2014-Q4 Form 8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 21, 2014

(Exact name of registrant as specified in its charter)

Commission File Number: 000-26926



SC	00-26926	57-0965380
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

6 Logue Court, Greenville, SC 29615

(Address of principal executive offices, including zip code)

(Registrant’s telephone number, including area code)

(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:



¨	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 August 21, 2014, ScanSource, Inc. issued a press release announcing its financial results for its fourth quarter and year ended June 30, 2014. A copy of the press release and accompanying presentation slides are attached as Exhibit 99.1 and 99.2 hereto and incorporated herein by reference and also made available through the Company’s website at www.scansource.com.

The information in this Item 2.02 Current Report on Form 8-K, including the exhibits, 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 8.01 Other Events

On August 14, 2014, the Board of Directors (the “Board”) of the Company authorized the repurchase of outstanding shares of the Company’s common stock, no par value per share, at any time and from time to time for a total aggregate cost to the Company not to exceed $120 million over three years. The Board authorized purchases through a trading plan adopted under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), open market purchases or private transactions, in accordance with the applicable federal securities laws, including Rule 10b-18 of the Exchange Act.

The share repurchase authorization does not obligate the Company to purchase any particular amount of common stock, and it may be suspended at any time at the Company's discretion. The Company intends to use cash on hand and cash generated from its operations to fund share repurchases.

Item 9.01. Financial Statements and Exhibits

99.1 – Press release issued by ScanSource, Inc. on August 21, 2014. 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.

99.2 – Presentation slides for the financial results conference call issued on August 21, 2014. 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.

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: August 21, 2014	By:	/s/ Charles A. Mathis
	Name:	Charles A. Mathis
	Its:	Executive Vice President and Chief Financial Officer

FOR IMMEDIATE RELEASE



Contact:
Charles A. Mathis		Mary M. Gentry
Executive Vice President and Chief Financial Officer	- or -	Treasurer and Director, Investor Relations
ScanSource, Inc.		ScanSource, Inc.
(864) 286-4975		(864) 286-4892

SCANSOURCE REPORTS FOURTH QUARTER AND ANNUAL RESULTS

Strong Finish to Fiscal Year 2014

GREENVILLE, SC -- August 21, 2014 -- ScanSource, Inc. (NASDAQ:SCSC), the leading international value-added distributor of specialty technology products, today announced financial results for the fourth quarter and full fiscal year ended June 30, 2014.



Quarter ended June 30, 2014:			Year ended June 30, 2014:
Net sales	$758.1	million	Net sales	$2.9	billion
GAAP net income	$27.1	million	GAAP net income	$81.8	million
Adjusted net income⁽¹⁾	$17.3	million	Adjusted net income⁽¹⁾	$72.0	million
GAAP diluted EPS	$0.94	per share	GAAP diluted EPS	$2.86	per share
Adjusted diluted EPS⁽¹⁾	$0.60	per share	Adjusted diluted EPS⁽¹⁾	$2.52	per share

⁽¹⁾ A reconciliation of non-GAAP financial information to GAAP financial information is presented in the following Supplementary Information table.

"We had a strong finish to fiscal year 2014 with sales and EPS above our expectations," said Mike Baur, CEO, ScanSource, Inc. "Our employees worldwide delivered excellent operating results for both of our business segments for the year."

For the quarter ended June 30, 2014, net sales increased 6.4% to $758.1 million, compared with $712.7 million for the prior year quarter. The translation impact of foreign currencies had minimal impact on the increase in net sales.

Operating income for the quarter ended June 30, 2014 included a pre-tax legal recovery relating to our previously disclosed ERP litigation, net of attorney fees, of $15.5 million. For the quarter ended June 30, 2013, the results included pre-tax, non-cash impairment charges of $28.2 million related to our former Microsoft Dynamics AX ERP software project and $20.6 million of goodwill impairment. Adjusted operating income decreased 12.1% to $24.9 million for the quarter ended June 30, 2014 from $28.4 million for the prior year quarter. Adjusted net income for the quarter ended June 30, 2014 decreased to $17.3 million, or $0.60 per diluted share, compared with adjusted net income of $19.9 million, or $0.71 per diluted share, for the prior year quarter.

On a GAAP basis, net income for the quarter ended June 30, 2014 totaled $27.1 million, or $0.94 per diluted share, compared with a net loss of $13.3 million, or $0.48 per diluted share, for the prior year quarter.

For the year ended June 30, 2014, net sales increased 1.3% to $2.9 billion. Adjusted operating income increased 4.3% to $106.3 million for the year ended June 30, 2014 from $101.9 million for the prior year. Adjusted net income for the year ended June 30, 2014 increased to $72.0 million, or $2.52 per diluted share, compared with adjusted net income of $69.3 million, or $2.47 per diluted share, for the prior year.

On a GAAP basis, net income for the year ended June 30, 2014 totaled $81.8 million, or $2.86 per diluted share, compared with net income of $34.7 million, or $1.24 per diluted share, for the prior year.

Share Repurchase Authorization

The Company also announced a $120 million authorization by its Board of Directors to repurchase shares of the Company’s common stock over three years. Repurchases may be made in the open market or through privately negotiated transactions, subject to market and business conditions, legal requirements, and other factors. ScanSource may enter into Rule 10b5-1 plans to facilitate repurchases. This share repurchase authorization does not obligate ScanSource to acquire any particular amount of common stock, and it may be suspended at any time at the Company’s discretion.

The Company expects to fund share repurchases through cash on hand and cash generated from its operations. ScanSource had approximately 28.5 million shares of common stock outstanding as of June 30, 2014.

Forecast for Next Quarter

The Company announced its current expectations for the first quarter fiscal year 2015. Excluding acquisitions and acquisition costs, ScanSource expects net sales for the quarter ending September 30, 2014 to range from $750 million to $770 million and diluted earnings per share to range from $0.59 to $0.61 per share.

ScanSource will present additional information about its financial results and outlook in a conference call with presentation slides today, August 21, 2014, at 5:00 p.m. (ET). A webcast of the call and accompanying presentation slides will be available for all interested parties and can be accessed at www.scansource.com (Investor Relations section). The webcast will be available for replay for 60 days.

Safe Harbor Statement

This press 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 or forecasted results, including, but not limited to, expanded international operations that expose the Company to greater risks than its operations in domestic markets; risks in connection with our growth which includes strategic acquisitions; costs and delays in connection with the Company's new ERP system; the ability to forecast volatility in earnings resulting from the quarterly revaluation of the Company's earnout obligation to the sellers of CDC; risks associated with consolidation of the Company's vendors; risks in connection with compliance with laws and regulations governing the Company's international business; macroeconomic circumstances that could impact the business, such as currency fluctuations, credit market conditions, and an economic downturn; the timing and amount of any share repurchases; the exercise of discretion by the Company to make any repurchase or continue the share repurchase authorization; and changes to the source of funds for any repurchases. 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, 2013 and the Company's quarterly report on Form 10-Q for the quarter ended March 31, 2014, filed with the Securities and Exchange Commission. Except as may be required by law, the Company expressly disclaims any obligation to update these forward-looking statements to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.

Non-GAAP Financial Information

In addition to disclosing results that are determined in accordance with United States Generally Accepted Accounting Principles ("GAAP"), the Company also discloses certain non-GAAP financial measures, including net sales excluding the translation impact of foreign currencies, adjusted net income and adjusted EPS, and return on invested capital ("ROIC"). Non-GAAP financial measures are used to better understand and evaluate performance, including comparisons from period to period, as described below.

Net sales excluding the translation impact of foreign currencies: The Company discusses the percentage change in net sales excluding the translation impact from changes in foreign currency exchange rates between reporting periods. This measure enhances comparability between periods to help analyze underlying trends.

Adjusted net income and adjusted EPS: To evaluate current period performance on a clearer and more consistent basis with prior periods, the Company discloses adjusted net income and adjusted diluted earnings per share. Results for the quarter and year ended June 30, 2014 exclude a legal recovery, net of attorney fees. Results for the quarter and year ended June 30, 2013 exclude ERP and goodwill impairment charges and costs associated with tax compliance and personnel replacement in the Company's Belgian office. Management believes that these historical items are outside of the Company's normal operating income and expenses. Adjusted net income and adjusted EPS are useful in better assessing and understanding the Company's operating performance, especially when comparing results with previous periods or forecasting performance for future periods.

Return on invested capital ("ROIC"): Management uses ROIC as a performance measurement to assess efficiency in allocating capital under the Company's control to generate returns. Management believes this metric balances the Company's operating results with asset and liability management, is not impacted by capitalization decisions and is considered to have a strong correlation with shareholder value creation. In addition, it is easily computed, communicated and understood. ROIC also provides management a measure of the Company's profitability on a basis more comparable to historical or future periods.

ScanSource Reports Fourth Quarter and Annual Results

ROIC assists management in comparing the Company's performance over various reporting periods on a consistent basis because it removes from operating results the impact of items that do not reflect core operating performance. Management believes the calculation of ROIC provides useful information to investors and is an additional relevant comparison of the Company's performance during the year. In addition, the Company's Board of Directors uses ROIC in evaluating business and management performance. Certain management incentive compensation targets are set and measured relative to ROIC.

These non-GAAP financial measures have limitations as analytical tools, and the non-GAAP financial measures that the Company reports may not be comparable to similarly titled amounts reported by other companies. Analysis of results and outlook on a non-GAAP basis should be considered in addition to, and not in substitution for or as superior to, measurements of financial performance prepared in accordance with GAAP. A reconciliation of the Company's non-GAAP financial information to GAAP is set forth in the following Supplementary Information tables.

About ScanSource, Inc.

ScanSource, Inc. (NASDAQ: SCSC) is the leading international distributor of specialty technology products, focusing on point-of-sale (POS) and barcode, communications and physical security solutions. ScanSource's teams provide value-added services and operate from two technology segments, Worldwide Barcode & Security and Worldwide Communications & Services. ScanSource is committed to helping its reseller customers choose, configure and deliver the industry's best products across almost every vertical market in North America, Latin America and Europe. Founded in 1992, the Company ranks #751 on the Fortune 1000. For more information, visit www.scansource.com.

ScanSource Reports Fourth Quarter and Annual Results



ScanSource, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands)
	June 30, 2014			June 30, 2013*
Assets
Current assets:
Cash and cash equivalents	$	194,851		$	148,164
Accounts receivable, less allowance of $26,257 at June 30, 2014	464,405			435,028
and $25,479 at June 30, 2013
Inventories	504,758			402,307
Prepaid expenses and other current assets	33,558			40,105
Deferred income taxes	18,109			16,456
Total current assets	1,215,681			1,042,060
Property and equipment, net	31,823			20,203
Goodwill	32,342			31,795
Other non-current assets, including net identifiable intangible assets	55,278			70,125
Total assets	$	1,335,124		$	1,164,183
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable	$	421,721		$	362,271
Accrued expenses and other current liabilities	63,574			59,983
Current portion of contingent consideration	5,851			3,732
Income taxes payable	8,685			1,696
Total current liabilities	499,831			427,682
Deferred income taxes	185			205
Long-term debt	5,429			5,429
Long-term portion of contingent consideration	5,256			8,813
Other long-term liabilities	21,780			26,098
Total liabilities	532,481			468,227
Shareholders' equity:
Common stock	168,447			149,821
Retained earnings	650,896			569,107
Accumulated other comprehensive income (loss)	(16,700		)	(22,972		)
Total shareholders' equity	802,643			695,956
Total liabilities and shareholders' equity	$	1,335,124		$	1,164,183



*	Derived from audited financial statements.

ScanSource Reports Fourth Quarter and Annual Results



ScanSource, Inc. and Subsidiaries
Condensed Consolidated Income Statements (Unaudited)
(in thousands)

	Quarter ended June 30,						Year ended June 30,
	2014			2013*			2014			2013*
Net sales	$	758,113		$	712,678		$	2,913,634		$	2,876,964
Cost of goods sold	684,120			637,027			2,612,535			2,584,090
Gross profit	73,993			75,651			301,099			292,874
Operating expenses:
Selling, general and administrative expenses	48,951			46,824			192,492			191,216
Impairment charges (legal recovery)^(a)	(15,490		)	48,772			(15,490		)	48,772
Change in fair value of contingent consideration	93			447			2,311			1,843
Operating income	40,439			(20,392		)	121,786			51,043
Other expense (income):
Interest expense	33			419			731			775
Interest income	(721		)	(590		)	(2,364		)	(2,238		)
Other, net	247			(554		)	312			(520		)
Income (loss) before income taxes	40,880			(19,667		)	123,107			53,026
Provision for income taxes	13,775			(6,352		)	41,318			18,364
Net income (loss)	$	27,105		$	(13,315	)	$	81,789		$	34,662
Per share data:
Weighted-average shares outstanding, basic	28,525			27,922			28,337			27,774
Net income (loss) per common share, basic	$	0.95		$	(0.48	)	$	2.89		$	1.25

Weighted-average shares outstanding, diluted	28,763			27,922			28,602			27,994
Net income (loss) per common share, diluted	$	0.94		$	(0.48	)	$	2.86		$	1.24



*	Derived from audited financial statements.
(a)	Includes a $15.5 million legal recovery, net of attorney fees related to our previously disclosed ERP litigation for the quarter and year ended June 30, 2014. Includes a $28.2 million non-cash impairment charge related to our former Microsoft Dynamics AX ERP software project and a $20.6 million non-cash goodwill impairment charge for two of our reporting units for the quarter and year ended June 30, 2013.

ScanSource Reports Fourth Quarter and Annual Results



ScanSource, Inc. and Subsidiaries
Supplementary Information (Unaudited)
(in thousands)

Net Sales by Segment:
	Quarter ended June 30,						Non-GAAP % Change
	2014		2013		% Change		Excluding FX^(a)
Worldwide Barcode & Security	$	490,505	$	444,766	10.3	%	10.0	%
Worldwide Communications & Services	267,608		267,912		(0.1	)%	(0.4	)%
Consolidated	$	758,113	$	712,678	6.4	%	6.1	%

	Year ended June 30,						Non-GAAP % Change
	2014		2013		% Change		Excluding FX^(a)
Worldwide Barcode & Security	$	1,873,177	$	1,828,219	2.5	%	2.5	%
Worldwide Communications & Services	1,040,457		1,048,745		(0.8	)%	(1.1	)%
Consolidated	$	2,913,634	$	2,876,964	1.3	%	1.2	%





Net Sales by Geographic Segment:
	Quarter ended June 30,						Non-GAAP % Change
	2014		2013		% Change		Excluding FX^(b)
North American (U.S. and Canada)	$	577,687	$	537,530	7.5	%	7.5	%
International	180,426		175,148		3.0	%	2.0	%
Consolidated	$	758,113	$	712,678	6.4	%	6.1	%


	Year ended June 30,						Non-GAAP % Change
	2014		2013		% Change		Excluding FX^(b)
North American (U.S. and Canada)	$	2,179,890	$	2,139,723	1.9	%	1.9	%
International	733,744		737,241		(0.5	)%	(0.7	)%
Consolidated	$	2,913,634	$	2,876,964	1.3	%	1.2	%

Notes:
(a) Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates. Calculated by translating the net sales for the quarter ended and year ended June 30, 2014 into U.S. dollars using the weighted average foreign exchange rates for the quarter ended and year ended June 30, 2013, respectively. Worldwide Barcode & Security net sales excluding the translation impact of foreign currencies for the quarter ended and year ended June 30, 2014, as adjusted, totaled $489.4 million and $1.9 billion, respectively. Worldwide Communications & Services net sales excluding the translation impact of foreign currencies for the quarter ended and year ended June 30, 2014, as adjusted, totaled $266.9 million and $1.0 billion.
(b) Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates. Calculated by translating the net sales for the quarter ended and year ended June 30, 2014 into U.S. dollars using the weighted average foreign exchange rates for the quarter ended and year ended June 30, 2013, respectively. International net sales excluding the translation impact of foreign currencies for the quarter ended and year ended June 30, 2014, as adjusted, totaled $178.7 million and $732.4 million, respectively.

ScanSource Reports Fourth Quarter and Annual Results



ScanSource, Inc. and Subsidiaries
Supplementary Information (Unaudited)
(in thousands)

Non-GAAP Financial Information:
	Quarter ended June 30, 2014
	Operating income			Pre-tax income			Net income			Diluted EPS
GAAP measure	$	40,439		$	40,880		$	27,105		$	0.94
Adjustment:
Legal recovery, net of attorney fees	(15,490		)	(15,490		)	(9,756		)	(0.34		)
Non-GAAP measure	$	24,949		$	25,390		$	17,349		$	0.60

	Quarter ended June 30, 2013
	Operating income (loss)			Pre-tax income (loss)			Net income (loss)			Diluted EPS
GAAP measure	$	(20,392	)	$	(19,667	)	$	(13,315	)	$	(0.48	)
Adjustments:
Impairment charges - ERP	28,210			28,210			18,015			0.65
Impairment charges - goodwill	20,562			20,562			15,201			0.54
Non-GAAP measure	$	28,380		$	29,105		$	19,901		$	0.71

	Year ended June 30, 2014
	Operating income			Pre-tax income			Net income			Diluted EPS
GAAP measure	$	121,786		$	123,107		$	81,789		$	2.86
Adjustment:
Legal recovery, net of attorney fees	(15,490		)	(15,490		)	(9,756		)	(0.34		)
Non-GAAP measure	$	106,296		$	107,617		$	72,033		$	2.52

	Year ended June 30, 2013
	Operating income			Pre-tax income			Net income			Diluted EPS
GAAP measure	$	51,043		$	53,026		$	34,662		$	1.24
Adjustments:
Belgian tax compliance and personnel replacement costs, including related professional fees	2,121			2,121			1,400			0.05
Impairment charges - ERP	28,210			28,210			18,015			0.64
Impairment charges - goodwill	20,562			20,562			15,201			0.54
Non-GAAP measure	$	101,936		$	103,919		$	69,278		$	2.47

ScanSource Reports Fourth Quarter and Annual Results



ScanSource, Inc. and Subsidiaries
Supplementary Information (Unaudited)
(in thousands)

Non-GAAP Financial Information:
	Quarter ended June 30,						Year ended June 30,
	2014			2013			2014			2013
Return on invested capital (ROIC), annualized ^(a)	13.9		%	17.2		%	15.4		%	16.0		%

Reconciliation of Net Income to EBITDA
Net income - GAAP	$	27,105		$	(13,315	)	$	81,789		$	34,662
Plus: Income taxes	13,774			(6,352		)	41,318			18,364
Plus: Interest expense	33			419			731			775
Plus: Depreciation and amortization	1,985			1,594			7,375			8,457
EBITDA	42,897			(17,654		)	131,213			62,258
Adjustments ^(b)	(15,490		)	48,772			(15,490		)	50,893
Adjusted EBITDA (numerator for ROIC) (non-GAAP)	$	27,407		$	31,118		$	115,723		$	113,151


Invested Capital Calculation
Equity - beginning of quarter/year	$	772,786		$	709,912		$	695,956		$	652,311
Equity - end of quarter/year	802,643			695,956			802,643			695,956
Add:
Adjustments, net of tax ^(b)	(9,756		)	33,216			(9,756		)	34,616
Average equity	782,837			719,542			744,422			691,442
Average funded debt ^(c)	5,429			5,429			5,429			15,405
Invested capital (denominator for ROIC) (non-GAAP)	$	788,266		$	724,971		$	749,851		$	706,847



Notes:
(a) Calculated as net income plus interest expense, income taxes, depreciation and amortization (EBITDA), annualized and divided by invested capital for the period. EBITDA excludes a legal recovery, net of attorney fees for the quarter ended June 30, 2014 and excludes non-cash impairment charges for the quarter ended June 30, 2013. EBITDA excludes a legal recovery, net of attorney fees for the year ended June 30, 2014 and excludes non-cash impairment charges and expenses associated with Belgian tax compliance and personnel replacement costs, including related professional fees for the year ended June 30, 2013.
(b) Includes a legal recovery, net of attorney fees for the quarter ended June 30, 2014 and includes non-cash impairment charges for the quarter ended June 30, 2013. Includes a legal recovery, net of attorney fees for the year ended June 30, 2014 and includes non-cash impairment charges and expenses associated with Belgian tax compliance and personnel replacement costs, including related professional fees for year ended June 30, 2013.
(c) Average funded debt is calculated as the average daily amounts outstanding on short-term and long-term interest-bearing debt.

Q4 FY 2014 AND FULL YEAR FINANCIAL RESULTS CONFERENCE CALL August 21, 2014 at 5:00 pm ET Exhibit 99.2

Safe Harbor This presentation may contain certain comments, which are “forward-looking” statements that involve plans, strategies, economic performance and trends, projections, expectations, or beliefs about future events and other statements that are not descriptions of historical facts, may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking information is inherently subject to risks and uncertainties; these statements are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. Any number of 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 “Risk Factors” included in the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2013, as well as the quarterly report on Form 10-Q for the quarter ended March 31, 2014, filed with the Securities and Exchange Commission (“SEC”). Although ScanSource believes the expectations reflected in its forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievements. ScanSource disclaims any intentions or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required by law. In addition to disclosing results that are determined in accordance with United States Generally Accepted Accounting Principles (“GAAP”), the Company also discloses certain non-GAAP measures, including adjusted net income and adjusted diluted EPS, return on invested capital (“ROIC”) and the percentage change in net sales excluding the impact of foreign currency exchange rates. A reconciliation of the Company's non-GAAP financial information to GAAP financial information is provided in the Company’s Form 8-K, filed with the SEC, with the quarterly earnings press release for the period indicated. 2

Highlights – Q4 FY14 3  Fourth quarter 2014 net sales of $ 758 million, up 6% Y/Y, and adjusted EPS of $0.60*; both above our expected range  Record sales quarter for Worldwide Barcode & Security, up 10% Y/Y  Record sales quarters for North America POS & Barcode and Security  Another solid sales growth quarter for Brazil and Europe  Worldwide Communications & Services sales unchanged from the prior year  Strong rebound from previous quarter, up 18% Q/Q  Record sales quarter for North America Communications unit  Fourth quarter 2014 return on invested capital of 13.9%* adjusted to exclude legal recovery, net of attorney fees  Announced agreement to acquire Network1, Brazil’s leading value-added communications distributor, and letter of intent to acquire Imago, Europe’s leading value-added video and voice communications distributor * See Appendix for calculation of adjusted EPS and ROIC, non-GAAP measures.

About Network1 Description  Leading value-added distributor of communications products and services in Brazil  Established in 2004; HQ in Brazil (Sao Paulo) Key Vendors  ~ 65 vendors and >8,000 customers  Avaya, Checkpoint, Dell, Extreme, F5, HP, Juniper, Microsoft, Polycom, Riverbed, Schneider-Electric Key Talent/ Employees  Rafael Paloni, Network1’s CEO and controlling shareholder, to lead ScanSource’s Communications business in Latin America  Nearly 400 employees Location  Local branches: Brazil, Mexico, Colombia, Chile, Peru, and Miami Export  Platform for value-added distribution in Latin America Financials  Calendar year 2014 net sales estimated at ~ R$850 million (approximately US$376 million)  Demonstrated double-digit sales growth with operating margins consistent with ScanSource’s Communications business Note: Reais converted into USD using 0.442 exchange rate. 4

Announces Agreement to Acquire Network1  Great fit with existing Brazil operations; adds Communications and platform for Latin America business  Aligned with leading vendors and growth technologies in attractive LATAM markets  Transaction summary: Purchase Price  All-cash share purchase  Debt-free/cash-free initial purchase price R$160 million (52% of purchase price) (approximately US$71 million)  Earn-out payments based on EBITDA over 4 years (12% annually) Multiple  Adjusted EBITDA multiple: Initial 7x; Earnouts 7.1x, 7.3x, 7.5x, 7.7x Accretion  Expected to be accretive to EPS and ROIC in the first year after closing, excluding one-time acquisition costs Funding  Funded with cash on hand Closing  Announced 8/15/14  Subject to completion of due diligence and regulatory approvals  Expect to close by the end of calendar year 2014 Note: Reais converted into USD using 0.442 exchange rate. 5

About Imago Description  Europe’s leading value-added video and voice communications distributor  Established in 1991; HQ in UK (Thatcham, Berkshire) Key Vendors  Largest Polycom distributor in Europe  Polycom, Barco, Samsung, NEC Key Talent/ Employees  Ian Vickerage, Imago’s Managing Director, founder, and majority owner, to continue to lead the company  Nearly 120 employees Location  Operations in UK and France  Recent acquisition of Vitec, a videoconferencing distributor in Germany (6/14) Financials  Sales for fiscal year ended 7/31/14 estimated at ~ GBP 50 million (approximately US$83 million)  Demonstrated double-digit sales growth with operating margins consistent with ScanSource’s Communications business 6 Note: GBP converted into USD using 1.667 exchange rate.

Announces Letter of Intent to Acquire Imago  Next step in strategy to be the leading value-added distributor of video, voice and data solutions for resellers in Europe  In 2013, Polycom named Imago its distributor of the year in EMEA  Transaction summary: Purchase Price  All-cash share purchase  Debt-free/cash-free initial purchase price GBP 24.5 million (90% of purchase price) (approximately US$41 million)  Earn-out payments based on EBITDA over 2 years (5% annually) Multiple  Adjusted EBITDA multiple: Initial 7x; Blended 7.1x Accretion  Expected to be accretive to EPS and ROIC in the first year after closing, excluding one-time acquisition costs Funding  Funded with cash on hand Closing  Announced 8/21/14  Subject to a definitive agreement and regulatory approvals  Expect to close by the end of September 2014 7 Note: GBP converted into USD using 1.667 exchange rate.

Proposed Acquisitions – Strategic Focus Areas As a % of FY14 net sales of $2.9 billion * Pro Forma reflects proposed acquisitions using estimated FY14 net sales for Network1 and Imago translated into US$ average FX rates for FY14 ** Includes the United States and Canada. 64% Barcode & Security 75% North America** 36% Communications & Services 8 Actual, FY 2014 Pro Forma, Acquisitions* By Technology: By Technology: By Geography: By Geography: 25% International 43% Communications & Services 57% Barcode & Security 34% International 66% North America**

Q4 FY14 Q4 FY13 GAAP Non- GAAP* GAAP Non- GAAP* Y/Y Change (non-GAAP): Net sales $758.1 $758.1 $712.7 $712.7  6.4% increase Gross margin % (of net sales) 9.8% 9.8% 10.6% 10.6%  86 bp margin decrease SG&A expenses $49.0 $49.0 $46.8 $46.8  4.5% higher SG&A Legal recovery, net (15.5) -- -- -- Impairment charges -- -- 48.8 -- Change, FV contingent consideration 0.1 0.1 0.4 0.4 Operating income 40.4 24.9 (20.4) 28.4  12% decrease Operating income % (of net sales) 5.33% 3.29% (2.86)% 3.98%  69 bp margin decrease Net income $27.1 $17.3 $(13.3) $19.9  13% decrease Diluted EPS $0.94 $0.60 $(0.48) $0.71  15% decrease Income Statement Highlights – Fourth Qtr In millions, except EPS 9 * Excluding legal recovery, net of attorney fees for Q4 FY14 and impairment charges for Q4 FY13; see Appendix for reconciliation of GAAP to non-GAAP measures.

FY14 FY13 GAAP Non- GAAP* GAAP Non- GAAP* Y/Y Change (non-GAAP): Net sales $2,914 $2,914 $2,877 $2,877  1.3% increase Gross margin % (of net sales) 10.3% 10.3% 10.2% 10.2%  15 bp margin increase SG&A expenses $192.5 $192.5 $189.1 $189.1  1.8% higher SG&A Legal recovery, net (15.5) -- -- -- Impairment charges/Belgian costs -- -- 50.9 -- Change, FV contingent consideration 2.3 2.3 1.8 1.8 Operating income 121.8 106.3 51.0 101.9  4% increase Operating income % (of net sales) 4.18% 3.65% 1.77% 3.54%  11 bp margin increase Net income $81.8 $72.0 $34.7 $69.3  4% increase Diluted EPS $2.86 $2.52 $1.24 $2.47  2% increase Income Statement Highlights – Full Year In millions, except EPS 10 * Excluding legal recovery, net of attorney fees for FY14 and impairment charges and Belgian tax compliance/ personnel replacement costs for FY13; see Appendix for reconciliation of GAAP to non-GAAP measures.

Q4 FY14 Sales Mix Barcode & Security = Worldwide Barcode and Security Communications & Services = Worldwide Communications and Services As a % of Q4 FY14 net sales of $758.1 million * Includes the United States and Canada. 65% Barcode & Security 76% North America* 35% Communications & Services 11 By Technology By Geography 24% International

Q4 FY14 Q4 FY13 Net sales $490.5 $444.8 Gross profit $41.7 $43.3 Gross margin 8.5% 9.7% Operating income (loss) $12.8 $(1.7) Impairment charge – goodwill -- 15.1 Adjusted operating income $12.8 $13.5 Operating income % 2.6% 3.0% $445 $491 Q4 FY13 Q4 FY14 WW Barcode & Security Net Sales, $ in millions Up 10.3% Excluding FX, Up 10.0% $ in millions 12 * See Appendix for reconciliation of net sales excluding impact of foreign exchange to a GAAP measure.

FY14 FY13 Net sales $1,873.2 $1.828.2 Gross profit $168.2 $168.1 Gross margin 9.0% 9.2% Operating income $51.5 $34.7 Impairment charge – goodwill -- 15.1 Adjusted operating income $51.5 $49.8 Operating income % 2.8% 2.7% $1,828 $1,873 FY13 FY14 WW Barcode & Security Net Sales, $ in millions Up 2.5% Excluding FX, Up 2.5% $ in millions 13 * See Appendix for reconciliation of net sales excluding impact of foreign exchange to a GAAP measure.

Q4 FY14 Q4 FY13 Net sales $267.6 $267.9 Gross profit $32.3 $32.3 Gross margin 12.1% 12.1% Operating income $12.2 $9.5 Impairment charge – goodwill -- 5.4 Adjusted operating income $12.2 $14.9 Operating income % 4.5% 5.6% $268 $268 Q4 FY13 Q4 FY14 WW Communications & Services Net Sales, $ in millions Down (0.1)% Excluding FX, Down (0.4)% $ in millions 14 * See Appendix for reconciliation of net sales excluding impact of foreign exchange to a GAAP measure.

FY14 FY13 Net sales $1,040.5 $1,048.7 Gross profit $132.9 $124.8 Gross margin 12.8% 11.9% Operating income $54.8 $44.6 Impairment charge – goodwill -- 5.4 Adjusted operating income $54.8 $50.0 Operating income % 5.3% 4.8% $1,049 $1,040 FY13 FY14 WW Communications & Services Net Sales, $ in millions Down (0.8)% Excluding FX, Down (1.1)% $ in millions 15 * See Appendix for reconciliation of net sales excluding impact of foreign exchange to a GAAP measure.

Q4 FY14 Q3 FY14 Q4 FY13 Return on invested capital (“ROIC”)* 13.9% 14.8% 17.2% Cash and cash equivalents (Q/E) $194.9 $183.6 $148.2 Uncleared checks (included in accounts payable) $84.2 $53.2 $65.9 Operating cash flow, trailing 12-months $47.7 $86.1 $129.4 Days sales outstanding in receivables 55 55 55 Inventory (Q/E) $504.8 $479.9 $402.3 Inventory turns 5.6 5.1 6.2 Paid for inventory days 10.9 15.3 5.7 Q4 FY14 Key Measures $ in millions 16 * See Appendix for calculation of ROIC, a non-GAAP measure.

Q1 FY15 Outlook* For the Quarter Ending September 30, 2014, excluding Acquisitions and acquisition costs: Net Sales Diluted Earnings Per Share  Range from $750 million to $770 million  Range midpoint: $760 million  Range from $0.59 to $0.61 per share  Range midpoint: $0.60 * Outlook as of August 21, 2014 17

WW Barcode & Security Highlights Net Sales, $ in millions Up 10.3% Excluding FX, Up 10.0% 18 * See Appendix for reconciliation of net sales excluding impact of foreign exchange to a GAAP measure.  65% of overall sales  Record sales quarter for the segment  Y/Y sales growth for all geographies, except Miami export business  Strong big deal quarter  Record sales quarter for North America POS & Barcode and Security business units  Another quarter of strong sales growth for Brazil, up 8% Y/Y or 17% in local currency $445 $491 Q4 FY13 Q4 FY14

WW Communications & Services Highlights Net Sales, $ in millions Down (0.1)% Excluding FX, Down (0.4)% 19 * See Appendix for reconciliation of net sales excluding impact of foreign exchange to a GAAP measure.  35% of overall sales  Increased 18% sequentially with Q/Q increases for all business units  Strong performance from networking vendors  Good sales quarter for vendor service contracts  Record sales quarter for ScanSource Communications in North America  ScanSource Services Group increased configuration services for IP phones and key injections $268 $268 Q4 FY13 Q4 FY14

Appendix: Non-GAAP Financial Information 20 Q4 FY14 Q3 FY14 Q4 FY13 Return on invested capital (ROIC), annualized (a) 13.9% 14.8% 17.2% Reconciliation of Net Income (Loss) to EBITDA Net income (loss) - GAAP $ 27,105 $ 16,949 $ (13,315) Plus: Income taxes 13,774 9,031 (6,352) Plus: Interest expense 33 217 419 Plus: Depreciation and amortization 1,985 1,743 1,594 EBITDA 42,897 27,940 (17,654) Legal recovery, net of attorney fees (15,490) - - Impairment charges - - 48,772 Adjusted EBITDA (numerator for ROIC)(non-GAAP) $ 27,407 $ 27,940 $ 31,118 Invested Capital Calculation Equity - beginning of the quarter $ 772,786 $ 751,446 $ 709,912 Equity - end of quarter 802,643 772,786 695,956 Add: Legal recovery, net of attorney fees and impairment charges, net of tax (9,756) - 33,216 Average equity 782,837 762,116 719,542 Average funded debt (b) 5,429 5,429 5,429 Invested capital (denominator for ROIC)(non-GAAP) $ 788,266 $ 767,545 $ 724,971 Notes: (a) Calculated as net income plus interest expense, income taxes, depreciation and amortization (EBITDA), annualized and divided by invested capital for the period. (b) Average daily amounts outstanding on short-term and long-term interest-bearing debt.

Appendix: Non-GAAP Financial Information 21 Year Ended June 30. 2014 2013 Return on invested capital (ROIC), annualized (a) 15.4% 16.0% Reconciliation of Net Income (Loss) to EBITDA Net income - GAAP $ 81,789 $ 34,662 Plus: Income taxes 41,318 18,364 Plus: Interest expense 731 775 Plus: Depreciation and amortization 7,375 8,457 EBITDA 131,213 62,258 Legal recovery, net of attorney fees (15,490) - Impairment charges - 48,772 Belgian tax compliance/personnel costs - 2,121 Adjusted EBITDA (numerator for ROIC)(non-GAAP) $ 115,723 $ 113,151 Invested Capital Calculation Equity - beginning of the quarter $ 695,956 $ 652,311 Equity - end of quarter 802,643 695,956 Add: Legal recovery, net of attorney fees, impairment charges, and Belgian costs, net of tax (9,756) 34,616 Average equity 744,422 691,442 Average funded debt (b) 5,429 15,405 Invested capital (denominator for ROIC)(non-GAAP) $ 749,851 $ 706,847 Notes: (a) Calculated as net income plus interest expense, income taxes, depreciation and amortization (EBITDA), annualized and divided by invested capital for the period. (b) Average daily amounts outstanding on short-term and long-term interest-bearing debt.

Appendix: Non-GAAP Financial Information 22 Worldwide Barcode & Security Net sales, excluding impact of foreign exchange (FX) - Y/Y Change: Q4 2014 net sales $ 490.5 Foreign exchange impact (1.1) Q4 2014 net sales, excluding FX impact $ 489.4 Q4 2013 sales $ 444.8 % Change 10.0% FY 2014 net sales $ 1,873.2 Foreign exchange impact 1.5 FY 2014 net sales, excluding FX impact $ 1,874.7 FY 2013 sales $ 1,828.2 % Change 2.5% Worldwide Communications & Services Net sales, excluding impact of foreign exchange (FX) - Y/Y Change: Q4 2014 net sales $ 267.6 Foreign exchange impact (0.7) Q4 2014 net sales, excluding FX impact $ 266.9 Q4 2013 sales $ 267.9 % Change -0.4% FY 2014 net sales $ 1,040.5 Foreign exchange impact (2.9) FY 2014 net sales, excluding FX impact $ 1,037.6 FY 2013 sales $ 1,048.7 % Change -1.1%