SYNNEX Corporation
Mar 25, 2010

SYNNEX Corporation Reports Fiscal 2010 First Quarter Results

EPS of $0.66 from Continuing Operations Surpass Wall Street Estimates

FREMONT, Calif., Mar 25, 2010 (BUSINESS WIRE) -- SYNNEX Corporation (NYSE: SNX), a leading business process services company, today announced financial results for the fiscal first quarter ended February 28, 2010.

For the fiscal first quarter, revenues from continuing operations were $1.94 billion, an increase of 12.5% compared to $1.72 billion for the fiscal quarter ended February 28, 2009. The reported revenues of $1.94 billion reflect the impact of the Company's fiscal first quarter 2010 change in revenue accounting for certain types of services and extended warranty contracts. These contracts, which would have contributed approximately $79 million of revenues in the fiscal first quarter, are now accounted for on a net fee basis. The Company's fiscal first quarter revenue estimate did not anticipate this change in net revenue accounting. This change in revenue accounting had no effect on the gross profit reported.

Income from continuing operations before non-operating items, income taxes and non-controlling interest was $39.0 million, or 2.01% of revenues, versus $33.8 million, or 1.96% of revenues in the prior year fiscal first quarter.

Net income from continuing operations for the fiscal first quarter was $23.2 million, or $0.66 per diluted share, exceeding average Wall Street estimates of $0.62. This compares with $18.0 million, or $0.55 per diluted share in the prior year fiscal first quarter. Net income attributable to SYNNEX including the sale of China Civilink (Cayman) for the fiscal first quarter of 2010 was $34.7 million, or $0.98 per diluted share.

"I am very pleased with our continued industry-leading, financial performance and top-line growth. SYNNEX has, once again, gained market share while expanding our margins and growing our EPS and ROIC," stated Kevin Murai, President and Chief Executive Officer. "This is a testament to our unique business model and our team's ability to execute effectively within our differentiated business strategy and further develop our key initiatives."

Financial Highlights:

Second Quarter Fiscal 2010 Outlook:

The following statements are based on the Company's current expectations for the second quarter of fiscal 2010. These statements are forward-looking and actual results may differ materially.

The calculation of diluted earnings per share for the second quarter of fiscal 2010 is based on a diluted weighted-average common share count of approximately 35.4 million.

"The outlook for the second quarter is based on our expectations of a stable demand environment and our continued focus on profitable growth," Mr. Murai continued. "We remain highly confident in our track record and our ability to continue to grow market share, EPS and ROIC."

Conference Call and Webcast

SYNNEX will be discussing its financial results and outlook on a conference call today at 2:00 p.m. (PT). A webcast of the call will be available at http://ir.synnex.com. The conference call can be accessed by dialing 866-364-4389 in North America or 706-902-0319 outside North America. The confirmation code for the call is 58609365. 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 8, 2010.

About SYNNEX Corporation

SYNNEX Corporation, a Fortune 500 corporation, is a leading business process services company, servicing resellers and original equipment manufacturers in multiple regions around the world. The Company provides services in IT distribution, supply chain management, contract assembly and global business services. Founded in 1980, SYNNEX employs over 6,300 associates worldwide and operates in the United States, Canada, China, Japan, Mexico, the Philippines and the United Kingdom. Additional information about SYNNEX may be found online at www.synnex.com.

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, provide, could and should and the negative of these terms or other similar expressions. These statements, including statements regarding expectations of our revenues, net income and earnings per share for the second quarter of fiscal 2010, anticipated demand, our focus on profitability and our ability to grow market share, EPS and ROIC, 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; our ability to gain market share; variations in supplier-sponsored programs; changes in our costs and operating expenses; changes in foreign currency exchange rates; changes in the tax laws, 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, 2009 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.

Copyright 2010 SYNNEX Corporation. All rights reserved. SYNNEX, the SYNNEX Logo, Jack of All Games, the Jack of All Games logo, and all other SYNNEX company, product and services names and slogans are trademarks or registered trademarks of SYNNEX Corporation. SYNNEX and the SYNNEX Logo Reg. U.S. Pat. & Tm. Off. Other names and marks are the property of their respective owners.

Source: SYNNEX Corporation

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

Three Months
Ended
February 28,

Three Months
Ended
February 28,

2010 2009
(As Adjusted)(1)
Revenue $ 1,936,038 $ 1,720,370
Cost of revenue (1,826,877 ) (1,619,523 )
Gross profit 109,161 100,847
Selling, general and administrative expenses (70,208 ) (67,060 )
Income from continuing operations before non-operating items, income taxes
and non-controlling interest 38,953 33,787
Interest expense and finance charges, net (3,809 ) (5,099 )
Other income (expense), net 1,163 (388 )
Income from continuing operations before income taxes and non-controlling interest 36,307 28,300
Provision for income taxes (13,067 ) (10,322 )
Income from continuing operations before non-controlling interest, net of tax 23,240 17,978
Income from discontinued operations, net of tax 75 1,074
Gain on sale of discontinued operations, net of tax 11,351 -
Net income 34,666 19,052
Net income attributable to non-controlling interest (7 ) (161 )
Net income attributable to SYNNEX Corporation $ 34,659 $ 18,891
Amounts attributable to SYNNEX Corporation:
Income from continuing operations, net of tax $ 23,249 $ 18,020

Discontinued operations:

Income from discontinued operations, net of tax 59 871
Gain on sale of discontinued operations, net of tax 11,351 -
Net income attributable to SYNNEX Corporation $ 34,659 $ 18,891
Earnings per share:
Basic
Income from continuing operations $ 0.69 $ 0.56
Income from discontinued operations $ 0.33 0.03
Net income per common share $ 1.02 $ 0.59
Diluted
Income from continuing operations $ 0.66 $ 0.55
Income from discontinued operations 0.32 0.03
Net income per common share $ 0.98 $ 0.58
Weighted-average common shares outstanding-basic 33,880 32,113
Weighted-average common shares outstanding-diluted 35,255 32,764

(1) In May 2008, the Financial Accounting Standards Board issued a new accounting pronouncement, "Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)". The provisions of the new accounting pronouncement were effective for the Company's fiscal year beginning December 1, 2009 and require retrospective application of all periods presented.

SYNNEX Corporation
Consolidated Balance Sheets
(in thousands)
(unaudited)
February 28, November 30,
2010 2009
(As Adjusted)(1)
Assets
Current assets:
Cash and cash equivalents $ 38,054 $ 37,816
Short-term investments 23,775 21,219
Accounts receivable, net 782,375 820,633
Receivable from vendors, net 106,342 99,610
Receivable from affiliates 884 5,144
Inventories 770,979 713,813
Deferred income taxes 27,807 27,787
Current deferred assets 24,492 13,830
Other current assets 50,067 26,144
Assets held for sale - 74,185
Total current assets 1,824,775 1,840,181
Property and equipment, net 94,203 94,725
Goodwill 110,697 107,563
Intangible assets, net 20,734 18,066
Deferred income taxes 306 2,849
Long-term deferred assets 16,174 10,636
Other assets 37,775 25,890
Total assets $ 2,104,664 $ 2,099,910
Liabilities and stockholders' equity
Current liabilities:
Borrowings under securitization, term loans and lines of credit $ 176,690 $ 150,740
Accounts payable 632,975 687,432
Payable to affiliates 76,541 82,728
Accrued liabilities 115,348 117,599
Current deferred liabilities 30,673 18,798
Income taxes payable 3,425 2,431
Liabilities related to assets held for sale - 18,148
Total current liabilities 1,035,652 1,077,876
Long-term borrowings 9,288 9,410
Convertible debt 127,881 126,785
Long-term liabilities 43,140 29,285
Long-term deferred liabilities 14,361 9,742
Deferred income taxes 5,533 8,077
Total liabilities 1,235,855 1,261,175
Stockholders' equity:
Preferred stock - -
Common stock 34 34
Additional paid-in capital 255,637 249,892
Accumulated other comprehensive income 24,313 27,151
Retained earnings 585,904 551,245
Total SYNNEX Corporation stockholders' equity 865,888 828,322

Non-controlling interest

2,921 10,413

Total equity

868,809 838,735
Total liabilities and stockholders' equity $ 2,104,664 $ 2,099,910

(1) In May 2008, the Financial Accounting Standards Board issued a new accounting pronouncement, "Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)". The provisions of the new accounting pronouncement were effective for the Company's fiscal year beginning December 1, 2009 and require retrospective application of all periods presented.

SOURCE: SYNNEX Corporation

SYNNEX Corporation
Laura Crowley, 510-668-3715
Director of Investor Relations and Public Relations
laurack@synnex.com

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