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)        January 28, 2010

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 January 28, 2010, ScanSource, Inc. issued a press release announcing its financial results for the second quarter and six months ended December 31, 2009. 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 January 28, 2010. 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: January 28, 2010	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 SECOND QUARTER RESULTS

Quarterly revenues grew 15% over prior year

GREENVILLE, SC — January 28, 2010—ScanSource, Inc. (NASDAQ:SCSC), a leading international distributor of AIDC (automatic identification and data capture), point of sale, communications, and physical security products for the reseller market, today announced complete financial results for its second quarter ended December 31, 2009.

Quarter ended December 31, 2009:

Net sales	$	548 million
Net income	$	11.8 million
Diluted EPS	$	0.44 per share

“We are very pleased with our sales results for the December quarter” said Mike Baur, CEO, ScanSource, Inc. “The quarter’s highlights included record sales results in our International business and ScanSource Security and a return to strong revenue growth across all product categories. The results for the quarter also include one month’s business from our newly acquired communications unit in Germany, formerly known as Algol Europe.”

For the quarter ended December 31, 2009, net sales increased 14.9% to $548 million compared to $477 million for the quarter ended December 31, 2008. Quarterly operating income decreased by 1.4% to $18.1 million from $18.4 million in the quarter ended December 31, 2008. Operating margin

ScanSource Reports Second Quarter Results

decreased to 3.31% when compared to 3.86% in the quarter ended December 31, 2008. The decrease in operating income margin is largely attributable to higher bad debt expense recognized during the current quarter. The increase in expense is reflected in our allowance for doubtful accounts and is in response to a specific customer account exposure. Net income decreased 12.6% to $11.8 million for the quarter ended December 31, 2009 versus $13.5 million for the quarter ended December 31, 2008. It should be noted that the quarter ended December 31, 2008 includes a $3.5 million recovery ($2.2 million after tax, or $0.08 per diluted share) related to the settlement of a legal claim against a former service provider. This settlement was recorded in Other Income in the accompanying condensed income statement. The effective tax rate for the quarter was 35.7%, compared to 34.8% for the quarter ended December 31, 2008. Diluted earnings per share decreased 13.7% to $0.44 in the current quarter compared to $0.51 in the prior year.

Outlook for Next Quarter

The Company announced its net revenue outlook for the third quarter of fiscal 2010. ScanSource expects net revenues for the March 2010 quarter could range from $535 million to $555 million.

Safe Harbor Statement

This press release contains “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, including, but not limited to macroeconomic circumstances that could impact our business, such as currency fluctuations, continued adverse capital and credit market conditions and a prolonged economic downturn. 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, 2009 filed with the Securities and Exchange Commission.

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ScanSource Reports Second Quarter Results

About ScanSource, Inc.

ScanSource, Inc. (NASDAQ: SCSC) is a leading international distributor of specialty technology products for resellers in North America, Latin America and Europe. ScanSource POS & Barcoding delivers AIDC and POS solutions; Catalyst Telecom and ScanSource Communications provide voice, video and converged communications equipment; and ScanSource Security offers physical security solutions. Founded in 1992, the company ranks #854 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 Second Quarter Results

ScanSource, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands)

	December 31, 2009		June 30, 2009*
Assets
Current assets:
Cash and cash equivalents	$	38,000	$	127,664
Trade & notes receivable		359,795		291,037
Other receivables		8,239		7,676
Inventories		308,996		216,829
Prepaid expenses and other assets		11,218		10,356
Deferred income taxes		8,747		8,735
Total current assets		734,995		662,297
Property and equipment, net		20,531		21,035
Goodwill		33,737		34,087
Other assets, including identifiable intangible assets		35,615		31,212
Total assets	$	824,878	$	748,631
Liabilities and Shareholders’ Equity
Current liabilities:
Current portion of long-term debt	$	—	$	—
Trade accounts payable		276,301		228,408
Accrued expenses and other liabilities		32,043		30,443
Income taxes payable		4,261		3,799
Total current liabilities		312,605		262,650
Deferred income taxes		—		—
Long-term debt		30,429		30,429
Borrowings under revolving credit facility		—		—
Other long-term liabilities		12,072		10,106
Total liabilities		355,106		303,185
Shareholder’s equity:
Common stock		107,327		104,461
Retained earnings		360,572		337,822
Accumulated other comprehensive income		1,873		3,163
Total shareholders’ equity		469,772		445,446
Total liabilities and shareholders’ equity	$	824,878	$	748,631

* Derived from audited financial statements at June 30, 2009.

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ScanSource Reports Second Quarter Results

ScanSource, Inc. and Subsidiaries

Condensed Consolidated Income Statements (Unaudited)

(in thousands, except per share information)

	Quarter ended December 31,						Six months ended December 31,
	2009			2008			2009			2008
Net sales	$	548,112		$	477,093		$	1,036,535		$	1,016,918
Cost of goods sold		491,816			424,765			928,821			909,088
Gross profit		56,296			52,328			107,714			107,830
Operating expenses:
Selling, general and administrative expenses		38,167			33,934			71,898			68,808
Operating income		18,129			18,394			35,816			39,022
Other expense (income):
Interest expense		364			623			730			1,202
Interest income		(422	)		(424	)		(685	)		(775	)
Other, net		(174	)		(2,559	)		(58	)		(2,283	)
Other expense (income)		(232	)		(2,360	)		(13	)		(1,856	)
Income before income taxes		18,361			20,754			35,829			40,878
Provision for income taxes		6,546			7,229			13,079			14,923
Net income	$	11,815		$	13,525		$	22,750		$	25,955
Per share data:
Net income per common share, basic	$	0.44		$	0.51		$	0.86		$	0.99
Weighted-average shares outstanding, basic		26,575			26,411			26,571			26,244
Net income per common share, diluted	$	0.44		$	0.51		$	0.85		$	0.98
Weighted-average shares outstanding, diluted		26,798			26,540			26,811			26,422

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