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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended August 31, 2021

OR

 

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                      to                     

Commission File Number: 001-31892

 

SYNNEX CORPORATION

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

94-2703333

(State or other jurisdiction of

incorporation or organization)

 

(IRS Employer

Identification No.)

 

 

 

44201 Nobel Drive

Fremont, California

 

94538

(Address of principal executive offices)

 

(Zip Code)

(510) 656-3333

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per share

SNX

The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes       No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes       No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

Emerging growth company

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act.    

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes       No    

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

 

Class

 

Outstanding as of September 30, 2021

Common Stock, $0.001 par value

 

96,008,186

 

 


Table of Contents

 

 

SYNNEX CORPORATION

 

FORM 10-Q

INDEX

 

 

 

 

Page

PART I

FINANCIAL INFORMATION

3

Item 1.

Financial Statements

3

 

Consolidated Balance Sheets (unaudited) as of August 31, 2021 and November 30, 2020

3

 

Consolidated Statements of Operations (unaudited) for the Three and Nine Months Ended August 31, 2021 and 2020

4

 

Consolidated Statements of Comprehensive Income (unaudited) for the Three and Nine Months Ended August 31, 2021 and 2020

5

 

Consolidated Statements of Stockholders’ Equity (unaudited) for the Three and Nine Months Ended August 31, 2021 and 2020

6

 

Consolidated Statements of Cash Flows (unaudited) for the Nine Months Ended August 31, 2021 and 2020

7

 

Notes to the Consolidated Financial Statements (unaudited)

8

 

Note 1—Organization and Basis of Presentation

8

 

Note 2—Summary of Significant Accounting Policies

8

 

Note 3—Discontinued Operations

11

 

Note 4—Share-Based Compensation

12

 

Note 5—Balance Sheet Components

13

 

Note 6—Derivative Instruments

15

 

Note 7—Fair Value Measurements

16

 

Note 8—Accounts Receivable Arrangements

17

 

Note 9—Borrowings

18

 

Note 10—Earnings Per Common Share

22

 

Note 11—Geographic Information

23

 

Note 12—Related Party Transactions

23

 

Note 13—Employee Benefit Plans

24

 

Note 14—Equity

24

 

Note 15—Leases

24

 

Note 16—Commitments and Contingencies

26

 

Note 17—Subsequent Event

27

Item 2.

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

28

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

40

Item 4.

Controls and Procedures

41

 

 

 

PART II

OTHER INFORMATION

42

Item 1A.

Risk Factors

42

Item 6.

Exhibits

44

Signatures

 

46

 

2


Table of Contents

 

 

PART I - FINANCIAL INFORMATION

ITEM 1. Financial Statements

SYNNEX CORPORATION

CONSOLIDATED BALANCE SHEETS

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

(unaudited)

 

 

 

August 31, 2021

 

 

November 30, 2020

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

4,050,364

 

 

$

1,412,016

 

Accounts receivable, net

 

 

2,229,640

 

 

 

2,791,703

 

Receivables from vendors, net

 

 

262,147

 

 

 

286,327

 

Inventories

 

 

2,866,212

 

 

 

2,684,076

 

Other current assets

 

 

195,058

 

 

 

173,940

 

Current assets of discontinued operations

 

 

 

 

 

1,421,065

 

Total current assets

 

 

9,603,421

 

 

 

8,769,127

 

Property and equipment, net

 

 

152,293

 

 

 

157,645

 

Goodwill

 

 

425,100

 

 

 

423,885

 

Intangible assets, net

 

 

158,397

 

 

 

186,047

 

Deferred tax assets

 

 

40,134

 

 

 

39,636

 

Other assets, net

 

 

127,636

 

 

 

138,070

 

Noncurrent assets of discontinued operations

 

 

 

 

 

3,754,180

 

Total assets

 

$

10,506,980

 

 

$

13,468,590

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Borrowings, current

 

$

8,737

 

 

$

124,958

 

Accounts payable

 

 

3,222,284

 

 

 

3,751,240

 

Accrued compensation and benefits

 

 

104,387

 

 

 

103,075

 

Other accrued liabilities

 

 

647,855

 

 

 

618,616

 

Income taxes payable

 

 

24,131

 

 

 

46,363

 

Current liabilities of discontinued operations

 

 

 

 

 

985,840

 

Total current liabilities

 

 

4,007,393

 

 

 

5,630,092

 

Long-term borrowings

 

 

4,016,449

 

 

 

1,496,700

 

Other long-term liabilities

 

 

130,917

 

 

 

130,296

 

Deferred tax liabilities

 

 

13,931

 

 

 

5,836

 

Noncurrent liabilities of discontinued operations

 

 

 

 

 

1,866,807

 

Total liabilities

 

 

8,168,690

 

 

 

9,129,730

 

Commitments and contingencies (Note 16)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

Common stock, $0.001 par value, 200,000 shares authorized, 53,855 and 53,671 shares issued as of August 31, 2021 and November 30, 2020, respectively

 

 

54

 

 

 

54

 

Additional paid-in capital

 

 

1,615,688

 

 

 

1,591,536

 

Treasury stock, 2,550 and 2,538 shares as of August 31, 2021 and November 30, 2020, respectively

 

 

(192,316

)

 

 

(191,216

)

Accumulated other comprehensive income (loss)

 

 

(156,778

)

 

 

(194,571

)

Retained earnings

 

 

1,071,642

 

 

 

3,133,058

 

Total stockholders' equity

 

 

2,338,290

 

 

 

4,338,860

 

Total liabilities and equity

 

$

10,506,980

 

 

$

13,468,590

 

 

(Amounts may not add due to rounding)

The accompanying Notes are an integral part of these Consolidated Financial Statements (unaudited).

3


Table of Contents

 

SYNNEX CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

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

(unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

August 31, 2021

 

 

August 31, 2020

 

 

August 31, 2021

 

 

August 31, 2020

 

Revenue

 

$

5,207,064

 

 

$

5,306,361

 

 

$

16,002,904

 

 

$

13,858,313

 

Cost of revenue

 

 

(4,894,442

)

 

 

(5,008,881

)

 

 

(15,056,539

)

 

 

(13,031,113

)

Gross profit

 

 

312,622

 

 

 

297,480

 

 

 

946,365

 

 

 

827,201

 

Selling, general and administrative expenses

 

 

(164,418

)

 

 

(165,107

)

 

 

(508,511

)

 

 

(506,239

)

Operating income

 

 

148,204

 

 

 

132,373

 

 

 

437,853

 

 

 

320,962

 

Interest expense and finance charges, net

 

 

(26,365

)

 

 

(19,747

)

 

 

(71,766

)

 

 

(59,531

)

Other income (expense), net

 

 

4,796

 

 

 

25

 

 

 

2,707

 

 

 

(1,004

)

Income from continuing operations before income taxes

 

 

126,635

 

 

 

112,650

 

 

 

368,794

 

 

 

260,426

 

Provision for income taxes

 

 

(31,931

)

 

 

(26,953

)

 

 

(93,165

)

 

 

(56,023

)

Income from continuing operations

 

 

94,705

 

 

 

85,697

 

 

 

275,628

 

 

 

204,403

 

Income from discontinued operations, net of taxes

 

 

 

 

 

48,767

 

 

 

 

 

 

109,605

 

Net income

 

$

94,705

 

 

$

134,464

 

 

$

275,628

 

 

$

314,008

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

1.82

 

 

$

1.67

 

 

$

5.32

 

 

$

3.97

 

Discontinued operations

 

 

 

 

 

0.95

 

 

 

 

 

 

2.13

 

Net income

 

$

1.82

 

 

$

2.61

 

 

$

5.32

 

 

$

6.10

 

Diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

1.81

 

 

$

1.65

 

 

$

5.27

 

 

$

3.95

 

Discontinued operations

 

 

 

 

 

0.94

 

 

 

 

 

 

2.12

 

Net income

 

$

1.81

 

 

$

2.60

 

 

$

5.27

 

 

$

6.07

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

51,275

 

 

 

50,890

 

 

 

51,204

 

 

 

50,851

 

Diluted

 

 

51,766

 

 

 

51,241

 

 

 

51,679

 

 

 

51,172

 

 

(Amounts may not add due to rounding)

The accompanying Notes are an integral part of these Consolidated Financial Statements (unaudited).

4


Table of Contents

 

SYNNEX CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(currency in thousands)

(unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

August 31, 2021

 

 

August 31, 2020

 

 

August 31, 2021

 

 

August 31, 2020

 

Net income

 

$

94,705

 

 

$

134,464

 

 

$

275,628

 

 

$

314,008

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in unrealized gains or losses of defined benefit plans, net of taxes of $0 for the three and nine months ended August 31, 2021, and $3,115 for the three and nine months ended August 31, 2020

 

 

 

 

 

(8,985

)

 

 

 

 

 

(8,768

)

Unrealized gains (losses) on cash flow hedges during the period, net of taxes of ($184) and $357 for the three and nine months ended August 31, 2021, respectively, and ($8,220) and $7,953 for the three and nine months ended August 31, 2020, respectively

 

 

500

 

 

 

24,641

 

 

 

1,696

 

 

 

(24,772

)

Reclassification of net (gains) losses on cash flow hedges to net income, net of tax expense (benefit) of ($2,636) and ($7,796) for the three and nine months ended August 31, 2021, respectively, and ($563) and ($1,120) for the three and nine months ended August 31, 2020, respectively

 

 

8,084

 

 

 

1,824

 

 

 

23,908

 

 

 

3,462

 

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

 

 

8,584

 

 

 

26,465

 

 

 

25,604

 

 

 

(21,310

)

Foreign currency translation adjustments, net of taxes of $308 and ($936) for the three and nine months ended August 31, 2021, respectively, and ($345) and ($51) for the three and nine months ended August 31, 2020, respectively

 

 

(20,194

)

 

 

95,168

 

 

 

8,375

 

 

 

14,526

 

Other comprehensive income (loss)

 

 

(11,610

)

 

 

112,648

 

 

 

33,979

 

 

 

(15,552

)

Comprehensive income

 

$

83,095

 

 

$

247,112

 

 

$

309,607

 

 

$

298,456

 

 

(Amounts may not add due to rounding)

The accompanying Notes are an integral part of these Consolidated Financial Statements (unaudited).

5


Table of Contents

 

SYNNEX CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(currency in thousands, except per share amounts)

(unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

August 31, 2021

 

 

August 31, 2020

 

 

August 31, 2021

 

 

August 31, 2020

 

Total Stockholders' equity, beginning balance

 

$

2,255,668

 

 

$

3,834,381

 

 

$

4,338,860

 

 

$

3,788,450

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock and additional paid-in capital:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

 

1,605,730

 

 

 

1,566,817

 

 

 

1,591,590

 

 

 

1,545,474

 

Share-based compensation

 

 

6,509

 

 

 

8,829

 

 

 

18,147

 

 

 

25,041

 

Common stock issued for employee benefit plans

 

 

3,503

 

 

 

3,433

 

 

 

6,006

 

 

 

8,564

 

Ending balance

 

 

1,615,742

 

 

 

1,579,079

 

 

 

1,615,742

 

 

 

1,579,079

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Treasury stock:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

 

(192,171

)

 

 

(178,609

)

 

 

(191,216

)

 

 

(172,627

)

Repurchases of common stock for tax withholdings on equity awards

 

 

(145

)

 

 

(166

)

 

 

(1,100

)

 

 

(2,743

)

Repurchases of common stock

 

 

 

 

 

 

 

 

 

 

 

(3,405

)

Ending balance

 

 

(192,316

)

 

 

(178,775

)

 

 

(192,316

)

 

 

(178,775

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retained earnings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

 

987,277

 

 

 

2,783,449

 

 

 

3,133,058

 

 

 

2,624,680

 

Separation of Concentrix

 

 

 

 

 

 

 

 

(2,305,982

)

 

 

 

Net income

 

 

94,705

 

 

 

134,464

 

 

 

275,628

 

 

 

314,008

 

Cash dividends declared

 

 

(10,340

)

 

 

(7

)

 

 

(31,062

)

 

 

(20,782

)

Ending balance

 

 

1,071,642

 

 

 

2,917,906

 

 

 

1,071,642

 

 

 

2,917,906

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

 

(145,169

)

 

 

(337,276

)

 

 

(194,572

)

 

 

(209,077

)

Separation of Concentrix

 

 

 

 

 

 

 

 

3,813

 

 

 

 

Other comprehensive income (loss)

 

 

(11,610

)

 

 

112,648

 

 

 

33,979

 

 

 

(15,552

)

Ending balance

 

 

(156,779

)

 

 

(224,628

)

 

 

(156,779

)

 

 

(224,628

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total stockholders' equity, ending balance

 

$

2,338,290

 

 

$

4,093,582

 

 

$

2,338,290

 

 

$

4,093,582

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per share

 

$

0.20

 

 

$

 

 

$

0.60

 

 

$

0.40

 

 

(Amounts may not add due to rounding)

The accompanying Notes are an integral part of these Consolidated Financial Statements (unaudited).

6


Table of Contents

 

SYNNEX CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(currency in thousands)

(unaudited)

 

 

 

Nine Months Ended

 

 

 

August 31, 2021

 

 

August 31, 2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

275,628

 

 

$

314,008

 

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

46,794

 

 

 

251,459

 

Share-based compensation

 

 

18,147

 

 

 

25,041

 

Provision for doubtful accounts

 

 

2,679

 

 

 

48,233

 

Deferred income taxes

 

 

(554

)

 

 

(24,070

)

Unrealized foreign exchange (gains) losses

 

 

3,714

 

 

 

12,764

 

Other

 

 

(1,313

)