What changed in this filing

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Item 1A. Risk Factors

2024-01-26 compared with 2023-01-24 · 43 added, 56 removed, 420 unchanged (19% of the section changed)

44 unchanged sentences

Our future success is highly dependent on our relationships with a small number of OEM suppliers.

For example, sales of HP Inc.

products and services comprised approximately 10%, 12% and 15% of our total revenue for fiscal years 2022, 2021 and 2020, respectively, and sales of Apple Inc.

products and services comprised approximately 11% of our total revenue for fiscal year 2022.

For example, sales of Apple Inc.

products and services comprised approximately 11% of our total revenue for both fiscal years 2023 and 2022, and sales of HP Inc.

products and services comprised approximately 10% and 12% of our total revenue for fiscal years 2022 and 2021, respectively.

Our OEM supplier agreements typically are short-term and may be terminated without cause upon short notice.

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A decrease in revenue could negatively affect the level of volume rebates received from our OEM suppliers and thus, our gross margin.

Because some rebates from OEM suppliers are based on percentage increases in sales of products, it may become more difficult for us to achieve the percentage growth in sales

required for larger discounts due to the current size of our revenue base.

Because some rebates from OEM suppliers are based on percentage increases in sales of products, it may become more difficult for us to achieve the percentage growth in sales required for larger discounts due to the current size of our revenue base.

A decrease or elimination of purchase discounts and rebates from our OEM suppliers would adversely affect our business and operating results.

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In most cases, we have no guaranteed price or delivery agreements with our OEM suppliers.

We have experienced a supply shortage of certain products as a result of strong demand or problems experienced by our OEM suppliers, including during fiscal years 2022, 2021 and 2020 due to global supply chain constraints.

We have experienced supply shortages of certain products as a result of strong demand or problems experienced by our OEM suppliers.

If shortages or delays persist, the price of those products may increase, or the products may not be available at all.

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Our recent and future acquisitions or investments may not be successful, and if we fail to realize the anticipated benefits of these acquisitions or investments, our business and operating results could be harmed.

We have incurred and will continue to incur significant acquisition and integration-related costs in connection with the Merger.

We have incurred a number of non-recurring costs associated with the Merger and combining the operations of Tech Data and SYNNEX, including professional services costs, personnel and other costs, long-lived assets charges and stock-based compensation expense.

We continue to assess the magnitude of these costs, and additional unanticipated costs may be incurred related to the Merger and the integration of Tech Data and SYNNEX.

Although we expect that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, should allow us to offset integration-related costs over time, this net benefit may not be achieved in the near term, or at all.

Our goodwill and identifiable intangible assets could become impaired, which could have a material non-cash adverse effect on our results of operations.

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Our annual goodwill impairment testing indicated no goodwill impairments for any of the years presented.

As of November 30, 2022, the Europe and APJ reporting units' goodwill balances are $1.3 billion and $74.8 million, respectively, and the fair value of the reporting unit exceeded its carrying value by 6% and 9% as of the annual goodwill impairment testing date, respectively.

If actual results in our Europe or APJ reporting units are substantially lower than the projections used in our valuation methodology, or if market discount rates substantially increase or our market capitalization substantially decreases, then our future valuations could be adversely affected.

We could be required to record a significant charge to earnings in our financial statements during the period in which any impairment of our goodwill or intangible assets is determined, negatively impacting our results of operations.

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Our business requires significant levels of capital to finance accounts receivable and product inventory that is not financed by trade creditors.

If cash from available sources is insufficient, proceeds from our accounts receivable

securitization and revolving credit programs are limited or cash is used for unanticipated needs, we may require additional capital sooner than anticipated.

If cash from available sources is insufficient, proceeds from our accounts receivable securitization and revolving credit programs are limited or cash is used for unanticipated needs, we may require additional capital sooner than anticipated.

In the event we are required, or elect, to raise additional funds, we may be unable to do so on favorable terms, or at all, and may incur expenses in raising the additional funds.

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We extend credit to our customers for a significant portion of our sales to them and they have a period of time, generally 30 days after the date of invoice, to make payment.

However, in certain cases, for some of our larger customers, we offer longer terms of payment.

However, in certain cases, for some of our customers, we offer longer terms of payment.

As a result, we are subject to the risk that our customers will not pay on time or at all.

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Except for certain of our key executives, we generally do not have employment agreements with our co-workers.

We also do not carry “key person” insurance coverage for any of our key

We also do not carry “key person” insurance coverage for any of our key executives.

We compete for qualified senior management and technical personnel.

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We have significant operations in our facilities located in the Americas, Europe and APJ.

Certain of our facilities, including one of our corporate headquarters locations in Clearwater, Florida, are located in geographic areas that heighten our exposure to hurricanes, tropical storms and other severe weather events.

Certain of our facilities, including our corporate headquarters locations in Clearwater, Florida and Fremont, California, are located in geographic areas that heighten our exposure to hurricanes, tropical storms, earthquakes and other severe weather events.

Any prolonged disruption in the operations of our facilities, whether due to technical difficulties, power failures, break-ins, destruction, damage to, or prolonged closure of, the facilities as a result of a natural disaster, fire, pandemic or any other reason, could harm our operating results.

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In exchange for a fee that is either subsidized by our OEM suppliers or paid by us, we transfer the risk of loss on the sale of our products to the floor plan companies.

We currently receive payment from these financing companies within approximately 15 to 30 days from the date of the sale, which allows our business to operate at much lower relative working capital levels than if such programs were not available.

These arrangements with financing companies allow our business to operate at much lower relative working capital levels than if such programs were not available.

If these floor plan arrangements are terminated or substantially reduced, the need for more working capital and the increased financing cost could harm our business and operating results.

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In addition, the interest rate payable on our Senior Notes, our revolving and term loan credit agreement and certain other debt instruments is subject to adjustment from time to time if our credit rating is downgraded.

The expected replacement of the LIBOR benchmark interest rate and other interbank offered rates with new benchmark rate indices may have an impact on our financing costs.

As of November 30, 2022, we had approxim ately $1.4 billion of term loan debt outstanding und er facilities with interest rates based on LIBOR.

Some of our credit facilities include fallback language that seeks to facilitate an agreement with our lenders on a replacement rate for LIBOR in the event of its discontinuance or that automatically replaces LIBOR with benchmark rates based on the Secured Overnight Financing Rate ("SOFR") or other benchmark replacement rates upon certain triggering events.

The discontinuation, reform, or replacement of LIBOR or any other benchmark rates may result in fluctuating interest rates that may have a negative impact on our interest expense and our profitability.

Potential changes to the underlying floating-rate indices and reference rates may have an adverse impact on our liabilities indexed to LIBOR and could have a negative impact on our profitability and cash flows.

We continue to evaluate the operational and other effects of such changes, including possible impacts on our accounting for interest rate hedging agreements.

Our variable rate indebtedness subjects us to interest rate risk, which could cause our indebtedness service obligations to increase significantly.

Interest rates in the United States and other countries where we operate increased during fiscal year 2022 and may continue to increase in the future.

Interest rates in the United States and other countries where we operate have increased and may continue to increase in the future.

As a result, interest rates on the obligations under certain of our credit facilities, our and our subsidiaries’ respective accounts receivable securitization programs and debt facilities, or other variable rate debt incurrences or offerings could be higher than current levels.

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While some of our debt arrangements have contractually negotiated spreads, any changes to these spreads in connection with renegotiations of our credit facilities could adversely affect our results of operations.

We have entered into interest rate swaps with financial institutions to effectively convert a portion of our floating rate debt to a fixed interest rate to manage our exposure to fluctuations in interest rates.

While we have entered into interest rate hedging agreements with respect to our borrowings under certain of our credit facilities, such agreements are not expected to fully mitigate against interest rate risk.

In the event of the nonperformance by the counterparties, we are exposed to credit losses.

Risks Related to Our Relationships with Apollo Global Management, Inc.

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As part of the Merger, 44 million shares of TD SYNNEX common stock were issued to Apollo.

Additionally, the Company entered into an Investor Rights Agreement at the closing of the Merger, which provides that the board of directors be comprised of eleven directors, and that affiliates of Apollo have the right to nominate (i) up to four directors, if Apollo and its affiliates own 30% or more of the outstanding shares of TD SYNNEX common stock;

Additionally, the Company entered into an Investor Rights Agreement at the closing of the Merger, which provides that the board of directors be comprised of at least eleven directors, and that affiliates of Apollo have the right to nominate (i) up to four directors , if Apollo and its affiliates own 30% or more of the outstanding shares of TD SYNNEX common stock;

(ii) up to three directors if Apollo and its affiliates own between 20% and 30% of the outstanding shares of TD SYNNEX common stock;

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As a result, Apollo is in a position to influence (subject to organizational documents and Delaware law) the composition of the Company’s board of directors and the outcome of corporate actions requiring stockholder approval, such as mergers, business combinations and dispositions of assets, among other corporate transactions.

This concentration of investment and voting power could discourage others from initiating a potential merger, takeover or other change of control transaction that may otherwise be beneficial to TD SYNNEX and its stockholders, which could adversely affect the market price of TD SYNNEX common stock.

This concentration of investment and voting power could discourage others from initiating a potential merger, takeover or other change of

control transaction that may otherwise be beneficial to TD SYNNEX and its stockholders, which could adversely affect the market price of TD SYNNEX common stock.

There could be potential conflicts of interest between us and MiTAC Holdings Corporation and its affiliates, which could affect our business and operating results.

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For example, we currently purchase inventories from MiTAC Holdings and its affiliates.

Similar risks could exist as a result of Matthew Miau’s positions as our Chairman Emeritus, a member of our Board of Directors, the Chairman of MiTAC Holdings and as a director or officer of MiTAC Holdings’ affiliates.

Similar risks could exist as a result of Matthew F.C.

Miau’s positions as our Chairman Emeritus, a member of our Board of Directors, the Chairman of MiTAC Holdings and as a director or officer of MiTAC Holdings’ affiliates.

For fiscal year 2023, Mr.

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We have granted registration rights to Apollo pursuant to an Investors Rights Agreement dated September 1, 2021, and to MiTAC Holdings pursuant to a Letter Agreement dated September 3, 2021, that require us to register their shares for resale in certain circumstances.

Sales of a substantial number of shares of the Company’s common stock in the

public market, or the perception that these sales may occur, could cause the market price of our common stock to decline.

On January 30, 2023, we announced the closing of a secondary public offering (the "January Offering") of an aggregate of approximately 5.2 million shares of our common stock that were sold by certain entities managed by Apollo.

Additionally, on October 10, 2023, we entered into an underwriting agreement relating to the secondary public offering (the "October Offering") of an aggregate of approximately 6.8 million shares sold by certain entities managed by affiliates of Apollo and certain entities affiliated with MiTAC Holdings Corporation (collectively, the "Selling Stockholders").

In addition, the Selling Stockholders granted the underwriters an option to purchase up to an additional 1,012,500 shares of our common stock.

The October Offering was completed on October 13, 2023 and the underwriters exercised their option in full.

We did not receive any of the proceeds from the sale of shares in the January Offering or the October Offering.

Any additional future sales of a substantial number of shares of the Company’s common stock in the public market, or the perc eption that these sales may occur, could cause the market price of our common stock to decline.

These sales, or the possibility of these sales, also may make it more difficult for us to sell equity securities in the future.

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We have, in the past, experienced decreases in demand and we anticipate that the industries we operate in will be subject to a high degree of cyclicality in the future.

Softening demand for our products and services caused by an ongoing economic downturn and over-capacity may impact our revenue, as well the salability of inventory and collection of reseller and retail customer accounts receivable.

Softening demand for our products and services caused by economic downturns and over-capacity may impact our revenue, as well the salability of inventory and collection of reseller and retail customer accounts receivable.

In addition, if we are not able to adequately adapt to the emergence of new technology or customer demand, such as cloud-based IT infrastructure and technology-as-a-service, our future operating results could be adversely affected.

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We may be unable to successfully respond to and manage our business in light of industry developments and trends.

As end-users migrate to cloud-based IT infrastructure and technology-as-a-service, sales of

hardware products may be reduced, thereby negatively impacting our operating results.

As end-users migrate to cloud-based IT infrastructure and technology-as-a-service, sales of hardware products may be reduced, thereby negatively impacting our operating results.

Also crucial to our success in managing our operations is our ability to achieve additional economies of scale.

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The widespread outbreak of an illness or any other communicable disease, or any other public health crisis, could adversely affect our business, results of operations and financial condition.

We could be negatively impacted by the widespread outbreak of an illness or any other communicable disease, or any other public health crisis that results in economic and trade disruptions, including the disruption of global supply chains.

In December 2019, there was an outbreak of a new strain of coronavirus, COVID-19.

On March 11, 2020, the World Health Organization characterized COVID-19 as a pandemic.

The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains and workforce participation due to “shelter-in-place” restrictions by various governments worldwide and created significant volatility and disruption of financial markets.

The extent of the impact of the COVID-19 pandemic on our future operational and financial performance, including our ability to execute our business strategies and initiatives in the expected time frame, will depend on future developments, including new COVID-19 variants;

the effect on our customers and demand for our products and services;

We could be negatively impacted by the widespread outbreak of an illness or any other communicable disease, such as the outbreak of COVID-19 that occurred during fiscal 2020, or any other public health crisis that results in economic and trade disruptions, including the disruption of global supply chains.

The extent of the impact of any such public health crisis on our future operational and financial performance, including our ability to execute our business strategies and initiatives in the expected time frame, could depend on future developments, including the effect on our customers and demand for our products and services;

our ability to sell and provide our products and services, including as a result of travel restrictions and people working remotely;

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any closures of our or our customers’ or partners’ offices and facilities;

and the impact of governmental actions or mandates imposed in response to COVID-19, all of which are uncertain and cannot be predicted.

and the impact of governmental actions or mandates imposed in response to any such public health crisis, all of which are uncertain and cannot be predicted.

An extended period of global supply chain and economic disruption could materially affect our business, our results of operations, our access to sources of liquidity, the carrying value of our goodwill and intangible assets, our financial condition and our stock price.

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dollars is also impacted by fluctuations in foreign currency exchange rates, which may positively or negatively impact our results of operations.

For example, in

fiscal year 2022, several foreign currencies in which we transact business depreciated against the U.S.

dollar, including the Euro and the Japanese yen, which adversely affected the results of operations of our Europe and APJ segments for the year.

For example, in the past, several foreign currencies in which we transact business depreciated against the U.S.

dollar, including the euro and the Japanese yen, which adversely affected the results of operations of our Europe and APJ segments in that year.

In addition, the value of our equity investment in foreign countries may fluctuate based upon changes in foreign currency exchange rates.

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• uncertainty in obtaining tax holiday extensions or expiration or loss of tax holidays in various jurisdictions.

The Organization for Economic Cooperation and Development has been working on the Base Erosion and Profit Shifting Project, and has issued and will continue to issue, guidelines and proposals that may change various aspects of the existing framework under which our tax obligations are determined in many of the countries in which we do business.

The Organization for Economic Cooperation and Development has been working on the Base Erosion and Profit Shifting Project, which would grant additional taxing rights over profits earned by multinational enterprises to the countries in which their products are sold and services rendered.

Rules adopted in response to this project would establish a global per-country minimum tax of 15%, and the European Union has approved a directive requiring members to adopt similar provisions into their respective domestic laws.

These rules would become effective for fiscal years starting on or after December 31, 2023 (fiscal year 2025 for the Company).

Significant details around the rules are still under formulation and the timing around enactment remains uncertain.

Due to these new rules, our income tax expense could be unfavorably impacted as the legislation becomes effective in countries in which we conduct business.

We will continue to monitor the pending legislation and implementation that follows by individual countries.

Certain countries are evaluating their tax policies and regulations, which could affect international business and may have an adverse effect on our overall tax rate, along with increasing the complexity, burden and cost of tax compliance.

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Additionally, such attacks could compromise our, or our customers' or vendors', intellectual property or confidential information or result in fraud or other financial loss.

For example, in July 2021, SYNNEX announced publicly that a threat actor had gained access to SYNNEX' systems.

For example, in July 2021, we announced publicly that a threat actor had gained access to our systems.

That incident did not have a material impact to the business.

In July 2022, we became aware that a sophisticated threat actor gained access to a portion of our networks and systems.

After conducting a thorough review of the attack with a leading third-party cybersecurity firm, we determined that the attack did not have a material impact on us.

Evidence indicates that the threat actor responsible for this incident is related to, or the same as, the threat actor that previously gained unauthorized access to SYNNEX' systems.

In response to both the July 2021 and the July 2022 threat, we engaged in remedial and preventative actions to remove the threat actor and prevent further unauthorized access to our network, analyzed the information that the threat actors accessed, enhanced our data security and governance program, added additional protective security layers and are cooperating with law enforcement authorities.

In July 2022 and September 2023, we became aware that a sophisticated threat actor gained access to a portion of our networks and systems.

After conducting a thorough review of those attacks with a leading third-party cybersecurity firm, we determined that those attacks did not have a material impact on us.

Evidence indicates that the threat actor responsible for these incidents is related to, or the same as, the threat actor that previously gained unauthorized access to our systems in July 2021.

In response to these threats, we engaged in remedial and preventative actions to remove the threat actor and prevent further unauthorized access to our network, analyzed the information that the threat actors accessed, enhanced our data security and governance program, added additional protective security layers and are cooperating with law enforcement authorities.

While we do not believe at this time that these cyber-attacks had a material impact on our systems or operations, should new or different information come to light establishing that the intrusions are broader than now known or if additional attacks occur, it could have a broader impact on our systems and operations, and we could incur significant costs in responding to such intrusions.

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Furthermore, data privacy is subject to frequently changing rules and regulations, which sometimes conflict among the various jurisdictions and countries in which we provide services.

The General Data Protection Regulation (“GDPR”) in Europe, the California Consumer Privacy Act and other similar laws have resulted, and will continue to

result, in increased compliance costs.

The General Data Protection Regulation (“GDPR”) in Europe, the California Consumer Privacy Act and other similar laws have resulted, and will continue to result, in increased compliance costs.

Our failure to adhere to or successfully implement processes in response to these and other changing regulatory requirements in this area could result in legal liability or impairment to our reputation in the marketplace, which could have a material adverse effect on our business, financial condition and results of operations.

Global health and economic, political and social conditions may harm our ability to do business, increase our costs and negatively affect our stock price.

Worldwide economic conditions remain uncertain due to increased inflation, increases in interest rates, market volatility as a result of political leadership in certain countries, including due to Russia's invasion of Ukraine, and other disruptions to global and regional economies and markets.

Worldwide economic conditions remain uncertain due to the persistence of inflation, elevated interest rates, market volatility as a result of political leadership in certain countries, including due to Russia's invasion of Ukraine, the Israel-Hamas War and other disruptions to global and regional economies and markets.

External factors, such as potential terrorist attacks, acts of war, geopolitical and social turmoil or epidemics and other similar outbreaks in many parts of the world, could prevent or hinder our ability to do business, increase our costs and negatively affect our stock price.

More generally, these geopolitical, social and economic conditions could result in increased volatility in the United States and worldwide financial markets and economy.

More generally, these geopolitical, social and economic conditions could result in increased volatility in the United States and worldwide financial markets and economies.

For example, increased instability may enhance volatility in currency exchange rates, cause our customers or potential customers to delay or reduce spending on our products or services, and limit our suppliers’ access to credit.

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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-K

Item 1A. Risk Factors