ScanSource (SCSC) 8-K Scansource Reports First Quarter Results

EXHIBIT 99.1

FOR IMMEDIATE RELEASE

Contact: Jeffery A. Bryson VP of Investor Relations ScanSource, Inc. 864 286-4305

SCANSOURCE REPORTS FIRST QUARTER RESULTS

*Sales increase 6% to a record $ 276.5 million

GREENVILLE, SC—October 23, 2003—ScanSource, Inc. (Nasdaq:SCSC), a leading value-added distributor of AIDC (automatic identification and data capture), point of sale and telephony products for the reseller market, today announced financial results for its first fiscal quarter ended September 30, 2003.

For the quarter ended September 30, 2003, net sales increased 6% to $276.5 million compared to $260.6 million for the quarter ended September 30, 2002. Operating income decreased 8% to $9.7 million from $10.5 million for the comparable quarter in 2002. Net income for the quarter ended September 30, 2003 was 2% higher at $6.1 million compared to $6.0 million for the same period last year. Diluted earnings per share was comparable at $0.48 per share for both the current and prior year September quarters. Per share results are based upon 12.681 million and 12.408 million diluted weighted average shares outstanding for the fiscal 2003 and 2002 quarters, respectively, reflecting a 2-for-1 split of the Company’s common stock in January 2003.

“Overall sales growth was very good this quarter led by strong worldwide growth in our AIDC and point of sale business,” said Mike Baur, President and CEO of ScanSource. “Distribution sales for telephony products was also better than expected.”

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ScanSource Reports First Quarter Results

Forecast for Next Quarter

The Company announced its financial forecast for the second quarter of fiscal 2004. ScanSource expects net revenues for the December quarter could range from $250 million to $270 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 Exchange Commission.

About ScanSource

ScanSource, Inc. is the 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; and converged communications products through its Paracon sales unit.

ScanSource provides both value-added distribution sales and partner services to technology resellers. The Company has two distribution segments: one serving North America from the Memphis distribution center, and an international segment currently serving Latin America and Europe. Founded in 1992, the Company markets products from more than 60

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ScanSource Reports First Quarter Results

technology manufacturers to over 15,000 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.

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ScanSource Reports First Quarter Results

SCANSOURCE, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands)

	September 30, 2003 (unaudited)		June 30, 2003
Assets
Current Assets
Cash	$	1,239	$	2,565
Trade & notes receivable, net		138,648		129,105
Other receivables		2,551		4,420
Inventories		156,568		152,261
Prepaid taxes		—		870
Prepaid expenses and other assets		1,485		869
Deferred income taxes		9,498		9,498
Total current assets		309,989		299,588
Property and equipment, net		26,450		27,270
Goodwill		9,801		9,841
Other assets including, identifiable intangible assets		7,465		7,648
Total assets	$	353,705	$	344,347
Liabilities and Shareholders’ Equity
Current Liabilities
Accounts payable	$	149,886	$	151,389
Current portion of long-term debt		890		914
Accrued expenses and other		11,867		12,308
Total current liabilities		162,643		164,611
Deferred tax liability		1,673		1,673
Borrowings under revolving credit facility		22,114		18,118
Long term debt		7,188		7,385
Total liabilities		193,618		191,787
Minority interest		1,155		1,673
Shareholders’ Equity
Common stock		58,442		56,706
Retained earnings		97,386		91,306
Accumulated other comprehensive income		3,104		2,875
Total shareholders’ equity		158,932		150,887
Total liabilities and shareholders’ equity	$	353,705	$	344,347

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ScanSource Reports First Quarter Results

SCANSOURCE, INC.

CONSOLIDATED INCOME STATEMENTS (UNAUDITED)

(In thousands, except share and per share data)

	Quarter ended September 30,
	2003			2002
Net sales	$	276,474		$	260,603
Cost of goods sold		245,630			230,408
Gross profit		30,844			30,195
Selling, general and admin. expenses		18,884			19,677
ChannelMax restructuring charge		2,275			—
Total operating expenses		21,159			19,677
Operating income		9,685			10,518
Other expense (income):
Interest expense		343			693
Interest income		(161	)		(304	)
Other (income) expense		(166	)		205
Other expense, net		16			594
Income before income taxes		9,669			9,924
Provision for income taxes		3,589			3,933
Net income	$	6,080		$	5,991
Per share data:
Basic earnings per share:
Net income (a)	$	0.50		$	0.51
Weighted-average shares outstanding (a)		12,265			11,698
Diluted earnings per share:
Net income (a)	$	0.48		$	0.48
Weighted-average shares outstanding (a)		12,681			12,408

(a) All per share amounts have been adjusted to reflect a 2-for-1 split of the Company’s common stock, effected in the form of a 100% common stock dividend paid on January 28, 2003.

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