Super Micro Computer (SMCI) 10-K risk factor changes: FY2021 vs FY2020

[removed: Risks Related to Our Business] [added: Strategic] and [removed: Industry][added: Industry Risks]

[removed: The] [added: - The] effects of the COVID-19 pandemic [removed: has, and will continue to an increasing degree,] adversely [removed: affect] [added: affected] our business operations, financial condition and results of operations, [removed: the severity of which remains uncertain.][added: and there are no assurances adverse effects will not continue.]

The novel strain of the coronavirus identified in Wuhan, China in late 2019 (COVID-19) [removed: has] spread throughout the world and [removed: has] resulted in authorities imposing, and businesses and individuals implementing, numerous unprecedented measures to try to contain the virus, including travel bans and restrictions, quarantines, shelter-in-place/stay-at-home and social distancing orders, and shutdowns.

These measures [removed: have] impacted and may [removed: further] [added: continue to] impact our [removed: workforce and] [added: business] operations, the operations of our customers, and those of our respective vendors, suppliers, and partners.

[removed: We continue] [added: During the pandemic, we continued] our manufacturing operations and customers’ orders processing and [removed: services at each location,] [added: services,] although our productivity at times slowed especially in the United States and in the Netherlands.

[removed: Travel restrictions and logistics challenges have] [added: The pandemic also] impacted [removed: our supply chain,] shipments to our [removed: customers,] [added: customers] and [added: (to a lesser extent)] our ability to provide services and support to our customers.

The extent to which the effects of the COVID-19 pandemic will continue to impact our business, operations, financial condition and results of operations [removed: is uncertain, rapidly changing and hard to predict, and] will depend on numerous evolving factors that we may not be able to control or predict, including:

[removed: | • |] [added: -] the duration and scope of the COVID-19 pandemic; [removed: |]

[removed: | • |] [added: -] the extent and effectiveness of responsive actions by authorities and the impact of these and other factors on our employees, customers and vendors; [removed: |]

[removed: | • |] [added: -] difficulty in adding new customers due to inability to gain direct access; [removed: |]

[removed: | • |] [added: -] the rate of spending on server and storage solutions, including delays in prospective customers’ purchasing decisions and delays in the provisioning of our products; [removed: |]

[removed: | • |] [added: -] the rate at which our suppliers develop and release new components such as microprocessors and memory; [removed: |]

[removed: | • |] [added: -] the rate at which our customers can perform acceptance testing or qualify our products, particularly if they contain new technologies; [removed: |]

[removed: | • |] [added: -] the length of heightened unemployment and economic recession pressures; [removed: |]

[removed: | • |] [added: -] the health impact of the pandemic on our employees, including key personnel; [removed: |]

[removed: | • |] [added: -] the impact on the liquidity of our sales partners and end customers, including lengthening of customers payment terms and potential bankruptcies; [removed: |]

[removed: | • |] [added: -] our continued ability to execute on business continuity plans for the maintenance of our critical business processes and managing our liquidity and access to credit facilities on terms acceptable to us; [removed: |]

[removed: | • |] [added: -] availability of and fluctuations in the cost of materials, logistics and labor; and [removed: |]

[removed: | • |] [added: -] erosion of economic activity by small and medium size business or sectors to which we are exposed through OEMs and indirect sales channels. [removed: |]

[removed: | • |] [added: -] Fluctuations in demand for our products, in part due to changes in the global economic environment; [removed: |]

[removed: | • |] [added: -] Fluctuations based upon seasonality, with the quarters ending March 31 and September 30 typically being weaker; [removed: |]

[removed: | • |] [added: -] The occurrence of global pandemics, including COVID-19, and other events that impact the global economy or one or more sectors of the global economy; [removed: |]

[removed: | • |] [added: -] Fluctuations in the timing and size of large customer orders, including with respect to changes in sales and implementation cycles of our products into our customers’ spending plans and associated revenue; [removed: |]

[removed: | • |] [added: -] Variability of our margins based on the mix of server and storage systems, subsystems and accessories we sell and the percentage of our sales to internet data center, cloud computing customers or certain geographical regions; [removed: |]

[removed: | • |] [added: -] Fluctuations in availability and costs associated with key components, particularly [added: semiconductors,] memory, storage solutions, and other materials needed to satisfy customer [removed: requirements; |][added: requirements, especially during a period of global market disruption, and, in particular, the impact of the extended duration of the COVID-19 pandemic on our supply chain and the supply chain of our suppliers;]

[removed: | • |] [added: -] The timing of the introduction of new products by leading microprocessor vendors and other suppliers; [removed: |]

[removed: | • |] [added: -] The introduction and market acceptance of new technologies and products, and our success in new and evolving markets, and incorporating emerging technologies in our products, as well as the adoption of new standards; [removed: |]

[removed: | • |] [added: -] Changes in our product pricing policies, including those made in response to new product announcements; [removed: |]

[removed: | • |] [added: -] Mix of whether customer purchases are of partially or fully integrated systems or subsystems and accessories and whether made directly or through our indirect sales channel partners; [removed: |]

[removed: | • |] [added: -] The effect of mergers and acquisitions among our competitors, suppliers, customers, or partners; [removed: |]

[removed: | • |] [added: -] General economic conditions in our geographic markets; [removed: |]

[removed: | • |] [added: -] Geopolitical tensions, including trade wars, tariffs and/or sanctions in our geographic markets; [removed: |]

[removed: | • |] [added: -] Impact of regulatory changes on our cost of doing business; and [removed: |]

[removed: | • |] [added: -] Costs associated with remediation [removed: of our material weaknesses] and [removed: preparation] [added: legal proceedings related to restatement] of our [removed: restated] financial [removed: statements, as well as related legal proceedings. |][added: statements in prior years.]

No single customer accounted for 10% or more of net sales in fiscal years [removed: 2020, 2019] [added: 2021, 2020] or [removed: 2018.][added: 2019.]

If customers buy our products in greater volumes and their business becomes a larger percentage of our net sales, we may grow increasingly dependent on those [added: customers to maintain our growth.]

If our largest customers do not purchase our products, or we are unable to supply such customers with products, at the levels, in the timeframes or within the geographies that we expect, including as a result of the impact of COVID-19 on their [added: or our] businesses, our ability to maintain or grow our net sales will be adversely affected.

[removed: We] [added: Before the COVID-19 pandemic, we] provided forward looking financial guidance when we announced our financial results for the prior quarter.

[removed: New developments related to the COVID-19 pandemic or other events] [added: No assurances can be given] that [removed: impact global economies may] [added: we will] continue to [removed: contribute to decisions to not] provide forward looking financial guidance, and if we do issue forward looking guidance, the uncertainties related to these items could cause us to revise such guidance.

Such prices are subject to decline if customers do not continue to purchase our latest generation products or additional [removed: components or as a result of factors related to the COVID-19 pandemic,] [added: components,] which could harm our results of [removed: operations.][added: operations.]

*The risks and uncertainties described below are not the only ones facing us.

Other events that we do not currently anticipate or that we currently deem immaterial also may affect our business, financial condition, results of operations, cash flows, other key metrics and the trading price of our common stock.*

Risk Factor Summary

Operational and Execution Risks

- Our quarterly operating results have fluctuated and will likely fluctuate in the future.

- Our revenue and margins for a particular period are difficult to predict, and a shortfall in revenue or decline in margins may harm our operating results.

- As we increasingly target larger customers and larger sales opportunities, our customer base may become more concentrated, our cost of sales may increase, our margins may be lower and our sales may be less predictable.

- If we fail to meet any publicly announced financial guidance or other expectations about our business, it could cause our stock to decline in value.

- Increases in average selling prices for our server solutions have historically significantly contributed to increases in net sales in some of the periods covered by this Annual Report.

- Our cost structure and ability to deliver server solutions to customers in a timely manner may be adversely affected by volatility of the market for core components and certain materials for our products.

- We may lose sales or incur unexpected expenses relating to insufficient, excess or obsolete inventory.

- Difficulties we encounter relating to automating internal controls utilizing our ERP systems or integrating processes that occur in other IT applications could adversely impact our controls environment.

- System security violations, data protection breaches, cyber-attacks and other related cyber-security issues could disrupt our internal operations or compromise the security of our products, and any such disruption could reduce our expected revenues, increase our expenses, damage our reputation and adversely affect our stock price.

- Any failure to adequately expand or retain our sales force will impede our growth.

- Conflicts of interest may arise between us and Ablecom and Compuware, and those conflicts may adversely affect our operations.

- Our reliance on Ablecom could be subject to risks associated with our reliance on a limited source of contract manufacturing services and inventory warehousing.

- If negative publicity arises with respect to us, our employees, our third-party service providers or our partners, our business and operating results could be adversely affected, regardless of whether the negative publicity is true.

- If we lose Charles Liang, our President, Chief Executive Officer and Chairman, or any other key employee, we may not be able to implement our business strategy in a timely manner.

- Our direct sales efforts may create confusion for our end customers and harm our relationships in our indirect sales channel and with our OEMs.

- If we do not successfully manage the expansion of our international manufacturing capacity and business operations, our business could be harmed.

- We may not be able to successfully manage our business for growth and expansion.

- We depend upon the development of new products and enhancements to our existing products, and if we fail to predict or respond to emerging technological trends and our customers’ changing needs, our operating results and market share may suffer.

- The market in which we participate is highly competitive.

- Industry consolidation may lead to increased competition and may harm our operating results.

- We must work closely with our suppliers to make timely new product introductions.

- Our suppliers’ failure to improve the functionality and performance of materials and key components for our products may impair or delay our ability to deliver innovative products to our customers.

- Our failure to deliver high quality server and storage solutions could damage our reputation and diminish demand for our products.

- Our growth into markets outside the United States exposes us to risks inherent in international business operations.

- Our results of operations may be subject to fluctuations based upon our investment in corporate ventures.

Legal and Regulatory Risks

- Our operations could involve the use of regulated materials, and we must comply with environmental, health and safety laws and regulations, which can be expensive.

- If we are unable to maintain and further develop effective internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock may decrease.

- The matters leading to the delay in the filing of our 2017 10-K and adverse publicity and potential concerns from our customers have had and could continue to have an adverse effect on our business and financial condition.

- Failure to comply with the U.S. Foreign Corrupt Practices Act, other applicable anti-corruption and anti-bribery laws, and applicable trade control laws could subject us to penalties and other adverse consequences.

- Any failure to protect our intellectual property could impair our brand and our competitiveness.

- Resolution of claims that we have violated or may violate the intellectual property rights of others could require us to indemnify others, or pay significant royalties to third parties.

- Provisions of our governance documents and Delaware law might discourage, delay or prevent a change of control of our company or changes in our management.

Financial Risks

- Our research and development expenditures, as a percentage of our net sales, are considerably higher than many of our competitors.

- Our future effective income tax rates could be affected by changes in the relative mix of our operations and income among different geographic regions and by changes in domestic and foreign income tax laws.

We have taken steps to protect our employees, including temporarily closing our offices in the United States, the Netherlands and to a lesser extent in Taiwan.

| | |

| --- | --- |

The duration and extent of the impact from the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time, such as the severity and transmission rate of the virus, the extent and effectiveness of containment actions and the impact of these and other factors on our employees, customers, partners and suppliers.

If we are not able to respond to and manage the impact of such events effectively, our business may be harmed.

| • | The ability of our customers and suppliers to obtain financing or fund capital expenditures, especially during a period of global credit market disruption, and, in particular, the impact of the extended duration of the COVID-19 pandemic on our smaller customers' ability to access financing and the related disruption of the demand from these customers; |

customers to maintain our growth.

Our ability to provide such support may be further affected by the COVID-19 pandemic, including challenges in obtaining site access, increased reliance on remote communications to diagnose and address support issues, and the need to increase responsiveness to customer needs.

In addition, if our

Adverse economic conditions may harm our business.

Our business depends on the overall demand for our products and on the economic health of our current and prospective customers.

We market and sell our products both domestically and in international markets.

COVID-19 has had a material adverse impact on the global economy, and it remains uncertain as to the extent or duration of such impacts in the future.

If our customers or potential customers experience economic hardship, this could reduce the demand for our products, delay and lengthen sales cycles, lower prices for our products, and lead to slower growth or even a decline in our revenues, operating results and cash flows.

Excess or

See Part II, Item 9A, "Controls and Procedures" of this Annual Report for a more fulsome description of our material weakness and remediation efforts surrounding our ERP systems.

We experienced unauthorized intrusions into our network between 2011 and 2018.

business may be harmed.

As a result of the 2017 Tax Reform Act, we recorded a one-time write down of our U.S. deferred tax assets and liabilities resulting from the U.S. federal corporate income tax rate decrease from 35% to 21%, and a one-time transition tax, in our income tax provision for the fiscal year ended June 30, 2018.

Subsequent to the implementation of the 2017 Tax Reform Act, in December 2019, we realigned our international business operations and group structure to take advantage of certain international tax planning opportunities and incentives.

Sales of our products through our indirect sales channel accounted for 53.1%, 39.3% and 41.5% of our net sales in fiscal years 2020, 2019 and 2018, respectively.

Liang's personal relationship with Ablecom’s Chief Executive Officer.

While effects of the COVID-19 pandemic have been less severe in Taiwan than other geographic regions to date, no assurances can be given that significant adverse effects will not emerge that could substantially affect our efforts in Taiwan.

Despite following previously issued SEC Staff guidance, the filing of our Annual Report Form 10-K for our fiscal year ended June 30, 2019 (the “2019 10-K”) may not make us “current” in our Exchange Act filing obligations, which means we may not be eligible to use certain forms or rely on certain rules of the SEC.

On December 19, 2019, we filed the 2019 10-K, which constituted a “comprehensive” Annual Report on Form 10-K, or “Super 10-K,” and which contained our audited consolidated balance sheets as of June 30, 2019 and 2018 and the related audited consolidated statements of operations loss, stockholders’ equity and cash flows for the years ended June 30, 2019, 2018 and 2017, along with selected unaudited condensed consolidated financial data for the years ended June 30, 2017 and 2016 Concurrently with filing our 2019 10-K, we filed unaudited quarterly and year to date condensed consolidated financial statements and Quarterly Reports on Form 10-Q for the quarterly periods ended September 30, 2018, December 31, 2018, and March 31, 2019.

On December 20, 2019, we filed our Quarterly report on Form 10-Q for the quarterly period ended September 30, 2019 (the “Q1 2020 10-Q”).

We followed previously issued guidance from the staff of the SEC's Division of Corporation Finance (the “Staff”) with respect to filing a comprehensive annual report on Form 10-K where issuers have been delinquent in meeting their periodic reporting requirements with the SEC.

In accordance with such guidance, our filing of the 2019 10-K does not necessarily mean that the Staff will conclude that we have complied with all applicable financial statement requirements or complied with all reporting requirements of the Securities Exchange Act of 1934 (“Exchange Act”), nor does it foreclose any enforcement action by the SEC with respect to our disclosure, filings or failures to file reports under the Exchange Act.

We do not intend to file a separate Annual Report on Form 10-K for the fiscal year ended June 30, 2018 or Quarterly Reports on Form 10-Q for the quarterly periods ended September 30, 2017, December 31, 2017 and March 31, 2018.

Without the missing reports, investors may not be able to review certain financial and other disclosures that would have been contained in those reports.

We have identified a material weakness in our internal control over financial reporting, which could, if not remediated, adversely affect our ability to report our financial condition and results of operations in a timely and accurate manner.

It is necessary for us to maintain effective internal

control over financial reporting to prevent fraud and errors and to maintain effective disclosure controls and procedures so that we can provide timely and reliable financial and other information.

A failure to maintain adequate internal controls may adversely affect our ability to provide financial statements that accurately reflect our financial condition and report information on a timely basis.

We have concluded that our internal control over financial reporting was not effective as of June 30, 2020 due to the existence of a material weakness in such controls, and we have also concluded that our disclosure controls and procedures were not effective as of June 30, 2020 due to a material weakness in our internal control over financial reporting, all as described in Part II, Item 9A, “Controls and Procedures” of this Annual Report.

While we have initiated remediation measures to address the identified material weakness, we cannot provide assurance that our remediation efforts will be adequate to allow us to conclude that such controls will be effective in the future.

We also cannot assure you that additional material weaknesses in our internal control over financial reporting will not arise or be identified in the future.

We intend to continue our control remediation activities and to continue to improve our overall control environment and our operational, information technology, financial systems, and infrastructure procedures and controls, as well as to continue to train, retain and manage our personnel who are essential to effective internal controls.

In doing so, we will continue to incur expenses and expend management time on compliance-related issues.

If we are unable to successfully complete our remediation efforts in a timely manner and are, therefore, not able to favorably assess the effectiveness of our internal control over financial reporting, this could further cause investors to lose confidence, and our operating results, financial position, ability to accurately report our financial results and timely file our SEC reports, and stock price could be adversely affected.

For fiscal years [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018,] [added: 2019,] our net income was [removed: $84.3] [added: $111.9] million, [removed: $71.9] [added: $84.3] million and [removed: $46.2] [added: $71.9] million, respectively.

Historically, our ability to introduce new products rapidly has allowed us to benefit from technology transitions such as the introduction of new microprocessors and storage technologies, and as a result, we monitor the introduction cycles of [added: NVIDIA Corporation,] Intel Corporation, Advanced Micro Devices, Inc., [removed: Nvidia Corporation,] Samsung Electronics Company Limited, Micron Technology, Inc. and others closely and carefully.

In an effort to contain COVID-19 or slow its spread, governments around the world have enacted various measures, including orders [removed: to close all businesses not deemed “essential,”] [added: that govern the operations of businesses, require masks be worn and define] shelter in [removed: place,] [added: place] and [removed: practice] social distancing [removed: when engaging in essential activities.][added: protocols.]

[removed: In] [added: Accordingly, in] late [removed: March,] [added: March 2020,] we responded to the directives from Santa Clara County and the State of California regarding [removed: shelter in place] instructions to combat the spread of COVID-19.

Our first priority is the safety of our workforce and we [removed: immediately began to implement] [added: have implemented] numerous health precautions and work practices to [added: be in compliance with the law and to] operate in a safe manner.

We quickly transitioned [removed: most] [added: certain] of our indirect labor forces to work from home [added: at the earlier phase of the pandemic] and continued to operate our local assembly in Taiwan and, after an initial period of disruption, in the United States and Europe.

We continue to see ongoing demand [removed: as we enter the first quarter of fiscal year 2021] and do not have significant direct exposure to industries such as [removed: retail and] [added: retail,] oil and [removed: gas,] [added: gas and hospitality,] which have been impacted the greatest.

We have actively managed our supply chain for potential shortage risk by [removed: first] building inventories of critical components required for our motherboards and other system printed circuit boards in response to the early outbreak of COVID-19 in China.

Since that time, we have continued to add to our inventories of key components such as CPUs, memory, SSDs and [removed: to a lesser extent] GPUs such that customer orders can be fulfilled as they are received.

We expect this trend to continue for the duration of the [removed: uncertainties related to the] COVID-19 pandemic.

In [removed: May 2020,] [added: June 2021,] we negotiated an extension of our credit facility with Bank of America to extend the maturity date to June [removed: 2021.][added: 2026.]

In [removed: June] [added: May] 2020, we entered into a ten-year, non-revolving term loan facility [removed: with China Trust and Bank Corp ("CTBC Bank")] [added: (the “2020 CTBC Term Loan Facility”)] to obtain [added: up to NTD 1.2 billion ($40.7 million in U.S. dollar equivalents) in] financing for use in the expansion and renovation of [removed: the] our Bade Manufacturing Facility located in Taiwan.

Our management team is focused on guiding our company through the [removed: unfolding and emerging] [added: ongoing] challenges presented by COVID-19.

Currently, [added: there are positive signs with vaccine availability and reductions in infection rates; however, with the possibility of new virus strains and vaccine supply constraints,] we are unable to predict the ultimate extent to which the global COVID-19 pandemic may further impact our business operations, financial performance and results of operations within the next 12 months.

The following is a summary of financial highlights of fiscal years [removed: 2020] [added: 2021] and [removed: 2019:][added: 2020:]

[removed: | • |] [added: -] Operating expenses [removed: increased] [added: declined] by [removed: 10.6%] [added: 6.8%] in fiscal year [removed: 2020] [added: 2021] as compared to fiscal year [removed: 2019,] [added: 2020,] primarily due to the special performance bonuses to our employees and the accrual for our settlement with the [removed: SEC. |][added: SEC incurred in fiscal year 2020.]

Critical Accounting [removed: Policies][added: Policies and Estimates]

We evaluate our estimates on an on-going basis, and base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making the judgments we make about the carrying values of assets and liabilities that are [added: not readily apparent from other sources.]

[removed: As part of determining the transaction price in contracts with customers, we] [added: We] estimate reserves for future sales returns based on a review of our history of actual [removed: returns for each major product line.][added: returns.]

Based upon historical [removed: experience] [added: experience,] a refund liability is recorded at the time of sale for estimated product returns and an asset is recognized for the amount expected to be recorded in inventory upon product return, less the expected recovery costs.

We also [removed: reduce revenue for] [added: estimate] the [removed: estimated] costs of customer and distributor programs and incentive offerings such as price [removed: protection and rebates] [added: protection, rebates,] as well as the estimated costs of cooperative marketing arrangements where the fair value of the benefit derived from the costs cannot be reasonably estimated.

Any provision [removed: for customer and distributor programs and other discounts] is recorded as a reduction of revenue at the time of sale based on an evaluation of the contract terms and historical experience.

We have concluded that Ablecom [removed: Technology, Inc. ("Ablecom")] and its affiliate, [removed: Compuware Technology, Inc. ("Compuware"),] [added: Compuware,] are VIEs; however, we are not the primary beneficiary as we do not have the power to direct the activities that are most significant to the entities and therefore, we do not consolidate these entities.

[removed: Also, as a result of the substantial related party relationships between us and] these two companies, we considered whether any implicit arrangements exist that would cause us to protect these related parties’ interests from suffering losses.

| | [added: | |] Years Ended June 30, | | | | | | | | [added: | | | | | | |]

| | [added: | | 2021 | | | | | |] 2020 | | | [removed: 2019] | | | [removed: 2018] [added: 2019] | | [added: |]

| Net sales | [added: | |] 100.0 | [added: |] % | | [added: | |] 100.0 | [added: |] % | | [added: | |] 100.0 | [added: |] % |

| Cost of sales | [removed: 84.2] | [added: | 85.0 | |] % | | [removed: 85.8] | [added: | 84.2 | |] % | | [removed: 87.2] | [added: | 85.8 | |] % |

| Gross profit | [removed: 15.8] | [added: | 15.0 | |] % | | [removed: 14.2] | [added: | 15.8 | |] % | | [removed: 12.8] | [added: | 14.2 | |] % |

| Operating expenses: | | | | | | | | | [added: | | | | | | | | |]

| Research and development | [removed: 6.6] | [added: | 6.3 | |] % | | [removed: 5.1] | [added: | 6.6 | |] % | | [removed: 4.9] | [added: | 5.1 | |] % |

| Sales and marketing | [removed: 2.5] | [added: | 2.4 | |] % | | [removed: 2.2] | [added: | 2.5 | |] % | | [removed: 2.1] | [added: | 2.2 | |] % |

| General and administrative | [removed: 4.1] | [added: | 2.8 | |] % | | [removed: 4.0] | [added: | 4.1 | |] % | | [removed: 2.9] | [added: | 4.0 | |] % |

| Total operating expenses | [removed: 13.2] | [added: | 11.5 | |] % | | [removed: 11.3] | [added: | 13.2 | |] % | | [removed: 9.9] | [added: | 11.3 | |] % |

| Income from operations | [removed: 2.6] | [added: | 3.5 | |] % | | [removed: 2.9] | [added: | 2.6 | |] % | | [added: | |] 2.9 | [added: |] % |

| Other (expense) income, net | [removed: —] | [added: | (0.1) | |] % | | [added: | |] — | [added: |] % | | [added: | |] — | [added: |] % |

| Interest expense | [removed: (0.1] | [removed: )%] | [added: (0.1)] | [removed: (0.2] | [removed: )%] [added: %] | | [removed: (0.2] | [removed: )%] | [added: (0.1) | | % | | | | (0.2) | | % |]

| Income before income tax provision | [removed: 2.5] | [added: | 3.3 | |] % | | [removed: 2.7] | [added: | 2.5 | |] % | | [added: | |] 2.7 | [added: |] % |

| Income tax provision | [removed: (0.1] | [removed: )%] | [added: (0.2)] | [removed: (0.4] | [removed: )%] [added: %] | | [removed: (1.1] | [removed: )%] | [added: (0.1) | | % | | | | (0.4) | | % |]

| Share of income (loss) from equity investee, net of taxes | [added: | | — | | % | | | |] 0.1 | [added: |] % | | [removed: (0.1] | [removed: )%] | [added: (0.1)] | [removed: (0.1] | [removed: )%] [added: %] |

In December 2020, our Taiwan subsidiary entered into a general credit agreement with E.SUN Bank in Taiwan.

This general credit agreement 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 million.

The term of this general credit agreement was through September 18, 2021.

In July 2021, we replaced our prior credit facility and term loan facility with China Trust and Bank Corp ("CTBC Bank"), with a new facility for omnibus credit lines.

See also “Business–Employees and Human Capital Resources.”

- Net sales increased by 6.5% in fiscal year 2021 as compared to fiscal year 2020.

- Gross margin declined to 15.0% in fiscal year 2021 from 15.8% in fiscal year 2020, primarily due to product and customer mix and increased logistic costs.

- Net income increased to $111.9 million in fiscal year 2021 as compared to $84.3 million in fiscal year 2020, which was primarily due to the higher net sales and lower operating expenses in fiscal year 2021 as compared to fiscal year 2020.

- Our cash and cash equivalents were $232.3 million and $210.5 million at the end of fiscal years 2021 and 2020, respectively.

In fiscal year 2021, we generated net cash of $21.1 million, of which $123.0 million was provided by operating activities related primarily to the increase in net income.

We also invested $58.0 million in purchases of property and equipment, including construction of a new facility in San Jose, California, and used $44.4 million in financing activities primarily due to the repurchase of $130.0 million of our common stock, which was offset by the proceeds from borrowings.

The most critical accounting policy estimate and judgments required in applying ASC 606, Revenue Recognition of Contracts from Customers, and our revenue recognition policy relate to the determination of the transaction price, distinct performance obligations and the evaluation of the standalone selling price (the “SSP”) for each performance obligation.

Many of our customer contracts include multiple performance obligations.

Judgment is required in determining whether each performance obligation within a customer contract is distinct.

This assessment involves subjective determinations and requires management to make judgments about the individual promised goods or services and whether such goods or services are separable from the other aspects of the contractual relationship.

As part of determining the transaction price in contracts with customers, we may be required to estimate variable consideration when determining the amount of revenue to recognize.

We allocate the transaction price for each customer contract to each performance obligation based on the relative SSP for each performance obligation within each contract.

We recognize the amount of transaction price allocated to each performance obligation within a customer contract as revenue as each performance obligation is delivered.

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

If the standalone selling price is not observable through past transactions, we apply judgment to estimate the SSP.

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

We typically establish an SSP range for our products and services, which is reassessed on a periodic basis or when facts and circumstances change.

SSP for our products and services can evolve over time due to changes in our 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 our products and services, economic and other factors.

These estimates and judgements have not fluctuated significantly for the fiscal year ended June 30, 2021 compared to prior fiscal years.

We determine the volume-based rebates to be recognized in the cost of sales on a first-in, first-out basis.

As part of the process of preparing our consolidated financial statements, we are required to estimate our taxes in each of the jurisdictions in which we operate.

We estimate actual current tax exposure together with assessing temporary differences resulting from differing treatment of items, such as accruals and allowances not currently deductible for tax purposes.

These differences result in deferred tax assets, which are included in our consolidated balance sheets.

In general, deferred tax assets

represent future tax benefits to be received when certain expenses previously recognized in our consolidated statements of income become deductible expenses under applicable income tax laws, or when loss or credit carryforwards are utilized.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

We continue to assess the need for a valuation allowance on the deferred tax assets by evaluating both positive and negative evidence that may exist.

Any adjustment to the valuation allowance on deferred tax assets would be recorded in the consolidated statements of income for the period that the adjustment is determined to be required.

The assumptions used to determine the fair value of the option awards represent management’s best estimates.

These estimates involve inherent uncertainties and the application of management’s judgment.

Our use of the Black-Scholes option-pricing model requires the input of highly subjective assumptions.

If factors change and different assumptions are used, our stock-based compensation expense could be materially different in the future.

Also, as a result of the substantial related party relationships between us and

Our ability to assess correctly our influence or control over an entity at inception of our involvement or on a continuous basis when determining the primary beneficiary of a VIE affects the presentation of these entities in our consolidated financial statements.

Nasdaq Relisting of our Common Stock

As a result of the delay in filing our periodic reports with the SEC and failure to hold an annual meeting, we were unable to comply with the Nasdaq listing standards and our common stock was suspended from trading on the Nasdaq Global Select Market effective August 23, 2018 and formally delisted effective March 22, 2019.

Following the suspension of trading, our common stock was quoted on the OTC Market and traded under the symbol “SMCI.” On January 14, 2020, our common stock was relisted on the NASDAQ Global Select Market under the symbol “SMCI".

For further information regarding trading in our common stock, refer to Part II, Item 5, “Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” in this Annual Report.

| | |

| --- | --- |

| • | Net sales declined by 4.6% in fiscal year 2020 as compared to fiscal year 2019. |

| • | Gross margin increased to 15.8% in fiscal year 2020 from 14.2% in fiscal year 2019, primarily due to lower prices for key components and increased services and software revenues that have higher margins. |

| • | Net income increased to $84.3 million in fiscal year 2020 as compared to $71.9 million in fiscal year 2019, which was primarily due to a reduction in our effective tax rate to 3.4% in fiscal year 2020 as compared to 16.6% in fiscal year 2019. |

| • | Our cash and cash equivalents were $210.5 million and $248.2 million at the end of fiscal years 2020 and 2019, respectively. In fiscal year 2020, we used net cash of $49.8 million, of which $30.3 million was used in operating activities related primarily to additional working capital requirements such as building increased inventories of critical components. We also invested $44.3 million in purchases of property and equipment, including construction of a new facility in San Jose, California, and generated $23.8 million in financing activities primarily from the proceeds from exercises of stock options. |

Subsequent Events

For details, see Part II, Item 8, Note 20, “Subsequent Events” in our notes to the consolidated financial statements in this Annual Report.

not readily apparent from other sources.

*Product sales*.

We recognize revenue from sales of products as control is transferred to customers, which generally happens at the point of shipment or upon delivery, unless customer acceptance is uncertain.

Products sold are delivered via shipment from our facilities or drop shipment directly to our customer from our vendor.

We may use distributors to sell products to end customers.

Revenue from distributors is recognized when the distributor obtains control of the product, which generally happens at the point of shipment or upon delivery.

*Services sales.* Our sale of services mainly consists of extended warranty and on-site services.

Revenue related to extended warranty commences upon the expiration of the standard warranty period and is recognized ratably over the contractual period as we stand ready to perform any required warranty service.

Revenue related to on-site services commences upon recognition of the product sale and is recognized ratably over the contractual period as the on-site services are made available to the customer.

These service contracts are typically one to five years in length.

Service revenue has been less than 10% of net sales for all periods presented and is not separately disclosed.

*Contracts with multiple promised goods and services.* Certain of our contracts contain multiple promised goods and services.

Performance obligations in a contract are identified based on the promised goods or services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from us, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract.

If these criteria are not met, the promised goods and services are accounted for as a combined performance obligation.

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.

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.

If the standalone selling price is not observable through past transactions, we 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.

When we receive consideration from a customer prior to transferring goods or services to the customer, we record a contract liability (deferred revenue).

We also recognize deferred revenue when we have an unconditional right to consideration (i.e., a receivable) before transfer of control of goods or services to a customer.

We consider shipping & handling activities as costs to fulfill the sales of products.

Shipping revenue is included in net sales when control of the product is transferred to the customer, and the related shipping and handling costs are included in cost of sales.

Taxes imposed by governmental authorities on our revenue producing activities with customers, such as sales taxes and value added taxes, are excluded from net sales and included in operating expenses.

Product Warranties

We offer product warranties typically ranging from 15 to 39 months against any defective products.

These standard warranties are assurance type warranties and we do not offer any services beyond the assurance that the product will continue working as specified.

Therefore, these warranties are not considered separate performance obligations in the arrangement.

Based on historical experience, we accrue for estimated returns of defective products at the time revenue is recognized.

As of June 30, [removed: 2020,] [added: 2021,] our investments were in money market funds, certificates of deposits and auction rate securities.

The interest rates for the term loans and the revolving lines of credit ranged from 0.45% to [removed: 3.0%] [added: 1.5%] at June 30, [removed: 2020.][added: 2021.]

Based on the outstanding principal indebtedness of [removed: $29.4] [added: $98.2] million under our credit facilities as of June 30, [removed: 2020,] [added: 2021,] we believe that a 10% change in interest rates would not have a significant impact on our results of operations.

Foreign exchange (loss) gain for fiscal years [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018] [added: 2019] was [removed: $(1.4)] [added: $(3.2)] million, [removed: $0.5] [added: $(1.4)] million and [removed: $(0.6)] [added: $0.5] million, respectively.

We are a Silicon Valley-based provider of application-optimized [removed: high performance] [added: high-performance] and high-efficiency server and storage systems for [removed: a variety of] [added: various] markets, including enterprise data centers, cloud computing, artificial intelligence, 5G and edge computing.

Our solutions include complete servers, storage systems, modular blade servers, blades, workstations, [added: complete rack scale plug and play solutions delivering pre-defined and pre-tested] full [removed: racks,] [added: rack solutions,] networking devices, [removed: server] [added: system] management software, and server sub-systems.

We offer our customers a high degree of flexibility and customization by providing a broad array of server [added: models and] configurations from which they can choose the best solutions to fit their computing needs.

Our server and storage systems, [removed: subsystems] [added: sub-systems] and accessories are architecturally designed to provide high levels of reliability, quality, configurability, and scalability.

Our in-house design competencies, [removed: control of] design [added: control] of many of the components used within our server and storage systems, and our Server Building Block Solutions® (an innovative, modular and open architecture) enable us to rapidly develop, build and test server and storage systems, [removed: subsystems] [added: sub-systems] and accessories with unique configurations.

We work closely with the leading microprocessor, graphics processing units (“GPU”), memory, disk/flash, and interconnect vendors and other hardware and software suppliers to coordinate [removed: the design of] our new [removed: products] [added: products' design] with their product release schedules.

This enhances our ability to [removed: rapidly] introduce new products incorporating the latest [removed: technology.][added: technology rapidly.]

We seek to be [added: the] first to market with products incorporating new technologies and to offer the broadest selection of products using those technologies to our customers.

[removed: In order to] [added: To] reduce the high cost of operating datacenters, IT managers increasingly turn to suppliers of high-performance products that are also cost-effective, energy-efficient, and green.

In addition, we offer product lines that are designed to share common computing resources, thereby saving both valuable space and power as compared to [removed: general purpose] [added: general-purpose] rackmount servers.

Our sales and marketing activities [removed: are conducted] [added: operate] through a combination of our direct sales force and [added: indirect]

[removed: indirect] sales channel partners.

[removed: In our indirect sales channels, we] [added: We] work with distributors, value-added resellers, system integrators, and original equipment manufacturers ("OEMs") to market and sell our optimized solutions to their end [removed: customers.][added: customers in our indirect sales channels.]

As of June 30, [removed: 2020,] [added: 2021,] we employed over [removed: 1,700] [added: 1,800] persons in our research and development organization.

For example, in early [removed: February 2020,] [added: April 2021,] we introduced over 100 new [added: application optimized] systems in support of Intel’s introduction of its [removed: second-generation] [added: 3rd Gen Intel] Xeon Scalable [removed: processor.][added: processors.]

In addition to serving traditional needs for server and storage systems, we have devoted, and will continue to devote, substantial resources to developing systems that support emerging and growing applications including cloud computing, artificial intelligence, 5G/edge [removed: computing] [added: computing, storage] and others.

We have recently [removed: started] [added: completed the construction of a new 749,000 square feet building in Taiwan] to increase our manufacturing capacity [removed: in Taiwan to] [added: and] diversify our operating base and optimize relatively low labor costs as compared to the United States.

The percentage of our net sales represented by sales of server and storage systems [added: was flat in fiscal year 2021 compared to fiscal year 2020 and] decreased to 78.5% in fiscal year 2020 from 81.7% in fiscal year [removed: 2019 and from 79.3% in fiscal year 2018,] [added: 2019,] and the percentage of our net sales represented by [added: sales of subsystems and accessories was 21.6% in fiscal year 2021, 21.5% in fiscal year 2020 and 18.3% in fiscal year 2019.]

We sell server and storage systems in rackmount, blade, [removed: and] multi-node [added: and embedded] form factors, which support single, dual, and multiprocessor architectures.

[removed: | • | SuperBlade®] [added: - SuperBlade®] and [removed: MicroBlade™] [added: MicroBlade™®] system families designed to share common computing resources, thereby saving space and power over standard rackmount servers; [removed: |]

[removed: | • | SuperStorage] [added: - SuperStorage] systems that provide [removed: high density] [added: high-density] storage while leveraging an efficient use of power to achieve performance-per-watt savings; [removed: |]

[removed: | • | Twin] [added: - Twin] family of multi-node server systems designed for density, performance, and power efficiency; [removed: |]

[removed: | • | Ultra] [added: - Ultra] Server systems for demanding enterprise workloads; [removed: |]

[removed: | • | GPU] [added: - GPU] or Accelerated [removed: systems; |][added: systems for rapidly growing AI markets;]

[removed: | • | Data] [added: - Data] Center Optimized server systems that deliver increased [added: scalability and] performance-per-watt with an improved thermal architecture; [removed: and |]

[removed: | • | MicroCloud] [added: - MicroCloud] server systems that deliver [removed: high performance] [added: node density] in environments with space and power constraints. [removed: |]

We perform [removed: the majority] [added: most] of our research and development activities in-house in the United States at our facilities in San Jose, California, and in Taiwan, increasing the communication and collaboration between design teams to streamline the [added: development process and reduce time-to-market.]

During fiscal year [removed: 2020,] [added: 2021,] we sold to over [removed: 820] [added: 1,000] direct customers in over 100 countries.

During each of fiscal [removed: year 2019] [added: years 2020] and [removed: 2018,] [added: 2019,] we sold to over [added: 820 and] 850 direct [removed: customers.][added: customers respectively.]

In addition, over the three years ended June 30, [removed: 2020] [added: 2021] we have sold to thousands of end users through our indirect sales channel.

In fiscal years [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018,] [added: 2019,] no customer represented greater than 10% of our total net sales.

Sales to customers located outside of the United States represented [removed: 41.4%, 41.9%] [added: 40.7%, 41.4%] and [removed: 43.4%] [added: 41.9%] of net sales in fiscal years [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018,] [added: 2019,] respectively.

Each of our facilities [added: Quality and Environmental Management System] has been certified according to ISO 9001, ISO 14001 and/or ISO 13485 standards.

We use several third-party suppliers and contract manufacturers for materials and [removed: sub-assemblies, such as serverboards, chassis, disk drives, SSDs, power supplies, fans and computer processors.][added: sub-assemblies.]

[removed: | • |] [added: -] Global technology vendors, such as Cisco, Dell, Hewlett-Packard Enterprise, [removed: Huawei,] and Lenovo; and [removed: |]

[removed: | • |] [added: -] ODMs, such as [removed: Inspur,] [added: Foxconn,] Quanta Computer, and Wiwynn Corporation. [removed: |]

[removed: | • |] [added: -] First to market with new emerging technologies; [removed: |]

[removed: | • |] [added: -] High product performance, efficiency and reliability; [removed: |]

[removed: | • |] [added: -] Early identification of emerging opportunities; [removed: |]

[removed: | • |] [added: -] Cost-effectiveness; [removed: |]

In March 2021, Supermicro announced one of the most versatile portfolio of AMD EPYC™ 7003-based systems delivering world record performance – 36% improvement -- for today’s most critical workloads.

These software products and services are required for large scale deployments, help meet service level agreements and address uptime requirements.

In addition, we have added a new building devoted to manufacturing at our San Jose, California headquarters.

- Embedded (5G/IoT/Edge) systems optimized for evolving networks and intelligent management of connected devices; and

- OEMs, such as Inspur

Employees and Human Capital Resources

“The key to success in technology is designing a company around people committed to work that they love”, quote from Charles Liang, our President, Chief Executive Officer and Chairman.

We are motivated to attract, develop and retain a high performing team engaged in work that they love, motivated by growth opportunities.

Talent Strategy

Our talent strategy focuses on attracting skilled, engaged employees who contribute the talent and skills critical to our innovative and forward-looking workforce.

Our recruiting process actively sources talent supporting our ability to hire candidates with professional qualifications and potentials.

We identify opportunities through tracking and analyzing data from various sources such as annual performance reviews to assess our progress in ensuring critical talents are in critical roles.

It is our policy to ensure equal employment opportunity for all applicants and employees without regard to prohibited considerations of race, color, religion, sex (including pregnancy, gender identity and sexual orientation), national origin, age, disability or genetic information, marital status or any other classification protected by applicable local, state or federal laws.

All employees receive training in the prevention of sexual harassment and abusive conduct in the workplace.

Total Rewards Program

Our total rewards program is designed to attract and reward talented individuals who possess the skills necessary to support our business objectives, assist in the achievement of our strategic goals and create long-term value for our stockholders.

We provide employees with compensation packages that include base salary, incentive bonus programs, and long-term equity awards, including restricted stock units and options, tied to the value of our stock price.

We believe that a compensation program with both short-term and long-term awards provides fair and competitive compensation and aligns employee and stockholder interests, including by incentivizing business and individual performance (pay for performance), motivating based on long-term company performance and integrating compensation with our business plans.

In addition to cash and equity compensation, we also offer U.S. employees benefits such as life and health (medical, dental & vision) insurance, paid time off, sick leave, holiday pay, and a 401(k) plan.

Outside of the U.S., we provide benefits based on local requirement and needs.

Health & Safety

From the start of the COVID-19 pandemic, we proactively implemented preventative protocols, which we continuously assess and update for changes in conditions and applicable regulations.

These preventative protocols are intended to safeguard our employees, contractors, suppliers, customers, and communities, and to ensure business continuity.

We are

following government policies and recommendations designed to slow the spread of COVID-19 and are committed to the health and safety of our employees, contractors, suppliers, customers, and communities.

We continuously assess our efforts to respond to the COVID-19 pandemic, which include the following:

- We require that on-site employees complete a daily health questionnaire, pass through thermal scanning equipment installed in some of our buildings to ensure they do not have an elevated body temperature, and adhere to social distance requirement and mask protocols;

- We have enhanced our contact tracing, significantly decreased non-priority business travel, and provided personal air purifier for each of the employees; and

- To respond to changing COVID-19 updates, we continue to work closely with our Environmental Health and Safety team to monitor and provide weekly updates to managers and promote and encourage employees to receive COVID-19 vaccinations.

We believe these actions are appropriate and essential to safeguard our employees, contractors, suppliers, customers, and communities while allowing us to safely continue operations.

Additionally, during the fiscal year 2021, the computer server industry is experiencing global supply chain shortage, which requires us to carry more inventories to fulfill our customers and partners’ demands and backlogs.

These software products and services are important because the uptime requirements and need to extend the functionality of computing infrastructure are a high priority for enterprise customers.

In addition, Taiwan has been less affected by COVID-19, which makes it a well-suited manufacturing location for our Asia and export operations and will also lower our logistics costs.

sales of subsystems and accessories was 21.5% in fiscal year 2020, 18.3% in fiscal year 2019 and 20.7% in fiscal year 2018.

| | |

| --- | --- |

development process and reducing time-to-market.

Employees

As a result, we do not have a significant backlog of unfilled customer orders.

Due to the inherent uncertainties of legal proceedings, we cannot predict the outcome of these proceedings at this time, and we can give no assurance that they will not have a material adverse effect on our financial position or results of [removed: operations.][added: operations]

The information required by this item is incorporated herein by reference to the information set forth under the caption “Litigation and Claims” in Note 16 “Commitments and Contingencies” of our notes to the consolidated financial statements included in this Annual Report.

From time to time, we have been involved in various legal proceedings arising from the course of business activities.

In management’s opinion, the resolution of any matters will not have a material adverse effect on our consolidated financial condition, results of operations or liquidity.

On February 8, 2018, two putative class action complaints were filed against us, our CEO, and our former CFO in the U.S. District Court for the Northern District of California (Hessefort v.

Super Micro Computer, Inc., et al., No. 18-cv-00838 and United Union of Roofers v.

Super Micro Computer, Inc., et al., No. 18-cv-00850).

The complaints contain similar allegations, claiming that the defendants violated Section 10(b) of the Securities Exchange Act due to alleged misrepresentations and/or omissions in public statements regarding recognition of revenue.

The court subsequently appointed New York Hotel Trades Council & Hotel Association of New York City, Inc. Pension Fund as lead plaintiff.

The lead plaintiff then filed an amended complaint naming our Senior Vice President of Investor Relations as an additional defendant.

On June 21, 2019, the lead plaintiff filed a further amended complaint naming our former Senior Vice President of International Sales, Corporate Secretary, and Director as an additional defendant.

On July 26, 2019, we filed a motion to dismiss the complaint.

On March 23, 2020, the Court granted our motion to dismiss the complaint, with leave for lead plaintiff to file an amended complaint within 30 days.

On April 22, 2020, lead plaintiff filed a further amended complaint.

On June 15, 2020, we filed a motion to dismiss the further amended complaint, the hearing for which is calendared for September 23, 2020.

We believe the claims are without merit and intend to vigorously defend against the lawsuit.

As previously disclosed, we cooperated with the SEC in its investigation of marketing expenses that contained certain irregularities discovered by our management, which irregularities were disclosed on August 31, 2015, and we cooperated with the SEC in its further investigation of the matters underlying our inability to timely file our 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 our products.

On August 25, 2020, to fully resolve all matters under investigation, we consented to entry of an Order Instituting Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933 and Section 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order (“Order”), as announced by the SEC.

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

We 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.

We also agreed to pay a civil money penalty of $17.5 million.

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

Our Chief Executive Officer will pay us 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.

As of and for the year ended June 30, 2020, we recorded a liability of $17.5 million for our SEC settlement which is included in accrued liabilities and general and administrative expenses in the consolidated financial statements.

Our Chief Executive Officer’s payment of $2,122,000 to us is a contingent gain and will be recorded when it is realized.

[removed: Form 10-K][added: Form 10-K]

| ☒ | [added: | |] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]

For the fiscal year [removed: ended June] [added: ended June] 30, [removed: 2020][added: 2021]

| ☐ | [added: | |] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]

Commission File [removed: Number 001-33383][added: Number 001-33383]

| Delaware | | [added: | | | |] 77-0353939 | [added: | |]

| (State or other jurisdiction [removed: of incorporation] [added: of incorporation] or organization) | | [added: | | | |] (I.R.S. [removed: Employer Identification] [added: Employer Identification] No.) | [added: | |]

San [removed: Jose, CA 95131][added: Jose, CA 95131]

[removed: (408) 503-8000][added: (408) 503-8000]

| Title of each class | [added: | |] Trading Symbol | [added: | |] Name of each exchange on which registered | [added: | |]

| Common Stock, $0.001 par value per share | [added: | |] SMCI | [added: | |] NASDAQ Global Select Market | [added: | |]

Yes [removed: ☐ No] ☒ [added: No ☐]

| Large accelerated filer | [added: | |] ☒ | | [added: | | | |] Accelerated filer | [added: | |] ☐ | [added: | |]

| Non-accelerated filer | [added: | |] ☐ | | [added: | | | |] Smaller reporting company | [added: | |] ☐ | [added: | |]

| Emerging growth company | [added: | |] ☐ | | | | [added: | | | | | | | |]

Indicate by check mark whether the registrant is a shell company (as defined in Rule [removed: 12b] [added: 12b-2] of the [removed: Exchange] Act) Yes ☐ No ☒

The aggregate market value of the registrant’s common stock held by non-affiliates, based upon the closing price of the common stock on December 31, [removed: 2019,] [added: 2020,] as reported by the [removed: OTC] [added: NASDAQ Global Select] Market, was [removed: $1,057,388,840.][added: $1,374,947,450.]

Shares of common stock held by each executive officer and director and by each person who owns 5% or more of the outstanding common stock, based on filings with the Securities Exchange [removed: Commission, have been]

[added: Commission, have been] excluded since such persons may be deemed affiliates.

As of July 31, [removed: 2020,] [added: 2021,] there were [removed: 52,436,548] [added: 50,590,466] shares of the registrant’s common stock, $0.001 par value, outstanding, which is the only class of common stock of the registrant issued.

| | | [added: | | | |] Page | [added: | |]

| | [added: | |] PART I | | [added: | | | |]

| Item 1. | [removed: [Business](#sC5763C6A581056D89E09F488AA4DB3B8)] | [removed: [2](#sC5763C6A581056D89E09F488AA4DB3B8)] | [added: [Business](#if356ebe46cb3493a845a822775a88c91_16) | | | [2](#if356ebe46cb3493a845a822775a88c91_16) | | |]

| Item 1A. | [added: | |] [Risk [removed: Factors](#sBEEDD227BA095B79A2DFB4CDA139B0D7)] [added: Factors](#if356ebe46cb3493a845a822775a88c91_19)] | [removed: [8](#sBEEDD227BA095B79A2DFB4CDA139B0D7)] | [added: | [9](#if356ebe46cb3493a845a822775a88c91_19) | | |]

| Item 1B. | [added: | |] [Unresolved Staff [removed: Comments](#sF06A8A1D15055104A839EC3B5A1C73A5)] [added: Comments](#if356ebe46cb3493a845a822775a88c91_22)] | [removed: [26](#sF06A8A1D15055104A839EC3B5A1C73A5)] | [added: | [29](#if356ebe46cb3493a845a822775a88c91_22) | | |]

| Item 2. | [removed: [Properties](#s3D582FC3B9CA5C0E9E75B4A09CB6E8EC)] | [removed: [26](#s3D582FC3B9CA5C0E9E75B4A09CB6E8EC)] | [added: [Properties](#if356ebe46cb3493a845a822775a88c91_25) | | | [29](#if356ebe46cb3493a845a822775a88c91_25) | | |]

| Item 3. | [added: | |] [Legal [removed: Proceedings](#s85A375D0A3B450FEB1CDE72FD7EC7E35)] [added: Proceedings](#if356ebe46cb3493a845a822775a88c91_28)] | [removed: [27](#s85A375D0A3B450FEB1CDE72FD7EC7E35)] | [added: | [30](#if356ebe46cb3493a845a822775a88c91_28) | | |]

| Item 4. | [added: | |] [Mine Safety [removed: Disclosures](#sFEC82CADC2595597B25CF2914B232AA1)] [added: Disclosures](#if356ebe46cb3493a845a822775a88c91_31)] | [removed: [27](#sFEC82CADC2595597B25CF2914B232AA1)] | [added: | [30](#if356ebe46cb3493a845a822775a88c91_31) | | |]

| | [added: | |] PART II | | [added: | | | |]

| Item 5. | [added: | |] [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#s3D81AE1D8397557698D6A35D8DB06BD8)] [added: Securities](#if356ebe46cb3493a845a822775a88c91_37)] | [removed: [28](#s3D81AE1D8397557698D6A35D8DB06BD8)] | [added: | [31](#if356ebe46cb3493a845a822775a88c91_37) | | |]

| Item 6. | [added: | |] [Selected Financial [removed: Data](#sFD3076EDF08C5BCDB0C048A47AC15478)] [added: Data](#if356ebe46cb3493a845a822775a88c91_40)] | [removed: [30](#sFD3076EDF08C5BCDB0C048A47AC15478)] | [added: | [33](#if356ebe46cb3493a845a822775a88c91_40) | | |]

| Item 7. | [added: | |] [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#s0AD63CC31D8D54F2A96BDCB732D1C610)] [added: Operations](#if356ebe46cb3493a845a822775a88c91_43)] | [removed: [32](#s0AD63CC31D8D54F2A96BDCB732D1C610)] | [added: | [34](#if356ebe46cb3493a845a822775a88c91_43) | | |]

| Item 7A. | [added: | |] [Quantitative and Qualitative Disclosures About Market [removed: Risk](#sC3824AF2C0F55C0EAA2F97461E23AC1C)] [added: Risk](#if356ebe46cb3493a845a822775a88c91_58)] | [removed: [46](#sC3824AF2C0F55C0EAA2F97461E23AC1C)] | [added: | [48](#if356ebe46cb3493a845a822775a88c91_58) | | |]

| Item 8. | [added: | |] [Financial Statements and Supplementary [removed: Data](#s77A6F3AF0CD959EB8B07B8FC7BF1B642)] [added: Data](#if356ebe46cb3493a845a822775a88c91_61)] | [removed: [47](#s77A6F3AF0CD959EB8B07B8FC7BF1B642)] | [added: | [49](#if356ebe46cb3493a845a822775a88c91_61) | | |]

| Item 9. | [added: | |] [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#sE5741CE2BFCD5AFB968DB789AEBADC3B)] [added: Disclosure](#if356ebe46cb3493a845a822775a88c91_187)] | [removed: [91](#sE5741CE2BFCD5AFB968DB789AEBADC3B)] | [added: | [91](#if356ebe46cb3493a845a822775a88c91_187) | | |]

| Item 9A. | [added: | |] [Controls and [removed: Procedures](#s539B5E68F83E5543997B958573969E6B)] [added: Procedures](#if356ebe46cb3493a845a822775a88c91_190)] | [removed: [91](#s539B5E68F83E5543997B958573969E6B)] | [added: | [91](#if356ebe46cb3493a845a822775a88c91_190) | | |]

| Item 9B. | [added: | |] [Other [removed: Information](#s2DDEDF559075593CA0E763B98824B888)] [added: Information](#if356ebe46cb3493a845a822775a88c91_196)] | [removed: [94](#s2DDEDF559075593CA0E763B98824B888)] | [added: | [93](#if356ebe46cb3493a845a822775a88c91_196) | | |]

| | [added: | |] PART III | | [added: | | | |]

| Item 10. | [added: | |] [Directors, Executive Officers and Corporate [removed: Governance](#sDE20BC32457B50679F8A45AE900B48D8)] [added: Governance](#if356ebe46cb3493a845a822775a88c91_202)] | [removed: [95](#sDE20BC32457B50679F8A45AE900B48D8)] | [added: | [94](#if356ebe46cb3493a845a822775a88c91_202) | | |]

| Item 11. | [added: | |] [Executive [removed: Compensation](#s9C1ED3525C9A51288355DDD3959E171E)] [added: Compensation](#if356ebe46cb3493a845a822775a88c91_205)] | [removed: [102](#s9C1ED3525C9A51288355DDD3959E171E)] | [added: | [102](#if356ebe46cb3493a845a822775a88c91_205) | | |]

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FOR THE FISCAL YEAR ENDED JUNE 30, 2021

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| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | [Signatures](#if356ebe46cb3493a845a822775a88c91_229) | | | [133](#if356ebe46cb3493a845a822775a88c91_229) | | |

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| --- | --- | --- | --- | --- |

| | [Signatures](#s167F05E4FAD859F785A30D8636B4C338) | [129](#s167F05E4FAD859F785A30D8636B4C338) |

As of June 30, [removed: 2020,] [added: 2021,] we owned approximately [removed: 1,320,000] [added: 2,273,000] square feet and leased approximately [removed: 810,000] [added: 753,000] square feet of office and manufacturing space.

Our long-lived assets located outside of the United States represented [removed: 23.5%, 21.5%] [added: 34.4%, 23.5%] and [removed: 22.9%] [added: 21.5%] of total value of long-lived assets in fiscal years [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018,] [added: 2019,] respectively.

Our principal executive offices, research and development center and production operations are located in San Jose, California where we own approximately [removed: 1,097,000] [added: 1,307,000] square feet of office and manufacturing space.

We lease approximately 5,000 square feet of office space in Jersey City, New Jersey under a lease that expires in January 2022, lease approximately [removed: 47,000] [added: 46,000] square feet of office space in San Jose, California under a lease that expires in January 2022, and lease approximately 246,000 square feet of warehouse space in Fremont, California under a lease that expires in July 2025.

In Asia, our manufacturing facilities are located in Taoyuan County, Taiwan where we own approximately [removed: 211,000] [added: 954,000] square feet of office and manufacturing space on [removed: 7.0] [added: 6.96] acres of land.

These manufacturing facilities are pledged as security under the existing term loans with [removed: $29.4] [added: $59.8] million remaining outstanding as of June 30, [removed: 2020.][added: 2021.]

Our research and development center, service operations, and warehouse space in Asia are located in an approximately [removed: 100,000] [added: 106,000] square feet facility in Taipei, Taiwan under [removed: ten] [added: twelve] leases that expire at various dates ranging from [removed: November 2020] [added: January 2022] through [removed: February 2023] [added: May 2024] and an approximately [removed: 202,000] [added: 134,000] square feet facility in Taoyuan, Taiwan under [removed: eight] [added: six] leases that expire from December 2021 through December 2023.

We lease approximately 4,000 square feet of office space in Shanghai and Beijing, China for sales and service operations under two leases that expire in August 2021 and November 2022, respectively.

We lease approximately 3,000 square feet of office space in Japan under two leases, which both expire in August 2021.

In addition, starting July 2020, we lease an additional 4,900 square feet of office space in Japan that expires in June 2023, in replacement to our two existing leases.

| | |

| --- | --- |

| Item 5. | Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |

Market Information

We became a public company in March 2007, prior to which there was no public market for our common stock.

From March 29, 2007 through August 22, 2018, our common stock traded on the Nasdaq Global Select Market.

Effective at the open of business on August 23, 2018, our common stock was suspended from trading on the Nasdaq Global Select Market.

Effective March 22, 2019, our common stock was delisted from the Nasdaq Global Select Market, whereupon our common stock was quoted on the OTC Market and traded under the symbol “SMCI.” On January 14, 2020, our common stock was relisted on the NASDAQ Global Select Market under the symbol “SMCI".

Holders

As of July 31, 2020, there were 30 registered stockholders of record of our common stock.

Because most of our shares are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of beneficial stockholders represented by these holders of record.

Dividend Policy

We have never declared or paid cash dividends on our capital stock.

We intend to retain any future earnings and do not expect to pay any dividends in the foreseeable future.

Under the terms of the credit agreement with Bank of America, as amended, we may not pay any dividends.

Equity Compensation Plan

Please see Part III, Item 12, *“*Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters*”* of this Annual Report for disclosure relating to our equity compensation plans.

Stock Performance Graph

*This performance graph shall not be deemed “soliciting material” or to be "filed" with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of Super Micro Computer, Inc. under the Securities Act of 1933, as amended, or the Exchange Act.*

The performance graph used in our Annual Report on Form 10-K for the year ended June 30, 2019 (the "FY2019 Annual Report") included the cumulative total shareholder return of our peer issuers’ common stock for comparing against the cumulative total shareholder return on our common stock as our common stock had been delisted from the Nasdaq Global Select Market.

On January 14, 2020, our common stock was relisted on the Nasdaq Global Select Market.

For the Annual Report on Form 10-K for the fiscal year ending June 30, 2021 (the "FY2021 Annual Report") and onward, we will no longer use the performance of our peer issuers’ common stock to compare against the performance of our common stock, and we will use the NASDAQ Composite Index and NASDAQ Computer Index for comparing against the performance of our common stock beginning with the performance graph contained within this Annual Report on Form 10-K.

The following graph compares our cumulative five-year total stockholder return on our common stock with the cumulative return of the Nasdaq Computer Index, the Nasdaq Composite Index and an industry peer group, which we refer to as the FY2020 Peer Group, consisting of: Cray Inc., Extreme Networks, Inc., Infinera Corporation, NetApp, Inc., and NetGear, Inc. Such FY2020 Peer Group is the same as the peer group used in the FY2019 Annual Report to allow easier comparability to the prior year given we do not intend to use such peer group for the FY2021 Annual Report as described above.

Cray Inc. was acquired in September 2019.

In selecting the companies for inclusion, we considered and selected companies with similar industry comparability, net revenues, and operating income as our company.

The graph reflects an investment of $100 (with reinvestment of all dividends, if any) in our common stock, the Nasdaq Computer Index, the Nasdaq Composite Index and the FY2020 Peer Group, on June 30, 2015 and our relative performance tracked through June 30, 2020.

The stockholder return shown on the graph below is not necessarily indicative of future performance, and we do not make or endorse any predictions as to future stockholder returns.


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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | 6/30/2015 | | | 6/30/2016 | | | 6/30/2017 | | | 6/30/2018 | | | 6/30/2019 | | | 6/30/2020 | |

| Super Micro Computer, Inc. | | 100.00 | | | 84.01 | | | 83.33 | | | 79.95 | | | 65.42 | | | 95.98 | |

| FY2020 Peer Group | | 100.00 | | | 96.08 | | | 103.58 | | | 159.66 | | | 132.35 | | | 83.55 | |

| Nasdaq Composite Index | | 100.00 | | | 97.11 | | | 123.13 | | | 150.60 | | | 160.55 | | | 201.71 | |

| Nasdaq Computer Index | | 100.00 | | | 101.41 | | | 138.22 | | | 178.95 | | | 193.66 | | | 277.44 | |

Recent Sales of Unregistered Securities

None.

Issuer Purchases of Equity Securities

Market Information

We became a public company in March 2007, prior to which there was no public market for our common stock.

On January 14, 2020, our common stock was relisted on the NASDAQ Global Select Market under the symbol “SMCI".

Holders

As of July 31, 2021, there were 23 registered stockholders of record of our common stock.

Because most of our shares are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of beneficial stockholders represented by these holders of record.

Dividend Policy

We have never declared or paid cash dividends on our capital stock.

We intend to retain any future earnings and do not expect to pay any dividends in the foreseeable future.

Under the terms of the credit agreement with Bank of America, as amended, we may not pay any dividends.

Equity Compensation Plan

Please see Part III, Item 12, *“*Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters*”* of this Annual Report for disclosure relating to our equity compensation plans.

Stock Performance Graph

*This performance graph shall not be deemed “soliciting material” or to be "filed" with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of Super Micro Computer, Inc. under the Securities Act of 1933, as amended, or the Exchange Act.*

The following graph compares our cumulative five-year total stockholder return on our common stock with the cumulative return of the Nasdaq Computer Index and Nasdaq Composite Index.

The graph reflects an investment of $100 (with reinvestment of all dividends, if any) in our common stock, the Nasdaq Computer Index and the Nasdaq Composite Index on June 30, 2016 and our relative performance tracked through June 30, 2021.

The stockholder return shown on the graph below is not necessarily indicative of future performance, and we do not make or endorse any predictions as to future stockholder returns.


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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | 6/30/2016 | | | | | | 6/30/2017 | | | | | | 6/30/2018 | | | | | | 6/30/2019 | | | | | | 6/30/2020 | | | | | | 6/30/2021 | | |

| Super Micro Computer, Inc. | | | | | | 100.00 | | | | | | 99.20 | | | | | | 95.17 | | | | | | 77.87 | | | | | | 114.25 | | | | | | 141.57 | | |

| Nasdaq Composite Index | | | | | | 100.00 | | | | | | 126.80 | | | | | | 155.09 | | | | | | 165.33 | | | | | | 207.71 | | | | | | 299.50 | | |

| Nasdaq Computer Index | | | | | | 100.00 | | | | | | 136.30 | | | | | | 176.47 | | | | | | 190.98 | | | | | | 273.59 | | | | | | 411.33 | | |

Recent Sales of Unregistered Securities

None.

Issuer Purchases of Equity Securities

During the three months ended June 30, 2021, we repurchased the following shares of our common stock:

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Period | | | Total Number of Shares Purchased(1) | | | | | | Average Price Paid per Share(1) | | | | | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2) | | | | | | Approximate Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs(2) | | |

| Month 1 (April 1, 2021 to April 30, 2021) | | | 236,171 | | | | | | $ | 39.56 | | | | | 236,171 | | | | | | $150.0 million | | |

| Month 2 (May 1, 2021 to May 31, 2021) | | | 83,341 | | | | | | $ | 35.28 | | | | | — | | | | | | $150.0 million | | |

| Month 3 (June 1, 2021 to June 30, 2021) | | | — | | | | | | $ | — | | | | | — | | | | | | $150.0 million | | |

| Total | | | 319,512 | | | | | | $ | 38.45 | | | | | 236,171 | | | | | | | | |

__________________________

(1)Includes shares withheld from delivery to satisfy tax withholding obligations of recipients that occur upon the vesting of restricted stock units granted under our equity incentive plans.

(2)On January 29, 2021, a duly authorized subcommittee of our Board approved a share repurchase program to repurchase up to $200 million of our common stock at prevailing prices in the open market.

The share repurchase program is effective until July 31, 2022 or until the maximum amount of common stock is repurchased, whichever occurs first.

Removed and reserved.

The following selected consolidated financial data should be read in conjunction with Part I, Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and the notes thereto included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report to fully understand factors that may affect the comparability of the information presented below.

We derived the selected consolidated balance sheet data as of June 30, 2020 and 2019, the consolidated statement of operations data and the stock-based compensation data for the years ended June 30, 2020, 2019 and 2018 from our audited consolidated financial statements and accompanying notes included in this Annual Report.

The consolidated balance sheet data as of June 30, 2018, 2017 and 2016, the consolidated statement of operations data and stock-based compensation data for the years ended June 30, 2017 and 2016 are derived from our audited consolidated financial statements which are not included in this Annual Report.

Operating results for any year are not necessarily indicative of results to be expected for any future periods.

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

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

| | 2020 | | | | 2019 | | | | 2018 | | | | 2017 | | | | 2016 | | |

| | (in thousands, except per share data) | | | | | | | | | | | | | | | | | | |

| Consolidated Statements of Operations Data: | | | | | | | | | | | | | | | | | | | |

| Net sales | $ | 3,339,281 | | | $ | 3,500,360 | | | $ | 3,360,492 | | | $ | 2,484,929 | | | $ | 2,225,022 | |

| Cost of sales | 2,813,071 | | | | 3,004,838 | | | | 2,930,498 | | | | 2,134,971 | | | | 1,894,521 | | |

| Gross profit | 526,210 | | | | 495,522 | | | | 429,994 | | | | 349,958 | | | | 330,501 | | |

| Operating expenses: | | | | | | | | | | | | | | | | | | | |

| Research and development | 221,478 | | | | 179,907 | | | | 165,104 | | | | 143,992 | | | | 124,223 | | |

| Sales and marketing | 85,137 | | | | 77,154 | | | | 71,579 | | | | 66,445 | | | | 58,338 | | |

| General and administrative | 133,941 | | | | 141,228 | | | | 98,597 | | | | 44,646 | | | | 40,449 | | |

| Total operating expenses | 440,556 | | | | 398,289 | | | | 335,280 | | | | 255,083 | | | | 223,010 | | |

| Income from operations | 85,654 | | | | 97,233 | | | | 94,714 | | | | 94,875 | | | | 107,491 | | |

| Other income (expense), net | 1,410 | | | | (1,020 | | ) | | (773 | | ) | | (984 | | ) | | 1,507 | | |

| Interest expense | (2,236 | | ) | | (6,690 | | ) | | (5,726 | | ) | | (2,300 | | ) | | (1,594 | | ) |

| Income before income tax provision | 84,828 | | | | 89,523 | | | | 88,215 | | | | 91,591 | | | | 107,404 | | |

| Income tax provision | (2,922 | | ) | | (14,884 | | ) | | (38,443 | | ) | | (24,434 | | ) | | (35,323 | | ) |

| Share of income (loss) from equity investee, net of taxes | 2,402 | | | | (2,721 | | ) | | (3,607 | | ) | | (303 | | ) | | — | | |

| Net income | $ | 84,308 | | | $ | 71,918 | | | $ | 46,165 | | | $ | 66,854 | | | $ | 72,081 | |

| Net income per common share: | | | | | | | | | | | | | | | | | | | |

| Basic | $ | 1.65 | | | $ | 1.44 | | | $ | 0.94 | | | $ | 1.38 | | | $ | 1.50 | |

| Diluted | $ | 1.60 | | | $ | 1.39 | | | $ | 0.89 | | | $ | 1.29 | | | $ | 1.39 | |

| Shares used in per share calculation: | | | | | | | | | | | | | | | | | | | |

| Basic | 50,987 | | | | 49,917 | | | | 49,345 | | | | 48,383 | | | | 47,917 | | |

| Diluted | 52,838 | | | | 51,716 | | | | 52,151 | | | | 51,679 | | | | 51,836 | | |

| | As of June 30, | | | | | | | | | | | | | | | | | | |

| | (in thousands) | | | | | | | | | | | | | | | | | | |

| Consolidated Balance Sheet Data: | | | | | | | | | | | | | | | | | | | |

| Cash and cash equivalents | $ | 210,533 | | | $ | 248,164 | | | $ | 115,377 | | | $ | 110,606 | | | $ | 178,820 | |

| Working capital | 885,126 | | | | 815,802 | | | | 719,321 | | | | 588,636 | | | | 544,698 | | |

| Total assets | 1,918,646 | | | | 1,682,594 | | | | 1,769,505 | | | | 1,515,130 | | | | 1,191,483 | | |

| Long-term obligations | 145,304 | | | | 135,449 | | | | 114,296 | | | | 68,754 | | | | 85,200 | | |

| Total stockholders’ equity | 1,065,707 | | | | 941,176 | | | | 843,652 | | | | 773,846 | | | | 696,653 | | |

| | [added: | |] Page | [added: | |]

| [Report of Independent Registered Public Accounting [removed: Firm](#s3A168ADB8CB85545A2CE34D7293202B4)] [added: Firm](#if356ebe46cb3493a845a822775a88c91_64)] | [removed: [48](#s3A168ADB8CB85545A2CE34D7293202B4)] | [added: | [50](#if356ebe46cb3493a845a822775a88c91_64) | | |]

| [Consolidated Balance [removed: Sheets](#s8CB424CA9F3154198BBD3F3FE545C681)] [added: Sheets](#if356ebe46cb3493a845a822775a88c91_67)] | [removed: [51](#s8CB424CA9F3154198BBD3F3FE545C681)] | [added: | [52](#if356ebe46cb3493a845a822775a88c91_67) | | |]

| [Consolidated Statements of [removed: Operations](#sD2062587592150CEBDFA417B780E5A97)] [added: Operations](#if356ebe46cb3493a845a822775a88c91_73)] | [removed: [52](#sD2062587592150CEBDFA417B780E5A97)] | [added: | [53](#if356ebe46cb3493a845a822775a88c91_73) | | |]

| [Consolidated Statements of Comprehensive [removed: Income](#s446BF44552785E6D86EE77003FF47240)] [added: Income](#if356ebe46cb3493a845a822775a88c91_79)] | [removed: [53](#s446BF44552785E6D86EE77003FF47240)] | [added: | [54](#if356ebe46cb3493a845a822775a88c91_79) | | |]

| [Consolidated Statements of Stockholders’ [removed: Equity](#sC8C3EF9CC6DB5DDBB7BE15EA9C70592D)] [added: Equity](#if356ebe46cb3493a845a822775a88c91_82)] | [removed: [54](#sC8C3EF9CC6DB5DDBB7BE15EA9C70592D)] | [added: | [55](#if356ebe46cb3493a845a822775a88c91_82) | | |]

| [Consolidated Statements of Cash [removed: Flows](#sB7ECBF89CBE35E8EAACE598DCF421CD2)] [added: Flows](#if356ebe46cb3493a845a822775a88c91_85)] | [removed: [55](#sB7ECBF89CBE35E8EAACE598DCF421CD2)] | [added: | [56](#if356ebe46cb3493a845a822775a88c91_85) | | |]

| [Notes to Consolidated Financial [removed: Statements](#sEB6A6D9515A25C50BB92E95A94E6DFAE)] [added: Statements](#if356ebe46cb3493a845a822775a88c91_91)] | [removed: [56](#sEB6A6D9515A25C50BB92E95A94E6DFAE)] | [added: | [57](#if356ebe46cb3493a845a822775a88c91_91) | | |]

We have audited the accompanying consolidated balance sheets of Super Micro Computer, Inc. and subsidiaries (the "Company") as of June [removed: 30,2020] [added: 30,2021] and [removed: 2019,] [added: 2020,] the related consolidated statements of operations, comprehensive income, stockholders' equity, and cash flows, for each of the three years in the period ended June 30, [removed: 2020,] [added: 2021,] and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] and the results of its operations and its cash flows for each of the three years in the period ended June 30, [removed: 2020,] [added: 2021,] in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of June 30, [removed: 2020,] [added: 2021,] based on criteria established in *Internal Control [removed: -] [added: —] Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated August [removed: 28, 2020,] [added: 27, 2021,] expressed an [removed: adverse] [added: unqualified] opinion on the Company’s internal control over financial [removed: reporting because of a material weakness.][added: reporting.]

The critical audit [removed: matters] [added: matter] communicated below [removed: are matters] [added: is a matter] arising from the current-period audit of the financial statements that [removed: were] [added: was] communicated or required to be communicated to the audit committee and that (1) [removed: relate] [added: relates] to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit [removed: matters] [added: matter] below, providing separate [removed: opinions] [added: opinion] on the critical audit [removed: matters] [added: matter] or on the accounts or disclosures to which [removed: they relate.][added: it relates.]

[removed: The Company considered its explicit arrangements with Ablecom and Compuware, including its supplier arrangements, and] [added: Also,] as a result of the substantial related party relationships between the [removed: Company, Ablecom] [added: Company] and [removed: Compuware,] [added: these entities,] the Company [removed: also] considered whether any implicit arrangements exist that [added: would cause the Company to protect these related parties’]

Inventories - Excess and Obsolescence Reserve [removed: -] [added: —] Refer to Notes 1 and 5 to the financial statements

The Company evaluates inventory [added: on a quarterly basis] for [added: excess and obsolescence and] lower of cost or net realizable value [removed: and excess and obsolescence] and, as necessary, writes down the valuation of [removed: units] [added: inventory] based upon inventory aging, forecasted usage and sales, anticipated selling price, product obsolescence and other factors.

We identified the excess and obsolescence reserve as a critical audit matter because of judgments made by management in [removed: recording] [added: determining] the [removed: manual adjustments that management may make] [added: reserve rates applied by inventory aging category] to estimate the [added: Company’s] excess and obsolescence reserve.

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

Our audit procedures related to the [added: reserve rates applied to the inventory aging categories to estimate the] Company’s excess and obsolescence reserve included the following procedures, among others:

[removed: | • | We gained an understanding] [added: b.To understand] and [removed: evaluated] [added: evaluate] the Company’s methodology for determining inventory that is excess or obsolete and the key assumptions and judgments made as part of the process, including [removed: manual adjustments. |][added: the reserve rates, we made inquiries of various personnel in the Company including but not limited to finance and operations personnel about the expected product lifecycles and product development plans.]

[removed: SUPER MICRO COMPUTER, INC.][added: Super Micro Computer, Inc., et al.*, *No. 18-cv-00850*).]

| | [added: | |] June 30, | | | | [added: | |] June 30, | | |

| | [added: | | 2021 | | | | | |] 2020 | | | | [added: | |] 2019 | | |

| ASSETS | | | | | | | | [added: | | | |]

| Current assets: | | | | | | | | [added: | | | |]

| Cash and cash equivalents | [added: | |] $ | [removed: 210,533] [added: 232,266] | | | [added: | |] $ | [removed: 248,164] [added: 210,533] | |

| Accounts receivable, net of allowances of [removed: $4,586] [added: $2,591] and [removed: $8,906] [added: $4,586] at June 30, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] respectively (including amounts receivable from related parties of [removed: $8,712] [added: $8,678] and [removed: $13,439] [added: $8,712] at June 30, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] respectively) | [removed: 403,745] | | [added: 463,834] | | [removed: 393,624] | | | [added: | 403,745 | | |]

| Inventories | [removed: 851,498] | | [added: 1,040,964] | | [removed: 670,188] | | | [added: | 851,498 | | |]

| Prepaid expenses and other current assets (including receivables from related parties of [removed: $19,791] [added: $23,748] and [removed: $21,302] [added: $19,791] at June 30, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] respectively) | [removed: 126,985] | | [added: 130,195] | | [removed: 109,795] | | | [added: | 126,985 | | |]

| Total current assets | [removed: 1,592,761] | | [added: 1,867,259] | | [removed: 1,421,771] | | | [added: | 1,592,761 | | |]

| Investment in equity investee | [removed: 2,703] | | [added: 4,578] | | [removed: 1,701] | | | [added: | 2,703 | | |]

| Property, plant and equipment, net | [removed: 233,785] | | [added: 274,713] | | [removed: 207,337] | | | [added: | 233,785 | | |]

| Deferred income taxes, net | [removed: 54,898] | | [added: 63,288] | | [removed: 41,126] | | | [added: | 54,898 | | |]

| Other assets | [removed: 34,499] | | [added: 32,126] | | [removed: 10,659] | | | [added: | 34,499 | | |]

| Total assets | [added: | |] $ | [removed: 1,918,646] [added: 2,241,964] | | | [added: | |] $ | [removed: 1,682,594] [added: 1,918,646] | |

| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | [added: | | | |]

| Current liabilities: | | | | | | | | [added: | | | |]

| Accounts payable (including amounts due to related parties of [removed: $72,368] [added: $70,096] and [removed: $59,809] [added: $72,368] at June 30, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] respectively) | [added: | |] $ | [removed: 417,673] [added: 612,336] | | | [added: | |] $ | [removed: 360,470] [added: 417,673] | |

| Accrued liabilities (including amounts due to related parties of [removed: $16,206] [added: $18,528] and [removed: $10,536] [added: $16,206] at June 30, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] respectively) | [removed: 155,401] | | [added: 178,850] | | [removed: 114,678] | | | [added: | 155,401 | | |]

| Income taxes payable | [removed: 4,700] | | [added: 12,741] | | [removed: 13,021] | | | [added: | 4,700 | | |]

| | | | | | |

| --- | --- | --- | --- | --- | --- |

a.We tested the effectiveness of controls over the review of the calculation of excess and obsolescence reserve based on the Company’s reserve methodology, including management’s evaluation of the reserve rates by inventory aging category using historical data.

c.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.

d.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.

e.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.

August 27, 2021

| | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Net income | | | $ | 111,865 | | | | | $ | 84,308 | | | | | $ | 71,918 | |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

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

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

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

| | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Net income | | | $ | 111,865 | | | | | $ | 84,308 | | | | | $ | 71,918 | |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

| Stock repurchases | | | (130,000) | | | | | | — | | | | | | — | | |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

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

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

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

| | |

| --- | --- |

Variable Interest Entities and Related Party Transactions - Refer to Notes 1 and 13 to the financial statements

*Critical Audit Matter Description*

The Company has a variety of business relationships defined by various agreements with Ablecom Technology, Inc. (“Ablecom”) and its affiliate, Compuware Technology, Inc. ("Compuware").

Ablecom is one of the Company’s major contract manufacturers; Compuware is both a distributor of the Company’s products and a contract manufacturer for the Company.

Purchases from Ablecom and Compuware were $160.1 million and $131.8 million, respectively, for the fiscal year ended June 30, 2020.

Net sales to Compuware as a distributor were $23.9 million for the fiscal year ended June 30, 2020.

The Company concluded that Ablecom and Compuware are variable interest entities (VIEs) and that it is not the primary beneficiary as it does not have the power to direct the activities that are most significant to Ablecom and Compuware.

Therefore, the Company does not consolidate Ablecom and Compuware.

would cause the Company to protect those related parties’ interests from suffering losses.

The Company determined that no material implicit arrangements exist with Ablecom, Compuware, or their shareholders.

We identified management’s conclusion that it is not the primary beneficiary as a critical audit matter because of the judgments necessary for management to determine whether any explicit and implicit arrangements exist that would cause the Company to protect those related parties’ interest from absorbing losses.

This required extensive audit effort due to the complexity and variety of related party relationships with Ablecom and Compuware and required a high degree of auditor judgment when performing audit procedures to audit the Company’s conclusion that it is not the primary beneficiary.

*How the Critical Audit Matter Was Addressed in the Audit*

Our audit procedures related to management’s conclusion that it is not the primary beneficiary included the following, among others:

| • | We evaluated and tested whether the arrangements are accurately considered and that such arrangements have been included in the consideration by comparing those related parties we had identified during our audit procedures for proper inclusion in the Company’s evaluation and performed inspection of source documents on a sample basis. |

| • | We tested management’s assertion that the Company does not direct the operations of, or is required to absorb and record losses incurred by Ablecom and Compuware by analyzing the gross margin for contract manufacturing transactions with Ablecom and Compuware in comparison to unrelated third parties to determine if there is an indication of off-market terms, assessing leasing arrangements by performing independent market data searches to assess if such leases are within the normal range of prices for Ablecom and Compuware and recalculating days sales outstanding as well as days purchases outstanding and compared to other contract manufacturers to assess comparability of payment terms. |

| • | We obtained confirmations directly from Ablecom and Compuware regarding the nature of their business relationships with the Company, the extent of power, if any, held by the Company over the most significant activities of Ablecom and Compuware’s businesses, and the existence of any implicit arrangements that may have a bearing on the Company’s ability to have power over Ablecom and Compuware. |

The provision for excess and obsolete inventory for the fiscal year ended June 30, 2020, was $22.6 million.

| • | We evaluated management’s estimate by performing corroborative inquiry with the Company’s program managers, sales personnel, and/or buyers, and inspected correspondence and other communications between the Company’s operations team and customers. |

| • | As a result of the Company’s material weakness identified in IT general controls, we increased the extent of testing on reports derived from the Company’s systems and applications. |

August 28, 2020

| | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Net changes in unrealized loss on investments | — | | | | — | | | | (38 | | ) |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Balance at June 30, 2017 | 50,273,527 | | | $ | 308,271 | | | (1,333,125 | ) | | $ | (20,491 | ) | | $ | (77 | ) | | $ | 485,973 | | | $ | 170 | | | $ | 773,846 | |

| Net changes in unrealized loss on investments, net of taxes | — | | | — | | | | — | | | — | | | | (38 | | ) | | — | | | | — | | | | (38 | | ) |

| Net income (loss) | — | | | — | | | | — | | | — | | | | — | | | | 46,165 | | | | (13 | | ) | | 46,152 | | |

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

| Proceeds from redemption of auction rate security | — | | | | — | | | | 1,000 | | |

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Investments in Auction Rate Securities

The Company classifies its investments in auction rate securities ("auction rate securities") as non-current available-for-sale investments.

The auction rate securities consist of municipal securities, which are debt securities.

The Company uses discounted cash flow to estimate the fair value of any auction rate securities.

These auction rate securities are recorded within other assets in the consolidated balance sheets at fair value.

Under the supervision, and with the participation, of our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), we evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of June 30, [removed: 2020.][added: 2021.]

Based on this evaluation, our CEO and CFO have concluded that our disclosure controls and procedures were [removed: not] effective [added: at a reasonable assurance level] as of June 30, [removed: 2020 because of a material weakness in our internal control over financial reporting, as further described below.][added: 2021.]

Management, including our CEO and CFO, assessed our internal control over financial reporting as of June 30, [removed: 2020.][added: 2021.]

The effectiveness of our internal control over financial reporting as of June 30, [removed: 2020] [added: 2021] has been audited by Deloitte & Touche LLP, [removed: our] [added: an] independent registered public accounting firm, [removed: as] [added: and their opinion is] stated in [removed: its] [added: their] report [removed: that] [added: which] is included [removed: herein.][added: in this Annual Report on Form 10-K.]

As we continue to evaluate and work to improve our internal control over financial reporting, we may [removed: take] [added: execute] additional [removed: or different] measures to [removed: address control deficiencies with] [added: enhance] the overall [removed: objective to provide reasonable assurance regarding the reliability of financial reporting and the preparation] [added: design] of our [removed: consolidated financial statements through an effective system of] internal [removed: control over financial reporting.][added: controls.]

[removed: | • |] [added: -] Re-designed the logical access roles associated with our primary ERP application and re-provisioned those roles to enforce segregation of duties and align user access commensurate with their business process role and job responsibilities; [removed: |]

[removed: | • |] [added: -] Implemented a third-party application to facilitate improved processes and controls related to provisioning privileged access roles and the monitoring of those roles; [removed: and |]

[removed: | • |] [added: -] For [removed: one of] our boundary applications [removed: (fulfillment and warehouse management),] [added: relevant to financial reporting,] implemented [removed: a] new program change management [removed: control. |][added: control;]

[removed: | • | Strengthening] [added: - Strengthened] access [added: and monitoring] controls related to boundary systems; [removed: |]

[removed: | • | Monitoring] [added: - Monitored] instances in which individuals [removed: are] [added: were] granted broad [removed: access; and |][added: access.]

Other than the remediation efforts described above, there were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the three months ended June 30, [removed: 2020] [added: 2021] that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We have audited the internal control over financial reporting of Super Micro Computer, Inc. and subsidiaries (the “Company”) as of June 30, [removed: 2020,] [added: 2021,] based on criteria established in *Internal Control [removed: -] [added: —] Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, [removed: because of] the [removed: effect of the material weakness identified below on the achievement of the objectives of the control criteria, the] Company [removed: has not maintained] [added: maintained, in all material respects,] effective internal control over financial reporting as of June 30, [removed: 2020,] [added: 2021,] based on criteria established in *Internal Control [removed: -] [added: —] Integrated Framework (2013)* issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended June 30, [removed: 2020,] [added: 2021,] of the Company and our report dated August [removed: 28, 2020,] [added: 27, 2021,] expressed an unqualified opinion on those financial statements.

[removed: Material] [added: Remediation of Prior Year Material] Weakness

Based on this assessment, management has concluded that our internal control over financial reporting was effective as of June 30, 2021 to provide reasonable assurance regarding the reliability of financial reporting and preparation of consolidated financial statements in accordance with U.S. GAAP.

We have remediated the IT general controls that aggregated to a material weakness as previously disclosed in our Annual Report on Form 10-K for the year ended June 30, 2020.

Since that time, with the oversight of our management and audit committee, we have implemented measures to remediate the material weakness.

The following actions have been implemented and performed:

- For our primary ERP application, strengthened provisioning of privileged access roles; and

We believe the foregoing efforts have effectively remediated the material weakness as these procedures

[Table](#if356ebe46cb3493a845a822775a88c91_7) [of Contents](#if356ebe46cb3493a845a822775a88c91_7)

have been implemented for a sufficient period of time during the fiscal year and we have completed our testing of the design and operating effectiveness of these above procedures as of June 30, 2021.

[Table](#if356ebe46cb3493a845a822775a88c91_7) [of Contents](#if356ebe46cb3493a845a822775a88c91_7)

August 27, 2021

Notwithstanding the material weakness, management believes that the consolidated financial statements and related financial information included in this Annual Report on Form 10-K present fairly, in all material respects, our financial condition, results of operations and cash flows as of and for the periods presented in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).

Based on this assessment, management has determined that we did not maintain effective internal control over financial reporting as of June 30, 2020 because of the material weakness described below.

A material weakness in internal controls is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

Because of its inherent limitations, even appropriate internal control over financial reporting may not prevent or detect misstatements.

*Information Technology (“IT”) General Controls*

We identified deficiencies related to IT general controls that aggregated to a material weakness.

The following were contributing factors to the material weakness in IT general controls:

| | |

| --- | --- |

| • | We have authorized certain IT users with broad access to all parts of our primary accounting system without adequate monitoring or recording of how they used that access. In addition, access control deficiencies and change management deficiencies were noted on other systems relevant to financial reporting. Some of our internally-developed systems relevant to financial reporting lack system tracking capabilities to monitor access changes or application changes. In some cases, IT general controls were not designed effectively, and in others, were designed effectively but did not operate effectively or for a sufficient period of time. Business process controls that depend on the affected information systems, or that depend on data or financial reports generated from the affected information |

systems to be accurate and complete, could be adversely affected, although we have identified no instances of any adverse effect due to these deficiencies.

Remediation Plan

We have remediated the material weaknesses related to each of the five COSO components of internal control (Control Environment; Risk Assessment; Control Activities; Information & Communication; Monitoring of Controls) and revenue recognition accounting controls by completing our remediation plan, as previously disclosed in our Annual Report on Form 10-K for the year ended June 30, 2019.

Our management is committed to remediating identified control deficiencies (including both those that rise to the level of a material weakness and those that do not), fostering continuous improvement in our internal controls and enhancing our overall internal controls environment.

Our management believes that the actions below will remediate the material weakness we have identified and strengthen our internal control over financial reporting.

To date, we have taken the following actions related to the material weakness that, as of June 30, 2020, had not yet been fully implemented or had not been in place for a sufficient period of time to demonstrate that they were having their desired effect:

Our management believes that meaningful progress has been made on the remaining remediation efforts.

Management regards successful completion of our remaining remediation actions as an important priority.

The remaining remediation activities include:

| • | Strengthening provisioning of privileged access roles; |

| • | Implementing new change management controls related to boundary systems. |

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weakness has been identified and included in management's assessment:

The Company identified deficiencies related to IT general controls that aggregated to a material weakness.

| • | The Company authorized certain IT users with broad access to all parts of the primary accounting system without adequate monitoring or recording of how they used that access. In addition, access control deficiencies and change management deficiencies were noted on other systems relevant to financial reporting. Some of the Company’s |

internally-developed systems relevant to financial reporting lack system tracking capabilities to monitor access changes or application changes.

In some cases IT general controls were not designed effectively, and in others, were designed effectively but did not operate effectively or for a sufficient period of time.

Business process controls that depend on the affected information systems, or that depend on data or financial reports generated from the affected information systems to be accurate and complete, could be adversely affected, although the Company has identified no instances of any adverse effect due to these deficiencies.

This material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the consolidated financial statements as of and for the year ended June 30, 2020, of the Company, and this report does not affect our report on such financial statements.

August 28, 2020

[Table](#if356ebe46cb3493a845a822775a88c91_7) [of Contents](#if356ebe46cb3493a845a822775a88c91_7)

The following table sets forth information regarding our current directors and executive officers and their ages as of July 31, [removed: 2020:][added: 2021:]

| Name | | [added: | | | |] Age | | [added: | | | |] Position(s) | [added: | |]

| Charles Liang | | [removed: 62] | | [added: | | 63 | | | | | |] President, Chief Executive Officer and Chairman of the Board | [added: | |]

| [removed: Kevin Bauer] [added: David Weigand] | | [removed: 60] | | [added: | | 63 | | | | | |] Senior Vice President, Chief Financial Officer [added: and Chief Compliance Officer] | [added: | |]

| Don Clegg | | [removed: 61] | | [added: | | 62 | | | | | |] Senior Vice President of Worldwide Sales | [added: | |]

| George Kao | | [removed: 59] | | [added: | | 60 | | | | | |] Senior Vice President of Operations | [added: | |]

[removed: | David Weigand | | 62 | |] [added: *David Weigand* has served as our] Senior Vice President, Chief [added: Financial Officer since February 2021 and as Chief] Compliance Officer [removed: |][added: since May 2018.]

| Sara Liu | | [removed: 58] | | [added: | | 59 | | | | | |] Co-Founder, Senior Vice President and Director | [added: | |]

| Daniel W. Fairfax (1)(4) | | [removed: 64] | | [added: | | 65 | | | | | |] Director | [added: | |]

| Saria Tseng (2)(3)(4) | | [removed: 50] | | [added: | | 51 | | | | | |] Director | [added: | |]

| Sherman Tuan (2)(3)(4) | | [removed: 66] | | [added: | | 67 | | | | | |] Director | [added: | |]

| Tally Liu (1)(4) | | [removed: 70] | | [added: | | 71 | | | | | |] Director | [added: | |]

(3)Member of the Nominating and Corporate Governance Committee [added: (the “Governance Committee”)]

Our [removed: Nominating and Corporate] Governance Committee [removed: (“Governance Committee”)] concluded that Mr. Liang should serve on the Board based on his skills, experience and qualifications in managing technology businesses, his technical expertise, and his long familiarity with our company’s business.

Mr. Fairfax currently serves on the board of directors of Energous Corporation, where he is [added: both] the chair of the [added: board and chair of the] audit committee.

Mr. Fairfax is a certified public accountant with an inactive license in California and holds an MBA degree from The University of Chicago Booth School of [added: Business and a Bachelor of Arts degree, with a major in Economics, from Whitman College.]

[removed: McAndrews*] [added: *Shiu Leung (Fred) Chan*] has been a member of our Board of Directors since [removed: February 2015.][added: October 2020.]

Our Governance Committee concluded that Mr. [removed: McAndrews] [added: Chan] should serve on the Board based on his [removed: skills, experience, his financial literacy] [added: skills] and [removed: his] [added: experience in growing companies and] familiarity with technology businesses.

Ms. Tseng has served as Vice President of Strategic Corporate Development, General Counsel and Secretary of Monolithic Power Systems, Inc. [added: (“MPS”),] a fabless manufacturer of high-performance analog and mixed-signal semiconductors since 2004.

Prior to Newegg, Mr. Liu held various positions with Knight Ridder Inc., including Vice President, Finance & [removed: Advance] [added: Advanced] Technology and Vice President of Internal Audit.

[added: Mr. Liu is also a Certified Information System Auditor (CISA) and Certified Information Security] Manager (CISM), with non-practice status, with the Information Systems Audit and Control Association (ISACA) and has also been certified in Control Self-assessment (CCSA) by the Institute of Internal Auditors (IIA).

Our authorized number of directors is [removed: eight.][added: currently seven.]

There are currently [removed: eight] [added: seven] directors.

| Class I Directors (1) | [added: | |] Charles Liang Sherman Tuan Tally Liu | [added: | |]

| Class III Directors (3) | [added: | |] Daniel W. Fairfax Saria Tseng [added: Shiu Leung (Fred) Chan] | [added: | |]

[removed: | (1) | The] [added: (1)The] term of Class I directors expires at the annual meeting of stockholders following fiscal year 2022. [removed: |]

[removed: | (2) | The] [added: (3)The] term of Class [removed: II] [added: III] directors expires at the annual meeting of stockholders following fiscal year [removed: 2020. |][added: 2021.]

[removed: | (3) | The] [added: (2)The] term of [added: the] Class [removed: III directors] [added: II director] expires at the annual meeting of stockholders following fiscal year [removed: 2021. |][added: 2023.]

We have adopted “Corporate Governance Guidelines” to help ensure that the Board of Directors is independent from management, appropriately performs its function as the overseer of management, and that the interests of the Board of Directors [removed: and management align with the interests of our stockholders.]

The “Corporate Governance Guidelines” are available at [removed: https://ir.supermicro.com/corp-governance#governance.][added: https://ir.supermicro.com/governance/governance-documents/default.aspx.]

Our “Code of Business Conduct and Ethics” is available at [removed: https://ir.supermicro.com/corp-governance#governance.][added: https://ir.supermicro.com/governance/governance-documents/default.aspx.]

Based on these standards, our Board of Directors has determined that [removed: six] [added: five] of its current [removed: eight] [added: seven] members, Daniel W.

[removed: McAndrews, Hwei-Ming (Fred) Tsai,] [added: Fairfax,] Saria Tseng, Sherman Tuan [added: Shiu Leung (Fred) Chan] and Tally Liu, are "independent directors" under the applicable rules and regulations of the SEC and the listing requirements and rules of The Nasdaq Stock Market.

We held an annual meeting of stockholders on [removed: June 5, 2020] [added: May 28, 2021] for our fiscal year [removed: 2019.][added: 2020.]

[removed: The] Board held [removed: 15] [added: nine] meetings during fiscal year [removed: 2020,] [added: 2021,] four of which were regularly scheduled meetings and [removed: 11] [added: five] of which were special meetings.

All directors attended at least 75% of the meetings of the Board and the committees on which they served during the time they were members of the Board or such committees during fiscal year [removed: 2020.][added: 2021.]

The Board and our [removed: Nominating and Corporate] Governance Committee [removed: (the "Governance Committee")] believe that it is appropriate for Mr. Liang to serve as both the Chief Executive Officer and Chairman due to the relatively small size of our Board, and the fact that Mr. Liang is the founder of our company with extensive experience in our industry.

The Board [removed: exercises] [added: conducts] this oversight [removed: responsibility] directly and through its committees.

Our management, with oversight from our Compensation Committee, has reviewed [removed: its] [added: our] compensation policies and practices with respect to risk-taking incentives and risk management and does not believe that potential risks arising from our compensation polices or practices are reasonably likely to have a material adverse effect on our company

The charter for each committee is available at [removed: https://ir.supermicro.com/corp-governance#governance.][added: https://ir.supermicro.com/governance/governance-documents/default.aspx.]

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Shiu Leung (Fred) Chan (1)(4) | | | | | | 73 | | | | | | Director | | |

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Mr. Chan is the founder and president of KCR Development, Inc. which has developed real estate projects in excess of $1 billion in California and Hawaii specializing in high-density residential and retail projects.

Mr. Chan also has more than three decades of experience in the high technology sector and as an entrepreneur.

He most recently served as chairman of ESS Technology, Inc., a privately held semiconductor company which he founded, from 2015 to 2019.

ESS Technology was previously a public company listed on Nasdaq from 1995 until 2008, where he had held a variety of senior executive roles, including as chairman, president and

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chief executive officer, and served as a director.

Mr. Chan has also previously served as chairman of a privately-held consumer electronic company, founder and an executive officer of a VLSI chip design center providing computer aided design, engineering and other design services, and co-founder and an executive officer of a company in the business of computer aided engineering systems development.

Mr. Chan holds B.S.E.E. and M.S.C. degrees from the University of Hawaii.

Directors chosen to fill newly created directorships hold office for a term expiring at the next annual meeting of stockholders to which the term of the office of the class to which they have been elected expires.

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| Class II Director (2) | | | Sara Liu | | |

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and management align with the interests of our stockholders.

The

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| Shiu Leung (Fred) Chan | | | | | | | | | | | | | | |

(2)The Governance Committee does not currently have a designated chairperson.

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The Compensation Committee charter provides that the Compensation Committee shall be comprised of no fewer than two members.

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The Governance Committee charter provides that the Governance Committee shall be comprised of no fewer than two members.

- Reviews and makes recommendations to the Board regarding the size of the Board;

- Conducts an annual evaluation of director independence according to Nasdaq rules, applicable law and our Corporate Governance Guidelines to enable the Board to make a determination of each director’s independence;

- Periodically reviews succession planning for executive officers;

- Periodically reviews and discusses with management our practices with respect to environmental, social and corporate governance issues; and

The Governance Committee may delegate its responsibilities, along with the authority to take action in relation to such responsibilities, to subcommittees comprised of one or more Governance Committee members, subject to requirements of our bylaws, applicable laws and regulations.

In accordance with our bylaws, our Board establishes additional committees for specific delegated purposes, roles and responsibilities that are temporary in nature.

Delinquent Section 16(a) Reports

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Section 16(a) of the Exchange Act, requires our directors, executive officers, and holders of more than 10% of our common stock to file reports regarding their ownership and changes in ownership of our securities with the SEC, and to furnish us with copies of all Section 16(a) reports that they file.

Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to us and certain written representations provided to us, we believe that during the fiscal year ended June 30, 2021, our directors, executive officers, and greater than 10% stockholders complied with all applicable Section 16(a) filing requirements, except that one late Form 4 was filed on September 15, 2020 for each of Ms. Sara Liu, Mr. Charles Liang (as the spouse of Ms. Sara Liu), Mr. David Weigand, and Mr. Don Clegg to reflect equity awards made to Ms. Liu, Mr. Weigand, and Mr. Clegg on August 4, 2020.

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| --- | --- | --- | --- | --- |

| Alex Hsu | | 71 | | Chief Operating Officer |

| Michael S. McAndrews (1)(4) | | 67 | | Director |

| Hwei-Ming (Fred) Tsai (1)(2)(3)(4) | | 64 | | Director |

*Kevin Bauer* has served as our Senior Vice President, Chief Financial Officer since January 2018 and previously served as our Senior Vice President, Corporate Development and Strategy beginning January 2017.

Prior to his employment with our company, Mr. Bauer was the Senior Vice President and Chief Financial Officer of Pericom Semiconductor Corporation, a semiconductor company, from February 2014 until its sale to Diodes, Incorporated in November 2015 and, thereafter, assisted Diodes with the integration of Pericom until November 2016.

Prior to that he was Chief Financial Officer of Exar Corporation, a semiconductor manufacturer, from June 2009 through December 2012, Corporate Controller from August 2004 to June 2009 and Operations Controller from February 2001 to August 2004.

Previously, Mr. Bauer was Operations Controller at WaferTech LLC (a subsidiary of Taiwan Semiconductor Manufacturing Company Limited) from July 1997 to February 2001.

Prior to WaferTech, he was at VLSI Technology for ten years where he held a variety of increasingly more senior finance roles culminating in his position as Director and Group Controller.

Mr. Bauer received an M.B.A. from Santa Clara University and a B.S. in Business Administration from California Lutheran University.

*Alex Hsu* serves as our Chief Operating Officer.

Mr. Hsu has served in various positions with the Company since October 2003, including as the Chairman of Supermicro Taiwan since February 2018, Executive Director of Supermicro Technology (Beijing) Co. Ltd. since August 2009, Sr. Chief Executive of Strategic Business from August 2009 to February 2018, Chief Sales and Marketing Officer from July 2006 to August 2009, Senior Vice President of Sales from October 2004 to July 2006 and President of European Offices and Vice President of Operations (USA) from October 2003 to October 2004.

From January 2002 to September 2003, Mr. Hsu was President and Chief Operating Officer of Bizlink Group, an IT solutions company.

From January 2001 to January 2002, he was a private investor and consultant working with startup companies in Silicon Valley.

From August 1999 to December 2000, he was President and Chief Operating Officer at Oplink Communications, Inc., a networking solutions company.

Mr. Hsu has over 40 years of experience in the IT industry and served in various managerial and executive positions at Philips, Acer, Hewlett-Packard and Umax group.

Mr. Hsu holds an M.B.A. and a B.S. in Electrical Engineering from National Chao-Tung University in Taiwan.

*David Weigand* has served as our Senior Vice President, Chief Compliance Officer since May 2018.

Business and a Bachelor of Arts degree, with a major in Economics, from Whitman College.

*Michael S.

Mr. McAndrews has served as a Principal of Abbott, Stringham & Lynch, an accounting firm serving the Silicon Valley, since September 2013.

From June 2002 to June 2013, he served as a Partner at PricewaterhouseCoopers LLP, a multinational professional services network, where he provided tax planning and consulting services to multinational public companies, private companies and their owners and emerging businesses in a variety of industries including high-technology, manufacturing, food processing and wholesale/retail distribution.

From November 1979 to June 2002, he worked for Arthur Andersen and Company, a global professional services firm.

He served as Partner from 1993 to 2002 where he focused primarily on providing tax planning and compliance services to high technology companies ranging in size from start-ups to large multinational public companies.

Mr. McAndrews is a certified public accountant with an active license in California and holds a Bachelor of Science in Commerce, Accounting degree from Santa Clara University.

*Hwei-Ming (Fred) Tsai* has been a member of our Board of Directors since August 2006.

Mr. Tsai served as an independent director of ANZ Bank (Taiwan) Limited, a wholly owned subsidiary of Australia and New Zealand Banking Group Limited from September 2013 to April 2019.

Mr. Tsai has also served as an independent director of Dynapack International Technology Corporation, a public company in Taiwan, since June 2017.

Mr. Tsai has been an independent business consultant since January 2010.

Mr. Tsai served as Executive Vice President and Chief Financial Officer of SinoPac Bancorp, a financial holding company based in Los Angeles, California from February 2001 and August 2005, respectively, to December 2009.

He also served as Senior Executive Vice President of Far East National Bank, a commercial bank that is held by SinoPac Bancorp from December 2002 to December 2009.

Mr. Tsai holds a Master in Professional Accounting from the University of Texas at Austin and a B.A. in Accounting from National Taiwan University in Taiwan.

Our Governance Committee concluded that Mr. Tsai should serve on the Board based on his skills, experience and qualifications in capital finance, his financial literacy and his familiarity with our company’s business.

Mr. Liu is also a Certified Information System Auditor (CISA) and Certified Information Security

| | |

| --- | --- |

| Class II Directors (2) | Sara Liu Michael S. McAndrews Hwei-Ming (Fred) Tsai |

Fairfax, Michael S.

| Michael S. McAndrews | | Saria Tseng | | Sherman Tuan |

Compensation Discussion and Analysis [added: (“CD&A”)]

In this section we provide an explanation and analysis of the material elements of the compensation provided to our Chief Executive Officer, [added: persons who served as] Chief Financial Officer [added: during fiscal year 2021,] and [added: our] other three most highly compensated executive officers who were serving as executive officers at the end of our fiscal year [removed: 2020] [added: 2021] (collectively referred to as our “named executive officers”).

Our named executive officers and their positions [removed: during] [added: at the end of] fiscal year [removed: 2020] [added: 2021] were:

| Charles Liang | [added: | |] President, Chief Executive Officer [added: (“CEO”)] and Chairman of the Board | [added: | |]

| Kevin [removed: Bauer] [added: Bauer(1)] | [added: | | Former] Senior Vice President, Chief Financial Officer | [added: | |]