SYNNEX Corporation
Sep 29, 2010

SYNNEX Corporation Reports Fiscal 2010 Third Quarter Results

Operating income from continuing operations reaches record level
Operating margin from continuing operations grows to 2.40%

FREMONT, Calif., Sep 29, 2010 (BUSINESS WIRE) -- SYNNEX Corporation (NYSE:SNX), a leading business process services company, today announced financial results for the fiscal third quarter ended August 31, 2010.

For the fiscal third quarter, revenue from continuing operations was $2.18 billion, an increase of 9.0% compared to $2.0 billion for the fiscal quarter ended August 31, 2009. The fiscal third quarter 2010 revenue reflects the impact of the previously announced presentation of certain types of services and extended warranty contracts on a net basis beginning in fiscal 2010. These contracts would have contributed approximately $95.7 million to revenue on a gross basis in the fiscal third quarter 2010.

Income from continuing operations before non-operating items, income taxes and non-controlling interest was a record $52.2 million, or 2.40% of revenue, compared to $38.2 million in the prior year fiscal third quarter and $43.4 million in the fiscal second quarter of 2010.

Amounts attributable to SYNNEX Corporation's income from continuing operations, net of tax, for the fiscal third quarter was $30.9 million, or $0.86 per diluted share. This compares with $21.5 million, or $0.62 per diluted share, in the third quarter of fiscal 2009.

"I am very pleased with our revenue growth and operating margin expansion," stated Kevin Murai, President and Chief Executive Officer. "In the third quarter we experienced ongoing broad-based demand and we continued to successfully drive our mix of higher margin products and services. Our Global Business Services segment performed well as it benefited from the ramp of recent competitive wins. Also, we continued to leverage our infrastructure to drive even greater operating margin expansion in both the Distribution and Global Business Services segments of our business."

Financial Highlights:

Fourth Quarter Fiscal 2010 Outlook:

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

The calculation of diluted earnings per share for the fourth quarter of fiscal 2010 is based on a diluted weighted-average common share count of approximately 36.2 million.

"For the fiscal fourth quarter we believe the demand environment in North America will remain relatively stable and in-line with normal seasonal trends. Also, the year-over-year reduction of revenue attributable to our July 2010 sale of certain of our legacy platform manufacturing contracts is expected to be largely offset by new revenue from our February 2010 acquisition of Jack of All Games," Mr. Murai continued. "From a profitability perspective, we expect to leverage our cost structure and continue to deliver industry leading margins."

Conference Call and Webcast

SYNNEX will be discussing its financial results and outlook on a conference call today at 2:00 p.m. (PDT). 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 99037840. 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 October 13, 2010.

About SYNNEX

SYNNEX Corporation, a Fortune 500 corporation, is a leading business process services company, servicing resellers, retailers and original equipment manufacturers in multiple regions around the world. The Company provides services in IT distribution, supply chain management, contract assembly and business process outsourcing. Founded in 1980, SYNNEX employs over 7,000 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 effective tax rate, our revenue, net income and diluted earnings per share for the fourth quarter of fiscal 2010, anticipated demand, anticipated revenue attributable to our acquisition of Jack of All Games, and our profitability and growth, 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 and consumer electronics 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-Q for the fiscal quarter ended May 31, 2010 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 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 - F

SYNNEX Corporation
Consolidated Balance Sheets
(in thousands)
(unaudited)
August 31, November 30,
2010 2009
(As Adjusted)(1)
Assets
Current assets:
Cash and cash equivalents $ 68,063 $ 37,816
Short-term investments 18,698 21,219
Accounts receivable, net 813,558 820,633
Receivable from vendors, net 115,130 99,610
Receivable from affiliates 13,688 5,144
Inventories 794,052 713,813
Current deferred tax assets 27,601 27,787
Current deferred assets 9,633 13,830
Other current assets 62,478 26,144
Assets held for sale - 74,185
Total current assets 1,922,901 1,840,181
Property and equipment, net 87,997 94,725
Goodwill 116,508 107,563
Intangible assets, net 17,774 18,066
Deferred tax assets 296 2,849
Long-term deferred assets 11,548 10,636
Other assets 18,583 25,890
Total assets $ 2,175,607 $ 2,099,910
Liabilities and equity
Current liabilities:
Borrowings under securitization, term loans and lines of credit $ 186,046 $ 150,740
Accounts payable 712,365 687,432
Payable to affiliates 17,377 82,728
Accrued liabilities 124,552 117,599
Current deferred liabilities 12,227 18,798
Income taxes payable 764 2,431
Liabilities related to assets held for sale - 18,148
Total current liabilities 1,053,331 1,077,876
Long-term borrowings 8,861 9,410
Convertible debt 130,133 126,785
Long-term liabilities 30,058 29,285
Long-term deferred liabilities 6,494 9,742
Deferred tax liabilities 5,446 8,077
Total liabilities 1,234,323 1,261,175
SYNNEX Corporation's stockholders' equity:
Preferred stock - -
Common stock 35 34
Additional paid-in capital 278,230 249,892
Accumulated other comprehensive income 21,357 27,151
Retained earnings 641,662 551,245
Total SYNNEX Corporation stockholders' equity 941,284 828,322
Non-controlling interest - 10,413
Total equity 941,284 838,735
Total liabilities and equity $ 2,175,607 $ 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.

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

Three Months
Ended

Three Months
Ended

Nine Months
Ended

Nine Months
Ended

August 31, 2010 August 31, 2009 August 31, 2010 August 31, 2009
(As Adjusted)(1) (As Adjusted)(1)
Revenue $ 2,177,066 $ 1,998,060 $ 6,145,916 $ 5,521,135
Cost of revenue (2,052,197 ) (1,892,083 ) (5,795,219 ) (5,213,371 )
Gross profit 124,869 105,977 350,697 307,764
Selling, general and administrative expenses (72,715 ) (67,778 ) (216,156 ) (205,785 )

Income from continuing operations before non-operating items, income taxes and non-controlling interest

52,154 38,199 134,541 101,979
Interest expense and finance charges, net (4,585 ) (4,220 ) (12,130 ) (13,497 )
Other income (expense), net (300 ) 729 770 1,758
Income from continuing operations before income taxes and non-controlling interest 47,269 34,708 123,181 90,240
Provision for income taxes (16,319 ) (13,200 ) (44,037 ) (33,466 )
Income from continuing operations before non-controlling interest, net of tax 30,950 21,508 79,144 56,774
Income from discontinued operations, net of tax - 1,192 75 3,852
Gain on sale of discontinued operations, net of tax - - 11,351 -
Net income 30,950 22,700 90,570 60,626
Net income attributable to non-controlling interest (36 ) (235 ) (153 ) (637 )
Net income attributable to SYNNEX Corporation $ 30,914 $ 22,465 $ 90,417 $ 59,989
Amounts attributable to SYNNEX Corporation:
Income from continuing operations, net of tax $ 30,914 $ 21,501 $ 79,007 $ 56,923
Discontinued operations:
Income from discontinued operations, net of tax - 964 59 3,066
Gain on sale of discontinued operations, net of tax - - 11,351 -
Net income attributable to SYNNEX Corporation $ 30,914 $ 22,465 $ 90,417 $ 59,989
Earnings per share attributable to SYNNEX Corporation:
Basic :
Income from continuing operations $ 0.88 $ 0.65 $ 2.29 $ 1.75
Discontinued operations - 0.03 0.33 0.10
Net income per common share $ 0.88 $ 0.68 $ 2.62 $ 1.85
Diluted :
Income from continuing operations $ 0.86 $ 0.62 $ 2.22 $ 1.69
Discontinued operations - 0.03 0.32 0.09
Net income per common share $ 0.86 $ 0.65 $ 2.54 $ 1.78
Weighted-average common shares outstanding-basic 35,083 32,837 34,534 32,478
Weighted-average common shares outstanding-diluted 35,910 34,595 35,628 33,700

(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
Lori Barker, 510-668-3715
Sr. Director, Investor Relations
lorib@synnex.com

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