What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-07-09 compared with 2021-04-09 · 224 added, 143 removed, 471 unchanged (44% of the section changed)

3 unchanged sentences

(currency and share amounts in thousands, except par value)

February 28, 2021 November 30, 2020

May 31, 2021 November 30, 2020

Current assets:

1 unchanged sentence

Accounts receivable, net 1,089,387 1,081,481

Assets held for sale 83,010 —

Other current assets 173,226 189,239

14 unchanged sentences

Income taxes payable 29,141 20,725

Liabilities held for sale 30,353 —

Total current liabilities 889,613 1,008,662

3 unchanged sentences

Total liabilities 2,572,472 2,875,471

Commitments and contingencies (Note 15)

Stockholders’ equity:

Preferred stock, $ 0.0001 par value, 10,000 shares authorized as of February 28, 2021;

no shares issued and outstanding as of February 28, 2021

Common stock, $ 0.0001 par value, 250,000 shares authorized as of February 28, 2021;

51,214 shares issued and outstanding as of February 28, 2021

Preferred stock, $ 0.0001 par value, 10,000 shares authorized as of May 31, 2021;

no shares issued and outstanding as of May 31, 2021

Common stock, $ 0.0001 par value, 250,000 shares authorized as of May 31, 2021;

51,296 shares issued and outstanding as of May 31, 2021

Additional paid-in capital 2,327,025 —

Treasury stock, 4 shares as of February 28, 2021

Treasury stock, 4 shares as of May 31, 2021

Retained earnings 171,715 —

Former parent company investment — 2,305,899

Accumulated other comprehensive loss ( 14,125 ) ( 3,814 )

Accumulated other comprehensive income (loss) 31,550 ( 3,814 )

Total stockholders’ equity 2,529,768 2,302,085

5 unchanged sentences

(currency and share amounts in thousands, except per share amounts)

Three Months Ended

February 28, 2021 February 29, 2020

Three Months Ended Six Months Ended

May 31, 2021 May 31, 2020 May 31, 2021 May 31, 2020

Revenue $ 1,369,878 $ 1,066,363 $ 2,723,156 $ 2,254,982

19 unchanged sentences

(currency in thousands)

Three Months Ended

February 28, 2021 February 29, 2020

Three Months Ended Six Months Ended

May 31, 2021 May 31, 2020 May 31, 2021 May 31, 2020

Net income $ 82,904 $ 2,470 $ 171,715 $ 54,787

Other comprehensive (loss) income:

Unrealized (loss) gain of defined benefit plans, net of taxes of $ 98 and $ 0 for the three months ended February 28, 2021 and February 29, 2020, respectively

Unrealized loss on cash flow hedges during the period, net of taxes of $ 2,255 and $ 587 for the three months ended February 28, 2021 and February 29, 2020, respectively

Other comprehensive income (loss):

Unrealized (loss) gain of defined benefit plans, net of taxes of $ 0 and $ 98 for the three and six months ended May 31, 2021, respectively, and $ 0 for the three and six months ended May 31, 2020, respectively

( 72 ) ( 16 ) ( 448 ) 2

Reclassification of net loss on cash flow hedges to net income, net of taxes of $ 3,022 and $ 1,654 for the three months ended February 28, 2021 and February 29, 2020, respectively

Unrealized gain on cash flow hedges during the period, net of taxes of $( 6,048 ) and $( 3,793 ) for the three and six months ended May 31, 2021, respectively, and $( 844 ) and $( 257 ) for the three and six months ended May 31, 2020, respectively

17,669 2,537 10,599 774

Total change in unrealized losses on cash flow hedges, net of taxes

Reclassification of net gains on cash flow hedges to net income, net of taxes of $ 2,518 and $ 5,540 for the three and six months ended May 31, 2021, respectively, and $ 1,144 and $ 2,798 for the three and six months ended May 31, 2020, respectively

( 7,355 ) ( 3,440 ) ( 16,526 ) ( 8,412 )

Foreign currency translation gain (loss), net of taxes of $ 0 for the three months ended February 28, 2021 and February 29, 2020

Total change in unrealized gain (loss) on cash flow hedges, net of taxes

10,314 ( 903 ) ( 5,927 ) ( 7,638 )

Other comprehensive loss

Foreign currency translation gain (loss), net of taxes of $ 0 for the three and six months ended May 31, 2021 and 2020, respectively

35,433 ( 26,227 ) 41,739 ( 38,490 )

Comprehensive income $ 78,500 $ 33,337

Other comprehensive income (loss)

45,675 ( 27,146 ) 35,364 ( 46,126 )

Comprehensive income (loss) $ 128,579 $ ( 24,676 ) $ 207,079 $ 8,661

(Amounts may not add due to rounding)

3 unchanged sentences

(currency in thousands)

Common stock Additional paid-in capital Treasury stock Retained earnings Former parent company investment Accumulated other comprehensive loss Total

Balances, November 30, 2019 $ — $ — $ — $ — $ 1,519,923 $ ( 50,082 ) $ 1,469,841

Share-based compensation — — — — 4,191 — 4,191

Other comprehensive loss — — — — — ( 18,980 ) ( 18,980 )

Hypothetical current tax expense recorded for separate return basis presentation — — — — 1,753 — 1,753

Net income — — — — 52,317 — 52,317

Three and Six Months Ended May 31, 2021

Common stock Additional paid-in capital Treasury stock Retained earnings Former parent company investment Accumulated other comprehensive income (loss) Total

Balances, February 28, 2021 $ 5 $ 2,314,996 $ ( 409 ) $ 88,811 $ — $ ( 14,125 ) $ 2,389,278

Other comprehensive income — — — — — 45,675 45,675

Share-based compensation activity — 12,029 — — — — 12,029

Repurchase of common stock for tax withholdings on equity awards — — ( 118 ) — — — ( 118 )

Net income — — — 82,904 — — 82,904

Balances, May 31, 2021 $ 5 $ 2,327,025 $ ( 527 ) $ 171,715 $ — $ 31,550 $ 2,529,768

Balances, November 30, 2020 $ — $ — $ — $ — $ 2,305,899 $ ( 3,814 ) $ 2,302,085

Other comprehensive loss — — — — — ( 10,311 ) ( 10,311 )

Other comprehensive income — — — — — 35,364 35,364

Reclassification of net former parent investment in Concentrix — 2,305,899 — — ( 2,305,899 ) — —

3 unchanged sentences

Net income — — — 171,715 — — 171,715

Balances, May 31, 2021 $ 5 $ 2,327,025 $ ( 527 ) $ 171,715 $ — $ 31,550 $ 2,529,768

(Amounts may not add due to rounding)

The accompanying notes are an integral part of these consolidated financial statements.

CONCENTRIX CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(currency in thousands)

Three and Six Months Ended May 31, 2020

Common stock Additional paid-in capital Treasury stock Retained earnings Former parent company investment Accumulated other comprehensive loss Total

Balances, February 29, 2020 $ — $ — $ — $ — $ 1,578,184 $ ( 69,062 ) $ 1,509,122

Share-based compensation — — — — 3,796 — 3,796

Other comprehensive loss — — — — — ( 27,146 ) ( 27,146 )

Hypothetical current tax expense recorded for separate return basis presentation — — — — 4,298 — 4,298

Net income — — — — 2,470 — 2,470

Balances, May 31, 2020 $ — $ — $ — $ — $ 1,588,748 $ ( 96,208 ) $ 1,492,540

Balances, November 30, 2019 $ — $ — $ — $ — $ 1,519,923 $ ( 50,082 ) $ 1,469,841

Share-based compensation — — — — 7,987 — 7,987

Other comprehensive loss — — — — — ( 46,126 ) ( 46,126 )

Hypothetical current tax expense recorded for separate return basis presentation — — — — 6,051 — 6,051

Net income — — — — 54,787 — 54,787

Balances, May 31, 2020 $ — $ — $ — $ — $ 1,588,748 $ ( 96,208 ) $ 1,492,540

(Amounts may not add due to rounding)

3 unchanged sentences

(currency in thousands)

Three Months Ended

February 28, 2021 February 29, 2020

Six Months Ended

May 31, 2021 May 31, 2020

Cash flows from operating activities:

18 unchanged sentences

Purchases of property and equipment ( 70,758 ) ( 69,241 )

Acquisitions of business, net of cash acquired and refunds ( 3,015 ) ( 2,635 )

Net cash used in investing activities ( 73,773 ) ( 66,384 )

37 unchanged sentences

certain allocations of former parent costs and expenses, were separately maintained in a separate ledger in the legal entities that made up the CX business.

As the separate legal entities that made up the CX business were not historically held by a single legal entity, former parent company investment was shown in lieu of stockholders’ equity in the prior period.

All significant intercompany balances and transactions between the legal entities that comprised the CX business were eliminated.

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Reclassifications

Certain amounts in the consolidated financial statements related to prior period have been reclassified to conform to the current period's presentation.

Certain amounts in the consolidated financial statements related to the prior period have been reclassified to conform to the current period’s presentation.

Risks and uncertainties related to the COVID-19 pandemic

In December 2019, there was an outbreak of a new strain of coronavirus (“COVID-19”).

In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic.

In December 2019, there was an outbreak of a new strain of coronavirus (“COVID-19”), which was declared a pandemic by the World Health Organization in March 2020.

The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains and labor force participation, and created significant volatility and disruption of financial markets.

The Company successfully transitioned a significant portion of its workforce to a remote working environment throughout the second quarter of 2020 and implemented a number of safety and social distancing measures in our sites to protect the health and safety of employees.

During the first quarter of 2021, almost all of the Company's workforce was productive.

The Company incurred incremental costs of approximately $ 10 million associated with COVID-19 during the first quarter of 2021.

The Company is unable to predict how long the pandemic conditions will persist in the regions in which the Company operates, what additional measures may be introduced by governments or the Company’s clients and the effect of any such additional measures on the Company’s business.

As a result, many of the estimates and assumptions used in preparation of these consolidated financial statements required increased judgment and carry a

higher degree of variability and volatility.

As events continue to evolve with respect to the pandemic, the Company’s estimates may materially change in future periods.

During the six months ended May 31, 2021, almost all of the Company’s workforce was productive.

The Company is unable to predict how long the pandemic conditions will persist in regions in which the Company operates, if or when countries or localities may experience an increase in COVID-19 cases, what additional measures may be introduced by governments or the Company’s clients in response to the pandemic generally or to an increase in COVID-19 cases in a particular country or locality, and the effect of any such additional measures on the Company’s business.

As a result, many of the estimates and assumptions used in

preparation of these consolidated financial statements required increased judgment and carry a higher degree of variability and volatility.

As events continue to evolve with respect to the pandemic and the global recovery from the pandemic, the Company’s estimates may materially change in future periods.

NOTE 2— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

For a discussion of the Company’s significant accounting policies, refer to the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2020.

Accounting pronouncements adopted during the three months ended February 28, 2021 are discussed below.

Accounting pronouncements adopted during the six months ended May 31, 2021 are discussed below.

Concentration of credit risk

For the three months ended February 28, 2021, one client accounted for 11.9 % of the Company’s consolidated revenue.

For the three months ended February 29, 2020, no client accounted for more than 10% of the Company's consolidated revenue.

As of February 28, 2021 and November 30, 2020, one client comprised 13.9 % and 16.2 %, respectively, of the Company's total accounts receivable balance.

For the three and six months ended May 31, 2021, one client accounted for 11.2 % and 11.5 % of the Company’s consolidated revenue, respectively.

For the three and six months ended May 31, 2020, one client accounted for 10.8 % and 10.3 % of the Company’s consolidated revenue, respectively.

As of May 31, 2021 and November 30, 2020, one client comprised 14.0 % and 16.2 %, respectively, of the Company’s total accounts receivable balance.

Recently adopted accounting pronouncements

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The adoption is not expected to have a material impact on the Company’s consolidated financial statements.

NOTE 3— ACQUISITIONS:

Convergys Acquisition

On October 5, 2018, SYNNEX acquired 100 % of Convergys Corporation (“Convergys”), an Ohio corporation, for a purchase price of $ 2,269,527 , pursuant to a merger agreement dated June 28, 2018.

The acquisition of this customer experience outsourcing company was related to the CX business and added scale, diversified the revenue base, expanded the Company's service delivery footprint and strengthened the Company’s leadership position as a top global provider of CX services.

Acquisition-related and integration expenses related to the Convergys acquisition were $ 15,352 during the three months ended February 29, 2020.

The following table presents the activity related to liability for restructuring charges related to the Convergys acquisition through February 28, 2021 and February 29, 2020:

Restructuring costs

Severance and benefits Facility and exit costs Total

Accrued balance as of November 30, 2019 $ 2,828 $ 14,164 $ 16,992

Additional (release of) accrual during the period 436 ( 11,734 ) ( 11,298 )

Cash payments ( 1,511 ) ( 1,309 ) ( 2,820 )

Accrued balance as of February 29, 2020 $ 1,753 $ 1,121 $ 2,874

Accrued balance as of November 30, 2020 $ — $ 17,810 $ 17,810

Cash payments — ( 2,004 ) ( 2,004 )

Accrued balance as of February 28, 2021 $ — $ 15,806 $ 15,806

NOTE 3— ASSETS HELD FOR SALE:

In May 2021, the Company entered into a definitive agreement to sell its insurance third-party administration operations and software platform, Concentrix Insurance Solutions (“CIS”), to a third party.

The Company completed the sale of CIS during July 2021.

As of May 31, 2021, the assets and liabilities of the CIS business qualified as assets and liabilities held for sale due to the planned divestiture.

The following is a summary of the major categories of assets and liabilities that were reclassified to held for sale:

Accounts receivable, net $ 6,657

Other current assets 4,066

Property and equipment, net 37,454

Goodwill 14,690

Intangible assets, net 3,447

Other assets 16,696

Total assets held for sale $ 83,010

Accounts payable $ 838

Accrued compensation and benefits 5,008

Other accrued liabilities 3,043

Deferred tax liabilities 13,733

Other long-term liabilities 7,731

Total liabilities held for sale $ 30,353

The Company determined that the sale of CIS did not qualify as discontinued operations.

The CIS results of operations are included within the Company’s statements of operations for the full three and six months ended May 31, 2021.

NOTE 4— SHARE-BASED COMPENSATION:

5 unchanged sentences

Following the conversion, it was determined that the share-based awards were modified in accordance with the applicable accounting guidance.

As a result, the fair values of the share-based awards immediately before and after the modification were assessed in order to determine if the modification resulted in any incremental compensation cost related to the awards.

As a result, the fair values of the share-based

awards immediately before and after the modification were assessed in order to determine if the modification resulted in any incremental compensation cost related to the awards.

Based on the analysis performed, including consideration of the anti-dilution feature contained in the SYNNEX stock incentive plan, it was determined that the conversion resulted in an immaterial amount of incremental compensation cost for the outstanding awards.

2 unchanged sentences

The Company recognizes share-based compensation expense for all share-based awards made to employees, including employee stock options, restricted stock awards, restricted stock units, performance-based restricted stock units and employee stock purchases, based on estimated fair values.

The Company recorded share-based compensation expense in the consolidated statements of operations for the three months ended February 28, 2021 and February 29, 2020 as follows:

Three Months Ended

February 28, 2021 February 29, 2020

The Company recorded share-based compensation expense in the consolidated statements of operations for the three and six months ended May 31, 2021 and 2020 as follows:

Three Months Ended Six Months Ended

May 31, 2021 May 31, 2020 May 31, 2021 May 31, 2020

Total share-based compensation $ 9,283 $ 3,840 $ 16,401 $ 8,102

1 unchanged sentence

Effect on net income $ 6,963 $ 2,880 $ 12,301 $ 6,077

Substantially all of the share-based compensation expense was recorded in “Selling, general and administrative expenses” in the consolidated statements of operations.

Share-based compensation expense is included in selling, general and administrative expenses in the consolidated statements of operations.

NOTE 5— BALANCE SHEET COMPONENTS:

1 unchanged sentence

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same amounts shown in the consolidated statements of cash flows:

February 28, 2021 November 30, 2020

May 31, 2021 November 30, 2020

Cash and cash equivalents $ 131,249 $ 152,656

4 unchanged sentences

Accounts receivable, net is comprised of the following:

February 28, 2021 November 30, 2020

May 31, 2021 November 30, 2020

Billed accounts receivable $ 645,785 $ 644,789

5 unchanged sentences

Presented below is a progression of the allowance for doubtful trade receivables:

Balances at November 30, 2019 $ 6,055

Net additions 1,501

Write-offs and reclassifications ( 603 )

Balances at February 29, 2020 $ 6,953

Balances at November 30, 2020 $ 8,963

Net reductions ( 2,554 )

Three Months Ended Six Months Ended

May 31, May 31,

2021 2020 2021 2020

Balance at beginning of period $ 6,239 $ 6,953 $ 8,963 $ 6,055

Net additions (reductions) 422 4,617 ( 2,132 ) 6,118

Write-offs and reclassifications ( 1,148 ) ( 697 ) ( 1,318 ) ( 1,300 )

Balances at February 28, 2021 $ 6,239

Balance at end of period $ 5,513 $ 10,873 $ 5,513 $ 10,873

Property and equipment, net:

The following tables summarize the carrying amounts and related accumulated depreciation for property and equipment as of February 28, 2021 and November 30, 2020:

February 28, 2021 November 30, 2020

The following tables summarize the carrying amounts and related accumulated depreciation for property and equipment as of May 31, 2021 and November 30, 2020:

May 31, 2021 November 30, 2020

Land $ 27,879 $ 29,000

9 unchanged sentences

Shown below are countries where 10% or more of the Company’s property and equipment, net are located:

February 28, 2021 November 30, 2020

May 31, 2021 November 30, 2020

Property and equipment, net:

4 unchanged sentences

Total $ 399,422 $ 451,649

The following table summarizes the changes in the Company’s goodwill for the period ended February 28, 2021:

The following table summarizes the changes in the Company’s goodwill for the period ended May 31, 2021:

Balance as of November 30, 2020

Acquisition 3,502

Assets held for sale ( 14,690 )

Foreign exchange translation 13,038

Balance as of February 28, 2021

Balance as of May 31, 2021

Intangible assets, net:

The following tables summarize the carrying amounts and related accumulated amortization for intangible assets as of February 28, 2021 and November 30, 2020:

As of February 28, 2021 As of November 30, 2020

The following tables summarize the carrying amounts and related accumulated amortization for intangible assets as of May 31, 2021 and November 30, 2020:

As of May 31, 2021 As of November 30, 2020

amounts Accumulated amortization Net amounts Gross

11 unchanged sentences

The components of accumulated other comprehensive income (loss) (“AOCI”), net of taxes, were as follows:

Three Months Ended May 31, 2021 and 2020

Unrecognized gains (losses) on

4 unchanged sentences

adjustments, net of taxes

Balances at November 30, 2019 $ ( 29,940 ) $ 17,523 $ ( 37,665 ) $ ( 50,082 )

Balance, February 29, 2020 $ ( 29,922 ) $ 10,788 $ ( 49,928 ) $ ( 69,062 )

Other comprehensive income (loss) before reclassification

( 16 ) 2,537 ( 26,227 ) ( 23,706 )

Reclassification of (gains) losses from other comprehensive income (loss)

Reclassification of gains from other comprehensive income (loss)

— ( 3,440 ) — ( 3,440 )

Balances at February 29, 2020 $ ( 29,922 ) $ 10,788 $ ( 49,928 ) $ ( 69,062 )

Balances at November 30, 2020 $ ( 38,584 ) $ 29,239 $ 5,531 $ ( 3,814 )

Balances at May 31, 2020

$ ( 29,938 ) $ 9,885 $ ( 76,155 ) $ ( 96,208 )

Balance, February 28, 2021 $ ( 38,960 ) $ 12,998 $ 11,837 $ ( 14,125 )

Other comprehensive income (loss) before reclassification

( 72 ) 17,669 35,433 53,030

Reclassification of (gains) losses from other comprehensive income (loss)

Reclassification of gains from other comprehensive income (loss)

— ( 7,355 ) — ( 7,355 )

Balances at February 28, 2021 $ ( 38,960 ) $ 12,998 $ 11,837 $ ( 14,125 )

Balances at May 31, 2021

$ ( 39,032 ) $ 23,312 $ 47,270 $ 31,550

Six Months Ended May 31, 2021 and 2020

Unrecognized gains (losses) on

defined benefit plan, net of taxes

Unrealized gains (losses) on

cash flow hedges, net of taxes

Foreign currency translation

adjustments, net of taxes

Balance, November 30, 2019 $ ( 29,940 ) $ 17,523 $ ( 37,665 ) $ ( 50,082 )

Other comprehensive income (loss) before reclassification

2 774 ( 38,490 ) ( 37,714 )

Reclassification of gains from other comprehensive income (loss)

— ( 8,412 ) — ( 8,412 )

Balances at May 31, 2020

$ ( 29,938 ) $ 9,885 $ ( 76,155 ) $ ( 96,208 )

Balance, November 30, 2020 $ ( 38,584 ) $ 29,239 $ 5,531 $ ( 3,814 )

Other comprehensive income (loss) before reclassification

( 448 ) 10,599 41,739 51,890

Reclassification of gains from other comprehensive income (loss)

— ( 16,526 ) — ( 16,526 )

Balances at May 31, 2021

$ ( 39,032 ) $ 23,312 $ 47,270 $ 31,550

Refer to Note 6 for the location of gains and losses on cash flow hedges reclassified from other comprehensive income (loss) to the consolidated statements of operations.

Reclassifications of amortization of actuarial (gains) losses of defined benefits plans is recorded in “Other income (expense), net” in the consolidated statement of operations.

Reclassifications of amortization of actuarial (gains) losses of defined benefits plans is recorded in “Other expense (income), net” in the consolidated statement of operations.

Restructuring:

The following table presents the activity related to liabilities for restructuring charges of previous acquisitions for the three and six months ended May 31, 2021 and 2020:

Three Months Ended May 31, 2021 and 2020

Restructuring costs

Severance and benefits Facility and exit costs Total

Accrued balance as of February 29, 2020 $ 1,753 $ 1,121 $ 2,874

Additional (release of) accrual during the period ( 757 ) 11,849 11,092

Cash payments ( 470 ) ( 2,422 ) ( 2,892 )

Accrued balance as of May 31, 2020 $ 526 $ 10,548 $ 11,074

Accrued balance as of February 28, 2021 $ — $ 15,806 $ 15,806

Release of accrual during the period — ( 410 ) ( 410 )

Cash payments — ( 1,202 ) ( 1,202 )

Accrued balance as of May 31, 2021 $ — $ 14,194 $ 14,194

Six Months Ended May 31, 2021 and 2020

Restructuring costs

Severance and benefits Facility and exit costs Total

Accrued balance as of November 30, 2019 $ 2,828 $ 14,164 $ 16,992

Additional (release of) accrual during the period ( 321 ) 115 ( 206 )

Cash payments ( 1,981 ) ( 3,731 ) ( 5,712 )

Accrued balance as of May 31, 2020 $ 526 $ 10,548 $ 11,074

Accrued balance as of November 30, 2020 $ — $ 17,810 $ 17,810

Release of accrual during the period — ( 410 ) ( 410 )

Cash payments — ( 3,206 ) ( 3,206 )

Accrued balance as of May 31, 2021 $ — $ 14,194 $ 14,194

NOTE 6— DERIVATIVE INSTRUMENTS:

12 unchanged sentences

dollars may hedge a portion of forecasted revenue or costs not denominated in the entities’ functional currencies.

These instruments mature at various dates through February 2023.

These instruments mature at various dates through May 2023.

Gains and losses on cash flow hedges are recorded in AOCI until the hedged item is recognized in earnings.

9 unchanged sentences

The fair values of the Company’s derivative instruments are disclosed in Note 7 and summarized in the table below:

Balance Sheet Line Item February 28, 2021 November 30, 2020

Balance Sheet Line Item May 31, 2021 November 30, 2020

Derivative instruments not designated as hedging instruments:

1 unchanged sentence

Other current assets

13,988 15,666

Other accrued liabilities

10 unchanged sentences

The following table shows the gains and losses, before taxes, of the Company’s derivative instruments designated as cash flow hedges and not designated as hedging instruments in other comprehensive income (“OCI”), and the consolidated statements of operations for the periods presented:

Locations of gain (loss) in income For the three months ended

February 28, 2021 February 29, 2020

Locations of gain (loss) in income For the three months ended For the six months ended

May 31, 2021 May 31, 2020 May 31, 2021 May 31, 2020

Derivative instruments designated as cash flow hedges

Losses recognized in OCI:

Gains recognized in OCI:

Foreign exchange forward contracts $ 23,718 $ 3,381 $ 14,393 $ 1,031

5 unchanged sentences

Derivative instruments not designated as hedging instruments:

Loss recognized from foreign exchange forward contracts, net (1)

$ ( 2,767 ) $ ( 224 )

Gain recognized from foreign exchange forward contracts, net (1)

Other income (expense), net $ 20,808 $ 2,404 $ 18,041 $ 2,180

(1) The gains and losses largely offset the currency gains and losses that resulted from changes in the assets and liabilities denominated in nonfunctional currencies.

11 unchanged sentences

The following table summarizes the valuation of the Company’s investments and financial instruments that are measured at fair value on a recurring basis:

As of February 28, 2021 As of November 30, 2020

As of May 31, 2021 As of November 30, 2020

Fair value measurement category Fair value measurement category

9 unchanged sentences

Fair values of long-term foreign currency exchange contracts are measured using valuations based upon quoted prices for similar assets and liabilities in active markets and are valued by reference to similar financial instruments, adjusted for terms specific to the contracts.

The effect of nonperformance risk on the fair value of derivative instruments was not material as of February 28, 2021 and November 30, 2020.

The effect of nonperformance risk on the fair value of derivative instruments was not material as of May 31, 2021 and November 30, 2020.

The carrying values of term deposits with maturities less than one year, accounts receivable and accounts payable approximate fair value due to their short maturities and interest rates that are variable in nature.

The carrying values of the outstanding balance on the Term Loan under the Company’s Credit Facility and the outstanding balance on the Securitization Facility approximate their fair value since they bear interest rates that are similar to existing market rates.

During the three months ended February 28, 2021 and February 29, 2020, there were no transfers between the fair value measurement category levels.

The carrying values of the outstanding balance on the Term Loan under the Company’s Credit Facility and the outstanding balance on the Securitization Facility approximate their fair values since they bear interest rates that are similar to existing market rates.

During the three and six months ended May 31, 2021 and 2020, there were no transfers between the fair value measurement category levels.

NOTE 8— BORROWINGS:

Borrowings consist of the following:

February 28, 2021 November 30, 2020

May 31, 2021 November 30, 2020

Credit Facility - current portion of Term Loan component $ — $ 33,750

6 unchanged sentences

Credit Facility

On October 16, 2020, Concentrix entered into a new senior secured credit facility, which provides for the extension of revolving loans of up to $ 600,000 (the “Revolver”) and term loan borrowings of up to $ 900,000 (the “Term Loan” and, together with the Revolver, the “Credit Facility”).

On October 16, 2020, Concentrix entered into a senior secured credit facility, which provides for the extension of revolving loans of up to $ 600,000 (the “Revolver”) and term loan borrowings of up to $ 900,000 (the “Term Loan” and, together with the Revolver, the “Credit Facility”).

On November 30, 2020, in connection with the spin-off, the Company incurred $ 900,000 of initial Term Loan borrowings under the Credit Facility.

1 unchanged sentence

The Credit Facility matures on November 30, 2025.

The outstanding principal amount of the Term Loan is payable in quarterly installments of $ 11,250 commencing on May 31, 2021, with the unpaid balance due in full on the maturity date.

Beginning May 31, 2021, the outstanding principal amount of the Term Loan is payable in quarterly installments of $ 11,250 with the unpaid balance due in full on the maturity date.

Concentrix may prepay the loans under the Credit Facility at any time without penalty, other than breakage fees.

During the three months ended February 28, 2021, the Company made $ 50,000 of early principal payments on the Term Loan.

The Company made additional early principal payments of $ 50,000 on March 31, 2021.

During the three and six months ended May 31, 2021, the Company paid $ 150,000 and $ 200,000 of the principal balance on the Term Loan, respectively.

Concentrix may request, subject to obtaining commitments from any participating lenders and certain other conditions, incremental commitments to increase the amount of the Revolver or the Term Loan available under the Credit Facility in an aggregate principal amount equal to $ 450,000 , plus an additional amount, so long as after giving effect to the incurrence of such additional amount, the Company’s pro forma first lien leverage ratio (as defined in the Credit Facility) would not exceed 3.00 to 1.00.

2 unchanged sentences

subsidiaries.

Borrowings under the Revolver and the Term Loan bear interest, in the case of LIBOR rate loans, at a per annum rate equal to the applicable LIBOR rate (but not less than 0.25 %), plus an applicable margin, which ranges

from 1.25 % to 2.25 %, based on Concentrix’ consolidated leverage ratio.

Borrowings under the Credit Facility that are not LIBOR rate loans bear interest at a per annum rate equal to (i) the greatest of (a) the Federal Funds Rate in effect on such day plus 1/2 of 1.0%, (b) the rate of interest last publicly announced by Bank of America as its “prime rate” and (c) the LIBOR rate plus 1.0 %, plus (ii) an applicable margin, which ranges from 0.25 % to 1.25 %, based on Concentrix’ consolidated leverage ratio.

Commitments under the Revolver are subject to a commitment fee on the unused portion of the Revolver, which fee ranges from 25 to 45 basis points, based on Concentrix’ consolidated leverage ratio.

The Credit Facility contains various loan covenants that restrict the ability of Concentrix and its subsidiaries to take certain actions, including, incurrence of indebtedness, creation of liens, mergers or consolidations, dispositions of assets, repurchase or redemption of capital stock, making certain investments, entering into certain transactions with affiliates or changing the nature of their business.

In addition, the Credit Facility contains financial covenants that require Concentrix to maintain at the end of each fiscal quarter commencing with the quarter ended February 28, 2021, (i) a consolidated leverage ratio (as defined in the Credit Facility) not to exceed 3.75 to 1.0 and (ii) a consolidated interest coverage ratio (as defined in the Credit Facility) equal to or greater than 3.00 to 1.0.

of assets, repurchase or redemption of capital stock, making certain investments, entering into certain transactions with affiliates or changing the nature of their business.

In addition, the Credit Facility contains financial covenants that require Concentrix to maintain at the end of each fiscal quarter, (i) a consolidated leverage ratio (as defined in the Credit Facility) not to exceed 3.75 to 1.0 and (ii) a consolidated interest coverage ratio (as defined in the Credit Facility) equal to or greater than 3.00 to 1.0.

The Credit Facility also contains various customary events of default, including payment defaults, defaults under certain other indebtedness, and a change of control of Concentrix.

At February 28, 2021 and November 30, 2020, no amounts were outstanding under the Revolver.

At May 31, 2021 and November 30, 2020, no amounts were outstanding under the Revolver.

Securitization Facility

On October 30, 2020, Concentrix entered into a new $ 350,000 accounts receivable securitization facility (the “Securitization Facility”) pursuant to certain agreements, including a Receivables Financing Agreement and a Receivables Purchase Agreement.

On October 30, 2020, Concentrix entered into a $ 350,000 accounts receivable securitization facility (the “Securitization Facility”) pursuant to certain agreements, including a Receivables Financing Agreement and a Receivables Purchase Agreement.

On November 30, 2020, in connection with the spin-off, the Company incurred $ 250,000 of borrowings under the Securitization Facility.

Substantially all of the proceeds from such indebtedness were transferred to SYNNEX on November 30, 2020 to eliminate debt owed by Concentrix to SYNNEX and in exchange for the contribution of certain Concentrix trademarks from SYNNEX to Concentrix.

Under the Securitization Facility, Concentrix and certain of its subsidiaries sell or otherwise transfer all of their accounts receivable to a special purpose bankruptcy-remote subsidiary of Concentrix (the “Borrower”) that grants a security interest in the receivables to the lenders in exchange for available borrowings of up to $ 350,000 .

Under the Securitization Facility, Concentrix and certain of its subsidiaries (the “Originators”) sell or otherwise transfer all of their accounts receivable to a special purpose bankruptcy-remote subsidiary of Concentrix (the “Borrower”) that grants a security interest in the receivables to the lenders in exchange for available borrowings of up to $ 350,000 .

The amount received under the Securitization Facility is recorded as debt on the Company’s consolidated balance sheets.

Borrowing availability under the Securitization Facility may be limited by our accounts receivables balances, changes in the credit ratings of the clients comprising the receivables, client concentration levels in the receivables, and certain characteristics of the accounts receivable being transferred (including factors tracking performance of the accounts receivable over time).

The Securitization Facility has an initial termination date of October 28, 2022.

In May 2021, the Company entered into an amendment of the Securitization Facility to remove CIS as an Originator.

The Securitization Facility has a termination date of October 28, 2022.

Borrowings under the Securitization Facility bear interest with respect to loans that are funded through the issuance of commercial paper at the applicable commercial paper rate plus a spread of 1.05 % and, otherwise, at a per annum rate equal to the applicable LIBOR rate plus a spread of 1.15 %.

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The Securitization Facility contains various affirmative and negative covenants, including a consolidated leverage ratio covenant that is consistent with the Credit Facility and customary events of default, including payment defaults, defaults under certain other indebtedness, a change in control of Concentrix, and certain events negatively affecting the overall credit quality of the transferred accounts receivable.

The Borrower’s sole business consists of the purchase or acceptance through capital contributions of the receivables and related security from Concentrix and its subsidiaries and the subsequent retransfer of or granting of a security interest in such receivables and related security to the administrative agent under the Securitization Facility for the benefit of the lenders.

becoming available to the Borrower’s equity holders, and the assets of the Borrower are not available to pay creditors of Concentrix and its subsidiaries.

The Borrower’s sole business consists of the purchase or acceptance through capital contributions of the receivables and related security from the Originators and the subsequent retransfer of or granting of a security interest in such receivables and related security to the administrative agent under the Securitization Facility for the benefit of the lenders.

The Borrower is a separate legal entity with its own separate creditors who will be entitled, upon its liquidation, to be satisfied out of the Borrower’s assets prior to any assets or value in the Borrower becoming available to the Borrower’s equity holders, and the assets of the Borrower are not available to pay creditors of Concentrix and its subsidiaries.

Covenant compliance

As of February 28, 2021, Concentrix was in compliance with all covenants for the above arrangements.

As of May 31, 2021, Concentrix was in compliance with all covenants for the above arrangements.

NOTE 9— EARNINGS PER SHARE:

Basic and diluted earnings per share ( “ EPS ” ) are computed using the two-class method, which is an earnings allocation formula that determines EPS for each class of common stock and participating securities, according to dividends declared and participation rights in undistributed earnings.

The Company's restricted stock awards are considered participating securities because they are legally issued at the grant date and holders are entitled to a non-forfeitable right to receive dividends.

The Company’s restricted stock awards are considered participating securities because they are legally issued at the grant date and holders have a non-forfeitable right to receive dividends.

Basic EPS is generally computed by dividing net income attributable to common stockholders by the weighted-average shares of common stock outstanding during the period.

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The dilutive effect of restricted stock units and stock options are reflected in diluted net income per share by applying the treasury stock method.

There were no Concentrix Corporation equity awards outstanding prior to the spin-off, thus the computation of basic and diluted earnings per common share for all prior periods disclosed is calculated using the shares issued in connection with the spin-off of 51.6 million shares.

Three Months Ended

February 28, 2021 February 29, 2020

There were no Concentrix equity awards outstanding prior to the spin-off, thus the computation of basic and diluted earnings per common share for all prior periods disclosed is calculated using the shares issued in connection with the spin-off of 51.6 million shares.

Three Months Ended Six Months Ended

May 31, 2021 May 31, 2020 May 31, 2021 May 31, 2020

Basic earnings per common share:

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net income allocated to participating securities (1)

( 1,272 ) — ( 2,346 ) —

Net income attributable to common stockholders $ 81,632 $ 2,470 $ 169,369 $ 54,787

Weighted-average number of common shares - basic 51,275 51,602 51,215 51,602

Basic earnings per share $ 1.72 $ 1.01

Basic earnings per common share $ 1.59 $ 0.05 $ 3.31 $ 1.06

Diluted earnings per common share:

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net income allocated to participating securities (1)

( 1,254 ) — ( 2,314 ) —

Net income attributable to common stockholders $ 81,650 $ 2,470 $ 169,401 $ 54,787

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In the following table, the Company’s revenue is disaggregated by primary industry verticals:

Three Months Ended

February 28, 2021 February 29, 2020

Three Months Ended Six Months Ended

May 31, 2021 May 31, 2020 May 31, 2021 May 31, 2020

Industry vertical:

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On December 1, 2020, in connection with the spin-off, the Company became an independent publicly-traded company.

The following table presents the Company's related party transactions with SYNNEX for the three months ended February 29, 2020:

Three months ended

February 29, 2020

The following table presents the Company’s related party transactions with SYNNEX for the three and six months ended May 31, 2020:

Three Months Ended Six Months Ended

Revenue from customer experience services to former parent $ 4,652 $ 10,098

Interest expense on borrowings from former parent

13,496 31,859

Interest income on borrowings made to former parent

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These SYNNEX guarantees were released or replaced by Concentrix guarantees on or prior to the spin-off.

set forth the principal actions to be taken in connection with the spin-off and define the Company’s ongoing relationship with SYNNEX after the spin-off.

In connection with the spin-off, on November 30, 2020, the Company entered into a separation and distribution agreement, an employee matters agreement, a tax matters agreement and a commercial agreement with SYNNEX to set forth the principal actions to be taken in connection with the spin-off and define the Company’s ongoing relationship with SYNNEX after the spin-off.

NOTE 12— PENSION AND EMPLOYEE BENEFITS PLANS:

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legal entities are covered by government mandated defined contribution plans.

During the three months ended February 28, 2021 and February 29, 2020, the Company contributed $ 20,174 and $ 15,476 , respectively, to defined contribution plans.

During the three and six months ended May 31, 2021, the Company contributed $ 18,967 and $ 39,141 , respectively, to defined contribution plans.

During the three and six months ended May 31, 2020, the Company contributed $ 14,962 and $ 30,438 , respectively, to defined contribution plans.

Defined Benefit Plans

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The plan assumptions are evaluated annually and are updated as deemed necessary.

Net benefit costs related to defined benefit plans were $ 3,311 and $ 3,276 , during the three months ended February 28, 2021 and February 29, 2020, respectively.

On an aggregate basis, the plans were underfunded by $ 126,968 and $ 134,399 at February 28, 2021 and November 30, 2020, respectively.

Net benefit costs related to defined benefit plans were $ 3,372 and $ 6,683 , during the three and six months ended May 31, 2021, respectively.

Net benefit costs related to defined benefit plans were $ 2,665 and $ 5,941 , during the three and six months ended May 31, 2020, respectively.

On an aggregate basis, the plans were underfunded by $ 127,689 and $ 134,399 at May 31, 2021 and November 30, 2020, respectively.

NOTE 13— INCOME TAXES:

Income taxes consist of current and deferred tax expense resulting from income earned in domestic and international jurisdictions.

For the first quarter of 2020, although the Company was included in the consolidated tax returns of SYNNEX in certain jurisdictions, the Company's tax provision was recorded as if Concentrix had filed its taxes on a stand-alone basis.

As a result, the Company calculated a hypothetical tax expense as part of the SYNNEX consolidated group, which resulted in an expense adjustment to increase the income tax provision by $ 1,753 during for the first quarter of 2020.

The offset to the hypothetical tax expense was reflected in parent company investment, a component of equity in the consolidated balance sheet prior to the spin-off.

The effective tax rates for the first quarter of 2021 and first quarter of 2020 were impacted by the geographic mix of worldwide income and certain discrete items.

The liability for unrecognized tax benefits was $ 63,664 and $ 62,315 at February 28, 2021 and November 30, 2020, respectively, and is included in other long-term liabilities in the consolidated balance sheets.

As of February 28, 2021 and November 30, 2020, the total amount of unrecognized tax benefits that would affect income tax expense if recognized in the consolidated financial statements was $ 56,222 and $ 54,910 , respectively.

For the three and six months ended May 31, 2020, although the Company was included in the consolidated tax returns of SYNNEX in certain jurisdictions, the Company’s tax provision was recorded as if Concentrix had filed its taxes on a stand-alone basis.

As a result, Concentrix calculated a hypothetical tax as part of the SYNNEX consolidated group, which resulted in an expense adjustment to increase the income tax provision by $ 4,298 and $ 6,051 , respectively, for the three and six months ended May 31, 2020.

The offset to the hypothetical tax expense was reflected in parent company investment, a component of equity in the Company’s consolidated balance sheet prior to the spin-off.

The effective tax rates for the three and six months ended May 31, 2021 and 2020 were impacted by the geographic mix of worldwide income and certain discrete items, which included an additional expense of $ 9,247 in the second quarter of 2021 related to the change in our indefinite reinvestment assertion for CIS.

The liability for unrecognized tax benefits was $ 63,054 and $ 62,315 at May 31, 2021 and November 30, 2020, respectively, and is included in other long-term liabilities in the consolidated balance sheets.

As of May 31, 2021 and November 30, 2020, the total amount of unrecognized tax benefits that would affect income tax expense if recognized in the consolidated financial statements was $ 55,561 and $ 54,910 , respectively.

This amount includes net interest and penalties of $ 14,064 and $ 14,402 for the respective periods.

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The following table presents the various components of lease costs:

Three Months Ended

February 28, 2021 February 29, 2020

Three Months Ended Six Months Ended

May 31, 2021 May 31, 2020 May 31, 2021 May 31, 2020

Operating lease cost $ 51,122 $ 49,964 $ 102,563 $ 110,202

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Total operating lease cost $ 64,536 $ 58,245 $ 129,333 $ 134,222

The following table presents a maturity analysis of expected undiscounted cash flows for operating leases on an annual basis for the next five years and thereafter as of February 28, 2021:

The following table presents a maturity analysis of expected undiscounted cash flows for operating leases on an annual basis for the next five years and thereafter as of May 31, 2021:

Fiscal Years Ending November 30,

2021 (remaining nine months) $ 142,700

2021 (remaining six months) $ 97,562

Thereafter 43,661

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The following amounts were recorded in the consolidated balance sheets related to the Company’s operating leases:

February 28, 2021 November 30, 2020

May 31, 2021 November 30, 2020

Operating lease ROU assets Other assets, net $ 513,972 $ 506,368

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Cash payments related to variable lease costs and short-term leases are not included in the measurement of operating lease liabilities, and, as such, are excluded from the amounts below:

Three Months Ended

February 28, 2021 February 29, 2020

Six Months Ended

May 31, 2021 May 31, 2020

Cash paid for amounts included in the measurement of lease liabilities $ 107,926 $ 100,942

Non-cash ROU assets obtained in exchange for lease liabilities 76,374 48,307

The weighted-average remaining lease term and discount rate as of February 28, 2021 and November 30, 2020 were as follows:

February 28, 2021 November 30, 2020

The weighted-average remaining lease term and discount rate as of May 31, 2021 and November 30, 2020 were as follows:

May 31, 2021 November 30, 2020

Weighted-average remaining lease term (years) 3.99 3.97

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements