What changed in this filing

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Item 1. Financial Statements

2020-10-09 compared with 2020-07-09 · 173 added, 123 removed, 711 unchanged (29% of the section changed)

3 unchanged sentences

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

August 31, 2020

November 30, 2019

24 unchanged sentences

Preferred stock, $ 0.001 par value, 5,000 shares authorized, no shares issued or outstanding

Common stock, $ 0.001 par value, 100,000 shares authorized, 53,305 and 53,154 shares issued as of May 31, 2020 and November 30, 2019, respectively

Common stock, $ 0.001 par value, 100,000 shares authorized, 53,380 and 53,154 shares issued as of August 31, 2020 and November 30, 2019, respectively

Additional paid-in capital

Treasury stock, 2,453 and 2,399 shares as of May 31, 2020 and November 30, 2019, respectively

Treasury stock, 2,454 and 2,399 shares as of August 31, 2020 and November 30, 2019, respectively

Accumulated other comprehensive income (loss)

8 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

August 31, 2020

August 31, 2019

August 31, 2020

August 31, 2019

Total revenue

11 unchanged sentences

SYNNEX CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(currency in thousands)

Three Months Ended

Six Months Ended

Nine Months Ended

August 31, 2020

August 31, 2019

August 31, 2020

August 31, 2019

Other comprehensive income (loss):

Change in unrealized gains (losses) of defined benefit plans, net of taxes of $ 0 for the three and six months ended May 31, 2020 and 2019

Unrealized gains (losses) on cash flow hedges during the period, net of taxes of $ 6,210 and $ 16,174 for the three and six months ended May 31, 2020, respectively, and $ 10,288 and $ 15,884 for the three and six months ended May 31, 2019, respectively

Reclassification of net (gains) losses on cash flow hedges to net income, net of tax expense (benefit) of ($ 904 ) and ($ 557 ) for the three and six months ended May 31, 2020, respectively, and $ 1,231 and $ 2,120 for three and six months ended May 31, 2019, respectively

Change in unrealized gains (losses) of defined benefit plans, net of taxes of $ 3,115 for the three and nine months ended August 31, 2020, and $ 0 for the three and nine months ended 2019

Unrealized gains (losses) on cash flow hedges during the period, net of taxes of $( 8,220 ) and $ 7,953 for the three and nine months ended August 31, 2020, respectively, and $ 8,722 and $ 24,605 for the three and nine months ended August 31, 2019, respectively

Reclassification of net (gains) losses on cash flow hedges to net income, net of tax expense (benefit) of $( 563 ) and $( 1,120 ) for the three and nine months ended August 31, 2020, respectively, and $ 1,121 and $ 3,241 for three and nine months ended August 31, 2019, respectively

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

Foreign currency translation adjustments, net of taxes of $ 148 and $ 294 for the three and six months ended May 31, 2020, respectively, and $ 174 and ($ 24 ) for the three and six months ended May 31, 2019, respectively

Foreign currency translation adjustments, net of taxes of $( 345 ) and $( 51 ) for the three and nine months ended August 31, 2020, respectively, and $( 31 ) and $( 55 ) for the three and nine months ended August 31, 2019, respectively

Other comprehensive income (loss)

Comprehensive income (loss)

Comprehensive income

(Amounts may not add due to rounding)

4 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

August 31, 2020

August 31, 2019

August 31, 2020

August 31, 2019

Total Stockholders' equity, beginning balance

27 unchanged sentences

(currency in thousands)

Six Months Ended

Nine Months Ended

August 31, 2020

August 31, 2019

Cash flows from operating activities:

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

9 unchanged sentences

Other operating assets and liabilities

Net cash provided by (used in) operating activities

Net cash provided by operating activities

Cash flows from investing activities:

6 unchanged sentences

Dividends paid

Decrease in book overdraft

Increase (decrease) in book overdraft

Repurchases of common stock

1 unchanged sentence

Repurchases of common stock for tax withholdings on equity awards

Settlement of contingent consideration

Net cash used in financing activities

5 unchanged sentences

Accrued costs for property and equipment purchases

Supplemental disclosure of non-cash financing activities:

Unsettled common stock repurchases

(Amounts may not add due to rounding)

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the three and six months ended May 31, 2020 and 2019

For the three and nine months ended August 31, 2020 and 2019

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

6 unchanged sentences

On January 9, 2020, the Company announced a plan to separate its Concentrix segment into an independent publicly-traded company.

The transaction, which was delayed due to the focus on managing the economic impact of the COVID-19 pandemic, barring further economic disruption, is now expected to be completed in the fourth quarter of calendar year 2020.

The transaction, which was delayed due to the focus on managing the economic impact of a pandemic caused by an outbreak of a new strain of coronavirus (“ COVID-19”), barring further economic disruption, is now expected to be completed in the fourth quarter of calendar year 2020.

The plan is subject to current economic and capital market trends.

2 unchanged sentences

Completion of the separation will not require a stockholder vote but will be subject to customary closing conditions, including, among others, obtaining final approval from the Company’s Board of Directors, receipt of a favorable opinion with respect to the tax-free nature of the transaction for federal income tax purposes, and the effectiveness of a Form 10 registration statement with the Securities and Exchange Commission.

The accompanying interim unaudited Consolidated Financial Statements as of May 31, 2020 and for the three and six months ended May 31, 2020 and 2019 have been prepared by the Company in accordance with the rules and regulations of the Securities and Exchange Commission.

The accompanying interim unaudited Consolidated Financial Statements as of August 31, 2020 and for the three and nine months ended August 31, 2020 and 2019 have been prepared by the Company in accordance with the rules and regulations of the Securities and Exchange Commission.

The amounts as of November 30, 2019 have been derived from the Company’s annual audited financial statements.

6 unchanged sentences

For a discussion of the Company’s significant accounting policies, refer to the discussion in the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2019.

As described more fully in Note 16 , as of May 31, 2020, due to the ongoing impact of the COVID-19 pandemic on the Company’s business, many of our estimates and assumptions required increased judgment and carry a higher degree of variability and volatility.

As described more fully in Note 16 , as of August 31, 2020, due to the ongoing impact of the COVID-19 pandemic on the Company’s business, many of our estimates and assumptions required increased judgment and carry a higher degree of variability and volatility.

As events continue to evolve and additional information becomes available, these estimates may change in future periods.

Accounting pronouncements adopted during the six months ended May 31, 2020 are discussed below.

Accounting pronouncements adopted during the nine months ended August 31, 2020 are discussed below.

Concentration of credit risk

1 unchanged sentence

The Company’s cash and cash equivalents and derivative instruments are transacted and maintained with financial institutions with high credit standing, and their compositions and maturities are regularly monitored by management.

Through May 31, 2020, the Company has not experienced any credit losses on such deposits and derivative instruments.

Through August 31, 2020, the Company has not experienced any credit losses on such deposits and derivative instruments.

Accounts receivable include amounts due from customers, including related party customers.

3 unchanged sentences

In estimating the required allowances, the Company takes into consideration the overall quality and aging of its receivable portfolio, the existence of a limited amount of credit insurance and specifically identified customer and vendor risks.

Through May 31, 2020, such losses have been within management’s expectations.

One customer accounted for 19 % and 17 % of the Company’s total revenue during the three and six months ended May 31, 2020.

The same customer accounted for 18 % of the Company’s total revenue during both the three and six months ended May 31, 2019.

Through August 31, 2020, such losses have been within management’s expectations.

One customer accounted for 16 % and 17 % of the Company’s total revenue during the three and nine months ended August 31, 2020.

The same customer accounted for 21 % and 19 % of the Company’s total revenue during the three and nine months ended August 31, 2019.

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

For the three and six months ended May 31, 2020 and 2019

For the three and nine months ended August 31, 2020 and 2019

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

purchased from the Company’s largest OEM supplier, HP Inc., accounted for approximately 12 % of total revenue during both the three and six months ended May 31, 2020 and approximately 12 % and 11 % of total revenue during the three and six months ended May 31, 2019 .

As of May 31, 2020 and November 30, 2019, one customer comprised 20 % and 19 %, respectively, of the consolidated accounts receivable balance.

purchased from the Company’s largest OEM supplier, HP Inc., accounted for approximately 12 % of total revenue during the three and nine months ended August 31, 2020 and 2019.

As of August 31, 2020 and November 30, 2019, one customer comprised 18 % and 19 %, respectively, of the consolidated accounts receivable balance.

Inventories are stated at the lower of cost and net realizable value.

37 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

For the three and six months ended May 31, 2020 and 2019

For the three and nine months ended August 31, 2020 and 2019

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

25 unchanged sentences

The Company recognizes share-based compensation expense for all share-based awards made to employees and directors, including employee stock options, restricted stock awards, restricted stock units, performance-based restricted stock units and employee stock purchases, based on estimated fair values.

The following table summarizes the number of share-based awards granted under the Company’s 2013 Stock Incentive Plan, as amended, during the three and six months ended May 31, 2020 and 2019, and the measurement-date fair value of those awards:

The following table summarizes the number of share-based awards granted under the Company’s 2013 Stock Incentive Plan, as amended, during the three and nine months ended August 31, 2020 and 2019, and the measurement-date fair value of those awards:

Three Months Ended

Six Months Ended

Nine Months Ended

August 31, 2020

August 31, 2019

August 31, 2020

August 31, 2019

Stock options

3 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

For the three and six months ended May 31, 2020 and 2019

For the three and nine months ended August 31, 2020 and 2019

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

The Company recorded share-based compensation expense in the Consolidated Statements of Operations for the three and six months ended May 31, 2020 and 2019 as follows:

The Company recorded share-based compensation expense in the Consolidated Statements of Operations for the three and nine months ended August 31, 2020 and 2019 as follows:

Three Months Ended

Six Months Ended

Nine Months Ended

August 31, 2020

August 31, 2019

August 31, 2020

August 31, 2019

Total share-based compensation (recorded in selling, general and

5 unchanged sentences

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same amounts shown in the Consolidated Statements of Cash Flows:

August 31, 2020

November 30, 2019

2 unchanged sentences

Cash, cash equivalents and restricted cash

Restricted cash balances relate primarily to temporary restrictions caused by the timing of lockbox collections under borrowing arrangements, restrictions placed by banks as collateral for the issuance of bank guarantees and the terms of a government grant.

Accounts receivable, net:

August 31, 2020

November 30, 2019

3 unchanged sentences

Receivables from vendors, net:

August 31, 2020

November 30, 2019

3 unchanged sentences

Property and equipment, net:

August 31, 2020

November 30, 2019

8 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

For the three and six months ended May 31, 2020 and 2019

For the three and nine months ended August 31, 2020 and 2019

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

Depreciation expense was $ 36,000 and $ 73,692 , respectively, for the three and six months ended May 31, 2020 and $ 42,601 and $ 84,118 , respectively, for the three and six months ended May 31, 2019.

Depreciation expense was $ 37,447 and $ 111,139 , respectively, for the three and nine months ended August 31, 2020 and $ 39,124 and $ 123,242 , respectively, for the three and nine months ended August 31, 2019.

Balance as of November 30, 2019

Foreign exchange translation

Balance as of May 31, 2020

Balance as of August 31, 2020

Intangible assets, net:

As of May 31, 2020

As of August 31, 2020

As of November 30, 2019

1 unchanged sentence

Other intangible assets

Amortization expense was $ 46,326 and $ 93,492 , respectively, for the three and six months ended May 31, 2020 and $ 52,864 and $ 105,721 , respectively, for the three and six months ended May 31, 2019.

Amortization expense was $ 46,828 and $ 140,320 , respectively, for the three and nine months ended August 31, 2020 and $ 52,428 and $ 158,150 , respectively, for the three and nine months ended August 31, 2019.

Estimated future amortization expense of the Company’s intangible assets is as follows:

Fiscal years ending November 30,

2020 (remaining six months)

2020 (remaining three months)

Other accrued liabilities:

August 31, 2020

November 30, 2019

6 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

For the three and six months ended May 31, 2020 and 2019

For the three and nine months ended August 31, 2020 and 2019

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

11 unchanged sentences

income (loss)

Balance as of May 31, 2020

Balance as of August 31, 2020

Refer to Note 5 for the location of gains and losses reclassified from other comprehensive income (loss) to the Consolidated Statements of Operations.

Foreign currency translation adjustment and other, net of taxes, is comprised of foreign currency translation adjustment and unrealized gains and losses on available-for-sale debt securities.

Substantially, all of the balance at both November 30, 2019 and May 31, 2020 represents foreign currency translation adjustment.

Substantially, all of the balance at both November 30, 2019 and August 31, 2020 represents foreign currency translation adjustment.

NOTE 5—DERIVATIVE INSTRUMENTS:

11 unchanged sentences

dollars may hedge a portion of forecasted revenue or costs not denominated in the subsidiaries’ functional currencies.

These instruments mature at various dates through May 2022 .

These instruments mature at various dates through August 2022 .

The Company also uses interest rate derivative contracts to economically convert a portion of its variable-rate debt to fixed-rate debt.

9 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

For the three and six months ended May 31, 2020 and 2019

For the three and nine months ended August 31, 2020 and 2019

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

5 unchanged sentences

Balance Sheet Line Item

August 31, 2020

November 30, 2019

13 unchanged sentences

Volume of Activity

The notional amounts of foreign exchange forward contracts represent the gross amounts of foreign currency, including, principally, the Philippine Peso, the Indian Rupee, the Euro, the Canadian Dollar, the British Pound, the Chinese Yuan, the Brazilian Real and the Colombian Peso that will be bought or sold at maturity.

The notional amounts of foreign exchange forward contracts represent the gross amounts of foreign currency, including, principally, the Philippine Peso, Indian Rupee, the Euro, Canadian Dollar, British Pound, the Chinese Yuan, the Japanese Yen and the Brazilian Real that will be bought or sold at maturity.

The term and notional amount of interest rate swaps are determined based on management’s assessment of future interest rates and other factors such as debt maturities.

3 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

For the three and six months ended May 31, 2020 and 2019

For the three and nine months ended August 31, 2020 and 2019

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

2 unchanged sentences

Location of Gain (Loss)

Three Months Ended May 31,

Six Months Ended May 31,

Three Months Ended August 31,

Nine Months Ended August 31,

Revenue for services

16 unchanged sentences

administrative expenses

Gain (loss) reclassified from AOCI into income

(expense), net

Interest rate swaps

15 unchanged sentences

In the Consolidated Balance Sheets, the Company does not offset derivative assets against liabilities in master netting arrangements.

If derivative exposures covered by a qualifying master netting agreement had been netted in the Consolidated Balance Sheet, the total derivative asset and liability positions would have been reduced by $ 8,832 each as of May 31, 2020 and $ 6,003 each as of November 30, 2019.

If derivative exposures covered by a qualifying master netting agreement had been netted in the

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

For the three and six months ended May 31, 2020 and 2019

For the three and nine months ended August 31, 2020 and 2019

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

Consolidated Balance Sheet , the total derivative asset and liability positions would have been reduced by $ 12,458 each as o f August 31, 2020 and $ 6,003 each as of November 30, 2019 .

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

6 unchanged sentences

The following table summarizes the valuation of the Company’s investments and financial instruments that are measured at fair value on a recurring basis:

As of May 31, 2020

As of August 31, 2020

As of November 30, 2019

15 unchanged sentences

Fair values of interest rate swaps are measured using standard valuation models using inputs that are readily available in public markets, or can be derived from observable market transactions, including LIBOR spot and forward rates.

The effect of nonperformance risk on the fair value of derivative instruments was not material as of May 31, 2020 and November 30, 2019.

The effect of nonperformance risk on the fair value of derivative instruments was not material as of August 31, 2020 and November 30, 2019.

The carrying values of accounts receivable, accounts payable and short-term debt approximate fair value due to their short maturities and interest rates which are variable in nature.

The carrying value of the Company’s term loans approximate their fair value since they bear interest rates that are similar to existing market rates.

During the six months ended May 31, 2020, there were no transfers between the fair value measurement category levels.

During the nine months ended August 31, 2020, there were no transfers between the fair value measurement category levels.

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

For the three and six months ended May 31, 2020 and 2019

For the three and nine months ended August 31, 2020 and 2019

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

2 unchanged sentences

Available capacity under this program is dependent on the level of the Company’s trade accounts receivable with these customers and the financial institution’s willingness to purchase such receivables.

As of May 31, 2020 and November 30, 2019, accounts receivable sold to and held by the financial institution under this program were $ 23,689 and $ 32,472 , respectively.

As of August 31, 2020 and November 30, 2019, accounts receivable sold to and held by the financial institution under this program were $ 17,957 and $ 32,472 , respectively.

Discount fees related to the sale of trade accounts receivable under this facility are included in “Interest expense and finance charges, net” in the Consolidated Statements of Operations.

During the three and six months ended May 31, 2020 and 2019, discount fees were not material to the Company’s results of operations.

During the three and nine months ended August 31, 2020 and 2019, discount fees were not material to the Company’s results of operations.

SYNNEX Japan, the Company’s Japanese Technology Solutions subsidiary, has arrangements with financial institutions for the sale and financing of approved accounts receivable and notes receivable.

The amounts outstanding under these arrangements that were sold, but not collected, as of May 31, 2020 and November 30, 2019 were $ 6,637 and $ 2,856 , respectively.

The amounts outstanding under these arrangements that were sold, but not collected, as of August 31, 2020 and November 30, 2019 were $ 5,760 and $ 2,856 , respectively.

The Company also has other financing agreements in North America with financial institutions (“Flooring Companies”) to allow certain customers of the Company to finance their purchases directly with the Flooring Companies.

4 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

August 31, 2020

August 31, 2019

August 31, 2020

August 31, 2019

Net sales financed

1 unchanged sentence

Flooring fees are included within “Interest expense and finance charges, net.”

As of May 31, 2020 and November 30, 2019, accounts receivable subject to flooring agreements were $ 53,272 and $ 69,637 , respectively.

As of August 31, 2020 and November 30, 2019, accounts receivable subject to flooring agreements were $ 58,567 and $ 69,637 , respectively.

NOTE 8—BORROWINGS:

Borrowings consist of the following:

August 31, 2020

November 30, 2019

17 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

For the three and six months ended May 31, 2020 and 2019

For the three and nine months ended August 31, 2020 and 2019

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

3 unchanged sentences

Prior to the amendment in May 2020 that is described in this paragraph, u nder the terms of the U.S.

AR Arrangement, which had a maturity date of May 2020 , the Company’s subsidiary that is the borrower under this facility could borrow up to a maximum of $ 850,000 based upon eligible trade accounts receivable.

AR Arrangement, the Company’s subsidiary that is the borrower under this facility could borrow up to a maximum of $ 850,000 based upon eligible trade accounts receivable.

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, provided that LIBOR would not be less than zero .

In addition, a program fee of 0.75 % per annum based on the used portion of the commitment, and a facility fee of 0.35% per annum, was payable on the adjusted commitment of the lenders.

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.

In addition, prior to the May 2020 amendment, a program fee of 0.75 % per annum based on the used portion of the commitment, and a facility fee of 0.35% per annum, was payable on the adjusted commitment of the lenders.

In May 2020 , the U.S.

4 unchanged sentences

In addition, the U.S.

AR Arrangement included an accordion feature to allow requests for an increase in the lenders' commitment by an additional $ 150,000 .

AR Arrangement includes an accordion feature to allow requests for an increase in the lenders' commitment by an additional $ 150,000 .

Under the terms of the U.S.

5 unchanged sentences

SYNNEX Canada accounts receivable securitization arrangement

In Canada, the Company has an accounts receivable securitization program with a bank to provide additional capital for its operations which was set to expire in May 2020 .

In March 2020, SYNNEX Canada Limited (“SYNNEX Canada”) renewed this agreement to mature in May 2023 .

SYNNEX Canada Limited (“SYNNEX Canada”), the Company's Technology Solutions subsidiary in Canada, has an accounts receivable securitization program with a bank to provide additional capital for its operations.

In March 2020, SYNNEX Canada renewed this agreement to mature in May 2023 .

Under the terms of this program, SYNNEX Canada can borrow up to CAD 100,000 , or $ 76,628 , in exchange for the transfer of eligible trade accounts receivable, on an ongoing revolving basis.

5 unchanged sentences

SYNNEX Canada pays a fee of 0.40 % per annum for any unused portion of the commitment up to CAD 60,000 , or $ 45,977 , and when the unused portion exceeds CAD 60,000 , or $ 45,977 , a fee of 0.55 % per annum of the unused portion of the commitment.

As of both May 31, 2020 and November 30, 2019, there was no outstanding balance under this arrangement.

As of both August 31, 2020 and November 30, 2019, there was no outstanding balance under this arrangement.

The Company has guaranteed the performance obligations of SYNNEX Canada under this facility.

11 unchanged sentences

These credit facilities can be terminated at any time by the Company’s Indian subsidiaries or the financial institution.

There were no borrowings outstanding under these credit facilities as of either May 31, 2020 or November 30, 2019.

There were no borrowings outstanding under these credit facilities as of either August 31, 2020 or November 30, 2019.

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

For the three and six months ended May 31, 2020 and 2019

For the three and nine months ended August 31, 2020 and 2019

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

38 unchanged sentences

The base rate could be a Banker's Acceptance Rate, a Canadian Prime Rate, LIBOR or U.S.

As of both May 31, 2020 and November 30, 2019, there were no borrowings outstanding under this credit facility.

As of both August 31, 2020 and November 30, 2019, there were no borrowings outstanding under this credit facility.

Other borrowings and term debt

Other borrowings and term debt include lines of credit with financial institutions at certain locations outside the United States, factoring of accounts receivable with recourse provisions, capital leases, a building mortgage and book overdrafts.

As of May 31, 2020, commitments for these revolving credit facilities aggregated $ 82,426 .

As of August 31, 2020, commitments for these revolving credit facilities aggregated $ 83,335 .

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

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

The maximum commitment amounts for local currency credit facilities have been translated into United States Dollars at May 31, 2020 exchange rates.

The maximum commitment amounts for local currency credit facilities have been translated into United States Dollars at August 31, 2020 exchange rates.

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

For the three and six months ended May 31, 2020 and 2019

For the three and nine months ended August 31, 2020 and 2019

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

Future principal payments

As of May 31, 2020, future principal payments under the above loans are as follows:

As of August 31, 2020, future principal payments under the above loans are as follows:

Fiscal Years Ending November 30,

2020 (remaining six months)

2020 (remaining three months)

Interest expense and finance charges

The total interest expense and finance charges for the Company's borrowings were $ 36,304 and $ 73,996 , respectively, for the three and six months ended May 31, 2020, and $ 44,068 and $ 87,710 , respectively, for the three and six months ended May 31, 2019.

The variable interest rates ranged between 0.77 % and 8.41 % during the three and six months ended May 31, 2020.

During the three months ended May 31, 2019, the variable interest rate ranged between 0.86 % and 6.25 %, and between 0.70 % and 11.38 % during the six months ended May 31, 2019.

The total interest expense and finance charges for the Company's borrowings were $ 31,021 and $ 105,017 , respectively, for the three and nine months ended August 31, 2020, and $ 44,401 and $ 132,111 , respectively, for the three and nine months ended August 31, 2019.

The variable interest rates ranged between 0.74 % and 4.95 % during the three months ended August 31, 2020, and between 0.74% and 8.41 % during the nine months ended August 31, 2020.

During the three months ended August 31, 2019, the variable interest rate ranged between 0.87 % and 10.74 %, and between 0.70 % and 11.38 % during the nine months ended August 31, 2019.

Covenant compliance

1 unchanged sentence

The covenants also limit the Company’s ability to incur additional debt, make or forgive intercompany loans, pay dividends and make other types of distributions, make certain acquisitions, repurchase the Company’s stock, create liens, cancel debt owed to the Company, enter into agreements with affiliates, modify the nature of the Company’s business, enter into sale-leaseback transactions, make certain investments, transfer and sell assets, cancel or terminate any material contracts and merge or consolidate.

As of May 31, 2020, the Company was in compliance with all material covenants for the above arrangements.

As of August 31, 2020, the Company was in compliance with all material covenants for the above arrangements.

NOTE 9—EARNINGS PER COMMON SHARE:

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

August 31, 2020

August 31, 2019

August 31, 2020

August 31, 2019

Basic earnings per common share:

12 unchanged sentences

Anti-dilutive shares excluded from diluted earnings per share calculation

Restricted stock awards granted to employees by the Company are considered participating securities .

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

For the three and six months ended May 31, 2020 and 2019

For the three and nine months ended August 31, 2020 and 2019

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

Restricted stock awards granted to employees by the Company are considered participating securities .

NOTE 10—SEGMENT INFORMATION:

1 unchanged sentence

Inter-Segment

Three months ended May 31, 2020

Three months ended August 31, 2020

External revenue

Operating income

Three months ended May 31, 2019

Three months ended August 31, 2019

External revenue

Operating income

Six months ended May 31, 2020

Nine months ended August 31, 2020

External revenue

Operating income

Six months ended May 31, 2019

Nine months ended August 31, 2019

External revenue

Operating income

Total assets as of May 31, 2020

Total assets as of August 31, 2020

Total assets as of November 30, 2019

4 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

August 31, 2020

August 31, 2019

August 31, 2020

August 31, 2019

United States

August 31, 2020

November 30, 2019

3 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

For the three and six months ended May 31, 2020 and 2019

For the three and nine months ended August 31, 2020 and 2019

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

1 unchanged sentence

The Company has a business relationship with MiTAC Holdings Corporation (“MiTAC Holdings”), a publicly-traded company in Taiwan, which began in 1992 when MiTAC Holdings became the Company's primary investor through its affiliates.

As of both May 31, 2020 and November 30, 2019, MiTAC Holdings and its affiliates beneficially owned approximately 18 % of the Company’s outstanding common stock.

As of both August 31, 2020 and November 30, 2019, MiTAC Holdings and its affiliates beneficially owned approximately 18 % of the Company’s outstanding common stock.

Matthew Miau, Chairman Emeritus of the Company’s Board of Directors and a director, is the Chairman of MiTAC Holdings and a director or officer of MiTAC Holdings’ affiliates.

Beneficial ownership of the Company’s common stock by MiTAC Holdings

As noted above, MiTAC Holdings and its affiliates in the aggregate beneficially owned approximately 18% of the Company’s outstanding common stock as of May 31, 2020.

As noted above, MiTAC Holdings and its affiliates in the aggregate beneficially owned approximately 18% of the Company’s outstanding common stock as of August 31, 2020.

These shares are owned by the following entities:

As of May 31, 2020

As of August 31, 2020

MiTAC Holdings (1)

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Three Months Ended

Six Months Ended

Nine Months Ended

August 31, 2020

August 31, 2019

August 31, 2020

August 31, 2019

Purchases of inventories and services

Sale of products to MiTAC Holdings and affiliates

Payments made for rent and overhead costs for use of facilities of MiTAC Holdings and affiliates

Rent and overhead costs incurred for use of facilities of MiTAC Holdings and affiliates

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

August 31, 2020

November 30, 2019

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

For the three and six months ended May 31, 2020 and 2019

For the three and nine months ended August 31, 2020 and 2019

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

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Employees in most of the Company's foreign subsidiaries are covered by government-mandated defined contribution plans.

During the three and six months ended May 31, 2020 , the Company contributed $ 16,193 and $ 32,613 , respectively, to defined contribution plans.

During the three and six months ended May 31, 2019 , the Company contributed $ 12,424 and $ 23,544 , respectively, to defined contribution plans .

During the three and nine months ended August 31, 2020 , the Company contributed $ 18,874 and $ 51,487 , respectively, to defined contribution plans.

During the three and nine months ended August 31, 2019 , the Company contributed $ 11,052 and $ 34,596 , respectively, to defined contribution plans .

The Company has a deferred compensation plan for certain directors and officers.

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The Company may invest balances in the plan in trading securities reported on recognized exchanges.

As of May 31, 2020 and November 30, 2019, the deferred compensation liability balance was $ 5,470 and $ 5,389 , respectively.

As of August 31, 2020 and November 30, 2019, the deferred compensation liability balance was $ 5,511 and $ 5,389 , respectively.

Defined Benefit Plans

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The plan assumptions are evaluated annually and are updated as deemed necessary.

During the three and six months ended May 31, 2020, net periodic pension costs were $ 2,782 and $ 6,176 , respectively, and the Company’s contribution was $ 229 and $ 397 , respectively.

During the three and six months ended May 31, 2019, net periodic pension costs were $ 2,894 and $ 5,474 , respectively, and the Company’s contribution was $ 1,835 and $ 3,212 , respectively.

The plans were underfunded by $ 118,799 and $ 116,675 as of May 31, 2020 and November 30, 2019, respectively.

During the three and nine months ended August 31, 2020, net periodic pension costs were $ 3,995 and $ 10,171 , respectively, and the Company’s contribution was $ 239 and $ 636 , respectively.

During the three and nine months ended August 31, 2019, net periodic pension costs were $ 6,204 and $ 11,678 , respectively, and the Company’s contribution was $ 2,225 and $ 5,437 , respectively.

The plans were underfunded by $ 135,313 and $ 116,675 as of August 31, 2020 and November 30, 2019, respectively.

NOTE 13—EQUITY:

Share repurchase program

In June 2020, the Board of Directors authorized a three-year $ 400,000 share repurchase program, effective July 1, 2020, pursuant to which the Company may repurchase its outstanding common stock from time to time in the open market or through privately negotiated transactions.

As of August 31, 2020, the Company had no t repurchased any shares under this program.

In June 2017, the Board of Directors authorized a three-year $ 300,000 share repurchase program, effective July 1, 2017, pursuant to which the Company could repurchase its outstanding common stock from time to time in the open market or through privately negotiated transactions.

During the three and six months ended May 31, 2020, the Company repurchased 35 shares at a total cost of $ 3,405 .

As of May 31, 2020, and upon expiration of the program in June 2020, the Company had repurchased 875 shares at a total cost of $ 84,577 .

Through the expiration of this program in June 2020, the Company had repurchased 875 shares at a total cost of $ 84,577 .

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

On March 24, 2020, as a result of the unpredictable economic environment due to the impact of the COVID-19 pandemic, the Company announced the suspension of further share repurchases.

On March 24, 2020, as a result of the unpredictable economic environment due to the impact of the COVID-19 pandemic, the Company announced the suspension of its quarterly dividend .

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Three Months Ended

Six Months Ended

Nine Months Ended

August 31, 2020

Operating lease cost

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Total operating lease cost

The following table presents a maturity analysis of expected undiscounted cash flows for operating leases on an annual basis for the next five years and thereafter as of May 31, 2020:

The following table presents a maturity analysis of expected undiscounted cash flows for operating leases on an annual basis for the next five years and thereafter as of August 31, 2020:

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

For the three and six months ended May 31, 2020 and 2019

For the three and nine months ended August 31, 2020 and 2019

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

Fiscal Years Ending November 30,

2020 (remaining six months)

2020 (remaining three months)

Total payments

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* Imputed interest represents the difference between undiscounted cash flows and discounted cash flows.

As of May 31, 2020 , the Company had $ 5,450 of future payments under an additional lease for a corporate facility that had not yet commenced.

This lease commenced in June 2020 , with a term of 3 years.

During the three and six months ended May 31, 2019, rent expense was $ 66,470 and $ 130,897 , respectively.

During the three and nine months ended August 31, 2019, rent expense was $ 66,749 and $ 197,645 , respectively.

Sublease income was immaterial.

The following amounts were recorded in the Company's Consolidated Balance Sheet as of May 31, 2020:

The following amounts were recorded in the Company's Consolidated Balance Sheet as of August 31, 2020:

Operating leases

Balance sheet location

August 31, 2020

Operating lease ROU assets

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Other long-term liabilities

The following table presents s upplemental cash flow information related to the Company's operating leases for the six months ended May 31, 2020.

The following table presents s upplemental cash flow information related to the Company's operating leases for the nine months ended August 31, 2020.

Cash payments related to variable lease costs and short-term leases are not included in the measurement of operating lease liabilities, and, as such, are excluded from the amounts below :

Six months ended

Nine months ended

Cash flow information

August 31, 2020

Cash paid for amounts included in the measurement of lease liabilities

Non-cash ROU assets obtained in exchange for lease liabilities (subsequent to initial adoption)

The weighted-average remaining lease term and discount rate as of May 31, 2020 were as follows:

The weighted-average remaining lease term and discount rate as of August 31, 2020 were as follows:

Operating lease term and discount rate

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

For the three and six months ended May 31, 2020 and 2019

For the three and nine months ended August 31, 2020 and 2019

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

NOTE 15— COMMITMENTS AND CONTINGENCIES:

The Company was contingently liable as of May 31, 2020 under agreements to repurchase repossessed inventory acquired by flooring companies as a result of default on floor plan financing arrangements by the Company's customers.

The Company was contingently liable as of August 31, 2020 under agreements to repurchase repossessed inventory acquired by flooring companies as a result of default on floor plan financing arrangements by the Company's customers.

These arrangements are described in Note 7 and do not have expiration dates.

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Losses, if any, would be the difference between the repossession cost and the resale value of the inventory.

There have been no repurchases through May 31, 2020 under these agreements and the Company is not aware of any pending customer defaults or repossession obligations.

There have been no repurchases through August 31, 2020 under these agreements and the Company is not aware of any pending customer defaults or repossession obligations.

The Company believes that, based on historical experience, the likelihood of a material loss pursuant to these inventory repurchase obligations is remote.

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

These disruptions have impacted the Company’s business including Concentrix’ ability to support customer demand due to decreased workforce productivity and limiting the Technology Solutions segment’s ability to support end market demand due to supply chain disruptions.

These disruptions, which were most acute during the second quarter of fiscal year 2020, have impacted the Company’s business including Concentrix’ ability to support customer demand due to decreased workforce productivity and limiting the Technology Solutions segment’s ability to support end market demand due to supply chain disruptions.

As a result, many of the estimates and assumptions used in preparation of these interim financial statements required increased judgment and carry a higher degree of variability and volatility.

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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 1. Financial Statements