Why was this 10-K/A filed?

The amendment was filed solely to re-file the CEO and CFO certifications attached as Exhibits 31.1 and 31.2 to add a new Section 5 that had been incorrectly omitted from the Original Filing dated August 28, 2007. All other information, including the financial statements, is unchanged, and the amendment does not update disclosures or reflect later events.

How did revenue and profitability trend in fiscal 2007?

Net sales increased to $420.4 million from $302.5 million, an increase of 39.0%, driven mainly by higher unit volumes and average selling prices. Net income rose to $19.3 million from $16.9 million. Gross profit as a percentage of net sales declined to 17.8% from 19.9%, mainly due to a mix shift toward X7 and PD series motherboards and higher inventory write-downs of $5.6 million.

What did the company do with its IPO proceeds?

The company sold 6,400,000 shares at $8.00 per share in its April 3, 2007 IPO, with net proceeds of $42,981,000. The filing states it used about $7.2 million to pay off one building loan, intends to use about $11.6 million to repay outstanding building loans, invested $15.0 million in auction rate securities, and intends to use about $11.3 million to purchase a property at 880 Fox Lane, San Jose.

What are the main concentration and related-party risks?

Intel and AMD are the only suppliers of the microprocessors used in its server systems. Ablecom Technology, a related party partly owned by the company's President and officers, accounted for approximately 27.7% of cost of sales in fiscal 2007, and purchases from Ablecom totaled $95.7 million. The filing notes that the company may not negotiate as aggressively with Ablecom as with an unrelated party, and that insiders collectively hold a significant share of common stock.

What legal and regulatory matters are disclosed?

The company previously settled export control matters with the U.S. Department of Justice (a guilty plea with a fine of approximately $150,000), the Bureau of Industry and Security (a fine of approximately $125,000), and OFAC (a fine of $179,000), and states it believes these issues are resolved. A Digitechnic, S.A. lawsuit in France remains pending after the French Supreme Court reversed an appellate decision in February 2007, and the company believes the claim is without merit.

SMCI/SMCIP 10-K FY2007 Annual Report — Revenue, Net Income, EPS

01—Abstract

Summary

Summary of the 10-K/A filed September 25, 2007. Cited figures are marked; the original filing is the authoritative source.

Super Micro Computer, Inc. filed this Amendment No. 1 on Form 10-K/A for the fiscal year ended June 30, 2007.

The amendment solely re-files the CEO and CFO Section 302 certifications (Exhibits 31.1 and 31.2) to add a Section 5 that had been omitted from the original August 28, 2007 filing; the financial statements and other disclosures are unchanged. The full annual report reflects a company that designs and sells application optimized x86 server systems and components, primarily through distributors, with net sales of $420.4 million^a in fiscal 2007, up from $302.5 million in fiscal 2006, and net income of $19.3 million, up from $16.9 million. Gross margin was 17.8% of net sales versus 19.9% a year earlier, while operating expenses rose to 10.7% of net sales from 10.8%.

The company completed its initial public offering on April 3, 2007, selling 6,400,000 shares at $8.00^b per share, with net proceeds to the company of $42,981,000. Cash and cash equivalents increased to $50.9 million at June 30, 2007 from $16.5 million, and total stockholders' equity rose to $115.9 million from $47.8 million. Key risks disclosed include heavy reliance on related-party contract manufacturer Ablecom Technology (27.7% of cost of sales in fiscal 2007), concentration of ownership by insiders, past export-control settlements with the U.S. Department of Justice, BIS and OFAC, and a pending Digitechnic litigation in France.

02—Key points

Key Highlights

Net sales rose to $420.4 million in fiscal 2007 from $302.5 million in fiscal 2006, with net income of $19.3 million versus $16.9 million.
Gross profit as a percentage of net sales was 17.8% in fiscal 2007, down from 19.9% in fiscal 2006; cost of sales was 82.2% of net sales.
Server systems sales were $152.5 million (36.3% of net sales), while serverboards and other components were $267.9 million (63.7%).
The IPO on April 3, 2007 generated net proceeds of $42,981,000 to the company; cash and cash equivalents ended the year at $50.9 million.
Sales to distributors were approximately 67% of net sales in fiscal 2007, and no customer accounted for 10% or more of net sales.
Ablecom Technology, a related party, supplied 27.7% of cost of sales in fiscal 2007, and insiders collectively own a large stake, which the filing says may limit minority stockholder influence.
This amendment re-files only the Section 302 certifications (Exhibits 31.1 and 31.2) to add a Section 5 omitted from the original filing; all financial information is unchanged.

03—Questions

Frequently Asked Questions

Why was this 10-K/A filed?
The amendment was filed solely to re-file the CEO and CFO certifications attached as Exhibits 31.1 and 31.2 to add a new Section 5 that had been incorrectly omitted from the Original Filing dated August 28, 2007. All other information, including the financial statements, is unchanged, and the amendment does not update disclosures or reflect later events.
How did revenue and profitability trend in fiscal 2007?
Net sales increased to $420.4 million from $302.5 million, an increase of 39.0%, driven mainly by higher unit volumes and average selling prices. Net income rose to $19.3 million from $16.9 million. Gross profit as a percentage of net sales declined to 17.8% from 19.9%, mainly due to a mix shift toward X7 and PD series motherboards and higher inventory write-downs of $5.6 million.
What did the company do with its IPO proceeds?
The company sold 6,400,000 shares at $8.00 per share in its April 3, 2007 IPO, with net proceeds of $42,981,000. The filing states it used about $7.2 million to pay off one building loan, intends to use about $11.6 million to repay outstanding building loans, invested $15.0 million in auction rate securities, and intends to use about $11.3 million to purchase a property at 880 Fox Lane, San Jose.
What are the main concentration and related-party risks?
Intel and AMD are the only suppliers of the microprocessors used in its server systems. Ablecom Technology, a related party partly owned by the company's President and officers, accounted for approximately 27.7% of cost of sales in fiscal 2007, and purchases from Ablecom totaled $95.7 million. The filing notes that the company may not negotiate as aggressively with Ablecom as with an unrelated party, and that insiders collectively hold a significant share of common stock.
What legal and regulatory matters are disclosed?
The company previously settled export control matters with the U.S. Department of Justice (a guilty plea with a fine of approximately $150,000), the Bureau of Industry and Security (a fine of approximately $125,000), and OFAC (a fine of $179,000), and states it believes these issues are resolved. A Digitechnic, S.A. lawsuit in France remains pending after the French Supreme Court reversed an appellate decision in February 2007, and the company believes the claim is without merit.

04—Continue

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