-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KrM79u4CeysYIYTvbn123WdBQLWr61omfsGC1ul34Hfvcze7A/4Txa/4l7NZhm3Y 1xUFwG6tbUFOxZ1TPe2N0A== 0000931763-00-000259.txt : 20000214 0000931763-00-000259.hdr.sgml : 20000214 ACCESSION NUMBER: 0000931763-00-000259 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000211 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SCANSOURCE INC CENTRAL INDEX KEY: 0000918965 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-COMPUTER & PERIPHERAL EQUIPMENT & SOFTWARE [5045] IRS NUMBER: 570965380 STATE OF INCORPORATION: SC FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-26926 FILM NUMBER: 534783 BUSINESS ADDRESS: STREET 1: 6 LOGUE COURT STE G CITY: GREENVILLE STATE: SC ZIP: 29615 BUSINESS PHONE: 8032882432 MAIL ADDRESS: STREET 1: 6 LOGUE COURT STE G CITY: GREENVILLE STATE: SC ZIP: 29615 10-Q 1 FORM 10-Q Conformed Securities and Exchange Commission Washington, D.C. 20549 Form 10-Q (Mark One) {x} Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 for the Quarterly Period Ended December 31, 1999 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 1-12842 ScanSource, Inc. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) South Carolina 57-0965380 - ----------------------------------- -------------------------------------- (State or other jurisdiction (I.R.S. Employer Identification No.) of incorporated or organization) 6 Logue Court, Suite G Greenville, SC 29615 - ----------------------------------- -------------------------------------- (Address of principal executive (Zip Code) offices) (864) 288-2432 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Not Applicable - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- As of December 31, 1999, 5,530,611 shares of the registrant's common stock, no par value, were outstanding. SCANSOURCE, INC. INDEX FORM 10-Q December 31, 1999
PART I. FINANCIAL INFORMATION Page No. -------- Item 1. Consolidated Financial Statements (Unaudited)..................... 2 Condensed Consolidated Balance Sheets............................. 2 Condensed Consolidated Income Statements.......................... 4 Condensed Consolidated Statements of Cash Flows................... 5 Notes to Condensed Consolidated Financial Statements.............. 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............................ 8 Item 3. Quantitative and Qualitative Disclosures About Market Risk........................................................... 12 PART II. OTHER INFORMATION Item 1. Legal Proceedings................................................. 13 Item 2. Changes in Securities............................................. 13 Item 3. Defaults Upon Senior Securities................................... 13 Item 4. Submission of Matters to a Vote of Security-Holders............... 13 Item 5. Other Information................................................. 14 Item 6. Exhibits and Reports on Form 8-K.................................. 14 SIGNATURES........................................................................... 15
1 PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements SCANSOURCE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31, 1999 1999 ------ ------ (Note 1) (Note 1) (Unaudited) Assets (In thousands) ------ Current assets: Cash....................................................... $ 15,282 706 Receivables: Trade, less allowance for doubtful accounts of $5,002,000 at June 30, 1999 and $6,625,000 at December 31, 1999 ...................... 42,774 43,023 Other ..................................................... 2,443 2,584 -------- -------- 45,217 45,607 Inventories ............................................... 50,282 86,635 Prepaid expenses and other assets ......................... 464 548 Deferred income taxes ..................................... 5,197 7,914 -------- -------- Total current assets ................................. 116,442 141,410 Property and equipment, net ................................... 7,453 15,179 Intangible assets, net ........................................ 1,520 1,460 Other assets .................................................. 312 303 -------- -------- Total assets ......................................... $125,727 158,352 ======== ========
See notes to condensed consolidated financial statements. 2 SCANSOURCE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
June 30, December 31, Liabilities and Shareholders' Equity 1999 1999 ------------------------------------ ---- ----- (Note 1) (Note 1) (Unaudited) (In thousands) Current liabilities: Current portion of long-term debt............................. $ 24 24 Trade accounts payable ....................................... 59,728 62,965 Accrued compensation ......................................... 1,147 860 Accrued expenses and other liabilities ....................... 3,252 4,589 Income taxes payable ......................................... 1,131 1,070 ------- ------- Total current liabilities ................................ 65,282 69,508 Deferred income taxes ........................................ 70 96 Long-term debt ............................................... 1,673 1,662 Revolving line of credit ..................................... -- 22,168 ------- ------- Total liabilities ..................................... 67,025 93,434 Shareholders' equity: Preferred stock, no par value; 3,000,000 shares authorized, none issued and outstanding ................. -- -- Common stock, no par value; 10,000,000 shares authorized, 5,503,512 and 5,530,611 shares issued and outstanding at June 30, 1999 and December 31, 1999, respectively ......................... 40,161 40,771 Retained earnings ............................................ 18,541 24,147 ------- ------- Total shareholders' equity .............................. 58,702 64,918 ------- ------- Total liabilities and shareholders' equity............... $125,727 158,352 ======= =======
See notes to condensed consolidated financial statements. 3 SCANSOURCE, INC. CONDENSED CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
Quarter Ended Six Months Ended December 31, December 31, 1998 1999 1998 1999 ---- ---- ---- ---- (In thousands except per share data) Net sales .................................... $ 65,543 113,922 126,262 227,101 Cost of goods sold ........................... 57,931 100,707 111,664 202,866 -------- -------- -------- ------- Gross profit ............................ 7,612 13,215 14,598 24,235 Selling, general and administrative expenses ............................... 4,854 8,411 9,313 15,092 Amortization of intangibles .................. 34 34 67 67 -------- -------- -------- ------- Total operating expenses .................... 4,888 8,445 9,380 15,159 -------- -------- -------- ------- Operating income ....................... 2,724 4,770 5,218 9,076 Other income (expense): Interest income (expense), net ........ 18 (144) (22) (48) Other income, net ....................... -- 6 -- 14 -------- -------- -------- ------- Total other income (expense) ........ 18 (138) (22) (34) -------- -------- -------- ------- Income before income taxes ................... 2,742 4,632 5,196 9,042 Income taxes ..................... 1,015 1,760 1,923 3,436 -------- -------- -------- ------- Net income ................................... 1,727 2,872 3,273 5,606 ======== ======== ======== ======= Basic EPS Net income per share ................. $ .32 .52 .60 1.02 ======== ======== ======== ======= Weighted average shares outstanding .. 5,464 5,531 5,448 5,521 ======== ======== ======== ======= Diluted EPS Net income per share................... .31 .48 .58 .95 ======== ======== ======== ======= Weighted average shares outstanding.... 5,624 5,994 5,604 5,922 ======== ======== ======== =======
See notes to condensed consolidated financial statements. 4 SCANSOURCE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended December 31, 1998 1999 ---- ---- (In thousands) Cash flows from operating activities: Net income Adjustments to reconcile net income to cash $ 3,273 5,606 (used in) provided by operating activities: Depreciation 516 935 Amortization of intangible assets 67 67 Deferred taxes -- (2,691) Changes in operating assets and liabilities: Receivables (7,148) (249) Other receivables 225 (141) Inventories (13,820) (36,353) Prepaid expenses and other assets (38) (84) Accounts payable 23,614 3,237 Accrued compensation 419 (287) Accrued expenses and other liabilities 145 1,337 Income tax payable 90 (61) Other noncurrent assets (144) 2 -------- -------- Net cash provided by (used in) operating activities 7,199 (28,682) -------- -------- Cash flows from investing activities: Capital expenditures, net (811) (1,671) Purchase of building -- (6,990) -------- -------- Net cash used in investing activities (811) (8,661) -------- -------- Cash flows from financing activities: (Payments) borrowings on line of credit (4,861) 22,168 Net proceeds from option exercises 403 610 Payments on building loan (11) (11) -------- -------- Net cash (used in) provided by financing activities (4,469) 22,767 -------- -------- Increase (decrease) in cash 1,919 (14,576) Cash at beginning of period 88 15,282 -------- -------- Cash at end of period $ 2,007 706 ======== ========
See notes to condensed consolidated financial statements 5 SCANSOURCE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (1) Basis of Presentation The interim financial information included herein is unaudited. Certain information and footnote disclosures normally included in the consolidated financial statements have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (SEC), although the Company believes that the disclosures made are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the financial statements and related notes contained in the Company's annual report on Form 10-K for the period ended June 30, 1999. Other than as indicated herein, there have been no significant changes from the financial data published in that report. In the opinion of management, such unaudited information reflects all adjustments, consisting only of normal recurring accruals and other adjustments as disclosed herein, necessary for a fair presentation of the unaudited information. Results for interim periods are not necessarily indicative of results expected for the full year, or for any subsequent period. The condensed consolidated balance sheet for June 30, 1999 has been derived from the audited consolidated balance sheet for that date. (2) Significant Accounting Policies Revenue Recognition - The Company records revenue when products are shipped. Inventories - Inventories are stated at the lower of cost (first-in, first-out method) or market. Net Income Per Share - Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding. Diluted net income per share is computed by dividing net income by the weighted average number of common and potential common shares outstanding. Diluted weighted average common and potential common shares include common shares and stock options using the treasury stock method. Basic and diluted weighted average shares differed only by the effect of dilutive stock options. There were no differences between the net income used to calculate basic and diluted net income per share for the six months ended December 31, 1998 and 1999. (3) Line of Credit The Company has a line of credit agreement with a bank extending to October 31, 2001 with a borrowing limit of $35 million, based upon 80% of eligible accounts receivable and 40% of eligible inventory at the 30 day LIBOR rate of interest plus a rate varying from 1.50% to 2.00% tied to the Company's debt-to-net worth ratio ranging from .75:1 to 2:1. The revolving credit facility 6 is collateralized by accounts receivable and eligible inventory. The agreement contains certain financial covenants including minimum net worth and capital expenditure requirements and a maximum debt to tangible net worth ratio. The average interest rate during the quarter was 7.95% and the outstanding balance on the line of credit was $22.2 million on a loan base which exceeded $35 million, leaving $12.8 million available at December 31, 1999. The Company was in compliance with the various covenants at December 31, 1999. (4) Segment Information SFAS 131 requires the use of the management approach to determine segment information to be reported. The management approach is based on the way management organizes the enterprise to assess performance and make operating decisions regarding the allocation of resources. This statement also requires companies that have a single reportable segment to disclose information about products and services, geographic areas, and information about major customers. The Company operates as a single reportable segment as a specialty products distributor in North America, with Canadian operations that are immaterial. The Company ships its products from a single warehouse via UPS and FedEx to technology resellers, who in turn sell directly to end-users. The Company's products are specialty technology equipment items. The Company's 16,000 product offerings may be divided into primary categories: i) bar code and point of sale equipment and ii) business telephones and computer telephony integration devices. The Company sells to more than 10,000 resellers and integrators of technology products, who are geographically disbursed over North America in a pattern that mirrors population concentration. 7 PART I. FINANCIAL INFORMATION Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Net Sales. Net sales for the quarter ended December 31, 1999 increased 73.8% to $113.9 million from $65.5 million for the comparable prior year quarter. Net sales increased 79.9% to $227.1 million for the six months ended December 31, 1999 from $126.3 million for the comparable prior year period. Growth of net sales resulted primarily from additions to the Company's sales force, competitive product pricing, selective expansion of its product line, and increased marketing efforts to specialty technology resellers. Gross Profit. Gross profit for the quarter ended December 31, 1999 increased 73.6% to $13.2 million from $7.6 million for the comparable prior year quarter. Gross profit increased 66.0% to $24.2 million for the six months ended December 31, 1999 from $14.6 million for the comparable prior year period. Gross profit as a percentage of sales was 11.6% and 10.7%, respectively, for the quarter and six months ended December 31, 1999, compared to 11.6% for both of the comparable prior year periods. The decrease in gross profit as a percentage of sales is the result of a change in the mix of sales to more lower-margin products and the volume discounts provided to resellers on large orders. Operating Expenses. Operating expenses, which include selling, general and administrative expenses and amortization, for the quarter ended December 31, 1999 increased 72.8% to $8.4 million compared to $4.9 million for the comparable prior year period. Operating expenses for the six months ended December 31, 1999 increased 61.6% to $15.2 million from $9.4 million for the comparable prior year period. Operating expenses as a percentage of sales were 7.4% and 6.7% for the quarter and six months ended December 31, 1999, compared to 7.4% and 7.4%, respectively, for the comparable prior year periods. Generally, lower gross margin sales require the Company to provide fewer value-added services causing a corresponding decrease in operating expenses. The general and administrative portion of operating expenses also decreased as a percentage of sales due to efficiencies gained through increased sales volume. Operating Income. Operating income for the quarter ended December 31, 1999 increased 75.1% to $4.8 million from $2.7 million for the same period in 1998, driven by the improvement in gross profit as described above. Operating income increased 73.9% to $9.1 million for the six months ended December 31, 1999 from $5.2 million for the comparable prior year period. Operating income as a percentage of sales was 4.3% and 4.0%, respectively, for the quarter and six months ended December 31, 1999, compared to 4.2% and 4.1%, respectively, for the comparable prior year periods. Other Income (Expense). Total other income (expense) net consists of interest income (expense), net, and other income, net. Net interest expense for the quarter ended December 31, 1999 was $144,000 resulting primarily from interest expense on the line of credit and building loan of $180,000 offset by interest income of $36,000 from invested cash. Net interest income for the 8 quarter ended December 31, 1998 was $18,000 resulting primarily from interest from invested cash. Income Taxes. Tax expense was provided at an effective rate of 38% and 37%, respectively, for the periods ended December 31, 1999 and 1998, respectively, and represented the state and federal tax expected to be due after annualizing income to the fiscal year end. Net Income. Improved operating income caused net income to increase 66.3% to $2.9 million for the quarter ended December 31, 1999 from $1.7 million for the year-earlier quarter. Net income for the six months ended December 31, 1999 increased 71.3% to $5.6 million from $3.3 million for the comparable prior year period. Net income as a percentage of sales was 2.5% for both the quarter and six months ended December 31, 1999 compared to 2.6% for both of the comparable prior year periods. Liquidity and Capital Resources The Company's primary sources of liquidity are results of operations, borrowings under its revolving credit facility, and proceeds from the sales of securities. The Company has a line of credit agreement with a bank extending to October 31, 2001 with a borrowing limit to $35.0 million at an interest rate equal to the 30 day LIBOR rate plus a rate varying from 1.50% to 2.00% tied to the Company's debt-to-net worth ratio ranging from .75:1 to 2:1. The borrowing base available under the credit facility is limited to 80% of eligible accounts receivable and 40% of eligible inventory. The outstanding balance on the line of credit was $22.2 million on a borrowing base which exceeded $35 million, leaving $12.8 million available at December 31, 1999. On December 1999, the Company purchased a new Memphis distribution center for a purchase price of approximately $7 million of which $6.1 million was allocated to the building and $900,000 was allocated to land. The Company temporarily funded the purchase with borrowings from the line of credit while a traditional real estate loan is being negotiated. For the six months ended December 31, 1999 net cash of $28.7 million was used in operating activities compared to $7.2 million provided by operations for the six months ended December 31, 1998. Cash used in operations in 1999 was primarily from an increase in inventory partially offset by growth in trade payables. Cash provided by operations in 1998 was primarily from an increase in accounts payable which exceeded the amount needed to fund increases in receivables and inventory. Cash used in investing activities of over $8.7 million for the six months ended December 31, 1999 included $1.7 million for capital expenditures and $7.0 million for the land and building purchase. Cash used in investing activities of $811,000 for the six months ended December 31, 1998 was for capital expenditures. Cash provided by financing activities for the six months ended December 31, 1999 was $22.8 million, primarily from borrowings on the line of credit. Cash used in financing activities for the six months ended December 31, 1998 was $4.5 million, primarily from payments on the line of credit. The Company's current ratios at December 31, 1999 and at June 30, 1999 were 2.03 and 1.78, respectively. 9 Year 2000 Introduction. During the years leading up to the Year 2000 ("Y2K"), an important business issue relating to the Company arose over the concern that many computer systems, software and devices used either directly by the Company or indirectly by the Company's vendors and customers would fail to properly handle dates after 1999. This issue was caused by the practice of storing the year as the last two digits, and assuming the first two digits as "19" (i.e., the number "99" for the year "1999"). Systems, software and devices that do not adequately address Y2K could cause an interruption of services. The following outlines the Company's approach to the Y2K issue. State of Readiness. With the assistance of an outside consultant, the Company formed a Y2K Project Team to oversee the Company's Y2K readiness activities in the information technology (IT) and non-IT areas, assess Y2K risks in connection with third-party relationships and develop contingency plans. The Y2K Project Team conducted a review of the Company's computer systems, including its primary business software, and concluded that such computer systems and software were and are Y2K compliant. The absence of system failures or other Y2K problems in both IT and non-IT areas following January 1, 2000 is consistent with the conclusion of the Y2K Project Team. The Y2K Project Team has the involvement of members of senior management, who have kept the Board of Directors advised as to all developments and progress. IT Systems. Since early 1996, ScanSource, in support of its long-term plans, has significantly upgraded and continues to upgrade its IT and communication systems. These upgrades include: enterprise-wide application system, a Digital Alpha Server, personal computers (PCs), PC software (standardized on Windows NT, Windows 9x, Microsoft Office Suite and Lotus Notes), local area networks (LAN's), LAN software (Novell NetWare, Windows NT), wide area networks (WAN's) and network integration of advanced fax, printer, and copier systems. The Company tested its enterprise-wide application system and PC's for Y2K compliance and obtained certification from the manufacturers of the equipment and systems not included in the tests. As a result, ScanSource believes its IT and voice and data communication systems are Y2K compliant. Non-IT Systems. ScanSource assessed the Y2K readiness of non-IT systems such as intelligent office equipment used in a stand-alone mode including fax machines, copiers and printers by obtaining certification from manufacturers that these products would not be impacted by the Y2K date transition or would otherwise continue to operate on and after January 1, 2000, just as they did prior to such date. To date, the Company is not aware of the failure of any of these non-IT systems as a result of Y2K problems. Third Party Interface. The Company also surveyed and considered the readiness of significant vendors and resellers with respect to their progress in identifying and addressing Y2K issues. Substantially all vendors and resellers indicated to the Company an expectation to be Y2K compliant. Disruptions in the computer systems of the Company's vendors could impair the ability of the Company to obtain necessary products or provide services to its customers. Management has further addressed the issues of non-compliant and/or non-responding vendors in its contingency and inventory planning. To date, the Company is not aware of the failures of any significant vendors and resellers to properly address Y2K issues. Contingency Planning and Risks. The Y2K Project Team developed contingency plans to address disruptions in the Company's business functions as a result of Y2K issues and various other 10 potential business interruptions. The Company's contingency plan addresses alternative providers and processes to deal with business interruptions that may be caused by internal system or third party failure to be Y2K ready, to the extent it is possible. Nevertheless, evidence of IT and non-IT system performance in the systems of the Company and its significant vendors and resellers following January 1, 2000 indicates that most of its areas of exposure to system malfunctions associated with the year 2000 have been properly addressed. There can be no assurance that the Company's systems have avoided all Y2K problems, that its efforts have identified all such problems in its own computer systems or those of its vendors or resellers in advance of their occurrence, or that the Company will be able to successfully remedy any problems that may yet be discovered. The Company's operating results could be materially adversely affected if the Company were to be held responsible for the failure of any products sold by it to be Y2K ready, despite the Company's disclaimer of product warranties and the limitation of liability contained in sales terms and conditions. The Company continues to review potential or possible causes of loss and institute plans for the mitigation of the same. In addition, the purchasing patterns of existing and potential customers may still be affected by Y2K problems, which could cause fluctuations in the Company's sales volumes. Maintenance or modification costs have been and will continue to be expensed as incurred. Products. The Company has informed its active customers by mail and all customers by Internet web postings that it does not make any representations or warranties that the products it distributes are or will be Y2K ready or compliant. The Company has assisted its customers by making it easy for them to learn about product readiness directly from manufacturers by publicizing the manufacturer's web sites and telephone numbers. Costs of Project. Expenses of the Company's efforts to identify and address potential Y2K problems have not exceeded $100,000 (excluding costs of systems upgrades that would normally have been made on a similar timetable). However, the expenses or liabilities to which the Company may become subject as a result of any such problems that may arise could have a material adverse effect on the Company's business, financial condition and results of operations. 11 Item 3. Quantitative and Qualitative Disclosures About Market Risk The Company is exposed to changes in financial market conditions in the normal course of its business as a result of its selective use of bank debt as well as transacting in Canadian currency in connection with its Canadian operations. The Company is exposed to changes in interest rates primarily as a result of its borrowing activities, which includes a revolving credit facility with a bank used to maintain liquidity and fund the Company's business operations. The nature and amount of the Company's debt may vary as a result of future business requirements, market conditions and other factors. The definitive extent of the Company's interest rate risk is not quantifiable or predictable because of the variability of future interest rates and business financing requirements, but the Company does not believe such risk is material. The Company does not currently use derivative instruments to adjust the Company's interest rate risk profile. The table below presents principal amounts and related weighted average rates by year of maturity for the Company's debt obligations at December 31, 1999:
(In thousands) 2000 2001 2002 2003 Thereafter Total Fair Value ---- ---- ---- ---- ---------- ----- ---------- Long-term debt 15 26 29 31 1,587 1,687 1,920 Average interest rate (fixed) 9.19% 9.19% 9.19% 9.19% 9.19% 9.19% 9.19%
The Company is exposed to changes in foreign exchange rates in connection with its Canadian operations. It is the Company's policy to enter into foreign currency transactions only to the extent considered necessary to support its Canadian operations. The amount of the Company's cash deposits denominated in Canadian currency has not been, and is not expected to be, material. Furthermore, the Company has no capital expenditure or other purchase commitments denominated in foreign currency. The Company does not utilize forward exchange contracts, currency options or other traditional hedging vehicles to adjust the Company's foreign exchange rate risk profile. The Company does not enter into foreign currency transactions for speculative purposes. The Company does not utilize financial instruments for trading or other speculative purposes, nor does it utilize leveraged financial instruments. On the basis of the fair value of the Company's market sensitive instruments at December 31, 1999, the Company does not consider the potential near-term losses in future earnings, fair values and cash flows from reasonable possible near-term changes in interest rates and exchange rates to be material. 12 PART II. OTHER INFORMATION Item 1. Legal Proceedings. Not applicable Item 2. Changes in Securities. Not applicable Item 3. Defaults Upon Senior Securities. Not applicable Item 4. Submission of Matters to a Vote of Security-Holders. (a) The Company's annual meeting of shareholders was held on December 2, 1999. (b) The four directors listed in subsection (c) below were elected at the meeting. The Company has no other directors whose term of office continued after the meeting. (c) (i) Election of Directors Number of Shares ---------------- Nominees For Withheld -------- --- -------- Michael L. Baur 4,519,940 123,291 Steven H. Owings 4,518,940 124,291 Steven R. Fischer 4,518,940 124,291 James G. Foody 4,520,640 122,591 (ii) Proposal to ratify the amendment to the Company's 1997 Stock Incentive Plan Number of Shares ---------------- For 1,697,357 Against 1,653,323 Abstain 13,762 Not voted 1,278,789 (iii) Proposal to ratify the adoption of the September 30, 1999 Non-Employee Director Stock Option Plan. Number of Shares ---------------- For 3,137,994 Against 211,706 Abstain 14,742 Not voted 1,278,789 13 (iv) Proposal to ratify the appointment of KPMG LLP as the Company's independent auditors for the fiscal year ending June 30, 2000. Number of Shares ---------------- For 4,640,170 Against 1,650 Abstain 1,411 Item 5. Other information. Not applicable. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits Exhibit 27 - Financial Data Schedule (b) Reports on Form 8-K None 14 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 Chief Executive Officer /s/ Jeffery A. Bryson ---------------------------------- JEFFERY A. BRYSON Chief Financial Officer Date: February 11, 2000 15 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BALANCE SHEET & INCOME STATEMENT FOR PERIOD ENDED 12/31/99. 1,000 6-MOS JUN-30-2000 JUL-01-1999 DEC-31-1999 706 0 49,648 6,625 86,635 141,410 18,766 3,587 158,352 69,508 0 0 0 40,771 0 158,352 227,101 227,101 202,866 15,159 67 0 0 9,042 3,436 5,606 0 0 0 5,606 1.02 .95
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