Exhibit 99.1
FOR IMMEDIATE RELEASE
Contact: Richard P. Cleys
VP and CFO
ScanSource, Inc.
864 286-4358
SCANSOURCE REPORTS RECORD FOURTH QUARTER
AND YEAR END SALES RESULTS
* Fourth quarter sales increase 14% to $524.3 million;
Fiscal year 2007 sales increase 19% to $1.99 billion
GREENVILLE, SC— August 23, 2007—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 complete financial results for its fourth quarter and fiscal year ended June 30, 2007.
QE 6/30/07 capsule: | |||
Net sales | $ | 524.3 million | |
Net income | $ | 11.3 million | |
Diluted EPS | $ | 0.43 per share |
“The fourth quarter record sales results were led by our AIDC/point of sale units in North America, Europe and Latin America,” said Mike Baur, CEO of ScanSource. “In addition, the ScanSource Security sales unit had excellent growth as the investments in training, education, and marketing are beginning to result in market share gains. Our T2 Supply sales unit finished its first year under ScanSource ownership and delivered another quarter of excellent results.”
ScanSource Reports Record Fourth Quarter and Year End Sales Results
For the quarter ended June 30, 2007, net sales increased 14% to $524.3 million compared to $461.1 million for the quarter ended June 30, 2006. Quarterly operating income increased 9% to $20.7 million from $18.9 million for the comparable quarter in 2006. Our effective tax rate for the fourth quarter of fiscal 2007 was 39% compared to 29% for the prior year. The fourth quarter fiscal 2006 tax rate was favorably impacted by foreign tax net operating loss benefits. Net income decreased 12% to $11.3 million for the quarter ended June 30, 2007 versus $12.9 million for the quarter ended June 30, 2006. Diluted earnings per share decreased 12% to $0.43 per share compared to $0.49 in the prior year quarter. When adjusted to exclude legal and accounting costs of third party providers relating to our Special Committee’s review of the Company’s stock option grant practices, net income for the June 2007 quarter decreased 2% versus the prior year quarter.
For the year ended June 30, 2007, net sales increased 19% to $1.99 billion compared to $1.67 billion for the prior year. Fiscal year operating income increased 19% to $75.3 million from $63.3 million for the prior year ended June 30, 2006. The effective tax rate for the year was 37.8% compared to 35.0% for the prior year. The tax rate for the fiscal 2006 year was favorably impacted by the fourth quarter recognition of foreign tax operating loss benefits. Net income increased 7% to $42.6 million compared to $39.8 million the prior year. Diluted earnings per share increased 7% to $1.63 compared to $1.53 in the prior year. When adjusted to exclude legal and accounting costs of third party providers relating to our Special Committee’s review of the Company’s stock option grant practices, net income for the year increased 22%.
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ScanSource Reports Record Fourth Quarter and Year End Sales Results
Forecast for Next Quarter
The Company announced its revenue forecast for the first quarter of fiscal 2008. ScanSource expects net revenues for the September 2007 quarter could range from $525 million to $545 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 actual results to differ from anticipated results, see the Company’s amended annual report on Form 10K/A for the year ended June 30, 2006 filed with, and the Company’s annual report on Form 10K for the year ended June 30, 2007 to be filed with, the Securities and Exchange Commission.
About ScanSource
ScanSource, Inc. is a leading international distributor of specialty technology products. The Company markets specialty technologies through five sales units: ScanSource [automatic identification and data capture (AIDC) and point-of-sale (POS) products]; Catalyst Telecom (Avaya communications products); Paracon (communications products); T2 Supply (video conferencing and telephone products); and ScanSource Security Distribution (electronic security products).
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ScanSource Reports Record Fourth Quarter and Year End Sales Results
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 ranks #956 on the Fortune 1000. 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 Record Fourth Quarter and Year End Sales Results
SCANSOURCE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, 2007 (unaudited) | June 30, 2006* | |||||
Assets | ||||||
Current Assets | ||||||
Cash and cash equivalents | $ | 1,864 | $ | 3,831 | ||
Trade & notes receivable, net | 349,961 | 300,240 | ||||
Other receivables | 6,755 | 4,558 | ||||
Inventories | 272,012 | 244,005 | ||||
Prepaid expenses and other assets | 10,444 | 2,293 | ||||
Deferred income taxes | 12,102 | 15,709 | ||||
Total current assets | 653,138 | 570,636 | ||||
Property and equipment, net | 26,781 | 27,098 | ||||
Goodwill | 29,361 | 14,404 | ||||
Other assets, including identifiable intangible assets | 29,168 | 5,359 | ||||
Total assets | $ | 738,448 | $ | 617,497 | ||
Liabilities and Shareholders’ Equity | ||||||
Current Liabilities | ||||||
Current portion of long-term debt | $ | 200 | $ | 229 | ||
Short-term borrowings | 3,490 | — | ||||
Trade accounts payable | 256,883 | 271,519 | ||||
Accrued expenses and other liabilities | 39,610 | 36,717 | ||||
Total current liabilities | 300,183 | 308,465 | ||||
Long-term debt | 17,216 | 4,398 | ||||
Borrowings under revolving credit facility | 90,314 | 27,558 | ||||
Other long-term liabilities | 5,475 | 2,757 | ||||
Total liabilities | 413,188 | 343,178 | ||||
Minority interest | 516 | 910 | ||||
Shareholders’ Equity | ||||||
Common stock | 83,653 | 76,915 | ||||
Retained earnings | 234,502 | 191,876 | ||||
Accumulated other comprehensive income | 6,589 | 4,618 | ||||
Total shareholders’ equity | 324,744 | 273,409 | ||||
Total liabilities and shareholders’ equity | $ | 738,448 | $ | 617,497 | ||
* | Derived from audited financial statements at June 30, 2006. |
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ScanSource Reports Record Fourth Quarter and Year End Sales Results
SCANSOURCE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
(In thousands, except per share data)
Quarter ended June 30, | Fiscal year ended June 30, | |||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Net sales | $ | 524,286 | $ | 461,144 | $ | 1,986,927 | $ | 1,665,600 | ||||||||
Cost of goods sold | 469,266 | 416,215 | 1,776,255 | 1,497,248 | ||||||||||||
Gross profit | 55,020 | 44,929 | 210,672 | 168,352 | ||||||||||||
Selling, general and administrative expenses | 34,325 | 25,991 | 135,339 | 105,042 | ||||||||||||
Operating income | 20,695 | 18,938 | 75,333 | 63,310 | ||||||||||||
Other expense (income): | ||||||||||||||||
Interest expense | 2,226 | 589 | 7,689 | 2,187 | ||||||||||||
Interest income | (356 | ) | (20 | ) | (885 | ) | (567 | ) | ||||||||
Other (income) expense | 275 | 217 | (144 | ) | 57 | |||||||||||
Other expense (income), net | 2,145 | 786 | 6,660 | 1,677 | ||||||||||||
Income before income taxes and minority interest | 18,550 | 18,152 | 68,673 | 61,633 | ||||||||||||
Provision for income taxes | 7,243 | 5,196 | 25,987 | 21,592 | ||||||||||||
Income before minority interest | 11,307 | 12,956 | 42,686 | 40,041 | ||||||||||||
Minority interest in income of consolidated subsidiaries, net of income taxes | 5 | 100 | 60 | 225 | ||||||||||||
Net income | $ | 11,302 | $ | 12,856 | $ | 42,626 | $ | 39,816 | ||||||||
Per share data: | ||||||||||||||||
Net income per common share, basic | $ | 0.44 | $ | 0.50 | $ | 1.65 | $ | 1.56 | ||||||||
Weighted-average shares outstanding, basic | 25,843 | 25,680 | 25,773 | 25,491 | ||||||||||||
Net income per common share, assuming dilution | $ | 0.43 | $ | 0.49 | $ | 1.63 | $ | 1.53 | ||||||||
Weighted-average shares outstanding, assuming dilution | 26,258 | 26,163 | 26,213 | 26,034 | ||||||||||||
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ScanSource Reports Record Fourth Quarter and Year End Sales Results
SCANSOURCE, INC. AND SUBSIDIARIES
RECONCILIATION OF NON GAAP INCOME (UNAUDITED)
(In thousands, except per share data)
Quarter ended June 30, 2007 | Fiscal year ended June 30, 2007 | |||||||||||||||||||||||
GAAP | Special Committee Costs | Non-GAAP | GAAP | Special Committee Costs | Non-GAAP | |||||||||||||||||||
Net sales | $ | 524,286 | $ | — | $ | 524,286 | $ | 1,986,927 | $ | — | $ | 1,986,927 | ||||||||||||
Cost of goods sold | 469,266 | — | 469,266 | 1,776,255 | — | 1,776,255 | ||||||||||||||||||
Gross profit | 55,020 | — | 55,020 | 210,672 | — | 210,672 | ||||||||||||||||||
Selling, general and administrative expenses | 34,325 | (2,000 | ) | 32,325 | 135,339 | (9,900 | ) | 125,439 | ||||||||||||||||
Operating income | 20,695 | 2,000 | 22,695 | 75,333 | 9,900 | 85,233 | ||||||||||||||||||
Other expense (income): | ||||||||||||||||||||||||
Interest expense | 2,226 | — | 2,226 | 7,689 | — | 7,689 | ||||||||||||||||||
Interest income | (356 | ) | — | (356 | ) | (885 | ) | — | (885 | ) | ||||||||||||||
Other (income) expense | 275 | — | 275 | (144 | ) | — | (144 | ) | ||||||||||||||||
Other expense (income), net | 2,145 | — | 2,145 | 6,660 | — | 6,660 | ||||||||||||||||||
Income before income taxes and minority interest | 18,550 | 2,000 | 20,550 | 68,673 | 9,900 | 78,573 | ||||||||||||||||||
Provision for income taxes | 7,243 | 760 | 8,003 | 25,987 | 3,762 | 29,749 | ||||||||||||||||||
Income before minority interest | 11,307 | 1,240 | 12,547 | 42,686 | 6,138 | 48,824 | ||||||||||||||||||
Minority interest in income of consolidated subsidiaries, net of income taxes | 5 | — | 5 | 60 | — | 60 | ||||||||||||||||||
Net income | $ | 11,302 | $ | 1,240 | $ | 12,542 | $ | 42,626 | $ | 6,138 | $ | 48,764 | ||||||||||||
Increase (decrease) over prior year results | (12%) | (2%) | 7% | 22% | ||||||||||||||||||||
Per share data: | ||||||||||||||||||||||||
Net income per common share, basic | $ | 0.44 | $ | 0.05 | $ | 0.49 | $ | 1.65 | $ | 0.24 | $ | 1.89 | ||||||||||||
Weighted-average shares outstanding, basic | 25,843 | 25,843 | 25,773 | 25,773 | ||||||||||||||||||||
Net income per common share, assuming dilution | $ | 0.43 | $ | 0.05 | $ | 0.48 | $ | 1.63 | $ | 0.23 | $ | 1.86 | ||||||||||||
Weighted-average shares outstanding, assuming dilution | 26,258 | 26,258 | 26,213 | 26,213 | ||||||||||||||||||||
To provide the reader more comparable information regarding the Company’s annual and quarterly operating results, the above schedule shows the impact on earnings had the Company not incurred the additional external costs related to the Special Committee in the annual and quarterly period indicated. These amounts consist primarily of legal and accounting costs of third party providers. For internal operating measurements, these costs are charged to the Company’s corporate overhead and are not allocated to product lines.
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