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When used in this Quarterly Report on Form 10-Q, or this “Report”, the words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “allows,” “can,” “may,” “could,” “designed,” “will,” and similar expressions are intended to identify forward-looking statements.
−Removed: These are statements that relate to future periods and include statements about the impact of COVID-19, market trends, our business model and our services, our business and market strategy, our proposed separation of SYNNEX and Concentrix, including the timing and impact thereof, future growth, including expansion of our product and service lines, our employee hiring, retention of the ownership interest of MiTAC Holdings Corporation (“MiTAC Holdings”), in us and its impact, our revenue, including our products revenue, sources of revenue, our gross margins, our operating costs and results, timing of payment, the value of our inventory, our competition, including with Synnex Technology International Corp., our future needs for additional financing, the likely sources for such funding and the impact of such funding, concentration of customers and suppliers, customer and supplier contract terms, customer forecasts and its impact on us, relationships with our suppliers, adequacy of our facilities, productivity, our data center and contact center operations, use of technology at contact centers, ability to manage and communicate with international resources, scalability of customer management solutions, ability to meet demand, managing inventory and our shipping costs, our operations and trends related thereto, our international operations, foreign currency exchange rates and hedging activities, the withdrawal of the UK from the EU, expansion of our operations and related effects, our strategic acquisitions and divestitures of businesses and assets, seasonality of sales, changes in share price, adequacy of our cash resources to meet our capital needs, our debt and financing arrangements, cash held by our foreign subsidiaries and repatriation, changes in fair value of derivative instruments, our tax liabilities, adequacy of our disclosure controls and procedures, dependency on personnel, pricing pressures, impact of economic and industry trends, changes to the markets in which we compete, impact of our accounting policies and recently issued accounting pronouncements, our estimates and assumptions, impact of inventory repurchase obligations and commitments and contingencies, our effective tax rates, our share repurchase and dividend program, our securitization programs, term loans and revolving credit lines, and our investments in working capital and personnel.
+Added: These are statements that relate to future periods and include statements about market trends, our business model and our services, our business and market strategy, our separation of SYNNEX and Concentrix, future growth, including expansion of our product and service lines, our infrastructure, our investment in our information technology, or IT, systems, our employee hiring;
+Added: and retention, the ownership interest of MiTAC Holdings Corporation or MiTAC Holdings, in us and its impact, our revenue, sources of revenue, our gross margins, our operating costs and results, timing of payment, the value of our inventory, our competition, including with Synnex Technology International Corp., our future needs for additional financing, the likely sources for such funding and the impact of such funding, concentration of customers and suppliers, customer and supplier contract terms, customer forecasts and its impact on us, relationships with our suppliers, adequacy of our facilities, ability to obtain comparable leases, ability to manage and communicate with international resources, ability to meet demand, managing inventory and our shipping costs, our legal proceedings, our operations and trends related thereto, our international operations, foreign currency exchange rates and hedging activities, expansion of our operations and related effects, our strategic acquisitions and divestitures of businesses and assets, including our proposed acquisition of Tech Data and the timing and impact thereof, revenue, cost of revenue and gross margin, our goodwill, seasonality of sales, changes in share price, adequacy of our cash resources to meet our capital needs, our debt and financing arrangements, including the impact of any change to our credit rating, cash held by our international subsidiaries and repatriation, changes in fair value of derivative instruments, our tax liabilities, adequacy of our disclosure controls and procedures, dependency on personnel, pricing pressures, cybersecurity and compliance with related rules and regulations, impact of rules and regulations affecting public companies, impact of our pricing policies, impact of economic and industry trends, changes to the markets in which we compete, impact of our accounting policies and recently issued accounting pronouncements, our estimates and assumptions, impact of inventory repurchase obligations and commitments and contingencies, our effective tax rates, impact of any impairment of our goodwill and intangible assets, our share repurchase and dividend program, our securitization programs, term loans, revolving credit lines and the Commitment letter, our investments in working capital and personnel and our succession planning.
Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected.
−Removed: These risks and uncertainties include, but are not limited to, those risks discussed herein and risks related to the impact of COVID-19 or coronavirus, or other pandemics, and the impact of related governmental, individual and business responses, including the ability of our staff to travel to work, our ability to maintain adequate inventories, delivery capabilities, the impact on our customers and supply chain, and the impact on demand in general, the proposed separation, as well as the seasonality of the buying patterns of our customers, concentration of sales to large customers, dependence upon and trends in capital spending budgets in the IT, and consumer electronics (“CE”), industries, fluctuations in general economic and market conditions, change in the market for our customers' products, employee turnover, changes in value of foreign currencies and interest rates and other risk factors contained below under Part I, Item 1A, “Risk Factors.” These forward-looking statements speak only as of the date hereof.
−Removed: We do not intend to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based, except as may be required by law.
+Added: These risks and uncertainties include, but are not limited to, those risks discussed herein and risks related to the separation, the COVID-19 global pandemic, as well as the seasonality of the buying patterns of our customers, concentration of sales to large customers, dependence upon and trends in capital spending budgets in the IT, and consumer electronics or CE, industries, fluctuations in general economic conditions, change in the market for our customers' products, employee turnover, changes in value of foreign currencies and interest rates and other risk factors contained below under Part I, Item 1A, “Risk Factors.” These forward-looking statements speak only as of the date hereof.
+Added: We do not intend to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based, unless otherwise required by law.
In the sections of this Report entitled “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” all references to “SYNNEX,” “we,” “us,” “our” or the “Company” mean SYNNEX Corporation and its subsidiaries, except where it is made clear that the term means only the parent company or one of its segments.
−Removed: SYNNEX, the SYNNEX Logo, CONCENTRIX, and all other SYNNEX company, product and services names and slogans are trademarks or registered trademarks of SYNNEX Corporation.
−Removed: SYNNEX, the SYNNEX Logo, and CONCENTRIX Reg.
+Added: SYNNEX, the SYNNEX Logo, and all other SYNNEX company, product and services names and slogans are trademarks or registered trademarks of SYNNEX Corporation.
+Added: SYNNEX, and the SYNNEX Logo Reg.
Other names and marks are the property of their respective owners .
−Removed: We are a Fortune 200 corporation and a leading business process services company, providing a comprehensive range of distribution, logistics and integration services for the technology industry and providing outsourced services focused on customer experience to a broad range of enterprises.
−Removed: We are organized to provide our products and services through two reportable business segments:
−Removed: Technology Solutions and Concentrix.
−Removed: Our Technology Solutions segment sells peripherals, information technology (“IT”) systems including data center server and storage solutions, system components, software, networking, communications and security equipment, consumer electronics (“CE”) and complementary products.
−Removed: Our Concentrix segment offers a portfolio of technology-infused strategic solutions and end-to-end business services focused on customer experience, process optimization, technology innovation, front and back-office automation and business transformation to clients in five primary industry verticals.
−Removed: In our Technology Solutions segment, we distribute more than 40,000 technology products (as measured by active SKUs) from more than 400 IT, CE and OEM, suppliers, to more than 25,000 resellers, system integrators, and retailers throughout the United States, Canada, Japan, Mexico and Central and South America.
+Added: We are a Fortune 200 corporation and a leading provider of a comprehensive range of distribution, systems design and integration solutions for the technology industry.
+Added: On December 1, 2020, we completed the previously announced separation of our customer experience services business (the “Separation”), which was accomplished by the distribution of one hundred percent of the outstanding common stock of Concentrix Corporation (“Concentrix”) to our stockholders as of the close of business on November 17, 2020, the record date for the distribution.
+Added: Our stockholders received one share of Concentrix common stock for every share of our common stock held at the close of business on the record date.
+Added: Concentrix is now an independent public company trading under the symbol “CNXC” on the Nasdaq Stock Market.
+Added: After the Separation, we do not beneficially own any shares of Concentrix’ common stock and beginning December 1, 2020, we no longer consolidate Concentrix within our financial results or reflect the financial results of Concentrix within our continuing results of operations.
+Added: We distributed a total of approximately 51.6 million shares of Concentrix common stock to our stockholders.
+Added: In connection with the Separation, we have entered into a separation and distribution agreement, as well as various other agreements with Concentrix that provide a framework for the relationships between the parties going forward, including among others an employee matters agreement, a tax matters agreement, and a commercial agreement, pursuant to which Concentrix will continue to provide services to us following the Separation.
+Added: The historical results of operations and financial positions of Concentrix are reported as discontinued operations in our Consolidated Financial Statements.
+Added: For further information on discontinued operations, see Note 3 - Discontinued Operations, to the Consolidated Condensed Financial Statements in Item 1 of Part I.
+Added: Pursuant to the Separation of the Concentrix segment, we operate in a single reportable segment, which represents an aggregation of our four geographic operating segments of United States, Canada, Japan and Latin America.
+Added: We distribute peripherals, information technology (“IT”) systems including data center server and storage solutions, system components, software, networking, communications and security equipment, consumer electronics (“CE”) and complementary products.
+Added: We also provide systems design and integration solutions.
+Added: We distribute more than 40,000 technology products (as measured by active SKUs) from more than 500 IT, CE and original equipment manufacturers (“OEM”), suppliers to more than 25,000 resellers, system integrators, and retailers throughout the United States, Canada, Japan, Mexico and Central and South America.
We purchase peripherals, IT systems, system components, software, networking, communications and security equipment, CE and complementary products from our suppliers and sell them to our reseller and retail customers.
We perform a similar function for our distribution of licensed software products.
−Removed: Our reseller customers include value-added resellers (“VARs”), corporate resellers, government resellers, system integrators, direct marketers, and national and regional retailers.
+Added: Our reseller customers include value-added resellers, corporate resellers, government resellers, system integrators, direct marketers, and national and regional retailers.
We combine our core strengths in distribution with demand generation, supply chain management and design and integration solutions to help our customers achieve greater efficiencies in time to market, cost minimization, real-time linkages in the supply chain and aftermarket product support.
−Removed: We also provide comprehensive IT solutions in key vertical markets such as government and healthcare, and we provide specialized service
−Removed: offerings that increase efficiencies in the areas of print management, renewals, logistics services and supply chain management.
+Added: We also provide comprehensive IT solutions in key vertical markets such as government and healthcare and we provide specialized service offerings that increase efficiencies in the areas of print management, renewals, logistics services and supply chain management.
Additionally, we provide our customers with systems design and integration solutions for data center servers and networking solutions built specific to our customers’ workloads and data center environments.
−Removed: Our Technology Solutions business is characterized by low gross profit as a percentage of revenue, or gross margin, and low income from operations as a percentage of revenue, or operating margin.
+Added: Our business is characterized by low gross profit as a percentage of revenue, or gross margin, and low income from operations as a percentage of revenue, or operating margin.
The market for IT and CE products is generally characterized by declining unit prices and short product life cycles.
We set our sales price based on the market supply and demand characteristics for each particular product or bundle of products we distribute and services we provide.
−Removed: In our Technology Solutions segment, we are highly dependent on the end-market demand for IT and CE products, and on our partners’ strategic initiatives and business models.
+Added: In our business, we are highly dependent on the end-market demand for IT and CE products, and on our partners’ strategic initiatives and business models.
This end-market demand is influenced by many factors including the introduction of new IT and CE products and software by OEMs, replacement cycles for existing IT and CE products, trends toward cloud computing, overall economic growth and general business activity.
A difficult and challenging economic environment may also lead to consolidation or decline in the IT and CE industries and increased price-based competition.
−Removed: In our Concentrix segment, we provide a comprehensive range of strategic services and solutions to enhance our clients' customer life cycles to acquire, support and renew customer relationships, to automate and optimize processes, to maximize the value of every customer experience and to improve business outcomes.
−Removed: Our portfolio of services includes end-to-end process outsourcing to customers in various industry vertical markets delivered through omni-channels that include both voice and non-voice media and in more than 70 languages.
−Removed: Our portfolio of solutions and services support our clients and their customers globally.
−Removed: Our Concentrix segment generates revenue from performing services that are generally tied to our clients’ products and services and how they are received in the marketplace.
−Removed: Any shift in business or size of the market for our clients’ products, any failure of technology or failure of acceptance of our clients’ products in the market may impact our business.
−Removed: The employee turnover rate in this business and the risk of losing experienced employees is high.
−Removed: Higher turnover rates can increase costs and decrease operating efficiencies and productivity.
We have been in business since 1980 and are headquartered in Fremont, California.
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We later reincorporated in the State of Delaware under the name of SYNNEX Corporation in October 2003.
−Removed: As of August 31, 2020, we had over 252,000 full-time and temporary employees worldwide.
+Added: As of February 28, 2021, we had over 8,700 full-time and temporary employees worldwide.
In December 2019, there was an outbreak of a new strain of coronavirus (“COVID-19”).
1 unchanged sentence
The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains and workforce participation, including our own, and created significant volatility and disruption of financial markets.
−Removed: The impact of the COVID-19 pandemic on our business is discussed below and at other appropriate places in the discussion of the results of our operations for the three and nine months ended August 31, 2020:
−Removed: ‒ The disruptions due to COVID-19 have impacted our business including logistics operations in our Technology Solutions segment and limited the productive ability of many of our associates in our Concentrix segment, particularly during the second quarter of fiscal year 2020 .
−Removed: We have successfully transitioned a significant portion of our workforce in both segments to a remote working environment and implemented a number of safety and social distancing measures within our premises to protect the health and safety of associates who are required to be on-premise to support our business.
−Removed: As of August 31, 2020, the majority of our workforce across both segments was productive.
−Removed: During the three months ended August 31, 2020, we incurred net incremental costs associated with COVID-19 of approximately $21 million, of which Concentrix incurred net costs of approximately $13 million and Technology Solutions incurred net costs of approximately $8 million.
−Removed: During the nine months ended August 31, 2020, we incurred net incremental costs associated with COVID-19 of approximately $110 million, of which Concentrix incurred net costs of approximately $65 million and Technology Solutions incurred net costs of approximately $45 million.
+Added: The impact of the COVID-19 pandemic on our business is discussed at the appropriate places in the discussion of the results of our operations for the three months ended February 28, 2021.
+Added: The disruptions due to COVID-19 have impacted our business including logistics operations.
We are unable to predict how long these conditions will persist, what additional measures may be introduced by governments, vendors or customers and the effect of any such additional measures on our business.
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As events continue to evolve with respect to the pandemic, our estimates may materially change in future periods.
−Removed: ‒ In March 2020, we announced the suspension of share repurchases and our quarterly dividends.
−Removed: In June 2020, our board of directors approved a new three-year $400 million share repurchase program effective July 1st, 2020.
−Removed: We view this as the “first step” in the return to the capital allocation program we had in place pre-pandemic.
−Removed: The focus of this new repurchase program will be anti-dilutive, similar to our historical approach, albeit at a more measured pace to start given the current environment and opportunistic buying when available.
−Removed: ‒ On January 9, 2020, we announced a plan to separate our Concentrix segment into an independent publicly-traded company.
−Removed: The transaction, which was delayed due to the economic impact of the COVID-19 pandemic, is now expected to be completed in the fourth quarter of calendar year 2020, subject to market conditions.
−Removed: The separation is intended to qualify as a tax-free transaction for federal income tax purposes.
−Removed: Immediately following the separation, it is expected that our stockholders will own shares of both SYNNEX and Concentrix, at the same percentage ownership that they held prior to the transaction.
−Removed: 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 our Board of
−Removed: 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.
Critical Accounting Policies and Estimates
−Removed: During the three and nine months ended August 31, 2020, there were no material changes to our critical accounting policies and estimates previously disclosed in our Annual Report on Form 10-K for the fiscal year ended November 30, 2019.
−Removed: See Note 2 to our Consolidated Financial Statements for impact of adoption of Accounting Standards Codification Topic 842, Leases, which revises various aspects of accounting for lease arrangements.
−Removed: As of August 31, 2020, the impact of COVID-19 on our business continued to unfold.
−Removed: As a result, many of our estimates and assumptions carry a higher degree of variability and volatility.
−Removed: As events continue to evolve and additional information becomes available, our estimates may change in future periods.
−Removed: We continually seek to augment organic growth in both our business segments with strategic acquisitions of businesses and assets that complement and expand our existing capabilities.
+Added: During the three months ended February 28, 2021, there were no material changes to our critical accounting policies and estimates previously disclosed in our Annual Report on Form 10-K for the fiscal year ended November 30, 2020, except as such policies relate to the Concentrix business.
+Added: During the three months ended February 28, 2021, we adopted certain other new accounting pronouncements.
+Added: The impact of adoption of these pronouncements was not material to our consolidated financial statements.
+Added: See Note 2 - Summary of Significant Accounting Policies to our Consolidated Financial Statements for further information.
+Added: We continually seek to augment organic growth in our business with strategic acquisitions of businesses and assets that complement and expand our existing capabilities.
We also divest businesses that we deem no longer strategic to our ongoing operations.
−Removed: In our Technology Solutions business, we seek to acquire new OEM relationships, enhance our supply chain and integration capabilities, the services we provide to our customers and OEM suppliers, and expand our geographic footprint.
−Removed: In our Concentrix segment, we seek to enhance our capabilities and domain expertise in our key verticals, expand our geographic footprint and further expand into higher value service offerings.
+Added: We seek to acquire new OEM relationships, enhance our supply chain and integration capabilities, the services we provide to our customers and OEM suppliers, and expand our geographic footprint.
We are also strategically focused on further increasing our scale to support our customers.
+Added: Pending Merger
+Added: On March 22, 2021, we announced that we had entered into a merger agreement to acquire 100% of the parent company of Tech Data Corporation, a Delaware Corporation ("Tech Data") in a cash and stock transaction (the "Merger").
+Added: The consideration payable to the stockholder that owns Tech Data consists of $1.61 billion of cash and 44 million shares of our common stock, plus cash in lieu of any fractional
+Added: shares of our stock, without interest (the “Merger Consideration”) .
+Added: Following the proposed transaction, the sole stockholder of Tech Data will own approximately 45% of our stock on a fully diluted basis as of February 28, 2021 .
+Added: If the Merger is not consummated, then under certain circumstances we would be obligated to pay Tech Data a termination fee ranging from $40 .9 million to $131 .7 million .
+Added: Either party can terminate the Merger agreement if certain matters are not approved by our stockholders , in which case, we may be obligated to pay Tech Data a fee equal to the reasonable fees, costs and other expenses directly related to the Merger , or in certain circumstances, the termination fee .
+Added: The Merger is expected to create a global IT distribution leader with significant breadth and depth of product offerings, services and logistic capabilities.
+Added: For the twelve months ended January 31, 2020, Tech Data generated approximately $37 billion in revenue and approximately $375 million of net income.
+Added: In connection with the Merger, we also entered into a commitment letter that includes a commitment for a 364-day $4.0 billion senior unsecured term bridge loan and a 364-day $3.5 billion senior unsecured revolving credit facility, subject to customary conditions, in order to finance a portion of the proposed acquisition, if necessary.
+Added: Completion of the Merger is subject to the approval by our stockholders of the stock to be issued as consideration and related amendments to our certificate of incorporation, approval by the New York Stock Exchange of the listing of our stock to be issued as consideration, and other customary closing conditions, including expiration of the federal Hart-Scott-Rodino Antitrust Improvements Act of 1976 waiting period and certain foreign regulatory approvals.
+Added: The transaction is expected to close in the second half of the calendar year 2021.
Results of Operations
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Three Months Ended
−Removed: Nine Months Ended
Statements of Operations Data:
−Removed: August 31, 2020
−Removed: August 31, 2019
−Removed: August 31, 2020
−Removed: August 31, 2019
−Removed: Products revenue
−Removed: Services revenue
−Removed: Total revenue
−Removed: Cost of products revenue
−Removed: Cost of services revenue
+Added: February 28, 2021
+Added: February 29, 2020
+Added: Cost of Revenue
Selling, general and administrative expenses
−Removed: Operating income
+Added: Operating income from continuing operations
Interest expense and finance charges, net
Other income (expense), net
−Removed: Income before income taxes
+Added: Income from continuing operations before income taxes
Provision for income taxes
−Removed: With the announcement of a plan to separate the Concentrix segment into a separate publicly-traded company in a transaction expected to be completed in the fourth calendar quarter of 2020, subject to market conditions, our services revenue and cost of services revenue which represent revenue and cost of revenue of our Concentrix segment are expected to be discontinued following the separation.
−Removed: Further, selling, general and administrative expenses, interest expense and finance charges, net, other income (expense), net and provision for income-taxes are expected to decrease by amounts related to the Concentrix segment or impacted by the proposed separation, with related reductions in gross profit, operating income and net income.
−Removed: Additionally, our gross margin and operating margin are expected to decrease due to the discontinuance of the higher margins earned in the Concentrix segment.
−Removed: Due to the ongoing impact the COVID-19 pandemic, current results and financial condition discussed herein may not be indicative of future operating results and trends.
−Removed: Certain non-GAAP financial information
+Added: Income from continuing operations
+Added: Income from discontinued operations, net of taxes
+Added: The financial results of the former Concentrix business are presented as income from discontinued operations, net of taxes in the Statements of Operations data.
+Added: In addition, in the second half of 2021, we expect a decrease in our revenue by up to approximately $600 million a quarter due to a customer moving to a consignment model where we will provide integration services on an agency basis.
+Added: Due to the ongoing impact of the COVID-19 pandemic, current results and financial condition discussed herein may not be indicative of future operating results and trends.
+Added: Ce rtain non-GAAP financial information
In addition to disclosing financial results that are determined in accordance with GAAP, we also disclose certain non-GAAP financial information, including:
Revenue in constant currency, which is revenue adjusted for the translation effect of foreign currencies so that certain financial results can be viewed without the impact of fluctuations in foreign currency exchange rates, thereby facilitating period-to-period comparisons of our business performance.
−Removed: Revenue in constant currency is calculated by translating the revenue for the three and nine months ended August 31, 2020 in the billing currency using their comparable prior period currency conversion rate.
+Added: Revenue in constant currency is calculated by translating the revenue for the three months ended February 28, 2021 in the billing currency using their comparable prior period currency conversion rate.
Generally, when the dollar either strengthens or weakens against other currencies, the growth at constant currency rates or adjusting for currency will be higher or lower than growth reported at actual exchange rates.
−Removed: Non-GAAP operating income, which is operating income adjusted to exclude acquisition-related and integration expenses, restructuring costs and amortization of intangible assets.
+Added: Non-GAAP operating income, which is operating income adjusted to exclude transaction-related and integration expenses, amortization of intangible assets and share-based compensation expense.
Non-GAAP operating margin, which is non-GAAP operating income, as defined above, divided by revenue.
−Removed: Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) which excludes other income (expense), net and acquisition-related and integration expenses.
−Removed: Non-GAAP diluted earnings per common share (“EPS”), which is diluted EPS excluding the per share, tax effected impact of (i) acquisition-related and integration expenses, (ii) amortization of intangible assets and (iii) a gain recorded in fiscal year 2019 upon the settlement of contingent consideration related to the acquisition of Westcon-Comstor Americas in fiscal year 2017 .
+Added: Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) which is net income before interest, taxes, depreciation and amortization, adjusted to exclude other income (expense), net, transaction-related and integration expenses and share-based compensation expense.
+Added: Non-GAAP diluted earnings per common share (“EPS”), which is diluted EPS excluding the per share, tax effected impact of (i) transaction-related and integration expenses, (ii) amortization of intangible assets, (iii) share-based compensation.
+Added: Transaction-related expenses typically consist of acquisition, integration, and divestiture related costs and are expensed as incurred.
+Added: These expenses primarily represent costs for legal, banking, consulting and advisory services, and debt extinguishment fees.
+Added: From time to time, this category may also include transaction-related gains/losses on divestitures/spin-off of businesses.
We believe that providing this additional information is useful to the reader to better assess and understand our base operating performance, especially when comparing results with previous periods and for planning and forecasting in future periods, primarily because management typically monitors the business adjusted for these items in addition to GAAP results.
11 unchanged sentences
These non-GAAP financial measures should not be considered in isolation or as a substitute for the comparable GAAP measures and should be used as a complement to, and in conjunction with data presented in accordance with GAAP.
+Added: In prior periods, SYNNEX has excluded other items relevant to those periods for purposes of its non-GAAP financial measures.
Non-GAAP Financial Information:
1 unchanged sentence
Three Months Ended
−Removed: Nine Months Ended
−Removed: August 31, 2020
−Removed: August 31, 2019
−Removed: August 31, 2020
−Removed: August 31, 2019
+Added: February 28, 2021
+Added: February 29, 2020
(in thousands, except per share amounts)
2 unchanged sentences
Operating income
−Removed: Acquisition-related and integration expenses
−Removed: Amortization of intangibles
−Removed: Non-GAAP operating income
−Removed: Operating margin
−Removed: Non-GAAP operating margin
−Removed: Interest expense and finance charges, net
−Removed: Provision for income taxes
−Removed: Depreciation (excluding accelerated depreciation included in acquisition-related and integration expenses below)
−Removed: Amortization of intangibles
−Removed: Other (income) expense, net (excluding amounts included in acquisition-related and integration expenses below)
−Removed: Acquisition-related and integration expenses
−Removed: Adjusted EBITDA
−Removed: Acquisition-related and integration expenses
−Removed: Amortization of intangibles
−Removed: Contingent consideration
−Removed: Income taxes related to the above (1)
−Removed: Non-GAAP diluted EPS
−Removed: Technology Solutions
−Removed: Foreign currency translation
−Removed: Revenue in constant currency
−Removed: Operating income
−Removed: Acquisition-related and integration expenses
+Added: Transaction-related and integration expenses
Amortization of intangibles
+Added: Share-based compensation
Non-GAAP operating income
5 unchanged sentences
Other (income) expense, net
−Removed: Acquisition-related and integration expenses
+Added: Transaction-related and integration expenses
+Added: Share-based compensation
+Added: Income from discontinued operations
Adjusted EBITDA
−Removed: Three Months Ended
−Removed: Nine Months Ended
−Removed: August 31, 2020
−Removed: August 31, 2019
−Removed: August 31, 2020
−Removed: August 31, 2019
−Removed: (in thousands, except per share amounts)
−Removed: Foreign currency translation
−Removed: Revenue in constant currency
−Removed: Operating income
−Removed: Acquisition-related and integration expenses
−Removed: Amortization of intangibles
−Removed: Non-GAAP operating income
−Removed: Operating margin
−Removed: Non-GAAP operating margin
−Removed: Interest expense and finance charges, net
−Removed: Provision for income taxes
−Removed: Depreciation (excluding accelerated depreciation included in acquisition-related and integration expenses below)
+Added: Diluted EPS from continuing operations
+Added: Transaction-related and integration expenses
Amortization of intangibles
−Removed: Other (income) expense, net (excluding amounts included in acquisition-related and integration expenses below)
−Removed: Acquisition-related and integration expenses
−Removed: Adjusted EBITDA
+Added: Share-based compensation
+Added: Income taxes related to the above (1)
+Added: Non-GAAP diluted EPS from continuing operations
The tax effect of taxable and deductible non-GAAP adjustments was calculated using the effective year-to-date tax rate during the respective periods.
−Removed: Three and Nine Months Ended August 31, 2020 and 2019
+Added: Three Months Ended February 28, 2021 and February 29, 2020
Three Months Ended
−Removed: Nine Months Ended
−Removed: August 31, 2020
−Removed: August 31, 2019
−Removed: August 31, 2020
−Removed: August 31, 2019
−Removed: (in thousands)
+Added: February 28, 2021
+Added: February 29, 2020
+Added: Percent Change
(in thousands)
−Removed: Technology Solutions revenue
−Removed: Concentrix revenue
−Removed: Inter-segment elimination
−Removed: Our revenue includes sales of products and services.
−Removed: In our Technology Solutions segment, we distribute a comprehensive range of products for the technology industry and design and integrate data center equipment.
+Added: Our revenue includes sales of products.
+Added: We distribute a comprehensive range of products for the technology industry and design and integrate data center equipment.
The prices of our products are highly dependent on the volumes purchased within a product category.
The products we sell from one period to the next are often not comparable due to changes in product models, features and customer demand requirements.
−Removed: The revenue generated by our Concentrix segment relates to business outsourcing services focused on customer experience, process optimization and back office automation.
−Removed: Inter-segment elimination represents services generated between our reportable segments that are eliminated on consolidation.
−Removed: Substantially all of the inter-segment revenue represents services provided by the Concentrix segment to the Technology Solutions segment.
−Removed: Revenue in our Technology Solutions segment increased during the three and nine months ended August 31, 2020, compared to the prior year periods, due to a demand for technology equipment as COVID-19 related government mandated shelter-in-place restrictions during the second and third quarters of fiscal year 2020 led to increased needs for work-at-home, learn-at-home and related solutions.
−Removed: The increase in Technology Solutions revenue during the nine months ended August 31, 2020, compared to the prior year period was partially offset by a decline in integration-based server solutions in the first half of fiscal year 2020.
−Removed: Revenue in our Concentrix segment during the three months ended August 31, 2020 increased slightly due to growth with technology, retail and e-commerce clients, partially offset by lower demand from media, communications, travel, tourism and automotive clients.
−Removed: Revenue for the nine months ended August 31, 2020 decreased compared to the prior period primarily due to the impact of COVID-19 related government mandated shelter in place restrictions in several countries in the world.
−Removed: These restrictions adversely impacted our revenue due to the inability of a significant number of our associates to work despite client demand.
−Removed: This impact was most acute in the second quarter of 2020.
−Removed: Our revenue for the nine months ended August 31, 2020 was also adversely impacted by lower demand from media , communications, travel, tourism and automotive clients, partially offset by an increase in demand from technology, financial services, retail , e - commerce and government clients.
−Removed: In addition, revenue during the three and nine months ended August 31, 2020 decreased compared to prior periods due to adverse translation effect s of foreign currencies.
+Added: Revenue increased during the three months ended February 28, 2021, as compared to the prior year period, due to broad-based demand for our products and solutions as the impact of COVID-19 related shelter-in-place restrictions continued to buoy remote work, learn and consumer needs.
Three Months Ended
−Removed: Nine Months Ended
−Removed: August 31, 2020
−Removed: August 31, 2019
−Removed: August 31, 2020
−Removed: August 31, 2019
−Removed: (in thousands)
+Added: February 28, 2021
+Added: February 29, 2020
+Added: Percent Change
(in thousands)
−Removed: Technology Solutions gross profit
−Removed: Technology Solutions gross margin
−Removed: Concentrix gross profit
−Removed: Concentrix gross margin
−Removed: Inter-segment elimination
−Removed: Our Technology Solutions gross margin is affected by a variety of factors, including competition, selling prices, mix of products and services, product costs along with rebate and discount programs from our suppliers, reserves or settlement adjustments, freight costs, inventory losses, acquisition of business units and fluctuations in revenue.
−Removed: Concentrix margins, which are higher than those in our Technology Solutions segment, can be impacted by resource location, client mix and pricing, additional lead time for programs to be fully scalable, and transition and initial set-up costs.
−Removed: Technology Solutions gross profit and margin decreased during the three months ended August 31, 2020, as compared to the prior year period, primarily due to lower margins driven by the product mix from our projects and integration-based server solutions .
−Removed: Technology Solutions gross profit increased, during the nine months ended August 31, 2020, as compared to the prior year period, driven by strong demand for technology products as COVID-19 related government mandated shelter-in-place restrictions during the second and third quarters of fiscal year 2020 led to a greater need for work-at-home, learn-at-home and related solutions.
−Removed: This increase was partially offset by lower margins driven by product mix from our projects and integration-based server solutions.
−Removed: Our Concentrix segment’s gross profit and margin decreased during the three and nine month periods ended August 31, 2020 as compared to the prior periods due to a decrease in revenue and an incremental impact of $9 million and $55 million, respectively, related to COVID-19 related non-productive workforce costs.
−Removed: In addition, gross margin was temporarily impacted by decreased productivity as we transitioned our workforce to work-from-home.
+Added: Our gross margin is affected by a variety of factors, including competition, selling prices, mix of products and services, product costs along with rebate and discount programs from our suppliers, reserves or settlement adjustments, freight costs, inventory losses, acquisition of business units and fluctuations in revenue.
+Added: Our gross profit increased, during the three months ended February 28, 2021, as compared to the prior year period, due to higher revenue.
+Added: The decrease in gross margin, as compared to the prior year period, is primarily due to product mix.
Selling, General and Administrative Expenses
Three Months Ended
−Removed: Nine Months Ended
−Removed: August 31, 2020
−Removed: August 31, 2019
−Removed: August 31, 2020
−Removed: August 31, 2019
−Removed: (in thousands)
+Added: February 28, 2021
+Added: February 29, 2020
+Added: Percent Change
(in thousands)
1 unchanged sentence
Percentage of revenue
−Removed: Technology Solutions selling, general and
−Removed: administrative expenses
−Removed: Percentage of Technology Solutions revenue
−Removed: Concentrix selling, general and
−Removed: administrative expenses
−Removed: Percentage of Concentrix revenue
−Removed: Inter-segment elimination
Our selling, general and administrative expenses consist primarily of personnel costs such as salaries, commissions, bonuses, share-based compensation and temporary personnel costs.
−Removed: Selling, general and administrative expenses also include cost of warehouses, delivery centers and other non-integration facilities, utility expenses, legal and professional fees, depreciation on certain of our capital equipment, bad debt expense, amortization of our non-technology related intangible assets, and marketing expenses, offset in part by reimbursements from our OEM suppliers.
−Removed: During the three and nine months ended August 31, 2020, selling, general and administrative expenses in our Technology Solutions segment increased in absolute dollars compared to the prior year period, primarily due to an increase in allowance for doubtful accounts and higher salaries and employee related expenses due to COVID-19, partially offset by a decrease in amortization of intangible assets and
−Removed: acquisition-related and integration expenses.
−Removed: Incremental costs related to COVID-19 were approximately $8 million and $45 million for the three and nine months ended August 31, 2020 .
−Removed: Concentrix segment selling, general and administrative expenses for the three and nine month periods ended August 31, 2020 decreased in absolute dollars and as a percentage of revenue, compared to the prior year periods, due to lower facility and employee costs pursuant to Convergys acquisition-related integration and facility rationalization under taken in fiscal year 2019, a decrease in the amortization of intangible assets of $4.6 million and $14.0 million for the three and nine month periods ended August 31, 2020, compared to the respective prior periods and a decrease in acquisition-related and integration expenses of $5.0 million and $29.2 million for these same periods.
−Removed: These decreases were offset by incremental COVID-19 cost of $4 million and $10 million for these same periods.
+Added: Selling, general and administrative expenses also include cost of warehouses and other non-integration facilities, utility expenses, legal and professional fees, depreciation on certain of our capital equipment, bad debt expense, amortization of intangible assets, and marketing expenses, offset in part by reimbursements from our OEM suppliers.
+Added: During the three months ended February 28, 2021, selling, general and administrative expenses increased, compared to the prior year period, primarily due to higher employee related expenses due to COVID-19, partially offset by a decrease in amortization of intangible assets and a decrease in allowance for doubtful accounts.
+Added: Selling, general and administrative expenses decreased as a percentage of revenue, compared to the prior year period , primarily due to scale.
Operating Income
Three Months Ended
−Removed: Nine Months Ended
−Removed: August 31, 2020
−Removed: August 31, 2019
−Removed: August 31, 2020
−Removed: August 31, 2019
−Removed: (in thousands)
+Added: February 28, 2021
+Added: February 29, 2020
+Added: Percent Change
(in thousands)
1 unchanged sentence
Operating margin
−Removed: Technology Solutions operating income
−Removed: Technology Solutions operating margin
−Removed: Concentrix operating income
−Removed: Concentrix operating margin
−Removed: Operating income and margin in our Technology Solutions segment decreased during the three and nine months ended August 31, 2020, compared to the prior year periods, primarily due to product mix, as well as COVID-19 related incremental costs associated with allowances for doubtful accounts and higher salary and employee related costs.
−Removed: Operating income and margin in our Concentrix segment increased during the three month period ended August 31, 2020 primarily due to lower acquisition-related and integration expenses and lower amortization of intangible assets partially offset by the impact of COVID-19 related revenue decreases and incremental costs.
−Removed: Operating income decreased during the nine months ended August 31, 2020 compared to the comparable prior period reflecting the decrease in revenue and COVID-19 related incremental costs as discussed above.
−Removed: Operating margin was unchanged across the two periods as the decrease in gross profit was offset by a reduction in selling, general and administrative expenses as a percent of revenue as discussed above.
+Added: Operating income and margin increased during the three months ended February 28, 2021, compared to the prior year period, primarily due to broad-based growth across our product portfolio and related scale efficiencies.
Interest Expense and Finance Charges, Net
Three Months Ended
−Removed: Nine Months Ended
−Removed: August 31, 2020
−Removed: August 31, 2019
−Removed: August 31, 2020
−Removed: August 31, 2019
−Removed: (in thousands)
+Added: February 28, 2021
+Added: February 29, 2020
+Added: Percent Change
(in thousands)
2 unchanged sentences
Amounts recorded in interest expense and finance charges, net, consist primarily of interest expense paid on our lines of credit and term loans, fees associated with third party accounts receivable flooring arrangements and the sale or pledge of accounts receivable through our securitization facilities, offset by income earned on our cash investments.
−Removed: During the three and nine months ended August 31, 2020, our interest expense and finance charges, net, decreased compared to the prior year period, due to lower interest expense as a result of reduction of approximately $700 million in our average borrowings during fiscal year 2020, as compared to the prior year periods, as well as a lower interest rate environment.
−Removed: Approximately 56% of our outstanding borrowings at August 31, 2020 have been economically converted to fixed-rate debt through interest rate swaps.
−Removed: Other Income (Expense), Net
+Added: During the three months ended February 28, 2021, our interest expense and finance charges, net, increased compared to the prior year period, primarily due to an increase in the average outstanding borrowings primarily due to the distribution to our stockholders by way of funding Concentrix in connection with the Separation.
+Added: Other Expense, Net
Three Months Ended
−Removed: Nine Months Ended
−Removed: August 31, 2020
−Removed: August 31, 2019
−Removed: August 31, 2020
−Removed: August 31, 2019
−Removed: (in thousands)
+Added: February 28, 2021
+Added: February 29, 2020
+Added: Percent Change
(in thousands)
−Removed: Other income (expense), net
+Added: Other expense, net
Percentage of revenue
−Removed: Amounts recorded as other income (expense), net include foreign currency transaction gains and losses, investment gains and losses, non-service component of pension costs, and other non-operating gains and losses, such as settlements received from class actions lawsuits.
−Removed: Other income (expense), net, which was a net expense during the three months ended August 31, 2020, was consistent with the prior year period.
−Removed: Other income (expense), net, which was a net income during the nine months ended August 31, 2020, decreased compared to the prior year period, primarily due to a $19.0 million gain recorded in fiscal year 2019 upon the settlement of contingent consideration related to our acquisition of Westcon-Comstor Americas in fiscal year 2017.
−Removed: This decrease was partially offset by a $3.5 million gain recorded in fiscal year 2020, upon reversal of certain tax indemnification provisions set up at the time of disposition of a subsidiary in a prior year.
+Added: Amounts recorded as other income (expense), net include foreign currency transaction gains and losses, investment gains and losses, and other non-operating gains and losses, such as settlements received from class actions lawsuits.
+Added: The increase in other expense, net during the three months ended February 28, 2021, as compared to the prior year period, was primarily due to higher foreign currency exchange losses.
Provision for Income Taxes
Three Months Ended
−Removed: Nine Months Ended
−Removed: August 31, 2020
−Removed: August 31, 2019
−Removed: August 31, 2020
−Removed: August 31, 2019
−Removed: (in thousands)
+Added: February 28, 2021
+Added: February 29, 2020
+Added: Percent Change
(in thousands)
Provision for income taxes
−Removed: Percentage of income before income taxes
+Added: Percentage of income from continuing operations before income taxes
Income taxes consist of our current and deferred tax expense resulting from our income earned in domestic and foreign jurisdictions.
Income taxes for the interim periods presented have been included in the accompanying Consolidated Financial Statements on the basis of an estimated annual effective tax rate.
−Removed: During the three months ended August 31, 2020, our income tax expense increased due to an increase in our income before income taxes.
−Removed: The effective tax rate was consistent with the prior year period.
−Removed: During the nine months ended August 31, 2020, our income tax expense decreased compared to the prior year period primarily due to a decrease in our income before income taxes as a result of the economic impact of COVID-19 during the first half of fiscal year 2020, as well as a lower effective tax rate.
−Removed: The effective tax rate for the nine months ended August 31, 2020, was lower compared to the prior year period, due to the benefit from exercising of employee stock options and reversal of uncertain tax positions.
−Removed: The comparative decrease in the effective tax rate for the nine months ended August 31, 2020 was partially offset by the favorable impact of a nontaxable contingent consideration gain recorded in the prior year period related to the fiscal year 2017 Westcon-Comstor Americas acquisition.
+Added: During the three months ended February 28, 2021, our income tax expense increased compared to the prior year period, due to higher income during the three months ended February 28, 2021 and lower taxes in the prior year period due to tax benefits received from the exercising of stock options by employees and the reversal of uncertain tax positions.
+Added: Discontinued Operations
+Added: Three Months Ended
+Added: February 28, 2021
+Added: February 29, 2020
+Added: Percent Change
+Added: (in thousands)
+Added: Income from discontinued operations, net of taxes
+Added: Percentage of revenue
+Added: Income from discontinued operation includes net income from Concentrix during the three months ended February 29, 2020.
+Added: Concentrix was separated on December 1, 2020, consequently, there was no revenue earned or cost incurred during the three months ended February 28, 2021 related to the discontinued operations.
Liquidity and Capital Resources
1 unchanged sentence
Three Months Ended
−Removed: August 31, 2020
+Added: February 28, 2021
November 30, 2020
−Removed: August 31, 2019
+Added: February 29, 2020
(Amounts in thousands)
Days sales outstanding ("DSO")
−Removed: Revenue (products and services)
Accounts receivable
2 unchanged sentences
Days inventory outstanding ("DIO")
−Removed: Cost of revenue (products and services)
+Added: Cost of revenue
Days inventory outstanding
1 unchanged sentence
Days payable outstanding ("DPO")
−Removed: Cost of revenue (products and services)
+Added: Cost of revenue
Accounts payable
3 unchanged sentences
(j) = (c)+(f)-(i)
−Removed: Our Technology Solutions business is working capital intensive.
+Added: Our business is working capital intensive.
Our working capital needs are primarily to finance accounts receivable and inventory.
−Removed: We rely heavily on term loans, accounts receivable arrangements, our securitization programs, and our revolver programs for
−Removed: our working capital needs.
+Added: We rely heavily on term loans, accounts receivable arrangements, our securitization programs, and our revolver programs for our working capital needs.
We have financed our growth and cash needs to date primarily through cash generated from operations and financing activities.
1 unchanged sentence
Conversely, when sales volume decreases, our net investment in working capital dollars typically decreases, which generally results in increases in cash flows generated from operating activities.
−Removed: Concentrix working capital is primarily comprised of accounts receivable.
−Removed: Our cash conversion cycle was 38 days and 49 days as of August 31, 2020 and 2019, respectively.
−Removed: The decrease was primarily due to faster turnover of our inventories and the timing of payments of accounts payables .
−Removed: To increase our market share and better serve our customers, we may further expand our operations through investments or acquisitions.
−Removed: We expect that such expansion would require an initial investment in working capital, personnel, facilities and operations.
+Added: Our cash conversion cycle was 32 days and 57 days as of February 28, 2021 and February 29, 2020, respectively.
+Added: The decrease was primarily due to faster turnover of our inventories and the timing of collections of accounts receivables related to our projects and integration-based server solutions business .
+Added: To increase our market share and better serve our customers, we may further expand our operations through investments or acquisitions, such as the pending acquisition of Tech Data.
+Added: We expect that any such expansions would require an initial investment in working capital, personnel, facilities and operations.
These investments or acquisitions would likely be funded primarily by our existing cash and cash equivalents, additional borrowings, or the issuance of securities.
−Removed: Net cash provided by operating activities was $1.547 billion during the nine months ended August 31, 2020, primarily due to net income of $314.0 million, adjustments for non-cash items of $320.9 million, decreases in accounts receivable of $280.5 million and receivables from vendors of $44.7 million, an increase in accounts payable of $454.3 million and a net change of $415.4 million in other operating assets and liabilities.
−Removed: These cash inflows were partially offset by an increase in inventories of $282.7 million.
−Removed: The decrease in accounts receivable and vendor receivables is primarily due to lower revenue in both segments during the three months ended August 31, 2020 compared to a seasonally high fourth quarter of fiscal year 2019 as well as an improvement in our collections.
−Removed: Notwithstanding the current economic uncertainties due to the impact of COVID-19, DSO in our Technology Solutions segment also decreased by approximately 3 days from the end of fiscal year 2019.
−Removed: The increase in accounts payable and cash inflow from changes in other operating assets and liabilities reflects primarily efficient working capital management and prepayments from customers received in our Technology Solutions segment.
−Removed: The increase in inventories was driven by purchases related to larger projects in the second fiscal quarter which were transacted in the third fiscal quarter, with further shipments expected in subsequent quarters.
−Removed: The adjustments for non-cash items consist primarily of amortization and depreciation, provision for doubtful accounts, share-based compensation expense, unrealized foreign exchange losses and a deferred tax benefit.
−Removed: Net cash provided by operating activities was $202.5 million during the nine months ended August 31, 2019, primarily due to net income of $324.7 million, adjustments for non-cash items of $295.1 million, and a decrease in accounts receivable of $148.1 million.
−Removed: These cash inflows were partially offset by an increase in inventories of $390.0 million, a decrease in accounts payable of $119.6 million, and a net change in other operating assets and liabilities of $69.1 million.
−Removed: The decrease in accounts receivable and accounts payable was primarily due to timing of collections and payments, respectively.
−Removed: Accounts receivable was also lower due to lower days’ sales outstanding compared to the fourth quarter of fiscal year 2018.
−Removed: The increase in inventories was primarily due to strong demand for our systems design and integration solutions business, where we carry higher levels of inventories, and higher anticipated seasonal demand in the fourth quarter.
−Removed: The adjustments for non-cash items consist primarily of amortization and depreciation, provision for doubtful accounts, stock-based compensation expense, a $19.0 million gain recorded upon the settlement of contingent consideration related to our Westcon-Comstor Americas acquisition in fiscal year 2017, and deferred tax benefit.
−Removed: Net cash used in investing activities during the nine months ended August 31, 2020 was $137.5 million, primarily due to capital expenditures of $127.3 million related to infrastructure investments to support growth in both of our business segments and $4.9 million of cash paid related to the settlement of employee stock-based awards assumed under the Convergys acquisition, being paid in accordance with the original vesting schedule.
−Removed: Net cash used in investing activities during the nine months ended August 31, 2019 was $102.3 million, primarily due to capital expenditures of $93.4 million related to infrastructure investments to support growth in both of our business segments and $8.6 million of cash paid related to the settlement of employee stock-based awards assumed under the Convergys acquisition.
−Removed: Net cash used in financing activities during the nine months ended August 31, 2020 was $187.8 million, representing primarily a pay down of our revolving lines of credit with cash generated from operations and scheduled quarterly repayments of our term loans aggregating $168.4 million.
−Removed: In addition, we paid dividends of $20.8 million in January 2020, prior to suspension of our dividends program due to the COVID-19 related economic uncertainties in March 2020.
−Removed: Net cash used in financing activities during the nine months ended August 31, 2019 was $298.4 million primarily due to net repayments under our borrowing arrangements of $214.1 million.
−Removed: Cash generated from operations was used to pay down revolving lines of credit.
−Removed: During the nine months ended August 31, 2019, the Company drew the last tranche of $250.0 million under a term loan facility obtained in fiscal year 2018 for the Convergys acquisition for the settlement of the remaining amount of convertible debentures assumed as part of the acquisition and the remainder was used for working capital.
−Removed: The Company also returned cash to stockholders in the form of $57.5 million of dividend payments and $15.2 million of repurchases of our common stock, and $14.0 million of cash was used to pay the contingent consideration related to our Westcon-Comstor Americas acquisition.
+Added: Net cash provided by operating activities was $25.0 million during the three months ended February 28, 2021, primarily due to decreases in accounts receivable of $427.1 million, receivables from vendors of $17.1 million and inventories of $126.9 million.
+Added: In addition, our net income of $87.8 million together with adjustments to net income for non-cash items of $25.3 million resulted in an increase in our cash balances.
+Added: These cash inflows were largely offset by a decrease in accounts payable of $636.0 million and a net change of $23.3 million in other operating assets and liabilities.
+Added: The decreases in accounts receivable, vendor receivables and inventories are primarily due to lower revenue during the three months ended February 28, 2021 compared to a seasonally high fourth quarter of fiscal year 2020.
+Added: The decrease in accounts payable and cash outflow from changes in other operating assets and liabilities is primarily due to timing of payments .
+Added: The adjustments for non-cash items consist primarily of amortization and depreciation and share-based compensation expense.
+Added: Net cash provided by operating activities was $58.1 million during the three months ended February 29, 2020, primarily due to decreases in accounts receivable of $619.3 million and receivables from vendors of $67.6 million .
+Added: Our net income of $122.6 million and adjustments to net income for non-cash items of $91.0 million also led to an increase in our cash balances.
+Added: These cash inflows were substantially offset by an increase in inventories of $162.8 million, a decrease in accounts payable of $613.8 million, and a net change in other operating assets and liabilities of $65.7 million.
+Added: The decrease in accounts receivable and payable was primarily due to lower revenue in our business during the three months ended February 29, 2020 following a seasonally high fourth quarter of fiscal year 2019.
+Added: The decrease in accounts payable was also impacted by timing of payments.
+Added: The increase in inventories was primarily due to timing of shipments in our systems design and integration solutions business.
+Added: The adjustments for non-cash items consist primarily of amortization and depreciation, share-based compensation expense, provision for doubtful accounts, and deferred tax benefit related to both our continuing operations as well as discontinued operations .
+Added: Net cash used in investing activities during the three months ended February 28, 2021 was $4.0 million, primarily due to capital expenditures related to infrastructure investments to support growth in our business.
+Added: Net cash used in investing activities during the three months ended February 29, 2020 was $54.3 million, primarily due to capital expenditures of $51.9 million related to infrastructure investments to support growth of our business including discontinued operations.
+Added: Net cash used in financing activities during the three months ended February 28, 2021 was $147.2 million, representing primarily net transfer of cash and cash equivalents of $149.9 million to Concentrix in connection with the Separation and a return of cash to stockholders in the form of dividends of $10.3 million.
+Added: This was partially offset by net proceeds of $13.0 million from our borrowing arrangements in certain international locations to fund working capital requirements.
+Added: Net cash provided by financing activities during the three months ended February 29, 2020 was $67.6 million, consisting primarily of net proceeds from our borrowing arrangements of $88.1 million to finance working capital, partially offset by $20.7 million of dividend payments.
Capital Resources
−Removed: Our cash and cash equivalents totaled $1.452 billion and $225.5 million as of August 31, 2020 and November 30, 2019, respectively.
−Removed: Of our total cash and cash equivalents, the cash held by our foreign subsidiaries was $397.5 million and $219.7 million as of August 31, 2020 and November 30, 2019, respectively.
−Removed: Our cash and cash equivalents held by foreign subsidiaries are no longer subject to U.S.
+Added: Our cash and cash equivalents totaled $1,443.7 million and $1,412.0 million as of February 28, 2021 and November 30, 2020, respectively.
+Added: Of our total cash and cash equivalents, the cash held by our international subsidiaries was $469.7 million and $434.8 million as of February 28, 2021 and November 30, 2020, respectively.
+Added: Our cash and cash equivalents held by international subsidiaries are no longer subject to U.S.
federal tax on repatriation into the United States.
1 unchanged sentence
Historically, we have fully utilized and reinvested all foreign cash to fund our foreign operations and expansion.
−Removed: If in the future our intentions change, and we repatriate the cash back to the United States, we will report in our Consolidated Financial Statements the impact of state and withholding taxes depending upon the
−Removed: planned timing and manner of such repatriation.
+Added: If in the future our intentions change, and we repatriate the cash back to the United States, we will report in our Consolidated Financial Statements the impact of state and withholding taxes depending upon the planned timing and manner of such repatriation.
Presently, we believe we have sufficient resources, cash flow and liquidity within the United States to fund current and expected future working capital, investment and other general corporate funding requirements.
−Removed: We believe that our available cash and cash equivalents balances, cash flows from operations and our existing sources of liquidity will be sufficient to satisfy our current and planned working capital and investment needs for the next twelve months in all geographies.
+Added: We believe that our available cash and cash equivalents balances, cash flows from operations and our existing sources of liquidity will be sufficient to satisfy our current and planned working capital and investment needs for the next twelve months in all geographies, including for the proposed acquisition of Tech Data.
We also believe that our longer-term working capital, planned capital expenditures, anticipated stock repurchases, dividend payments and other general corporate funding requirements will be satisfied through cash flows from operations and, to the extent necessary, from our borrowing facilities and future financial market activities.
−Removed: Historically, we have renewed our accounts receivable securitization programs and our credit facility agreements described below on, or prior to, their respective expiration dates.
+Added: Historically, we have renewed our accounts receivable securitization program and our U.S.
+Added: credit facility agreement described below on, or prior to, their respective expiration dates.
We have no reason to believe that these and other arrangements will not be renewed or replaced as we continue to be in good credit standing with the participating financial institutions.
6 unchanged sentences
The effective borrowing cost under the U.S.
−Removed: AR Arrangement is a blended rate based upon the composition of the lenders that included prevailing dealer commercial paper rates and a rate based upon LIBOR.
−Removed: 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.
+Added: AR Arrangement is a blended rate based upon the composition of the lenders that included prevailing dealer commercial paper rates and a rate based upon LIBOR, provided that LIBOR would not be less than zero.
+Added: 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.
In May 2020 , the U.S.
−Removed: AR Arrangement was amended to revise the maximum borrowing amount to $650,000 and to extend the maturity date of the U.S.
+Added: AR Arrangement was amended to revise the maximum borrowing amount to $650.0 million and to extend the maturity date of the U.S.
AR Arrangement to May 2022.
6 unchanged sentences
subsidiaries sell, on a revolving basis, our receivables to a wholly-owned, bankruptcy-remote subsidiary.
−Removed: The borrowings are funded by pledging all of the rights, title and interest in the receivables acquired by our bankruptcy-remote subsidiary as security.
+Added: The borrowings are funded by pledging all of the rights, title and interest in the receivables
+Added: acquired by our bankruptcy-remote subsidiary as security.
Any amounts received under the U.S.
AR Arrangement are recorded as debt on our Consolidated Balance Sheets.
−Removed: As of August 31, 2020, there were no borrowings outstanding under this facility.
−Removed: As of November 30, 2019, $108.0 million was outstanding under the U.S.
−Removed: AR Arrangement.
+Added: As of both February 28, 2021 and November 30, 2020 , there were no borrowings outstanding under this facility.
In Canada, we have an accounts receivable securitization program with a bank to provide additional capital for operations.
7 unchanged sentences
SYNNEX Canada pays a fee of 0.40% per annum for any unused portion of the commitment up to CAD60.0 million, or $47.1 million, and when the unused portion exceeds CAD60.0 million, or $47.1 million, a fee of 0.55% per annum on the remaining unused commitment.
−Removed: As of both August 31, 2020 and November 30, 2019, there was no outstanding balance under this arrangement.
+Added: As of both February 28, 2021 and November 30, 2020, there was no outstanding balance under this arrangement.
SYNNEX Japan has a credit agreement with a group of banks for a maximum commitment of JPY15.0 billion or $140.8 million.
4 unchanged sentences
We have guaranteed the obligations of SYNNEX Japan under this facility.
−Removed: As of August 31, 2020 and November 30, 2019, the balances outstanding under the term loan component of these facilities were $66.1 million and $63.9 million, respectively.
−Removed: As of August 31, 2020 and November 30, 2019, $72.7 million and $5.9 million, respectively, was outstanding under the revolving credit facility.
−Removed: Indian subsidiaries of our Concentrix segment have credit facilities with a financial institution to borrow up to an aggregate amount of $22.0 million.
−Removed: The interest rate under these facilities is the higher of the bank's minimum lending rate or LIBOR, plus a margin of 0.9% per annum.
−Removed: We guarantee the obligations under these credit facilities.
−Removed: These credit facilities can be terminated at any time by our Indian subsidiaries or the financial institution.
−Removed: There were no borrowings outstanding under these credit facilities as of either August 31, 2020 or November 30, 2019.
+Added: As of February 28, 2021 and November 30, 2020, the balances outstanding under the term loan component of these facilities were $65.7 million and $67.1 million respectively.
+Added: As of February 28, 2021 and November 30, 2020, $45.0 million and $31.6 million, respectively, was outstanding under the revolving credit facility.
In the United States, we have a senior secured credit agreement (as amended, the "U.S.
4 unchanged sentences
Credit Agreement matures in September 2022.
−Removed: The outstanding principal amount of the term loan is repayable in quarterly installments of $15.0 million , with the unpaid balance due in full on the September 2022 maturity date.
−Removed: The term loan can be repaid at any time prior to the maturity date without penalty.
+Added: At November 30, 2020, in connection with the Separation, we partially repaid $535.0 million of the term loan, using funds drawn by Concentrix from its borrowing arrangements.
+Added: The remaining outstanding principal of the term loan is payable on maturity.
Interest on borrowings under the U.S.
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Term Loan Credit Agreement (defined below) pursuant to an intercreditor agreement and are guaranteed by certain of our United States domestic subsidiaries.
−Removed: As of August 31, 2020 and November 30, 2019 , the balance outstanding under the term loan component of the U.S.
−Removed: Credit Agreement was $1.0 billion and $1.1 billion, respectively.
−Removed: There were no borrowings outstanding under the revolving line of credit under the U.S.
−Removed: Credit Agreement as of August 31, 2020 .
−Removed: As of November 30, 2019 , the balance outstanding under the revolving line of credit component of the U.S.
+Added: As of both February 28, 2021 and November 30, 2020, the balance outstanding under the term loan component of the U.S.
Credit Agreement was $500.0 million.
−Removed: We have a secured term loan credit agreement (the “U.S.
+Added: There were no borrowings outstanding under the revolving line of credit under the U.S.
+Added: Credit Agreement as of both February 28, 2021 and November 30, 2020.
+Added: We have a senior secured term loan credit agreement (the “U.S.
Term Loan Credit Agreement”) with a group of financial institutions, in the original principal amount of $1.8 billion.
−Removed: Term Loan Credit Agreement matures in October 2023.The outstanding principal amount of the term loans is payable in quarterly installments of $22.5 million, with the unpaid balance due in full on the maturity date.
−Removed: The term loan can be repaid at any time prior to the maturity date without penalty.
+Added: Term Loan Credit Agreement matures in October 2023.
+Added: At November 30, 2020, in connection with the Separation, we partially repaid $665.0 million of the term loan, using funds drawn by Concentrix from its borrowing arrangements.
+Added: The remaining outstanding principal amount of the term loan is payable on maturity.
Interest on borrowings under the U.S.
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Credit Agreement pursuant to an intercreditor agreement, and are guaranteed by certain of our domestic subsidiaries.
−Removed: As of both August 31, 2020 and November 30, 2019, the balance outstanding under the U.S.
+Added: As of both February 28, 2021 and November 30, 2020, the balance outstanding under the U.S.
Term Loan Credit Agreement was $1.0 billion.
2 unchanged sentences
The base rate could be a Banker's Acceptance Rate, a Canadian Prime Rate, LIBOR or U.S.
−Removed: As of both August 31, 2020 and November 30, 2019, there were no borrowings outstanding under this credit facility.
+Added: As of both February 28, 2021 and November 30, 2020, there were no borrowings outstanding under this credit facility.
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.
−Removed: As of August 31, 2020 , commitments for these revolving credit facilities aggregated $83.3 million .
+Added: As of February 28, 2021 , commitments for these revolving credit facilities aggregated $46.9 million .
Interest rates and other terms of borrowing under these lines of credit vary by country, depending on local market conditions.
Borrowings under these facilities are generally guaranteed by us or secured by eligible accounts receivable.
−Removed: As of August 31, 2020 and November 30, 2019 , the balances outstanding under these revolving credit facilities were $ 19.2 million and $ 6 .
−Removed: 0 million, respectively.
−Removed: The maximum commitment amounts for local currency credit facilities have been translated into United States Dollars at August 31, 2020 exchange rates.
+Added: As of February 28, 2021 and November 30, 2020 , the balances outstanding under these revolving credit facilities were $24.0 million and $ 25 .8 million , respectively.
+Added: The maximum commitment amounts for local currency credit facilities have been translated into United States Dollars at February 28, 2021 exchange rates.
+Added: In connection with the Merger, we entered into a debt commitment letter (the “Commitment Letter”), dated as of March 22, 2021, with Citigroup Global Markets Inc.
+Added: (“Citi”), pursuant to which Citi has committed to provide (i) a $4.0 billion 364-day senior unsecured term bridge facility and (ii) a $3.5 billion 364-day senior unsecured revolving credit facility, each subject to the satisfaction of certain customary closing conditions including the consummation of the proposed Mergers (the “Bridge Facility”).
+Added: The Bridge Facility is available to (i) pay for a portion of the Merger Consideration, (ii) directly or indirectly pay, repay, repurchase, or settle, as applicable, certain existing indebtedness of the Company and its subsidiaries and Tech Data and its subsidiaries, and (iii) to pay the costs and expenses related to the Merger, the Bridge Facility and the transactions being entered into or otherwise contemplated in connection therewith.
+Added: If the Company utilizes the Bridge Facility, amounts drawn thereunder will bear interest at an annual rate equal to LIBOR plus a margin which may initially range from 1.125% to 1.750%, depending on SYNNEX’ debt rating, which margin will be increased by 0.25% for each 90 days that elapse after the closing of the Bridge Facility.
+Added: The Company will pay commitment fees on the undrawn amount of this commitment ranging from 0.125% to 0.300% based upon SYNNEX’ debt rating.
Off-Balance Sheet Arrangements
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Available capacity under these programs is dependent upon the level of our trade accounts receivable eligible to be sold into these programs and the financial institutions’ willingness to purchase such receivables.
−Removed: At August 31, 2020 and November 30, 2019, we had a total of $23.7 million and $35.3 million, respectively, of trade accounts receivable sold to and held by the financial institutions under these programs.
+Added: At February 28, 2021 and November 30, 2020, we had a total of $80.9 million and $22.5 million, respectively, of trade accounts receivable sold to and held by the financial institutions under these programs.
Covenant Compliance
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They also limit our ability to incur additional debt, make intercompany loans, pay dividends and make other types of distributions, make certain acquisitions, repurchase our stock, create liens, cancel debt owed to us, enter into agreements with affiliates, modify the nature of our business, enter into sale-leaseback transactions, make certain investments, enter into new real estate leases, transfer and sell assets, cancel or terminate any material contracts and merge or consolidate.
−Removed: As of August 31, 2020, we were in compliance with all material covenants for the above arrangements, and we do not believe we are at material risk of not meeting such covenants.
+Added: As of February 28, 2021, we were in compliance with all material covenants for the above arrangements, and we do not believe we are at material risk of not meeting such covenants.
Contractual Obligations
−Removed: Our contractual obligations consist of future payments due under our loans, payments for our operating lease commitments and repatriation tax under the TCJA which are already recorded on our Consolidated Balance Sheet.
+Added: Our contractual obligations consist of future payments due under our loans, payments for our operating lease commitments and repatriation tax under the Tax Cuts and Jobs Act (“the TCJA”) which are already recorded on our Consolidated Balance Sheet.
In addition, our contractual obligations include interest on our debt.
−Removed: As of August 31, 2020, there have been no material changes from our disclosure in our Annual Report on Form 10-K for the fiscal year ended November 30, 2019.
−Removed: For more information on our future minimum rental obligations under non-cancellable lease agreements as of August 31, 2020, see Note 14 to the Consolidated Financial Statements .
+Added: The following table summarizes our contractual obligations as at February 28, 2021:
+Added: Payments Due by Period
+Added: (in thousands)
+Added: Contractual Obligations:
+Added: Principal debt payments
+Added: Interest on debt
+Added: Repatriation tax under the TCJA
+Added: Non-cancellable operating leases
+Added: On December 1, 2020, upon completion of Separation, Concentrix’ borrowing arrangements with outstanding balances aggregating $1.2 billion were no longer part of our contractual obligations.
+Added: Principal debt payments at February 28, 2021 disclosed above, assume the repayment of our revolving lines of credit within a year.
+Added: Interest on debt, in the table above, includes estimated interest on our term loans and revolving credit facilities at rates of interest applicable at the end of our fiscal period.
We are contingently liable under agreements, without expiration dates, to repurchase repossessed inventory acquired by flooring companies as a result of default on floor plan financing arrangements by our customers.
−Removed: There have been no repurchases through August 31, 2020 under these agreements and we are not aware of any pending customer defaults or repossession obligations.
−Removed: As we do not have access to information regarding the amount of inventory purchased from us still on hand with the customer at any point in time, our repurchase obligations relating to inventory cannot be reasonably estimated.
−Removed: As of August 31, 2020 and November 30, 2019, accounts receivable subject to flooring arrangements was $58.6 million and $69.6 million, respectively.
−Removed: For more information on our third-party revolving short-term financing arrangements, see Note 7 to the Consolidated Financial Statements.
+Added: There have been no repurchases through November 30, 2020 under these agreements and we are not aware of any pending customer defaults or repossession obligations.
+Added: As we do not have access to
+Added: information regarding the amount of inventory purchased from us still on hand with the customer at any point in time, our repurchase obligations relating to inventory cannot be reasonably estimated.
+Added: As of February 28, 2021, and November 30, 2020, accounts receivable subject to flooring arrangements were $4 2.4 million and $ 49 .
+Added: 5 million, respectively.
+Added: For more information on our third-party revolving short-term financing arrangements, see Note 8 - Accounts Receivable Arrangements to the Consolidated Financial Statements included in Item 1 of Part I of this Report.
+Added: As of November 30, 2020, we have established a reserve of $12.4 million for unrecognized tax benefits.
+Added: As we are unable to reasonably predict the timing of settlement of these guarantees and the reserve for unrecognized tax benefits, the table above excludes such liabilities.
+Added: In addition, refer to Note 17 - Subsequent Events for contractual obligations under the Merger Agreement entered into subsequent to February 28, 2021.
Related Party Transactions
We have a business relationship with MiTAC Holdings, a publicly-traded company in Taiwan, which began in 1992 when MiTAC Holdings became our primary investor through its affiliates.
−Removed: As of both August 31, 2020 and November 30, 2019, MiTAC Holdings and its affiliates beneficially owned approximately 18% of our outstanding common stock.
+Added: As of both February 28, 2021 and November 30, 2020, MiTAC Holdings and its affiliates beneficially owned approximately 18% of our outstanding common stock.
Matthew Miau, the Chairman Emeritus of our Board of Directors and a director, is the Chairman of MiTAC Holdings' and a director or officer of MiTAC Holdings' affiliates.
The shares owned by MiTAC Holdings are held by the following entities:
−Removed: As of August 31, 2020
+Added: As of February 28, 2021
(in thousands)
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Miau is affiliated with any person(s), entity, or entities that hold a majority interest in MiTAC Incorporated.
−Removed: MiTAC Holdings generally has significant influence over us regarding matters submitted to stockholders for consideration, including any merger or acquisition of ours.
−Removed: Among other things, this could have the effect of delaying, deterring or preventing a change of control over us.
−Removed: We purchased inventories and services from MiTAC Holdings and its affiliates totaling $53.4 million and $151.9 million during the three and nine months ended August 31, 2020, respectively, and totaling $42.0 million and $120.1 million, respectively, during the three and nine months ended August 31, 2019.
−Removed: Our sales to MiTAC Holdings and its affiliates totaled $0.3 million and $0.9 million during the three and nine months ended August 31, 2020, respectively, and totaled $0.1 million and $0.5 million, respectively, during the three and nine months ended August 31, 2019.
−Removed: In addition, we paid rent and overhead costs for the use of the facilities of MiTAC Holdings and its affiliates amounting to $27.0 thousand and $91.0 thousand during the three and nine months ended August 31, 2020.
−Removed: There were no rent and overhead costs during the three and nine months ended August 31, 2019.
−Removed: As of August 31, 2020 and November 30, 2019, our payables to MiTAC Holdings and its affiliates were $28.8 million and $23.2 million, respectively.
−Removed: As of August 31, 2020 and November 30, 2019, our receivables from MiTAC Holdings and its affiliates were $15.8 million and $4.4 million, respectively.
+Added: MiTAC Holdings generally has influence over us regarding matters submitted to stockholders for consideration, including any merger or acquisition of ours.
+Added: Among other things, this could have the effect of delaying, deterring or preventing a change of control over the Company.
+Added: We purchased inventories and services from MiTAC Holdings and its affiliates totaling $41.2 million and $43.2 million during the three months ended February 28, 2021 and February 29, 2020, respectively.
+Added: Our sales to MiTAC Holdings and its affiliates totaled $0.2 million and $0.3 million during the three months ended February 28, 2021, and February 29, 2020, respectively.
+Added: In addition, we paid for reimbursement of rent and overhead costs for the use of facilities of MiTAC Holdings and its affiliates amounting to $32 thousand and $30 thousand during the three months ended February 28, 2021 and February 29, 2020, respectively.
+Added: As of February 28, 2021 and November 30, 2020, our payables to MiTAC Holdings and its affiliates were $16.7 million and $49.6 million, respectively.
+Added: As of February 28, 2021 and November 30, 2020, our receivables from MiTAC Holdings and its affiliates were $7.8 million and $26.2 million, respectively.
Our business relationship with MiTAC Holdings and its affiliates has been informal and is generally not governed by long-term commitments or arrangements with respect to pricing terms, revenue or capacity commitments.
8 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.