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

Quarterly period ended March 31, 2020

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____ to ____

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

Securities registered pursuant to Section 12(b) of the Act:
Title of each class:	Trading Symbol:	Name of exchange on which registered:
Common stock, no par value	SCSC	NASDAQ Global Select Market

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  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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	☒	Smaller reporting company	☐
Accelerated filer	☐	Emerging growth company	☐
Non-accelerated filer	☐

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  ☒

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 8, 2020
Common Stock, no par value per share	25,345,789 shares

SCANSOURCE, INC.

INDEX TO FORM 10-Q

March 31, 2020

		Page #
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	5
	Condensed Consolidated Balance Sheets (unaudited) at March 31, 2020 and June 30, 2019	5
	Condensed Consolidated Income Statements (unaudited) for the Quarters and Nine Months Ended March 31, 2020 and 2019	6
	Condensed Consolidated Statements of Comprehensive (Loss) Income (unaudited) for the Quarters and Nine Months Ended March 31, 2020 and 2019	7
	Condensed Consolidated Statements of Shareholders' Equity (unaudited) for the Quarters and Nine Months Ended March 31, 2020 and 2019	8
	Condensed Consolidated Statements of Cash Flows (unaudited) for the Nine Months Ended March 31, 2020 and 2019	10
	Notes to Condensed Consolidated Financial Statements (unaudited)	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	47
Item 4.	Controls and Procedures	48
PART II. OTHER INFORMATION
Item 1	Legal Proceedings	49
Item 1A.	Risk Factors	49
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	49
Item 6.	Exhibits	50
SIGNATURES		51

3

FORWARD-LOOKING STATEMENTS

Forward-looking statements are included in the "Risk Factors," "Legal Proceedings," "Management’s Discussion and Analysis of Financial Condition and Results of Operations," and "Quantitative and Qualitative Disclosures About Market Risk" sections and elsewhere herein. 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 generally identify such forward-looking statements. 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, except as required by law. Actual results could differ materially from those anticipated in 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 suppliers, termination of our relationship with key suppliers or a significant modification of the terms under which we operate with a key supplier, 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, the impact of the COVID-19 pandemic on our operations and financial condition and the other factors set forth in "Risk Factors" contained in our Annual Report on Form 10-K for the year ended June 30, 2019 and in the "Risk Factors" contained in Part II, Item 1a in this Quarterly Report on Form 10-Q.

4

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

SCANSOURCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands, except share information)

	March 31, 2020			June 30, 2019
Assets
Current assets:
Cash and cash equivalents	$	34,596		$	23,818
Accounts receivable, less allowance of $34,119 at March 31, 2020 and $38,849 at June 30, 2019	618,758			654,983
Inventories	666,458			697,343
Prepaid expenses and other current assets	116,221			101,171
Total current assets	1,436,033			1,477,315
Property and equipment, net	60,891			63,363
Goodwill	338,358			319,538
Identifiable intangible assets, net	133,228			127,939
Deferred income taxes	23,635			24,724
Other non-current assets	81,656			54,382
Total assets	$	2,073,801		$	2,067,261
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	608,417		$	558,101
Accrued expenses and other current liabilities	108,086			91,407
Current portion of contingent consideration	45,660			38,393
Income taxes payable	989			4,310
Short-term borrowings	143			4,590
Current portion of long-term debt	6,901			4,085
Total current liabilities	770,196			700,886
Deferred income taxes	1,077			1,395
Long-term debt, net of current portion	145,050			151,014
Borrowings under revolving credit facility	168,502			200,817
Long-term portion of contingent consideration	—			39,532
Other long-term liabilities	91,298			59,488
Total liabilities	1,176,123			1,153,132
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, 25,345,798 and 25,408,397 shares issued and outstanding at March 31, 2020 and June 30, 2019, respectively	62,314			64,287
Retained earnings	964,538			939,930
Accumulated other comprehensive loss	(129,174		)	(90,088		)
Total shareholders’ equity	897,678			914,129
Total liabilities and shareholders’ equity	$	2,073,801		$	2,067,261
June 30, 2019 amounts are derived from audited consolidated financial statements.
See accompanying notes to these condensed consolidated financial statements.

5

SCANSOURCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED INCOME STATEMENTS (UNAUDITED)

(In thousands, except per share data)

	Quarter ended						Nine months ended
	March 31,						March 31,
	2020			2019			2020			2019
Net sales	$	872,483		$	893,357		$	2,850,812		$	2,912,278
Cost of goods sold	777,674			783,342			2,530,020			2,569,570
Gross profit	94,809			110,015			320,792			342,708
Selling, general and administrative expenses	78,923			77,688			244,557			236,569
Depreciation expense	3,493			3,417			10,500			9,954
Intangible amortization expense	5,486			5,005			16,079			14,708
Change in fair value of contingent consideration	618			5,101			6,266			11,535
Operating income	6,289			18,804			43,390			69,942
Interest expense	3,421			3,670			10,964			9,415
Interest income	(1,080		)	(682		)	(2,629		)	(1,397		)
Other (income) expense, net	296			21			102			254
Income before income taxes	3,652			15,795			34,953			61,670
Provision for income taxes	1,939			4,080			10,345			15,651
Net income	$	1,713		$	11,715		$	24,608		$	46,019
Per share data:
Net income per common share, basic	$	0.07		$	0.46		$	0.97		$	1.79
Weighted-average shares outstanding, basic	25,346			25,704			25,386			25,647
Net income per common share, diluted	$	0.07		$	0.45		$	0.97		$	1.79
Weighted-average shares outstanding, diluted	25,363			25,762			25,444			25,755

See accompanying notes to these condensed consolidated financial statements.

6

SCANSOURCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED)

(In thousands)

	Quarter ended						Nine months ended
	March 31,						March 31,
	2020			2019			2020			2019
Net income	$	1,713		$	11,715		$	24,608		$	46,019
Unrealized (loss) gain on hedged transaction, net of tax	(4,046		)	(350		)	(4,217		)	(819		)
Foreign currency translation adjustment	(28,788		)	(1,797		)	(34,869		)	(5,196		)
Comprehensive (loss) income	$	(31,121	)	$	9,568		$	(14,478	)	$	40,004

See accompanying notes to these condensed consolidated financial statements.

7

SCANSOURCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)

(In thousands, except share information)

	Common Stock (Shares)		Common Stock (Amount)			Retained Earnings		Accumulated Other Comprehensive Loss			Total
Balance at June 30, 2019	25,408,397		$	64,287		$	939,930	$	(90,088	)	$	914,129
Net income	—		—			11,530		—			11,530
Unrealized loss on hedged transaction, net of tax	—		—			—		(1,071		)	(1,071		)
Foreign currency translation adjustment	—		—			—		(14,639		)	(14,639		)
Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes	786		(12		)	—		—			(12		)
Common stock repurchased	(168,068	)	(5,432		)	—		—			(5,432		)
Share-based compensation	—		1,246			—		—			1,246
Balance at September 30, 2019	25,241,115		$	60,089		$	951,460	$	(105,798	)	$	905,751
Net income	—		—			11,366		—			11,366
Unrealized loss on hedged transaction, net of tax	—		—			—		900			900
Foreign currency translation adjustment	—		—			—		8,558			8,558
Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes	104,683		(621		)	—		—			(621		)
Common stock repurchased	—		—			—		—			—
Share-based compensation	—		1,627			—		—			1,627
Balance at December 31, 2019	25,345,798		$	61,095		$	962,825	$	(96,340	)	$	927,580
Net income	—		—			1,713		—			1,713
Unrealized loss on hedged transaction, net of tax	—		—			—		(4,046		)	(4,046		)
Foreign currency translation adjustment	—		—			—		(28,788		)	(28,788		)
Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes	—		34			—		—			34
Common stock repurchased	—		—			—		—			—
Share-based compensation	—		1,185			—		—			1,185
Balance at March 31, 2020	25,345,798		$	62,314		$	964,538	$	(129,174	)	$	897,678
See accompanying notes to these condensed consolidated financial statements.

8

SCANSOURCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)

(In thousands, except share information)

	Common Stock (Shares)		Common Stock (Amount)			Retained Earnings		Accumulated Other Comprehensive Loss			Total
Balance at June 30, 2018	25,593,122		$	68,220		$	882,333	$	(84,177	)	$	866,376
Net income	—		—			14,322		—			14,322
Unrealized gain on hedged transaction, net of tax	—		—			—		146			146
Foreign currency translation adjustment	—		—			—		(4,762		)	(4,762		)
Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes	14,542		425			—		—			425
Share-based compensation	—		1,390			—		—			1,390
Balance at September 30, 2018	25,607,664		$	70,035		$	896,655	$	(88,793	)	$	877,897
Net income	—		—			19,982		—			19,982
Unrealized loss on hedged transaction, net of tax	—		—			—		(615		)	(615		)
Foreign currency translation adjustment	—		—			—		1,363			1,363
Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes	104,065		(321		)	—		—			(321		)
Stock repurchased	(9,387	)	(308		)	—		—			(308		)
Share based compensation	—		1,506			—		—			1,506
Balance at December 31, 2018	25,702,342		$	70,912		$	916,637	$	(88,045	)	$	899,504
Net income	—		—			11,715		—			11,715
Unrealized loss on hedged transaction, net of tax	—		—			—		(350		)	(350		)
Foreign currency translation adjustment	—		—			—		(1,797		)	(1,797		)
Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes	3,500		(2		)	—		—			(2		)
Share based compensation	—		1,993			—		—			1,993
Balance at March 31, 2019	25,705,842		$	72,903		$	928,352	$	(90,192	)	$	911,063
See accompanying notes to these condensed consolidated financial statements.

9

SCANSOURCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)

	Nine months ended
	March 31,
	2020			2019
Cash flows from operating activities:
Net income	$	24,608		$	46,019
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	28,428			27,566
Amortization of debt issuance costs	313			252
Provision for doubtful accounts	3,077			3,199
Share-based compensation	4,097			4,906
Deferred income taxes	(1,748		)	1,132
Change in fair value of contingent consideration	6,266			11,535
Contingent consideration payments excess	(3,050		)	(10,190		)
Finance lease interest	64			—
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	11,842			40,530
Inventories	15,656			(169,031		)
Prepaid expenses and other assets	(15,957		)	10,116
Other non-current assets	428			413
Accounts payable	62,553			25,138
Accrued expenses and other liabilities	17,153			(4,082		)
Income taxes payable	(3,647		)	(12,050		)
Net cash provided by (used in) operating activities	150,083			(24,547		)
Cash flows from investing activities:
Capital expenditures	(6,617		)	(10,977		)
Cash paid for business acquisitions, net of cash acquired	(48,921		)	(32,161		)
Net cash used in investing activities	(55,538		)	(43,138		)
Cash flows from financing activities:
Borrowings on revolving credit	1,670,227			1,602,568
Repayments on revolving credit	(1,701,494		)	(1,503,654		)
Repayments on short-term borrowings, net	(4,384		)	—
Repayments on long-term debt	(3,147		)	(330		)
Repayments of finance lease obligations	(660		)	(495		)
Contingent consideration payments	(35,481		)	(35,606		)
Exercise and issuance of equity awards	754			1,509
Taxes paid on settlement of equity awards	(1,354		)	(1,406		)
Repurchase of common stock	(6,077		)	(308		)
Net cash (used in) provided by financing activities	(81,616		)	62,278
Effect of exchange rate changes on cash and cash equivalents	(2,151		)	277
Increase (decrease) in cash and cash equivalents	10,778			(5,130		)
Cash and cash equivalents at beginning of period	23,818			25,530
Cash and cash equivalents at end of period	$	34,596		$	20,400
See accompanying notes to these condensed consolidated financial statements.

10

SCANSOURCE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(1) Business and Summary of Significant Accounting Policies

Business Description

ScanSource, Inc. (together with its subsidiaries referred to as “the Company” or “ScanSource”) is at the center of the solution delivery channel, connecting businesses and providing technology solutions. The Company brings technology solutions and services from the world’s leading suppliers of point-of-sale (POS), payments, barcode, physical security, unified communications and collaboration, and telecom and cloud services to market. The Company operates in the United States, Canada, Brazil, additional Latin American countries, and Europe. The Company's two operating segments, Worldwide Barcode, Networking & Security and Worldwide Communications & Services, are based on product, customer and service type.

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 ("U.S. 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 U.S. GAAP for annual financial statements. The unaudited condensed consolidated financial statements included herein contain all adjustments (consisting of normal recurring and non-recurring adjustments) that are, in the opinion of management, necessary to present fairly the financial position at March 31, 2020 and June 30, 2019, the results of operations for the quarters and nine months ended March 31, 2020 and 2019, the statements of comprehensive (loss) income for the quarters and nine months ended March 31, 2020 and 2019, the statements of shareholders' equity for the quarters and nine months ended March 31, 2020 and 2019 and the statements of cash flows for the nine months ended March 31, 2020 and 2019. The results of operations for the quarters and nine months ended March 31, 2020 and 2019 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, 2019.

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 ended March 31, 2020 from the policies described 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, 2019. 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, 2019.

See Note 11 Leases for a discussion of the policies established upon adoption of Accounting Standards Update ("ASU") 2016-02, Leases (ASC Topic 842) in fiscal year 2020.

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 $2.5 million and $7.4 million are included in accounts payable on the condensed consolidated balance at March 31, 2020 and June 30, 2019, respectively.

Long-lived Assets

11

The Company presents depreciation expense and intangible amortization expense on the Condensed Consolidated Income Statements. The Company's depreciation expense related to selling, general and administrative costs totaled $3.5 million and $10.5 million for the quarter and nine months ended March 31, 2020, respectively, and $3.4 million and $10.0 million for the quarter and nine months ended March 31, 2019, respectively. Depreciation expense reported as part of cost of goods sold on the Condensed Consolidated Income Statements totaled $0.6 million and $1.8 million for the quarter and nine months ended March 31, 2020, respectively, and $0.9 million and $2.9 million for the quarter and nine months ended March 31, 2019, respectively. The Company's intangible amortization expense reported on the Condensed Consolidated Income Statements relates to selling, general and administrative costs, not the cost of selling goods. Intangible amortization expense totaled $5.5 million and $16.1 million for the quarter and nine months ended March 31, 2020, respectively, and $5.0 million and $14.7 million for the quarter and nine months ended March 31, 2019, respectively.

Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-02, Leases (ASC Topic 842) requiring lessees to reflect most leases on their balance sheets and recognize expenses on their income statements in a manner similar to current guidance. Under the new guidance, lessees are 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 is 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. This ASU is effective for the Company beginning in the first quarter of fiscal 2020. Entities are required to use the modified retrospective approach of adoption, with the option of applying the requirements of the standard either (1) retrospectively to each prior comparative reporting period presented or (2) retrospectively at the beginning of the period of adoption.  The Company adopted the standard on July 1, 2019 and applied it at the beginning of the period of adoption. Therefore, upon adoption, financial information and disclosures are not updated for comparative reporting periods under the new standard. Additionally, the Company has elected the transition package of practical expedients upon adoption which, among other things, allows an entity to not reassess the historical lease classification. Upon adoption, the Company recognized right-of-use assets and corresponding lease liabilities for both operating and finance leases of approximately $37.0 million on the Condensed Consolidated Balance Sheets. The adoption of this standard was not material to the Company’s Condensed Consolidated Income Statements. See Note 11 for additional lease disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (ASC Topic 326). In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326: Financial Instruments - Credit Losses, which provides supplemental guidance and clarification to ASU 2016-13 and must be adopted concurrently. The pronouncement revises the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. The guidance is effective for the Company beginning in the first quarter of fiscal year 2021 with early adoption permitted. The Company is currently evaluating the potential need for a revised method to assess its allowance for doubtful accounts receivable and the related impact of this guidance on its consolidated financial statements.

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (ASC Topic 815) that amends and simplifies guidance related to hedge accounting to more accurately portray the economics of an entity’s risk management activities in its financial statements. The standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The guidance requires adoption using a modified retrospective approach. The presentation and disclosure requirements apply prospectively. The Company adopted the standard in the current fiscal year, and it had no impact on the consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (ASC Topic 820) Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. The pronouncement eliminates, modifies and adds disclosure requirements for fair value measurements. This guidance is effective for fiscal years beginning after December 15, 2019, and for interim periods within those fiscal years, with early adoption permitted. This guidance is applicable to the Company’s fiscal year beginning July 1, 2020. The Company is currently evaluating the potential impact of this guidance on its consolidated financial statements.

The Company has reviewed other newly issued accounting pronouncements and concluded that they are either not applicable to its business or that no material effect is expected on its consolidated financial statements as a result of future adoption.

12

(2) Revenue Recognition

The Company provides technology solutions and services from the world's leading suppliers of POS, payments, barcode, physical security, unified communications and collaboration, and telecom and cloud services. This includes hardware, related accessories and device configuration as well as software licenses, professional services and hardware support programs.

The Company adopted ASC 606, effective July 1, 2018 utilizing the full retrospective method. In determining the appropriate amount of revenue to recognize, the Company applies the following five-step model: (i) identify contracts with customers; (ii) identify performance obligations in the contracts; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations per the contracts; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company recognizes revenue as control of products and services are transferred to customers, which is generally at the point of shipment. The Company delivers products to customers in several ways, including: (i) shipment from the Company's warehouse, (ii) drop-shipment directly from the supplier, or (iii) electronic delivery for non-physical products.

Principal versus Agent Considerations

The Company is the principal for sales of all hardware, software and certain services, including self-branded warranty programs. The Company considers itself the principal in these transactions as it has control of the product or service before it is transferred to the customer. When the Company provides self-branded warranty programs, it engages a third party, generally the original equipment manufacturer, to cover the fulfillment of any obligations arising from these contracts. These revenues and associated third-party costs are amortized over the life of the contract on a straight-line basis. The Company recognizes the previously described revenue and cost of goods sold on a gross basis.

The Company is the agent for third-party service contracts, including product warranties and supplier-hosted software. These service contracts are sold separately from the products, and the Company often serves as the agent for the contract on behalf of the original equipment manufacturer. The Company's responsibility is to arrange for the provision of the specified service by the original equipment manufacturer, and the Company does not control the specified service before it is transferred to the customer. Because the Company acts as an agent, revenue is recognized net of cost at the time of sale.

Related to the Company’s Intelisys business, the Company acts as a master agent connecting independent sales partners with service providers or suppliers who offer telecom and cloud services to end-customers. Intelisys’ sales partners earn commission payments from those service providers or suppliers on end-customer sales. Intelisys provides commission processing services to sales partners, earning a percentage of the commission stream. Because the Company acts as an agent, revenue is recognized on a net basis.

Variable Considerations

For certain transactions, products are sold with a right of return and may also provide other rebates or incentives, which are accounted for as variable consideration. The Company estimates returns allowance based on historical experience and reduces revenue accordingly. The Company estimates the amount of variable consideration for rebates and incentives by using the expected value or the most likely amount to be given to the customer and reduces the revenue by those estimated amounts. These estimates are reviewed and updated as necessary at the end of each reporting period.

Contract Balances

The Company records contract assets and liabilities for payments received from customers in advance of services performed. These assets and liabilities are the result of the sales of the Company's self-branded warranty programs and other transactions where control has not yet passed to the customer. These amounts are immaterial to the consolidated financial statements for the periods presented.

Disaggregation of Revenue

The following tables represent the Company's disaggregation of revenue:

13

	Quarter ended March 31, 2020
			(in thousands)
	Worldwide Barcode, Networking & Security Segment		Worldwide Communications & Services Segment		Total
Revenue by product/service:
Technology solutions	$	583,642	$	273,120	$	856,762
Master agency and professional services(a)	—		15,721		15,721
	$	583,642	$	288,841	$	872,483
	Nine months ended March 31, 2020
			(in thousands)
	Worldwide Barcode, Networking & Security Segment		Worldwide Communications & Services Segment		Total
Revenue by product/service:
Technology solutions	$	1,967,670	$	836,883	$	2,804,553
Master agency and professional services(a)	—		46,259		46,259
	$	1,967,670	$	883,142	$	2,850,812
(a) Includes Intelisys Communications, Inc., Canpango and Intelisys Global Ltd.

	Quarter ended March 31, 2019
			(in thousands)
	Worldwide Barcode, Networking & Security Segment		Worldwide Communications & Services Segment		Total
Revenue by product/service:
Technology solutions	$	596,913	$	282,124	$	879,037
Master agency and professional services(a)	—		14,320		14,320
	$	596,913	$	296,444	$	893,357
	Nine months ended March 31, 2019
			(in thousands)
	Worldwide Barcode, Networking & Security Segment		Worldwide Communications & Services Segment		Total
Revenue by product/service:
Technology solutions	$	1,953,664	$	917,727	$	2,871,391
Master agency and professional services(a)	—		40,887		40,887
	$	1,953,664	$	958,614	$	2,912,278
(a) Includes Intelisys Communications, Inc., Canpango and Intelisys Global Ltd.

(3) Earnings Per Share

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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,
	2020		2019		2020		2019
	(in thousands, except per share data)
Numerator:
Net income	$	1,713	$	11,715	$	24,608	$	46,019
Denominator:
Weighted-average shares, basic	25,346		25,704		25,386		25,647
Dilutive effect of share-based payments	17		58		58		108
Weighted-average shares, diluted	25,363		25,762		25,444		25,755
Net income per common share, basic	$	0.07	$	0.46	$	0.97	$	1.79
Net income per common share, diluted	$	0.07	$	0.45	$	0.97	$	1.79

For the quarter and nine months ended March 31, 2020, weighted-average shares outstanding excluded from the computation of diluted earnings per share because their effect would be anti-dilutive were 1,036,740 and 980,803, respectively. For the quarter and nine months ended March 31, 2019, weighted-average shares outstanding excluded from the computation of diluted earnings per share were 592,411 and 459,189, respectively.

(4) Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss consists of the following: 

	March 31, 2020			June 30, 2019
	(in thousands)
Foreign currency translation adjustment	$	(122,782	)	$	(87,913	)
Unrealized loss on hedged transaction, net of tax	(6,392		)	(2,175		)
Accumulated other comprehensive loss	$	(129,174	)	$	(90,088	)

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,
	2020			2019			2020			2019
	(in thousands)
Tax (expense) benefit	$	(740	)	$	(193	)	$	(1,174	)	$	(187	)

(5) Acquisitions

intY

On July 1, 2019, the Company acquired all of the outstanding shares of intY and its CASCADE cloud services distribution platform. The purchase price of this acquisition, net of cash acquired, was approximately $48.9 million. The allocation of the purchase price to the assets and liabilities acquired, including the valuation of the identifiable intangible assets, has not been concluded as of the reporting date. The impact of this acquisition was not material to the consolidated financial statements. The Company recognized less than $0.1 million and $0.5 million for the quarter and nine months ended March 31, 2020, respectively, in acquisition-related

15

costs included in selling, general and administrative expenses on the Condensed Consolidated Income Statements in connection with this acquisition. This acquisition is included in the Worldwide Communications & Services segment.

RPM, Canpango and Intelisys Global

During the quarter ended December 31, 2018, the Company acquired the assets of RPM Software ("RPM"), a business process software developer with focus in the telecom channel business for calculating and paying agency commissions in an automated cloud-based system. During the quarter ended September 30, 2018, the Company completed the acquisition of Canpango, a global Salesforce implementation and consulting business with deep knowledge of customer relationship management (CRM) and integration with telecom systems. Intelisys Global was also acquired during the quarter ended September 30, 2018. The total combined purchase price for all companies, net of cash acquired, was approximately $32.2 million. The purchase price of these collective acquisitions was allocated to the assets acquired and liabilities assumed based on their estimated fair values on the transaction date. Purchase accounting was finalized during the year ended June 30, 2019. The impact of these acquisitions was not material to the consolidated financial statements. The Company recognized $0.2 million and $1.0 million during the quarter and nine months ended March 31, 2019, respectively, in acquisition-related costs included in selling, general and administrative expenses on the Condensed Consolidated Income Statements in connection with these acquisitions. RPM, Canpango and Intelisys Global are included in the Worldwide Communications & Services segment.

(6) Goodwill and Other Identifiable Intangible Assets

The changes in the carrying amount of goodwill for the nine months ended March 31, 2020, by reporting segment, are set forth in the table below. Additions to goodwill for the current year are due to the acquisition of intY. The allocation of the purchase price for the intY acquisition, including the valuation of the identifiable intangible assets, has not been concluded as of the reporting date.

	Worldwide Barcode, Networking & Security Segment			Worldwide Communications & Services Segment			Total
	(in thousands)
Balance at June 30, 2019	$	137,077		$	182,461		$	319,538
Additions	—			26,110			26,110
Foreign currency translation adjustment	(584		)	(6,706		)	(7,290		)
Balance at March 31, 2020	$	136,493		$	201,865		$	338,358

The following table shows changes in the amount recognized for net identifiable intangible assets for the nine months ended March 31, 2020. Additions to identifiable intangible assets for the current year are estimates recognized from the acquisition of intY.

	Net Identifiable Intangible Assets
	(in thousands)
Balance at June 30, 2019	$	127,939
Additions	23,725
Amortization expense	(16,079		)
Foreign currency translation adjustment	(2,357		)
Balance at March 31, 2020	$	133,228

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

The following table presents the Company’s debt at March 31, 2020 and June 30, 2019.

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	March 31, 2020		June 30, 2019
	(in thousands)
Short-term borrowings	$	143	$	4,590
Current portion of long-term debt	6,901		4,085
Mississippi revenue bond, net of current portion	4,425		4,764
Senior secured term loan facility, net of current portion	140,625		146,250
Borrowings under revolving credit facility	168,502		200,817
Total debt	$	320,596	$	360,506

Short-term Borrowings

The Company has a bank overdraft facility with Bank     of America used by its European subsidiaries. The facility allows the Company to disburse checks in excess of bank balances up to $14.0 million U.S. dollar equivalent for up to seven days. Borrowings under the overdraft facility bear interest at a rate equal to a spread of 1.0% over the applicable currency's London Interbank Offered Rate ("LIBOR") with a zero percent floor. Since borrowings outstanding under the overdraft facility at March 31, 2020 were denominated in euros, which bore a negative LIBOR rate, the interest applicable to the Company was 1.0%. There was $0.1 million outstanding balance on the overdraft facility at March 31, 2020 and $4.6 million outstanding at June 30, 2019.

Credit Facility

The Company has a multi-currency senior secured credit facility with JPMorgan Chase Bank N.A., as administrative agent, and a syndicate of banks (the “Amended Credit Agreement”). On April 30, 2019, the Company amended this credit facility to expand the borrowing capacity and extend its maturity to April 30, 2024. The Amended Credit Agreement includes (i) a five-year $350 million multi-currency senior secured revolving credit facility and (ii) a five-year $150 million senior secured term loan facility. Pursuant to an “accordion feature,” the Company may increase its borrowings up to an additional $250 million for a total of up to $750 million, subject to obtaining additional credit commitments from the lenders participating in the increase. The Amended Credit Agreement allows for the issuance of up to $50 million for letters of credit, subject to obtaining additional credit commitments from the lenders participating in the increase. The Company incurred debt issuance costs of $1.1 million in connection with the amendments to the Amended Credit Agreement. These costs were capitalized to other non-current 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 under the Amended Credit Agreement, other than swingline loans, bear interest at a rate equal to a spread over the LIBOR or alternate base rate depending upon the Company's net leverage ratio, calculated as total debt less up to $15 million of unrestricted domestic cash ("Credit Facility Net Debt") to trailing four-quarter adjusted earnings before interest expense, taxes, depreciation and amortization ("Credit Facility EBITDA") (the "Leverage Ratio"). This spread ranges from 1.00% to 1.75% for LIBOR-based loans and 0.00% to 0.75% for alternate base rate loans. Additionally, the Company is charged commitment fees ranging from 0.15% to 0.30%, depending upon the Leverage Ratio, on non-utilized borrowing availability, excluding swingline loans. The Amended Credit Agreement provides for the substitution of a new interest rate benchmark upon the transition from LIBOR, subject to agreement between the Company and the administrative agent. Borrowings under the Amended Credit Agreement 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. Under the terms of the revolving credit facility, the payment of cash dividends is restricted.

At March 31, 2020, the spread in effect was 1.750% for LIBOR-based loans and 0.750% for alternate base rate loans. The commitment fee rate in effect at March 31, 2020 was 0.30%. The Amended Credit Agreement includes customary representations, warranties, and affirmative and negative covenants, including financial covenants. Specifically, the Company’s Leverage Ratio must be less than or equal to 3.50 to 1.00 at all times. In addition, the Company’s Interest Coverage Ratio (as such term is defined in the Amended Credit Agreement) must be at least 3.00 to1.00 at the end of each fiscal quarter. In the event of a default, customary remedies are available to the lenders, including acceleration and increased interest rates. The Company was in compliance with all covenants under the credit facility at March 31, 2020.

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The average daily outstanding balance on the revolving credit facility, excluding the term loan facility, during the nine month periods ended March 31, 2020 and 2019 was $252.4 million and $313.6 million, respectively. There was $181.5 million and $149.2 million in unused borrowing capacity at March 31, 2020 and June 30, 2019, respectively. At March 31, 2020, based upon the Leverage Ratio calculation, there was $79.0 million available for additional borrowings. There were letters of credit issued under the multi-currency revolving credit facility of $0.3 million at March 31, 2020. There were no letters of credit issued at June 30, 2019.

Mississippi Revenue Bond

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. At March 31, 2020, the Company was in compliance with all covenants under this bond. The interest rates at March 31, 2020 and June 30, 2019 were 2.21% and 3.28%, respectively.

Debt Issuance Costs

At March 31, 2020, net debt issuance costs associated with the credit facility and bond totaled $1.7 million and are being amortized through the maturity date of each respective debt instrument.

(8) Derivatives and Hedging Activities

The Company's results of operations could be materially impacted by significant changes in foreign currency exchange rates and interest rates. In an effort to manage the exposure to these risks, 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 U.S. GAAP. The Company records all derivatives on the consolidated balance sheet at fair value. Derivatives that are not designated as hedging instruments or the ineffective portions of cash flow hedges 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 $94.8 million and $110.7 million for the exchange of foreign currencies at March 31, 2020 and June 30, 2019, 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 included in the Condensed Consolidated Income Statements for the quarters and nine months ended March 31, 2020 and 2019 are as follows:

	Quarter ended						Nine months ended
	March 31,						March 31,
	2020			2019			2020			2019
	(in thousands)
Net foreign exchange derivative contract losses (gains)	$	(6,178	)	$	1,125		$	(5,978	)	$	178
Net foreign currency transactional and re-measurement (gains) losses	6,546			(654		)	6,155			810
Net foreign currency exchange (gains) losses	$	368		$	471		$	177		$	988

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Net foreign currency 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 currency 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, British pound versus the euro and other currencies versus the U.S. dollar.

Interest Rates - The Company’s earnings are also affected by changes in interest rates due to the impact those changes have on interest expense from floating rate debt instruments. The Company manages its exposure to changes in interest rates by using interest rate swaps to hedge this exposure and to achieve a desired proportion of fixed versus floating rate debt. The Company entered into an interest rate swap agreement, which was subsequently settled, and entered into a new amended agreement on April 30, 2019. The swap agreement has a notional amount of $100.0 million, with a $50.0 million tranche scheduled to mature on April 30, 2024 and a $50.0 million tranche scheduled to mature April 30, 2026. This swap agreement is designated as a cash flow hedge to hedge the variable rate interest payments on the revolving credit facility. Interest rate differentials paid or received under the swap agreement are recognized as adjustments to interest expense. To the extent the swap is effective in offsetting the variability of the hedged cash flows, changes in the fair value of the swap are not included in current earnings but are reported as other comprehensive income (loss). There was no ineffective portion to be recorded as an adjustment to earnings for the quarters and nine months ended March 31, 2020 and 2019.

The components of the cash flow hedge included in the Condensed Consolidated Statement of Comprehensive (Loss) Income for the quarters and nine months ended March 31, 2020 and 2019, are as follows:

	Quarter ended						Nine months ended
	March 31,						March 31,
	2020			2019			2020			2019
	(in thousands)
Net interest expense (income) recognized as a result of interest rate swap	$	180		$	(79	)	$	343		$	(161	)
Unrealized gain (loss) in fair value of interest rate swap	(5,518		)	(385		)	(5,890		)	(919		)
Net increase (decrease) in accumulated other comprehensive (loss) income	$	(5,338	)	$	(464	)	$	(5,547	)	$	(1,080	)
Income tax effect	(1,292		)	(114		)	(1,330		)	(261		)
Net increase (decrease) in accumulated other comprehensive (loss) income, net of tax	$	(4,046	)	$	(350	)	$	(4,217	)	$	(819	)

The Company used the following derivative instruments at March 31, 2020 and June 30, 2019, reflected in its Condensed Consolidated Balance Sheets, for the risk management purposes detailed above:

		March 31, 2020				June 30, 2019
	Balance Sheet Location	Fair Value  of Derivatives Designated  as Hedge Instruments		Fair Value  of Derivatives Not Designated as  Hedge Instruments		Fair Value  of Derivatives Designated as Hedge Instruments		Fair Value  of Derivatives Not Designated as Hedge Instruments
		(in thousands)
Derivative assets:
Foreign exchange contracts	Prepaid expenses and other current assets	$	—	$	209	$	—	$	165
Derivative liabilities:
Foreign exchange contracts	Accrued expenses and other current liabilities	$	—	$	130	$	—	$	168
Interest rate swap agreement	Other long-term liabilities	$	8,922	$	—	$	3,504	$	—

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(9) 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 forward foreign currency exchange contracts, interest rate swap agreements and contingent consideration owed to the previous owners of 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 at March 31, 2020:

	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	$	23,553	$	23,553	$	—	$	—
Forward foreign currency exchange contracts	209		—		209		—
Total assets at fair value	$	23,762	$	23,553	$	209	$	—
Liabilities:
Deferred compensation plan investments, current and non-current portion	$	23,553	$	23,553	$	—	$	—
Forward foreign currency exchange contracts	130		—		130		—
Interest rate swap agreement	8,922		—		8,922		—
Liability for contingent consideration	45,660		—		—		45,660
Total liabilities at fair value	$	78,265	$	23,553	$	9,052	$	45,660

The following table summarizes the valuation of the Company’s remaining assets and liabilities measured at fair value on a recurring basis at June 30, 2019:

20

	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	$	25,787	$	25,787	$	—	$	—
Forward foreign currency exchange contracts	165		—		165		—
Total assets at fair value	$	25,952	$	25,787	$	165	$	—
Liabilities:
Deferred compensation plan investments, current and non-current portion	$	25,787	$	25,787	$	—	$	—
Forward foreign currency exchange contracts	168		—		168		—
Interest rate swap agreement	3,504		—		3,504		—
Liability for contingent consideration	77,925		—		—		77,925
Total liabilities at fair value	$	107,384	$	25,787	$	3,672	$	77,925

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 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). Fair values of interest rate swaps are measured using standard valuation models with inputs that can be derived from observable market transactions, including LIBOR spot and forward rates (Level 2). Foreign currency contracts and interest rate swap agreements are classified in the Condensed Consolidated Balance Sheets as prepaid expenses and other non-current assets or accrued expenses and other long-term liabilities, depending on the respective instruments' favorable or unfavorable positions. See Note 8 - Derivatives and Hedging Activities.

The Company recorded contingent consideration liabilities at the acquisition date of 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 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 (loss) income through the changes in foreign currency translation adjustments line item as seen in Note 4 - Accumulated Other Comprehensive Loss.

Network1 and Intelisys are part of the Company's Worldwide Communications & Services segment. The final earnout payment due to former shareholders of Network1 was paid during fiscal year ended June 30, 2019. The table below provides a summary of the changes in fair value of the Company's contingent considerations for the Intelisys earnout, which is measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the quarter and nine months ended March 31, 2020.

	Quarter ended March 31, 2020		Nine months ended March 31, 2020
	Worldwide Communications & Services Segment
	(in thousands)
Fair value at beginning of period	$	45,043	$	77,925
Payments	—		(38,531		)
Change in fair value of contingent consideration	617		6,266
Fair value at end of period	$	45,660	$	45,660

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The table below provides a summary of the changes in fair value of the Company’s contingent considerations (Level 3) for the Network1 and Intelisys earnouts for the quarter and nine months ended March 31, 2019.

	Quarter ended March 31, 2019			Nine months ended March 31, 2019
	Worldwide Communications & Services Segment
	(in thousands)
Fair value at beginning of period	$	71,886		$	108,233
Payments	(2,736		)	(45,796		)
Change in fair value of contingent consideration	5,101			11,535
Foreign currency translation adjustment	8			287
Fair value at end of period	$	74,259		$	74,259

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. In accordance with ASC 805, the Company will revalue the contingent consideration liability 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 liability 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 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 liability related to Intelisys at March 31, 2020 and June 30, 2019 were as follows.

Reporting Period	Valuation Technique	Significant Unobservable Inputs	Weighted Average Rates(a)
March 31, 2020	Discounted cash flow	Weighted average cost of capital	12.3	%
		Adjusted EBITDA growth rate	24.9	%
June 30, 2019	Discounted cash flow	Weighted average cost of capital	14.2	%
		Adjusted EBITDA growth rate	21.5	%

^(a) Weighted average rates identified for each significant unobservable input relate to the valuation of the Intelisys contingent consideration.

Intelisys

The fair value of the liability for the contingent consideration related to Intelisys recognized at March 31, 2020 was $45.7 million, all of which is classified as current. The expense from the change in fair value of the contingent consideration recognized in the Condensed Consolidated Income Statement totaled $0.6 million and $6.3 million for the quarter and nine months ended March 31, 2020, respectively. The change in fair value for the quarter is primarily driven by the recurring amortization of the unrecognized fair value discount and a reduction in the discount rate, partially offset by lower than expected actual results. The change in fair value for the nine month period is primarily driven by the recurring amortization of the unrecognized fair value discount and better than expected actual results. Although there is no contractual limit, total future undiscounted contingent consideration payments are anticipated to range up to $48.1 million, based on the Company’s best estimate of the earnout calculated on a multiple of adjusted earnings.

22

The fair value of the liability for the contingent consideration related to Intelisys recognized at March 31, 2019 was $74.3 million, of which $39.4 million was classified as current. The expense from the change in fair value of the contingent consideration recognized in the Condensed Consolidated Income Statement totaled $2.6 million and $9.0 million for the quarter and nine months ended March 31, 2019, respectively. The change in fair value for the prior-year quarter is primarily driven by the recurring amortization of the unrecognized fair value discount. The change in fair value for the prior-year nine month period is primarily the result of recurring amortization of the unrecognized fair value discount as well as improved financial results.

Network1

The final earnout payments were paid to the former shareholders of Network1 during the fiscal year ended June 30, 2019. The change in fair value of the contingent consideration for the quarter and nine months ended March 31, 2019 recognized in the Condensed Consolidated Income Statements contributed a loss of $2.5 million for agreed upon adjustments in the final payments.

(10) Segment Information

The Company is a leading provider of technology solutions and services to customers in specialty technology markets. The Company has two reportable segments, based on product, customer and service type.

Worldwide Barcode, Networking & Security Segment

The Worldwide Barcode, Networking & Security segment includes a portfolio of solutions primarily for enterprise mobile computing, data capture, barcode printing, POS, payments, networking, electronic physical security, cyber security and other technologies. We have business operations within this segment in the United States, Canada, Brazil, additional Latin American countries and Europe. We see adjacencies among these technologies in helping our customers develop solutions. Data capture and POS solutions 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 health care applications. Electronic physical security products include identification, access control, video surveillance, intrusion-related and wireless and networking infrastructure products.

Worldwide Communications & Services Segment

The Worldwide Communications & Services segment includes a portfolio of solutions primarily for communications technologies and services and includes our recent acquisition of intY. We have business operations within this segment in the United States, Canada, Brazil, additional Latin American countries and Europe. These offerings include voice, video conferencing, wireless, data networking, cable, unified communications and collaboration, cloud and technology services. As these solutions come together on IP networks, new opportunities are created to move into adjacent solutions for all vertical markets, such as education, healthcare and government.

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Selected financial information for each business segment is presented below:

	Quarter ended						Nine months ended
	March 31,						March 31,
	2020			2019			2020			2019
	(in thousands)
Sales:
Worldwide Barcode, Networking & Security	$	583,642		$	596,913		$	1,967,670		$	1,953,664
Worldwide Communications & Services	288,841			296,444			883,142			958,614
	$	872,483		$	893,357		$	2,850,812		$	2,912,278
Depreciation and amortization:
Worldwide Barcode, Networking & Security	$	4,298		$	4,371		$	13,019		$	13,387
Worldwide Communications & Services	4,446			4,097			13,024			11,494
Corporate	795			895			2,384			2,685
	$	9,539		$	9,363		$	28,427		$	27,566
Change in fair value of contingent consideration:
Worldwide Barcode, Networking & Security	$	—		$	—		$	—		$	—
Worldwide Communications & Services	618			5,101			6,266			11,535
	$	618		$	5,101		$	6,266		$	11,535
Operating income (loss):
Worldwide Barcode, Networking & Security	$	3,870		$	16,865		$	29,938		$	48,974
Worldwide Communications & Services	3,199			2,161			16,141			21,956
Corporate	(780		)	(222		)	(2,689		)	(988		)
	$	6,289		$	18,804		$	43,390		$	69,942
Capital expenditures:
Worldwide Barcode, Networking & Security	$	1,878		$	2,298		$	3,324		$	6,038
Worldwide Communications & Services	1,989			2,899			3,293			4,935
Corporate	—			—			—			4
	$	3,867		$	5,197		$	6,617		$	10,977
Sales by Geography Category:
United States and Canada	$	676,703		$	678,078		$	2,198,173		$	2,210,729
International(1)	202,310			221,202			677,478			722,715
Less intercompany sales	(6,530		)	(5,923		)	(24,839		)	(21,166		)
	$	872,483		$	893,357		$	2,850,812		$	2,912,278
(1) For the quarters and nine months ended March 31, 2020 and 2019, no sales exceeded 10% of consolidated net sales to any single international country.

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	March 31, 2020		June 30, 2019
	(in thousands)
Assets:
Worldwide Barcode, Networking & Security	$	1,144,034	$	1,097,207
Worldwide Communications & Services	886,899		905,439
Corporate	42,868		64,615
	$	2,073,801	$	2,067,261
Property and equipment, net by Geography Category:
United States and Canada	$	56,326	$	58,961
International	4,565		4,402
	$	60,891	$	63,363

(11) Leases

In accordance with ASC 842, at contract inception the Company determines if a contract contains a lease by assessing whether the contract contains an identified asset and whether the Company has the ability to control the asset. The Company also determines if the lease meets the classification criteria for an operating lease versus a finance lease under ASC 842. Substantially all of the Company's leases are operating leases for real estate, warehouse and office equipment ranging in duration from 1 year to 10 years. The Company has elected not to record short-term operating leases with an initial term of 12 months or less on the Condensed Consolidated Balance Sheets. Operating leases are recorded as other non-current assets, accrued expenses and other current liabilities and other long-term liabilities on the Condensed Consolidated Balance Sheets. The Company has finance leases for information technology equipment expiring in fiscal year 2022. Finance leases are recorded as property and equipment, net, accrued expenses and other current liabilities and other long-term liabilities on the Condensed Consolidated Balance Sheets. The gross amount of the balances recorded related to finance leases is immaterial to the financial statements at March 31, 2020 and June 30, 2019.

Operating lease right-of-use assets and lease liabilities are recognized at the commencement date based on the net present value of future minimum lease payments over the lease term. The Company generally is not able to determine the rate implicit in its leases and has elected to apply an incremental borrowing rate as the discount rate for the present value determination, which is based on the Company's cost of borrowings for the relevant terms of each lease and geographical economic factors. Certain operating lease agreements contain options to extend or terminate the lease. The lease term used is adjusted for these options when the Company is reasonably certain it will exercise the option. Operating lease expense is recognized on a straight-line basis over the lease term. Variable lease payments not based on a rate or index, such as costs for common area maintenance, are expensed as incurred. Further, the Company has elected the practical expedient to recognize all lease and non-lease components as a single lease component, where applicable.

The following table presents amounts recorded on the Condensed Consolidated Balance Sheet related to operating leases at March 31, 2020:

Operating leases	Balance Sheet location	March 31, 2020
		(in thousands)
Operating lease right-of-use assets	Other non-current assets	$	30,196
Current operating lease liabilities	Accrued expenses and other current liabilities	$	5,805
Long-term operating lease liabilities	Other long-term liabilities	$	26,490

The following table presents amounts recorded in operating lease expense as part of selling general and administrative expenses on the Condensed Consolidated Income Statements during the quarter and nine months ended March 31, 2020. Operating lease costs contain immaterial amounts of short-term lease costs for leases with an initial term of 12 months or less.

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	Quarter ended		Nine months ended
	March 31, 2020		March 31, 2020
	(in thousands)
Operating lease cost	$	1,873	$	6,005
Variable lease cost	542		1,325
	$	2,415	$	7,330

Supplemental cash flow information related to the Company's operating leases for the quarter and nine months ended March 31, 2020 are presented in the table below:

	Quarter ended		Nine months ended
	March 31, 2020		March 31, 2020
	(in thousands)
Cash paid for amounts in the measurement of lease liabilities	$	1,719	$	5,189
Right-of-use assets obtained in exchange for lease obligations	250		1,804

The weighted-average remaining lease term and discount rate at March 31, 2020 are presented in the table below:

	March 31, 2020
Weighted-average remaining lease term	6.27 years
Weighted-average discount rate	3.9	%

The following table presents the maturities of the Company's operating lease liabilities at March 31, 2020:

	Operating leases
	(in thousands)
Remainder of 2020	$	2,362
2021	7,828
2022	7,090
2023	5,574
2024	4,757
Thereafter	11,282
Total future payments	38,893
Less: amounts representing interest	6,598
Present value of lease payments	$	32,295

(12) 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.

In early March 2020, the World Health Organization characterized the novel coronavirus (“COVID-19”) as a pandemic. The rapid spread of COVID-19 since December 2019 has resulted in the implementation of numerous measures to contain the virus worldwide, such as travel bans and restrictions, quarantines, shelter-in-place orders and business shutdowns. The pandemic and these containment measures have had, and are expected to continue to have, a substantial impact on businesses around the world, including the Company’s business, and on global, regional and national economies. The Company is unable at this time to predict

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the ultimate impact that COVID-19 will have on its business due to the inability to predict the duration or magnitude of the virus' impacts.

During the Company's due diligence for the Network1 acquisition, several pre-acquisition contingencies were identified regarding various Brazilian federal and state tax exposures. The Company recorded indemnification receivables that are reported gross of the pre-acquisition contingency liabilities as the funds were escrowed as part of the acquisition. The amount available after the impact of foreign currency translation for future pre-acquisition contingency settlements or to be released to the sellers was $5.0 million and $6.5 million, at March 31, 2020 and June 30, 2019, respectively.

The table below summarizes the balances and line item presentation of Network1's pre-acquisition contingencies and corresponding indemnification receivables in the Company's Condensed Consolidated Balance Sheets at March 31, 2020 and June 30, 2019:

	March 31, 2020		June 30, 2019
	Network1
	(in thousands)
Assets
Prepaid expenses and other current assets	$	15	$	761
Other non-current assets	$	3,847	$	5,219
Liabilities
Accrued expenses and other current liabilities	$	15	$	761
Other long-term liabilities	$	3,847	$	5,219

The reduction in pre-acquisition contingencies and corresponding indemnification receivables is due to expiration of the statute of limitations on several identified contingencies, coupled with a reduction in the foreign exchange rate of the Brazilian real against the US dollar.

(13) Income Taxes

Income taxes for the quarter and nine months ended March 31, 2020 have been included in the accompanying condensed consolidated financial statements using an estimated annual effective tax rate. In addition to applying the estimated annual effective tax rate to pre-tax income, the Company also includes certain items treated as discrete events to arrive at an estimated overall tax provision. During the nine months ended March 31, 2020, the Company recognized a net discrete tax benefit of $0.2 million related to the reversal of an unrecognized tax benefit and a change in estimate of nondeductible expenses for a prior period.

The Company’s effective tax rate of 53.1% and 29.6% for the quarter and nine months ended March 31, 2020, respectively, differs from the current federal statutory rate of 21% primarily as a result of income derived from tax jurisdictions with varying income tax rates, nondeductible expenses and state income taxes. The effective tax rate for the quarter is significantly higher than effective tax rate for the nine month period primarily due to the impact of lowered forecasted earnings and changes in the geographical mix of income.

The Company has provided for U.S. income taxes for the current earnings of its Canadian subsidiary and will continue to distribute the earnings of its Canadian subsidiary. Earnings from Brazil will continue to be considered retained indefinitely for reinvestment and all other foreign geographies are immaterial. It has been the practice of the Company to reinvest those earnings in the businesses outside the United States. Apart from the one-time transition tax recognized in accordance with the U.S. government enacted Tax Cuts and Jobs Act (the “Tax Act”) during fiscal year 2018, any incremental deferred income taxes on the unremitted foreign earnings are not expected to be material.

The Tax Act created a provision known as global intangible low-tax income ("GILTI") that imposes a tax on certain earnings of foreign subsidiaries. The GILTI tax became effective for the Company during fiscal year 2019, and an accounting policy election was made to treat the tax as a current period expense.

The Company had approximately $1.0 million and $1.2 million of total gross unrecognized tax benefits at March 31, 2020 and June 30, 2019, respectively. Of this total at March 31, 2020, approximately $0.8 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.

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The Company conducts business globally and 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 federal, state and local, or non-U.S. income tax examinations by tax authorities for the years before June 30, 2014.

The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense. At March 31, 2020 and June 30, 2019, the Company had approximately $1.1 million and $1.0 million, respectively, accrued for interest and penalties, respectively.

Financial results in Belgium produced a pre-tax loss of approximately $1.0 million and $0.8 million for the quarters ended March 31, 2020 and 2019. The valuation of Belgium's net deferred tax asset will depend on future profitability and potential future transactions. In the judgment of management, it is more likely than not that the deferred tax asset will be realized.

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

Overview

ScanSource is at the center of the technology solution delivery channel, connecting businesses and providing solutions for their complex needs. We provide technology solutions and services from the world’s leading suppliers of point-of-sale (POS), payments, barcode, physical security, unified communications and collaboration, and telecom and cloud services to our customers. We serve approximately 38,000 sales partners located in the United States, Canada, Brazil, additional Latin America and Europe and provide solutions and services from over 550 technology suppliers.

We segment our business into two technology-focused areas that each operate in the United States, Canada, Brazil, additional Latin American countries, and Europe:

• Worldwide Barcode, Networking & Security

• Worldwide Communications & Services

We sell products to the United States and Canada from our facilities located in the United States; into Latin America from facilities located in the United States, Mexico, Brazil, Colombia and Chile; and into Europe from facilities in Europe and the United Kingdom. We also have drop-shipment arrangements with some of our suppliers, which allow us to offer products to customers without taking physical delivery at our facilities.

Our key suppliers include 8x8, ACC Business, AT&T, Aruba/HPE, Axis, AudioCodes, Avaya, Barco, Bematech, CenturyLink, Cisco, Comcast Business, Datalogic, Dell, Dialogic, Elo, Epson, F5, Fortinet, Hanwha, Honeywell, HID, Ingenico, Jabra, March Networks, Masergy, Microsoft, Mitel, NCR, NICE inContact, Oracle, Panasonic, Poly, RingCentral, Samsung, Sony, Spectralink, Spectrum, Toshiba Global Commerce Solutions, TPx, Ubiquiti, Verifone, Verizon, Windstream, Zayo and Zebra Technologies. We also offer customers significant choices in cloud services through our Intelisys business, including offerings in contact center, infrastructure and unified communications.

Recent Developments

Impact of Coronavirus ("COVID-19") on our Business Environment

In early March 2020, the World Health Organization characterized COVID-19 as a pandemic. The rapid spread of COVID-19 since December 2019 has resulted in the implementation of numerous measures to contain the virus worldwide, such as travel bans and restrictions, quarantines, shelter-in-place orders and business shutdowns. The pandemic and these containment measures have had, and are expected to continue to have, a substantial impact on businesses around the world and on global, regional and national economies.

During the COVID-19 pandemic, our top priority is protecting the health and safety of our employees. We moved quickly to transition our employees, where possible, to a fully remote working environment. We have taken a number of measures to ensure our teams feel secure in their jobs and have the flexibility and resources they need to stay safe and healthy.

As of the date of this filing, we have activated our contingency plans. We have deployed teams to monitor the rapidly evolving situation and recommend risk mitigation actions; we have implemented travel restrictions; and we are following social distancing practices. We are following guidance from authorities and health officials including, but not limited to, checking the temperature of associates when entering our facilities, requiring associates to wear masks and other protective clothing as appropriate, and implementing additional cleaning and sanitation routines. In addition, nearly all office-based employees around the world are working remotely.

During the first two months of the quarter ended March, 31, 2020, while COVID-19 was primarily limited to specific countries in Asia and Europe, our business was roughly in line with previous March quarters. During the second half of March, the sudden move to work-from-home triggered a rise in some of our sales for products that are used by remote workers. For the month of April, our net sales declined 22% year-over-year, or 20% year-over-year excluding the negative impact of foreign currency translation.

See "Risk Factors" for information on additional impacts of COVID-19 and related containment efforts as well as other matters that could have a material adverse effect on our results of operations and financial condition.

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Divestitures

On August 20, 2019, we announced plans to divest our physical product distribution businesses in Europe, UK, Mexico, Colombia, Chile, Peru and our Miami-based export operations (the "Planned Divestitures"). We will continue to operate our digital businesses in these locations. The Company has identified potential buyers for these businesses and is in due diligence and purchase agreement negotiations. There can be no assurance that this sale process will result in a transaction or regarding the timing of any transaction.

Our Strategy

We rely on a channel sales model offering hardware, software, services and connectivity solutions from technology suppliers to sales partners that serve end customers. We sell technology solutions that solve end customers' business needs. While we do not manufacture products, we provide technology solutions and services from leading technology suppliers. Our solutions may include a combination of offerings from multiple suppliers or give our sales partners access to additional services, such as custom configuration, key injection, integration support, custom development and other services, to deliver solutions. We also offer the flexibility of on-premise, cloud and hybrid solutions.

As a trusted adviser to our sales partners, we provide more complete solutions through a better understanding of end customer needs. We drive growth through enhancing our sales partners' capabilities to provide hardware, software, services and connectivity solutions to meet these needs. Our teams deliver value-added support programs and services, including education and training, network assessments, implementation, custom development and marketing to help our sales partners extend their capabilities, develop new technology practices or reach new end customers.

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Results of Operations

Net Sales

The following tables summarize our net sales results by technology segment and by geographic location for the quarters and nine months ended March 31, 2020 and 2019:

	Quarter ended March 31,									% Change, Constant Currency, Excluding Planned Divestitures and Acquisitions (a)
Net Sales by Segment:	2020		2019		$ Change			% Change
	(in thousands)
Worldwide Barcode, Networking & Security	$	583,642	$	596,913	$	(13,271	)	(2.2	)%	(0.8	)%
Worldwide Communications & Services	288,841		296,444		(7,603		)	(2.6	)%	2.9	%
Total net sales	$	872,483	$	893,357	$	(20,874	)	(2.3	)%	0.5	%
	Nine months ended March 31,									% Change, Constant Currency, Excluding Planned Divestitures and Acquisitions (a)
	2020		2019		$ Change			% Change
	(in thousands)
Worldwide Barcode, Networking & Security	$	1,967,670	$	1,953,664	$	14,006		0.7	%	2.4	%
Worldwide Communications & Services	883,142		958,614		(75,472		)	(7.9	)%	(6.2	)%
Total net sales	$	2,850,812	$	2,912,278	$	(61,466	)	(2.1	)%	(0.5	)%

^(a) A reconciliation of non-GAAP net sales in constant currency, excluding Planned Divestitures and acquisitions is presented at the end of Results of Operations in the non-GAAP section.

Worldwide Barcode, Networking & Security

The Worldwide Barcode, Networking & Security segment consists of sales to customers in North America, Europe, Brazil and additional Latin American countries. For the quarter ended March 31, 2020, net sales for the Barcode, Networking & Security segment decreased $13.3 million, or 2.2%, compared to the prior-year quarter primarily from lower sales volume in Europe and negative foreign currency translation for Brazil. Excluding the foreign exchange negative impact and Planned Divestitures, adjusted net sales decreased $3.9 million, or 0.8%, for the quarter ended March 31, 2020 compared to the prior-year quarter primarily from lower sales volumes in parts of our business in North America, partially offset by growth across our diversified technologies.

Net sales increased $14.0 million, or 0.7%, for the nine months ended March 31, 2020 compared to the prior-year nine month period. Excluding the foreign exchange negative impact and Planned Divestitures, adjusted net sales increased $38.1 million, or 2.4%, for the nine months ended March 31, 2020. The increase in net sales and adjusted net sales for the nine months ended March 31, 2020 is primarily due to higher sales volume across our diversified key technologies in North America.

Worldwide Communications & Services

The Worldwide Communications & Services segment consists of sales to customers in North America, Europe, Brazil, and additional Latin American countries. For the quarter ended March 31, 2020, net sales decreased $7.6 million primarily from our Planned Divestitures. Excluding the foreign exchange negative impact and net sales from Planned Divestitures and acquisitions, adjusted net sales increased $7.3 million, or 2.9%, for the quarter largely from sales growth in Brazil and increases in net sales from our master agency business.

For the nine months ended March 31, 2020, net sales decreased $75.5 million, compared to the prior-year nine month period primarily due to lower sales in the premise-based communications business in North America. Excluding the foreign exchange negative impact and net sales from Planned Divestitures and acquisitions, adjusted net sales decreased $51.0 million, or 6.2%, for the nine month period primarily due to lower sales in the premise-based communications business in North America, partially offset by sales growth in Brazil and increases in net sales from our master agency business.

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	Quarter ended March 31,									% Change, Constant Currency, Excluding Planned Divestitures and Acquisitions (a)
Net Sales by Geography:	2020		2019		$ Change			% Change
	(in thousands)
United States and Canada	$	670,175	$	672,155	$	(1,980	)	(0.3	)%	(0.3	)%
International	$	202,308	$	221,202	(18,894		)	(8.5	)%	6.9	%
Total net sales	$	872,483	$	893,357	$	(20,874	)	(2.3	)%	0.5	%
	Nine months ended March 31,									% Change, Constant Currency, Excluding Planned Divestitures and Acquisitions (a)
	2020		2019		$ Change			% Change
	(in thousands)
United States and Canada	$	2,173,516	$	2,189,567	$	(16,051	)	(0.7	)%	(0.9	)%
International	677,296		722,711		(45,415		)	(6.3	)%	2.3	%
Total net sales	$	2,850,812	$	2,912,278	$	(61,466	)	(2.1	)%	(0.5	)%

^(a) A reconciliation of non-GAAP net sales in constant currency, excluding Planned Divestitures and acquisitions is presented at the end of Results of Operations in the non-GAAP section.

Gross Profit

The following tables summarize our gross profit for the quarters and nine months ended March 31, 2020 and 2019:

	Quarter ended March 31,									% of Net Sales March 31,
	2020		2019		$ Change			% Change		2020		2019
	(in thousands)
Worldwide Barcode, Networking & Security	$	48,583	$	61,563	$	(12,980	)	(21.1	)%	8.3	%	10.3	%
Worldwide Communications & Services	46,226		48,452		(2,226		)	(4.6	)%	16.0	%	16.3	%
Gross profit	$	94,809	$	110,015	$	(15,206	)	(13.8	)%	10.9	%	12.3	%
	Nine months ended March 31,									% of Net Sales March 31,
	2020		2019		$ Change			% Change		2020		2019
	(in thousands)
Worldwide Barcode, Networking & Security	$	166,990	$	188,339	$	(21,349	)	(11.3	)%	8.5	%	9.6	%
Worldwide Communications & Services	153,802		154,369		(567		)	(0.4	)%	17.4	%	16.1	%
Gross profit	$	320,792	$	342,708	$	(21,916	)	(6.4	)%	11.3	%	11.8	%

During the current fiscal year, we undertook a conversion to a new inventory management system in our Southaven, Mississippi distribution center. That software has not performed up to expectations, and during the quarter ended March 31, 2020, we incurred a $4.5 million expense for inventory charges. That charge increased our cost of goods sold, which lowered gross profit for the quarter ended March 31, 2020. We implemented an inventory action plan to address the warehouse inventory discrepancies and are back to typical warehouse operations during the month of April.

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Worldwide Barcode, Networking & Security

Gross profit dollars and gross profit margin for the Worldwide Barcode, Networking & Security segment decreased for the quarter and nine months ended March 31, 2020 compared to the prior-year periods primarily from higher inventory charges following the conversion to a new inventory management system and lower vendor program recognition.

Worldwide Communications & Services

Gross profit dollars and gross profit margin decreased for the Worldwide Communications & Services segment for the quarter ended March 31, 2020 primarily from higher inventory charges following the conversion to a new inventory management system and lower vendor program recognition. For the nine months ended March 31, 2020, gross profit margin increased primarily due to a more favorable sales mix, including results contributed by our Intelisys recurring revenue business.

Operating Expenses

The following tables summarize our operating expenses for the quarters and nine months ended March 31, 2020 and 2019:

	Quarter ended March 31,									% of Net Sales March 31,
	2020		2019		$ Change			% Change		2020		2019
	(in thousands)
Selling, general and administrative expenses	$	78,923	$	77,688	$	1,235		1.6	%	9.0	%	8.7	%
Depreciation expense	3,493		3,417		76			2.2	%	0.4	%	0.4	%
Intangible amortization expense	5,486		5,005		481			9.6	%	0.6	%	0.6	%
Change in fair value of contingent consideration	618		5,101		(4,483		)	(87.9	)%	0.1	%	0.6	%
Operating expenses	$	88,520	$	91,211	$	(2,691	)	(3.0	)%	10.1	%	10.2	%
	Nine months ended March 31,									% of Net Sales March 31,
	2020		2019		$ Change			% Change		2020		2019
	(in thousands)
Selling, general and administrative expenses	$	244,557	$	236,569	$	7,988		3.4	%	8.6	%	8.1	%
Depreciation expense	10,500		9,954		546			5.5	%	0.4	%	0.3	%
Intangible amortization expense	16,079		14,708		1,371			9.3	%	0.6	%	0.5	%
Change in fair value of contingent consideration	6,266		11,535		(5,269		)	(45.7	)%	0.2	%	0.4	%
Operating expenses	$	277,402	$	272,766	$	4,636		1.7	%	9.7	%	9.4	%

Selling, general and administrative expenses ("SG&A") increased $1.2 million and $8.0 million for the quarter and nine months ended March 31, 2020, respectively, as compared to the prior-year periods. Higher SG&A expenses for the quarter and nine months reflect investments in future growth for our recurring revenue and service-based businesses. These investments have primarily resulted in increased employee-related expenses.

Depreciation expense remained fairly consistent for the quarter ended March 31, 2020 compared to the prior-year quarter. Depreciation expense increased $0.5 million for the nine months ended March 31, 2020, compared to the prior-year nine month period, primarily due to additional expense on capitalized IT investments.

Amortization expense increased $0.5 million and $1.4 million for the quarter and nine months ended March 31, 2020 compared to the prior year largely due to estimates of intangible amortization expense for the intY acquisition. The purchase price allocation for the intY acquisition has not been finalized as of the reporting date.

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We recorded expense from change in fair value of contingent consideration of $0.6 million and $6.3 million for the quarter and nine months ended March 31, 2020, all of which relates to Intelisys. The expense from the change in fair value for the quarter is primarily driven by the recurring amortization of the unrecognized fair value discount and a reduction in the discount rate, partially offset by lower than expected actual results. The expense from change in fair value for the nine month period is primarily driven by the recurring amortization of the unrecognized fair value discount and better than expected actual results.

Operating Income

The following tables summarize our operating income for the quarters and nine months ended March 31, 2020 and 2019:

 

	Quarter ended March 31,											% of Net Sales March 31,
	2020			2019			$ Change			% Change		2020		2019
	(in thousands)
Worldwide Barcode, Networking & Security	$	3,870		$	16,865		$	(12,995	)	(77.1	)%	0.7	%	2.8	%
Worldwide Communications & Services	3,199			2,161			1,038			48.0	%	1.1	%	0.7	%
Corporate	(780		)	(222		)	(558		)	nm*		nm*		nm*
Operating income	$	6,289		$	18,804		$	(12,515	)	(66.6	)%	0.7	%	2.1	%
	Nine months ended March 31,											% of Net Sales March 31,
	2020			2019			$ Change			% Change		2020		2019
	(in thousands)
Worldwide Barcode, Networking & Security	$	29,938		$	48,974		$	(19,036	)	(38.9	)%	1.5	%	2.5	%
Worldwide Communications & Services	16,141			21,956			(5,815		)	(26.5	)%	1.8	%	2.3	%
Corporate	(2,689		)	(988		)	(1,701		)	nm*		nm*		nm*
Operating income	$	43,390		$	69,942		$	(26,552	)	(38.0	)%	1.5	%	2.4	%

*nm - percentages are not meaningful

Worldwide Barcode, Networking & Security

For the Worldwide Barcode, Networking & Security segment, operating income decreased $13.0 million and $19.0 million for the quarter and nine months ended March 31, 2020, respectively, compared to the prior-year periods. Operating margin decreased to 0.7% and 1.5% for the quarter and nine months ended March 31, 2020 compared to the prior-year periods, primarily due to lower gross profits.

Worldwide Communications & Services

For the Worldwide Communications & Services segment, operating income and operating margin increased for the quarter ended March 31, 2020 primarily from lower expense from the change in fair value of contingent consideration. For the nine months ended March 31, 2020, operating income decreased $5.8 million, and operating margin decreased to 1.8% largely due to SG&A investments in future growth of our master agency and service-based businesses.

Corporate

Corporate incurred $0.8 million and $2.7 million in acquisition and divestiture expenses for the quarter and nine months ended March 31, 2020, respectively, compared to $0.2 million and $1.0 million in acquisition expenses for the quarter and nine months ended March 31, 2019, respectively.

Total Other (Income) Expense

The following tables summarize our total other (income) expense for the quarters and nine months ended March 31, 2020 and 2019:

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	Quarter ended March 31,											% of Net Sales March 31,
	2020			2019			$ Change			% Change		2020		2019
	(in thousands)
Interest expense	$	3,421		$	3,670		$	(249	)	(6.8	)%	0.4	%	0.4	%
Interest income	(1,080		)	(682		)	(398		)	(58.4	)%	(0.1	)%	(0.1	)%
Net foreign exchange (gains) losses	368			471			(103		)	(21.9	)%	0.0	%	0.1	%
Other, net	(72		)	(450		)	378			84.0	%	(0.0	)%	(0.1	)%
Total other (income) expense, net	$	2,637		$	3,009		$	(372	)	(12.4	)%	0.3	%	0.3	%
	Nine months ended March 31,											% of Net Sales March 31,
	2020			2019			$ Change			% Change		2020		2019
	(in thousands)
Interest expense	$	10,964		$	9,415		$	1,549		16.5	%	0.4	%	0.3	%
Interest income	(2,629		)	(1,397		)	(1,232		)	88.2	%	(0.1	)%	(0.0	)%
Net foreign exchange (gains) losses	177			988			(811		)	(82.1	)%	0.0	%	0.0	%
Other, net	(75		)	(734		)	659			(89.8	)%	(0.0	)%	(0.0	)%
Total other (income) expense, net	$	8,437		$	8,272		$	165		2.0	%	0.3	%	0.3	%

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 expense increased for the quarter ended March 31, 2020 compared to the prior-year quarter primarily from lower net borrowing on our multi-currency senior secured revolving credit facility. Interest expense increased for the nine months ended March 31, 2020 compared to the prior-year period, principally from higher borrowings on our multi-currency senior secured revolving credit facility and senior secured term loan facility.

Interest income for the quarter and nine months ended March 31, 2020 was generated on interest-bearing customer receivables and interest earned on cash and cash equivalents. Interest income increased for the quarter and nine months ended March 31, 2020 compared to the prior-year principally from interest earned on customer receivables in North America.

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. 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, the Canadian dollar versus the U.S. dollar 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. We partially offset foreign currency exposure with the use of foreign exchange forward contracts to hedge against these exposures. The costs associated with foreign exchange forward contracts are included in the net foreign exchange gains and losses.

Provision for Income Taxes

For the quarter and nine months ended March 31, 2020, income tax expense was $1.9 million and $10.3 million, respectively, reflecting an effective tax rate of 53.1% and 29.6%, respectively. The effective tax rate for the quarter and nine months ended March 31, 2019 was 25.8% and 25.4%, respectively. The increase in the effective tax rate is primarily due to the impact of lowered forecasted earnings and changes in the geographical mix of income as compared to the prior-year. We expect the effective tax rate, excluding discrete items, for fiscal year 2020 to be approximately 29.5% to 30.5%. See Note 13- Income Taxes to the Notes to Consolidated Financial Statements for further discussion.

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" or "GAAP"), we also disclose certain non-GAAP financial measures. These measures include non-GAAP net sales, non-GAAP gross profit, non-GAAP operating income, non-GAAP other expense, net, non-GAAP pre-tax income, non-GAAP net

35

income, non-GAAP earnings per share ("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 Planned Divestitures and 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 and the impact of Planned Divestitures 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 Planned Divestitures and acquisitions. Below we show organic growth by providing a non-GAAP reconciliation of net sales in constant currency, excluding Planned Divestitures and acquisitions:

Net Sales by Segment:
	Quarter ended March 31,
	2020			2019			$ Change			% Change
Worldwide Barcode, Networking & Security:	in thousands
Net sales, reported	$	583,642		$	596,913		$	(13,271	)	(2.2	)%
Planned Divestitures	(94,424		)	(100,170		)
Non-GAAP net sales, excluding Planned Divestitures	489,218			496,743			(7,525		)	(1.5	)%
Foreign exchange impact(a)	3,590			—
Non-GAAP net sales, constant currency excluding Planned Divestitures and acquisitions	$	492,808		$	496,743		$	(3,935	)	(0.8	)%
Worldwide Communications & Services:
Net sales, reported	$	288,841		$	296,444		$	(7,603	)	(2.6	)%
Planned Divestitures	(33,451		)	(40,341		)
Non-GAAP net sales, excluding Planned Divestitures	255,390			256,103			(713		)	(0.3	)%
Foreign exchange impact(a)	9,738			—
Less: Acquisitions(b)	(1,677		)	—
Non-GAAP net sales, constant currency excluding Planned Divestitures and acquisitions	$	263,451		$	256,103		$	7,348		2.9	%
Consolidated:
Net sales, reported	$	872,483		$	893,357		$	(20,874	)	(2.3	)%
Planned Divestitures	(127,875		)	(140,511		)
Non-GAAP net sales, excluding Planned Divestitures	744,608			752,846			(8,238		)	(1.1	)%
Foreign exchange impact(a)	13,328			—
Less: Acquisitions(b)	(1,677		)	—
Non-GAAP net sales, constant currency excluding Planned Divestitures and acquisitions	$	756,259		$	752,846		$	3,413		0.5	%

^(a) Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates. Calculated by translating the net sales for the quarter ended March 31, 2020 into U.S. dollars using the average foreign exchange rates for the quarter ended March 31, 2019.

^(b) Reflects a revenue recognition change to a net basis for the intY acquisition.

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Net Sales by Segment:
	Nine months ended March 31,
	2020			2019			$ Change			% Change
Worldwide Barcode, Networking & Security:	(in thousands)
Net sales, as reported	$	1,967,670		$	1,953,664		$	14,006		0.7	%
Planned Divestitures	(322,264		)	(340,862		)
Non-GAAP net sales, excluding Planned Divestitures	1,645,406			1,612,802			32,604			2.0	%
Foreign exchange impact(a)	5,484			—
Non-GAAP net sales, constant currency excluding Planned Divestitures and acquisitions	$	1,650,890		$	1,612,802		$	38,088		2.4	%
Worldwide Communications & Services:
Net sales, as reported	$	883,142		$	958,614		$	(75,472	)	(7.9	)%
Planned Divestitures	(116,893		)	(132,905		)
Non-GAAP net sales, excluding Planned Divestitures	766,249			825,709			(59,460		)	(7.2	)%
Foreign exchange impact(a)	15,169			—
Less: Acquisitions(b)	(7,767		)	(1,062		)
Non-GAAP net sales, constant currency excluding Planned Divestitures and acquisitions	$	773,651		$	824,647		$	(50,996	)	(6.2	)%
Consolidated:
Net sales, as reported	$	2,850,812		$	2,912,278		$	(61,466	)	(2.1	)%
Planned Divestitures	(439,157		)	(473,767		)
Non-GAAP net sales, excluding Planned Divestitures	2,411,655			2,438,511			(26,856		)	(1.1	)%
Foreign exchange impact(a)	20,653			—
Less: Acquisitions(b)	(7,767		)	(1,062		)
Non-GAAP net sales, constant currency excluding Planned Divestitures and acquisitions	$	2,424,541		$	2,437,449		$	(12,908	)	(0.5	)%

^(a) Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates. Calculated by translating the net sales for the nine months ended March 31, 2020 into U.S. dollars using the average foreign exchange rates for the nine months ended March 31, 2019.

^(b) Reflects a revenue recognition change to a net basis for the intY acquisition.

Net Sales by Geography:
	Quarter ended March 31,
	2020			2019			$ Change			% Change
United States and Canada:	(in thousands)
Net sales, as reported	$	670,175		$	672,155		$	(1,980	)	(0.3	)%
Less: Acquisitions(b)	(141		)	—
Non-GAAP Net sales, excluding acquisitions	$	670,034		$	672,155		$	(2,121	)	(0.3	)%
International:
Net sales, as reported	$	202,308		$	221,202		$	(18,894	)	(8.5	)%
Planned Divestitures	(127,875		)	(140,511		)
Non-GAAP net sales, excluding Planned Divestitures	74,433			80,691			(6,258		)	(7.8	)%
Foreign exchange impact (a)	13,328			—
Less: Acquisitions(b)	(1,536		)	—
Non-GAAP net sales, constant currency excluding Planned Divestitures and acquisitions	$	86,225		$	80,691		$	5,534		6.9	%

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Consolidated:
Net sales, as reported	$	872,483		$	893,357		$	(20,874	)	(2.3	)%
Planned Divestitures	(127,875		)	(140,511		)
Non-GAAP net sales, excluding Planned Divestitures	744,608			752,846			(8,238		)	(1.1	)%
Foreign exchange impact(a)	13,328			—
Less: Acquisitions(b)	(1,677		)	—
Non-GAAP net sales, constant currency excluding Planned Divestitures and acquisitions	$	756,259		$	752,846		$	3,413		0.5	%
(a) Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates. Calculated by translating the net sales for the quarter ended March 31, 2020 into U.S. dollars using the average foreign exchange rates for the quarter ended March 31, 2019.
(b) Reflects a revenue recognition change to a net basis for the intY acquisition.
	Nine months ended March 31,
	2020			2019			$ Change			% Change
United States and Canada:	(in thousands)
Net sales, as reported	$	2,173,516		$	2,189,567		$	(16,051	)	(0.7	)%
Less: Acquisitions(b)	(3,623		)	(1,062		)
Net sales, constant currency excluding acquisitions	$	2,169,893		$	2,188,505		$	(18,612	)	(0.9	)%
International:
Net sales, as reported	$	677,296		$	722,711		$	(45,415	)	(6.3	)%
Planned Divestitures	(439,157		)	(473,767		)
Non-GAAP net sales, excluding Planned Divestitures	238,139			248,944			(10,805		)	(4.3	)%
Foreign exchange impact(a)	20,653			—
Less: Acquisitions(b)	(4,144		)	—
Non-GAAP net sales, constant currency excluding Planned Divestitures and acquisitions	$	254,648		$	248,944		$	5,704		2.3	%
Consolidated:
Net sales, as reported	$	2,850,812		$	2,912,278		$	(61,466	)	(2.1	)%
Planned Divestitures	(439,157		)	(473,767		)
Non-GAAP net sales, excluding Planned Divestitures	2,411,655			2,438,511			(26,856		)	(1.1	)%
Foreign exchange impact(a)	20,653			—
Less: Acquisitions(b)	(7,767		)	(1,062		)
Non-GAAP net sales, constant currency excluding Planned Divestitures and acquisitions	$	2,424,541		$	2,437,449		$	(12,908	)	(0.5	)%
(a) Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates. Calculated by translating the net sales for the nine months ended March 31, 2020 into U.S. dollars using the average foreign exchange rates for the nine months ended March 31, 2019.
(b) Reflects a revenue recognition change to a net basis for the intY acquisition.

Income Statement Non-GAAP Metrics

To evaluate current period performance on a more consistent basis with prior periods, we disclose non-GAAP net sales, non-GAAP gross profit, non-GAAP operating income, non-GAAP other expense, net, 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 and divestiture costs, restructuring costs, impact of Planned Divestitures and other non-GAAP adjustments. These metrics are useful in assessing and understanding our operating

38

performance, especially when comparing results with previous periods or forecasting performance for future periods. Below we provide a non-GAAP reconciliation of the aforementioned metrics adjusted for the costs and charges mentioned above:

	Quarter ended March 31, 2020
	Reported GAAP measure		Intangible amortization expense		Change in fair value of contingent consideration		Acquisition, divestiture and restructuring costs(a)		Tax recovery, net			Impact of Planned Divestitures			Non-GAAP measure
	(in thousands, except per share data)
Net sales	$	872,483	$	—	$	—	$	—	$	—		$	(127,875	)	$	744,608
Gross profit	94,809		—		—		—		—			(10,206		)	84,603
Operating income	6,289		5,486		618		935		(1,529		)	3,020			14,819
Other expense, net	2,637		—		—		—		—			(759		)	1,878
Pre-tax income	3,652		5,486		618		935		—			4,571			15,262
Net income	1,713		4,171		467		894		(1,224		)	3,248			9,269
Diluted EPS	$	0.07	$	0.16	$	0.02	$	0.04	$	(0.05	)	$	0.13		$	0.37
(a) Acquisition and divestiture costs totaled $0.8 million for the quarter ended March 31, 2020 and are generally nondeductible for tax purposes. Restructuring costs totaled $0.1 million for the quarter ended March 31, 2020.
	Quarter ended March 31, 2019
	Reported GAAP measure		Intangible amortization expense		Change in fair value of contingent consideration		Acquisition, divestiture and restructuring costs(a)		Tax recovery, net			Impact of Planned Divestitures			Non-GAAP measure
	(in thousands, except per share data)
Net sales	$	893,357	$	—	$	—	$	—	$	—		$	(140,511	)	$	752,846
Gross profit	110,015		—		—		—		—			(14,208		)	95,807
Operating income	18,804		5,005		5,101		814		—			898			30,622
Other expense, net	3,009		—		—		—		—			(257		)	2,752
Pre-tax income	15,795		5,005		5,101		814		—			1,155			27,870
Net income	11,715		3,789		3,619		665		—			846			20,634
Diluted EPS	$	0.45	$	0.15	$	0.14	$	0.03	$	—		$	0.03		$	0.80
(a) Acquisition and divestiture costs totaled $0.2 million for the quarter ended March 31, 2019 and are generally nondeductible for tax purposes. Restructuring costs totaled $0.6 million for the quarter ended March 31, 2019.

39

	Nine months ended March 31, 2020
	Reported GAAP measure		Intangible amortization expense		Change in fair value of contingent consideration		Acquisition, divestiture and restructuring costs(a)		Tax recovery, net			Impact of Planned Divestitures			Non-GAAP measure
	(in thousands, except per share data)
Net sales	$	2,850,812	$	—	$	—	$	—	$	—		$	(439,157	)	$	2,411,655
Gross profit	320,792		—		—		—		—			(39,073		)	281,719
Operating income	43,390		16,079		6,266		3,503		(1,529		)	3,156			70,865
Other expense, net	8,437		—		—		—		—			(1,137		)	7,300
Pre-tax income	34,953		16,079		6,266		3,503		—			5,085			65,886
Net income	24,608		12,206		4,737		3,308		(1,224		)	3,571			47,206
Diluted EPS	$	0.97	$	0.48	$	0.19	$	0.13	$	(0.05	)	$	0.14		$	1.86
(a) Acquisition and divestiture costs totaled $2.7 million for the nine months ended March 31, 2020 and are generally nondeductible for tax purposes. Restructuring costs totaled $0.8 million for the nine months ended March 31, 2020.
	Nine months ended March 31, 2019
	Reported GAAP measure		Intangible amortization expense		Change in fair value of contingent consideration		Acquisition, divestiture and restructuring costs(a)		Tax recovery, net			Impact of Planned Divestitures			Non-GAAP measure
	(in thousands, except per share data)
Net sales	$	2,912,278	$	—	$	—	$	—	$	—		$	(473,767	)	$	2,438,511
Gross profit	342,708		—		—		—		—			(46,404		)	296,304
Operating income	69,942		14,708		11,535		2,907		—			(1,253		)	97,839
Other expense, net	8,272		—		—		—		—			(603		)	7,669
Pre-tax income	61,670		14,708		11,535		2,907		—			(650		)	90,170
Net income	46,019		11,154		8,514		2,386		—			150			68,223
Diluted EPS	$	1.79	$	0.43	$	0.33	$	0.09	$	—		$	0.01		$	2.65
(a) Acquisition and divestiture costs totaled $1.0 million for the nine months ended March 31, 2019 and are generally nondeductible for tax purposes. Restructuring costs totaled $1.9 million for the nine months ended March 31, 2019.

40

Operating Income by Segment:
	Quarter ended March 31,											% of Net Sales March 31,
	2020			2019			$ Change			% Change		2020		2019
Worldwide Barcode, Networking & Security:	(in thousands)
GAAP operating income	$	3,870		$	16,865		$	(12,995	)	(77.1	)%	0.7	%	2.8	%
Adjustments:
Amortization of intangible assets	1,968			1,968			—
Tax recovery, net	(1,452		)	—			(1,452		)
Planned Divestitures	925			(618		)	1,543
Non-GAAP operating income	$	5,311		$	18,215		$	(12,904	)	(70.8	)%	1.1	%	3.7	%
Worldwide Communications & Services:
GAAP operating income	$	3,199		$	2,161		$	1,038		48.0	%	1.1	%	0.7	%
Adjustments:
Amortization of intangible assets	3,518			3,037			481
Change in fair value of contingent consideration	618			5,101			(4,483		)
Restructuring costs	155			592			(437		)
Tax recovery, net	(77		)	—			(77		)
Planned Divestitures	2,095			1,516			579
Non-GAAP operating income	$	9,508		$	12,407		$	(2,899	)	(23.4	)%	3.7	%	4.8	%
Corporate:
GAAP operating income	$	(780	)	$	(222	)	$	(558	)	nm*		nm*		nm*
Adjustments:
Acquisition and divestiture costs	780			222			558
Non-GAAP operating income	$	—		$	—		$	—		nm*		nm*		nm*
Consolidated:
GAAP operating income	$	6,289		$	18,804		$	(12,515	)	(66.6	)%	0.7	%	2.1	%
Adjustments:
Amortization of intangible assets	5,486			5,005			481
Change in fair value of contingent consideration	618			5,101			(4,483		)
Tax recovery, net	(1,529		)	—			(1,529		)
Acquisition and divestiture costs	780			222			558
Restructuring costs	155			592			(437		)
Planned Divestitures	3,020			898			2,122
Non-GAAP operating income	$	14,819		$	30,622		$	(15,803	)	(51.6	)%	2.0	%	4.1	%

41

Operating Income by Segment:
	Nine months ended March 31,											% of Net Sales March 31,
	2020			2019			$ Change			% Change		2020		2019
Worldwide Barcode, Networking & Security:	(in thousands)
GAAP operating income	$	29,938		$	48,974		$	(19,036	)	(38.9	)%	1.5	%	2.5	%
Adjustments:
Amortization of intangible assets	5,903			6,131			(228		)
Tax recovery, net	(1,452		)	—			(1,452		)
Restructuring Costs	—			707			(707		)
Planned Divestitures	(709		)	(3,388		)	2,679
Non-GAAP operating income	$	33,680		$	52,424		$	(18,744	)	(35.8	)%	2.0	%	3.3	%
Worldwide Communications & Services:
GAAP operating income	$	16,141		$	21,956		$	(5,815	)	(26.5	)%	1.8	%	2.3	%
Adjustments:
Amortization of intangible assets	10,176			8,577			1,599
Change in fair value of contingent consideration	6,266			11,535			(5,269		)
Tax recovery, net	(77		)	—			(77		)
Restructuring costs	645			1,212			(567		)
Planned Divestitures	3,865			2,135			1,730
Non-GAAP operating income	$	37,016		$	45,415		$	(8,399	)	(18.5	)%	4.8	%	5.5	%
Corporate:
GAAP operating income	$	(2,689	)	$	(988	)	$	(1,701	)	nm*		nm*		nm*
Adjustments:
Acquisition and divestiture costs	2,689			988			1,701
Restructuring costs	169			—			169
Non-GAAP operating income	$	169		$	—		$	169		nm*		nm*		nm*
Consolidated:
GAAP operating income	$	43,390		$	69,942		$	(26,552	)	(38.0	)%	1.5	%	2.4	%
Adjustments:
Amortization of intangible assets	16,079			14,708			1,371
Change in fair value of contingent consideration	6,266			11,535			(5,269		)
Tax recovery, net	(1,529		)	—			(1,529		)
Acquisition and divestiture costs	2,689			988			1,701
Restructuring costs	814			1,919			(1,105		)
Planned Divestitures	3,156			(1,253		)	4,409
Non-GAAP operating income	70,865			97,839			$	(26,974	)	(27.6	)%	2.9	%	4.0	%

Return on Invested Capital

Management uses ROIC as a performance measurement to assess efficiency at allocating capital under our control to generate returns. Management believes this metric balances our operating results with asset and liability management, is not impacted by

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capitalization decisions and correlates with shareholder value creation. In addition, it is easily computed, communicated and understood. ROIC also provides management a measure of our 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.

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, 2020 and 2019, respectively:

	Quarter ended March 31,
	2020		2019
Return on invested capital ratio, annualized(a)	6.1	%	11.4	%

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

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

	Quarter ended March 31,
	2020			2019
	(in thousands)
Reconciliation of net income to EBITDA:
Net income (GAAP)	$	1,713		$	11,715
Plus: Interest expense	3,421			3,670
Plus: Income taxes	1,939			4,080
Plus: Depreciation and amortization	9,539			9,363
EBITDA (non-GAAP)	16,612			28,828
Plus: Change in fair value of contingent consideration	618			5,101
Plus: Tax recovery, net	(1,529		)	—
Plus: Acquisition and divestiture costs (a)	780			222
Plus: Restructuring costs (b)	155			456
Plus: Impact of Planned Divestitures	3,231			854
Adjusted EBITDA (numerator for ROIC) (non-GAAP)	$	19,867		$	35,461

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	Quarter ended March 31,
	2020			2019
	(in thousands)
Invested capital calculations:
Equity – beginning of the quarter	$	927,580		$	899,503
Equity – end of the quarter	897,678			911,063
Plus: Change in fair value of contingent consideration, net of tax	467			3,619
Plus: Acquisition and divestiture costs (a)	780			222
Plus: Restructuring, net of tax	114			334
Plus: Tax recovery, net of tax	(1,224		)	—
Plus: Impact of Planned Divestitures, net of tax	3,248			1,181
Average equity	914,322			907,961
Average funded debt (c)	405,533			357,443
Invested capital (denominator for ROIC) (non-GAAP)	$	1,319,855		$	1,265,404

(a) Acquisition and divestiture costs are generally nondeductible for tax purposes.

(b) Accelerated depreciation expense on certain European facilities in connection with restructuring for the quarter ended March 31, 2019 are classified as depreciation expense above rather than restructuring costs.

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

Liquidity and Capital Resources

Our primary sources of liquidity are cash flows from operations and borrowings under our $350 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 $34.6 million at March 31, 2020, compared to $23.8 million at June 30, 2019, including $26.5 million and $18.9 million held outside of the United States at March 31, 2020 and June 30, 2019, respectively. Checks released but not yet cleared in the amounts of $2.5 million and $7.4 million are included in accounts payable at March 31, 2020 and June 30, 2019, respectively.

We conduct business in many locations throughout the world where we generate and use cash. We provide for U.S. income taxes for the earnings of our Canadian subsidiary, but earnings from Brazil will continue to be considered retained indefinitely for reinvestment. All other foreign geographies are immaterial. It has been our practice to reinvest those earnings in the businesses outside the United States.

Our net investment in working capital at March 31, 2020 was $665.8 million compared to $776.4 million at June 30, 2019 and $752.7 million at March 31, 2019. 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 and payments to vendors.

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	Nine months ended
	March 31,
	2020			2019
Cash provided by (used in):	(in thousands)
Operating activities	$	150,083		$	(24,547	)
Investing activities	(55,538		)	(43,138		)
Financing activities	(81,616		)	62,278
Effect of exchange rate change on cash and cash equivalents	(2,151		)	277
Increase (decrease) in cash and cash equivalents	$	10,778		$	(5,130	)

Net cash provided by operating activities was $150.1 million for the nine months ended March 31, 2020, compared to $24.5 million used by operating activities in the prior-year period. Cash provided by operating activities for the nine months ended March 31, 2020 is primarily attributable to increases in accounts payable, reductions in inventory and cash from net income, partially offset by increases in prepaid expenses and other assets. Cash used in operating activities for the nine months ended March 31, 2019 is primarily attributable to increases in inventory, partially offset by decreases in accounts receivable, increases in accounts payable and cash from net income.

Excluding Intelisys, the number of days sales outstanding ("DSO") was 64 days at March 31, 2020, compared to 62 days at June 30, 2019 and 60 days at March 31, 2019. The increase in DSO is primarily a result of changes in the aging portfolio of North America. Inventory turned 4.4 times during the quarter ended March 31, 2020 compared to 4.8 for previous quarter ended December 31, 2019 and 4.3 times in the prior-year quarter ended March 31, 2019.

Cash used in investing activities for the nine months ended March 31, 2020 was $55.5 million, compared to $43.1 million used in the prior-year period. Cash used in investing activities primarily represents cash used to acquire intY in the nine months ended March 31, 2020, compared to cash used to acquire Canpango, Intelisys Global and RPM in the prior-year period.

Management expects capital expenditures for fiscal year 2020 to range from $7 million to $8 million, primarily for rental equipment investments, IT investments and facility improvements.

For the nine months ended March 31, 2020, cash used for financing activities totaled $81.6 million, compared to $62.3 million provided in the prior-year period. Cash used in financing activities for the nine months ended March 31, 2020 was primarily used for contingent consideration payments to the former shareholders of Intelisys and net repayments on the revolving credit facility. Cash provided by financing activities for the nine months ended March 31, 2019 was primarily from net borrowings on the revolving credit facility, partially offset by cash used to pay contingent consideration payments to the former shareholders of Intelisys and Network1.

We have a multi-currency senior secured credit facility with JPMorgan Chase Bank N.A., as administrative agent, and a syndicate of banks. On April 30, 2019, we amended this credit facility to expand the borrowing capacity and extend its maturity to April 30, 2024. The Amended Credit Agreement established (i) a five-year $350 million multi-currency senior secured revolving credit facility and (ii) a five-year $150 million senior secured term loan facility. Pursuant to an “accordion feature,” we may increase borrowings up to an additional $250 million for a total of up to $750 million. The Amended Credit Agreement allows for the issuance of up to $50 million for letters of credit, subject to obtaining additional credit commitments from the lenders participating in the increase.

At our option, loans 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 our net leverage ratio, calculated as total debt less up to $15 million of unrestricted domestic cash to trailing four-quarter adjusted EBITDA.

This spread ranges from 1.00% to 1.75% for LIBOR-based loans and 0.00% to 0.75% for alternate base rate loans. The Amended Credit Agreement provides for the substitution of a new interest rate benchmark upon the transition from LIBOR, subject to agreement between the Company and the administrative agent. The Amended Credit Agreement contains customary yield protection provisions. Additionally, the Company is assessed commitment fees ranging from 0.15% to 0.30%, depending upon the Leverage Ratio, on non-utilized borrowing availability, excluding swingline loans. The secured term loan facility will amortize based on the percentage of original principal amount with 2.5% in Year 1, 5.0% in Year 2, 5.0% in Year 3, 7.5% in Year 4 and 10.0% in Year 5. Borrowings under the Amended Credit Agreement are guaranteed by substantially all of the domestic assets of the Company

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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.

The Amended Credit Agreement includes customary representations, warranties, and affirmative and negative covenants, including financial covenants. Specifically, our Leverage Ratio must be less than or equal to 3.50 to 1.00 at all times. In addition, our Interest Coverage Ratio (as such term is defined in the Amended Credit Agreement) must be at least 3.00 to 1.00 at the end of each fiscal quarter. In the event of a default, customary remedies are available to the lenders, including acceleration and increased interest rates. We were in compliance with all covenants under the credit facility at March 31, 2020. There was $168.5 million and $200.8 million in outstanding borrowings on our revolving credit facility at March 31, 2020 and June 30, 2019, respectively.

On a gross basis, we borrowed $1,670 million and repaid $1,701 million on our revolving credit facility in the nine months ended March 31, 2020. In the prior-year period, on a gross basis, we borrowed $1,603 million and repaid $1,504 million. The average daily balances during the nine month periods ended March 31, 2020 and 2019 were $252.4 million and $313.6 million, respectively. There were letters of credit issued under the multi-currency revolving credit facility of $0.3 million at March 31, 2020. There were no letters of credit issued at June 30, 2019. There was $181.5 million and $149.2 million in unused borrowing capacity under our revolving credit facility at March 31, 2020 and June 30, 2019, respectively. Availability to use this borrowing capacity depends upon, among other things, the levels of our Leverage Ratio and Interest Coverage Ratio, which, in turn, will depend upon (1) our Credit Facility Net Debt relative to our Credit Facility EBITDA and (2) Credit Facility EBITDA relative to total interest expense, respectively.  As a result, our availability will increase if EBITDA increases (subject to the limit of the facility) and decrease if EBITDA decreases. At March 31, 2020, based upon the calculation of our Credit Facility Net Debt relative to our Credit Facility EBITDA, there was $79.0 million available for borrowing. While we were in compliance with the financial covenants contained in the Credit Facility as of March 31, 2020, and currently expect to continue to maintain such compliance, should we encounter difficulties, our historical relationship with our Credit Facility lending group has been strong and we anticipate their continued support of our long-term business.

We have a bank overdraft facility with Bank    of America used by our European subsidiaries. The facility allows us to disburse checks in excess of bank balances up to $14.0 million U.S. dollar equivalent for up to seven days. Borrowings under the overdraft facility bear interest at a rate equal to a spread of 1.0% over the applicable currency's LIBOR with a zero percent floor. There was $0.1 million outstanding balance on the overdraft facility at March 31, 2020 and $4.6 million outstanding at June 30, 2019.

At March 31, 2020, we were obligated to pay one remaining earnout payment to the former shareholders of Intelisys related to the acquisition on August 29, 2016. See Note 9 - Fair Value of Financial Instruments for a discussion on the liabilities recorded. The future earnout payment for Intelisys is expected to be funded by cash from operations and our existing revolving credit facility.

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

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect or change on our 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. 

At March 31, 2020, we have made adjustments to our contingent consideration owed to the former shareholders of Intelisys. See Note 9 - Fair Value of Financial Instruments for a discussion on the liabilities recorded. There have been no other material changes in our contractual obligations and commitments disclosed in our Annual Report on Form 10-K filed on August 22, 2019.

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 our 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 fiscal year ended June 30, 2019 for a complete discussion.

Goodwill

We account for recorded goodwill in accordance with ASC 350, Goodwill and Other Intangible Assets, which requires that goodwill be reviewed annually for impairment or more frequently if impairment indicators exist. Goodwill testing utilizes an impairment analysis, whereby we compare the carrying value of each identified reporting unit to its fair value. The carrying value of goodwill is reviewed at a reporting unit level at least annually for impairment, or more frequently if impairment indicators exist. Our goodwill reporting units align directly with our operating segments, Worldwide Barcode, Networking & Security and Worldwide Communications & Services. The fair values of the reporting units are estimated using the net present value of discounted cash flows generated by each reporting unit. Considerable judgment is necessary in estimating future cash flows, discount rates and other factors affecting the estimated fair value of the reporting units, including the operating and macroeconomic factors. Historical financial information, internal plans and projections and industry information are used in making such estimates. While we believe our assumptions are appropriate, they are subject to uncertainty and by nature include judgments and estimates regarding future events, including projected growth rates, margin percentages and operating efficiencies. An impairment charge could occur if the COVID-19 economic impact is longer or more severe than we have estimated. An impairment charge could also occur if proceeds received in exchange for the Planned Divestitures are lower than the fair value estimates used in our goodwill impairment testing.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

For a description of the Company's market risks, see Part II, Item 7A. "Quantitative and Qualitative Disclosures About Market Risk" in our Annual Report on Form 10-K for the fiscal year ended June 30, 2019. No material changes have occurred to our market risks since June 30, 2019.

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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 Chief Financial Officer ("CFO") of the effectiveness of the Company’s disclosure controls and procedures at March 31, 2020. Based on that evaluation, the Company’s management, including the CEO and CFO, concluded that the Company’s disclosure controls and procedures are effective at March 31, 2020. During the quarter ended March 31, 2020, 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 our subsidiaries are, from time to time, parties to lawsuits arising out of operations. Although there can be no assurance, based upon information known to us, we believe that any liability resulting from an adverse determination of such lawsuits would not have a material adverse effect on our financial condition or results of operations. For a description of our material legal proceedings, see Note 12 - Commitments and Contingencies in the notes to the condensed consolidated financial statements, which is incorporated herein by reference.

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, 2019, which could materially affect our business, financial condition and/or future operating results. Furthermore, we are subjected to the following risks:

COVID-19 is expected to have a significant and adverse impact upon our business.

Although our results for the quarter ended March 31, 2020 were not significantly impacted by COVID-19, we expect impacts in the fourth quarter of fiscal year 2020 on both our revenue and how we conduct our business. We are unable at this time to predict the ultimate impact that COVID-19 will have on our business due to the inability to predict the duration or magnitude of the virus' impacts, including whether there will be further cycles of the virus this fall and subsequently. However, there could be further decreases in revenue, increased employee-related healthcare costs, our suppliers may not be able to supply us products in a timely manner, our distribution centers may not be able to maintain staffing levels and therefore shipments, and our cash flows could suffer. Overall, we expect COVID-19 to adversely impact our results of operations for at least the next two quarters if not longer, while we will likely make adjustments to our operating practices as appropriate, it is unlikely that any changes that we could make would be sufficient to fully offset the adverse impacts.

There is no guarantee we will sell our Planned Divestitures on favorable terms or at all.

In August 2019, we announced plans to divest our physical products distribution business located in Europe, UK, Mexico, Colombia, Chile and Peru and our Miami-based export operations. While we have identified a potential buyer for these businesses and are in the process of due diligence and purchase agreement negotiations there can be no guarantee that we will complete the sale of such businesses, or that the terms of the sale will be favorable. The completion of the sale is subject to further negotiation, completion of due diligence, execution of a definitive purchase agreement and certain divestitures are conditioned by regulatory approvals. Our failure to effectively complete these transactions or to complete these transactions on favorable terms could have an adverse effect on our business operations and financial condition, including our results of operations, cash flows and stock price.

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

On August 29, 2016, we announced a Board of Directors ("BOD") authorization to repurchase shares up to $120 million of our common stock over three years. The share repurchase authorization expired in August 2019. There was no share-repurchase activity, including shares withheld from employees for stock based awards, for the quarter ended March 31, 2020.

We have never declared or paid a cash dividend. Under the terms of our credit facility, the payment of cash dividends is restricted.

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Item 6. Exhibits

Exhibit Number	Description
10.1	Form of Restricted Stock Unit Award Certificate (Performance- and Service-Based for grants on or after November 15, 2019 (incorporated by reference to Exhibit 10.1 of the registrant's Current Report filed with the SEC on Form 8-K on January 30, 2020)
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, 2020, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets at March 31, 2020 and June 30, 2019; (ii) the Condensed Consolidated Income Statements for the quarter and nine months ended March 31, 2020 and 2019; (iii) the Condensed Consolidated Statements of Comprehensive (Loss) Income for the quarter and nine months ended March 31, 2020 and 2019; (iv) the Condensed Consolidated Statements of Shareholder's Equity at March 31, 2020 and 2019; (v) the Condensed Consolidated Statements of Cash Flows for the nine months ended March 31, 2020 and 2019; and (vi) the Notes to the Condensed Consolidated Financial Statements. The instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL
	document.

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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 11, 2020	Chairman and Chief Executive Officer (Principal Executive Officer)

		/s/ GERALD LYONS
		Gerald Lyons
Date:	May 11, 2020	Executive Vice President and Chief Financial Officer (Principal Financial Officer)

51

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, Chairmen, Chief Executive Officer and President (Principal Executive Officer)

Date: May 11, 2020

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, Senior Executive Vice President and Chief Financial Officer (Principal Financial Officer)

Date: May 11, 2020

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 quarterly report of ScanSource, Inc. (the “Company”) on Form 10-Q for the quarter and nine months ended March 31, 2020 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 11, 2020	/s/ Michael L. Baur
		Michael L. Baur,
		Chairmen, Chief Executive Officer and President (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 quarterly report of ScanSource, Inc. (the “Company”) on Form 10-Q for the quarter and nine months ended March 31, 2020 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 11, 2020	/s/ Gerald Lyons
		Gerald Lyons
		Senior Executive Vice President and Chief Financial Officer (Principal Financial 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

Leases - Narrative (Details)	Mar. 31, 2020
Minimum [Member]
Lessee, Lease, Description [Line Items]
Lease term	1 year
Maximum [Member]
Lessee, Lease, Description [Line Items]
Lease term	10 years

XML

Leases - Weighted Average Remaining Term and Discount Rate (Details)	Mar. 31, 2020
Leases [Abstract]
Weighted-average remaining lease term	6 years 3 months 7 days
Weighted-average discount rate	3.90%

XML

Goodwill and Other Identifiable Intangible Assets (Changes in the Carrying Amount of Goodwill) (Details) $ in Thousands	9 Months Ended
	Mar. 31, 2020 USD ($)
Goodwill [Roll Forward]
Balance at June 30, 2019	$ 319,538
Additions	26,110
Foreign currency translation adjustment	(7,290)
Balance at March 31, 2020	338,358
Barcode, Networking & Security Segment [Member]
Goodwill [Roll Forward]
Balance at June 30, 2019	137,077
Additions	0
Foreign currency translation adjustment	(584)
Balance at March 31, 2020	136,493
Communications & Services Segment [Member]
Goodwill [Roll Forward]
Balance at June 30, 2019	182,461
Additions	26,110
Foreign currency translation adjustment	(6,706)
Balance at March 31, 2020	$ 201,865

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Revenue Recognition (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019
Disaggregation of Revenue [Line Items]
Revenues	$ 872,483	$ 893,357	$ 2,850,812	$ 2,912,278
Technology Solutions [Member]
Disaggregation of Revenue [Line Items]
Revenues	856,762	879,037	2,804,553	2,871,391
Master Agency and Professional Services [Member]
Disaggregation of Revenue [Line Items]
Revenues	15,721	14,320	46,259	40,887
Worldwide Barcode, Networking & Security Segment [Member]
Disaggregation of Revenue [Line Items]
Revenues	583,642	596,913	1,967,670	1,953,664
Worldwide Barcode, Networking & Security Segment [Member] | Technology Solutions [Member]
Disaggregation of Revenue [Line Items]
Revenues	583,642	596,913	1,967,670	1,953,664
Worldwide Barcode, Networking & Security Segment [Member] | Master Agency and Professional Services [Member]
Disaggregation of Revenue [Line Items]
Revenues	0	0	0	0
Worldwide Communications & Services Segment [Member]
Disaggregation of Revenue [Line Items]
Revenues	288,841	296,444	883,142	958,614
Worldwide Communications & Services Segment [Member] | Technology Solutions [Member]
Disaggregation of Revenue [Line Items]
Revenues	273,120	282,124	836,883	917,727
Worldwide Communications & Services Segment [Member] | Master Agency and Professional Services [Member]
Disaggregation of Revenue [Line Items]
Revenues	$ 15,721	$ 14,320	$ 46,259	$ 40,887

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Earnings Per Share

9 Months Ended

Mar. 31, 2020

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,
	2020		2019		2020		2019
	(in thousands, except per share data)
Numerator:
Net income	$	1,713	$	11,715	$	24,608	$	46,019
Denominator:
Weighted-average shares, basic	25,346		25,704		25,386		25,647
Dilutive effect of share-based payments	17		58		58		108
Weighted-average shares, diluted	25,363		25,762		25,444		25,755
Net income per common share, basic	$	0.07	$	0.46	$	0.97	$	1.79
Net income per common share, diluted	$	0.07	$	0.45	$	0.97	$	1.79

For the quarter and nine months ended March 31, 2020, weighted-average shares outstanding excluded from the computation of diluted earnings per share because their effect would be anti-dilutive were 1,036,740 and 980,803, respectively. For the quarter and nine months ended March 31, 2019, weighted-average shares outstanding excluded from the computation of diluted earnings per share were 592,411 and 459,189, respectively.

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Short-Term Borrowings and Long-Term Debt

9 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

Short-Term Borrowings and Long-Term Debt

Short-Term Borrowings and Long-Term Debt

The following table presents the Company’s debt at March 31, 2020 and June 30, 2019.

	March 31, 2020		June 30, 2019
	(in thousands)
Short-term borrowings	$	143	$	4,590
Current portion of long-term debt	6,901		4,085
Mississippi revenue bond, net of current portion	4,425		4,764
Senior secured term loan facility, net of current portion	140,625		146,250
Borrowings under revolving credit facility	168,502		200,817
Total debt	$	320,596	$	360,506

Short-term Borrowings

The Company has a bank overdraft facility with Bank     of America used by its European subsidiaries. The facility allows the Company to disburse checks in excess of bank balances up to $14.0 million U.S. dollar equivalent for up to seven days. Borrowings under the overdraft facility bear interest at a rate equal to a spread of 1.0% over the applicable currency's London Interbank Offered Rate ("LIBOR") with a zero percent floor. Since borrowings outstanding under the overdraft facility at March 31, 2020 were denominated in euros, which bore a negative LIBOR rate, the interest applicable to the Company was 1.0%. There was $0.1 million outstanding balance on the overdraft facility at March 31, 2020 and $4.6 million outstanding at June 30, 2019.

Credit Facility

The Company has a multi-currency senior secured credit facility with JPMorgan Chase Bank N.A., as administrative agent, and a syndicate of banks (the “Amended Credit Agreement”). On April 30, 2019, the Company amended this credit facility to expand the borrowing capacity and extend its maturity to April 30, 2024. The Amended Credit Agreement includes (i) a five-year $350 million multi-currency senior secured revolving credit facility and (ii) a five-year $150 million senior secured term loan facility. Pursuant to an “accordion feature,” the Company may increase its borrowings up to an additional $250 million for a total of up to $750 million, subject to obtaining additional credit commitments from the lenders participating in the increase. The Amended Credit Agreement allows for the issuance of up to $50 million for letters of credit, subject to obtaining additional credit commitments from the lenders participating in the increase. The Company incurred debt issuance costs of $1.1 million in connection with the amendments to the Amended Credit Agreement. These costs were capitalized to other non-current 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 under the Amended Credit Agreement, other than swingline loans, bear interest at a rate equal to a spread over the LIBOR or alternate base rate depending upon the Company's net leverage ratio, calculated as total debt less up to $15 million of unrestricted domestic cash ("Credit Facility Net Debt") to trailing four-quarter adjusted earnings before interest expense, taxes, depreciation and amortization ("Credit Facility EBITDA") (the "Leverage Ratio"). This spread ranges from 1.00% to 1.75% for LIBOR-based loans and 0.00% to 0.75% for alternate base rate loans. Additionally, the Company is charged commitment fees ranging from 0.15% to 0.30%, depending upon the Leverage Ratio, on non-utilized borrowing availability, excluding swingline loans. The Amended Credit Agreement provides for the substitution of a new interest rate benchmark upon the transition from LIBOR, subject to agreement between the Company and the administrative agent. Borrowings under the Amended Credit Agreement 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. Under the terms of the revolving credit facility, the payment of cash dividends is restricted.

At March 31, 2020, the spread in effect was 1.750% for LIBOR-based loans and 0.750% for alternate base rate loans. The commitment fee rate in effect at March 31, 2020 was 0.30%. The Amended Credit Agreement includes customary representations, warranties, and affirmative and negative covenants, including financial covenants. Specifically, the Company’s Leverage Ratio must be less than or equal to 3.50 to 1.00 at all times. In addition, the Company’s Interest Coverage Ratio (as such term is defined in the Amended Credit Agreement) must be at least 3.00 to1.00 at the end of each fiscal quarter. In the event of a default, customary remedies are available to the lenders, including acceleration and increased interest rates. The Company was in compliance with all covenants under the credit facility at March 31, 2020.

The average daily outstanding balance on the revolving credit facility, excluding the term loan facility, during the nine month periods ended March 31, 2020 and 2019 was $252.4 million and $313.6 million, respectively. There was $181.5 million and $149.2 million in unused borrowing capacity at March 31, 2020 and June 30, 2019, respectively. At March 31, 2020, based upon the Leverage Ratio calculation, there was $79.0 million available for additional borrowings. There were letters of credit issued under the multi-currency revolving credit facility of $0.3 million at March 31, 2020. There were no letters of credit issued at June 30, 2019.

Mississippi Revenue Bond

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. At March 31, 2020, the Company was in compliance with all covenants under this bond. The interest rates at March 31, 2020 and June 30, 2019 were 2.21% and 3.28%, respectively.

Debt Issuance Costs

At March 31, 2020, net debt issuance costs associated with the credit facility and bond totaled $1.7 million and are being amortized through the maturity date of each respective debt instrument.

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Leases

9 Months Ended

Mar. 31, 2020

Leases [Abstract]

Leases

Leases

In accordance with ASC 842, at contract inception the Company determines if a contract contains a lease by assessing whether the contract contains an identified asset and whether the Company has the ability to control the asset. The Company also determines if the lease meets the classification criteria for an operating lease versus a finance lease under ASC 842. Substantially all of the Company's leases are operating leases for real estate, warehouse and office equipment ranging in duration from 1 year to 10 years. The Company has elected not to record short-term operating leases with an initial term of 12 months or less on the Condensed Consolidated Balance Sheets. Operating leases are recorded as other non-current assets, accrued expenses and other current liabilities and other long-term liabilities on the Condensed Consolidated Balance Sheets. The Company has finance leases for information technology equipment expiring in fiscal year 2022. Finance leases are recorded as property and equipment, net, accrued expenses and other current liabilities and other long-term liabilities on the Condensed Consolidated Balance Sheets. The gross amount of the balances recorded related to finance leases is immaterial to the financial statements at March 31, 2020 and June 30, 2019.

Operating lease right-of-use assets and lease liabilities are recognized at the commencement date based on the net present value of future minimum lease payments over the lease term. The Company generally is not able to determine the rate implicit in its leases and has elected to apply an incremental borrowing rate as the discount rate for the present value determination, which is based on the Company's cost of borrowings for the relevant terms of each lease and geographical economic factors. Certain operating lease agreements contain options to extend or terminate the lease. The lease term used is adjusted for these options when the Company is reasonably certain it will exercise the option. Operating lease expense is recognized on a straight-line basis over the lease term. Variable lease payments not based on a rate or index, such as costs for common area maintenance, are expensed as incurred. Further, the Company has elected the practical expedient to recognize all lease and non-lease components as a single lease component, where applicable.

The following table presents amounts recorded on the Condensed Consolidated Balance Sheet related to operating leases at March 31, 2020:

Operating leases	Balance Sheet location	March 31, 2020
		(in thousands)
Operating lease right-of-use assets	Other non-current assets	$	30,196
Current operating lease liabilities	Accrued expenses and other current liabilities	$	5,805
Long-term operating lease liabilities	Other long-term liabilities	$	26,490

The following table presents amounts recorded in operating lease expense as part of selling general and administrative expenses on the Condensed Consolidated Income Statements during the quarter and nine months ended March 31, 2020. Operating lease costs contain immaterial amounts of short-term lease costs for leases with an initial term of 12 months or less.

	Quarter ended		Nine months ended
	March 31, 2020		March 31, 2020
	(in thousands)
Operating lease cost	$	1,873	$	6,005
Variable lease cost	542		1,325
	$	2,415	$	7,330

Supplemental cash flow information related to the Company's operating leases for the quarter and nine months ended March 31, 2020 are presented in the table below:

	Quarter ended		Nine months ended
	March 31, 2020		March 31, 2020
	(in thousands)
Cash paid for amounts in the measurement of lease liabilities	$	1,719	$	5,189
Right-of-use assets obtained in exchange for lease obligations	250		1,804

The weighted-average remaining lease term and discount rate at March 31, 2020 are presented in the table below:

	March 31, 2020
Weighted-average remaining lease term	6.27 years
Weighted-average discount rate	3.9	%

The following table presents the maturities of the Company's operating lease liabilities at March 31, 2020:

	Operating leases
	(in thousands)
Remainder of 2020	$	2,362
2021	7,828
2022	7,090
2023	5,574
2024	4,757
Thereafter	11,282
Total future payments	38,893
Less: amounts representing interest	6,598
Present value of lease payments	$	32,295

Leases

Leases

In accordance with ASC 842, at contract inception the Company determines if a contract contains a lease by assessing whether the contract contains an identified asset and whether the Company has the ability to control the asset. The Company also determines if the lease meets the classification criteria for an operating lease versus a finance lease under ASC 842. Substantially all of the Company's leases are operating leases for real estate, warehouse and office equipment ranging in duration from 1 year to 10 years. The Company has elected not to record short-term operating leases with an initial term of 12 months or less on the Condensed Consolidated Balance Sheets. Operating leases are recorded as other non-current assets, accrued expenses and other current liabilities and other long-term liabilities on the Condensed Consolidated Balance Sheets. The Company has finance leases for information technology equipment expiring in fiscal year 2022. Finance leases are recorded as property and equipment, net, accrued expenses and other current liabilities and other long-term liabilities on the Condensed Consolidated Balance Sheets. The gross amount of the balances recorded related to finance leases is immaterial to the financial statements at March 31, 2020 and June 30, 2019.

Operating lease right-of-use assets and lease liabilities are recognized at the commencement date based on the net present value of future minimum lease payments over the lease term. The Company generally is not able to determine the rate implicit in its leases and has elected to apply an incremental borrowing rate as the discount rate for the present value determination, which is based on the Company's cost of borrowings for the relevant terms of each lease and geographical economic factors. Certain operating lease agreements contain options to extend or terminate the lease. The lease term used is adjusted for these options when the Company is reasonably certain it will exercise the option. Operating lease expense is recognized on a straight-line basis over the lease term. Variable lease payments not based on a rate or index, such as costs for common area maintenance, are expensed as incurred. Further, the Company has elected the practical expedient to recognize all lease and non-lease components as a single lease component, where applicable.

The following table presents amounts recorded on the Condensed Consolidated Balance Sheet related to operating leases at March 31, 2020:

Operating leases	Balance Sheet location	March 31, 2020
		(in thousands)
Operating lease right-of-use assets	Other non-current assets	$	30,196
Current operating lease liabilities	Accrued expenses and other current liabilities	$	5,805
Long-term operating lease liabilities	Other long-term liabilities	$	26,490

The following table presents amounts recorded in operating lease expense as part of selling general and administrative expenses on the Condensed Consolidated Income Statements during the quarter and nine months ended March 31, 2020. Operating lease costs contain immaterial amounts of short-term lease costs for leases with an initial term of 12 months or less.

	Quarter ended		Nine months ended
	March 31, 2020		March 31, 2020
	(in thousands)
Operating lease cost	$	1,873	$	6,005
Variable lease cost	542		1,325
	$	2,415	$	7,330

Supplemental cash flow information related to the Company's operating leases for the quarter and nine months ended March 31, 2020 are presented in the table below:

	Quarter ended		Nine months ended
	March 31, 2020		March 31, 2020
	(in thousands)
Cash paid for amounts in the measurement of lease liabilities	$	1,719	$	5,189
Right-of-use assets obtained in exchange for lease obligations	250		1,804

The weighted-average remaining lease term and discount rate at March 31, 2020 are presented in the table below:

	March 31, 2020
Weighted-average remaining lease term	6.27 years
Weighted-average discount rate	3.9	%

The following table presents the maturities of the Company's operating lease liabilities at March 31, 2020:

	Operating leases
	(in thousands)
Remainder of 2020	$	2,362
2021	7,828
2022	7,090
2023	5,574
2024	4,757
Thereafter	11,282
Total future payments	38,893
Less: amounts representing interest	6,598
Present value of lease payments	$	32,295

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Revenue Recognition (Tables)

9 Months Ended

Mar. 31, 2020

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

The following tables represent the Company's disaggregation of revenue:

	Quarter ended March 31, 2020
			(in thousands)
	Worldwide Barcode, Networking & Security Segment		Worldwide Communications & Services Segment		Total
Revenue by product/service:
Technology solutions	$	583,642	$	273,120	$	856,762
Master agency and professional services(a)	—		15,721		15,721
	$	583,642	$	288,841	$	872,483
	Nine months ended March 31, 2020
			(in thousands)
	Worldwide Barcode, Networking & Security Segment		Worldwide Communications & Services Segment		Total
Revenue by product/service:
Technology solutions	$	1,967,670	$	836,883	$	2,804,553
Master agency and professional services(a)	—		46,259		46,259
	$	1,967,670	$	883,142	$	2,850,812
(a) Includes Intelisys Communications, Inc., Canpango and Intelisys Global Ltd.

	Quarter ended March 31, 2019
			(in thousands)
	Worldwide Barcode, Networking & Security Segment		Worldwide Communications & Services Segment		Total
Revenue by product/service:
Technology solutions	$	596,913	$	282,124	$	879,037
Master agency and professional services(a)	—		14,320		14,320
	$	596,913	$	296,444	$	893,357
	Nine months ended March 31, 2019
			(in thousands)
	Worldwide Barcode, Networking & Security Segment		Worldwide Communications & Services Segment		Total
Revenue by product/service:
Technology solutions	$	1,953,664	$	917,727	$	2,871,391
Master agency and professional services(a)	—		40,887		40,887
	$	1,953,664	$	958,614	$	2,912,278
(a) Includes Intelisys Communications, Inc., Canpango and Intelisys Global Ltd.

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Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2020	Jun. 30, 2019
Current assets:
Allowance for accounts receivable	$ 34,119	$ 38,849
Stockholders' Equity Attributable to Parent [Abstract]
Preferred stock, shares authorized (in shares)	3,000,000	3,000,000
Preferred stock, shares issued (in shares)	0	0
Common stock, shares authorized (in shares)	45,000,000	45,000,000
Common stock, share issued (in shares)	25,345,798	25,408,397
Common stock, shares outstanding (in shares)	25,345,798	25,408,397

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Cash flows from operating activities:
Net income	$ 24,608	$ 46,019
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	28,428	27,566
Amortization of debt issuance costs	313	252
Provision for doubtful accounts	3,077	3,199
Share-based compensation	4,097	4,906
Deferred income taxes	(1,748)	1,132
Change in fair value of contingent consideration	6,266	11,535
Contingent consideration payments excess	(3,050)	(10,190)
Finance lease interest	64	0
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	11,842	40,530
Inventories	15,656	(169,031)
Prepaid expenses and other assets	(15,957)	10,116
Other non-current assets	428	413
Accounts payable	62,553	25,138
Accrued expenses and other liabilities	17,153	(4,082)
Income taxes payable	(3,647)	(12,050)
Net cash provided by (used in) operating activities	150,083	(24,547)
Cash flows from investing activities:
Capital expenditures	(6,617)	(10,977)
Cash paid for business acquisitions, net of cash acquired	(48,921)	(32,161)
Net cash used in investing activities	(55,538)	(43,138)
Cash flows from financing activities:
Borrowings on revolving credit	1,670,227	1,602,568
Repayments on revolving credit	(1,701,494)	(1,503,654)
Repayments on short-term borrowings, net	(4,384)	0
Repayments on long-term debt	(3,147)	(330)
Repayments of finance lease obligations	(660)
Repayments of finance lease obligations		(495)
Contingent consideration payments	(35,481)	(35,606)
Exercise and issuance of equity awards	754	1,509
Taxes paid on settlement of equity awards	(1,354)	(1,406)
Repurchase of common stock	(6,077)	(308)
Net cash (used in) provided by financing activities	(81,616)	62,278
Effect of exchange rate changes on cash and cash equivalents	(2,151)	277
Increase (decrease) in cash and cash equivalents	10,778	(5,130)
Cash and cash equivalents at beginning of period	23,818	25,530
Cash and cash equivalents at end of period	$ 34,596	$ 20,400

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

9 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

Schedule of Debt

The following table presents the Company’s debt at March 31, 2020 and June 30, 2019.

	March 31, 2020		June 30, 2019
	(in thousands)
Short-term borrowings	$	143	$	4,590
Current portion of long-term debt	6,901		4,085
Mississippi revenue bond, net of current portion	4,425		4,764
Senior secured term loan facility, net of current portion	140,625		146,250
Borrowings under revolving credit facility	168,502		200,817
Total debt	$	320,596	$	360,506

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Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019	Jun. 30, 2019
Income Taxes [Line Items]
Discrete tax expense (benefit) due to change in estimate of nondeductible expenses			$ (200)
Effective income tax rate	53.10%		29.60%
Gross unrecognized tax benefits	$ 1,000		$ 1,000		$ 1,200
Unrecognized tax benefits that would impact effective tax rate if recognized	800		800
Income tax penalties and interest accrued	1,100		1,100		$ 1,000
Income (loss) before income taxes	3,652	$ 15,795	$ 34,953	$ 61,670
Administration of the Treasury, Belgium [Member]
Income Taxes [Line Items]
Income (loss) before income taxes	$ 1,000	$ 800

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Fair Value of Financial Instruments (Schedule of Valuation Techniques and Significant Observable Inputs) (Details)	Mar. 31, 2020	Jun. 30, 2019
Weighted average cost of capital [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Contingent consideration, liability, measurement input	0.123	0.142
Adjusted EBITDA growth rate [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Contingent consideration, liability, measurement input	0.249	0.215

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Derivatives and Hedging Activities (Schedule of Cash Flow Hedge Included in Accumulated Other Comprehensive Income (Loss), Net of Income Taxes) (Details) - USD ($) $ in Thousands	3 Months Ended				9 Months Ended
	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2019	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019
Derivative Instruments, Gain (Loss) [Line Items]
Net increase (decrease) in accumulated other comprehensive (loss) income, net of tax	$ (4,046)	$ 900	$ (1,071)		$ (4,217)
Net increase (decrease) in accumulated other comprehensive (loss) income, net of tax				$ (350)		$ (819)
Interest Rate Swap [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Net interest expense (income) recognized as a result of interest rate swap	180			(79)	343	(161)
Unrealized gain (loss) in fair value of interest rate swap	(5,518)				(5,890)
Unrealized gain (loss) in fair value of interest rate swap				(385)		(919)
Net increase (decrease) in accumulated other comprehensive (loss) income	(5,338)				(5,547)
Net increase (decrease) in accumulated other comprehensive (loss) income				(464)		(1,080)
Income tax effect	(1,292)				(1,330)
Income tax effect				(114)		(261)
Net increase (decrease) in accumulated other comprehensive (loss) income, net of tax	$ (4,046)				$ (4,217)
Net increase (decrease) in accumulated other comprehensive (loss) income, net of tax				$ (350)		$ (819)

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Earnings Per Share (Tables)

9 Months Ended

Mar. 31, 2020

Earnings Per Share [Abstract]

Schedule of Earnings Per Share

	Quarter ended				Nine months ended
	March 31,				March 31,
	2020		2019		2020		2019
	(in thousands, except per share data)
Numerator:
Net income	$	1,713	$	11,715	$	24,608	$	46,019
Denominator:
Weighted-average shares, basic	25,346		25,704		25,386		25,647
Dilutive effect of share-based payments	17		58		58		108
Weighted-average shares, diluted	25,363		25,762		25,444		25,755
Net income per common share, basic	$	0.07	$	0.46	$	0.97	$	1.79
Net income per common share, diluted	$	0.07	$	0.45	$	0.97	$	1.79

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Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2020	Jun. 30, 2019
Current assets:
Cash and cash equivalents	$ 34,596	$ 23,818
Accounts receivable, less allowance of $34,119 at March 31, 2020 and $38,849 at June 30, 2019	618,758	654,983
Inventories	666,458	697,343
Prepaid expenses and other current assets	116,221	101,171
Total current assets	1,436,033	1,477,315
Property and equipment, net	60,891	63,363
Goodwill	338,358	319,538
Identifiable intangible assets, net	133,228	127,939
Deferred income taxes	23,635	24,724
Other non-current assets	81,656	54,382
Total assets	2,073,801	2,067,261
Current liabilities:
Accounts payable	608,417	558,101
Accrued expenses and other current liabilities	108,086	91,407
Current portion of contingent consideration	45,660	38,393
Income taxes payable	989	4,310
Short-term borrowings	143	4,590
Current portion of long-term debt	6,901	4,085
Total current liabilities	770,196	700,886
Deferred income taxes	1,077	1,395
Long-term debt, net of current portion	145,050	151,014
Borrowings under revolving credit facility	168,502	200,817
Long-term portion of contingent consideration	0	39,532
Other long-term liabilities	91,298	59,488
Total liabilities	1,176,123	1,153,132
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, 25,345,798 and 25,408,397 shares issued and outstanding at March 31, 2020 and June 30, 2019, respectively	62,314	64,287
Retained earnings	964,538	939,930
Accumulated other comprehensive loss	(129,174)	(90,088)
Total shareholders’ equity	897,678	914,129
Total liabilities and shareholders’ equity	$ 2,073,801	$ 2,067,261

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Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) $ in Thousands	Total	Common Stock [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Loss [Member]
Beginning balance (in shares) at Jun. 30, 2018		25,593,122
Beginning balance at Jun. 30, 2018	$ 866,376	$ 68,220	$ 882,333	$ (84,177)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	14,322		14,322
Unrealized loss on hedged transaction, net of tax	146			146
Foreign currency translation adjustment	(4,762)			(4,762)
Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes (in shares)		14,542
Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes	425	$ 425
Share-based compensation	1,390	$ 1,390
Ending balance (in shares) at Sep. 30, 2018		25,607,664
Ending balance at Sep. 30, 2018	877,897	$ 70,035	896,655	(88,793)
Beginning balance (in shares) at Jun. 30, 2018		25,593,122
Beginning balance at Jun. 30, 2018	866,376	$ 68,220	882,333	(84,177)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	46,019
Ending balance (in shares) at Mar. 31, 2019		25,705,842
Ending balance at Mar. 31, 2019	911,063	$ 72,903	928,352	(90,192)
Beginning balance (in shares) at Sep. 30, 2018		25,607,664
Beginning balance at Sep. 30, 2018	877,897	$ 70,035	896,655	(88,793)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	19,982		19,982
Unrealized loss on hedged transaction, net of tax	(615)			(615)
Foreign currency translation adjustment	1,363			1,363
Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes (in shares)		104,065
Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes	(321)	$ (321)
Common stock repurchased (in shares)		(9,387)
Common stock repurchased	(308)	$ (308)
Share-based compensation	1,506	$ 1,506
Ending balance (in shares) at Dec. 31, 2018		25,702,342
Ending balance at Dec. 31, 2018	899,504	$ 70,912	916,637	(88,045)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	11,715		11,715
Unrealized loss on hedged transaction, net of tax	(350)			(350)
Foreign currency translation adjustment	(1,797)			(1,797)
Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes (in shares)		3,500
Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes	(2)	$ (2)
Share-based compensation	1,993	$ 1,993
Ending balance (in shares) at Mar. 31, 2019		25,705,842
Ending balance at Mar. 31, 2019	911,063	$ 72,903	928,352	(90,192)
Beginning balance (in shares) at Jun. 30, 2019		25,408,397
Beginning balance at Jun. 30, 2019	914,129	$ 64,287	939,930	(90,088)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	11,530		11,530
Unrealized loss on hedged transaction, net of tax	(1,071)			(1,071)
Foreign currency translation adjustment	(14,639)			(14,639)
Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes (in shares)		786
Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes	(12)	$ (12)
Common stock repurchased (in shares)		(168,068)
Common stock repurchased	(5,432)	$ (5,432)
Share-based compensation	1,246	$ 1,246
Ending balance (in shares) at Sep. 30, 2019		25,241,115
Ending balance at Sep. 30, 2019	905,751	$ 60,089	951,460	(105,798)
Beginning balance (in shares) at Jun. 30, 2019		25,408,397
Beginning balance at Jun. 30, 2019	914,129	$ 64,287	939,930	(90,088)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	24,608
Unrealized loss on hedged transaction, net of tax	(4,217)
Ending balance (in shares) at Mar. 31, 2020		25,345,798
Ending balance at Mar. 31, 2020	897,678	$ 62,314	964,538	(129,174)
Beginning balance (in shares) at Sep. 30, 2019		25,241,115
Beginning balance at Sep. 30, 2019	905,751	$ 60,089	951,460	(105,798)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	11,366		11,366
Unrealized loss on hedged transaction, net of tax	900			900
Foreign currency translation adjustment	8,558			8,558
Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes (in shares)		104,683
Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes	(621)	$ (621)
Common stock repurchased	0
Share-based compensation	1,627	$ 1,627
Ending balance (in shares) at Dec. 31, 2019		25,345,798
Ending balance at Dec. 31, 2019	927,580	$ 61,095	962,825	(96,340)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	1,713		1,713
Unrealized loss on hedged transaction, net of tax	(4,046)			(4,046)
Foreign currency translation adjustment	(28,788)			(28,788)
Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes (in shares)		0
Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes	34	$ 34
Common stock repurchased	0
Share-based compensation	1,185	$ 1,185
Ending balance (in shares) at Mar. 31, 2020		25,345,798
Ending balance at Mar. 31, 2020	$ 897,678	$ 62,314	$ 964,538	$ (129,174)

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Derivatives and Hedging Activities (Tables)

9 Months Ended

Mar. 31, 2020

General Discussion of Derivative Instruments and Hedging Activities [Abstract]

Schedule of 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 included in the Condensed Consolidated Income Statements for the quarters and nine months ended March 31, 2020 and 2019 are as follows:

	Quarter ended						Nine months ended
	March 31,						March 31,
	2020			2019			2020			2019
	(in thousands)
Net foreign exchange derivative contract losses (gains)	$	(6,178	)	$	1,125		$	(5,978	)	$	178
Net foreign currency transactional and re-measurement (gains) losses	6,546			(654		)	6,155			810
Net foreign currency exchange (gains) losses	$	368		$	471		$	177		$	988

Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss)

The components of the cash flow hedge included in the Condensed Consolidated Statement of Comprehensive (Loss) Income for the quarters and nine months ended March 31, 2020 and 2019, are as follows:

	Quarter ended						Nine months ended
	March 31,						March 31,
	2020			2019			2020			2019
	(in thousands)
Net interest expense (income) recognized as a result of interest rate swap	$	180		$	(79	)	$	343		$	(161	)
Unrealized gain (loss) in fair value of interest rate swap	(5,518		)	(385		)	(5,890		)	(919		)
Net increase (decrease) in accumulated other comprehensive (loss) income	$	(5,338	)	$	(464	)	$	(5,547	)	$	(1,080	)
Income tax effect	(1,292		)	(114		)	(1,330		)	(261		)
Net increase (decrease) in accumulated other comprehensive (loss) income, net of tax	$	(4,046	)	$	(350	)	$	(4,217	)	$	(819	)

Schedule of Derivative Instruments

The Company used the following derivative instruments at March 31, 2020 and June 30, 2019, reflected in its Condensed Consolidated Balance Sheets, for the risk management purposes detailed above:

		March 31, 2020				June 30, 2019
	Balance Sheet Location	Fair Value  of Derivatives Designated  as Hedge Instruments		Fair Value  of Derivatives Not Designated as  Hedge Instruments		Fair Value  of Derivatives Designated as Hedge Instruments		Fair Value  of Derivatives Not Designated as Hedge Instruments
		(in thousands)
Derivative assets:
Foreign exchange contracts	Prepaid expenses and other current assets	$	—	$	209	$	—	$	165
Derivative liabilities:
Foreign exchange contracts	Accrued expenses and other current liabilities	$	—	$	130	$	—	$	168
Interest rate swap agreement	Other long-term liabilities	$	8,922	$	—	$	3,504	$	—

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Fair Value of Financial Instruments (Schedule of Changes in Fair Value of Contingent Considerations) (Details) - Communications & Services Segment [Member] - Fair Value, Inputs, Level 3 [Member] - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value at beginning of period	$ 45,043	$ 71,886	$ 77,925	$ 108,233
Payments	0	(2,736)	(38,531)	(45,796)
Change in fair value of contingent consideration	617	5,101	6,266	11,535
Foreign currency translation adjustment		8		287
Fair value at end of period	$ 45,660	$ 74,259	$ 45,660	$ 74,259

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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, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019
General Discussion of Derivative Instruments and Hedging Activities [Abstract]
Net foreign exchange derivative contract losses (gains)	$ (6,178)	$ 1,125	$ (5,978)	$ 178
Net foreign currency transactional and re-measurement (gains) losses	6,546	(654)	6,155	810
Net foreign currency exchange (gains) losses	$ 368	$ 471	$ 177	$ 988

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Leases - Supplemental Balance Sheet Information (Details) $ in Thousands	Mar. 31, 2020 USD ($)
Leases [Abstract]
Operating lease right-of-use assets	$ 30,196
Current operating lease liabilities	5,805
Long-term operating lease liabilities	$ 26,490

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Leases - Maturities of Operating Lease Liabilities (Details) $ in Thousands	Mar. 31, 2020 USD ($)
Leases [Abstract]
Remainder of 2020	$ 2,362
2021	7,828
2022	7,090
2023	5,574
2024	4,757
Thereafter	11,282
Total future payments	38,893
Less: amounts representing interest	6,598
Present value of lease payments	$ 32,295

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Acquisitions (Narrative) (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended	9 Months Ended
	Jul. 01, 2019	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2020	Mar. 31, 2019
Business Acquisition [Line Items]
Consideration transferred, net of cash acquired					$ 48,921	$ 32,161
intY [Member]
Business Acquisition [Line Items]
Consideration transferred, net of cash acquired	$ 48,900
Business combination, acquisition related costs		$ 100			$ 500
RPM, Canpango and Intelisys Global [Member]
Business Acquisition [Line Items]
Consideration transferred, net of cash acquired				$ 32,200
Business combination, acquisition related costs			$ 200			$ 1,000

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Business and Summary of Significant Accounting Policies (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2020 USD ($)	Mar. 31, 2019 USD ($)	Mar. 31, 2020 USD ($) segment	Mar. 31, 2019 USD ($)	Jul. 01, 2019 USD ($)	Jun. 30, 2019 USD ($)
Cash and Cash Equivalents [Line Items]
Number of operating segments | segment			2
Depreciation expense related to selling, general and administrative costs	$ 3,493	$ 3,417	$ 10,500	$ 9,954
Amortization of intangible assets	5,486	5,005	16,079	14,708
Operating lease right-of-use assets	30,196		30,196
Operating lease, liability	32,295		32,295
Bank Overdrafts [Member]
Cash and Cash Equivalents [Line Items]
Outstanding checks	2,500		2,500			$ 7,400
Product [Member]
Cash and Cash Equivalents [Line Items]
Depreciation expense reported as part of cost of goods sold	$ 600	$ 900	$ 1,800	$ 2,900
Accounting Standards Update 2016-02 [Member]
Cash and Cash Equivalents [Line Items]
Operating lease right-of-use assets					$ 37,000
Operating lease, liability					$ 37,000

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Commitments and Contingencies

9 Months Ended

Mar. 31, 2020

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.

In early March 2020, the World Health Organization characterized the novel coronavirus (“COVID-19”) as a pandemic. The rapid spread of COVID-19 since December 2019 has resulted in the implementation of numerous measures to contain the virus worldwide, such as travel bans and restrictions, quarantines, shelter-in-place orders and business shutdowns. The pandemic and these containment measures have had, and are expected to continue to have, a substantial impact on businesses around the world, including the Company’s business, and on global, regional and national economies. The Company is unable at this time to predict

the ultimate impact that COVID-19 will have on its business due to the inability to predict the duration or magnitude of the virus' impacts.

During the Company's due diligence for the Network1 acquisition, several pre-acquisition contingencies were identified regarding various Brazilian federal and state tax exposures. The Company recorded indemnification receivables that are reported gross of the pre-acquisition contingency liabilities as the funds were escrowed as part of the acquisition. The amount available after the impact of foreign currency translation for future pre-acquisition contingency settlements or to be released to the sellers was $5.0 million and $6.5 million, at March 31, 2020 and June 30, 2019, respectively.

The table below summarizes the balances and line item presentation of Network1's pre-acquisition contingencies and corresponding indemnification receivables in the Company's Condensed Consolidated Balance Sheets at March 31, 2020 and June 30, 2019:

	March 31, 2020		June 30, 2019
	Network1
	(in thousands)
Assets
Prepaid expenses and other current assets	$	15	$	761
Other non-current assets	$	3,847	$	5,219
Liabilities
Accrued expenses and other current liabilities	$	15	$	761
Other long-term liabilities	$	3,847	$	5,219

The reduction in pre-acquisition contingencies and corresponding indemnification receivables is due to expiration of the statute of limitations on several identified contingencies, coupled with a reduction in the foreign exchange rate of the Brazilian real against the US dollar.

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Accumulated Other Comprehensive Loss

9 Months Ended

Mar. 31, 2020

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

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss consists of the following: 

	March 31, 2020			June 30, 2019
	(in thousands)
Foreign currency translation adjustment	$	(122,782	)	$	(87,913	)
Unrealized loss on hedged transaction, net of tax	(6,392		)	(2,175		)
Accumulated other comprehensive loss	$	(129,174	)	$	(90,088	)

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,
	2020			2019			2020			2019
	(in thousands)
Tax (expense) benefit	$	(740	)	$	(193	)	$	(1,174	)	$	(187	)

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Derivatives and Hedging Activities

9 Months Ended

Mar. 31, 2020

General Discussion of Derivative Instruments and Hedging Activities [Abstract]

Derivatives and Hedging Activities

Derivatives and Hedging Activities

The Company's results of operations could be materially impacted by significant changes in foreign currency exchange rates and interest rates. In an effort to manage the exposure to these risks, 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 U.S. GAAP. The Company records all derivatives on the consolidated balance sheet at fair value. Derivatives that are not designated as hedging instruments or the ineffective portions of cash flow hedges 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 $94.8 million and $110.7 million for the exchange of foreign currencies at March 31, 2020 and June 30, 2019, 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 included in the Condensed Consolidated Income Statements for the quarters and nine months ended March 31, 2020 and 2019 are as follows:

	Quarter ended						Nine months ended
	March 31,						March 31,
	2020			2019			2020			2019
	(in thousands)
Net foreign exchange derivative contract losses (gains)	$	(6,178	)	$	1,125		$	(5,978	)	$	178
Net foreign currency transactional and re-measurement (gains) losses	6,546			(654		)	6,155			810
Net foreign currency exchange (gains) losses	$	368		$	471		$	177		$	988

Net foreign currency 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 currency 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, British pound versus the euro and other currencies versus the U.S. dollar.

Interest Rates - The Company’s earnings are also affected by changes in interest rates due to the impact those changes have on interest expense from floating rate debt instruments. The Company manages its exposure to changes in interest rates by using interest rate swaps to hedge this exposure and to achieve a desired proportion of fixed versus floating rate debt. The Company entered into an interest rate swap agreement, which was subsequently settled, and entered into a new amended agreement on April 30, 2019. The swap agreement has a notional amount of $100.0 million, with a $50.0 million tranche scheduled to mature on April 30, 2024 and a $50.0 million tranche scheduled to mature April 30, 2026. This swap agreement is designated as a cash flow hedge to hedge the variable rate interest payments on the revolving credit facility. Interest rate differentials paid or received under the swap agreement are recognized as adjustments to interest expense. To the extent the swap is effective in offsetting the variability of the hedged cash flows, changes in the fair value of the swap are not included in current earnings but are reported as other comprehensive income (loss). There was no ineffective portion to be recorded as an adjustment to earnings for the quarters and nine months ended March 31, 2020 and 2019.

The components of the cash flow hedge included in the Condensed Consolidated Statement of Comprehensive (Loss) Income for the quarters and nine months ended March 31, 2020 and 2019, are as follows:

	Quarter ended						Nine months ended
	March 31,						March 31,
	2020			2019			2020			2019
	(in thousands)
Net interest expense (income) recognized as a result of interest rate swap	$	180		$	(79	)	$	343		$	(161	)
Unrealized gain (loss) in fair value of interest rate swap	(5,518		)	(385		)	(5,890		)	(919		)
Net increase (decrease) in accumulated other comprehensive (loss) income	$	(5,338	)	$	(464	)	$	(5,547	)	$	(1,080	)
Income tax effect	(1,292		)	(114		)	(1,330		)	(261		)
Net increase (decrease) in accumulated other comprehensive (loss) income, net of tax	$	(4,046	)	$	(350	)	$	(4,217	)	$	(819	)

The Company used the following derivative instruments at March 31, 2020 and June 30, 2019, reflected in its Condensed Consolidated Balance Sheets, for the risk management purposes detailed above:

		March 31, 2020				June 30, 2019
	Balance Sheet Location	Fair Value  of Derivatives Designated  as Hedge Instruments		Fair Value  of Derivatives Not Designated as  Hedge Instruments		Fair Value  of Derivatives Designated as Hedge Instruments		Fair Value  of Derivatives Not Designated as Hedge Instruments
		(in thousands)
Derivative assets:
Foreign exchange contracts	Prepaid expenses and other current assets	$	—	$	209	$	—	$	165
Derivative liabilities:
Foreign exchange contracts	Accrued expenses and other current liabilities	$	—	$	130	$	—	$	168
Interest rate swap agreement	Other long-term liabilities	$	8,922	$	—	$	3,504	$	—

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Business and Summary of Significant Accounting Policies (Policies)

9 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

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 ("U.S. 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 U.S. GAAP for annual financial statements. The unaudited condensed consolidated financial statements included herein contain all adjustments (consisting of normal recurring and non-recurring adjustments) that are, in the opinion of management, necessary to present fairly the financial position at March 31, 2020 and June 30, 2019, the results of operations for the quarters and nine months ended March 31, 2020 and 2019, the statements of comprehensive (loss) income for the quarters and nine months ended March 31, 2020 and 2019, the statements of shareholders' equity for the quarters and nine months ended March 31, 2020 and 2019 and the statements of cash flows for the nine months ended March 31, 2020 and 2019. The results of operations for the quarters and nine months ended March 31, 2020 and 2019 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, 2019.

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 ended March 31, 2020 from the policies described 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, 2019. 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, 2019.

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.

Long-lived Assets

The Company presents depreciation expense and intangible amortization expense on the Condensed Consolidated Income Statements. The Company's depreciation expense related to selling, general and administrative costs totaled $3.5 million and $10.5 million for the quarter and nine months ended March 31, 2020, respectively, and $3.4 million and $10.0 million for the quarter and nine months ended March 31, 2019, respectively. Depreciation expense reported as part of cost of goods sold on the Condensed Consolidated Income Statements totaled $0.6 million and $1.8 million for the quarter and nine months ended March 31, 2020, respectively, and $0.9 million and $2.9 million for the quarter and nine months ended March 31, 2019, respectively. The Company's intangible amortization expense reported on the Condensed Consolidated Income Statements relates to selling, general and administrative costs, not the cost of selling goods.

Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-02, Leases (ASC Topic 842) requiring lessees to reflect most leases on their balance sheets and recognize expenses on their income statements in a manner similar to current guidance. Under the new guidance, lessees are 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 is 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. This ASU is effective for the Company beginning in the first quarter of fiscal 2020. Entities are required to use the modified retrospective approach of adoption, with the option of applying the requirements of the standard either (1) retrospectively to each prior comparative reporting period presented or (2) retrospectively at the beginning of the period of adoption.  The Company adopted the standard on July 1, 2019 and applied it at the beginning of the period of adoption. Therefore, upon adoption, financial information and disclosures are not updated for comparative reporting periods under the new standard. Additionally, the Company has elected the transition package of practical expedients upon adoption which, among other things, allows an entity to not reassess the historical lease classification. Upon adoption, the Company recognized right-of-use assets and corresponding lease liabilities for both operating and finance leases of approximately $37.0 million on the Condensed Consolidated Balance Sheets. The adoption of this standard was not material to the Company’s Condensed Consolidated Income Statements. See Note 11 for additional lease disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (ASC Topic 326). In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326: Financial Instruments - Credit Losses, which provides supplemental guidance and clarification to ASU 2016-13 and must be adopted concurrently. The pronouncement revises the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. The guidance is effective for the Company beginning in the first quarter of fiscal year 2021 with early adoption permitted. The Company is currently evaluating the potential need for a revised method to assess its allowance for doubtful accounts receivable and the related impact of this guidance on its consolidated financial statements.

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (ASC Topic 815) that amends and simplifies guidance related to hedge accounting to more accurately portray the economics of an entity’s risk management activities in its financial statements. The standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The guidance requires adoption using a modified retrospective approach. The presentation and disclosure requirements apply prospectively. The Company adopted the standard in the current fiscal year, and it had no impact on the consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (ASC Topic 820) Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. The pronouncement eliminates, modifies and adds disclosure requirements for fair value measurements. This guidance is effective for fiscal years beginning after December 15, 2019, and for interim periods within those fiscal years, with early adoption permitted. This guidance is applicable to the Company’s fiscal year beginning July 1, 2020. The Company is currently evaluating the potential impact of this guidance on its consolidated financial statements.

The Company has reviewed other newly issued accounting pronouncements and concluded that they are either not applicable to its business or that no material effect is expected on its consolidated financial statements as a result of future adoption.

Revenue Recognition

The Company provides technology solutions and services from the world's leading suppliers of POS, payments, barcode, physical security, unified communications and collaboration, and telecom and cloud services. This includes hardware, related accessories and device configuration as well as software licenses, professional services and hardware support programs.

The Company adopted ASC 606, effective July 1, 2018 utilizing the full retrospective method. In determining the appropriate amount of revenue to recognize, the Company applies the following five-step model: (i) identify contracts with customers; (ii) identify performance obligations in the contracts; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations per the contracts; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company recognizes revenue as control of products and services are transferred to customers, which is generally at the point of shipment. The Company delivers products to customers in several ways, including: (i) shipment from the Company's warehouse, (ii) drop-shipment directly from the supplier, or (iii) electronic delivery for non-physical products.

Principal versus Agent Considerations

The Company is the principal for sales of all hardware, software and certain services, including self-branded warranty programs. The Company considers itself the principal in these transactions as it has control of the product or service before it is transferred to the customer. When the Company provides self-branded warranty programs, it engages a third party, generally the original equipment manufacturer, to cover the fulfillment of any obligations arising from these contracts. These revenues and associated third-party costs are amortized over the life of the contract on a straight-line basis. The Company recognizes the previously described revenue and cost of goods sold on a gross basis.

The Company is the agent for third-party service contracts, including product warranties and supplier-hosted software. These service contracts are sold separately from the products, and the Company often serves as the agent for the contract on behalf of the original equipment manufacturer. The Company's responsibility is to arrange for the provision of the specified service by the original equipment manufacturer, and the Company does not control the specified service before it is transferred to the customer. Because the Company acts as an agent, revenue is recognized net of cost at the time of sale.

Related to the Company’s Intelisys business, the Company acts as a master agent connecting independent sales partners with service providers or suppliers who offer telecom and cloud services to end-customers. Intelisys’ sales partners earn commission payments from those service providers or suppliers on end-customer sales. Intelisys provides commission processing services to sales partners, earning a percentage of the commission stream. Because the Company acts as an agent, revenue is recognized on a net basis.

Variable Considerations

For certain transactions, products are sold with a right of return and may also provide other rebates or incentives, which are accounted for as variable consideration. The Company estimates returns allowance based on historical experience and reduces revenue accordingly. The Company estimates the amount of variable consideration for rebates and incentives by using the expected value or the most likely amount to be given to the customer and reduces the revenue by those estimated amounts. These estimates are reviewed and updated as necessary at the end of each reporting period.

Contract Balances

The Company records contract assets and liabilities for payments received from customers in advance of services performed. These assets and liabilities are the result of the sales of the Company's self-branded warranty programs and other transactions where control has not yet passed to the customer. These amounts are immaterial to the consolidated financial statements for the periods presented.

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Condensed Consolidated Income Statements (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019
Income Statement [Abstract]
Net sales	$ 872,483	$ 893,357	$ 2,850,812	$ 2,912,278
Cost of goods sold	777,674	783,342	2,530,020	2,569,570
Gross profit	94,809	110,015	320,792	342,708
Selling, general and administrative expenses	78,923	77,688	244,557	236,569
Depreciation expense	3,493	3,417	10,500	9,954
Intangible amortization expense	5,486	5,005	16,079	14,708
Change in fair value of contingent consideration	618	5,101	6,266	11,535
Operating income	6,289	18,804	43,390	69,942
Interest expense	3,421	3,670	10,964	9,415
Interest income	(1,080)	(682)	(2,629)	(1,397)
Other (income) expense, net	296	21	102	254
Income before income taxes	3,652	15,795	34,953	61,670
Provision for income taxes	1,939	4,080	10,345	15,651
Net income	$ 1,713	$ 11,715	$ 24,608	$ 46,019
Per share data:
Net income per common share, basic (in dollars per share)	$ 0.07	$ 0.46	$ 0.97	$ 1.79
Weighted-average shares outstanding, basic (in shares)	25,346	25,704	25,386	25,647
Net income per common share, diluted (in dollars per share)	$ 0.07	$ 0.45	$ 0.97	$ 1.79
Weighted-average shares outstanding, diluted (in shares)	25,363	25,762	25,444	25,755

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Goodwill and Other Identifiable Intangible Assets (Tables)

9 Months Ended

Mar. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Changes in the Carrying Amount of Goodwill

The changes in the carrying amount of goodwill for the nine months ended March 31, 2020, by reporting segment, are set forth in the table below. Additions to goodwill for the current year are due to the acquisition of intY. The allocation of the purchase price for the intY acquisition, including the valuation of the identifiable intangible assets, has not been concluded as of the reporting date.

	Worldwide Barcode, Networking & Security Segment			Worldwide Communications & Services Segment			Total
	(in thousands)
Balance at June 30, 2019	$	137,077		$	182,461		$	319,538
Additions	—			26,110			26,110
Foreign currency translation adjustment	(584		)	(6,706		)	(7,290		)
Balance at March 31, 2020	$	136,493		$	201,865		$	338,358

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, 2020. Additions to identifiable intangible assets for the current year are estimates recognized from the acquisition of intY.

	Net Identifiable Intangible Assets
	(in thousands)
Balance at June 30, 2019	$	127,939
Additions	23,725
Amortization expense	(16,079		)
Foreign currency translation adjustment	(2,357		)
Balance at March 31, 2020	$	133,228

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Segment Information (Tables)

9 Months Ended

Mar. 31, 2020

Segment Reporting, Measurement Disclosures [Abstract]

Schedule of Financial Information by Segment

Selected financial information for each business segment is presented below:

	Quarter ended						Nine months ended
	March 31,						March 31,
	2020			2019			2020			2019
	(in thousands)
Sales:
Worldwide Barcode, Networking & Security	$	583,642		$	596,913		$	1,967,670		$	1,953,664
Worldwide Communications & Services	288,841			296,444			883,142			958,614
	$	872,483		$	893,357		$	2,850,812		$	2,912,278
Depreciation and amortization:
Worldwide Barcode, Networking & Security	$	4,298		$	4,371		$	13,019		$	13,387
Worldwide Communications & Services	4,446			4,097			13,024			11,494
Corporate	795			895			2,384			2,685
	$	9,539		$	9,363		$	28,427		$	27,566
Change in fair value of contingent consideration:
Worldwide Barcode, Networking & Security	$	—		$	—		$	—		$	—
Worldwide Communications & Services	618			5,101			6,266			11,535
	$	618		$	5,101		$	6,266		$	11,535
Operating income (loss):
Worldwide Barcode, Networking & Security	$	3,870		$	16,865		$	29,938		$	48,974
Worldwide Communications & Services	3,199			2,161			16,141			21,956
Corporate	(780		)	(222		)	(2,689		)	(988		)
	$	6,289		$	18,804		$	43,390		$	69,942
Capital expenditures:
Worldwide Barcode, Networking & Security	$	1,878		$	2,298		$	3,324		$	6,038
Worldwide Communications & Services	1,989			2,899			3,293			4,935
Corporate	—			—			—			4
	$	3,867		$	5,197		$	6,617		$	10,977
Sales by Geography Category:
United States and Canada	$	676,703		$	678,078		$	2,198,173		$	2,210,729
International(1)	202,310			221,202			677,478			722,715
Less intercompany sales	(6,530		)	(5,923		)	(24,839		)	(21,166		)
	$	872,483		$	893,357		$	2,850,812		$	2,912,278
(1) For the quarters and nine months ended March 31, 2020 and 2019, no sales exceeded 10% of consolidated net sales to any single international country.

Schedule of Reconciliation of Assets from Segment to Consolidated

	March 31, 2020		June 30, 2019
	(in thousands)
Assets:
Worldwide Barcode, Networking & Security	$	1,144,034	$	1,097,207
Worldwide Communications & Services	886,899		905,439
Corporate	42,868		64,615
	$	2,073,801	$	2,067,261
Property and equipment, net by Geography Category:
United States and Canada	$	56,326	$	58,961
International	4,565		4,402
	$	60,891	$	63,363

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Business and Summary of Significant Accounting Policies

9 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

Business and Summary of Significant Accounting Policies

Business and Summary of Significant Accounting Policies

Business Description

ScanSource, Inc. (together with its subsidiaries referred to as “the Company” or “ScanSource”) is at the center of the solution delivery channel, connecting businesses and providing technology solutions. The Company brings technology solutions and services from the world’s leading suppliers of point-of-sale (POS), payments, barcode, physical security, unified communications and collaboration, and telecom and cloud services to market. The Company operates in the United States, Canada, Brazil, additional Latin American countries, and Europe. The Company's two operating segments, Worldwide Barcode, Networking & Security and Worldwide Communications & Services, are based on product, customer and service type.

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 ("U.S. 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 U.S. GAAP for annual financial statements. The unaudited condensed consolidated financial statements included herein contain all adjustments (consisting of normal recurring and non-recurring adjustments) that are, in the opinion of management, necessary to present fairly the financial position at March 31, 2020 and June 30, 2019, the results of operations for the quarters and nine months ended March 31, 2020 and 2019, the statements of comprehensive (loss) income for the quarters and nine months ended March 31, 2020 and 2019, the statements of shareholders' equity for the quarters and nine months ended March 31, 2020 and 2019 and the statements of cash flows for the nine months ended March 31, 2020 and 2019. The results of operations for the quarters and nine months ended March 31, 2020 and 2019 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, 2019.

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 ended March 31, 2020 from the policies described 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, 2019. 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, 2019.

See Note 11 Leases for a discussion of the policies established upon adoption of Accounting Standards Update ("ASU") 2016-02, Leases (ASC Topic 842) in fiscal year 2020.

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 $2.5 million and $7.4 million are included in accounts payable on the condensed consolidated balance at March 31, 2020 and June 30, 2019, respectively.

Long-lived Assets

The Company presents depreciation expense and intangible amortization expense on the Condensed Consolidated Income Statements. The Company's depreciation expense related to selling, general and administrative costs totaled $3.5 million and $10.5 million for the quarter and nine months ended March 31, 2020, respectively, and $3.4 million and $10.0 million for the quarter and nine months ended March 31, 2019, respectively. Depreciation expense reported as part of cost of goods sold on the Condensed Consolidated Income Statements totaled $0.6 million and $1.8 million for the quarter and nine months ended March 31, 2020, respectively, and $0.9 million and $2.9 million for the quarter and nine months ended March 31, 2019, respectively. The Company's intangible amortization expense reported on the Condensed Consolidated Income Statements relates to selling, general and administrative costs, not the cost of selling goods. Intangible amortization expense totaled $5.5 million and $16.1 million for the quarter and nine months ended March 31, 2020, respectively, and $5.0 million and $14.7 million for the quarter and nine months ended March 31, 2019, respectively.

Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-02, Leases (ASC Topic 842) requiring lessees to reflect most leases on their balance sheets and recognize expenses on their income statements in a manner similar to current guidance. Under the new guidance, lessees are 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 is 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. This ASU is effective for the Company beginning in the first quarter of fiscal 2020. Entities are required to use the modified retrospective approach of adoption, with the option of applying the requirements of the standard either (1) retrospectively to each prior comparative reporting period presented or (2) retrospectively at the beginning of the period of adoption.  The Company adopted the standard on July 1, 2019 and applied it at the beginning of the period of adoption. Therefore, upon adoption, financial information and disclosures are not updated for comparative reporting periods under the new standard. Additionally, the Company has elected the transition package of practical expedients upon adoption which, among other things, allows an entity to not reassess the historical lease classification. Upon adoption, the Company recognized right-of-use assets and corresponding lease liabilities for both operating and finance leases of approximately $37.0 million on the Condensed Consolidated Balance Sheets. The adoption of this standard was not material to the Company’s Condensed Consolidated Income Statements. See Note 11 for additional lease disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (ASC Topic 326). In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326: Financial Instruments - Credit Losses, which provides supplemental guidance and clarification to ASU 2016-13 and must be adopted concurrently. The pronouncement revises the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. The guidance is effective for the Company beginning in the first quarter of fiscal year 2021 with early adoption permitted. The Company is currently evaluating the potential need for a revised method to assess its allowance for doubtful accounts receivable and the related impact of this guidance on its consolidated financial statements.

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (ASC Topic 815) that amends and simplifies guidance related to hedge accounting to more accurately portray the economics of an entity’s risk management activities in its financial statements. The standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The guidance requires adoption using a modified retrospective approach. The presentation and disclosure requirements apply prospectively. The Company adopted the standard in the current fiscal year, and it had no impact on the consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (ASC Topic 820) Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. The pronouncement eliminates, modifies and adds disclosure requirements for fair value measurements. This guidance is effective for fiscal years beginning after December 15, 2019, and for interim periods within those fiscal years, with early adoption permitted. This guidance is applicable to the Company’s fiscal year beginning July 1, 2020. The Company is currently evaluating the potential impact of this guidance on its consolidated financial statements.

The Company has reviewed other newly issued accounting pronouncements and concluded that they are either not applicable to its business or that no material effect is expected on its consolidated financial statements as a result of future adoption.

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Fair Value of Financial Instruments (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019	Jun. 30, 2019	Dec. 31, 2018	Jun. 30, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Current portion of contingent consideration	$ 45,660		$ 45,660			$ 38,393
Communications & Services Segment [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of liability for contingent consideration	45,660	$ 74,259	45,660	$ 74,259	$ 45,043	$ 77,925	$ 71,886	$ 108,233
Change in fair value of contingent consideration	617	5,101	6,266	11,535
Communications & Services Segment [Member] | Intelisys [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of liability for contingent consideration	45,700	74,300	45,700	74,300
Change in fair value of contingent consideration	(600)	(2,600)	(6,300)	(9,000)
Current portion of contingent consideration		39,400		39,400
Contingent consideration arrangements, maximum range of outcome	$ 48,100		$ 48,100
Communications & Services Segment [Member] | Network1 [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Change in fair value of contingent consideration		$ (2,500)		$ (2,500)

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Derivatives and Hedging Activities (Derivative Instruments) (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Jun. 30, 2019
Foreign Exchange Contract [Member]
Derivatives, Fair Value [Line Items]
Derivative assets	$ 209	$ 165
Foreign Exchange Contract [Member] | Prepaid Expenses and Other Current Assets [Member] | Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative assets	0	0
Foreign Exchange Contract [Member] | Prepaid Expenses and Other Current Assets [Member] | Not Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative assets	209	165
Foreign Exchange Contract [Member] | Accrued Expenses And Other Current Liabilities [Member] | Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative liabilities	0	0
Foreign Exchange Contract [Member] | Accrued Expenses And Other Current Liabilities [Member] | Not Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative liabilities	130	168
Interest Rate Swap [Member] | Other Noncurrent Liabilities [Member] | Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative liabilities	8,922	3,504
Interest Rate Swap [Member] | Other Noncurrent Liabilities [Member] | Not Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative liabilities	$ 0	$ 0

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Short-Term Borrowings and Long-Term Debt (Narrative) (Details)		9 Months Ended
	Apr. 30, 2019 USD ($)	Mar. 31, 2020 USD ($) quarter	Mar. 31, 2019 USD ($)	Jun. 30, 2019 USD ($)
Debt Instrument [Line Items]
Short-term borrowings		$ 143,000		$ 4,590,000
Long-term debt		145,050,000		151,014,000
Debt issuance costs, net		$ 1,700,000
Mississippi Revenue Bond [Member]
Debt Instrument [Line Items]
Percentage spread points on variable rate debt instrument		0.85%
Long-term debt		$ 4,425,000		$ 4,764,000
Maximum time period of interest (in years)		10 years
Put option, exercisable period limitation		180 days
Debt instrument, anniversary, options exercisable, period		5 years
Percentage of principal due on exercise of put option		100.00%
Long-term debt, percentage bearing variable interest		2.21%		3.28%
Overdraft Facility [Member]
Debt Instrument [Line Items]
Borrowing capacity under credit facility		$ 14,000,000.0
Debt instrument, term		7 days
Short-term borrowings		$ 100,000		$ 4,590,000
Overdraft Facility [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Percentage spread points on variable rate debt instrument		1.00%
Overdraft Facility [Member] | LIBOR Floor Rate [Member]
Debt Instrument [Line Items]
Percentage spread points on variable rate debt instrument		0.00%
Multi-Currency Revolving Credit Facility, Amended Credit Agreement [Member]
Debt Instrument [Line Items]
Borrowing capacity under credit facility	$ 350,000,000
Line of credit facility, expiration period	5 years
Line of credit facility, accordion feature, higher borrowing capacity option	$ 250,000,000
Letters of credit outstanding		$ 300,000		0
Debt issuance costs, gross	$ 1,100,000
Cash		$ 15,000,000
Debt instrument, covenant requirement, leverage ratio, EBITDA, number of quarters in measurement period | quarter		4
Line of credit facility, unused capacity, commitment fee percentage		0.30%
Percentage of capital stock or other equity interest pledged per credit agreement (up to)		65.00%
Average daily balance on revolving credit facility		$ 252,400,000	$ 313,600,000
Line of credit facility, remaining borrowing capacity		181,500,000		149,200,000
Line of credit facility, available for additional borrowings		$ 79,000,000.0
Multi-Currency Revolving Credit Facility, Amended Credit Agreement [Member] | Minimum [Member]
Debt Instrument [Line Items]
Line of credit facility, unused capacity, commitment fee percentage		0.15%
Line of credit facility, interest coverage ratio		3.00
Multi-Currency Revolving Credit Facility, Amended Credit Agreement [Member] | Maximum [Member]
Debt Instrument [Line Items]
Line of credit facility, unused capacity, commitment fee percentage		0.30%
Line of credit facility, leverage ratio		3.50
Multi-Currency Revolving Credit Facility, Amended Credit Agreement [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Percentage spread points on variable rate debt instrument		1.75%
Multi-Currency Revolving Credit Facility, Amended Credit Agreement [Member] | London Interbank Offered Rate (LIBOR) [Member] | Minimum [Member]
Debt Instrument [Line Items]
Percentage spread points on variable rate debt instrument		1.00%
Multi-Currency Revolving Credit Facility, Amended Credit Agreement [Member] | London Interbank Offered Rate (LIBOR) [Member] | Maximum [Member]
Debt Instrument [Line Items]
Percentage spread points on variable rate debt instrument		1.75%
Multi-Currency Revolving Credit Facility, Amended Credit Agreement [Member] | Alternate Base Rate Loans [Member]
Debt Instrument [Line Items]
Percentage spread points on variable rate debt instrument		0.75%
Multi-Currency Revolving Credit Facility, Amended Credit Agreement [Member] | Alternate Base Rate Loans [Member] | Minimum [Member]
Debt Instrument [Line Items]
Percentage spread points on variable rate debt instrument		0.00%
Multi-Currency Revolving Credit Facility, Amended Credit Agreement [Member] | Alternate Base Rate Loans [Member] | Maximum [Member]
Debt Instrument [Line Items]
Percentage spread points on variable rate debt instrument		0.75%
Term Loan Facility [Member]
Debt Instrument [Line Items]
Line of credit facility, expiration period	5 years
Long-term debt	$ 150,000,000	$ 140,625,000		$ 146,250,000
Multi-Currency Revolving Credit Facility, Combined with Accordion Feature [Member]
Debt Instrument [Line Items]
Borrowing capacity under credit facility	750,000,000
Letter of Credit [Member]
Debt Instrument [Line Items]
Letters of credit outstanding	$ 50,000,000

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Segment Information (Assets By Segment) (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Jun. 30, 2019
Segment Reporting Information [Line Items]
Assets	$ 2,073,801	$ 2,067,261
Property and equipment, net by Geography Category	60,891	63,363
Corporate, Non-Segment [Member]
Segment Reporting Information [Line Items]
Assets	42,868	64,615
Reportable Geographical Components [Member] | United States and Canada [Member]
Segment Reporting Information [Line Items]
Property and equipment, net by Geography Category	56,326	58,961
Reportable Geographical Components [Member] | International [Member]
Segment Reporting Information [Line Items]
Property and equipment, net by Geography Category	4,565	4,402
Barcode, Networking & Security Segment [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Assets	1,144,034	1,097,207
Communications & Services Segment [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Assets	$ 886,899	$ 905,439

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Leases - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Mar. 31, 2020	Mar. 31, 2020
Leases [Abstract]
Cash paid for amounts in the measurement of lease liabilities	$ 1,719	$ 5,189
Right-of-use assets obtained in exchange for lease obligations	$ 250	$ 1,804

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Commitments and Contingencies (Summary of Pre-Acquisition Contingencies) (Details) - Network1 [Member] - USD ($) $ in Thousands	Mar. 31, 2020	Jun. 30, 2019
Assets
Prepaid expenses and other current assets	$ 15	$ 761
Other non-current assets	3,847	5,219
Liabilities
Accrued expenses and other current liabilities	15	761
Other long-term liabilities	$ 3,847	$ 5,219

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Goodwill and Other Identifiable Intangible Assets

9 Months Ended

Mar. 31, 2020

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, 2020, by reporting segment, are set forth in the table below. Additions to goodwill for the current year are due to the acquisition of intY. The allocation of the purchase price for the intY acquisition, including the valuation of the identifiable intangible assets, has not been concluded as of the reporting date.

	Worldwide Barcode, Networking & Security Segment			Worldwide Communications & Services Segment			Total
	(in thousands)
Balance at June 30, 2019	$	137,077		$	182,461		$	319,538
Additions	—			26,110			26,110
Foreign currency translation adjustment	(584		)	(6,706		)	(7,290		)
Balance at March 31, 2020	$	136,493		$	201,865		$	338,358

The following table shows changes in the amount recognized for net identifiable intangible assets for the nine months ended March 31, 2020. Additions to identifiable intangible assets for the current year are estimates recognized from the acquisition of intY.

	Net Identifiable Intangible Assets
	(in thousands)
Balance at June 30, 2019	$	127,939
Additions	23,725
Amortization expense	(16,079		)
Foreign currency translation adjustment	(2,357		)
Balance at March 31, 2020	$	133,228

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Segment Information

9 Months Ended

Mar. 31, 2020

Segment Reporting, Measurement Disclosures [Abstract]

Segment Information

Segment Information

The Company is a leading provider of technology solutions and services to customers in specialty technology markets. The Company has two reportable segments, based on product, customer and service type.

Worldwide Barcode, Networking & Security Segment

The Worldwide Barcode, Networking & Security segment includes a portfolio of solutions primarily for enterprise mobile computing, data capture, barcode printing, POS, payments, networking, electronic physical security, cyber security and other technologies. We have business operations within this segment in the United States, Canada, Brazil, additional Latin American countries and Europe. We see adjacencies among these technologies in helping our customers develop solutions. Data capture and POS solutions 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 health care applications. Electronic physical security products include identification, access control, video surveillance, intrusion-related and wireless and networking infrastructure products.

Worldwide Communications & Services Segment

The Worldwide Communications & Services segment includes a portfolio of solutions primarily for communications technologies and services and includes our recent acquisition of intY. We have business operations within this segment in the United States, Canada, Brazil, additional Latin American countries and Europe. These offerings include voice, video conferencing, wireless, data networking, cable, unified communications and collaboration, cloud and technology services. As these solutions come together on IP networks, new opportunities are created to move into adjacent solutions for all vertical markets, such as education, healthcare and government.

Selected financial information for each business segment is presented below:

	Quarter ended						Nine months ended
	March 31,						March 31,
	2020			2019			2020			2019
	(in thousands)
Sales:
Worldwide Barcode, Networking & Security	$	583,642		$	596,913		$	1,967,670		$	1,953,664
Worldwide Communications & Services	288,841			296,444			883,142			958,614
	$	872,483		$	893,357		$	2,850,812		$	2,912,278
Depreciation and amortization:
Worldwide Barcode, Networking & Security	$	4,298		$	4,371		$	13,019		$	13,387
Worldwide Communications & Services	4,446			4,097			13,024			11,494
Corporate	795			895			2,384			2,685
	$	9,539		$	9,363		$	28,427		$	27,566
Change in fair value of contingent consideration:
Worldwide Barcode, Networking & Security	$	—		$	—		$	—		$	—
Worldwide Communications & Services	618			5,101			6,266			11,535
	$	618		$	5,101		$	6,266		$	11,535
Operating income (loss):
Worldwide Barcode, Networking & Security	$	3,870		$	16,865		$	29,938		$	48,974
Worldwide Communications & Services	3,199			2,161			16,141			21,956
Corporate	(780		)	(222		)	(2,689		)	(988		)
	$	6,289		$	18,804		$	43,390		$	69,942
Capital expenditures:
Worldwide Barcode, Networking & Security	$	1,878		$	2,298		$	3,324		$	6,038
Worldwide Communications & Services	1,989			2,899			3,293			4,935
Corporate	—			—			—			4
	$	3,867		$	5,197		$	6,617		$	10,977
Sales by Geography Category:
United States and Canada	$	676,703		$	678,078		$	2,198,173		$	2,210,729
International(1)	202,310			221,202			677,478			722,715
Less intercompany sales	(6,530		)	(5,923		)	(24,839		)	(21,166		)
	$	872,483		$	893,357		$	2,850,812		$	2,912,278
(1) For the quarters and nine months ended March 31, 2020 and 2019, no sales exceeded 10% of consolidated net sales to any single international country.

	March 31, 2020		June 30, 2019
	(in thousands)
Assets:
Worldwide Barcode, Networking & Security	$	1,144,034	$	1,097,207
Worldwide Communications & Services	886,899		905,439
Corporate	42,868		64,615
	$	2,073,801	$	2,067,261
Property and equipment, net by Geography Category:
United States and Canada	$	56,326	$	58,961
International	4,565		4,402
	$	60,891	$	63,363

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Goodwill and Other Identifiable Intangible Assets (Net Identifiable Intangible Assets) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019
Finite-lived Intangible Assets [Roll Forward]
Balance at June 30, 2019			$ 127,939
Additions			23,725
Amortization expense	$ (5,486)	$ (5,005)	(16,079)	$ (14,708)
Foreign currency translation adjustment			(2,357)
Balance at March 31, 2020	$ 133,228		$ 133,228

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Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended						9 Months Ended
	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Mar. 31, 2020	Mar. 31, 2019
Numerator:
Net income	$ 1,713	$ 11,366	$ 11,530	$ 11,715	$ 19,982	$ 14,322	$ 24,608	$ 46,019
Denominator:
Weighted-average shares, basic (in shares)	25,346,000			25,704,000			25,386,000	25,647,000
Dilutive effect of share-based payments (in shares)	17,000			58,000			58,000	108,000
Weighted-average shares, diluted (in shares)	25,363,000			25,762,000			25,444,000	25,755,000
Net income per common share, basic (in dollars per share)	$ 0.07			$ 0.46			$ 0.97	$ 1.79
Net income per common share, diluted (in dollars per share)	$ 0.07			$ 0.45			$ 0.97	$ 1.79
Weighted average shares excluded from the computation of diluted earnings per share (in shares)	1,036,740			592,411			980,803	459,189

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Leases (Tables)

9 Months Ended

Mar. 31, 2020

Leases [Abstract]

Assets And Liabilities, Lessee

The following table presents amounts recorded on the Condensed Consolidated Balance Sheet related to operating leases at March 31, 2020:

Operating leases	Balance Sheet location	March 31, 2020
		(in thousands)
Operating lease right-of-use assets	Other non-current assets	$	30,196
Current operating lease liabilities	Accrued expenses and other current liabilities	$	5,805
Long-term operating lease liabilities	Other long-term liabilities	$	26,490

Lease, Cost

The following table presents amounts recorded in operating lease expense as part of selling general and administrative expenses on the Condensed Consolidated Income Statements during the quarter and nine months ended March 31, 2020. Operating lease costs contain immaterial amounts of short-term lease costs for leases with an initial term of 12 months or less.

	Quarter ended		Nine months ended
	March 31, 2020		March 31, 2020
	(in thousands)
Operating lease cost	$	1,873	$	6,005
Variable lease cost	542		1,325
	$	2,415	$	7,330

Supplemental cash flow information related to the Company's operating leases for the quarter and nine months ended March 31, 2020 are presented in the table below:

	Quarter ended		Nine months ended
	March 31, 2020		March 31, 2020
	(in thousands)
Cash paid for amounts in the measurement of lease liabilities	$	1,719	$	5,189
Right-of-use assets obtained in exchange for lease obligations	250		1,804

The weighted-average remaining lease term and discount rate at March 31, 2020 are presented in the table below:

	March 31, 2020
Weighted-average remaining lease term	6.27 years
Weighted-average discount rate	3.9	%

Lessee, Operating Lease, Liability, Maturity

The following table presents the maturities of the Company's operating lease liabilities at March 31, 2020:

	Operating leases
	(in thousands)
Remainder of 2020	$	2,362
2021	7,828
2022	7,090
2023	5,574
2024	4,757
Thereafter	11,282
Total future payments	38,893
Less: amounts representing interest	6,598
Present value of lease payments	$	32,295

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Commitments and Contingencies (Narrative) (Details) - USD ($) $ in Millions	Mar. 31, 2020	Jun. 30, 2019
Network1 [Member]
Other Commitments [Line Items]
Cash held in escrow	$ 5.0	$ 6.5

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Segment Information (Financial Information by Segment) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019
Segment Reporting Information [Line Items]
Sales	$ 872,483	$ 893,357	$ 2,850,812	$ 2,912,278
Depreciation and amortization	9,539	9,363	28,427	27,566
Change in fair value of contingent consideration	618	5,101	6,266	11,535
Operating income (loss)	6,289	18,804	43,390	69,942
Capital expenditures	3,867	5,197	6,617	10,977
Corporate, Non-Segment [Member]
Segment Reporting Information [Line Items]
Depreciation and amortization	795	895	2,384	2,685
Operating income (loss)	(780)	(222)	(2,689)	(988)
Capital expenditures	0	0	0	4
Reportable Geographical Components [Member] | United States and Canada [Member]
Segment Reporting Information [Line Items]
Sales	676,703	678,078	2,198,173	2,210,729
Reportable Geographical Components [Member] | International [Member]
Segment Reporting Information [Line Items]
Sales	202,310	221,202	677,478	722,715
Geography Eliminations [Member]
Segment Reporting Information [Line Items]
Sales	(6,530)	(5,923)	(24,839)	(21,166)
Barcode, Networking & Security Segment [Member]
Segment Reporting Information [Line Items]
Sales	583,642	596,913	1,967,670	1,953,664
Barcode, Networking & Security Segment [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Sales	583,642	596,913	1,967,670	1,953,664
Depreciation and amortization	4,298	4,371	13,019	13,387
Change in fair value of contingent consideration	0	0	0	0
Operating income (loss)	3,870	16,865	29,938	48,974
Capital expenditures	1,878	2,298	3,324	6,038
Communications & Services Segment [Member]
Segment Reporting Information [Line Items]
Sales	288,841	296,444	883,142	958,614
Communications & Services Segment [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Sales	288,841	296,444	883,142	958,614
Depreciation and amortization	4,446	4,097	13,024	11,494
Change in fair value of contingent consideration	618	5,101	6,266	11,535
Operating income (loss)	3,199	2,161	16,141	21,956
Capital expenditures	$ 1,989	$ 2,899	$ 3,293	$ 4,935

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Leases - Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Mar. 31, 2020	Mar. 31, 2020
Leases [Abstract]
Operating lease cost	$ 1,873	$ 6,005
Variable lease cost	542	1,325
Total cost	$ 2,415	$ 7,330

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Acquisitions

9 Months Ended

Mar. 31, 2020

Business Combinations [Abstract]

Acquisitions

Acquisitions

intY

On July 1, 2019, the Company acquired all of the outstanding shares of intY and its CASCADE cloud services distribution platform. The purchase price of this acquisition, net of cash acquired, was approximately $48.9 million. The allocation of the purchase price to the assets and liabilities acquired, including the valuation of the identifiable intangible assets, has not been concluded as of the reporting date. The impact of this acquisition was not material to the consolidated financial statements. The Company recognized less than $0.1 million and $0.5 million for the quarter and nine months ended March 31, 2020, respectively, in acquisition-related

costs included in selling, general and administrative expenses on the Condensed Consolidated Income Statements in connection with this acquisition. This acquisition is included in the Worldwide Communications & Services segment.

RPM, Canpango and Intelisys Global

During the quarter ended December 31, 2018, the Company acquired the assets of RPM Software ("RPM"), a business process software developer with focus in the telecom channel business for calculating and paying agency commissions in an automated cloud-based system. During the quarter ended September 30, 2018, the Company completed the acquisition of Canpango, a global Salesforce implementation and consulting business with deep knowledge of customer relationship management (CRM) and integration with telecom systems. Intelisys Global was also acquired during the quarter ended September 30, 2018. The total combined purchase price for all companies, net of cash acquired, was approximately $32.2 million. The purchase price of these collective acquisitions was allocated to the assets acquired and liabilities assumed based on their estimated fair values on the transaction date. Purchase accounting was finalized during the year ended June 30, 2019. The impact of these acquisitions was not material to the consolidated financial statements. The Company recognized $0.2 million and $1.0 million during the quarter and nine months ended March 31, 2019, respectively, in acquisition-related costs included in selling, general and administrative expenses on the Condensed Consolidated Income Statements in connection with these acquisitions. RPM, Canpango and Intelisys Global are included in the Worldwide Communications & Services segment.

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Fair Value of Financial Instruments

9 Months Ended

Mar. 31, 2020

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 forward foreign currency exchange contracts, interest rate swap agreements and contingent consideration owed to the previous owners of 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 at March 31, 2020:

	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	$	23,553	$	23,553	$	—	$	—
Forward foreign currency exchange contracts	209		—		209		—
Total assets at fair value	$	23,762	$	23,553	$	209	$	—
Liabilities:
Deferred compensation plan investments, current and non-current portion	$	23,553	$	23,553	$	—	$	—
Forward foreign currency exchange contracts	130		—		130		—
Interest rate swap agreement	8,922		—		8,922		—
Liability for contingent consideration	45,660		—		—		45,660
Total liabilities at fair value	$	78,265	$	23,553	$	9,052	$	45,660

The following table summarizes the valuation of the Company’s remaining assets and liabilities measured at fair value on a recurring basis at June 30, 2019:

	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	$	25,787	$	25,787	$	—	$	—
Forward foreign currency exchange contracts	165		—		165		—
Total assets at fair value	$	25,952	$	25,787	$	165	$	—
Liabilities:
Deferred compensation plan investments, current and non-current portion	$	25,787	$	25,787	$	—	$	—
Forward foreign currency exchange contracts	168		—		168		—
Interest rate swap agreement	3,504		—		3,504		—
Liability for contingent consideration	77,925		—		—		77,925
Total liabilities at fair value	$	107,384	$	25,787	$	3,672	$	77,925

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 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). Fair values of interest rate swaps are measured using standard valuation models with inputs that can be derived from observable market transactions, including LIBOR spot and forward rates (Level 2). Foreign currency contracts and interest rate swap agreements are classified in the Condensed Consolidated Balance Sheets as prepaid expenses and other non-current assets or accrued expenses and other long-term liabilities, depending on the respective instruments' favorable or unfavorable positions. See Note 8 - Derivatives and Hedging Activities.

The Company recorded contingent consideration liabilities at the acquisition date of 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 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 (loss) income through the changes in foreign currency translation adjustments line item as seen in Note 4 - Accumulated Other Comprehensive Loss.

Network1 and Intelisys are part of the Company's Worldwide Communications & Services segment. The final earnout payment due to former shareholders of Network1 was paid during fiscal year ended June 30, 2019. The table below provides a summary of the changes in fair value of the Company's contingent considerations for the Intelisys earnout, which is measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the quarter and nine months ended March 31, 2020.

	Quarter ended March 31, 2020		Nine months ended March 31, 2020
	Worldwide Communications & Services Segment
	(in thousands)
Fair value at beginning of period	$	45,043	$	77,925
Payments	—		(38,531		)
Change in fair value of contingent consideration	617		6,266
Fair value at end of period	$	45,660	$	45,660

The table below provides a summary of the changes in fair value of the Company’s contingent considerations (Level 3) for the Network1 and Intelisys earnouts for the quarter and nine months ended March 31, 2019.

	Quarter ended March 31, 2019			Nine months ended March 31, 2019
	Worldwide Communications & Services Segment
	(in thousands)
Fair value at beginning of period	$	71,886		$	108,233
Payments	(2,736		)	(45,796		)
Change in fair value of contingent consideration	5,101			11,535
Foreign currency translation adjustment	8			287
Fair value at end of period	$	74,259		$	74,259

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. In accordance with ASC 805, the Company will revalue the contingent consideration liability 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 liability 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 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 liability related to Intelisys at March 31, 2020 and June 30, 2019 were as follows.

Reporting Period	Valuation Technique	Significant Unobservable Inputs	Weighted Average Rates(a)
March 31, 2020	Discounted cash flow	Weighted average cost of capital	12.3	%
		Adjusted EBITDA growth rate	24.9	%
June 30, 2019	Discounted cash flow	Weighted average cost of capital	14.2	%
		Adjusted EBITDA growth rate	21.5	%

^(a) Weighted average rates identified for each significant unobservable input relate to the valuation of the Intelisys contingent consideration.

Intelisys

The fair value of the liability for the contingent consideration related to Intelisys recognized at March 31, 2020 was $45.7 million, all of which is classified as current. The expense from the change in fair value of the contingent consideration recognized in the Condensed Consolidated Income Statement totaled $0.6 million and $6.3 million for the quarter and nine months ended March 31, 2020, respectively. The change in fair value for the quarter is primarily driven by the recurring amortization of the unrecognized fair value discount and a reduction in the discount rate, partially offset by lower than expected actual results. The change in fair value for the nine month period is primarily driven by the recurring amortization of the unrecognized fair value discount and better than expected actual results. Although there is no contractual limit, total future undiscounted contingent consideration payments are anticipated to range up to $48.1 million, based on the Company’s best estimate of the earnout calculated on a multiple of adjusted earnings.

The fair value of the liability for the contingent consideration related to Intelisys recognized at March 31, 2019 was $74.3 million, of which $39.4 million was classified as current. The expense from the change in fair value of the contingent consideration recognized in the Condensed Consolidated Income Statement totaled $2.6 million and $9.0 million for the quarter and nine months ended March 31, 2019, respectively. The change in fair value for the prior-year quarter is primarily driven by the recurring amortization of the unrecognized fair value discount. The change in fair value for the prior-year nine month period is primarily the result of recurring amortization of the unrecognized fair value discount as well as improved financial results.

Network1

The final earnout payments were paid to the former shareholders of Network1 during the fiscal year ended June 30, 2019. The change in fair value of the contingent consideration for the quarter and nine months ended March 31, 2019 recognized in the Condensed Consolidated Income Statements contributed a loss of $2.5 million for agreed upon adjustments in the final payments.

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Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018
Accumulated Other Comprehensive Income (Loss) [Line Items]
Stockholders' equity attributable to parent	$ 897,678	$ 911,063	$ 897,678	$ 911,063	$ 927,580	$ 905,751	$ 914,129	$ 899,504	$ 877,897	$ 866,376
Tax (expense) benefit	(740)	(193)	(1,174)	(187)
Foreign currency translation adjustment [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Stockholders' equity attributable to parent	(122,782)		(122,782)				(87,913)
Unrealized loss on hedged transaction, net of tax [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Stockholders' equity attributable to parent	(6,392)		(6,392)
Unrealized loss on hedged transaction, net of tax [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Stockholders' equity attributable to parent							(2,175)
Accumulated Other Comprehensive Loss [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Stockholders' equity attributable to parent	$ (129,174)	$ (90,192)	$ (129,174)	$ (90,192)	$ (96,340)	$ (105,798)	$ (90,088)	$ (88,045)	$ (88,793)	$ (84,177)

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Commitments and Contingencies (Tables)

9 Months Ended

Mar. 31, 2020

Commitments and Contingencies Disclosure [Abstract]

Schedule of Pre-acquisition Contingencies and Corresponding Indemnification Receivables

The table below summarizes the balances and line item presentation of Network1's pre-acquisition contingencies and corresponding indemnification receivables in the Company's Condensed Consolidated Balance Sheets at March 31, 2020 and June 30, 2019:

	March 31, 2020		June 30, 2019
	Network1
	(in thousands)
Assets
Prepaid expenses and other current assets	$	15	$	761
Other non-current assets	$	3,847	$	5,219
Liabilities
Accrued expenses and other current liabilities	$	15	$	761
Other long-term liabilities	$	3,847	$	5,219

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Short-Term Borrowings and Long-Term Debt (Schedule of Debt) (Details) - USD ($)	Mar. 31, 2020	Jun. 30, 2019	Apr. 30, 2019
Debt Instrument [Line Items]
Short-term borrowings	$ 143,000	$ 4,590,000
Current portion of long-term debt	6,901,000	4,085,000
Long-term debt	145,050,000	151,014,000
Borrowings under revolving credit facility	168,502,000	200,817,000
Total debt	320,596,000	360,506,000
Term Loan Facility [Member]
Debt Instrument [Line Items]
Long-term debt	140,625,000	146,250,000	$ 150,000,000
Multi-Currency Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Borrowings under revolving credit facility	168,502,000	200,817,000
Mississippi Revenue Bond [Member]
Debt Instrument [Line Items]
Long-term debt	$ 4,425,000	$ 4,764,000

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Fair Value of Financial Instruments (Tables)

9 Months Ended

Mar. 31, 2020

Fair Value Disclosures [Abstract]

Schedule 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 at March 31, 2020:

	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	$	23,553	$	23,553	$	—	$	—
Forward foreign currency exchange contracts	209		—		209		—
Total assets at fair value	$	23,762	$	23,553	$	209	$	—
Liabilities:
Deferred compensation plan investments, current and non-current portion	$	23,553	$	23,553	$	—	$	—
Forward foreign currency exchange contracts	130		—		130		—
Interest rate swap agreement	8,922		—		8,922		—
Liability for contingent consideration	45,660		—		—		45,660
Total liabilities at fair value	$	78,265	$	23,553	$	9,052	$	45,660

The following table summarizes the valuation of the Company’s remaining assets and liabilities measured at fair value on a recurring basis at June 30, 2019:

	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	$	25,787	$	25,787	$	—	$	—
Forward foreign currency exchange contracts	165		—		165		—
Total assets at fair value	$	25,952	$	25,787	$	165	$	—
Liabilities:
Deferred compensation plan investments, current and non-current portion	$	25,787	$	25,787	$	—	$	—
Forward foreign currency exchange contracts	168		—		168		—
Interest rate swap agreement	3,504		—		3,504		—
Liability for contingent consideration	77,925		—		—		77,925
Total liabilities at fair value	$	107,384	$	25,787	$	3,672	$	77,925

Schedule 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 liability related to Intelisys at March 31, 2020 and June 30, 2019 were as follows.

Reporting Period	Valuation Technique	Significant Unobservable Inputs	Weighted Average Rates(a)
March 31, 2020	Discounted cash flow	Weighted average cost of capital	12.3	%
		Adjusted EBITDA growth rate	24.9	%
June 30, 2019	Discounted cash flow	Weighted average cost of capital	14.2	%
		Adjusted EBITDA growth rate	21.5	%

^(a) Weighted average rates identified for each significant unobservable input relate to the valuation of the Intelisys contingent consideration.

The table below provides a summary of the changes in fair value of the Company's contingent considerations for the Intelisys earnout, which is measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the quarter and nine months ended March 31, 2020.

	Quarter ended March 31, 2020		Nine months ended March 31, 2020
	Worldwide Communications & Services Segment
	(in thousands)
Fair value at beginning of period	$	45,043	$	77,925
Payments	—		(38,531		)
Change in fair value of contingent consideration	617		6,266
Fair value at end of period	$	45,660	$	45,660

The table below provides a summary of the changes in fair value of the Company’s contingent considerations (Level 3) for the Network1 and Intelisys earnouts for the quarter and nine months ended March 31, 2019.

	Quarter ended March 31, 2019			Nine months ended March 31, 2019
	Worldwide Communications & Services Segment
	(in thousands)
Fair value at beginning of period	$	71,886		$	108,233
Payments	(2,736		)	(45,796		)
Change in fair value of contingent consideration	5,101			11,535
Foreign currency translation adjustment	8			287
Fair value at end of period	$	74,259		$	74,259

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Revenue Recognition

9 Months Ended

Mar. 31, 2020

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Revenue Recognition

The Company provides technology solutions and services from the world's leading suppliers of POS, payments, barcode, physical security, unified communications and collaboration, and telecom and cloud services. This includes hardware, related accessories and device configuration as well as software licenses, professional services and hardware support programs.

The Company adopted ASC 606, effective July 1, 2018 utilizing the full retrospective method. In determining the appropriate amount of revenue to recognize, the Company applies the following five-step model: (i) identify contracts with customers; (ii) identify performance obligations in the contracts; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations per the contracts; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company recognizes revenue as control of products and services are transferred to customers, which is generally at the point of shipment. The Company delivers products to customers in several ways, including: (i) shipment from the Company's warehouse, (ii) drop-shipment directly from the supplier, or (iii) electronic delivery for non-physical products.

Principal versus Agent Considerations

The Company is the principal for sales of all hardware, software and certain services, including self-branded warranty programs. The Company considers itself the principal in these transactions as it has control of the product or service before it is transferred to the customer. When the Company provides self-branded warranty programs, it engages a third party, generally the original equipment manufacturer, to cover the fulfillment of any obligations arising from these contracts. These revenues and associated third-party costs are amortized over the life of the contract on a straight-line basis. The Company recognizes the previously described revenue and cost of goods sold on a gross basis.

The Company is the agent for third-party service contracts, including product warranties and supplier-hosted software. These service contracts are sold separately from the products, and the Company often serves as the agent for the contract on behalf of the original equipment manufacturer. The Company's responsibility is to arrange for the provision of the specified service by the original equipment manufacturer, and the Company does not control the specified service before it is transferred to the customer. Because the Company acts as an agent, revenue is recognized net of cost at the time of sale.

Related to the Company’s Intelisys business, the Company acts as a master agent connecting independent sales partners with service providers or suppliers who offer telecom and cloud services to end-customers. Intelisys’ sales partners earn commission payments from those service providers or suppliers on end-customer sales. Intelisys provides commission processing services to sales partners, earning a percentage of the commission stream. Because the Company acts as an agent, revenue is recognized on a net basis.

Variable Considerations

For certain transactions, products are sold with a right of return and may also provide other rebates or incentives, which are accounted for as variable consideration. The Company estimates returns allowance based on historical experience and reduces revenue accordingly. The Company estimates the amount of variable consideration for rebates and incentives by using the expected value or the most likely amount to be given to the customer and reduces the revenue by those estimated amounts. These estimates are reviewed and updated as necessary at the end of each reporting period.

Contract Balances

The Company records contract assets and liabilities for payments received from customers in advance of services performed. These assets and liabilities are the result of the sales of the Company's self-branded warranty programs and other transactions where control has not yet passed to the customer. These amounts are immaterial to the consolidated financial statements for the periods presented.

Disaggregation of Revenue

The following tables represent the Company's disaggregation of revenue:

	Quarter ended March 31, 2020
			(in thousands)
	Worldwide Barcode, Networking & Security Segment		Worldwide Communications & Services Segment		Total
Revenue by product/service:
Technology solutions	$	583,642	$	273,120	$	856,762
Master agency and professional services(a)	—		15,721		15,721
	$	583,642	$	288,841	$	872,483
	Nine months ended March 31, 2020
			(in thousands)
	Worldwide Barcode, Networking & Security Segment		Worldwide Communications & Services Segment		Total
Revenue by product/service:
Technology solutions	$	1,967,670	$	836,883	$	2,804,553
Master agency and professional services(a)	—		46,259		46,259
	$	1,967,670	$	883,142	$	2,850,812
(a) Includes Intelisys Communications, Inc., Canpango and Intelisys Global Ltd.

	Quarter ended March 31, 2019
			(in thousands)
	Worldwide Barcode, Networking & Security Segment		Worldwide Communications & Services Segment		Total
Revenue by product/service:
Technology solutions	$	596,913	$	282,124	$	879,037
Master agency and professional services(a)	—		14,320		14,320
	$	596,913	$	296,444	$	893,357
	Nine months ended March 31, 2019
			(in thousands)
	Worldwide Barcode, Networking & Security Segment		Worldwide Communications & Services Segment		Total
Revenue by product/service:
Technology solutions	$	1,953,664	$	917,727	$	2,871,391
Master agency and professional services(a)	—		40,887		40,887
	$	1,953,664	$	958,614	$	2,912,278
(a) Includes Intelisys Communications, Inc., Canpango and Intelisys Global Ltd.

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Income Taxes

9 Months Ended

Mar. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income taxes for the quarter and nine months ended March 31, 2020 have been included in the accompanying condensed consolidated financial statements using an estimated annual effective tax rate. In addition to applying the estimated annual effective tax rate to pre-tax income, the Company also includes certain items treated as discrete events to arrive at an estimated overall tax provision. During the nine months ended March 31, 2020, the Company recognized a net discrete tax benefit of $0.2 million related to the reversal of an unrecognized tax benefit and a change in estimate of nondeductible expenses for a prior period.

The Company’s effective tax rate of 53.1% and 29.6% for the quarter and nine months ended March 31, 2020, respectively, differs from the current federal statutory rate of 21% primarily as a result of income derived from tax jurisdictions with varying income tax rates, nondeductible expenses and state income taxes. The effective tax rate for the quarter is significantly higher than effective tax rate for the nine month period primarily due to the impact of lowered forecasted earnings and changes in the geographical mix of income.

The Company has provided for U.S. income taxes for the current earnings of its Canadian subsidiary and will continue to distribute the earnings of its Canadian subsidiary. Earnings from Brazil will continue to be considered retained indefinitely for reinvestment and all other foreign geographies are immaterial. It has been the practice of the Company to reinvest those earnings in the businesses outside the United States. Apart from the one-time transition tax recognized in accordance with the U.S. government enacted Tax Cuts and Jobs Act (the “Tax Act”) during fiscal year 2018, any incremental deferred income taxes on the unremitted foreign earnings are not expected to be material.

The Tax Act created a provision known as global intangible low-tax income ("GILTI") that imposes a tax on certain earnings of foreign subsidiaries. The GILTI tax became effective for the Company during fiscal year 2019, and an accounting policy election was made to treat the tax as a current period expense.

The Company had approximately $1.0 million and $1.2 million of total gross unrecognized tax benefits at March 31, 2020 and June 30, 2019, respectively. Of this total at March 31, 2020, approximately $0.8 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 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 federal, state and local, or non-U.S. income tax examinations by tax authorities for the years before June 30, 2014.

The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense. At March 31, 2020 and June 30, 2019, the Company had approximately $1.1 million and $1.0 million, respectively, accrued for interest and penalties, respectively.

Financial results in Belgium produced a pre-tax loss of approximately $1.0 million and $0.8 million for the quarters ended March 31, 2020 and 2019. The valuation of Belgium's net deferred tax asset will depend on future profitability and potential future transactions. In the judgment of management, it is more likely than not that the deferred tax asset will be realized.

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Cover Page - shares	9 Months Ended
	Mar. 31, 2020	May 08, 2020
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2020
Document Transition Report	false
Entity File Number	000-26926
Entity Registrant Name	ScanSource, Inc.
Entity Incorporation, State or Country Code	SC
Entity Tax Identification Number	57-0965380
Entity Address, Address Line One	6 Logue Court
Entity Address, City or Town	Greenville
Entity Address, State or Province	SC
Entity Address, Postal Zip Code	29615
City Area Code	864
Local Phone Number	288-2432
Title of 12(b) Security	Common stock, no par value
Trading Symbol	SCSC
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		25,345,789
Entity Central Index Key	0000918965
Current Fiscal Year End Date	--06-30
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q3
Amendment Flag	false

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Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract]
Net income	$ 1,713	$ 11,715	$ 24,608	$ 46,019
Unrealized (loss) gain on hedged transaction, net of tax	(4,046)		(4,217)
Unrealized (loss) gain on hedged transaction, net of tax		(350)		(819)
Foreign currency translation adjustment	(28,788)	(1,797)	(34,869)	(5,196)
Comprehensive (loss) income	$ (31,121)	$ 9,568	$ (14,478)	$ 40,004

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Accumulated Other Comprehensive Loss (Tables)

9 Months Ended

Mar. 31, 2020

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

Schedule of Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive loss consists of the following: 

	March 31, 2020			June 30, 2019
	(in thousands)
Foreign currency translation adjustment	$	(122,782	)	$	(87,913	)
Unrealized loss on hedged transaction, net of tax	(6,392		)	(2,175		)
Accumulated other comprehensive loss	$	(129,174	)	$	(90,088	)

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,
	2020			2019			2020			2019
	(in thousands)
Tax (expense) benefit	$	(740	)	$	(193	)	$	(1,174	)	$	(187	)

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Fair Value of Financial Instruments (Schedule of Remaining Assets and Liabilities Measured at Fair Value on a Recurring Basis) (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Jun. 30, 2019
Assets
Deferred compensation plan investments, current and non-current portion	$ 23,553	$ 25,787
Total assets at fair value	23,762	25,952
Liabilities
Deferred compensation plan investments, current and non-current portion	23,553	25,787
Liability for contingent consideration	45,660	77,925
Total liabilities at fair value	78,265	107,384
Quoted prices in active markets (Level 1) [Member]
Assets
Deferred compensation plan investments, current and non-current portion	23,553	25,787
Total assets at fair value	23,553	25,787
Liabilities
Deferred compensation plan investments, current and non-current portion	23,553	25,787
Liability for contingent consideration	0	0
Total liabilities at fair value	23,553	25,787
Significant other observable inputs (Level 2) [Member]
Assets
Deferred compensation plan investments, current and non-current portion	0	0
Total assets at fair value	209	165
Liabilities
Deferred compensation plan investments, current and non-current portion	0	0
Liability for contingent consideration	0	0
Total liabilities at fair value	9,052	3,672
Significant unobservable inputs (Level 3) [Member]
Assets
Deferred compensation plan investments, current and non-current portion	0	0
Total assets at fair value	0	0
Liabilities
Deferred compensation plan investments, current and non-current portion	0	0
Liability for contingent consideration	45,660	77,925
Total liabilities at fair value	45,660	77,925
Foreign Exchange Contract [Member]
Assets
Derivative assets	209	165
Liabilities
Derivative liability	130	168
Foreign Exchange Contract [Member] | Quoted prices in active markets (Level 1) [Member]
Assets
Derivative assets	0	0
Liabilities
Derivative liability	0	0
Foreign Exchange Contract [Member] | Significant other observable inputs (Level 2) [Member]
Assets
Derivative assets	209	165
Liabilities
Derivative liability	130	168
Foreign Exchange Contract [Member] | Significant unobservable inputs (Level 3) [Member]
Assets
Derivative assets	0	0
Liabilities
Derivative liability	0	0
Interest Rate Swap [Member]
Liabilities
Derivative liability	8,922	3,504
Interest Rate Swap [Member] | Quoted prices in active markets (Level 1) [Member]
Liabilities
Derivative liability	0	0
Interest Rate Swap [Member] | Significant other observable inputs (Level 2) [Member]
Liabilities
Derivative liability	8,922	3,504
Interest Rate Swap [Member] | Significant unobservable inputs (Level 3) [Member]
Liabilities
Derivative liability	$ 0	$ 0

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Derivatives and Hedging Activities (Narrative) (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2020	Jun. 30, 2019	Apr. 30, 2019
Foreign Exchange Contract [Member]
Derivative [Line Items]
Derivative, notional amount		$ 94,800,000	$ 110,700,000
Interest Rate Swap [Member]
Derivative [Line Items]
Derivative, notional amount				$ 100,000,000.0
Ineffective portion of cash flow hedge	$ 0
Interest Rate Swap, Maturing April 30, 2024 [Member]
Derivative [Line Items]
Derivative, notional amount				50,000,000.0
Interest Rate Swap, Maturing April 30, 2026 [Member]
Derivative [Line Items]
Derivative, notional amount				$ 50,000,000.0

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Segment Information (Narrative) (Details)	9 Months Ended
	Mar. 31, 2020 segment
Segment Reporting, Measurement Disclosures [Abstract]
Number of reportable segments	2