What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-08-29 compared with 2021-08-27 · 472 added, 344 removed, 1063 unchanged (43% of the section changed)

Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Index to Consolidated Financial Statements Page

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Balance Sheets

4 unchanged sentences

Notes to Consolidated Financial Statements

SMCI | 2022 Form 10-K | 51

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate the reasonableness of the Company’s reserve rates within its estimation of the inventory excess and obsolescence reserve.

SMCI | 2022 Form 10-K | 52

How the Critical Audit Matter Was Addressed in the Audit

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• We involved data specialists to assess management’s estimate on reserve rates by recalculating historical reserve rates across multiple fiscal periods.

We compared our independently developed historical reserve rates with the reserve rates used by management.

We compared our independently developed historical reserve rates with the reserve rates used by management to evaluate management’s ability to accurately estimate excess and obsolete inventory.

• We tested the accuracy and completeness of the underlying data utilized in management’s excess and obsolescence reserve, including the classification of inventory by aging category.

Then, selected a sample of inventory products and verified the items were properly included in the correct aging category for determination of the reserve rate.

• We considered the existence of contradictory evidence based on reading of internal communications to management, Company press releases, and industry reports, as well as our observations and inquires as to changes within the business.

3 unchanged sentences

We have served as the Company's auditor since fiscal 2003.

SMCI | 2022 Form 10-K | 53

SUPER MICRO COMPUTER, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

(in thousands, except per share amounts)

June 30, June 30,

24 unchanged sentences

Long-term debt 147,618 34,700

Other long-term liabilities (including related party balance of $ 0 and $ 1,699 at June 30, 2021 and 2020, respectively)

41,132 41,995

Other long-term liabilities 39,140 41,132

Total liabilities 1,779,330 1,145,566

3 unchanged sentences

Authorized shares:

100,000,000 ;

Outstanding shares:

3 unchanged sentences

481,741 438,012

Treasury stock (at cost), 0 and 1,333,125 shares at June 30, 2021 and 2020, respectively

Accumulated other comprehensive income (loss) 453 ( 152 )

Accumulated other comprehensive income 911 453

Retained earnings 942,923 657,760

5 unchanged sentences

See accompanying notes to consolidated financial statements.

SMCI | 2022 Form 10-K | 54

SUPER MICRO COMPUTER, INC.

17 unchanged sentences

Income from operations 335,167 123,947 85,654

Other (expense) income, net ( 2,834 ) 1,410 ( 1,020 )

Other income (expense), net 8,079 ( 2,834 ) 1,410

Interest expense ( 6,413 ) ( 2,485 ) ( 2,236 )

1 unchanged sentence

Income tax provision ( 52,876 ) ( 6,936 ) ( 2,922 )

Share of income (loss) from equity investee, net of taxes 173 2,402 ( 2,721 )

Share of income from equity investee, net of taxes 1,206 173 2,402

Net income $ 285,163 $ 111,865 $ 84,308

6 unchanged sentences

See accompanying notes to consolidated financial statements.

SMCI | 2022 Form 10-K | 55

SUPER MICRO COMPUTER, INC.

5 unchanged sentences

Other comprehensive income (loss), net of tax:

Foreign currency translation gain (loss) 605 ( 72 ) ( 245 )

Total other comprehensive income (loss) 605 ( 72 ) ( 245 )

Foreign currency translation gain (loss) and other ( 247 ) 605 ( 72 )

Net change in defined benefit obligations 705 — —

Total other comprehensive income (loss), net of tax 458 605 ( 72 )

Total comprehensive income $ 285,621 $ 112,470 $ 84,236

See accompanying notes to consolidated financial statements.

SMCI | 2022 Form 10-K | 56

SUPER MICRO COMPUTER, INC.

10 unchanged sentences

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

Cumulative effect of adjustment from adoption of new accounting standard, net of taxes — — — — — 7,714 — 7,714

Exercise of stock options, net of taxes 1,804,789 28,343 — — — — — 28,343

Release of common stock shares upon vesting of restricted stock units 979,274 — — — — — — —

1 unchanged sentence

Stock-based compensation — 20,189 — — — — — 20,189

Foreign currency translation loss — — — — ( 245 ) — — ( 245 )

Other comprehensive loss — — — — ( 72 ) — — ( 72 )

Net income — — — — — 84,308 6 84,314

3 unchanged sentences

Shares withheld for the withholding tax on vesting of restricted stock units ( 274,620 ) ( 8,721 ) — — — — — ( 8,721 )

Share repurchase and retirement ( 5,542,336 ) ( 175 ) 1,333,125 20,491 — ( 150,316 ) — ( 130,000 )

Stock-based compensation — 28,549 — — — — — 28,549

Foreign currency translation loss — — — — ( 72 ) — — ( 72 )

Other comprehensive income — — — — 605 — — 605

Net income — — — — — 111,865 6 111,871

3 unchanged sentences

Shares withheld for the withholding tax on vesting of restricted stock units ( 232,461 ) ( 10,081 ) — — — — — ( 10,081 )

Share repurchase and retirement ( 5,542,336 ) ( 175 ) 1,333,125 20,491 ( 150,316 ) ( 130,000 )

Stock-based compensation — 32,816 — — — — — 32,816

Foreign currency translation gain — — — — 605 — — 605

Other comprehensive income — — — — 458 — — 458

Net income — — — — — 285,163 ( 1 ) 285,162

1 unchanged sentence

See accompanying notes to consolidated financial statements.

SMCI | 2022 Form 10-K | 57

SUPER MICRO COMPUTER, INC.

8 unchanged sentences

Stock-based compensation expense 32,816 28,549 20,189

(Recoveries of) Allowance for doubtful accounts ( 820 ) ( 3,081 ) 7,058

Recovery of allowance for doubtful accounts ( 840 ) ( 820 ) ( 3,081 )

Provision for excess and obsolete inventories 15,090 6,805 18,373

Other 368 ( 1,044 ) 1,364

Impairment of investments — — 2,661

Share of (income) loss from equity investee ( 173 ) ( 2,402 ) 2,721

Foreign currency exchange loss (gain) 2,482 1,008 ( 313 )

Share of income from equity investee ( 1,206 ) ( 173 ) ( 2,402 )

Foreign currency exchange (gain) loss ( 13,747 ) 2,482 1,008

Deferred income taxes, net ( 6,817 ) ( 8,390 ) ( 13,772 )

17 unchanged sentences

( 45,182 ) ( 58,016 ) ( 44,338 )

Investment in a privately-held company ( 1,100 ) — —

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

1 unchanged sentence

FINANCING ACTIVITIES:

Proceeds from borrowings, net of debt issuance costs 127,059 164,791 41,760

Proceeds from borrowings 1,153,317 127,059 164,791

Repayment of debt ( 640,695 ) ( 60,629 ) ( 159,191 )

1 unchanged sentence

Payment of other fees for debt financing ( 592 ) ( 561 ) ( 650 )

Proceeds from exercise of stock options 28,387 28,343 —

Proceeds from exercise of stock options, net of taxes 20,994 28,387 28,343

Changes in obligations under capital leases ( 72 ) 25 ( 138 )

9 unchanged sentences

Cash paid for taxes, net of refunds $ 19,690 $ 2,914 $ 43,317

SMCI | 2022 Form 10-K | 58

Non-cash investing and financing activities:

1 unchanged sentence

$ 7,825 $ 9,003 $ 12,051

Equipment purchased under capital leases $ 3,258 $ — $ —

Contribution of certain technology rights to equity investee $ — $ — $ 3,000

Right of use ("ROU") assets obtained in exchange for operating lease commitments $ 11,151 $ 3,258 $ —

See accompanying notes to consolidated financial statements.

SMCI | 2022 Form 10-K | 59

SUPER MICRO COMPUTER, INC.

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Actual results could differ from those estimates.

The Company considered estimates of the economic implications of the COVID-19 pandemic on its critical and significant accounting estimates, including an assessment of the collectability of each customer contract as part of the revenue recognition process, assessment of the valuation of accounts receivable, assessment of provision for excess and obsolete inventory and an impairment of long-lived assets.

The Company considered estimates of the economic implications of the COVID-19 pandemic pressures, global economic recession, inflation and increased interest rates on its critical and significant accounting estimates, including an assessment of the collectability of each customer contract as part of the revenue recognition process, assessment of the valuation of accounts receivable, assessment of provision for excess and obsolete inventory and an impairment of long-lived assets.

Fair Value of Financial Instruments

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• Level 3 - Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

SMCI | 2022 Form 10-K | 60

SUPER MICRO COMPUTER, INC.

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No impairment charge for long-lived assets has been recorded in any of the periods presented.

SMCI | 2022 Form 10-K | 61

SUPER MICRO COMPUTER, INC.

25 unchanged sentences

Revenue allocated to each performance obligation is recognized at the time the related performance obligation is satisfied by transferring control of the promised good or service to a customer.

SMCI | 2022 Form 10-K | 62

SUPER MICRO COMPUTER, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation.

Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis.

The Company determines standalone selling prices based on the price at which the performance obligation is sold separately.

If the standalone selling price is not observable through past transactions, the Company applies judgment to estimate the standalone selling price taking into account available information, such as internally approved pricing guidelines with respect to geographies, customer type, internal costs, and gross margin objectives, for the related performance obligations.

For contracts that contain multiple performance obligations, the Company allocates the transaction price for each customer contract to each performance obligation based on the relative standalone selling price (SSP) for each performance obligation within each contract.

The Company recognizes the amount of transaction price allocated to each performance obligation within a customer contract as revenue at the time the related performance obligation is satisfied by transferring control of the promised good or service to a customer.

Determining the relative SSP for contracts that contain multiple performance obligations requires significant judgement.

The Company determines SSP based on the price at which the performance obligation is sold separately.

If the SSP is not observable through past transactions, the Company applies judgment to estimate the SSP.

For substantially all performance obligations, the Company is able to establish the SSP based on the observable prices of products or services sold separately in comparable circumstances to similar customers.

The Company typically establishes an SSP range for its products and services, which is reassessed on a periodic basis or when facts and circumstances change.

SSP for the Company’s products and services can evolve over time due to changes in its pricing practices, internally approved pricing guidelines with respect to geographies, customer type, internal costs, and gross margin objectives for the related performance obligations which can also be influenced by intense competition, changes in demand for the Company’s products and services, economic and other factors.

These estimates and judgements have not fluctuated significantly for the fiscal year ended June 30, 2022, compared to prior fiscal years.

When the Company receives consideration from a customer prior to transferring goods or services to the customer, the Company records a contract liability (deferred revenue).

The Company also recognizes deferred revenue when it has an unconditional right to consideration (i.e., a receivable) before transfer of control of goods or services to a customer.

SUPER MICRO COMPUTER, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company considers shipping & handling activities as costs to fulfill the sales of products.

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On a quarterly basis, the Company makes estimates of its uncollectible accounts receivable by analyzing the aging of accounts receivable, history of bad debts, customer concentrations, customer-credit-worthiness, and current economic trends to evaluate the adequacy of the allowance for doubtful accounts.

The Company's (recovery of) provision for bad debt was $( 0.8 ) million, $( 3.1 ) million, and $ 7.1 million in fiscal years 2021, 2020 and 2019, respectively.

The Company's recovery of allowance for bad debt was $( 0.8 ) million, $( 0.8 ) million, and $( 3.1 ) million in fiscal years 2022, 2021 and 2020, respectively.

Cost of Sales

Cost of sales primarily consists of the costs of materials, contract manufacturing, in-bound shipping, personnel and related expenses including stock-based compensation, equipment and facility expenses, warranty costs and provision for lower of cost or net realizable value and excess and obsolete inventory.

SMCI | 2022 Form 10-K | 63

SUPER MICRO COMPUTER, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Product Warranties

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Such amounts are recorded as a reduction of research and development expenses and were $ 8.2 million, $ 10.9 million, and $ 2.1 million for the fiscal years ended June 30, 2022, 2021 and 2020, respectively.

During the fiscal year ended June 30, 2020, the Company also recorded a

SUPER MICRO COMPUTER, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

$ 9.5 million net settlement fee as a reduction in the research and development expenses related to the reimbursement of previously incurred expenses for one canceled joint product development agreement.

During the fiscal year ended June 30, 2020, the Company also recorded a $ 9.5 million net settlement fee as a reduction in the research and development expenses related to the reimbursement of previously incurred expenses for one canceled joint product development agreement.

Software development costs, including costs to develop software sold, leased, or otherwise marketed, that are incurred subsequent to the establishment of technological feasibility are capitalized if significant.

4 unchanged sentences

Advertising costs, net of reimbursements received under the cooperative marketing arrangements with the Company's vendors, are expensed as incurred.

Total advertising and promotional expenses were $ 4.1 million, $ 3.0 million and $ 2.4 million for the fiscal years ended June 30, 2021, 2020 and 2019, respectively.

Total advertising and promotional expenses were $ 0.1 million, $ 4.1 million and $ 3.0 million for the fiscal years ended June 30, 2022, 2021 and 2020, respectively, net of credits from marketing development funds.

SMCI | 2022 Form 10-K | 64

SUPER MICRO COMPUTER, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Stock-Based Compensation

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The Company's leases with an initial term of 12 months or less are immaterial.

SUPER MICRO COMPUTER, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Operating lease ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments over the lease term.

5 unchanged sentences

Non-lease components that are variable costs, such as common area maintenance, are expensed as incurred and not included in the ROU assets and lease liabilities.

SMCI | 2022 Form 10-K | 65

SUPER MICRO COMPUTER, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Finance Leases

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In performing its analysis, the Company considered its explicit arrangements with Ablecom and Compuware, all contractual arrangements with these entities.

Also, as a result of the substantial related party relationships between the Company and these entities, the Company considered whether any implicit arrangements exist that would cause the Company to protect these related parties’

SUPER MICRO COMPUTER, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

interests from suffering losses.

The Company determined it has no material implicit arrangements with Ablecom, Compuware or their shareholders.

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Net income (loss) attributable to Ablecom's interest was not material for the periods presented and was included in general and administrative expenses in the Company's consolidated statements of operations.

SMCI | 2022 Form 10-K | 66

SUPER MICRO COMPUTER, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Foreign Currency Transactions

7 unchanged sentences

dollars at the average exchange rates during the period.

Remeasurement of foreign currency accounts and resulting foreign exchange transaction gains and losses, which have not been material, are reflected in the consolidated statements of operations in other expense, net.

Remeasurement of foreign currency accounts and resulting foreign exchange transaction gains and losses, are reflected in the consolidated statements of operations in other income (expense), net.

The functional currency of Super Micro Asia and Technology Park, Inc.

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Additionally, the exercise of stock options and the vesting of RSUs results in a further dilutive effect on net income per share.

The computation of basic and diluted net income per common share is as follows (in thousands, except per share amounts):

SMCI | 2022 Form 10-K | 67

SUPER MICRO COMPUTER, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The computation of basic and diluted net income per common share is as follows (in thousands, except per share amounts):

Years Ended June 30,

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

One supplier accounted for 20.3 %, 26.8 %, and 21.8 % of total purchases for the fiscal years ended June 30, 2021, 2020 and 2019, respectively.

Purchases from Ablecom and Compuware, related parties of the Company as noted in Note 13, "Related Party Transactions," accounted for a combined 7.8 %, 10.1 %, and 9.2 % of total cost of sales for the fiscal years ended June 30, 2021, 2020 and 2019, respectively.

Two suppliers accounted for 18.1 % and 11.4 % of total purchases for the fiscal year ended June 30, 2022.

Two suppliers accounted for 20.3 % and 11.8 % of total purchases for the fiscal years ended June 30, 2021.

One supplier accounted for 26.8 % of total purchases for the fiscal years ended June 30, 2020.

Purchases from Ablecom and Compuware, related parties of the Company as noted in Part II, Item 8, Note 12, "Related Party Transactions," accounted for a combined 8.3 %, 7.8 %, and 10.1 % of total cost of sales for the fiscal years ended June 30, 2022, 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 in fiscal years 2021, 2020 and 2019.

No single customer accounted for 10% or more of the net sales in any of fiscal years 2022, 2021 and 2020.

One customer accounted for 21.7 % and 13.5 % of accounts receivable, net as of June 30, 2022 and 2021, respectively.

4 unchanged sentences

Accounting Pronouncements Recently Adopted

In June 2016, the FASB issued authoritative guidance, Financial Instruments-Credit Losses:

Measurement of Credit Losses on Financial Instruments .

Under this new guidance, a company is required to estimate credit losses on certain types of financial instruments using an expected-loss model, replacing the current incurred-loss model, and record the estimate through an allowance for credit losses, which results in more timely recognition of credit losses.

The Company adopted this guidance on July 1, 2020 using the modified retrospective transition method, which requires a cumulative-effect adjustment, if any, to the opening balance of retained earnings to be recognized on the date of adoption with prior periods not restated.

The adoption of the guidance had no material impact on the Company’s consolidated financial statements as of July 1, 2020.

SUPER MICRO COMPUTER, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company maintains an allowance for credit losses for accounts receivable and the investment in an auction rate security.

The allowance for credit losses is estimated using a loss rate method, considering factors such as customers’ credit risk, historical loss experience, current conditions, and forecasts.

The allowance for credit losses is measured on a collective (pool) basis by aggregating customer balances with similar risk characteristics.

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

The new guidance has no material impact on the Company's consolidated financial statements for the year ended June 30, 2021.

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

Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measuremen t, to modify the disclosure requirements on fair value measurements based on the concepts in the FASB Concepts Statements, including the consideration of costs and benefits.

The Company adopted this guidance on July 1, 2020.

As of June 30, 2021, the Company’s investment in an auction rate security is the only Level 3 investment measured at fair value on a recurring basis.

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

See Note 2, "Fair Value Disclosure".

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

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

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

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

The adoption of this guidance did not have a material impact on the Company's consolidated financial statements and disclosures.

Accounting Pronouncements Not Yet Adopted

In December 2019, the FASB issued amended guidance, Simplifying the Accounting for Income Taxes, to remove certain exceptions to the general principles from ASC 740 - Income Taxes, and to improve consistent application of U.S.

1 unchanged sentence

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

early adoption is permitted.

The Company determined that the adoption of the guidance will not have a material impact on the Company's consolidated financial statements and disclosures.

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

SMCI | 2022 Form 10-K | 68

SUPER MICRO COMPUTER, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Accounting Pronouncements Not Yet Adopted

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

1 unchanged sentence

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 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.

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

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

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 with a new maturity date of June 28, 2026 and fallback terms related to LIBOR replacement mechanics.

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

E.SUN Credit Facility will terminate on September 18, 2021 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.

In April 2022, FASB issued a proposed accounting standard update for the deferral of the sunset date of Topic 848 and amendments to the definition of secured overnight financing rate (“SOFR").

The proposed amendment defers the sunset date of Topic 848 to December 31, 2024.

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 was 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 to provide for a new maturity date of June 28, 2026 and fallback terms related to LIBOR replacement mechanics.

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 SOFR.

As these amendments had other contemporaneous changes to the facility, including the amount of borrowings permitted under the facility 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.

Fair Value Disclosure

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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.

SUPER MICRO COMPUTER, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company’s investment in an auction rate security is classified within Level 3 of the fair value hierarchy as the determination of its fair value was not based on observable inputs as of June 30, 2022 and June 30, 2021.

See Note 1, "Organization and Summary of Significant Accounting Policies," for a discussion of the Company’s policies regarding the fair value hierarchy.

See Part II, Item 8, Note 1, "Organization and Summary of Significant Accounting Policies," for a discussion of the Company’s policies regarding the fair value hierarchy.

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:

2 unchanged sentences

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 June 30, 2022.

SMCI | 2022 Form 10-K | 69

SUPER MICRO COMPUTER, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Financial Assets and Liabilities Measured on a Recurring Basis

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

Performance awards liability (3)

$ — $ 2,100 $ — $ 2,100

Total liabilities measured at fair value $ — $ 2,100 $ — $ 2,100

__________________________

(1) $ 20.0 million and $ 0.0 million in money market funds are included in cash and cash equivalents and $ 0.2 million and $ 0.2 million in money market funds are included in restricted cash, non-current in other assets in the consolidated balance sheets as of June 30, 2022 and 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 $ 0.3 million and $ 0.4 million in certificates of deposit are included in restricted cash, non-current in other assets in the consolidated balance sheets as of June 30, 2022 and 2021, respectively.

(3) As of June 30, 2021, the Company no longer measures performance awards liability at fair value because the Company trued up the performance awards liability to the cash payment value.

As of June 30, 2020, the current portion of the performance awards liability of $ 1.5 million is included in accrued liabilities and the noncurrent portion of $ 0.6 million is included in other long-term liabilities in the consolidated balance sheets.

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

For the fiscal year ended June 30, 2021, the credit losses related to the Company’s investments was not significant.

SUPER MICRO COMPUTER, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

As of June 30, 2020, the Company estimated the fair value of performance awards using the Monte-Carlo simulation model and classified them within Level 2 of the fair value hierarchy as estimates are based on the observable inputs.

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

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

$ 28.39 1.25 - 2.00 years

0.16 % 53.75 % —

There was no movement in the balances of the Company's financial assets measured at fair value on a recurring basis, consisting of investment in an auction rate security, using significant unobservable inputs (Level 3) for fiscal years 2021 and 2020.

For the fiscal year ended June 30, 2022, the credit losses related to the Company’s investments were not significant.

There was an immaterial 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 fiscal years 2022 and 2021.

There were no transfers between Level 1, Level 2 or Level 3 financial instruments in fiscal years 2022 and 2021.

8 unchanged sentences

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

SMCI | 2022 Form 10-K | 70

SUPER MICRO COMPUTER, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the fiscal year ended June 30, 2022, the Company recognized $ 0.03 million of unrealized gain for the auction rate security in other comprehensive income based on the current valuation.

For the fiscal year ended June 30, 2021, the Company's loss recognized in other comprehensive income for the auction rate security was immaterial .

No gain or loss was recognized in other comprehensive income for the auction rate security for the fiscal years ended June 30, 2020 and 2019.

No gain or loss was recognized in other comprehensive income for the auction rate security for the fiscal year ended June 30, 2020.

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

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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 $ 0.1 million as of June 30, 2021 and 2020, respectively.

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 as of each of June 30, 2022, and 2021.

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

1 unchanged sentence

The Company also did not record any impairment to the carrying values of the non-marketable equity securities during fiscal year 2022, 2021 and 2020.

During fiscal year 2019, the Company recorded impairment charges of $ 2.7 million for its non-marketable equity securities which had an initial cost basis of $ 2.7 million as it was determined the carrying value of the investments were not recoverable.

SUPER MICRO COMPUTER, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Disaggregation of Revenue

18 unchanged sentences

Total $ 5,196,099 $ 3,557,422 $ 3,339,281

SMCI | 2022 Form 10-K | 71

SUPER MICRO COMPUTER, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

7 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.

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 fiscal year ended June 30, 2022, which was included in the opening deferred revenue balance as of June 30, 2021, of $ 202.3 million, was $ 100.2 million.

Deferred revenue decreased $ 1.5 million during the fiscal year ended June 30, 2021 as compared to the fiscal year ended June 30, 2020 mainly due to the recognition of revenue from contracts entered into in prior periods exceeding the value of the transaction price allocated for service contract performance obligations during the fiscal year ended June 30, 2021.

Deferred revenue increased $ 31.5 million during the fiscal year ended June 30, 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

SUPER MICRO COMPUTER, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

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

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 June 30, 2022, was approximately $ 233.8 million.

10 unchanged sentences

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

SMCI | 2022 Form 10-K | 72

SUPER MICRO COMPUTER, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Accounts Receivable Allowances

13 unchanged sentences

Total inventories $ 1,545,606 $ 1,040,964

SUPER MICRO COMPUTER, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

During fiscal years 2022, 2021 and 2020, the Company recorded a net provision for excess and obsolete inventory to cost of sales totaling $ 15.1 million, $ 6.8 million and $ 18.4 million, respectively.

6 unchanged sentences

Buildings construction in progress (1)

87,438 46,311

Building and leasehold improvements 45,169 26,640

4 unchanged sentences

Property, plant and equipment, net $ 285,972 $ 274,713

__________________________

(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.

(1) Construction in progress balance as of June 30, 2021, primarily relates to the development and construction costs associated with the Company’s Green Computing Park located in San Jose, California and the new building in Taiwan.

SMCI | 2022 Form 10-K | 73

SUPER MICRO COMPUTER, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Prepaid Expenses and Other Assets

2 unchanged sentences

$ 138,054 $ 99,921

Prepaid income tax 12,288 14,323

Prepaid expenses 5,632 6,719

Deferred service costs 5,562 4,900

Prepaid income tax 2,352 12,288

Restricted cash 251 251

1 unchanged sentence

Total prepaid expenses and other current assets $ 158,799 $ 130,195

__________________________

(1) Includes other receivables from contract manufacturers based on certain buy-sell arrangements of $ 98.9 million and $ 76.2 million as of June 30, 2022 and 2021, respectively.

SUPER MICRO COMPUTER, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Other assets as of June 30, 2022 and 2021 consisted of the following (in thousands):

1 unchanged sentence

Deferred service costs, non-current 6,316 5,421

Deposits 1,669 1,201

Prepaid expense, non-current 2,011 1,973

Investment in auction rate security 1,590 1,556

Deposits 1,069 1,669

Restricted cash, non-current 911 932

6 unchanged sentences

Total cash, cash equivalents and restricted cash $ 268,559 $ 233,449

Investment in a Corporate Venture

In October 2016, the Company entered into agreements pursuant to which the Company contributed certain technology rights in connection with an investment in the Corporate Venture to expand the Company's presence in China.

The Corporate Venture is 30 % owned by the Company and 70 % owned by another company in China.

The transaction was closed in the third fiscal quarter of 2017 and the investment has been accounted for using the equity method.

As such, the Corporate Venture is also a related party.

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

As of June 30, 2021 and 2020, the Company had unamortized deferred gain balance of $ 1.0 million and $ 2.0 million, respectively, in accrued liabilities and $ 0.0 million and $ 1.0 million, respectively, in other long-term liabilities in the Company’s 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.

In June 2020, the third-party parent company that controls the Corporate Venture was placed on a U.S.

government export control list, along with

several of such third-party parent's related entities and a separate listing for one of its subsidiaries.

The Corporate Venture is not itself a restricted party.

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 June 30, 2021.

No impairment charge was recorded for the fiscal years ended June 30, 2021 and 2020.

The Company sold products worth $ 51.2 million, $ 61.9 million, $ 52.2 million to the Corporate Venture in the fiscal years 2021, 2020, 2019, respectively, and the Company's share of intra-entity profits on the products that remained unsold by the Corporate Venture as of June 30, 2021 and June 30, 2020 have been eliminated and have reduced the carrying value of the Company's investment in the Corporate Venture.

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

The Company had $ 8.5 million and $ 7.8 million due from the Corporate Venture in accounts receivable, net as of June 30, 2021 and 2020, respectively.

Accrued Liabilities

SMCI | 2022 Form 10-K | 74

SUPER MICRO COMPUTER, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Accrued Liabilities

Accrued liabilities as of June 30, 2022 and 2021 consisted of the following (in thousands):

2 unchanged sentences

Customer deposits 30,421 32,419

Accrued legal liabilities (Note 15) 18,250 —

Accrued warranty costs 9,073 10,185

Operating lease liability 6,322 6,310

Accrued cooperative marketing expenses 8,757 5,652

Operating lease liability 7,139 6,322

Accrued professional fees 4,281 2,737

Accrued legal liabilities — 18,114

Others 35,637 30,446

2 unchanged sentences

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 up 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 but no determination has been made if there has been adequate progress in remediating the Company’s internal weaknesses in its internal control over financial reporting.

The cash payment under the second tranche has been made as of June 30, 2021, but no cash payment had been made for the first tranche as the Board has to approve this payment.

Performance bonuses for a senior executive and two members of the Board are earned based on achieving a specified target average closing price for the Company’s common stock over the specified period as determined by the Board at the grant dates and continuous services through the payment dates.

A senior executive earned an aggregate cash payment of $ 0.1 million when the target average closing price was met in the fourth quarter of fiscal year 2020.

The two members of the Board can earn aggregate cash payments of $ 0.3 million in two tranches if the target average closing price reaches $ 31.61 for the first tranche and $ 32.99 per share for the second tranche.

During the fiscal year ended June 30, 2021, the target average closing prices for both tranches were met and the cash payment for both tranches was made to the two Board members.

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

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

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

The requisite service periods over which expenses are recognized are derived from the Monte-Carlo model for all performance awards, except for the first 50 % of the Chief Executive Officer’s award that includes a performance condition.

The Company estimates if it is probable that the performance condition will be met prior to the expiration date of this award.

If at the measurement date it is determined to be probable, the Company estimates the requisite period as the longer of the service period derived by the Monte-Carlo model and the implicit service period when the Company expects to make adequate progress in remediating its material weaknesses in its internal control over financial reporting, as reported by the Company's Audit Committee.

If it is determined to not be probable,

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 fiscal years ended June 30, 2022 and June 30, 2021, $ 1.6 million of benefit and $ 5.8 million of expense was recognized, respectively.

SMCI | 2022 Form 10-K | 75

SUPER MICRO COMPUTER, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

then the Company will reverse any previously recognized expense for this award in the period when it is no longer probable that the performance condition will be achieved.

With the satisfaction of the target average closing price conditions in the fiscal year ended June 30, 2021, the Company trued up all the unpaid performance bonuses to the cash payment value.

As of June 30, 2021, the full cash value of the bonuses were paid, except the Chief Executive Officer's first tranche performance bonus which was recorded as an accrued liability on the Company's consolidated balance sheet.

The Company has completed the remediation of its material weaknesses in its internal control over financial reporting, and anticipates that the Board will conclude that there has been adequate progress in remediating the Company's material weaknesses in its internal control over financial reporting by October 31, 2021.

Therefore, as of June 30, 2021, the Company trued up the accrued liability for the Chief Executive Officer’s first tranche award to the expected payable amount vested through the period end and the unrecognized cash value will be recorded over the remaining service period.

Based on the cash payment value and estimated fair value of these performance bonuses as of June 30, 2021 and June 30, 2020, the Company recorded a $ 3.6 million and $ 2.1 million liability, respectively, of which $ 3.6 million and $ 1.5 million, respectively, was recorded within accrued liabilities and $ 0.0 million and $ 0.6 million, respectively, was recorded within other long-term liabilities on the Company's consolidated balance sheet.

An unrecognized compensation expense of $ 0.5 million will be recorded over the remaining service periods of 0.18 years.

The expense recognized during fiscal years 2021 and 2020 was $ 5.8 million and $ 2.1 million, respectively.

Short-term and Long-term Debt

1 unchanged sentence

Line of credit:

CTBC Bank $ 18,000 $ —

E.SUN Bank 20,400 —

2018 Bank of America Credit Facility $ 268,245 $ —

2022 Bank of America Credit Facility 9,500 —

Cathay Bank Line of Credit 30,000 —

2021 CTBC Credit Lines 84,800 18,000

HSBC Bank Credit Facility 30,000 —

2021 E.SUN Bank Credit Facility 7,800 20,400

Mega Bank Credit Facility 3,500 —

Total line of credit 433,845 38,400

CTBC Bank, due August 31, 2021 25,090 23,704

CTBC Bank, due June 4, 2030 34,700 5,697

Term loan facilities:

Chang Hwa Bank Credit Facility due October 15, 2026 33,643 —

CTBC Bank term loan, due August 31, 2022 — 25,090

CTBC Bank term loan, due June 4, 2030 40,372 34,700

2021 CTBC Credit Lines, due December 27, 2027 5,468 —

2021 E.SUN Bank Credit Facility, due September 15, 2026 43,064 —

Mega Bank Credit Facility, due September 15, 2026 40,372 —

Total term loans 162,919 59,790

6 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 (the accordion feature) 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.

SUPER MICRO COMPUTER, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 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.

3 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 June 30, 2021 and 2020, the Company had no outstanding borrowings under the 2018 Bank of America Credit Facility.

The interest rates under the 2018 Bank of America Credit Facility as of June 30, 2021 and 2020 were 1.50 % and 3.00 %, respectively.

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

No amount was drawn under the standby letter of credit.

In May 2021, the letter of credit was cancelled.

The balance of debt issuance costs outstanding were $ 0.5 million and $ 0.6 million as of June 30, 2021 and 2020, respectively.

The Company has been in compliance with all the covenants under the 2018 Bank of America Credit Facility, and as of June 30, 2021, the Company's available borrowing capacity was $ 200.0 million , subject to the borrowing base limitation and compliance with other applicable terms.

CTBC Credit Facility

In June 2019, the Company entered into a credit agreement with CTBC Bank, which was amended in August 2020, (collectively, the "CTBC Credit Facility").

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

SMCI | 2022 Form 10-K | 76

SUPER MICRO COMPUTER, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

As of June 30, 2022, the total outstanding borrowings under the 2018 Bank of America Credit Facility were $ 268.2 million.

As of June 30, 2021, the Company had no outstanding borrowings under the 2018 Bank of America Credit Facility.

The interest rate under the 2018 Bank of America Credit Facility as of June 30, 2022 and 2021 was 2.53 % and 1.50 %, respectively.

The balance of debt issuance costs outstanding as of June 30, 2022 and June 30, 2021 was $ 1.0 million and $ 0.5 million, respectively.

The Company is in compliance with all covenants under the 2018 Bank of America Credit Facility, and as of June 30, 2022, the Company's available borrowing capacity was $ 81.8 million, subject to the borrowing base limitation and compliance with other applicable terms.

2022 Bank of America Credit Facility

On March 23, 2022, 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 June 30, 2022, the total outstanding borrowings were $ 9.5 million with an interest rate of 1.85 % per annum under the 2022 Bank of America Credit Facility.

2021 CTBC Credit Lines

The Company through its Taiwan subsidiary was party to (i) that certain credit agreement, dated May 6, 2020, with CTBC Bank Co., Ltd.

(“CTBC Bank”), which provided for a ten-year , non-revolving term loan facility (the “2020 CTBC Term Loan Facility”) to obtain up to NTD 1,200.0 million ($ 40.7 million U.S.

dollar equivalent) and (ii) that certain credit agreement, dated August 24, 2020, with CTBC Bank (the “CTBC Credit Facility”), which provided for total borrowings of up to $ 50.0 million (collectively, the “Prior CTBC Credit Lines”).

On July 20, 2021 (the “Effective Date”), the Company through its Taiwan subsidiary entered into a general agreement for omnibus credit lines with CTBC Bank (the “2021 CTBC Credit Lines), which replaced the Prior CTBC Credit Lines in their entirety and permit borrowings, from time to time, pursuant to (i) a term loan facility of up to NTD 1,550.0 million ($ 55.4 million U.S.

dollar equivalent) including the existing 2020 CTBC Term Loan Facility of NTD 1,200.0 million ($ 42.9 million U.S.

dollar equivalent) and a new 75-month , non-revolving term loan facility of NTD 350.0 million ($ 12.5 million U.S.

dollar equivalent) to use to purchase machinery and equipment for the Company’s Bade Manufacturing Facility located in Taiwan (the “2021 CTBC Machine Loan”), and (ii) a line of credit facility of up to $ 105.0 million (the “2021 CTBC Credit Facility”), which increased the borrowing capacity of CTBC Credit Facility.

The 2021 CTBC Credit Facility provides (i) a 12-month NTD 1,250.0 million ($ 44.7 million U.S.

dollar equivalent) term loan facility secured by the land and building located in Bade, Taiwan with an interest rate equal to the lender's established NTD interest rate plus 0.50 % per annum which is adjusted monthly, which term loan facility also includes a 12-month guarantee of up to NTD 100.0 million ($ 3.6 million U.S.

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

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

In February 2021, CTBC Bank amended the USD interest rate to be the lender's established USD interest rate plus 0.70 % to 0.75 % per annum which is adjusted monthly.

The total borrowings allowed under the CTBC Credit Facility was capped at $ 50.0 million.

There are no financial covenants associated with the CTBC Credit Facility.

dollar equivalent) with an annual fee equal to 0.50 % per annum, and (ii) a 12-month revolving line of credit of up to 100 % of eligible accounts receivable in an aggregate amount of up to $ 105.0 million with an interest rate equal to the lender's established USD interest rate plus 0.70 % to 0.75 % per annum which is adjusted monthly.

Interest rates are to be established according to individual credit arrangements established pursuant to the 2021 CTBC Credit Lines, which interest rates shall be subject to adjustment depending on the satisfaction of certain conditions.

Term loans made pursuant to the 2021 CTBC Credit Lines are secured by certain of the Taiwan subsidiary’s assets, including certain property, land, plant, and equipment.

There are various financial covenants under the 2021 CTBC Credit Lines, including current ratio, debt service coverage ratio, and financial debt ratio requirements.

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

As of June 30, 2022 and 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 0.825 % per annum as of June 30, 2022 and 0.45 % as of June 30, 2021.

Under the 2021 CTBC Machine Loan, the amounts outstanding were $ 5.5 million on June 30, 2022.

The interest rate for this loan was 1.025 % per annum as of June 30, 2022.

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

SMCI | 2022 Form 10-K | 77

SUPER MICRO COMPUTER, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 June 30, 2022 and 2021, respectively.

The interest rate for these loans were 0.75 % per annum as of June 30, 2021 and 0.63 % per annum as of June 30, 2020.

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 June 30, 2022 and 2021, the outstanding borrowings under the 2021 CTBC Credit Facility revolving line of credit were $ 84.8 million and $ 18.0 million, respectively.

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

The interest rates for these loans ranged from 1.80 % to 2.52 % per annum as of June 30, 2022 and were 0.98 % per annum as of June 30, 2021.

As of June 30, 2022, the amount available for future borrowing under the 2021 CTBC Credit Facility was $ 20.2 million.

As of June 30, 2021, the net book value of land and building located in Bade, Taiwan, collateralizing the CTBC Credit Facility term loan was $ 24.8 million.

2020 CTBC Term Loan Facility due June 4, 2030

In May 2020, the Company entered into a ten-year , non-revolving term loan facility (“2020 CTBC Term Loan Facility”) to obtain up to NTD 1.2 billion ($ 40.7 million in U.S.

dollar equivalents) in financing for use in the expansion and renovation of the Company’s Bade Manufacturing Facility located in Taiwan.

Drawdowns on the 2020 CTBC Term Loan Facility are based on 80 % of balances owed on commercial invoices from the contractor and shall be drawn according to the progress of the renovations.

Borrowings under the 2020 CTBC Term Loan Facility are available through June 2022.

The Company is required to pay against total outstanding principal and interest in equal monthly installments starting June 2023 and continuing through the maturity date of June 2030.

Interest under the 2020 CTBC Term Loan Facility is the two-year term

As of June 30, 2022, the net book value of land and building located in Bade, Taiwan, collateralizing the 2021 CTBC Credit Lines was $ 77.3 million.

The Company was in compliance with all financial covenants under 2021 CTBC Credit Lines as of June 30, 2022.

E.SUN Bank Credit Facility

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 $ 30.0 million (the “Prior E.SUN Bank Credit Facility”).

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

On September 13, 2021 (the “Old 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”).

The 2021 E.SUN Bank Credit Facility permitted borrowings of up to (i) NTD 1,600.0 million ($ 57.6 million U.S.

dollar equivalent) and (ii) $ 30.0 million as loans, advances, acceptances, bills, bank guarantees, overdrafts, letters of credit, and other types of drawdown instruments.

Other terms of the 2021 E.SUN Bank Credit Facility were substantially identical to the Prior E.SUN Bank Credit Facility.

Generally, interest for base rate loans made under the 2021 E.SUN Bank Credit Facility were 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 had 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 were 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, were to be set forth in Notifications and Confirmation of Credit Conditions (a “Notification and Confirmation”) negotiated with E.SUN Bank.

A Notification and Confirmation was entered into on the Old E.SUN Bank Effective Date for (i) a five-year , non-revolving term loan facility to obtain up to NTD 1,600.0 million ($ 57.6 million U.S.

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 June 30, 2022, the total outstanding borrowings under the Term Loan were denominated in NTD and remeasured into U.S.

dollars of $ 43.1 million and the interest rates for the Term Loan was 1.37 % per annum.

As of June 30, 2022 and June 30, 2021, the amounts outstanding under the Import Loan were $ 7.8 million and $ 20.4 million, respectively.

The interest rate for the fiscal year ended June 30, 2022 was 1.81 % per annum.

The interest rate for the fiscal year ended June 30, 2021 ranged from 1.00 % to 1.29 % per annum.

As of June 30, 2022 the amount available for future borrowing under the Import Loan was $ 22.2 million.

The Company was in compliance with all financial covenants under 2021 E.SUN Bank Credit Facility as of June 30, 2022.

SMCI | 2022 Form 10-K | 78

SUPER MICRO COMPUTER, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

floating rate of postal saving interest rate plus 0.105 % and is established on the date of the drawdown application .

If no interest rate is agreed upon, interest shall accrue at the annual base rate for CTBC plus 4.00 %.

The 2020 CTBC Term Loan Facility is secured by the Bade Manufacturing Facility and its expansion.

Fees paid to the lender as debt issuance costs were immaterial.

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

As of June 30, 2021 and 2020, the amounts outstanding under the 2020 CTBC Term Loan Facility were $ 34.7 million and $ 5.7 million, respectively.

The interest rates for these loans were 0.45 % per annum as of June 30, 2021 and June 30, 2020.

The net book value of the property serving as collateral as of June 30, 2021 was $ 45.9 million.

As of June 30, 2021, the Company was in compliance with all financial covenants under the 2020 CTBC Term Loan Facility.

2021 CTBC Credit Lines

On July 20, 2021 (the “Effective Date”), the Company entered into a general agreement for omnibus credit lines with CTBC Bank, which replaced the CTBC Credit Facility and 2020 CTBC Term Loan Facility (the “Prior CTBC Credit Lines”) in their entirety and permit borrowings, from time to time, of (i) a term loan facility of up to NTD 1,550.0 million ($ 55.4 million in U.S.

dollar equivalents) and (ii) a line of credit facility of up to US$ 105.0 million (the “2021 CTBC Credit Lines”).

Term loans made pursuant to the 2021 CTBC Credit Lines are secured by certain of the Company’s assets, including certain property, land, plant, and equipment.

As of June 30, 2021, the net book value of land and building located in Bade, Taiwan, collateralizing the New CTBC Credit Facility term loan was $ 70.7 million.

The Company is subject to various financial covenants under the 2021 CTBC Credit Lines, including current ratio, debt service coverage ratio, and financial debt ratio requirements.

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

2022 E.SUN Bank Credit Facility

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

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

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

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

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

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

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

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

A Notification and Confirmation of Credit Conditions agreement under the E.SUN Credit Facility was entered into on December 2, 2020 for a $ 30.0 million import loan (the “Import Loan”) with a tenor of 120 days.

In June 2021, the Import Loan was amended to, among other items, bearing interest at a rate based on the higher of LIBOR plus 1.00 % then divided by 0.946 or TAIFX plus 0.80 % then divided by 0.946 .

As of June 30, 2021, the amounts outstanding under the E.SUN Credit Facility was $ 20.4 million and the interest rates for these loans ranged from approximately 1.0 % to 1.29 % per annum.

As of June 30, 2021, the amount available for future borrowing under the E.SUN Credit Facility was $ 9.6 million .

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

On August 9, 2022 (the “New 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 2021 E.SUN Bank Credit Facility (the “New E.SUN Bank Credit Facility”).

The New E.SUN Bank Credit Facility permits borrowings of up to (i) NTD 1.8 billion ($ 61.0 million U.S.

dollar equivalent) and (ii) US$ 30.0 million.

Other terms of the New E.SUN Bank Credit Facility are substantially identical to the Prior E.SUN Bank Credit Facility.

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

The New 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.

The Company is not a guarantor of the New E.SUN Bank Credit Facility.

Terms for specific drawdown instruments issued under the New 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.

Under a Notification and Confirmation entered into on the New E.SUN Bank Effective Date, the Subsidiary and E.SUN Bank have agreed to both a medium term credit loan of NTD 680.0 million ($ 23.0 million U.S.

dollar equivalent) with a tenor of 5 years (the “Medium Term Loan”) and a drawdown of US $ 30.0 million under the E.SUN Bank Credit Facility for an import loan with a tenor of 120 days (the “Import O/A Loan”).

With respect to the Medium Term Loan, the period of use is between April 28, 2022 and April 28, 2023.

The interest rate thereunder is based upon a floating annual rate plus a fixed margin, subject to adjustment under certain circumstances.

Interest payments are due on a monthly basis.

Principal is amortized evenly on a monthly basis, with principal payments subject to a one year grace period prior to the commencement of repayment.

The Medium Term Loan will be used by the Taiwan subsidiary to support its manufacturing activities (such as purchase of materials and components) (“Use of Proceeds”).

Drawdowns may be in amounts of up to 80 % of permitted Use of Proceeds expenses.

The Subsidiary is subject to various financial covenants in connection with the Medium Term Loan, including a current ratio, net debt to equity ratio, and interest coverage ratio.

The current Medium Term Loan and the prior medium term loan under the Prior E.SUN Bank Credit Facility shall not exceed in aggregate NTD 1.8 billion.

With respect to the Import O/A Loan, the period of use is between April 28, 2022 and April 28, 2023.

The interest rate thereunder is based on TAIFX3 plus a fixed margin, subject to negotiation on a monthly basis and adjustment under certain circumstances.

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

Neither the Medium Term Loan nor Import O/A loan are secured.

Mega Bank Credit Facilities

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.

dollar equivalent) credit facility (the “Mega Bank Credit Facility”) with Mega International Commercial Bank (“Mega Bank”).

The Mega Bank Credit Facility will be used to support manufacturing activities (such as purchase of materials and components), and to provide medium-term working capital (the “Permitted Uses”).

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.

The interest rate depends upon the amount borrowed under Mega Bank Credit Facility, and as of the Mega Bank Effective Date, ranged from 0.645 % to 0.845 % per annum.

The interest rate is subject to adjustment in certain circumstances, such as events of default.

Interest is payable monthly.

Principal payments for amounts borrowed commence on the 15th day of the month following two years after the first drawdown and are repaid in monthly installments over a period of three years thereafter.

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 June 30, 2022, the total outstanding borrowings under the Mega Bank Credit Facility were denominated in NTD and remeasured into U.S.

dollars of $ 40.4 million and the interest rates ranged from 1.02 % to 1.22 % per annum.

SMCI | 2022 Form 10-K | 79

SUPER MICRO COMPUTER, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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.

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 an 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 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 % then 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 a bill of exchange, the Company would be required to pay a 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.

As of June 30, 2022 the amount outstanding under the Credit Authorization Agreement was $ 3.5 million.

The interest rate for the fiscal year ended June 30, 2022, was 1.85 % per annum.

As of June 30, 2022, the amount available for future borrowing under the Credit Limit was $ 16.5 million.

Chang Hwa Bank

Chang Hwa Bank Credit Facility

On October 5, 2021 (the “Chang Hwa Bank Effective Date”), the Company through its Taiwan subsidiary entered into a credit facility (the “Chang Hwa Bank Credit Facility”) with Chang Hwa Commercial Bank, Ltd.

(“Chang Hwa Bank”).

The Chang Hwa Bank Credit Facility permits borrowings of up to NTD 1,000.0 million ($ 36.0 million U.S.

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 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.

On May 13, 2022, Chang Hwa Bank notified that they increased the borrowing capacity limit by $ 20.0 million.

As of June 30, 2022, the total outstanding borrowings under the Chang Hwa Bank Credit Facility were denominated in NTD and remeasured into U.S.

dollars of $ 33.6 million and the interest rate was 1.175 % 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.

On the Chang Hwa Bank Effective Date, three Loan Contracts were entered into.

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

The Company is not a guarantor under Chang Hwa Bank Credit Facility.

SMCI | 2022 Form 10-K | 80

SUPER MICRO COMPUTER, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 a 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 the Company’s 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 (each, a “Facility Letter”) negotiated with HSBC Bank.

Under a Facility Letter entered into on the HSBC Bank Effective Date, the Company’s Taiwan subsidiary and HSBC Bank 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 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.

As of June 30, 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 ranged from 1.95 % to 2.20 % per annum as of June 30, 2022.

As of June 30, 2022, there was no amount available for future borrowing under the 2022 HSBC Bank Credit Facility.

Cathay Bank Line of Credit

On May 19, 2022 (the “Cathay Bank Effective Date”), the Company entered into a Loan Agreement (the “Cathay Bank Loan Agreement”) with Cathay Bank (“Cathay Bank”) pursuant to which Cathay Bank has agreed to provide a revolving line of credit of up to $ 132 million (the “Commitment”) for the five-year period following the Cathay Bank Effective Date.

On the fifth anniversary of the Cathay Bank Effective Date, the total outstanding borrowings under the Cathay Bank Loan Agreement will automatically be converted into a five-year term loan.

The interest rate under the Cathay Bank Loan Agreement is based upon either the SOFR index or prime rate index, at the Company’s quarterly election, plus a tiered spread that is based upon the average amounts deposited by the Company at Cathay Bank as a percentage of the Commitment.

The spread is either 1.65 % or 2.0 % if the index is SOFR index, or 1.25 % or 1.00 % if the spread is the prime rate index with the higher spread applying in each case if an amount less than 25% of the Commitment is on deposit with Cathay Bank.

Interest is payable monthly during the five-year period following the Cathay Bank Effective Date.

After conversion to a term loan on the fifth anniversary of the Cathay Bank Effective Rate, interest is payable monthly based on a 20 -year amortization schedule with the unpaid balance due at maturity.

The Cathay Bank Loan Agreement has customary default provisions and is cross defaulted with other indebtedness to the extent such default causes a material adverse effect with respect to the Commitment.

The Company is required to comply with certain covenants, including maintaining a fixed charge coverage ratio of at least 1.15 :1.00.

The Company is required to pay Cathay Bank an unused facility fee in the amount of 0.15 % per annum of the undrawn Commitment payable quarterly in arrears.

Borrowings under the Loan Agreement are secured against certain of the Company’s properties located in San Jose, California (the “Collateral”).

The Company has agreed to indemnify the Bank with respect to certain environmental matters with respect to the Collateral.

The Collateral is subject to re-appraisal every two years at the election of the Bank, and the Bank reserves the right to reduce the Commitment in accordance with such appraised values.

As of June 30, 2022, the outstanding borrowings under the Cathay Bank line of credit were $ 30.0 million.

SMCI | 2022 Form 10-K | 81

SUPER MICRO COMPUTER, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

Principal Payments

4 unchanged sentences

Other long-term liabilities as of June 30, 2022 and 2021 consisted of the following (in thousands):

Accrued unrecognized tax benefits including related interest and penalties $ 17,841 $ 15,496

Accrued unrecognized tax benefits including related interest and penalties, non-current $ 18,866 $ 17,841

Operating lease liability, non-current 16,661 14,539

Accrued warranty costs, non-current 3,064 2,678

Others 6,074 6,002

Other 549 6,074

Total other long-term liabilities $ 39,140 $ 41,132

8 unchanged sentences

Non-lease variable payments expensed in the years ended June 30, 2022, 2021 and 2020 were $ 1.1 million, $ 1.8 million and $ 1.3 million, respectively.

As of June 30, 2021, the weighted average remaining lease term for operating leases was 3.8 years and the weighted average discount rate was 3.4 %.

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

SMCI | 2022 Form 10-K | 82

SUPER MICRO COMPUTER, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

As of June 30, 2022, the weighted average remaining lease term for operating leases was 3.8 years and the weighted average discount rate was 3.0 %.

Maturities of operating lease liabilities under noncancelable operating lease arrangements as of June 30, 2022, were as follows (in thousands):

Maturities of operating leases

5 unchanged sentences

The Company has entered into lease agreements with related parties.

See Note 13, "Related Party Transactions" for a further discussion.

See Part II, Item 8, Note 12, "Related Party Transactions" for a further discussion.

Related Party Transactions

16 unchanged sentences

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

SMCI | 2022 Form 10-K | 83

SUPER MICRO COMPUTER, INC.

NOTES TO 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.

3 unchanged sentences

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

SUPER MICRO COMPUTER, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 $ 40.2 million and $ 23.2 million at June 30, 2021 and 2020, respectively, representing the maximum exposure to financial loss.

Outstanding cancellable and non-cancellable purchase orders from the Company to Ablecom on June 30, 2022 were $ 39.5 million and $ 36.0 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.

12 unchanged sentences

The Company sells to Compuware most of the components needed to manufacture the above products.

Compuware uses the components to manufacture the products and then sells the products back to the Company at a purchase price equal to the price at which the Company sold the components to Compuware, plus a “manufacturing value added” fee and other miscellaneous material charges and costs.

The Company and Compuware frequently review and negotiate the amount of the “manufacturing value added” fee that will be included in the price of the products the Company purchases from Compuware.

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

SMCI | 2022 Form 10-K | 84

SUPER MICRO COMPUTER, INC.

NOTES TO 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 $ 71.0 million and $ 45.7 million at June 30, 2021 and 2020, respectively, representing the maximum exposure to financial loss.

Outstanding cancellable and non-cancellable purchase orders from the Company to Compuware on June 30, 2022 were $ 213.3 million and $ 44.3 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.

The Company’s results from transactions with Ablecom and Compuware for each of the fiscal years ended June 30, 2021, 2020 and 2019 are as follows (in thousands):

Dealings with Investment in a Corporate Venture

In October 2016, the Company entered into agreements pursuant to which the Company contributed certain technology rights in connection with an investment in a privately held company located in China to expand the Company's presence in China.

The Corporate Venture is 30 % owned by the Company and 70 % owned by another company in China.

The transaction was closed in the third fiscal quarter of 2017 and the investment is accounted for using the equity method.

As such, the Corporate Venture is also a related party.

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

As of June 30, 2022 and 2021, the Company had unamortized deferred gain balance of $ 0.0 million and $ 1.0 million, respectively, in accrued liabilities and none in other long-term liabilities in the Company’s consolidated balance sheets.

In June 2020, the third-party parent company that controls the Corporate Venture was placed on a U.S.

government export control list, along with several of such third-party parent's related entities and a separate listing for one of its subsidiaries.

The Corporate Venture is not itself a restricted party.

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 June 30, 2022.

No impairment charge was recorded for the fiscal years ended June 30, 2022 and 2021.

The Company sold products worth $ 121.0 million, $ 51.2 million, $ 61.9 million to the Corporate Venture in the fiscal years 2022, 2021 and 2020, respectively, and the Company's share of intra-entity profits on the products that remained unsold by the Corporate Venture as of June 30, 2022 and June 30, 2021 have been eliminated and have reduced the carrying value of the Company's investment in the Corporate Venture.

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

The Company had $ 8.0 million and $ 8.5 million due from the Corporate Venture in accounts receivable, net as of June 30, 2022 and 2021, respectively.

Dealings with Monolithic Power Systems, Inc.

The Company procures certain semiconductor products from Monolithic Power Systems, Inc.

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

A member of the Board of Directors, who served during fiscal year 2022 until May 18, 2022, also serves as an officer of MPS.

SMCI | 2022 Form 10-K | 85

SUPER MICRO COMPUTER, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Years Ended June 30,

The Company had the following balances related to transactions with its related parties as of the fiscal years ended June 30, 2022, 2021 and 2020 (in thousands):

Ablecom Compuware Corporate Venture MPS Total

Years Ended June 30, Years Ended June 30, Years Ended June 30, Years Ended June 30, Years Ended June 30,

2022 2021 2020 2022 2021 2020 2022 2021 2020 2022 2021 2020 2022 2021 2020

Purchases (1)

Accounts receivable $ 2 $ 2 $ ( 27 ) $ 404 $ 198 $ 938 $ 7,992 $ 8,478 $ 7,801 $ — $ — $ — $ 8,398 $ 8,678 $ 8,712

Other receivable (1) $ 4,816 $ 5,575 $ 6,406 $ 19,596 $ 18,173 $ 13,385 $ — $ — $ — $ — $ 89 $ — $ 24,412 $ 23,837 $ 19,791

Accounts payable $ 42,463 $ 38,152 $ 36,955 $ 44,892 $ 31,944 $ 35,413 $ — $ — $ — $ — $ — $ — $ 87,355 $ 70,096 $ 72,368

Accrued liabilities (2) $ 3,531 $ 3,042 $ 3,101 $ 15,145 $ 14,486 $ 11,105 $ — $ 1,000 $ 2,000 $ — $ — $ — $ 18,676 $ 18,528 $ 16,206

(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 fiscal years ended June 30, 2022, 2021 and 2020, are as follows (in thousands):

Ablecom Compuware Corporate Venture MPS Total

Years Ended June 30, Years Ended June 30, Years Ended June 30, Years Ended June 30, Years Ended June 30,

2022 2021 2020 2022 2021 2020 2022 2021 2020 2022 2021 2020 2022 2021 2020

Net sales $ 15 $ ( 23 ) $ ( 7 ) $ 26,085 $ 27,865 $ 23,867 $ 120,991 $ 51,176 $ 61,899 $ — $ — $ — $ 147,091 $ 79,018 $ 85,759

Purchases (1)

115,213 131,763 139,579

__________________________

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

The Company's net sales to Ablecom were not material for the fiscal years ended June 30, 2021, 2020 and 2019.

The Company had the following balances related to transactions with Ablecom and Compuware as of June 30, 2021 and 2020 (in thousands):

Accounts receivable and other receivables (1)

$ 5,577 $ 6,379

Accounts payable and accrued liabilities (2)

41,194 40,056

Other long-term liabilities (3)

Accounts receivable and other receivables (1)

18,371 14,323

Accounts payable and accrued liabilities (2)

46,430 46,518

Other long-term liabilities (3)

Purchases - inventory $ 192,441 $ 122,243 $ 152,464 $ 170,300 $ 113,400 $ 130,592 $ — $ — $ — $ 8,335 $ 3,915 $ 5,215 $ 371,076 $ 239,558 $ 288,271

Purchases - other miscellaneous items $ 8,265 $ 8,609 $ 7,620 $ 1,455 $ 1,813 $ 1,171 $ — $ — $ — $ — $ — $ — $ 9,720 $ 10,422 $ 8,791

SMCI | 2022 Form 10-K | 86

SUPER MICRO COMPUTER, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company’s cash flow impact from transactions with its related parties for the fiscal years ended June 30, 2022, 2021 and 2020, are as follows (in thousands):

Ablecom Compuware Corporate Venture MPS Total

Years Ended June 30, Years Ended June 30, Years Ended June 30, Years Ended June 30, Years Ended June 30,

2022 2021 2020 2022 2021 2020 2022 2021 2020 2022 2021 2020 2022 2021 2020

(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.

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

The Company procures certain semiconductor products from Monolithic Power Systems, Inc.

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

Saria Tseng, who serves as a member on the Board of Directors, also serves as Vice President of Strategic Corporate Development, General Counsel and Secretary of MPS.

The Company purchased $ 3.9 million, $ 5.2 million and $ 3.7 million of semiconductor products from MPS for use in its manufacturing process during the years ended June 30, 2021, 2020 and 2019, respectively.

The amounts due to MPS as of June 30, 2021 and 2020 were not material.

See Note 8, "Investment in a Corporate Venture" for a discussion of the investment and the transactions and balances in the Company's Corporate Venture.

Changes in accounts receivable $ — $ ( 29 ) $ 42 $ ( 206 ) $ 740 $ ( 623 ) $ 486 $ ( 677 ) $ 5,308 $ — $ — $ — $ 280 $ 34 $ 4,727

Changes in other receivable $ 759 $ 832 $ 816 $ ( 1,423 ) $ ( 4,788 ) $ 695 $ — $ — $ — $ 89 $ ( 13 ) $ — $ ( 575 ) $ ( 3,969 ) $ 1,511

Changes in accounts payable $ 4,311 $ 1,198 $ 5,709 $ 12,948 $ ( 3,470 ) $ 6,850 $ — $ — $ — $ — $ — $ — $ 17,259 $ ( 2,272 ) $ 12,559

Changes in accrued liabilities $ 489 $ ( 59 ) $ 419 $ 659 $ 3,381 $ 5,251 $ ( 1,000 ) $ ( 1,000 ) $ — $ — $ — $ — $ 148 $ 2,322 $ 5,670

Changes in other long-term liabilities $ — $ ( 513 ) $ 513 $ 499 $ ( 186 ) $ 186 $ — $ ( 1,000 ) $ ( 2,000 ) $ — $ — $ — $ 499 $ ( 1,699 ) $ ( 1,301 )

Purchases of property, plant and equipment $ 4,678 $ 7,110 $ 4,384 $ 140 $ 237 $ 2 $ — $ — $ — $ — $ — $ — $ 4,818 $ 7,347 $ 4,386

Unpaid property, plant and equipment $ 583 $ 338 $ 2,158 $ 106 $ 62 $ 65 $ — $ — $ — $ — $ — $ — $ 689 $ 400 $ 2,223

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 789.0 million (or approximately US $ 28.3 million) from either available cash and/or borrowings under loan agreements to which the Subsidiary is a party 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 June 30, 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.

Stock-based Compensation and Stockholders’ Equity

Equity Incentive Plan

On June 5, 2020, the stockholders of the Company approved the 2020 Equity and Incentive Compensation Plan (the "2020 Plan").

The maximum number of shares available under the 2020 Plan is 5,000,000 plus 1,045,000 shares of common stock that remained available for future awards under the 2016 Equity Incentive Plan (the “2016 Plan”), at the time of adoption of the 2020 Plan.

No other awards can be granted under the 2016 Plan and 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.

On June 5, 2020, the stockholders of the Company approved the 2020 Equity and Incentive Compensation Plan (the "Original 2020 Plan").

The maximum number of shares available under the Original 2020 Plan was 5,000,000 plus 1,045,000 shares of common stock that remained available for future awards under the 2016 Equity Incentive Plan (the “2016 Plan”), at the time of adoption of the Original 2020 Plan.

No other awards can be granted under the 2016 Plan and 7,246,000 shares of common stock remain reserved for outstanding awards issued under the Original 2016 Plan at the time of adoption of the Original 2020 Plan.

On May 18, 2022, the stockholders of the Company approved an amendment and restatement of the Original 2020 Plan (as amended and restated, the “2020 Plan”) which, among other things, increased the number of shares available for award under the 2020 Plan by an additional 2,000,000 shares.

SMCI | 2022 Form 10-K | 87

SUPER MICRO COMPUTER, INC.

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Common Stock Repurchase and Retirement

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

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

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

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

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

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

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

As of March 31, 2021, 1,675,746 shares of common stock were repurchased and retired for an aggregate $ 50.0 million and the program ended.

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

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

The program was effective until July 31, 2022 or if earlier, until the maximum amount of common stock is repurchased (the "Prior Repurchase Program").

1,391,171 shares of common stock were repurchased and retired for an aggregate $ 50.0 million as of June 30, 2021.

The Company had $ 150.0 million of remaining availability under the Prior Repurchase Program as of June 30, 2022.

There were no shares repurchased under the Prior Repurchase Program during fiscal year 2022.

During the fiscal year ended June 30, 2021, the Company repurchased and retired 4,209,211 shares of common stock for an aggregated $ 130.0 million.

Additionally, the Company retired 1,333,125 shares of common stock repurchased in prior years.

On August 3, 2022, after the expiration of the Prior Repurchase Program, a duly authorized subcommittee of the Company's Board approved a new share repurchase program to repurchase shares of common stock for up to $ 200 million at prevailing prices in the open market.

The share repurchase program is effective until January 31, 2024 or until the maximum amount of common stock is repurchased, whichever occurs first.

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 fiscal years ended June 30, 2021, 2020 and 2019 was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:

SMCI | 2022 Form 10-K | 88

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The fair value of stock option grants for the fiscal years ended June 30, 2022, 2021 and 2020 was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:

Years Ended June 30,

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Stock-based compensation expense, net $ 20,596 $ 19,975 $ 13,375

As of June 30, 2021, $ 8.4 million of unrecognized compensation cost related to stock options is expected to be recognized over a weighted-average period of 4 years, $ 45.1 million of unrecognized compensation cost related to unvested RSUs is expected to be recognized over a weighted-average period of 2.73 years and $ 0.1 million of unrecognized compensation cost related to unvested PRSUs is expected to be recognized over a period of 0.36 year.

As of June 30, 2022, $ 12.5 million of unrecognized compensation cost related to stock options is expected to be recognized over a weighted-average period of 3.41 years and $ 56.5 million of unrecognized compensation cost related to unvested RSUs is expected to be recognized over a weighted-average period of 2.78 years.

Additionally, as described below, $ 5.6 million of unrecognized compensation cost related to the 2021 CEO Performance Stock Option is expected to be recognized over a period of 3.0 years.

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The 2021 CEO Performance Stock Option has five vesting tranches with a vesting schedule based entirely on the attainment of operational milestones (performance conditions) and market conditions, assuming (1) continued employment either as the CEO or in such capacity as agreed upon between the Company’s CEO and the Board and (2) service through each vesting date.

Each of the five vesting tranches of the 2021 CEO Performance Stock Option will vest upon certification by the Compensation Committee that both (i) the market price milestone for such tranche, which begins at $ 45.00 per share for the first tranche and increases up to $ 120.00 per share thereafter (based on a 60 calendar day average, counting only trading days), has been achieved, and (ii) any one of five operational milestones focused on total revenue, as reported under U.S.

Each of the five vesting tranches of the 2021 CEO Performance Stock Option will vest upon certification by the Compensation Committee that both (i) the market price milestone for such tranche, which begins at $ 45.00 per share for the first tranche and increases up to $ 120.00 per share thereafter (based on a 60 trading day average stock price), has been achieved, and (ii) any one of five operational milestones focused on total revenue, as reported under U.S.

GAAP, have been achieved for the previous four consecutive fiscal quarters.

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.

SMCI | 2022 Form 10-K | 89

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The achievement status of the operational and stock price milestones as of June 30, 2022, was as follows:

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(in billions)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

$ 4.0 Probable

$ 4.0 Achieved

$ 4.8 Achieved (2)

Not yet achieved

$ 5.8 Probable

Not yet achieved

$ 6.8 Probable

Not yet achieved

$ 8.0 Probable

Not yet achieved

(1) The Company’s Compensation Committee had certified achievement of the $ 4 billion annualized revenue milestone on March 26, 2022.

The $ 45 stock price milestone was achieved based upon the 60 -trading day average stock price from March 15, 2022 through June 8, 2022.

The achievement of such stock price milestone and the vesting of the first tranche of 200,000 option shares under the 2021 CEO Performance Stock Option, representing one-fifth of such award were certified by the Company's Compensation Committee subsequent to June 30, 2022.

(2) To be certified by the Company's Compensation Committee after Annual Report on Form 10-K for the year ended June 30, 2022, as filed with the SEC.

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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As of June 30, 2022, $ 5.6 million in unrecognized compensation cost related to the 2021 CEO Performance Stock Option is expected to be recognized over a period of 3.0 years.

SMCI | 2022 Form 10-K | 90

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table summarizes stock option activity during the fiscal years ended June 30, 2022, 2021 and 2020 under all plans:

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Granted 273,260 $ 19.61

Exercised ( 1,812,000 ) $ 15.74

Forfeited/Cancelled ( 456,127 ) $ 11.97

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Options vested and exercisable at June 30, 2022 2,497,977 $ 22.24 3.31 $ 45,232

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The total pretax intrinsic value of options exercised during the fiscal year ended June 30, 2021, 2020 and 2019 was $ 24.3 million, $ 19.3 million and $ 0 , respectively.

The total pretax intrinsic value of options exercised during the fiscal year ended June 30, 2022, 2021 and 2020 was $ 29.6 million, $ 24.3 million and $ 19.3 million, respectively.

Additional information regarding options outstanding as of June 30, 2022, is as follows:

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4,311,416 5.60 $ 29.99 2,497,977 $ 22.24

SMCI | 2022 Form 10-K | 91

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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.

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

50 % of the PRSUs vested at June 30, 2018 when performance conditions were achieved, while the remainder vest in equal amounts over the following ten quarters subject to the continued employment of the CEO.

As of June 30, 2021, the remaining 50 % of the PRSUs had vested in accordance with the terms of the grant.

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

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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 vested on November 10, 2021.

The following table summarizes RSUs and PRSUs activity during the fiscal years ended June 30, 2022, and 2021 under all plans:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Time-based RSUs Outstanding Weighted

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Balance as of June 30, 2022 1,879,073 $ 33.72 — $ —

_________________

(1) The number of shares released excludes 172,857 RSUs that were vested but not released in fiscal year 2019.

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The number of shares released also excludes 24,000 PRSUs that were vested but not released in fiscal year 2019.

These vested RSUs and PRSUs were primarily released in fiscal year 2020 and included in fiscal year 2020 number upon the effectiveness of the Company's registration statement on Form S-8.

These vested RSUs and PRSUs were primarily released in fiscal year 2020 and included in fiscal year 2020 upon the effectiveness of the Company's registration statement on Form S-8.

The total pretax intrinsic value of RSUs and PRSUs vested was $ 33.1 million, $ 32.6 million and $ 18.9 million for the fiscal years ended June 30, 2022, 2021 and 2020, respectively.

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Total payments for the employees' tax obligations to tax authorities were $ 10.1 million, $ 8.7 million and $ 8.2 million for the fiscal years ended June 30, 2022, 2021 and 2020, respectively, and are reflected as a financing activity within the consolidated statements of cash flows.

Pursuant to the terms of the 2020 and 2016 Plan, shares withheld in connection with net-share settlements are returned to the 2016 Plan and are available for future grants under the 2020 and 2016 Plan.

Pursuant to the terms of the 2020 and 2016 Plan, shares withheld in connection with net-share settlements are returned to the 2020 and 2016 Plan, respectively, and are available for future grants under the 2020 Plan.

SMCI | 2022 Form 10-K | 92

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The components of income before income tax provision for the fiscal years ended June 30, 2022, 2021 and 2020 are as follows (in thousands):

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The income tax provision for the fiscal years ended June 30, 2022, 2021 and 2020, consists of the following (in thousands):

SUPER MICRO COMPUTER, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Years Ended June 30,

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Income tax provision $ 52,876 $ 6,936 $ 2,922

SMCI | 2022 Form 10-K | 93

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company’s net deferred tax assets as of June 30, 2022 and 2021 consist of the following (in thousands):

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As of June 30, 2022, the Company believes that most of its deferred tax assets are “more-likely-than not” to be realized with the exception of state research and development tax credits that have not met the “more-likely than not” realization threshold criteria.

As a result, at June 30, 2021, the gross excess credits of $ 37.1 million, or net of federal tax benefit of $ 29.3 million, are sub ject to a full valuation allowance.

At June 30, 2020, the gross excess credits of $ 30.8 million , or net of federal tax benefit of $ 24.3 million , are subject to a full valuation allowance.

As a result, at June 30, 2022, the gross excess credits of $ 42.0 million, or net of federal tax benefit of $ 33.2 million, were sub ject to a full valuation allowance.

At June 30, 2021, the gross excess credits of $ 37.1 million , or net of federal tax benefit of $ 29.3 million , were subject to a full valuation allowance.

The change in valuation allowance is $ 3.8 million and $ 5.0 million for the fiscal years ended June 30, 2022 and 2021, respectively.

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The net deferred tax assets balance as of June 30, 2022 and 2021 was $ 69.9 million and $ 63.3 million, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The 2017 Tax Reform Act also creates a new requirement that Global Intangible Low-Taxed Income (“GILTI”) earned by controlled foreign corporations (“CFCs”) that must be included currently in the gross income of a CFC’s U.S.

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

The Company previously asserted that all of its foreign undistributed earnings were indefinitely reinvested.

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

The Company may repatriate foreign earnings from Netherlands which are previously taxed income as a result of the 2017 Tax Reform Act.

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 foreign earnings from the Netherlands that have been previously taxed in the U.S.

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

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As a part of this restructuring, the Company moved certain intellectual property back to the United States.

As a result of this restructuring, the Company estimated approximately $ 3.0 million and $ 1.9 million additional tax benefit from foreign derived intangible income in fiscal years 2021 and 2020 as compared to fiscal year 2019.

As a result of this restructuring, the Company realized $ 4.6 million and $ 3.0 million additional tax benefit from foreign derived intangible income in fiscal years 2022 and 2021 respectively, as compared to fiscal year 2020.

SMCI | 2022 Form 10-K | 94

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

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The state research and development tax credits will carryforward indefinitely to offset future state income taxes.

The following table summarizes the activity related to the unrecognized tax benefits (in thousands):

SMCI | 2022 Form 10-K | 95

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table summarizes the activity related to the unrecognized tax benefits (in thousands):

Balance at June 30, 2019 $ 28,048

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Gross decreases:

Decreases due to settlements with taxing authority ( 7,632 )

Decreases due to lapse of statute of limitations ( 1,243 )

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For current year’s tax positions 2,392

For prior years’ tax positions 1,439

Gross decreases:

Decreases due to settlements with taxing authority ( 4,090 )

Decreases due to lapse of statute of limitations ( 1,036 )

Balance at June 30, 2022 $ 38,001

________________________

*excludes interest, penalties, federal benefit of state reserves

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Accordingly, the Company’s provision on federal, state and foreign tax related matters to be recorded in the future may change as revised estimates are made or as the underlying matters are settled or otherwise resolved.

SMCI | 2022 Form 10-K | 96

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The federal statute of limitations remains open in general for tax years ended June 30, 2019 through 2022.

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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 2022.

It is reasonably possible that our gross unrecognized tax benefits will decrease by approximately $ 1.0 million, in the next 12

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

months, due to the lapse of the statute of limitations.

It is reasonably possible that our gross unrecognized tax benefits will decrease by approximately $ 1.4 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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District Court for the Northern District of California (Hessefort v.

Super Micro Computer, Inc., et al.

Super Micro Computer, Inc., et al., No.

18-cv-00838 and United Union of Roofers v.

Super Micro Computer, Inc., et al.

Super Micro Computer, Inc., et al., No.

18-cv-00850).

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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 20, 2022.

The Company intends to defend the lawsuit vigorously.

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

On April 8, 2022, the parties entered into a stipulation of settlement, pursuant to which 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.

On May 25, 2022, the Court vacated the hearing on preliminary approval of the proposed settlement scheduled for June 2, 2022, stating that the unopposed motion was suitable for disposition without oral argument.

Consequently, the parties expect the Court will grant preliminary approval and calendar a future hearing for final approval.

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

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.

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

The plaintiff seeks unspecified compensatory damages and other equitable relief.

Defendants filed demurrers, which were set for hearing on August 4, 2021, but which were continued to September 15, 2021.

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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 November 24, 2021.

The case is otherwise currently stayed.

The Company intends to defend the lawsuit vigorously.

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.

On May 13, 2022, plaintiff’s counsel reported to the Court that plaintiff would not file an amended complaint and the May 20 deadline lapsed without further amendment.

On June 8, 2022, the court entered judgment in defendants’ favor and with prejudice against plaintiff.

This matter has now been dismissed.

SMCI | 2022 Form 10-K | 97

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NOTES TO 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.

District Court for the Northern District of California, captioned Stein v.

Liang, et al.

Liang, et al., Case No.

3:21-cv-03357-KAW (the “Stein Derivative Action”).

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The plaintiff seeks unspecified compensatory damages and other equitable relief.

Defendants filed motions to dismiss the complaint on August 6, 2021, and the Court has calendared the hearing for November 4, 2021.

The Company intends to defend the lawsuit vigorously.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Defendants filed motions to dismiss the complaint on August 6, 2021.

Rather than oppose defendants’ motions, plaintiff informed defendants that plaintiff was prepared to dismiss his action with prejudice.

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 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.

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.

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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 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

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As of June 30, 2022, these remaining noncancelable commitments were $ 562.9 million, including $ 80.2 million for related parties.

Standby Letter of Credit - In October 2019, Bank of America increased the value of a previously issued standby letter of credit to a beneficiary from $ 3.2 million to $ 6.4 million to facilitate ongoing operations of the Company.

The standby letter of credit is cancellable upon written notice from the issuer.

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

In May 2021, the standby letter of credit was cancelled.

Lease Commitments - See Note 12, "Leases," for a discussion of the Company's operating lease and financing lease commitments.

SMCI | 2022 Form 10-K | 98

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Lease Commitments - See Part II, Item 8, Note 11, "Leases," for a discussion of the Company's operating lease and financing lease commitments.

Retirement Plans

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Similar to contributions into a 401(k) plan, the Company's obligation is limited to the contributions made to the contribution plan.

Investment risk and investment rewards are

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

assumed by the employees and not by the Company.

Investment risk and investment rewards are assumed by the employees and not by the Company.

For the fiscal years ended June 30, 2022, 2021 and 2020, the Company’s matching contribution was $ 0.8 million, $ 0.7 million, and $ 0.6 million, respectively.

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As such, the Company does not have any right to intervene in the investments of the Fund.

For the fiscal year ended June 30, 2021, the Company recorded a pension expense of $ 1.0 million.

For the fiscal years ended June 30, 2020 and 2019, the Company’s pension expense was immaterial.

For the fiscal years ended June 30, 2022 and 2021, the Company recorded a pension expense of $ 0.4 million and $ 1.0 million, respectively.

For the fiscal year ended June 30, 2020, the Company’s pension expense was immaterial .

Segment Reporting

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The Company’s revenue is presented on a disaggregated basis in Note 3, “Revenue” by type of product and by geographical market.

SMCI | 2022 Form 10-K | 99

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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-K

Item 8. Financial Statements and Supplementary Data