##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, 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, 2008Oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number:
    001-33306
  Opnext, Inc.
 (Exact name of registrant as
    specified in its charter)
      Delaware

22-3761205(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)1 Christopher Way, Eatontown, New Jersey

07724(Address of principal executive
    office)

(Zip Code)  (732) 544-3400
 (Registrants telephone number, including area code)
  Securities registered pursuant to Section 12(b) of the
    Act:
 None
  Securities registered pursuant to Section 12(g) of the
    Act:
 Class A Membership Interests
  o þ
  o þ
  o þ
  Regulation S-K Form 10-K Form 10-K. o
  12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer o
    Non-accelerated
    filer þ
    Smaller
    reporting
    company o   Rule 12b-2 o þ




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##### 





Table of
    Contents
   
 PART IItem 1.


Business


3Item 1A.


Risk Factors


12Item 1B.


Unresolved Staff Comments


26Item 2.


Properties


26Item 3.


Legal Proceedings


27Item 4.


Submission of Matters to a Vote of Security
    Holders


28PART IIItem 5.


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


28Item 6.


Selected Financial Data


31Item 7.


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


32Item 7A.


Quantitative and Qualitative Disclosures about
    Market Risk


43Item 8.


Financial Statements and Supplementary
    Data


45Item 9


Changes in and Disagreements with Accountants
    on Accounting and Financial Disclosure


72Item 9A


Controls and Procedures


72Item 9B


Other


74PART IIIItem 10.


Executive Officers, Directors, Director
    Independence and Corporate Governance


74Item 11.


Executive Compensation


74Item 12.


Security Ownership of Certain Beneficial
    Owners, Management and Related Stockholders Matters


74Item 13.


Certain Relationships, Related Transactions,
    and Director Independence


74Item 14.


Principal Accountant Fees and Services


74PART IVItem 15.


Exhibits, Financial Statement Schedules


74SIGNATURES


77EXHIBIT 23.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2    EX-10.4.D:


FORM OF AMENDMENT TO STOCK APPRECIATION RIGHT AGREEMENTEX-23.1:


CONSENT OF ERNST & YOUNG LLPEX-31.1:


CERTIFICATIONEX-31.2:


CERTIFICATIONEX-32.1:


CERTIFICATIONEX-32.2:


CERTIFICATION  2




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PART I  Item 1.
    Business  Business
    Description
      30-year
    Industry
    Background
   3




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IP-based e-mail,
      
    The Power Challenge.  Modules that operate at
    10Gbps consume two to more than five times as much electrical
    power as those modules operating at the preceding data rate and
    the power challenges are expected to become more difficult as
    the industry moves beyond 10Gbps. Network service providers
    generally have fixed, limited space in their network central
    offices, closets, and data centers to house network equipment,
    creating de facto standards on the physical size allowed for
    each piece of network equipment regardless of data rate. To
    offer increasingly higher speed systems, network system vendors
    need more efficient modules to support greater port density
    while adhering to power supply and cooling system constraints.
    These constraints drive the need for laser technology with
    higher temperature tolerance and improved efficiency which
    reduces power consumption and enables smaller form factor
    modules to be used.
    The Temperature Challenge.  Within an optical
    module, the laser diode is the component most sensitive to
    temperature. As a result, 10Gbps modules have in the past been
    constrained to 70°C maximum operating case temperature.
    Even in temperature controlled environments, heat dissipation
    from neighboring electronic components can raise internal
    equipment temperatures to levels that degrade laser and module
    performance. Furthermore, some network equipment is located
    outdoors in non-temperature controlled environments where
    transceiver modules need to operate reliably up to an operating
    case temperature of +85° C. Therefore, customers are
    demanding optical modules that can operate at wider temperature
    ranges, especially incorporating uncooled lasers that do not
    require costly and inefficient thermoelectric coolers.
    The Size Challenge.  The system throughput,
    data rate of each port and the overall chassis dimensions of a
    system define the bandwidth capacity of that system. Network
    service providers and enterprises have limited space in which to
    house their optical network equipment within an office or
    equipment room. Expanding the capacity of a system requires
    increasing the number of ports and the data rate of those ports.
    To meet these higher speed and density requirements, industry
    leaders have defined smaller 10Gbps transceiver packages. As the
    size of these packages decreases, so does their ability to
    dissipate heat making it virtually impossible to support cooled
    laser technology. Therefore, lower power consumption uncooled
    laser technology with 4




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higher temperature tolerance and improved efficiency is required
    to meet the thermal capacity of these smaller packages.    Our Key
    Advantages
    Technology Leadership.
  Broad Product Line.
  Superior Performance.
 5




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Continuous Innovation.
  MSA Leadership.
  Technology
    and Research and Development
    Semiconductor Laser Design &
    Manufacturing.
  Optical Semiconductor Materials.
 6




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Subassembly Design.
  Module Design.
    Products
       7




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Product LineProduct Types

Equipment

Application

Speed

Reach

Shipping300 pin

Transport & Routers

Telecom & Datacom

40/43Gbps

2km, Tunable PSBT
    and DPSK

Since 2004300 pin

Transport, MSS, Routers & AM*

Telecom & Datacom

10Gbps

600m, 2km, 12km, 20km, 40km, 80km,
    DWDM & Tunable

Since 2000XENPAK

Switches & Routers

Datacom

10Gbps

300m, 10km, 40km, 80km & DWDM

Since 2002X2

Switches & Routers

Datacom

10Gbps

300m, 10km, 40km, 80km & DWDM

Since 2004XPAK

Servers, Switches

Datacom & Storage

10Gbps

300m, 10km

Since 2005XFP

Transport, MSS, Switches, Routers & AM, Servers

Telecom, Datacom & Storage

10Gbps

300m, 600m, 2km, 12km, 20km, 40km, 80km & DWDM

Since 2004SFP+

Servers, Switches

Datacom & Storage

8-10Gbps

100m, 300m, 10km & 40km

Since 2007XMD and XLMD
    TOSA & ROSA

Transceiver Modules

Telecom & Datacom

10-43Gbps

10km, 40km, 80km

Since 2005LDM/PDM

Transport & MSS

Telecom

10Gbps

40km, 80km, DWDM

Since 2000SFP

Transport, MSS, Routers & AM

Telecom

155Mbps, 622Mbps, 2.5Gbps

2km, 15km, 40km, 80km, DWDM

Since 2003SFP

Hubs & Switches

Datacom

1.25Gbps

500m, 10km, 80km

Since 2004     *
    
    MSS refers to multi-service switches and AM refers to access
    multiplexers.   8




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Customers
      Competition
    
    product performance, including size, speed, operating
    temperature range, power consumption and reliability;
    price to performance characteristics;
    delivery performance and lead times;
    ability to introduce new products in a timely manner that meet
    customers design-in schedules and requirements;
    breadth of product solutions;
    sales, technical and post-sales service and support;
    sales channels; and
    ability to comply with new industry MSAs and requirements.    
    price to performance characteristics;
    delivery performance and lead times;
    breadth of product solutions;
    sales, technical, and post-sales service and support; and
    sales channels. 9




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Manufacturing
            Sales,
    Marketing and Technical Support
   10




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Patents
    and Other Intellectual Property Rights
           11




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Employees
    Item 1A.
    Risk
    Factors  Risks
    Relating To Our Business and Industry
  We
    depend on a limited number of customers for a significant
    percentage of our revenues, and any loss, cancellation,
    reduction or delay in purchases by these customers could harm
    our business.
    We are
    dependent on contract manufacturers for a significant portion of
    our revenue.
    Uncertainty
    in customer forecasts of their demands and other factors may
    lead to delays and disruptions in manufacturing, which could
    result in delays in product shipments to customers and could
    adversely affect our business.
   12




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We
    participate in vendor managed inventory programs for the benefit
    of certain of our customers which could result in increased
    inventory levels and/or decreased visibility into the timing of
    revenues.
      If our
    customers do not qualify our products or if their customers do
    not qualify their products, our results of operations may
    suffer.
      We do
    not have long-term volume purchase contracts with our customers,
    so our customers may increase, decrease, cancel or delay their
    buying levels at any time with minimal advance notice to us,
    which may significantly harm our business.
   13




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We may
    experience low manufacturing yields or higher than expected
    costs.
    There
    is a limited number of potential suppliers for certain
    components. In addition, we depend on a limited number of
    suppliers whose components have been qualified into our products
    and who could disrupt our business if they stop, decrease or
    delay shipments or if the components they ship have quality or
    consistency issues. We may also face component shortages if we
    experience increased demand for modules and components beyond
    what our qualified suppliers can deliver.
   14




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We
    rely substantially upon a limited number of contract
    manufacturing partners and, if these contract manufacturers fail
    to meet our short and long-term needs and contractual
    obligations, our business may be negatively
    impacted.
    We
    depend on facilities located outside of the United States to
    manufacture our products, which subjects us to additional
    risks.
    
    unexpected changes in regulatory requirements;
    legal uncertainties regarding liabilities, tariffs and other
    trade barriers;
    inadequate protection of intellectual property in some countries;
    greater incidence of shipping delays;
    greater difficulty in overseeing manufacturing operations,
    including, but not limited to, the levels of inventory
    associated therewith;
    greater difficulty in hiring talent needed to oversee
    manufacturing operations;
    potential political and economic instability; and
    the outbreak of infectious diseases which could result in travel
    restrictions or the closure of our facilities or the facilities
    of our customers and suppliers.    We
    face increasing competition from other providers of competing
    products, which could negatively impact our results of
    operations and market share.
     15




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Decreases
    in average selling prices of our products may reduce operating
    profit and net income, particularly if we are not able to reduce
    our expenses commensurately.
      Shifts
    in our product mix may result in declines in operating income
    and net income.
    If
    demand for optical systems, particularly for 10Gbps and 40Gbps
    network systems, does not continue to expand as expected, our
    business will suffer.
   16




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Our
    products may contain defects that may cause us to incur
    significant costs, divert our attention from product development
    efforts, result in a loss of customers and may possibly result
    in product liability claims.
  and/or
      Our
    market is subject to rapid technological change and, to compete
    effectively, we must continually introduce new products that
    achieve market acceptance or our business may be significantly
    harmed.
    
    changing product specifications and customer requirements;
    unanticipated engineering complexities;
    delays in or denials of membership in future MSAs that become
    successful, or membership in and product development for MSAs
    that do not become successful; 17




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
    difficulties in hiring and retaining necessary technical
    personnel;
    difficulties in reallocating engineering resources and
    overcoming resource limitations; and
    changing market or competitive product requirements.    Our
    products are complex and may take longer to develop and qualify
    than anticipated and we may not recognize revenues from new
    products until after long customer qualification
    periods.
        If we
    fail to obtain the right to use others intellectual
    property rights necessary to operate our business, our ability
    to succeed will be adversely affected.
     18




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
    cease the manufacture, use or sale of the infringing products,
    processes or technology;
    pay substantial damages for past, present and future use of the
    infringing technology;
    expend significant resources to develop non-infringing
    technology; or
    pay substantial damages to our customers or end users to
    discontinue use or replace infringing technology with
    non-infringing technology.    We
    license our intellectual property to Hitachi and its
    wholly-owned subsidiaries without restriction. In addition,
    Hitachi is free to license certain of Hitachis
    intellectual property which we use in our business to any
    third-party, including our competitors, which could harm our
    business and operating results.
      Our
    failure to protect our intellectual property may significantly
    harm our business.
    Pursuing
    infringers of our intellectual property rights can be
    costly.
   19




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Third
    parties may claim we are infringing their intellectual property
    rights, and we could be prevented from selling our products, or
    suffer significant litigation expense, even if these claims have
    no merit.
      Our
    future operating results may be subject to volatility as a
    result of exposure to foreign currency exchange
    risks.
    Our
    financial results may vary significantly from quarter-to-quarter
    due to a number of factors, which may lead to volatility in our
    stock price.
    
    fluctuations in demand for our products;
    the timing, size and product mix of sales of our products;
    our ability to manufacture and deliver products to our customers
    in a timely and cost-effective manner;
    quality control problems in our manufacturing operations; 20




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
    fluctuations in our manufacturing yields;
    length and variability of the sales cycles of our products;
    new product introductions and enhancements by our competitors
    and ourselves;
    changes in our pricing and sales policies or the pricing and
    sales policies of our competitors;
    our ability to develop, introduce and ship new products and
    product enhancements that meet customer requirements in a timely
    manner;
    unanticipated increase in costs and expenses; and
    fluctuations in foreign currency exchange rates.    We may
    not be able to obtain capital when desired on favorable terms,
    if at all, or without dilution to our
    stockholders.
    
    acquire complementary businesses or technologies;
    enhance our operating infrastructure;
    hire additional technical and other personnel; or
    otherwise pursue our strategic plans and respond to competitive
    pressures.    If we
    fail to retain our senior management and other key personnel or
    if we fail to attract additional qualified personnel, we may not
    be able to achieve our anticipated level of growth and our
    business could suffer.
   21




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Potential
    future acquisitions may not generate the results expected, could
    be difficult to integrate, divert the attention of key
    personnel, disrupt our business, dilute stockholder value and
    impair our financial results.
    
    difficulties in integrating the manufacturing, operations,
    technologies, products, existing contracts, accounting and
    personnel of the target company and realizing the anticipated
    synergies of the combined businesses;
    difficulties in supporting and transitioning customers, if any,
    of the target company;
    diversion of financial and management resources from existing
    operations;
    the price we pay or other resources that we devote may exceed
    the value we realize, or the value we could have realized if we
    had allocated the purchase price or other resources to another
    opportunity or for our existing operations;
    risks of entering new markets in which we have limited or no
    experience;
    potential loss of key employees, customers and strategic
    alliances from either our current business or the target
    companys business;
    assumption of unanticipated problems or latent liabilities, such
    as problems with the quality of the target companys
    products;
    inability to generate sufficient revenue and profitability to
    offset acquisition costs;
    equity based acquisitions may have a dilutive effect on our
    stock; and
    inability to successfully consummate transactions with
    identified acquisition candidates.    We
    depend on Hitachi for assistance with our research and
    development efforts. Any failure of Hitachi to provide these
    services could have a material adverse effect on our
    business.
    Hitachi
    and Clarity could collectively control the outcome of
    shareholder actions in our company.
   22




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##### Table of Contents



Business
    disruptions resulting from international uncertainties could
    negatively impact our profitability.
    
    different technical standards or requirements, such as country
    or region-specific requirements to eliminate the use of lead;
    difficulties in staffing, managing and supporting operations in
    more than one country;
    difficulties in enforcing agreements and collecting receivables
    through foreign legal systems;
    fewer legal protections for intellectual property;
    fluctuations in foreign economies;
    fluctuations in the value of foreign currencies and interest
    rates;
    domestic and international economic or political changes,
    hostilities and other disruptions in regions where we currently
    operate or may operate in the future; and
    different and changing legal and regulatory requirements in the
    jurisdictions in which we currently operate or may operate in
    the future.    Our
    business and future operating results may be adversely affected
    by events outside of our control.
   23




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Environmental
    laws and regulations may subject us to significant costs and
    liabilities.
    The
    price of our common stock is highly volatile and may continue to
    fluctuate substantially which could result in substantial losses
    for our investors.
    
    actual or anticipated fluctuations in our results of operations;
    variance in our financial performance from the expectations of
    market analysts;
    conditions and trends in the markets we serve;
    announcements of significant new products by us or our
    competitors;
    changes in our pricing policies or the pricing policies of our
    competitors;
    legislation or regulatory policies, practices, or actions;
    the commencement or outcome of litigation;
    our sale of common stock or other securities in the future, or
    sales of our common stock by our principal stockholders;
    changes in market valuation or earnings of our competitors;
    the trading volume of our common stock;
    changes in the estimation of the future size and growth rate of
    our markets;
    general economic conditions; and
    material weaknesses in internal controls    Certain
    provisions of our corporate governing documents and Delaware Law
    could make an acquisition of our company
    difficult.
    
    authorize the issuance of preferred stock that can be created
    and issued by our board of directors without prior stockholder
    approval, commonly referred to as blank check
    preferred stock, with rights senior to those of our common stock; 24




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##### Table of Contents




    limit the persons who can call special stockholder meetings;
    provide that a supermajority vote of our stockholders is
    required to amend some portions of our amended and restated
    certificate of incorporation and amended and restated bylaws;
    establish advance notice requirements to nominate persons for
    election to our board of directors or to propose matters that
    can be acted on by stockholders at stockholder meetings;
    do not provide for cumulative voting in the election of
    directors; and
    provide for the filling of vacancies on our board of directors
    by action of a majority of the directors and not by the
    stockholders.      We
    have recently been the target of a securities class action
    complaints and are at risk of future securities class action
    litigation. This or any additional litigation could result in
    substantial costs to us, drain our resources and divert our
    managements time and attention.
  Bixler v. Opnext, Inc., et al. Action # 3:08-cv-00920) inter alia inter alia Coleman v. Opnext, Inc., et
    al. Action # 3:08-cv-01222) Johnson v. Opnext, Inc., et al. No. 3:08-cv-01451), Bixler Coleman Johnson Bixler Coleman Johnson No. 08-920
   25




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We may
    be subject to potential shareholder litigation resulting from a
    lack of effective internal control over financial
    reporting.
    Form 10-K/A Form 10-K/A Form 10-Q/A
    Item 1B.
    Unresolved
    Staff Comments.    Item 2.
    Properties   26




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##### Table of Contents



Location

Approximate Square Feet

Function

Lease Expiration DateUnited StatesEatontown, New Jersey



26,285 (of which 3,277 is
    subleased to a third party)



Administration, Sales,
    Marketing


August 23, 2011 for the master lease; February 28,
    2009 for the subleaseFremont, California



18,160



Sales, Manufacturing, Research
    and Development


July 31, 2008Orange City, Florida



710



Sales


November 30, 2008InternationalTotsuka, Japan



114,991 (10,683 square meters)



Manufacturing, Research and
    Development


September 30, 2011 (automatic
    1-year
    extensions unless notice given by either party)Komoro, Japan



34,542 (3,209 square meters)



Manufacturing, Research
    and Development


March 31, 2011
    (5-year
    automatic extensions unless notice given by either party)Chiyoda-ku, Japan



2,330 (216 square meters)



Sales


June 11, 2010 (unlimited automatic
    2-year
    extensions unless notice given by either party)Munich, Germany



2,153 (200 square meters)



Sales


September 30, 2008Shanghai, China



560 (52 square meters)



Sales


March 31, 2009   Item 3.
    Legal
    Proceedings.  Bixler v. Opnext, Inc., et al. inter
    alia inter
    alia Coleman v. Opnext, Inc., et al. 3:08-cv-01222) Johnson v. Opnext, Inc., et al. No. 3:08-cv-01451),
  Bixler Coleman Johnson Bixler Coleman Johnson No. 08-920
    Item 4.
    Submission
    of Matters to a Vote of Security Holders.   27




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PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities.    High


LowFiscal 2008 Quarter:January 1, 2008 to March 31, 2008


8.70



4.16October 1, 2007 to December 31, 2007


14.81



6.96July 1, 2007 to September 30, 2007


15.42



10.39April 1, 2007 to June 30, 2007


14.85



10.51Fiscal 2007 Quarter:February 15, 2007 to March 31, 2007


18.71



14.79    28




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##### Table of Contents



Stock
    Performance Graph
      
  2/15/07


3/31/2007


3/31/2008Opnext, Inc.



100.00




85.00




31.32Nasdaq Telecommunications Index



100.00




96.50




92.87Nasdaq Composite Index



100.00




96.98




91.27Amex Networking Index



100.00




95.74




84.07   Dividend
    Policy
   29




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##### Table of Contents



Stock-Based
    Incentive Plan Information
    Opnext Options

Pine Options

Total Stock Options

SARsWeighted



Weighted



Weighted



WeightedAverage



Average



Average



AverageExercise



Exercise



Exercise



ExerciseShares

Price

Shares

Price

Shares

Price

Shares

PriceStock-based incentive plans approved by our stockholders


5,359


$
14.13



39


$
1.34



5,398


$
14.04



635


$
15.00Stock-based incentive plans not approved by our stockholders





$







$







$







$
   Repurchases
    of Equity
  24-month
   30




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##### Table of Contents



Item 6.
    Selected
    Financial Data.  The following consolidated balance sheet data as of
    March 31, 2008 and 2007 and the consolidated statements of
    operations data for the fiscal years ended March 31, 2008,
    2007 and 2006 have been derived from our audited financial
    statements and related notes which are included elsewhere in
    this document. The consolidated balance sheet data as of
    March 31, 2006, 2005 and 2004 and the statement of
    operations data for the fiscal years ended March 31, 2005
    and 2004, have been derived from our audited financial
    statements and related notes that do not appear in this
    document. The consolidated selected financial data set forth
    below should be read in conjunction with our consolidated
    financial statements, the related notes and
    Managements Discussion and Analysis of Financial
    Condition and Results of Operations included elsewhere in
    this document. The historical results are not necessarily
    indicative of the results to be expected for any future
    period.
  Historical
    Financial Data
  Year Ended March 31,2008


2007


2006


2005


2004(in thousands, except per share data)Consolidated statements of operations data:Sales

$
283,498


$
222,859


$
151,691


$
138,432


$
79,390Cost of sales


187,123



148,753



120,320



107,694



73,144Gross margin


96,375



74,106



31,371



30,738



6,24634.0
%


33.3
%


20.7
%


22.2
%


7.9
%Research and development expenses


38,324



35,615



33,669



33,251



30,921Selling, general, and administrative expenses


48,291



40,231



33,116



33,629



33,164Loss on disposal of property, plant and equipment


502



311



1,065



50



5,886Asset impairment


















19,150Other operating expenses










399



17



247Operating income (loss)


9,258



(2,051
)


(36,878
)


(36,209
)


(83,122
)Interest income, net


8,534



3,298



4,102



2,138



2,374Other (expense) income


(744
)


(551
)


1,561



52



258Income (loss) before income taxes


17,048



696



(31,215
)


(34,019
)


(80,490
)Income tax (expense) benefit










(278
)


1,275



Net income (loss)

$
17,048


$
696


$
(31,493
)

$
(32,744
)

$
(80,490
)Net income (loss) per share:Basic

$
0.26


$
0.01


$
(0.61
)

$
(0.63
)

$
(1.57
)Diluted


0.26



0.01



(0.61
)


(0.63
)


(1.57
)Weighted average number of shares:Basic


64,598



53,432



51,945



51,873



51,383Diluted


64,633



53,486



51,945



51,873



51,383   March 31,2008


2007


2006


2005


2004(in thousands)Consolidated balance sheet data:Total assets

$
432,459


$
367,849


$
215,969


$
291,912


$
322,540Long-term liabilities


22,192



17,271



7,716



2,245



20,774Total shareholders equity


323,078



290,657



118,652



148,176



177,901  31




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Selected
    Quarterly Financial Information (Unaudited)
  The following table shows our unaudited consolidated
    quarterly statements of operations data for each of the quarters
    in the fiscal years ended March 31, 2008 and 2007. This
    information has been derived from our unaudited financial
    information, which, in the opinion of management, has been
    prepared on the same basis as our audited financial statements
    and include all adjustments necessary for the fair presentation
    of the financial information for the quarters presented. This
    information should be read in conjunction with the audited
    financial statements and related notes included elsewhere in
    this document.
  Three Months EndedMarch 31,


Dec. 31,


Sept. 30,


June 30,2008


2007


2007


2007(in thousands, except per share data)Sales

$
72,684


$
66,408


$
76,579


$
67,827Gross margin


23,899



21,755



26,948



23,773Net income*


950



4,255



5,843



6,000Net income per share:Basic

$
0.01


$
0.07


$
0.09


$
0.09Diluted


0.01



0.07



0.09



0.09Weighted average shares outstanding:Basic


64,640



64,627



64,576



64,550Diluted


64,669



64,670



64,627



64,603     *
    
    Net income for the three months ended March 31, 2008,
    December 31, 2007, September 30, 2007 and
    June 30, 2007 includes $1.0 million,
    $1.3 million, $1.0 million and $0.1 million,
    respectively, of stock-based compensation expense.  Three Months EndedMarch 31,


Dec. 31,


Sept. 30,


June 30,2007


2006


2006


2006(in thousands, except per share data)Sales

$
65,376


$
61,736


$
55,323


$
40,424Gross margin


22,189



20,628



18,513



12,776Net income (loss)*


909



2,513



1,233



(3,959
)Net income (loss) per share:Basic

$
0.02


$
0.05


$
0.02


$
(0.08
)Diluted


0.02



0.05



0.02



(0.08
)Weighted average shares outstanding:Basic


57,803



52,008



52,008



51,989Diluted


58,027



52,061



52,059



51,989     *
    
    Net income for the three months ended March 31, 2007
    includes $3.5 million of stock-based compensation expense.  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.  The following discussion includes forward-looking statements
    that involve risks and uncertainties. Our actual results could
    differ substantially from those anticipated as a result of many
    factors including those set forth under the caption Risk
    Factors, included elsewhere in this annual report. The
    following discussion should be read together with our financial
    statements, the related notes thereto and the other financial
    information included elsewhere in the document.
 32




---



##### Table of Contents



OVERVIEW
              Sales
       33




---



##### Table of Contents



IP-TV,
      Cost
    of Sales and Gross Margin
       34




---



##### Table of Contents



Research
    and Development Costs
    Selling,
    General and Administrative Expenses
    Inventory
    Significant
    Accounting Policies and Estimates
  Revenue
    Recognition, Warranties and Allowances
   35




---



##### Table of Contents



Inventory
    Valuation
  first-in,
  Income
    Taxes
       36




---



##### Table of Contents



Impairment
    of Long-Lived Assets
  Accounting for Impairment of
    Long-Lived Assets
  Stock-Based
    Incentive Plans
  Share-Based Payment
    
    The time period our stock-based awards are expected to remain
    outstanding has been determined based on the average of the
    original award period and the remaining vesting period in
    accordance with the SECs Staff Accounting
    Bulletin 107 simplified method. Our expected term
    assumption for awards issued during the years ended
    March 31, 2008 and 2007 was 6.25 years. As additional
    evidence develops from our stocks trading history, the
    expected term assumption will be refined to capture the relevant
    trends.
    Through December 31, 2007, the future volatility of our
    stock was estimated based on the median calculated value of the
    historical volatility of companies believed to have similar
    market performance characteristics as those of our company. Use
    of comparable companies was necessary during this period since
    we did not possess a sufficient stock price history. Subsequent
    to December 31, 2007, we estimated volatility based on our
    historical stock prices. The expected volatility assumption for
    awards issued during the twelve-month period ending
    March 31, 2008 and 2007 was 88.1% and 99.3%, respectively.
    A dividend yield of zero has been assumed for awards issued
    during the years ended March 31, 2008 and 2007 based on our
    actual past experience and the fact that we do not anticipate
    paying a dividend on our shares in the near future. 37




---



##### Table of Contents




    We have based our risk-free interest rate assumption for awards
    issued during the years ended March 31, 2008 and 2007 on
    the implied weighted-average yields of 4.5% and 4.8%,
    respectively, available on U.S. Treasury zero-coupon issues
    with an equivalent expected term.
    Forfeiture rates for awards issued during the years ended
    March 31, 2008 and 2007 have been estimated based on our
    companys actual historical forfeiture trends of
    approximately 10% over their expected terms.  Accounting for Stock-Based Compensation
  Use of
    Estimates
    Pending
    Adoption of New Accounting Standards
  Fair Value Measurements 157-2 FSP 157-2 FSP 157-2
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities  Including an amendment of FASB Statement
    No. 115
  Business Combinations
 38




---



##### Table of Contents



Results
    of Operations for the Years Ended March 31, 2008, 2007 and
    2006
    Year Ended March 31,


Year Ended March 31,2008


2007


2006


2008


2007


2006(in thousands)


(as percentage of sales)Sales

$
283,498


$
222,859


$
151,691



100.0
%


100.0
%


100.0
%Cost of sales


187,123



148,753



120,320



66.0
%


66.7
%


79.3
%Gross margin


96,375



74,106



31,371



34.0
%


33.3
%


20.7
%Research and development expenses


38,324



35,615



33,669



13.5
%


16.0
%


22.2
%Selling, general and administrative expenses


48,291



40,231



33,116



17.0
%


18.1
%


21.8
%Other operating expenses


502



311



1,464



0.2
%


0.1
%


1.0
%Operating income (loss)


9,258



(2,051
)


(36,878
)


3.3
%


(0.9
)%


(24.3
)%Interest income, net


8,534



3,298



4,102



3.0
%


1.5
%


2.7
%Other income (loss), net


(744
)


(551
)


1,561



(0.3
)%


(0.2
)%


1.0
%Income (loss) before income taxes


17,048



696



(31,215
)


6.0
%


0.3
%


(20.6
)%Income tax expense










(278
)


0.0
%


0.0
%


(0.2
)%Net income (loss)

$
17,048


$
696


$
(31,493
)


6.0
%


0.3
%


(20.8
)%   Comparison
    of the Years Ended March 31, 2008 and 2007
  Sales.
    Gross Margin.
   39




---



##### Table of Contents



Research and Development Expenses.
  Selling, General and Administrative
    Expenses.
  Other Operating Expenses.
  Interest Income, Net.
  Other (Expense) Income, Net.
  Income Taxes.
  Comparison
    of the Years Ended March 31, 2007 and 2006
  Sales.
 40




---



##### Table of Contents



Gross Margin.
    Research and Development Expenses.
  Selling, General and Administrative
    Expenses.
  Other Operating Expenses.
 41




---



##### Table of Contents



Interest Income, Net.
  Other (Expense) Income, Net.
  Income Taxes.
    Liquidity
    and Capital Resources
     42




---



##### Table of Contents



Contractual
    Obligations
    LessThan








More ThanTotal


1 Year


1-3 Years


3-5 Years


5 YearsCapital lease obligations

$
28.0


$
8.1


$
15.8


$
4.1


$
Operating lease obligations


4.4



2.5



1.6



0.3



Purchase obligations


55.0



55.0











Short-term debt


20.1



20.1











Total

$
107.5


$
85.7


$
17.4


$
4.4


$
     Off-Balance
    Sheet Arrangements
    Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk.     43




---



##### Table of Contents



44




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data.  OPNEXT,
    INC.
  INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
  PageReport of Independent Registered Public
    Accounting Firm on Financial Statements


46Consolidated Balance Sheets at March 31,
    2008 and March 31, 2007


47Consolidated Statements of Operations for the
    fiscal years ended March 31, 2008, 2007 and 2006


48Consolidated Statements of Shareholders
    Equity and Comprehensive Income (Loss) for the fiscal years
    ended March 31, 2008, 2007 and 2006


49Consolidated Statements of Cash Flows for the
    fiscal years ended March 31, 2008, 2007 and 2006


50Notes to Consolidated Financial Statements


51  45




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm on Financial
    Statements               ERNST &
    YOUNG LLP
    46




---



##### Table of Contents



Opnext,
    Inc.
  Consolidated
    Balance Sheets
  March 31,2008


2007(in thousands, except share and per share amounts)ASSETSCurrent assets:Cash and cash equivalents

$
221,686


$
199,786Trade receivables, net, including $5,811 and $3,000 due from
    related parties at March 31, 2008 and 2007, respectively


55,443



53,974Inventories


90,297



62,560Prepaid expenses and other current assets


3,639



3,221Total current assets


371,065



319,541Property, plant, and equipment, net


55,488



42,396Goodwill


5,698



5,698Other assets


208



214Total assets

$
432,459


$
367,849LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Trade payables, including $8,353 and $9,264 due to related
    parties at March 31, 2008 and 2007, respectively

$
45,531


$
41,585Accrued expenses


14,184



14,201Short-term debt


20,060



Capital lease obligations


7,414



4,135Total current liabilities


87,189



59,921Capital lease obligations


18,843



11,858Other long-term liabilities


3,349



5,413Total liabilities


109,381



77,192Commitments and contingenciesShareholders equity:Preferred stock, par value $0.01 per share: 15,000,000
    authorized, no shares issued and outstanding






Common stock, par value $0.01 per share: authorized
    150,000,000 shares; issued and outstanding 64,619,913, net
    of 20,937 shares of treasury stock, and 64,549,100 at
    March 31, 2008 and March 31, 2007, respectively


552



645Additional paid-in capital


583,766



577,257Accumulated deficit


(265,060
)


(282,108
)Accumulated other comprehensive income (loss)


3,820



(5,137
)Total shareholders equity


323,078



290,657Total liabilities and shareholders equity

$
432,459


$
367,849    47




---



##### Table of Contents



Opnext,
    Inc.
  Consolidated
    Statements of Operations
  Year Ended March 31,2008


2007


2006(in thousands, except per share amounts)Sales, including $8,925, $9,671 and $24,090 to related parties
    for the years ended March 31, 2008, 2007 and 2006,
    respectively

$
283,498


$
222,859


$
151,691Cost of sales


187,123



148,753



120,320Gross margin


96,375



74,106



31,371Research and development expenses, including $5,225, $4,403 and
    $4,171 from related parties for the years ended March 31,
    2008, 2007 and 2006, respectively


38,324



35,615



33,669Selling, general and administrative expenses, including $5,515,
    $4,557 and $4,136 from related parties for the years ended
    March 31, 2008, 2007 and 2006, respectively


48,291



40,231



33,116Other operating expenses


502



311



1,464Operating income (loss)


9,258



(2,051
)


(36,878
)Interest income, net, including $0, $42 and $2,835 of interest
    income from related parties for the years ended March 31,
    2008, 2007 and 2006, respectively


8,534



3,298



4,102Other (expense) income, net


(744
)


(551
)


1,561Income (loss) before income taxes


17,048



696



(31,215
)Income tax expense










(278
)Net income (loss)

$
17,048


$
696


$
(31,493
)Net income (loss) per share:Basic

$
0.26


$
0.01


$
(0.61
)Diluted

$
0.26


$
0.01


$
(0.61
)Weighted average number of shares used in computing net income
    (loss) per shareBasic


64,598



53,432



51,945Diluted


64,633



53,486



51,945    48




---



##### Table of Contents



Opnext,
    Inc.
  Consolidated
    Statements of Shareholders Equity and Comprehensive Income
    (Loss)
 Years
    ended March 31, 2008, 2007 and 2006
  Class A


Class B














Retained


AccumulatedCommon Stock


Common Stock


Common Stock





Additional


Earnings


OtherNumber


Par


Number


Par


Number


Par


Unearned


Paid-In


(Accumulated


Comprehensive


Shareholders


Comprehensiveof Shares


Value


of Shares


Value


of Shares


Value


Compensation


Capital


Deficit)


Income (Loss)


Equity


Income (Loss)(in thousands, except share and per share amounts)Balance at March 31, 2005


49,999,999


$
500



1,941,443


$
19






$



$
(13
)

$
406,089


$
(251,311
)

$
(7,108
)

$
148,176Stock-based compensation


























12















12Stock options exercised










44,014



1















35











36Net loss


































(31,493
)






(31,493
)

$
(31,493
)Foreign currency translation adjustment






































1,921



1,921



1,921Total comprehensive loss













































$
(29,572
)Balance at March 31, 2006


49,999,999


$
500



1,985,457


$
20






$



$
(1
)

$
406,124


$
(282,804
)

$
(5,187
)

$
118,652Conversion of common stock


(49,999,999
)


(500
)


(1,985,457
)


(20
)


51,985,456



520



















Stock-based compensation


























1



229











230Stock options exercised


















27,238











46











46Net proceeds from initial public offering


















12,536,406



125







170,858











170,983Net income


































696







696


$
696Foreign currency translation adjustment






































50



50



50Total comprehensive income













































$
746Balance at March 31, 2007





$







$




64,549,100


$
645


$



$
577,257


$
(282,108
)

$
(5,137
)

$
290,657Stock-based compensation, net of forfeitures


















70,177











4,160











4,160Stock options exercised


















21,573



1







22











23Amendment of stock appreciation rights






























2,432











2,432Restricted shares repurchased


















(20,937
)


(94
)


















(94
)Initial public offering costs






























(105
)










(105
)Net income


































17,048







17,048


$
17,048Unrealized gain on foreign currency forward contract






































85



85



85Retirement allowance benefit






































(254
)


(254
)


(254
)Foreign currency translation adjustment






































9,126



9,126



9,126Total comprehensive income













































$
26,005Balance at March 31, 2008





$







$




64,619,913


$
552


$



$
583,766


$
(265,060
)

$
3,820


$
323,078    49




---



##### Table of Contents



Opnext,
    Inc.
  Consolidated
    Statements of Cash Flows
  Year Ended March 31,2008


2007


2006(in thousands)Cash flows from operating activitiesNet income (loss)

$
17,048


$
696


$
(31,493
)Adjustments to reconcile net income (loss) to net cash provided
    by (used in) operating activities:Depreciation and amortization


10,615



10,305



12,579Non-cash compensation expense


3,337



3,552



12Loss on disposal of property, plant and equipment


502



311



1,065Changes in assets and liabilities:Trade receivables, net


3,134



(17,155
)


(11,116
)Inventories, net


(18,741
)


(17,555
)


(4,804
)Prepaid expenses and other current assets


(452
)


(1,184
)


(615
)Other assets


(2
)


(12
)


433Trade payables


(2,492
)


15,250



2,191Accrued expenses and other liabilities


(1,424
)


1,760



1,567Net cash provided by (used in) operating activities


11,525



(4,032
)


(30,181
)Cash flows from investing activitiesCapital expenditures


(5,071
)


(3,142
)


(3,115
)Net cash used in investing activities


(5,071
)


(3,142
)


(3,115
)Cash flows from financing activitiesShort-term debt borrowings (payments), net


20,060



(50,892
)


(25,313
)Payments on capital lease obligations


(5,452
)


(2,464
)


(1,265
)Payment to Hitachi, Ltd.










(20,000
)Exercise of stock options


23



46



36Net proceeds from initial public offering


(105
)


170,983



Restricted shares repurchased


(94
)






Net cash provided by (used in) financing activities


14,432



117,673



(46,542
)Effect of foreign currency exchange rates on cash and cash
    equivalents


1,014



(71
)


(308
)Increase (decrease) in cash and cash equivalents


21,900



110,428



(80,146
)Cash and cash equivalents at beginning of year


199,786



89,358



169,504Cash and cash equivalents at end of year

$
221,686


$
199,786


$
89,358Supplemental cash flow informationCash paid during the year for:Interest

$
435


$
531


$
535Income taxes










278Non-cash financing activitiesCapital lease obligations incurred

$
(11,825
)

$
(10,265
)

$
(7,882
)    50




---



##### Table of Contents



Opnext,
    Inc.
  Notes
    to Consolidated Financial Statements
 (in
    thousands, except per share amounts)
  1.
    Background
    and Basis of Presentation                2.
    Summary
    of Significant Accounting Policies  Principles
    of Consolidation
    Use of
    Estimates
   51




---



##### Table of Contents



Opnext,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 (in
    thousands, except per share amounts)
    Revenue
    Recognition
      Warranties
    Research
    and Development Costs
    Shipping
    and Handling Costs
    Foreign
    Currency Transactions and Translation
   52




---



##### Table of Contents



Opnext,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 (in
    thousands, except per share amounts)
  long-term-investment
  Accounting for Derivative Instruments and Hedging Activities,
    as amended by SFAS No. 149, Amendment of Statement 133
    on Derivative Instruments and Hedging Activities.
    Net
    Income (Loss) per Common Share
  Earnings Per Share
  Cash
    and Cash Equivalents
    Trade
    Receivables
    Inventories
  first-in,
 53




---



##### Table of Contents



Opnext,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 (in
    thousands, except per share amounts)
      Property,
    Plant, and Equipment and Internal Use Software
      98-1, Accounting for the Costs of Computer Software Developed or
    Obtained for Internal Use
  Impairment
    of Long-Lived Assets
  Accounting for
    Impairment of Long-Lived Assets
 54




---



##### Table of Contents



Opnext,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 (in
    thousands, except per share amounts)
  Goodwill
    and Business Combinations
  Business Combinations Goodwill and Other Intangible Assets
  Income
    Taxes
      Fair
    Value of Financial Instruments
    Stock-Based
    Incentive Plans
  Share-Based Payment
    
    The time period that stock based awards are expected to remain
    outstanding has been determined based on the average of the
    original award period and the remaining vesting period in
    accordance with the SECs short-cut approach pursuant to
    SAB No. 107, Disclosure About Fair Value of
    Financial Statements. The expected term assumption for
    awards issued during the twelve-month periods ended
    March 31, 2008 and 55




---



##### Table of Contents



Opnext,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 (in
    thousands, except per share amounts)
  2007 was 6.25 years. As additional evidence develops from
    the Companys stock trading history, the expected term
    assumption will be refined to capture the relevant trends.  
    The future volatility of the Companys stock from
    April 1, 2007 through December 31, 2007 was estimated
    based on the median calculated value of the historical
    volatility of companies believed to have similar market
    performance characteristics as those of the Company. Use of
    comparable companies was necessary during this period since the
    Company did not possess a sufficient stock price history. Since
    December 31, 2007, the Company has estimated volatility
    based on the Companys historical stock prices. The
    expected volatility assumption for awards issued during the
    twelve-month periods ending March 31, 2008 and 2007 was
    88.1% and 99.3%, respectively.
    A dividend yield of zero has been assumed for awards issued
    during the twelve-month periods ended March 31, 2008 and
    2007 based on the Companys actual past experience and the
    fact that Company does not anticipate paying a dividend on its
    shares in the near future.
    The Company has based its risk-free interest rate assumption for
    awards issued during the twelve-month periods ended
    March 31, 2008 and 2007 on the implied yield available
    during such periods on U.S. Treasury zero-coupon issues
    with an equivalent expected term, which was 4.5% and 4.8%,
    respectively.
    The forfeiture rate for awards issued during the twelve-month
    periods ended March 31, 2008 and 2007 was approximately 10%
    and was based on the Companys actual historical forfeiture
    trend.  Accounting for Stock-Based
    Compensation, Valuation of Privately-Held
    Company Equity Securities Issued as Compensation
    Year EndedMarch 31,2006Dividend yield


0.00
%Expected volatility


1.00
%Risk free interest rate


5.10
%Expected holding period (in years)


5  56




---



##### Table of Contents



Opnext,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 (in
    thousands, except per share amounts)
    Year EndedMarch 31,2006Net loss as reported

$
(31,493
)Compensation expense included in net loss


12Pro forma compensation income (expense)


60Pro forma net loss

$
(31,421
)Pro forma net loss per share basic and diluted

$
(0.61
)Weighted average number of shares used in computing pro forma
    net loss per share, basic and diluted


51,945   96-18, Accounting for Equity Instruments That Are Issued to Other
    Than Employees for Acquiring, or in Conjunction with Selling
    Goods or Services
  Pending
    Adoption of New Accounting Pronouncements
  Fair Value Measurements 157-2 FSP 157-2 FSP 157-2
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities  Including an amendment of FASB Statement
    No. 115 ,
  Business Combinations
 57




---



##### Table of Contents



Opnext,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 (in
    thousands, except per share amounts)
    3.
    Inventories    March 31,2008


2007Raw materials

$
48,867


$
31,881Work in process


11,048



15,478Finished goods


30,382



15,201Inventories

$
90,297


$
62,560     4.
    Property,
    Plant, and Equipment    March 31,2008


2007Machinery, electronic, and other equipment

$
214,021


$
165,404Computer software


11,943



11,153Building improvements


5,439



4,877Construction in progress


1,646



7,767Total property, plant, and equipment


233,049



189,201Less accumulated depreciation and amortization


(177,561
)


(146,805
)Property, plant, and equipment, net

$
55,488


$
42,396    58




---



##### Table of Contents



Opnext,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 (in
    thousands, except per share amounts)
  5.
    Income
    Taxes    Year Ended March 31,2008


2007


2006United States

$
(5,873
)

$
(7,850
)

$
(10,252
)Foreign


22,921



8,546



(20,963
)Income (loss) before income taxes

$
17,048


$
696


$
(31,215
)       Year Ended March 31,2008


2007


2006U.S. Federal statutory income tax rate


35.0
%


35.0
%


(35.0
)%State and local income taxes, net of Federal income tax effect


(1.8
)


(52.1
)


(1.8
)Foreign earnings taxed at different rates


7.5



71.8



(3.7
)Change in valuation allowance


(45.0
)


(270.6
)


48.6Long-term investment foreign currency transaction losses










(7.0
)Stock-based compensation


0.1



188.6



Other


4.2



27.3



(0.2
)Effective income tax rate


0.0
%


0.0
%


0.9
%   ,
    Accounting for Uncertainty in Income Taxes, an interpretation of
    FASB Statement 109
   59




---



##### Table of Contents



Opnext,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 (in
    thousands, except per share amounts)
      March 31,2008


2007Net deferred income tax assets:Net operating loss, capital loss and credit carryforwards

$
186,597


$
165,714Intellectual property and goodwill


10,375



19,313Inventory and other reserves


23,142



17,383Non-employee stock option expense to related parties


9,387



9,387Capital leases and property, plant, and equipment


(2,508
)


(2,065
)Other


1,468



(1,237
)Valuation allowance


(228,461
)


(208,495
)Total net deferred tax assets

$



$
         6.
    Stockholders
    Equity     60




---



##### Table of Contents



Opnext,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 (in
    thousands, except per share amounts)
    24-month
    7.
    Net
    Income (Loss) Per Share      Year Ended March 31,2008


2007


2006Numerator:Net income (loss), basic and diluted

$
17,048


$
696


$
(31,493
)Denominator:Weighted average shares outstanding  basic


64,598



53,432



51,945Effect of potentially dilutive options


35



54



Weighted average shares outstanding  diluted


64,633



53,486



51,945Basic net income (loss) per share

$
0.26


$
0.01


$
(0.61
)Diluted net income (loss) per share

$
0.26


$
0.01


$
(0.61
)     Year Ended March 31,2008


2007


2006Stock options


5,548



4,387



4,437Stock appreciation rights


546



664



669Total options and stock appreciation rights


6,094



5,051



5,106  61




---



##### Table of Contents



Opnext,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 (in
    thousands, except per share amounts)
  8.
    Accumulated
    Other Comprehensive Income (Loss)    Year Ended March 31,2008


2007Beginning accumulated other comprehensive loss

$
(5,137
)

$
(5,187
)Unrealized gain on foreign currency forward contract


85



Retirement allowance benefit


(254
)


Foreign currency translation adjustment


9,126



50Ending accumulated other comprehensive income (loss)

$
3,820


$
(5,137
)   9.
    Employee
    Benefits      10.
    Stock-Based
    Incentive Plans    Restricted
    Stock
     62




---



##### Table of Contents



Opnext,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 (in
    thousands, except per share amounts)
          Stock
    Options
  EITF 96-18
     63




---



##### Table of Contents



Opnext,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 (in
    thousands, except per share amounts)
    Opnext Options


Pine Options


Total Stock OptionsWeighted





Weighted





WeightedAverage





Average





AverageExercise





Exercise





ExerciseShares


Price


Shares


Price


Shares


PriceBalance at March 31, 2005


4,402


$
15.00



149


$
1.07



4,551


$
14.54Granted


17



15.00











17



15.00Forfeited


(75
)


15.00



(12
)


1.20



(87
)


13.12Exercised










(44
)


0.84



(44
)


0.84Balance at March 31, 2006


4,344


$
15.00



93


$
1.16



4,437


$
14.71Granted


90



15.00











90



15.00Forfeited


(22
)


15.00



(7
)


1.45



(29
)


11.67Exercised


(1
)






(26
)


0.96



(27
)


1.64Balance at March 31, 2007


4,411


$
15.00



60


$
1.22



4,471


$
14.81Granted


1,165



10.91











1,165



10.91Forfeited


(217
)


14.52











(217
)


14.52Exercised










(21
)


0.99



(21
)


0.99Balance at March 31, 2008


5,359


$
14.13



39


$
1.34



5,398


$
14.04     Options Outstanding


Options ExercisableWeighted





WeightedAverage





AverageNumber


Remaining


Number


RemainingExercise Price

Outstanding


Life


Exercisable


Life(in years)





(in years)$0.78


28



3.5



28



3.5$2.73


11



5.2



11



5.2$4.47


23



9.9







$8.89


255



9.6







$11.34


743



9.4







$13.79


15



9.0



1



9.0$13.85


100



9.1







$15.00


4,223



3.4



4,131



3.3$14.15


5,398







4,171   Stock
    Appreciation Rights (SAR) Plan
   64




---



##### Table of Contents



Opnext,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 (in
    thousands, except per share amounts)
          Cash Settlement


Stock Settlement


Total SARsWeighted





Weighted





WeightedAverage





Average





AverageExercise





Exercise





ExerciseShares


Price


Shares


Price


Shares


PriceBalance at March 31, 2005


567


$
15.00






$




567


$
15.00Granted


154



15.00











154



15.00Forfeited


(52
)


15.00











(52
)


15.00Balance at March 31, 2006


669


$
15.00






$




669


$
15.00Granted


52



15.00











52



15.00Forfeited


(54
)


15.00











(54
)


15.00Exercised


(3
)


15.00











(3
)


15.00Balance at March 31, 2007


664


$
15.00






$




664


$
15.00Amended stock appreciation rights


(553
)


15.00



553



15.00







Forfeited


(22
)


15.00



(7
)


15.00



(29
)


15.00Balance at March 31, 2008


89


$
15.00



546


$
15.00



635


$
15.00   11.
    Short-Term
    Debt     65




---



##### Table of Contents



Opnext,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 (in
    thousands, except per share amounts)
    12.
    Concentrations
    of Risk      13.
    Commitments
    and Contingencies    Capital


OperatingLeases


LeasesYear ending March 31:2009

$
8,128


$
2,5562010


8,303



7852011


7,500



7852012


2,656



2622013


1,414



Total minimum lease payments


28,001


$
4,388Less amount representing interest


(1,744
)Present value of capitalized payments


26,257Less current portion


7,414Long-term portion

$
18,843    66




---



##### Table of Contents



Opnext,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 (in
    thousands, except per share amounts)
    Year Ended March 31,2008


2007


2006Beginning balance

$
610


$
551


$
834Claims paid


(1,003
)


(525
)


(737
)Warranty expense


1,812



592



521Foreign currency translation and other


236



(8
)


(67
)Ending balance

$
1,655


$
610


$
551   Bixler v. Opnext, Inc., et al. inter alia inter alia Coleman v. Opnext, Inc., et al. Johnson v.
    Opnext, Inc., et al. No. 3:08-cv-01451),
  Bixler Coleman Johnson Bixler Coleman Johnson No. 08-920
    14.
    Other
    Operating Expenses    Year Ended March 31,2008


2007


2006Loss on disposal of property, plant, and equipment

$
502


$
311


$
1,065Severance










53Subsidiary stock registration fee










346$
502


$
311


$
1,464  67




---



##### Table of Contents



Opnext,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 (in
    thousands, except per share amounts)
  15.
    Related-Party
    Transactions      Opnext
    Japan, Inc. Related Party Agreements
    Sales
    Transition Agreement
    Intellectual
    Property License Agreements
  paid-up, paid-up,
  paid-up, paid-up,
  Opnext
    Japan Research and Development Agreement
   68




---



##### Table of Contents



Opnext,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 (in
    thousands, except per share amounts)
    Opnext
    Research and Development Agreement
  and/or
    Preferred
    Provider and Procurement Agreements
    Raw
    Materials Supply Agreement
    Outsourcing
    Agreement
    Secondment
    Agreements
   69




---



##### Table of Contents



Opnext,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 (in
    thousands, except per share amounts)
    Lease
    Agreements
    Trademark
    Indication Agreements
    OPD
    Related Party Agreements
    Intellectual
    Property License Agreement
    Secondment
    Agreements
    Lease
    Agreement
   70




---



##### Table of Contents



Opnext,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 (in
    thousands, except per share amounts)
  16.
    Operating
    Segments and Geographic Information  Operating
    Segments
    Geographic
    Information
  Year Ended March 31,2008


2007


2006Sales:United States

$
166,386


$
123,026


$
72,700Europe


64,501



58,183



34,240Japan


35,194



30,222



38,930Asia Pacific


17,417



11,428



5,821Total

$
283,498


$
222,859


$
151,691     March 31,2008


2007Assets:United States

$
266,056


$
240,985Japan


148,068



106,880Europe


18,335



19,984Total

$
432,459


$
367,849     17.
    Valuation
    and Qualifying Accounts  Allowance
    for Doubtful Accounts
  Year Ended March 31,2008


2007


2006Beginning balance

$
491


$
293


$
291Deduction and write offs


(23
)


(48
)


14(Reduction) charge to expense


(175
)


213



Foreign currency translation and other


42



33



(12
)Ending balance

$
335


$
491


$
293   Tax
    Valuation Allowance
  Year Ended March 31,2008


2007


2006Beginning balance

$
208,495


$
212,782


$
214,204Changes in valuation allowance


(9,519
)


(4,225
)


14,160Foreign currency translation


29,485



(62
)


(15,582
)Ending balance

$
228,461


$
208,495


$
212,782  71




---



##### 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.
  Rules 13a-15(e) 15d-15(e)) Rules 13(a)-15 15d-15.
    Managements
    Annual Report on Internal Controls over Financial
    Reporting
  Internal
    Control  Integrated Framework.
   72




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
 on Internal Control Over Financial Reporting
                 ERNST &
    YOUNG LLP
    73




---



##### Table of Contents



Changes
    in internal control over financial reporting
  Form 10-Q
  Rule 13a-15(f)
  Item 9B
    Other.    PART III  Item 10.
    Executive
    Officers, Directors, Director Independence and Corporate
    Governance.    Item 11.
    Executive
    Compensation.    Item 12.
    Security
    Ownership of Certain Beneficial Owners, Management and Related
    Stockholders Matters.    Item 13.
    Certain
    Relationships, Related Transactions, and Director
    Independence.    Item 14.
    Principal
    Accountant Fees and Services.   PART IV  Item 15.
    Exhibits,
    Financial Statement Schedules.  All financial statements. Form 10-K.
  Financial statement schedules. Form 10-K.
  Exhibits.
  74




---



##### Table of Contents



Exhibit Index
  ExhibitNo.

Description of Document3
.1

Form of Amended and Restated Certificate of Incorporation of
    Opnext, Inc.(1)3
.2

Form of Amended and Restated Bylaws of Opnext, Inc.(1)3
.3

Specimen of stock certificate for common stock.(1)4
.1

Pine Stockholder Agreement, dated as of June 4, 2003, by
    and among Opnext, Inc. and the Stockholders of Pine Photonics
    Communications, Inc.(1)4
.2

Registration Rights Agreement, entered into as of July 31,
    2001, by and among Opnext, Inc., Clarity Partners, L.P., Clarity
    Opnext Holdings I, LLC, Clarity Opnext Holdings II, LLC,
    and Hitachi, Ltd.(1)4
.3

Stockholders Agreement, dated as of July 31, 2001,
    between Opnext, Inc. and each of Hitachi, Ltd., Clarity
    Partners, L.P., Clarity Opnext Holdings I, LLC and Clarity
    Opnext Holdings II, LLC, as amended.(1)10
.1+

Pine Photonics Communications, Inc. 2000 Stock Plan.(1)10
.2+

Form of Pine Photonics Communications, Inc. 2000 Stock Plan:
    Stock Option Agreement.(1)10
.3+

Opnext, Inc. 2001 Long-Term Stock Incentive Plan.(1)10
.4+

Form of Opnext, Inc. 2001 Long-Term Stock Incentive Plan,
    Nonqualified Stock Option Agreement.(1)10
.4a+

Form of Opnext, Inc. 2001 Long-Term Stock Incentive Plan,
    Nonqualified Stock Option Agreement for Senior Executives.(1)10
.4b+

Opnext, Inc. Nonqualified Stock Option Agreement dated as of
    November 1, 2004, between Opnext, Inc. and Harry L. Bosco
    (Participant).(1)10
.4c+

Form of Opnext, Inc. 2001 Long-Term Stock Incentive Plan, Stock
    Appreciation Right Agreement.(1)10
.4d+*

Form of Amendment to Stock Appreciation Right Agreement.10
.5

Form of Hitachi, Ltd. and Clarity Management, L.P. Nonqualified
    Stock Option Agreement.(1)10
.6+

Opnext, Inc. Amended and Restated 2001 Long-Term Stock Incentive
    Plan.(1)10
.7+

Employment Agreement, entered into as of July 31, 2001, by
    and between Opnext, Inc. and Harry L. Bosco, as amended.(1)10
.8+

Employment Agreement, entered into as of August 24, 2001,
    by and between Opnext, Inc. and Michael C. Chan, as amended.(1)10
.9+

Employment Agreement, entered into as of August 24, 2001,
    by and between Opnext, Inc. and Chi-Ho Christopher Lin, as
    amended.(1)10
.10+

Employment Agreement, dated March 5, 2001, by and between
    Opnext, Inc. and Robert J. Nobile.(1)10
.11+

Form of Opnext, Inc. Restricted Stock Agreement.(1)10
.12

Research and Development Agreement, dated as of July 31,
    2001, by and among Hitachi, Ltd., Opnext Japan, Inc. and Opto
    Device, Ltd. as amended.(1)10
.13

Research and Development Agreement, dated as of July 31,
    2002, by and between Hitachi, Ltd. and Opnext, Inc., as
    amended.(1)10
.14

Outsourcing Agreement, made and entered into as of July 31,
    2001, by and between Hitachi, Ltd. and Opnext Japan, Inc., as
    amended.(1)10
.15

Preferred Provider Agreement, made and entered into as of
    July 31, 2001, by and between Hitachi, Ltd. and Opnext,
    Inc., as amended.(1)10
.16

Procurement Agreement, made and entered into as of July 31,
    2001, by and between Opnext Japan, Inc. and Hitachi, Ltd., as
    amended.(1)10
.17

Raw Materials Supply Agreement, made and entered into as of
    July 31, 2001, by and between Hitachi, Ltd. and Opnext,
    Inc., as amended.(1)10
.18

Intellectual Property License Agreement, dated as of
    July 31, 2001, by and between Hitachi, Ltd. and Opnext
    Japan, Inc., as amended.(1)10
.19

Intellectual Property License Agreement, dated as of
    October 1, 2002, by and between Hitachi, Ltd. and Opnext
    Japan, Inc., as amended.(1)10
.20

Intellectual Property License Agreement, effective as of
    October 1, 2002, by and between Hitachi Communication
    Technologies, Ltd. and Opnext Japan, Inc.(1)10
.21

Trademark Indication Agreement, dated as of October 1,
    2002, by and between Hitachi, Ltd. and Opnext Japan, Inc., as
    amended.(1) 75




---



##### Table of Contents



ExhibitNo.

Description of Document10
.22

Trademark Indication Agreement, dated as of July 31, 2001,
    by and between Hitachi, Ltd., Opnext, Inc. and Opnext Japan,
    Inc., as amended.(1)10
.23

Lease Agreement, made as of July 31, 2001, between Hitachi
    Communication Technologies, Ltd. and Opnext Japan, Inc., as
    amended.(1)10
.24

Lease Agreement, made as of October 1, 2002, between
    Renesas Technology Corp. and Opnext Japan, Inc., as amended.(1)10
.25

Business Park Net Lease Agreement, dated as of June 30,
    2000, by and between Bedford Property Investors, Inc. and
    Opnext, Inc., as amended.(1)10
.26

Agreement on Bank Transactions between Opnext Japan, Inc. and
    The Bank of Tokyo-Mitsubishi UFJ, Ltd., as amended.(1)10
.27

Software User License Agreement, dated as of October 20,
    2003, by and between Renesas Technology Corp. and Opnext Japan,
    Inc.(1)10
.28

Logistics Agreement, effective as of April 1, 2002, between
    Opnext, Inc. and Hitachi Transport System, Ltd.(1)10
.29

Distribution Agreement, dated April 1, 2001, between
    Hitachi Electronic Devices Sales, Inc. and Opnext Japan, Inc.(1)10
.30

Distribution Agreement, dated April 1, 2003, between Opnext
    Japan, Inc. and Renesas Technology Sale Co., Ltd.(1)10
.31

Distribution Agreement, dated July 1, 2003, between Opnext
    Japan, Inc. and Hitachi High-Technologies Corp.(1)10
.32

Employment Agreement, dated as of November 1, 2007, between
    Opnext, Inc. and Gilles Bouchard, together with the form of the
    Nonqualified Stock Option Agreement and Restricted Stock
    Agreement to be entered into between the Company and
    Mr. Bouchard.(2)10
.33

Non-Competition Agreement, dated as of November 1, 2007,
    between Opnext, Inc. and Gilles Bouchard.(2)10
.34

Indemnification Agreement, dated as of November 1, 2007,
    between Opnext, Inc. and Gilles Bouchard.(2)10
.35

First Amendment to Opnext, Inc. Amended and Restated 2001
    Long-Term Stock Incentive Plan, dated as of December 12,
    2007.(3)21


List of Subsidiaries.(1)23
.1*

Consent of Ernst & Young LLP, Independent Registered Public
    Accounting Firm.31
.1*

Certification of Principal Executive Officer pursuant to Rule
    13a-14 of the Securities Exchange Act of 1934, as adopted
    pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31
.2*

Certification of Principal Financial Officer pursuant to Rule
    13a-14 of the Securities Exchange Act of 1934, as adopted
    pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32
.1**

Certification of Principal Executive Officer pursuant to
    18 U.S.C. Section 350, as adopted pursuant to Section 906
    of the Sarbanes-Oxley Act of 2002.32
.2**

Certification of Principal Financial Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to Section 906
    of the Sarbanes-Oxley Act of 2002.     (1)
    
    Filed as an exhibit to the
    Form S-1
    Registration Statement (No.
    333-138262)
    declared effective on February 14, 2007 and incorporated
    herein by reference.(2)
    
    Filed as an exhibit on
    Form 8-K
    as filed with the Securities and Exchange Commission on
    November 1, 2007 and incorporated herein by reference.(3)
    
    Filed as an exhibit on
    Form 8-K
    as filed with the Securities and Exchange Commission on
    December 12, 2007 and incorporated herein by reference.*
    
    Filed herewith.**
    
    Furnished herewith and not filed for purposes of
    Section 18 of the Securities Exchange Act of 1934, as
    amended.+
    
    Management contract or compensatory plan or arrangement. 76




---



##### Table of Contents



SIGNATURES    OPNEXT, INC.
  By:
    /s/  Harry
    L. Bosco     By:
    /s/  Robert
    J. Nobile      77




---



##### Table of Contents



POWER OF
    ATTORNEY
  Form 10-K
    Signature

Title/s/  Harry
    L. BoscoHarry
    L. Bosco

Director, President and Chief Executive Officer 
    (principal executive officer)/s/  Robert
    J. NobileRobert
    J. Nobile

Chief Financial Officer and Senior Vice President, Finance
    (principal financial and accounting officer)/s/  Dr. Naoya
    TakahashiDr. Naoya
    Takahashi

Director and Chairman of the Board/s/  Dr. David
    LeeDr. David
    Lee

Director and Co-Chairman of the Board/s/  Ryuichi
    OtsukiRyuichi
    Otsuki

Director/s/  John
    F. Otto, Jr.John
    F. Otto, Jr.

Director/s/  Kendall
    W. CowanKendall
    W. Cowan

Director/s/  Dr. Isamu
    KuruDr. Isamu
    Kuru

Director  78




---



##### Table of Contents



Exhibit Index
  ExhibitNo.

Description of Document3
.1

Form of Amended and Restated Certificate of Incorporation of
    Opnext, Inc.(1)3
.2

Form of Amended and Restated Bylaws of Opnext, Inc.(1)3
.3

Specimen of stock certificate for common stock.(1)4
.1

Pine Stockholder Agreement, dated as of June 4, 2003, by
    and among Opnext, Inc. and the Stockholders of Pine Photonics
    Communications, Inc.(1)4
.2

Registration Rights Agreement, entered into as of July 31,
    2001, by and among Opnext, Inc., Clarity Partners, L.P., Clarity
    Opnext Holdings I, LLC, Clarity Opnext Holdings II, LLC,
    and Hitachi, Ltd.(1)4
.3

Stockholders Agreement, dated as of July 31, 2001,
    between Opnext, Inc. and each of Hitachi, Ltd., Clarity
    Partners, L.P., Clarity Opnext Holdings I, LLC and Clarity
    Opnext Holdings II, LLC, as amended.(1)10
.1+

Pine Photonics Communications, Inc. 2000 Stock Plan.(1)10
.2+

Form of Pine Photonics Communications, Inc. 2000 Stock Plan:
    Stock Option Agreement.(1)10
.3+

Opnext, Inc. 2001 Long-Term Stock Incentive Plan.(1)10
.4+

Form of Opnext, Inc. 2001 Long-Term Stock Incentive Plan,
    Nonqualified Stock Option Agreement.(1)10
.4a+

Form of Opnext, Inc. 2001 Long-Term Stock Incentive Plan,
    Nonqualified Stock Option Agreement for Senior Executives.(1)10
.4b+

Opnext, Inc. Nonqualified Stock Option Agreement dated as of
    November 1, 2004, between Opnext, Inc. and Harry L. Bosco
    (Participant).(1)10
.4c+

Form of Opnext, Inc. 2001 Long-Term Stock Incentive Plan, Stock
    Appreciation Right Agreement.(1)10
.4d+*

Form of Amendment to Stock Appreciation Right Agreement.10
.5

Form of Hitachi, Ltd. and Clarity Management, L.P. Nonqualified
    Stock Option Agreement.(1)10
.6+

Opnext, Inc. Amended and Restated 2001 Long-Term Stock Incentive
    Plan.(1)10
.7+

Employment Agreement, entered into as of July 31, 2001, by
    and between Opnext, Inc. and Harry L. Bosco, as amended.(1)10
.8+

Employment Agreement, entered into as of August 24, 2001,
    by and between Opnext, Inc. and Michael C. Chan, as amended.(1)10
.9+

Employment Agreement, entered into as of August 24, 2001,
    by and between Opnext, Inc. and Chi-Ho Christopher Lin, as
    amended.(1)10
.10+

Employment Agreement, dated March 5, 2001, by and between
    Opnext, Inc. and Robert J. Nobile.(1)10
.11+

Form of Opnext, Inc. Restricted Stock Agreement.(1)10
.12

Research and Development Agreement, dated as of July 31,
    2001, by and among Hitachi, Ltd., Opnext Japan, Inc. and Opto
    Device, Ltd. as amended.(1)10
.13

Research and Development Agreement, dated as of July 31,
    2002, by and between Hitachi, Ltd. and Opnext, Inc., as
    amended.(1)10
.14

Outsourcing Agreement, made and entered into as of July 31,
    2001, by and between Hitachi, Ltd. and Opnext Japan, Inc., as
    amended.(1)10
.15

Preferred Provider Agreement, made and entered into as of
    July 31, 2001, by and between Hitachi, Ltd. and Opnext,
    Inc., as amended.(1)10
.16

Procurement Agreement, made and entered into as of July 31,
    2001, by and between Opnext Japan, Inc. and Hitachi, Ltd., as
    amended.(1)10
.17

Raw Materials Supply Agreement, made and entered into as of
    July 31, 2001, by and between Hitachi, Ltd. and Opnext,
    Inc., as amended.(1)10
.18

Intellectual Property License Agreement, dated as of
    July 31, 2001, by and between Hitachi, Ltd. and Opnext
    Japan, Inc., as amended.(1)10
.19

Intellectual Property License Agreement, dated as of
    October 1, 2002, by and between Hitachi, Ltd. and Opnext
    Japan, Inc., as amended.(1)10
.20

Intellectual Property License Agreement, effective as of
    October 1, 2002, by and between Hitachi Communication
    Technologies, Ltd. and Opnext Japan, Inc.(1)10
.21

Trademark Indication Agreement, dated as of October 1,
    2002, by and between Hitachi, Ltd. and Opnext Japan, Inc., as
    amended.(1) 79




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##### Table of Contents



ExhibitNo.

Description of Document10
.22

Trademark Indication Agreement, dated as of July 31, 2001,
    by and between Hitachi, Ltd., Opnext, Inc. and Opnext Japan,
    Inc., as amended.(1)10
.23

Lease Agreement, made as of July 31, 2001, between Hitachi
    Communication Technologies, Ltd. and Opnext Japan, Inc., as
    amended.(1)10
.24

Lease Agreement, made as of October 1, 2002, between
    Renesas Technology Corp. and Opnext Japan, Inc., as amended.(1)10
.25

Business Park Net Lease Agreement, dated as of June 30,
    2000, by and between Bedford Property Investors, Inc. and
    Opnext, Inc., as amended.(1)10
.26

Agreement on Bank Transactions between Opnext Japan, Inc. and
    The Bank of Tokyo-Mitsubishi UFJ, Ltd., as amended.(1)10
.27

Software User License Agreement, dated as of October 20,
    2003, by and between Renesas Technology Corp. and Opnext Japan,
    Inc.(1)10
.28

Logistics Agreement, effective as of April 1, 2002, between
    Opnext, Inc. and Hitachi Transport System, Ltd.(1)10
.29

Distribution Agreement, dated April 1, 2001, between
    Hitachi Electronic Devices Sales, Inc. and Opnext Japan, Inc.(1)10
.30

Distribution Agreement, dated April 1, 2003, between Opnext
    Japan, Inc. and Renesas Technology Sale Co., Ltd.(1)10
.31

Distribution Agreement, dated July 1, 2003, between Opnext
    Japan, Inc. and Hitachi High-Technologies Corp.(1)10
.32

Employment Agreement, dated as of November 1, 2007, between
    Opnext, Inc. and Gilles Bouchard, together with the form of the
    Nonqualified Stock Option Agreement and Restricted Stock
    Agreement to be entered into between the Company and
    Mr. Bouchard.(2)10
.33

Non-Competition Agreement, dated as of November 1, 2007,
    between Opnext, Inc. and Gilles Bouchard.(2)10
.34

Indemnification Agreement, dated as of November 1, 2007,
    between Opnext, Inc. and Gilles Bouchard.(2)10
.35

First Amendment to Opnext, Inc. Amended and Restated 2001
    Long-Term Stock Incentive Plan, dated as of December 12,
    2007.(3)21


List of Subsidiaries.(1)23
.1*

Consent of Ernst & Young LLP, Independent Registered
    Public Accounting Firm.24


Power of Attorney (set forth on the signature page of this
    Form 10-K).31
.1*

Certification of Principal Executive Officer pursuant to
    Rule 13a-14
    of the Securities Exchange Act of 1934, as adopted pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.31
.2*

Certification of Principal Financial Officer pursuant to
    Rule 13a-14
    of the Securities Exchange Act of 1934, as adopted pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.32
.1**

Certification of Principal Executive Officer pursuant to
    18 U.S.C. Section 350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.32
.2**

Certification of Principal Financial Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.     (1)
    
    Filed as an exhibit to the
    Form S-1
    Registration Statement
    (No. 333-138262)
    declared effective on February 14, 2007 and incorporated
    herein by reference.(2)
    
    Filed as an exhibit on
    Form 8-K
    as filed with the Securities and Exchange Commission on
    November 1, 2007 and incorporated herein by reference.(3)
    
    Filed as an exhibit on
    Form 8-K
    as filed with the Securities and Exchange Commission on
    December 12, 2007 and incorporated herein by reference.*
    
    Filed herewith.**
    
    Furnished herewith and not filed for purposes of
    Section 18 of the Securities Exchange Act of 1934, as
    amended.+
    
    Management contract or compensatory plan or arrangement. 80