What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-10-04 compared with 2022-07-07 · 116 added, 145 removed, 322 unchanged (45% of the section changed)

5 unchanged sentences

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

These risks and uncertainties include, but are not limited to, those risks discussed herein and risks related to the risk that the legacy SYNNEX and legacy Tech Data businesses will not be integrated successfully or realize the anticipated benefits of the combined company , the COVID-19 global pandemic, the ability to retain key personnel, the seasonality of the buying patterns of our customers, concentration of sales to large customers, the loss or consolidation of one or more of our significant original equipment manufacturer, or OEM, suppliers or customers, market acceptance and product life of the products we assemble and distribute, competitive conditions in our industry and their impact on our margins, pricing and other terms with our OEM suppliers, our ability to gain market share, variations in supplier-sponsored programs, changes in our costs and operating expenses, dependence upon and trends in capital spending budgets in the IT industry, fluctuations in general economic conditions including impacts from Russia's invasion of Ukraine, change in the market for our customers' products, employee turnover, changes in tax laws, risks associated with our international operations, uncertainties and variability in demand by our reseller and integration customers, supply shortages or delays, any termination or reduction in our floor plan financing arrangements, changes in value of foreign currencies and interest rates and other risk factors contained in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended November 30, 2021 and below under Part II, Item 1A, “Risk Factors.” These forward-looking statements speak only as of the date hereof.

These risks and uncertainties include, but are not limited to, those risks discussed herein and risks related to the risk that the legacy SYNNEX and legacy Tech Data businesses will not be integrated successfully or realize the anticipated benefits of the combined company , the COVID-19 global pandemic, the ability to retain key personnel, the seasonality of the buying patterns of our customers, concentration of sales to large customers, the loss or consolidation of one or more of our significant original equipment manufacturer, or OEM, suppliers or customers, market acceptance and product life of the products we assemble and distribute, competitive conditions in our industry and their impact on our margins, pricing and other terms with our OEM suppliers, our ability to gain market share, variations in supplier-sponsored programs, changes in our costs and operating expenses, increased inflation, dependence upon and trends in capital spending budgets in the IT industry, fluctuations in general economic conditions including impacts from Russia's invasion of Ukraine, change in the market for our customers' products, employee turnover, changes in tax laws, risks associated with our international operations, uncertainties and variability in demand by our reseller and integration customers, supply shortages or delays, any termination or reduction in our floor plan financing arrangements, changes in value of foreign currencies and interest rates and other risk factors contained in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended November 30, 2021 and below under Part II, Item 1A, “Risk Factors.” These forward-looking statements speak only as of the date hereof.

We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based, unless otherwise required by law.

16 unchanged sentences

After completion of the Merger, we reviewed our reportable segments as there was a change in our chief executive officer, who is also our chief operating decision maker.

Our chief operating decision maker has a leadership structure aligned with the geographic locations of the Americas, Europe and Asia-Pacific and Japan (“APJ”) and reviews and allocates resources based on these geographic locations.

As a result, as of September 1, 2021 we began operating in three reportable segments based on our geographic locations:

Our chief operating decision maker has a leadership structure aligned with the geographic regions of the Americas, Europe and Asia-Pacific and Japan (“APJ”) and reviews and allocates resources based on these geographic regions.

As a result, as of September 1, 2021 we began operating in three reportable segments based on our geographic regions:

the Americas, Europe and APJ.

14 unchanged sentences

This end-market demand is influenced by many factors including the introduction of new IT products and software by OEMs, replacement cycles for existing IT products, trends toward cloud computing, overall economic growth and general business activity.

A difficult and challenging economic environment may also lead to consolidation or decline in the IT industries and increased price-based competition.

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

A difficult and challenging economic environment, including due to the impacts of increased inflation and Russia's invasion of Ukraine, may also lead to consolidation or decline in the IT industries and increased price-based competition.

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

The disruptions due to COVID-19 have impacted our business including logistics operations.

Despite improvements in the global economy since the onset of the pandemic, the emergence of the Delta and Omicron variants and other mutations bring uncertainty to continued economic recovery.

Despite improvements in the global economy since the onset of the pandemic, resurgences of COVID-19 variants and the related impacts bring uncertainty to continued economic recovery.

As a result, the Company cannot at this time accurately predict what effects these conditions will have on its operations and financial condition, including due to the uncertainties relating to the severity and duration of the pandemic, the effect on its customers and customer demand and the length of t he restrictions and closures imposed by various governments, including recent restrictions and closures within the Asia-Pacific region .

2 unchanged sentences

Critical Accounting Policies and Estimates

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.

During the nine months ended August 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 nine months ended August 31, 2022, we adopted certain other new accounting pronouncements.

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

6 unchanged sentences

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

Three Months Ended Six Months Ended

Three Months Ended Nine Months Ended

Statements of Operations Data:

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

August 31, 2022 August 31, 2021 August 31, 2022 August 31, 2021

Revenue 100.00 % 100.00 % 100.00 % 100.00 %

5 unchanged sentences

Interest expense and finance charges, net (0.34) % (0.51) % (0.31) % (0.45) %

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

Other (expense) income, net (0.01) % 0.09 % (0.03) % 0.02 %

Income before income taxes 1.22 % 2.43 % 1.21 % 2.30 %

6 unchanged sentences

• Non-GAAP operating margin, which is non-GAAP operating income, as defined above, divided by revenue.

• Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) which is net income before interest, taxes, depreciation and amortization, adjusted to exclude other income (expense), net, acquisition, integration and restructuring costs, share-based compensation expense, and purchase accounting adjustments.

• Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) which is net income before interest, taxes, depreciation and amortization, adjusted to exclude other (expense) income, net, acquisition, integration and restructuring costs, share-based compensation expense, and purchase accounting adjustments.

• Non-GAAP net income, which is net income, adjusted to exclude acquisition, integration and restructuring costs, amortization of intangible assets, share-based compensation expense, purchase accounting adjustments, income taxes related to the aforementioned items, as well as a capital loss carryback benefit.

22 unchanged sentences

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

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

August 31, 2022 August 31, 2021 August 31, 2022 August 31, 2021

Operating Income and Operating Margin - Consolidated (in thousands)

6 unchanged sentences

Non-GAAP operating income $ 398,283 $ 168,232 $ 1,228,461 $ 494,195

Operating margin 1.66 % 2.53 % 1.55 % 2.68 %

GAAP operating margin 1.57 % 2.85 % 1.55 % 2.74 %

Non-GAAP operating margin 2.59 % 3.23 % 2.67 % 3.09 %

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

August 31, 2022 August 31, 2021 August 31, 2022 August 31, 2021

Operating Income and Operating Margin - Americas (in thousands)

8 unchanged sentences

Non-GAAP operating margin 2.85 % 3.30 % 2.84 % 3.07 %

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

August 31, 2022 August 31, 2021 August 31, 2022 August 31, 2021

Operating Income and Operating Margin - Europe (in thousands)

8 unchanged sentences

Non-GAAP operating margin 2.07 % 4.03 % 2.32 % 4.93 %

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

August 31, 2022 August 31, 2021 August 31, 2022 August 31, 2021

Operating Income and Operating Margin - APJ (in thousands)

7 unchanged sentences

Non-GAAP operating margin 2.50 % 1.73 % 2.67 % 2.35 %

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

August 31, 2022 August 31, 2021 August 31, 2022 August 31, 2021

Adjusted EBITDA - Consolidated (in thousands)

6 unchanged sentences

EBITDA $ 341,199 $ 168,020 $ 1,060,979 $ 485,487

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

Other expense (income), net 1,852 (4,796) 12,375 (2,707)

Acquisition, integration and restructuring costs 42,025 7,258 115,002 13,193

2 unchanged sentences

Adjusted EBITDA $ 422,137 $ 176,991 $ 1,303,758 $ 514,119

_________________________

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

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

August 31, 2022 August 31, 2021 August 31, 2022 August 31, 2021

Net Income - Consolidated (in thousands)

7 unchanged sentences

Non-GAAP net income $ 263,424 $ 111,925 $ 818,125 $ 319,904

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

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

Diluted EPS $ 1.55 $ 1.81 $ 4.47 $ 5.27

6 unchanged sentences

Non-GAAP diluted EPS $ 2.74 $ 2.14 $ 8.50 $ 6.12

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

Three and Nine Months Ended August 31, 2022 and August 31, 2021

Three Months Ended Percent

Change Six Months Ended Percent

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

Change Nine Months Ended Percent

August 31, 2022 August 31, 2021 August 31, 2022 August 31, 2021

(in thousands) (in thousands)

3 unchanged sentences

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 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.

Revenue increased during the three and nine months ended August 31, 2022, as compared to the prior year period, primarily due to an increase in sales resulting from the impact of the Merger of approximately $9 billion and $28 billion, respectively, as well as broad-based demand for technology equipment.

Three Months Ended Percent

Change Six Months Ended Percent

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

Change Nine Months Ended Percent

August 31, 2022 August 31, 2021 August 31, 2022 August 31, 2021

(in thousands) (in thousands)

2 unchanged sentences

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 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.

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

The slight decrease in gross margin during the three months ended August 31, 2022, as compared to the three months ended August 31, 2021, along with the increase during the nine months ended August 31, 2022, as compared to the nine months ended August 31, 2021, is primarily due to product and customer 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

Change Nine Months Ended Percent

August 31, 2022 August 31, 2021 August 31, 2022 August 31, 2021

(in thousands) (in thousands)

3 unchanged sentences

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.

During the three and nine months ended August 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.

2 unchanged sentences

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.

Professional services costs are primarily comprised of legal expenses and tax and other consulting services.

Personnel and other costs are primarily comprised of costs related to retention and other bonuses, as well as severance costs.

Long-lived assets charges are comprised of accelerated depreciation and amortization expense of $52.9 million recorded due to changes in asset useful lives in conjunction with the consolidation of certain IT systems.

Professional services costs are primarily comprised of IT and other consulting services, as well as legal expenses.

Personnel and other costs are primarily comprised of costs related to retention and other bonuses, as well as severance and duplicative labor costs.

Long-lived assets charges are primarily comprised of accelerated depreciation and amortization expense of $57.3 million recorded during the nine months ended August 31, 2022 due to changes in asset useful lives in conjunction with the consolidation of certain IT systems, as well as impairment charges.

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 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

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

Three Months Ended Nine Months Ended

August 31, 2022 August 31, 2021 August 31, 2022 August 31, 2021

(in thousands)

4 unchanged sentences

Total $ 39,817 $ 4,133 $ 148,442 $ 10,068

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.

During the three and nine months ended August 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

Prior to the Merger, Tech Data implemented its GBO 2 Program that includes investments to optimize and standardize processes and apply data and analytics to be more agile in a rapidly evolving environment, increasing productivity, profitability and optimizing net-working capital.

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

TD SYNNEX continued 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 costs.

1 unchanged sentence

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

There were no acquisition, integration and restructuring costs incurred under the GBO 2 Program during the three and nine months ended August 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 nine months ended August 31, 2022 included the following:

Three Months Ended Nine Months Ended

August 31, 2022 August 31, 2022

(in thousands)

2 unchanged sentences

Total $ 6,601 $ 23,824

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

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

Three Months Ended Nine Months Ended

August 31, 2022 August 31, 2022

(in thousands)

3 unchanged sentences

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

Three Months Ended Nine Months Ended

August 31, 2022 August 31, 2022

(in thousands)

4 unchanged sentences

Three Months Ended Percent

Change Six Months Ended Percent

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

Change Nine Months Ended Percent

August 31, 2022 August 31, 2021 August 31, 2022 August 31, 2021

(in thousands) (in thousands)

1 unchanged sentence

Operating margin 1.57 % 2.85 % 1.55 % 2.74 %

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.

Operating income increased during the three and nine months ended August 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 nine months ended August 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.

Interest Expense and Finance Charges, Net

Three Months Ended Percent

Change Six Months Ended Percent

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

Change Nine Months Ended Percent

August 31, 2022 August 31, 2021 August 31, 2022 August 31, 2021

(in thousands) (in thousands)

1 unchanged sentence

Percentage of revenue 0.34 % 0.51 % 0.31 % 0.45 %

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 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

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, our accounts receivable securitization facilities and our term loans, and fees associated with the sale of accounts receivable, partially offset by income earned on our cash investments.

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

Other (Expense) Income, Net

Three Months Ended Percent

Change Six Months Ended Percent

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

Change Nine Months Ended Percent

August 31, 2022 August 31, 2021 August 31, 2022 August 31, 2021

(in thousands) (in thousands)

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

Other (expense) income, net $ (1,852) $ 4,796 (138.6) % $ (12,375) $ 2,707 (557.1) %

Percentage of revenue (0.01) % 0.09 % (0.03) % 0.02 %

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.

Amounts recorded as other (expense) income, 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) income, net during the three and nine months ended August 31, 2022, as compared to the prior year period, was primarily due to a gain on sale of an investment in the prior year and increased costs for foreign exchange hedges coupled with an expanded program.

Provision for Income Taxes

Three Months Ended Percent

Change Six Months Ended Percent

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

Change Nine Months Ended Percent

August 31, 2022 August 31, 2021 August 31, 2022 August 31, 2021

(in thousands) (in thousands)

3 unchanged sentences

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 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.

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

In connection with the Merger, in the fourth quarter of fiscal 2021 we restructured our foreign financing structure, as well as select legal entities, in anticipation of legally integrating legacy Tech Data and SYNNEX foreign operations.

In addition to the treasury efficiencies, these restructurings resulted in a one-time domestic capital loss which would offset certain domestic capital gains when carried back under United States tax law to tax year 2020, resulting in a tax benefit of approximately $45 million in the fourth quarter of fiscal 2021.

During the three and nine months ended August 31, 2022, we recorded additional tax benefits of $5.1 million and $8.3 million, respectively, related to the capital loss carryback.

The effective tax rate was lower during the three and nine months ended August 31, 2022 as compared to the three and nine months ended August 31, 2021, primarily due to the capital loss carryback benefit, as well as the relative mix of earnings and losses within the taxing jurisdictions in which we operate.

Liquidity and Capital Resources

1 unchanged sentence

Three Months Ended

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

August 31, 2022 November 30, 2021 August 31, 2021

(Amounts in thousands)

14 unchanged sentences

Our working capital needs are primarily to finance accounts receivable and inventory.

We rely heavily on term loans, accounts receivable arrangements, our securitization programs, our revolver programs and trade credit from vendors for our working capital needs.

We rely heavily on term loans, accounts receivable arrangements, our securitization programs, our revolver programs and net trade credit from vendors for our working capital needs.

We have financed our growth and cash needs to date primarily through cash generated from operations and financing activities.

2 unchanged sentences

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 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 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.

Our CCC was 23 days and 14 days as of August 31, 2022 and November 30, 2021, respectively.

The increase was primarily due to our DIO, which

was impacted by an increase in inventory to support growth in our business, partially offset by a corresponding increase in our DPO.

Our CCC was 23 days and 32 days as of August 31, 2022 and August 31, 2021, respectively.

The decrease was primarily due to the impact of the Merger, including an increase in our DPO due to the payment timing of accounts payable in our business, partially offset by 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.

2 unchanged sentences

Operating Activities

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.

Net cash used in operating activities was $351.8 million during the nine months ended August 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 $248.8 million during the nine months ended August 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 August 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 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.

Net cash used in investing activities during the nine months ended August 31, 2022 and 2021 was $77.0 million and $2.9 million, respectively, primarily due to capital expenditures related to infrastructure investments to support growth in our business.

Financing Activities

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.

Net cash used in financing activities during the nine months ended August 31, 2022 was $159.2 million, driven primarily by the payment of stockholder dividends of $86.2 million and the payment of $83.0 million to repurchase common stock under our share repurchase program.

Net cash provided by financing activities during the nine months ended August 31, 2021 was $2,232.7 million, representing primarily proceeds received on issuance of the Senior Notes of $2.5 billion to support the Merger, partially offset by the net transfer of cash and cash equivalents of $149.9 million to Concentrix in connection with the Separation, along with $64.5 million representing a paydown of our revolving lines of credit, a return of cash to stockholders in the form of dividends of $31.1 million and $26.8 million of issuance costs related to the Senior Notes.

Capital Resources

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 totaled $350.8 million and $994.0 million as of August 31, 2022 and November 30, 2021, respectively.

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

7 unchanged sentences

Historically, we have renewed our accounts receivable securitization program and our parent company credit facilities on, or prior to, their respective expiration dates.

We have no reason to believe that these and other arrangements will not be renewed or replaced as we continue to be in good credit standing with the participating financial institutions.

We have no reason to believe that these and other arrangements

will not be renewed or replaced as we continue to be in good credit standing with the participating financial institutions.

We have had similar borrowing arrangements with various financial institutions throughout our years as a public company.

3 unchanged sentences

Under the terms of the U.S.

AR Arrangement, as amended in December 2021, we and our subsidiaries that are party to the U.S.

AR Arrangement, we and our subsidiaries that are party to the U.S.

AR Arrangement can borrow up to a maximum of $1.5 billion based upon eligible trade accounts receivable.

1 unchanged sentence

The effective borrowing cost under the U.S.

AR Arrangement is a blended rate based upon the composition of the lenders, that includes prevailing dealer commercial paper rates and a rate based upon LIBOR.

AR Arrangement is a blended rate based upon the composition of the lenders, that includes prevailing dealer commercial paper rates and a rate based upon SOFR.

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.

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 May 31, 2022 or November 30, 2021.

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

Under the terms of the U.S.

1 unchanged sentence

subsidiaries sell, on a revolving basis, our receivables (other than certain excluded receivables) to a wholly-owned, bankruptcy-remote subsidiary.

Such receivables, which are recorded in the Consolidated Balance Sheet, totaled approximately $2.9 billion as of August 31, 2022.

The borrowings are funded by pledging all of the rights, title and interest in the receivables acquired by our bankruptcy-remote subsidiary as security.

3 unchanged sentences

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 May 31, 2022 or November 30, 2021.

There were no amounts outstanding under the TD SYNNEX revolving credit facility at August 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.

6 unchanged sentences

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.

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 effective interest rate for the TD SYNNEX term loan was 3.91% and 1.49% as of August 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.

7 unchanged sentences

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).

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 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.

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.

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

We did not receive any proceeds from the Exchange Offer, and the aggregate principal amount of Exchange Notes that were issued was equal to the aggregate principal amount of Senior Notes that were surrendered pursuant to the Exchange Offer.

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

The Exchange Offer expired on July 14, 2022 and settlement occurred on July 15, 2022.

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 $566.2 million as of May 31, 2022.

We have various other committed and uncommitted lines of credit with financial institutions, accounts receivable securitization arrangements, finance leases, short-term loans, term loans, credit facilities and book overdraft facilities, totaling approximately $585.0 million as of August 31, 2022.

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

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%.

There was $177.2 million outstanding on these facilities at August 31, 2022, at a weighted average interest rate of 6.42%, 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 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 May 31, 2022 exchange rates.

At August 31, 2022 , we were also continge ntly liable for reimbursement obligations with respect to issued standby letters of credit in the aggregate outstanding amount of $86.6 million.

T hese 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 August 31, 2022 exchange rates.

Accounts Receivable Purchase Agreements

2 unchanged sentences

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

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.

At August 31, 2022 and November 30, 2021, we had a total of $1.35 billion 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 $5.0 million and $11.9 million in the three and nine months ended August 31, 2022, respectively, and $0.6 million and $1.8 million in the three and nine months ended August 31, 2021 , r espectively.

Covenant Compliance

Our credit facilities have a number of covenants and restrictions that require us to maintain specified financial ratios.

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

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 consolid ate.

As of August 31, 2022, we were in compliance with the financial covenant requirements 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.

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 May 31, 2022

(in thousands)

MiTAC Holdings (1)

Synnex Technology International Corp.

_______________

(1) Shares are held via Silver Star Developments Ltd., a wholly-owned subsidiary of MiTAC Holdings.

Excludes 194 thousand shares held directly by Mr.

Miau, 217 thousand shares indirectly held by Mr.

Miau through a charitable remainder trust, and 190 thousand shares held by his spouse.

(2) Synnex Technology International Corp.

(“Synnex Technology International”) is a separate entity from us and is a publicly-traded corporation in Taiwan.

Shares are held via Peer Development Ltd., a wholly-owned subsidiary of Synnex Technology International.

MiTAC Holdings owns a noncontrolling interest of 14.1% in MiTAC Incorporated, a privately-held Taiwanese company, which in turn holds a noncontrolling interest of 15.7% in Synnex Technology International.

Neither MiTAC Holdings nor Mr.

Miau is affiliated with any person(s), entity, or entities that hold a majority interest in MiTAC Incorporated.

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

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

Sale of products to MiTAC Holdings and affiliates 1,076 242 1,136 460

Payments made for rent and overhead costs

for use of facilities of MiTAC Holdings and affiliates, net 45 47 81 79

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

May 31, 2022 November 30, 2021

(in thousands)

Receivable from related parties (included in Accounts receivable, net) $ 18,090 $ 21,841

Payable to related parties (included in Accounts payable) 26,727 32,802

For a summary of related party transactions, see Note 12 - Related Party Transactions to the Consolidated Financial Statements, which can be found under Part I, Item 1 of this Report.

Recently Issued Accounting Pronouncements

5 unchanged sentences

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