ScanSource Reports Third Quarter Results

  ScanSource Reports Third Quarter Results

                    Solid Performance Led by North America

Business Wire

GREENVILLE, S.C. -- April 25, 2013

ScanSource, Inc. (NASDAQ:SCSC), the leading international value-added
distributor of specialty technology products, today announced complete
financial results for its third quarter ended March 31, 2013.

Quarter ended March 31, 2013:
Net sales                       $683.0 million
Net income                      $14.0 million
Diluted EPS                     $0.50 per share

“Our North American business units, led by our Communications unit, drove
solid quarterly results,” said Mike Baur, CEO, ScanSource, Inc. “However, our
International operating performance was disappointing. As a result, we've
taken actions to restructure our overall European business for profitable
growth. We are lowering our annualized costs by $3.1 million by reducing
headcount in our Communications business in Europe and by moving certain back
office functions from Brussels to ScanSource headquarters in Greenville, South

For the quarter ended March 31, 2013, net sales decreased 3.5% to $683.0
million, compared with $707.9 million for the quarter ended March 31, 2012.
Excluding the translation impact of foreign currencies, net sales decreased
3.0% year-over-year. Operating income decreased to $20.8 million from $21.5
million in the comparable prior year quarter. The effective tax rate increased
to 34.0% in the current quarter from 32.3% in the prior year quarter. Net
income for the quarter ended March 31, 2013 was $14.0 million, or $0.50 per
diluted share, compared with net income of $14.8 million, or $0.53 per diluted
share, for the prior year quarter.

Selling, general and administrative expenses for the quarter ended March 31,
2013 included $1.2 million pre-tax ($0.8 million after tax, or $0.03 per
diluted share) in restructuring costs associated with the Company's business
in Europe. The restructuring included the elimination of positions to set the
cost structure in line with current operations.

Forecast for Next Quarter

The Company announced its current expectations for the fourth quarter of
fiscal 2013. ScanSource expects that net sales for the quarter ending June 30,
2013 could range from $715 million to $735 million, and diluted earnings per
share could be in the range of $0.58 to $0.60 per share.

Webcast Details

ScanSource will present additional information about its financial results and
outlook on a conference call today, April 25, 2013, at 5:00 p.m. (ET). A
webcast of the call will be available for all interested parties and can be
accessed at (Investor Relations section). The webcast
will be available for replay for 60 days.

Safe Harbor Statement

This press release contains comments that are “forward-looking” statements
that involve risks and uncertainties; these statements are subject to the safe
harbor created by the Private Securities Litigation Reform Act of 1995. Any
number of important factors could cause actual results to differ materially
from anticipated or forecasted results, including, but not limited to,
expanded operations in emerging markets, such as Brazil, that expose us to
greater political and economic volatility than our operations in established
markets; additional costs and delays in connection with our new ERP system and
associated litigation; costs and efficiencies expected to be associated with
the Company's pan-European strategy and macroeconomic circumstances that could
impact the strategy and business independent of the new structure created by
the Company; our ability to forecast volatility in earnings resulting from the
quarterly revaluation of the Company's earnout obligation to the sellers of
CDC; and macroeconomic circumstances that could impact our business, such as
currency fluctuations, credit market conditions, and an economic downturn. For
more information concerning factors that could cause actual results to differ
from anticipated results, see the Company's annual report on Form 10-K for the
year ended June 30, 2012 filed with the Securities and Exchange Commission.
Except as may be required by law, the Company expressly disclaims any
obligation to update these forward-looking statements to reflect events or
circumstances after the date of this press release or to reflect the
occurrence of unanticipated events.

Non-GAAP Financial Information

In addition to disclosing results that are determined in accordance with
United States Generally Accepted Accounting Principles (“GAAP”), the Company
also discloses non-GAAP measures. Management uses return on invested capital
(“ROIC”), a non-GAAP measure, as a performance measurement because management
believes that this metric best balances the Company's operating results with
its asset and liability management. The Company's Board of Directors uses ROIC
in evaluating management performance and setting management compensation. The
Company also discloses the percentage change in net sales excluding the impact
of foreign currency exchange rates to better assess the changes from prior

Analysis of results and outlook on a non-GAAP basis should be used as a
complement to, and in conjunction with, data presented in accordance with
GAAP. A reconciliation of the Company's non-GAAP financial information to GAAP
is set forth in the following Supplemental Information table.

About ScanSource, Inc.

ScanSource, Inc. (NASDAQ: SCSC) is the leading international distributor of
specialty technology products, operating from dedicated business units in
North America, Latin America and Europe. ScanSource POS & Barcode delivers
AIDC (automatic identification and data capture) and POS (point-of-sale)
solutions; Catalyst Telecom and ScanSource Communications provide voice,
video, data and converged communications equipment; ScanSource Security offers
physical security solutions; and ScanSource Services Group delivers
value-added support programs and services. Founded in 1992, the company ranks
#760 on the Fortune 1000. For more information, call the toll-free sales
telephone number at 800.944.2432 or visit

ScanSource, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands)
                                               March 31, 2013   June 30, 2012*
Current assets:
Cash and cash equivalents                      $  93,905        $  29,173
Accounts receivable, less allowance            431,264          470,808
$30,996 at March 31, 2013
$27,349 at June 30, 2012
Inventories                                    407,093          475,479
Prepaid expenses and other current             42,041           41,846
Deferred income taxes                          14,687          14,624       
Total current assets                           988,990          1,031,930
Property and equipment, net                    49,008           48,785
Goodwill                                       53,743           53,885
Other non-current assets, including            66,698          67,206       
identifiable intangible assets
Total assets                                   $  1,158,439    $  1,201,806 
Liabilities and Shareholders' Equity
Current liabilities:
Short-term borrowings                          $  —             $  4,268
Accounts payable                               325,658          419,683
Accrued expenses and other current             68,169           67,776
Current portion of contingent                  4,524            4,976
Income taxes payable                           2,699           1,698        
Total current liabilities                      401,050          498,401
Deferred income taxes                          2,879            —
Long-term debt                                 5,429            5,429
Long-term portion of contingent                8,797            11,677
Other long-term liabilities                    30,372          33,988       
Total liabilities                              448,527          549,495
Shareholders' equity:
Common stock                                   146,975          139,557
Retained earnings                              582,421          534,445
Accumulated other comprehensive                (19,484      )   (21,691      )
income (loss)
Total shareholders' equity                     709,912         652,311      
Total liabilities and shareholders'            $  1,158,439    $  1,201,806 

* Derived from audited financial statements.

ScanSource, Inc. and Subsidiaries
Condensed Consolidated Income Statements (Unaudited)
(in thousands, except per share data)
                       Quarter ended                   Nine months ended

                       March 31,                       March 31,
                       2013            2012            2013              2012
Net sales              $  682,965     $  707,883     $  2,164,286     $  2,260,827
Cost of goods          614,133        638,615        1,947,063        2,032,630     
Gross profit           68,832          69,268          217,223           228,197
Selling, general
and                    47,937          46,711          144,392           141,753
Change in fair
value of               100            1,072          1,396            1,244         
Operating income       20,795          21,485          71,435            85,200
Other expense
Interest expense       102             254             356               1,490
Interest income        (483        )   (780        )   (1,648        )   (2,233        )
Other, net             (4          )   206            34               3,363         
Income before          21,180          21,805          72,693            82,580
income taxes
Provision for          7,202          7,049          24,716           28,077        
income taxes
Net income             $  13,978     $  14,756     $  47,977       $  54,503    
Per share data:
shares                 27,847         27,489         27,725           27,290        
Net income per
common share,          $  0.50       $  0.54       $  1.73         $  2.00      
shares                 28,024         27,926         27,960           27,709        
Net income per
common share,          $  0.50       $  0.53       $  1.72         $  1.97      

ScanSource, Inc. and Subsidiaries
Supplementary Information (Unaudited)
(in thousands)
Net Sales by
                Quarter ended March 31,                              % Change
                2013               2012                % Change     Excluding
North American
(U.S. and       $  508,394          $  529,845          (4.0  )%     (4.0   )%
International   174,571            178,038            (1.9  )%     0.1    %
Consolidated    $  682,965         $  707,883         (3.5  )%     (3.0   )%
                Nine months ended March 31,                          % Change
                2013                2012                % Change     Excluding
North American
(U.S. and       $  1,602,193        $  1,666,240        (3.8  )%     (3.8   )%
International   562,093            594,587            (5.5  )%     0.9    %
Consolidated    $  2,164,286       $  2,260,827       (4.3  )%     (2.6   )%
(a) Year-over-year net sales growth rate excluding the translation impact of
changes in foreign currency exchange rates. Calculated by translating the net
sales for the quarter and nine months ended March 31, 2013 into U.S. dollars
using the weighted average foreign exchange rates for the quarter and nine
months ended March 31, 2013, respectively. International net sales excluding
the translation impact of foreign currencies for the quarter and nine months
ended March 31, 2013, as adjusted, totaled $178.1 million and $599.8 million,

ScanSource, Inc. and Subsidiaries
Supplementary Information (Unaudited)
(in thousands, except per share data)
Non-GAAP Financial
                                   Quarter ended March 31,
                                   2013                      2012
Return on invested
capital (ROIC),                    13.3%                     13.5%
annualized ^(a)
Reconciliation of EBITDA
to Net Income
Net income (GAAP)                  $    13,978               $   14,756
Plus: Income taxes                 7,202                     7,049
Plus: Interest expense             102                       254
Plus: Depreciation and             2,274                    2,754         
EBITDA (numerator for              $    23,556              $   24,813    
Invested Capital
Equity - beginning of              $    696,960              $   616,103
Equity - end of quarter            709,912                  642,450       
Average equity                     703,436                   629,277
Average funded debt ^(b)           15,675                   111,247       
Invested capital                   $    719,111             $   740,524   
(denominator for ROIC)
(a) Calculated as net income plus interest expense, income taxes, depreciation
and amortization (EBITDA), annualized and divided by invested capital for the

(b) Average funded debt is calculated as the daily average amounts outstanding
on our short-term and long-term interest-bearing debt.


ScanSource, Inc.
Charles A. Mathis, 864-286-4975
Chief Financial Officer
Mary M. Gentry, 864-286-4892
Treasurer and Director, Investor Relations
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