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TD Synnex Annual Report, Year Ended Nov 30, 2006

Filing Date
Filed February 13, 2007
Period End
November 30, 2006
Security
SNX
In the record · 2016–202610-K1110-Q338-K163

SNX filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 163 current reports (8-K) between 2016 and 2026.

  1. Deal closed8-K · Sep ’17Sep ’17
  2. Leadership change8-K · Jul ’19Jul ’19
  3. Leadership change8-K · Sep ’21Sep ’21
  4. Material agreement8-K · Oct ’25Oct ’25

01—Abstract

Summary

Summary of the 10-K filed February 13, 2007. Cited figures are marked; the original filing is the authoritative source.

SYNNEX Corporation, a global information technology supply chain services company headquartered in Fremont, California, reported fiscal 2006 (year ended November 30, 2006) revenue of $6.34 billiona, up 12.5% from $5.64 billion in fiscal 2005.

Growth was driven by distribution revenue of $5.80 billionb (up 13.3%), while contract assembly revenue rose 4.5% to $543.2 million. Gross profit increased 19.6% to $285.4 million, with gross margin expanding to 4.50% of revenue from 4.23%, and net income was $51.4 million, or $1.61 per diluted share, compared with $52.8 million in fiscal 2005, which included a $12.7 million gain on the sale of the Japan subsidiary. The filing highlights significant customer and supplier concentration.

HP products accounted for approximately 25%c of fiscal 2006 revenue, and the HP U.S. Business Development Partner Agreement expires May 31, 2007. Sun Microsystems represented approximately 91% of contract assembly revenue, and the company relies on MiTAC International, its largest indirect stockholder, for certain manufacturing services under an informal arrangement. Executive officers, directors and principal stockholders owned approximately 48% of common stock, with MiTAC International and affiliates owning about 47%.

The balance sheet expanded, with total assets rising to $1.38 billiond from $1.08 billion and stockholders' equity reaching $511.5 million. Operating cash flow was negative $18.9 million in fiscal 2006, primarily due to working capital needs and new long-term deferred assets from a Mexico government-related contract. The company disclosed subsequent February 2007 amendments that increased its U.S. receivables securitization program to $350.0 million and its senior secured revolver to $100.0 million.

02—Key points

Key Highlights

  1. Revenue rose 12.5% to $6.34 billion in fiscal 2006, with distribution revenue at $5.80 billion (up 13.3%) and contract assembly revenue at $543.2 million (up 4.5%).
  2. Gross margin improved to 4.50% of revenue from 4.23%, and gross profit increased 19.6% to $285.4 million.
  3. Net income was $51.4 million ($1.61 per diluted share), versus $52.8 million in fiscal 2005, which benefited from a $12.7 million gain on the sale of SYNNEX K.K.
  4. HP accounted for approximately 25% of fiscal 2006 revenue, and the U.S. HP partner agreement expires May 31, 2007.
  5. Sun Microsystems represented approximately 91% of contract assembly revenue, and Sun relationships depend on MiTAC International.
  6. Operating cash flow was negative $18.9 million in fiscal 2006, driven by working capital and long-term deferred assets from a Mexico contract.
  7. In February 2007 the U.S. receivables securitization program was increased to $350.0 million and the revolver to $100.0 million.

03—Questions

Frequently Asked Questions

  1. How concentrated is SYNNEX's supplier and customer base?

    HP products represented approximately 25% of fiscal 2006 revenue, down from about 28% in fiscal 2005. Sun Microsystems accounted for approximately 91% of contract assembly revenue. No reseller customer accounted for more than 10% of total revenue in fiscal 2006 or 2005.

  2. What drove the change in profitability in fiscal 2006?

    Gross profit rose 19.6% to $285.4 million on higher distribution margins, supported by pricing initiatives and value-added services. Selling, general and administrative expenses rose 18.5% to $189.1 million, and income from continuing operations before non-operating items increased 21.9% to $96.2 million.

  3. Why did operating cash flow turn negative in fiscal 2006?

    The company reported net cash used in operating activities of $18.9 million, primarily from a net use of cash for working capital and net deferred assets of $95.9 million, partly offset by net income of $51.4 million and depreciation and amortization of $9.8 million. The deferred assets relate to a multi-year Mexico government-related equipment contract.

  4. What are the key relationship and ownership risks?

    MiTAC International and its affiliates owned approximately 47% of common stock as of November 30, 2006, and the company relies on MiTAC for certain manufacturing and supply services under an informal arrangement not governed by long-term commitments. Executive officers, directors and principal stockholders together owned approximately 48%.

  5. What changed in the company's financing capacity after year-end?

    In February 2007 the U.S. accounts receivable securitization program was amended to increase to $350.0 million and extended to February 2011. The senior secured revolver was increased to a maximum of $100.0 million and extended to February 2011. At November 30, 2006, total outstanding short and long-term borrowings were $98.8 million.

04—Continue

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