included in consolidated accounts
    receivable  current

$
1,190


$
17


$
5


$
22


$
1,212Lease balances included in consolidated accounts
    receivable  long-term


3,696















3,696Total gross sales-type leases


4,886



17



5



22



4,908Allowance










(2
)


(2
)


(2
)Total net sales-type leases

$
4,886


$
17


$
3


$
20


$
4,906   Allowance
    for credit losses
    Inventories
  first-in,
      March 31,


March 31,2010


2011Raw materials and components

$
11,107


$
12,005Work in process


669



459Finished goods


14,215



17,043$
25,991


$
29,507  69




---



##### Table of Contents



Prepaid
    Expenses and Other Current Assets
    Property
    and Equipment
   
  Property, Plant and Equipment
 
    March 31,2010


2011(As Restated)Land and land improvements

$
1,436


$
1,474Buildings


14,072



15,104Furniture, fixtures and office equipment


6,615



8,323Leasehold improvements






9Equipment leased to customers under Power Purchase Agreements






4,994Plant equipment


7,627



8,067Construction in progress


5,774



2,27235,524



40,243Less: accumulated depreciation and amortization


(7,331
)


(10,226
)Net property and equipment

$
28,193


$
30,017     March 31,2010


2011Equipment

$
25


$
Less: accumulated amortization


(20
)


Net equipment

$
5


$
  
   
  Land improvements


10  15 yearsBuildings


10  39 yearsLeasehold improvements


Shorter of asset life or life of leaseFurniture, fixtures and office equipment


2  10 yearsPlant equipment


3  10 years  70




---



##### Table of Contents



Patents
    and Licenses
        Fiscal 2012

$
122Fiscal 2013


119Fiscal 2014


118Fiscal 2015


118Fiscal 2016


117Thereafter


1,026$
1,620     Long-Term
    Receivables
     71




---



##### Table of Contents



Fiscal 2012

$
Fiscal 2013


955Fiscal 2014


993Fiscal 2015


936Fiscal 2016


292Total gross long-term receivable


3,176Less: amount representing interest


(1,090
)Net long-term receivable

$
2,086   Other
    Long-Term Assets
      Accrued
    Expenses
        March 31,2010


2011Beginning of year

$
55


$
60Provision to cost of revenue


80



114Charges


(75
)


(115
)End of year

$
60


$
59   Incentive
    Compensation
  28-125% and/or
 72




---



##### Table of Contents



Revenue
    Recognition
        
    persuasive evidence of an arrangement exists;
    delivery has occurred and title has passed to the customer;
    the sales price is fixed and determinable and no further
    obligation exists; and
    collectability is reasonably assured    ASC 605-25
     73




---



##### Table of Contents



March 31,


March 31,2010


2011Deferred revenue  current liability

$
338


$
262Deferred revenue  long term liability


186



1,777Total deferred revenue

$
524


$
2,039   Shipping
    and Handling Costs
   74




---



##### Table of Contents



Advertising
    Research
    and Development
    Income
    Taxes
     
   
  Stock
    Option Plans
   
   
   75




---



##### Table of Contents



Fiscal Year Ended March 31,2009

2010

2011Weighted average expected term


5.7 years



6.6 years



5.7 yearsRisk-free interest rate


3.01
%


2.68
%


2.14
%Expected volatility


60
%


60
%


60.0 - 74.8
%Expected forfeiture rate


2.0
%


3.0
%


11.4
%   Net
    Income per Common Share
      Fiscal Year Ended March 31,2009


2010


2011(As Restated)Numerator:Net income (loss) (in thousands)

$
511


$
(3,473
)

$
1,600Denominator:Weighted-average common shares outstanding


25,351,839



21,844,150



22,678,411Weighted-average effect of assumed conversion of stock options
    and warrants


2,093,451







519,652Weighted-average common shares and common share equivalents
    outstanding


27,445,290



21,844,150



23,198,063Net income (loss) per common share:Basic

$
0.02


$
(0.16
)

$
0.07Diluted

$
0.02


$
(0.16
)

$
0.07     March 31,2009


2010


2011Common stock options


3,680,945



3,546,249



3,658,768Common stock warrants


488,504



76,240



38,980Total


4,169,449



3,622,489



3,697,748   Concentration
    of Credit Risk and Other Risks and Uncertainties
   76




---



##### Table of Contents



Recent
    Accounting Pronouncements
  2010-20, Disclosures about the Credit Quality of Financing Receivables
    and the Allowance for Credit Losses 2010-20). 2010-20 2010-20
  No. 2011-03 Transfers and Servicing (Topic 860): Reconsideration of
    Effective Control for Repurchase Agreements 2011-03). No. 2011-03 2011-03 2011-03 2011-03 2011-03
  No. 2011-04 Fair Value Measurements (Topic 820): Amendments to Achieve
    Common Fair Value Measurement and Disclosure Requirements in US
    GAAP and International Financial Reporting Standards
    (IFRS) 2011-04). 2011-04 2011-04, 2011-04
 
  No. 2011-05, Comprehensive Income (ASC Topic 220): Presentation of
    Comprehensive Income, 2011-05) 2011-05 2011-05
 
 77




---



##### Table of Contents



2009-13, Multiple-Deliverable Revenue Arrangements 650-25
  NOTE D 
    RELATED
    PARTY TRANSACTIONS        NOTE E 
    LONG-TERM
    DEBT    March 31,2010


2011Term note

$
1,017


$
782Customer equipment finance notes payable






1,793First mortgage note payable


926



853Debenture payable


847



807Lease obligations


7



Other long-term debt


921



1,127Total long-term debt


3,718



5,362Less current maturities


(562
)


(1,137
)Long-term debt, less current maturities

$
3,156


$
4,225  78




---



##### Table of Contents



Revolving
    Credit Agreement
      and/or
    Customer
    Equipment Finance Notes Payable
     79




---



##### Table of Contents



Term
    Note
    First
    Mortgage Note Payable
    Debenture
    Payable
    Other
    Long-Term Debt
         80




---



##### Table of Contents



Aggregate
    Maturities
    Fiscal 2012

$
1,137Fiscal 2013


1,089Fiscal 2014


1,079Fiscal 2015


759Fiscal 2016


668Thereafter


630$
5,362   NOTE F 
    INCOME
    TAXES    
 Fiscal Year Ended March 31,2009


2010


2011(As Restated)Current

$
782


$
109


$
597Deferred


145



(1,112
)


(840
)$
927


$
(1,003
)

$
(243
)  
  2009


2010


2011(As Restated)Federal

$
824


$
(1,348
)

$
(366
)State


103



345



123$
927


$
(1,003
)

$
(243
)     
 Fiscal Year Ended March 31,2009


2010


2011(As Restated)Statutory federal tax rate


34.0
%


(34.0
)%


34.0
%State taxes, net


11.0
%


2.6
%


2.6
%Stock-based compensation expense


21.2
%


5.0
%


(45.1
)%Federal tax credit


(2.7
)%


(3.5
)%


(15.1
)%State tax credit


(1.5
)%


(0.4
)%


(2.2
)%Change in valuation reserve


1.4
%


5.1
%


8.3
%Permanent items



%


0.1
%


5.7
%Change in tax contingency reserve


0.7
%



%



%Other, net


0.4
%


2.7
%


(6.1
)%Effective income tax rate


64.5
%


(22.4
)%


(17.9
)%  
 81




---



##### Table of Contents



March 31,2010


2011(As Restated)Inventory, accruals and reserves

$
607


$
705Other


533



350Deferred revenue


104



(108
)Total net current deferred tax assets and liabilities


1,244



947Federal and state operating loss carryforwards


1,199



1,191Tax credit carryforwards


848



1,201Non qualified stock options


603



1,540Deferred revenue






311Fixed assets


(1,410
)


(1,753
)Valuation allowance


(266
)


(378
)Total net long-term deferred tax assets and liabilities

$
974


$
2,112Total net deferred tax assets

$
2,218


$
3,059              82




---



##### Table of Contents



Uncertain
    tax positions
      Fiscal Year Ended March 31,2009


2010


2011Unrecognized tax benefits as of beginning of fiscal year

$
392


$
397


$
398Decreases relating to settlements with tax authorities


(5
)






Additions based on tax positions related to the current period
    positions


10



1



1Unrecognized tax benefits as of end of fiscal year

$
397


$
398


$
399   NOTE G 
    COMMITMENTS
    AND CONTINGENCIES  Operating
    Leases
    
 Fiscal 2012

$
1,751Fiscal 2013


1,368Fiscal 2014


922Fiscal 2015


911Fiscal 2016


888Thereafter


3,496$
9,336  
  Purchase
    Commitments
   83




---



##### Table of Contents



Retirement
    Savings Plan
    Litigation
        NOTE H
    
    SHAREHOLDERS EQUITY  Conversion
    of Preferred Stock Upon Completion of Initial Public
    Offering
  one-to-one
  Share
    Repurchase Program and Treasury Stock
     84




---



##### Table of Contents



Shareholder
    Rights Plan
          Employee
    Stock Purchase Plan
  10-year
  As of March 31, 2011SharesIssued





Shares IssuedUnder ESPP


Closing Market


Under Loan


Dollar Value of


Repayment ofPlan


Price


Program


Loans Issued


LoansQuarter Ended September 30, 2010


40,560


$
3.17



38,202


$
121,100


$
Quarter Ended December 31, 2010


12,274



3.34



10,898



36,400



844Quarter Ended March 31, 2011


12,942



4.04



9,555



38,600



1,841Total


65,776


$
3.37



58,655


$
196,100


$
2,685    85




---



##### Table of Contents



NOTE I 
    STOCK
    OPTIONS AND WARRANTS          Fiscal Year Ended2009


2010


2011Cost of product revenue

$
269


$
222


$
187General and administrative


676



539



560Sales and marketing


587



691



523Research and development


45



39



31$
1,577


$
1,491


$
1,301  86




---



##### Table of Contents



Available at March 31, 2008


1,482,058Granted stock options


(731,879
)Granted shares


(16,627
)Forfeited


337,402Available at March 31, 2009


1,070,954Granted stock options


(888,018
)Granted shares


(11,211
)Forfeited


397,965Available at March 31, 2010


569,690Amendment to Plan


1,500,000Granted stock options


(744,077
)Granted shares


(15,475
)Forfeited


267,538Available at March 31, 2011


1,577,676     WeightedAverage FairWeighted


Value ofNumber of


Average Exercise


Options


Aggregate IntrinsicShares


Price


Granted


ValueOutstanding at March 31, 2008


4,716,022



2.30


$
3.03Granted


731,879



7.58Exercised


(1,429,554
)


1.24Forfeited


(337,402
)


6.26Outstanding at March 31, 2009


3,680,945



3.40


$
4.25Granted


888,018



3.92Exercised


(624,749
)


1.71Forfeited


(397,965
)


4.89Outstanding at March 31, 2010


3,546,249



3.66


$
2.23Granted


744,077



3.57Exercised


(364,020
)


1.30Forfeited


(267,538
)


4.33Outstanding at March 31, 2011


3,658,768



3.83


$
2.04


$
3,415,917Exercisable at March 31, 2011


1,826,601










$
2,284,748  87




---



##### Table of Contents



March 31, 2011WeightedAverage








WeightedRemaining


Weighted





AverageContractual Life


Average





ExerciseOutstanding


(Years)


Exercise Price


Vested


Price$0.69


241,510



0.26


$
0.69



241,510


$
0.690.75  0.94


10,000



4.01



0.75



10,000



0.751.5


25,000



2.71



1.50



25,000



1.502.20  2.25


883,746



5.47



2.21



583,346



2.212.50  2.75


107,167



4.89



2.51



107,167



2.512.86  4.32


1,216,141



8.88



3.45



196,604



3.304.48  4.76


474,832



5.30



4.54



367,432



4.515.34  6.05


414,420



7.92



5.42



134,590



5.429.00  10.04


112,750



6.58



9.46



66,150



9.3110.14  11.61


173,202



6.82



11.01



94,802



10.953,658,768



6.60


$
3.83



1,826,601


$
3.53       Fiscal 2012

$
1,269Fiscal 2013


1,058Fiscal 2014


750Fiscal 2015


470Fiscal 2016


270Thereafter


172$
3,989Remaining weighted average expected term


6.6 years    88




---



##### Table of Contents



Number of


Weighted AverageShares


Exercise PriceOutstanding at March 31, 2008


578,788


$
2.31Issued






Exercised


(90,284
)


2.32Cancelled






Outstanding at March 31, 2009


488,504


$
2.31Issued






Exercised


(399,364
)


2.30Cancelled


(12,900
)


Outstanding at March 31, 2010


76,240


$
2.37Issued






Exercised


(22,060
)


2.50Cancelled


(15,200
)


2.50Outstanding at March 31, 2011


38,980


$
2.25     Exercise Price

Number of Warrants

Expiration2.25


38,980



Fiscal 2015   NOTE J 
    SEGMENT
    DATA    Energy
    Management
    Engineered
    Systems
    Corporate
    and Other
    Revenues

Operating (Loss) ProfitFor the Year Ended March 31,

For the Year Ended March 31,2010

2011

2010

2011(Dollars in thousands)Segments:Energy Management

$
59,649


$
71,866


$
1,203


$
5,754Engineered Systems


8,424



20,592



(471
)


1,371Corporate and Other










(5,311
)


(4,921
)$
68,073


$
92,458


$
(4,579
)

$
2,204  89




---



##### Table of Contents



Depreciation

Capital ExpendituresFor the Year Ended March 31,

For the Year Ended March 31,2010

2011

2010

2011(Dollars in thousands)Segments:Energy Management

$
1,929


$
1,454


$
1,325


$
1,696Engineered Systems


56



207



2,682



2,374Corporate and Other


568



1,050



4,293



1,465$
2,553


$
2,711


$
8,300


$
5,535   Total Assets

Deferred Revenue31-Mar-10

31-Mar-11

31-Mar-10

31-Mar-11(Dollars in thousands)Segments:Energy Management

$
58,332


$
67,449


$
390


$
533Engineered Systems


3,976



14,405



134



1,506Corporate and Other


42,270



33,136







$
104,578


$
114,990


$
524


$
2,039     NOTE K 
    SUBSEQUENT
    EVENTS    NOTE L 
    QUARTERLY
    FINANCIAL DATA (UNAUDITED)    Three Months EndedJune 30,

Sept. 30,

Dec. 31,

Mar. 31,2010

2010

2010

2011

Total(As Restated)

(As Restated)

(As Restated)(In thousands, except per share amounts)Total revenue

$
16,977


$
15,853


$
30,056


$
29,572


$
92,458Gross profit


5,753



5,610



9,154



9,191



29,708Net income (loss)


(536
)


540



756



840



1,600Basic net income per share


(0.02
)


0.02



0.03



0.04



0.07Shares used in basic per share calculation


22,523



22,639



22,726



22,827



22,678Diluted net income per share


(0.02
)


0.02



0.03



0.04



0.07Shares used in diluted per share calculation


22,523



22,902



23,111



23,332



23,198   90




---



##### Table of Contents



Three Months EndedJune 30,

Sept. 30,

Dec. 31,

Mar. 31,2009

2009

2009

2010

Total(As Restated)

(As Restated)

(As Restated)

(As Restated)

(As Restated)(In thousands, except per share amounts)Total revenue

$
13,875


$
16,075


$
20,827


$
17,296


$
68,073Gross profit


3,872



5,321



7,399



6,152



22,744Net income (loss)


(2,080
)


(932
)


754



(1,215
)


(3,473
)Basic net income per share


(0.10
)


(0.04
)


0.03



(0.05
)


(0.16
)Shares used in basic per share calculation


21,588



21,707



21,792



22,255



21,844Diluted net income per share


(0.10
)


(0.04
)


0.03



(0.05
)


(0.16
)Shares used in diluted per share calculation


21,588



21,707



22,568



22,255



21,844    91




---



##### Table of Contents



ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    ITEM 9A.
    CONTROLS
    AND PROCEDURES  Evaluation
    of Disclosure Controls and Procedures
    Rule 13a-15 15d-15.
  Managements
    Report on Internal Control Over Financial Reporting
  Rule 13a-15(f) 15d-15(f)
  
    pertain to the maintenance of records that in reasonable detail
    accurately and fairly reflect the transactions and dispositions
    of our assets;
    provide reasonable assurance that transactions are recorded as
    necessary to permit preparation of financial statements in
    accordance with generally accepted accounting principles, and
    that our receipts and expenditures are being made only in
    accordance with authorization of our management and
    directors: and
    provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use or disposition of our
    assets that could have a material effect on the financial
    statements.       
  Form 10-K.
 
 92




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##### Table of Contents



Changes
    in Internal Controls Over Financial Reporting
  Rules 13a-15(f) 15d-15(f)
  ITEM 9B.
    OTHER
    INFORMATION   PART III  ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE  Directors
    Class I
    Directors  Terms Expiring 2011
  Thomas A. Quadracci
  Michael J. Potts
  Elizabeth Gamsky Rich Farm-to-Consumer
  Class II
    Directors  Terms Expiring 2012
  Mark C. Williamson
 93




---



##### Table of Contents



Michael W. Altschaefl
  Tryg C. Jacobson
  Class III
    Directors  Terms Expiring 2013
  Neal R. Verfuerth
  James R. Kackley
  Thomas N. Schueller
 94




---



##### Table of Contents



Executive
    Officers
    Name

Age

PositionNeal R. Verfuerth


52


Chief Executive OfficerScott R. Jensen


44


Chief Financial Officer and TreasurerMichael J. Potts


47


President and Chief Operating OfficerRichard Gaumer


58


Executive Vice President of Operations and Chief Accounting
    OfficerStuart L. Ralsky


62


Senior Vice President of Human ResourcesJohn H. Scribante


46


President, Orion Engineered SystemsDaniel J. Waibel


51


President, Orion Asset Management Division     Scott R. Jensen
  Richard Gaumer
  Stuart L. Ralsky
 95




---



##### Table of Contents



John H. Scribante
  Daniel J. Waibel
  Section 16(a)
    Beneficial Ownership Reporting Compliance
      Code of
    Conduct
    Shareholder
    Nominations
    Audit and
    Finance Committee
     96




---



##### Table of Contents



and/or
  ITEM 11.
    EXECUTIVE
    COMPENSATION  Compensation
    Discussion and Analysis
    Overview
    of Our Executive Compensation Philosophy and Design
    
    to motivate our executive officers to achieve strong financial
    performance, particularly increased revenue, profitability, free
    cash flow and shareholder value;
    to attract and retain executive officers who we believe have the
    experience, temperament, talents and convictions to contribute
    significantly to our future success; and
    to align the interests of our executive officers with the
    interests of our shareholders.      
    Pay no annual bonuses for fiscal 2010;
    Continue to freeze base salaries for fiscal 2011 at their
    respective fiscal 2010 levels (in most cases at fiscal 2009
    levels), except for new hires and certain limited exceptions; 97




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##### Table of Contents




    Implement a new annual cash bonus program with threshold
    corporate financial performance criteria requiring at least a
    20% year over year increase in our revenue and a minimum of a
    $4 million operating profit; and
    Grant long-term equity incentive awards to our NEOs at
    substantially lower levels than past practice.      
    Continue to freeze base salaries for fiscal 2012 at their
    respective fiscal 2011 levels (in most cases unchanged from
    fiscal 2009 levels), except for new hires, promotions and
    limited exceptions.
    Pay no bonuses for fiscal 2011, despite increasing revenue by
    over 35% from fiscal 2010.
    Substitute, in lieu of our existing annual cash bonus program
    and fiscal 2012 grants under our long-term equity incentive
    program, a new, comprehensive equity- and performance-based
    incentive compensation program, described below, which is
    designed to focus our management team and key employees on
    delivering substantial financial performance improvements in
    fiscal 2012 over fiscal 2011.  and/or and/or and/or
  Setting
    Executive Compensation
  Rule 16b-3
     98




---



##### Table of Contents




    Towers Watson had undertaken extensive work on behalf of the
    committee in the preceding fiscal year relating to our executive
    compensation levels relative to our peer group and market trends.
    The compensation committee believed, based on informal
    discussions with Towers Watson, that the relative market trends
    for executive compensation for our peer group, and for the
    market generally, had not significantly changed during fiscal
    2011, and that our relative executive compensation levels remain
    well within the median range of our peer group.
    The committee did not expect to change significantly the total
    base compensation levels for our executive officers for fiscal
    2012. In particular, the committee expected to maintain
    executive base salary levels flat with prior years for the third
    year in a row and bonus opportunities were largely the same as
    provided in fiscal 2012 (unless we achieve exceptional
    performance).    Elements
    of Executive Compensation
    
    Base salary;
    Incentive compensation (both annual and long-term); and
    Retirement and other benefits. 99




---



##### Table of Contents



Base
    Salary
      Name and Current Position

Base Salary ($)Neal R. Verfuerth

$
460,000Chief Executive OfficerMichael J. Potts


275,000President and Chief Operating Officer(1)John H. Scribante


275,000President of Orion Engineered SystemsDaniel J. Waibel


225,000President of Orion Asset Management DivisionScott R. Jensen(2)


200,000Chief Financial Officer and Treasurer     (1)
    
    Mr. Potts became our president and chief operating officer
    effective as of July 21, 2010.(2)
    
    Mr. Jensens base salary was increased to $225,000 for
    fiscal 2012 in connection with his resumption of the role of our
    chief financial officer in June 2011.  pay-for-performance
  Incentive
    Compensation
  Incentive
    Compensation for Fiscal 2011
    Annual
    Cash Incentive Opportunity for Fiscal 2011
   100




---



##### Table of Contents



and/or
  TargetFiscal 2011 BonusName and Current Position

AmountNeal R. Verfuerth

$
88,627Chief Executive OfficerMichael J. Potts


18,916President and Chief Operating Officer(1)John H. Scribante


43,350President of Orion Engineered SystemsDaniel J. Waibel


43,350President of Orion Asset Management DivisionScott R. Jensen


16,814Chief Financial Officer and Treasurer     (1)
    
    Mr. Potts became our president and chief operating officer
    effective as of July 21, 2010.  Long-Term
    Equity Incentive Compensation in Fiscal 2011
   101




---



##### Table of Contents



and/or
  and/or
  Fiscal 2011 Option GrantName and Current Position

Fair Value ($)/Shares (#)Neal R. Verfuerth

$
77,307/34,207Chief Executive OfficerMichael J. Potts

$
26,261/11,620President and Chief Operating Officer(1)John H. Scribante

$
37,813/16,731President of Orion Engineered SystemsDaniel J. Waibel

$
37,813/16,731President of Orion Asset Management DivisionScott R. Jensen

$
23,343/10,329Chief Financial Officer and Treasurer     (1)
    
    Mr. Potts became our president and chief operating officer
    effective as of July 21, 2010. 102




---



##### Table of Contents



Incentive
    Compensation Opportunities for Fiscal 2012
  pay-for-performance
  
    A grant of stock options, which we refer to as accelerated
    vesting stock options, the vesting of which is tied
    directly to our achievement of significant improvements in three
    financial metrics in fiscal 2012: total revenues, net income,
    and free cash flow (calculated as described below).
    An annual incentive award payable after the end of fiscal 2012
    in a grant of stock options, which we refer to as
    immediately vested stock options, the relative size
    of which is also tied directly to our achievement of significant
    improvements in total revenues, net income, and free cash flow
    in fiscal 2012.
    A potential cash incentive award for extraordinary performance
    during fiscal 2012 (performance at a 120% or greater level as
    measured by each of the three specified financial metric targets
    in fiscal 2012).    
    Fiscal 2012 revenues of $115.0 million, determined pursuant
    to generally accepted accounting principles (GAAP).
    Fiscal 2012 net income of $4.9 million, determined
    pursuant to GAAP, but excluding the impact of material gains or
    losses that are non-cash in nature (as determined by our
    compensation committee).
    Fiscal 2012 free cash flow of $4.9 million, calculated as
    operating cash flow as determined pursuant to GAAP, less
    traditional capital expenditures and OTA capital expenditures
    (in each case, as determined by our compensation committee).      Accelerated
    Vesting Stock Options
  90-day
   103




---



##### Table of Contents



pay-for-performance
    Fiscal
    2012 Accelerated Vesting Option Grants
  Number of Shares Subject to OptionNeal Verfuerth


36,166Mike Potts


21,621John Scribante


21,621Dan Waibel


17,690Scott Jensen


15,724   Immediately
    Vested Stock Options and Extraordinary Performance Cash Bonus
    Opportunities
      and/or
    Retirement
    and Other Benefits
  Welfare and Retirement Benefits.
 104




---



##### Table of Contents



i.e.
  Perquisites and Other Personal Benefits.
  Severance
    and Change of Control Arrangements
       105




---



##### Table of Contents



Other
    Policies
  Policies On Timing of Option Grants.
      Executive Officer Stock Ownership
    Guidelines.
    NumberPosition

of SharesChief Executive Officer


112,154Chief Operating Officer


38,077Executive Vice President


38,077Chief Financial Officer


38,077Senior Vice President


11,539Vice President


11,539     Tax Considerations.
 106




---



##### Table of Contents



Compensation
    Committee Report
  Form 10-K Form 10-K.
  
 107




---



##### Table of Contents



Summary
    Compensation Table for Fiscal 2011
    Non-EquityOption

Incentive Plan

All OtherFiscal

Salary

Bonus

Awards

Compensation

Compensation

TotalName and Current Principal Position

Year

($)

($)

($)(1)

($)

($)

($)Neal R. Verfuerth


2011


$
460,000






$
67,467






$
68,655
(2)

$
596,122Chief Executive Officer


2010



460,000







75,991







59,943



595,9342009



460,000







340,041







101,028



901,069Scott R. Jensen


2011



200,000







20,372







144
(4)


220,516Chief Financial


2010



173,750







336,464







144



510,358Officer and Treasurer(3)


2009



150,417







51,522







144



202,083Michael J. Potts


2011



260,016







22,918







16,530
(6)


299,465President and Chief


2010



225,000







25,331







16,194



266,525Operating Officer(5)John H. Scribante


2011



254,437







32,999







7,673
(7)


295,109President of Orion


2010



225,000







482,831











707,831Engineered Systems


2009



225,000







66,977











291,977Daniel J. Waibel


2011



225,000







32,999







13,392
(8)


271,391President of Orion Asset


2010



225,000















12,960



237,960Management Division


2009



225,000







37,222







13,055



275,277     (1)
    
    Represents the grant date fair value calculated pursuant to ASC
    Topic 718 for the indicated fiscal year. Additional information
    about the assumptions that we used when valuing equity awards is
    set forth in our Annual Report on
    Form 10-K
    in the Notes to Consolidated Financial Statements for our fiscal
    year ended March 31, 2011.(2)
    
    Includes (i) an automobile allowance of $12,000;
    (ii) $27,462 in life insurance premiums; and
    (iii) personal use of leased corporate aircraft with an
    aggregate incremental cost of $29,193. The aggregate incremental
    cost of the aircraft was calculated as follows: the actual per
    mileage cost for fiscal 2011 multiplied by the personal miles
    flown during fiscal 2011.(3)
    
    Mr. Jensen became our chief accounting officer and
    treasurer effective as of April 1, 2011. Previously,
    Mr. Jensen had served as our chief financial officer since
    July 2008.(4)
    
    401(k) matching contribution.(5)
    
    Mr. Potts became our president and chief operating officer
    effective as of July 21, 2010.(6)
    
    Includes an automobile allowance of $12,000 and $4,530 in life
    insurance premiums;.(7)
    
    Includes personal use of leased corporate aircraft of $7,673.(8)
    
    Includes (i) an automobile allowance of $12,000;
    (ii) $1,242 in life insurance premiums; and 401(k) matching
    contribution of $150. 108




---



##### Table of Contents



Grants of
    Plan-Based Awards for Fiscal 2011
    All OtherOption



GrantAwards:



DateEstimated Future Payouts Under

Estimated Future Payouts

Number of

Exercise

FairNon-Equity Incentive Plan

Under Equity Incentive

Securities

Price of

Value ofDate of

Awards(1)

Plan Awards

Underlying

Option

OptionGrant

Committee

Threshold

Target

Max

Threshold

Target

Max

Options

Awards

AwardsName

Date

Action

($)

($)

($)

(#)

(#)

(#)

(#)(2)

($/Sh)(3)

($)(4)Neal R. Verfuerth


5/18/10



5/12/10







88,627



2,000,000















34,207



3.46



67,467Scott R. Jensen


5/18/10



5/12/10







16,814



2,000,000















10,329



3.46



20,372Michael J. Potts


5/18/10



5/12/10







18,916



2,000,000















11,620



3.46



22,918John H. Scribante


5/18/10



5/12/10







43,350



2,000,000















16,731



3.46



32,999Daniel J. Waibel


5/18/10



5/12/10







18,916



2,000,000















16,731



3.46



32,999     (1)
    
    Amounts in the three columns below represent possible payments
    for the cash bonus incentive compensation awards that we granted
    with respect to the performance period of fiscal 2011. No cash
    bonuses were paid for fiscal 2011. See Elements of
    Compensation  Annual Cash Bonus Incentive
    Compensation above for a discussion.(2)
    
    We granted the stock options listed in this column under our
    2004 Stock and Incentive Awards Plan in fiscal 2011.(3)
    
    The exercise price per share is equal to closing market price of
    a share of our Common Stock on the grant date.(4)
    
    Represents the grant date fair value of the stock options
    computed in accordance with ASC Topic 718. 109




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##### Table of Contents



Outstanding
    Equity Awards at Fiscal 2011 Year End
    Option AwardsNumber of

Number ofShares

SharesUnderlying

UnderlyingUnexercised

Unexercised

Option

OptionOptions (#)

Options (#)

Exercise

ExpirationName

Exercisable

Unexercisable

Price ($)

DateNeal R. Verfuerth






34,207
(1)


3.46



05/18/20207,055



28,221
(2)


3.78



05/19/201943,564



65,347
(3)


5.35



08/08/2018154,546



50,000
(4)


2.20



12/20/2016180,958







4.49



07/27/2011Scott R. Jensen






10,329
(5)


3.46



05/18/202020,000



80,000
(6)


5.44



02/05/20202,351



9,408
(7)


3.78



05/19/20196,600



9,902
(8)


5.35



08/08/201820,000



5,000
(9)


2.20



03/01/20177,000







2.25



08/30/2014Michael J. Potts






11,620
(10)


3.46



05/18/20202,351



9,408
(11)


3.78



05/19/20198,580



12,872
(12)


5.35



08/08/201830,000



15,000
(13)


2.20



12/20/2016John H. Scribante






16,731
(14)


3.46



05/18/2020100,000



150,000
(15)


3.01



09/01/20192,351



9,408
(16)


3.78



05/19/20198,580



12,872
(17)


5.35



08/08/201840,000







2.50



06/02/201625,000







2.25



07/31/2014Daniel J. Waibel






16,731
(18)


3.46



05/18/202010,560



15,843
(19)


5.35



08/08/201880,000



20,000
(20)


2.20



12/20/2016     (1)
    
    This option vested with respect to 20% of the option shares on
    May 18, 2011, and will vest in 20% increments on
    May 18, 2012, 2013, 2014 and 2015, respectively, contingent
    on Mr. Verfuerths continued employment through the
    applicable vesting date.(2)
    
    The option vested with respect to 7,055 shares on
    May 19, 2011 and will vest with respect to
    7,055 shares on May 19 of each of 2012 and 2013 and with
    respect to 7,056 shares on May 19, 2014, contingent on
    Mr. Verfuerths continued employment through the
    applicable vesting date.(3)
    
    The option will vest with respect to 21,782 shares on
    August 8 of each of 2011 and 2012 and with respect to
    21,783 shares on August 8, 2013, contingent on
    Mr. Verfuerths continued employment through the
    applicable vesting date.(4)
    
    The option will vest with respect to 50,000 shares on
    December 20, 2011, contingent on Mr. Verfuerths
    continued employment through the applicable vesting date.(5)
    
    This option vested with respect to 20% of the option shares on
    May 18, 2011 and will vest in 20% increments on
    May 18, 2012, 2013, 2014 and 2015, respectively, contingent
    on Mr. Jensens continued employment through the
    applicable vesting date.(6)
    
    The option will vest with respect to 20,000 shares on
    February 5 of each of 2012, 2013, 2014 and 2015, contingent on
    Mr. Jensens continued employment through the
    applicable vesting date. 110




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##### Table of Contents



(7)
    
    The option vested with respect to 2,352 shares on
    May 19, 2011 and will vest with respect to
    2,352 shares on May 19 of each of 2012, 2013 and 2014,
    contingent on Mr. Jensens continued employment
    through the applicable vesting date.(8)
    
    The option will vest with respect to 3,300 shares on
    August 8, 2011 and will vest with respect to
    3,301 shares on August 8 of each of 2012 and 2013,
    contingent on Mr. Jensens continued employment
    through the applicable vesting date.(9)
    
    The option will vest with respect to 5,000 shares on
    March 1, 2012, contingent on Mr. Jensens
    continued employment through the applicable vesting date.(10)
    
    This option vested with respect to 20% of the option shares on
    May 18, 2011 and will vest in 20% increments on
    May 18, 2012, 2013, 2014 and 2015, respectively, contingent
    on Mr. Potts continued employment through the
    applicable vesting date.(11)
    
    The option vested with respect to 2,352 shares on
    May 19, 2011 and will vest with respect to
    2,352 shares on May 19 of each of 2012, 2013 and 2014,
    contingent on Mr. Potts continued employment through
    the applicable vesting date.(12)
    
    The option will vest with respect to 4,290 shares on
    August 8, 2011 and will vest with respect to
    4,291 shares on August 8 of each of 2012 and 2013,
    contingent on Mr. Potts continued employment through
    the applicable vesting date.(13)
    
    The option will vest with respect to 15,000 shares on
    December 20, 2011, contingent on Mr. Potts
    continued employment through the applicable vesting date.(14)
    
    This option vested with respect to 20% of the option shares on
    May 18, 2011 and will vest in 20% increments on
    May 18, 2012, 2013, 2014 and 2015, respectively, contingent
    on Mr. Scribantes continued employment through the
    applicable vesting date.(15)
    
    The option will vest in 50,000 share increments when our
    Common Stocks average closing price over five consecutive
    trading days equals or exceeds $6.00, $7.00 and $8.00 per share,
    respectively, contingent on Mr. Scribantes continued
    employment through the applicable vesting date.(16)
    
    The option vested with respect to 2,352 shares on
    May 19, 2011 and will vest with respect to
    2,352 shares on May 19 of each of 2012, 2013 and 2014,
    contingent on Mr. Scribantes continued employment
    through the applicable vesting date.(17)
    
    The option will vest with respect to 4,290 shares on
    August 8, 2011, and with respect to 4,291 shares on
    August 8 of each of 2012 and 2013, contingent on
    Mr. Scribantes continued employment through the
    applicable vesting date.(18)
    
    This option vested with respect to 20% of the option shares on
    May 18, 2011 and will vest in 20% increments on
    May 18, 2012, 2013, 2014 and 2015, respectively, contingent
    on Mr. Waibels continued employment through the
    applicable vesting date.(19)
    
    The option will vest with respect to 5,281 shares on August
    8 of each of 2011, 2012 and 2013, contingent on
    Mr. Waibels continued employment through the
    applicable vesting date.(20)
    
    The option will vest with respect to 20,000 shares on
    December 20, 2011, contingent on Mr. Waibels
    continued employment through the applicable vesting date. 111




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##### Table of Contents



Option
    Exercises for Fiscal 2011
    Option AwardsNumber of SharesAcquired on

Value RealizedExercise

on ExerciseName

(#)

($)(1)Neal R. Verfuerth


20,000



19,200Scott R. Jensen


1,000



2,500Michael J. Potts


30,000



1,200John H. Scribante






Daniel J. Waibel






     (1)
    
    Represents the difference, if any, between the closing sale
    price of a share of our Common Stock on the date of exercise of
    the shares purchased and the aggregate exercise price per share
    paid by the executive.  Payments
    Upon Termination or Change of Control
  Employment
    Agreements
    Cause not-to-sue,
  Good reason
 112




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##### Table of Contents



Employment

Renewal

Noncompete andExecutive

Severance

Term

Term

ConfidentialityNeal R. Verfuerth


2 × Salary + Avg. Bonus



2 Years



2 Years



YesScott R. Jensen


1/2 × Salary + Avg. Bonus



1 Year



1 Year



YesMichael J. Potts


1 × Salary + Avg. Bonus



1 Year



1 Year



YesJohn H. Scribante


1/2 × Salary + Avg. Bonus



1 Year



1 Year



Yes         Post Changeof ControlEmployment



Excise TaxExecutive

Severance

Term

Trigger

Gross-Up

ValleyNeal R. Verfuerth


3 × Salary + Avg. Bonus



3 Years



Double



No



YesScott R. Jensen


1 × Salary + Avg. Bonus



1 Year



Double



No



YesMichael J. Potts


2 × Salary + Avg. Bonus



2 Years



Double



No



YesJohn H. Scribante


1 × Salary + Avg. Bonus



1 Year



Double



No



Yes      113




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##### Table of Contents



Equity
    Plans
  and/or
  
    With certain exceptions, any person (as such term is
    used in sections 13(d) and l4(d) of the Exchange Act),
    becomes a beneficial owner (as defined in
    Rule 13d-3
    under the Exchange Act), directly or indirectly, of securities
    representing more than 50% of the voting power of our then
    outstanding securities.
    Our shareholders approve (or, if shareholder approval is not
    required, our board approves) an agreement providing for
    (i) our merger or consolidation with another entity where
    our shareholders immediately prior to the merger or
    consolidation will not beneficially own, immediately after the
    merger or consolidation, securities of the surviving entity
    representing more than 50% of the voting power of the then
    outstanding securities of the surviving entity, (ii) the
    sale or other disposition of all or substantially all of our
    assets, or (iii) our liquidation or dissolution.
    Any person has commenced a tender offer or exchange offer for
    30% or more of the voting power of our then outstanding shares.
    Directors are elected such that a majority of the members of our
    board shall have been members of our board for less than two
    years, unless the election or nomination for election of each
    new director who was not a director at the beginning of such
    two-year period was approved by a vote of at least two-thirds of
    the directors then still in office who were directors at the
    beginning of such period.   114




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##### Table of Contents



Payments
    Upon Termination
    WithoutWithout

Cause or forCause or for Good

Good Reason in ConnectionName

Benefit

Reason ($)

With a Change of Control ($)Neal R. Verfuerth

Severance


1,114,667



1,672,000Pro Rata Target Bonus


88,627



88,627Benefits


13,908



13,908Acceleration of Options






119,178Excise Tax Cut-Back






Total


1,217,202



1,893,713Scott R. Jensen

Severance


116,667



233,333Pro Rata Target Bonus


16,814



16,814Benefits


21,251



21,251Acceleration of Options






17,638Excise Tax Cut-Back






Total


154,732



289,036Michael J. Potts

Severance


296,667



593,333Pro Rata Target Bonus


18,916



18,916Benefits


21,251



21,251Acceleration of Options






36,788Excise Tax Cut-Back






Total


336,834



670,288John H. Scribante

Severance


147,500



295,000Pro Rata Target Bonus


43,350



43,350Benefits






Acceleration of Options






166,653Excise Tax Cut-Back






Total


190,850



505,000Daniel J. Waibel

Severance






Pro Rata Target Bonus






Benefits






Acceleration of Options






46,505Excise Tax Cut-Back






Total






46,505Total




1,899,616



3,404,544   Payments
    Upon Change of Control (No Termination)
    Number of Unvested OptionShares Accelerated and Cashed OutName

(#)

Value Realized ($)Neal R. Verfuerth


177,775


$
119,178Scott R. Jensen


114,639



17,638Michael J. Potts


48,900



36,788John H. Scribante


176,139



166,653Daniel J. Waibel


52,574



46,505  115




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##### Table of Contents



RISK
    ASSESSMENT OF OUR COMPENSATION POLICIES AND PRACTICES
      
    Identified our material compensation arrangements and
    categorized them according to the levels of potential
    risk-taking behaviors that our compensation committee believes
    they may encourage.
    Met with our chief financial officer to develop a better
    understanding of our enterprise risk profile and the material
    risks, including reputational risk and those described under
    Part I, Item 1A, Risk Factors, in our
    Annual Report on
    Form 10-K
    for the fiscal year ended March 31, 2011, that we face and
    the relationship of our compensation policies and practices to
    those identified enterprise-related risks.
    Evaluated the levels of potential risk-taking that may be
    encouraged by each material compensation arrangement to
    determine whether it is appropriate in the context of our
    overall compensation arrangements, our objectives for our
    compensation arrangements, our strategic goals and objectives
    and our enterprise risk profile.
    Identified and evaluated the likely effectiveness of the
    risk-mitigation attributes contained in our compensation
    policies and practices, as set forth below.    
    We believe that we have set base salaries at a sufficient level
    to discourage excessive or unnecessary risk taking. We believe
    that base salary, as a non-variable element of compensation,
    helps to moderate the incentives to incur risk in the pursuit of
    increased financial performance metrics that are directly tied
    to the payment of variable elements of compensation. To perform
    its moderating function, we believe that base salary should make
    up a substantial portion of target total compensation. Our
    NEOs fiscal 2011 base salaries were, on average, more than
    75% of their fiscal 2011 total actual compensation. Although we
    do not expect base salaries to continue to comprise such a
    significant portion of total actual compensation, we intend for
    base salary to make up a substantial portion of target total
    compensation in future years. We also did not increase base
    salaries for executives in either fiscal 2011 or fiscal 2012
    pending significantly improved operating results.
    Our incentive compensation goals are directly tied to and
    support our strategic business plan and are based upon annual
    operating budget levels that are reviewed and approved by our
    board of directors and that we believe are attainable at their
    targeted levels without the need to (i) take excessive or
    unnecessary risks; (ii) take actions that would violate our
    Code of Conduct; or (iii) make material changes to our
    long-term business strategy or our methods of management or
    operation.
    Our fiscal 2012 incentive compensation program includes an
    overall limit on the number of option shares that may be granted
    and caps the amount of the cash bonus opportunity.
    We use three different corporate financial performance metrics,
    revenue, net income and free cash flow, under our fiscal 2012
    incentive compensation program, as well as the price of our
    common stock, to 116




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##### Table of Contents



determine the total amount of our incentive compensation awards
    to our named executive officers and certain other
    management-level employees. We believe that using different
    financial metrics helps to mitigate excessive or unnecessary
    risk taking and the motivation to focus on achieving any single
    financial performance measure that is directly tied to the
    amount of our incentive compensation awards.  
    Almost all of our incentive compensation awards for fiscal 2012
    (other than the cash bonus opportunity for extraordinary
    performance) are equity-based so that employees who receive
    these equity-based awards may only realize value through the
    sustained long-term appreciation of our shareholder value. We
    also believe that the overall size of the potential incentive
    compensation program is moderate and is spread over a broad
    group of employees.
    We have implemented stock ownership guidelines for all of our
    executive officers, which we believe help to focus them on
    long-term stock price appreciation and sustainability.
    We have adopted a clawback policy as an additional
    risk mitigation provision. Our clawback policy calls on our
    board of directors to require reimbursement from any officer of
    an amount equal to the amount of any overpayment or
    overrealization of any incentive compensation paid to, or
    realized by, the officer if:
    The payment or vesting of incentive compensation was predicated
    upon the achievement of certain company financial or operating
    results with respect to the applicable performance period that
    were subsequently the subject of a material financial statement
    restatement (other than a restatement due to subsequent changes
    in generally accepted accounting principles, policies or
    practices) that adversely affects our prior announced or stated
    financial results, financial condition or cash flows;
    In our boards view, the recipient engaged in misconduct
    that caused, partially caused or otherwise contributed to the
    need for the financial statement restatement; and
    Vesting would not have occurred, or no payment or a lower
    payment would have been made to the recipient, based upon our
    restated financial results, financial condition or cash flow.    Director
    Compensation
     117




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##### Table of Contents



Director
    Compensation for Fiscal 2011
    Fees Earned

Optionor Paid in

Awards

All OtherName

Cash ($)(1)

($)(2)(3)

Compensation ($)

Total ($)Michael W. Altschaefl


55,000



32,361







87,361James R. Kackley(4)


40,000



32,361







72,361Thomas A. Quadracci


50,000



32,361







82,361Elizabeth Gamsky Rich(5)


30,932



26,430







57,362Thomas N. Schueller(6)


30,000



32,361







62,361Roland G. Stephenson(7)


20,000



32,361







52,361Mark C. Williamson


65,000



32,361







97,361     (1)
    
    As permitted under our compensation program for non-employee
    directors, the following directors elected to received the
    following portions of their fiscal 2011 retainer in shares of
    our Common Stock: Mr. Altschaefl  $41,250, which
    equated to 12,281 shares; Mr. Stephenson 
    $10,000, which equated to 3,194 shares.(2)
    
    Represents the grant date fair value of the awards pursuant to
    ASC Topic 718. Additional information about the assumptions that
    we used when valuing equity awards is set forth in our Annual
    Report on
    Form 10-K
    in the Notes to Consolidated Financial Statements for our fiscal
    year ended March 31, 2011.(3)
    
    The option awards outstanding as of March 31, 2011 for each
    non-employee director were as follows: Mr. Altschaefl held
    options to purchase 25,203 shares of our Common Stock;
    Mr. Kackley held options to purchase 90,346 shares of
    our Common Stock; Mr. Quadracci held options to purchase
    55,346 shares of our Common Stock; Ms. Gamsky Rich
    held options to purchase 19,912 shares of our Common Stock;
    Mr. Schueller held options to purchase 19,912 shares
    of our Common Stock; and Mr. Williamson held options to
    purchase 30,495 shares of our Common Stock. All options
    vest ratably over a three-year continued board service period.(4)
    
    As disclosed above, on July 22, 2009, Mr. Kackley
    became our president and chief operating officer. He retired
    from those positions effective May 14, 2010 but remains a
    director of our company and, since August 25, 2010,
    non-executive chairman of our board.(5)
    
    Ms. Rich was appointed to our board of directors on
    June 23, 2010.(6)
    
    Mr. Schueller was appointed to our board of directors on
    April 28, 2010.(7)
    
    Mr. Stephenson resigned from our board of directors on
    August 25, 2010.  ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED SHAREHOLDER MATTERS  Security
    Ownership Of Certain Beneficial Owners and Management
    
    each person (or group of affiliated persons) known to us to be
    the beneficial owner of more than 5% of our Common Stock;
    each of our named executive officers;
    each of our directors; and
    all of our directors and current executive officers as a group. 118




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c/o Orion
  Shares Beneficially OwnedPercentage ofNumber

OutstandingDirectors and executive officersNeal R. Verfuerth(1)


2,207,883



9.5
%Michael J. Potts(2)


467,961



2.0
%John Scribante(3)


220,447



*Daniel J. Waibel(4)


768,309



3.4
%Scott R. Jensen(5)


72,371



*James R. Kackley(6)


316,521



1.4
%Michael W. Altschaefl(7)


34,102



*Tryg C. Jacobson






*Thomas A. Quadracci(8)


125,121



*Elizabeth G. Rich


3,591



*Thomas N. Schueller(9)


12,138



*Mark C. Williamson(10)


23,694



*All current directors and executive officers as a group (16
    individuals)(11)


4,271,523



18.0
%Principal shareholdersGE Capital Equity Investments, Inc.(12)


1,570,990



6.9
%     *
    
    Indicates less than 1%.(1)
    
    Consists of (i) 1,807,861 shares of Common Stock; and
    (ii) 400,022 shares of Common Stock issuable upon the
    exercise of vested and exercisable options. The number does not
    reflect (i) 200,042 shares of Common Stock subject to
    options held by Mr. Verfuerth that will not become
    exercisable within 60 days of May 31, 2011.(2)
    
    Consists of (i) 422,352 shares of Common Stock; and
    (ii) 45,609 shares of Common Stock issuable upon the
    exercise of vested and exercisable options. The number does not
    include 65,843 shares of Common Stock subject to options
    held by Mr. Potts that will not become exercisable within
    60 days of May 31, 2011.(3)
    
    Consists of (i) 23,815 shares of Common Stock owned by
    Garden Villa on 3rd LLP; (ii) 15,000 shares of Common
    Stock held in the TMS Trust; and (iii) 181,632 shares
    of Common Stock issuable upon the exercise of vested and
    exercisable options. The number does not include
    204,931 shares of Common Stock subject to options held by
    Mr. Scribante that will not become exercisable within
    60 days of May 31, 2011.(4)
    
    Consists of (i) 674,400 shares of Common Stock; and
    (ii) 93,909 shares of Common Stock issuable upon the
    exercise of vested and exercisable options. The number does not
    include 67,185 shares of Common Stock subject to options
    held by Mr. Waibel that will not become exercisable within
    60 days of May 31, 2011.(5)
    
    Consists of (i) 12,000 shares of Common Stock; and
    (ii) 60,371 shares of Common Stock issuable upon the
    exercise of vested and exercisable options. The number does not
    include 125,943 shares of Common Stock subject to options
    held by Mr. Jensen that will not become exercisable within
    60 days of May 31, 2011. 119




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(6)
    
    Consists of (i) 197,976 shares of Common Stock;
    (ii) 73,545 shares of Common Stock issuable upon the
    exercise of vested and exercisable options; and
    (iii) 45,000 shares of Common Stock beneficially owned
    by Mr. Kackleys grandchildren. The number does not
    include 38,846 shares of Common Stock subject to options
    held by Mr. Kackley that will not become exercisable within
    60 days of May 31, 2011.(7)
    
    Consists of (i) 25,700 shares of Common Stock; and
    (ii) 8,402 shares of Common Stock issuable upon the
    exercise of vested and exercisable options. The number does not
    include 38,846 shares of Common Stock subject to options
    held by Mr. Altschaefl that will not become exercisable
    within 60 days of May 31, 2011.(8)
    
    Consists of (i) 82,976 shares of Common Stock;
    (ii) 3,600 shares of Common Stock held by
    Mr. Quadraccis wife; and
    (iii) 38,545 shares of Common Stock issuable upon the
    exercise of vested and exercisable options. The number does not
    include 38,846 shares of Common Stock subject to options
    held by Mr. Quadracci that will not become exercisable
    within 60 days of May 31, 2011.(9)
    
    Consists of (i) 5,500 shares of Common Stock held in
    an IRA; and (ii) 6,638 shares of Common Stock issuable
    upon the exercise of vested and exercisable options. The number
    does not include 35,319 shares of Common Stock subject to
    options held by Mr. Schueller that will not become
    exercisable within 60 days of May 31, 2011.(10)
    
    Consists of (i) 10,000 shares of Common Stock and
    (ii) 13,694 shares of Common Stock issuable upon the
    exercise of vested and exercisable options. The number does not
    include 38,846 shares of Common Stock subject to options
    held by Mr. Williamson that will not become exercisable
    within 60 days of May 31, 2011.(11)
    
    Includes 934,020 shares of Common Stock issuable upon the
    exercise of vested and exercisable options. The number does not
    include 1,116,675 shares of Common Stock subject to options
    that will not become exercisable within 60 days of
    May 31, 2011.(12)
    
    The address of GE Capital Equity Investments, Inc., which we
    refer to as GECEI, is 201 Merritt 7, Norwalk,
    Connecticut 06851. Other than share ownership percentage
    information, the information set forth is as of
    December 31, 2010, as reported by GECEI in its
    Schedule 13G filed with us and the SEC.  ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
    INDEPENDENCE  Policies
    and Procedures Governing Related Person Transactions
    
    a related person means any of our directors,
    executive officers, nominees for director, holder of 5% or more
    of our Common Stock or any of their immediate family
    members; and
    a related person transaction generally is a
    transaction (including any indebtedness or a guarantee of
    indebtedness) in which we were or are to be a participant and
    the amount involved exceeds $120,000, and in which a related
    person had or will have a direct or indirect material interest.   120




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##### Table of Contents



Related
    Person Transactions
    Thomas
    A. Quadracci
    James
    R. Kackley
    Neal
    R. Verfuerth
    Director
    Independence
    ITEM 14.
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES  Form 10-K
 121




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##### Table of Contents



Fiscal 2011


Fiscal 2010Audit fees(1)

$
282,873


$
292,844Audit-related fees(2)


14,150



14,648Tax fees(3)


57,817



72,431Total fees

$
354,840


$
379,923     (1)
    
    Represents the aggregate fees billed for the integrated audit of
    our fiscal 2011 and 2010 financial statements, respectively,
    review of quarterly financial statements and attendance at audit
    committee meetings and shareholder meetings.(2)
    
    Represents the aggregate fees billed for audit of our benefit
    plans.(3)
    
    Represents the aggregate fees billed for tax compliance.    case-by-case
 PART IV  ITEM 15.
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES  (a)
    Financial
    Statements  Form 10-K.
  (b)
    Financial
    Statement Schedule  SCHEDULE IIVALUATION and QUALIFYING ACCOUNTSBalance at

Provisions



Balance atBeginning of

Charged to

Write offs

End ofPeriod

Expense

and Other

Period(In thousands)March 31,2009


Allowance for Doubtful Accounts

$
79



178



35


$
2222010


Allowance for Doubtful Accounts


222



388



228



3822011


Allowance for Doubtful Accounts


382



186



132



4362009


Inventory Obsolescence Reserve

$
530



149



11


$
6682010


Inventory Obsolescence Reserve


668



105



17



7562011


Inventory Obsolescence Reserve


756



57



2



811  122




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##### Table of Contents



EXHIBIT INDEX
  Number

Exhibit Title3
.1

Amended and Restated Articles of Incorporation of Orion Energy
    Systems, Inc., filed as Exhibit 3.3 to the
    Registrants
    Form S-1
    filed August 20, 2007 (File
    No. 333-145569),
    is hereby incorporated by reference.3
.2

Amended and Restated Bylaws of Orion Energy Systems, Inc., filed
    as Exhibit 3.5 to the Registrants
    Form S-1
    filed August 20, 2007 (File
    No. 333-145569),
    is hereby incorporated by reference.4
.1

Form of Warrant to purchase Common Stock of Orion Energy
    Systems, Inc., filed as Exhibit 4.3 to the
    Registrants
    Form S-1
    filed August 20, 2007 (File
    No. 333-145569),
    is hereby incorporated by reference.4
.2

Form of Warrant to purchase Common Stock of Orion Energy
    Systems, Inc., filed as Exhibit 4.4 to the
    Registrants
    Form S-1
    filed August 20, 2007 (File
    No. 333-145569),
    is hereby incorporated by reference.4
.3

Rights Agreement, dated as of January 7, 2009, between
    Orion Energy Systems, Inc. and Wells Fargo Bank, N.A., which
    includes as Exhibit A thereto the Form of Right Certificate
    and as Exhibit B thereto the Summary of Common Share
    Purchase Rights, filed as Exhibit 4.1 to the
    Registrants
    Form 8-A
    filed January 8, 2009 (File
    No. 001-33887),
    is hereby incorporated by reference.10
.1

Credit Agreement, dated June 30, 2010, by and among Orion
    Energy Systems, Inc., Orion Asset Management LLC, Clean Energy
    Solutions, LLC and JP Morgan Chase Bank, N.A., filed as
    Exhibit 10.1 to the Registrants Current Report on
    Form 8-K
    filed July 2, 2010 (File
    No. 001-33887),
    is hereby incorporated by reference.10
.2

Orion Energy Systems, Inc. 2003 Stock Option Plan, as amended,
    filed as Exhibit 10.6 to the Registrants
    Form S-1
    filed August 20, 2007 (File
    No. 333-145569),
    is hereby incorporated by reference.*10
.3

Form of Stock Option Agreement under the Orion Energy Systems,
    Inc. 2003 Stock Option Plan, filed as Exhibit 10.7 to the
    Registrants
    Form S-1
    filed August 20, 2007 (File
    No. 333-145569),
    is hereby incorporated by reference.*10
.4

Orion Energy Systems, Inc. 2004 Stock and Incentive Awards Plan,
    filed as Exhibit 10.9 to the Registrants
    Form S-1
    filed August 20, 2007 (File
    No. 333-145569),
    is hereby incorporated by reference.*10
.5

Form of Stock Option Agreement under the Orion Energy Systems,
    Inc. 2004 Equity Incentive Plan, filed as Exhibit 10.10 to
    the Registrants
    Form S-1
    filed August 20, 2007 (File
    No. 333-145569),
    is hereby incorporated by reference.*10
.6

Form of Stock Option Agreement under the Orion Energy Systems,
    Inc. 2004 Stock and Incentive Awards Plan, filed as
    Exhibit 10.11 to the Registrants
    Form S-1
    filed August 20, 2007 (File
    No. 333-145569),
    is hereby incorporated by reference.*10
.7

Form of Accelerated Vesting Stock Option Agreement under the
    Orion Energy Systems, Inc. 2004 Stock and Incentive Awards
    Plan.* +10
.8

Summary of Non-Employee Director Compensation.*
    +10
.9

Executive Employment and Severance Agreement, dated
    February 21, 2008, by and between Orion Energy Systems,
    Inc. and Michael J. Potts, filed as Exhibit 10.2 to the
    Registrants
    Form 8-K
    filed February 22, 2008 (File
    No. 001-33887),
    is hereby incorporated by reference.*10
.10

Executive Employment and Severance Agreement, dated
    March 18, 2008, by and between Orion Energy Systems, Inc.
    and John H. Scribante, filed as Exhibit 10.3 to the
    Registrants
    Form 8-K
    filed March 21, 2008 (File
    No. 001-33887),
    is hereby incorporated by reference.*10
.11

Executive Employment and Severance Agreement, dated
    April 14, 2008, by and between Orion Energy Systems, Inc.
    and Neal R. Verfuerth, filed as Exhibit 10.1 to the
    Registrants
    Form 8-K
    filed April 18, 2008 (File
    No. 001-33887),
    is hereby incorporated by reference.*10
.12

Executive Employment and Severance Agreement, dated
    August 12, 2008, by and between Orion Energy Systems, Inc.
    and Scott R. Jensen, filed as Exhibit 10.1 to the
    Registrants Quarterly Report on
    Form 10-Q
    for the quarterly period ended June 30, 2008 (File
    No. 001-33887),
    is hereby incorporated by reference.*10
.13

Letter Agreement, dated as of August 27, 2009, between the
    Company and John H. Scribante, filed as Exhibit 10.1 to the
    Companys
    Form 8-K
    filed on September 2, 2009, is hereby incorporated by
    reference.* 123




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##### Table of Contents



Number

Exhibit Title10
.14

Executive Employment and Severance Agreement, dated
    September 8, 2009, by and between Stuart L. Ralsky and the
    Company, filed as Exhibit 10.2 to the Companys
    Quarterly Report on
    Form 10-Q
    for the quarterly period ended September 30, 2009, is
    hereby incorporated by reference.*21
.1

Subsidiaries of Orion Energy Systems, Inc.
    +23
.1

Consent of Independent Registered Public Accounting Firm.
    +31
.1

Certification of Chief Executive Officer of Orion Energy
    Systems, Inc. pursuant to
    Rule 13a-14(a)
    or
    Rule 15d-14(a)
    promulgated under the Securities Exchange Act of 1934, as
    amended. +31
.2

Certification of Chief Financial Officer of Orion Energy
    Systems, Inc. pursuant to
    Rule 13a-14(a)
    or
    Rule 15d-14(a)
    promulgated under the Securities Exchange Act of 1934, as
    amended. +32
.1

Certification of Chief Executive Officer and Chief Financial
    Officer of Orion Energy Systems, Inc. pursuant to
    Rule 13a-14(b)
    promulgated under the Securities Exchange Act of 1934, as
    amended, and 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
    +     *
    
    Management contract or compensatory plan or arrangement required
    to be filed (and/or incorporated by reference) as an exhibit to
    this Annual Report on
    Form 10-K
    pursuant to Item 15(a)(3) of
    Form 10-K.+
    
    Filed herewith 124




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##### Table of Contents



SIGNATURES  Form 10-K
 
    By:
    /s/  Neal
    R. Verfuerth    
  Form 10-K
 
  Signature

Title/s/  Neal
    R. VerfuerthNeal
    R. Verfuerth

Chief Executive Officer and Director 
    (Principal Executive Officer)/s/  Scott
    R. JensenScott
    R. Jensen

Chief Financial Officer 
    (Principal Financial Officer)/s/  Richard
    GaumerRichard
    Gaumer

Chief Accounting Officer 
    (Principal Accounting Officer)/s/  James
    R. KackleyJames
    R. Kackley

Chairman of the Board/s/  Michael
    W. AltschaeflMichael
    W. Altschaefl

Director/s/  Michael
    J. PottsMichael
    J. Potts

Director/s/  Thomas
    A. QuadracciThomas
    A. Quadracci

Director/s/  Elizabeth
    Gamsky RichElizabeth
    Gamsky Rich

Director/s/  Thomas
    N. SchuellerThomas
    N. Schueller

Director/s/  Mark
    C. WilliamsonMark
    C. Williamson

Director/s/  Tryg
    C. JacobsonTryg
    C. Jacobson

Director  125