What changed in this filing

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Item 1. Financial Statements

2022-05-06 compared with 2022-02-04 · 254 added, 235 removed, 730 unchanged (40% of the section changed)

3 unchanged sentences

(in thousands, except per share amounts)

December 31, June 30,

March 31, June 30,

Current assets:

Cash and cash equivalents $ 247,424 $ 232,266

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)

Accounts receivable, net of allowances of $ 1,776 and $ 2,591 at March 31, 2022 and June 30, 2021, respectively (including accounts receivable from related parties of $ 34,084 and $ 8,678 at March 31, 2022 and June 30, 2021, respectively)

679,785 463,834

Inventories 1,588,542 1,040,964

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)

Prepaid expenses and other current assets (including receivables from related parties of $ 29,561 and $ 23,837 at March 31, 2022 and June 30, 2021, respectively)

162,964 130,195

7 unchanged sentences

Current liabilities:

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

Accounts payable (including amounts due to related parties of $ 87,266 and $ 70,096 at March 31, 2022 and June 30, 2021, respectively)

$ 779,561 $ 612,336

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

Accrued liabilities (including amounts due to related parties of $ 15,315 and $ 18,528 at March 31, 2022 and June 30, 2021, respectively)

181,448 178,850

12 unchanged sentences

Outstanding shares:

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

51,870 and 50,582 at March 31, 2022 and June 30, 2021, respectively

Issued shares:

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

51,870 and 50,582 at March 31, 2022 and June 30, 2021, respectively

471,088 438,012

11 unchanged sentences

Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

2022 2021 2022 2021

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)

Net sales (including related party sales of $ 47,669 and $ 20,432 in the three months ended March 31, 2022 and 2021, respectively, and $ 120,206 and $ 58,853 in the nine months ended March 31, 2022 and 2021, respectively)

$ 1,355,490 $ 895,881 $ 3,560,639 $ 2,488,437

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)

Cost of sales (including related party purchases of $ 95,479 and $ 57,454 in the three months ended March 31, 2022 and 2021, respectively, and $ 279,893 and $ 167,845 in the nine months ended March 31, 2022 and 2021, respectively)

1,144,715 772,864 3,047,982 2,099,410

6 unchanged sentences

Income from operations 89,777 17,055 169,954 84,866

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

Other (expense) income, net 4,663 2,017 4,106 ( 1,363 )

Interest expense ( 1,531 ) ( 607 ) ( 3,485 ) ( 1,850 )

Income before income tax provision 92,909 18,465 170,575 81,653

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

Income tax benefit (provision) ( 16,192 ) 227 ( 27,116 ) ( 8,541 )

Share of income (loss) from equity investee, net of taxes 255 ( 264 ) 882 ( 409 )

11 unchanged sentences

Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

2022 2021 2022 2021

Net income $ 76,972 $ 18,428 $ 144,341 $ 72,703

Other comprehensive income, net of tax:

Foreign currency translation gain 100 301 96 548

Total other comprehensive income 100 301 96 548

Other comprehensive income (loss), net of tax:

Foreign currency translation gain (loss) 5 ( 34 ) 101 514

Total other comprehensive income (loss) 5 ( 34 ) 101 514

Total comprehensive income $ 76,977 $ 18,394 $ 144,442 $ 73,217

3 unchanged sentences

(in thousands, except share amounts)

Three Months Ended December 31, 2021 Common Stock and

Three Months Ended March 31, 2022 Common Stock and

Additional Paid-In

5 unchanged sentences

Shares Amount Shares Amount

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

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

Exercise of stock options, net of taxes 251,598 4,363 — — — — — 4,363

4 unchanged sentences

Net income — — — — — 76,972 ( 1 ) 76,971

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

Balance at March 31, 2022 51,870,173 $ 471,088 — $ — $ 554 $ 802,101 $ 176 $ 1,273,919

Three Months Ended March 31, 2021 Common Stock and

Additional Paid-In

Capital Treasury Stock Accumulated

Comprehensive

Income Retained

Comprehensive (Loss) Income Retained

Earnings Non-controlling Interest Total

1 unchanged sentence

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

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

Exercise of stock options, net of taxes 511,801 9,577 — — — — — 9,577

3 unchanged sentences

Stock-based compensation — 7,494 — — — — — 7,494

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

Foreign currency translation loss — — — — ( 34 ) — — ( 34 )

Net income — — — — — 18,428 ( 5 ) 18,423

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

Balance at March 31, 2021 50,036,368 $ 425,489 — $ — $ 362 $ 627,929 $ 168 $ 1,053,948

Nine Months Ended March 31, 2022 Common Stock and

Additional Paid-In

13 unchanged sentences

Net income — — — — — 144,341 3 144,344

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

Balance at March 31, 2022 51,870,173 $ 471,088 — $ — $ 554 $ 802,101 $ 176 $ 1,273,919

Nine Months Ended March 31, 2021 Common Stock and

Additional Paid-In

1 unchanged sentence

Comprehensive

Income Retained

(Loss) Income Retained

Earnings Non-controlling Interest Total

9 unchanged sentences

Net income — — — — — 72,703 1 72,704

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

Balance at March 31, 2021 50,036,368 $ 425,489 — $ — $ 362 $ 627,929 $ 168 $ 1,053,948

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Six Months Ended

Nine Months Ended

OPERATING ACTIVITIES:

10 unchanged sentences

Changes in operating assets and liabilities:

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)

Accounts receivable, net (including changes in related party balances of $( 25,405 ) and $( 3,532 ) during the nine months ended March 31, 2022 and 2021, respectively)

( 216,464 ) ( 3,036 )

Inventories ( 561,453 ) ( 57,249 )

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)

Prepaid expenses and other assets (including changes in related party balances of $( 5,726 ) and $( 442 ) during the nine months ended March 31, 2022 and 2021, respectively)

( 32,750 ) ( 25,039 )

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)

Accounts payable (including changes in related party balances of $ 17,170 and $( 18,296 ) during the nine months ended March 31, 2022 and 2021, respectively)

173,031 45,301

1 unchanged sentence

Deferred revenue 27,434 ( 13,726 )

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)

Accrued liabilities (including changes in related party balances of $( 3,213 ) and $( 180 ) during the nine months ended March 31, 2022 and 2021, respectively)

4,644 ( 5,807 )

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)

Other long-term liabilities (including changes in related party balances of $ 596 and $( 1,699 ) during the nine months ended March 31, 2022 and 2021, respectively)

( 8,892 ) ( 3,295 )

1 unchanged sentence

INVESTING ACTIVITIES:

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)

Purchases of property, plant and equipment (including payments to related parties of $ 2,505 and $ 5,845 during the nine months ended March 31, 2022 and 2021, respectively)

( 34,157 ) ( 44,627 )

11 unchanged sentences

Effect of exchange rate fluctuations on cash ( 304 ) 362

Net increase in cash, cash equivalents and restricted cash 15,136 105,094

Net increase (decrease) in cash, cash equivalents and restricted cash 15,146 ( 33,318 )

Cash, cash equivalents and restricted cash at the beginning of the period 233,449 212,390

4 unchanged sentences

Non-cash investing and financing activities:

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)

Unpaid property, plant and equipment purchases (including due to related parties of $ 729 and $ 1,502 as of March 31, 2022 and 2021, respectively)

$ 7,464 $ 7,662

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 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.

The consolidated results of operations for the three and nine months ended March 31, 2022 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 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.

Two suppliers accounted for 13.0 % and 19.4 % of total purchases for the three months ended March 31, 2022, and two suppliers accounted for 21.4 % and 14.7 % of total purchases for the three months ended March 31, 2021.

Two suppliers accounted for 18.0 % and 11.4 % of total purchases for the nine months ended March 31, 2022, and two suppliers accounted for 21.1 % and 13.8 % of total purchases for the nine months ended March 31, 2021.

Purchases from Ablecom, and Compuware, related parties of the Company (see Note 8, "Related Party Transactions") accounted for a combined 8.2 % and 7.3 % of total cost of sales for the three months ended March 31, 2022 and 2021, respectively, and a combined 9.0 % and 7.9 % of total cost of sales for the nine months ended March 31, 2022 and 2021, 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 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.

One customer accounted for 10.2 % of the net sales for the three months ended March 31, 2022 and no customer accounted for 10% or more of the net sales for the nine months ended March 31, 2022 or for the three and nine months ended March 31, 2021.

No customer accounted for greater than 10% of the Company's accounts receivable, net as of March 31, 2022, whereas one customer accounted for 13.5 % of accounts receivable, net as of June 30, 2021.

Accounting Pronouncements Recently Adopted

9 unchanged sentences

The guidance also establishes (1) a general contract modification principle that entities can apply in other areas that may be affected by reference rate reform and (2) certain elective hedge accounting expedients.

The amendment is effective for all entities through December 31, 2022.

The amendments in this update do not apply to contract modifications made after December 31, 2022, new hedging relationships entered into after December 31, 2022, and existing hedging relationships evaluated for effectiveness in periods after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that apply certain optional expedients in which the accounting effects are recorded through the end of the hedging relationship.

In January 2021, the FASB issued further guidance on this topic, which clarified the scope and application of the original guidance.

The amendments are effective for all entities on December 31, 2022, with early adoption permitted for an interim period beginning after March 12, 2020.

The Company has loans and lines of credit with various financial institutions.

Benchmark interest rates are used to calculate the interest on borrowings under the Chang Hwa Bank, CTBC, HSBC, Mega Bank Credit Facilities.

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 was amended on June 28, 2021 which provided for a new maturity date of June 28, 2026 and fallback terms related to LIBOR replacement mechanics.

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

On March 3, 2022, the 2018 Bank of America Credit Facility was amended to, among other items, increase the size of the facility from $ 200.0 million to $ 350.0 million and update provisions relating to payments and LIBOR replacement mechanics to secured overnight financing rate (“SOFR").

As these amendments had other contemporaneous changes to the facility including the amount and not just directly related to LIBOR replacement, optional expedients under this guidance cannot be elected.

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

4 unchanged sentences

Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

2022 2021 2022 2021

4 unchanged sentences

Subsystems and accessories are comprised of server boards, chassis and accessories.

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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, 2021 and 2020, of net sales by geographic region (in thousands):

The following is a summary for the three and nine months ended March 31, 2022 and 2021, of net sales by geographic region (in thousands):

Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

2022 2021 2022 2021

8 unchanged sentences

Receivables relate to the Company’s unconditional right to consideration for performance obligations either partially or fully completed.

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Contract assets are rights to consideration in exchange for goods or services that the Company has transferred to a customer when such right is conditional on something other than the passage of time.

3 unchanged sentences

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 .

Revenue recognized during the three and nine months ended March 31, 2022, which was included in the deferred revenue balance as of June 30, 2021 of $ 202.3 million, was $ 23.0 million and $ 79.7 million, respectively.

Deferred revenue increased $ 27.4 million as of March 31, 2022 as compared to the fiscal year ended June 30, 2021 mainly because the deferral on invoiced amounts for service contracts during the period exceeded the recognition of revenue from contracts entered into in prior periods.

Transaction Price Allocated to the Remaining Performance Obligations

Remaining performance obligations represent in aggregate the amount of transaction price that has been allocated to performance obligations not delivered, or only partially undelivered, as of the end of the reporting period.

The Company applies the 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 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, 2021 was $ 252.6 million .

The value of the transaction price allocated to remaining performance obligations as of March 31, 2022 was $ 229.8 million .

The Company expects to recognize approximately 50 % of remaining performance obligations as revenue in the next 12 months, and the remainder thereafter.

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Capitalized Contract Acquisition Costs and Fulfillment Cost

8 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 and six months ended December 31, 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 nine months ended March 31, 2022 and 2021 (in thousands, except per share amounts):

Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

2022 2021 2022 2021

5 unchanged sentences

Diluted net income per common share $ 1.43 $ 0.35 $ 2.70 $ 1.35

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.

For the three and nine months ended March 31, 2022 and 2021, 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 452,611 and 578,892 for the three months ended March 31, 2022 and 2021, respectively, and 452,182 and 617,807 for the nine months ended March 31, 2022 and 2021, respectively.

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Balance Sheet Components

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

December 31, 2021 June 30, 2021

March 31, 2022 June 30, 2021

Finished goods $ 994,184 $ 761,694

2 unchanged sentences

Total inventories $ 1,588,542 $ 1,040,964

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.

During the three and nine months ended March 31, 2022, the Company recorded a net provision for excess and obsolete inventory to cost of sales totaling $ 10.2 million and $ 13.9 million, respectively, and $ 2.9 million and $ 4.6 million for the three and nine months ended March 31, 2021, 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:

December 31, 2021 June 30, 2021

March 31, 2022 June 30, 2021

Other receivables (1) $ 139,380 $ 99,921

Prepaid income tax 13,686 12,288

Prepaid expenses 7,302 6,719

Deferred service costs 5,365 4,900

Prepaid income tax 341 12,288

Restricted cash 251 251

2 unchanged sentences

__________________________

(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.

(1) Includes other receivables from contract manufacturers based on certain buy-sell arrangements of $ 96.0 million and $ 76.2 million as of March 31, 2022 and June 30, 2021, respectively.

Cash, cash equivalents and restricted cash:

December 31, 2021 June 30, 2021

March 31, 2022 June 30, 2021

Cash and cash equivalents $ 247,424 $ 232,266

2 unchanged sentences

Total cash, cash equivalents and restricted cash $ 248,595 $ 233,449

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Property, Plant, and Equipment:

December 31, 2021 June 30, 2021

March 31, 2022 June 30, 2021

Buildings $ 143,509 $ 86,930

Land 84,616 76,421

Machinery and equipment 111,714 97,671

Building construction in progress (1) 303 87,438

Land 84,616 76,421

Building and leasehold improvements 48,846 26,640

Software 23,178 22,592

Furniture and fixtures 32,590 22,843

Software 23,333 22,592

Building construction in progress (1) 303 87,438

444,911 420,535

3 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.

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Other Assets:

December 31, 2021 June 30, 2021

March 31, 2022 June 30, 2021

Operating lease right-of-use asset $ 25,338 $ 20,047

7 unchanged sentences

Accrued Liabilities:

December 31, 2021 June 30, 2021

March 31, 2022 June 30, 2021

Accrued payroll and related expenses $ 45,837 $ 45,770

5 unchanged sentences

Accrued professional fees 3,381 2,737

Accrued legal liabilities 18,250 —

Other 29,916 30,446

Total accrued liabilities $ 181,448 $ 178,850

Performance Awards Liability

In March 2020, the Board of Directors (the “Board”) approved performance bonuses for the Chief Executive Officer, a senior executive and two members of the Board, which payments will be earned when specified market and performance conditions are achieved.

The Chief Executive Officer’s aggregate cash bonuses of u p to $ 8.1 million are earned in two tranches.

The first 50 % is payable if the average closing price for the Company’s common stock equals or exceeds $ 31.61 for any period of 20 consecutive trading days following the date of the agreement and ending prior to September 30, 2021 and the Chief Executive Officer remains employed with the Company through the date that such common stock price goal is determined to have been achieved.

This payment can be reduced at the discretion of the Board to the extent the Company has not made adequate progress in remediating its material weaknesses in its internal control over financial reporting as determined by the Board.

The second 50 % is payable if the average closing price for the Company’s common stock equals or exceeds $ 32.99 for any period of 20 consecutive trading days following the date of the agreement and ending prior to June 30, 2022 and the Chief Executive Officer remains employed with the Company through the date that such common stock price goal is achieved.

During the fiscal year ended June 30, 2021, the target average closing prices for both tranches were met and the cash payment under the second tranche was made.

On September 21, 2021, the Audit Committee of the Board determined and advised the Board as to its view that the Company had made adequate progress in remediating the material weaknesses in its internal control over financial reporting.

On September 30, 2021, the Board considered and agreed with this assessment, but also considered the impact of accomplishments of Company employees other than Mr.

Liang in achieving this adequate progress.

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 during the quarter ended December 31, 2021.

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company previously expected that the full amount of the first tranche would be paid to its Chief Executive Officer and, accordingly, recorded a liability of $ 3.6 million related to this tranche on its balance sheet as of June 30, 2021.

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.

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.

Performance Awards Liability

The Chief Executive Officer’s total cash bonus opportunity was $ 8.1 million, divided into two equal tranches.

Each tranche would be earned if the average closing price for the Company’s common stock reached specified targets.

The Board retained the flexibility to reduce the amount payable under the first tranche (but not the second tranche) based on performance goals.

Both price targets were reached during the fiscal year ended June 30, 2021, and the second tranche totaled $ 4.0 million was paid in full.

As of June 30, 2021, the Company also expected it would likely pay the first tranche in full, and therefore recorded an expense of $ 3.6 million since March 2020 relating to the first tranche.

In September 2021, after the Company had closed its books for the year ended June 30, 2021, the Board decided to exercise its discretion to reduce the amount to be paid to the Chief Executive for the first tranche to $ 2.0 million, which was paid in the quarter ended December 31, 2021.

As a result of the Board’s decision to reduce the amount to be paid under the first tranche, the Company adjusted the $ 3.6 million expense previously recorded for the first tranche to the new amount of $ 2.0 million, which resulted in the Company recognizing a $ 1.6 million benefit from this adjustment during the quarter ended September 30, 2021.

For the three months and nine months ended March 31, 2021, $ 2.5 million and $ 5.1 million of expense was recognized, respectively.

There was no expense or benefit related to this bonus for the three months ended March 31, 2022 .

For the nine months ended March 31, 2022 , the $ 1.6 million benefit described above is included.

Other Long-term Liabilities:

December 31, 2021 June 30, 2021

March 31, 2022 June 30, 2021

Accrued unrecognized tax benefits including related interests and penalties, non-current $ 19,427 $ 17,841

5 unchanged sentences

Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

2022 2021 2022 2021

9 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 December 31, 2021 and June 30, 2021.

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 December 31, 2021.

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 December 31, 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 March 31, 2022 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):

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

March 31, 2022 Level 1 Level 2 Level 3 Asset at

Money market funds (1) $ 152 $ — $ — $ 152

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 December 31, 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 December 31, 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 March 31, 2022 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 and six months ended December 31, 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 and six months ended December 31, 2021 and 2020.

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):

For the three and nine months ended March 31, 2022, the credit losses related to the Company’s investments were not significant.

There were no transfers between Level 1, Level 2 or Level 3 financial instruments in the three and nine months ended March 31, 2022 and 2021.

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following is a summary of the Company’s investment in an auction rate security as of March 31, 2022 and June 30, 2021 (in thousands):

Cost Basis Gross

1 unchanged sentence

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

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 and six months ended December 31, 2021 and 2020.

No gain or loss was recognized in other comprehensive income for the auction rate security for the three and nine months ended March 31, 2022 and 2021.

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

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.

As of March 31, 2022 and June 30, 2021, total debt of $ 547.5 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 December 31, 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 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.

During the three and nine months ended March 31, 2022 and 2021, 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 nine months ended March 31, 2022 and 2021.

SUPER MICRO COMPUTER, INC.

1 unchanged sentence

Short-term and Long-term Debt

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,

Short-term and long-term debt obligations as of March 31, 2022 and June 30, 2021 consisted of the following (in thousands):

March 31, June 30,

Line of credit:

1 unchanged sentence

CTBC Bank 101,000 18,000

HSBC Bank 30,000 —

E.SUN Bank 23,000 20,400

14 unchanged sentences

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 June 28, 2021, the 2018 Bank of America Credit Facility was amended to, among other items, extend the maturity to June 28, 2026, reduce the size of the facility from $ 250.0 million to $ 200.0 million, increase the maximum amount that the Company can request the facility be increased from $ 100.0 million to $ 150.0 million, and update provisions relating to erroneous payments and LIBOR replacement mechanics.

In addition, the amendment reduced both the unused line fee from 0.375 % per annum to 0.2 % or 0.3 % per annum (depending upon amount drawn under the facility) and the interest rate applicable to the facility from LIBOR plus 2.00 % or 3.00 % per annum (depending upon amount drawn under the facility) to LIBOR plus 1.375 % or 1.625 % per annum.

On March 3, 2022, the 2018 Bank of America Credit Facility was amended to, among other items, increase the size of the facility from $ 200.0 million to $ 350.0 million and change provisions relating to payments and LIBOR replacement mechanics to secured overnight financing rate (“SOFR").

The obligations bear a base interest rate plus 0.5 % to 1.5 % based on the SOFR availability.

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

Prior to that, on June 28, 2021, the 2018 Bank of America Credit Facility was amended to, among other items, extend the maturity to June 28, 2026 and increase the maximum amount that the Company can request the facility be increased from $ 100 million to $ 150 million.

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.

5 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

As of March 31, 2022, the total outstanding borrowings under the 2018 Bank of America Credit Facility were $ 241.5 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.

The interest rates under the 2018 Bank of America Credit Facility as of March 31, 2022 and June 30, 2021 range from 1.50 % to 1.54 %.

The balance of debt issuance costs outstanding as of March 31, 2022 and June 30, 2021 was $ 0.8 million and $ 0.5 million, respectively.

The Company is in compliance with all the covenants under the 2018 Bank of America Credit Facility, and as of March 31, 2022, the Company's available borrowing capacity was $ 108.5 million , subject to the borrowing base limitation and compliance with other applicable terms.

On March 23, 2022 (the “Effective Date”), the Company through its Taiwan subsidiary entered into an Uncommitted Facility Agreement for credit lines with Bank of America – Taipei Branch (the “2022 Bank of America Credit Facility”), for an amount not to exceed in aggregate $ 20.0 million.

The interest rate will be quoted by Bank of America – Taipei Branch for each drawdown.

As of March 31, 2022, there were no outstanding borrowings under this Bank of America Credit Facility.

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 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.

As of March 31, 2022 and June 30, 2021, the amounts outstanding under the 2020 CTBC Term Loan Facility were $ 41.7 million and $ 34.7 million, respectively.

The interest rates for these loans were 0.70 % per annum as of March 31, 2022, and 0.45 % as of June 30, 2021.

Under the 2021 CTBC Machine Loan, the amounts outstanding were $ 5.5 million on March 31, 2022.

The interest rates for this loan was 0.90 % per annum as of March 31, 2022.

As of June 30, 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 total outstanding borrowings under the 2021 CTBC Credit Facility term loan were denominated in NTD and remeasured into U.S.

dollars of $ 0.0 million and $ 25.1 million at March 31, 2022 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.

As of March 31, 2022 and June 30, 2021, the outstanding borrowings under the 2021 CTBC Credit Facility revolving line of credit were $ 101.0 million and $ 18.0 million, respectively.

The interest rates for these loans ranges from 0.94 % to 1.40 % per annum as of March 31, 2022 and 0.98 % per annum as of June 30, 2021.

As of March 31, 2022, the amount available for future borrowing under the 2021 CTBC Credit Facility was $ 4.0 million.

As of March 31, 2022, the net book value of land and building located in Bade, Taiwan, collateralizing the 2021 CTBC Credit Lines was $ 77.7 million.

The financial covenants under the 2021 CTBC Credit Lines will be reviewed by CTBC Bank every six months on June 30 and December 31.

2021 E.SUN Bank Credit Facility

6 unchanged sentences

Generally, interest for base rate loans made under the 2021 E.SUN Bank Credit Facility are 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.

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.

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 Taiwan 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 to be reviewed on a yearly basis at fiscal year end.

2 unchanged sentences

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

As of March 31, 2022, the total outstanding borrowings under the Term Loan were denominated in NTD and remeasured into U.S.

dollars of $ 28.1 million and the interest rates for these loans were 1.245 % per annum.

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 .

As of March 31, 2022 and June 30, 2021 , the amounts outstanding under the Import Loan were $ 23.0 million and $ 20.4 million, respectively.

The interest rate for the quarter ended March 31, 2022 ranges from 1.09 % to 1.33 % per annum.

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

At March 31, 2022, the amount available for future borrowing under the Import Loan was $ 7.0 million .

Mega Bank Credit Facilities

5 unchanged sentences

Drawdowns under the Mega Bank Credit Facility may be made through December 31, 2024, with the first drawdown date not later than November 5, 2021.

The first drawdown date was on October 4, 2021.

Drawdowns may be in amounts of up to 80 % of Permitted Uses certified to the Bank in drawdown certificates.

4 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 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.

As of March 31, 2022, the total outstanding borrowings under the Mega Bank Credit Facility were denominated in NTD and remeasured into U.S.

dollars of $ 41.8 million and the interest rates ranged from 0.895 % to 1.095 % per annum.

Credit Agreement with Mega Bank

On April 25, 2022, the Company through its Taiwan subsidiary, entered into a $ 20.0 million (or foreign currency equivalent) (the “Credit Limit”) Omnibus Credit Authorization Agreement (the “Omnibus Credit Authorization Agreement”) with Mega Bank.

The Omnibus Credit Authorization Agreement permits individual credit authorizations subject to specified drawdown conditions up to the Credit Limit (on a revolving basis) to be used as loans for the purchase of materials or supplies.

During the loan period, the Company is required to maintain 100 % direct or indirect share ownership of the Taiwan subsidiary.

Pursuant to the Omnibus Credit Authorization Agreement, the Taiwan subsidiary also entered into both a Credit Authorization Agreement (the “Credit Authorization Agreement”) and Credit Authorization Approval Notice (the “Credit Authorization Approval Notice”) with Mega Bank and associated branch of Mega Bank, respectively.

Pursuant to such Agreement and Notice, Mega Bank permits the Taiwan subsidiary to make drawdowns up to the Credit Limit for short-term loans for material purchases with a tenor not to exceed 120 days on a revolving basis.

Drawdowns under the Mega Bank facility may be made through March 2023.

The interest rate for each individual credit authorization is adjusted according to the Mega Bank’s USD basic loan interest rate at the time of signing the agreement which was 0.90 % per annum.

Interest on such drawdowns is based upon TAIFX OFFER for six months plus 0.23 % and divided by 0.946 , subject to periodic adjustment and adjustment in certain other circumstances, such as failure to maintain a sufficient balance in a demand deposit account with Mega Bank which are subject to the bank’s right of set off.

The interest rate shall be adjusted once every month but shall not be lower than the USD basic loan interest rate plus 0.1 %.

If the loan involves the acceptance of bill of exchange, the Company would pay handling fee at the annual rate of 0.75 % calculated based on the number of actual acceptance days.

The fee is paid in full upon acceptance and a minimum handling fee of NTD 400 is charged for each transaction.

Amounts borrowed are otherwise unsecured, and the Credit Authorization Agreement has customary default provisions permitting Mega Bank to reduce the extension of credit, shorten the term for loan repayment or declare all of the amounts immediately due and payable.

The Company is not a guarantor under the Credit Authorization Agreement or Credit Authorization Approval Notice.

Chang Hwa Bank

6 unchanged sentences

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.

As of March 31, 2022, the total outstanding borrowings under the Chang Hwa Bank Credit Facility were denominated in NTD and remeasured into U.S.

dollars of $ 34.8 million and the interest rate is 1.05 % per annum.

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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.

7 unchanged sentences

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.

Under a Facility Letter entered into on the HSBC Bank Effective Date, the 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)

As of March 31, 2022, the outstanding borrowings under the 2022 HSBC Bank Credit Facility revolving line of credit were $ 30.0 million.

The interest rates for these loans were approximately 0.96 % per annum as of March 31, 2022.

As of March 31, 2022, there was no amount available for future borrowing under the 2022 HSBC Bank Credit Facility.

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

3 unchanged sentences

Total short-term and long-term debt $ 547,468

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 and six months ended December 31, 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 nine months ended March 31, 2022 and 2021 were as follows (in thousands):

Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

2022 2021 2022 2021

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)

Operating lease expense (including expense for lease agreements with related parties of $ 143 and $ 568 for the three and nine months ended March 31, 2022, respectively, and $ 347 and $ 1,040 for the three and nine months ended March 31, 2021, respectively)

$ 2,017 $ 1,952 $ 6,183 $ 5,900

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)

Cash payments for operating leases (including payments to related parties of $ 141 and $ 631 for the three and nine months ended March 31, 2022, respectively, and $ 347 and $ 1,040 for the three and nine months ended March 31, 2021, respectively)

1,854 1,994 6,067 5,951

New operating lease assets obtained in exchange for operating lease liabilities 3,730 22 11,108 2,715

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)

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):

During the three and nine months ended March 31, 2022 and 2021, 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 nine months ended March 31, 2022 were $ 0.2 million and $ 0.7 million, respectively.

Variable payments expensed in the three and nine months ended March 31, 2021 were $ 0.4 million and $ 1.2 million, respectively.

As of March 31, 2022, the weighted average remaining lease term for operating leases was 4.0 years and the weighted average discount rate was 3.0 %.

Maturities of operating lease liabilities under noncancelable operating lease arrangements as of March 31, 2022 were as follows (in thousands):

Minimum lease payments

3 unchanged sentences

Present value of operating lease liabilities $ 25,706

As of December 31, 2021, commitments under short-term lease arrangements, and operating and financing leases that have not yet commenced were immaterial.

As of March 31, 2022, 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 December 31, 2021.

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

5 unchanged sentences

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 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.

Ablecom manufactured approximately 88.8 % and 92.5 % of the chassis included in the products sold by the Company during the three months ended March 31, 2022 and 2021, respectively, and 82.5 % and 92.5 % of the chassis included in the products sold by the Company during the nine months ended March 31, 2022 and 2021, 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 $ 49.4 million and $ 40.2 million at December 31, 2021 and June 30, 2021, respectively, effectively representing the exposure to financial loss.

Outstanding cancellable and non-cancellable purchase orders from the Company to Ablecom on March 31, 2022 were $ 44.6 million and $ 40.5 million, respectively, and outstanding cancellable and non-cancellable purchase orders from the Company to Ablecom on June 30, 2021 were $ 44.9 million and $ 40.2 million, 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.

Since Ablecom manufactures substantially all the chassis that the Company incorporates into its products, if Ablecom were to suddenly be unable to manufacture chassis for the Company, the Company’s business could suffer if the Company is unable to quickly qualify substitute suppliers who can supply high-quality chassis to the Company in volume and at acceptable prices.

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Dealings with Compuware

13 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 $ 50.9 million and $ 71.0 million at December 31, 2021 and June 30, 2021, respectively, effectively representing the exposure to financial loss.

Outstanding cancellable and non-cancellable purchase orders from the Company to Compuware on March 31, 2022 were $ 192.4 million and $ 42.3 million, respectively and outstanding cancellable and non-cancellable purchase orders from the Company to Compuware on June 30, 2021 were $ 123.3 million and $ 71.0 million, 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 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.

As of March 31, 2022 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.

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 December 31, 2021.

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

The Company does not believe that the equity investment carrying value is impacted as of March 31, 2022.

No impairment charge was recorded for the three and nine months ended March 31, 2022 and 2021, 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.

3 unchanged sentences

(“MPS”), a fabless manufacturer of high-performance analog and mixed-signal semiconductors, for use in its products.

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

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

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

The Company had the following balances related to transactions with its related parties as of March 31, 2022 and June 30, 2021 (in thousands):

Ablecom Compuware Corporate Venture MPS Total

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

March 31, 2022 June 30, 2021 March 31, 2022 June 30, 2021 March 31, 2022 June 30, 2021 March 31, 2022 June 30, 2021 March 31, 2022 June 30, 2021

Accounts receivable $ 1 $ 2 $ 381 $ 198 $ 33,702 $ 8,478 $ — $ — $ 34,084 $ 8,678

2 unchanged sentences

Accrued liabilities (2) $ 982 $ 3,042 $ 14,333 $ 14,486 $ — $ 1,000 $ — $ — $ 15,315 $ 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 December 31, 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 March 31, 2022 and 2021, are as follows (in thousands):

Ablecom Compuware Corporate Venture MPS Total

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,

Three months ended March 31, Three months ended March 31, Three months ended March 31, Three months ended March 31, Three months ended March 31,

2022 2021 2022 2021 2022 2021 2022 2021 2022 2021

2 unchanged sentences

Purchases - other miscellaneous items $ 1,687 $ 2,002 $ 404 $ 475 $ — $ — $ — $ — $ 2,091 $ 2,477

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):

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company's results from transactions with its related parties for each of the nine months ended March 31, 2022 and 2021, 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,

Nine months ended March 31, Nine months ended March 31, Nine months ended March 31, Nine months ended March 31, Nine months ended March 31,

2022 2021 2022 2021 2022 2021 2022 2021 2022 2021

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Purchases - other miscellaneous items $ 6,671 $ 7,482 $ 1,090 $ 1,434 $ — $ — $ — $ — $ 7,761 $ 8,916

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):

The Company’s cash flow impact from transactions with its related parties for each of the nine months ended March 31, 2022 and 2021, 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,

Nine months ended March 31, Nine months ended March 31, Nine months ended March 31, Nine months ended March 31, Nine months ended March 31,

2022 2021 2022 2021 2022 2021 2022 2021 2022 2021

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Unpaid property, plant and equipment $ 681 $ 1,434 $ 48 68 $ — $ — $ — $ — $ 729 $ 1,502

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Tripartite Agreement

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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.

As of March 31, 2022, 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.

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

As of March 31, 2022, the Company had 1,979,112 authorized shares available for future issuance under the 2020 Plan.

Common Stock Repurchase

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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 December 31, 2021.

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

The Company had $ 150.0 million of remaining availability under the share repurchase program as of March 31, 2022.

There were no shares repurchased under the share repurchase program during the three and nine months ended March 31, 2022.

Determining Fair Value

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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 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:

The fair value of stock option grants for the three and nine months ended March 31, 2022 and 2021 was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:

Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

2022 2021 2022 2021

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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 and six months ended December 31, 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 nine months ended March 31, 2022 and 2021 (in thousands):

Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

2022 2021 2022 2021

6 unchanged sentences

Stock-based compensation expense, net $ 5,310 $ 5,105 $ 15,855 $ 15,037

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.

As of March 31, 2022, $ 9.6 million of unrecognized compensation expense related to stock options is expected to be recognized over a weighted-average period of 3.57 years, $ 53.0 million of unrecognized compensation cost related to unvested RSUs is expected to be recognized over a weighted-average period of 2.72 years and unrecognized compensation cost of $ 0.1 million related to unvested PRSUs was recognized during the nine months ended March 31, 2022.

Additionally, as described below, $ 5.2 million of unrecognized compensation cost related to the 2021 CEO Performance Stock Option is expected to be recognized over a period of 2.75 years.

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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 December 31, 2021 was as follows:

The achievement status of the operational and stock price milestones as of March 31, 2022 was as follows:

Annualized Revenue Milestone Achievement Status Stock Price Milestone Achievement Status

(in billions)

$ 4.0 Achieved (1)

$ 4.0 Achieved $ 45 Not met

$ 4.8 Probable $ 60 Not met

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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 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:

During the three and nine months ended March 31, 2022, the Company recognized compensation expense related to the 2021 CEO Performance Stock Option of $ 1.5 million and $ 5.3 million, respectively.

During the three and nine months ended March 31, 2021, the Company recognized compensation expense related to the 2021 CEO Performance Stock Option of $ 0.3 million and $ 0.3 million, respectively.

As of March 31, 2022 and June 30, 2021, the Company had $ 5.2 million and $ 10.5 million, respectively, in unrecognized compensation cost related to the 2021 CEO Performance Stock Option.

The unrecognized compensation cost as of March 31, 2022 is expected to be recognized over a period of more than 2.75 years.

The following table summarizes stock option activity during the nine months ended March 31, 2022 under all plans:

Outstanding Weighted

5 unchanged sentences

Forfeited/Cancelled ( 123,113 ) $ 29.48

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

Balance as of March 31, 2022 4,417,440 $ 28.64 5.50

Options vested and exercisable at March 31, 2022 2,700,170 $ 21.61 3.38

RSU and PRSU Activity

In January 2015, the Company began to grant RSUs to employees.

The Company grants RSUs to certain employees as part of its regular employee equity compensation review program as well as to selected new hires.

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.

4 unchanged sentences

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:

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table summarizes RSU and PRSU activity during the nine months ended March 31, 2022 under all plans:

Time-Based RSUs

7 unchanged sentences

Forfeited ( 274,972 ) $ 29.44 — $ —

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

Balance as of March 31, 2022 1,902,889 $ 32.09 — $ —

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 recorded a provision for income taxes of $ 16.2 million and $ 27.1 million for the three and nine months ended March 31, 2022, respectively.

The Company recorded a benefit for income taxes of $ 0.2 million for the three months ended March 31, 2021, and a provision for income taxes of $ 8.5 million for the nine months ended March 31, 2021.

The effective tax rate was 17.4 % and 15.9 % for the three and nine months ended March 31, 2022, respectively, and ( 1.2 )% and 10.5 % for the three and nine months ended March 31, 2021, respectively.

The effective tax rate for the three and nine months ended March 31, 2022 is higher than that for the same periods ended March 31, 2021, primarily due to a significant increase in pre-tax income in fiscal 2022 and corresponding decreases in the effective tax rate benefits from R&D credits, deductions for foreign sales, and windfall tax benefits.

As of March 31, 2022, the Company had gross unrecognized tax benefits of $ 38.9 million, of which, $ 15.7 million if recognized, would affect the Company's effective tax rate.

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 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.

The CARES Act provides temporary relief from certain aspects of the 2017 Tax Reform Act that imposed limitations on the utilization of certain losses, interest expense deductions and alternative minimum tax credits and made a technical correction to the 2017 Tax Reform Act related to the depreciable life of qualified improvement property.

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

The Company has determined that its foreign undistributed earnings are indefinitely reinvested except for undistributed earnings related to the Company's operations in the Netherlands.

As of March 31, 2022, the Company had accrued $ 3.1 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 its foreign subsidiaries.

As a result of the 2017 Tax Reform Act, the Company has determined that its foreign undistributed earnings are indefinitely reinvested except for undistributed earnings related to the Company's operations in the Netherlands.

The Company may repatriate certain foreign earnings from the Netherlands that have been previously taxed in the U.S.

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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 April 21, 2022.

The Company intends to defend the lawsuit vigorously.

On March 11, 2022, the Company, together with the individual defendants, entered into an agreement in principle with plaintiff’s counsel to settle the action.

On April 8, 2022, the parties entered into a stipulation of settlement with plaintiff's counsel.

Pursuant to the terms of the stipulation of settlement, and subject to Court approval, plaintiff will dismiss with prejudice and release on behalf of a class of shareholders all claims against defendants, including the Company, in exchange for payment of $ 18,250,000 , of which sum $ 2,000,000 will be funded by the Company.

This settlement, if approved by the Court, will fully resolve the action.

A hearing on preliminary approval of the proposed settlement is scheduled for June 2, 2022.

As of March 31, 2022, the Company recorded a liability of $ 18,250,000 for the Hessefort case settlement in accrued liabilities and $ 16,250,000 of litigation settlement costs recovery in other receivables in its condensed consolidated balance sheets.

The net Hessefort litigation settlement costs of $ 2,000,000 is recorded as a charge to general and administrative expense in the Company's condensed consolidated statement of operations for the three and nine months ended March 31, 2022.

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.

6 unchanged sentences

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 continued the hearing to March 23, 2022.

Defendants demurred to the amended complaint on August 24, 2021.

Following a March 23, 2022 hearing, on March 25, 2022, the Court granted defendants’ demurrers on the grounds that plaintiffs had failed to allege demand futility and the Court dismissed the amended complaint, but with leave to amend by May 20, 2022.

The case is otherwise currently stayed.

The Company intends to defend the lawsuit vigorously.

The Company intends to defend the lawsuit vigorously if a second amended complaint is filed.

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

On May 5, 2021, certain current and former directors and officers of the Company were named as defendants in a putative derivative lawsuit filed in the U.S.

10 unchanged sentences

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)

No shareholder sought to intervene during the 45 -day notice period ending on February 4, 2022, and on March 24, 2022, the Court issued an order dismissing the lawsuit with prejudice as to the named plaintiff.

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.

8 unchanged sentences

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 December 31, 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 March 31, 2022 and any prior periods.

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

3 unchanged sentences

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

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

As of March 31, 2022, these remaining noncancelable commitments were $ 628.6 million, including $ 82.8 million for related parties.

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

2 unchanged sentences

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

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

December 31, June 30,

March 31, June 30,

Long-lived assets:

5 unchanged sentences

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