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Item 7. Management’s Discussion and Analysis

2022-01-28 compared with 2021-01-28 · 343 added, 383 removed, 214 unchanged (77% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

For an understanding of SYNNEX and the significant factors that influenced our performance during the past two fiscal years, the following discussion and analysis of our financial condition and results of operations should be read in conjunction with the description of the business appearing in Item 1 of this Report, Selected Consolidated Financial Data and Item 8 Financial Statements and Supplementary Data included elsewhere in this Report.

You should carefully review and consider the information regarding our financial condition and results of operations set forth under Part I-Item 7 (Management’s Discussion and Analysis of Financial Condition and Results of Operations) in our Annual Report on Form 10-K for the fiscal year ended November 30, 2019, filed with the Securities and Exchange Commission on January 29, 2020, f or an understanding of our results of operations and liquidity discussions and analysis comparing fiscal year 2019 to fiscal year 2018 .

For an understanding of TD SYNNEX and the significant factors that influenced our performance during the past three fiscal years, the following discussion and analysis of our financial condition and results of operations should be read in conjunction with the description of the business appearing in Item 1 of this Report and Item 8 Financial Statements and Supplementary Data included elsewhere in this Report.

Amounts in certain tables appearing in this Report may not add or compute due to rounding.

When used in this Annual Report on Form 10-K, or this Report, the words “believes,” “estimates,” “expects,” “allows,” “can,” “may,” “designed,” “will,” and similar expressions are intended to identify forward-looking statements.

These are statements that relate to future periods and include statements about market trends, our business model and our services, our market strategy, including expansion of our product lines, the separation of SYNNEX and Concentrix, including as to the effect on our results of operations going forward, our infrastructure, our investment in information technology, or IT, systems, our employee hiring, retention and turnover, the ownership interest of MiTAC Holdings Corporation, or MiTAC Holdings, in us and its impact, our revenue, our gross margins, our operating costs and results, the value of our inventory, competition with Synnex Technology International Corp., our future needs for additional financing, the likely sources for such funding and the impact of such funding, market acceptance of our customers’ products, concentration of customers, our international operations, foreign currency exchange rates and expected trends related thereto, expansion and scaling of our operations and related effects, our strategic acquisitions and divestitures of businesses and assets, our goodwill, seasonality of sales, adequacy of our capital resources to meet our capital needs, cash held by our international subsidiaries and repatriation, changes in fair value of derivative instruments, adequacy of our disclosure controls and procedures, pricing pressures, competition, impact of economic and industry trends, impact of our accounting policies and recently issued accounting pronouncements, our belief regarding the impact of inventory repurchase obligations and commitments and contingencies, our effective tax rates, our share repurchase and dividend program, our securitization programs and revolving credit lines, our succession planning, our investments in working capital, personnel, facilities and operations.

Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected.

These risks and uncertainties include, but are not limited to, those risks discussed herein, 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 and other risk factors set forth under Part I, Item 1A, “Risk Factors.” These forward-looking statements speak only as of the date hereof.

We expressly disclaim any obligation or undertaking 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.

In addition to historical information, the MD&A contains forward-looking statements that involve risks and uncertainties.

These forward-looking statements include, but are not limited to, those matters discussed under the heading “Note Regarding Forward-looking Statements.” Our actual results could differ materially from those anticipated by these forward‑looking statements due to various factors, including, but not limited to, those set forth under Item 1A.

Risk Factors of this Form 10-K and elsewhere in this document.

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”).

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.

Concentrix is now an independent public company trading under the symbol “CNXC” on the Nasdaq Stock Market.

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.

We distributed a total of approximately 51.6 million shares of Concentrix common stock to our stockholders.

In connection with the Separation, we 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 has continued to provide services to us following the Separation.

The historical results of operations and financial position of Concentrix are reported as discontinued operations in our Consolidated Financial Statements.

For further information on discontinued operations, see Note 5 - Discontinued Operations, to the Consolidated Financial Statements in Item 8.

On March 22, 2021, SYNNEX entered into an agreement and plan of merger (the “Merger Agreement”) which provided that legacy SYNNEX Corporation would acquire legacy Tech Data Corporation, a Florida corporation (“Tech Data”) through a series of mergers, which would result in Tech Data becoming an indirect subsidiary of TD SYNNEX Corporation.

(collectively, the "Merger").

On September 1, 2021, pursuant to the terms of the Merger Agreement, we acquired all the outstanding shares of common stock of Tiger Parent (AP) Corporation, the parent corporation of Tech Data, for consideration of $1.61 billion in cash ($1.11 billion in cash after giving effect to a $500 million equity contribution by Tiger Parent Holdings, L.P., Tiger Parent (AP) Corporation’s sole stockholder and an affiliate of Apollo Global Management, Inc., to Tiger Parent (AP) Corporation prior to the effective time of the Merger) and 44 million shares of common stock of SYNNEX, valued at approximately $5.61 billion.

See Note 3 – Acquisitions to the Consolidated Financial Statements for further information.

We previously had two reportable segments as of November 30, 2020:

Technology Solutions and Concentrix.

After giving effect to the Separation on December 1, 2020, we operated in a single reportable segment.

After completion of the Merger, we reviewed our reportable segments as there was a change in our chief executive officer, who is also our chief operating decision maker.

Our chief operating decision maker has a leadership structure aligned with the geographic locations of the Americas, Europe and Asia-Pacific and Japan (“APJ”) and reviews and allocates resources based on these geographic locations.

As a result, as of September 1, 2021 we began operating in three reportable segments based on our geographic locations:

the Americas, Europe and APJ.

Our three reportable segments each generate revenues from products and services across our Endpoint Solutions and Advanced Solutions portfolios.

Segment results for all prior periods have been restated for comparability to our current reportable segments.

For financial information by segment, refer to Note 13 – Segment Information, to the Consolidated Financial Statements in Item 8.

We have not presented information by reportable segment within the Management’s Discussion and Analysis of Financial Condition and Results of Operations due to the lack of comparability between periods resulting from the Merger on September 1, 2021.

Revenue and Cost of Revenue

We derive our Technology Solutions revenue primarily through the distribution of peripherals, IT systems, system components, software, networking, communications and security equipment and CE and complementary products, and the delivery of servers and networking solutions for our design and integration solutions customers’ data centers.

In our Concentrix segment, we provided high value business outsourcing services and solutions to improve customer experience of our clients.

Our Concentrix customer contracts typically consisted of a master services agreement or statement of work, which contained the terms and conditions of each program or service we offered.

Our agreements could range from less than one year to over five years and were subject to early termination by our customers or us for any reason, typically with 30 to 90 days’ notice.

In fiscal years 2020 and 2019, approximately 34% of our consolidated revenue and approximately 24% of our Technology Solutions revenue, was generated from our international operations.

We distribute peripherals, information technology (“IT”) systems including data center server and storage solutions, system components, software, networking, communications and security equipment, consumer electronics and complementary products.

We also provide systems design and integration solutions.

In fiscal years 2021, 2020 and 2019 approximately 37%, 24% and 23% of our revenue, respectively, was generated from our international operations.

As a result, our revenue growth has been impacted by fluctuations in foreign currency exchange rates.

The market for IT products and services is generally characterized by declining unit prices and short product life cycles.

The market for IT products is generally characterized by declining unit prices and short product life cycles.

Our overall business is also highly competitive on the basis of price.

We set our sales price based on the market supply and demand characteristics for each particular product or bundle of products we distribute and solutions we provide.

From time to time, we also participate in the incentive and rebate programs of our OEM suppliers.

We also participate in the incentive and rebate

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programs of our OEM suppliers.

These programs are important determinants of the final sales price we charge to our reseller customers.

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We carefully manage our inventory to maximize the benefit to us of these supplier - provided protections.

A significant portion of our Technology Solutions cost of revenue is the purchase price we pay our OEM suppliers for the products we sell, net of any incentives, rebates, price protection and purchase discounts received from our OEM suppliers.

Cost of products revenue also consists of provisions for inventory losses and write-downs, freight expenses associated with the receipt in and shipment out of our inventory, and royalties due to OEM vendors.

A significant portion of our cost of revenue is the purchase price we pay our OEM suppliers for the products we sell, net of any incentives, rebates, price protection and purchase discounts received from our OEM suppliers.

Cost of revenue also consists of provisions for inventory losses and write-downs, freight expenses associated with the receipt in and shipment out of our inventory, and royalties due to OEM vendors.

In addition, cost of revenue includes the cost of material, labor and overhead for our systems design and integration solutions.

In our Concentrix segment, cost of revenue consists primarily of personnel costs related to contract services delivery.

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Revenue and cost of revenue in our Technology Solutions segment relate to products, and revenue and cost of revenue in our Concentrix segment relate to services.

The Technology Solutions industry in which we operate 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.

Our Technology Solutions gross margin has fluctuated annually due to changes in the mix of products we offer, customers we sell to, incentives and rebates received from our OEM suppliers, competition, seasonality, replacement of lower margin business, inventory obsolescence, and lower costs associated with increased efficiencies.

Generally, when our revenue becomes more concentrated on limited products or customers, our Technology Solutions gross margin tends to decrease due to increased pricing pressure from OEM suppliers or reseller customers.

Concentrix gross margins, which are higher than those in our Technology Solutions segment, can be impacted by the mix of customer contracts, additional lead time for programs to be fully scalable and transition and initial set-up costs.

Our operating margin has also fluctuated in the past, based primarily on our ability to achieve economies of scale, the management of our operating expenses, changes in the relative mix of our Technology Solutions and Concentrix revenue, and the timing of our acquisitions and investments.

The IT distribution industry in which we operate 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.

Our gross margin has fluctuated annually due to changes in the mix of products we offer, customers we sell to, incentives and rebates received from our OEM suppliers, competition, seasonality, replacement of lower margin business, inventory obsolescence, and lower costs associated with increased efficiencies.

Generally, when our revenue becomes more concentrated on limited products or customers, our gross margin tends to decrease due to increased pricing pressure from OEM suppliers or reseller customers.

Our operating margin has also fluctuated in the past, based primarily on our ability to achieve economies of scale, the management of our operating expenses, changes in the relative mix of our revenue, and the timing of our acquisitions and investments.

Economic and Industry Trends

Our Technology Solutions revenue is highly dependent on the end-market demand for IT and CE products.

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, seasonality and 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 distribution industry and increased price-based competition.

Our revenue is highly dependent on the end-market demand for IT products.

This end-market demand is influenced by many factors including the introduction of new IT products and software by OEMs, replacement cycles for existing IT products, seasonality and overall economic growth and general business activity.

A difficult and challenging economic environment may also lead to consolidation or decline in the IT distribution industry and increased price-based competition.

Business in our system design and solutions is highly dependent on the demand for cloud infrastructure, and the number of key customers and suppliers in the market.

Our Technology Solutions business includes operations in the United States, Canada, Japan and Latin America, so we are affected by demand for our products in those regions and the strengthening or weakening of local currencies relative to the U.S.

The customer experience services industry in which our Concentrix segment operated is competitive.

Customers’ performance measures were based on competitive pricing terms and quality of services.

Our Concentrix business was largely concentrated in the United States, the United Kingdom, the Philippines, India, Canada, China and Japan.

Accordingly, we were impacted by economic strength or weakness in these geographies and by the strengthening or weakening of local currencies relative to the U.S.

Our business includes operations in the Americas, Europe and APJ, so we are affected by demand for our products in those regions and the strengthening or weakening of local currencies relative to the U.S.

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

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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.

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 who were in our Concentrix segment, particularly during the second quarter of fiscal year 2020 .

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.

As of November 30, 2020, the majority of our workforce across both segments was productive.

During the fiscal year ended November 30, 2020, we incurred net incremental costs associated with COVID-19 of approximately $131 million, of which Concentrix incurred net costs of approximately $86 million and Technology Solutions incurred net costs of approximately $45 million.

The disruptions due to COVID-19 have impacted our business including logistics operations in our business particularly during the second quarter of fiscal year 2020 .

We have successfully transitioned a significant portion of our workforce 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 co-workers who are required to be on-premise to support our business.

During the fiscal year ended November 30, 2020, we incurred net incremental costs associated with COVID-19 of approximately $45 million.

Net incremental costs associated with COVID-19 were not material during the fiscal year ended November 30, 2021.

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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Actual results could differ from these estimates under different assumptions or conditions.

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We believe the following critical accounting policies involve the more significant judgments, estimates and/or assumptions used in the preparation of our Consolidated Financial Statements.

Revenue Recognition.

We generate revenue primarily from (i) the sale of various IT products through our Technology Solutions business unit and (ii) the provision of business outsourcing services focused on customer experience through our Concentrix business unit.

Revenue from our Technology Solutions segment is categorized as products revenue in our Consolidated Statements of Operations.

Revenue from our Concentrix segment is categorized as services revenue in the Consolidated Statements of Operations.

We recognize revenue from the sale of IT hardware and software as control is transferred to customers, which is at the time when the product is shipped or delivered.

Products sold by us are delivered via shipment from our facilities, drop-shipment directly from the vendor, or by electronic delivery of software products.

We generate revenue primarily from the sale of various IT products.

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We recognize revenue s 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.

We account 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 our 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 us are delivered via shipment from our 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 we can objectively verify the products comply with specifications underlying acceptance and the customer has control of the products .

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Payments are due as per contract terms and do not contain a significant financing component.

Ser vice 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.

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We recognize revenue on a net basis on certain contracts, where our 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 we do not assume the risks and rewards of ownership, by recognizing the margins earned in revenue with no associated cost of revenue.

Such arrangements, which are not material to our consolidated revenue or our “Products” or “Services” revenue, include supplier service contracts, post-contract software support services and extended warranty contracts.

Such arrangements include supplier service contracts, post-contract software support services and extended warranty contracts.

We consider 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 products sold.

For the Concentrix segment, we recognize revenue from services contracts over time as the promised services are delivered to clients for an amount that reflects the consideration to which we are entitled in exchange for those services.

Revenue is presented net of taxes collected from customers and remitted to government authorities.

We generally invoice a customer after performance of services, or in accordance with specific contractual provisions.

Payments are due as per contract terms and do not contain a significant financing component.

Service contracts may be based on a fixed price or on a fixed unit-price per transaction or other objective measure of output.

We determine whether the services performed during the initial phases of an arrangement, such as setup activities, are distinct.

In most cases, the arrangement is a single performance obligation comprised of a series of distinct services that are substantially the same and that have the same pattern of transfer (i.e., distinct days of service).

We record deferred revenue attributable to certain process transition, setup activities where such activities do not represent separate performance obligations.

Billings related to such transition activities are classified under contract liabilities and subsequently recognized ratably over the period in which the related services are performed.

We apply a measure of progress (typically time-based) to any fixed consideration and allocate variable consideration to the distinct periods of service based on usage.

As a result, revenue is generally recognized over the period the services are provided on a usage basis.

This results in revenue recognition that corresponds with the benefit to the client of the services transferred to date relative to the remaining services promised.

Revenue on fixed price contracts is recognized on a straight-line basis over the term of the contract as services are provided.

Revenue on unit-price transactions is recognized using an objective measure of output including staffing hours or the number of transactions processed by service agents.

Client contract terms can range from less than one year to more than five years.

Certain client contracts include incentive payments from the client upon achieving certain agreed-upon service levels and performance metrics or service level agreements that could result in credits or refunds to the client.

Revenue relating to such arrangements is accounted for as variable consideration when the likely amount of revenue to be recognized can be estimated to the extent that it is probable that a significant reversal of any incremental revenue will not occur.

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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.

Business Combinations.

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Amounts recorded in a business combination may change during the measurement period, which is a period not to exceed one year from the date of acquisition, as additional information about conditions existing at the acquisition date becomes available.

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.

Goodwill, intangible assets and long-lived assets

The values assigned to intangible assets include estimates and judgment regarding expectations for the length of customer relationships acquired in a business combination.

Included within intangible assets is an indefinite lived trade names intangible asset.

Indefinite lived intangible assets are tested for impairment annually and more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired.

Other purchased intangible assets are amortized over the useful lives based on estimates of the use of the economic benefit of the asset or on the straight-line amortization method.

We allocate goodwill to reporting units based on the reporting unit expected to benefit from the business combination and test for impairment annually in the fourth quarter or more frequently if events or changes in circumstances indicate that it may be impaired.

Goodwill is tested for impairment at the reporting unit level by first performing a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value.

The factors that are considered in the qualitative analysis include macroeconomic conditions, industry and market considerations, cost factors such as increases in product cost, labor, or other costs that would have a negative effect on earnings and cash flows;

and other relevant entity-specific events and information.

If the reporting unit does not pass the qualitative assessment, then the reporting unit’s carrying value is compared to its fair value.

The fair values of the reporting units are estimated using market and discounted cash flow approaches.

The assumptions used in the market approach are based on the value of a business through an analysis of sales and other multiples of guideline companies and recent sales or offerings of a comparable entity.

The assumptions used in the discounted cash flow approach are based on historical and forecasted revenue, operating costs, future economic conditions, and other relevant factors.

Goodwill is considered impaired if the carrying value of the reporting unit exceeds its fair value and the excess is recognized as an impairment loss.

No goodwill impairment has been identified for any of the years presented.

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We review the recoverability of our long-lived assets, such as definite-lived intangible assets, property and equipment and certain other assets, when events or changes in circumstances occur that indicate the carrying value of the asset or asset group may not be recoverable.

The assessment of possible impairment is based on our ability to recover the carrying value of the asset or asset group from the expected future pre-tax cash flows, undiscounted and without interest charges, of the related operations.

If these cash flows are less than the carrying value of such assets, an impairment loss is recognized for the difference between estimated fair value and carrying value.

The asset and liability method is used in accounting for income taxes.

Under this method, deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts in the financial statements using enacted tax rates and laws that will be in effect when the difference is expected to reverse.

Tax on global low-taxed intangible income is accounted for as a current expense in the period in which the income is includable in a tax return using the “period cost” method.

Valuation allowances are provided against deferred tax assets that are not likely to be realized.

We recognize tax benefits from uncertain tax positions only if that tax position is more likely than not to be sustained on examination by the taxing authorities, based on the technical merits of the position.

The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement.

We recognize interest and penalties related to unrecognized tax benefits in the provision for income taxes.

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.

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.

In our Concentrix segment, prior to the Separation, we sought to enhance our capabilities and domain expertise in key industry verticals, expand our geographic footprint and further expand into higher value service offerings and increase scale.

In our 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.

Results of Operations

The following table sets forth, for the indicated periods, data as percentages of total revenue:

The following table sets forth, for the indicated periods, Consolidated Statement of Operations data as a percentage of revenue:

Fiscal Years Ended November 30,

Statements of Operations Data:

Products revenue

Services revenue

Total revenue

Cost of products revenue

Cost of services revenue

Cost of revenue

Acquisition, integration and restructuring costs

Selling, general and administrative expenses

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Other income (expense), net

Income before income taxes

Income from continuing operations before income taxes

Provision for income taxes

With the completion of the Separation on December 1, 2020, our services revenue and cost of services revenue which represent revenue and cost of revenue of our Concentrix segment will be discontinued.

Further, selling, general and administrative expenses, interest expense and finance charges, net, other income (expense), net and provision for income-taxes will decrease by amounts related to the Concentrix segment or impacted by the Separation, with related reductions in gross profit, operating income and net income.

Additionally, our gross margin and operating margin will decrease due to the discontinuance of the higher margins earned in the Concentrix segment.

In addition, in the second half of 2021, we expect a decrease in our products revenue of approximately $1.2 billion due to a customer moving to a consignment model where we will provide integration services on an agency basis.

Income from continuing operations

Income from discontinued operations, net of taxes

The financial results of the former Concentrix business are presented as income from discontinued operations, net of taxes in the Consolidated Statement of Operations data.

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.

Certain 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.

Revenue in constant currency is calculated by translating the revenue of fiscal year 2020 in the billing currency using the prior year’s 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.

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Non-GAAP operating income, which is operating income , adjusted to exclude transaction -related and integration expenses, restructuring costs and amortization of intangible assets.

Non-GAAP operating income, which is operating income, adjusted to exclude acquisition, integration and restructuring costs, amortization of intangible assets, share-based compensation expense and purchase accounting adjustments.

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Non-GAAP operating margin, which is non-GAAP operating income, as defined above, divided by revenue.

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) a gain upon the settlement of contingent consideration related to the acquisition of Westcon-Comstor Americas in fiscal year 2017, and (iv) a gain recorded upon realization of a contingent asset related to the Westcon-Comstor Americas acquisition.

Transaction-related expenses typically consist of acquisition, integration, and divestiture related costs and are expensed as incurred.

These expenses primarily represent costs for legal, banking, consulting and advisory services, and debt extinguishment fees.

From time to time, this category may also include transaction-related gains/losses on divestitures/spin-off of businesses.

Our acquisition activities have resulted in the recognition of intangible assets which consist primarily of customer relationships, vendor lists and technology.

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, acquisition, integration and restructuring costs, share-based compensation expense, purchase accounting adjustments and income from discontinued operations, net of taxes.

Non-GAAP income from continuing operations, which is income from continuing operations, adjusted to exclude acquisition, integration and restructuring costs, amortization of intangible assets, share-based compensation expense, purchase accounting adjustments, contingent consideration, an acquisition-related contingent gain, income taxes related to the aforementioned items, as well as a capital loss carryback benefit .

Non-GAAP diluted earnings per common share (“EPS”) from continuing operations, which is diluted EPS from continuing operations excluding the per share impact of acquisition, integration and restructuring costs, amortization of intangible assets, share-based compensation expense, purchase accounting adjustments, contingent consideration, an acquisition-related contingent gain, income taxes related to the aforementioned items, as well as a capital loss carryback benefit .

Acquisition, integration and restructuring costs typically consist of acquisition, integration, restructuring and divestiture related costs and are expensed as incurred.

These expenses primarily represent professional services costs for legal, banking, consulting and advisory services, severance and other personnel related costs and debt extinguishment fees.

From time to time, this category may also include transaction-related gains/losses on divestitures/spin-off of businesses, as well as various other costs associated with the acquisition or divestiture.

Our acquisition activities have resulted in the recognition of definite-lived intangible assets which consist primarily of customer relationships and lists and vendor lists.

Definite-lived intangible assets are amortized over their estimated useful lives and are tested for impairment when events indicate that the carrying value may not be recoverable.

The amortization of intangible assets is reflected in our statements of operations within each segment.

Although intangible assets contribute to our revenue generation, the amortization of intangible assets does not directly relate to the sale of our products and the services performed for our clients.

The amortization of intangible assets is reflected in our statements of operations.

Although intangible assets contribute to our revenue generation, the amortization of intangible assets does not directly relate to the sale of our products.

Additionally, intangible asset amortization expense typically fluctuates based on the size and timing of our acquisition activity.

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Intangible asset amortization is excluded from the related non-GAAP financial measure because the amortization, unlike the related revenue, is not affected by operations of any particular period unless an intangible asset becomes impaired or the estimated useful life of an intangible asset is revised.

S hare-based compensation expense is a non-cash expense arising from the grant of equity awards to employees based on the estimated fair value of those awards.

Although share-based compensation is an important aspect of the compensation of our employees, the fair value of the share-based awards may bear little resemblance to the actual value realized upon the vesting or future exercise of the related share-based awards and the expense can vary significantly between periods as a result of the timing of grants of new stock-based awards, including grants in connection with acquisitions.

Given the variety and timing of awards and the subjective assumptions that are necessary when calculating share-based compensation expense, we believe this additional information allows investors to make additional comparisons between our operating results from period to period.

Purchase accounting adjustments are primarily related to the impact of purchase accounting on the recognition of certain consideration received from vendors related to the Merger.

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.

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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.

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Non-GAAP Financial Information:

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(in thousands, except per share amounts)

Foreign currency translation

Revenue in constant currency

Operating income

Transaction-related and integration expenses

Acquisition, integration and restructuring costs

Amortization of intangibles

Share-based compensation

Purchase accounting adjustments

Non-GAAP operating income

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Provision for income taxes

Depreciation (excluding accelerated depreciation included in transaction-related and integration expenses below)

Amortization of intangibles

Other (income) expense, net (excluding amounts included in transaction-related and integration expenses below)

Transaction-related and integration expenses

Other (income) expense, net

Acquisition, integration and restructuring costs

Share-based compensation

Purchase accounting adjustments

Income from discontinued operations, net of taxes

Adjusted EBITDA

Transaction-related and integration expenses

Income from continuing operations

Acquisition, integration and restructuring costs

Amortization of intangibles

Share-based compensation

Purchase accounting adjustments

Contingent consideration

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Income taxes related to the above

Non-GAAP diluted EPS

Technology Solutions

Foreign currency translation

Revenue in constant currency

Operating income

Transaction-related and integration expenses

Amortization of intangibles

Non-GAAP operating income

Operating margin

Non-GAAP operating margin

Interest expense and finance charges, net

Provision for income taxes

Amortization of intangibles

Other (income) expense, net

Transaction-related and integration expenses

Adjusted EBITDA

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Fiscal Years Ended November 30,

(in thousands, except per share amounts)

Foreign currency translation

Revenue in constant currency

Operating income

Transaction-related and integration expenses

Amortization of intangibles

Non-GAAP operating income

Operating margin

Non-GAAP operating margin

Interest expense and finance charges, net

Provision for income taxes

Depreciation (excluding accelerated depreciation included in transaction-related and integration expenses below)

Income tax capital loss carryback benefit

Non-GAAP income from continuing operations

Diluted EPS from continuing operations

Acquisition, integration and restructuring costs

Amortization of intangibles

Other (income) expense, net (excluding amounts included in transaction-related and integration expenses below)

Transaction-related and integration expenses

Adjusted EBITDA

The tax effect of taxable and deductible non-GAAP adjustments was calculated using the effective tax rate during the respective fiscal years.

Share-based compensation

Purchase accounting adjustments

Contingent consideration

Acquisition-related contingent gain

Income taxes related to the above

Income tax capital loss carryback benefit

Non-GAAP diluted EPS from continuing operations

Fiscal Years Ended November 30, 2021, 2020 and 2019

2 unchanged sentences

(in thousands)

Technology Solutions revenue

Concentrix revenue

Inter-segment elimination

Our revenue includes sales of products and services.

In our Technology Solutions segment, we distribute a comprehensive range of products for the technology industry and design and integrate data center equipment.

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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.

The revenue generated by our Concentrix segment relates to business outsourcing services focused on customer experience, process optimization and back office automation.

Inter-segment elimination represents services generated between our reportable segments that are eliminated on consolidation.

Substantially all of the inter-segment revenue represents services provided by the Concentrix segment to the Technology Solutions segment.

Revenue in our Technology Solutions segment increased in fiscal year 2020 compared to fiscal year 2019 primarily due to a demand for technology equipment as COVID-19 related government mandated shelter-in-place restrictions during the second, third and fourth quarters of fiscal year 2020 led to increased needs for remote work, learn and consume related solutions .

On a constant currency basis, revenue in our Technology Solutions segment increased by 5.2% during fiscal year 2020, compared to fiscal year 2019.

Concentrix segment revenue increased slightly in fiscal year 2020, compared to fiscal year 2019, due to growth with technology, retail and ecommerce clients partially offset by lower demand from media, communications, travel, tourism and automotive clients.

During fiscal year 2020, Concentrix revenue was impacted by the COVID-19 related government mandated shelter-in-place restrictions in several countries in the world.

These restrictions adversely impacted our revenue due to the inability of a significant

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number of our associates to work despite client demand.

This impact was most acute in the second quarter of 2020.

Our revenue was also unfavorably impacted by the translation effect of foreign currencies .

Revenue increased in fiscal year 2021 compared to fiscal year 2020 primarily due to an increase in sales resulting from the Merger of approximately $10 billion as well as broad-based demand for technology equipment.

Revenue increased in fiscal year 2020 compared to fiscal year 2019 primarily due to a demand for technology equipment as COVID-19 related government mandated shelter-in-place restrictions during the second, third and fourth quarters of fiscal year 2020 led to increased needs for remote work, learn and consume related solutions.

On a constant currency basis, revenue in our business increased by 4.8% during fiscal year 2020, compared to fiscal year 2019.

Fiscal Years Ended November 30,

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(in thousands)

Technology Solutions gross profit

Technology Solutions gross margin

Concentrix gross profit

Concentrix gross margin

Inter-segment elimination

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.

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.

Technology Solutions gross profit increased in fiscal year 2020, as compared to the prior fiscal year, primarily driven by strong demand for technology products as COVID-19 related government mandated shelter-in-place restrictions during the second, third and fourth quarters of fiscal year 2020 led to a greater need for remote work, learn and consume related solutions.

This increase was partially offset by lower margins due to product mix from our projects and integration-based server solutions and incremental COVID-19 related costs of approximately $10.4 million.

Our Concentrix segment’s gross profit and margin decreased during fiscal year 2020 as compared to the prior fiscal year, due to the incremental impact of $76.0 million in COVID-19 related non-productive workforce and other costs, which was most acute during the second and third quarters of fiscal year 2020, as we transitioned our workforce to work remotely .

Our gross margin is affected by a variety of factors, including competition, selling prices, mix of products, product costs along with rebate and discount programs from our suppliers, reserves or settlement adjustments, freight costs, inventory losses and fluctuations in revenue.

Our gross profit increased in fiscal year 2021, as compared to the prior fiscal year, primarily driven by an increase in sales as a result of the Merger.

Our gross profit increased in fiscal year 2020, as compared to the prior fiscal year, primarily driven by strong demand for technology products as COVID-19 related government mandated shelter-in-place restrictions during the second, third and fourth quarters of fiscal year 2020 led to a greater need for remote work, learn and consume related solutions.

This increase was partially offset by lower margins driven by product mix from our projects and integration-based server solutions.

Acquisition, Integration and Restructuring Costs

Acquisition, integration and restructuring costs are primarily comprised of costs related to the Merger, costs related to the Global Business Optimization 2 Program initiated by Tech Data prior to the Merger (the “GBO 2 Program”) and costs related to the Separation.

We incurred acquisition, integration and restructuring costs related to the completion of the Merger, including professional services costs, personnel and other costs, an impairment of long-lived assets and stock-based compensation expense.

Professional services costs are primarily comprised of legal expenses and tax and other consulting services.

Personnel and other costs are primarily comprised of costs related to the settlement of c ertain outstanding long-term cash incentive awards for Tech Data upon closing of the Merger, retention and other bonuses, as well as severance costs.

Impairment of long-lived assets relates to a charge of $22.2 million recorded for the write-off of capitalized costs associated with Tech Data’s tdONE program in conjunction with the decision to consolidate certain IT systems.

Stock-based compensation expense primarily relates to costs associated with the conversion of certain Tech Data performance-based equity awards issued prior to the Merger into restricted stock units of TD SYNNEX (refer to Note 6 – Share-Based Compensation to the Consolidated Financial Statements for further information) and expenses for certain restricted stock awards issued in conjunction with the Merger.

To date, acquisition and integration expenses related to the Merger were composed of the following:

Year Ended November 30,

(in thousands)

Professional services costs

Personnel and other costs

Impairment of long-lived assets

Stock-based compensation

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GBO 2 Program

Prior to the Merger, Tech Data implemented its GBO 2 Program, that includes investments to optimize and standardize processes and apply data and analytics to be more agile in a rapidly evolving environment, increasing productivity, profitability and optimizing net-working capital.

TD SYNNEX plans to continue this program in conjunction with the Company’s integration activities.

Acquisition, integration and restructuring expenses related to the GBO 2 Program are primarily comprised of restructuring costs and other professional services costs.

Restructuring costs are comprised of severance costs and other associated exit costs, including certain consulting costs.

Other professional services costs are primarily comprised of professional services fees not related to restructuring activities, including costs related to improving profitability and optimizing net-working capital.

Acquisition, integration and restructuring costs under the GBO 2 Program for fiscal 2021 included the following:

Year Ended November 30,

(in thousands)

Restructuring costs

Other professional services costs

Restructuring costs under the GBO 2 Program for fiscal 2021 were composed of the following:

Year Ended November 30,

(in thousands)

Other exit costs

During fiscal 2021, we recorded restructuring costs related to GBO 2 of $2.7 million, $5.7 million and $0.3 million, for the Americas, Europe and APJ regions, respectively.

The Separation

During the fiscal year ended November 30, 2020, we incurred $7.4 million in transaction costs related to the Separation of Concentrix.

Selling, General and Administrative Expenses

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(in thousands)

Selling, general and administrative

Selling, general and administrative expenses

Percentage of revenue

Technology Solutions selling, general and

administrative expenses

Percentage of Technology Solutions revenue

Concentrix selling, general and

administrative expenses

Percentage of Concentrix revenue

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.

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.

Selling, general and administrative expenses in our Technology Solutions segment increased in fiscal year 2020, compared to fiscal year 2019, primarily due to an increase in allowance for doubtful accounts and higher salaries and employee related expenses due to COVID-19.

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 intangible assets, and marketing expenses, offset in part by reimbursements from our OEM suppliers.

Selling, general and administrative expenses increased in fiscal year 2021, compared to fiscal year 2020, primarily due to an increase in employee related expenses resulting from the Merger and an increase in amortization of intangible assets acquired in connection with the Merger.

S elling, general and administrative expenses increased as a percentage of revenue, compared to the prior year period, primarily due to the impact of the Merger.

Selling, general and administrative expenses increased in fiscal year 2020, compared to fiscal year 2019, primarily due to an increase in allowance for doubtful accounts and higher salaries and employee related expenses due to COVID-19.

Incremental costs related to COVID-19 were approximately $33 million for fiscal year 2020.

In addition, we incurred $7.4 million in transaction costs related to the Separation of Concentrix.

These increases were partially offset by a $3.7 million decrease in amortization of intangible assets.

Technology Solutions selling, general and administrative expenses as a percentage of revenue in fiscal year 2020, was consistent with the prior fiscal year.

Concentrix selling, general and administrative expenses decreased, in both absolute dollars and as a percentage of revenue, in fiscal year 2020, compared to the prior fiscal year, primarily due to lower facility and employee costs as a result of integration and

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facility rationalization undertaken in fiscal year 2019 in connection with the acquisition of Convergys Corporation as well as the impact of reduction in variable operating expenses and discretionary spend due to COVID-19 related remote work.

The decrease in the current fiscal year was also caused by an $18.9 million reduction in the amortization of intangible assets and a decrease in transaction-related and integration expenses by $33.0 million as compared to the prior year.

These decreases were partially offset by incremental technology and health and safety c osts of approximately $10.0 million due to COVID-19 related remote work.

This increase was partially offset by a $3.7 million decrease in amortization of intangible assets.

Our selling, general and administrative expenses as a percentage of revenue in fiscal year 2020, was consistent with the prior fiscal year.

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Operating Income

4 unchanged sentences

Operating margin

Technology Solutions operating income

Technology Solutions operating margin

Concentrix operating income

Concentrix operating margin

Operating income in our Technology Solutions segment increased during fiscal year 2020, compared to the prior year, primarily due to broad based growth , decreases in the amortization of intangible assets and transaction-related expenses.

These increases were partially offset by the impact of COVID-19 related incremental costs associated with allowances for doubtful accounts and higher salary and employee related costs .

Operating margin in our Technology Solutions segment decreased due to product mix.

Operating income and margin in our Concentrix segment increased during fiscal year 2020, compared to the prior year, primarily due to lower transaction-related and integration expenses and lower amortization of intangible assets partially offset by the impact of COVID-19 related incremental costs.

Operating income increased during fiscal year 2021, compared to the prior year, primarily due to increased sales as a result of the Merger, partially offset by an increase in employee related expenses resulting from the Merger, an increase in acquisition, integration and restructuring costs and an increase in amortization of intangible assets acquired in connection with the Merger.

Operating margin decreased due to an increase in employee related expenses resulting from the Merger, an increase in acquisition, integration and restructuring costs and an increase in amortization of intangible assets acquired in connection with the Merger.

Operating income increased during fiscal year 2020, compared to the prior year, primarily due to broad based growth, decreases in the amortization of intangible assets and transaction-related expenses.

These increases were offset by the impact of COVID-19 related incremental costs associated with allowances for doubtful accounts and higher salary and employee related costs.

Operating margin in our business decreased due to product mix.

Interest Expense and Finance Charges, Net

4 unchanged sentences

Percentage of revenue

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.

The decrease in our interest expense and finance charges, net, compared to the prior year, was due to 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, as well as a lower interest rate environment.

$1.6 billion of our outstanding borrowings at November 30, 2020, representing substantially all of our borrowings post the Separation of Concentrix, have been economically converted to fixed-rate debt through interest rate swaps.

Amounts recorded in interest expense and finance charges, net, consist primarily of interest expense paid on our Senior Notes (as defined below), our lines of credit and term loans and fees associated with the sale or pledge of accounts receivable through our securitization facilities, offset by income earned on our cash investments.

The increase in our interest expense and finance charges net, during the fiscal year 2021, compared to the prior year, was due to approximately $47 million of acquisition and integration related financing costs primarily related to a commitment for a bridge loan facility obtained in March 2021 which was terminated in conjunction with the Merger and an increase in interest expense related to the issuance of our Senior Notes and higher average outstanding borrowings.

The increase in our interest expense and finance charges net, during the fiscal year 2020, compared to the prior year, was primarily due to increased financing activities related to growth in the business and the planned Separation of Concentrix.

Other Income (Expense), Net

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Percentage of revenue

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Amounts recorded as other income (expense), net include foreign currency transaction gains and losses other than on cash flow hedges, investment gains and losses, non-service component of pension costs, debt extinguishment gains and losses and other non-operating gains and losses, such as settlements received from class actions lawsuits and realization of contingent assets.

Amounts recorded as other income (expense), net include certain foreign currency transaction gains and losses, investment gains and losses, debt extinguishment gains and losses, and other non-operating gains and losses, such as settlements received from class actions lawsuits and realization of contingent assets.

Other income (expense), net increased during the fiscal year ended November 30, 2021, compared to the prior year, primarily due to a gain on sale of investment.

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Other income (expense), net decreased during the fiscal year ended November 30, 2020, compared to the prior year, primarily due to a gain of $19.0 million upon the settlement of contingent consideration related to our acquisition of Westcon-Comstor Americas in an earlier year and a gain of $11.1 million recorded upon realization of contingent sales-tax assets related to the Westcon-Comstor Americas acquisition recorded in fiscal year 2019.

In addition, other income (expense), net in fiscal year 2020 decreased compared to the prior year due to the write-off of $2.2 million of deferred financing costs associated with the $1.2 billion partial prepayment of our term loans on November 30, 2020 in preparation of the Separation on December 1, 2020.

These decreases were 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 .

Provision for Income Taxes

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Income taxes consist of our current and deferred tax expense resulting from our income earned in domestic and foreign jurisdictions.

In connection with the Merger, the Company restructured its foreign financing structure, as well as select legal entities in anticipation of legally integrating legacy Tech Data and SYNNEX foreign operations.

In addition to the treasury efficiencies, these restructurings resulted in a one-time domestic capital loss which would offset certain domestic capital gains when carried back under United States tax law to tax year 2020, resulting in a tax benefit of approximately $45 million.

Our income tax expense decreased during the fiscal year ended November 30, 2021, as compared to the prior year, due to the capital loss carryback benefit, partially offset by an increase in income from continuing operations before income taxes.

The effective tax rate for fiscal year 2021 was lower when compared to the prior year due to the capital loss carryback benefit.

Our income tax expense decreased during the fiscal year ended November 30, 2020, as compared to the prior year, due to the decrease in our effective tax rate.

The effective tax rate for fiscal year 2020 was lower compared to the prior year, due to the benefit from the exercise of employee stock options and reversal of uncertain tax positions.

The effective tax rate for fiscal year 2020 was lower compared to the prior year, due to the benefit from the exercise of employee stock options and the reversal of a reserve for uncertain tax positions.

The comparative decrease in the effective tax rate for fiscal year 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.

See Note 15 of the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report for further details.

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Discontinued Operations

Fiscal Years Ended November 30,

Percent Change

(in thousands)

Income from discontinued operations, net of taxes

Percentage of revenue

Income from discontinued operations includes net income from Concentrix during the fiscal years ended November 30, 2020 and 2019, prior to the Separation on December 1, 2020.

See Note 5 - Discontinued Operations of the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report for further details.

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Liquidity and Capital Resources

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Days sales outstanding ("DSO")

Revenue (products and services)

Accounts receivable, including receivable

from related parties

Accounts receivable, net

Days sales outstanding

3 unchanged sentences

Days inventory outstanding ("DIO")

Cost of revenue (products and services)

Cost of revenue

Days inventory outstanding

3 unchanged sentences

Days payable outstanding ("DPO")

Cost of revenue (products and services)

Accounts payable, including payable to

related parties

Cost of revenue

Accounts payable

Days payable outstanding

4 unchanged sentences

(j) = (c)+(f)-(i)

Technology Solutions

Days sales outstanding

Segment revenue

Accounts receivable, net

Days sales outstanding

Days inventory outstanding

Segment cost of revenue

Days inventory outstanding

(f) = (e)/((d)/the number of days during the period)

Days payable outstanding

Segment cost of revenue

Accounts payable

Days payable outstanding

(i) = (h)/((g)/the number of days during the period)

Cash conversion cycle

(j) = (c)+(f)-(i)

Our Technology Solutions business is working capital intensive.

Our business is working capital intensive.

Our working capital needs are primarily to finance accounts receivable and inventory.

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

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generated from operations and financing activities.

We rely heavily on term loans, accounts receivable arrangements, our securitization programs, our revolver programs and trade credit from vendors for our working capital needs.

We have financed our growth and cash needs to date primarily through cash generated from operations and financing activities.

As a general rule, when sales volumes are increasing, our net investment in working capital dollars typically increases, which generally results in decreased cash flow generated from operating activities.

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.

We calculate CCC as days of the last fiscal quarter’s sales outstanding in accounts receivable plus days of supply on hand in inventory, less days of the last fiscal quarter’s direct cost outstanding in accounts payable.

Our CCC was 31 days and 4 4 days at the end of fiscal years 20 20 and 201 9 , respectively.

CCC of our Technology Solutions segment was 25 days compared to 41 days at the end of fiscal years 2020 and 2019, respectively.

The de crease in fiscal year 20 20 , compared to fiscal year 20 19 , was primarily due to efficient collections of accounts receivable and faster turnover of our inventor ies in our Technology Solutions segment .

In addition, o ur DPO was favorably impacted by the timing of payments of accounts payable in both our Technology Solutions and Concentrix reportable segments .

Conversely, when sales volumes decrease, our net investment in working capital dollars typically decreases, which generally results in increases in cash flows generated from operating activities.

We calculate CCC as days of the last fiscal quarter’s revenue outstanding in accounts receivable plus days of supply on hand in inventory, less days of the last fiscal quarter’s cost of revenue outstanding in accounts payable.

Our CCC was 14 days, 25 days and 41 days at the end of fiscal years 2021, 2020 and 2019, respectively.

The decrease in fiscal year 2021, compared to fiscal year 2020, was primarily due to our DPO, which was impacted by the timing of payments of accounts payable in our business including the impact of the Merger.

The decrease in fiscal year 2020, compared to fiscal year 2019, was primarily due to efficient collections of accounts receivable and faster turnover of our inventories in the Company and the timing of payments of accounts payable in our business.

To increase our market share and better serve our customers, we may further expand our operations through investments or acquisitions.

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These investments or acquisitions would likely be funded primarily by our existing cash and cash equivalents, additional borrowings, or the issuance of securities.

Net cash provided by operating activities was $1.834 billion during fiscal year 2020, primarily due to net income of $529.2 million, adjustments for non-cash items of $393.7 million, decreases in accounts receivable of $12.7 million and receivables from vendors of $79.8 million, an increase in accounts payable of $685.0 million and a net change of $262.8 million in other operating assets and liabilities.

These cash inflows were partially offset by an increase in inventories of $128.8 million.

The decrease in accounts receivable and vendor receivables is primarily due to an improvement in our collections in our Technology Solutions segment.

Notwithstanding the current economic uncertainties due to the impact of COVID-19, DSO in our Technology Solutions segment decreased by approximately 9 days from the end of fiscal year 2019.

This decrease in accounts receivable was partially offset by longer collection cycles in our Concentrix segment largely due to the impact of COVID-19.

The increase in accounts payable and cash inflow from changes in other operating assets and liabilities reflects primarily efficient working capital management in our Technology Solutions segment.

Operating liabilities also increased as the payment date for a higher number of days of salary of certain of our associates in the Concentrix segment became due after year end, as compared to the prior fiscal year, favorably impacting our operating cash flows for the year.

The increase in inventories was driven by growth in our larger projects and integration-based server solutions.

The adjustments for non-cash items consist primarily of amortization and depreciation, provision for doubtful accounts, share-based compensation expense, unrealized foreign exchange losses, amortization of deferred financing costs and a deferred tax benefit.

Excluding the impact of intercompany transactions, $1.346 billion of our cash provided by operating activities was generated in our Technology Solutions segment and $488.3 million was generated by our Concentrix segment.

Net cash provided by operating activities was $549.9 million during fiscal year 2019, primarily due to net income of $500.7 million, adjustments for non-cash items of $410.6 million, an increase in accounts payable of $98.4 million, and a net change in other operating assets and liabilities of $46.5 million.

These cash inflows were partially offset by an increase in accounts receivable and receivables from vendors of $353.1 million and an increase in inventories of $153.1 million.

The increase in accounts receivable, including receivables from vendors, inventories and accounts payable was driven by growth in our Technology Solutions segment.

The adjustments for non-cash items consist primarily of amortization and depreciation, provision for doubtful accounts, stock-based compensation expense, a gain recorded upon the settlement of contingent consideration related to our Westcon-Comstor Americas acquisition in fiscal year 2017 and a deferred tax benefit.

Excluding the impact of intercompany transactions, $93.1 million of our cash provided by operating activities was generated in our Technology Solutions segment and $456.8 million was generated by our Concentrix segment.

Net cash used in investing activities in fiscal year 2020 was $209.5 million, primarily due to capital expenditures of $198.0 million related to infrastructure investments to support growth in both of our business segments and $5.6 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.

Net cash used in investing activities in fiscal year 2019 was $146.8 million, primarily due to capital expenditures of $137.4 million, principally related to infrastructure investments to support the anticipated growth in our Concentrix segment and from $9.4 million of cash paid related to the settlement of employee stock-based awards assumed under the Convergys acquisition.

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Net cash used in financing activities in fiscal year 2020 was $291.7 million, primarily due to net repayments of $262.6 million under our borrowing arrangements.

Cash generated from our operations was used to pay down revolving lines of credit and scheduled quarterly repayments of our term loans.

In addition, at November 30, 2020, in order to complete the S eparation, our Concentrix subsidiary borrowed approximately $1.

2 billion under credit facilities it had previously entered into and used substantially all of those funds to eliminate non-trade intercompany balances and other indebtedness owed by the Concentrix subsidiary to us .

These funds were used by our parent company to pay down $1.

2 billion in a partial repayment of its outstanding term loans.

Accordingly, Concentrix ’ borrowings and our term loan repayment s had no impact on our net debt at November 30, 2020.

Upon completion of the Separation on December 1, 2020 , t he approximately $1.

2 billion borrowed by the Concentrix subsidiary is now debt of the independent Concentrix company.

Consequently, our borrowings are lower by that amount post S eparation.

In addition, w e returned cash to stockholders in the form of dividends of $20.8 million and $3.4 million of repurchases of our common stock during the year, prior to suspension of our dividends program and share repurchases due to the COVID-19 related economic uncertainties in March 2020 .

Effective January 2021, our board of directors has reinstated our quarterly dividends.

Net cash used in financing activities in fiscal year 2019 was $631.7 million, primarily due to net repayments of $521.4 million under our borrowing arrangements.

Cash generated from our operations was used to pay down revolving lines of credit.

During fiscal year 2019, we drew the last tranche of $250.0 million under a term loan facility obtained in fiscal year 2018 for the Convergys acquisition, which was used for the settlement of the remaining amount of convertible debentures assumed as part of this acquisition, and the remainder used for working capital purposes.

We also returned cash to stockholders through $76.6 million of dividend payments and $15.2 million of repurchases of our common stock.

Our Consolidated Statements of Cash Flows include both continuing and discontinued operations.

See Note 5 – Discontinued Operations of the Consolidated Financial Statements for further details.

Operating Activities

Net cash provided by operating activities was $810 million during fiscal year 2021, primarily due to net income and an increase in accounts payable due to the timing of payments, including the impact of the Merger.

These cash inflows were partially offset by an increase in inventory and accounts receivable driven by growth in our business, including the impact of the Merger.

Net cash provided by operating activities was $1.834 billion during fiscal year 2020, primarily due to net income and cash inflows from an increase in accounts payable and changes in other operating assets and liabilities primarily reflecting efficient

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working capital management in our business, and a decrease in DSO in our business of approximately 9 days from the end of fiscal year 2019 largely due to the impact of COVID-19.

These items were partially offset by an increase in inventories driven by growth in our larger projects and integration-based server solutions.

Net cash provided by operating activities was $550 million during fiscal year 2019, primarily due to net income, an increase in accounts payable and a net change in other operating assets and liabilities.

These cash inflows were partially offset by an increase in accounts receivable and receivables from vendors, and an increase in inventories.

The increase in accounts receivable, including receivables from vendors, inventories and accounts payable was driven by growth in our business.

The significant components of our investing and financing cash flow activities are listed below.

Investing Activities

$907.1 million in net cash paid related to the Merger.

$54.9 million related to infrastructure investments.

$198.0 million related to infrastructure investments.

$5.6 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.

$137.4 million related to infrastructure investments.

$9.4 million of cash paid related to the settlement of employee stock-based awards assumed under the Convergys acquisition.

Financing Activities

Proceeds of $2.5 billion for issuance of Senior Notes to finance the Merger.

Repayment of approximately $2.6 billion of debt of Tech Data paid off substantially concurrent with the closing of the Merger.

$149.9 million net transfer of cash and cash equivalents to Concentrix in connection with the Separation.

Dividends of $50.3 million paid.

Debt issuance costs of $42.3 million paid.

Net repayments of $262.6 million under our borrowing arrangements.

Dividends of $20.8 million paid.

Net repayments of $521.4 million under our borrowing arrangements.

$76.6 million of dividend payments.

$15.2 million of repurchases of our common stock.

$14.0 million in cash was used to pay contingent consideration related to our Westcon-Comstor Americas acquisition.

We believe our current cash balances and credit availability are sufficient to support the operating activities for at least the next twelve months.

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We believe our current cash balances, cash flows from operations and credit availability are sufficient to support our operating activities for at least the next twelve months.

Capital Resources

Our cash and cash equivalents totaled $1.565 billion and $225.5 million as of November 30, 2020 and 2019, respectively.

Of our total cash and cash equivalents, the cash held by our international subsidiaries was $570.8 million and $219.7 million as of November 30, 2020 and 2019, respectively.

Our cash and cash equivalents totaled $994.0 million and $1.4 billion as of November 30, 2021 and 2020, respectively.

Our cash and cash equivalents held by international subsidiaries are no longer subject to U.S.

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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, including the impact of the separation of our Concentrix segment.

We believe that our available cash and cash equivalents balances, the cash flows expected to be generated from operations and our existing sources of liquidity, will be sufficient to satisfy our current and planned working capital and investment needs, including the impact of the separation of our Concentrix segment, for the next twelve months in all geographies.

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.

Historically, we have renewed our accounts receivable securitization program and our U.S.

credit facility agreement described below on, or prior to, their respective expiration dates.

Historically, we have renewed our accounts receivable securitization program and our parent company credit facilities 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.

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On-Balance Sheet Arrangements

TD SYNNEX United States accounts receivable securitization agreement

In the United States, we have an accounts receivable securitization program to provide additional capital for our operations (the “U.S.

AR Arrangement”).

Under the terms of the U.S.

AR Arrangement, which has a maturity date of May 2022 , our subsidiary, which is the borrower under this facility, can borrow up to a maximum of $650.0 million based upon eligible trade accounts receivable.

U nder the terms of the U.S.

AR Arrangement, that, prior to the December 2021 amendment described below, was scheduled to expire in May 2022, our subsidiary that is the borrower under this facility could borrow up to a maximum of $650 million based upon eligible trade accounts receivable.

The effective borrowing cost under the U.S.

AR Arrangement is a blended rate based upon the composition of the lenders that included prevailing dealer commercial paper rates and a rate based upon London Interbank Offered Rate (“LIBOR”).

In addition, a program fee is payable on the used portion of the lenders’ commitment 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).

The facility fee payable on the adjusted commitment of the lenders accrues 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.

In addition, the U.S.

AR Arrangement includes an accordion feature to allow requests for an increase in the lenders' commitment by an additional $150.0 million.

AR Arrangement was a blended rate based upon the composition of the lenders, that included 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, accrued at 1.25% per annum in the case of lender groups who funded their advances based on prevailing commercial paper rates, and 1.30% per annum in the case of lender groups who funded their advances based on LIBOR (subject to a 0.50% per annum floor).

A facility fee was 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, we and two of our U.S.

AR Arrangement, we and certain of our U.S.

subsidiaries sell, on a revolving basis, our receivables to a wholly-owned, bankruptcy-remote subsidiary.

The borrowings are funded by pledging all of the rights, title and interest in the

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receivables acquired by our bankruptcy-remote subsidiary as security.

The borrowings are funded by pledging all of the rights, title and interest in the receivables 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.

As of November 30, 20 20 , there were no borrowings outstanding under this facility.

As of November 30, 2019, $ 108.0 million was outstanding under the U.S.

AR Arrangement.

In Canada, we have an accounts receivable securitization program with a bank to provide additional capital for operations.

Under the terms of this program, as renewed in March 2020, SYNNEX Canada Limited (“SYNNEX Canada”) can borrow up to CAD100.0 million, or $76.9 million, in exchange for the transfer of eligible trade accounts receivable, on an ongoing revolving basis through May 2023.

The program includes an accordion feature that allows us to request an increase in the bank's commitment by an additional CAD50.0 million, or $38.4 million.

Any amounts received under this arrangement are recorded as debt on our 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, SYNNEX Canada is obligated to pay a program fee of 0.75% 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 CAD60.0 million, or $46.1 million, and when the unused portion exceeds CAD60.0 million, or $46.1 million, a fee of 0.55% on the first CAD25.0 million, or $19.2 million, of the unused portion and a fee of 0.55% per annum on the remaining unused commitment.

As of both November 30, 2020 and 2019, 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 $143.8 million.

The credit agreement is comprised of a JPY7.0 billion, or $67.1 million, term loan and a JPY8.0 billion, or $76.7 million, revolving credit facility and expires in November 2021.

The interest rate for the term loan and revolving credit facility is based on the Tokyo Interbank Offered Rate, plus a margin, which is based on our consolidated leverage ratio, and currently equals 0.70% per annum.

The unused line fee on the revolving credit facility is currently 0.10% per annum based on our consolidated current leverage ratio.

The term loan can be repaid at any time prior to the expiration date without penalty.

We have guaranteed the obligations of SYNNEX Japan under this facility.

As of November 30, 2020 and 2019, the balance outstanding under the term loan component of this facility was $67.1 million and $63.9 million, respectively.

Balance outstanding under the revolving credit facility was $31.6 million and $5.9 million as of November 30, 2020 and 2019, respectively.

In the United States, we have a senior secured credit agreement (as amended, the U.S.

On December 22, 2021, we and our subsidiaries that are party to the U.S.

AR Arrangement amended the U.S.

AR Arrangement to extend the maturity date to December 2024 and increase the lending commitment to $1.5 billion.

Further, the effective borrowing cost under the U.S.

AR Arrangement was also modified through adjustments to the (i) program fee payable on the used portion of the lenders’ commitment, which now accrues at 0.75% per annum and (ii) facility fee payable on the adjusted commitment of the lenders, which now accrues at different tiers ranging between 0.30% per annum and 0.40% per annum depending on the amount of outstanding advances from time to time.

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SYNNEX United States credit agreement

Prior to the Merger, in the United States, we had a senior secured credit agreement (as amended, the "U.S.

Credit Agreement") with a group of financial institutions.

Credit Agreement includes a $600.0 million commitment for a revolving credit facility and a term loan in the original principal amount of $1.2 billion.

We can request incremental commitments to increase the principal amount of the revolving line of credit or term loan by $500.0 million, plus an additional amount which is dependent upon our pro forma first lien leverage ratio, as calculated under the U.S.

Credit Agreement.

Credit Agreement matures in September 2022.

The term loan can be repaid at any time prior to the maturity date without penalty.

On November 30, 2020, we partially repaid the term loan with a portion of the funds drawn from the Concentrix borrowing arrangements in the United States described below.

The remaining outstanding principal of the term loan is payable on maturity.

Credit Agreement included a $600 million commitment for a revolving credit facility and a term loan in the original principal amount of $1.2 billion.

Interest on borrowings under the U.S.

Credit Agreement can be based on LIBOR or a base rate at our 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 0.50%, (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 1.00%.

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 our consolidated leverage ratio, as calculated under the U.S.

Credit Agreement was based on LIBOR or a base rate at our option, plus a margin.

The margin for LIBOR loans ranged from 1.25% to 2.00% and the margin for base rate loans ranged from 0.25% to 1.00%, provided that LIBOR was not less than zero.

The base rate was a variable rate which was 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 ranged from 0.175% to 0.30% per annum.

The margins above the applicable interest rates and the revolving commitment fee for revolving loans were based on our consolidated leverage ratio, as calculated under the U.S.

Credit Agreement.

Our 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 our United States domestic subsidiaries.

As of November 30, 2020 and 2019, the balance outstanding under the term loan component of the U.S.

Credit Agreement was $0.5 billion and $1.1 billion, respectively.

There were no borrowings outstanding under the revolving line of credit under the U.S.

Credit Agreement as of November 30, 2020.

As of November 30, 2019, the balance outstanding under the revolving line of credit component of the U.S.

Credit Agreement was $25.8 million.

We have a secured term loan credit agreement (the “U.S.

Credit Agreement were secured by substantially all of the parent company’s and our 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 were guaranteed by certain of our United States domestic subsidiaries.

Credit Agreement was originally scheduled to mature in September 2022, however the U.S.

Credit Agreement was terminated on September 1, 2021 and all outstanding balances were repaid in full as part of the Merger (see Note 3 – Acquisitions for further discussion).

SYNNEX United States term loan credit agreement

Prior to the Merger, in the United States we had 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.

Term Loan Credit Agreement matures in October 2023.

The term loan can be repaid at any time prior to the maturity date without penalty.

On November 30, 2020, we partially repaid the term loan with a portion of the funds drawn from the Concentrix borrowing arrangements in the United States described below.

The remaining outstanding principal was payable on maturity.

Interest on borrowings under the U.S.

Term Loan Credit Agreement can be based on LIBOR or a base rate at our option, plus a margin.

The margin for LIBOR loans ranges from 1.25% to 1.75% and the margin for base rate loan 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.

Term Loan Credit Agreement were based on LIBOR or a base rate at our option, plus a margin.

The margin for LIBOR loans ranged from 1.25% to 1.75% and the margin for base rate loans ranged from 0.25% to 0.75%, provided that LIBOR was not less than zero.

The base rate was a variable rate which was 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, we paid term loan commitment fees.

The margins above our applicable interest rates are, and the term loan commitment fee were, based on our consolidated leverage ratio as calculated under the U.S.

The margins above our applicable interest rates and the term loan commitment fee were based on our consolidated leverage ratio as calculated under the U.S.

Term Loan Credit Agreement.

Our obligations under the U.S.

Term Loan Credit Agreement are secured by substantially all of the parent company 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

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to an intercreditor agreement, and are guaranteed by certain of our domestic subsidiaries.

As of November 30 , 20 20 and 201 9 , the balance outstanding under the U.S.

Term Loan Credit Agreement was $1.

0 billion and $1.

7 billion, respectively.

SYNNEX Canada has an uncommitted revolving line of credit with a bank under which it can borrow up to CAD50.0 million, or $38.4 million.

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.

As of both November 30, 2020 and 2019, 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.

As of November 30, 2020, commitments for these revolving credit facilities aggregated $84.6 million.

Term Loan Credit Agreement were secured by substantially all of our and certain of our domestic subsidiaries’ assets on a pari passu basis with the interests of the lenders under the U.S.

Credit Agreement pursuant to an intercreditor agreement, and were guaranteed by certain of our domestic subsidiaries.

Term Loan Credit Agreement was originally scheduled to mature in October 2023, however 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 (see Note 3 – Acquisitions for further discussion).

TD SYNNEX credit agreement

In connection with the Merger Agreement, we entered into a credit agreement, dated as of April 16, 2021 (the “TD SYNNEX Credit Agreement”) with the lenders party thereto and Citibank, N.A., as agent, pursuant to which we received commitments for the extension of a senior unsecured revolving credit facility not to exceed an aggregate principal amount of $3.5 billion, which revolving credit facility (the “TD SYNNEX revolving credit facility”) may, at our request but subject to the lenders’ discretion, potentially be increased by up to an aggregate amount of $500 million.

The TD SYNNEX Credit Agreement also includes a senior unsecured term loan (the “TD SYNNEX term loan” and, together with the TD SYNNEX revolving credit facility, the “TD SYNNEX credit facilities”) in an aggregate principal amount of $1.5 billion, that was fully funded in connection with the closing of the Merger.

The borrower under the TD SYNNEX credit facilities is the Company.

There are no guarantors of the TD SYNNEX credit facilities.

The maturity of the TD SYNNEX credit facilities is on the fifth anniversary of the September 2021 closing date, to occur in September 2026, subject in the case of the revolving credit facility, to two one-year extensions upon our prior notice to the lenders and the agreement of the lenders to extend such maturity date.

The outstanding principal amount of the TD SYNNEX term loan is payable in quarterly installments in an amount equal to 1.25% of the original $1.5 billion principal balance commencing on the last day of the first full fiscal quarter after the closing date of the TD SYNNEX credit facilities, with the outstanding principal amount of the term loans due in full on the maturity date.

Loans borrowed under the TD SYNNEX 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 our public debt rating (as defined in the TD SYNNEX 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 that ranges from 0.125% to 0.300% on any unused commitment under the TD SYNNEX revolving credit facility based on our public debt rating.

As of November 30, 2021, the effective interest rate for the term loan was 1.49%.

The TD SYNNEX Credit Agreement contains various loan covenants that are customary for similar facilities for similarly rated borrowers that restrict our ability to take certain actions.

The TD SYNNEX Credit Agreement also contains financial covenants that 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 TD SYNNEX credit facilities.

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The TD SYNNEX Credit Agreement also contains various customary events of default, including with respect to a change of control of the Company .

On March 22, 2021, we 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 us entering into the TD SYNNEX Credit Agreement;

and on August 9, 2021 the Bridge Facility was reduced to zero as a result of the issuance of the TD SYNNEX Senior Notes described below.

TD SYNNEX Senior Notes

On August 9, 2021, we completed our 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 “Senior Notes,” and such offering, the “Senior Notes Offering”).

We incurred $19.6 million towards issuance costs for the Senior Notes.

We 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 our existing indebtedness and pay related fees and expenses and for general corporate purposes.

The interest rate payable on each series of the Senior Notes will be subject to adjustment from time to time if the credit rating assigned to such series of Senior Notes is downgraded (or downgraded and subsequently upgraded).

We may redeem the Senior Notes, at any time in whole or from time to time in part, prior to (i) August 9, 2022 (the “2024 Par Call Date”) in the case of the 2024 Senior Notes, (ii) July 9, 2026 (the “2026 Par Call Date”) in the case of the 2026 Senior Notes, (iii) June 9, 2028 (the “2028 Par Call Date”) in the case of the 2028 Senior Notes, and (iv) May 9, 2031 in the case of the 2031 Senior Notes (the “2031 Par Call Date” and, together with the 2024 Par Call Date, the 2026 Par Call Date and the 2028 Par Call Date, each, a “Par Call Date” and together, the “Par Call Dates”), at a redemption price equal to the greater of (x) 100% of the aggregate principal amount of the applicable Senior Notes to be redeemed and (y) the sum of the present values of the remaining scheduled payments of the principal and interest on the Senior Notes, discounted to the date of redemption on a semi-annual basis at a rate equal to the sum of the applicable treasury rate plus 15 basis points for the 2024 Senior Notes, 20 basis points for the 2026 Senior Notes and 25 basis points for the 2028 Senior Notes and 2031 Senior Notes, plus in each case, accrued and unpaid interest thereon to, but excluding, the redemption date.

We may also redeem the Senior Notes of any series at our option, at any time in whole or from time to time in part, on or after the applicable Par Call Date, at a redemption price equal to 100% of the principal amount of the Senior Notes to be redeemed.

Other borrowings and term debt

We have various other committed and uncommitted lines of credit with financial institutions at certain locations outside the United States, accounts receivable securitization arrangements, factoring of accounts receivable with recourse provisions, capital leases, a building mortgage, short-term loans, term loans, credit facilities, and book overdraft facilities, totaling approximately $635.5 million in borrowing capacity as of November 30, 2021.

Most of these facilities are provided on an unsecured, short-term basis and are reviewed periodically for renewal.

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 guaranteed by us or secured by eligible accounts receivable.

As of November 30, 2020 and 2019, the balances outstanding under these revolving credit facilities were $25.8 million and $6.0 million, respectively.

As of November 30, 2020, Concentrix and its subsidiaries had borrowing arrangements with financial institutions credit facility that includes a revolving loan commitment of up to $600.0 million and a fully drawn term loan of $900.0 million, an accounts receivable securitization facility to borrow up to $350.0 million in the United States and revolving credit facilities aggregating $22.0 million with a financial institution in India.

Subsequent to November 30, 2020, upon completion of the Separation, these facilities are no longer part of our borrowing arrangements.

Refer to Note 9 of Item 8 of this Report for further details about Concentrix’ borrowings arrangements.

There was $106.3 million outstanding on these facilities at November 30, 2021, at a weighted average interest rate of 4.59%, and there was $57.9 million outstanding at November 30, 2020, at a weighted average interest rate of 1.03%.

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

At November 30, 2021, we were also contingently liable for reimbursement obligations with respect to issued standby letters of credit in the aggregate outstanding amount of $104.7 million.

These letters of credit typically act as a guarantee of payment to certain third parties in accordance with specified terms and conditions.

The maximum commitment amounts for local currency credit facilities have been translated into United States Dollars at November 30, 2021 exchange rates.

Off-Balance Sheet Arrangements

We have financing programs in the United States and Japan under which trade accounts receivable of certain customers may be sold to financial institutions.

We have financing programs under which trade accounts receivable owed by certain customers may be sold to financial institutions.

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.

At November 30, 2020 and 2019, we had a total of $22.5 million and $35.3 million, respectively, of trade accounts receivable sold to and held by the financial institutions under these programs.

In addition, certain of these programs also require that we continue to service, administer and collect the sold accounts receivable.

At November 30, 2021 and 2020, we had a total of $759.9 million and $21.4 million, respectively, of trade accounts receivable sold to and held by the financial institutions under

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these programs.

Discount fees for these programs in the year s ended November 30, 2021, 2020 and 2019 totaled $4.7 million , $3.2 million and $2.3 million , respectively.

Covenant Compliance

Our credit facilities have a number of covenants and restrictions that, among other things, require us to maintain specified financial ratios and satisfy certain financial condition tests.

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.

As of November 30, 2020, we were in compliance with all material covenants for the above arrangements.

Contractual Obligations

Our contractual obligations consist of future payments due under our loans, payments for our operating lease arrangements and repatriation tax under the Tax Cuts and Jobs Act of 2017 (“TCJA”), which are already recorded on our Consolidated Balance Sheet.

In addition, our contractual obligations include interest on our debt and guarantees.

The following table summarizes our contractual obligations at November 30, 2020:

Payments Due by Period

(in thousands)

Our credit facilities have a number of covenants and restrictions that require us to maintain specified financial ratios.

They also limit our ability to incur additional debt, create liens, enter into agreements with affiliates, modify the nature of our business, and merge or consolidate.

As of November 30, 2021, we were in compliance with all current and material covenants for the above arrangements.

Contractual Obligations

Principal debt payments under SYNNEX borrowing arrangements

Principal debt payments under Concentrix borrowing arrangements

Principal debt payments - Consolidated

Interest on debt

Repatriation tax under the TCJA

Non-cancellable operating leases

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Principal debt payments assumes the repayment of our revolving lines of credit within a year.

Upon completion of Separation, the Concentrix borrowing arrangements are no longer part of our contractual obligations.

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 year, but excludes interest on outstanding balances under the Concentrix borrowing arrangements.

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.

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.

There have been no material repurchases through November 30, 2021 under these agreements and we are not aware of any pending customer defaults or repossession obligations.

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.

As of November 30, 2020 and 2019, accounts receivable subject to flooring arrangements were $49.5 million and $69.6 million, respectively.

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 Part II, Item 8 of this Report.

As of November 30, 2020, we have established a reserve of $60.4 million for unrecognized tax benefits.

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.

For more information on our third-party revolving short-term financing arrangements, see Note 2 – Summary of Significant Accounting Policies to the Consolidated Financial Statements included in Part II, Item 8 of this Report.

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.

As of both November 30, 2020 and 2019, MiTAC Holdings and its affiliates beneficially owned approximately 18% of our outstanding common stock.

As of November 30, 2021 and 2020, MiTAC Holdings and its affiliates beneficially owned approximately 9.5% and 18% of our outstanding common stock, respectively.

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.

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Excludes 192 shares held directly by Mr.

Miau, 217 thousand shares indirectly held by Mr.

Miau, 217 shares indirectly held by Mr.

Miau through a charitable remainder trust, and 190 shares held by his spouse.

5 unchanged sentences

Miau is affiliated with any person(s), entity, or entities that hold a majority interest in MiTAC Incorporated.

MiTAC Holdings generally has influence over us regarding matters submitted to stockholders for consideration, including any merger or acquisition of ours.

Among other things, this could have the effect of delaying, deterring or preventing a change of control over us.

We purchased inventories and services from MiTAC Holdings and its affiliates totaling $211.9 million and $173.4 million during fiscal years 2020 and 2019, respectively.

Our sales to MiTAC Holdings and its affiliates during fiscal years 2020 and 2019 totaled $1.1 million and $0.8 million, respectively.

In addition, we made payments of $0.1 million and $41 thousand to MiTAC Holdings and its affiliates for reimbursement of rent and overhead costs for facilities used by us during fiscal year ended November 30, 2020 and 2019, respectively.

We purchased inventories and services from MiTAC Holdings and its affiliates totaling $199.7 million, $211.9 million and $173.4 million during fiscal years 2021, 2020 and 2019, respectively.

Our sales to MiTAC Holdings and its affiliates during fiscal years 2021, 2020 and 2019 totaled $0.6 million, $0.8 million and $0.8 million, respectively.

In addition, we made payments of $0.2 million, $0.1 million and $41 thousand to MiTAC Holdings and its affiliates for reimbursement of rent and overhead costs for facilities used by us during the fiscal years ended November 30, 2021, 2020 and 2019, 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.

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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 our potential competitor.

MiTAC Holdings and its affiliates are not restricted from competing with us.

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Recently Issued Accounting Pronouncements

For a summary of recent accounting pronouncements and the anticipated effects on our consolidated financial statements see Note 2 - Summary of Significant Accounting Policies to the Consolidated Financial Statements, which can be found under Item 8 of this Report.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis