What changed in this filing

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Item 1. Financial Statements

2022-02-04 compared with 2021-11-05 · 294 added, 202 removed, 671 unchanged (43% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

September 30, June 30,

(in thousands, except per share amounts)

December 31, June 30,

Current assets:

Cash and cash equivalents $ 247,407 $ 232,266

Accounts receivable, net of allowances of $ 2,461 and $ 2,591 at September 30, 2021 and June 30, 2021, respectively (including accounts receivable from related parties of $ 13,993 and $ 8,678 at September 30, 2021 and June 30, 2021, respectively)

Accounts receivable, net of allowances of $ 1,949 and $ 2,591 at December 31, 2021 and June 30, 2021, respectively (including accounts receivable from related parties of $ 34,532 and $ 8,678 at December 31, 2021 and June 30, 2021, respectively)

497,431 463,834

Inventories 1,393,672 1,040,964

Prepaid expenses and other current assets (including receivables from related parties of $ 26,283 and $ 23,837 at September 30, 2021 and June 30, 2021, respectively)

Prepaid expenses and other current assets (including receivables from related parties of $ 35,002 and $ 23,837 at December 31, 2021 and June 30, 2021, respectively)

154,778 130,195

7 unchanged sentences

Current liabilities:

Accounts payable (including amounts due to related parties of $ 77,754 and $ 70,096 at September 30, 2021 and June 30, 2021, respectively)

Accounts payable (including amounts due to related parties of $ 96,036 and $ 70,096 at December 31, 2021 and June 30, 2021, respectively)

$ 695,180 $ 612,336

Accrued liabilities (including amounts due to related parties of $ 20,103 and $ 18,528 at September 30, 2021 and June 30, 2021, respectively)

Accrued liabilities (including amounts due to related parties of $ 20,029 and $ 18,528 at December 31, 2021 and June 30, 2021, respectively)

171,010 178,850

11 unchanged sentences

Authorized shares:

100,000,000 ;

Outstanding shares:

51,071,844 and 50,582,078 at September 30, 2021 and June 30, 2021, respectively

51,509 and 50,582 at December 31, 2021 and June 30, 2021, respectively

Issued shares:

51,071,844 and 50,582,078 at September 30, 2021 and June 30, 2021, respectively

51,509 and 50,582 at December 31, 2021 and June 30, 2021, respectively

460,990 438,012

11 unchanged sentences

Three Months Ended

September 30,

Net sales (including related party sales of $ 30,922 and $ 19,716 in the three months ended September 30, 2021 and 2020, respectively)

December 31, Six Months Ended

2021 2020 2021 2020

Cost of sales (including related party purchases of $ 87,687 and $ 58,859 in the three months ended September 30, 2021 and 2020, respectively)

Net sales (including related party sales of $ 41,616 and $ 18,706 in the three months ended December 31, 2021 and 2020, respectively, and $ 72,538 and $ 38,421 in the six months ended December 31, 2021 and 2020, respectively)

$ 1,172,419 $ 830,306 $ 2,205,149 $ 1,592,556

Cost of sales (including related party purchases of $ 96,728 and $ 51,532 in the three months ended December 31, 2021 and 2020, respectively, and $ 184,415 and $ 110,392 in the six months ended December 31, 2021 and 2020, respectively)

1,008,676 694,211 1,903,267 1,326,546

Gross profit 163,743 136,095 301,882 266,010

5 unchanged sentences

Income from operations 51,049 37,365 80,177 67,811

Other (expense) income, net 50 ( 841 )

Other expense, net ( 607 ) ( 2,539 ) ( 557 ) ( 3,380 )

Interest expense ( 1,150 ) ( 569 ) ( 1,954 ) ( 1,243 )

1 unchanged sentence

Income tax provision ( 7,599 ) ( 5,108 ) ( 10,924 ) ( 8,768 )

Share of income from equity investee, net of taxes 388 1,330

Share of income (loss) from equity investee, net of taxes 239 ( 1,475 ) 627 ( 145 )

Net income $ 41,932 $ 27,674 $ 67,369 $ 54,275

10 unchanged sentences

Three Months Ended

September 30,

December 31, Six Months Ended

2021 2020 2021 2020

Net income $ 41,932 $ 27,674 $ 67,369 $ 54,275

Other comprehensive income (loss), net of tax:

Foreign currency translation gain (loss) ( 4 ) 247

Total other comprehensive income (loss) ( 4 ) 247

Other comprehensive income, net of tax:

Foreign currency translation gain 100 301 96 548

Total other comprehensive income 100 301 96 548

Total comprehensive income $ 42,032 $ 27,975 $ 67,465 $ 54,823

3 unchanged sentences

(in thousands, except share amounts)

Three Months Ended September 30, 2021 Common Stock and

Three Months Ended December 31, 2021 Common Stock and

Additional Paid-In

1 unchanged sentence

Comprehensive

Income (Loss) Retained

Income Retained

Earnings Non-controlling Interest Total

1 unchanged sentence

Shares Amount Shares Amount

Balance at June 30, 2021 50,582,078 $ 438,012 — $ — $ 453 $ 657,760 $ 173 $ 1,096,398

Balance at September 30, 2021 51,071,844 $ 448,976 — $ — $ 449 $ 683,197 $ 176 $ 1,132,798

Exercise of stock options, net of taxes 299,337 5,570 — — — — — 5,570

2 unchanged sentences

Stock-based compensation — 9,176 — — — — — 9,176

Foreign currency translation loss — — — — ( 4 ) — — ( 4 )

Foreign currency translation gain — — — — 100 — — 100

Net income — — — — — 41,932 1 41,933

Balance at December 31, 2021 51,508,616 $ 460,990 — $ — $ 549 $ 725,129 $ 177 $ 1,186,845

Three Months Ended December 31, 2020 Common Stock and

Additional Paid-In

Capital Treasury Stock Accumulated

Comprehensive

Income Retained

Earnings Non-controlling Interest Total

Stockholders’

Shares Amount Shares Amount

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

Three Months Ended September 30, 2020 Common Stock and

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

Release of common stock shares upon vesting of restricted stock units 193,017 — — — — — — —

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

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

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

Foreign currency translation gain — — — — 301 — — 301

Net income — — — — — 27,674 4 27,678

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

Six Months Ended December 31, 2021 Common Stock and

Additional Paid-In

1 unchanged sentence

Comprehensive

Income (Loss) Retained

Income Retained

Earnings Non-controlling Interest Total

5 unchanged sentences

Shares withheld for the withholding tax on vesting of restricted stock units ( 116,461 ) ( 4,801 ) — — — — — ( 4,801 )

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

Shares repurchase and retirement — — — — — — —

Stock-based compensation — 16,191 — — — — — 16,191

1 unchanged sentence

Net income — — — — — 67,369 4 67,373

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

Balance at December 31, 2021 51,508,616 $ 460,990 — $ — $ 549 $ 725,129 $ 177 $ 1,186,845

Six Months Ended December 31, 2020 Common Stock and

Additional Paid-In

Capital Treasury Stock Accumulated

Comprehensive

Income Retained

Earnings Non-controlling Interest Total

Stockholders’

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

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

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

Shares 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

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Three Months Ended

September 30,

Six Months Ended

OPERATING ACTIVITIES:

5 unchanged sentences

Provision for excess and obsolete inventories 3,691 1,740

Share of income from equity investee ( 388 ) ( 1,330 )

Foreign currency exchange gain 45 618

Share of (income) loss from equity investee ( 627 ) 145

Foreign currency exchange (gain) loss ( 2,738 ) 2,905

Deferred income taxes, net 1,451 ( 883 )

1 unchanged sentence

Changes in operating assets and liabilities:

Accounts receivable, net (including changes in related party balances of $( 5,315 ) and $ 7,510 during the three months ended September 30, 2021 and 2020, respectively)

Accounts receivable, net (including changes in related party balances of $( 25,854 ) and $( 6,304 ) during the six months ended December 31, 2021 and 2020, respectively)

( 33,491 ) 81,156

Inventories ( 356,399 ) 42,327

Prepaid expenses and other assets (including changes in related party balances of $( 2,446 ) and $ 12,158 during the three months ended September 30, 2021 and 2020, respectively)

Accounts payable (including changes in related party balances of $ 7,658 and $( 24,676 ) during the three months ended September 30, 2021 and 2020, respectively)

Prepaid expenses and other assets (including changes in related party balances of $( 11,165 ) and $ 7,629 during the six months ended December 31, 2021 and 2020, respectively)

( 24,481 ) 27,426

Accounts payable (including changes in related party balances of $ 25,940 and $( 24,112 ) during the six months ended December 31, 2021 and 2020, respectively)

83,188 ( 25,296 )

Income taxes payable 1,723 5,855

Deferred revenue 50,235 ( 8,864 )

Accrued liabilities (including changes in related party balances of $ 1,575 and $( 3,577 ) during the three months ended September 30, 2021 and 2020, respectively)

Accrued liabilities (including changes in related party balances of $ 1,501 and $( 4,867 ) during the six months ended December 31, 2021 and 2020, respectively)

( 2,507 ) ( 20,619 )

Other long-term liabilities (including changes in related party balances of $ 0 and $( 530 ) during the three months ended September 30, 2021 and 2020, respectively)

Other long-term liabilities (including changes in related party balances of $ 0 and $( 1,671 ) during the six months ended December 31, 2021 and 2020, respectively)

( 7,417 ) ( 3,240 )

1 unchanged sentence

INVESTING ACTIVITIES:

Purchases of property, plant and equipment (including payments to related parties of $ 400 and $ 2,230 during the three months ended September 30, 2021 and 2020, respectively)

Purchases of property, plant and equipment (including payments to related parties of $ 1,770 and $ 3,058 during the six months ended December 31, 2021 and 2020, respectively)

( 23,206 ) ( 25,551 )

18 unchanged sentences

Non-cash investing and financing activities:

Unpaid property, plant and equipment purchases (including due to related parties of $ 1,360 and $ 1,664 as of September 30, 2021 and 2020, respectively)

Unpaid property, plant and equipment purchases (including due to related parties of $ 2,312 and $ 3,056 as of December 31, 2021 and 2020, respectively)

$ 11,140 $ 11,596

13 unchanged sentences

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, 2021 are not necessarily indicative of the results that may be expected for future quarters or for the fiscal year ending June 30, 2022.

The consolidated results of operations for the three and six months ended December 31, 2021 are not necessarily indicative of the results that may be expected for future quarters or for the fiscal year ending June 30, 2022.

Concentration of Supplier Risk

1 unchanged sentence

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

One supplier accounted for 20.1 % and 22.0 % of total purchases for the three months ended September 30, 2021 and 2020, respectively.

Purchases from Ablecom, and Compuware, related parties of the Company (see Note 8, "Related Party Transactions") accounted for a combined 9.6 % and 9.2 % of total cost of sales for the three months ended September 30, 2021 and 2020, respectively.

One supplier accounted for 26.9 % and 20.0 % of total purchases for the three months ended December 31, 2021 and 2020, respectively, and 23.1 % and 20.9 % of total purchases for the six months ended December 31, 2021 and 2020, respectively.

Purchases from Ablecom, and Compuware, related parties of the Company (see Note 8, "Related Party Transactions") accounted for a combined 9.4 % and 7.3 % of total cost of sales for the three months ended December 31, 2021 and 2020, respectively, and a combined 9.5 % and 8.2 % of total cost of sales for the six months ended December 31, 2021 and 2020, 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, 2021 and 2020.

One customer accounted for 11.7 % and 13.5 % of accounts receivable, net as of September 30, 2021 and June 30, 2021, respectively.

No single customer accounted for 10% or more of the net sales for the three and six months ended December 31, 2021 and 2020.

No customer accounted for greater than 10% of the Company's accounts receivable, net as of December 31, 2021, whereas one customer accounted for 13.5 % of accounts receivable, net as of June 30, 2021.

Accounting Pronouncements Recently Adopted

14 unchanged sentences

As the amendment had changes not related to LIBOR replacement, optional expedients under this guidance cannot be elected.

The E.SUN Credit Facility will terminate on July 29, 2022 before the phase out of LIBOR.

Therefore, the Company does not expect the adoption of the guidance to have an impact on its consolidated financial statements and disclosures.

The Company is currently evaluating the overall impact of adoption of the guidance on its consolidated financial statements and disclosures.

Disaggregation of Revenue

3 unchanged sentences

Three Months Ended

September 30,

December 31, Six Months Ended

2021 2020 2021 2020

Server and storage systems $ 986,052 $ 642,711 $ 1,835,908 $ 1,260,499

4 unchanged sentences

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 months ended September 30, 2021 and 2020, of net sales by geographic region (in thousands):

The following is a summary for the three and six months ended December 31, 2021 and 2020, of net sales by geographic region (in thousands):

Three Months Ended

September 30,

December 31, Six Months Ended

2021 2020 2021 2020

United States $ 638,207 $ 463,102 $ 1,199,155 $ 959,188

13 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, 2021, which was included in the opening deferred revenue balance as of June 30, 2021 of $ 202.3 million, was $ 30.0 million.

Deferred revenue increased $ 13.1 million during the three months ended September 30, 2021 as compared to the fiscal year ended June 30, 2021 mainly due to the increase in non-cancellable non-refundable advance considerations received from customers which precede the Company's satisfaction of the associated performance obligations.

Additionally, at times, deferred revenue may fluctuate due to the timing of advance consideration received from non-cancellable non-refundable contract liabilities relating to the sale of future products.

Revenue recognized during the three and six months ended December 31, 2021, which was included in the opening deferred revenue balance as of June 30, 2021 of $ 202.3 million, was $ 26.7 million and $ 56.7 million, respectively.

Deferred revenue increased $ 50.2 million as of December 31, 2021 as compared to the fiscal year ended June 30, 2021 of which $ 37.8 million was due to the increase in non-cancellable non-refundable advance consideration received from customers which precedes the Company's satisfaction of the associated performance obligations relating to product sales that the Company expects to fulfill in the next 12 months .

Transaction Price Allocated to the Remaining Performance Obligations

2 unchanged sentences

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 September 30, 2021 was $ 215.4 million .

The value of the transaction price allocated to remaining performance obligations as of December 31, 2021 was $ 252.6 million .

The Company expects to recognize approximately 56 % of remaining performance obligations as revenue in the next 12 months, and the remainder thereafter.

9 unchanged sentences

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

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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, 2021 and 2020 (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, 2021 and 2020 (in thousands, except per share amounts):

Three Months Ended

September 30,

December 31, Six Months Ended

2021 2020 2021 2020

Net income $ 41,932 $ 27,674 $ 67,369 $ 54,275

4 unchanged sentences

Diluted net income per common share $ 0.78 $ 0.52 $ 1.27 $ 1.00

For the three months ended September 30, 2021 and 2020, 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 694,211 and 1,177,694 for the three months ended September 30, 2021 and 2020, respectively.

For the three and six months ended December 31, 2021 and 2020, 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 419,423 and 1,040,890 for the three months ended December 31, 2021 and 2020, respectively, and 1,501,560 and 1,113,845 for the six months ended December 31, 2021 and 2020, respectively.

Balance Sheet Components

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

September 30, 2021 June 30, 2021

December 31, 2021 June 30, 2021

Finished goods $ 923,702 $ 761,694

2 unchanged sentences

Total inventories $ 1,393,672 $ 1,040,964

During the three months ended September 30, 2021 and 2020, the Company recorded a net provision for excess and obsolete inventory to cost of sales totaling $ 3.5 million and $ 0.9 million, respectively.

The Company classifies subsystems and

accessories that may be sold separately or incorporated into systems as finished goods.

Table of Contents SUPER MICRO COMPUTER, INC.

During the three and six months ended December 31, 2021, the Company recorded a net provision for excess and obsolete inventory to cost of sales totaling $ 0.2 million and $ 3.7 million, respectively, and $ 2.5 million and $ 1.7 million for the three and six months ended December 31, 2020.

respectively.

The Company classifies subsystems and accessories that may be sold separately or incorporated into systems as finished goods.

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Prepaid Expenses and Other Current Assets:

September 30, 2021 June 30, 2021

December 31, 2021 June 30, 2021

Other receivables (1) $ 120,085 $ 99,921

6 unchanged sentences

__________________________

(1) Includes other receivables from contract manufacturers based on certain buy-sell arrangements of $ 75.2 million and $ 76.2 million as of September 30, 2021 and June 30, 2021, respectively.

(1) Includes other receivables from contract manufacturers based on certain buy-sell arrangements of $ 99.5 million and $ 76.2 million as of December 31, 2021 and June 30, 2021, respectively.

Cash, cash equivalents and restricted cash:

September 30, 2021 June 30, 2021

December 31, 2021 June 30, 2021

Cash and cash equivalents $ 247,407 $ 232,266

3 unchanged sentences

Property, Plant, and Equipment:

September 30, 2021 June 30, 2021

December 31, 2021 June 30, 2021

Buildings $ 143,509 $ 86,930

10 unchanged sentences

(1) Primarily relates to the development and construction costs associated with the Company’s Green Computing Park located in San Jose, California, and a new building in Taiwan.

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SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Other Assets:

September 30, 2021 June 30, 2021

December 31, 2021 June 30, 2021

Operating lease right-of-use asset $ 23,622 $ 20,047

7 unchanged sentences

Accrued Liabilities:

September 30, 2021 June 30, 2021

December 31, 2021 June 30, 2021

Accrued payroll and related expenses $ 45,315 $ 45,770

18 unchanged sentences

The Board exercised its discretion under the terms of the performance bonuses to reduce the payout for the first tranche from 50 % to approximately 25 % of $ 8.1 million, for an aggregate of $ 2.0 million.

The payout of $ 2.0 million was made subsequent to September 30, 2021.

Table of Contents SUPER MICRO COMPUTER, INC.

The payout of $ 2.0 million was made during the quarter ended December 31, 2021.

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

1 unchanged sentence

In light of the Board’s action in September 2021 to reduce the amount of the first tranche payout to $ 2.0 million, the Company adjusted the amount of this liability on its balance sheet as of September 30, 2021 to $ 2.0 million and recognized a benefit of $ 1.6 million in its consolidated statement of operations during the quarter ended September 30, 2021.

The (benefit) or expense recognized during the three months ended September 30, 2021 and 2020 was $( 1.6 ) million and $ 0.1 million, respectively.

There was no expense for the three months ended December 31, 2021 and for three months ended December 31, 2020 $ 2.5 million expense was recognized.

For the six months ended December 31, 2021 and 2020, $ 1.6 million and $ 2.6 million expense was recognized, respectively.

Other Long-term Liabilities:

September 30, 2021 June 30, 2021

December 31, 2021 June 30, 2021

Accrued unrecognized tax benefits including related interests and penalties, non-current $ 19,203 $ 17,841

Operating lease liability, non-current 17,625 14,539

Accrued unrecognized tax benefits including related interest and penalties 18,392 17,841

Accrued warranty costs, non-current 2,680 2,678

3 unchanged sentences

Three Months Ended

September 30,

December 31, Six Months Ended

2021 2020 2021 2020

Balance, beginning of the period $ 12,233 $ 13,727 $ 12,863 $ 12,379

8 unchanged sentences

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’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, 2021 and June 30, 2021.

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, 2021.

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SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Financial Assets and Liabilities Measured on a Recurring Basis

The following table sets forth the Company’s financial instruments as of September 30, 2021 and June 30, 2021, 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, 2021 and June 30, 2021, 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, 2021 Level 1 Level 2 Level 3 Asset at

December 31, 2021 Level 1 Level 2 Level 3 Asset at

Money market funds (1) $ 151 $ — $ — $ 151

7 unchanged sentences

Total assets measured at fair value $ 151 $ 863 $ 1,556 $ 2,570

__________________________

(1) $ 0.2 million and $ 0.2 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, 2021 and June 30, 2021, 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 $ 0.4 million and $ 0.4 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, 2021 and June 30, 2021, respectively.

(1) $ 0.2 million and $ 0.2 million in money market funds are included in restricted cash, non-current in other assets in the condensed consolidated balance sheets as of December 31, 2021 and June 30, 2021, respectively.

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

For the three months ended September 30, 2021, the credit losses related to the Company’s investments was not significant.

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, 2021 and 2020.

There were no transfers between Level 1, Level 2 or Level 3 financial instruments in the three months ended September 30, 2021 and 2020.

The following is a summary of the Company’s investment in an auction rate security as of September 30, 2021 and June 30, 2021 (in thousands):

For the three and six months ended December 31, 2021, the credit losses related to the Company’s investments was not significant.

There were no transfers between Level 1, Level 2 or Level 3 financial instruments in the three and six months ended December 31, 2021 and 2020.

The following is a summary of the Company’s investment in an auction rate security as of December 31, 2021 and June 30, 2021 (in thousands):

Cost Basis Gross

1 unchanged sentence

Auction rate security $ 1,750 $ — $ ( 194 ) $ 1,556

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SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

No gain or loss was recognized in other comprehensive income for the auction rate security for the three months ended September 30, 2021 and 2020.

No gain or loss was recognized in other comprehensive income for the auction rate security for the three and six months ended December 31, 2021 and 2020.

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

As of September 30, 2021 and June 30, 2021, total debt of $ 278.8 million and $ 98.2 million, respectively, was reported at amortized cost.

As of December 31, 2021 and June 30, 2021, total debt of $ 315.9 million and $ 98.2 million, respectively, was reported at amortized cost.

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

1 unchanged sentence

Other Financial Assets - Investments into Non-Marketable Equity Securities

The Company's non-marketable equity securities are investments in privately held companies without readily determinable fair values in the amount of $ 1.2 million and $ 0.1 million as of September 30, 2021 and June 30, 2021, respectively.

The Company accounts for these investments at cost less impairment, if any, plus or minus changes from observable price changes in orderly transactions for the identical or similar investments by the same issuer.

During the three months ended September 30, 2021 and 2020, the Company did not record any upward or downward adjustments to the carrying values of the non-marketable equity securities related to observable price changes.

The Company also did not record any impairment to the carrying values of the non-marketable equity securities during the three months ended September 30, 2021 and 2020.

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During the three and six months ended December 31, 2021 and 2020, the Company did not record any upward or downward adjustments to the carrying values of the non-marketable equity securities related to observable price changes.

The Company also did not record any impairment to the carrying values of the non-marketable equity securities during the three and six months ended December 31, 2021 and 2020.

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Short-term and Long-term Debt

Short-term and long-term debt obligations as of September 30, 2021 and June 30, 2021 consisted of the following (in thousands):

September 30, June 30,

Short-term and long-term debt obligations as of December 31, 2021 and June 30, 2021 consisted of the following (in thousands):

December 31, June 30,

Line of credit:

7 unchanged sentences

E.SUN Bank term loan, due September 15, 2026 18,346 —

Mega Bank term loan, due September 15, 2026 43,388 —

Chang Hwa Bank term loan due October 15, 2026 36,157 —

Total term loans 141,848 59,790

14 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, 2021, the total outstanding borrowings under the 2018 Bank of America Credit Facility were $ 110.2 million.

As of June 30, 2021, 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, 2021 and June 30, 2021 were 1.50 %.

The balance of debt issuance costs outstanding as of September 30, 2021 and June 30, 2021 were $ 0.5 million.

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SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Company has been in compliance with all the covenants under the 2018 Bank of America Credit Facility, and as of September 30, 2021, the Company's available borrowing capacity was $ 89.8 million , subject to the borrowing base limitation and compliance with other applicable terms.

As of December 31, 2021, the total outstanding borrowings under the 2018 Bank of America Credit Facility were $ 60.6 million.

As of June 30, 2021, 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, 2021 and June 30, 2021 were 1.50 %.

The balance of debt issuance costs outstanding as of December 31, 2021 and June 30, 2021 were $ 0.5 million.

The Company has been in compliance with all the covenants under the 2018 Bank of America Credit Facility, and as of December 31, 2021, the Company's available borrowing capacity was $ 139.4 million , subject to the borrowing base limitation and compliance with other applicable terms.

2021 CTBC Credit Lines

13 unchanged sentences

Amounts outstanding under the Prior CTBC Credit Lines on the Effective Date were assumed by the 2021 CTBC Credit Lines.

As of September 30, 2021 and June 30, 2021, the amounts outstanding under the 2020 CTBC Term Loan Facility were $ 39.0 million and $ 34.7 million, respectively.

The interest rates for these loans were 0.45 % per annum as of September 30, 2021 and June 30, 2021.

Under the 2021 CTBC Machine Loan, the amounts outstanding were $ 1.4 million at September 30, 2021.

The interest rates for these loans were 0.65 % per annum as of September 30, 2021.

As of June 30, 2021, there were no outstanding borrowings under the 2021 CTBC Machine Loan.

The total outstanding borrowings under the 2021 CTBC Credit Facility term loan were denominated in NTD and remeasured into U.S.

dollars of $ 25.2 million and $ 25.1 million at September 30, 2021 and June 30, 2021, respectively.

The interest rate for these loans were 0.74 % and 0.75 % per annum as of September 30, 2021 and June 30, 2021, respectively.

As of September 30, 2021, and June 30, 2021, the outstanding borrowings of 2021 CTBC Credit Facility revolving line of credit were $ 68.1 million and $ 18.0 million, respectively.

The interest rates for these loans ranged from approximately 0.94 % to 0.95 % per annum as of September 30, 2021.

The interest rate was 0.98 % per annum as of June 30, 2021.

As of September 30, 2021, the amount available for future borrowing under the 2021 CTBC Credit Facility was $ 11.7 million.

As of September 30, 2021, the net book value of land and building located in Bade, Taiwan, collateralizing the 2021 CTBC Credit Lines was $ 77.7 million.

As of September 30, 2021, all financial covenants under the 2021 CTBC Credit Lines were satisfied.

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As of December 31, 2021 and June 30, 2021, the amounts outstanding under the 2020 CTBC Term Loan Facility were $ 40.4 million and $ 34.7 million, respectively.

The interest rates for these loans were 0.45 % per annum as of December 31, 2021 and June 30, 2021.

Under the 2021 CTBC Machine Loan, the amounts outstanding were $ 3.5 million at December 31, 2021.

The interest rates for this loan was 0.65 % per annum as of December 31, 2021.

As of December 31, 2021, there were no outstanding borrowings under the 2021 CTBC Machine Loan.

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The total outstanding borrowings under the 2021 CTBC Credit Facility term loan was denominated in NTD and remeasured into U.S.

dollars of $ 0.0 million and $ 25.1 million at December 31, 2021 and June 30, 2021, respectively.

The 2021 CTBC Credit Facility term loan was repaid on October 26, 2021.

The interest rate for the 2021 CTBC Credit Facility term loan was 0.75 % per annum as of June 30, 2021.

As of December 31, 2021 and June 30, 2021, the outstanding borrowings under the 2021 CTBC Credit Facility revolving line of credit were $ 97.0 million and $ 18.0 million, respectively.

The interest rates for these loans were approximately 1.00 % per annum as of December 31, 2021.

The interest rate was 0.98 % per annum as of June 30, 2021.

As of December 31, 2021, the amount available for future borrowing under the 2021 CTBC Credit Facility was $ 8.0 million.

As of December 31, 2021, the net book value of land and building located in Bade, Taiwan, collateralizing the 2021 CTBC Credit Lines was $ 78.2 million.

As of December 31, 2021, all financial covenants under the 2021 CTBC Credit Lines were satisfied.

2021 E.SUN Bank Credit Facility

The Company through its Taiwan subsidiary was party to that certain General Credit Agreement, dated December 2, 2020, with E.SUN Bank (“E.SUN Bank”), which provided 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 US$ 30 million (the “Prior E.SUN Bank Credit Facility”).

The term of the Prior E.SUN Bank Credit Facility was until September 18, 2021.

The term of the Prior E.SUN Bank Credit Facility expired on September 18, 2021.

On September 13, 2021 (the “E.SUN Bank Effective Date”), the Company through its Taiwan subsidiary entered into a new General Credit Agreement with E.SUN Bank, which replaced the Prior E.SUN Bank Credit Facility (the “2021 E.SUN Bank Credit Facility”).

4 unchanged sentences

The 2021 E.SUN Bank 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 the Subsidiary has an overdue liability at another financial organization.

There are various financial covenants under the 2021 E.SUN Bank Credit Facility, including current ratio, net debt ratio, and interest coverage requirements.

There are various financial covenants under the 2021 E.SUN Bank Credit Facility, including current ratio, net debt ratio, and interest coverage requirements to be reviewed on a yearly basis at fiscal year end.

Terms for specific drawdown instruments issued under the 2021 E.SUN Bank 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 (a “Notification and Confirmation”) negotiated with E.SUN Bank.

1 unchanged sentence

dollar equivalent) in financing for use in research and development activities (the “Term Loan”), and (ii) a $ 30.0 million import loan (the “Import Loan”) with a tenor of 120 days.

As of September 30, 2021, the total outstanding borrowings under the Term Loan were denominated in NTD and remeasured into U.S.

As of December 31, 2021, the total outstanding borrowings under the Term Loan were denominated in NTD and remeasured into U.S.

dollars of $ 18.3 million and the interest rates for these loans were 0.995 % per annum.

As of September 30, 2021 and June 30, 2021 , the amounts outstanding under the Import Loan were $ 30.0 and $ 20.4 million, respectively.

The interest rates for these loans ranged approximately from 0.96 % to 1.23 % and 1.00 % to 1.29 % per annum as of September 30, 2021 and June 30, 2021, respectively.

At September 30, 2021, the amount available for future borrowing under the Import Loan was $ 0.0 million and all financial covenants under the 2021 E.SUN Bank Credit Facility were satisfied .

As of December 31, 2021 and June 30, 2021 , the amounts outstanding under the Import Loan were $ 16.5 million and $ 20.4 million, respectively.

The interest rates for the quarter ended December 31, 2021 is 0.96 %.

The interest rate for the quarter ended June 30, 2021 ranges approximately from 1.00 % to 1.29 % per annum .

At December 31, 2021, the amount available for future borrowing under the Import Loan was $ 13.5 million .

Mega Bank Credit Facilities

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

On September 13, 2021 (the “Mega Bank Effective Date”), the Company through its Taiwan subsidiary entered into a NTD 1,200.0 million ($ 43.2 million U.S.

8 unchanged sentences

The Mega Bank Credit Facility is unsecured and has customary default provisions permitting Mega Bank to reduce or cancel the extension of credit, or declare all principal and interest amounts immediately due and payable.

As of September 30, 2021, there were no outstanding borrowings under the Mega Bank Credit Facility.

As of December 31, 2021, the total outstanding borrowings under the Mega Bank Credit Facility were denominated in NTD and remeasured into U.S.

dollars of $ 43.4 million and the interest rates ranged is 0.65 % to 0.85 % per annum.

Chang Hwa Bank

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Chang Hwa Bank Credit Facility

3 unchanged sentences

dollar equivalent), including up to $ 20.0 million as loans, advances, acceptances, bills, bank guarantees, overdrafts, letters of credit, and other types of drawdown instruments.

The Chang Hwa Bank Credit Facility has customary default provisions permitting the Chang Hwa Bank to terminate or reduce the credit limit, shorten the credit period, or deem all liabilities due and payable, including in cross-default provisions with respect to the other Taiwan subsidiary debt obligations.

The Chang Hwa Bank Credit Facility has customary default provisions permitting Chang Hwa Bank to terminate or reduce the credit limit, shorten the credit period, or deem all liabilities due and payable, including in cross-default provisions with respect to the other Taiwan subsidiary debt obligations.

Under the Chang Hwa Bank Credit Facility, Chang Hwa Bank has the right to demand collateral for debts owed.

As of December 31, 2021, the total outstanding borrowings under the Chang Hwa Bank Credit Facility were denominated in NTD and remeasured into U.S.

dollars of $ 36.2 million and the interest rate is 0.8 % per annum.

Terms for specific drawdown instruments issued under the Chang Hwa Bank 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 separate loan contracts (each, a “Loan Contract”) negotiated with Chang Hwa Bank.

1 unchanged sentence

None of the three Loan Contracts are secured and there are no financial covenants.

HSBC Bank Credit Facility

On January 7, 2022 (the “HSBC Bank Effective Date”), the Company through its Taiwan subsidiary entered into a General Loan, Export/Import Financing, Overdraft Facilities and Securities Agreement (the “Loan Agreement”) with the Taiwan affiliate of HSBC Bank (“HSBC Bank”).

The Loan Agreement provides for borrowings in the form of loans, export/import financings, overdrafts, commercial paper guaranties, and other types of drawdown instruments.

The Loan Agreement has customary default provisions permitting HSBC Bank to terminate or reduce the credit limit, shorten the credit period, or deem all liabilities due and payable, including in the event its Taiwan subsidiary fails to make payment of sums under another agreement which permits acceleration of maturity of such indebtedness.

The Company is not a guarantor of the Loan Agreement.

Terms for specific drawdown instruments issued under the Loan Agreement, such as credit amount, term of use, mode of drawdown, specific lending rate, and other relevant terms, may be set forth in Facility Letters (a “Facility Letter”) negotiated with the HSBC Bank.

Under a Facility Letter entered into on the HSBC Bank Effective Date, its Taiwan subsidiary and the HSBC Bank have agreed to a $ 30.0 million export/seller trade facility under the Loan Agreement with a tenor of 120 days.

The interest rate thereunder is based on the HSBC Bank’s base rate plus a fixed margin, subject to adjustment under certain circumstances.

Interest payments are due on a monthly basis, and principal is repayable on the due date.

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Principal payments on short-term and long-term obligations are due as follows (in thousands):

4 unchanged sentences

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, 2021 and 2020 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, 2021 and 2020 were as follows (in thousands):

Three Months Ended

September 30,

Operating lease expense (including expense for lease agreements with related parties of $ 246 and $ 347 for the three months ended September 30, 2021 and 2020, respectively)

December 31, Six Months Ended

2021 2020 2021 2020

Cash payments for operating leases (including payments to related parties of $ 279 and $ 347 for the three months ended September 30, 2021 and 2020, respectively)

Operating lease expense (including expense for lease agreements with related parties of $ 179 and $ 425 for the three and six months ended December 31, 2021, respectively, and $ 347 and $ 693 for the three and six months ended December 31, 2020, respectively)

$ 1,983 $ 1,947 $ 4,166 $ 3,947

Cash payments for operating leases (including payments to related parties of $ 211 and $ 490 for the three and six months ended December 31, 2021;

$ 347 , and $ 693 for the three and six months ended December 31, 2020, respectively)

2,008 1,991 4,213 3,957

New operating lease assets obtained in exchange for operating lease liabilities 1,260 662 7,379 2,693

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During the three and six months ended December 31, 2021 and 2020, 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, 2021 were $ 0.2 million and $ 0.5 million, respectively.

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

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

During the three months ended September 30, 2021 and 2020, the Company's costs related to short-term lease arrangements for real estate and non-real estate assets were immaterial.

Non-lease variable payments expensed in the three months ended September 30, 2021 and 2020 were immaterial.

As of September 30, 2021, the weighted average remaining lease term for operating leases was 4.3 years and the weighted average discount rate was 3.2 %.

Maturities of operating lease liabilities under noncancelable operating lease arrangements as of September 30, 2021 were as follows (in thousands):

As of December 31, 2021, the weighted average remaining lease term for operating leases was 4.1 years and the weighted average discount rate was 3.0 %.

Maturities of operating lease liabilities under noncancelable operating lease arrangements as of December 31, 2021 were as follows (in thousands):

Minimum lease payments

3 unchanged sentences

Present value of operating lease liabilities $ 24,056

As of September 30, 2021, commitments under short-term lease arrangements, and operating and financing leases that have not yet commenced were immaterial.

As of December 31, 2021, 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.

6 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, 2021.

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

4 unchanged sentences

The Company has entered into a series of agreements with Ablecom, including multiple product development, production and service agreements, product manufacturing agreements, manufacturing services agreements and lease agreements for warehouse space.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 92.5 % and 93.6 % of the chassis included in the products sold by the Company during the three months ended September 30, 2021 and 2020, respectively.

Ablecom manufactured approximately 88.3 % and 91.6 % of the chassis included in the products sold by the Company during the three months ended December 31, 2021 and 2020, respectively, and 90.3 % and 92.6 % of the chassis included in the products sold by the Company during the six months ended December 2021 and 2020, 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.

1 unchanged sentence

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

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

With respect to the manufacturing aspects of the relationship, Ablecom purchases most of materials needed to manufacture the chassis from third parties and the Company provides certain components used in the manufacturing process (such as power supplies) to Ablecom through consignment or sales transactions.

4 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 $ 36.7 million and $ 40.2 million at September 30, 2021 and June 30, 2021, respectively, effectively representing the exposure to financial loss.

Outstanding purchase orders from the Company to Ablecom were $ 49.4 million and $ 40.2 million at December 31, 2021 and June 30, 2021, respectively, effectively representing the 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.

10 unchanged sentences

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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Compuware also manufactures motherboards, backplanes and other components used on printed circuit boards for the Company.

3 unchanged sentences

In addition to the inventory purchases, the Company also incurs costs associated with design services, tooling assets, and miscellaneous costs.

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 $ 87.8 million and $ 71.0 million at September 30, 2021 and June 30, 2021, respectively, effectively representing the exposure to financial loss.

Outstanding purchase orders from the Company to Compuware were $ 50.9 million and $ 71.0 million at December 31, 2021 and June 30, 2021, respectively, effectively representing the 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.

5 unchanged sentences

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

As of September 30, 2021 and June 30, 2021, the Company had unamortized deferred gain balance of $ 0.5 million and $ 1.0 million, respectively, in accrued liabilities and none in other long-term liabilities in the Company’s condensed consolidated balance sheets.

As of December 31, 2021 and June 30, 2021, the Company had unamortized deferred gain balance of $ 0 million and $ 1.0 million, respectively, in accrued 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.

3 unchanged sentences

The Company has concluded that the Corporate Venture is in compliance with the new restrictions.

The Company does not believe that the equity investment carrying value is impacted as of September 30, 2021.

No impairment charge was recorded for the three months ended September 30, 2021 and 2020, respectively.

The Company does not believe that the equity investment carrying value is impacted as of December 31, 2021.

No impairment charge was recorded for the three and six months ended December 31, 2021 and 2020, respectively.

The Company sold products to the Corporate Venture and the Company’s share of intra-entity profits on the products that remained unsold by the Corporate Venture have been eliminated and have reduced the carrying value of the Company’s investment in the Corporate Venture.

4 unchanged sentences

A member on the Board of Directors, also serves as an officer of MPS.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company had the following balances related to transactions with its related parties as of September 30, 2021 and June 30, 2021 (in thousands):

The Company had the following balances related to transactions with its related parties as of December 31, 2021 and June 30, 2021 (in thousands):

Ablecom Compuware Corporate Venture MPS Total

September 30, 2021 June 30, 2021 September 30, 2021 June 30, 2021 September 30, 2021 June 30, 2021 September 30, 2021 June 30, 2021 September 30, 2021 June 30, 2021

December 31, 2021 June 30, 2021 December 31, 2021 June 30, 2021 December 31, 2021 June 30, 2021 December 31, 2021 June 30, 2021 December 31, 2021 June 30, 2021

Accounts receivable $ 1 $ 2 $ 264 $ 198 $ 34,267 $ 8,478 $ — $ — $ 34,532 $ 8,678

2 unchanged sentences

Accrued liabilities (2) $ 2,829 $ 3,042 $ 17,200 $ 14,486 $ — $ 1,000 $ — $ — $ 20,029 $ 18,528

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(1) Other receivables include receivables from vendors included in prepaid and other current assets.

(2) Includes current portion of operating lease liabilities included in other current liabilities.

The Company's results from transactions with its related parties for each of the three months ended September 30, 2021 and 2020, are as follows (in thousands):

The Company's results from transactions with its related parties for each of the three months ended December 31, 2021 and 2020, are as follows (in thousands):

Ablecom Compuware Corporate Venture MPS Total

Three months ended September 30, Three months ended September 30, Three months ended September 30, Three months ended September 30, Three months ended September 30,

Three months ended December 31, Three months ended December 31, Three months ended December 31, Three months ended December 31, Three months ended December 31,

2021 2020 2021 2020 2021 2020 2021 2020 2021 2020

2 unchanged sentences

Purchases - other miscellaneous items $ 2,867 $ 2,762 $ 347 $ 626 $ — $ — $ — $ — $ 3,214 $ 3,388

The Company’s cash flow impact from transactions with its related parties for each of the three months ended September 30, 2021 and 2020, are as follows (in thousands):

The Company's results from transactions with its related parties for each of the six months ended December 31, 2021 and 2020, are as follows (in thousands):

Ablecom Compuware Corporate Venture MPS Total

Three months ended September 30, Three months ended September 30, Three months ended September 30, Three months ended September 30, Three months ended September 30,

Six months ended December 31, Six months ended December 31, Six months ended December 31, Six months ended December 31, Six months ended December 31,

2021 2020 2021 2020 2021 2020 2021 2020 2021 2020

Net sales $ 10 $ ( 27 ) $ 19,004 $ 18,871 $ 53,524 $ 19,577 $ — $ — $ 72,538 $ 38,421

Purchases - inventory $ 98,309 $ 45,689 $ 82,050 $ 63,215 $ — $ — $ 4,056 $ 1,488 $ 184,415 $ 110,392

Purchases - other miscellaneous items $ 4,983 $ 5,480 $ 686 $ 960 $ — $ — $ — $ — $ 5,669 $ 6,440

The Company’s cash flow impact from transactions with its related parties for each of the six months ended December 31, 2021 and 2020, are as follows (in thousands):

Ablecom Compuware Corporate Venture MPS Total

Six months ended December 31, Six months ended December 31, Six months ended December 31, Six months ended December 31, Six months ended December 31,

2021 2020 2021 2020 2021 2020 2021 2020 2021 2020

Changes in accounts receivable 1 $ ( 29 ) $ ( 66 ) $ 311 $ ( 25,789 ) $ ( 6,586 ) $ — $ — $ ( 25,854 ) $ ( 6,304 )

5 unchanged sentences

Unpaid property, plant and equipment $ 2,312 $ 2,976 $ — 80 $ — $ — $ — $ — $ 2,312 $ 3,056

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SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Tripartite Agreement

On November 8, 2021, Super Micro Computer Inc., Taiwan (the “Subsidiary”), a Taiwan corporation and wholly-owned subsidiary of the Company, entered into a Tripartite Agreement (the “Agreement”) with Ablecom and Compuware related to a three-way purchase of land.

Pursuant to the Agreement, the Subsidiary will participate in purchasing 33.33 % of the 137,225.97 square meters (approximately 34 acres) of land Ablecom has agreed to acquire from third-party landowners in proximity to the Company’s campus in Bade, Taiwan.

Compuware will acquire 17.21 % of such land and Ablecom will retain the remaining 49.46 % of the land.

Under the Agreement, fees and costs related to such land purchase would be borne by the parties according to their proportionate share of the land purchased.

The Company intends to fund its proportionate share of the land purchased under the Agreement which is estimated to be approximately NTD 789 million (or approximately US$ 28.3 million) from either available cash and/or borrowings under loan agreements the Subsidiary has in Taiwan.

Amounts payable related to the purchase of the land are due in three installments based upon the achievement of specified milestones.

The transaction is subject to various customary conditions precedent, including the receipt of government approvals, the discharge of mortgages and leases on the land, and the completion of due diligence.

As of December 31, 2021, due diligence and discussions with government officials are continuing, and no installment payments have been made with respect to the transaction.

If the transaction does not close within 12 months, Ablecom may offer the land to other parties.

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Stock-based Compensation and Stockholders' Equity

4 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, 2021, the Company had 2,385,365 authorized shares available for future issuance under the 2020 Plan.

As of December 31, 2021, the Company had 2,142,683 authorized shares available for future issuance under the 2020 Plan.

Common Stock Repurchase

1 unchanged sentence

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

The Company had $ 150.0 million of remaining availability under the share repurchase program as of September 30, 2021.

There were no shares repurchased under the share repurchase program during the three months ended September 30, 2021.

The Company had $ 150.0 million of remaining availability under the share repurchase program as of December 31, 2021.

There were no shares repurchased under the share repurchase program during the three and six months ended December 31, 2021.

Determining Fair Value

7 unchanged sentences

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, 2021 and 2020 was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:

The fair value of stock option grants for the three and six months ended December 31, 2021 and 2020 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

2021 2020 2021 2020

Risk-free interest rate 0.81 % 0.45 %

Expected term 6.09 years 5.98 years

0.81 % - 0.45 %

0.27 % - 0.45 %

Expected term 6.09 years 5.98 years 6.09 years 5.98 years

Dividend yield — % — % — % — %

Volatility 49.69 % 50.34 %

49.69 % - 49.71 %

50.34 % - 50.43 %

Weighted-average fair value $ 17.94 $ 11.13 $ 17.59 $ 13.14

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SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table shows total stock-based compensation expense included in the condensed consolidated statements of operations for the three months ended September 30, 2021 and 2020 (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, 2021 and 2020 (in thousands):

Three Months Ended

September 30,

December 31, Six Months Ended

2021 2020 2021 2020

Cost of sales $ 471 $ 407 $ 918 $ 910

5 unchanged sentences

Stock-based compensation expense, net $ 6,866 $ 4,721 $ 11,993 $ 9,936

As of September 30, 2021, $ 9.4 million of unrecognized compensation expense related to stock options is expected to be recognized over a weighted-average period of 3.85 years, $ 51.2 million of unrecognized compensation cost related to unvested RSUs is expected to be recognized over a weighted-average period of 2.77 years and less than $ 0.1 million of unrecognized compensation cost related to unvested PRSUs is expected to be recognized over a period of 0.11 years.

As of December 31, 2021, $ 9.4 million of unrecognized compensation expense related to stock options is expected to be recognized over a weighted-average period of 3.71 years, $ 53.2 million of unrecognized compensation cost related to unvested RSUs is expected to be recognized over a weighted-average period of 2.77 years and unrecognized compensation cost of $ 0.1 million related to unvested PRSUs was recognized during the quarter ended December 31, 2021.

Additionally, as described below, $ 6.7 million of unrecognized compensation cost related to the 2021 CEO Performance Stock Option is expected to be recognized over a period of 5.0 years.

5 unchanged sentences

Upon vesting and exercise, including the payment of the exercise price of $ 45.00 per share, prior to March 2, 2024, the Company’s CEO must hold shares that he acquires until March 2, 2024, other than those shares sold pursuant to a cashless exercise where shares are simultaneously sold to pay for the exercise price and any required tax withholding.

The achievement status of the operational and stock price milestones as of September 30, 2021 was as follows:

The achievement status of the operational and stock price milestones as of December 31, 2021 was as follows:

Annualized Revenue Milestone Achievement Status Stock Price Milestone Achievement Status

(in billions)

$ 4.0 Probable $ 45 Not met

$ 4.0 Achieved (1)

$ 4.8 Probable $ 60 Not met

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$ 6.8 Probable $ 95 Not met

$ 8.0 — $ 120 Not met

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$ 8.0 Improbable $ 120 Not met

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(1) The Company has presented this revenue goal as having been “Achieved”, as its reported revenues for the four quarters ended December 31, 2021 were $ 4.17 billion.

Under the terms of the agreement governing this award, the Compensation Committee must certify that the goal has been achieved after the Company files this Quarterly Report on Form 10-Q before the goal will be deemed achieved under that agreement.

The Company expects the Compensation Committee to so certify shortly after the filing date of this report and the Company does not intend to file a Current Report on Form 8-K following such certification.

On the grant date, a Monte Carlo simulation was used to determine for each tranche (i) a fixed expense amount for such tranche and (ii) the future time when the market price milestone for such tranche was expected to be achieved, or its “expected market price milestone achievement time.” Separately, based on a subjective assessment of the Company’s future financial performance, each quarter, the Company will determine whether achievement is probable for each operational milestone that has not previously been achieved or deemed probable of achievement, and, if so, the future time when the Company expects to achieve that operational milestone, or its “expected operational milestone achievement time.” When the Company first determines that an operational milestone has become probable of being achieved, the Company will allocate the entire expense for the related tranche over the number of quarters between the grant date and the then-applicable “expected vesting time.” The “expected vesting time” at any given time is the later of (i) the expected operational milestone achievement time (if the related operational milestone has not yet been achieved) and (ii) the expected market price milestone achievement time (if the related market price milestone has not yet been achieved).

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Each quarter thereafter, the Company will recognize the prorated portion of the then-remaining expense for the tranche based on the number of quarters between such quarter and the then-applicable expected vesting time, except that upon vesting of a tranche, all remaining expenses for that tranche will be immediately recognized.

During the three months ended September 30, 2021, the Company recognized compensation expense related to the 2021 CEO Performance Stock Option of $ 0.9 million.

No compensation expense related to the 2021 CEO Performance Stock Option was recognized during the three months ended September 30, 2020.

As of September 30, 2021 and June 30, 2021, the Company had $ 9.6 million and $ 10.5 million, respectively, in unrecognized compensation cost related to the 2021 CEO Performance Stock Option.

The unrecognized compensation cost as of September 30, 2021 is expected to be recognized over a period of five years .

The following table summarizes stock option activity during the three months ended September 30, 2021 under all plans:

During the three and six months ended December 31, 2021, the Company recognized compensation expense related to the 2021 CEO Performance Stock Option of $ 2.9 million and $ 3.8 million, respectively.

No compensation expense related to the 2021 CEO Performance Stock Option was recognized during the three and six months ended December 31, 2020.

As of December 31, 2021 and June 30, 2021, the Company had $ 6.7 million and $ 10.5 million, respectively, in unrecognized compensation cost related to the 2021 CEO Performance Stock Option.

The unrecognized compensation cost as of December 31, 2021 is expected to be recognized over a period of five years .

The following table summarizes stock option activity during the six months ended December 31, 2021 under all plans:

Outstanding Weighted

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Forfeited/Cancelled ( 85,000 ) $ 29.84

Balance as of September 30, 2021 4,859,013 $ 27.13 5.52

Options vested and exercisable at September 30, 2021 3,099,511 $ 20.82 3.47

Balance as of December 31, 2021 4,614,771 $ 27.82 5.49

Options vested and exercisable at December 31, 2021 2,876,247 $ 21.10 3.41

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

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Each tranche has 15,000 RSUs that vest in May 2021 and November 2021 based on service conditions only.

Additional units can be earned based on revenue growth percentage in fiscal year 2020 compared to fiscal year 2019, which units would vest in May 2021, and based on revenue growth percentage in fiscal year 2021 compared to fiscal year 2020, which units would vest in November 2021.

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

An additional 2,939 units were earned for fiscal year 2021 that would vest on November 10, 2021.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table summarizes RSU and PRSU activity during the three months ended September 30, 2021 under all plans:

An additional 2,939 units were earned for fiscal year 2021 that vested on November 10, 2021.

The following table summarizes RSU and PRSU activity during the six months ended December 31, 2021 under all plans:

Time-Based RSUs

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Forfeited ( 185,036 ) $ 28.49 — $ —

Balance as of September 30, 2021 1,952,696 $ 29.15 15,000 $ 34.27

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Balance as of December 31, 2021 1,955,458 $ 30.69 — $ —

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company recorded a provision for income taxes of $ 3.3 million and $ 3.7 million for the three months ended September 30, 2021 and 2020, respectively.

The effective tax rate was 11.7 % and 12.7 % for the three months ended September 30, 2021 and 2020, respectively.

The effective tax rate for the three months ended September 30, 2021 is lower than that for the three months ended September 30, 2020, primarily due to a decrease in certain non-deductible expenses and a decrease in foreign tax liability.

As of September 30, 2021, the Company had gross unrecognized tax benefits of $ 45.1 million, of which, $ 28.3 million, if recognized, would affect the Company's effective tax rate.

During the three months ended September 30, 2021, there was a $ 4.3 million increase in gross unrecognized tax benefits.

The Company recorded a provision for income taxes of $ 7.6 million and $ 10.9 million for the three and six months ended December 31, 2021, respectively, and $ 5.1 million and $ 8.8 million for the three and six months ended December 31, 2020, respectively.

The effective tax rate was 15.4 % and 14.1 % for the three and six months ended December 31, 2021, respectively, and 14.9 % and 13.9 % for the three and six months ended December 31, 2020, respectively.

The effective tax rate for the three and six months ended December 31, 2021 is higher than that for the three and six months ended December 31, 2020, primarily due to a decrease in the deduction from foreign-derived intangible income and an increase in certain non-deductible expenses.

As of December 31, 2021, the Company had gross unrecognized tax benefits of $ 45.1 million, of which, $ 28.4 million, if recognized, would affect the Company's effective tax rate.

During the six months ended December 31, 2021, there was a $ 4.4 million increase in gross unrecognized tax benefits.

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, 2021, the Company had accrued $ 2.7 million of interest and penalties relating to unrecognized tax benefits.

As of December 31, 2021, the Company had accrued $ 2.9 million of interest and penalties relating to unrecognized tax benefits.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted.

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Certain statutes of limitations in major foreign jurisdictions remain open in general for the tax years ended June 30, 2016 through 2021.

It is reasonably possible that our gross unrecognized tax benefits will decrease by approximately $ 1.0 million, in the next 12 months, due to the lapse of the statute of limitations.

These adjustments, if recognized, would positively impact our effective tax rate, and would be recognized as additional tax benefits.

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It is reasonably possible that the Company's gross unrecognized tax benefits will decrease by approximately $ 1.0 million, in the next 12 months, due to the lapse of the statute of limitations.

These adjustments, if recognized, would positively impact the Company's effective tax rate, and would be recognized as additional tax benefits.

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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The Court denied the motions to dismiss the Section 10(b) and Section 20 claims against the Company, Charles Liang, and Howard Hideshima, the Company’s former CFO.

Discovery has commenced, and the Court has calendared a hearing on class certification for January 22, 2022.

Discovery has commenced, and the Court has calendared a hearing on class certification for April 21, 2022.

The Company intends to defend the lawsuit vigorously.

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primarily, the amendment added allegations describing the March 29, 2021 motion to dismiss decision in the Hessefort class action.

Defendants demurred to the amended complaint on August 24, 2021, and the Court has calendared the hearing for January 26, 2022.

Defendants demurred to the amended complaint on August 24, 2021, and the Court has continued the hearing to March 23, 2022.

The case is otherwise currently stayed.

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On September 29, 2021, the parties submitted a stipulation for dismissal with prejudice as to the named plaintiff to the Court for its approval.

On October 27, 2021, the Court issued an order for the parties to submit within 30 days a plan of notice of dismissal for the Court’s approval.

The Court noted that, if no shareholder seeks to intervene during the notice period, plaintiff may file an administrative motion requesting that the Court dismiss the lawsuit with prejudice

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On December 16, 2021, the Court issued an order for the parties to submit within 30 days a plan of notice of dismissal for the Court’s approval.

The Company provided notice as required by the Court on December 21, 2021.

The Court order notes that, if no shareholder seeks to intervene during the 45 -day notice period ending on February 4, 2022, plaintiff may file an administrative motion requesting that the Court dismiss the lawsuit with prejudice.

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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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 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.

In addition, the Company’s Chief Executive Officer concluded a settlement with the SEC on August 25, 2020, as announced by the SEC.

The Company’s Chief Executive Officer paid the Company the sum of $ 2,122,000 as reimbursement of profits from certain stock sales during the relevant period, pursuant to Section 304 of the Sarbanes-Oxley Act of 2002.

The settlement amount was paid during the first quarter of fiscal 2021 and the Company recorded the payment as a credit to general and administrative expense.

The settlement amount was paid during the first quarter of fiscal 2021 and the Company recorded the payment as a credit to general and administrative expense in the first quarter of fiscal 2021.

Other legal proceedings and indemnifications

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, 2021 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, 2021 and any prior periods.

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

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

As of September 30, 2021, these remaining noncancelable commitments were $ 508.2 million, including $ 124.4 million for related parties.

As of December 31, 2021, these remaining noncancelable commitments were $ 816.0 million, including $ 100.3 million for related parties.

Lease Commitments - See Note 7, "Leases," for a discussion of the Company's operating lease and financing lease commitments.

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The Company’s chief operating decision maker is the Chief Executive Officer.

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SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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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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