EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

FOR IMMEDIATE RELEASE

 

Contact: Richard P. Cleys
     VP and CFO
     ScanSource, Inc.
     (864) 286-4358

 

 

 

SCANSOURCE REPORTS THIRD QUARTER RESULTS

* Third quarter sales increase 4% to $514.4 million

 

GREENVILLE, SC—April 24, 2008—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 third quarter ended March 31, 2008.

 

    QE 3/31/08 capsule:     
   

Net sales

  $514.4 million     
   

Net income

  $11.0 million     
   

Diluted EPS

  $0.42 per share     

“We were disappointed with our results for the quarter primarily due to a significant drop in our Catalyst Telecom communications business. In addition, our international segment’s revenue grew at a slower rate than expected and our gross profit margins dropped considerably,” said Mike Baur, CEO of ScanSource, Inc. “However, our North America barcoding and point-of-sale business, ScanSource Security, and ScanSource Communications had good sales growth and market share gains in the March quarter.”

 


ScanSource Reports Third Quarter Results

 

For the quarter ended March 31, 2008, net sales increased 4% to $514.4 million compared to $492.7 million for the quarter ended March 31, 2007. Quarterly operating income increased 10% to $19.0 million from $17.2 million for the comparable quarter in 2007. Our effective tax rate for the quarter was 38.8% compared to 34.6% for the prior year. Net income increased 10% to $11.0 million for the quarter ended March 31, 2008 versus $10.1 million for the quarter ended March 31, 2007. Diluted earnings per share increased 11% to $0.42 per share compared to $0.38 in the prior year quarter.

The comparable prior year quarter and fiscal year-to-date periods were impacted by expenditures related to our Special Committee’s review of the Company’s stock option grant practices and related matters. Such expenses were immaterial in the current quarter which coincides with the completion of the United States Securities and Exchange Commission’s investigation of the Company’s historical stock option grant practices, as previously announced in a press release dated January 24, 2008. When adjusted to exclude legal and accounting costs of third party providers relating to this review for the comparable period, net income was $11.0 million for the quarter ended March 31, 2008 versus $12.0 million for the quarter ended March 31, 2007, a decrease of 8%, and diluted earnings per share decreased 9% to $0.42 per share compared to $0.46 per share in the prior year quarter. Supplemental schedules have been included to show this reconciliation for the quarter and year-to-date periods ended March 31, 2008 and 2007.

Forecast for Next Quarter

The Company announced its revenue forecast for the fourth quarter of fiscal 2008. ScanSource expects net revenues for the June 2008 quarter could range from $540 million to $560 million.

 

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ScanSource Reports Third Quarter Results

 

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 annual report on Form 10-K for the year ended June 30, 2007 filed with the Securities and Exchange Commission.

About ScanSource

ScanSource, Inc. {NASDAQ:SCSC} is a leading international distributor of specialty technology products. The Company markets specialty technologies through four sales units: ScanSource POS and Barcoding [automatic identification and data capture (AIDC) and point-of-sale (POS) products]; Catalyst Telecom (Avaya communications products); ScanSource Communications (video conferencing, telephony and communications products); and ScanSource Security (electronic security products).

ScanSource, Inc. serves the North America, Latin America and Europe markets. Founded in 1992, the company ranks #901 on the Fortune 1000. For more information, call the toll-free sales telephone number at 800.944.2432 or visit www.scansourceinc.com.

 

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ScanSource Reports Third Quarter Results

 

SCANSOURCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

 

     March 31,
2008
(unaudited)
   June 30,
2007 *

Assets

     

Current Assets

     

Cash and cash equivalents

   $ 5,973    $ 1,864

Trade & notes receivable, net

     337,662      349,961

Other receivables

     10,371      6,755

Inventories

     296,883      272,012

Prepaid expenses and other assets

     4,886      10,444

Deferred income taxes

     12,519      12,102
             

Total current assets

     668,294      653,138

Property and equipment, net

     22,633      26,781

Goodwill

     29,909      29,361

Other assets, including identifiable intangible assets

     30,820      29,168
             

Total assets

   $ 751,656    $ 738,448
             

Liabilities and Shareholders’ Equity

     

Current Liabilities

     

Current portion of long-term debt

   $ —      $ 200

Short-term borrowings

     1,266      3,490

Trade accounts payable

     222,151      256,883

Accrued expenses and other liabilities

     42,775      39,610
             

Total current liabilities

     266,192      300,183

Long-term debt

     28,888      17,216

Borrowings under revolving credit facility

     69,499      90,314

Other long-term liabilities

     8,102      5,475
             

Total liabilities

     372,681      413,188
             

Minority interest

     —        516

Shareholders’ Equity

     

Common stock

     94,273      83,653

Retained earnings

     275,667      234,502

Accumulated other comprehensive income

     9,035      6,589
             

Total shareholders’ equity

     378,975      324,744
             

Total liabilities and shareholders’ equity

   $ 751,656    $ 738,448
             

 

* Derived from audited financial statements at June 30, 2007.

 

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ScanSource Reports Third Quarter Results

 

SCANSOURCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED INCOME STATEMENTS (UNAUDITED)

(In thousands, except per share data)

 

     Quarter ended
March 31,
    Nine months ended
March 31,
 
     2008     2007     2008     2007  

Net sales

   $ 514,420     $ 492,678     $ 1,621,455     $ 1,462,642  

Cost of goods sold

     462,701       441,641       1,452,435       1,306,990  
                                

Gross profit

     51,719       51,037       169,020       155,652  
                                

Selling, general and administrative expenses

     32,723       33,795       99,238       101,014  
                                

Operating income

     18,996       17,242       69,782       54,638  

Other expense (income):

        

Interest expense

     1,097       1,939       4,496       5,464  

Interest income

     (401 )     (246 )     (1,108 )     (529 )

Other expense (income)

     286       141       (118 )     (420 )
                                

Other expense, net

     982       1,834       3,270       4,515  
                                

Income before income taxes and minority interest

     18,014       15,408       66,512       50,123  

Provision for income taxes

     6,986       5,326       25,347       18,743  
                                

Income before minority interest

     11,028       10,082       41,165       31,380  

Minority interest in income of consolidated subsidiaries, net of income taxes

     —         11       —         57  
                                

Net income

   $ 11,028     $ 10,071     $ 41,165     $ 31,323  
                                

Per share data:

        

Net income per common share, basic

   $ 0.42     $ 0.39     $ 1.59     $ 1.22  
                                

Weighted-average shares outstanding, basic

     26,038       25,770       25,934       25,749  
                                

Net income per common share, assuming dilution

   $ 0.42     $ 0.38     $ 1.56     $ 1.19  
                                

Weighted-average shares outstanding, assuming dilution

     26,423       26,194       26,325       26,213  
                                

 

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ScanSource Reports Third Quarter Results

 

SCANSOURCE, INC. AND SUBSIDIARIES

RECONCILIATION OF NON GAAP INCOME (UNAUDITED)

(In thousands, except per share data)

 

     Quarter ended March 31, 2008     Quarter ended March 31, 2007  
     GAAP     Special
Committee
Costs
   Non-GAAP     GAAP     Special
Committee
Costs
    Non-GAAP  

Net sales

   $ 514,420     $ —      $ 514,420     $ 492,678     $ —       $ 492,678  

Cost of goods sold

     462,701       —        462,701       441,641       —         441,641  
                                               

Gross profit

     51,719       —        51,719       51,037       —         51,037  
                                               

Selling, general and administrative expenses

     32,723       —        32,723       33,795       (2,972 )     30,823  
                                               

Operating income

     18,996       —        18,996       17,242       2,972       20,214  

Other expense (income):

             

Interest expense

     1,097       —        1,097       1,939       —         1,939  

Interest income

     (401 )     —        (401 )     (246 )     —         (246 )

Other expense

     286       —        286       141       —         141  
                                               

Other expense, net

     982       —        982       1,834       —         1,834  
                                               

Income before income taxes and minority interest

     18,014       —        18,014       15,408       2,972       18,380  

Provision for income taxes

     6,986       —        6,986       5,326       1,028       6,354  
                                               

Income before minority interest

     11,028       —        11,028       10,082       1,944       12,026  

Minority interest in income of consolidated subsidiaries, net of income taxes

     —         —        —         11       —         11  
                                               

Net income

   $ 11,028     $ —      $ 11,028     $ 10,071     $ 1,944     $ 12,015  
                                               

Per share data:

             

Net income per common share, basic

   $ 0.42     $ —      $ 0.42     $ 0.39     $ 0.08     $ 0.47  
                                               

Weighted-average shares outstanding, basic

     26,038          26,038       25,770         25,770  
                                     

Net income per common share, assuming dilution

   $ 0.42     $ —      $ 0.42     $ 0.38     $ 0.08     $ 0.46  
                                               

Weighted-average shares outstanding, assuming dilution

     26,423          26,423       26,194         26,194  
                                     

To provide the reader more comparable information regarding the Company’s 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 and related matters, in the quarterly periods 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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ScanSource Reports Third Quarter Results

 

SCANSOURCE, INC. AND SUBSIDIARIES

RECONCILIATION OF NON GAAP INCOME (UNAUDITED)

(In thousands, except per share data)

 

     Nine months ended March 31, 2008     Nine months ended March 31, 2007  
     GAAP     Special
Committee
Costs
    Non-GAAP     GAAP     Special
Committee
Costs
    Non-GAAP  

Net sales

   $ 1,621,455     $ —       $ 1,621,455     $ 1,462,642     $ —       $ 1,462,642  

Cost of goods sold

     1,452,435       —         1,452,435       1,306,990       —         1,306,990  
                                                

Gross profit

     169,020       —         169,020       155,652       —         155,652  
                                                

Selling, general and administrative expenses

     99,238       (1,011 )     98,227       101,014       (7,872 )     93,142  
                                                

Operating income

     69,782       1,011       70,793       54,638       7,872       62,510  

Other expense (income):

            

Interest expense

     4,496       —         4,496       5,464       —         5,464  

Interest income

     (1,108 )     —         (1,108 )     (529 )     —         (529 )

Other (income)

     (118 )     —         (118 )     (420 )     —         (420 )
                                                

Other expense, net

     3,270       —         3,270       4,515       —         4,515  
                                                

Income before income taxes and minority interest

     66,512       1,011       67,523       50,123       7,872       57,995  

Provision for income taxes

     25,347       385       25,732       18,743       2,944       21,687  
                                                

Income before minority interest

     41,165       626       41,791       31,380       4,928       36,308  

Minority interest in income of consolidated subsidiaries, net of income taxes

     —         —         —         57       —         57  
                                                

Net income

   $ 41,165     $ 626     $ 41,791     $ 31,323     $ 4,928     $ 36,251  
                                                

Per share data:

            

Net income per common share, basic

   $ 1.59     $ 0.02     $ 1.61     $ 1.22     $ 0.19     $ 1.41  
                                                

Weighted-average shares outstanding, basic

     25,934         25,934       25,749         25,749  
                                    

Net income per common share, assuming dilution

   $ 1.56     $ 0.03     $ 1.59     $ 1.19     $ 0.19     $ 1.38  
                                                

Weighted-average shares outstanding, assuming dilution

     26,325         26,325       26,213         26,213  
                                    

To provide the reader more comparable information regarding the Company’s year-to-date operating results, the above schedule shows the impact on earnings had the Company not incurred the additional external costs related to the Special Committee and related matters, in the year-to-date periods 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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