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March 20, 2020
Christopher Caldwell
Chief Executive Officer
Concentrix Corp
44111 Nobel Drive
Fremont, CA 94538
Re: Concentrix Corp
Draft Registration Statement on Form 10
Submitted on February 21, 2020
CIK No. 0001803599
Dear Mr. Caldwell:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so we may
better
understand your disclosure.
Please respond to this letter by providing the requested information and
either submitting
an amended draft registration statement or publicly filing your registration
statement on
EDGAR. If you do not believe our comments apply to your facts and circumstances
or do not
believe an amendment is appropriate, please tell us why in your response.
After reviewing the information you provide in response to these comments
and your
amended draft registration statement or filed registration statement, we may
have additional
comments.
Draft Registration Statement on Form 10 submitted February 21, 2020
Summary, page 1
1. Please revise your summary to disclose the amount of the net
distribution to be paid to
SYNNEX, how you arrived at the amount of the distribution, and how you
intend to
finance it.
Our Market Opportunity, page 2
2. You refer to numerous services and addressable markets, such as IVR,
RPA, AI, ML,
Vertical BPO, Back Office BPO, and emotion and sentiment analytics.
However, you
have not sufficiently described in the prospectus the enhanced services,
functions, and
opportunities they provide for your clients. As an example, please
revise the prospectus to
Christopher Caldwell
FirstName LastNameChristopher Caldwell
Concentrix Corp
Comapany2020
March 20, NameConcentrix Corp
Page 2
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FirstName LastName
explain how AI and IVR may be used by your company to improve client
outcomes and
discuss the costs and key challenges of developing and/or integrating
each new
technology into your platform.
What business will we operate after the spin-off?, page 12
3. Please revise here, or add a question and answer, where appropriate,
to briefly and clearly
summarize the business and assets that will remain with SYNNEX and
those that will
remain with Concentrix.
Will SYNNEX distribute fractional shares?, page 13
4. Please enhance your disclosure to explain how you intend to handle
fractional shares if
you do not intend to distribute them to shareholders.
Will Concentrix have any debt after the spinoff?, page 14
5. Please revise to disclose the amount of your anticipated indebtedness
upon completion of
the transaction. In addition, please briefly summarize your new
financing agreement once
finalized and clarify whether you will continue to guarantee
indebtedness for SYNNEX
after completion of the spin-off. In this regard, we note your
disclosure on page 63 of the
prospectus.
Will I be paid any dividends on Concentrix common stock?, page 14
6. Please revise here and under "Dividend Policy" on page 44 to quantify
the amount of the
SYNNEX dividend and the percentage of the payment that will be made by
Concentrix
and SYNNEX, respectively.
Our client contracts include provisions, page 18
7. Please describe the nature of the performance-related targets that are
included in your
client contracts and the percentage of your compensation, if material,
that is typically
linked to targets.
Cyberattacks or the improper disclosure or control of personal information,
page 19
8. We note your cybersecurity risk factor disclosure on page 19. To the
extent cybersecurity
risks are material to your business, please describe the board's
anticipated role in
overseeing the company's cybersecurity risk management and how this
function may
effect the board's leadership structure.
Reasons for the Spin-Off, page 35
9. You state here that the reasons for the separation include, among
other reasons, focusing
on distinct operating priorities and strategies, and the unique needs
of each business and
distinct markets. Please describe the most significant differences in
strategy, operating
priorities and business needs. In this regard, we also note your
disclosure on page 27 that
Christopher Caldwell
Concentrix Corp
March 20, 2020
Page 3
at least some of your client relationships have been improved by the
client's relationship
with SYNNEX which may suggest that certain synergies exist between the
two
companies.
Dividend Policy, page 44
10. Please revise to include here the tabular summaries of historical cash
distributions
declared by you and Synnex that you currently provide on page F-102,
consistent with
Item 201(c) of Regulation S-K. In doing so, please disclose whether
any dividends you
might pay would be based upon similar or different historical
considerations so that
readers can appreciate how you might decide whether the continue to
pay dividends in the
future. Please also disclose any restrictions you may have upon the
ability to pay
dividends in the future.
Critical Accounting Policies and Estimates
Goodwill, page 54
11. Please provide more information for investors to assess the
probability of future goodwill
impairment charges. For example, please disclose whether any of your
reporting units are
at risk of failing step one of the quantitative impairment test or
that the fair value of each
of your reporting units are substantially in excess of carrying value
and are not at risk of
failing step one. If a reporting unit is at risk of failing step one,
you should disclose:
the percentage by which fair value exceeded carrying value at the
date of the most
recent step one test;
the amount of goodwill allocated to the reporting unit;
a more detailed description of the methods and key assumptions
used and how the
key assumptions were determined;
a discussion of the degree of uncertainty associated with the
assumptions; and
a description of potential events and/or changes in circumstances
that could
reasonably be expected to negatively affect the key assumptions.
Please refer to Item 303(a)(3)(ii) of Regulation S-K, which requires a
description of
known uncertainties, and Section V of the Commission's Guidance
Regarding
FirstName LastNameChristopher Caldwell
Management's Discussion and Analysis of Financial Condition and Results
of Operations,
Comapany NameConcentrix Corp issued December 19, 2003 and available on our
website at
SEC Release No. 34-48960,
March www.sec.gov. 3
20, 2020 Page
FirstName LastName
Christopher Caldwell
FirstName LastNameChristopher Caldwell
Concentrix Corp
Comapany2020
March 20, NameConcentrix Corp
Page 4
March 20, 2020 Page 4
FirstName LastName
Results of Operations, page 55
12. Where you describe two or more factors that contributed to a material
change in a
financial statement line item between periods, please quantify, to the
extent practicable,
the incremental impact of each factor identified. See Item 303(a) of
Regulation S-K.
13. It appears the first paragraph on page 56 mistakenly refers to 2019 vs
2018 and the last
paragraph on page 58 mistakenly refers to the effective tax rate for
2019 increasing
compared to 2018. Please revise or advise.
14. Please tell your consideration of whether the discussion of the
results of operations and
financial condition set forth in the audited financial statements
should be supplemented by
a discussion based upon pro forma financial information giving effect
to the acquisition of
Convergys Corporation. Please note that supplemental discussions based
on Article 11
of Regulation S-X pro forma financial information should not be
presented with greater
prominence than the discussion of the historical financial statements
required by Item 303
of Regulation S-K.
Certain non-GAAP financial information, page 59
15. We note non-GAAP operating income and non-GAAP net income include an
adjustment
to eliminate the amortization expense related to acquired intangible
assets. We also note
that the majority of your intangible assets relate to the acquisition
of Convergys
Corporation and assume that significant revenue was generated from the
customer
relationship intangible assets. Please tell us why you believe
non-GAAP operating
income and non-GAAP net income, which exclude amortization expense
related to
acquired intangible assets, are useful to your investors in evaluating
your "base
operations" considering customer related intangible assets contribute
to the generation of
revenue, which is contemplated in the related non-GAAP measures.
16. Please revise to reconcile Adjusted EBITDA to net income. Refer to
Question 103.02 of
the Division's Compliance and Disclosure Interpretations regarding
Non-GAAP Financial
Measures.
Client Concentration, page 63
17. You state that one customer accounted for 10%, 21% and 23% of your
revenues in fiscal
years 2019, 2018 and 2017, respectively. Please identify this customer
and disclose the
material terms of your agreement with the customer, including any
termination
provisions. In addition, please revise your risk factor on page 20
beginning "We depend
on a limited number of clients" to describe any specific risks related
to your reliance on
this particular client. Refer to Item 101(c)(1)(vii) of Regulation
S-K.
Christopher Caldwell
FirstName LastNameChristopher Caldwell
Concentrix Corp
Comapany2020
March 20, NameConcentrix Corp
Page 5
March 20, 2020 Page 5
FirstName LastName
Elements of the SYNNEX Compensation Program, page 80
18. We note that your equity grants are made based, among other things,
upon objective data
synthesized to competitive ranges. Please revise to clarify whether
you use targets in your
determination of grants and disclose the targets, as appropriate.
Similarly, please disclose
all targets for your named executive officers under the SYNNEX LTI
program.
Transfer of Assets and Assumption of Liabilities, page 93
19. We note that you disclose on page 25 your reliance on proprietary IT
systems, mobile
applications, and cloud-based technology and acquired technologies.
Please clarify
whether your post-spin intellectual property assets will be owned by
the company,
licensed from SYNNEX or another third-party, or some combination of
these alternatives.
If you will be licensing any assets to SYNNEX, please also disclose
that arrangement. To
the extent there are any material restrictions on the use of your
intellectual property,
please add a risk factor to address such restrictions.
Note 2. Summary of Significant Accounting Policies
Pension and post-retirement benefits, page F-16
20. We note your reference to the existence of multi-employer plans.
Please revise to clarify
whether these are multiemployer or multiple-employer plans. If they
are multiemployer
plans, please tell us your consideration of providing the disclosures
required by ASC 715-
80-50-4 through 50-10.
Audited Combined Financial Statements of Concentrix
Note 9. Revenue, page F-34
21. We note your disaggregation of revenue by industry served and by
geography. We note
your disclosure on page 4 that your CX solutions emcompass four
services: customer
lifestyle management, CX/UX strategy and design, digital
transformation, and VOC and
analytics. Please tell us what consideration you gave to
disaggregating revenue by service
area in addition to industries served and geography.
Note 12. Income Taxes, page F-38
22. We noted that your 2019 tax expense was increased to reflect the
hypothetical tax impact
if you were not part of SYNNEX U.S. consolidated group and thereby
suffering a much
higher US foreign tax credit limitation. Please tell us whether a
similar adjustment was
made to 2018 and 2017 tax expense and if not, why. Please also tell us
where the 2019
adjustment is presented in the reconciliation of statutory United
States federal income tax
rate to your effective rate and why such labeling is appropriate.
Christopher Caldwell
FirstName LastNameChristopher Caldwell
Concentrix Corp
Comapany2020
March 20, NameConcentrix Corp
Page 6
March 20, 2020 Page 6
FirstName LastName
You may contact Adam Phippen at (202) 551-3336 or Lyn Shenk at (202)
551-3380 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Daniel Morris at (202) 551-3314 or Mara Ransom, Office Chief, at (202)
551-3264 with
any other questions.
Sincerely,
Division of
Corporation Finance
Office of Trade &
Services
cc: Allison Leopold Tilley, Esq.