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SOUTH CAROLINA
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57-0965380
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Large accelerated filer
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x
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Class
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Outstanding at May 5, 2014
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Common Stock, no par value per share
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28,518,432 shares
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Page #
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|
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Item 1.
|
||
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||
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Condensed Consolidated Income Statements for the Quarters and Nine Months Ended March 31, 2014 and 2013
|
|
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Condensed Consolidated Statements of Comprehensive Income for the Quarters and Nine Months Ended March 31, 2014 and 2013
|
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Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2014 and 2013
|
|
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Item 2.
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||
Item 3.
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Item 4.
|
||
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Item 1
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Legal Proceeding
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Item 1A.
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||
Item 5.
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Other Information
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Item 6.
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||
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Item 1.
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Financial Statements
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March 31,
2014 |
|
June 30,
2013 |
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
183,562
|
|
|
$
|
148,164
|
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Accounts receivable, less allowance of $26,825 at March 31, 2014 and $25,479 at June 30, 2013
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419,889
|
|
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435,028
|
|
||
Inventories
|
479,871
|
|
|
402,307
|
|
||
Prepaid expenses and other current assets
|
41,947
|
|
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40,105
|
|
||
Deferred income taxes
|
15,876
|
|
|
16,456
|
|
||
Total current assets
|
1,141,145
|
|
|
1,042,060
|
|
||
Property and equipment, net
|
25,674
|
|
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20,203
|
|
||
Goodwill
|
32,143
|
|
|
31,795
|
|
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Other non-current assets, including net identifiable intangible assets
|
53,412
|
|
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70,125
|
|
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Total assets
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$
|
1,252,374
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|
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$
|
1,164,183
|
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Liabilities and Shareholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
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375,892
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|
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$
|
362,271
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Accrued expenses and other current liabilities
|
62,756
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|
|
59,983
|
|
||
Current portion of contingent consideration
|
5,718
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|
|
3,732
|
|
||
Income taxes payable
|
2,289
|
|
|
1,696
|
|
||
Total current liabilities
|
446,655
|
|
|
427,682
|
|
||
Deferred income taxes
|
192
|
|
|
205
|
|
||
Long-term debt
|
5,429
|
|
|
5,429
|
|
||
Long-term portion of contingent consideration
|
5,018
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|
|
8,813
|
|
||
Other long-term liabilities
|
22,294
|
|
|
26,098
|
|
||
Total liabilities
|
479,588
|
|
|
468,227
|
|
||
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, 28,513,120
and 27,971,809 shares issued and outstanding at March 31, 2014 and June 30, 2013, respectively
|
166,509
|
|
|
149,821
|
|
||
Retained earnings
|
623,791
|
|
|
569,107
|
|
||
Accumulated other comprehensive income (loss)
|
(17,514
|
)
|
|
(22,972
|
)
|
||
Total shareholders’ equity
|
772,786
|
|
|
695,956
|
|
||
Total liabilities and shareholders’ equity
|
$
|
1,252,374
|
|
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$
|
1,164,183
|
|
June 30, 2013 amounts are derived from audited consolidated financial statements.
|
|
See accompanying notes to these condensed consolidated financial statements.
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|
Quarter ended
|
|
Nine months ended
|
||||||||||||
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March 31,
|
|
March 31,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Net sales
|
$
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682,998
|
|
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$
|
682,965
|
|
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$
|
2,155,520
|
|
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$
|
2,164,286
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Cost of goods sold
|
609,647
|
|
|
614,133
|
|
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1,928,414
|
|
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1,947,063
|
|
||||
Gross profit
|
73,351
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|
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68,832
|
|
|
227,106
|
|
|
217,223
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|
||||
Selling, general and administrative expenses
|
46,705
|
|
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47,937
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|
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143,541
|
|
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144,392
|
|
||||
Change in fair value of contingent consideration
|
981
|
|
|
100
|
|
|
2,218
|
|
|
1,396
|
|
||||
Operating income
|
25,665
|
|
|
20,795
|
|
|
81,347
|
|
|
71,435
|
|
||||
Interest expense
|
217
|
|
|
102
|
|
|
698
|
|
|
356
|
|
||||
Interest income
|
(545
|
)
|
|
(483
|
)
|
|
(1,644
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)
|
|
(1,648
|
)
|
||||
Other (income) expense, net
|
13
|
|
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(4
|
)
|
|
65
|
|
|
34
|
|
||||
Income before income taxes
|
25,980
|
|
|
21,180
|
|
|
82,228
|
|
|
72,693
|
|
||||
Provision for income taxes
|
9,031
|
|
|
7,202
|
|
|
27,544
|
|
|
24,716
|
|
||||
Net income
|
$
|
16,949
|
|
|
$
|
13,978
|
|
|
$
|
54,684
|
|
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$
|
47,977
|
|
Per share data:
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares outstanding, basic
|
28,502
|
|
|
27,847
|
|
|
28,275
|
|
|
27,725
|
|
||||
Net income per common share, basic
|
$
|
0.59
|
|
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$
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0.50
|
|
|
$
|
1.93
|
|
|
$
|
1.73
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares outstanding, diluted
|
28,730
|
|
|
28,024
|
|
|
28,548
|
|
|
27,960
|
|
||||
Net income per common share, diluted
|
$
|
0.59
|
|
|
$
|
0.50
|
|
|
$
|
1.92
|
|
|
$
|
1.72
|
|
See accompanying notes to these condensed consolidated financial statements.
|
|
Quarter ended
|
|
Nine months ended
|
||||||||||||
|
March 31,
|
|
March 31,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Net income
|
$
|
16,949
|
|
|
$
|
13,978
|
|
|
$
|
54,684
|
|
|
$
|
47,977
|
|
Foreign currency translation adjustment
|
1,562
|
|
|
(3,107
|
)
|
|
5,458
|
|
|
2,206
|
|
||||
Comprehensive income
|
$
|
18,511
|
|
|
$
|
10,871
|
|
|
$
|
60,142
|
|
|
$
|
50,183
|
|
See accompanying notes to these condensed consolidated financial statements.
|
|
Nine months ended
|
||||||
|
March 31,
|
||||||
|
2014
|
|
2013
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
54,684
|
|
|
$
|
47,977
|
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
|
|
|
||||
Depreciation and amortization
|
5,391
|
|
|
6,604
|
|
||
Amortization of debt issuance costs
|
238
|
|
|
259
|
|
||
Provision for doubtful accounts
|
5,469
|
|
|
8,312
|
|
||
Share-based compensation and restricted stock
|
3,807
|
|
|
4,565
|
|
||
Deferred income taxes
|
10,981
|
|
|
(4,028
|
)
|
||
Excess tax benefits from share-based payment arrangements
|
(982
|
)
|
|
(849
|
)
|
||
Change in fair value of contingent consideration
|
2,218
|
|
|
1,396
|
|
||
Changes in operating assets and liabilities, net of acquisitions:
|
|
|
|
||||
Accounts receivable
|
13,340
|
|
|
32,061
|
|
||
Inventories
|
(74,461
|
)
|
|
72,170
|
|
||
Prepaid expenses and other assets
|
(2,924
|
)
|
|
(303
|
)
|
||
Other non-current assets
|
3,790
|
|
|
3,658
|
|
||
Accounts payable
|
12,404
|
|
|
(94,951
|
)
|
||
Accrued expenses and other liabilities
|
(2,817
|
)
|
|
(2,696
|
)
|
||
Income taxes payable
|
1,532
|
|
|
1,831
|
|
||
Net cash provided by (used in) operating activities
|
32,670
|
|
|
76,006
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures
|
(6,785
|
)
|
|
(4,463
|
)
|
||
Net cash provided by (used in) investing activities
|
(6,785
|
)
|
|
(4,463
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Borrowings (repayments) on short-term borrowings, net
|
—
|
|
|
(4,459
|
)
|
||
Borrowings on revolving credit
|
—
|
|
|
515,262
|
|
||
Repayments on revolving credit
|
—
|
|
|
(515,877
|
)
|
||
Debt issuance costs
|
(468
|
)
|
|
—
|
|
||
Contingent consideration payments
|
(3,793
|
)
|
|
(4,777
|
)
|
||
Exercise of stock options
|
12,152
|
|
|
2,231
|
|
||
Excess tax benefits from share-based payment arrangements
|
982
|
|
|
849
|
|
||
Net cash provided by (used in) financing activities
|
8,873
|
|
|
(6,771
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
640
|
|
|
(40
|
)
|
||
Increase (decrease) in cash and cash equivalents
|
35,398
|
|
|
64,732
|
|
||
Cash and cash equivalents at beginning of period
|
148,164
|
|
|
29,173
|
|
||
Cash and cash equivalents at end of period
|
$
|
183,562
|
|
|
$
|
93,905
|
|
See accompanying notes to these condensed consolidated financial statements.
|
|
Quarter ended
|
|
Nine months ended
|
||||||||||||
|
March 31,
|
|
March 31,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
(in thousands, except per share data)
|
||||||||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net Income
|
$
|
16,949
|
|
|
$
|
13,978
|
|
|
$
|
54,684
|
|
|
$
|
47,977
|
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares, basic
|
28,502
|
|
|
27,847
|
|
|
28,275
|
|
|
27,725
|
|
||||
Dilutive effect of share-based payments
|
228
|
|
|
177
|
|
|
273
|
|
|
235
|
|
||||
Weighted-average shares, diluted
|
28,730
|
|
|
28,024
|
|
|
28,548
|
|
|
27,960
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income per common share, basic
|
$
|
0.59
|
|
|
$
|
0.50
|
|
|
$
|
1.93
|
|
|
$
|
1.73
|
|
Net income per common share, diluted
|
$
|
0.59
|
|
|
$
|
0.50
|
|
|
$
|
1.92
|
|
|
$
|
1.72
|
|
|
March 31,
2014 |
|
June 30,
2013 |
||||
|
(in thousands)
|
||||||
Foreign currency translation adjustment
|
$
|
(17,514
|
)
|
|
$
|
(22,972
|
)
|
Accumulated other comprehensive income (loss)
|
$
|
(17,514
|
)
|
|
$
|
(22,972
|
)
|
|
|
|
|
|
Barcode & Security Segment
|
|
Communications & Services Segment
|
|
Total
|
||||||
|
(in thousands)
|
||||||||||
Balance as of June 30, 2013
|
$
|
16,329
|
|
|
$
|
15,466
|
|
|
$
|
31,795
|
|
Foreign currency translation adjustment
|
348
|
|
|
—
|
|
|
348
|
|
|||
Balance as of March 31, 2014
|
$
|
16,677
|
|
|
$
|
15,466
|
|
|
$
|
32,143
|
|
|
Quarter ended
|
|
Nine months ended
|
||||||||||||
|
March 31,
|
|
March 31,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
(in thousands)
|
||||||||||||||
Net foreign exchange derivative contract (gains) losses
|
$
|
114
|
|
|
$
|
(2,092
|
)
|
|
$
|
2,511
|
|
|
$
|
(759
|
)
|
Net foreign currency transactional and re-measurement (gains) losses
|
(57
|
)
|
|
2,237
|
|
|
(2,185
|
)
|
|
1,087
|
|
||||
Net foreign currency (gains) losses
|
$
|
57
|
|
|
$
|
145
|
|
|
$
|
326
|
|
|
$
|
328
|
|
|
As of March 31, 2014
|
||||||
|
Fair Value of
Derivatives
Designated as Hedge
Instruments
|
|
Fair Value of
Derivatives
Not Designated as Hedge
Instruments
|
||||
|
(in thousands)
|
||||||
Derivative assets:
(a)
|
|
|
|
||||
Foreign exchange contracts
|
$
|
—
|
|
|
$
|
23
|
|
Derivative liabilities:
(b)
|
|
|
|
||||
Foreign exchange contracts
|
$
|
—
|
|
|
$
|
61
|
|
(a)
|
All derivative assets are recorded as prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets.
|
(b)
|
All derivative liabilities are recorded as accrued expenses and other current liabilities in the Condensed Consolidated Balance Sheets.
|
•
|
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; and
|
•
|
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
|
$
|
15,403
|
|
|
$
|
15,403
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Forward foreign currency exchange contracts
|
23
|
|
|
—
|
|
|
23
|
|
|
—
|
|
||||
Total assets at fair value
|
$
|
15,426
|
|
|
$
|
15,403
|
|
|
$
|
23
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Deferred compensation plan investments, current and non-current portion
|
$
|
15,403
|
|
|
$
|
15,403
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Forward foreign currency exchange contracts
|
61
|
|
|
—
|
|
|
61
|
|
|
—
|
|
||||
Liability for contingent consideration, current and non-current portion
|
10,736
|
|
|
—
|
|
|
—
|
|
|
10,736
|
|
||||
Total liabilities at fair value
|
$
|
26,200
|
|
|
$
|
15,403
|
|
|
$
|
61
|
|
|
$
|
10,736
|
|
|
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
|
$
|
13,752
|
|
|
$
|
13,752
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Forward foreign currency exchange contracts
|
308
|
|
|
—
|
|
|
308
|
|
|
—
|
|
||||
Total assets at fair value
|
$
|
14,060
|
|
|
$
|
13,752
|
|
|
$
|
308
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Deferred compensation plan investments, current and non-current portion
|
$
|
13,752
|
|
|
$
|
13,752
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Forward foreign currency exchange contracts
|
34
|
|
|
—
|
|
|
34
|
|
|
—
|
|
||||
Liability for contingent consideration, current and non-current portion
|
12,545
|
|
|
—
|
|
|
—
|
|
|
12,545
|
|
||||
Total liabilities at fair value
|
$
|
26,331
|
|
|
$
|
13,752
|
|
|
$
|
34
|
|
|
$
|
12,545
|
|
|
Contingent consideration for the
quarter ended |
|
Contingent consideration for the nine months ended
|
||||||||||||
|
March 31,
|
|
March 31,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
(in thousands)
|
||||||||||||||
Fair value at beginning of period
|
$
|
9,547
|
|
|
$
|
13,090
|
|
|
$
|
12,545
|
|
|
$
|
16,653
|
|
Payments
|
(147
|
)
|
|
(61
|
)
|
|
(3,793
|
)
|
|
(4,777
|
)
|
||||
Change in fair value of contingent consideration
|
981
|
|
|
100
|
|
|
2,218
|
|
|
1,396
|
|
||||
Foreign currency translation adjustment
|
355
|
|
|
192
|
|
|
(234
|
)
|
|
49
|
|
||||
Fair value at end of period
|
$
|
10,736
|
|
|
$
|
13,321
|
|
|
$
|
10,736
|
|
|
$
|
13,321
|
|
•
|
estimated future results, net of pro forma adjustments set forth in the Share Purchase and Sale Agreement;
|
•
|
the probability of achieving these results; and
|
•
|
a discount rate reflective of the Company’s creditworthiness and market risk premium associated with the Brazilian market.
|
|
Quarter ended
|
|
Nine months ended
|
||||||||||||
|
March 31,
|
|
March 31,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
(In thousands)
|
||||||||||||||
Sales:
|
|
|
|
|
|
|
|
||||||||
Worldwide Barcode & Security
|
$
|
455,822
|
|
|
$
|
438,191
|
|
|
$
|
1,382,672
|
|
|
$
|
1,383,453
|
|
Worldwide Communications & Services
|
227,176
|
|
|
244,774
|
|
|
772,848
|
|
|
780,833
|
|
||||
|
$
|
682,998
|
|
|
$
|
682,965
|
|
|
$
|
2,155,520
|
|
|
$
|
2,164,286
|
|
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization:
|
|
|
|
|
|
|
|
||||||||
Worldwide Barcode & Security
|
$
|
1,024
|
|
|
$
|
1,415
|
|
|
$
|
3,159
|
|
|
$
|
4,274
|
|
Worldwide Communications & Services
|
719
|
|
|
773
|
|
|
2,232
|
|
|
2,330
|
|
||||
|
$
|
1,743
|
|
|
$
|
2,188
|
|
|
$
|
5,391
|
|
|
$
|
6,604
|
|
Operating income:
|
|
|
|
|
|
|
|
||||||||
Worldwide Barcode & Security
|
$
|
13,820
|
|
|
$
|
10,413
|
|
|
$
|
38,734
|
|
|
$
|
36,326
|
|
Worldwide Communications & Services
|
11,845
|
|
|
10,382
|
|
|
42,613
|
|
|
35,109
|
|
||||
|
$
|
25,665
|
|
|
$
|
20,795
|
|
|
$
|
81,347
|
|
|
$
|
71,435
|
|
Capital expenditures:
|
|
|
|
|
|
|
|
||||||||
Worldwide Barcode & Security
|
$
|
204
|
|
|
$
|
181
|
|
|
$
|
507
|
|
|
$
|
324
|
|
Worldwide Communications & Services
|
130
|
|
|
211
|
|
|
249
|
|
|
877
|
|
||||
Corporate
|
6,029
|
|
|
868
|
|
|
6,029
|
|
|
3,262
|
|
||||
|
$
|
6,363
|
|
|
$
|
1,260
|
|
|
$
|
6,785
|
|
|
$
|
4,463
|
|
|
|
|
|
|
|
|
|
||||||||
Sales by Geography Category:
|
|
|
|
|
|
|
|
||||||||
North America
|
$
|
508,751
|
|
|
$
|
519,502
|
|
|
$
|
1,637,308
|
|
|
$
|
1,647,115
|
|
International
|
184,225
|
|
|
174,571
|
|
|
553,318
|
|
|
562,093
|
|
||||
Less intercompany sales
|
(9,978
|
)
|
|
(11,108
|
)
|
|
(35,106
|
)
|
|
(44,922
|
)
|
||||
|
$
|
682,998
|
|
|
$
|
682,965
|
|
|
$
|
2,155,520
|
|
|
$
|
2,164,286
|
|
|
March 31, 2014
|
|
June 30, 2013
|
||||
|
(in thousands)
|
||||||
Assets:
|
|
|
|
||||
Worldwide Barcode & Security
|
$
|
663,135
|
|
|
$
|
609,939
|
|
Worldwide Communications & Services
|
399,030
|
|
|
387,097
|
|
||
Corporate
|
190,209
|
|
|
167,147
|
|
||
|
$
|
1,252,374
|
|
|
$
|
1,164,183
|
|
|
March 31, 2014
|
|
June 30, 2013
|
||||
|
(in thousands)
|
||||||
Assets
|
|
|
|
||||
Prepaid expenses and other current assets
|
$
|
4,889
|
|
|
$
|
5,061
|
|
Other non-current assets
|
$
|
1,189
|
|
|
$
|
2,905
|
|
Liabilities
|
|
|
|
||||
Accrued expenses and other current liabilities
|
$
|
4,889
|
|
|
$
|
5,061
|
|
Other long-term liabilities
|
$
|
1,189
|
|
|
$
|
2,905
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
Quarter ended March 31,
|
||||
|
2014
|
|
2013
|
||
Return on invested capital ratio, annualized
(a)
|
14.8
|
%
|
|
13.3
|
%
|
(a)
|
The annualized EBITDA amount is divided by days in the quarter times 365 days per year (366 during leap years). There were 90 days in the current and prior year quarter, respectively.
|
|
Quarter ended March 31,
|
||||||
|
2014
|
|
2013
|
||||
|
(in thousands)
|
||||||
Reconciliation of net income to EBITDA:
|
|
||||||
Net income (GAAP)
|
$
|
16,949
|
|
|
$
|
13,978
|
|
Plus: income taxes
|
9,031
|
|
|
7,202
|
|
||
Plus: interest expense
|
217
|
|
|
102
|
|
||
Plus: depreciation and amortization
(a)
|
1,743
|
|
|
2,274
|
|
||
EBITDA (numerator for ROIC) (non-GAAP)
|
$
|
27,940
|
|
|
$
|
23,556
|
|
|
Quarter ended March 31,
|
||||||
|
2014
|
|
2013
|
||||
|
(in thousands)
|
||||||
Invested capital calculations:
|
|
||||||
Equity – beginning of the quarter
|
$
|
751,446
|
|
|
$
|
696,960
|
|
Equity – end of the quarter
|
772,786
|
|
|
709,912
|
|
||
Average equity
|
762,116
|
|
|
703,436
|
|
||
Average funded debt
(a)
|
5,429
|
|
|
15,675
|
|
||
Invested capital (denominator for ROIC) (non-GAAP)
|
$
|
767,545
|
|
|
$
|
719,111
|
|
(a)
|
Average funded debt is calculated as the average daily amounts outstanding on our short-term and long-term interest-bearing debt.
|
|
Quarter ended March 31,
|
|
|
|||||||||||
Net Sales by Segment:
|
2014
|
|
2013
|
|
$ Change
|
|
% Change
|
|||||||
|
(in thousands)
|
|
|
|||||||||||
Worldwide Barcode & Security
|
$
|
455,822
|
|
|
$
|
438,191
|
|
|
$
|
17,631
|
|
|
4.0
|
%
|
Worldwide Communications & Services
|
227,176
|
|
|
244,774
|
|
|
(17,598
|
)
|
|
(7.2
|
)%
|
|||
Total net sales
|
$
|
682,998
|
|
|
$
|
682,965
|
|
|
$
|
33
|
|
|
—
|
%
|
|
|
|
|
|
|
|
|
|||||||
|
Nine Months ended March 31,
|
|
|
|||||||||||
|
2014
|
|
2013
|
|
$ Change
|
|
% Change
|
|||||||
|
(in thousands)
|
|
|
|
||||||||||
Worldwide Barcode & Security
|
$
|
1,382,672
|
|
|
$
|
1,383,453
|
|
|
$
|
(781
|
)
|
|
(0.1
|
)%
|
Worldwide Communications & Services
|
772,848
|
|
|
780,833
|
|
|
(7,985
|
)
|
|
(1.0
|
)%
|
|||
Total net sales
|
$
|
2,155,520
|
|
|
$
|
2,164,286
|
|
|
$
|
(8,766
|
)
|
|
(0.4
|
)%
|
|
Quarter ended March 31,
|
|
|
|
|
|
% of Net Sales March 31,
|
|||||||||||||
|
2014
|
|
2013
|
|
$ Change
|
|
% Change
|
|
2014
|
|
2013
|
|||||||||
|
(in thousands)
|
|
|
|
|
|
|
|||||||||||||
Worldwide Barcode & Security
|
$
|
43,031
|
|
|
$
|
39,078
|
|
|
$
|
3,953
|
|
|
10.1
|
%
|
|
9.4
|
%
|
|
8.9
|
%
|
Worldwide Communications & Services
|
30,320
|
|
|
29,754
|
|
|
566
|
|
|
1.9
|
%
|
|
13.3
|
%
|
|
12.2
|
%
|
|||
Gross profit
|
$
|
73,351
|
|
|
$
|
68,832
|
|
|
$
|
4,519
|
|
|
6.6
|
%
|
|
10.7
|
%
|
|
10.1
|
%
|
|
Nine Months ended March 31,
|
|
|
|
|
|
% of Net Sales March 31,
|
|||||||||||||
|
2014
|
|
2013
|
|
$ Change
|
|
% Change
|
|
2014
|
|
2013
|
|||||||||
|
(in thousands)
|
|
|
|
|
|
|
|||||||||||||
Worldwide Barcode & Security
|
$
|
126,512
|
|
|
$
|
124,774
|
|
|
$
|
1,738
|
|
|
1.4
|
%
|
|
9.1
|
%
|
|
9.0
|
%
|
Worldwide Communications & Services
|
100,594
|
|
|
92,449
|
|
|
8,145
|
|
|
8.8
|
%
|
|
13.0
|
%
|
|
11.8
|
%
|
|||
Gross profit
|
$
|
227,106
|
|
|
$
|
217,223
|
|
|
$
|
9,883
|
|
|
4.5
|
%
|
|
10.5
|
%
|
|
10.0
|
%
|
|
Quarter ended March 31,
|
|
|
|
|
|
% of Net Sales March 31,
|
|||||||||||||
|
2014
|
|
2013
|
|
$ Change
|
|
% Change
|
|
2014
|
|
2013
|
|||||||||
|
(in thousands)
|
|
|
|
|
|
|
|||||||||||||
Selling, general and administrative expenses
|
$
|
46,705
|
|
|
$
|
47,937
|
|
|
$
|
(1,232
|
)
|
|
(2.6
|
)%
|
|
6.8
|
%
|
|
7.0
|
%
|
Change in fair value of contingent consideration
|
981
|
|
|
100
|
|
|
881
|
|
|
881.0
|
%
|
|
0.1
|
%
|
|
0.0
|
%
|
|||
Operating expenses
|
$
|
47,686
|
|
|
$
|
48,037
|
|
|
$
|
(351
|
)
|
|
(0.7
|
)%
|
|
7.0
|
%
|
|
7.0
|
%
|
|
Nine Months ended March 31,
|
|
|
|
|
|
% of Net Sales March 31,
|
|||||||||||||
|
2014
|
|
2013
|
|
$ Change
|
|
% Change
|
|
2014
|
|
2013
|
|||||||||
|
(in thousands)
|
|
|
|
|
|
|
|||||||||||||
Selling, general and administrative expenses
|
$
|
143,541
|
|
|
$
|
144,392
|
|
|
$
|
(851
|
)
|
|
(0.6
|
)%
|
|
6.7
|
%
|
|
6.7
|
%
|
Change in fair value of contingent consideration
|
2,218
|
|
|
1,396
|
|
|
822
|
|
|
58.9
|
%
|
|
0.1
|
%
|
|
0.1
|
%
|
|||
Operating expenses
|
$
|
145,759
|
|
|
$
|
145,788
|
|
|
$
|
(29
|
)
|
|
0.0
|
%
|
|
6.8
|
%
|
|
6.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended March 31,
|
|
|
|
|
|
% of Net Sales March 31,
|
|||||||||||||
|
2014
|
|
2013
|
|
$ Change
|
|
% Change
|
|
2014
|
|
2013
|
|||||||||
|
(in thousands)
|
|
|
|
|
|
|
|||||||||||||
Worldwide Barcode & Security
|
$
|
13,820
|
|
|
$
|
10,413
|
|
|
$
|
3,407
|
|
|
32.7
|
%
|
|
3.0
|
%
|
|
2.4
|
%
|
Worldwide Communications & Services
|
11,845
|
|
|
10,382
|
|
|
1,463
|
|
|
14.1
|
%
|
|
5.2
|
%
|
|
4.2
|
%
|
|||
Operating income
|
$
|
25,665
|
|
|
$
|
20,795
|
|
|
$
|
4,870
|
|
|
23.4
|
%
|
|
3.8
|
%
|
|
3.0
|
%
|
|
Nine Months ended March 31,
|
|
|
|
|
|
% of Net Sales March 31,
|
|||||||||||||
|
2014
|
|
2013
|
|
$ Change
|
|
% Change
|
|
2014
|
|
2013
|
|||||||||
|
(in thousands)
|
|
|
|
|
|
|
|||||||||||||
Worldwide Barcode & Security
|
$
|
38,734
|
|
|
$
|
36,326
|
|
|
$
|
2,408
|
|
|
6.6
|
%
|
|
2.8
|
%
|
|
2.6
|
%
|
Worldwide Communications & Services
|
42,613
|
|
|
35,109
|
|
|
7,504
|
|
|
21.4
|
%
|
|
5.5
|
%
|
|
4.5
|
%
|
|||
Operating income
|
$
|
81,347
|
|
|
$
|
71,435
|
|
|
$
|
9,912
|
|
|
13.9
|
%
|
|
3.8
|
%
|
|
3.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended March 31,
|
|
|
|
|
|
% of Net Sales March 31,
|
|||||||||||||
|
2014
|
|
2013
|
|
$ Change
|
|
% Change
|
|
2014
|
|
2013
|
|||||||||
|
(in thousands)
|
|
|
|
|
|
|
|||||||||||||
Interest expense
|
$
|
217
|
|
|
$
|
102
|
|
|
$
|
115
|
|
|
112.7
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
Interest income
|
(545
|
)
|
|
(483
|
)
|
|
(62
|
)
|
|
12.8
|
%
|
|
(0.1
|
)%
|
|
(0.1
|
)%
|
|||
Net foreign exchange (gains) losses
|
57
|
|
|
145
|
|
|
(88
|
)
|
|
(60.7
|
)%
|
|
0.0
|
%
|
|
0.0
|
%
|
|||
Other, net
|
(44
|
)
|
|
(149
|
)
|
|
105
|
|
|
(70.5
|
)%
|
|
(0.0
|
)%
|
|
(0.0
|
)%
|
|||
Total other (income) expense, net
|
$
|
(315
|
)
|
|
$
|
(385
|
)
|
|
$
|
70
|
|
|
(18.2
|
)%
|
|
(0.0
|
)%
|
|
(0.1
|
)%
|
|
Nine Months ended March 31,
|
|
|
|
|
|
% of Net Sales March 31,
|
|||||||||||||
|
2014
|
|
2013
|
|
$ Change
|
|
% Change
|
|
2014
|
|
2013
|
|||||||||
|
(in thousands)
|
|
|
|
|
|
|
|||||||||||||
Interest expense
|
$
|
698
|
|
|
$
|
356
|
|
|
$
|
342
|
|
|
96.1
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
Interest income
|
(1,644
|
)
|
|
(1,648
|
)
|
|
4
|
|
|
(0.2
|
)%
|
|
(0.1
|
)%
|
|
(0.1
|
)%
|
|||
Net foreign exchange (gains) losses
|
326
|
|
|
328
|
|
|
(2
|
)
|
|
(0.6
|
)%
|
|
0.0
|
%
|
|
0.0
|
%
|
|||
Other, net
|
(261
|
)
|
|
(294
|
)
|
|
33
|
|
|
(11.2
|
)%
|
|
(0.0
|
)%
|
|
(0.0
|
)%
|
|||
Total other (income) expense, net
|
$
|
(881
|
)
|
|
$
|
(1,258
|
)
|
|
$
|
377
|
|
|
(30.0
|
)%
|
|
(0.0
|
)%
|
|
(0.1
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 5.
|
Other Information
|
Item 6.
|
Exhibits
|
Exhibit
Number
|
Description
|
|
|
3.2
|
Amended and Restated Bylaws
|
|
|
10.1+
|
Distribution Agreement with Symbol Technologies, Inc. dated February 12, 2014
|
|
|
16.1
|
Letter from Ernst & Young LLP, dated January 6, 2014 (incorporated by reference from Exhibit 16.1 to th Form 8-K filed on January 7, 2014).
|
|
|
18.1
|
Preferability Letter Regarding Change in Accounting Policy related to Goodwill
|
|
|
31.1
|
Certification Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
31.2
|
Certification Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
32.1
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
32.2
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
101
|
The following materials from our Quarterly Report on Form 10-Q for the quarter and nine months ended March 31, 2014, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets as of March 31, 2014 and June 30, 2013; (ii) the Condensed Consolidated Income Statements for the quarters and nine months ended March 31, 2014 and 2013; (iii) the Condensed Consolidated Statements of Comprehensive Income for the quarters and nine months ended March 31, 2014 and 2013; (iv) the Condensed Consolidated Statements of Cash flows for the nine months ended March 31, 2014 and 2013; and (v) the Notes to the Condensed Consolidated Financial Statements.
|
|
|
|
+ Confidential treatment has been requested with respect to certain portions of this Exhibit, which portions have been omitted and filed separately with the Commission as part of an application for confidential treatment.
|
|
|
ScanSource, Inc.
|
|
|
|
|
|
/s/ MICHAEL L. BAUR
|
|
|
Michael L. Baur
|
Date:
|
May 7, 2014
|
Chief Executive Officer
(Principal Executive Officer)
|
|
|
/s/ CHARLES A. MATHIS
|
|
|
Charles A. Mathis
|
Date:
|
May 7, 2014
|
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|
|
/s/ GERALD LYONS
|
|
|
Gerald Lyons
|
Date:
|
May 7, 2014
|
Senior Vice President of Finance and Principal Accounting Officer
(Principal Accounting Officer)
|
Exhibit
Number
|
Description
|
|
|
3.2
|
Amended and Restated Bylaws
|
|
|
10.1+
|
Distribution Agreement with Symbol Technologies, Inc. dated February 12, 2014
|
|
|
16.1
|
Letter from Ernst & Young LLP, dated January 6, 2014 (incorporated by reference from Exhibit 16.1 to th Form 8-K filed on January 7, 2014).
|
|
|
18.1
|
Preferability Letter Regarding Change in Accounting Policy related to Goodwill
|
|
|
31.1
|
Certification Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
31.2
|
Certification Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
32.1
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
32.2
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
101
|
The following materials from our Quarterly Report on Form 10-Q for the quarter and nine months ended March 31, 2014, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets as of March 31, 2014 and June 30, 2013; (ii) the Condensed Consolidated Income Statement for the quarters and nine months ended March 31, 2014 and 2013; (iii) the Condensed Consolidated Statements of Comprehensive Income for the quarters and nine months ended March 31, 2014 and 2013; (iv) the Condensed Consolidated Statements of Cash Flows for the nine months ended March 31, 2014 and 2013; and (v) the notes to the Condensed Consolidated Financial Statements.
|
|
|
|
+ Confidential treatment has been requested with respect to certain portions of this Exhibit, which portions have been omitted and filed separately with the Commission as part of an application for confidential treatment.
|
|
(1)
|
authorize distributions;
|
|
(2)
|
approve or propose to shareholders action that the Act requires be approved by shareholders;
|
|
(3)
|
fill vacancies on the Board of Directors or on any of its committees;
|
|
(4)
|
amend the Articles of Incorporation pursuant to the authority of Directors;
|
|
(5)
|
adopt, amend, or repeal bylaws;
|
|
(6)
|
approve a plan of merger not requiring shareholder approval;
|
|
(7)
|
authorize or approve reacquisition of shares, except according to a formula or method prescribed by the Board of Directors; or
|
|
(8)
|
authorize or approve the issuance or sale or contract for sale of shares or determine the designation and relative rights, preferences, and limitations of a class or series of shares, except that the Board of Directors may authorize a committee (or an executive officer of the Corporation) to do so within limits specifically prescribed by the Board of Directors.
|
(2)
|
Delegation of any Power
. Delegate to any officer or Director, any of the powers of the Board of Directors
|
(3)
|
Lines of succession
. Designate lines of succession of officers and agents, in the event that any of them is unable to discharge their duties;
|
(4)
|
Relocate principal place of business
. Relocate the principal place of business, or designate successive or simultaneous principal places of business; and
|
(5)
|
All Other Action
. Take any other action, convenient, helpful, or necessary, to carry on the business of the Corporation.
|
|
|
/s/ John J. Ellsworth
|
Secretary
|
1.
|
SYMBOL TECHNOLOGIES, INC.
, a corporation incorporated in Delaware with a place of business at One Motorola Plaza, Holtsville, New York 11742 (“
Motorola Solutions
”); and
|
2.
|
SCANSOURCE, INC.
, a corporation incorporated in South Carolina, with a place of business at 6 Logue Court, Greenville, South Carolina 29615 (“
Distributor
”).
|
Schedule 1
|
Market and Distributor Business Model
|
Schedule 2
|
Terms and Conditions of Sale
|
Schedule 3
|
Technology Segments(s) and Special Provisions Relating Thereto (the “Technology Segments Schedule”)
|
Schedule 5
|
Sales where a US Federal Government Entity is the End User
|
Schedule 6
|
Confidentiality
|
Schedule 7
|
Motorola Solutions End User Software License Agreement
|
2.
|
DEFINITION OF TERMS
|
2.25
|
‘‘Web Site(s)’’
means the Motorola Solutions on line (“MOL”) or other similar business-to-business e-commerce web sites and other web portals including without limitations the domain names Motorola Solutions.com, Motorola Solutions Online.com, Motorola Solutionsbrand.com and/or any equivalent thereof.
|
3.
|
APPOINTMENT AND RELATIONSHIP
|
5.
|
STANDARD PRODUCT SUPPORT.
|
6.
|
FLOW-DOWN REQUIREMENTS
|
8.
|
TERMS AND CONDITIONS OF SALE
|
12.
|
INTELLECTUAL PROPERTY RIGHTS AND SOFTWARE LICENSE
|
17.
|
FORCE MAJEURE
|
23
|
EXECUTION, MODIFICATION AND SEVERABILITY
|
25.
|
THIRD PARTY RIGHTS
|
1.
|
GEOGRAPHICAL AREA (“TERRITORY”) FOR ALL PRODUCTS
(Unless specified otherwise in Schedule 5 - Sales where the US Federal Government is the End User or in any other Schedule)
:
|
3.
|
CUSTOMER’S DISTRIBUTOR WILL SERVE: (Per the Program Elements as of the Effective Date)
|
4.
|
NAMED END-USER ACCOUNTS EXCLUDED FROM DISTRIBUTOR IN LATIN AMERICA AND THE CARRIBEAN
|
1.
|
General
|
3.
|
Consistency with Law
|
a.
|
The Parties will implement and maintain security procedures and measures in order to ensure the protection of EDI against the risks of unauthorized access, alteration, delay, destruction or loss.
|
b.
|
Security procedures and measures include the verification of origin, the verification of integrity, the non-repudiation of origin and receipt and the confidentiality of EDI.
|
c.
|
If the use of security procedures and measures results in the rejection of or in the detection of an error in any EDI, the receiver shall inform the sender thereof as soon as possible. The receiver of such EDI shall not act until instructions are received from
|
a.
|
A complete and chronological record of all electronically transmitted data exchanged by the Parties in the course of a trade transaction/Order shall be stored by each Party, unaltered and securely, in accordance with the time limits and specifications prescribed by the legislative requirements of its own national law, and, in any event, for a minimum of seven years following the completion of the transaction.
|
b.
|
Unless otherwise provided by national laws, all electronically transmitted data shall be stored by the sender in the transmitted format and by the receiver in the format in which they are received.
|
c.
|
Parties shall ensure that electronic or computer records of such data shall be readily accessible, are capable of being reproduced in a human readable form and of being printed, if required. Any operational equipment required in this connection shall be retained.
|
a.
|
The Agreement has been executed by the Parties to evidence their mutual intent to create binding purchase and sale obligations in connection with electronically transmitted Orders placed via the Web Site.
|
b.
|
Any document or data properly transmitted electronically pursuant to the Agreement shall be considered to be a "writing" or "in writing."
|
c.
|
The Parties agree not to contest the validity or enforceability of documents or data electronically submitted pursuant to the Agreement under the provisions of any applicable law relating to whether certain documents or data are to be in writing or signed by the Party to be bound thereby. Electronic documents, if introduced as evidence on paper in any judicial, arbitration, mediation or administrative proceedings, will be admissible as between the Parties to the same extent and under the same conditions as other business records originated and maintained in documentary form. Neither Party shall contest the admissibility of copies of electronic documents under either the business records exception to the hearsay rule nor the best evidence rule on the basis that the electronic documents were not originated or maintained in documentary form.
|
a.
|
Subject to Limitations of Liability provision of the main body of the Agreement, if a Party engages any intermediary to perform such services as the transmission, logging or processing of a document electronically pursuant to the Agreement, that Party shall be
|
b.
|
Subject to Limitations of Liability provision of the main body of the Agreement, if a Party requires another Party to use the services of an intermediary to perform the transmission, logging or processing of data or document, the Party who required such use shall be liable to the other Party for damage arising directly from that intermediary's negligent acts or willful misconduct in the provision of said services.
|
1.
|
SALE OF SERVICES TO CUSTOMER (Not applicable to the MESH Technology Segment)
|
(a)
|
Are performed or delivered on a device to restore it to the defined specifications after it has failed or been damaged, either at a Motorola Solutions repair center or at the Customer location.
|
(c)
|
Provide full access to technical support resources and the right to use and copy entitled software releases, if any, for the products covered by a service agreement or warranty.
|
(a)
|
When Break/Fix Services are purchased, Motorola Solutions’ terms and conditions posted at www.motorolasolutions.com/partnerempoweradditionaltermsandconditions
(the “Site”) under the title Break/Fix Services, and when Other Services are purchased the terms and conditions posted on the Site under the title Professional Services Terms; and
|
(b)
|
Motorola Solutions’ standard service description document (“SDD”) which defines the scope of the Sell Through Services and the Subcontracted Services. Motorola Solutions may amend the terms and conditions of the Break/Fix Services, the Professional Services and the SDDs at any time and upon written notice to Distributor.
|
(a)
|
Distributor agrees that it will procure and offer the Sell Through Services only on the basis of the Indirect Model.
|
(b)
|
Distributor agrees that in the event Motorola Solutions provides Subcontracted Services the terms of the Motorola Solutions Services Contract will apply.
|
(i)
|
the Motorola Solutions Services Contract shall be the operative contract between Distributor and Resellers for the supply of the Sell Through Services;
|
(ii)
|
The terms and conditions of Section 6 of the Agreement - Flow Down Requirements, will apply with respect to Distributor’s obligation to include Motorola Solutions’ Services Contracts in its transactions with Resellers for further flow down to their respective End Users.
|
(d)
|
The provisions in this Section (iv) shall take precedence over any other terms set forth in Motorola Solutions’ standard Service Order Form unless specifically agreed to in a writing identified as an amendment to this Agreement.
|
1
|
GENERAL PROVISIONS
|
1.1
|
This PA automatically incorporates any future amendments to the Agreement and such amendments will be made part of the PA to the extent they do not conflict with the PA and unless otherwise agreed in writing by the parties to this PA.
|
1.2
|
By signing this PA Motorola Ltda. hereby agrees to be bound by the terms of the Agreement (as modified herein) as a party thereto for the sole purpose of conducting business with and selling Products to ScanSource Brasil (the “Purpose”) and ScanSource Brasil hereby agrees to be bound by the terms of the Agreement (as modified herein) as a party thereto for the Purpose.
|
1.5
|
Motorola Ltda. and ScanSource Brasil respectively, represent and warrant:
|
1.2
|
That they are duly incorporated, validly existing and in good standing under the laws of the jurisdiction of their incorporation and have the power and authority to enter into and perform their respective obligations under the Agreement and under this PA.
|
1.3
|
That the person executing and delivering this PA on behalf of Motorola Ltda. and ScanSource Brasil respectively, is duly authorized to make such execution and delivery and, upon the execution and delivery, this PA will constitute a valid obligation binding upon and enforceable against Motorola Ltda. and ScanSource Brasil, as applicable, in accordance with its terms.
|
1.6.
|
Except for the modifications contained herein, the Agreement shall remain in full force and effect in accordance with its terms.
|
1.7
|
In the event of a conflict between the terms of the Agreement and this PA, the terms of the PA shall take precedence.
|
2
|
DEFINITIONS
|
2.1
|
The term “Motorola Solutions” shall mean Motorola Ltda.
|
2.2
|
The term “Distributor” shall be mean SCANSOURCE BRASIL.
|
2.3
|
The term “Parties” shall be Motorola Ltda. and SCANSOURCE BRASIL.
|
2.4
|
The term “Territory” shall mean Brazil.
|
1.
|
PURCHASE ORDER PROCEDURE
|
MOTOROLA SOLUTIONS LTDA.
|
CDC BRASIL DISTRIBUIDORA DE TECNOLOGIAS ESPECIAIS LTDA.
|
SYMBOL TECHNOLOGIES, INC.
|
SCANSOURCE, INC.
|
|
SCHEDULE 4 B
PARTICIPATION AGREEMENT
RELATING TO DISTRIBUTION AGREEMENT
BETWEEN
SYMBOL TECHNOLOGIES, INC.
AND
SCANSOURCE, INC.
|
A.
|
Symbol Technologies, Inc.
(referred to in this Participation Agreement as “Motorola Solutions”) and
ScanSource, Inc. (“Distributor”)
entered into a Distribution Agreement on even date hereof (the “Agreement”).
|
B
.
|
(1) ScanSource Latin America, Inc.
, a Distributor Affiliate incorporated in Florida, whose registered business address is 1935 NW 87 Avenue, Miami, Florida 33172 (“
Scan Source Latin America
”); and
|
1.
|
Expressions used in this PA shall have the same meanings given to them in the Agreement, unless the context requires otherwise.
|
2.
|
This PA automatically incorporates any future amendments to the Agreement and such amendments will be made part of this PA to the extent that the amendments do not conflict with this PA, unless otherwise agreed in writing by the parties to this PA.
|
3.
|
Participants adopt and incorporate by reference all of the terms and conditions of the Agreement. Participants confirm that they have reviewed and understood the terms and conditions of the Agreement.
|
4.
|
Participants agree to honor and be bound by the Agreement as parties thereto by signing this PA and the parties agree that the purchases and sales of Products will be conducted in accordance with, and be subject to, the terms and conditions of the Agreement.
|
5.
|
Participants and each one respectively) hereby represent and warrant to Motorola Solutions:
|
a.
|
That they are duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation and have the power and authority to enter into and perform its obligations under this PA.
|
b.
|
That the individuals executing and delivering this PA on behalf of Participants are duly authorized to make such execution and delivery and, upon the execution and delivery, this PA will constitute a valid obligation binding upon and enforceable against Participants in accordance with its terms.
|
6.
|
The following will replace Sections 6.1 and 6.2 of Schedule 2 of the Agreement with respect to ScanSource Brasil payment terms:
|
|
For the voidance of doubt, the terms of this Section 6 will not apply to Scan Source Latin America and its payment terms will be as specified in the Agreement.
|
8.
|
In the event of conflict, the terms of this PA shall take precedence.
|
SYMBOL TECHNOLOGIES, INC.
|
CDC BRASIL DISTRIBUIDORA DE TECNOLOGIAS ESPECIAIS LTDA.
|
1.
|
Expressions used in this PA shall have the same meanings given to them in the Agreement, unless the context requires otherwise.
|
2.
|
This PA automatically incorporates any future amendments to the Agreement and such amendments will be made part of this PA to the extent that the amendments do not conflict with this PA, unless otherwise agreed in writing by the parties to this PA.
|
3.
|
By signing this PA Psion, Inc. hereby agrees to be bound by the terms of the Agreement as a party thereto for the sole purpose of selling the PA Products to Distributor. The parties agree that the purchase and sale of PA Products will be conducted in accordance with, and be subject to, the terms and conditions of the Agreement.
|
4.
|
With the exception of the sales of the PA Products, Psion, Inc. does not assume any obligations (prior, current or future) of Motorola Solutions under the Agreement.
|
5.
|
Except for the amendments contained herein, the terms of the Agreement shall remain in full force and effect in accordance with its terms.
|
6.
|
In the event of conflict, the terms of this PA shall take precedence.
|
1.
|
For purposes of this Schedule and the Agreement, a “Federal Governmental Entity” is any department, agency, or instrumentality of the U.S. Federal Government. Sales made by Distributor to Resellers for further resale (directly or indirectly) to a US Federal Government Entity (“US Fed Gov Sales”) are subject to the terms of this Schedule. Distributor is prohibited from selling directly to Federal Governmental Entities.
|
2.
|
Program Members purchasing from Distributor for US Fed Gov Sales must be authorized by Motorola Solutions to participate in the U.S. Federal Market Specialization (as indicated in the Distributor Download) and such Program Members must use a special US Federal Government ordering number to the extent such number is provided by Motorola to Distributor.
|
3.
|
Program Members buying for US Fed Gov Sales may resell to other resellers who do not have to be members in the Program, provided such other resellers are either prime contractors to a Federal Government Entity or subcontractors between the Program Members and such prime contractors and provided they are approved in writing by Motorola for each particular US Fed Gov Sales opportunity (the “Three-Stepping Opportunities”).
*****
|
4.
|
Distributor cannot obligate Motorola Solutions as subcontractor or otherwise to any Federal Governmental Entity. If Distributor transacts such sales, it is solely and exclusively responsible for complying with all laws, regulations, and provisions governing sales to any Federal Government Entity.
|
5.
|
On a case-by-case basis and at Motorola Solutions’ sole discretion, Motorola Solutions may, upon request from Distributor, provide a General Services Administration (GSA) Letter of Supply (“LoS”), or other contract vehicle supply authorization(s), to Resellers, for use in authorizing the addition of specified Products to their respective GSA or other identified Federal agency contracts (“Federal Contract Vehicles”). This LoS, or Federal Contract Vehicle can NOT be used by Distributor to support direct Federal sales by the Distributor under the Distributor's GSA or Distributor’s other Federal Contracts Vehicles. The Federal Contract Vehicles supply authorization(s) will include Motorola Solutions’ commitments regarding delivery schedules and other related representations (e.g., Trade Agreements Act). These terms and representations will apply and can only be used for the authorized LoS transactions and cannot be used for non-LoS transactions.
|
7.
|
For those Products containing Mesh technology Distributor agrees that it will not modify the Motorola Solutions hardware or software purchased for US Fed Gov Sales or design or adapt the Products for military applications. The terms of Section 6 of the Agreement- Flow Down Requirements, will apply with respect to Distributor’s obligation to advise Resellers of this restriction and the need to advise their respective Federal Government Entities thereof.
|
|
9. When the Federal Government Entities are located outside the U.S. Distributor agrees to comply with the following additional export and product regulatory requirements:
|
(a)
|
Distributor will effect or secure all necessary governmental permits, licenses and registrations required in connection with the execution or performance of any transaction contemplated under the Agreement and this Schedule, including the exportation from the U.S.A. or from the Products’ FCA (Incoterms 2010) Motorola Solutions’ regional distribution location, and the importation into and purchase and sale of the Products in the country where End User is located, and provide Motorola Solutions with copies thereof upon Motorola Solutions’ request. Motorola agrees to provide such assistance to Distributor as reasonably needed in order to effect or secure such necessary governmental permits, licenses and registrations.
|
(b)
|
Distributor recognizes and confirms that Products could only be deployed in countries that as of the date of deployment have all the necessary regulatory approvals. Distributor will not purchase Products for deployment in locations that are not an approved (from a regulatory perspective or otherwise) geographical region for use of the Product being ordered, per Motorola Solutions product information provided in its electronic product ordering guide.
|
(c)
|
If Distributor is requested to drop-ship Products in countries where regulatory approvals for such Products have not yet been obtained, Distributor shall obtain, at its own cost and in Motorola Solutions’ name, any required regulatory approvals, governmental clearances, authorizations/test and development & site licenses and any other approval required prior to such deployments. Motorola agrees to provide such assistance to Distributor as reasonably required to effect or secure such necessary regulatory approvals.
|
(d)
|
Without limiting the generality of the forgoing, where:
|
(ii)
|
Governmental agencies mandate the removal of any installed Product due to such Product not having the required regulatory approvals for use in the applicable locality on the date it was installed, this shall be the responsibility Distributor.
|
11.
|
In the event of a violation of law by Distributor or a suspension or debarment from federal business, Motorola Solutions may immediately terminate this Schedule and/or the Agreement.
|
1.
|
Motorola Solutions and Distributor and their respective Affiliates may disclose and/or receive Confidential Information of each other in accordance with the Distributor Agreement to which this Agreement is appended as Schedule 6 (the “Distributor Agreement”) and therefore each Party and its Affiliates shall be considered “Recipient Party” and “Disclosing Party” for the purposes of this Agreement.
|
2.
|
“Confidential Information” shall mean any confidential or proprietary data or information of either Party, consistent with Program participation by Distributor, and which is disclosed in any form (oral, written, graphic, machine readable and /or sample form) and on any media by the Disclosing Party to the Receiving Party, being clearly designated, labeled or marked as “confidential,” “proprietary” or their equivalent at the time of disclosure, or obtained by examination, testing or analysis of any hardware, software or any component part thereof provided by the Disclosing Party to the Receiving Party, or which by its very nature is confidential or proprietary, and shall include but is not limited to:
|
i)
|
all information and documents furnished to the Recipient Party pursuant to the Distributor Agreement, including point of sale (sales out) information;
|
ii)
|
application and registration information and all other information which pertain to the Program Elements and reference materials thereof;
|
iii)
|
the content of the Distributor Agreement (including all Schedules, Appendices and Annexes thereto and references made therein;
|
iv)
|
Products and their respective pricing and Discount information;
|
v)
|
any information regarding Resellers and Customers, including but not limited to lists, contracts, requirements, billing histories, needs and products or services provided to the Customers;
|
vi)
|
all financial information, including financial statements, earnings, operating results, sales data and projections and similar financial information;
|
vii)
|
all plans and projections for business opportunities for new or developing business, and the business relationship of the Parties hereto; and
|
viii)
|
other information designated in writing to be proprietary or confidential.
|
3.
|
During the term of the Distributor Agreement and for a period of three (3) years from the expiration or termination thereof, each Party will (i) not disclose Confidential Information to any third party (except as otherwise provided in this Agreement); (ii) restrict disclosure of Confidential Information to only those employees, agents or
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4.
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The Parties further agree that Confidential Information is and shall at all times remain the property of the Disclosing Party and no grant of any proprietary rights is hereby given or intended, including any license implied or otherwise. Within ten (10) days of receipt of Disclosing Party’s written request, Receiving Party will return all Confidential Information to Disclosing Party along with all copies and portions thereof, or certify in writing that all such Confidential Information has been destroyed. However, Receiving Party may retain one (1) archival copy of the Confidential Information that it may use only in case of a dispute concerning the Distributor Agreement. No license, express or implied, in the Confidential Information is granted other than to use the Confidential Information in the manner and to the extent authorized by this Agreement. Disclosing Party warrants that it is authorized to disclose any Confidential Information it discloses pursuant to this Agreement. However, Disclosing Party makes no other representation or warranty of any kind with respect to the Confidential Information.
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5.
|
The Parties also agree that Motorola Solutions may disclose on the Web Site(s) and/or send to other Program participants and Program Members in support of the then current Program Elements, the following Confidential Information received from Distributor, including:
|
(i)
|
Model of Distributor and the Track(s), Track Segment(s) and Markets it serves;
|
(iv)
|
Specific interest, business focus, and specialization of Distributor in Products, and Market(s);
|
(vi)
|
Training and/or Certification status of Distributor and its personnel or former personnel in the Program, Tracks and Track Segments.
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6.
|
Notwithstanding anything to the contrary herein, the Receiving Party shall have no obligation to preserve the confidentiality of any information which:
|
i)
|
is or becomes public knowledge through no wrongful act of the Receiving Party; or
|
ii)
|
is already known to the Receiving Party without an obligation of confidentiality; or
|
iii)
|
is rightfully obtained by the Receiving Party from any third party without similar restriction and without breach of any obligation owed to the Disclosing Party; or
|
iv)
|
is independently developed by or for the Receiving Party without the use of any of the Disclosing Party’s Confidential Information or any breach of this term; or
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v)
|
is furnished to a third party by the Disclosing Party without a similar restriction on the third party’s rights; or
|
vi)
|
is disclosed pursuant to a lawful requirement or request by a government agency; or
|
vii)
|
is approved for release by written authorization of the Disclosing Party.
|
7.
|
If a Receiving Party is required to disclose Confidential Information pursuant to applicable law, statute, or regulation, or court order, the Receiving Party will give to the Disclosing Party prompt written notice of the request and a reasonable opportunity to object to such disclosure or any part thereof and seek a protective order or appropriate remedy. If, in the absence of a protective order, the Receiving Party determines, upon the advice of counsel, that it is required to disclose such information, it may disclose only Confidential Information specifically required and only to the extent compelled to do so.
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8.
|
The Receiving Party will not transfer, directly or indirectly, any product, technical data or software furnished hereunder or the direct product of such technical data or software to any country for which the United States or any other applicable government requires an export license or other governmental approval without first obtaining such license or approval, and the provisions of Section 15 of the Distributor Agreement (Export Controls) shall apply with respect thereof.
|
9.
|
Enforcement.
Violation of this Confidentiality Agreement by the unauthorized use or disclosure of Confidential Information would cause irreparable damage to the Party whose Confidential Information is being used or disclosed. Therefore, in the event of such violation or threatened violation by one Party, the other Party will be entitled to seek injunctions, both preliminary as well as final, enjoining such behavior, in addition to all other remedies available to it in law or equity.
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11.
|
This Agreement shall be governed and construed in accordance with the laws of the State of New York and the terms of Section 22 of the Distributor Agreement (Governing Law and Dispute Resolution) will apply with respect thereto.
|
▪
|
Pre-sales configuration
|
▪
|
Order and delivery management
|
▪
|
Post-sales technical support
|
▪
|
Dead-on-arrival with advanced exchange
|
▪
|
Coordinate the Symbol Return Materials Authorizations (RMA) for warranty and service on behalf of the OEM
|
▪
|
Demo equipment
|
▪
|
Private labeling
|
▪
|
Software and firmware loading
|
▪
|
Kitting
|
▪
|
Bulk packing
|
▪
|
Unit package development
|
▪
|
Document editing and printing
|
•
|
Warranty Flow-Down Requirements and Motorola Standard Product Warranty
|
•
|
Motorola Sell-Through Terms and Conditions including Break/Fix and Professional Services Terms
|
•
|
Software Redistribution Requirements
|
•
|
Motorola End User Software License Agreement (EULA)
|
•
|
“Three-Stepping” Opportunities
|
•
|
Products containing MESH Technology
|
•
|
Products purchased for use in countries that are part of the European Union (EU)
|
•
|
Software Redistribution Requirements
|
•
|
Motorola End User Software License Agreement (EULA)
|
2.
|
SERVICES TERMS AND CONDITIONS
|
a.
|
Those Motorola’s terms and conditions provided herein under the title Break/Fix
|
4.1
|
The Master Terms and Conditions and the Reseller Community Addendum establish the terms under which you may procure Services from an Authorized Distributor for further resale to End Users.
|
4.2
|
(a) You agree that you will procure and offer the Sell Through Services only on the basis of the Indirect Model.
|
(b)
|
You acknowledge and agree that:
|
(i)
|
the Motorola Services Contract shall be the operative contract between you and End Users for the procurement and the supply (as applicable) of the Sell Through Services;
|
(ii)
|
any agreement(s) it enters into with End User(s) for the provision of Sell Through Services will be on the basis of the Motorola Services Contract and Motorola will be an intended third party beneficiary to such agreement(s); and
|
(iii)
|
in any order acknowledgment issued by you to indicate its acceptance of an End User’s purchase order for Sell Through Services, you will state: “All purchases of these services are subject to Motorola terms and conditions posted at http://www.motorolasolutions.com/staticfiles/Business/_Documents/static%20files/SellThroughTermsNA.pdf, or attached.”
|
(i)
|
End User’s assertion that the Motorola Services Contract does not regulate the supply of the Sell Through Services from Motorola to End User; or
|
(ii)
|
End User’s exertion of its contractual rights against Motorola where End User has not entered into the Motorola Services Contract with you and instead is relying upon different contractual terms (the “
Services Claim
”), you agree to defend Motorola in the Services Claim (at Motorola’s request) and to indemnify and hold Motorola harmless from and against: any costs, settlement, service credits or similar losses due and/or payable as a result of the Services Claim; and/or any judgment awarding damages or other remedy against Motorola in the Services Claim.
|
5.
|
Subcontracted Services
. You agree that in the event Motorola provides Subcontracted Services the terms of the Motorola Services Contract will apply.
|
1.
|
For purposes hereof, a “Federal Governmental Entity” is any department, agency, or instrumentality of the U.S. Federal Government. Sales you make for further resale (directly or indirectly) to a US Federal Government Entity (“US Fed Gov Sales”) are subject to the terms of Sections 1-4 below.
|
2.
|
When buying for US Fed Gov Sales you may resell to other resellers for further sale to End Users, provided such other resellers are either prime contractors to a Federal Government Entity or subcontractors between you and such prime contractors and provided they are approved in writing by Motorola for each particular US Fed Gov Sales opportunity.
|
May 7, 2014
Board of Directors
ScanSource, Inc.
6 Logue Court
Greenville, SC 29615
|
1.
|
I have reviewed this quarterly report on Form 10-Q of ScanSource, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Michael L. Baur
|
|
Michael L. Baur, Chief Executive Officer (Principal Executive Officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of ScanSource, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Charles A. Mathis
|
|
Charles A. Mathis, Vice President and Chief Financial Officer (Principal Financial Officer)
|
1)
|
The Report fully complies with the requirements of §13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”); and
|
2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
May 7, 2014
|
/s/ Michael L. Baur
|
|
|
Michael L. Baur,
|
|
|
Chief Executive Officer
(Principal Executive Officer)
|
1)
|
The Report fully complies with the requirements of §13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”); and
|
2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
May 7, 2014
|
/s/ Charles A. Mathis
|
|
|
Charles A. Mathis
|
|
|
Vice President and Chief Financial Officer
(Principal Financial Officer)
|