10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 for the

Quarterly period ended March 31, 2017

Commission File Number: 000-26926

ScanSource, Inc.

South Carolina

(State of Incorporation)

57-0965380

(I.R.S. Employer Identification No.)

6 Logue Court

Greenville, South Carolina, 29615

(864) 288-2432

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x		Smaller reporting company	¨
Accelerated filer	¨		Emerging growth company	¨
Non-accelerated filer	¨	(Do not check if a smaller reporting company)

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at May 5, 2017
Common Stock, no par value per share	25,314,306

SCANSOURCE, INC.

INDEX TO FORM 10-Q

March 31, 2017

		Page #
PART I. FINANCIAL INFORMATION		4
Item 1.	Financial Statements	4
	Condensed Consolidated Balance Sheets as of March 31, 2017 and June 30, 2016	4
	Condensed Consolidated Income Statements for the Quarter and Nine Months Ended March 31, 2017 and 2016	5
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Quarter and Nine Months Ended March 31, 2017 and 2016	6
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2017 and 2016	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	36
PART II. OTHER INFORMATION		37
Item 1	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 6.	Exhibits	38
SIGNATURES		39
EXHIBIT INDEX		40

2

FORWARD-LOOKING STATEMENTS

We include forward-looking statements in the "Management’s Discussion and Analysis of Financial Condition and Results of Operations," "Quantitative and Qualitative Disclosures About Market Risk" and "Risk Factors" sections and elsewhere herein. These statements generally can be identified by words such as "expects," "anticipates," "believes," "intends," "plans," "hopes," "forecasts," "seeks," "estimates," "goals," "projects," "strategy," "future," "likely," "may," "should," and variations of such words and similar expressions. Any forward-looking statement made by us in this Form 10-Q is based only on information currently available to us and speaks only as of the date on which it is made. Except as may be required by law, we expressly disclaim any obligation to update these forward-looking statements to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect the occurrence of unanticipated events. Actual results could differ materially from those suggested by these forward-looking statements as a result of a number of factors including, but not limited to, changes in interest and exchange rates and regulatory regimes impacting our overseas operations, the failure of acquisitions to meet our expectations, the failure to manage and implement our organic growth strategy, credit risks involving our larger customers and vendors, termination of our relationship with key vendors or a significant modification of the terms under which we operate with a key vendor, the decline in demand for the products and services that we provide, reduced prices for the products and services that we provide due both to competitor and customer actions, and the other factors set forth in "Risk Factors" contained in our Annual Report on Form 10-K for the year ended June 30, 2016.

3

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

SCANSOURCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands, except share information)

	March 31, 2017			June 30, 2016
Assets
Current assets:
Cash and cash equivalents	$	62,187		$	61,400
Accounts receivable, less allowance of $42,494 at March 31, 2017 and $39,032 at June 30, 2016	565,242			559,557
Inventories	514,238			558,581
Prepaid expenses and other current assets	59,739			49,367
Total current assets	1,201,406			1,228,905
Property and equipment, net	56,409			52,388
Goodwill	201,066			92,715
Identifiable intangible assets, net	105,578			51,127
Deferred income taxes	27,534			28,813
Other non-current assets	39,823			37,237
Total assets	$	1,631,816		$	1,491,185
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	437,226		$	471,487
Accrued expenses and other current liabilities	111,330			98,975
Current portion of contingent consideration	31,257			11,594
Income taxes payable	5,461			3,056
Total current liabilities	585,274			585,112
Deferred income taxes	2,163			2,555
Long-term debt	5,429			5,429
Borrowings under revolving credit facility	108,505			71,427
Long-term portion of contingent consideration	81,966			13,058
Other long-term liabilities	39,760			39,108
Total liabilities	823,097			716,689
Commitments and contingencies
Shareholders’ equity:
Preferred stock, no par value; 3,000,000 shares authorized, none issued	—			—
Common stock, no par value; 45,000,000 shares authorized, 25,314,031and 25,614,673 shares issued and outstanding at March 31, 2017 and June 30, 2016, respectively	55,997			67,249
Retained earnings	830,210			779,934
Accumulated other comprehensive income (loss)	(77,488		)	(72,687		)
Total shareholders’ equity	808,719			774,496
Total liabilities and shareholders’ equity	$	1,631,816		$	1,491,185

June 30, 2016 amounts are derived from audited consolidated financial statements.

See accompanying notes to these condensed consolidated financial statements.

4

SCANSOURCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED INCOME STATEMENTS (UNAUDITED)

(In thousands, except per share data)

	Quarter ended						Nine months ended
	March 31,						March 31,
	2017			2016			2017			2016
Net sales	$	813,538		$	798,404		$	2,650,895		$	2,662,754
Cost of goods sold	720,867			713,928			2,368,155			2,390,093
Gross profit	92,671			84,476			282,740			272,661
Selling, general and administrative expenses	70,733			61,690			212,691			190,202
Change in fair value of contingent consideration	1,960			1,139			3,921			4,520
Operating income	19,978			21,647			66,128			77,939
Interest expense	780			694			2,281			1,684
Interest income	(1,040		)	(800		)	(2,948		)	(2,509		)
Other (income) expense, net	667			400			(11,280		)	1,357
Income before income taxes	19,571			21,353			78,075			77,407
Provision for income taxes	7,147			7,311			27,799			26,713
Net income	$	12,424		$	14,042		$	50,276		$	50,694
Per share data:
Net income per common share, basic	$	0.49		$	0.54		$	1.99		$	1.90
Weighted-average shares outstanding, basic	25,262			25,863			25,311			26,741
Net income per common share, diluted	$	0.49		$	0.54		$	1.97		$	1.88
Weighted-average shares outstanding, diluted	25,400			25,967			25,458			26,908

See accompanying notes to these condensed consolidated financial statements.

5

SCANSOURCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(In thousands)

	Quarter ended				Nine months ended
	March 31,				March 31,
	2017		2016		2017			2016
Net income	$	12,424	$	14,042	$	50,276		$	50,694
Foreign currency translation adjustment	4,762		10,288		(4,801		)	(12,667		)
Comprehensive income	$	17,186	$	24,330	$	45,475		$	38,027

See accompanying notes to these condensed consolidated financial statements.

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SCANSOURCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)

	Nine months ended
	March 31,
	2017			2016
Cash flows from operating activities:
Net income	$	50,276		$	50,694
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	18,692			12,570
Amortization of debt issuance costs	223			223
Provision for doubtful accounts	5,632			2,803
Share-based compensation	4,862			5,194
Deferred income taxes	455			7,248
Excess tax benefits from share-based payment arrangements	(88		)	(101		)
Change in fair value of contingent consideration	3,921			4,520
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	7,022			52,327
Inventories	41,509			(7,736		)
Prepaid expenses and other assets	(8,125		)	(312		)
Other non-current assets	(32		)	(1,571		)
Accounts payable	(54,378		)	(108,896		)
Accrued expenses and other liabilities	11,720			8,005
Income taxes payable	2,435			(656		)
Net cash provided by (used in) operating activities	84,124			24,312
Cash flows from investing activities:
Capital expenditures	(6,445		)	(9,120		)
Cash paid for business acquisitions, net of cash acquired	(83,804		)	(61,475		)
Payments for acquisition of intangible assets	(3,583		)	—
Net cash provided by (used in) investing activities	(93,832		)	(70,595		)
Cash flows from financing activities:
Borrowings on revolving credit	1,305,922			1,058,720
Repayments on revolving credit	(1,268,846		)	(985,079		)
Repayments on long-term debt	—			(2,019		)
Repayments on capital lease obligation	(184		)	(162		)
Contingent consideration payments	(10,241		)	(7,286		)
Exercise of stock options	4,770			3,816
Repurchase of common stock	(20,882		)	(98,414		)
Excess tax benefits from share-based payment arrangements	88			101
Net cash provided by (used in) financing activities	10,627			(30,323		)
Effect of exchange rate changes on cash and cash equivalents	(132		)	(4,191		)
Increase (decrease) in cash and cash equivalents	787			(80,797		)
Cash and cash equivalents at beginning of period	61,400			121,646
Cash and cash equivalents at end of period	$	62,187		$	40,849
See accompanying notes to these condensed consolidated financial statements.

7

SCANSOURCE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(1) Business and Summary of Significant Accounting Policies

Business Description

ScanSource, Inc. is a leading global provider of technology products and solutions. ScanSource, Inc. and its subsidiaries (the "Company") provide value-added solutions from technology suppliers and sell to resellers and sales partners in specialty technology markets through its Worldwide Barcode, Networking & Security segment and Worldwide Communications & Services segment.

The Company operates in the United States, Canada, Latin America and Europe. The Company sells products into the United States and Canada from a facility located in Mississippi; into Latin America principally from facilities located in Florida, Mexico, Brazil and Colombia; and into Europe from facilities located in Belgium, France, Germany and the United Kingdom.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared by the Company’s management in accordance with United States generally accepted accounting principles ("US GAAP") for interim financial information and applicable rules and regulations of the Securities Exchange Act of 1934. Accordingly, they do not include all of the information and footnotes required by US GAAP for annual financial statements. The unaudited condensed consolidated financial statements included herein contain all adjustments (consisting of normal recurring and non-recurring adjustments) which are, in the opinion of management, necessary to present fairly the financial position as of March 31, 2017 and June 30, 2016, the results of operations for the quarters and nine months ended March 31, 2017 and 2016, the statements of comprehensive income for the quarters and nine months endedMarch 31, 2017 and 2016, and the statements of cash flows for the nine months endedMarch 31, 2017 and 2016. The results of operations for the quarters and nine months endedMarch 31, 2017 and 2016 are not necessarily indicative of the results to be expected for a full year. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2016.

Summary of Significant Accounting Policies

Except as described below, there have been no material changes to the Company’s significant accounting policies for the nine months endedMarch 31, 2017 from the information included in the notes to the Company’s consolidated financial statements included in the Annual Report on Form 10-K for the fiscal year ended June 30, 2016. For a discussion of the Company’s significant accounting policies, please see the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2016.

Cash and Cash Equivalents

The Company considers all highly-liquid investments with original maturities of three months or less, when purchased, to be cash equivalents. The Company maintains zero-balance disbursement accounts at various financial institutions at which the Company does not maintain significant depository relationships. Due to the terms of the agreements governing these accounts, the Company generally does not have the right to offset outstanding checks written from these accounts against cash on hand, and the respective institutions are not legally obligated to honor the checks until sufficient funds are transferred to fund the checks. As a result, checks released but not yet cleared from these accounts in the amounts of $2.9 million and $78.3 million are included in accounts payable as of March 31, 2017 and June 30, 2016, respectively.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued a comprehensive new revenue recognition standard for contracts with customers that will supersede most current revenue recognition guidance, including industry-specific guidance. The core principle of this standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, the standard provides a five-step analysis of transactions to determine when and how revenue is recognized. Other major provisions include the capitalization and amortization of certain contract costs, ensuring the time value of money is considered in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. This guidance also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. The new standard is

8

effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. The standard permits the use of either the retrospective or cumulative effect transition method. This guidance will be applicable to the Company for the fiscal year beginning July 1, 2018. We are currently in the process of evaluating the impact of this guidance on our consolidated financial results to determine the appropriate transition method for the Company. We have engaged a third-party consultant to assist with developing a multi-phase plan to assess the impact of adoption. We have also begun our initial review and analysis of business processes and current material contracts.

In February 2016, the FASB issued Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842) requiring lessees to reflect most leases on their balance sheets and recognize expenses on their income statements. Under the new guidance, lessees will be required to recognize a lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis, and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The asset will be measured at the lease liability amount, adjusted for lease prepayments, lease incentives received, and the lessee's initial direct costs. For leases with a lease term of 12 months or less, as long as the lease does not include options to purchase the underlying assets, lessees can elect not to recognize a lease liability and right-of-use asset. Under the new guidance, lessor accounting is largely unchanged, and the accounting for sale and leaseback transactions is simplified. The standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. This guidance will be applicable to the Company for the fiscal year beginning July 1, 2019. The guidance must be adopted using a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. The Company is currently evaluating the impact on its consolidated financial statements upon the adoption of this new guidance.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230) intended to reduce diversity in practice of how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The update addresses eight specific cash flow issues, with the treatment of contingent consideration payments made after a business combination being the most directly applicable to the Company. The update requires that cash payments made approximately three months or less after an acquisition's consummation date should be classified as cash outflows for investing activities. Payment made thereafter up to the amount of the original contingent consideration liability should be classified as cash outflows from financing activities. Payments made in excess of the amount of the original contingent consideration liability should be classified as cash outflows from operating activities. The standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The standard will be applicable to the Company for the fiscal year beginning July 1, 2018. Early adoption is permitted, provided all eight amendments are adopted in the same period. The guidance requires adoption using a retrospective transition method. The Company is currently evaluating the impact on its consolidated financial statements upon the adoption of this new guidance.

In January 2017, the FASB issued guidance clarifying the definition of a business within Accounting Standards Codification ("ASC") Topic 850 Business Combinations. The new standard narrows the definition of a business and therefore affects whether an acquisition represents the purchase of a business or an asset. The standard provides for an initial assessment to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, qualifying as an asset, not a business. If the definition of the acquisition is not clear after the initial assessment, the guidance provides framework to determine if the asset(s) acquired include an input and a substantive process that together significantly contribute to the ability to create an output, which constitutes a business. The distinction between a business and an asset is important because asset acquisitions do not result in goodwill, do not require the expensing of transaction costs and do not record contingent consideration at fair value at the acquisition date, as well as other accounting concepts. The standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted as long as the transaction has not been reported in financial statements that have been issued or made available for issuance. The Company adopted the new standard in connection with an asset acquisition completed during the quarter ended March 31, 2017 (See Note 4-Acquisitions).

In January 2017, the FASB issued guidance to simplify the accounting for goodwill impairment. It removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Goodwill impairment will now be calculated as the amount by which a reporting unit’s carrying value exceeds its fair value, not exceeding the carrying amount of goodwill. In addition, income tax effects from any tax deductible goodwill shall also be considered in measuring goodwill impairment loss, if applicable. The guidance is effective for annual and interim periods beginning after December 15, 2019 and should be adopted prospectively. Early adoption is permitted for interim or annual goodwill impairment test performed with a measurement date after January 1, 2017. The Company intends to adopt the guidance prospectively during the fiscal quarter ended June 30, 2017 as our annual goodwill impairment testing measurement date is April 30, 2017 for the current fiscal year. The adoption is not expected to have an impact on the Company's consolidated financial statements.

9

(2) Earnings Per Share

Basic earnings per share are computed by dividing net income by the weighted-average number of common shares outstanding. Diluted earnings per share are computed by dividing net income by the weighted-average number of common and potential common shares outstanding.

	Quarter ended				Nine months ended
	March 31,				March 31,
	2017		2016		2017		2016
	(in thousands, except per share data)
Numerator:
Net Income	$	12,424	$	14,042	$	50,276	$	50,694
Denominator:
Weighted-average shares, basic	25,262		25,863		25,311		26,741
Dilutive effect of share-based payments	138		104		147		167
Weighted-average shares, diluted	25,400		25,967		25,458		26,908
Net income per common share, basic	$	0.49	$	0.54	$	1.99	$	1.90
Net income per common share, diluted	$	0.49	$	0.54	$	1.97	$	1.88

For the quarter and nine months endedMarch 31, 2017, weighted-average shares outstanding excluded from the computation of diluted earnings per share because their effect would be anti-dilutive were 442,001 and 454,006, respectively. For the quarter and nine months endedMarch 31, 2016, there were 868,211 and 835,055, respectively, weighted-average shares outstanding excluded from the computation of diluted earnings per share because their effect would be anti-dilutive.

(3) Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) consists of the following:

	March 31, 2017			June 30, 2016
	(in thousands)
Foreign currency translation adjustment	$	(77,488	)	$	(72,687	)
Accumulated other comprehensive income (loss)	$	(77,488	)	$	(72,687	)

The tax effect of amounts in comprehensive income (loss) reflect a tax expense or benefit as follows:

	Quarter ended March 31,						Nine months ended March 31,
	2017			2016			2017			2016
	(in thousands)
Tax expense (benefit)	$	(271	)	$	(1,264	)	$	(179	)	$	1,723

(4) Acquisitions

KBZ

On September 4, 2015, the Company acquired substantially all the assets of KBZ Communications, Inc. ("KBZ"), a Cisco Authorized Distributor specializing in video conferencing, services, and cloud. KBZ is part of the Company's Worldwide Barcode, Networking and Security operating segment. This acquisition enables the Company to enhance its focus on Cisco’s solutions, combining the strengths of both companies to provide a more robust portfolio of products, solutions and services.

10

Under the asset purchase agreement, the Company acquired the assets of KBZ for a cash payment of $64.6 million. The Company acquired $3.1 million of cash as part of the acquisition, resulting in $61.5 million net cash paid for KBZ.

The purchase price of this acquisition was allocated to the assets acquired and liabilities assumed based on their estimated fair values on the transaction date. Pro forma results of operations have not been presented for this acquisition because the results of this acquisition are not material to our consolidated results. The purchase price allocation is as follows:

	KBZ
	(in thousands)
Receivables, net	$	63,131
Inventory	11,227
Other Current Assets	10,303
Property and equipment, net	677
Goodwill	21,639
Identifiable intangible assets	18,400
Other non-current assets	1,399
	$	126,776
Accounts payable	$	48,271
Accrued expenses and other current liabilities	14,863
Other long-term liabilities	2,167
Consideration transferred, net of cash acquired	61,475
	$	126,776

Intangible assets acquired include trade names, customer relationships, and non-compete agreements.

Intelisys

On August 29, 2016, the Company acquired substantially all the assets of Intelisys, a technology services company with voice, data, cable, wireless, and cloud services. Intelisys is part of the Company's Worldwide Communications and Services operating segment. With this acquisition, the Company broadens its capabilities in the telecom and cloud services market and generates the opportunity for high-growth recurring revenue.

Under the asset purchase agreement, the Company made an initial cash payment of approximately $84.6 million, which consisted of an initial purchase price of $83.6 million and $1.0 million for additional net assets acquired at closing, and agreed to make four additional annual cash installments based on a form of adjusted EBITDA for the periods ending June 30, 2017 through June 30, 2020. The Company acquired $0.8 million of cash as part of the acquisition, resulting in $83.8 million net cash paid for Intelisys initially. A portion of the purchase price was placed into escrow to indemnify the Company for certain pre-acquisition damages. As of March 31, 2017, the balance available in escrow was $8.5 million.

The purchase price of this acquisition was allocated to the assets acquired and liabilities assumed based on their estimated fair values on the transaction date. The goodwill balance is primarily attributed to entering the recurring revenue telecom and cloud services market and expanded market opportunities to grow recurring revenue streams. Goodwill and identifiable intangible assets are expected to be fully deductible for tax purposes.

11

	Intelisys
	(in thousands)
Receivables, net	$	21,655
Other current assets	1,547
Property and equipment, net	5,298
Goodwill	109,005
Identifiable intangible assets	63,110
Other non-current assets	1,839
	$	202,454
Accounts payable	$	21,063
Accrued expenses and other current liabilities	2,587
Contingent consideration	95,000
Consideration transferred, net of cash acquired	83,804
	$	202,454

Following the acquisition date, Intelisys contributed the following results to the Condensed Consolidated Income Statement for the quarter and nine months endedMarch 31, 2017.

	Quarter ended March 31, 2017			Nine months ended March 31, 2017
Net Sales	$	8,893		$	20,244
Amortization of intangible assets	1,586			3,701
Change in fair value of contingent consideration	3,289			6,457
Operating income (loss)	(656		)	(942		)
Net income (loss)	$	(403	)	$	(392	)

The following tables summarize the Company's unaudited consolidated pro forma results of operations as though the acquisition happened on July 1, 2015. The pro forma consolidated financial statements do not necessarily reflect what the combined company's financial condition or results from operations would have been had the acquisition occurred on the dates indicated. They also may not be useful in predicting the future financial condition and results of operations of the combined company. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors.

For the two months ended August 31, 2016, and the quarter and nine months endedMarch 31, 2016, the Company has not provided for a change in fair value of contingent consideration.

	Quarter ended March 31, 2017				Nine months ended March 31, 2017
	(in thousands, except per share data)				(in thousands, except per share data)
	As Reported, Consolidated		Pro forma, Consolidated (1)		As Reported, Consolidated		Pro forma, Consolidated (2)
Net Sales	$	813,538	$	813,538	$	2,650,895	$	2,656,111
Operating income	19,978		19,978		66,128		67,580
Net Income	12,424		12,424		50,276		51,361
Earnings per share:
Basic	$	0.49	$	0.49	$	1.99	$	2.03
Diluted	$	0.49	$	0.49	$	1.97	$	2.02

(1) There were no acquisition costs in the pro forma results presented for the quarter endedMarch 31, 2017.

(2) Pro forma results include actual results from Intelisys for the two months ended August 31, 2016. Adjustments include additional amortization and depreciation expense as if the fair value of identifiable intangible assets, including software, had been recorded on July 1, 2015. On a gross basis, operating income includes additional amortization expense of $1.1 million and additional depreciation expense of $0.2 million for the nine months endedMarch 31, 2017. Net income, net of tax, includes additional amortization expense of $0.7 million and additional depreciation expense of $0.1 million for the nine months endedMarch 31, 2017. Adjustments also include additional income tax expense of $0.8 million and adding back acquisition costs of $0.5 million.

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	Quarter ended March 31, 2016				Nine months ended March 31, 2016
	(in thousands, except per share data)				(in thousands, except per share data)
	As Reported, Consolidated		Pro forma, Consolidated (3)		As Reported, Consolidated		Pro forma, Consolidated (4)
Net Sales	$	798,404	$	805,097	$	2,662,754	$	2,683,588
Operating income	21,647		22,112		77,939		81,483
Net Income	14,042		14,296		50,694		52,768
Earnings per share:
Basic	$	0.54	$	0.55	$	1.90	$	1.97
Diluted	$	0.54	$	0.55	$	1.88	$	1.96

(3) Includes actual results for Intelisys for the quarter endedMarch 31, 2016. On a gross basis, operating income includes additional amortization expense of $1.6 million and additional depreciation expense of $0.3 million for the quarter endedMarch 31, 2016. Net income, net of tax, includes additional amortization expense of $1.0 million and additional depreciation expense of $0.2 million for the quarter endedMarch 31, 2016. Adjustments also include additional income tax expense of $0.8 million.

(4) Includes actual results for Intelisys for the nine months endedMarch 31, 2016. On a gross basis, operating income includes additional amortization expense of $4.8 million and additional depreciation expense of $0.8 million for the nine months endedMarch 31, 2016. Net income, net of tax, includes additional amortization expense of $3.0 million and additional depreciation expense of $0.5 million for the nine months endedMarch 31, 2016. Adjustments also include additional income tax expense of $3.4 million.

(5) Goodwill and Other Identifiable Intangible Assets

The changes in the carrying amount of goodwill for the nine months ended March 31, 2017, by reporting segment, are as follows:

	Barcode, Networking & Security Segment			Communications & Services Segment			Total
	(in thousands)
Balance as of June 30, 2016	$	36,434		$	56,281		$	92,715
Additions	—			109,005			109,005
Foreign currency translation adjustment	(234		)	(420		)	(654		)
Balance as of March 31, 2017	$	36,200		$	164,866		$	201,066

The following table shows changes in the amount recognized for net identifiable intangible assets for the nine months ended March 31, 2017.

	Net Identifiable Intangible Assets
	(in thousands)
Balance as of June 30, 2016	$	51,127
Additions	66,693
Amortization expense	(11,537		)
Foreign currency translation adjustment	(705		)
Balance as of March 31, 2017	$	105,578

Intangible asset balances include trade names, customer relationships, customer contracts, non-compete agreements, and distributor agreements. On March 22, 2017, the Company completed an asset acquisition through its subsidiary, Intelisys, of supplier partner program assets to enhance our high-growth recurring revenue model. The acquired assets have been recorded as intangible assets in the accompanying Condensed Consolidated Balance Sheets and will be amortized over a ten-year period.

(6) Short-Term Borrowings and Long-Term Debt

Revolving Credit Facility

13

The Company has a $300 million multi-currency senior secured revolving credit facility with JPMorgan Chase Bank N.A., as administrative agent, and a syndicate of banks (the “Amended Credit Agreement”) that was scheduled to mature on November 6, 2018. On April 3, 2017, the Company entered into an amendment of this credit facility that extended its maturity to April 3, 2022. The Amended Credit Agreement allows for the issuance of up to $50 million for letters of credit and has a $200 million accordion feature that allows the Company to increase the availability to $500 million, subject to obtaining additional credit commitments from the lenders participating in the increase. The Company incurred debt issuance costs of $1 million in connection with the Amended Credit Agreement, which were capitalized to other assets on the Condensed Consolidated Balance Sheets and added to the unamortized debt issuance costs from the previous credit facility.

At the Company's option, loans denominated in U.S. dollars under the Amended Credit Agreement, other than swingline loans, bear interest at a rate equal to a spread over the London Interbank Offered Rate ("LIBOR") or alternate base rate depending upon the Company's ratio of total debt (excluding accounts payable and accrued liabilities), measured as of the end of the most recent quarter, to adjusted earnings before interest expense, income taxes, depreciation and amortization ("EBITDA") for the most recently completed four quarters (the "Leverage Ratio"). This spread ranges from 1.00% to 2.125% for LIBOR-based loans and 0.00% to 1.125% for alternate base rate loans. Additionally, the Company is assessed commitment fees ranging from 0.175% to 0.350%, depending upon the Leverage Ratio, on non-utilized borrowing availability, excluding swingline loans. Borrowings are guaranteed by substantially all of the domestic assets of the Company and a pledge of up to 65% of capital stock or other equity interest in certain foreign subsidiaries determined to be either material or a subsidiary borrower as defined in the Amended Credit Agreement.

At March 31, 2017, the spread in effect was 1.25% for LIBOR-based loans and 0.25% for alternate base rate loans. The commitment fee rate in effect as of March 31, 2017 was 0.20%. The Company was in compliance with all covenants under the credit facility as of March 31, 2017. There was $108.5 million and $71.4 million outstanding on the revolving credit facility at March 31, 2017 and June 30, 2016, respectively.

The average daily outstanding balance during the nine month periods ended March 31, 2017 and 2016 was $131.2 million and $93.5 million, respectively. There was $191.5 million and $228.2 million available for additional borrowings as of March 31, 2017 and June 30, 2016, respectively. There were no letters of credit issued under the multi-currency revolving credit facility as of March 31, 2017 and €0.4 million as of June 30, 2016.

Long-Term Debt

On August 1, 2007, the Company entered into an agreement with the State of Mississippi to provide financing for the acquisition and installation of certain equipment to be utilized at the Company’s Southaven, Mississippi warehouse, through the issuance of an industrial development revenue bond. The bond matures on September 1, 2032 and accrues interest at the 30-day LIBOR rate plus a spread of 0.85%. The terms of the bond allow for payment of interest only for the first 10 years of the agreement, and then, starting on September 1, 2018 through 2032, principal and interest payments are due until the maturity date or the redemption of the bond. The agreement also provides the bondholder with a put option, exercisable only within 180 days of each fifth anniversary of the agreement, requiring the Company to pay back the bonds at 100% of the principal amount outstanding. As of March 31, 2017, the Company was in compliance with all covenants under this bond. The balance on the bond was $5.4 million as of March 31, 2017 and June 30, 2016 and is included in long-term debt. The interest rate at March 31, 2017 and June 30, 2016 was 1.66% and 1.32%, respectively.

Debt Issuance Costs

As of March 31, 2017, net debt issuance costs associated with the credit facility and bond totaled $1.4 million and are being amortized on a straight-line basis through the maturity date of each respective debt instrument.

14

(7) Derivatives and Hedging Activities

In an effort to manage the exposure to foreign currency exchange rates and interest rates, the Company periodically enters into various derivative instruments. The Company’s accounting policies for these instruments are based on whether the instruments are designated as hedge or non-hedge instruments in accordance with US GAAP. The Company records all derivatives on the balance sheet at fair value. Derivatives that are not designated as hedging instruments and the ineffective portions of cash flow hedges designated as hedging instruments are adjusted to fair value through earnings in other income and expense.

Foreign Currency Derivatives – The Company conducts a portion of its business internationally in a variety of foreign currencies. The exposure to market risk for changes in foreign currency exchange rates arises from foreign currency-denominated assets and liabilities, and transactions arising from non-functional currency financing or trading activities. The Company’s objective is to preserve the economic value of non-functional currency-denominated cash flows. The Company attempts to hedge transaction exposures with natural offsets to the fullest extent possible and, once these opportunities have been exhausted, through forward contracts or other hedging instruments with third parties. These contracts hedge the exchange of various currencies, including the U.S. dollar, Brazilian real, euro, British pound, Canadian dollar, Mexican peso, Chilean peso, Colombian peso and Peruvian nuevo sol. While the Company utilizes foreign exchange contracts to hedge foreign currency exposure, the Company's foreign exchange policy prohibits the use of derivative financial instruments for speculative purposes.

The Company had contracts outstanding for purposes of managing cash flows with notional amounts of $64.5 million and $46.2 million for the exchange of foreign currencies as of March 31, 2017 and June 30, 2016, respectively. To date, the Company has chosen not to designate these derivatives as hedging instruments, and accordingly, these instruments are adjusted to fair value through earnings in other income and expense. Summarized financial information related to these derivative contracts and changes in the underlying value of the foreign currency exposures are as follows:

	Quarter ended					Nine months ended
	March 31,					March 31,
	2017			2016		2017			2016
	(in thousands)
Net foreign exchange derivative contract (gains) losses	$	735		$	286	$	(225	)	$	(2,014	)
Net foreign currency transactional and re-measurement (gains) losses	(24		)	67		1,856			3,622
Net foreign currency (gains) losses	$	711		$	353	$	1,631		$	1,608

Net foreign exchange gains and losses consist of foreign currency transactional and functional currency re-measurements, offset by net foreign currency exchange contract gains and losses and are included in other income and expense. Foreign exchange gains and losses are generated as the result of fluctuations in the value of the U.S. dollar versus the Brazilian real, the U.S. dollar versus the euro, the British pound versus the euro, and other currencies versus the U.S. dollar.

The Company used the following derivative instruments, reflected in its Condensed Consolidated Balance Sheets, for the risk management purposes detailed above:

	As of March 31, 2017
	Fair Value  of Derivatives Designated as Hedge Instruments		Fair Value  of Derivatives Not Designated as Hedge Instruments
	(in thousands)
Derivative assets:(a)
Forward foreign currency exchange contracts	$	—	$	614
Derivative liabilities:(b)
Forward foreign currency exchange contracts	$	—	$	274

(a) All derivative assets are recorded as prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets.

(b) All derivative liabilities are recorded as accrued expenses and other current liabilities in the Condensed Consolidated Balance Sheets.

15

(8) Fair Value of Financial Instruments

Accounting guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Under this guidance, the Company classifies certain assets and liabilities based on the fair value hierarchy, which aggregates fair value measured assets and liabilities based upon the following levels of inputs:

• Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

• Level 2 – Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and

• Level 3 – Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported by little or no market activity).

The assets and liabilities maintained by the Company that are required to be measured or disclosed at fair value on a recurring basis include the Company’s various debt instruments, deferred compensation plan investments, outstanding foreign exchange forward contracts and contingent consideration owed to the previous owners of CDC, Imago, Network1, and Intelisys. The carrying value of debt is considered to approximate fair value, as the Company’s debt instruments are indexed to a variable rate using the market approach (Level 2 criteria).

The following table summarizes the valuation of the Company’s remaining assets and liabilities measured at fair value on a recurring basis as of March 31, 2017:

	Total		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
	(in thousands)
Assets:
Deferred compensation plan investments, current and non-current portion	$	20,763	$	20,763	$	—	$	—
Forward foreign currency exchange contracts	614		—		614		—
Total assets at fair value	$	21,377	$	20,763	$	614	$	—
Liabilities:
Deferred compensation plan investments, current and non-current portion	$	20,398	$	20,398	$	—	$	—
Forward foreign currency exchange contracts	274		—		274		—
Liability for contingent consideration, current and non-current portion	113,223		—		—		113,223
Total liabilities at fair value	$	133,895	$	20,398	$	274	$	113,223

16

The following table summarizes the valuation of the Company’s remaining assets and liabilities measured at fair value on a recurring basis as of June 30, 2016:

	Total		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
	(in thousands)
Assets:
Deferred compensation plan investments, current and non-current portion	$	17,893	$	17,893	$	—	$	—
Forward foreign currency exchange contracts	33		—		33		—
Total assets at fair value	$	17,926	$	17,893	$	33	$	—
Liabilities:
Deferred compensation plan investments, current and non-current portion	$	17,893	$	17,893	$	—	$	—
Forward foreign currency exchange contracts	551		—		551		—
Liability for contingent consideration, current and non-current portion	24,652		—		—		24,652
Total liabilities at fair value	$	43,096	$	17,893	$	551	$	24,652

The investments in the deferred compensation plan are held in a rabbi trust and include mutual funds and cash equivalents for payment of non-qualified benefits for certain retired, terminated and active employees. These investments are recorded to prepaid expenses and other current assets or other non-current assets depending on their corresponding, anticipated distribution dates to recipients, which are reported in accrued expenses and other current liabilities or other long-term non-current liabilities, respectively.

Derivative instruments, such as foreign currency forward contracts, are measured using the market approach on a recurring basis considering foreign currency spot rates and forward rates quoted by banks or foreign currency dealers and interest rates quoted by banks (Level 2). See Note 7 - Derivatives and Hedging Activities. Foreign currency contracts and cross currency swap agreements are classified in the Condensed Consolidated Balance Sheets as prepaid expenses and other current assets or accrued expenses and other current liabilities, depending on the respective instruments' favorable or unfavorable positions.

The Company recorded contingent consideration liabilities at the acquisition date of CDC, Imago, Network1 and Intelisys representing the amounts payable to former shareholders, as outlined under the terms of the purchase agreements, based upon the achievement of a projected earnings measure, net of specific pro forma adjustments. The final payment to CDC was paid during fiscal year 2016 and the final payment to Imago was paid during the quarter ended December 31, 2016. The current and non-current portions of these obligations are reported separately on the Condensed Consolidated Balance Sheets. The fair value of the contingent considerations (Level 3) are determined using a form of a probability weighted discounted cash flow model. Subsequent changes in the fair value of the contingent consideration liabilities are recorded to the change in fair value of contingent consideration line item in the Condensed Consolidated Income Statements. Fluctuations due to foreign currency translation are captured in other comprehensive income through the changes in foreign currency translation adjustments line item as seen in Note 3 - Accumulated Other Comprehensive Income (Loss).

CDC is part of the Company's Worldwide Barcode, Networking and Security Segment, and Imago, Network1 and Intelisys are part of the Company's Worldwide Communications and Services segment.

17

The table below provides a summary of the changes in fair value of the Company’s contingent considerations (Level 3) for the Imago, Network1 and Intelisys earnouts for the quarter and nine months endedMarch 31, 2017:

	Contingent consideration for the quarter ended		Contingent consideration for the nine months ended
	March 31, 2017		March 31, 2017
	Communications & Services Segment		Communications & Services Segment
	(in thousands)
Fair value at beginning of period	$	110,880	$	24,652
Issuance of contingent consideration	—		95,000
Payments	—		(10,241		)
Change in fair value of contingent consideration	1,960		3,921
Foreign currency translation adjustment	383		(109		)
Fair value at end of period	$	113,223	$	113,223

The table below provides a summary of the changes in fair value of the Company’s contingent considerations (Level 3) for the CDC, Imago, and Network1 earnouts for the quarter andnine months endedMarch 31, 2016:

	Contingent consideration for the quarter ended						Contingent consideration for the nine months ended
	March 31, 2016						March 31, 2016
	Barcode, Networking & Security Segment		Communications & Services Segment		Total		Barcode, Networking & Security Segment			Communications & Services Segment			Total
	(in thousands)
Fair value at beginning of period	$	1,156	$	22,844	$	24,000	$	5,109		$	28,851		$	33,960
Payments	—		—		—		(3,133		)	(4,153		)	(7,286		)
Change in fair value of contingent consideration	—		1,139		1,139		126			4,394			4,520
Foreign currency translation adjustment	113		1,889		2,002		(833		)	(3,220		)	(4,053		)
Fair value at end of period	$	1,269	$	25,872	$	27,141	$	1,269		$	25,872		$	27,141

The fair values of amounts owed are recorded in current portion of contingent consideration and long-term portion of contingent consideration in the Company’s Condensed Consolidated Balance Sheets. The U.S. dollar amounts of actual disbursements made in connection with future earnout payments are subject to change as the liability is denominated in currencies other than the U.S. dollar and subject to foreign exchange fluctuation risk. The Company will revalue the contingent consideration liabilities at each reporting date through the last payment, with changes in the fair value of the contingent consideration reflected in the change in fair value of contingent consideration line item on the Company’s Condensed Consolidated Income Statements that is included in the calculation of operating income. The fair value of the contingent consideration liabilities associated with future earnout payments is based on several factors, including:

• estimated future results, net of pro forma adjustments set forth in the purchase agreements;

• the probability of achieving these results; and

• a discount rate reflective of the Company’s creditworthiness and market risk premium associated with the United States, Brazilian and European markets.

A change in any of these unobservable inputs can significantly change the fair value of the contingent consideration. Valuation techniques and significant observable inputs used in recurring Level 3 fair value measurements for our contingent consideration liabilities as of March 31, 2017 and June 30, 2016 were as follows.

18

Reporting Period	Valuation Technique	Significant Unobservable Inputs	Weighted Average Rates
March 31, 2017	Discounted cash flow	Weighted average cost of capital	15.2	%
		Adjusted EBITDA growth rate	44.3	%
June 30, 2016	Discounted cash flow	Weighted average cost of capital	17.7	%
		Adjusted EBITDA growth rate	44.0	%

The final payment of the contingent consideration related to Imago was paid during the quarter ended December 31, 2016. The change in fair value of the contingent consideration recognized in the Condensed Consolidated Income Statements contributed a gain of $1.1 million for the nine months endedMarch 31, 2017. The change in fair value is primarily driven by actual results that were less than expected, including special adjustments as determined by the stock purchase agreement. In addition, volatility in the foreign exchange between the British pound and the U.S. dollar has driven changes in the translation of this British pound denominated liability.

The discounted fair value of the liability for the contingent consideration related to Network1 recognized at March 31, 2017 was $11.8 million, of which $5.5 million is classified as current. For the quarter and nine months endedMarch 31, 2017 the change in fair value of the contingent consideration recognized in the Condensed Consolidated Income Statements contributed a gain of $1.3 million and $1.5 million, primarily driven by less than expected results, partially offset by the recurring amortization of the unrecognized fair value discount. In addition, volatility in the foreign exchange between the Brazilian real and the U.S. dollar has driven changes in the translation of this Brazilian real denominated liability. Although there is no contractual limit, total future undiscounted contingent consideration payments are anticipated to range up to $14.0 million, based on the Company’s best estimate of the earnout calculated on a multiple of adjusted earnings, before interest expense, income taxes, depreciation and amortization, plus the effects of foreign exchange.

The discounted fair value of the liability for the contingent consideration related to Intelisys recognized at March 31, 2017 was $101.5 million, of which $25.8 million is classified as current. The change in fair value of the contingent consideration recognized in the Condensed Consolidated Income Statement contributed a loss of $3.3 million and $6.5 million for the quarter and nine months endedMarch 31, 2017, respectively. The change for the quarter and nine month period is driven by the recurring amortization of the unrecognized fair value discount. Although there is no contractual limit, total future undiscounted contingent consideration payments are anticipated to range up to $132.8 million, based on the Company’s best estimate of the earnout calculated on a multiple of earnings, before interest expense, income taxes, depreciation and amortization.

19

(9) Segment Information

The Company is a leading global provider of technology products and solutions to resellers and sales partners in specialty technology markets. The Company has two reportable segments, based on product, customer and service type.

During the quarter, we elected to transition a portion of our Latin American business from the Barcode & Security segment to the Communications & Services segment. We have reclassified prior period results for each business segment to provide comparable information.

Worldwide Barcode, Networking & Security Segment

The Barcode, Networking & Security segment focuses on automatic identification and data capture ("AIDC"), point-of-sale ("POS"), networking, electronic physical security, 3D printing technologies and other specialty technologies. We have business units within this segment in North America, Latin America and Europe. We see adjacencies among these technologies in helping our resellers develop solutions, such as with networking products. AIDC and POS products interface with computer systems used to automate the collection, processing and communication of information for commercial and industrial applications, including retail sales, distribution, shipping, inventory control, materials handling, warehouse management and healthcare applications. Electronic physical security products include identification, access control, video surveillance, intrusion-related and wireless and networking infrastructure products. 3D printing solutions replace and complement traditional methods and reduce the time and cost of designing new products by printing real parts directly from digital input.

Worldwide Communications & Services Segment

The Communications & Services segment focuses on communications technologies and services. We have business units within this segment that offer voice, video conferencing, wireless, data networking, cable, collaboration, converged communications, cloud and technology services in North America, Latin America and Europe. As these solutions come together on IP networks, new opportunities are created for value-added resellers to move into adjacent solutions for all vertical markets, such as education, healthcare, and government. Our teams deliver value-added support programs and services, including education and training, network assessments, custom configuration, implementation and marketing to help resellers develop a new technology practice, or to extend their capability and reach.

20

Selected financial information for each business segment is presented below:

	Quarter ended						Nine months ended
	March 31,						March 31,
	2017			2016			2017			2016
	(in thousands)
Sales:
Worldwide Barcode, Networking & Security	$	548,971		$	528,009		$	1,770,015		$	1,780,324
Worldwide Communications & Services	264,567			270,395			880,880			882,430
	$	813,538		$	798,404		$	2,650,895		$	2,662,754
Depreciation and amortization:
Worldwide Barcode, Networking & Security	$	1,828		$	1,453		$	5,183		$	3,996
Worldwide Communications & Services	4,182			1,969			11,002			6,274
Corporate	870			859			2,507			2,300
	$	6,880		$	4,281		$	18,692		$	12,570
Operating income:
Worldwide Barcode, Networking & Security	$	11,175		$	11,160		$	36,729		$	43,420
Worldwide Communications & Services	8,803			10,516			30,232			34,830
Corporate	—			(29		)	(833		)	(311		)
	$	19,978		$	21,647		$	66,128		$	77,939
Capital expenditures:
Worldwide Barcode, Networking & Security	$	1,144		$	1,247		$	2,522		$	3,024
Worldwide Communications & Services	943			571			2,033			2,205
Corporate	1,098			3,836			1,890			3,891
	$	3,185		$	5,654		$	6,445		$	9,120
Sales by Geography Category:
United States	$	619,590		$	599,375		$	2,016,561		$	1,996,270
International(1)	200,382			206,748			660,124			693,526
Less intercompany sales	(6,434		)	(7,719		)	(25,790		)	(27,042		)
	$	813,538		$	798,404		$	2,650,895		$	2,662,754
(1) For the quarter and nine months ended March 31, 2017, there were no sales in excess of 10% of consolidated net sales to any single international country.

	March 31, 2017		June 30, 2016
	(in thousands)
Assets:
Worldwide Barcode, Networking & Security	$	807,219	$	836,674
Worldwide Communications & Services	759,010		595,781
Corporate	65,587		58,730
	$	1,631,816	$	1,491,185
Property and equipment, net by Geography Category:
United States	$	51,614	$	46,935
International	4,795		5,453
	$	56,409	$	52,388

21

(10) Commitments and Contingencies

The Company and its subsidiaries are, from time to time, parties to lawsuits arising out of operations. Although there can be no assurance, based upon information known to the Company, the Company believes that any liability resulting from an adverse determination of such lawsuits would not have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

During the quarter ended December 31, 2016, the Company recognized $12.8 million in proceeds from a legal settlement, net of attorney fees.

The Company is in the process of completing several capital projects for fiscal year 2017 that will result in significant cash commitments. Total capital expenditures for fiscal year 2017 are expected to range from $7 million to $10 million, primarily for IT investments.

During the Company's due diligence for the CDC and Network1 acquisitions, several pre-acquisition contingencies were identified regarding various Brazilian federal and state tax exposures. The Company is able to record indemnification receivables that are reported gross of the pre-acquisition contingency liabilities as sufficient funds to pay those obligations were escrowed or the Company is entitled to offset those obligations against future earnout payments under the share purchase agreements. However, indemnity claims can be made up to the entire purchase price, which includes the initial payment and all future earnout payments. The table below summarizes the balances and line item presentation of these pre-acquisition contingencies and corresponding indemnification receivables in the Company's Condensed Consolidated Balance Sheets as of March 31, 2017:

	March 31, 2017
	CDC		Network1
	(in thousands)
Assets
Prepaid expenses and other current assets	$	2,309	$	1,351
Other non-current assets	$	—	$	8,598
Liabilities
Accrued expenses and other current liabilities	$	2,309	$	1,351
Other long-term liabilities	$	—	$	8,598

The table below summarizes the balances and line item presentation of these pre-acquisition contingencies and corresponding indemnification receivables in the Company's Condensed Consolidated Balance Sheets as of June 30, 2016:

	June 30, 2016
	CDC		Network1
	(in thousands)
Assets
Prepaid expenses and other current assets	$	2,346	$	595
Other non-current assets	$	—	$	9,837
Liabilities
Accrued expenses and other current liabilities	$	2,346	$	595
Other long-term liabilities	$	—	$	9,837

Changes in these contingent liabilities and receivables from June 30, 2016 are primarily driven by foreign currency translation and the lapse of the statute of limitations on a portion of the Network1 contingencies.

(11) Income Taxes

The Company had approximately $2.2 million and $2.1 million of total gross unrecognized tax benefits as of March 31, 2017 and June 30, 2016, respectively. Of this total at March 31, 2017, approximately $1.4 million represents the amount of unrecognized tax benefits that are permanent in nature and, if recognized, would affect the annual effective tax rate. The Company does not believe that the total amount of unrecognized tax benefits will significantly increase or decrease within twelve months of the reporting date.

22

The Company conducts business globally and, as a result, one or more of its subsidiaries files income tax returns in the U.S. federal, various state, local and foreign jurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities in countries and states in which it operates. With certain exceptions, the Company is no longer subject to state and local, or non-U.S. income tax examinations by tax authorities for the years before June 30, 2012.

The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense. As of March 31, 2017, the Company had approximately $1.1 million accrued for interest and penalties.

Income taxes for the interim period presented have been included in the accompanying condensed consolidated financial statements on the basis of an estimated annual effective tax rate. In addition to the amount of tax resulting from applying the estimated annual effective tax rate to pre-tax income, the Company includes certain items treated as discrete events to arrive at an estimated overall tax provision. There were no material discrete items during the period.

The Company’s effective tax rate of 35.6% for the nine months endedMarch 31, 2017 differs from the federal statutory rate of 35% primarily as a result of income derived from tax jurisdictions with varying income tax rates, nondeductible expenses, state income taxes and adjustments to tax credits.

The Company has provided for U.S. income taxes for the current earnings of its Canadian subsidiary. Earnings from all other geographies will continue to be considered retained indefinitely for reinvestment. 

Financial results in Belgium for the quarter and nine months endedMarch 31, 2017 produced a pre-tax loss, compared to pre-tax income generated for the quarter and nine months endedMarch 31, 2016. Over the most recent three-year period, our Belgium business has produced overall positive cumulative earnings. In the judgment of management, the conditions that gave rise to the losses recognized for the current quarter and most recent fiscal year are temporary, and it is more likely than not that the deferred tax asset will be realized.

23

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

ScanSource, Inc. is a leading global provider of technology products and solutions. ScanSource, Inc. and its subsidiaries (the "Company") provide value-added solutions from approximately 500 technology suppliers and sell to approximately 33,000 resellers and sales partners in the following specialty technology markets: POS and Barcode, networking and security, communications, telecom and cloud services, and emerging technologies.

We operate our business under a management structure that enhances our worldwide technology market focus and growth strategy. As a part of this structure, ScanSource has two technology segments, each with its own president or co-presidents: Worldwide Barcode, Networking & Security and Worldwide Communications & Services.

The Company operates in the United States, Canada, Latin America and Europe. The Company sells products into the United States and Canada from its facilities located in Mississippi; into Latin America principally from facilities located in Florida, Mexico, Brazil and Colombia; and into Europe principally from facilities in Belgium, France, Germany and the United Kingdom.

The Company's key vendors include Aruba/HPE, Axis, AudioCodes, Avaya, Barco, Bematech, Brocade/Ruckus Wireless, CenturyLink, Cisco, Comcast Business, Datalogic, Dell, Dialogic, Elo, Epson, Honeywell, HID, Ingenico, Jabra, Level 3, March Networks, Mitel, NCR, Oracle, Panasonic, Plantronics, Polycom, Samsung, ShoreTel, Sony, Spectralink, Toshiba Global Commerce Solutions, Ubiquiti, Unify, Verifone, Verizon, Windstream, XO and Zebra Technologies.

Recent Developments

On August 29, 2016, the Company acquired substantially all the assets of Intelisys Communications, Inc., a technology services company with voice, data, cable, wireless and cloud services. Intelisys is part of the Company's Worldwide Communications & Services operating segment. With this acquisition, the Company broadened its capabilities in the telecom and cloud services market and generated the opportunity for high-growth recurring revenue.

Our Future

Our objective is to grow profitable sales in the technologies we offer. On an ongoing basis we evaluate strategic acquisitions to enhance our technological and geographic portfolios and to expand our capabilities in higher margin, high growth areas. In doing so, we face numerous challenges that require attention and resources. Certain business units and geographies continue to experience increased competition. This competition may come in the form of pricing, credit terms, service levels and product availability. As this competition could affect both our market share and pricing of our products, we may change our strategy in order to more effectively compete in the marketplace.

24

Results of Operations

During the quarter, we elected to transition a portion of our Latin American business from the Barcode & Security segment to the Communications & Services segment. We have reclassified prior period results for each business segment to provide comparable information.

Net Sales

The following tables summarize the Company’s net sales results by technology segment and by geographic location for the quarters and nine months endedMarch 31, 2017 and 2016.

	Quarter ended March 31,									% Change, Constant Currency, Excluding Acquisitions (a)
Net Sales by Segment:	2017		2016		$ Change			% Change
	(in thousands)
Worldwide Barcode, Networking & Security	$	548,971	$	528,009	$	20,962		4.0	%	3.4	%
Worldwide Communications & Services	264,567		270,395		(5,828		)	(2.2	)%	(6.8	)%
Total net sales	$	813,538	$	798,404	$	15,134		1.9	%	(0.1	)%
	Nine months ended March 31,									% Change, Constant Currency, Excluding Acquisitions (a)
	2017		2016		$ Change			% Change
	(in thousands)
Worldwide Barcode, Networking & Security	$	1,770,015	$	1,780,324	$	(10,309	)	(0.6	)%	(4.8	)%
Worldwide Communications & Services	880,880		882,430		(1,550		)	(0.2	)%	(3.3	)%
Total net sales	$	2,650,895	$	2,662,754	$	(11,859	)	(0.4	)%	(4.3	)%

^(a)A reconciliation of non-GAAP net sales in constant currency, excluding acquisitions is presented at the end of Results of Operations, under Non-GAAP Financial Information.

Worldwide Barcode, Networking & Security

The Barcode, Networking & Security segment consists of sales to technology resellers and sales partners in North America, Europe and Latin America. For the quarter ended March 31, 2017, net sales for the Barcode, Networking & Security segment increased $21.0 million, or 4.0% compared to the prior year quarter. Excluding the foreign exchange positive impact, adjusted net sales increased $17.8 million, or 3.4%. The increase in net sales and adjusted net sales for the quarter is primarily due to sales growth in North America.

For the nine months ended March 31, 2017, net sales decreased $10.3 million, or 0.6% compared to the prior year primarily due to lower sales volume in all geographies, with the exception of higher sales in our KBZ acquisition. Excluding the foreign exchange positive impact, as well as sales from the KBZ acquisition for the three months ended September 30, 2016 and 2015, adjusted net sales for the Barcode, Networking & Security segment decreased $84.5 million, or 4.8%. The decrease in adjusted net sales for the nine month period is largely due to lower sales volume in our North American business units, partially attributable to a large transaction within our KBZ business in the prior year December quarter that did not recur, nor did we expect it to recur in the current year.

Worldwide Communications & Services

The Communications & Services segment consists of sales to technology resellers and sales partners in North America, Europe and Latin America. For the quarter ended March 31, 2017, net sales for the Communications & Services segment decreased $5.8 million, or 2.2% compared to the prior year quarter primarily due to lower sales volume in all geographies, with the exception of sales from Intelisys. Excluding the foreign exchange impact and sales from the Intelisys acquisition for the quarter, adjusted net sales decreased $18.4 million, or 6.8% primarily due to lower sales volume in North America and Latin America.

For the nine months ended March 31, 2017, net sales decreased $1.6 million, or 0.2% compared to the prior year primarily due to overall lower sales volume in Europe and Brazil, partially offset by results from Intelisys included in the current year. Excluding the foreign exchange positive impact and sales from the Intelisys acquisition for the nine month period, adjusted net sales decreased $29.0 million, or 3.3% largely due to lower sales volume in Europe and Latin America.

25

	Quarter ended March 31,
Net Sales by Geography:	2017		2016		$ Change			% Change
	(in thousands)
United States	$	613,157	$	591,663	$	21,494		3.6	%
International	$	200,381	$	206,741	(6,360		)	(3.1	)%
Total net sales	$	813,538	$	798,404	$	15,134		1.9	%
	Nine months ended March 31,
	2017		2016		$ Change			% Change
	(in thousands)
United States	$	1,990,784	$	1,969,236	$	21,548		1.1	%
International	660,111		693,518		(33,407		)	(4.8	)%
Total net sales	$	2,650,895	$	2,662,754	$	(11,859	)	(0.4	)%

Gross Profit

The following table summarizes the Company’s gross profit for the quarters and nine months endedMarch 31, 2017 and 2016:

	Quarter ended March 31,									% of Net Sales March 31,
	2017		2016		$ Change			% Change		2017		2016
	(in thousands)
Worldwide Barcode, Networking & Security	$	45,850	$	45,740	$	110		0.2	%	8.4	%	8.7	%
Worldwide Communications & Services	46,821		38,736		8,085			20.9	%	17.7	%	14.3	%
Gross profit	$	92,671	$	84,476	$	8,195		9.7	%	11.4	%	10.6	%
	Nine months ended March 31,									% of Net Sales March 31,
	2017		2016		$ Change			% Change		2017		2016
	(in thousands)
Worldwide Barcode, Networking & Security	$	144,057	$	149,999	$	(5,942	)	(4.0	)%	8.1	%	8.4	%
Worldwide Communications & Services	138,683		122,662		16,021			13.1	%	15.7	%	13.9	%
Gross profit	$	282,740	$	272,661	$	10,079		3.7	%	10.7	%	10.2	%

Worldwide Barcode, Networking & Security

Gross profit dollars increased slightly, while gross profit margins decreased for the Barcode, Networking & Security segment for thequarter ended March 31, 2017 compared to the prior year quarter. Gross profit dollars and gross profit margin decreased for the nine month period compared to the prior year. The decrease in gross profit margin for the quarter and nine months endedMarch 31, 2017 is primarily due to vendor program changes from the prior year.

Worldwide Communications & Services

In the Communications & Services segment, gross profit dollars and gross profit margin increased for the quarterand nine months endedMarch 31, 2017 primarily due to the results contributed by Intelisys. Excluding the impact of the gross profit from the Intelisys acquisition, adjusted gross profit dollars decreased $0.8 million and $4.2 million, respectively, related to the lower sales volumes. Adjusted gross profit margin, excluding Intelisys, increased to 14.8% for the quarter primarily due to timing of vendor program recognition. Adjusted gross profit margin, excluding Intelisys, decreased slightly to 13.8% for the nine month period compared to the prior year primarily due to an overall less favorable sales mix.

Operating Expenses

The following table summarizes our operating expenses for the quarters and nine months endedMarch 31, 2017 and 2016:

26

	Quarter ended March 31,									% of Net Sales March 31,
	2017		2016		$ Change			% Change		2017		2016
	(in thousands)
Selling, general and administrative expenses	$	70,733	$	61,690	$	9,043		14.7	%	8.7	%	7.7	%
Change in fair value of contingent consideration	1,960		1,139		821			72.1	%	0.2	%	0.1	%
Operating expenses	$	72,693	$	62,829	$	9,864		15.7	%	8.9	%	7.9	%
	Nine months ended March 31,									% of Net Sales March 31,
	2017		2016		$ Change			% Change		2017		2016
	(in thousands)
Selling, general and administrative expenses	$	212,691	$	190,202	$	22,489		11.8	%	8.0	%	7.1	%
Change in fair value of contingent consideration	3,921		4,520		(599		)	(13.3	)%	0.1	%	0.2	%
Operating expenses	$	216,612	$	194,722	$	21,890		11.2	%	8.2	%	7.3	%

Selling, general and administrative expenses ("SG&A") increased $9.0 million and $22.5 million, respectively, for the quarter and nine months endedMarch 31, 2017 as compared to the prior year. The increase in SG&A for the quarter and nine month period is primarily due to increased employee-related expenses and amortization expense, both largely related to the Intelisys acquisition, and increases in bad debt expense.

We present changes in fair value of the contingent consideration owed to the former shareholders of Intelisys, Network1, and Imago as a separate line item in operating expenses. The final earnout payment was paid to the former shareholders of Imago during the quarter ended December 31, 2016. We recorded fair value adjustment losses of $2.0 million and $3.9 million for the quarter and nine month period, respectively, which was primarily driven by the recurring amortization of the unrecognized fair value discount, partially offset by lower than expected results for Network1.

Operating Income

The following table summarizes our operating income for the quarters and nine months endedMarch 31, 2017 and 2016:

	Quarter ended March 31,											% of Net Sales March 31,
	2017			2016			$ Change			% Change		2017		2016
	(in thousands)
Worldwide Barcode, Networking & Security	$	11,175		$	11,160		$	15		0.1	%	2.0	%	2.1	%
Worldwide Communications & Services	8,803			10,516			(1,713		)	(16.3	)%	3.3	%	3.9	%
Corporate	—			(29		)	29			nm*		nm*		nm*
Operating income	$	19,978		$	21,647		$	(1,669	)	(7.7	)%	2.5	%	2.7	%
	Nine months ended March 31,											% of Net Sales March 31,
	2017			2016			$ Change			% Change		2017		2016
	(in thousands)
Worldwide Barcode, Networking & Security	$	36,729		$	43,420		$	(6,691	)	(15.4	)%	2.1	%	2.4	%
Worldwide Communications & Services	30,232			34,830			(4,598		)	(13.2	)%	3.4	%	3.9	%
Corporate	(833		)	(311		)	(522		)	nm*		nm*		nm*
Operating income	$	66,128		$	77,939		$	(11,811	)	(15.2	)%	2.5	%	2.9	%

*nm - percentages are not meaningful

27

Worldwide Barcode, Networking & Security

For the Barcode, Networking & Security segment, operating income and operating margin of 2.0% for the current quarter versus 2.1% for the prior year quarter remained fairly consistent for the quarter ended March 31, 2017. Operating income and operating margin decreased for the nine months endedMarch 31, 2017 largely due to the effect of decreases in gross profit dollars and gross profit margin, coupled with increased employee related costs.

Worldwide Communications & Services

For the Communications & Services segment, operating income and operating margin decreased for the quarter and nine months endedMarch 31, 2017 compared to the prior year. For the quarter, the decrease in operating income is largely due to the expense recorded from the change in fair value of contingent consideration for Intelisys and increased bad debt expense. For the nine month period, the decrease in operating income is primarily due to an increase in bad debt expense.

Corporate

Corporate incurred no expense and $0.8 million of expense relating to acquisition costs during the quarter and nine months endedMarch 31, 2017, respectively, compared to less than $0.1 million and $0.3 million of expense relating to acquisition costs for the quarter and nine months endedMarch 31, 2016, respectively.

Total Other (Income) Expense

The following table summarizes our total other (income) expense for the quarters and nine months endedMarch 31, 2017 and 2016:

	Quarter ended March 31,											% of Net Sales March 31,
	2017			2016			$ Change			% Change		2017		2016
	(in thousands)
Interest expense	$	780		$	694		$	86		12.4	%	0.1	%	0.1	%
Interest income	(1,040		)	(800		)	(240		)	30.0	%	(0.1	)%	(0.1	)%
Net foreign exchange (gains) losses	711			353			358			101.4	%	0.1	%	0.0	%
Other, net	(44		)	47			(91		)	(193.6	)%	(0.0	)%	0.0	%
Total other (income) expense, net	$	407		$	294		$	113		38.4	%	0.1	%	0.0	%
	Nine months ended March 31,											% of Net Sales March 31,
	2017			2016			$ Change			% Change		2017		2016
	(in thousands)
Interest expense	$	2,281		$	1,684		$	597		35.5	%	0.1	%	0.1	%
Interest income	(2,948		)	(2,509		)	(439		)	17.5	%	(0.1	)%	(0.1	)%
Net foreign exchange (gains) losses	1,631			1,608			23			1.4	%	0.1	%	0.1	%
Other, net	(12,911		)	(251		)	(12,660		)	nm*		(0.7	)%	(0.0	)%
Total other (income) expense, net	$	(11,947	)	$	532		$	(12,479	)	nm*		(0.7	)%	0.0	%

*nm - percentages are not meaningful

Interest expense consists primarily of interest incurred on borrowings, non-utilization fees charged on the revolving credit facility and amortization of debt issuance costs.

Interest income consists primarily of interest income generated on longer-term interest bearing receivables and interest earned on cash and cash equivalents.

28

Net foreign exchange losses consist of foreign currency transactional and functional currency re-measurements, offset by net foreign currency exchange contract gains and losses. Foreign exchange gains and losses are generated from fluctuations in the value of the U.S. dollar versus the Brazilian real, the U.S. dollar versus the euro, the British pound versus the euro, the Canadian dollar versus the U.S. dollar, the U.S. dollar versus the Colombian peso and other currencies versus the U.S. dollar. While we utilize foreign exchange contracts and debt in non-functional currencies to hedge foreign currency exposure, our foreign exchange policy prohibits the use of derivative financial instruments for speculative transactions. The Company's net foreign exchange losses are driven by changes in foreign currency exchange rates, partially offset by the use of foreign exchange forward contracts to hedge against currency exposures.

Other income for the nine month period increased $12.7 million primarily due to the recognition of a legal settlement, net of attorney fees compared to the prior year.

Provision for Income Taxes

For the quarter and nine months endedMarch 31, 2017, income tax expense was $7.1 million and $27.8 million, respectively, reflecting an effective tax rate of 36.5% and 35.6%, respectively. The effective tax rate for the quarter and nine months endedMarch 31, 2016 was 34.2% and 34.5%, respectively. The increase in the effective tax rate from the prior year quarter and nine month period is primarily due to an increase in non-deductible expenses, adjustments to estimated available tax credits and a higher mix of income in North America. Our estimated annual effective tax rate range for the full 2017 fiscal year is approximately 35.3% to 35.8%.

Non-GAAP Financial Information

Evaluating Financial Condition and Operating Performance

In addition to disclosing results that are determined in accordance with United States generally accepted accounting principles ("US GAAP"), we also disclose certain non-GAAP financial measures. These measures include non-GAAP operating income, non-GAAP pre-tax income, non-GAAP net income, non-GAAP EPS, return on invested capital ("ROIC") and "constant currency." Constant currency is a measure that excludes the translation exchange impact from changes in foreign currency exchange rates between reporting periods. We use non-GAAP financial measures to better understand and evaluate performance, including comparisons from period to period.

These non-GAAP financial measures have limitations as analytical tools, and the non-GAAP financial measures that we report 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 US GAAP.

Net Sales in Constant Currency, Excluding Acquisitions

We make references to "constant currency," a non-GAAP performance measure that excludes the foreign exchange rate impact from fluctuations in the average foreign exchange rates between reporting periods. Constant currency is calculated by translating current period results from currencies other than the U.S. dollar into U.S. dollars using the comparable average foreign exchange rates from the prior year period. We also exclude the impact of acquisitions prior to the first full year of operations from the acquisition date in order to show net sales results on an organic basis. This information is provided to analyze underlying trends without the translation impact of fluctuations in foreign currency rates and the impact of acquisitions. Below we provide a non-GAAP reconciliation of net sales in constant currency, excluding acquisition (organic growth):

29

Net Sales by Segment:
	Quarter ended March 31,
	2017			2016			$ Change			% Change
Worldwide Barcode, Networking & Security:	(in thousands)
Net sales, as reported	$	548,971		$	528,009		$	20,962		4.0	%
Foreign exchange impact	(3,130		)	—
Net sales, constant currency	545,841			528,009			17,832			3.4	%
Less: Acquisitions	—			—
Net sales, constant currency excluding acquisitions	$	545,841		$	528,009		$	17,832		3.4	%
Worldwide Communications & Services:
Net sales, as reported	$	264,567		$	270,395		$	(5,828	)	(2.2	)%
Foreign exchange impact	(3,707		)	—
Net sales, constant currency	260,860			270,395			(9,535		)	(3.5	)%
Less: Acquisitions	(8,893		)	—
Net sales, constant currency excluding acquisitions	$	251,967		$	270,395		$	(18,428	)	(6.8	)%
Consolidated:
Net sales, as reported	$	813,538		$	798,404		$	15,134		1.9	%
Foreign exchange impact (a)	(6,837		)	—
Net sales, constant currency	806,701			798,404			8,297			1.0	%
Less: Acquisitions	(8,893		)	—
Net sales, constant currency excluding acquisitions	$	797,808		$	798,404		$	(596	)	(0.1	)%
	Nine months ended March 31,
Worldwide Barcode, Networking & Security:	2017			2016			$ Change			% Change
	(in thousands)
Net sales, as reported	$	1,770,015		$	1,780,324		$	(10,309	)	(0.6	)%
Foreign exchange impact (a)	(9,510		)	—
Net sales, constant currency	1,760,505			1,780,324			(19,819		)	(1.1	)%
Less: Acquisitions	(99,332		)	(34,628		)
Net sales, constant currency excluding acquisitions	$	1,661,173		$	1,745,696		$	(84,523	)	(4.8	)%
Worldwide Communications & Services:
Net sales, as reported	$	880,880		$	882,430		$	(1,550	)	(0.2	)%
Foreign exchange impact (a)	(7,170		)	—
Net sales, constant currency	873,710			882,430			(8,720		)	(1.0	)%
Less: Acquisitions	(20,244		)	—
Net sales, constant currency excluding acquisitions	$	853,466		$	882,430		$	(28,964	)	(3.3	)%
Consolidated:
Net sales, as reported	$	2,650,895		$	2,662,754		$	(11,859	)	(0.4	)%
Foreign exchange impact (a)	(16,680		)	—
Net sales, constant currency	2,634,215			2,662,754			(28,539		)	(1.1	)%
Less: Acquisitions	(119,576		)	(34,628		)
Net sales, constant currency excluding acquisitions	$	2,514,639		$	2,628,126		$	(113,487	)	(4.3	)%

30

Non-GAAP Operating Income, Non-GAAP Pre-Tax Income, Non-GAAP Net Income and Non-GAAP EPS

To evaluate current period performance on a more consistent basis with prior periods, the Company discloses non-GAAP operating income, non-GAAP pre-tax income, non-GAAP net income and non-GAAP diluted earnings per share. Non-GAAP results exclude amortization of intangible assets related to acquisitions, changes in fair value of contingent consideration, acquisition costs, and other non-GAAP adjustments. Non-GAAP operating income, non-GAAP pre-tax income, non-GAAP net income and non-GAAP diluted EPS are useful in assessing and understanding the Company's operating performance, especially when comparing results with previous periods or forecasting performance for future periods. Below we provide a non-GAAP reconciliation of operating income, net income and earnings per share adjusted for the costs and charges mentioned above:

	Quarter ended March 31, 2017								Quarter ended March 31, 2016
	Operating Income		Pre-Tax Income		Net Income		Diluted EPS		Operating Income		Pre-Tax Income		Net Income		Diluted EPS
	(in thousands, except per share data)
GAAP Measures	$	19,978	$	19,571	$	12,424	$	0.49	$	21,647	$	21,353	$	14,042	$	0.54
Adjustments:
Amortization of intangible assets	4,217		4,217		2,774		0.11		2,507		2,507		1,703		0.07
Change in fair value of contingent consideration	1,960		1,960		1,194		0.05		1,139		1,139		748		0.03
Acquisition costs	—		—		—		—		29		29		29		—
Non-GAAP measures	$	26,155	$	25,748	$	16,392	$	0.65	$	25,322	$	25,028	$	16,522	$	0.64

Return on Invested Capital

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, is not impacted by capitalization decisions and is considered to have a strong correlation with shareholder value creation. In addition, it is easily computed, communicated and understood. ROIC also provides management a measure of the Company's profitability on a basis more comparable to historical or future periods.

ROIC assists us in comparing our performance over various reporting periods on a consistent basis because it removes from our operating results the impact of items that do not reflect our core operating performance. We believe the calculation of ROIC provides useful information to investors and is an additional relevant comparison of our performance during the year. 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.

We calculate ROIC as earnings before interest expense, income taxes, depreciation and amortization, plus change in fair value of contingent consideration and other non-GAAP adjustments ("adjusted EBITDA") divided by invested capital. Invested capital is defined as average equity plus average daily funded interest-bearing debt for the period. The following table summarizes annualized ROIC for the quarters ended March 31, 2017 and 2016, respectively:

	Quarter ended March 31,
	2017		2016
Return on invested capital ratio, annualized(a)	12.6	%	12.3	%

(a) The annualized EBITDA amount is divided by days in the quarter times 365 days per year (366 during leap years). There were 90 days in the current quarter and 91 days in the prior-year quarter.

31

The components of this calculation and reconciliation to our financial statements are shown on the following schedule:

	Quarter ended March 31,
	2017		2016
	(in thousands)
Reconciliation of net income to EBITDA:
Net income (GAAP)	$	12,424	$	14,042
Plus: interest expense	780		694
Plus: income taxes	7,147		7,311
Plus: depreciation and amortization	6,880		4,281
EBITDA (non-GAAP)	27,231		26,328
Plus: Change in fair value of contingent consideration	1,960		1,139
Plus: Acquisition costs	—		29
Adjusted EBITDA (numerator for ROIC) (non-GAAP)	$	29,191	$	27,496

	Quarter ended March 31,
	2017		2016
	(in thousands)
Invested capital calculations:
Equity – beginning of the quarter	$	787,536	$	754,794
Equity – end of the quarter	808,719		757,374
Plus: Change in fair value of contingent consideration, net of tax	1,194		748
Plus: Acquisition costs, net of tax (a)	—		29
Average equity	798,725		756,473
Average funded debt (b)	137,597		146,213
Invested capital (denominator for ROIC) (non-GAAP)	$	936,322	$	902,686

(a) Acquisition costs are nondeductible for tax purposes.

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

32

Liquidity and Capital Resources

Our primary sources of liquidity are cash flows from operations and borrowings under our $300 million revolving credit facility. Our business requires significant investment in working capital, particularly accounts receivable and inventory, partially financed through our accounts payable to vendors, cash generated from operations and revolving lines of credit. In general, as our sales volumes increase, our net investment in working capital increases, which typically results in decreased cash flow from operating activities. Conversely, when sales volumes decrease, our net investment in working capital typically decreases, which typically results in increased cash flow from operating activities.

Our cash and cash equivalents balance totaled $62.2 million at March 31, 2017, compared to $61.4 million at June 30, 2016, including $56.9 million and $52.7 million held outside of the United States at March 31, 2017 and June 30, 2016, respectively. Checks released but not yet cleared in the amounts of $2.9 million and $78.3 million are included in accounts payable as of March 31, 2017 and June 30, 2016, respectively. The decrease in checks released but not yet cleared primarily relates to the increased use of electronic funds transfers as compared to manual checks in prior quarters. The available cash for borrowings under the revolving credit facility was in excess of checks released but not yet cleared as of March 31, 2017 and June 30, 2016, respectively.

We conduct business in many locations throughout the world where we generate and use cash. The Company provides for U.S. income taxes for the earnings of its Canadian subsidiary. The Company does not provide for U.S. income taxes for undistributed earnings from all other geographies, which are considered to be retained indefinitely for reinvestment. If these funds were distributed in the operations of the United States, we would be required to record and pay significant additional foreign withholding taxes and additional U.S. federal income taxes upon repatriation.

Our net investment in working capital at March 31, 2017 was $616.1 million compared to $643.8 million at June 30, 2016 and $656.6 million at March 31, 2016. Our net investment in working capital is affected by several factors such as fluctuations in sales volume, net income, timing of collections from customers, increases and decreases to inventory levels, payments to vendors, as well as cash generated or used by other financing and investing activities.

	Nine months ended
	(in thousands)
Cash provided by (used in):	March 31, 2017			March 31, 2016
Operating activities	$	84,124		$	24,312
Investing activities	(93,832		)	(70,595		)
Financing activities	10,627			(30,323		)
Effect of exchange rate change on cash and cash equivalents	(132		)	(4,191		)
Increase (decrease) in cash and cash equivalents	$	787		$	(80,797	)

Net cash provided by operating activities was $84.1 million for the nine months ended March 31, 2017, compared to $24.3 million provided in the prior year period. Cash provided by operating activities for the nine months endedMarch 31, 2017 is primarily attributable to net income and decreases in inventory purchases, partially offset by lower accounts payable balances, excluding the impact of accounts payable initially acquired from Intelisys.

The number of days sales outstanding ("DSO") was 60 days at March 31, 2017, excluding the impact of the Intelisys acquisition on August 29, 2016, compared to 57 days at June 30, 2016 and 59 days at March 31, 2016. DSO increased due to higher accounts receivable as a percentage of sales. Inventory turned 5.6 times during the third quarter of fiscal year 2017 compared to 6.0 for the sequential quarter and 4.9 times in the prior year quarter.

Cash used in investing activities for the nine months endedMarch 31, 2017 was $93.8 million, compared to $70.6 million used in the prior year period. Cash used in investing activities for the nine months endedMarch 31, 2017 primarily represents the cash used to acquire Intelisys. Cash used in investing activities for the nine months endedMarch 31, 2016 primarily represents cash used to acquire KBZ.

Management expects capital expenditures for fiscal year 2017 to range from $7 million to $10 million, primarily for IT investments.

For the nine months endedMarch 31, 2017, cash provided by financing activities totaled to $10.6 million compared to $30.3 million used in the prior year period. Cash provided by financing activities for the nine months endedMarch 31, 2017 was primarily

33

from net borrowings on the revolving credit facility, partially offset by cash used to repurchase common stock and pay contingent consideration payments to the former shareholders of Network1 and Imago. Cash used by financing activities for the nine months endedMarch 31, 2016 was primarily from net borrowings on the revolving credit facility, partially offset by cash used to repurchase common stock.

In August 2016, our Board of Directors authorized a new three-year $120 million share repurchase program. Under the program through March 31, 2017, the Company repurchased approximately 0.6 million shares for approximately $20.3 million.

The Company has a $300 million multi-currency senior secured revolving credit facility with JP Morgan Chase Bank, N.A., as administrative agent, and a syndicate of banks that was scheduled to mature on November 6, 2018. On April 3, 2017, the Company entered into an amendment of this credit facility that extended its maturity to April 3, 2022. The Amended Credit Agreement allows for the issuance of up to $50 million for letters of credit and has a $200 million accordion feature that allows the Company to increase the availability to $500 million, subject to obtaining additional credit commitments from the lenders participating in the increase.

At the Company's option, loans denominated in U.S. dollars under the Amended Credit Agreement, other than swingline loans, bear interest at a rate equal to a spread over the London Interbank Offered Rate ("LIBOR") or alternate base rate depending upon the Company's ratio of total debt (excluding accounts payable and accrued liabilities) to EBITDA, measured as of the end of the most recent year or quarter, as applicable, for which financial statements have been delivered to the Lenders (the "Leverage Ratio"). This spread ranges from 1.00% to 2.125% for LIBOR-based loans and 0.00% to 1.125% for alternate base rate loans. Borrowings under the Amended Credit Agreement are guaranteed by substantially all of the domestic assets of the Company as well as certain foreign subsidiaries determined to be material under the Amended Credit Agreement and a pledge of up to 65% of capital stock or other equity interest in each Guarantor (as defined in the Amended Credit Agreement). The Company was in compliance with all covenants under the credit facility as of March 31, 2017.

There was $108.5 million and $71.4 million in outstanding borrowings on our $300 million revolving credit facility as of March 31, 2017 and June 30, 2016, respectively.

On a gross basis, we borrowed $1,305.9 million and repaid $1,268.8 million on our revolving credit facility in the nine months ended March 31, 2017. In the prior year period, on a gross basis, we borrowed $1,058.7 million and repaid $985.1 million. The average daily balance during the nine month periods ended March 31, 2017 and 2016 was $131.2 million and $93.5 million, respectively. As of March 31, 2017, there were no stand-by letters of credit issued under the multi-currency revolving credit facility, and $191.5 million was available for additional borrowings.

As of March 31, 2017, the Company is obligated to pay certain earnout payments to the former shareholders Intelisys and Network1 related to their acquisitions on January 13, 2015 and August 29, 2016, respectively. See Note 8 - Fair Value of Financial Instruments for a discussion on the liabilities recorded. The final earnout payment owed to the former shareholders of Imago was paid during the December quarter of the current year. Future earnout payments for Intelysis are expected to be funded by cash from operations and our existing revolving credit facility. Future earnout payments for Network1 are expected to be funded by existing cash balances in Brazil and cash from operations.

We believe that our existing sources of liquidity, including cash resources and cash provided by operating activities, supplemented as necessary with funds under our credit agreements, will provide sufficient resources to meet the present and future working capital and cash requirements for at least the next twelve months.

Off-Balance Sheet Arrangements and Contractual Obligations

The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future affect or change on the Company’s financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term “off-balance sheet arrangement” generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with the Company is a party, under which the Company has (i) any obligation arising under a guarantee contract, derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets. 

There have been no material changes in our contractual obligations and commitments disclosed in our Annual Report on Form 10-K filed on August 29, 2016.

Accounting Standards Recently Issued

See Note 1 of the Notes to Condensed Consolidated Financial Statements for a full description of recent accounting pronouncements, including the anticipated dates of adoption and the effects on the Company's consolidated financial position and results of operations.

Critical Accounting Policies and Estimates

Critical accounting policies are those that are important to our financial condition and require management's most difficult, subjective or complex judgments. Different amounts would be reported under different operating conditions or under alternative assumptions. See Management's Discussion and Analysis of Financial Condition and Results from Operations in our Annual Report on Form 10-K for the year ended June 30, 2016 for a complete discussion.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company’s principal exposure to changes in financial market conditions in the normal course of its business is a result of its selective use of bank debt and transacting business in foreign currencies in connection with its foreign operations.

Interest Rate Risk

The Company is exposed to changes in interest rates primarily as a result of its borrowing activities, which include revolving credit facilities with a group of banks used to maintain liquidity and fund the Company’s business operations. The nature and amount of the Company’s debt may vary as a result of future business requirements, market conditions and other factors. A hypothetical 100 basis point increase or decrease in interest rates on borrowings on the Company’s revolving credit facility and variable rate long-term debt would have resulted in a $1.1 million increase or decrease annually in pre-tax income for the period.

The Company evaluates its interest rate risk and may use interest rate swaps to mitigate the risk of interest rate fluctuations associated with the Company's current and long-term debt. At March 31, 2017, the Company had $113.9 million in variable rate long term debt and borrowings under the revolving credit facility with no interest rate swaps in place. The Company's use of derivative instruments have the potential to expose the Company to certain market risks including the possibility of (1) the Company’s hedging activities not being as effective as anticipated in reducing the volatility of the Company’s cash flows, (2) the counterparty not performing its obligations under the applicable hedging arrangement, (3) the hedging arrangement being imperfect or ineffective, or (4) the terms of the swap or associated debt changing. The Company seeks to lessen such risks by having established a policy to identify, control, and manage market risks which may arise from changes in interest rates, as well as limiting its counterparties to major financial institutions.

Foreign Currency Exchange Rate Risk

The Company is exposed to foreign currency risks that arise from its foreign operations in Canada, Latin America and Europe. These risks include transactions denominated in non-functional currencies and intercompany loans with foreign subsidiaries. In the normal course of the business, foreign exchange risk is managed by balance sheet netting of exposures, as well as the use of foreign currency forward contracts to hedge these exposures. In addition, exchange rate fluctuations may cause our international results to fluctuate significantly when translated into U.S. dollars. These risks may change over time as business practices evolve and could have a material impact on the Company’s financial results in the future.

The Company’s senior management has approved a foreign exchange hedging policy to reduce foreign currency exposure. The Company’s policy is to utilize financial instruments to reduce risks where internal netting cannot be effectively employed and not to enter into foreign currency derivative instruments for speculative or trading purposes. The Company monitors its risk associated with the volatility of certain foreign currencies against its functional currencies and enters into foreign exchange derivative contracts to minimize short-term currency risks on cash flows. These positions are based upon balance sheet exposures and, in certain foreign currencies, our forecasted purchases and sales. The Company continually evaluates foreign exchange risk and may enter into foreign exchange transactions in accordance with its policy. Actual variances from these forecasted transactions can adversely impact foreign exchange results. Foreign currency gains and losses are included in other expense (income).

The Company has elected not to designate its foreign currency contracts as hedging instruments, and therefore, the instruments are marked-to-market with changes in their values recorded in the consolidated income statement each period. The Company's foreign currencies are primarily Brazilian reais, euros, British pounds, Canadian dollars, Mexican pesos, Chilean pesos, Colombian pesos and Peruvian nuevos soles. At March 31, 2017, the fair value of the Company’s currency forward contracts outstanding was a net receivable of $0.3 million. The Company does not utilize financial instruments for trading or other speculative purposes.

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Item 4. Controls and Procedures

An evaluation was carried out under the supervision and with the participation of the Company’s management, including its Chief Executive Officer ("CEO") and Interim Chief Financial Officer ("Interim CFO") of the effectiveness of the Company’s disclosure controls and procedures as of March 31, 2017. Based on that evaluation, the Company’s management, including the CEO and Interim CFO, concluded that the Company’s disclosure controls and procedures are effective as of March 31, 2017. During the quarter ended March 31, 2017, there was no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The Company and its subsidiaries are, from time to time, parties to lawsuits arising out of operations. Although there can be no assurance, based upon information known to the Company, the Company believes that any liability resulting from an adverse determination of such lawsuits would not have a material adverse effect on the Company’s financial condition or results of operations.

Item 1A. Risk Factors

In addition to the risk factors discussed in our other reports and statements that we file with the SEC, you should carefully consider the factors discussed in Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the year ended June 30, 2016, which could materially affect our business, financial condition and/or future operating results. Furthermore, we are subjected to the following risk.

Vendor relationships - One of our key vendors recently filed for protection under Chapter 11 of the U.S. Bankruptcy Code.  This filing, or similar filings from other of our key vendors, could adversely affect our business, results of operations and financial condition.

On January 19, 2017, Avaya Inc. (“Avaya”) filed for protection under Chapter 11 of the U.S. Bankruptcy Code.  Avaya is one of the Company’s largest vendors, and while the Company expects Avaya to reorganize under the Bankruptcy Code and for the Company’s relationship with Avaya to continue consistent with past practices, the bankruptcy process entails numerous uncertainties and it is possible that Avaya will not be able to successfully reorganize, or that the bankruptcy will result in a loss of customer confidence that will negatively impact sales.  Any such adverse outcome could have an adverse effect on our business, results of operations and financial condition.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On August 29, 2016, the Company announced a Board of Directors authorization to repurchase shares up to $120 million of the Company's common stock over three years. During the quarter endedMarch 31, 2017, the Company did not repurchase any shares of its common stock.

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Item 6. Exhibits

Exhibit Number	Description
10.1+	Amendment to Distribution Agreement with Avaya.
10.2+	Partner Hosted Cloud Services Amendment to Distribution Agreement with Avaya.
10.3	Severance Agreement and General Release by and between ScanSource, Inc. and John Ellsworth dated as of February 24, 2017 (incorporated by reference to Exhibit 10.1 of registrant’s Current Report filed with the SEC on Form 8-K on March 2, 2017).
10.4	Amended and Restated Credit Agreement (as amended) (incorporated by reference to Exhibit 10.1 of registrant’s Current Report filed with the SEC on Form 8-K on April 5, 2017).
31.1	Certification of the Chief Executive Officer, Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Chief Financial Officer, Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of the Chief Executive Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of the Chief Financial Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following materials from our Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets as of March 31, 2017 and June 30, 2016; (ii) the Condensed Consolidated Income Statement for the quarter and nine months ended March 31, 2017 and 2016; (iii) the Condensed Consolidated Statements of Comprehensive Income (Loss) for the quarter and nine months ended March 31, 2017 and 2016; (iv) the Condensed Consolidated Statements of Cash Flows for the nine months ended March 31, 2017 and 2016; and (v) the Notes to the Condensed Consolidated Financial Statements.
+	Confidential treatment has been requested with respect to certain portions of this Exhibit, which portions have been omitted and filed separately with the Commission as part of an application for confidential treatment.

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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 thereunto duly authorized.

		ScanSource, Inc.
		/s/ MICHAEL L. BAUR
		Michael L. Baur
Date:	May 9, 2017	Chief Executive Officer (Principal Executive Officer)

		/s/ GERALD LYONS
		Gerald Lyons
Date:	May 9, 2017	Interim Chief Financial Officer, Senior Vice President, Corporate Controller and Principal Accounting Officer (Principal Accounting Officer)

39

EXHIBIT INDEX TO QUARTERLY REPORT ON FORM 10-Q

Exhibit Number	Description
10.1+	Amendment to Distribution Agreement with Avaya.
10.2+	Partner Hosted Cloud Services Amendment to Distribution Agreement with Avaya.
10.3	Severance Agreement and General Release by and between ScanSource, Inc. and John Ellsworth dated as of February 24, 2017 (incorporated by reference to Exhibit 10.1 of registrant’s Current Report filed with the SEC on Form 8-K on March 2, 2017).
10.4	Amended and Restated Credit Agreement (as amended) (incorporated by reference to Exhibit 10.1 of registrant’s Current Report filed with the SEC on Form 8-K on April 5, 2017).
31.1	Certification of the Chief Executive Officer, Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Chief Financial Officer, Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of the Chief Executive Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of the Chief Financial Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following materials from our Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets as of March 31, 2017 and June 30, 2016; (ii) the Condensed Consolidated Income Statement for the quarter and nine months ended March 31, 2017 and 2016; (iii) the Condensed Consolidated Statements of Comprehensive Income (Loss) for the quarter and nine months ended March 31, 2017 and 2016; (iv) the Condensed Consolidated Statements of Cash Flows for the nine months ended March 31, 2017 and 2016; and (v) the Notes to the Condensed Consolidated Financial Statements.
+	Confidential treatment has been requested with respect to certain portions of this Exhibit, which portions have been omitted and filed separately with the Commission as part of an application for confidential treatment.

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EX-10.1

CERTAIN CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT, MARKED BY [*****] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

Amendment
to
Distributor Agreement: AVDIST1-021001
For [*****]

This Amendment shall be effective as of the date of signature by the last party (“Effective Date”) and is by and between Avaya Inc. (“Avaya”) and ScanSource, Inc. dba ScanSource Catalyst (“Distributor”).

WHEREAS, Avaya and Distributor have executed a Distributor Agreement with Contract Reference Number AVDIST1-021001 dated August 16, 2002 as amended to include the Hosted Services Amendment dated April 27, 2016 and the Google Services Amendment dated April 27, 2016 (collectively the “Agreement”).

AND WHEREAS, the parties desire to amend the termination provisions in the Offer Definition Version 1.7 for OnAvaya —Google Cloud Platform 1.1.1 (“Hosted SAS”) applicable to Distributor’s purchase and resell of OnAvaya-IPOCC to [*****] solely for the End Users and quotes listed below:

End UserQuote Number

[*****]    [*****]

The following attachment is hereby incorporated by reference:

• Offer Definition Version 1.7 for OnAvaya — Google Cloud Platform 1.1.1

NOW, THEREFORE, the parties agree as follows:

1. Avaya hereby authorizes Distributor to pass through the following termination provisions to KBG with respect to their purchase of OnAvaya-IPOCC Services as described in the quote numbers for the End Users listed above from Distributor as authorized under the Distributor Agreement:

Distributor may terminate the order for the OnAvaya-IPOCC Services as described in the quote numbers listed above in accordance with the terms contained in the attached Offer Definition Version 1.7 for OnAvaya — Google Cloud Platform 1.1.1 under Sections 5.1 Termination for Cause and 5.2 Termination for Convenience and will be required to pay the Cancellation Fees as described in Section 4.5.3 Cancellation Fees.

Nothwithstanding the foregoing, Cancellation Fees will be waived in the event that Distributor cancels the order within [*****] of the 36 month offer term contained in the applicable quote for the order being cancelled.

2. ENTIRE AGREEMENT. Except as explicitly modified herein, all terms, conditions and provisions of the Agreement and amendments thereto, shall continue in full force and effect. In the event of any inconsistency or conflict between the Agreement and this Amendment, the terms, conditions and provisions of this Amendment shall govern and control. Capitalized terms used in this Amendment but not defined will have the meanings given them in the Agreement.

IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by their duly authorized representatives with the intent to be legally bound as of the Effective Date, for good and valuable consideration, the receipt and adequacy of which is hereby acknowledged.

Avaya Inc.	ScanSource, Inc. d/b/a ScanSource Catalyst
Signature: /s/ Ryan McDowell	Signature: /s/ David Hertwig
Printed Name: Ryan McDowell	Printed Name: David Hertwig
Title: DCAM	Title: President, ScanSource Catalyst
Date: March 13, 2017	Date: 3/13/17

EX-10.2

CERTAIN CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT, MARKED BY [*****] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

PARTNER HOSTED CLOUD SERVICES AMENDMENTTODISTRIBUTOR AGREEMENT
CONTRACT NUMBER: AVDIST-021001

This Partner Hosted Cloud Services Amendment (the “Amendment”) is made by and between Avaya Inc. (“Avaya”) and ScanSource, Inc. dba ScanSource Catalyst (“Distributor”) and is effective on the date that the last party below signs it (“Amendment Effective Date”).

WHEREAS:

(A)    Avaya and Distributor are parties to a certain Distributor Agreement, contract number AVDIST1-021001, effective August 16, 2002 as amended (the “Agreement”);

(B)    This Amendment will supersede and replace the Distributor Hosted IP Office Interim Addendum to the Agreement executed between the parties with an effective date of October 20, 2014.

(C)    Avaya and Distributor desire to implement and, where applicable, modify the terms and conditions of the Agreement, pursuant to which Distributor may purchase from Avaya, on a subscription basis, certain Software licenses and related Maintenance Services in order to provide Distributor’s Cloud Services to one or more Resellers in the Territory using Cloud Software located and hosted primarily in Distributor or its subcontractor’s data center for further resale of such Cloud Services by Resellers to Cloud End Users located in the Reseller’s authorized territory or for Reseller’s own internal use, as described in more detail in this Amendment;

(D)    The Agreement is incorporated in this Amendment by reference, except where specifically stated to the contrary. NOW THEREFORE, Avaya and Distributor agree as follows:

1.DEFINITIONS AND INTERPRETATION

1.1.Definitions. Capitalized terms not defined in this Amendment will have the meanings given them in the Agreement. Any definitions included in this Amendment apply solely for purposes of this Amendment. The following terms will have the meanings assigned to them below:

1.1.1.“Avaya Aura Call Center Elite System” means Avaya’s proprietary Communication Manager Software licensed as a separate option for the incoming voice call centers.

1.1.2.“Channel Policies” means all the Avaya policies and programs applicable to Distributor or Resellers and available on Avaya Partner Portal (https://www.avaya.com/salesportal or successor site), as amended by Avaya from time to time at Avaya’s discretion upon prior written notice to Distributor.

1.1.3.“Cloud” means a delivery model of communication solutions, located primarily in Distributor’s or its subcontractor’s data center, which are made available to one or more Resellers remotely on a subscription basis .

1.1.4.“Cloud End User” means an End User purchasing Cloud Services from Reseller solely for End User’s internal business use and not for resale, sublease or sublicense.

1.1.5.“Cloud Fee” means a recurring subscription-based fee payable by Distributor to Avaya for a time-bound license to the Cloud Software and related Maintenance Services provided under this Amendment as described in more detail in this Amendment and/or the Cloud Offer Definition.

1.1.6.“Cloud Offer Definition” means: (i) any Avaya offer definition document for Cloud Software then current as of the date of Avaya’s acceptance of a Cloud Order under this Amendment describing Avaya’s offer to Channel Partners for the cloud enabled Avaya solutions and related Maintenance Services; and/or (ii) a statement of work executed by the parties describing the specific Cloud Software and related Services to be provided by Avaya to Distributor.

1    

CERTAIN CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT, MARKED BY [*****] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

1.1.7.“Cloud Order” means an order issued by Distributor to Avaya under this Amendment for the Cloud Software and related Maintenance Services.

1.1.8.“Cloud Services” means a time-bound subscription service based on the Hosted Solution provided by Distributor to one or more Reseller in the Territory against a periodic fee determined by Distributor during an agreed invoicing period.

1.1.9.“Cloud Software” means Software made available by Avaya to Distributor subject to a subscription-based fee which enables Distributor to provide Cloud Services.

1.1.10.“Commencement Date” means, unless otherwise stated on the accepted Cloud Order or the Cloud Offer Definition, the earlier of the following dates: (i) the date of activation of the first Cloud End User or 2 months following the Delivery Date of Cloud Software – where Avaya does not provide Implementation Services for the Cloud Software; or (ii) the date of activation of the first Cloud End User or the date of acceptance of the Implementation Services – where Avaya performs Implementation Services for the Cloud Software.

1.1.11.“Concurrent Elite Agent License” means licenses for agents or other users to use the Avaya Aura Call Centre Elite Software. Licenses are measured by the number of agents or other users that are simultaneously logged in to the Avaya Aura Call Centre Elite System.

1.1.12.“Early Termination Fees” means the fees payable by Distributor due to an early termination of a Cloud Order as detailed in Section 14.3.

1.1.13.“Grace Period” means, with respect to any Cloud Order that is subject to a Minimum Commitment, a limited time period during which, as an exception to the general rule, a Minimum Commitment does not apply. Grace Periods, if applicable, are defined in the applicable Cloud Offer Definition or Avaya’s quotation.

1.1.14.“Hosted Solution” means the Cloud Software, software, hardware, Third Party Products and/or their combination hosted primarily by Distributor in Distributor’s or its subcontractor’s data center in the Territory for the purpose of providing Cloud Services to one or more Resellers.

1.1.15.“Minimum Commitment” means a minimum number of Units or a minimum net amount for which Distributor will be invoiced during each invoicing period for the entire Term, irrespective of the actual usage of the Cloud Software. The Minimum Commitment, if applicable, is defined in the applicable Cloud Offer Definition or Avaya’s quotation.

1.1.16.“Monthly Average Daily Peak” means the number of Units used by Distributor during any invoicing period calculated by adding together the daily peak number of Units for each day in the invoicing period and dividing the resulting sum by the number of days in that period.

1.1.17.“Monthly Peak” means the highest number of Units used by Distributor during the monthly invoicing period.

1.1.18.“Resale Agreement” means an agreement between Distributor and Reseller under which Distributor provides Cloud Services to Reseller.

1.1.19.“Term” means the initial term of a Cloud Order and any renewal terms thereof during which Distributor is authorized to use the Cloud Software and related Maintenance Services on a time-bound subscription basis subject to timely payment of Cloud Fees to Avaya.

1.1.20.“Unit” refers to the specific metrics used by Avaya as the basis for the pricing and invoicing for the Cloud Software and related Maintenance Services as set out in the then current Avaya price list and more fully described in the applicable Cloud Offer Definition or an accepted Cloud Order including provisioned, configured, concurrent or ordered users or provisioned virtual meeting rooms (VMRs).

2    

CERTAIN CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT, MARKED BY [*****] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

1.2.Interpretation. In this Amendment, unless otherwise specified or the context expressly requires otherwise: (i) a reference to the singular includes the plural and vice versa; (ii) the headings are inserted for convenience only and will not affect the interpretation of this Amendment; (iii) whenever the words “include”, “includes”, “including” or “in particular” (or similar derivatives) are used, they are deemed to be followed by the words “without limitation”; (iv) all references to “Sections” are to the Sections in this Amendment; (v) all references to “written” or “in writing” include emails or other electronic means of communications; and (v) a reference to “use” or “usage” of the Cloud Software will be deemed to refer to usage, configuration, ordering, provisioning, activation or consumption of the Cloud Software as set out in the applicable Cloud Offer Definition, and any reference to “used” will be construed correlative to the foregoing.

2.AUTHORIZATION; RESELLERS AND RESALE AGREEMENTS

2.1.    Subject to the terms and conditions of this Amendment, Avaya authorizes Distributor to purchase from Avaya a non-exclusive, non-transferable, non-sublicensable, limited license to use certain Cloud Software and related Maintenance Services for the sole purpose of marketing and providing Cloud Services to Resellers in the Territory for: (i) further resale of such Cloud Services by Resellers to Cloud End Users located in the Reseller’s authorized territory; and (ii) Reseller’s own internal use. Any Cloud Software and Maintenance Services ordered under this Amendment will be provided to Distributor on a subscription basis only subject to timely payment of the applicable Cloud Fees. Unless the Cloud Offer Definition expressly provides otherwise, except for the specific Maintenance Services for the Cloud Software included in the Cloud Fees this Amendment does not apply to any hardware Products or Services necessary to deploy Cloud Services. Such Services or hardware Products may be ordered by Distributor under the terms of the Agreement. Distributor shall not market Cloud Services or use the Hosted Solution except as permitted in this Section and the Internal Use provisions of the Agreement. In particular, Distributor is not authorized to resell Cloud Services or any other Products or Services directly to Cloud End Users. Avaya reserves the right to modify the conditions of or revoke this authorization subject to the terms of the Channel Policies by giving Distributor a [*****] written notice with the effective date on the last day of the applicable invoicing period.

2.2.Resellers. Prior to providing Cloud Services to any Reseller, Distributor must first execute a Resale Agreement with each such Reseller implementing all flow-down related requirements set forth in this Amendment or, if applicable, amend the existing Resale Agreement for that purpose. Each Reseller to whom Distributor may provide Cloud Services must be an Avaya authorized reseller complying with the Avaya authorization requirements and maintaining all accreditations and credentials for the Cloud Software and related Maintenance Services as set out in the Channel Policies. Resellers are only authorized to market and resell Cloud Services to Cloud End Users located in the Reseller’s authorized territory for Cloud End Users’ own internal use and not for any resale or other provision of Cloud Services to any third parties. Distributor shall expressly prohibit any resale of Cloud Services by Resellers to any other resellers or distributors. To the extent Cloud Services are purchased by any Reseller for its own internal use, then any such Reseller will be deemed a Cloud End User for all purposes of this Amendment.

2.3.Termination of Resale Agreement. Distributor shall promptly terminate the Resale Agreement, or its part applicable to Cloud Services, with any Reseller who: (i) is no longer an authorized reseller of Avaya; (ii) does not comply with any applicable Avaya authorization requirements or does not maintain any required accreditations or credentials; or (iii) has in any way failed to comply with: (a) Avaya End User License; (b) confidentiality obligations with respect to Avaya’s confidential information or Cloud Software; or (c) any legal obligations including those described in Section 5. In case of termination or expiry of a Resale Agreement, or its part applicable to Cloud Services, for any reason Distributor shall de-activate Cloud Software licenses allocated to the affected Reseller, unless such Reseller’s Cloud End Users are re-allocated to an alternative Reseller within 30 days of termination or expiry of the Resale Agreement. Notwithstanding the foregoing, Distributor shall continue to pay Avaya for any activated Cloud Software licenses for the affected Reseller until such licenses have been deactivated and a reasonable proof of de-activation has been provided to Avaya.

2.4.Reseller and Cloud End Users obligations. Distributor acknowledges and agrees that certain obligations under this Amendment, whether expressly identified as such in this Amendment or not, may also apply to Resellers and Cloud End Users (“Flowdown Obligations”). Distributor shall: (i) contractually obligate its Resellers to comply with the Flowdown Obligations, including by implementing the Flowdown Obligations in the Resale Agreements and contractually obligating Resellers to include the Flowdown Obligations in the agreements between Resellers and Cloud End Users; (ii) enforce the terms of Resale Agreements against Resellers and fully cooperate with Avaya in doing so; and (iii) contractually obligate Resellers to enforce the terms of their agreements with Cloud End Users in connection with the subject matter of this Amendment and in doing so fully cooperate with Distributor and Avaya. Where any Reseller or Cloud End User fails to comply with any Flowdown Obligation, Avaya will not be held liable for any resulting failure to perform its obligations under this Amendment. Upon Avaya’s request, Distributor shall provide Avaya with a copy of the relevant provisions in the Reseller Agreement containing the Flowdown Obligations.

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2.5.Indemnification. [*****]

3.DOCUMENTS AND CLOUD ORDERS

3.1.Applicable terms. Avaya will provide Cloud Software and related Maintenance Services in accordance with the terms and conditions of this Amendment, the applicable Cloud Offer Definition (if any) and accepted Cloud Order and, solely with respect to the Maintenance Services, the applicable Service Description for the Maintenance Services identified in the Cloud Offer Definition or Avaya’s quotation. The applicable Cloud Offer Definitions and Service Descriptions are incorporated by reference into this Amendment and available on Avaya Channel Partner portal (https://sales.avaya.com/en/products-and-solutions or a successor site as designated by Avaya from time to time), Avaya OneSource portal (www.avaya.com/ebizn or a successor site as designated by Avaya from time to time), or on Distributor’s request directly from Avaya. Upon submission of the Cloud Order, Distributor represents and warrants to Avaya that it has familiarized itself with the applicable Cloud Offer Definition and Service Description then current as of the date of Cloud Order submission.

3.2.Cloud Orders. Distributor shall issue all Cloud Orders in accordance with Avaya’s quotation, this Amendment and the applicable Cloud Offer Definition and Service Description. The applicable Service Description or Cloud Offer Definition may require, and Distributor agrees, to issue an open or blanket Cloud Order for a pre-defined amount and period of time to enable regular invoicing for the Cloud Software and related Maintenance Services. Distributor shall explicitly reference this Amendment and the applicable Cloud Offer Definition on any Cloud Order and use the Cloud Order form, if provided by Avaya. If a Cloud Order is not submitted based on a form provided by Avaya, Distributor shall also reference the applicable Avaya quotation and any other details that Avaya may reasonably require from time to time. All Cloud Orders are subject to acceptance by Avaya. Each Cloud Order is deemed to incorporate by reference this Amendment, the applicable Cloud Offer Definition and Service Description as it relates to the Maintenance Services for the Cloud Software.

3.3.Initial and subsequent Cloud Orders. Subject to Distributor’s compliance with the Hosted Solution configuration requirements defined in Section 4.2, Distributor shall issue an initial Cloud Order for the Cloud Software necessary to set-up the Hosted Solution. The initial Cloud Order shall include a specified number of Cloud Software licenses and related Maintenance Services as necessary to properly enable the usage of the Hosted Solution at the desired capacity level. Subject to Distributor’s continued compliance with the terms of this Amendment, Distributor may submit subsequent Cloud Orders relating to that Hosted Solution. Such subsequent Cloud Orders will be based on Avaya’s then current prices for the Cloud Software and related Maintenance Services and may be subject to an additional Minimum Commitment, minimum Term, Early Termination Fees and other terms and conditions as set forth in the then current Cloud Offer Definition or Avaya’s quotation.

3.4.Order of precedence. Unless this Amendment expressly states otherwise, in the event of a conflict between the Agreement (including its Attachments and Appendices), this Amendment, Service Description, Cloud Offer Definition and any Cloud Order accepted by Avaya, the order of precedence is as follows: (i) this Amendment; (ii) the Agreement; (iii) Cloud Offer Definition; (iv) Service Description; and (v) Cloud Order. In the event of any conflict between any standard Cloud Offer Definition and a statement of work, the statement of work will control.

4.DISTRIBUTOR RESPONSIBILITIES

4.1.Authorization, accreditation and credentials requirements. Distributor shall at all times during the term of this Amendment: (i) comply with the industry best practices and standards applicable to the Hosted Solution and Cloud Services as well as any Avaya authorization requirements; and (ii) maintain all accreditations and credentials, applicable to the Avaya authorized Cloud Service Providers and resellers of Cloud Software, related Maintenance Services and other Products included in the Hosted Solution, as detailed in the applicable Cloud Offer Definition and Channel Policies. The authorization, accreditation and credential requirements are subject to review and renewal and may be withdrawn or terminated by Avaya at any time in accordance with this Amendment and the Channel Policies. In addition, Distributor shall require that during the term of the Resale Agreement, or its part applicable to Cloud Services, each Reseller appointed by Distributor to resell Cloud Services must comply with the Avaya authorization requirements and maintain all required accreditations and credentials applicable to resellers of Cloud Software and related Maintenance Services as detailed in the Channel Policies.

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4.2.Setup and maintenance of Hosted Solution. Distributor is at all times responsible for: (i) the architecture, design, configuration and capacity management of the Hosted Solution excluding any errors solely attributable by Avaya’s architecture, design and configuration of the Cloud Software and other architectural requirements to accommodate the expected number of Resellers and Cloud End Users in order to properly enable the usage of the Hosted Solution at the desired capacity level and compliance with Avaya’s reference architecture and similar requirements; (ii) timely ordering of Cloud Software and related Maintenance Services and any other components of the Hosted Solution; (iii) installation, configuration, maintenance coverage, and other activities in relation to the delivery, deployment, maintenance and support of the Hosted Solution excluding any errors solely attributable by Avaya’s architecture, design and configuration of the Cloud Software; (iv) provision, at Distributor’s own cost, of SIP trunking (if applicable) and all hardware, equipment, software, and services as may be necessary for the deployment of the Hosted Solution and provision of Cloud Services, with the exception of the Cloud Software and related Maintenance Services purchased under this Amendment. Notwithstanding the foregoing, Avaya may require Distributor to make reasonable changes to the Hosted Solution based on the quality, capacity, environmental, safety, security or similar considerations. Any changes required by Avaya that materially affect the functionality or costs of the Hosted Solution, unless such changes are required by law, may be subject to a change control process to be agreed upon by the parties.

4.3.Security. [*****]

4.4.Hosting. Distributor may host the Cloud Software from its own or its subcontractor’s data center, provided that Distributor shall: (i) first enter into an agreement with its subcontractor with applicable terms at least as protective of the Cloud Software as the terms of this Amendment (including with respect to compliance with the Avaya End User License, if and to the extent the subcontractor is accessing or using the Cloud Software in connection with its subcontracting activities, and the confidentiality and protection of the Cloud Software), and Distributor shall cooperate with Avaya in enforcing the terms of such agreement; and (ii) [*****].

4.5.Management of Hosted Solution. Distributor is responsible for the day-to-day management, configuration and capacity management of the Hosted Solution and Cloud Services, including timely ordering (whether from Avaya, its authorized Distributor or third parties) of additional Cloud Software, hardware, software and services necessary to set up and operate the Hosted Solution and to market Cloud Services at the desired capacity and quality level. Distributor and/or Reseller will be responsible for performing all on-boarding and off-boarding activities for each Reseller and Cloud End User. On-boarding activities include design, installation and configuration of the Hosted Solution to meet the requirements of each Reseller and Cloud End User. Prior to on-boarding any Reseller or Cloud End User, Distributor shall ensure that all components of the Hosted Solution are in good working order in accordance with the applicable manufacturer documentation and specifications; provided that Avaya shall remain responsible for the performance of the Cloud Software to the extent covered by the warranty in Section 10.3. Distributor shall notify Avaya of any removal or relocation of the Hosted Solution or any of its components and provide Avaya with all information it may reasonably require for the timely performance of its obligations.

4.6.Integration into network environment. Distributor is solely responsible for providing all facilities, software, equipment, network, trunking and services, other than Cloud Software licenses provided by Avaya under this Amendment, as may be necessary to deploy the Cloud Services. Distributor is responsible for all costs associated with operating and maintaining such facilities, software and equipment, including rent, office costs, utilities fees, connectivity charges and all applicable taxes and duties with respect to the same. Except to the extent that Avaya is contracted to perform specific integration services, Distributor is responsible for the integration of the Hosted Solution and/or any of its components with (i) Distributor’s, Reseller’s and/or Cloud End User’s network environment and (ii) any interoperating hardware, software or systems.

4.7.Helpdesk and co-delivery support. Unless the applicable Cloud Offer Definition or Service Description expressly states otherwise, Avaya will only provide Tier 3 and Tier 4 Maintenance Services for the Cloud Software directly to Distributor. Distributor and/or Reseller shall provide co-delivery support to Resellers and Cloud End Users, including helpdesk, Tier 1 and Tier 2 support. Nothing in this Amendment obligates Avaya to provide any Maintenance Services or other support directly to any Reseller or Cloud End User. Distributor must have the ability and competencies to provide helpdesk support and serve as Reseller’s and Cloud End User’s interface and relationship manager. In addition, Distributor and/or Reseller shall be responsible to respond to a reported issue, open a trouble ticket in a tracking system, evaluate the issue and route the trouble ticket to the appropriate support team. Avaya may require Distributor’s helpdesk support personnel to complete, at Distributor’s cost, a series of training courses relating to the applicable Cloud Software and any other Products included in the Hosted Solution.

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4.8.Endpoints. Except as otherwise expressly stated to the contrary in the applicable Cloud Offer Definition or Avaya’s quotation, Avaya is not responsible for the provision of any end points or similar devices necessary to deploy Cloud Services for any Reseller or Cloud End User, including personal end points, personal computers, mobile devices and telepresence or room systems.

4.9.Cooperation. In addition to Distributor’s co-operation obligations as set out in the Agreement, at no cost to Avaya, Distributor shall in a reasonably timely manner: (i) provide Avaya with interface and other information regarding access to Third Party Products in the Hosted Solution or Distributor’s, Reseller’s and Cloud End User’s network and necessary third party consents and licenses to enable Avaya’s performance and fulfillment of its obligations; (ii) provide Avaya, its agents and/or subcontractors with access to the Hosted Solution both at the Distributor’s, its subcontractor’s, Reseller’s or Cloud End User’s premises and remotely; (iii) provide Avaya with all credentials, passwords and other information that may be necessary to enable Avaya to access the Cloud Software and usage monitoring application, whether remotely or on-site; (iv) secure all necessary approvals, consents and performance from Resellers required in order for Avaya to perform its obligations under this Amendment or to exercise its rights under this Amendment and contractually obligate its Resellers to secure all necessary approvals, consents and performance from its Cloud End Users required in order for Avaya to perform its obligations under this Amendment or to exercise its rights under this Amendment; (v) for each Resale Agreement and Cloud End User contract, contractually obligate Reseller to provide Avaya with the Reseller and Cloud End User name, contract term and any agreed minimum commitment; and (vi) cooperate in all reasonable ways with Avaya in relation to Avaya’s performance of its obligations under this Amendment, including: (a) in the diagnosis, investigation and correction of any reported Incident; (b) providing Avaya any further information that Avaya may reasonably require to fulfill its obligations under this Amendment; (c) keeping backup or archival copies of its Cloud Orders, databases and computer records in accordance with commercially reasonable computing practices; and (d) notifying Avaya in advance of any significant configuration or definition changes in the Hosted Solution or Cloud Services.

4.10.Compliance with Channel Policies. Distributor shall comply with all Channel Policies applicable to Distributor. Avaya shall notify Distributor of any modification or termination of the applicable Channel Policies by, at least 30 days prior to the effective date of such modification or termination, by posting the modification or termination on the Avaya Partner Portal (https://www.avaya.com/salesportal) or by other previously agreed to form of notification. Distributor shall periodically check the Avaya Partner Portal for changes to the Channel Policies. If anything contained in the Channel Policies may be interpreted to void or conflict with an express term of this Addendum, the terms of this Addendum will govern.

5.COMPLIANCE WITH LAWS AND REGULATORY REQUIREMENTS; PAYMENT OF REGULATORY FEES

5.1.COMPLIANCE WITH LAWS AND REGULATIONS. DISTRIBUTOR SHALL, AND TO THE APPLICABLE EXTENT SHALL OBLIGATE RESELLERS TO, COMPLY WITH ALL APPLICABLE LAWS AND REGULATIONS IN THE TERRITORY, INCLUDING COMPLIANCE WITH ANY LAWS, REGULATIONS, TAXES, FEES OR OTHER REQUIREMENTS RELATED TO THE USE, MARKETING AND PROVISION OF CLOUD SERVICES AND OTHER REGULATED SERVICES AND THE PROVISIONING, HOSTING, USING, INSTALLING, DE-INSTALLING, ACTIVATING, DEACTIVATING AND DECOMMISSIONING OF THE HOSTED SOLUTION (OR ANY PORTION THEREOF) AT DISTRIBUTOR’S, ITS SUBCONTRACTOR’S, RESELLER’S OR CLOUD END USERS’ PREMISES AND ANY REGULATIONS PROMULGATED BY THE FEDERAL COMMUNICATIONS COMMISSION IN THE U.S., AND ANY STATE PUBLIC UTILITY COMMISSION IN THE INDIVIDUAL U.S. STATES, AS WELL AS SIMILAR, CORRESPONDING GOVERNMENTAL AGENCIES IN OTHER COUNTRIES AND LOCALITIES. WITHOUT LIMITING THE FOREGOING, DISTRIBUTOR SHALL, AND TO THE APPLICABLE EXTENT SHALL OBLIGATE RESELLERS TO: (I) COMPLY WITH ALL APPLICABLE DATA PRIVACY AND CALL RECORDING LAWS AND REGULATIONS; AND (II) PROVIDE ANY APPLICABLE NOTICES TO AND OBTAIN ANY APPLICABLE CONSENT FROM RESELLERS AND CLOUD END USERS.

5.2.Regulatory requirements. Distributor’s authorization under this Amendment is conditioned upon all regulatory notifications, registrations, approvals or consents (as applicable) being made, obtained and maintained by Distributor, at its own cost and during the entire Term, as may be required under any applicable law from time to time. Such regulatory consents and approvals include any registration, notification, approval or consent by the duly authorized authorities for the connection, deployment or use of the Hosted Solution and its components or marketing of Cloud Services in the Territory or to specific types of Resellers or Cloud End Users, such as in particular authorization to: (i) connect any components of the Hosted Solution to the public telecommunications network; (ii) connect the Hosted Solution to the public electrical/energy grid; (iii) import the Hosted Solution components into the Territory; (iv) deploy or use the Hosted Solution in the Territory; or (v) offer and market Cloud Services in the Territory and/or to specific types of Resellers or Cloud End Users.

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5.3.REGULATORY FEES. IN ADDITION TO DISTRIBUTOR’S OBLIGATION TO PAY TAXES IN ACCORDANCE WITH THE AGREEMENT, DISTRIBUTOR SHALL BE RESPONSIBLE FOR THE COLLECTION AND REMITTANCE OF ANY AND ALL GOVERNMENTAL ASSESSMENTS, SURCHARGES AND FEES PERTAINING TO ITS PROVISION, RESALE OR USE OF THE HOSTED SOLUTION OR CLOUD SERVICES. DISTRIBUTOR SHALL BE RESPONSIBLE FOR ANY AND ALL GOVERNMENTAL ASSESSMENTS, SURCHARGES AND FEES THAT ARE IMPOSED ON AVAYA OR ANY AFFILIATE OF AVAYA INCIDENT TO THE PROVISION OR SALE OF THE CLOUD SOFTWARE AND RELATED MAINTENANCE SERVICES TO DISTRIBUTOR, INCLUDING ANY GOVERNMENT ASSESSMENT OR REGULATORY FEES IMPOSED ON AVAYA AS A RESULT OF A MATERIAL CHANGE IN THE MANNER IN WHICH CLOUD SOFTWARE, MAINTENANCE SERVICE OR AVAYA IS REGULATED.

6.MONITORING TOOLS

The usage, provisioning, ordering, configuration or activation, as applicable, of any Cloud Software will be determined by Avaya based on the application, procedures or tools specified by Avaya (“Monitoring Tools”). Avaya will have sole authority and control over the installation, configuration, implementation and ongoing administration of any Monitoring Tools. If Distributor can access any Monitoring Tools, it shall do so only in accordance with Avaya’s specifications or instructions and shall not have any administrative privileges within such Monitoring Tools. Distributor shall fully cooperate with Avaya during the installation, configuration, implementation, maintenance, and administration of any Monitoring Tools in accordance with Avaya’s specifications and requirements and shall procure any required co-operation from Resellers and Cloud End Users.

7.CLOUD FEES; INVOICING AND PAYMENT

7.1.Prices and Cloud Fees. Prices for the provision of the Cloud Software and applicable Maintenance Services will be as set forth on: (i) Avaya’s price list or Cloud Offer Definition current as of the date of invoicing; or (ii) an accepted Cloud Order. Unless otherwise stated in the Cloud Offer Definition or accepted Cloud Order, prices are quoted on a per Unit per month basis, expressed in U.S. Dollars and exclusive of any and all Taxes. Where any price or Cloud Fee refers to a group or other combination, the price, Cloud Fee and grouping are not divisible. Cloud Fees due under this Amendment are non-cancellable and non-refundable.

7.2.Changes. Unless otherwise agreed to in writing by Avaya, Avaya may increase list prices, add or delete Unit types and/or modify Distributor’s entitlements under each Unit type by providing Distributor a [*****] written notice, without a need for a formal amendment of this Amendment. Avaya may also decrease prices for the provision of Cloud Software and related Maintenance Services without a need for a formal amendment to this Amendment or advance notice to or the prior consent of Distributor, but Avaya shall provide written notification of any such changes and their effective date. Any changes will apply prospectively as of the effective date indicated on Avaya’s notification.

7.3.Minimum Commitment. If the applicable Cloud Offer Definition or Avaya’s quotation provides for a Minimum Commitment, the provision and pricing of the Cloud Software and related Maintenance Services will be subject to Distributor’s compliance with that Minimum Commitment during the entire Term. If the Minimum Commitment is higher than the net amount that would have been invoiced by Avaya based on the number of Units actually used by Distributor during any invoicing period for the applicable Cloud Software and related Maintenance Services and Cloud Order, then Avaya will invoice, and Distributor agrees to pay, the Cloud Fees determined in accordance with the applicable Minimum Commitment.

7.4.Calculation of Cloud Fees. Cloud Fees will be determined by Avaya based on the calculation methodology specified in the applicable Cloud Offer Definition. If no calculation methodology has been specified, the provisions in this Section 7.4 will apply.

7.4.1.General. Cloud Fees will be calculated by Avaya on a calendar month basis, based on the data available from the Monitoring Tools as set out in Section 6, for each Cloud Software application, each Cloud End User and each Unit type separately. For any partial month, the monthly Cloud Fees will be calculated on a pro rata basis. Cloud Fees will also be due and payable during any Grace Period. The following calculation methodology will apply with respect to the Cloud Software applications identified below if and to the extent the below offers are generally available from Avaya at the date of the Cloud Order submission. The below list is illustrative only and not exhaustive:

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7.4.2.UCaaS & CCaaS Software. Avaya will invoice Distributor for the Unified Communication Software (“UCaaS Software”) and Contact Center Cloud Software (“CCaaS Software”), excluding WFO Cloud Software (as detailed in Section 7.4.3 below), on a monthly concurrent or provisioned usage basis as detailed in the applicable Cloud Offer Definition. Cloud Fees will be calculated for each UCaaS Software and CCaaS Software application, each Cloud End User and each Unit type separately. Cloud Fees will be determined by multiplying the applicable price per Unit per month by the Monthly Average Daily Peak number of concurrent or provisioned Units.

7.4.3.WFO Cloud Software. Avaya will invoice Distributor for Workforce Optimization Cloud Software identified in the applicable Cloud Offer Definition or Avaya quotation (“WFO Cloud Software”) as detailed below.

7.4.3.1.    Where the applicable WFO Cloud Software is billed on a per Concurrent Elite Agent License basis, as set out in the Offer Definition or on an Avaya quotation, Avaya will invoice Distributor on a Monthly Peak basis. Cloud Fees will be determined, for each and every Cloud End User, by multiplying the price per applicable WFO Cloud Software per month by the Monthly Peak number of Concurrent Elite Agent Licenses used by the applicable Cloud End User.

7.4.3.2.    Where the applicable WFO Cloud Software is billed on a per server basis as set out in the Offer Definition or on an Avaya quotation, Avaya will invoice Distributor on an active, in-service server basis. Cloud Fees will be determined by multiplying the price per applicable WFO Cloud Software per month by the number of active, in-service servers on which such WFO Cloud Software is installed during the applicable invoicing period in connection with Cloud Services, except that Avaya will not charge Distributor any Cloud Fees with respect to the redundant servers installed with WFO Cloud Software for back-up purposes only.

7.4.3.3.    Where the applicable WFO Cloud Software is billed on a per Cloud End User basis as set out in the Offer Definition or on an Avaya quotation, Cloud Fees will be determined by multiplying the price per applicable WFO Cloud Software per month by the Monthly Peak number of Cloud End Users using such WFO Cloud Software during the applicable month.

7.4.4.VaaS Software. Avaya will invoice Distributor for Video as a Service Software applications (“VaaS Software”) on a monthly provisioned usage basis. Cloud Fees will be calculated for each Cloud system deployed, each VaaS Software application and each Unit type separately. Cloud Fees for VaaS Software will be determined by multiplying the applicable price per Unit per month by the Monthly Peak number of provisioned Units.

7.4.5.IP Office and IP Office Contact Center Software. Cloud Fees will be calculated for each IP Office and IP Office Contact Center Cloud Software application and each Unit type separately. Cloud Fees will be determined by multiplying the applicable price per Unit per month by the Monthly Average Daily Peak number of ordered Units. The Unit counts are determined irrespective of how many Units are effectively used. Any IP Office and IP Office Contact Center Cloud Software application made available in any way to Distributor under this Amendment will be charged for and shall be paid by Distributor, even if unused by Distributor or Cloud End User, until such time as the applicable Unit has been deactivated in accordance with the applicable Cloud Offer Definition.

7.4.6.Avaya Control Manager (ACM). Unless otherwise stated in the applicable Cloud Offer Definition or Avaya’s quotation, Cloud Fees for ACM Cloud Software will be calculated on a per instance basis by multiplying the number of ACM instances active at the end of each invoicing period by the applicable price per instance per month. As it pertains specifically to ACM, an instance of ACM may run on multiple virtual machines which are, in combination, delivering the function of one ACM.

7.5.Invoicing. Unless otherwise stated in the applicable Cloud Offer Definition or Avaya’s quotation, Cloud Fees will be calculated and invoiced monthly in arrears. Invoicing for each Cloud Order will start on the Commencement Date of that Cloud Order.

7.6.Information and cooperation. Upon Avaya’s request, Distributor shall timely provide Avaya with all information, data, reports, and Distributor’s full cooperation that may be reasonably required by Avaya to calculate the Cloud Fees. Distributor represents and warrants that to the best of its knowledge any such information and data it provides to Avaya is accurate and complete.

7.7.Consent to disclosure. As necessary and to the extent permitted by applicable law, Distributor agrees that Avaya may disclose to third parties information related to the use of Cloud Software by Distributor, Resellers or Cloud End Users as it may be necessary to determine compliance with this Amendment or for the calculation or auditing of royalty or other third party software licensing payments.

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8.SOFTWARE LICENSE

8.1.License Grant. Notwithstanding anything in the Avaya End User License to the contrary and subject to the terms of this Amendment, Avaya grants to Distributor a personal, nonexclusive, nontransferable, non-sublicensable, limited license to use Cloud Software during the Term solely to provide Cloud Services to Resellers in the Territory for further resale of those Cloud Services to Cloud End Users in the Reseller’s authorized territory or for Reseller’s own internal use. Subject to the provisions set forth in this Amendment, Distributor shall comply with the terms of the Avaya End User License to the same extent as if Distributor were a “Cloud End User”.

8.2.Cloud Software available to Resellers. In the event that any Cloud Software (or its portion) is installed or downloaded at a Reseller’s site or device or otherwise made available to or accessible by any Reseller, Avaya shall extend the Avaya End User License to such Reseller, providing Distributor shall:

8.2.1.    Obtain, subject to Section 10.9, Reseller’s written agreement to the Avaya End User License prior to or upon Distributor’s acceptance of the Reseller’s order and enforce the Resale Agreement as it pertains to Cloud Software and/or related Documentation;

8.2.2.    Communicate to Reseller the license types applicable to Cloud Software;

8.2.3.    [*****];

8.2.4.    [*****];

8.2.5.    Notify Avaya promptly, if Distributor becomes aware of any Reseller’s breach of the Avaya End User License and, upon Avaya’s request, immediately terminate such Reseller’s access and right to use the Cloud Services; and

8.2.6.    Contractually require that Reseller agree that at the earlier of: (i) the conclusion of the Cloud Services term for that Reseller; or (ii) upon termination or expiry of the Resale Agreement, or its portion associated with the subject matter of this Amendment, Reseller shall: (a) cease and desist all use of the Cloud Software and related Documentation; (b) in accordance with Avaya’s instructions, irretrievably delete, return and/or destroy any Cloud Software installed or downloaded at that Reseller’s site or on its devices or otherwise made available to or accessible by that Reseller, as well as any related Documentation; and (c) certify compliance with the foregoing requirements by an authorized representative of that Reseller. Upon Avaya’s request, Distributor will request such certification from Reseller and provide to Avaya and acknowledges and agrees that Avaya may share with its applicable licensors. Distributor shall obtain Reseller’s consent to provide such certification to Avaya and its licensors.

8.3.Cloud Software available to Cloud End Users. In the event that any Cloud Software (or its portion) is installed or downloaded at a Cloud End User’s site or device or otherwise made available to or accessible by Cloud End Users, Avaya shall extend the Avaya End User License to such Cloud End User, providing that Distributor shall obligate Reseller in the Resale Agreement to:

8.3.1.    Obtain, subject to Section 10.9, Cloud End User’s written agreement to the Avaya End User License prior to or upon Reseller’s acceptance of the Cloud End User’s order and enforce the terms and conditions of its agreement with Cloud End User as they pertain to Cloud Software and/or related Documentation;

8.3.2.    Communicate to Cloud End User the license types applicable to Cloud Software;

8.3.3.    Not agree to any contractual limitations on Cloud End User’s liability for violations of Avaya’s Intellectual Property Rights, including through breaches of a Cloud Software license or reverse engineering;

8.3.4.    [*****];

8.3.5.    [*****]; and

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8.3.6.    Obtain, subject to Section 8.3.5, Cloud End User’s written agreement that, at the earlier of: (i) the conclusion of the Cloud Services term for that Cloud End User; or (ii) upon termination or expiry of the agreement between the Cloud End User and Reseller associated with the subject matter of this Amendment, Cloud End User shall: (a) cease and desist all use of the Cloud Software and related Documentation; (b) in accordance with Avaya’s instructions, irretrievably delete, return and/or destroy any Cloud Software installed or downloaded at that Cloud End User’s site or on its devices or otherwise made available to or accessible by that Cloud End User, as well as any related Documentation; and (c) promptly certify compliance with the foregoing requirements by an authorized representative of that Cloud End User. Upon Avaya’s request, Distributor shall promptly provide such certification to Avaya and acknowledges and agrees that Avaya may share with its applicable licensors. Distributor shall obtain, or shall procure Reseller to obtain, Reseller’s and Cloud End User’s consent to provide such certification to Avaya and its licensors.

8.3.7.    Not agree with a Cloud End User to a term of Cloud Services that is longer than the Term.

8.4.Additional License Restrictions. Cloud Software will be provided to Distributor and, if applicable, Reseller and Cloud End User solely on a non- perpetual, time-bound subscription basis (unless a different invoicing period applies). Distributor’s and, if applicable, Reseller’s and Cloud End User’s right to use such Cloud Software will at all times be subject to Distributor’s timely payment of the Cloud Fees and compliance with the terms and conditions of this Amendment. Upon expiry or termination of any Cloud Order or this Amendment for any reason, all applicable Cloud Software licenses will terminate immediately and all related Maintenance Services and any other Avaya obligations will discontinue.

8.5.Third Party Software Licensing Requirement. Distributor acknowledges and agrees that Distributor’s hosting of any products, including the Cloud Software, that use or embed certain third party software, such as (by way of example only) Microsoft software or codecs, may require Distributor to independently obtain licenses, at its expense, directly from the applicable third party supplier. With respect to Microsoft specifically, if Distributor hosts any products that use or embed Microsoft software, Distributor must independently obtain, at Distributor’s expense, an applicable agreement from Microsoft. With respect to codecs, if Distributor is hosting any products that use or embed the g.729 codec, h.264 codec, or h.265 codec, Distributor acknowledges and agrees that it is responsible for any and all related fees and/or royalties.

8.6.Ownership of Cloud Software. Distributor understands and agrees that the Cloud Software, and all copies thereof, including translations, compilations, derivative works and partial copies, are and will at all times remain the property of Avaya or its licensors.

8.7.Notification. Distributor shall provide Avaya with written notice of any misappropriation of confidential information or infringement of Intellectual Property Rights by Distributor, Reseller or Cloud End User as it pertains to Cloud Software and/or any related Documentation or any use of Cloud Software and/or related Documentation that exceeds the scope of the licenses authorized, as soon as reasonably practicable upon becoming made aware of the breach.

8.8.Termination of License. Avaya may terminate the license granted under this Section 8, any Cloud Order, this Amendment and/or the Agreement if, within 10 business days of Distributor’s receipt of a reasonably detailed written request to cure, Distributor has not: (i) cured all breaches of license limitations or restrictions; (ii) terminated Reseller’s access to Cloud Services and right to use Cloud Software in accordance with Section 8.2.5; or (iii) procured Reseller to terminate Cloud End User’s access to Cloud Services and right to use Cloud Software in accordance with Section 8.3.5.

8.9.Capex Software. Certain Software licenses may be available for purchase from Avaya on an upfront one-time license fee basis subject to the terms and conditions of this Amendment (“Capex Software”). Except as otherwise stated in this Section, Distributor shall, and shall procure that Resellers and Cloud End User, use the Capex Software consistent with this Amendment, Documentation and associated material code description. Distributor shall, and shall obligate Reseller to, allocate the Capex Software licenses to a specific Cloud End User and may not re-allocate them for use by any other Cloud End User, except as otherwise expressly agreed to by Avaya in writing. Distributor shall maintain a current Maintenance Services support coverage for the Capex Software for the entire term of the Cloud Services. Invoicing, license duration and warranty for the Capex Software licenses will be subject to the applicable provisions in the Agreement, except that no warranty will extend to Cloud End Users.

10    

CERTAIN CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT, MARKED BY [*****] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

9.AUDIT RIGHTS

Avaya, or an independent auditor acting on Avaya’s behalf, may audit Distributor and, where applicable, its Resellers and Cloud End Users, in connection with usage monitoring and invoicing under this Amendment and/or in order to determine compliance with this Amendment. Distributor shall, and shall procure that Resellers and Cloud End Users, provide Avaya, or an independent auditor acting on Avaya’s behalf, access to any information, data as well as the data centers and premises housing the Hosted Solution and each system configuration containing Cloud Software, on-site and/or remotely, for any actions reasonably required by Avaya to conduct such audits. On-site audits may be conducted upon 5 business days’ notice. No notice is required for remote audits. If Avaya suspects a breach by Reseller or Cloud End User under the Avaya End User License as it relates to this Amendment, then upon Avaya’s request, Distributor shall: (i) audit such Reseller or Cloud End User; or (ii) procure that Reseller audits such Cloud End User. Upon Avaya’s request, Distributor shall, and where applicable shall obligate Reseller to, provide the results of the audit to Avaya. Distributor shall, and shall procure that Resellers and Cloud End Users, fully cooperate with Avaya in connection with any audits conducted by or on behalf of Avaya.

10.WARRANTIES AND LIMITATIONS

10.1.Warranty. Avaya warrants to Distributor that during the applicable warranty period: (i) Cloud Software will conform to and operate in accordance with the applicable Documentation in all material respects; (ii) Maintenance Services will be carried out in a professional and workmanlike manner by qualified personnel.

10.2.Warranty Period. Unless otherwise agreed in writing, the warranty period is [*****] beginning on the date of provision of the Cloud Software or performance of the Maintenance Service, as applicable, provided that no warranty period will be longer than the Term.

10.3.Cloud Software. If any Cloud Software is not in conformance with the warranty above and during the warranty period Avaya receives from Distributor a written notice describing in reasonable detail how the Cloud Software failed to be in conformance, Avaya shall, at its option, repair or replace the Cloud Software to achieve conformance. Distributor must provide Avaya with: (i) information in sufficient detail to enable Avaya to reproduce and analyze the failure; and (ii) remote or on site access to the Cloud Software, as requested by Avaya. Repaired Cloud Software is warranted as above for the remainder of the original warranty period. If Avaya determines that repair or replacement of the Cloud Software is not commercially reasonable, Distributor may terminate, with prospective effect, the Cloud Order for the affected Cloud Software, subject to payment of Cloud Fees up until termination.

10.4.Maintenance Services. To the extent that Avaya has not performed Maintenance Services in conformance with the above warranty and, within the warranty period, receives a written notice from Distributor identifying the non-conforming Maintenance Services in reasonable detail, Avaya shall re-perform the non-conforming Maintenance Service.

10.5.Warranty Procedures. Distributor shall return or otherwise make available the Cloud Software subject to a warranty claim to Avaya in accordance with Avaya’s then current return procedures as defined by the Channel Policies, or as otherwise advised by Avaya, accompanied by evidence that Cloud Software remains entitled to warranty protection.

10.6.Costs. Within the applicable warranty period Avaya shall not charge for any repair, replacement, error identification or correction of the Cloud Software or Maintenance Service subject to a warranty claim. If Avaya determines that Cloud Software or Maintenance Service is free of defects, Distributor shall pay to Avaya all costs of handling and inspection of the warranty claim at Avaya’s then current rates and reimburse Avaya for all costs incurred.

10.7.Warranty to Resellers and Cloud End Users. Distributor shall grant Resellers, and shall obligate Resellers to grant to Cloud End Users, a warranty consistent with current market conditions and applicable law for similar high-quality communications services. Distributor’s and Reseller’s grant will be their own responsibility and will not be binding upon Avaya.

10.8.Support to Resellers and Cloud End Users for Warranty and License Issues. Distributor and/or Reseller shall provide support to Resellers and Cloud End Users with regard to any warranty or non-conformance issues or questions concerning the Cloud Services and Hosted Solution and filing warranty claims, and with regard to any license issue or question. In addition, Distributor shall obligate Resellers to provide the above support to Cloud End Users.

10.9.NO WARRANTY TO CLOUD END USERS. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE AVAYA END USER LICENSE, THIS AMENDMENT OR THE AGREEMENT, [*****].

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10.10.Exclusions and Disclaimers. Any warranty exclusions and disclaimers set out in the Agreement apply to the Cloud Software and Maintenance Services. In addition, Avaya is not responsible under this Amendment for any software, equipment, hardware or services that Distributor may have separately purchased apart from this Amendment or is re-using. Distributor is responsible to ensure that any such software, equipment or hardware is in good working order and compatible with the Cloud Software. This Section does not limit any warranty and/or support obligations Avaya may have elsewhere under any agreements with Distributor.

11.NON-PRODUCTION SOFTWARE

11.1.    At its discretion and upon prior written notice, Avaya may provide, at no charge to Distributor, a defined number of Cloud Software licenses for a limited period of time (“Non-production Term”) solely for Distributor’s internal testing of such Cloud Software in a non-production environment or other noncommercial internal purposes(“Non-production Software”). Except as otherwise stated in this Section 11, Non-production Software will be governed by the Software license provision set out in Section 8, and will be subject to the restrictions detailed in the Avaya End User License. Without Avaya’s prior written consent, Distributor may not disclose the results of the Non-production Software use to any third party. Non-production Software licenses will expire automatically at the earlier of: (i) end of the Non-production Term; or (ii) at the time indicated in Avaya’s notice to Distributor. Distributor may not charge for any service using any Non-production Software.

11.2.    Unless otherwise expressly agreed to by Avaya in writing, Non-production Software may not be installed, downloaded or otherwise made available for use by any Reseller or Cloud End User. Notwithstanding the foregoing, if Avaya gives Distributor prior written approval to conduct a limited pilot using any Non-production Software that involves any Reseller and/or Cloud End User, Distributors shall, and to the applicable extent shall contractually obligate that Resellers shall: (i) not charge Resellers and, if applicable, Cloud End Users during such pilot; (ii) cause Resellers and, if applicable, Cloud End Users to comply with the terms at least as protective as the terms in this Amendment and, except as expressly altered in this Amendment, the Avaya End User License; (iii) upon Avaya’s request, enforce such terms against Resellers and contractually obligate Resellers to enforce such terms against Cloud End Users;; and (iv) cause Resellers and contractually obligate Resellers to cause Cloud End Users to immediately stop using the Non-production Software at the end of the Non-production Term or as notified by Avaya in accordance with Section 11.1. Any feedback or other suggestions provided by Distributor, Resellers or Cloud End Users to Avaya during or as a result of the use of any Non-production Software will become Avaya’s property and Distributor shall obtain and contractually require Reseller to obtain from Cloud End User, written consent to the foregoing from Reseller or Cloud End User, as applicable. Avaya may use such feedback at its discretion, including by assigning, licensing or otherwise transferring any products so changed or modified to third parties without obligation or recourse to Distributor.

11.3.    By providing any Non-production Software that is not generally available (“Non-GA Software”), Avaya does not promise or guarantee that it will make any Non-GA Software generally available to anyone in the future. Avaya has the sole discretion to determine if any Non-GA Software will become generally available and no express or implied obligation to announce the general availability of any Non-GA Software or any similar or compatible product. Distributor’s, Reseller’s or Cloud End User’s access to any Non-GA Software will not be construed as Avaya’s acceptance of a Cloud Order for the generally available version of that Non-GA Software (if any).

11.4.    NOTWITHSTANDING ANYTHING TO THE CONTRARY, NON-PRODUCTION SOFTWARE IS PROVIDED “AS IS”, WITHOUT ANY WARRANTY OR INDEMNIFICATION, AND AVAYA, ITS AFFILIATES, LICENSORS AND SUPPLIERS EXPRESSLY DISCLAIM ANY AND ALL EXPRESS, STATUTORY, IMPLIED OR OTHER WARRANTIES, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND/OR NON-INFRINGEMENT. TO THE EXTENT PERMITTED BY APPLICABLE LAW, [*****]. THE PARTIES AGREE THAT THE LIMITATIONS SPECIFIED IN THIS SECTION 11.4 WILL APPLY EVEN IF ANY LIMITED REMEDY PROVIDED IN THIS AMENDMENT OR THE AGREEMENT IS FOUND TO HAVE FAILED OF ITS ESSENTIAL PURPOSE.

12.INDEMNIFICATION

[*****]

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13.DISCONTINUATION

At any time during the term of this Amendment Avaya may discontinue the sale or licensing of any generally available offering, Maintenance Services or Cloud Software, or modify generally available offerings, including the underlying Cloud Offer Definitions or Service Descriptions, without liability to Distributor, Reseller, Cloud End User or any other person or entity. Avaya shall notify Distributor in accordance with the then current discontinuation policy of such end of sale date or modification for any Maintenance Services, Cloud Software or generally available offering by posting the relevant information on Avaya’s web sites or by written notice to Distributor. Avaya’s current product lifecycle policy is located at http://support.avaya.com or a successor site as designated by Avaya from time to time.

14.TERM AND TERMINATION

14.1.Term of Amendment. This Amendment enters into force on the date last party signs it and remains in force for the duration of the Agreement, unless terminated earlier in accordance with the terms of this Amendment.

14.2.Term of Cloud Orders. Unless otherwise stated in the applicable Cloud Offer Definition or an accepted Cloud Order: (i) the initial Term of any Cloud Order will start on the Commencement Date and will end 12 months thereafter; and (ii) Cloud Orders will renew automatically for subsequent 12 month terms at Avaya’s then current price list for the relevant Cloud Software and related Maintenance Services and Minimum Commitment (if any), unless either party gives written notice to the other party of its intent not to renew no later than 90 days in advance of each anniversary of the Commencement Date. The Term of any subsequent Cloud Order will be co-terminous with the Term of the underlying initial Cloud Order. Notwithstanding the foregoing, Cloud Orders may be terminated by Distributor in accordance with this Amendment, subject to Distributor’s payment of Early Termination Fees (if any).

14.3.Early Termination Fees. In case of an early termination of a Cloud Order, Distributor shall pay Avaya the Early Termination Fees set out in the applicable Cloud Offer Definition or Avaya’s quotation (if any), except that no Early Termination Fees will apply in relation to any Cloud Order terminated: (i) in accordance with Section 10.3; or (i) for Avaya’s uncured material breach in accordance with Section 14.5. Avaya may set off the Early Termination Fees against any amounts due by Avaya to Distributor under this Amendment or otherwise, subject to a written notification to Distributor.

14.4.Termination for convenience. Unless the applicable Cloud Offer Definition states otherwise: (i) Distributor may terminate any Cloud Order for its convenience by providing Avaya at least 3 months advance written notice of its intent to terminate, subject to Distributor’s payment of all Cloud Fees due up until the effective date of termination and the applicable Early Termination Fees (if any); and (ii) any such termination will be effective on the last day of the last month in the termination notice period. In case of an early termination by Distributor for its convenience, Avaya will be under no obligation to refund to Distributor any prepaid amounts.

14.5.Termination for breach. Subject to Section 8.8, either party may terminate this Amendment and/or any underlying Cloud Order by written notice to the other party, effective immediately upon receipt, if the other party fails to cure any material breach of this Amendment and/or Cloud Order within a 45 day period after having received a written notice from the non-breaching party detailing the breach and requesting the breach to be cured. Notwithstanding the foregoing, Avaya may terminate this Amendment and/or any underlying Cloud Order by written notice to Distributor effective immediately upon receipt if Distributor has not provided Avaya with access to the Cloud Software or Monitoring Tools, whether remotely or on-site, as requested by Avaya, or has otherwise interfered with Avaya’s ability to correctly track the usage of Cloud Software or auditing Distributor’s or Cloud End User’s compliance with Avaya End User License.

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14.6.Effects of termination. If this Amendment expires or terminates during the Term of any Cloud Order, the parties agree that, except as set forth in this Section, this Amendment will remain in effect solely for purposes of enabling the underlying Cloud Orders. Notwithstanding the foregoing, termination or expiry of this Amendment for an uncured material breach in accordance with Section 14.5 will be deemed to terminate all underlying Cloud Orders, unless the parties expressly agree otherwise in writing. Termination or expiry of any Cloud Order will be deemed to terminate all Cloud Software licenses granted under that Cloud Order. Upon termination or expiry of this Amendment for any reason, Distributor shall immediately and permanently destroy all copies of Cloud Software and any related materials, including Documentation, in Distributor’s possession or control and, upon Avaya’s request, certify such destruction in writing. Rights of termination under this Amendment will be without prejudice to any accrued rights or liabilities of either party to the other arising out of this Amendment. Unless otherwise agreed to by Avaya in writing, upon termination or expiry of this Amendment Distributor shall: (i) discontinue all use of the Licensed Trademarks in connection with the Cloud Software and related Maintenance Services; (ii) cease holding itself out in any manner as an authorized Avaya Cloud or CaaS service provider and notify and arrange for all persons who may identify, list or publish Distributor’s name as an authorized Avaya Cloud or CaaS service provider to discontinue such designation; and (iii) return to Avaya all promotional or other materials supplied by Avaya specifically in connection with the Cloud Software and this Amendment. Upon termination or expiry of this Amendment, Avaya may inform any and all Resellers and Cloud End Users that Distributor is no longer an authorized Avaya Cloud or CaaS service provider and may provide Resellers and/or Cloud End Users with alternative support options to transition to a new service. Provisions in this Amendment concerning ownership, indemnification, limitation of liability, termination, payments due, warranty disclaimers, notices, and any other terms which, by their nature, are intended to survive termination or expiry of this Amendment or a Cloud Order will survive such termination or expiry.

15.OTHER PROVISIONS

15.1.Notices. Unless specified elsewhere in this Amendment, any notice under this Amendment will be in writing in English (notwithstanding the language of this Amendment) and addressed to the other party at its address set forth below (or to any other address that the receiving party may designate from time to time in accordance with this Section). Notices will be delivered by: (i) personal delivery; (ii) courier or first class mail (with all fees or postage prepaid); (iii) facsimile (with confirmation of transmission); or (iv) an e-mail of a duly signed PDF document (with receipt confirmed). Notices will be deemed to have been given, as applicable, on the earlier of: (a) the date of receipt; (b) two working days after sending by courier; (iii) five working days after first class posting; (c) next working day after sending by facsimile or email.

FOR DISTRIBUTOR:	FOR AVAYA:
ScanSource, Inc. dba ScanSource Catalyst 6 Logue Court Greenville, SC 29615 United States FASCIMILE: Email: chris.marlar@scansource.com	Attention: Vice President, Law Avaya Inc. 4655 Great America Parkway Santa Clara, CA 95054-1233 United States FACSIMILE: 408-562-3749 Email: lglnoticescomm@avaya.com

15.2.Electronic signature. This Amendment and any amendment thereto may be executed in multiple counterparts, each of which will constitute an original and all of which will constitute but one document. Subject to any applicable local law requirements, the parties agree that this Amendment and any amendments hereto may be executed by electronic signature, which will be binding between the parties as if handwritten. Any modifications or amendments to this Amendment must be in writing and physically or electronically signed by both parties. In no event will electronic mail constitute a modification or amendment to this Amendment.

15.3.Amendment to the Agreement. The Agreement (including all attachments and other documents referenced therein as well as any amendments thereto) is amended by this Amendment. Except as modified by this Amendment, all other terms of the Agreement remain unaffected.

15.4.Entire Agreement. This Amendment along with the Agreement incorporated into this Amendment by reference (except as otherwise stated in this Amendment) constitutes the entire understanding of the parties with respect to the subject matter of this Amendment and will supersede all previous and contemporaneous communications, representations or understandings, either oral or written, between the parties relating to that subject matter and will not be contradicted or supplemented by any prior course of dealing between the parties.

14    

CERTAIN CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT, MARKED BY [*****] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by their duly authorized representatives, for good and valuable consideration, the receipt and adequacy of which is hereby acknowledged.

ScanSource, Inc. d/b/a ScanSource Catalyst	Avaya Inc.
By: /s/ David Hertwig	By: /s/ Gary M. Levy
Name David Hertwig	Name Gary M. Levy
Title: President, ScanSource Catalyst	Title: Vice President – US Channels
Date: February 1, 2017	Date: February 5, 2017

15    

EX-31.1

Exhibit 31.1

Certification Pursuant to Rule 13a-14(a) or 15d-14(a)

of the Exchange Act, as adopted Pursuant to Section 302 of the

Sarbanes-Oxley Act of 2002

I, Michael L. Baur, certify that:

1. I have reviewed this quarterly report on Form 10-Q of ScanSource, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Michael L. Baur

Michael L. Baur, Chief Executive Officer (Principal Executive Officer)

Date: May 9, 2017

EX-31.2

Exhibit 31.2

Certification Pursuant to Rule 13a-14(a) or 15d-14(a)

of the Exchange Act, as adopted Pursuant to Section 302 of the

Sarbanes-Oxley Act of 2002

I, Gerald Lyons, certify that:

1. I have reviewed this quarterly report on Form 10-Q of ScanSource, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Gerald Lyons

Gerald Lyons, Interim Chief Financial Officer, Senior Vice President, Corporate Controller and Principal Accounting Officer (Principal Accounting Officer)

Date: May 9, 2017

EX-32.1

Exhibit 32.1

Certification of the Chief Executive Officer of ScanSource, Inc.

Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to § 906

of the Sarbanes-Oxley Act of 2002

In connection with the annual report of ScanSource, Inc. (the “Company”) on Form 10-Q for the quarter and nine months endedMarch 31, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officer of the Company certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1) The Report fully complies with the requirements of §13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”); and

2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	May 9, 2017	/s/ Michael L. Baur
		Michael L. Baur,
		Chief Executive Officer (Principal Executive Officer)

This certification is being furnished solely to comply with the provisions of § 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as part of the accompanying Report, including for purposes of Section 18 of the Exchange Act, or as a separate disclosure document. A signed original of this written certification required by Section 906, or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written certification required by Section 906, has been provided to the Company and will be rendered by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

Certification of the Chief Financial Officer of ScanSource, Inc.

Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to § 906

of the Sarbanes-Oxley Act of 2002

In connection with the annual report of ScanSource, Inc. (the “Company”) on Form 10-Q for the quarter and nine months endedMarch 31, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officer of the Company certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1) The Report fully complies with the requirements of §13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”); and

2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	May 9, 2017	/s/ Gerald Lyons
		Gerald Lyons
		Interim Chief Financial Officer, Senior Vice President, Corporate Controller and Principal Accounting Officer (Principal Accounting Officer)

This certification is being furnished solely to comply with the provisions of § 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as part of the accompanying Report, including for purposes of Section 18 of the Exchange Act, or as a separate disclosure document. A signed original of this written certification required by Section 906, or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written certification required by Section 906, has been provided to the Company and will be rendered by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	9 Months Ended
	Mar. 31, 2017	May 05, 2017
Document And Entity Information
Entity Registrant Name	SCANSOURCE, INC.
Entity Central Index Key	0000918965
Current Fiscal Year End Date	--06-30
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Mar. 31, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock, Shares Outstanding		25,314,306

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2017	Jun. 30, 2016
Current assets:
Cash and cash equivalents	$ 62,187	$ 61,400
Accounts receivable, less allowance of $42,494 at March 31, 2017 and $39,032 at June 30, 2016	565,242	559,557
Inventories	514,238	558,581
Prepaid expenses and other current assets	59,739	49,367
Total current assets	1,201,406	1,228,905
Property and equipment, net	56,409	52,388
Goodwill	201,066	92,715
Identifiable intangible assets, net	105,578	51,127
Deferred income taxes	27,534	28,813
Other non-current assets	39,823	37,237
Total assets	1,631,816	1,491,185
Current liabilities:
Accounts payable	437,226	471,487
Accrued expenses and other current liabilities	111,330	98,975
Current portion of contingent consideration	31,257	11,594
Income taxes payable	5,461	3,056
Total current liabilities	585,274	585,112
Deferred income taxes	2,163	2,555
Long-term debt	5,429	5,429
Borrowings under revolving credit facility	108,505	71,427
Long-term portion of contingent consideration	81,966	13,058
Other long-term liabilities	39,760	39,108
Total liabilities	823,097	716,689
Commitments and contingencies
Shareholders’ equity:
Preferred stock, no par value; 3,000,000 shares authorized, none issued	0	0
Common stock, no par value; 45,000,000 shares authorized, 25,314,031 and 25,614,673 shares issued and outstanding at March 31, 2017 and June 30, 2016, respectively	55,997	67,249
Retained earnings	830,210	779,934
Accumulated other comprehensive income (loss)	(77,488)	(72,687)
Total shareholders’ equity	808,719	774,496
Total liabilities and shareholders’ equity	$ 1,631,816	$ 1,491,185

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Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2017	Jun. 30, 2016
Current assets:
Allowance for accounts receivable	$ 42,494	$ 39,032
Stockholders' Equity Attributable to Parent [Abstract]
Preferred stock, par value (in dollars per share)	$ 0	$ 0
Preferred stock, shares authorized (in shares)	3,000,000	3,000,000
Preferred stock, shares issued (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0	$ 0
Common stock, shares authorized (in shares)	45,000,000	45,000,000
Common stock, share issued (in shares)	25,314,031	25,614,673
Common stock, shares outstanding (in shares)	25,314,031	25,614,673

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Condensed Consolidated Income Statements (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Income Statement [Abstract]
Net sales	$ 813,538	$ 798,404	$ 2,650,895	$ 2,662,754
Cost of goods sold	720,867	713,928	2,368,155	2,390,093
Gross profit	92,671	84,476	282,740	272,661
Selling, general and administrative expenses	70,733	61,690	212,691	190,202
Change in fair value of contingent consideration	1,960	1,139	3,921	4,520
Operating income	19,978	21,647	66,128	77,939
Interest expense	780	694	2,281	1,684
Interest income	(1,040)	(800)	(2,948)	(2,509)
Other (income) expense, net	667	400	(11,280)	1,357
Income before income taxes	19,571	21,353	78,075	77,407
Provision for income taxes	7,147	7,311	27,799	26,713
Net income	$ 12,424	$ 14,042	$ 50,276	$ 50,694
Per share data:
Net income per common share, basic (in dollars per share)	$ 0.49	$ 0.54	$ 1.99	$ 1.90
Weighted-average shares outstanding, basic (in shares)	25,262	25,863	25,311	26,741
Net income per common share, diluted (in dollars per share)	$ 0.49	$ 0.54	$ 1.97	$ 1.88
Weighted-average shares outstanding, diluted (in shares)	25,400	25,967	25,458	26,908

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Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract]
Net income	$ 12,424	$ 14,042	$ 50,276	$ 50,694
Foreign currency translation adjustment	4,762	10,288	(4,801)	(12,667)
Comprehensive income	$ 17,186	$ 24,330	$ 45,475	$ 38,027

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Cash flows from operating activities:
Net income	$ 50,276	$ 50,694
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	18,692	12,570
Amortization of debt issuance costs	223	223
Provision for doubtful accounts	5,632	2,803
Share-based compensation	4,862	5,194
Deferred income taxes	455	7,248
Excess tax benefits from share-based payment arrangements	(88)	(101)
Change in fair value of contingent consideration	3,921	4,520
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	7,022	52,327
Inventories	41,509	(7,736)
Prepaid expenses and other assets	(8,125)	(312)
Other non-current assets	(32)	(1,571)
Accounts payable	(54,378)	(108,896)
Accrued expenses and other liabilities	11,720	8,005
Income taxes payable	2,435	(656)
Net cash provided by (used in) operating activities	84,124	24,312
Cash flows from investing activities:
Capital expenditures	(6,445)	(9,120)
Cash paid for business acquisitions, net of cash acquired	(83,804)	(61,475)
Payments for acquisition of intangible assets	(3,583)	0
Net cash provided by (used in) investing activities	(93,832)	(70,595)
Cash flows from financing activities:
Borrowings on revolving credit	1,305,922	1,058,720
Repayments on revolving credit	(1,268,846)	(985,079)
Repayments on long-term debt	0	(2,019)
Repayments on capital lease obligation	(184)	(162)
Contingent consideration payments	(10,241)	(7,286)
Exercise of stock options	4,770	3,816
Repurchase of common stock	(20,882)	(98,414)
Excess tax benefits from share-based payment arrangements	88	101
Net cash provided by (used in) financing activities	10,627	(30,323)
Effect of exchange rate changes on cash and cash equivalents	(132)	(4,191)
Increase (decrease) in cash and cash equivalents	787	(80,797)
Cash and cash equivalents at beginning of period	61,400	121,646
Cash and cash equivalents at end of period	$ 62,187	$ 40,849

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Business and Summary of Significant Accounting Policies

9 Months Ended

Mar. 31, 2017

Accounting Policies [Abstract]

Business and Summary of Significant Accounting Policies

Business and Summary of Significant Accounting Policies

Business Description

ScanSource, Inc. is a leading global provider of technology products and solutions. ScanSource, Inc. and its subsidiaries (the "Company") provide value-added solutions from technology suppliers and sell to resellers and sales partners in specialty technology markets through its Worldwide Barcode, Networking & Security segment and Worldwide Communications & Services segment.

The Company operates in the United States, Canada, Latin America and Europe. The Company sells products into the United States and Canada from a facility located in Mississippi; into Latin America principally from facilities located in Florida, Mexico, Brazil and Colombia; and into Europe from facilities located in Belgium, France, Germany and the United Kingdom.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared by the Company’s management in accordance with United States generally accepted accounting principles ("US GAAP") for interim financial information and applicable rules and regulations of the Securities Exchange Act of 1934. Accordingly, they do not include all of the information and footnotes required by US GAAP for annual financial statements. The unaudited condensed consolidated financial statements included herein contain all adjustments (consisting of normal recurring and non-recurring adjustments) which are, in the opinion of management, necessary to present fairly the financial position as of March 31, 2017 and June 30, 2016, the results of operations for the quarters and nine months ended March 31, 2017 and 2016, the statements of comprehensive income for the quarters and nine months endedMarch 31, 2017 and 2016, and the statements of cash flows for the nine months endedMarch 31, 2017 and 2016. The results of operations for the quarters and nine months endedMarch 31, 2017 and 2016 are not necessarily indicative of the results to be expected for a full year. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2016.

Summary of Significant Accounting Policies

Except as described below, there have been no material changes to the Company’s significant accounting policies for the nine months endedMarch 31, 2017 from the information included in the notes to the Company’s consolidated financial statements included in the Annual Report on Form 10-K for the fiscal year ended June 30, 2016. For a discussion of the Company’s significant accounting policies, please see the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2016.

Cash and Cash Equivalents

The Company considers all highly-liquid investments with original maturities of three months or less, when purchased, to be cash equivalents. The Company maintains zero-balance disbursement accounts at various financial institutions at which the Company does not maintain significant depository relationships. Due to the terms of the agreements governing these accounts, the Company generally does not have the right to offset outstanding checks written from these accounts against cash on hand, and the respective institutions are not legally obligated to honor the checks until sufficient funds are transferred to fund the checks. As a result, checks released but not yet cleared from these accounts in the amounts of $2.9 million and $78.3 million are included in accounts payable as of March 31, 2017 and June 30, 2016, respectively.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued a comprehensive new revenue recognition standard for contracts with customers that will supersede most current revenue recognition guidance, including industry-specific guidance. The core principle of this standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, the standard provides a five-step analysis of transactions to determine when and how revenue is recognized. Other major provisions include the capitalization and amortization of certain contract costs, ensuring the time value of money is considered in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. This guidance also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. The new standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. The standard permits the use of either the retrospective or cumulative effect transition method. This guidance will be applicable to the Company for the fiscal year beginning July 1, 2018. We are currently in the process of evaluating the impact of this guidance on our consolidated financial results to determine the appropriate transition method for the Company. We have engaged a third-party consultant to assist with developing a multi-phase plan to assess the impact of adoption. We have also begun our initial review and analysis of business processes and current material contracts.

In February 2016, the FASB issued Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842) requiring lessees to reflect most leases on their balance sheets and recognize expenses on their income statements. Under the new guidance, lessees will be required to recognize a lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis, and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The asset will be measured at the lease liability amount, adjusted for lease prepayments, lease incentives received, and the lessee's initial direct costs. For leases with a lease term of 12 months or less, as long as the lease does not include options to purchase the underlying assets, lessees can elect not to recognize a lease liability and right-of-use asset. Under the new guidance, lessor accounting is largely unchanged, and the accounting for sale and leaseback transactions is simplified. The standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. This guidance will be applicable to the Company for the fiscal year beginning July 1, 2019. The guidance must be adopted using a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. The Company is currently evaluating the impact on its consolidated financial statements upon the adoption of this new guidance.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230) intended to reduce diversity in practice of how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The update addresses eight specific cash flow issues, with the treatment of contingent consideration payments made after a business combination being the most directly applicable to the Company. The update requires that cash payments made approximately three months or less after an acquisition's consummation date should be classified as cash outflows for investing activities. Payment made thereafter up to the amount of the original contingent consideration liability should be classified as cash outflows from financing activities. Payments made in excess of the amount of the original contingent consideration liability should be classified as cash outflows from operating activities. The standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The standard will be applicable to the Company for the fiscal year beginning July 1, 2018. Early adoption is permitted, provided all eight amendments are adopted in the same period. The guidance requires adoption using a retrospective transition method. The Company is currently evaluating the impact on its consolidated financial statements upon the adoption of this new guidance.

In January 2017, the FASB issued guidance clarifying the definition of a business within Accounting Standards Codification ("ASC") Topic 850 Business Combinations. The new standard narrows the definition of a business and therefore affects whether an acquisition represents the purchase of a business or an asset. The standard provides for an initial assessment to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, qualifying as an asset, not a business. If the definition of the acquisition is not clear after the initial assessment, the guidance provides framework to determine if the asset(s) acquired include an input and a substantive process that together significantly contribute to the ability to create an output, which constitutes a business. The distinction between a business and an asset is important because asset acquisitions do not result in goodwill, do not require the expensing of transaction costs and do not record contingent consideration at fair value at the acquisition date, as well as other accounting concepts. The standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted as long as the transaction has not been reported in financial statements that have been issued or made available for issuance. The Company adopted the new standard in connection with an asset acquisition completed during the quarter ended March 31, 2017 (See Note 4-Acquisitions).

In January 2017, the FASB issued guidance to simplify the accounting for goodwill impairment. It removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Goodwill impairment will now be calculated as the amount by which a reporting unit’s carrying value exceeds its fair value, not exceeding the carrying amount of goodwill. In addition, income tax effects from any tax deductible goodwill shall also be considered in measuring goodwill impairment loss, if applicable. The guidance is effective for annual and interim periods beginning after December 15, 2019 and should be adopted prospectively. Early adoption is permitted for interim or annual goodwill impairment test performed with a measurement date after January 1, 2017. The Company intends to adopt the guidance prospectively during the fiscal quarter ended June 30, 2017 as our annual goodwill impairment testing measurement date is April 30, 2017 for the current fiscal year. The adoption is not expected to have an impact on the Company's consolidated financial statements.

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Earnings Per Share

9 Months Ended

Mar. 31, 2017

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

Basic earnings per share are computed by dividing net income by the weighted-average number of common shares outstanding. Diluted earnings per share are computed by dividing net income by the weighted-average number of common and potential common shares outstanding.

	Quarter ended				Nine months ended
	March 31,				March 31,
	2017		2016		2017		2016
	(in thousands, except per share data)
Numerator:
Net Income	$	12,424	$	14,042	$	50,276	$	50,694
Denominator:
Weighted-average shares, basic	25,262		25,863		25,311		26,741
Dilutive effect of share-based payments	138		104		147		167
Weighted-average shares, diluted	25,400		25,967		25,458		26,908
Net income per common share, basic	$	0.49	$	0.54	$	1.99	$	1.90
Net income per common share, diluted	$	0.49	$	0.54	$	1.97	$	1.88

For the quarter and nine months endedMarch 31, 2017, weighted-average shares outstanding excluded from the computation of diluted earnings per share because their effect would be anti-dilutive were 442,001 and 454,006, respectively. For the quarter and nine months endedMarch 31, 2016, there were 868,211 and 835,055, respectively, weighted-average shares outstanding excluded from the computation of diluted earnings per share because their effect would be anti-dilutive.

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Accumulated Other Comprehensive Income (Loss)

9 Months Ended

Mar. 31, 2017

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Accumulated Other Comprehensive Income (Loss)

Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) consists of the following:

	March 31, 2017			June 30, 2016
	(in thousands)
Foreign currency translation adjustment	$	(77,488	)	$	(72,687	)
Accumulated other comprehensive income (loss)	$	(77,488	)	$	(72,687	)

The tax effect of amounts in comprehensive income (loss) reflect a tax expense or benefit as follows:

	Quarter ended March 31,						Nine months ended March 31,
	2017			2016			2017			2016
	(in thousands)
Tax expense (benefit)	$	(271	)	$	(1,264	)	$	(179	)	$	1,723

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Acquisitions

9 Months Ended

Mar. 31, 2017

Business Combinations [Abstract]

Acquisitions

Acquisitions

KBZ

On September 4, 2015, the Company acquired substantially all the assets of KBZ Communications, Inc. ("KBZ"), a Cisco Authorized Distributor specializing in video conferencing, services, and cloud. KBZ is part of the Company's Worldwide Barcode, Networking and Security operating segment. This acquisition enables the Company to enhance its focus on Cisco’s solutions, combining the strengths of both companies to provide a more robust portfolio of products, solutions and services.

Under the asset purchase agreement, the Company acquired the assets of KBZ for a cash payment of $64.6 million. The Company acquired $3.1 million of cash as part of the acquisition, resulting in $61.5 million net cash paid for KBZ.

The purchase price of this acquisition was allocated to the assets acquired and liabilities assumed based on their estimated fair values on the transaction date. Pro forma results of operations have not been presented for this acquisition because the results of this acquisition are not material to our consolidated results. The purchase price allocation is as follows:

	KBZ
	(in thousands)
Receivables, net	$	63,131
Inventory	11,227
Other Current Assets	10,303
Property and equipment, net	677
Goodwill	21,639
Identifiable intangible assets	18,400
Other non-current assets	1,399
	$	126,776
Accounts payable	$	48,271
Accrued expenses and other current liabilities	14,863
Other long-term liabilities	2,167
Consideration transferred, net of cash acquired	61,475
	$	126,776

Intangible assets acquired include trade names, customer relationships, and non-compete agreements.

Intelisys

On August 29, 2016, the Company acquired substantially all the assets of Intelisys, a technology services company with voice, data, cable, wireless, and cloud services. Intelisys is part of the Company's Worldwide Communications and Services operating segment. With this acquisition, the Company broadens its capabilities in the telecom and cloud services market and generates the opportunity for high-growth recurring revenue.

Under the asset purchase agreement, the Company made an initial cash payment of approximately $84.6 million, which consisted of an initial purchase price of $83.6 million and $1.0 million for additional net assets acquired at closing, and agreed to make four additional annual cash installments based on a form of adjusted EBITDA for the periods ending June 30, 2017 through June 30, 2020. The Company acquired $0.8 million of cash as part of the acquisition, resulting in $83.8 million net cash paid for Intelisys initially. A portion of the purchase price was placed into escrow to indemnify the Company for certain pre-acquisition damages. As of March 31, 2017, the balance available in escrow was $8.5 million.

The purchase price of this acquisition was allocated to the assets acquired and liabilities assumed based on their estimated fair values on the transaction date. The goodwill balance is primarily attributed to entering the recurring revenue telecom and cloud services market and expanded market opportunities to grow recurring revenue streams. Goodwill and identifiable intangible assets are expected to be fully deductible for tax purposes.

	Intelisys
	(in thousands)
Receivables, net	$	21,655
Other current assets	1,547
Property and equipment, net	5,298
Goodwill	109,005
Identifiable intangible assets	63,110
Other non-current assets	1,839
	$	202,454
Accounts payable	$	21,063
Accrued expenses and other current liabilities	2,587
Contingent consideration	95,000
Consideration transferred, net of cash acquired	83,804
	$	202,454

Following the acquisition date, Intelisys contributed the following results to the Condensed Consolidated Income Statement for the quarter and nine months endedMarch 31, 2017.

	Quarter ended March 31, 2017			Nine months ended March 31, 2017
Net Sales	$	8,893		$	20,244
Amortization of intangible assets	1,586			3,701
Change in fair value of contingent consideration	3,289			6,457
Operating income (loss)	(656		)	(942		)
Net income (loss)	$	(403	)	$	(392	)

The following tables summarize the Company's unaudited consolidated pro forma results of operations as though the acquisition happened on July 1, 2015. The pro forma consolidated financial statements do not necessarily reflect what the combined company's financial condition or results from operations would have been had the acquisition occurred on the dates indicated. They also may not be useful in predicting the future financial condition and results of operations of the combined company. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors.

For the two months ended August 31, 2016, and the quarter and nine months endedMarch 31, 2016, the Company has not provided for a change in fair value of contingent consideration.

	Quarter ended March 31, 2017				Nine months ended March 31, 2017
	(in thousands, except per share data)				(in thousands, except per share data)
	As Reported, Consolidated		Pro forma, Consolidated (1)		As Reported, Consolidated		Pro forma, Consolidated (2)
Net Sales	$	813,538	$	813,538	$	2,650,895	$	2,656,111
Operating income	19,978		19,978		66,128		67,580
Net Income	12,424		12,424		50,276		51,361
Earnings per share:
Basic	$	0.49	$	0.49	$	1.99	$	2.03
Diluted	$	0.49	$	0.49	$	1.97	$	2.02

(1) There were no acquisition costs in the pro forma results presented for the quarter endedMarch 31, 2017.

(2) Pro forma results include actual results from Intelisys for the two months ended August 31, 2016. Adjustments include additional amortization and depreciation expense as if the fair value of identifiable intangible assets, including software, had been recorded on July 1, 2015. On a gross basis, operating income includes additional amortization expense of $1.1 million and additional depreciation expense of $0.2 million for the nine months endedMarch 31, 2017. Net income, net of tax, includes additional amortization expense of $0.7 million and additional depreciation expense of $0.1 million for the nine months endedMarch 31, 2017. Adjustments also include additional income tax expense of $0.8 million and adding back acquisition costs of $0.5 million.

	Quarter ended March 31, 2016				Nine months ended March 31, 2016
	(in thousands, except per share data)				(in thousands, except per share data)
	As Reported, Consolidated		Pro forma, Consolidated (3)		As Reported, Consolidated		Pro forma, Consolidated (4)
Net Sales	$	798,404	$	805,097	$	2,662,754	$	2,683,588
Operating income	21,647		22,112		77,939		81,483
Net Income	14,042		14,296		50,694		52,768
Earnings per share:
Basic	$	0.54	$	0.55	$	1.90	$	1.97
Diluted	$	0.54	$	0.55	$	1.88	$	1.96

(3) Includes actual results for Intelisys for the quarter endedMarch 31, 2016. On a gross basis, operating income includes additional amortization expense of $1.6 million and additional depreciation expense of $0.3 million for the quarter endedMarch 31, 2016. Net income, net of tax, includes additional amortization expense of $1.0 million and additional depreciation expense of $0.2 million for the quarter endedMarch 31, 2016. Adjustments also include additional income tax expense of $0.8 million.

(4) Includes actual results for Intelisys for the nine months endedMarch 31, 2016. On a gross basis, operating income includes additional amortization expense of $4.8 million and additional depreciation expense of $0.8 million for the nine months endedMarch 31, 2016. Net income, net of tax, includes additional amortization expense of $3.0 million and additional depreciation expense of $0.5 million for the nine months endedMarch 31, 2016. Adjustments also include additional income tax expense of $3.4 million.

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Goodwill and Other Identifiable Intangible Assets

9 Months Ended

Mar. 31, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Identifiable Intangible Assets

Goodwill and Other Identifiable Intangible Assets

The changes in the carrying amount of goodwill for the nine months ended March 31, 2017, by reporting segment, are as follows:

	Barcode, Networking & Security Segment			Communications & Services Segment			Total
	(in thousands)
Balance as of June 30, 2016	$	36,434		$	56,281		$	92,715
Additions	—			109,005			109,005
Foreign currency translation adjustment	(234		)	(420		)	(654		)
Balance as of March 31, 2017	$	36,200		$	164,866		$	201,066

The following table shows changes in the amount recognized for net identifiable intangible assets for the nine months ended March 31, 2017.

	Net Identifiable Intangible Assets
	(in thousands)
Balance as of June 30, 2016	$	51,127
Additions	66,693
Amortization expense	(11,537		)
Foreign currency translation adjustment	(705		)
Balance as of March 31, 2017	$	105,578

Intangible asset balances include trade names, customer relationships, customer contracts, non-compete agreements, and distributor agreements. On March 22, 2017, the Company completed an asset acquisition through its subsidiary, Intelisys, of supplier partner program assets to enhance our high-growth recurring revenue model. The acquired assets have been recorded as intangible assets in the accompanying Condensed Consolidated Balance Sheets and will be amortized over a ten-year period.

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Short-Term Borrowings and Long-Term Debt

9 Months Ended

Mar. 31, 2017

Debt Disclosure [Abstract]

Short Term Borrowings and Long Term Debt

Short-Term Borrowings and Long-Term Debt

Revolving Credit Facility

The Company has a $300 million multi-currency senior secured revolving credit facility with JPMorgan Chase Bank N.A., as administrative agent, and a syndicate of banks (the “Amended Credit Agreement”) that was scheduled to mature on November 6, 2018. On April 3, 2017, the Company entered into an amendment of this credit facility that extended its maturity to April 3, 2022. The Amended Credit Agreement allows for the issuance of up to $50 million for letters of credit and has a $200 million accordion feature that allows the Company to increase the availability to $500 million, subject to obtaining additional credit commitments from the lenders participating in the increase. The Company incurred debt issuance costs of $1 million in connection with the Amended Credit Agreement, which were capitalized to other assets on the Condensed Consolidated Balance Sheets and added to the unamortized debt issuance costs from the previous credit facility.

At the Company's option, loans denominated in U.S. dollars under the Amended Credit Agreement, other than swingline loans, bear interest at a rate equal to a spread over the London Interbank Offered Rate ("LIBOR") or alternate base rate depending upon the Company's ratio of total debt (excluding accounts payable and accrued liabilities), measured as of the end of the most recent quarter, to adjusted earnings before interest expense, income taxes, depreciation and amortization ("EBITDA") for the most recently completed four quarters (the "Leverage Ratio"). This spread ranges from 1.00% to 2.125% for LIBOR-based loans and 0.00% to 1.125% for alternate base rate loans. Additionally, the Company is assessed commitment fees ranging from 0.175% to 0.350%, depending upon the Leverage Ratio, on non-utilized borrowing availability, excluding swingline loans. Borrowings are guaranteed by substantially all of the domestic assets of the Company and a pledge of up to 65% of capital stock or other equity interest in certain foreign subsidiaries determined to be either material or a subsidiary borrower as defined in the Amended Credit Agreement.

At March 31, 2017, the spread in effect was 1.25% for LIBOR-based loans and 0.25% for alternate base rate loans. The commitment fee rate in effect as of March 31, 2017 was 0.20%. The Company was in compliance with all covenants under the credit facility as of March 31, 2017. There was $108.5 million and $71.4 million outstanding on the revolving credit facility at March 31, 2017 and June 30, 2016, respectively.

The average daily outstanding balance during the nine month periods ended March 31, 2017 and 2016 was $131.2 million and $93.5 million, respectively. There was $191.5 million and $228.2 million available for additional borrowings as of March 31, 2017 and June 30, 2016, respectively. There were no letters of credit issued under the multi-currency revolving credit facility as of March 31, 2017 and €0.4 million as of June 30, 2016.

Long-Term Debt

On August 1, 2007, the Company entered into an agreement with the State of Mississippi to provide financing for the acquisition and installation of certain equipment to be utilized at the Company’s Southaven, Mississippi warehouse, through the issuance of an industrial development revenue bond. The bond matures on September 1, 2032 and accrues interest at the 30-day LIBOR rate plus a spread of 0.85%. The terms of the bond allow for payment of interest only for the first 10 years of the agreement, and then, starting on September 1, 2018 through 2032, principal and interest payments are due until the maturity date or the redemption of the bond. The agreement also provides the bondholder with a put option, exercisable only within 180 days of each fifth anniversary of the agreement, requiring the Company to pay back the bonds at 100% of the principal amount outstanding. As of March 31, 2017, the Company was in compliance with all covenants under this bond. The balance on the bond was $5.4 million as of March 31, 2017 and June 30, 2016 and is included in long-term debt. The interest rate at March 31, 2017 and June 30, 2016 was 1.66% and 1.32%, respectively.

Debt Issuance Costs

As of March 31, 2017, net debt issuance costs associated with the credit facility and bond totaled $1.4 million and are being amortized on a straight-line basis through the maturity date of each respective debt instrument.

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Derivatives and Hedging Activities

9 Months Ended

Mar. 31, 2017

General Discussion of Derivative Instruments and Hedging Activities [Abstract]

Derivatives and Hedging Activities

Derivatives and Hedging Activities

In an effort to manage the exposure to foreign currency exchange rates and interest rates, the Company periodically enters into various derivative instruments. The Company’s accounting policies for these instruments are based on whether the instruments are designated as hedge or non-hedge instruments in accordance with US GAAP. The Company records all derivatives on the balance sheet at fair value. Derivatives that are not designated as hedging instruments and the ineffective portions of cash flow hedges designated as hedging instruments are adjusted to fair value through earnings in other income and expense.

Foreign Currency Derivatives – The Company conducts a portion of its business internationally in a variety of foreign currencies. The exposure to market risk for changes in foreign currency exchange rates arises from foreign currency-denominated assets and liabilities, and transactions arising from non-functional currency financing or trading activities. The Company’s objective is to preserve the economic value of non-functional currency-denominated cash flows. The Company attempts to hedge transaction exposures with natural offsets to the fullest extent possible and, once these opportunities have been exhausted, through forward contracts or other hedging instruments with third parties. These contracts hedge the exchange of various currencies, including the U.S. dollar, Brazilian real, euro, British pound, Canadian dollar, Mexican peso, Chilean peso, Colombian peso and Peruvian nuevo sol. While the Company utilizes foreign exchange contracts to hedge foreign currency exposure, the Company's foreign exchange policy prohibits the use of derivative financial instruments for speculative purposes.

The Company had contracts outstanding for purposes of managing cash flows with notional amounts of $64.5 million and $46.2 million for the exchange of foreign currencies as of March 31, 2017 and June 30, 2016, respectively. To date, the Company has chosen not to designate these derivatives as hedging instruments, and accordingly, these instruments are adjusted to fair value through earnings in other income and expense. Summarized financial information related to these derivative contracts and changes in the underlying value of the foreign currency exposures are as follows:

	Quarter ended					Nine months ended
	March 31,					March 31,
	2017			2016		2017			2016
	(in thousands)
Net foreign exchange derivative contract (gains) losses	$	735		$	286	$	(225	)	$	(2,014	)
Net foreign currency transactional and re-measurement (gains) losses	(24		)	67		1,856			3,622
Net foreign currency (gains) losses	$	711		$	353	$	1,631		$	1,608

Net foreign exchange gains and losses consist of foreign currency transactional and functional currency re-measurements, offset by net foreign currency exchange contract gains and losses and are included in other income and expense. Foreign exchange gains and losses are generated as the result of fluctuations in the value of the U.S. dollar versus the Brazilian real, the U.S. dollar versus the euro, the British pound versus the euro, and other currencies versus the U.S. dollar.

The Company used the following derivative instruments, reflected in its Condensed Consolidated Balance Sheets, for the risk management purposes detailed above:

	As of March 31, 2017
	Fair Value  of Derivatives Designated as Hedge Instruments		Fair Value  of Derivatives Not Designated as Hedge Instruments
	(in thousands)
Derivative assets:(a)
Forward foreign currency exchange contracts	$	—	$	614
Derivative liabilities:(b)
Forward foreign currency exchange contracts	$	—	$	274

(a) All derivative assets are recorded as prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets.

(b) All derivative liabilities are recorded as accrued expenses and other current liabilities in the Condensed Consolidated Balance Sheets.

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Fair Value of Financial Instruments

9 Months Ended

Mar. 31, 2017

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Accounting guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Under this guidance, the Company classifies certain assets and liabilities based on the fair value hierarchy, which aggregates fair value measured assets and liabilities based upon the following levels of inputs:

• Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

• Level 2 – Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and

• Level 3 – Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported by little or no market activity).

The assets and liabilities maintained by the Company that are required to be measured or disclosed at fair value on a recurring basis include the Company’s various debt instruments, deferred compensation plan investments, outstanding foreign exchange forward contracts and contingent consideration owed to the previous owners of CDC, Imago, Network1, and Intelisys. The carrying value of debt is considered to approximate fair value, as the Company’s debt instruments are indexed to a variable rate using the market approach (Level 2 criteria).

The following table summarizes the valuation of the Company’s remaining assets and liabilities measured at fair value on a recurring basis as of March 31, 2017:

	Total		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
	(in thousands)
Assets:
Deferred compensation plan investments, current and non-current portion	$	20,763	$	20,763	$	—	$	—
Forward foreign currency exchange contracts	614		—		614		—
Total assets at fair value	$	21,377	$	20,763	$	614	$	—
Liabilities:
Deferred compensation plan investments, current and non-current portion	$	20,398	$	20,398	$	—	$	—
Forward foreign currency exchange contracts	274		—		274		—
Liability for contingent consideration, current and non-current portion	113,223		—		—		113,223
Total liabilities at fair value	$	133,895	$	20,398	$	274	$	113,223

The following table summarizes the valuation of the Company’s remaining assets and liabilities measured at fair value on a recurring basis as of June 30, 2016:

	Total		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
	(in thousands)
Assets:
Deferred compensation plan investments, current and non-current portion	$	17,893	$	17,893	$	—	$	—
Forward foreign currency exchange contracts	33		—		33		—
Total assets at fair value	$	17,926	$	17,893	$	33	$	—
Liabilities:
Deferred compensation plan investments, current and non-current portion	$	17,893	$	17,893	$	—	$	—
Forward foreign currency exchange contracts	551		—		551		—
Liability for contingent consideration, current and non-current portion	24,652		—		—		24,652
Total liabilities at fair value	$	43,096	$	17,893	$	551	$	24,652

The investments in the deferred compensation plan are held in a rabbi trust and include mutual funds and cash equivalents for payment of non-qualified benefits for certain retired, terminated and active employees. These investments are recorded to prepaid expenses and other current assets or other non-current assets depending on their corresponding, anticipated distribution dates to recipients, which are reported in accrued expenses and other current liabilities or other long-term non-current liabilities, respectively.

Derivative instruments, such as foreign currency forward contracts, are measured using the market approach on a recurring basis considering foreign currency spot rates and forward rates quoted by banks or foreign currency dealers and interest rates quoted by banks (Level 2). See Note 7 - Derivatives and Hedging Activities. Foreign currency contracts and cross currency swap agreements are classified in the Condensed Consolidated Balance Sheets as prepaid expenses and other current assets or accrued expenses and other current liabilities, depending on the respective instruments' favorable or unfavorable positions.

The Company recorded contingent consideration liabilities at the acquisition date of CDC, Imago, Network1 and Intelisys representing the amounts payable to former shareholders, as outlined under the terms of the purchase agreements, based upon the achievement of a projected earnings measure, net of specific pro forma adjustments. The final payment to CDC was paid during fiscal year 2016 and the final payment to Imago was paid during the quarter ended December 31, 2016. The current and non-current portions of these obligations are reported separately on the Condensed Consolidated Balance Sheets. The fair value of the contingent considerations (Level 3) are determined using a form of a probability weighted discounted cash flow model. Subsequent changes in the fair value of the contingent consideration liabilities are recorded to the change in fair value of contingent consideration line item in the Condensed Consolidated Income Statements. Fluctuations due to foreign currency translation are captured in other comprehensive income through the changes in foreign currency translation adjustments line item as seen in Note 3 - Accumulated Other Comprehensive Income (Loss).

CDC is part of the Company's Worldwide Barcode, Networking and Security Segment, and Imago, Network1 and Intelisys are part of the Company's Worldwide Communications and Services segment.

The table below provides a summary of the changes in fair value of the Company’s contingent considerations (Level 3) for the Imago, Network1 and Intelisys earnouts for the quarter and nine months endedMarch 31, 2017:

	Contingent consideration for the quarter ended		Contingent consideration for the nine months ended
	March 31, 2017		March 31, 2017
	Communications & Services Segment		Communications & Services Segment
	(in thousands)
Fair value at beginning of period	$	110,880	$	24,652
Issuance of contingent consideration	—		95,000
Payments	—		(10,241		)
Change in fair value of contingent consideration	1,960		3,921
Foreign currency translation adjustment	383		(109		)
Fair value at end of period	$	113,223	$	113,223

The table below provides a summary of the changes in fair value of the Company’s contingent considerations (Level 3) for the CDC, Imago, and Network1 earnouts for the quarter andnine months endedMarch 31, 2016:

	Contingent consideration for the quarter ended						Contingent consideration for the nine months ended
	March 31, 2016						March 31, 2016
	Barcode, Networking & Security Segment		Communications & Services Segment		Total		Barcode, Networking & Security Segment			Communications & Services Segment			Total
	(in thousands)
Fair value at beginning of period	$	1,156	$	22,844	$	24,000	$	5,109		$	28,851		$	33,960
Payments	—		—		—		(3,133		)	(4,153		)	(7,286		)
Change in fair value of contingent consideration	—		1,139		1,139		126			4,394			4,520
Foreign currency translation adjustment	113		1,889		2,002		(833		)	(3,220		)	(4,053		)
Fair value at end of period	$	1,269	$	25,872	$	27,141	$	1,269		$	25,872		$	27,141

The fair values of amounts owed are recorded in current portion of contingent consideration and long-term portion of contingent consideration in the Company’s Condensed Consolidated Balance Sheets. The U.S. dollar amounts of actual disbursements made in connection with future earnout payments are subject to change as the liability is denominated in currencies other than the U.S. dollar and subject to foreign exchange fluctuation risk. The Company will revalue the contingent consideration liabilities at each reporting date through the last payment, with changes in the fair value of the contingent consideration reflected in the change in fair value of contingent consideration line item on the Company’s Condensed Consolidated Income Statements that is included in the calculation of operating income. The fair value of the contingent consideration liabilities associated with future earnout payments is based on several factors, including:

• estimated future results, net of pro forma adjustments set forth in the purchase agreements;

• the probability of achieving these results; and

• a discount rate reflective of the Company’s creditworthiness and market risk premium associated with the United States, Brazilian and European markets.

A change in any of these unobservable inputs can significantly change the fair value of the contingent consideration. Valuation techniques and significant observable inputs used in recurring Level 3 fair value measurements for our contingent consideration liabilities as of March 31, 2017 and June 30, 2016 were as follows.

Reporting Period	Valuation Technique	Significant Unobservable Inputs	Weighted Average Rates
March 31, 2017	Discounted cash flow	Weighted average cost of capital	15.2	%
		Adjusted EBITDA growth rate	44.3	%
June 30, 2016	Discounted cash flow	Weighted average cost of capital	17.7	%
		Adjusted EBITDA growth rate	44.0	%

The final payment of the contingent consideration related to Imago was paid during the quarter ended December 31, 2016. The change in fair value of the contingent consideration recognized in the Condensed Consolidated Income Statements contributed a gain of $1.1 million for the nine months endedMarch 31, 2017. The change in fair value is primarily driven by actual results that were less than expected, including special adjustments as determined by the stock purchase agreement. In addition, volatility in the foreign exchange between the British pound and the U.S. dollar has driven changes in the translation of this British pound denominated liability.

The discounted fair value of the liability for the contingent consideration related to Network1 recognized at March 31, 2017 was $11.8 million, of which $5.5 million is classified as current. For the quarter and nine months endedMarch 31, 2017 the change in fair value of the contingent consideration recognized in the Condensed Consolidated Income Statements contributed a gain of $1.3 million and $1.5 million, primarily driven by less than expected results, partially offset by the recurring amortization of the unrecognized fair value discount. In addition, volatility in the foreign exchange between the Brazilian real and the U.S. dollar has driven changes in the translation of this Brazilian real denominated liability. Although there is no contractual limit, total future undiscounted contingent consideration payments are anticipated to range up to $14.0 million, based on the Company’s best estimate of the earnout calculated on a multiple of adjusted earnings, before interest expense, income taxes, depreciation and amortization, plus the effects of foreign exchange.

The discounted fair value of the liability for the contingent consideration related to Intelisys recognized at March 31, 2017 was $101.5 million, of which $25.8 million is classified as current. The change in fair value of the contingent consideration recognized in the Condensed Consolidated Income Statement contributed a loss of $3.3 million and $6.5 million for the quarter and nine months endedMarch 31, 2017, respectively. The change for the quarter and nine month period is driven by the recurring amortization of the unrecognized fair value discount. Although there is no contractual limit, total future undiscounted contingent consideration payments are anticipated to range up to $132.8 million, based on the Company’s best estimate of the earnout calculated on a multiple of earnings, before interest expense, income taxes, depreciation and amortization.

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Segment Information

9 Months Ended

Mar. 31, 2017

Segment Reporting, Measurement Disclosures [Abstract]

Segment Information

Segment Information

The Company is a leading global provider of technology products and solutions to resellers and sales partners in specialty technology markets. The Company has two reportable segments, based on product, customer and service type.

During the quarter, we elected to transition a portion of our Latin American business from the Barcode & Security segment to the Communications & Services segment. We have reclassified prior period results for each business segment to provide comparable information.

Worldwide Barcode, Networking & Security Segment

The Barcode, Networking & Security segment focuses on automatic identification and data capture ("AIDC"), point-of-sale ("POS"), networking, electronic physical security, 3D printing technologies and other specialty technologies. We have business units within this segment in North America, Latin America and Europe. We see adjacencies among these technologies in helping our resellers develop solutions, such as with networking products. AIDC and POS products interface with computer systems used to automate the collection, processing and communication of information for commercial and industrial applications, including retail sales, distribution, shipping, inventory control, materials handling, warehouse management and healthcare applications. Electronic physical security products include identification, access control, video surveillance, intrusion-related and wireless and networking infrastructure products. 3D printing solutions replace and complement traditional methods and reduce the time and cost of designing new products by printing real parts directly from digital input.

Worldwide Communications & Services Segment

The Communications & Services segment focuses on communications technologies and services. We have business units within this segment that offer voice, video conferencing, wireless, data networking, cable, collaboration, converged communications, cloud and technology services in North America, Latin America and Europe. As these solutions come together on IP networks, new opportunities are created for value-added resellers to move into adjacent solutions for all vertical markets, such as education, healthcare, and government. Our teams deliver value-added support programs and services, including education and training, network assessments, custom configuration, implementation and marketing to help resellers develop a new technology practice, or to extend their capability and reach.

Selected financial information for each business segment is presented below:

	Quarter ended						Nine months ended
	March 31,						March 31,
	2017			2016			2017			2016
	(in thousands)
Sales:
Worldwide Barcode, Networking & Security	$	548,971		$	528,009		$	1,770,015		$	1,780,324
Worldwide Communications & Services	264,567			270,395			880,880			882,430
	$	813,538		$	798,404		$	2,650,895		$	2,662,754
Depreciation and amortization:
Worldwide Barcode, Networking & Security	$	1,828		$	1,453		$	5,183		$	3,996
Worldwide Communications & Services	4,182			1,969			11,002			6,274
Corporate	870			859			2,507			2,300
	$	6,880		$	4,281		$	18,692		$	12,570
Operating income:
Worldwide Barcode, Networking & Security	$	11,175		$	11,160		$	36,729		$	43,420
Worldwide Communications & Services	8,803			10,516			30,232			34,830
Corporate	—			(29		)	(833		)	(311		)
	$	19,978		$	21,647		$	66,128		$	77,939
Capital expenditures:
Worldwide Barcode, Networking & Security	$	1,144		$	1,247		$	2,522		$	3,024
Worldwide Communications & Services	943			571			2,033			2,205
Corporate	1,098			3,836			1,890			3,891
	$	3,185		$	5,654		$	6,445		$	9,120
Sales by Geography Category:
United States	$	619,590		$	599,375		$	2,016,561		$	1,996,270
International(1)	200,382			206,748			660,124			693,526
Less intercompany sales	(6,434		)	(7,719		)	(25,790		)	(27,042		)
	$	813,538		$	798,404		$	2,650,895		$	2,662,754
(1) For the quarter and nine months ended March 31, 2017, there were no sales in excess of 10% of consolidated net sales to any single international country.

	March 31, 2017		June 30, 2016
	(in thousands)
Assets:
Worldwide Barcode, Networking & Security	$	807,219	$	836,674
Worldwide Communications & Services	759,010		595,781
Corporate	65,587		58,730
	$	1,631,816	$	1,491,185
Property and equipment, net by Geography Category:
United States	$	51,614	$	46,935
International	4,795		5,453
	$	56,409	$	52,388

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Commitments and Contingencies

9 Months Ended

Mar. 31, 2017

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

The Company and its subsidiaries are, from time to time, parties to lawsuits arising out of operations. Although there can be no assurance, based upon information known to the Company, the Company believes that any liability resulting from an adverse determination of such lawsuits would not have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

During the quarter ended December 31, 2016, the Company recognized $12.8 million in proceeds from a legal settlement, net of attorney fees.

The Company is in the process of completing several capital projects for fiscal year 2017 that will result in significant cash commitments. Total capital expenditures for fiscal year 2017 are expected to range from $7 million to $10 million, primarily for IT investments.

During the Company's due diligence for the CDC and Network1 acquisitions, several pre-acquisition contingencies were identified regarding various Brazilian federal and state tax exposures. The Company is able to record indemnification receivables that are reported gross of the pre-acquisition contingency liabilities as sufficient funds to pay those obligations were escrowed or the Company is entitled to offset those obligations against future earnout payments under the share purchase agreements. However, indemnity claims can be made up to the entire purchase price, which includes the initial payment and all future earnout payments. The table below summarizes the balances and line item presentation of these pre-acquisition contingencies and corresponding indemnification receivables in the Company's Condensed Consolidated Balance Sheets as of March 31, 2017:

	March 31, 2017
	CDC		Network1
	(in thousands)
Assets
Prepaid expenses and other current assets	$	2,309	$	1,351
Other non-current assets	$	—	$	8,598
Liabilities
Accrued expenses and other current liabilities	$	2,309	$	1,351
Other long-term liabilities	$	—	$	8,598

The table below summarizes the balances and line item presentation of these pre-acquisition contingencies and corresponding indemnification receivables in the Company's Condensed Consolidated Balance Sheets as of June 30, 2016:

	June 30, 2016
	CDC		Network1
	(in thousands)
Assets
Prepaid expenses and other current assets	$	2,346	$	595
Other non-current assets	$	—	$	9,837
Liabilities
Accrued expenses and other current liabilities	$	2,346	$	595
Other long-term liabilities	$	—	$	9,837

Changes in these contingent liabilities and receivables from June 30, 2016 are primarily driven by foreign currency translation and the lapse of the statute of limitations on a portion of the Network1 contingencies.

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Income Taxes

9 Months Ended

Mar. 31, 2017

Income Tax Expense (Benefit), Continuing Operations [Abstract]

Income Taxes

Income Taxes

The Company had approximately $2.2 million and $2.1 million of total gross unrecognized tax benefits as of March 31, 2017 and June 30, 2016, respectively. Of this total at March 31, 2017, approximately $1.4 million represents the amount of unrecognized tax benefits that are permanent in nature and, if recognized, would affect the annual effective tax rate. The Company does not believe that the total amount of unrecognized tax benefits will significantly increase or decrease within twelve months of the reporting date.

The Company conducts business globally and, as a result, one or more of its subsidiaries files income tax returns in the U.S. federal, various state, local and foreign jurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities in countries and states in which it operates. With certain exceptions, the Company is no longer subject to state and local, or non-U.S. income tax examinations by tax authorities for the years before June 30, 2012.

The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense. As of March 31, 2017, the Company had approximately $1.1 million accrued for interest and penalties.

Income taxes for the interim period presented have been included in the accompanying condensed consolidated financial statements on the basis of an estimated annual effective tax rate. In addition to the amount of tax resulting from applying the estimated annual effective tax rate to pre-tax income, the Company includes certain items treated as discrete events to arrive at an estimated overall tax provision. There were no material discrete items during the period.

The Company’s effective tax rate of 35.6% for the nine months endedMarch 31, 2017 differs from the federal statutory rate of 35% primarily as a result of income derived from tax jurisdictions with varying income tax rates, nondeductible expenses, state income taxes and adjustments to tax credits.

The Company has provided for U.S. income taxes for the current earnings of its Canadian subsidiary. Earnings from all other geographies will continue to be considered retained indefinitely for reinvestment. 

Financial results in Belgium for the quarter and nine months endedMarch 31, 2017 produced a pre-tax loss, compared to pre-tax income generated for the quarter and nine months endedMarch 31, 2016. Over the most recent three-year period, our Belgium business has produced overall positive cumulative earnings. In the judgment of management, the conditions that gave rise to the losses recognized for the current quarter and most recent fiscal year are temporary, and it is more likely than not that the deferred tax asset will be realized.

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Business and Summary of Significant Accounting Policies (Policies)

9 Months Ended

Mar. 31, 2017

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared by the Company’s management in accordance with United States generally accepted accounting principles ("US GAAP") for interim financial information and applicable rules and regulations of the Securities Exchange Act of 1934. Accordingly, they do not include all of the information and footnotes required by US GAAP for annual financial statements. The unaudited condensed consolidated financial statements included herein contain all adjustments (consisting of normal recurring and non-recurring adjustments) which are, in the opinion of management, necessary to present fairly the financial position as of March 31, 2017 and June 30, 2016, the results of operations for the quarters and nine months ended March 31, 2017 and 2016, the statements of comprehensive income for the quarters and nine months endedMarch 31, 2017 and 2016, and the statements of cash flows for the nine months endedMarch 31, 2017 and 2016. The results of operations for the quarters and nine months endedMarch 31, 2017 and 2016 are not necessarily indicative of the results to be expected for a full year. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2016.

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company considers all highly-liquid investments with original maturities of three months or less, when purchased, to be cash equivalents. The Company maintains zero-balance disbursement accounts at various financial institutions at which the Company does not maintain significant depository relationships. Due to the terms of the agreements governing these accounts, the Company generally does not have the right to offset outstanding checks written from these accounts against cash on hand, and the respective institutions are not legally obligated to honor the checks until sufficient funds are transferred to fund the checks. As a result, checks released but not yet cleared from these accounts in the amounts of $2.9 million and $78.3 million are included in accounts payable as of March 31, 2017 and June 30, 2016, respectively.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued a comprehensive new revenue recognition standard for contracts with customers that will supersede most current revenue recognition guidance, including industry-specific guidance. The core principle of this standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, the standard provides a five-step analysis of transactions to determine when and how revenue is recognized. Other major provisions include the capitalization and amortization of certain contract costs, ensuring the time value of money is considered in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. This guidance also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. The new standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. The standard permits the use of either the retrospective or cumulative effect transition method. This guidance will be applicable to the Company for the fiscal year beginning July 1, 2018. We are currently in the process of evaluating the impact of this guidance on our consolidated financial results to determine the appropriate transition method for the Company. We have engaged a third-party consultant to assist with developing a multi-phase plan to assess the impact of adoption. We have also begun our initial review and analysis of business processes and current material contracts.

In February 2016, the FASB issued Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842) requiring lessees to reflect most leases on their balance sheets and recognize expenses on their income statements. Under the new guidance, lessees will be required to recognize a lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis, and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The asset will be measured at the lease liability amount, adjusted for lease prepayments, lease incentives received, and the lessee's initial direct costs. For leases with a lease term of 12 months or less, as long as the lease does not include options to purchase the underlying assets, lessees can elect not to recognize a lease liability and right-of-use asset. Under the new guidance, lessor accounting is largely unchanged, and the accounting for sale and leaseback transactions is simplified. The standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. This guidance will be applicable to the Company for the fiscal year beginning July 1, 2019. The guidance must be adopted using a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. The Company is currently evaluating the impact on its consolidated financial statements upon the adoption of this new guidance.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230) intended to reduce diversity in practice of how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The update addresses eight specific cash flow issues, with the treatment of contingent consideration payments made after a business combination being the most directly applicable to the Company. The update requires that cash payments made approximately three months or less after an acquisition's consummation date should be classified as cash outflows for investing activities. Payment made thereafter up to the amount of the original contingent consideration liability should be classified as cash outflows from financing activities. Payments made in excess of the amount of the original contingent consideration liability should be classified as cash outflows from operating activities. The standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The standard will be applicable to the Company for the fiscal year beginning July 1, 2018. Early adoption is permitted, provided all eight amendments are adopted in the same period. The guidance requires adoption using a retrospective transition method. The Company is currently evaluating the impact on its consolidated financial statements upon the adoption of this new guidance.

In January 2017, the FASB issued guidance clarifying the definition of a business within Accounting Standards Codification ("ASC") Topic 850 Business Combinations. The new standard narrows the definition of a business and therefore affects whether an acquisition represents the purchase of a business or an asset. The standard provides for an initial assessment to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, qualifying as an asset, not a business. If the definition of the acquisition is not clear after the initial assessment, the guidance provides framework to determine if the asset(s) acquired include an input and a substantive process that together significantly contribute to the ability to create an output, which constitutes a business. The distinction between a business and an asset is important because asset acquisitions do not result in goodwill, do not require the expensing of transaction costs and do not record contingent consideration at fair value at the acquisition date, as well as other accounting concepts. The standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted as long as the transaction has not been reported in financial statements that have been issued or made available for issuance. The Company adopted the new standard in connection with an asset acquisition completed during the quarter ended March 31, 2017 (See Note 4-Acquisitions).

In January 2017, the FASB issued guidance to simplify the accounting for goodwill impairment. It removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Goodwill impairment will now be calculated as the amount by which a reporting unit’s carrying value exceeds its fair value, not exceeding the carrying amount of goodwill. In addition, income tax effects from any tax deductible goodwill shall also be considered in measuring goodwill impairment loss, if applicable. The guidance is effective for annual and interim periods beginning after December 15, 2019 and should be adopted prospectively. Early adoption is permitted for interim or annual goodwill impairment test performed with a measurement date after January 1, 2017. The Company intends to adopt the guidance prospectively during the fiscal quarter ended June 30, 2017 as our annual goodwill impairment testing measurement date is April 30, 2017 for the current fiscal year. The adoption is not expected to have an impact on the Company's consolidated financial statements.

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Earnings Per Share (Tables)

9 Months Ended

Mar. 31, 2017

Earnings Per Share [Abstract]

Schedule of Earnings Per Share

	Quarter ended				Nine months ended
	March 31,				March 31,
	2017		2016		2017		2016
	(in thousands, except per share data)
Numerator:
Net Income	$	12,424	$	14,042	$	50,276	$	50,694
Denominator:
Weighted-average shares, basic	25,262		25,863		25,311		26,741
Dilutive effect of share-based payments	138		104		147		167
Weighted-average shares, diluted	25,400		25,967		25,458		26,908
Net income per common share, basic	$	0.49	$	0.54	$	1.99	$	1.90
Net income per common share, diluted	$	0.49	$	0.54	$	1.97	$	1.88

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Accumulated Other Comprehensive Income (Loss) (Tables)

9 Months Ended

Mar. 31, 2017

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Components of Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) consists of the following:

	March 31, 2017			June 30, 2016
	(in thousands)
Foreign currency translation adjustment	$	(77,488	)	$	(72,687	)
Accumulated other comprehensive income (loss)	$	(77,488	)	$	(72,687	)

Schedule of Other Comprehensive Income (Loss), Tax Expense (Benefit)

The tax effect of amounts in comprehensive income (loss) reflect a tax expense or benefit as follows:

	Quarter ended March 31,						Nine months ended March 31,
	2017			2016			2017			2016
	(in thousands)
Tax expense (benefit)	$	(271	)	$	(1,264	)	$	(179	)	$	1,723

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Acquisitions (Tables)

9 Months Ended

Mar. 31, 2017

Business Acquisition [Line Items]

Schedule of Unaudited Consolidated Pro Forma Results of Operations

	Quarter ended March 31, 2017				Nine months ended March 31, 2017
	(in thousands, except per share data)				(in thousands, except per share data)
	As Reported, Consolidated		Pro forma, Consolidated (1)		As Reported, Consolidated		Pro forma, Consolidated (2)
Net Sales	$	813,538	$	813,538	$	2,650,895	$	2,656,111
Operating income	19,978		19,978		66,128		67,580
Net Income	12,424		12,424		50,276		51,361
Earnings per share:
Basic	$	0.49	$	0.49	$	1.99	$	2.03
Diluted	$	0.49	$	0.49	$	1.97	$	2.02

(1) There were no acquisition costs in the pro forma results presented for the quarter endedMarch 31, 2017.

(2) Pro forma results include actual results from Intelisys for the two months ended August 31, 2016. Adjustments include additional amortization and depreciation expense as if the fair value of identifiable intangible assets, including software, had been recorded on July 1, 2015. On a gross basis, operating income includes additional amortization expense of $1.1 million and additional depreciation expense of $0.2 million for the nine months endedMarch 31, 2017. Net income, net of tax, includes additional amortization expense of $0.7 million and additional depreciation expense of $0.1 million for the nine months endedMarch 31, 2017. Adjustments also include additional income tax expense of $0.8 million and adding back acquisition costs of $0.5 million.

	Quarter ended March 31, 2016				Nine months ended March 31, 2016
	(in thousands, except per share data)				(in thousands, except per share data)
	As Reported, Consolidated		Pro forma, Consolidated (3)		As Reported, Consolidated		Pro forma, Consolidated (4)
Net Sales	$	798,404	$	805,097	$	2,662,754	$	2,683,588
Operating income	21,647		22,112		77,939		81,483
Net Income	14,042		14,296		50,694		52,768
Earnings per share:
Basic	$	0.54	$	0.55	$	1.90	$	1.97
Diluted	$	0.54	$	0.55	$	1.88	$	1.96

(3) Includes actual results for Intelisys for the quarter endedMarch 31, 2016. On a gross basis, operating income includes additional amortization expense of $1.6 million and additional depreciation expense of $0.3 million for the quarter endedMarch 31, 2016. Net income, net of tax, includes additional amortization expense of $1.0 million and additional depreciation expense of $0.2 million for the quarter endedMarch 31, 2016. Adjustments also include additional income tax expense of $0.8 million.

(4) Includes actual results for Intelisys for the nine months endedMarch 31, 2016. On a gross basis, operating income includes additional amortization expense of $4.8 million and additional depreciation expense of $0.8 million for the nine months endedMarch 31, 2016. Net income, net of tax, includes additional amortization expense of $3.0 million and additional depreciation expense of $0.5 million for the nine months endedMarch 31, 2016. Adjustments also include additional income tax expense of $3.4 million.

Following the acquisition date, Intelisys contributed the following results to the Condensed Consolidated Income Statement for the quarter and nine months endedMarch 31, 2017.

	Quarter ended March 31, 2017			Nine months ended March 31, 2017
Net Sales	$	8,893		$	20,244
Amortization of intangible assets	1,586			3,701
Change in fair value of contingent consideration	3,289			6,457
Operating income (loss)	(656		)	(942		)
Net income (loss)	$	(403	)	$	(392	)

KBZ, Inc.

Business Acquisition [Line Items]

Schedule of Purchase Price Allocations of Assets Acquired and Liabilities Assumed

The purchase price allocation is as follows:

	KBZ
	(in thousands)
Receivables, net	$	63,131
Inventory	11,227
Other Current Assets	10,303
Property and equipment, net	677
Goodwill	21,639
Identifiable intangible assets	18,400
Other non-current assets	1,399
	$	126,776
Accounts payable	$	48,271
Accrued expenses and other current liabilities	14,863
Other long-term liabilities	2,167
Consideration transferred, net of cash acquired	61,475
	$	126,776

Intelisys

Business Acquisition [Line Items]

Schedule of Purchase Price Allocations of Assets Acquired and Liabilities Assumed

	Intelisys
	(in thousands)
Receivables, net	$	21,655
Other current assets	1,547
Property and equipment, net	5,298
Goodwill	109,005
Identifiable intangible assets	63,110
Other non-current assets	1,839
	$	202,454
Accounts payable	$	21,063
Accrued expenses and other current liabilities	2,587
Contingent consideration	95,000
Consideration transferred, net of cash acquired	83,804
	$	202,454

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Goodwill and Other Identifiable Intangible Assets (Tables)

9 Months Ended

Mar. 31, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Changes in the Carrying Amount of Goodwill

The changes in the carrying amount of goodwill for the nine months ended March 31, 2017, by reporting segment, are as follows:

	Barcode, Networking & Security Segment			Communications & Services Segment			Total
	(in thousands)
Balance as of June 30, 2016	$	36,434		$	56,281		$	92,715
Additions	—			109,005			109,005
Foreign currency translation adjustment	(234		)	(420		)	(654		)
Balance as of March 31, 2017	$	36,200		$	164,866		$	201,066

Schedule of Net Identifiable Intangible Assets

The following table shows changes in the amount recognized for net identifiable intangible assets for the nine months ended March 31, 2017.

	Net Identifiable Intangible Assets
	(in thousands)
Balance as of June 30, 2016	$	51,127
Additions	66,693
Amortization expense	(11,537		)
Foreign currency translation adjustment	(705		)
Balance as of March 31, 2017	$	105,578

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Derivatives and Hedging Activities (Tables)

9 Months Ended

Mar. 31, 2017

General Discussion of Derivative Instruments and Hedging Activities [Abstract]

Derivative Contracts and Changes in Underlying Value of the Foreign Currency Exposures

Summarized financial information related to these derivative contracts and changes in the underlying value of the foreign currency exposures are as follows:

	Quarter ended					Nine months ended
	March 31,					March 31,
	2017			2016		2017			2016
	(in thousands)
Net foreign exchange derivative contract (gains) losses	$	735		$	286	$	(225	)	$	(2,014	)
Net foreign currency transactional and re-measurement (gains) losses	(24		)	67		1,856			3,622
Net foreign currency (gains) losses	$	711		$	353	$	1,631		$	1,608

Derivative Instruments

The Company used the following derivative instruments, reflected in its Condensed Consolidated Balance Sheets, for the risk management purposes detailed above:

	As of March 31, 2017
	Fair Value  of Derivatives Designated as Hedge Instruments		Fair Value  of Derivatives Not Designated as Hedge Instruments
	(in thousands)
Derivative assets:(a)
Forward foreign currency exchange contracts	$	—	$	614
Derivative liabilities:(b)
Forward foreign currency exchange contracts	$	—	$	274

(a) All derivative assets are recorded as prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets.

(b) All derivative liabilities are recorded as accrued expenses and other current liabilities in the Condensed Consolidated Balance Sheets.

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Fair Value of Financial Instruments (Tables)

9 Months Ended

Mar. 31, 2017

Fair Value Disclosures [Abstract]

Summary of Assets and Liabilities Measured at Fair Value

The following table summarizes the valuation of the Company’s remaining assets and liabilities measured at fair value on a recurring basis as of March 31, 2017:

	Total		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
	(in thousands)
Assets:
Deferred compensation plan investments, current and non-current portion	$	20,763	$	20,763	$	—	$	—
Forward foreign currency exchange contracts	614		—		614		—
Total assets at fair value	$	21,377	$	20,763	$	614	$	—
Liabilities:
Deferred compensation plan investments, current and non-current portion	$	20,398	$	20,398	$	—	$	—
Forward foreign currency exchange contracts	274		—		274		—
Liability for contingent consideration, current and non-current portion	113,223		—		—		113,223
Total liabilities at fair value	$	133,895	$	20,398	$	274	$	113,223

The following table summarizes the valuation of the Company’s remaining assets and liabilities measured at fair value on a recurring basis as of June 30, 2016:

	Total		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
	(in thousands)
Assets:
Deferred compensation plan investments, current and non-current portion	$	17,893	$	17,893	$	—	$	—
Forward foreign currency exchange contracts	33		—		33		—
Total assets at fair value	$	17,926	$	17,893	$	33	$	—
Liabilities:
Deferred compensation plan investments, current and non-current portion	$	17,893	$	17,893	$	—	$	—
Forward foreign currency exchange contracts	551		—		551		—
Liability for contingent consideration, current and non-current portion	24,652		—		—		24,652
Total liabilities at fair value	$	43,096	$	17,893	$	551	$	24,652

Summary of Changes in Fair Value of Contingent Considerations

Valuation techniques and significant observable inputs used in recurring Level 3 fair value measurements for our contingent consideration liabilities as of March 31, 2017 and June 30, 2016 were as follows.

Reporting Period	Valuation Technique	Significant Unobservable Inputs	Weighted Average Rates
March 31, 2017	Discounted cash flow	Weighted average cost of capital	15.2	%
		Adjusted EBITDA growth rate	44.3	%
June 30, 2016	Discounted cash flow	Weighted average cost of capital	17.7	%
		Adjusted EBITDA growth rate	44.0	%

The table below provides a summary of the changes in fair value of the Company’s contingent considerations (Level 3) for the Imago, Network1 and Intelisys earnouts for the quarter and nine months endedMarch 31, 2017:

	Contingent consideration for the quarter ended		Contingent consideration for the nine months ended
	March 31, 2017		March 31, 2017
	Communications & Services Segment		Communications & Services Segment
	(in thousands)
Fair value at beginning of period	$	110,880	$	24,652
Issuance of contingent consideration	—		95,000
Payments	—		(10,241		)
Change in fair value of contingent consideration	1,960		3,921
Foreign currency translation adjustment	383		(109		)
Fair value at end of period	$	113,223	$	113,223

The table below provides a summary of the changes in fair value of the Company’s contingent considerations (Level 3) for the CDC, Imago, and Network1 earnouts for the quarter andnine months endedMarch 31, 2016:

	Contingent consideration for the quarter ended						Contingent consideration for the nine months ended
	March 31, 2016						March 31, 2016
	Barcode, Networking & Security Segment		Communications & Services Segment		Total		Barcode, Networking & Security Segment			Communications & Services Segment			Total
	(in thousands)
Fair value at beginning of period	$	1,156	$	22,844	$	24,000	$	5,109		$	28,851		$	33,960
Payments	—		—		—		(3,133		)	(4,153		)	(7,286		)
Change in fair value of contingent consideration	—		1,139		1,139		126			4,394			4,520
Foreign currency translation adjustment	113		1,889		2,002		(833		)	(3,220		)	(4,053		)
Fair value at end of period	$	1,269	$	25,872	$	27,141	$	1,269		$	25,872		$	27,141

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Segment Information (Tables)

9 Months Ended

Mar. 31, 2017

Segment Reporting, Measurement Disclosures [Abstract]

Financial Information by Segment

Selected financial information for each business segment is presented below:

	Quarter ended						Nine months ended
	March 31,						March 31,
	2017			2016			2017			2016
	(in thousands)
Sales:
Worldwide Barcode, Networking & Security	$	548,971		$	528,009		$	1,770,015		$	1,780,324
Worldwide Communications & Services	264,567			270,395			880,880			882,430
	$	813,538		$	798,404		$	2,650,895		$	2,662,754
Depreciation and amortization:
Worldwide Barcode, Networking & Security	$	1,828		$	1,453		$	5,183		$	3,996
Worldwide Communications & Services	4,182			1,969			11,002			6,274
Corporate	870			859			2,507			2,300
	$	6,880		$	4,281		$	18,692		$	12,570
Operating income:
Worldwide Barcode, Networking & Security	$	11,175		$	11,160		$	36,729		$	43,420
Worldwide Communications & Services	8,803			10,516			30,232			34,830
Corporate	—			(29		)	(833		)	(311		)
	$	19,978		$	21,647		$	66,128		$	77,939
Capital expenditures:
Worldwide Barcode, Networking & Security	$	1,144		$	1,247		$	2,522		$	3,024
Worldwide Communications & Services	943			571			2,033			2,205
Corporate	1,098			3,836			1,890			3,891
	$	3,185		$	5,654		$	6,445		$	9,120
Sales by Geography Category:
United States	$	619,590		$	599,375		$	2,016,561		$	1,996,270
International(1)	200,382			206,748			660,124			693,526
Less intercompany sales	(6,434		)	(7,719		)	(25,790		)	(27,042		)
	$	813,538		$	798,404		$	2,650,895		$	2,662,754
(1) For the quarter and nine months ended March 31, 2017, there were no sales in excess of 10% of consolidated net sales to any single international country.

Reconciliation of Assets from Segment to Consolidated

	March 31, 2017		June 30, 2016
	(in thousands)
Assets:
Worldwide Barcode, Networking & Security	$	807,219	$	836,674
Worldwide Communications & Services	759,010		595,781
Corporate	65,587		58,730
	$	1,631,816	$	1,491,185
Property and equipment, net by Geography Category:
United States	$	51,614	$	46,935
International	4,795		5,453
	$	56,409	$	52,388

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Commitments and Contingencies (Tables)

9 Months Ended

Mar. 31, 2017

Commitments and Contingencies Disclosure [Abstract]

Pre-acquisition Contingencies and Corresponding Indemnification Receivables

The table below summarizes the balances and line item presentation of these pre-acquisition contingencies and corresponding indemnification receivables in the Company's Condensed Consolidated Balance Sheets as of March 31, 2017:

	March 31, 2017
	CDC		Network1
	(in thousands)
Assets
Prepaid expenses and other current assets	$	2,309	$	1,351
Other non-current assets	$	—	$	8,598
Liabilities
Accrued expenses and other current liabilities	$	2,309	$	1,351
Other long-term liabilities	$	—	$	8,598

The table below summarizes the balances and line item presentation of these pre-acquisition contingencies and corresponding indemnification receivables in the Company's Condensed Consolidated Balance Sheets as of June 30, 2016:

	June 30, 2016
	CDC		Network1
	(in thousands)
Assets
Prepaid expenses and other current assets	$	2,346	$	595
Other non-current assets	$	—	$	9,837
Liabilities
Accrued expenses and other current liabilities	$	2,346	$	595
Other long-term liabilities	$	—	$	9,837

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Business and Summary of Significant Accounting Policies (Details) - USD ($) $ in Millions	Mar. 31, 2017	Jun. 30, 2016
Bank Overdrafts
Cash and Cash Equivalents [Line Items]
Outstanding checks	$ 2.9	$ 78.3

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Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Numerator:
Net Income	$ 12,424	$ 14,042	$ 50,276	$ 50,694
Denominator:
Weighted-average shares, basic (in shares)	25,262,000	25,863,000	25,311,000	26,741,000
Dilutive effect of share-based payments (in shares)	138,000	104,000	147,000	167,000
Weighted-average shares, diluted (in shares)	25,400,000	25,967,000	25,458,000	26,908,000
Net income per common share, basic (in dollars per share)	$ 0.49	$ 0.54	$ 1.99	$ 1.90
Net income per common share, diluted (in dollars per share)	$ 0.49	$ 0.54	$ 1.97	$ 1.88
Weighted average shares excluded from the computation of diluted earnings per share (in shares)	442,001	868,211	454,006	835,055

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Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016	Jun. 30, 2016
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]
Foreign currency translation adjustment	$ (77,488)		$ (77,488)		$ (72,687)
Accumulated other comprehensive income (loss)	(77,488)		(77,488)		$ (72,687)
Tax expense (benefit)	$ (271)	$ (1,264)	$ (179)	$ 1,723

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Acquisitions (Details) $ in Thousands			9 Months Ended
	Aug. 29, 2016 USD ($) installment	Sep. 04, 2015 USD ($)	Mar. 31, 2017 USD ($)	Mar. 31, 2016 USD ($)	Jun. 30, 2016 USD ($)
Business Acquisition [Line Items]
Consideration transferred, net of cash acquired			$ 83,804	$ 61,475
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract]
Goodwill			201,066		$ 92,715
Consideration transferred, net of cash acquired			83,804	$ 61,475
KBZ, Inc.
Business Acquisition [Line Items]
Consideration transferred		$ 64,600
Cash acquired		3,100
Consideration transferred, net of cash acquired		61,475
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract]
Receivables, net		63,131
Inventory		11,227
Other Current Assets		10,303
Property and equipment, net		677
Goodwill		21,639
Identifiable intangible assets		18,400
Other non-current assets		1,399
Total assets assumed		126,776
Accounts payable		48,271
Accrued expenses and other current liabilities		14,863
Other long-term liabilities		2,167
Consideration transferred, net of cash acquired		61,475
Total liabilities assumed including consideration transferred		$ 126,776
Intelisys
Business Acquisition [Line Items]
Consideration transferred	$ 84,600
Cash acquired	800
Consideration transferred, net of cash acquired	83,804
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract]
Receivables, net	21,655
Other Current Assets	1,547
Property and equipment, net	5,298
Goodwill	109,005
Identifiable intangible assets	63,110
Other non-current assets	1,839
Total assets assumed	202,454
Accounts payable	21,063
Accrued expenses and other current liabilities	2,587
Contingent consideration	95,000
Consideration transferred, net of cash acquired	83,804
Total liabilities assumed including consideration transferred	202,454
Consideration transferred, initial purchase price	83,600
Consideration transferred, additional net assets acquired	$ 1,000
Additional annual cash installments | installment	4
Purchase price in escrow			$ 8,500

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Acquisitions - Pro Forma Results (Details) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Acquiree Contribution to Consolidated Financial Statements [Abstract]
Amortization of intangible assets			$ 11,537,000
As Reported Consolidated
Net sales	$ 813,538,000	$ 798,404,000	2,650,895,000	$ 2,662,754,000
Operating income	19,978,000	21,647,000	66,128,000	77,939,000
Net income	$ 12,424,000	$ 14,042,000	$ 50,276,000	$ 50,694,000
Earnings Per Share As Reported
Earnings per share, basic (in dollars per share)	$ 0.49	$ 0.54	$ 1.99	$ 1.90
Earnings per share, diluted (in dollars per share)	$ 0.49	$ 0.54	$ 1.97	$ 1.88
Provision for income taxes	$ 7,147,000	$ 7,311,000	$ 27,799,000	$ 26,713,000
Intelisys
Acquiree Contribution to Consolidated Financial Statements [Abstract]
Net Sales	8,893,000		20,244,000
Amortization of intangible assets	1,586,000		3,701,000
Change in fair value of contingent consideration	(3,289,000)		(6,457,000)
Operating income (loss)	(656,000)		(942,000)
Net income (loss)	(403,000)		(392,000)
Business Acquisition, Pro Forma Information [Abstract]
Net Sales	813,538,000	805,097,000	2,656,111,000	2,683,588,000
Operating income	19,978,000	22,112,000	67,580,000	81,483,000
Net income	$ 12,424,000	$ 14,296,000	$ 51,361,000	$ 52,768,000
Earnings Per Share Pro forma
Earnings per share, basic (in dollars per share)	$ 0.49	$ 0.55	$ 2.03	$ 1.97
Earnings per share, diluted (in dollars per share)	$ 0.49	$ 0.55	$ 2.02	$ 1.96
Earnings Per Share As Reported
Acquisition costs	$ 0
Fair Value Adjustment to Intangible Assets | Intelisys
Acquiree Contribution to Consolidated Financial Statements [Abstract]
Amortization of intangible assets		$ 1,600,000	$ 1,100,000	$ 4,800,000
Earnings Per Share As Reported
Amortization intangible asset, net of tax		1,000,000	700,000	3,000,000
Fair Value Adjustment to Property, Plant and Equipment | Intelisys
Earnings Per Share As Reported
Depreciation		300,000	200,000	800,000
Depreciation, net of tax		200,000	100,000	500,000
Fair Value Adjustment to Income Tax Expense | Intelisys
Earnings Per Share As Reported
Provision for income taxes		$ 800,000	800,000	$ 3,400,000
Fair Value Adjustment and Acquisition-related Costs | Intelisys
Earnings Per Share As Reported
Acquisition costs			$ 500,000

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Goodwill and Other Identifiable Intangible Assets - Changes in the Carrying Amount of Goodwill (Details) $ in Thousands	9 Months Ended
	Mar. 31, 2017 USD ($)
Goodwill [Roll Forward]
Goodwill, beginning balance	$ 92,715
Additions	109,005
Foreign currency translation adjustment	(654)
Goodwill, ending balance	201,066
Barcode, Networking & Security Segment
Goodwill [Roll Forward]
Goodwill, beginning balance	36,434
Additions	0
Foreign currency translation adjustment	(234)
Goodwill, ending balance	36,200
Communications & Services Segment
Goodwill [Roll Forward]
Goodwill, beginning balance	56,281
Additions	109,005
Foreign currency translation adjustment	(420)
Goodwill, ending balance	$ 164,866
Supplier Partner Agreements [Member]
Goodwill [Roll Forward]
Acquired intangible assets, weighted average useful life	10 years

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Goodwill and Other Identifiable Intangible Assets - Net Identifiable Intangible Assets (Details) $ in Thousands	9 Months Ended
	Mar. 31, 2017 USD ($)
Finite-lived Intangible Assets [Roll Forward]
Balance as of June 30, 2016	$ 51,127
Additions	66,693
Amortization expense	(11,537)
Foreign currency translation adjustment	(705)
Balance as of March 31, 2017	$ 105,578

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Short-Term Borrowings and Long-Term Debt - Narrative (Details) € in Millions	9 Months Ended
	Mar. 31, 2017 USD ($)	Mar. 31, 2016 USD ($)	Apr. 03, 2017 USD ($)	Jun. 30, 2016 USD ($)	Jun. 30, 2016 EUR (€)
Debt Instrument [Line Items]
Borrowings under revolving credit facility	$ 108,505,000			$ 71,427,000
Debt issuance costs	$ 1,400,000
Industrial Development Revenue Bond
Debt Instrument [Line Items]
Percentage spread points on variable rate debt instrument	0.85%
Debt Instrument, Maturity Date	Sep. 01, 2032
Maximum time period of interest (in years)	10 years
Put option, exercisable period limitation	180 days
Percentage of principal due on exercise of put option	100.00%
Long-term debt	$ 5,400,000			$ 5,400,000
Long-term debt, percentage bearing variable interest	1.66%			1.32%	1.32%
Multi-Currency Revolving Credit Facility
Debt Instrument [Line Items]
Borrowing capacity under credit facility	$ 300,000,000
Line of credit facility, expiration date	Nov. 06, 2018
Line of credit facility, unused capacity, commitment fee percentage	0.20%
Percentage of capital stock or other equity interest pledged per credit agreement (up to)	65.00%
Borrowings under revolving credit facility	$ 108,500,000			$ 71,400,000
Average daily balance on revolving credit facility	131,200,000	$ 93,500,000
Line of credit facility, remaining borrowing capacity	191,500,000			$ 228,200,000
Letters of credit outstanding	$ 0				€ 0.4
Multi-Currency Revolving Credit Facility | Minimum
Debt Instrument [Line Items]
Line of credit facility, unused capacity, commitment fee percentage	0.175%
Multi-Currency Revolving Credit Facility | Maximum
Debt Instrument [Line Items]
Line of credit facility, unused capacity, commitment fee percentage	0.35%
Multi-Currency Revolving Credit Facility | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Percentage spread points on variable rate debt instrument	1.25%
Multi-Currency Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | Minimum
Debt Instrument [Line Items]
Percentage spread points on variable rate debt instrument	1.00%
Multi-Currency Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | Maximum
Debt Instrument [Line Items]
Percentage spread points on variable rate debt instrument	2.125%
Multi-Currency Revolving Credit Facility | Alternate Base Rate Loans
Debt Instrument [Line Items]
Percentage spread points on variable rate debt instrument	0.25%
Multi-Currency Revolving Credit Facility | Alternate Base Rate Loans | Minimum
Debt Instrument [Line Items]
Percentage spread points on variable rate debt instrument	0.00%
Multi-Currency Revolving Credit Facility | Alternate Base Rate Loans | Maximum
Debt Instrument [Line Items]
Percentage spread points on variable rate debt instrument	1.125%
Multi-Currency Revolving Credit Facility, Accordion Feature
Debt Instrument [Line Items]
Borrowing capacity under credit facility	$ 200,000,000
Subsequent Event | Multi-Currency Revolving Credit Facility, Combined with Accordion Feature
Debt Instrument [Line Items]
Borrowing capacity under credit facility			$ 500,000,000
Debt issuance costs			1,000,000
Subsequent Event | Letter of Credit
Debt Instrument [Line Items]
Borrowing capacity under credit facility			$ 50,000,000

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Derivatives and Hedging Activities - Narrative (Details) - USD ($)	Mar. 31, 2017	Jun. 30, 2016
Forward foreign currency exchange contracts
Derivative [Line Items]
Notional amount of foreign currency contracts outstanding	$ 64,500,000.0	$ 46,200,000.0

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Derivatives and Hedging Activities - Derivative Contracts and Changes in Underlying Value of the Foreign Currency Exposures (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
General Discussion of Derivative Instruments and Hedging Activities [Abstract]
Net foreign exchange derivative contract (gains) losses	$ 735	$ 286	$ (225)	$ (2,014)
Net foreign currency transactional and re-measurement (gains) losses	(24)	67	1,856	3,622
Net foreign currency (gains) losses	$ 711	$ 353	$ 1,631	$ 1,608

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Derivatives and Hedging Activities - Derivative Instruments (Details) - Forward foreign currency exchange contracts $ in Thousands	Mar. 31, 2017 USD ($)
Designated as Hedge Instruments
Derivative assets: foreign exchange contracts	$ 0
Derivative liabilities: foreign exchange contracts	0
Not Designated as Hedge Instruments
Derivative assets: foreign exchange contracts	614
Derivative liabilities: foreign exchange contracts	$ 274

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Fair Value of Financial Instruments - Summary of Assets and Liabilities Measured at Fair Value (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Jun. 30, 2016
Assets
Deferred compensation plan investments, current and non-current portion	$ 20,763	$ 17,893
Forward foreign currency exchange contracts	614	33
Total assets at fair value	21,377	17,926
Liabilities
Deferred compensation plan investments, current and non-current portion	20,398	17,893
Forward foreign currency exchange contracts	274	551
Liability for contingent consideration, current and non-current portion	113,223	24,652
Total liabilities at fair value	133,895	43,096
Quoted prices in active markets (Level 1)
Assets
Deferred compensation plan investments, current and non-current portion	20,763	17,893
Forward foreign currency exchange contracts	0	0
Total assets at fair value	20,763	17,893
Liabilities
Deferred compensation plan investments, current and non-current portion	20,398	17,893
Forward foreign currency exchange contracts	0	0
Liability for contingent consideration, current and non-current portion	0	0
Total liabilities at fair value	20,398	17,893
Significant other observable inputs (Level 2)
Assets
Deferred compensation plan investments, current and non-current portion	0	0
Forward foreign currency exchange contracts	614	33
Total assets at fair value	614	33
Liabilities
Deferred compensation plan investments, current and non-current portion	0	0
Forward foreign currency exchange contracts	274	551
Liability for contingent consideration, current and non-current portion	0	0
Total liabilities at fair value	274	551
Significant unobservable inputs (Level 3)
Assets
Deferred compensation plan investments, current and non-current portion	0	0
Forward foreign currency exchange contracts	0	0
Total assets at fair value	0	0
Liabilities
Deferred compensation plan investments, current and non-current portion	0	0
Forward foreign currency exchange contracts	0	0
Liability for contingent consideration, current and non-current portion	113,223	24,652
Total liabilities at fair value	$ 113,223	$ 24,652

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Fair Value of Financial Instruments - Summary of Changes in Fair Value of Contingent Considerations (Details) - Significant unobservable inputs (Level 3) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value at beginning of period		$ 24,000		$ 33,960
Payments		0		(7,286)
Change in fair value of contingent consideration		1,139		4,520
Foreign currency translation adjustment		2,002		(4,053)
Fair value at end of period		27,141		27,141
Barcode, Networking & Security Segment
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value at beginning of period		1,156		5,109
Payments		0		(3,133)
Change in fair value of contingent consideration		0		126
Foreign currency translation adjustment		113		(833)
Fair value at end of period		1,269		1,269
Communications & Services Segment
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value at beginning of period	$ 110,880	22,844	$ 24,652	28,851
Issuance of contingent consideration	0		95,000
Payments	0	0	(10,241)	(4,153)
Change in fair value of contingent consideration	1,960	1,139	3,921	4,394
Foreign currency translation adjustment	383	1,889	(109)	(3,220)
Fair value at end of period	$ 113,223	$ 25,872	$ 113,223	$ 25,872

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Fair Value of Financial Instruments - Narrative (Details) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Current portion of contingent consideration	$ 31,257,000		$ 31,257,000		$ 11,594,000
Significant unobservable inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gain (loss) due to change in fair value of contingent consideration		$ 1,139,000		$ 4,520,000
Fair value of liability for contingent consideration		$ 27,141,000		$ 27,141,000		$ 24,000,000	$ 33,960,000
Imago | Significant unobservable inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gain (loss) due to change in fair value of contingent consideration			1,100,000
Network1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration arrangements, maximum range of outcome	14,015,000		14,015,000
Network1 | Significant unobservable inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gain (loss) due to change in fair value of contingent consideration	1,300,000		1,500,000
Fair value of liability for contingent consideration	11,800,000		11,800,000
Current portion of contingent consideration	5,500,000		5,500,000
Intelisys
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gain (loss) due to change in fair value of contingent consideration	(3,289,000)		(6,457,000)
Contingent consideration arrangements, maximum range of outcome	132,800,000		132,800,000
Intelisys | Significant unobservable inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of liability for contingent consideration	101,500,000		101,500,000
Current portion of contingent consideration	$ 25,800,000		$ 25,800,000

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Fair Value of Financial Instruments - Valuation Techniques and Significant Observable Inputs (Details) - Discounted Cash Flow - Fair Value, Measurements, Recurring - Significant unobservable inputs (Level 3)	9 Months Ended	12 Months Ended
	Mar. 31, 2017	Jun. 30, 2016
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value Inputs, Discount Rate	15.20%	17.70%
Fair Value Inputs, Adjusted Earning before Interest, Taxes, Depreciation, and Amortization Growth Rate	44.30%	44.00%

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Segment Information - Narrative (Details)	9 Months Ended
	Mar. 31, 2017 segment
Segment Reporting, Measurement Disclosures [Abstract]
Number of reportable segments	2

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Segment Information - Financial Information by Segment (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Segment Reporting Information [Line Items]
Sales	$ 813,538	$ 798,404	$ 2,650,895	$ 2,662,754
Depreciation and amortization	6,880	4,281	18,692	12,570
Operating income	19,978	21,647	66,128	77,939
Capital expenditures	3,185	5,654	6,445	9,120
Operating Segments | United States
Segment Reporting Information [Line Items]
Sales	619,590	599,375	2,016,561	1,996,270
Operating Segments | International
Segment Reporting Information [Line Items]
Sales	200,382	206,748	660,124	693,526
Corporate, Non-Segment
Segment Reporting Information [Line Items]
Depreciation and amortization	870	859	2,507	2,300
Operating income	0	(29)	(833)	(311)
Capital expenditures	1,098	3,836	1,890	3,891
Intersegment Eliminations
Segment Reporting Information [Line Items]
Sales	(6,434)	(7,719)	(25,790)	(27,042)
Worldwide Barcode, Networking & Security | Operating Segments
Segment Reporting Information [Line Items]
Sales	548,971	528,009	1,770,015	1,780,324
Depreciation and amortization	1,828	1,453	5,183	3,996
Operating income	11,175	11,160	36,729	43,420
Capital expenditures	1,144	1,247	2,522	3,024
Worldwide Communications & Services | Operating Segments
Segment Reporting Information [Line Items]
Sales	264,567	270,395	880,880	882,430
Depreciation and amortization	4,182	1,969	11,002	6,274
Operating income	8,803	10,516	30,232	34,830
Capital expenditures	$ 943	$ 571	$ 2,033	$ 2,205

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Segment Information - Assets By Segment (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Jun. 30, 2016
Assets	$ 1,631,816	$ 1,491,185
Property and equipment, net	56,409	52,388
Operating Segments | United States
Property and equipment, net	51,614	46,935
Operating Segments | International
Property and equipment, net	4,795	5,453
Corporate, Non-Segment
Assets	65,587	58,730
Worldwide Barcode, Networking & Security | Operating Segments
Assets	807,219	836,674
Worldwide Communications & Services | Operating Segments
Assets	$ 759,010	$ 595,781

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Commitments and Contingencies - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended		12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016	Jun. 30, 2017
Other Commitments [Line Items]
Proceeds from legal settlements		$ 12,800
Expected future capital expenditures	$ 3,185		$ 5,654	$ 6,445	$ 9,120
Scenario, Forecast | Minimum
Other Commitments [Line Items]
Expected future capital expenditures						$ 7,000
Scenario, Forecast | Maximum
Other Commitments [Line Items]
Expected future capital expenditures						$ 10,000

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Commitments and Contingencies (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Jun. 30, 2016
CDC
Assets
Prepaid expenses and other current assets	$ 2,309	$ 2,346
Other non-current assets	0	0
Liabilities
Accrued expenses and other current liabilities	2,309	2,346
Other long-term liabilities	0	0
Network1
Assets
Prepaid expenses and other current assets	1,351	595
Other non-current assets	8,598	9,837
Liabilities
Accrued expenses and other current liabilities	1,351	595
Other long-term liabilities	$ 8,598	$ 9,837

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Income Taxes - Narrative (Details) - USD ($) $ in Millions	9 Months Ended
	Mar. 31, 2017	Jun. 30, 2016
Income Taxes [Line Items]
Gross unrecognized tax benefits	$ 2.2	$ 2.1
Unrecognized tax benefits that would impact effective tax rate if recognized	1.4
Income tax penalties and interest accrued	$ 1.1
Effective tax rate	35.60%
Federal statutory income tax rate	35.00%
Minimum
Income Taxes [Line Items]
Open tax year	2012