##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K/A
 Amendment No. 1
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the fiscal year ended March 31, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 001-33306
 OPNEXT, INC.
  Delaware
    
    22-3761205(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification Number)1 Christopher Way, Eatontown, New Jersey
    
    07724(Address of principal executive offices)
    
    (Zip Code)
 (732) 544-3400   Securities registered pursuant to section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 par value
 o þ
 o þ
 þ o
 þ
  Large accelerated
filer o
    
    Accelerated filer o
    
    Non-accelerated
filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



EXPLANATORY NOTE
    TABLE OF CONTENTS
  
 PagePART IIITEM 6.
    
    Selected Consolidated Financial Data
    
    
    3ITEM 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    5ITEM 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    15ITEM 8.
    
    Consolidated Financial Statements and Supplementary Data
    
    
    16ITEM 9A.
    
    Controls and Procedures
    
    
    40PART IVITEM 15.
    
    Exhibits, Financial Statement Schedules
    
    
    41Signatures
    
    
    44EX-23.1: CONSENT OF ERNST & YOUNG LLPEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION
  2




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##### Table of Contents



Item 6. Selected Financial Data
 The following consolidated statements of operations data for the years ended March
31, 2007, 2006 and 2005 and the consolidated balance sheet data as of March 31, 2007
and 2006 have been derived from our audited financial statements as restated and
related notes which are included elsewhere in this document. The consolidated balance
sheet data as of March 31, 2005 and 2004 and the statement of operations data for the
year ended March 31, 2004, have been derived from our audited financial statements and
related notes that do not appear in this document. The consolidated statements of
operations data for the year ended March 31, 2003 and the consolidated balance sheet
data as of March 31, 2003 have been derived from our unaudited financial statements
that do not appear in this document. In the opinion of management, the unaudited
consolidated financial statements have been prepared on the same basis as the audited
financial statements and include all adjustments necessary for the fair presentation of
our financial position and results of operations for the period and as of the date
indicated. Fiscal years 2006 and 2007 were restated as further described in Item 7,
Managements Discussion and Analysis of Financial Condition and Results of Operations,
as well as in Note 2, Restatement of Consolidated Financial Statements, of the Notes
to Consolidated Financial Statements. The consolidated selected financial data set
forth below should be read in conjunction with our consolidated financial statements,
the related notes and Managements Discussion and Analysis of Financial Condition and
Results of Operations included elsewhere in this document. The historical results are
not necessarily indicative of the results to be expected for any future period.
 Historical Financial Data
 Year Ended March 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003(in thousands, except per share data)(as restated)
    
    (as restated)
    
    
    
    
    
    
    
    (unaudited)Consolidated statements of
operations data:Sales
    
    $
    222,859
    
    
    $
    151,691
    
    
    $
    138,432
    
    
    $
    79,390
    
    
    $
    79,915Cost of sales
    
    
    148,753
    
    
    
    120,320
    
    
    
    107,694
    
    
    
    73,144
    
    
    
    74,250Gross margin
    
    
    74,106
    
    
    
    31,371
    
    
    
    30,738
    
    
    
    6,246
    
    
    
    5,66533.3
    %
    
    
    20.7
    %
    
    
    22.2
    %
    
    
    7.9
    %
    
    
    7.1
    %Research and development expenses
    
    
    35,615
    
    
    
    33,669
    
    
    
    33,251
    
    
    
    30,921
    
    
    
    35,960Selling, general, and
administrative expenses
    
    
    40,231
    
    
    
    33,116
    
    
    
    33,629
    
    
    
    33,164
    
    
    
    36,159Loss on disposal of property, plant
and equipment
    
    
    311
    
    
    
    1,065
    
    
    
    50
    
    
    
    5,886
    
    
    
    1,667Asset impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,150
    
    
    
    Other operating expenses
    
    
    
    
    
    
    399
    
    
    
    17
    
    
    
    247
    
    
    
    2,909Operating loss
    
    
    (2,051
    )
    
    
    (36,878
    )
    
    
    (36,209
    )
    
    
    (83,122
    )
    
    
    (71,030
    )Interest income, net
    
    
    3,298
    
    
    
    4,102
    
    
    
    2,138
    
    
    
    2,374
    
    
    
    3,426Other (expense) income
    
    
    (551
    )
    
    
    1,561
    
    
    
    52
    
    
    
    258
    
    
    
    71Income (loss) before income taxes
    
    
    696
    
    
    
    (31,215
    )
    
    
    (34,019
    )
    
    
    (80,490
    )
    
    
    (67,533
    )Income tax (expense) benefit
    
    
    
    
    
    
    (278
    )
    
    
    1,275
    
    
    
    
    
    
    
    Net income (loss)
    
    $
    696
    
    
    $
    (31,493
    )
    
    $
    (32,744
    )
    
    $
    (80,490
    )
    
    $
    (67,533
    )Net income (loss) per share:Basic
    
    $
    0.01
    
    
    $
    (0.61
    )
    
    $
    (0.63
    )
    
    $
    (1.57
    )
    
    $
    (1.35
    )Diluted
    
    $
    0.01
    
    
    $
    (0.61
    )
    
    $
    (0.63
    )
    
    $
    (1.57
    )
    
    $
    (1.35
    )Weighted average number of shares:Basic
    
    
    53,432
    
    
    
    51,945
    
    
    
    51,873
    
    
    
    51,383
    
    
    
    50,000Diluted
    
    
    53,486
    
    
    
    51,945
    
    
    
    51,873
    
    
    
    51,383
    
    
    
    50,000Consolidated balance sheet data:Total assets
    
    $
    367,849
    
    
    $
    215,969
    
    
    $
    291,912
    
    
    $
    322,540
    
    
    $
    365,961Long-term liabilities
    
    
    17,271
    
    
    
    7,716
    
    
    
    2,245
    
    
    
    20,774
    
    
    
    22,339Total shareholders equity
    
    
    290,657
    
    
    
    118,652
    
    
    
    148,176
    
    
    
    177,901
    
    
    
    251,405
 3




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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 years ended March 31, 2007 and 2006.
This information has been derived from our unaudited financial information, which, in
the opinion of management, has been prepared on the same basis as our audited financial
statements and include all adjustments necessary for the fair presentation of the
financial information for the quarters presented. Fiscal years 2006 and 2007 were
restated as further described in Item 7, Managements Discussion and Analysis of
Financial Condition and Results of Operations, as well as in Note 2, Restatement of
Consolidated Financial Statements, of the Notes to Consolidated Financial Statements.
This information should be read in conjunction with the audited financial statements
and related notes included elsewhere in this document.
 Three Months EndedMarch 31,
    
    Dec. 31,
    
    Sept. 30,
    
    June 30,2007
    
    2006
    
    2006
    
    2006(in thousands except per share data)(as restated)
    
    (as restated)
    
    (as restated)
    
    (as restated)Sales
    
    $
    65,376
    
    
    $
    61,736
    
    
    $
    55,323
    
    
    $
    40,424Gross margin
    
    
    22,189
    
    
    
    20,628
    
    
    
    18,513
    
    
    
    12,776Net income (loss)*
    
    
    909
    
    
    
    2,513
    
    
    
    1,233
    
    
    
    (3,959
    )Net income (loss) per share:Basic
    
    
    0.02
    
    
    
    0.05
    
    
    
    0.02
    
    
    
    (0.08
    )Diluted
    
    
    0.02
    
    
    
    0.05
    
    
    
    0.02
    
    
    
    (0.08
    )Weighted average shares outstanding:Basic
    
    
    57,803
    
    
    
    52,008
    
    
    
    52,008
    
    
    
    51,989Diluted
    
    
    58,027
    
    
    
    52,061
    
    
    
    52,059
    
    
    
    51,989
 Three Months EndedMarch 31,
    
    Dec. 31,
    
    Sept. 30,
    
    June 30,2006
    
    2005
    
    2005
    
    2005(in thousands except per share data)(as restated)
    
    (as restated)
    
    (as restated)
    
    (as restated)Sales
    
    $
    46,208
    
    
    $
    38,609
    
    
    $
    35,504
    
    
    $
    31,370Gross margin
    
    
    14,242
    
    
    
    9,963
    
    
    
    3,591
    
    
    
    3,575Net loss
    
    
    (2,576
    )
    
    
    (4,668
    )
    
    
    (12,733
    )
    
    
    (11,516
    )Net loss per share:Basic
    
    
    (0.05
    )
    
    
    (0.09
    )
    
    
    (0.25
    )
    
    
    (0.22
    )Diluted
    
    
    (0.05
    )
    
    
    (0.09
    )
    
    
    (0.25
    )
    
    
    (0.22
    )Weighted average shares outstanding:Basic
    
    
    51,949
    
    
    
    51,945
    
    
    
    51,943
    
    
    
    51,941Diluted
    
    
    51,949
    
    
    
    51,945
    
    
    
    51,943
    
    
    
    51,941
 
 *
    
    Net income for the three months ended March 31, 2007 includes $3.5 million of stock-based compensation expense. 4




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Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 The following discussion includes forward-looking statements that involve risks and uncertainties.
Our actual results could differ substantially from those anticipated as a result of many factors
including those set forth in Risk Factors, included elsewhere in the document. The following
discussion should be read together with our financial statements, the related notes thereto and the
other financial information included elsewhere in the document. The discussion and analysis gives
effect to the restatement of the consolidated financial statements discussed in Note 2,
Restatement of Consolidated Financial Statements, of the Notes to Consolidated Financial
Statements.
 OVERVIEW
       5




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##### Table of Contents



Restatement of Consolidated Financial Statements
   As of March 31, 2007
    
    As of March 31, 2006As
    
    
    
    
    
    
    
    
    
    AsPreviously
    
    Adjust-
    
    As
    
    Previously
    
    Adjust-
    
    AsReported
    
    ments
    
    Restated
    
    Reported
    
    ments
    
    RestatedConsolidated Balance Sheet Data:Inventories, net
    
    $
    65,321
    
    
    $
    (2,761
    )
    
    $
    $62,560
    
    
    $
    45,865
    
    
    $
    (857
    )
    
    $
    45,008Total current assets
    
    
    322,302
    
    
    
    (2,761
    )
    
    
    319,541
    
    
    
    170,975
    
    
    
    (857
    )
    
    
    170,118Total assets
    
    
    370,610
    
    
    
    (2,761
    )
    
    
    367,849
    
    
    
    216,826
    
    
    
    (857
    )
    
    
    215,969Trade payables
    
    
    41,581
    
    
    
    4
    
    
    
    41,585
    
    
    
    26,127
    
    
    
    154
    
    
    
    26,281Total current liabilities
    
    
    59,917
    
    
    
    4
    
    
    
    59,921
    
    
    
    89,447
    
    
    
    154
    
    
    
    89,601Total liabilities
    
    
    77,188
    
    
    
    4
    
    
    
    77,192
    
    
    
    97,163
    
    
    
    154
    
    
    
    97,317Accumulated deficit
    
    
    (279,343
    )
    
    
    (2,765
    )
    
    
    (282,108
    )
    
    
    (281,785
    )
    
    
    (1,019
    )
    
    
    (282,804
    )Accumulated other comprehensive
loss
    
    
    (5,137
    )
    
    
    
    
    
    
    (5,137
    )
    
    
    (5,195
    )
    
    
    8
    
    
    
    (5,187
    )Total shareholders equity
    
    
    293,422
    
    
    
    (2,765
    )
    
    
    290,657
    
    
    
    119,663
    
    
    
    (1,011
    )
    
    
    118,652Total liabilities and
shareholders equity
    
    
    370,610
    
    
    
    (2,761
    )
    
    
    367,849
    
    
    
    216,826
    
    
    
    (857
    )
    
    
    215,969
 For the year ended March 31, 2007
    
    For the year ended March 31, 2006As
    
    
    
    
    
    
    
    
    
    AsPreviously
    
    Adjust-
    
    As
    
    Previously
    
    Adjust-
    
    AsReported
    
    ments
    
    Restated
    
    Reported
    
    ments
    
    RestatedConsolidated Statement of
Operations Data:Cost of sales
    
    $
    146,684
    
    
    $
    2,069
    
    
    $
    148,753
    
    
    $
    119,626
    
    
    $
    694
    
    
    $
    120,320Gross margin
    
    
    76,175
    
    
    
    (2,069
    )
    
    
    74,106
    
    
    
    32,065
    
    
    
    (694
    )
    
    
    31,371Operating income (loss)
    
    
    18
    
    
    
    (2,069
    )
    
    
    (2,051
    )
    
    
    (36,184
    )
    
    
    (694
    )
    
    
    (36,878
    )Other (expense) income, net
    
    
    (874
    )
    
    
    323
    
    
    
    (551
    )
    
    
    1,886
    
    
    
    (325
    )
    
    
    1,561Income (loss) before income taxes
    
    
    2,442
    
    
    
    (1,746
    )
    
    
    696
    
    
    
    (30,196
    )
    
    
    (1,019
    )
    
    
    (31,215
    )Net income (loss)
    
    
    2,442
    
    
    
    (1,746
    )
    
    
    696
    
    
    
    (30,474
    )
    
    
    (1,019
    )
    
    
    (31,493
    )Earnings Per Share: Basic
    
    
    0.05
    
    
    
    (0.04
    )
    
    
    0.01
    
    
    
    (0.59
    )
    
    
    (0.02
    )
    
    
    (0.61
    )Earnings Per Share: Diluted
    
    
    0.05
    
    
    
    (0.04
    )
    
    
    0.01
    
    
    
    (0.59
    )
    
    
    (0.02
    )
    
    
    (0.61
    )Consolidated Statement of Cash
Flows Data:Net income (loss)
    
    $
    2,442
    
    
    $
    (1,746
    )
    
    $
    696
    
    
    $
    (30,474
    )
    
    $
    (1,019
    )
    
    $
    (31,493
    )Inventories
    
    
    (19,459
    )
    
    
    1,904
    
    
    
    (17,555
    )
    
    
    (5,661
    )
    
    
    857
    
    
    
    (4,804
    )Accounts payable
    
    
    15,400
    
    
    
    (150
    )
    
    
    15,250
    
    
    
    2,037
    
    
    
    154
    
    
    
    2,191Net cash used in operating
activities
    
    
    (4,040
    )
    
    
    8
    
    
    
    (4,032
    )
    
    
    (30,173
    )
    
    
    (8
    )
    
    
    (30,181
    )Effect of foreign currency
exchange rates on cash and cash
equivalents
    
    
    (63
    )
    
    
    (8
    )
    
    
    (71
    )
    
    
    (316
    )
    
    
    8
    
    
    
    (308
    )
 6




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Sales
       Cost of Sales and Gross Margin
  7




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##### Table of Contents



Research and Development Costs
  Selling, General and Administrative Expenses
  Significant Accounting Policies
 Revenue Recognition, Warranties and Allowances
    8




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##### Table of Contents



Inventory Valuation
  Income Taxes
    Impairment of Long-Lived Assets
 Accounting for Impairment of
Long-Lived Assets
  Stock-Based Incentive Plans
 Share-Based Payment
 9




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
    
    The time period our stock-based awards are expected to remain
outstanding has been determined based on the average of the original
award period and the remaining vesting period in accordance with the
SECs Staff Accounting Bulletin 107 simplified method. Our expected
term assumption for awards issued during the year ended March 31, 2007
was 6.25 years. As additional evidence develops from our stocks
trading history, the expected term assumption will be refined to
capture the relevant trends.
    
    The future volatility of our stock has been estimated based on the
median calculated value of the historical volatility of companies we
believe should have similar market performance characteristics as
those of our Company. Use of comparable companies is necessary since
we do not possess a sufficient stock price history. Our expected
volatility assumption for awards issued during the year ended March
31, 2007 was 99.3%. As additional evidence develops, the future
volatility estimate will be refined to capture the relevant trends.
    
    A dividend yield of zero has been assumed for awards issued during the
year ended March 31, 2007 based on our actual past experience and the
fact that we do not anticipate paying a dividend on our shares in the
near future.
    
    We have based our risk-free interest rate assumption for awards issued
during the year ended March 31, 2007 on the implied weighted-average
yield of 4.8% available on U.S. Treasury zero-coupon issues with an
equivalent expected term.
    
    Forfeiture rates for awards issued during these same periods have been
estimated based on the Companys actual historical forfeiture trends
of approximately 10%.
 Accounting for Stock-Based Compensation
 Pending Adoption of New Accounting Standards
 Accounting for Uncertainty in
Income Taxes, an interpretation of FASB Statement 109 (FIN 48).
 Fair Value Measurements
 The Fair Value Option for
Financial Assets and Financial Liabilities  Including an amendment of FASB Statement
No. 115
 10




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##### Table of Contents



Results of Operations for the Years Ended March 31, 2007, 2006 and 2005
  Year Ended March 31,
    
    
    Year Ended March 31,2007
    
    
    2006
    
    
    2005
    
    
    2007
    
    
    2006
    
    
    2005(in thousands)
    
    
    
    
    
    
    (as percentage of sales)(as restated)
    
    
    (as restated)
    
    
    
    
    
    
    (as restated)
    
    
    (as restated)Sales
    
    $
    222,859
    
    
    $
    151,691
    
    
    $
    138,432
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales
    
    
    148,753
    
    
    
    120,320
    
    
    
    107,694
    
    
    
    66.7
    %
    
    
    79.3
    %
    
    
    77.8
    %Gross margin
    
    
    74,106
    
    
    
    31,371
    
    
    
    30,738
    
    
    
    33.3
    %
    
    
    20.7
    %
    
    
    22.2
    %Research and development expenses
    
    
    35,615
    
    
    
    33,669
    
    
    
    33,251
    
    
    
    16.0
    %
    
    
    22.2
    %
    
    
    24.0
    %Selling, general and administrative expenses
    
    
    40,231
    
    
    
    33,116
    
    
    
    33,629
    
    
    
    18.1
    %
    
    
    21.8
    %
    
    
    24.3
    %Other operating expenses
    
    
    311
    
    
    
    1,464
    
    
    
    67
    
    
    
    0.1
    %
    
    
    1.0
    %
    
    
    0.0
    %Operating income (loss)
    
    
    (2,051
    )
    
    
    (36,878
    )
    
    
    (36,209
    )
    
    
    (0.9
    )%
    
    
    (24.3
    )%
    
    
    (26.2
    )%Interest income, net
    
    
    3,298
    
    
    
    4,102
    
    
    
    2,138
    
    
    
    1.5
    %
    
    
    2.7
    %
    
    
    1.5
    %Other income, net
    
    
    (551
    )
    
    
    1,561
    
    
    
    52
    
    
    
    (0.2
    )%
    
    
    1.0
    %
    
    
    0.0
    %Income (loss) before income taxes
    
    
    696
    
    
    
    (31,215
    )
    
    
    (34,019
    )
    
    
    0.3
    %
    
    
    (20.6
    )%
    
    
    (24.6
    )%Income tax (expense) benefit
    
    
    
    
    
    
    (278
    )
    
    
    1,275
    
    
    
    0.0
    %
    
    
    (0.2
    )%
    
    
    0.9
    %Net income (loss)
    
    $
    696
    
    
    $
    (31,493
    )
    
    $
    (32,744
    )
    
    
    0.3
    %
    
    
    (20.8
    )%
    
    
    (23.7
    )%
 Comparison of the Years Ended March 31, 2007 and 2006
 Sales.
  Gross Margin.
  11




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##### Table of Contents



Research and Development Expenses.
 Selling, General and Administrative Expenses.
 Other Operating Expenses.
 Interest Income, Net.
 Other (Expense) Income, Net.
 Income Taxes.
  Comparison of the Years Ended March 31, 2006 and 2005
 Sales. 50 150
 12




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##### Table of Contents



Gross Margin.
  Research and Development Expenses.
 Selling, General and Administrative Expenses.
 Other Operating Expenses.
 Interest Income, Net.
 Other Income, Net.
 13




---



##### Table of Contents



Income Taxes.
  Liquidity and Capital Resources
       14




---



##### Table of Contents



Contractual Obligations
  Lessthan
    
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5 YearsCapital lease obligations
    
    $
    17.1
    
    
    $
    4.6
    
    
    $
    9.0
    
    
    $
    3.5
    
    
    $
    Operating lease obligations
    
    
    5.2
    
    
    
    2.6
    
    
    
    1.6
    
    
    
    1.0
    
    
    
    Purchase obligations
    
    
    57.3
    
    
    
    57.3
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    79.6
    
    
    $
    64.5
    
    
    $
    10.6
    
    
    $
    4.5
    
    
    $
    
   Off-Balance Sheet Arrangements
  
 Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
       15




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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
    
    
    16Consolidated Balance Sheets at March 31, 2007 (as restated) and March 31, 2006 (as restated)
    
    
    17Consolidated Statements of Operations for the years ended March 31, 2007 (as restated),
2006 (as restated) and 2005
    
    
    18Consolidated Statements of Shareholders Equity and Comprehensive Income (Loss) for the
years ended March 31, 2007 (as restated), 2006 (as restated) and 2005
    
    
    19Consolidated
Statements of Cash Flows for the years ended March 31, 2007 (as restated), 2006
(as restated) and 2005
    
    
    20Notes to Consolidated Financial Statements
    
    
    21
 
 Report of Independent Registered Public Accounting Firm
       /s/  Ernst & Young LLP 
 16




---



##### Table of Contents



Opnext, Inc.
 
 Consolidated Balance Sheets
 March 31,2007
    
    
    2006(In thousands, except share andper share amounts)(as restated)
    
    
    (as restated)ASSETSCurrent assets:Cash and cash equivalents, including $0
and $8,745 due from related parties at
March 31, 2007 and 2006, respectively
    
    $
    199,786
    
    
    $
    89,358Trade receivables, net, including $3,000
and $6,820 due from related parties at
March 31, 2007 and 2006, respectively
    
    
    53,974
    
    
    
    33,608Inventories, net
    
    
    62,560
    
    
    
    45,008Prepaid expenses and other current assets
    
    
    3,221
    
    
    
    2,144Total current assets
    
    
    319,541
    
    
    
    170,118Property, plant, and equipment, net
    
    
    42,396
    
    
    
    39,926Goodwill
    
    
    5,698
    
    
    
    5,698Other assets
    
    
    214
    
    
    
    227Total assets
    
    $
    367,849
    
    
    $
    215,969LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Trade payables, including $9,264 and
$7,063 due to related parties at March
31, 2007 and 2006, respectively
    
    $
    41,585
    
    
    $
    26,281Accrued expenses
    
    
    14,201
    
    
    
    10,333Short-term debt
    
    
    
    
    
    
    50,942Capital lease obligations
    
    
    4,135
    
    
    
    2,045Total current liabilities
    
    
    59,921
    
    
    
    89,601Capital lease obligations
    
    
    11,858
    
    
    
    6,392Other long-term liabilities
    
    
    5,413
    
    
    
    1,324Total liabilities
    
    
    77,192
    
    
    
    97,317Commitments and contingenciesShareholders equity:Preferred stock, par value $0.01 per
share: 15,000,000 authorized, no shares
issued and outstanding
    
    
    
    
    
    
    Class A common stock, par value $0.01
per share: no shares authorized, issued
or outstanding at March 31, 2007;
authorized 150,000,000, issued and
outstanding 49,999,999 shares at March
31, 2006
    
    
    
    
    
    
    500Class B common stock, par value $0.01
per share: no shares authorized, issued
or outstanding at March 31, 2007,
authorized 178,300,000 shares, issued
and outstanding 1,985,457 at March 31,
2006
    
    
    
    
    
    
    20Common
stock, par value $0.01 per share: authorized 150,000,000 shares, issued
and outstanding 64,549,100 at March 31,
2007, no shares authorized, issued and
outstanding at March 31, 2006
    
    
    645
    
    
    
    Additional paid-in capital
    
    
    577,257
    
    
    
    406,124Unearned compensation
    
    
    
    
    
    
    (1
    )Accumulated deficit
    
    
    (282,108
    )
    
    
    (282,804
    )Accumulated other comprehensive loss
    
    
    (5,137
    )
    
    
    (5,187
    )Total shareholders equity
    
    
    290,657
    
    
    
    118,652Total liabilities and shareholders equity
    
    $
    367,849
    
    
    $
    215,969
  17




---



##### Table of Contents



Opnext, Inc.
 
 Consolidated Statements of Operations
 Year Ended March 31,2007
    
    
    2006
    
    
    2005(In thousands, except per share amounts)(as restated)
    
    
    (as restated)Sales, including $9,671, $24,090
and $30,331 to related parties for
the years ended March 31, 2007,
2006 and 2005, respectively
    
    $
    222,859
    
    
    $
    151,691
    
    
    $
    138,432Cost of sales
    
    
    148,753
    
    
    
    120,320
    
    
    
    107,694Gross margin
    
    
    74,106
    
    
    
    31,371
    
    
    
    30,738Research and development expenses,
including $4,403, $4,171 and $3,389
from related parties for the years
ended March 31, 2007, 2006 and
2005, respectively
    
    
    35,615
    
    
    
    33,669
    
    
    
    33,251Selling, general and administrative
expenses, including $4,557, $4,136
and $3,754 from related parties for
the years ended March 31, 2007,
2006 and 2005, respectively
    
    
    40,231
    
    
    
    33,116
    
    
    
    33,629Other operating expenses
    
    
    311
    
    
    
    1,464
    
    
    
    67Operating income (loss)
    
    
    (2,051
    )
    
    
    (36,878
    )
    
    
    (36,209
    )Interest income, net, including
$42, $2,835, and $1,682 of interest
income from related parties for the
years ended March 31, 2007, 2006
and 2005, respectively
    
    
    3,298
    
    
    
    4,102
    
    
    
    2,138Other (expense) income, net
    
    
    (551
    )
    
    
    1,561
    
    
    
    52Income (loss) before income taxes
    
    
    696
    
    
    
    (31,215
    )
    
    
    (34,019
    )Income tax (expense) benefit
    
    
    
    
    
    
    (278
    )
    
    
    1,275Net income (loss)
    
    $
    696
    
    
    $
    (31,493
    )
    
    $
    (32,744
    )Net income (loss) per share:Basic
    
    $
    0.01
    
    
    $
    (0.61
    )
    
    $
    (0.63
    )Diluted
    
    $
    0.01
    
    
    $
    (0.61
    )
    
    $
    (0.63
    )Weighted average number of shares
used in computing net income (loss)
per shareBasic
    
    
    53,432
    
    
    
    51,945
    
    
    
    51,873Diluted
    
    
    53,486
    
    
    
    51,945
    
    
    
    51,873
  18




---



##### Table of Contents



Opnext, Inc.
 
 Consolidated Statements of Shareholders Equity and Comprehensive Income (Loss)
Years ended March 31, 2007, 2006 and 2005
 Class A
    
    
    Class B
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Retained
    
    
    AccumulatedCommon Stock
    
    
    Common Stock
    
    
    Common Stock
    
    
    
    
    
    
    Additional
    
    
    Earnings
    
    
    OtherNumber
    
    
    Par
    
    
    Number
    
    
    Par
    
    
    Number
    
    
    Par
    
    
    Unearned
    
    
    Paid-In
    
    
    (Accumulated
    
    
    Comprehensive
    
    
    Shareholders
    
    
    Comprehensiveof Shares
    
    
    Value
    
    
    of Shares
    
    
    Value
    
    
    of Shares
    
    
    Value
    
    
    Compensation
    
    
    Capital
    
    
    Deficit)
    
    
    Loss
    
    
    Equity
    
    
    Income (Loss)(In thousands, except share amounts)Balance at March
31, 2004
    
    
    49,999,999
    
    
    $
    500
    
    
    
    1,695,951
    
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    (49
    )
    
    
    404,121
    
    
    
    (218,567
    )
    
    
    (8,121
    )
    
    
    177,901Issuance of
restricted stock
    
    
    
    
    
    
    
    
    
    
    216,661
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )Compensation
expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36Stock options
exercised
    
    
    
    
    
    
    
    
    
    
    28,831
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25
    
    
    
    
    
    
    
    
    
    
    
    25Non-employee stock
option expense to
related parties
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,945
    
    
    
    
    
    
    
    
    
    
    
    1,945Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (32,744
    )
    
    
    
    
    
    
    (32,744
    )
    
    $
    (32,744
    )Foreign currency
translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,013
    
    
    
    1,013
    
    
    
    1,013Total
comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (31,731
    )Balance at March
31, 2005
    
    
    49,999,999
    
    
    
    500
    
    
    
    1,941,443
    
    
    
    19
    
    
    
    
    
    
    
    
    
    
    
    (13
    )
    
    
    406,089
    
    
    
    (251,311
    )
    
    
    (7,108
    )
    
    
    148,176Compensation
expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12Stock options
exercised
    
    
    
    
    
    
    
    
    
    
    44,014
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35
    
    
    
    
    
    
    
    
    
    
    
    36Net loss (as
restated)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (31,493
    )
    
    
    
    
    
    
    (31,493
    )
    
    $
    (31,493
    )Foreign currency
translation
adjustment (as
restated)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,921
    
    
    
    1,921
    
    
    
    1,921Total
comprehensive loss
(as restated)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (29,572
    )Balance at March
31, 2006 (as
restated)
    
    
    49,999,999
    
    
    
    500
    
    
    
    1,985,457
    
    
    
    20
    
    
    
    
    
    
    $
    
    
    
    $
    (1
    )
    
    $
    406,124
    
    
    $
    (282,804
    )
    
    $
    (5,187
    )
    
    $
    118,652Conversion of
Common Stock
    
    
    (49,999,999
    )
    
    
    (500
    )
    
    
    (1,985,457
    )
    
    
    (20
    )
    
    
    51,985,456
    
    
    
    520
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Compensation
Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    229
    
    
    
    
    
    
    
    
    
    
    
    230Stock options
Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,238
    
    
    
    
    
    
    
    
    
    
    
    46
    
    
    
    
    
    
    
    
    
    
    
    46Net proceeds from
initial public
offering
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,536,406
    
    
    
    125
    
    
    
    
    
    
    
    170,858
    
    
    
    
    
    
    
    
    
    
    
    170,983Net income (as
restated)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    696
    
    
    
    
    
    
    
    696
    
    
    
    696Foreign currency
translation
adjustment (as
restated)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50
    
    
    
    50
    
    
    
    50Total
comprehensive
income (as
restated)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    746Balance at March
31, 2007 (as
restated)
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    64,549,100
    
    
    $
    645
    
    
    $
    
    
    
    $
    577,257
    
    
    $
    (282,108
    )
    
    $
    (5,137
    )
    
    $
    290,657
  19




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##### Table of Contents



Opnext, Inc.
 
 Consolidated Statements of Cash Flows
 Year Ended March 31,2007
    
    
    2006
    
    
    2005(Dollars in thousands)(as restated)
    
    
    (as restated)Cash flows from operating activitiesNet income (loss)
    
    $
    696
    
    
    $
    (31,493
    )
    
    $
    (32,744
    )Adjustments to reconcile net income (loss) to net cash used in
operating activities:Depreciation and amortization
    
    
    10,305
    
    
    
    12,579
    
    
    
    12,567Compensation expense
    
    
    3,552
    
    
    
    12
    
    
    
    36Loss on disposal of property, plant and equipment
    
    
    311
    
    
    
    1,065
    
    
    
    50Non-employee stock option expense to related parties
    
    
    
    
    
    
    
    
    
    
    1,945Changes in assets and liabilities:Trade receivables, net
    
    
    (17,155
    )
    
    
    (11,116
    )
    
    
    (2,051
    )Inventories, net
    
    
    (17,555
    )
    
    
    (4,804
    )
    
    
    (9,927
    )Prepaid expenses and other current assets
    
    
    (1,184
    )
    
    
    (615
    )
    
    
    1,264Other assets
    
    
    (12
    )
    
    
    433
    
    
    
    12Trade payables
    
    
    15,250
    
    
    
    2,191
    
    
    
    14,860Accrued expenses and other liabilities
    
    
    1,760
    
    
    
    1,567
    
    
    
    (13,359
    )Net cash used in operating activities
    
    
    (4,032
    )
    
    
    (30,181
    )
    
    
    (27,347
    )Cash flows from investing activitiesCapital expenditures
    
    
    (3,142
    )
    
    
    (3,115
    )
    
    
    (4,438
    )Net cash used in investing activities
    
    
    (3,142
    )
    
    
    (3,115
    )
    
    
    (4,438
    )Cash flows from financing activitiesShort-term debt payments, net
    
    
    (50,892
    )
    
    
    (25,313
    )
    
    
    (1,305
    )Payments on capital lease obligations
    
    
    (2,464
    )
    
    
    (1,265
    )
    
    
    (681
    )Payment to Hitachi, Ltd.
    
    
    
    
    
    
    (20,000
    )
    
    
    Exercise of stock options
    
    
    46
    
    
    
    36
    
    
    
    25Net proceeds from initial public offering
    
    
    170,983
    
    
    
    
    
    
    
    Net cash provided by (used in) financing activities
    
    
    117,673
    
    
    
    (46,542
    )
    
    
    (1,961
    )Effect of foreign currency exchange rates on cash and cash equivalents
    
    
    (71
    )
    
    
    (308
    )
    
    
    35Increase (decrease) in cash and cash equivalents
    
    
    110,428
    
    
    
    (80,146
    )
    
    
    (33,711
    )Cash and cash equivalents at beginning of year
    
    
    89,358
    
    
    
    169,504
    
    
    
    203,215Cash and cash equivalents at end of year
    
    $
    199,786
    
    
    $
    89,358
    
    
    $
    169,504Supplemental cash flow informationCash paid during the year for:Interest
    
    $
    531
    
    
    $
    535
    
    
    $
    477Income taxes
    
    
    
    
    
    
    278
    
    
    
    Non-cash financing activitiesCapital lease obligations incurred
    
    $
    (10,265
    )
    
    $
    (7,882
    )
    
    $
    (2,188
    )
  20




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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
        Current assets
    
    $
    1,428Non-current tangible assets
    
    
    3,325Goodwill
    
    
    5,698Unearned compensation
    
    
    109Current liabilities
    
    
    (3,646
    )Non-current liabilities
    
    
    (1,721
    )$
    5,193
    21




---



##### Table of Contents



Opnext, Inc.
Notes to Consolidated Financial Statements  (Continued)
(In thousands, except per share amounts)
 2. Restatement of Consolidated Financial Statements
   As of March 31, 2007
    
    As of March 31, 2006As
    
    
    
    
    
    
    
    
    
    AsPreviously
    
    
    
    
    
    As
    
    Previously
    
    
    
    
    
    AsReported
    
    Adjustments
    
    Restated
    
    Reported
    
    Adjustments
    
    RestatedConsolidated Balance
Sheet Data:Inventories, net
    
    $
    65,321
    
    
    $
    (2,761
    )
    
    $
    $62,560
    
    
    $
    45,865
    
    
    $
    (857
    )
    
    $
    45,008Total current assets
    
    
    322,302
    
    
    
    (2,761
    )
    
    
    319,541
    
    
    
    170,975
    
    
    
    (857
    )
    
    
    170,118Total assets
    
    
    370,610
    
    
    
    (2,761
    )
    
    
    367,849
    
    
    
    216,826
    
    
    
    (857
    )
    
    
    215,969Trade payables
    
    
    41,581
    
    
    
    4
    
    
    
    41,585
    
    
    
    26,127
    
    
    
    154
    
    
    
    26,281Total current liabilities
    
    
    59,917
    
    
    
    4
    
    
    
    59,921
    
    
    
    89,447
    
    
    
    154
    
    
    
    89,601Total liabilities
    
    
    77,188
    
    
    
    4
    
    
    
    77,192
    
    
    
    97,163
    
    
    
    154
    
    
    
    97,317Accumulated deficit
    
    
    (279,343
    )
    
    
    (2,765
    )
    
    
    (282,108
    )
    
    
    (281,785
    )
    
    
    (1,019
    )
    
    
    (282,804
    )Accumulated other
comprehensive loss
    
    
    (5,137
    )
    
    
    
    
    
    
    (5,137
    )
    
    
    (5,195
    )
    
    
    8
    
    
    
    (5,187
    )Total shareholders equity
    
    
    293,422
    
    
    
    (2,765
    )
    
    
    290,657
    
    
    
    119,663
    
    
    
    (1,011
    )
    
    
    118,652Total liabilities and
shareholders equity
    
    $
    370,610
    
    
    $
    (2,761
    )
    
    $
    367,849
    
    
    $
    216,826
    
    
    $
    (857
    )
    
    $
    215,969
 For the year ended March 31, 2007
    
    For the year ended March 31, 2006As
    
    
    
    
    
    
    
    
    
    AsPreviously
    
    
    
    
    
    As
    
    Previously
    
    
    
    
    
    AsReported
    
    Adjustments
    
    Restated
    
    Reported
    
    Adjustments
    
    RestatedConsolidated Statement of
Operations Data:Cost of sales
    
    $
    146,684
    
    
    $
    2,069
    
    
    $
    148,753
    
    
    $
    119,626
    
    
    $
    694
    
    
    $
    120,320Gross margin
    
    
    76,175
    
    
    
    (2,069
    )
    
    
    74,106
    
    
    
    32,065
    
    
    
    (694
    )
    
    
    31,371Operating income (loss)
    
    
    18
    
    
    
    (2,069
    )
    
    
    (2,051
    )
    
    
    (36,184
    )
    
    
    (694
    )
    
    
    (36,878
    )Other (expense) income, net
    
    
    (874
    )
    
    
    323
    
    
    
    (551
    )
    
    
    1,886
    
    
    
    (325
    )
    
    
    1,561Income (loss) before income taxes
    
    
    2,442
    
    
    
    (1,746
    )
    
    
    696
    
    
    
    (30,196
    )
    
    
    (1,019
    )
    
    
    (31,215
    )Net income (loss)
    
    
    2,442
    
    
    
    (1,746
    )
    
    
    696
    
    
    
    (30,474
    )
    
    
    (1,019
    )
    
    
    (31,493
    )Earnings Per Share: Basic
    
    
    0.05
    
    
    
    (0.04
    )
    
    
    0.01
    
    
    
    (0.59
    )
    
    
    (0.02
    )
    
    
    (0.61
    )Earnings Per Share: Diluted
    
    $
    0.05
    
    
    $
    (0.04
    )
    
    $
    0.01
    
    
    $
    (0.59
    )
    
    $
    (0.02
    )
    
    $
    (0.61
    )Consolidated Statement of Cash
Flows Data:Net income
    
    $
    2,442
    
    
    $
    (1,746
    )
    
    $
    696
    
    
    $
    (30,474
    )
    
    $
    (1,019
    )
    
    $
    (31,493
    )Inventories
    
    
    (19,459
    )
    
    
    1,904
    
    
    
    (17,555
    )
    
    
    (5,661
    )
    
    
    857
    
    
    
    (4,804
    )Accounts payable
    
    
    15,400
    
    
    
    (150
    )
    
    
    15,250
    
    
    
    2,037
    
    
    
    154
    
    
    
    2,191Net cash used in operating
activities
    
    
    (4,040
    )
    
    
    8
    
    
    
    (4,032
    )
    
    
    (30,173
    )
    
    
    (8
    )
    
    
    (30,181
    )Effect of foreign currency
exchange rates on cash and cash
equivalents
    
    $
    (63
    )
    
    $
    (8
    )
    
    $
    (71
    )
    
    $
    (316
    )
    
    $
    8
    
    
    $
    (308
    )
 22




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(In thousands, except per share amounts)
 3. Summary of Significant Accounting Policies
 Principles of Consolidation
  Use of Estimates
  Revenue Recognition
  Warranties
  Research and Development Costs
  Shipping and Handling Costs
  Foreign Currency Transactions and Translation
   23




---



##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(In thousands, except per share amounts)
 Accounting for Derivative Instruments and Hedging Activities, as amended by SFAS No.
149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities.
  Net Income (Loss) per Common Share
 Earnings Per Share
 Cash and Cash Equivalents
  Trade Receivables
  Inventories
  Property, Plant, and Equipment and Internal Use Software
  24




---



##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(In thousands, except per share amounts)
  Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use
 Impairment of Long-Lived Assets
 Accounting for Impairment of Long-Lived Assets
  Goodwill and Business Combinations
 Business Combinations Goodwill and Other Intangible Assets
 Income Taxes
   Fair Value of Financial Instruments
  Stock-Based Incentive Plans
 Share-Based Payment
 25




---



##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(In thousands, except per share amounts)
  
    
    The time period that stock based awards are expected to remain
outstanding has been determined based on the average of the original
award period and the remaining vesting period in accordance with the
SECsshort-cut approach pursuant to SAB No. 107, Disclosure About Fair Value of
Financial Statements. The expected term assumption for awards issued during
the twelve-month period ended March 31, 2007 was 6.25 years. As additional
evidence develops from the Companys stock trading history, the expected term
assumption will be refined to capture the relevant trends.
    
    The future volatility of the Companys stock has been 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 is necessary
since the Company does not possess a sufficient stock price history.
The expected volatility assumption for awards issued during the
twelve-month period ending March 31, 2007 was 99.3%. As additional
evidence develops, the future volatility estimate will be refined to
capture the relevant trends.
    
    A dividend yield of zero has been assumed for awards issued during the
twelve-month period ended March 31, 2007 based on the Companys actual
past experience and the fact that Company does not anticipate paying a
dividend on its shares in the near future.
    
    The Company has based its risk-free interest rate assumption for
awards issued during the twelve-month period ended March 31, 2007 on
the implied yield available on U.S. Treasury zero-coupon issues with
an equivalent expected term, which was 4.8% during the period.
    
    The forfeiture rate for awards issued during the twelve-month period
ended March 31, 2007 was approximately 10% and was based on the
Companys actual historical forfeiture trend.
 Accounting for Stock-Based Compensation, Valuation of
Privately-Held Company Equity Securities Issued as Compensation
  Year EndedMarch 31,2006
    
    
    2005Dividend yield
    
    
    0.00
    %
    
    
    0.00
    %Expected volatility
    
    
    1.00
    %
    
    
    1.00
    %Risk free interest rate
    
    
    5.10
    %
    
    
    4.18
    %Expected holding period (in years)
    
    
    5
    
    
    
    5
 26




---



##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(In thousands, except per share amounts)
  Year Ended March 31,2006
    
    
    2005(as restated)Net loss
    
    $
    (31,493
    )
    
    $
    (32,744
    )Compensation expense included in net loss
    
    
    12
    
    
    
    36Pro forma compensation income (expense)
    
    
    60
    
    
    
    (323
    )Pro forma net loss
    
    $
    (31,421
    )
    
    $
    (33,031
    )Pro forma net loss per share basic and diluted
    
    $
    (0.61
    )
    
    $
    (0.64
    )Weighted average number of shares used in
computing pro forma net loss per share, basic
and diluted
    
    
    51,945
    
    
    
    51,873
 Accounting for Equity Instruments That Are Issued to
Other Than Employees for Acquiring, or in Conjunction with Selling Goods or Services
 Pending Adoption of New Accounting Pronouncements
 Accounting for Uncertainty in
Income Taxes, an interpretation of FASB Statement 109 (FIN 48).
 Fair Value Measurements
 The Fair Value Option for
Financial Assets and Financial Liabilities  Including an amendment of FASB Statement
No. 115
 27




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(In thousands, except per share amounts)
 4. Inventories
  March 31,2007
    
    
    2006(as restated)
    
    
    (as restated)Raw materials
    
    $
    31,881
    
    
    $
    23,033Work in process
    
    
    15,478
    
    
    
    13,224Finished goods
    
    
    15,201
    
    
    
    8,751Inventories, net
    
    $
    62,560
    
    
    $
    45,008
  5. Property, Plant, and Equipment
  March 31,2007
    
    
    2006Machinery, electronic, and other equipment
    
    $
    165,404
    
    
    $
    166,845Computer software
    
    
    11,153
    
    
    
    9,724Building improvements
    
    
    4,877
    
    
    
    4,541Construction in progress
    
    
    7,767
    
    
    
    496Total property, plant, and equipment
    
    
    189,201
    
    
    
    181,606Less accumulated depreciation and amortization
    
    
    (146,805
    )
    
    
    (141,680
    )Property, plant, and equipment, net
    
    $
    42,396
    
    
    $
    39,926
  6. Income Taxes
  Year Ended March 31,2007
    
    
    2006
    
    
    2005(as restated)
    
    
    (as restated)United States
    
    $
    (7,850
    )
    
    $
    (10,252
    )
    
    $
    (16,199
    )Foreign
    
    
    8,546
    
    
    
    (20,963
    )
    
    
    (17,820
    )Income (loss) before income taxes
    
    $
    696
    
    
    $
    (31,215
    )
    
    $
    (34,019
    )
 28




---



##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(In thousands, except per share amounts)
  Year Ended March 31,2007
    
    
    2006
    
    
    2005(as
restated)
    
    

(as
restated)U.S. Federal statutory income tax rate
    
    
    35.0
    %
    
    
    (35.0
    )%
    
    
    (35.0
    )%State and local income taxes, net of Federal income tax effect
    
    
    (52.1
    )
    
    
    (1.8
    )
    
    
    (2.5
    )Foreign earnings taxed at different rates
    
    
    71.8
    
    
    
    (3.7
    )
    
    
    (3.0
    )Change in valuation allowance
    
    
    (270.6
    )
    
    
    48.6
    
    
    
    41.3Long-term investment foreign currency transaction losses
    
    
    
    
    
    
    (7.0
    )
    
    
    Income tax reserve adjustment
    
    
    
    
    
    
    
    
    
    
    (3.7
    )Stock based compensation
    
    
    188.6
    
    
    
    
    
    
    
    Other
    
    
    27.3
    
    
    
    (0.2
    )
    
    
    (0.8
    )Effective income tax rate
    
    
    0.0
    %
    
    
    0.9
    %
    
    
    (3.7
    )%
  March 31,2007
    
    
    2006(as restated)
    
    
    (as restated)Net deferred income tax assets:Net operating loss, capital loss and credit carryforwards
    
    $
    165,714
    
    
    $
    157,852Intellectual property and goodwill
    
    
    19,313
    
    
    
    32,124Inventory and other reserves
    
    
    17,383
    
    
    
    15,623Non-employee stock option expense to related parties
    
    
    9,387
    
    
    
    9,387Capital leases and property, plant, and equipment
    
    
    (2,065
    )
    
    
    (3,154
    )Other
    
    
    (1,237
    )
    
    
    950Valuation allowance
    
    
    (208,495
    )
    
    
    (212,782
    )Total net deferred tax assets
    
    $
    
    
    
    $
    
   29




---



##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(In thousands, except per share amounts)
   7. Stockholders Equity
   8. Net Income (Loss) Per Share
   Year Ended March 31,2007
    
    
    2006
    
    
    2005(as restated)
    
    
    (as restated)Numerator:Net income (loss), basic and diluted
    
    $
    696
    
    
    $
    (31,493
    )
    
    $
    (32,744
    )Denominator:Weighted average shares outstanding  basic
    
    
    53,432
    
    
    
    51,945
    
    
    
    51,873Effect of potentially dilutive options
    
    
    54
    
    
    
    
    
    
    
    Weighted average shares outstanding  diluted
    
    
    53,486
    
    
    
    51,945
    
    
    
    51,873Basic net income (loss) per share
    
    $
    0.01
    
    
    $
    (0.61
    )
    
    $
    (0.63
    )Diluted net income (loss) per share
    
    $
    0.01
    
    
    $
    (0.61
    )
    
    $
    (0.63
    )
 30




---



##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(In thousands, except per share amounts)
  Year Ended March 31,2007
    
    
    2006
    
    
    2005Stock options
    
    
    4,387
    
    
    
    4,437
    
    
    
    4,551Stock appreciation rights
    
    
    664
    
    
    
    669
    
    
    
    567Total options and stock appreciation rights
    
    
    5,051
    
    
    
    5,106
    
    
    
    5,118
 9. Comprehensive Income (Loss)
  Year Ended March 31,2007
    
    
    2006
    
    
    2005(as restated)
    
    
    (as restated)Net income (loss)
    
    $
    696
    
    
    $
    (31,493
    )
    
    $
    (32,744
    )Foreign currency translation adjustment
    
    
    50
    
    
    
    1,921
    
    
    
    1,013Comprehensive income (loss)
    
    $
    746
    
    
    $
    (29.572
    )
    
    $
    (31,731
    )
  10. Employee Benefits
   11. Stock-Based Incentive Plans
  31




---



##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(In thousands, except per share amounts)
 Restricted Stock
  Stock Options
     Options Outstanding
    
    Options ExercisableWeighted
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    AverageNumber
    
    Remaining
    
    Number
    
    RemainingExercise Price
    
    Outstanding
    
    Life
    
    Exercisable
    
    Life(In years)
    
    
    
    
    
    (In years)$0.78
    
    
    47
    
    
    
    4.6
    
    
    
    47
    
    
    
    4.6$2.73
    
    
    13
    
    
    
    6.2
    
    
    
    13
    
    
    
    6.2$15.00
    
    
    4,411
    
    
    
    4.4
    
    
    
    4,219
    
    
    
    4.3$14.81
    
    
    4,471
    
    
    
    
    
    
    
    4,279
 32




---



##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(In thousands, except per share amounts)
 Stock Appreciation Rights (SARs) Plan
    Opnext Options
    
    
    Pine Options
    
    
    Total Stock Options
    
    
    SARsWeighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    Exercise
    
    
    
    
    
    
    Exercise
    
    
    
    
    
    
    ExerciseShares
    
    
    Price
    
    
    Shares
    
    
    Price
    
    
    Shares
    
    
    Price
    
    
    Shares
    
    
    PriceBalance at March
31, 2004
    
    
    4,157
    
    
    $
    15.00
    
    
    
    199
    
    
    $
    1.10
    
    
    
    4,356
    
    
    $
    14.37
    
    
    
    294
    
    
    $
    15.00Granted
    
    
    260
    
    
    
    15.00
    
    
    
    
    
    
    
    
    
    
    
    260
    
    
    
    15.00
    
    
    
    295
    
    
    
    15.00Forfeited
    
    
    (15
    )
    
    
    15.00
    
    
    
    (21
    )
    
    
    1.58
    
    
    
    (36
    )
    
    
    7.18
    
    
    
    (22
    )
    
    
    15.00Exercised
    
    
    
    
    
    
    
    
    
    
    (29
    )
    
    
    0.91
    
    
    
    (29
    )
    
    
    0.91
    
    
    
    
    
    
    
    Balance at March
31, 2005
    
    
    4,402
    
    
    
    15.00
    
    
    
    149
    
    
    
    1.07
    
    
    
    4,551
    
    
    
    14.54
    
    
    
    567
    
    
    
    15.00Granted
    
    
    17
    
    
    
    15.00
    
    
    
    
    
    
    
    
    
    
    
    17
    
    
    
    15.00
    
    
    
    154
    
    
    
    15.00Forfeited
    
    
    (75
    )
    
    
    15.00
    
    
    
    (12
    )
    
    
    1.20
    
    
    
    (87
    )
    
    
    13.12
    
    
    
    (52
    )
    
    
    15.00Exercised
    
    
    
    
    
    
    
    
    
    
    (44
    )
    
    
    0.84
    
    
    
    (44
    )
    
    
    0.84
    
    
    
    
    
    
    
    Balance at March
31, 2006
    
    
    4,344
    
    
    
    15.00
    
    
    
    93
    
    
    
    1.16
    
    
    
    4,437
    
    
    
    14.71
    
    
    
    669
    
    
    
    15.00Granted
    
    
    90
    
    
    
    15.00
    
    
    
    
    
    
    
    
    
    
    
    90
    
    
    
    15.00
    
    
    
    52
    
    
    
    15.00Forfeited
    
    
    (22
    )
    
    
    15.00
    
    
    
    (7
    )
    
    
    1.45
    
    
    
    (29
    )
    
    
    11.67
    
    
    
    (54
    )
    
    
    15.00Exercised
    
    
    (1
    )
    
    
    
    
    
    
    (26
    )
    
    
    0.96
    
    
    
    (27
    )
    
    
    1.64
    
    
    
    (3
    )
    
    
    15.00Balance at March
31, 2007
    
    
    4,411
    
    
    $
    15.00
    
    
    
    60
    
    
    $
    1.22
    
    
    
    4,471
    
    
    $
    14.81
    
    
    
    664
    
    
    $
    15.00
 12. Short-Term Debt
  33




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(In thousands, except per share amounts)
 13. Concentrations of Risk
   14. Commitments and Contingencies
  Capital
    
    
    OperatingLeases
    
    
    LeasesYear ending March 31:2008
    
    $
    4,542
    
    
    $
    2,5752009
    
    
    4,405
    
    
    
    8272010
    
    
    4,553
    
    
    
    7862011
    
    
    3,546
    
    
    
    7862012
    
    
    
    
    
    
    262Total minimum lease payments
    
    
    17,046
    
    
    $
    5,236Less amount representing interest
    
    
    (1,053
    )Present value of capitalized payments
    
    
    15,993Less current portion
    
    
    4,135Long-term portion
    
    $
    11,858
  34




---



##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(In thousands, except per share amounts)
  Year Ended March 31,2007
    
    
    2006
    
    
    2005Beginning balance
    
    $
    551
    
    
    $
    834
    
    
    $
    891Claims paid
    
    
    (525
    )
    
    
    (737
    )
    
    
    (631
    )Warranty expense
    
    
    592
    
    
    
    521
    
    
    
    597Foreign currency translation and other
    
    
    (8
    )
    
    
    (67
    )
    
    
    (23
    )Ending balance
    
    $
    610
    
    
    $
    551
    
    
    $
    834
 15. Other Operating Expenses
  Year Ended March 31,2007
    
    
    2006
    
    
    2005Loss on disposal of property, plant, and equipment
    
    $
    311
    
    
    $
    1,065
    
    
    $
    50Severance
    
    
    
    
    
    
    53
    
    
    
    17Subsidiary stock registration fee
    
    
    
    
    
    
    346
    
    
    
    $
    311
    
    
    $
    1,464
    
    
    $
    67
 16. Related Party Transactions
    35




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(In thousands, except per share amounts)
 Opnext Japan, Inc. Related Party Agreements
  Sales Transition Agreement
  Intellectual Property License Agreements
   Opnext Japan Research and Development Agreement
  Opnext Research and Development Agreement
   36




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(In thousands, except per share amounts)
 Preferred Provider and Procurement Agreements
  Raw Materials Supply Agreement
  Outsourcing Agreement
  Secondment Agreements
  Lease Agreements
   37




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(In thousands, except per share amounts)
 Trademark Indication Agreements
  OPD Related Party Agreements
  Intellectual Property License Agreement
  Secondment Agreements
  Lease Agreement
  17. Operating Segments and Geographic Information
 Operating Segments
  Geographic Information
 Year Ended March 31,2007
    
    
    2006
    
    
    2005Sales:United States
    
    $
    123,026
    
    
    $
    72,700
    
    
    $
    61,045Europe
    
    
    58,183
    
    
    
    34,240
    
    
    
    31,966Japan
    
    
    30,222
    
    
    
    38,930
    
    
    
    43,511Asia Pacific
    
    
    11,428
    
    
    
    5,821
    
    
    
    1,910Total
    
    $
    222,859
    
    
    $
    151,691
    
    
    $
    138,432
 38




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(In thousands, except per share amounts)
  March 31,2007
    
    
    2006(as restated)
    
    
    (as restated)Assets:United States
    
    $
    240,985
    
    
    $
    111,730Japan
    
    
    106,880
    
    
    
    91,674Europe
    
    
    19,984
    
    
    
    12,565Total
    
    $
    367,849
    
    
    $
    215,969
  18. Valuation and Qualifying Accounts
 Allowance for Doubtful Accounts
 Year Ended March 31,2007
    
    
    2006
    
    
    2005Beginning balance
    
    $
    293
    
    
    $
    291
    
    
    $
    282Deduction and write offs
    
    
    (48
    )
    
    
    14
    
    
    
    (2
    )Charge to expense
    
    
    213
    
    
    
    
    
    
    
    Foreign currency translation and other
    
    
    33
    
    
    
    (12
    )
    
    
    11Ending balance
    
    $
    491
    
    
    $
    293
    
    
    $
    291
 Tax Valuation Allowance
 Year Ended March 31,2007
    
    
    2006
    
    
    2005(as restated)
    
    
    (as restated)Beginning balance
    
    $
    212,782
    
    
    $
    214,204
    
    
    $
    204,554Changes in valuation allowance
    
    
    (4,225
    )
    
    
    14,160
    
    
    
    14,417Foreign currency translation
    
    
    (62
    )
    
    
    (15,582
    )
    
    
    (4,767
    )Ending balance
    
    $
    208,495
    
    
    $
    212,782
    
    
    $
    214,204
 19. Subsequent Events
    39




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##### Table of Contents



ITEM 9A. CONTROLS AND PROCEDURES (As Restated)
 Evaluation of Disclosure Controls and Procedures
     Changes in Internal Control Over Financial Reporting
  40




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##### Table of Contents



PART IV
 
 Item 15. Exhibits, Financial Statement Schedules.
 All financial statements.
 Financial statement schedules.
 Exhibits.
 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)
 41




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##### Table of Contents



ExhibitNo.
    
    Description of Document10.4+
    
    Form of Opnext, Inc. 2001 Long-Term Stock Incentive Plan, Nonqualified Stock Option
Agreement.(1)10.4a+
    
    Form of Opnext, Inc. 2001 Long-Term Stock Incentive Plan, Nonqualified Stock Option Agreement
for Senior Executives.(1)10.4b+
    
    Opnext, Inc. Nonqualified Stock Option Agreement dated as of November 1, 2004, between Opnext,
Inc. and Harry L. Bosco (Participant).(1)10.4c+
    
    Form of Opnext, Inc. 2001 Long-Term Stock Incentive Plan, Stock Appreciation Right
Agreement.(1)10.4d+*
    
    Form of Amendment to Stock Appreciation Right Agreement.10.5
    
    Form of Hitachi, Ltd. and Clarity Management, L.P. Nonqualified Stock Option Agreement.(1)10.6+
    
    Opnext, Inc. Amended and Restated 2001 Long-Term Stock Incentive Plan.(1)10.7+
    
    Employment Agreement, entered into as of July 31, 2001, by and between Opnext, Inc. and Harry
L. Bosco, as amended.(1)10.8+
    
    Employment Agreement, entered into as of August 24, 2001, by and between Opnext, Inc. and
Michael C. Chan, as amended.(1)10.9+
    
    Employment Agreement, entered into as of August 24, 2001, by and between Opnext, Inc. and
Chi-Ho Christopher Lin, as amended.(1)10.10+
    
    Employment Agreement, dated March 5, 2001, by and between Opnext, Inc. and Robert J. Nobile.(1)10.11+
    
    Form of Opnext, Inc. Restricted Stock Agreement.(1)10.12
    
    Research and Development Agreement, dated as of July 31, 2001, by and among Hitachi, Ltd.,
Opnext Japan, Inc. and Opto Device, Ltd. as amended.(1)10.13
    
    Research and Development Agreement, dated as of July 31, 2002, by and between Hitachi, Ltd.
and Opnext, Inc., as amended.(1)10.14
    
    Outsourcing Agreement, made and entered into as of July 31, 2001, by and between Hitachi, Ltd.
and Opnext Japan, Inc., as amended.(1)10.15
    
    Preferred Provider Agreement, made and entered into as of July 31, 2001, by and between
Hitachi, Ltd. and Opnext, Inc., as amended.(1)10.16
    
    Procurement Agreement, made and entered into as of July 31, 2001, by and between Opnext Japan,
Inc. and Hitachi, Ltd., as amended.(1)10.17
    
    Raw Materials Supply Agreement, made and entered into as of July 31, 2001, by and between
Hitachi, Ltd. and Opnext, Inc., as amended.(1)10.18
    
    Intellectual Property License Agreement, dated as of July 31, 2001, by and between Hitachi,
Ltd. and Opnext Japan, Inc., as amended.(1)10.19
    
    Intellectual Property License Agreement, dated as of October 1, 2002, by and between Hitachi,
Ltd. and Opnext Japan, Inc., as amended.(1)10.20
    
    Intellectual Property License Agreement, effective as of October 1, 2002, by and between
Hitachi Communication Technologies, Ltd. and Opnext Japan, Inc.(1)10.21
    
    Trademark Indication Agreement, dated as of October 1, 2002, by and between Hitachi, Ltd. and
Opnext Japan, Inc., as amended.(1)10.22
    
    Trademark Indication Agreement, dated as of July 31, 2001, by and between Hitachi, Ltd.,
Opnext, Inc. and Opnext Japan, Inc., as amended.(1)10.23
    
    Lease Agreement, made as of July 31, 2001, between Hitachi Communication Technologies, Ltd.
and Opnext Japan, Inc., as amended.(1)10.24
    
    Lease Agreement, made as of October 1, 2002, between Renesas Technology Corp. and Opnext
Japan, Inc., as amended.(1)10.25
    
    Business Park Net Lease Agreement, dated as of June 30, 2000, by and between Bedford Property
Investors, Inc. and Opnext, Inc., as amended.(1)10.26
    
    Agreement on Bank Transactions between Opnext Japan, Inc. and The Bank of Tokyo-Mitsubishi
UFJ, Ltd., as amended.(1)
 42




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##### Table of Contents



ExhibitNo.
    
    Description of Document10.27
    
    Software User License Agreement, dated as of October 20, 2003, by and
between Renesas Technology Corp. and Opnext Japan, Inc.(1)10.28
    
    Logistics Agreement, effective as of April 1, 2002, between Opnext, Inc.
and Hitachi Transport System, Ltd.(1)10.29
    
    Distribution Agreement, dated April 1, 2001, between Hitachi Electronic
Devices Sales, Inc. and Opnext Japan, Inc.(1)10.30
    
    Distribution Agreement, dated April 1, 2003, between Opnext Japan, Inc. and
Renesas Technology Sale Co., Ltd.(1)10.31
    
    Distribution Agreement, dated July 1, 2003, between Opnext Japan, Inc. and
Hitachi High-Technologies Corp.(1)21
    
    List of Subsidiaries.(1)23.1*
    
    Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.24
    
    Power of Attorney (set forth on the signature page of this Form 10-K).31.1*
    
    Certification of Principal Executive Officer pursuant to Rule 13a-14 of the
Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.2*
    
    Certification of Principal Financial Officer pursuant to Rule 13a-14 of the
Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.32.1**
    
    Certification of Principal Executive Officer pursuant to 18 U.S.C. Section
350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2**
    
    Certification of Principal Financial Officer pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 (1)
    
    Filed as an exhibit to the Form S-1 Registration Statement (No.
333-138262) declared effective on February 14, 2007 and incorporated
herein by reference.*
    
    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. 43




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##### Table of Contents



SIGNATURES
  OPNEXT, INC.By:
    /s/  Harry L. BoscoHarry L. Bosco, President,Chief Executive Officer and DirectorBy:
    /s/  Robert J. NobileRobert J. Nobile, Chief Financial Officer andSenior Vice President, Finance  POWER OF ATTORNEY
   Signature
    
    Title/s/ Harry L. Bosco

Harry L. Bosco
    
    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/ Dr. Naoya Takahashi

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

Dr. David Lee
    
    Director and Co-Chairman of the Board/s/ Ryuichi Otsuki

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

John F. Otto, Jr.
    
    Director/s/ Kendall W. Cowan

Kendall W. Cowan
    
    Director/s/ Dr. Isamu Kuru

Dr. Isamu Kuru
    
    Director
 44




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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+
    
    Opnext, Inc. Nonqualified Stock Option Agreement dated as of November 1, 2004, between Opnext,
Inc. and Harry L. Bosco (Participant).(1)10.4c+
    
    Form of Opnext, Inc. 2001 Long-Term Stock Incentive Plan, Stock Appreciation Right
Agreement.(1)10.4d+*
    
    Form of Amendment to Stock Appreciation Right Agreement.10.5
    
    Form of Hitachi, Ltd. and Clarity Management, L.P. Nonqualified Stock Option Agreement.(1)10.6+
    
    Opnext, Inc. Amended and Restated 2001 Long-Term Stock Incentive Plan.(1)10.7+
    
    Employment Agreement, entered into as of July 31, 2001, by and between Opnext, Inc. and Harry
L. Bosco, as amended.(1)10.8+
    
    Employment Agreement, entered into as of August 24, 2001, by and between Opnext, Inc. and
Michael C. Chan, as amended.(1)10.9+
    
    Employment Agreement, entered into as of August 24, 2001, by and between Opnext, Inc. and
Chi-Ho Christopher Lin, as amended.(1)10.10+
    
    Employment Agreement, dated March 5, 2001, by and between Opnext, Inc. and Robert J. Nobile.(1)10.11+
    
    Form of Opnext, Inc. Restricted Stock Agreement.(1)10.12
    
    Research and Development Agreement, dated as of July 31, 2001, by and among Hitachi, Ltd.,
Opnext Japan, Inc. and Opto Device, Ltd. as amended.(1)10.13
    
    Research and Development Agreement, dated as of July 31, 2002, by and between Hitachi, Ltd.
and Opnext, Inc., as amended.(1)10.14
    
    Outsourcing Agreement, made and entered into as of July 31, 2001, by and between Hitachi, Ltd.
and Opnext Japan, Inc., as amended.(1)10.15
    
    Preferred Provider Agreement, made and entered into as of July 31, 2001, by and between
Hitachi, Ltd. and Opnext, Inc., as amended.(1)10.16
    
    Procurement Agreement, made and entered into as of July 31, 2001, by and between Opnext Japan,
Inc. and Hitachi, Ltd., as amended.(1)10.17
    
    Raw Materials Supply Agreement, made and entered into as of July 31, 2001, by and between
Hitachi, Ltd. and Opnext, Inc., as amended.(1)10.18
    
    Intellectual Property License Agreement, dated as of July 31, 2001, by and between Hitachi,
Ltd. and Opnext Japan, Inc., as amended.(1)10.19
    
    Intellectual Property License Agreement, dated as of October 1, 2002, by and between Hitachi,
Ltd. and Opnext Japan, Inc., as amended.(1)
 45




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##### Table of Contents



ExhibitNo.
    
    Description of Document10.20
    
    Intellectual Property License Agreement, effective as of October 1, 2002,
by and between Hitachi Communication Technologies, Ltd. and Opnext Japan,
Inc.(1)10.21
    
    Trademark Indication Agreement, dated as of October 1, 2002, by and between
Hitachi, Ltd. and Opnext Japan, Inc., as amended.(1)10.22
    
    Trademark Indication Agreement, dated as of July 31, 2001, by and between
Hitachi, Ltd., Opnext, Inc. and Opnext Japan, Inc., as amended.(1)10.23
    
    Lease Agreement, made as of July 31, 2001, between Hitachi Communication
Technologies, Ltd. and Opnext Japan, Inc., as amended.(1)10.24
    
    Lease Agreement, made as of October 1, 2002, between Renesas Technology
Corp. and Opnext Japan, Inc., as amended.(1)10.25
    
    Business Park Net Lease Agreement, dated as of June 30, 2000, by and
between Bedford Property Investors, Inc. and Opnext, Inc., as amended.(1)10.26
    
    Agreement on Bank Transactions between Opnext Japan, Inc. and The Bank of
Tokyo-Mitsubishi UFJ, Ltd., as amended.(1)10.27
    
    Software User License Agreement, dated as of October 20, 2003, by and
between Renesas Technology Corp. and Opnext Japan, Inc.(1)10.28
    
    Logistics Agreement, effective as of April 1, 2002, between Opnext, Inc.
and Hitachi Transport System, Ltd.(1)10.29
    
    Distribution Agreement, dated April 1, 2001, between Hitachi Electronic
Devices Sales, Inc. and Opnext Japan, Inc.(1)10.30
    
    Distribution Agreement, dated April 1, 2003, between Opnext Japan, Inc. and
Renesas Technology Sale Co., Ltd.(1)10.31
    
    Distribution Agreement, dated July 1, 2003, between Opnext Japan, Inc. and
Hitachi High-Technologies Corp.(1)21
    
    List of Subsidiaries.(1)23.1*
    
    Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.24
    
    Power of Attorney (set forth on the signature page of this Form 10-K).31.1*
    
    Certification of Principal Executive Officer pursuant to Rule 13a-14 of the
Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.2*
    
    Certification of Principal Financial Officer pursuant to Rule 13a-14 of the
Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.32.1**
    
    Certification of Principal Executive Officer pursuant to 18 U.S.C. Section
350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2**
    
    Certification of Principal Financial Officer pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 (1)
    
    Filed as an exhibit to the Form S-1 Registration Statement (No.
333-138262) declared effective on February 14, 2007 and incorporated
herein by reference.*
    
    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. 46