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TheStreet Open House

ScanSource Reports Fourth Quarter And Full Year Results

About ScanSource, Inc.

ScanSource, Inc. (NASDAQ:SCSC) is the 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, data and converged communications equipment; and ScanSource Security in North America offers physical security solutions. Founded in 1992, the company ranks #760 on the Fortune 1000. For more information, call the toll-free sales telephone number at 800.944.2432 or visit www.scansourceinc.com.

Scan Source, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands)
   
June 30, 2012 June 30, 2011*
Assets
Current assets:
Cash and cash equivalents $ 29,173 $ 28,747
Accounts receivable, less allowance of 470,808 462,102
$27,349 at June 30, 2012
$26,562 at June 30, 2011
Inventories 475,479 467,350
Prepaid expenses and other assets 41,846 35,421
Deferred income taxes 14,624   15,894
Total current assets 1,031,930 1,009,514
Property and equipment, net 48,785 36,819
Goodwill 53,885 59,090
Other assets, including identifiable intangible assets 67,206   76,765
Total assets $ 1,201,806   $ 1,182,188
Liabilities and Shareholders' Equity
Current liabilities:
Short-term borrowings $ 4,268 $ 3,164
Current portion of contingent consideration 4,976 2,398
Accounts payable 419,683 406,453
Accrued expenses and other liabilities 67,776 60,157
Income taxes payable 1,698   5,175
Total current liabilities 498,401 477,347
Long-term debt 5,429 30,429
Borrowings under revolving credit facility 26,513
Long-term portion of contingent consideration 11,677 21,396
Other long-term liabilities 33,988   39,109
Total liabilities 549,495   594,794
Shareholders' equity:
Common stock 139,557 123,608
Retained earnings 534,445 460,157
Accumulated other comprehensive income (loss) (21,691 ) 3,629
Total shareholders' equity 652,311   587,394
Total liabilities and shareholders' equity $ 1,201,806   $ 1,182,188
* Derived from audited financial statements at June 30, 2011.
Scan Source, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands)
       
Quarter ended

June 30,

Year ended

June 30,

2012 2011* 2012 2011*
Net sales $ 754,470 $ 734,891 $ 3,015,296 $ 2,666,531
Cost of goods sold 680,643   660,520   2,713,272   2,392,224  
Gross profit 73,827   74,371   302,024   274,307  
Operating expenses:
Selling, general and administrative expenses 46,634 45,256 188,388 161,326
Change in fair value of contingent consideration (1,123 ) (128 ) 120   (128 )
Operating income 28,316 29,243 113,516 113,109
Other expense (income):
Interest expense 150 541 1,639 1,723
Interest income (653 ) (294 ) (2,886 ) (1,212 )
Other, net 188   220   3,552   712  
Income before income taxes 28,631 28,776 111,211 111,886
Provision for income taxes 8,846   9,115   36,923   38,363  
Net income $ 19,785   $ 19,661   $ 74,288   $ 73,523  
Per share data:
Net income per common share, basic $ 0.72   $ 0.73   $ 2.72   $ 2.74  
Weighted-average shares outstanding, basic 27,579   27,056   27,362   26,872  
Net income per common share, diluted $ 0.71   $ 0.71   $ 2.68   $ 2.70  
Weighted-average shares outstanding, diluted 27,886   27,515   27,751   27,246  
* Derived from audited financial statements at June 30, 2011
ScanSource, Inc. and Subsidiaries
Supplementary Information (Unaudited)
(in thousands)
             
Net Sales by Geographic Segment: Quarter ended June 30,
2012   2011 % Change
North American (U.S. and Canada) $ 570,219 $ 543,422 4.9 %
International 184,251   191,469   (3.8 )%
Consolidated $ 754,470   $ 734,891   2.7 %
 
Year ended June 30,
2012 2011 % Change
North American (U.S. and Canada) $ 2,236,459 $ 2,022,668 10.6 %
International 778,837   643,863   21.0 %
Consolidated $ 3,015,296   $ 2,666,531   13.1 %
 
Non-GAAP Financial Information: Quarter ended June 30,
2012 2011
Return on invested capital (ROIC), annualized (a) 18.2 % 19.9 %
 

Reconciliation of EBITDA to Net Income

Net income - GAAP $ 19,785 $ 19,661
Plus: Income taxes 8,846 9,115
Plus: Interest expense 150 541
Plus: Depreciation and amortization 2,328   2,312  
EBITDA (numerator for ROIC) $ 31,109   $ 31,629  
 

Invested Capital Calculation

Equity - beginning of quarter $ 642,450 $ 562,071
Equity - end of quarter 652,311   587,394  
Average equity 647,381 574,733
Average funded debt (b) 41,324   61,310  
Invested capital (denominator for ROIC) $ 688,705   $ 636,043  
 
Year ended June 30,
2012 2011

Return on invested capital (ROIC) (a)

17.2 % 20.6 %
 

Reconciliation of EBITDA to Net Income

Net income - GAAP $ 74,288 $ 73,523
Plus: Income taxes 36,923 38,363
Plus: Interest expense 1,639 1,723
Plus: Depreciation and amortization 9,922   6,662  
EBITDA (numerator for ROIC) $ 122,772   $ 120,271  
 

Invested Capital Calculation

Equity - beginning of year $ 587,394 $ 486,851
Equity - end of year 652,311   587,394  
Average equity 619,853 537,123
Average funded debt (b) 92,125   46,186  
Invested capital (denominator for ROIC) $ 711,978   $ 583,309  
Notes:
(a) Calculated as net income plus income taxes, interest expense, depreciation and amortization (EBITDA), annualized and divided by invested capital for the period

(b) Daily average interest-bearing debt





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