8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 24, 2013

SCANSOURCE INC

(Exact name of registrant as specified in its charter)

Commission File Number: 000-26926

SC	57-0965380
(State or other jurisdiction of incorporation)	(IRS Employer Identification No.)

6 Logue Court, Greenville, SC 29615

(Address of principal executive offices, including zip code)

864-288-2432

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition

On October 24, 2013, ScanSource, Inc. issued a press release announcing its financial results for its first quarter ended September 30, 2013. A copy of the press release and accompanying presentation slides are attached as Exhibit 99.1 and 99.2 hereto and incorporated herein by reference and also made available through the Company’s website at www.scansource.com.

The information in this Current Report on Form 8-K, including the exhibit, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act.

Item 9.01. Financial Statements and Exhibits

(c) Exhibits

99.1 – Press release issued by ScanSource, Inc. on October 24, 2013. The information contained in the attached exhibit is unaudited and should be read in conjunction with the Registrant’s annual and quarterly reports filed with the Securities and Exchange Commission.

99.2 – Presentation slides for Q1 FY 2014 financial results conference call issued on October 24, 2013.  The information contained in the attached exhibit is unaudited and should be read in conjunction with the Registrant’s annual and quarterly reports filed with the Securities and Exchange Commission.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	ScanSource, Inc.
Date: October 24, 2013	By:	/s/ Charles A. Mathis
	Name:	Charles A. Mathis
	Its:	Senior Vice President and Chief Financial Officer

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

Contact:
Charles A. Mathis		Mary M. Gentry
Senior Vice President and Chief Financial Officer	- or -	Treasurer and Director, Investor Relations
ScanSource, Inc.		ScanSource, Inc.
(864) 286-4975		(864) 286-4892

SCANSOURCE REPORTS FIRST QUARTER RESULTS

Solid Sales Growth in North America Communications and Security Business Units

GREENVILLE, SC -- October 24, 2013 -- ScanSource, Inc. (NASDAQ:SCSC), the leading international value-added distributor of specialty technology products, today announced complete financial results for its first quarter ended September 30, 2013.

Quarter ended September 30, 2013:
Net sales	$731.9 million
Net income	$19.4 million
Diluted EPS	$0.69 per share

“Our quarterly sales results were led by solid year-over-year growth for our North America Communications and Security business units,” said Mike Baur, CEO, ScanSource, Inc.  “Our teams executed well in a slower growth environment, especially internationally where Europe and Brazil achieved better operating results than a year ago.”    

For the quarter ended September 30, 2013, net sales totaled $731.9 million.  This represents a 2.7% increase from the prior quarter’s sales of $712.7 million and a slight decrease from net sales of $733.6 million for the quarter ended September 30, 2012. Operating income increased 7.7% to $28.2 million from $26.2 million in the comparable prior year quarter. Net income for the quarter ended September 30, 2013 was $19.4 million, or $0.69 per diluted share, compared with net income of $17.6 million, or $0.63 per diluted share, for the prior year quarter.

Forecast for Next Quarter and Sales Release Update

The Company announced its current expectations for the second quarter of fiscal 2014. ScanSource expects that net sales for the quarter ending December 31, 2013 could range from $740 million to $760 million, and diluted earnings per share could be in the range of $0.62 to $0.64 per share. Starting with the quarter ending December 31, 2013, the Company will no longer provide a sales release in the first week following the quarter end.

Webcast Details

ScanSource will present additional information about its financial results and outlook in a conference call with presentation slides today, October 24, 2013, at 5:00 p.m. (ET).  A webcast of the call and accompanying presentations slides will be available for all interested parties and can be accessed at www.scansource.com (Investor Relations section).  The webcast will be available for replay for 60 days.

ScanSource Reports First Quarter Results

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 the Company to greater political and economic volatility than its operations in established markets; additional costs and delays in connection with the Company's new ERP system and associated litigation; the 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 the 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, 2013 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 certain non-GAAP financial measures, including net sales excluding the translation impact of foreign currencies and return on invested capital ("ROIC"). Non-GAAP financial measures are used to better understand and evaluate performance, including comparisons from period to period, as described below.

Net sales excluding the translation impact of foreign currencies: The Company discusses the percentage change in net sales excluding the translation impact from changes in foreign currency exchange rates between reporting periods. This measure enhances comparability between periods to help analyze underlying trends.

Return on invested capital ("ROIC"): Management uses ROIC as a performance measurement to assess efficiency at allocating capital under the Company's control to generate returns. Management believes this metric balances the Company's operating results with asset and liability management, excludes the results of capitalization decisions, is easily computed and understood, and is considered to have a strong correlation with shareholder value creation. ROIC also provides management a measure of the Company's profitability on a basis more comparable to historical or future periods. In addition, the Company's Board of Directors uses ROIC in evaluating business and management performance. Certain management incentive compensation targets are set and measured relative to ROIC.

These non-GAAP financial measures have limitations as analytical tools, and the non-GAAP financial measures that the Company reports may not be comparable to similarly titled amounts reported by other companies. Analysis of results and outlook on a non-GAAP basis should be considered in addition to, and not in substitution for or as superior to, measurements of financial performance prepared in accordance with GAAP. A reconciliation of the Company's non-GAAP financial information to GAAP is set forth in the following Supplemental Information tables.

About ScanSource, Inc.

ScanSource, Inc. (NASDAQ: SCSC) is the leading international distributor of specialty technology products, focusing on point-of-sale (POS) and barcode, communications and physical security solutions. ScanSource's teams provide value-added services and operate from two technology segments, Worldwide Barcode & Security and Worldwide Communications & Services. ScanSource is committed to helping its reseller customers choose, configure, and deliver the industry's best products across almost every vertical market in North America, Latin America and Europe. Founded in 1992, the Company ranks #711 on the Fortune 1000. For more information, visit www.scansource.com.

ScanSource Reports First Quarter Results

ScanSource, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands)
	September 30, 2013			June 30, 2013*
Assets
Current assets:
Cash and cash equivalents	$	193,769		$	148,164
Accounts receivable, less allowance of	443,256			435,028
$27,966 at September 30, 2013
$25,479 at June 30, 2013
Inventories	433,109			402,307
Prepaid expenses and other current assets	43,023			40,105
Deferred income taxes	15,522			16,456
Total current assets	1,128,679			1,042,060
Property and equipment, net	19,545			20,203
Goodwill	32,044			31,795
Other non-current assets, including identifiable intangible assets	71,589			70,125
Total assets	$	1,251,857		$	1,164,183
Liabilities and Shareholders' Equity
Current liabilities:
Current portion of contingent consideration	$	5,453		$	3,732
Accounts payable	417,103			362,271
Accrued expenses and other current liabilities	57,967			59,983
Income taxes payable	10,730			1,696
Total current liabilities	491,253			427,682
Deferred income taxes	698			205
Long-term debt	5,429			5,429
Long-term portion of contingent consideration	4,053			8,813
Other long-term liabilities	26,676			26,098
Total liabilities	528,109			468,227
Shareholders' equity:
Common stock	153,905			149,821
Retained earnings	588,544			569,107
Accumulated other comprehensive income (loss)	(18,701		)	(22,972		)
Total shareholders' equity	723,748			695,956
Total liabilities and shareholders' equity	$	1,251,857		$	1,164,183

* Derived from audited financial statements.

ScanSource Reports First Quarter Results

ScanSource, Inc. and Subsidiaries
Condensed Consolidated Income Statements (Unaudited)
(in thousands)
	Quarter ended September 30,
	2013			2012
Net sales	$	731,904		$	733,605
Cost of goods sold	655,405			659,565
Gross profit	76,499			74,040
Operating expenses:
Selling, general and administrative expenses	47,540			47,061
Change in fair value of contingent consideration	738			764
Operating income	28,221			26,215
Other expense (income):
Interest expense	247			124
Interest income	(574		)	(633		)
Other, net	109			(15		)
Income before income taxes	28,439			26,739
Provision for income taxes	9,002			9,097
Net income	$	19,437		$	17,642
Per share data:
Weighted-average shares outstanding, basic	28,034			27,618
Net income per common share, basic	$	0.69		$	0.64
Weighted-average shares outstanding, diluted	28,257			27,901
Net income per common share, diluted	$	0.69		$	0.63

ScanSource Reports First Quarter Results

ScanSource, Inc. and Subsidiaries
Supplementary Information (Unaudited)
(in thousands)
Net Sales by Segment:									Non-GAAP
	Quarter ended September 30,								% Change
	2013			2012			% Change		Excluding FX(a)
Worldwide Barcode & Security	$	450,644		$	456,187		(1.2	)%	(1.2	)%
Worldwide Communications & Services	281,260			277,418			1.4	%	1.0	%
Consolidated	$	731,904		$	733,605		(0.2	)%	(0.4	)%
Net Sales by Geographic Segment:									Non-GAAP
	Quarter ended September 30,								% Change
	2013			2012			% Change		Excluding FX(b)
North American (U.S. and Canada)	$	558,340		$	545,813		2.3	%	2.3	%
International	173,564			187,792			(7.6	)%	(8.1	)%
Consolidated	$	731,904		$	733,605		(0.2	)%	(0.4	)%
Non-GAAP Financial Information:	Quarter ended September 30,
	2013			2012
Return on invested capital (ROIC), annualized (c)	16.9		%	17.0		%
Reconciliation of Net Income to EBITDA
Net income - GAAP	$	19,437		$	17,642
Plus: Income taxes	9,002			9,097
Plus: Interest expense	247			124
Plus: Depreciation and amortization	1,869			2,314
EBITDA (numerator for ROIC) (non-GAAP)	$	30,555		$	29,177
(a) Depreciation & amortization for the quarter ended September 30, 2012 includes debt issue costs of $0.1 million.
Invested Capital Calculation
Equity - beginning of quarter	$	695,956		$	652,311
Equity - end of quarter	723,748			676,136
Average equity	709,852			664,224
Average funded debt (d)	5,429			16,563
Invested capital (denominator for ROIC) (non-GAAP)	$	715,281		$	680,787
Notes:
(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 ended September 30, 2013 into U.S. dollars using the weighted average foreign exchange rates for the quarter ended September 30, 2012. Worldwide Barcode & Security net sales excluding the translation impact of foreign currencies for the quarter September 30, 2013, as adjusted, totaled $450.8 million. Worldwide Communications & Services net sales excluding the translation impact of foreign currencies for the quarter ended September 30, 2013, as adjusted, totaled $280.2 million.
(b)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 ended September 30, 2013 into U.S. dollars using the weighted average foreign exchange rates for the quarter ended September 30, 2012. International net sales excluding the translation impact of foreign currencies for the quarter ended September 30, 2013, as adjusted, totaled $172.6 million.
(c) Calculated as net income plus interest expense, income taxes, depreciation and amortization (EBITDA), annualized and divided by invested capital for the period.
(d) Average funded debt is calculated as the daily average amounts outstanding on our short-term and long-term interest-bearing debt.

EX-99.2

Q1 FY 2014 FINANCIAL RESULTS CONFERENCE CALL October 24, 2013 at 5:00 pm ET Exhibit 99.2

Safe Harbor This presentation may contain certain comments, which are “forward-looking” statements that involve plans, strategies, economic performance and trends, projections, expectations, or beliefs about future events and other statements that are not descriptions of historical facts, may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking information is inherently subject to risks and uncertainties; these statements are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. Any number of factors could cause actual results to differ materially from anticipated results. For more information concerning factors that could cause actual results to differ from anticipated results, see the “Risk Factors” included in the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2013 filed with the Securities and Exchange Commission (“SEC”). Although ScanSource believes the expectations reflected in its forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievements. ScanSource disclaims any intentions or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required by law. In addition to disclosing results that are determined in accordance with United States Generally Accepted Accounting Principles (“GAAP”), the Company also discloses certain non-GAAP measures, including return on invested capital (“ROIC”) and the percentage change in net sales excluding the impact of foreign currency exchange rates. A reconciliation of the Company's non-GAAP financial information to GAAP financial information is provided in the Company’s Form 8-K, filed with the SEC, with the quarterly earnings press release for the period indicated. 2

Highlights – Q1 FY14 3 • First quarter 2014 net sales of $732 million, at the upper end of our expected range – Solid Y/Y growth from North America Communications and Security • International business had better operating results than a year ago • Good overall quarter for our Communications and Services segment • Faster inventory turns, while keeping products readily available for our customers • First quarter 2014 return on invested capital of 16.9% • Strong balance sheet position for growth • Effective July 1st, new management structure to enhance worldwide technology markets focus and growth strategy

New Segments Enhance Technology Focus 4 Worldwide Barcode and Security Segment Worldwide Communications and Services Segment President: Buck Baker Technologies: POS and Barcode Physical Security Business Units: President: Mike Ferney Technologies: Communications Services Business Units:

Income Statement Highlights Q1 FY14 Q1 FY13 Net sales $731.9 $733.6 Gross margin % (of net sales) 10.5% 10.1% SG&A expenses $47.5 $47.1 Change in FV of contingent consideration $0.7 $0.8 Operating income $28.2 $26.2 Operating income % (of net sales) 3.86% 3.57% Net income $19.4 $17.6 Diluted EPS $0.69 $0.63 In millions, except EPS 5

Q1 FY14 Sales Mix By Segment By Geography Q1 FY14 Net Sales: $731.9 million Q1 FY14 Net Sales: $731.9 million 74% North America* Barcode & Security = Worldwide Barcode and Security Communications & Services = Worldwide Communications and Services As a % of net sales * Includes the United States and Canada 62% Barcode & Security 76% North America* 24% International 38% Communications & Services 6

$456 $451 Q1 FY13 Q1 FY14 WW Barcode & Security Segment Net Sales, $ in millions Down (1.2%) Excluding FX, Down (1.2%) Q1 FY14 Q1 FY13 Net sales $450.6 $456.2 Gross profit $40.7 $41.3 Gross margin 9.0% 9.0% Operating income $12.0 $12.6 Operating income % 2.7% 2.8% $ in millions 7

Q1 FY14 Q1 FY13 Net sales $281.3 $277.4 Gross profit $35.8 $32.8 Gross margin 12.7% 11.8% Operating income $16.3 $13.6 Operating income % 5.8% 4.9% $277 $281 Q1 FY13 Q1 FY14 WW Communications & Services Segment $ in millions Net Sales, $ in millions Up 1.4% Excluding FX, Up 1.0% 8

Q1 FY14 Key Measures Q1 FY14 Q4 FY13 Q1 FY13 Return on invested capital (“ROIC”)* 16.9% 17.2% 17.0% Cash and cash equivalents (Q/E) $193.8 $148.2 $38.7 Operating cash flow $45.7 $53.4 $2.4 Days sales outstanding in receivables 55 55 56 Inventory (Q/E) $433.1 $402.3 $483.2 Inventory turns 6.3 6.2 5.4 Paid for inventory days 2.2 5.7 13.5 * See Appendix for calculation of ROIC, a non-GAAP measure. $ in millions 9

$456 $451 Q1 FY13 Q1 FY14 WW Barcode & Security Highlights Net Sales, $ in millions Down (1.2%) Excluding FX, Down (1.2%) 10 • 62% of overall sales • POS & Barcode units declined year-over- year – Big deals delayed and broken into smaller pieces – More deals going direct to Tier 1 or end users • POS & Barcode in North America positive year-over-year growth – Strong results for retail POS, payment processing, and data networking • Record sales quarter in Brazil, in local currency • Good growth for Security – Record quarters with key vendors – Named Ruckus Wireless North American Distributor of the Year

$277 $281 Q1 FY13 Q1 FY14 WW Communications & Services Highlights Net Sales, $ in millions Up 1.4% Excluding FX, Up 1.0% 11 • 38% of overall sales • Increased 5% sequentially • North America Communications has its second best quarter ever • ScanSource Catalyst grew Q/Q – Strong Avaya growth across all products – Increase in the # of Catalyst customers for Cisco • For Europe Communications, record sales quarter in the UK and sales in Germany grew for the 2nd quarter in a row – Second best Avaya quarter ever • ScanSource Services Group – Higher professional services revenue – Increase in configuration services for Communications

Q2 FY14 Outlook For the Quarter Ending December 31, 2013: Net Sales Diluted Earnings Per Share • Range from $740 million to $760 million • Range midpoint: $750 million • Range from $0.62 to $0.64 per share • Range midpoint: $0.63 Outlook as of October 24, 2013 12

Appendix: Non-GAAP Financial Information 13 Q1 FY14 Q4 FY13 Q1 FY13 Return on invested capital (ROIC), annualized (a) 16.9% 17.2% 17.0% Reconciliation of Net Income (Loss) to EBITDA Net income (loss) - GAAP $ 19,437 $ (13,315) $ 17,642 Plus: Income taxes 9,002 (6,352) 9,097 Plus: Interest expense 247 419 124 Plus: Depreciation and amortization 1,869 1,594 2,314 EBITDA 30,555 (17,654) 29,177 Adjustments: Impairment charges, including ERP & goodwill - 48,772 - Adjusted EBITDA (numerator for ROIC)(non-GAAP) $ 30,555 $ 31,118 $ 29,177 Invested Capital Calculation Equity - beginning of the quarter $ 695,956 $ 709,912 $ 652,311 Equity - end of quarter 723,748 695,956 676,136 Add: Impairment charges, including ERP & goodwill, net of tax - 33,216 - Average equity 709,852 719,542 664,224 Average funded debt (b) 5,429 5,429 16,563 Invested capital (denominator for ROIC)(non-GAAP) $ 715,281 $ 724,971 $ 680,787 Notes: (a) Calculated as net income plus interest expense, income taxes, depreciation and amortization (EBITDA), annualized and divided by invested capital for the period. EBITDA excludes non-cash impairment charges. (b) Average daily amounts outstanding on our short-term and long-term interest-bearing debt.

Appendix: Non-GAAP Financial Information 14 Worldwide Barcode & Security Net sales, excluding impact of foreign exchange (FX) - Y/Y Change: Q1 2014 net sales $ 450.6 Foreign exchange impact 0.2 Q1 2014 net sales, excluding FX impact $ 450.8 Worldwide Barcode & Security Q1 2013 sales $ 456.2 % Change -1.2% Worldwide Communications & Services Net sales, excluding impact of foreign exchange (FX) - Y/Y Change: Q1 2014 net sales $ 281.3 Foreign exchange impact (1.1) Q1 2014 net sales, excluding FX impact $ 280.2 Worldwide Communications & Services Q1 2013 sales $ 277.4 % Change 1.0%