SYNNEX Corporation
SYNNEX CORP (Form: 8-K, Received: 06/25/2015 16:12:58)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
      
_______________________________
FORM 8-K
 
_______________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): June 25, 2015
______________________________
SYNNEX CORPORATION
(Exact name of registrant as specified in its charter)
  _______________________________
 
 
 
 
 
 
Delaware
 
001-31892
 
94-2703333
(State or Other Jurisdiction
of Incorporation)
 
(Commission
File Number)
 
(I.R.S. Employer
Identification Number)
 
 
44201 Nobel Drive
Fremont, California
 
94538
(Address of principal executive offices)
 
(Zip Code)
(510) 656-3333
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report.)
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions (see General Instruction A.2. below):
 
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240-13e-4(c))
 



Item 2.02.
Results of Operations and Financial Condition.
The information in this Current Report is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
On June 25, 2015 , SYNNEX Corporation (“SYNNEX”) issued a press release regarding SYNNEX’ financial results for its fiscal second quarter ended May 31, 2015 . The full text of SYNNEX’ press release is furnished herewith as Exhibit 99.1.

Item 9.01.
Financial Statements and Exhibits
(d) Exhibits

Exhibit No.          Description

99.1          Press Release dated June 25, 2015


 


1



SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: June 25, 2015
 
 
 
 
 
SYNNEX CORPORATION
 
 
By:
 
/s/ Simon Y. Leung
 
 
Simon Y. Leung
Senior Vice President, General Counsel and
Corporate Secretary


2



EXHIBIT INDEX

Exhibit No.          Description

99.1          Press Release dated June 25, 2015




3

Exhibit 99.1
FOR IMMEDIATE RELEASE

Contact Info :
Marshall Witt, CFO
SYNNEX Corporation
Telephone: (510) 668-3837
marshallwitt@synnex.com

SYNNEX Corporation Reports Fiscal 2015 Second Quarter Results
Record Second Quarter Operating Profit and Margin

Fremont, Calif., - June 25, 2015 - SYNNEX Corporation (NYSE: SNX), a leading business process services company, today announced financial results for the fiscal second quarter ended May 31, 2015 .
 
Q2 FY15
Q2 FY14
Net change
Revenue ($M)
$3,254
$3,454
-5.8%
Operating income ($M)
$89.4
$68.1
31.3%
Non-GAAP operating income ($M) (1)
$104.9
$99.0
5.9%
Operating margin
2.75%
1.97%
78 bps
Non-GAAP operating margin (1)
3.22%
2.87%
35 bps
Net income attributable to SYNNEX Corporation ($M)  
$51.9
$39.6
31.2%
Non-GAAP net income attributable to SYNNEX Corporation ($M) (1)  
$61.7
$59.5
3.7%
Diluted EPS
$1.30
$1.00
30.0%
Non-GAAP Diluted EPS (1)
$1.55
$1.50
3.3%
(1) Non-GAAP financial measures exclude the impact of acquisition and other integration expenses and the amortization of intangible assets. A reconciliation of GAAP to Non-GAAP financial information is presented in the supplementary information section at the end of this  press release.
“I am pleased to report a record operating profit and margin for our second quarter," stated Kevin Murai, President and Chief Executive Officer. “Technology Solutions earnings and operating margin improved and the investments made in Concentrix resulted in revenue and operating margin exceeding our expectations.”

Fiscal 2015 Second Quarter Highlights:
Technology Solutions: Revenue was $2.9 billion , down 7.82% from the prior fiscal year quarter. Adjusting for the translation effect of foreign currencies, the Technology Solutions business decreased by 5.1%. Technology Solutions income before non-operating items, income taxes and noncontrolling interest was $80.2 million , or 2.75% of segment revenue, compared to $70.1 million , or 2.22% of segment revenue, in the fiscal second quarter of 2014.




Concentrix: Revenue was $341.8 million , up from $293.5 million in the prior fiscal year quarter, an increase of 16.5%. Adjusting for the translation effect of foreign currencies, the Concentrix business grew 24.6%. Income before non-operating items, income taxes and noncontrolling interest was $9.0 million , or 2.64% of Concentrix revenue, compared to a loss of $2.2 million in the prior fiscal year quarter. Non-GAAP income before non-operating items, income taxes and noncontrolling interest was $23.9 million , or 6.98% of segment revenue, for fiscal second quarter of 2015, compared to $27.8 million , or 9.48% of segment revenue, in the second fiscal quarter of 2014.

The trailing fiscal four quarter ROIC was 8.6% compared to 8.5% in the prior year fiscal second quarter. Excluding the impact of acquisition and integration expenses and amortization of intangibles, the trailing fiscal second quarter ROIC was 10.3%.

The debt to capitalization ratio was 30%, down from 38% in the prior fiscal year quarter.

Depreciation and amortization were $11.1 million and $13.5 million, respectively.

Cash flows from operations were approximately $127 million, compared to $165 million used in operations in the second fiscal quarter of 2014.

Fiscal 2015 Third Quarter Outlook and Dividend Announcement:
The following statements are based on SYNNEX’s current expectations for the fiscal 2015 third quarter and the non-GAAP financial measures do not include acquisition and other integration expenses and amortization of intangibles. These statements are forward-looking and actual results may differ materially.
Revenue is expected to be in the range of $3.30 billion to $3.40 billion .
Non-GAAP net income is expected to be in the range of $56.1 million to $58.1 million.
Non-GAAP diluted earnings per share are expected to be in the range of $1.40 to $1.45, which includes a pre-tax cost of $3 million associated with the withdrawal from a multi-employer pension plan in Japan.
After-tax amortization of intangibles is expected to be $8.6 million, or $0.21 per share.
We anticipate a negative currency impact on revenue of approximately $120 million.
SYNNEX announced today that its Board of Directors has declared a quarterly cash dividend of $0.125 per common share. The dividend will be payable on July 31, 2015 to the stockholders of record as of the close of business on July 17, 2015.

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 will also be available via telephone by dialing (888) 469-3219 in North America or (630) 395-0205 outside North America. The passcode code for the call is “SNX.” A replay of the webcast will be available at http://ir.synnex.com approximately two hours after the conference call has concluded.




About SYNNEX
SYNNEX Corporation (NYSE: SNX), a Fortune 500 corporation, is a leading business process services company, optimizing supply chains and providing outsourced services focused on customer relationship management. SYNNEX distributes a broad range of information technology systems and products, and also provides systems design and integration solutions.  The Concentrix segment offers a portfolio of strategic solutions and end-to-end business services around customer engagement strategy, process optimization, technology innovation, front and back-office automation and business transformation to clients in ten identified industry verticals. Founded in 1980, SYNNEX operates in 25 countries around the world. Additional information about SYNNEX may be found online at www.synnex.com .

Use of Non-GAAP Financial Information
To supplement the financial results presented in accordance with GAAP, SYNNEX uses non-GAAP operating income, non-GAAP operating margin, non-GAAP net income and non-GAAP diluted earnings per share, which are non-GAAP financial measures that exclude the amortization of intangible assets and acquisition and integration related expenses. These non-GAAP measures provide investors with an additional tool to evaluate operating results. Because these non-GAAP measures are not calculated in accordance with GAAP, they may not necessarily be comparable to similarly titled measures employed by other companies. These non-GAAP financial measures should not be considered in isolation or as a substitute for the comparable GAAP measures, and should be read only in conjunction with the Company's consolidated financial statements prepared in accordance with GAAP.
SYNNEX management uses the non-GAAP financial measures internally to understand, manage and evaluate the business. SYNNEX management believes it is useful for the company and investors to review, as applicable, both GAAP information and the non-GAAP measures in order to assess the performance of SYNNEX’ continuing businesses and for planning and forecasting in future periods. These non-GAAP measures are intended to provide investors with an understanding of SYNNEX’ operational results and trends that more readily enable investors to analyze SYNNEX' base financial and operating performance and to facilitate period-to-period comparisons and analysis of operational trends. The management of SYNNEX believes the non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision-making. A reconciliation of SYNNEX’ non-GAAP financial information to GAAP is set forth in the supplemental information table at the end of this press release.

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, foresee, expect, may, will, provide, could and should and the negative of these terms or other similar expressions. These statements, including statements regarding SYNNEX’ expectations and outlook for the fiscal 2015 third quarter as to revenue, non-GAAP net income, non-GAAP diluted earnings per share, after-tax amortization of intangibles, currency impact, costs associated with the Japan multi-employer pension plan withdrawal, the frequency and occurrence of dividend declarations, and the anticipated benefits of the non-GAAP financial measures, 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: our ability to successfully integrate our recent acquisitions; diversion of management as a result of our recent and pending acquisitions; loss of vendors and suppliers as a result of our recent acquisitions; 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 tax laws; risks associated with our international operations; uncertainties and variability in demand by our reseller and integration 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 anti-dilution share repurchase program; and other risks and uncertainties detailed in our Form 10-K for the fiscal year ended November 30, 2014 and subsequent 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 2015 SYNNEX Corporation. All rights reserved. SYNNEX, the SYNNEX Logo, CONCENTRIX, and all other SYNNEX company, product and services names and slogans are trademarks or registered trademarks of SYNNEX Corporation. SYNNEX, the SYNNEX Logo, and CONCENTRIX Reg. U.S. Pat. & Tm. Off. Other names and marks are the property of their respective owners.

SNX-F









SYNNEX Corporation
Consolidated Balance Sheets
(currency in thousands)
(unaudited)
 
May 31,
2015
 
November 30,
2014
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
215,505

 
$
180,143

Restricted cash
27,517

 
34,269

Short-term investments
5,587

 
7,128

Accounts receivable, net
1,692,087

 
2,091,511

Receivable from related parties
108

 
332

Inventories
1,246,498

 
1,398,463

Current deferred tax assets
33,563

 
34,310

Other current assets
88,150

 
153,833

Total current assets
3,309,015

 
3,899,989

Property and equipment, net
222,504

 
200,803

Goodwill
312,878

 
314,213

Intangible assets, net
196,396

 
229,684

Deferred tax assets
12,251

 
10,790

Other assets
61,876

 
57,563

Total assets
$
4,114,920

 
$
4,713,042

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Borrowings under securitization, term loans and lines of credit
$
81,121

 
$
716,257

Accounts payable
1,231,085

 
1,585,606

Payable to related parties
4,145

 
5,129

Accrued liabilities
336,253

 
391,608

Income taxes payable
7,519

 
23,129

Total current liabilities
1,660,123

 
2,721,729

Long-term borrowings
654,607

 
264,246

Long-term liabilities
60,001

 
60,215

Deferred tax liabilities
11,801

 
12,867

Total liabilities
2,386,532

 
3,059,057

SYNNEX Corporation stockholders’ equity:
 
 
 
Preferred stock

 

Common stock
40

 
40

Additional paid-in capital
398,351

 
384,625

Treasury stock
(36,904
)
 
(32,723
)
Accumulated other comprehensive loss
(30,144
)
 
(6,628
)
Retained earnings
1,396,608

 
1,308,244

Total SYNNEX Corporation stockholders’ equity
1,727,951

 
1,653,558

Noncontrolling interest
437

 
427

Total equity
1,728,388

 
1,653,985

Total liabilities and equity
$
4,114,920

 
$
4,713,042




SYNNEX Corporation
Financial Highlights
(currency and share amounts in thousands, except for per share amounts)
(unaudited)
 
Three Months Ended
 
Six Months Ended
 
May 31, 2015
 
May 31, 2014
 
May 31, 2015
 
May 31, 2014
Revenue
$
3,253,785

 
$
3,453,535

 
$
6,456,243

 
$
6,480,519

Cost of revenue
(2,953,726
)
 
(3,174,521
)
 
(5,867,966
)
 
(5,994,859
)
Gross profit
300,059

 
279,014

 
588,277

 
485,660

Selling, general and administrative expenses
(210,698
)
 
(210,931
)
 
(419,969
)
 
(355,627
)
Income before non-operating items, income taxes and noncontrolling interest
89,361

 
68,083

 
168,308

 
130,033

Interest expense and finance charges, net
(5,815
)
 
(6,160
)
 
(12,256
)
 
(10,658
)
Other income (expense), net
(1,584
)
 
(197
)
 
(1,517
)
 
2,771

Income before income taxes and noncontrolling interest
81,962

 
61,726

 
154,535

 
122,146

Provision for income taxes
(30,052
)
 
(22,147
)
 
(56,323
)
 
(44,109
)
Net income
51,910

 
39,579

 
98,212

 
78,037

Net income attributable to noncontrolling interest
(36
)
 
(28
)
 
(15
)
 
(69
)
Net income attributable to SYNNEX Corporation
$
51,874

 
$
39,551

 
$
98,197

 
$
77,968

Earnings per share attributable to SYNNEX Corporation:
 
 
 
 
 
 
 
Basic
$
1.31

 
$
1.01

 
$
2.49

 
$
2.01

Diluted
$
1.30

 
$
1.00

 
$
2.47

 
$
2.00

Weighted-average common shares outstanding:
 
 


 
 
 
 
Basic
39,054

 
38,663

 
39,011

 
38,165

Diluted
39,343

 
39,011

 
39,323

 
38,544

Cash dividends declared per share
$
0.13

 
$

 
$
0.25

 
$

 




SYNNEX Corporation
Segment Information
(currency in thousands)
(unaudited)
 
Three Months Ended
 
Six Months Ended
 
May 31, 2015
 
May 31, 2014
 
May 31, 2015
 
May 31, 2014
Revenue:
 
 
 
 
 
 
 
  Technology Solutions
$
2,915,557

 
$
3,162,998

 
$
5,779,845

 
$
6,065,905

  Concentrix
341,805

 
293,482

 
683,567

 
420,447

  Inter-segment elimination
(3,577
)
 
(2,945
)
 
(7,169
)
 
(5,833
)
  Consolidated
$
3,253,785

 
$
3,453,535

 
$
6,456,243

 
$
6,480,519

 
 
 
 
 
 
 
 
Income (loss) before non-operating items, income taxes and noncontrolling interest:
 
 
 
 
 
 
 
  Technology Solutions
$
80,230

 
$
70,134

 
$
151,480

 
$
133,665

  Concentrix
9,012

 
(2,169
)
 
16,590

 
(3,948
)
  Inter-segment elimination
119

 
118

 
238

 
316

  Consolidated
$
89,361

 
$
68,083

 
$
168,308

 
$
130,033









Reconciliation of GAAP to Non-GAAP financial measures
(currency and share amounts in thousands, except for per share amounts)
 
Three Months Ended
 
Six Months Ended
 
May 31, 2015
 
May 31, 2014
 
May 31, 2015
 
May 31, 2014
Operating income and Operating margin
 
 
 
 
 
 
 
Consolidated
 
 
 
 
 
 
 
Revenue
$
3,253,785

 
$
3,453,535

 
$
6,456,243

 
$
6,480,519

 
 
 
 
 
 
 
 
GAAP income before non-operating items, income taxes and noncontrolling interest
$
89,361

 
$
68,083

 
$
168,308

 
$
130,033

IBM CRM acquisition and other integration expenses
2,039

 
15,741

 
6,032

 
24,649

Amortization of intangibles
13,462

 
15,166

 
28,055

 
20,863

Non-GAAP operating income
$
104,862

 
$
98,990

 
$
202,395

 
$
175,545

 
 
 
 
 
 
 
 
GAAP operating margin
2.75
%
 
1.97
 %
 
2.61
%
 
2.01
 %
Non-GAAP operating margin
3.22
%
 
2.87
 %
 
3.13
%
 
2.71
 %
 
 
 
 
 
 
 
 
Technology Solutions
 
 
 
 
 
 
 
Revenue
$
2,915,557

 
$
3,162,998

 
$
5,779,845

 
$
6,065,905

 
 
 
 
 
 
 
 
GAAP income before non-operating items, income taxes and noncontrolling interest
$
80,230

 
$
70,134

 
$
151,480

 
$
133,665

Amortization of intangibles
658

 
910

 
1,327

 
1,896

Non-GAAP operating income
$
80,888

 
$
71,044

 
$
152,807

 
$
135,561

 
 
 
 
 
 
 
 
GAAP operating margin
2.75
%
 
2.22
 %
 
2.62
%
 
2.20
 %
Non-GAAP operating margin
2.77
%
 
2.25
 %
 
2.64
%
 
2.23
 %
 
 
 
 
 
 
 
 
Concentrix
 
 
 
 
 
 
 
Revenue
$
341,805

 
$
293,482

 
$
683,567

 
$
420,447

 
 
 
 
 
 
 
 
GAAP income (loss) before non-operating items, income taxes and noncontrolling interest
$
9,012

 
$
(2,169
)
 
$
16,590

 
$
(3,948
)
IBM CRM acquisition and other integration expenses
2,039

 
15,741

 
6,032

 
24,649

Amortization of intangibles
12,804

 
14,256

 
26,728

 
18,967

Non-GAAP operating income
$
23,855

 
$
27,828

 
$
49,350

 
$
39,668

 
 
 
 
 
 
 
 
GAAP operating margin
2.64
%
 
(0.74
)%
 
2.43
%
 
(0.94
)%
Non-GAAP operating margin
6.98
%
 
9.48
 %
 
7.22
%
 
9.43
 %




Reconciliation of GAAP to Non-GAAP financial measures
(currency and share amounts in thousands, except for per share amounts)
 
Three Months Ended
 
Six Months Ended
 
May 31, 2015
 
May 31, 2014
 
May 31, 2015
 
May 31, 2014
Net income
 
 
 
 
 
 
 
Net income attributable to SYNNEX Corporation
$
51,874

 
$
39,551

 
$
98,197

 
$
77,968

IBM CRM acquisition and other integration expenses, net of taxes (1)
$
1,286

 
$
10,179

 
$
3,834

 
$
15,849

Amortization of intangibles, net of taxes (1)
$
8,520

 
$
9,725

 
$
17,830

 
$
13,352

Non-GAAP net income attributable to SYNNEX Corporation
$
61,680

 
$
59,455

 
$
119,861

 
$
107,169

 
 
 
 
 
 
 
 
Diluted earnings per common share ("EPS") (2)
 
 
 
 
 
 
 
Net income attributable to SYNNEX Corporation
$
51,874

 
$
39,551

 
$
98,197

 
$
77,968

Less: net income allocated to participating securities
630

 
547

 
1,220

 
1,068

Net income attributable to SYNNEX Corporation common stockholders
51,244

 
39,004

 
96,977

 
76,900

IBM CRM acquisition and other integration expenses   attributable to SYNNEX Corporation common stockholders, net of taxes (1)
1,272

 
10,044

 
3,789

 
15,641

Amortization of intangibles attributable to SYNNEX Corporation common stockholders, net of taxes (1)
8,418

 
9,596

 
17,614

 
13,177

Non-GAAP net income attributable to SYNNEX Corporation common stockholders
$
60,934

 
$
58,644

 
$
118,380

 
$
105,718

 
 
 
 
 
 
 
 
Weighted-average number of common shares - diluted:
39,343

 
39,011

 
39,323

 
38,544

 
 
 
 
 
 
 
 
Diluted EPS (2)
$
1.30

 
$
1.00

 
$
2.47

 
$
2.00

IBM CRM acquisition and other integration expenses
0.03

 
0.26

 
0.10

 
0.41

Amortization of intangibles
0.21

 
0.25

 
0.45

 
0.34

Non-GAAP Diluted EPS (3)
$
1.55

 
$
1.50

 
$
3.01

 
$
2.74

 
 
 
 
 
 
 
 
(1) The tax effect of the non-GAAP adjustments was calculated using the applicable effective tax rate during the periods.
 
(2)  Diluted EPS for all periods presented is calculated using the two-class method. Unvested restricted stock awards granted to employees and non-employee directors are considered participating securities.  For purposes of calculating Diluted EPS, Net income allocated to participating securities were approximately 1.2% of the Net income attributable to SYNNEX Corporation for both the three and six months ended May 31, 2015, and approximately 1.4% for both the three and six months ended May 31, 2014.
 
(3)  The sum of the components of Non-GAAP Diluted EPS may not agree to totals, as presented, due to rounding.