Opnext Announces Expected Restatement of Financial Statements

Opnext, Inc. (NASDAQ:OPXT), a global leader in the design and manufacturing of optical modules and components, announced today that in the course of preparing the Company’s financial statements for the quarter ended December 31, 2007, the Company has determined that errors occurred in the valuation of inventory consigned to one of its contract manufacturers and that, as a result, the Company’s inventory and trade payables balances and the reported amounts of cost of goods sold and other income expense, net, were not properly reported for each of the fiscal years ended March 31, 2006 and March 31, 2007, and for the affected quarterly periods in each of those years.

The Company estimates that, as a result of the errors, the Company’s net income was overstated by approximately $1.8 million for the fiscal year ended March 31, 2007 and its net loss was understated by approximately $1.0 million for the fiscal year ended March 31, 2006. In addition, net income was overstated by approximately $0.7 million for the three-month period ended December 31, 2006 and was understated by approximately $0.1 million for the three-month period ended September 30, 2006, while net loss was understated by approximately $0.5 million for the three-month period ended June 30, 2006. The Company expects to file an amendment to its Annual Report on Form 10-K for the fiscal year ended March 31, 2007 to restate the previously issued audited financial statements for the years ended March 31, 2007 and March 31, 2006. The Company also expects to file amendments to its Quarterly Reports on Form 10-Q for the quarters ended June 30, 2007 and September 30, 2007 to restate the previously issued comparative financial statements for the quarters ended June 30, 2006 and September 30, 2006, respectively. The previously issued comparative financial statements for the quarter and nine-month period ended December 31, 2006 will be restated in the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2007.

Senior management of the Company has reviewed the errors and determined that its previously issued financial statements for the above-referenced periods should no longer be relied upon. Management has discussed the matters described above with the Company’s Audit Committee of the Board of Directors, and the Audit Committee has concurred with management’s determinations relating to the restatement. The Audit Committee and management have also discussed the matters described above with Ernst & Young LLP, the Company’s independent registered public accounting firm. Furthermore, the Company has notified the NASDAQ National Market of the review and of the Company’s expected restatement of previously reported financial statements.

Pending the completion of the restatement, the Company is postponing its earnings release and the filing of its Quarterly Report on Form 10-Q for the quarter ended December 31, 2007.

Forward-looking Statements

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements reflect management’s current expectations based on currently available information, including, but not limited to, the amount and nature of the identified errors, and the nature and extent of the related restatements of the above-referenced financial statements. Our forward-looking statements include our discussion of the estimated errors impacting the Company’s above-referenced financial statements and are generally identified with words such as “expect,”“estimates,” “believe,”“intend,” “plan,”“could,” “may” and similar expressions. These forward-looking statements are subject to risks, uncertainties and assumptions that could cause the actual restatements of the Company’s above-referenced financial statements to differ materially from those anticipated in or implied by the forward-looking statements. The risks, uncertainties and assumptions that could affect our forward-looking statements include, among other things:

• The finalization of the Company’s review of the amounts of the identified errors;
• The completion of the related restatements described above and the Company's third quarter financial results and the review or audit of such matters by its independent registered public accounting firm; and
• The identification of additional or different errors as a result of the completion of such review that could be separately material and affect other periods.

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About Opnext

From the latest communications networks to new security systems, and from major advances in medical systems to high-demand consumer electronics, Opnext (NASDAQ: OPXT) laser technologies add the spark of innovation to a world of new applications. The Company’s industry expertise, future-focused thinking and commitment to research and development combine in bringing to market solutions that are ready for the next generation of laser-based products. Formed out of Hitachi, Opnext has built on more than 30 years experience in advanced technology to establish its broad portfolio of solutions and solid reputation for excellence in service. For additional information, visit www.opnext.com.