Super Micro Computer 10-Q/A 2016-12-31

Filed 2019-05-17. 8 sections, 267K characters. Original on sec.gov · Markdown · JSON

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10-Q/A 1 smci-20161231x10qxa.htm 10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q/A

(Amendment No. 1)

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2016

or

¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-33383

Super Micro Computer, Inc.

(Exact name of registrant as specified in its charter)

Delaware77-0353939
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)

980 Rock Avenue

San Jose, CA 95131

(Address of principal executive offices, including zip code)

(408) 503-8000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ¨ No x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer xAccelerated filer ¨
Non-accelerated filer ¨ (Do not check if a smaller reporting company)Smaller reporting company ¨
Emerging growth company ¨ ¬

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $0.001 par value per shareSMCIOTC

As of March 31, 2019 there were 49,881,914 shares of the registrant’s common stock, $0.001 par value, outstanding, which is the only class of common stock of the registrant issued.

Explanatory Note

This Amendment No. 1 to our Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2016 (this “Quarterly Report on Form 10-Q/A”) is being filed to amend and restate certain items presented in our Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2016, which was initially filed with the Securities and Exchange Commission (the “SEC”) on February 7, 2017 (the “Original Form 10-Q”). This Quarterly Report on Form 10-Q/A includes restatement of: (1) our condensed consolidated balance sheet as of December 31, 2016 and June 30, 2016 and the related condensed consolidated statements of operations and comprehensive income for each of the three and six months ended December 31, 2016 and 2015, and cash flows for the six months ended December 31, 2016 and 2015; and (2) our management’s discussion and analysis of financial condition and results of operations as of and for the three and six months ended December 31, 2016 and 2015 contained in Part I, Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Quarterly Report on Form 10-Q/A. See below and Part I, Item 1, Note 12, “Restatement of Previously Issued Condensed Consolidated Financial Statements” in the notes to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q/A for a detailed discussion of the effect of the restatement.

For the convenience of the reader, we have included all items in this Quarterly Report on Form 10-Q/A which supersedes in its entirety the Original Form 10-Q. Prior to filing this Quarterly Report on Form 10-Q/A, we have filed the amended Quarterly Report on Form 10-Q/A for the quarterly period ended September 30, 2016. Subsequent to the filing of this Quarterly Report on Form 10-Q/A we expect to file the amended Quarterly Report on Form 10-Q/A for the quarterly period ended March 31, 2017 and the Annual Report on Form 10-K for the year ended June 30, 2017. These reports will include restatement of the consolidated financial statements (and related disclosures) for the periods described therein, as set forth in those reports.

Background of Restatement

In August 2017, prior to the issuance of our consolidated financial statements for the fiscal year ended June 30, 2017, the audit committee (the “Audit Committee”) of our Board of Directors (the “Board”) commenced an investigation (the “Investigation”) into certain accounting and internal control matters, principally focused on certain revenue recognition matters. The Investigation was conducted with the assistance of outside counsel, which retained forensic accountants to assist them in their work. Following the conclusion of the Investigation, the Audit Committee directed its outside counsel and its forensic accountants to conduct additional procedures on an expanded scope of revenue recognition matters. Concurrent with these additional procedures, new members of our management, under the direction of the Audit Committee, performed a thorough analysis of our historical financial statements, accounting policies and financial reporting, as well as our disclosure controls and procedures and our internal control over financial reporting. During the course of the Investigation, the further procedures by outside counsel and the management analysis (collectively, the “Investigation, Procedures and Analysis”), the Audit Committee and management determined certain employees had violated our Code of Business Conduct and Ethics and discovered accounting and financial reporting errors and certain irregularities. On November 14, 2018, the Board, upon the recommendation, and with the concurrence, of the Audit Committee and new members of management, concluded that certain previously filed consolidated financial statements and related financial information should no longer be relied upon.

The Investigation, Procedures and Analysis identified certain material weaknesses in our internal control over financial reporting. See Part I, Item 4, “Controls and Procedures” in this Quarterly Report on Form 10-Q/A for the conclusions of our Chief Executive Officer and Chief Financial Officer regarding disclosure controls and procedures and our internal control over financial reporting.

SUPER MICRO COMPUTER, INC.

QUARTERLY REPORT ON FORM 10-Q/A

FOR THE THREE AND

SIX MONTHS ENDED DECEMBER 31, 2016

TABLE OF CONTENTS

Page
PART IFINANCIAL INFORMATION
ITEM 1.Financial Statements (Unaudited, As Restated)1
Condensed Consolidated Balance Sheets as of December 31, 2016 and June 30, 20161
Condensed Consolidated Statements of Operations for the Three and Six Months Ended December 31, 2016 and 20152
Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended December 31, 2016 and 20153
Condensed Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2016 and 20154
Notes to Condensed Consolidated Financial Statements5
ITEM 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations42
ITEM 3.Quantitative and Qualitative Disclosures About Market Risk53
ITEM 4.Controls and Procedures53
PART IIOTHER INFORMATION
ITEM 1.Legal Proceedings60
ITEM 1A.Risk Factors60
ITEM 2.Unregistered Sales of Equity Securities and Use of Proceeds60
ITEM 3.Defaults Upon Senior Securities60
ITEM 4.Mine Safety Disclosures61
ITEM 5.Other Information61
ITEM 6.Exhibits61
Signatures61

Unless the context requires otherwise, the words “Super Micro,” “Supermicro,” “we,” “Company,” “us” and “our” in this document refer to Super Micro Computer, Inc. and where appropriate, our wholly owned subsidiaries. Supermicro, the Company logo and our other registered or common law trademarks, service marks, or trade names appearing in this December 31, 2016 Form 10-Q/A are the property of Super Micro Computer, Inc. or its affiliates. Other trademarks, service marks, or trade names appearing in this December 31, 2016 Form 10-Q/A are the property of their respective owners.

PART I: FINANCIAL INFORMATION

Item 1. Financial Statements

SUPER MICRO COMPUTER, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

(unaudited)

December 31,June 30,
20162016
(As Restated- see Note 12)(As Restated- see Note 12)
ASSETS
Current assets:
Cash and cash equivalents$126,608$178,820
Accounts receivable, net of allowances of $2,969 and $2,413 at December 31, 2016 and June 30, 2016, respectively (including amounts receivable from related parties of $93 and $49 at December 31, 2016 and June 30, 2016, respectively)249,614174,933
Inventories667,220516,807
Prepaid income taxes5,1644,341
Prepaid expenses and other current assets (including receivables from related parties of $23,507 and $9,622 at December 31, 2016 and June 30, 2016, respectively)106,33779,427
Total current assets1,154,943954,328
Long-term investments2,6432,643
Property, plant and equipment, net193,670187,949
Deferred income taxes, net36,11133,678
Other assets10,69412,885
Total assets$1,398,061$1,191,483
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable (including amounts due to related parties of $65,565 and $44,941 at December 31, 2016 and June 30, 2016, respectively)$373,252$267,391
Accrued liabilities (including amounts due to related parties of $12,601 and $5,354 at December 31, 2016 and June 30, 2016, respectively)107,50183,596
Income taxes payable2,3335,054
Short-term debt and current portion of long-term debt, net of debt issuance costs92,44353,589
Total current liabilities575,529409,630
Long-term debt, net of debt issuance costs34,73240,000
Other long-term liabilities57,22845,200
Total liabilities667,489494,830
Commitments and contingencies (Note 9)
Stockholders’ equity:
Common stock and additional paid-in capital, $0.001 par value
Authorized shares: 100,000,000
Issued shares: 49,627,204 and 48,999,717 at December 31, 2016 and June 30, 2016, respectively293,617279,465
Treasury stock (at cost), 1,333,125 and 445,028 shares at December 31, 2016 and June 30, 2016, respectively(20,491)(2,030)
Accumulated other comprehensive loss(83)(85)
Retained earnings457,368419,119
Total Super Micro Computer, Inc. stockholders’ equity730,411696,469
Noncontrolling interest161184
Total stockholders’ equity730,572696,653
Total liabilities and stockholders’ equity$1,398,061$1,191,483

See accompanying notes to condensed consolidated financial statements.

SUPER MICRO COMPUTER, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

Three Months Ended December 31,Six Months Ended December 31,
2016201520162015
(As Restated- see Note 12)(As Restated- see Note 12)(As Restated- see Note 12)(As Restated- see Note 12)
Net sales (including related party sales of $6,410 and $5,898 in the three months ended December 31, 2016 and 2015, respectively, and $9,974 and $16,662 in the six months ended December 31, 2016 and 2015, respectively)$663,200$641,235$1,191,963$1,180,339
Cost of sales (including related party purchases of $64,999 and $71,451 in the three months ended December 31, 2016 and 2015, respectively, and $115,220 and $131,405 in the six months ended December 31, 2016 and 2015, respectively)567,064538,0481,013,275999,677
Gross profit96,136103,187178,688180,662
Operating expenses:
Research and development35,45830,65969,60858,806
Sales and marketing16,77615,06131,93928,638
General and administrative10,3819,85321,19720,399
Total operating expenses62,61555,573122,744107,843
Income from operations33,52147,61455,94472,819
Other income (expense), net690(642)2411,426
Interest expense(497)(400)(827)(724)
Income before income tax provision33,71446,57255,35873,521
Income tax provision10,83813,36817,10922,966
Net income$22,876$33,204$38,249$50,555
Net income per common share:
Basic$0.48$0.70$0.79$1.06
Diluted$0.44$0.64$0.74$0.98
Weighted-average shares used in calculation of net income per common share:
Basic48,12447,65148,14447,584
Diluted51,52151,48951,35251,405

See accompanying notes to condensed consolidated financial statements.

SUPER MICRO COMPUTER, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)

Three Months Ended December 31,Six Months Ended December 31,
2016201520162015
(As Restated- see Note 12)(As Restated- see Note 12)(As Restated- see Note 12)(As Restated- see Note 12)
Net income$22,876$33,204$38,249$50,555
Other comprehensive income (loss), net of tax:
Foreign currency translation gains (losses)(7)22(16)
Total other comprehensive income (loss)(7)22(16)
Total comprehensive income$22,869$33,206$38,251$50,539

See accompanying notes to condensed consolidated financial statements.

SUPER MICRO COMPUTER, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

Six Months Ended December 31,
20162015
(As Restated- see Note 12)(As Restated- see Note 12)
OPERATING ACTIVITIES:

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

This section and other parts of this Quarterly Report on Form 10-Q/A contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that involve risks and uncertainties. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology including “would,” “could,” “may,” “will,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” or “continue,” the negative of these terms or other comparable terminology. In evaluating these statements, you should specifically consider various factors, including the risks discussed under “Risk Factors in Part II, Item 1A of this filing. These factors may cause our actual results to differ materially from those anticipated or implied in the forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. We cannot guarantee future results, levels of activity, performance or achievements.

The following discussion and analysis of the financial condition and results of our operations should be read in conjunction with our condensed consolidated financial statements and related footnotes included elsewhere in this Quarterly Report on Form 10-Q/A and with the consolidated financial statements included in our Annual Report on Form 10-K for the year ended June 30, 2017, which we expect to file subsequent to the filing of this Quarterly Report on Form 10-Q/A and which will include our restated consolidated financial statements for the years ended June 30, 2016 and 2015.

Background of Investigation, Procedures and Analysis

See "Explanatory Note" to this Quarterly Report on Form 10-Q/A.

Nasdaq Delisting 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 has been quoted on the OTC Market and is currently traded under the symbol “SMCI.”

Overview

We are a global leader in high performance, high efficiency server technology and innovation. We develop and provide end-to-end green computing solutions to the cloud computing, data center, enterprise, big data, high performance computing ("HPC") and internet of things ("IoT")/embedded markets. Our solutions range from complete server, storage, blade and workstations to full racks, networking devices, server management software and technology support and services.

We commenced operations in 1993 and have been profitable every year since inception. Our net income was $22.9 million and $38.2 million for the three and six months ended December 31, 2016, respectively, and $33.2 million and $50.6 million for the three and six months ended December 31, 2015, respectively.

In order to increase our sales and profits, we believe that we must continue to develop flexible and customizable server solutions and be among the first to market with new features and products. We must also continue to expand our software and customer service and support offerings, particularly as we increasingly focus on larger enterprise sales. We measure our financial success based on various indicators, including growth in net sales, gross profit margin and operating margin as key measures of profitability, and cash conversion cycle as a key measure of working capital management. Among the key non-financial indicators of our success is our ability to rapidly introduce new products and deliver the latest application optimized server solutions. In this regard, we work closely with microprocessor and other component vendors to take advantage of new technologies as they are introduced. Historically, our ability to introduce new products rapidly has allowed us to benefit from the introduction of new microprocessors and as a result we monitor the introduction cycles of Intel Corporation, Advanced Micro Devices, Inc. and Nvidia Corporation carefully. This also impacts our research and development expenditures as we continue to invest more in our current and future product development efforts.

Financial Highlights

The following is a summary of other financial highlights of the three months ended December 31, 2016:

•Net sales increased by 3.4% as compared to the three months ended December 31, 2015, which increase was primarily due to an increase in sales of our subsystems and accessories to our distributors as well as growth in

our Twin family product line of servers including our FatTwin, storage, accelerated GPU computing servers or HPC and MicroBlade.

•Gross margin decreased to 14.5% from 16.1% in the three months ended December 31, 2015. The decrease was primarily due to higher costs related to shortages of memory and solid-state drives (“SSD”) as well as many of our server systems being based on mature, late life cycle processors and GPUs at lower prices.
•Operating expenses increased by 12.6% as compared to the three months ended December 31, 2015, and were equal to 9.4% of sales in the three months ended December 31, 2016 as compared to 8.6% of total sales in the three months ended December 31, 2015. This increase was mainly due to our continued increase in our human talent, primarily with respect to further investments in research and development.

Subsequent Events

For details, see Part I, Item 1, Note 11, "Subsequent Events," in our notes to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q/A.

Fiscal Year

Our fiscal year ends on June 30. References to fiscal year 2017, for example, refer to the fiscal year ending June 30, 2017.

Revenues and Expenses

Net sales. Net sales consist of sales of our server solutions, including server systems and related services, subsystems and accessories. The main factors that impact our net sales are the number of compute nodes sold, the average selling prices per node for our server system sales and units shipped and the average selling price per unit for our subsystem and accessories. The prices for our server systems range widely depending upon the configuration, including the number of compute nodes, and the prices for our subsystems and accessories vary based on the type. A compute node is a hardware configuration having its own CPU, RAM and storage and that is capable of running its own instance of a non-virtualized operating system. Measuring volume using compute nodes enables more consistent measurement across different server form factors and across different vendors. As with most electronics-based products, average selling prices typically are highest at the time of introduction of new products that utilize the latest technology and tend to decrease over time as such products mature in the market and are replaced by next generation products.

Cost of sales. Cost of sales primarily consists of the costs to manufacture our products, including the costs of materials, contract manufacturing, shipping, personnel and related expenses including stock-based compensation, equipment and facility expenses, warranty costs and inventory excess and obsolete provisions. The primary factors that impact our cost of sales are the mix of products sold and cost of materials, which include raw material costs, shipping costs and salary and benefits related to production. Cost of sales as a percentage of net sales may increase over time if decreases in average selling prices are not offset by corresponding decreases in our costs. Our cost of sales as a percentage of net sales is also impacted by the extent to which we are able to efficiently utilize our expanding manufacturing capacity. Because we generally do not have long-term fixed supply agreements, our cost of sales is subject to change in the cost of materials based on market conditions. As a result, our cost of sales as a percentage of sales in any period can be negatively impacted by significant component price increases resulting from component shortages.

Research and development expenses. Research and development expenses consist of the personnel and related expenses including stock-based compensation of our research and development teams, and materials and supplies, consulting services, third-party testing services and equipment and facility expenses related to our research and development activities. All research and development costs are expensed as incurred. We occasionally receive non-recurring engineering (“NRE”) funding from certain suppliers and customers for joint development. Under these programs, we are reimbursed for certain research and development costs that we incur as part of the joint development of our products and those of our suppliers and customers. These amounts offset a portion of the related research and development expenses and have the effect of reducing our reported research and development expenses.

Sales and marketing expenses. Sales and marketing expenses consist primarily of salaries, stock-based compensation and incentive bonuses for our sales and marketing personnel, costs for tradeshows, independent sales representative fees and

marketing programs. From time to time, we receive cooperative marketing funding from certain suppliers. Under these programs, we are reimbursed for certain marketing costs that we incur as part of the joint promotion of our products and those of our suppliers. These amounts offset a portion of the related expenses and have the effect of reducing our reported sales and marketing expenses. The timing, magnitude and estimated usage of these programs can result in significant variations in reported sales and marketing expenses from period to period. Spending on cooperative marketing, reimbursed by our suppliers, typically increases in connection with significant product releases by our suppliers.

General and administrative expenses. General and administrative expenses consist primarily of general corporate costs, including personnel expenses, financial reporting, information technology, corporate governance and compliance and outside legal, audit and tax fees.

Other income (expense), net. Other income (expense), net consists primarily of interest earned on our investment and cash balances and foreign exchange gains and losses.

Interest expense. Interest expense represents interest expense on our term loans and lines of credit.

Income tax provision. Our income tax provision is based on our taxable income generated in the jurisdictions in which we operate, primarily the United States, Taiwan and the Netherlands. Our effective tax rate differs from the statutory rate primarily due to research and development tax credits and the domestic production activities deduction which were partially offset by state taxes and unrecognized tax benefits related to permanent establishment exposures.

Critical Accounting Policies and Estimates

For a description of our critical accounting policies and estimates, see Part I, Item 1, Note 1, "Organization and Summary of Significant Accounting Policies" in our notes to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q/A.

Results of Operations

Net Sales

The following table presents net sales by product type for the three and six months ended December 31, 2016 and 2015 (dollars in millions):

Three Months Ended December 31,ChangeSix Months Ended December 31,Change
20162015$%20162015$%
Server systems$456.1$455.9$0.2—%$815.0$829.3$(14.3)(1.7)%
Percentage of total net sales68.8%71.1%68.4%70.3%
Subsystems and accessories$207.1$185.3$21.811.8%$376.9$351.0$25.97.4%
Percentage of total net sales31.2%28.9%31.6%29.7%
Total net sales$663.2$641.2$22.03.4%$1,191.9$1,180.3$11.61.0%

Comparison of Three Months Ended December 31, 2016 and 2015

The increase of $22.0 million in our net sales in the three months ended December 31, 2016 as compared with the three months ended December 31, 2015 was primarily due to an increase in sales of our subsystems and accessories to our distributors. The average selling price for our subsystems and accessories increased from $174 per unit in the three months ended December 31, 2015 to $194 per unit in the three months ended December 31, 2016. Net sales of our server systems remained relatively consistent in the three months ended December 31, 2016 as compared with the three months ended December 31, 2015.

Comparison of Six Months Ended December 31, 2016 and 2015

The increase of $11.6 million in our net sales in the six months ended December 31, 2016 as compared with the six months ended December 31, 2015 was primarily due to an increase in sales of our subsystems and accessories to our distributors. The average selling price for our subsystems and accessories increased from $177 per unit in the six months ended

December 31, 2015 to $188 per unit in the six months ended December 31, 2016. The decrease in net sales of our server systems was primarily due to a decrease in average selling price per node from $3,113 in the six months ended December 31, 2015 to $2,907 in the six months ended December 31, 2016 as a result of lower shipment volumes of complete servers and rack servers.

The following table presents the percentages of net sales from products sold to distributors and direct and original equipment manufacturers ("OEM") customers for the three and six months ended December 31, 2016 and 2015:

Three Months Ended December 31,ChangeSix Months Ended December 31,Change
20162015%20162015%
Distributors46.5%43.1%3.4%48.4%45.1%3.3%
Direct and OEM customers53.5%56.9%(3.4)%51.6%54.9%(3.3)%
Total net sales100.0%100.0%100.0%100.0%

The increase in net sales to distributors in the three and six months ended December 31, 2016 as compared to three and six months ended December 31, 2015, as a percentage of total net sales was primarily due to the higher demand for our subsystem and accessories that are typically sold through distributors. The decrease in net sales to direct/OEM customers in the three and six months ended December 31, 2016 as compared to three and six months ended December 31, 2015, as a percentage of total net sales was primarily due to the lower demand for our bundled servers and rack servers.

The following table presents percentages of net sales by geographic region for the three and six months ended December 31, 2016 and 2015:

Three Months Ended December 31,ChangeSix Months Ended December 31,Change
20162015%20162015%
United States58.5%64.2%(5.7)%58.7%63.8%(5.1)%
Europe18.8%17.3%1.5%19.4%17.8%1.6%
Asia18.7%13.9%4.8%17.7%14.2%3.5%
Others4.0%4.6%(0.6)%4.2%4.2%—%
Total net sales100.0%100.0%100.0%100.0%

The decrease in net sales in the United States was primarily due to the lower sales of server systems to our cloud computing and internet data center customers. As a result, our United States sales as a percentage of total net sales decreased in the three and six months ended December 31, 2016 as compared to three and six months ended December 31, 2015. The increase in net sales in Asia and Europe in the three and six months ended December 31, 2016 as a percentage of total net sales was primarily due to the higher demand for our server systems in China, the United Kingdom and Russia.

Cost of Sales and Gross Margin

Cost of sales and gross margin for the three and six months ended December 31, 2016 and 2015 are as follows (dollars in millions):

Three Months Ended December 31,ChangeSix Months Ended December 31,Change
20162015$%20162015$%
Cost of sales$567.1$538.0$29.15.4%$1,013.3$999.7$13.61.4%
Gross profit$96.1$103.2$(7.1)(6.9)%$178.7$180.7$(2.0)(1.1)%
Gross margin14.5%16.1%(1.6)%15.0%15.3%(0.3)%

Comparison of Three Months Ended December 31, 2016 and 2015

The $29.1 million increase in cost of sales in the three months ended December 31, 2016 as compared with the three months ended December 31, 2015 was primarily attributable to an increase of $27.8 million in product cost as related to the

increase in net sales and higher costs related to shortages of memory and SSD components, an increase of $0.7 million in compensation and benefits including stock-based compensation as a result of an increase in annual salaries and an increase of 71 operation personnel to support the growth of our business and an increase of $0.4 million in inventory provision.

Gross margin percentage was 14.5% and 16.1% for the three months ended December 31, 2016 and 2015, respectively. This decrease was primarily due to higher costs related to shortages of memory and SSD as well as many of our server systems being based on mature, late life cycle processors and GPUs at lower margins. Geographically, we had higher sales in Asia where pricing is typically more competitive.

Comparison of Six Months Ended December 31, 2016 and 2015

The $13.6 million increase in cost of sales in six months ended December 31, 2016 as compared with the six months ended December 31, 2015 was primarily attributable to an increase of $7.4 million in product cost as related to the increase in net sales and higher costs related to shortages of memory and SSD components, an increase of $2.7 million in inventory provision, an increase of $2.0 million in compensation and benefits including stock-based compensation as a result of an increase in annual salaries and an increase operation personnel to support the growth of our business and an increase of $1.2 million in the warranty provision charge as a result of an increase in cost of servicing warranty claims in the nine months ended December 31, 2016.

Our gross margin percentage was 15.0% and 15.3% for the six months ended December 31, 2016 and 2015, respectively. The decrease was primarily due to higher costs related to shortages of memory and SSD as well as many of our server systems being based on mature, late life cycle processors and GPUs at lower margins. Geographically, we had higher sales in Asia where pricing is typically more competitive.

Operating Expenses

Operating expenses for the three and six months ended December 31, 2016 and 2015 are as follows (dollars in millions):

Three Months Ended December 31,ChangeSix Months Ended December 31,Change
20162015$%20162015$%
Research and development$35.4$30.6$4.815.7%$69.6$58.8$10.818.4%
Percentage of total net sales5.3%4.8%5.8%5.0%
Sales and marketing$16.8$15.1$1.711.3%$31.9$28.6$3.311.5%
Percentage of total net sales2.5%2.3%2.7%2.4%
General and administrative$10.4$9.9$0.55.1%$21.2$20.4$0.83.9%
Percentage of total net sales1.6%1.5%1.8%1.7%
Total operating expenses$62.6$55.6$7.012.6%$122.7$107.8$14.913.8%
Percentage of total net sales9.4%8.6%10.3%9.1%

Comparison of Three Months Ended December 31, 2016 and 2015

Research and development expenses. Research and development expenses increased by $4.8 million in the three months ended December 31, 2016 as compared with the three months ended December 31, 2015. The increase was primarily due to an increase of $4.5 million in compensation and benefits including stock-based compensation as a result of an increase in annual salaries and an increase of 133 research and development personnel to support our expanded product development initiatives in the United States and in Taiwan and to support the growth of our business.

Sales and marketing expenses. Sales and marketing expenses increased by $1.7 million in the three months ended December 31, 2016 as compared to the three months ended December 31, 2015. The increase was primarily due to an increase of $0.6 million in compensation and benefits including stock-based compensation as a result of an increase in annual salaries and an increase of 25 sales and marketing personnel and an increase of $0.5 million in advertising, marketing promotional and trade show expenses.

General and administrative expenses. General and administrative expenses was $10.4 million, or 1.6% of net sales, for the three months ended December 31, 2016 which remained relatively consistent as compared with the $9.9 million, or 1.5% of net sales, for three months ended December 31, 2015.

Comparison of Six Months Ended December 31, 2016 and 2015

Research and development expenses. Research and development expenses increased by $10.8 million in the six months ended December 31, 2016 as compared with the six months ended December 31, 2015. The increase was driven primarily by an increase of $9.9 million in compensation and benefits including stock-based compensation expense and an increase of $2.1 million in product development expenses for prototype materials.

Sales and marketing expenses. Sales and marketing expenses increased by $3.3 million in the six months ended December 31, 2016 as compared with the six months ended December 31, 2015. The increase was primarily due to an increase of $1.9 million in compensation and benefits including stock-based compensation expense, resulting primarily from growth in sales and marketing personnel and an increase of $0.4 million in advertising, marketing promotional and trade show expenses.

General and administrative expenses. General and administrative expenses remained consistent from $21.2 million, or 1.8% of net sales, in the six months ended December 31, 2016 as compared with the $20.4 million, or 1.7% of net sales, in the six months ended December 31, 2015.

Interest and Other Income (Expense), Net

Other income (expense), net consists primarily of interest earned on our investment and cash balances and foreign exchange gains and losses.

Interest expense represents interest expense on our term loans and lines of credit.

Interest and other income (expense), net for the three and six months ended December 31, 2016 and 2015 are as follows (dollars in millions):

Three Months Ended December 31,ChangeSix Months Ended December 31,Change
20162015$%20162015$%
Other income (expense), net$0.7$(0.6)$1.3(216.7)%$0.2$1.4$(1.2)(85.7)%
Interest expense(0.5)(0.4)(0.1)25.0%(0.8)(0.7)(0.1)14.3%
Interest and other income (expense), net$0.2$(1.0)$1.2(120.0)%$(0.6)$0.7$(1.3)(185.7)%

Comparison of Three Months Ended December 31, 2016 and 2015

Interest and other income (expense), net. Interest and other income (expense), net increased by $1.2 million in the three months ended December 31, 2016 as compared with the three months ended December 31, 2015. This change was primarily due to a foreign currency gain related to the remeasurement of our NTD$700.0 million CTBC Bank term loan.

Comparison of Six Months Ended December 31, 2016 and 2015

Interest and other income (expense), net. Interest and other income (expense), net decreased by $1.3 million in the six months ended December 31, 2016 as compared with the six months ended December 31, 2015. The decrease was primarily due to a foreign currency loss related the remeasurement of our NTD$700.0 million CTBC term loan.

Provision for Income Taxes

Provision for income taxes and effective tax rates for the three and six months ended December 31, 2016 and 2015 are as follows (dollars in millions):

Three Months Ended December 31,ChangeSix Months Ended December 31,Change
20162015$%20162015$%
Income tax provision$10.8$13.4$(2.6)(19.4)%$17.1$23.0$(5.9)(25.7)%
Percentage of total net sales1.6%2.1%1.4%1.9%
Effective tax rate32.1%28.7%30.9%31.2%

Comparison of Three Months Ended December 31, 2016 and 2015

Income tax provision. Provision for income taxes decreased by $2.6 million, or 19.4%, in the three months ended December 31, 2016 as compared to the three months ended December 31, 2015. The effective tax rate was 32.1% and 28.7% for the three months ended December 31, 2016 and 2015, respectively. The lower income tax provision for the three months ended December 31, 2016 was primarily attributable to our lower operating income. The effective tax rate for the three months ended December 31, 2016 was higher primarily due to the effect of international transfer pricing requirements.

Comparison of Six Months Ended December 31, 2016 and 2015

Income tax provision. Provision for income taxes decreased by $6.0 million, or 26.0%, in the six months ended December 31, 2016 as compared to the six months ended December 31, 2015. The effective tax rate was 30.9% and 31.2% for the six months ended December 31, 2016 and 2015, respectively. The lower income tax provision for the six months ended December 31, 2016 was primarily attributable to our lower operating income. The effective tax rate for the six months ended December 31, 2016 was lower primarily due to the benefits from domestic production activities deductions.

Liquidity and Capital Resources

Since our inception, we have financed our growth primarily with funds generated from operations and from the proceeds of our initial public offering. In addition, we have, from time to time, utilized borrowing facilities, particularly in relation to the financing of real property acquisitions. Our cash and cash equivalents were $126.6 million and $178.8 million as of December 31, 2016 and June 30, 2016, respectively. Our cash in foreign locations was $54.1 million and $46.5 million as of December 31, 2016 and June 30, 2016, respectively. It is management's intention to reinvest the undistributed foreign earnings indefinitely in foreign operations. We believe that our current cash and cash equivalents are adequate to meet our needs, including any debt balances due at maturity, for the next twelve months from the issuance of these condensed consolidated financial statements.

Operating Activities. Net cash provided by (used in) operating activities was $(55.2) million and $87.6 million for the six months ended December 31, 2016 and 2015, respectively.

Net cash used in our operating activities for the six months ended December 31, 2016 was primarily due to cash outflows from an increase in inventories of $156.8 million and an increase in accounts receivable of $75.5 million, a decrease in deferred taxes of $2.4 million, decrease in $2.3 million in income taxes payable, and an increase in prepaid expenses and other assets of $25.3 million. These cash outflows were partially offset by cash inflows from our net income of $38.2 million, an increase in accounts payable of $110.0 million, an increase in accrued liabilities of $23.1 million, an increase in other long-term liabilities of $12.1 million, and non-cash charges relating to stock-based compensation expense of $9.4 million, provision for excess and obsolete inventories of $6.4 million, and depreciation and amortization expense of $7.7 million.

Net cash provided by our operating activities for the six months ended December 31, 2015 was primarily due to cash inflows from our net income of $50.6 million, an increase in accounts payable of $23.3 million, an increase in accrued liabilities of $18.3 million, a decrease in accounts receivable of $7.6 million, an increase in other long-term liabilities of $14.3 million, increase in income taxes payable of $1.6 million, and non-cash charges from stock-based compensation expense of $8.1 million, depreciation and amortization expense of $6.0 million, and provision for excess and obsolete inventories of $3.8 million. These cash inflows were partially offset by cash outflows from an increase in inventories of $13.6 million, an increase in deferred income taxes of $3.4 million, and an increase in prepaid expenses and other assets of $28.3 million.

The increase for the six months ended December 31, 2016 in accounts receivable was primarily due to higher sales in the last month of the second quarter of fiscal year 2017 as compared to the last month of the fourth quarter of fiscal year 2016. The increase for the six months ended December 31, 2016 in inventories and accounts payable was due to higher purchases to

support memory and SSD component shortages as well as the lunar new year holiday shutdown in Asia at the end of January 2017. We anticipate that accounts receivable, inventories and accounts payable will increase to the extent we continue to grow our product lines and our business.

The decrease for the six months ended December 31, 2015 in accounts receivable was primarily due to lower sales in the last month of the second quarter of fiscal year 2016 as compared to the last month of the fourth quarter of fiscal year 2015. The increase for the six months ended December 31, 2015 in inventories and accounts payable was primarily due to higher purchases to support the lunar new year holiday shutdown in Asia in the beginning of February 2016 and higher sales in the six months ended December 31, 2015.

Investing activities. Net cash used in our investing activities was $17.7 million and $15.6 million for the six months ended December 31, 2016 and 2015, respectively. In the six months ended December 31, 2016, of the net cash used in our investing activities, $17.4 million was related to the purchase of property, plant and equipment, of which $8.2 million was related to the property and equipment for the manufacturing buildings at our Green Computing Park in San Jose, California. In the six months ended December 31, 2015, $15.2 million was related to the purchase of property, plant and equipment.

Financing activities. Net cash provided by our financing activities was $20.8 million and $3.3 million for the six months ended December 31, 2016 and 2015, respectively. In the six months ended December 31, 2016, we borrowed an additional $130.1 million under our term loan and revolving lines of credit from Bank of America and CTBC Bank and repaid $96.6 million in loans. We received $5.9 million related to the proceeds from the exercise of stock options in the six months ended December 31, 2016. Further, we used $18.5 million to repurchase our outstanding common stock.

In the six months ended December 31, 2015, we borrowed an additional $14.4 million under our revolving line of credit from Bank of America and CTBC Bank and repaid $13.3 million in loans. Further, we received $2.4 million in connection with the exercise of stock options in the six months ended December 31, 2015.

We expect to experience continued growth in our working capital requirements and capital expenditures as we continue to expand our business. Our long-term future capital requirements will depend on many factors, including our level of revenues, the timing and extent of spending to support our product development efforts, the expansion of sales and marketing activities, the timing of our introductions of new products, the costs to ensure access to adequate manufacturing capacity and the continuing market acceptance of our products. We intend to fund this continued expansion through cash generated by operations and by drawing on our revolving credit facility or through other debt financing. However, we cannot be certain whether such financing will be available on commercially reasonable or otherwise favorable terms or that such financing will be available at all. We anticipate that working capital and capital expenditures will constitute a material use of our cash resources.

Other factors affecting liquidity and capital resources

Activities under Revolving Lines of Credit and Term Loans

Bank of America

2015 Bank of America Credit Facility

In June 2015, we entered into an amendment to our then existing credit agreement with Bank of America N.A. (“Bank of America”) which provided for (i) a $65.0 million revolving line of credit facility that would have matured on November 15, 2015 and (ii) a five-year $14.0 million term loan facility (collectively, the “2015 Bank of America Credit Facility”). The term loan was secured by three buildings located in San Jose, California and the principal and interest was payable monthly through September 30, 2016 with an interest rate at the LIBOR rate plus 1.50% per annum. In May 2016, we extended the revolving line of credit to mature on June 30, 2016.

2016 Bank of America Credit Facility

In June 2016, we entered into a new credit agreement with Bank of America, which provided for (i) a $55.0 million revolving line of credit facility including a $5.0 million letter of credit sublimit that was to mature on June 30, 2017 and (ii) a five-year $50.0 million term loan facility (collectively, the “2016 Bank of America Credit Facility”). The 2016 Bank of America Credit Facility replaced the 2015 Bank of America Credit Facility. The 2016 Bank of America Credit Facility term loan is secured by seven buildings located in San Jose, California and the property, plant and equipment and the inventory in those buildings. The principal and interest of the 2016 Bank of America Credit Facility term loan are payable monthly through

June 30, 2021 with an interest rate at the LIBOR rate plus 1.25% per annum. The interest rate for the 2016 Bank of America Credit Facility revolving line of credit is at the LIBOR rate plus 1.25% per annum. The LIBOR rate was 0.61% at December 31, 2016. The letter of credit bears interest at a rate of 1.25% per annum. In May 2017, we entered into an amendment to the 2016 Bank of America Credit Facility to increase the revolving line of credit to $85.0 million and extended the maturity date of the revolving lines of credit to October 31, 2018. Prior to the maturity, in April 2018, we repaid and terminated the 2016 Bank of America Credit Facility with proceeds from a new revolving line of credit (the "2018 Bank of America Credit Facility").

In June 2016, we also entered into a separate credit agreement as a part of the 2016 Bank of America Credit Facility, which provided for a revolving line of credit of $10.0 million for our Taiwan and Netherlands subsidiaries that was to mature on June 30, 2017. The interest rate of the revolving line of credit is equal to a minimum of 0.9% per annum plus the lender's cost of funds. In December 2016, we entered into an amendment to this separate credit agreement to increase the revolving line of credit from $10.0 million to $20.0 million. We extended the revolving line of credit to mature on October 31, 2018. Under the terms of this separate credit agreement, we cannot directly or indirectly pay any dividends, except in limited situations.

As of December 31, 2016 and June 30, 2016, the total outstanding borrowings under the 2016 Bank of America Credit Facility term loans was $45.0 million and $0.9 million, respectively. The total outstanding borrowings under the 2016 Bank of America Credit Facility revolving lines of credit was $43.2 million and $62.2 million as of December 31, 2016 and June 30, 2016, respectively. The interest rates for these loans ranged from 1.19% to 2.14% per annum as of December 31, 2016 and from 1.02% to 1.96% per annum as of June 30, 2016, respectively. As of December 31, 2016, the amount of the unused revolving lines of credit with Bank of America under the credit agreements was $21.8 million. As of December 31, 2016, total assets amounting to $1,043.7 million collateralized the line of credit with Bank of America under the credit agreement, which represent our total assets of our United States headquarters, except for seven buildings located in San Jose, California and property, plant and equipment and inventory in those buildings. As of December 31, 2016, total assets collateralizing the term loan with Bank of America under the credit agreement were $101.1 million.

2018 Bank of America Credit Facility

In April 2018, we entered into the 2018 Bank of America Credit Facility, which replaced the 2016 Bank of America Credit Facility. The 2018 Bank of America Credit Facility provides for a revolving credit line and other financial accommodations of up to $250.0 million extended by certain lenders. The 2018 Bank of America Credit Facility expires after 364 days, or at our option, and if certain conditions are satisfied, including being current on all of our delinquent quarterly and annual filings with the SEC, may convert into a 5-year revolving credit facility. If and upon such conversion, the lenders for the 2018 Bank of America Credit Facility shall extend, in aggregate, a principal amount of up to $400.0 million. Prior to the 2018 Bank of America Credit Facility’s conversion to the 5-year revolving credit facility, interest shall be at the LIBOR rate plus 2.75% per annum. Upon the 2018 Bank of America Credit Facility converting to the 5-year revolving credit facility, interest shall accrue at the LIBOR rate plus an amount between 1.50% and 2.00% for loans to both Super Micro Computer and Super Micro Computer B.V. Interest accrued on any loans under the 2018 Bank of America Credit Facility is due on the first day of each month, and the loans are due and payable in full on the termination date of the 2018 Bank of America Credit Facility, unless payment is required earlier. Voluntary prepayments are permitted without early repayment fees or penalties. Subject to customary exceptions, the 2018 Bank of America Credit Facility is secured by substantially all of our assets. Upon conversion to the 5-year revolving credit facility both Super Micro Computer’s assets, and at our option, Super Micro Computer B.V.'s assets will be used as collateral. Under the terms of the 2018 Bank of America Credit Facility, we cannot pay any dividends.

On January 31, 2019, we paid a fee and entered into an amendment of the 2018 Bank of America Credit Facility that resulted in the extension of the maturity date of the 2018 Bank of America Credit Facility from April 19, 2019 to June 30, 2019.

CTBC Bank

In April 2016, we entered into a credit agreement with CTBC Bank Co., Ltd (“CTBC Bank”) that provides for (i) a 12-month NTD$700.0 million or $21.6 million U.S. dollar equivalent term loan facility secured by our land and building located in Bade, Taiwan with an interest rate equal to the lender's established NTD interest rate plus 0.25% per annum which was adjusted monthly, which term loan facility also included a 12-month line of guarantee up to NTD$100.0 million or $3.1 million U.S. dollar equivalent with an annual fee equal to 0.5% per annum, and (ii) a 12-month revolving line of credit up to 80.0% of eligible accounts receivable in an aggregate amount of up to $40.0 million with an interest rate equal to the lender's established USD interest rate plus 0.30% per annum which was adjusted monthly (collectively, the “CTBC Credit Facility”). The total borrowings allowed under the CTBC Credit Facility was capped at $40.0 million. We extended the CTBC Credit Facility to mature on May 31, 2017.

In May 2017, we renewed the credit agreement with respect to the CTBC Credit Facility, such that it provides for (i) a 12-month NTD$700.0 million or $23.0 million U.S. dollar equivalent term loan facility secured by our land and building located in Bade, Taiwan with an interest rate equal to the lender's established NTD interest rate plus 0.25% per annum which is adjusted monthly, which term loan facility also included a 12-month line of guarantee up to NTD$100.0 million or $3.3 million U.S. dollar equivalent with an annual fee equal to 0.5% per annum, and (ii) a 12-month revolving line of credit up to 80.0% of eligible accounts receivable in an aggregate amount of up to $50.0 million with an interest rate equal to the lender's established USD interest rate plus an interest rate ranging from 0.40% to 0.45% per annum which is adjusted monthly. The total borrowings allowed under the CTBC Credit Facility were capped at $50.0 million.

The total outstanding borrowings under the CTBC Credit Facility term loan were denominated in Taiwanese dollars and remeasured into U.S. dollars of $18.5 million and $20.4 million at December 31, 2016 and June 30, 2016, respectively. At December 31, 2016 and June 30, 2016, the total outstanding borrowings under the CTBC Credit Facility revolving line of credit was $20.8 million and $10.1 million, respectively, in U.S. dollars. The interest rate for these loans ranged from 0.95% and 2.15% at December 31, 2016 and 0.90% and 1.25% per annum at June 30, 2016. At December 31, 2016, the amount available for future borrowing under the CTBC Credit Facility was $0.6 million. As of December 31, 2016, the net book value of land and building located in Bade, Taiwan, collateralizing the CTBC Credit Facility term loan was $26.6 million. Under the terms of the May 2017 renewed credit agreement, the CTBC Credit Facility was to mature on April 30, 2018 but prior to the maturity we entered into a new credit agreement with CTBC Bank in January 2018.

In January 2018, we entered into a credit agreement with CTBC Bank that provides for (i) a 12-month NTD$700.0 million or $23.6 million U.S. dollar equivalent term loan facility secured by the land and building located in Bade, Taiwan with an interest rate equal to the lender's established NTD interest rate plus 0.25% per annum which is adjusted monthly, which term loan facility also includes a 12-month line of guarantee up to NTD$100.0 million or $3.4 million U.S. dollar equivalent with an annual fee equal to 0.5% per annum, and (ii) a 12-month NTD$1,500.0 million or $50.5 million U.S. dollar equivalent term loan facility with an interest rate equal to the lender's established NTD interest rate plus 0.25% per annum which is adjusted monthly (collectively, the “2018 CTBC Credit Facility”). The 2018 CTBC Credit Facility replaced the CTBC Credit Facility. The total borrowings allowed under the 2018 CTBC Credit Facility was initially capped at $50.0 million and in August 2018 was reduced to $40.0 million. In April 2019, we extended the maturity of 2018 CTBC Credit Facility to June 30, 2019.

Covenant Compliance

2018 Bank of America Credit Facility

The credit agreement with Bank of America related to the 2018 Bank of America Credit Facility

contains customary representations and warranties and customary affirmative and negative covenants applicable to us. The credit agreement contains a financial covenant, which requires that we maintain a Fixed Charge Coverage Ratio, as defined in the agreement of at least 1.00 for each twelve-month period while a Trigger Period, as defined in the agreement, is in effect. We have maintained compliance with this covenant.

On September 7, 2018, Bank of America issued an extension letter to us in connection with the 2018 Bank of America Credit Facility, which extended the delivery date of our audited consolidated financial statements, compliance certificates and other material reports for the fiscal year ended June 30, 2018 to January 31, 2019. On January 31, 2019, we entered into an amendment of the loan and security agreement with respect to the 2018 Bank of America Credit Facility to, among other matters, (a) extend the delivery date of our audited consolidated financial statements, compliance certificates and other material reports for the fiscal year ended June 30, 2018 to June 30, 2019, and (b) require the delivery, by no later than March 31, 2019, of our audited consolidated financial statements for the fiscal year ended June 30, 2017. In April 2019, we paid a fee to extend the delivery of our audited consolidated financial statements for the fiscal year ended June 30, 2017 to June 30, 2019. We intend to negotiate the further extension for delivery of our audited consolidated financial statements, compliance certificates and other material reports for the fiscal year ended June 30, 2018.

CTBC Bank

There are no financial covenants associated with the CTBC Credit Facility or the 2018 CTBC Credit Facility.

Share Repurchase Program

In July 2016, our Board of Directors adopted a program to repurchase from time to time at management’s discretion up to $100.0 million of our common stock in the open market or in private transactions during the next twelve months at

prevailing market prices. During the three months ended December 31, 2016, we did not purchase any shares of our common stock in the open market. During the six months ended December 31, 2016, we purchased 888,097 shares of our common stock in the open market at a weighted average price of $20.79 per share for approximately $18.5 million. Repurchases were made under the program using our cash resources. The repurchase program ended in July 2017.

Recent Accounting Pronouncements

For a description of recent accounting pronouncements, including the expected dates of adoption and estimated effects, if any, on our condensed consolidated financial statements, see Part I, Item 1, Note 1, “Organization and Summary of Significant Accounting Policies” in our notes to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q/A.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

Interest Rate Risk

The primary objectives of our investment activities are to preserve principal, provide liquidity and maximize income without significantly increasing the risk. Some of the securities we invest in are subject to market risk. This means that a change in prevailing interest rates may cause the fair value of the investment to fluctuate. To minimize this risk, we maintain our portfolio of cash equivalents and short-term investments in money market funds and certificates of deposit. Our long-term investments include auction rate securities, which have been classified as long-term due to the lack of a liquid market for these securities. Since our results of operations are not dependent on investments, the risk associated with fluctuating interest rates is limited to our investment portfolio, and we believe that a 10% change in interest rates would not have a significant impact on our results of operations. As of December 31, 2016, our investments were in money market funds, certificates of deposits and auction rate securities.

We are exposed to changes in interest rates as a result of our borrowings under our term loan and revolving lines of credit. The interest rates for the term loans and the revolving lines of credit ranged from 0.95% to 2.15% at December 31, 2016 and 0.90% to 1.96% at June 30, 2016, respectively. Based on the outstanding principal indebtedness of $127.5 million under our credit facilities as of December 31, 2016, we believe that a 10% change in interest rates would not have a significant impact on our results of operations.

Foreign Currency Risk

To date, our international customer and supplier agreements have been denominated primarily in U.S. dollars, and accordingly, we have limited exposure to foreign currency exchange rate fluctuations from customer agreements, and do not currently engage in foreign currency hedging transactions. The functional currency of our subsidiaries in the Netherlands and Taiwan is the U.S. dollar. However, certain transactions in these entities are denominated in currency other than the U.S. dollar, and thus we are subject to foreign currency exchange rate fluctuations associated with re-measurement to U.S. dollars. Such fluctuations have not been significant historically. Foreign exchange gain (loss) for the three and six months ended December 31, 2016 was $0.6 million and $0.1 million, respectively, and for the three and six months ended December 31, 2015 was $(0.7) million and $1.3 million, respectively.

Item 4. Controls and Procedures

Background

In August 2017, prior to the issuance of the Company’s consolidated financial statements for the fiscal year ended June 30, 2017, the audit committee (the “Audit Committee”) of the Company’s Board of Directors (the “Board”) commenced an investigation (the “Investigation”) into certain accounting and internal control matters at the Company, principally focused on certain revenue recognition matters. The Investigation was conducted with the assistance of outside counsel, which retained forensic accountants to assist them in their work. Following the conclusion of the Investigation, the Audit Committee directed its outside counsel and its forensic accountants to conduct additional procedures on an expanded scope of revenue recognition matters. Concurrently with these additional procedures, new members of the Company’s management, under the direction of the Audit Committee, performed a thorough analysis of the Company’s historical financial statements, accounting policies and financial reporting, as well as the Company’s disclosure controls and procedures and its internal control over financial reporting. During the course of the Investigation, the further procedures by outside counsel and the management analysis (collectively, the “Investigation, Procedures and Analysis”), the Audit Committee and management discovered accounting and financial reporting errors and certain irregularities.

The Audit Committee and management also discovered internal control deficiencies and determined that certain employees had violated the Company’s Code of Business Conduct and Ethics (“Code of Conduct”). In connection with the preparation and filing of this Quarterly Report on Form 10-Q/A, we have conducted the requisite evaluations of the effectiveness of our disclosure controls and procedures and of our internal control over financial reporting both as of December 31, 2016. These conclusions are explained below.

Evaluation of Effectiveness of Disclosure Controls and Procedures

In connection with the February 2017 original filing of our Quarterly Report on Form 10-Q for the quarter ended December 31, 2016, our Chief Executive Officer ("CEO") and former Chief Financial Officer ("CFO") had concluded that, as of December 31, 2016 (the “Evaluation Date”), 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 (“Exchange Act”)) were effective. However, in connection with the Investigation, Procedures and Analysis, an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures was reperformed under the supervision and with the participation of our management, including our current CFO. As a result of this evaluation, our CEO and current CFO concluded that our disclosure controls and procedures were not effective as of the Evaluation Date because of the material weaknesses in internal control.

Notwithstanding the conclusion by our CEO and CFO that our disclosure controls and procedures as of December 31, 2016 were not effective, and notwithstanding the material weaknesses in our internal control over financial reporting we have identified, management believes that the condensed consolidated financial statements and related financial information included in this Quarterly Report on Form 10-Q/A fairly present in all material respects our financial condition, results of operations and cash flows as of the dates presented, and for the periods ended on such dates, in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”).

Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f).

Internal control over financial reporting is a process designed by, or under the supervision of, our CEO and CFO to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our consolidated financial statements for external purposes in accordance with U.S. GAAP. Management’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets, (ii) provide reasonable assurance that transactions are appropriately recorded to permit preparation of financial statements in accordance with U.S. GAAP and that our receipts and expenditures are made only in accordance with authorizations of management, acting under authority delegated to them by the Board, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

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.

In connection with management’s assessment of the Company’s internal control over financial reporting described above, management has identified the deficiencies described below that constituted material weaknesses in our internal control over financial reporting as of December 31, 2016. These deficiencies led to material errors in our previously issued financial statements, which in turn led to the restatement of those previously issued condensed consolidated financial statements, as described in Note 12 to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q/A.

Control Environment

We have identified deficiencies in the control environment component of the COSO Framework that constitute material weaknesses, either individually or in the aggregate. These deficiencies related to all the principles associated with the control environment component of the COSO Framework. Contributing factors include:

•We had a culture of aggressively focusing on quarterly revenue without sufficient focus on compliance. Senior management did not establish and promote a control environment with an appropriate tone of compliance and control consciousness throughout the entire Company. The Company did not sufficiently promote, monitor or enforce adherence to the Code of Conduct. In the pursuit of quarterly revenue, certain of our sales, finance and operations personnel, including officers and managers, were aware of, condoned or were involved in actions that reflected an inappropriate tone at the top, that violated our Code of Conduct and our accounting policies and procedures, and that were inconsistent with a commitment to integrity and ethical values. These actions included (i) shipping products in advance of customer requested delivery dates, (ii) shipping products to storage facilities at the end of a quarter for later delivery to customers, (iii) in certain cases entering into side agreements with customers, (iv) in certain cases, shipping products before manufacturing was completed, (v) altering source documents related to some sales transactions and (vi) failing to disclose or obscuring material facts about sales transactions. As a result of those actions, we recognized revenue from numerous sales transactions in the incorrect period, although these valid sales transactions were recognized in one or more subsequent quarters in the aforementioned restatement. Some employees, including officers and managers, also failed to raise issues with material accounting consequences to the Audit Committee and our external auditors, and with respect to one transaction, appear to have attempted to minimize material facts about a sales transaction to, or obscure those facts from, the Audit Committee and our external auditors. Finally, we did not, on a consistent basis, (i) timely and thoroughly detect and address failures to comply with the Code of Conduct and (ii) train employees adequately to identify and report issues to management and the Audit Committee.
•The Company did not maintain a sufficient complement of management, accounting, financial reporting, sales, operations, engineering and information technology personnel who had appropriate levels of knowledge, experience, and training in accounting and internal control matters commensurate with the nature, growth and complexity of our business. The lack of sufficient appropriately skilled and trained personnel contributed to our failure to (i) adequately identify potential risks, (ii) include in the scope of our internal controls framework certain systems relevant to financial reporting and the preparation of our consolidated financial statements, (iii) design and implement certain risk-mitigating internal controls and (iv) consistently operate certain of our internal controls. The lack of sufficient appropriately skilled and trained personnel also contributed to deficiencies in establishing and maintaining policies and procedures, establishing and enforcing standards for maintaining documents for revenue recognition purposes and establishing accountability for internal controls across the entire Company.

Due to the interdependencies between the COSO Framework components, the weaknesses in our control environment contributed to other material weaknesses within our system of internal control over financial reporting.

Risk Assessment

We have identified deficiencies in the risk assessment component of the COSO Framework that aggregate to a material weakness. These deficiencies related to the principles associated with the risk assessment component of the COSO Framework, specifically principles within the component related to: (i) identifying, assessing, and communicating appropriate control objectives, (ii) identifying and analyzing risks to achieve these objectives, (iii) contemplating fraud risks, and (iv) identifying and assessing changes in the business that could impact our system of internal controls.

Control Activities

We have identified deficiencies in the control activities component of the COSO Framework that aggregate to a material weakness. These deficiencies related to principles associated with the control activities component of the COSO Framework, specifically principles within the component related to (i) selecting and developing control activities that mitigate risks (ii) selecting and developing general controls over technology and (iii) deploying control activities through policies that establish what is expected and procedures that put policies into action. We did not design or operate certain control activities to sufficiently respond to potential risks of material misstatement in the area of revenue recognition. We did not effectively select and develop certain information technology (“IT”) general controls and we also had control deficiencies at both the IT administrator and end-user levels across multiple applications relevant to financial reporting. We also had deficiencies related to segregation of duties. Deficiencies in control activities contributed to material accounting errors, and the potential for there to have been material accounting errors, in substantially all financial statements account balances and disclosures.

Information and Communication

We have identified deficiencies in the information and communication component of the COSO Framework that aggregate to a material weakness. These deficiencies related to principles associated with the information and communications component of the COSO Framework, specifically principles within the component related to (i) generating and using relevant quality information, (ii) internally communicating information, including objectives and responsibilities for internal control, necessary to support the functioning of internal control and (iii) communicating with external parties regarding matters affecting the functioning of internal control. We rely on manual business processes to compensate for a lack of extensive integration in our information systems. We also rely heavily on each of our various functions, such as sales, operations, accounting, legal and management, to communicate to the other functions information that the entire organization needs to operate an effective internal control environment. In certain areas, our control activity deficiencies resulted from insufficient communication of information among our internal functions as well as from officers and managers to both the Audit Committee and our external auditors.

Monitoring of Controls

We have identified deficiencies in the monitoring of controls component of the COSO Framework that aggregate to a material weakness. There were deficiencies related to principles associated with the monitoring of controls component of the COSO Framework, specifically principles within the component related to (i) selecting, developing and performing ongoing and/or separate evaluations and (ii) evaluating and communicating deficiencies in a timely manner. We lacked controls (i) to determine whether components of internal control were present and functioning, (ii) to mitigate the risk of management overriding internal controls and (iii) to detect incorrect accounting practices. Consequently, we did not identify internal control deficiencies, or did not raise such deficiencies in a timely manner to those parties responsible for internal controls. In addition, we did not always ensure that these deficiencies were remediated thoroughly and timely.

The material weaknesses noted above contributed to the following additional material weaknesses:

Revenue Recognition Accounting

We have identified deficiencies in revenue recognition accounting controls that resulted in material errors constituting material weaknesses, either individually or in the aggregate, as we did not appropriately design, or effectively operate, internal controls over certain aspects of accurate recording, presentation, and disclosure of revenue and related costs. The following were contributing factors to the material weaknesses in revenue recognition accounting:

•The Company’s internal controls did not consistently identify and properly account for key non-standard contract or arrangement terms for sales transactions that involved multiple elements (such as when the price of a system includes an extended warranty period and/or our agreement to provide services to our customer). Specifically, the Company’s internal controls failed to identify, accumulate and assess the accounting impact of situations in which we recognized revenue before all the elements necessary to establish “delivery” had occurred.
•With respect to sales transactions near quarter-end, our internal controls failed to consistently identify transactions where the terms of the sales arrangements with our customers were not properly documented in a form that fully reflected the final understanding between the parties as to the specific nature and terms of the agreed-upon transaction.
•Our internal controls failed to consistently identify, resolve, document in our accounting system and allow for proper accounting where there were inconsistencies among the various documents underlying our sales transactions, and we did not always communicate the existence or resolution of those inconsistencies to our accounting organization to enable the proper recognition of revenue.
•We lacked a control to ensure a consistent approach for reviewing our pricing and establishing supportable estimates of best estimated selling prices in allocating revenue between multiple elements. Consequently, we did not always correctly calculate the portions of the total revenue recognized from sales transactions allocated among the various elements.

Information Technology General Controls

We have identified deficiencies related to IT general controls that represent a material weakness, either individually or in the aggregate. The following were contributing factors:

•We have a decentralized approach to developing IT policies and practices and to monitoring our IT controls. As a result, our internal procedures for granting and monitoring employee access, and managing changes to various applications and infrastructure layers relevant to our financial reporting are not consistent across those applications and infrastructure layers. In addition, some of our internally-developed applications relevant to financial reporting lack logging capabilities to monitor access changes or application changes. We have also authorized certain users with broad access, both as a user and as an administrator, to all parts of our primary accounting system without adequate monitoring or recording of how they used that access. As a result of these factors, we have material weaknesses related to access controls and change management. The fact that we had material weaknesses related to access controls and change management means that it is possible that our business process controls that depend on the affected information systems, or that depend on data or financial reports generated from affected information systems, could be adversely affected due to the access control and change management issues, although we have identified no instances of any adverse effect due to these deficiencies.

Remediation Plan and Status

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 these remediation actions, along with additional actions, when fully implemented, will remediate the material weaknesses we have identified and strengthen our internal control over financial reporting. We are committed to improving our internal control processes and intend to continue to review and improve our financial reporting controls and procedures. As we continue to evaluate and work to improve our internal control over financial reporting, we may take additional measures to address control deficiencies with the overall objective to design and operate internal controls that mitigate identified risks and enable an effective system of internal control over external financial reporting.

To date, we have taken the following remediation actions:

•Restructured our sales organization, which resulted in the resignations of the Senior Vice President of International Sales, the Senior Vice President of Worldwide Sales, the Vice President, Strategic Accounts, the Vice President, Strategic Sales, the Vice President, Business Development and certain other sales personnel.
•Appointed experienced professionals to key accounting and finance and compliance leadership positions, including the appointments of a new Chief Financial Officer and a new Corporate Controller in January 2018, and the creation of, and appointments to, two newly established roles of Chief Compliance Officer and Vice President of Internal Audit in May 2018 and August 2018, respectively.
•Reviewed and amended our Code of Conduct to align with the organizational changes described above and to strengthen certain provisions regarding compliance and reporting.
•Adopted an Internal Audit Charter setting forth the responsibilities of the internal audit function and establishing that the Vice President of Internal Audit reports directly to the Audit Committee and that the Audit Committee has authority to provide adequate funding for this function.
•Changed our organizational structure to narrow the scope of responsibilities of certain of our senior executives and to revise various reporting relationships, which included the appointment of a new Senior Vice President of Worldwide Sales, and a new Senior Vice President of Operations.
•Conducted training in the following areas:
−Revenue recognition training for our global sales force, various operations personnel, and certain senior executives, including our CEO, which included detailed examples of acceptable and unacceptable sales practices,
−Reviewing with our senior management team our amended Code of Conduct,

− Reviewing with our CEO enhanced processes for periodic evaluations by the CEO and the CFO of the effectiveness of our disclosure controls and procedures, and the periodic assessments by the CEO and the CFO of the effectiveness of our internal control over financial reporting, and other compliance matters, and

− Shipping and cut-off training for accounting and operations personnel that included new requirements for quarter-end procedures.

•Upgraded our accounting department to include the new roles of Senior Director of Tax, Financial Audit Director and Information Technology Audit Director, as well as replaced certain of our accounting personnel with more experienced individuals, including rebuilding and expanding our revenue recognition team.
•Enhanced the sales sub-certification document that supports our CEO’s and CFO’s financial statement certifications and expanded the sub-certification participation population to the global sales force.

Our management believes that meaningful progress has been made on the remaining remediation efforts. Although timetables vary, management regards successful completion of our remaining remediation actions as an important priority. Some of the more significant remaining remediation activities include:

•Developing and implementing an ongoing compliance training program regarding significant accounting and financial reporting matters, as well as broad compliance matters, for accounting, financial reporting, sales and operations personnel, as well as for our CEO, our other corporate executives and the Board.
•Integrating the responsibility for internal controls across business functions to ensure accountability for internal controls beyond the accounting and finance team.
•Continuing to assess current staffing levels and competencies to ensure the optimal complement of personnel with appropriate qualifications and skill sets.
•Reevaluating and revising our Sarbanes-Oxley compliance program (our “SOX Program”), and making improvements to our SOX Program governance, risk assessment processes, testing methodologies and corrective action mechanisms.
•Redesigning and implementing necessary changes to the existing system of internal controls in the context of the revised and more comprehensive risk assessment.
•Assigning accountability for certain internal controls to our Compliance Department, such as our organizational-wide quarterly sales certification process.
•Reevaluating the boundary applications that interface with our primary accounting and reporting application and redesigning logical access and program change controls to enhance the reliability of information used to conduct other internal controls.
•Continuing to re-assess risks and controls related to the accurate recording, presentation, and disclosure of revenue and related costs

Changes in Internal Control over Financial Reporting

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 December 31, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Management, including our Chief Executive Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, misstatements, errors, and instances of fraud, if any, within our organization have been or will be prevented or detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls also can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no

assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, internal controls may become inadequate as a result of changes in conditions, or through the deterioration of the degree of compliance with policies or procedures.

PART II: OTHER INFORMATION

Item 1. Legal Proceedings

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

On September 4, 2015, a complaint was filed against us, our Chief Executive Officer, and our former Chief Financial Officer in the U.S. District Court for the Northern District of California (Deason v. Super Micro Computer, Inc., et al., No. 15-cv-04049). The complaint claimed that the defendants violated Section 10(b) of the Securities Exchange Act of 1934 because of alleged misrepresentations and/or omissions in public statements which supposedly were revealed when we announced on August 31, 2015 that the filing of our Annual Report on Form 10-K for fiscal 2015 would be delayed to allow us to complete an investigation into certain marketing expenses. On January 12, 2018, after an initial round of successful motion to dismiss briefing leading to Plaintiff filing an amended complaint, we and the named individual defendants filed another motion to dismiss on the grounds that the amended complaint failed to state a claim because it did not plead falsity or scienter. On June 27, 2018, the Court granted our motion to dismiss without leave to amend and entered judgment in favor of us and the other defendants. On July 24, 2018, Plaintiff filed a notice of appeal to the 9th Circuit Court of Appeals; however, Plaintiff subsequently filed a voluntary notice dismissing the appeal and, thus, ending the litigation on November 1, 2018.

On February 8, 2018, two putative class action complaints were filed against us, our Chief Executive Officer, and our former Chief Financial Officer 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 and it filed an amended complaint naming our Senior Vice President of Investor Relations, as an additional defendant. The court approved the parties’ agreement to permit a further amendment of the complaint, which was filed on January 22, 2019. We believe the allegations filed are without merit, and intend to vigorously defend against the lawsuit.

Between late 2015 and 2017, 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. In addition, we have received subpoenas from the SEC in connection with the matters underlying our inability to timely file our Form 10-K for the fiscal year ending June 30, 2017. We also received a subpoena from the SEC following the false and widely-discredited reporting in October 2018 by Bloomberg Businessweek concerning our products. We are cooperating fully to comply with these government requests.

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 operations.

Item 1A. Risk Factors

Important risk factors that could affect our operations and financial performance, or that could cause results or events to differ from current expectations, will be described in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended June 30, 2017, which we expect to file subsequent to the filing of this Quarterly Report on Form 10-Q/A.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

In July 2016, our Board of Directors adopted a program to repurchase from time to time at management’s discretion up to $100.0 million of our common stock in the open market or in private transactions during the following twelve months at prevailing market prices. Repurchases were made under the program using our cash resources. We started repurchases under the program in July 2016 and the program ended in July 2017.

During the three months ended December 31, 2016, we did not repurchase any shares of our common stock. As of December 31, 2016, the approximate dollar value of shares that may yet be purchased under our share repurchase program was $81.5 million.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

On November 4, 2016, our Board of Directors elected Saria Tseng to serve as a member of the Board of Directors, effective immediately. Ms. Tseng serves as a Class III director. In addition, Ms. Tseng was appointed as a member of the Compensation Committee and Nominating and Corporate Governance Committee of the Board, effective immediately.

Ms. Tseng has served as Vice President of Strategic Corporate Development, General Counsel and Secretary of Monolithic Power Systems (Nasdaq:MPWR) since 2004, a leading fabless manufacturer of high-performance analog and mixed-signal semiconductors. Over the past 22 years, Ms. Tseng has accumulated a broad spectrum of legal expertise and business knowledge in the technology industry. From 2001 to 2004, Ms. Tseng served as Vice President, General Counsel and Corporate Secretary of MaXXan Systems, an enterprise class storage network system. Previously, Ms. Tseng was an attorney at Gray Cary (now DLA Piper) and Jones Day. Ms. Tseng is a member of the state bar in both California and New York and is a member of the bar association of the Republic of China, Taiwan. She holds Master of Law degrees from the University of California at Berkeley and the Chinese Culture University in Taipei.

As a member of the Board of Directors, Ms. Tseng will be entitled to participate in our non-employee director compensation program, under which she will receive (i) an annual retainer of $40,000 for her service as a director, (ii) an annual retainer of $2,500 for each of her committee memberships, (iii) an initial option to purchase 18,000 shares upon first becoming a member of the Board (“Initial Grant”) and (iv) an annual grant of options to purchase 4,500 shares of our common stock (“Annual Grant”). The Initial Grant will vest and become exercisable over four years, with the first 25% of the shares subject to vesting on the first anniversary of the date of grant and the remainder vesting quarterly thereafter. The Annual Grant will vest and become exercisable on the first anniversary of the date of grant or immediately prior to our next annual meeting of stockholders, if earlier. The Initial Grant and Annual Grant have a per share exercise price equal to 100% of the fair market value of the underlying shares on the date of grant, and will become fully vested if we are subject to a change of control.

There are no arrangements or understandings between Ms. Tseng and any other persons pursuant to which she was selected as a director. There are no related party transactions of the kind described in Item 404(a) of Regulation S-K in which Ms. Tseng is or was a participant.

Item 6. Exhibits

(a) Exhibits.

Exhibit NumberDescription
31.1Certification of Charles Liang, President and Chief Executive Officer of the Registrant pursuant to Section 302, as adopted pursuant to the Sarbanes-Oxley Act of 2002
31.2Certification of Kevin Bauer, Chief Financial Officer of the Registrant pursuant to Section 302, as adopted pursuant to the Sarbanes-Oxley Act of 2002
32.1Certification of Charles Liang, President and Chief Executive Officer of the Registrant pursuant to Section 906, as adopted pursuant to the Sarbanes-Oxley Act of 2002
32.2Certification of Kevin Bauer, Chief Financial Officer of the Registrant pursuant to Section 906, as adopted pursuant to the Sarbanes-Oxley Act of 2002
101.INSXBRL Instance Document
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SUPER MICRO COMPUTER, INC.

Date:May 16, 2019/s/ CHARLES LIANG
Charles Liang President, Chief Executive Officer and Chairman of the Board (Principal Executive Officer)
Date:May 16, 2019/s/ Kevin Bauer
Kevin Bauer Senior Vice President, Chief Financial Officer (Principal Financial and Accounting Officer)