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 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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