ScanSource Reports First Quarter Results

ScanSource, Inc. (NASDAQ:SCSC), a leading international distributor of AIDC (automatic identification and data capture), point of sale, communications, and electronic security products for the reseller market, today announced complete financial results for its first quarter ended September 30, 2009.

Quarter ended September 30, 2009:
Net Sales	$488 million
Net income	$10.9 million
Diluted EPS	$0.41 per share

“We are pleased that our sales results exceeded our expectations,” said Mike Baur, CEO, ScanSource, Inc. “We believe that our business units gained market share across all geographies.”

For the quarter ended September 30, 2009, net sales decreased 9.5% to $488 million compared to $540 million for the quarter ended September 30, 2008. Quarterly operating income also decreased 14.3% to $17.7 million from $20.6 million for the comparable prior year quarter. Net income decreased 12.0% to $10.9 million for the quarter ended September 30, 2009 versus $12.4 million for the quarter ended September 30, 2008. The effective tax rate for the quarter was 37.4%, compared to 38.2% for the prior year quarter. Diluted earnings per share decreased 12.8% to $0.41 compared to $0.47 in the prior year quarter.

Forecast for Next Quarter

The Company announced its revenue forecast for the second quarter of fiscal 2010. ScanSource expects net revenues for the December 2009 quarter could range from $475 million to $495 million.

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 results, including, but not limited to macroeconomic circumstances that could impact our business, such as currency fluctuations, continued adverse capital and credit market conditions and a prolonged 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, 2009 filed with the Securities and Exchange Commission.

About ScanSource, Inc.

ScanSource, Inc. (NASDAQ:SCSC) is a leading international distributor of specialty technology products, consisting of seven sales units in North America, Latin America and Europe.

ScanSource POS and Barcoding in North America, Latin America and Europe delivers AIDC and POS solutions; Catalyst Telecom in the U.S. and ScanSource Communications in North America and Europe, provide voice, video and converged communications equipment; and ScanSource Security in North America offers physical security solutions. Founded in 1992, the company ranks #854 on the Fortune 1000. For more information, call the toll-free sales telephone number at 800.944.2432 or visit www.scansourceinc.com.

ScanSource, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) (in thousands)
		September 30, 2009			June 30, 2009*
	Assets
Current assets:
	Cash and cash equivalents	$	87,825		$	127,664
	Trade & notes receivable		316,509			291,037
	Other receivables		6,461			7,676
	Inventories		269,695			216,829
	Prepaid expenses and other assets		5,655			10,356
	Deferred income taxes		8,758			8,735
	Total current assets		694,903			662,297
Property and equipment, net			20,191			21,035
Goodwill			33,737			34,087
Other assets, including identifiable intangible assets			32,356			31,212
	Total assets	$	781,187		$	748,631
	Liabilities and Shareholders' Equity
Current liabilities:
	Current portion of long-term debt	$	-		$	-
	Trade accounts payable		250,442			228,408
	Accrued expenses and other liabilities		25,048			30,443
	Income taxes payable		5,186			3,799
	Total current liabilities		280,676			262,650
Deferred income taxes			-			-
Long-term debt			30,429			30,429
Borrowings under revolving credit facility			-			-
Other long-term liabilities			11,516			10,106
	Total liabilities		322,621			303,185
Shareholder's equity:
	Common stock		105,893			104,461
	Retained earnings		348,756			337,822
	Accumulated other comprehensive income		3,917			3,163
	Total shareholders' equity		458,566			445,446
	Total liabilities and shareholders' equity	$	781,187		$	748,631
* Derived from audited financial statements at June 30, 2009.

ScanSource, Inc. and Subsidiaries Condensed Consolidated Income Statements (Unaudited) (in thousands, except per share information)
		Quarter ended September 30,
		2009				2008
Net sales		$	488,423			$	539,825
Cost of goods sold			437,005				484,323
Gross profit			51,418				55,502
Operating expenses:
Selling, general and administrative expenses			33,731				34,874
Operating income			17,687				20,628
Other expense (income):
Interest expense			366				579
Interest income			(263	)			(351	)
Other, net			116				277
Other expense (income)			219				505
Income before income taxes			17,468				20,123
Provision for income taxes			6,533				7,693
Net income		$	10,935			$	12,430
Per share data:
Net income per common share, basic		$	0.41			$	0.47
Weighted-average shares outstanding, basic			26,567				26,364
Net income per common share, diluted		$	0.41			$	0.47
Weighted-average shares outstanding, diluted			26,821				26,611