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): January 30, 2014

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 January 30, 2014, ScanSource, Inc. issued a press release announcing its financial results for its second quarter ended December 31, 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

(d) Exhibits

99.1 – Press release issued by ScanSource, Inc. on January 30, 2014. 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 the financial results conference call issued on January 30, 2014.  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: January 30, 2014	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 SECOND QUARTER RESULTS

Solid Performance Led by Communications Business Units in North America

GREENVILLE, SC -- January 30, 2014 -- ScanSource, Inc. (NASDAQ:SCSC), the leading international value-added distributor of specialty technology products, today announced financial results for its second quarter in fiscal year 2014, for the period ended December 31, 2013.

Quarter ended December 31, 2013:
Net sales	$740.6	million
Net income	$18.3	million
Diluted EPS	$0.64	per share

"Year-over-year growth for both of our communications business units in North America drove strong operating performance," said Mike Baur, CEO, ScanSource, Inc. "Our worldwide POS and barcode business units showed improved market demand, and quarterly revenues for Brazil were an all-time record."   

For the quarter ended December 31, 2013, net sales totaled $740.6 million.  This represents a 1.2% increase from the prior quarter’s sales of $731.9 million and a 0.9% decrease from net sales of $747.7 million for the quarter ended December 31, 2012. Operating income totaled $27.5 million, compared with $24.4 million in the prior year quarter. Net income for the quarter ended December 31, 2013 totaled $18.3 million, or $0.64 per diluted share, compared with net income of $16.4 million, or $0.59 per diluted share, for the prior year quarter. Excluding expenses associated with Belgian tax compliance and personnel replacement costs, adjusted net income for the quarter ended December 31, 2012 totaled $17.8 million, or $0.64 per diluted share.

Forecast for Next Quarter

The Company announced its current expectations for the third quarter of fiscal year 2014. ScanSource expects that net sales for the quarter ending March 31, 2014 could range from $700 million to $720 million, and diluted earnings per share could be in the range of $0.53 to $0.55 per share.

Webcast Details

ScanSource will present additional information about its financial results and outlook in a conference call with presentation slides today, January 30, 2014, 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 Second 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; costs and delays in connection with the Company's new ERP system and the costs associated with the litigation of the prior ERP system project; 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 and the Company's quarterly report on Form 10-Q for the quarter ended September 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 in 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.

Adjusted net income and adjusted EPS: To evaluate current period performance on a clearer and more consistent basis with prior periods, the Company discloses adjusted net income and adjusted diluted earnings per share, which exclude costs associated with tax compliance and personnel replacement in the Company's Belgian office for the quarter ended December 31, 2012. Management believes that these historical items are outside of the Company's normal operating expenses. Adjusted net income and adjusted EPS are useful in better assessing and understanding the Company's operating performance, especially when comparing results with previous periods or forecasting performance for future periods.

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 Supplementary 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 Second Quarter Results

ScanSource, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands)
	December 31, 2013			June 30, 2013*
Assets
Current assets:
Cash and cash equivalents	$	157,130		$	148,164
Accounts receivable, less allowance of	438,358			435,028
$29,545 at December 31, 2013
$25,479 at June 30, 2013
Inventories	467,202			402,307
Prepaid expenses and other current assets	40,731			40,105
Deferred income taxes	16,815			16,456
Total current assets	1,120,236			1,042,060
Property and equipment, net	18,890			20,203
Goodwill	31,994			31,795
Other non-current assets, including identifiable intangible assets	67,182			70,125
Total assets	$	1,238,302		$	1,164,183
Liabilities and Shareholders' Equity
Current liabilities:
Current portion of contingent consideration	$	5,229		$	3,732
Accounts payable	383,996			362,271
Accrued expenses and other current liabilities	59,705			59,983
Income taxes payable	2,137			1,696
Total current liabilities	451,067			427,682
Deferred income taxes	201			205
Long-term debt	5,429			5,429
Long-term portion of contingent consideration	4,318			8,813
Other long-term liabilities	25,841			26,098
Total liabilities	486,856			468,227
Shareholders' equity:
Common stock	163,680			149,821
Retained earnings	606,842			569,107
Accumulated other comprehensive income (loss)	(19,076		)	(22,972		)
Total shareholders' equity	751,446			695,956
Total liabilities and shareholders' equity	$	1,238,302		$	1,164,183

* Derived from audited financial statements.

ScanSource Reports Second Quarter Results

ScanSource, Inc. and Subsidiaries
Condensed Consolidated Income Statements (Unaudited)
(in thousands)
	Quarter ended December 31,						Six months ended December 31,
	2013			2012			2013			2012
Net sales	$	740,618		$	747,716		$	1,472,522		$	1,481,320
Cost of goods sold	663,362			673,365			1,318,767			1,332,930
Gross profit	77,256			74,351			153,755			148,390
Operating expenses:
Selling, general and administrative expenses	49,296			49,393			96,836			96,454
Change in fair value of contingent consideration	499			533			1,237			1,296
Operating income	27,461			24,425			55,682			50,640
Other expense (income):
Interest expense	235			130			482			254
Interest income	(525		)	(532		)	(1,099		)	(1,166		)
Other, net	(58		)	53			51			39
Income before income taxes	27,809			24,774			56,248			51,513
Provision for income taxes	9,511			8,417			18,513			17,514
Net income	$	18,298		$	16,357		$	37,735		$	33,999
Per share data:
Weighted-average shares outstanding, basic	28,293			27,713			28,164			27,665
Net income per common share, basic	$	0.65		$	0.59		$	1.34		$	1.23
Weighted-average shares outstanding, diluted	28,597			27,958			28,434			27,928
Net income per common share, diluted	$	0.64		$	0.59		$	1.33		$	1.22

ScanSource Reports Second Quarter Results

ScanSource, Inc. and Subsidiaries
Supplementary Information (Unaudited)
(in thousands)
Net Sales by Segment:
	Quarter ended December 31,						Non-GAAP % Change
	2013		2012		% Change		Excluding FX(a)
Worldwide Barcode & Security	$	476,206	$	489,075	(2.6	)%	(2.7	)%
Worldwide Communications & Services	264,412		258,641		2.2	%	1.9	%
Consolidated	$	740,618	$	747,716	(0.9	)%	(1.1	)%
	Six months ended December 31,						Non-GAAP % Change
	2013		2012		% Change		Excluding FX(a)
Worldwide Barcode & Security	$	926,850	$	945,262	(1.9	)%	(2.0	)%
Worldwide Communications & Services	545,672		536,058		1.8	%	1.5	%
Consolidated	$	1,472,522	$	1,481,320	(0.6	)%	(0.7	)%
Net Sales by Geographic Segment:
	Quarter ended December 31,						Non-GAAP % Change
	2013		2012		% Change		Excluding FX(b)
North American (U.S. and Canada)	$	545,089	$	547,987	(0.5	)%	(0.5	)%
International	195,529		199,729		(2.1	)%	(2.7	)%
Consolidated	$	740,618	$	747,716	(0.9	)%	(1.1	)%
	Six months ended December 31,						Non-GAAP % Change
	2013		2012		% Change		Excluding FX(b)
North American (U.S. and Canada)	$	1,103,429	$	1,093,799	0.9	%	0.9	%
International	369,093		387,521		(4.8	)%	(5.3	)%
Consolidated	$	1,472,522	$	1,481,320	(0.6	)%	(0.7	)%
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 and six months ended December 31, 2013 into U.S. dollars using the weighted average foreign exchange rates for the quarter ended and six months ended December 31, 2012, respectively. Worldwide Barcode & Security net sales excluding the translation impact of foreign currencies for the quarter ended and six months ended December 31, 2013, as adjusted, totaled $475.8 million and $926.5 million, respectively. Worldwide Communications & Services net sales excluding the translation impact of foreign currencies for the quarter ended and six months ended December 31, 2013, as adjusted, totaled $263.6 million and $543.9 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 and six months ended December 31, 2013 into U.S. dollars using the weighted average foreign exchange rates for the quarter ended and six months ended December 31, 2012, respectively. International net sales excluding the translation impact of foreign currencies for the quarter ended and six months ended December 31, 2013, as adjusted, totaled $194.3 million and $367.0 million, respectively.

ScanSource Reports Second Quarter Results

Non-GAAP Financial Information:
	Quarter ended December 31, 2013								Quarter ended December 31, 2012
	Pre-tax income			Net Income			Diluted EPS		Pre-tax Income		Net Income		Diluted EPS
GAAP Measure	$	27,809		$	18,298		$	0.64	$	24,774	$	16,357	$	0.59
Non-GAAP Adjustment(a)	—			—			—		2,121		1,400		0.05
Non-GAAP Measure	$	27,809		$	18,298		$	0.64	$	26,895	$	17,757	$	0.64
	Quarter ended December 31,
	2013			2012
Return on invested capital (ROIC), annualized (b)	15.9		%	15.2		%
Reconciliation of Net Income to EBITDA
Net income - GAAP	$	18,298		$	16,357
Plus: Income taxes	9,511			8,417
Plus: Interest expense	235			130
Plus: Depreciation and amortization (c)	1,778			2,275
EBITDA (numerator for ROIC) (non-GAAP)	$	29,822		$	27,179
Invested Capital Calculation
Equity - beginning of quarter	$	723,748		$	676,136
Equity - end of quarter	751,446			696,960
Average equity	737,597			686,548
Average funded debt (d)	5,429			23,850
Invested capital (denominator for ROIC) (non-GAAP)	$	743,026		$	710,398
Notes:
(a) Expenses associated with Belgian tax compliance and personnel replacement costs, including related professional fees.
(b) Calculated as net income plus interest expense, income taxes, depreciation and amortization (EBITDA), annualized and divided by invested capital for the period.
(c) Depreciation and amortization for the quarter ended December 31, 2012 includes debt issuance costs of $0.1 million.
(d) Average funded debt is calculated as the average daily amounts outstanding on our short-term and long-term interest-bearing debt.

EX-99.2

Q2 FY 2014 FINANCIAL RESULTS CONFERENCE CALL January 30, 2014 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, as well as the quarterly report on Form 10-Q for the quarter ended September 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 – Q2 FY14 3  Second quarter 2014 net sales of $741 million, at the lower end of our expected range, and EPS of $0.64, at the upper end of our expected range  Both North America Communications business units (ScanSource Communications and Catalyst) had solid Y/Y sales growth and higher margins  POS & Barcode sales declined Y/Y; however, Q/Q sales growth for all POS and Barcode business units  Record sales quarter in Brazil for the second quarter in a row  Second quarter 2014 return on invested capital of 15.9%*  Strong balance sheet position for growth  Signed contract with SAP for software and implementation services for new ERP * See Appendix for calculation of ROIC, a non-GAAP measure.

Q2 FY13 Q2 FY14 GAAP Non-GAAP* Net sales $740.6 $747.7 $747.7 Gross margin % (of net sales) 10.43% 9.94% 9.94% SG&A expenses $49.3 $47.3 $47.3 Belgian tax compliance/personnel costs -- $2.1 -- Change in FV of contingent consideration $0.5 $0.5 $0.5 Operating income $27.5 $24.4 $26.5 Operating income % (of net sales) 3.71% 3.27% 3.55% Net income $18.3 $16.4 $17.8 Diluted EPS $0.64 $0.59 $0.64 Income Statement Highlights In millions, except EPS 4 * Excluding Belgian tax compliance and personnel replacement costs; see press release provided in 1/30/14 8-K for reconciliation

Q2 FY14 Sales Mix Barcode & Security = Worldwide Barcode and Security Communications & Services = Worldwide Communications and Services As a % of Q2 FY14 net sales of $740.6 million * Includes the United States and Canada. 64% Barcode & Security 74% North America* 36% Communications & Services 5 By Technology By Geography 26% International

Q2 FY14 Q2 FY13 Net sales $476.2 $489.1 Gross profit $42.8 $44.4 Gross margin 9.0% 9.1% Operating income $13.0 $13.3 Operating income % 2.7% 2.7% $489 $476 Q2 FY13 Q2 FY14 WW Barcode & Security Net Sales, $ in millions Down (2.6%) Excluding FX, Down (2.7%)* $ in millions 6 * See Appendix for reconciliation of net sales excluding impact of foreign exchange to a GAAP measure.

Q2 FY14 Q2 FY13 Net sales $264.4 $258.6 Gross profit $34.5 $29.9 Gross margin 13.1% 11.6% Operating income $14.5 $11.1 Operating income % 5.5% 4.3% $259 $264 Q2 FY13 Q2 FY14 WW Communications & Services $ in millions Net Sales, $ in millions Up 2.2% Excluding FX, Up 1.9%* 7 * See Appendix for reconciliation of net sales excluding impact of foreign exchange to a GAAP measure.

Q2 FY14 Q1 FY14 Q2 FY13 Return on invested capital (“ROIC”)* 15.9% 16.9% 15.2% Cash and cash equivalents (Q/E) $157.1 $193.8 $31.5 Operating cash flow $(44.4) $45.7 $(12.4) Days sales outstanding in receivables 53 55 54 Inventory (Q/E) $467.2 $433.1 $474.7 Inventory turns 5.9 6.3 5.6 Paid for inventory days 11.3 2.2 17.8 Q2 FY14 Key Measures * See Appendix for calculation of ROIC, a non-GAAP measure. $ in millions 8

WW Barcode & Security Highlights Net Sales, $ in millions Down (2.6%) Excluding FX, Down (2.7%)* 9  64% of overall sales  Better market demand for our POS and Barcode units across all geographies  Slowness in big deals continued  Record sales quarter for Brazil for second quarter in a row  Named Yvette McKenzie President of ScanSource Latin America and Mexico  Security sales declined ̶ Weaker sales from wireless infrastructure and card printers offset good growth in video surveillance and access control * See Appendix for reconciliation of net sales excluding impact of foreign exchange to a GAAP measure. $489 $476 Q2 FY13 Q2 FY14

WW Communications & Services Highlights Net Sales, $ in millions Up 2.2% Excluding FX, Up 1.9%* 10  36% of overall sales  ScanSource Communications in North America and Catalyst solid Y/Y growth ̶ Higher big deals ̶ Higher gross profit margin from increase in net service fee revenue and vendor program recognition  Europe sales declined ̶ In UK, timing of business ̶ In Germany, competitive pressures  ScanSource Services Group ̶ Record operating income for marketing services ̶ Good demand for configuration services and training classes * See Appendix for reconciliation of net sales excluding impact of foreign exchange to a GAAP measure. $259 $264 Q2 FY13 Q2 FY14

Q3 FY14 Outlook * For the Quarter Ending March 31, 2014: Net Sales Diluted Earnings Per Share  Range from $700 million to $720 million  Range midpoint: $710 million  Range from $0.53 to $0.55 per share  Range midpoint: $0.54 * Outlook as of January 30, 2014 11

Appendix: Non-GAAP Financial Information 12 Q2 FY14 Q1 FY14 Q2 FY13 Return on invested capital (ROIC), annualized (a) 15.9% 16.9% 15.2% Reconciliation of Net Income (Loss) to EBITDA Net income (loss) - GAAP $ 18,298 $ 19,437 $ 16,357 Plus: Income taxes 9,511 9,002 8,417 Plus: Interest expense 235 247 130 Plus: Depreciation and amortization 1,778 1,869 2,275 EBITDA (numerator for ROIC)(non-GAAP) $ 29,822 $ 30,555 $ 27,179 Invested Capital Calculation Equity - beginning of the quarter $ 723,748 $ 695,956 $ 676,136 Equity - end of quarter 751,446 723,748 696,960 Average equity 737,597 709,852 686,548 Average funded debt (b) 5,429 5,429 23,850 Invested capital (denominator for ROIC)(non-GAAP) $ 743,026 $ 715,281 $ 710,398 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 13 Worldwide Barcode & Security Net sales, excluding impact of foreign exchange (FX) - Y/Y Change: Q2 2014 net sales $ 476.2 Foreign exchange impact (0.4) Q2 2014 net sales, excluding FX impact $ 475.8 Q2 2013 sales $ 489.1 % Change -2.7% Worldwide Communications & Services Net sales, excluding impact of foreign exchange (FX) - Y/Y Change: Q2 2014 net sales $ 264.4 Foreign exchange impact (0.8) Q2 2014 net sales, excluding FX impact $ 263.6 Q2 2013 sales $ 258.6 % Change 1.9%