SCSC ScanSource Inc

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 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.

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.

  ScanSource, Inc. and SubsidiariesCondensed 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.   ScanSource, Inc. and SubsidiariesCondensed Consolidated Income Statements (Unaudited)(in thousands, except per share information)         Quarter endedDecember 31, Six months endedDecember 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