−Removed: The following discussion is divided into two sections.
+Added: The following discussion is divided into five sections.
The first section, which begins immediately following this paragraph, discusses some of the risks that may affect our business, results of operations and financial condition.
−Removed: The second section, captioned "Risk Factors Related to the Proposed Separation," discusses some of the risks relating to our plan to separate Concentrix into an independent publicly-traded company.
−Removed: You should carefully review both of these sections, as well as our consolidated financial statements and notes thereto and the other information appearing in this report, for important information regarding risks that affect us.
+Added: The second section, captioned “ Risks Related to Our Relationship with MiTAC Holdings Corporation,” discusses risks relating to MiTAC’s influence over us.
+Added: The third section, captioned “Risks Related to our Industry,” discusses risk impacting businesses operating in our industry.
+Added: The fourth section, captioned “Risks Related to the Separation,” discusses some of the risks relating to the separation of Concentrix into an independent publicly-traded company.
+Added: The fifth section, captioned “Risks Related to the Macroeconomic and Regulatory Environment,” relates to risks which broadly affect companies operating in regions that we do.
+Added: With the completion of the Separation on December 1, 2020, our discussion about our risks is focused on our Technology Solutions segment.
+Added: You should carefully review all of these sections, as well as our consolidated financial statements and notes thereto and the other information appearing in this report, for important information regarding risks that affect us.
These risk factors should be considered in connection with evaluating the forward-looking statements contained in this Report because these factors could cause the actual results and conditions to differ materially from those projected in the forward-looking statements.
4 unchanged sentences
Table of Content
+Added: Risks Related to Our Business and Operations
We anticipate that our revenue and operating results will fluctuate, which could adversely affect the enterprise value of our Company and our securities.
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the loss or consolidation of one or more of our significant OEM suppliers or customers;
−Removed: consolidation of our Concentrix competitors, including insourcing by clients;
market acceptance, quality, pricing, availability and useful life of our products and services, as well as the mix of our products and services sold;
competitive conditions in our industry;
−Removed: trends towards cloud based infrastructure and “as-a-Service” type product offerings in our Technology Solution segment;
+Added: trends towards cloud based infrastructure and “as-a-Service” type product offerings;
pricing, margin and other terms with our OEM suppliers;
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Therefore, we may not be able to control spending in a timely manner to compensate for any unexpected revenue shortfall.
−Removed: Our operating results in the Technology Solutions segment also are affected by the seasonality of the IT and CE products and services industry.
+Added: Our operating results are affected by the seasonality of the IT and CE products and services industry.
We have historically experienced higher sales in our fourth fiscal quarter due to patterns in the capital budgeting, federal government spending and purchasing cycles of end-users.
−Removed: Revenue in our Concentrix segment is typically higher in our fourth quarter due to seasonal patterns in our clients’ business.
These patterns may not be repeated in subsequent periods.
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We are subject to uncertainties and variability in demand by our customers, which could decrease revenue and adversely affect our operating results, and we have customer contracts with provisions that could cause fluctuations in our revenue.
−Removed: In our Technology Solutions segment, we sell to our customers on a purchase order basis, rather than pursuant to long-term contracts or contracts with minimum purchase requirements.
+Added: We sell to our customers on a purchase order basis, rather than pursuant to long-term contracts or contracts with minimum purchase requirements.
Consequently, our sales are subject to demand variability by our customers.
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We have limited protection against excess inventory should anticipated demand not materialize.
−Removed: In our Concentrix segment, we provide global business services to our clients under contracts with provisions that, if triggered, could impact our profitability.
−Removed: For example, many of our contracts may be terminated with a short amount of notice, and to the extent our clients terminate these contracts, we could experience unexpected fluctuations in our revenue and operating results from period to period.
−Removed: Additionally, some contracts have performance-related bonus or penalty provisions, whereby we could receive a bonus if we satisfy certain performance levels or have to pay a penalty for failing to do so.
−Removed: Whether we receive a bonus or are required to pay a penalty is unpredictable, and may cause additional fluctuations in our financial results.
−Removed: In addition, our clients may not guarantee a minimum volume;
−Removed: however, we hire employees based on anticipated volumes.
−Removed: If we fail to anticipate volumes correctly, our operations and financial results may suffer.
−Removed: The reduction of volume, loss of clients, payment of penalties or inability to terminate any unprofitable contracts could have an adverse impact on our operations and financial results.
−Removed: Table of Content
−Removed: In our Technology Solutions segment, we depend on a limited number of OEMs to supply the IT and CE products and services that we sell and the loss of, or a material change in, our business relationship with a major OEM supplier could adversely affect our business, financial position and operating results.
+Added: We depend on a limited number of OEMs to supply the IT and CE products and services that we sell and the loss of, or a material change in, our business relationship with a major OEM supplier could adversely affect our business, financial position and operating results.
Our future success is highly dependent on our relationships with a small number of OEM suppliers.
−Removed: For example, sales of HP products and services comprised approximately 12%, 13% (as adjusted) and 14% (as adjusted) of our consolidated revenue for fiscal years 2019, 2018 and 2017, respectively.
+Added: For example, sales of HP products and services comprised approximately 12%, 12% and 13% of our consolidated revenue for fiscal years 2020, 2019 and 2018, respectively.
Our OEM supplier agreements typically are short-term and may be terminated without cause upon short notice.
1 unchanged sentence
In addition, OEM suppliers may face liquidity or solvency issues that in turn could negatively affect our business and operating results.
+Added: Table of Content
Our business is also highly dependent on the terms provided by our OEM suppliers.
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If we are unable to pass the impact of these changes through to our reseller and retail customers, our business, financial position and operating results could be adversely affected.
−Removed: In our Technology Solutions segment our gross margins are low, which magnifies the impact of variations in gross margin, operating costs and our operating results.
+Added: Our gross margins are low, which magnifies the impact of variations in gross margin, operating costs and our operating results.
As a result of significant price competition in the IT and CE products and services industry, our gross margins are low, and we expect them to continue to be low in the future.
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In addition, our OEM suppliers may decide to distribute, or to substantially increase their existing distribution business, through other distributors, their own dealer networks, or directly to resellers, retailers or end-users.
−Removed: Accordingly, if we are not able to secure and maintain an adequate
−Removed: Table of Content
−Removed: supply of products to fulfill our customer orders on a timely basis, our business, financial position and operating results could be adversely affected.
−Removed: Our delivery center activities in our Concentrix business are significantly concentrated in Philippines and India, which may expose us to operational risks.
−Removed: Operations in our Concentrix segment are based on a global delivery model with client services provided from delivery centers located in several countries with more than half of our workforce located in Philippines and India.
−Removed: Socio-economic situations which are specific to these countries can severely disrupt our operations and impact our ability to fulfill our contractual obligations to our clients.
−Removed: If these regions experience severe natural calamities or political unrest, our personnel resources may be affected, our IT and communication infrastructure may be at risk and the client processes that we manage may be adversely affected.
−Removed: Changes in governments, laws, regulations, minimum wages, and taxation rules may severely impact our ability to do business in these countries, our business practices, our operating costs and our results of operations.
−Removed: Both our Technology Solutions and Concentrix segments have customer concentration and intense competition which could adversely impact our revenue.
+Added: Accordingly, if we are not able to secure and maintain an adequate supply of products to fulfill our customer orders on a timely basis, our business, financial position and operating results could be adversely affected.
+Added: We experience customer concentration and intense competition which could adversely impact our revenue.
Our business experiences customer concentration from time to time.
−Removed: In 2019, 2018 and 2017, one customer accounted for 19%, 17% (as adjusted) and 21% (as adjusted), respectively, of our revenue.
−Removed: While we do not believe that the loss of any single customer would have a material adverse effect on the Company and its subsidiaries taken as a whole, such loss could result in an adverse impact on certain of our businesses.
−Removed: For example, the systems design and integration solutions business of our Technology Solutions segment has significant customer concentration, requires investments in working capital and infrastructure, and has customer contracts that often offer limited or no volume guarantees or protection for end-of-life investments.
+Added: One customer accounted for 19%, of our consolidated revenue in fiscal years 2020 and 2019 and 17%, in fiscal year 2018.
+Added: While we do not believe that the loss of any single customer would have a material adverse effect on us, such loss could result in an adverse impact on certain of our businesses.
+Added: For example, our systems design and integration solutions product line has significant customer concentration, requires investments in working capital and infrastructure, and has customer contracts that often offer limited or no volume guarantees or protection for end-of-life investments.
The loss of a customer or reduction in order volumes could adversely impact our revenue, provision for inventory losses, the absorption of fixed overhead costs and our future expansion plans.
1 unchanged sentence
Volumes can fluctuate based on customer demand, delivery quality and the competitive landscape.
−Removed: Our ability to deliver customized solutions on a timely basis is critical to our success.
+Added: Table of Content
+Added: ability to deliver customized solutions on a timely basis is critical to our success.
Any delay could impact our competitive position and result in loss of customer orders, which could impact our financial position and operating results.
−Removed: In our Concentrix segment, we have experienced client concentration.
−Removed: This client concentration increases the risk of quarterly fluctuations in our operating results, depending on the seasonal pattern of our top clients’ business.
−Removed: In addition, our top clients could make greater demands on us with regard to pricing and contractual terms in general.
−Removed: The loss of, or significant decrease in demand from, any of our top clients could affect our business, results of operations and financial condition of the segment.
The market for CE products that we distribute is characterized by short product life cycles.
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Further, if we are unable to successfully compete for resellers’ or retailers’ space and promotional resources, this could negatively impact market acceptance of our products and negatively impact our business and operating results.
−Removed: Our Concentrix business is subject to dynamic changes in its business model and intense competition, which in turn could cause our operations to suffer.
−Removed: The customer experience services industry is highly competitive, highly fragmented and subject to rapid change.
−Removed: We believe that the principal competitive factors in this market are breadth and depth of process and domain expertise, service quality, the ability to attract, train and retain qualified people, compliance rigor, global delivery capabilities, price and marketing and sales capabilities.
−Removed: We compete for business with a variety of companies, including in-house operations of existing and potential clients.
−Removed: If our clients place more focus in this area and internalize these operations, this could also cause a significant reduction in the size of the available market for third party service providers like us.
−Removed: Similarly, if competitors offer their services at lower prices to gain market share or provide services that gain greater market acceptance than the services we offer or develop, this could cause a significant decrease in the available market for us.
−Removed: In addition, our success may depend on our ability to continue to develop and implement services and solutions that anticipate and respond to rapid and continuing changes in technology and offerings to serve the evolving needs of our clients.
−Removed: Some of these technologies, such as cloud-based services, artificial intelligence and automation, may cause an adverse shift in the way our existing business operations are conducted or decrease the size of the available market.
−Removed: If we are unable to hire and retain employees with domain expertise for our Concentrix business, our operations will be disrupted, and such disruption may impact our ability to manage our costs, which in turn could impact our profitability.
−Removed: The success of our operations and the quality of our services are highly dependent on our ability to attract and retain skilled personnel in all of our international delivery centers.
−Removed: The industry is characterized by high employee attrition rates and we face
−Removed: Table of Content
−Removed: competition in hiring, retaining and motivating talented and skilled leaders and employees with domain experience.
−Removed: Any increase in our employee turnover rate could increase recruiting and training costs and could decrease operating effectiveness and productivity.
−Removed: In addition, our profitability is directly affected by the utilization rate of our personnel resources.
−Removed: If we are unable to achieve optimum utilization of our personnel resources, we may experience erosions in our profit margin.
−Removed: However, if our utilization is too high, it may result in a deterioration in the quality of services provided to our clients and may also result in higher attrition rates.
−Removed: If we are unable to manage our employee attrition rates, adequately motivate our employees or utilize our personnel resources efficiently, our operations will be disrupted, and such disruption may impact our ability to manage our costs, which in turn could impact our profitability.
−Removed: If we fail to maintain effective internal controls over operations we perform for our clients in our Concentrix business or if our information systems are breached or client data are compromised, client relations may suffer, which in turn may adversely affect our revenue and results of operations.
−Removed: Our customer experience services business involves us representing our clients in certain critical operations of their business processes such as sales, marketing and customer support.
−Removed: If our clients experience disruptions in these operations or are dissatisfied with the quality of service provided, our client relationships may suffer and we may face possible legal action.
−Removed: In addition, in management of our clients’ operations, we manage large volumes of customer information and confidential data.
−Removed: We may be liable and our operations may be disrupted if there is a breach of confidentiality of client data, if an employee violates policies and regulations governing the management of personal information, if we lose our client’s data or if the security of our IT systems is compromised.
−Removed: We may also be liable if we do not maintain adequate internal controls over the processes we manage for our clients or if we fail to comply with the laws and regulations applicable to the operations in which we represent our clients.
−Removed: Our clients may request us to obtain audit reports over our internal controls.
−Removed: If we are unable to complete these audit reports in a timely manner, or if internal control deficiencies are identified in the audit process, our client relationships may suffer.
−Removed: We have issued guarantees to certain of our Concentrix clients to guarantee the performance obligations of our subsidiaries.
−Removed: If our subsidiaries are unable to meet their performance obligations under the terms of client contracts, we are obligated under these guarantees to pay damages, which may adversely affect the results of our operations.
−Removed: If we are unable to successfully manage our delivery centers in the Concentrix business, our results of operations could be adversely affected.
−Removed: Our Concentrix business, which has extensive international operations, may be adversely impacted if we are unable to manage and communicate with the resources located internationally.
−Removed: Service quality may be placed at risk and our ability to optimize our resources may be compromised if we are unable to manage our resources remotely.
−Removed: Our Concentrix business uses a wide variety of technologies to allow us to manage a large volume of work.
−Removed: These technologies are designed to keep our employees productive.
−Removed: Any failure in technology may have a negative impact on our operations.
−Removed: The success of our services primarily depends on the performance of our employees and resulting client satisfaction.
−Removed: Any increase in average waiting time or handling time or lack of promptness or technical expertise of our employees will directly impact client satisfaction.
−Removed: Any adverse client satisfaction may impact the overall business.
−Removed: If we are unable to successfully manage our delivery centers, our results of operations could be adversely affected.
−Removed: Changes in foreign currency exchange rates and limitations on the convertibility of foreign currencies could adversely affect our business and operating results.
−Removed: Approximately 34%, 28% (as adjusted) and 27% (as adjusted) of our revenues in fiscal years 2019, 2018 and 2017, respectively, were generated outside the United States.
−Removed: Most of our international revenue, cost of revenue and operating expenses are denominated in foreign currencies.
−Removed: Westcon-Comstor Latin America revenue is generally denominated in local currencies while cost of revenue is denominated in U.S.
−Removed: We presently have currency exposure arising from both sales and purchases denominated in foreign currencies.
−Removed: Changes in exchange rates between foreign currencies and the U.S.
−Removed: dollar may adversely affect our operating margins.
−Removed: For example, if these foreign currencies appreciate against the U.S.
−Removed: dollar, it will be more expensive in terms of U.S.
−Removed: dollars to purchase inventory or pay expenses with foreign currencies.
−Removed: This could have a negative impact on us if revenue related to these purchases is transacted in U.S.
−Removed: In addition, currency devaluation can result in our products, the majority of which are purchased by us in U.S.
−Removed: dollars, to be relatively more expensive to procure than products manufactured locally.
−Removed: In our Technology Solutions segment, we currently conduct only limited hedging activities, which involve the use of currency forward contracts.
−Removed: Hedging foreign currencies can be risky.
−Removed: Certain of these hedge positions are undesignated hedges of balance sheet exposures, such as intercompany loans, and typically have maturities of less than one year.
−Removed: Table of Content
−Removed: In our Concentrix segment, our customer experience services are delivered from several delivery centers located around the world, with significant operations in the Philippines and India .
−Removed: As a result, our revenue may be earned in currencies that are different from the currencies in which we incur corresponding expenses.
−Removed: Fluctuations in the value of currencies, such as the Philippine Peso and the Indian Rupee against the U.S.
−Removed: Dollar, and inflation in the local economies in which these delivery centers are located, could increase the operating and labor costs in these delivery centers which can result in reduced profitability.
−Removed: Although we enter into hedging contracts in certain currencies to limit our potential foreign currency exposure, a significant decrease in the value of the contractual currency, relative to the currencies where services are provided, could have a material adverse impact on our operating results that are not fully offset by gains realized under our hedging contracts.
−Removed: There is also additional risk if the currency is not freely or actively traded.
−Removed: Some currencies, such as the Chinese Renminbi, the Philippines Peso and the Indian Rupee, are subject to limitations on conversion into other currencies, which can limit our ability to hedge or to otherwise react to rapid foreign currency devaluations.
−Removed: We cannot predict the impact of future exchange rate fluctuations on our business and operating results.
−Removed: We do not use derivative financial instruments for speculative trading purposes, nor do we hedge our foreign currency exposure in a manner that entirely offsets the effects of changes in foreign exchange rates.
−Removed: As a general rule, we do not use financial instruments to hedge local currency denominated operating expenses in countries where a natural hedge exists.
−Removed: For example, in many countries, revenue from the local currency services substantially offsets the local currency denominated operating expenses.
−Removed: Because we conduct substantial operations in China, risks associated with economic, political and social events in China could negatively affect our business and operating results.
−Removed: A substantial portion of our Technology Solutions IT systems operations, including our IT systems support and software development operations, and a portion of our Concentrix services, are located in China.
−Removed: In addition, we also conduct general and administrative activities from our facilities in China.
−Removed: Our operations in China are subject to a number of risks relating to China’s economic and political systems, including:
−Removed: a government controlled foreign exchange rate and limitations on the convertibility of the Chinese Renminbi;
−Removed: extensive government regulation;
−Removed: changing governmental policies relating to tax benefits available to foreign-owned businesses;
−Removed: the telecommunications infrastructure;
−Removed: a relatively uncertain legal system;
−Removed: uncertainties related to continued economic and social reform.
−Removed: Our IT systems are an important part of our global operations.
−Removed: Any significant interruption in service, whether resulting from any of the above uncertainties, natural disasters or otherwise, could result in delays in our inventory purchasing, errors in order fulfillment, reduced levels of customer service and other disruptions in operations, any of which could cause our business and operating results to suffer.
−Removed: We may have higher than anticipated tax liabilities.
−Removed: We conduct business globally and file income tax returns in various tax jurisdictions.
−Removed: Our effective tax rate could be adversely affected by several factors, many of which are outside of our control, including:
−Removed: changes in income before taxes in various jurisdictions in which we operate that have differing statutory tax rates;
−Removed: changing tax laws, regulations, and/or interpretations of such tax laws in multiple jurisdictions;
−Removed: effect of tax rate on accounting for acquisitions and dispositions;
−Removed: issues arising from tax audit or examinations and any related interest or penalties;
−Removed: uncertainty in obtaining tax holiday extensions or expiration or loss of tax holidays in various jurisdictions.
−Removed: Table of Content
−Removed: We report our results of operations based on our determination of the amount of taxes owed in various tax jurisdictions in which we operate.
−Removed: The determination of our worldwide provision for income taxes and other tax liabilities requires estimation, judgment and calculations where the ultimate tax determination may not be certain.
−Removed: Our determination of tax liability is always subject to review or examination by tax authorities in various tax jurisdictions.
−Removed: Any adverse outcome of such review or examination could have a negative impact on our operating results and financial condition.
−Removed: The results from various tax examinations and audits may differ from the liabilities recorded in our financial statements and could adversely affect our financial results and cash flows.
We have pursued and intend to continue to pursue strategic acquisitions or investments in new markets and may encounter risks associated with these activities, which could harm our business and operating results.
19 unchanged sentences
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 were determined, negatively impacting our results of operations.
−Removed: Because of the capital-intensive nature of our Technology Solutions business, we need continued access to capital, which if not available to us or if not available on favorable terms, could harm our ability to operate or expand our business.
−Removed: Our Technology Solutions business requires significant levels of capital to finance accounts receivable and product inventory that is not financed by trade creditors.
+Added: Because of the capital-intensive nature of our business, we need continued access to capital, which if not available to us or if not available on favorable terms, could harm our ability to operate or expand our business.
+Added: 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.
−Removed: In the event we are required, or elect, to raise additional funds, including as a result of the separation, we may be unable to do so on favorable terms, or at all, and may incur expenses in raising the additional funds.
+Added: Table of Content
+Added: 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.
Our current and future indebtedness could adversely affect our operating results and severely limit our ability to plan for, or react to, changes in our business or industry.
We could also be limited by financial and other restrictive covenants in securitization or credit arrangements, including limitations on our borrowing of additional funds and issuing dividends.
−Removed: Furthermore, the cost of securitization or debt financing could significantly increase in the future, including as a result of the separation, making it cost prohibitive to securitize our accounts receivable or borrow, which could force us to issue new equity securities.
−Removed: If we issue new equity securities, existing stockholders may experience dilution,
−Removed: Table of Content
−Removed: or the new equity securities may have rights, preferences or privileges senior to those of existing holders of common stock.
+Added: Furthermore, the cost of securitization or debt financing could significantly increase in the future, making it cost prohibitive to securitize our accounts receivable or borrow, which could force us to issue new equity securities.
+Added: If we issue new equity securities, existing stockholders may experience dilution, or the new equity securities may have rights, preferences or privileges senior to those of existing holders of common stock.
If we cannot raise funds on acceptable terms, we may not be able to take advantage of future opportunities or respond to competitive pressures or unanticipated requirements.
Any inability to raise additional capital when required could have an adverse effect on our business and operating results.
−Removed: The terms of our debt arrangements impose significant restrictions on our ability to operate which in turn could negatively affect our ability to respond to business and market conditions and therefore could have an adverse effect on our business and operating results.
−Removed: As of November 30, 2019, we had $3.0 billion in outstanding short and long-term borrowings under term loans, lines of credit, accounts receivable securitization programs and capital leases, excluding trade payables.
−Removed: The terms of one or more of the agreements under which this indebtedness was incurred may limit or restrict, among other things, our ability to:
−Removed: incur additional indebtedness;
−Removed: make investments;
−Removed: pay dividends or make certain other restricted payments;
−Removed: repurchase common stock;
−Removed: consummate certain asset sales or acquisitions;
−Removed: enter into certain transactions with affiliates;
−Removed: merge, consolidate or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of our assets.
−Removed: We are also required to maintain specified financial ratios and satisfy certain financial condition tests under certain of our debt facilities.
−Removed: Our inability to meet these ratios and tests, including as a result of the separation, could result in the acceleration of the repayment of the related debt, termination of the applicable facility, an increase in our effective cost of funds or the cross-default of other credit and securitization arrangements.
−Removed: As a result, our ability to operate may be restricted and our ability to respond to business and market conditions may be limited, which could have an adverse effect on our business and operating results.
−Removed: We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations, which could adversely affect our business.
−Removed: Our ability to make scheduled debt payments or to refinance our debt obligations depends on our financial and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control.
−Removed: We cannot be certain that we will maintain a level of cash flows from operating activities sufficient to permit us to pay the principal and interest on our indebtedness.
−Removed: If our cash flows and capital resources are insufficient to fund our debt service obligations, including as a result of the separation, we may be forced to reduce or delay capital expenditures, sell assets or operations, seek additional capital or restructure or refinance our indebtedness.
−Removed: We cannot be certain that we would be able to take any of these actions, that these actions would be successful and permit us to meet our scheduled debt service obligations or that these actions would be permitted under the terms of our existing or future debt agreements.
−Removed: In the absence of such operating results and resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations.
−Removed: Some of our credit facilities restrict our ability to dispose assets and use the proceeds from such disposition.
−Removed: As such, we may not be able to consummate those dispositions or use any resulting proceeds and, in addition, such proceeds may not be adequate to meet any debt service obligations then due.
−Removed: If we cannot make scheduled payments on our debt, we will be in default and, as a result:
−Removed: our lenders could declare all outstanding principal and interest to be due and payable;
−Removed: the lenders under our credit agreements could terminate their commitments to loan us money and, in the case of our secured credit agreements, foreclose against the assets securing their borrowings;
−Removed: we could be forced to raise additional capital through the issuance of additional, potentially dilutive securities;
−Removed: we could be forced into bankruptcy or liquidation, which is likely to result in delays in the payment of our indebtedness and in the exercise of enforcement remedies related to our indebtedness.
−Removed: If the interest rates on our borrowings increase, our access to capital and net income could be adversely affected.
−Removed: Our borrowings and securitization arrangements are variable-rate obligations and expose us to interest rate risks.
−Removed: If interest rates increase, debt service obligations and our interest expense will increase even though the amount borrowed remains the same.
−Removed: Our net income and cash flows, including cash available for servicing indebtedness, will correspondingly decrease.
−Removed: Table of Content
−Removed: An increase in interest rates may increase our future borrowing costs and restrict our access to capital.
−Removed: Additionally, current market conditions, the recovering global economy, and overall credit conditions could limit our availability of capital, which could cause increases in interest margin spreads over underlying indices, effectively increasing the cost of our borrowing.
−Removed: While some of our credit facilities have contractually negotiated spreads, any changes to these spreads in connection with renegotiations of our credit facilities could adversely affect our results of operations.
−Removed: 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.
−Removed: In the event of the nonperformance by the counterparties, we are exposed to credit losses.
−Removed: A portion of our revenue is financed by floor plan financing companies and any termination or reduction in these financing arrangements could increase our financing costs and harm our business and operating results.
−Removed: A portion of our product distribution revenue is financed by floor plan financing companies.
−Removed: Floor plan financing companies are engaged by our customers to finance, or floor, the purchase of products from us.
−Removed: In exchange for a fee, we transfer the risk of loss on the sale of our products to the floor plan companies.
−Removed: 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.
−Removed: 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.
We have significant credit exposure to our customers, and negative trends in their businesses could cause us significant credit loss and negatively impact our cash flow and liquidity position.
11 unchanged sentences
We depend on IT and telecommunications systems and the Internet for our operations.
−Removed: These systems support a variety of functions including inventory management, order processing, shipping, shipment tracking, billing, and our Concentrix business.
+Added: These systems support a variety of functions including inventory management, order processing, shipping, shipment tracking, and billing.
Failures or significant downtime of our IT or telecommunications systems could prevent us from taking customer orders, printing product pick-lists, shipping products, billing customers and handling call volume.
−Removed: Frequent or prolonged interruption in our ability to provide service in our Concentrix business would adversely affect our client relationships and damage our reputation.
Sales also may be affected if our reseller and retail customers are unable to access our pricing and product availability information.
4 unchanged sentences
Disruption of our website or the Internet in general could impair our order processing or more generally prevent our OEM suppliers and reseller and retail customers from accessing information.
−Removed: Our Concentrix business is dependent upon telephone and data services provided by third party telecommunications service vendors and our IT and telecommunications systems.
−Removed: Any significant increase in our IT and telecommunications costs or temporary or permanent loss of our IT or telecommunications systems could harm our relationships with our customers.
+Added: A significant increase in our IT costs or a temporary or permanent loss of our IT systems could harm our relationships with our customers.
The occurrence of any of these events could have an adverse effect on our operations and financial results.
−Removed: Cyberattacks or the improper disclosure or control of personal information could result in liability and harm our reputation, which could adversely affect our business.
−Removed: Our business is heavily dependent upon information technology networks and systems.
−Removed: Internal or external attacks on those networks and systems could disrupt our normal operations centers and impede our ability to provide critical products and services to our customers and clients, subjecting us to liability under our contracts and damaging our reputation.
−Removed: Table of Content
−Removed: Our business also involves the use, storage and transmission of information about our employees, our clients and customers of our clients.
−Removed: If any person, including any of our employees, negligently disregards or intentionally breaches our established controls with respect to such data or otherwise mismanages or misappropriates that data, we could be subject to monetary damages, fines or criminal prosecution.
−Removed: Unauthorized disclosure of sensitive or confidential client or customer data, whether through system failure, employee negligence, fraud or misappropriation, along with unauthorized access to or through our information systems or those we develop for clients, whether by our employees or third parties, could result in negative publicity, loss of clients, legal liability and damage to our reputation, business, results of operations and financial condition.
−Removed: While we take measures to protect the security of, and prevent unauthorized access to, our systems and personal and proprietary information, the security controls for our systems, as well as other security practices we follow, may not prevent improper access to, or disclosure of, personally identifiable or proprietary information.
−Removed: 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.
−Removed: The General Data Protection Regulation (GDPR) in Europe, the Data Privacy Act in Philippines, the California Consumer Privacy Act and other similar laws have resulted, and will continue to result, in increased compliance costs.
−Removed: 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.
−Removed: We rely on independent shipping companies for delivery of products, and price increases or service interruptions from these carriers could adversely affect our business and operating results.
−Removed: We rely almost entirely on arrangements with independent shipping companies, such as FedEx and UPS, for the delivery of our products from OEM suppliers and delivery of products to reseller and retail customers.
−Removed: Freight and shipping charges can have a significant impact on our gross margin.
−Removed: As a result, an increase in freight surcharges due to rising fuel cost or general price increases will have an immediate adverse effect on our margins, unless we are able to pass the increased charges to our reseller and retail customers or renegotiate terms with our OEM suppliers.
−Removed: In addition, in the past, carriers have experienced work stoppages due to labor negotiations with management.
−Removed: An increase in freight or shipping charges, the termination of our arrangements with one or more of these independent shipping companies, the failure or inability of one or more of these independent shipping companies to deliver products, or the unavailability of their shipping services, even temporarily, could have an adverse effect on our business and operating results.
Because of the experience of our key personnel in the IT, CE and the customer experience services industries and their technological and industry expertise, if we were to lose any of our key personnel, it could inhibit our ability to operate and grow our business successfully.
8 unchanged sentences
Also, the same or similar incidents may occur in the future for which we may not have sufficient insurance coverage or policy limits to be fully compensated for the loss, which may have an adverse effect on our business and financial results.
+Added: Table of Content
We may become involved in intellectual property or other disputes that could cause us to incur substantial costs, divert the efforts of our management, and require us to pay substantial damages or require us to obtain a license, which may not be available on commercially reasonable terms, if at all.
5 unchanged sentences
We may be unable to obtain such a license on commercially reasonable terms, if at all.
−Removed: Table of Content
We are from time to time involved in other litigation in the ordinary course of business.
7 unchanged sentences
If we are unable to fulfill customer requirements in a timely manner, this could harm our operating results.
−Removed: For example, our Philippines operation is at greater risk due to adverse weather conditions, such as typhoons, mudslides and floods.
We currently have a disaster recovery plan and business interruption insurance;
however, they may not be sufficient to compensate for losses that may occur.
−Removed: Global health and economic, political and social conditions may harm our ability to do business, increase our costs and negatively affect our stock price.
−Removed: Worldwide economic conditions remain uncertain due to adverse consequences concerning the United States and China trade negotiations, the United Kingdom’s impending exit from the European Union, United States federal government budget disruptions, market volatility as a result of political leadership in certain countries and other disruptions to global and regional economies and markets.
−Removed: 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.
−Removed: More generally, these geopolitical, social and economic conditions could result in increased volatility in the United States and worldwide financial markets and economy.
−Removed: 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.
−Removed: It could also adversely impact our ability to obtain adequate insurance at reasonable rates and may require us to incur increased costs for security measures for our domestic and international operations.
−Removed: We are predominantly uninsured for losses and interruptions caused by terrorism, acts of war and similar events.
−Removed: These uncertainties make it difficult for us and our suppliers and customers to accurately plan future business activities.
−Removed: Part of our business is conducted outside of the United States, exposing us to additional risks that may not exist in the United States, which in turn could cause our business and operating results to suffer.
−Removed: We have significant international operations and presence which subjects us to risks, including:
−Removed: political or economic instability;
−Removed: extensive governmental regulation;
−Removed: changes in import/export duties;
−Removed: fluctuation in foreign currency exchange rates;
−Removed: trade restrictions;
−Removed: compliance with the Foreign Corrupt Practices Act, U.K.
−Removed: bribery laws and similar laws;
−Removed: difficulties and costs of staffing and managing operations in certain foreign countries;
−Removed: work stoppages or other changes in labor conditions;
−Removed: minimum wage increases;
−Removed: difficulties in collecting accounts receivable on a timely basis or at all;
−Removed: seasonal reductions in business activity in some parts of the world.
−Removed: We may continue to expand internationally to respond to competitive pressure and customer and market requirements.
−Removed: Establishing operations in any foreign country or region presents risks such as those described above as well as risks specific to the particular country or region.
−Removed: In addition, until a payment history is established over time with customers in a new geography or region,
+Added: The terms of our debt arrangements impose significant restrictions on our ability to operate which in turn could negatively affect our ability to respond to business and market conditions and therefore could have an adverse effect on our business and operating results.
+Added: As of November 30, 2020, we had $2.8 billion, including obligations of Concentrix, in outstanding short and long-term borrowings under term loans, lines of credit, accounts receivable securitization programs and capital leases, excluding trade payables.
+Added: Subsequent to November 30, 2020, upon completion of the Separation, our outstanding borrowings totaled $1.6 billion.
+Added: The terms of one or more of the agreements under which this indebtedness was incurred may limit or restrict, among other things, our ability to:
+Added: incur additional indebtedness;
+Added: make investments;
+Added: pay dividends or make certain other restricted payments;
+Added: repurchase common stock;
+Added: consummate certain asset sales or acquisitions;
+Added: enter into certain transactions with affiliates;
+Added: merge, consolidate or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of our assets.
+Added: We are also required to maintain specified financial ratios and satisfy certain financial condition tests under certain of our debt facilities.
+Added: Our inability to meet these ratios and tests could result in the acceleration of the repayment of the related debt, termination of the applicable facility, an increase in our effective cost of funds or the cross-default of other credit and securitization arrangements.
+Added: As a result, our ability to operate may be restricted and our ability to respond to business and market conditions may be limited, which could have an adverse effect on our business and operating results.
+Added: We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations, which could adversely affect our business.
+Added: Our ability to make scheduled debt payments or to refinance our debt obligations depends on our financial and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business and other factors
Table of Content
−Removed: the likelihood of collecting accounts receivable generated by such operations could be less than our expectations.
−Removed: As a result, there is a greater risk that reserves set with respect to the collection of such accounts receivable may be inadequate.
−Removed: Furthermore, if our international expansion efforts in any foreign country are unsuccessful, we may decide to cease operations, which would likely cause us to incur additional expense and loss.
−Removed: In addition, changes in policies or laws of the United States or foreign governments resulting in, among other things, higher taxation, currency conversion limitations, restrictions on fund transfers or the expropriation of private enterprises, could reduce the anticipated benefits of our international expansion.
−Removed: Any actions by countries in which we conduct business to reverse policies that encourage foreign trade or investment could adversely affect our business.
−Removed: If we fail to realize the anticipated growth of our future international operations, our business and operating results could suffer.
+Added: beyond our control.
+Added: We cannot be certain that we will maintain a level of cash flows from operating activities sufficient to permit us to pay the principal and interest on our indebtedness.
+Added: If our cash flows and capital resources are insufficient to fund our debt service obligations we may be forced to reduce or delay capital expenditures, sell assets or operations, seek additional capital or restructure or refinance our indebtedness.
+Added: We cannot be certain that we would be able to take any of these actions, that these actions would be successful and permit us to meet our scheduled debt service obligations or that these actions would be permitted under the terms of our existing or future debt agreements.
+Added: In the absence of such operating results and resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations.
+Added: Some of our credit facilities restrict our ability to dispose assets and use the proceeds from such disposition.
+Added: As such, we may not be able to consummate those dispositions or use any resulting proceeds and, in addition, such proceeds may not be adequate to meet any debt service obligations then due.
+Added: If we cannot make scheduled payments on our debt, we will be in default and, as a result:
+Added: our lenders could declare all outstanding principal and interest to be due and payable;
+Added: the lenders under our credit agreements could terminate their commitments to loan us money and, in the case of our secured credit agreements, foreclose against the assets securing their borrowings;
+Added: we could be forced to raise additional capital through the issuance of additional, potentially dilutive securities;
+Added: we could be forced into bankruptcy or liquidation, which is likely to result in delays in the payment of our indebtedness and in the exercise of enforcement remedies related to our indebtedness.
+Added: If the interest rates on our borrowings increase, our access to capital and net income could be adversely affected.
+Added: Our borrowings and securitization arrangements are variable-rate obligations and expose us to interest rate risks.
+Added: If interest rates increase, debt service obligations and our interest expense will increase even though the amount borrowed remains the same.
+Added: Our net income and cash flows, including cash available for servicing indebtedness, will correspondingly decrease.
+Added: An increase in interest rates may increase our future borrowing costs and restrict our access to capital.
+Added: Additionally, current market conditions, the recovering global economy, and overall credit conditions could limit our availability of capital, which could cause increases in interest margin spreads over underlying indices, effectively increasing the cost of our borrowing.
+Added: While some of our credit facilities have contractually negotiated spreads, any changes to these spreads in connection with renegotiations of our credit facilities could adversely affect our results of operations.
+Added: 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.
+Added: In the event of the nonperformance by the counterparties, we are exposed to credit losses.
+Added: A portion of our revenue is financed by floor plan financing companies and any termination or reduction in these financing arrangements could increase our financing costs and harm our business and operating results.
+Added: A portion of our product distribution revenue is financed by floor plan financing companies.
+Added: Floor plan financing companies are engaged by our customers to finance, or floor, the purchase of products from us.
+Added: In exchange for a fee, we transfer the risk of loss on the sale of our products to the floor plan companies.
+Added: 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.
+Added: 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.
+Added: Risks Related to Our Relationship with MiTAC Holdings Corporation
The concentration of ownership of our common stock among our executive officers, directors and principal stockholders could allow them to influence all matters requiring stockholder approval and could delay or prevent a change in control of SYNNEX.
2 unchanged sentences
MiTAC Holdings is a publicly-traded company on the Taiwan Stock Exchange.
−Removed: As a result, these stockholders have the potential ability to influence or control matters requiring stockholder approval, including the election of directors and the approval of mergers and acquisitions, or exert influence on actions of our Board of Directors.
+Added: As a result, these stockholders have the potential ability to influence matters requiring stockholder approval, including the election of directors and the approval of mergers and acquisitions, or exert influence on actions of our Board of Directors.
This concentration of ownership may have the effect of delaying, preventing or deterring a change of control of our company, could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of our company and might ultimately affect the market price of our common stock.
+Added: Table of Content
There could be potential conflicts of interest between us and MiTAC Holdings and its affiliates, which could affect our business and operating results.
16 unchanged sentences
Moreover, we cannot limit or control the use of the Synnex name by Synnex Technology International in certain geographies and our use of the Synnex name may be restricted as a result of registration of the name by Synnex Technology International or the prior use in jurisdictions where it currently operates.
+Added: Risks Related to Our Industry
Volatility in the IT and CE industries could have a material adverse effect on our business and operating results.
2 unchanged sentences
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 software-as-a-service, our future operating results could be adversely affected.
−Removed: Table of Content
−Removed: We are subject to intense competition in the Technology Solutions and Concentrix businesses, both in the United States and internationally, and if we fail to compete successfully, we will be unable to gain or retain market share.
+Added: We are subject to intense competition, both in the United States and internationally, and if we fail to compete successfully, we will be unable to gain or retain market share.
We operate in a highly competitive environment, both in the United States and internationally.
5 unchanged sentences
We may lose market share in the United States or in international markets, or may be forced in the future to reduce our prices in response to the actions of our competitors and thereby experience a reduction in our gross margins.
−Removed: In addition, in our Concentrix business, we also face competition from our clients.
−Removed: For example, some of our clients may have internal capabilities and resources to provide their own customer contact centers.
−Removed: Furthermore, pricing pressures and quality of services could impact our business adversely.
−Removed: Our ability to provide a high quality of service is dependent on our ability to retain and properly train our employees and to continue investing in our infrastructure, including IT and telecommunications systems.
We may initiate other business activities, including the broadening of our supply chain capabilities, and may face competition from companies with more experience in those new areas.
1 unchanged sentence
Increased competition and negative reaction from our OEM suppliers or reseller and retail customers resulting from our expansion into new business areas could harm our business and operating results.
+Added: Table of Content
Our business may be adversely affected by some OEM suppliers’ strategies to consolidate business or increase their direct sales, which in turn could cause our business and operating results to suffer.
11 unchanged sentences
Our failure to achieve these additional economies of scale or to respond to changes in the IT and CE industries could adversely affect our business and operating results.
+Added: Risks Related to the Separation
+Added: We or Concentrix may fail to perform under the transaction agreements executed as part of the Separation, which in turn may adversely affect our business.
+Added: In connection with the Separation, we and Concentrix entered into several agreements, including among others a separation and distribution agreement and an employee matters agreement.
+Added: The separation and distribution agreement and employee matters agreement determine the allocation of assets and liabilities between the companies following the Separation for those respective areas and include any necessary indemnifications related to liabilities and obligations.
+Added: Concentrix has spun off and some of its obligations under these and other agreements have transferred to the successor entities.
+Added: We will rely on Concentrix or its successor entities to satisfy their performance and payment obligations under these agreements.
+Added: If Concentrix or its successor entities are unable to satisfy their obligations under these agreements, we could incur operational difficulties or losses that could have a material and adverse effect on our business, financial condition and results of operations.
+Added: The Separation may not achieve some or all of the anticipated benefits, which may in turn affect our business and stock price.
+Added: We may not realize some or all of the anticipated strategic, financial, operational, marketing or other benefits from the Separation, or such benefits may be delayed by a variety of circumstances, which may not be under our control or Concentrix’.
+Added: As independent publicly-traded companies, we and Concentrix will be smaller, less diversified companies with a narrower business focus and may be more vulnerable to changing market conditions, which could materially and adversely affect our respective business, financial condition and results of operations.
+Added: Further, there can be no assurance that the combined value of the common stock of the two publicly-traded companies will be equal to or greater than what the value of our common stock would have been had the proposed Separation not occurred.
+Added: If the Separation fails to qualify for tax-free treatment, it could result in substantial tax liability for the Company.
+Added: We have obtained an opinion that, for U.S.
+Added: federal income tax purposes, the Separation will qualify as a tax-free reorganization under Sections 368(a)(1)(D) and 355 of the Internal Revenue Code of 1986, as amended, to us and our United States stockholders.
+Added: The opinion we received will not be binding on the IRS or any court.
+Added: Accordingly, there can be no assurance that the IRS will not challenge the conclusions reflected in the opinion or that a court would not sustain such a challenge.
+Added: If the Separation fails to qualify for tax-free treatment, we would be subject to tax as if we had sold the stock of Concentrix in a taxable sale for its fair market value, which would result in substantial tax liability for us, and our stockholders would be subject to tax on the fair market value of the Concentrix stock received in the Separation.
+Added: Table of Content
+Added: Risks Related to the Macro - Economic and Regulatory Environment
+Added: 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.
+Added: 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.
+Added: In December 2019, there was an outbreak of a new strain of coronavirus, COVID-19.
+Added: On March 11, 2020, the World Health Organization characterized COVID-19 as a pandemic.
+Added: 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.
+Added: This has adversely impacted our results of operations during fiscal year 2020 .
+Added: 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 the duration and spread of the pandemic and related restrictions on travel and transports, the effect on our customers and demand for our products and services;
+Added: our ability to sell and provide our products and services, including as a result of travel restrictions and people working remotely;
+Added: the ability of our customers to pay for our solutions;
+Added: and any closures of our or our customers’ offices and facilities all of which are uncertain and cannot be predicted.
+Added: 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.
+Added: Changes in foreign currency exchange rates and limitations on the convertibility of foreign currencies could adversely affect our business and operating results.
+Added: Approximately 34%, 34% and 28% of our revenues in fiscal years 2020, 2019 and 2018, respectively, were generated outside the United States.
+Added: Most of our international revenue, cost of revenue and operating expenses are denominated in foreign currencies.
+Added: In Latin America, our revenue is generally denominated in local currencies while cost of revenue is denominated in U.S.
+Added: We presently have currency exposure arising from both sales and purchases denominated in foreign currencies.
+Added: Changes in exchange rates between foreign currencies and the U.S.
+Added: dollar may adversely affect our operating margins.
+Added: For example, if these foreign currencies appreciate against the U.S.
+Added: dollar, it will be more expensive in terms of U.S.
+Added: dollars to purchase inventory or pay expenses with foreign currencies.
+Added: This could have a negative impact on us if revenue related to these purchases is transacted in U.S.
+Added: In addition, currency devaluation can result in our products, the majority of which are purchased by us in U.S.
+Added: dollars, to be relatively more expensive to procure than products manufactured locally.
+Added: We currently conduct only limited hedging activities, which involve the use of currency forward contracts.
+Added: Hedging foreign currencies can be risky.
+Added: Certain of these hedge positions are undesignated hedges of balance sheet exposures, such as intercompany loans, and typically have maturities of less than one year.
+Added: There is also additional risk if the currency is not freely or actively traded.
+Added: Some currencies, such as the Chinese Renminbi are subject to limitations on conversion into other currencies, which can limit our ability to hedge or to otherwise react to rapid foreign currency devaluations.
+Added: We cannot predict the impact of future exchange rate fluctuations on our business and operating results.
+Added: We do not use derivative financial instruments for speculative trading purposes, nor do we hedge our foreign currency exposure in a manner that entirely offsets the effects of changes in foreign exchange rates.
+Added: As a general rule, we do not use financial instruments to hedge local currency denominated operating expenses in countries where a natural hedge exists.
+Added: For example, in many countries, revenue from the local currency services substantially offsets the local currency denominated operating expenses.
+Added: We rely on independent shipping companies for delivery of products, and price increases or service interruptions from these carriers could adversely affect our business and operating results.
+Added: We rely almost entirely on arrangements with independent shipping companies, such as FedEx and UPS, for the delivery of our products from OEM suppliers and delivery of products to reseller and retail customers.
+Added: Freight and shipping charges can have a significant impact on our gross margin.
+Added: As a result, an increase in freight surcharges due to rising fuel cost or general price increases will have an immediate adverse effect on our margins, unless we are able to pass the increased charges to our reseller and retail customers or renegotiate terms with our OEM suppliers.
+Added: In addition, in the past, carriers have experienced work stoppages due to labor negotiations with management.
+Added: An increase in freight or shipping charges, the termination of our arrangements with one or more of these independent shipping companies, the failure or inability of one or more of these independent shipping companies to deliver products, or the unavailability of their shipping services, even temporarily, could have an adverse effect on our business and operating results.
+Added: Table of Content
+Added: Because we conduct substantial operations in China, risks associated with economic, political and social events in China could negatively affect our business and operating results.
+Added: A substantial portion of our IT systems operations, including our IT systems support and software development operations, are located in China.
+Added: In addition, we also conduct general and administrative activities from our facilities in China.
+Added: Our operations in China are subject to a number of risks relating to China’s economic and political systems, including:
+Added: a government controlled foreign exchange rate and limitations on the convertibility of the Chinese Renminbi;
+Added: extensive government regulation;
+Added: changing governmental policies relating to tax benefits available to foreign-owned businesses;
+Added: the telecommunications infrastructure;
+Added: a relatively uncertain legal system;
+Added: uncertainties related to continued economic and social reform.
+Added: Our IT systems are an important part of our global operations.
+Added: Any significant interruption in service, whether resulting from any of the above uncertainties, natural disasters or otherwise, could result in delays in our inventory purchasing, errors in order fulfillment, reduced levels of customer service and other disruptions in operations, any of which could cause our business and operating results to suffer.
+Added: We may have higher than anticipated tax liabilities.
+Added: We conduct business globally and file income tax returns in various tax jurisdictions.
+Added: Our effective tax rate could be adversely affected by several factors, many of which are outside of our control, including:
+Added: changes in income before taxes in various jurisdictions in which we operate that have differing statutory tax rates;
+Added: changing tax laws, regulations, and/or interpretations of such tax laws in multiple jurisdictions;
+Added: effect of tax rate on accounting for acquisitions and dispositions;
+Added: issues arising from tax audit or examinations and any related interest or penalties;
+Added: uncertainty in obtaining tax holiday extensions or expiration or loss of tax holidays in various jurisdictions.
+Added: We report our results of operations based on our determination of the amount of taxes owed in various tax jurisdictions in which we operate.
+Added: The determination of our worldwide provision for income taxes and other tax liabilities requires estimation, judgment and calculations where the ultimate tax determination may not be certain.
+Added: Our determination of tax liability is always subject to review or examination by tax authorities in various tax jurisdictions.
+Added: Any adverse outcome of such review or examination could have a negative impact on our operating results and financial condition.
+Added: The results from various tax examinations and audits may differ from the liabilities recorded in our financial statements and could adversely affect our financial results and cash flows.
+Added: Cyberattacks or the improper disclosure or control of personal information could result in liability and harm our reputation, which could adversely affect our business.
+Added: Our business is heavily dependent upon information technology networks and systems.
+Added: Internal or external attacks on those networks and systems could disrupt our normal operations centers and impede our ability to provide critical products and services to our customers and clients, subjecting us to liability under our contracts and damaging our reputation.
+Added: Our business also involves the use, storage and transmission of information about our employees, and customers.
+Added: If any person, including any of our employees, negligently disregards or intentionally breaches our established controls with respect to such data or otherwise mismanages or misappropriates that data, we could be subject to monetary damages, fines or criminal prosecution.
+Added: While we take measures to protect the security of, and prevent unauthorized access to, our systems and personal and proprietary information, the security controls for our systems, as well as other security practices we follow, may not prevent improper access to, or disclosure of, personally identifiable or proprietary information.
+Added: 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.
+Added: The General Data Protection Regulation in Europe, the California Consumer Privacy Act and other similar laws have resulted, and will continue to result, in increased compliance costs.
+Added: 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.
+Added: We could also face legal, reputational and financial risks if we fail to protect customer and internal data from security breaches or cyberattacks.
+Added: Table of Content
+Added: Global health and economic, political and social conditions may harm our ability to do business, increase our costs and negatively affect our stock price.
+Added: Worldwide economic conditions remain uncertain due to adverse consequences concerning the United States and China trade negotiations, market volatility as a result of political leadership in certain countries and other disruptions to global and regional economies and markets.
+Added: 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.
+Added: More generally, these geopolitical, social and economic conditions could result in increased volatility in the United States and worldwide financial markets and economy.
+Added: 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.
+Added: It could also adversely impact our ability to obtain adequate insurance at reasonable rates and may require us to incur increased costs for security measures for our domestic and international operations.
+Added: We are predominantly uninsured for losses and interruptions caused by terrorism, acts of war and similar events.
+Added: These uncertainties make it difficult for us and our suppliers and customers to accurately plan future business activities.
+Added: Part of our business is conducted outside of the United States, exposing us to additional risks that may not exist in the United States, which in turn could cause our business and operating results to suffer.
+Added: We have significant international operations and presence which subjects us to risks, including:
+Added: political or economic instability;
+Added: extensive governmental regulation;
+Added: changes in import/export duties;
+Added: fluctuation in foreign currency exchange rates;
+Added: trade restrictions;
+Added: compliance with the Foreign Corrupt Practices Act, U.K.
+Added: bribery laws and similar laws;
+Added: difficulties and costs of staffing and managing operations in certain foreign countries;
+Added: work stoppages or other changes in labor conditions;
+Added: minimum wage increases;
+Added: difficulties in collecting accounts receivable on a timely basis or at all;
+Added: seasonal reductions in business activity in some parts of the world.
+Added: We may continue to expand internationally to respond to competitive pressure and customer and market requirements.
+Added: Establishing operations in any foreign country or region presents risks such as those described above as well as risks specific to the particular country or region.
+Added: In addition, until a payment history is established over time with customers in a new geography or region, the likelihood of collecting accounts receivable generated by such operations could be less than our expectations.
+Added: As a result, there is a greater risk that reserves set with respect to the collection of such accounts receivable may be inadequate.
+Added: Furthermore, if our international expansion efforts in any foreign country are unsuccessful, we may decide to cease operations, which would likely cause us to incur additional expense and loss.
+Added: In addition, changes in policies or laws of the United States or foreign governments resulting in, among other things, higher taxation, currency conversion limitations, restrictions on fund transfers or the expropriation of private enterprises, could reduce the anticipated benefits of our international expansion.
+Added: Any actions by countries in which we conduct business to reverse policies that encourage foreign trade or investment could adversely affect our business.
+Added: If we fail to realize the anticipated growth of our future international operations, our business and operating results could suffer.
If we are unable to maintain effective internal control over financial reporting, our ability to report our financial results on a timely and accurate basis may be adversely affected, which in turn could cause the market price of our common stock to decline.
Section 404 of the Sarbanes-Oxley Act of 2002 requires our management to report on, and our independent registered public accounting firm to attest to, the effectiveness of our internal control structure and procedures for financial reporting.
−Removed: We completed an evaluation of the effectiveness of our internal control over financial reporting for fiscal year 2019, and we have an ongoing program to perform the system and process evaluation and testing necessary to continue to comply with these requirements.
+Added: We completed an evaluation of the effectiveness of our internal control over financial reporting for fiscal year 2020, and we have an ongoing program to
+Added: Table of Content
+Added: perform the system and process evaluation and testing necessary to continue to comply with these requirements.
However, internal control over financial reporting has inherent limitations, including human error, the possibility that controls could be circumvented or become inadequate because of changed conditions, and fraud.
1 unchanged sentence
We expect to continue to incur significant expense and to devote management resources to Section 404 compliance.
−Removed: In the event that one of our Chief Executive Officer, Chief Financial Officer or
−Removed: Table of Content
−Removed: independent registered public accounting firm determines that our internal control over financial reporting is not effective as defined under Section 404, investor perceptions and our reputation may be adversely affected, and the market price of our stock could decline.
+Added: In the event that one of our Chief Executive Officer, Chief Financial Officer or independent registered public accounting firm determines that our internal control over financial reporting is not effective as defined under Section 404, investor perceptions and our reputation may be adversely affected, and the market price of our stock could decline.
Changes to financial accounting standards may affect our results of operations and cause us to change our business practices.
3 unchanged sentences
Changes to those rules or the questioning of current practices may adversely affect our reported financial results or the way we conduct our business.
−Removed: Risks Relating to the Proposed Separation
−Removed: Our plan to separate into two independent publicly-traded companies is subject to various risks and uncertainties and may not be completed in accordance with the expected plans or anticipated timeline, or at all, and will involve significant time and expense, which could disrupt or adversely affect our business.
−Removed: On January 9, 2020, we announced plans to separate into two independent publicly-traded companies.
−Removed: The separation, which is currently targeted to be completed in the second half of 2020, is subject to certain closing conditions, including final approval of the SYNNEX Board of Directors, the receipt of favorable opinion with respect to the tax-free nature of the transaction, and the effectiveness of a Form 10 registration statement with the U.S.
−Removed: Securities and Exchange Commission.
−Removed: Unanticipated developments, including changes in the competitive conditions of SYNNEX’ and Concentrix’ respective markets, possible delays in obtaining tax opinions, the uncertainty of the financial markets and challenges in executing the separation, could delay or prevent the completion of the proposed separation, or cause the proposed separation to occur on terms or conditions that are different or less favorable than expected.
−Removed: We expect that the process of completing the proposed separation will be time-consuming and involve significant costs and expenses, which may be significantly higher than what we currently anticipate and may not yield a discernible benefit if the separation is not completed.
−Removed: Executing the proposed separation will require significant time and attention from our senior management and employees, which could adversely affect our business, financial results and results of operations.
−Removed: We may also experience increased difficulties in attracting, retaining and motivating employees during the pendency of the separation and following its completion, which could harm our businesses.
−Removed: The separation may not achieve some or all of the anticipated benefits.
−Removed: We may not realize some or all of the anticipated strategic, financial, operational, marketing or other benefits from the separation, or such benefits may be delayed by a variety of circumstances, which may not be under the control of SYNNEX or Concentrix.
−Removed: As independent publicly-traded companies, SYNNEX and Concentrix will be smaller, less diversified companies with a narrower business focus and may be more vulnerable to changing market conditions, which could materially and adversely affect their respective business, financial condition and results of operations.
−Removed: Further, there can be no assurance that the combined value of the common stock of the two publicly-traded companies will be equal to or greater than what the value of our common stock would have been had the proposed separation not occurred.
−Removed: The proposed separation may result in disruptions to, and negatively impact our relationships with, our customers and other business partners.
−Removed: Parties with which we do business may experience uncertainty associated with the separation, including with respect to current or future business relationships with us.
−Removed: Our business relationships may be subject to disruption as clients, vendors and others may attempt to negotiate changes in existing business relationships or consider entering into business relationships with parties other than us.
−Removed: These disruptions could have a material and adverse effect on the businesses, financial condition, results of operations or prospects of the combined business, including a material and adverse effect on our ability to realize the anticipated benefits of the separation.
−Removed: The separation could result in substantial tax liability.
−Removed: We intend to obtain an opinion to the effect that, for U.S.
−Removed: federal income tax purposes, the separation will qualify, for both SYNNEX and its stockholders, as a tax-free reorganization within the meaning of Sections 368(a)(1)(D) and 355 of the U.S.
−Removed: Internal Revenue Code of 1986, as amended.
−Removed: The opinion will be based, among other things, on various factual assumptions and
−Removed: Table of Content
−Removed: representations we have made.
−Removed: If any of these assumptions or representations are, or become, inaccurate or incomplete, reliance on the opinion may be affected and the separation could be taxable to SYNNEX and its stockholders .
−Removed: The opinion we will receive will not be binding on the IRS or any court.
−Removed: Accordingly, there can be no assurance that the IRS will not challenge the conclusions reflected in the opinion or that a court would not sustain such a challenge.
−Removed: The separation could negatively impact our access to capital and the terms of our borrowing arrangements, which in turn would have an adverse effect on our business and operating results.
−Removed: The provisions of our term loans, lines of credit, accounts receivable securitization programs and capital leases (excluding trade payables) may require that we amend the terms of our borrowings due to the separation, and we may not be able to secure terms that are as favorable as those received prior to the separation.
−Removed: Additionally, as a result of the separation and the resulting decreased revenue diversification and decreased earnings we may become unable to satisfy certain financial condition tests or maintain specified financial ratios that are required under our debt facilities, which could result in the acceleration of the repayment of debt (including as a result of cross-defaults under other arrangements), termination of the applicable facility or an increase in our effective cost of funds.
−Removed: As a result, our ability to operate would be restricted, which would have an adverse effect on our business and operating results.
+Added: The United Kingdom’s withdrawal from the European Union (“EU”) could adversely impact our business, results of operations and financial condition.
+Added: On January 31, 2020, the United Kingdom left the EU (“Brexit”).
+Added: The United Kingdom and EU entered into a new trade agreement in December 2020, subject to final approval by the European Parliament.
+Added: In addition, the United Kingdom is in the process of negotiating trade agreements with the United States and certain other countries The most significant impact of the new agreement between the United Kingdom and the EU are new regulations regarding trade, tax, security and employees, among others, in the United Kingdom.
+Added: Compliance with such regulations could be costly, negatively impacting our business, results of operations and financial condition.
Unresolved Staff Comments
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.