What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-02-05 compared with 2020-11-06 · 296 added, 199 removed, 625 unchanged (44% of the section changed)

3 unchanged sentences

(in thousands, except share and per share amounts)

September 30, June 30,

December 31, June 30,

Current assets:

Cash and cash equivalents $ 315,610 $ 210,533

Accounts receivable, net of allowances of $ 3,290 and $ 4,586 at September 30, 2020 and June 30, 2020, respectively (including accounts receivable from related parties of $ 1,202 and $ 8,712 at September 30, 2020 and June 30, 2020, respectively)

Accounts receivable, net of allowances of $ 2,941 and $ 4,586 at December 31, 2020 and June 30, 2020, respectively (including accounts receivable from related parties of $ 15,016 and $ 8,712 at December 31, 2020 and June 30, 2020, respectively)

323,021 403,745

Inventories 807,431 851,498

Prepaid expenses and other current assets (including other receivables from related parties of $ 7,708 and $ 19,791 at September 30, 2020 and June 30, 2020, respectively)

Prepaid expenses and other current assets (including other receivables from related parties of $ 12,237 and $ 19,791 at December 31, 2020 and June 30, 2020, respectively)

98,211 126,985

7 unchanged sentences

Current liabilities:

Accounts payable (including amounts due to related parties of $ 47,692 and $ 72,368 at September 30, 2020 and June 30, 2020, respectively)

Accounts payable (including amounts due to related parties of $ 48,256 and $ 72,368 at December 31, 2020 and June 30, 2020, respectively)

$ 396,288 $ 417,673

Accrued liabilities (including amounts due to related parties of $ 12,629 and $ 16,206 at September 30, 2020 and June 30, 2020, respectively)

Accrued liabilities (including amounts due to related parties of $ 11,339 and $ 16,206 at December 31, 2020 and June 30, 2020, respectively)

141,698 155,401

5 unchanged sentences

Long-term debt, net of debt issuance costs 20,577 5,697

Other long-term liabilities (including related party balance of $ 1,169 and $ 1,699 at September 30, 2020 and June 30, 2020, respectively)

Other long-term liabilities (including related party balance of $ 28 and $ 1,699 at December 31, 2020 and June 30, 2020, respectively)

40,908 41,995

6 unchanged sentences

Outstanding shares:

51,765,627 and 52,408,703 at September 30, 2020 and June 30, 2020, respectively

50,651,054 and 52,408,703 at December 31, 2020 and June 30, 2020, respectively

Issued shares:

54,241,046 and 53,741,828 at September 30, 2020 and June 30, 2020, respectively

400,157 389,972

Treasury stock (at cost), 2,475,419 and 1,333,125 shares at September 30, 2020 and June 30, 2020, respectively

50,651,054 and 53,741,828 at December 31, 2020 and June 30, 2020, respectively

410,522 389,972

Treasury stock (at cost), — and 1,333,125 shares at December 31, 2020 and June 30, 2020, respectively

Accumulated other comprehensive gain (loss) 396 ( 152 )

10 unchanged sentences

Three Months Ended

September 30,

Net sales (including related party sales of $ 13,899 and $ 27,662 in the three months ended September 30, 2020 and 2019, respectively)

December 31, Six Months Ended

2020 2019 2020 2019

Cost of sales (including related party purchases of $ 62,199 and $ 65,033 in the three months ended September 30, 2020 and 2019, respectively)

Net sales (including related party sales of $ 18,706 and $ 21,784 in the three months ended December 31, 2020 and 2019, respectively, and $ 38,421 and $ 49,446 in the six months ended December 31, 2020 and 2019, respectively)

$ 830,306 $ 870,943 $ 1,592,556 $ 1,670,747

Cost of sales (including related party purchases of $ 50,835 and $ 75,333 in the three months ended December 31, 2020 and 2019, respectively, and $ 113,034 and $ 140,366 in the six months ended December 31, 2020 and 2019, respectively)

694,211 732,539 1,326,546 1,401,414

Gross profit 136,095 138,404 266,010 269,333

9 unchanged sentences

Income tax provision ( 5,108 ) ( 2,113 ) ( 8,768 ) ( 10,681 )

Share of income from equity investee, net of taxes 1,330 1,011

Share of (loss) from equity investee, net of taxes ( 1,475 ) ( 1,020 ) ( 145 ) ( 9 )

Net income $ 27,674 $ 23,706 $ 54,275 $ 50,051

10 unchanged sentences

Three Months Ended

September 30,

December 31, Six Months Ended

2020 2019 2020 2019

Net income $ 27,674 $ 23,706 $ 54,275 $ 50,051

7 unchanged sentences

(in thousands, except share amounts)

Three Months Ended September 30, 2020 Common Stock and

Three Months Ended December 31, 2020 Common Stock and

Additional Paid-In

5 unchanged sentences

Shares Amount Shares Amount

Balance at June 30, 2020 53,741,828 $ 389,972 ( 1,333,125 ) $ ( 20,491 ) $ ( 152 ) $ 696,211 $ 167 $ 1,065,707

Balance at September 30, 2020 54,241,046 $ 400,157 ( 2,475,419 ) $ ( 50,491 ) $ 95 $ 722,812 $ 169 $ 1,072,742

Exercise of stock options, net of taxes 332,783 5,747 — — — — — 5,747

1 unchanged sentence

Shares of common stock withheld for the withholding tax on vesting of restricted stock units ( 60,166 ) ( 1,713 ) — — — — — ( 1,713 )

Stock repurchases — — ( 1,142,294 ) ( 30,000 ) — — — ( 30,000 )

Stock repurchases and retirement ( 4,055,626 ) ( 122 ) 2,475,419 50,491 — ( 97,357 ) — ( 46,988 )

Stock-based compensation — 6,453 — — — — — 6,453

1 unchanged sentence

Net income — — — — — 27,674 4 27,678

Balance at December 31, 2020 50,651,054 $ 410,522 — $ — $ 396 $ 653,129 $ 173 $ 1,064,220

Three Months Ended December 31, 2019 Common Stock and

Additional Paid-In

Capital Treasury Stock Accumulated

Comprehensive

(Loss) Gain Retained

Earnings Non-controlling Interest Total

Stockholders’

Shares Amount Shares Amount

Balance at September 30, 2019 51,358,810 $ 354,157 ( 1,333,125 ) $ ( 20,491 ) $ ( 220 ) $ 638,248 $ 162 $ 971,856

Three Months Ended September 30, 2019 Common Stock and

Exercise of stock options, net of shares withheld for withholding taxes 283,987 3,933 — — — — — 3,933

Release of shares of common stock upon vesting of restricted stock units 408,793 — — — — — — —

Shares of common stock withheld for the withholding tax on vesting of restricted stock units ( 128,330 ) ( 2,994 ) — — — — — ( 2,994 )

Stock-based compensation — 4,964 — — — — — 4,964

Foreign currency translation gain — — — — 85 — — 85

Net income — — — — — 23,706 3 23,709

Balance at December 31, 2019 51,923,260 $ 360,060 ( 1,333,125 ) $ ( 20,491 ) $ ( 135 ) $ 661,954 $ 165 $ 1,001,553

See accompanying notes to condensed consolidated financial statements.

SUPER MICRO COMPUTER, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share amounts)

Six Months Ended December 31, 2020 Common Stock and

Additional Paid-In

1 unchanged sentence

Comprehensive

Loss Retained

(Loss) Gain Retained

Earnings Non-controlling Interest Total

2 unchanged sentences

Balance at June 30, 2020 53,741,828 $ 389,972 ( 1,333,125 ) $ ( 20,491 ) $ ( 152 ) $ 696,211 $ 167 $ 1,065,707

Exercise of stock options, net of taxes 683,613 10,767 — — — — — 10,767

Release of shares of common stock upon vesting of restricted stock units 410,536 — — — — — — —

Shares of common stock withheld for the withholding tax on vesting of restricted stock units ( 129,297 ) ( 3,718 ) — — — — — ( 3,718 )

Share repurchase and retirement ( 4,055,626 ) ( 122 ) 1,333,125 20,491 ( 97,357 ) ( 76,988 )

Stock-based compensation — 13,623 — — — — — 13,623

Foreign currency translation gain — — — — 548 — — 548

Net income — — — — — 54,275 6 54,281

Balance at December 31, 2020 50,651,054 $ 410,522 — $ — $ 396 $ 653,129 $ 173 $ 1,064,220

Six Months Ended December 31, 2019 Common Stock and

Additional Paid-In

Capital Treasury Stock Accumulated

Comprehensive

(Loss) Gain Retained

Earnings Non-controlling Interest Total

Stockholders’

Shares Amount Shares Amount

Balance at June 30, 2019 51,289,413 $ 349,683 ( 1,333,125 ) $ ( 20,491 ) $ ( 80 ) $ 611,903 $ 161 $ 941,176

Exercise of stock options, net of taxes 283,987 3,933 — — — — — 3,933

Release of shares of common stock upon vesting of restricted stock units 508,979 — — — — — — —

Shares of common stock withheld for the withholding tax on vesting of restricted stock units ( 159,119 ) ( 3,574 ) — — — — — ( 3,574 )

Stock-based compensation — 10,018 — — — — — 10,018

Foreign currency translation loss — — — — ( 55 ) — — ( 55 )

Net income — — — — — 50,051 4 50,055

Balance at September 30, 2019 51,358,810 $ 354,157 ( 1,333,125 ) $ ( 20,491 ) $ ( 220 ) $ 638,248 $ 162 $ 971,856

Balance at December 31, 2019 51,923,260 $ 360,060 ( 1,333,125 ) $ ( 20,491 ) $ ( 135 ) $ 661,954 $ 165 $ 1,001,553

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Three Months Ended

September 30,

Six Months Ended

OPERATING ACTIVITIES:

4 unchanged sentences

Allowances for (recovery of) doubtful accounts ( 476 ) 43

Provision for (recovery of) excess and obsolete inventories ( 902 ) 8,328

Provision for excess and obsolete inventories 1,740 14,218

Share of income from equity investee 145 9

3 unchanged sentences

Changes in operating assets and liabilities:

Accounts receivable (including changes in related party balances of $ 7,510 and $( 4,474 ) during the three months ended September 30, 2020 and 2019, respectively)

Accounts receivable (including changes in related party balances of $( 6,304 ) and $( 4,318 ) during the six months ended December 31, 2020 and 2019, respectively)

81,156 33,444

Inventories 42,327 ( 48,460 )

Prepaid expenses and other assets (including changes in related party balances of $ 12,083 and $( 3,554 ) during the three months ended September 30, 2020 and 2019, respectively)

Prepaid expenses and other assets (including changes in related party balances of $ 7,554 and $( 3,673 ) during the six months ended December 31, 2020 and 2019, respectively)

27,426 ( 35,450 )

Accounts payable (including changes in related party balances of $( 24,676 ) and $ 3,796 during the three months ended September 30, 2020 and 2019, respectively)

Accounts payable (including changes in related party balances of $( 24,112 ) and $ 16,107 during the six months ended December 31, 2020 and 2019, respectively)

( 25,296 ) 32,415

1 unchanged sentence

Deferred revenue ( 8,864 ) 12,192

Accrued liabilities (including changes in related party balances of $( 3,577 ) and $ 5,324 during the three months ended September 30, 2020 and 2019, respectively)

Accrued liabilities (including changes in related party balances of $( 4,867 ) and $ 5,249 during the six months ended December 31, 2020 and 2019, respectively)

( 20,619 ) 17,810

Other long-term liabilities (including changes in related party balances of $( 530 ) and $ 1,272 during the three months ended September 30, 2020 and 2019, respectively)

Other long-term liabilities (including changes in related party balances of $( 1,671 ) and $ 430 during the six months ended December 31, 2020 and 2019, respectively)

( 3,240 ) ( 3,654 )

Net cash provided by operating activities 183,802 87,153

INVESTING ACTIVITIES:

Purchases of property, plant and equipment (including payments to related parties of $ 2,230 and $ 813 during the three months ended September 30, 2020 and 2019, respectively)

Purchases of property, plant and equipment (including payments to related parties of $ 3,058 and $ 2,274 during the six months ended December 31, 2020 and 2019, respectively)

( 25,551 ) ( 24,089 )

Proceeds from sale of investment in a privately-held company — 750

Net cash used in investing activities ( 25,551 ) ( 23,339 )

9 unchanged sentences

Effect of exchange rate fluctuations on cash 540 175

Net increase (decrease) in cash, cash equivalents and restricted cash 89,562 ( 9,518 )

Net increase in cash, cash equivalents and restricted cash 105,094 61,913

Cash, cash equivalents and restricted cash at the beginning of the period 212,390 262,140

4 unchanged sentences

Non-cash investing and financing activities:

Unpaid property, plant and equipment purchases (including due to related parties of $ 1,664 and $ 1,514 as of September 30, 2020 and 2019, respectively)

Unpaid property, plant and equipment purchases (including due to related parties of $ 3,056 and $ 1,729 as of December 31, 2020 and 2019, respectively)

$ 11,596 $ 9,222

New operating lease assets obtained in exchange for operating lease liabilities

Receivable from exercise of stock options — 1,229

Unpaid stock repurchases 2,164 —

8 unchanged sentences

The unaudited condensed consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”).

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principals in the United States of America ("U.S.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America ("U.S.

GAAP") have been condensed or omitted pursuant to such rules and regulations.

The unaudited condensed consolidated financial statements included herein reflect all adjustments, including normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the consolidated financial position, results of operations and cash flows for the periods presented.

The consolidated results of operations for the three months ended September 30, 2020 are not necessarily indicative of the results that may be expected for future quarters or for the fiscal year ending June 30, 2021.

The consolidated results of operations for the three and six months ended December 31, 2020 are not necessarily indicative of the results that may be expected for future quarters or for the fiscal year ending June 30, 2021.

Investment in a Corporate Venture

4 unchanged sentences

The Company recorded a deferred gain related to the contribution of certain technology rights.

As of September 30, 2020 and June 30, 2020, the Company had unamortized deferred gain balance of $ 2.0 million and $ 2.0 million, respectively, in accrued liabilities and $ 0.5 million and $ 1.0 million, respectively, in other long-term liabilities in the Company’s condensed consolidated balance sheets.

As of December 31, 2020 and June 30, 2020, the Company had unamortized deferred gain balance of $ 2.0 million and $ 2.0 million, respectively, in accrued liabilities and $ 0.0 million and $ 1.0 million, respectively, in other long-term liabilities in the Company’s condensed

consolidated balance sheets.

The Company monitors the investment for events or circumstances indicative of potential impairment and makes appropriate reductions in carrying values if it determines that an impairment charge is required.

4 unchanged sentences

The Company is working with the Corporate Venture's management to ensure that the Corporate Venture remains in compliance with the new restrictions.

The Company does not believe that the equity investment carrying value is impacted as of September 30, 2020.

No impairment charge was recorded for the three months ended September 30, 2020 and 2019, respectively.

The Company sold products worth $ 0.6 million and $ 22.1 million to the Corporate Venture in the three months ended September 30, 2020 and 2019, respectively, and the Company’s share of intra-entity profits on the products that remained unsold by the Corporate Venture in the amounts of $ 2.3 million and $ 3.0 million as of September 30, 2020 and June 30, 2020, respectively, have been eliminated and have reduced the carrying value of the Company’s investment in the Corporate Venture.

The Company does not believe that the equity investment carrying value is impacted as of December 31, 2020.

No impairment charge was recorded for the three and six months ended December 31, 2020 and 2019, respectively.

The Company sold products worth $ 13.2 million and $ 15.4 million to the Corporate Venture in the three months ended December 31, 2020 and 2019, respectively, and $ 19.6 million and $ 37.5 million for the six months ended December 31, 2020 and 2019, respectively.

The Company’s share of intra-entity profits on the products that remained unsold by the Corporate Venture as of December 31, 2020 and June 30, 2020 have been eliminated and have reduced the carrying value of the Company’s investment in the Corporate Venture.

To the extent that the elimination of intra-entity profits reduces the investment balance below zero, such amounts are recorded within accrued liabilities.

The Company had $ 0.6 million and $ 7.8 million due from the Corporate Venture in accounts receivable, net as of September 30, 2020 and June 30, 2020, respectively.

The Company had $ 14.4 million and $ 7.8 million due from the Corporate Venture in accounts receivable, net as of December 31, 2020 and June 30, 2020, respectively.

SUPER MICRO COMPUTER, INC.

3 unchanged sentences

Shortages could occur in these materials due to an interruption of supply or increased demand in the industry.

One supplier accounted for 22.0 % and 28.7 % of total purchases for the three months ended September 30, 2020 and 2019, respectively.

Ablecom and Compuware, related parties of the Company (see Note 8, "Related Party Transactions") accounted for 9.8 % and 9.7 % of total cost of sales for the three months ended September 30, 2020 and 2019, respectively.

One supplier accounted for 20.0 % and 28.5 % of total purchases for the three months ended December 31, 2020 and 2019, respectively, and 20.9 % and 28.6 % for the six months ended December 31, 2020 and 2019, respectively.

Ablecom and Compuware, related parties of the Company (see Note 8, "Related Party Transactions") accounted for a combined 7.3 % and 10.3 % of total cost of sales for the three months ended December 31, 2020 and 2019, respectively, and a combined 8.5 % and 10.0 % for the six months ended December 31, 2020 and 2019, respectively.

Concentration of Credit Risk

Financial instruments which potentially subject the Company to concentration of credit risk consist primarily of cash and cash equivalents, restricted cash, investment in an auction rate security and accounts receivable.

No single customer accounted for 10% or more of the net sales for the three months ended September 30, 2020 and 2019.

No customer accounted for greater than 10% of the Company's accounts receivable, net as of September 30, 2020, whereas one customer accounted for 10.1 % of accounts receivable, net as of June 30, 2020.

No single customer accounted for 10% or more of the net sales for the three and six months ended December 31, 2020 and 2019.

No customer accounted for greater than 10% of the Company's accounts receivable, net as of December 31, 2020, whereas one customer accounted for 10.1 % of accounts receivable, net as of June 30, 2020.

Treasury Stock

The Company accounts for treasury stock under the cost method.

Upon the retirement of treasury shares, the Company deducts the par value of the retired treasury shares from common stock and allocates the excess of cost over par as a deduction to additional paid-in capital based on the pro-rata portion of additional paid-in-capital, and the remaining excess as a deduction to retained earnings.

Retired treasury shares revert to the status of authorized but unissued shares.

Accounting Pronouncements Recently Adopted

8 unchanged sentences

The Company also records a specific allowance based on an analysis of individual past due balances or customer-specific information, such as a decline in creditworthiness or bankruptcy.

The new guidance has no material impact on the Company's condensed consolidated financial statements for the three months ended September 30, 2020.

The new guidance has no material impact on the Company's condensed consolidated financial statements for the three and six months ended December 31, 2020.

In August 2018, the FASB issued amended guidance, Fair Value Measurement:

1 unchanged sentence

The Company adopted this guidance on July 1, 2020.

As of September 30, 2020, the Company’s investment in an auction rate security is the only Level 3 investment measured at fair value on a recurring basis.

As of December 31, 2020, the Company’s investment in an auction rate security is the only Level 3 investment measured at fair value on a recurring basis.

Changes to the disclosures in the condensed consolidated financial statements were immaterial.

See Note 5 below.

See Note 5, "Fair Value Disclosure".

In August 2018, the FASB issued authoritative guidance, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40):

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract , to align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract as well as hosting arrangements that include an internal use software license with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.

The accounting for the service element of a hosting arrangement that is a service contract is not affected by the new guidance.

The accounting for the service element of

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

a hosting arrangement that is a service contract is not affected by the new guidance.

The Company adopted this guidance on July 1, 2020, prospectively.

4 unchanged sentences

The guidance is effective for the Company from July 1, 2021;

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

early adoption is permitted.

The adoption of the guidance is not anticipated to have a material impact on its consolidated financial statements and disclosures.

The adoption of the guidance is not anticipated to have a material impact on its condensed consolidated financial statements and disclosures.

In March 2020, the FASB issued authoritative guidance, Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

2 unchanged sentences

The amendment is effective for all entities through December 15, 2022.

LIBOR is used to calculate the interest on borrowings under the Company's 2018 Bank of America Credit Facility.

As the 2018 Bank of America Credit Facility, as amended, will terminate on June 30, 2021 before the phase out of LIBOR, the Company does not expect the adoption of the guidance to have an impact on its consolidated financial statements and disclosures.

LIBOR is used to calculate the interest on borrowings under the Company's 2018 Bank of America Credit Facility and E.SUN Credit Facility.

The 2018 Bank of America Credit Facility, as amended, will terminate on June 30, 2021 and E.SUN Credit Facility will terminate on September 18, 2021.

As both credit facilities will expire before the phase out of LIBOR, the Company does not expect the adoption of the guidance to have an impact on its condensed consolidated financial statements and disclosures.

Disaggregation of Revenue

3 unchanged sentences

Three Months Ended

September 30,

December 31, Six Months Ended

2020 2019 2020 2019

Server and storage systems $ 642,711 $ 672,727 $ 1,260,499 $ 1,308,753

3 unchanged sentences

Subsystems and accessories are comprised of serverboards, chassis and accessories.

International net sales are based on the country and region to which the products were shipped.

The following is a summary for the three months ended September 30, 2020 and 2019, of net sales by geographic region (in thousands):

International net sales are based on the country and geographic region to which the products were shipped.

The following is a summary for the three and six months ended December 31, 2020 and 2019, of net sales by geographic region (in thousands):

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Three Months Ended

September 30,

December 31, Six Months Ended

2020 2019 2020 2019

United States $ 463,102 $ 527,404 $ 959,188 $ 996,245

Europe 112,089 128,059

Asia 161,415 165,716 288,121 327,355

Europe 154,819 147,564 266,908 275,623

Others 50,970 30,259 78,339 71,524

1 unchanged sentence

Starting July 1, 2020, the Company no longer separately discloses revenue by products sold to indirect sales channel partners or direct customers and original equipment manufacturers because management does not make business operational decisions based on this set of disaggregation so the disclosure is no longer material to investors.

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Contract Balances

6 unchanged sentences

The Company’s deferred revenue primarily results from customer payments received upfront for extended warranties and on-site services because these performance obligations are satisfied over time.

Revenue recognized during the three months ended September 30, 2020, which was included in the opening deferred revenue balance as of June 30, 2020 of $ 203.8 million, was $ 28.6 million.

Deferred revenue decreased $ 1.9 million during the three months ended September 30, 2020 because the recognition of revenue from contracts entered into in prior periods was greater than the invoiced amounts for service contracts during the period.

Revenue recognized during the three and six months ended December 31, 2020, which was included in the opening deferred revenue balance as of June 30, 2020 of $ 203.8 million, was $ 26.8 million and $ 55.4 million, respectively.

Deferred revenue decreased $ 8.8 million during the six months ended December 31, 2020 because the recognition of revenue from contracts entered into in prior periods was greater than the invoiced amounts for service contracts during the period.

Transaction Price Allocated to the Remaining Performance Obligations

1 unchanged sentence

The Company applies the optional exemption to not disclose information about remaining performance obligations that are part of a contract that has an original expected duration of one year or less.

These performance obligations generally consist of services, such as on-site integration services and extended warranty services that are contracted for one year or less, and products for which control has not yet been transferred.

The value of the transaction price allocated to remaining performance obligations as of September 30, 2020 was $ 201.8 million.

These performance obligations generally consist of services, such as on-site services, including integration services and extended warranty services that are contracted for one year or less, and products for which control has not yet been transferred.

The value of the transaction price allocated to remaining performance obligations as of December 31, 2020 was $ 194.9 million.

The Company expects to recognize approximately 51 % of remaining performance obligations as revenue in the next 12 months, and the remainder thereafter.

4 unchanged sentences

The Company applies the practical expedient to expense incentive bonus costs as incurred if the amortization period would be one year or less, generally upon delivery of the associated server and storage systems or components.

Where the amortization period of the contract cost would be more than a year, the Company applies judgment in the allocation of the incentive bonus cost asset between hardware and service performance obligations and expenses the cost allocated to the hardware performance obligations upon delivery of associated server and storage systems or components and amortizes the cost allocated to service performance obligations over the period the services are expected to be provided.

Contract acquisition costs allocated to service performance obligations that are subject to capitalization are insignificant to the Company’s consolidated financial statements.

Where the amortization period of the contract cost would be more than a year, the Company applies

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

judgment in the allocation of the incentive bonus cost asset between hardware and service performance obligations and expenses the cost allocated to the hardware performance obligations upon delivery of associated server and storage systems or components and amortizes the cost allocated to service performance obligations over the period the services are expected to be provided.

Contract acquisition costs allocated to service performance obligations that are subject to capitalization are insignificant to the Company’s condensed consolidated financial statements.

Contract fulfillment costs consist of costs paid in advance for outsourced services provided by third parties to the extent they are not in the scope of other guidance.

Fulfillment costs paid in advance for outsourced services provided by third parties are capitalized and amortized over the period the services are expected to be provided.

Such fulfillment costs are insignificant to the Company’s consolidated financial statements.

Such fulfillment costs are insignificant to the Company’s condensed consolidated financial statements.

Net Income Per Common Share

The following table shows the computation of basic and diluted net income per common share for the three months ended September 30, 2020 and 2019 (in thousands, except per share amounts):

The following table shows the computation of basic and diluted net income per common share for the three and six months ended December 31, 2020 and 2019 (in thousands, except per share amounts):

Three Months Ended

September 30,

December 31, Six Months Ended

2020 2019 2020 2019

Net income $ 27,674 $ 23,706 $ 54,275 $ 50,051

4 unchanged sentences

Diluted net income per common share $ 0.52 $ 0.46 $ 1.00 $ 0.97

For the three months ended September 30, 2020 and 2019, the Company had stock options, restricted stock units ("RSUs") and performance based restricted stock units ("PRSUs") outstanding that could potentially dilute basic earnings per share in the future, but were excluded from the computation of diluted net income per share in the periods presented, as their effect would have been anti-dilutive.

The anti-dilutive common share equivalents resulting from outstanding equity awards were 1,177,694 and 3,958,789 for three months ended September 30, 2020, and 2019, respectively.

For the three and six months ended December 31, 2020 and 2019, the Company had stock options, restricted stock units ("RSUs") and performance based restricted stock units ("PRSUs") outstanding that could potentially dilute basic earnings per share in the future, but were excluded from the computation of diluted net income per share in the periods presented, as their effect would have been anti-dilutive.

The anti-dilutive common share equivalents resulting from outstanding equity awards were 1,040,890 and 2,501,684 for the three months ended December 31, 2020 and 2019, respectively, and 1,113,845 and 3,171,619 for the six months ended December 31, 2020 and 2019, respectively.

Balance Sheet Components

The following tables provide details of the selected balance sheet items (in thousands):

September 30, 2020 June 30, 2020

December 31, 2020 June 30, 2020

Finished goods $ 566,054 $ 656,817

2 unchanged sentences

Total inventories $ 807,431 $ 851,498

The Company recorded a (recovery) provision for excess and obsolete inventory to cost of sales totaling $( 0.8 ) million and $ 10.1 million in the three months ended September 30, 2020 and 2019, respectively.

These amounts exclude a provision (recovery) for adjusting the cost of certain inventories to net realizable value of $ 0.9 million and $( 1.8 ) million for the three months ended September 30, 2020 and 2019, respectively.

The recovery is recognized when previously reserved inventories are sold.

The Company recorded a provision for excess and obsolete inventory to cost of sales totaling $ 2.5 million and $ 1.7 million in the three and six months ended December 31, 2020 and $ 6.8 million and $ 16.9 million for the three and six

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

months ended December 31, 2019, respectively.

These amounts exclude a provision (recovery) for adjusting the cost of certain inventories to net realizable value of $ 0.2 million and $ 1.0 million for the three and six months ended December 31, 2020, respectively, and $( 0.9 ) million and $( 2.7 ) million for the three and six months ended December 31, 2019, respectively.

The recovery is recognized when previously reserved inventories are sold.

Prepaid Expenses and Other Current Assets:

September 30, 2020 June 30, 2020

December 31, 2020 June 30, 2020

Other receivables (1) $ 70,247 $ 96,669

6 unchanged sentences

__________________________

(1) Includes other receivables from contract manufacturers based on certain buy-sell arrangements of $ 33.6 million and $ 83.8 million as of September 30, 2020 and June 30, 2020, respectively.

(1) Includes other receivables from contract manufacturers based on certain buy-sell arrangements of $ 42.9 million and $ 83.8 million as of December 31, 2020 and June 30, 2020, respectively.

Cash, cash equivalents and restricted cash:

September 30, 2020 June 30, 2020

December 31, 2020 June 30, 2020

Cash and cash equivalents $ 315,610 $ 210,533

3 unchanged sentences

Property, Plant, and Equipment:

September 30, 2020 June 30, 2020

December 31, 2020 June 30, 2020

Buildings $ 86,930 $ 86,930

13 unchanged sentences

Other Assets:

September 30, 2020 June 30, 2020

December 31, 2020 June 30, 2020

Operating lease right-of-use asset $ 22,975 $ 23,784

7 unchanged sentences

Accrued Liabilities:

September 30, 2020 June 30, 2020

December 31, 2020 June 30, 2020

Accrued payroll and related expenses $ 47,650 $ 33,577

22 unchanged sentences

The Company accounts for the outstanding performance bonuses as liabilities and estimates fair value of payable amounts using a Monte-Carlo simulation model.

The awards are re-measured at each period end with changes in fair value recorded in the Company’s consolidated statement of operations in operating expenses.

The awards are re-measured at each period end with changes in fair value recorded in the Company’s condensed consolidated statement of operations in operating expenses.

The cumulative recorded expense at each period end is trued-up to the expected payable amount vested through the period end.

3 unchanged sentences

If it is determined to not be probable, then the Company will reverse any previously recognized expense for this award in the period when it is no longer probable that the performance condition will be achieved.

As of September 30, 2020 and June 30, 2020, the fair value of these performance bonuses was $ 2.2 million and $ 2.1 million, respectively, of which $ 2.2 million and $ 1.5 million, respectively, was recorded within accrued liabilities and $ 0 .0 million and $ 0.6 million, respectively, was recorded within other long-term liabilities on the Company's consolidated balance sheet.

Based on the estimated fair value of these performance bonuses as of December 31, 2020 and June 30, 2020, the Company recorded a $ 4.7 million and $ 2.1 million liability, respectively, of which $ 4.7 million and $ 1.5 million, respectively, was recorded within accrued liabilities and $ 0.0 million and $ 0.6 million, respectively, was recorded within other long-term liabilities on the Company's condensed consolidated balance sheet.

An unrecognized compensation expense of $ 1.9 million will be recorded over the remaining service periods from 0.06 years to 0.67 years.

The fair value of these awards is remeasured each reporting period.

The expense recognized during the three months ended September 30, 2020 and September 30, 2019 was $ 0.1 million and $ 0.0 million respectively.

The expense recognized during the three months ended December 31, 2020 and 2019 was $ 2.5 million and $ 0.0 million, respectively, and $ 2.6 million and $ 0.0 million for the six months ended December 31, 2020 and 2019, respectively.

Other Long-term Liabilities:

September 30, 2020 June 30, 2020

December 31, 2020 June 30, 2020

Operating lease liability, non-current $ 16,750 $ 18,102

5 unchanged sentences

Three Months Ended

September 30,

December 31, Six Months Ended

2020 2019 2020 2019

Balance, beginning of the period $ 13,727 $ 11,285 $ 12,379 $ 11,034

7 unchanged sentences

The financial instruments of the Company measured at fair value on a recurring basis are included in cash equivalents, other assets and accrued liabilities.

The Company classifies its financial instruments, except for its investment in an auction rate security, within Level 1 or Level 2 in the fair value hierarchy because the Company uses quoted prices in active markets or alternative pricing sources and models using market observable inputs to determine their fair value.

The Company classifies its financial instruments, except for its investment in an auction rate

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company’s investment in an auction rate security is classified within Level 3 of the fair value hierarchy as the determination of its fair value was not based on observable inputs as of September 30, 2020 and June 30, 2020.

security, within Level 1 or Level 2 in the fair value hierarchy because the Company uses quoted prices in active markets or alternative pricing sources and models using market observable inputs to determine their fair value.

The Company is using the discounted cash flow method to estimate the fair value of the auction rate security at each period end and the following assumptions:

1 unchanged sentence

The liquidity discount assumption is based on the management estimate of lack of marketability discount of similar securities and is determined based on the analysis of financial market trends over time, recent redemptions of securities and other market activities.

The Company performed a sensitivity analysis and applying a change of either plus or minus 100 basis points in the liquidity discount does not result in a significantly higher or lower fair value measurement of the auction rate security as of September 30, 2020.

Financial Assets and Liabilities Measured on a Recurring Basis

The following table sets forth the Company’s financial instruments as of September 30, 2020 and June 30, 2020, which are measured at fair value on a recurring basis by level within the fair value hierarchy.

The following table sets forth the Company’s financial instruments as of December 31, 2020 and June 30, 2020, which are measured at fair value on a recurring basis by level within the fair value hierarchy.

These are classified based on the lowest level of input that is significant to the fair value measurement (in thousands):

September 30, 2020 Level 1 Level 2 Level 3 Asset at

December 31, 2020 Level 1 Level 2 Level 3 Asset at

Money market funds (1) $ 841 $ — $ — $ 841

12 unchanged sentences

__________________________

(1) $ 0.0 million and $ 0.4 million in money market funds are included in cash and cash equivalents and $ 0.8 million and $ 0.8 million in money market funds are included in restricted cash, non-current in other assets in the condensed consolidated balance sheets as of September 30, 2020 and June 30, 2020, respectively.

(2) $ 0.2 million and $ 0.2 million in certificates of deposit are included in cash and cash equivalents, $ 0.3 million and $ 0.3 million in certificates of deposit are included in prepaid expenses and other assets, and $ 0.3 million and $ 0.3 million in certificates of deposit are included in restricted cash, non-current in other assets in the condensed consolidated balance sheets as of September 30, 2020 and June 30, 2020, respectively.

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(3) As of September 30, 2020 and June 30, 2020, the current portion of the performance awards liability of $ 2.2 million and $ 1.5 million, respectively, is included in accrued liabilities and the noncurrent portion of $ 0.0 million and $ 0.6 million, respectively, is included in other long-term liabilities in the condensed consolidated balance sheets.

certificates of deposit are included in restricted cash, non-current in other assets in the condensed consolidated balance sheets as of December 31, 2020 and June 30, 2020, respectively.

(3) As of December 31, 2020 and June 30, 2020, the current portion of the performance awards liability of $ 4.7 million and $ 1.5 million, respectively, is included in accrued liabilities and the non-current portion of $ 0.0 million and $ 0.6 million, respectively, is included in other long-term liabilities in the condensed consolidated balance sheets.

On a quarterly basis, the Company also evaluates the current expected credit loss by considering factors such as historical experience, market data, issuer-specific factors, and current economic conditions.

For the three months ended September 30, 2020, the credit losses related to the Company’s investments was not significant.

For the three and six months ended December 31, 2020, the credit losses related to the Company’s investments was not significant.

The Company estimated the fair value of performance awards using the Monte-Carlo simulation model and classified them within Level 2 of the fair value hierarchy as estimates are based on the observable inputs.

The significant inputs used in estimating the fair value of the awards as of September 30, 2020 and June 30, 2020 are as follows:

September 30, 2020

The significant inputs used in estimating the fair value of the awards as of December 31, 2020 and June 30, 2020 are as follows:

December 31, 2020

Stock Price as of Period End Performance Period Risk-free Rate Volatility Dividend Yield

5 unchanged sentences

0.16 % 53.75 % — %

There was no movement in the balances of the Company's financial assets measured at fair value on a recurring basis, consisting of investment in an auction rate security, using significant unobservable inputs (Level 3) for the three months ended September 30, 2020 and 2019.

There were no transfers between Level 1, Level 2 or Level 3 financial instruments in the three months ended September 30, 2020 and 2019.

The following is a summary of the Company’s investment in an auction rate security as of September 30, 2020 and June 30, 2020 (in thousands):

September 30, 2020 and June 30, 2020

There were no transfers between Level 1, Level 2 or Level 3 financial instruments in the three and six months ended December 31, 2020 and 2019.

The following is a summary of the Company’s investment in an auction rate security as of December 31, 2020 and June 30, 2020 (in thousands):

December 31, 2020 and June 30, 2020

Cost Basis Gross

1 unchanged sentence

Auction rate security $ 1,750 $ — $ ( 179 ) $ 1,571

No gain or loss was recognized in other comprehensive income for the auction rate security for the three months ended September 30, 2020 and 2019.

No gain or loss was recognized in other comprehensive income for the auction rate security for the three and six months ended December 31, 2020 and 2019.

The Company measures the fair value of outstanding debt for disclosure purposes on a recurring basis.

As of September 30, 2020 and June 30, 2020, total debt of $ 36.0 million and $ 29.4 million, respectively, is reported at amortized cost.

As of December 31, 2020 and June 30, 2020, total debt of $ 45.5 million and $ 29.4 million, respectively, is reported at amortized cost.

This outstanding debt is classified as Level 2 as it is not actively traded.

3 unchanged sentences

Short-term and Long-term Debt

Short-term debt obligations as of September 30, 2020 and June 30, 2020 consisted of the following (in thousands):

September 30, June 30,

Short-term debt obligations as of December 31, 2020 and June 30, 2020 consisted of the following (in thousands):

December 31, June 30,

CTBC Bank term loan, due August 31, 2021 $ 24,921 $ 23,704

6 unchanged sentences

2018 Bank of America Credit Facility

In April 2018, the Company entered into a revolving line of credit with Bank of America (the "2018 Bank of America Credit Facility"), which was amended on May 12, 2020.

The Company paid a fee of $ 0.7 million and entered into a third amendment of the 2018 Bank of America Credit Facility that extended the maturity of the credit facility to June 30, 2021 and changed certain terms of the original agreement.

The amendment was accounted for as a modification and the impact was immaterial to the consolidated financial statements.

Under the terms of the May 12, 2020 amendment of the 2018 Bank of America Credit Facility, in the event of default or if outstanding borrowings are in excess of $ 220.0 million, the Company is required to grant the lenders a continuing security interest in and lien upon all amounts credited to any of the Company's deposit accounts.

In April 2018, the Company entered into a revolving line of credit with Bank of America for up to $ 250.0 million (as amended from time to time, the "2018 Bank of America Credit Facility").

On May 12, 2020, the 2018 Bank of America Credit Facility was amended to, among other items, extend the maturity to June 30, 2021 and provide that in the event of default or if outstanding borrowings are in excess of $ 220.0 million, the Company is required to grant the lenders a continuing security interest in and lien upon all amounts credited to any of the Company's deposit accounts.

In addition, the amendment released the real property of Super Micro Computer as a collateral.

The amendment was accounted for as a modification and the impact was immaterial to the condensed consolidated financial statements.

Interest accrued on any loans under the 2018 Bank of America Credit Facility is due on the first day of each month, and the loans are due and payable in full on the termination date of the 2018 Bank of America Credit Facility.

4 unchanged sentences

The 2018 Bank of America Credit Facility contains customary representations and warranties and customary affirmative and negative covenants applicable to the Company and its subsidiaries and contains a financial covenant, which requires that the Company maintain a certain fixed charge coverage ratio, for each twelve-month period while in a Trigger Period, as defined in the agreement, is in effect.

As of September 30, 2020 and June 30, 2020, the Company had no outstanding borrowings under the 2018 Bank of America Credit Facility.

The interest rates under the 2018 Bank of America Credit Facility as of September 30, 2020 and June 30, 2020 were 3.00 %.

As of December 31, 2020 and June 30, 2020, the Company had no outstanding borrowings under the 2018 Bank of America Credit Facility.

The interest rates under the 2018 Bank of America Credit Facility as of December 31, 2020 and June 30, 2020 were 3.00 %.

In October 2018, a $ 3.2 million letter of credit was issued under the 2018 Bank of America Credit Facility and in October 2019, the letter of credit amount was increased to $ 6.4 million.

No amounts have been drawn under the standby letter of credit.

The balance of debt issuance costs outstanding were $ 0.5 million and $ 0.6 million as of September 30, 2020 and June 30, 2020, respectively.

The Company has been in compliance with all the covenants under the 2018 Bank of America Credit Facility, and as of September 30, 2020, the Company's available borrowing capacity was $ 243.6 million, subject to the borrowing base limitation and compliance with other applicable terms.

The balance of debt issuance costs outstanding were $ 0.3 million and $ 0.6 million as of December 31, 2020 and June 30, 2020, respectively.

The Company has been in compliance with all the covenants under the 2018 Bank of America Credit Facility, and as of December 31, 2020, the Company's available borrowing capacity was $ 243.6 million, subject to the borrowing base limitation and compliance with other applicable terms.

CTBC Credit Facility

1 unchanged sentence

The amended credit agreement with CTBC Bank that provides for (i) a 12 -month NTD 700.0 million ($ 24.0 million U.S.

dollar equivalent) term loan facility secured by the land and building located in Bade,

dollar equivalent) term loan facility secured by the land and building located in Bade, Taiwan with an interest rate equal to the lender's established NTD interest rate plus 0.25 % per annum which is adjusted monthly, which term loan facility also includes a 12 -month guarantee of up to NTD 100.0 million ($ 3.4 million U.S.

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Taiwan with an interest rate equal to the lender's established NTD interest rate plus 0.25 % per annum which is adjusted monthly, which term loan facility also includes a 12 -month guarantee of up to NTD 100.0 million ($ 3.4 million U.S.

dollar equivalent) with an annual fee equal to 0.50 % per annum, (ii) a 180 -day NTD 1,500.0 million ($ 51.5 million U.S.

equivalent) with an annual fee equal to 0.50 % per annum, (ii) a 180 -day NTD 1,500.0 million ($ 51.5 million U.S.

dollar equivalent) term loan facility up to 100 % of eligible accounts receivable in an aggregate amount with an interest rate equal to the lender's established NTD interest rate plus an interest rate ranging from 0.30 % to 0.50 % per annum which is adjusted monthly, and (ⅲ) a 12 -month revolving line of credit of up to 100 % of eligible accounts receivable in an aggregate amount of up to $ 50.0 million with an interest rate equal to the lender's established USD interest rate plus 0.80 % per annum which is adjusted monthly, or equal to the lender’s established NTD interest rate plus an interest rate ranging from 0.30 % to 0.50 % per annum which is adjusted monthly if the borrowing is in NTD.

2 unchanged sentences

The total outstanding borrowings under the CTBC Credit Facility term loan were denominated in NTD and remeasured into U.S.

dollars of $ 24.0 million and $ 23.7 million at September 30, 2020 and June 30, 2020, respectively.

As of September 30, 2020 and June 30, 2020, the Company did no t have any outstanding borrowings under the CTBC Credit Facility revolving line of credit.

The interest rate for these loans were 0.73 % per annum as of September 30, 2020 and 0.63 % per annum as of June 30, 2020.

At September 30, 2020, the amount available for future borrowing under the CTBC Credit Facility was $ 26.0 million.

As of September 30, 2020, the net book value of land and building located in Bade, Taiwan, collateralizing the CTBC Credit Facility term loan was $ 25.3 million.

dollars of $ 24.9 million and $ 23.7 million at December 31, 2020 and June 30, 2020, respectively.

As of December 31, 2020 and June 30, 2020, the Company did no t have any outstanding borrowings under the CTBC Credit Facility revolving line of credit.

The interest rate for these loans were 0.73 % per annum as of December 31, 2020 and 0.63 % per annum as of June 30, 2020.

At December 31, 2020, the amount available for future borrowing under the CTBC Credit Facility was $ 25.1 million.

As of December 31, 2020, the net book value of land and building located in Bade, Taiwan, collateralizing the CTBC Credit Facility term loan was $ 25.1 million.

2020 CTBC Term Loan Facility

9 unchanged sentences

The Company has financial covenants requiring the Company's current ratio, debt service coverage ratio, and financial debt ratio, as defined in the agreement, to be maintained at certain levels under the 2020 CTBC Term Loan Facility.

As of September 30, 2020 and June 30, 2020, the amounts outstanding under the 2020 CTBC Term Loan Facility were $ 12.0 million and $ 5.7 million, respectively.

The interest rate for these loans were 0.45 % per annum as of September 30, 2020 and June 30, 2020.

The net book value of the property serving as collateral as of September 30, 2020 was $ 17.1 million.

As of September 30, 2020, the Company was in compliance with all financial covenants under the 2020 CTBC Term Loan Facility.

As of December 31, 2020 and June 30, 2020, the amounts outstanding under the 2020 CTBC Term Loan Facility were $ 20.6 million and $ 5.7 million, respectively.

The interest rate for these loans were 0.45 % per annum as of December 31, 2020 and June 30, 2020.

The net book value of the property serving as collateral as of December 31, 2020 was $ 29.2 million.

As of December 31, 2020, the Company was in compliance with all financial covenants under the 2020 CTBC Term Loan Facility.

E.SUN Bank Credit Facility

In December 2020, Super Micro Computer Inc, Taiwan, a Taiwan subsidiary of the Company entered into a General Credit Agreement (the “E.SUN Credit Facility”) with E.SUN Bank in Taiwan.

Such Credit Facility provides for the issuance of loans, advances, acceptances, bills, bank guarantees, overdrafts, letters of credit, and other types of drawdown instruments up to a credit limit of $ 30.0 million.

The term of the E.SUN Credit Facility expires on September 18, 2021.

Generally, the interest for base rate loans made under the E.SUN Credit Facility is based upon an average interbank overnight call loan rate in the finance industry (such as LIBOR or TAIFX) plus a fixed margin, and is subject to occasional adjustment.

Interest for adjustable loan rate loans made under the E.SUN Credit Facility is based upon an average one-year fixed rate time saving deposit rate of a selected reference bank which shall be a well-known domestic bank in Taiwan, and is subject to occasional adjustment.

The E.SUN Credit Facility has customary default provisions permitting E.SUN Bank to terminate or reduce the credit limit, shorten the credit period, or deem all liabilities due and payable, including in the event such Taiwan subsidiary of the Company has an overdue liability at another financial organization.

There are no financial covenants associated with the E.SUN Credit Facility.

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Terms for specific drawdown instruments issued under the E.SUN Credit Facility, such as credit amount, term of use, mode of drawdown, specific lending rate, and other relevant terms, are to be set forth in Notifications and Confirmation of Credit Conditions negotiated with E.SUN Bank.

A Notification and Confirmation of Credit Conditions agreement under the E.SUN Credit Facility was entered into on December 2, 2020 for a $ 30.0 million import loan (the “Import Loan”) with a tenor of 120 days and with an interest rate calculated based on the higher of LIBOR plus 0.75 % then divided by 0.946 or TAIFX plus 0.55 % then divided by 0.946 .

As of December 31, 2020, no drawings had been made from the Import Loan.

The Company leases offices, warehouses and other premises, vehicles and certain equipment leased under non-cancelable operating leases.

Operating lease expense recognized and supplemental cash flow information related to operating leases for the three months ended September 30, 2020 and 2019 were as follows (in thousands):

Operating lease expense recognized and supplemental cash flow information related to operating leases for the three and six months ended December 31, 2020 and 2019 were as follows (in thousands):

Three Months Ended

September 30,

Operating lease expense (including expense for lease agreements with related parties of $ 347 and $ 365 for the three months ended September 30, 2020 and 2019, respectively)

December 31, Six Months Ended

2020 2019 2020 2019 2019

Cash payments for operating leases (including payments to related parties of $ 347 and $ 357 for the three months ended September 30, 2020 and, 2019, respectively)

Operating lease expense (including expense for lease agreements with related parties of $ 347 and $ 693 for the three and six months ended December 31, 2020, respectively, and $ 362 and $ 727 for the three and six months ended December 31, 2019, respectively)

$ 1,947 $ 1,595 $ 3,947 $ 3,304

During the three months ended September 30, 2020 and 2019, the Company's costs related to short-term lease arrangements for real estate and non-real estate assets were immaterial.

Variable payments expensed in the three months ended September 30, 2020 and September 30, 2019 were immaterial.

As of September 30, 2020, the weighted average remaining lease term for operating leases was 4.3 years and the weighted average discount rate was 3.5 %.

Future minimum lease payments under noncancelable operating lease arrangements as of September 30, 2020 were as follows (in thousands):

Cash payments for operating leases (including payments to related parties of $ 347 and $ 693 for the three and six months ended December 31, 2020, respectively, and $ 380 and $ 737 for the three and six months ended December 31, 2019, respectively)

$ 1,991 $ 1,570 $ 3,957 $ 3,415

During the three and six months ended December 31, 2020 and 2019, respectively, the Company's costs related to short-term lease arrangements for real estate and non-real estate assets were immaterial.

Variable payments expensed in the three and six months ended December 31, 2020 were $ 0.4 million and $ 0.8 million, respectively.

Variable payments expensed in the three months and six months ended December 31, 2019 were $ 0.4 million and $ 0.7 million, respectively.

As of December 31, 2020, the weighted average remaining lease term for operating leases was 4.1 years and the weighted average discount rate was 3.5 %.

Future minimum lease payments under noncancelable operating lease arrangements as of December 31, 2020 were as follows (in thousands):

Minimum lease payments

2021 (remainder) $ 4,075

2026 and beyond 1,044

2 unchanged sentences

Present value of operating lease liabilities $ 24,185

As of September 30, 2020, commitments under short-term lease arrangements, and operating and financing leases that have not yet commenced were immaterial.

As of December 31, 2020, commitments under short-term lease arrangements, and operating and financing leases that have not yet commenced were immaterial.

The Company has entered into lease agreements with related parties.

See Note 8, "Related Party Transactions," for discussion.

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Related Party Transactions

4 unchanged sentences

Ablecom’s Chief Executive Officer, Steve Liang, is the brother of Charles Liang, the Company’s President, Chief Executive Officer and Chairman of the Board.

Steve Liang and his family members owned approximately 28.8 % of Ablecom’s stock and Charles Liang and his spouse, Sara Liu, who is also an officer and director of the Company, collectively owned approximately 10.5 % of Ablecom’s capital stock as of September 30, 2020.

Bill Liang, a brother of both Charles Liang and Steve Liang, is a member of the Board of Ablecom.

1 unchanged sentence

Steve Liang is also a member of Compuware’s Board and is an equity holder of Compuware.

Charles Liang and

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Sara Liu do not own any capital stock of Compuware and the Company does not own any of Ablecom or Compuware’s capital stock.

Charles Liang and Sara Liu do not own any capital stock of Compuware and the Company does not own any of Ablecom or Compuware’s capital stock.

Dealings with Ablecom

1 unchanged sentence

Under these agreements, the Company outsources to Ablecom a portion of its design activities and a significant part of its server chassis manufacturing as well as an immaterial portion of other components.

Ablecom manufactured approximately 93.6 % and 92.7 % of the chassis included in the products sold by the Company during the three months ended September 30, 2020 and 2019, respectively.

Ablecom manufactured approximately 91.6 % and 97.5 % of the chassis included in the products sold by the Company during the three months ended December 31, 2020 and 2019, respectively, and 92.6 % and 95.4 % of the chassis included in the products sold by the Company during the six months ended December31, 2020 and 2019, respectively.

With respect to design activities, Ablecom generally agrees to design certain agreed-upon products according to the Company’s specifications, and further agrees to build the tools needed to manufacture the products.

7 unchanged sentences

The Company’s exposure to financial loss as a result of its involvement with Ablecom is limited to potential losses on its purchase orders in the event of an unforeseen decline in the market price and/or demand of the Company’s products such that the Company incurs a loss on the sale or cannot sell the products.

Outstanding purchase orders from the Company to Ablecom were $ 11.1 million and $ 23.2 million at September 30, 2020 and June 30, 2020, respectively, representing the maximum exposure to financial loss.

Outstanding purchase orders from the Company to Ablecom were $ 25.4 million and $ 23.2 million at December 31, 2020 and June 30, 2020, respectively, representing the maximum exposure to financial loss.

The Company does not directly or indirectly guarantee any obligations of Ablecom, or any losses that the equity holders of Ablecom may suffer.

2 unchanged sentences

The Company has entered into a distribution agreement with Compuware, under which the Company appointed Compuware as a non-exclusive distributor of the Company’s products in Taiwan, China and Australia.

Compuware assumes the responsibility to install the Company's products at the site of the end customer, if required, and administers customer support in exchange for a discount from the Company's standard price for its purchases.

The Company also has entered into a series of agreements with Compuware, including a multiple product development, production and service agreements, product manufacturing agreements, and lease agreements for office space.

Compuware assumes the

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

responsibility to install the Company's products at the site of the end customer, if required, and administers customer support in exchange for a discount from the Company's standard price for its purchases.

The Company also has entered into a series of agreements with Compuware, including multiple product development, production and service agreements, product manufacturing agreements, and lease agreements for office space.

Under these agreements, the Company outsources to Compuware a portion of its design activities and a significant part of its power supplies manufacturing as well as an immaterial portion of other components.

2 unchanged sentences

The Company retains full ownership of any intellectual property resulting from the design of these products and tooling.

With respect to the manufacturing aspects of the relationship, Compuware purchases most of materials needed to manufacture the power supplies from outside markets and uses these

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

materials to manufacture the products and then sell those products to the Company.

With respect to the manufacturing aspects of the relationship, Compuware purchases most of materials needed to manufacture the power supplies from outside markets and uses these materials to manufacture the products and then sell those products to the Company.

The Company and Compuware frequently review and negotiate the prices of the power supplies the Company purchases from Compuware.

5 unchanged sentences

The Company’s exposure to financial loss as a result of its involvement with Compuware is limited to potential losses on its purchase orders in the event of an unforeseen decline in the market price and/or demand of the Company’s products such that the Company incurs a loss on the sale or cannot sell the products.

Outstanding purchase orders from the Company to Compuware were $ 21.9 million and $ 45.7 million at September 30, 2020 and June 30, 2020, respectively, representing the maximum exposure to financial loss.

Outstanding purchase orders from the Company to Compuware were $ 26.8 million and $ 45.7 million at December 31, 2020 and June 30, 2020, respectively, representing the maximum exposure to financial loss.

The Company does not directly or indirectly guarantee any obligations of Compuware, or any losses that the equity holders of Compuware may suffer.

The Company’s results from transactions with Ablecom and Compuware for each of the three months ended September 30, 2020 and 2019, are as follows (in thousands):

The Company’s results from transactions with Ablecom and Compuware for each of the three and six months ended December 31, 2020 and 2019, are as follows (in thousands):

Three Months Ended

September 30,

December 31, Six Months Ended

2020 2019 2020 2019

Purchases (1) $ 24,580 $ 44,568 $ 50,903 $ 77,688

3 unchanged sentences

(1) Includes principally purchases of inventory and other miscellaneous items.

The Company's net sales to Ablecom were not material for the three months ended September 30, 2020 and 2019.

The Company had the following balances related to transactions with Ablecom and Compuware as of September 30, 2020 and June 30, 2020 (in thousands):

September 30, 2020 June 30, 2020

The Company's net sales to Ablecom were not material for the three and six months ended December 31, 2020 and 2019.

The Company had the following balances related to transactions with Ablecom and Compuware as of December 31, 2020 and June 30, 2020 (in thousands):

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2020 June 30, 2020

Accounts receivable and other receivables (1) $ 6,099 $ 6,379

7 unchanged sentences

(2) Includes current portion of operating lease liabilities.

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(3) Represents non-current portion of operating lease liabilities.

See Note 1, "Summary of Significant Accounting Policies" for a discussion of the transactions and balances in the Company’s Corporate Venture.

Stock-based Compensation

Stock-based Compensation and Stockholders' Equity

Equity Incentive Plan

3 unchanged sentences

7,246,000 shares of common stock remain reserved for outstanding awards issued under the 2016 Plan at the time of adoption of the 2020 Plan.

As of September 30, 2020, the Company had 4,593,009 authorized shares available for future issuance under the 2020 Plan.

Share Repurchase Program

As of December 31, 2020, the Company had 4,277,287 authorized shares available for future issuance under the 2020 Plan.

Common Stock Repurchase and Retirement

On August 9, 2020, the Board approved a share repurchase program to repurchase shares of common stock for up to an aggregate of $ 30.0 million at market prices.

The program is effective until December 31, 2020 or if earlier, until the maximum amount of common stock is repurchased.

The program was effective until December 31, 2020 or if earlier, until the maximum amount of common stock is repurchased.

During the three months ended September 30, 2020, 1,142,294 shares of common stock were repurchased for $ 30.0 million and the program ended.

Repurchased shares were recorded as treasury shares in the Company's condensed consolidated balance sheet.

Repurchased shares were recorded as treasury shares in the Company's condensed consolidated balance sheet as of September 30, 2020.

On December 11, 2020, the Board approved the retirement of 2,475,419 shares of the Company's common stock, which were recorded as treasury stock in the Company's condensed consolidated balance sheet as of September 30, 2020.

On October 31, 2020, the Board approved a share repurchase program to repurchase shares of common stock for up to an aggregate of $ 50.0 million at market prices.

The program is effective until October 31, 2021 or if earlier, until the maximum amount of common stock is repurchased.

During the three months ended December 31, 2020, 1,580,207 shares of common stock were repurchased for $ 47.0 million.

All these shares have been retired as of December 31, 2020.

Determining Fair Value

The Company's fair value of RSUs and PRSUs is based on the closing market price of the Company's common stock on the date of grant.

The Company estimates the fair value of stock options granted using the Black-Scholes-option-pricing model.

The Company estimates the fair value of stock options granted using the Black-Scholes-option-pricing

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

This fair value is then amortized ratably over the requisite service periods of the awards, which is generally the vesting period.

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Risk-Free Interest Rate—The risk-free interest rate used in the Black-Scholes valuation method is based on the United States Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of option.

The fair value of stock option grants for the three months ended September 30, 2020 and 2019 was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The fair value of stock option grants for the three and six months ended December 31, 2020 and 2019 was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:

Three Months Ended

September 30,

December 31, Six Months Ended

2020 2019 2020 2019

Risk-free interest rate 0.45 % 1.72 % 0.27 % - 0.45 %

Expected term 5.98 years 6.27 years

1.58 % - 1.72 %

Expected term 5.98 years 6.27 years 5.98 years 6.27 years

Dividend yield — % — % — % — %

Volatility 50.34 % 49.74 % 50.34 % - 50.43 %

49.74 % - 50.04 %

Weighted-average fair value $ 11.13 $ 10.30 $ 13.14 $ 9.14

The following table shows total stock-based compensation expense included in the condensed consolidated statements of operations for the three months ended September 30, 2020 and 2019 (in thousands):

The following table shows total stock-based compensation expense included in the condensed consolidated statements of operations for the three and six months ended December 31, 2020 and 2019 (in thousands):

Three Months Ended

September 30,

December 31, Six Months Ended

2020 2019 2020 2019

Cost of sales $ 407 $ 384 $ 910 $ 779

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Stock-based compensation expense, net $ 4,721 $ 3,833 $ 9,936 $ 7,735

As of September 30, 2020, $ 7.2 million of unrecognized compensation cost related to stock options is expected to be recognized over a weighted-average period of 2.39 years, $ 39.7 million of unrecognized compensation cost related to unvested RSUs is expected to be recognized over a weighted-average period of 2.56 years and $ 0.4 million of unrecognized compensation cost related to unvested PRSUs is expected to be recognized over a period of 0.76 years.

As of December 31, 2020, $ 7.2 million of unrecognized compensation cost related to stock options is expected to be recognized over a weighted-average period of 2.43 years, $ 39.7 million of unrecognized compensation cost related to unvested RSUs is expected to be recognized over a weighted-average period of 2.54 years and $ 0.3 million of unrecognized compensation cost related to unvested PRSUs is expected to be recognized over a period of 0.61 years.

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Stock Option Activity

The following table summarizes stock option activity during the three months ended September 30, 2020 under all plans:

The following table summarizes stock option activity during the six months ended December 31, 2020 under all plans:

Outstanding Weighted

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Forfeited/Cancelled ( 35,894 ) $ 24.41

Balance as of September 30, 2020 5,214,851 $ 20.14 4.20

Options vested and exercisable at September 30, 2020 4,457,311 $ 19.67 3.43

Balance as of December 31, 2020 4,973,231 $ 20.40 4.20

Options vested and exercisable at December 31, 2020 4,189,436 $ 19.88 3.36

RSU and PRSU Activity

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RSUs are typically service based share awards that entitle the holder to receive freely tradable shares of the Company's common stock upon vesting.

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In August 2017, the Compensation Committee granted two PRSU awards to the Company's Chief Executive Officer, both of which have both performance and service conditions.

50 % of the PRSUs vested at June 30, 2018 when performance conditions were achieved, while the remainder vest in equal amounts over the following ten quarters if the Company's Chief Executive Officer continued to be employed during those ten quarters.

As of September 30, 2020, an additional 45 % of the PRSUs vested and 5 % are expected to vest in the three months ended December 31, 2020, in accordance with the terms of the grant.

As of December 31, 2020, the remaining 50 % of the PRSUs had vested in accordance with the terms of the grant.

In March 2020, the Compensation Committee granted a PRSU award to one of the Company's senior executives.

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No additional units were earned for fiscal year 2020 as revenue decreased from fiscal year 2019.

The following table summarizes RSU and PRSU activity during the three months ended September 30, 2020 under all plans:

The following table summarizes RSU and PRSU activity during the six months ended December 31, 2020 under all plans:

Time-Based RSUs

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Forfeited ( 102,115 ) $ 23.14 — $ —

Balance as of September 30, 2020 2,023,784 $ 22.55 36,000 $ 21.49

Balance as of December 31, 2020 2,058,326 $ 22.89 30,000 $ 20.37

__________________________

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company recorded a provision for income taxes of $ 3.7 million and $ 8.6 million for the three months ended September 30, 2020 and 2019, respectively.

The effective tax rate was 12.7 % and 25.3 % for the three months ended September 30, 2020 and 2019, respectively.

The effective tax rate for the three months ended September 30, 2020 is lower than that for the three months ended September 30, 2019, primarily due to decrease in tax reserves for uncertain tax positions after settlement of certain tax audits, and increase in the tax benefit related to employees’ stock-based compensation.

The Company recorded a provision for income taxes of $ 5.1 million and $ 8.8 million for the three and six months ended December 31, 2020, respectively, and $ 2.1 million and $ 10.7 million for the three and six months ended December 31, 2019, respectively.

The effective tax rate was 14.9 % and 13.9 % for the three and six months ended December 31, 2020, respectively, and 7.9 % and 17.6 % for the three and six months ended December 31, 2019, respectively.

The effective tax rate for the three months ended December 31, 2020 is higher than that for the three months ended December 31, 2019, primarily due to release of uncertain tax positions after settlement of a Taiwan tax audit in 2019.

The effective tax rate for the six months ended December 31, 2020 is lower than that for the six months ended December 31, 2019, primarily due to decrease in tax reserves for uncertain tax positions and an increase in tax benefit from employees stock based compensation.

As a result of the 2017 Tax Reform Act, in December 2019, the Company realigned its international business operations and group structure.

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The CARES Act does not have a material impact on the Company.

As of September 30, 2020, the Company had gross unrecognized tax benefits of $ 30.5 million, of which, $ 14.1 million if recognized, would affect the Company's effective tax rate.

During the three months ended September 30, 2020, there was a $ 3.3 million increase in gross unrecognized tax benefits.

As of December 31, 2020, the Company had gross unrecognized tax benefits of $ 39.4 million, of which, $ 14.1 million if recognized, would affect the Company's effective tax rate.

During the six months ended December 31, 2020, there was a $ 8.8 million increase in gross unrecognized tax benefits, primarily due to an uncertain tax position in a foreign jurisdiction.

The Company’s policy is to include interest and penalties related to unrecognized tax benefits within the provision for taxes on the condensed consolidated statements of operations.

As of September 30, 2020, the Company had accrued $ 2.3 million of interest and penalties relating to unrecognized tax benefits.

As of December 31, 2020, the Company had accrued $ 2.4 million of interest and penalties relating to unrecognized tax benefits.

Under the 2017 Tax Reform Act, starting on July 1, 2018, the Company is no longer subject to federal income tax on earnings remitted from our foreign subsidiaries.

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The tax impact of such repatriation is estimated to be immaterial.

In October 2019, the Taiwan tax authority completed its audit in Taiwan for fiscal year 2018 and proposed a transfer pricing adjustment resulting in additional tax liability of $ 1.6 million.

In October 2019, the Taiwan tax authority completed its audit in Taiwan for fiscal year 2018 and proposed an adjustment resulting in additional tax liability of $ 1.6 million.

The Company accepted the proposed adjustment in October 2019 and paid the $ 1.6 million tax liability in February 2020.

In February 2020, the Taiwan tax authority completed its audit in Taiwan for fiscal year 2019 and proposed a transfer pricing adjustment resulting in an additional tax liability of $ 1.0 million.

In February 2020, the Taiwan tax authority completed its audit in Taiwan for fiscal year 2019 and proposed an adjustment resulting in an additional tax liability of $ 1.0 million.

The Company accepted the proposed adjustment and paid the $ 1.0 million tax liability in February 2020.

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On October 28, 2020, defendants filed a supplemental motion to dismiss.

The Court has not set a new date for the motion to dismiss hearing, but expects the hearing will be set in late 2020 or early 2021 following completion of supplemental motion to dismiss briefing.

The Court has taken the motion under submission.

The Company believes the claims are without merit and intends to vigorously defend against the lawsuit.

On October 27, 2020, certain current and former directors and officers of the Company were named as defendants in a putative derivative lawsuit filed in the Superior Court of the State of California, County of Santa Clara (the “Court”), captioned Barry v.

Liang, et al., 20-CV-372190 (the “Derivative Action”).

The Company was also named as a nominal defendant.

The complaint purports to allege claims for breaches of fiduciary duties, waste of corporate assets, and unjust enrichment arising out of allegations that the Company’s officers and directors caused the Company to issue false and misleading statements about recognition of revenue and the effectiveness of its internal controls, failed to adopt and implement effective internal controls, and failed to timely file various reports with the Securities and Exchange Commission.

The plaintiffs seek unspecified compensatory damages and other equitable relief.

A case management conference has been set for late February 2021, and the matter is stayed until such time.

On November 13, 2020, Build Group Inc.

(“Build Group”) filed a complaint against the Company in the Superior Court for Santa Clara County, seeking damages of approximately $ 2 million.

Build Group served the complaint on the Company on December 1, 2020.

Build Group alleged that the Company breached the construction contract between the Company and Build Group by failing to approve or reject certain requests for change orders to the scope of work covered by the construction project in a timely manner, or at all.

A substantial portion of the amounts covered by the change orders at issue related to delays in the construction project.

Build Group asserted that these delays were beyond its control and that therefore it was entitled to additional payments as a result of the delays in completion of the project.

The Company believed that it had meritorious defenses to Build Group’s claims, but nonetheless negotiated a settlement with Build Group.

The settlement agreement resolving this dispute was executed effective January 19, 2021.

As a result, the Company did not have to respond to the complaint.

Per the settlement agreement, Build Group agreed to dismiss the entire action with prejudice once the Company complied with its obligations under the settlement agreement.

The Company has complied with its obligations and Build Group has submitted the dismissal, which should be granted by the court in the near term.

As of December 31, 2020, the Company recorded a liability of $ 1.6 million for the construction project expenses incurred pertaining to this matter.

SEC Matter— The Company cooperated with the SEC in its investigation of marketing expenses that contained certain irregularities discovered by Company management, which irregularities were disclosed on August 31, 2015, and the Company cooperated with the SEC in its further investigation of the matters underlying the Company’s inability to timely file its Form 10-K for the fiscal year ended June 30, 2017 and concerning the publication of a false and widely discredited news article in October 2018 concerning the Company’s products.

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The Company admitted the SEC’s jurisdiction over the Company and the subject matter of the proceedings, but otherwise neither admitted nor denied the SEC’s findings, as described in the Order.

The Company agreed to cease and desist from committing or causing any violations and any future violations of Sections 17(a)(2) and (3) of the Securities Act and Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B), of the Exchange Act and Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder.

The Company agreed to cease and desist from committing or causing any violations and any future violations of Sections

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

17(a)(2) and (3) of the Securities Act and Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B), of the Exchange Act and Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder.

The Company agreed and paid a civil money penalty of $ 17,500,000 during the three months ended September 30, 2020, which was recorded to general and administrative expense in the Company's condensed consolidated statement of operations.

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From time to time, the Company has been involved in various legal proceedings arising from the normal course of business activities.

The resolution of any such matters have not had a material impact on the Company’s consolidated financial condition, results of operations or liquidity as of September 30, 2020 and any prior periods.

The resolution of any such matters have not had a material impact on the Company’s consolidated financial condition, results of operations or liquidity as of December 31, 2020 and any prior periods.

The Company has entered into indemnification agreements with its current and former directors and executive officers.

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However, the Company maintains directors and officers liability insurance coverage to reduce its exposure to such obligations.

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Purchase Commitments — The Company has agreements to purchase inventory and non-inventory items primarily through the next 12 months.

As of September 30, 2020, these remaining noncancelable commitments were $ 119.7 million, including $ 33.1 million for related parties.

As of December 31, 2020, these remaining noncancelable commitments were $ 248.3 million, including $ 52.3 million for related parties.

Standby Letter of Credit — In October 2018, a $ 3.2 million letter of credit was issued under the 2018 Bank of America Credit Facility and in October 2019, the letter of credit amount was increased to $ 6.4 million.

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The following is a summary of property, plant and equipment, net (in thousands):

September 30, June 30,

December 31, June 30,

Long-lived assets:

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The Company’s revenue is presented on a disaggregated basis in Note 2, “Revenue,” by type of product and by geographical market.

Subsequent Events

Liang, et al., 20-CV-372190 (the “Derivative Action”).

The Company was also named as a nominal defendant.

The plaintiffs seek unspecified compensatory damages and other equitable relief.

On October 31, 2020, the Company's Board of Directors approved a share repurchase program to repurchase shares of its common stock for up to $ 50 million at prevailing prices in the open market.

The share repurchase program is effective until October 31, 2021 or until the maximum amount of common stock is repurchased, whichever occurs first.

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Subsequent Event

On January 29, 2021, a duly authorized subcommittee of the Board approved a share repurchase program to repurchase shares of common stock for up to an aggregate of $ 200.0 million at market price.

The program is effective until July 31, 2022 or if earlier, until the maximum amount of common stock is repurchased.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements