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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, 2011
 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:
 Title of Each Class
    
    Name of Each Exchange on Which RegisteredCommon Stock, $0.01 par value
    
    The NASDAQ Stock Market LLC
 Securities registered pursuant to Section 12(g) of the Exchange Act:
None
 o þ
 o þ
 þ o
 o o
 þ
  Large accelerated filer oAccelerated filer þNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company o o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



Table of Contents
 PART IItem 1. Business
    
    
    3Item 1A. Risk Factors
    
    
    12Item 1B. Unresolved Staff Comments
    
    
    31Item 2. Properties
    
    
    31Item 3. Legal Proceedings
    
    
    31Item 4. Reserved
    
    
    32PART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    33Item 6. Selected Financial Data
    
    
    36Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    39Item 7A. Quantitative and Qualitative Disclosures about Market Risk
    
    
    52Item 8. Financial Statements and Supplementary Data
    
    
    54Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    88Item 9A Controls and Procedures
    
    
    88Item 9B Other Information
    
    
    90PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    91Item 11. Executive Compensation
    
    
    91Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholders Matters
    
    
    91Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    91Item 14. Principal Accountant Fees and Services
    
    
    91PART IVItem 15. Exhibits and Financial Statement Schedules
    
    
    91SIGNATURES
    
    
    95EX-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. Modules that operate at 10Gbps and 40Gbps consume two to more than
five times as much electrical power as modules operating at the preceding data rate, and the power
challenges are expected to become more difficult as the industry moves toward 100Gbps. Network
service providers generally have fixed, limited space in their network central offices, closets,
and data centers to house network equipment, creating de facto standards on the physical size
allowed for each piece of network equipment regardless of data rate. To offer increasingly
higher-speed systems, network system vendors need more efficient modules to support greater port
density while adhering to power supply and cooling system constraints. These constraints drive the
need for laser technology with higher temperature tolerance and improved efficiency, which reduces
power consumption and enables smaller form factor modules to be used. Most carriers and system
vendors also now have well established green programs and award preference to suppliers that help
them reduce their carbon footprint through lower power consumption.
    
    The Temperature Challenge. Within an optical module, the laser diode is the component most
sensitive to temperature. As a result, 10Gbps modules have in the past been constrained to 70°C
maximum operating case temperature. Even in temperature controlled environments, heat dissipation
from neighboring electronic components can raise internal equipment temperatures to levels that
degrade laser and module performance. Furthermore, some network equipment is located outdoors in
non-temperature controlled environments where transceiver modules need to operate reliably up to an
operating case temperature of 85°C. Therefore, customers are demanding optical modules that can
operate at wider temperature ranges, especially incorporating lasers that do not require costly and
inefficient thermoelectric coolers. A benefit of more efficient and uncooled lasers is that they
draw less current, which reduces power consumption and helps the environment. We are extending this
technology to reaches of up to 80km at 10Gbps.
    
    The Size Challenge. The system throughput, data rate of each port and the overall chassis
dimensions of a system define the bandwidth capacity of that system. Expanding the capacity of a
system requires increasing the number of ports and the data rate of those ports. To meet these
higher speed and density requirements, industry leaders have defined smaller transceiver packages.
As the size of these packages decreases, so does their ability to dissipate heat, making it
virtually impossible to support cooled-laser technology.
 5




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Therefore, lower power consumption
uncooled-laser technology with higher temperature tolerance and improved efficiency is required to
meet the thermal capacity of these smaller packages.
  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.
 6




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Module Design.
 Modulation Techniques.
 System-Level Software.
   Products
   7




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Reach and Application
    
    <10G
    
    10G
    
    40G
    
    100GClient- side
    
    ≤300 m
    
    SFP
    
    SFP+, XFP, X2, XENPAK≤2/10 km
    
    SFP
    
    SFP+, XFP, X2,
XENPAK, 300pin, XMD
TOSA, XMD ROSA,
chips
    
    300pin, QSFP+, CFP,
XLMD TOSA, XLMD
ROSA
    
    CFP≤40 km
    
    SFP, chips
    
    SFP+, XFP, X2,
XENPAK, 300pin, XMD
TOSA, XMD ROSA,
chips≤80 km
    
    SFP, chips
    
    SFP+, XFP, X2,
XENPAK, 300pin, XMD
TOSA, XMD ROSA,
chipsLine-side
    
    Metro
to
Long Haul
    
    SFP, laser diode
modules, chips
    
    SFP+, XFP, X2,
XENPAK, 300pin
    
    300pin DPSK, 300pin
DQPSK, DPSK
Subsystem
    
    Under Development
 8




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Customers
    Competition
  
    
    product performance, including size, speed, operating temperature range, power
consumption and reliability;
    
    price-to-performance characteristics;
    
    delivery performance and lead times;
    
    ability to introduce new products in a timely manner that meet customers design-in
schedules and requirements;
    
    ability to dedicate resources to, and successfully progress, research and development
efforts;
    
    breadth of product solutions;
    
    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;
 9




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
    
    sales, technical and post-sales service and support; and
    
    sales channels.
 Manufacturing
       Sources and Availability of Raw Materials
   10




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Backlog and Geographic Financial Information
   Sales, Marketing and Technical Support
     Patents and Other Intellectual Property Rights
   11




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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.
  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.
  12




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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 are dependent on contract manufacturers used by our customers for a significant portion of our
sales.
  13




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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.
   14




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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 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.
  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;
 15




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
    
    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;
    
    the occurrence and effects of natural disasters, including in Japan which has a high level of
seismic activity;
    
    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.
  16




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Shifts in our product mix may result in declines in gross margin.
    Certain of our revenues are derived from research and development agreements, which can result in
material increases or decreases in our 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.
  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.
  17




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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;
    
    the occurrence and effects of natural disasters, including in Japan which has a high level of
seismic activity;
    
    general economic conditions; and
    
    material weaknesses in internal controls.
 18




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We face increasing competition from providers of competing products, which could negatively impact
our results of operations and market share.
    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.
   19




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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;
    
    access to or availability of parts and components needed in new products;
    
    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.
  20




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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;
    
    the impact of earthquakes or other natural disasters, including in Japan which has a high level
of seismic activity;
    
    potential political and economic instability; and
 21




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
    
    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 or risks could negatively impact
our profitability.
  
    
    different technical standards or requirements, such as country or region-specific
requirements to eliminate the use of lead;
    
    difficulties in staffing, managing and supporting operations in more than one country;
    
    difficulties in enforcing agreements and collecting receivables through foreign legal
systems;
    
    fewer legal protections for intellectual property;
    
    fluctuations in foreign economies;
    
    fluctuations in the value of foreign currencies and interest rates;
    
    domestic and international economic or political changes, hostilities 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, including, but not limited to, natural disasters such as the recent earthquake and
tsunami in Japan.
   22




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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.
  23




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
    
    cease the manufacture, use or sale of the infringing products, processes or technology;
    
    pay substantial damages for past, present and future use of the infringing technology;
    
    expend significant resources to develop non-infringing technology; or
    
    pay substantial damages to our customers or end users to discontinue use or replace
infringing technology with non-infringing technology.
  We license our intellectual property to Hitachi and its wholly owned subsidiaries without
restriction. In addition, Hitachi is free to license certain of Hitachis intellectual property
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.
  24




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Third parties may claim we are infringing their intellectual property rights, and we could be
prevented from selling our products or suffer significant litigation expense, even if these claims
have no merit.
   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.
  
    
    integrating product offerings and manufacturing activities;
    
    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
 25




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
    
    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;
    
    our inability to make the significant capital expenditures required to develop
StrataLights planned products;
    
    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
expected;
    
    changes in technology that increase the number of competitors we face or require us 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;
 26




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
    
    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.
   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.
  27




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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.
    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.
   28




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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.
   29




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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.
   30




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Item 1B. Unresolved Staff Comments.
  
 Item 2. Properties
   Location
    
    Approximate Square Feet
    
    Function
    
    Lease Expiration DateUnited StatesEatontown, New Jersey
    
    7,853
    
    Administration, Sales
    
    August 31, 2011Fremont, 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
    
    September 30, 2011Los Gatos,
California Building
2
    
    10,073
    
    Administration,
Marketing, Research and
Development
    
    June 30, 2011San Jose, California
(with a rent
commencement date on
or about September
1, 2011)
    
    25,300
    
    Administration,
Marketing,
Research and Development
    
    November 30, 2016InternationalChiyoda-ku, Japan
    
    2,330 (216
square meters)
    
    Sales
    
    June 11, 2012
(automatic 2-year
extensions unless
notice given by
either party)Komoro, Japan
    
    34,542 (3,209
square meters)
    
    Manufacturing, Research
and Development
    
    March 31, 2016
(automatic 5-year
extensions unless
notice given by
either party)Munich, Germany
    
    2,992 (278 square
meters)
    
    Sales
    
    October 31, 2012Shanghai, China
    
    1,356 (126 square
meters)
    
    Sales
    
    January 21, 2014Totsuka, 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.
  31




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Item 4. Reserved
 32




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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 2011 Quarter:January 1, 2011 to March 31, 2011
    
    
    4.19
    
    
    
    1.84October 1, 2010 to December 31, 2010
    
    
    1.90
    
    
    
    1.35July 1, 2010 to September 30, 2010
    
    
    1.85
    
    
    
    1.36April 1, 2010 to June 30, 2010
    
    
    2.46
    
    
    
    1.65Fiscal 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
    
    
    
    1.72
  33




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Stock Performance Graph
   
 2/15/2007
    
    3/31/2007
    
    3/31/2008
    
    3/31/2009
    
    3/31/2010
    
    3/31/2011Opnext, Inc.
    
    
    100.00
    
    
    
    85.00
    
    
    
    31.32
    
    
    
    9.83
    
    
    
    13.56
    
    
    
    13.97NASDAQ
Telecommunications
Index
    
    
    100.00
    
    
    
    96.50
    
    
    
    92.87
    
    
    
    61.31
    
    
    
    92.41
    
    
    
    91.00NASDAQ Composite Index
    
    
    100.00
    
    
    
    96.98
    
    
    
    91.27
    
    
    
    61.21
    
    
    
    96.03
    
    
    
    111.37Amex Networking Index
    
    
    100.00
    
    
    
    95.74
    
    
    
    84.07
    
    
    
    52.82
    
    
    
    100.57
    
    
    
    130.72
 34




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Dividend Policy
  Securities Authorized for Issuance under Equity Compensation Plans
  Number of Securities to be issued
    
    
    
    
    
    
    Number of securitiesupon exercise of outstanding
    
    
    Weighted-average
    
    
    remaining available foroptions, stock appreciation rights
    
    
    exercise
    
    
    future issuance under equityand stock units
    
    
    price
    
    
    compensation plansEquity
compensation plans
approved by our
security holders
    
    
    13,778
    
    
    $
    5.90
    
    
    
    13,238Equity
compensation plans
not approved by our
security holders
    
    
    
    
    
    $
    
    
    
    
    
 Repurchases of Equity
  35




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Item 6. Selected Financial Data.
 The following consolidated balance sheet data as of March 31, 2011 and 2010 and the
consolidated statements of operations data for the fiscal years ended March 31, 2011,
2010 and 2009 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, 2009, 2008 and 2007 and the statement of operations data for the fiscal
years ended March 31, 2008 and 2007 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
 Fiscal Year Ended March 31,2011
    
    
    2010
    
    
    2009
    
    
    2008
    
    
    2007(in thousands, except per share data)Consolidated statements of
operations data:Revenues(1)
    
    $
    357,641
    
    
    $
    319,132
    
    
    $
    318,555
    
    
    $
    283,498
    
    
    $
    222,859Cost of sales
    
    
    281,418
    
    
    
    252,490
    
    
    
    242,782
    
    
    
    187,123
    
    
    
    148,753Amortization of acquired developed
technology
    
    
    5,780
    
    
    
    5,780
    
    
    
    1,321
    
    
    
    
    
    
    
    Gross margin
    
    
    70,443
    
    
    
    60,862
    
    
    
    74,452
    
    
    
    96,375
    
    
    
    74,10619.7
    %
    
    
    19.1
    %
    
    
    23.4
    %
    
    
    34.0
    %
    
    
    33.3
    %Research and development expenses
    
    
    62,039
    
    
    
    74,145
    
    
    
    54,043
    
    
    
    38,324
    
    
    
    35,615Selling, general, and administrative
expenses
    
    
    58,258
    
    
    
    54,829
    
    
    
    63,483
    
    
    
    48,291
    
    
    
    40,231Impairment of goodwill
    
    
    
    
    
    
    
    
    
    
    67,681
    
    
    
    
    
    
    
    Acquired in-process research and
development
    
    
    
    
    
    
    
    
    
    
    15,700
    
    
    
    
    
    
    
    Amortization of purchased intangibles
    
    
    1,368
    
    
    
    9,240
    
    
    
    5,540
    
    
    
    
    
    
    
    Loss on disposal of property and
equipment
    
    
    578
    
    
    
    159
    
    
    
    122
    
    
    
    502
    
    
    
    311Operating (loss) income
    
    
    (51,800
    )
    
    
    (77,511
    )
    
    
    (132,117
    )
    
    
    9,258
    
    
    
    (2,051
    )Gain on sale of technology assets, net
    
    
    21,436
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interest (expense) income, net
    
    
    (823
    )
    
    
    (615
    )
    
    
    2,748
    
    
    
    8,534
    
    
    
    3,298Other
expense, net
    
    
    (494
    )
    
    
    (472
    )
    
    
    (187
    )
    
    
    (744
    )
    
    
    (551
    )(Loss) income before income taxes
    
    
    (31,681
    )
    
    
    (78,598
    )
    
    
    (129,556
    )
    
    
    17,048
    
    
    
    696Income tax (expense) benefit
    
    
    (151
    )
    
    
    85
    
    
    
    (16
    )
    
    
    
    
    
    
    Net (loss) income
    
    $
    (31,832
    )
    
    $
    (78,513
    )
    
    $
    (129,572
    )
    
    $
    17,048
    
    
    $
    696Net (loss) income per share:Basic
    
    $
    (0.35
    )
    
    $
    (0.88
    )
    
    $
    (1.86
    )
    
    $
    0.26
    
    
    $
    0.01Diluted
    
    
    (0.35
    )
    
    
    (0.88
    )
    
    
    (1.86
    )
    
    
    0.26
    
    
    
    0.01Weighted average number of shares:Basic
    
    
    89,904
    
    
    
    88,952
    
    
    
    69,775
    
    
    
    64,598
    
    
    
    53,432Diluted
    
    
    89,904
    
    
    
    88,952
    
    
    
    69,775
    
    
    
    64,633
    
    
    
    53,486Consolidated balance sheet data:Total assets
    
    $
    374,357
    
    
    $
    370,298
    
    
    $
    449,764
    
    
    $
    432,459
    
    
    $
    367,849Long-term liabilities
    
    
    19,409
    
    
    
    16,672
    
    
    
    26,050
    
    
    
    22,192
    
    
    
    17,271Total shareholders equity
    
    
    236,226
    
    
    
    253,540
    
    
    
    320,537
    
    
    
    323,078
    
    
    
    290,657
 
 (1)
    
    Revenues include revenues attributable to StrataLight Communications, Inc. commencing January 9, 2009. 36




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Selected Quarterly Financial Information (Unaudited)
 The following table shows our unaudited consolidated quarterly statements of
operations data for each of the quarters in the fiscal years ended March 31, 2011 and
2010. 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 30,2011
    
    2010
    
    2010
    
    2010(in thousands, except per share data)Revenues
    
    $
    95,348
    
    
    $
    97,051
    
    
    $
    86,376
    
    
    $
    78,866Gross margin
    
    
    18,703
    
    
    
    19,362
    
    
    
    17,587
    
    
    
    14,791Net income (loss) (1)
    
    
    9,035
    
    
    
    (10,180
    )
    
    
    (14,427
    )
    
    
    (16,260
    )Net income (loss) per share:Basic
    
    $
    0.10
    
    
    $
    (0.11
    )
    
    $
    (0.16
    )
    
    $
    (0.18
    )Diluted
    
    
    0.10
    
    
    
    (0.11
    )
    
    
    (0.16
    )
    
    
    (0.18
    )Weighted average shares outstanding:Basic
    
    
    89,964
    
    
    
    89,892
    
    
    
    89,889
    
    
    
    89,873Diluted
    
    
    91,974
    
    
    
    89,892
    
    
    
    89,889
    
    
    
    89,873
 
 (1)
    
    Net income for the three months ended March 31, 2011 included
$21.4 million of net gain from the sale of technology assets,
$1.9 million of stock-based compensation expense, and $1.8
million of amortization of purchased intangibles. Net loss for
the three months ended December 31, 2010 included $2.4 million of
stock-based compensation expense, $1.8 million of amortization of
purchased intangibles, and $0.5 million of restructuring charges.
Net loss for the three months ended September 30, 2010 included
$1.9 million of stock-based compensation expense, $1.8 million of
amortization of purchased intangibles, and $0.1 million of
restructuring charges. Net loss for the three months ended June
30, 2010 included $2.0 million of stock-based compensation
expense, $1.8 million of amortization of purchased intangibles,
and $0.3 million of restructuring charges. 37




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Three Months EndedMarch 31,
    
    Dec. 31,
    
    Sept. 30,
    
    June 30,2010
    
    2009
    
    2009
    
    2009(in thousands, except per share data)Revenues
    
    $
    76,783
    
    
    $
    76,065
    
    
    $
    80,975
    
    
    $
    85,309Gross margin
    
    
    14,407
    
    
    
    12,120
    
    
    
    17,589
    
    
    
    16,746Net loss (1)
    
    
    (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)
    
    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
charges 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 charges 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 charges 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, $2.8 million of StrataLight Employee
Liquidity Bonus Plan expense, $1.6 million of stock-based
compensation expense, $1.0 million of restructuring charges, $1.0
million attributable to purchase price accounting adjustments for
inventory sold during the period, and $0.4 million of integration
cost. 38




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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 impact of natural events such as severe weather
or earthquakes in locations in which we, our customers, our contract manufacturers or
our suppliers operate, 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
   Japan Earthquake and Tsunami
   39




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Acquisition of StrataLight
  Sale of Technology Assets
  Revenues
   40




---



##### Table of Contents



Cost of Sales and Gross Margin
    Research and Development Expense
  41




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Selling, General and Administrative Expenses
   Impairment of Goodwill
  Inventory
  Income Taxes
   42




---



##### Table of Contents



Factors That May Influence Future Results of Operations
 Global Economic Conditions
  Japan Earthquake and Tsunami
    Fluctuations of the Japanese Yen and the U.S. Dollar
  Expiration of Temporary Expense Reduction Initiatives
  43




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Impact of Price Declines and Supply Constraints on Revenues
   Effect of Product Life Cycle on Gross Margins
   Research and Development Expense
  44




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Significant Accounting Policies and Estimates
 Revenue Recognition, Warranties and Allowances
     Inventory Valuation
  Income Taxes
   45




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##### Table of Contents



Impairment of Long-Lived Assets
  Goodwill and Business Combinations
    Stock-Based Incentive Plans
  
    
    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 simplified method. Our
expected term assumption for awards issued during the
fiscal years ended March 31, 2011, 2010 and 2009 was 4.6
years, 4.5 years and 4.9 years, respectively. As additional
evidence develops from our option activity, the expected
term assumption may be refined to capture more relevant
trends.
    
    We estimated volatility based on our historical stock
prices. The expected volatility assumption for awards
issued during the fiscal years ended March 31, 2011, 2010
and 2009 was 82.6%, 86.2% and 83.5%, respectively.
    
    A dividend yield of zero has been assumed for awards issued
during the fiscal years ended March 31, 2011, 2010 and 2009
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 fiscal years ended March 31, 2011,
2010 and 2009 on the implied weighted-average yields of
2.0%, 2.1% and 2.3%, respectively, available on U.S.
Treasury zero-coupon issues with an equivalent expected
term.
 46




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
    
    Forfeiture rates for awards issued during the fiscal years
ended March 31, 2011, 2010 and 2009 have been estimated
based on our actual historical forfeiture trends of
approximately 10% over their expected terms.
  Use of Estimates
  Results of Operations for the Fiscal Years Ended March 31, 2011, 2010 and 2009
  Fiscal Year Ended March 31,
    
    
    Fiscal Year Ended March 31,2011
    
    
    2010
    
    
    2009
    
    
    2011
    
    
    2010
    
    
    2009(in thousands)
    
    
    (as percentage of revenue)Revenues
    
    $
    357,641
    
    
    $
    319,132
    
    
    $
    318,555
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales
    
    
    281,418
    
    
    
    252,490
    
    
    
    242,782
    
    
    
    78.7
    %
    
    
    79.1
    %
    
    
    76.2
    %Amortization of acquired
developed technology
    
    
    5,780
    
    
    
    5,780
    
    
    
    1,321
    
    
    
    1.6
    %
    
    
    1.8
    %
    
    
    0.4
    %Gross margin
    
    
    70,443
    
    
    
    60,862
    
    
    
    74,452
    
    
    
    19.7
    %
    
    
    19.1
    %
    
    
    23.4
    %Research and development expenses
    
    
    62,039
    
    
    
    74,145
    
    
    
    54,043
    
    
    
    17.3
    %
    
    
    23.3
    %
    
    
    17.0
    %Selling, general and
administrative expenses
    
    
    58,258
    
    
    
    54,829
    
    
    
    63,483
    
    
    
    16.3
    %
    
    
    17.2
    %
    
    
    19.9
    %Impairment of goodwill
    
    
    
    
    
    
    
    
    
    
    67,681
    
    
    
    
    
    
    
    
    
    
    
    21.3
    %Acquired in-process research and
development
    
    
    
    
    
    
    
    
    
    
    15,700
    
    
    
    
    
    
    
    
    
    
    
    4.9
    %Amortization of purchased
intangibles
    
    
    1,368
    
    
    
    9,240
    
    
    
    5,540
    
    
    
    0.4
    %
    
    
    2.9
    %
    
    
    1.7
    %Loss on disposal of property and
equipment
    
    
    578
    
    
    
    159
    
    
    
    122
    
    
    
    0.2
    %
    
    
    0.0
    %
    
    
    0.0
    %Operating loss
    
    
    (51,800
    )
    
    
    (77,511
    )
    
    
    (132,117
    )
    
    
    (14.5
    )%
    
    
    (24.3
    )%
    
    
    (41.5
    )%Gain on sale of technology
assets, net
    
    
    21,436
    
    
    
    
    
    
    
    
    
    
    
    6.0
    %
    
    
    
    
    
    
    Interest (expense) income, net
    
    
    (823
    )
    
    
    (615
    )
    
    
    2,748
    
    
    
    (0.2
    )%
    
    
    (0.2
    )%
    
    
    0.9
    %Other expense, net
    
    
    (494
    )
    
    
    (472
    )
    
    
    (187
    )
    
    
    (0.1
    )%
    
    
    (0.1
    )%
    
    
    (0.1
    )%Loss before income taxes
    
    
    (31,681
    )
    
    
    (78,598
    )
    
    
    (129,556
    )
    
    
    (8.9
    )%
    
    
    (24.6
    )%
    
    
    (40.7
    )%Income tax (expense) benefit
    
    
    (151
    )
    
    
    85
    
    
    
    (16
    )
    
    
    (0.0
    )%
    
    
    0.0
    %
    
    
    (0.0
    )%Net loss
    
    $
    (31,832
    )
    
    $
    (78,513
    )
    
    $
    (129,572
    )
    
    
    (8.9
    )%
    
    
    (24.6
    )%
    
    
    (40.7
    )%
 Comparison of the Fiscal Years Ended March 31, 2011 and 2010
 Revenues.
 47




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##### Table of Contents



Gross Margin.
  Research and Development Expenses.
 Selling, General and Administrative Expenses.
 Amortization of Purchased Intangibles.
 Loss on Disposal of Property and Equipment.
 48




---



##### Table of Contents



Gain on Sale of Technology Assets, Net.
 Interest Expense, Net.
 Other Expense, Net.
 Income Taxes.
   Comparison of the Fiscal Years Ended March 31, 2010 and 2009
 Revenues.
   Gross Margin.
 49




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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.
 Loss on Disposal of Property and Equipment.
 Interest (Expense) Income, Net.
 50




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##### Table of Contents



Other Expense, Net.
 Income Taxes.
   Liquidity and Capital Resources
    51




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##### Table of Contents



Contractual Obligations
  Payments Due by PeriodLess thanTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    3-5 YearsCapital lease obligations
    
    $
    26.1
    
    
    $
    11.4
    
    
    $
    10.6
    
    
    $
    4.1Operating lease obligations
    
    
    3.3
    
    
    
    2.6
    
    
    
    0.7
    
    
    
    Purchase obligations
    
    
    71.6
    
    
    
    71.6
    
    
    
    
    
    
    
    Short-term debt
    
    
    18.1
    
    
    
    18.1
    
    
    
    
    
    
    
    Total contractual obligations
    
    $
    119.1
    
    
    $
    103.7
    
    
    $
    11.3
    
    
    $
    4.1
  Off-Balance Sheet Arrangements
  
 Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
  52




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53




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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
    
    
    55Consolidated Balance Sheets at March 31, 2011 and March 31, 2010
    
    
    56Consolidated Statements of Operations for the fiscal years ended March 31, 2011, 2010 and 2009
    
    
    57Consolidated Statements of Shareholders Equity and Comprehensive Income (Loss) for the
fiscal years ended March 31, 2011, 2010 and 2009
    
    
    58Consolidated Statements of Cash Flows for the fiscal years ended March 31, 2011, 2010 and 2009
    
    
    59Notes to Consolidated Financial Statements
    
    
    60
 54




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Report of Independent Registered Public Accounting Firm on Financial Statements
 
     ERNST & YOUNG LLP
 
 55




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Opnext, Inc.
 
 Consolidated Balance Sheets
 March 31,2011
    
    
    2010(in thousands, except share and pershare amounts)ASSETSCurrent assets:Cash and cash equivalents, including
$1,210 and $1,205 of restricted cash at
March 31, 2011 and 2010, respectively
    
    $
    100,284
    
    
    $
    132,643Trade receivables, net, including $8,557
and $4,509 due from related parties at
March 31, 2011 and 2010, respectively
    
    
    70,701
    
    
    
    54,849Inventories
    
    
    118,588
    
    
    
    93,018Prepaid expenses and other current assets
    
    
    7,458
    
    
    
    4,755Total current assets
    
    
    297,031
    
    
    
    285,265Property, plant, and equipment, net
    
    
    59,992
    
    
    
    60,322Purchased intangibles
    
    
    17,076
    
    
    
    24,220Other assets
    
    
    258
    
    
    
    491Total assets
    
    $
    374,357
    
    
    $
    370,298LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Trade payables, including $6,191 and
$4,707 due to related parties at March
31, 2011 and 2010, respectively
    
    $
    63,383
    
    
    $
    44,040Accrued expenses
    
    
    23,771
    
    
    
    22,101Short-term debt
    
    
    18,055
    
    
    
    21,430Capital lease obligations
    
    
    13,513
    
    
    
    12,515Total current liabilities
    
    
    118,722
    
    
    
    100,086Capital lease obligations
    
    
    12,554
    
    
    
    11,202Other long-term liabilities
    
    
    6,855
    
    
    
    5,470Total liabilities
    
    
    138,131
    
    
    
    116,758Commitments 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
91,363,613, outstanding 90,028,612, net
of 58,630 shares of treasury stock at
March 31, 2011; issued 91,192,937,
outstanding 89,857,936, net of 58,630
shares of treasury stock at March 31,
2010
    
    
    727
    
    
    
    725Additional paid-in capital
    
    
    724,775
    
    
    
    716,315Accumulated deficit
    
    
    (504,977
    )
    
    
    (473,145
    )Accumulated other comprehensive income
    
    
    15,701
    
    
    
    9,645Total shareholders equity
    
    
    236,226
    
    
    
    253,540Total liabilities and shareholders equity
    
    $
    374,357
    
    
    $
    370,298
  56




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Opnext, Inc.
 
 Consolidated Statements of Operations
 Fiscal Year Ended March 31,2011
    
    
    2010
    
    
    2009(in thousands, except per share amounts)Revenues, including $9,016, $14,659 and
$19,470 to related parties for the fiscal
years ended March 31, 2011, 2010 and 2009,
respectively
    
    $
    357,641
    
    
    $
    319,132
    
    
    $
    318,555Cost of sales
    
    
    281,418
    
    
    
    252,490
    
    
    
    242,782Amortization of acquired developed technology
    
    
    5,780
    
    
    
    5,780
    
    
    
    1,321Gross margin
    
    
    70,443
    
    
    
    60,862
    
    
    
    74,452Research and development expenses, including
$3,743, $4,368 and $6,077 from related
parties for the fiscal years ended March 31,
2011, 2010 and 2009, respectively
    
    
    62,039
    
    
    
    74,145
    
    
    
    54,043Selling, general and administrative
expenses, including $4,582, $3,832, and
$5,493 from related parties for the fiscal
years ended March 31, 2011, 2010 and 2009,
respectively
    
    
    58,258
    
    
    
    54,829
    
    
    
    63,483Amortization of purchased intangibles
    
    
    1,368
    
    
    
    9,240
    
    
    
    5,540Loss on disposal of property and equipment
    
    
    578
    
    
    
    159
    
    
    
    122Impairment of goodwill
    
    
    
    
    
    
    
    
    
    
    67,681Acquired in-process research and development
    
    
    
    
    
    
    
    
    
    
    15,700Operating loss
    
    
    (51,800
    )
    
    
    (77,511
    )
    
    
    (132,117
    )Gain on sale of technology assets, net
    
    
    21,436
    
    
    
    
    
    
    
    Interest (expense) income, net
    
    
    (823
    )
    
    
    (615
    )
    
    
    2,748Other expense, net
    
    
    (494
    )
    
    
    (472
    )
    
    
    (187
    )Loss before income taxes
    
    
    (31,681
    )
    
    
    (78,598
    )
    
    
    (129,556
    )Income tax (expense) benefit
    
    
    (151
    )
    
    
    85
    
    
    
    (16
    )Net loss
    
    $
    (31,832
    )
    
    $
    (78,513
    )
    
    $
    (129,572
    )Net loss per share:Basic and diluted
    
    $
    (0.35
    )
    
    $
    (0.88
    )
    
    $
    (1.86
    )Weighted average number of shares used in
computing net loss per share:Basic and diluted
    
    
    89,904
    
    
    
    88,952
    
    
    
    69,775
  57




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##### Table of Contents



Opnext, Inc.
 
 Consolidated Statements of Shareholders Equity and Comprehensive Income (Loss)
Fiscal Years Ended March 31, 2011, 2010 and 2009
 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, 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
    
    
    $
    253,540Stock-based compensation,
net of forfeitures
    
    
    
    
    
    
    
    
    
    
    8,167
    
    
    
    
    
    
    
    
    
    
    
    8,167Stock options exercised
    
    
    170,676
    
    
    
    2
    
    
    
    293
    
    
    
    
    
    
    
    
    
    
    
    295Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (31,832
    )
    
    
    
    
    
    
    (31,832
    )
    
    $
    (31,832
    )Unrealized loss on foreign
currency forward contracts
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20
    )
    
    
    (20
    )
    
    
    (20
    )Defined benefit plan costs, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    157
    
    
    
    157
    
    
    
    157Foreign currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,919
    
    
    
    5,919
    
    
    
    5,919Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (25,776
    )Balance at March 31, 2011
    
    
    90,028,612
    
    
    $
    727
    
    
    $
    724,775
    
    
    $
    (504,977
    )
    
    $
    15,701
    
    
    $
    236,226
  58




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##### Table of Contents



Opnext, Inc.
Consolidated Statements of Cash Flows
 Fiscal Year Ended March 31,2011
    
    
    2010
    
    
    2009(in thousands)Cash flows from operating activitiesNet loss
    
    $
    (31,832
    )
    
    $
    (78,513
    )
    
    $
    (129,572
    )Adjustments to reconcile net loss to net cash used in operating
activities:Depreciation and amortization
    
    
    24,330
    
    
    
    22,312
    
    
    
    14,385Stock-based compensation expense associated with equity awards
    
    
    8,167
    
    
    
    6,632
    
    
    
    5,644Amortization of purchased intangibles
    
    
    7,148
    
    
    
    15,019
    
    
    
    6,861Stock-based compensation expense associated with the StrataLight
Employee Liquidity Bonus Plan
    
    
    
    
    
    
    1,216
    
    
    
    5,766Impairment of goodwill
    
    
    
    
    
    
    
    
    
    
    67,681Acquired in-process research and development
    
    
    
    
    
    
    
    
    
    
    15,700Loss on disposal of property and equipment
    
    
    578
    
    
    
    159
    
    
    
    122Gain on sale of technology assets, net
    
    
    (21,436
    )
    
    
    
    
    
    
    Changes in assets and liabilities, net of acquisition of business:Trade receivables, net
    
    
    (14,112
    )
    
    
    9,073
    
    
    
    (4,374
    )Inventories
    
    
    (18,013
    )
    
    
    12,397
    
    
    
    23,046Prepaid expenses and other current assets
    
    
    (2,345
    )
    
    
    (492
    )
    
    
    (454
    )Other assets
    
    
    243
    
    
    
    (167
    )
    
    
    (163
    )Trade payables
    
    
    15,240
    
    
    
    4,523
    
    
    
    (16,939
    )Accrued expenses and other liabilities
    
    
    1,979
    
    
    
    (10,742
    )
    
    
    1,871Net cash used in operating activities
    
    
    (30,053
    )
    
    
    (18,583
    )
    
    
    (10,426
    )Cash flows from investing activitiesCapital expenditures
    
    
    (8,605
    )
    
    
    (7,877
    )
    
    
    (4,157
    )Acquisition of business, net of cash acquired
    
    
    
    
    
    
    
    
    
    
    (28,425
    )Proceeds from sale of technology assets, net
    
    
    21,436
    
    
    
    
    
    
    
    Net cash provided by (used in) investing activities
    
    
    12,831
    
    
    
    (7,877
    )
    
    
    (32,582
    )Cash flows from financing activitiesPayments on capital lease obligations
    
    
    (10,964
    )
    
    
    (10,602
    )
    
    
    (9,105
    )Short-term debt payments, net
    
    
    (5,822
    )
    
    
    
    
    
    
    Restricted shares repurchased
    
    
    
    
    
    
    (17
    )
    
    
    (63
    )Exercise of stock options
    
    
    294
    
    
    
    16
    
    
    
    6Net cash used in financing activities
    
    
    (16,492
    )
    
    
    (10,603
    )
    
    
    (9,162
    )Effect of foreign currency exchange rates on cash and cash equivalents
    
    
    1,355
    
    
    
    797
    
    
    
    (607
    )Decrease in cash and cash equivalents
    
    
    (32,359
    )
    
    
    (36,266
    )
    
    
    (52,777
    )Cash and cash equivalents at beginning of year
    
    
    132,643
    
    
    
    168,909
    
    
    
    221,686Cash and cash equivalents at end of year
    
    $
    100,284
    
    
    $
    132,643
    
    
    $
    168,909Supplemental cash flow informationCash paid during the year for:Interest paid
    
    $
    955
    
    
    $
    980
    
    
    $
    965Income tax paid (refunded), net
    
    $
    78
    
    
    $
    (129
    )
    
    $
    Supplemental investing activitiesNet cash paid for acquisition of StrataLight
    
    $
    
    
    
    $
    
    
    
    $
    21,593Payments for acquisition and equity registration costs
    
    
    
    
    
    
    
    
    
    
    6,832Acquisition of StrataLight, net of cash acquired
    
    $
    
    
    
    $
    
    
    
    $
    28,425Non-cash financing activitiesCapital lease obligations incurred
    
    $
    (10,395
    )
    
    $
    (109
    )
    
    $
    (15,384
    )
  59




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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
  Revenue Recognition
   60




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
  Warranties
  Research and Development Costs
  Shipping and Handling Costs
  Foreign Currency Transactions and Translation
    61




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
  Net Loss per Common Share
  Cash and Cash Equivalents
  Trade Receivables
  Inventories
   62




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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
  Goodwill and Business Combinations
    63




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
 Income Taxes
  Fair Value Measurements
  
    
    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.
 64




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
 
  SignificantQuoted Market
    
    Other
    
    SignificantValue as of
    
    Prices in Active
    
    Observable
    
    UnobservableMarch 31,
    
    Markets
    
    Inputs
    
    Inputs2011
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)
    
    Balance Sheet ClassificationAssets:Money market funds
    
    $
    59,578
    
    
    $
    59,578
    
    
    $
    
    
    
    $
    
    
    
    Cash and cash equivalentsLiabilities:Forward foreign
currency exchange
contracts
    
    $
    271
    
    
    $
    
    
    
    $
    271
    
    
    $
    
    
    
    Accrued expenses
 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 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.
    
    The Company has estimated volatility based on the Companys historical stock prices.
    
    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.
 65




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
 
 3. Business Combinations
     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
 66




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
  Pro Forma Basis for Fiscal YearsEnded March 31,2009
    
    2008Revenues
    
    $
    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
    )
   4. Restructuring Charges
   Twelve months ended
    
    
    Twelve months endedMarch 31, 2011
    
    
    March 31, 2010Workforce
    
    
    
    
    
    
    WorkforceReduction
    
    
    Facilities
    
    
    Reduction
    
    
    FacilitiesAccrual balance at beginning of period
    
    $
    121
    
    
    $
    502
    
    
    $
    331
    
    
    $
    724Restructuring charges:Manufacturing expense
    
    
    28
    
    
    
    
    
    
    
    359
    
    
    
    Research and development expense
    
    
    201
    
    
    
    
    
    
    
    276
    
    
    
    Selling, general and
administrative expense
    
    
    53
    
    
    
    
    
    
    
    744
    
    
    
    95Cash payments
    
    
    (403
    )
    
    
    (348
    )
    
    
    (1,589
    )
    
    
    (317
    )Accrual balance at end of period
    
    $
    
    
    
    $
    154
    
    
    $
    121
    
    
    $
    502
 67




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
  5. Inventories
  March 31,2011
    
    
    2010Raw materials
    
    $
    64,144
    
    
    $
    49,859Work-in-process
    
    
    17,783
    
    
    
    14,810Finished goods
    
    
    36,661
    
    
    
    28,349Inventories
    
    $
    118,588
    
    
    $
    93,018
  6. Property, Plant, and Equipment
  March 31,2011
    
    
    2010Machinery, electronic, and other equipment
    
    $
    282,064
    
    
    $
    245,154Computer software
    
    
    19,974
    
    
    
    17,928Building improvements
    
    
    6,115
    
    
    
    6,093Construction-in-progress
    
    
    5,233
    
    
    
    5,755Total property, plant, and equipment
    
    
    313,386
    
    
    
    274,930Less accumulated depreciation and amortization
    
    
    (253,394
    )
    
    
    (214,608
    )Property, plant, and equipment, net
    
    $
    59,992
    
    
    $
    60,322
  7. Intangible Assets and Goodwill
 Intangible Assets other than Goodwill
  68




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
   Gross Carrying
    
    
    Accumulated
    
    
    Net CarryingAmount
    
    
    Amortization
    
    
    AmountDeveloped product research
    
    $
    28,900
    
    
    $
    (12,878
    )
    
    $
    16,022Order backlog
    
    
    13,100
    
    
    
    (13,100
    )
    
    
    Customer relationships
    
    
    4,100
    
    
    
    (3,046
    )
    
    
    1,054Total intangible assets
    
    $
    46,100
    
    
    $
    (29,024
    )
    
    $
    17,076
  AmountFiscal Year Ended March 31,2012
    
    $
    6,8342013
    
    
    5,7802014
    
    
    4,462Total
    
    $
    17,076
 Sale of Technology Assets
    69




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
  Goodwill
     Fiscal Year Ended March 31,2011
    
    
    2010
    
    
    2009Beginning balance
    
    $
    
    
    
    $
    
    
    
    $
    5,698Acquisition of StrataLight
    
    
    
    
    
    
    
    
    
    
    61,983Impairment of goodwill
    
    
    
    
    
    
    
    
    
    
    (67,681
    )Ending balance
    
    $
    
    
    
    $
    
    
    
    $
    
 8. Income Taxes
  Fiscal Year Ended March 31,2011
    
    
    2010
    
    
    2009United States
    
    $
    (28,468
    )
    
    $
    (52,113
    )
    
    $
    (120,665
    )Foreign
    
    
    (3,213
    )
    
    
    (26,485
    )
    
    
    (8,891
    )Loss before income taxes
    
    $
    (31,681
    )
    
    $
    (78,598
    )
    
    $
    (129,556
    )Income tax provision (benefit):Current:Federal
    
    $
    
    
    
    $
    (228
    )
    
    $
    State and local
    
    
    49
    
    
    
    87
    
    
    
    Foreign
    
    
    102
    
    
    
    56
    
    
    
    16Subtotal
    
    $
    151
    
    
    $
    (85
    )
    
    $
    16Deferred:Federal
    
    $
    
    
    
    $
    
    
    
    $
    State and local
    
    
    
    
    
    
    
    
    
    
    Foreign
    
    
    
    
    
    
    
    
    
    
    Subtotal
    
    $
    
    
    
    $
    
    
    
    $
    Income tax provision (benefit)
    
    $
    151
    
    
    $
    (85
    )
    
    $
    16
 70




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
  Fiscal Year Ended March 31,2011
    
    2010
    
    2009U.S. federal statutory income tax rate
    
    
    (35.0
    )%
    
    
    (35.0
    )%
    
    
    (35.0
    )%State and local income taxes, net of federal income tax effect
    
    
    (3.7
    )
    
    
    (3.2
    )
    
    
    (5.0
    )Foreign earnings taxed at different rates
    
    
    (0.5
    )
    
    
    (1.7
    )
    
    
    (0.3
    )Change in valuation allowance
    
    
    (100.0
    )
    
    
    (12.6
    )
    
    
    (1.6
    )Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    21.2Expired net operating loss carryforwards
    
    
    132.6
    
    
    
    52.0
    
    
    
    15.6Other
    
    
    7.1
    
    
    
    0.4
    
    
    
    5.1Effective income tax rate
    
    
    0.5
    %
    
    
    (0.1
    )%
    
    
    0.0
    %
    71




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
 March 31,2011
    
    
    2010Net deferred income tax assets:Net operating loss, capital loss and credit carryforwards
    
    $
    186,913
    
    
    $
    204,042Inventory and other reserves
    
    
    28,259
    
    
    
    29,851Non-employee stock option expense to related parties
    
    
    9,387
    
    
    
    9,387Stock-based compensation
    
    
    8,792
    
    
    
    5,844Purchased intangibles and goodwill
    
    
    (6,956
    )
    
    
    (9,868
    )Capital leases and property, plant, and equipment
    
    
    722
    
    
    
    (431
    )Other
    
    
    (2,890
    )
    
    
    (2,398
    )Valuation allowance
    
    
    (224,227
    )
    
    
    (236,427
    )Total net deferred tax assets
    
    $
    
    
    
    $
    
     9. Stockholders Equity
  72




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
   Rights Agreement
      73




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
  10. Net Loss Per Share
   Fiscal Year Ended March 31,2011
    
    
    2010
    
    
    2009Numerator:Net loss, basic and diluted
    
    $
    (31,832
    )
    
    $
    (78,513
    )
    
    $
    (129,572
    )Denominator:Weighted average shares outstanding  basic
    
    
    89,904
    
    
    
    88,952
    
    
    
    69,775Effect of potentially dilutive options
    
    
    
    
    
    
    
    
    
    
    Weighted average shares outstanding  diluted
    
    
    89,904
    
    
    
    88,952
    
    
    
    69,775Basic and diluted net loss per share
    
    $
    (0.35
    )
    
    $
    (0.88
    )
    
    $
    (1.86
    )
  Fiscal Year Ended March 31,2011
    
    2010
    
    2009Stock options
    
    
    12,725
    
    
    
    13,355
    
    
    
    9,029Stock appreciation rights
    
    
    507
    
    
    
    525
    
    
    
    543Restricted stock units and other
    
    
    546
    
    
    
    321
    
    
    
    133Total
    
    
    13,778
    
    
    
    14,201
    
    
    
    9,705
 11. Accumulated Other Comprehensive Income (Loss)
  Fiscal Year EndedMarch 31,2011
    
    
    2010Unrealized loss on foreign currency forward contract
    
    $
    (271
    )
    
    $
    (251
    )Defined benefit plan costs, net
    
    
    93
    
    
    
    (64
    )Foreign currency translation adjustment
    
    
    15,879
    
    
    
    9,960Accumulated other comprehensive income
    
    $
    15,701
    
    
    $
    9,645
 74




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
 12. Employee Benefits
     Fiscal Year Ended March 31,2011
    
    
    2010
    
    
    2009Pension benefit:Service cost
    
    $
    1,027
    
    
    $
    946
    
    
    $
    834Interest cost
    
    
    108
    
    
    
    82
    
    
    
    59Amortization of prior service cost
    
    
    91
    
    
    
    83
    
    
    
    76Net pension plan cost
    
    $
    1,226
    
    
    $
    1,111
    
    
    $
    969Weighted average assumptions
used to determine net pension
plan cost:Discount rate
    
    
    2.00
    %
    
    
    2.00
    %
    
    
    2.00
    %Salary increase rate
    
    
    2.7
    %
    
    
    2.8
    %
    
    
    3.1
    %Expected residual active life
    
    15.5 years
    
    15.8 years
    
    15.9 years
  75




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
 Fiscal Year Ended March 31,2011
    
    
    2010Change in benefit obligation:Benefit obligation at beginning of period
    
    $
    4,957
    
    
    $
    3,828Service cost
    
    
    1,027
    
    
    
    946Interest cost
    
    
    108
    
    
    
    82Realized actuarial (gain) loss
    
    
    (67
    )
    
    
    (44
    )Benefits paid
    
    
    (55
    )
    
    
    (75
    )Foreign currency translation
    
    
    647
    
    
    
    220Benefit obligation at end of period
    
    $
    6,617
    
    
    $
    4,957Amount recognized in the consolidated balance sheet:Accrued liabilities
    
    $
    182
    
    
    $
    85Other long-term liabilities
    
    
    6,435
    
    
    
    4,872Net amount recognized at end of fiscal year
    
    $
    6,617
    
    
    $
    4,957Amounts recognized in accumulated other comprehensive loss:Net unrealized actuarial gain
    
    $
    353
    
    
    $
    258Prior service cost
    
    
    (260
    )
    
    
    (322
    )Accumulated other comprehensive loss at end of fiscal year
    
    $
    93
    
    
    $
    (64
    )
  13. Stock-Based Incentive Plan
  Restricted Stock Units and Restricted Common Shares
  The following table presents a summary of restricted stock unit activity:
 Weighted
    
    
    
    
    
    
    AverageRestricted
    
    
    Average
    
    
    Aggregate
    
    
    RemainingStock
    
    
    Grant Date
    
    
    Intrinsic
    
    
    VestingUnits
    
    
    Fair Value
    
    
    Value
    
    
    Period(per share)
    
    
    
    
    
    
    (in years)Non-vested balance at March 31, 2008
    
    
    16
    
    
    $
    9.46Granted
    
    
    126
    
    
    
    2.16Forfeited
    
    
    (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
    
    
    
    1.89Granted
    
    
    207
    
    
    
    2.11Vested
    
    
    (148
    )
    
    
    1.89Non-vested balance at March 31, 2011
    
    
    207
    
    
    $
    2.11
    
    
    $
    504
    
    
    
    0.6Vested balance at March 31, 2011
    
    
    339
    
    
    $
    2.28
    
    
    $
    824
 76




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
   Employee Incentive Award Program
   77




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
 Stock Options
  78




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
  Fiscal Year Ended March 31,2011
    
    2010
    
    2009Expected term (in years)
    
    
    4.64
    
    
    
    4.50
    
    
    
    4.90Volatility
    
    
    82.6
    %
    
    
    86.2
    %
    
    
    83.5
    %Risk-free interest rate
    
    
    2.0
    %
    
    
    2.1
    %
    
    
    2.3
    %Dividend yield
    
    
    
    
    
    
    
    
    
    
    Forfeiture rate
    
    
    10.0
    %
    
    
    10.0
    %
    
    
    10.0
    %
   Weighted
    
    
    
    
    
    
    AverageAverage
    
    
    Aggregate
    
    
    RemainingExercise
    
    
    Intrinsic
    
    
    ContractualOptions
    
    
    Price
    
    
    Value
    
    
    Life(per share)
    
    
    
    
    
    
    (in years)Balance 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
    
    
    
    6.16Granted
    
    
    2,501
    
    
    
    2.11Forfeited
    
    
    (2,081
    )
    
    
    2.28Expired
    
    
    (879
    )
    
    
    11.68Exercised
    
    
    (171
    )
    
    
    1.71Balance at March 31, 2011
    
    
    12,725
    
    
    $
    5.68
    
    
    $
    2,369
    
    
    
    4.8Options exercisable at March 31, 2011
    
    
    7,027
    
    
    $
    7.89
    
    
    $
    886
    
    
    
    3.9
 79




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
  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
    
    
    1,001
    
    
    
    6.4
    
    
    $
    1.66
    
    
    
    603
    
    
    
    5.5
    
    
    $
    1.67$1.74 - $2.73
    
    
    6,343
    
    
    
    5.7
    
    
    
    2.19
    
    
    
    2,074
    
    
    
    5.2
    
    
    
    2.23$4.47 - $8.89
    
    
    2,454
    
    
    
    5.0
    
    
    
    5.98
    
    
    
    1,569
    
    
    
    4.8
    
    
    
    6.07$11.34 - $15.00
    
    
    2,927
    
    
    
    2.2
    
    
    
    14.35
    
    
    
    2,781
    
    
    
    1.9
    
    
    
    14.49Total
    
    
    12,725
    
    
    
    
    
    
    
    
    
    
    
    7,027
 Stock Appreciation Rights (SARs)
      Cash Settlement
    
    
    Stock Settlement
    
    
    Total SARsWeighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    Exercise
    
    
    
    
    
    
    ExerciseShares
    
    
    Price
    
    
    Shares
    
    
    Price
    
    
    Shares
    
    
    PriceBalance 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
    
    
    
    15.00Granted
    
    
    22
    
    
    
    1.77
    
    
    
    
    
    
    
    
    
    
    
    22
    
    
    
    1.77Expired
    
    
    (3
    )
    
    
    15.00
    
    
    
    (9
    )
    
    
    15.00
    
    
    
    (12
    )
    
    
    15.00Forfeited
    
    
    
    
    
    
    
    
    
    
    (9
    )
    
    
    15.00
    
    
    
    (9
    )
    
    
    15.00Balance at March 31, 2011
    
    
    58
    
    
    $
    9.98
    
    
    
    507
    
    
    $
    15.00
    
    
    
    565
    
    
    $
    14.48
 80




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Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
 14. Short-Term Debt
   15. Concentrations of Risk
   16. Commitments and Contingencies
  Capital
    
    
    OperatingLeases
    
    
    LeasesFiscal year ending March 31:2012
    
    $
    12,084
    
    
    $
    2,5632013
    
    
    8,118
    
    
    
    4162014
    
    
    2,948
    
    
    
    2912015
    
    
    2,869
    
    
    
    2016
    
    
    1,434
    
    
    
    Total minimum lease payments
    
    
    27,453
    
    
    $
    3,270Less amount representing interest
    
    
    (1,386
    )Present value of capitalized payments
    
    
    26,067Less current portion
    
    
    (13,513
    )Long-term portion
    
    $
    12,554
 81




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
   Fiscal Year Ended March 31,2011
    
    
    2010
    
    
    2009Beginning balance
    
    $
    7,583
    
    
    $
    11,922
    
    
    $
    1,655Acquisition of StrataLight
    
    
    
    
    
    
    
    
    
    
    11,253Warranty provision on products sold
    
    
    1,534
    
    
    
    1,604
    
    
    
    3,482Warranty claims processed including
expirations and changes to prior
estimates
    
    
    (5,497
    )
    
    
    (6,060
    )
    
    
    (4,613
    )Foreign currency translation and other
    
    
    218
    
    
    
    117
    
    
    
    145Ending balance
    
    $
    3,838
    
    
    $
    7,583
    
    
    $
    11,922
   17. Related-Party Transactions
  82




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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
  83




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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
  Secondment Agreements
  84




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##### Table of Contents



Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
  Lease Agreements
  Opto Devices Related Party Agreements
  Intellectual Property License Agreement
  Secondment Agreements
  Lease Agreement
  18. Operating Segments and Geographic Information
 Operating Segments
 85




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Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
  Geographic Information
 Fiscal Year Ended March 31,2011
    
    
    2010
    
    
    2009Sales:Americas
    
    $
    143,026
    
    
    $
    144,799
    
    
    $
    158,530Asia Pacific, excluding Japan
    
    
    85,697
    
    
    
    46,746
    
    
    
    31,010Europe
    
    
    75,072
    
    
    
    97,572
    
    
    
    86,019Japan
    
    
    53,846
    
    
    
    30,015
    
    
    
    42,996Total
    
    $
    357,641
    
    
    $
    319,132
    
    
    $
    318,555
  March 31,2011
    
    
    2010Assets:North America
    
    $
    208,356
    
    
    $
    230,851Japan
    
    
    144,696
    
    
    
    121,122Europe
    
    
    21,305
    
    
    
    18,325Total
    
    $
    374,357
    
    
    $
    370,298
  19. Valuation and Qualifying Accounts
 Allowance for Doubtful Accounts
 Fiscal Year Ended March 31,2011
    
    
    2010
    
    
    2009Beginning balance
    
    $
    900
    
    
    $
    1,022
    
    
    $
    335Charge (reduction) to expense
    
    
    283
    
    
    
    (66
    )
    
    
    718Deduction and write-offs
    
    
    (223
    )
    
    
    (61
    )
    
    
    Foreign currency translation and other
    
    
    17
    
    
    
    5
    
    
    
    (31
    )Ending balance
    
    $
    977
    
    
    $
    900
    
    
    $
    1,022
 Tax Valuation Allowance
 Fiscal Year Ended March 31,2011
    
    
    2010
    
    
    2009Beginning balance
    
    $
    236,427
    
    
    $
    238,264
    
    
    $
    228,461Changes in valuation allowance
    
    
    (30,191
    )
    
    
    (11,556
    )
    
    
    8,442Foreign currency translation
    
    
    17,991
    
    
    
    9,719
    
    
    
    1,361Ending balance
    
    $
    224,227
    
    
    $
    236,427
    
    
    $
    238,264
 86




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Opnext, Inc.
 Notes to Consolidated Financial Statements  (Continued)
(in thousands, except per share amounts)
 20. Subsequent Events
  87




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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.
 88




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
on Internal Control Over Financial Reporting
 
        
 89




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##### Table of Contents



Changes in internal control over financial reporting
  
 Item 9B Other.
  90




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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 and 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.
    91




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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+
    
    Form of Opnext, Inc. 2001 Long-Term Stock Incentive Plan, Nonqualified Stock Option Agreement.(1)10.3a+
    
    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)10.3c+
    
    Form of Amendment to Stock Appreciation Right Agreement.(3)10.4
    
    Form of Hitachi, Ltd. and Clarity Management, L.P. Nonqualified Stock Option Agreement.(1)10.5+
    
    Form of Opnext, Inc. Restricted Stock Agreement.(1)10.6
    
    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)10.7
    
    Research and Development Agreement, dated as of July 31, 2002, by and between Hitachi, Ltd. and
Opnext, Inc., as amended.(1)10.8
    
    Intellectual Property License Agreement, dated as of July 31, 2001, by and between Hitachi, Ltd. and
Opnext Japan, Inc., as amended.(1)10.9
    
    Intellectual Property License Agreement, dated as of October 1, 2002, by and between Hitachi, Ltd.
and Opnext Japan, Inc., as amended.(1)10.10
    
    Intellectual Property License Agreement, effective as of October 1, 2002, by and between Hitachi
Communication Technologies, Ltd. and Opnext Japan, Inc.(1)10.11
    
    Trademark Indication Agreement, dated as of October 1, 2002, by and between Hitachi, Ltd. and Opnext
Japan, Inc., as amended.(1)10.12
    
    Trademark Indication Agreement, dated as of July 31, 2001, by and between Hitachi, Ltd., Opnext,
Inc. and Opnext Japan, Inc., as amended.(1)10.13
    
    Lease Agreement, made as of July 31, 2001, between Hitachi Communication Technologies, Ltd. and
Opnext Japan, Inc., as amended.(1)10.14
    
    Lease Agreement, made as of October 1, 2002, between Renesas Technology Corp. and Opnext Japan,
Inc., as amended.(1)10.15
    
    Agreement on Bank Transactions between Opnext Japan, Inc. and The Bank of Tokyo-Mitsubishi UFJ,
Ltd., as amended.(1)10.16
    
    Software User License Agreement, dated as of October 20, 2003, by and between Renesas Technology
Corp. and Opnext Japan, Inc.(1)10.17
    
    Logistics Agreement, effective as of April 1, 2002, between Opnext, Inc. and Hitachi Transport
System, Ltd.(1)
 92




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##### Table of Contents



ExhibitNo.
    
    Description of Document10.18
    
    Distribution Agreement, dated April 1, 2001, between Hitachi Electronic Devices Sales, Inc. and
Opnext Japan, Inc.(1)10.19
    
    Distribution Agreement, dated April 1, 2003, between Opnext Japan, Inc. and Renesas Technology Sale
Co., Ltd.(1)10.20
    
    Distribution Agreement, dated July 1, 2003, between Opnext Japan, Inc. and Hitachi High-Technologies
Corp.(1)10.21+
    
    Non-Competition Agreement, dated as of November 1, 2007, between Opnext, Inc. and Gilles Bouchard.(2)10.22+
    
    Indemnification Agreement, dated as of November 1, 2007, between Opnext, Inc. and Gilles Bouchard.(2)10.23+
    
    Amended and Restated Employment Agreement, dated as of July 29, 2008, between Opnext, Inc. and
Michael C. Chan.(3)10.24+
    
    Amended and Restated Employment Agreement, dated as of December 31, 2008, between Opnext, Inc. and
Robert J. Nobile.(4)10.25+
    
    Amended and Restated Employment Agreement, dated as of May 15, 2009, between Opnext, Inc. and Gilles
Bouchard.(5)10.26+
    
    Opnext, Inc. Second Amended and Restated 2001 Long-Term Stock Incentive Plan, dated as of January 6,
2009.(6)10.27
    
    Lease Agreement, made as of September 15, 2008, between Fremont Ventures LLC and Opnext, Inc.(6)10.28
    
    Lease Agreement, made as of March 14, 2006, between Los Gatos Business Park and StrataLight
Communications, Inc.(6)10.29
    
    Lease Agreement, made as of February 1, 2008, and amended June 2, 2008, between Los Gatos Business
Park and StrataLight Communications, Inc.(6)10.30+
    
    First Amendment to Employment Agreement, dated as of May 15, 2009, between Opnext, Inc. and Michael
Chan.(5)10.31+
    
    Separation Agreement, dated as of December 9, 2010, between Opnext, Inc. and Gilles Bouchard.(7)10.32+
    
    First Amendment to Opnext, Inc. Second Amended and Restated 2001 Long-Term Stock Incentive Plan,
dated as of December 22, 2010.(8)10.33+
    
    Employment Agreement, dated as of January 26, 2011, between Opnext, Inc. and Harry L. Bosco.(9)10.34
    
    Asset Purchase Agreement, dated as of February 9, 2011, by and among Juniper Networks, Inc. and
Opnext Subsystems, Inc.(10)21
    
    List of Subsidiaries.(6)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. 93




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##### Table of Contents



(3)
    
    Filed as an exhibit to Form 10-K/A (Amendment No. 1) as filed with the Securities and
Exchange Commission on July 29, 2008 and incorporated herein by reference.(4)
    
    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.(5)
    
    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.(6)
    
    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.(7)
    
    Filed as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on
December 13, 2010 and incorporated herein by reference.(8)
    
    Filed as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on
January 26, 2011 and incorporated herein by reference.(9)
    
    Filed as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on
January 28, 2011 and incorporated herein by reference.(10)
    
    Filed as an exhibit on Form 10-Q as filed with the Securities and Exchange Commission on
February 9, 2011 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. 94




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##### Table of Contents



SIGNATURES
  OPNEXT, INC.By:
    /s/ Harry L. BoscoHarry L. Bosco, President and Chief Executive OfficerBy:
    /s/ Robert J. NobileRobert J. Nobile, Chief Financial Officer andSenior Vice President, Finance  95




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##### Table of Contents



POWER OF ATTORNEY
   Signature
    
    Title/s/ Harry L. Bosco

Harry L. Bosco
    
    Chairman of the Board, 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. 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/ 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
 96




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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+
    
    Form of Opnext, Inc. 2001 Long-Term Stock Incentive Plan, Nonqualified Stock Option Agreement.(1)10.3a+
    
    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)10.3c+
    
    Form of Amendment to Stock Appreciation Right Agreement.(3)10.4
    
    Form of Hitachi, Ltd. and Clarity Management, L.P. Nonqualified Stock Option Agreement.(1)10.5+
    
    Form of Opnext, Inc. Restricted Stock Agreement.(1)10.6
    
    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)10.7
    
    Research and Development Agreement, dated as of July 31, 2002, by and between Hitachi, Ltd. and
Opnext, Inc., as amended.(1)10.8
    
    Intellectual Property License Agreement, dated as of July 31, 2001, by and between Hitachi, Ltd. and
Opnext Japan, Inc., as amended.(1)10.9
    
    Intellectual Property License Agreement, dated as of October 1, 2002, by and between Hitachi, Ltd.
and Opnext Japan, Inc., as amended.(1)10.10
    
    Intellectual Property License Agreement, effective as of October 1, 2002, by and between Hitachi
Communication Technologies, Ltd. and Opnext Japan, Inc.(1)10.11
    
    Trademark Indication Agreement, dated as of October 1, 2002, by and between Hitachi, Ltd. and Opnext
Japan, Inc., as amended.(1)10.12
    
    Trademark Indication Agreement, dated as of July 31, 2001, by and between Hitachi, Ltd., Opnext,
Inc. and Opnext Japan, Inc., as amended.(1)10.13
    
    Lease Agreement, made as of July 31, 2001, between Hitachi Communication Technologies, Ltd. and
Opnext Japan, Inc., as amended.(1)10.14
    
    Lease Agreement, made as of October 1, 2002, between Renesas Technology Corp. and Opnext Japan,
Inc., as amended.(1)10.15
    
    Agreement on Bank Transactions between Opnext Japan, Inc. and The Bank of Tokyo-Mitsubishi UFJ,
Ltd., as amended.(1)10.16
    
    Software User License Agreement, dated as of October 20, 2003, by and between Renesas Technology
Corp. and Opnext Japan, Inc.(1)10.17
    
    Logistics Agreement, effective as of April 1, 2002, between Opnext, Inc. and Hitachi Transport
System, Ltd.(1)
 97




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##### Table of Contents



ExhibitNo.
    
    Description of Document10.18
    
    Distribution Agreement, dated April 1, 2001, between Hitachi Electronic Devices Sales, Inc. and
Opnext Japan, Inc.(1)10.19
    
    Distribution Agreement, dated April 1, 2003, between Opnext Japan, Inc. and Renesas Technology Sale
Co., Ltd.(1)10.20
    
    Distribution Agreement, dated July 1, 2003, between Opnext Japan, Inc. and Hitachi High-Technologies
Corp.(1)10.21+
    
    Non-Competition Agreement, dated as of November 1, 2007, between Opnext, Inc. and Gilles Bouchard.(2)10.22+
    
    Indemnification Agreement, dated as of November 1, 2007, between Opnext, Inc. and Gilles Bouchard.(2)10.23+
    
    Amended and Restated Employment Agreement, dated as of July 29, 2008, between Opnext, Inc. and
Michael C. Chan.(3)10.24+
    
    Amended and Restated Employment Agreement, dated as of December 31, 2008, between Opnext, Inc. and
Robert J. Nobile.(4)10.25+
    
    Amended and Restated Employment Agreement, dated as of May 15, 2009, between Opnext, Inc. and Gilles
Bouchard.(5)10.26+
    
    Opnext, Inc. Second Amended and Restated 2001 Long-Term Stock Incentive Plan, dated as of January 6,
2009.(6)10.27
    
    Lease Agreement, made as of September 15, 2008, between Fremont Ventures LLC and Opnext, Inc.(6)10.28
    
    Lease Agreement, made as of March 14, 2006, between Los Gatos Business Park and StrataLight
Communications, Inc.(6)10.29
    
    Lease Agreement, made as of February 1, 2008, and amended June 2, 2008, between Los Gatos Business
Park and StrataLight Communications, Inc.(6)10.30+
    
    First Amendment to Employment Agreement, dated as of May 15, 2009, between Opnext, Inc. and Michael
Chan.(5)10.31+
    
    Separation Agreement, dated as of December 9, 2010, between Opnext, Inc. and Gilles Bouchard.(7)10.32+
    
    First Amendment to Opnext, Inc. Second Amended and Restated 2001 Long-Term Stock Incentive Plan,
dated as of December 22, 2010.(8)10.33+
    
    Employment Agreement, dated as of January 26, 2011, between Opnext, Inc. and Harry L. Bosco.(9)10.34
    
    Asset Purchase Agreement, dated as of February 9, 2011, by and among Juniper Networks, Inc. and
Opnext Subsystems, Inc.(10)21
    
    List of Subsidiaries.(6)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. 98




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##### Table of Contents



(3)
    
    Filed as an exhibit to Form 10-K/A (Amendment No. 1) as filed with the Securities and
Exchange Commission on July 29, 2008 and incorporated herein by reference.(4)
    
    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.(5)
    
    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.(6)
    
    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.(7)
    
    Filed as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on
December 13, 2010 and incorporated herein by reference.(8)
    
    Filed as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on
January 26, 2011 and incorporated herein by reference.(9)
    
    Filed as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on
January 28, 2011 and incorporated herein by reference.(10)
    
    Filed as an exhibit on Form 10-Q as filed with the Securities and Exchange Commission on
February 9, 2011 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. 99