8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported) August 23, 2007

ScanSource, Inc.

(Exact Name of Registrant as Specified in Its Charter)

South Carolina	000-26926	57-0965380
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification Number)

6 Logue Court, Greenville, South Carolina 29615

(Address, Including Zip Code, of Principal Executive Offices)

(864) 288-2432

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

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

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

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

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

Item 2.02. Results of Operations and Financial Condition

On August 23, 2007, ScanSource, Inc. issued a press release announcing its financial results for the fourth quarter and fiscal year ended June 30, 2007. A copy of the press release is attached as Exhibit 99.1 hereto and incorporated herein by reference and also made available through the Company’s website at www.scansource.com.

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

Item 9.01. Financial Statements and Exhibits

(c) Exhibits

99.1 – Press release issued by ScanSource, Inc. on August 23, 2007. The information contained in the attached exhibit is unaudited and should be read in conjunction with the Registrant’s annual and quarterly reports filed with the Securities and Exchange Commission.

SIGNATURES

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

	ScanSource, Inc.
Date: August 23, 2007	By:	/s/ Richard P. Cleys
	Name:	Richard P. Cleys
	Its:	Vice President and Chief Financial Officer

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

Contact:     Richard P. Cleys

 VP and CFO

 ScanSource, Inc.

 864 286-4358

SCANSOURCE REPORTS RECORD FOURTH QUARTER

AND YEAR END SALES RESULTS

* Fourth quarter sales increase 14% to $524.3 million;

Fiscal year 2007 sales increase 19% to $1.99 billion

GREENVILLE, SC — August 23, 2007—ScanSource, Inc. (Nasdaq:SCSC), a leading international distributor of AIDC (automatic identification and data capture), point of sale, communications and electronic security products for the reseller market, today announced complete financial results for its fourth quarter and fiscal year ended June 30, 2007.

QE 6/30/07 capsule:
Net sales	$	524.3 million
Net income	$	11.3 million
Diluted EPS	$	0.43 per share

“The fourth quarter record sales results were led by our AIDC/point of sale units in North America, Europe and Latin America,” said Mike Baur, CEO of ScanSource. “In addition, the ScanSource Security sales unit had excellent growth as the investments in training, education, and marketing are beginning to result in market share gains. Our T2 Supply sales unit finished its first year under ScanSource ownership and delivered another quarter of excellent results.”

ScanSource Reports Record Fourth Quarter and Year End Sales Results

For the quarter ended June 30, 2007, net sales increased 14% to $524.3 million compared to $461.1 million for the quarter ended June 30, 2006. Quarterly operating income increased 9% to $20.7 million from $18.9 million for the comparable quarter in 2006. Our effective tax rate for the fourth quarter of fiscal 2007 was 39% compared to 29% for the prior year. The fourth quarter fiscal 2006 tax rate was favorably impacted by foreign tax net operating loss benefits. Net income decreased 12% to $11.3 million for the quarter ended June 30, 2007 versus $12.9 million for the quarter ended June 30, 2006. Diluted earnings per share decreased 12% to $0.43 per share compared to $0.49 in the prior year quarter. When adjusted to exclude legal and accounting costs of third party providers relating to our Special Committee’s review of the Company’s stock option grant practices, net income for the June 2007 quarter decreased 2% versus the prior year quarter.

For the year ended June 30, 2007, net sales increased 19% to $1.99 billion compared to $1.67 billion for the prior year. Fiscal year operating income increased 19% to $75.3 million from $63.3 million for the prior year ended June 30, 2006. The effective tax rate for the year was 37.8% compared to 35.0% for the prior year. The tax rate for the fiscal 2006 year was favorably impacted by the fourth quarter recognition of foreign tax operating loss benefits. Net income increased 7% to $42.6 million compared to $39.8 million the prior year. Diluted earnings per share increased 7% to $1.63 compared to $1.53 in the prior year. When adjusted to exclude legal and accounting costs of third party providers relating to our Special Committee’s review of the Company’s stock option grant practices, net income for the year increased 22%.

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ScanSource Reports Record Fourth Quarter and Year End Sales Results

Forecast for Next Quarter

The Company announced its revenue forecast for the first quarter of fiscal 2008. ScanSource expects net revenues for the September 2007 quarter could range from $525 million to $545 million.

Safe Harbor Statement

This news release contains comments that are “forward looking” statements that involve risks and uncertainties; these statements are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. Any number of important factors could cause actual results to differ materially from anticipated results. For more information concerning factors that could cause actual results to differ from anticipated results, see the Company’s amended annual report on Form 10K/A for the year ended June 30, 2006 filed with, and the Company’s annual report on Form 10K for the year ended June 30, 2007 to be filed with, the Securities and Exchange Commission.

About ScanSource

ScanSource, Inc. is a leading international distributor of specialty technology products. The Company markets specialty technologies through five sales units: ScanSource [automatic identification and data capture (AIDC) and point-of-sale (POS) products]; Catalyst Telecom (Avaya communications products); Paracon (communications products); T2 Supply (video conferencing and telephone products); and ScanSource Security Distribution (electronic security products).

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ScanSource Reports Record Fourth Quarter and Year End Sales Results

The Company serves the North America marketplace and has an international segment, which sells AIDC and POS products in Latin America and Europe. Founded in 1992, the Company ranks #956 on the Fortune 1000. For more information, call the toll-free sales telephone number at 800.944.2432 or visit www.scansource.com.

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ScanSource Reports Record Fourth Quarter and Year End Sales Results

SCANSOURCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

	June 30, 2007 (unaudited)		June 30, 2006*
Assets
Current Assets
Cash and cash equivalents	$	1,864	$	3,831
Trade & notes receivable, net		349,961		300,240
Other receivables		6,755		4,558
Inventories		272,012		244,005
Prepaid expenses and other assets		10,444		2,293
Deferred income taxes		12,102		15,709
Total current assets		653,138		570,636
Property and equipment, net		26,781		27,098
Goodwill		29,361		14,404
Other assets, including identifiable intangible assets		29,168		5,359
Total assets	$	738,448	$	617,497
Liabilities and Shareholders’ Equity
Current Liabilities
Current portion of long-term debt	$	200	$	229
Short-term borrowings		3,490		—
Trade accounts payable		256,883		271,519
Accrued expenses and other liabilities		39,610		36,717
Total current liabilities		300,183		308,465
Long-term debt		17,216		4,398
Borrowings under revolving credit facility		90,314		27,558
Other long-term liabilities		5,475		2,757
Total liabilities		413,188		343,178
Minority interest		516		910
Shareholders’ Equity
Common stock		83,653		76,915
Retained earnings		234,502		191,876
Accumulated other comprehensive income		6,589		4,618
Total shareholders’ equity		324,744		273,409
Total liabilities and shareholders’ equity	$	738,448	$	617,497

* Derived from audited financial statements at June 30, 2006.

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ScanSource Reports Record Fourth Quarter and Year End Sales Results

SCANSOURCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED INCOME STATEMENTS (UNAUDITED)

(In thousands, except per share data)

	Quarter ended June 30,						Fiscal year ended June 30,
	2007			2006			2007			2006
Net sales	$	524,286		$	461,144		$	1,986,927		$	1,665,600
Cost of goods sold		469,266			416,215			1,776,255			1,497,248
Gross profit		55,020			44,929			210,672			168,352
Selling, general and administrative expenses		34,325			25,991			135,339			105,042
Operating income		20,695			18,938			75,333			63,310
Other expense (income):
Interest expense		2,226			589			7,689			2,187
Interest income		(356	)		(20	)		(885	)		(567	)
Other (income) expense		275			217			(144	)		57
Other expense (income), net		2,145			786			6,660			1,677
Income before income taxes and minority interest		18,550			18,152			68,673			61,633
Provision for income taxes		7,243			5,196			25,987			21,592
Income before minority interest		11,307			12,956			42,686			40,041
Minority interest in income of consolidated subsidiaries, net of income taxes		5			100			60			225
Net income	$	11,302		$	12,856		$	42,626		$	39,816
Per share data:
Net income per common share, basic	$	0.44		$	0.50		$	1.65		$	1.56
Weighted-average shares outstanding, basic		25,843			25,680			25,773			25,491
Net income per common share, assuming dilution	$	0.43		$	0.49		$	1.63		$	1.53
Weighted-average shares outstanding, assuming dilution		26,258			26,163			26,213			26,034

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ScanSource Reports Record Fourth Quarter and Year End Sales Results

SCANSOURCE, INC. AND SUBSIDIARIES

RECONCILIATION OF NON GAAP INCOME (UNAUDITED)

(In thousands, except per share data)

	Quarter ended June 30, 2007									Fiscal year ended June 30, 2007
	GAAP			Special Committee Costs			Non-GAAP			GAAP			Special Committee Costs			Non-GAAP
Net sales	$	524,286		$	—		$	524,286		$	1,986,927		$	—		$	1,986,927
Cost of goods sold		469,266			—			469,266			1,776,255			—			1,776,255
Gross profit		55,020			—			55,020			210,672			—			210,672
Selling, general and administrative expenses		34,325			(2,000	)		32,325			135,339			(9,900	)		125,439
Operating income		20,695			2,000			22,695			75,333			9,900			85,233
Other expense (income):
Interest expense		2,226			—			2,226			7,689			—			7,689
Interest income		(356	)		—			(356	)		(885	)		—			(885	)
Other (income) expense		275			—			275			(144	)		—			(144	)
Other expense (income), net		2,145			—			2,145			6,660			—			6,660
Income before income taxes and minority interest		18,550			2,000			20,550			68,673			9,900			78,573
Provision for income taxes		7,243			760			8,003			25,987			3,762			29,749
Income before minority interest		11,307			1,240			12,547			42,686			6,138			48,824
Minority interest in income of consolidated subsidiaries, net of income taxes		5			—			5			60			—			60
Net income	$	11,302		$	1,240		$	12,542		$	42,626		$	6,138		$	48,764
Increase (decrease) over prior year results		(12%)						(2%)			7%						22%
Per share data:
Net income per common share, basic	$	0.44		$	0.05		$	0.49		$	1.65		$	0.24		$	1.89
Weighted-average shares outstanding, basic		25,843						25,843			25,773						25,773
Net income per common share, assuming dilution	$	0.43		$	0.05		$	0.48		$	1.63		$	0.23		$	1.86
Weighted-average shares outstanding, assuming dilution		26,258						26,258			26,213						26,213

To provide the reader more comparable information regarding the Company’s annual and quarterly operating results, the above schedule shows the impact on earnings had the Company not incurred the additional external costs related to the Special Committee in the annual and quarterly period indicated. These amounts consist primarily of legal and accounting costs of third party providers. For internal operating measurements, these costs are charged to the Company’s corporate overhead and are not allocated to product lines.

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