What changed in this filing

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Item 1. Financial Statements

2022-04-08 compared with 2021-10-08 · 276 added, 307 removed, 381 unchanged (60% of the section changed)

3 unchanged sentences

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

August 31, 2021 November 30, 2020

February 28, 2022 November 30, 2021

Current assets:

9 unchanged sentences

Total assets $ 6,716,788 $ 5,046,367

LIABILITIES AND EQUITY

LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY

Current liabilities:

1 unchanged sentence

Current portion of long-term debt 78,750 —

Payable to former parent — 22,825

Accrued compensation and benefits 414,971 453,434

7 unchanged sentences

Commitments and contingencies (Note 14)

Redeemable non-controlling interest 2,266 —

Stockholders’ equity:

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

no shares issued and outstanding as of August 31, 2021

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

51,448 shares issued and outstanding as of August 31, 2021

Preferred stock, $ 0.0001 par value, 10,000 shares authorized and no shares issued and outstanding as of February 28, 2022 and November 30, 2021, respectively

Common stock, $ 0.0001 par value, 250,000 shares authorized;

52,011 and 51,927 shares issued as of February 28, 2022 and November 30, 2021, respectively, and 51,664 and 51,594 shares outstanding as of February 28, 2022 and November 30, 2021, respectively

Additional paid-in capital 2,389,403 2,355,767

Treasury stock, 93 shares as of August 31, 2021

Treasury stock, 348 and 333 shares as of February 28, 2022 and November 30, 2021, respectively

( 60,040 ) ( 57,486 )

Retained earnings 489,656 392,495

Former parent company investment — 2,305,899

Accumulated other comprehensive loss ( 87,025 ) ( 70,526 )

Total stockholders’ equity 2,731,999 2,620,255

Total liabilities and stockholders’ equity $ 5,009,440 $ 5,177,556

(Amounts may not add due to rounding)

Total liabilities, redeemable non-controlling interest, and stockholders’ equity $ 6,716,788 $ 5,046,367

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

2 unchanged sentences

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

Three Months Ended Nine Months Ended

August 31, 2021 August 31, 2020 August 31, 2021 August 31, 2020

Three Months Ended

February 28, 2022 February 28, 2021

Revenue $ 1,536,052 $ 1,353,278

7 unchanged sentences

Provision for income taxes 36,052 34,572

Net income $ 109,754 $ 45,397 $ 281,469 $ 100,184

Net income before non-controlling interest 110,539 88,811

Net income attributable to non-controlling interest 266 —

Net income attributable to Concentrix Corporation $ 110,273 $ 88,811

Earnings per common share:

4 unchanged sentences

Diluted 52,046 51,805

(Amounts may not add due to rounding)

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

2 unchanged sentences

(currency in thousands)

Three Months Ended Nine Months Ended

August 31, 2021 August 31, 2020 August 31, 2021 August 31, 2020

Net income $ 109,754 $ 45,397 $ 281,469 $ 100,184

Other comprehensive income (loss):

Unrealized gains (losses) of defined benefit plans, net of taxes of $ 0 and $ 98 for the three and nine months ended August 31, 2021, respectively, and $ 3,114 for the three and nine months ended August 31, 2020, respectively

Three Months Ended

February 28, 2022 February 28, 2021

Net income before non-controlling interest

$ 110,539 $ 88,811

Unrealized gains (losses) on cash flow hedges during the period, net of taxes of $ 3,840 and $ 47 for the three and nine months ended August 31, 2021, respectively, and $( 8,677 ) and $( 8,934 ) for the three and nine months ended August 31, 2020, respectively

Other comprehensive loss:

Unrealized gains (losses) of defined benefit plans, net of taxes of $ 0 and $ 98 for the three months ended February 28, 2022 and 2021, respectively

Unrealized losses on cash flow hedges during the period, net of taxes of $ 947 and $ 2,255 for the three months ended February 28, 2022 and 2021, respectively

( 2,760 ) ( 7,070 )

Reclassification of net gains on cash flow hedges to net income, net of taxes of $ 1,400 and $ 6,940 for the three and nine months ended August 31, 2021, respectively, and $ 1,976 and $ 4,774 for the three and nine months ended August 31, 2020, respectively

Reclassification of net gains on cash flow hedges to net income, net of taxes of $ 232 and $ 3,022 for the three months ended February 28, 2022 and 2021, respectively

( 673 ) ( 9,171 )

1 unchanged sentence

( 3,433 ) ( 16,241 )

Foreign currency translation gains (losses), net of taxes of $ 0 for the three and nine months ended August 31, 2021 and 2020, respectively

Foreign currency translation adjustments, net of taxes of $ 0 for the three months ended February 28, 2022 and 2021, respectively

( 13,839 ) 6,306

Other comprehensive income (loss)

Other comprehensive loss

( 16,499 ) ( 10,311 )

Comprehensive income 94,040 78,500

(Amounts may not add due to rounding)

Comprehensive income attributable to non-controlling interests 266 —

Comprehensive income attributable to Concentrix Corporation $ 93,774 $ 78,500

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

1 unchanged sentence

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(currency in thousands)

Three and Nine Months Ended August 31, 2021

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

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

Other comprehensive loss — — — — — ( 71,413 ) ( 71,413 )

Share-based compensation activity — 11,083 — — — — 11,083

Repurchase of common stock for tax withholdings on equity awards — — ( 13,437 ) — — — ( 13,437 )

Net income — — — 109,754 — — 109,754

Balances, August 31, 2021 $ 5 $ 2,338,108 $ ( 13,964 ) $ 281,469 $ — $ ( 39,863 ) $ 2,565,755

(currency and share amounts in thousands)

Concentrix Corporation Stockholders’ Equity

Common stock Treasury stock

Redeemable non-controlling interest Shares Amount Additional paid-in capital Shares Amount Retained earnings Former parent company investment Accumulated other comprehensive loss Total Stockholders’ Equity

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

5 unchanged sentences

Net income — — — — — — 88,811 — — 88,811

Balances, August 31, 2021 $ 5 $ 2,338,108 $ ( 13,964 ) $ 281,469 $ — $ ( 39,863 ) $ 2,565,755

(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 Nine Months Ended August 31, 2020

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

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

Share-based compensation — — — — 3,834 — 3,834

Transfers from former parent — — — — ( 2,986 ) — ( 2,986 )

Other comprehensive income — — — — — 85,646 85,646

Hypothetical current tax expense recorded for separate return basis presentation — — — — 3,536 — 3,536

Net income — — — — 45,397 — 45,397

Balances, August 31, 2020 $ — $ — $ — $ — $ 1,638,529 $ ( 10,562 ) $ 1,627,967

Balances, February 28, 2021 $ — 51,214 $ 5 $ 2,314,996 4 $ ( 409 ) $ 88,811 $ — $ ( 14,125 ) $ 2,389,278

Balances, November 30, 2021 $ — 51,594 $ 5 $ 2,355,767 333 $ ( 57,486 ) $ 392,495 $ — $ ( 70,526 ) $ 2,620,255

Share-based compensation — — — — 11,821 — 11,821

Transfers from former parent — — — — ( 2,986 ) — ( 2,986 )

Other comprehensive income — — — — — 39,520 39,520

Hypothetical current tax expense recorded for separate return basis presentation — — — — 9,587 — 9,587

Other comprehensive loss — — — — — — — — ( 16,499 ) ( 16,499 )

Equity awards issued as acquisition purchase consideration — — — 15,725 — — — — — 15,725

Acquisition of non-controlling interest in subsidiary 2,000 — — — — — — — — —

Net income attributable to non-controlling interest 266 — — — — — — — — —

Share-based compensation activity — 70 — 17,911 — — — — — 17,911

Repurchase of common stock for tax withholdings on equity awards — — — — 15 ( 2,554 ) — — — ( 2,554 )

Repurchase of common stock — — — — — — — — — —

Dividends — — — — — — ( 13,112 ) — — ( 13,112 )

Net income — — — — — — 110,273 — — 110,273

Balances, August 31, 2020 $ — $ — $ — $ — $ 1,638,529 $ ( 10,562 ) $ 1,627,967

(Amounts may not add due to rounding)

Balances, February 28, 2022 $ 2,266 51,664 $ 5 $ 2,389,403 348 $ ( 60,040 ) $ 489,656 $ — $ ( 87,025 ) $ 2,731,999

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

2 unchanged sentences

(currency in thousands)

Nine Months Ended

August 31, 2021 August 31, 2020

Three Months Ended

February 28, 2022 February 28, 2021

Cash flows from operating activities:

Net income $ 281,469 $ 100,184

Net income before non-controlling interest $ 110,539 $ 88,811

Adjustments to reconcile net income to net cash provided by operating activities:

4 unchanged sentences

Deferred income taxes ( 10,646 ) ( 8,276 )

Hypothetical current tax expense recorded for separate return basis presentation — 9,587

Unrealized foreign exchange (gain) loss ( 446 ) 12,666

Gain on divestitures and related transaction costs ( 13,197 ) —

Unrealized foreign exchange loss 726 6,305

Other ( 98 ) 133

6 unchanged sentences

Cash flows from investing activities:

Repayments of loan to non-Concentrix subsidiary of former parent as part of its centralized treasury operations — ( 5,749 )

Purchases of property and equipment ( 45,393 ) ( 41,950 )

Acquisitions of business, net of cash acquired and refunds ( 3,279 ) ( 4,941 )

Proceeds from divestitures, net of cash sold 73,708 —

Acquisitions of business, net of cash acquired ( 1,564,430 ) —

Other investments ( 1,000 ) —

Net cash used in investing activities ( 1,610,823 ) ( 41,950 )

Cash flows from financing activities:

Repayments of the Credit Facility - Term Loan ( 200,000 ) —

Proceeds from the Credit Facility - Term Loan 2,100,000 —

Repayments of the Credit Facility - Prior Term Loan ( 700,000 ) ( 50,000 )

Proceeds from the Securitization Facility 508,000 399,500

Repayments of the Securitization Facility ( 359,000 ) ( 382,000 )

Repayments of borrowings from former parent — ( 260,178 )

Cash paid for debt issuance costs ( 8,863 ) —

Proceeds from exercise of stock options 2,882 2,291

Repurchase of common stock for tax withholdings on equity awards ( 2,554 ) ( 409 )

Net cash used in financing activities ( 288,094 ) ( 260,178 )

Dividends paid ( 13,112 ) —

Net cash provided by (used in) financing activities 1,527,353 ( 30,618 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 1,395 ) ( 471 )

Net (decrease) increase in cash, cash equivalents and restricted cash ( 757 ) 13,581

Net decrease in cash, cash equivalents and restricted cash ( 39,850 ) ( 37,155 )

Cash, cash equivalents and restricted cash at beginning of year 183,010 156,351

2 unchanged sentences

Accrued costs for property and equipment purchases $ 6,293 $ 6,768

(Amounts may not add due to rounding)

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

3 unchanged sentences

NOTE 1— BACKGROUND AND BASIS OF PRESENTATION:

Concentrix Corporation (“Concentrix,” the “CX business” or the “Company”) is a leading global provider of technology-infused Customer Experience (“CX”) solutions that help iconic and disruptive brands drive deep understanding, full lifecycle engagement, and differentiated experiences for their end-customers around the world.

The Company provides end-to-end capabilities, including CX process optimization, technology innovation, front- and back-office automation, analytics and business transformation services to clients in five primary industry verticals.

On December 1, 2020, the separation of the CX business (the “separation”) from SYNNEX Corporation (“SYNNEX” or the “former parent”) was completed through a tax-free distribution of all of the issued and outstanding shares of the Company’s common stock to SYNNEX stockholders (the “distribution” and, together with the separation, the “spin-off”).

SYNNEX stockholders received one share of the Company’s common stock for each share of SYNNEX common stock held as of the close of business on November 17, 2020.

Concentrix Corporation (“Concentrix,” the “CX business” or the “Company”) is a leading global provider of Customer Experience (“CX”) solutions and technology that help iconic and disruptive brands drive deep understanding, full lifecycle engagement, and differentiated experiences for their end-customers around the world.

The Company provides end-to-end capabilities, including CX process optimization, technology innovation and design engineering, front- and back-office automation, analytics and business transformation services to clients in five primary industry verticals.

The Company’s primary verticals are technology and consumer electronics, communications and media, retail, travel and e-commerce, banking, financial services and insurance, and healthcare.

On December 1, 2020, the separation of the CX business (the “separation”) from SYNNEX Corporation, now known as TD SYNNEX Corporation (“TD SYNNEX” or the “former parent”) was completed through a tax-free distribution of all of the issued and outstanding shares of the Company’s common stock to TD SYNNEX stockholders (the “distribution” and, together with the separation, the “spin-off”).

TD SYNNEX stockholders received one share of the Company’s common stock for each share of TD SYNNEX common stock held as of the close of business on November 17, 2020.

As a result of the spin-off, the Company became an independent public company and the Company’s common stock commenced trading on the Nasdaq Stock Market (“Nasdaq”) under the symbol “CNXC” on December 1, 2020.

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.

Basis of presentation

4 unchanged sentences

These interim consolidated financial statements should be read in conjunction with the annual audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2021.

Prior to the spin-off on December 1, 2020

Prior to the spin-off, the CX business was held entirely within certain wholly-owned subsidiaries of SYNNEX dedicated to the CX business.

As the separate legal entities that made up the CX business were not historically held by a single legal entity, the financial statements of the Company were prepared in connection with the expected separation and were derived from the SYNNEX consolidated financial statements and accounting records as if the Company had been operated on a stand-alone basis during the periods presented.

Accordingly, for periods prior to December 1, 2020, the Company’s financial statements are presented on a combined basis, and for the periods subsequent to December 1, 2020, they are presented on a consolidated basis (all periods hereinafter are referred to as “consolidated financial statements”).

All direct revenue and expenses attributable to the CX business, including

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 year periods.

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

Management of the Company and the former parent considered allocations of former parent costs to be a reasonable reflection of the utilization of services by, or the benefits provided to, the Company.

The allocations may not, however, have reflected the expense the Company would have incurred as a stand-alone company for those periods presented.

Actual costs that may have been incurred if the Company had been a stand-alone company would depend on a number of factors, including the chosen organizational structure, what functions were outsourced or performed by employees and other strategic decisions.

Prior to the spin-off, certain Concentrix legal entities in the United States jointly and severally guaranteed certain of SYNNEX’ borrowing arrangements and substantially all of the assets of these Concentrix legal entities secured SYNNEX’ obligations under the borrowing arrangements.

Historically, Concentrix received or provided funding for acquisitions or ongoing operations as part of SYNNEX’ centralized treasury program.

Accordingly, only cash amounts specifically recorded in the separate Concentrix ledger were reflected in the balance sheets.

The Company reflected transfers of the cash from the former parent’s cash management system as loans or other accounts payable to the former parent or a reduction of accounts or loans receivable in the balance sheets based on the purpose for which the cash was provided by the former parent.

Similarly, cash transfers to the former parent were reflected as reductions of loans or other accounts payable to the former parent or as loans receivable from the former parent.

The cash payments and receipts were recorded in the statements of cash flows as operating or financing activities based on the nature of the transactions for which the funds were transferred between the Company and the former parent.

Prior to the spin-off, operations of Concentrix were included in the consolidated U.S.

federal, and certain state and local income tax returns filed by SYNNEX, where applicable.

Concentrix also filed certain separate state, local and foreign tax returns.

Income tax expense and other income tax related information contained in the financial statements prior to the spin-off were presented on a separate return basis, which required the Company to estimate tax expense as if the Company filed a separate return apart from SYNNEX.

The income taxes of Concentrix as presented in the financial statements for these periods may not be indicative of the income taxes that Concentrix has incurred or will incur following the spin-off.

Reclassifications

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

All intercompany balances and transactions have been eliminated in consolidation.

Risks and uncertainties related to the COVID-19 pandemic

1 unchanged sentence

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 nine months ended August 31, 2021, almost all of the Company’s workforce was productive.

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 the Company’s sites to protect the health and safety of the team.

During the three months ended February 28, 2022, almost all of the Company’s workforce was productive, but the Company experienced the continued effects of the COVID-19 pandemic, as variants caused new waves of COVID-19 cases around the globe.

The extent of the continued impact of the COVID-19 pandemic on the Company’s operational and financial performance, including its ability to execute business strategies and initiatives in the expected time frame, will

depend on future developments, including the duration, spread and severity of the pandemic, the evolution of the virus and the effects of mutations in its genetic code, country and state restrictions regarding virus containment, the availability and effectiveness of vaccines and treatment options, accessibility to the Company’s delivery and operations locations, its continued utilization of remote work environments in response to future health and safety restrictions, and the effect on the Company’s clients’ businesses and the demand for their products and services, all of which are uncertain and cannot be predicted.

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 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.

1 unchanged sentence

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, 2021.

Accounting pronouncements adopted during the nine months ended August 31, 2021 are discussed below.

Accounting pronouncements adopted during the three months ended February 28, 2022 are discussed below.

Concentration of credit risk

For the three and nine months ended August 31, 2021, one client accounted for 11.9 % and 11.7 % of the Company’s consolidated revenue, respectively.

For the three and nine months ended August 31, 2020, one client accounted for 11.8 % and 10.8 % of the Company’s consolidated revenue, respectively.

As of August 31, 2021 and November 30, 2020, one client comprised 14.9 % and 16.2 %, respectively, of the Company’s total accounts receivable balance.

For the three months ended February 28, 2022 and February 28, 2021, one client accounted for 10.3 % and 11.9 %, respectively, of the Company’s consolidated revenue.

As of February 28, 2022 and November 30, 2021, one client comprised 12.3 % and 15.3 %, respectively, of the Company’s total accounts receivable balance.

Recently adopted accounting pronouncements

In June 2016, the Financial Accounting Standards Board (the “FASB”) issued a new credit loss standard that replaces the current incurred loss impairment model with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to determine credit loss estimates.

This standard became effective for the Company's fiscal year beginning December 1, 2020.

The adoption did not have a material impact on the consolidated financial statements.

Recently issued accounting pronouncements

In March 2020, the FASB issued optional guidance for a limited time to ease the potential burden in accounting for or recognizing the effects of reference rate reform, particularly, the risk of cessation of the London Interbank Offered Rate (“LIBOR”) on financial reporting.

The guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

The amendments are elective and are effective upon issuance for all entities through December 31, 2022.

The Company is currently evaluating the impact of the new guidance.

In December 2019, the FASB issued new guidance that simplifies the accounting for income taxes.

In December 2019, the Financial Accounting Standards Board (the “FASB”) issued new guidance that simplifies the accounting for income taxes.

The guidance is effective for annual reporting periods beginning after December 15, 2020, and interim periods within those reporting periods.

Certain amendments should be applied prospectively, while other amendments should be applied retrospectively to all periods presented.

The Company is currently evaluating the impact of the new guidance.

This standard became effective for fiscal year 2022 and did not have a material impact on the consolidated financial statements.

In August 2018, the FASB issued new guidance to add, remove, and clarify disclosure requirements related to defined benefit pension and other postretirement plans.

1 unchanged sentence

It also requires the Company to disclose the reasons for significant changes in the benefit obligation or plan assets, including significant gains and losses affecting the benefit obligation for the period.

This standard is effective for fiscal years ending after December 15, 2020, and early adoption is permitted.

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

NOTE 3— DIVESTITURES:

In July 2021, the Company completed the sales of its insurance third-party administration operations and software platform, Concentrix Insurance Solutions (“CIS”), and another non-CX solutions business in separate transactions for total cash consideration of approximately $ 73,708 , both subject to customary post-closing adjustments.

The divestitures generated a pre-tax gain of approximately $ 13,197 , net of related transaction costs.

The gain on divestitures and related transaction costs are included in selling, general and administrative expenses in the consolidated statements of operations.

The Company determined that the sales of the businesses did not qualify as discontinued operations.

The results of the sold businesses’ operations are included within the Company’s statements of operations for fiscal year 2021 through the sales dates in July 2021 .

This standard became effective for fiscal year 2021 and did not have a material impact on the consolidated financial statements.

In June 2016, the FASB issued a new credit loss standard that replaced the prior incurred loss impairment model with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to determine credit loss estimates.

This standard became effective for fiscal year 2021 and did not have a material impact on the consolidated financial statements.

Recently issued accounting pronouncements

In March 2020, the FASB issued optional guidance to ease the potential burden for a limited time in accounting for or recognizing the effects of reference rate reform, particularly, the risk of cessation of the London Interbank Offered Rate (“LIBOR”) on financial reporting.

The guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if

certain criteria are met.

The amendments are elective and are effective upon issuance for all entities through December 31, 2022.

The Company is currently evaluating the impact of this guidance.

NOTE 3— ACQUISITION:

PK Acquisition

On December 27, 2021, the Company completed its acquisition of PK, a leading CX design engineering company with more than 5,000 staff in four countries.

PK creates pioneering experiences that accelerate digital outcomes for their clients’ customers, partners and staff.

The acquisition of PK expands the Company’s scale in the digital IT services market and supports the Company’s growth strategy of investing in digital transformation to deliver exceptional customer experiences.

The addition of the PK staff and technology to the Company’s team further strengthens its capabilities in CX design and development, artificial intelligence (“AI”), intelligent automation, and customer loyalty.

Purchase price consideration

The total purchase price, net of cash acquired, was $ 1,581.2 million, which was funded by proceeds from the Company’s new term loan (the “Term Loan”) under its amended senior secured credit facility (the “Credit Facility”) and additional borrowings under its accounts receivable securitization facility (the “Securitization Facility”).

See Note 8 — Borrowings for a further discussion of the Term Loan, the Credit Facility and the Securitization Facility.

The preliminary purchase price consideration to acquire PK consisted of the following:

Cash consideration for PK stock (1)

Cash consideration for PK vested equity awards (2)

Cash consideration for repayment of PK debt, including accrued interest (3)

Cash consideration for transaction expenses of PK (4)

Total cash consideration 1,595,131

Non-cash equity consideration for conversion of PK equity awards (5)

Total consideration transferred 1,610,856

Cash acquired (6)

Total purchase price consideration $ 1,581,203

(1) Represents the cash consideration paid for the outstanding shares of PK’s common stock, which includes a preliminary estimate of the merger consideration adjustment to be paid pursuant to the merger agreement.

(2) Represents the cash consideration paid for vested PK stock option awards and restricted stock awards.

(3) Represents the cash consideration paid to retire PK’s outstanding third-party debt, including accrued interest.

(4) Represents the cash consideration paid for expenses incurred by PK in connection with the merger and paid by Concentrix pursuant to the merger agreement.

These expenses primarily related to third-party consulting services.

(5) Represents the issuance of vested Concentrix stock options that were issued in conversion of certain vested PK stock options that were assumed by Concentrix pursuant to the merger agreement.

(6) Represents the PK cash balance acquired at acquisition.

Preliminary purchase price allocation

The acquisition was accounted for as a business combination in accordance with Accounting Standards Codification Topic 805, Business Combinations .

The purchase price was allocated to the assets acquired, liabilities assumed and non-controlling interest based on management’s estimate of the respective fair values at the date of

Goodwill was calculated as the excess of the consideration transferred over the net assets recognized and represents the estimated future economic benefits arising from other assets acquired that could not be individually identified and separately recognized.

The factors contributing to the recognition of goodwill were the assembled workforce, comprehensive service portfolio delivery capabilities and strategic benefits that are expected to be realized from the acquisition.

None of the goodwill is expected to be deductible for income tax purposes.

The following table summarizes the preliminary estimates of fair values of the assets acquired, liabilities assumed and non-controlling interest as of the acquisition date:

December 27, 2021

Assets acquired:

Cash and cash equivalents $ 29,653

Accounts receivable 86,955

Property and equipment 11,335

Operating lease right-of-use assets 12,288

Identifiable intangible assets 469,300

Goodwill 1,132,017

Other assets 11,954

Total assets acquired $ 1,753,502

Liabilities assumed and non-controlling interest:

Accounts payable and accrued liabilities 70,269

Operating lease liabilities 12,288

Deferred tax liabilities 58,089

Non-controlling interest 2,000

Total liabilities assumed and non-controlling interest $ 142,646

Total consideration transferred $ 1,610,856

As of February 28, 2022, the purchase price allocation is preliminary.

The preliminary purchase price allocation was based upon a preliminary valuation, and the Company’s estimates and assumptions are subject to change within the measurement period (defined as the twelve months following the acquisition date).

The primary areas of the preliminary purchase price allocation that are not yet finalized relate to the valuation of identifiable intangible assets acquired, the fair value of certain tangible assets acquired and liabilities assumed, and deferred income taxes.

The Company expects to continue to obtain information for the purpose of determining the fair value of the assets acquired and liabilities assumed on the acquisition date throughout the remainder of the measurement period.

The preliminary purchase price allocation includes $ 469.3 million of acquired identifiable intangible assets, all of which have finite lives.

The preliminary fair value of the identifiable intangible assets has been estimated using the income approach through a discounted cash flow analysis of certain cash flow projections.

The cash flow projections are based on forecasts used by the Company to price the PK acquisition, and the discount rates applied were benchmarked by referencing the implied rate of return of the Company’s pricing model and the weighted average cost of capital.

The intangible assets are being amortized over their estimated useful lives on either a straight-line basis or an accelerated method that reflects the economic benefit of the asset.

The determination of the useful lives is based upon various industry studies, historical acquisition experience, economic factors, and future forecasted cash flows of the Company following the acquisition of PK.

Impact on results of operations

The results of the PK operations have been included in the consolidated financial statements since December 27, 2021.

The following table provides the results of operations for PK included in the consolidated statement of operations from the acquisition date through February 28, 2022:

Revenue $ 83,196

Income before income taxes 207

In connection with the acquisition of PK, the Company incurred a total of $ 0.9 million of acquisition-related and integration expenses for the three months ended February 28, 2022.

These expenses primarily include legal and professional services, and severance and retention payments to integrate the business.

These acquisition-related and integration expenses were recorded within selling, general and administrative expenses.

Supplemental Pro Forma Information

The supplemental pro forma financial information presented below is for illustrative purposes only, does not include the pro forma adjustments that would be required under Regulation S-X for pro forma financial information, is not necessarily indicative of the financial position or results of operations that would have been realized if the PK acquisition had been completed on the date indicated, does not reflect synergies that might have been achieved, nor is it indicative of future operating results or financial position.

The pro forma adjustments are based upon currently available information and certain assumptions that we believe are reasonable under the circumstances.

The supplemental pro forma financial information reflects pro forma adjustments to present the combined pro forma results of operations as if the PK acquisition had occurred on December 1, 2020 to give effect to certain events that the Company believes to be directly attributable to the PK acquisition.

These pro forma adjustments primarily include:

• An increase in amortization expense that would have been recognized due to acquired identifiable intangible assets.

• An adjustment to interest expense to reflect the additional borrowings of Concentrix on the amended credit facility and the repayment of PK’s historical debt in conjunction with the acquisition.

• The related income tax effects of the adjustments noted above.

The supplemental pro forma financial information for the periods presented is as follows:

Three Months Ended

Revenue $ 1,569,013 $ 1,448,752

Net income 106,351 84,235

NOTE 4— SHARE-BASED COMPENSATION:

In November 2020, in connection with the spin-off, SYNNEX, as sole stockholder of Concentrix, approved the Concentrix Corporation 2020 Stock Incentive Plan (the “Concentrix Stock Incentive Plan”) and the Concentrix Corporation 2020 Employee Stock Purchase Plan (the “Concentrix ESPP”), each to be effective upon completion of the spin-off.

In November 2020, in connection with the spin-off, TD SYNNEX, as sole stockholder of Concentrix, approved the Concentrix Corporation 2020 Stock Incentive Plan (the “Concentrix Stock Incentive Plan”) and the Concentrix Corporation 2020 Employee Stock Purchase Plan (the “Concentrix ESPP”), each to be effective upon completion of the spin-off.

4,000 shares of Concentrix common stock were reserved for issuance under the Concentrix Stock Incentive Plan, and 1,000 shares of Concentrix common stock were authorized for issuance under the Concentrix ESPP.

Prior to the spin-off, certain of the Company’s employees participated in a long-term incentive plan sponsored by SYNNEX.

In connection with the completion of the spin-off and pursuant to the employee matters agreement with SYNNEX, each outstanding SYNNEX share-based award as of the distribution date was converted into either (a) SYNNEX and Concentrix share-based awards, each with the same number of shares as the original SYNNEX award, or (b) a share-based award of only SYNNEX common stock or only Concentrix common stock, with an adjustment to the number of shares to preserve the value of the award.

As a result of the conversion of awards, on December 1, 2020, 827 restricted stock awards and restricted stock units and 684 stock options were issued under the Concentrix Stock Incentive Plan.

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.

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.

On January 20, 2021, the Company granted 431 restricted stock awards and restricted stock units and 26 stock options under the Concentrix Stock Incentive Plan, representing annual employee stock awards for fiscal year 2020 and pro-rated non-employee director stock awards for the 2020-2021 service year.

The employee grants were delayed from October 2020 to January 2021 due to the previously pending spin-off.

On July 1, 2021, the Company granted 109 performance-based restricted stock units under the Concentrix Stock Incentive Plan.

In December 2021, 523 additional shares of Concentrix common stock were reserved for issuance under the Concentrix Stock Incentive Plan resulting from an automatic annual increase pursuant to the terms of the plan.

In January 2022, the Company granted 137 restricted stock awards and restricted stock units and 129 performance-based restricted stock units under the Concentrix Stock Incentive Plan, which included annual awards to the Company’s senior executive team and retention and new hire awards to staff who joined the Company from PK.

The restricted stock awards and restricted stock units awards had a weighted average grant date fair value of $ 181.09 per share and vest over a service period of four years .

The performance-based restricted stock units will vest, if at all, upon the achievement of certain annual financial targets during the three-year period ending November 30, 2024.

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 and nine months ended August 31, 2021 and 2020 as follows:

Three Months Ended Nine Months Ended

August 31, 2021 August 31, 2020 August 31, 2021 August 31, 2020

The performance-based restricted stock units had a grant date weighted average fair value of $ 178.58 per share.

The Company recorded share-based compensation expense in the consolidated statements of operations for the three months ended February 28, 2022 and 2021 as follows:

Three Months Ended

February 28, 2022 February 28, 2021

Total share-based compensation $ 15,169 $ 7,118

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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:

August 31, 2021 November 30, 2020

February 28, 2022 November 30, 2021

Cash and cash equivalents $ 142,157 $ 182,038

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Cash, cash equivalents and restricted cash $ 143,160 $ 183,010

Restricted cash balances relate primarily to restrictions placed by banks on cash collateral for the issuance of bank guarantees and the terms of a government grant.

Restricted cash balances relate primarily to restrictions placed on cash deposits by banks as collateral for the issuance of bank guarantees and the terms of a government grant.

Accounts receivable, net:

Accounts receivable, net is comprised of the following:

August 31, 2021 November 30, 2020

Accounts receivable, net is comprised of the following as of February 28, 2022 and 2021:

February 28, 2022 November 30, 2021

Billed accounts receivable $ 781,807 $ 714,032

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

Three Months Ended Nine Months Ended

August 31, August 31,

2021 2020 2021 2020

Three Months Ended

Balance at beginning of period $ 5,421 $ 8,963

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Property and equipment, net:

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

August 31, 2021 November 30, 2020

The following tables summarize the carrying amounts and related accumulated depreciation for property and equipment as of February 28, 2022 and November 30, 2021:

February 28, 2022 November 30, 2021

Land $ 27,663 $ 27,677

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$ 416,874 $ 407,144

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

August 31, 2021 November 30, 2020

Shown below are the countries where 10% or more of the Company’s property and equipment, net are located as of February 28, 2022 and November 30, 2021:

February 28, 2022 November 30, 2021

Property and equipment, net:

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Total $ 416,874 $ 407,144

The following table summarizes the changes in the Company’s goodwill for the nine months ended August 31, 2021:

The following table summarizes the changes in the Company’s goodwill for the three months ended February 28, 2022:

Balance as of November 30, 2021

Acquisition 1,132,017

Divestitures ( 14,690 )

Foreign exchange translation ( 3,080 )

Balance as of August 31, 2021

Balance as of February 28, 2022

Intangible assets, net:

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

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

The following tables summarize the carrying amounts and related accumulated amortization for intangible assets as of February 28, 2022 and November 30, 2021:

As of February 28, 2022 As of November 30, 2021

Gross amounts Accumulated amortization Net amounts Gross amounts Accumulated amortization Net amounts

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Trade names 11,721 ( 6,807 ) 4,914 6,724 ( 6,391 ) 333

Non-compete agreements 2,200 ( 130 ) 2,070 — — —

$ 1,833,371 $ ( 747,429 ) $ 1,085,942 $ 1,365,520 $ ( 709,992 ) $ 655,528

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Fiscal years ending November 30,

2021 (remaining three months) $ 33,824

2022 (remaining nine months) $ 124,838

Thereafter 422,798

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

Three Months Ended August 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

gain (losses), net of taxes

Balance, May 31, 2020 $ ( 29,938 ) $ 9,885 $ ( 76,155 ) $ ( 96,208 )

Other comprehensive income (loss) before reclassification

( 8,881 ) 26,086 74,383 91,588

Reclassification of gains from other comprehensive income (loss)

— ( 5,942 ) — ( 5,942 )

Balances at August 31, 2020

$ ( 38,819 ) $ 30,029 $ ( 1,772 ) $ ( 10,562 )

Balance, May 31, 2021 $ ( 39,032 ) $ 23,312 $ 47,270 $ 31,550

Other comprehensive income (loss) before reclassification

2 ( 11,219 ) ( 56,105 ) ( 67,322 )

Reclassification of gains from other comprehensive income (loss)

— ( 4,091 ) — ( 4,091 )

Balances at August 31, 2021

$ ( 39,030 ) $ 8,002 $ ( 8,835 ) $ ( 39,863 )

Nine Months Ended August 31, 2021 and 2020

Three Months Ended February 28, 2022 and 2021

Unrecognized gains (losses) on

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Foreign currency translation

gains (losses), net of taxes

adjustments, net of taxes

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

3 unchanged sentences

— ( 9,171 ) — ( 9,171 )

Balances at August 31, 2020

Balances at February 28, 2021

$ ( 38,960 ) $ 12,998 $ 11,837 $ ( 14,125 )

4 unchanged sentences

— ( 673 ) — ( 673 )

Balances at August 31, 2021

Balances at February 28, 2022

$ ( 21,972 ) $ ( 4,836 ) $ ( 60,217 ) $ ( 87,025 )

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 expense (income), net” in the consolidated statement of operations.

Reclassifications of amortization of actuarial (gains) losses of defined benefit 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 nine months ended August 31, 2021 and 2020:

Three Months Ended August 31, 2021 and 2020

Restructuring costs

Severance and benefits Facility and exit costs Total

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

Additional (release of) accrual during the period ( 214 ) 336 122

Cash payments ( 219 ) ( 2,362 ) ( 2,581 )

Accrued balance as of August 31, 2020 $ 93 $ 8,522 $ 8,615

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

Additional accrual during the period — 62 62

Cash payments — ( 990 ) ( 990 )

Accrued balance as of August 31, 2021 $ — $ 13,266 $ 13,266

Nine Months Ended August 31, 2021 and 2020

The following table presents the activity related to liabilities for restructuring charges of previous acquisitions for the three months ended February 28, 2022 and 2021:

Three Months Ended

February 28, 2022 and 2021

Restructuring costs

Severance and benefits Facility and exit costs Total

Facility and exit costs

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

Additional (release of) accrual during the period ( 535 ) 451 ( 84 )

Cash payments ( 2,004 )

Accrued balance as of August 31, 2020 $ 93 $ 8,522 $ 8,615

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

Accrued balance as of November 30, 2021 $ 12,406

Release of accrual during the period — ( 348 ) ( 348 )

Additional accrual during the period 47

Cash payments ( 1,002 )

Accrued balance as of August 31, 2021 $ — $ 13,266 $ 13,266

Accrued balance as of February 28, 2022 $ 11,451

NOTE 6— DERIVATIVE INSTRUMENTS:

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The Company enters into transactions, and owns monetary assets and liabilities, that are denominated in currencies other than the legal entity’s functional currency.

The Company may enter into forward contracts, option contracts, or other derivative instruments to offset a portion of the risk on expected future cash flows, earnings, net investments in certain non-U.S.

The Company may enter into forward contracts, option contracts, or other

derivative instruments to offset a portion of the risk on expected future cash flows, earnings, net investments in certain non-U.S.

legal entities and certain existing assets and liabilities.

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The Company’s hedging program is not used for trading or speculative purposes.

All derivatives are recognized on the balance sheet at their fair value.

All derivatives are recognized on the consolidated balance sheets at their fair values.

Changes in the fair value of derivatives are recorded in the consolidated statements of operations, or as a component of AOCI in the consolidated balance sheets, as discussed below.

Cash Flow Hedges

To protect gross margins from fluctuations in foreign currency exchange rates, certain of the Company’s legal entities with functional currencies that are not U.S.

To mitigate the risk of fluctuations in foreign currency exchange rates on gross margins, certain of the Company’s legal entities with functional currencies that are not U.S.

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

These instruments mature at various dates through August 2023.

These instruments mature at various dates through February 2024.

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

Deferred gains and losses associated with cash flow hedges of foreign currency revenue are recognized as a component of “Revenue” in the same period as the related revenue is recognized, and deferred gains and losses related to cash flow hedges of costs are recognized as a component of “Cost of revenue” or “Selling, general and administrative expenses” in the same period as the related costs are recognized.

Deferred gains and losses associated with cash flow hedges of foreign currency revenue are recognized as a component of “Revenue” in the same period as the related revenue is recognized, and deferred gains and losses related to cash flow hedges of foreign currency costs are recognized as a component of “Cost of revenue” or “Selling, general and administrative expenses” in the same period as the related costs are recognized.

Derivative instruments designated as cash flow hedges must be de-designated as hedges when it is probable the forecasted hedged transaction will not occur in the initially identified time period or within a subsequent two-month time period.

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Non-Designated Derivatives

The Company uses short-term forward contracts to offset the foreign exchange risk of assets and liabilities denominated in currencies other than the functional currency of the respective entities.

The Company uses short-term forward contracts to offset the foreign exchange risk of assets and liabilities denominated in currencies other than the functional currency of the Company’s legal entities that own the asset or liability.

These contracts, which are not designated as hedging instruments, mature or settle within twelve months.

Derivatives that are not designated as

hedging instruments are adjusted to fair value through earnings in the financial statement line item to which the derivative relates.

Derivatives that are not designated as hedging instruments are adjusted to fair value through earnings in the financial statement line item to which the derivative relates.

Fair Values of Derivative Instruments in the Consolidated Balance Sheets

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

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

Balance Sheet Line Item February 28, 2022 November 30, 2021

Derivative instruments not designated as hedging instruments:

1 unchanged sentence

Other current assets

11,392 15,666

Other accrued liabilities

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Other current assets and other assets

18,033 38,212

Other accrued liabilities and other long-term liabilities

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The notional amounts for outstanding derivative instruments provide one measure of the transaction volume outstanding and do not represent the amount of the Company’s exposure to credit or market loss.

The Company’s exposure to credit loss and market risk will vary over time as currency rates change.

The Company’s exposure to credit loss and market risk will vary over time as currency exchange rates change.

The Effect of Derivative Instruments on AOCI and the Consolidated Statements of Operations

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 Three Months Ended Nine Months Ended

August 31, 2021 August 31, 2020 August 31, 2021 August 31, 2020

Three Months Ended

Locations of gain (loss) in statement of operations February 28, 2022 February 28, 2021

Derivative instruments designated as cash flow hedges

(Losses) gains recognized in OCI:

Losses recognized in OCI:

Foreign exchange forward contracts $ ( 3,707 ) $ ( 9,325 )

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Derivative instruments not designated as hedging instruments:

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

Other income (expense), net $ ( 13,388 ) $ 24,783 $ 4,653 $ 26,963

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

Other expense (income), net $ ( 1,012 ) $ ( 2,767 )

(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.

There were no material gain or loss amounts excluded from the assessment of effectiveness.

Existing net gains in AOCI that are expected to be reclassified into earnings in the normal course of business within the next twelve months are $ 10,306 .

Existing net losses in AOCI that are expected to be reclassified into earnings in the normal course of business within the next twelve months are $ 6,376 .

Offsetting of Derivatives

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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 August 31, 2021 As of November 30, 2020

As of February 28, 2022 As of November 30, 2021

Fair value measurement category Fair value measurement category

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The carrying values of cash equivalents approximate fair value since they are near their maturity.

Investment in foreign government bond classified as available-for-sale debt security is recorded at fair value based on quoted market prices.

The fair values of forward exchange contracts are measured based on the foreign currency spot and forward rates quoted by the banks or foreign currency dealers.

Investment in foreign government bond classified as an available-for-sale debt security is recorded at fair value based on quoted market prices.

The fair values of forward exchange contracts are measured based on the foreign currency spot and forward rates quoted by banks or foreign currency dealers.

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 August 31, 2021 and November 30, 2020.

The effect of nonperformance risk on the fair value of derivative instruments was not material as of February 28, 2022 and November 30, 2021.

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 values since they bear interest rates that are similar to existing market rates.

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

During the three months ended February 28, 2022 and 2021, there were no transfers between the fair value measurement category levels.

NOTE 8— BORROWINGS:

Borrowings consist of the following:

August 31, 2021 November 30, 2020

February 28, 2022 November 30, 2021

Credit Facility - current portion of Term Loan component $ 78,750 $ —

Current portion of long term debt 78,750 —

Credit Facility - Term Loan component $ 2,021,250 $ —

Credit Facility - Prior Term Loan component — 700,000

Securitization Facility 254,000 105,000

3 unchanged sentences

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.

Substantially all of the proceeds from such indebtedness, net of debt issuance costs, 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.

The Credit Facility matures on November 30, 2025.

Beginning May 31, 2021, the outstanding principal amount of the Term Loan was 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 nine months ended August 31, 2021, the Company paid $ 200,000 of the principal balance on the Term Loan.

On December 27, 2021, in connection with the closing of the acquisition of PK, Concentrix entered into an amendment of its senior secured credit facility (the “Credit Facility”) (i) to refinance the previously existing term loan (the “Prior Term Loan”) with a new term loan, which was fully advanced, in the aggregate outstanding principal amount of $ 2,100,000 (the “Term Loan”), (ii) to increase the revolving credit facility to $ 1,000,000 (the “Revolver”), (iii) to extend the maturity of the Credit Facility from November 30, 2025 to December 27, 2026, (iv) to replace LIBOR with SOFR (the Secured Overnight Financing Rate) as the primary reference rate used to calculate interest on the loans under the Credit Facility, and (v) to modify the commitment fee on the unused portion of the Revolver and the margins in excess of the reference rates at which the loans under the Credit Facility bear interest.

The proceeds from the Term Loan and additional borrowings on the Securitization Facility were used to repay the principal amounts outstanding on the Prior Term Loan and to finance the acquisition of PK, including the repayment of certain indebtedness of PK and the payment of fees and expenses in connection with the acquisition of PK.

As amended, borrowings under the Credit Facility bear interest, in the case of SOFR rate loans, at a per annum rate equal to the applicable SOFR rate (but not less than 0.0 %), plus an adjustment of between 0.10 % and 0.25 % depending on the interest period of each SOFR loan, plus an applicable margin, which ranges from 1.25 % to 2.00 %, based on Concentrix’ consolidated leverage ratio.

Borrowings under the Credit Facility that are not SOFR 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 ½ of 1.00%, (b) the rate of interest last publicly announced by Bank of America as its “prime rate” and (c) the term SOFR rate plus 1.00 %, plus (ii) an applicable margin, which ranges from 0.25 % to 1.00 %, based on Concentrix’ consolidated leverage ratio.

As amended, the commitment fee on the unused portion of the Revolver ranges from 22.5 to 30 basis points, based on Concentrix’ consolidated leverage ratio.

Beginning August 31, 2022, the outstanding principal of the Term Loan will be payable in quarterly installments of $ 26.25 million, with the unpaid balance due in full on the maturity date.

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 of up 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, (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 August 31, 2021 and November 30, 2020, no amounts were outstanding under the Revolver.

Concentrix initially entered into the Credit Facility on October 16, 2020, and the Credit Facility initially provided for the extension of revolving loans of up to $ 600,000 and term loan borrowings of up to $ 900,000 .

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

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

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

During the fiscal year ended November 30, 2021, the Company paid $ 200,000 of the principal balance on the Prior Term Loan, including $ 166,250 of voluntary prepayments, without penalty.

At February 28, 2022 and November 30, 2021, no amounts were outstanding under the Revolver.

Securitization Facility

1 unchanged sentence

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.

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

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).

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

Borrowing availability under the Securitization Facility may be limited by the Company’s accounts receivable 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 a termination date of October 28, 2022.

Amounts drawn under this Securitization Facility have been classified as long-term debt within the consolidated balance sheet based on the Company’s ability and intent to refinance on a long-term basis as of February 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 %.

Concentrix is also obligated to pay a monthly undrawn fee that ranges from 30 to 37.5 basis points based on the portion of the Securitization Facility that is undrawn.

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.

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 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.

1 unchanged sentence

Covenant compliance

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

As of February 28, 2022, Concentrix was in compliance with all covenants for the above arrangements.

NOTE 9— EARNINGS PER SHARE:

Basic and diluted earnings per common 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 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 number of shares of common stock outstanding during the period.

Diluted earnings per common share is generally computed by dividing net income attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, increased to include the number of shares of common stock that would have been outstanding had potential dilutive shares of common stock been issued.

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 equity awards outstanding prior to the spin-off, thus the computation of basic and diluted earnings per common share for all prior year periods disclosed is calculated using the shares issued in connection with the spin-off of 51.6 million shares.

Three Months Ended Nine Months Ended

August 31, 2021 August 31, 2020 August 31, 2021 August 31, 2020

Three Months Ended

February 28, 2022 February 28, 2021

Basic earnings per common share:

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

Three Months Ended Nine Months Ended

August 31, 2021 August 31, 2020 August 31, 2021 August 31, 2020

Three Months Ended

February 28, 2022 February 28, 2021

Industry vertical:

10 unchanged sentences

Total $ 1,536,052 $ 1,353,278

Deferred revenue contract liabilities and deferred costs to obtain or fulfill a contract are not material.

NOTE 11— TRANSACTIONS WITH FORMER PARENT:

The Company provides certain services related to its core business to SYNNEX, its former parent.

Revenue from customer experience services to former parent is included within revenue in the statements of operations.

The cost associated with such services is reported as cost of revenue in the statements of operations.

The Company purchases certain products from SYNNEX and, through November 30, 2020, recorded compensation expense for share-based awards granted by SYNNEX to Concentrix employees.

Prior to November 30, 2020, the Company received allocations of corporate expenses by way of a monthly management fee and received financing for acquisition and operations under the terms of intra-SYNNEX group borrowing arrangements.

Prior to December 1, 2020, the Company consisted of the CX business of SYNNEX and thus, transactions with SYNNEX were considered related party transactions.

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 and nine months ended August 31, 2020:

August 31, 2020

Three Months Ended Nine Months Ended

Revenue from customer experience services to former parent $ 5,273 $ 15,371

Interest expense on borrowings from former parent

Interest income on borrowings made to former parent

Corporate allocations 394 1,181

Share-based compensation 3,929 12,031

As of November 30, 2020, the payable to former parent and its non-Concentrix subsidiaries was primarily trade in nature.

Prior to the spin-off, SYNNEX had issued guarantees to certain of the Company’s clients to guarantee the performance obligations of the Company’s legal entities.

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

NOTE 11— PENSION AND EMPLOYEE BENEFITS PLANS:

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legal entities are covered by government mandated defined contribution plans.

During the three and nine months ended August 31, 2021, the Company contributed $ 27,503 and $ 66,644 , respectively, to defined contribution plans.

During the three and nine months ended August 31, 2020, the Company contributed $ 17,927 and $ 48,365 , respectively, to defined contribution plans.

During the three months ended February 28, 2022 and 2021, the Company contributed $ 21,812 and $ 20,174 , respectively, to defined contribution plans.

Defined Benefit Plans

The Company has defined benefit pension or retirement plans for eligible employees in certain non-U.S.

The Company has defined benefit pension and retirement plans for eligible employees of certain non-U.S.

legal entities.

Benefits under these plans are primarily based on years of service and compensation during the years immediately preceding retirement or termination of participation in the plans.

In addition, the Company has a frozen defined benefit pension plan, which includes both a qualified and non-qualified portion, for all eligible employees in the U.S.

(“the cash balance plan”) and unfunded defined benefit plans for certain eligible employees in the Philippines, Malaysia and France.

For eligible employees in the U.S., the Company maintains a frozen defined benefit pension plan (“the cash balance plan”), which includes both a qualified and non-qualified portion.

The pension benefit formula for the cash balance plan is determined by a combination of compensation, age-based credits and annual guaranteed interest credits.

The qualified portion of the cash balance plan has been funded through contributions made to a trust fund.

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

Net benefit costs related to defined benefit plans were $ 6,288 and $ 12,971 , during the three and nine months ended August 31, 2021, respectively.

Net benefit costs related to defined benefit plans were $ 3,875 and $ 9,816 , during the three and nine months ended August 31, 2020, respectively.

On an aggregate basis, the plans were underfunded by $ 127,173 and $ 134,399 at August 31, 2021 and November 30, 2020, respectively.

The Company maintains funded or unfunded defined benefit pension or retirement plans for certain eligible employees in the Philippines, Malaysia, India, and France.

Benefits under these plans are primarily based on years of service and compensation during the years immediately preceding retirement or termination of participation in the plans.

Net benefit costs related to defined benefit plans were $ 5,722 and $ 3,311 , during the three months ended February 28, 2022 and 2021, respectively.

On an aggregate basis, the plans were underfunded by $ 102,276 and $ 104,689 at February 28, 2022 and November 30, 2021, respectively.

NOTE 12— INCOME TAXES:

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

For the three and nine months ended August 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 $ 3,536 and $ 9,587 , respectively, for the three and nine months ended August 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 nine months ended August 31, 2021 and 2020 were impacted by the geographic mix of worldwide income and certain discrete items, which included an expense related to the sale of CIS of $ 3,745 and $ 12,991 for the three and nine months ended August 31, 2021.

The liability for unrecognized tax benefits was $ 62,246 and $ 62,315 at August 31, 2021 and November 30, 2020, respectively, and is included in other long-term liabilities in the consolidated balance sheets.

As of August 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 $ 54,752 and $ 54,910 , respectively.

The effective tax rates for the three months ended February 28, 2022 and 2021 were impacted by the geographic mix of worldwide income and certain discrete items.

The liability for unrecognized tax benefits was $ 56,046 and $ 56,308 at February 28, 2022 and November 30, 2021, respectively, and is included in other long-term liabilities in the consolidated balance sheets.

As of February 28, 2022 and November 30, 2021, the total amount of unrecognized tax benefits that would affect income

tax expense if recognized in the consolidated financial statements was $ 48,241 and $ 48,438 , respectively.

This amount includes net interest and penalties of $ 8,884 and $ 8,861 for the respective periods.

It is reasonably possible that the total amount of unrecognized tax benefits will decrease between approximately $ 11,000 and $ 28,000 in the next twelve months;

The net interest and penalties balance for November 30, 2021 includes an immaterial prior period disclosure adjustment to properly present the amount.

This disclosure adjustment resulted in no impact to the Company’s consolidated balance sheets or consolidated statement of operations for any period presented.

The Company believes that it is reasonably possible that the total amount of unrecognized tax benefits could decrease between approximately $ 6,484 and $ 12,693 in the next twelve months;

however, actual developments in this area could differ from those currently expected.

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The Company’s finance leases are not material.

The following table presents the various components of lease costs:

Three Months Ended Nine Months Ended

August 31, 2021 August 31, 2020 August 31, 2021 August 31, 2020

The following table presents the various components of operating lease costs:

Three Months Ended

February 28, 2022 February 28, 2021

Operating lease cost $ 50,802 $ 51,441

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Total operating lease cost $ 66,388 $ 64,797

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 August 31, 2021:

The following table presents a maturity analysis of expected undiscounted cash flows for operating leases on an annual basis for the next five fiscal years and thereafter as of February 28, 2022:

Fiscal Years Ending November 30,

2021 (remaining three months) $ 49,030

2022 (remaining nine months) $ 145,077

Thereafter 21,730

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

August 31, 2021 November 30, 2020

February 28, 2022 November 30, 2021

Operating lease ROU assets Other assets, net $ 483,083 $ 489,171

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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:

Nine Months Ended

August 31, 2021 August 31, 2020

Three Months Ended

February 28, 2022 February 28, 2021

Cash paid for amounts included in the measurement of lease liabilities $ 50,044 $ 54,004

Non-cash ROU assets obtained in exchange for lease liabilities 37,492 14,873

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

August 31, 2021 November 30, 2020

The weighted-average remaining lease term and discount rate as of February 28, 2022 and November 30, 2021 were as follows:

February 28, 2022 November 30, 2021

Weighted-average remaining lease term (years) 3.68 3.81

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The Company evaluates these claims and records the related liabilities.

It is possible that the ultimate liabilities could differ from the amounts recorded.

Under the separation and distribution agreement with SYNNEX, the Company agreed to indemnify SYNNEX, each of its subsidiaries and each of their respective directors, officers and employees from and against all liabilities allocated to Concentrix under the separation and distribution agreement, which are generally those liabilities that relate to the CX business and the Company’s business activities, whether incurred prior to or after the spin-off.

Under the tax matters agreement with SYNNEX, if the spin-off fails to qualify for tax-free treatment, the Company is generally required to indemnify SYNNEX for any taxes resulting from the spin-off (and related costs and other damages) to the extent such amounts result from (1) an acquisition of all or a portion of the Company’s equity securities or assets by any means, (2) any action or failure to act by the Company after the distribution affecting the voting rights of the Company’s stock, (3) other actions or failures to act by the Company, or (4) certain breaches of the Company’s agreements and representations in the tax matters agreement.

The Company’s indemnification obligations to SYNNEX and its subsidiaries, officers, directors and employees are not limited by any maximum amount.

It is possible that the liabilities ultimately incurred by the Company could differ from the amounts recorded.

Under the separation and distribution agreement with TD SYNNEX, the Company agreed to indemnify TD SYNNEX, each of its subsidiaries and each of their respective directors, officers and employees from and against all liabilities allocated to Concentrix under the separation and distribution agreement, which are generally those liabilities that relate to the CX business and the Company’s business activities, whether incurred prior to or after the spin-off.

Under the tax matters agreement with TD SYNNEX, if the spin-off fails to qualify for tax-free treatment, the Company is generally required to indemnify TD SYNNEX for any taxes resulting from the spin-off (and related costs and other damages) to the extent such amounts result from (1) an acquisition of all or a portion of the Company’s equity securities or assets by any means, (2) any action or failure to act by the Company after the distribution affecting the voting rights of the Company’s stock, (3) other actions or failures to act by the Company, or (4) certain breaches of the Company’s agreements and representations in the tax matters agreement.

The Company’s indemnification obligations to TD SYNNEX and its subsidiaries, officers, directors and employees are not limited by any maximum amount.

The Company does not believe that the above commitments and contingencies will have a material adverse effect on the Company’s results of operations, financial position or cash flows.

NOTE 16— SUBSEQUENT EVENTS:

In September 2021, the Company’s Board of Directors (the “Board”) declared a quarterly dividend of $ 0.25 per share.

The dividend will be payable in cash on November 2, 2021, to shareholders of record at the close of business on October 22, 2021.

In addition, the Board has authorized the Company to purchase up to $ 500 million of the Company’s outstanding shares of common stock from time to time as market and business conditions warrant, including through open market purchases or Rule 10b5-1 trading plans.

NOTE 15— STOCKHOLDERS’ EQUITY:

Share repurchase program

In September 2021, the Company’s board of directors authorized the Company to purchase up to $ 500,000 of the Company’s outstanding shares of common stock from time to time as market and business conditions warrant, including through open market purchases or Rule 10b5-1 trading plans.

The repurchase program has no termination date and may be suspended or discontinued at any time.

During the three months ended February 28, 2022, the Company did not repurchase any shares under the program.

At February 28, 2022, approximately $ 474,900 remained available for share repurchases under the existing authorization from the Company’s board of directors.

During fiscal years 2022 and 2021, the Company has paid the following dividends per share approved by the Company’s board of directors:

Announcement Date Record Date Per Share Dividend Amount Payment Date

September 27, 2021 October 22, 2021 $ 0.25 November 2, 2021

January 18, 2022 January 28, 2022 $ 0.25 February 8, 2022

On March 29, 2022, the Company announced a cash dividend of $ 0.25 per share to stockholders of record as of April 29, 2022, payable on May 10, 2022.

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