What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-07-07 compared with 2022-04-05 · 129 added, 111 removed, 338 unchanged (42% of the section changed)

3 unchanged sentences

When used in this Quarterly Report on Form 10-Q, or this “Report”, the words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “allows,” “can,” “may,” “could,” “designed,” “will,” and similar expressions are intended to identify forward-looking statements.

and retention, the ownership interest of MiTAC Holdings Corporation or MiTAC Holdings, in us and its impact, the ownership interest of Apollo Global Management, Inc., or Apollo, in us and its impact, the impact of the Merger, our integration plans, our plans with respect to the GBO 2 Program, our revenue, sources of revenue, our gross margins, our operating costs and results, timing of payment, the value of our inventory, our competition, including with Synnex Technology International Corp., our future needs for additional financing, the likely sources for such funding and the impact of such funding, concentration of customers and suppliers, customer and supplier contract terms, customer forecasts and its impact on us, relationships with our suppliers, adequacy of our facilities, ability to obtain comparable leases, ability to manage and communicate with international resources, ability to meet demand, managing inventory and our shipping costs, our legal proceedings, including the investigation by the Competition Authority, our operations and trends related thereto, our international operations, foreign currency exchange rates and hedging activities, expansion of our operations and related effects, our strategic acquisitions including anticipated cost savings and other benefits, divestitures of businesses and assets, revenue, cost of revenue and gross margin, our goodwill, seasonality of sales, changes in share price, adequacy of our cash resources to meet our capital needs, our debt and financing arrangements, including the impact of any change to our credit rating, interest rate risk and impact thereof, cash held by our international subsidiaries and repatriation, changes in fair value of derivative instruments, our tax liabilities, adequacy of our disclosure controls and procedures, dependency on personnel, pricing pressures, cybersecurity and compliance with related rules and regulations, impact of rules and regulations affecting public companies, the replacement of LIBOR, impact of our pricing policies, impact of economic and industry trends, changes to the markets in which we compete, impact of our accounting policies and recently issued accounting pronouncements, our estimates and assumptions, impact of inventory repurchase obligations and commitments and contingencies, our effective tax rates, impact of any impairment of our goodwill and intangible assets, our share repurchase and dividend program, our securitization programs, term loans and revolving credit lines, our investments in working capital, personnel, our succession planning and various environmental, social and governance initiatives and attention, our purchase accounting adjustments, plans with respect to our controls and procedures, and the impact of global economic, political and social conditions.

These are statements that relate to future periods and include statements about market trends, our business model and our services, our business and market strategy, future growth, including expansion of our product and service lines, our infrastructure, our investment in our information technology, or IT, systems, our employee hiring and retention, the ownership interest of MiTAC Holdings Corporation or MiTAC Holdings, in us and its impact, the ownership interest of Apollo Global Management, Inc., or Apollo, in us and its impact, the impact of the Merger, our integration plans, our plans with respect to the GBO 2 Program, our revenue, sources of revenue, our gross margins, our operating costs and results, timing of payment, the value of our inventory, our competition, including with Synnex Technology International Corp., our future needs for additional financing, the likely sources for such funding and the impact of such funding, concentration of customers and suppliers, customer and supplier contract terms, customer forecasts and its impact on us, relationships with our suppliers, adequacy of our facilities, ability to obtain comparable leases, ability to manage and communicate with international resources, ability to meet demand, managing inventory and our shipping costs, our legal proceedings, including the investigation by the Competition Authority, our operations and trends related thereto, our international operations, foreign currency exchange rates and hedging activities, expansion of our operations and related effects, our strategic acquisitions including anticipated cost savings and other benefits, divestitures of businesses and assets, revenue, cost of revenue and gross margin, our goodwill, seasonality of sales, changes in share price, adequacy of our cash resources to meet our capital needs, our debt and financing arrangements, including the impact of any change to our credit rating, interest rate risk and impact thereof, cash held by our international subsidiaries and repatriation, changes in fair value of derivative instruments, our tax liabilities, adequacy of our disclosure controls and procedures, dependency on personnel, pricing pressures, cybersecurity and compliance with related rules and regulations, impact of rules and regulations affecting public companies, the replacement of LIBOR, impact of our pricing policies, impact of economic and industry trends, changes to the markets in which we compete, impact of our accounting policies and recently issued accounting pronouncements, our estimates and assumptions, impact of inventory repurchase obligations and commitments and contingencies, our effective tax rates, impact of any impairment of our goodwill and intangible assets, our share repurchase and dividend program, our securitization programs, term loans and revolving credit lines, our investments in working capital, personnel, our succession planning and various environmental, social and governance initiatives and attention, our purchase accounting adjustments, plans with respect to our controls and procedures, and the impact of global economic, political and social conditions.

Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected.

45 unchanged sentences

Critical Accounting Policies and Estimates

During the three months ended February 28, 2022, there were no material changes to our critical accounting policies and estimates previously disclosed in our Annual Report on Form 10-K for the fiscal year ended November 30, 2021.

During the three months ended February 28, 2022, we adopted certain other new accounting pronouncements.

During the six months ended May 31, 2022, there were no material changes to our critical accounting policies and estimates previously disclosed in our Annual Report on Form 10-K for the fiscal year ended November 30, 2021.

During the six months ended May 31, 2022, we adopted certain other new accounting pronouncements.

The impact of adoption of these pronouncements was not material to our consolidated financial statements.

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The following table sets forth, for the indicated periods, data as percentages of total revenue:

Three months ended

Three Months Ended Six Months Ended

Statements of Operations Data:

February 28, 2022 February 28, 2021

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

Revenue 100.00 % 100.00 % 100.00 % 100.00 %

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Gross profit 6.26 % 5.62 % 6.26 % 5.87 %

Acquisition, integration and restructuring costs (0.60) % — %

Selling, general and administrative expenses (4.39) % (3.00) % (4.31) % (3.14) %

Acquisition, integration and restructuring costs (0.21) % (0.10) % (0.41) % (0.05) %

Operating income 1.66 % 2.53 % 1.55 % 2.68 %

Interest expense and finance charges, net (0.31) % (0.39) % (0.30) % (0.42) %

Other income (expense), net (0.03) % (0.03) %

Other expense, net (0.05) % (0.01) % (0.03) % (0.02) %

Income before income taxes 1.30 % 2.13 % 1.22 % 2.24 %

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The following tables provide the reconciliations of our most comparable GAAP measures to our non-GAAP measures presented:

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 Income and Operating Margin - Consolidated (in thousands)

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Non-GAAP operating margin 2.61 % 2.90 % 2.70 % 3.02 %

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 Income and Operating Margin - Americas (in thousands)

8 unchanged sentences

Non-GAAP operating margin 2.84 % 2.80 % 2.81 % 2.95 %

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 Income and Operating Margin - Europe (in thousands)

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Amortization of intangibles 30,470 — 62,440 —

Share-based compensation 2,080 — 2,080 —

Purchase accounting adjustments 12,562 — 27,985 —

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Non-GAAP operating margin 2.08 % 5.79 % 2.44 % 5.46 %

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 Income and Operating Margin - APJ (in thousands)

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Amortization of intangibles 638 — 1,276 —

Share-based compensation 618 — 618 —

Non-GAAP operating income $ 24,164 $ 9,721 $ 50,484 $ 24,799

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Non-GAAP operating margin 2.88 % 2.09 % 3.05 % 2.57 %

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

Adjusted EBITDA - Consolidated (in thousands)

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Depreciation (1)

24,949 5,668 104,314 11,167

Amortization of intangibles 74,676 9,373 150,812 18,742

EBITDA $ 346,107 $ 162,187 $ 719,780 $ 317,469

Other (income) expense, net 4,268 1,333

Other expense, net 6,255 755 10,523 2,089

Acquisition, integration and restructuring costs 32,478 5,935 72,977 5,935

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(1) Includes depreciation recorded in acquisition, integration and restructuring 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

Net Income - Consolidated (in thousands)

7 unchanged sentences

Non-GAAP net income $ 262,257 $ 109,427 $ 554,701 $ 207,980

Three Months Ended

Diluted Earnings per Common Share February 28, 2022 February 28, 2021

Three Months Ended Six Months Ended

Diluted Earnings per Common Share May 31, 2022 May 31, 2021 May 31, 2022 May 31, 2021

Diluted EPS $ 1.55 $ 1.78 $ 2.92 $ 3.46

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Non-GAAP diluted EPS $ 2.72 $ 2.09 $ 5.75 $ 3.98

Three Months Ended February 28, 2022

Three and Six Months Ended May 31, 2022 and May 31, 2021

Three Months Ended Percent

February 28, 2022 February 28, 2021

(in thousands)

Change Six Months Ended Percent

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

(in thousands) (in thousands)

Revenue $ 15,269,791 $ 5,856,825 160.7 % $ 30,739,768 $ 10,795,839 184.7 %

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The products we sell from one period to the next are often not comparable due to changes in product models, features and customer demand requirements.

Revenue increased during the three months ended February 28, 2022, as compared to the prior year period, primarily due to an increase in sales resulting from the impact of the Merger of approximately $10 billion as well as broad-based demand for technology equipment.

Revenue increased during the three and six months ended May 31, 2022, as compared to the prior year period, primarily due to an increase in sales resulting from the impact of the Merger of approximate ly $9 billion an d $19 billion , respectively , as well as broad-based demand for technology equipment.

Three Months Ended Percent

February 28, 2022 February 28, 2021

(in thousands)

Change Six Months Ended Percent

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

(in thousands) (in thousands)

Gross profit $ 955,789 $ 329,175 190.4 % $ 1,924,450 $ 633,742 203.7 %

1 unchanged sentence

Our gross margin is affected by a variety of factors, including competition, selling prices, mix of products, product costs along with rebate and discount programs from our suppliers, reserves or settlement adjustments, freight costs, inventory losses and fluctuations in revenue.

Our gross profit increased, during the three months ended February 28, 2022, as compared to the prior year period, primarily due to an increase in sales resulting from the impact of the Merger.

The increase in gross margin during the three months ended February 28, 2022, as compared to the prior year period, is primarily due to product mix.

Our gross profit increased, during the three and six months ended May 31, 2022, as compared to the prior year period, primarily due to an increase in sales resulting from the impact of the Merger.

The increase in gross margin during the three and six months ended May 31, 2022, as compared to the prior year period, is primarily due to product mix.

Selling, General and Administrative Expenses

Three Months Ended Percent

Change Six Months Ended Percent

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

(in thousands) (in thousands)

Selling, general and administrative expenses $ 670,574 $ 175,339 282.4 % $ 1,323,425 $ 338,159 291.4 %

Percentage of revenue 4.39 % 3.00 % 4.31 % 3.14 %

Our selling, general and administrative expenses consist primarily of personnel costs such as salaries, commissions, bonuses, share-based compensation and temporary personnel costs.

Selling, general and administrative expenses also include cost of warehouses, delivery centers and other non-integration facilities, utility expenses, legal and professional fees, depreciation on certain of our capital equipment, bad debt expense, amortization of our intangible assets, and marketing expenses.

During the three and six months ended May 31, 2022, selling, general and administrative expenses increased, compared to the prior year period, primarily due to an increase in personnel costs resulting from the Merger and an increase in amortization of intangible assets acquired in connection with the Merger.

Selling, general and administrative expenses increased as a percentage of revenue, compared to the prior year period, primarily due to the impact of the Merger including an increase in personnel costs and amortization of intangible assets.

Acquisition, Integration and Restructuring Costs

Acquisition, integration and restructuring costs are primarily comprised of costs related to the Merger and costs related to the Global Business Optimization 2 Program initiated by Tech Data prior to the Merger (the “GBO 2 Program”).

There were no acquisition, integration and restructuring costs incurred during the three months ended February 28, 2021.

We incurred acquisition, integration and restructuring costs related to the completion of the Merger, including professional services costs, personnel and other costs, long-lived assets charges and stock-based compensation expense.

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Stock-based compensation expense primarily relates to costs associated with the conversion of certain Tech Data performance-based equity awards issued prior to the Merger into restricted shares of TD SYNNEX (refer to Note 5 – Share-Based Compensation to the Consolidated Financial Statements in Part I, Item 1 of this Report for further information) and expenses for certain restricted stock awards issued in conjunction with the Merger.

During the three months ended February 28, 2022, acquisition and integration expenses related to the Merger were composed of the following:

Three Months Ended

February 28, 2022

During the three and six months ended May 31, 2022 and 2021, acquisition and integration expenses related to the Merger were composed of the following:

Three Months Ended Six Months Ended

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

(in thousands)

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Total $ 23,086 $ 5,935 $ 108,625 $ 5,935

During the three and six months ended May 31, 2022, acquisition and integration expenses related to the Merger increased, compared to the prior year period, due to the timing of the Merger as it was completed on September 1, 2021.

GBO 2 Program

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TD SYNNEX plans to continue this program in conjunction with the Company’s integration activities.

Acquisition, integration and restructuring expenses related to the GBO 2 Program are primarily comprised of restructuring costs and other professional services costs.

Acquisition, integration and restructuring expenses related to the GBO 2 Program are primarily comprised of restructuring costs and other costs.

Restructuring costs are comprised of severance costs and other associated exit costs, including certain consulting costs.

Other professional services

costs are primarily comprised of professional services fees not related to restructuring activities, including costs related to improving profitability and optimizing net-working capital.

Acquisition, integration and restructuring costs under the GBO 2 Program for the three months ended February 28, 2022 included the following:

Three Months Ended

February 28, 2022

Other costs are primarily comprised of personnel costs, facilities costs and certain professional services fees not related to restructuring activities.

There were no acquisition, integration and restructuring costs incurred under the GBO 2 Program during the three and six months ended May 31, 2021 due to the timing of the completion of the Merger.

Acquisition, integration and restructuring costs under the GBO 2 Program for the three and six months ended May 31, 2022 included the following:

Three Months Ended Six Months Ended

May 31, 2022 May 31, 2022

(in thousands)

Restructuring costs $ 4,738 $ 10,784

Other professional services costs 1,785

Other costs 4,654 6,439

Total $ 9,392 $ 17,223

Restructuring costs under the GBO 2 Program for the three months ended February 28, 2022 were composed of the following:

Three Months Ended

February 28, 2022

Restructuring costs under the GBO 2 Program for the three and six months ended May 31, 2022 were composed of the following:

Three Months Ended Six Months Ended

May 31, 2022 May 31, 2022

(in thousands)

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Total $ 4,738 $ 10,784

During the three months ended February 28, 2022, we recorded restructuring costs related to GBO 2 of $1.8 million, $3.9 million and $0.3 million, for the Americas, Europe and APJ regions, respectively.

Selling, General and Administrative Expenses

Three Months Ended Percent

February 28, 2022 February 28, 2021

Restructuring costs related to the GBO 2 Program by segment are as follows:

Three Months Ended Six Months Ended

May 31, 2022 May 31, 2022

(in thousands)

Selling, general and administrative expenses $ 652,851 $ 162,820 301.0 %

Percentage of revenue 4.22 % 3.30 %

Our selling, general and administrative expenses consist primarily of personnel costs such as salaries, commissions, bonuses, share-based compensation and temporary personnel costs.

During the three months ended February 28, 2022, selling, general and administrative expenses increased, compared to the prior year period, primarily due to an increase in employee related expenses resulting from the Merger and an increase in amortization of intangible assets acquired in connection with the Merger.

Americas $ 1,582 $ 3,422

Europe 3,073 6,945

Total $ 4,738 $ 10,784

Operating Income

Three Months Ended Percent

February 28, 2022 February 28, 2021

(in thousands)

Change Six Months Ended Percent

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

(in thousands) (in thousands)

Operating income $ 252,737 $ 147,901 70.9 % $ 475,177 $ 289,649 64.1 %

Operating margin 1.66 % 2.53 % 1.55 % 2.68 %

Operating income increased during the three months ended February 28, 2022 compared to the prior year period, primarily due to increased sales as a result of the Merger, partially offset by an increase in employee related expenses resulting from the Merger, an increase in acquisition, integration and restructuring costs and an increase in amortization of intangible assets acquired in connection with the Merger.

Operating margin decreased during the three months ended February 28, 2022, compared to the prior year period, primarily due to an increase in employee related expenses resulting from the Merger, an increase in acquisition, integration and restructuring costs and an increase in amortization of intangible assets acquired in connection with the Merger.

Operating income increased during the three and six months ended May 31, 2022 compared to the prior year period, primarily due to increased sales as a result of the Merger, partially offset by an increase in personnel costs resulting from the Merger, an increase in amortization of intangible assets acquired in connection with the Merger and an increase in acquisition, integration and restructuring costs.

Operating margin decreased during the three and six months ended May 31,

2022, compared to the prior year period, primarily due to an increase in personnel costs resulting from the Merger, an increase in amortization of intangible assets acquired in connection with the Merger and an increase in acquisition, integration and restructuring costs, partially offset by an increase in gross margin primarily due to product mix.

Interest Expense and Finance Charges, Net

Three Months Ended Percent

February 28, 2022 February 28, 2021

(in thousands)

Change Six Months Ended Percent

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

(in thousands) (in thousands)

Interest expense and finance charges, net $ 47,968 $ 22,563 112.6 % $ 90,311 $ 45,401 98.9 %

1 unchanged sentence

Amounts recorded in interest expense and finance charges, net, consist primarily of interest expense paid on our Senior Notes (as defined below), our lines of credit and term loans and fees associated with the sale or pledge of accounts receivable through our securitization facilities, offset by income earned on our cash investments.

The increase in our interest expense and finance charges, net during the three months ended February 28, 2022, compared to the prior year, was due to an increase in interest expense related to the Senior Notes and higher average outstanding borrowings.

Other Income (Expense), Net

The increase in our interest expense and finance charges, net during the three and six months ended May 31, 2022, compared to the prior year, was due to an increase in interest expense from higher average outstanding borrowings primarily due to the issuance of the Senior Notes.

Other Expense, Net

Three Months Ended Percent

February 28, 2022 February 28, 2021

(in thousands)

Other income (expense), net $ (4,268) $ (1,333) 220.2 %

Change Six Months Ended Percent

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

(in thousands) (in thousands)

Other expense, net $ 6,255 $ 755 728.5 % $ 10,523 $ 2,089 403.7 %

Percentage of revenue 0.05 % 0.01 % 0.03 % 0.02 %

Amounts recorded as other income (expense), net include foreign currency transaction gains and losses on certain financing transactions and the related derivative instruments used to hedge such financing transactions, the cost of hedging, investment gains and losses, and other non-operating gains and losses, such as settlements received from class actions lawsuits.

The increase in other income (expense), net during the three months ended February 28, 2022, as compared to the prior year period, was primarily due to higher costs of hedging.

Amounts recorded as other expense, net include foreign currency transaction gains and losses on certain financing transactions and the related derivative instruments used to hedge such financing transactions, the cost of hedging, investment gains and losses, and other non-operating gains and losses, such as settlements received from class actions lawsuits.

The increase in other expense, net during the three and six months ended May 31, 2022, as compared to the prior year period, was primarily related to increased costs for foreign exchange hedges coupled with an expanded program.

Provision for Income Taxes

Three Months Ended Percent

February 28, 2022 February 28, 2021

(in thousands)

Change Six Months Ended Percent

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

(in thousands) (in thousands)

Provision for income taxes $ 49,597 $ 31,481 57.5 % $ 93,102 $ 61,235 52.0 %

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Income taxes for the interim periods presented have been included in the accompanying Consolidated Financial Statements on the basis of an estimated annual effective tax rate.

During the three months ended February 28, 2022, our income tax expense increased compared to the prior year period, primarily due to higher income during the three months ended February 28, 2022, including the impacts of the Merger.

The effective tax rate was slightly lower during the three months ended February 28, 2022 as compared to the three months ended February 28, 2021, primarily due to the relative mix of earnings and losses within the taxing jurisdictions in which we operate.

During the three and six months ended May 31, 2022, our income tax expense increased compared to the prior year period, primarily due to higher income during the three and six months ended May 31, 2022, including the impacts of the Merger.

The effective tax rate was slightly lower during the three and six months ended May 31, 2022 as compared to

the three and six months ended May 31, 2021, primarily due to the relative mix of earnings and losses within the taxing jurisdictions in which we operate.

Liquidity and Capital Resources

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Three Months Ended

February 28, 2022 November 30, 2021 February 28, 2021

May 31, 2022 November 30, 2021 May 31, 2021

(Amounts in thousands)

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We calculate CCC as days of the last fiscal quarter’s revenue outstanding in accounts receivable plus days of supply on hand in inventory, less days of the last fiscal quarter’s cost of revenue outstanding in accounts payable.

Our CCC was 24 days and 32 days as of February 28, 2022 and February 28, 2021, respectively.

Our CCC was 21 days and 26 days as of May 31, 2022 and May 31, 2021, respectively.

The decrease was primarily due to our DPO, which was impacted by the increase in the payment timing of accounts payable in our business primarily due to the impact of the Merger.

Our CCC was 24 days and 14 days as of February 28, 2022 and November 30, 2021, respectively.

The increase was primarily due to our DIO, which was impacted by a temporary increase to support revenue growth and strategic inventory purchases that are expected to sell through in the next 3 to 5 months.

Our CCC was 21 days and 14 days as of May 31, 2022 and November 30, 2021, respectively.

The increase was primarily due to our DIO, which was impacted by increases to support growth in our business.

To increase our market share and better serve our customers, we may further expand our operations through investments or acquisitions.

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Operating Activities

Net cash used in operating activities was $1.3 billion during the three months ended February 28, 2022, primarily due to a temporary increase in net working capital to support revenue growth and strategic inventory purchases that are expected to sell through in the next 3 to 5 months.

Net cash provided by operating activities was $25.0 million during the three months ended February 28, 2021, primarily due to decreases in accounts receivable and inventories, which were largely offset by a decrease in accounts payable.

The decreases in accounts receivable and inventories were primarily due to lower revenue during the three months ended February 28, 2021 compared to a seasonally high fourth quarter of fiscal year 2020.

Net cash used in operating activities was $284.5 million during the six months ended May 31, 2022, primarily due to an increase in inventories to support growth in our business, partially offset by an increase in accounts payable due to timing of payments and net income.

Net cash provided by operating activities was $304.3 million during the six months ended May 31, 2021, primarily due to net income and a decrease in accounts receivable, which was partially offset by a decrease in accounts payable.

The decrease in accounts receivable was primarily due to efficient collections during the three months ended May 31, 2021 as well as lower revenue compared to a seasonally high fourth quarter of fiscal year 2020.

The decrease in accounts payable was primarily due to timing of payments.

Investing Activities

Net cash used in investing activities during the three months ended February 28, 2022 was $25.2 million, primarily due to capital expenditures related to infrastructure investments to support growth in our business.

Net cash used in investing activities during the three months ended February 28, 2021 was $4.0 million, primarily due to capital expenditures related to infrastructure investments to support growth in our business.

Net cash used in investing activities during the six months ended May 31, 2022 and 2021 was $46.7 million and $7.5 million, respectively, primarily due to capital expenditures related to infrastructure investments to support growth in our business.

Financing Activities

Net cash provided by financing activities during the three months ended February 28, 2022 was $854.5 million, representing primarily short-term borrowings to fund working capital requirements.

In addition, we paid stockholders dividends of $28.8 million and we paid $23.8 million to repurchase common stock under our share repurchase program.

Net cash used in financing activities during the three months ended February 28, 2021 was $147.2 million, representing primarily the net transfer of cash and cash equivalents of $149.9 million to Concentrix in connection with the Separation and a return of cash to stockholders in the form of dividends of $10.3 million.

This was partially offset by net proceeds of $13.0 million from our borrowing arrangements in certain international locations to fund working capital requirements.

Net cash used in financing activities during the six months ended May 31, 2022 was $130.0 million, driven primarily by the payment of stockholder dividends of $57.6 million and the payment of $52.8 million to repurchase common stock under our share repurchase program.

Net cash used in financing activities during the six months ended May 31, 2021 was $222.0 million, representing primarily the net transfer of cash and cash equivalents of $149.9 million to Concentrix in connection with the Separation, along with $54.0 million representing a paydown of our revolving lines of credit, and a return of cash to stockholders in the form of dividends of $20.7 million.

Capital Resources

Our cash and cash equivalents totaled $510.2 million and $994.0 million as of February 28, 2022 and November 30, 2021, respectively.

Our cash and cash equivalents totaled $521.5 million and $994.0 million as of May 31, 2022 and November 30, 2021, respectively.

Our cash and cash equivalents held by international subsidiaries are no longer subject to U.S.

2 unchanged sentences

Historically, we have fully utilized and reinvested all foreign cash to fund our foreign operations and expansion.

If in the future our intentions change, and we repatriate the cash back to the United States, we will report in our Consolidated

Financial Statements the impact of state and withholding taxes depending upon the planned timing and manner of such repatriation.

If in the future our intentions change, and we repatriate the cash back to the United States, we will report in our Consolidated Financial Statements the impact of state and withholding taxes depending upon the planned timing and manner of such repatriation.

Presently, we believe we have sufficient resources, cash flow and liquidity within the United States to fund current and expected future working capital, investment and other general corporate funding requirements.

We believe that our available cash and cash equivalents balances, cash flows from operations and our existing sources of liquidity will be sufficient to satisfy our current and planned working capital and investment needs for the next twelve months in all geographies.

We believe that our available cash and cash equivalents balances, cash flows from operations and our existing sources of liquidity, including available capacity under our borrowing facilities, will be sufficient to satisfy our current and planned working capital and investment needs for the next twelve months in all geographies.

We also believe that our longer-term working capital, planned capital expenditures, anticipated stock repurchases, dividend payments and other general corporate funding requirements will be satisfied through cash flows from operations and, to the extent necessary, from our borrowing facilities and future financial market activities.

12 unchanged sentences

In addition, a program fee payable on the used portion of the lenders’ commitment, accrues at 0.75% per annum.

A facility fee is payable on the adjusted commitment of the lenders, to accrue at different tiers ranging between 0.30% per annum and 0.40% per annum depending on the amount of outstanding advances from time to time.

There was $749.0 million outstanding under the U.S.

AR Arrangement at February 28, 2022 at an interest rate of 1.18%.

A facility fee is payable on the adjusted commitment of

the lenders, to accrue at different tiers ranging between 0.30% per annum and 0.40% per annum depending on the amount of outstanding advances from time to time.

There were no amounts outstanding under the U.S.

AR Arrangement at November 30, 2021.

AR Arrangement at May 31, 2022 or November 30, 2021.

Under the terms of the U.S.

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The Company is party to a credit agreement, dated as of April 16, 2021 (the “TD SYNNEX Credit Agreement”) with the lenders party thereto and Citibank, N.A., as agent, pursuant to which we received commitments for the extension of a senior unsecured revolving credit facility not to exceed an aggregate principal amount of $3.5 billion, which revolving credit facility (the “TD SYNNEX revolving credit facility”) may, at our request but subject to the lenders’ discretion, potentially be increased by up to an aggregate amount of $500 million.

There were no amounts outstanding under the TD SYNNEX revolving credit facility at February 28, 2022 or November 30, 2021.

There were no amounts outstanding under the TD SYNNEX revolving credit facility at May 31, 2022 or November 30, 2021.

The TD SYNNEX Credit Agreement also includes a fully funded senior unsecured term loan (the “TD SYNNEX term loan” and, together with the TD SYNNEX revolving credit facility, the “TD SYNNEX credit facilities”) that had an original aggregate principal amount of $1.5 billion and has begun amortizing as described below.

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In addition to these borrowing rates, there is a commitment fee that ranges from 0.125% to 0.300% on any unused commitment under the TD SYNNEX revolving credit facility based on our public debt rating.

effective interest rate for the TD SYNNEX term loan was 1.59% and 1.49% as of February 28, 2022 and November 30, 2021, respectively.

The effective interest rate for the TD SYNNEX term loan was 2.44% and 1.49% as of May 31, 2022 and November 30, 2021, respectively.

The TD SYNNEX Credit Agreement contains various loan covenants that are customary for similar facilities for similarly rated borrowers that restrict our ability to take certain actions.

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The interest rate payable on each series of the Senior Notes will be subject to adjustment from time to time if the credit rating assigned to such series of Senior Notes is downgraded (or downgraded and subsequently upgraded).

We may redeem the Senior Notes, at any time in whole or from time to time in part, prior to (i) August 9, 2022 (the “2024 Par Call Date”) in the case of the 2024 Senior Notes, (ii) July 9, 2026 (the “2026 Par Call Date”) in the case of the 2026 Senior Notes, (iii) June 9, 2028 (the “2028 Par Call Date”) in the case of the 2028 Senior Notes, and (iv) May 9, 2031 in the case of the 2031 Senior Notes (the “2031 Par Call Date” and, together with the 2024 Par Call Date, the 2026 Par Call Date and the 2028 Par Call Date, each, a “Par Call Date” and together, the “Par Call Dates”), at a redemption price equal to the greater of (x) 100% of the aggregate principal amount of the applicable Senior Notes to be redeemed and (y) the sum of the present values of the remaining scheduled payments of the principal and interest on the Senior Notes, discounted to the date of redemption on a semi-annual basis at a rate equal to the sum of the applicable treasury rate plus 15 basis points for the 2024 Senior Notes, 20 basis points for the 2026 Senior Notes and 25 basis points for the 2028 Senior Notes and 2031 Senior Notes, plus in each case, accrued and unpaid interest thereon to, but excluding, the redemption date.

the 2028 Par Call Date, each, a “Par Call Date” and together, the “Par Call Dates”), at a redemption price equal to the greater of (x) 100% of the aggregate principal amount of the applicable Senior Notes to be redeemed and (y) the sum of the present values of the remaining scheduled payments of the principal and interest on the Senior Notes, discounted to the date of redemption on a semi-annual basis at a rate equal to the sum of the applicable treasury rate plus 15 basis points for the 2024 Senior Notes, 20 basis points for the 2026 Senior Notes and 25 basis points for the 2028 Senior Notes and 2031 Senior Notes, plus in each case, accrued and unpaid interest thereon to, but excluding, the redemption date.

We may also redeem the Senior Notes of any series at our option, at any time in whole or from time to time in part, on or after the applicable Par Call Date, at a redemption price equal to 100% of the principal amount of the Senior Notes to be redeemed.

On June 14, 2022, we commenced an offer to exchange (the "Exchange Offer") our outstanding unregistered Senior Notes for new registered notes (the "Exchange Notes").

The purpose of the Exchange Offer is to fulfill our obligations under the applicable registration rights agreement entered into in connection with the issuance of the Senior Notes.

The Company will not receive any proceeds from the Exchange Offer, and the aggregate principal amount of Exchange Notes that will be issued will be equal to the aggregate principal amount of Senior Notes that are surrendered pursuant to the Exchange Offer.

The terms of the Exchange Notes offered in the Exchange Offer are substantially identical to the terms of the respective series of the Senior Notes, except that the Exchange Notes will be registered under the Securities Act, and certain transfer restrictions, registration rights, and additional interest provisions relating to the Senior Notes will not apply to the Exchange Notes.

The Exchange Offer will expire on July 14, 2022, unless extended.

The settlement date for the Exchange Offer will occur promptly following the expiration of the Exchange Offer.

Other Borrowings and Term Debt

The Company has various other committed and uncommitted lines of credit with financial institutions, accounts receivable securitization arrangements, factoring of accounts receivable with recourse provisions, finance leases, short-term loans, term loans, credit facilities and book overdraft facilities, totaling approximately $618.8 million as of February 28, 2022.

Interest rates and other terms of borrowing under these lines of credit vary by country, depending on local market conditions.

There was $287.4 million outstanding on these facilities at February 28, 2022, at a weighted average interest rate of 2.98%, and there was $106.3 million outstanding at November 30, 2021, at a weighted average interest rate of 4.59%.

There was $133.6 million outstanding on these facilities at May 31, 2022, at a weighted average interest rate of 5.53%, and there was $106.3 million outstanding at November 30, 2021, at a weighted average interest rate of 4.59%.

Borrowings under certain of these lines of credit facilities are guaranteed by the Company or secured by eligible accounts receivable.

At February 28, 2022, we were also contingently liable for reimbursement obligations with respect to issued standby letters of credit in the aggregate outstanding amount of $102.0 million.

At May 31, 2022 , we were also contingently liable for reimbursement obligations with respect to issued standby letters of credit in the aggregate outstanding amount of $98.5 million .

These letters of credit typically act as a guarantee of payment to certain third parties in accordance with specified terms and conditions.

The maximum commitment amounts for local currency credit facilities have been translated into United States Dollars at February 28, 2022 exchange rates.

The maximum commitment amounts for local currency credit facilities have been translated into United States dollars at May 31, 2022 exchange rates.

Accounts Receivable Purchase Agreements

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In addition, certain of these programs also require that we continue to service, administer and collect the sold accounts receivable.

At February 28, 2022 and November 30, 2021, we had a total of $966.0 million and $759.9 million, respectively, of trade accounts receivable sold to

and held by the financial institutions under these programs.

Discount fees for these programs in the three months ended February 28, 2022 and February 28, 2021 tota led $3.0 million an d $0.6 million, r espectively.

At May 31, 2022 and November 30, 2021, we had a total of $947.6 million and $759.9 million, respectively, of trade accounts receivable sold to and held by the financial institutions under these programs.

Discount fees for these programs totaled $3.9 million and $6.9 million in the three and six months ended May 31, 2022, respectively, and $0.7 million and $1.2 million in the three and six months ended May 31, 2021 , r espectively.

Covenant Compliance

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They also limit our ability to incur additional debt, create liens, enter into agreements with affiliates, modify the nature of our business, and merge or consolida te.

As of February 28, 2022, we were in compliance with all current and material covenants for the above arrangements.

As of May 31, 2022, we were in compliance with all current and material covenants for the above arrangements.

Related Party Transactions

We have a business relationship with MiTAC Holdings Corporation ("MiTAC Holdings"), a publicly-traded company in Taiwan, which began in 1992 when MiTAC Holdings became our primary investor through its affiliates.

As of both February 28, 2022 and November 30, 2021, MiTAC Holdings and its affiliates beneficially owned approximately 9.5% of our outstanding common stock.

both May 31, 2022 and November 30, 2021, MiTAC Holdings and its affiliates beneficially owned approximately 9.6% of our outstanding common stock.

Matthew Miau, the Chairman Emeritus of our Board of Directors and a director, is the Chairman of MiTAC Holdings' and a director or officer of MiTAC Holdings' affiliates.

The shares owned by MiTAC Holdings are held by the following entities:

As of February 28, 2022

As of May 31, 2022

(in thousands)

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The following table presents the Company's transactions with MiTAC Holdings and its affiliates for the periods indicated:

Three Months Ended

February 28, 2022 February 28, 2021

(in thousands)

Three Months Ended Six Months Ended

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

(in thousands) (in thousands)

Purchases of inventories and services $ 54,474 $ 48,602 $ 101,050 $ 89,759

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The following table presents the Company’s receivable from and payable to MiTAC Holdings and its affiliates for the periods presented:

February 28, 2022 November 30, 2021

May 31, 2022 November 30, 2021

(in thousands)

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Recently Issued Accounting Pronouncements

For a summary of recent accounting pronouncements and the anticipated effects on our consolidated financial statements, see Note 2 - Summary of Significant Accounting Policies to the Consolidated Financial Statements, which can be found under Item 1 of this Report.

Quantitative and Qualitative Disclosures about Market Risk

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis