What changed in this filing

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Item 1. Financial Statements

2022-07-08 compared with 2022-04-08 · 193 added, 138 removed, 519 unchanged (39% of the section changed)

3 unchanged sentences

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

February 28, 2022 November 30, 2021

May 31, 2022 November 30, 2021

Current assets:

24 unchanged sentences

Stockholders’ equity:

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

Preferred stock, $ 0.0001 par value, 10,000 shares authorized and no shares issued and outstanding as of May 31, 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

52,058 and 51,927 shares issued as of May 31, 2022 and November 30, 2021, respectively, and 51,342 and 51,594 shares outstanding as of May 31, 2022 and November 30, 2021, respectively

Additional paid-in capital 2,404,281 2,355,767

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

Treasury stock, 716 and 333 shares as of May 31, 2022 and November 30, 2021, respectively

( 118,248 ) ( 57,486 )

7 unchanged sentences

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

Three Months Ended

February 28, 2022 February 28, 2021

Three Months Ended Six Months Ended

May 31, 2022 May 31, 2021 May 31, 2022 May 31, 2021

Revenue $ 1,568,101 $ 1,369,878 $ 3,104,153 $ 2,723,156

8 unchanged sentences

Net income before non-controlling interest 113,033 82,904 223,572 171,715

Net income attributable to non-controlling interest 266 —

Net income (loss) attributable to non-controlling interest ( 109 ) — 157 —

Net income attributable to Concentrix Corporation $ 113,142 $ 82,904 $ 223,415 $ 171,715

9 unchanged sentences

(currency in thousands)

Three Months Ended

February 28, 2022 February 28, 2021

Three Months Ended Six Months Ended

May 31, 2022 May 31, 2021 May 31, 2022 May 31, 2021

Net income before non-controlling interest

$ 113,033 $ 82,904 $ 223,572 $ 171,715

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

Other comprehensive income (loss):

Unrealized gains (losses) of defined benefit plans, net of taxes of $ 0 and $ 0 for the three and six months ended May 31, 2022, respectively, and $ 0 and $ 98 for the three and six months ended May 31, 2021, respectively

( 7 ) ( 72 ) 766 ( 448 )

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

Unrealized gains (losses) on cash flow hedges during the period, net of taxes of $ 4,440 and $ 5,387 for the three and six months ended May 31, 2022, respectively, and $( 6,048 ) and $( 3,793 ) for the three and six months ended May 31, 2021, respectively

( 12,944 ) 17,669 ( 15,704 ) 10,599

Reclassification of net (gains) losses on cash flow hedges to net income, net of taxes of $( 1,078 ) and $( 846 ) for the three and six months ended May 31, 2022, respectively, and $ 2,518 and $ 5,540 for the three and six months ended May 31, 2021, respectively

3,138 ( 7,355 ) 2,465 ( 16,526 )

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

( 9,806 ) 10,314 ( 13,239 ) ( 5,927 )

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

Foreign currency translation, net of taxes of $ 0 for the three and six months ended May 31, 2022 and 2021, respectively

( 54,995 ) 35,433 ( 68,834 ) 41,739

Other comprehensive loss

Other comprehensive income (loss)

( 64,808 ) 45,675 ( 81,307 ) 35,364

Comprehensive income 48,225 128,579 142,265 207,079

Comprehensive income attributable to non-controlling interests 266 —

Comprehensive income (loss) attributable to non-controlling interest ( 109 ) — 157 —

Comprehensive income attributable to Concentrix Corporation $ 48,334 $ 128,579 $ 142,108 $ 207,079

3 unchanged sentences

(currency and share amounts in thousands)

Three and Six Months Ended May 31, 2022

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

Redeemable non-controlling interest Shares Amount Additional paid-in capital Shares Amount Retained earnings Accumulated other comprehensive loss Total stockholders’ equity

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

Other comprehensive loss — — — — — — — ( 64,808 ) ( 64,808 )

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

Issuance of common stock at separation and spin-off — 51,135 5 ( 5 ) — — — — — —

Net income attributable to non-controlling interest ( 109 ) — — — — — — — —

Share-based compensation activity — ( 322 ) — 14,878 — — — — 14,878

Repurchase of common stock for tax withholdings on equity awards — — — — 1 ( 358 ) — — ( 358 )

Repurchase of common stock — — — — 367 ( 57,850 ) — — ( 57,850 )

Dividends — — — — — — ( 13,058 ) — ( 13,058 )

Net income — — — — — — 113,142 — 113,142

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

Balances, May 31, 2022 $ 2,157 51,342 $ 5 $ 2,404,281 716 $ ( 118,248 ) $ 589,740 $ ( 151,833 ) $ 2,723,945

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

8 unchanged sentences

Net income — — — — — — 223,415 — 223,415

Balances, May 31, 2022 $ 2,157 51,342 $ 5 $ 2,404,281 716 $ ( 118,248 ) $ 589,740 $ ( 151,833 ) $ 2,723,945

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

CONCENTRIX CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(currency and share amounts in thousands)

Concentrix Corporation Stockholders’ Equity

Common stock Treasury stock

Shares Amount Additional paid-in capital Shares Amount Retained earnings Former parent company investment Accumulated other comprehensive loss Total stockholders’ equity

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

Other comprehensive loss — — — — — — — 45,675 45,675

Share-based compensation activity 82 — 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 51,296 $ 5 $ 2,327,025 4 $ ( 527 ) $ 171,715 $ — $ 31,550 $ 2,529,768

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

Other comprehensive loss — — — — — — — 35,364 35,364

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

Issuance of common stock at separation and spin-off 51,135 5 ( 5 ) — — — — — —

Share-based compensation activity 161 — 21,131 — — — — — 21,131

Repurchase of common stock for tax withholdings on equity awards — — — 4 ( 527 ) — — — ( 527 )

Net income — — — — — 171,715 — — 171,715

Balances, May 31, 2021 51,296 $ 5 $ 2,327,025 4 $ ( 527 ) $ 171,715 $ — $ 31,550 $ 2,529,768

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

2 unchanged sentences

(currency in thousands)

Three Months Ended

February 28, 2022 February 28, 2021

Six Months Ended

May 31, 2022 May 31, 2021

Cash flows from operating activities:

27 unchanged sentences

Repurchase of common stock for tax withholdings on equity awards ( 2,912 ) ( 527 )

Repurchase of common stock ( 57,850 ) —

Dividends paid ( 26,170 ) —

25 unchanged sentences

Risks and uncertainties related to the COVID-19 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 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.

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.

During the three and six months ended May 31, 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.

3 unchanged sentences

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 three months ended February 28, 2022 are discussed below.

Accounting pronouncements adopted during the six months ended May 31, 2022 are discussed below.

Concentration of credit risk

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.

For the three and six months ended May 31, 2022, no client accounted for more than 10% of the Company’s consolidated revenue.

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

As of May 31, 2022 and November 30, 2021, one client comprised 10.4 % and 15.3 %, respectively, of the Company’s total accounts receivable balance.

Recently adopted accounting pronouncements

1 unchanged sentence

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

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.

The guidance requires the Company to disclose the weighted-average interest crediting rates used in cash balance pension plans.

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 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.

This standard became effective for the Company in fiscal year 2022 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 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:

NOTE 3— ACQUISITIONS:

PK Acquisition

1 unchanged sentence

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.

The acquisition of PK expanded the Company’s scale in the digital IT services market and supported 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 strengthened 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”).

The total purchase price consideration, net of cash acquired, was $ 1,581.0 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.

9 unchanged sentences

Total purchase price consideration $ 1,580,977

(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.

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

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

6 unchanged sentences

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

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 acquisition.

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.

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.

17 unchanged sentences

Total consideration transferred $ 1,610,630

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).

As of May 31, 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 (not to exceed 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 Company made immaterial measurement period adjustments during the second quarter of fiscal year 2022.

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

3 unchanged sentences

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.

The preliminary amounts allocated to intangible assets are as follows:

Gross Carrying Amount Weighted-Average Useful Life

Customer relationships $ 398,600 15 years

Technology 63,500 5 years

Trade name 5,000 3 years

Non-compete agreements 2,200 3 years

Total $ 469,300

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:

The following table provides the results of operations for PK included in the consolidated statement of operations from the acquisition date through May 31, 2022:

Three Months Ended Six Months Ended

May 31, 2022 May 31, 2022

Revenue $ 123,963 $ 207,159

Income before income taxes 2,773 2,980

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.

In connection with the acquisition of PK, the Company incurred a total of $ 1.7 million and $ 2.6 million of acquisition-related and integration expenses for the three and six months ended May 31, 2022, respectively.

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.

These acquisition-related and integration expenses were recorded within selling, general and administrative expenses in the consolidated statement of operations.

Supplemental Pro Forma Information

7 unchanged sentences

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

Three Months Ended

Three Months Ended Six Months Ended

May 31, May 31,

2022 2021 2022 2021

Revenue $ 1,568,101 $ 1,479,640 $ 3,137,114 $ 2,928,392

Net income 113,438 81,618 219,789 165,853

ServiceSource Pending Acquisition

In May 2022, the Company announced a definitive agreement to acquire ServiceSource International, Inc.

(“ServiceSource”), a global market leader in B2B digital sales, for $ 1.50 per share in an all-cash transaction valued at approximately $ 131 million, inclusive of ServiceSource’s net cash.

ServiceSource is a global outsourced go-to-market services provider, delivering B2B digital sales and customer success solutions that are expected to complement the Company’s existing offerings in this area.

The transaction is expected to close in the second half of fiscal year 2022, subject to customary closing conditions, including approval by ServiceSource’s stockholders and regulatory requirements.

ServiceSource has established a special meeting date of July 20, 2022 for its stockholders to consider approval of the transaction.

NOTE 4— SHARE-BASED COMPENSATION:

2 unchanged sentences

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 .

1 unchanged sentence

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

The Company recorded share-based compensation expense in the consolidated statements of operations for the three and six months ended May 31, 2022 and 2021 as follows:

Three Months Ended Six Months Ended

May 31, 2022 May 31, 2021 May 31, 2022 May 31, 2021

Total share-based compensation $ 12,647 $ 9,283 $ 27,816 $ 16,401

5 unchanged sentences

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, 2022 November 30, 2021

May 31, 2022 November 30, 2021

Cash and cash equivalents $ 163,364 $ 182,038

1 unchanged sentence

Cash, cash equivalents and restricted cash $ 164,099 $ 183,010

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.

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 government grants.

Accounts receivable, net:

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

February 28, 2022 November 30, 2021

Accounts receivable, net is comprised of the following as of May 31, 2022 and November 30, 2021:

May 31, 2022 November 30, 2021

Billed accounts receivable $ 772,084 $ 714,032

5 unchanged sentences

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

Three Months Ended

Three Months Ended Six Months Ended

May 31, May 31,

2022 2021 2022 2021

Balance at beginning of period $ 6,904 $ 6,239 $ 5,421 $ 8,963

3 unchanged sentences

Property and equipment, net:

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

The following tables summarize the carrying amounts and related accumulated depreciation for property and equipment as of May 31, 2022 and November 30, 2021:

May 31, 2022 November 30, 2021

Land $ 27,529 $ 27,677

8 unchanged sentences

$ 401,716 $ 407,144

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

Shown below are the countries where 10% or more of the Company’s property and equipment, net are located as of May 31, 2022 and November 30, 2021:

May 31, 2022 November 30, 2021

Property and equipment, net:

4 unchanged sentences

Total $ 401,716 $ 407,144

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

The following table summarizes the changes in the Company’s goodwill for the six months ended May 31, 2022:

Balance as of November 30, 2021

1 unchanged sentence

Foreign exchange translation ( 13,934 )

Balance as of February 28, 2022

Balance as of May 31, 2022

Intangible assets, net:

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

The following tables summarize the carrying amounts and related accumulated amortization for intangible assets as of May 31, 2022 and November 30, 2021:

As of May 31, 2022 As of November 30, 2021

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

6 unchanged sentences

Fiscal years ending November 30,

2022 (remaining nine months) $ 124,838

2022 (remaining six months) $ 82,532

Thereafter 420,429

2 unchanged sentences

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

Three Months Ended February 28, 2022 and 2021

Three Months Ended May 31, 2022 and 2021

Unrecognized gains (losses) on

4 unchanged sentences

adjustments, net of taxes

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 from other comprehensive income (loss)

— ( 7,355 ) — ( 7,355 )

Balances at May 31, 2021

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

Balance, February 28, 2022 $ ( 21,972 ) $ ( 4,836 ) $ ( 60,217 ) $ ( 87,025 )

Other comprehensive income (loss) before reclassification

( 7 ) ( 12,944 ) ( 54,995 ) ( 67,946 )

Reclassification of gains from other comprehensive income (loss)

— 3,138 — 3,138

Balances at May 31, 2022

$ ( 21,979 ) $ ( 14,642 ) $ ( 115,212 ) $ ( 151,833 )

Six Months Ended May 31, 2022 and 2021

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

3 unchanged sentences

— ( 16,526 ) — ( 16,526 )

Balances at February 28, 2021

Balances at May 31, 2021

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

4 unchanged sentences

— 2,465 — 2,465

Balances at February 28, 2022

Balances at May 31, 2022

$ ( 21,979 ) $ ( 14,642 ) $ ( 115,212 ) $ ( 151,833 )

1 unchanged sentence

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 months ended February 28, 2022 and 2021:

Three Months Ended

February 28, 2022 and 2021

Restructuring costs

Facility and exit costs

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

Cash payments ( 2,004 )

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

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

Additional accrual during the period 47

Cash payments ( 1,002 )

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

NOTE 6— DERIVATIVE INSTRUMENTS:

1 unchanged sentence

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.

8 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 2024.

These instruments mature at various dates through May 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 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.

Deferred gains and losses in AOCI associated with such derivative instruments are reclassified into earnings in the period of de-designation.

6 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, 2022 November 30, 2021

Balance Sheet Line Item May 31, 2022 November 30, 2021

Derivative instruments not designated as hedging instruments:

1 unchanged sentence

Other current assets

11,376 10,058

Other accrued liabilities

11,930 12,542

Derivative instruments designated as cash flow hedges:

8 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:

Three Months Ended

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

Three Months Ended Six Months Ended

Locations of gain (loss) in statement of operations May 31, 2022 May 31, 2021 May 31, 2022 May 31, 2021

Derivative instruments designated as cash flow hedges

Losses recognized in OCI:

(Loss) / Gain recognized in OCI:

Foreign exchange forward contracts $ ( 17,384 ) $ 23,718 $ ( 21,091 ) $ 14,393

1 unchanged sentence

Foreign exchange forward contracts

Gain reclassified from AOCI into income Cost of revenue for services $ 415 $ 8,835

Gain reclassified from AOCI into income Selling, general and administrative expenses 490 3,358

(Loss) / Gain reclassified from AOCI into income Cost of revenue for services $ ( 3,426 ) $ 7,127 $ ( 3,011 ) $ 15,962

(Loss) / Gain reclassified from AOCI into income Selling, general and administrative expenses ( 790 ) 2,746 ( 300 ) 6,104

Total $ ( 4,216 ) $ 9,873 $ ( 3,311 ) $ 22,066

Derivative instruments not designated as hedging instruments:

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

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

Other expense (income), net $ ( 16,148 ) $ 20,808 $ ( 17,160 ) $ 18,041

5 unchanged sentences

Credit exposure for derivative financial instruments is limited to the amounts, if any, by which the counterparties’ obligations under the contracts exceed the Company’s obligations to the counterparties.

The Company manages the potential risk of credit losses through careful evaluation of counterparty credit standing and selection of counterparties from a limited group of financial institutions.

Company manages the potential risk of credit losses through careful evaluation of counterparty credit standing and selection of counterparties from a limited group of financial institutions.

NOTE 7— FAIR VALUE MEASUREMENTS:

4 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, 2022 As of November 30, 2021

As of May 31, 2022 As of November 30, 2021

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, 2022 and November 30, 2021.

The effect of nonperformance risk on the fair value of derivative instruments was not material as of May 31, 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 months ended February 28, 2022 and 2021, there were no transfers between the fair value measurement category levels.

During the three and six months ended May 31, 2022 and 2021, there were no transfers between the fair value measurement category levels.

NOTE 8—BORROWINGS:

Borrowings consist of the following:

February 28, 2022 November 30, 2021

May 31, 2022 November 30, 2021

Credit Facility - current portion of Term Loan component $ 105,000 $ —

7 unchanged sentences

Credit Facility

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.

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”) to (i) refinance the then-outstanding 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) increase the commitments under its revolving credit facility to $ 1,000,000 (the “Revolver”), (iii) extend the maturity of the Credit Facility from November 30, 2025 to December 27, 2026, (iv) 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) 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 under the Securitization Facility were used to repay the outstanding principal amount of 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.

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.

A commitment fee is payable on the unused portion of the Revolver that 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.

6 unchanged sentences

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.

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.

Prior to being amended in December 2021, Concentrix initially entered into its senior secured credit facility on October 16, 2020, and it 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 the full $ 900,000 of term loan borrowings under the Credit Facility.

Substantially all of the proceeds from such borrowings, 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.

At May 31, 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 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.

Substantially all of the proceeds from such borrowings 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 .

2 unchanged sentences

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.

Amounts drawn under the Securitization Facility are 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 May 31, 2022 as evidenced through the amendment to the Securitization Facility described below.

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 %.

4 unchanged sentences

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.

On July 6, 2022, the Company entered into an amendment to the Securitization Facility to (i) increase the commitment of the lenders to provide available borrowings of up to $ 500,000 , (ii) extend the termination date of the Securitization Facility from October 28, 2022 to July 5, 2024, and (iii) replace LIBOR with SOFR as one of the reference rates used to calculate interest on borrowings under the Securitization Facility.

In addition, the interest rate margins were amended, such that borrowings under the Securitization Facility that are funded through the issuance of commercial paper bear interest at the applicable commercial paper rate plus a spread of 0.70 % and, otherwise, at a per annum rate equal to the applicable SOFR rate (which includes a SOFR related adjustment of 0.10 %), plus a spread of 0.80 %.

Covenant compliance

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

As of May 31, 2022, Concentrix was in compliance with all covenants for the above arrangements.

NOTE 9— EARNINGS PER SHARE:

1 unchanged sentence

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.

Three Months Ended

February 28, 2022 February 28, 2021

Three Months Ended Six Months Ended

May 31, 2022 May 31, 2021 May 31, 2022 May 31, 2021

Basic earnings per common share:

19 unchanged sentences

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

Three Months Ended

February 28, 2022 February 28, 2021

Three Months Ended Six Months Ended

May 31, 2022 May 31, 2021 May 31, 2022 May 31, 2021

Industry vertical:

1 unchanged sentence

$ 466,754 $ 417,277 $ 936,953 $ 830,095

Communications and media

260,643 248,790

Retail, travel and ecommerce

295,025 231,966 579,942 470,967

Communications and media

273,817 254,860 534,460 503,650

Banking, financial services and insurance

9 unchanged sentences

legal entities are covered by government mandated 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.

During the three and six months ended May 31, 2022, the Company contributed $ 26,855 and $ 48,667 , 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.

Defined Benefit Plans

6 unchanged sentences

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.

Net benefit costs related to defined benefit plans were $ 2,353 and $ 5,628 , during the three and six months ended May 31, 2022, 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.

On an aggregate basis, the plans were underfunded by $ 96,016 and $ 104,689 at May 31, 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.

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.

The effective tax rates for the three and six months ended May 31, 2022 and 2021 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 the Company’s indefinite reinvestment assertion for Concentrix Insurance Solutions due to the then-pending sale, which closed in the third quarter of 2021.

The liability for unrecognized tax benefits was $ 54,302 and $ 56,308 at May 31, 2022 and November 30, 2021, respectively, and is included in other long-term liabilities in the consolidated balance sheets.

As of May 31, 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 $ 46,449 and $ 48,438 , respectively.

This amount includes net interest and penalties of $ 8,604 and $ 8,861 for the respective periods.

7 unchanged sentences

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

Three Months Ended

February 28, 2022 February 28, 2021

Three Months Ended Six Months Ended

May 31, 2022 May 31, 2021 May 31, 2022 May 31, 2021

Operating lease cost $ 49,738 $ 51,122 $ 100,540 $ 102,563

3 unchanged sentences

Total operating lease cost $ 65,466 $ 64,536 $ 131,854 $ 129,333

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:

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 May 31, 2022:

Fiscal Years Ending November 30,

2022 (remaining nine months) $ 145,077

2022 (remaining six months)

Thereafter 25,434

4 unchanged sentences

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

February 28, 2022 November 30, 2021

May 31, 2022 November 30, 2021

Operating lease ROU assets Other assets, net $ 461,760 $ 489,171

3 unchanged sentences

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, 2022 February 28, 2021

Six Months Ended

May 31, 2022 May 31, 2021

Cash paid for amounts included in the measurement of lease liabilities $ 100,857 $ 107,926

Non-cash ROU assets obtained in exchange for lease liabilities 68,238 76,374

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

The weighted-average remaining lease term and discount rate as of May 31, 2022 and November 30, 2021 were as follows:

May 31, 2022 November 30, 2021

Weighted-average remaining lease term (years) 3.63 3.81

14 unchanged sentences

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 the three and six months ended May 31, 2022, the Company repurchased 367 aggregate shares of its common stock for an aggregate purchase price of $ 57,850 .

The share repurchases were made on the open market and the shares repurchased by the Company are held in treasury for general corporate purposes.

At May 31, 2022, approximately $ 417,055 remained available for share repurchases under the existing authorization from the Company’s board of directors.

During June 2022, the Company repurchased 92 aggregate shares of its common stock for an aggregate purchase price of $ 13,764 .

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

2 unchanged sentences

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.

March 29, 2022 April 29, 2022 $ 0.25 May 10, 2022

On June 27, 2022, the Company announced a cash dividend of $ 0.25 per share to stockholders of record as of July 29, 2022, payable on August 9, 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