SCSC ScanSource Inc

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 financial results for its fourth quarter and fiscal year ended June 30, 2005. For the quarter ended June 30, 2005, net sales increased 14% to $381.2 million compared to $333.1 million for the quarter ended June 30, 2004. Quarterly operating income increased 2% to $15.9 million from $15.6 million for the comparable quarter in 2004. Net income increased 4% to $9.4 million for the quarter ended June 30, 2005 versus $9.0 million for the quarter ended June 30, 2004. Diluted earnings per share increased 6% to $0.73 per share, compared to $0.69 in the prior year quarter. "We were very pleased with our sales results, led by a record quarter for our international segment," said Mike Baur, President and CEO of ScanSource. "Steady communications and AIDC sales across all product categories helped the North America unit offset weaker market conditions in retail, including point-of-sale." For the fiscal year ended June 30, 2005, net sales increased 23% to $1.469 billion compared to $1.192 billion for the year ended June 30, 2004. Fiscal year operating income increased 19% to $58.7 million from $49.3 million for the comparable period in 2004. Net income increased 19% to $35.7 million for the year ended June 30, 2005 versus $30.0 million for the year ended June 30, 2004. Diluted earnings per share increased 19% to $2.75 per share, compared to $2.31 in the prior year. Adoption of Stock Option Expensing Standard The Company will begin expensing stock options in the first quarter of fiscal 2006, in accordance with Statement of Financial Accounting Standards No. 123(R), Share-Based Payment. The Company estimates that this will result in additional expense of approximately $.03 per share for the first quarter of fiscal 2006. Forecast for Next Quarter The Company announced its financial forecast for the first quarter of fiscal 2006. ScanSource expects net revenues for the September 2005 quarter could range from $360 million to $385 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 such a difference, see the Company's annual report on Form 10K filed with the Securities and Exchange Commission. About ScanSource ScanSource, Inc. is a leading international distributor of specialty technology products, including automatic identification and data capture (AIDC) and point-of-sale (POS) products through its ScanSource sales unit; Avaya voice, data and converged communications products through its Catalyst Telecom sales unit; communications products from Intel and NEC through its Paracon sales unit; and electronic security products through its ScanSource Security Distribution unit. The Company serves the North America marketplace and has an international segment which sells AIDC and POS products in Latin America and Europe. Founded in 1992, the Company markets products from more than 100 technology manufacturers to over 16,000 value-added technology resellers and is committed to empowering them with tools and services designed to help them grow. For more information, call the toll-free sales telephone number at 800.944.2432 or visit www.scansource.com. -0- *T SCANSOURCE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) June 30, 2005 June 30, (unaudited) 2004(a) ----------- --------- Assets Current Assets -------------- Cash and cash equivalents $ 8,609 $ 1,047 Trade & notes receivable, net 215,190 175,417 Other receivables 5,479 3,919 Inventories 178,917 182,868 Prepaid expenses and other assets 3,546 1,670 Deferred income taxes 10,227 8,440 -------- -------- Total current assets 421,968 373,361 Property and equipment, net 23,299 23,663 Goodwill 12,915 9,978 Other assets, including identifiable intangible assets 8,888 6,190 -------- -------- Total assets $467,070 $413,192 ======== ======== Liabilities and Shareholders' Equity Current Liabilities ------------------- Current portion of long-term debt $ 564 $ 854 Short-term borrowings 4,478 - Trade accounts payable 173,255 167,053 Accrued expenses and other liabilities 22,133 17,358 -------- -------- Total current liabilities 200,430 185,265 Deferred income taxes 1,008 1,058 Long-term debt 6,045 6,584 Borrowings under revolving credit facility 31,269 32,569 Other long-term liabilities 1,341 - -------- -------- Total liabilities 240,093 225,476 -------- -------- Minority interest 1,092 1,072 Shareholders' Equity -------------------- Common stock 65,381 61,856 Retained earnings 157,020 121,288 Accumulated other comprehensive income 3,484 3,500 -------- -------- Total shareholders' equity 225,885 186,644 -------- -------- Total liabilities and shareholders' equity $467,070 $413,192 ======== ======== (a) Derived from audited financial statements at June 30, 2004. *T -0- *T SCANSOURCE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED INCOME STATEMENTS (UNAUDITED) (In thousands, except per share data) Quarter ended Year ended June 30, June 30, 2005 2004 2005 2004 --------- -------- ---------- ---------- Net sales $381,195 $333,076 $1,469,094 $1,192,090 Cost of goods sold 341,787 296,014 1,319,368 1,060,310 -------- -------- ---------- ---------- Gross profit 39,408 37,062 149,726 131,780 -------- -------- ---------- ---------- Selling, general & administrative expenses 23,462 21,492 90,977 82,524 -------- -------- ---------- ---------- Operating income 15,946 15,570 58,749 49,256 Other expense (income): Interest expense 683 303 2,127 1,159 Interest income (173) (171) (863) (558) Other expense (income) (14) 127 (466) (164) -------- -------- ---------- ---------- Other expense (income), net 496 259 798 437 -------- -------- ---------- ---------- Income before income taxes and minority interest 15,450 15,311 57,951 48,819 Provision for income taxes 5,956 6,264 21,928 18,700 -------- -------- ---------- ---------- Income before minority interest 9,494 9,047 36,023 30,119 -------- -------- ---------- ---------- Minority interest in income of consolidated subsidiaries, net of income taxes 100 33 291 137 -------- -------- ---------- ---------- Net income $ 9,394 $ 9,014 $ 35,732 $ 29,982 ======== ======== ========== ========== Per share data: Net income per common share, basic $ 0.74 $ 0.72 $ 2.83 $ 2.40 ======== ======== ========== ========== Weighted-average shares outstanding, basic 12,664 12,561 12,627 12,485 ======== ======== ========== ========== Net income per common share, assuming dilution $ 0.73 $ 0.69 $ 2.75 $ 2.31 ======== ======== ========== ========== Weighted-average shares outstanding, assuming dilution 12,943 12,997 13,009 12,952 ======== ======== ========== ========== *T