SYNNEX Corporation Reports Fourth Quarter and Fiscal Year Results

FREMONT, Calif.--(BUSINESS WIRE)--Jan. 8, 2004--SYNNEX Corporation (NYSE:SNX), a global IT supply chain services company, today announced financial results for the fourth quarter and year-ended November 30, 2003.

For the quarter ended November 30, 2003, net revenues increased by 16.7% to $1.25 billion compared to $1.07 billion for the quarter ended November 30, 2002. Fourth quarter 2003 net income totaled $8.6 million, or $0.35 per diluted share, compared with net income of $7.7 million, or $0.31 per diluted share in the prior year fourth quarter.

For the year ended November 30, 2003, net revenues increased by 9.5% to $4.13 billion compared to $3.77 billion for the year ended November 30, 2002. Net income for 2003 totaled $30.0 million, or $1.22 per diluted share, compared with net income of $28.0 million, or $1.16 per diluted share for 2002.

On November 25, 2003, SYNNEX completed its Initial Public Offering (IPO) that resulted in aggregate proceeds of $78.3 million. After the underwriting discount and payment of offering expenses, the Company received $46.7 million and selling stockholders received $24.6 million. As the official close date of the IPO was December 1, 2003, fourth quarter and year-end figures in this press release do not reflect the effects of the offering.

"We are very pleased to complete our IPO and I would like to thank our new investors for their show of confidence in our company and our future," said Robert Huang, President and Chief Executive Officer. "I would also like to thank our dedicated employees for their hard work and support over the past twenty-three years."

    Fourth Quarter Financial Highlights:

    --  Distribution net revenues were $1.16 billion, an increase of
        14.8% over the prior year quarter and 17.9% sequentially.
        Assembly net revenues were $93.5 million, an increase of 48.0%
        over the prior year quarter and 80.2% sequentially. Strong US
        distribution and increased assembly business contributed to
        the growth in revenues.

    --  Gross margin was 4.46%, essentially flat versus the prior year
        quarter and down 0.08% sequentially. Higher volume of sales to
        larger customers and competitive pressures contributed to a
        decline in distribution gross margins.

    --  Income from operations was $18.0 million, or 1.44% of revenue,
        versus $13.2 million, or 1.23% of revenue in the prior year
        quarter, and $14.6 million, or 1.41% of revenue in the prior
        sequential quarter.

    --  Income from distribution operations was $14.1 million, or
        1.21% of revenue, versus $12.7 million, or 1.26% of revenue in
        the prior year quarter, and $13.7 million, or 1.39% of revenue
        in the prior sequential quarter.

    --  Income from assembly operations was $3.9 million, or 4.21% of
        revenue, versus $0.5 million, or 0.72% of revenue in the prior
        year quarter, and $1.0 million, or 1.84% of revenue in the
        prior sequential quarter.

    --  Other expense, consisting primarily of financing fees, net
        foreign currency losses and offset by net miscellaneous
        income, increased by $3.0 million over the prior year quarter.
        Foreign currency losses of $4.3 million, primarily the result
        of purchases of forward foreign currency contracts not
        conducted within normal Company hedging policy, combined with
        a weakening US dollar, was the main contributor to the
        increased expense. A portion of the foreign currency loss was
        related to the first nine months of the year but the effect on
        net income for the period was $1.0 million, which was not
        considered material.

    --  Fourth quarter depreciation, amortization and stock-based
        compensation expense was $0.9 million, $0.7 million and $0.8
        million respectively.

As previously disclosed, 2003 fourth quarter results include a charge of $1.8 million, ($1.3 million net of tax) related to the departure of a former executive officer.

    Outlook For The First Quarter of 2004 Ending February 29, 2004

The following statements are based on the Company's current expectations for the first quarter of 2004. These statements are forward looking and actual results may differ materially.

    --  Net revenues are expected to be in the range of $1.125 billion
        to $1.175 billion

    --  Net income is expected to be in the range $8.8 million to $9.4
        million

    --  Diluted earnings per share are expected to be in the range of
        $0.30 to $0.32.

The calculation of diluted earnings per share for the first quarter of 2004 is based on an approximate weighted average diluted share count of 29.3 million.

"Our first quarter guidance reflects reasonably strong growth in our December results and we are cautiously optimistic that the recent improvement in technology spending will continue," noted Huang.

Conference Call and Webcast

SYNNEX will be discussing its financial results and outlook on a conference call today at 5:00 p.m. (EST). A webcast of the call will be available at http://ir.synnex.com.The conference call can be accessed by dialing 888-675-7686 in North America or 334-420-2612 outside North America. The confirmation code for the call is 3938380. A replay of the webcast will be available at http://ir.synnex.com approximately two hours after the conference call has concluded and will be archived until January 22, 2004.

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 expect, may, will, could and should and the negative of these terms or other similar expressions. These statements, including statements regarding the Company's expectations for the first quarter of 2004, 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 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; variations in our levels of excess inventory and doubtful accounts and changes in the terms of OEM supplier-sponsored programs; changes in our costs and operating expenses; changes in foreign currency exchange rates, 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 from time to time in our SEC filings. For a discussion of these and other risks and uncertainties, please see the Company's filings with the Securities and Exchange Commission. 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.

About SYNNEX

Founded in 1980, SYNNEX Corporation is a global IT supply chain services company offering a comprehensive range of services to original equipment manufacturers, software publishers and reseller customers worldwide. SYNNEX offers product distribution, related logistics services and contract assembly and works with the leading industry suppliers of IT systems, peripherals, system components, software and networking equipment. Additional information about SYNNEX may be found online at www.synnex.com.

SYNNEX and the SYNNEX logo are trademarks of SYNNEX Corporation or its subsidiaries and should be treated as such. All rights reserved. All other company names mentioned herein are trademarks of their respective owners.

                          SYNNEX Corporation
                   Consolidated Statements of Income
                  (in thousands, except for share and
                          per share amounts)

                        Quarter Ended Nov. 30,    Year Ended Nov. 30,
                       ----------------------- -----------------------
                             2003        2002        2003        2002
                       ----------- ----------- ----------- -----------

Revenue                $1,252,947  $1,073,506  $4,126,240  $3,767,882

Cost of revenue         1,197,078   1,025,563   3,938,524   3,593,982
                       ----------- ----------- ----------- -----------

Gross profit               55,869      47,943     187,716     173,900

Selling, general
  and administrative
   expenses                37,882      34,780     129,850     123,418
                       ----------- ----------- ----------- -----------

Income from operations     17,987      13,163      57,866      50,482

Interest income
 (expense), net              (524)       (353)     (1,961)     (1,422)
Other income
 (expense), net            (3,870)       (860)     (8,771)     (4,207)
                       ----------- ----------- ----------- -----------

Income before income
 taxes and minority
 interest                  13,593      11,950      47,134      44,853

Provision for income
 taxes                     (5,084)     (4,102)    (17,360)    (16,837)
Minority interest in
 subsidiary                   116        (160)        222          16
                       ----------- ----------- ----------- -----------

Net income                 $8,625      $7,688     $29,996     $28,032
                       ----------- ----------- ----------- -----------


Diluted earnings per
 share                      $0.35       $0.31       $1.22       $1.16
                       ----------- ----------- ----------- -----------

Diluted weighted average
 common shares
 outstanding           24,903,712  24,683,302  24,555,312  24,250,528
                       ----------- ----------- ----------- -----------

                          SYNNEX Corporation
                      Consolidated Balance Sheet
                            (in thousands)



                                                        November 30,
                                                   -------------------
                                                       2003      2002
Assets
Current assets:
 Cash and cash equivalent                           $22,079   $15,503
 Restricted cash                                      4,306     5,561
 Short-term investments                               3,832     3,830
 Accounts receivable, net                           263,944   221,432
 Receivable from vendors, net                        54,209    35,162
 Receivable from affiliates                             667     2,138
 Inventories                                        360,686   261,498
 Deferred income taxes                               15,902    13,805
 Other current assets                                16,783    13,511
                                                   --------- ---------
                   Total current assets             742,408   572,440

Property and equipment, net                          23,938    25,295
Intangible assets                                    19,357    23,769
Deferred income taxes                                   708       529
Other assets                                          3,517     7,042
                                                   --------- ---------

                      Total assets                 $789,928  $629,075
                                                   ========= =========

Liabilities and Shareholders' Equity
Current liabilities:
 Borrowings under term loans and lines of credit    $69,464   $19,685
 Payable to affiliates                               54,986    16,817
 Accounts payable                                   343,071   269,608
 Accrued liabilities                                 53,279    66,202
 Income taxes payable                                 4,211       107
                                                   --------- ---------
                   Total current liabilities        525,011   372,419

Long-term borrowings                                  8,134    38,714
Long-term liabilities                                 1,123     1,535
Deferred income taxes                                   260       579
                                                   --------- ---------
                   Total liabilities                534,528   413,247
                                                   --------- ---------

Commitments and contingencies                             -         -

Minority interest                                     2,586     2,610
                                                   --------- ---------

Shareholders' equity:
 Preferred stock                                          -         -
 Common stock                                            22        22
 Additional paid-in-capital                          80,067    79,251
 Unearned stock-based compensation                     (202)     (753)
 Accumulated other comprehensive income (loss)        7,373      (860)
 Retained earnings                                  165,554   135,558
                                                   --------- ---------
     Total shareholders' equity                     252,814   213,218
                                                   --------- ---------

    Total liabilities and shareholders' equity     $789,928  $629,075
                                                   ========= =========

    CONTACT: SYNNEX Corporation
             Sandra M. Salah, 510-668-3715
             Sr. Director of Marketing and Investor Relations
             sandras@synnex.com

    SOURCE: SYNNEX Corporation