UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 __________________________________________________________

FORM 10-Q

 __________________________________________________________

(Mark One)

S QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended August 31, 2013

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)	(IRS 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)

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  S    No  £

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  S    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one).

Large accelerated filer S Accelerated filer £ Non-accelerated filer £ Smaller reporting company £

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  S

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class	Outstanding as of September 27, 2013
Common Stock, $0.001 par value	37,613,497

SYNNEX CORPORATION

FORM 10-Q

INDEX

		Page
PART I	FINANCIAL INFORMATION	3
Item 1.	Financial Statements	3
	Consolidated Balance Sheets (unaudited) as of August 31, 2013 and November 30, 2012	3
	Consolidated Statements of Operations (unaudited) for the Three and Nine Months Ended August 31, 2013 and 2012	4
	Consolidated Statements of Comprehensive Income (unaudited) for the Three and Nine Months Ended August 31, 2013 and 2012	5
	Consolidated Statements of Cash Flows (unaudited) for the Nine Months Ended August 31, 2013 and 2012	6
	Notes to the Consolidated Financial Statements (unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	36
Item 4.	Controls and Procedures	37
PART II	OTHER INFORMATION	38
Item 1A.	Risk Factors	38
Item 6.	Exhibits	53
Signatures		54
Exhibit Index		55

2

PART I - FINANCIAL INFORMATION

ITEM 1. Financial Statements

SYNNEX CORPORATION

CONSOLIDATED BALANCE SHEETS

(currency and share amounts in thousands, except for par value)

(unaudited)

	August 31, 2013			November 30, 2012
ASSETS
Current assets:
Cash and cash equivalents	$	139,363		$	163,699
Short-term investments	14,525			15,933
Accounts receivable, net	1,307,209			1,401,087
Receivable from affiliates	215			285
Inventories	1,012,055			923,340
Current deferred tax assets	22,577			23,390
Other current assets	65,714			52,727
Total current assets	2,561,658			2,580,461
Property and equipment, net	124,128			122,923
Goodwill	188,140			189,088
Intangible assets, net	26,109			29,049
Deferred tax assets	10,042			619
Other assets	40,073			41,122
Total assets	$	2,950,150		$	2,963,262
LIABILITIES AND EQUITY
Current liabilities:
Borrowings under securitization, term loans and lines of credit	$	165,072		$	52,698
Convertible debt	—			141,436
Accounts payable	1,106,576			1,111,833
Accrued liabilities	174,949			181,270
Income taxes payable	12,444			7,470
Total current liabilities	1,459,041			1,494,707
Long-term borrowings	68,232			81,152
Long-term liabilities	53,065			58,783
Deferred tax liabilities	3,169			9,265
Total liabilities	1,583,507			1,643,907
Commitments and contingencies (Note 17)
SYNNEX Corporation stockholders’ equity:
Preferred stock, $0.001 par value, 5,000 shares authorized, no shares issued or outstanding	—			—
Common stock, $0.001 par value, 100,000 shares authorized, 37,804 and 37,348 shares issued as of August 31, 2013 and November 30, 2012, respectively	37			37
Additional paid-in capital	279,196			324,292
Treasury stock, 781 and 720 shares as of August 31, 2013 and November 30, 2012, respectively	(23,703		)	(21,611		)
Accumulated other comprehensive income	19,059			35,405
Retained earnings	1,091,649			980,900
Total SYNNEX Corporation stockholders’ equity	1,366,238			1,319,023
Noncontrolling interest	405			332
Total equity	1,366,643			1,319,355
Total liabilities and equity	$	2,950,150		$	2,963,262

The accompanying Notes are an integral part of these Consolidated Financial Statements (unaudited).

3

SYNNEX CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(currency and share amounts in thousands, except for per share amounts)

(unaudited)

	Three Months Ended						Nine Months Ended
	August 31, 2013			August 31, 2012			August 31, 2013			August 31, 2012
Revenue	$	2,733,913		$	2,576,948		$	7,786,113		$	7,520,441
Cost of revenue	(2,569,633		)	(2,425,019		)	(7,310,956		)	(7,042,804		)
Gross profit	164,280			151,929			475,157			477,637
Selling, general and administrative expenses	(100,781		)	(94,878		)	(303,754		)	(297,277		)
Income before non-operating items, income taxes and noncontrolling interest	63,499			57,051			171,403			180,360
Interest expense and finance charges, net	(2,983		)	(5,809		)	(13,339		)	(17,363		)
Other income, net	12,159			890			13,948			2,607
Income before income taxes and noncontrolling interest	72,675			52,132			172,012			165,604
Provision for income taxes	(26,042		)	(17,306		)	(61,196		)	(56,794		)
Net income	46,633			34,826			110,816			108,810
Net (income) loss attributable to noncontrolling interest	(22		)	313			(67		)	(1,074		)
Net income attributable to SYNNEX Corporation	$	46,611		$	35,139		$	110,749		$	107,736
Earnings per share attributable to SYNNEX Corporation:
Basic	$	1.26		$	0.96		$	3.01		$	2.95
Diluted	$	0.19		$	0.93		$	1.97		$	2.84
Weighted-average common shares outstanding:
Basic	36,965			36,700			36,805			36,537
Diluted	37,559			37,917			37,820			37,966

The accompanying Notes are an integral part of these Consolidated Financial Statements (unaudited).

4

SYNNEX CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(currency in thousands)

(unaudited)

	Three Months Ended						Nine Months Ended
	August 31, 2013			August 31, 2012			August 31, 2013			August 31, 2012
Net income	$	46,633		$	34,826		$	110,816		$	108,810
Other comprehensive income (loss):
Unrealized gains (losses) on available-for-sale securities, net of $0 tax for both the three and nine months ended August 31, 2013 and 2012	5			(377		)	193			(356		)
Change in unrecognized pension and post-retirement benefit costs, net of $0 tax for both the three and nine months ended August 31, 2013 and 2012	—			62			—			62
Foreign currency translation adjustments, net of tax of $351 and $799 for the three and nine months ended August 31, 2013, respectively, and net of tax of $413 for both the three and nine months ended August 31, 2012, respectively	(2,588		)	11,229			(16,549		)	6,275
Total other comprehensive income (loss)	(2,583		)	10,914			(16,356		)	5,981
Comprehensive income:	44,050			45,740			94,460			114,791
Comprehensive (income) loss attributable to noncontrolling interest	(24		)	316			(57		)	(768		)
Comprehensive income attributable to SYNNEX Corporation	$	44,026		$	46,056		$	94,403		$	114,023

The accompanying Notes are an integral part of these Consolidated Financial Statements (unaudited).

5

SYNNEX CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(currency in thousands)

(unaudited)

	Nine Months Ended
	August 31, 2013			August 31, 2012
Cash flows from operating activities:
Net income	$	110,816		$	108,810
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	12,330			12,445
Amortization of intangible assets	5,922			6,209
Accretion of convertible notes discount	2,314			3,920
Share-based compensation	6,790			6,256
Provision for (benefit from) doubtful accounts	4,340			(912		)
Tax benefits from employee stock plans	2,063			2,768
Excess tax benefit from share-based compensation	(2,537		)	(2,764		)
Gains on investments	(949		)	(2,398		)
Changes in assets and liabilities, net of acquisition of businesses:
Accounts receivable	108,638			124,693
Inventories	(67,035		)	78,197
Other assets	(16,101		)	(4,065		)
Accounts payable	(52,173		)	(102,770		)
Accrued liabilities	11,384			(18,416		)
Deferred liabilities	(7,715		)	6,666
Net cash provided by operating activities	118,087			218,639
Cash flows from investing activities:
Purchase of trading investments	(410		)	(3,875		)
Proceeds from sale of trading investments	3,477			5,525
Investment in held-to-maturity term deposits, net	(129		)	—
Acquisition of businesses, net of cash acquired	(25,889		)	1,870
Purchase of property and equipment	(15,343		)	(11,540		)
Loans and deposits to third parties, net of payments received	1,368			1,056
Proceeds from sale of equity method investments	4,153			3,480
Purchase of cost investment	(1,705		)	—
Changes in restricted cash	1,659			4
Net cash used in investing activities	(32,819		)	(3,480		)
Cash flows from financing activities:
Proceeds from securitization and revolving line of credit	554,052			1,307,301
Payment of securitization and revolving line of credit	(488,264		)	(1,390,897		)
Payment of long-term bank loans, capital leases and other borrowings	(1,208		)	(2,208		)
Payment of Convertible Senior Notes	(218,870		)	—
Excess tax benefit from share-based compensation	2,537			2,764
Increase (decrease) in book overdraft	43,285			(26,506		)
Payment of acquisition related contingent consideration	—			(1,052		)
Cash paid for repurchase of treasury stock	(1,882		)	—
Proceeds from issuance of common stock, net of taxes paid for settlement of equity awards	6,920			8,520
Payment for purchase of shares of subsidiary from noncontrolling interest	(11,400		)	(6,050		)
Net cash used in financing activities	(114,830		)	(108,128		)
Effect of exchange rate changes on cash and cash equivalents	5,226			(1,610		)
Net increase (decrease) in cash and cash equivalents	(24,336		)	105,421
Cash and cash equivalents at beginning of period	163,699			67,571
Cash and cash equivalents at end of period	$	139,363		$	172,992

The accompanying notes are an integral part of these Consolidated Financial Statements (unaudited).

6

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the three and nine months ended August 31, 2013 and 2012

(currency and share amounts in thousands, except per share amounts)

(unaudited)

NOTE 1—ORGANIZATION AND BASIS OF PRESENTATION:

SYNNEX Corporation (together with its subsidiaries, herein referred to as “SYNNEX” or the “Company”) is a business process services company offering a comprehensive range of services to resellers, retailers, and original equipment manufacturers (“OEMs”) worldwide. SYNNEX’s business process services include wholesale distribution and business process outsourcing (“BPO”) services. SYNNEX is headquartered in Fremont, California and has operations in North America, Central America, Asia and Europe.

The accompanying interim unaudited Consolidated Financial Statements as of August 31, 2013 and for the three and nine months ended August 31, 2013 and 2012 have been prepared by the Company in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). The amounts as of November 30, 2012 have been derived from the Company’s annual audited financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States have been condensed or omitted in accordance with such rules and regulations. In the opinion of management, the accompanying unaudited Consolidated Financial Statements reflect all adjustments, consisting only of normal recurring adjustments, necessary to state fairly the financial position of the Company and its results of operations and cash flows as of and for the periods presented. These financial statements should be read in conjunction with the annual audited financial statements and notes thereto as of and for the fiscal year ended November 30, 2012, included in the Company’s Annual Report on Form 10-K for the fiscal year then ended.

The results of operations for the three and nine months ended August 31, 2013 are not necessarily indicative of the results that may be expected for the fiscal year ending November 30, 2013, or any future period and the Company makes no representations related thereto.

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The Company’s significant accounting policies are disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2012. There have been no material changes to these accounting policies, except as described below. For a discussion of the significant accounting policies, please see the discussion in the Annual Report on Form 10-K for the fiscal year ended November 30, 2012.

Restricted cash

Restricted cash balances relate to temporary restrictions caused by the timing of lockbox collections under the Company’s borrowing arrangements, future payments to contractors for the long-term projects at the Company’s Mexico operation and deposits.

The following table summarizes the restricted cash balances as of August 31, 2013 and November 30, 2012 and the location where these amounts are recorded on the Consolidated Balance Sheets:

	As of
	August 31, 2013		November 30, 2012
Related to borrowing arrangements and others:
Other current assets	$	23,357	$	23,247
Related to long-term projects:
Other assets	4,184		6,103
Total restricted cash	$	27,541	$	29,350

Concentration of credit risk

Financial instruments that potentially subject the Company to significant concentration of credit risk consist principally of accounts receivable, and cash and cash equivalents.

7

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS---(continued)

For the three and nine months ended August 31, 2013 and 2012

(currency and share amounts in thousands, except per share amounts)

(unaudited)

The Company’s cash and cash equivalents are maintained with high quality institutions, the compositions and maturities of which are regularly monitored by management. Through August 31, 2013, the Company had not experienced any losses on such deposits.

Accounts receivable include amounts due from customers and vendors primarily in the technology industry. The Company performs ongoing credit evaluations of its customers’ financial condition and limits the amount of credit extended when deemed necessary, but generally requires no collateral. The Company also maintains allowances for potential credit losses. In estimating the required allowances, the Company takes into consideration the overall quality and aging of the receivable portfolio, the existence of a limited amount of credit insurance and specifically identified customer and vendor risks. Through August 31, 2013, such losses have been within management’s expectations.

In both three and nine months ended August 31, 2013, one customer accounted for 10% of the Company's total revenue. In both three and nine months ended August 31, 2012, nocustomer accounted for 10% or more of the Company's total revenue. Products purchased from the Company’s largest OEM supplier, Hewlett-Packard Company (“HP”), accounted for approximately 30% and 31% for the three and nine months ended August 31, 2013, respectively, and 38% and 36% of the total revenue for the three and nine months ended August 31, 2012, respectively.

As of August 31, 2013, nocustomer exceeded 10% of the total consolidated accounts receivable balance. As of November 30, 2012, one customer accounted for 10% of the consolidated accounts receivable balance.

Revenue recognition

The Company generally recognizes revenue on the sale of hardware and software products when they are shipped and on services when they are performed, if a purchase order exists, the sales price is fixed or determinable, collection of resulting accounts receivable is reasonably assured, risk of loss and title have transferred and product returns are reasonably estimable. Provisions for sales returns are estimated based on historical data and are recorded concurrently with the recognition of revenue. These provisions are reviewed and adjusted periodically by the Company. Revenue is reduced for early payment discounts and volume incentive rebates offered to customers. The Company recognizes revenue on certain service contracts, post-contract software support services, and extended warranty contracts, where it is not the primary obligor, on a net basis.

The Company provides services such as call center, renewals, maintenance and contract management services to its customers under contracts that typically consist of a master services agreement or statement of work, which contains the terms and conditions of each program and service offering. Typically the contracts are based on time, transactions or volume. Revenue is generally recognized over the term of the contract or when service has been rendered, the sales price is fixed or determinable and collection of the resulting accounts receivable is reasonably assured.

The Company's operation in Mexico primarily focuses on projects with the Mexican government and other local agencies that are long-term in nature. Under the agreements, the Company sells computers and equipment to contractors that provide services to the Mexican government. The Company also sells computer equipment and services directly to the Mexican government. The payments are due on a monthly basis and contingent upon the satisfactory performance of certain services, fulfillment of certain obligations and meeting certain conditions. The Company recognizes revenue and cost of revenue on a straight-line basis over the term of the contract, as the contingencies are satisfied and payments become due.

Earnings per common share

Earnings per common share-basic is computed by dividing the net income attributable to SYNNEX Corporation for the period by the basic weighted-average number of outstanding common shares.

Earnings per common share-diluted is computed by adding the dilutive effect of in-the-money employee stock options, restricted stock awards, restricted stock units and similar equity instruments granted by the Company to the basic weighted-average number of outstanding common shares. The Company uses the treasury stock method, under which, the amount the employee must pay for exercising stock options, the amount of compensation cost for future services that the Company has not yet recognized and the amount of tax benefits that would be recorded in “Additional paid-in capital” when the award becomes deductible are assumed to be used to repurchase shares.

It was the Company’s intent to settle the principal amount of the convertible debt in cash; accordingly, the principal amount was excluded from the determination of diluted earnings per share. In April 2013, the Company decided to settle the

8

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS---(continued)

For the three and nine months ended August 31, 2013 and 2012

(currency and share amounts in thousands, except per share amounts)

(unaudited)

payment of the conversion premium in cash as discussed in Note 11—Convertible Debt. Through April 2013, the Company accounted for the conversion premium using the treasury stock method by adjusting the diluted weighted-average common shares if the effect was dilutive. From April 2013, the numerator for the computation of earnings per common share-diluted was adjusted for the changes in the estimated value of the conversion premium until the final settlement date.

The calculation of earnings per common share attributable to SYNNEX Corporation is presented in Note 12.

Reclassifications

Certain reclassifications have been made to prior period amounts in the Consolidated Statements of Cash Flows to conform to current period presentation. Such reclassifications have no effect on the cash flow from operating, investing and financing activities as previously reported.

Recent accounting pronouncements

In February 2013, the Financial Accounting Standards Board ("FASB") issued an accounting update which requires companies to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present significant amounts reclassified out of accumulated other comprehensive income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. The amendments are effective prospectively for reporting periods beginning after December 15, 2012 with early adoption permitted. The accounting update will be applicable to the Company in the first quarter of fiscal year 2014.

In March 2013, the FASB issued an accounting update that clarifies the applicable guidance for the release of the cumulative translation adjustment when an entity ceases to have a controlling financial interest in a subsidiary or a group of assets that is a business within a foreign entity. The guidance clarifies that the accounting for the release of cumulative translation adjustment into net income for sales or transfers of a controlling financial interest within a foreign entity is the same irrespective of whether the sale or transfer is of a subsidiary or a group of assets that is a business. The accounting update is applicable for fiscal years and interim reporting periods within those years beginning after December 15, 2013 with early adoption permitted. The accounting update will be applicable for the Company in the second quarter of fiscal year 2014.

In July 2013, the FASB issued a new accounting standard that will require the presentation of certain unrecognized tax benefits as reductions to deferred tax assets rather than as liabilities in the Consolidated Balance Sheets when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The new accounting update will be applicable to the Company in the first quarter of fiscal 2015; however, early adoption and retrospective application are permitted. The Company is currently evaluating the impact of this new standard on its Consolidated Financial Statements.

During fiscal year 2013, the following accounting standards were adopted:

In June 2011, the FASB issued an accounting update that amends the presentation of “Comprehensive income” in the financial statements. The new guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, with early adoption permitted. The Company adopted the accounting update in the first quarter of fiscal year 2013 and updated its presentation of comprehensive income in the financial statements.

NOTE 3—ACQUISITIONS AND DIVESTITURES:

Fiscal year 2013 acquisitions

In April 2013, the Company acquired substantially all of the assets of Supercom Canada Limited ("Supercom Canada"), a distributor of information technology ("IT") and consumer electronics products and services in Canada. The purchase price was approximately CAD36,500, or US$35,599, in cash, including CAD4,450, or US$4,340, in deferred payments, subject to certain post-closing conditions, payable within 18 months. Subsequent to the acquisition, the Company repaid debt and working capital lines in the amount of US$53,721. Based on the preliminary purchase price allocation, the Company recorded net tangible assets of US$25,677, goodwill of US$5,384 and intangible assets of US$4,369 in relation to this acquisition. The determination of the fair value of the assets and liabilities acquired is preliminary and subject to the finalization of more detailed analysis. This acquisition did not meet the conditions of a material business combination and was not subject to the disclosure requirements of accounting guidance for business combinations utilizing the purchase method of accounting. The

9

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS---(continued)

For the three and nine months ended August 31, 2013 and 2012

(currency and share amounts in thousands, except per share amounts)

(unaudited)

acquisition is integrated into the distribution services segment and is expected to expand the Company's existing product and service offerings in Canada.

Fiscal year 2012 acquisitions and divestitures

In fiscal year 2012, the Company purchased shares of its subsidiary SYNNEX Infotec Corporation (“Infotec Japan”) which were held by the noncontrolling interest SB Pacific Corporation Limited ("SB Pacific") for $17,450, of which $11,400 was paid during the nine months ended August 31, 2013. The transaction increased the Company's ownership interest in Infotec Japan from 70.0% to 99.8%. In fiscal year 2012, the Company also sold its 33.3% noncontrolling interest in SB Pacific, its equity-method investee at that time, back to SB Pacific. During the nine months ended August 31, 2013, the Company received the final payment of $4,153 of the sale price.

In fiscal year 2012, the Company acquired a business in the Global Business Services ("GBS") segment for a purchase price of $6,200 with $1,200 payable upon the completion of certain post-closing procedures and $1,300 contingent consideration payable upon the achievement of certain target earnings. The Company recorded goodwill of $6,150 in relation to this acquisition. This acquisition did not meet the conditions of a material business combination and was not subject to the disclosure requirements of accounting guidance for business combinations utilizing the purchase method of accounting.

NOTE 4—SHARE-BASED COMPENSATION:

The Company recognizes share-based compensation expense for all share-based awards made to employees and directors, including employee stock options, restricted stock awards, restricted stock units and employee stock purchases, based on estimated fair values.

The Company uses the Black-Scholes valuation model to estimate fair value of stock options. The Black-Scholes option-pricing model was developed for use in estimating the fair value of short-lived exchange traded options that have no vesting restrictions and are fully transferable. In addition, option-pricing models require the input of highly subjective assumptions, including the option’s expected life and the price volatility of the underlying stock. The expected stock price volatility assumption was determined using historical volatility of the Company’s common stock.

The following table summarizes the number of share-based awards granted under the Company’s Amended and Restated 2003 Stock Incentive Plan, as amended, during the three and nine months ended August 31, 2013 and 2012 and the grant-date fair value of the awards:

	Three Months Ended						Nine Months Ended
	August 31, 2013			August 31, 2012			August 31, 2013			August 31, 2012
	Units awarded	Fair value of grants		Units awarded	Fair value of grants		Units awarded	Fair value of grants		Units awarded	Fair value of grants
Stock options	—	$	—	—	$	—	—	$	—	20	$	301
Restricted stock awards	1	25		7	228		39	1,354		42	1,578
Restricted stock units	—	—		—	—		106	3,736		23	971
	1	$	25	7	$	228	145	$	5,090	85	$	2,850

The Company recorded share-based compensation expenses of $2,092 and $6,790 in "Selling, general and administrative expenses" for the three and nine months ended August 31, 2013, respectively, and $2,031 and $6,256 for the three and nine months ended August 31, 2012, respectively.

10

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS---(continued)

For the three and nine months ended August 31, 2013 and 2012

(currency and share amounts in thousands, except per share amounts)

(unaudited)

NOTE 5—BALANCE SHEET COMPONENTS:

	As of
	August 31, 2013		November 30, 2012
Short-term investments:
Trading securities	$	4,202	$	5,709
Available-for-sale securities	47		44
Held-to-maturity securities	8,580		8,297
Cost method investments	1,696		1,883
	$	14,525	$	15,933

	As of
	August 31, 2013			November 30, 2012
Accounts receivable, net:
Accounts receivable	$	1,360,801		$	1,461,796
Less: Allowance for doubtful accounts	(18,730		)	(18,229		)
Less: Allowance for sales returns	(34,862		)	(42,480		)
	$	1,307,209		$	1,401,087

	As of
	August 31, 2013			November 30, 2012
Property and equipment, net:
Land	$	19,229		$	18,699
Equipment and computers	104,833			101,994
Furniture and fixtures	21,045			21,373
Buildings and leasehold improvements	107,421			101,848
Construction in progress	1,283			1,804
Total property and equipment, gross	253,811			245,718
Less: Accumulated depreciation	(129,683		)	(122,795		)
	$	124,128		$	122,923

Goodwill:

	Distribution			GBS			Total
Balance as of November 30, 2012	$	105,860		$	83,228		$	189,088
Additions from acquisitions, net of adjustments	5,620			123			5,743
Foreign exchange translation	(5,448		)	(1,243		)	(6,691		)
Balance as of August 31, 2013	$	106,032		$	82,108		$	188,140

The additions to "Goodwill" recorded during the nine months ended August 31, 2013 relate primarily to the acquisition of Supercom Canada in the distribution segment and adjustments for the purchase price allocation for a prior period acquisition in the GBS segment.

11

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS---(continued)

For the three and nine months ended August 31, 2013 and 2012

(currency and share amounts in thousands, except per share amounts)

(unaudited)

Intangible assets, net:

	As of August 31, 2013							As of November 30, 2012
	Gross Amounts		Accumulated Amortization			Net Amounts		Gross Amounts		Accumulated Amortization			Net Amounts
Vendor lists	$	36,938	$	(29,867	)	$	7,071	$	36,945	$	(28,684	)	$	8,261
Customer lists	52,453		(33,845		)	18,608		50,406		(30,360		)	20,046
Other intangible assets	4,866		(4,436		)	430		4,962		(4,220		)	742
	$	94,257	$	(68,148	)	$	26,109	$	92,313	$	(63,264	)	$	29,049

Amortization expenses were $1,998 and $5,922 for the three and nine months ended August 31, 2013, respectively, and $2,063 and $6,209 for the three and nine months ended August 31, 2012, respectively.

NOTE 6—INVESTMENTS:

The carrying amount of the Company’s investments is shown in the table below:

	August 31, 2013						November 30, 2012
	Cost Basis		Unrealized Gains		Carrying Value		Cost Basis		Unrealized Gains		Carrying Value
Short-term:
Trading securities	$	3,811	$	391	$	4,202	$	5,636	$	73	$	5,709
Available-for-sale securities	—		47		47		—		44		44
Held-to-maturity investments	8,580		—		8,580		8,297		—		8,297
Cost method securities	1,696		—		1,696		1,883		—		1,883
	$	14,087	$	438	$	14,525	$	15,816	$	117	$	15,933
Long-term investments in other assets:
Available-for-sale securities	$	943	$	183	$	1,126	$	1,095	$	22	$	1,117
Cost-method investments	4,985		—		4,985		3,313		—		3,313

Short-term trading securities generally consist of equity securities relating to the Company’s deferred compensation plan. Short-term and long-term available-for-sale securities primarily consist of investments in other companies’ equity securities. Held-to-maturity investments primarily consist of term deposits with maturities from the date of purchase greater than three months and less than one year. These term deposits are held until the maturity date and are not traded. Short-term cost-method securities primarily consist of investments in a hedge fund and a private equity fund under the Company’s deferred compensation plan. Long-term cost-method investments consist of investments in equity securities of private entities.

Trading securities and available-for-sale securities are recorded at fair value in each reporting period and therefore the carrying value of these securities equals their fair value. For cost-method securities, the Company records an impairment charge when the decline in fair value is determined to be other-than-temporary. The fair value of the cost-method investments is based on (i) the published fund values, (ii) a valuation model developed internally based on the published value of the securities held by the fund or (iii) an internal valuation of the investee.

The following table summarizes the total gains and losses recorded in “Other income, net” in the Consolidated Statements of Operations for changes in the fair value of the Company's trading investments during the three and nine months ended August 31, 2013 and 2012:

	Three Months Ended				Nine Months Ended
	August 31, 2013		August 31, 2012		August 31, 2013		August 31, 2012
Gain on trading investments, net	$	142	$	695	$	1,382	$	1,809

12

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS---(continued)

For the three and nine months ended August 31, 2013 and 2012

(currency and share amounts in thousands, except per share amounts)

(unaudited)

NOTE 7—DERIVATIVE INSTRUMENTS:

In the ordinary course of business, the Company is exposed to foreign currency risk, interest risk, equity risk and credit risk. The Company’s transactions in some of its foreign operations are denominated in local currency. The Company’s foreign locations enter into transactions, and own monetary assets and liabilities, that are denominated in currencies other than their functional currency. As part of its risk management strategy, the Company uses short-term forward contracts to minimize its balance sheet exposure to foreign currency risk. These derivatives are not designated as hedging instruments. The forward exchange contracts are recorded at fair value in each reporting period and any gains or losses, resulting from the changes in fair value, are recorded in earnings in the period of change. Generally, the Company does not use derivative instruments to cover equity risk and credit risk. The Company’s policy is not to allow the use of derivatives for trading or speculative purposes. The fair value of the Company’s forward exchange contracts are also disclosed in Note 8.

The following table summarizes the fair value of the Company’s foreign exchange forward contracts as of August 31, 2013 and November 30, 2012:

	Fair Value as of
Location	August 31, 2013		November 30, 2012
Other current assets	$	2,839	$	1,292
Accrued liabilities	105		—

The notional amounts of the foreign exchange forward contracts that were outstanding as of August 31, 2013 and November 30, 2012 were $157,768 and $128,518, respectively. The notional amounts represent the gross amounts of foreign currency that will be bought or sold at maturity. In relation to its forward contracts, the Company recorded gains of $1,254 and $7,734 in “Other income (expense), net” during the three and nine months ended August 31, 2013, respectively, and gains of $2,270 and $3,637, during the three and nine months ended August 31, 2012, respectively.

NOTE 8—FAIR VALUE MEASUREMENTS:

The Company’s fair value measurements are classified and disclosed in one of the following three categories:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability;

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

13

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS---(continued)

For the three and nine months ended August 31, 2013 and 2012

(currency and share amounts in thousands, except per share amounts)

(unaudited)

The following table summarizes the valuation of the Company’s investments and financial instruments that are measured at fair value on a recurring basis:

	As of August 31, 2013								As of November 30, 2012
	Total		Fair value measurement category						Total		Fair value measurement category
			Level 1		Level 2		Level 3				Level 1		Level 2		Level 3
Assets:
Cash equivalents	$	29,191	$	29,191	$	—	$	—	$	95,074	$	95,074	$	—	$	—
Trading securities	4,202		4,202		—		—		5,709		5,709		—		—
Available-for-sale securities in short-term investments	47		47		—		—		44		44		—		—
Available-for-sale securities in other assets	1,126		1,126		—		—		1,117		1,117		—		—
Forward foreign currency exchange contracts	2,839		—		2,839		—		1,292		—		1,292		—
Liabilities:
Forward foreign currency exchange contracts	$	105	$	—	$	105	$	—	$	—	$	—	$	—	$	—
Acquisition-related contingent consideration	1,300		—		—		1,300		2,611		—		—		2,611

The Company's cash equivalents consist primarily of highly liquid investments in money market funds and term deposits with maturity periods of three months or less. The carrying value of the cash equivalents approximates the fair value since they are near their maturity. Investments in trading and available-for-sale securities consist of equity securities and are recorded at fair value based on quoted market prices. The fair values of forward exchange contracts are measured based on the foreign currency spot and forward rates quoted by the banks or foreign currency dealers.

The acquisition-related contingent consideration liability represents the future potential earn-out payments relating to the acquisitions in the GBS segment. The fair values of the contingent consideration liabilities are based on the Company’s probability assessment of the established profitability measures during the periods ranging from one year to three years from the date of the acquisitions. During the three and nine months ended August 31, 2013, the fair value of the contingent consideration liability was remeasured and the resulting decrease of $786 and $1,233, respectively, were recorded as a benefit to “Selling, general and administrative expenses” in the Consolidated Statements of Operations. The change in the fair value was due to updated estimates of expected revenue and gross profit related to the achievement of established earn-out targets. The remaining change in the carrying value of the liability is due to the translation effect of foreign currencies.

The carrying value of held-to-maturity securities, accounts receivable, accounts payable and short-term debt, approximate fair value due to their short maturities and the interest rates which are variable in nature. The carrying value of the Company's term loans approximate their fair value since they bear interest rates that are similar to existing market rates. The convertible debt had a carrying value of $141,436 as of November 30, 2012 and a fair value of $167,735 based on the closing price of the convertible debt traded in a limited trading market. The fair value was categorized as level 2 in the fair value measurement category levels. In August 2013, the Company repaid all of the outstanding convertible debt.

During the three and nine months ended August 31, 2013, there were no transfers between the fair value measurement category levels.

NOTE 9—ACCOUNTS RECEIVABLE ARRANGEMENTS:

The Company primarily finances its United States operations with an accounts receivable securitization program (the “U.S. Arrangement”). The Company can finance up to a maximum of $400,000 in U.S. trade accounts receivable (“U.S. Receivables”). The maturity date of the U.S. Arrangement is October 18, 2015. The effective borrowing cost under the U.S. Arrangement is a blend of the prevailing dealer commercial paper rates plus a program fee of 0.425% per annum based on the used portion of the commitment, and a facility fee of 0.425% per annum payable on the aggregate commitment of the lenders. As of August 31, 2013, there was $90,000 of borrowings outstanding under the U.S. Arrangement. As of November 30, 2012,

14

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS---(continued)

For the three and nine months ended August 31, 2013 and 2012

(currency and share amounts in thousands, except per share amounts)

(unaudited)

there were no borrowings outstanding under the U.S. Arrangement. In September 2013, the Company amended the U.S Arrangement to increase the commitment of the lenders to $500,000. In addition, the amendment also included an accordion feature to allow requests for an increase in the lenders' commitment by an additional $100,000 to a maximum commitment of $600,000. All other terms and conditions of the U.S Arrangement remained the same.

Under the terms of the U.S. Arrangement, the Company sells, on a revolving basis, its U.S. Receivables to a wholly-owned, bankruptcy-remote subsidiary. The borrowings by this subsidiary are secured by pledging all of such subsidiary's rights, title and interest in and to the U.S. Receivables as security for repayment of its borrowings. Any borrowings under the U.S. Arrangement are recorded as debt on the Company's Consolidated Balance Sheets. As is customary in trade accounts receivable securitization arrangements, a credit rating agency's downgrade of the third party issuer of commercial paper or of a back-up liquidity provider (which provides a source of funding if the commercial paper market cannot be accessed) could result in an increase in the Company's cost of borrowing or loss of the Company's financing capacity under these programs if the commercial paper issuer or liquidity back-up provider is not replaced. Loss of such financing capacity could have a material adverse effect on the Company's financial condition and results of operations.

The Company also has other financing agreements in North America with various financial institutions (“Flooring Companies”) to allow certain customers of the Company to finance their purchases directly with the Flooring Companies. Under these agreements, the Flooring Companies pay the Company directly on behalf of the customer and typically charge certain fees which the Company records as flooring fees. The Company is contingently liable to repurchase inventory sold under flooring agreements in the event of any default by its customers under the agreement and such inventory being repossessed by the Flooring Companies. Please see Note 17—Commitments and Contingencies for further information.

The following table summarizes the net sales financed through the flooring agreements and the flooring fees incurred:

	Three Months Ended				Nine Months Ended
	August 31, 2013		August 31, 2012		August 31, 2013		August 31, 2012
Net sales financed	$	275,021	$	229,370	$	681,047	$	603,195
Flooring fees(1)	1,420		1,358		3,864		3,553

____________________________________

(1) Flooring fees are included within “Interest expense and finance charges, net.”

As of August 31, 2013 and November 30, 2012, accounts receivable subject to flooring agreements were $61,084 and $55,963, respectively.

Infotec Japan has arrangements with various banks and financial institutions for the sale and financing of approved accounts receivable and notes receivable. The amount outstanding under these arrangements that was sold, but not collected as of August 31, 2013 and November 30, 2012 was $16,358 and $11,233, respectively.

15

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS---(continued)

For the three and nine months ended August 31, 2013 and 2012

(currency and share amounts in thousands, except per share amounts)

(unaudited)

NOTE 10—BORROWINGS:

Borrowings consist of the following:

	As of
	August 31, 2013			November 30, 2012
Convertible debt	$	—		$	141,436
SYNNEX U.S. securitization	90,000			—
SYNNEX Canada revolving line of credit	7,686			—
SYNNEX Canada term loan	7,648			8,648
Infotec Japan credit facility	117,157			111,542
Other borrowings and capital leases	10,813			13,660
Total borrowings	233,304			275,286
Less: Current portion	(165,072		)	(194,134		)
Non-current portion	$	68,232		$	81,152

Convertible debt

In May 2008, the Company issued $143,750 of aggregate principal amount of its 4.0% Convertible Senior Notes due 2018 (the “Convertible Senior Notes”) in a private placement. The carrying amount of the Convertible Senior Notes, net of the unamortized debt discount, was $141,436 as of November 30, 2012. The convertible debt was repaid in August 2013. See Note 11—Convertible Debt.

SYNNEX U.S. securitization

The Company can finance up to a maximum of $400,000 in U.S. Receivables under its U.S. Arrangement. See Note 9—Accounts Receivable Arrangements. The effective borrowing cost under the U.S. Arrangement is a blend of the prevailing dealer commercial paper rates, plus a program fee on the used portion of the commitment and a facility fee payable on the aggregate commitment. As of August 31, 2013, the outstanding balance under the U.S. arrangement was $90,000. As of November 30, 2012 there were no borrowings outstanding under the U.S. Arrangement.

SYNNEX U.S. senior secured revolving line of credit

The Company has a senior secured revolving line of credit arrangement (the “Revolver”) with a financial institution which provides a maximum commitment of $100,000 and expires in October 2017. The Revolver includes an accordion feature to increase the maximum commitment by an additional $50,000 to $150,000 at the Company's request, in the event the current lender consents to such increase or another lender participates in the Revolver. Interest on borrowings under the Revolver is based on a base rate or London Interbank Offered Rate (“LIBOR”), at the Company's option. The margin on the LIBOR is determined in accordance with the Company's fixed charge coverage ratio and is currently 1.50% per annum. The Company's base rate is based on the financial institution's prime rate. The Revolver also contains an unused line fee of 0.30% per annum. The Revolver is secured by the Company's inventory and other assets. It would be an event of default under the Revolver if a lender under the U.S. Arrangement declines to extend the maturity date at any point within thirty days prior to the maturity date of the U.S. Arrangement, unless the Company has a binding commitment in place to renew or replace the U.S. Arrangement. There is no event of default if within the thirty day period prior to maturity of the Revolver: (a) borrowing availability exceeds 90% of the commitment amount and (b) the fixed charge coverage ratio, when measured at the end of the fiscal quarter on a trailing four quarter basis, is greater than or equal to 1.75 to 1.00. There were no borrowings outstanding under this credit arrangement as of both August 31, 2013 and November 30, 2012.

SYNNEX Canada revolving line of credit

SYNNEX Canada Limited ("SYNNEX Canada") has a revolving line of credit arrangement with a financial institution (the “Canadian Revolving Arrangement”) which has a maximum commitment of CAD100,000 and includes an accordion feature to increase the maximum commitment by an additional CAD25,000 to CAD125,000, at SYNNEX Canada's request. The Canadian Revolving Arrangement also provides a sublimit of US$5,000 for the issuance of standby letters of credit. As of

16

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS---(continued)

For the three and nine months ended August 31, 2013 and 2012

(currency and share amounts in thousands, except per share amounts)

(unaudited)

November 30, 2012, outstanding standby letters of credit totaled US$3,447. There were no letters of credit outstanding as of August 31, 2013. SYNNEX Canada has granted a security interest in substantially all of its assets in favor of the lender under the Canadian Revolving Arrangement. In addition, the Company pledged its stock in SYNNEX Canada as collateral for the Canadian Revolving Arrangement. The interest rate applicable under the Canadian Revolving Arrangement is equal to (i) the Canadian base rate plus a margin of 0.75% for a Base Rate Loan in Canadian Dollars, (ii) the US base rate plus a margin of 0.75% for a Base Rate Loan in U.S. Dollars, and (iii) the Bankers' Acceptance rate ("BA") plus a margin of 2.00% for a BA Rate Loan. The Canadian base rate means the greater of (a) the prime rate determined by a major Canadian financial institution and (b) the one month Canadian Dealer Offered Rate ("CDOR") (the average rate applicable to Canadian dollar bankers' acceptances for the applicable period) plus 1.50%. The US base rate means the greater of (a) a reference rate determined by a major Canadian financial institution for US dollar loans made to Canadian borrowers and (b) the US federal funds rate plus 0.50%. A fee of 0.25% per annum is payable with respect to the unused portion of the commitment. The credit arrangement expires in May 2017. As of August 31, 2013, there was US$7,686 outstanding under the Canadian Revolving Arrangement. There was no borrowing outstanding under the Canadian Revolving Arrangement as of November 30, 2012.

SYNNEX Canada term loan

SYNNEX Canada has a term loan associated with the purchase of its logistics facility in Guelph, Canada. The interest rate for the unpaid principal amount is a fixed rate of 5.374% per annum. The final maturity date for repayment of the unpaid principal is April 1, 2017. The balance outstanding on the term loan as of August 31, 2013 and November 30, 2012 was $7,648 and $8,648, respectively.

Infotec Japan credit facility

Infotec Japan has a credit agreement with a group of financial institutions for a maximum commitment of JPY14,000,000. The credit agreement is comprised of a JPY6,000,000 long-term loan and a JPY8,000,000 short-term revolving credit facility. The credit agreement was refinanced in December 2012, to increase the short-term revolving credit facility to JPY8,000,000 from JPY4,000,000. The interest rate for the long-term and short-term loans is based on the Tokyo Interbank Offered Rate ("TIBOR") plus a margin of 1.90% per annum. As of August 31, 2013 and November 30, 2013, the balance outstanding under the credit facility was $117,157 and $111,542, respectively. The credit facility expires in December 2015. The long-term loan can be repaid at any time prior to December 2015 without penalty. The Company has issued a guarantee to cover all obligations of Infotec Japan to the lenders.

Other borrowings and capital leases

Infotec Japan has a short-term revolving credit facility of JPY1,000,000 with a financial institution. The credit facility was renewed for one year in March 2013 and bears an interest rate that is based on TIBOR plus a margin of 1.60% per annum. As of August 31, 2013 and November 30, 2012, the balance outstanding under this credit facility was $10,187 and $12,124, respectively. In addition, as of November 30, 2012, Infotec Japan had a term loan with a financial institution with a balance of $424, which was repaid in December 2012 and bore a fixed interest rate of 1.50%.

In September 2013, Infotec Japan established a short-term revolving credit facility of JPY2,000,000 with a financial institution. The interest rate for the credit facility is based on TIBOR plus a margin of 0.50% per annum. In addition, there is a facility fee of 0.425% per annum. The credit facility can be renewed annually.

As of August 31, 2013 and November 30, 2012, the Company also had $624 and $1,112, respectively, in outstanding capital lease obligations and obligations for the sale and financing of approved accounts receivable and notes receivable with recourse provisions to Infotec Japan.

Interest expense and finance charges 

For the three and nine months ended August 31, 2013, the total interest expense and finance charges for the Company's borrowings were $3,623 and $15,936, respectively. The interest expense for the nine months ended August 31, 2013, includes non-cash interest expenses of $2,314 for the Convertible Senior Notes. For the three and nine months ended August 31, 2012, the total interest expense and finance charges for the Company's borrowings were $6,989 and $20,986, respectively, including non-cash interest expenses of $1,335 and $3,920, respectively, for the Convertible Senior Notes. The variable interest rates ranged between 0.64% and 4.08%during both three and nine months ended August 31, 2013 and between 0.87%and4.06%, and 0.87% and 4.24%, respectively, during the three and nine months ended August 31, 2012.

17

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS---(continued)

For the three and nine months ended August 31, 2013 and 2012

(currency and share amounts in thousands, except per share amounts)

(unaudited)

Covenants compliance

In relation to the U.S. Arrangement, the Revolver, the Infotec Japan credit facility and the Canadian Revolving Arrangement, the Company has a number of covenants and restrictions that, among other things, require the Company to comply with certain financial and other covenants. These covenants require the Company to maintain specified financial ratios and satisfy certain financial condition tests, including minimum net worth and fixed charge coverage ratios. They also limit the Company’s ability to incur additional debt, make or forgive intercompany loans, pay dividends and make other types of distributions, make certain acquisitions, repurchase the Company’s stock, create liens, cancel debt owed to the Company, enter into agreements with affiliates, modify the nature of the Company’s business, enter into sale-leaseback transactions, make certain investments, enter into new real estate leases, transfer and sell assets, cancel or terminate any material contracts and merge or consolidate.

Guarantees

The Company has issued guarantees to certain vendors, lenders of its subsidiaries for trade credit lines and loans, and to a certain customer's lessor. In addition, the Company, as the ultimate parent, guaranteed the obligations of SYNNEX Investment Holdings Corporation up to $35,035 in connection with the sale of China Civilink (Cayman), which operated in China as HiChina Web Solutions, to Alibaba.com Limited. The total guarantees issued by the Company as of August 31, 2013 and November 30, 2012 were $341,110 and $264,162, respectively. The Company is obligated under these guarantees to pay amounts due should its subsidiaries or customer not pay valid amounts owed to their vendors or lenders or not comply with subsidiary sales agreements.

NOTE 11—CONVERTIBLE DEBT:

In August 2013, the Company settled its Convertible Senior Notes with an aggregate principal amount of $143,750 which were issued in May 2008 in a private placement. The Convertible Senior Notes bore a cash coupon interest rate of 4.0% per annum and the initial conversion rate was 33.9945 shares of common stock per $1 principal amount, equivalent to an initial conversion price of $29.42 per share of common stock. The Convertible Senior Notes were called in the second quarter of fiscal year 2013. No interest was accrued subsequent to May 2013 in accordance with the Indenture. The final settlement amount of $218,870 was paid in cash and comprised of $143,750 in principal payments and $75,120 in payment of conversion premium. The conversion premium, which represents the total settlement amount less the principal, was recorded as a reduction of "Additional paid-in capital.” The final settlement amount was calculated in accordance with the Indenture based on the volume weighted-average trading price of the Company's common stock over the 60 consecutive trading-day period beginning on and including the third trading day after the related conversion.

Based on a cash coupon interest rate of 4.0%, the Company recorded contractual interest expense of $3,010 during the nine months ended August 31, 2013. There was no interest expense recorded for the three months ended August 31, 2013. The contractual interest expense was $1,624 and $4,872, respectively, during the three and nine months ended August 31, 2012. Based on an effective rate of 8.0%, the Company recorded non-cash interest expenses of $2,314 during the nine months ended August 31, 2013. There was no non-cash interest expense recorded during the three months ended August 31, 2013. The non-cash interest expense was $1,335 and $3,920, respectively, during the three and nine months ended August 31, 2012. As of November 30, 2012, the carrying value of the Convertible Senior Notes, net of unamortized debt discount of $2,314, was $141,436. The debt discount was fully amortized as of May 31, 2013.

18

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS---(continued)

For the three and nine months ended August 31, 2013 and 2012

(currency and share amounts in thousands, except per share amounts)

(unaudited)

NOTE 12—EARNINGS PER COMMON SHARE:

The following table sets forth the computation of basic and diluted earnings per common share for the periods indicated:

	Three Months Ended					Nine Months Ended
	August 31, 2013			August 31, 2012		August 31, 2013			August 31, 2012
Numerator:
Net income attributable to SYNNEX Corporation	$	46,611		$	35,139	$	110,749		$	107,736
Less: impact of conversion premium of convertible debt	(39,474		)	—		(36,409		)	—
Net income for diluted earnings per share calculation	$	7,137		$	35,139	$	74,340		$	107,736
Denominator:
Weighted-average common shares - basic	36,965			36,700		36,805			36,537
Effect of dilutive securities:
Stock options, restricted stock awards and restricted stock units	594			574		547			617
Conversion premium of convertible debt	—			643		468			812
Weighted-average common shares - diluted	37,559			37,917		37,820			37,966
Earnings per share attributable to SYNNEX Corporation:
Basic	$	1.26		$	0.96	$	3.01		$	2.95
Diluted	$	0.19		$	0.93	$	1.97		$	2.84

It was the Company’s intent to settle the principal amount of the Convertible Senior Notes in cash; accordingly, the principal amount was excluded from the determination of diluted earnings per share. In April 2013, the Company decided to settle the payment of the conversion premium in cash as discussed in Note 11—Convertible Debt. Through April 2013, the Company accounted for the conversion premium using the treasury stock method by adjusting the diluted weighted-average common shares if the effect was dilutive. For the three months ended August 31, 2013, the numerator for the computation of earnings per common share-diluted was adjusted for any dilutive changes in the estimated value of the conversion premium from May 31, 2013 through the final settlement date. For the nine months ended August 31, 2013, the numerator for the computation of diluted earnings per common share was adjusted for any dilutive changes in the estimated value of the conversion premium from April 2013 through the final settlement date. For the three and nine months ended August 31, 2013, the adjustment to the numerator had the effect of reducing the diluted earnings per share by $1.05 and $0.96, respectively.

Options to purchase 10, 13 and 7 shares during the nine months ended August 31, 2013 and during the three and nine months ended August 31, 2012, respectively, have not been included in the computation of diluted earnings per share as their effect would have been anti-dilutive. No options were anti-dilutive for the three months ended August 31, 2013.

NOTE 13—SEGMENT INFORMATION:

Operating segments

Operating segments are based on components of the Company that engage in business activity that earn revenue and incur expenses and (a) whose operating results are regularly reviewed by the chief operating decision maker to make decisions about resource allocation and performance and (b) for which discrete financial information is available.

The distribution services segment distributes IT systems, peripherals, system components, software, networking equipment, consumer electronics ("CE") and complementary products and offers data center server and storage solutions. The distribution services segment also provides contract assembly services.

19

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS---(continued)

For the three and nine months ended August 31, 2013 and 2012

(currency and share amounts in thousands, except per share amounts)

(unaudited)

The GBS segment offers a range of BPO services to customers that include technical support, renewals management, lead management, direct sales, customer service, back office processing and information technology outsourcing ("ITO"). Many of these services are delivered and supported on the proprietary software platforms that the Company has developed to provide additional value to its customers.

Summarized financial information related to the Company’s reportable business segments for the three and nine months ended August 31, 2013 and 2012 is shown below:

	Distribution		GBS		Inter-Segment Elimination			Consolidated
Three months ended August 31, 2013
Revenue	$	2,687,283	$	55,064	$	(8,434	)	$	2,733,913
Income from operations before non-operating items, income taxes and noncontrolling interest	61,783		1,773		(57		)	63,499
Three months ended August 31, 2012
Revenue	2,535,991		49,729		(8,772		)	2,576,948
Income from operations before non-operating items, income taxes and noncontrolling interest	52,627		4,581		(157		)	57,051
Nine months ended August 31, 2013
Revenue	$	7,648,896	$	162,598	$	(25,381	)	$	7,786,113
Income from operations before non-operating items, income taxes and noncontrolling interest	161,591		10,022		(210		)	171,403
Nine months ended August 31, 2012
Revenue	7,402,218		142,505		(24,282		)	7,520,441
Income from operations before non-operating items, income taxes and noncontrolling interest	171,379		9,151		(170		)	180,360
Total assets as of August 31, 2013	$	2,835,441	$	319,258	$	(204,549	)	$	2,950,150
Total assets as of November 30, 2012	2,848,689		316,993		(202,420		)	2,963,262

The inter-segment elimination relates to the inter-segment, back office support services provided by the GBS segment to the distribution services segment, elimination of inter-segment profit, inter-segment investments and inter-segment receivables.

Segment by geography

The Company primarily operates in North America. The United States and Canada are included in the “North America” operations. China, India, Japan and the Philippines are included in “Asia-Pacific” operations and the remaining countries it operates in are included in “Other” operations. The revenues attributable to countries are based on geography of entities from where the products are distributed or services are provided.

20

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS---(continued)

For the three and nine months ended August 31, 2013 and 2012

(currency and share amounts in thousands, except per share amounts)

(unaudited)

Shown below is summarized financial information related to the geographic areas in which the Company operated during the three and nine months ended August 31, 2013 and 2012:

	Three Months Ended				Nine Months Ended
	August 31, 2013		August 31, 2012		August 31, 2013		August 31, 2012
Revenue:
North America	$	2,441,447	$	2,287,397	$	6,840,300	$	6,523,462
Asia-Pacific	270,455		272,933		883,127		944,010
Other	22,011		16,618		62,686		52,969
	$	2,733,913	$	2,576,948	$	7,786,113	$	7,520,441

	As of
	August 31, 2013		November 30, 2012
Property and equipment, net:
North America	$	87,254	$	87,689
Asia-Pacific	20,485		22,782
Other	16,389		12,452
	$	124,128	$	122,923

Revenue in the United States was approximately 75% and 74% of the total revenue for the three and nine months ended August 31, 2013, respectively, and 76% and 73% of the total revenue for the three and nine months ended August 31, 2012, respectively. Revenue in Canada was approximately 15% and 14% of total revenue for the three and nine months ended August 31, 2013, respectively and 13% and 14% for the three and nine months ended August 31, 2012, respectively. Revenue in Japan was approximately 9% and 11% of the total revenue for the three and nine months ended August 31, 2013, respectively, and10% and12%of the total revenue for the three and nine months ended August 31, 2012, respectively.

Net property and equipment in the United States was approximately 56% and 57% of the total as of August 31, 2013 and November 30, 2012, respectively. Net property and equipment in Canada was approximately 14% of the total as of both August 31, 2013 and November 30, 2012. As of both August 31, 2013 and November 30, 2012, no other country represented more than 10% of the total net property and equipment.

NOTE 14—RELATED PARTY TRANSACTIONS: 

The Company has a business relationship with MiTAC International Corporation (“MiTAC International”), a publicly-traded company in Taiwan, which began in 1992 when MiTAC International became the Company's primary investor through its affiliates. As of both August 31, 2013 and November 30, 2012, MiTAC International and its affiliates beneficially owned approximately 27% of the Company’s common stock. Matthew Miau, the Company’s Chairman Emeritus of the Board of Directors and a director, is the Chairman of MiTAC International and a director or officer of MiTAC International’s affiliates. The shares owned by MiTAC International are held by the following entities:

	As of August 31, 2013
MiTAC International(1)	5,908
Synnex Technology International Corp.(2)	4,283
Total	10,191

_____________________________________

(1) Shares are held via Silver Star Developments Ltd., a wholly-owned subsidiary of MiTAC International. Excludes 594 shares (of which 534 shares are directly held and 60 shares are subject to exercisable options) held by Matthew Miau.

(2) Synnex Technology International Corp. ("Synnex Technology International") is a separate entity from the Company and is a publicly-traded corporation in Taiwan. Shares are held via Peer Development Ltd., a wholly-owned subsidiary of Synnex Technology International. MiTAC International owns a noncontrolling interest of 8.7% in MiTAC Incorporated, a privately-held Taiwanese company, which in turn holds a noncontrolling interest of 13.6% in Synnex Technology International.

21

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS---(continued)

For the three and nine months ended August 31, 2013 and 2012

(currency and share amounts in thousands, except per share amounts)

(unaudited)

MiTAC International generally has significant influence over the Company and over the outcome of all matters submitted to stockholders for consideration, including any merger or acquisition of the Company. Among other things, this could have the effect of delaying, deterring or preventing a change of control over the Company.

The Company purchased inventories from MiTAC International and its affiliates totaling $3,485 and $8,639 during the three and nine months ended August 31, 2013, respectively, and $1,840 and $2,819 during the three and nine months ended August 31, 2012, respectively. The Company’s sales to MiTAC International and its affiliates during the three and nine months ended August 31, 2013, totaled $364 and $939, respectively, and during the three and nine months ended August 31, 2012, totaled $362and $2,585, respectively. In addition, the Company received reimbursements of rent and overhead costs for facilities used by MiTAC International amounting to $857and $2,580during the three and nine months ended August 31, 2013, respectively, and $870 and $2,742, during the three and nine months ended August 31, 2012, respectively.

The Company’s business relationship with MiTAC International has been informal and is not governed by long-term commitments or arrangements with respect to pricing terms, revenue or capacity commitments. The Company negotiates manufacturing, pricing and other material terms on a case-by-case basis with MiTAC International and its contract assembly customers for a given project. While MiTAC International is a related party and a controlling stockholder, the Company believes that the significant terms under its arrangements with MiTAC International, including pricing, will not materially differ from the terms it could have negotiated with unaffiliated third parties, and it has adopted a policy requiring that material transactions with MiTAC International or its related parties be approved by its Audit Committee, which is composed solely of independent directors. In addition, Matthew Miau’s compensation is approved by the Nominating and Corporate Governance Committee, which is also composed solely of independent directors.

Synnex Technology International is a publicly-traded corporation in Taiwan that currently provides distribution and fulfillment services to various markets in Asia and Australia, and is also a potential competitor of the Company. Neither MiTAC International, nor Synnex Technology International is restricted from competing with the Company.

NOTE 15—PENSION AND EMPLOYEE BENEFITS PLANS:

The employees of Infotec Japan are covered by certain defined benefit pension plans, including a multi-employer pension plan. Full-time employees are eligible to participate in the plans on the first day of February following their date of hire and are not required to contribute to the plans.

The components of net periodic pension costs pertaining to the Company's single employer benefit plan during the three and nine months ended August 31, 2013 and 2012 were as follows:

	Three Months Ended						Nine Months Ended
	August 31, 2013			August 31, 2012			August 31, 2013			August 31, 2012
Service cost	$	145		$	216		$	453		$	585
Interest cost	37			56			114			152
Expected return on plan assets	(15		)	(34		)	(46		)	(92		)
Net periodic pension costs	$	167		$	238		$	521		$	645

During the three and nine months ended August 31, 2013, the Company contributed $161 and $498, respectively, to the single-employer benefit plan. During the three and nine months ended August 31, 2012, the Company contributed $204 and $638, respectively, to the plan.

22

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS---(continued)

For the three and nine months ended August 31, 2013 and 2012

(currency and share amounts in thousands, except per share amounts)

(unaudited)

NOTE 16—EQUITY:

Share repurchase program 

In June 2011, the Board of Directors authorized a three-year $65,000 share repurchase program. During the nine months ended August 31, 2013, the Company purchased 55 shares at a weighted-average price of $34.28 per share. The Company did not purchase any shares during the three months ended August 31, 2013. As of August 31, 2013 the Company has purchased 361 shares for a total cost of $11,340.

The share purchases were made on the open market and the shares repurchased by the Company are held in treasury for general corporate purposes.

23

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS---(continued)

For the three and nine months ended August 31, 2013 and 2012

(currency and share amounts in thousands, except per share amounts)

(unaudited)

Changes in equity

A reconciliation of the changes in equity for the nine months ended August 31, 2013 and August 31, 2012 is presented below:

	Nine Months Ended August 31, 2013									Nine Months Ended August 31, 2012
	Attributable to   SYNNEX Corporation			Attributable to   Noncontrolling interest			Total Equity			Attributable   to SYNNEX       Corporation			Attributable to   Noncontrolling interest			Total Equity
Beginning balance of equity:	$	1,319,023		$	332		$	1,319,355		$	1,158,379		$	10,079		$	1,168,458
Issuance of common stock on exercise of options	6,056			—			6,056			7,789			—			7,789
Issuance of common stock for employee stock purchase plan	1,074			—			1,074			1,026			—			1,026
Tax benefit from employee stock plans	2,063			—			2,063			2,768			—			2,768
Taxes paid for the settlement of equity awards	(210		)	—			(210		)	(295		)	—			(295		)
Share-based compensation	6,790			—			6,790			6,250			6			6,256
Changes in ownership of noncontrolling interest	7			16			23			(2,364		)	(4,051		)	(6,415		)
Repurchase of treasury stock	(1,882		)	—			(1,882		)	—			—			—
Conversion premium of convertible debt	(75,120		)	—			(75,120		)	—			—			—
Deferred tax adjustment for settlement of convertible debt	14,034			—			14,034			—			—			—
Comprehensive income:
Net income	110,749			67			110,816			107,736			1,074			108,810
Other comprehensive income (loss):
Changes in unrealized gains (losses) on available-for-sale securities	193			—			193			(420		)	64			(356		)
Net unrealized components of defined benefit pension plans	—			—			—			126			(64		)	62
Foreign currency translation adjustments	(16,539		)	(10		)	(16,549		)	6,581			(306		)	6,275
Total other comprehensive income (loss)	(16,346		)	(10		)	(16,356		)	6,287			(306		)	5,981
Total comprehensive income	94,403			57			94,460			114,023			768			114,791
Ending balance of equity:	$	1,366,238		$	405		$	1,366,643		$	1,287,576		$	6,802		$	1,294,378

The balance of "Accumulated other comprehensive income," which is included in the total equity attributable to SYNNEX Corporation, is primarily comprised of cumulative translation adjustments.

24

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS---(continued)

For the three and nine months ended August 31, 2013 and 2012

(currency and share amounts in thousands, except per share amounts)

(unaudited)

NOTE 17—COMMITMENTS AND CONTINGENCIES:

The Company was contingently liable as of August 31, 2013 under agreements to repurchase repossessed inventory acquired by Flooring Companies as a result of default on floor plan financing arrangements by the Company's customers. These arrangements are described in Note 9—Accounts Receivable Arrangements. Losses, if any, would be the difference between the repossession cost and the resale value of the inventory. There have been no repurchases through August 31, 2013 under these agreements and the Company is not aware of any pending customer defaults or repossession obligations. From time to time, the Company receives notices from third parties, including customers and suppliers, seeking indemnification, payment of money or other actions in connection with claims made against them. Also, the Company is involved in various bankruptcy preference actions where the Company was a supplier to the companies now in bankruptcy. In addition, the Company is subject to various other claims, both asserted and unasserted, that arise in the ordinary course of business. The Company is not currently involved in any material proceedings.

In December 2009, the Company sold China Civilink (Cayman), which operated in China as HiChina Web Solutions, to Alibaba.com Limited. In conjunction with this sale, the Company has recorded a contingent indemnification liability of $4,122.

The Company does not believe that the above commitments and contingencies will have a material adverse effect on the Company's results of operations, financial position or cash flows.

NOTE 18—SUBSEQUENT EVENTS:

On September 10, 2013, the Company announced that it entered into a Master Asset Purchase Agreement with International Business Machines Corporation, a New York corporation (“IBM”), pursuant to which the Company will acquire IBM's customer care business ("the Assets") for an aggregate purchase price of $505,000, subject to post-closing adjustments. A portion of the purchase price will be paid in shares of the Company's common stock up to the lesser of $75,000 or 5% of the outstanding shares of the Company's common stock (the "Stock Consideration"). At the closing, the Company will issue the Stock Consideration and $430,000 in cash, less $75,000 to be held back in the event a portion of the Assets are not transferred to us at the initial closing. IBM will operate the Assets for the benefit of the Company pending one or more subsequent closings, which are to occur no later than June 30, 2015. In connection with the acquisition, the Company intends to offer employment to approximately 35,000 employees in locations around the world, including the United States, the United Kingdom, India and the Philippines.

The Company anticipates the initial closing to occur in the coming months. Completion of the acquisition is subject to customary closing conditions, including, but not limited to, expiration or termination of the applicable waiting period under Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and other regulatory approvals.

25

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the Consolidated Financial Statements and related Notes included elsewhere in this Report.

When used in this Quarterly Report on Form 10-Q or the Report, the words “believes,” “plans,” “estimates,” “anticipates,” “expects,” “intends,” “allows,” “can,” “may,” “designed,” “will,” and similar expressions are intended to identify forward-looking statements. These are statements that relate to future periods and include statements about our business model and our services, our market strategy, including expansion of our product lines, our infrastructure, anticipated benefits, costs, and timing of our acquisitions, including our acquisition of the customer care business of International Business Machines Corporation, or IBM, our employee hiring, impact of MiTAC International Corporation, or MiTAC International, ownership interest in us, our revenue and operating results, our gross margins, competition with Synnex Technology International Corp., our future needs for additional financing, concentration of customers, our international operations, including our operations in Japan, expansion of our operations, our strategic acquisitions of businesses and assets, effects of future expansion of our operations, adequacy of our cash resources to meet our capital needs, cash held by our foreign subsidiaries, adequacy of our disclosure controls and procedures, pricing pressures, competition, impact of our accounting policies, our tax rates, our anti-dilution share repurchase program, and statements regarding our securitization programs and revolving credit lines. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks and uncertainties include, but are not limited to, those risks discussed, as well as the seasonality of the buying patterns of our customers, concentration of sales to large customers, dependence upon and trends in capital spending budgets in the information technology, or IT, and consumer electronics, or CE, industries, fluctuations in general economic conditions and risks set forth under Part II, Item 1A, “Risk Factors.” These forward-looking statements speak only as of the date hereof. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

Overview

We are a Fortune 500 corporation and a leading business process services company, servicing resellers, retailers and original equipment manufacturers, or OEMs, in multiple regions around the world. Our primary business process services are wholesale distribution and business process outsourcing, or BPO. We operate in two segments: distribution services and global business services, or GBS. Our distribution services segment distributes IT systems, peripherals, system components, software, networking equipment, CE, and complementary products and also offers data center server and storage solutions. Our GBS segment offers a range of BPO services to customers that include technical support, renewals management, lead management, direct sales, customer service, back office processing and information technology outsourcing, or ITO. Many of these services are delivered and supported on the proprietary software platforms we have developed to provide additional value to our customers.

We combine our core strengths in distribution with our BPO services to help our customers achieve greater efficiencies in time to market, cost minimization, real-time linkages in the supply chain and after-market product support. We distribute more than 25,000 technology products (as measured by active SKUs) from more than 200 IT, CE and OEM suppliers to more than 20,000 resellers, system integrators, and retailers throughout the United States, Canada, Japan and Mexico. As of August 31, 2013, we had approximately 14,000 full-time and temporary employees worldwide. From a geographic perspective, approximately 89% and 88%, of our total revenue was from North America for the three and nine months ended August 31, 2013, respectively, and 89% and 87% for the three and nine months ended August 31, 2012.

In our distribution services segment, we purchase IT systems, peripherals, system components, software, networking equipment, CE and complementary products from our primary suppliers such as Hewlett-Packard Company, or HP, Lenovo, AsusTek Computer Inc., Beats Electronics LLC and Seagate Technologies LLC and sell them to our reseller and retail customers. We perform a similar function for our distribution of licensed software products. Our reseller customers include value-added resellers, or VARs, corporate resellers, government resellers, system integrators, direct marketers, and national and regional retailers. In our distribution business, we provide comprehensive IT solutions in key vertical markets such as government and healthcare. We also provide specialized service offerings that increase efficiencies in areas like print management, renewals, networking and other services. In our GBS segment, our customers are primarily manufacturers of IT hardware and CE devices, developers of software, cloud service providers, and broadcast and social media.

26

Critical Accounting Policies and Estimates

There have been no material changes in our critical accounting policies and estimates for the three and nine months ended August 31, 2013 from our disclosure in our Annual Report on Form 10-K for the fiscal year ended November 30, 2012. For more information on our critical accounting policies, please see the discussion in our Annual Report on Form 10-K for the fiscal year ended November 30, 2012.

Recent Acquisitions and Divestitures 

We seek to augment our services offering expansion with strategic acquisitions of businesses and assets that complement and expand our global BPO capabilities. We also divest businesses that we deem no longer strategic to our ongoing operations. Our historical acquisitions have brought us new reseller and retail customers, OEM suppliers, and product lines have extended the geographic reach of our operations, particularly in targeted markets, and have diversified and expanded the services we provide to our OEM suppliers and customers. We account for acquisitions using the purchase method of accounting and include acquired entities within our Consolidated Financial Statements from the closing date of the acquisition.

Acquisitions subsequent to the three and nine months ended August 31, 2013

On September 10, 2013, we announced that we entered into a Master Asset Purchase Agreement with IBM, a New York corporation, pursuant to which we will acquire IBM’s customer care business, or the Assets, for an aggregate purchase price of $505.0 million, subject to post-closing adjustments. A portion of the purchase price will be paid in shares of our common stock up to the lesser of $75.0 million or 5% of the outstanding shares of our common stock, or the Stock Consideration. At the closing, we will issue the Stock Consideration and $430.0 million in cash, less $75.0 million to be held back in the event a portion of the Assets are not transferred to us at the initial closing. If a portion of the Assets are not transferred at the initial closing, IBM will operate the Assets for our benefit, pending one or more subsequent closings, which are to occur no later June 30, 2015. In connection with the acquisition, we intend to offer employment to approximately 35,000 employees in locations around the world, including the United States, the United Kingdom, India and the Philippines.

We anticipate the initial closing to occur in the coming months. Completion of the acquisition is subject to customary closing conditions, including, but not limited to, expiration or termination of the applicable waiting period under Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and other regulatory approvals.

Acquisitions during fiscal year 2013

In April 2013, we acquired substantially all of the assets of Supercom Canada Limited or Supercom Canada, a distributor of IT and consumer electronics products and services in Canada. The purchase price was approximately CAD36.5 million, or US$35.6 million, in cash, including approximately CAD4.5 million, or US$4.3 million, in deferred payments, subject to certain post-closing conditions, payable within 18 months. Subsequent to the acquisition, we repaid debt and working capital lines in the amount of US$53.7 million. Based on the preliminary purchase price allocation, we recorded net tangible assets of US$25.7 million, goodwill of US$5.4 million and intangible assets of US$4.4 million in relation to this acquisition. The determination of the fair value of the assets and liabilities acquired is preliminary and subject to the finalization of more detailed analysis. The acquisition is integrated into the distribution services segment and is expected to expand our existing product and service offerings in Canada.

Acquisitions and divestitures during fiscal year 2012

In fiscal year 2012, we purchased shares of our subsidiary SYNNEX Infotec Corporation, or Infotec Japan, which were held by the noncontrolling interest SB Pacific Corporation Limited, or SB Pacific, for $17.5 million, of which $11.4 million was paid during the nine months ended August 31, 2013. The transaction increased our ownership interest in Infotec Japan from 70.0% to 99.8%. In fiscal year 2012, we also sold our 33.3% noncontrolling interest in SB Pacific, our equity-method investee at that time, back to SB Pacific. During the nine months ended August 31, 2013, we received the final payment of $4.2 million of the sale price.

In fiscal year 2012, we acquired a business in the GBS segment for a purchase price of $6.2 million with $1.2 million payable upon the completion of certain post-closing procedures and $1.3 million contingent consideration payable upon the achievement of certain target earnings. We recorded goodwill of $6.2 million in relation to this acquisition.

27

Results of Operations

The following table sets forth, for the indicated periods, data as percentages of revenue:

Statements of Operations Data:	Three Months Ended				Nine Months Ended
	August 31, 2013		August 31, 2012		August 31, 2013		August 31, 2012
Revenue	100.00	%	100.00	%	100.00	%	100.00	%
Cost of revenue	(93.99	)	(94.10	)	(93.90	)	(93.65	)
Gross profit	6.01		5.90		6.10		6.35
Selling, general and administrative expenses	(3.69	)	(3.69	)	(3.90	)	(3.95	)
Income from operations before non-operating items, income taxes and noncontrolling interest	2.32		2.21		2.20		2.40
Interest expense and finance charges, net	(0.10	)	(0.23	)	(0.17	)	(0.23	)
Other income, net	0.44		0.04		0.18		0.03
Income from operations before income taxes and noncontrolling interest	2.66		2.02		2.21		2.20
Provision for income taxes	(0.96	)	(0.67	)	(0.79	)	(0.75	)
Net income	1.70		1.35		1.42		1.45
Net (income) loss attributable to noncontrolling interest	(0.00)		0.01		(0.00)		(0.02	)
Net income attributable to SYNNEX Corporation	1.70	%	1.36	%	1.42	%	1.43	%

Three and Nine Months Ended August 31, 2013 and 2012

Revenue

	Three Months Ended								Nine Months Ended
	August 31, 2013			August 31, 2012			Percent  Change		August 31, 2013			August 31, 2012			Percent  Change
	(in thousands)								(in thousands)
Revenue	$	2,733,913		$	2,576,948		6.1	%	$	7,786,113		$	7,520,441		3.5	%
Distribution revenue	2,687,283			2,535,991			6.0	%	7,648,896			7,402,218			3.3	%
GBS revenue	55,064			49,729			10.7	%	162,598			142,505			14.1	%
Inter-segment elimination	(8,434		)	(8,772		)	(3.9	)%	(25,381		)	(24,282		)	4.5	%

In our distribution services segment, we sell in excess of 25,000 technology products (as measured by active SKUs) from more than 200 IT, CE and OEM suppliers to more than 20,000 resellers. The prices of our products are highly dependent on the volumes purchased within a product category. The products we sell from one period to the next are often not comparable because of rapid changes in product models and features. The revenue generated in our GBS segment relates to BPO services such as technical support, renewals management, lead management, direct sales, customer service, back office processing and ITO. The inter-segment elimination relates to the inter-segment, back office support services provided by our GBS segment to our distribution services segment. Third-party GBS revenue can be derived by netting the inter-segment eliminations into GBS revenue. The GBS programs and customer service requirements change frequently from one period to the next and are often not comparable.

Revenue in our distribution services segment increased by 6.0% during the three months ended August 31, 2013 compared to the three months ended August 31, 2012. The increase in revenue was due to growth in U.S. sales, local currency sales in Japan and the acquisition of Supercom Canada in April 2013. These increases were negatively impacted by a 2.8% translation impact of foreign exchange rates, primarily due to the weakening of the Japanese yen and the Canadian dollar.

28

The increase in our revenue was caused by the growth in peripheral sales of 17%, primarily from the sale of audio products and system accessories, 9% higher networking equipment sales and 2% higher IT system and system component sales. Revenue growth was partially offset by 9% lower software sales primarily due to the strategic consolidation of less profitable products. All product categories were negatively impacted by the translation impact of foreign exchange rates, primarily due to the weakening Japanese yen and the Canadian dollar.

Revenue in our distribution services segment increased by 3.3% during the nine months ended August 31, 2013 compared to the nine months ended August 31, 2012. The increase in revenue was due to growth in U.S. sales, local currency sales growth in Japan and the April 2013 acquisition of Supercom Canada. These increases were negatively impacted by 2.3% for the translation impact of foreign exchange rates, primarily from the weakening of the Japanese yen.

The increase in revenue by product category, in comparison to the nine months ended August 31, 2012, was caused by 10% higher sales of peripherals, 8% higher networking equipment sales and 7% higher system components sales. Revenue growth was partially offset by 17% lower software sales, primarily due to lower gaming sales during the first half of the year and the reduction in revenue associated with a strategic decision to consolidate less profitable products. All product categories were negatively impacted by the translation impact of foreign exchange rates, primarily due to the weakening Japanese yen.

In our GBS segment, revenue in the three and nine months ended August 31, 2013 increased 10.7% and 14.1%, respectively, from the three and nine months ended August 31, 2012 primarily due to revenue generated from new customer contracts and expanded business from certain existing customers.

The demand for our products and services improved in the third quarter of fiscal year 2013 in the U.S and Asian markets, while Canada continued to navigate through a flat to modest economic environment.

Gross Profit

	Three Months Ended								Nine Months Ended
	August 31, 2013			August 31, 2012			Percent  Change		August 31, 2013			August 31, 2012			Percent  Change
	(in thousands)								(in thousands)
Gross profit	$	164,280		$	151,929		8.1	%	$	475,157		$	477,637		(0.5	)%
Percentage of revenue	6.01		%	5.90		%			6.10		%	6.35		%

Our gross profit is affected by a variety of factors, including competition, average selling prices, mix of products and services we sell, our customers, our sources of revenue by segments, product costs along with rebate and discount programs from our suppliers, reserves or settlements thereof, freight costs, charges for inventory losses, acquisitions and divestitures of business units, fluctuations in revenue, and our mix of business including our GBS services.

Our gross margin was higher by 11 basis points during the three months ended August 31, 2013 compared to the three months ended August 31, 2012. The improvement was primarily due to a reduction in reserve requirements related to certain vendor programs and our product mix. Gross margin improvement was partially offset by the onboarding of personnel in our GBS segment due to recently signed business.

Our gross margin during the nine months ended August 31, 2013, was 25 basis points lower as compared to the nine months ended August 31, 2012. As we started fiscal year 2013, the comparisons were difficult as fiscal year 2012 had benefitted from higher incentive rebates and higher profitability as a result of market supply and demand changes due to a shortage of hard disk drives. A strengthening U.S. and Japan market and a reduction in reserve requirements related to certain vendor programs improved gross margin in the first three fiscal quarters of fiscal 2013.

No specific customers, or changes in pricing strategy, individually or in the aggregate, contributed materially to the change in gross profit.

29

Selling, General and Administrative Expenses

	Three Months Ended								Nine Months Ended
	August 31, 2013			August 31, 2012			Percent  Change		August 31, 2013			August 31, 2012			Percent  Change
	(in thousands)								(in thousands)
Selling, general and administrative expenses	$	100,781		$	94,878		6.2	%	$	303,754		$	297,277		2.2	%
Percentage of revenue	3.69		%	3.69		%			3.90		%	3.95		%

Approximately two-thirds of our selling, general and administrative expenses consist of personnel costs such as salaries, commissions, bonuses, share-based compensation, deferred compensation expense or income, and temporary personnel costs. Selling, general and administrative expenses also include costs of our facilities, utility expense, professional fees, depreciation expense on our capital equipment, bad debt expense, amortization expense on our intangible assets, and marketing expenses, offset in part by reimbursements from our OEM suppliers.

Our selling, general and administrative expenses in the three months ended August 31, 2013 were 6.2% higher compared to the three months ended August 31, 2012. The increase in expense was primarily due to $6.4 million in higher personnel costs and general overhead expenses as the result of our April 2013 acquisition of Supercom Canada in our distribution segment and to support the growth in our GBS segment. Our operating expenses during the three months ended August 31, 2013 also included expenses related to our anticipated acquisition of the IBM customer care business. In addition, the prior year period benefitted from $2.3 million lower bad debt reserve requirements. These higher expenses were offset in part by a $3.4 million decrease as a result of fluctuations in foreign exchange rates, primarily due to the weakening of the Japanese yen.

Our selling, general and administrative expenses in the nine months ended August 31, 2013 were 2.2% higher compared to the nine months ended August 31, 2012. Our personnel costs and general overhead expenses were higher by $12.8 million, as a result of the growth in both our segments and the impact of the April 2013 acquisition of Supercom Canada. In addition, we recognized one-time integration expenses for the acquisition of Supercom Canada and acquisition related expenses for the anticipated acquisition of the IBM customer care business. These increases in expenses were offset in part by a $7.9 million decrease as a result of changes in foreign exchange rates, primarily due to the weakening of the Japanese yen.

Income from Operations before Non-Operating Items, Income Taxes and Noncontrolling Interests

	Three Months Ended								Nine Months Ended
	August 31, 2013			August 31, 2012			Percent  Change		August 31, 2013			August 31, 2012			Percent  Change
	(in thousands)								(in thousands)
Income from operations before non-operating items, income taxes and noncontrolling interest	$	63,499		$	57,051		11.3	%	$	171,403		$	180,360		(5.0	)%
Percentage of total revenue	2.32		%	2.21		%			2.20		%	2.40		%
Distribution income from operations before non-operating items, income taxes and noncontrolling interest	61,783			52,627			17.4	%	161,591			171,379			(5.7	)%
Percentage of distribution revenue	2.30		%	2.08		%			2.11		%	2.32		%
GBS income from operations before non-operating items, income taxes and noncontrolling interest	1,773			4,581			(61.3	)%	10,022			9,151			9.5	%
Percentage of GBS revenue	3.22		%	9.21		%			6.16		%	6.42		%
Inter-segment eliminations	(57)			(157		)	(63.7	)%	(210)			(170		)	23.5	%

In our distribution services segment, our operating margin in the three months ended August 31, 2013 was higher than the three months ended August 31, 2012, benefiting from higher gross margin as a result of a strengthening demand environment, positive adjustments to certain program related reserves and higher vendor incentives, offset in part by higher selling, general and operating expenses.

30

Our operating margin in the nine months ended August 31, 2013 was lower than the nine months ended August 31, 2012. Distribution services gross margin during the first half of fiscal year 2013 was negatively impacted by competitive pricing pressure, a mixed demand environment and the $2.1 million one-time integration expenses related to the acquisition of Supercom Canada.

In our GBS segment, our operating margin in the three months ended August 31, 2013 was lower than the three months ended August 31, 2012. The GBS results in the three months ended August 31, 2013 include $2.3 million in charges, primarily consisting of $1.4 million in costs incurred for our anticipated acquisition of the IBM customer care unit, which was recorded in selling, general and administrative expenses. GBS margin was also lower due to upfront personnel investment in the third quarter of fiscal year 2013 associated with recent business wins. These incremental expenses in the third quarter of fiscal year 2013 resulted in the operating margin for the nine months ended August 31, 2013 being lower than the nine months ended August 31, 2012.

Interest Expense and Finance Charges, Net

Three Months Ended			Nine Months Ended
August 31, 2013	August 31, 2012	Percent  Change	August 31, 2013	August 31, 2012	Percent  Change
(in thousands)