TD SYNNEX CORP 10-Q

ITEM 1. Financial Statements SYNNEX CORPORATION CONSOLIDATED BALANCE SHEETS (currency and share amounts in thousands, except par value) (unaudited) August 31, 2021 November 30, 2020 ASSETS Current assets: Cash and cash equivalents $ 4,050,364 $ 1,412,016 Accounts receivable, net 2,229,640 2,791,703 Receivables from vendors, net 262,147 286,327 Inventories 2,866,212 2,684,076 Other current assets 195,058 173,940 Current assets of discontinued operations — 1,421,065 Total current assets 9,603,421 8,769,127 Property and equipment, net 152,293 157,645 Goodwill 425,100 423,885 Intangible assets, net 158,397 186,047 Deferred tax assets 40,134 39,636 Other assets, net 127,636 138,070 Noncurrent assets of discontinued operations — 3,754,180 Total assets $ 10,506,980 $ 13,468,590 LIABILITIES AND EQUITY Current liabilities: Borrowings, current $ 8,737 $ 124,958 Accounts payable 3,222,284 3,751,240 Accrued compensation and benefits 104,387 103,075 Other accrued liabilities 647,855 618,616 Income taxes payable 24,131 46,363 Current liabilities of discontinued operations — 985,840 Total current liabilities 4,007,393 5,630,092 Long-term borrowings 4,016,449 1,496,700 Other long-term liabilities 130,917 130,296 Deferred tax liabilities 13,931 5,836 Noncurrent liabilities of discontinued operations — 1,866,807 Total liabilities 8,168,690 9,129,730 Commitments and contingencies ( Note 16 ) Stockholders’ equity: Preferred stock, $ 0.001 par value, 5,000 shares authorized, no shares issued or outstanding — — Common stock, $ 0.001 par value, 200,000 shares authorized, 53,855 and 53,671 shares issued as of August 31, 2021 and November 30, 2020, respectively 54 54 Additional paid-in capital 1,615,688 1,591,536 Treasury stock, 2,550 and 2,538 shares as of August 31, 2021 and November 30, 2020, respectively ( 192,316 ) ( 191,216 ) Accumulated other comprehensive income (loss) ( 156,778 ) ( 194,571 ) Retained earnings 1,071,642 3,133,058 Total stockholders' equity 2,338,290 4,338,860 Total liabilities and equity $ 10,506,980 $ 13,468,590 (Amounts may not add due to rounding) The accompanying Notes are an integral part of these Consolidated Financial Statements (unaudited). 3 Table of Contents SYNNEX CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (currency and share amounts in thousands, except per share amounts) (unaudited) Three Months Ended Nine Months Ended August 31, 2021 August 31, 2020 August 31, 2021 August 31, 2020 Revenue $ 5,207,064 $ 5,306,361 $ 16,002,904 $ 13,858,313 Cost of revenue ( 4,894,442 ) ( 5,008,881 ) ( 15,056,539 ) ( 13,031,113 ) Gross profit 312,622 297,480 946,365 827,201 Selling, general and administrative expenses ( 164,418 ) ( 165,107 ) ( 508,511 ) ( 506,239 ) Operating income 148,204 132,373 437,853 320,962 Interest expense and finance charges, net ( 26,365 ) ( 19,747 ) ( 71,766 ) ( 59,531 ) Other income (expense), net 4,796 25 2,707 ( 1,004 ) Income from continuing operations before income taxes 126,635 112,650 368,794 260,426 Provision for income taxes ( 31,931 ) ( 26,953 ) ( 93,165 ) ( 56,023 ) Income from continuing operations 94,705 85,697 275,628 204,403 Income from discontinued operations, net of taxes — 48,767 — 109,605 Net income $ 94,705 $ 134,464 $ 275,628 $ 314,008 Earnings per common share: Basic Continuing operations $ 1.82 $ 1.67 $ 5.32 $ 3.97 Discontinued operations — 0.95 — 2.13 Net income $ 1.82 $ 2.61 $ 5.32 $ 6.10 Diluted Continuing operations $ 1.81 $ 1.65 $ 5.27 $ 3.95 Discontinued operations — 0.94 — 2.12 Net income $ 1.81 $ 2.60 $ 5.27 $ 6.07 Weighted-average common shares outstanding: Basic 51,275 50,890 51,204 50,851 Diluted 51,766 51,241 51,679 51,172 (Amounts may not add due to rounding) The accompanying Notes are an integral part of these Consolidated Financial Statements (unaudited). 4 Table of Contents SYNNEX CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (currency in thousands) (unaudited) Three Months Ended Nine Months Ended August 31, 2021 August 31, 2020 August 31, 2021 August 31, 2020 Net income $ 94,705 $ 134,464 $ 275,628 $ 314,008 Other comprehensive income (loss): Change in unrealized gains or losses of defined benefit plans, net of taxes of $ 0 for the three and nine months ended August 31, 2021, and $ 3,115 for the three and nine months ended August 31, 2020 — ( 8,985 ) — ( 8,768 ) Unrealized gains (losses) on cash flow hedges during the period, net of taxes of ($ 184 ) and $ 357 for the three and nine months ended August 31, 2021, respectively, and ($ 8,220 ) and $ 7,953 for the three and nine months ended August 31, 2020, respectively 500 24,641 1,696 ( 24,772 ) Reclassification of net (gains) losses on cash flow hedges to net income, net of tax expense (benefit) of ($ 2,636 ) and ($ 7,796 ) for the three and nine months ended August 31, 2021, respectively, and ($ 563 ) and ($ 1,120 ) for the three and nine months ended August 31, 2020, respectively 8,084 1,824 23,908 3,462 Total change in unrealized gains (losses) on cash flow hedges, net of taxes 8,584 26,465 25,604 ( 21,310 ) Foreign currency translation adjustments, net of taxes of $ 308 and ($ 936 ) for the three and nine months ended August 31, 2021, respectively, and ($ 345 ) and ($ 51 ) for the three and nine months ended August 31, 2020, respectively ( 20,194 ) 95,168 8,375 14,526 Other comprehensive income (loss) ( 11,610 ) 112,648 33,979 ( 15,552 ) Comprehensive income $ 83,095 $ 247,112 $ 309,607 $ 298,456 (Amounts may not add due to rounding) The accompanying Notes are an integral part of these Consolidated Financial Statements (unaudited). 5 Table of Contents SYNNEX CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (currency in thousands, except per share amounts) (unaudited) Three Months Ended Nine Months Ended August 31, 2021 August 31, 2020 August 31, 2021 August 31, 2020 Total Stockholders' equity, beginning balance $ 2,255,668 $ 3,834,381 $ 4,338,860 $ 3,788,450 Common stock and additional paid-in capital: Beginning balance 1,605,730 1,566,817 1,591,590 1,545,474 Share-based compensation 6,509 8,829 18,147 25,041 Common stock issued for employee benefit plans 3,503 3,433 6,006 8,564 Ending balance 1,615,742 1,579,079 1,615,742 1,579,079 Treasury stock: Beginning balance ( 192,171 ) ( 178,609 ) ( 191,216 ) ( 172,627 ) Repurchases of common stock for tax withholdings on equity awards ( 145 ) ( 166 ) ( 1,100 ) ( 2,743 ) Repurchases of common stock — — — ( 3,405 ) Ending balance ( 192,316 ) ( 178,775 ) ( 192,316 ) ( 178,775 ) Retained earnings: Beginning balance 987,277 2,783,449 3,133,058 2,624,680 Separation of Concentrix — — ( 2,305,982 ) — Net income 94,705 134,464 275,628 314,008 Cash dividends declared ( 10,340 ) ( 7 ) ( 31,062 ) ( 20,782 ) Ending balance 1,071,642 2,917,906 1,071,642 2,917,906 Accumulated other comprehensive income (loss): Beginning balance ( 145,169 ) ( 337,276 ) ( 194,572 ) ( 209,077 ) Separation of Concentrix — — 3,813 — Other comprehensive income (loss) ( 11,610 ) 112,648 33,979 ( 15,552 ) Ending balance ( 156,779 ) ( 224,628 ) ( 156,779 ) ( 224,628 ) Total stockholders' equity, ending balance $ 2,338,290 $ 4,093,582 $ 2,338,290 $ 4,093,582 Cash dividends declared per share $ 0.20 $ — $ 0.60 $ 0.40 (Amounts may not add due to rounding) The accompanying Notes are an integral part of these Consolidated Financial Statements (unaudited). 6 Table of Contents SYNNEX CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (currency in thousands) (unaudited) Nine Months Ended August 31, 2021 August 31, 2020 Cash flows from operating activities: Net income $ 275,628 $ 314,008 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 46,794 251,459 Share-based compensation 18,147 25,041 Provision for doubtful accounts 2,679 48,233 Deferred income taxes ( 554 ) ( 24,070 ) Unrealized foreign exchange (gains) losses 3,714 12,764 Other ( 1,313 ) 7,456 Changes in operating assets and liabilities, net of the impact of Concentrix separation: Accounts receivable, net 571,746 280,476 Receivables from vendors, net 24,747 44,666 Inventories ( 183,777 ) ( 282,654 ) Accounts payable ( 533,945 ) 454,290 Other operating assets and liabilities 24,926 415,428 Net cash provided by operating activities 248,791 1,547,097 Cash flows from investing activities: Purchases of property and equipment ( 14,111 ) ( 127,326 ) Acquisition of businesses — ( 4,941 ) Other 11,241 ( 5,248 ) Net cash used in investing activities ( 2,870 ) ( 137,515 ) Cash flows from financing activities: Proceeds from borrowings 639,331 3,747,096 Repayments of borrowings ( 703,812 ) ( 3,915,519 ) Dividends paid ( 31,062 ) ( 20,782 ) Repurchases of common stock — ( 3,405 ) Increase (decrease) in book overdraft — ( 1,051 ) Proceeds from issuance of common stock 6,006 8,564 Repurchases of common stock for tax withholdings on equity awards ( 1,100 ) ( 2,743 ) Net transfer of cash and cash equivalents to Concentrix ( 149,948 ) — Proceeds from issuance of Bonds 2,500,000 — Debt issuance cost ( 26,759 ) — Net cash provided by (used in) financing activities 2,232,658 ( 187,841 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash 3,479 3,902 Net increase in cash, cash equivalents and restricted cash 2,482,057 1,225,644 Cash, cash equivalents and restricted cash at beginning of period 1,568,870 231,149 Cash, cash equivalents and restricted cash at end of period $ 4,050,929 $ 1,456,793 Supplemental disclosure of non-cash investing activities: Accrued costs for property and equipment purchases $ 354 $ 13,425 Supplemental disclosure of non-cash financing activities: Net assets transferred to Concentrix $ 2,322,598 $ — (Amounts may not add due to rounding) The accompanying Notes are an integral part of these Consolidated Financial Statements (unaudited). 7 Table of Contents SYNNEX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the three and nine months ended August 31, 2021 and 2020 ( Except per share amounts or as otherwise indicated, currency and share amounts in thousands ) (unaudited) NOTE 1—ORGANIZATION AND BASIS OF PRESENTATION: SYNNEX Corporation (together with its subsidiaries, herein referred to as “SYNNEX” or the “Company”) is a leading provider of a comprehensive range of distribution, systems design and integration solutions for the technology industry, headquartered in Fremont, California and has operations in North and South America, Asia-Pacific and Europe. On December 1, 2020 , the Company completed the previously announced separation of its customer experience services business (the “Separation”), in a tax-free transaction for federal income tax purposes, which was accomplished by the distribution of one hundred per cent of the outstanding common stock of Concentrix Corporation (“Concentrix”) to SYNNEX stockholders as of the close of business on November 17, 2020 , the record date for the distribution. SYNNEX stockholders received one share of Concentrix common stock for every share of SYNNEX common stock held at the close of business on the record date. The Company distributed 51,602 shares of Concentrix common stock to its stockholders. Concentrix is now an independent public company trading under the symbol “CNXC” on the Nasdaq Stock Market. After the Separation, SYNNEX does not beneficially own any shares of Concentrix’ common stock. Beginning December 1, 2020, the Company no longer consolidates Concentrix within its financial results or reflects the financial results of Concentrix within its continuing results of operations. The financial results of Concentrix for the three and nine months ended August 31, 2020 are presented as income from discontinued operations, net of taxes on the Consolidated Statements of Operations and its assets and liabilities as of November 30, 2020 are presented as discontinued operations in the Consolidated Balance Sheets. The historical statements of comprehensive income, cash flows and the balances in stockholders' equity have not been revised to reflect the effect of the Separation. For further information on discontinued operations, see Note 3 - Discontinued Operations. Unless noted otherwise, discussion in the Notes to the Consolidated Financial Statements pertain to continuing operations. In connection with the Separation, the Company and Concentrix entered into a separation and distribution agreement as well as various other agreements 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 certain limited services to SYNNEX following the Separation. The accompanying interim unaudited Consolidated Financial Statements as of August 31, 2021 and for the three and nine months ended August 31, 2021 and 2020 have been prepared by the Company in accordance with the rules and regulations of the Securities and Exchange Commission. The amounts as of November 30, 2020 have been derived from the Company’s annual audited financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States have been condensed or omitted in accordance with such rules and regulations. In the opinion of management, the accompanying unaudited Consolidated Financial Statements reflect all adjustments, consisting only of normal recurring adjustments, necessary to state fairly the financial position of the Company and its results of operations and cash flows as of and for the periods presented. These financial statements should be read in conjunction with the annual audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2020. On March 22, 2021, the Company entered into an agreement and plan of merger (the “Merger Agreement”) to acquire 100 % of Tiger Parent (AP) Corporation, the parent company of Tech Data Corporation (“Tech Data”), in a cash and stock transaction (the "Merger"). On September 1, 2021, pursuant to the terms of the Merger Agreement, the Company acquired all the outstanding shares of common stock of Tiger Parent (AP) Corporation for consideration of $ 1.61 billion in cash and 44 million shares of common stock of SYNNEX. The combined company is referred to as TD SYNNEX. See Note 17 – Subsequent Event for further discussion. Interim results of operations are not necessarily indicative of financial results for a full year, and the Company makes no representations related thereto. Certain columns and rows may not add due to the use of rounded numbers. NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: For a discussion of the Company’s significant accounting policies, refer to the discussion in the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2020. Accounting pronouncements adopted during the nine months ended August 31, 2021 are discussed below. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expense during the reporting period. The Company evaluates these estimates on a regular basis and bases them on historical experience and on various assumptions that the Company believes are reasonable. The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains and work force participation and created volatility and disruption of financial markets, the impact of which was most acute during the second quarter of fiscal year 2020. Despite improvements in the global economy since 8 Table of Contents SYNNEX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) For the three and nine months ended August 31, 2021 and 2020 ( Except per share amounts or as otherwise indicated, currency and share amounts in thousands ) (unaudited) the onset of the pandemic, the resurgence of the Delta variant and other mutations bring uncertainty to continued economic recovery. As a result, the Company cannot at this time accurately predict what effects these conditions will have on its operations and financial condition, including due to the uncertainties relating to the severity and duration of the pandemic, the effect on its customers and customer demand and the length of the restrictions and closures imposed by various governments. Consequently, many of the estimates and assumptions required increased judgment and carry a higher degree of variability and volatility. As events continue to evolve and additional information becomes av ailable, these estimates may change in future periods. Actual results could differ from the estimates. Concentration of credit risk Financial instruments that potentially subject the Company to significant concentration of credit risk consist principally of cash and cash equivalents, accounts receivable, receivables from vendors and derivative instruments. The Company’s cash and cash equivalents and derivative instruments are transacted and maintained with financial institutions with high credit standing, and their compositions and maturities are regularly monitored by management. Through August 31, 2021, the Company has not experienced any credit losses on such deposits and derivative instruments. Accounts receivable include amounts due from customers, including related party customers. Receivables from vendors, net, includes amounts due from original equipment manufacturer (“OEM”) vendors primarily in the technology industry. The Company performs ongoing credit evaluations of its customers’ financial condition and limits the amount of credit extended when deemed necessary, but generally requires no collateral. The Company also maintains allowances for expected credit losses. In estimating the required allowances, the Company takes into consideration the overall quality and aging of its receivable portfolio, the existence of a limited amount of credit insurance and specifically identified customer and vendor risks. The Company also considers risks attributed to COVID-19 in establishing the required allowances. Through August 31, 2021, such losses have been within management’s expectations. One customer accounted for 23 % and 29 % of the Company’s total revenue during the three and nine months ended August 31, 2021, respectively. The same customer accounted for 23 % and 22 % of the Company’s total revenue during the three and nine months ended August 31, 2020, respectively. Products purchased from the Company’s largest OEM supplier, HP Inc., accounted for approximately 13 % of total revenue during both the three and nine months ended August 31, 2021, respectively, and approximately 15 % of total revenue during both the three and nine months ended August 31, 2020. As of August 31, 2021 and November 30, 2020, one customer comprised 25 % and 15 %, respectively, of the consolidated accounts receivable balance. Inventories Inventories are stated at the lower of cost and net realizable value. Cost is computed based on the weighted-average method. Inventories are comprised of finished goods and work-in-process. Finished goods include products purchased for resale, system components purchased for both resale and for use in the Company’s projects and integration-based completed systems. Work-in-process inventories are not material to the Consolidated Financial Statements. Segments Operating segments are based on components of the Company that engage in business activities that earn revenues and incur expenses (a) whose operating results are regularly reviewed by the Company’s chief operating decision maker to make decisions about resource allocation and performance and (b) for which discrete financial information is available. The Company had two reportable segments: Technology Solutions and Concentrix. After giving effect to the Separation of the Concentrix segment, the Company now operates a single reportable segment, which represents an aggregation of four geographic operating segments of United States, Canada, Japan and Latin America. The Company distributes peripherals, IT systems, including data center servers, system components, software, networking, communications and security equipment, consumer electronics and complementary products to a variety of customers, including value-added resellers, system integrators and retailers. The Company also designs and integrates data center equipment built specific to the customers' data center environment. 9 Table of Contents SYNNEX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) For the three and nine months ended August 31, 2021 and 2020 ( Except per share amounts or as otherwise indicated, currency and share amounts in thousands ) (unaudited) Revenue Recognition The Company generates revenue primarily from the sale of various IT products. The Company recognizes revenues from the sale of IT hardware and software as control is transferred to customers, which is at the point in time when the product is shipped or delivered. The Company accounts for a contract with a customer when it has written approval, the contract is committed, the rights of the parties, including payment terms, are identified, the contract has commercial substance and consideration is probable of collection. Binding purchase orders from customers together with agreement to the Company's terms and conditions of sale by way of an executed agreement or other signed documents are considered to be the contract with a customer. Products sold by the Company are delivered via shipment from the Company’s facilities, drop-shipment directly from the vendor, or by electronic delivery of software products. In situations where arrangements include customer acceptance provisions, revenue is recognized when the Company can objectively verify the products comply with specifications underlying acceptance and the customer has control of the products. Revenue is presented net of taxes collected from customers and remitted to government authorities. The Company generally invoices a customer upon shipment, or in accordance with specific contractual provisions. Payments are due as per contract terms and do not contain a significant financing component. Service revenues represents less than 10 % of the total revenue for the periods presented. Provisions for sales returns and allowances are estimated based on historical data and are recorded concurrently with the recognition of revenue. A liability is recorded at the time of sale for estimated product returns based upon historical experience and an asset is recognized for the amount expected to be recorded in inventory upon product return. These provisions are reviewed and adjusted periodically by the Company. Revenue is reduced for early payment discounts and volume incentive rebates offered to customers, which are considered variable consideration, at the time of sale based on an evaluation of the contract terms and historical experience. The Company recognizes revenue on a net basis on certain contracts, where the Company’s performance obligation is to arrange for the products or services to be provided by another party or the rendering of logistics services for the delivery of inventory for which the Company does not assume the risks and rewards of ownership, by recognizing the margins earned in revenue with no associated cost of revenue. Such arrangements include supplier service contracts, post-contract software support services and extended warranty contracts. The Company considers shipping and handling activities as costs to fulfill the sale of products. Shipping revenue is included in revenue when control of the product is transferred to the customer, and the related shipping and handling costs are included in cost of revenue. Recently adopted accounting pronouncements In August 2018, the Financial Accounting Standard Board (“FASB”) issued new guidance to add, remove, and clarify disclosure requirements related to defined benefit pension and other postretirement plans. The amendment requires the Company to disclose the weighted-average interest crediting rates used in cash balance pension plans. It also requires the Company to disclose the reasons for significant changes in the benefit obligation or plan assets including significant gains and losses affecting the benefit obligation for the period. The adoption of this new guidance did not have a material impact on the Company's Consolidated Financial Statements. In August 2018, the FASB issued guidance to improve the effectiveness of fair value measurement disclosures by removing or modifying certain disclosure requirements and adding other requirements. Certain amendments should be applied prospectively, while all other amendments should be applied retrospectively to all periods presented. This guidance was applicable to the Company at the beginning of fiscal year 2021 and its adoption did not have a material impact on the Company's Consolidated Financial Statements. In June 2016, the FASB issued a new credit loss standard to replace the incurred loss impairment methodology. The new impairment model requires immediate recognition of estimated credit losses expected to occur for most financial assets and certain other instruments. This new standard is to be adopted by way of a cumulative-effect adjustment to retained earnings as of the beginning of the first effective reporting period. This guidance was applicable to the Company at the beginning of fiscal year 2021 and its adoption did not have a material impact on the Company's Consolidated Financial Statements. Recently issued accounting pronouncements In March 2020, the FASB issued optional guidance for a limited time to ease the potential burden in accounting for or recognizing the effects of reference rate reform, particularly, the risk of cessation of the London Interbank Offered Rate (“LIBOR”) on financial reporting. The guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments are elective and are effective upon issuance for all entities through December 31, 2022. The Company is currently evaluating the impact of the new guidance. In December 2019, the FASB issued new guidance that simplifies the accounting for income taxes. The guidance is effective for annual reporting periods beginning after December 15, 2020, and interim periods within those reporting periods. Certain amendments should be applied prospectively, while other amendments should be applied retrospectively to all periods presented. The Company is currently evaluating the impact of the new guidance. 10 Table of Contents SYNNEX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) For the three and nine months ended August 31, 2021 and 2020 ( Except per share amounts or as otherwise indicated, currency and share amounts in thousands ) (unaudited) NOTE 3—DISCONTINUED OPERATIONS: The following table summarizes the financial results from discontinued operations of Concentrix included in the Consolidated Statement of Operations: Three Months Ended Nine Months Ended August 31, 2020 August 31, 2020 Revenue $ 1,163,694 $ 3,418,676 Costs and expenses ( 1,086,931 ) ( 3,230,122 ) Interest expense and finance charges and others, net ( 9,594 ) ( 35,231 ) Income from discontinued operations before taxes 67,169 153,322 Provision for income taxes ( 18,402 ) ( 43,717 ) Income from discontinued operations, net of taxes $ 48,767 $ 109,605 There were no revenues earned or cost and expenses incurred of discontinued operations during the three and nine months ended August 31, 2021. There were no non-cash items or capital expenditures of discontinued operations during the nine months ended August 31, 2021. During the nine months ended August 31, 2020, significant non-cash items and capital expenditures of discontinued operations included in the consolidated statement of cash flows are outlined below: Nine Months Ended August 31, 2020 Operating activities: Depreciation and amortization $ 203,679 Share-based compensation 11,821 Provision for doubtful accounts 5,476 Deferred income taxes ( 23,975 ) Unrealized foreign exchange (gains) losses 12,666 Investing activities: Purchases of property and equipment $ 106,249 11 Table of Contents SYNNEX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) For the three and nine months ended August 31, 2021 and 2020 ( Except per share amounts or as otherwise indicated, currency and share amounts in thousands ) (unaudited) The following table presents assets and liabilities that were transferred to Concentrix as of December 1, 2020 and presented as discontinued operations in the Consolidated Balance Sheet as of November 30, 2020: November 30, 2020 Cash and cash equivalents $ 152,656 Accounts receivable, net 1,079,086 Other current assets 189,323 Current assets of discontinued operations $ 1,421,065 Property and equipment, net $ 451,649 Goodwill 1,836,050 Intangible assets, net 798,959 Deferred tax assets 47,423 Other assets 620,099 Noncurrent assets of discontinued operations $ 3,754,180 Borrowings, current $ 33,756 Accounts payable 140,575 Accrued compensation and benefits 419,715 Other accrued liabilities 371,069 Income taxes payable 20,725 Current liabilities of discontinued operations $ 985,840 Long-term borrowings $ 1,111,362 Other long-term liabilities 601,885 Deferred tax liabilities 153,560 Noncurrent liabilities of discontinued operations $ 1,866,807 In connection with the Separation, $ 3,813 of accumulated other comprehensive income, net of income taxes, related to foreign currency translation adjustments, cash flow hedges and pension plan obligations was transferred to Concentrix on the Separation date. Refer to Note 5 - Balance Sheet Components for more information. NOTE 4—SHARE-BASED COMPENSATION: The Company recognizes share-based compensation expense for all share-based awards made to employees and directors, including employee stock options, restricted stock awards, restricted stock units, performance-based restricted stock units and employee stock purchases, based on estimated fair values. The following table summarizes the number of share-based awards granted under the Company’s stock incentive plans, during the three and nine months ended August 31, 2021 and 2020, and the measurement-date fair value of those awards: Three Months Ended Nine Months Ended August 31, 2021 August 31, 2020 August 31, 2021 August 31, 2020 Shares awarded Fair value of grants Shares awarded Fair value of grants Shares awarded Fair value of grants Shares awarded Fair value of grants Stock options — $ — — $ — 98 $ 2,995 — $ — Restricted stock awards 2 181 — — 256 23,515 30 2,533 Restricted stock units — * 3 — — 99 7,665 — * 25 2 $ 184 — $ — 453 $ 34,175 30 $ 2,558 * Less than a thousand units. 12 Table of Contents SYNNEX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) For the three and nine months ended August 31, 2021 and 2020 ( Except per share amounts or as otherwise indicated, currency and share amounts in thousands ) (unaudited) The Company recorded share-based compensation expense in the Consolidated Statements of Operations for the three and nine months ended August 31, 2021 and 2020 as follows: Three Months Ended Nine Months Ended August 31, 2021 August 31, 2020 August 31, 2021 August 31, 2020 Total share-based compensation (recorded in selling, general and administrative expenses) $ 6,509 $ 4,996 $ 18,147 $ 13,220 Tax benefit recorded in the provision for income taxes ( 1,610 ) ( 1,251 ) ( 4,501 ) ( 3,297 ) Effect on net income $ 4,899 $ 3,745 $ 13,646 $ 9,923 In connection with the Separation, as required by the SYNNEX stock incentive plans, the Company made certain adjustments to outstanding employee equity awards with the intention of preserving the intrinsic value of the awards prior to the Separation. There were 1,452 awards outstanding at November 30, 2020. In accordance with the employee matters agreement, each exercisable and non-exercisable stock option and unvested restricted stock award was modified into similar awards of both SYNNEX and Concentrix and the exercise price of outstanding stock options was adjusted to preserve the intrinsic value of the awards. Certain restricted stock units and performance-contingent awards were modified to provide the holders restricted stock units and performance contingent awards in the company that employs such employee following the Separation. When settled wholly in the employer’s shares, the ratio was based on the closing stock price of SYNNEX at November 30, 2020 compared to the opening stock price of the respective entity on December 1, 2020. The options strike prices were adjusted in the same manner. The modification of these awards did not result in material incremental compensation cost. NOTE 5—BALANCE SHEET COMPONENTS: Cash, cash equivalents and restricted cash: The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same amounts shown in the Consolidated Statements of Cash Flows: As of August 31, 2021 November 30, 2020 Cash and cash equivalents $ 4,050,364 $ 1,412,016 Restricted cash included in other current assets 565 504 Cash, cash equivalents and restricted cash $ 4,050,929 $ 1,412,520 Accounts receivable, net: As of August 31, 2021 November 30, 2020 Accounts receivable $ 2,291,466 $ 2,859,064 Less: Allowance for doubtful accounts ( 61,826 ) ( 67,361 ) Accounts receivable, net $ 2,229,640 $ 2,791,703 Receivables from vendors, net: As of August 31, 2021 November 30, 2020 Receivables from vendors $ 268,027 $ 291,453 Less: Allowance for doubtful accounts ( 5,880 ) ( 5,125 ) Receivables from vendors, net $ 262,147 $ 286,327 Property and equipment, net: As of August 31, 2021 November 30, 2020 Land $ 18,545 $ 18,400 Equipment, computers and software 155,263 143,791 Furniture and fixtures 31,813 30,355 Buildings, building improvements and leasehold improvements 148,701 147,830 Construction-in-progress 209 1,732 Total property and equipment, gross $ 354,531 $ 342,108 Less: Accumulated depreciation ( 202,238 ) ( 184,464 ) Property and equipment, net $ 152,293 $ 157,645 13 Table of Contents SYNNEX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) For the three and nine months ended August 31, 2021 and 2020 ( Except per share amounts or as otherwise indicated, currency and share amounts in thousands ) (unaudited) Depreciation expense was $ 5,633 and $ 16,800 , respectively, for the three and nine months ended August 31, 2021 and $ 5,937 and $ 17,650 , respectively, for the three and nine months ended August 31, 2020. Goodwill: Amount Balance as of November 30, 2020 $ 423,885 Foreign exchange translation 1,215 Balance as of August 31, 2021 $ 425,100 Intangible assets, net: As of August 31, 2021 As of November 30, 2020 Gross Amounts Accumulated Amortization Net Amounts Gross Amounts Accumulated Amortization Net Amounts Customer relationships and lists $ 175,927 $ ( 114,241 ) $ 61,687 $ 175,812 $ ( 101,095 ) $ 74,717 Vendor lists 177,918 ( 94,917 ) 83,001 177,555 ( 82,187 ) 95,368 Trade name and others 28,418 ( 14,708 ) 13,710 28,349 ( 12,387 ) 15,962 Total $ 382,263 $ ( 223,866 ) $ 158,397 $ 381,716 $ ( 195,669 ) $ 186,047 Amortization expense was $ 9,386 and $ 28,128 , respectively, for the three and nine months ended August 31, 2021 and $ 9,995 and $ 30,130 , respectively, for the three and nine months ended August 31, 2020. Estimated future amortization expense of the Company’s intangible assets is as follows: Fiscal years ending November 30, 2021 (remaining three months) $ 9,373 2022 34,426 2023 30,610 2024 25,682 2025 22,228 Thereafter 36,077 Total $ 158,397 Accumulated other comprehensive income (loss): The components of accumulated other comprehensive income (loss) (“AOCI”), net of taxes, were as follows: Unrecognized gains (losses) on defined benefit plans, net of taxes Unrealized gains (losses) on cash flow hedges, net of taxes Foreign currency translation adjustment and other, net of taxes Total Balance as of November 30, 2020 $ ( 37,584 ) $ ( 60,147 ) $ ( 96,840 ) $ ( 194,571 ) Transferred to Concentrix 38,655 ( 29,240 ) ( 5,602 ) 3,813 Other comprehensive income (loss) before reclassification — 1,696 8,375 10,071 Reclassification of (gains) losses from Other comprehensive income (loss) — 23,908 — 23,908 Balance as of August 31, 2021 $ 1,071 $ ( 63,783 ) $ ( 94,067 ) $ ( 156,778 ) Refer to Note 6 - Derivative Instruments for the location of gains and losses reclassified from other comprehensive income to the Consolidated Statements of Operations. Foreign currency translation adjustment and other, net of taxes, is comprised of foreign currency translation adjustments and unrealized gains and losses on Concentrix’ available-for-sale debt securities prior to the Separation. 14 Table of Contents SYNNEX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) For the three and nine months ended August 31, 2021 and 2020 ( Except per share amounts or as otherwise indicated, currency and share amounts in thousands ) (unaudited) NOTE 6—DERIVATIVE INSTRUMENTS: In the ordinary course of business, the Company is exposed to foreign currency risk, interest rate risk, equity risk, commodity price changes and credit risk. The Company enters into transactions, and owns monetary assets and liabilities, that are denominated in currencies other than the legal entity’s functional currency. The Company may enter into forward contracts, option contracts, swaps, or other derivative instruments to offset a portion of the risk on expected future cash flows, earnings, net investments in certain international subsidiaries and certain existing assets and liabilities. However, the Company may choose not to hedge certain exposures for a variety of reasons including, but not limited to, accounting considerations and the prohibitive economic cost of hedging particular exposures. There can be no assurance the hedges will offset more than a portion of the financial impact resulting from movements in foreign currency exchange or interest rates. Generally, the Company does not use derivative instruments to cover equity risk and credit risk. The Company’s hedging program is not used for trading or speculative purposes. All derivatives are recognized on the balance sheet at their fair value. Changes in the fair value of derivatives are recorded in the Consolidated Statements of Operations, or as a component of AOCI in the Consolidated Balance Sheets, as discussed below. Cash Flow Hedges The Company uses interest rate derivative contracts to economically convert a portion of its variable-rate debt to fixed-rate debt. The swaps have maturities at various dates through October 2023 . Gains and losses on cash flow hedges are recorded in AOCI until the hedged item is recognized in earnings. Deferred gains and losses associated with cash flow hedges of interest payments are recognized in “Interest expense and Finance charges, net” in the same period as the related expense is recognized. Derivative instruments designated as cash flow hedges must be de-designated as hedges when it is probable the forecasted hedged transaction will not occur in the initially identified time period or within a subsequent two-month time period. Deferred gains and losses in AOCI associated with such derivative instruments are reclassified into earnings in the period of de-designation. Any subsequent changes in fair value of such derivative instruments are recorded in earnings unless they are re-designated as hedges of other transactions. Non-Designated Derivatives The Company uses short-term forward contracts to offset the foreign exchange risk of assets and liabilities denominated in currencies other than the functional currency of the respective entities. These contracts, which are not designated as hedging instruments, mature or settle within twelve months . Derivatives that are not designated as hedging instruments are adjusted to fair value through earnings in the financial statement line item to which the derivative relates. Fair Values of Derivative Instruments in the Consolidated Balance Sheets The fair values of the Company’s derivative instruments are disclosed in Note 7 - Fair Value Measurements and summarized in the table below: Value as of Balance Sheet Line Item August 31, 2021 November 30, 2020 Derivative instruments not designated as hedging instruments: Foreign exchange forward contracts (notional value) $ 289,883 $ 274,181 Other current assets 630 209 Other accrued liabilities 1,493 3,232 Interest rate swap (notional value) $ — $ 100,000 Other accrued liabilities — 128 Derivative instruments designated as cash flow hedges: Interest rate swaps (notional value) $ 1,500,000 $ 1,500,000 Other accrued liabilities 82,735 115,598 Volume of Activity The notional amounts of foreign exchange forward contracts represent the gross amounts of foreign currency, including, principally, the Canadian Dollar, the Indian Rupee, the Brazilian Real, the Colombian Peso, the Euro, the Mexican Peso, the Chinese Yuan, and the Chilean Peso, that will be bought or sold at maturity. The term and notional amount of interest rate swaps are determined based on management’s assessment of future interest rates and other factors such as debt maturities. The notional amounts for outstanding derivative instruments provide one measure of the transaction volume outstanding and do not represent the amount of the Company’s exposure to credit or market loss. The Company’s exposure to credit loss and market risk will vary over time as currency and interest rates change. 15 Table of Contents SYNNEX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) For the three and nine months ended August 31, 2021 and 2020 ( Except per share amounts or as otherwise indicated, currency and share amounts in thousands ) (unaudited) The Effect of Derivative Instruments on AOCI and the Consolidated Statements of Operations The following table shows the gains and losses, before taxes, of the Company’s derivative instruments designated as cash flow hedges and not designated as hedging instruments in Other Comprehensive Income (“OCI”), and the Consolidated Statements of Operations for the periods presented: Three Months Ended, Nine Months Ended, Location of Gains (Losses) in Income August 31, 2021 August 31, 2020 August 31, 2021 August 31, 2020 Interest expense and finance charges, net $ ( 26,365 ) $ ( 19,747 ) $ ( 71,766 ) $ ( 59,531 ) Other income (expense), net 4,796 25 2,707 ( 1,004 ) Derivative instruments designated as cash flow hedges: Gains (losses) recognized in OCI on interest rate swaps $ 684 $ ( 1,902 ) $ 1,339 $ ( 68,520 ) Gains (losses) on interest rate swaps reclassified from AOCI into income Interest expense and finance charges, net $ ( 10,721 ) $ ( 10,305 ) $ ( 31,704 ) $ ( 23,710 ) Derivative instruments not designated as hedging instruments: Gains (losses) recognized from foreign exchange forward contracts, net ( 1) Other income (expense), net $ 1,782 $ 189 $ ( 7,347 ) $ 5,550 Gains (losses) recognized from interest rate swaps, net Interest expense and finance charges, net — 222 ( 128 ) ( 882 ) Total $ 1,782 $ 411 $ ( 7,475 ) $ 4,668 (1) The gains and losses largely offset the currency gains and losses that resulted from changes in the assets and liabilities denominated in nonfunctional currencies. There were no material gain or loss amounts excluded from the assessment of effectiveness. Existing net losses in AOCI that are expected to be reclassified into earnings in the normal course of business within the next twelve months are $ 39,160 . Offsetting of Derivatives The Company’s derivative instruments are generally governed by standard International Swaps and Derivatives Association, Inc. master agreements, which generally do not require the Company to post any collateral, and specify netting rights, and other customary provisions including events of defaults and termination rights. In the Consolidated Balance Sheets, the Company does not offset derivative assets against liabilities in master netting arrangements. If derivative exposures covered by a qualifying master netting agreement had been netted in the Consolidated Balance Sheets, the total derivative asset and liability positions would have been reduced by $ 630 each as of August 31, 2021 and $ 139 each as of November 30, 2020. Credit exposure for derivative financial instruments is limited to the amounts, if any, by which the counterparties’ obligations under the contracts exceed the Company’s obligations to the counterparties. The Company manages the potential risk of credit losses through careful evaluation of counterparty credit standing and selection of counterparties from a limited group of financial institutions. NOTE 7—FAIR VALUE MEASUREMENTS: The Company’s fair value measurements are classified and disclosed in one of the following three categories: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). 16 Table of Contents SYNNEX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) For the three and nine months ended August 31, 2021 and 2020 ( Except per share amounts or as otherwise indicated, currency and share amounts in thousands ) (unaudited) The following table summarizes the valuation of the Company’s investments and financial instruments that are measured at fair value on a recurring basis: As of August 31, 2021 As of November 30, 2020 Fair value measurement category Fair value measurement category Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Assets: Cash equivalents $ 564 $ 564 $ — $ — $ 7,915 $ 7,915 $ — $ — Marketable equity securities 2,852 2,852 — — 3,050 3,050 — — Forward foreign currency exchange contracts 630 — 630 — 209 — 209 — Liabilities: Forward foreign currency exchange contracts $ 1,493 $ — $ 1,493 $ — $ 3,232 $ — $ 3,232 $ — Interest rate swaps 82,735 — 82,735 — 115,725 — 115,725 — The Company’s cash equivalents consist primarily of highly liquid investments in money market funds and term deposits with maturity periods of three months or less. The carrying values of cash equivalents approximate fair value since they are near their maturity. Investments in marketable equity securities, primarily comprising investments in other companies’ equity securities as per local customary business practice, are recorded at fair value based on quoted market prices. The fair values of forward exchange contracts are measured based on the foreign currency spot and forward rates quoted by the banks or foreign currency dealers. Fair values of interest rate swaps are measured using standard valuation models using inputs that are readily available in public markets, or can be derived from observable market transactions, including LIBOR spot and forward rates. The effect of nonperformance risk on the fair value of derivative instruments was not material as of August 31, 2021 and November 30, 2020. The carrying values of accounts receivable, accounts payable and short-term debt approximate fair value due to their short maturities and interest rates which are variable in nature. The carrying value of the Company’s term loans approximate their fair value since they bear interest rates that are similar to existing market rates. During the nine months ended August 31, 2021, there were no transfers between the fair value measurement category levels. NOTE 8—ACCOUNTS RECEIVABLE ARRANGEMENTS: The Company has an uncommitted supply-chain financing program with a global financial institution under which trade accounts receivable of certain customers and their affiliates may be acquired, without recourse, by the financial institution. Available capacity under this program is dependent on the level of the Company’s trade accounts receivable with these customers and the financial institution’s willingness to purchase such receivables. As of August 31, 2021 and November 30, 2020, accounts receivable sold to and held by the financial institution under this program were $ 19,317 and $ 15,572 , respectively. Discount fees related to the sale of trade accounts receivable under this facility are included in “Interest expense and finance charges, net” in the Consolidated Statements of Operations. During the three and nine months ended August 31, 2021 and 2020, discount fees were not material to the Company’s results of operations. SYNNEX Japan, the Company’s Japanese subsidiary, has arrangements with financial institutions for the sale and financing of approved accounts receivable and notes receivable. The amounts outstanding under these arrangements that were sold, but not collected, as of August 31, 2021 and November 30, 2020 were $ 29,366 and $ 5,798 , respectively. Discount fees related to the sale of trade accounts and notes receivable under this facility are included in “Interest expense and finance charges, net” in the Consolidated Statements of Operations. During the three and nine months ended August 31, 2021 and 2020, discount fees were not material to the Company’s results of operations. The Company also has other financing agreements in North America with financial institutions (“Flooring Companies”) to allow certain customers of the Company to finance their purchases directly with the Flooring Companies. Under these agreements, the Flooring Companies pay to the Company the selling price of products sold to various customers, less a discount, within approximately 15 to 30 days from the date of sale. The Company is contingently liable to repurchase inventory sold under flooring agreements in the event of any default by its customers under the agreement and such inventory being repossessed by the Flooring Companies. See Note 16 - Commitments and Contingencies for further information. 17 Table of Contents SYNNEX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) For the three and nine months ended August 31, 2021 and 2020 ( Except per share amounts or as otherwise indicated, currency and share amounts in thousands ) (unaudited) The following table summarizes the net sales financed through flooring agreements and the flooring fees incurred: Three Months Ended Nine Months Ended August 31, 2021 August 31, 2020 August 31, 2021 August 31, 2020 Net sales financed $ 626,544 $ 584,901 $ 1,718,190 $ 1,512,429 Flooring fees ( 1) 3,919 3,690 11,065 9,563 (1) Flooring fees are included within “Interest expense and finance charges, net.” As of August 31, 2021 and November 30, 2020, accounts receivable subject to flooring agreements were $ 42,114 and $ 49,461 , respectively. NOTE 9—BORROWINGS: Borrowings consist of the following: As of August 31, 2021 November 30, 2020 SYNNEX Japan credit facility - revolving line of credit component $ 8,181 $ 31,627 SYNNEX Japan credit agreement - term loan component — 67,088 Other borrowings 556 26,243 Borrowings, current $ 8,737 $ 124,958 SYNNEX United States credit agreement - term loan component $ 500,000 $ 500,000 SYNNEX United States term loan credit agreement 1,000,000 1,000,000 SYNNEX Japan credit facility - term loan component 45,450 — SYNNEX new Senior Notes 2,500,000 — Other term debt — 85 Long-term borrowings, before unamortized debt discount and issuance costs $ 4,045,450 $ 1,500,085 Less: unamortized debt discount and issuance costs ( 29,001 ) ( 3,385 ) Long-term borrowings $ 4,016,449 $ 1,496,700 SYNNEX United States accounts receivable securitization arrangement In the United States, the Company has an accounts receivable securitization program to provide additional capital for its operations (the “U.S. AR Arrangement”). U nder the terms of the U.S. AR Arrangement, which expires in May 2022 , the Company’s subsidiary that is the borrower under this facility could borrow up to a maximum of $ 650,000 based upon eligible trade accounts receivable. In addition, the U.S. AR Arrangement includes an accordion feature to allow requests for an increase in the lenders' commitment by an additional $ 150,000 . The effective borrowing cost under the U.S. AR Arrangement is a blended rate based upon the composition of the lenders, that includes prevailing dealer commercial paper rates and a rate based upon LIBOR. In addition, a program fee payable on the used portion of the lenders’ commitment, accrues at 1.25 % per annum in the case of lender groups who fund their advances based on prevailing commercial paper rates, and 1.30 % per annum in the case of lender groups who fund their advances based on LIBOR (subject to a 0.50 % per annum floor). A facility fee is payable on the adjusted commitment of the lenders, to accrue at different tiers ranging between 0.35 % per annum and 0.45 % per annum depending on the amount of outstanding advances from time to time. Under the terms of the U.S. AR Arrangement, the Company and two of its U.S. subsidiaries sell, on a revolving basis, their receivables to a wholly-owned, bankruptcy-remote subsidiary. The borrowings are funded by pledging all of the rights, title and interest in the receivables acquired by the Company's bankruptcy-remote subsidiary as security. Any amounts received under the U.S. AR Arrangement are recorded as debt on the Company's Consolidated Balance Sheets. 18 Table of Contents SYNNEX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) For the three and nine months ended August 31, 2021 and 2020 ( Except per share amounts or as otherwise indicated, currency and share amounts in thousands ) (unaudited) SYNNEX Canada accounts receivable securitization arrangement SYNNEX Canada Limited (“SYNNEX Canada”), the Company's subsidiary in Canada, has an accounts receivable securitization program with a bank to provide additional capital for its operations. Under the terms of this program, which matures in May 2023 , SYNNEX Canada can borrow up to CAD 100,000 , or $ 79,264 , in exchange for the transfer of eligible trade accounts receivable, on an ongoing revolving basis. The program includes an accordion feature that allows SYNNEX Canada to request an increase in the bank's commitment up to an additional CAD 50,000 , or $ 39,632 . Any amounts received under this arrangement are recorded as debt on the Company's Consolidated Balance Sheets and are secured by pledging all of the rights, title and interest in the receivables to the bank. The effective borrowing cost is based on the weighted-average of the Canadian Dollar Offered Rate plus a margin of 1.00 % per annum and the prevailing lender commercial paper rates. In addition, prior to an event of termination, SYNNEX Canada is obligated to pay a program fee of 0.75 % per annum based on the used portion of the commitment. After an event of termination, the program fee shall be the sum of the base rate and 2.50 % per annum, based on the used portion of the commitment. SYNNEX Canada pays a fee of 0.40 % per annum for any unused portion of the commitment up to CAD 60,000 , or $ 47,559 , and when the unused portion exceeds CAD 60,000 , or $ 47,559 , a fee of 0.55 % per annum of the unused portion of the commitment. As of both August 31, 2021 and November 30, 2020, there was no outstanding balance under this arrangement. The Company has guaranteed the performance obligations of SYNNEX Canada under this facility. SYNNEX Japan credit facility SYNNEX Japan has a credit agreement with a group of banks for a maximum commitment of JPY 15,000,000 , or $ 136,351 . The credit agreement is comprised of a JPY 5,000,000 , or $ 45,450 , term loan and a JPY 10,000,000 , or $ 90,901 , revolving credit facility and expires in June 2026 . Prior to renewal in June 2021, SYNNEX Japan had a maximum commitment of JPY 15,000,000 , or $ 136,351 , comprised of a JPY 7,000,000 , or $ 63,631 , term loan and a JPY 8,000,000 , or $ 72,721 , revolving credit facility. The interest rate for the term loan and revolving credit facility is based on the Tokyo Interbank Offered Rate, plus a margin, which, prior to the Merger transaction was based on the Company’s consolidated leverage ratio, and after the Merger transaction is based on the Company’s credit rating. Currently the margin over the Tokyo Interbank Offered Rate equals 0.80 % per annum. The unused line fee on the revolving credit facility is currently 0.125 % per annum and prior to the Merger was based on the Company's consolidated current leverage ratio, but is now also based on the Company’s credit rating. The term loan can be repaid at any time prior to the expiration date without penalty. The Company has guaranteed the obligations of SYNNEX Japan under this facility. SYNNEX United States credit agreement In the United States, the Company has a senior secured credit agreement (as amended, the "U.S. Credit Agreement") with a group of financial institutions. The U.S. Credit Agreement includes a $ 600,000 commitment for a revolving credit facility and a term loan in the original principal amount of $ 1,200,000 . The Company may request incremental commitments to increase the principal amount of the revolving line of credit or term loan by $ 500,000 , plus an additional amount which is dependent upon the Company's pro forma first lien leverage ratio, as calculated under the U.S. Credit Agreement. The U.S. Credit Agreement matures in September 2022 . The remaining outstanding principal of the term loan is payable on maturity. Interest on borrowings under the U.S. Credit Agreement can be based on LIBOR or a base rate at the Company's option, plus a margin. The margin for LIBOR loans ranges from 1.25 % to 2.00 % and the margin for base rate loans ranges from 0.25 % to 1.00 %, provided that LIBOR shall not be less than zero . The base rate is a variable-rate which is the highest of (a) the Federal Funds Rate, plus a margin of 0.5 %, (b) the rate of interest announced, from time to time, by the agent, Bank of America, N.A., as its “prime rate,” and (c) the Eurodollar Rate, plus 1.0 %. The unused revolving credit facility commitment fee ranges from 0.175 % to 0.30 % per annum. The margins above the applicable interest rates and the revolving commitment fee for revolving loans are based on the Company’s consolidated leverage ratio, as calculated under the U.S. Credit Agreement. The Company’s obligations under the U.S. Credit Agreement are secured by substantially all of the parent company’s and its United States domestic subsidiaries’ assets on a pari passu basis with the interests of the lenders under the U.S. Term Loan Credit Agreement (defined below) pursuant to an intercreditor agreement and are guaranteed by certain of the Company's United States domestic subsidiaries. The U.S. Credit Agreement was terminated on September 1, 2021 and all outstanding balances were repaid in full as part of the Merger transaction (see Note 17 – Subsequent Event for further discussion). 19 Table of Contents SYNNEX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) For the three and nine months ended August 31, 2021 and 2020 ( Except per share amounts or as otherwise indicated, currency and share amounts in thousands ) (unaudited) SYNNEX United States term loan credit agreement The Company has 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 $ 1,800,000 . The U.S. Term Loan Credit Agreement matures in October 2023 . The remaining outstanding principal is payable on maturity. Interest on borrowings under the U.S. Term Loan Credit Agreement can be based on LIBOR or a base rate at the Company’s option, plus a margin. The margin for LIBOR loans ranges from 1.25 % to 1.75 % and the margin for base rate loans ranges from 0.25 % to 0.75 %, provided that LIBOR shall not be less than zero . The base rate is a variable-rate which is the highest of (a) 0.5 % plus the greater of (x) the Federal Funds Rate in effect on such day and (y) the overnight bank funding rate in effect on such day, (b) the Eurodollar Rate plus 1.0 % per annum, and (c) the rate of interest last quoted by The Wall Street Journal as the “Prime Rate” in the U.S. During the period in which the term loans were available to be drawn, the Company paid term loan commitment fees. The margins above the Company's applicable interest rates are, and the term loan commitment fee were, based on the Company's consolidated leverage ratio as calculated under the U.S. Term Loan Credit Agreement. The Company's obligations under the U.S. Term Loan Credit Agreement are secured by substantially all of the Company’s and certain of its domestic subsidiaries’ assets on a pari passu basis with the interests of the lenders under the existing U.S. Credit Agreement pursuant to an intercreditor agreement, and are guaranteed by certain of its domestic subsidiaries. The U.S. Term Loan Credit Agreement was terminated on September 1, 2021 and all outstanding balances were repaid in full as part of the Merger transaction (see Note 17 – Subsequent Event for further discussion). SYNNEX new credit agreement In connection with the Merger Agreement described in Note 17 – Subsequent Event, the Company entered into a new credit agreement, dated as of April 16, 2021 (the “New Credit Agreement”) with the lenders party thereto and Citibank, N.A., as agent, pursuant to which the Company received commitments for the extension of a senior unsecured revolving credit facility not to exceed an aggregate principal amount of $ 3,500,000 , which revolving credit facility (the “new revolving credit facility”) may, at the request of the Company but subject to the lenders’ discretion, potentially be increased by up to an aggregate amount of $ 500,000 . The New Credit Agreement also includes a senior unsecured term loan (the “new term loan” and, together with the new revolving credit facility, the “new credit facilities”) in an aggregate principal amount of $ 1,500,000 , which was fully funded in connection with the closing of the Merger. The borrower under the new credit facilities is the Company. There are no guarantors of the new credit facilities. The maturity of the new credit facilities is on the fifth anniversary of the September 2021 closing date, which will occur in September 2026, subject in the case of the revolving credit facility, to two one-year extensions upon the Company’s prior notice to the lenders and the agreement of the lenders to extend such maturity date. The outstanding principal amount of the new term loan is payable in quarterly installments in an amount equal to 1.25% of the original $ 1,500,000 principal balance commencing on the last day of the first full fiscal quarter after the closing date of the new credit facilities, with the outstanding principal amount of the term loans due in full on the maturity date. Loans borrowed under the New Credit Agreement bear interest, in the case of LIBOR (or successor) rate loans, at a per annum rate equal to the applicable LIBOR (or successor) rate, plus the applicable margin, which may range from 1.125 % to 1.75 %, based on the Company’s public debt rating (as defined in the New Credit Agreement). The applicable margin on base rate loans is 1.00 % less than the corresponding margin on LIBOR (or successor rate) based loans. In addition to these borrowing rates, there is a commitment fee which ranges from 0.125 % to 0.300 % on any unused commitment under the new revolving credit facility based on the Company’s public debt rating. The New Credit Agreement contains various loan covenants that are customary for similar facilities for similarly rated borrowers that will restrict the ability of the Company and its subsidiaries to take certain actions. The New Credit Agreement also contains financial covenants which require compliance with a maximum debt to EBITDA ratio and a minimum interest coverage ratio, in each case tested on the last day of each fiscal quarter commencing with the first full fiscal quarter to occur after the closing date of the new credit facilities. The New Credit Agreement also contains various customary events of default, including with respect to a change of control of the Company. See Note 17 – Subsequent Event for further discussion regarding borrowings under the New Credit Agreement in conjunction with the Merger. 20 Table of Contents SYNNEX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) For the three and nine months ended August 31, 2021 and 2020 ( Except per share amounts or as otherwise indicated, currency and share amounts in thousands ) (unaudited) On March 22, 2021, the Company had entered into a debt commitment letter (the “Commitment Letter”), under which Citigroup Global Markets Inc. and certain other financing institutions joining thereto pursuant to the terms thereof committed to provide ( i ) a $ 1.5 billion senior unsecured term bridge facility (the "Term Loan A Bridge Facility"), (ii) a $ 2.5 billion senior unsecured term bridge facility (the “Bridge Facility”) and (iii) a $ 3.5 billion senior unsecured revolving bridge facility (the "Bridge Revolving Facility"), subject to the satisfaction of certain customary closing conditions. On April 16, 2021, ( i ) the $ 1.5 billion commitment with respect to the Term Loan A Bridge Facility under the Commitment Letter and (ii) the $ 3.5 billion commitment with respect to the Bridge Revolving Facility under the Commitment Letter were reduced to zero , in each case, as a result of SYNNEX entering into the New Credit Agreement ; and on August 9, 2021 the Bridge Facility was reduced to zero as a result of the issuance of the Notes described below. SYNNEX new Senior Notes On August 9, 2021, SYNNEX completed its offering of $ 2.5 billion aggregate principal amount of senior unsecured notes, consisting of $ 700.0 million of 1.25 % senior notes due 2024 , $ 700.0 million of 1.75 % senior notes due 2026 , $ 600.0 million of 2.375 % senior notes due 2028 , and $ 500.0 million of 2.65 % senior notes due 2031 (collectively, the “Notes,” and such offering, the “Notes Offering”). SYNNEX incurred $ 27 million towards issuance costs. SYNNEX will pay interest semi-annually on the notes on each of February 9 and August 9, beginning February 9, 2022. The net proceeds from this offering were used to fund a portion of the aggregate cash consideration payable in connection with the Merger, refinance certain of SYNNEX’ and Tech Data’s existing indebtedness and pay related fees and expenses (see Note 17 – Subsequent Event for further discussion). SYNNEX expects to use any remaining net proceeds from the Notes Offering for general corporate purposes. SYNNEX Canada revolving line of credit SYNNEX Canada has an uncommitted revolving line of credit with a bank under which it can borrow up to CAD 50,000 , or $ 39,632 . Borrowings under the facility are secured by eligible inventory and bear interest at a base rate plus a margin ranging from 0.50 % to 2.25 % depending on the base rate used. The base rate could be a Banker's Acceptance Rate, a Canadian Prime Rate, LIBOR or U.S. Base Rate. As of both August 31, 2021 and November 30, 2020, there were no borrowings outstanding under this credit facility. Other borrowings and term debt Other borrowings and term debt include lines of credit with financial institutions at certain locations outside the United States, factoring of accounts receivable with recourse provisions, finance leases, a building mortgage and book overdrafts. Interest rates and other terms of borrowing under these lines of credit vary by country, depending on local market conditions. Borrowings under these lines of credit facilities are guaranteed by the Company or secured by eligible accounts receivable. The maximum commitment amounts for local currency credit facilities have been translated into United States Dollars at August 31, 2021 exchange rates. Future principal payments As of August 31, 2021, future principal payments under the above loans are as follows: Fiscal Years Ending November 30, 2021 (remaining three months) $ 8,737 2022 500,000 2023 1,000,000 2024 700,000 2025 — Thereafter 1,845,450 Total $ 4,054,187 Interest expense and finance charges The total interest expense and finance charges for the Company's borrowings were $ 27,393 and $ 75,259 , respectively, for the three and nine months ended August 31, 2021, and $ 30,950 and $ 104,182 , respectively for the three and nine months ended August 31, 2020. The variable interest rates ranged between 0.79 % and 4.46 % during the three months ended August 31, 2021, and between 0.77 % and 4.46 % during the nine months ended August 31, 2021. During the three months ended August 31, 2020, the variable interest rates ranged between 0.74 % and 4.95 %, and between 0.74 % and 8.41 % during the nine months ended August 31, 2020. 21 Table of Contents SYNNEX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) For the three and nine months ended August 31, 2021 and 2020 ( Except per share amounts or as otherwise indicated, currency and share amounts in thousands ) (unaudited) Covenant compliance The Company's credit facilities have a number of covenants and restrictions that, among other things, require the Company to maintain specified financial ratios and satisfy certain financial condition tests. The covenants also limit the Company’s ability to incur additional debt, make intercompany loans, pay dividends and make other types of distributions, make certain acquisitions, repurchase the Company’s stock, create liens, cancel debt owed to the Company, enter into agreements with affiliates, modify the nature of the Company’s business, enter into sale-leaseback transactions, make certain investments, transfer and sell assets, cancel or terminate any material contracts and merge or consolidate. As of August 31, 2021, the Company was in compliance with all material covenants for the above arrangements. NOTE 10—EARNINGS PER COMMON SHARE: The following table sets forth the computation of basic and diluted earnings per common share for the periods indicated: Three Months Ended Nine Months Ended August 31, 2021 August 31, 2020 August 31, 2021 August 31, 2020 Basic earnings per common share: Income from continuing operations attributable to common stockholders ( 1) $ 93,512 $ 84,747 $ 272,322 $ 202,011 Income from discontinued operations attributable to common stockholders ( 1) — 48,226 — 108,374 Net income attributable to common stockholders ( 1) $ 93,512 $ 132,973 $ 272,322 $ 310,385 Weighted-average number of common shares - basic 51,275 50,890 51,204 50,851 Basic earnings per common share Continuing operations $ 1.82 $ 1.67 $ 5.32 $ 3.97 Discontinued operations — 0.95 — 2.13 Total basic net earnings per share $ 1.82 $ 2.61 $ 5.32 $ 6.10 Diluted earnings per common share: Income from continuing operations attributable to common stockholders ( 1) $ 93,522 $ 84,753 $ 272,348 $ 202,024 Income from discontinued operations attributable to common stockholders ( 1) — 48,230 — 108,382 Net income attributable to common stockholders ( 1) $ 93,522 $ 132,983 $ 272,348 $ 310,406 Weighted-average number of common shares - basic 51,275 50,890 51,204 50,851 Effect of dilutive securities: Stock options and restricted stock units 491 351 475 321 Weighted-average number of common shares - diluted 51,766 51,241 51,679 51,172 Diluted earnings per common share Continuing operations $ 1.81 $ 1.65 $ 5.27 $ 3.95 Discontinued operations — 0.94 — 2.12 Total diluted net earnings per share $ 1.81 $ 2.60 $ 5.27 $ 6.07 Anti-dilutive shares excluded from diluted earnings per share calculation — 41 7 83 (1) Restricted stock awards granted by the Company are considered participating securities. Income available to participating securities was immaterial in all periods presented . 22 Table of Contents SYNNEX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) For the three and nine months ended August 31, 2021 and 2020 ( Except per share amounts or as otherwise indicated, currency and share amounts in thousands ) (unaudited) NOTE 11—GEOGRAPHIC INFORMATION: The Company attributes revenues from external customers to the country from where products are delivered. Shown below are the countries accounted for 10% or more of the Company’s revenue and property and equipment, net, for the periods presented: Three Months Ended Nine Months Ended August 31, 2021 August 31, 2020 August 31, 2021 August 31, 2020 Revenue: United States $ 3,918,739 $ 4,162,383 $ 11,872,642 $ 10,626,249 Others 1,288,325 1,143,978 4,130,262 3,232,064 Total $ 5,207,064 $ 5,306,361 $ 16,002,904 $ 13,858,313 As of August 31, 2021 November 30, 2020 Property and equipment, net: United States $ 121,088 $ 126,160 Others 31,205 31,485 Total $ 152,293 $ 157,645 NOTE 12—RELATED PARTY TRANSACTIONS: The Company has a business relationship with MiTAC Holdings Corporation (“MiTAC Holdings”), a publicly-traded company in Taiwan, which began in 1992 when MiTAC Holdings became the Company's primary investor through its affiliates. As of both August 31, 2021 and November 30, 2020, MiTAC Holdings and its affiliates beneficially owned approximately 18 % of the Company’s outstanding common stock. Mr. Matthew Miau, Chairman Emeritus of the Company’s Board of Directors and a director, is the Chairman of MiTAC Holdings and a director or officer of MiTAC Holdings’ affiliates. Beneficial ownership of the Company’s common stock by MiTAC Holdings As noted above, MiTAC Holdings and its affiliates in the aggregate beneficially owned approximately 18% of the Company’s outstanding common stock as of August 31, 2021. These shares are owned by the following entities: As of August 31, 2021 MiTAC Holdings ( 1) 5,300 Synnex Technology International Corp. ( 2) 3,860 Total 9,160 _________________________ (1) Shares are held via Silver Star Developments Ltd., a wholly-owned subsidiary of MiTAC Holdings. Excludes 192 shares held directly by Mr. Miau, 217 shares indirectly held by Mr. Miau through a charitable remainder trust, and 190 shares held by his spouse. (2) Synnex Technology International Corp. (“Synnex Technology International”) is a separate entity from the Company and is a publicly-traded corporation in Taiwan. Shares are held via Peer Development Ltd., a wholly-owned subsidiary of Synnex Technology International. MiTAC Holdings owns a noncontrolling interest of 14.06 % in MiTAC Incorporated, a privately-held Taiwanese company, which in turn holds a noncontrolling interest of 15.65 % in Synnex Technology International. Neither MiTAC Holdings nor Mr. Miau is affiliated with any person(s), entity, or entities that hold a majority interest in MiTAC Incorporated. MiTAC Holdings generally has influence over the Company regarding matters submitted to stockholders for consideration, including any merger or acquisition of the Company. Among other things, this could have the effect of delaying, deterring or preventing a change of control over the Company. The following table presents the Company's transactions with MiTAC Holdings and its affiliates for the periods indicated: Three Months Ended Nine Months Ended August 31, 2021 August 31, 2020 August 31, 2021 August 31, 2020 Purchases of inventories and services $ 46,393 $ 53,365 $ 136,152 $ 151,929 Sale of products to MiTAC Holdings and affiliates 69 203 529 656 Payments made for rent and overhead costs for use of facilities of MiTAC Holdings and affiliates, net 38 27 118 91 23 Table of Contents SYNNEX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) For the three and nine months ended August 31, 2021 and 2020 ( Except per share amounts or as otherwise indicated, currency and share amounts in thousands ) (unaudited) The following table presents the Company’s receivable from and payable to MiTAC Holdings and its affiliates for the periods presented: August 31, 2021 November 30, 2020 Receivable from related parties (included in Accounts receivable, net) $ 10,950 $ 26,133 Payable to related parties (included in Accounts payable) 24,142 49,603 The Company’s 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. The Company negotiates pricing and other material terms on a case-by-case basis with MiTAC Holdings and affiliates. The Company has adopted a policy requiring that material transactions with MiTAC Holdings or its related parties be approved by its Audit Committee, which is composed solely of independent directors. In addition, Mr. Miau’s compensation is approved by the Nominating and Corporate Governance Committee, which is also composed solely of independent directors. Synnex Technology International is a publicly-traded corporation in Taiwan that currently provides distribution and fulfillment services to various markets in Asia and Australia, and is also a potential competitor of the Company. Neither MiTAC Holdings nor Synnex Technology International is restricted from competing with the Company. NOTE 13—EMPLOYEE BENEFIT PLANS: The Company has 401(k) plans in the United States under which eligible employees may contribute up to the maximum amount as provided by law. Employees become eligible to participate in these plans on the first day of the month after their employment date. The Company may make discretionary contributions under the plans. Employees in certain international subsidiaries of the Company are covered by government-mandated defined contribution plans. During the three and nine months ended August 31, 2021, the Company contributed $ 1,178 and $ 3,742 , respectively, to defined contribution plans. During the three and nine months ended August 31, 2020, the Company contributed $ 960 and $ 3,176 , respectively, to defined contribution plans. The Company has a deferred compensation plan for certain directors and officers. Distributions under the plan are subject to Section 409A of the United States Tax Code. The Company may invest balances in the plan in trading securities reported on recognized exchanges. As of August 31, 2021, and November 30, 2020, the deferred compensation liability balance was $ 4,733 and $ 4,628 , respectively . Defined Benefit Plans The Company’s defined benefit plans sponsored by certain international subsidiaries are not material to operations. NOTE 14—EQUITY: Share repurchase program In June 2020, the Board of Directors authorized a three-year $ 400,000 share repurchase program, effective July 1, 2020, pursuant to which the Company may repurchase its outstanding common stock from time to time in the open market or through privately negotiated transactions. As of August 31, 2021, the Company had not repurchased any shares under this program. Dividends On September 28, 2021 , the Company announced that its Board of Directors declared a quarterly cash dividend of $ 0.20 per common share payable on October 29, 2021 to stockholders of record as of the close of business on October 15, 2021 . Future dividends are subject to continued capital availability, compliance with the covenants and conditions in some of the Company's credit facilities and declaration by the Board of Directors in the best interest of the Company’s stockholders. NOTE 15—LEASES: The Company leases certain of its facilities and equipment under operating lease agreements, which expire in various periods through 2030 . The Company’s finance leases are not material. 24 Table of Contents SYNNEX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) For the three and nine months ended August 31, 2021 and 2020 ( Except per share amounts or as otherwise indicated, currency and share amounts in thousands ) (unaudited) The following table presents the various components of lease costs. Three Months Ended Nine Months Ended August 31, 2021 August 31, 2020 August 31, 2021 August 31, 2020 Operating lease cost $ 6,201 $ 5,589 $ 18,586 $ 16,838 Short-term lease cost 43 — 75 277 Variable lease cost 697 992 2,247 2,941 Sublease income ( 101 ) — ( 101 ) ( 7 ) Total operating lease cost $ 6,840 $ 6,581 $ 20,807 $ 20,049 As of August 31, 2021, the Company had $ 9,610 of future payments under additional leases, primarily for corporate facilities that had not yet commenced. These leases will commence in 2021, with lease terms ranging from 3 to 5 years. The following table presents a maturity analysis of expected undiscounted cash flows for operating leases on an annual basis for the next five years and thereafter as of August 31, 2021: Fiscal Years Ending November 30, 2021 (remaining three months) $ 6,607 2022 24,962 2023 19,158 2024 15,803 2025 9,416 Thereafter 13,273 Total payments $ 89,219 Less: imputed interest* 16,329 Total present value of lease payments $ 72,890 * Imputed interest represents the difference between undiscounted cash flows and discounted cash flows. The following amounts were recorded in the Company's Consolidated Balance Sheet as of: Operating leases Balance sheet location August 31, 2021 November 30, 2020 Operating lease Right of Use ("ROU") assets Other assets, net $ 67,461 $ 70,575 Current operating lease liabilities Other accrued liabilities 23,964 23,055 Noncurrent operating lease liabilities Other long-term liabilities 48,926 53,130 The following table presents s upplemental cash flow information related to the Company's operating leases for the nine months ended August 31, 2021, and 2020. Cash payments related to variable lease costs and short-term leases are not included in the measurement of operating lease liabilities, and, as such, are excluded from the amounts below : Nine months ended Cash flow information August 31, 2021 August 31, 2020 Cash paid for amounts included in the measurement of lease liabilities $ 18,688 $ 17,076 Non-cash ROU assets obtained in exchange for lease liabilities (subsequent to initial adoption) 14,635 10,842 The weighted-average remaining lease term and discount rate were as follows: Nine months ended Operating lease term and discount rate August 31, 2021 August 31, 2020 Weighted-average remaining lease term (years) 4.33 4.47 Weighted-average discount rate 3.76 % 4.21 % 25 Table of Contents SYNNEX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) For the three and nine months ended August 31, 2021 and 2020 ( Except per share amounts or as otherwise indicated, currency and share amounts in thousands ) (unaudited) NOTE 16—COMMITMENTS AND CONTINGENCIES: The Company was contingently liable as of August 31, 2021 under agreements to repurchase repossessed inventory acquired by flooring companies as a result of default on floor plan financing arrangements by the Company's customers. These arrangements are described in Note 8 - Accounts Receivable Arrangements and do not have expiration dates. As the Company does not have access to information regarding the amount of inventory purchased from the Company, still on hand with the customer at any point in time, the Company’s repurchase obligations relating to inventory cannot be reasonably estimated. Losses, if any, would be the difference between the repossession cost and the resale value of the inventory. There have been no repurchases through August 31, 2021 under these agreements and the Company is not aware of any pending customer defaults or repossession obligations. The Company believes that, based on historical experience, the likelihood of a material loss pursuant to these inventory repurchase obligations is remote. From time to time, the Company receives notices from third parties, including customers and suppliers, seeking indemnification, payment of money or other actions in connection with claims made against them. Also, from time to time, the Company has been involved in various bankruptcy preference actions where the Company was a supplier to the companies now in bankruptcy. In addition, the Company is subject to various other claims, both asserted and unasserted, that arise in the ordinary course of business. The Company evaluates these claims and records the related liabilities. It is possible that the ultimate liabilities could differ from the amounts recorded. Under the separation and distribution agreement with Concentrix that was entered into in connection with the Separation, SYNNEX agreed to indemnify Concentrix, each of its subsidiaries and each of their respective directors, officers and employees from and against all liabilities relating to, arising out of or resulting from, among other matters, the liabilities allocated to SYNNEX as part of the Separation. Similarly, Concentrix agreed to indemnify SYNNEX, each of its subsidiaries and each of their respective directors, officers and employees from and against all liabilities relating to, arising out of or resulting from, among other matters, the liabilities allocated to Concentrix as part of the Separation. SYNNEX expects Concentrix to fully perform under the terms of the separation and distribution agreement. Under the separation and distribution agreement, SYNNEX and Concentrix agreed to cooperate with each other in managing litigation related to both companies' businesses. The separation and distribution agreement also included provisions that assign to each company responsibility for managing pending and future litigation related to the general corporate matters of SYNNEX arising prior to the Separation. Under the tax matters agreement with Concentrix that was entered into in connection with the Separation, if the spin-off fails to qualify for tax-free treatment, Concentrix is generally required to indemnify the Company for any taxes resulting from the spin-off (and related costs and other damages) to the extent such amounts result from (1) an acquisition of all or a portion of the Concentrix’ equity securities or assets by any means, (2) any action or failure to act by Concentrix after the distribution affecting the voting rights of Concentrix’ stock, (3) other actions or failures to act by Concentrix, or (4) certain breaches of the Concentrix agreements and representations in the tax matters agreement. The Company does not believe that the above commitments and contingencies will have a material adverse effect on the Company's results of operations, financial position or cash flows. 26 Table of Contents SYNNEX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) For the three and nine months ended August 31, 2021 and 2020 ( Except per share amounts or as otherwise indicated, currency and share amounts in thousands ) (unaudited) NOTE 17—SUBSEQUENT EVENT: On September 1, 2021, pursuant to the terms of the Merger Agreement, SYNNEX acquired all the outstanding shares of common stock of Tiger Parent (AP) Corporation, the parent company of Tech Data, for consideration of $ 1.61 billion in cash and 44 million shares of common stock of SYNNEX, valued at approximately $ 5,614,400 . The combined company is referred to as TD SYNNEX. The Merger is expected to create a leading global distributor and solutions aggregator for the IT ecosystem. Following the Merger, the stockholders of Tiger Parent (AP) Corporation own approximately 46 % of SYNNEX common stock on a fully diluted basis, based on the Company’s shares outstanding as of August 31, 2021. Given the short period of time from the close of the acquisition to the filing of this Form 10-Q, the Company is in the process of compiling the initial accounting for the Merger, including the determination of the fair values of tangible assets acquired and liabilities assumed, the valuation of intangible assets acquired, income and non-income based taxes, residual goodwill and the amount of goodwill that will be deductible for tax purposes. In connection with the closing of the Merger, SYNNEX repaid in full all amounts outstanding and terminated all outstanding commitments under the U.S. Credit Agreement, of which a principal amount of $ 500 million of term loans were outstanding on the date of repayment and termination, and the U.S. Term Loan Credit Agreement, of which a principal amount of $ 1.0 billion of term loans were outstanding on the date of repayment and termination. Indebtedness outstanding at the closing of the Merger under Tech Data’s Asset-Based Credit Agreement was also repaid in full and the agreement was terminated. SYNNEX used the net proceeds from the Notes Offering, together with borrowings made under the New Credit Agreement, and cash on hand at SYNNEX and Tiger Parent (AP) Corporation, to fund the cash consideration for the Merger and repay existing borrowings. Additionally, on October 1, 2021, approximately $ 66 million outstanding aggregate principal amount of Tech Data’s 3.70 % Senior Notes due in 2022 and approximately $ 131 million outstanding aggregate principal amount of Tech Data’s 4.95 % Senior Notes due in 2027 were redeemed in full. 27 Table of Contents