UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended February 29, 2004
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) |
(I.R.S. 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)
3797 Spinnaker Court
Fremont, California
(Former name, former address and former fiscal year, if changed since last report)
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 x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes ¨ No x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
| Class |
Outstanding at April 2, 2004 | |
| Common Stock, $0.001 par value | 26,521,457 |
FORM 10-Q
INDEX
| Page | ||||
| PART I. |
FINANCIAL INFORMATION | 3 | ||
| Item 1. |
3 | |||
| Condensed Consolidated Balance Sheets (unaudited) as of February 29, 2004 and November 30, 2003 |
3 | |||
| 4 | ||||
| 5 | ||||
| 6 | ||||
| Notes to Condensed Consolidated Financial Statements (unaudited) |
7 | |||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
18 | ||
| Item 3. |
38 | |||
| Item 4. |
39 | |||
| PART II. |
40 | |||
| Item 6. |
40 | |||
| 41 | ||||
| 42 | ||||
2
PART I – FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except for share amounts)
(unaudited)
| February 29, 2004 |
November 30, 2003 |
|||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 19,544 | $ | 22,079 | ||||
| Restricted cash |
4,290 | 4,306 | ||||||
| Short-term investments |
4,477 | 3,832 | ||||||
| Accounts receivable, net |
295,634 | 263,944 | ||||||
| Receivable from vendors, net |
54,943 | 54,209 | ||||||
| Receivable from affiliates |
1,539 | 667 | ||||||
| Inventories |
385,529 | 360,686 | ||||||
| Deferred income taxes |
15,259 | 15,902 | ||||||
| Other current assets |
10,938 | 16,783 | ||||||
| Total current assets |
792,153 | 742,408 | ||||||
| Property and equipment, net |
24,045 | 23,938 | ||||||
| Intangible assets |
18,687 | 19,357 | ||||||
| Deferred income taxes |
695 | 708 | ||||||
| Other assets |
1,955 | 3,517 | ||||||
| Total assets |
$ | 837,535 | $ | 789,928 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Borrowings under term loans and lines of credit |
$ | 46,897 | $ | 69,464 | ||||
| Payable to affiliates |
73,779 | 54,986 | ||||||
| Accounts payable |
338,498 | 343,071 | ||||||
| Accrued liabilities |
46,303 | 53,279 | ||||||
| Income taxes payable |
6,465 | 4,211 | ||||||
| Total current liabilities |
511,942 | 525,011 | ||||||
| Long-term borrowings |
7,650 | 8,134 | ||||||
| Long-term liabilities |
1,130 | 1,123 | ||||||
| Deferred income taxes |
258 | 260 | ||||||
| Total liabilities |
520,980 | 534,528 | ||||||
| Minority interest in subsidiaries |
2,454 | 2,586 | ||||||
| Commitments and contingencies (Note 10) |
— | — | ||||||
| Stockholder’s equity: |
||||||||
| Preferred stock, $0.001 par value, 5,000,000 shares authorized, no shares issued or outstanding |
— | — | ||||||
| Common stock, $0.001 par value; 100,000,000 shares authorized; 26,366,300 and 22,118,483 shares issued and outstanding |
26 | 22 | ||||||
| Additional paid-in capital |
132,294 | 80,067 | ||||||
| Unearned stock-based compensation |
(65 | ) | (202 | ) | ||||
| Accumulated other comprehensive income |
6,639 | 7,373 | ||||||
| Retained earnings |
175,207 | 165,554 | ||||||
| Total stockholders’ equity |
314,101 | 252,814 | ||||||
| Total liabilities and stockholders’ equity |
$ | 837,535 | $ | 789,928 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited).
3
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for share and per share amounts)
(unaudited)
| Three Months Ended |
||||||||
| February 29, 2004 |
February 28, 2003 |
|||||||
| Revenue |
$ | 1,222,151 | $ | 892,924 | ||||
| Cost of revenue |
(1,169,189 | ) | (850,936 | ) | ||||
| Gross profit |
52,962 | 41,988 | ||||||
| Selling, general and administrative expenses |
(35,356 | ) | (29,894 | ) | ||||
| Income from operations |
17,606 | 12,094 | ||||||
| Interest expense, net |
(525 | ) | (589 | ) | ||||
| Other income (expense), net |
(2,085 | ) | (1,268 | ) | ||||
| Income before income taxes and minority interest |
14,996 | 10,237 | ||||||
| Provision for income taxes |
(5,471 | ) | (3,493 | ) | ||||
| Minority interest in subsidiaries |
128 | (43 | ) | |||||
| Net income |
$ | 9,653 | $ | 6,701 | ||||
| Net income per common share — basic |
$ | 0.37 | $ | 0.30 | ||||
| Net income per common share — diluted |
$ | 0.33 | $ | 0.27 | ||||
| Weighted average common shares outstanding — basic |
25,952,784 | 22,084,795 | ||||||
| Weighted average common shares outstanding — diluted |
29,505,628 | 24,637,184 | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited).
4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| Three Months Ended |
||||||||
| February 29, 2004 |
February 28, 2003 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ | 9,653 | $ | 6,701 | ||||
| Adjustments to reconcile net income to net cash used in operating activities: |
||||||||
| Depreciation expense |
927 | 1,191 | ||||||
| Amortization of intangible assets |
687 | 762 | ||||||
| Amortization of unearned stock-based compensation |
137 | 138 | ||||||
| Unrealized (gains) losses on trading securities |
(571 | ) | 430 | |||||
| Minority interest in subsidiaries |
(128 | ) | 43 | |||||
| Changes in assets and liabilities, net of acquisition of businesses: |
||||||||
| Accounts receivable |
(33,246 | ) | (11,158 | ) | ||||
| Receivable from vendors |
(744 | ) | (3,729 | ) | ||||
| Receivable from affiliates |
(872 | ) | 1,180 | |||||
| Inventories |
(25,793 | ) | 1,125 | |||||
| Other assets |
8,114 | (5,896 | ) | |||||
| Payable to affiliates |
18,704 | 1,728 | ||||||
| Accounts payable |
(6,723 | ) | 6,344 | |||||
| Accrued liabilities |
(4,727 | ) | (1,317 | ) | ||||
| Net cash used in operating activities |
(34,582 | ) | (2,458 | ) | ||||
| Cash flows from investing activities: |
||||||||
| Purchases of short-term investments |
— | (2,350 | ) | |||||
| Proceeds from sale of short-term investments |
— | 885 | ||||||
| Acquisition of businesses |
(272 | ) | (500 | ) | ||||
| Purchase of property and equipment, net |
(1,047 | ) | (465 | ) | ||||
| Decrease (increase) in restricted cash |
22 | (1,000 | ) | |||||
| Net cash used in investing activities |
(1,297 | ) | (3,430 | ) | ||||
| Cash flows from financing activities: |
||||||||
| Cash overdraft |
3,471 | 14,322 | ||||||
| Proceeds from revolving line of credit |
28,100 | 16,500 | ||||||
| Payments on revolving line of credit |
(33,100 | ) | (16,500 | ) | ||||
| Proceeds from bank loan |
223,317 | 170,864 | ||||||
| Repayment of bank loan |
(241,513 | ) | (167,570 | ) | ||||
| Net proceeds (payments) under other lines of credit |
1,228 | (2,063 | ) | |||||
| Proceeds from issuance of bonds |
— | 1,680 | ||||||
| Payments of bonds |
(374 | ) | — | |||||
| Net proceeds from issuance of common stock |
52,254 | 31 | ||||||
| Net cash provided by financing activities |
33,383 | 17,264 | ||||||
| Effect of exchange rate changes on cash and cash equivalents |
(39 | ) | 325 | |||||
| Net increase (decrease) in cash and cash equivalents |
(2,535 | ) | 11,701 | |||||
| Cash and cash equivalents at beginning of period |
22,079 | 15,503 | ||||||
| Cash and cash equivalents at end of period |
$ | 19,544 | $ | 27,204 | ||||
| Supplemental disclosures of cash flow information: |
||||||||
| Interest paid |
$ | 958 | $ | 670 | ||||
| Income taxes paid |
$ | 2,563 | $ | 424 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited).
5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)
| Three Months Ended |
||||||||
| February 29, 2004 |
February 28, 2003 |
|||||||
| Net income |
$ | 9,653 | $ | 6,701 | ||||
| Other comprehensive loss: |
||||||||
| Changes in unrealized gains (losses) on available-for-sale securities |
74 | (7 | ) | |||||
| Foreign currency translation adjustment |
(808 | ) | 1,934 | |||||
| Total comprehensive income |
$ | 8,919 | $ | 8,628 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited).