Concentrix Corp 10-Q

ITEM 1. FINANCIAL STATEMENTS CONCENTRIX CORPORATION CONSOLIDATED BALANCE SHEETS (currency and share amounts in thousands, except par value) February 28, 2023 November 30, 2022 (unaudited) ASSETS Current assets: Cash and cash equivalents $ 178,386 $ 145,382 Accounts receivable, net 1,381,610 1,390,474 Other current assets 188,141 218,476 Total current assets 1,748,137 1,754,332 Property and equipment, net 399,132 403,829 Goodwill 2,905,078 2,904,402 Intangible assets, net 948,904 985,572 Deferred tax assets 44,934 48,541 Other assets 576,885 573,092 Total assets $ 6,623,070 $ 6,669,768 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 141,666 $ 161,190 Current portion of long-term debt — — Accrued compensation and benefits 388,786 506,966 Other accrued liabilities 392,722 395,304 Income taxes payable 70,792 68,663 Total current liabilities 993,966 1,132,123 Long-term debt, net 2,220,207 2,224,288 Other long-term liabilities 508,770 511,995 Deferred tax liabilities 99,626 105,458 Total liabilities 3,822,569 3,973,864 Commitments and contingencies (Note 14) Stockholders’ equity: Preferred stock, $ 0.0001 par value, 10,000 shares authorized and no shares issued and outstanding as of February 28, 2023 and November 30, 2022, respectively — — Common stock, $ 0.0001 par value, 250,000 shares authorized; 52,595 and 52,367 shares issued as of February 28, 2023 and November 30, 2022, respectively, and 51,195 and 51,096 shares outstanding as of February 28, 2023 and November 30, 2022, respectively 5 5 Additional paid-in capital 2,447,418 2,428,313 Treasury stock, 1,400 and 1,271 shares as of February 28, 2023 and November 30, 2022, respectively ( 208,996 ) ( 190,779 ) Retained earnings 847,671 774,114 Accumulated other comprehensive loss ( 285,597 ) ( 315,749 ) Total stockholders’ equity 2,800,501 2,695,904 Total liabilities and stockholders’ equity $ 6,623,070 $ 6,669,768 The accompanying notes are an integral part of these consolidated financial statements. 2 CONCENTRIX CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (currency and share amounts in thousands, except per share amounts) (unaudited) Three Months Ended February 28, 2023 February 28, 2022 Revenue $ 1,636,404 $ 1,536,052 Cost of revenue 1,055,243 997,918 Gross profit 581,161 538,134 Selling, general and administrative expenses 425,114 390,389 Operating income 156,047 147,745 Interest expense and finance charges, net 33,990 8,770 Other expense (income), net 3,714 ( 7,616 ) Income before income taxes 118,343 146,591 Provision for income taxes 30,473 36,052 Net income before non-controlling interest 87,870 110,539 Less: Net income attributable to non-controlling interest — 266 Net income attributable to Concentrix Corporation $ 87,870 $ 110,273 Earnings per common share: Basic $ 1.69 $ 2.11 Diluted $ 1.68 $ 2.09 Weighted-average common shares outstanding: Basic 51,150 51,629 Diluted 51,476 52,046 The accompanying notes are an integral part of these consolidated financial statements. 3 CONCENTRIX CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (currency in thousands) (unaudited) Three Months Ended February 28, 2023 February 28, 2022 Net income before non-controlling interest $ 87,870 $ 110,539 Other comprehensive income (loss): Unrealized gains (losses) of defined benefit plans, net of taxes of $ 109 and $ 0 for the three months ended February 28, 2023 and 2022, respectively ( 552 ) 773 Unrealized gains (losses) on cash flow hedges during the period, net of taxes of $( 2,549 ) and $ 947 for the three months ended February 28, 2023 and 2022, respectively 7,654 ( 2,760 ) Reclassification of net (gains) losses on cash flow hedges to net income, net of taxes of $( 1,934 ) and $ 232 for the three months ended February 28, 2023 and 2022, respectively 5,807 ( 673 ) Total change in unrealized gains (losses) on cash flow hedges, net of taxes 13,461 ( 3,433 ) Foreign currency translation, net of taxes of $ 0 for the three months ended February 28, 2023 and 2022, respectively 17,243 ( 13,839 ) Other comprehensive income (loss) 30,152 ( 16,499 ) Comprehensive income 118,022 94,040 Less: Comprehensive income attributable to non-controlling interest — 266 Comprehensive income attributable to Concentrix Corporation $ 118,022 $ 93,774 The accompanying notes are an integral part of these consolidated financial statements. 4 CONCENTRIX CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (currency and share amounts in thousands) (unaudited) Three Months Ended February 28, 2023 and 2022 Concentrix Corporation Stockholders’ Equity Common stock Treasury stock Redeemable non-controlling interest Shares Amount Additional paid-in capital Shares Amount Retained earnings Accumulated other comprehensive income (loss) Total stockholders’ equity Balances, November 30, 2021 $ — 51,594 $ 5 $ 2,355,767 333 $ ( 57,486 ) $ 392,495 $ ( 70,526 ) $ 2,620,255 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, February 28, 2022 $ 2,266 51,664 $ 5 $ 2,389,403 348 $ ( 60,040 ) $ 489,656 $ ( 87,025 ) $ 2,731,999 Balances, November 30, 2022 $ — 52,367 $ 5 $ 2,428,313 1,271 $ ( 190,779 ) $ 774,114 $ ( 315,749 ) $ 2,695,904 Other comprehensive income — — — — — — — 30,152 30,152 Share-based compensation activity — 228 — 19,105 — — — — 19,105 Repurchase of common stock for tax withholdings on equity awards — — — — 58 ( 8,216 ) — — ( 8,216 ) Repurchase of common stock — — — — 71 ( 10,001 ) — — ( 10,001 ) Dividends — — — — — — ( 14,313 ) — ( 14,313 ) Net income — — — — — — 87,870 — 87,870 Balances, February 28, 2023 $ — 52,595 $ 5 $ 2,447,418 1,400 $ ( 208,996 ) $ 847,671 $ ( 285,597 ) $ 2,800,501 The accompanying notes are an integral part of these consolidated financial statements. 5 CONCENTRIX CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (currency in thousands) (unaudited) Three Months Ended February 28, 2023 February 28, 2022 Cash flows from operating activities: Net income before non-controlling interest $ 87,870 $ 110,539 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 38,175 36,037 Amortization 39,260 38,056 Non-cash share-based compensation expense 16,601 15,030 Provision for doubtful accounts 1,722 1,948 Deferred income taxes ( 7,393 ) ( 10,646 ) Unrealized foreign exchange loss — 726 Pension and other post-retirement benefit costs 2,934 5,722 Pension and other post-retirement plan contributions ( 615 ) ( 931 ) Other 433 ( 98 ) Changes in operating assets and liabilities: Accounts receivable, net 112 ( 30,188 ) Accounts payable ( 9,672 ) ( 7,171 ) Other operating assets and liabilities ( 65,534 ) ( 114,009 ) Net cash provided by operating activities 103,893 45,015 Cash flows from investing activities: Purchases of property and equipment ( 39,597 ) ( 45,393 ) Acquisition of business, net of cash and restricted cash acquired — ( 1,564,430 ) Other investments — ( 1,000 ) Net cash used in investing activities ( 39,597 ) ( 1,610,823 ) Cash flows from financing activities: Proceeds from the Credit Facility - Term Loan — 2,100,000 Repayments of the Credit Facility - Term Loan ( 25,000 ) — Repayments of the Credit Facility - Prior Term Loan — ( 700,000 ) Proceeds from the Securitization Facility 417,500 508,000 Repayments of the Securitization Facility ( 397,000 ) ( 359,000 ) Cash paid for debt issuance costs — ( 8,863 ) Proceeds from exercise of stock options 2,504 2,882 Repurchase of common stock for tax withholdings on equity awards ( 8,216 ) ( 2,554 ) Repurchase of common stock ( 10,001 ) — Dividends paid ( 14,313 ) ( 13,112 ) Net cash provided by (used in) financing activities ( 34,526 ) 1,527,353 Effect of exchange rate changes on cash, cash equivalents and restricted cash 2,797 ( 1,395 ) Net increase (decrease) in cash, cash equivalents and restricted cash 32,567 ( 39,850 ) Cash, cash equivalents and restricted cash at beginning of year 157,463 183,010 Cash, cash equivalents and restricted cash at end of period $ 190,030 $ 143,160 Supplemental disclosure of non-cash investing activities: Accrued costs for property and equipment purchases $ 5,747 $ 6,293 The accompanying notes are an integral part of these consolidated financial statements. 6 CONCENTRIX CORPORATION NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (currency and share amounts in thousands, except per share amounts) NOTE 1— BACKGROUND AND BASIS OF PRESENTATION: Background Concentrix Corporation (“Concentrix” 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, retail, travel and e-commerce, communications and media, banking, financial services and insurance, and healthcare. Basis of presentation The accompanying interim unaudited consolidated financial statements have been prepared by the Company in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). The amounts as of November 30, 2022 have been derived from the Company’s annual audited financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2022. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States have been condensed or omitted in accordance with such rules and regulations. In the opinion of management, the accompanying unaudited consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary to state fairly the financial position of the Company and its results of operations and cash flows as of and for the periods presented. 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, 2022. All intercompany balances and transactions have been eliminated in consolidation. Reclassifications Certain amounts in the consolidated financial statements related to the prior years have been reclassified to conform to the current year’s presentation. NOTE 2— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: For a discussion of the Company’s significant accounting policies, refer to the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2022. Recently adopted accounting pronouncements are discussed below. Concentration of credit risk For the three months ended February 28, 2023, no client accounted for more than 10% of the Company’s consolidated revenue. For the three months ended February 28, 2022, one client accounted for 10.3 % of the Company’s consolidated revenue. As of February 28, 2023, no client comprised more than 10% of the Company’s total accounts receivable balance. As of November 30, 2022, one client comprised 12.4 % of the Company’s total accounts receivable balance. 7 Recently adopted accounting pronouncements In December 2019, the Financial Accounting Standards Board (the “FASB”) issued new guidance that simplified the accounting for income taxes. The guidance was effective for annual reporting periods beginning after December 15, 2020, and interim periods within those reporting periods. This standard became effective for the Company in fiscal year 2022 and did not have a material impact on the consolidated financial statements. No other new accounting pronouncements recently adopted or issued had or are expected to have a material impact on the consolidated financial statements. NOTE 3— ACQUISITIONS: PK Acquisition Background 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 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 consideration, net of cash and restricted cash acquired, for the acquisition of PK was $ 1,573.3 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. 8 The purchase price consideration to acquire PK consisted of the following: Cash consideration for PK stock (1) $ 1,177,342 Cash consideration for PK vested equity awards (2) 246,229 Cash consideration for repayment of PK debt, including accrued interest (3) 148,492 Cash consideration for transaction expenses of PK (4) 22,842 Total cash consideration 1,594,905 Non-cash equity consideration for conversion of PK equity awards (5) 15,725 Total consideration transferred 1,610,630 Less: Cash and restricted cash acquired (6) 37,310 Total purchase price consideration $ 1,573,320 (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 certain 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 and restricted cash balance acquired at the acquisition. 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 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. None of the goodwill is expected to be deductible for income tax purposes. 9 The following table summarizes the final fair values of the assets acquired, liabilities assumed and non-controlling interest as of the acquisition date: As of December 27, 2021 Assets acquired: Cash and cash equivalents $ 30,798 Accounts receivable 85,367 Property and equipment 11,158 Operating lease right-of-use assets 12,288 Identifiable intangible assets 469,300 Goodwill 1,119,068 Other assets 26,449 Total assets acquired 1,754,428 Liabilities assumed and non-controlling interest: Accounts payable and accrued liabilities 78,092 Operating lease liabilities 12,288 Deferred tax liabilities 51,418 Non-controlling interest 2,000 Total liabilities assumed and non-controlling interest 143,798 Total consideration transferred $ 1,610,630 The purchase price allocation includes $ 469,300 of acquired identifiable intangible assets, all of which have finite lives. The fair value of the identifiable intangible assets has been estimated by 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. The 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 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, 10 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 December 1, 2020, 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 the Company believes 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 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 under the 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 prior period first fiscal quarter is as follows: Three Months Ended February 28, 2022 Revenue $ 1,569,013 Net income 106,351 ServiceSource Acquisition Background On July 20, 2022, the Company completed its acquisition of ServiceSource International, Inc. (“ServiceSource”), a global outsourced go-to-market services provider, delivering business-to-business (“B2B”) digital sales and customer success solutions that complemented Concentrix’ offerings in this area. Purchase price consideration The total purchase price consideration, net of cash acquired, for the acquisition of ServiceSource was $ 141.5 million, which was primarily funded by cash on the Company’s balance sheet, as well as borrowings under the Company’s Securitization Facility. The preliminary purchase price consideration to acquire ServiceSource consisted of the following: Cash consideration for ServiceSource stock (1) $ 150,392 Cash consideration for ServiceSource vested and unvested equity awards (2) 6,704 Cash consideration for repayment of ServiceSource debt, including accrued interest (3) 10,063 Total consideration transferred 167,159 Less: Cash and restricted cash acquired (4) 25,652 Total purchase price consideration $ 141,507 (1) Represents the cash consideration paid for the outstanding shares of ServiceSource’s common stock. (2) Represents the cash consideration paid or to be paid for vested and unvested ServiceSource stock option awards, restricted stock units and performance stock units. (3) Represents the cash consideration paid to retire ServiceSource’s outstanding third-party debt, including accrued interest. (4) Represents the ServiceSource cash and restricted cash balance acquired at the acquisition. 11 Preliminary purchase price allocation The purchase price was allocated to the assets acquired and liabilities assumed 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, high-value service 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 and liabilities assumed as of the acquisition date: As of July 20, 2022 Assets acquired: Cash and cash equivalents $ 24,355 Accounts receivable 40,097 Property and equipment 8,112 Operating lease right-of-use assets 29,487 Identifiable intangible assets 40,200 Goodwill 45,502 Net deferred tax assets 22,724 Other assets 20,238 Total assets acquired 230,715 Liabilities assumed: Accounts payable and accrued liabilities 34,069 Operating lease liabilities 29,487 Total liabilities assumed 63,556 Total consideration transferred $ 167,159 As of February 28, 2023, 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. Measurement period adjustments to the preliminary purchase price allocation during the three months ended February 28, 2023 were not material. The preliminary purchase price allocation includes $ 40,200 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 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 ServiceSource. 12 The preliminary amounts allocated to intangible assets are as follows: Gross Carrying Amount Weighted-Average Useful Life Customer relationships $ 31,370 15 years Technology 5,640 5 years Trade name 3,190 3 years Total $ 40,200 Acquisition-related and integration expenses In connection with the acquisitions of PK and ServiceSource, the Company incurred $ 5,543 and $ 922 of acquisition-related and integration expenses for the three months ended February 28, 2023 and 2022, respectively. These expenses primarily include legal and professional services, cash-settled awards, severance and retention payments and costs associated with lease terminations to integrate the businesses. These acquisition-related and integration expenses were recorded within selling, general and administrative expenses in the consolidated statement of operations. NOTE 4— SHARE-BASED COMPENSATION: The Company recognizes share-based compensation expense for all share-based awards made to employees and directors, including employee stock options, restricted stock awards, restricted stock units and performance-based restricted stock units based on estimated fair values. In January 2023, the Company granted 53 restricted stock awards and restricted stock units and 52 performance-based restricted stock units under the Concentrix Stock Incentive Plan, which included annual awards to the Company’s senior executive team. The restricted stock awards and restricted stock units had a weighted average grant date fair value of $ 138.79 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, 2025. The performance-based restricted stock units had a grant date weighted average fair value of $ 136.19 per share. The Company recorded share-based compensation expense in the consolidated statements of operations for the three months ended February 28, 2023 and 2022 as follows: Three Months Ended February 28, 2023 February 28, 2022 Total share-based compensation $ 16,754 $ 15,169 Tax benefit recorded in the provision for income taxes ( 4,188 ) ( 3,852 ) Effect on net income $ 12,566 $ 11,317 Share-based compensation expense is included in selling, general and administrative expenses in the consolidated statements of operations. 13 NOTE 5— BALANCE SHEET COMPONENTS: Cash, cash equivalents and restricted cash: The following table provides a reconciliation of cash, 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: As of February 28, 2023 November 30, 2022 Cash and cash equivalents $ 178,386 $ 145,382 Restricted cash included in other current assets 11,644 12,081 Cash, cash equivalents and restricted cash $ 190,030 $ 157,463 Restricted cash balances relate primarily to funds held for clients, restrictions placed on cash deposits by banks as collateral for the issuance of bank guarantees and the terms of a government grant, and letters of credit for leases. Accounts receivable, net: Accounts receivable, net is comprised of the following as of February 28, 2023 and November 30, 2022: As of February 28, 2023 November 30, 2022 Billed accounts receivable $ 813,828 $ 782,049 Unbilled accounts receivable 573,866 613,222 Less: Allowance for doubtful accounts ( 6,084 ) ( 4,797 ) Accounts receivable, net $ 1,381,610 $ 1,390,474 Allowance for doubtful trade receivables: Presented below is a progression of the allowance for doubtful trade receivables: Three Months Ended February 28, 2023 February 28, 2022 Balance at beginning of period $ 4,797 $ 5,421 Net additions (reductions) 1,722 1,948 Write-offs and reclassifications ( 435 ) ( 465 ) Balance at end of period $ 6,084 $ 6,904 14 Property and equipment, net: The following table summarizes the carrying amounts and related accumulated depreciation for property and equipment as of February 28, 2023 and November 30, 2022: As of February 28, 2023 November 30, 2022 Land $ 27,376 $ 27,336 Equipment, computers and software 567,165 542,209 Furniture and fixtures 89,530 89,167 Buildings, building improvements and leasehold improvements 377,283 362,218 Construction-in-progress 8,231 14,975 Total property and equipment, gross $ 1,069,585 $ 1,035,905 Less: Accumulated depreciation ( 670,453 ) ( 632,076 ) Property and equipment, net $ 399,132 $ 403,829 Shown below are the countries where 10% or more of the Company’s property and equipment, net are located as of February 28, 2023 and November 30, 2022: As of February 28, 2023 November 30, 2022 Property and equipment, net: United States $ 120,613 $ 123,184 Philippines 76,275 76,361 India 44,111 42,698 Others 158,133 161,586 Total $ 399,132 $ 403,829 Goodwill: The following table summarizes the changes in the Company’s goodwill for the three months ended February 28, 2023 and 2022: Three Months Ended February 28, 2023 February 28, 2022 Balance at beginning of period $ 2,904,402 $ 1,813,502 Acquisitions — 1,132,017 Foreign exchange translation 676 ( 3,080 ) Balance at end of period $ 2,905,078 $ 2,942,439 15 Intangible assets, net: The following tables summarize the carrying amounts and related accumulated amortization for intangible assets as of February 28, 2023 and November 30, 2022: As of February 28, 2023 As of November 30, 2022 Gross amounts Accumulated amortization Net amounts Gross amounts Accumulated amortization Net amounts Customer relationships $ 1,737,414 $ ( 849,731 ) $ 887,683 $ 1,731,610 $ ( 811,727 ) $ 919,883 Technology 79,724 ( 25,418 ) 54,306 79,728 ( 21,820 ) 57,908 Trade names 14,567 ( 8,988 ) 5,579 14,552 ( 8,291 ) 6,261 Non-compete agreements 2,200 ( 864 ) 1,336 2,200 ( 680 ) 1,520 $ 1,833,905 $ ( 885,001 ) $ 948,904 $ 1,828,090 $ ( 842,518 ) $ 985,572 Estimated future amortization expense of the Company’s intangible assets is as follows: Fiscal years ending November 30, 2023 (remaining nine months) $ 117,883 2024 146,111 2025 134,021 2026 117,517 2027 87,264 Thereafter 346,108 Total $ 948,904 Accumulated other comprehensive income (loss): The components of accumulated other comprehensive income (loss) (“AOCI”), net of taxes, were as follows: Three Months Ended February 28, 2023 and 2022 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 Total Balance, November 30, 2021 $ ( 22,745 ) $ ( 1,403 ) $ ( 46,378 ) $ ( 70,526 ) Other comprehensive income (loss) before reclassification 773 ( 2,760 ) ( 13,839 ) ( 15,826 ) Reclassification of gains from other comprehensive income (loss) — ( 673 ) — ( 673 ) Balances at February 28, 2022 $ ( 21,972 ) $ ( 4,836 ) $ ( 60,217 ) $ ( 87,025 ) Balance, November 30, 2022 $ ( 8,471 ) $ ( 19,914 ) $ ( 287,364 ) $ ( 315,749 ) Other comprehensive income (loss) before reclassification ( 552 ) 7,654 17,243 24,345 Reclassification of gains from other comprehensive income (loss) — 5,807 — 5,807 Balances at February 28, 2023 $ ( 9,023 ) $ ( 6,453 ) $ ( 270,121 ) $ ( 285,597 ) Refer to Note 6—Derivative Instruments 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 16 amortization of actuarial (gains) losses of defined benefit plans is recorded in “Other expense (income), net” in the consolidated statement of operations. NOTE 6— DERIVATIVE INSTRUMENTS: In the ordinary course of business, the Company is exposed to foreign currency risk and credit risk. 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. legal entities and certain existing assets and liabilities. However, the Company may choose not to hedge certain exposures for a variety of reasons including, but not limited to, accounting considerations and the economic cost of hedging particular exposures. There can be no assurance the hedges will offset more than a portion of the financial impact resulting from movements in foreign currency exchange or interest rates. Generally, the Company does not use derivative instruments to cover equity risk and credit risk. The Company’s hedging program is not used for trading or speculative purposes. 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. 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 2025. 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. Any subsequent changes in fair value of such derivative instruments are recorded in earnings unless they are re-designated as hedges of other transactions. 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 currencies of the Company’s legal entities that own the assets or liabilities. 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. 17 Fair Values of Derivative Instruments in the Consolidated Balance Sheets The fair values of the Company’s derivative instruments are disclosed in Note 7—Fair Value Measurements and summarized in the table below: Value as of Balance Sheet Line Item February 28, 2023 November 30, 2022 Derivative instruments not designated as hedging instruments: Foreign exchange forward contracts (notional value) $ 1,535,892 $ 1,465,853 Other current assets 19,249 22,839 Other accrued liabilities 13,582 14,934 Derivative instruments designated as cash flow hedges: Foreign exchange forward contracts (notional value) $ 1,026,969 $ 963,844 Other current assets and other assets 10,731 6,389 Other accrued liabilities and other long-term liabilities 19,332 32,935 Volume of activity The notional amounts of foreign exchange forward contracts represent the gross amounts of foreign currency, including, principally, the Philippine peso, the Indian rupee, the Canadian dollar, the Japanese yen and the Australian dollar, that will be bought or sold at maturity. 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 exchange rates change. 18 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: Three Months Ended Locations of gain (loss) in statement of operations February 28, 2023 February 28, 2022 Derivative instruments designated as cash flow hedges Gains (losses) recognized in OCI: Foreign exchange forward contracts $ 10,203 $ ( 3,707 ) (Losses) gains reclassified from AOCI into income: Foreign exchange forward contracts (Loss) gain reclassified from AOCI into income Cost of revenue for services $ ( 5,760 ) $ 415 (Loss) gain reclassified from AOCI into income Selling, general and administrative expenses ( 1,981 ) 490 Total $ ( 7,741 ) $ 905 Derivative instruments not designated as hedging instruments: Gain (loss) recognized from foreign exchange forward contracts, net (1) Other expense (income), net $ 6,225 $ ( 1,012 ) (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 losses in AOCI that are expected to be reclassified into earnings in the normal course of business within the next twelve months are $ 10,899 . Offsetting of Derivatives In the consolidated balance sheets, the Company does not offset derivative assets against liabilities in master netting arrangements. 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 with high credit standing. NOTE 7— FAIR VALUE MEASUREMENTS: The Company’s fair value measurements are classified and disclosed in one of the following three categories: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; 19 Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). 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, 2023 As of November 30, 2022 Fair value measurement category Fair value measurement category Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Assets: Cash equivalents $ 92,715 $ 92,715 $ — $ — $ 89,932 $ 89,932 $ — $ — Foreign government bond 1,564 1,564 — — 1,529 1,529 — — Forward foreign currency exchange contracts 29,980 — 29,980 — 29,228 — 29,228 — Liabilities: Forward foreign currency exchange contracts $ 32,914 $ — $ 32,914 $ — $ 47,869 $ — $ 47,869 $ — The Company’s cash equivalents consist primarily of highly liquid investments in money market funds and term deposits with maturity periods of three months or less. The carrying values of cash equivalents approximate fair value since they are near their maturity. 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. 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, 2023 and November 30, 2022. 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, 2023 and 2022, there were no transfers between the fair value measurement category levels. 20 NOTE 8—BORROWINGS: Borrowings consist of the following: As of February 28, 2023 November 30, 2022 Credit Facility - current portion of Term Loan component $ — $ — Current portion of long term debt $ — $ — Credit Facility - Term Loan component $ 1,850,000 $ 1,875,000 Securitization Facility 377,000 356,500 Long-term debt, before unamortized debt discount and issuance costs 2,227,000 2,231,500 Less: unamortized debt discount and issuance costs ( 6,793 ) ( 7,212 ) Long-term debt, net $ 2,220,207 $ 2,224,288 Credit Facility On December 27, 2021, in connection with the closing of the acquisition of PK, Concentrix entered into the Credit Facility to (i) refinance the then-outstanding term loan (the “Prior Term Loan”) with the Term Loan, which was fully advanced, in the aggregate outstanding principal amount of $ 2,100,000 , (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 term or daily SOFR 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 base 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. 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 became payable in quarterly installments of $ 26,250 , with the unpaid balance due in full on the maturity date. During the three months ended February 28, 2023, the Company paid $ 25,000 of voluntary principal prepayments, without penalty, on the Term Loan. Based on the Company’s required and voluntary principal prepayments made to date, the next quarterly installment of $ 26,250 is due in November of 2024. 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. 21 Obligations under the Credit Facility are secured by substantially all of the assets of Concentrix Corporation and certain of its U.S. subsidiaries and are guaranteed by certain of its U.S. subsidiaries. The Credit Facility contains various loan covenants that restrict the ability of Concentrix Corporation 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 February 28, 2023 and November 30, 2022, no amounts were outstanding under the Revolver. Securitization Facility On July 6, 2022, the Company entered into an amendment to the Securitization Facility, which was initially entered into on October 30, 2020, to (i) increase the commitment of the lenders to provide available borrowings from up to $ 350,000 to 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 %. 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 $ 500,000 . 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 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 contains various affirmative and negative covenants, including a consolidated leverage ratio covenant that is consistent with the Credit Facility and customary events of default, including payment defaults, defaults under certain other indebtedness, a change in control of Concentrix, and certain events negatively affecting the overall credit quality of the transferred accounts receivable. The Borrower’s sole business consists of the purchase or acceptance through capital contributions of the receivables and related security from the Originators and the subsequent retransfer of or granting of a security interest in such receivables and related security to the administrative agent under the Securitization Facility for the benefit of the lenders. The Borrower is a separate legal entity with its own separate creditors who will be entitled, upon its liquidation, to be satisfied out of the Borrower’s assets prior to any assets or value in the Borrower becoming available to the Borrower’s equity holders, and the assets of the Borrower are not available to pay creditors of Concentrix and its subsidiaries. Covenant compliance As of February 28, 2023 and November 30, 2022, Concentrix was in compliance with all covenants for the above arrangements. 22 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 security. 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, 2023 February 28, 2022 Basic earnings per common share: Net income $ 87,870 $ 110,273 Less: net income allocated to participating securities (1) ( 1,556 ) ( 1,554 ) Net income attributable to common stockholders $ 86,314 $ 108,719 Weighted-average number of common shares - basic 51,150 51,629 Basic earnings per common share $ 1.69 $ 2.11 Diluted earnings per common share: Net income $ 87,870 $ 110,273 Less: net income allocated to participating securities (1) ( 1,546 ) ( 1,542 ) Net income attributable to common stockholders $ 86,324 $ 108,731 Weighted-average number of common shares - basic 51,150 51,629 Effect of dilutive securities: Stock options and restricted stock units 326 417 Weighted-average number of common shares - diluted 51,476 52,046 Diluted earnings per common share $ 1.68 $ 2.09 (1) Restricted stock awards granted to employees by the Company are considered participating securities. NOTE 10— REVENUE: Disaggregated revenue In the following table, the Company’s revenue is disaggregated by primary industry verticals: Three Months Ended February 28, 2023 February 28, 2022 Industry vertical: Technology and consumer electronics $ 516,608 $ 470,199 Retail, travel and ecommerce 305,504 284,917 Communications and media 256,987 260,643 Banking, financial services and insurance 259,653 243,246 Healthcare 177,824 150,136 Other 119,828 126,911 Total $ 1,636,404 $ 1,536,052 23 NOTE 11— PENSION AND EMPLOYEE BENEFITS PLANS: The Company has a 401(k) plan in the United States under which eligible employees may contribute up to the maximum amount as provided by law. Employees become eligible to participate in the 401(k) plan on the first day of the month after their employment date. The Company may make discretionary contributions under the plan. Employees in most of the Company’s non-U.S. legal entities are covered by government mandated defined contribution plans. During the three months ended February 28, 2023 and 2022, the Company contributed $ 22,654 and $ 21,812 , respectively, to defined contribution plans. Defined Benefit Plans The Company has defined benefit pension and retirement plans for eligible employees of certain non-U.S. legal entities. For eligible employees in the United States, 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 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 $ 2,934 and $ 5,722 , during the three months ended February 28, 2023 and 2022, respectively. On an aggregate basis, the plans were underfunded by $ 72,288 and $ 71,815 at February 28, 2023 and November 30, 2022, 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, 2023 and 2022 were impacted by the geographic mix of worldwide income and certain discrete items. The liability for unrecognized tax benefits was $ 79,983 and $ 78,501 at February 28, 2023 and November 30, 2022, respectively, and is included in other long-term liabilities in the consolidated balance sheets. As of February 28, 2023 and November 30, 2022, the total amount of unrecognized tax benefits that would affect income tax expense if recognized in the consolidated financial statements was $ 42,631 and $ 40,793 , respectively. This amount includes net interest and penalties of $ 8,163 and $ 7,538 for the respective periods. The Company believes that it is reasonably possible that the total amount of unrecognized tax benefits could decrease between approximately $ 37,341 and $ 40,198 in the next twelve months; however, actual developments in this area could differ from those currently expected. 24 NOTE 13— LEASES: The Company leases certain of its facilities and equipment under operating lease agreements, which expire in various periods through 2035. The Company’s finance leases are not material. The following table presents the various components of operating lease costs: Three Months Ended February 28, 2023 February 28, 2022 Operating lease cost $ 51,760 $ 50,802 Short-term lease cost 4,719 4,337 Variable lease cost 12,331 11,984 Sublease income ( 1,363 ) ( 735 ) Total operating lease cost $ 67,447 $ 66,388 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, 2023: Fiscal Years Ending November 30, 2023 (remaining nine months) $ 147,247 2024 167,079 2025 118,069 2026 63,503 2027 27,877 Thereafter 28,691 Total payments 552,466 Less: imputed interest* 49,055 Total present value of lease payments $ 503,411 *Imputed interest represents the difference between undiscounted cash flows and discounted cash flows. The following amounts were recorded in the consolidated balance sheets related to the Company’s operating leases: As of February 28, 2023 November 30, 2022 Operating lease ROU assets Other assets, net $ 475,471 $ 473,039 Current operating lease liabilities Other accrued liabilities 167,397 158,801 Non-current operating lease liabilities Other long-term liabilities 336,014 340,673 The following table presents supplemental cash flow information related to the Company’s operating leases. 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, 2023 February 28, 2022 Cash paid for amounts included in the measurement of lease liabilities $ 53,825 $ 50,044 Non-cash ROU assets obtained in exchange for lease liabilities 41,394 37,492 25 The weighted-average remaining lease term and discount rate as of February 28, 2023 and November 30, 2022 were as follows: As of February 28, 2023 November 30, 2022 Weighted-average remaining lease term (years) 3.63 3.72 Weighted-average discount rate 5.38 % 5.24 % NOTE 14— COMMITMENTS AND CONTINGENCIES: From time to time, the Company receives notices from third parties, including customers and suppliers, seeking indemnification, payment of money or other actions in connection with claims made against them. Also, from time to time, the Company has been involved in various bankruptcy preference actions where the Company was a supplier to the companies now in bankruptcy. In addition, the Company is subject to various other claims, both asserted and unasserted, that arise in the ordinary course of business. The Company evaluates these claims and records the related liabilities. 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 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, 2023, the Company repurchased 71 shares of its common stock for an aggregate purchase price of $ 10,001 . During the three months ended February 28, 2022, the Company did not repurchase any shares under the program. 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 February 28, 2023, approximately $ 344,083 remained available for share repurchases under the existing authorization from the Company’s board of directors. During March 2023, the Company repurchased 39 shares of its common stock for an aggregate purchase price of $ 4,940 . 26 Dividends During fiscal years 2023 and 2022, 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 January 18, 2022 January 28, 2022 $ 0.25 February 8, 2022 March 29, 2022 April 29, 2022 $ 0.25 May 10, 2022 June 27, 2022 July 29, 2022 $ 0.25 August 9, 2022 September 28, 2022 October 28, 2022 $ 0.275 November 8, 2022 January 19, 2023 January 30, 2023 $ 0.275 February 10, 2023 On March 29, 2023, the Company announced a cash dividend of $ 0.275 per share to stockholders of record as of April 28, 2023, payable on May 9, 2023. NOTE 16—SUBSEQUENT EVENTS Pending Combination with Webhelp In March 2023, Concentrix entered into a binding put option agreement with certain shareholders of Marnix Lux SA (“Webhelp Parent”), the parent company of the Webhelp business. Webhelp is a leading provider of CX solutions, including sales, marketing, and payment services, with significant operations and client relationships in Europe, Latin America, and Africa. Following completion of required works council consultation processes, the parties are expected to enter into a definitive purchase agreement. Under the terms of the agreement and subject to completion of the required works council consultations and the satisfaction of closing conditions, Concentrix will acquire 100% of the shares of Webhelp Parent in a transaction valued at approximately $ 4.8 billion, including the assumption of approximately € 1.55 billion of net debt. At the closing of the transaction, shareholders of Webhelp Parent will receive (i) approximately 14.9 million shares of Concentrix common stock, (ii) € 500 million in cash, (iii) a € 700 million note payable in two years , bearing interest at 2 % per annum, and (iv) the right to earn an additional 0.75 million shares of Concentrix common stock if the share price of Concentrix common stock reaches $ 170.00 per share within seven years from the closing of the transaction (based on daily volume weighted average prices measured over a specified period). Upon the closing of the transaction, Concentrix shareholders will own approximately 78 % of the combined company with Webhelp Parent shareholders owning approximately 22 %. The transaction is expected to close by the end of the year, subject to completion of the required works council consultations and the satisfaction of customary closing conditions, including approval by Concentrix shareholders and regulatory approvals. Debt Commitment Letter In connection with the pending combination, the Company entered into a debt commitment letter (the “Commitment Letter”), dated as of March 29, 2023, with JPMorgan Chase Bank, N.A. (“JPMorgan”), pursuant to which JPMorgan has committed to provide a 364-day bridge loan facility in an aggregate principal amount of $ 5.29 billion (the “Bridge Facility”), consisting of three tranches: (i) a $ 2.44 billion tranche of term bridge loans, (ii) a $ 1.85 billion tranche of term bridge loans and (iii) a $ 1.0 billion tranche of revolving commitments (the “Amendment Revolving Tranche”), each subject to the satisfaction of certain customary closing conditions including the consummation of the combination with Webhelp. The Bridge Facility is available to (i) pay for a portion of the cash purchase price, (ii) directly or indirectly repay certain indebtedness of Webhelp Parent and its subsidiaries and certain indebtedness of the Company and its subsidiaries, and (iii) to pay fees, costs and expenses related to the transaction, the Bridge Facility and transactions being entered into or otherwise contemplated in 27 connection therewith. Additionally, the Amendment Revolving Tranche will be available after the consummation of the combination for working capital and other general corporate purposes. If the Company utilizes the Bridge Facility, amounts drawn thereunder will bear interest at an annual rate equal to adjusted term SOFR plus a margin which may initially range from 1.125 % to 2.000 %, depending on the Company’s debt rating or leverage ratio, as applicable, as determined in accordance with the Commitment Letter, which margin will be increased by 0.25 % on each of the 90th, 180th and 270th day after the closing of the Bridge Facility. The Company will pay commitment fees on the undrawn amount of this commitment ranging from 0.125 % to 0.275 % if based upon the Company’s debt rating, or 0.225 % to 0.300 % if based upon the Company’s leverage ratio, as applicable, determined in accordance with the Commitment Letter. 28