SYNNEX Corporation
Mar 23, 2006

SYNNEX Corporation Reports First Quarter 2006 Results; GAAP EPS of $0.34; Non-GAAP EPS of $0.36

FREMONT, Calif.--(BUSINESS WIRE)--March 23, 2006--SYNNEX Corporation (NYSE:SNX), a global IT supply chain services company, today announced financial results for its fiscal first quarter ended February 28, 2006.

For the first quarter of fiscal 2006, revenues increased by 15% to $1.50 billion compared to $1.31 billion for the quarter ended February 28, 2005. Income from continuing operations for the first quarter increased 29% to $10.7 million, or $0.34 per share, compared with $8.3 million, or $0.26 per share in the prior year quarter.

Net income on a non-generally accepted accounting principles, or Non-GAAP, basis for the first quarter of fiscal 2006 was $11.2 million, or $0.36 per share, which excludes stock-based compensation expense of $0.5 million, net of tax, or $0.02 per share, compared with net income of $9.7 million, or $0.31 per share in prior year quarter. The Non-GAAP results from the first quarter of fiscal 2005 exclude Canadian restructuring charges and charges associated with the early retirement of debt. Net income prior to fiscal 2006 did not include stock-based compensation expense due to the adoption of SFAS 123® in the first quarter of fiscal 2006.

"We are pleased with our revenue and profit growth in the first quarter of 2006," said Robert Huang, President and Chief Executive Officer. "Our US and Canadian distribution teams performed well and built on the momentum they generated in the second half of fiscal 2005. We look forward to further executing on our fiscal 2006 goals throughout the balance of the year."

First Quarter Financial Highlights:

Second Quarter Fiscal 2006 Outlook:

The following statements are based on the Company's current expectations for the second quarter of fiscal 2006. The outlook amounts do not include any impact of stock option expensing, special charges or restructuring amounts that could be incurred. These statements are forward looking and actual results may differ materially.

The effect of stock option and other related non-cash compensation expense will approximate $0.02 to $0.03 per share in the second quarter of fiscal 2006.

The calculation of earnings per share for the second quarter of fiscal 2006 is based on an approximate weighted average diluted share count of 31.5 million.

Conference Call and Webcast

SYNNEX will be discussing its financial results and outlook on a conference call today at 2:00 p.m. (PST). A webcast of the call will be available at http://ir.synnex.com. The conference call can be accessed by dialing 866-847-7859 in North America or 703-639-1426 outside North America. The confirmation code for the call is 872177. A replay of the conference call will be available at http://ir.synnex.com approximately two hours after the conference call has concluded and will be archived until April 6, 2006.

About SYNNEX

Founded in 1980, SYNNEX Corporation is a global IT supply chain services company offering a comprehensive range of services to original equipment manufacturers, software publishers and reseller customers worldwide. SYNNEX offers product distribution, related logistics services, demand generation marketing and contract assembly and works with the leading industry suppliers of IT systems, peripherals, system components, software and networking equipment. Additional information about SYNNEX may be found online at www.synnex.com.

Use Of Non-GAAP Financial Information

The Non-GAAP data contained in this release are included with the intention of providing investors a more complete understanding of our operational results and trends, but should only be used in conjunction with results reported in accordance with Generally Accepted Accounting Principles, or GAAP. The Non-GAAP financial measures enable investors to analyze the base financial and operating performance of the Company and facilitate period-to-period comparisons and analysis of operating trends. Non-GAAP measures presented in this release or other releases, presentations and similar documents issued by the Company, exclude restructuring charges, non-operating settlement gains or losses, results associated with the Company's discontinued Japan operations, gains or losses, including foreign exchange, in the Company's equity investment in MCJ Co. Ltd., stock based compensation expense and other infrequent or unusual items. A detailed reconciliation of the adjustments between results calculated using GAAP and Non-GAAP in this release is contained in the attached financial summary.

Safe Harbor Statement

Statements in this press release regarding SYNNEX Corporation, which are not historical facts, are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements may be identified by terms such as believe, expect, may, will, could and should and the negative of these terms or other similar expressions. These statements, including statements regarding the execution of our fiscal 2006 goals, our expectations of our revenues, net income and earnings per share for the second quarter of fiscal 2006, and expectations regarding our expenses for the second quarter of fiscal 2006, are subject to risks and uncertainties that could cause actual results to differ materially from those discussed in the forward-looking statements. These risks and uncertainties include, but are not limited to: general economic conditions and any weakness in IT spending; the loss or consolidation of one or more of our significant OEM suppliers or customers; market acceptance and product life of the products we assemble and distribute; competitive conditions in our industry and their impact on our margins; pricing, margin and other terms with our OEM suppliers; variations in our levels of excess inventory and doubtful accounts and changes in the terms of OEM supplier-sponsored programs; changes in our costs and operating expenses; changes in foreign currency exchange rates; risks associated with our international operations; uncertainties and variability in demand by our reseller and contract assembly customers; supply shortages or delays; any termination or reduction in our floor plan financing arrangements; credit exposure to our reseller customers, and negative trends in their businesses; any future incidents of theft; risks associated with our contract assembly business and other risks and uncertainties detailed in our Form 10-K for the fiscal year ended November 30, 2005 and from time to time in our SEC filings. Statements included in this press release are based upon information known to SYNNEX Corporation as of the date of this release, and SYNNEX Corporation assumes no obligation to update information contained in this press release.

SYNNEX and the SYNNEX logo are trademarks of SYNNEX Corporation or its subsidiaries and should be treated as such. All rights reserved. All other company names mentioned herein are trademarks of their respective owners.

                          SYNNEX Corporation
                     Consolidated Balance Sheets
                            (in thousands)
                             (unaudited)

                                             February 28, November 30,
                                                2006         2005
                                             ------------ ------------
Assets
Current assets:
    Cash and cash equivalents                 $   11,146   $   13,636
    Short-term investments                        21,826       27,985
    Accounts receivable, net                     301,645      342,322
    Receivable from vendors, net                  76,477       82,721
    Receivable from affiliates                     3,001        5,177
    Inventories                                  524,705      494,617
    Deferred income taxes                         15,400       15,445
    Current deferred assets                        5,752            -
    Other current assets                          12,597       10,908
                                             ------------ ------------
            Total current assets                 972,549      992,811

Property and equipment, net                       35,655       33,713
Goodwill and intangible assets                    42,814       43,004
Deferred income taxes                              3,869        4,781
Long-term deferred assets                         71,202            -
Other assets                                       5,124        8,179
                                             ------------ ------------

            Total assets                      $1,131,213   $1,082,488
                                             ============ ============

Liabilities and Stockholders' Equity
Current liabilities:
    Borrowings under term loans and lines of
     credit                                   $   30,751   $   28,548
    Accounts payable                             445,208      448,339
    Payable to affiliates                         66,754       85,871
    Accrued liabilities                           56,586       68,619
    Other current liabilities                      6,211        6,085
    Current deferred liabilities                   7,758            -
    Income taxes payable                           6,661        4,820
                                             ------------ ------------
            Total current liabilities            619,929      642,282

Long-term borrowings                               1,091        1,153
Long-term liabilities                              1,129          840
Long-term deferred liabilities                    54,438            -
Deferred income taxes                                986          988
                                             ------------ ------------
            Total liabilities                    677,573      645,263
                                             ------------ ------------

Stockholders' equity:
    Preferred stock                                    -            -
    Common stock                                      29           29
    Additional paid-in-capital                   169,382      161,195
    Unearned stock-based compensation             (6,244)      (1,644)
    Accumulated other comprehensive income        14,846       12,701
    Retained earnings                            275,627      264,944
                                             ------------ ------------
        Total stockholders' equity               453,640      437,225
                                             ------------ ------------

                Total liabilities and
                 stockholders' equity         $1,131,213   $1,082,488
                                             ============ ============



                          SYNNEX Corporation
                 Consolidated Statements of Operations
             (in thousands, except for per share amounts)
                              (unaudited)

                                             Three Months Three Months
                                                Ended        Ended
                                             February 28, February 28,
                                                2006         2005
                                             -------------------------

Revenue                                       $1,501,735   $1,309,763

Cost of revenue                                1,436,725    1,253,629
                                             -------------------------

Gross profit                                      65,010       56,134

Selling, general and administrative expenses      42,763       39,712
                                             -------------------------

Income from continuing operations before
 non-operating items, income taxes and
 minority interest                                22,247       16,422

Interest expense and finance charges, net          5,853        3,812
Other (income) expense, net                         (273)        (709)
                                             -------------------------

Income from continuing operations before
 income taxes and minority interest               16,667       13,319

Provision for income taxes                         5,984        5,042
Minority interest in subsidiary                        -          (26)
                                             -------------------------

Income from continuing operations                 10,683        8,303

Income from discontinued operations, net of
 tax                                                   -          304
                                             -------------------------

Net income                                    $   10,683   $    8,607
                                             =========================

Diluted earnings per share from continuing
 operations                                   $     0.34   $     0.26
                                             -------------------------

Diluted earnings per share                    $     0.34   $     0.27
                                             -------------------------

Diluted weighted average common shares
 outstanding                                      31,204       31,450
                                             =========================



                          SYNNEX Corporation
                   GAAP to Non-GAAP Reconciliation
             (in thousands, except for per share amounts)
                             (unaudited)

The following tables reconcile GAAP to Non GAAP financial information
----------------------------------------------------------------------


1. Operating Expenses Reconciliation:
                                             Three Months Three Months
                                                Ended        Ended
                                             February 28, February 28,
                                                2006         2005
                                             -------------------------

Operating Expenses - GAAP                        $42,763      $39,712
Canadian restructuring charges                         -       (1,640)
Stock-based compensation expense                    (735)           -
                                             -------------------------
Operating Expenses - Non GAAP                    $42,028      $38,072
                                             =========================


2. Income from Distribution Continuing Operations Reconciliation:
                                             Three Months Three Months
                                                Ended        Ended
                                             February 28, February 28,
                                                2006         2005
                                             -------------------------

Income from Distribution Continuing
 Operations before non-operating items,
 income taxes and minority interest - GAAP       $20,257      $13,016
Canadian restructuring charges                         -        1,640
Stock-based compensation expense                     676            -
                                             -------------------------
Income from Distribution Continuing
 Operations before non-operating items,
 income taxes and minority interest - Non
 GAAP                                            $20,933      $14,656
                                             =========================


3. Income from Contract Assembly Continuing Operations Reconciliation:
                                             Three Months Three Months
                                                Ended        Ended
                                             February 28, February 28,
                                                2006         2005
                                             -------------------------

Income from Contract Assembly Continuing
 Operations before non-operating items,
 income taxes and minority interest - GAAP       $ 1,990      $ 3,406
Canadian restructuring charges                         -            -
Stock-based compensation expense                      59            -
                                             -------------------------
Income from Contract Assembly Continuing
 Operations before non-operating items,
 income taxes and minority interest - Non
 GAAP                                            $ 2,049      $ 3,406
                                             =========================


4. Operating Income Reconciliation:
                                             Three Months Three Months
                                                Ended        Ended
                                             February 28, February 28,
                                                2006         2005
                                             -------------------------

Income from Continuing Operations before non-
 operating items, income taxes and minority
 interest - GAAP                                 $22,247      $16,422
Canadian restructuring charges                         -        1,640
Stock-based compensation expense                     735            -
                                             -------------------------
Income from Continuing Operations before non-
 operating items, income taxes and minority
 interest - Non GAAP                             $22,982      $18,062
                                             =========================


5. Net Income Reconciliation:
                                             Three Months Three Months
                                                Ended        Ended
                                             February 28, February 28,
                                                2006         2005
                                             -------------------------

Net Income - GAAP                                $10,683      $ 8,607
Stock-based compensation expense, net of tax         470            -
Canadian restructuring charges, net of tax             -        1,092
Penalty on early debt payment, net of tax              -          333
Income from discontinued operations, net of
 tax                                                   -         (304)
                                             -------------------------
Net Income - Non GAAP                            $11,153      $ 9,728
                                             =========================


6. Diluted Earnings Per Share Reconciliation:
                                             Three Months Three Months
                                                Ended        Ended
                                             February 28, February 28,
                                                2006         2005
                                             -------------------------

Diluted Earnings Per Share - GAAP                $  0.34      $  0.27
Stock-based compensation expense, net of tax        0.02            -
Canadian restructuring charges, net of tax             -         0.04
Penalty on early debt payment, net of tax              -         0.01
Income from discontinued operations, net of
 tax                                                   -        (0.01)
                                             -------------------------
Diluted Earnings Per Share - Non GAAP            $  0.36      $  0.31
                                             =========================

CONTACT: SYNNEX Corporation
Laura Crowley, 510-668-3715
laurack@synnex.com

SOURCE: SYNNEX Corporation