Edgar Filing: SYNNEX CORP

Form S-1/A Amendment No. 4

As filed with the Securities and Exchange Commission on November 19, 2003

Registration No. 333-108543

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

AMENDMENT NO. 4

FORM S-1

REGISTRATION STATEMENT

Under

The Securities Act of 1933

SYNNEX Corporation

(Exact Name of Registrant as Specified in its Charter)

Delaware

33411

94-2703333

(State or Other Jurisdiction of Incorporation or Organization)

(Primary Standard Industrial Classification Code Number)

(I.R.S. Employer

Identification No.)

3797 Spinnaker Court, Fremont, CA 94538

(510) 656-3333

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

ROBERT T. HUANG

President and Chief Executive Officer

SYNNEX CORPORATION

3797 Spinnaker Court, Fremont, CA 94538

(510) 656-3333

(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)

Copies to:

JORGE DEL CALVO, ESQ.

ALLISON LEOPOLD TILLEY, ESQ.

DAVINA K. KAILE, ESQ.

PILLSBURY WINTHROP LLP

2550 Hanover Street

Palo Alto, California 94304

(650) 233-4500

Fax (650) 233-4545

GREGORY C. SMITH, ESQ.

SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP

525 University Avenue, Suite 1100

Palo Alto, California 94301

(650) 470-4500

Fax (650) 470-4570

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨ ____________

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨ ____________

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨ ____________

If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. ¨

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the Registration Statement shall become effective on such date as the Commission acting pursuant to such Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the Securities and Exchange Commission declares our registration statement effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED NOVEMBER 19, 2003

Prospectus

LOGO

5,400,000 shares

SYNNEX Corporation

Common Stock

This is the initial public offering of 5,400,000 shares of common stock of SYNNEX Corporation. No public market currently exists for our shares.

We currently anticipate the initial public offering price of our common stock to be between $14.00 and $16.00 per share. We intend to apply to have our shares approved for listing on the New York Stock Exchange under the symbol “SNX”.

We are selling 3,577,500 of the shares of common stock under this prospectus, and certain of our stockholders, referred to in this prospectus as selling stockholders, are offering an additional 1,822,500 shares. We will not receive any of the proceeds from the sale of the shares being sold by the selling stockholders.

See “ Risk Factors” beginning on page 5 to read about certain risks that you should consider before buying shares of our common stock.



		Per Share		Total
Public Offering Price	$		$
Underwriting Discount	$		$
Proceeds, Before expenses, to SYNNEX	$		$
Proceeds, Before expenses, to the Selling Stockholders	$		$

We and certain of the selling stockholders identified in this prospectus have granted the underwriters a 30-day option to purchase up to 810,000 additional shares to cover any over-allotments.

Delivery of shares will be made on or about , 2003.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

Bear, Stearns & Co. Inc.

Banc of America Securities LLC

Raymond James

The date of this prospectus is , 2003.

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information that you should consider before investing in our common stock. You should read the entire prospectus carefully, including the section entitled “Risk Factors” and our consolidated financial statements and the related notes and pro forma financial data before making an investment decision.

SYNNEX Corporation

Our Business

We are a global information technology, or IT, supply chain services company. We offer a comprehensive range of services to IT original equipment manufacturers and software publishers, collectively OEMs, and reseller customers worldwide. The supply chain services that we offer include product distribution, related logistics and contract assembly.

We have been in the IT distribution business since 1980 and are one of the largest IT product distributors based on 2002 reported revenue. We focus our core wholesale distribution business on a limited number of leading IT OEMs, which allows us to enhance and increase the value we provide to our OEM suppliers and reseller customers.

In our distribution operations, we purchase IT systems, peripherals, system components, packaged software and networking equipment from OEM suppliers such as HP, IBM, Intel, Microsoft Corporation and Seagate and sell them to our reseller customers. We perform the same function for our purchases of licensed software products. Our reseller customers include value added resellers, or VARs, corporate resellers, government resellers, system integrators, direct marketers and retailers. We currently distribute and market approximately 15,000 products (as measured by active SKUs) from over 100 OEM suppliers to more than 15,000 resellers.

Our contract assembly operations are generally related to building IT systems such as personal computers, workstations and servers. By leveraging the inventory management capabilities and system component supplier relationships of our distribution business, we provide cost-effective IT system contract assembly.

Because we offer distribution, contract assembly and complementary logistics support, OEM suppliers and resellers can outsource to us multiple areas of their business outside of their core competencies. This model allows us to provide services at several points along the IT product supply chain. We believe that the combination of our broad range of supply chain capabilities, our focus on serving the leading IT OEMs and our efficient operations enables us to realize strong and expanding relationships with these OEMs and our reseller customers.

Our Strategy

We intend to continue to expand our business by pursuing the following strategies:

•

Deepen relationships with our existing OEM suppliers and reseller customers by expanding the supply chain services we offer to them.

•

Establish new strategic relationships with leading OEMs to increase the breadth of product lines that we distribute.

•

Increase our reseller customer base by offering competitive pricing, in-depth product expertise and a comprehensive selection of IT products.

•

Expand our contract assembly operations to benefit from the continuing trend of OEMs outsourcing their production activities.

•

Control costs by maintaining our low cost operations and seeking ways to further reduce costs in all areas of our business.

•

Pursue strategic acquisitions and investments to increase our OEM and reseller relationships, enhance our supply chain capabilities and expand our geographic reach.

Our Relationship with MiTAC International

In 1992, MiTAC International Corporation, or MiTAC International, acquired a controlling interest in us. Since 1992, MiTAC International, through its affiliates, has increased its beneficial ownership interest in us to approximately 98%.

MiTAC International, established in 1982, is a publicly held, original design manufacturing company based in Taiwan. MiTAC International specializes in the development and manufacture of motherboards, servers, LCD PCs, mobile wireless handheld devices, such as wireless PDAs and smart phones. In the last 20 years, MiTAC International has expanded its presence in more than 20 countries around the world. In 1994, we began offering contract assembly that we jointly market with MiTAC International’s manufacturing and design capabilities.

All of the selling stockholders are related to MiTAC International. After completion of this offering, MiTAC International and its affiliates will beneficially own approximately 77.3% of our outstanding common stock, assuming the underwriters do not exercise their over-allotment option, and approximately 74.6% if the underwriters exercise their over-allotment option in full. As a result of this ownership interest, MiTAC International and its affiliates control us and they will continue to control us upon completion of the offering.

There are potential conflicts of interest between us and MiTAC International and its affiliates. Synnex Technology International, a publicly traded company based in Taiwan affiliated with MiTAC International, currently provides distribution and fulfillment services to various markets in Asia and Australia. Synnex Technology International is a separate entity from us and is also a potential competitor of ours. Although Synnex Technology International is a separate entity from us, it is possible that there will be confusion as a result of the similarity of our names. Mitac Incorporated, a privately held company based in Taiwan and a separate entity from MiTAC International, owns approximately 16.0% of Synnex Technology International and approximately 9.6% of MiTAC International. MiTAC International indirectly owns 0.41% of Synnex Technology International and Synnex Technology International owns approximately 1.3% of MiTAC International. In addition, MiTAC International indirectly owns approximately 9.0% of Mitac Incorporated and Synnex Technology International owns approximately 14.4% of Mitac Incorporated. Each of MiTAC International and Synnex Technology International indirectly owns 50% of Abundant Investment Group Limited, a selling stockholder. Synnex Technology International also indirectly owns 100% of Peer Developments Ltd., which in turns owns approximately 24% of our common stock. Also, our Chairman, Mr. Matthew Miau, is the chairman of MiTAC International and is the chairman or officer of several of the companies affiliated with MiTAC International, including Synnex Technology International. Mr. Miau’s positions with us and MiTAC International and some of its affiliated entities could create actual or perceived conflicts of interest with respect to a variety of matters, such as matters requiring stockholder approval, corporate opportunities and business relationships.

We were incorporated in the State of California as COMPAC Microelectronics, Inc. on November 18, 1980, and we changed our name to SYNNEX Information Technologies, Inc. on February 4, 1994. We reincorporated in the State of Delaware under the name “SYNNEX Corporation” in October 2003. Our principal offices are located at 3797 Spinnaker Court, Fremont, CA 94538, and our telephone number is (510) 656-3333. We have distribution, sales and assembly facilities located in Asia, Europe and North America. Our website is located at www.synnex.com. The information contained on our website is not a part of this prospectus.

THE OFFERING

Shares of common stock being offered by us		3,577,500 shares

Shares of common stock being offered by the selling stockholders		1,822,500 shares

Shares of common stock to be outstanding after this offering		25,667,791 shares

Use of proceeds		We intend to use all of the estimated net proceeds from this offering of $48.2 million first to reduce the amounts outstanding under our U.S. credit facility when this offering is completed, if any, and then to reduce the use of our accounts receivable securitization program under which the amount of our accounts receivable sold was $196.5 million at August 31, 2003.

Dividend policy		We have not declared or paid any cash dividends since our inception. We currently intend to retain future earnings, if any, for use in our operations and the expansion of our business.

Proposed New York Stock Exchange symbol		SNX

The number of shares of common stock to be outstanding after this offering is based on our outstanding shares as of August 31, 2003. These shares exclude:

•

8,502,497 shares issuable upon the exercise of options outstanding at August 31, 2003 under our stock option plans with a weighted average exercise price of $7.37 per share;

•

5,422,144 shares reserved for future grant under our stock option plans at August 31, 2003; and

•

500,000 shares reserved for issuance under our employee stock purchase plan.

Except when otherwise indicated, all information in this prospectus:

•

has been adjusted to give effect to a 1 for 2 reverse stock split of our common stock which was effected on November 12, 2003; and

•

assumes no exercise by the underwriters of their option to purchase additional shares of common stock from us and some of the selling stockholders to cover over-allotments, if any.

SUMMARY HISTORICAL FINANCIAL AND OPERATING DATA

The following table presents our summary consolidated historical financial information. The statement of operations data generally includes the operating results of our acquisitions from the closing date of each acquisition. You should read this information together with the consolidated financial statements and related notes, unaudited as adjusted financial information and the information under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.

	Years Ended November 30,							Nine Months Ended August 31,
	2000			2001		2002		2002		2003
	(in thousands, except per share data)
Statement of Operations Data:
Revenue	$	3,802,629		$	3,224,390	$	3,767,882	$	2,694,376	$	2,873,293
Cost of revenue		3,626,317			3,060,304		3,593,982		2,568,419		2,741,446

Gross profit		176,312			164,086		173,900		125,957		131,847
Selling, general and administrative expenses		106,489			106,197		123,418		88,638		91,968

Income from operations		69,823			57,889		50,482		37,319		39,879
Income from continuing operations		42,011			25,797		28,032		20,344		21,371
Loss from discontinued operations		(5,577	)		—		—		—		—

Net income	$	36,434		$	25,797	$	28,032	$	20,344	$	21,371

Net income per common share—diluted:
Income from continuing operations	$	1.72		$	1.06	$	1.16	$	0.83	$	0.87

	August 31, 2003
	Actual		As Adjusted
	(in thousands)
Balance Sheet Data:
Cash and cash equivalents	$	23,174	$	23,174
Working capital		206,602		254,808
Total assets		707,553		755,759
Current borrowings under term loans and lines of credit		51,447		51,447
Long-term borrowings		7,852		7,852
Total stockholders’ equity		239,538		287,744

As adjusted information gives effect to the application of the net proceeds from the sale of 3,577,500 shares of our common stock offered by us at an assumed initial public offering price of $15.00 per share and after deducting estimated offering expenses and underwriting discounts and commissions. In addition to the repayment of any outstanding borrowings under our U.S. credit facility, we intend to use the remaining portion of the net proceeds received by us from this offering to reduce the use of our accounts receivable securitization program. The impact to our financial statements of this reduction will be to increase our accounts receivable.

	Years Ended November 30,						Nine Months Ended August 31,
	2000		2001		2002		2002		2003
	(in thousands)
Other Data:
Depreciation and Amortization	$	6,753	$	9,350	$	8,337	$	6,008	$	5,685

RISK FACTORS

An investment in our common stock involves a high degree of risk. Before you invest in our common stock, you should carefully consider all of the risks of our business, including those described below, together with all of the other information included in this prospectus. Our business and operating results could be materially and adversely affected by any of these risks. The trading price of our common stock could decline, and you may lose all or part of your investment.

Risks Related to Our Business

We anticipate that our revenue and operating results will fluctuate, which could adversely affect the price of our common stock.

Our operating results have fluctuated and will fluctuate in the future as a result of many factors, including:

•

general economic conditions and weakness in IT spending;

•

the loss or consolidation of one or more of our significant original equipment manufacturer, or OEM, suppliers or customers;

•

market acceptance and product life of the products we assemble and distribute;

•

competitive conditions in our industry, which may impact our margins;

•

pricing, margin and other terms with our OEM suppliers;

•

variations in our levels of excess inventory and doubtful accounts, and changes in the terms of OEM supplier-sponsored programs, such as price protection and return rights;

•

changes in our costs and operating expenses; and

•

the contribution to our total revenue of our international operations.

Although we attempt to control our expense levels, these levels are based, in part, on anticipated revenue. Therefore, we may not be able to control spending in a timely manner to compensate for any unexpected revenue shortfall.

Our operating results also are affected by the seasonality of the IT products industry. We have historically experienced higher sales in our fourth fiscal quarter due to patterns in the capital budgeting and purchasing cycles of end-users. These patterns may not be repeated in subsequent periods.

You should not rely on period-to-period comparisons of our operating results as an indication of future performance. The results of any quarterly period are not indicative of results to be expected for a full fiscal year. In future quarters, our operating results may be below the expectations of public market analysts or investors, which would likely cause our share price to decline.

We depend on a small number of OEMs to supply the IT products that we sell and the loss of, or a material change in, our business relationship with a major OEM supplier could adversely affect our business, financial position and operating results.

Our future success is highly dependent on our relationships with a small number of OEM suppliers. Sales of HP products represented approximately 35.0% of our total revenue in fiscal 2002 and 31.5% in the nine months ended August 31, 2003. Our OEM supplier agreements typically are short-term and may be terminated without cause upon short notice. The loss or deterioration of our relationships with a major OEM supplier, the authorization by OEM suppliers of additional distributors, the sale of products by OEM suppliers directly to our reseller customers and end users, or our failure to establish relationships with new OEM suppliers or to expand the distribution and supply chain services that we provide OEM suppliers could adversely affect our business,

financial position and operating results. In addition, OEM suppliers may face liquidity or solvency issues which in turn could negatively affect our business and operating results.

Our business is also highly dependent on the terms provided by our OEM suppliers. Generally, each OEM supplier has the ability to change the terms and conditions of their sales agreements, such as reducing the amount of price protection and return rights or reducing the level of purchase discounts, rebates and marketing programs available to us. If we are unable to pass the impact of these changes through to our reseller customers, our business, financial position and operating results could be adversely affected.

Our gross margins are low, which magnifies the impact of variations in revenue, operating costs, bad debts and interest expense on our operating results.

As a result of intense price competition in the IT products industry, our gross margins are low, and we expect them to continue to be low in the future. Increased competition arising from industry consolidation and low demand for certain IT products may hinder our ability to maintain or improve our gross margins. These low gross margins magnify the impact of variations in revenue, operating costs, bad debts and interest expense on our operating results. A portion of our operating expenses is relatively fixed, and planned expenditures are based in part on anticipated orders that are forecasted with limited visibility of future demand. As a result, we may not be able to reduce our operating expenses as a percentage of revenue to mitigate any further reductions in gross margins in the future. If we cannot proportionately decrease our cost structure in response to competitive price pressures, our business and operating results could suffer.

We also receive purchase discounts and rebates from OEM suppliers based on various factors, including sales or purchase volume and breadth of customers. A decrease in net sales could negatively affect the level of volume rebates received from our OEM suppliers and thus, our gross margins. Because some purchase discounts and rebates from OEM suppliers are based on percentage increases in sales of products, it may become more difficult for us to achieve the percentage growth in sales required for larger discounts due to the current size of our revenue base. A decrease or elimination of purchase discounts and rebates from our OEM suppliers could adversely affect our business and operating results.

Because we sell on a purchase order basis, we are subject to uncertainties and variability in demand by our reseller and contract assembly customers, which could decrease revenue and adversely affect our operating results.

We sell to our reseller and contract assembly customers on a purchase order basis rather than pursuant to long-term contracts or contracts with minimum purchase requirements. Consequently, our sales are subject to demand variability by our reseller and contract assembly customers. The level and timing of orders placed by our reseller and contract assembly customers vary for a variety of reasons, including seasonal buying by end-users, the introduction of new hardware and software technologies and general economic conditions. Customers submitting a purchase order may cancel, reduce or delay their orders. If we are unable to anticipate and respond to the demands of our reseller and contract assembly customers, we may lose customers because we have an inadequate supply of products, or we may have excess inventory, either of which may harm our business, financial position and operating results.

We are subject to the risk that our inventory value may decline, and protective terms under our OEM supplier agreements may not adequately cover the decline in value, which in turn may harm our business, financial position and operating results.

The IT products industry is subject to rapid technological change, new and enhanced product specification requirements, and evolving industry standards. These changes may cause inventory on hand to decline substantially in value or to rapidly become obsolete. Most of our OEM suppliers offer limited protection from the loss in value of inventory. For example, we can receive a credit from many OEM suppliers for products held in inventory in the event of a supplier price reduction. In addition, we have a limited right to return a certain percentage of purchases to most OEM suppliers. These policies are subject to time restrictions and do not protect

us in all cases from declines in inventory value. In addition, our OEM suppliers may become unable or unwilling to fulfill their protection obligations to us. The decrease or elimination of price protection or the inability of our OEM suppliers to fulfill their protection obligations could lower our gross margins and cause us to record inventory write-downs. If we are unable to manage our inventory with our OEM suppliers with a high degree of precision, we may have insufficient product supplies or we may have excess inventory, resulting in inventory write downs, either of which may harm our business, financial position and operating results.

We depend on OEM suppliers to maintain an adequate supply of products to fulfill customer orders on a timely basis, and any supply shortages or delays could cause us to be unable to fulfill orders on a timely basis, which in turn could harm our business, financial position and operating results.

Our ability to obtain particular products in the required quantities and to fulfill reseller customer orders on a timely basis is critical to our success. In most cases, we have no guaranteed price or delivery agreements with our OEM suppliers. We occasionally experience a supply shortage of certain products as a result of strong demand or problems experienced by our OEM suppliers. If shortages or delays persist, the price of those products may increase, or the products may not be available at all. In addition, our OEM suppliers may decide to distribute, or to substantially increase their existing distribution business, through other distributors, their own dealer networks, or directly to resellers. Accordingly, if we are not able to secure and maintain an adequate supply of products to fulfill our reseller customer orders on a timely basis, our business, financial position and operating results may be adversely affected.

A portion of our revenue is financed by floor plan financing companies and any termination or reduction in these financing arrangements could harm our business and operating results.

A portion of our distribution revenue is financed by floor plan financing companies. Floor plan financing companies are engaged by our customers to finance, or “floor,” the purchase of products from us. In exchange for a fee, we transfer the risk of loss on the sale of our products to the floor plan companies. We currently receive payment from these financing companies within approximately 15 business days from the date of the sale, which allows our business to operate at much lower relative working capital levels than if such programs were not available. If these floor plan arrangements are terminated or substantially reduced, the need for more working capital and the increased financing cost could harm our business and operating results. We have not experienced any termination or significant reduction in floor plan arrangements in the past.

We have significant credit exposure to our reseller customers, and negative trends in their businesses could cause us significant credit loss and negatively impact our cash flow and liquidity position.

We extend credit to our reseller customers for a significant portion of our sales to them. Resellers have a period of time, generally 30 days after the date of invoice, to make payment. As a result, we are subject to the risk that our reseller customers will not pay for the products they purchase. Our credit exposure risk may increase due to liquidity or solvency issues experienced by our resellers as a result of an economic downturn, including the current downturn, or a decrease in IT spending by end-users. If we are unable collect payment for products we ship to our reseller customers or if our reseller customers are unable to timely pay for the products we ship to them, it will be more difficult or costly to utilize receivable-based financing, which could negatively impact our cash flow and liquidity position.

We experienced theft of product from our warehouses. Future thefts could harm our operating results.

We recently experienced theft as a result of break-ins at three of our warehouses in which approximately $9.4 million of inventory was stolen. Based on our investigation, discussions with local law enforcement and meetings with federal authorities, we believe the thefts at our warehouses, which occurred between February and May 2003, were part of an organized crime effort that targeted a number of technology equipment warehouses throughout the United States. As a result of the loss, we reduced our inventory value by $9.4 million, expensed

the deductible of $75,000 and recorded the net amount as a receivable from our insurance company, within “other current assets” on our balance sheet. Based on the notification we have received from our insurance broker, we believe that collection of the receivable is assured. These types of incidents may make it more difficult or expensive for us to obtain theft coverage in the future. We have from time to time also experienced incidents of theft at various facilities. There is no assurance that future incidents of theft will not re-occur.

A significant portion of our contract assembly revenue comes from a single customer, and any decrease in sales from this customer could adversely affect our revenue.

Our primary contract assembly customer, Sun Microsystems, accounted for approximately $203.5 million or 54.5% of our contract assembly revenue in fiscal 2002 and approximately $131.7 million or 96.1% of our contract assembly revenue in the nine months ended August 31, 2003. Sun Microsystems accounted for less than 10% of our total revenue in fiscal 2002 and the nine months ended August 31, 2003. Revenue from Sun Microsystems has decreased over the past three years and could decrease in the future. Our business with Sun Microsystems is dependent upon obtaining new orders from this customer. In addition, the future success of our relationship with Sun Microsystems depends on MiTAC International continuing to work with us to service Sun Microsystems’ needs. Our relationship with Sun Microsystems evolved from a customer relationship initiated by MiTAC International and is a joint relationship with MiTAC International. We rely on MiTAC International to manufacture and supply subassemblies and components for the computer systems we assemble for Sun Microsystems. If we are unable to maintain our relationship with MiTAC International, our relationship with Sun Microsystems could suffer, which in turn could harm our business, financial position and operating results. In addition, if we are unable to obtain assembly contracts for new and successful products as a result of the current economic downturn or other reasons, our business and operating results would suffer. For example, our loss of contract assembly business from Compaq Computer Corporation, or Compaq, in fiscal 2001 had a material adverse effect on our revenue and operating results in subsequent periods.

We have pursued and intend to continue to pursue strategic acquisitions or investments in new markets and may encounter risks associated with these activities which could harm our business and operating results.

The distribution and contract assembly industries have experienced significant consolidation due to price erosion and market competition, augmented by the economic downturn. We expect this consolidation to continue. We have in the past pursued and in the future expect to pursue acquisitions of, or investments in, businesses and assets in new markets, either within or outside the IT products industry, that complement or expand our existing business. Our acquisition strategy involves a number of risks, including:

•

difficulty in successfully integrating acquired operations, IT systems, customers, OEM supplier and partner relationships, products and businesses with our operations;

•

loss of key employees of acquired operations or inability to hire key employees necessary for our expansion;

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diversion of our capital and management attention away from other business issues;

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an increase in our expenses and working capital requirements;

•

in the case of acquisitions that we may make outside of the United States, difficulty in operating in foreign countries and over significant geographical distances; and

•

other financial risks, such as potential liabilities of the businesses we acquire.

Our growth may be limited and our competitive position may be harmed if we are unable to identify, finance and complete future acquisitions. We believe that further expansion may be a prerequisite to our long-term success as some of our competitors in the IT product distribution industry have larger international operations, higher revenues and greater financial resources than us. We have incurred costs and encountered difficulties in the past in connection with our acquisitions and investments. For example, our operating margins were adversely affected as a result of our acquisition of Merisel Canada Inc. and we have written off substantial investments in the past, one of which was eManage.com. Future acquisitions may result in dilutive issuances of equity securities, the incurrence of additional debt, large write-offs, a decrease in future profitability, or future losses. The incurrence of debt in connection with any future acquisitions could restrict our ability to obtain working capital or other financing necessary to operate our business. Our recent and future acquisitions or investments may not be successful, and if we fail to realize the anticipated benefits of these acquisitions or investments, our business and operating results could be harmed.

We are dependent on a variety of IT and telecommunications systems, and any failure of these systems could adversely impact our business and operating results.

We depend on IT and telecommunications systems for our operations. These systems support a variety of functions, including inventory management, order processing, shipping, shipment tracking and billing.

Failures or significant downtime of our IT or telecommunications systems could prevent us from taking customer orders, printing product pick-lists, operating our automated product pick machinery, shipping products or billing customers. Sales also may be affected if our reseller customers are unable to access our price and product availability information. We also rely on the Internet, and in particular electronic data interchange or EDI, for a large portion of our orders and information exchanges with our OEM suppliers and reseller customers. The Internet and individual websites have experienced a number of disruptions and slowdowns, some of which were caused by organized attacks. In addition, some websites have experienced security breakdowns. If we were to experience a security breakdown, disruption or breach that compromised sensitive information, it could harm our relationship with our OEM suppliers or reseller customers. Disruption of our website or the Internet in general could impair our order processing or more generally prevent our OEM suppliers or reseller customers from accessing information. The occurrence of any of these events could have an adverse effect on our business and operating results.

We rely on independent shipping companies for delivery of products, and price increases or service interruptions from these carriers could adversely affect our business and operating results.

We rely almost entirely on arrangements with independent shipping companies, such as FedEx and UPS, for the delivery of our products from OEM suppliers and delivery of products to reseller customers. Freight and shipping charges are a substantial portion of our cost of goods sold. As a result, an increase in freight surcharges due to rising fuel cost or general price increases will have an immediate adverse effect on our margins, unless we are able to pass the increased charges to our reseller customers or renegotiate terms with our OEM suppliers. In addition, in the past, UPS has experienced work stoppages due to labor negotiations with management. The termination of our arrangements with one or more of these independent shipping companies, the failure or inability of one or more of these independent shipping companies to deliver products, or the unavailability of their shipping services, even temporarily, could have an adverse effect on our business and operating results.

Part of our business is conducted outside of the United States, exposing us to additional risks that may not exist in the United States which in turn could cause our business and operating results to suffer.

We have international operations in Canada, China, Japan, Mexico and the United Kingdom. In fiscal 2002 and the nine months ended August 31, 2003, approximately 21% and 22%, respectively, of our total revenue was generated outside the United States. In fiscal 2002 and the nine months ended August 31, 2003, approximately 13% of our total revenue was generated in Canada. No other country or region accounted for more than 10% of our total revenue. Our international operations are subject to risks, including:

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political or economic instability;

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changes in governmental regulation;

•

changes in import/export duties;

•

trade restrictions;

•

difficulties and costs of staffing and managing operations in certain foreign countries;

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work stoppages or other changes in labor conditions;

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difficulties in collecting of accounts receivables on a timely basis or at all;

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taxes; and

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seasonal reductions in business activity in some parts of the world, such as Europe.

We may continue to expand internationally to respond to competitive pressure and customer and market requirements. For example, we commenced our Mexico operations in April 2002. Establishing operations in any other foreign country or region presents risks such as those described above as well as risks specific to the particular country or region. In addition, until a payment history is established over time with customers in a new geography or region, the likelihood of collecting receivables generated by such operations could be less than our expectations. As a result, there is a greater risk that reserves set with respect to the collection of such receivables may be inadequate. We have established and subsequently ceased operations in foreign countries in the past, which caused us to incur additional expense and loss. If our international expansion efforts in any foreign country are unsuccessful, we may decide to cease operations, which would likely cause us to incur similar additional expenses and loss.

In addition, changes in policies and/or laws of the United States or foreign governments resulting in, among other things, higher taxation, currency conversion limitations, restrictions on fund transfers or the expropriation of private enterprises, could reduce the anticipated benefits of our international expansion. Furthermore, any actions by countries in which we conduct business to reverse policies that encourage foreign trade or investment could adversely affect our business. If we fail to realize the anticipated revenue growth of our future international operations, our business and operating results could suffer.

Because we conduct substantial operations in China, risks associated with economic, political and social events in China could negatively affect our business and operating results.

A substantial portion of our IT systems operations, including our IT systems support and software development operations, are located in China. As of August 31, 2003, we had 130 personnel in IT systems support and software development, of which 70 are located in China. In addition, we also conduct general and administrative activities from our facility in China. We expect to increase our operations in China in the future. Our operations in China are subject to a number of risks relating to China’s economic and political systems, including:

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a government fixed foreign exchange rate and limitations on the convertibility of the Chinese renminbi;

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extensive government regulation;

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changing governmental policies relating to tax benefits available to foreign-owned businesses;

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the telecommunications infrastructure;

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a relatively uncertain legal system; and

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uncertainties related to continued economic and social reform, including the effect of China’s recent entry into the World Trade Organization.

In addition, external events in Asia, such as the recent outbreak of severe acute respiratory syndrome, or SARS, or heightened political tensions in this region may adversely affect our business by disrupting the IT supply chain, restricting travel or interfering with the electronic and communications infrastructure.

Our IT systems are an important part of our global operations. Any significant interruption in service, whether resulting from any of the above uncertainties, natural disasters or otherwise, could result in delays in our inventory purchasing, errors in order fulfillment, reduced levels of customer service and other disruptions in operations, any of which could cause our business and operating results to suffer.

Changes in foreign exchange rates and limitations on the convertibility of foreign currencies could adversely affect our business and operating results.

In fiscal 2002 and the nine months ended August 31, 2003, approximately 21% and 22%, respectively, of our total revenue was generated outside the United States. Our international revenue, cost of revenue and operating expenses are denominated in foreign currencies. We presently have currency exposure arising from both sales and purchases denominated in foreign currencies. Changes in exchange rates between foreign currencies and the U.S. dollar may adversely affect our operating margins. For example, if these foreign currencies appreciate against the U.S. dollar, it will make it more expensive in terms of U.S. dollars to purchase inventory or pay expenses with foreign currencies. In addition, currency devaluation can result in a loss to us if we hold deposits of that currency as well as make our products, which are usually purchased by us with U.S. dollars, relatively more expensive than products manufactured locally. We currently conduct only limited hedging activities, which involve the use of currency forward contracts. Hedging foreign currencies can be risky, especially if the currency is not freely or actively traded. In addition, some currencies, such as the Chinese renminbi, are subject to limitations on conversion into other currencies, which can limit our ability to hedge or to otherwise react to rapid foreign currency devaluations. We cannot predict the impact of future exchange rate fluctuations on our business and operating results.

Because of the experience of our key personnel in the IT products industry and their technological expertise, if we were to lose any of our key personnel, it could inhibit our ability to operate and grow our business successfully.

We operate in the highly competitive IT products industry. We are dependent in large part on our ability to retain the services of our key senior executives and other technical experts and personnel. Our employees and executives do not have employment agreements. Furthermore, we do not carry “key person” insurance coverage for any of our key executives. We compete for qualified senior management and technical personnel. The loss of, or inability to hire, key executives or qualified employees could inhibit our ability to operate and grow our business successfully.

We may become involved in intellectual property or other disputes that could cause us to incur substantial costs, divert the efforts of our management, require us to pay substantial damages or require us to obtain a license, which may not be available on commercially reasonable terms, if at all.

We may from time to time receive notifications alleging infringements of intellectual property rights allegedly held by others relating to our business or the products we sell or assemble for our OEM suppliers and

others. Litigation with respect to patents or other intellectual property matters could result in substantial costs and diversion of management and other resources and could have an adverse effect on our business. Although we generally have various levels of indemnification protection from our OEM suppliers and contract assembly customers, in many cases any indemnification to which we may be entitled is subject to maximum limits or other restrictions. In addition, we have developed proprietary IT systems that play an important role in our business. If any infringement claim is successful against us and if indemnification is not available or sufficient, we may be required to pay substantial damages or we may need to seek and obtain a license of the other party’s intellectual property rights. We may be unable to obtain such a license on commercially reasonable terms, if at all.

We are from time to time involved in other litigation in the ordinary course of business. For example, we are currently defending a trademark infringement action, a civil matter involving third party investors in eManage.com and various bankruptcy preference actions. We may not be successful in defending these or other claims. Regardless of the outcome, litigation can result in substantial expense and could divert the efforts of our management.

Because of the capital-intensive nature of our business, we need continued access to capital which, if not available to us, could harm our ability to operate or expand our business.

Our business requires significant levels of capital to finance accounts receivable and product inventory that is not financed by trade creditors. If cash from available sources is insufficient, or if cash is used for unanticipated needs, we may require additional capital sooner than anticipated. In the event we are required, or elect, to raise additional funds, we may be unable to do so on favorable terms, or at all. Our current and future indebtedness could adversely affect our operating results and severely limit our ability to plan for, or react to, changes in our business or industry. We could also be limited by financial and other restrictive covenants in any credit arrangements, including limitations on our borrowing of additional funds and issuing dividends. Furthermore, the cost of debt financing could significantly increase, making it cost prohibitive to borrow, which could force us to issue new equity securities.

If we issue new equity securities, existing stockholders may experience additional dilution, or the new equity securities may have rights, preferences or privileges senior to those of existing holders of common stock. If we cannot raise funds on acceptable terms, we may not be able to take advantage of future opportunities or respond to competitive pressures or unanticipated requirements. Any inability to raise additional capital when required could have an adverse effect on our business and operating results.

The terms of our indebtedness agreements impose significant restrictions on our ability to operate which in turn may negatively affect our ability to respond to business and market conditions and therefore have an adverse effect on our business and operating results.

As of August 31, 2003, we had approximately $59.3 million in outstanding short and long-term borrowings under term loans and lines of credit, excluding trade payables. As of August 31, 2003, approximately $196.5 million of our accounts receivable were sold to and held by General Electric Capital Corporation under our accounts receivable securitization program. The terms of our current indebtedness agreements restrict, among other things, our ability to:

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incur additional indebtedness;

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pay dividends or make certain other restricted payments;

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consummate certain asset sales or acquisitions;

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enter into certain transactions with affiliates; and

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merge, consolidate or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of our assets.

We are also required to maintain specified financial ratios and satisfy certain financial condition tests, including minimum net worth and fixed charge coverage ratio as outlined in our senior secured revolving line of credit arrangement. We may be unable to meet these ratios and tests, which could result in the acceleration of the repayment of the related debt, the termination of the facility or the increase in our effective cost of funds. As a result, our ability to operate may be restricted and our ability to respond to business and market conditions limited, which could have an adverse effect on our business and operating results.

We have significant operations concentrated in Northern California, South Carolina and Toronto and any disruption in the operations of our facilities could harm our business and operating results.

Our worldwide operations could be subject to natural disasters and other business disruptions, which could seriously harm our revenue and financial condition and increase our costs and expenses. We have significant operations in our facilities located in Fremont, California, Greenville, South Carolina and Toronto. As a result, any prolonged disruption in the operations of our facilities, whether due to technical difficulties, power failures, destruction or damage to the facilities as a result of a natural disaster, fire or any other reason, could harm our operating results. For example, the California energy crisis in 2001 affected our ability to meet our customer obligations. Should an energy crisis occur again, it could harm our business and operating results. In addition, some of our OEM suppliers are located in areas geographically close to us. We currently do not have a formal disaster recovery plan and may not have sufficient business interruption insurance to compensate for losses that could occur.

Global health, economic, political and social conditions may harm our ability to do business, increase our costs and negatively affect our stock price.

External factors such as the SARS virus, potential terrorist attacks, acts of war or geopolitical and social turmoil in many parts of the world could prevent or hinder our ability to do business, increase our costs and negatively affect our stock price. For example, increased instability may adversely impact the desire of employees and customers to travel, the reliability and cost of transportation, our ability to obtain adequate insurance at reasonable rates or require us to incur increased costs for security measures for our domestic and international operations. These uncertainties make it difficult for us and our customers to accurately plan future business activities. More generally, these geopolitical social and economic conditions could result in increased volatility in the United States and worldwide financial markets and economy. We are predominantly uninsured for losses and interruptions caused by terrorist acts and acts of war.

If we account for employee stock option and employee stock purchase plans using the fair value method, it could significantly reduce our net income and earnings per share.

There has been ongoing public debate whether employee stock option and employee stock purchase plans shares should be treated as a compensation expense and, if so, how to properly value these charges. If we elected or were required to record a non-cash expense for our stock-based compensation plans using the fair value method, we could have significant accounting charges. For example in fiscal 2002, had we accounted for stock-based compensation plans under Statement 123 as amended by Statement 148, earnings per share would have been reduced by $0.07 per share. Although we are not currently required to record any compensation expense using the fair value method in connection with option grants that have an exercise price at or above fair market value and for shares issued under our employee stock purchase plan, it is possible that future laws or regulations will require us to treat all stock-based compensation as a compensation expense using the fair value method.

Risks Related to Our Relationship with MiTAC and its Affiliated Entities

We rely on MiTAC International for certain manufacturing and assembly services and the loss of these services would require us to seek alternate providers which may charge us more for their services.

We rely on MiTAC International to manufacture and supply subassemblies and components for some of our contract assembly customers, including Sun Microsystems, currently our primary contract assembly customer, and our reliance on MiTAC International may increase in the future. Our 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. Accordingly, we negotiate manufacturing and pricing terms on a project-by-project basis, based on manufacturing services rendered by MiTAC International or us. In the event MiTAC International no longer provides such services and components to us, we would need to find an alternative source for these services and components. There can be no assurance that we would be able to obtain alternative services and components on similar terms, which may in turn increase our manufacturing costs. In addition, we may not find manufacturers with sufficient capacity, which may in turn lead to shortages in our product supplies. Increased costs and products shortages could harm our business and operating results. In fiscal 2000, 2001 and 2002 and the nine months ended August 31, 2003, we purchased inventories, including notebook computers, motherboard and other peripherals, from MiTAC International and its affiliates totaling approximately $392.0 million, $236.0 million, $142.4 million and $90.3 million, respectively. Our sales to MiTAC International and its affiliates during fiscal 2000, 2001, 2002 and the nine months ended August 31, 2003, totaled approximately $8.6 million, $4.7 million, $2.4 million and $2.3 million, respectively. The payment terms relating to the purchase and sale of product to MiTAC International are similar to the terms that we have with non-affiliated customers and vendors.

Our business relationship to date 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. Accordingly, we negotiate manufacturing and pricing terms, including allocating customer revenue, on a case-by-case basis with MiTAC International. Our business relationship with MiTAC International has been and will continue to be negotiated as related parties and therefore may not be the result of arms’-length negotiations between independent parties. Our relationship, including pricing and other material terms with our shared customers or with MiTAC International, may or may not be as advantageous to us as the terms we could have negotiated with unaffiliated third parties. We have a joint sales and marketing agreement with MiTAC International, pursuant to which both parties agree to use their commercially reasonable efforts to promote the other party’s service offerings to their respective customers who are interested in such product offerings. There are no sales attributable to the joint marketing agreement. This agreement does not provide for the terms upon which we negotiate manufacturing and pricing terms. To date, these negotiations have been on a case-by-case basis. The agreement had an initial term of one year and will automatically renew for subsequent one year terms unless either party provides written notice of non-renewal within 90 days of the end of any renewal term. The agreement may also be terminated without cause either by the mutual written agreement of both parties or by either party without cause upon 90 days prior written notice of termination to the other party. Either party may immediately terminate the agreement by providing written notice of (a) the other party’s material breach of any provision of the agreement and failure to cure within 30 days, or (b) if the other party becomes bankrupt or insolvent. In addition, we are party to a general agreement with MiTAC International and Sun Microsystems under which we work with MiTAC International to provide contract assembly services to Sun Microsystems. We do not currently anticipate entering into any long-term commitments or arrangements with MiTAC International. We have adopted a policy requiring material transactions in which any of our directors has a potential conflict of interest to be approved by our Audit Committee, which is composed of disinterested members of the board. Fred Breidenbach, David Rynne and Dwight Steffensen are the current members of our Audit Committee.

Some of our customer relationships evolved from relationships between such customers and MiTAC International and the loss of such relationships could harm our business and operating results.

Our relationship with Sun Microsystems and some of our other customers evolved from customer relationships that were initiated by MiTAC International. Our relationship with Sun Microsystems is a joint relationship with MiTAC International and us, and the future success of our relationship with Sun Microsystems depends on MiTAC International continuing to work with us to service Sun Microsystems’ requirements. The original agreement between Sun Microsystems and MiTAC International was signed on August 28, 1999 and we became a party to the agreement on February 12, 2002. All of our contract assembly services to Sun Microsystems are covered by the general agreement. The agreement continues indefinitely until terminated in accordance with its terms. Sun Microsystems may terminate this agreement for any reason on 60 days written notice. Any party may terminate the agreement with written notice if one of the other parties materially breaches any provision of the agreement and the breach is incapable of being cured or is not cured within 30 days. The agreement may also be terminated on written notice if one of the other parties becomes bankrupt or insolvent. If we are unable to maintain our relationship with MiTAC International, our relationship with Sun Microsystems could suffer and we could lose other customer relationships or referrals, which in turn could harm our business, financial position and operating results.

There could be potential conflicts of interest between us and affiliates of MiTAC International, which could impact our business and operating results.

MiTAC International’s and its affiliates’ continuing beneficial ownership of our common stock could create conflicts of interest with respect to a variety of matters, such as potential acquisitions, competition, issuance or disposition of securities, election of directors, payment of dividends and other business matters. Similar risks could exist as a result of Matthew Miau’s positions as our Chairman, the Chairman of MiTAC International and as a director or officer of MiTAC International’s affiliated companies. In fiscal 2002, Mr. Miau received a discretionary bonus of $550,000 for his performance of Chairman and it is expected that Mr. Miau will receive a similar discretionary bonus in fiscal 2003. We have adopted a policy requiring material transactions in which any of our directors has a potential conflict of interest to be approved by our Audit Committee, which is composed of disinterested members of the board. Fred Breidenbach, David Rynne and Dwight Steffensen are the current members of our Audit Committee.

Synnex Technology International Corp., or Synnex Technology International, a publicly traded company based in Taiwan and affiliated with MiTAC International, currently provides distribution and fulfillment services to various markets in Asia and Australia, and is also a potential competitor of ours. Mitac Incorporated, a privately held company based in Taiwan and a separate entity from MiTAC International, owns approximately 16.0% of Synnex Technology International and approximately 9.6% of MiTAC International. MiTAC International indirectly owns 0.41% of Synnex Technology International and Synnex Technology International owns approximately 1.3% of MiTAC International. In addition, MiTAC International indirectly owns approximately 9.0% of Mitac Incorporated and Synnex Technology International owns approximately 14.4% of Mitac Incorporated. Prior to this offering, Synnex Technology International indirectly through its ownership of Peer Developments Limited owns approximately 24% of our outstanding common stock. In addition, each of MiTAC International and Synnex Technology International indirectly owns 50% of Abundant Investment Group Limited, a selling stockholder. Neither MiTAC International nor Synnex Technology International is restricted from competing with us. In the future, we may increasingly compete with Synnex Technology International, particularly if our business in Asia expands or Synnex Technology International expands its business into geographies or customers we serve. Although Synnex Technology International is a separate entity from us, it is possible that there will be confusion as a result of the similarity of our names. Moreover, we cannot limit or control the use of the Synnex name by Synnex Technology International or MiTAC International, and our use of the Synnex name may be restricted as a result of registration of the name by Synnex Technology International or their prior use in jurisdictions where they currently operate.

After completion of this offering, our executive officers, directors and principal stockholders will own approximately 77.9% of our common stock and this concentration of ownership will allow them to control all matters requiring stockholder approval and could delay or prevent a change in control of SYNNEX.

Upon completion of this offering, our executive officers, directors and principal stockholders will beneficially own approximately 77.9% of our outstanding common stock. In particular, upon completion of this offering, MiTAC International, through its affiliates, will beneficially own approximately 77.3% of our outstanding common stock, assuming the underwriters do not exercise their over-allotment option, and approximately 74.6% if the underwriters exercise their over-allotment option in full. All selling stockholders in this offering are affiliates of MiTAC International. The beneficial ownership of MiTAC International and its affiliates will decrease as a result of this offering and it will decrease further if MiTAC International or any of its affiliates elects to sell additional shares of our common stock or we issue additional shares for capital purposes, strategic acquisitions or otherwise.

Despite the decrease in their ownership percentage as a result of the offering, MiTAC International and its affiliates will continue to own a controlling interest in us upon completion of the offering. As a result, MiTAC International’s interests and ours may increasingly conflict. For example, we rely on MiTAC International for certain manufacturing and supply services and for relationships with certain key customers. As a result of the decrease in their ownership in us, we may lose these services and relationships which may lead to increased costs to replace the lost services and the loss of certain key customers. We cannot predict the likelihood that we may incur increased costs or lose customers if MiTAC International’s ownership percentage of us decreases in the future.

Risks Related to Our Industry

The recent economic downturn in the IT industry could continue to have a material adverse effect on our business and operating results.

The IT industry in which we operate has experienced a decrease in demand. Softening demand for our products and services caused by the ongoing economic downturn and over-capacity was responsible in part for a decline in our revenue in fiscal 2001, as well as problems with the saleability of inventory and collection of reseller customer receivables.

The global economy may remain weak and market conditions continue to be challenging in the IT industry. As a result, individuals and companies may continue delaying or reducing expenditures, including those for IT products. While in the past we may have benefited from the consolidation in our industry resulting from the slowdown, further delays or reductions in IT spending in particular, and economic weakness generally, could have an adverse effect on our business and operating results.

Our distribution business may be adversely affected by OEM suppliers increasing their commitment to direct sales, which in turn could cause our business and operating results to suffer.

Consolidation of OEM suppliers has resulted in fewer sources for some of the products that we distribute. This consolidation has also resulted in larger OEM suppliers that have significant operating and financial resources. OEM suppliers, including the leading OEM suppliers that we service, have been selling a greater volume of products directly to end-users, thereby limiting our business opportunity. If large OEM suppliers continue the trend to sell directly to our resellers, rather than use us as the distributor of their products, our business and operating results will suffer.

OEMs are limiting the number of supply chain service providers with which they do business, which in turn would negatively impact our business and operating results.

Currently, there is a trend towards reducing the number of authorized distributors used by the OEM suppliers. As a smaller market participant in the IT product distribution and contract assembly industries, than

some of our competitors, we may be more susceptible to loss of business from further reductions of authorized distributors or contract assemblers by IT product OEMs. For example, the termination of Compaq’s contract assembly business with us in fiscal 2001 had a significant negative effect on our revenue and operating results. A determination by any of our primary OEMs to consolidate their business with other distributors or contract assemblers would negatively affect our business and operating results.

The IT industry is subject to rapidly changing technologies and process developments, and we may not be able to adequately adjust our business to these changes, which in turn would harm our business and operating results.

Dynamic changes in the IT industry, including the consolidation of OEM suppliers, reductions in the number of authorized distributors used by OEM suppliers and the general slowdown of the economy, have resulted in new and increased responsibilities for management personnel and have placed, and continue to place, a significant strain upon our management, operating and financial systems and other resources. We may be unable to successfully respond to and manage our business in light of industry developments and trends. Also crucial to our success in managing our operations will be our ability to achieve additional economies of scale. Our failure to achieve these additional economies of scale or to respond to changes in the IT industry could adversely affect our business and operating results.

We are subject to intense competition in the IT industry, both in the United States and internationally, and if we fail to compete successfully, we will be unable to gain or retain market share.

We operate in a highly competitive environment, both in the United States and internationally. The IT product distribution and contract assembly industries are characterized by intense competition, based primarily on product availability, credit availability, price, speed of delivery, ability to tailor specific solutions to customer needs, quality and depth of product lines, pre-sale and post-sale technical support, flexibility and timely response to design changes, technological capabilities, product quality, service and support. We compete with a variety of regional, national and international IT product distributors and contract manufacturers and assemblers. In some instances, we also compete with our own customers, our own OEM suppliers and MiTAC International.

Many of our competitors are substantially larger and have greater financial, operating, manufacturing and marketing resources than us. Some of our competitors may have broader geographic breadth and range of services than us and may have more developed relationships with their existing customers. We may lose market share in the United States or in international markets, or may be forced in the future to reduce our prices in response to the actions of our competitors and thereby experience a reduction in our gross margins.

We may initiate other business activities, including the broadening of our supply chain capabilities, and may face competition from companies with more experience in those new areas. In addition, as we enter new areas of business, we may also encounter increased competition from current competitors and/or from new competitors, including some who may once have been our OEM suppliers or reseller customers. Increased competition and negative reaction from our OEM suppliers or reseller customers resulting from our expansion into new business areas may harm our business and operating results.

Risks Related to Our Offering

There may not be an active market for our common stock, making it difficult for you to sell your shares.

This is our initial public offering, which means that there is no current market for our common stock. The initial public offering price will be determined by negotiations between us and the representatives of the underwriters and may bear no relationship to the price at which shares of our common stock will trade upon completion of this offering. Our common stock may not be traded actively after this offering. An illiquid market for shares of our common stock may result in lower trading prices and increased volatility, which could negatively affect the value of your investment.

Our common stock will likely be subject to substantial price and volume fluctuations due to a number of factors, some of which are beyond our control.

Share prices and trading volumes for many distribution and contract assembly service related companies fluctuate widely for a number of reasons, including some reasons which may be unrelated to their businesses or results of operations. This market volatility, as well as general domestic or international economic, market and political conditions, could materially adversely affect the price of our common stock without regard to our operating performance. In addition, our operating results may be below the expectations of public market analysts and investors. If this were to occur, the market price of our common stock would likely decrease.

Significant fluctuations in the market price of our common stock could result in securities class action claims against us, which could seriously harm our business.

Securities class action claims have been brought against companies in the past where volatility in the market price of that company’s securities has taken place. This kind of litigation could be very costly and divert our management’s attention and resources, and any adverse determination in this litigation could also subject us to significant liabilities, any or all of which could adversely affect our business and operating results.

Anti-takeover provisions in our certificate of incorporation may make it more difficult for someone to acquire us in a hostile takeover.

Upon completion of this offering, our board of directors will have the authority to issue up to 5,000,000 shares of preferred stock and to determine the price, rights, preferences, privileges and restrictions, including voting rights, of those shares without any further vote or action by our stockholders. The rights of the holders of our common stock will be subject to, and may be adversely affected by, the rights of the holders of any preferred stock that we may issue in the future. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could have the effect of making it more difficult for a third party to acquire a majority of our outstanding voting shares. We have no current plans to issue any shares of the preferred stock.

In addition, our certificate of incorporation contains certain provisions that, together with the ownership position of our officers, directors and their affiliates, could discourage potential takeover attempts and make attempts by stockholders to change management more difficult, which could adversely affect the market price of our common stock.

The sale of shares eligible for future sale in the open market could depress our share price.

Sales of substantial amounts of common stock (including shares issued upon the exercise of outstanding options) in the public market after this offering could cause the market price of our common stock to decline. Those sales also might make it more difficult for us to sell equity-related securities in the future or reduce the price at which we could sell any such equity-related securities.

All of the shares sold in this offering will be freely tradable without restriction under the Securities Act unless those shares are held by “affiliates,” as that term is defined in Rule 144 under the Securities Act. Of the outstanding shares not sold in this offering and assuming no exercise by the underwriters of their option to purchase additional shares of common stock from the selling stockholders, 105,994 shares will be immediately eligible for sale as of the date of this prospectus, 38,862 shares will become eligible for sale between the date of this prospectus and 180 days after the date of this prospectus, and 20,122,935 shares will be eligible for sale in the public markets 180 days after the date of this prospectus pursuant to Rules 701 or 144 upon expiration of the lock-up agreement with our underwriters, a portion of which will be subject to Rule 144 volume limitations. Bear, Stearns & Co. Inc. may, in its sole discretion at any time without public notice, release all or any portion of the shares subject to lockup agreements.

Of the 20,122,935 shares eligible for sale upon expiration of the underwriters’ lock-up and assuming no exercise by the underwriters of their option to purchase additional shares of common stock from the selling stockholders, 19,838,550 shares are held by MiTAC International and its affiliates. MiTAC International and its affiliates have advised us that they presently do not intend to distribute or dispose of their shares of our common stock held upon completion of this offering. However, following the lock-up period with the underwriters, and prior thereto with the consent of the Bear, Stearns & Co. Inc., MiTAC International and its affiliates may elect to distribute or sell some or all of their shares. In this regard, MiTAC International and its affiliates could effect a pro rata distribution of its shares to their public and private shareholders without compliance with Rule 144 or further registration under the Securities Act. These shares also may be resold in the public market pursuant to the volume, reporting and other requirements of Rule 144 or by registration. We have entered into a registration rights agreement with MiTAC International and its affiliates requiring us to register these shares for resale to the public.

As of August 31, 2003, options to purchase a total of 8,502,497 shares of our common stock were outstanding, of which 6,003,836 are currently exercisable. We intend to file a Form S-8 registration statement under the Securities Act to register all of the shares issuable under our 2003 Stock Incentive Plan and our Employee Stock Purchase Plan. Accordingly, the shares underlying these options will be eligible for sale in the public markets, subject to vesting restrictions or the lock-up agreements described above.

If securities or industry analysts do not publish research or reports about our business, our stock price and trading volume could decline.

The trading market for our common stock will depend on the research and reports that industry or securities analysts publish about us or our business. We do not have any control over these analysts. If one or more of the analysts who cover us downgrade our stock, our stock price would likely decline. If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.

We will be subject to additional rules and regulations as a public company, which will increase our administration costs which in turn could harm our operating results.

As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley Act of 2002, as well as new rules subsequently implemented by the Securities and Exchange Commission, have required changes in corporate governance practices of public companies. In addition to final rules and rule proposals already made by the Securities and Exchange Commission, the New York Stock Exchange has proposed revisions to its requirements for companies that are NYSE-listed. We expect these new rules and regulations to increase our legal and financial compliance costs, and to make some activities more time consuming and/or costly. We also expect these new rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These new rules and regulations could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee, and qualified executive officers.

CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS

We have made forward-looking statements in this prospectus, including in the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Business” and elsewhere in this prospectus that are based on our management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements include, but are not limited to, statements regarding:

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our possible or assumed future results of operations, business strategies, financing plans, competitive position and industry environment;

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the anticipated impact on our business and financial results of recent and future acquisitions;

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potential growth opportunities; and

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the effects of competition.

Forward-looking statements include all statements that are not historical facts and generally can be identified by the use of terminology such as the words “may,” “will,” “should,” “potential,” “continue,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates” or similar expressions.

Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed in the forward-looking statements for a number of reasons, including those appearing elsewhere in this prospectus under the caption “Risk Factors.” Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements after the date of this prospectus.

The SYNNEX name and logo are trademarks, registered trademarks, service marks or registered service marks of SYNNEX in the United States. All other trademarks, service marks and trade names referred to in this prospectus are the property of their respective owners.

USE OF PROCEEDS

The net proceeds to us from this offering, at an assumed initial public offering price of $15.00 per share, are estimated to be approximately $48.2 million ($55.3 million if the underwriters’ over-allotment option is exercised in full), after deducting estimated underwriting discounts and commissions and expenses payable by us. We will not receive any of the proceeds from the sale of shares offered by the selling stockholders. We intend to use all of the net proceeds received by us from this offering first to repay outstanding borrowings under our U.S. credit facility when this offering is completed, if any, and then to reduce the use of our accounts receivable securitization program. From time to time thereafter, we may increase the amounts outstanding under our term loans and lines of credit and accounts receivable securitization program and use the proceeds therefrom for working capital and other general corporate purposes, including:

•

to finance our growth;

•

for capital expenditures made in the ordinary course of business; and

•

for acquisitions of businesses and assets that complement and expand our supply chain service capabilities.

At August 31, 2003, we had no outstanding borrowings under our U.S. revolving credit facility, which expires in 2008. Our effective borrowing cost under this facility at August 31, 2003 was 3.10% per annum.

At August 31, 2003, the amount of our accounts receivable sold to and held by General Electric Capital Corporation under our revolving accounts receivable securitization program, which expires in 2008, was $196.5 million. Our effective borrowing cost under the program at August 31, 2003 was 1.95% per annum. A description of our accounts receivable securitization program is contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

DIVIDEND POLICY

We have not declared or paid any cash dividends since our inception. We currently intend to retain future earnings, if any, for use in our operations and the expansion of our business. If we elect to pay cash dividends in the future, payment will depend on our financial condition, results of operations and capital requirements, as well as other factors deemed relevant by our board of directors. In addition, our credit facilities place restrictions on our ability to pay dividends.

CAPITALIZATION

The following table sets forth, as of August 31, 2003, our capitalization:

•

on an actual basis; and

•

on an as adjusted basis to give effect to the sale of 3,577,500 shares of common stock offered by us in this offering at an assumed initial public offering price of $15.00 per share, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us, and the application of the estimated net proceeds from this offering to reduce the amounts outstanding under our U.S. credit facility, if any, and to reduce the use of our accounts receivable securitization program.

This information should be read together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the consolidated financial statements and the notes related thereto and pro forma financial information appearing elsewhere in this prospectus.

	August 31, 2003
	Actual			As Adjusted
	(in thousands, except share and per share data)
Cash and cash equivalents	$	23,174		$	23,174


Borrowings under term loans and lines of credit	$	51,447		$	51,447
Long-term borrowings		7,852			7,852

Minority interest in subsidiaries		2,733			2,733

Stockholders’ equity:
Preferred stock, $0.001 par value, 5,000,000 shares authorized, no shares issued and outstanding, actual or as adjusted		—			—
Common stock, $0.001 par value, 100,000,000 shares authorized, 22,090,291 shares issued and outstanding, actual; and 25,667,791 shares issued and outstanding, as adjusted		22			26
Additional paid-in capital		79,282			127,484
Unearned stock-based compensation		(340	)		(340	)
Accumulated other comprehensive income		3,645			3,645
Retained earnings		156,929			156,929

Total stockholders’ equity		239,538			287,744

Total capitalization	$	301,570		$	349,776

In addition to the repayment of any outstanding borrowings under our U.S. credit facility we intend to use the remaining portion of the net proceeds received by us from this offering to reduce the use of our accounts receivable securitization program. At August 31, 2003, the amount of our accounts receivable sold to and held by General Electric Capital Corporation under our accounts receivable securitization program was $196.5 million. The impact to our financial statements of this reduction will be to increase our accounts receivable by approximately $48.2 million.

The number of shares of our common stock outstanding excludes the following:

•

8,502,497 shares issuable upon exercise of options outstanding at August 31, 2003 under our stock option plans, with a weighted average exercise price of $7.37 per share;

•

5,422,144 shares reserved for future grant under our stock option plans at August 31, 2003; and

•

500,000 shares reserved for issuance under our employee stock purchase plan.

DILUTION

Our net tangible book value as of August 31, 2003 was approximately $219.7 million, or $9.95 per share. Net tangible book value per share is calculated by subtracting our total liabilities, including minority interest, from our total tangible assets, which equals total assets less intangible assets, and dividing this amount by the number of shares of common stock outstanding at August 31, 2003.

Dilution in net tangible book value per share represents the difference between the amount per share paid by purchasers of shares of our common stock in this offering and the as adjusted net tangible book value per share of our common stock immediately after completion of this offering. Assuming the sale by us of 3,577,500 shares of common stock offered in this offering at an assumed initial public offering price of $15.00 per share and after deducting underwriting discounts and commissions and estimated offering expenses and taking into account our intended application of the estimated net proceeds from the offering, our as adjusted net tangible book value at August 31, 2003 would have been $267.9 million, or $10.44 per share. Assuming completion of this offering, there will be an immediate increase in the net tangible book value of $0.49 per share to our existing stockholders and an immediate dilution in the net tangible book value of $4.56 per share to new investors. The following table illustrates this per share dilution:

Assumed initial public offering price per share			$	15.00
Net tangible book value per share as of August 31, 2003	$	9.95
Increase per share attributable to new investors		0.49

As adjusted net tangible book value per share after the offering				10.44

Dilution per share to new investors			$	4.56

The following table summarizes the total number of shares of common stock purchased from us, the total consideration paid to us and the average price per share paid by existing stockholders and by new investors, in each case based upon the number of shares of common stock outstanding at August 31, 2003.

	Shares Purchased			Total Consideration				Average Price Per Share
	Number	Percent		Amount		Percent		Average Price Per Share
Existing stockholders	22,090,291	86.1	%	$	61,664,000	53.5	%	$	2.79
New investors	3,577,500	13.9	%	$	53,662,500	46.5	%	$	15.00

Total	25,667,791	100.0	%	$	115,326,500	100.0	%

Sales by the selling stockholders in this offering will cause the number of shares held by existing stockholders to be reduced to 20,267,791, or 79.0% of the total number of shares of our common stock outstanding after this offering, and will increase the number of shares held by new investors to 5,400,000, or 21.0% of the total number of shares of our common stock outstanding after this offering. If the underwriters’ over-allotment option is exercised in full, the number of shares held by existing stockholders after this offering would be reduced to 19,967,791, or 76.3% and the number of shares held by new investors would increase to 6,210,000, or 23.7% of the total number of shares of our common stock outstanding after this offering.

The tables and calculations above assume no exercise of outstanding options. At August 31, 2003, there were 8,502,497 shares of our common stock issuable upon exercise of options outstanding with a weighted average exercise price of $7.37 per share and 5,422,144 shares reserved for future issuance under our stock option plans. To the extent that these options are exercised, there will be further dilution to new investors. In addition, 500,000 shares are reserved for issuance under our employee stock purchase plan.

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data should be read together with our consolidated financial statements and related notes to those statements, pro forma financial information and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus. The consolidated statement of operations and cash flow data presented below for the fiscal years ended November 30, 2000, 2001 and 2002 and the nine months ended August 31, 2003 and the consolidated balance sheet data as of November 30, 2001 and 2002 and August 31, 2003 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The consolidated statements of operations and other data for the fiscal years ended November 30, 1998 and 1999 and the consolidated balance sheet data as of November 30, 1998, 1999 and 2000 have been derived from our audited consolidated financial statements that are not included in this prospectus. The consolidated financial statements of operations and other data for the nine months ended August 31, 2002 have been derived from our unaudited consolidated financial statements that appear elsewhere in this prospectus. These unaudited consolidated financial statements include all adjustments that we consider necessary for a fair presentation of that information. These adjustments are only of a normal and recurring nature. The consolidated statement of operations data generally include the operating results from our acquisitions from the closing date of each acquisition. Historical operating results are not necessarily indicative of the results that may be expected for any future period. Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and note 2 and note 4 to our consolidated financial statements included elsewhere in this prospectus for a discussion of factors such as business combinations that affect the comparability of the following selected consolidated financial data.

	Years Ended November 30,															Nine Months Ended August 31,
	1998			1999			2000			2001			2002			2002			2003
	(in thousands, except per share data)
Statement of Operations Data:
Revenue	$	2,422,832		$	3,173,602		$	3,802,629		$	3,224,390		$	3,767,882		$	2,694,376		$	2,873,293
Cost of revenue		2,313,019			3,039,923			3,626,317			3,060,304			3,593,982			2,568,419			2,741,446

Gross profit		109,813			133,679			176,312			164,086			173,900			125,957			131,847
Selling, general and administrative expenses		79,839			90,016			106,489			106,197			123,418			88,638			91,968

Income from operations		29,974			43,663			69,823			57,889			50,482			37,319			39,879
Interest expense, net		(1,559	)		(1,111	)		(452	)		(1,397	)		(1,422	)		(1,069	)		(1,437	)
Other income (expense), net		(7,371	)		(3,946	)		6,845			(12,813	)		(4,207	)		(3,347	)		(4,901	)

Income from continuing operations before income taxes and minority interest		21,044			38,606			76,216			43,679			44,853			32,903			33,541
Provision for income taxes		9,006			15,680			33,373			17,608			16,837			12,735			12,276
Minority interest in subsidiaries		—			329			832			274			(16	)		(176	)		(106	)

Income from continuing operations		12,038			22,597			42,011			25,797			28,032			20,344			21,371
Loss from discontinued operations		—			(921	)		(5,577	)		—			—			—			—

Net income	$	12,038		$	21,676		$	36,434		$	25,797		$	28,032		$	20,344		$	21,371

Net income per common share, basic:
Income from continuing operations	$	0.61		$	1.15		$	1.96		$	1.18		$	1.27		$	0.92		$	0.97
Loss from discontinued operations		—			(0.05	)		(0.26	)		—			—			—			—

Net income per common share, basic	$	0.61		$	1.10		$	1.70		$	1.18		$	1.27		$	0.92		$	0.97

Net income per common share, diluted:
Income from continuing operations	$	0.60		$	1.10		$	1.72		$	1.06		$	1.16		$	0.83		$	0.87
Loss from discontinued operations		—			(0.05	)		(0.23	)		—			—			—			—

Net income per common share, diluted	$	0.60		$	1.05		$	1.49		$	1.06		$	1.16		$	0.83		$	0.87

	November 30,										August 31, 2003
	1998		1999		2000		2001		2002		August 31, 2003
	(in thousands)
Balance Sheet Data:
Cash and cash equivalents	$	14,020	$	33,487	$	20,564	$	15,730	$	15,503	$	23,174
Working capital		53,436		73,164		116,292		187,235		200,021		206,602
Total assets		437,083		505,272		636,434		565,034		629,075		707,553
Current borrowings under term loans and lines of credit		49,382		34,833		32,121		18,104		19,685		51,447
Long-term borrowings		1,631		2,175		2,090		43,036		38,714		7,852
Total stockholders’ equity		89,663		112,718		157,823		183,372		213,218		239,538

	Years Ended November 30,										Nine Months Ended August 31,
	1998		1999		2000		2001		2002		2002		2003
	(in thousands)
Other Data:
Depreciation and Amortization	$	5,656	$	5,460	$	6,753	$	9,350	$	8,337	$	6,008	$	5,685

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of the financial condition and results of operations of SYNNEX should be read together with the consolidated financial statements and the related notes thereto included elsewhere in this prospectus. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including but not limited to, those discussed in “Risk Factors,” “Business” and elsewhere in this prospectus.

Overview

Because we offer distribution, contract assembly and complementary supply chain services, OEM suppliers and resellers can outsource to us multiple areas of their business outside of their core competencies. This model allows us to provide services at several points along the IT product supply chain. We believe that the combination of our broad range of supply chain capabilities, our focus on serving the leading IT OEMs and our efficient operations enables us to realize strong relationships with our OEM suppliers and reseller customers. We are headquartered in Fremont, California and have distribution, sales and assembly facilities in Asia, Europe and North America.

Revenue and Cost of Revenue

We derive our revenue primarily through the distribution of IT systems, peripherals, system components, software and networking equipment, and, to a lesser extent, from contract assembly. We recognize revenue in both our distribution and contract assembly operations as products are shipped, provided that a purchase order exists, the sales price is fixed or determinable, collection of the resulting receivable is reasonably assured, risk of loss and title have transferred and product returns are reasonably estimable. Our distribution sales are made to reseller customers on a purchase order basis and generally relate to a specific order from a reseller’s end-user customer. Our contract assembly sales are generated from specific purchase orders received from our OEM customers for a specified unit quantity. We do not have long-term sales agreements with our reseller or contract assembly customers.

Revenue from our distribution business represented 57.2%, 76.4% and 90.1% of our total revenue in fiscal 2000, 2001 and 2002, respectively, and 95.2% for the nine months ended August 31, 2003. In our distribution business, our primary customers are resellers. None of our reseller customers accounted for more than 10% of our total revenue in fiscal 2000, 2001 or 2002, or for the nine months ended August 31, 2003, and we do not expect any reseller customer to account for more than 10% of our total revenue for the remainder of fiscal 2003. Approximately 23.5%, 30.4% and 35.0% of our total revenue in fiscal 2000, 2001 and 2002, respectively, and 31.5% for the nine months ended August 31, 2003, was derived from the sale of HP products. Most of our remaining revenue is derived from the distribution and assembly of the IT products of a relatively small number of other suppliers.

Approximately 42.8%, 23.6% and 9.9% of our total revenue in fiscal 2000, 2001 and 2002, respectively, and 4.8% of our total revenue for the nine months ended August 31, 2003, was derived from our contract assembly business. We provide contract assembly primarily to IT product OEMs. Our contract assembly revenue is dependent on a small number of customers. Revenue from contract assembly provided to Sun Microsystems accounted for approximately 15.0% and 11.9% of our total revenue in fiscal 2000 and 2001, respectively, and accounted for less than 10% of our total revenue in fiscal 2002 and the nine months ended August 31, 2003. In fiscal 2000 and 2001, revenue from contract assembly provided to Compaq accounted for approximately 22.7% and 5.8% of our total revenue, respectively, and we derived no revenue from contract assembly to Compaq in fiscal 2002. Compaq notified us in November 2000 that it would no longer utilize our contract assembly operations and subsequently our contract assembly revenue has been materially adversely affected.

The market for IT products is generally characterized by declining unit prices and short product life cycles. Our distribution business is also highly competitive on the basis of price. We set our sales price based on the market supply and demand characteristics for each particular product or bundle of products we distribute. From time to time, we also participate in the incentive and rebate programs of our OEM suppliers. These programs are important determinants of the final sales price we charge to our reseller customers. To mitigate the risk of declining prices and obsolescence of our distribution inventory, our OEM suppliers generally offer us limited price protection and return rights for products that are marked down or discontinued by them. We carefully manage our inventory to maximize the benefit to us of these supplier provided protections.

A significant portion of our cost of distribution revenue is the purchase price we pay our OEM suppliers for the products we sell, net of any rebates and purchase discounts received from our OEM suppliers. Cost of distribution revenue also consists of provisions for inventory losses and write-downs, and freight expenses associated with the receipt in and shipment out of our inventory. Our contract assembly cost of revenue consists primarily of cost of materials, labor and overhead.

Margins

The IT product distribution and contract assembly industries in which we operate are characterized by low gross profit as a percentage of revenue, or gross margin, and low income from operations as a percentage of revenue, or operating margin. Our gross margin has fluctuated between 4.2% and 5.1% annually over the past five years due to the mix of products, customers, seasonality and the general economic environment. Increased competition arising from industry consolidation and low demand for IT products may hinder our ability to maintain or improve our gross margin. Generally, when our revenue becomes more concentrated on limited products or customers, our gross margin tends to decrease due to increased pricing pressure from OEM suppliers or reseller customers. Our operating margin has also fluctuated between 1.2% and 1.8% annually over the past five years, based primarily on our ability to achieve economies of scale, the management of our operating expenses, the relative mix of our distribution and contract assembly revenue and the timing of our acquisitions and investments.

Recent Acquisitions

We seek to augment our organic growth with strategic acquisitions of businesses and assets that complement and expand our supply chain service capabilities. Our historical acquisitions have brought us new reseller customers and OEM suppliers, extended the geographic reach of our operations, particularly in international markets, and expanded the services we provide to our OEM suppliers and customers. All of our acquisitions were accounted for using the purchase method of accounting and are included within our consolidated financial statements from the closing date of the acquisition, except for our acquisition of Mitac Europe Ltd. The acquisition of Mitac Europe Ltd. was accounted for as a transfer of assets under common control and is included within our consolidated financial statements for all periods presented.

Gates/Arrow Distributing. On May 31, 2002, we acquired substantially all of the net working capital assets, approximately $44.5 million, of Gates/Arrow Distributing, a business unit of Arrow Electronics, Inc., for

approximately $44.5 million. Gates/Arrow was a full-line IT product distributor serving value-added resellers across North America and was located in Greenville, South Carolina. The Gates/Arrow acquisition further expanded our distribution market share in North America, increased the number of OEM software publishers we distribute for and also increased the number of value-added enterprise level resellers we serve. Our balance sheet as of May 31, 2002 gives effect to the acquisition of Gates/Arrow. Because of the timing of the acquisition, our operating results through May 31, 2002 were not affected.

License Online, Inc. On May 10, 2002, we acquired the assets of License Online, Inc., a provider of Web-based software licensing technology to IT consultants focused on small- to medium-sized businesses, for approximately $3.3 million in cash. We acquired License Online to broaden our software offerings in our distribution business and to extend our service offerings to our reseller customers.

Merisel Canada Inc. On July 28, 2001, we acquired Merisel Canada Inc., an indirect subsidiary of Merisel, Inc., which now operates as SYNNEX Canada, for approximately $19.9 million. We acquired Merisel Canada in order to enter the Canadian IT product distribution market as part of our expansion effort in North America.

Mitac Europe Ltd. On September 15, 2000, we completed the acquisition of Mitac Europe Ltd, which now operates as SYNNEX UK, from Silver Star Developments Ltd., a company controlled by our largest indirect stockholder, MiTAC International, for 1.6 million shares of our common stock. The acquisition was accounted for as a transfer of assets under common control and the net tangible assets acquired were recorded at their historical cost of $7.6 million and the assets and liabilities and financial results of Mitac Europe Ltd are included within the consolidated financial statements for all periods presented. We acquired Mitac Europe Ltd as part of our international expansion effort to enable us to more effectively provide contract assembly to the European market.

MiTAC Industrial Corp. On August 31, 2000, we acquired all of the outstanding shares of MiTAC Industrial Corp. from MIX System Holdings Ltd., an affiliate of MiTAC International, in exchange for 322,500 shares of our common stock. We acquired this company to expand our U.S. systems integration business.

Economic and Industry Trends

The IT products industry has experienced a significant downturn since 2000. Our revenue is highly dependent on the end-market demand for the IT products that we distribute and assemble. This end-market demand is influenced by many factors including the introduction of new IT products and software by OEMs, replacement cycles for existing IT products and overall economic growth and general business activity. Though the economy and information technology sector appear to have stabilized recently, if demand decreases, we may not be able to achieve in fiscal 2003 the revenue levels we experienced in fiscal 2002. This challenging economic environment may also lead to additional consolidation in the IT distribution industry and increased price-based competition.

Investments

In the past we have invested in the following entities in an attempt to expand our offerings and to capitalize on industry trends. We currently do not hold any significant equity investments.

VA Software Corporation, formerly VA Linux. During fiscal 1999, we invested $800,000 in VA Software Corporation, or VA Linux. At the time of our investment, VA Linux had outsourced their systems manufacturing exclusively to us. Subsequent to its initial public offering in December 1999, we sold our investment in VA Linux for a pre-tax gain of approximately $7.6 million.

eManage.com. During fiscal 1999 and 2000, we invested a total of $6.5 million in the equity capital of eManage.com, or eManage. During fiscal 2000, eManage also received equity investments, totaling $5.7 million, from management of eManage, executive officers of SYNNEX, affiliates of SYNNEX and unrelated investors. As a result of our majority ownership of eManage, we consolidated its financial results in our financial statements. eManage was unable to compete profitably in the very difficult web hosting and services marketplace and eventually filed for bankruptcy in November 2000. In addition to a $6.5 million loss on our investment, we incurred a loss of $3.4 million on accounts receivable due from eManage at the time of the bankruptcy filing. As a result of the bankruptcy filing, we treated eManage as a discontinued operation in fiscal 2000. eManage ceased all operations in February 2001.

Converge, Inc. During fiscal 2000, we invested $3.3 million in the equity capital of Converge, Inc., an electronic global trading exchange for electronics components and computer products. Affiliates of SYNNEX invested an additional $3.3 million. Converge, Inc. substantially reduced its operations in September 2001, and as a result we reduced the value of our investment to zero.

Deferred Compensation Plan

We have a deferred compensation plan for a limited number of our directors and employees. We maintain a liability on our balance sheet for salary and bonus amounts deferred by participants and we accrue interest expense on unpaid amounts. Interest expense on the deferred amounts is classified in “interest expenses, net” on our consolidated statement of income. The plan allows for the participants to direct investment of deferred amounts in equity securities. These equity investments are classified as trading securities. Generally accepted accounting principles require that gains (losses) on the deferred compensation equity securities be recorded in “other income (expense), net” and that an equal amount be charged (or credited if losses) to “selling, general and administrative expenses” relating to compensation amounts which are payable to the plan participants. In fiscal 2002 and the nine months ended August 31, 2003, our deferred compensation expense was a credit of $528,000 and $204,000, respectively. In fiscal 2000 and 2001, our deferred compensation expense was $5.2 million and $68,000, respectively.

Unearned Stock-Based Compensation

In fiscal 2000 and 2002, in connection with the granting of employee stock options that had exercise prices determined to be below fair market value on the date of grant, we have recorded unearned stock-based compensation. Unearned stock-based compensation represents the difference between the fair market value of our common stock for financial reporting purposes on the date of grant and the exercise price of these options. Unearned stock-based compensation is included as a reduction of stockholders’ equity and is amortized over the vesting period of the applicable options, generally five years, using the straight-line method. Our stock-based compensation expense relates to stock options granted to individuals and is reflected in cost of revenue and selling, general and administrative expenses. At August 31, 2003, we had unamortized stock-based compensation of $340,000. This amount will be fully amortized by the end of fiscal 2004.

Seasonality

Our operating results are affected by the seasonality of the IT products industry. We have historically experienced higher sales in our fourth fiscal quarter due to patterns in the capital budgeting and purchasing cycles of our customers and end-users. These patterns may not be repeated in subsequent periods.

Insurance Coverage

Although from time to time we have experienced incidents of theft at various facilities, we have recently experienced theft as a result of break-ins at three of our warehouses in which approximately $391,000 and $9.0 million of inventory was stolen in the quarters ended February 28, 2002 and May 31, 2003 respectively; for a

total of $9.4 million. Based on our investigation, discussions with local law enforcement and meetings with federal authorities, we believe the thefts at our warehouses, which occurred between February and May 2003, were part of an organized crime effort that targeted a number of technology equipment warehouses throughout the United States. As a result of the loss, we reduced our inventory value by $9.4 million, expensed the deductible of $75,000 and recorded the net amount as a receivable from our insurance company, included within “other current assets” on our balance sheet. Based on the notification we have received from our insurance broker, we believe that collection of the receivable from the insurance company is assured. These types of incidents may make it more difficult or expensive for us to obtain theft coverage in the future. There is no assurance that future incidents of theft will not re-occur.

Critical Accounting Policies and Estimates

The discussions and analyses of our consolidated financial condition and results of operations are based on our consolidated financial statements, which have been prepared in conformity with generally accepted accounting principles in the United States. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of any contingent assets and liabilities at the financial statement date, and reported amounts of revenue and expenses during the reporting period. On an ongoing basis, we review and evaluate our estimates and assumptions, including those that relate to accounts receivable, vendor programs, inventories, intangible assets and other long-lived assets, income taxes, and contingencies and litigation. Our estimates are based on our historical experience and a variety of other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making our judgment about the carrying values of assets and liabilities that are not readily available from other sources. Actual results could differ from these estimates under different assumptions or conditions.

We believe the following critical accounting policies are affected by our judgment, estimates and/or assumptions used in the preparation of our consolidated financial statements.

Accounts Receivable. We provide allowances for doubtful accounts on our accounts receivable for estimated losses resulting from the inability of our customers to make required payments. If the financial condition of our customers were to deteriorate, which may result in the impairment of their ability to make payments, additional allowances may be required. In estimating our allowance, we take into consideration the overall quality and aging of our receivable portfolio, our continuing credit evaluation of our customers’ financial conditions and collateral requirements from our customers in certain circumstances.

OEM Supplier Programs. We receive funds from OEM suppliers for inventory price protection, product rebates, marketing and infrastructure reimbursement, and promotion programs. Inventory price protection and product rebates are recorded as a reduction of cost of revenue. Marketing, infrastructure and promotion programs are recorded, net of direct costs, in selling, general and administrative expense. Any excess funds associated with these programs are recorded in cost of sales. All funds received from suppliers are deferred until the related inventory is sold. We accrue rebates based on the terms of the program and sales of qualifying products. Some of these programs may extend over one or more quarterly reporting periods. Amounts received or receivable from OEM suppliers that are not yet earned are deferred in the consolidated balance sheet. Actual rebates may vary based on volume or other sales achievement levels, which could result in an increase or reduction in the estimated amounts previously accrued. In addition, if market conditions were to deteriorate due to an economic downturn, OEM suppliers may change the terms of some or all of these programs or cease them altogether. Any such change could lower our gross margins on products we sell or revenue earned. We also provide reserves for receivables on OEM supplier programs for estimated losses resulting from OEM suppliers’ inability to pay, or rejections of such claims by OEM suppliers.

Inventories. Our inventory levels are based on our projections of future demand and market conditions. Any sudden decline in demand and/or rapid product improvements and technological changes can cause us to have excess and/or obsolete inventories. On an ongoing basis, we review for estimated obsolete or unmarketable inventories and write down our inventories to their estimated net realizable value based upon our forecasts of future demand and market conditions. These write downs are reflected in our cost of revenue. If actual market conditions are less favorable than our forecasts, additional inventory reserves may be required. Our estimates are influenced by the following considerations: sudden decline in demand due to economic downturns, rapid product improvements and technological changes, our ability to return to OEM suppliers a certain percentage of our purchases, and protection from loss in value of inventory under our OEM supplier agreements.

Intangible Assets and Other Long-Lived Assets. We assess potential impairment of our intangible assets and other long-lived assets when there is evidence that recent events or changes in circumstances have made recovery of an asset’s carrying value unlikely. If indicators of impairment were present in intangible assets used in operations and future cash flows were not expected to be sufficient to recover the assets’ carrying amount, an impairment loss would be charged to expense in the period identified. The amount of an impairment loss would be recognized as the excess of the asset’s carrying value over its fair value. Factors we consider important, which may cause an impairment include: significant changes in the manner of use of the acquired asset, negative industry or economic trends, and significant underperformance relative to historical or projected operating results.

Income Taxes. As part of the process of preparing our consolidated financial statements, we have to estimate our income taxes in each of the taxing jurisdictions in which we operate. This process involves estimating our actual current tax expense together with assessing any temporary differences resulting from the different treatment of certain items, such as the timing for recognizing revenue and expenses, for tax and accounting purposes. These differences may result in deferred tax assets and liabilities, which are included in our consolidated balance sheet. We are required to assess the likelihood that our deferred tax assets, which include net operating loss carry forwards and temporary differences that are expected to be deductible in future years, will be recoverable from future taxable income or other tax planning strategies. If recovery is not likely, we have to provide a valuation allowance based on our estimates of future taxable income in the various taxing jurisdictions, and the amount of deferred taxes that are ultimately realizable. The provision for current and deferred taxes involves evaluations and judgments of uncertainties in the interpretation of complex tax regulations by various taxing authorities. Actual results could differ from our estimates.

Contingencies and Litigation. There are various claims, lawsuits and pending actions against us incident to our operations. If a loss arising from these actions is probable and can be reasonably estimated, we record the amount of the loss, or the minimum estimated liability when the loss is estimated using a range within which no point is more probable than another. Based on current available information, we believe that the ultimate resolution of these actions will not have a material adverse effect on our financial position or results of operations. As additional information becomes available, we assess any potential liability related to these actions and may need to revise our estimates. Future revisions of our estimates could materially impact the results of our operations, financial position or cash flows.

Results of Operations

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

	Years Ended November 30,						Nine Months Ended August 31,
	2000		2001		2002		2002		2003
Revenue	100.00	%	100.00	%	100.00	%	100.00	%	100.00	%
Cost of revenue	95.36		94.91		95.38		95.33		95.41

Gross margin	4.64		5.09		4.62		4.67		4.59
Selling, general and administrative expenses	2.80		3.29		3.28		3.29		3.20

Income from operations	1.84		1.80		1.34		1.38		1.39
Interest expense, net	(0.00	)	(0.04	)	(0.04	)	(0.04	)	(0.05	)
Other income (expense), net	0.18		(0.40	)	(0.11	)	(0.12	)	(0.17	)

Income from continuing operations before income taxes and minority interest	2.00		1.36		1.19		1.22		1.17
Provision for income taxes	0.88		0.55		0.45		0.47		0.43
Minority interest in subsidiaries	0.02		0.01		0.00		(0.01	)	(0.00	)

Income from continuing operations	1.10		0.80		0.74		0.76		0.74
Loss from discontinued operations	0.14		0.00		0.00		0.00		0.00

Net income	0.96	%	0.80	%	0.74	%	0.76	%	0.74	%

Nine Months Ended August 31, 2003 Compared to Nine Months Ended August 31, 2002

Revenue. Our revenue increased 6.6% to $2.87 billion in the nine months ended August 31, 2003 from $2.69 billion in the nine months ended August 31, 2002. On a segmented basis, our distribution revenue increased 14.8% from $2.38 billion in the nine months ended August 31, 2002 to $2.74 billion in the nine months ended August 31, 2003, and our contract assembly revenue decreased 55.8% to $137.0 million in the nine months ended August 31, 2003 from $310.0 million in the nine months ended August 31, 2002. The increase in distribution revenue was attributable primarily to the acquisition of Gates/Arrow Distributing in May 2002 and market share increases through increased selling efforts, primarily in North America. The increase was also attributable to the commencement of our Mexico distribution operations in April 2002. Our Mexico operations accounted for $70.0 million of the distribution revenue increase in the period ending August 31, 2003 versus the same period in 2002. The increase in distribution revenue was somewhat mitigated by a continued general decline in demand for IT products. The decline in contract assembly revenue was the result of a decline in demand for IT products that we assemble for our primary OEM customer, Sun Microsystems. While we currently expect continued fluctuations in the level of our contract assembly revenue, we do not anticipate significant declines in the foreseeable future.

Gross Margin. Our gross margin has been and will continue to be affected by a variety of factors, including competition, the mix and average selling prices of products we sell and the mix of customers to whom we sell, rebate and discount programs from our suppliers, freight costs and reserves for inventory losses. Gross margins decreased to 4.6% of revenue for the nine months ended August 31, 2003 from 4.7% for the nine months ended August 31, 2002. The decrease in gross margin was a result of the increase in our lower gross margin distribution business and a decrease in our higher gross margin contract assembly business. Distribution gross margin was essentially unchanged for the nine months ended August 31, 2003 as compared with the nine months ended August 31, 2002 as a result of our efforts to maintain our pricing policies in selling our products. We expect that our total gross margins may decrease further in future periods as a result of the relative mix of our distribution and contract assembly revenue as well as due to potential increased competition or softness in the overall economy.

Selling, General and Administrative Expenses. Our selling, general and administrative expenses consist primarily of salaries, commissions, bonuses, and related expenses for personnel engaged in sales, product marketing, distribution and contract assembly operations and administration. Selling, general and administrative expenses also include stock-based compensation expense, deferred compensation expense, temporary personnel

fees, the costs of our facilities, utility expense, professional fees, depreciation expense on our capital equipment and amortization expense on our intangible assets. As a percentage of revenue, selling, general and administrative expenses declined slightly in the nine months ended August 31, 2003 to 3.2% from 3.3% for the nine months ended August 31, 2002. Selling, general and administrative expense increased by $3.3 million or 3.8% to $92.0 million in the nine months ended August 31, 2003 as compared with the nine months ended August 31, 2002. The increase was primarily a result of the April 2002 commencement of our Mexico distribution operations, which accounted for $3.3 million of the selling, general and administrative expense increase, and, a loss on disposition of property and equipment of $933,000. These amounts were partly offset by decrease in selling, general and administrative expenses in geographies outside of North America and Mexico of $1.0 million. Netted against selling, general and administrative expenses are reimbursements from OEM suppliers of $9.9 million for the nine months ended August 31, 2003, compared to $7.1 million for the nine months ended August 31, 2002. The reimbursements relate to marketing, infrastructure and promotion programs such as advertisements in trade publications, direct marketing campaigns through mail and e-mail and product demonstrations at trade shows. We make the arrangements and pay for the advertising, facility fees and other costs of the programs, which feature the OEM suppliers’ products. If our OEM suppliers had not offered reimbursements for these programs, then we might have chosen not to have these programs and incur the related costs.

Income from Operations. Income from operations as a percentage of revenue was unchanged at 1.4% for the nine months ended August 31, 2003 and 2002. On a segmented basis, our distribution operating income as a percentage of distribution revenue was relatively unchanged at 1.4% for the nine months ended August 31, 2003 as compared to 1.3% for the nine months ended August 31, 2002, and our contract assembly operating income as a percentage of contract assembly revenue was 0.9% for the nine months ended August 31, 2003, down from 2.2% for the nine months ended August 31, 2002. The decrease in contract assembly operating margin was primarily due to the decrease in contract assembly revenue, as discussed above.

Interest Expense, net. Amounts recorded in interest expense, net are primarily interest expense paid on our lines of credit, long-term debt and deferred compensation liability offset by income earned on our excess cash investments. Interest expense, net increased to $1.4 million in the nine months ended August 31, 2003 from $1.1 million in the nine months ended August 31, 2002. The increase in interest expense, net was primarily the result of increased borrowing activity in the nine months ended August 31, 2003 versus the nine months ended August 31, 2002 in order to support our increase in revenue and operations.

Other Income (Expense), net. Amounts recorded in other income (expense), net include fees associated with third party accounts receivable flooring arrangements, fees associated with the sale of accounts receivable through our securitization facility, foreign currency transaction gains and losses, investment gains and losses, including those in our deferred compensation plan and other non-operating gains and losses. Other income (expense), net increased by 46.4% to an expense of $4.9 million in the nine months ended August 31, 2003 from an expense of $3.3 million in the nine months ended August 31, 2002. This increase was primarily related to an increase in foreign currency transaction losses from gains of $88,000 for the nine months ended August 31, 2002 to losses of $629,000 for the nine months ended August 31, 2003. The increase was also due to a decrease in miscellaneous gains of $605,000 and an increase in flooring and securitization fees of $374,000.

Provision for Income Taxes. Income taxes consist of our current and deferred tax expense resulting from our income earned in domestic and foreign jurisdictions. Our provision for income taxes decreased 3.6% to $12.3 million in the nine months ended August 31, 2003 from $12.7 million in the nine months ended August 31, 2002. Our effective tax rate was 37.7% for the nine months ended August 31, 2003 as compared with an effective tax rate of 38.5% for the nine months ended August 31, 2002. The decrease in our income tax provision and effective tax rate was primarily a result of the lower effective tax rate of our subsidiaries in Canada and China.

Minority Interest. Minority interest is the portion of earnings from operations from subsidiaries of our company attributable to others. Our subsidiaries in Japan and Mexico have minority stockholders. Minority interest decreased by $70,000 to a benefit of $106,000 in the nine months ended August 31, 2003 as compared to a benefit of $176,000 for the nine months ended August 31, 2002 due to increased profits at our Japan subsidiary.

Fiscal Year Ended November 30, 2002 Compared to Fiscal Year Ended November 30, 2001

Revenue. Our revenue increased 16.9% to $3.77 billion in fiscal 2002 from $3.22 billion in fiscal 2001. On a segmented basis, our distribution revenue increased 37.8% from $2.46 billion in fiscal 2001 to $3.39 billion in fiscal 2002 and our contract assembly revenue decreased 50.9% from $760.0 million in fiscal 2001 to $373.0 million in fiscal 2002. The increase in our distribution revenue was primarily attributable to market share increases through increased selling efforts, including an increase in the size of our sales force and our number of distribution centers, the acquisition of Merisel Canada in July 2001, the acquisition of Gates/Arrow Distributing in May 2002 and the commencement of our Mexico distribution operations in April 2002. The acquisition of Merisel Canada and the commencement of our Mexico distribution operations accounted for $349.4 million and $44.0 million, respectively, of the distribution revenue increase in fiscal 2002 as compared to fiscal 2001. The decline in contract assembly revenue was primarily attributable to the termination of our contract assembly contract with Compaq in 2001 as well as the general decline in demand for technology products that affected our other OEM customers.

Gross Margin. Gross margin decreased to 4.6% of total revenue in fiscal 2002 from 5.1% in fiscal 2001. The decrease in gross margin was primarily due to the increase in our lower gross margin distribution business and a decrease in our higher margin contract assembly business. Distribution gross margin was relatively unchanged in fiscal 2002 versus fiscal 2001 as a result of our efforts to maintain our pricing policies in selling our products. Gross margins in our North American distribution business were slightly higher in fiscal 2002 versus fiscal 2001; however this increase was offset by a decline in gross margins in our Japan distribution business in fiscal 2002 as a result of a change in the mix of products distributed.

Selling, General and Administrative Expenses. Total selling, general and administrative expenses increased by $17.2 million, or 16.2%, to $123.4 million in fiscal 2002 as compared to $106.2 million in fiscal 2001. The increase in selling, general and administrative expense was primarily a result of a full year of expenses, contributing an incremental $11.3 million in expense in fiscal 2002, from our subsidiary in Canada, which was acquired in July 2001, and increased expenses associated with the acquisition of Gates/Arrow Distributing and the commencement of our subsidiary in Mexico, which contributed an increase of $2.5 million in expense in fiscal 2002. Incremental expense associated with our increased revenue contributed to the rise in selling, general and administrative as well. Included in fiscal 2001 selling, general and administrative expense was $2.1 million of accelerated depreciation expense related to the impairment of assembly assets associated with the loss of our Compaq assembly business and $2.8 million in stock-based compensation expense, compared to $495,000 in fiscal 2002. Netted against selling, general and administrative expenses are reimbursements from our OEM suppliers of $9.5 million for fiscal 2002, compared to $6.3 million for fiscal 2001 related to marketing, infrastructure and promotion programs.

Income from Operations. Income from operations as a percentage of revenue decreased to 1.3% in fiscal 2002 from 1.8% in fiscal 2001. The decrease in our income from operations, on a percentage basis, was primarily due to the increase in our lower operating margin distribution business and a decrease in our higher margin contract assembly business. On a segmented basis, our distribution operating income as a percentage of distribution revenue was unchanged at 1.3% in fiscal 2002, and our contract assembly operating income as a percentage of contract assembly revenue decreased to 2.0% in fiscal 2002 from 3.4% in fiscal 2001.

Interest Expense, net. Interest expense, net was relatively unchanged at $1.4 million in fiscal 2002 compared to fiscal 2001. Higher interest expense at our subsidiary in Canada, due to its acquisition in July 2001, was offset by an increase in interest income.

Other Income (Expense), net. Other income (expense), net decreased by $8.6 million to an expense of $4.2 million in fiscal 2002 from an expense of $12.8 million in fiscal 2001. Expense in fiscal 2002 consisted primarily of fees of $4.8 million associated with our accounts receivable flooring arrangements and the sale of accounts receivable through our securitization facility and foreign currency transaction losses of $177,000 offset by other income of $1.0 million. Expense in fiscal 2001 consisted primarily of fees of $5.8 million associated with third party accounts receivable flooring arrangements and the sale of accounts receivable through our securitization facility, foreign currency transaction losses of $3.4 million and the write-off of our investment in Converge in the amount of $3.3 million.

Provision for Income Taxes. Our provision for income taxes decreased 4.4% to $16.8 million in fiscal 2002 from $17.6 million in fiscal 2001. Our effective tax rate was 37.5% in fiscal 2002 compared to 40.3% in fiscal 2001. The decrease in our income tax provision and our effective tax rate was primarily a result of the lower effective tax rate of our subsidiary in Canada.

Minority Interest. Minority interest decreased by $290,000 to a benefit of $16,000 in fiscal 2002 from an expense of $274,000 in fiscal 2001 due to a decrease in the profits of our subsidiary in Japan as a result of continued weak economic conditions in Japan.

Fiscal Year Ended November 30, 2001 Compared to Fiscal Year Ended November 30, 2000

Revenue. Our revenue decreased 15.2% to $3.22 billion in fiscal 2001 from $3.80 billion in fiscal 2000. On a segmented basis our distribution revenue increased 13.3% from $2.17 billion to $2.46 billion and our contract assembly revenue decreased 53.3% from $1.63 billion to $760.0 million. The increase in our distribution revenue was attributable to the acquisition of Merisel Canada in July 2001, which contributed approximately $144.3 million of revenue in fiscal 2001, and market share increases through increased selling efforts, primarily in North America. The increase in distribution revenue was somewhat mitigated by a general decline in demand for IT products. The decline in contract assembly revenue was primarily the result of the decrease in revenue from the termination of our contract assembly agreement with Compaq in 2001 of $675.0 million, as well as the general decline in demand for technology products that affected our other OEM customers.

Gross Margin. Gross margin increased to 5.1% of total revenue in fiscal 2001 from 4.6% in fiscal 2000. The increase in gross margin was primarily due to improved purchasing and management of the product costs associated with our contract assembly business and the loss of the lower margin Compaq contract assembly business. Distribution gross margins declined in fiscal 2001 versus fiscal 2000, due to a decline in the gross margins of our Japan distribution business resulting from a change in the mix of products distributed in Japan and due to pricing pressures in North America.

Selling, General and Administrative Expenses. Total selling, general and administrative expenses decreased by $292,000, or 0.3%, to $106.2 million in fiscal 2001 as compared to $106.5 million in fiscal 2000. Selling, general and administrative expenses associated with acquired subsidiaries were $7.3 million higher in fiscal 2001 than in fiscal 2000 primarily due to the acquisition of Merisel Canada on July 28, 2001. Selling, general and administrative expenses in fiscal 2001 also included $2.1 million for accelerated deprecation of impaired assets associated with the terminated Compaq business. Deferred compensation charges were $7.5 million higher in fiscal 2000 than in fiscal 2001 because of appreciation of investments held on behalf of officers in fiscal 2000. Stock-based compensation charges were $2.9 million higher in fiscal 2000 than in fiscal 2001 primarily due to the issuance of vested options. Netted against selling, general and administrative expenses are reimbursements from our OEM suppliers of $6.3 million for fiscal 2001, compared to $4.3 million for fiscal 2000 related to marketing, infrastructure and promotion programs.

Income from Operations. Income from operations as a percentage of revenue increased to 1.8% in fiscal 2001 from 1.7% in fiscal 2000. The increase in our income from operations, on a percentage basis, was primarily due to the increase in our gross margin in fiscal 2001 as compared to fiscal 2000, partially offset by the increase in our selling, general and administrative expense as a percent of revenue in fiscal 2001 as compared to fiscal 2000, in each case as discussed above. On a segmented basis, our distribution operating income as a percentage of distribution revenue decreased to 1.3% in fiscal 2001 from 1.7% in fiscal 2000, and our contract assembly operating income as a percentage of contract assembly revenue increased to 3.4% in fiscal 2001 from 1.8% in fiscal 2000. The decrease in distribution margin was due to overall lower gross margins and the selling, general and administrative expenses associated with the acquisition of Merisel Canada, as discussed above. The increase in contract assembly margin was primarily due to higher gross margins, as discussed above.

Interest Expense, net. Interest expense, net increased to $1.4 million in fiscal 2001 from $452,000 in fiscal 2000. The increase in interest expense, net was primarily a result of the acquisition of Merisel Canada and the resultant interest expense from its secured credit facility.

Other Income (Expense), net. Other income (expense), net changed by $19.7 million to an expense of $12.8 million in fiscal 2001 from income of $6.8 million in fiscal 2000. Expense in fiscal 2001 consisted primarily of fees of $5.8 million associated with third party accounts receivable flooring arrangements and the sale of accounts receivable through our securitization facility and foreign currency transaction losses of $3.4 million. The income in fiscal 2000 was primarily a result of a gain of approximately $7.6 million from the sale of our investment in VA Linux as well as gains of $5.2 million on equity investments associated with deferred compensation accounts. These amounts were partially offset by fees of $9.6 million in fiscal 2000 associated with our accounts receivable flooring arrangements and the sale of accounts receivable through our securitization facility.

Provision for Income Taxes. Our provision for income taxes decreased 47.3% to $17.6 million in fiscal 2001 from $33.4 million in fiscal 2000 primarily due to the 42.7% decrease in our income before taxes. Our effective tax rate was 40.3% in fiscal 2001 compared to 43.8% in fiscal 2000. The decrease in the fiscal 2001 effective tax rate was primarily a result of a decrease in stock-based compensation expenses, which are not deductible for tax purposes.

Minority Interest. Minority interest decreased by $558,000, to an expense of $274,000 in fiscal 2001 from an expense of $832,000 in fiscal 2000 due to a reduced amount of income generated by our subsidiary in Japan as a result of weak economic conditions in Japan.

Quarterly Financial Data

The following tables set forth certain unaudited statements of operations, balance sheet and other data, in thousands, for the eleven quarters ended August 31, 2003. The unaudited interim consolidated financial statements contained herein have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, that we consider necessary for a fair presentation of such information when read together with the consolidated financial statements and related notes thereto appearing elsewhere in this prospectus. The operating results for any quarter should not be considered indicative of results of any future period.

	Fiscal 2001 Three Months Ended												Fiscal 2002 Three Months Ended												Fiscal 2003 Three Months Ended
	Feb. 28, 2001			May 31, 2001			Aug. 31, 2001			Nov. 30, 2001			Feb. 28, 2002			May 31, 2002			Aug. 31, 2002			Nov. 30, 2002			Feb. 28, 2003			May 31, 2003			Aug. 31, 2003
	(in thousands)
Statement of Operations Data:
Revenue	$	876,697		$	754,052		$	736,901		$	856,740		$	817,756		$	867,475		$	1,009,145		$	1,073,506		$	892,924		$	945,104		$	1,035,265
Cost of revenue		831,466			711,598			698,643			818,597			778,719			825,350			964,350			1,025,563			850,936			902,261			988,249

Gross profit		45,231			42,454			38,258			38,143			39,037			42,125			44,795			47,943			41,988			42,843			47,016
Selling, general and administrative expenses		28,239			25,483			24,885			27,590			26,690			29,690			32,258			34,780			29,894			29,689			32,385

Income from operations		16,992			16,971			13,373			10,553			12,347			12,435			12,537			13,163			12,094			13,154			14,631
Interest expense, net		(61	)		(289	)		(497	)		(550	)		(470	)		(290	)		(309	)		(353	)		(589	)		(496	)		(352	)
Other income (expense), net		(3,821	)		(2,281	)		(2,103	)		(4,608	)		(1,751	)		(785	)		(811	)		(860	)		(1,268	)		(1,703	)		(1,930	)

Income before income taxes and minority interest		13,110			14,401			10,773			5,395			10,126			11,360			11,417			11,950			10,237			10,955			12,349
Provision for income taxes		5,285			5,805			4,342			2,176			3,902			4,431			4,402			4,102			3,493			3,950			4,833
Minority interest in subsidiaries		105			160			74			(65	)		(7	)		22			(191	)		160			43			(15	)		(134	)

Net income	$	7,720		$	8,436		$	6,357		$	3,284		$	6,231		$	6,907		$	7,206		$	7,688		$	6,701		$	7,020		$	7,650


Other Data:
Distribution revenue	$	559,531		$	548,739		$	610,584		$	745,532		$	722,417		$	745,030		$	916,969		$	1,010,311		$	850,440		$	902,472		$	983,381

Contract assembly revenue		317,166			205,313			126,317			111,208			95,339			122,445			92,176			63,195			42,484			42,632			51,884

Depreciation expense		3,257			1,321			1,328			1,269			1,180			1,136			1,298			1,421			1,189			1,118			1,012

Amortization of intangible assets		377			348			401			484			599			631			756			755			762			761			430

	Fiscal 2001												Fiscal 2002												Fiscal 2003
	Feb. 28, 2001			May 31, 2001			Aug. 31, 2001			Nov. 30, 2001			Feb. 28, 2002			May 31, 2002			Aug. 31 2002			Nov. 30, 2002			Feb. 28, 2003			May 31, 2003			Aug. 31, 2003
	(in thousands)
Balance Sheet Data:
Assets
Current assets:
Cash and cash equivalents	$	16,163		$	22,635		$	22,041		$	15,730		$	16,342		$	23,258		$	22,730		$	15,503		$	27,204		$	17,293		$	23,174
Restricted cash		—			—			—			1,002			2,010			2,020			5,531			5,561			6,587			6,603			4,333
Short-term investments		2,314			1,178			1,039			1,499			5,232			5,238			4,205			3,830			4,012			4,236			4,670
Accounts receivable, net		227,728			163,247			230,358			204,624			227,012			203,380			250,452			221,432			235,616			176,482			191,056
Receivable from vendors, net		40,950			37,298			39,534			34,886			33,645			42,292			45,769			35,162			39,117			50,415			52,522
Receivable from affiliates		6,510			6,038			6,400			7,637			7,031			7,906			1,412			2,138			996			804			866
Inventories		235,385			206,707			241,861			236,127			245,838			256,587			277,743			261,498			262,103			280,520			353,229
Deferred income taxes		13,801			13,359			15,026			13,535			13,464			14,536			15,392			13,805			13,049			13,571			14,573
Other current assets		5,781			4,458			9,008			7,366			14,710			11,018			11,242			13,511			21,914			21,330			17,761

Total current assets		548,632			454,920			565,267			522,406			565,284			566,235			634,476			572,440			610,598			571,254			662,184

Long-term investments		208			49			49			49			—			—			—			—			—			—			—
Property and equipment, net		17,652			16,627			16,946			16,616			15,653			19,856			22,630			25,295			24,675			24,392			22,921
Intangible assets		18,810			18,420			21,901			21,321			20,525			25,119			24,500			23,769			23,116			22,327			19,865
Deferred income taxes		475			447			881			874			859			525			532			529			556			593			590
Other assets		6,695			6,211			5,778			3,768			3,366			3,728			5,081			7,042			5,395			5,348			1,993

Total assets	$	592,472		$	496,674		$	610,822		$	565,034		$	605,687		$	615,463		$	687,219		$	629,075		$	664,340		$	623,914		$	707,553


Liabilities and Stockholders’ Equity
Current liabilities:
Borrowings under term loans and lines of credit	$	39,832		$	34,148		$	28,329		$	18,104		$	21,339		$	19,047		$	30,536		$	19,685		$	50,021		$	42,838		$	51,447
Payable to affiliates		71,898			47,117			30,835			24,968			20,336			25,595			16,120			16,817			18,578			16,297			26,348
Accounts payable		247,620			165,717			256,911			248,307			281,637			271,181			341,008			269,608			291,846			256,535			327,158
Accrued liabilities		58,341			60,272			60,546			42,901			39,457			56,785			55,678			66,202			60,909			55,418			49,568
Income taxes payable		4,028			1,107			2,252			891			2,274			2,107			1,420			107			2,713			2,097			1,061

Total current liabilities		421,719			308,361			378,873			335,171			365,043			374,715			444,762			372,419			424,067			373,185			455,582
Long-term borrowings		2,048			10,745			47,411			43,036			48,383			39,056			32,822			38,714			13,772			13,580			7,852
Other long-term liabilities		—			—			—			—			—			—			—			1,535			1,550			1,534			1,053
Deferred income taxes		1,282			1,251			1,231			1,007			1,007			850			873			579			312			458			795

Total liabilities		425,049			320,357			427,515			379,214			414,433			414,621			478,457			413,247			439,701			388,757			465,282

Minority interest in subsidiaries		2,279			2,439			2,513			2,448			2,441			2,544			3,031			2,610			2,624			2,593			2,733


Stockholders’ equity:
Common stock		22			22			22			22			22			22			22			22			22			22			22
Additional paid-in capital		78,554			78,651			79,011			79,004			79,003			79,193			79,072			79,251			79,282			79,282			79,282
Unearned stock-based compensation		(1,790	)		(1,592	)		(1,447	)		(1,283	)		(1,143	)		(1,007	)		(871	)		(753	)		(615	)		(477	)		(340	)
Receivables from stockholders		—			—			—			(300	)		(300	)		(300	)		—			—			—			—			—
Accumulated other comprehensive loss		(1,091	)		(1,088	)		(1,034	)		(1,597	)		(2,526	)		(274	)		(361	)		(860	)		1,067			4,458			3,645
Retained earnings		89,449			97,885			104,242			107,526			113,757			120,664			127,869			135,558			142,259			149,279			156,929

Total stockholders’ equity		165,144			173,878			180,794			183,372			188,813			198,298			205,731			213,218			222,015			232,564			239,538

Total liabilities and stockholders’ equity	$	592,472		$	496,674		$	610,822		$	565,034		$	605,687		$	615,463		$	687,219		$	629,075		$	664,340		$	623,914		$	707,553

Our operating results have fluctuated, and will likely fluctuate in the future, as a result of many factors. Although we attempt to control our expense levels, these levels are based, in part, on anticipated revenue. Therefore we may not be able to control spending in a timely manner to compensate for any unexpected revenue shortfall. We believe that you should not rely on period-to-period comparisons of our operating results as an indication of future performance. The results of any quarterly period are not indicative of results to be expected for a full fiscal year. In future quarters, our operating results may be below the expectations of public market analysts or investors, which would adversely impact our share price.

Liquidity and Capital Resources

Cash Flows

Our business is working capital intensive. Our working capital needs are primarily to finance accounts receivable and inventory. We rely heavily on debt, accounts receivable flooring programs and the sale of our accounts receivable under our securitization program for our working capital needs.

We have financed our growth and cash needs to date primarily through working capital financing facilities, bank credit lines and cash generated from operations. The primary uses of cash have been to fund increases in inventory and accounts receivable resulting from increased sales, and for acquisitions.

We had positive net working capital of $206.6 million, $200.0 million and $187.2 million at August 31, 2003 and November 30, 2002 and 2001, respectively. We believe that cash flows from operations, our current cash balance and funds available under our working capital and credit facilities will be sufficient to meet our working capital needs and planned capital expenditures for the next 12 months.

Net cash provided by operating activities was $1.5 million for the nine months ended August 31, 2003. Cash provided by operating activities in the nine months ended August 31, 2003 was primarily attributable to cash generated from net income of $21.4 million and depreciation and amortization of $5.7 million partially offset by the use of cash for working capital of $26.6 million. The cash used for working capital in the nine months ended August 31, 2003 was primarily due to increases in receivables from vendors and inventory as well as a decrease in accrued liabilities, partially offset by an increase in accounts payable and a decrease in accounts receivable. The fluctuations in these working capital balances were primarily due to the increase in our revenue and a net increase in sales of accounts receivable to General Electric Capital Corporation under our securitization program of $38.5 million. Absent the increase in accounts receivable sold under our securitization program, our use of cash for working capital would have been $65.1 million and net cash used in operating activities would have been $37.0 million in the nine months ended August 31, 2003.

Net cash provided by operating activities was $69.3 million in fiscal 2002. Cash provided by operations in fiscal 2002 was primarily attributable to net income of $28.0 million plus depreciation and amortization of $8.3 million. Also contributing to the cash provided by operations was an increase in cash from net working capital of $32.7 million. The increase in cash from working capital was primarily attributable to a net increase in sales of our accounts receivable under our accounts receivable securitization program of $86.0 million in fiscal 2002. Absent this increase in accounts receivable sold under our securitization program, our use of cash for working capital would have been $53.3 million and net cash used in operating activities would have been $16.7 million in fiscal 2002. The cash used for working capital in fiscal 2002, excluding the impact of the increase in accounts receivable sold under our securitization program, was primarily due to increases in accounts receivable, inventory and other assets as well as a decrease in payable to affiliates, partially offset by increases in accounts payable and accrued liabilities. The fluctuations in our accounts receivable, inventory, other assets, accounts payable and accrued liabilities were primarily related to the increase in our distribution revenue in the period. The decrease in payable to affiliates was primarily related to the decline in our contract assembly operations in fiscal 2002.

Net cash provided by operating activities was $11.5 million in fiscal 2001. Cash provided by operations in 2001 was primarily attributable to net income of $25.8 million plus depreciation and amortization of $9.4 million and impairment of investments of $3.7 million partially offset by the use of cash for working capital of $27.3 million. The use of cash for working capital was primarily attributable to a net reduction in sales of our accounts receivable to a financial institution under our accounts receivable securitization program of $78.0 million in fiscal 2001. Excluding this reduction, our cash generated from working capital reduction would have been $50.7 million and cash provided by operations would have been $89.5 million in fiscal 2001. The positive cash generated from working capital reductions in fiscal 2001, excluding the impact of the reduction in accounts receivable sold under our securitization program, was primarily attributable to decreases in inventory and accounts receivable, partially offset by lower accounts payable, due to the decrease in revenue and our improved management of working capital in the period.

Net cash used in investing activities was $2.5 million in the nine months ended August 31, 2003, $63.0 million in fiscal 2002 and $20.8 million in fiscal 2001. The use of cash in the nine months ended August 31, 2003 was primarily the result of a final payment of $1.5 million to Arrow Electronics for our Gates/Arrow Distributing acquisition and capital expenditures of $1.7 million. The use of cash in fiscal 2002 was primarily a result of our acquisition of Gates/Arrow Distributing and License Online for $42.9 million and $3.2 million, respectively, net of cash acquired, and capital expenditures of $8.9 million. The use of cash in fiscal 2001 was primarily a result of our acquisition of Merisel Canada for $17.1 million, net of cash acquired, and capital expenditures of $3.3 million.

Net cash provided by financing activities was $8.2 million in the nine months ended August 31, 2003 and was primarily related to our cash overdraft of $11.8 million offset by net repayment of borrowings under our credit facilities. Net cash used in financing activities of $7.3 million in fiscal 2002 was primarily due to the net repayment of borrowings under our credit facilities. Net cash provided by financing activities was $5.2 million in fiscal 2001, and consisted primarily of the increase in our cash overdraft balance at November 30, 2001 as compared to November 30, 2000.

To increase our market share and better serve our customers, we plan to further expand our international operations. We expect that this expansion will require an initial investment in personnel, facilities and operations, which may be more costly than similar investments in domestic operations. As a result of these investments, we may experience an increase in cost of sales and operating expenses that is disproportionate to revenue from those operations.

Capital Resources

Our cash and cash equivalents totaled $23.2 million, $15.5 million and $15.7 million at August 31, 2003 and November 30, 2002 and 2001, respectively.

Off Balance Sheet Arrangements

Effective August 30, 2002, we entered into a revolving accounts receivable securitization program in the United States, which provides for the sale of up to $200.0 million of U.S. trade accounts receivable to General Electric Capital Corporation. On June 30, 2003, we amended our accounts variable securitization program to provide for the sale of up to $210.0 million of U.S. trade accounts receivable and extend the maturity for one additional year to August 30, 2008. In connection with this program substantially all of our U.S. trade accounts receivable are transferred without recourse to our wholly-owned subsidiary, which, in turn, sells the accounts receivables to the financial institution. Sales of the accounts receivables to the financial institution under this program result in a reduction of total accounts receivable in our consolidated balance sheet. The remaining accounts receivables not sold to General Electric Capital Corporation are carried at their net realizable value, including an allowance for doubtful accounts. Our effective borrowing cost under the program is the prevailing commercial paper rate of return plus 0.90% per annum. At August 31, 2003 and November 30, 2002, the amount

of our accounts receivable sold to and held by General Electric Capital Corporation under this accounts receivable securitization program totaled $196.5 million and $158.0 million, respectively. The increase in fiscal 2003 reflected our higher financing needs as a result of our higher volume of business. We believe that available funding under our accounts receivable financing programs provides us increased flexibility to make incremental investments in strategic growth initiatives and to manage working capital requirements, and that there are sufficient trade accounts receivable to support the U.S. financing programs.

Under the program, we continue to service the accounts receivable, and receive a service fee from General Electric Capital Corporation. The program contains customary financial covenants, including, but not limited to, requiring us to maintain on a consolidated basis:

•

a minimum net worth at the end of each fiscal quarter in each fiscal year ending on or after November 30, 2003 of not less than the sum of (i) the minimum net worth required under the arrangement for the immediately preceding fiscal year plus (ii) an amount equal to 50% of the positive net income of us and our subsidiaries on a consolidated basis for the immediately preceding fiscal year plus (iii) an amount equal to 100% of the amount of any equity raised by or capital contributed to us during the immediately preceding fiscal year;

•

a fixed charge ratio for each rolling period from and after the closing of the arrangement of not less than 1.75 to 1.00. The fixed charge ratio is the ratio of EBITDA for the rolling period ending on such date to “fixed charges” for such period. Fixed charges means, with respect to any of our fiscal periods the sum of (a) cash interest expense during such period, plus (b) regularly scheduled payments of principal on our debt (other than debt owing under the arrangement) paid during such period, plus (c) the aggregate amount of all capital expenditures made by us during such period other than capital expenditures related to the purchase of and improvements to the building occupied by our subsidiary in China in an amount not to exceed $8.5 million, plus (d) income tax expense during such period, plus (e) any dividend, return of capital or any other distribution in connection with our capital stock. Rolling period means as of the end of any or our fiscal quarters, the immediately preceding four fiscal quarters (including the fiscal quarter then ending); and

•

with respect to our wholly-owned subsidiary, a net worth percentage of not less than 5.0%.

We are also obligated to provide periodic financial statements and investment reports, notices of material litigation and any other information relating to our U.S. trade accounts receivables as requested by General Electric Capital Corporation.

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 adverse change or loss of our financing capacity under these programs if the commercial paper issuer and/or liquidity back-up provider is not replaced. Loss of such financing capacity could have a material adverse effect on our financial condition and results of operations.

Our securitization balance consists of accounts receivable sold to and held by a financial institution under our accounts receivable securitization program. Sales of accounts receivables under this program result in a reduction of total accounts receivable on our consolidated balance sheet. At February 28, 2001, May 31, 2001, August 31, 2001 and November 30, 2001, our securitization balance was $56.0 million, $43.0 million, $36.0 million and $72.0 million, respectively. At February 28, 2002, May 31, 2002, August 31, 2002 and November 30, 2002, our securitization balance was $71.0 million, $134.5 million, $126.0 million and $158.0 million, respectively. At February 28, 2003, May 31, 2003 and August 31, 2003, our securitization balance was $94.0 million, $177.0 million and $196.5 million, respectively.

We have also issued guarantees to certain SYNNEX Canada vendors and resellers for the total amount of $23.2 million as of August 31, 2003 and $15.4 million as of November 30, 2002.

We have also issued guarantees to certain SYNNEX Mexico vendors and resellers for the total amount of $18.9 million as of August 31, 2003 and $24.3 million as of November 30, 2002.

We have also issued guarantees of C$75.0 million in relation to a revolving loan agreement between SYNNEX Canada and a financial institution and $15.0 million in relation to a revolving loan agreement between SYNNEX Mexico and a financial institution.

We are obligated under these guarantees to pay amounts due should our subsidiaries not pay valid amounts owed to their vendors or lenders. The vendor guarantees are typically one year arrangements, with 30 day cancellation clauses and the lender guarantees are typically for the term of the loan agreement.

On Balance Sheet Arrangements

In December 1997, we entered into a senior secured revolving line of credit arrangement, or the Revolver, with a financial institution, which is secured by our inventory. The Revolver’s maximum commitment is 50% of eligible inventory valued at the lower of cost or market up to a maximum borrowing of $10.0 million. In July 2002, the Revolver was amended and extended for an additional five-year period, and the credit limit was increased to $15.0 million. In June 2003, the Revolver was amended to increase the credit limit to $25.0 million and to extend the maturity to 2008. Interest on borrowings under the Revolver is based on the prime rate plus 1.0% or LIBOR plus 2.0% at our option. There were no borrowings outstanding under the Revolver at August 31, 2003 and November 30, 2002.

Upon our acquisition of SYNNEX Canada, we assumed a three-year C$100.0 million revolving loan agreement with a financial institution due January 2004. In August 2001, the revolving loan agreement was amended to reduce the credit limit to C$75.0 million. In April 2002, the agreement was further amended to increase the credit limit back to C$100.0 million. Borrowings under the loan agreement are collateralized by substantially all of SYNNEX Canada’s assets, including inventories and accounts receivable. Borrowings bear interest at the prime rate of a Canadian bank designated by the financial institution plus 0.75% for Canadian Dollar denominated loans (totaling 5.50% at August 31, 2003), at the prime rate of a U.S. bank designated by the financial institution plus 0.25% (totaling 4.25% at August 31, 2003) or at LIBOR plus 2.00% for U.S. Dollar denominated loans. The balance outstanding at August 31, 2003 and November 30, 2002 was $26.9 million and $26.4 million, respectively.

We also have other lines of credit and revolving facilities with financial institutions, which provide for borrowing capacity aggregating approximately $45.7 million and $43.7 million at August 31, 2003 and November 30, 2002, respectively. At August 31, 2003 and November 30, 2002, we had borrowings of $14.9 million and $17.8 million, respectively, outstanding under these facilities. The expiration dates of these facilities range from 2004 to 2011.

We also have various term loans, bonds and mortgages with financial institutions. Future principal payments due under these term loans, bonds and mortgages and payments due under our operating lease arrangements after November 30, 2002 are as follows (in thousands):

	Payments Due By Period
Contractual obligations	2003		2004		2005		2006		2007
Principal debt payments	$	2,982	$	9,685	$	2,839	$	1,127	$	1,127
Non-cancelable operating leases		8,920		6,692		5,546		5,128		4,651

Total	$	11,902	$	16,377	$	8,385	$	6,255	$	5,778

We are in compliance with all covenants or other requirements set forth in our accounts receivable financing programs and credit agreements discussed above.

Qualitative and Quantitative Market Risks

Foreign Currency Risk

We are exposed to foreign currency risk in the ordinary course of business. We hedge cash flow exposures for our major countries using a combination of forward contracts. Principal currencies hedged are the British pound, Canadian dollar, Mexican peso and Japanese yen. We do not hold or issue derivative financial instruments for trading purposes. These instruments are generally short-term in nature, with typical maturities of less than one year.

The following table presents the hypothetical changes in fair values in our outstanding derivative instruments at August 31, 2003 that are sensitive to the changes in foreign currency exchange rates. The modeling technique used measures the change in fair values arising from an instantaneous strengthening or weakening of the U.S. dollar by 5%, 10% and 15% (in thousands).

Loss on Derivative

Instruments Given a

Weakening of U.S. dollar

by X Percent

Gain
Assuming
No Change
in Exchange
Rate

Gain on Derivative
Instruments Given a
Strengthening of U.S. dollar
by X Percent

15%

10%

15%

Forward contracts

(7,241

)

(4,819

)

(2,398

)

2,445

4,866

7,287

Interest Rate Risk

During the last two years, the majority of our debt obligations have been short-term in nature and the associated interest obligations have floated relative to major interest rate benchmarks, such as the London Interbank Offered Rate. While we have not used derivative financial instruments to alter the interest rate characteristics of our investment holdings or debt instruments in the past, we may do so in the future.

The fair value of our outstanding borrowing that is sensitive to changes in interest rates is $9.0 million at August 31, 2003. A 150-basis point increase or decrease in rates at August 31, 2003 would not result in any material change in the fair value of this obligation.

The following table presents the hypothetical changes in interest expense related to our outstanding borrowings for the nine months ending August 31, 2003 that are sensitive to changes in interest rates. The modeling technique used measures the change in interest expense arising from hypothetical parallel shifts in the respective countries’ yield curves, of plus or minus 5%, 10% and 15% for the nine months ended August 31, 2003 (in thousands).

	Interest Expense Given an Interest Rate Decrease by X Percent						Actual Interest Expense Assuming No Change in Interest Rate		Interest Expense Given an Interest Rate Increase by X Percent
	15%		10%		5%		Actual Interest Expense Assuming No Change in Interest Rate		5%		10%		15%
SYNNEX US	$	346	$	366	$	386	$	406	$	427	$	447	$	467
SYNNEX Canada		629		666		703		740		777		813		850
SYNNEX Japan		197		209		220		232		243		255		266
SYNNEX Mexico		14		15		16		17		17		18		19

Total	$	1,186	$	1,256	$	1,325	$	1,395	$	1,464	$	1,533	$	1,602

Equity Price Risk

The equity price risk associated with our marketable equity securities at November 30, 2001, 2002 and August 31, 2003 is not material in relation to our consolidated financial position, results of operations or cash flow. Marketable equity securities include shares of common stock. The investments are classified as either

trading or available-for-sale securities. Securities classified as trading are recorded at fair market value, based on quoted market prices and unrealized gains and losses are included in results of operations. Securities classified as available-for-sale are recorded at fair market value, based on quoted market prices and unrealized gains and losses are included in other comprehensive income. Realized gains and losses, which are calculated based on the specific identification method, are recorded in operations as incurred.

Recent Accounting Pronouncements

In July 2002, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” which addresses the recognition, measurement and reporting of costs associated with exit or disposal activities. SFAS No. 146 requires the recognition of a liability for a disposal activity, including those related to employee termination benefits and obligations under operating leases and order contracts, and that the liability be recognized when incurred and not necessarily on the date of an entity’s commitment to an exit plan. SFAS No. 146 also establishes that the initial measurement of a liability be based on fair value. The provisions of SFAS No. 146 are effective for exit or disposal activities that are initiated after December 31, 2002. We have not had any exit on disposal activities since the adoption of the standard.

In November 2002, the FASB issued FASB Interpretation (“FIN”) No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” FIN No. 45 requires that a liability be recorded in the guarantor’s balance sheet upon issuance of a guarantee. In addition, FIN No. 45 requires disclosures about the guarantees that an entity has issued, including a reconciliation of changes in the entity’s product warranty liabilities. The initial recognition and initial measurement provisions of FIN No. 45 are applicable on a prospective basis to guarantees issued or modified after December 31, 2002, irrespective of the guarantor’s fiscal year-end. The disclosure requirements of FIN No. 45 are effective for financial statements of interim or annual periods ending after December 15, 2002. The adoption of this standard did not have any material impact on our financial position or results of operations.

In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation, Transition and Disclosure.” SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. SFAS No. 148 also requires that disclosures of the pro forma effect of using the fair value method of accounting for stock-based employee compensation be displayed more prominently and in a tabular format. Additionally, SFAS No. 148 requires disclosure of the pro forma effect in interim financial statements. The transition and annual disclosure requirements of SFAS No. 148 are effective for fiscal years ended after December 15, 2002. The interim disclosure requirements are effective for interim periods beginning after December 15, 2002. We have applied the disclosure provisions of SFAS No. 148.

In January 2003, the FASB issued FIN No. 46, “Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51.” Fin No. 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN No. 46 is effective immediately for all new variable interest entities created or acquired after January 31, 2003. For variable interest entities created or acquired prior to February 1, 2003, the provisions of FIN No. 46 must be applied for the first interim or annual period ending after December 15, 2003. We believe that the adoption of this standard will have no material impact on our financial position and results of operations.

projects dealing with financial instruments; and (c) in connection with the implementation issues raised related to the application of the definition of a derivative. SFAS No. 149 is effective for contracts entered into or modified after June 30, 2003 and for designated hedging relationships after June 30, 2003. We believe that the adoption of SFAS No. 149 will not have a material impact on our financial position and results of operations.

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” The Statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity and further requires that an issuer classify as a liability (or an asset in some circumstances) financial instruments that fall within its scope because that financial instrument embodies an obligation of the issuer. Many of these instruments were previously classified as equity. The statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. We believe that the adoption of this standard will not have a material impact on our financial position and results of operations.

In November 2002, the Emerging Issues Task Force (“EITF”) reached a consensus on Issue No. 00-21 (“EITF No. 00-21”), “Multiple-Deliverable Revenue Arrangements.” EITF No. 00-21 addresses how to account for arrangements that may involve the delivery or performance of multiple products, services, and/or rights to use assets. The consensus mandates how to identify whether goods or services or both that are to be delivered separately in a bundled sales arrangement should be accounted for separately because they are separate units of accounting. The guidance can affect the timing of revenue recognition for such arrangements, even though it does not change rules governing the timing or pattern of revenue recognition of individual items accounted for separately. The final consensus is applicable to agreements entered into in fiscal years beginning after June 15, 2003 with early adoption permitted. Additionally, companies will be permitted to apply the consensus guidance to all existing arrangements as the cumulative effect of a change in accounting principle in accordance with APB No. 20, “Accounting Changes.” We are assessing the impact of EITF No. 00-21 and believe that the adoption will not have a material impact on our financial position and results of operations.

In March 2003, the EITF finalized Issue No. 02-16 (“EITF No. 02-16”), “Accounting for Consideration Received from a Vendor by a Customer (Including a Reseller of the Vendor’s Products).” EITF No. 02-16 requires that consideration received from vendors, such as advertising support funds, be accounted for as a reduction to cost of sales when recognized in the reseller’s income statement unless certain conditions are met showing that the funds are used for a specific program entirely funded by an individual vendor. If these specific requirements related to individual vendors are met, the consideration is accounted for as a reduction in the related expense category, such as advertising or selling and administrative expense. EITF No. 02-16 applies to all agreements modified or entered into on or after January 1, 2003. Adopting EITF No. 02-16 had no material impact on our financial position and results of operations.

BUSINESS

Overview

Because we offer distribution, contract assembly and complementary logistics services, OEM suppliers and resellers can outsource to us multiple areas of their business outside of their core competencies. This model allows us to provide services at several points along the IT product supply chain. We believe that the combination of our broad range of supply chain capabilities, our focus on serving the leading IT OEMs and our efficient operations enables us to realize strong and expanding relationships with these OEMs and our reseller customers.

Our Industry

The information technology, or IT, product supply chain generally consists of original equipment manufacturers, or OEMs, contract manufacturers, distributors, resellers and end-users. The roles of these participants are described in the table below:

IT Product Supply Chain

Participant	Description	Companies

IT OEMs	• Design IT systems, system components, peripherals and software. • Manufacture IT products, directly or on an outsourced basis. • Market and sell IT products directly or through distributors to resellers, retailers and large end-users.	Systems (including PCs, servers, storage systems, workstations): Apple, Dell, EMC, HP, IBM, Sun Microsystems, Toshiba Peripherals (including monitors, printers, supplies): APC, HP, Lexmark, NEC, ViewSonic, Xerox System Components (including CPUs, memory, hard disk drives): Asus, Intel, Micron, Seagate, Western Digital Software (including applications, operating systems): Adobe, Computer Associates, IBM, Intuit, Microsoft, Oracle, Symantec Networking Equipment (including network interface cards, routers, switches, hubs, wireless products): Cisco, Intel, Lucent, Nortel, 3COM


Contract Manufacturers/ Assemblers	• Design IT products. • Source product materials. • Manufacture and assemble printed circuit boards. • Assemble and test finished products.	Benchmark, Celestica, Flextronics, Foxconn, MiTAC International, Sanmina-SCI, Solectron, SYNNEX


Distributors	• Purchase IT products from OEMs. • Sell IT products to resellers. • Provide logistics, marketing, financial, technical support and other supply chain services.	Arrow, Avnet, Bell Micro, Ingram Micro, Pioneer-Standard, ScanSource, SYNNEX, Tech Data, Westcon


Resellers	• Sell IT products directly to end-users. • Provide value added services, including design, installation, integration and training.	Value Added Resellers and Solution Providers: small- to medium-sized business focused, local, regional and industry specific resellers Corporate Resellers: Amherst, ASAP, CompuCom, EnPointe, Pomeroy, TIG Government Resellers: Government Micro Resources, GTSI, PlanetGov, TELOS, Westwood Computer Systems Integrators: AMAX, Comptech Micro System, Equus Computer Systems, Hatch Associates, Premio Computer Direct Marketers: CDW, Creative Computer, Insight, PC Connection Retailers: Amazon.com, Best Buy, Circuit City, CompUSA, Fry’s Electronics


End-Users	• Use IT products for commercial or personal use.	Large corporations, governments and educational institutions, small- to medium-sized businesses, personal users

The IT product supply chain is fluid as participants assume changing roles in the chain based on their various products, customer demands and business objectives. For example, a contract manufacturer may perform design features for some OEM products while solely manufacturing products for the same or other OEMs. Similarly, OEMs may elect to sell products directly to resellers or end-users without the use of a distributor, particularly in the case of larger volume end-user purchasers.

Distribution

OEMs rely on distributors because of the wide range and high complexity of IT products, the short product life cycle of some products and the desire of end-users to integrate solutions from multiple OEMs. Distributors provide an efficient and cost-effective means for OEMs to reach a broad range of resellers who sell to a large number of end-users. In addition, distributors provide OEMs with demand creation marketing, inventory management, logistics service, and pre- and post-sale technical support.

Resellers depend on distributors for product information, real-time price and availability information, system configuration, marketing, credit, logistics and technical support needs. Resellers also rely on distributors for inventory management services. These services allow resellers to reduce their inventory, staffing levels and warehouse requirements, thereby lowering their invested capital requirements and reducing their costs.

In October 2003, IDC estimated that the total worldwide IT spending on hardware and packaged software was $519.9 billion in 2002 and would grow to $657.2 billion by 2007, representing a compound annual growth rate of 4.8%. IDC also estimated that IT spending on hardware and packaged software in the U.S. was $214.2 billion in 2002 and would grow to $263.7 billion by 2007, representing a compound annual growth rate of 4.2%. In doing so, IDC makes assumptions about economic conditions that may or may not prove accurate. The distribution business in which we and our competitors operate addresses only a portion of this total market.

The IT product distribution industry has undergone significant consolidation as a result of several factors. These factors include the current economic downturn, reductions in IT spending, overcapacity, more restrictive terms and conditions from OEMs, reductions in the number of OEM-authorized distributors, a high level of price competition among distributors and evolving OEM business models such as direct sales initiatives.

Contract Manufacturing and Assembly

In addition to using wholesale distributors, OEMs in the IT industry have increasingly outsourced their manufacturing and product assembly. Historically, OEMs were vertically integrated and invested significantly in equipment and facilities to manufacture, service and distribute their products. Contract manufacturers originated to provide additional capacity during periods of high demand by assembling and testing printed circuit boards that typically form the backbone of electronic devices and have evolved to provide full system assembly. Recently, contract manufacturers have also expanded their electronic manufacturing operations to include design, component procurement, inventory management, logistics and after-market services.

OEMs use contract manufacturers and assemblers for many reasons including to reduce their time to market by using a contract manufacturer’s established manufacturing expertise, broad capabilities, global presence and infrastructure, reduce the OEMs’ overall capital equipment requirements, allow OEMs to focus on core technologies and activities such as product development and marketing and to reduce production and inventory costs by using a contract manufacturer’s volume procurement capabilities and expertise in inventory management.

Our Solution

We distribute the products of leading IT product OEMs and provide complementary contract assembly and supply chain activities. Our comprehensive offerings are an essential part of our OEM suppliers’ and

reseller customers’ supply chains that enable them to meet their specific sales, distribution, manufacturing and logistics objectives. The key components of our IT supply chain solution are as follows:

Distribution

Focus on leading OEMs. We primarily serve leading OEMs in selected IT product categories. This OEM focus enables us to dedicate teams that work directly with these OEMs and develop in-depth knowledge of the OEMs’ products. Because of our intimate knowledge of the products we distribute, we are able to provide effective product marketing activities for our OEM suppliers in order to help them meet their sales objectives. In addition, our in-depth product knowledge enables us to deliver solutions to our reseller customers that integrate several products, sometimes from multiple OEMs.

Broad Market Reach. Through our network of more than 15,000 reseller customers, we offer our OEM suppliers access to customers they could not reach cost-effectively otherwise. Our reseller relationships provide an important sales channel for these OEMs to connect with small- to medium-sized businesses, government agencies and educational institutions that generally buy IT products through intermediaries.

Low Cost Solutions. Our ability to effectively market and sell products for leading OEMs can save our OEM suppliers money relative to selling direct. OEMs can streamline their sales organization by using us to expand their reach to additional IT product resellers. OEMs can also reduce their costs associated with warehouse facilities by utilizing our inventory management and logistics support.

Financing Options for Resellers. Many resellers have limited working capital and rely on us to provide them with financing alternatives. By offering these alternatives, we enable our reseller customers to fulfill larger orders than their resources otherwise would allow.

Demand Creation Marketing. We offer our OEM suppliers a full range of demand creation marketing activities targeted to specific resellers. These activities include trade publication advertising, direct mail, e-mail marketing, national and regional trade show events and many Web-based marketing offerings.

Local Points of Presence. Our sales and distribution centers are geographically dispersed. Our regional locations enable us to work closely with our reseller customers to better serve them and their end-users. Our regional distribution centers also allow us to deliver products quickly. In addition, because shipping companies generally charge based on the distance shipped, our approach allows us to reduce our shipping costs, a significant component of our cost of sales.

Electronic Commerce. We maintain EDI, or electronic data interchange, and web-based communication links with many of our reseller customers. These links improve the speed and efficiency of our transactions with our reseller customers by enabling them to:

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search for products;

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check inventory availability;

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configure systems;

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price systems and products;

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place and track orders;

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receive invoices; and

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process returns.

Competitive Pricing. We are able to offer our reseller customers competitive prices due to our high volume purchasing, low cost structure, efficient distribution methods and focus on leading OEM suppliers.

Other Supply Chain Support Activities. We provide both OEMs and resellers logistics services such as outsourced fulfillment, virtual distribution and direct ship to end-users. We also offer our reseller customers outsourced back-office support services, including management of sales and purchase orders, inventory, invoicing and collections, vendor claims and returns. Furthermore, we provide our reseller customers with pre- and post-sale technical support services.

Contract Assembly

Efficient System Components Sourcing. We distribute many of the system components used in the assembly of our OEM customers’ products. As a result, our assembly customers are able to minimize their inventory risk because they can take advantage of the terms and conditions of our distribution relationships. A primary benefit of our distribution relationships is vendor provided price protection that allows our OEM customers to benefit from declines in component prices. We also offer increased inventory availability to our OEM customers because we stock items for both distribution and assembly. In addition, we generally can use our distribution operations to provide logistics, drop shipments to end-user customers and to sell excess system components ordered by our OEM assembly customers.

Flexible Product Assembly. We provide our OEM customers with a high degree of flexibility with our build-to-order or configure-to-order capabilities. By focusing only on system-level assembly and outsourcing more capital intensive contract manufacturing activities, such as printed circuit board assembly, we are able to maintain a flexible operating structure that allows us to rapidly increase or decrease production volumes and deliver customized assembly solutions.

Joint Design and Manufacturing Services. We offer contract design and manufacturing services to OEMs through our relationship with our largest indirect stockholder, MiTAC International. These activities complement our system assembly capabilities and allow us to deliver a complete design-to-delivery solution for our OEM customers. MiTAC International is a leading original design manufacturing company based in Taiwan, specializing in product design, printed circuit board assembly, power supply manufacturing, and plastic and sheet metal molding. We work closely with MiTAC International to collaborate on OEM outsourcing opportunities.

Product Return Services. We provide our OEM customers with product return services for the IT systems we build for them in our contract assembly facilities. These services allow for the management of product returns directly from the OEM’s customer to us. These services include refurbishment of these systems to a like-new condition as well as the ability to re-sell the refurbished systems through authorized sales channels.

Our Strategy

Our objective is to continue to expand our business by providing IT product OEMs and other suppliers outsourcing solutions including distribution, assembly and supply chain support, and by providing our reseller customers outstanding execution, service and support. In particular, we intend to achieve this objective by pursuing the following strategies:

Deepen Relationships with Our Existing OEM Suppliers and Reseller Customers

We believe our present OEM and reseller relationships represent significant opportunities for growth. We seek to increase business opportunities with our existing OEM suppliers by expanding the distribution, assembly and supply chain support activities that we provide to them. We work closely with these suppliers to ensure that our service offerings meet their evolving needs. We aim to provide a complete supply chain solution to our OEM suppliers to decrease the costs associated with assembling, selling and distributing IT products.

Establish New Strategic Relationships with Leading OEMs

We intend to establish additional relationships with select leading IT product OEMs to increase the breadth of products we distribute. We will offer these OEMs our comprehensive range of global distribution and supply chain support activities, our ability to deliver services anywhere along the IT supply chain, our ability to assist OEMs in reaching a broad range of resellers and their end user customers.

Increase Our Reseller Customer Base

We seek to grow by increasing the number of reseller customers to which we sell IT products. Our depth of product knowledge resulting from our focus on leading OEM vendors enables us to provide a high level of service to resellers. Our efficient operating disciplines have permitted us to profitably sell IT products at competitive prices. We also seek opportunities to increase the number of resellers that buy from us by expanding the breadth of products that we distribute.

Expand Our Contract Assembly Business

We intend to expand our contract assembly business as the continuing trend of OEMs outsourcing of production activities creates a growing market opportunity. Our strategy is to remain focused on system level assembly operations serving IT product OEMs. Within the broad spectrum of IT products, we have targeted the non-branded, or white-box, segment of the IT product market as a focus of our assembly expansion efforts. We believe the white-box market has growth potential. We are also continuing to work with MiTAC International to jointly pursue contract manufacturing opportunities where we can combine MiTAC International’s design and printed circuit board assembly operations with our system assembly capabilities to deliver an integrated, cost-effective solution to OEMs.

Control Costs

We intend to maintain our low cost operations and seek ways to further reduce costs in all areas of our operations. Our low cost structure is predicated upon our management of facility costs, capital outlays, and our effective use of IT systems and temporary labor. We also manage our costs by locating some professional and administrative functions, such as IT development, materials management and accounts payable, in low cost geographic regions, like China. Our strategy to operate numerous distribution centers that are geographically dispersed also helps us to control costs by reducing shipping costs.

Pursue Strategic Acquisitions and Investments

Over the last three years, we have completed a number of acquisitions and investments. We intend to continue to grow our business through strategic acquisitions or investments of complementary businesses or assets in order to increase our OEM and reseller relationships, enhance our service offerings and expand our geographic reach. Additionally, we plan to capitalize on the trend toward consolidation in the distribution and contract manufacturing industries. We believe that a critical part of any acquisition is proper management of the post-acquisition process. We intend to continue to devote attention and resources to the integration of management, personnel, culture, IT systems, products, customer relationships and other issues arising from recent and future acquisitions. We also intend to pursue strategic investments to leverage our core competencies in areas such as execution, IT management, logistics and systems manufacturing.

Our Products and Suppliers

We distribute a full range of IT products, including IT systems, peripherals, system components, software and networking equipment for more than 100 OEM suppliers, enabling us to offer comprehensive solutions to our reseller customers. Our primary OEM suppliers for fiscal 2002 and representative products we currently distribute for them include the following:

Supplier		Representative Products
HP		Desktop and Notebook PCs, Printers, Imaging Products, Supplies, Servers, Storage Products
IBM		Desktop and Notebook PCs, Servers, Storage Systems, Software
Intel		CPUs, Motherboards, Networking Products
Lexmark		Printers and Supplies
Microsoft		Operating Systems, Application Software
NEC-Mitsubishi		Displays and Monitors
Panasonic		Ruggedized Notebook PCs
Seagate		Hard Disk Drives
Toshiba America		Notebook PCs
Xerox		Printers and Supplies

Our largest OEM supplier is HP. Revenue from the sale of HP products represented approximately 23.5%, 30.4% and 35.0% of our revenue for fiscal 2000, 2001 and 2002, respectively, and approximately 31.5% of our revenue in the nine months ended August 31, 2003. We entered into a U.S. Business Development Partner Agreement with Hewlett-Packard Company on November 6, 2003 which governs our relationship with HP in the United States. The agreement remains in effect until March 31, 2005 unless terminated earlier in accordance with its terms. As is typical with our OEM supplier agreements, either party may terminate the agreement upon 30 days written notice. In addition, either party may terminate the agreement with cause upon 15 days written notice. “Cause” is not defined in the agreement. In the event the agreement is terminated for cause or if we in any way fail to perform any of our obligations under the agreement, any an all agreements between us and HP for the resale of any all products, support and services shall automatically terminate upon such default or termination. In the event of any breach the agreement by us, HP may terminate the agreement and we may be required to refund HP any discounts or program payments paid during the period we were in breach of the agreement and reimburse HP for reasonable attorney fees. If either party becomes insolvent or bankrupt, the other party may terminate the agreement without notice and cancel any unfulfilled obligations, except for payment obligations. Our subsidiaries in Canada and Mexico have territorial supplier agreements with subsidiaries of HP located in the same countries. We currently do not have plans to expand into additional territories.

During fiscal 2002 and the nine months ended August 31, 2003, our distribution product mix by category was in the following ranges:

Product Category:
Peripherals		32%-36%
System Components		24%-28%
IT Systems		20%-24%
Software		11%-15%
Networking Equipment		3%- 7%

In our contract assembly business we primarily assemble IT systems.

We have distribution agreements with many of our suppliers. These agreements usually provide for nonexclusive distribution rights and pertain to specific geographic territories. The agreements are also generally

short term, subject to periodic renewal, and often contain provisions permitting termination by either us or our supplier without cause upon relatively short notice. An OEM supplier that elects to terminate a distribution agreement will generally repurchase its products carried in our inventory.

Our IT distribution and assembly business subjects us to the risk that the value of our inventory will be affected adversely by suppliers’ price reductions or by technological changes affecting the usefulness or desirability of the products comprising our inventory. Many of our OEM suppliers offer us limited protection from the loss in value of our inventory due to technological change or a supplier’s price reductions. Under many of these agreements, we have a limited period of time to return or exchange products or claim price protection credits. We monitor our inventory levels and attempt to time our purchases to maximize our protection under supplier programs.

Our OEM suppliers generally warrant the products we distribute and allow returns of defective products, including those returned to us by our reseller customers. We generally do not independently warrant the products we distribute; however, we warrant our services with regard to products that we configure for our reseller customers, and the products that we assemble from components purchased from other sources. A provision for estimated warranty costs is recorded at the time of sale and periodically adjusted to reflect actual experience. Historically, our warranty expense has not been material.

Our Customers

Distribution

We distribute IT products to more than 15,000 resellers. Resellers are classified primarily by the end-users to which they sell as well as the services they provide. End-users include large corporations, governments, small- to medium-sized businesses, or SMBs, and personal users. In addition, resellers vary greatly in size and geographic reach. No reseller accounted for more than 10% of our total revenue in fiscal 2002 or for the nine months ended August 31, 2003. Our reseller customers buy from us and other distributors. Some of our larger reseller customers also buy certain products directly from OEM suppliers. Some of our largest reseller customers include Business Depot, CDW, EnPointe, Insight and PlanetGov.

Contract Assembly

The customers of our contract assembly business are IT product OEMs seeking to outsource product assembly and production logistics. Currently our primary contract assembly customer is Sun Microsystems. No contract assembly customer accounted for more than 10% of our total revenue in fiscal 2002 or for the nine months ended August 31, 2003.

Our Services

We offer a variety of services to our distribution and contract assembly customers, including the following:

Distribution

Distribution Services. We have sophisticated pick, pack and ship operations, which allows us to efficiently receive shipments from our OEM suppliers and fill orders from our reseller customers. We generally stock or otherwise have access to the inventory of our OEM suppliers to satisfy the demands of our reseller customers.

Logistics Services. We provide logistics support to our reseller customers such as outsourced fulfillment, virtual distribution and direct ship to end users. Other logistics support activities we provide include generation of customized shipping documents, multi-level serial number tracking for customized, configured products and online order and shipment tracking. We also provide logistics support both individually and in bulk directly to resellers, other distributors and end users.

Outsourced Back-Office Services. We offer our reseller customers outsourced back-office support, including management of sales and purchase orders, credit verification, inventory management, invoicing and collections, vendor claims and returns. Some of our reseller customers have outsourced to us their entire order processing, shipping and billing functions, eliminating the need for them to hire and maintain staff to perform these functions.

Online Services. We maintain EDI and web-based communication links with many of our reseller customers. These links improve the speed and efficiency of our transactions with our reseller customers by enabling them to search for products, check inventory availability and prices, configure systems, place and track orders, receive invoices, review account status and process returns. We also have web-application software that allows our resellers or their end-user customers to order software and take delivery online.

Financing Services. We offer our reseller customers a wide range of financing options, including net terms, third party leasing and floor plan financing, letters of credit and arrangements where we collect payment directly from the end user. The availability and terms of our financing services are subject to our credit policies or those of third party financing providers to our reseller customers.

Marketing Services. We offer our OEM suppliers a full range of marketing activities targeting specific resellers, including direct mail, external media advertising, reseller product training, targeted telemarketing campaigns, national and regional trade shows and web-based marketing. Web-based marketing includes customized areas of our web site that focus on an OEM suppliers’ products, programs, and services; web banners; web casts designed to allow an OEM supplier to make presentations to a targeted group of resellers; and web-based training.

Technical Support Services. We provide our reseller customers technical support services, including pre- and post-sale support.

Contract Assembly

Materials Procurement and Management. We provide our contract assembly customers with materials procurement and management activities including planning, purchasing, expediting and warehousing system components and materials used in the assembly process. Because we distribute many of the system components used in the assembly of our contract assembly customers’ products, our assembly customers are able to minimize their inventory risk by taking advantage of the terms and conditions of our distribution relationships. In addition, we also offer increased inventory availability to our contract assembly customers because we stock items for both distribution and assembly.

Assembly Services. We provide our OEM assembly customers with build-to-order, or BTO, and configure-to-order, or CTO, assembly capabilities. BTO assembly consists of building a group of systems with the same pre-defined specifications, generally for our OEM customers’ inventory. CTO assembly consists of building a customized system for an OEM customer’s individual order specifications. We possess adequate systems and assembly flexibility to produce both large and small volumes of products that include numerous configurations. We also offer production value added services such as kitting, reconfiguration, asset tagging and hard drive imaging.

Sales and Marketing

As of August 31, 2003, we employed 627 sales and marketing professionals. We serve our large government and commercial reseller customers through dedicated sales professionals. We market to smaller resellers through dedicated regional sales teams. In addition, we have dedicated product marketing and sales specialists that focus on the sale and promotion of the products of selected suppliers. These specialists are also directly involved in establishing new relationships with leading OEMs and resellers. Our sales and marketing professionals are complemented by members of our executive management team who are integral in identifying potential new customer opportunities and ensuring customer satisfaction. We have sales offices in North America and Asia and attempt to locate our sales and marketing professionals in close proximity to our reseller customers.

We also have a sales team dedicated to cultivating new contract assembly opportunities with IT product OEMs. On selected opportunities, this team works with MiTAC International representatives to offer OEMs comprehensive outsourced supply chain solutions. This joint sales effort enables us to deliver complete design-to-delivery solutions for our OEM customers.

Our Operations

Distribution

We operate 15 distribution facilities in the United States, Canada, Japan and Mexico. Our distribution processes are highly automated to reduce errors, ensure timely order fulfillment and enhance the efficiency of our warehouse operations and back office administration. In the United States, we operate ten distribution facilities that are geographically dispersed to be near end-users. This regional strategy enables us to benefit from lower shipping costs and shorter delivery lead times to our customers. Our regional locations also enable us to make local deliveries and provide will-call fulfillment to more customers than if our distribution operations were centralized resulting in better service to our customers. Our workforce is comprised of permanent and temporary employees, enabling us to respond to short term changes in order activity. Furthermore, we track several performance measurements to continuously improve the efficiency and accuracy of our distribution operations.

Our proprietary IT systems and processes, along with technology solutions from leading warehouse automation providers, enable us to automate many of our distribution operations. For example, we use radio frequency and bar code scanning technologies in all of our warehouse operations to maintain real time inventory records, facilitate frequent cycle counts and improve the accuracy of order fulfillment. We use palm readers to capture real time labor cost data enabling efficient management of our daily labor costs. We also scan and archive receiving documents and generate electronic freight out vouchers to streamline our accounts payable administration.

To enhance the accuracy of our order fulfillment and protect our inventory from shrinkage, our systems also incorporate numerous controls. These controls include order weight checks, bar code scanning, and serial number profile verification to verify that the product shipped matches the customer order. We also use digital video imaging to record our small package shipping activities by order. These images and other warehouse and shipping data are available online to our customer service representatives enabling us to quickly respond to order inquiries by our customers.

Contract Assembly

We operate assembly facilities in the United States and the United Kingdom. In our contract assembly business, we source materials, assemble IT systems, and ship completed products on behalf of our OEM customers. We generally assemble IT systems, including personal computers, workstations and servers, incorporating system components from our distribution inventory and other sources. Additionally, we perform production value added services, including kitting, asset tagging, hard-drive imaging and reconfiguration. Our contract assembly facilities are ISO 9001:2000 certified.

We focus on system level contract assembly rather than full service manufacturing in order to minimize our capital investments in our assembly business. Because of the variability of our assembly orders, our workforce is predominantly comprised of temporary workers. We also partner with MiTAC International to provide certain manufacturing capabilities, including design and printed circuit board assembly as these activities require extensive capital investments and labor.

International Operations

Approximately 10%, 14% and 21% of our revenue for the years ended November 30, 2000, 2001 and 2002, respectively, and approximately 22% of our revenue for the nine months ended August 31, 2003, originated outside of the United States. A key element in our business strategy is to expand our global presence in order to provide our distribution and contract assembly capabilities to OEMs in locations that meet their regional requirements. Consistent with this strategy, we have established international operations in Canada, China, Japan, Mexico and the United Kingdom. We plan to continue to seek strategic opportunities to expand our operations throughout the world.

Purchasing

Product costs represent our single largest expense and IT product inventory is one of our largest working capital investments. Furthermore, product procurement from our OEM suppliers is a highly complex process that involves marketing incentive programs, rebate programs, price protection and other arrangements. Consequently, efficient and effective purchasing operations are critical to our success.

Our purchasing group works closely with many areas of our organization, especially our product managers who work closely with our OEM suppliers and our sales force, to understand the volume and mix of IT products that should be purchased. In addition, the purchasing group utilizes an internally developed, proprietary information systems application tool, which further aids the purchasing group in forecasting future product demand based on several factors, including past sales levels, expected product life cycle and current and projected economic conditions. Our information systems tool also tracks warehouse and channel inventory levels and open purchase orders on a real-time basis enabling us to stock inventory at a regional level closer to the customer as well as to actively manage our working capital resources. This level of automation allows for greater efficiencies of inventory management by replenishing and turning inventory as well as placing purchase orders on a more frequent basis. Furthermore, our systems tool also allows for automated checks and controls to prevent the generation of inaccurate orders.

The purchasing group is supported by employees based in China who handle daily back-office routine functions such as purchase order issuance, changes to purchase orders and returns. Having a purchasing support team in China allows us to benefit from highly skilled and lower cost labor.

Managing our OEM supplier incentive programs is another critical function of our purchasing group. We attempt to maximize the benefit of incentives, rebates and volume discounts that our OEM suppliers offer us from time-to-time. We carefully evaluate these purchasing benefits relative to our product handling and carrying costs so that we do not over-invest in our inventory. We also closely monitor inventory levels on a product-by-product basis and plan purchases to take advantage of OEM supplier provided price protection. By managing inventory levels at each of our regional distribution facilities, we can minimize our shipping costs by stocking products near to our resellers and their end-user customers.

Financial Services

We offer various credit terms to our customers as well as prepayment, credit card and cash on delivery terms. We also collect outstanding accounts receivable on behalf of our reseller customers in certain markets. In issuing credit to our reseller customers, we closely and continually monitor their credit worthiness through our

information systems, which contain detailed information on each customer’s payment history, as well as through periodic detailed credit file reviews by our financial services staff. In addition, we participate in a U.S. credit association whose members exchange customer credit rating information. In our operations in Canada, we have also purchased credit insurance to further control credit risks. Finally, we establish reserves for estimated credit losses in the normal course of business.

We also sell to certain reseller customers where the transactions are financed by a third-party floor plan financing company. These transactions generally involve large sales and are limited to selected product lines. The expenses charged by these financing companies will be subsidized either by our OEM suppliers or paid by us. We generally receive payment from these financing institutions within 15 days from the date of sale, depending on the specific arrangement.

Information Technology

Our IT systems manage the entire order cycle, including processing customer orders, production planning, customer billing and payment tracking. These internally developed IT systems make our distribution and contract assembly operations more efficient and provide visibility into all aspects of our operations. We believe our IT infrastructure is scalable to support further growth. The continuing enhancement of our IT systems facilitates improved product and inventory management, streamlines order and delivery processes, and increases operational flexibility. Having a common enterprise resource-planning platform allows us to quickly respond to fluctuations in our customers’ orders in different parts of the world and facilitates simultaneous product introduction in multiple regions while providing visibility into product availability.

To allow our customers and suppliers to communicate and transact business with us in an efficient and consistent manner, we have implemented a mix of proprietary and off-the-shelf software programs which integrate our IT systems with those of our customers and suppliers. In particular, we maintain EDI and web-based communication links with many of our reseller customers to enable them to search for products, check real-time price, inventory availability and specifications, place and track orders, receive invoices and process returns. We plan to continue making significant investments in our IT systems to facilitate the flow of information, increase our efficiency and lower transaction costs.

Competition

Our current major competitors in IT product distribution include Bell Microproducts, Ingram Micro and Tech Data and, to a lesser extent, regional distributors. We also face competition from our OEM suppliers, which also sell directly to resellers and end-users. The distribution industry has recently undergone, and continues to undergo, major consolidation. During this period, a number of significant players within the IT distribution industry exited or merged with other players within the distribution market. We have participated in this consolidation through our acquisitions of Merisel Canada and Gates/Arrow, and we are continuing to evaluate other opportunities.

Our current competitors in contract assembly include Benchmark Electronics, Celestica, Foxconn, Sanmina-SCI and Solectron. We also face competition from the manufacturing and assembly operations of our current and potential customers, which continually evaluate the relative benefits of internal manufacturing and assembly compared to outsourcing.

Employees

As of August 31, 2003, we had 1,540 full-time employees, including 627 in sales and marketing, 558 in distribution and assembly operations, and 355 in executive, finance, IT and administration. Given the variability in our business and the quick response time required by customers, it is critical that we are able to rapidly ramp-up and ramp-down our production capabilities to maximize efficiency. As a result, we frequently use a significant number of temporary or contract workers. Our employees are not represented by a labor union nor are they covered by a collective bargaining agreement. We consider our employee relations to be good.

Facilities

Our principal executive offices are located in Fremont, California. We operate more than 25 distribution, assembly and administrative facilities in six different countries encompassing a total of approximately 1.6 million square feet. We lease each of these facilities, except a 62,500 square foot sales and marketing facility in Greenville, South Carolina, a 40,700 square foot administrative facility in China, a 9,300 square foot administrative facility in Japan and a 124,000 square foot assembly facility in the United Kingdom which we own. In the United States, we operate 12 principal facilities with a total area of approximately one million square feet of space. Leases for our current U.S. facilities expire between March 2004 and July 2013. Our principal assembly facility is located in Fremont, California and our principal distribution facilities are located in in Fremont, California and Toronto, Ontario. Our distribution facility in Fremont, California is ISO 9001:2000 certified. We have sublet unused portions of some of our facilities. We believe our facilities are well maintained and adequate for current operating needs.

Legal Proceedings

We are not currently a party to any material legal proceedings. We are from time to time involved in legal proceedings in the ordinary course of business, including the following:

On May 1, 2002, Seanix Technology Inc. filed a trademark infringement action in the Federal Court of Canada against us and our wholly-owned Canadian subsidiary, SYNNEX Canada Limited. The suit claims that we have infringed on Seanix’s exclusive rights to its Canadian Trademark Registration and caused confusion between the two companies resulting from, among other things, our use of marks confusingly similar to the Seanix trademarks. The complaint seeks injunctive relief and monetary damages in an amount to be determined. No discover has taken place and no trial date has been set.

On May 7, 2002, Acropolis Systems, Inc. and Tony Yeh filed a civil suit in Santa Clara county California Superior Court against us, Robert Huang, C. Kevin Chuang and Stephen R. Bowling. The suit alleges violation of California securities laws, fraud and concealment and breach of contract resulting from, among other things, our alleged failure to disclose the existence of a lien in favor of us on the assets of eManage.com prior to entering into stock purchase agreements for shares of eManage stock. At the time of this stock purchase, we were the majority shareholder of eManage.com. The complaint seeks monetary damages in the amount of approximately $2,000,000. No discovery has taken place and no trial date has been set.

In addition, we are involved in various bankruptcy preference actions where we were a supplier to the companies now in bankruptcy. For example, on March 14, 2002, the trustees of the bankruptcy estate of Inacom Corp. filed a bankruptcy preference action in the United States Bankruptcy Court for the District of Delaware against us. On April 10, 2002, the trustees of the bankruptcy estate of MicroAge, Inc. filed a bankruptcy preference action in the United States Bankruptcy Court for the District of Arizona against us. On February 21,

2003, the trustees of the bankruptcy estate of US Office Products Company filed a bankruptcy preference action in the United States Bankruptcy Court for the District of Delaware against us. On March 31, 2003, the trustees of the bankruptcy estate of Infinite Technology Group Ltd. filed a bankruptcy preference action in the United States Bankruptcy Court for the Eastern District of New York against us. On November 2, 2003, the trustees of the bankruptcy estate of Harvard Manufacturing—Texas LLC filed a bankruptcy preference action in the United States Bankruptcy Court for the Western District of Texas against us. These preference actions are filed by the trustee of the bankruptcy estate on behalf of the bankrupt entity’s debtors and generally seek to have payments made by the bankrupt entity within 90 days prior to the bankruptcy returned to the bankruptcy estate for allocation among all of the bankrupt entity’s creditors. The amounts sought to be returned in the various preference actions range from $7,000 to $700,000. In each of the actions, no discovery has taken place and no trial dates have been set.

We believe that the outcome of these actions will not have a material adverse effect on us. We may not be successful in defending these or other claims. Regardless of the outcome, litigation can result in substantial expense and could divert the efforts of our management. See “Risk Factors—We may become involved in intellectual property or other disputes that could cause us to incur substantial costs, divert the efforts of our management, require us to pay substantial damages or require us to obtain a license, which may not be available on commercially reasonable terms, if at all.”

MANAGEMENT

Executive Officers and Directors

The following table sets forth certain information regarding our executive officers, key employees and directors and their ages as of September 30, 2003:

Name	Age	Position
Matthew Miau(1)	57	Chairman of the Board
Robert Huang(1)	58	President, Chief Executive Officer and Director
Peter Larocque	41	Executive Vice President, Distribution
Dennis Polk	37	Chief Financial Officer and Senior Vice President, Corporate Finance
Simon Leung	37	General Counsel and Corporate Secretary
Catherine Chiu	47	Senior Vice President of Corporate Development and Communications
David Dennis	42	Senior Vice President, Product Marketing
Peggy Fong	42	Senior Vice President, Finance Operations
Gary Gulmon	42	Chief Information Officer
Stephen Ichinaga	42	Senior Vice President, Systems Integration
Steve Jow	40	Senior Vice President, Commercial Sales
Mitchell Martin	40	President, Sales and Marketing, SYNNEX Canada Limited
Timothy Rush	42	Senior Vice President, Operations
Michael Thomson	57	Senior Vice President, Marketing and Services
Michael Van Gieson	46	Senior Vice President, Product Marketing
Fred Breidenbach(2)(3)	56	Director
David Rynne(1)(2)(3)(4)	63	Director
Young Sohn(3)(4)	47	Director
Dwight Steffensen(2)(4)	60	Director

(1)	Member of the Executive Committee

(2)	Member of the Audit Committee

(3)	Member of the Nominating and Corporate Governance Committee

(4)	Member of the Compensation Committee

Matthew Miau has served as a member of our board of directors since 1992 and as a non-executive employee since 2001. Mr. Miau is the Chairman of the Board of MiTAC International Corporation, MiTAC Incorporated, Synnex Technology International and us. Mr. Miau is also the Vice Chairman of UPC Technology Corp. and the Chairman of Lien Hwa Industrial Corp. He is also a member of the Board of Directors of the Institute for Information Industry and a member of the Board of Supervisors of the Industrial Technology Research Institute, each in Taiwan. Mr. Miau received a Bachelor of Science degree in Electrical Engineering/Computer Science from the University of California, Berkeley and a Master of Business degree from Santa Clara University.

Robert Huang founded our company in 1980 and serves as President, Chief Executive Officer and Director. Prior to founding our company, Mr. Huang served as the Headquarters Sales Manager of Advanced Micro Devices, a semiconductor company. Mr. Huang received a Bachelor of Science degree in Electrical Engineering from Kyushyu University, Japan, Master of Science degrees in Electrical Engineering and Statistics from the University of Rochester and a Master of Science degree in Management Science from the Sloan School of Management at the Massachusetts Institute of Technology.

Peter Larocque has served as our Executive Vice President of Distribution since June 2001 and previously served as our Senior Vice President of Sales and Marketing from September 1997 until June 2001. Mr. Larocque is responsible for our North America distribution business. Mr. Larocque received a Bachelor of Science degree in Economics from the University of Western Ontario, Canada.

Dennis Polk is our Chief Financial Officer and Senior Vice President of Corporate Finance and has served in this capacity since joining us in February 2002. From March 2001 through January 2002, Mr. Polk provided services, primarily in the capacity of chief financial officer, for several entities, including IPS Associates, SeeCommerce and Prestwick Partners. From February 2000 to February 2001, Mr. Polk served as the Vice President, Finance at DoveBid, Inc., a capital asset disposition and valuation firm. From December 1995 to January 2000, Mr. Polk was first the Corporate Controller and later the Senior Vice President of Finance and Principal Financial Officer of Savoir Technology Group, Inc., a computer systems distributor and contract assembler. Mr. Polk received a Bachelor of Science degree in Accounting from Santa Clara University and is a Certified Public Accountant.

Simon Leung is our General Counsel and Corporate Secretary and has served in this capacity since May 2001. Mr. Leung joined us in November 2000 as Corporate Counsel. From December 1999 to November 2000, Mr. Leung was an attorney at the law firm of Paul, Hastings, Janofsky & Walker LLP. From May 1995 to December 1999, Mr. Leung was an attorney at the former law firm of Fotenos & Suttle, P.C. Mr. Leung received a Bachelor of Arts degree from the University of California, Davis and his Juris Doctor degree from the University of Minnesota Law School.

Catherine Chiu has served as our Senior Vice President of Corporate Development and Communications since November 2003. Prior to joining us, Ms. Chiu was a principal of Falcon Group, a consulting organization providing strategy, finance and mergers and acquisition advisory services. From January 2000 to February 2001, Ms. Chiu served first as Chief Financial Officer and later as Chief Executive Officer of Certainty Solutions, a company offering out-sourced internet infrastructure management services. From January 1997 to December 1999, Ms. Chiu worked as a venture partner at Alpine Technology Ventures, an early-stage venture capital firm. From 1995 to 1997, Ms. Chiu was a Managing Director at CIBC Wood Gundy in charge of technology mergers and acquisitions. Ms. Chiu received a Bachelor of Science in Electrical Engineering from Johns Hopkins University and a Master’s degree in Business Administration from the University of California, Berkeley Haas School of Business.

David Dennis has served as our Senior Vice President of Product Marketing for HP product offerings since May 2003 and previously served as our Vice President of Product Management for the HP product lines from November 2000 to April 2003. Mr. Dennis joined us in 1994 and has held a variety of sales and product management positions. Mr. Dennis received a Bachelor of Science degree in Business Administration and Marketing from California State University, Chico.

Peggy Fong has served as our Senior Vice President of Finance Operations since August 2002 and previously served as our Vice President of Finance Operations. Ms. Fong joined us in November 1999 as our Controller of Manufacturing Operations. Prior to joining us, Ms. Fong served as the Chief Financial Officer and Chief Executive Officer at Hercules Computer Technology, Inc., a leading graphics card company, from August 1992 to August 1999. Ms. Fong received a Bachelor of Science degree in Business Administration from San Jose State University.

Gary Gulmon has served as our Chief Information Officer since December 2000. Mr. Gulmon joined us in 1982 and has held several positions with our company. From July 1997 to December 2000, he served as Director of MIS. Mr. Gulmon received a Bachelor of Science degree in Business Administration and Accounting from San Jose State University.

Stephen Ichinaga has served as our Senior Vice President of the Systems Integration Division since August 2002 and has previously served as our Senior Vice President of Business Development. Mr. Ichinaga joined us in March 1984 and has held a variety of sales positions. From October 1999 to June 2001, Mr. Ichinaga served as Vice President of Business Development. Prior to this position, Mr. Ichinaga served as Vice President of Western U.S. Sales. Mr. Ichinaga received a Bachelor of Science degree in Managerial Economics from the University of California, Davis.

Steve Jow has served as our Senior Vice President of Commercial Sales since May 2003 and previously served as our Vice President of Western U.S. Distribution Sales from June 2000 to April 2003. Mr. Jow joined us

in 1990 and has held a variety of sales and management positions. From September 1999 to June 2000, Mr. Jow served as Associate Vice President of Distribution.

Mitchell Martin has served as President of Sales and Marketing, SYNNEX Canada Limited since September 2001 and previously served as President and Chief Executive Officer of Merisel Canada from August 2000 until our acquisition of Merisel Canada in July 2001. Prior to this, he joined the Products department at Merisel in 1989. Mr. Martin received a Master’s degree in Business Administration, with emphasis in the areas of product marketing and product management, from York University in Toronto.

Timothy Rush has served as our Senior Vice President of Operations since July 2001. Mr Rush joined us in March 1997 as our Vice President of Operations. Prior to joining us, Mr. Rush served as the Vice President of Operations of Merisel FAB, Inc. from March 1995 to March 1997. From November 1993 to March 1995, Mr. Rush served as the Director of Procurement and Vendor Relations of Vanstar Corporation, a network integrator and computer reseller. Mr. Rush received a Bachelor of Science degree in Business Management and an Associate of Science degree in Computer Studies from Keene State College.

Michael Thomson has served as our Senior Vice President of Marketing and Services since July 2003. From January 2002 to July 2003, Mr. Thomson served as our Senior Vice President of Eastern U.S. Sales. Mr. Thomson joined us in May 1996 as our Vice President of Eastern U.S. Sales. Prior to joining us, Mr. Thomson served as Vice President of Sales of Gates/Arrow Distributing from July 1992 until October 1995.

Michael Van Gieson has served as our Senior Vice President of Product Marketing since January 2002 and previously served as our Vice President of Tier One Product Marketing from May 1999 until January 2002. Mr. Van Gieson joined us in February 1997 as Associate Vice President of Product Marketing. Mr. Van Gieson received a Bachelor of Science degree in Administrative Management from Clemson University.

Fred Breidenbach has served as a member of our board of directors since February 2003. Mr. Breidenbach has had his own consulting firm of FA Breidenbach & Associates, LLC since November 1997. Prior to that, he served as the President and Chief Operating Officer of Gulfstream Aerospace Corporation, an aviation company, from 1993 to 1997. Prior to joining Gulfstream, Mr. Breidenbach spent 25 years in various positions at General Electric Company, including five years as an officer of the General Electric Company and two years as President, GE Aerospace Asia Pacific, responsible for business development and Asian operations. Mr. Breidenbach currently serves on the board of directors of Suntron. Mr. Breidenbach received a Bachelor of Science degree in Industrial Engineering from Pennsylvania State University and a Master of Business Administration from Xavier University.

David Rynne has served as a member of our board of directors since October 2003. Mr. Rynne served as the Chief Executive Officer of Receipt.com, a secure data transfer company, from July 1999 until its acquisition by Vali-Cert in December 1999. From August 1998 to June 1999, he served as Vice President at Nortel Networks, a networking solutions company. Mr. Rynne served as the Executive Vice President and Chief Financial Officer at Bay Networks from January 1997 until its merger into Nortel Networks in August 1998. From July 1982 until December 1996, Mr. Rynne was Senior Vice President and Chief Financial Officer of Tandem Computers, a computer manufacturer. Prior to Tandem, Mr. Rynne spent 18 years in various financial positions including Corporate Controller at Burroughs Corporation. Mr. Rynne is on the board of directors of Zoran Corporation and two private companies. Mr. Rynne received a Bachelor of Science degree in Finance and a Master of Business Administration from the University of Buffalo.

Young Sohn has served as a member of our board of directors since February 2001. Mr. Sohn joined Agilent Technologies, Inc., a global diversified technology company, in August 2003 as the Senior Vice President and General Manager of the Semiconductor Products Group. From February 1999 to August 2003, Mr. Sohn was the Chairman and Chief Executive Officer of Oak Technology, Inc. Before joining Oak Technology, Inc., Mr. Sohn served as President of the Hard Disk Drive Group of Quantum Corporation from February 1996 to February 1999. Prior to Quantum Corporation, Mr. Sohn spent ten years in various management positions at Intel Corporation, including Marketing Director of Worldwide Channel Marketing, and

PC Chipset Business Unit Manager. Mr. Sohn is a member of the board of directors of Cymer, Inc. and PLX Technology, Inc. Mr. Sohn received a Bachelor of Science degree in Electrical Engineering from the University of Pennsylvania and a Master of Business Administration from the Sloan School of Management at the Massachusetts Institute of Technology.

Dwight Steffensen has served as a member of our board of directors since February 2002. Mr. Steffensen served as the Chairman and Chief Executive Officer of Merisel, Inc. from February 1996 until August 2000. Prior to joining Merisel, Mr. Steffensen served as President and Chief Operating Officer at Bergen Brunswig Corporation, a healthcare company. Prior to the merger of Bergen Brunswig Corporation and Synergex Corporation, he served as President and Chief Executive Officer of Synergex. Mr. Steffensen received a Bachelor of Science degree in Economics from Stanford University and is a certified public accountant.

Director Compensation

Each outside member of our Board of Directors receives a cash bonus of $25,000 upon joining the Board and then receives an annual cash retainer fee of $25,000, an additional $1,000 for each meeting of the Board of Directors attended and $2,000 for each committee meeting attended. In addition, each committee chair receives an annual retainer fee of $5,000. All directors are reimbursed for their reasonable out-of-pocket expenses in serving on the Board of Directors or any committee of the Board of Directors. Directors are eligible to receive stock options under our 1997 Stock Option/Stock Issuance Plan and our Special Executive Stock Option/Stock Issuance Plan and will be eligible to receive equity incentives, in the form of stock options or direct stock issuances, under our 2003 Stock Incentive Plan.

On the date of each annual stockholders meeting held after completion of this offering, each of our continuing non-employee board members will receive an option to purchase 5,000 shares of common stock pursuant to the automatic option grant program under our 2003 Stock Incentive Plan, provided such individual has served on our board for at least six months. Each non-employee director who is first elected as a non-employee board member on or after the completion of this offering and who has not been in our prior employ will receive an option to purchase 25,000 shares of common stock on the date such individual joins the board. The options will have an exercise price equal to the fair market value of the common stock on the grant date, and will have a term of 10 years, subject to earlier termination following the director’s cessation of board service. The shares subject to each annual 5,000 share option grant and the shares subject to each initial 25,000 share automatic option grant will vest over five years at a rate of 20% upon the first anniversary of their vesting start dates and then at a rate of 1/60th per month thereafter. Before adoption of the 2003 Stock Incentive Plan, options were generally granted to non-employee directors for the same number of shares and subject to the same basic terms as described above.

In fiscal 2002, Matthew Miau received a $1,000 quarterly retainer, $2,500 for board meeting fees and a 187,500 share option grant. Mr. Miau also received $550,000 for extraordinary services as our Chairman and for services as a non-officer employee. The services performed by Mr. Miau were beyond those typically provided by a non-executive chairman. For example, in 2002 and 2003, Mr. Miau was actively involved in marketing and new business development activities for us. During this period, he participated in meetings with certain existing and potential customers. Mr. Miau also participated in meetings assisting our management in the oversight of business and financial strategies. In addition, Mr. Miau has played an integral role in the collaborative effort of MiTAC International and SYNNEX in the contract assembly business. Any future compensation payable to Mr. Miau will be based upon the recommendation of the compensation committee and subject to the approval of the board of directors. In fiscal 2002, Mr. Sohn received a $25,000 retainer, $6,000 for board meeting fees and a 5,000 share option grant. In fiscal 2002, Mr. Steffensen received a $25,000 retainer, $6,500 for board meeting fees and a 25,000 share option grant.

Board Structure

Our board of directors currently consists of six directors. All directors are elected to hold office until the next annual meeting of our stockholders and until their successors have been elected.

Board Committees

Our board of directors has an audit committee, compensation committee, a nominating and corporate governance committee and an executive committee.

Audit Committee

The audit committee provides assistance to the board of directors in fulfilling its legal and fiduciary obligations in matters involving our accounting, auditing, financial reporting, internal control and legal compliance functions by approving the services performed by our independent accountants and reviewing their reports regarding our accounting practices and systems of internal accounting controls. The audit committee also oversees the audit efforts of our independent accountants and takes those actions as it deems necessary to satisfy itself that the accountants are independent of management. The audit committee currently consists of Fred Breidenbach, David Rynne and Dwight Steffensen. Mr. Steffensen is the chairman of the audit committee and our audit committee financial expert as currently defined under SEC rules. We believe that the composition of our audit committee meets the criteria for independence under, and the functioning of our audit committee complies with the requirements of, the Sarbanes-Oxley Act of 2002, the rules of the New York Stock Exchange and SEC rules and regulations. We intend to comply with future audit committee requirements as they become applicable to us.

Compensation Committee

The compensation committee determines our general compensation policies and the compensation provided to our directors and officers. The compensation committee also reviews and determines bonuses for our officers and other employees. In addition, the compensation committee reviews and determines equity-based compensation for our directors, officers, employees and consultants and administers our stock option plans and employee stock purchase plan. The current members of the compensation committee are David Rynne, Young Sohn and Dwight Steffensen. Mr. Sohn is the chairman of our compensation committee. We believe that the composition of our compensation committee meet the criteria for independence under, and the functioning of our compensation committee complies with the applicable requirements of, the Sarbanes-Oxley Act of 2002, the New York Stock Exchange and SEC rules and regulations. We intend to comply with future compensation committee requirements as they become applicable to us.

Nominating and Corporate Governance Committee

The nominating and corporate governance committee is responsible for making recommendations to the board of directors regarding candidates for directorships and the size and composition of the board and for overseeing our corporate governance guidelines and reporting and making recommendations to the board concerning corporate governance matters. The current members of the nominating and corporate governance committee are Fred Breidenbach, David Rynne and Young Sohn. Mr. Breidenbach is the chairman of the nominating and corporate governance committee. We believe that the composition of our nominating and corporate governance committee meet the criteria for independence under, and the functioning of our nominating and corporation governance committee complies with the applicable requirements of, the Sarbanes-Oxley Act of 2002, the New York Stock Exchange and SEC rules and regulations. We intend to comply with future nominating and corporate governance committee requirements as they become applicable to us.

Executive Committee

The executive committee is responsible for identifying strategic opportunities, including but not limited to acquisitions or investments and assessing these opportunities. The executive committee is also responsible for making recommendations to our board of directors regarding these opportunities. The current members of our executive committee are Robert Huang, Matthew Miau and David Rynne. Mr. Miau is the chairman of our executive committee.

Compensation Committee Interlocks and Insider Participation

None of our executive officers serves on the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of our board of directors or compensation committee.

Corporate Governance

We intend to adopt a code of business conduct and ethics for directors, officers and employees which meets the requirements under the Sarbanes-Oxley Act of 2002, SEC rules and regulations and the proposed New York Stock Exchange requirements. We intend to comply with future code of conduct requirements as they become applicable to us.

A copy of our code of business conduct and ethics will be posted on our website in accordance with the requirements of the Sarbanes-Oxley Act of 2002.

Prior to completion of this offering, we intend to have in place disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 will be recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission rules and forms and that such information will be accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Executive Compensation

The following table sets forth the cash compensation paid by us, as well as certain other compensation paid or accrued, during the fiscal year ended November 30, 2002 to our Chief Executive Officer and our four next most highly compensated executive officers whose total salary and bonus for services rendered in fiscal 2002 exceeded $100,000, whom we refer to as the named executive officers.

Summary Compensation Table

	Annual Compensation							Long-term Compensation
Name and Principal Position(s)	Salary		Bonus		Other Compensation			Shares Underlying Options
Robert Huang President, Chief Executive Officer and Director	$	350,000	$	1,100,000		—		375,000
Peter Larocque Executive Vice President, Distribution	$	277,645	$	300,000	$	4,100	(1)	75,000
Dennis Polk(3) Chief Financial Officer and Senior Vice President, Corporate Finance	$	138,836	$	50,000	$	500	(2)	75,000
Simon Leung General Counsel and Corporate Secretary	$	148,967	$	60,000	$	500	(2)	20,000
Kevin Chuang Executive Vice President and Chief Operating Officer(4)	$	266,615	$	300,000		—		75,000

(1)	Represents $3,600 in automobile allowance and $500 in 401(k) plan contributions.

(2)	Represents $500 in 401(k) plan contributions.

(3)	Mr. Polk joined us as our Chief Financial Officer and Senior Vice President of Corporate Finance in February 2002. Mr. Polk’s salary for fiscal 2002 on an annualized basis was $180,000.

(4)	Mr. Chuang resigned as our Executive Vice President and Chief Operating Officer in June 2002.

Option Grants in Last Fiscal Year

This table provides information concerning stock options granted to the named executive officers during fiscal 2002. The percentage of total options granted is based on a total of 1,397,548 options granted in fiscal 2002. The exercise price on the date of grant was equal to the fair market value on the date of grant as determined by the board of directors. Options have a maximum term of 10 years but may terminate earlier for specified events related to cessation of employment. These options were granted under our Special Executive Option Plan and our 1997 Stock Option/Stock Incentive Plan and vest over five years at a rate of 20% upon the first anniversary of their vesting start dates and then at a rate of ¹/60 per month thereafter. The 5% and 10% assumed rates of appreciation are mandated by the rules of the Securities and Exchange Commission and do not represent our estimate or projection of the future stock price.

The values reflected in the table may never be achieved. The dollar values have been calculated by determining the difference between the fair market value of the securities underlying the options at November 30, 2002 and the exercise prices of the options. Solely for purposes of determining the value of the options at November 30, 2002, we have assumed that the fair market value of shares of common stock issuable upon exercise of options was $15.00 per share, the mid-point of the estimated range of the initial public offering price per share, since the common stock was not traded in an established market prior to the offering.

	Individual Grants					Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term ($)
Name	Number of Securities Underlying Options Granted (#)	Percent of Total Options Granted in Fiscal 2002 (%)		Exercise Price Per Share ($)	Expiration Date
Name	Number of Securities Underlying Options Granted (#)	Percent of Total Options Granted in Fiscal 2002 (%)		Exercise Price Per Share ($)	Expiration Date	5%		10%
Robert Huang	375,000	26.8	%	10.00	3/29/12	$	5,412,532	$	10,839,801
Peter Larocque	75,000	5.4		10.00	3/29/12	$	1,082,506	$	2,167,960
Dennis Polk	75,000	5.4		10.00	2/15/12	$	1,082,506	$	2,167,960
Simon Leung	20,000	1.4		10.00	2/15/12	$	288,668	$	578,123
Kevin Chuang	75,000	5.4		10.00	3/29/12	$	1,082,506	$	2,167,960

Aggregated Option Exercises in 2002 and Fiscal Year-End Values

This table sets forth with respect to the named executive officers, the number of shares acquired and the value realized upon exercise of stock options during fiscal 2002 and the exercisable and unexercisable options held by them as of November 30, 2002. The “Value Realized” and the “Value of Unexercised In-the-Money Options” shown in the table represents an amount equal to the difference between the assumed initial public offering price of $15.00 per share and the option exercise price multiplied by the number of shares acquired on exercise and the number of unexercised in-the-money options.

Name	Shares Acquired on Exercise (#)	Value Realized ($)		Number of Securities Underlying Unexercised Options at November 30, 2002		Value of Unexercised In-the-Money Options at November 30, 2002
Name	Shares Acquired on Exercise (#)	Value Realized ($)		Exercisable	Unexercisable	Exercisable		Unexercisable
Robert Huang	—	$	—	1,246,666	603,333	$	10,839,993	$	3,484,997
Peter Larocque	—		—	221,134	118,663	$	2,096,603	$	675,971
Dennis Polk	—		—	—	75,000	$	—	$	375,000
Simon Leung	—		—	7,667	32,333	$	23,001	$	136,999
Kevin Chuang	—		—	325,166	136,334	$	2,988,995	$	809,006

Employee Benefit Plans

2003 Stock Incentive Plan

General. Our 2003 Stock Incentive Plan is intended to serve as the successor plan to our 1997 Stock Option/Stock Issuance Plan, Special Executive Stock Option/Stock Issuance Plan and our 1993 Stock Option Plan, which have all been terminated in connection with this offering. Our 2003 Stock Incentive Plan was adopted by our board of directors in 2003 and is subject to approval by our stockholders. It will become effective upon completion of this offering. The plan provides for the direct award or sale of shares of common stock, the grant of options to purchase shares of common stock and the award of stock appreciation rights to employees and non-employee directors, advisors and consultants. However, incentive stock options as defined in Section 422 of the Internal Revenue Code may be granted only to employees.

Administration. The 2003 Stock Incentive Plan will be administered by our compensation committee. The compensation committee will determine which eligible individuals are to receive awards under the plan, the number of shares subject to the awards, the vesting schedule applicable to the awards and other terms of the award, subject to the limits of the plan. The compensation committee may delegate its administrative authority, subject to certain limitations, with respect to individuals who are not officers.

The board of directors will be able to amend or modify the 2003 Stock Incentive Plan at any time, subject to any required stockholder approval. The plan will terminate no later than September 1, 2013.

Authorized Shares. The maximum number of shares authorized for issuance under the 2003 Stock Incentive Plan shall not exceed the sum of (1) the number of shares subject to outstanding options granted under our 1997 Stock Option/Stock Issuance Plan, our Special Executive Stock Option/Stock Issuance Plan and our 1993 Stock Option Plan outstanding as of the closing of this offering, to the extent those options expire, terminate or are cancelled for any reason prior to being exercised, plus (2) 5,506,649 shares of common stock; provided however, that the number of authorized shares under the 2003 Stock Incentive Plan shall not exceed 14,111,761 shares of common stock. However, no participant in the 2003 Stock Incentive Plan may receive option grants or stock appreciation rights for more than 1,500,000 shares per calendar year, or more than 2,500,000 shares in the participant’s first calendar year of service.

Plan Features. Under the 2003 Stock Incentive Plan:

•

Qualified employees will be eligible for the grant of incentive stock options to purchase shares of common stock.

•

Qualified employees and non-employee directors, advisors and consultants will also be eligible for the grant of nonstatutory stock options and restricted stock grants.

•

Qualified non-employee directors will be eligible to receive automatic option grants to purchase shares of common stock at an exercise price equal to 100% of the fair market value of those shares on the date of grant. Non-employee directors who first join the board after the plan is effective will receive an initial option grant of 25,000 shares, and all non-employee directors will be eligible for annual option grants for 5,000 shares for each year they continue to serve.

•

The compensation committee will determine the exercise price of options or the purchase price of restricted stock grants, but the option price for incentive stock options will not be less than 100% of the fair market value of the stock on the date of grant and the option price for nonstatutory stock options will not be less than 85% of the fair market value of the stock on the date of grant although the committee may determine that the price will vary in accordance with a predetermined formula.

•

The exercise price or purchase price may, at the discretion of the compensation committee, be paid in cash, cash equivalents, full-recourse promissory notes, past services or future services.

•

Qualified employees and non-employee directors, advisors and consultants will also be eligible for the award of stock appreciation rights, which enable the holder to realize the value of future appreciation in our common stock, payable in cash or shares of common stock.

Vesting. The 2003 Stock Incentive Plan includes change in control provisions that may result in accelerated vesting of outstanding awards. The committee may also grant options, restricted stock or stock appreciation rights in which all or some of the shares shall become vested if we have a change in control. Change in control is defined under the 2003 Stock Incentive Plan as:

•

a change in the composition of the board of directors, as a result of which fewer than one-half of the incumbent directors are directors who either:

•

had been directors on our board 24 months before the change; or

•

were elected, or nominated for election, to the board with the affirmative votes of at least a majority of the directors who had been directors 24 months before the change and who were still in office at the time of the election or nomination and the directors whose election or nomination was previously so approved; or

•

an acquisition or aggregation of securities by a person, including two or more persons acting together, as a result of which the person becomes the beneficial owner of 50% or more of the voting power of our outstanding securities; or

•

a merger in which our stockholder do not continue to own more than 50% of our stock.

Upon a corporate reorganization, outstanding awards may accelerate vesting or be settled for cash if not assumed by the acquiring company.

2003 Employee Stock Purchase Plan.

General. The board of directors adopted our 2003 Employee Stock Purchase Plan in 2003, to be effective upon completion of this offering. Our 2003 Employee Stock Purchase Plan is subject to approval by our stockholders. A total of 500,000 shares of common stock have been reserved for issuance under the 2003 Employee Stock Purchase Plan.

Administration. Our 2003 Employee Stock Purchase Plan, which is intended to qualify under Section 423 of the Internal Revenue Code, is administered by the board of directors or by a committee appointed by the board. Employees in the U.S. or Canada other than officers and employee directors who constitute “highly compensated employees” under Section 414 (q) of the Internal Revenue Code and 5% or greater stockholders, are eligible to participate if they are customarily employed for more than 20 hours per week and for more than five months in any calendar year. Our 2003 Employee Stock Purchase Plan permits eligible employees to purchase common stock through payroll deductions, which may not exceed 15% of an employee’s total compensation. The maximum number of shares a participant may purchase during a single accumulation period is 1,250 shares.

Offering and Accumulation Periods. The 2003 Employee Stock Purchase Plan will be implemented by a series of overlapping offering periods of 24 months’ duration, with new offering periods, other than the first offering period, beginning in October and April each year. Each offering period will consist of four accumulation periods of up to six months each. During each accumulation period, payroll deductions will accumulate, without interest. On the last trading day of each accumulation period, accumulated payroll deductions will be used to purchase common stock. The initial offering period is expected to begin on the date of this offering and end on September 30, 2005. The initial accumulation period is expected to begin on the date of this offering and end on March 31, 2004.

The purchase price will equal 85% of the fair market value per share of common stock on either the first trading day of the offering period or on the last trading day of the accumulation period, whichever is less. If the fair market value of our stock at the start of an offering period is higher than the fair market value at the start of a subsequent offering period, then the first offering period will automatically terminate and participants will be automatically re-enrolled in the new offering period.

Employees may withdraw their accumulated payroll deductions at any time. Participation in our 2003 Employee Stock Purchase Plan ends automatically on termination of employment. Immediately before the effective time of a corporate reorganization, the accumulation period then in progress will terminate and stock will be purchased with the accumulated payroll deductions, unless the 2003 Employee Stock Purchase Plan is assumed by the surviving corporation or its parent corporation under the plan of merger or consolidation.

The board of directors may amend, suspend or terminate the plan at any time. However, certain amendments may require stockholder approval. Unless earlier terminated, the 2003 Employee Stock Purchase Plan will terminate on September 1, 2013.

Deferred Compensation Plan

Introduction. Our Deferred Compensation Plan became effective on January 1, 1994. The plan is designed to permit designated employees to accumulate additional income for retirement and other personal financial goals through a nonqualified deferred compensation plan that enables the officer or director to make elective deferrals of compensation to which he or she will become entitled in the future.

Eligibility. Employees designated by the company as eligible to participate in the plan may participate in the plan.

Elective Contributions. Each participant executes a salary and/or bonus reduction agreement to reduce a specified amount or salary and/or bonus for any calendar year. Such salary reduction agreement must be executed no later than the last day of the preceding calendar year, except that a salary reduction agreement may be executed with respect to a bonus before the amount of the bonus is ascertainable. A salary reduction agreement for a participant’s initial participation in the plan must be executed no later than thirty (30) days after the participant becomes eligible to participate in the plan and will be applied only to compensation earned after its execution or to a bonus before the amount of the bonus is ascertainable. No salary reduction agreement may be amended or revoked with respect to base salary after it has been earned, or with respect to a bonus after the amount of the bonus is ascertainable.

Account. An account is maintained for each participant for the purpose of recording the current value of his or her elective contributions, including earnings credited thereto. The account is maintained on our books only, and we are under no obligation to segregate any assets to provide for the plan liabilities. The participant may designate one or more investments as the measure of investment return on the participant’s account. The participant’s account is adjusted monthly to reflect earnings and losses on the participant’s designated investments. If the participant does not designate one or more investments as the measure of the investment return on the participant’s account, then such participant’s account will be credited with interest at a rate determined by our compensation committee.

Distributions. The amount credited to the participant’s account will be distributed as soon as practicable after the earlier of the participant’s termination of employment or attainment of age sixty-five (65). The distribution of benefits to the participant will be made in accordance with the election made by the participant in a lump sum or in equal monthly or annual installments over a period not to exceed fifteen (15) years.

The participant may apply for a hardship distribution in limited circumstances in the event of such participant’s immediate and substantial financial need and participant’s account will be reduced by the amount of

any such hardship withdrawal. A hardship distribution will be distributed at such time or times as the compensation committee determines.

In the event the participant requests a distribution other than a hardship distribution, the compensation committee may distribute any portion of the participant’s account, provided the participant’s account is debited an amount equal to ten percent (10%) of the amount of the requested distribution, in addition to the amount of the requested distribution. Such distribution will be in the form of a lump sum cash payment.

Amendment and Termination. We have the right to refuse to allow a participant to make additional income deferrals under the plan at any time. The plan may be amended or terminated in whole or in part at any time by the Board in its sole discretion. Any amendment or termination will not affect the rights of any participant under the plan other than as may be required by law.

401(k) Plan

In 1993, we adopted a 401(k) profit sharing plan for which our employees generally are eligible. The plan is intended to qualify under Section 401(k) of the Internal Revenue Code, so that contributions to the plan by employees or us and the investment earnings on the contributions are not taxable to the employees until withdrawn. Our contributions are deductible when made. Our employees may elect to reduce their current compensation by an amount equal to the maximum of 20% of total annual compensation or the annual limit permitted by law ($11,000 in 2002) and to have those funds contributed to the plan. We make contributions to the plan which match 25% of each participant’s contribution for the year to the extent that the participant’s contribution does not exceed 4% of the participant’s salary for the year. However, the maximum matching contribution for a participant in any year is $500. A participant vests in his or her matching contribution account in annual increments over three years of service.

Profit Sharing Program

We have a profit sharing program under which we have historically accrued 15% of our pre-tax, before profit sharing accrual, profits for bonus allocation purposes. Under this program, bonuses granted to officers at the Senior Vice President level and above are determined by our compensation committee. Bonus allocations to all other employees are granted at our discretion. Bonus amounts paid to employees through the profit sharing program are not based on quantitative goals. Payments are based on rewarding employees for individual contribution, loyalty, teamwork and integrity. There are no goal amounts within the program as payments are based on the recommendations of managers, and of the compensation committee for senior executives, as a result of their assessment of these factors for the year. Our compensation committee has determined that for fiscal 2003, the bonus for Mr. Huang, our Chief Executive Officer, will be an amount equal to 16.7% of the bonus pool under this program subject to certain criteria related to our performance. Our compensation committee has also determined that for fiscal 2003, the bonus for Mr. Miau, our Chairman, will be an amount equal to 50% of the bonus amount granted to our Chief Executive Officer. Any future compensation payable to Mr. Miau will be based upon the recommendation of the compensation committee and subject to the approval of the board of directors.

Indemnification under our Certificate of Incorporation

Our certificate of incorporation provides that no director shall be personally liable to the company or our stockholders for monetary damages for breach of a fiduciary duty as a director, except for liability (i) for any breach of director’s duty of loyalty to us or our stockholders, (ii) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, (iii) for unlawful payments of dividends or stock repurchases or redemptions or (iv) for any transaction from which the director derived an improper personal benefit.

Our certificate of incorporation requires us to indemnify our directors to the fullest extent permitted by Delaware law. In addition, we have entered into indemnification agreements with each of our directors. Indemnification may not apply in certain circumstances to actions arising under federal securities laws. We believe that the limitation of liability provisions in our certificate of incorporation and indemnification agreements may enhance our ability to attract and retain qualified individuals to serve as directors.

Employment Agreements, Termination of Employment and Change in Control Arrangements

In connection with his termination of employment with us, on or before this offering, Kevin Chuang, our former Chief Operating Officer will execute a severance and non-competition agreement with, and a release in favor of, us in exchange for cash payments totaling $1.7 million. In addition to the cash payments, the agreement accelerates the vesting and extends the exercise period, of certain options previously issued to Mr. Chuang. We estimate the non-cash expense related to the change in options terms will be approximately $564,000. The net, after-tax, effect of the cash payments and option acceleration expense will be approximately $1.4 million. This amount is expected to be incurred in our fiscal fourth quarter.

In addition, if any of the following officers are terminated without cause within two months before or 12 months after a change in control of us (including a voluntary termination because of a reduction in salary or position or a relocation), the officer would be entitled to the following post-termination salary and benefits arrangements:

•

Executive Vice Presidents would be entitled to receive salary continuation at the rate equal to the average of such officer’s total salary and bonus over the prior three years for a minimum of 18 months plus one month per year of employment with us after the eighteenth year of such employment, up to a maximum of 24 months, and paid COBRA for two years; and

•

Senior Vice Presidents and the Chief Information Officer would be entitled to receive salary continuation at the rate equal to the average of such officer’s total salary and bonus over the prior three years for a minimum of 12 months plus one month per year of employment with us after the thirteenth year of such employment, up to a maximum of 18 months, and paid COBRA for one year.

OWNERSHIP BY MITAC INTERNATIONAL AND ITS AFFILIATES

In 1992, MiTAC International, through its wholly-owned subsidiary, Silver Star Development, Ltd., acquired a controlling interest in us. Since 1992, MiTAC International, through its affiliates, has increased its beneficial ownership interest in us to approximately 98%.

MiTAC International, established in 1982, is a publicly held, original design manufacturing company based in Taiwan. MiTAC International specializes in the development and manufacturing of motherboards, servers, LCD PCs, mobile wireless handheld devices, such as wireless PDAs and smart phones. In the last 20 years, MiTAC International has expanded its presence in more than 20 countries around the world.

After completion of this offering, MiTAC International, through its affiliates, will beneficially own approximately 77.3% of our outstanding common stock, assuming the underwriters do not exercise their over-allotment option, and approximately 74.6% if the underwriters exercise their over-allotment option in full. MiTAC International and its affiliates will continue to control us upon completion of the offering. As a result of MiTAC International’s and its affiliates’ continuing beneficial ownership of our common stock, as well as Mr. Miau’s position as Chairman of our board of directors and as chairman, director or officer of MiTAC International and some of its affiliates, MiTAC International and its affiliates will be able to determine the outcome of all matters requiring stockholder action. Other than shares sold by the selling stockholders in this offering, MiTAC International and its affiliates have advised us that they do not presently intend to distribute or dispose of their shares of our common stock held upon completion of this offering. However, following the 180 day lock-up period with the underwriters, and prior thereto with the consent of Bear, Stearns & Co. Inc., MiTAC International and its affiliates may elect to distribute or dispose of some or all of their shares.

The following table sets forth the ownership of our shares by the various entities affiliated with, or which may be considered to be affiliated with, MiTAC International.

Name of our current stockholders	Percentage ownership of us before offering		Percentage ownership of us after this offering, assuming the underwriters do not exercise their over-allotment option		Percentage ownership of us after this offering, if the underwriters exercise their over-allotment option in full
Silver Star Developments Ltd.(1)	55	%	46	%	45	%
Peer Developments Ltd.(2)	24	%	21	%	20	%
Constant Holdings Ltd.(3)	14	%	10	%	9	%
Abundant Investment Group Limited	2	%	*		*
MIX System Holdings Ltd.	1	%	*		*
Harbinger (BVI) Venture Capital Corp.	*		*		*
Budworth Investments Ltd.	*		*		*

(1)	MiTAC International owns 100% of Silver Star Developments Ltd.

(2)	Synnex Technology International indirectly owns 100% of Peer Developments Ltd.

(3)	UPC Technology Corp. owns 100% of Constant Holdings Ltd.

*	Less than 1%.

The above-listed entities are all owned or controlled directly or indirectly by MiTAC International or its significant stockholders, Lien Hwa Industrial Corp., UPC Technology Corp. and Mitac Incorporated, each of which is based in Taiwan. MiTAC International, Lien Hwa Industrial Corp. and UPC Technology Corp. are listed on the Taiwan Stock Exchange. Mitac Incorporated is a privately held company. Our Chairman serves as the chairman, a member of the board of directors or an executive officer of each of the above MiTAC affiliated entities or their parent company.

Synnex Technology International, a publicly traded company based in Taiwan affiliated with MiTAC International, currently provides distribution and fulfillment services to various markets in Asia and Australia,

and is also a potential competitor of ours. Mitac Incorporated, a privately held company based in Taiwan and a separate entity from MiTAC International, owns approximately 16.0% of Synnex Technology International and approximately 9.6% of MiTAC International. MiTAC International indirectly owns 0.41% of Synnex Technology International and Synnex Technology International owns approximately 1.3% of MiTAC International. In addition, MiTAC International indirectly owns approximately 9.0% of Mitac Incorporated and Synnex Technology International owns approximately 14.4% of Mitac Incorporated. In addition, each of MiTAC International and Synnex Technology International indirectly owns 50% of Abundant Investment Group Limited, a selling stockholder. In addition, Synnex Technology International indirectly owns 100% of Peer Developments Ltd., which has an ownership interest in us as set forth in the preceding chart.

MiTAC International’s and its affiliates’ continuing beneficial ownership of our common stock, as well as our Chairman’s position as chairman or director or officer of these entities could create conflicts of interest with respect to a variety of matters that could have different implications for MiTAC International, its affiliates and us, including potential acquisitions of businesses, effects of competition, issuance or disposition of securities, election of directors, payment of dividends and other business matters.

CERTAIN RELATIONSHIPS AND TRANSACTIONS

Transactions with Management and Others and Certain Business Relationships

Business Relationships and Agreements with MiTAC International

We have a business relationship with MiTAC International that began in 1992 when it, through its affiliates, became our primary investor.

We work closely with MiTAC International to collaborate on OEM outsourcing opportunities and jointly market MiTAC’s design and electronic manufacturing services and our contract assembly capabilities. This relationship has enabled us to build relationships with MiTAC International’s customers and we continue to work with and depend on MiTAC International to jointly serve our shared customers.

In fiscal 2000, 2001 and 2002 and the nine months ended August 31, 2003, we purchased inventories, including notebook computers, motherboard and other peripherals, from MiTAC International and its affiliates totaling approximately $392.0 million, $236.0 million, $142.4 million and $90.3 million, respectively. Our sales to MiTAC International and its affiliates during fiscal 2000, 2001, 2002 and the nine months ended August 31, 2003, totaled approximately $8.6 million, $4.7 million, $2.4 million and $2.3 million, respectively.

Joint Sales and Marketing Agreement with MiTAC International. In May 2002, we entered into a joint sales and marketing agreement with MiTAC International. Pursuant to the agreement, both parties agree to use their commercially reasonable efforts to promote the other party’s capabilities to their respective customers who are interested in such product offerings. This agreement does not provide for the terms upon which we negotiate manufacturing and pricing terms, including allocating customer revenue. To date, these negotiations have been on a case-by-case basis. There are no sales attributable to the joint marketing agreement. The agreement had an initial term of one year and will automatically renew for subsequent one year terms unless either party provides written notice of non-renewal within 90 days of the end of any renewal term. The agreement may also be terminated without cause either by the mutual written agreement of both parties or by either party without cause upon 90 days prior written notice of termination to the other party. Either party may immediately terminate the agreement by providing written notice of (a) the other party’s material breach of any provision of the agreement and failure to cure within 30 days, or (b) if the other party becomes bankrupt or insolvent.

Agreement with MiTAC International and Sun Microsystems. In August 1999, MiTAC International entered into a general agreement with Sun Microsystems. This agreement does not constitute a contract or obligation by Sun Microsystems to purchase products or services. In February 2002, the agreement was amended to include us as a supplier under the agreement. Pursuant to the agreement, the terms for the manufacture and purchase of each particular product awarded by Sun Microsystems are individually negotiated and if agreed upon

by the parties, such terms are included in a product award letter. There is no minimum level of commitment required by any of the parties under the agreement. We negotiate manufacturing and pricing terms, including allocating customer revenue based on manufacturing services that each party provides, on a project-by-project basis with MiTAC International and Sun Microsystems for a given project. In the past, these negotiations with MiTAC International were not conducted on an arms’-length basis. Between February 1, 2002 and August 31, 2003, we purchased approximately $213.3 million of products from MiTAC International under this agreement. All of our contract assembly services to Sun Microsystems are covered by the general agreement. The agreement continues indefinitely until terminated in accordance with its terms. Sun Microsystems may terminate this agreement for any reason on 60 days written notice. Any party may terminate the agreement with written notice if one of the other parties materially breaches any provision of the agreement and the breach is incapable of being cured or is not cured within 30 days. The agreement may also be terminated on written notice if one of the other parties becomes bankrupt or insolvent.

Registration Rights Agreement. We have entered into a registration rights agreement with certain holders of our common stock, including the MiTAC International affiliated entities. After this offering and assuming no exercise by the underwriters of their option to purchase additional shares of common stock from the selling stockholders, the holders of an aggregate of 19,838,550 shares of our common stock will be entitled to registration rights with respect to their shares. Any group of holders of at least 30% of the securities with registration rights can require us to register all or part of their shares at any time following six months after this offering, so long as the thresholds in the registration rights agreement are met with respect to the amount of securities to be sold. After we have completed two such registrations subject to certain exceptions, we are no longer subject to these demand rights. In addition, holders of securities with registration rights may also require us to include their shares in future registration statements we file, subject to cutback at the option of the underwriters of any such offering. Subject to our eligibility to do so, holders of registrable securities may also require us to register their shares with the Securities and Exchange Commission on Form S-3 if total proceeds are at least $500,000 and if we have not completed two such registrations in any 12-month period. Upon any of these registrations, these shares will be freely tradable in the public market without restriction.

Sales of Securities

In August 2000, we acquired all of the outstanding shares of MiTAC Industrial Corp., from MIX System Holdings Ltd., which is wholly owned by Mitac Incorporated which in turn directly owns approximately 9% of MiTAC International, for approximately $4.2 million in common stock. We acquired MiTAC Industrial Corp. as part of our U.S. contract assembly expansion efforts.

In September 2000, we acquired all of the outstanding shares of Mitac Europe Ltd. from Silver Star Developments Ltd, a company controlled by our largest indirect stockholder, MiTAC International, for 1,637,500 shares of our common stock. We acquired Mitac Europe Ltd. as part of our international expansion effort to enable us to more effectively provide contract assembly to the European market.

Additional Compensation for Mr. Miau

In fiscal 2000, 2001 and 2002, Matthew Miau, our Chairman of the Board, received discretionary bonus payments and salary payments totaling $187,500, $500,000 and $550,000, respectively, and options to purchase an aggregate of 912,500 shares of our common stock in connection with his performance of duties as Chairman, and his services as a non-executive employee. For fiscal 2003, it is expected that Mr. Miau will receive a similar discretionary bonus as was paid in fiscal 2002 for his services as our Chairman and as a non-executive employee. Any future compensation payable to Mr. Miau will be based upon the recommendation of the compensation committee and subject to the approval of the board of directors.

Deferred Compensation Investment in SYNNEX Japan

In fiscal 1997 and 2000, pursuant to our deferred compensation plan, Matthew Miau, Robert Huang and Kevin Chuang allocated $173,228 of their deferred compensation into our investment in one of our subsidiaries, SYNNEX Japan K.K, or SYNNEX Japan. The terms of such investment were determined by the managements of SYNNEX and SYNNEX Japan. On November 30, 2002, the majority of the disinterested directors on our Board of Directors approved the divestiture by Messrs. Miau, Huang and Chuang of their interests in 200,000, 200,000 and 40,000 shares, respectively, of SYNNEX Japan at a price of $0.09 per share. In addition, we purchased the remaining shares of SYNNEX Japan held by Messrs. Miau, Huang and Chuang for $71,792, $71,792 and $17,948, respectively. The purchase price of $0.09 per share was equal to the price per share paid to an independent third party for shares in SYNNEX Japan. Although we continue to maintain our deferred compensation plan, in the future, we do not anticipate allowing our executive officers and directors to invest in our other subsidiaries through our deferred compensation plan.

Stock Option Repurchase Program

On August 31, 2001, we implemented an option repurchase program in which we offered some of our employees, including our named executive officers and current executive officers, the right to sell certain of their unexercised fully vested stock options to us. The payment per unexercised option share was equal to the difference between $10.00, the fair market value of one share of common stock on the date we made the repurchase offer as determined by our board of directors, and the exercise price per share of the unexercised option. We recorded compensation expense of $2.6 million in respect to the payments made to our employees. Participation in the option repurchase program was voluntary, and participants were permitted to elect to have some, all or none of their eligible options repurchased pursuant to the option repurchase program. The following table summarizes the options repurchased from, and the amounts paid to, our named executive officers and current executive officers pursuant to the option repurchase program.

Named Executive Officers and Current Executive Officers	Total Number of Unexercised Options Surrendered for Repurchase	Total Consideration Received in Return for Surrendering the Unexercised Options
Matthew Miau	8,632	$	69,056
Robert Huang	131,250	$	1,155,000
Peter Larocque	41,200	$	313,400
Kevin Chuang	45,999	$	336,993

Separation with Former Officer

In October 2001, Kevin Chuang, who is the brother-in-law of Mr. Huang and who was then serving as our Chief Operating Officer, entered into a plea agreement with the United States Attorney’s Office for the Northern District of California in which he plead guilty to one felony charge of perjury relating to a customer’s 1996 bankruptcy proceeding. No charges of wrongdoing by us or any of our other officers or directors were brought in connection with this matter.

In June 2002, Mr. Chuang ceased to be our Chief Operating Officer. Thereafter, he has continued to serve as our employee. His employment will terminate at least five days before the completion of this offering. Upon his termination, Mr. Chuang will execute a severance and non-competition agreement with, and a release in favor of, the Company, as described under “Management—Employment Agreements, Termination of Employment and Change in Control Arrangements.” We paid approximately $260,000 of Mr. Chuang’s legal costs and expenses in connection with this matter, including a fine and special assessment fee. As part of this settlement, Mr. Chuang will repay, prior to the closing of this offering, the amounts so advanced by us.

Indebtedness of Management

On December 31, 2002, Mr. Huang, our Chief Executive Officer, repaid the remaining balance of both promissory notes described below.

In January 1998, Mr. Huang issued a secured full recourse promissory note to us pursuant to which he could borrow up to $1,000,000, which note was secured by a deed of trust on real property owned by Mr. Huang. Interest was calculated based on the unpaid principal from the date of each borrowing at an annual rate of the then prevailing LIBOR rate plus 1.75% at the beginning of each calendar year, with the accrued interest payable on the last business day of the calendar year.

In December 2001, Mr. Huang borrowed an additional $1.1 million from us pursuant to a secured full recourse promissory note with interest at the rate of 7% per annum. The note is secured by the same deed of trust on real property which serves as collateral for Mr. Huang’s January 1998 promissory note.

In fiscal 2002, the largest aggregate amount outstanding under these notes was $1.7 million.

On August 29, 2003, Mr. Larocque, our Executive Vice President, Distribution, repaid the promissory note described below.

In January 2002, Mr. Larocque borrowed $200,000 from us pursuant to a secured full recourse promissory note. The note bears interest at the rate of 7% per annum. The note is due on or before January 25, 2017. The note is secured by a deed of trust on real property owned by Mr. Larocque. In fiscal 2002, the largest aggregate amount outstanding under this note was $200,000.

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information as of August 31, 2003, regarding the beneficial ownership of our common stock by:

•

each person or entity known by us to own beneficially more than 5%, in the aggregate, of our outstanding common stock;

•

each of our named executive officers;

•

each of our directors;

•

all of our current directors and executive officers as a group; and

•

the selling stockholders.

Except as otherwise indicated, each person named in the table has sole voting and investment power with respect to all of the shares of our common stock beneficially owned by such person, subject to applicable community property laws. Except as otherwise indicated, the address for each stockholder is c/o SYNNEX Corporation, 3797 Spinnaker Court, Fremont, CA 94538. Some of the selling stockholders are or may be considered to be affiliates of MiTAC International, our majority stockholder as more fully described under “Ownership by MiTAC International and its Affiliates.”

The percentages shown are calculated based on 22,090,291 shares of common stock outstanding on August 31, 2003. The numbers and percentages shown include the shares actually owned as of August 31, 2003, and the shares that the identified person or group has the right to acquire within 60 days of such date. In calculating the percentage ownership, all shares that the identified person or group has the right to acquire within 60 days of August 31, 2003 upon exercise of options are deemed to be outstanding for the purpose of computing the percentage of shares owned by that person or group, but are not deemed to be outstanding for the purpose of computing the percentage of shares owned by any other person or group. In addition, the following table assumes no exercise by the underwriters of their over-allotment option to purchase additional shares of common stock from us and certain of the selling stockholders.

	Beneficial Ownership of Shares Before the Offering			Number of Shares Offered	Beneficial Ownership of Shares After the Offering
Name of Beneficial Owner	Number	Percent		Number of Shares Offered	Number	Percent
5% Stockholders:
MiTAC International Corporation and related parties(1)	21,661,050	98.1	%	1,822,500	19,838,550	77.3	%

Directors and Named Executive Officers:
Matthew Miau(2)	1,306,576	5.6	%	—	1,306,576	4.8%
Robert Huang(3)	1,581,249	6.7	%	—	1,581,249	5.8	%
Peter Larocque(4)	256,882	1.1	%	—	256,882	1.0	%
Dennis Polk(5)	25,000	*		—	25,000	*
Simon Leung(6)	18,000	*		—	18,000	*
Kevin Chuang(7)	378,584	1.7	%	—	378,584	1.5	%
Fred Breidenbach	—	—		—	—	—
David Rynne	—	—		—	—	—
Young Sohn(8)	15,000	*		—	15,000	*
Dwight Steffensen(9)	8,333	*		—	8,333	*
All current directors and executive officers as a group (9 persons)(10)	3,211,040	12.8	%	—	3,211,040	11.2	%

Selling Stockholders:
Silver Star Developments Ltd.(11)	12,197,024	55.2	%	500,000	11,697,024	45.6	%
Constant Holdings Ltd.(12)	3,047,082	13.8	%	500,000	2,547,082	9.9	%
Abundant Investment Group Limited(13)	500,000	2.3	%	500,000	—	—
MIX System Holdings Ltd.(14)	322,500	1.5	%	322,500	—	—

*	Represents beneficial ownership of less than one percent (1%).

(1)

Represents 12,197,024 shares held by Silver Star Developments Ltd., 5,294,444 shares held by Peer Developments Ltd., 3,047,082 shares held by Constant Holdings Ltd., 500,000 shares held by Abundant Investment Group Limited, 322,500 shares held by MIX System Holdings, Ltd., 200,000 shares held by Harbinger (BVI) Venture Capital Corporation and 100,000 shares held by Budworth Investments Ltd. Matthew Miau, Feng-Tzu Tsai, Jhi-Wu Ho and Chi-Ying Yuan, the directors of Silver Star Developments Ltd., hold shared voting and dispositive power over the shares held by Silver Star Developments Ltd. Matthew Miau and Hermie Hoi-Ming Miu, the directors of Constant Holdings Ltd., hold shared voting and dispositive power over the shares held by Constant Holdings Ltd. Hsiang-Yun Yang and Jong-Long Tzeng, the directors of Abundant Investment Group Limited, hold shared voting and dispositive power over the shares held by Abundant Investment Group Limited. Matthew Miau and Judy B.L. Tsai, the directors of MIX System Holdings Ltd., hold shared voting and dispositive power over the share held by MIX System Holdings Ltd. C.K. Cheng and T.C. Chou, the directors of Harbinger (BVI) Venture Capital Corporation, hold shared voting and dispositive power over the shares held by Harbinger (BVI) Venture Capital Corporation and C.K. Cheng and T.C. Chou, the directors of Budworth Investments Ltd., hold shared voting and dispositive power over the shares held by Budworth Investments Ltd.

(2)

Includes 1,295,208 shares issuable upon the exercise of options exercisable within 60 days of August 31, 2003. Excludes all securities held by Silver Star Developments Ltd., Peer Developments Ltd., Constant Holdings Ltd., Abundant Investment Group Limited, MIX System Holdings Ltd., Harbinger (BVI) Venture Capital Corporation and Budworth Investments Ltd. Mr. Miau disclaims beneficial ownership of the shares held by the above-listed entities, except to the extent of his pecuniary interest therein.

(3)	Includes 1,431,249 shares subject to options which are currently exercisable or will become exercisable within 60 days of August 31, 2003.

(4)	Represents 256,882 shares subject to options which are currently exercisable or will become exercisable within 60 days of August 31, 2003.

(5)	Represents 25,000 shares subject to options which are currently exercisable or will become exercisable within 60 days of August 31, 2003.

(6)	Represents 18,000 shares subject to options which are currently exercisable or will become exercisable within 60 days of August 31, 2003.

(7)	Represents 378,584 shares subject to options which are currently exercisable or will become exercisable within 60 days of August 31, 2003.

(8)	Represents 15,000 shares subject to options which are currently exercisable or will become exercisable within 60 days of August 31, 2003.

(9)	Represents 8,333 shares subject to options which are currently exercisable or will become exercisable within 60 days of August 31, 2003.

(10)	Includes 3,049,672 shares subject to options which are currently exercisable or will become exercisable within 60 days of August 31, 2003.

(11)

The principal business address of Silver Star Developments Ltd. is 6F, No. 200, Wen Hua 2nd Road, Kuei San Hsiang, Taoyuan, Taiwan, R.O.C. Excludes all securities held by Peer Developments Ltd., Constant Holdings Ltd., Abundant Investment Group Limited, MIX System Holdings Ltd., Harbinger (BVI) Venture Capital Corporation and Budworth Investments Ltd. Matthew Miau, Feng-Tzu Tsai, Jhi-Wu Ho, and Chi-Ying Yuan, the directors of Silver Star Developments Ltd., hold shared voting and dispositive power over the shares held by Silver Star Developments Ltd.

(12)

The principal business address of Constant Holdings Ltd. is 5F, 20 Lane 478, Rueiguang Rd., Neihu 114, Taipei, Taiwan, R.O.C. Excludes all securities held by Silver Star Developments Ltd., Peer Developments Ltd., Abundant Investment Group Limited, MIX System Holdings Ltd., Harbinger (BVI) Venture Capital Corporation and Budworth Investments Ltd. Matthew Miau and Hermie Hoi-Ming Miu, the directors of Constant Holdings Ltd., hold shared voting and dispositive power over the shares held by Constant Holdings Ltd.

(13)

The principal business address of Abundant Investment Group Limited is Beaufort House, P.O. Box 438, Road Town, Tortola, British Virgin Islands. Excludes all securities held by Silver Star Developments Ltd., Constant Holdings Ltd., Peer Developments Ltd., Abundant Investment Group Limited, MIX System Holdings Ltd., Harbinger (BVI) Venture Capital Corporation and Budworth Investments Ltd. Hsiang-Yun Yang and Jong-Long Tzeng, the directors of Abundant Investment Group Limited, hold shared voting and dispositive power over the shares held by Abundant Investment Group Limited.

(14)

The principal business address of MIX System Holdings Ltd. is c/o MiTAC, Inc., 11F, No. 187, Tiding Blvd., Sec. 2, Neihu 114, Taipei, Taiwan, R.O.C. Excludes all securities held by Silver Star Developments Ltd., Peer Developments Ltd., Constant Holdings Limited, Abundant Investment Group Limited, Harbinger (BVI) Venture Capital Corporation and Budworth Investments Limited. Matthew Miau and Judy B.L. Tsai, the directors of MIX System Holdings Ltd., hold shared voting and dispositive power over the shares held by MIX System Holdings Ltd.

DESCRIPTION OF CAPITAL STOCK

The following discussion summarizes our capital stock. This summary is not complete and is subject to the complete text of our amended and restated certificate of incorporation.

Authorized Capitalization

Upon the closing of this offering, our capital structure will consist of 100,000,000 authorized shares of common stock, par value $0.001 per share, and 5,000,000 shares of undesignated preferred stock, par value $0.001 per share. Immediately following the completion of this offering, an aggregate of 25,667,791 shares of common stock will be issued and outstanding and no shares of preferred stock will be issued and outstanding. As of August 31, 2003, there were approximately 50 stockholders of record.

Common Stock

The holders of our common stock are entitled to dividends as our board of directors may declare from time to time from legally available funds subject to the preferential rights of the holders of any shares of our preferred stock that we may issue in the future. The holders of our common stock are entitled to one vote per share on any matter to be voted upon by stockholders.

Our amended and restated certificate of incorporation does not provide for cumulative voting in connection with the election of directors. Accordingly, directors will be elected by a plurality of the shares voting once a quorum is present. No holder of our common stock will have any preemptive right to subscribe for any shares of capital stock issued in the future.

Upon any voluntary or involuntary liquidation, dissolution or winding up of our affairs, the holders of our common stock are entitled to share, on a pro rata basis, all assets remaining after payment to creditors and subject to prior distribution rights of any shares of preferred stock that we may issue in the future. All of the outstanding shares of common stock are, and the shares offered by us in this offering will be, fully paid and non-assessable.

Preferred Stock

As of the closing of this offering, no shares of our preferred stock will be outstanding. Under our amended and restated certificate of incorporation, our board of directors, without further action by our stockholders, will be authorized to issue shares of preferred stock in one or more classes or series. The board may fix the rights, preferences and privileges of the preferred stock, along with any limitations or restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences of each class or series of preferred stock. The preferred stock could have voting or conversion rights that could adversely affect the voting power or other rights of holders of our common stock. The issuance of preferred stock could also have the effect, under certain circumstances, of delaying, deferring or preventing a takeover or other transaction that holders of some or a majority of our common stock might believe to be in their best interests or in which holder might receive a premium for their shares over the then market price of the shares. We currently have no plans to issue any shares of preferred stock.

Certain Anti-Takeover, Limited Liability and Indemnification Provisions

Our amended and restated certificate of incorporation and our bylaws described below may have the effect of delaying, deferring or discouraging another person from acquiring control of us.

Amended and Restated Certificate of Incorporation and Bylaw Provisions

Our amended and restated certificate of incorporation and bylaws include provisions that may have the effect of discouraging, delaying or preventing a change in control or an unsolicited acquisition proposal that a stockholder might consider favorable, including a proposal that might result in the payment of a premium over the market price for the shares held by stockholders. These provisions are summarized in the following paragraphs.

•

Supermajority Voting. Our amended and restated certificate of incorporation requires the approval of the holders of at least 66²/3% of our combined voting power to effect certain amendments to our amended and restated certificate of incorporation. Our bylaws may be amended by either a majority of the board of directors, or the holders of 66²/3% of our voting stock.

•

Authorized but Unissued or Undesignated Capital Stock. At the closing of this offering, our authorized capital stock consists of 100,000,000 shares of common stock and 5,000,000 shares of preferred stock. No preferred stock will be designated upon consummation of this offering. After this offering, we will have outstanding 25,667,791 shares of common stock. The authorized but unissued (and in the case of preferred stock, undesignated) stock may be issued by the board of directors in one or more transactions. In this regard, our amended and restated certificate of incorporation grants the board of directors broad power to establish the rights and preferences of authorized and unissued preferred stock. The issuance of shares of preferred stock pursuant to the board of director’s authority described above could decrease the amount of earnings and assets available for distribution to holders of common stock and adversely affect the rights and powers, including voting rights, of such holders and may have the effect of delaying, deferring or preventing a change in control. The board of directors does not currently intend to seek stockholder approval prior to any issuance of preferred stock, unless otherwise required by law.

•

Special Meetings of Stockholders. Our bylaws provide that special meetings of our stockholders may be called by the chairman of the board or by a majority of the board of directors.

•

No Stockholder Action by Written Consent. Our amended and restated certificate of incorporation and bylaws provide that an action required or permitted to be taken at any annual or special meeting of our stockholders may only be taken at a duly called annual or special meeting of stockholders. This provision prevents stockholders from initiating or effecting any action by written consent, and thereby taking actions opposed by the board.

•

Notice Procedures. Our bylaws establish advance notice procedures with regard to all stockholder proposals to be brought before meetings of our stockholders, including proposals relating to the nomination of candidates for election as directors, the removal of directors and amendments to our amended and restated certificate of incorporation or bylaws. These procedures provide that notice of such stockholder proposals must be timely given in writing to our Secretary prior to the meeting. The notice must contain certain information specified in the bylaws.

Other Anti-Takeover Provisions

See “Management — Employee Benefit Plans” for a discussion of certain provisions of the 2003 Stock Incentive Plan and “Management — Employment Agreements, Termination of Employment and Change in Control Arrangements” for discussion of certain change in control arrangements which may have the effect of discouraging, delaying or preventing a change in control or unsolicited acquisition proposals.

Limitation of Director Liability

Our amended and restated certificate of incorporation limits the liability of our directors (in their capacity as directors but not in their capacity as officers) to us or our stockholders to the fullest extent permitted by Delaware law. Specifically, our directors will not be personally liable for monetary damages for breach of a director’s fiduciary duty as a director, except for liability:

•

for any breach of the director’s duty of loyalty to us or our stockholders;

•

for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;

•

under Section 174 of the Delaware General Corporation Law, which relates to unlawful payments of dividends or unlawful stock repurchases or redemptions; or

•

for any transaction from which the director derived an improper personal benefit.

Indemnification Arrangements

Our bylaws provide that our directors and officers shall be indemnified and provide for the advancement to them of expenses in connection with actual or threatened proceedings and claims arising out of their status as such to the fullest extent permitted by the Delaware General Corporation Law. We have entered into indemnification agreements with each of our directors and executive officers that provide them with rights to indemnification and expense advancement to the fullest extent permitted under the Delaware General Corporation Law.

Transfer Agent and Registrar

The transfer agent and registrar for our common stock is EquiServe Trust Company and its telephone number is (781) 575-2717.

SHARES ELIGIBLE FOR FUTURE SALE

All of the shares sold in this offering will be freely tradable without restriction under the Securities Act unless those shares are held by “affiliates,” as that term is defined in Rule 144 under the Securities Act. Of the outstanding shares not sold in this offering and assuming no exercise by the underwriters of their option to purchase additional shares of common stock from the selling stockholders, 105,994 shares will be eligible for sale immediately as of the date of this prospectus, 38,862 shares will become eligible for sale between the date of this prospectus and 180 days after the date of this prospectus, and 20,122,935 shares will be eligible for sale in the public markets 180 days after the date of this prospectus pursuant to Rules 701 or 144 upon expiration of lock-up agreements with our underwriters, a portion of which will be subject to Rule 144 volume limitations.

Lock-up Agreements

We have agreed, and each of our officers and directors and holders of substantially all of the outstanding shares of our common stock have agreed not to, without the prior written consent of Bear, Stearns & Co. Inc., sell or otherwise dispose of any shares or options to acquire shares of our common stock or take any action to do any of the foregoing during the 180-day period following the date of this prospectus. Bear, Stearns & Co. Inc. may, in its sole discretion and at any time without notice, release all or any portion of the securities subject to the lock-up agreements. In addition, certain of our stockholders have entered into agreements with us under which they have agreed not to sell or otherwise dispose of any of their shares or options to purchase shares of our common stock during the 180-day period following the closing of this offering without our prior written consent.

Of the 20,122,935 shares eligible for sale upon expiration of the underwriters’ lock-up and assuming no exercise by the underwriters of their option to purchase additional shares of common stock from the selling stockholders, 19,838,550 shares are held by MiTAC International and its affiliates. MiTAC International and its affiliates have advised us that they presently do not intend to distribute or dispose of their shares of our common stock held upon completion of this offering. However, following the lock-up period with the underwriters, and prior thereto with the consent of the Bear, Stearns & Co. Inc., MiTAC International and its affiliates may elect to distribute or sell some or all of their shares. In this regard, MiTAC International and its affiliates could effect a pro rata distribution of its shares to their public and private shareholders without compliance with Rule 144 or further registration under the Securities Act. These shares also may be resold in the public markets pursuant to the volume, reporting and other requirements of Rule 144 or by registration. We have entered into a registration rights agreement with MiTAC International and its affiliates requiring us to register these shares for resale to the public.

Rule 144

In general, under Rule 144 as currently in effect, beginning 90 days after the date of this prospectus, a person deemed to be our affiliate, or a person holding restricted shares who beneficially owns shares that were not acquired from us or our affiliate within the previous one year, would be entitled to sell within any three-month period a number of shares that does not exceed the greater of:

•

1% of the then outstanding shares of common stock, or approximately 256,678 shares immediately after this offering, assuming no exercise of the underwriters’ over-allotment option, or

•

the average weekly trading volume of the common stock during the four calendar weeks preceding the date on which notice of the sale is filed with the SEC.

Sales under Rule 144 are subject to requirements relating to manner of sale, notice and availability of current public information about us.

Rule 144(k)

A person who is not deemed to have been our affiliate at any time during the 90 days immediately preceding a sale and who owned shares for at least two years, including the holding period of any prior owner who is not an affiliate, would be entitled to sell restricted shares following this offering under Rule 144(k) without complying with the volume limitations, manner of sale provisions, public information or notice requirements of Rule 144.

Rule 701 and Options

Rule 701 permits resales of shares in reliance upon Rule 144 but without compliance with some restrictions of Rule 144. Any employee, officer or director or consultant who purchased his shares under a written compensatory plan or contract may rely on the resale provisions of Rule 701. Under Rule 701:

•

affiliates can sell Rule 701 shares without complying with the holding period requirements of Rule 144;

•

non-affiliates can sell these shares in reliance on Rule 144 without having to comply with the holding period, public information, volume limitation or notice provisions of Rule 144; and

•

Rule 701 shares must be held at least 90 days after the date of this prospectus before they can be resold.

However, all shares issued by us under Rule 701 are subject to lock-up provisions and will only become eligible for sale 180 days after the date of this prospectus.

Stock Options

Registration Rights

Following this offering and assuming no exercise by the underwriters of their option to purchase additional shares of common stock from the selling stockholders, under specified circumstances and subject to customary conditions, holders of 19,838,550 shares of our common stock, without taking into account any shares sold in this offering by selling stockholders, will have demand registration rights with respect to their shares, subject to the 180-day lock-up arrangement described above, to require us to register their shares under the Securities Act, and rights to participate in future registrations of our securities. If the holders of these registrable securities request that we register their shares, and if the registration is effected, these shares will become freely tradable without restriction under the Securities Act. Any sales of securities by these stockholders could have a material adverse effect on the trading price of our common stock.

UNDERWRITING

Subject to the terms and conditions set forth in an underwriting agreement dated , 2003, each of the underwriters named below, through their representatives Bear, Stearns & Co. Inc., Banc of America Securities LLC and Raymond James & Associates, Inc., has severally agreed to purchase from us and the selling stockholders the aggregate number of shares of common stock set forth opposite its name below at the public offering price less the underwriting discount set forth on the cover page of this prospectus.

Underwriter		Number of Shares
Bear, Stearns & Co. Inc.
Banc of America Securities LLC
Raymond James & Associates, Inc.


Total		5,400,000

The underwriting agreement provides that the obligations of the underwriters thereunder are several and subject to approval of certain legal matters by their counsel and various other conditions. Under the underwriting agreement, the underwriters are obligated to purchase and pay for all of the above shares, other than those covered by the over-allotment option described below, if they purchase any of the shares.

The underwriters have advised us that they propose to initially offer some of the shares directly to the public at the offering price set forth on the cover page of this prospectus and some of the shares to dealers at this price less a concession not in excess of $ per share. The underwriters may allow, and dealers may re-allow, concessions not in excess of $ per share on sales to other dealers. After the initial offering of the shares to the public, the underwriters may change the offering price, concessions and other selling terms. The underwriters do not intend to confirm sales to discretionary accounts to exceed three percent of the total number of shares offered by them.

We and certain of the selling stockholders have granted the underwriters an option exercisable for 30 days from the date of the underwriting agreement to purchase up to 810,000 additional shares, at the offering price less the underwriting discount. The underwriters may exercise this option solely to cover over-allotments, if any, made in connection with this offering. To the extent underwriters exercise this option in whole or in part, then each of the underwriters will become obligated, subject to conditions, to purchase a number of additional shares approximately proportionate to each underwriter’s initial purchase commitment as indicated in the preceding table.

We, the selling stockholders and MiTAC International have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act, or to contribute to payments that the underwriters may be required to make in respect of those liabilities.

Our directors, executive officers and stockholders, who collectively hold a total of 20,122,935 shares of common stock, have agreed not to sell or offer to sell or otherwise dispose of any shares or securities convertible into or exercisable or exchangeable for shares of our common stock, for a period of 180 days after the date of this prospectus, without the prior written consent of Bear, Stearns & Co. Inc., on behalf of the underwriters.

We have been advised by Bear, Stearns & Co. Inc. that the decision to waive or shorten any lock-up period will be made by Bear, Stearns & Co. Inc. on a case-by-case basis after considering such factors as the then-current equity market conditions, the performance of our stock price since the offering and the likely impact of any waiver on our future stock price performance, and the requesting party’s motivation for making the request.

In addition, we have agreed that for a period of 180 days after the date of this prospectus we will not offer, sell, or otherwise dispose of any shares our common stock, except for the shares offered in this offering and any

shares offered in connection with employee benefit plans described in this prospectus, without the consent of Bear, Stearns & Co. Inc., on behalf of the underwriters.

Prior to this offering, there has been no public market for our common stock. Consequently, the initial offering price for our common stock will be determined by negotiations between us and the representatives of the underwriters. Among the factors to be considered in these negotiations will be the following:

•

our results of operations in recent periods;

•

estimates of our business potential;

•

an assessment of our management;

•

prevailing market conditions; and

•

the prices of similar securities of generally comparable companies.

We intend to apply to have our common stock approved for quotation on the New York Stock Exchange under the symbol “SNX.” We cannot assure you, however, that an active or orderly trading market will develop for our common stock or that our common stock will trade in the public markets subsequent to the offering at or above the initial offering price.

A prospectus in electronic format may be made available on the Internet sites or through other online services maintained by one or more of the underwriters of this offering, or by their affiliates. The underwriters may allocate a number of shares for sale to online brokerage account holders. Any such allocation for online distributions will be made by the underwriters on the same basis as other allocations. Other than any prospectus made available in electronic format as described above, the information on any web site containing the prospectus is not a part of this prospectus or the registration statement of which this prospectus forms a part, has not been approved or endorsed by us or any underwriter in such capacity and should not be relied on by prospectus investors.

In order to facilitate this offering, the underwriters may engage in transactions that stabilize, maintain, or otherwise affect the price of our common stock during and after this offering. Specifically, the underwriters may over-allot or otherwise create a short position in our common stock for their own account by selling more shares than we have actually sold to them. The underwriters may elect to cover any short position by purchasing shares in the open market or by exercising the over-allotment option granted to the underwriters. In addition, the underwriters may stabilize or maintain the price of our common stock by bidding for or purchasing shares in the open market and may impose penalty bids, under which selling concessions allowed to syndicate members or other broker-dealers participating in this offering are reclaimed if shares previously distributed in this offering are repurchased in connection with stabilization transactions or otherwise. The effect of these transactions may be to stabilize or maintain the market price at a level above that which might otherwise prevail in the open market and these transactions may be discontinued at any time. The imposition of a penalty bid may also affect the price of shares to the extent that it discourages resales. No representation is made as to the magnitude or effect of these activities.

The underwriters have reserved for sale, at the initial public offering price, up to 270,000 shares for employees, directors, and other persons associated with us who express an interest in purchasing these shares in this offering. The number of shares available for sale to the general public in the offering will be reduced to the extent these persons purchase reserved shares. Any reserved shares not purchased by these persons will be offered by the underwriters to the general public on the same terms as the other shares in this offering.

Some of the underwriters and their affiliates have in the past provided, and may, from time to time, in the future provide banking and other financial services to us for which they have in the past received, and may in the future receive, customary fees and expenses.

Affiliates of Banc of America Securities LLC provide banking and other financial services to our affiliates for which they have received customary interest payments, fees and expenses. These services include short term credit facilities and cash management services.

The following table shows the underwriting discount to be paid to the underwriters by us and the selling stockholders in connection with this offering. These amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase additional shares.

			Total
	Per Share		Without Over-Allotment Option		With Over-Allotment Option
Assumed initial public offering price	$	15.00	$		$
Underwriting discounts and commissions payable by us				3,756,375		4,291,875
Underwriting discounts and commissions payable by certain of the selling stockholders				1,913,625		2,228,625
Proceeds, before expenses, to us				49,906,125		57,020,625
Proceeds to the selling stockholders				25,423,875		29,608,875

Other expenses of this offering, including the registration fees and the fees of financial printers, legal counsel, and accountants, payable by us are expected to be approximately $1,700,000.

Japan

With regard to investors resident in Japan, as the offering falls under Sub-item (b), Item 2, Paragraph 3 of Article 2 of the Securities and Exchange Law of Japan (Law No. 25 of 1947, as amended), no registration statement for the offering has been or will be filed with the Japanese government under Paragraph 1 of Article 4 of the Securities and Exchange Law of Japan. Further, the Underwriters have not been subject to the requirement to file a Securities Report under Paragraph 1 of Article 24 of the Securities and Exchange Law of Japan.

Hong Kong

WARNING: The contents of this Prospectus have neither been reviewed nor endorsed by any regulatory authority in Hong Kong. You are advised to exercise caution in relation to the offer. If you are in any doubt about any of the contents of this document, you should obtain independent professional advice.

This Prospectus has not been registered by the Registrar of Companies in Hong Kong. Accordingly the shares in SYNNEX may not be offered or sold in Hong Kong other than to persons whose ordinary business it is to buy or sell shares or debentures, whether as principal or as agent, or in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32 of the Laws of Hong Kong). In addition, this Prospectus may not be issued or possessed for the purposes of issue, whether in Hong Kong or elsewhere, to any person unless such person is outside Hong Kong, such person is a professional investor within the meaning of the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) or as otherwise may be permitted by that Ordinance.

Taiwan

The shares of SYNNEX may not be sold, issued or publicly offered in Taiwan and may only be made available to Taiwan investors from outside Taiwan on a private placement basis. No person or entity in Taiwan has been authorized to offer, sell, give advice regarding or otherwise intermediate the offering and sale of these shares of SYNNEX.

LEGAL MATTERS

Selected legal matters with respect to the validity of the common stock offered by this prospectus will be passed upon for us by Pillsbury Winthrop LLP, Palo Alto, California. Certain legal matters in connection with this offering will be passed upon for the underwriters by Skadden, Arps, Slate, Meagher & Flom LLP, Palo Alto, California.

EXPERTS

The consolidated financial statements of SYNNEX Corporation as of November 30, 2001, November 30, 2002 and August 31, 2003 and for each of the three years in the period ended November 30, 2002 and the nine months ended August 31, 2003 included in this Prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting.

ADDITIONAL INFORMATION

We have filed with the Securities and Exchange Commission, Washington, D.C., a Registration Statement on Form S-1 under the Securities Act with respect to the shares of our common stock offered in this offering. This prospectus omits certain information set forth in the Registration Statement and the exhibits and schedules thereto. For further information with respect to us and the shares offered in this offering, reference is made to such Registration Statement, exhibits and schedules. Statements contained in this prospectus as to the contents of any contract or other document referred to are not necessarily complete, and in each instance reference is made to the copy of such contract or other document filed as an exhibit to the Registration Statement, each such statement being qualified in all respects by such reference. After consummation of this offering we will be subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and in accordance therewith, will be required to file annual and quarterly reports, proxy statements and other information with the Commission. The Registration Statement, including the exhibits and schedules filed therewith, as well as such reports and other information filed by us may be inspected without charge at the public reference facilities maintained by the Securities and Exchange Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of such materials may be obtained from the Public Reference Section of the Securities and Exchange Commission, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates and from the Commission’s Internet Web site at http://www.sec.gov.

SYNNEX CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

		Page
SYNNEX Corporation
Consolidated Financial Statements
Report of Independent Auditors		F-2
Consolidated Balance Sheets		F-3
Consolidated Statements of Operations		F-4
Consolidated Statements of Stockholders’ Equity		F-5
Consolidated Statements of Cash Flows		F-6
Notes to Consolidated Financial Statements		F-7

F-1

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Stockholders of

SYNNEX Corporation

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, of stockholders’ equity and of cash flows present fairly, in all material respects, the financial position of SYNNEX Corporation (“the Company”, a majority-owned subsidiary of Silver Star Development Limited) and its subsidiaries at November 30, 2001, November 30, 2002 and August 31, 2003 and the results of their operations and their cash flows for each of the three years in the period ended November 30, 2002 and the nine months ended August 31, 2003 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

/s/ PRICEWATERHOUSECOOPERS LLP

San Jose, California

October 11, 2003 except for Note 19

for which the date is November 12, 2003

F-2

SYNNEX CORPORATION

CONSOLIDATED BALANCE SHEETS

(in thousands, except for share amounts)

	November 30,						August 31, 2003
	2001			2002			August 31, 2003
ASSETS
Current assets:
Cash and cash equivalents	$	15,730		$	15,503		$	23,174
Restricted cash		1,002			5,561			4,333
Short-term investments		1,499			3,830			4,670
Accounts receivable, net		204,624			221,432			191,056
Receivables from vendors, net		34,886			35,162			52,522
Receivable from affiliates		7,637			2,138			866
Inventories		236,127			261,498			353,229
Deferred income taxes		13,535			13,805			14,573
Other current assets		7,366			13,511			17,761

Total current assets		522,406			572,440			662,184
Property and equipment, net		16,616			25,295			22,921
Intangible assets		21,321			23,769			19,865
Deferred income taxes		874			529			590
Other assets		3,817			7,042			1,993

Total assets	$	565,034		$	629,075		$	707,553


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Borrowings under term loans and lines of credit	$	18,104		$	19,685		$	51,447
Payable to affiliates		24,968			16,817			26,348
Accounts payable		248,307			269,608			327,158
Accrued liabilities		42,901			66,202			49,568
Income taxes payable		891			107			1,061

Total current liabilities		335,171			372,419			455,582
Long-term borrowings		43,036			38,714			7,852
Long-term liabilities		—			1,535			1,053
Deferred income taxes		1,007			579			795

Total liabilities		379,214			413,247			465,282

Minority interest in subsidiaries		2,448			2,610			2,733

Commitments and contingencies (Note 18)

Stockholders’ equity:
Preferred stock, $0.001 par value, 5,000,000 shares authorized, no shares issued or outstanding		—			—			—
Common stock, $0.001 par value; 100,000,000 shares authorized; 22,047,399 and 22,081,441 and 22,090,291 shares issued and outstanding		22			22			22
Additional paid-in capital		79,004			79,251			79,282
Unearned stock-based compensation		(1,283	)		(753	)		(340	)
Receivables from stockholders		(300	)		—			—
Accumulated other comprehensive income (loss)		(1,597	)		(860	)		3,645
Retained earnings		107,526			135,558			156,929

Total stockholders’ equity		183,372			213,218			239,538

Total liabilities and stockholders’ equity	$	565,034		$	629,075		$	707,553

The accompanying notes are an integral part of these consolidated financial statements.

F-3

SYNNEX CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

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

	Years Ended November 30,									Nine Months Ended August 31,
	2000			2001			2002			2002			2003
										(unaudited)
Revenue	$	3,802,629		$	3,224,390		$	3,767,882		$	2,694,376		$	2,873,293
Cost of revenue (inclusive of stock-based compensation expense of $552, $194 and $66 in 2000, 2001 and 2002, respectively, and $50 (unaudited) and $50 for the nine months ended August 31, 2002 and 2003, respectively)		(3,626,317	)		(3,060,304	)		(3,593,982	)		(2,568,419	)		(2,741,446	)

Gross profit		176,312			164,086			173,900			125,957			131,847
Selling, general and administrative expenses (inclusive of stock-based compensation expense of $5,684, $2,784 and $495 in 2000, 2001 and 2002, respectively and $358 (unaudited) and $363 for the nine months ended August 31, 2002 and 2003, respectively)		(106,489	)		(106,197	)		(123,418	)		(88,638	)		(91,968	)

Income from operations		69,823			57,889			50,482			37,319			39,879
Interest expense, net		(452	)		(1,397	)		(1,422	)		(1,069	)		(1,437	)
Other income (expense), net		6,845			(12,813	)		(4,207	)		(3,347	)		(4,901	)

Income from continuing operations before income taxes and minority interest		76,216			43,679			44,853			32,903			33,541
Provision for income taxes		(33,373	)		(17,608	)		(16,837	)		(12,735	)		(12,276	)
Minority interest in subsidiaries		(832	)		(274	)		16			176			106

Income from continuing operations		42,011			25,797			28,032			20,344			21,371
Discontinued operations:
Loss from discontinued operations, adjusted for applicable benefit for income taxes of $4,600 and minority interest of $2,313		(5,189	)		—			—			—			—
Loss on write-off of net assets of discontinued operations, adjusted for applicable benefit for income taxes of $345 and minority interest of $540		(388	)		—			—			—			—

Net income	$	36,434		$	25,797		$	28,032		$	20,344		$	21,371

Net income per common share — basic:
Income from continuing operations	$	1.96		$	1.18		$	1.27		$	0.92		$	0.97
Loss from discontinued operations		(0.26	)		—			—			—			—

Net income per common share — basic	$	1.70		$	1.18		$	1.27		$	0.92		$	0.97

Net income per common share — diluted:
Income from continuing operations	$	1.72		$	1.06		$	1.16		$	0.83		$	0.87
Loss from discontinued operations		(0.23	)		—			—			—			—

Net income per common share — diluted	$	1.49		$	1.06		$	1.16		$	0.83		$	0.87

Weighted average common shares outstanding — basic		21,466,002			21,918,742			22,060,578			22,053,762			22,088,463

Weighted average common shares outstanding — diluted		24,404,129			24,391,871			24,250,528			24,396,925			24,442,652

The accompanying notes are an integral part of these consolidated financial statements.

F-4

SYNNEX CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except for share amounts)

	Common Stock				Additional Paid-In Capital			Unearned Stock-based Compensation			Receivables from Stockholders			Accumulated Other Comprehensive Income (Loss)			Retained Earnings		Total Stockholders’ Equity			Comprehensive Income
	Shares		Amount		Additional Paid-In Capital			Unearned Stock-based Compensation			Receivables from Stockholders			Accumulated Other Comprehensive Income (Loss)			Retained Earnings		Total Stockholders’ Equity			Comprehensive Income
Balances, November 30, 1999	21,379,551		$	21	$	68,242		$	—		$	—		$	(840	)	$	45,295	$	112,718
Issuance of common stock in connection with acquisition	322,500			1		4,211			—			—			—			—		4,212
Unearned stock-based compensation	—			—		4,055			(4,055	)		—			—			—		—
Reversal of unearned stock-based compensation due to terminations	—			—		(729	)		729			—			—			—		—
Amortization of unearned stock-based compensation	—			—		—			1,347			—			—			—		1,347
Issuance of stock options to parent company employees in exchange for services	—			—		2,280			—			—			—			—		2,280
Issuance of common stock for cash on exercise of options	84,511			—		357			—			—			—			—		357
Issuance of common stock for note receivable on exercise of options	12,222			—		55			—			(55	)		—			—		—
Change in unrealized losses on available-for-sale securities	—			—		—			—			—			(1,030	)		—		(1,030	)	$	(1,030	)
Foreign currency translation adjustment	—			—		—			—			—			1,505			—		1,505			1,505
Net income	—			—		—			—			—			—			36,434		36,434			36,434

Balances, November 30, 2000	21,798,784			22		78,471			(1,979	)		(55	)		(365	)		81,729		157,823		$	36,909

Repurchase of common stock	(20,000	)		—		(128	)		—			55			—			—		(73	)
Reversal of unearned stock-based compensation due to terminations	—			—		(131	)		131			—			—			—		—
Amortization of unearned stock-based compensation	—			—		—			565			—			—			—		565
Issuance of stock options to parent company employees in exchange for services	—			—		28			—			—			—			—		28
Issuance of common stock for cash on exercise of options	118,615			—		464			—			—			—			—		464
Issuance of common stock for note receivable on exercise of options	150,000			—		300			—			(300	)		—			—		—
Change in unrealized losses on available-for-sale securities	—			—		—			—			—			(37	)		—		(37	)	$	(37	)
Foreign currency translation adjustment	—			—		—			—			—			(1,195	)		—		(1,195	)		(1,195	)
Net income	—			—		—			—			—			—			25,797		25,797			25,797

Balances, November 30, 2001	22,047,399			22		79,004			(1,283	)		(300	)		(1,597	)		107,526		183,372		$	24,565

Tax benefits from exercise of non-qualified employee stock options	—			—		116			—			—			—			—		116
Unearned stock-based compensation	—			—		35			(35	)		—			—			—		—
Reversal of unearned stock based compensation due to terminations	—			—		(4	)		4			—			—			—		—
Amortization of unearned stock-based compensation	—			—		—			561			—			—			—		561
Issuance of common stock for cash on exercise of options	34,042			—		100			—			—			—			—		100
Repayment of employee note receivable	—			—		—			—			300			—			—		300
Change in unrealized losses on available-for-sale securities	—			—		—			—			—			(66	)		—		(66	)	$	(66	)
Foreign currency translation adjustment	—			—		—			—			—			803			—		803			803
Net income	—			—		—			—			—			—			28,032		28,032			28,032

Balances, November 30, 2002	22,081,441			22		79,251			(753	)		—			(860	)		135,558		213,218		$	28,769

Amortization of unearned stock-based compensation	—			—		—			413			—			—			—		413
Issuance of common stock for cash on exercise of options	8,850			—		31			—			—			—			—		31
Change in unrealized gains on available-for-sale securities	—			—		—			—			—			154			—		154		$	154
Foreign currency translation adjustment	—			—		—			—			—			4,351			—		4,351			4,351
Net income	—			—		—			—			—			—			21,371		21,371			21,371

Balances, August 31, 2003	22,090,291		$	22	$	79,282		$	(340	)	$	—		$	3,645		$	156,929	$	239,538		$	25,876

The accompanying notes are an integral part of these consolidated financial statements.

F-5

SYNNEX CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Years Ended November 30,									Nine Months Ended August 31,
	2000			2001			2002			2002			2003
										(unaudited)
Cash flows from operating activities:
Net income	$	36,434		$	25,797		$	28,032		$	20,344		$	21,371
Add: loss from discontinued operations		5,577			—			—			—			—

Income from continuing operations		42,011			25,797			28,032			20,344			21,371
Adjustments to reconcile net income from continuing operations to net cash provided by continuing operations:
Depreciation expense		3,991			7,175			5,035			3,614			3,319
Amortization of intangible assets		1,415			1,610			2,741			1,986			1,953
Amortization of unearned stock-based compensation		1,347			565			561			408			413
Issuance of stock options to parent company employees in exchange for services		2,280			28			—			—			—
Tax benefits from employee stock plans		—			—			116			—			—
Unrealized losses on trading securities		1,012			61			630			1,357			495
Net realized gains on investments		(18,672	)		(518	)		(582	)		(726	)		(292	)
Impairment of investments		515			3,743			—			—			—
Loss on disposal of property and equipment		15			63			105			57			933
Minority interest in subsidiaries		832			274			(16	)		(176	)		(106	)
Changes in assets and liabilities, net of acquisitions of businesses:
Accounts receivable		(24,700	)		57,504			23,831			(3,335	)		38,703
Receivables from vendors		(14,334	)		20,764			(376	)		(10,505	)		(17,012	)
Receivable from affiliates		3,189			(4,501	)		5,825			6,417			1,308
Inventories		(100,635	)		80,602			(9,992	)		(25,505	)		(95,627	)
Other assets		237			5,579			(10,415	)		(7,247	)		8,711
Payable to affiliates		37,161			(70,958	)		(7,775	)		(8,320	)		9,642
Accounts payable		49,937			(90,230	)		10,363			68,034			42,343
Accrued liabilities		54,643			(26,081	)		21,246			10,054			(14,661	)

Net cash provided by continuing operations		40,244			11,477			69,329			56,457			1,493
Net cash used in discontinued operations		(9,929	)		—			—			—			—

Net cash provided by operating activities		30,315			11,477			69,329			56,457			1,493

Cash flows from investing activities:
Purchases of short-term investments		(7,480	)		(472	)		(8,406	)		(7,711	)		(2,611	)
Proceeds from sale of short-term investments		14,526			1,494			6,016			4,498			2,045
Purchase of additional investment in affiliates		—			(333	)		—			—			—
Proceeds from sale of investment in affiliates		3,500			—			—			—			—
Acquisition of businesses, net of cash acquired		3,472			(17,143	)		(47,174	)		(47,088	)		(1,525	)
Purchase of property and equipment, net		(9,604	)		(3,296	)		(8,912	)		(4,786	)		(1,677	)
Decrease (increase) decrease in restricted cash		—			(1,000	)		(4,500	)		(4,500	)		1,284

Net cash provided by (used in) investing activities		4,414			(20,750	)		(62,976	)		(59,587	)		(2,484	)

Cash flows from financing activities:
Cash overdraft	$	(45,780	)	$	9,658		$	(5,296	)	$	7,353		$	11,754
Proceeds from revolving line of credit		292,351			182,800			98,992			88,800			110,292
Payments on revolving line of credit		(292,351	)		(182,800	)		(98,992	)		(80,800	)		(110,054	)
Net proceeds (payments) under other lines of credit		(843	)		(10,877	)		924			3,627			(5,179	)
Proceeds from bank loan		387			162,853			517,422			411,083			419,265
Repayments of bank loan		(573	)		(156,794	)		(521,474	)		(421,705	)		(422,996	)
Proceeds from issuance of bonds by SYNNEX (Japan) K.K.		—			—			—			—			5,051
Proceeds from issuance of common stock (including $305 from sales of SYNNEX (Japan) K.K. common stock in 2000)		662			464			1,076			1,049			86
Repurchase of common stock		—			(73	)		—			—			—

Net cash provided by (used in) financing activities		(46,147	)		5,231			(7,348	)		9,407			8,219

Effect of exchange rate changes on cash and cash equivalents		(1,505	)		(792	)		768			723			443

Net increase (decrease) in cash and cash equivalents		(12,923	)		(4,834	)		(227	)		7,000			7,671
Cash and cash equivalents at beginning of period		33,487			20,564			15,730			15,730			15,503

Cash and cash equivalents at end of period	$	20,564		$	15,730		$	15,503		$	22,730		$	23,174

Supplemental disclosures of cash flow information:
Interest paid	$	1,426		$	5,093		$	2,443		$	1,786		$	1,934

Income taxes paid	$	24,792		$	24,301		$	18,470		$	13,855		$	11,935

Supplemental disclosure of non cash investing and financing activities:
Issuance of common stock for acquisition of subsidiary	$	4,211		$	—		$	—		$	—		$	—

Unearned stock-based compensation	$	4,055		$	—		$	35		$	—		$	—

Issuance of common stock in exchange for receivables from stockholders	$	55		$	300		$	—		$	—		$	—

The accompanying notes are an integral part of these financial statements.

F-6

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(INFORMATION FOR THE NINE MONTHS ENDED AUGUST 31, 2002 IS UNAUDITED)

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

NOTE 1 — ORGANIZATION AND BASIS OF PRESENTATION:

SYNNEX Corporation (together with its subsidiaries, herein referred to as “SYNNEX” or the “Company”) is an information technology products supply chain services company. The Company’s supply chain outsourcing services include distribution, contract assembly and logistics. SYNNEX is headquartered in Fremont, California and has operations in North America, Asia and Europe.

The Company is a majority-owned subsidiary of Silver Star Development Limited (“SSDL”), which is a wholly-owned subsidiary of MiTAC International Corporation, a publicly traded corporation in Taiwan. At November 30, 2002, SSDL owned approximately 55% of the Company’s common stock. At November 30, 2002, MiTAC International Corporation and its affiliates had a combined ownership of approximately 98% in the Company.

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Unaudited interim financial information

The accompanying, the consolidated statements of operations and cash flows for the nine months ended August 31, 2002 are unaudited. The unaudited interim financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Company’s financial position as of August 31, 2002 and its results of operations and its cash flows for the nine months ended August 31, 2002. The financial data and other information disclosed in these notes to financial statements related to the nine-month period ended August 31, 2002 are unaudited.

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates.

Principles of consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries and majority owned subsidiaries in which no substantive participating rights are held by minority stockholders. All significant intercompany accounts and transactions have been eliminated.

Investments in 20% through 50% owned affiliated companies are included under the equity method where the Company exercises significant influence over operating and financial affairs of the investee. Investments in less than 20% owned companies or investments in 20% through 50% owned companies where the Company does not exercise significant influence over operating and financial affairs of the investee are recorded under the cost method.

Sale of stock by subsidiary company

At the time a subsidiary or investee accounted for under the consolidation or equity method of accounting sells its stock to a third party at a price per share which is different than the Company’s carrying value per share,

F-7

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(INFORMATION FOR THE NINE MONTHS ENDED AUGUST 31, 2002 IS UNAUDITED)

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

the Company’s share of the subsidiary net equity changes. Pursuant to the Securities and Exchange Commission’s Staff Accounting Bulletin (“SAB”) No. 84, the Company records the change in its share of the subsidiary’s net equity as a gain within “other income (expense), net”. To date, the only such transaction has been the sale of 377,000 shares of SYNNEX (Japan) K.K. common stock for $305 during 2000.

Cash and cash equivalents

The Company considers all highly liquid debt instruments purchased with an original maturity or remaining maturity at date of purchase of three months or less to be cash equivalents. Cash equivalents consist principally of money market deposit accounts that are stated at cost, which approximates fair value. The Company’s cash management program utilizes zero balance accounts, and all book overdraft balances have been reclassified to accounts payable and amounted to $22,826, $17,530 and $29,284 at November 30, 2001 and 2002 and August 31, 2003, respectively.

Restricted cash

The Company provides letter of credit to vendors on behalf of its subsidiaries in Asia and North America. The Company is required by the banks to maintain certain balances in its bank accounts as collateral for such credit arrangements. At November 30, 2001 and 2002 and August 31, 2003, the Company had restricted cash balances of $1,002, $5,561 and $4,333, respectively.

Investments

Short-term investments include equity instruments which are expected to be sold during the normal operating cycle of the business (within twelve months). The Company classifies its investments in marketable securities as trading and available-for-sale. Securities classified as trading are recorded at fair value, based on quoted market prices, and unrealized gains and losses are included in results of operations. Securities classified as available-for-sale are recorded at fair market value, based on quoted market prices, and unrealized gains and losses are included in other comprehensive income, a component of stockholders’ equity. Realized gains and losses, which are calculated based on the specific identification method, and declines in value judged to be other than temporary, if any, are recorded in operations as incurred.

To determine whether a decline in value is other-than-temporary, the Company evaluates current factors, including current economic environment, market conditions, operational and financial performance of the investee, and other specific factors relating to the business underlying the investment, including business outlook of the investee, future trends in the investee’s industry and the Company’s intent to carry the investment for a sufficient period of time for any recovery in fair value. If a decline in value is deemed as other-than-temporary, the Company records reductions in carrying values to estimated fair values, which are determined based on quoted market prices if available or on one or more of the valuation methods such as pricing models using historical and projected financial information, liquidation values, and values of other comparable public companies.

Long-term investments include instruments that the Company has the ability and intent to hold for more than twelve months. The Company classifies its long-term investments as available-for-sale if a readily determinable fair value is available.

F-8

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(INFORMATION FOR THE NINE MONTHS ENDED AUGUST 31, 2002 IS UNAUDITED)

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

The Company has investments in equity instruments of privately-held companies. These investments are included in other assets and are accounted for under the cost method as the Company does not have the ability to exercise significant influence over operations. The Company monitors its investments for impairment by considering current factors, including economic environment, market conditions, operational performance and other specific factors relating to the business underlying the investment, and records reductions in carrying values when necessary.

Inventories

Inventories are stated at the lower of cost or market. Cost is computed based on the weighted average method. Inventories consist of finished goods purchased from various manufacturers for distribution resale and components used for contract assembly.

Property and equipment

Property and equipment are stated at cost, less accumulated depreciation. Depreciation and amortization are computed using the straight-line method based upon the shorter of the estimated useful lives of the assets, or the lease term of the respective assets, if applicable. Maintenance and repairs are charged to expense as incurred, and improvements and betterments are capitalized. When assets are retired or otherwise disposed of, the cost and accumulated depreciation and amortization are removed from the accounts and any resulting gain or loss is reflected in operations in the period realized. The depreciation and amortization periods for property and equipment categories are as follows:

Equipment		5 years
Software		3 years
Furniture		7 years
Building		39 years

Intangible assets

Intangible assets consist of vendor lists, customer lists, trade names and land rights, which are amortized on a straight-line basis over their estimated lives. Intangible assets acquired in the years ended November 30, 2001 and 2002 are amortized over 8 years. Vendor and customer lists acquired prior to November 30, 2000 were initially amortized over 15 years. Effective December 1, 2001, the remaining useful lives of these assets were reduced to 8 years. The effect of the change was to increase the amortization of intangible assets by $513,000 per year for the eight years beginning in the year ended November 30, 2002.

Software Costs

The Company develops software for internal use only. The payroll and other costs of the Company’s software department have been expensed as incurred. Excluding the costs of support, maintenance and training functions that are not subject to capitalization, the costs of the software department were not material for the periods presented. If the internal software development costs become material, the Company will capitalize the costs based on the defined criteria for capitalization in accordance with Statement of Position (“SOP”) 98-1 “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use.”

F-9

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(INFORMATION FOR THE NINE MONTHS ENDED AUGUST 31, 2002 IS UNAUDITED)

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

Impairment of long-lived assets

The Company reviews the recoverability of its long-lived assets, such as property and equipment, when events or changes in circumstances occur that indicate the carrying value of the asset or asset group may not be recoverable. The assessment of possible impairment is based on the Company’s ability to recover the carrying value of the asset or asset group from the expected future pre-tax cash flows, undiscounted and without interest charges, of the related operations. If these cash flows are less than the carrying value of such assets, an impairment loss is recognized for the difference between estimated fair value and carrying value. The measurement of impairment requires management to estimate future cash flows and the fair value of long-lived assets.

Concentration of credit risk

Financial instruments that potentially subject the Company to significant concentration of credit risk consist principally of cash and cash equivalents and accounts receivable. 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, 2003, the Company had not experienced any losses on such deposits.

Accounts receivable include amounts due from customers in the technology industry. The Company believes that the concentration of credit risk on its accounts receivable is substantially mitigated by the Company’s evaluation process and relatively short collection terms. The Company performs ongoing credit evaluations of its customer’s 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 when deemed necessary. Through August 31, 2003, such losses had been within management’s expectations.

Two customers accounted for 22.7% and 15.2% of the Company’s revenue in 2000. One customer accounted for 10.9% of the Company’s revenue in 2001. In 2002 and the nine months ended August 31, 2003 the Company did not have sales to any one customer comprising 10% or more of the Company’s total revenues. At November 30, 2001, the Company had no accounts receivable balance from any one customer which represented more than 10% of the total consolidated accounts receivable balance. At November 30, 2002, one customer comprised 12% of the total consolidated accounts receivable balance. At August 31, 2003, one customer comprised 11% of the total consolidated account receivable balance.

Revenue recognition

The Company recognizes revenue as products are shipped, if a purchase order exists, the sale price is fixed or determinable, collection of resulting receivables is reasonably assured, risk of loss and title have transferred and product returns are reasonably estimable. The shipping terms are F.O.B. the Company’s warehouse. 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 purchases licensed software products from OEM vendors and distributes them to customers. Revenues are recognized upon shipment of software products when a purchase order exists, the sales price is fixed or determinable and collection is determined to be probable. Subsequent to the sale of software products,

F-10

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(INFORMATION FOR THE NINE MONTHS ENDED AUGUST 31, 2002 IS UNAUDITED)

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

the Company has no obligation to provide any modification, customization, upgrades, enhancements, or any other post-contract customer support.

Original Equipment Manufacturer (“OEM”) supplier programs

Funds received from OEM suppliers for inventory volume promotion programs, price protection and product rebates are recorded as adjustments to cost of revenue. The Company tracks vendor promotional programs for volume discounts on a program-by-program basis. Once the program is implemented, the expected benefit of the program based on the estimated volume is recorded as a receivable from vendors with a corresponding reduction in the cost of inventories. As the inventories are sold, the benefit is earned and reflected as a reduction in the cost of sales. Concurrently, the vendor receivable is realized, generally through reductions authorized by the vendor to accounts payable. The Company monitors the balances of vendor receivables on a quarterly basis and adjusts the allowance for differences between expected and actual volume sales. For price protection programs, the Company records a reduction in the payable to the vendor and a reduction in the related inventory. Funds received for specific marketing and infrastructure reimbursements are recorded as adjustments to selling, general and administrative expenses, and any excess reimbursement amount is recorded as an adjustment to cost of revenue.

Royalties

The Company purchases licensed software products from OEM vendors and distributes to resellers. Royalties to OEM vendors are accrued for and recorded in cost of revenue when software products are shipped and revenue is recognized.

Warranties

The Company’s OEM suppliers generally warrant the products distributed by the Company and allow returns of defective products. The Company generally does not independently warrant the products it distributes; however, the Company does warrant the following: (1) its services with regard to products that it assembles for its customers, and (2) products that it builds to order from components purchased from other sources. An accrual for estimated warranty costs is recorded at the time of sale and periodically adjusted to reflect actual experience. Neither warranty expense nor the accrual for warranty costs is material to the Company’s consolidated financial statements.

Advertising

Costs related to advertising and promotion expenditures of products are charged to selling, general and administrative expense as incurred. To date, costs related to advertising and promotion expenditures has not been material.

Income taxes

The asset and liability method is used in accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts in the financial statements using enacted tax rates and laws that will be in effect when the difference is expected to reverse. Valuation allowances are provided against assets which are not likely to be realized.

F-11

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(INFORMATION FOR THE NINE MONTHS ENDED AUGUST 31, 2002 IS UNAUDITED)

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

Fair value of financial instruments

For certain of the Company’s financial instruments, including cash, accounts receivable and accounts payable, the carrying amounts approximate fair value due to the short maturities. The amount shown for borrowings also approximates fair value because current interest rates offered to the Company for debt of similar maturities are approximately the same. The estimated fair value of foreign exchange contracts are based on market prices or current rates offered for contracts with similar terms and maturities. The ultimate amounts paid or received under these foreign exchange contracts, however, depend on future exchange rates. The gains or losses are recognized as “Other income (expense), net” based on changes in the fair value of the contracts, which generally occur as a result of changes in foreign currency exchange rates.

Foreign currency translations

The functional currencies of the Company’s foreign subsidiaries are their respective local currencies. The financial statements of the foreign subsidiaries are translated into U.S. dollars for consolidation as follows: assets and liabilities at the exchange rate as of the balance sheet date, stockholders’ equity at the historical rates of exchange, and income and expense amounts at the average exchange rate for the year. Translation adjustments resulting from the translation of the subsidiaries’ accounts are included in “Accumulated other comprehensive income (loss). Gains and losses resulting from foreign currency transactions are included within “Other income (expense), net”. During the years ended November 30, 2000, 2001 and 2002 and the nine months ended August 31, 2002 and 2003, the Company recorded transaction losses (gain) of $709, $3,362, $177, $(88) (unaudited) and $629, respectively.

Stock-based compensation

The Company’s employee stock option plan is accounted for in accordance with Accounting Principles Board No. 25, “Accounting for Stock Issued to Employees,” (“APB No. 25”) and complies with the disclosure provisions of Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (“SFAS No. 123”), and Statement of Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation, Transition and Disclosure” (“SFAS No. 148”). Expense associated with stock-based compensation is amortized on a straight-line basis over the vesting period of the individual award.

The Company accounts for stock issued to non-employees in accordance with the provisions of SFAS No. 123 and Emerging Issues Task Force Consensus No. 96-18, “Accounting for Equity Instruments That are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services” (“EITF No. 96-18”). Under SFAS No. 123 and EITF No. 96-18, stock option awards issued to non-employees are accounted for at fair value using the Black-Scholes option-pricing model.

F-12

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(INFORMATION FOR THE NINE MONTHS ENDED AUGUST 31, 2002 IS UNAUDITED)

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

The following table illustrates the effect on net income per share if the Company had applied the fair value recognition provisions of SFAS No. 123 to stock-based employee compensation. The estimated fair value of each Company option is calculated using the Black-Scholes option-pricing model:

	Years Ended November 30,									Nine Months Ended August 31,
	2000			2001			2002			2002			2003
										(unaudited)

Net income—as reported	$	36,434		$	25,797		$	28,032		$	20,344		$	21,371

Plus: Stock-based employee compensation expense determined under APB No. 25, included in reported net income		1,347			565			561			408			413

Less: Stock-based employee compensation expense determined under fair value based method		(2,032	)		(2,001	)		(2,553	)		(1,936	)		(1,915	)


Net income—as adjusted	$	35,749		$	24,361		$	26,040		$	18,816		$	19,869


Net earnings (loss) per share—basic:
As reported	$	1.70		$	1.18		$	1.27		$	0.92		$	0.97
Pro forma	$	1.67		$	1.11		$	1.18		$	0.85		$	0.90

Net earnings (loss) per share—diluted:
As reported	$	1.49		$	1.06		$	1.16		$	0.83		$	0.87
Pro forma	$	1.49		$	1.01		$	1.09		$	0.78		$	0.82

Shares used in computing net income (loss) per share—basic:
As reported		21,466,002			21,918,742			22,060,578			22,053,762			22,088,463
Pro forma		21,466,002			21,918,742			22,060,578			22,053,762			22,088,463

Shares used in computing net income (loss) per share—diluted:
As reported		24,404,129			24,391,871			24,250,528			24,396,925			24,442,652
Pro forma		24,008,931			24,085,945			23,871,899			23,998,954			24,207,883

Comprehensive income

Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. The primary components of comprehensive income for the Company includes foreign currency translation adjustments arising from the consolidation of the Company’s foreign subsidiaries and unrealized gains and losses on the Company’s available-for-sale securities. Comprehensive income is disclosed in the Consolidated Statements of Stockholders’ Equity.

F-13

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(INFORMATION FOR THE NINE MONTHS ENDED AUGUST 31, 2002 IS UNAUDITED)

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

Net income per common share

Net income per common share-basic is computed by dividing the net income for the period by the weighted average number of shares of common stock outstanding during the period. Net income per common share-diluted reflects the potential dilution that could occur if stock options were exercised. The calculations of net income per common share are presented in Note 13.

Recently issued accounting pronouncements

In July 2002, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities,” which addresses the recognition, measurement and reporting costs associated with exit or disposal activities, and supersedes previous authoritative guidance, Emerging Issues Task Force (“EITF”) No. 94-3. The principal difference is that the new standard requires that a liability for a disposal activity (including those related to the employee termination benefits and obligations under operation leases and other contracts) be recognized when a liability is incurred, and not necessarily the date of an entity’s commitment to an exit plan, as under EITF No. 94-3. SFAS No. 146 also establishes that the initial measurement of a liability recognized under SFAS No. 146 be based on fair value. The provisions of SFAS No. 146 are effective for exit or disposal activities that are initiated after December 31, 2002. The Company has not had any exit or disposal activities since the adoption of the standard.

In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation, Transition and Disclosure.” SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. SFAS No. 148 also requires that disclosures of the pro forma effect of using the fair value method of accounting for stock-based employee compensation be displayed more prominently and in a tabular format. Additionally, SFAS No. 148 requires disclosure of the pro forma effect in interim financial statements. The transition and annual disclosure requirements of SFAS No. 148 are effective for fiscal years ended after December 15, 2002. The interim disclosure requirements are effective for interim periods beginning after December 15, 2002. The Company has applied the disclosure provision of SFAS No. 148.

In January 2003, the FASB issued FIN No. 46, “Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51.” FIN No. 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN No. 46 is effective immediately for all new variable interest entities created or acquired after January 31, 2003. For variable interest entities created or acquired prior

F-14

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(INFORMATION FOR THE NINE MONTHS ENDED AUGUST 31, 2002 IS UNAUDITED)

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

to February 1, 2003, the provisions of FIN No. 46 must be applied for the first interim or annual period ending after December 15, 2003. The Company believes that the adoption of this standard will have no material impact on its financial position or results of operations.

In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” SFAS No. 149 amends and clarifies financial accounting and reporting of derivative instruments and hedging activities under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” SFAS No. 149 amends SFAS No. 133 for decisions made: (i) as part of the Derivatives Implementation Group process that require amendment to SFAS No. 133; (ii) in connection with other FASB projects dealing with financial instruments; and (iii) in connection with the implementation issues raised related to the application of the definition of a derivative. SFAS No. 149 is effective for contracts entered into or modified after June 30, 2003 and for designated hedging relationships after June 30, 2003. The Company believes that the adoption of SFAS No. 149 will not have a material impact on its financial position or results of operations.

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” The Statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity and further requires that an issuer classify as a liability (or an asset in some circumstances) financial instruments that fall within its scope because that financial instrument embodies an obligation of the issuer. Many of such instruments were previously classified as equity. The statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The Company believes that the adoption of this standard will not have a material impact on its financial position or results of operations.

In November 2002, the EITF reached a consensus on Issue No. 00-21 (“EITF No. 00-21”), “Multiple-Deliverable Revenue Arrangements.” EITF No. 00-21 addresses how to account for arrangements that may involve the delivery or performance of multiple products, services, and/or rights to use assets. The consensus mandates how to identify whether goods or services or both that are to be delivered separately in a bundled sales arrangement should be accounted for separately because they are separate units of accounting. The guidance can affect the timing of revenue recognition for such arrangements, even though it does not change rules governing the timing or pattern of revenue recognition of individual items accounted for separately. The final consensus is applicable to agreements entered into in fiscal years beginning after June 15, 2003 with early adoption permitted. Additionally, companies will be permitted to apply the consensus guidance to all existing arrangements as the cumulative effect of a change in accounting principle in accordance with APB No. 20, “Accounting Changes.” The Company is assessing the impact of EITF No. 00-21 and believes that the adoption will not have a material impact on its financial position or results of operations.

F-15

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(INFORMATION FOR THE NINE MONTHS ENDED AUGUST 31, 2002 IS UNAUDITED)

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

NOTE 3 — BALANCE SHEET COMPONENTS:

	November 30,						August 31, 2003
	2001			2002			August 31, 2003
Accounts receivable, net:
Trade accounts receivables	$	219,128		$	233,504		$	207,727
Less: Allowance for doubtful accounts		(7,961	)		(8,315	)		(8,581	)
Less: Allowance for sales returns		(6,543	)		(3,757	)		(8,090	)

	$	204,624		$	221,432		$	191,056

Receivables from vendors, net:
Receivables from vendors	$	37,562		$	37,866		$	56,570
Less: Allowance for doubtful accounts		(2,676	)		(2,704	)		(4,048	)

	$	34,886		$	35,162		$	52,522

Inventories:
Components	$	37,701		$	6,713		$	16,166
Finished goods		198,426			254,785			337,063

	$	236,127		$	261,498		$	353,229

Property and equipment, net:
Equipment and computers	$	32,274		$	31,476		$	31,581
Furniture and fixtures		4,024			4,295			4,632
Vehicles		428			515			488
Buildings and land		9,885			20,617			21,465

		46,611			56,903			58,166
Less: Accumulated depreciation		(29,995	)		(31,608	)		(35,245	)

	$	16,616		$	25,295		$	22,921

Depreciation expense was $3,991, $7,175, $5,035, $3,614 (unaudited) and $3,319 for the years ended November 30, 2000, 2001 and 2002 and the nine months ended August 31, 2002 and 2003, respectively.

Intangible assets:

	November 30,														August 31, 2003
	2001							2002							August 31, 2003
	Gross Amount		Accumulated Amortization			Net Amount		Gross Amount		Accumulated Amortization			Net Amount		Gross Amount		Accumulated Amortization			Net Amount
Vendor lists	$	23,530	$	(6,629	)	$	16,901	$	22,482	$	(8,535	)	$	13,947	$	22,482	$	(10,038	)	$	12,444
Customer lists		1,346		(56	)		1,290		7,574		(789	)		6,785		5,490		(1,171	)		4,319
Other intangible assets		3,535		(405	)		3,130		3,540		(503	)		3,037		3,675		(573	)		3,102

	$	28,411	$	(7,090	)	$	21,321	$	33,596	$	(9,827	)	$	23,769	$	31,647	$	(11,782	)	$	19,865

F-16

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(INFORMATION FOR THE NINE MONTHS ENDED AUGUST 31, 2002 IS UNAUDITED)

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

Amortization expense was $1,415, $1,610, $2,741, $1,986 (unaudited) and $1,953 for the years ended November 30, 2000, 2001, 2002 and the nine months ended August 31, 2002 and 2003, respectively. Intangible assets are being amortized over estimated useful lives of eight years. Estimated future amortization expense is as follows:

Years ending November 30,
2003	$	2,760
2004		2,760
2005		2,760
2006		2,760
2007		2,760
thereafter		9,969

	$	23,769

	November 30,				August 31, 2003
	2001		2002		August 31, 2003
Accrued liabilities:
Payroll related accruals	$	11,435	$	12,801	$	12,070
Deferred compensation liability		10,398		12,911		14,347
Royalty and warranty accruals		957		4,587		4,657
Sales tax payable		770		7,971		5,183
Other accrued liabilities		19,341		27,932		13,311

	$	42,901	$	66,202	$	49,568

NOTE 4 — ACQUISITIONS:

Acquisitions during the year ended November 30, 2002

Gates/Arrow Distributing

On May 31, 2002, the Company acquired certain assets and liabilities of Gates/Arrow Distributing, a business unit of Arrow Electronics, Inc. for cash of approximately $44,487. Gates/Arrow was a distributor of computer systems, peripherals and software, serving value-added resellers across North America. The purchase enabled the Company to expand its market share in North America.

License Online, Inc.

On May 10, 2002, the Company acquired the assets of License Online, Inc., a provider of Web-based software licensing technology to small to medium-sized business (“SMB”) solution providers and their SMB customers, for $3,292 in cash.

Novitech, S.A. de C.V.

On May 7, 2002, the Company acquired certain distribution and sale assets of Novitech, S.A. de C.V., a Mexican distributor of information technology products. The purchase price for the assets was $920 in cash.

F-17

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(INFORMATION FOR THE NINE MONTHS ENDED AUGUST 31, 2002 IS UNAUDITED)

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

Accounting for the Acquisitions

All of these acquisitions have been accounted for using the purchase method of accounting; thus, the consolidated financial statements do not include the financial results of any acquired business prior to the closing date of the acquisition.

The aggregate purchase consideration of the three acquisitions was $48,509 plus acquisition costs of $190, and has been allocated to the assets acquired and liabilities assumed as follows:

Purchase Consideration	Fair Value
Cash	$	48,509
Acquisition costs		190

	$	48,699


Allocation	Fair Value			Amortization Period
Accounts receivable	$	41,893		—
Inventories		15,416		—
Property and equipment		4,278		—
Customer lists		3,086		8 years
Accounts payable		(15,974	)	—

	$	48,699

The following unaudited pro forma financial information combines the consolidated results of operations as if the acquisition of Gates/Arrow Distributing, License Online, Inc., and Novitech, S.A. de C.V. had occurred as of the beginning of the periods presented. Pro forma adjustments include only the effects of events directly attributed to transactions that are factually supportable and expected to have a continuing impact. The pro forma results contained in the table below include pro forma adjustments for amortization of acquired intangibles and additional finance charges related to the financing of the purchase consideration of the acquisitions. The table includes pro forma information relating to the acquisition of Merisel Canada, Inc. in 2001 as if the acquisition had occurred on December 1, 2000.

	Years Ended November 30,				Nine Months Ended August 31,
	2001		2002		2001		2002
	(unaudited)				(unaudited)
Revenue	$	4,216,141	$	4,000,270	$	2,858,039	$	2,926,764
Net income	$	17,898	$	26,733	$	19,544	$	19,123
Net income per common share — basic	$	0.82	$	1.21	$	0.89	$	0.87
Net income per common share — diluted	$	0.73	$	1.10	$	0.80	$	0.78

F-18

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(INFORMATION FOR THE NINE MONTHS ENDED AUGUST 31, 2002 IS UNAUDITED)

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

Acquisition during the year ended November 30, 2001

On July 28, 2001, the Company acquired all of the outstanding shares of Merisel Canada, Inc. (“Merisel Canada”) from Merisel Americas, Inc., a wholly-owned subsidiary of Merisel, Inc. Merisel Canada is a distributor of computer hardware and software products, with locations in Toronto, Ontario; Vancouver, British Columbia; and Montreal, Quebec. The purchase of Merisel Canada enables the Company to expand its market share in North America. Effective August 30, 2001, Merisel Canada changed its name to SYNNEX Canada Limited. For reporting purposes, the results of Merisel Canada have been reflected in the Distribution Business Segment. The acquisition has been accounted for by the purchase method of accounting, and the results of operations of Merisel Canada are included in the accompanying consolidated financial statements from the date of acquisition. The source of the funds for the acquisition came from a sale of accounts receivable to a financial institution under the Company’s accounts receivable securitization program.

The total purchase consideration was $19,940 and has been allocated to the assets acquired and liabilities assumed in the acquisition as follows:

	Fair Value
Purchase consideration:
Cash	$	19,559
Acquisition costs		381

	$	19,940


	Fair Value			Amortization Period
Cash and cash equivalents	$	2,796		—
Accounts receivables		59,338		—
Inventories		42,210		—
Other current assets		2,109		—
Vendor list		2,020		8 years
Customer list		1,346		8 years
Trade names		500		8 years
Other long-term assets		1,177		—
Accounts payable		(51,037	)	—
Accrued liabilities		(4,549	)	—
Other long-term liabilities		(35,970	)	—

	$	19,940

F-19

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(INFORMATION FOR THE NINE MONTHS ENDED AUGUST 31, 2002 IS UNAUDITED)

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

The following unaudited pro forma financial information combines the consolidated results of operations as if the acquisition of Merisel Canada had occurred as of the beginning of the periods presented. Pro forma adjustments include only the effects of events directly attributed to a transaction that are factually supportable and expected to have a continuing impact. The pro forma adjustments contained in the table below include amortization of acquired intangibles and additional finance charges related to the financing of the purchase consideration of the acquisition.

	Years Ended November 30,
	2000		2001
	(unaudited)
Revenue	$	4,486,365	$	3,562,289
Income from continuing operations	$	23,596	$	21,849
Net income	$	18,019	$	21,849
Income from continuing operations per common share — basic	$	1.10	$	1.00
Income from continuing operations per common share — diluted	$	0.97	$	0.90
Net income per common share — basic	$	0.84	$	1.00
Net income per common share — diluted	$	0.74	$	0.90

The pro forma financial information is not necessarily indicative of the operating results that would have occurred had the acquisition been consummated as of the beginning of periods presented, nor are they necessarily indicative of future operating results.

Acquisitions during the year ended November 30, 2000

On August 31, 2000, the Company acquired all of the outstanding shares of MiTAC Industrial Corporation (“MID”) from MIX System Holding Limited (“MIX”) in exchange for 322,500 shares of SYNNEX common stock with a fair value of $13.06 per share. MIX is wholly owned by MiTAC, Inc., which in turn owns approximately 9% of MiTAC International Corporation, the indirect parent company of SYNNEX.

MID is an industrial personal computer manufacturer, located in Fremont, California that assembles special purpose equipment for industries that require rugged or heavy-duty personal computers.

The acquisition of MID was accounted for by the purchase method of accounting and, accordingly, the results of operations of MID are included in the accompanying consolidated financial statements from the date of acquisition. The $1,048 excess of the purchase price of $4,212 over the net tangible assets acquired of $3,164 was allocated to vendor lists, which is being amortized on a straight-line basis over 8 years.

The pre-acquisition revenue and net income of MID were not material to the results of SYNNEX and accordingly, no pro forma results have been presented.

MID had assets of $3,969 and liabilities of $805 at the date of the acquisition. The consolidated financial statements contain the results of MID from the date of the acquisition.

F-20

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(INFORMATION FOR THE NINE MONTHS ENDED AUGUST 31, 2002 IS UNAUDITED)

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

On September 15, 2000, the Company acquired MiTAC Europe Limited (“MEL”) from SYNNEX’s immediate parent company, SSDL, through the issuance of 1,637,500 shares of SYNNEX common stock. The acquisition was accounted for as a transfer under common control whereby the net tangible assets acquired were recorded at their historical cost of $7,558 and the assets and liabilities and financial results of MEL are included within the consolidated financial statements for all periods presented. MEL was subsequently renamed SYNNEX Information Technologies (UK) Limited (“SYNNEX UK”).

NOTE 5 — INVESTMENTS:

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

	November 30, 2001							November 30, 2002							August 31, 2003
	Original Cost		Unrealized Losses			Fair Value		Original Cost		Unrealized Losses			Fair Value		Original Cost		Unrealized Losses			Fair Value
Short-term:
Trading	$	1,259	$	(61	)	$	1,198	$	4,399	$	(630	)	$	3,769	$	5,558	$	(1,103	)	$	4,455
Available-for-sale		931		(630	)		301		757		(696	)		61		757		(542	)		215

	$	2,190	$	(691	)	$	1,499	$	5,156	$	(1,326	)	$	3,830	$	6,315	$	(1,645	)	$	4,670

Long-term:
Available-for-sale	$	49	$	—		$	49	$	300	$	—		$	300	$	—	$	—		$	—

Short-term trading securities consist of equity securities relating to the deferred compensation plan. Short-term and long-term available-for-sale securities primarily consist of investments in other companies’ equity securities.

Total realized gains on investments were $18,672, $518, $582 and $292 for the years ended November 30, 2000, 2001 and 2002 and the nine months ended August 31, 2003, respectively.

During the year ended November 30, 2001, the Company performed an impairment assessment of the carrying value of its equity investments. One of these investments, Converge, Inc., substantially reduced its operations during fiscal 2001. As a result, the Company wrote down the investment amount for “other than temporary impairment” by $3,333 to zero.

NOTE 6 — ACCOUNTS RECEIVABLE ARRANGEMENTS:

Effective December 1997, the Company established a five-year revolving arrangement (the “Arrangement”) through a consolidated wholly-owned subsidiary to sell up to $150,000 of U.S. trade accounts receivables (the “Receivables”) to a financial institution. In August 2002, the Arrangement was amended to allow the Company to sell up to $200,000 of receivables and was extended for an additional five-year period. Subsequently, in June 2003 the Arrangement was amended again to allow the Company to sell up to $210,000, of receivables and to extend the Arrangement to August 2008. In connection with the Arrangement, the Company sells its Receivables to its wholly-owned subsidiary on a continuing basis, which will in turn sell an undivided interest in the Receivables to the financial institution without recourse, at market value, calculated as the gross receivable amount, less a facility fee. The fee is based on the prevailing commercial paper interest rates plus 0.90%. A separate fee based on the unused portion of the facility, at 0.375% per annum, is also charged by the financial institution. To the extent that cash was received in exchange, the amount of Receivables sold to the financial

F-21

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(INFORMATION FOR THE NINE MONTHS ENDED AUGUST 31, 2002 IS UNAUDITED)

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

institution has been recorded as a true sale, in accordance with SFAS No. 140, “Accounting for Transfer and Servicing of Financial Assets and Extinguishments of Liabilities”. The amount of Receivables sold to the financial institution and not yet collected from customers at November 30, 2001, 2002 and August 31, 2003 was $72,000, $158,000 and $196,500, respectively. The wholly-owned subsidiary is consolidated in the financial statements of the Company, and the remaining balance of unsold Receivables at November 30, 2001, 2002 and August 31, 2003 of $117,655, $102,544 and $84,606, respectively, are included within “Accounts receivable, net”.

The gross proceeds resulting from the sale of the Receivables totaled approximately $822,000, $599,100, $672,500 and $642,000 in 2000, 2001, 2002 and the nine months ended August 31, 2003, respectively. The gross payments to the financial institution under the Arrangement totaled approximately $730,000, $677,100, $586,500 and $603,500 in 2000, 2001, 2002 and the nine months ended August 31, 2003, respectively, which arose from the subsequent collection of Receivables. The proceeds (net of the facility fee) are reflected in the consolidated statement of cash flows in operating activities within changes in accounts receivable.

The Company continues to collect the Receivables on behalf of the financial institution, for which it receives a service fee from the financial institution, and remits collections to the financial institution. The Company estimates that the service fee it receives approximates the market rate for such services, and as a result, has recognized no servicing assets or liabilities in its consolidated balance sheet. Facility fees (net of service fees) charged by the financial institution totaled $7,020, $2,693, $2,786 and $2,328 for 2000, 2001, 2002 and the nine months ended August 31, 2003, respectively, and were recorded within “Other income (expense), net”.

Under the Arrangement, as amended, the Company is required to maintain certain financial covenants to maintain its eligibility to sell additional receivables under the facility. These covenants include minimum net worth, minimum fixed charge ratio, and net worth percentage. The Company was in compliance with the covenants at November 30, 2002 and August 31, 2003.

The Company has also entered into financing agreements 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 to the Company the selling price of products sold to various customers, less a discount, within approximately 15 business days from the date of sale. 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. See Note 18, “Commitments and Contingencies” for additional information. Approximately $977,023, $984,017, $836,906 and $566,692 of the Company’s net sales were financed under these programs in 2000, 2001, 2002 and the nine months ended August 31, 2003, respectively. Approximately $31,168, $38,030 and $33,333 of accounts receivable at November 30, 2001, 2002 and the nine months ended August 31, 2003, respectively, were subject to flooring agreements. Flooring fees were approximately $2,593, $3,098, $2,013 and $1,386 in 2000, 2001, 2002 and the nine months ended August 31, 2003, respectively, and are included within “Other income (expense), net”.

F-22

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(INFORMATION FOR THE NINE MONTHS ENDED AUGUST 31, 2002 IS UNAUDITED)

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

NOTE 7 — BORROWINGS:

Borrowings consist of the following:

	November 30,						August 31, 2003
	2001			2002			August 31, 2003
SYNNEX Information Technologies, Inc. (“SYNNEX USA”) short-term loan	$	—		$	1,931		$	—
SYNNEX Mexico revolving loan		—			—			227
SYNNEX USA corporate margin account arrangement		—			—			135
SYNNEX Canada revolving loan		33,144			26,393			26,853
SYNNEX (Japan) K.K. line of credit		17,822			17,151			14,548
SYNNEX (Japan) K.K. term loan		8,168			8,160			8,557
SYNNEX (Japan) K.K. mortgage		1,296			1,175			1,095
SYNNEX (Japan) K.K bond		—			—			5,134
SYNNEX Information Technologies (UK), Ltd. term loan		710			610			—
SYNNEX (Beijing), Ltd. mortgage		—			2,979			2,750

		61,140			58,399			59,299
Less: Current portion		(18,104	)		(19,685	)		(51,447	)

Non current portion	$	43,036		$	38,714		$	7,852

SYNNEX USA short-term loan

In July 2002, SYNNEX USA entered into a short-term financing arrangement of $2,900 with a financial institution that is payable in 12 monthly installments. The loan was collateralized by certain inventory items. At November 30, 2002 and August 31, 2003, the outstanding balance was $1,931 and $0, respectively.

SYNNEX USA senior secured revolving line of credit

In December 1997, the Company entered into a senior secured revolving line of credit arrangement (the “Revolver”) with a group of financial institutions, which is secured by the Company’s inventory. The Revolver’s maximum commitment is 50% of eligible inventory valued at the lower of cost or market up to a maximum borrowing of $10,000. In July 2002, the Revolver was amended and extended for an additional five-year period, and the credit limit was increased to $15,000. Subsequently, in June 2003, the Revolver was amended again and the credit limit was increased to $25,000. Interest on borrowings under the Revolver is based on the prime rate plus 1.0% or LIBOR plus 2.0% at the Company’s option. There were no borrowings outstanding under the Revolver at November 30, 2002 and 2001. A fee of 0.30% per annum is payable with respect to the unused portion of the commitment. Under the 2002 amendment, the Company is required to comply with minimum net worth and minimum fixed charge ratio covenants. The Company was in compliance with these covenants at November 30, 2001 and 2002 and August 31, 2003. During the years ended November 30, 2001 and 2002 and the nine months ended August 31, 2003, the Company borrowed and repaid approximately $182,800, $98,992 and $110,054, respectively, under the Revolver.

F-23

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(INFORMATION FOR THE NINE MONTHS ENDED AUGUST 31, 2002 IS UNAUDITED)

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

SYNNEX USA corporate margin account arrangement

On April 1, 1997, the Company entered into a corporate account arrangement with a security broker, allowing the Company to perform margin transactions. Under the terms of the margin account, the Company may borrow funds to purchase publicly-traded securities at an interest rate of 5.75% to 7.5%. Borrowings are restricted to 50% of the equity held in the brokerage account and are collateralized by the marketable securities. There were no borrowings outstanding at November 30, 2001 and 2002, and an outstanding balance of $135 as at August 31, 2003.

SYNNEX Canada revolving loan

Upon acquisition of SYNNEX Canada Limited, SYNNEX Information Technologies, Inc., assumed a three-year C$100,000 revolving loan agreement with a financial institution. Subsequently, in August 2001, the revolving loan agreement was amended to reduce the credit limit to C$75,000. In April 2002, the agreement was further amended to increase the credit limit back to C$100,000. Borrowings under the loan agreement are collateralized by substantially all of SYNNEX Canada’s assets, including inventories and accounts receivable and are guaranteed, up to C$75,000, by SYNNEX Information Technologies, Inc. Borrowings bear interest at the prime rate of a Canadian bank designated by the financial institution plus 0.75% for Canadian Dollar denominated loans, at the prime rate of a U.S. bank designated by the financial institution plus 0.25% or at LIBOR plus 2.00% for U.S. Dollar denominated loans. A fee of 0.25% per annum is payable with respect to the unused portion of the commitment. The loan agreement contains covenants which SYNNEX Canada Limited was in compliance with for the year ended November 30, 2001 and 2002 and for the nine months ended August 31, 2003. The balance outstanding at November 30, 2001 and 2002 and August 31, 2003 was $33,144, $26,393 and $26,853, respectively.

SYNNEX (Japan) K.K. line of credit

SYNNEX (Japan) K.K. has a Japanese Yen denominated line of credit with several Japanese banks, with total available credit under these facilities of $41,524 as of November 30, 2002. Under the line of credit, approximately $17,822, $17,151 and $14,548 was outstanding at November 30, 2001 and 2002 and August 31, 2003, respectively, bearing interest at fixed rates ranging from 1.38% to 3.8% per annum.

SYNNEX (Japan) K.K. term loan

SYNNEX (Japan) K.K. had a total of $8,168, $8,160 and $8,557 outstanding as of November 30, 2001 and 2002 and August 31, 2003, respectively, under a Japanese yen denominated term loan agreement with a Japanese bank. The amount must be repaid in 2004, and bears interest at fixed rates ranging from 1.28% to 1.30% per annum.

SYNNEX (Japan) K.K. mortgage

SYNNEX (Japan) K.K. has a Japanese Yen denominated mortgage loan with a Japanese bank. Total amount outstanding under the mortgage was approximately $1,296, $1,175 and $1,095 at November 30, 2001 and 2002 and August 31, 2003, respectively, bearing interest at a fixed rate of 3.10% per annum. The mortgage is repayable between 2002 and 2011 and is secured by the Company’s office building in Japan.

F-24

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(INFORMATION FOR THE NINE MONTHS ENDED AUGUST 31, 2002 IS UNAUDITED)

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

SYNNEX (Japan) K.K. bond

SYNNEX (Japan) K.K. issued two Japanese Yen denominated bonds in February and July 2003. The bonds bear interest at 0.45% and 0.57% per year, and are to be redeemed in February 2005 and in ten equal installments by July 2008, respectively. The two bonds are guaranteed by a bank in Japan, and a fee of 0.70% and 0.80%, respectively, of the guaranteed amount are payable to the bank every year. At August 31, 2003, the carrying value of the bonds is $5,134.

SYNNEX UK term loan

In 1996, SYNNEX UK entered into a British Pound denominated loan agreement with a financial institution, which is collateralized by real estate. The total credit available under this facility was $2,138 as of November 30, 2002, of which approximately $710 and $610 was outstanding at November 30, 2001 and 2002, respectively. Interest on the borrowing is payable at 8% per annum. The loan agreement expires in 2006. The Company had no outstanding balance at August 31, 2003.

SYNNEX (Beijing), Ltd. mortgage

In September 2002, SYNNEX (Beijing), Ltd. obtained a Chinese Renminbi denominated mortgage loan with a financial institution of approximately $3,055. The amount outstanding at November 30, 2002 was $2,979. The mortgage is repayable by 2012 and is secured by the Company’s real estate in Beijing. The interest rate is adjustable based on a lending rate as determined by People’s Bank of China. For fiscal year 2002, the rate was 5.18%. At August 31, 2003, the balance was $2,750.

SYNNEX Mexico Revolving Loan

In June 2003, SYNNEX Mexico entered into a revolving loan agreement consisting of $15,000 with a financial institution. The borrowing bears an interest rate of TIIE plus 3.25% per year and is collateralized by accounts receivable. At August 31, 2003, the balance was $227.

Guarantees

SYNNEX USA has also issued guarantees to certain of its subsidiaries’ vendors, totaling $72,000 and $74,115 for trade credit lines as of November 30, 2002 and August 31, 2003, respectively.

Future principal payments

Future principal payments under the above loans as of November 30, 2002 are as follows:

Years Ending November 30,
2003	$	19,685
2004		35,156
2005		603
2006		549
2007		437
Thereafter		1,969

	$	58,399

F-25

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(INFORMATION FOR THE NINE MONTHS ENDED AUGUST 31, 2002 IS UNAUDITED)

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

NOTE 8 — DERIVATIVE INSTRUMENTS:

In the normal course of business, the Company enters into currency forward contracts to protect itself from the risk that the eventual cash outflows or inflows resulting from purchase or sale of inventory will be adversely affected by exchange rate fluctuations. The Company does not apply hedge accounting to these currency forward contracts; and has not designated any of them as hedging instruments. As of November 30, 2000, 2001, 2002 and August 31, 2002 and 2003, the Company had unrealized losses (gain) of $0, $327, $192, $(36) (unaudited) and $23, respectively, as a result of fair value changes on its outstanding currency forward contracts. These unrealized losses were charged to expense during the year.

The Company does not use derivatives for trading or speculative purposes, nor is it a party to leveraged derivatives. Further, the Company has a policy of only entering into contracts with major financial institutions. The Company has not sustained a material loss from these instruments nor does it anticipate any material adverse effect on its net income, financial position or cash flows in the future from the use of derivatives.

NOTE 9 — INCOME TAXES:

The components of the provision for income taxes were as follows:

	Years Ended November 30,								Nine Months Ended August 31, 2003
	2000			2001		2002			Nine Months Ended August 31, 2003
Current tax provision:
Federal	$	20,780		$	13,176	$	13,892		$	10,530
State		4,321			2,939		2,693			2,261
Foreign		3,621			1,185		599			299

		28,722			17,300		17,184			13,090

Deferred tax provision (benefit):
Federal		(90	)		129		(311	)		(533	)
State		(204	)		40		6			(281	)
Foreign		—			139		(42	)		—

		(294	)		308		(347	)		(814	)

		28,428			17,608		16,837			12,276
Tax benefit related to discontinued operations		4,945			—		—			—

Total tax provision related to continuing operations	$	33,373		$	17,608	$	16,837		$	12,276

F-26

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(INFORMATION FOR THE NINE MONTHS ENDED AUGUST 31, 2002 IS UNAUDITED)

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

Net deferred tax assets consist of the following:

	November 30,						August 31, 2003
	2001			2002			August 31, 2003

Inventory reserves	$	2,597		$	2,035			1,939
Bad debt and sales return reserves		3,294			2,978			3,669
Vacation and profits sharing accruals		1,932			2,462			1,477
Depreciation and amortization		(1,023	)		(303	)		334
State tax deduction		698			526			526
Deferred compensation		4,085			5,044			5,647
Net operating losses		7,318			5,820			7,803
Other		246			304			1,252
Valuation allowance		(6,619	)		(5,640	)		(8,869	)

Net deferred tax assets	$	12,528		$	13,226		$	13,778

The valuation allowance relates to deferred tax assets in tax jurisdictions for which realization of the assets is uncertain.

A reconciliation of the statutory U.S. federal income tax rate to the Company’s effective income tax rate is as follows:

	Years Ended November 30,						Nine Months Ended August 31, 2003
	2000		2001		2002		Nine Months Ended August 31, 2003
Federal statutory income tax rate	35.0	%	35.0	%	35.0	%	35.0	%
State taxes, net of federal income tax benefit	5.0		4.3		4.0		4.4
Foreign taxes	0.7		1.0		1.9		0.7
Valuation allowance adjustments	0.0		0.0		(3.4	)	(2.4	)
Permanent differences	2.4		0.8		0.6		0.6
Other	0.7		(0.8	)	(0.4	)	(0.6	)

Effective income tax rate	43.8	%	40.3	%	37.5	%	37.7	%

NOTE 10 — DEFERRED COMPENSATION PLAN:

The Company has a deferred compensation plan for certain directors and officers, which became effective in January 1994.

The plan is designed to permit eligible officers and directors to accumulate additional income through a nonqualified deferred compensation plan that enables the officer or director to make elective deferrals of compensation to which he or she will become entitled in the future.

An account is maintained for each participant for the purpose of recording the current value of his or her elective contributions, including earnings credited thereto. The participant may designate one or more

F-27

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(INFORMATION FOR THE NINE MONTHS ENDED AUGUST 31, 2002 IS UNAUDITED)

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

investments as the measure of investment return on the participant’s account. The participant’s account is adjusted monthly to reflect earnings and losses on the participant’s designated investments.

The amount credited to the participant’s account will be distributed as soon as practicable after the earlier of the participant’s termination of employment or attainment of age sixty-five. The distribution of benefits to the participant will be made in accordance with the election made by the participant in a lump sum or in equal monthly or annual installments over a period not to exceed fifteen years.

In the event the participant requests a distribution other than a hardship distribution, a 10% withdrawal penalty will be levied. Such distribution will be in the form of a lump sum cash payment.

As of November 30, 2001 and 2002 and August 31, 2003, the deferred compensation liability balance was $10,398, $12,911 and $14,347, respectively. Of the balances deferred, $1,198, $3,769 and $4,455 have been invested in equity securities at November 30, 2001 and 2002 and August 31, 2003, respectively, and are classified as trading securities. The Company has recorded gains (losses) in “Other income (expense), net” on the trading securities of $5,242, $68, $(528), $(13) (unaudited) and $(204) for the years ended November 30, 2000, 2001, 2002 and the nine months ended August 31, 2002 and 2003, respectively. An amount equal to these gains (losses) has been charged (credited) to selling, general and administrative expenses, relating to compensation amounts which are payable to the directors and officers.

NOTE 11 — EMPLOYEE BENEFIT PLAN:

The Company has a 401(k) Plan (the “Plan”) under which eligible employees may contribute the lesser of up to 15% of their gross compensation or the maximum amount as provided by law. Employees become eligible to participate in the Plan six months after their employment date. The Company can make discretionary contributions under the Plan. During 2000, 2001 and 2002 and the nine months ended August 31, 2002 and 2003, the Company contributed $135, $143, $178, $159 (unaudited) and $165, respectively.

NOTE 12 — STOCKHOLDERS’ EQUITY:

Receivables from Stockholders

During the year ended November 30, 2001, in conjunction with the exercise of 150,000 stock options by the Company’s CEO at $2.00 per share, the CEO drew down $300 from the $1,000 full recourse promissory note described in Note 14. The note bears interest at an annual rate of 1.75% plus the annual LIBOR rate at the beginning of each calendar year, was due and payable in full no later than January 29, 2003 and was recorded as a reduction of Stockholders’ Equity. The note was repaid in full in 2002.

During the year ended November 30, 2000, in conjunction with the exercise of 20,000 stock options by another employee of the Company at $4.50 per share, the Company received a full recourse promissory note for $55 as part of the payment. The note had an interest rate of 7.5% per annum and was due and payable in full no later than December 31, 2002. During the year ended November 30, 2001, the Company repurchased the shares at the fair value of $10.00 per share for $145 in cash, net of the note repayment. The Company recorded an associated compensation expense of $72, which represented the excess of the fair value over the exercise price of the option, less compensation expense of $38, previously recognized.

F-28

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(INFORMATION FOR THE NINE MONTHS ENDED AUGUST 31, 2002 IS UNAUDITED)

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

Tax benefits from employee stock option plans

During the year ended November 30, 2002, various employees exercised their fully-vested non-qualified stock options. The tax benefits from such employee stock option transactions reduce the Company’s income taxes currently payable for federal and state purposes. These benefits totaled $116 for fiscal 2002, and were reflected as a credit to Stockholders’ Equity.

1992 Stock Options

Certain employees received options to purchase common stock of the Company prior to 1993 at an exercise price of $0.60 per share. As of November 30, 2000, 131,250 shares of such options were outstanding and exercisable. These options were repurchased during 2001 and, as discussed below, the Company recorded compensation expense in respect of the repurchases.

1993 Stock Option Plan

Under the 1993 Stock Option Plan (the “1993 Plan”), as amended in 1996, 5,400,000 shares of common stock have been reserved for issuance to employees, officers, directors and consultants of the Company, as approved by the Board of Directors and stockholders. The 1993 Plan, which will expire in 2003, provides for incentive as well as non-statutory stock options.

Options under the 1993 Plan can be granted at exercise prices ranging from 85% to 110% of the fair market value of the shares at the date of the grant, as determined by the Board. No options have been granted at exercise prices less than 100% of fair market value of common stock. Options granted under the 1993 Plan expire ten years from the grant date. Options granted vest annually over a five-year period. The Board determined that no further options would be available for grant under the 1993 Plan upon the adoption of the 1997 Stock Option Plan and Special Executive Stock Option Plan.

1997 Stock Option Plan

In December 1997, the Company adopted the 1997 Stock Option Plan (the “1997 Plan”). The 1997 Plan provides for incentive stock options and non-statutory stock options and stock purchase rights to employees, officers and consultants of the Company. Under the 1997 Plan, 6,500,000 shares of common stock have been reserved for issuance, as approved by the Board of Directors and stockholders. Incentive stock options are granted at an exercise price that is not less than 100% of the fair market value of common stock on the date of grant, as determined by the Board of Directors. Non-statutory stock options are granted at an exercise price that is not less than 85% of the fair market value of common stock on the date of grant, as determined by the Board of Directors. The exercise price of any option granted to a 10% stockholder will not be less than 110% of the fair market value of the common stock on the date of grant, as determined by the Board of Directors. Options granted vest monthly over a five-year period with a one-year cliff and expire in ten years from the date of grant. In 2000, the Board of Directors granted 1,537,400 options under this plan at exercise prices ranging from $4.50 to $7.00 per share. In 2001, the Board of Directors granted 282,160 options under this plan at exercise prices ranging from $10.00 to $12.00 per share. In 2002, the Board of Directors granted 320,050 options at exercise prices ranging from $9.00 to $12.00 per share. In the nine months ended August 31, 2003, the Board of Directors granted 219,125 options at exercise prices ranging from $10.00 to $12.00 per share.

F-29

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(INFORMATION FOR THE NINE MONTHS ENDED AUGUST 31, 2002 IS UNAUDITED)

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

Executive Stock Option Plan

In December 1997, the Company adopted the Special Executive Stock Option Plan (the “Executive Plan”). The Executive Plan provides for incentive and non-statutory stock options to officers and the members of the Company’s Board of Directors. Under the Executive Plan, 7,150,000 shares of common stock have been reserved for issuance, as approved by the Board of Directors and stockholders. Incentive stock options are granted at an exercise price that is not less than 100% of the fair market value of common stock shares on the date of grant, as determined by the Board of Directors. Non-statutory stock options are granted at an exercise price that is not less than 85% of the fair market value of the common stock on the date of grant, as determined by the Board of Directors. The exercise price of any option granted to a 10% stockholder will not be less than 110% of the fair market value of the common stock on the date of grant, as determined by the Board of Directors. Options granted vest monthly over a five-year period with a one-year cliff and expire in ten years from the date of grant. In 2000, the Board of Directors granted 2,827,500 options under this plan at exercise prices ranging from $4.50 to $9.00 per share. In 2001, the Board of Directors granted 142,500 options at exercise prices ranging from $10.00 to $12.00 per share. In 2002 the Board of Directors granted 1,077,500 options at exercise prices ranging from $10.00 to $12.00 per share. In the nine months ended August 31, 2003, the Board of Directors granted 724,995 options at exercise prices ranging from $10.00 to $12.00 per share.

The following table summarizes the stock options outstanding and exercisable under the Company’s option plans as of November 30, 2001 and 2002 and August 31, 2003:

	Number of Options at November 30, 2001		Number of Options at November 30, 2002		Number of Options at August 31, 2003
	Outstanding	Exercisable	Outstanding	Exercisable	Outstanding	Exercisable
1993 Stock Option Plan	1,002,109	991,109	929,629	929,629	910,829	910,829
1997 Stock Option Plan	1,640,780	1,107,797	1,885,681	1,326,554	1,929,344	1,373,895
Executive Stock Option Plan	3,988,828	2,553,966	5,030,493	3,178,435	5,662,324	3,719,112

	6,631,717	4,652,872	7,845,803	5,434,618	8,502,497	6,003,836

F-30

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(INFORMATION FOR THE NINE MONTHS ENDED AUGUST 31, 2002 IS UNAUDITED)

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

A summary of the activity under the Company’s stock option plans is set forth below:

			Options Outstanding
	Shares Available For Grant		Number of Shares		Weighted Average Exercise Price
Balances, November 30, 1999	4,035,414		4,046,010		$	3.54
Additional shares reserved	7,650,000		—			—
Options granted	(4,364,898	)	4,364,898			6.63
Options exercised	—		(96,732	)		4.27
Options cancelled	630,314		(835,722	)		4.11
Options repurchased	—		(399,829	)		2.48

Balances, November 30, 2000	7,950,830		7,078,625			5.43
Options granted	(454,660	)	464,660			11.55
Options exercised	—		(268,615	)		2.84
Options cancelled	356,557		(350,361	)		5.81
Options repurchased	—		(292,590	)		2.10

Balances, November 30, 2001	7,852,727		6,631,719			6.09
Options granted	(1,357,548	)	1,397,548			10.05
Options exercised	—		(34,042	)		2.93
Options cancelled	105,307		(120,790	)		6.33
Options repurchased	—		(28,632	)		2.00

Balances, November 30, 2002	6,600,486		7,845,803			6.82
Options granted	(944,120	)	944,120			11.93
Options exercised	—		(8,850	)		3.48
Options cancelled	265,778		(278,576	)		7.32

Balances, August 31, 2003	5,922,144		8,502,497		$	7.37

The options outstanding and exercisable at November 30, 2002 are as follows:

Options Outstanding				Options Vested and Exercisable
Range of Exercise Prices	Shares	Weighted Average Remaining Contractual Life (Years)	Weighted Average Exercise Price Per Share	Shares	Weighted Average Exercise Price Per Share
$3.00	874,629	3.67	$3.00	874,629	$3.00
$3.50	55,000	4.83	$3.50	55,000	$3.50
$4.50	3,108,474	6.60	$4.50	2,786,229	$4.50
$7.00	56,300	7.14	$7.00	34,887	$7.00
$9.00	1,976,999	7.43	$9.00	1,457,285	$9.00
$10.00	1,403,498	9.24	$10.00	67,728	$10.00
$12.00	370,903	8.32	$12.00	158,860	$12.00

$3.00–$12.00	7,845,803	7.03	$6.82	5,434,618	$5.76

F-31

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(INFORMATION FOR THE NINE MONTHS ENDED AUGUST 31, 2002 IS UNAUDITED)

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

The options outstanding and exercisable at August 31, 2003 are as follows:

Options Outstanding				Options Vested and Exercisable
Range of Exercise Prices	Shares	Weighted Average Remaining Contractual Life (Years)	Weighted Average Exercise Price Per Share	Shares	Weighted Average Exercise Price Per Share
$3.00	855,829	2.91	$3.00	855,829	$3.00
$3.50	55,000	4.08	$3.50	55,000	$3.50
$4.50	2,974,865	5.85	$4.50	2,870,510	$4.50
$7.00	51,885	6.39	$7.00	38,051	$7.00
$9.00	1,974,499	6.68	$9.00	1,622,710	$9.00
$10.00	1,348,981	8.55	$10.00	361,322	$10.00
$12.00	1,241,438	9.31	$12.00	200,414	$12.00

$3.00–$12.00	8,502,497	6.67	$7.37	6,003,836	$6.09

At November 30, 2000 and 2001, options to purchase 4,159,890 and 4,652,872 shares, respectively, were exercisable and the weighted average price for each exercisable option was $4.87 and $5.46, respectively.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The Black-Scholes model, as well as other currently accepted option valuation models, was developed to estimate the fair value of freely tradable, fully transferable options without vesting restrictions, and these assumptions differ significantly from the characteristics of Company stock option grants. The following weighted average assumptions, together with the minimum value method as prescribed by SFAS No. 123, are used to estimate the fair value of stock option grants in 2000, 2001, 2002 and the nine-month periods ended August 31, 2002 and 2003:

	Year Ended November 30,						Nine Months Ended August 31,
	2000		2001		2002		2002		2003
Expected life (years)	5		5		5		5		5
Risk-free interest rate	6.0	%	4.7	%	4.5	%	4.4	%	3.0	%
Dividend yield	0	%	0	%	0	%	0	%	0	%

As the determination of fair value of all options granted after such time the Company becomes a public company will include an expected volatility factor in addition to the factors described in the preceding table, the pro forma net income (loss) (see Note 2) may not be representative of future periods.

The weighted-average per share grant date fair value of options granted during the years ended December 31, 2000, 2001 and 2002 and the nine months ended August 31, 2002 and 2003 was $2.72, $2.42, $2.10, $2.06 (unaudited) and $1.82, respectively.

F-32

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(INFORMATION FOR THE NINE MONTHS ENDED AUGUST 31, 2002 IS UNAUDITED)

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

Stock-based compensation

The Company applies APB No. 25 accounting to its stock-based compensation plans.

In connection with certain stock option grants to employees during the years ended November 30, 2000, 2001 and 2002, the Company recognized approximately $4,055, $0 and $35, respectively, of unearned stock- based compensation for the excess of the deemed fair value of shares of common stock subject to such options over the exercise price of these options at the date of grant. Such amounts are included as a reduction of stockholders’ equity and are being amortized on a straight-line basis over the vesting period, generally five years. The Company recorded amortization expense of unearned stock-based compensation of $1,347, $565, $561 and $413 during the years ended November 30, 2000, 2001, 2002 and the nine months ended August 31, 2003, respectively.

During the years ended November 30, 2000 and 2001, the Company granted 370,000 and 10,000 options, respectively, at exercise prices ranging from $4.50 per share to $12.00 per share to employees of its parent company which were immediately vested and exercisable. The Company measured the fair value of the options using the Black-Scholes options pricing model assuming a dividend yield of 0%, volatility of 75%, expected option term of 10 years and a risk free interest rate between 4.74% and 5.52%. Accordingly, the Company recorded stock-based compensation expense of approximately $2,280 and $28 for the years ended November 30, 2000 and 2001, respectively.

Stock option repurchase

On August 31, 2001, the Company repurchased 292,591 stock options at a per share price that equaled $10.00 less the original exercise price. The Company recognized compensation expense of $2,312, of which $114 was charged to cost of revenue and $2,198 to selling, general and administrative expenses.

On April 10, 2000, the Company repurchased 399,829 stock options at a per share price that equaled $9.00 less the original exercise price. The Company recognized compensation expense of $2,609, of which $249 was charged to cost of revenue and $2,360 to selling, general and administrative expenses.

F-33

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(INFORMATION FOR THE NINE MONTHS ENDED AUGUST 31, 2002 IS UNAUDITED)

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

NOTE 13 — NET INCOME PER COMMON SHARE:

The following table sets forth the computation of basic and diluted net income per common share for the period indicated:

	Years Ended November 30,							Nine Months Ended August 31,
	2000			2001		2002		2002		2003
								(unaudited)
Income from continuing operations	$	42,011		$	25,797	$	28,032	$	20,344	$	21,371
Loss from discontinued operations		(5,577	)		—		—		—		—

Net income	$	36,434		$	25,797	$	28,032	$	20,344	$	21,371

Weighted average common shares — basic		21,466,002			21,918,742		22,060,578		22,053,762		22,088,463
Effect of dilutive securities:
Stock options		2,938,127			2,473,129		2,189,950		2,343,163		2,354,189

Weighted average common shares — diluted		24,404,129			24,391,871		24,250,528		24,396,925		24,442,652

Net income per common share — basic income from continuing operations	$	1.96		$	1.18	$	1.27	$	0.92	$	0.97
Loss from discontinued operations		(0.26	)		—		—		—		—

Net income per common share — basic	$	1.70		$	1.18	$	1.27	$	0.92	$	0.97

Net income per common share — diluted:
Income from continuing operations	$	1.72		$	1.06	$	1.16	$	0.83	$	0.87
Loss from discontinued operations		(0.23	)		—		—		—		—

Net income per common share — diluted	$	1.49		$	1.06	$	1.16	$	0.83	$	0.87

Options to purchase 366,048, 369,460, 335,439 (unaudited) and 1,291,441 shares of common stock as at November 30, 2001 and 2002 and August 31, 2002 and 2003, respectively, have not been included in the computation of diluted net income per share as their effect would have been anti-dilutive. There were no anti-dilutive securities outstanding at November 30, 2000.

NOTE 14 — RELATED PARTY TRANSACTIONS:

Purchases of inventories from MiTAC International Corporation and its affiliates (principally notebook PC’s, motherboards and other peripherals) were approximately $392,000, $236,000, $142,354 and $90,274 during the years ended November 30, 2000, 2001, 2002 and the nine months ended August 31, 2003, respectively. Sales to MiTAC International Corporation and its affiliates during the years ended November 30, 2000, 2001, 2002 and the nine months ended August 31, 2003, were approximately $8,617, $4,706, $2,364 and $2,272, respectively. The Company’s relationship with MiTAC International Corporation has been informal and is not governed by long-term commitments or arrangements with respect to pricing terms, revenue, or capacity

F-34

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(INFORMATION FOR THE NINE MONTHS ENDED AUGUST 31, 2002 IS UNAUDITED)

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

commitments. Accordingly, the Company negotiates manufacturing and pricing terms, including allocating customer revenue, on a case-by-case basis with MiTAC International Corporation.

In January 1998, the Company’s Chief Executive Officer (“CEO”) issued a secured full recourse promissory note to the Company pursuant to which he can borrow up to $1,000. Interest is calculated based on the unpaid principal from the date of each borrowing at an annual rate of the then prevailing LIBOR rate plus 1.75% at the beginning of each calendar year with the accrued interest being payable on the last business day of the calendar year. The note was due on or before January 29, 2003 and is secured by a deed of trust on real property owned by the CEO. As of November 30, 2001, the amounts outstanding under the note were $871. As of November 30, 2002, there was no amount outstanding under the note.

In December 2001, the CEO borrowed an additional $1,100 from the Company pursuant to a secured full recourse promissory note. The note was due on or before December 28, 2031 and bore interest of 7.00%, payable on the last day of the calendar year. The note was secured by the same deed of trust on real property which serves as collateral for the 1998 promissory note. In December 2002, the entire amount of the note was paid off.

In January 2002, another officer of the Company borrowed $200 from the Company pursuant to a secured full recourse promissory note. The note is evidenced by a secured promissory note with interest at the rate of 7.00% per annum, payable on the last day of each calendar month. The note is due on or before January 25, 2017. The note is collateralized by a deed of trust on real property owned by the officer. As of November 30, 2002, $200 was outstanding under the note. In August 2003, the entire amount of the note was paid off.

In October 2001, the Company established a brokerage account in Taiwan and deposited $2,000 in the account, for the purpose of acquiring shares of MiTAC International Corporation and its affiliates. As of November 30, 2001, the fair value of the common stock acquired was approximately $211. In 2002, the brokerage account was liquidated.

In February 2002, as a new investment option for the deferred compensation plan, the Company established another brokerage account in Taiwan. The purpose of the account is to hold shares of MiTAC International Corporation and its affiliates. Between February and August 2002, the Company deposited a total of $1,500 in the account. As of November 30, 2002 and August 31, 2003, the fair market value of the common stock acquired was approximately $1,464 and $1,924.

NOTE 15 — SEGMENT INFORMATION:

Segments were determined based on products and services provided by each segment. Accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company has identified the following two reportable business segments:

The Distribution segment distributes computer systems and complementary products to a variety of customers, including value-added resellers, system integrators, retailers, OEMs and direct outbound resellers.

The Contract Assembly segment provides electronics manufacturing services to various OEMs, including integrated supply chain management, build-to-order and configure-to-order system configurations, materials management and logistics.

F-35

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(INFORMATION FOR THE NINE MONTHS ENDED AUGUST 31, 2002 IS UNAUDITED)

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

Summarized financial information related to the Company’s reportable business segments as at November 30, 2000, 2001, 2002 and August 31, 2002 and 2003, and for each of the periods then ended, is shown below:

	Distribution		Contract Assembly		Consolidated
Year ended November 30, 2000:
Revenue	$	2,174,826	$	1,627,803	$	3,802,629
Income from operations		38,266		31,557		69,823
Total assets		508,766		127,668		636,434

Year ended November 30, 2001:
Revenue		2,464,386		760,004		3,224,390
Income from operations		31,977		25,912		57,889
Total assets		498,404		66,630		565,034

Year ended November 30, 2002:
Revenue		3,394,727		373,155		3,767,882
Income from operations		43,087		7,395		50,482
Total assets		585,424		43,651		629,075

Nine months ended August 31, 2002 (unaudited):
Revenue		2,384,416		309,960		2,694,376
Income from operations		30,378		6,941		37,319
Total assets		638,813		48,406		687,219

Nine months ended August 31, 2003:
Revenue		2,736,293		137,000		2,873,293
Income from operations		38,682		1,197		39,879
Total assets		654,876		52,677		707,553

F-36

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(INFORMATION FOR THE NINE MONTHS ENDED AUGUST 31, 2002 IS UNAUDITED)

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

Summarized financial information related to the geographic areas in which the Company operated at November 30, 2000, 2001, 2002 and August 31, 2002 and 2003 and for each of the periods then ended is shown below:

	North America		Other	Consolidation Adjustments			Consolidated
Year Ended November 30, 2000:
Revenue	$	3,429,113	380,821	$	(7,305	)	$	3,802,629
Income from continuing operations		32,563	13,071		(3,623	)		42,011
Total long-lived assets		30,355	15,965		—			46,320

Year Ended November 30, 2001:
Revenue	$	2,913,200	317,587	$	(6,397	)	$	3,224,390
Income from continuing operations		23,680	2,233		(116	)		25,797
Total long-lived assets		27,760	14,868		—			42,628

Year Ended November 30, 2002:
Revenue	$	3,481,367	291,408	$	(4,893	)	$	3,767,882
Income from continuing operations		27,693	665		(326	)		28,032
Total long-lived assets		34,042	22,323		—			56,635

Nine Months Ended August 31, 2002 (unaudited):
Revenue	$	2,496,862	200,863	$	(3,349	)	$	2,694,376
Income from continuing operations		20,216	367		(239	)		20,344
Total long-lived assets		35,947	16,796		—			52,743
Nine Months Ended August 31, 2003:
Revenue	$	2,602,491	276,231	$	(5,429	)	$	2,873,293
Income from continuing operations		21,217	514		(360	)		21,371
Total long-lived assets		26,406	18,963		—			45,369

NOTE 16 — DISCONTINUED OPERATIONS:

On November 20, 2000, one of the Company’s majority-owned subsidiaries, eManage.com (“eManage”), filed for protection under Chapter 11 of the U.S. Bankruptcy Code. The Company consolidated the results of eManage through November 19, 2000. The loss from discontinued operations, including loss on write-off of net assets, associated with eManage.com was $5,577 in 2000. Concurrent with the bankruptcy filing the Company exited the web hosting and service business, and, as a result, the net financial results of eManage.com are reported separately as discontinued operations in the Company’s Consolidated Statement of Operations.

F-37

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(INFORMATION FOR THE NINE MONTHS ENDED AUGUST 31, 2002 IS UNAUDITED)

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

Revenue and loss from discontinued operations are as follows:

	Year End November 30, 2000
Revenue from discontinued operations	$	2,056
Loss from discontinued operations:
Operating loss		(12,107	)
Minority interest		2,318
Income tax benefit		4,600

	$	(5,189	)

Loss on write-off of net assets of discontinued operations:
Loss on write-off of net assets	$	(1,273	)
Minority interest		540
Income tax benefit		345

	$	(388	)

NOTE 17 — RISK AND UNCERTAINTIES:

The Company operates in a highly competitive industry and is subject to various risks and uncertainties. Factors that could affect the Company’s future operating results and cause actual results to differ materially from expectations include, but are not limited to, dependence on few customers, competition, new products and services, dependence upon key personnel, industry conditions, foreign currency fluctuations, and aspects of our strategic relationship with MiTAC International Corporation.

NOTE 18 — COMMITMENTS AND CONTINGENCIES:

The Company leases its facilities under operating lease agreements, which expire in various periods through 2007. Future minimum rental obligations under noncancelable lease agreements as of August 31, 2003 were as follows:

Years Ending November 30,
2003	$	8,920
2004		6,692
2005		5,546
2006		5,128
2007		4,651
Thereafter		10,657

Total minimum lease payments	$	41,594

Rent expense for the years ended November 30, 2000, 2001 and 2002 and for the nine months ended August 31, 2002 and 2003 amounted to $5,786, $8,303, $10,567, $7,564 (unaudited) and $7,319, respectively.

F-38

SYNNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(INFORMATION FOR THE NINE MONTHS ENDED AUGUST 31, 2002 IS UNAUDITED)

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

The Company was contingently liable at August 31, 2003, 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 6. Losses, if any, would be the difference between repossession cost and the resale value of the inventory. There have been no repurchases through August 31, 2003 under these agreements nor is the Company aware of any pending customer defaults or repossession obligations.

The Company experienced theft as a result of break-ins at three of its warehouses in which approximately $9,400 of inventory was stolen. The August 31, 2003 consolidated balance sheet includes a receivable for the claim from the insurance company less the deductible portion and amounts already collected. No loss has been recorded because the Company believes that collection of the claim is assured.

The Company is involved in certain ongoing litigation in the normal course of operations. The Company believes that the outcome of the litigation will not have a material adverse effect on its financial position, cash flows, or results of operations.

NOTE 19 — SUBSEQUENT EVENTS:

Reincorporation

The Company intends to reincorporate in the State of Delaware prior to the effective date of this offering, and the historical information contained in these consolidated financial statements has been updated to reflect this reincorporation.

Severance Agreement

The Company has reached an agreement regarding the severance arrangements with an officer whose employment is to be terminated. The agreement calls for a cash payment of $1,671 and the acceleration of vesting and extension of the exercise period of certain options previously issued to him, resulting in a non-cash charge of approximately $355. The expense related to the cash payments and option acceleration, net of tax, is expected to be approximately $1,200. Subject to certain conditions, the termination is to be finalized and the expense taken in the quarter ended November 30, 2003.

Reverse Stock Split

On October 11, 2003, the Board of Directors declared a reverse stock split of one share for two shares which became effective on November 12, 2003. The accompanying historical financial statements have been restated to reflect this reverse stock split.

F-39

No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this prospectus. You must not rely on any unauthorized information or representations. This prospectus is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date.

TABLE OF CONTENTS

		Page
Prospectus Summary		1
Risk Factors		5
Cautionary Note on Forward-looking Statements		20
Use of Proceeds		21
Dividend Policy		21
Capitalization		22
Dilution		23
Selected Consolidated Financial Data		24
Management’s Discussion and Analysis of Financial Condition and Results of Operations		26
Business		46
Management		60
Ownership by MiTAC International and its Affiliates		72
Certain Relationships and Transactions		74
Principal and Selling Stockholders		78
Description of Capital Stock		81
Shares Eligible for Future Sale		84
Underwriting		86
Legal Matters		89
Experts		89
Additional Information		89
Index to Consolidated Financial Statements		F-1

Until , 2003 (25 days after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

5,400,000 shares

LOGO

SYNNEX Corporation

Common Stock

PROSPECTUS

, 2003

Bear, Stearns & Co. Inc.

Banc of America Securities LLC

Raymond James

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the costs and expenses, other than underwriting discounts, payable by the Registrant in connection with the offer and sale of the shares of common stock being registered. All amounts are estimates except the registration fee, the NASD filing fee and the New York Stock Exchange entry and application fee.

Registration fee	$	8,039
NASD filing fee		9,700
Blue Sky/NASD fees and expenses (including legal fees)		10,000
New York Stock Exchange entry and application fee		191,937
Accounting fees and expenses		400,000
Other legal fees and expenses		750,000
Transfer agent and registrar fee		15,000
Printing and engraving		300,000
Miscellaneous		15,324

Total	$	1,700,000

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law authorizes a court to award or a corporation’s board of directors to grant indemnification to directors and officers in terms sufficiently broad to permit such indemnification under certain circumstances for liabilities (including reimbursement for expenses incurred) arising under the Securities Act of 1933, as amended (the “Securities Act”). Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

Article VII of our Amended and Restated Certificate of Incorporation (Exhibit 3(i)3 hereto) and Section 6 of the our bylaws (Exhibit 3(ii)3 hereto) provide for indemnification of our directors, officers, employees and other agents to the extent and under the circumstances permitted by the Delaware General Corporation Law. We have entered into Indemnification Agreements (Exhibit 10.6 hereto) with our officers and directors that will require us to, among other things, indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers to the fullest extent not prohibited by law. The Underwriting Agreement (Exhibit 1.1 hereto) provides for indemnification by the Underwriters of us, our directors and officers and by us, the selling stockholders and MiTAC International of the Underwriters, for certain liabilities, including liabilities arising under the Securities Act and affords certain rights of contribution with respect thereto. We also maintain directors and officers liabilities insurance.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

Since August 2, 2000, we have issued and sold the following securities:

(a) We have issued and sold 331,526 shares of our common stock to officers, employees and consultants for an aggregate purchase price of $973,687 pursuant to stock issuances and option exercise under our 1993 Stock Option Plan, 1997 Stock Option/Stock Issuance Plan and Special Executive Stock Option/Stock Issuance Plan.

II-1

(b) In September 2000, we issued 322,500 shares of our common stock to MIX System Holdings Ltd. in exchange for all of the outstanding shares of MiTAC Industrial Corporation.

(c) In September 2000, we issued 1,637,500 shares of our common stock to Silver Star Developments Ltd. in exchange for all of the outstanding shares of MiTAC Europe, Ltd.

None of the foregoing transactions involved any underwriters, underwriting discounts or commissions, or any public offering, and the Registrant believes that each transaction was exempt from the registration requirements of the Securities Act by virtue of Section 4(2) thereof, Regulation D promulgated thereunder or Rule 701 pursuant to compensatory benefit plans and contracts relating to compensation as provided under such Rule 701. The recipients in such transactions represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were affixed to the share certificates and instruments issued in such transactions. All recipients had adequate access, through their relationships with the Registrant, to information about the Registrant.

II-2

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

1.1**		Form of Underwriting Agreement
3.(i)1**		Articles of Incorporation of the Registrant
3.(i)2**		Form of Restated Certificate of Incorporation of the Registrant, to be filed following our reincorporation under Delaware law
3.(i)3**		Form of Restated Certificate of Incorporation of the Registrant, to be filed upon the closing of the offering to which this Registration Statement relates
3.(ii)1**		Bylaws of the Registrant
3.(ii)2**		Restated Bylaws of the Registrant, to be effective following our reincorporation under Delaware law
3.(ii)3**		Restated Bylaws of the Registrant, to be effective upon the closing of the offering to which this Registration Statement relates
4.1**		Specimen Common Stock Certificate
5.1**		Opinion of Pillsbury Winthrop LLP
10.1†**		1993 Stock Option Plan and form of agreements thereunder
10.2†**		1997 Stock Option/Stock Issuance Plan and form of agreements thereunder
10.3†**		Special Executive Stock Option/Stock Issuance Plan and form of agreements thereunder
10.4†**		Form of 2003 Stock Incentive Plan and form of agreements thereunder
10.5†**		Form of 2003 Employee Stock Purchase Plan
10.6**		Form of Indemnification Agreement between the Registrant and its officers and directors
10.7**		Registration Rights Agreement dated July 1, 2002
10.8**		Amended and Restated Receivables Purchase and Servicing Agreement, dated August 30, 2002, by and among the Registrant, SIT Funding Corporation, Redwood Receivables Corporation and General Electric Capital Corporation
10.9**		Amendment No. 1 dated June 30, 2003 to Amended and Restated Receivables Purchase and Servicing Agreement and Amended and Restated Receivables Transfer Agreement dated August 30, 2002 by and among the Registrant, SIT Funding Corporation, Redwood Receivables Corporation and General Electric Capital Corporation
10.10**		Standard Industrial Lease, dated December 5, 1996, between the Registrant and Alexander & Baldwin, Inc.
10.11**		First Amendment to Lease, dated May 24, 1999, between the Registrant and Bedford Property Investors, Inc.
10.12**		Second Amendment to Lease, dated March 30, 2001, between the Registrant and Bedford Property Investors, Inc.
10.13†**		Form of Change of Control Severance Plan
10.14**		HP U.S. Business Development Partner Agreement, dated November 6, 2003, between the Registrant and Hewlett-Packard Company
10.15**		Master External Manufacturing Agreement, dated August 28, 1999, by and among the Registrant, MiTAC International Corporation and Sun Microsystems, Inc., including amendments thereto
10.16**		Joint Sales and Marketing Agreement, dated May 6, 2002, between the Registrant and MiTAC International Corporation
10.17		Form of Severance and Non-Compete Agreement between Kevin Chuang and the Registrant
21.1**		List of Subsidiaries
23.1		Consent of PricewaterhouseCoopers LLP, independent accountants
23.2**		Consent of Pillsbury Winthrop LLP (included in Exhibit 5.1)
24.1**		Power of Attorney
24.2**		Power of Attorney for David Rynne

**	Previously filed.

†	Denotes management compensatory plan or arrangement.

(b) Financial Statement Schedules.

Report of Independent Auditors

Schedule II—Valuation and Qualifying Accounts

II-3

ITEM 17. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act, the information omitted from the form of Prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective; and

(2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

The undersigned Registrant hereby undertakes to provide to the Underwriters at the closing specified in the Underwriting Agreement certificates in such denominations and registered in such names as required by the Underwriters to permit prompt delivery to each purchaser.

II-4

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-1 and has duly caused this Amendment No. 4 to Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Fremont, State of California, on this 19th day of November, 2003.

SYNNEX CORPORATION

/s/ ROBERT T. HUANG

By:

Robert T. Huang

President and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this Amendment No. 4 to the Registration Statement has been signed by the persons whose signatures appear below, which persons have signed such Registration Statement in the capacities and on the dates indicated:

Signature	Title	Date

/s/ ROBERT T. HUANG Robert T. Huang	Chief Executive Officer, President and Director (Principal Executive Officer)	November 19, 2003

/s/ DENNIS POLK Dennis Polk	Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)	November 19, 2003

* Matthew Miau	Chairman of the Board	November 19, 2003

* Fred Breidenbach	Director	November 19, 2003

* David Rynne	Director	November 19, 2003

* Young Sohn	Director	November 19, 2003

* Dwight Steffensen	Director	November 19, 2003


*		/s/ DENNIS POLK

		Attorney-in-Fact

II-5

REPORT OF INDEPENDENT AUDITORS

ON FINANCIAL STATEMENT SCHEDULE

To the Board of Directors and Stockholders of

SYNNEX Corporation

Our audits of the consolidated financial statements referred to in our report dated October 11, 2003 appearing in the Registration Statement on Form S-1 also included an audit of the financial statement schedule listed in Item 16(b) of this Form S-1. In our opinion, this financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.

/s/ PricewaterhouseCoopers LLP

San Jose, California

October 11, 2003

S-1

SCHEDULE II

SYNNEX INFORMATION TECHNOLOGIES, INC.

VALUATION AND QUALIFYING ACCOUNTS

Description	Balance Beginning of Period		Additions from Acquisitions			Additions Charged to Revenues and Costs and Expenses		Writeoffs and Deductions			Balance at End of Period
2000
Allowance for doubtful trade receivables	$	6,064	$	209		$	8,246	$	(6,463	)	$	8,056

Allowance for vendor receivables	$	3,064	$	—		$	13	$	(756	)	$	2,321

Allowance for sales returns	$	3,313	$	—		$	26,909	$	(25,613	)	$	4,609

Allowance for inventory reserve	$	3,550	$	—		$	6,151	$	(2,536	)	$	7,165

Allowance for deferred tax assets	$	—	$	—		$	—	$	—		$	—


2001
Allowance for doubtful trade receivables	$	8,056	$	3,781		$	4,820	$	(8,696	)	$	7,961

Allowance for vendor receivables	$	2,321	$	—		$	31	$	324	(1)	$	2,676

Allowance for sales returns	$	4,609	$	—		$	42,955	$	(41,021	)	$	6,543

Allowance for inventory reserve	$	7,165	$	2,712		$	1,360	$	(2,970	)	$	8,267

Allowance for deferred tax assets	$	—	$	6,619		$	—	$	—		$	6,619


2002
Allowance for doubtful trade receivables	$	7,961	$	1,220		$	6,189	$	(7,055	)	$	8,315

Allowance for vendor receivables	$	2,676	$	—		$	89	$	(61	)	$	2,704

Allowance for sales returns	$	6,543	$	—		$	37,326	$	(40,112	)	$	3,757

Allowance for inventory reserve	$	8,267	$	788		$	1,726	$	(3,362	)	$	7,419

Allowance for deferred tax assets	$	6,619	$	—		$	—	$	(979	)	$	5,640


Nine months through August 31, 2003
Allowance for doubtful trade receivables	$	8,315	$	(963	)	$	3,473	$	(2,244	)	$	8,581

Allowance for vendor receivables	$	2,704	$	—		$	1,379	$	(35	)	$	4,048

Allowance for sales returns	$	3,757	$	—		$	37,206	$	(32,873	)	$	8,090

Allowance for inventory reserve	$	7,419	$	(787	)	$	2,355	$	(2,979	)	$	6,008

Allowance for deferred tax assets	$	5,640	$	—		$	3,999	$	(770	)	$	8,869

(1)	The amount represents a net recovery of previously written-off vendor receivables.

S-2

EXHIBIT INDEX

Exhibit Number		Description
1.1**		Form of Underwriting Agreement

3.(i)1**		Articles of Incorporation of the Registrant

3.(i)2**		Form of Restated Certificate of Incorporation of the Registrant, to be filed following our reincorporation under Delaware law

3.(i)3**		Form of Restated Certificate of Incorporation of the Registrant, to be filed upon the closing of the offering to which this Registration Statement relates

3.(ii)1**		Bylaws of the Registrant

3.(ii)2**		Restated Bylaws of the Registrant, to be effective following our reincorporation under Delaware law

3.(ii)3**		Restated Bylaws of the Registrant, to be effective upon the closing of the offering to which this Registration Statement relates

4.1**		Specimen Common Stock Certificate

5.1**		Opinion of Pillsbury Winthrop LLP

10.1†**		1993 Stock Option Plan and form of agreements thereunder

10.2†**		1997 Stock Option/Stock Issuance Plan and form of agreements thereunder

10.3†**		Special Executive Stock Option/Stock Issuance Plan and form of agreements thereunder

10.4†**		Form of 2003 Stock Incentive Plan and form of agreements thereunder

10.5†**		Form of 2003 Employee Stock Purchase Plan

10.6**		Form of Indemnification Agreement between the Registrant and its officers and directors

10.7**		Registration Rights Agreement dated July 1, 2002

10.8**		Amended and Restated Receivables Purchase and Servicing Agreement, dated August 30, 2002, by and among the Registrant, SIT Funding Corporation, Redwood Receivables Corporation and General Electric Capital Corporation

10.9**		Amendment No. 1 dated June 30, 2003 to Amended and Restated Receivables Purchase and Servicing Agreement and Amended and Restated Receivables Transfer Agreement dated August 30, 2002 by and among the Registrant, SIT Funding Corporation, Redwood Receivables Corporation and General Electric Capital Corporation

10.10**		Standard Industrial Lease, dated December 5, 1996, between the Registrant and Alexander & Baldwin, Inc.

10.11**		First Amendment to Lease, dated May 24, 1999, between the Registrant and Bedford Property Investors, Inc.

10.12**		Second Amendment to Lease, dated March 30, 2001, between the Registrant and Bedford Property Investors, Inc.

10.13†**		Form of Change of Control Severance Plan

10.14**		HP U.S. Business Development Partner Agreement, dated November 6, 2003, between the Registrant and Hewlett-Packard Company

10.15**		Master External Manufacturing Agreement, dated August 28, 1999, by and among the Registrant, MiTAC International Corporation and Sun Microsystems, Inc., including amendments thereto

10.16**		Joint Sales and Marketing Agreement, dated May 6, 2002, between the Registrant and MiTAC International Corporation

10.17		Form of Severance and Non-Compete Agreement between Kevin Chuang and the Registrant

21.1**		List of Subsidiaries

23.1		Consent of PricewaterhouseCoopers LLP, independent accountants

23.2**		Consent of Pillsbury Winthrop LLP (included in Exhibit 5.1)

24.1**		Power of Attorney

24.2**		Power of Attorney for David Rynne

**	Previously filed.

†	Denotes management compensatory plan or arrangement.