ScanSource (SCSC) 8-K Scansource Reports Strong Second Quarter Results

Exhibit 99.1

FOR IMMEDIATE RELEASE

Contact:	Richard P. Cleys
	VP and CFO
	ScanSource, Inc.
	(864) 286-4358

SCANSOURCE REPORTS STRONG SECOND QUARTER RESULTS

*Second quarter sales increase 17% to $553.3 million

GREENVILLE, SC —— January 24, 2008—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 second quarter ended December 31, 2007.

QE 12/31/ 07 capsule:
Net sales	$553.3 million
Net income	$15.5 million
Diluted EPS	$0.59 per share

“Our growth was led by record results in our North American and International POS/Bar Code units,” said Mike Baur, CEO of ScanSource. “Excellent execution by our sales and support teams worldwide allowed us to gain market share and achieve our financial goals. We are also very pleased with the record quarterly sales growth of our newly formed ScanSource Communications business unit.”

ScanSource Reports Strong Second Quarter Results

For the quarter ended December 31, 2007, net sales increased 17% to $553.3 million compared to $473.7 million for the quarter ended December 31, 2006. Quarterly operating income increased 60% to $25.4 million from $15.9 million for the comparable quarter in 2006. Our effective tax rate for the quarter was 37.7% compared to 39.0% for the prior year. Net income increased 76% to $15.5 million for the quarter ended December 31, 2007 versus $8.8 million for the quarter ended December 31, 2006. Diluted earnings per share increased 74% to $0.59 per share compared to $0.34 in the prior year quarter.

The comparable quarter and year-to-date periods are impacted by the ongoing expenditures related to our Special Committee’s review of the Company’s stock option grant practices and related matters. When adjusted to exclude legal and accounting costs of third party providers relating to this review for both periods, net income was $15.7 million for the quarter ended December 31, 2007 versus $11.8 million for the quarter ended December 31, 2006, an increase of 33%. Diluted earnings, as adjusted, per share also increased 33% to $0.60 per share compared to $0.45 in the prior year quarter. Supplemental schedules have been included to show this reconciliation for the quarter and year-to-date periods ended December 31, 2007 and 2006, respectively.

Forecast for Next Quarter

The Company announced its revenue forecast for the third quarter of fiscal 2008. ScanSource expects net revenues for the March 2008 quarter could range from $550 million to $570 million.

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ScanSource Reports Strong Second Quarter Results

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 creased 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 annual report on Form 10-K for the year ended June 30, 2007 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 four sales units: ScanSource [automatic identification and data capture (AIDC) and point-of-sale (POS) products]; Catalyst Telecom (Avaya communications products); ScanSource Communications (video conferencing, telephone and communications products); and ScanSource Security Distribution (electronic security products).

The Company services 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 visitwww.scansourceinc.com.

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ScanSource Reports Strong Second Quarter Results

SCANSOURCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

	December 31, 2007 (unaudited)		June 30, 2007 *
Assets
Current Assets
Cash and cash equivalents	$	3,650	$	1,864
Trade & notes receivable, net		349,281		349,961
Other receivables		10,526		6,755
Inventories		336,107		272,012
Prepaid expenses and other assets		9,983		10,444
Deferred income taxes		13,700		12,102
Total current assets		723,247		653,138
Property and equipment, net		22,832		26,781
Goodwill		29,310		29,361
Other assets, including identifiable intangible assets		30,370		29,168
Total assets	$	805,759	$	738,448
Liabilities and Shareholders’ Equity
Current Liabilities
Current portion of long-term debt	$	—	$	200
Short-term borrowings		1,973		3,490
Trade accounts payable		345,241		256,883
Accrued expenses and other liabilities		42,062		39,610
Total current liabilities		389,276		300,183
Deferred income taxes		—		—
Long-term debt		3,888		17,216
Borrowings under revolving credit facility		45,277		90,314
Other long-term liabilities		7,182		5,475
Total liabilities		445,623		413,188
Minority interest		—		516
Shareholders’ Equity
Common stock		87,796		83,653
Retained earnings		264,639		234,502
Accumulated other comprehensive income		7,701		6,589
Total shareholders’ equity		360,136		324,744
Total liabilities and shareholders’ equity	$	805,759	$	738,448

* Derived from audited financial statements at June 30, 2007.

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ScanSource Reports Strong Second Quarter Results

SCANSOURCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED INCOME STATEMENTS (UNAUDITED)

(In thousands, except per share data)

	Quarter ended December 31,						Six months ended December 31,
	2007			2006			2007			2006
Net sales	$	553,344		$	473,734		$	1,107,035		$	969,963
Cost of goods sold		494,167			420,957			989,734			865,348
Gross profit		59,177			52,777			117,301			104,615
Selling, general and administrative expenses		33,743			36,899			66,514			67,219
Operating income		25,434			15,878			50,787			37,396
Other expense (income):
Interest expense		1,274			1,754			3,399			3,525
Interest income		(404	)		(174	)		(707	)		(282	)
Other (income) expense		(251	)		(126	)		(403	)		(562	)
Other expense (income), net		619			1,454			2,289			2,681
Income before income taxes and minority interest		24,815			14,424			48,498			34,715
Provision for income taxes		9,365			5,620			18,361			13,417
Income before minority interest		15,450			8,804			30,137			21,298
Minority interest in income of consolidated subsidiaries, net of income taxes		—			13			—			46
Net income	$	15,450		$	8,791		$	30,137		$	21,252
Per share data:
Net income per common share, basic	$	0.60		$	0.34		$	1.16		$	0.83
Weighted-average shares outstanding, basic		25,899			25,749			25,883			25,739
Net income per common share, assuming dilution	$	0.59		$	0.34		$	1.15		$	0.81
Weighted-average shares outstanding, assuming dilution		26,330			26,236			26,275			26,225

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ScanSource Reports Strong Second Quarter Results

SCANSOURCE, INC. AND SUBSIDIARIES

RECONCILIATION OF NON GAAP INCOME (UNAUDITED)

(In thousands, except per share data)

	Quarter ended December 31, 2007									Quarter ended December 31, 2006
	GAAP			Special Committee Costs			Non-GAAP			GAAP			Special Committee Costs			Non-GAAP
Net sales	$	553,344		$	—		$	553,344		$	473,734		$	—		$	473,734
Cost of goods sold		494,167			—			494,167			420,957			—			420,957
Gross profit		59,177			—			59,177			52,777			—			52,777
Selling, general and administrative expenses		33,743			(468	)		33,275			36,899			(4,900	)		31,999
Operating income		25,434			468			25,902			15,878			4,900			20,778
Other expense (income):
Interest expense		1,274			—			1,274			1,754			—			1,754
Interest income		(404	)		—			(404	)		(174	)		—			(174	)
Other (income) expense		(251	)		—			(251	)		(126	)		—			(126	)
Other expense (income), net		619			—			619			1,454			—			1,454
Income before income taxes and minority interest		24,815			468			25,283			14,424			4,900			19,324
Provision for income taxes		9,365			176			9,541			5,620			1,862			7,482
Income before minority interest		15,450			292			15,742			8,804			3,038			11,842
Minority interest in income of consolidated subsidiaries, net of income taxes		—			—			—			13			—			13
Net income	$	15,450		$	292		$	15,742		$	8,791		$	3,038		$	11,829
Per share data:
Net income per common share, basic	$	0.60		$	0.01		$	0.61		$	0.34		$	0.12		$	0.46
Weighted-average shares outstanding, basic		25,899						25,899			25,749						25,749
Net income per common share, assuming dilution	$	0.59		$	0.01		$	0.60		$	0.34		$	0.12		$	0.45
Weighted-average shares outstanding, assuming dilution		26,330						26,330			26,236						26,236

To provide the reader more comparable information regarding the Company’s 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 and related matters, in the quarterly periods 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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ScanSource Reports Strong Second Quarter Results

SCANSOURCE, INC. AND SUBSIDIARIES

RECONCILIATION OF NON GAAP INCOME (UNAUDITED)

(In thousands, except per share data)

	Six months ended December 31, 2007									Six months ended December 31, 2006
	GAAP			Special Committee Costs			Non-GAAP			GAAP			Special Committee Costs			Non-GAAP
Net sales	$	1,107,035		$	—		$	1,107,035		$	969,963		$	—		$	969,963
Cost of goods sold		989,734			—			989,734			865,348			—			865,348
Gross profit		117,301			—			117,301			104,615			—			104,615
Selling, general and administrative expenses		66,514			(1,011	)		65,503			67,219			(4,900	)		62,319
Operating income		50,787			1,011			51,798			37,396			4,900			42,296
Other expense (income):
Interest expense		3,399			—			3,399			3,525			—			3,525
Interest income		(707	)		—			(707	)		(282	)		—			(282	)
Other (income) expense		(403	)		—			(403	)		(562	)		—			(562	)
Other expense (income), net		2,289			—			2,289			2,681			—			2,681
Income before income taxes and minority interest		48,498			1,011			49,509			34,715			4,900			39,615
Provision for income taxes		18,361			381			18,742			13,417			1,862			15,279
Income before minority interest		30,137			630			30,767			21,298			3,038			24,336
Minority interest in income of consolidated subsidiaries, net of income taxes		—			—			—			46			—			46
Net income	$	30,137		$	630		$	30,767		$	21,252		$	3,038		$	24,290
Per share data:
Net income per common share, basic	$	1.16		$	0.02		$	1.18		$	0.83		$	0.12		$	0.95
Weighted-average shares outstanding, basic		25,883						25,883			25,739						25,739
Net income per common share, assuming dilution	$	1.15		$	0.02		$	1.17		$	0.81		$	0.12		$	0.93
Weighted-average shares outstanding, assuming dilution		26,275						26,275			26,225						26,225

To provide the reader more comparable information regarding the Company’s year-to-date operating results, the above schedule shows the impact on earnings had the Company not incurred the additional external costs related to the Special Committee and related matters, in the year-to-date periods 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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