Super Micro Computer, Inc. Announces 2nd Quarter Fiscal Year 2008 Financial Results

January 30, 2008

SAN JOSE, Calif., Jan 30, 2008 (BUSINESS WIRE) -- Super Micro Computer, Inc. (NASDAQ:SMCI), a leader in application optimized, high performance server solutions, today announced second quarter financial results for fiscal year 2008.

Q2 Fiscal Year 2008 Highlights

-- Record quarterly net sales of $136.9 million, up 16.1% and 20.5% from the first quarter fiscal year 2008 and year-ago second quarter in fiscal year 2007, respectively

-- Record net income of $7.7 million, or $0.20 per diluted share, up 33.3% and 56.1% from first quarter fiscal year 2008 and year-ago second quarter in fiscal year 2007, respectively

-- Server Solutions accounted for 42.4% of net sales

-- Introduction of Server/Workstation Product Line Based on Intel(R) 5100 (San Clemente) Chipset with minimum power consumption and whisper-quiet operation to as low as 28 dB

Q2 Fiscal 2008 Financial Results

Net sales for the second quarter ended December 31, 2007 were $136.9 million, up 20.5% from $113.6 million in the second quarter of fiscal year 2007. Net sales from server solutions comprised 42.4% of net sales, up from 35.4% in the second quarter of fiscal year 2007. On a sequential basis, net sales increased by 16.1% from $117.9 million in the first quarter of fiscal year 2008. The net sales growth was primarily due to growth in high efficiency power supply solutions and new products. No customer accounted for more than 10% of net sales during the quarter.

Net income for the second quarter of fiscal year 2008 was $7.7 million, or $0.20 per diluted share, compared to net income of $5.0 million, or $0.15 per diluted share, in the same period a year ago. Included in net income for the quarter was $0.9 million of stock-based compensation expense (pre-tax). Excluding stock-based compensation expense and the related tax effect, non-GAAP net income for the second quarter was $8.6 million, or $0.22 per diluted share, compared to non-GAAP net income of $5.3 million, or $0.16 per diluted share, in the same period a year ago. On a sequential basis, GAAP net income increased by $1.9 million, or $0.05 per diluted share and non-GAAP net income increased by $2.0 million, or $0.05 per diluted share.

Gross margin for the second quarter was 19.9%, compared to 16.7% in the same period a year ago. Non-GAAP gross margin for the second quarter was 20.0% compared to 16.8% in the same period a year ago. Second quarter of fiscal year 2008 gross margin was higher than the same period a year ago primarily due to higher revenue mix of server solutions and sales of new products. On a sequential basis, GAAP gross margin increased by 0.4% from 19.5% in the first quarter of fiscal 2008 and non-GAAP gross margin increased by 0.4% from 19.6% in the first quarter of fiscal 2008. The increase was primarily due to higher revenue from server solutions.

The Company ended the second quarter of fiscal year 2008 with $64.7 million in cash and cash equivalents and short-term investments compared to $65.9 million at the end of fourth quarter of fiscal year 2007.

6-Month Summary

Net sales for the six months ended December 31, 2007 were $254.9 million, up 25.1% from $203.8 million for the first six months of fiscal year 2007. Net income for the first six months of fiscal year 2008 was $13.5 million or $0.35 per diluted share, compared to $9.8 million or $0.30 per diluted share in the same period a year ago. Excluding stock based-compensation expense and related tax effect, non-GAAP net income for the first six months was $15.2 million or $0.39 per diluted share, compared to $10.6 million or $0.33 per diluted share in the same period a year ago.

Business Outlook & Management Commentary

The server industry has historically experienced seasonal revenue weakness in the quarters ending September 30 and March 31, our fiscal Q1 and Q3. However, the Company has also benefited from increased revenue traction following the introduction of new products. The Company expects that both trends will continue this quarter and that new products introduced during the prior quarters should offset in part the impact of seasonal weakness. As a result, the Company expects revenues to be in the range of $137 to $142 million for the third quarter of fiscal year 2008 ending March 31, 2008.

In addition, the Company re-confirms the guidance provided on November 14, 2007 regarding fiscal year 2008 revenue and net income. The Company continues to expect that as compared to fiscal 2007, for fiscal 2008, revenues from server products will grow by approximately 50%, total net sales will increase by a minimum of 30% and net income will increase by a minimum of 35%. It is currently expected that the outlook will not be updated until the release of the Company's next quarterly earnings announcement, notwithstanding subsequent developments; however, the Company may update the outlook or any portion thereof at any time.

"Supermicro had a great quarter with record revenue and net income. The broad base of products we offer and the ability to deliver application optimized solutions in an efficient and timely manner to our customers around the world drove these outstanding results," said Charles Liang, President and Chief Executive Officer of Super Micro Computer. "We continue our global focus on optimizing our business through innovation and expansion."

Conference Call Information

Super Micro Computer will discuss these financial results and its outlook for the second quarter of fiscal 2008 in a conference call at 2:00 p.m. PT, today. Those wishing to participate in the conference call should call 1-888-737-3705 (international callers dial 1-913-312-1442) a few minutes prior to the call's start to register. A replay of the call will be available through 11:59 p.m. (Eastern Time) on Wednesday, February 6, by dialing 1-888-203-1112 (international callers dial 1-719-457-0820) and entering replay PIN 4322983. The live web cast and replay of the call will be available on the Investor Relations section at www.supermicro.com, with the replay beginning approximately two hours after the conclusion of the call and will remain available until the Company's next earnings call.

Cautionary Statement Regarding Forward Looking Statements

Statements contained in this press release that are not historical fact may be 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. Such forward-looking statements may relate, among other things, to our expected financial and operating results, our ability to build and grow Super Micro Computer, the benefits of our products and our ability to achieve our goals, plans and objectives. Such forward-looking statements do not constitute guarantees of future performance and are subject to a variety of risks and uncertainties that could cause our actual results to differ materially from those anticipated. These include, but are not limited to: our dependence on continued growth in the market for X86 and blade servers, increased competition, difficulties of predicting timing, introduction and customer acceptance of new products, poor product sales, difficulties in establishing and maintaining successful relationships with our distribution partners, shortages or price fluctuations in our supply chain, our ability to protect our intellectual property rights, our ability to control the rate of expansion domestically and internationally, difficulty managing rapid growth and general political, economic and market conditions and events. Additional factors that could cause actual results to differ materially from those projected or suggested in any forward-looking statements are contained in our filings with the Securities and Exchange Commission, including those factors discussed under the caption "Risk Factors" in such filings.

Use of Non-GAAP Financial Measures

Non-GAAP gross margin discussed in this press release excludes stock-based compensation expense. Non-GAAP net income (loss) and net income (loss) per share discussed in this press release exclude stock-based compensation expense and the related tax effect of the applicable items. Management presents non-GAAP financial measures because it considers them to be important supplemental measures of performance. Management uses the non-GAAP financial measures for planning purposes, including analysis of the Company's performance against prior periods, the preparation of operating budgets and to determine appropriate levels of operating and capital investments. Management also believes that the non-GAAP financial measures provide additional insight for analysts and investors in evaluating the Company's financial and operational performance. However, these non-GAAP financial measures have limitations as an analytical tool, and are not intended to be an alternative to financial measures prepared in accordance with GAAP. Pursuant to the requirements of SEC Regulation G, detailed reconciliations between the Company's GAAP and non-GAAP financial results is provided at the end of this press release. Investors are advised to carefully review and consider this information as well as the GAAP financial results that are disclosed in the Company's SEC filings.

About Super Micro Computer, Inc.

Established in 1993, Supermicro emphasizes superior product design and uncompromising quality control to produce industry-leading serverboards, chassis and server systems. These mission-critical Server Building Block solutions provide benefits across many environments, including data center deployment, high-performance computing, high-end workstations, storage networks and standalone server installations. For more information on Supermicro's complete line of advanced motherboards, SuperServers, and optimized chassis, visit www.Supermicro.com, email Marketing@Supermicro.com or call the San Jose, CA headquarters at +1 408-503-8000.

                      SUPER MICRO COMPUTER, INC.
                CONDENSED CONSOLIDATED BALANCE SHEETS
                            (In thousands)
                             (Unaudited)
                                              December 31,  June 30,
                                                  2007        2007
                                              ------------ -----------
ASSETS
Current assets:
  Cash and cash equivalents                     $   45,400   $  50,864
  Short-term investments                            19,331      15,055
  Accounts receivable, net                          45,774      33,426
  Inventories, net                                  92,665      66,772
  Deferred income taxes - current                    7,273       5,630
  Prepaid expenses and other current assets          2,055       1,759
                                              ------------ -----------
                   Total current assets            212,498     173,506
Property, plant and equipment, net                  44,398      31,089
Deferred income taxes - noncurrent                     992         624
Other assets                                           273         364
                                              ------------ -----------
                   Total assets                 $  258,161   $ 205,583
                                              ============ ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                              $   94,614   $  61,453
  Accrued liabilities                               13,015      14,074
  Income tax payable                                 1,191       1,489
  Advances from receivable financing
   arrangements                                        896         982
  Current portion of capital lease
   obligations                                          69         118
  Current portion of long-term debt                    290         304
                                              ------------ -----------
                   Total current liabilities       110,075      78,420

Long-term capital lease obligations-net of
 current portion                                        18          40
Long-term debt-net of current portion               10,158      11,251
Other long-term liabilities                          3,933           -
                                              ------------ -----------
                   Total liabilities               124,184      89,711
Stockholders' equity:
  Common stock and additional paid-in capital       63,345      58,239
  Deferred stock-based compensation                (1,059)     (1,500)
  Retained earnings                                 71,691      59,133
                                              ------------ -----------
                   Total stockholders' equity      133,977     115,872
                                              ------------ -----------
                   Total liabilities and
                    stockholders' equity        $  258,161   $ 205,583
                                              ============ ===========

           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
          (In thousands, except share and per share amounts)
                             (Unaudited)

                         Three Months Ended       Six Months Ended
                       ----------------------- -----------------------
                        December    December    December    December
                           31,         31,         31,         31,
                          2007        2006        2007        2006
                       ----------- ----------- ----------- -----------
Net sales              $   136,933 $   113,602 $   254,882 $   203,789
Cost of sales              109,678      94,587     204,582     166,789
                       ----------- ----------- ----------- -----------
Gross profit                27,255      19,015      50,300      37,000
Operating expenses:
    Research and
     development             6,987       5,557      13,693      10,494
    Sales and marketing      4,560       3,126       8,289       5,483
    General and
     administrative          3,472       2,908       6,896       5,511
    Reversal of
     litigation loss             -           -           -       (120)
                       ----------- ----------- ----------- -----------
Total operating
 expenses                   15,019      11,591      28,878      21,368
Income from operations      12,236       7,424      21,422      15,632
Interest income                454          67         992         121
Interest expense             (248)       (344)       (500)       (671)
                       ----------- ----------- ----------- -----------
Income before income
 taxes provision            12,442       7,147      21,914      15,082
Income tax provision         4,702       2,189       8,367       5,315
                       ----------- ----------- ----------- -----------
Net income             $     7,740 $     4,958 $    13,547 $     9,767
                       =========== =========== =========== ===========
Net income per share:
    Basic              $      0.25 $      0.22 $      0.44 $      0.44
                       =========== =========== =========== ===========
    Diluted            $      0.20 $      0.15 $      0.35 $      0.30
                       =========== =========== =========== ===========
Shares used in per
 share calculation:
    Basic               30,817,552  22,212,156  30,556,084  22,201,438
                       =========== =========== =========== ===========
    Diluted             38,741,151  32,390,310  38,683,142  32,340,044
                       =========== =========== =========== ===========


Stock-based compensation is included in the following cost and expense
categories by period (in thousands):

                         Three Months Ended       Six Months Ended
                       ----------------------- -----------------------
                        December    December    December    December
                           31,         31,         31,         31,
                          2007        2006        2007        2006
                       ----------- ----------- -----------------------
    Cost of sales      $       118 $        68 $       230 $        84
    Research and
     development               406         361         755         481
    Sales and marketing        148         136         292         189
    General and
     administrative            266         167         531         236

                      SUPER MICRO COMPUTER, INC
             CONDENSED CONSOLIDATED CASH FLOW STATEMENTS
                            (In thousands)
                             (Unaudited)
                                           Six Months    Six Months
                                              Ended         Ended
                                           December 31,  December 31,
                                              2007           2006
                                          ------------- --------------
OPERATING ACTIVITIES:
Net income                                 $     13,547  $       9,767
Reconciliation of net income to net cash
 provided by operating activities:
     Depreciation and amortization                1,137            747
     Stock-based compensation expense             1,808            990
     Allowance for doubtful accounts                196            150
     Allowance for sales returns                  2,631          2,328
     Loss on disposal of property, plant
      and equipment                                   -              2
     Deferred income taxes                      (2,011)           (44)
     Excess tax benefits from stock-based
      compensation                              (2,418)           (67)
     Gain on short-term investments               (418)            (1)
     Changes in operating assets and
      liabilities:
         Accounts receivable, net              (15,175)       (11,385)
         Inventories, net                      (25,893)       (17,052)
         Prepaid expenses and other
          current assets                          (259)        (2,227)
         Other assets                                89              -
         Accounts payable                        31,275         24,073
         Income tax payable                       2,121          1,051
         Accrued litigation loss                      -          (575)
         Accrued liabilities                    (1,039)          2,035
         Other long-term liabilities              2,944              -
                                          ------------- --------------
Net cash provided by operating activities         8,535          9,792
                                          ------------- --------------
INVESTING ACTIVITIES:
Proceeds from short-term investments             17,480              -
Purchases of short-term investments            (21,375)              -
Purchases of property, plant and
 equipment                                     (12,550)        (1,884)
Other assets                                        (4)              9
                                          ------------- --------------
Net cash used in investing activities          (16,449)        (1,875)
                                          ------------- --------------
FINANCING ACTIVITIES:
Repayment of long-term debt                     (1,107)          (299)
Proceeds from exercise of stock options           1,320             77
Excess tax benefits from stock-based
 compensation                                     2,418             67
Payment of obligations under capital
 leases                                            (75)           (86)
Advances under receivable financing
 arrangements                                      (86)            146
Payment of offering costs                          (20)        (2,699)
                                          ------------- --------------
Net cash provided by (used in) financing
 activities                                       2,450        (2,794)
                                          ------------- --------------
Net increase (decrease) in cash and cash
 equivalents                                    (5,464)          5,123
Cash and cash equivalents at beginning of
 year                                            50,864         16,509
                                          ------------- --------------
Cash and cash equivalents at end of year   $     45,400  $      21,632
                                          ============= ==============

Supplemental disclosure of cash flow
 information:
   Cash paid for interest                  $        500  $         671
   Cash paid for taxes                     $      5,054  $       4,307

Non-cash investing and financing
 activities:
   Equipment purchased under capital
    leases                                 $          4  $         109
   Reversals of deferred stock-based
    compensation for cancellation of
    stock options                          $         21  $         106
   Accrued costs for property and
    equipment purchases                    $      1,964  $         459
   Accrued offering costs                  $        297  $         400

                      SUPER MICRO COMPUTER, INC
        RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
          (In thousands, except share and per share amounts)
                             (Unaudited)

                         Three Months Ended       Six Months Ended
                       ----------------------- -----------------------
                        December    December    December    December
                           31,         31,         31,         31,
                          2007        2006        2007        2006
                       ----------- ----------- ----------- -----------
GAAP GROSS PROFIT      $    27,255 $    19,015 $    50,300 $    37,000
  Add back stock-based
   compensation (a)            118          68         230          84
                       ----------- ----------- ----------- -----------
Non-GAAP GROSS PROFIT  $    27,373 $    19,083 $    50,530 $    37,084
                       =========== =========== =========== ===========

GAAP GROSS MARGIN            19.9%       16.7%       19.7%       18.2%
  Add back stock-based
   compensation (a)           0.1%        0.1%        0.1%        0.0%
                       ----------- ----------- ----------- -----------
Non-GAAP GROSS MARGIN        20.0%       16.8%       19.8%       18.2%
                       =========== =========== =========== ===========

GAAP INCOME FROM
 OPERATIONS            $    12,236 $     7,424 $    21,422 $    15,632
  Add back stock-based
   compensation (a)            938         732       1,808         990
                       ----------- ----------- ----------- -----------
Non-GAAP INCOME FROM
 OPERATIONS            $    13,174 $     8,156 $    23,230 $   16, 622
                       =========== =========== =========== ===========

GAAP NET INCOME        $     7,740 $     4,958 $    13,547 $     9,767
  Add back stock-based
   compensation (a)            938         732       1,808         990
  Add back adjustments
   to tax provision (b)      (120)       (357)       (168)       (151)
                       ----------- ----------- ----------- -----------
Non-GAAP NET INCOME    $     8,558 $     5,333 $    15,187 $    10,606
                       =========== =========== =========== ===========

GAAP NET INCOME PER
 SHARE - BASIC         $      0.25 $      0.22 $      0.44 $      0.44
  Add back stock-based
   compensation and
   adjustments to tax
   provision (a) (b)          0.03        0.02        0.06        0.04
                       ----------- ----------- ----------- -----------
Non-GAAP NET INCOME PER
 SHARE - BASIC         $      0.28 $      0.24 $      0.50 $      0.48
                       =========== =========== =========== ===========


GAAP NET INCOME PER
 SHARE - DILUTED       $      0.20 $      0.15 $      0.35 $      0.30
  Add back stock-based
   compensation and
   adjustments to tax
   provision (a) (b)          0.02        0.01        0.04        0.03
                       ----------- ----------- ----------- -----------
Non-GAAP NET INCOME PER
 SHARE - DILUTED       $      0.22 $      0.16 $      0.39 $      0.33
                       =========== =========== =========== ===========

SHARES USED IN
 COMPUTING NET INCOME
 PER SHARE
  BASIC - GAAP          30,817,552  22,212,156  30,556,084  22,201,438
                       =========== =========== =========== ===========
  BASIC - Non-GAAP      30,817,552  22,212,156  30,556,084  22,201,438
                       =========== =========== =========== ===========

  DILUTED - GAAP        38,741,151  32,390,310  38,683,142  32,340,044
                       =========== =========== =========== ===========
  DILUTED - Non-GAAP    38,942,446  32,548,155  38,899,565  32,515,063
                       =========== =========== =========== ===========


(a) Amortization of SFAS No. 123R, APB 25 and SFAS No. 123 stock-based
 compensation for the three and six months ended December 31, 2007 and
 December 31, 2006.
(b) The provision of income taxes used in arriving at the non-GAAP net
 income was computed using an income tax rate of 36.0% and 32.3% for
 the three months ended December 31, 2007 and 2006, respectively and
 36.0% and 34.0% for the six months ended December 31, 2007 and 2006,
 respectively.

SMCI-F

SOURCE: Super Micro Computer, Inc.

Super Micro Computer, Inc.
Howard Hideshima, 408-503-8000
Chief Financial Officer
ir@supermicro.com
or
Kalt Rosen Group/Ruder Finn
Howard Kalt, 415-317-0092
Investor Relations
ir@supermicro.com

Copyright Business Wire 2008

News Provided by COMTEX