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 21, 2008

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 21, 2008, ScanSource, Inc. issued a press release announcing its financial results for the fourth quarter and fiscal year ended June 30, 2008. 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.scansourceinc.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 21, 2008. 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 21, 2008	By:	/s/ Richard P. Cleys
	Name: Its:	Richard P. Cleys 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 FOURTH QUARTER AND YEAR END RESULTS

* Fourth quarter sales increase 6% to $554.0 million;

Fiscal year 2008 sales increase 9% to $2.18 billion

GREENVILLE, SC — August 21, 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 fourth quarter and fiscal year ended June 30, 2008.

QE 6/30/08 capsule:
Net sales	$554.0 million
Net income	$14.5 million
Diluted EPS	$0.54 per share

“We were very pleased with our record results, especially after a challenging March quarter,” said Mike Baur, CEO, ScanSource, Inc. “In North America we achieved very good results in the AIDC/POS, ScanSource Communications and ScanSource Security sales units. Our International segment also delivered good results after resolving a key vendor issue from last quarter.”

For the quarter ended June 30, 2008, net sales increased 6% to $554.0 million compared to $524.3 million for the quarter ended June 30, 2007. Quarterly operating income increased 17% to

ScanSource Reports Fourth Quarter and Year End Results

$24.2 million from $20.7 million for the comparable quarter in 2007. The effective tax rate was 39% for the quarters ended June 30, 2008 and 2007, respectively. Net income increased 28% to $14.5 million for the quarter ended June 30, 2008 versus $11.3 million for the quarter ended June 30, 2007. Diluted earnings per share increased 26% to $0.54 per share compared to $0.43 in the prior year quarter.

For the year ended June 30, 2008, net sales increased 9% to $2.18 billion compared to $1.99 billion for the prior year. Fiscal year operating income increased 25% to $94.0 million from $75.3 million for the prior year ended June 30, 2007. The effective tax rate for the year was 38.3% compared to 37.8% for the prior year. Net income increased 31% to $55.6 million compared to $42.6 million the prior year. Diluted earnings per share increased 29% to $2.10 compared to $1.63 in the prior year.

The comparable prior year quarter and fiscal year-to-date periods were impacted by expenditures related to the Company’s Special Committee review of its stock option grant practices and related matters. There were no such expenses in the current quarter, and when adjusted to exclude legal and accounting costs of third party providers relating to this review for the comparable period, net income was $14.5 million for the quarter ended June 30, 2008 versus on a non-GAAP basis $12.5 million for the quarter ended June 30, 2007, an increase of 16%. Excluding such costs for the comparable fiscal year-end periods, non-GAAP net income was $56.3 million for the fiscal year ended June 30, 2008 versus $48.8 million for the same prior year period, an increase of 15%. Diluted earnings per share increased 13% to $0.54 per share for the quarter ended June 30, 2008 compared to a non-GAAP $0.48 per share in the prior year quarter. Compared on a fiscal year-over-year basis, non-GAAP diluted earnings per share increased 15% to $2.13 per share for the fiscal year ended June 30, 2008 versus $1.86 for the same period in the prior year. Supplemental schedules have been included to show this reconciliation for the quarter and fiscal year periods ended June 30, 2008 and 2007, respectively.

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ScanSource Reports Fourth Quarter and Year End Results

Forecast for Next Quarter

The Company announced its revenue forecast for the first quarter of fiscal 2009. ScanSource expects net revenues for the September 2008 quarter could range from $530 million to $550 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 annual report on Form 10-K for the year ended June 30, 2007 filed with, and the Company’s annual report on Form 10-K for the year ended June 30, 2008 to be filed with, the Securities and Exchange Commission.

About ScanSource

ScanSource, Inc. {NASDAQ:SCSC} is a leading international distributor of specialty technology products, consisting of seven sales units in North America, Latin America and Europe.

ScanSource POS and Barcoding in North America, Latin America and Europe delivers AIDC and POS solutions; Catalyst Telecom in the U.S. and ScanSource Communications in North America and Europe, provide voice, video and converged communications equipment; and ScanSource Security in North America offers electronic security solutions. 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 Fourth Quarter and Year End Results

SCANSOURCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

	June 30, 2008		June 30,
	(unaudited)		2007 *
Assets
Current Assets
Cash and cash equivalents	$	15,224	$	1,864
Trade & notes receivable, net		360,154		349,961
Other receivables		8,052		6,755
Inventories		280,077		272,012
Prepaid expenses and other assets		5,556		10,444
Deferred income taxes		11,428		12,102
Total current assets		680,491		653,138
Property and equipment, net		22,420		26,781
Goodwill		36,121		29,361
Other assets, including identifiable intangible assets		33,174		29,168
Total assets	$	772,206	$	738,448
Liabilities and Shareholders’ Equity
Current Liabilities
Current portion of long-term debt	$	—	$	200
Short-term borrowings		7,649		3,490
Trade accounts payable		265,284		256,883
Accrued expenses and other liabilities		38,922		39,610
Total current liabilities		311,855		300,183
Long-term debt		29,576		17,216
Borrowings under revolving credit facility		27,047		90,314
Other long-term liabilities		7,975		5,475
Total liabilities		376,453		413,188
Minority interest		—		516
Shareholders’ Equity
Common stock		96,097		83,653
Retained earnings		290,134		234,502
Accumulated other comprehensive income		9,522		6,589
Total shareholders’ equity		395,753		324,744
Total liabilities and shareholders’ equity	$	772,206	$	738,448

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

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ScanSource Reports Fourth Quarter and Year End 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,
	2008			2007			2008			2007
Net sales	$	554,030		$	524,286		$	2,175,485		$	1,986,927
Cost of goods sold		495,432			469,266			1,947,867			1,776,255
Gross profit		58,598			55,020			227,618			210,672
Selling, general and administrative expenses		34,415			34,325			133,653			135,339
Operating income		24,183			20,695			93,965			75,333
Other expense (income):
Interest expense		974			2,226			5,471			7,689
Interest income		(404	)		(356	)		(1,512	)		(885	)
Other expense (income)		(93	)		275			(212	)		(144	)
Other expense, net		477			2,145			3,747			6,660
Income before income taxes and minority interest		23,706			18,550			90,218			68,673
Provision for income taxes		9,239			7,243			34,586			25,987
Income before minority interest		14,467			11,307			55,632			42,686
Minority interest in income of consolidated subsidiaries, net of income taxes		—			5			—			60
Net income	$	14,467		$	11,302		$	55,632		$	42,626
Per share data:
Net income per common share, basic	$	0.55		$	0.44		$	2.13		$	1.65
Weighted-average shares outstanding, basic		26,307			25,843			26,098			25,773
Net income per common share, assuming dilution	$	0.54		$	0.43		$	2.10		$	1.63
Weighted-average shares outstanding, assuming dilution		26,549			26,258			26,445			26,213

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ScanSource Reports Fourth Quarter and Year End Results

SCANSOURCE, INC. AND SUBSIDIARIES

RECONCILIATION OF NON GAAP INCOME (UNAUDITED)

(In thousands, except per share data)

	Quarter ended June 30, 2008								Quarter ended June 30, 2007
	GAAP			Special Committee Costs		Non-GAAP			GAAP			Special Committee Costs			Non-GAAP
Net sales	$	554,030		$	—	$	554,030		$	524,286		$	—		$	524,286
Cost of goods sold		495,432			—		495,432			469,266			—			469,266
Gross profit		58,598			—		58,598			55,020			—			55,020
Selling, general and administrative expenses		34,415			—		34,415			34,325			(2,000	)		32,325
Operating income		24,183			—		24,183			20,695			2,000			22,695
Other expense (income):
Interest expense		974			—		974			2,226			—			2,226
Interest income		(404	)		—		(404	)		(356	)		—			(356	)
Other expense		(93	)		—		(93	)		275			—			275
Other expense, net		477			—		477			2,145			—			2,145
Income before income taxes and minority interest		23,706			—		23,706			18,550			2,000			20,550
Provision for income taxes		9,239			—		9,239			7,243			760			8,003
Income before minority interest		14,467			—		14,467			11,307			1,240			12,547
Minority interest in income of consolidated subsidiaries, net of income taxes		—			—		—			5			—			5
Net income	$	14,467		$	—	$	14,467		$	11,302		$	1,240		$	12,542
Per share data:
Net income per common share, basic	$	0.55		$	—	$	0.55		$	0.44		$	0.05		$	0.49
Weighted-average shares outstanding, basic		26,307					26,307			25,843						25,843
Net income per common share, assuming dilution	$	0.54		$	—	$	0.54		$	0.43		$	0.05		$	0.48
Weighted-average shares outstanding, assuming dilution		26,549					26,549			26,258						26,258

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 Fourth Quarter and Year End Results

SCANSOURCE, INC. AND SUBSIDIARIES

RECONCILIATION OF NON GAAP INCOME (UNAUDITED)

(In thousands, except per share data)

	Fiscal year ended June 30, 2008									Fiscal year ended June 30, 2007
	GAAP			Special Committee Costs			Non-GAAP			GAAP			Special Committee Costs			Non-GAAP
Net sales	$	2,175,485		$	—		$	2,175,485		$	1,986,927		$	—		$	1,986,927
Cost of goods sold		1,947,867			—			1,947,867			1,776,255			—			1,776,255
Gross profit		227,618			—			227,618			210,672			—			210,672
Selling, general and administrative expenses		133,653			(1,011	)		132,642			135,339			(9,900	)		125,439
Operating income		93,965			1,011			94,976			75,333			9,900			85,233
Other expense (income):
Interest expense		5,471			—			5,471			7,689			—			7,689
Interest income		(1,512	)		—			(1,512	)		(885	)		—			(885	)
Other (income)		(212	)		—			(212	)		(144	)		—			(144	)
Other expense, net		3,747			—			3,747			6,660			—			6,660
Income before income taxes and minority interest		90,218			1,011			91,229			68,673			9,900			78,573
Provision for income taxes		34,586			385			34,971			25,987			3,762			29,749
Income before minority interest		55,632			626			56,258			42,686			6,138			48,824
Minority interest in income of consolidated subsidiaries, net of income taxes		—			—			—			60			—			60
Net income	$	55,632		$	626		$	56,258		$	42,626		$	6,138		$	48,764
Per share data:
Net income per common share, basic	$	2.13		$	0.03		$	2.16		$	1.65		$	0.24		$	1.89
Weighted-average shares outstanding, basic		26,098						26,098			25,773						25,773
Net income per common share, assuming dilution	$	2.10		$	0.03		$	2.13		$	1.63		$	0.23		$	1.86
Weighted-average shares outstanding, assuming dilution		26,445						26,445			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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