SUPER MICRO COMPUTER, INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

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This section and other parts of this Quarterly Report 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 and included in our Annual Report on Form 10-K for the fiscal year ended
June 30, 2021 (the "2021 10-K"), which includes our condensed consolidated
financial statements for the fiscal years ended June 30, 2021 and 2020.

Insight

We are a global leader and innovator of application-optimized high performance
and high-efficiency server and storage systems for a variety of markets,
including enterprise data centers, cloud computing, artificial intelligence, 5G
and edge computing. Our solutions include complete servers, storage systems,
modular blade servers, blades, workstations, full racks, networking devices,
server management software, and server sub-systems. We also provide global
support and services to help our customers install, upgrade and maintain their
computing infrastructure.

We commenced operations in 1993 and have been profitable every year since
inception. Our net income for the three months ended March 31, 2022 increased to
$77.0 million from $18.4 million for the corresponding period in the prior year.
In order to increase our sales and profits, we believe that we must continue to
develop flexible and application optimized server and storage 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 customers. Additionally, we must
focus on development of our sales partners and distribution channels to further
expand our market share. We measure our financial success based on various
indicators, including growth in net sales, gross profit margin and operating
margin. Among the key non-financial indicators of our success is our ability to
rapidly introduce new products and deliver the latest application-optimized
server and storage solutions. In this regard, we work closely with
microprocessor and other key 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 technology transitions such as
the introduction of new microprocessors and storage technologies, and as a
result, we monitor the introduction cycles of Intel Corporation, NVIDIA
Corporation, Advanced Micro Devices, Inc., Samsung Electronics Company Limited,
Micron Technology, Inc., Broadcom Inc. and others closely and carefully. This
also impacts our research and development expenditures as we continue to invest
more in our current and future product development efforts.


Impact of the coronavirus pandemic (COVID-19)

The coronavirus (COVID-19) and its variants have continued to create volatility,
uncertainty and economic disruption for many businesses worldwide. In an effort
to contain COVID-19 or slow its spread, governments around the world have
enacted various measures, including orders that govern the operations of
businesses. We are an essential critical infrastructure (information technology)
business under the relevant federal, state and county regulations. Our first
priority is the safety of our workforce and we have therefore implemented
numerous health precautions and work practices to be in compliance with the law
and to operate in a safe manner.

We have continued to see ongoing demand for our IT solutions and do not have
significant direct exposure to industries which have been impacted the greatest.
The pandemic has created additional demand for many server applications, that
support the global movement towards a digital economy. These applications
include greater use of online transactions for everyday purchases by consumers
of food, clothing, entertainment from gaming and video streaming, as well as
tele-health, social networking, messaging, email, autonomous driving solutions
and video conferencing companies.

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We have actively managed our supply chain for potential shortage risk by
building inventories of critical components required such as CPUs, memory, SSDs
and GPUs to support our ability to fulfill customer orders. Our architecture,
which is based on a "Building Block Solutions" design approach, has also
assisted us during the pandemic, to qualify different components for
compatibility with our systems to help us overcome some shortages.

Logistics has continued to be a challenge during this pandemic as the global
transportation industry, and particularly ocean transportation, has been
challenged by shortages of containers, laborers, truckers and crowded ports.
Shipping by air, has been used more frequently despite that it is more expensive
and there are fewer flights during the COVID-19 pandemic than there were
previously. We have experienced increased costs in freight as well as direct
labor costs as we incentivized our employees to continue to work and assist us
in serving our customers, many of whom are in critical industries. We expect
this trend to continue until the COVID-19 pandemic ends.

We monitor the credit profile and payment history of our customers to evaluate
risk in specific industries or geographic areas where cash flow may be
disrupted. While we believe that we are adequately capitalized, we actively
manage our liquidity needs. In June 2021, we negotiated an extension of our
credit facility with Bank of America to extend the maturity date to June 2026
and, in March 2022, further negotiated an increase in the size of our credit
facility with Bank of America from $200 million to $350 million. In July 2021,
we replaced our prior credit facility and term loan facility with CTBC Bank,
with a new facility for omnibus credit lines. In September 2021, we replaced our
prior credit facility with E.SUN Bank, with new credit facility and term
facility. In September 2021 and April 2022, we entered into a term loan facility
and credit line, respectively, with Mega Bank which will be used to support our
manufacturing activities (such as purchase of materials and components) and
provide medium-term working capital. In October 2021, we entered into a credit
facility with Chang Hwa Bank and in January 2022 we entered into a loan
agreement with HSBC Bank which will both be used to support the growth of our
Taiwan business. See "- Liquidity and Capital Resources - Other Factors
Affecting Liquidity and Capital Resources."

Our management team is focused on guiding our company through the ongoing
challenges presented by COVID-19, including the emergence of any new variants.
There are positive signs with the expiration of various COVID-19 mandates,
vaccine availability and the rollout of boosters; however, with the possibility
of the emergence of other new virus strains and vaccine supply constraints, we
are unable to predict the ultimate extent to which the global COVID-19 pandemic
may further impact our business operations, financial performance and results of
operations within the next 12 months.

Financial Highlights

Here is a summary of our financial highlights for the third quarter of fiscal 2022:

• Net sales increased 51.3% in the three months ended March 31, 2022 compared to the three months ended March 31, 2021.

• Gross margin increased to 15.5% in the three months ended March 31, 2022 13.7% in the three months ended March 31, 2021.

• Operating expenses increased by 14.2% compared to the quarter ended
March 31, 2021and were equal to 8.9% and 11.8% of net sales during the three months ended March 31, 2022 and 2021, respectively.

• Effective tax rate increased to 17.4% during the quarter ended March 31, 2022
of (1.2)% during the three months ended March 31, 2021.

Significant Accounting Policies and Estimates

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Our discussion and analysis of our financial condition and results of operations
are based upon our condensed consolidated financial statements, which have been
prepared in accordance with generally accepted accounting principles in the
United States. The preparation of these condensed consolidated financial
statements requires us to make estimates and assumptions that affect the
reported amounts of assets, liabilities, net sales and expenses. We evaluate our
estimates and assumptions on an ongoing basis, and base our estimates on
historical experience and on various other assumptions that we believe to be
reasonable under the circumstances, the results of which form the basis for the
judgments we make about the carrying value of assets and liabilities that are
not readily apparent from other sources. Because these estimates can vary
depending on the situation, actual results may differ from these estimates.
Making estimates and judgments about future events is inherently unpredictable
and is subject to significant uncertainties, some of which are beyond our
control. Should any of these estimates and assumptions change or prove to have
been incorrect, it could have a material impact on our results of operations,
financial position and statement of cash flows.

There have been no material changes in our critical accounting policies and estimates from those disclosed in our 2021 10-K. For a description of our critical accounting policies and estimates, see Part I, Section 1, Note 1, “Summary of Significant Accounting Policies” in our Notes to the Condensed Consolidated Financial Statements in this Quarterly Report.

Operating results

The following table sets forth certain items in our condensed consolidated statements of earnings expressed as a percentage of revenue.

                                                                  Three Months Ended                           Nine Months Ended
                                                                       March 31,                                   March 31,
                                                              2022                  2021                  2022                  2021
Net sales                                                       100.0  %              100.0  %              100.0  %              100.0  %
Cost of sales                                                    84.5  %               86.3  %               85.6  %               84.4  %
Gross profit                                                     15.5  %               13.7  %               14.4  %               15.6  %
Operating expenses:
Research and development                                          5.2  %                6.5  %                5.7  %                6.6  %
Sales and marketing                                               1.6  %                2.4  %                1.9  %                2.5  %
General and administrative                                        2.0  %                2.9  %                2.1  %                3.0  %
Total operating expenses                                          8.9  %               11.8  %                9.6  %               12.2  %
Income from operations                                            6.6  %                1.9  %                4.8  %                3.4  %
Other (expense) income, net                                       0.3  %                0.2  %                0.1  %               (0.1) %
Interest expense                                                 (0.1) %               (0.1) %               (0.1) %               (0.1) %
Income before income tax provision                                6.9  %                2.1  %                4.8  %                3.3  %
Income tax provision                                             (1.2) %                  -  %               (0.8) %               (0.3) %
Share of income (loss) from equity investee, net of
taxes                                                               -  %                  -  %                  -  %                  -  %
Net income                                                        5.7  %                2.1  %                4.1  %                2.9  %



Net Sales

Net sales consist of sales of our server and storage solutions, including
systems and related services and subsystems and accessories. The main factors
that impact our net sales of our server and storage systems are the number of
compute nodes sold and the average selling prices per node. The main factors
that impact our net sales of our subsystems and accessories are units shipped
and the average selling price per unit. The prices for our server and storage
systems range widely depending upon the configuration, including the number of
compute nodes in a server system as well as the level of integration of key
components such as SSDs and memory. The prices for our subsystems and
accessories can also vary widely based on whether a customer is purchasing power
supplies, server boards, chassis or other accessories.

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A compute node is an independent hardware configuration within a server system
capable of having its own CPU, memory and storage and that is capable of running
its own instance of a non-virtualized operating system. The number of compute
nodes sold, which can vary by product, is an important metric we use to track
our business. Measuring volume using compute nodes enables more consistent
measurement across different server form factors and across different vendors.
As with most electronics-based product life cycles, 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. Additionally, in order
to remain competitive throughout all industry cycles, we actively change our
selling price per unit in response to changes in costs for key components such
as memory and SSDs.

The following table shows net sales by product type for the three and nine months ended March 31, 2022 and 2021 (in millions of dollars):

                                     Three Months Ended March 31,                     Change                      Nine Months Ended March 31,                       Change
                                        2022                  2021              $                %                  2022                  2021                $                 %
Server and storage systems       $       1,145.9           $ 693.3          $ 452.6             65.3  %       $     2,981.8           $ 1,953.8          $ 1,028.0             52.6  %
Percentage of total net sales               84.5   %          77.4  %                                                  83.7   %            78.5  %
Subsystems and accessories       $         209.6           $ 202.5          $   7.1              3.5  %       $       578.9           $   534.6          $    44.3              8.3  %
Percentage of total net sales               15.5   %          22.6  %                                                  16.3   %            21.5  %
Total net sales                  $       1,355.5           $ 895.9          $ 459.6             51.3  %       $     3,560.7           $ 2,488.4          $ 1,072.3             43.1  %



Server and storage systems constitute an assembly and integration of subsystems
and accessories, and related services. Subsystems and accessories are comprised
of server-boards, chassis and accessories.

Comparison of the three months ended March 31, 2022 and 2021

The period-over-period increase in net sales of our server and storage systems
was due to a 19.7% increase in the number of units of compute nodes sold and a
41.0% increase in the average selling price.
The period-over-period increase in net sales for our subsystems and accessories
is only at 3.5% increase and this is primarily driven by an increase in the
number of units sold and due to change in product mix, largely offset by lower
pricing per unit.

Comparison of the nine months ended March 31, 2022 and 2021

The period-over-period increase in net sales of our server and storage systems
was due to a 25.2% increase in the number of units of compute nodes sold and a
24.3% increase in the average selling price.
The period-over-period increase in net sales of our subsystems and accessories
is primarily due to an increase in the number of units sold by 24.9% offset by a
decrease in the average selling prices by 13.3%, driven by product mix.

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The following table presents net sales by geographic region for the three and
nine months ended March 31, 2022 and 2021 (dollars in millions):

                             Three Months Ended March 31,             Change            Change               Nine Months Ended March 31,              Change            Change
                                2022                  2021              $                  %                   2022                  2021               $                 %
United States            $         762.4           $ 499.1          $ 263.3                52.8  %       $     1,961.6           $ 1,458.2          $ 503.4               34.5  %
Percentage of total net
sales                               56.2   %          55.7  %                                                     55.1   %            58.6  %
Asia                     $         310.0           $ 207.2          $ 102.8                49.6  %       $       857.2           $   495.3          $ 361.9               73.1  %
Percentage of total net
sales                               22.9   %          23.1  %                                                     24.1   %            19.9  %
Europe                   $         205.4           $ 162.3          $  43.1                26.6  %       $       600.6           $   429.2          $ 171.4               39.9  %
Percentage of total net
sales                               15.2   %          18.1  %                                                     16.9   %            17.2  %
Others                   $          77.7           $  27.3          $  50.4               184.6  %       $       141.4           $   105.7          $  35.7               33.8  %
Percentage of total net
sales                                5.7   %           3.0  %                                                      4.0   %             4.2  %
Total net sales          $       1,355.5           $ 895.9                                               $     3,560.6           $ 2,488.4


Comparison of the three months ended March 31, 2022 and 2021

The period-over-period increase in net sales in the United States was primarily
due to higher sales driven by higher server and storage systems unit volume,
driven by increased sales in the East Coast region combined with higher average
selling price. The period-over-period increase in net sales in Asia was due
primarily to increased sales in China and Singapore. The increase of net sales
in Europe was primarily due to higher sales in the Netherlands and Germany,
partially offset by lower sales in Russia. The period-over-period increase in
net sales in other countries was primarily due to higher sales in Brazil.

Comparison of the nine months ended March 31, 2022 and 2021

The period-over-period increase in net sales in the United States was primarily
due to higher sales driven by higher server and storage systems unit volume,
driven by increased sales in the East Coast region combined with higher average
selling price. The period-over-period increase in net sales in Asia was due
primarily to increased sales in China, Singapore, Taiwan and Korea. The
period-over-period increase of net sales in Europe was primarily due to higher
sales in Germany and the Netherlands. The period-over-period increase in net
sales in other countries was primarily due to higher sales in Brazil and U.A.E.,
partially offset by lower sales in Mexico.

Cost of sales and gross margin

Cost of sales primarily consists of the costs to manufacture our products,
including the costs of materials, contract manufacturing, shipping, personnel
expenses, including salaries, benefits, stock-based compensation and incentive
bonuses, equipment and facility expenses, warranty costs and inventory excess
and obsolescence provisions. The primary factors that impact our cost of sales
are the mix of products sold and cost of materials, which include purchased
parts, shipping costs, salary and benefits and overhead costs 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 based on the cost of
materials and market conditions. As a result, our cost of sales as a percentage
of net sales in any period can increase due to significant component price
increases resulting from component shortages.

We use several suppliers and contract manufacturers to design and manufacture
subsystems in accordance with our specifications, with final assembly and
testing predominantly performed at our manufacturing facilities in the same
region where our products are sold. We work with Ablecom, one of our key
contract manufacturers and also a related party to optimize modular designs for
our chassis and certain of other components. We also outsource to Compuware,
also a related party, a portion of our design activities and a significant part
of the manufacturing of components, particularly power supplies.

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Cost of sales and gross margin for the three and nine months ended March 31,
2022 and 2021 are as follows (dollars in millions):

                              Three Months Ended March 31,                     Change                      Nine Months Ended March 31,                      Change
                                 2022                  2021              $                %                  2022                  2021               $                %
Cost of sales             $       1,144.7           $ 772.9          $ 371.8             48.1  %       $     3,048.0           $ 2,099.4          $ 948.6             45.2  %
Gross profit              $         210.8           $ 123.0          $  87.8             71.4  %       $       512.7           $   389.0          $ 123.7             31.8  %
Gross margin                         15.5   %          13.7  %                            1.8  %                14.4   %            15.6  %                           (1.2) %


Comparison of the three months ended March 31, 2022 and 2021

The period-over-period increase in cost of sales was primarily attributed to an
increase of $342.4 million in costs of materials and contract manufacturing
expenses primarily related to the increase in net sales volume, a $15.8 million
increase in freight costs, a $2.7 million increase in overhead costs and a
$8.1 million increase in excess and obsolete inventory charges.

The period-over-period increase in the gross margin percentage was primarily due
to sales price increases. Since the start of the COVID-19 pandemic, we have
experienced an increase in costs of sales, logistics costs as well as direct
labor costs as we incentivize our employees. For the quarter ended March 31,
2022, we were able to mitigate the impact of these higher costs by charging
higher prices for our products and services.

Comparison of the nine months ended March 31, 2022 and 2021

The period-over-period increase in cost of sales was primarily attributed to an
increase of $854.8 million in costs of materials and contract manufacturing
expenses primarily related to the increase in net sales volume, a $48.3 million
increase in freight charges, a $19.6 million increase due to lower cost recovery
of cost paid in prior periods, a $9.9 million increase in excess and obsolete
inventory charges and a $7.2 million increase in overhead costs.

The period-over-period decrease in the gross margin percentage was primarily due
to sales prices increasing at a slower rate than the increase in the costs of
sales. Since the start of the COVID-19 pandemic, we have experienced an increase
in costs of sales, logistics costs as well as direct labor costs as we
incentivize our employees. This increase in costs negatively impacts our gross
margin, and we expect these higher costs to continue for the duration of the
COVID-19 pandemic.

Operating Expenses

Research and development expenses consist of personnel expenses, including
salaries, benefits, stock-based compensation and incentive bonuses, and related
expenses for our research and development personnel, as well as product
development costs such as 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 funding
from certain suppliers and customers for joint development. Under these
arrangements, we are reimbursed for certain research and development costs that
we incur as part of the joint development efforts with 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 consist primarily of personnel expenses, including
salaries, benefits, stock-based compensation and incentive bonuses, and related
expenses for our sales and marketing personnel, costs for trade-shows,
independent sales representative fees and marketing programs. From time to time,
we receive cooperative marketing funding from certain suppliers. Under these
arrangements, 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 new product
releases by our suppliers.

General and administrative expenses consist primarily of general corporate
costs, including personnel expenses such as salaries, benefits, stock-based
compensation and incentive bonuses, and related expenses for our general and
administrative personnel, financial reporting, information technology, corporate
governance and compliance, outside legal, audit, tax fees, insurance and bad
debt reserves on accounts receivable.

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Operating expenses for the three and nine months ended March 31, 2022 and 2021
are as follows (dollars in millions):

                                     Three Months Ended March 31,                    Change                    Nine Months Ended March 31,                     Change
                                        2022                 2021              $               %                  2022                 2021              $               %
Research and development          $        70.9           $  57.9          $ 13.0             22.5  %       $       201.5           $ 165.4          $ 36.1             21.8  %
Percentage of total net sales               5.2   %           6.5  %                                                  5.7   %           6.6  %
Sales and marketing               $        22.4           $  21.8          $  0.6              2.8  %       $        65.9           $  62.9          $  3.0              4.8  %
Percentage of total net sales               1.6   %           2.4  %                                                  1.9   %           2.5  %
General and administrative        $        27.8           $  26.2          $  1.6              6.1  %       $        75.3           $  75.9          $ (0.6)            (0.8) %
Percentage of total net sales               2.0   %           2.9  %                                                  2.1   %           3.0  %
Total operating expenses          $       121.0           $ 106.0          $ 15.0             14.2  %       $       342.7           $ 304.2          $ 38.5             12.7  %
Percentage of total net sales               8.9   %          11.8  %                                                  9.6   %          12.2  %


Comparison of the three months ended March 31, 2022 and 2021

Research and development expenses. The period-over-period increase in research
and development expenses was primarily due to a $10.7 million increase in
personnel expenses due to salary increases and a higher headcount and $2.1
million lower non-recurring engineering ("'NRE") payments from certain suppliers
and customers towards our development efforts.

Sales and Marketing Expenses. The period-over-period increase in selling and marketing expenses is primarily due to a $2.9 million increase in personnel costs, offset by a $1.4 million increase in marketing development funds received and a $1.4 million decrease in advertising and other expenses.

General and administrative expenses. The period-over-period change in general
and administrative expenses was primarily due to an increase of $1.5 million in
compensation and other expenses, $2.5 million increase in professional fees and
litigation settlement expenses, offset by $2.5 million decrease in expense
relating to special performance awards.

Comparison of the nine months ended March 31, 2022 and 2021

Research and development expenses. The period-over-period increase in research
and development expenses was primarily due to a $26.8 million increase in
personnel expenses due to salary increases and a higher headcount, $5.8 million
lower NRE payments from certain suppliers and customers towards our development
efforts and a $2.5 million increase in product development costs.

Sales and Marketing Expenses. The period-over-period increase in selling and marketing expenses is primarily due to a $6.5 million increase in personnel costs, offset by a $2.9 million increase in marketing development funds received and a $0.6 million decrease in advertising and other expenses.

General and administrative expenses. The period-over-period decrease in general
and administrative expenses was primarily due to a decrease of $2.6 million in
professional fees driven by lower expenses incurred to investigate, assess and
remediate the causes that led to the delay in filing our periodic reports with
the SEC and the associated restatement of certain of our previously issued
financial statements and a $6.3 million decrease in expense from special
performance awards, offset by a $4.1 million increase in legal and litigation
settlement expenses and $4.2 million increase in compensation expenses and other
expenses.

Interest and other (expense) income, net

Other (expense) income, net, primarily includes interest earned on our investments and cash balances as well as foreign exchange gains and losses.

Interest expense represents interest expense on our term loans and lines of credit and increased due to higher debt outstanding.

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Interest and other (expense) income, net for the three and nine months ended
March 31, 2022 and 2021 are as follows (dollars in millions):

                                   Three Months Ended                                                        Nine Months Ended
                                       March 31,                              Change                             March 31,                             Change
                                  2022                2021              $               %                  2022                2021              $                %
Other (expense) income,
net                        $      4.7               $  2.0          $  2.7            135.0  %       $      4.1              $ (1.4)         $  5.5            (392.9) %
Interest expense           $     (1.5)              $ (0.6)         $ (0.9)           150.0  %       $     (3.5)             $ (1.8)         $ (1.7)             94.4  %
Interest and other
(expense) income, net      $      3.2               $  1.4          $  1.8            128.6  %       $      0.6              $ (3.2)         $  3.8            (118.8) %


Comparison of the three months ended March 31, 2022 and 2021

The change of $1.8 million in interest and other (expense) income, net was
primarily attributable to a $2.7 million increase in foreign exchange gain due
to favorable currency fluctuations offset by a $0.9 million increase in interest
expense due to increase in loan balances and interest rates.

Comparison of the nine months ended March 31, 2022 and 2021

The change of $3.8 million in interest and other (expense) income, net was
primarily attributable to a $5.5 million increase in foreign exchange gain due
to favorable currency fluctuations offset by a $1.7 million increase in interest
expense due to increase in loan balances and interest rates.

Provision for income taxes

Our income tax provision is based on our taxable income generated in the
jurisdictions in which we operate, which primarily include the United States,
Taiwan, and the Netherlands. Our effective tax rate differs from the statutory
rate primarily due to research and development tax credits, certain
non-deductible expenses, tax benefits from foreign derived intangible income and
stock based compensation.

Provision for income taxes and effective tax rates for the three and nine months ended March 31, 2022 and 2021 are as follows (in millions of dollars):

                                Three Months Ended                                                       Nine Months Ended
                                     March 31,                            Change                             March 31,                           Change
                               2022              2021              $                 %                 2022              2021              $               %

Income tax provision       $    16.2           $ (0.2)         $ 16.4            (8,200.0) %       $    27.1           $  8.5          $ 18.6            218.8  %
Percentage of total net
sales                            1.2   %            -  %                                                 0.8   %          0.3  %

Effective tax rate              17.4   %         (1.2) %                                                15.9   %         10.5  %


Comparison of the three months ended March 31, 2022 and 2021

The income tax provision and effective tax rate for the three months ended March
31, 2022 is higher than that for the three months ended March 31, 2021,
primarily due to a significant increase in taxable income while the deductible
expenses stayed the same as the same period for the prior year.

Comparison of the nine months ended March 31, 2022 and 2021

The income tax provision and effective tax rate for the nine months ended March
31, 2022 is higher than that for the nine months ended March 31, 2021, primarily
due to a significant increase in the nine months taxable income and our forecast
of annual taxable income, while the tax deductible expenses and R&D tax credit
stayed the same as the same period for the prior year.

Share of issuing company’s income (loss), net of tax

The investee’s share of income (loss), net of tax, represents the company’s share of the income of the joint venture in which the company has a 30% interest.

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Share of income (loss) of the issuing company, net of tax for the three and nine months ended March 31, 2022 and 2021 are as follows (in millions of dollars):

                                      Three Months Ended                                                         Nine Months Ended
                                          March 31,                                  Change                          March 31,                             Change
                                   2022                 2021              $                  %                  2022             2021              $                  %
Share of income (loss) from
equity investee, net of taxes  $    0.3               $ (0.3)         $  0.6             (200.0)%           $    0.9           $ (0.4)         $  1.3             (325.0)%
Percentage of total net sales      0.02   %                -  %                                                 0.02   %            -  %


Comparison of the three months ended March 31, 2022 and 2021

The period-over-period increase of $0.6 million in share of income (loss) from
equity investee, net of taxes was primarily due to more net income recognized by
the Corporate Venture.

Comparison of the nine months ended March 31, 2022 and 2021

The period-over-period increase of $1.3 million in share of income (loss) from
equity investee, net of taxes was primarily due to more net income recognized by
the Corporate Venture.

Cash and capital resources

We have financed our growth primarily with funds generated from operations, in
addition to utilizing borrowing facilities, particularly in relation to the
financing of real property acquisitions as well as an increase in the need for
working capital due to longer supply chain manufacturing and delivery times and
funds received from the exercise of employee stock options. Our cash and cash
equivalents were $247.4 million and $232.3 million as of March 31, 2022 and June
30, 2021, respectively. Our cash in foreign locations was $150.6 million and
$152.6 million as of March 31, 2022 and June 30, 2021, respectively.

Amounts held outside of the U.S. are generally utilized to support non-U.S.
liquidity needs. Repatriations generally will not be taxable from a U.S. federal
tax perspective, but may be subject to state income or foreign withholding tax.
Where local restrictions prevent an efficient intercompany transfer of funds,
our intent is to keep cash balances outside of the U.S. and to meet liquidity
needs through operating cash flows, external borrowings, or both. We do not
expect restrictions or potential taxes incurred on repatriation of amounts held
outside of the U.S. to have a material effect on our overall liquidity,
financial condition or results of operations.

We believe that our current cash, cash equivalents, borrowing capacity available
from our credit facilities and internally generated cash flows will be
sufficient to support our operating businesses, and maturing debt and interest
payments for the twelve months following the issuance of these condensed
consolidated financial statements.

On January 29, 2021, a duly authorized subcommittee of the Board of Directors
approved a share repurchase program to repurchase up to an aggregate of $200.0
million of the Company's common stock at market prices. The program is effective
until the earlier of July 31, 2022 or the date when the maximum amount of common
stock is repurchased. The Company had $150.0 million of remaining availability
under the share repurchase program as of March 31, 2022.

Our key cash flow metrics were as follows (in millions of dollars):

                                                                    Nine Months Ended
                                                                        March 31,
                                                                  2022               2021            Change
Net cash provided by (used in) operating activities           $   (415.7)         $  59.4          $ (475.1)
Net cash used in investing activities                         $    (35.3)         $ (44.6)         $    9.3
Net cash provided by (used in) financing activities           $    466.4          $ (48.4)         $  514.8
Net increase (decrease) in cash, cash equivalents and
restricted cash                                               $     15.1          $ (33.3)         $   48.4



Operating Activities

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Net cash provided by operating activities decreased by $475.1 million for the
nine months ended March 31, 2022 as compared to the nine months ended March 31,
2021. The decrease was primarily due to an increase in net cash required for net
working capital of $552.5 million to meet customer demand, support expected
business growth and mitigate supply chain risk due to the COVID-19 pandemic
environment and $8.5 million decrease in unrealized gain and loss. These
decreases are partially offset by increases in provision for excess and obsolete
inventories of $9.0 million and net income of $71.6 million. Since the beginning
of the pandemic and resulting supply chain disruptions our management decided to
increase all components of our inventory (finished goods, work in process and
purchased parts and raw materials). This decision reflected our belief that we
had opportunities to increase our net sales if we could mitigate the risks of
being unable to satisfy customer demand because of these disruptions, including
longer lead times. We expect disruption of the supply chain and longer lead
times to continue for the foreseeable future and therefore expect to continue to
carry larger amounts of inventory than we would if the supply chain were
functioning more normally and predictably.

Investing activities

Net cash used in investing activities decreased by $9.3 million for the nine
months ended March 31, 2022 as compared to the nine months ended March 31, 2021
as we continued to invest in expanding our manufacturing capacity and office
space, including the expansion of our Green Computing Park in San Jose and Bade
manufacturing facility in Taiwan.

Fundraising activities

Net cash provided by financing activities for the nine months ended March 31,
2022 was $466.4 million while net cash used by financing activities for the nine
months ended March 31, 2021 was $48.4 million. The change in cash flows from
financing activities was primarily due to an increase of $402.3 million in
proceeds from borrowings net of repayment, offset by a $117.9 million decrease
in stock repurchases.

Other Factors Affecting Liquidity and Capital Resources

Bank of America

2018 Bank of America credit facility

In April 2018, the Company entered into a revolving line of credit with Bank of
America for up to $250.0 million (as amended from time to time, the "2018 Bank
of America Credit Facility"). On March 3, 2022, the 2018 Bank of America Credit
Facility was amended to, among other items, increase the size of the facility
from $200.0 million to $350.0 million and change provisions relating to payments
and LIBOR replacement mechanics to secured overnight financing rate ("SOFR").
The obligations bear a base interest rate plus 0.5% to 1.5% based on the SOFR
availability. The amendment was accounted for as a modification and the impact
was immaterial to the consolidated financial statements. Prior to that, on June
28, 2021, the 2018 Bank of America Credit Facility was amended to, among other
items, extend the maturity to June 28, 2026 and increase the maximum amount that
the Company can request the facility be increased from $100 million to
$150 million. Interest accrued on any loans under the 2018 Bank of America
Credit Facility is due on the first day of each month, and the loans are due and
payable in full on the termination date of the 2018 Bank of America Credit
Facility. 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 Super Micro Computer's assets, other
than real property assets. Under the terms of the 2018 Bank of America Credit
Facility, the Company is not permitted to pay any dividends. The 2018 Bank of
America Credit Facility contains customary representations and warranties and
customary affirmative and negative covenants applicable to the Company and its
subsidiaries and contains a financial covenant, which requires that the Company
maintain a certain fixed charge coverage ratio, for each twelve-month period
while in a Trigger Period, as defined in the agreement, is in effect.

As of March 31, 2022, the total outstanding borrowings under the 2018 Bank of
America Credit Facility were $241.5 million. As of June 30, 2021, the Company
had no outstanding borrowings under the 2018 Bank of America Credit Facility.
The interest rates under the 2018 Bank of America Credit Facility as of March
31, 2022 and June 30, 2021 range from 1.50% to 1.54%. The balance of debt
issuance costs outstanding as of March 31, 2022 and June 30, 2021 was
$0.8 million and $0.5 million, respectively. The Company is in compliance with
all the covenants under the 2018 Bank of America Credit Facility, and as of
March 31, 2022, the Company's available borrowing capacity was $108.5 million,
subject to the borrowing base limitation and compliance with other applicable
terms.

On March 23, 2022 (the "Effective Date"), the Company through its Taiwan
subsidiary entered into an Uncommitted Facility Agreement for credit lines with
Bank of America - Taipei Branch (the "2022 Bank of America Credit Facility"),
for an
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amount not to exceed in aggregate $20.0 million. The interest rate will be
quoted by Bank of America - Taipei Branch for each drawdown. As of March 31,
2022, there were no outstanding borrowings under this Bank of America Credit
Facility.


CTBC Bank

2021 CTBC Credit Lines

The Company through its Taiwan subsidiary was party to (i) that certain credit
agreement, dated May 6, 2020, with CTBC Bank Co., Ltd. ("CTBC Bank"), which
provided for a ten-year, non-revolving term loan facility (the "2020 CTBC Term
Loan Facility") to obtain up to NTD 1,200.0 million ($40.7 million U.S. dollar
equivalent) and (ii) that certain credit agreement, dated August 24, 2020, with
CTBC Bank (the "CTBC Credit Facility"), which provided for total borrowings of
up to $50.0 million (collectively, the "Prior CTBC Credit Lines").

On July 20, 2021 (the "Effective Date"), the Company through its Taiwan
subsidiary entered into a general agreement for omnibus credit lines with CTBC
Bank (the "2021 CTBC Credit Lines), which replaced the Prior CTBC Credit Lines
in their entirety and permit borrowings, from time to time, pursuant to (i) a
term loan facility of up to NTD 1,550.0 million ($55.4 million U.S. dollar
equivalents) including the existing 2020 CTBC Term Loan Facility of NTD
1,200.0 million ($42.9 million U.S. dollar equivalents) and a new 75-month,
non-revolving term loan facility of NTD 350.0 million ($12.5 million U.S. dollar
equivalents) to use to purchase machinery and equipment for the Company's Bade
Manufacturing Facility located in Taiwan (the "2021 CTBC Machine Loan"), and
(ii) a line of credit facility of up to $105.0 million (the "2021 CTBC Credit
Facility"), which increased the borrowing capacity of CTBC Credit Facility. The
2021 CTBC Credit Facility provides (i) a 12-month NTD 1,250.0 million
($44.7 million U.S. dollar equivalent) term loan facility secured by the land
and building located in Bade, Taiwan with an interest rate equal to the lender's
established NTD interest rate plus 0.50% per annum which is adjusted monthly,
which term loan facility also includes a 12-month guarantee of up to NTD
100.0 million ($3.6 million U.S. dollar equivalent) with an annual fee equal to
0.50% per annum, and (ii) a 12-month revolving line of credit of up to 100% of
eligible accounts receivable in an aggregate amount of up to $105.0 million with
an interest rate equal to the lender's established USD interest rate plus 0.70%
to 0.75% per annum which is adjusted monthly.

Interest rates are to be established according to individual credit arrangements
established pursuant to the 2021 CTBC Credit Lines, which interest rates shall
be subject to adjustment depending on the satisfaction of certain conditions.
Term loans made pursuant to the 2021 CTBC Credit Lines are secured by certain of
the Taiwan subsidiary's assets, including certain property, land, plant, and
equipment. There are various financial covenants under the 2021 CTBC Credit
Lines, including current ratio, debt service coverage ratio, and financial debt
ratio requirements. Amounts outstanding under the Prior CTBC Credit Lines on the
Effective Date were assumed by the 2021 CTBC Credit Lines.

As of March 31, 2022 and June 30, 2021, the amounts outstanding under the 2020
CTBC Term Loan Facility were $41.7 million and $34.7 million, respectively. The
interest rates for these loans were 0.70% per annum as of March 31, 2022, and
0.45% as of June 30, 2021. Under the 2021 CTBC Machine Loan, the amounts
outstanding were $5.5 million on March 31, 2022. The interest rates for this
loan was 0.90% per annum as of March 31, 2022. As of June 30, 2021, there were
no outstanding borrowings under the 2021 CTBC Machine Loan.

The total outstanding borrowings under the 2021 CTBC Credit Facility term loan
were denominated in NTD and remeasured into U.S. dollars of $0.0 million and
$25.1 million at March 31, 2022 and June 30, 2021, respectively. The 2021 CTBC
Credit Facility term loan was repaid on October 26, 2021. The interest rate for
the 2021 CTBC Credit Facility term loan was 0.75% per annum as of June 30, 2021.
As of March 31, 2022 and June 30, 2021, the outstanding borrowings under the
2021 CTBC Credit Facility revolving line of credit were $101.0 million and
$18.0 million, respectively. The interest rates for these loans ranges from
0.94% to 1.40% per annum as of March 31, 2022 and 0.98% per annum as of June 30,
2021. As of March 31, 2022, the amount available for future borrowing under the
2021 CTBC Credit Facility was $4.0 million. As of March 31, 2022, the net book
value of land and building located in Bade, Taiwan, collateralizing the 2021
CTBC Credit Lines was $77.7 million. The financial covenants under the 2021 CTBC
Credit Lines will be reviewed by CTBC Bank every six months on June 30 and
December 31.

E.SUN Bank

E.SUN Bank Credit Facility 2021

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The Company through its Taiwan subsidiary was party to that certain General
Credit Agreement, dated December 2, 2020, with E.SUN Bank ("E.SUN Bank"), which
provided for the issuance of loans, advances, acceptances, bills, bank
guarantees, overdrafts, letters of credit, and other types of drawdown
instruments up to a credit limit of US$30.0 million (the "Prior E.SUN Bank
Credit Facility"). The term of the Prior E.SUN Bank Credit Facility expired on
September 18, 2021.

On September 13, 2021 (the "E.SUN Bank Effective Date"), the Company through its
Taiwan subsidiary entered into a new General Credit Agreement with E.SUN Bank,
which replaced the Prior E.SUN Bank Credit Facility (the "2021 E.SUN Bank Credit
Facility"). The 2021 E.SUN Bank Credit Facility permits borrowings of up to (i)
NTD 1,600.0 million ($57.6 million U.S. dollar equivalent) and (ii)
$30.0 million as loans, advances, acceptances, bills, bank guarantees,
overdrafts, letters of credit, and other types of drawdown instruments. Other
terms of the 2021 E.SUN Bank Credit Facility are substantially identical to the
Prior E.SUN Bank Credit Facility. Generally, interest for base rate loans made
under the 2021 E.SUN Bank Credit Facility are based upon an average interbank
overnight call loan rate in the finance industry (such as LIBOR or TAIFX) plus a
fixed margin, and is subject to occasional adjustment. The 2021 E.SUN Bank
Credit Facility has customary default provisions permitting E.SUN Bank to
terminate or reduce the credit limit, shorten the credit period, or deem all
liabilities due and payable, including in the event the Taiwan subsidiary has an
overdue liability at another financial organization. There are various financial
covenants under the 2021 E.SUN Bank Credit Facility, including current ratio,
net debt ratio, and interest coverage requirements to be reviewed on a yearly
basis at fiscal year end.

Terms for specific drawdown instruments issued under the 2021 E.SUN Bank Credit
Facility, such as credit amount, term of use, mode of drawdown, specific lending
rate, and other relevant terms, are to be set forth in Notifications and
Confirmation of Credit Conditions (a "Notification and Confirmation") negotiated
with E.SUN Bank. A Notification and Confirmation was entered into on the E.SUN
Bank Effective Date for (i) a five-year, non-revolving term loan facility to
obtain up to NTD 1,600.0 million ($57.6 million U.S. dollar equivalent) in
financing for use in research and development activities (the "Term Loan"), and
(ii) a $30.0 million import loan (the "Import Loan") with a tenor of 120 days.
As of March 31, 2022, the total outstanding borrowings under the Term Loan were
denominated in NTD and remeasured into U.S. dollars of $28.1 million and the
interest rates for these loans were 1.245% per annum. As of March 31, 2022 and
June 30, 2021, the amounts outstanding under the Import Loan were $23.0 million
and $20.4 million, respectively. The interest rate for the quarter ended March
31, 2022 ranges from 1.09% to 1.33%. The interest rate for the quarter ended
June 30, 2021 ranges from 1.00% to 1.29% per annum. At March 31, 2022, the
amount available for future borrowing under the Import Loan was $7.0 million.

Mega Bank

Mega Bank Credit Facilities

On September 13, 2021 (the "Mega Bank Effective Date"), the Company through its
Taiwan subsidiary entered into a NTD 1,200.0 million ($43.2 million U.S. dollar
equivalent) credit facility (the "Mega Bank Credit Facility") with Mega
International Commercial Bank ("Mega Bank"). The Mega Bank Credit Facility will
be used to support manufacturing activities (such as purchase of materials and
components), and to provide medium-term working capital (the "Permitted Uses").
Drawdowns under the Mega Bank Credit Facility may be made through December 31,
2024, with the first drawdown date not later than November 5, 2021. The first
drawdown date was on October 4, 2021. Drawdowns may be in amounts of up to 80%
of Permitted Uses certified to the Bank in drawdown certificates. The interest
rate depends upon the amount borrowed under Mega Bank Credit Facility, and as of
the Mega Bank Effective Date, ranges from 0.645% to 0.845% per annum. The
interest rate is subject to adjustment in certain circumstances, such as events
of default. Interest is payable monthly. Principal payments for amounts borrowed
commence on the 15th day of the month following two years after the first
drawdown, and are repaid in monthly installments over a period of three years
thereafter. The Mega Bank Credit Facility is unsecured and has customary default
provisions permitting Mega Bank to reduce or cancel the extension of credit, or
declare all principal and interest amounts immediately due and payable. As of
March 31, 2022, the total outstanding borrowings under the Mega Bank Credit
Facility were denominated in NTD and remeasured into U.S. dollars of
$41.8 million and the interest rates ranged from 0.895% to 1.095% per annum.

Credit agreement with Mega bank

On April 25, 2022, the Company through its Taiwan subsidiary, entered into a
$20.0 million (or foreign currency equivalent) (the "Credit Limit") Omnibus
Credit Authorization Agreement (the "Omnibus Credit Authorization Agreement")
with Mega Bank. The Omnibus Credit Authorization Agreement permits individual
credit authorizations subject to specified drawdown conditions up to the Credit
Limit (on a revolving basis) to be used as loans for the purchase of materials
or supplies. During the loan period, the Company is required to maintain 100%
direct or indirect share ownership of the Taiwan subsidiary.

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Pursuant to the Omnibus Credit Authorization Agreement, the Taiwan subsidiary
also entered into both a Credit Authorization Agreement (the "Credit
Authorization Agreement") and Credit Authorization Approval Notice (the "Credit
Authorization Approval Notice") with Mega Bank and associated branch of Mega
Bank, respectively. Pursuant to such Agreement and Notice, Mega Bank permits the
Taiwan subsidiary to make drawdowns up to the Credit Limit for short-term loans
for material purchases with a tenor not to exceed 120 days on a revolving basis.
Drawdowns under the Mega Bank facility may be made through March 2023. The
interest rate for each individual credit authorization is adjusted according to
the Mega Bank's USD basic loan interest rate at the time of signing the
agreement which was 0.90% per annum. Interest on such drawdowns is based upon
TAIFX OFFER for six months plus 0.23% and divided by 0.946, subject to periodic
adjustment and adjustment in certain other circumstances, such as failure to
maintain a sufficient balance in a demand deposit account with Mega Bank which
are subject to the bank's right of set off. The interest rate shall be adjusted
once every month but shall not be lower than the USD basic loan interest rate
plus 0.1%. If the loan involves the acceptance of bill of exchange, the Company
would pay handling fee at the annual rate of 0.75% calculated based on the
number of actual acceptance days. The fee is paid in full upon acceptance and a
minimum handling fee of NTD 400 is charged for each transaction. Amounts
borrowed are otherwise unsecured, and the Credit Authorization Agreement has
customary default provisions permitting Mega Bank to reduce the extension of
credit, shorten the term for loan repayment or declare all of the amounts
immediately due and payable. The Company is not a guarantor under the Credit
Authorization Agreement or Credit Authorization Approval Notice.

Chang Hwa Bank

Chang Hwa Bank credit facility

On October 5, 2021 (the "Chang Hwa Bank Effective Date"), the Company through
its Taiwan subsidiary entered into a credit facility (the "Chang Hwa Bank Credit
Facility") with Chang Hwa Commercial Bank, Ltd. ("Chang Hwa Bank"). The Chang
Hwa Bank Credit Facility permits borrowings of up to NTD 1,000.0 million
($36.0 million U.S. dollar equivalent), including up to $20.0 million as loans,
advances, acceptances, bills, bank guarantees, overdrafts, letters of credit,
and other types of drawdown instruments. The Chang Hwa Bank Credit Facility has
customary default provisions permitting Chang Hwa Bank to terminate or reduce
the credit limit, shorten the credit period, or deem all liabilities due and
payable, including in cross-default provisions with respect to the other Taiwan
subsidiary debt obligations. Under the Chang Hwa Bank Credit Facility, Chang Hwa
Bank has the right to demand collateral for debts owed. As of March 31, 2022,
the total outstanding borrowings under the Chang Hwa Bank Credit Facility were
denominated in NTD and remeasured into U.S. dollars of $34.8 million and the
interest rate is 1.05% per annum.

Terms for specific drawdown instruments issued under the Chang Hwa Bank Credit
Facility, such as credit amount, term of use, mode of drawdown, specific lending
rate, and other relevant terms, are to be set forth in separate loan contracts
(each, a "Loan Contract") negotiated with Chang Hwa Bank. On the Chang Hwa Bank
Effective Date, three Loan Contracts were entered into. None of the three Loan
Contracts are secured and there are no financial covenants.

HSBC Bank

HSBC bank credit facility

On January 7, 2022 (the "HSBC Bank Effective Date"), the Company through its
Taiwan subsidiary entered into a General Loan, Export/Import Financing,
Overdraft Facilities and Securities Agreement (the "Loan Agreement") with the
Taiwan affiliate of HSBC Bank ("HSBC Bank"). The Loan Agreement provides for
borrowings in the form of loans, export/import financings, overdrafts,
commercial paper guaranties, and other types of drawdown instruments. The Loan
Agreement has customary default provisions permitting HSBC Bank to terminate or
reduce the credit limit, shorten the credit period, or deem all liabilities due
and payable, including in the event its Taiwan subsidiary fails to make payment
of sums under another agreement which permits acceleration of maturity of such
indebtedness. The Company is not a guarantor of the Loan Agreement.

Terms for specific drawdown instruments issued under the Loan Agreement, such as
credit amount, term of use, mode of drawdown, specific lending rate, and other
relevant terms, may be set forth in Facility Letters (a "Facility Letter")
negotiated with the HSBC Bank. Under a Facility Letter entered into on the HSBC
Bank Effective Date, the Taiwan subsidiary and the HSBC Bank have agreed to a
$30.0 million export/seller trade facility under the Loan Agreement with a tenor
of 120 days. The interest rate thereunder is based on the HSBC Bank's base rate
plus a fixed margin, subject to adjustment under certain circumstances. Interest
payments are due on a monthly basis, and principal is repayable on the due date.

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As of March 31, 2022, the outstanding borrowings under the 2022 HSBC Bank Credit
Facility revolving line of credit were $30.0 million. The interest rates for
these loans were approximately 0.96% per annum as of March 31, 2022. As of March
31, 2022, there was no amount available for future borrowing under the 2022 HSBC
Bank Credit Facility.

Refer to Part I, Item 1, Note 6, "Short-term and Long-term Debt," in our notes
to condensed consolidated financial statements in this Quarterly Report on Form
10-Q for further information on our outstanding debt.

Capital expenditure needs

We intend to continue to focus our capital expenditures in fiscal year 2022 to
support the growth of our operations. We anticipate our capital expenditures for
the remainder of fiscal year 2022 will be approximately $10 to $15 million,
relating primarily to costs associated with our manufacturing capabilities,
including tooling for new products, new information technology investments, and
facilities upgrades. We will continue to evaluate new business opportunities and
new markets. As a result, our future growth within the existing business or new
opportunities and markets may dictate the need for additional facilities and
capital expenditures to support that growth. We evaluate capital expenditure
projects based on a variety of factors, including expected strategic impacts
(such as forecasted impact on revenue growth, productivity, expenses, service
levels and customer retention) and our expected return on investment. Our future
capital requirements will depend on many factors including our growth rate, the
timing and extent of spending to support development efforts, the expansion of
sales and marketing activities, the introduction of new and enhanced software
and services offerings, the investments in our office facilities and our
information systems infrastructure, the continuing market acceptance of our
offerings and our planned investments, particularly in our product development
efforts, applications or technologies.

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, "Summary of Significant
Accounting Policies," in our notes to condensed consolidated financial
statements in this Quarterly Report on Form 10-Q.


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