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Share Name | Share Symbol | Market | Type |
---|---|---|---|
ScanSource Inc | NASDAQ:SCSC | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 42.44 | 41.60 | 43.28 | 0 | 01:00:00 |
|
|
|
|
|
|
|
|
|
|
|
|
Large accelerated filer
|
x
|
|
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Smaller reporting company
|
¨
|
Accelerated filer
|
¨
|
|
|
Emerging growth company
|
¨
|
Non-accelerated filer
|
¨
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Class
|
|
Outstanding at February 1, 2019
|
Common Stock, no par value per share
|
|
25,702,342
|
|
|
Page #
|
|
||
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|
|
Item 1.
|
||
|
Condensed Consolidated Balance Sheets (unaudited) as of December 31, 2018 and June 30, 2018
|
|
|
Condensed Consolidated Income Statements (unaudited) for the Quarter and Six Months Ended December 31, 2018 and 2017
|
|
|
Condensed Consolidated Statements of Comprehensive Income (unaudited) for the Quarter and Six Months Ended December 31, 2018 and 2017
|
|
|
Condensed Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended December 31, 2018 and 2017
|
|
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
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|
|
|
||
|
|
|
Item 1
|
Legal Proceedings
|
|
Item 1A.
|
||
Item 2
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
|
Item 6.
|
||
|
|
|
|
|
|
Item 1.
|
Financial Statements
|
|
December 31, 2018
|
|
June 30, 2018
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
22,749
|
|
|
$
|
25,530
|
|
Accounts receivable, less allowance of $45,240 at December 31, 2018 and $45,561 at June 30, 2018
|
708,531
|
|
|
678,940
|
|
||
Inventories
|
704,444
|
|
|
595,948
|
|
||
Prepaid expenses and other current assets
|
59,785
|
|
|
61,744
|
|
||
Total current assets
|
1,495,509
|
|
|
1,362,162
|
|
||
Property and equipment, net
|
73,354
|
|
|
73,042
|
|
||
Goodwill
|
326,675
|
|
|
298,174
|
|
||
Identifiable intangible assets, net
|
129,020
|
|
|
136,806
|
|
||
Deferred income taxes
|
20,448
|
|
|
22,199
|
|
||
Other non-current assets
|
50,727
|
|
|
52,912
|
|
||
Total assets
|
$
|
2,095,733
|
|
|
$
|
1,945,295
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
604,630
|
|
|
$
|
562,564
|
|
Accrued expenses and other current liabilities
|
89,444
|
|
|
90,873
|
|
||
Current portion of contingent consideration
|
39,729
|
|
|
42,975
|
|
||
Income taxes payable
|
2,421
|
|
|
13,348
|
|
||
Current portion of long-term debt
|
335
|
|
|
551
|
|
||
Total current liabilities
|
736,559
|
|
|
710,311
|
|
||
Deferred income taxes
|
1,958
|
|
|
1,769
|
|
||
Long-term debt
|
4,764
|
|
|
4,878
|
|
||
Borrowings under revolving credit facility
|
367,311
|
|
|
244,000
|
|
||
Long-term portion of contingent consideration
|
32,157
|
|
|
65,258
|
|
||
Other long-term liabilities
|
53,481
|
|
|
52,703
|
|
||
Total liabilities
|
1,196,230
|
|
|
1,078,919
|
|
||
Commitments and contingencies
|
|
|
|
|
|
||
Shareholders’ equity:
|
|
|
|
||||
Preferred stock, no par value; 3,000,000 shares authorized, none issued
|
—
|
|
|
—
|
|
||
Common stock, no par value; 45,000,000 shares authorized, 25,702,342
and 25,593,122 shares issued and outstanding at December 31, 2018 and June 30, 2018, respectively
|
70,912
|
|
|
68,220
|
|
||
Retained earnings
|
916,636
|
|
|
882,333
|
|
||
Accumulated other comprehensive income (loss)
|
(88,045
|
)
|
|
(84,177
|
)
|
||
Total shareholders’ equity
|
899,503
|
|
|
866,376
|
|
||
Total liabilities and shareholders’ equity
|
$
|
2,095,733
|
|
|
$
|
1,945,295
|
|
|
|
|
|
||||
June 30, 2018 amounts are derived from audited consolidated financial statements.
|
|||||||
See accompanying notes to these condensed consolidated financial statements.
|
|
Quarter ended
|
|
Six months ended
|
||||||||||||
|
December 31,
|
|
December 31,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net sales
|
$
|
1,046,021
|
|
|
$
|
1,032,212
|
|
|
$
|
2,018,921
|
|
|
$
|
1,956,771
|
|
Cost of goods sold
|
925,543
|
|
|
919,241
|
|
|
1,786,229
|
|
|
1,737,883
|
|
||||
Gross profit
|
120,478
|
|
|
112,971
|
|
|
232,692
|
|
|
218,888
|
|
||||
Selling, general and administrative expenses
|
80,950
|
|
|
74,763
|
|
|
158,880
|
|
|
147,950
|
|
||||
Depreciation expense
|
3,272
|
|
|
3,467
|
|
|
6,538
|
|
|
6,707
|
|
||||
Intangible amortization expense
|
4,700
|
|
|
5,487
|
|
|
9,703
|
|
|
10,498
|
|
||||
Change in fair value of contingent consideration
|
1,850
|
|
|
6,913
|
|
|
6,434
|
|
|
23,794
|
|
||||
Operating income
|
29,706
|
|
|
22,341
|
|
|
51,137
|
|
|
29,939
|
|
||||
Interest expense
|
3,119
|
|
|
2,285
|
|
|
5,746
|
|
|
3,870
|
|
||||
Interest income
|
(264
|
)
|
|
(580
|
)
|
|
(715
|
)
|
|
(1,462
|
)
|
||||
Other expense, net
|
201
|
|
|
326
|
|
|
233
|
|
|
441
|
|
||||
Income before income taxes
|
26,650
|
|
|
20,310
|
|
|
45,873
|
|
|
27,090
|
|
||||
Provision for income taxes
|
6,668
|
|
|
12,341
|
|
|
11,570
|
|
|
14,974
|
|
||||
Net income
|
$
|
19,982
|
|
|
$
|
7,969
|
|
|
$
|
34,303
|
|
|
$
|
12,116
|
|
Per share data:
|
|
|
|
|
|
|
|
||||||||
Net income per common share, basic
|
$
|
0.78
|
|
|
$
|
0.31
|
|
|
$
|
1.34
|
|
|
$
|
0.48
|
|
Weighted-average shares outstanding, basic
|
25,640
|
|
|
25,506
|
|
|
25,619
|
|
|
25,470
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income per common share, diluted
|
$
|
0.78
|
|
|
$
|
0.31
|
|
|
$
|
1.33
|
|
|
$
|
0.47
|
|
Weighted-average shares outstanding, diluted
|
25,750
|
|
|
25,648
|
|
|
25,752
|
|
|
25,612
|
|
See accompanying notes to these condensed consolidated financial statements.
|
|
Quarter ended
|
|
Six months ended
|
||||||||||||
|
December 31,
|
|
December 31,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net income
|
$
|
19,982
|
|
|
$
|
7,969
|
|
|
$
|
34,303
|
|
|
$
|
12,116
|
|
Unrealized (loss) gain on hedged transaction, net of tax
|
(615
|
)
|
|
320
|
|
|
(469
|
)
|
|
349
|
|
||||
Foreign currency translation adjustment
|
1,362
|
|
|
(2,435
|
)
|
|
(3,399
|
)
|
|
7,450
|
|
||||
Comprehensive income
|
$
|
20,729
|
|
|
$
|
5,854
|
|
|
$
|
30,435
|
|
|
$
|
19,915
|
|
See accompanying notes to these condensed consolidated financial statements.
|
|
Six months ended
|
||||||
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
34,303
|
|
|
$
|
12,116
|
|
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
18,203
|
|
|
18,766
|
|
||
Amortization of debt issuance costs
|
168
|
|
|
158
|
|
||
Provision for doubtful accounts
|
2,187
|
|
|
5,331
|
|
||
Share-based compensation
|
2,907
|
|
|
3,233
|
|
||
Deferred income taxes
|
1,835
|
|
|
(1,540
|
)
|
||
Change in fair value of contingent consideration
|
6,434
|
|
|
23,794
|
|
||
Contingent consideration paid in excess of acquisition fair value
|
(7,444
|
)
|
|
(3,066
|
)
|
||
Changes in operating assets and liabilities, net of acquisitions:
|
|
|
|
||||
Accounts receivable
|
(32,864
|
)
|
|
(72,975
|
)
|
||
Inventories
|
(110,909
|
)
|
|
(37,749
|
)
|
||
Prepaid expenses and other assets
|
2,960
|
|
|
(10,081
|
)
|
||
Other non-current assets
|
1,849
|
|
|
(4,775
|
)
|
||
Accounts payable
|
43,853
|
|
|
(11,524
|
)
|
||
Accrued expenses and other liabilities
|
(3,993
|
)
|
|
(5,654
|
)
|
||
Income taxes payable
|
(11,259
|
)
|
|
(3,283
|
)
|
||
Net cash (used in) operating activities
|
(51,770
|
)
|
|
(87,249
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures
|
(5,780
|
)
|
|
(3,296
|
)
|
||
Cash paid for business acquisitions, net of cash acquired
|
(32,183
|
)
|
|
(143,768
|
)
|
||
Net cash (used in) investing activities
|
(37,963
|
)
|
|
(147,064
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Borrowings on revolving credit
|
1,126,333
|
|
|
1,279,193
|
|
||
Repayments on revolving credit
|
(1,003,022
|
)
|
|
(1,015,672
|
)
|
||
Debt issuance costs
|
—
|
|
|
(296
|
)
|
||
Repayments on long-term debt
|
(331
|
)
|
|
—
|
|
||
Repayments on capital lease obligation
|
(330
|
)
|
|
(281
|
)
|
||
Contingent consideration payments
|
(35,616
|
)
|
|
(50,959
|
)
|
||
Exercise and issuance of equity awards
|
1,509
|
|
|
2,126
|
|
||
Taxes paid on settlement of equity awards
|
(1,404
|
)
|
|
(1,616
|
)
|
||
Repurchase of common stock
|
(308
|
)
|
|
—
|
|
||
Net cash provided by financing activities
|
86,831
|
|
|
212,495
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
121
|
|
|
1,159
|
|
||
Decrease in cash and cash equivalents
|
(2,781
|
)
|
|
(20,659
|
)
|
||
Cash and cash equivalents at beginning of period
|
25,530
|
|
|
56,094
|
|
||
Cash and cash equivalents at end of period
|
$
|
22,749
|
|
|
$
|
35,435
|
|
|
|
|
|
||||
See accompanying notes to these condensed consolidated financial statements.
|
•
|
Incremental costs of obtaining a contract
- These costs are included in selling, general and administrative expenses as the amortization period is generally one year or less. The Company expenses costs associated with obtaining and fulfilling contracts as incurred.
|
•
|
Shipping costs
- The Company accounts for certain shipping and handling activities as fulfillment costs and expenses them as incurred.
|
•
|
Significant financing components
- The Company has elected not to adjust the promised amount of consideration for the effects of a significant financing component as the Company expects, at contract inception, that the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service will generally be one year or less.
|
•
|
Sales tax and other related taxes
- Sales and other tax amounts collected from customers for remittance to governmental authorities are excluded from revenue.
|
|
|
Quarter ended December 31, 2018
|
||||||||||
|
|
|
|
(in thousands)
|
|
|
||||||
|
|
Worldwide Barcode, Networking & Security Segment
|
|
Worldwide Communications & Services Segment
|
|
Total
|
||||||
Revenue by product/service:
|
|
|
|
|
|
|
||||||
Technology solutions
|
|
$
|
701,639
|
|
|
$
|
330,827
|
|
|
$
|
1,032,466
|
|
Master agency and professional services
|
|
—
|
|
|
13,555
|
|
|
13,555
|
|
|||
|
|
$
|
701,639
|
|
|
$
|
344,382
|
|
|
$
|
1,046,021
|
|
|
|
|
|
|
|
|
||||||
|
|
Six months ended December 31, 2018
|
||||||||||
|
|
|
|
(in thousands)
|
|
|
||||||
|
|
Worldwide Barcode, Networking & Security Segment
|
|
Worldwide Communications & Services Segment
|
|
Total
|
||||||
Revenue by product/service:
|
|
|
|
|
|
|
||||||
Technology solutions
|
|
$
|
1,356,752
|
|
|
$
|
635,602
|
|
|
$
|
1,992,354
|
|
Master agency and professional services
|
|
—
|
|
|
26,567
|
|
|
26,567
|
|
|||
|
|
$
|
1,356,752
|
|
|
$
|
662,169
|
|
|
$
|
2,018,921
|
|
|
|
Quarter ended December 31, 2017
|
||||||||||
|
|
|
|
(in thousands)
|
|
|
||||||
|
|
Worldwide Barcode, Networking & Security Segment
|
|
Worldwide Communications & Services Segment
|
|
Total
|
||||||
Revenue by product/service:
|
|
|
|
|
|
|
||||||
Technology solutions
|
|
$
|
719,786
|
|
|
$
|
302,072
|
|
|
$
|
1,021,858
|
|
Master agency and professional services
|
|
—
|
|
|
10,354
|
|
|
10,354
|
|
|||
|
|
$
|
719,786
|
|
|
$
|
312,426
|
|
|
$
|
1,032,212
|
|
|
|
|
|
|
|
|
||||||
|
|
Six months ended December 31, 2017
|
||||||||||
|
|
|
|
(in thousands)
|
|
|
||||||
|
|
Worldwide Barcode, Networking & Security Segment
|
|
Worldwide Communications & Services Segment
|
|
Total
|
||||||
Revenue by product/service:
|
|
|
|
|
|
|
||||||
Technology solutions
|
|
$
|
1,340,114
|
|
|
$
|
596,553
|
|
|
$
|
1,936,667
|
|
Master agency and professional services
|
|
—
|
|
|
20,104
|
|
|
20,104
|
|
|||
|
|
$
|
1,340,114
|
|
|
$
|
616,657
|
|
|
$
|
1,956,771
|
|
|
Quarter ended
|
|
Six months ended
|
||||||||||||
|
December 31,
|
|
December 31,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in thousands, except per share data)
|
||||||||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
19,982
|
|
|
$
|
7,969
|
|
|
$
|
34,303
|
|
|
$
|
12,116
|
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares, basic
|
25,640
|
|
|
25,506
|
|
|
25,619
|
|
|
25,470
|
|
||||
Dilutive effect of share-based payments
|
110
|
|
|
142
|
|
|
133
|
|
|
142
|
|
||||
Weighted-average shares, diluted
|
25,750
|
|
|
25,648
|
|
|
25,752
|
|
|
25,612
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income per common share, basic
|
$
|
0.78
|
|
|
$
|
0.31
|
|
|
$
|
1.34
|
|
|
$
|
0.48
|
|
Net income per common share, diluted
|
$
|
0.78
|
|
|
$
|
0.31
|
|
|
$
|
1.33
|
|
|
$
|
0.47
|
|
|
December 31, 2018
|
|
June 30, 2018
|
||||
|
(in thousands)
|
||||||
Foreign currency translation adjustment
|
$
|
(88,678
|
)
|
|
$
|
(85,279
|
)
|
Unrealized gain (loss) on hedged transaction, net of tax
|
633
|
|
|
1,102
|
|
||
Accumulated other comprehensive income (loss)
|
$
|
(88,045
|
)
|
|
$
|
(84,177
|
)
|
|
|
|
|
|
Quarter ended December 31,
|
|
Six months ended December 31,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in thousands)
|
||||||||||||||
Tax expense (benefit)
|
$
|
(141
|
)
|
|
$
|
75
|
|
|
$
|
(598
|
)
|
|
$
|
379
|
|
|
|
|
|
|
|
|
|
|
POS Portal
|
||
|
(in thousands)
|
||
Receivables
|
$
|
8,914
|
|
Inventory
|
8,352
|
|
|
Other current assets
|
917
|
|
|
Property and equipment
|
24,963
|
|
|
Goodwill
|
101,198
|
|
|
Identifiable intangible assets
|
57,000
|
|
|
Other non-current assets
|
100
|
|
|
|
$
|
201,444
|
|
|
|
||
Accounts payable
|
$
|
10,897
|
|
Accrued expenses and other current liabilities
|
5,130
|
|
|
Contingent consideration
|
13,098
|
|
|
Other long-term liabilities
|
102
|
|
|
Long-term deferred taxes
|
28,449
|
|
|
Consideration transferred, net of cash acquired
|
143,768
|
|
|
|
$
|
201,444
|
|
|
Barcode, Networking & Security Segment
|
|
Communications & Services Segment
|
|
Total
|
||||||
|
(in thousands)
|
||||||||||
Balance as of June 30, 2018
|
$
|
137,214
|
|
|
$
|
160,960
|
|
|
$
|
298,174
|
|
Additions
|
—
|
|
|
29,160
|
|
|
29,160
|
|
|||
Foreign currency translation adjustment
|
(147
|
)
|
|
(512
|
)
|
|
(659
|
)
|
|||
Balance as of December 31, 2018
|
$
|
137,067
|
|
|
$
|
189,608
|
|
|
$
|
326,675
|
|
|
Net Identifiable Intangible Assets
|
||
|
(in thousands)
|
||
Balance as of June 30, 2018
|
$
|
136,806
|
|
Additions
|
2,250
|
|
|
Amortization expense
|
(9,703
|
)
|
|
Foreign currency translation adjustment
|
(333
|
)
|
|
Balance as of December 31, 2018
|
$
|
129,020
|
|
|
December 31, 2018
|
|
June 30, 2018
|
||||
|
(in thousands)
|
||||||
Current portion of long-term debt
|
$
|
335
|
|
|
$
|
551
|
|
Long-term debt, net of current portion
|
4,764
|
|
|
4,878
|
|
||
Borrowings under revolving credit facility
|
367,311
|
|
|
244,000
|
|
||
Total debt
|
$
|
372,410
|
|
|
$
|
249,429
|
|
|
Quarter ended
|
|
Six months ended
|
||||||||||||
|
December 31,
|
|
December 31,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in thousands)
|
||||||||||||||
Net foreign exchange derivative contract (gains) losses
|
$
|
(964
|
)
|
|
$
|
121
|
|
|
$
|
(948
|
)
|
|
$
|
942
|
|
Net foreign currency transactional and re-measurement (gains) losses
|
1,384
|
|
|
473
|
|
|
1,465
|
|
|
(160
|
)
|
||||
Net foreign currency (gains) losses
|
$
|
420
|
|
|
$
|
594
|
|
|
$
|
517
|
|
|
$
|
782
|
|
|
|
Quarter ended
|
|
Six months ended
|
||||||||||||
|
|
December 31,
|
|
December 31,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
(in thousands)
|
||||||||||||||
Net interest (income) expense recognized as a result of interest rate swap
|
|
$
|
(57
|
)
|
|
$
|
64
|
|
|
$
|
(83
|
)
|
|
$
|
133
|
|
Unrealized gain (loss) in fair value of interest rate swap
|
|
(751
|
)
|
|
447
|
|
|
(533
|
)
|
|
424
|
|
||||
Net increase (decrease) in accumulated other comprehensive income (loss)
|
|
$
|
(808
|
)
|
|
$
|
511
|
|
|
$
|
(616
|
)
|
|
$
|
557
|
|
Income tax effect
|
|
(193
|
)
|
|
191
|
|
|
(147
|
)
|
|
208
|
|
||||
Net increase (decrease) in accumulated other comprehensive income (loss), net of tax
|
|
$
|
(615
|
)
|
|
$
|
320
|
|
|
$
|
(469
|
)
|
|
$
|
349
|
|
|
|
|
December 31, 2018
|
|
June 30, 2018
|
||||||||||||
|
Balance Sheet Location
|
|
Fair Value of
Derivatives
Designated
as Hedge Instruments
|
|
Fair Value of
Derivatives
Not Designated as Hedge Instruments
|
|
Fair Value of
Derivatives
Designated
as Hedge Instruments
|
|
Fair Value of
Derivatives
Not Designated as Hedge Instruments
|
||||||||
|
|
|
(in thousands)
|
||||||||||||||
Derivative assets:
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
Prepaid expenses and other current assets
|
|
$
|
—
|
|
|
$
|
190
|
|
|
$
|
—
|
|
|
$
|
157
|
|
Interest rate swap agreement
|
Other non-current assets
|
|
$
|
988
|
|
|
$
|
—
|
|
|
$
|
1,604
|
|
|
$
|
—
|
|
Derivative liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
Accrued expenses and other current liabilities
|
|
$
|
—
|
|
|
$
|
300
|
|
|
$
|
—
|
|
|
$
|
156
|
|
•
|
Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
|
•
|
Level 2 – Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability;
|
•
|
Level 3 – Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported by little or no market activity).
|
|
Total
|
|
Quoted
prices in
active
markets
(Level 1)
|
|
Significant
other
observable
inputs
(Level 2)
|
|
Significant
unobservable
inputs
(Level 3)
|
||||||||
|
(in thousands)
|
||||||||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Deferred compensation plan investments, current and non-current portion
|
$
|
23,057
|
|
|
$
|
23,057
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Forward foreign currency exchange contracts
|
190
|
|
|
—
|
|
|
190
|
|
|
—
|
|
||||
Interest rate swap agreement
|
988
|
|
|
—
|
|
|
988
|
|
|
—
|
|
||||
Total assets at fair value
|
$
|
24,235
|
|
|
$
|
23,057
|
|
|
$
|
1,178
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Deferred compensation plan investments, current and non-current portion
|
$
|
23,056
|
|
|
$
|
23,056
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Forward foreign currency exchange contracts
|
300
|
|
|
—
|
|
|
300
|
|
|
—
|
|
||||
Liability for contingent consideration, current and non-current portion
|
71,886
|
|
|
—
|
|
|
—
|
|
|
71,886
|
|
||||
Total liabilities at fair value
|
$
|
95,242
|
|
|
$
|
23,056
|
|
|
$
|
300
|
|
|
$
|
71,886
|
|
|
Total
|
|
Quoted
prices in
active
markets
(Level 1)
|
|
Significant
other
observable
inputs
(Level 2)
|
|
Significant
unobservable
inputs
(Level 3)
|
||||||||
|
(in thousands)
|
||||||||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Deferred compensation plan investments, current and non-current portion
|
$
|
23,352
|
|
|
$
|
23,352
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Forward foreign currency exchange contracts
|
157
|
|
|
—
|
|
|
157
|
|
|
—
|
|
||||
Interest rate swap agreement
|
1,604
|
|
|
—
|
|
|
1,604
|
|
|
—
|
|
||||
Total assets at fair value
|
$
|
25,113
|
|
|
$
|
23,352
|
|
|
$
|
1,761
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Deferred compensation plan investments, current and non-current portion
|
$
|
23,352
|
|
|
$
|
23,352
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Forward foreign currency exchange contracts
|
156
|
|
|
—
|
|
|
156
|
|
|
—
|
|
||||
Liability for contingent consideration, current and non-current portion
|
108,233
|
|
|
—
|
|
|
—
|
|
|
108,233
|
|
||||
Total liabilities at fair value
|
$
|
131,741
|
|
|
$
|
23,352
|
|
|
$
|
156
|
|
|
$
|
108,233
|
|
|
Contingent consideration for the quarter ended
|
|
Contingent consideration for the six months ended
|
||||||||||||||||||||
|
December 31, 2018
|
|
December 31, 2018
|
||||||||||||||||||||
|
Barcode, Networking & Security Segment
|
|
Communications & Services Segment
|
|
Total
|
|
Barcode, Networking & Security Segment
|
|
Communications & Services Segment
|
|
Total
|
||||||||||||
|
(in thousands)
|
||||||||||||||||||||||
Fair value at beginning of period
|
$
|
—
|
|
|
$
|
80,173
|
|
|
$
|
80,173
|
|
|
$
|
—
|
|
|
$
|
108,233
|
|
|
$
|
108,233
|
|
Issuance of contingent consideration
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Payments
|
—
|
|
|
(10,813
|
)
|
|
(10,813
|
)
|
|
—
|
|
|
(43,060
|
)
|
|
(43,060
|
)
|
||||||
Change in fair value of contingent consideration
|
—
|
|
|
1,850
|
|
|
1,850
|
|
|
—
|
|
|
6,434
|
|
|
6,434
|
|
||||||
Foreign currency translation adjustment
|
—
|
|
|
676
|
|
|
676
|
|
|
—
|
|
|
279
|
|
|
279
|
|
||||||
Fair value at end of period
|
$
|
—
|
|
|
$
|
71,886
|
|
|
$
|
71,886
|
|
|
$
|
—
|
|
|
$
|
71,886
|
|
|
$
|
71,886
|
|
|
Contingent consideration for the quarter ended
|
|
Contingent consideration for the six months ended
|
||||||||||||||||||||
|
December 31, 2017
|
|
December 31, 2017
|
||||||||||||||||||||
|
Barcode, Networking & Security Segment
|
|
Communications & Services Segment
|
|
Total
|
|
Barcode, Networking & Security Segment
|
|
Communications & Services Segment
|
|
Total
|
||||||||||||
|
(in thousands)
|
||||||||||||||||||||||
Fair value at beginning of period
|
$
|
13,167
|
|
|
$
|
90,326
|
|
|
$
|
103,493
|
|
|
$
|
—
|
|
|
$
|
114,036
|
|
|
$
|
114,036
|
|
Issuance of contingent consideration
|
—
|
|
|
—
|
|
|
—
|
|
|
13,098
|
|
|
—
|
|
|
13,098
|
|
||||||
Payments
|
(13,167
|
)
|
|
—
|
|
|
(13,167
|
)
|
|
(13,167
|
)
|
|
(40,858
|
)
|
|
(54,025
|
)
|
||||||
Change in fair value of contingent consideration
|
—
|
|
|
6,913
|
|
|
6,913
|
|
|
69
|
|
|
23,725
|
|
|
23,794
|
|
||||||
Foreign currency translation adjustment
|
—
|
|
|
(208
|
)
|
|
(208
|
)
|
|
—
|
|
|
128
|
|
|
128
|
|
||||||
Fair value at end of period
|
$
|
—
|
|
|
$
|
97,031
|
|
|
$
|
97,031
|
|
|
$
|
—
|
|
|
$
|
97,031
|
|
|
$
|
97,031
|
|
•
|
estimated future results, net of pro forma adjustments set forth in the purchase agreements;
|
•
|
the probability of achieving these results; and
|
•
|
a discount rate reflective of the Company’s creditworthiness and market risk premium associated with the United States and Brazilian markets.
|
Reporting Period
|
|
Valuation Technique
|
|
Significant Unobservable Inputs
|
|
Weighted Average Rates
|
|
December 31, 2018
|
|
Discounted cash flow
|
|
Weighted average cost of capital
|
|
15.1
|
%
|
|
|
|
|
Adjusted EBITDA growth rate
|
|
15.2
|
%
|
|
|
|
|
|
|
|
|
June 30, 2018
|
|
Discounted cash flow
|
|
Weighted average cost of capital
|
|
14.8
|
%
|
|
|
|
|
Adjusted EBITDA growth rate
|
|
18.2
|
%
|
|
December 31, 2018
|
|
June 30, 2018
|
||||
|
(in thousands)
|
||||||
Assets:
|
|
|
|
||||
Worldwide Barcode, Networking & Security
|
$
|
1,113,474
|
|
|
$
|
1,062,143
|
|
Worldwide Communications & Services
|
954,554
|
|
|
841,490
|
|
||
Corporate
|
27,705
|
|
|
41,662
|
|
||
|
$
|
2,095,733
|
|
|
$
|
1,945,295
|
|
Property and equipment, net by Geography Category:
|
|
|
|
||||
United States and Canada
|
$
|
69,811
|
|
|
$
|
69,032
|
|
International
|
3,543
|
|
|
4,010
|
|
||
|
$
|
73,354
|
|
|
$
|
73,042
|
|
|
December 31, 2018
|
|
June 30, 2018
|
||||
|
Network1
|
||||||
|
(in thousands)
|
||||||
Assets
|
|
|
|
||||
Prepaid expenses and other current assets
|
$
|
531
|
|
|
$
|
1,385
|
|
Other non-current assets
|
$
|
5,161
|
|
|
$
|
5,700
|
|
Liabilities
|
|
|
|
||||
Accrued expenses and other current liabilities
|
$
|
531
|
|
|
$
|
1,385
|
|
Other long-term liabilities
|
$
|
5,161
|
|
|
$
|
5,700
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Worldwide Barcode, Networking & Security
|
•
|
Worldwide Communications & Services
|
|
Quarter ended December 31,
|
|
|
|
% Change, Constant Currency, Excluding Acquisitions
(a)
|
||||||||||||
Net Sales by Segment:
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|
|||||||||
|
(in thousands)
|
|
|
|
|
||||||||||||
Worldwide Barcode, Networking & Security
|
$
|
701,639
|
|
|
$
|
719,786
|
|
|
$
|
(18,147
|
)
|
|
(2.5
|
)%
|
|
(1.4
|
)%
|
Worldwide Communications & Services
|
344,382
|
|
|
312,426
|
|
|
31,956
|
|
|
10.2
|
%
|
|
13.8
|
%
|
|||
Total net sales
|
$
|
1,046,021
|
|
|
$
|
1,032,212
|
|
|
$
|
13,809
|
|
|
1.3
|
%
|
|
3.2
|
%
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Six months ended December 31,
|
|
|
|
% Change, Constant Currency, Excluding Acquisitions
(a)
|
||||||||||||
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|
|||||||||
|
(in thousands)
|
|
|
|
|
|
|||||||||||
Worldwide Barcode, Networking & Security
|
$
|
1,356,752
|
|
|
$
|
1,340,114
|
|
|
$
|
16,638
|
|
|
1.2
|
%
|
|
1.7
|
%
|
Worldwide Communications & Services
|
662,169
|
|
|
616,657
|
|
|
45,512
|
|
|
7.4
|
%
|
|
11.2
|
%
|
|||
Total net sales
|
$
|
2,018,921
|
|
|
$
|
1,956,771
|
|
|
$
|
62,150
|
|
|
3.2
|
%
|
|
4.7
|
%
|
|
Quarter ended December 31,
|
|
|
|
|
|
% of Net Sales December 31,
|
|||||||||||||
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|
2018
|
|
2017
|
|||||||||
|
(in thousands)
|
|
|
|
|
|
|
|||||||||||||
Worldwide Barcode, Networking & Security
|
$
|
64,825
|
|
|
$
|
61,983
|
|
|
$
|
2,842
|
|
|
4.6
|
%
|
|
9.2
|
%
|
|
8.6
|
%
|
Worldwide Communications & Services
|
55,653
|
|
|
50,988
|
|
|
4,665
|
|
|
9.1
|
%
|
|
16.2
|
%
|
|
16.3
|
%
|
|||
Gross profit
|
$
|
120,478
|
|
|
$
|
112,971
|
|
|
$
|
7,507
|
|
|
6.6
|
%
|
|
11.5
|
%
|
|
10.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Six months ended December 31,
|
|
|
|
|
|
% of Net Sales December 31,
|
|||||||||||||
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|
2018
|
|
2017
|
|||||||||
|
(in thousands)
|
|
|
|
|
|
|
|||||||||||||
Worldwide Barcode, Networking & Security
|
$
|
126,776
|
|
|
$
|
119,446
|
|
|
$
|
7,330
|
|
|
6.1
|
%
|
|
9.3
|
%
|
|
8.9
|
%
|
Worldwide Communications & Services
|
105,916
|
|
|
99,442
|
|
|
6,474
|
|
|
6.5
|
%
|
|
16.0
|
%
|
|
16.1
|
%
|
|||
Gross profit
|
$
|
232,692
|
|
|
$
|
218,888
|
|
|
$
|
13,804
|
|
|
6.3
|
%
|
|
11.5
|
%
|
|
11.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended December 31,
|
|
|
|
|
|
% of Net Sales December 31,
|
|||||||||||||
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|
2018
|
|
2017
|
|||||||||
|
(in thousands)
|
|
|
|
|
|
|
|||||||||||||
Selling, general and administrative expenses
|
$
|
80,950
|
|
|
$
|
74,763
|
|
|
$
|
6,187
|
|
|
8.3
|
%
|
|
7.7
|
%
|
|
7.2
|
%
|
Depreciation expense
|
3,272
|
|
|
3,467
|
|
|
(195
|
)
|
|
(5.6
|
)%
|
|
0.3
|
%
|
|
0.3
|
%
|
|||
Intangible amortization expense
|
4,700
|
|
|
5,487
|
|
|
(787
|
)
|
|
(14.3
|
)%
|
|
0.4
|
%
|
|
0.5
|
%
|
|||
Change in fair value of contingent consideration
|
1,850
|
|
|
6,913
|
|
|
(5,063
|
)
|
|
(73.2
|
)%
|
|
0.2
|
%
|
|
0.7
|
%
|
|||
Operating expenses
|
$
|
90,772
|
|
|
$
|
90,630
|
|
|
$
|
142
|
|
|
0.2
|
%
|
|
8.7
|
%
|
|
8.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Six months ended December 31,
|
|
|
|
|
|
% of Net Sales December 31,
|
|||||||||||||
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|
2018
|
|
2017
|
|||||||||
|
(in thousands)
|
|
|
|
|
|
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Selling, general and administrative expenses
|
$
|
158,880
|
|
|
$
|
147,950
|
|
|
$
|
10,930
|
|
|
7.4
|
%
|
|
7.9
|
%
|
|
7.6
|
%
|
Depreciation expense
|
6,538
|
|
|
6,707
|
|
|
(169
|
)
|
|
(2.5
|
)%
|
|
0.3
|
%
|
|
0.3
|
%
|
|||
Intangible amortization expense
|
9,703
|
|
|
10,498
|
|
|
(795
|
)
|
|
(7.6
|
)%
|
|
0.5
|
%
|
|
0.5
|
%
|
|||
Change in fair value of contingent consideration
|
6,434
|
|
|
23,794
|
|
|
(17,360
|
)
|
|
(73.0
|
)%
|
|
0.3
|
%
|
|
1.2
|
%
|
|||
Operating expenses
|
$
|
181,555
|
|
|
$
|
188,949
|
|
|
$
|
(7,394
|
)
|
|
(3.9
|
)%
|
|
9.0
|
%
|
|
9.7
|
%
|
|
Quarter ended December 31,
|
|
|
|
|
|
% of Net Sales December 31,
|
|||||||||||||
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|
2018
|
|
2017
|
|||||||||
|
(in thousands)
|
|
|
|
|
|
|
|||||||||||||
Worldwide Barcode, Networking & Security
|
$
|
18,581
|
|
|
$
|
15,542
|
|
|
$
|
3,039
|
|
|
19.6
|
%
|
|
2.6
|
%
|
|
2.2
|
%
|
Worldwide Communications & Services
|
11,539
|
|
|
6,799
|
|
|
4,740
|
|
|
69.7
|
%
|
|
3.4
|
%
|
|
2.2
|
%
|
|||
Corporate
|
(414
|
)
|
|
—
|
|
|
(414
|
)
|
|
nm*
|
|
|
nm*
|
|
|
nm*
|
|
|||
Operating income
|
$
|
29,706
|
|
|
$
|
22,341
|
|
|
$
|
7,365
|
|
|
33.0
|
%
|
|
2.8
|
%
|
|
2.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Six months ended December 31,
|
|
|
|
|
|
% of Net Sales December 31,
|
|||||||||||||
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|
2018
|
|
2017
|
|||||||||
|
(in thousands)
|
|
|
|
|
|
|
|||||||||||||
Worldwide Barcode, Networking & Security
|
$
|
32,112
|
|
|
$
|
29,578
|
|
|
$
|
2,534
|
|
|
8.6
|
%
|
|
2.4
|
%
|
|
2.2
|
%
|
Worldwide Communications & Services
|
19,794
|
|
|
533
|
|
|
19,261
|
|
|
nm*
|
|
|
3.0
|
%
|
|
0.1
|
%
|
|||
Corporate
|
(769
|
)
|
|
(172
|
)
|
|
(597
|
)
|
|
nm*
|
|
|
nm*
|
|
|
nm*
|
|
|||
Operating income
|
$
|
51,137
|
|
|
$
|
29,939
|
|
|
$
|
21,198
|
|
|
70.8
|
%
|
|
2.5
|
%
|
|
1.5
|
%
|
|
Quarter ended December 31,
|
|
|
|
|
|
% of Net Sales December 31,
|
|||||||||||||
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|
2018
|
|
2017
|
|||||||||
|
(in thousands)
|
|
|
|
|
|
|
|||||||||||||
Interest expense
|
$
|
3,119
|
|
|
$
|
2,285
|
|
|
$
|
834
|
|
|
36.5
|
%
|
|
0.3
|
%
|
|
0.2
|
%
|
Interest income
|
(264
|
)
|
|
(580
|
)
|
|
316
|
|
|
54.5
|
%
|
|
(0.0
|
)%
|
|
(0.1
|
)%
|
|||
Net foreign exchange (gains) losses
|
420
|
|
|
594
|
|
|
(174
|
)
|
|
(29.3
|
)%
|
|
0.0
|
%
|
|
0.1
|
%
|
|||
Other, net
|
(219
|
)
|
|
(268
|
)
|
|
49
|
|
|
18.3
|
%
|
|
(0.0
|
)%
|
|
(0.0
|
)%
|
|||
Total other (income) expense, net
|
$
|
3,056
|
|
|
$
|
2,031
|
|
|
$
|
1,025
|
|
|
50.5
|
%
|
|
0.3
|
%
|
|
0.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Six months ended December 31,
|
|
|
|
|
|
% of Net Sales December 31,
|
|||||||||||||
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|
2018
|
|
2017
|
|||||||||
|
(in thousands)
|
|
|
|
|
|
|
|||||||||||||
Interest expense
|
$
|
5,746
|
|
|
$
|
3,870
|
|
|
$
|
1,876
|
|
|
48.5
|
%
|
|
0.3
|
%
|
|
0.2
|
%
|
Interest income
|
(715
|
)
|
|
(1,462
|
)
|
|
747
|
|
|
(51.1
|
)%
|
|
(0.0
|
)%
|
|
(0.1
|
)%
|
|||
Net foreign exchange (gains) losses
|
517
|
|
|
782
|
|
|
(265
|
)
|
|
(33.9
|
)%
|
|
0.0
|
%
|
|
0.0
|
%
|
|||
Other, net
|
(284
|
)
|
|
(341
|
)
|
|
57
|
|
|
(16.7
|
)%
|
|
(0.0
|
)%
|
|
(0.0
|
)%
|
|||
Total other (income) expense, net
|
$
|
5,264
|
|
|
$
|
2,849
|
|
|
$
|
2,415
|
|
|
84.8
|
%
|
|
0.3
|
%
|
|
0.1
|
%
|
Net Sales by Segment:
|
|
|
|
|
|
|||||||||
|
Quarter ended December 31,
|
|
|
|
|
|||||||||
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|||||||
Worldwide Barcode, Networking & Security:
|
(in thousands)
|
|
|
|
|
|||||||||
Net sales, as reported
|
$
|
701,639
|
|
|
$
|
719,786
|
|
|
$
|
(18,147
|
)
|
|
(2.5
|
)%
|
Foreign exchange impact
(a)
|
7,805
|
|
|
—
|
|
|
|
|
|
|||||
Net sales, constant currency
|
709,444
|
|
|
719,786
|
|
|
(10,342
|
)
|
|
(1.4
|
)%
|
|||
Less: Acquisitions
|
—
|
|
|
—
|
|
|
|
|
|
|||||
Net sales, constant currency excluding acquisitions
|
$
|
709,444
|
|
|
$
|
719,786
|
|
|
$
|
(10,342
|
)
|
|
(1.4
|
)%
|
|
|
|
|
|
|
|
|
|||||||
Worldwide Communications & Services:
|
|
|
|
|
|
|
|
|||||||
Net sales, as reported
|
$
|
344,382
|
|
|
$
|
312,426
|
|
|
$
|
31,956
|
|
|
10.2
|
%
|
Foreign exchange impact
(a)
|
12,915
|
|
|
—
|
|
|
|
|
|
|||||
Net sales, constant currency
|
357,297
|
|
|
312,426
|
|
|
44,871
|
|
|
14.4
|
%
|
|||
Less: Acquisitions
|
(1,832
|
)
|
|
—
|
|
|
|
|
|
|||||
Net sales, constant currency excluding acquisitions
|
$
|
355,465
|
|
|
$
|
312,426
|
|
|
$
|
43,039
|
|
|
13.8
|
%
|
|
|
|
|
|
|
|
|
|||||||
Consolidated:
|
|
|
|
|
|
|
|
|||||||
Net sales, as reported
|
$
|
1,046,021
|
|
|
$
|
1,032,212
|
|
|
$
|
13,809
|
|
|
1.3
|
%
|
Foreign exchange impact
(a)
|
20,720
|
|
|
—
|
|
|
|
|
|
|||||
Net sales, constant currency
|
1,066,741
|
|
|
1,032,212
|
|
|
34,529
|
|
|
3.3
|
%
|
|||
Less: Acquisitions
|
(1,832
|
)
|
|
—
|
|
|
|
|
|
|||||
Net sales, constant currency excluding acquisitions
|
$
|
1,064,909
|
|
|
$
|
1,032,212
|
|
|
$
|
32,697
|
|
|
3.2
|
%
|
|
|
|
|
|
|
|
|
|||||||
Net Sales by Segment:
|
|
|
|
|
|
|||||||||
|
Six months ended December 31,
|
|
|
|
|
|||||||||
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|||||||
Worldwide Barcode, Networking & Security:
|
(in thousands)
|
|
|
|
|
|||||||||
Net sales, as reported
|
$
|
1,356,752
|
|
|
$
|
1,340,114
|
|
|
$
|
16,638
|
|
|
1.2
|
%
|
Foreign exchange impact
(a)
|
15,317
|
|
|
—
|
|
|
|
|
|
|||||
Net sales, constant currency
|
1,372,069
|
|
|
1,340,114
|
|
|
31,955
|
|
|
2.4
|
%
|
|||
Less: Acquisitions
|
(23,465
|
)
|
|
(14,553
|
)
|
|
|
|
|
|||||
Net sales, constant currency excluding acquisitions
|
$
|
1,348,604
|
|
|
$
|
1,325,561
|
|
|
$
|
23,043
|
|
|
1.7
|
%
|
|
|
|
|
|
|
|
|
|||||||
Worldwide Communications & Services:
|
|
|
|
|
|
|
|
|||||||
Net sales, as reported
|
$
|
662,169
|
|
|
$
|
616,657
|
|
|
$
|
45,512
|
|
|
7.4
|
%
|
Foreign exchange impact
(a)
|
26,221
|
|
|
—
|
|
|
|
|
|
|||||
Net sales, constant currency
|
688,390
|
|
|
616,657
|
|
|
71,733
|
|
|
11.6
|
%
|
|||
Less: Acquisitions
|
(2,796
|
)
|
|
—
|
|
|
|
|
|
|||||
Net sales, constant currency excluding acquisitions
|
$
|
685,594
|
|
|
$
|
616,657
|
|
|
$
|
68,937
|
|
|
11.2
|
%
|
|
|
|
|
|
|
|
|
|||||||
Consolidated:
|
|
|
|
|
|
|
|
|||||||
Net sales, as reported
|
$
|
2,018,921
|
|
|
$
|
1,956,771
|
|
|
$
|
62,150
|
|
|
3.2
|
%
|
Foreign exchange impact
(a)
|
41,538
|
|
|
—
|
|
|
|
|
|
|||||
Net sales, constant currency
|
2,060,459
|
|
|
1,956,771
|
|
|
103,688
|
|
|
5.3
|
%
|
|||
Less: Acquisitions
|
(26,261
|
)
|
|
(14,553
|
)
|
|
|
|
|
|||||
Net sales, constant currency excluding acquisitions
|
$
|
2,034,198
|
|
|
$
|
1,942,218
|
|
|
$
|
91,980
|
|
|
4.7
|
%
|
|
|
|
|
|
|
|
|
|
Quarter ended December 31, 2018
|
|
Quarter ended December 31, 2017
|
||||||||||||||||||||||||||||
|
Operating Income
|
|
Pre-Tax Income
|
|
Net Income
|
|
Diluted EPS
|
|
Operating Income
|
|
Pre-Tax Income
|
|
Net Income
|
|
Diluted EPS
|
||||||||||||||||
|
(in thousands, except per share data)
|
||||||||||||||||||||||||||||||
GAAP Measures
|
$
|
29,706
|
|
|
$
|
26,650
|
|
|
$
|
19,982
|
|
|
$
|
0.78
|
|
|
$
|
22,341
|
|
|
$
|
20,310
|
|
|
$
|
7,969
|
|
|
$
|
0.31
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Amortization of intangible assets
|
4,700
|
|
|
4,700
|
|
|
3,567
|
|
|
0.14
|
|
|
5,487
|
|
|
5,487
|
|
|
3,648
|
|
|
0.14
|
|
||||||||
Change in fair value of contingent consideration
|
1,850
|
|
|
1,850
|
|
|
1,408
|
|
|
0.05
|
|
|
6,913
|
|
|
6,913
|
|
|
4,742
|
|
|
0.18
|
|
||||||||
Acquisition costs
|
414
|
|
|
414
|
|
|
414
|
|
|
0.02
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Tax reform charges
(a)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,689
|
|
|
0.26
|
|
||||||||
Non-GAAP measures
|
$
|
36,670
|
|
|
$
|
33,614
|
|
|
$
|
25,371
|
|
|
$
|
0.99
|
|
|
$
|
34,741
|
|
|
$
|
32,710
|
|
|
$
|
23,048
|
|
|
$
|
0.90
|
|
Operating Income by Segment:
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Quarter ended December 31,
|
|
|
|
|
|
% of Net Sales December 31,
|
|||||||||||||
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|
2018
|
|
2017
|
|||||||||
Worldwide Barcode, Networking & Security:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
GAAP operating income
|
$
|
18,581
|
|
|
$
|
15,542
|
|
|
$
|
3,039
|
|
|
19.6
|
%
|
|
2.6
|
%
|
|
2.2
|
%
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Amortization of intangible assets
|
1,854
|
|
|
2,309
|
|
|
(455
|
)
|
|
|
|
|
|
|
|
|||||
Non-GAAP operating income
|
$
|
20,435
|
|
|
$
|
17,851
|
|
|
$
|
2,584
|
|
|
14.5
|
%
|
|
2.9
|
%
|
|
2.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Worldwide Communications & Services:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
GAAP operating income
|
$
|
11,539
|
|
|
$
|
6,799
|
|
|
$
|
4,740
|
|
|
69.7
|
%
|
|
3.4
|
%
|
|
2.2
|
%
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Amortization of intangible assets
|
2,846
|
|
|
3,178
|
|
|
(332
|
)
|
|
|
|
|
|
|
||||||
Change in fair value of contingent consideration
|
1,850
|
|
|
6,913
|
|
|
(5,063
|
)
|
|
|
|
|
|
|
||||||
Non-GAAP operating income
|
$
|
16,235
|
|
|
$
|
16,890
|
|
|
$
|
(655
|
)
|
|
(3.9
|
)%
|
|
4.7
|
%
|
|
5.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Corporate:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
GAAP operating income
|
$
|
(414
|
)
|
|
$
|
—
|
|
|
$
|
(414
|
)
|
|
nm*
|
|
|
nm*
|
|
|
nm*
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Acquisition costs
|
414
|
|
|
—
|
|
|
414
|
|
|
|
|
|
|
|
||||||
Non-GAAP operating income
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
nm*
|
|
|
nm*
|
|
|
nm*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Consolidated:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
GAAP operating income
|
$
|
29,706
|
|
|
$
|
22,341
|
|
|
$
|
7,365
|
|
|
33.0
|
%
|
|
2.8
|
%
|
|
2.2
|
%
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Amortization of intangible assets
|
4,700
|
|
|
5,487
|
|
|
(787
|
)
|
|
|
|
|
|
|
||||||
Change in fair value of contingent consideration
|
1,850
|
|
|
6,913
|
|
|
(5,063
|
)
|
|
|
|
|
|
|
||||||
Acquisition costs
|
414
|
|
|
—
|
|
|
414
|
|
|
|
|
|
|
|
||||||
Non-GAAP operating income
|
$
|
36,670
|
|
|
$
|
34,741
|
|
|
$
|
1,929
|
|
|
5.6
|
%
|
|
3.5
|
%
|
|
3.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Operating Income by Segment:
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Six months ended December 31,
|
|
|
|
|
|
% of Net Sales December 31,
|
|||||||||||||
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|
2018
|
|
2017
|
|||||||||
Worldwide Barcode, Networking & Security:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
GAAP operating income
|
$
|
32,112
|
|
|
$
|
29,578
|
|
|
$
|
2,534
|
|
|
8.6
|
%
|
|
2.4
|
%
|
|
2.2
|
%
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Amortization of intangible assets
|
4,163
|
|
|
4,084
|
|
|
79
|
|
|
|
|
|
|
|
||||||
Change in fair value of contingent consideration
|
—
|
|
|
69
|
|
|
(69
|
)
|
|
|
|
|
|
|
||||||
Restructuring Costs
|
708
|
|
|
—
|
|
|
708
|
|
|
|
|
|
|
|
||||||
Non-GAAP operating income
|
$
|
36,983
|
|
|
$
|
33,731
|
|
|
$
|
3,252
|
|
|
9.6
|
%
|
|
2.7
|
%
|
|
2.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Worldwide Communications & Services:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
GAAP operating income
|
$
|
19,794
|
|
|
$
|
533
|
|
|
$
|
19,261
|
|
|
nm*
|
|
|
3.0
|
%
|
|
0.1
|
%
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Amortization of intangible assets
|
5,540
|
|
|
6,414
|
|
|
(874
|
)
|
|
|
|
|
|
|
||||||
Change in fair value of contingent consideration
|
6,434
|
|
|
23,725
|
|
|
(17,291
|
)
|
|
|
|
|
|
|
||||||
Restructuring costs
|
620
|
|
|
—
|
|
|
620
|
|
|
|
|
|
|
|
||||||
Legal settlement
|
—
|
|
|
952
|
|
|
(952
|
)
|
|
|
|
|
|
|
||||||
Non-GAAP operating income
|
$
|
32,388
|
|
|
$
|
31,624
|
|
|
$
|
764
|
|
|
2.4
|
%
|
|
4.9
|
%
|
|
5.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Corporate:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
GAAP operating income
|
$
|
(769
|
)
|
|
$
|
(172
|
)
|
|
$
|
(597
|
)
|
|
nm*
|
|
|
nm*
|
|
|
nm*
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Acquisition costs
|
769
|
|
|
172
|
|
|
597
|
|
|
|
|
|
|
|
||||||
Non-GAAP operating income
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
nm*
|
|
|
nm*
|
|
|
nm*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Consolidated:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
GAAP operating income
|
$
|
51,137
|
|
|
$
|
29,939
|
|
|
$
|
21,198
|
|
|
70.8
|
%
|
|
2.5
|
%
|
|
1.5
|
%
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Amortization of intangible assets
|
9,703
|
|
|
10,498
|
|
|
(795
|
)
|
|
|
|
|
|
|
||||||
Change in fair value of contingent consideration
|
6,434
|
|
|
23,794
|
|
|
(17,360
|
)
|
|
|
|
|
|
|
||||||
Acquisition costs
|
769
|
|
|
172
|
|
|
597
|
|
|
|
|
|
|
|
||||||
Restructuring costs
|
1,328
|
|
|
—
|
|
|
1,328
|
|
|
|
|
|
|
|
||||||
Legal settlement
|
—
|
|
|
952
|
|
|
(952
|
)
|
|
|
|
|
|
|
||||||
Non-GAAP operating income
|
69,371
|
|
|
65,355
|
|
|
$
|
4,016
|
|
|
6.1
|
%
|
|
3.4
|
%
|
|
3.3
|
%
|
|
Quarter ended December 31,
|
||||
|
2018
|
|
2017
|
||
Return on invested capital ratio, annualized
(a)
|
13.3
|
%
|
|
13.3
|
%
|
(a)
|
The annualized EBITDA amount is divided by days in the quarter times 365 days per year. There were 92 days in the current and prior-year quarter.
|
|
Quarter ended December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in thousands)
|
||||||
Reconciliation of net income to EBITDA:
|
|
||||||
Net income (GAAP)
|
$
|
19,982
|
|
|
$
|
7,969
|
|
Plus: Interest expense
|
3,119
|
|
|
2,285
|
|
||
Plus: Income taxes
|
6,668
|
|
|
12,341
|
|
||
Plus: Depreciation and amortization
|
8,935
|
|
|
9,901
|
|
||
EBITDA (non-GAAP)
|
38,704
|
|
|
32,496
|
|
||
Plus: Change in fair value of contingent consideration
|
1,850
|
|
|
6,913
|
|
||
Plus: Acquisition costs
(a)
|
414
|
|
|
—
|
|
||
Adjusted EBITDA (numerator for ROIC) (non-GAAP)
|
$
|
40,968
|
|
|
$
|
39,409
|
|
|
Quarter ended December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in thousands)
|
||||||
Invested capital calculations:
|
|
||||||
Equity – beginning of the quarter
|
$
|
877,897
|
|
|
$
|
852,976
|
|
Equity – end of the quarter
|
899,503
|
|
|
860,787
|
|
||
Plus: Change in fair value of contingent consideration, net of tax
|
1,408
|
|
|
4,742
|
|
||
Plus: Acquisition costs
(a)
|
414
|
|
|
—
|
|
||
Plus: Tax reform charges
|
—
|
|
|
6,689
|
|
||
Average equity
|
889,611
|
|
|
862,597
|
|
||
Average funded debt
(b)
|
333,138
|
|
|
311,327
|
|
||
Invested capital (denominator for ROIC) (non-GAAP)
|
$
|
1,222,749
|
|
|
$
|
1,173,924
|
|
(a)
|
Acquisition costs are nondeductible for tax purposes.
|
(b)
|
Average funded debt is calculated as the average daily amounts outstanding on our current and long-term interest-bearing debt.
|
|
Six months ended
|
||||||
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Cash provided by (used in):
|
(in thousands)
|
||||||
Operating activities
|
$
|
(51,770
|
)
|
|
$
|
(87,249
|
)
|
Investing activities
|
(37,963
|
)
|
|
(147,064
|
)
|
||
Financing activities
|
86,831
|
|
|
212,495
|
|
||
Effect of exchange rate change on cash and cash equivalents
|
121
|
|
|
1,159
|
|
||
Decrease in cash and cash equivalents
|
$
|
(2,781
|
)
|
|
$
|
(20,659
|
)
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Period
|
|
Total number of shares purchased
(a)
|
|
Average price paid per share
|
|
Total number of shares purchased as part of the publicly announced plan or program
|
|
Approximate dollar value of shares that may yet be purchased under the plan or program
|
||||||
October 1, 2018 through October 31, 2018
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
99,664,707
|
|
November 1, 2018 through November 30, 2018
|
|
892
|
|
|
$
|
39.70
|
|
|
—
|
|
|
$
|
99,664,707
|
|
December 1, 2018 through December 31, 2018
|
|
46,132
|
|
|
$
|
36.03
|
|
|
9,387
|
|
|
$
|
99,356,839
|
|
Total
|
|
47,024
|
|
|
$
|
36.10
|
|
|
9,387
|
|
|
$
|
99,356,839
|
|
|
|
|
|
|
|
|
|
|
Item 6.
|
Exhibits
|
Exhibit
Number
|
Description
|
|
|
31.1
|
|
|
|
31.2
|
|
|
|
32.1
|
|
|
|
32.2
|
|
|
|
3.1
|
|
|
|
10.1
|
|
|
|
10.2
|
|
|
|
10.3
|
|
|
|
10.4
|
|
|
|
10.5
|
|
|
|
99.1
|
|
|
|
101
|
The following materials from our Quarterly Report on Form 10-Q for the quarter ended December 31, 2018, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets as of December 31, 2018 and June 30, 2018; (ii) the Condensed Consolidated Income Statement for the quarter and six months ended December 31, 2018 and 2017; (iii) the Condensed Consolidated Statements of Comprehensive Income for the quarter and six months ended December 31, 2018 and 2017; (iv) the Condensed Consolidated Statements of Cash Flows for the six months ended December 31, 2018 and 2017; and (v) the Notes to the Condensed Consolidated Financial Statements.
|
|
|
ScanSource, Inc.
|
|
|
|
|
|
/s/ MICHAEL L. BAUR
|
|
|
Michael L. Baur
|
Date:
|
February 5, 2019
|
Chairmen and Chief Executive Officer
(Principal Executive Officer)
|
|
|
/s/ GERALD LYONS
|
|
|
Gerald Lyons
|
Date:
|
February 5, 2019
|
Executive Vice President and Chief Financial Officer (Principal Financial Officer)
|
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