01—Abstract
Summary
Summary of the 10-K filed February 5, 2010. Cited figures are marked; the original filing is the authoritative source.
SYNNEX Corporation, a Fremont, California business process services company, reported fiscal 2009 (year ended November 30, 2009) revenue of $7.72 billiona, down slightly from $7.74 billion in fiscal 2008, while net income rose to $92.1 million from $83.8 million.
The company operates two segments: distribution services, which generated $7.64 billionb of revenue, and global business services (GBS), which generated $101.1 million. Gross margin improved to 5.48% from 5.35%, and income from continuing operations before non-operating items rose to $149.6 million. Diluted EPS was $2.70 versus $2.52 in fiscal 2008.
The filing attributes the distribution revenue decline to a slow economic environment and foreign exchange translation of Canadian operations, offset by market share gains and the full-year effect of the New Age acquisition. Balance sheet and cash flow data show operating cash flow of $262.0 millionc in fiscal 2009, compared with $52.6 million in fiscal 2008. Total stockholders' equity increased to $818.4 million, and cash and cash equivalents were $37.8 million.
Borrowings under securitization, term loans and lines of credit fell to $150.7 milliond from $340.5 million, and the $143.75 million 4.0% convertible senior notes due 2018 remain outstanding. Management states it believes its resources are sufficient for the next twelve months. Concentration and related-party exposure remain significant.
HP products accounted for approximately 36% of fiscal 2009 revenue, and MiTAC International and its affiliates beneficially owned approximately 34% of common stock. The company also disclosed a definitive agreement to acquire Jack of All Games for $43.25 million and the sale of its HiChina Web Solutions interest for approximately $60 million, subject to a 10% holdback.
02—Key points
Key Highlights
- Fiscal 2009 revenue of $7.72 billion was roughly flat versus $7.74 billion in fiscal 2008, with distribution revenue of $7.64 billion and GBS revenue of $101.1 million, up 22.6%.
- Net income rose to $92.1 million ($2.70 diluted EPS) from $83.8 million ($2.52 diluted EPS) in fiscal 2008.
- Gross margin improved to 5.48% of revenue from 5.35%, and GBS segment income rose to 11.79% of GBS revenue from 9.14%.
- Operating cash flow was $262.0 million in fiscal 2009, compared with $52.6 million in fiscal 2008, and bank and securitization borrowings fell to $150.7 million from $340.5 million.
- HP products represented approximately 36% of fiscal 2009 revenue, and the HP U.S. Business Development Partner Agreement expires May 31, 2010.
- MiTAC International and its affiliates beneficially owned approximately 34% of common stock, giving them significant influence over matters submitted to stockholders.
- Subsequent events include the agreement to acquire Jack of All Games for $43.25 million and the sale of the controlling interest in HiChina Web Solutions for approximately $60 million.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2009, TD Synnex kept $0.01.
- Revenue$7.72B100.0%
- Cost of revenue−$7.30B94.5%
- Gross profit$423.0M5.5%
- Operating costs−$273.4M3.5%
- Operating income$149.6M1.9%
- Interest, other & tax−$60.0M0.8%
- Net income$89.7M1.2%
Where FY2009 revenue went
$7.72B- Cost of revenue: $7.30B, 95% of revenue
- Net income: $89.7M, 1.2% of revenue
- SG&A: $273.4M, 3.5% of revenue
- Interest, other & tax: $60.0M, 0.8% of revenue
Kept 1.2% as net incomeNet income $89.7M · 1.2%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2009filed February 5, 2010Financial Statements
| Revenue | $7.72B |
| Cost of Revenue | $7.30B |
| Gross Profit | $423.03M |
| SG&A Expenses | $273.38M |
| Operating Income | $149.65M |
| Interest Expense | $25.92M |
| Net Income | $89.67M |
| EPS (Basic) | $2.74 |
| EPS (Diluted) | $2.64 |
| Shares Outstanding (Basic) | 32.71M |
| Shares Outstanding (Diluted) | 34.01M |
05—Questions
Frequently Asked Questions
How did SYNNEX perform financially in fiscal 2009?
Revenue was $7.72 billion, compared with $7.74 billion in fiscal 2008. Income from continuing operations before non-operating items, income taxes and minority interest rose to $149.6 million from $146.4 million, and net income increased to $92.1 million from $83.8 million. Diluted EPS was $2.70, versus $2.52 a year earlier.
How concentrated is the company's revenue and supplier base?
No customer accounted for more than 10% of total revenue in fiscal 2009, 2008 or 2007. However, HP products represented approximately 36% of fiscal 2009 revenue, up from 32% in fiscal 2008 and 28% in fiscal 2007. The HP agreement remains in effect until May 31, 2010 unless terminated earlier, and either party may terminate it on 30 days' written notice.
What are the main risks related to MiTAC International?
MiTAC International and its affiliates owned approximately 34% of common stock as of November 30, 2009, which gives them significant influence over stockholder matters. The company also relies on MiTAC International for manufacturing and contract assembly services, particularly for Sun Microsystems. That relationship is informal, with pricing and terms negotiated on a project-by-project basis. The company states that a change in pricing or other material terms demanded by MiTAC International could have a material adverse effect on its business.
How is the company financing its working capital?
The company relies on a U.S. accounts receivable securitization program of up to $350.0 million, with $119.0 million outstanding at November 30, 2009. The Amended and Restated Revolver had no borrowings outstanding at year-end, with an $80.0 million maximum commitment. The 4.0% convertible senior notes of $143.75 million are due May 15, 2018. Subsequent to year-end, the U.S. securitization arrangement was renewed on January 11, 2010, with a maturity date of January 10, 2011.
What are the company's significant pending transactions?
The company announced a definitive agreement on December 21, 2009 to acquire Jack of All Games for a total consideration of $43.25 million, including approximately $6.75 million in deferred payments. The transaction was expected to close in late February or early March 2010. The company also completed the sale of its controlling interest in HiChina Web Solutions to Alibaba.com Limited for approximately $60 million, subject to a 10% holdback for six months.
06—Continue