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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 Form 10-K
 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended March 31, 2010
 Commission file number 001-33306
 
 Opnext, Inc.
  
 Delaware(State or other jurisdiction of 
incorporation or organization)
    
    22-3761205(I.R.S. Employer
Identification No.)46429 Landing Parkway, Fremont, California(Address of principal executive office)
    
    94538(Zip Code)
 (510) 580-8828
(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 Exchange Act:
 Title of Each Class
    
    Name of Each Exchange on Which RegisteredCommon Stock, $0.01 par value
    
    The NASDAQ Stock Market LLC
 o þ
 o þ
 þ o
 o o
 o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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Table of Contents
 PART IItem 1. Business
    
    
    3Item 1A. Risk Factors
    
    
    10Item 1B. Unresolved Staff Comments
    
    
    24Item 2. Properties
    
    
    24Item 3. Legal Proceedings
    
    
    25Item 4. Reserved
    
    
    25PART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    26Item 6. Selected Financial Data
    
    
    29Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    31Item 7A. Quantitative and Qualitative Disclosures about Market Risk
    
    
    46Item 8. Financial Statements and Supplementary Data
    
    
    47Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    81Item 9A Controls and Procedures
    
    
    81Item 9B Other Information
    
    
    84PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    85Item 11. Executive Compensation
    
    
    85Item 12. Security Ownership of Certain Beneficial Owners, Management and Related Stockholders Matters
    
    
    85Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    85Item 14. Principal Accountant Fees and Services
    
    
    85PART IVItem 15. Exhibits and Financial Statement Schedules
    
    
    85SIGNATURES
    
    
    89EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2
  2




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PART I
 
 Item 1. Business
 Business Description
    3




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Industry Background
       4




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Standardization in the Optical Communications Industry
      The Power Challenge
  The Temperature Challenge
  The Size Challenge
 5




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Technology and Research and Development
  Semiconductor Laser Design & Manufacturing.
 Optical Semiconductor Materials.
 Subassembly Design.
 Analog Integrated Circuit and Radio Frequency Design.
 High Speed Optical Design.
 Digital Logic Design.
 Module Design.
 Modulation Techniques.
 6




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System-Level Software.
  Products
      7




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Reach andApplication
    
    
    <10G
    
    
    10G
    
    
    40G
    
    
    100GClient- side
    
    
    <300 m
    
    
    SFP
    
    
    SFP, SFP+, XFP, X2, XENPAK, XPAK<2/10 km
    
    
    SFP
    
    
    SFP, SFP+, XFP, X2, XENPAK, XPAK, 300pin, XMD TOSA, XMD ROSA, chips
    
    
    300pin, CFP, XLMD TOSA, XLMD ROSA
    
    
    CFP<40 km
    
    
    SFP, chips
    
    
    SFP, SFP+, XFP, X2, XENPAK, 300pin, XMD TOSA, XMD ROSA, chips<80 km
    
    
    SFP, chips
    
    
    SFP, SFP+, XFP, X2, XENPAK, 300pin, XMD TOSA, XMD ROSA, chipsLine-side
    
    

Metro
to Long Haul
    
    
    SFP, laser diode modules, chips
    
    
    SFP, SFP+, XFP, X2, XENPAK, 300pin
    
    
    300pin DPSK, 300pin DQPSK, DPSK Subsystem
    
    
    Under Development
  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;
    
    ability to dedicate resources to, and successfully progress, research and development
efforts;
    
    breadth of product solutions;
 8




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
    
    sales, technical and post-sales service and support;
    
    sales channels; and
    
    ability to comply with new industry standard interfaces and MSAs.
  
    
    price-to-performance characteristics;
    
    delivery performance and lead times;
    
    breadth-of-product solutions;
    
    sales, technical and post-sales service and support; and
    
    sales channels.
 Manufacturing
       Sales, Marketing and Technical Support
   9




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Patents and Other Intellectual Property Rights
      Employees
  
 Item 1A. Risk Factors
 You should carefully consider each of the following risks and all of the other information set
forth in this annual report. The following risks relate principally to our business and our common
stock. The risks and uncertainties described below are not the only ones we face. Additional risks
and uncertainties that we do not know or that we currently believe to be immaterial may also
adversely affect our business. If any of the following risks and uncertainties develop into actual
events, they could have a material adverse effect on our business, financial condition or results
of operations, which could also adversely affect the trading price of our common stock.
 We depend on a limited number of customers for a significant percentage of our sales, and any loss,
cancellation, reduction or delay in purchases by these customers could harm our business.
  10




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We are dependent on contract manufacturers used by our customers for a significant portion of our
sales.
  Uncertainty in customers 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.
  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
sales.
   If our customers do not qualify our products or if their customers do not qualify their products,
our results of operations may suffer.
   11




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Our products are complex and may take longer to develop and qualify than anticipated and we may not
recognize sales from new products until after long customer qualification periods.
    We do not have long-term volume purchase contracts with our customers, and, as a result, 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.
  There is a limited number of potential suppliers for certain components used in our products. 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.
  We rely substantially upon a limited number of contract manufacturers and, if these contract
manufacturers fail to meet our short and long-term needs and contractual obligations, our business
may be negatively impacted.
  12




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Our financial results may vary significantly from quarter to quarter as the result of 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;
    
    the timing and size of revenues derived from research and development agreements;
    
    our ability to source component parts and to manufacture and deliver products to our
customers in a timely and cost-effective manner;
 
    
    quality control problems in our and our contract manufacturers manufacturing operations;
    
    fluctuations in our manufacturing yields;
    
    length and variability of the sales cycles of our products;
    
    the loss or gain of significant customers;
    
    new product introductions and enhancements by our competitors and ourselves and the level
of market acceptance thereof;
    
    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;
    
    the evolving and unpredictable nature of the markets for products incorporating our optical
components and subsystems;
    
    unanticipated increases in costs and expenses; and
    
    fluctuations in foreign currency exchange rates.
  Our future operating results may be subject to volatility as a result of exposure to foreign
currency exchange rate risks.
  We may experience low manufacturing yields or higher than expected costs.
  Shifts in our product mix may result in declines in operating income and net income.
  Certain of our revenues are derived from research and development agreements, which can result in
material increases or decreases in our revenue, gross margin and net earnings from quarter to
quarter due to the recognition or deferral of revenue related to these agreements in a particular
quarter.
  13




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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 or possibly result in product
liability claims.
    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.
 14




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We face increasing competition from providers of competing products, which could negatively impact
our results of operations and market share.
    15




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The market for optical components continues to be characterized by intense price competition
which has had, and will continue to have, a material adverse effect on our results of operations,
particularly if we are not able to reduce our expenses commensurately.
   If demand for optical systems, particularly for 10Gbps and above network systems, does not continue
to expand as expected, our business will suffer.
  Our markets are 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;
    
    difficulties in hiring and retaining necessary technical personnel;
    
    difficulties in reallocating engineering resources and overcoming resource limitations; and
    
    changing market or competitive product requirements.
  16




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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.
  Adverse conditions in the global economy have negatively impacted our customers, suppliers and our
business.
  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, including, but not limited to, as a result of customs
delays;
    
    greater difficulty in overseeing manufacturing operations, including, but not limited to,
the levels of inventory maintained at our and our contract manufacturers facilities;
    
    greater difficulty in hiring talent needed to oversee manufacturing operations;
    
    potential political and economic instability; and
    
    the outbreak of infectious diseases that could result in travel restrictions or the closure
of our facilities or the facilities of our contract manufacturers or suppliers.
  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;
 17




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
    
    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 or other disruptions
in regions where we currently operate or may operate in the future;
    
    limitations on travel engendered by the outbreak of diseases and any other widespread
public health problems; 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.
  We may not be able to obtain additional capital in the future, and failure to do so may harm our
business.
  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.
    
    
    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.
  18




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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
that 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.
  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.
   19




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The anticipated benefits of the acquisition of StrataLight may not be realized fully, or realized
at all, or may take longer to realize than expected.
  
    
    consolidating and rationalizing administrative infrastructures;
    
    integrating product offerings;
    
    coordinating sales and marketing efforts to effectively communicate our capabilities to
customers;
    
    coordinating and rationalizing research and development activities to enhance introduction
of new products and technologies with reduced cost; and
    
    preserving important relationships of both Opnext and StrataLight and resolving potential
conflicts that may arise.
  We may not achieve strategic objectives, anticipated synergies and cost savings and other potential
benefits of the acquisition of StrataLight.
  
    
    our inability to increase product sales;
    
    unfavorable customer reaction to the our companys products;
    
    competitive factors, including technological advances attained by competitors and patents
granted to or contested by competitors, which would enhance their ability to compete against
us;
    
    the failure of key markets for our products to develop to the extent or as rapidly as
currently expected;
    
    changes in technology that increase the number of competitors that we face or require us to
make significant capital expenditures to develop competitive products; and
    
    the failure to retain key employees.
  Potential future acquisitions may not generate the results expected and 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 acquired 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 actually
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 associated with 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 acquired companys business;
 
    
    assumption of unanticipated problems or latent liabilities, such as problems with the
quality of the acquired 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.
   20




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We could be subject to legal and regulatory consequences if we fail to comply with applicable
export control laws and regulations.
   Environmental laws and regulations may subject us to significant costs and liabilities.
  We were recently the target of securities class action complaints and are at risk of future
securities class action litigation. Any additional litigation could result in substantial costs to
us, drain our resources and divert our managements time and attention.
    21




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A lack of effective internal control over financial reporting could result in an inability to
accurately report our financial results, which could lead to a loss of investor confidence in our
financial reports and have an adverse effect on our stock price.
     Our ability to utilize our net operating loss carryforwards to offset future taxable income is
limited and may in the future be subject to further limitations.
   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.
  22




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Hitachi and Clarity could effectively together control the outcome of shareholder actions in the
Company.
   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;
    
    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.
 23




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Item 1B. Unresolved Staff Comments.
  
 Item 2. Properties
   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
    
    August 23, 2011 (sublease end date July 31, 2011)Fremont, California
    
    30,574
    
    Administration, Sales, Marketing, Manufacturing, Research and Development
    
    November 30, 2013Los Gatos, California Building 1
    
    33,290
    
    Administration, Marketing, Manufacturing, Research and Development
    
    June 30, 2011Los Gatos, California Building 2
    
    10,073
    
    Administration, Marketing, Research and Development
    
    June 30, 2011Tulsa, Oklahoma
    
    3513
    
    Research and Development
    
    November 30, 2010
 24




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Location
    
    Approximate Square Feet
    
    Function
    
    Lease Expiration DateInternationalChiyoda-ku, Japan
    
    2,330 (216 square meters)
    
    Sales
    
    June 11, 2012 (unlimited automatic 2-year extensions unless notice given by either party)Komoro, Japan
    
    34,542 (3,209 square meters)
    
    Manufacturing, Research and Development
    
    March 31, 2011 (automatic 5-year extensions unless notice given by either party)Munich, Germany
    
    2,992 (278 square meters)
    
    Sales
    
    October 31, 2011Shanghai, China
    
    1,356 (126 square meters)
    
    Sales
    
    November 15, 2010Totsuka, Japan
    
    115,852 (10,763 square meters)
    
    Administration, Manufacturing, Research and Development
    
    September 30, 2011 (automatic 1-year extensions unless notice given by either party)Kanazawa-ku, Japan
    
    2,727 (253 square meters)
    
    Research and Development
    
    February 28, 2015 (automatic 2-year extensions unless notice given by either party)
 
 Item 3. Legal Proceedings.
      
 Item 4. Reserved
 25




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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 2010 Quarter:January 1, 2010 to March 31, 2010
    
    
    2.69
    
    
    
    1.74October 1, 2009 to December 31, 2009
    
    
    3.20
    
    
    
    1.75July 1, 2009 to September 30, 2009
    
    
    3.14
    
    
    
    1.72April 1, 2009 to June 30, 2009
    
    
    2.53
    
    
    
    1.72Fiscal 2009 Quarter:January 1, 2009 to March 31, 2009
    
    
    2.53
    
    
    
    1.42October 1, 2008 to December 31, 2008
    
    
    4.09
    
    
    
    1.30July 1, 2008 to September 30, 2008
    
    
    6.45
    
    
    
    4.30April 1, 2008 to June 30, 2008
    
    
    7.00
    
    
    
    4.84
  26




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Stock Performance Graph
   
 2/15/2007
    
    
    3/31/2007
    
    
    3/31/2008
    
    
    3/31/2009
    
    
    3/31/2010Opnext, Inc.
    
    
    
    100.00
    
    
    
    
    85.00
    
    
    
    
    31.32
    
    
    
    
    9.83
    
    
    
    
    13.56NASDAQ Telecommunications Index
    
    
    
    100.00
    
    
    
    
    96.50
    
    
    
    
    92.87
    
    
    
    
    61.31
    
    
    
    
    92.41NASDAQ Composite Index
    
    
    
    100.00
    
    
    
    
    96.98
    
    
    
    
    91.27
    
    
    
    
    61.21
    
    
    
    
    96.03Amex Networking Index
    
    
    
    100.00
    
    
    
    
    95.74
    
    
    
    
    84.07
    
    
    
    
    52.82
    
    
    
    
    100.57
 27




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Dividend Policy
  Securities Authorized for Issuance under Equity Compensation Plans
  Number of Securities to be issued
    
    
    Weighted-
    
    
    Number of securitiesupon exercise of outstanding
    
    
    average
    
    
    remaining available foroptions, stock appreciation rights
    
    
    exercise
    
    
    future issuance under equityand stock units
    
    
    price
    
    
    compensation plansEquity
compensation plans
approved by our
security holders
    
    
    14,240
    
    
    $
    6.42
    
    
    
    4,651Equity
compensation plans
not approved by our
security holders
    
    
    
    
    
    
    
    
    
    
    
 Repurchases of Equity
  28




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Item 6. Selected Financial Data.
 The following consolidated balance sheet data as of March 31, 2010 and
2009 and the consolidated statements of operations data for the fiscal years ended
March 31, 2010, 2009 and 2008 have been derived from our audited financial statements
and related notes that are included elsewhere in this annual report. The consolidated
balance sheet data as of March 31, 2008, 2007 and 2006 and the statement of
operations data for the fiscal years ended March 31, 2007 and 2006 have been derived
from our audited financial statements and related notes that do not appear in this
annual report. 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 annual report. The historical results are not
necessarily indicative of the results to be expected for any future period.
 Historical Financial Data
 Year Ended March 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(in thousands, except per share data)Consolidated statements of
operations data:Sales
    
    $
    319,132
    
    
    $
    318,555
    
    
    $
    283,498
    
    
    $
    222,859
    
    
    $
    151,691Cost of sales
    
    
    252,490
    
    
    
    242,782
    
    
    
    187,123
    
    
    
    148,753
    
    
    
    120,320Amortization of acquired developed
technology
    
    
    5,780
    
    
    
    1,321
    
    
    
    
    
    
    
    
    
    
    
    Gross margin
    
    
    60,862
    
    
    
    74,452
    
    
    
    96,375
    
    
    
    74,106
    
    
    
    31,37119.1
    %
    
    
    23.4
    %
    
    
    34.0
    %
    
    
    33.3
    %
    
    
    20.7
    %Research and development expenses
    
    
    74,145
    
    
    
    54,043
    
    
    
    38,324
    
    
    
    35,615
    
    
    
    33,669Selling, general, and administrative
expenses
    
    
    54,829
    
    
    
    63,483
    
    
    
    48,291
    
    
    
    40,231
    
    
    
    33,116Impairment of goodwill
    
    
    
    
    
    
    67,681
    
    
    
    
    
    
    
    
    
    
    
    Acquired in-process research and
development expense
    
    
    
    
    
    
    15,700
    
    
    
    
    
    
    
    
    
    
    
    Amortization of purchased intangibles
    
    
    9,240
    
    
    
    5,540
    
    
    
    
    
    
    
    
    
    
    
    Loss on disposal of property and
equipment
    
    
    159
    
    
    
    122
    
    
    
    502
    
    
    
    311
    
    
    
    1,065Other operating expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    399Operating (loss) income
    
    
    (77,511
    )
    
    
    (132,117
    )
    
    
    9,258
    
    
    
    (2,051
    )
    
    
    (36,878
    )Interest (expense) income, net
    
    
    (615
    )
    
    
    2,748
    
    
    
    8,534
    
    
    
    3,298
    
    
    
    4,102Other (expense) income
    
    
    (472
    )
    
    
    (187
    )
    
    
    (744
    )
    
    
    (551
    )
    
    
    1,561(Loss) income before income taxes
    
    
    (78,598
    )
    
    
    (129,556
    )
    
    
    17,048
    
    
    
    696
    
    
    
    (31,215
    )Income tax (expense) benefit
    
    
    85
    
    
    
    (16
    )
    
    
    
    
    
    
    
    
    
    
    (278
    )Net (loss) income
    
    $
    (78,513
    )
    
    $
    (129,572
    )
    
    $
    17,048
    
    
    $
    696
    
    
    $
    (31,493
    )Net (loss) income per share:Basic
    
    $
    (0.88
    )
    
    $
    (1.86
    )
    
    $
    0.26
    
    
    $
    0.01
    
    
    $
    (0.61
    )Diluted
    
    
    (0.88
    )
    
    
    (1.86
    )
    
    
    0.26
    
    
    
    0.01
    
    
    
    (0.61
    )Weighted average number of shares:Basic
    
    
    88,952
    
    
    
    69,775
    
    
    
    64,598
    
    
    
    53,432
    
    
    
    51,945Diluted
    
    
    88,952
    
    
    
    69,775
    
    
    
    64,633
    
    
    
    53,486
    
    
    
    51,945March 31,2010
    
    
    2010
    
    
    2010
    
    
    2010
    
    
    2010(in thousands)Consolidated balance sheet data:Total assets
    
    $
    370,298
    
    
    $
    449,764
    
    
    $
    432,459
    
    
    $
    367,849
    
    
    $
    215,969Long-term liabilities
    
    
    16,672
    
    
    
    26,050
    
    
    
    22,192
    
    
    
    17,271
    
    
    
    7,716Total shareholders equity
    
    
    253,540
    
    
    
    320,537
    
    
    
    323,078
    
    
    
    290,657
    
    
    
    118,652
 29




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##### Table of Contents



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, 2010 and 2009. 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 includes 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 annual report.
 Three Months EndedMarch 31,
    
    Dec. 31,
    
    Sept. 30,
    
    June 30,2010
    
    2009
    
    2009
    
    2009(in thousands, except per share data)Sales (1)
    
    $
    76,783
    
    
    $
    76,065
    
    
    $
    80,975
    
    
    $
    85,309Gross margin
    
    
    14,407
    
    
    
    12,120
    
    
    
    17,589
    
    
    
    16,746Net loss (2)
    
    
    (18,303
    )
    
    
    (18,580
    )
    
    
    (17,913
    )
    
    
    (23,717
    )Net loss per share:Basic
    
    $
    (0.20
    )
    
    $
    (0.21
    )
    
    $
    (0.20
    )
    
    $
    (0.27
    )Diluted
    
    
    (0.20
    )
    
    
    (0.21
    )
    
    
    (0.20
    )
    
    
    (0.27
    )Weighted average shares outstanding:Basic
    
    
    89,392
    
    
    
    88,960
    
    
    
    88,769
    
    
    
    88,656Diluted
    
    
    89,392
    
    
    
    88,960
    
    
    
    88,769
    
    
    
    88,656
 
 (1)
    
    Sales for the three months ended March 31, 2010, December 31,
2009, September 30, 2009 and June 30, 2009 included $14.2
million, $12.1 million, $24.3 million and $32.3 million,
respectively, of revenues attributable to the StrataLight
acquisition.(2)
    
    Net loss for the three months ended March 31, 2010 included $1.8
million of amortization of purchased intangibles, $1.6 million of
stock-based compensation expense, $0.3 million of restructuring
cost and $0.1 million of StrataLight Employee Liquidity Bonus
Plan expense. Net loss for the three months ended December 31,
2009 included $1.8 million of amortization of purchased
intangibles, $1.7 million of stock-based compensation expense,
$1.6 million of StrataLight Employee Liquidity Bonus Plan
expense, $0.9 million of restructuring cost and $0.1 million of
litigation expense. Net loss for the three months ended September
30, 2009 included $3.8 million of amortization of purchased
intangibles, $2.9 million of StrataLight Employee Liquidity Bonus
Plan expense, $1.7 million of stock-based compensation expense,
$0.2 million of restructuring cost and $0.1 million of litigation
expense. Net loss for the three months ended June 30, 2009
included $7.7 million of amortization of purchased intangibles
expense, $2.8 million of StrataLight Employee Liquidity Bonus
Plan expense, $1.6 million of stock-based compensation expense,
$1.0 million of restructuring cost, $1.0 million attributable to
purchase price accounting adjustments for inventory sold during
the period, and $0.4 million of integration cost. Three Months EndedMarch 31,
    
    Dec. 31,
    
    Sept. 30,
    
    June 30,2009
    
    2008
    
    2008
    
    2008(in thousands, except per share data)Sales (1)
    
    $
    83,626
    
    
    $
    70,533
    
    
    $
    80,159
    
    
    $
    84,237Gross margin
    
    
    7,288
    
    
    
    15,582
    
    
    
    24,451
    
    
    
    27,131Net (loss) income (2)
    
    
    (118,831
    )
    
    
    (14,538
    )
    
    
    1,188
    
    
    
    2,609Net (loss) income per share:Basic
    
    $
    (1.39
    )
    
    $
    (0.23
    )
    
    $
    0.02
    
    
    $
    0.04Diluted
    
    
    (1.39
    )
    
    
    (0.23
    )
    
    
    0.02
    
    
    
    0.04Weighted average shares outstanding:Basic
    
    
    85,527
    
    
    
    64,612
    
    
    
    64,620
    
    
    
    64,623Diluted
    
    
    85,527
    
    
    
    64,612
    
    
    
    64,769
    
    
    
    64,666
 
 (1)
    
    Sales for the three months ended March 31, 2009 included $37.8
million of revenues attributable to the StrataLight acquisition.(2)
    
    Net loss for the three months ended March 31, 2009 included $62.0
million of goodwill impairment expense, $15.7 million of
in-process research and development expense, $11.0 million of
StrataLight Employee Liquidity Bonus Plan expense, $6.9 million
of amortization of purchased intangibles expense, $1.8 million
attributable to purchase price accounting adjustments for
inventory sold during the period, $1.5 million of stock-based
compensation expense, $1.1 million of restructuring cost, $0.5
million of integration cost and $0.1 million of litigation
expense. Net loss for the three months ended December 31, 2008
included $5.7 million of goodwill impairment expense, $1.6
million of stock-based compensation expense, $0.3 million of
litigation expense and $0.2 million of business acquisition cost.
Net income for the three months ended September 30, 2008 included
$1.5 million of stock-based compensation expense and $0.7 million
of litigation expense. Net income for the three months ended June
30, 2008 included $1.1 million of stock-based compensation
expense. 30




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##### Table of Contents



Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 The following discussion relates to our consolidated financial statements
and should be read in conjunction with the financial statements and notes thereto
appearing elsewhere in this annual report. Statements contained in this Managements
Discussion and Analysis of Financial Condition and Results of Operations that are
not historical facts may be forward-looking statements. Such statements are subject
to certain risks and uncertainties, which could cause actual results to differ
materially from the forward-looking statement. Although the information is based on
our current expectations, actual results could vary from expectations stated in this
report. Numerous factors will affect our actual results, some of which are beyond our
control. These include current and future economic conditions and events and their
impact on us and our customers, the strength of telecommunications and data
communications markets, competitive market conditions, interest rate levels,
volatility in our stock price, and capital market conditions. You are cautioned not
to place undue reliance on this information, which speaks only as of the date of this
annual report. We assume no obligation to update publicly any forward-looking
information, whether as a result of new information, future events or otherwise,
except to the extent we are required to do so in connection with our ongoing
requirements under federal securities laws to disclose material information. For a
discussion of important risks related to our business, and related to investing in
our securities, including risks that could cause actual results and events to differ
materially from results and events referred to in the forward-looking information,
see Item 1A: Risk Factors and the discussion under the captions  Factors That May
Influence Future Results of Operations and  Liquidity and Capital Resources
below. In light of these risks, uncertainties and assumptions, the forward-looking
events discussed in this report might not occur.
 Overview and Background
  Acquisition of StrataLight
  31




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##### Table of Contents



Sales
     Cost of Sales and Gross Margin
  32




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##### Table of Contents



Research and Development Expense
  Selling, General and Administrative Expenses
   Impairment of Goodwill
  33




---



##### Table of Contents



Inventory
  Income Taxes
    Factors That May Influence Future Results of Operations
 Global Economic Conditions
  34




---



##### Table of Contents



Cost Reduction Actions
  Sales
     35




---



##### Table of Contents



Cost of Sales and Gross Margins
    Research and Development Expense
  Selling, General and Administrative Expenses
  36




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##### Table of Contents



Significant Accounting Policies and Estimates
 Revenue Recognition, Warranties and Allowances
     Inventory Valuation
  37




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##### Table of Contents



Income Taxes
   Impairment of Long-Lived Assets
  Goodwill and Business Combinations
    Stock-Based Incentive Plans
  38




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##### Table of Contents




    
    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. Our
expected term assumption for awards issued during the years
ended March 31, 2010, 2009 and 2008 was 4.5 years, 4.9
years and 6.25 years, respectively. As additional evidence
develops from our option activity, the expected term
assumption may be refined to capture more 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 to ours. 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 years
ended March 31, 2010, 2009 and 2008 was 86.2%, 83.5% and
88.1%, respectively.
    
    A dividend yield of zero has been assumed for awards issued
during the years ended March 31, 2010, 2009 and 2008 based
on our actual past experience and the fact that we do not
anticipate paying a dividend on our shares in the near
future.
    
    We have based our risk-free interest rate assumption for
awards issued during the years ended March 31, 2010, 2009
and 2008 on the implied weighted-average yields of 2.1%,
2.3% and 4.5%, 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, 2010, 2009 and 2008 have been estimated based on
our actual historical forfeiture trends of approximately
10% over their expected terms.
  Use of Estimates
  39




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##### Table of Contents



Results of Operations for the Years Ended March 31, 2010, 2009 and 2008
  Year Ended March 31,
    
    
    Year Ended March 31,2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009
    
    
    2008(in thousands)
    
    
    (as percentage of sales)Sales
    
    $
    319,132
    
    
    $
    318,555
    
    
    $
    283,498
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales
    
    
    252,490
    
    
    
    242,782
    
    
    
    187,123
    
    
    
    79.1
    %
    
    
    76.2
    %
    
    
    66.0
    %Amortization of acquired
developed technology
    
    
    5,780
    
    
    
    1,321
    
    
    
    
    
    
    
    1.8
    %
    
    
    0.4
    %
    
    
    Gross margin
    
    
    60,862
    
    
    
    74,452
    
    
    
    96,375
    
    
    
    19.1
    %
    
    
    23.4
    %
    
    
    34.0
    %Research and development expenses
    
    
    74,145
    
    
    
    54,043
    
    
    
    38,324
    
    
    
    23.3
    %
    
    
    17.0
    %
    
    
    13.5
    %Selling, general and
administrative expenses
    
    
    54,829
    
    
    
    63,483
    
    
    
    48,291
    
    
    
    17.2
    %
    
    
    19.9
    %
    
    
    17.0
    %Impairment of goodwill
    
    
    
    
    
    
    67,681
    
    
    
    
    
    
    
    
    
    
    
    21.3
    %
    
    
    Acquired in-process research and
development
    
    
    
    
    
    
    15,700
    
    
    
    
    
    
    
    
    
    
    
    4.9
    %
    
    
    Amortization of purchased
intangibles
    
    
    9,240
    
    
    
    5,540
    
    
    
    
    
    
    
    2.9
    %
    
    
    1.7
    %
    
    
    Loss on disposal of property and
equipment
    
    
    159
    
    
    
    122
    
    
    
    502
    
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.2
    %Operating (loss) income
    
    
    (77,511
    )
    
    
    (132,117
    )
    
    
    9,258
    
    
    
    (24.3
    )%
    
    
    (41.5
    )%
    
    
    3.3
    %Interest (expense) income, net
    
    
    (615
    )
    
    
    2,748
    
    
    
    8,534
    
    
    
    (0.2
    )%
    
    
    0.9
    %
    
    
    3.0
    %Other expense, net
    
    
    (472
    )
    
    
    (187
    )
    
    
    (744
    )
    
    
    (0.1
    )%
    
    
    (0.1
    )%
    
    
    (0.3
    )%(Loss) income before income
taxes
    
    
    (78,598
    )
    
    
    (129,556
    )
    
    
    17,048
    
    
    
    (24.6
    )%
    
    
    (40.7
    )%
    
    
    6.0
    %Income tax benefit (expense)
    
    
    85
    
    
    
    (16
    )
    
    
    
    
    
    
    0.0
    %
    
    
    (0.0
    )%
    
    
    Net (loss) income
    
    $
    (78,513
    )
    
    $
    (129,572
    )
    
    $
    17,048
    
    
    
    (24.6
    )%
    
    
    (40.7
    )%
    
    
    6.0
    %
 Comparison of the Years Ended March 31, 2010 and 2009
 Sales.
   Gross Margin.
 40




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##### Table of Contents



Research and Development Expenses.
 Selling, General and Administrative Expenses.
 Impairment of Goodwill.
  Acquired In-process Research and Development.
 Amortization of Purchased Intangibles.
 41




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##### Table of Contents



Loss on Disposal of Property and Equipment.
 Interest (Expense) Income, Net.
 Other Expense, Net.
 Income Taxes.
   Comparison of the Years Ended March 31, 2009 and 2008
 Sales.
  Gross Margin.
 42




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##### Table of Contents



Research and Development Expenses.
 Selling, General and Administrative Expenses.
 Impairment of Goodwill.
  Acquired In-process Research and Development.
 43




---



##### Table of Contents



Amortization of Purchased Intangibles.
 Loss on Disposal of Property and Equipment.
 Interest Income, Net.
 Other (Expense) Income, Net.
 Income Taxes
 Liquidity and Capital Resources
   44




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##### Table of Contents



Contractual Obligations
  Payments Due by PeriodTotal
    
    
    Less than 1 Year
    
    
    1-3 Years
    
    
    3-5 YearsCapital lease obligations
    
    $
    23.7
    
    
    $
    12.5
    
    
    $
    11.0
    
    
    $
    0.2Operating lease obligations
    
    
    5.1
    
    
    
    3.6
    
    
    
    1.2
    
    
    
    0.3Purchase obligations
    
    
    66.8
    
    
    
    66.8
    
    
    
    
    
    
    
    Short-term debt
    
    
    21.4
    
    
    
    21.4
    
    
    
    
    
    
    
    Total contractual obligations
    
    $
    117.0
    
    
    $
    104.3
    
    
    $
    12.2
    
    
    $
    0.5
  45




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##### Table of Contents



Off-Balance Sheet Arrangements
  
 Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
        46




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##### 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
    
    
    48Consolidated Balance Sheets at March 31, 2010 and March 31, 2009
    
    
    49Consolidated Statements of Operations for the fiscal years ended March 31, 2010, 2009 and 2008
    
    
    50Consolidated Statements of Shareholders Equity and Comprehensive Income (Loss) for the
fiscal years ended March 31, 2010, 2009 and 2008
    
    
    51Consolidated Statements of Cash Flows for the fiscal years ended March 31, 2010, 2009 and 2008
    
    
    52Notes to Consolidated Financial Statements
    
    
    53
 47




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##### Table of Contents



Report of Independent Registered Public Accounting Firm on Financial Statements
      ERNST & YOUNG LLP
 
 48




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Opnext, Inc.


Consolidated Balance Sheets
 March 31,2010
    
    
    2009(in thousands, except share andper share amounts)ASSETSCurrent assets:Cash and cash equivalents, including $1,205
and $6,328 of restricted cash at March 31,
2010 and 2009, respectively
    
    $
    132,643
    
    
    $
    168,909Trade receivables, net, including $4,509
and $3,483 due from related parties at
March 31, 2010 and 2009, respectively
    
    
    54,849
    
    
    
    63,961Inventories
    
    
    93,018
    
    
    
    101,610Prepaid expenses and other current assets
    
    
    4,755
    
    
    
    3,708Total current assets
    
    
    285,265
    
    
    
    338,188Property, plant, and equipment, net
    
    
    60,322
    
    
    
    71,966Purchased intangibles
    
    
    24,220
    
    
    
    39,239Other assets
    
    
    491
    
    
    
    371Total assets
    
    $
    370,298
    
    
    $
    449,764LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Trade payables, including $4,707 and $6,052
due to related parties at March 31, 2010
and 2009, respectively
    
    $
    44,040
    
    
    $
    38,356Accrued expenses
    
    
    22,101
    
    
    
    33,190Short-term debt
    
    
    21,430
    
    
    
    20,243Capital lease obligations
    
    
    12,515
    
    
    
    11,388Total current liabilities
    
    
    100,086
    
    
    
    103,177Capital lease obligations
    
    
    11,202
    
    
    
    21,402Other long-term liabilities
    
    
    5,470
    
    
    
    4,648Total liabilities
    
    
    116,758
    
    
    
    129,227Commitments 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
91,192,937, outstanding 89,857,936, net of
58,630 shares of treasury stock at March
31, 2010; issued 91,130,377, outstanding
88,656,447, net of 51,508 shares of
treasury stock at March 31, 2009
    
    
    725
    
    
    
    730Additional paid-in capital
    
    
    716,315
    
    
    
    708,588Accumulated deficit
    
    
    (473,145
    )
    
    
    (394,632
    )Accumulated other comprehensive income
    
    
    9,645
    
    
    
    5,851Total shareholders equity
    
    
    253,540
    
    
    
    320,537Total liabilities and shareholders equity
    
    $
    370,298
    
    
    $
    449,764
  49




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Opnext, Inc.


Consolidated Statements of Operations
 Year Ended March 31,2010
    
    
    2009
    
    
    2008(in thousands, except per share amounts)Sales, including $14,659, $19,470 and
$8,925 to related parties for the years
ended March 31, 2010, 2009 and 2008,
respectively
    
    $
    319,132
    
    
    $
    318,555
    
    
    $
    283,498Cost of sales
    
    
    252,490
    
    
    
    242,782
    
    
    
    187,123Amortization of acquired developed technology
    
    
    5,780
    
    
    
    1,321
    
    
    
    Gross margin
    
    
    60,862
    
    
    
    74,452
    
    
    
    96,375Research and development expenses, including
$4,368, $6,077 and $5,225 from related
parties for the years ended March 31, 2010,
2009 and 2008, respectively
    
    
    74,145
    
    
    
    54,043
    
    
    
    38,324Selling, general and administrative
expenses, including $3,832, $5,493 and
$5,515 from related parties for the years
ended March 31, 2010, 2009 and 2008,
respectively
    
    
    54,829
    
    
    
    63,483
    
    
    
    48,291Impairment of goodwill
    
    
    
    
    
    
    67,681
    
    
    
    Acquired in-process research and development
    
    
    
    
    
    
    15,700
    
    
    
    Amortization of purchased intangibles
    
    
    9,240
    
    
    
    5,540
    
    
    
    Loss on disposal of property and equipment
    
    
    159
    
    
    
    122
    
    
    
    502Operating (loss) income
    
    
    (77,511
    )
    
    
    (132,117
    )
    
    
    9,258Interest (expense) income, net
    
    
    (615
    )
    
    
    2,748
    
    
    
    8,534Other expense, net
    
    
    (472
    )
    
    
    (187
    )
    
    
    (744
    )(Loss) income before income taxes
    
    
    (78,598
    )
    
    
    (129,556
    )
    
    
    17,048Income tax benefit (expense)
    
    
    85
    
    
    
    (16
    )
    
    
    Net (loss) income
    
    $
    (78,513
    )
    
    $
    (129,572
    )
    
    $
    17,048Net (loss) income per share:Basic
    
    $
    (0.88
    )
    
    $
    (1.86
    )
    
    $
    0.26Diluted
    
    $
    (0.88
    )
    
    $
    (1.86
    )
    
    $
    0.26Weighted average number of shares used in
computing net (loss) income per share:Basic
    
    
    88,952
    
    
    
    69,775
    
    
    
    64,598Diluted
    
    
    88,952
    
    
    
    69,775
    
    
    
    64,633
  50




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Opnext, Inc.


Consolidated Statements of Shareholders Equity and Comprehensive Income (Loss)
Years ended March 31, 2010, 2009 and 2008
 Retained
    
    
    AccumulatedNumber
    
    
    
    
    
    
    Additional
    
    
    Earnings
    
    
    OtherOf
    
    
    Par
    
    
    Paid-In
    
    
    (Accumulated
    
    
    Comprehensive
    
    
    Shareholders
    
    
    ComprehensiveShares
    
    
    Value
    
    
    Capital
    
    
    Deficit)
    
    
    Income (Loss)
    
    
    Equity
    
    
    Income (Loss)(in thousands, except share and per share amounts)Balance 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 contracts
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    85
    
    
    
    85
    
    
    
    85Defined benefit plan costs, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (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
    
    
    
    323,078Stock-based compensation, net
of forfeitures
    
    
    
    
    
    
    
    
    
    
    5,705
    
    
    
    
    
    
    
    
    
    
    
    5,705Stock options exercised
    
    
    3,934
    
    
    
    
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    6Restricted shares forfeited
    
    
    (8,333
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Restricted shares repurchased
    
    
    (30,571
    )
    
    
    (63
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (63
    )Equity offering to StrataLight
shareholders, net
    
    
    22,298,161
    
    
    
    223
    
    
    
    113,336
    
    
    
    
    
    
    
    
    
    
    
    113,559StrataLight Employee Liquidity
Bonus Plan
    
    
    1,773,343
    
    
    
    18
    
    
    
    5,775
    
    
    
    
    
    
    
    
    
    
    
    5,793Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (129,572
    )
    
    
    
    
    
    
    (129,572
    )
    
    $
    (129,572
    )Unrealized loss on foreign
currency forward contracts
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (145
    )
    
    
    (145
    )
    
    
    (145
    )Defined benefit plan costs, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    65
    
    
    
    65
    
    
    
    65Foreign currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,111
    
    
    
    2,111
    
    
    
    2,111Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (127,541
    )Balance at March 31, 2009
    
    
    88,656,447
    
    
    
    730
    
    
    
    708,588
    
    
    
    (394,632
    )
    
    
    5,851
    
    
    
    320,537Stock-based compensation,
net of forfeitures
    
    
    
    
    
    
    
    
    
    
    6,630
    
    
    
    
    
    
    
    
    
    
    

    6,630Stock options exercised
    
    
    11,053
    
    
    
    
    
    
    
    16
    
    
    
    
    

    
    
    
    
    
    
    16Restricted shares repurchased
    
    
    (7,122
    )
    
    
    (17
    )
    
    
    
    
    
    
    
    

    
    
    
    
    
    
    (17
    )StrataLight Employee Liquidity
Bonus Plan, net of cancellations
    
    
    1,197,558
    
    
    
    12
    
    
    
    1,081
    
    
    
    
    

    
    
    
    
    
    
    1,093Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (78,513
    )
    
    
    
    
    
    
    (78,513
    )
    
    $
    (78,513
    )Unrealized loss on foreign
currency forward contracts
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (191
    )
    
    
    (191
    )
    
    
    (191
    )Defined benefit plan costs, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    125
    
    
    

    125
    
    
    
    125Foreign currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,860
    
    
    
    3,860
    
    
    
    3,860Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (74,719
    )Balance at March 31, 2010
    
    
    89,857,936
    
    
    $
    725
    
    
    $
    716,315
    
    
    $
    (473,145
    )
    
    $
    9,645
    
    
    $
    253,540
  51




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##### Table of Contents



Opnext, Inc.


Consolidated Statements of Cash Flows
 Year Ended March 31,2010
    
    
    2009
    
    
    2008(in thousands)Cash flows from operating activitiesNet (loss) income
    
    $
    (78,513
    )
    
    $
    (129,572
    )
    
    $
    17,048Adjustments to reconcile net (loss) income to net cash (used in)
provided by operating activities:Impairment of goodwill
    
    
    
    
    
    
    67,681
    
    
    
    Acquired in-process research and development
    
    
    
    
    
    
    15,700
    
    
    
    Depreciation and amortization
    
    
    22,312
    
    
    
    14,385
    
    
    
    10,615Amortization of purchased intangibles
    
    
    15,019
    
    
    
    6,861
    
    
    
    Stock-based compensation expense associated with the StrataLight
Employee Liquidity Bonus Plan
    
    
    1,216
    
    
    
    5,766
    
    
    
    Stock-based compensation expense associated with equity awards
    
    
    6,632
    
    
    
    5,644
    
    
    
    3,337Loss on disposal of property and equipment
    
    
    159
    
    
    
    122
    
    
    
    502Changes in assets and liabilities, net of acquisition of business:Trade receivables, net
    
    
    9,073
    
    
    
    (4,374
    )
    
    
    3,134Inventories
    
    
    12,397
    
    
    
    23,046
    
    
    
    (18,741
    )Prepaid expenses and other current assets
    
    
    (492
    )
    
    
    (454
    )
    
    
    (452
    )Other assets
    
    
    (167
    )
    
    
    (163
    )
    
    
    (2
    )Trade payables
    
    
    4,523
    
    
    
    (16,939
    )
    
    
    (2,492
    )Accrued expenses and other liabilities
    
    
    (10,742
    )
    
    
    1,871
    
    
    
    (1,424
    )Net cash (used in) provided by operating activities
    
    
    (18,583
    )
    
    
    (10,426
    )
    
    
    11,525Cash flows from investing activitiesCapital expenditures
    
    
    (7,877
    )
    
    
    (4,157
    )
    
    
    (5,071
    )Acquisition of business, net of cash acquired
    
    
    
    
    
    
    (28,425
    )
    
    
    Net cash used in investing activities
    
    
    (7,877
    )
    
    
    (32,582
    )
    
    
    (5,071
    )Cash flows from financing activitiesShort-term debt borrowings, net
    
    
    
    
    
    
    
    
    
    
    20,060Payments on capital lease obligations
    
    
    (10,602
    )
    
    
    (9,105
    )
    
    
    (5,452
    )Exercise of stock options
    
    
    16
    
    
    
    6
    
    
    
    23Net proceeds from initial public offering
    
    
    
    
    
    
    
    
    
    
    (105
    )Restricted shares repurchased
    
    
    (17
    )
    
    
    (63
    )
    
    
    (94
    )Net cash (used in) provided by financing activities
    
    
    (10,603
    )
    
    
    (9,162
    )
    
    
    14,432Effect of foreign currency exchange rates on cash and cash equivalents
    
    
    797
    
    
    
    (607
    )
    
    
    1,014(Decrease) increase in cash and cash equivalents
    
    
    (36,266
    )
    
    
    (52,777
    )
    
    
    21,900Cash and cash equivalents at beginning of year
    
    
    168,909
    
    
    
    221,686
    
    
    
    199,786Cash and cash equivalents at end of year
    
    $
    132,643
    
    
    $
    168,909
    
    
    $
    221,686Supplemental cash flow informationCash paid during the year for:Interest paid
    
    $
    980
    
    
    $
    965
    
    
    $
    435Income tax refund, net
    
    $
    (129
    )
    
    $
    
    
    
    $
    Supplemental investing activitiesNet cash paid for acquisition of StrataLight
    
    $
    
    
    
    $
    21,593
    
    
    $
    Payments for acquisition and equity registration costs
    
    
    
    
    
    
    6,832
    
    
    
    Acquisition of StrataLight, net of cash acquired
    
    $
    
    
    
    $
    28,425
    
    
    $
    Non-cash financing activitiesCapital lease obligations incurred
    
    $
    (109
    )
    
    $
    (15,384
    )
    
    $
    (11,825
    )
  52




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##### 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
  53




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##### 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
  54




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
   Net (Loss) Income per Common Share
  Cash and Cash Equivalents
  Trade Receivables
  Inventories
  55




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##### 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
    Impairment of Long-Lived Assets
  56




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
 Goodwill and Business Combinations
    Income Taxes
  Fair Value Measurements
  57




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
 
    
    Level 1  Valuations based on quoted prices in active
markets for identical assets or liabilities that the
Company has the ability to access. Valuation adjustments
and block discounts are not applied to Level 1
instruments. Because valuations are based on quoted prices
that are readily and regularly available in an active
market, valuation of these instruments does not entail a
significant degree of judgment.
    
    Level 2  Valuations based on quoted prices in markets
that are not active or for which all significant inputs
are observable, either directly or indirectly. Valuations
for Level 2 assets are prepared on an individual asset
basis using data obtained from recent transactions for
identical securities in inactive markets or pricing data
from similar assets in active and inactive markets.
    
    Level 3  Valuations based on inputs that are unobservable
and significant to the overall fair value measurement.
  SignificantQuoted Market
    
    Other
    
    SignificantValue as of
    
    Prices in Active
    
    Observable
    
    UnobservableMarch 31,
    
    Markets
    
    Inputs
    
    Inputs2010
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)
    
    Balance Sheet ClassificationAssets:Money market funds
    
    $
    82,487
    
    
    $
    82,487
    
    
    $
    
    
    
    $
    
    
    
    Cash and cash equivalentsLiabilities:Forward foreign
currency exchange
contracts
    
    $
    251
    
    
    $
    
    
    
    $
    251
    
    
    $
    
    
    
    Accrued expensesSignificantQuoted Market
    
    Other
    
    SignificantValue as of
    
    Prices in
    
    Observable
    
    UnobservableMarch 31,
    
    Active Markets
    
    Inputs
    
    Inputs2009
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)
    
    Balance Sheet ClassificationAssets:Money market funds
    
    $
    134,774
    
    
    $
    134,774
    
    
    $
    
    
    
    $
    
    
    
    Cash and cash equivalentsLiabilities:Forward foreign
currency exchange
contracts
    
    $
    60
    
    
    $
    
    
    
    $
    60
    
    
    $
    
    
    
    Accrued expenses
  Stock-Based Incentive Plans
  
    
    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.
 58




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
 
    
    Since December 31, 2007, the Company has estimated volatility based on the Companys
historical stock prices. Until December 31, 2007, the future volatility of the Companys
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 the
Company. Use of comparable companies was necessary during this period since the Company did
not possess a sufficient stock price history.
    
    A dividend yield of zero has been assumed for all issued awards 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 on the implied yield
currently available on U.S. Treasury zero-coupon issues with a remaining term equal to the
expected term of the award.
    
    The forfeiture rate for awards was based on the Companys actual historical forfeiture trend.
 Recent Accounting Pronouncements
 The FASB Accounting Standards Codification and the Hierarchy of Generally
Accepted Accounting Principlesa replacement of FASB Statement No. 162
 Subsequent Events (ASC 855) Subsequent Events (Topic 855 an amendment of ASC 855,
 59




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
 3. Business Combinations
    60




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
  Fair Value of Opnext shares
    
    $
    114,167Cash consideration
    
    
    40,275Acquisition related transaction costs
    
    
    6,224Acquisition related employee bonus costs
    
    
    27Total purchase price
    
    $
    160,693
   Tangible assets acquired and liabilities assumed:Cash and short-term investments
    
    $
    18,682Inventories
    
    
    30,400Other current assets
    
    
    6,707Fixed assets
    
    
    10,635Other non-current assets
    
    
    59Accounts payable and accrued liabilities
    
    
    (29,518
    )Other non-current liabilities
    
    
    (55
    )Net tangible assets
    
    
    36,910Identifiable intangible assets
    
    
    46,100In-process research and development
    
    
    15,700Goodwill
    
    
    61,983Total purchase price
    
    $
    160,693
  Pro Forma Basis for Fiscal YearsEnded March 31,2009
    
    2008Sales
    
    $
    409,416
    
    
    $
    378,714Net loss
    
    
    (52,517
    )
    
    
    (107,971
    )Net loss per share-basic
    
    $
    (0.58
    )
    
    $
    (1.23
    )Net loss per share-diluted
    
    $
    (0.58
    )
    
    $
    (1.23
    )
  61




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
   4. Restructuring Charges
   WorkforceReduction
    
    
    FacilitiesAccrual balance as of March 31, 2009
    
    $
    331
    
    
    $
    724Restructuring charges:Manufacturing expense
    
    
    359
    
    
    
    Research and development expense
    
    
    276
    
    
    
    Marketing and sales expense
    
    
    136
    
    
    
    General and administrative expense
    
    
    608
    
    
    
    95Cash payments
    
    
    (1,589
    )
    
    
    (317
    )Accrual balance as of March 31, 2010
    
    $
    121
    
    
    $
    502
 5. Inventories
  March 31,2010
    
    
    2009Raw materials
    
    $
    49,859
    
    
    $
    61,132Work-in-process
    
    
    14,810
    
    
    
    10,791Finished goods
    
    
    28,349
    
    
    
    29,687Inventories
    
    $
    93,018
    
    
    $
    101,610
  6. Property, Plant, and Equipment
  March 31,2010
    
    
    2009Machinery, electronic, and other equipment
    
    $
    245,154
    
    
    $
    224,854Computer software
    
    
    17,928
    
    
    
    16,815Building improvements
    
    
    6,093
    
    
    
    5,830Construction-in-progress
    
    
    5,755
    
    
    
    9,489Total property, plant, and equipment
    
    
    274,930
    
    
    
    256,988Less accumulated depreciation and amortization
    
    
    (214,608
    )
    
    
    (185,022
    )Property, plant, and equipment, net
    
    $
    60,322
    
    
    $
    71,966
  62




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
 7. Intangible Assets and Goodwill
 Intangible Assets other than Goodwill
   Gross Carrying
    
    
    Accumulated
    
    
    Net CarryingAmount
    
    
    Amortization
    
    
    AmountDeveloped product research
    
    $
    28,900
    
    
    $
    (7,101
    )
    
    $
    21,799Order backlog
    
    
    13,100
    
    
    
    (13,100
    )
    
    
    Customer relationships
    
    
    4,100
    
    
    
    (1,679
    )
    
    
    2,421Total intangible assets
    
    $
    46,100
    
    
    $
    (21,880
    )
    
    $
    24,220
  Year Ended March 31,
    
    Amount2011
    
    $
    7,1472012
    
    
    6,8342013
    
    
    5,7802014
    
    
    4,459Total
    
    $
    24,220
 Goodwill
   63




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
    Year Ended March 31,2010
    
    
    2009
    
    
    2008Beginning balance
    
    $
    
    
    
    $
    5,698
    
    
    $
    5,698Acquisition of StrataLight
    
    
    
    
    
    
    61,983
    
    
    
    Impairment of goodwill
    
    
    
    
    
    
    (67,681
    )
    
    
    Ending balance
    
    $
    
    
    
    $
    
    
    
    $
    5,698
 8. Income Taxes
  Year Ended March 31,2010
    
    
    2009
    
    
    2008United States
    
    $
    (52,113
    )
    
    $
    (120,665
    )
    
    $
    (5,873
    )Foreign
    
    
    (26,485
    )
    
    
    (8,891
    )
    
    
    22,921(Loss) income before income taxes
    
    $
    (78,598
    )
    
    $
    (129,556
    )
    
    $
    17,048Provision for income taxes:Current:Federal
    
    $
    (228
    )
    
    $
    
    
    
    $
    State and local
    
    
    87
    
    
    
    
    
    
    
    Foreign
    
    
    56
    
    
    
    16
    
    
    
    Subtotal
    
    $
    (85
    )
    
    $
    16
    
    
    $
    Deferred:Federal
    
    $
    
    
    
    $
    
    
    
    $
    State and local
    
    
    
    
    
    
    
    
    
    
    Foreign
    
    
    
    
    
    
    
    
    
    
    Subtotal
    
    $
    
    
    
    $
    
    
    
    $
    Provision for income taxes
    
    $
    (85
    )
    
    $
    16
    
    
    $
    
 64




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
  Year Ended March 31,2010
    
    2009
    
    2008U.S. federal statutory income tax rate
    
    
    (35.0
    )%
    
    
    (35.0
    )%
    
    
    35.0
    %State and local income taxes, net of federal income tax effect
    
    
    (3.2
    )
    
    
    (5.0
    )
    
    
    (1.8
    )Foreign earnings taxed at different rates
    
    
    (1.7
    )
    
    
    (0.3
    )
    
    
    7.5Change in valuation allowance
    
    
    (12.6
    )
    
    
    (1.6
    )
    
    
    (45.0
    )Goodwill impairment
    
    
    
    
    
    
    21.2
    
    
    
    Expired net operating loss carryforwards
    
    
    52.0
    
    
    
    15.6
    
    
    
    Other
    
    
    0.4
    
    
    
    5.1
    
    
    
    4.3Effective income tax rate
    
    
    (0.1
    )%
    
    
    0.0
    %
    
    
    0.0
    %
    March 31,2010
    
    
    2009Net operating loss, capital loss and credit carryforwards
    
    $
    204,042
    
    
    $
    208,277Inventory and other reserves
    
    
    29,851
    
    
    
    36,029Non-employee stock option expense to related parties
    
    
    9,387
    
    
    
    9,387Stock-based compensation
    
    
    5,844
    
    
    
    4,191Purchased intangibles and goodwill
    
    
    (9,868
    )
    
    
    (15,988
    )Capital leases and property, plant, and equipment
    
    
    (431
    )
    
    
    (2,605
    )Other
    
    
    (2,398
    )
    
    
    (1,027
    )Valuation allowance
    
    
    (236,427
    )
    
    
    (238,264
    )Total deferred tax assets (liabilities)
    
    $
    
    
    
    $
    
  65




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
      9. Stockholders Equity
    Rights Agreement
  66




---



##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
      10. Net (Loss) Income Per Share
   Year Ended March 31,2010
    
    
    2009
    
    
    2008Numerator:Net (loss) income, basic and diluted
    
    $
    (78,513
    )
    
    $
    (129,572
    )
    
    $
    17,048Denominator:Weighted average shares outstanding  basic
    
    
    88,952
    
    
    
    69,775
    
    
    
    64,598Effect of potentially dilutive options
    
    
    
    
    
    
    
    
    
    
    35Weighted average shares outstanding  diluted
    
    
    88,952
    
    
    
    69,775
    
    
    
    64,633Basic net (loss) income per share
    
    $
    (0.88
    )
    
    $
    (1.86
    )
    
    $
    0.26Diluted net (loss) income per share
    
    $
    (0.88
    )
    
    $
    (1.86
    )
    
    $
    0.26
 67




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
  Year Ended March 31,2010
    
    
    2009
    
    
    2008Stock options
    
    
    13,355
    
    
    
    9,029
    
    
    
    5,548Stock appreciation rights
    
    
    525
    
    
    
    543
    
    
    
    546Restricted stock units and other
    
    
    321
    
    
    
    133
    
    
    
    Total
    
    
    14,201
    
    
    
    9,705
    
    
    
    6,094
 11. Accumulated Other Comprehensive Income (Loss)
  Year Ended March 31,2010
    
    
    2009Unrealized loss on foreign currency forward contract
    
    $
    (251
    )
    
    $
    (60
    )Defined benefit plan costs, net
    
    
    (64
    )
    
    
    (189
    )Foreign currency translation adjustment
    
    
    9,960
    
    
    
    6,100Accumulated other comprehensive income
    
    $
    9,645
    
    
    $
    5,851
 12. Employee Benefits
  68




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
   Year Ended March 31,2010
    
    
    2009
    
    
    2008Pension benefit:Service cost
    
    $
    946
    
    
    $
    834
    
    
    $
    620Interest cost
    
    
    82
    
    
    
    59
    
    
    
    33Amortization of prior service cost
    
    
    83
    
    
    
    76
    
    
    
    60Net pension plan cost
    
    $
    1,111
    
    
    $
    969
    
    
    $
    713Weighted average assumptions
used to determine net pension
plan cost:Discount rate
    
    
    2.00
    %
    
    
    2.00
    %
    
    
    2.00
    %Salary increase rate
    
    
    2.8
    %
    
    
    3.1
    %
    
    
    3.1
    %Expected residual active life
    
    15.8 years
    
    
    15.9 years
    
    
    15.9 years
  Year Ended March 31,2010
    
    
    2009Change in benefit obligation:Benefit obligation at beginning of period
    
    $
    3,828
    
    
    $
    2,942Service cost
    
    
    946
    
    
    
    831Interest cost
    
    
    82
    
    
    
    58Realized actuarial (gain) loss
    
    
    (44
    )
    
    
    28Benefits paid
    
    
    (75
    )
    
    
    (67
    )Foreign currency translation
    
    
    220
    
    
    
    36Benefit obligation at end of period
    
    $
    4,957
    
    
    $
    3,828Amount recognized in the consolidated balance sheet:Accrued liabilities
    
    $
    85
    
    
    $
    57Other long-term liabilities
    
    
    4,872
    
    
    
    3,771Net amount recognized at end of fiscal year
    
    $
    4,957
    
    
    $
    3,828Amounts recognized in accumulated other comprehensive loss:Net unrealized actuarial gain
    
    $
    258
    
    
    $
    190Prior service cost
    
    
    (322
    )
    
    
    (379
    )Accumulated other comprehensive loss at end of fiscal year
    
    $
    (64
    )
    
    $
    (189
    )
 69




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
  13. Stock-Based Incentive Plans
  Restricted Stock Units and Restricted Common Shares
   Weighted
    
    
    
    
    
    
    AverageRestricted
    
    
    Average
    
    
    Aggregate
    
    
    RemainingStock
    
    
    Grant Date
    
    
    Intrinsic
    
    
    VestingUnits
    
    
    Fair Value
    
    
    Value
    
    
    Period(per share)
    
    
    
    
    
    (in years)Non-vested balance at March 31, 2007
    
    
    
    
    
    $
    Granted
    
    
    22
    
    
    
    8.99Forfeited
    
    
    (6
    )
    
    
    10.14Non-vested balance at March 31, 2008
    
    
    16
    
    
    
    9.46Granted
    
    
    126
    
    
    
    2.16Vested
    
    
    (16
    )
    
    
    8.51Non-vested balance at March 31, 2009
    
    
    126
    
    
    
    2.16Granted
    
    
    179
    
    
    
    1.86Vested
    
    
    (157
    )
    
    
    2.07Non-vested balance at March 31, 2010
    
    
    148
    
    
    $
    1.89
    
    
    $
    1,003
    
    
    
    0.7Vested balance at March 31, 2010
    
    
    173
    
    
    $
    2.65
    
    
    $
    362
   70




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
 Stock Options
   Year Ended March 31,2010
    
    2009
    
    2008Expected term (in years)
    
    
    4.50
    
    
    
    4.90
    
    
    
    6.25Volatility
    
    
    86.2
    %
    
    
    83.5
    %
    
    
    88.1
    %Risk-free interest rate
    
    
    2.1
    %
    
    
    2.3
    %
    
    
    4.5
    %Dividend yield
    
    
    
    
    
    
    
    
    
    
    Forfeiture rate
    
    
    10.0
    %
    
    
    10.0
    %
    
    
    10.0
    %
  71




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
  Weighted
    
    
    
    
    
    
    AverageAverage
    
    
    Aggregate
    
    
    RemainingExercise
    
    
    Intrinsic
    
    
    ContractualShares
    
    
    Price
    
    
    Value
    
    
    Life(per share)
    
    
    
    
    
    
    (in years)Balance at March 31, 2007
    
    
    4,471
    
    
    $
    14.81Granted
    
    
    1,165
    
    
    
    10.91Forfeited
    
    
    (217
    )
    
    
    14.52Exercised
    
    
    (21
    )
    
    
    0.99Balance at March 31, 2008
    
    
    5,398
    
    
    
    14.04Granted
    
    
    5,093
    
    
    
    3.69Forfeited
    
    
    (218
    )
    
    
    10.33Expired
    
    
    (1,240
    )
    
    
    14.96Exercised
    
    
    (4
    )
    
    
    3.93Balance at March 31, 2009
    
    
    9,029
    
    
    
    8.17Granted
    
    
    4,746
    
    
    
    2.16Forfeited
    
    
    (350
    )
    
    
    2.54Expired
    
    
    (59
    )
    
    
    13.28Exercised
    
    
    (11
    )
    
    
    1.51Balance at March 31, 2010
    
    
    13,355
    
    
    $
    6.16
    
    
    $
    2,165
    
    
    
    5.5Options exercisable at March 31, 2010
    
    
    5,035
    
    
    $
    10.88
    
    
    $
    487
    
    
    
    3.7
  Options Outstanding
    
    Options ExercisableWeighted
    
    Weighted
    
    
    
    
    
    Weighted
    
    WeightedAverage
    
    Average
    
    
    
    
    
    Average
    
    AverageNumber
    
    Remaining
    
    Exercise
    
    Number
    
    Remaining
    
    ExerciseRange of Exercise Prices
    
    Outstanding
    
    Life
    
    Price
    
    Exercisable
    
    Life
    
    Price(in years)
    
    (in years)$0.78 - $1.68
    
    
    1,674
    
    
    
    7.6
    
    
    $
    1.67
    
    
    
    663
    
    
    
    5.6
    
    
    $
    1.65$1.74 - $2.73
    
    
    5,409
    
    
    
    6.3
    
    
    
    2.17
    
    
    
    229
    
    
    
    8.2
    
    
    
    2.30$4.47 - $8.89
    
    
    2,680
    
    
    
    6.0
    
    
    
    5.94
    
    
    
    874
    
    
    
    5.8
    
    
    
    6.00$11.34 - $15.00
    
    
    3,592
    
    
    
    2.9
    
    
    
    14.41
    
    
    
    3,269
    
    
    
    2.5
    
    
    
    14.66Total
    
    
    13,355
    
    
    
    
    
    
    
    
    
    
    
    5,035
 Stock Appreciation Rights (SAR) Plan
  72




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##### 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, 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
    
    
    
    15.00Forfeited
    
    
    (50
    )
    
    
    15.00
    
    
    
    (3
    )
    
    
    15.00
    
    
    
    (53
    )
    
    
    15.00Balance at March 31, 2009
    
    
    39
    
    
    
    15.00
    
    
    
    543
    
    
    
    15.00
    
    
    
    582
    
    
    
    15.00Forfeited
    
    
    
    
    
    
    15.00
    
    
    
    (18
    )
    
    
    15.00
    
    
    
    (18
    )
    
    
    15.00Balance at March 31, 2010
    
    
    39
    
    
    $
    15.00
    
    
    
    525
    
    
    $
    15.00
    
    
    
    564
    
    
    $
    15.00
 14. Short-Term Debt
   73




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
 15. Concentrations of Risk
   16. Commitments and Contingencies
  Capital
    
    
    OperatingLeases
    
    
    LeasesYear ending March 31:2011
    
    $
    12,793
    
    
    $
    3,5942012
    
    
    7,452
    
    
    
    8822013
    
    
    4,491
    
    
    
    3642014
    
    
    246
    
    
    
    248Total minimum lease payments
    
    
    24,982
    
    
    $
    5,088Less amount representing interest
    
    
    (1,265
    )Present value of capitalized payments
    
    
    23,717Less current portion
    
    
    (12,515
    )Long-term portion
    
    $
    11,202
  74




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
  Year Ended March 31,2010
    
    
    2009
    
    
    2008Beginning balance
    
    $
    11,922
    
    
    $
    1,655
    
    
    $
    610Acquisition of StrataLight
    
    
    
    
    
    
    11,253
    
    
    
    Warranty expense
    
    
    1,604
    
    
    
    3,482
    
    
    
    1,812Claims processed
    
    
    (6,060
    )
    
    
    (4,613
    )
    
    
    (1,003
    )Foreign currency translation and other
    
    
    117
    
    
    
    145
    
    
    
    236Ending balance
    
    $
    7,583
    
    
    $
    11,922
    
    
    $
    1,655
     75




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
 17. Related-Party Transactions
    Opnext Japan, Inc. Related Party Agreements
  Sales Transition Agreement
  Intellectual Property License Agreements
   Opnext Japan Research and Development Agreement
  76




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
  Opnext Research and Development Agreement
   Preferred Provider and Procurement Agreements
  Raw Materials Supply Agreement
  Outsourcing Agreement
  77




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
 Secondment Agreements
  Lease Agreements
  Trademark Indication Agreements
  OPD Related Party Agreements
  Intellectual Property License Agreement
  Secondment Agreements
  78




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
 Lease Agreement
  18. Operating Segments and Geographic Information
 Operating Segments
  Geographic Information
 Year Ended March 31,2010
    
    
    2009
    
    
    2008Sales:North America
    
    $
    144,799
    
    
    $
    158,530
    
    
    $
    166,386Europe
    
    
    97,572
    
    
    
    86,019
    
    
    
    64,501Japan
    
    
    30,015
    
    
    
    42,996
    
    
    
    35,194Asia Pacific, excluding Japan
    
    
    46,746
    
    
    
    31,010
    
    
    
    17,417Total
    
    $
    319,132
    
    
    $
    318,555
    
    
    $
    283,498
  March 31,2010
    
    
    2009Assets:North America
    
    $
    230,851
    
    
    $
    304,029Japan
    
    
    121,122
    
    
    
    126,503Europe
    
    
    18,325
    
    
    
    19,232Total
    
    $
    370,298
    
    
    $
    449,764
  19. Valuation and Qualifying Accounts
 Allowance for Doubtful Accounts
 Year Ended March 31,2010
    
    
    2009
    
    
    2008Beginning balance
    
    $
    1,022
    
    
    $
    335
    
    
    $
    491Charge (reduction) to expense
    
    
    (66
    )
    
    
    718
    
    
    
    (175
    )Deduction and write offs
    
    
    (61
    )
    
    
    
    
    
    
    (23
    )Foreign currency translation and other
    
    
    5
    
    
    
    (31
    )
    
    
    42Ending balance
    
    $
    900
    
    
    $
    1,022
    
    
    $
    335
 79




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
 Tax Valuation Allowance
 Year Ended March 31,2010
    
    
    2009
    
    
    2008Beginning balance
    
    $
    238,264
    
    
    $
    228,461
    
    
    $
    208,495Changes in valuation allowance
    
    
    (11,556
    )
    
    
    8,442
    
    
    
    (9,519
    )Foreign currency translation
    
    
    9,719
    
    
    
    1,361
    
    
    
    29,485Ending balance
    
    $
    236,427
    
    
    $
    238,264
    
    
    $
    228,461
 20. Subsequent Events
  80




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##### 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.
   Managements Annual Report on Internal Controls Over Financial Reporting
 Internal Control  Integrated Framework.
 81




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
on Internal Control Over Financial Reporting
        /s/   ERNST & YOUNG LLP 
 82




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##### Table of Contents



Changes in internal control over financial reporting
  83




---



##### Table of Contents



Item 9B Other Information.
   FOR
    
    WITHHELD
    
    BROKER NON-VOTESMr. William L. Smith
    
    
    69,277,722
    
    
    
    385,068
    
    
    
    4,356,434Mr. Shinjiro Iwata
    
    
    68,438,888
    
    
    
    1,223,902
    
    
    
    4,356,434Mr. Gilles Bouchard
    
    
    68,416,214
    
    
    
    1,246,576
    
    
    
    4,356,434Mr. John F. Otto, Jr.
    
    
    68,094,552
    
    
    
    1,568,238
    
    
    
    4,356,434Mr. Harry L. Bosco
    
    
    68,416,214
    
    
    
    1,246,576
    
    
    
    4,356,434Dr. Isamu Kuru
    
    
    69,274,092
    
    
    
    388,698
    
    
    
    4,356,434
   FOR
    
    AGAINST
    
    ABSTAIN
    
    BROKER NON-VOTES47,106,126
    
    
    
    22,548,337
    
    
    
    8,327
    
    
    
    4,356,434
  FOR
    
    AGAINST
    
    ABSTAIN73,889,983
    
    
    
    112,926
    
    
    
    16,315
 84




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##### Table of Contents



PART III
 
 Item 10. Directors, Executive Officers and Corporate Governance.
  
 Item 11. Executive Compensation.
  
 Item 12. Security Ownership of Certain Beneficial Owners, Management and Related Stockholders
Matters.
  
 Item 13. Certain Relationships and Related Transactions, and Director Independence.
  
 Item 14. Principal Accountant Fees and Services.
  
 PART IV
 
 Item 15.
    
    Exhibits and Financial Statement Schedules.
    85




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##### 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+
    
    Form of Opnext, Inc. 2001 Long-Term Stock Incentive Plan, Stock Appreciation Right Agreement.(1)10.4c+
    
    Form of Amendment to Stock Appreciation Right Agreement.(4)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+
    
    Form of Opnext, Inc. Restricted Stock Agreement.(1)10.8
    
    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)10.9
    
    Research and Development Agreement, dated as of July 31, 2002, by and between Hitachi, Ltd. and Opnext, Inc.,
as amended.(1)10.10
    
    Intellectual Property License Agreement, dated as of July 31, 2001, by and between Hitachi, Ltd. and Opnext
Japan, Inc., as amended.(1)10.11
    
    Intellectual Property License Agreement, dated as of October 1, 2002, by and between Hitachi, Ltd. and Opnext
Japan, Inc., as amended.(1)10.12
    
    Intellectual Property License Agreement, effective as of October 1, 2002, by and between Hitachi Communication
Technologies, Ltd. and Opnext Japan, Inc.(1)10.13
    
    Trademark Indication Agreement, dated as of October 1, 2002, by and between Hitachi, Ltd. and Opnext Japan,
Inc., as amended.(1)10.14
    
    Trademark Indication Agreement, dated as of July 31, 2001, by and between Hitachi, Ltd., Opnext, Inc. and
Opnext Japan, Inc., as amended.(1)10.15
    
    Lease Agreement, made as of July 31, 2001, between Hitachi Communication Technologies, Ltd. and Opnext Japan,
Inc., as amended.(1)10.16
    
    Lease Agreement, made as of October 1, 2002, between Renesas Technology Corp. and Opnext Japan, Inc., as
amended.(1)10.17
    
    Agreement on Bank Transactions between Opnext Japan, Inc. and The Bank of Tokyo-Mitsubishi UFJ, Ltd., as
amended.(1)
 86




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ExhibitNo.
    
    Description of Document10.18
    
    Software User License Agreement, dated as of October 20, 2003, by and between Renesas Technology Corp. and
Opnext Japan, Inc.(1)10.19
    
    Logistics Agreement, effective as of April 1, 2002, between Opnext, Inc. and Hitachi Transport System, Ltd.(1)10.20
    
    Distribution Agreement, dated April 1, 2001, between Hitachi Electronic Devices Sales, Inc. and Opnext Japan,
Inc.(1)10.21
    
    Distribution Agreement, dated April 1, 2003, between Opnext Japan, Inc. and Renesas Technology Sale Co., Ltd.(1)10.22
    
    Distribution Agreement, dated July 1, 2003, between Opnext Japan, Inc. and Hitachi High-Technologies Corp.(1)10.23+
    
    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)10.24+
    
    Non-Competition Agreement, dated as of November 1, 2007, between Opnext, Inc. and Gilles Bouchard.(2)10.25+
    
    Indemnification Agreement, dated as of November 1, 2007, between Opnext, Inc. and Gilles Bouchard.(2)10.26+
    
    Amended and Restated Employment Agreement, dated as of July 29, 2008, between Opnext, Inc. and Michael C.
Chan.(4)10.27+
    
    Amended and Restated Employment Agreement, dated as of December 31, 2008, between Opnext, Inc. and Robert J.
Nobile.(5)10.28+
    
    Amended and Restated Employment Agreement, dated as of May 15, 2009, between Opnext, Inc. and Gilles
Bouchard.(6)10.29+
    
    Opnext, Inc. Second Amended and Restated 2001 Long-Term Stock Incentive Plan, dated as of January 6, 2009.(7)10.30
    
    Lease Agreement, made as of September 15, 2008, between Fremont Ventures LLC and Opnext, Inc.(7)10.31
    
    Lease Agreement, made as of March 14, 2006 , between Los Gatos Business Park and StrataLight Communications,
Inc.(7)10.32
    
    Lease Agreement, made as of February 1, 2008, and amended June 2, 2008, between Los Gatos Business Park and
StrataLight Communications, Inc.(7)10.33+
    
    Employment Agreement, dated as of February 18, 2009, between Opnext, Inc. and Shrichand Dodani.(7)10.34+
    
    First Amendment to Employment Agreement, dated as of May 15, 2009, between Opnext, Inc. and Michael Chan.(6)21
    
    List of Subsidiaries.(7)23.1*
    
    Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm24*
    
    Power of Attorney (set fourth 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 1350, 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.(4)
    
    Filed as an exhibit to Form 10-K/A (Amendment No. 1) as filed with the Securities and
Exchange Commission on July 29, 2008 87




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##### Table of Contents



and incorporated herein by reference.(5)
    
    Filed as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on
January 7, 2009 and incorporated herein by reference.(6)
    
    Filed as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on May
19, 2009 and incorporated herein by reference.(7)
    
    Filed as an exhibit to Form 10-K/A (Amendment No. 1) as filed with the Securities and
Exchange Commission on July 29, 2009 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. 88




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##### Table of Contents



SIGNATURES
  OPNEXT, INC.By:
    /s/  Gilles BouchardGilles Bouchard, President and Chief Executive OfficerBy:
    /s/  Robert J. NobileRobert J. Nobile, Chief Financial Officer andDated: June 14, 2010
    
    Senior Vice President, Finance 89




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##### Table of Contents



POWER OF ATTORNEY
   Signature
    
    Title/s/ Gilles Bouchard

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

Robert J. Nobile
    
    Chief Financial Officer and Senior Vice President, Finance (principal
financial and accounting officer)/s/ Harry L. Bosco

Harry L. Bosco
    
    Director and Chairman of the Board/s/ Dr. David Lee

Dr. David Lee
    
    Director and Co-Chairman of the Board/s/ Charles J. Abbe

Charles J. Abbe
    
    Director/s/ Kendall Cowan

Kendall Cowan
    
    Director/s/ Shinjiro Iwata

Shinjiro Iwata
    
    Director/s/ Dr. Isamu Kuru

Dr. Isamu Kuru
    
    Director/s/ Ryuichi Otsuki

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

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

Philip F. Otto
    
    Director/s/ William L. Smith

William L. Smith
    
    Director
 90




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##### 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+
    
    Form of Opnext, Inc. 2001 Long-Term Stock Incentive Plan, Stock Appreciation Right Agreement.(1)10.4c+
    
    Form of Amendment to Stock Appreciation Right Agreement.(4)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+
    
    Form of Opnext, Inc. Restricted Stock Agreement.(1)10.8
    
    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)10.9
    
    Research and Development Agreement, dated as of July 31, 2002, by and between Hitachi, Ltd. and Opnext, Inc.,
as amended.(1)10.10
    
    Intellectual Property License Agreement, dated as of July 31, 2001, by and between Hitachi, Ltd. and Opnext
Japan, Inc., as amended.(1)10.11
    
    Intellectual Property License Agreement, dated as of October 1, 2002, by and between Hitachi, Ltd. and Opnext
Japan, Inc., as amended.(1)10.12
    
    Intellectual Property License Agreement, effective as of October 1, 2002, by and between Hitachi Communication
Technologies, Ltd. and Opnext Japan, Inc.(1)10.13
    
    Trademark Indication Agreement, dated as of October 1, 2002, by and between Hitachi, Ltd. and Opnext Japan,
Inc., as amended.(1)10.14
    
    Trademark Indication Agreement, dated as of July 31, 2001, by and between Hitachi, Ltd., Opnext, Inc. and
Opnext Japan, Inc., as amended.(1)10.15
    
    Lease Agreement, made as of July 31, 2001, between Hitachi Communication Technologies, Ltd. and Opnext Japan,
Inc., as amended.(1)10.16
    
    Lease Agreement, made as of October 1, 2002, between Renesas Technology Corp. and Opnext Japan, Inc., as
amended.(1)10.17
    
    Agreement on Bank Transactions between Opnext Japan, Inc. and The Bank of Tokyo-Mitsubishi UFJ, Ltd., as
amended.(1)
 91




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##### Table of Contents



ExhibitNo.
    
    Description of Document10.18
    
    Software User License Agreement, dated as of October 20, 2003, by and between Renesas Technology Corp. and
Opnext Japan, Inc.(1)10.19
    
    Logistics Agreement, effective as of April 1, 2002, between Opnext, Inc. and Hitachi Transport System, Ltd.(1)10.20
    
    Distribution Agreement, dated April 1, 2001, between Hitachi Electronic Devices Sales, Inc. and Opnext Japan,
Inc.(1)10.21
    
    Distribution Agreement, dated April 1, 2003, between Opnext Japan, Inc. and Renesas Technology Sale Co., Ltd.(1)10.22
    
    Distribution Agreement, dated July 1, 2003, between Opnext Japan, Inc. and Hitachi High-Technologies Corp.(1)10.23+
    
    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)10.24+
    
    Non-Competition Agreement, dated as of November 1, 2007, between Opnext, Inc. and Gilles Bouchard.(2)10.25+
    
    Indemnification Agreement, dated as of November 1, 2007, between Opnext, Inc. and Gilles Bouchard.(2)10.26+
    
    Amended and Restated Employment Agreement, dated as of July 29, 2008, between Opnext, Inc. and Michael C.
Chan.(4)10.27+
    
    Amended and Restated Employment Agreement, dated as of December 31, 2008, between Opnext, Inc. and Robert J.
Nobile.(5)10.28+
    
    Amended and Restated Employment Agreement, dated as of May 15, 2009, between Opnext, Inc. and Gilles
Bouchard.(6)10.29+
    
    Opnext, Inc. Second Amended and Restated 2001 Long-Term Stock Incentive Plan, dated as of January 6, 2009.(7)10.30
    
    Lease Agreement, made as of September 15, 2008, between Fremont Ventures LLC and Opnext, Inc.(7)10.31
    
    Lease Agreement, made as of March 14, 2006 , between Los Gatos Business Park and StrataLight Communications,
Inc.(7)10.32
    
    Lease Agreement, made as of February 1, 2008, and amended June 2, 2008, between Los Gatos Business Park and
StrataLight Communications, Inc.(7)10.33+
    
    Employment Agreement, dated as of February 18, 2009, between Opnext, Inc. and Shrichand Dodani.(7)10.34+
    
    First Amendment to Employment Agreement, dated as of May 15, 2009, between Opnext, Inc. and Michael Chan.(6)21
    
    List of Subsidiaries.(7)23.1*
    
    Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm24*
    
    Power of Attorney (set fourth 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 1350, 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.(4)
    
    Filed as an exhibit to Form 10-K/A (Amendment No. 1) as filed with the Securities and
Exchange Commission on July 29, 2008 92




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##### Table of Contents



and incorporated herein by reference.(5)
    
    Filed as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on
January 7, 2009 and incorporated herein by reference.(6)
    
    Filed as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on May
19, 2009 and incorporated herein by reference.(7)
    
    Filed as an exhibit to Form 10-K/A (Amendment No. 1) as filed with the Securities and
Exchange Commission on July 29, 2009 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. 93