Title of Each Class
|
|
Name of Each Exchange on Which Registered
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Common Stock, no par value
|
|
NASDAQ Global Select Market
|
Large accelerated filer
|
ý
|
Accelerated filer
|
¨
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Non-accelerated filer
(Do not check if a smaller reporting company)
|
¨
|
Smaller reporting company
|
¨
|
Class
|
|
Outstanding at August 25, 2016
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Common Stock, no par value per share
|
|
25,625,806 shares
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|
Page
|
|
|
||
Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Mine Safety Disclosures
|
|
|
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Item 5.
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Item 6.
|
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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||
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•
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AIDC technology incorporates the capabilities for electronic identification and data processing without the need for manual input and consists of a wide range of products that include portable data collection terminals, wireless products, bar code label printers and scanners. As AIDC technology has become more pervasive, applications have evolved from traditional uses such as inventory control, materials handling, distribution, shipping and warehouse management to more advanced applications, such as health care.
|
•
|
POS products include those computer-based systems that have replaced electronic cash registers in grocery, retail and hospitality environments. POS product lines include computer-based terminals, monitors, payment processing solutions, receipt printers, pole displays, cash drawers, keyboards, peripheral equipment and fully integrated processing units. In
|
•
|
Electronic physical security products include identification, access control, video surveillance and intrusion-related products, and networking. Physical security products are used every day across every vertical market to protect lives, property and information, there is a heavy penetration into schools, municipalities, correctional institutions and retail environments. Physical security products are deployed across both wired and wireless infrastructures and often serve as the backbone of the solution. These technology products require specialized knowledge to deploy effectively, and ScanSource Security offers in-depth training and education to its partners to enable them to maintain the appropriate skill levels.
|
•
|
Communications technologies, such as voice and data products include private branch exchanges ("PBXs"), key systems, telephone handsets and components used in voice, fax, data, voice recognition, call center management and IP communication applications. Converged communication products combine voice, data, fax and speech technologies to deliver communications solutions that combine computers, telecommunications and the Internet. Converged communications products include telephone and IP network interfaces, Voice over Internet Protocol ("VoIP") systems, PBX integration products and carrier-class board systems-level products. Video products include video and voice conferencing and network systems; and data networking products include switches, servers and routers.
|
•
|
Our service teams deliver value-added support programs, including education and training, customer configuration, marketing services, network assessments, WiFi services, and partnership programs. Service teams focus on reducing complexity, building efficiency, and helping our resellers to develop a new technology practice or to extend their capability and reach.
|
•
|
The Company has two non-exclusive distribution agreements with Avaya. One agreement covers the distribution of Avaya products in the United States and Latin America, and the other agreement covers distribution of Avaya products in the United Kingdom and portions of continental Europe. The Company's Avaya agreements each have a one year term that automatically renews for additional one year terms. Either party may terminate upon 180 days' for the U.S. and Latin America agreement and upon 90 days' for the European agreement.
|
•
|
The Company has two non-exclusive distribution agreements with Cisco. One agreement covers the distribution of Cisco products in the United States for the newly acquired KBZ business and has a three year term, the other agreement covers distribution of Cisco products in the Unites States for the ScanSource business and has a two year term; each must be renewed by written agreement. Either party may terminate the agreement upon 30 days' notice to the other party.
|
•
|
The Company has two non-exclusive distribution agreements with Zebra. One agreement covers sales of Zebra hardware and software products in North and South America, and another agreement covers sales of Zebra hardware and software products in Europe, the Middle East and Africa ("EMEA"). The Zebra agreements each have a one year term that automatically renews for additional one year terms, and either party may terminate the agreement upon 30 days' notice to the other party.
|
ITEM 1A.
|
Risk Factors.
|
•
|
Fluctuations of foreign currency, exchange rates, which can impact sales, costs of the goods we sell, and the reporting of our results and assets on our financial statements;
|
•
|
Difficulties in collecting accounts receivable and longer collection periods;
|
•
|
Changes in, or expiration of, various foreign incentives that provide economic benefits to us;
|
•
|
Labor laws that impact our ability to hire, retain, and discharge employees;
|
•
|
Difficulties in staffing and managing operations in foreign countries;
|
•
|
Changes in international trade laws, such as the North American Free Trade Agreement, affecting our import and export activities, including export license requirements, restrictions on the export of certain technology, and tariff changes;
|
•
|
Changes in the interpretation and enforcement of laws (in particular related to items such as duty and taxation);
|
•
|
Global economic and financial market instability related to the U.K.’s referendum withdrawal from the E.U.;
|
•
|
Potential political and economic instability and changes in governments;
|
•
|
Compliance with foreign and domestic import and export regulations and anti-corruption laws, including the Iran Threat Reduction and Syria Human Rights Act of 2012, U.S. Foreign Corrupt Practices Act, and similar laws of other jurisdictions, for our business activities outside the United States, the violation of which could result in severe penalties, including monetary fines, criminal proceedings and suspension of export or import privileges; and
|
•
|
Terrorist or military actions that result in destruction or seizure of our assets or suspension or disruption of our operations or those of our customers.
|
ITEM 2.
|
Properties.
|
ITEM 3.
|
Legal Proceedings.
|
ITEM 5.
|
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
|
|
High
|
|
Low
|
||||
Fiscal Year 2016
|
|
|
|
||||
First quarter
|
$
|
39.03
|
|
|
$
|
29.53
|
|
Second quarter
|
41.18
|
|
|
32.17
|
|
||
Third quarter
|
40.48
|
|
|
27.46
|
|
||
Fourth quarter
|
42.54
|
|
|
35.57
|
|
||
Fiscal Year 2015
|
|
|
|
||||
First quarter
|
$
|
39.98
|
|
|
$
|
34.49
|
|
Second quarter
|
42.52
|
|
|
31.32
|
|
||
Third quarter
|
41.10
|
|
|
32.99
|
|
||
Fourth quarter
|
41.95
|
|
|
37.52
|
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
||||||||||||
ScanSource, Inc.
|
$
|
100
|
|
|
$
|
82
|
|
|
$
|
85
|
|
|
$
|
102
|
|
|
$
|
102
|
|
|
$
|
99
|
|
NASDAQ Composite
|
$
|
100
|
|
|
$
|
109
|
|
|
$
|
128
|
|
|
$
|
169
|
|
|
$
|
192
|
|
|
$
|
188
|
|
SIC Code 5045 – Computers & Peripheral Equipment
|
$
|
100
|
|
|
$
|
97
|
|
|
$
|
109
|
|
|
$
|
156
|
|
|
$
|
144
|
|
|
$
|
183
|
|
Period
|
Total number of shares purchased
|
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
|
||||||
July 1, 2015 through July 31, 2015
|
316,738
|
|
$
|
37.50
|
|
316,738
|
|
$
|
89,354,059
|
|
August 1, 2015 through August 31, 2015
|
394,944
|
|
$
|
36.37
|
|
394,944
|
|
$
|
74,989,947
|
|
September 1, 2015 through September 30, 2015
|
437,421
|
|
$
|
35.91
|
|
437,421
|
|
$
|
59,283,524
|
|
October 1, 2015 through October 31, 2015
|
313,799
|
|
$
|
37.28
|
|
313,799
|
|
$
|
47,585,237
|
|
November 1, 2015 through November 30, 2015
|
266,120
|
|
$
|
37.82
|
|
266,120
|
|
$
|
37,520,574
|
|
December 1, 2015 through December 31, 2015
|
221,121
|
|
$
|
35.62
|
|
221,121
|
|
$
|
29,645,281
|
|
January 1, 2016 through January 31, 2016
|
522,880
|
|
$
|
29.44
|
|
522,880
|
|
$
|
14,254,276
|
|
February 1, 2016 through February 29, 2016
|
341,487
|
|
$
|
32.82
|
|
341,487
|
|
$
|
3,048,328
|
|
March 1, 2016 through March 31, 2016
|
6,049
|
|
$
|
37.98
|
|
6,049
|
|
$
|
2,818,608
|
|
April 1, 2016 through April 30, 2016
|
—
|
|
$
|
—
|
|
—
|
|
$
|
2,818,608
|
|
May 1, 2016 through May 31, 2016
|
6,251
|
|
$
|
37.96
|
|
6,251
|
|
$
|
2,581,308
|
|
June 1, 2016 through June 30, 2016
|
57,400
|
|
$
|
33.01
|
|
57,400
|
|
$
|
480,185
|
|
Total
|
2,884,210
|
|
$
|
34.93
|
|
2,884,210
|
|
$
|
480,185
|
|
|
Fiscal Year Ended June 30,
|
||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
|
(in thousands, except per share data)
|
||||||||||||||||||
Statement of income data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
3,540,226
|
|
|
$
|
3,218,626
|
|
|
$
|
2,913,634
|
|
|
$
|
2,876,964
|
|
|
$
|
3,015,296
|
|
Cost of goods sold
|
3,184,786
|
|
|
2,891,536
|
|
|
2,612,535
|
|
|
2,584,090
|
|
|
2,713,272
|
|
|||||
Gross profit
|
355,440
|
|
|
327,090
|
|
|
301,099
|
|
|
292,874
|
|
|
302,024
|
|
|||||
Selling, general and administrative expenses
|
257,269
|
|
|
222,982
|
|
|
192,492
|
|
|
191,216
|
|
|
188,388
|
|
|||||
Impairment charges (legal recovery)
|
—
|
|
|
—
|
|
|
(15,490
|
)
|
|
48,772
|
|
|
—
|
|
|||||
Change in fair value of contingent consideration
|
1,294
|
|
|
2,667
|
|
|
2,311
|
|
|
1,843
|
|
|
120
|
|
|||||
Operating income
|
96,877
|
|
|
101,441
|
|
|
121,786
|
|
|
51,043
|
|
|
113,516
|
|
|||||
Interest expense
|
2,124
|
|
|
1,797
|
|
|
731
|
|
|
775
|
|
|
1,639
|
|
|||||
Interest income
|
(3,448
|
)
|
|
(2,638
|
)
|
|
(2,364
|
)
|
|
(2,238
|
)
|
|
(2,886
|
)
|
|||||
Other (income) expense, net
|
2,191
|
|
|
2,376
|
|
|
312
|
|
|
(520
|
)
|
|
3,552
|
|
|||||
Income before income taxes
|
96,010
|
|
|
99,906
|
|
|
123,107
|
|
|
53,026
|
|
|
111,211
|
|
|||||
Provision for income taxes
|
32,391
|
|
|
34,487
|
|
|
41,318
|
|
|
18,364
|
|
|
36,923
|
|
|||||
Net income
|
$
|
63,619
|
|
|
$
|
65,419
|
|
|
$
|
81,789
|
|
|
$
|
34,662
|
|
|
$
|
74,288
|
|
Net income per common share, basic
|
$
|
2.40
|
|
|
$
|
2.29
|
|
|
$
|
2.89
|
|
|
$
|
1.25
|
|
|
$
|
2.72
|
|
Weighted-average shares outstanding, basic
|
26,472
|
|
|
28,558
|
|
|
28,337
|
|
|
27,774
|
|
|
27,362
|
|
|||||
Net income per common share, diluted
|
$
|
2.38
|
|
|
$
|
2.27
|
|
|
$
|
2.86
|
|
|
$
|
1.24
|
|
|
$
|
2.68
|
|
Weighted-average shares outstanding, diluted
|
26,687
|
|
|
28,799
|
|
|
28,602
|
|
|
27,994
|
|
|
27,751
|
|
|
As of June 30,
|
||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Balance sheet data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Working capital
|
$
|
643,793
|
|
|
$
|
645,398
|
|
|
$
|
715,850
|
|
|
$
|
614,378
|
|
|
$
|
533,529
|
|
Total assets
|
1,491,185
|
|
|
1,476,941
|
|
|
1,335,124
|
|
|
1,164,183
|
|
|
1,201,806
|
|
|||||
Total long-term debt (including current debt)
|
76,856
|
|
|
8,826
|
|
|
5,429
|
|
|
5,429
|
|
|
9,697
|
|
|||||
Total shareholders’ equity
|
$
|
774,496
|
|
|
$
|
808,985
|
|
|
$
|
802,643
|
|
|
$
|
695,956
|
|
|
$
|
652,311
|
|
ITEM 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
|
Year ended June 30, 2016
|
|
Year ended June 30, 2015
|
||||||||||||||||||||||||||||
|
Operating Income
|
|
Pre-Tax Income
|
|
Net Income
|
|
Diluted EPS
|
|
Operating Income
|
|
Pre-Tax Income
|
|
Net Income
|
|
Diluted EPS
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
GAAP Measures
|
$
|
96,877
|
|
|
$
|
96,010
|
|
|
$
|
63,619
|
|
|
$
|
2.38
|
|
|
$
|
101,441
|
|
|
$
|
99,906
|
|
|
$
|
65,419
|
|
|
$
|
2.27
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Amortization of intangible assets
|
9,828
|
|
|
9,828
|
|
|
6,790
|
|
|
0.25
|
|
|
6,641
|
|
|
6,641
|
|
|
4,599
|
|
|
0.16
|
|
||||||||
Change in fair value of contingent considerations
|
1,294
|
|
|
1,294
|
|
|
977
|
|
|
0.04
|
|
|
2,667
|
|
|
2,667
|
|
|
1,842
|
|
|
0.06
|
|
||||||||
Acquisition costs
|
863
|
|
|
863
|
|
|
863
|
|
|
0.04
|
|
|
3,254
|
|
|
3,254
|
|
|
3,254
|
|
|
0.12
|
|
||||||||
Non-GAAP measures
|
$
|
108,862
|
|
|
$
|
107,995
|
|
|
$
|
72,249
|
|
|
$
|
2.71
|
|
|
$
|
114,003
|
|
|
$
|
112,468
|
|
|
$
|
75,114
|
|
|
$
|
2.61
|
|
|
2016
|
|
2015
|
|
2014
|
|||
Return on invested capital ratio
|
13.3
|
%
|
|
14.6
|
%
|
|
15.7
|
%
|
Reconciliation of EBITDA to Net Income
|
Fiscal Year Ended June 30,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(in thousands)
|
||||||||||
Net income (GAAP)
|
$
|
63,619
|
|
|
$
|
65,419
|
|
|
$
|
81,789
|
|
Plus: income taxes
|
32,391
|
|
|
34,487
|
|
|
41,318
|
|
|||
Plus: interest expense
|
2,124
|
|
|
1,797
|
|
|
731
|
|
|||
Plus: depreciation & amortization
|
17,154
|
|
|
11,997
|
|
|
7,375
|
|
|||
EBITDA
|
115,288
|
|
|
113,700
|
|
|
131,213
|
|
|||
Change in fair value of contingent consideration
|
1,294
|
|
|
2,667
|
|
|
2,311
|
|
|||
Adjustments
(a)
|
863
|
|
|
3,254
|
|
|
(15,490
|
)
|
|||
Adjusted EBITDA (numerator for ROIC) (non-GAAP)
|
$
|
117,445
|
|
|
$
|
119,621
|
|
|
$
|
118,034
|
|
Invested capital calculations
|
Fiscal Year Ended June 30,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(in thousands)
|
||||||||||
Equity – beginning of the year
|
$
|
808,985
|
|
|
$
|
802,643
|
|
|
$
|
695,956
|
|
Equity – end of the year
|
774,496
|
|
|
808,985
|
|
|
802,643
|
|
|||
Change in fair value of contingent consideration, net of tax
|
977
|
|
|
1,842
|
|
|
1,525
|
|
|||
Adjustments, net of tax
(a)
|
863
|
|
|
3,254
|
|
|
(9,756
|
)
|
|||
Average equity, adjusted
|
792,661
|
|
|
808,362
|
|
|
745,184
|
|
|||
Average funded debt
(b)
|
93,500
|
|
|
13,421
|
|
|
5,429
|
|
|||
Invested capital (denominator)
|
$
|
886,161
|
|
|
$
|
821,783
|
|
|
$
|
750,613
|
|
Return on invested capital
|
13.3
|
%
|
|
14.6
|
%
|
|
15.7
|
%
|
|||
|
|
|
|
|
|
|
Fiscal Year Ended June 30,
|
|||||||
|
2016
|
|
2015
|
|
2014
|
|||
Statement of income data:
|
|
|
|
|
|
|||
Net sales
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of goods sold
|
90.0
|
|
|
89.8
|
|
|
89.7
|
|
Gross profit
|
10.0
|
|
|
10.2
|
|
|
10.3
|
|
Selling, general and administrative expenses, net of amortization expense
|
7.0
|
|
|
6.7
|
|
|
6.5
|
|
Intangible amortization expense
|
0.3
|
|
|
0.2
|
|
|
0.1
|
|
Legal recovery
|
0.0
|
|
|
0.0
|
|
|
(0.5
|
)
|
Change in fair value of contingent consideration
|
0.0
|
|
|
0.1
|
|
|
0.1
|
|
Operating income
|
2.7
|
|
|
3.2
|
|
|
4.2
|
|
Interest expense (income), net
|
0.0
|
|
|
0.0
|
|
|
(0.1
|
)
|
Other expense (income), net
|
0.1
|
|
|
0.1
|
|
|
0.0
|
|
Income before income taxes and minority interest
|
2.7
|
|
|
3.1
|
|
|
4.2
|
|
Provision for income taxes
|
0.9
|
|
|
1.1
|
|
|
1.4
|
|
Net income
|
1.8
|
%
|
|
2.0
|
%
|
|
2.8
|
%
|
|
2016
|
|
2015
|
|
$ Change
|
|
% Change
|
|||||||
|
(in thousands)
|
|
|
|||||||||||
Worldwide Barcode & Security
|
$
|
2,381,331
|
|
|
$
|
2,134,124
|
|
|
$
|
247,207
|
|
|
11.6
|
%
|
Worldwide Communications & Services
|
1,158,895
|
|
|
1,084,502
|
|
|
74,393
|
|
|
6.9
|
%
|
|||
Total net sales
|
$
|
3,540,226
|
|
|
$
|
3,218,626
|
|
|
$
|
321,600
|
|
|
10.0
|
%
|
|
2016
|
|
2015
|
|
$ Change
|
|
% Change
|
|||||||
|
(in thousands)
|
|
|
|||||||||||
North American
|
$
|
2,620,184
|
|
|
$
|
2,346,764
|
|
|
$
|
273,420
|
|
|
11.7
|
%
|
International
|
920,042
|
|
|
871,862
|
|
|
48,180
|
|
|
5.5
|
%
|
|||
Total net sales
|
$
|
3,540,226
|
|
|
$
|
3,218,626
|
|
|
$
|
321,600
|
|
|
10.0
|
%
|
|
2015
|
|
2014
|
|
$ Change
|
|
% Change
|
|||||||
|
(in thousands)
|
|
|
|||||||||||
Worldwide Barcode & Security
|
$
|
2,134,124
|
|
|
$
|
2,003,911
|
|
|
$
|
130,213
|
|
|
6.5
|
%
|
Worldwide Communications & Services
|
1,084,502
|
|
|
909,723
|
|
|
174,779
|
|
|
19.2
|
%
|
|||
Total net sales
|
$
|
3,218,626
|
|
|
$
|
2,913,634
|
|
|
$
|
304,992
|
|
|
10.5
|
%
|
|
2015
|
|
2014
|
|
$ Change
|
|
% Change
|
|||||||
|
(in thousands)
|
|
|
|||||||||||
North American
|
$
|
2,346,764
|
|
|
$
|
2,179,890
|
|
|
$
|
166,874
|
|
|
7.7
|
%
|
International
|
871,862
|
|
|
733,744
|
|
|
138,118
|
|
|
18.8
|
%
|
|||
Total net sales
|
$
|
3,218,626
|
|
|
$
|
2,913,634
|
|
|
$
|
304,992
|
|
|
10.5
|
%
|
|
|
|
|
|
|
|
|
|
% of Sales
June 30,
|
|||||||||||
|
2016
|
|
2015
|
|
$ Change
|
|
% Change
|
|
2016
|
|
2015
|
|||||||||
|
(in thousands)
|
|
|
|
|
|
|
|||||||||||||
Worldwide Barcode & Security
|
$
|
199,728
|
|
|
$
|
177,835
|
|
|
$
|
21,893
|
|
|
12.3
|
%
|
|
8.4
|
%
|
|
8.3
|
%
|
Worldwide Communications & Services
|
155,712
|
|
|
149,255
|
|
|
6,457
|
|
|
4.3
|
%
|
|
13.4
|
%
|
|
13.8
|
%
|
|||
Total gross profit
|
$
|
355,440
|
|
|
$
|
327,090
|
|
|
$
|
28,350
|
|
|
8.7
|
%
|
|
10.0
|
%
|
|
10.2
|
%
|
|
|
|
|
|
|
|
|
|
% of Sales
June 30,
|
|||||||||||
|
2015
|
|
2014
|
|
$ Change
|
|
% Change
|
|
2015
|
|
2014
|
|||||||||
|
(in thousands)
|
|
|
|
|
|
|
|||||||||||||
Worldwide Barcode & Security
|
$
|
177,835
|
|
|
$
|
174,932
|
|
|
$
|
2,903
|
|
|
1.7
|
%
|
|
8.3
|
%
|
|
8.7
|
%
|
Worldwide Communications & Services
|
149,255
|
|
|
126,167
|
|
|
23,088
|
|
|
18.3
|
%
|
|
13.8
|
%
|
|
13.9
|
%
|
|||
Total gross profit
|
$
|
327,090
|
|
|
$
|
301,099
|
|
|
$
|
25,991
|
|
|
8.6
|
%
|
|
10.2
|
%
|
|
10.3
|
%
|
|
|
|
|
|
|
|
|
|
% of Sales
June 30,
|
|||||||||||
|
2016
|
|
2015
|
|
$ Change
|
|
% Change
|
|
2016
|
|
2015
|
|||||||||
|
(in thousands)
|
|
|
|
|
|
|
|
||||||||||||
Selling, general and administrative expenses
|
$
|
257,269
|
|
|
$
|
222,982
|
|
|
$
|
34,287
|
|
|
15.4
|
%
|
|
7.3
|
%
|
|
6.9
|
%
|
Change in fair value of contingent consideration
|
1,294
|
|
|
2,667
|
|
|
(1,373
|
)
|
|
(51.5
|
)%
|
|
—
|
%
|
|
0.1
|
%
|
|||
Operating expenses
|
258,563
|
|
|
225,649
|
|
|
32,914
|
|
|
14.6
|
%
|
|
7.3
|
%
|
|
7.0
|
%
|
|
|
|
|
|
|
|
|
|
% of Sales
June 30,
|
|||||||||||
|
2015
|
|
2014
|
|
$ Change
|
|
% Change
|
|
2015
|
|
2014
|
|||||||||
|
(in thousands)
|
|
|
|
|
|
|
|||||||||||||
Selling, general and administrative expense
|
$
|
222,982
|
|
|
$
|
192,492
|
|
|
$
|
30,490
|
|
|
15.8
|
%
|
|
6.9
|
%
|
|
6.6
|
%
|
Impairment charges (legal recovery)
|
—
|
|
|
(15,490
|
)
|
|
15,490
|
|
|
(100.0
|
)%
|
|
—
|
%
|
|
(0.5
|
)%
|
|||
Change in fair value of contingent consideration
|
2,667
|
|
|
2,311
|
|
|
356
|
|
|
15.4
|
%
|
|
0.1
|
%
|
|
0.1
|
%
|
|||
Operating expenses
|
$
|
225,649
|
|
|
$
|
179,313
|
|
|
$
|
46,336
|
|
|
25.8
|
%
|
|
7.0
|
%
|
|
6.2
|
%
|
|
|
|
|
|
|
|
|
|
% of Sales
June 30,
|
|||||||||||
|
2016
|
|
2015
|
|
$ Change
|
|
% Change
|
|
2016
|
|
2015
|
|||||||||
|
(in thousands)
|
|
|
|
|
|
|
|
||||||||||||
Worldwide Barcode & Security
|
$
|
53,015
|
|
|
$
|
49,045
|
|
|
$
|
3,970
|
|
|
8.1
|
%
|
|
2.2
|
%
|
|
2.3
|
%
|
Worldwide Communications & Services
|
44,725
|
|
|
55,650
|
|
|
(10,925
|
)
|
|
(19.6
|
)%
|
|
3.9
|
%
|
|
5.1
|
%
|
|||
Corporate
|
(863
|
)
|
|
(3,254
|
)
|
|
2,391
|
|
|
(73.5
|
)%
|
|
—
|
%
|
|
—
|
%
|
|||
Total operating income
|
$
|
96,877
|
|
|
$
|
101,441
|
|
|
$
|
(4,564
|
)
|
|
(4.5
|
)%
|
|
2.7
|
%
|
|
3.2
|
%
|
|
|
|
|
|
|
|
|
|
% of Sales
June 30,
|
|||||||||||
|
2015
|
|
2014
|
|
$ Change
|
|
% Change
|
|
2015
|
|
2014
|
|||||||||
|
(in thousands)
|
|
|
|
|
|
|
|||||||||||||
Worldwide Barcode & Security
|
$
|
49,045
|
|
|
$
|
49,544
|
|
|
$
|
(499
|
)
|
|
(1.0
|
)%
|
|
2.3
|
%
|
|
2.5
|
%
|
Worldwide Communications & Services
|
55,650
|
|
|
56,752
|
|
|
(1,102
|
)
|
|
(1.9
|
)%
|
|
5.1
|
%
|
|
6.2
|
%
|
|||
Corporate
|
(3,254
|
)
|
|
15,490
|
|
|
(18,744
|
)
|
|
(121.0
|
)%
|
|
—
|
%
|
|
—
|
%
|
|||
Total operating income
|
$
|
101,441
|
|
|
$
|
121,786
|
|
|
$
|
(20,345
|
)
|
|
(16.7
|
)%
|
|
3.2
|
%
|
|
4.2
|
%
|
|
|
|
|
|
|
|
|
|
% of Sales
June 30,
|
|||||||||||
|
2016
|
|
2015
|
|
$ Change
|
|
% Change
|
|
2016
|
|
2015
|
|||||||||
|
(in thousands)
|
|
|
|
|
|
|
|||||||||||||
Interest expense
|
$
|
2,124
|
|
|
$
|
1,797
|
|
|
$
|
327
|
|
|
18.2
|
%
|
|
0.1
|
%
|
|
0.1
|
%
|
Interest income
|
(3,448
|
)
|
|
(2,638
|
)
|
|
(810
|
)
|
|
30.7
|
%
|
|
(0.1
|
)%
|
|
(0.1
|
)%
|
|||
Net foreign exchange losses (gains)
|
2,571
|
|
|
3,044
|
|
|
(473
|
)
|
|
(15.5
|
)%
|
|
0.1
|
%
|
|
0.1
|
%
|
|||
Other, net
|
(380
|
)
|
|
(668
|
)
|
|
288
|
|
|
(43.1
|
)%
|
|
—
|
%
|
|
—
|
%
|
|||
Total other (income) expense
|
$
|
867
|
|
|
$
|
1,535
|
|
|
$
|
(668
|
)
|
|
(43.5
|
)%
|
|
—
|
%
|
|
—
|
%
|
|
|
|
|
|
|
|
|
|
% of Sales
June 30,
|
|||||||||||
|
2015
|
|
2014
|
|
$ Change
|
|
% Change
|
|
2015
|
|
2014
|
|||||||||
|
(in thousands)
|
|
|
|
|
|
|
|||||||||||||
Interest expense
|
$
|
1,797
|
|
|
$
|
731
|
|
|
$
|
1,066
|
|
|
145.8
|
%
|
|
0.1
|
%
|
|
—
|
%
|
Interest income
|
(2,638
|
)
|
|
(2,364
|
)
|
|
(274
|
)
|
|
11.6
|
%
|
|
(0.1
|
)%
|
|
(0.1
|
)%
|
|||
Net foreign exchange (gains) losses
|
3,044
|
|
|
616
|
|
|
2,428
|
|
|
nm*
|
|
|
0.1
|
%
|
|
—
|
%
|
|||
Other, net
|
(668
|
)
|
|
(304
|
)
|
|
(364
|
)
|
|
119.7
|
%
|
|
—
|
%
|
|
—
|
%
|
|||
Total other (income) expense
|
$
|
1,535
|
|
|
$
|
(1,321
|
)
|
|
$
|
2,856
|
|
|
(216.2
|
)%
|
|
—
|
%
|
|
—
|
%
|
|
Three Months Ended
|
||||||||||||||||||||||||||||||
|
Fiscal 2016
|
|
Fiscal 2015
|
||||||||||||||||||||||||||||
|
Jun. 30
2016
|
|
Mar. 31
2016
|
|
Dec. 31
2015
|
|
Sept. 30
2015
|
|
Jun. 30
2015
|
|
Mar. 31
2015
|
|
Dec. 31
2014
|
|
Sept. 30
2014
|
||||||||||||||||
|
(in thousands, except per share data)
|
||||||||||||||||||||||||||||||
Net sales
|
$
|
877,471
|
|
|
$
|
798,404
|
|
|
$
|
993,522
|
|
|
$
|
870,829
|
|
|
$
|
856,685
|
|
|
$
|
763,203
|
|
|
$
|
807,019
|
|
|
$
|
791,720
|
|
Cost of goods sold
|
794,692
|
|
|
713,928
|
|
|
892,889
|
|
|
783,277
|
|
|
765,367
|
|
|
683,187
|
|
|
728,908
|
|
|
714,075
|
|
||||||||
Gross profit
|
$
|
82,779
|
|
|
$
|
84,476
|
|
|
$
|
100,633
|
|
|
$
|
87,552
|
|
|
$
|
91,318
|
|
|
$
|
80,016
|
|
|
$
|
78,111
|
|
|
$
|
77,645
|
|
Net income
|
$
|
12,925
|
|
|
$
|
14,042
|
|
|
$
|
20,656
|
|
|
$
|
15,996
|
|
|
$
|
16,447
|
|
|
$
|
12,943
|
|
|
$
|
16,821
|
|
|
$
|
19,208
|
|
Weighted-average shares outstanding, basic
|
25,661
|
|
|
25,863
|
|
|
26,648
|
|
|
27,702
|
|
|
28,461
|
|
|
28,646
|
|
|
28,579
|
|
|
28,544
|
|
||||||||
Weighted-average shares outstanding, diluted
|
25,879
|
|
|
25,967
|
|
|
26,902
|
|
|
27,929
|
|
|
28,722
|
|
|
28,855
|
|
|
28,831
|
|
|
28,794
|
|
||||||||
Net income per common share, basic
|
$
|
0.50
|
|
|
$
|
0.54
|
|
|
$
|
0.78
|
|
|
$
|
0.58
|
|
|
$
|
0.58
|
|
|
$
|
0.45
|
|
|
$
|
0.59
|
|
|
$
|
0.67
|
|
Net income per common share, diluted
|
$
|
0.50
|
|
|
$
|
0.54
|
|
|
$
|
0.77
|
|
|
$
|
0.57
|
|
|
$
|
0.57
|
|
|
$
|
0.45
|
|
|
$
|
0.58
|
|
|
$
|
0.67
|
|
•
|
Industry weighted-average cost of capital ("WACC"): We utilized a WACC relative to each reporting unit's respective geography and industry as the discount rate for estimated future cash flows. The WACC is intended to represent a rate of return that would be expected by a market place participant in each respective geography.
|
•
|
Operating income: We utilized historical and expected revenue growth rates, gross margins and operating expense percentages, which varied based on the projections of each reporting unit being evaluated.
|
•
|
Cash flows from working capital changes: We utilized a projected cash flow impact pertaining to expected changes in working capital as each of our goodwill reporting units grow.
|
|
Year ended
|
||||||
Cash provided by (used in):
|
June 30, 2016
|
|
June 30, 2015
|
||||
Operating activities
|
$
|
52,211
|
|
|
$
|
75,522
|
|
Investing activities
|
(73,556
|
)
|
|
(80,541
|
)
|
||
Financing activities
|
(36,305
|
)
|
|
(56,893
|
)
|
||
Effect of exchange rate change on cash and cash equivalents
|
(2,596
|
)
|
|
(11,293
|
)
|
||
Increase (decrease) in cash and cash equivalents
|
$
|
(60,246
|
)
|
|
$
|
(73,205
|
)
|
|
Payments Due by Period
|
||||||||||||||||||
|
Total
|
|
Year 1
|
|
Years 2-3
|
|
Years 4-5
|
|
Greater than
5 Years
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Contractual Obligations
|
|
||||||||||||||||||
Non-cancelable operating leases
(1)
|
$
|
13,975
|
|
|
$
|
6,828
|
|
|
$
|
5,495
|
|
|
$
|
1,624
|
|
|
$
|
28
|
|
Capital lease
|
248
|
|
|
248
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Principal debt payments
|
5,429
|
|
|
—
|
|
|
329
|
|
|
671
|
|
|
4,429
|
|
|||||
Contingent consideration
(2)
|
24,652
|
|
|
11,594
|
|
|
13,058
|
|
|
—
|
|
|
—
|
|
|||||
Other
(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total obligations
|
$
|
44,304
|
|
|
$
|
18,670
|
|
|
$
|
18,882
|
|
|
$
|
2,295
|
|
|
$
|
4,457
|
|
(1)
|
Amounts to be paid in future periods for real estate taxes, insurance, and other operating expenses applicable to the properties pursuant to the respective operating leases have been excluded from the table above as the amounts payable in future periods are generally not specified in the lease agreements and are dependent upon amounts which are not known at this time. Such amounts were not material in the current fiscal year.
|
(2)
|
Amounts disclosed regarding future Imago ScanSource and Network1 earnout payments are presented at their discounted fair value. Estimated future, undiscounted earnout payments could range as high as
$3.0 million
and
$26.0 million
, respectively, as of
June 30, 2016
.
|
(3)
|
Amounts totaling
$17.9 million
of deferred compensation, which are included in accrued expenses and other current liabilities and other long-term liabilities in our Consolidated Balance Sheets as of
June 30, 2016
, have been excluded from the table above due to the uncertainty of the timing of the payment of these obligations, which are generally at the discretion of the individual employees or upon death of the former employee, respectively.
|
ITEM 7A.
|
Quantitative and Qualitative Disclosures about Market Risk.
|
ITEM 8.
|
Financial Statements and Supplementary Data.
|
|
|
|
Page
|
Financial Statements
|
|
|
|
|
/s/ Grant Thornton LLP
|
|
/s/ Grant Thornton LLP
|
|
June 30,
2016 |
|
June 30,
2015 |
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
61,400
|
|
|
$
|
121,646
|
|
Accounts receivable, less allowance of $39,032 at June 30, 2016
and $32,589 at June 30, 2015
|
559,557
|
|
|
522,532
|
|
||
Inventories
|
558,581
|
|
|
553,063
|
|
||
Prepaid expenses and other current assets
|
49,367
|
|
|
46,917
|
|
||
Total current assets
|
1,228,905
|
|
|
1,244,158
|
|
||
Property and equipment, net
|
52,388
|
|
|
46,574
|
|
||
Goodwill
|
92,715
|
|
|
66,509
|
|
||
Net identifiable intangible assets
|
51,127
|
|
|
46,272
|
|
||
Deferred income taxes
|
28,813
|
|
|
38,963
|
|
||
Other non-current assets
|
37,237
|
|
|
34,465
|
|
||
Total assets
|
$
|
1,491,185
|
|
|
$
|
1,476,941
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current debt
|
$
|
—
|
|
|
$
|
2,860
|
|
Accounts payable
|
471,487
|
|
|
501,329
|
|
||
Accrued expenses and other current liabilities
|
98,975
|
|
|
81,000
|
|
||
Current portion of contingent consideration
|
11,594
|
|
|
9,391
|
|
||
Income taxes payable
|
3,056
|
|
|
4,180
|
|
||
Total current liabilities
|
585,112
|
|
|
598,760
|
|
||
Deferred income taxes
|
2,555
|
|
|
3,773
|
|
||
Long-term debt, net of current portion
|
5,429
|
|
|
5,966
|
|
||
Borrowings under revolving credit facility
|
71,427
|
|
|
—
|
|
||
Long-term portion of contingent consideration
|
13,058
|
|
|
24,569
|
|
||
Other long-term liabilities
|
39,108
|
|
|
34,888
|
|
||
Total liabilities
|
716,689
|
|
|
667,956
|
|
||
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, 25,614,673 and 28,214,153 shares issued and outstanding at June 30, 2016 and June 30, 2015, respectively
|
67,249
|
|
|
157,172
|
|
||
Retained earnings
|
779,934
|
|
|
716,315
|
|
||
Accumulated other comprehensive (loss) income
|
(72,687
|
)
|
|
(64,502
|
)
|
||
Total shareholders’ equity
|
774,496
|
|
|
808,985
|
|
||
Total liabilities and shareholders’ equity
|
$
|
1,491,185
|
|
|
$
|
1,476,941
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
Net sales
|
$
|
3,540,226
|
|
|
$
|
3,218,626
|
|
|
$
|
2,913,634
|
|
Cost of goods sold
|
3,184,786
|
|
|
2,891,536
|
|
|
2,612,535
|
|
|||
Gross profit
|
355,440
|
|
|
327,090
|
|
|
301,099
|
|
|||
Selling, general and administrative expenses
|
257,269
|
|
|
222,982
|
|
|
192,492
|
|
|||
Legal recovery on impairment charges
|
—
|
|
|
—
|
|
|
(15,490
|
)
|
|||
Change in fair value of contingent consideration
|
1,294
|
|
|
2,667
|
|
|
2,311
|
|
|||
Operating income
|
96,877
|
|
|
101,441
|
|
|
121,786
|
|
|||
Interest expense
|
2,124
|
|
|
1,797
|
|
|
731
|
|
|||
Interest income
|
(3,448
|
)
|
|
(2,638
|
)
|
|
(2,364
|
)
|
|||
Other (income) expense, net
|
2,191
|
|
|
2,376
|
|
|
312
|
|
|||
Income before income taxes
|
96,010
|
|
|
99,906
|
|
|
123,107
|
|
|||
Provision for income taxes
|
32,391
|
|
|
34,487
|
|
|
41,318
|
|
|||
Net income
|
$
|
63,619
|
|
|
$
|
65,419
|
|
|
$
|
81,789
|
|
Per share data:
|
|
|
|
|
|
||||||
Net income per common share, basic
|
$
|
2.40
|
|
|
$
|
2.29
|
|
|
$
|
2.89
|
|
Weighted-average shares outstanding, basic
|
26,472
|
|
|
28,558
|
|
|
28,337
|
|
|||
Net income per common share, diluted
|
$
|
2.38
|
|
|
$
|
2.27
|
|
|
$
|
2.86
|
|
Weighted-average shares outstanding, diluted
|
26,687
|
|
|
28,799
|
|
|
28,602
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
Net income
|
$
|
63,619
|
|
|
$
|
65,419
|
|
|
$
|
81,789
|
|
Foreign currency translation adjustment
|
(8,185
|
)
|
|
(47,802
|
)
|
|
6,272
|
|
|||
Comprehensive income
|
$
|
55,434
|
|
|
$
|
17,617
|
|
|
$
|
88,061
|
|
|
|
|
|
|
|
||||||
See accompanying notes to these consolidated financial statements.
|
|
|
|||||||||
|
|
|
|
|
|
|
Common
Stock
(Shares)
|
|
Common
Stock
(Amount)
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Total
|
|||||||||
Balance at June 30, 2013
|
27,971,809
|
|
|
$
|
149,821
|
|
|
$
|
569,107
|
|
|
$
|
(22,972
|
)
|
|
$
|
695,956
|
|
Net income
|
—
|
|
|
—
|
|
|
81,789
|
|
|
—
|
|
|
81,789
|
|
||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
6,272
|
|
|
6,272
|
|
||||
Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes
|
567,672
|
|
|
12,581
|
|
|
—
|
|
|
—
|
|
|
12,581
|
|
||||
Share based compensation
|
—
|
|
|
5,328
|
|
|
—
|
|
|
—
|
|
|
5,328
|
|
||||
Tax benefit of deductible compensation arising from exercise or vesting of share-based payment arrangements
|
—
|
|
|
717
|
|
|
—
|
|
|
—
|
|
|
717
|
|
||||
Balance at June 30, 2014
|
28,539,481
|
|
|
$
|
168,447
|
|
|
$
|
650,896
|
|
|
$
|
(16,700
|
)
|
|
$
|
802,643
|
|
Net income
|
—
|
|
|
—
|
|
|
65,419
|
|
|
—
|
|
|
65,419
|
|
||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
(47,802
|
)
|
|
(47,802
|
)
|
||||
Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes
|
154,497
|
|
|
760
|
|
|
—
|
|
|
—
|
|
|
760
|
|
||||
Common stock repurchased
|
(479,825
|
)
|
|
(18,768
|
)
|
|
|
|
|
|
(18,768
|
)
|
||||||
Share based compensation
|
—
|
|
|
6,517
|
|
|
—
|
|
|
—
|
|
|
6,517
|
|
||||
Tax benefit of deductible compensation arising from exercise or vesting of share-based payment arrangements
|
—
|
|
|
216
|
|
|
—
|
|
|
—
|
|
|
216
|
|
||||
Balance at June 30, 2015
|
28,214,153
|
|
|
$
|
157,172
|
|
|
$
|
716,315
|
|
|
$
|
(64,502
|
)
|
|
$
|
808,985
|
|
Net income
|
—
|
|
|
—
|
|
|
63,619
|
|
|
—
|
|
|
63,619
|
|
||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,185
|
)
|
|
(8,185
|
)
|
||||
Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes
|
284,730
|
|
|
3,994
|
|
|
—
|
|
|
—
|
|
|
3,994
|
|
||||
Common stock repurchased
|
(2,884,210
|
)
|
|
(100,751
|
)
|
|
—
|
|
|
—
|
|
|
(100,751
|
)
|
||||
Share based compensation
|
—
|
|
|
7,093
|
|
|
—
|
|
|
—
|
|
|
7,093
|
|
||||
Tax shortfall from exercise or vesting of share-based payment arrangements
|
—
|
|
|
(259
|
)
|
|
—
|
|
|
—
|
|
|
(259
|
)
|
||||
Balance at June 30, 2016
|
25,614,673
|
|
|
$
|
67,249
|
|
|
$
|
779,934
|
|
|
$
|
(72,687
|
)
|
|
$
|
774,496
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
63,619
|
|
|
$
|
65,419
|
|
|
$
|
81,789
|
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
17,154
|
|
|
11,997
|
|
|
7,375
|
|
|||
Amortization of debt issue costs
|
297
|
|
|
297
|
|
|
312
|
|
|||
Provision for doubtful accounts
|
7,571
|
|
|
993
|
|
|
6,573
|
|
|||
Share-based compensation
|
7,093
|
|
|
6,522
|
|
|
5,248
|
|
|||
Deferred income taxes
|
1,846
|
|
|
3,921
|
|
|
8,606
|
|
|||
Excess tax benefits from share-based payment arrangements
|
(101
|
)
|
|
(260
|
)
|
|
(982
|
)
|
|||
Change in fair value of contingent consideration
|
1,294
|
|
|
2,667
|
|
|
2,311
|
|
|||
Changes in operating assets and liabilities, net of acquisitions:
|
|
|
|
|
|
||||||
Accounts receivable
|
14,167
|
|
|
(14,476
|
)
|
|
(31,860
|
)
|
|||
Inventories
|
2,999
|
|
|
(37,695
|
)
|
|
(99,214
|
)
|
|||
Prepaid expenses and other assets
|
4,612
|
|
|
2,337
|
|
|
6,206
|
|
|||
Other noncurrent assets
|
(2,186
|
)
|
|
1,431
|
|
|
1,285
|
|
|||
Accounts payable
|
(71,706
|
)
|
|
28,280
|
|
|
57,532
|
|
|||
Accrued expenses and other liabilities
|
6,401
|
|
|
7,449
|
|
|
(5,357
|
)
|
|||
Income taxes payable
|
(849
|
)
|
|
(3,360
|
)
|
|
7,898
|
|
|||
Net cash provided by (used in) operating activities
|
52,211
|
|
|
75,522
|
|
|
47,722
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Capital expenditures
|
(12,081
|
)
|
|
(20,762
|
)
|
|
(11,228
|
)
|
|||
Cash paid for business acquisitions, net of cash acquired
|
(61,475
|
)
|
|
(59,779
|
)
|
|
—
|
|
|||
Net cash provided by (used in) investing activities
|
(73,556
|
)
|
|
(80,541
|
)
|
|
(11,228
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Borrowings (repayments) short-term borrowings, net
|
—
|
|
|
(24,097
|
)
|
|
—
|
|
|||
Borrowings on revolving credit, net of expenses
|
1,376,620
|
|
|
93,579
|
|
|
—
|
|
|||
Repayments on revolving credit, net of expenses
|
(1,305,193
|
)
|
|
(93,579
|
)
|
|
—
|
|
|||
Repayments on long-term debt
|
(2,792
|
)
|
|
(9,146
|
)
|
|
—
|
|
|||
Repayments of capital lease obligations
|
(223
|
)
|
|
(262
|
)
|
|
—
|
|
|||
Debt issuance costs
|
—
|
|
|
—
|
|
|
(468
|
)
|
|||
Contingent consideration payments
|
(8,606
|
)
|
|
(5,640
|
)
|
|
(3,810
|
)
|
|||
Exercise of stock options
|
3,994
|
|
|
760
|
|
|
12,581
|
|
|||
Repurchase of common stock
|
(100,206
|
)
|
|
(18,768
|
)
|
|
—
|
|
|||
Excess tax benefits from share-based payment arrangements
|
101
|
|
|
260
|
|
|
982
|
|
|||
Net cash provided by (used in) financing activities
|
(36,305
|
)
|
|
(56,893
|
)
|
|
9,285
|
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(2,596
|
)
|
|
(11,293
|
)
|
|
908
|
|
|||
Increase (decrease) in cash and cash equivalents
|
(60,246
|
)
|
|
(73,205
|
)
|
|
46,687
|
|
|||
Cash and cash equivalents at beginning of period
|
121,646
|
|
|
194,851
|
|
|
148,164
|
|
|||
Cash and cash equivalents at end of period
|
$
|
61,400
|
|
|
$
|
121,646
|
|
|
$
|
194,851
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
||||||
Interest paid during the year
|
$
|
1,706
|
|
|
$
|
1,075
|
|
|
$
|
739
|
|
Income taxes paid during the year
|
$
|
33,859
|
|
|
$
|
36,272
|
|
|
$
|
24,323
|
|
(1)
|
Business and Summary of Significant Accounting Policies
|
•
|
Industry weighted-average cost of capital ("WACC"): We utilized a WACC relative to each reporting unit's respective geography and industry as the discount rate for estimated future cash flows. The WACC is intended to represent a rate of return that would be expected by a market place participant in each respective geography.
|
•
|
Operating income: We utilized historical and expected revenue growth rates, gross margins and operating expense percentages, which varied based on the projections of each reporting unit being evaluated.
|
•
|
Cash flows from working capital changes: We utilized a projected cash flow impact pertaining to expected changes in working capital as each of our goodwill reporting units grow.
|
|
Fiscal Year Ended June 30,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(in thousands, except per share data)
|
||||||||||
Numerator:
|
|
|
|
|
|
||||||
Net income
|
$
|
63,619
|
|
|
65,419
|
|
|
81,789
|
|
||
|
|
|
|
|
|
||||||
Denominator:
|
|
|
|
|
|
|
|
||||
Weighted-average shares, basic
|
26,472
|
|
28,558
|
|
|
28,337
|
|
||||
Dilutive effect of share-based payments
|
215
|
|
|
241
|
|
|
265
|
|
|||
Weighted-average shares, diluted
|
26,687
|
|
28,799
|
|
|
28,602
|
|
||||
|
|
|
|
|
|
|
|
||||
Net income per common share, basic
|
$
|
2.40
|
|
|
$
|
2.29
|
|
|
$
|
2.89
|
|
Net income per common share, diluted
|
$
|
2.38
|
|
|
$
|
2.27
|
|
|
$
|
2.86
|
|
|
June 30,
|
||||||
|
2016
|
|
2015
|
||||
|
(in thousands)
|
||||||
Land
|
$
|
3,009
|
|
|
$
|
3,009
|
|
Buildings and leasehold improvements
|
20,473
|
|
|
21,266
|
|
||
Computer software and equipment
|
46,112
|
|
|
44,444
|
|
||
Furniture, fixtures and equipment
|
23,316
|
|
|
16,849
|
|
||
Construction in progress
|
4,897
|
|
|
126
|
|
||
|
97,807
|
|
|
85,694
|
|
||
Less accumulated depreciation
|
(45,419
|
)
|
|
(39,120
|
)
|
||
|
$
|
52,388
|
|
|
$
|
46,574
|
|
(4)
|
Accrued Expenses and Other Current Liabilities
|
|
June 30,
|
||||||
|
2016
|
|
2015
|
||||
|
(in thousands)
|
||||||
Deferred warranty revenue
|
$
|
29,836
|
|
|
$
|
22,346
|
|
Accrued compensation
|
19,917
|
|
|
20,906
|
|
||
Accrued marketing expense
|
2,459
|
|
|
1,480
|
|
||
Accrued freight
|
3,507
|
|
|
3,291
|
|
||
Brazilian pre-acquisition contingencies
|
2,941
|
|
|
3,676
|
|
||
Other taxes payable
|
11,044
|
|
|
9,240
|
|
||
Other accrued liabilities
|
29,271
|
|
|
20,061
|
|
||
|
$
|
98,975
|
|
|
$
|
81,000
|
|
|
September 4, 2015
|
||
|
(in thousands)
|
||
Receivables, net
|
$
|
63,131
|
|
Inventory
|
11,227
|
|
|
Other Current Assets
|
10,303
|
|
|
Property and equipment, net
|
677
|
|
|
Goodwill
|
21,639
|
|
|
Identifiable intangible assets
|
18,400
|
|
|
Other non-current assets
|
1,399
|
|
|
|
$
|
126,776
|
|
Accounts payable
|
$
|
48,271
|
|
Accrued expenses and other current liabilities
|
14,863
|
|
|
Other long-term liabilities
|
2,167
|
|
|
Consideration transferred, net of cash acquired
|
61,475
|
|
|
|
$
|
126,776
|
|
|
Goodwill
|
|
Identifiable Intangible Assets
|
||||
|
(in thousands)
|
||||||
Purchase price allocation June 30, 2015
|
$
|
22,536
|
|
|
$
|
23,258
|
|
Opening balance sheet adjustments
|
8,496
|
|
|
(76
|
)
|
||
Purchase price allocation June 30, 2016
|
$
|
31,032
|
|
|
$
|
23,182
|
|
|
Goodwill
|
|
Identifiable Intangible Assets
|
||||
|
(in thousands)
|
||||||
Imago ScanSource
|
$
|
18,266
|
|
|
$
|
19,606
|
|
(6)
|
Goodwill and Other Identifiable Intangible Assets
|
|
Barcode & Security Segment
|
|
Communications & Services Segment
|
|
Total
|
||||||
|
(in thousands)
|
||||||||||
Balance at June 30, 2014
|
$
|
16,876
|
|
|
$
|
15,466
|
|
|
$
|
32,342
|
|
Additions
|
—
|
|
|
40,802
|
|
|
40,802
|
|
|||
Unrealized gain (loss) on foreign currency translation
|
(1,341
|
)
|
|
(5,294
|
)
|
|
(6,635
|
)
|
|||
Balance at June 30, 2015
|
$
|
15,535
|
|
|
$
|
50,974
|
|
|
$
|
66,509
|
|
Additions
|
21,639
|
|
|
8,496
|
|
1
|
30,135
|
|
|||
Unrealized gain (loss) on foreign currency translation
|
(740
|
)
|
|
(3,189
|
)
|
|
(3,929
|
)
|
|||
Balance at June 30, 2016
|
$
|
36,434
|
|
|
$
|
56,281
|
|
|
$
|
92,715
|
|
|
June 30, 2016
|
|
June 30, 2015
|
||||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Book
Value
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Book
Value
|
||||||||||||
|
(in thousands)
|
||||||||||||||||||||||
Amortized intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Customer relationships
|
$
|
70,379
|
|
|
$
|
26,668
|
|
|
$
|
43,711
|
|
|
$
|
59,448
|
|
|
$
|
20,573
|
|
|
$
|
38,875
|
|
Trade names
|
11,270
|
|
|
4,398
|
|
|
6,872
|
|
|
7,857
|
|
|
1,278
|
|
|
6,579
|
|
||||||
Non-compete agreements
|
1,103
|
|
|
777
|
|
|
326
|
|
|
1,113
|
|
|
539
|
|
|
574
|
|
||||||
Distributor agreements
|
345
|
|
|
127
|
|
|
218
|
|
|
345
|
|
|
101
|
|
|
244
|
|
||||||
Total intangibles
|
$
|
83,097
|
|
|
$
|
31,970
|
|
|
$
|
51,127
|
|
|
$
|
68,763
|
|
|
$
|
22,491
|
|
|
$
|
46,272
|
|
(7)
|
Short-Term Borrowings and Long-Term Debt
|
|
Long-Term Debt
|
|
Revolving Credit Facility
|
||||
|
(in thousands)
|
|
|
||||
Fiscal year:
|
|
|
|
||||
2017
|
$
|
—
|
|
|
$
|
—
|
|
2018
|
—
|
|
|
—
|
|
||
2019
|
329
|
|
|
71,427
|
|
||
2020
|
333
|
|
|
—
|
|
||
2021
|
338
|
|
|
—
|
|
||
Thereafter
|
4,429
|
|
|
—
|
|
||
Total principal payments
|
$
|
5,429
|
|
|
$
|
71,427
|
|
|
Fiscal Year Ended June 30,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(in thousands)
|
||||||||||
Net foreign exchange derivative contract (gain) loss
|
$
|
(1,951
|
)
|
|
$
|
(5,364
|
)
|
|
$
|
3,640
|
|
Net foreign currency transactional and re-measurement (gain) loss
|
4,522
|
|
|
8,408
|
|
|
(3,024
|
)
|
|||
Net foreign currency (gain) loss
|
$
|
2,571
|
|
|
$
|
3,044
|
|
|
$
|
616
|
|
|
As of June 30, 2016
|
||||||
|
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
|
$
|
—
|
|
|
$
|
33
|
|
Derivative liabilities:
(b)
|
|
|
|
||||
Foreign exchange contracts
|
$
|
—
|
|
|
$
|
551
|
|
(a)
|
All derivative assets are recorded as prepaid expense and other current assets in the Consolidated Balance Sheets.
|
(b)
|
All derivative liabilities are recorded as accrued expenses and other current liabilities in the 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;
|
•
|
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
|
$
|
17,893
|
|
|
$
|
17,893
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Forward foreign currency exchange contracts
|
33
|
|
|
—
|
|
|
33
|
|
|
—
|
|
||||
Total assets at fair value
|
$
|
17,926
|
|
|
$
|
17,893
|
|
|
$
|
33
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Deferred compensation plan investments, current and non-current portion
|
$
|
17,893
|
|
|
$
|
17,893
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Forward foreign currency exchange contracts
|
551
|
|
|
—
|
|
|
551
|
|
|
—
|
|
||||
Liability for contingent consideration, current and non-current
|
24,652
|
|
|
—
|
|
|
—
|
|
|
24,652
|
|
||||
Total liabilities at fair value
|
$
|
43,096
|
|
|
$
|
17,893
|
|
|
$
|
551
|
|
|
$
|
24,652
|
|
|
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
|
$
|
15,970
|
|
|
$
|
15,970
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Forward foreign currency exchange contracts
|
125
|
|
|
—
|
|
|
125
|
|
|
—
|
|
||||
Cross-currency swap agreements
|
$
|
103
|
|
|
$
|
—
|
|
|
$
|
103
|
|
|
$
|
—
|
|
Total assets at fair value
|
$
|
16,198
|
|
|
$
|
15,970
|
|
|
$
|
228
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Deferred compensation plan investments, current and non-current portion
|
$
|
15,970
|
|
|
$
|
15,970
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Forward foreign currency exchange contracts
|
476
|
|
|
—
|
|
|
476
|
|
|
—
|
|
||||
Liability for contingent consideration, current and non-current
|
33,960
|
|
|
—
|
|
|
—
|
|
|
33,960
|
|
||||
Total liabilities at fair value
|
$
|
50,406
|
|
|
$
|
15,970
|
|
|
$
|
476
|
|
|
$
|
33,960
|
|
|
Contingent Consideration for the Year Ended
|
||||||||||
|
June 30, 2016
|
||||||||||
|
Barcode & Security Segment
|
|
Communications & Services Segment
|
|
Total
|
||||||
|
(in thousands)
|
||||||||||
Fair value at beginning of period
|
$
|
5,109
|
|
|
$
|
28,851
|
|
|
$
|
33,960
|
|
Payments
|
(4,453
|
)
|
|
(4,153
|
)
|
|
(8,606
|
)
|
|||
Change in fair value
|
181
|
|
|
1,113
|
|
|
1,294
|
|
|||
Fluctuation due to foreign currency exchange
|
(837
|
)
|
|
(1,159
|
)
|
|
(1,996
|
)
|
|||
Fair value at end of period
|
$
|
—
|
|
|
$
|
24,652
|
|
|
$
|
24,652
|
|
|
Contingent Consideration for the Year Ended
|
||||||||||
|
June 30, 2015
|
||||||||||
|
Barcode & Security Segment
|
|
Communications & Services Segment
|
|
Total
|
||||||
|
(in thousands)
|
||||||||||
Fair value at beginning of period
|
$
|
11,107
|
|
|
$
|
—
|
|
|
$
|
11,107
|
|
Issuance of contingent consideration
|
—
|
|
|
32,035
|
|
|
32,035
|
|
|||
Payments
|
(5,640
|
)
|
|
—
|
|
|
(5,640
|
)
|
|||
Change in fair value
|
1,636
|
|
|
1,031
|
|
|
2,667
|
|
|||
Fluctuation due to foreign currency exchange
|
(1,994
|
)
|
|
(4,215
|
)
|
|
(6,209
|
)
|
|||
Fair value at end of period
|
$
|
5,109
|
|
|
$
|
28,851
|
|
|
$
|
33,960
|
|
•
|
estimated future results, net of pro forma adjustments set forth in the applicable share 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 Brazilian and European markets.
|
|
Fiscal Year Ended June 30,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(in thousands)
|
||||||||||
Share-based compensation related to:
|
|
|
|
|
|
||||||
Equity classified stock options
|
$
|
1,479
|
|
|
$
|
1,480
|
|
|
$
|
1,577
|
|
Equity classified restricted stock
|
5,614
|
|
|
5,042
|
|
|
3,671
|
|
|||
Total share-based compensation
|
$
|
7,093
|
|
|
$
|
6,522
|
|
|
$
|
5,248
|
|
|
Fiscal Year Ended June 30,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Expected term
|
4.02 years
|
|
|
4.02 years
|
|
|
4.00 years
|
|
|||
Expected volatility
|
28.70
|
%
|
|
30.06
|
%
|
|
33.70
|
%
|
|||
Risk-free interest rate
|
1.47
|
%
|
|
1.22
|
%
|
|
1.07
|
%
|
|||
Dividend yield
|
0.00
|
%
|
|
0.00
|
%
|
|
0.00
|
%
|
|||
Weighted-average fair value per option
|
$
|
9.53
|
|
|
$
|
10.51
|
|
|
$
|
11.91
|
|
|
Fiscal Year Ended June 30, 2016
|
|||||||||||
|
Options
|
|
Weighted-
Average
Exercise
Price
|
|
Weighted-
Average
Remaining
Contractual
Life
|
|
Aggregate
Intrinsic
Value
|
|||||
Outstanding, beginning of year
|
1,166,031
|
|
|
$
|
35.09
|
|
|
|
|
|
||
Granted during the period
|
128,000
|
|
|
38.15
|
|
|
|
|
|
|||
Exercised during the period
|
(194,041
|
)
|
|
29.04
|
|
|
|
|
|
|||
Canceled, forfeited, or expired during the period
|
(1,825
|
)
|
|
32.03
|
|
|
|
|
|
|||
Outstanding, end of year
|
1,098,165
|
|
|
36.52
|
|
|
5.35
|
|
$
|
2,123,342
|
|
|
Vested and expected to vest at June 30, 2016
|
1,096,239
|
|
|
36.51
|
|
|
5.34
|
|
$
|
2,123,244
|
|
|
Exercisable, end of year
|
819,670
|
|
|
$
|
35.35
|
|
|
4.19
|
|
$
|
2,120,598
|
|
|
Fiscal Year Ended June 30, 2016
|
|||||||||
|
Options
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Grant
Date Fair-
Value
|
|||||
Unvested, beginning of year
|
286,580
|
|
|
$
|
39.98
|
|
|
$
|
10.91
|
|
Granted
|
128,000
|
|
|
38.15
|
|
|
9.53
|
|
||
Vested
|
(136,085
|
)
|
|
38.29
|
|
|
10.93
|
|
||
Canceled or forfeited
|
—
|
|
|
—
|
|
|
—
|
|
||
Unvested, end of year
|
278,495
|
|
|
$
|
39.96
|
|
|
$
|
10.27
|
|
|
|
Options Outstanding
|
|
Options Exercisable
|
||||||||||||
Range of Exercise Prices
|
|
Shares
Outstanding
|
|
Weighted
Average
Remaining
Contractual
Life
|
|
Weighted
Average
Exercise
Price
|
|
Number
Exercisable
|
|
Weighted
Average
Exercise
Price
|
||||||
$18.13 - $22.27
|
|
5,600
|
|
|
2.43
|
|
$
|
18.14
|
|
|
5,600
|
|
|
$
|
18.14
|
|
$22.27 - $26.38
|
|
30,000
|
|
|
3.43
|
|
24.57
|
|
|
30,000
|
|
|
24.57
|
|
||
$26.38 - $30.49
|
|
35,922
|
|
|
6.48
|
|
29.59
|
|
|
35,922
|
|
|
29.59
|
|
||
$30.49 - $34.60
|
|
296,929
|
|
|
3.38
|
|
33.23
|
|
|
296,929
|
|
|
33.23
|
|
||
$34.60 - $38.71
|
|
442,765
|
|
|
5.02
|
|
36.92
|
|
|
313,940
|
|
|
36.43
|
|
||
$38.71 - $42.82
|
|
286,949
|
|
|
8.02
|
|
41.77
|
|
|
137,279
|
|
|
42.04
|
|
||
|
|
1,098,165
|
|
|
5.35
|
|
$
|
36.52
|
|
|
819,670
|
|
|
$
|
35.35
|
|
|
Fiscal Year Ended June 30, 2016
|
||||||||
|
Shares
granted
|
|
Date granted
|
|
Grant date
fair value
|
|
Vesting period
|
||
Employees
|
|
|
|
|
|
|
|
||
Certain employees
|
124,572
|
|
December 4, 2015
|
|
38.19
|
|
|
Annually over 3 years
|
|
Certain employees
|
476
|
|
February 12, 2016
|
|
36.30
|
|
|
Annually over 3 years
|
|
Non-Employee Directors
(1)
|
|
|
|
|
|
|
|
||
Certain Directors
|
13,500
|
|
December 4, 2015
|
|
$
|
38.19
|
|
|
6 months
|
|
Fiscal Year Ended June 30, 2016
|
|||||
|
Shares
|
|
Weighted-Average
Grant Date Fair
Value
|
|||
Outstanding, beginning of year
|
279,196
|
|
|
$
|
38.87
|
|
Granted during the period
|
138,634
|
|
|
38.18
|
|
|
Target shares adjustment during the period
(1)
|
366
|
|
|
39.01
|
|
|
Vested during the period
|
(133,068
|
)
|
|
38.83
|
|
|
Cancelled, forfeited, or expired during the period
|
(10,324
|
)
|
|
40.65
|
|
|
Outstanding, end of year
|
274,804
|
|
|
$
|
39.06
|
|
|
Fiscal Year Ended June 30,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(in thousands)
|
||||||||||
Matching contributions
|
$
|
735
|
|
|
$
|
626
|
|
|
$
|
553
|
|
Discretionary contributions
|
3,617
|
|
|
5,350
|
|
|
5,207
|
|
|||
Total contributions
|
$
|
4,352
|
|
|
$
|
5,976
|
|
|
$
|
5,760
|
|
|
Fiscal Year Ended June 30,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(in thousands)
|
||||||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
21,855
|
|
|
$
|
24,658
|
|
|
$
|
25,895
|
|
State
|
1,652
|
|
|
1,639
|
|
|
2,439
|
|
|||
Foreign
|
6,100
|
|
|
4,927
|
|
|
3,826
|
|
|||
Total current
|
29,607
|
|
|
31,224
|
|
|
32,160
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
3,990
|
|
|
2,165
|
|
|
7,933
|
|
|||
State
|
365
|
|
|
198
|
|
|
725
|
|
|||
Foreign
|
(1,571
|
)
|
|
900
|
|
|
500
|
|
|||
Total deferred
|
2,784
|
|
|
3,263
|
|
|
9,158
|
|
|||
Provision for income taxes
|
$
|
32,391
|
|
|
$
|
34,487
|
|
|
$
|
41,318
|
|
|
Fiscal Year Ended June 30,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(in thousands)
|
||||||||||
U.S. Federal income tax at statutory rate
|
$
|
33,603
|
|
|
$
|
34,967
|
|
|
$
|
43,088
|
|
Increase (decrease) in income taxes due to:
|
|
|
|
|
|
||||||
State and local income taxes, net of Federal benefit
|
1,578
|
|
|
1,318
|
|
|
1,974
|
|
|||
Tax credits
|
(2,517
|
)
|
|
(1,435
|
)
|
|
(1,935
|
)
|
|||
Valuation allowance
|
541
|
|
|
582
|
|
|
803
|
|
|||
Effect of foreign operations, net
|
(1,150
|
)
|
|
(1,665
|
)
|
|
(1,627
|
)
|
|||
Stock compensation
|
(62
|
)
|
|
(419
|
)
|
|
(494
|
)
|
|||
Capitalized acquisition costs
|
70
|
|
|
839
|
|
|
—
|
|
|||
Other
|
328
|
|
|
300
|
|
|
(491
|
)
|
|||
Provision for income taxes
|
$
|
32,391
|
|
|
$
|
34,487
|
|
|
$
|
41,318
|
|
|
June 30,
|
||||||
|
2016
|
|
2015
|
||||
|
(in thousands)
|
||||||
Deferred tax assets derived from:
|
|
|
|
||||
Allowance for accounts receivable
|
$
|
12,458
|
|
|
$
|
9,925
|
|
Inventories
|
4,799
|
|
|
5,235
|
|
||
Nondeductible accrued expenses
|
3,842
|
|
|
5,838
|
|
||
Net operating loss carryforwards
|
3,036
|
|
|
2,223
|
|
||
Tax credits
|
3,316
|
|
|
2,136
|
|
||
Timing of amortization deduction from goodwill
|
2,660
|
|
|
10,652
|
|
||
Deferred compensation
|
6,733
|
|
|
6,014
|
|
||
Stock compensation
|
6,014
|
|
|
5,730
|
|
||
Timing of amortization deduction from intangible assets
|
1,600
|
|
|
83
|
|
||
Total deferred tax assets
|
44,458
|
|
|
47,836
|
|
||
Valuation allowance
|
(3,029
|
)
|
|
(2,509
|
)
|
||
Total deferred tax assets, net of allowance
|
41,429
|
|
|
45,327
|
|
||
Deferred tax liabilities derived from:
|
|
|
|
||||
Timing of depreciation and other deductions from building and equipment
|
(6,827
|
)
|
|
(549
|
)
|
||
Timing of amortization deduction from goodwill
|
(5,370
|
)
|
|
(4,908
|
)
|
||
Timing of amortization deduction from intangible assets
|
(2,974
|
)
|
|
(4,680
|
)
|
||
Total deferred tax liabilities
|
(15,171
|
)
|
|
(10,137
|
)
|
||
Net deferred tax assets
|
$
|
26,258
|
|
|
$
|
35,190
|
|
|
Fiscal Year Ended June 30,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(in thousands)
|
||||||||||
Domestic
|
$
|
76,062
|
|
|
$
|
79,364
|
|
|
$
|
104,685
|
|
Foreign
|
19,948
|
|
|
20,542
|
|
|
18,422
|
|
|||
Worldwide pretax earnings
|
$
|
96,010
|
|
|
$
|
99,906
|
|
|
$
|
123,107
|
|
|
June 30,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(in thousands)
|
||||||||||
Beginning Balance
|
$
|
1,301
|
|
|
$
|
1,153
|
|
|
$
|
1,034
|
|
Additions based on tax positions related to the current year
|
326
|
|
|
262
|
|
|
204
|
|
|||
Additions for tax positions of prior years
|
658
|
|
|
—
|
|
|
—
|
|
|||
Reduction for tax positions of prior years
|
(137
|
)
|
|
(114
|
)
|
|
(85
|
)
|
|||
Ending Balance
|
$
|
2,148
|
|
|
$
|
1,301
|
|
|
$
|
1,153
|
|
|
Fiscal Year Ended June 30,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(in thousands)
|
||||||||||
Lease expense
|
$
|
7,394
|
|
|
$
|
6,168
|
|
|
$
|
5,561
|
|
|
Operating Lease Payments
|
|
Capital Lease Payments
|
|
Total Payments
|
||||||
|
(in thousands)
|
||||||||||
Fiscal Year Ended June 30,
|
|
|
|
|
|
||||||
2017
|
$
|
6,828
|
|
|
$
|
248
|
|
|
$
|
7,076
|
|
2018
|
3,670
|
|
|
—
|
|
|
3,670
|
|
|||
2019
|
1,825
|
|
|
—
|
|
|
1,825
|
|
|||
2020
|
1,146
|
|
|
—
|
|
|
1,146
|
|
|||
2021
|
478
|
|
|
—
|
|
|
478
|
|
|||
Thereafter
|
28
|
|
|
—
|
|
|
28
|
|
|||
Total future minimum lease payments
|
13,975
|
|
|
248
|
|
|
14,223
|
|
|||
Less: amounts representing interest on capital lease
|
—
|
|
|
2
|
|
|
2
|
|
|||
Total future minimum principal lease payments
|
$
|
13,975
|
|
|
$
|
246
|
|
|
$
|
14,221
|
|
|
|
|
|
|
|
|
Capital Lease Obligations
|
||||||||||||||||
|
Property & Equipment
|
|
Accumulated Depreciation
|
|
Net Book Value
|
|
Short-Term
|
|
Long-Term
|
|
Total
|
||||||||||||
|
(in thousands)
|
||||||||||||||||||||||
IT Infrastructure
|
$
|
731
|
|
|
$
|
487
|
|
|
$
|
244
|
|
|
$
|
246
|
|
|
$
|
—
|
|
|
$
|
246
|
|
|
June 30, 2016
|
|
June 30, 2015
|
||||
|
(in thousands)
|
||||||
Assets
|
|
|
|
||||
Prepaid expenses and other assets (current)
|
$
|
2,346
|
|
|
$
|
3,156
|
|
Other assets (noncurrent)
|
$
|
—
|
|
|
$
|
69
|
|
Liabilities
|
|
|
|
||||
Other current liabilities
|
$
|
2,346
|
|
|
$
|
3,156
|
|
Other long-term liabilities
|
$
|
—
|
|
|
$
|
69
|
|
|
June 30, 2016
|
|
June 30, 2015
|
||||
|
(in thousands)
|
||||||
Assets
|
|
|
|
||||
Prepaid expenses and other assets (current)
|
$
|
595
|
|
|
$
|
520
|
|
Other assets (noncurrent)
|
$
|
9,837
|
|
|
$
|
10,769
|
|
Liabilities
|
|
|
|
||||
Other current liabilities
|
$
|
595
|
|
|
$
|
520
|
|
Other long-term liabilities
|
$
|
9,837
|
|
|
$
|
10,769
|
|
|
Fiscal Year Ended June 30,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(in thousands)
|
||||||||||
Sales:
|
|
|
|
|
|
||||||
Worldwide Barcode & Security
|
$
|
2,381,331
|
|
|
$
|
2,134,124
|
|
|
$
|
2,003,911
|
|
Worldwide Communications & Services
|
1,158,895
|
|
|
1,084,502
|
|
|
909,723
|
|
|||
|
$
|
3,540,226
|
|
|
$
|
3,218,626
|
|
|
$
|
2,913,634
|
|
Depreciation and amortization:
|
|
|
|
|
|
||||||
Worldwide Barcode & Security
|
$
|
5,663
|
|
|
$
|
3,813
|
|
|
$
|
4,243
|
|
Worldwide Communications & Services
|
8,531
|
|
|
6,912
|
|
|
3,132
|
|
|||
Corporate
|
2,960
|
|
|
1,272
|
|
|
—
|
|
|||
|
$
|
17,154
|
|
|
$
|
11,997
|
|
|
$
|
7,375
|
|
Operating income:
|
|
|
|
|
|
||||||
Worldwide Barcode & Security
|
$
|
53,015
|
|
|
$
|
49,045
|
|
|
$
|
49,544
|
|
Worldwide Communications & Services
|
44,725
|
|
|
55,650
|
|
|
56,752
|
|
|||
Corporate
(1)
|
(863
|
)
|
|
(3,254
|
)
|
|
15,490
|
|
|||
|
$
|
96,877
|
|
|
$
|
101,441
|
|
|
$
|
121,786
|
|
Capital expenditures:
|
|
|
|
|
|
||||||
Worldwide Barcode & Security
|
$
|
5,310
|
|
|
$
|
733
|
|
|
$
|
784
|
|
Worldwide Communications & Services
|
3,911
|
|
|
1,448
|
|
|
316
|
|
|||
Corporate
|
2,860
|
|
|
18,581
|
|
|
10,128
|
|
|||
|
$
|
12,081
|
|
|
$
|
20,762
|
|
|
$
|
11,228
|
|
Sales by Geography Category:
|
|
|
|
|
|
||||||
United States
|
$
|
2,655,760
|
|
|
$
|
2,391,073
|
|
|
$
|
2,225,962
|
|
International
|
920,098
|
|
|
871,862
|
|
|
733,744
|
|
|||
Less intercompany sales
|
(35,632
|
)
|
|
(44,309
|
)
|
|
(46,072
|
)
|
|||
|
$
|
3,540,226
|
|
|
$
|
3,218,626
|
|
|
$
|
2,913,634
|
|
|
|
|
|
|
|
|
June 30, 2016
|
|
June 30, 2015
|
||||
|
(in thousands)
|
||||||
Assets:
|
|
|
|
||||
Worldwide Barcode & Security
|
$
|
836,674
|
|
|
$
|
740,020
|
|
Worldwide Communications & Services
|
595,781
|
|
|
599,358
|
|
||
Corporate
|
58,730
|
|
|
137,563
|
|
||
|
$
|
1,491,185
|
|
|
$
|
1,476,941
|
|
Property and equipment, net by Geography Category:
|
|
|
|
||||
United States
|
$
|
46,935
|
|
|
$
|
41,159
|
|
International
|
5,453
|
|
|
5,415
|
|
||
|
$
|
52,388
|
|
|
$
|
46,574
|
|
(15)
|
Accumulated Other Comprehensive (Loss) Income
|
|
Fiscal Years Ended June 30,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(in thousands)
|
||||||||||
Currency translation adjustment
|
$
|
(72,687
|
)
|
|
$
|
(64,502
|
)
|
|
$
|
(16,700
|
)
|
Accumulated other comprehensive income (loss)
|
$
|
(72,687
|
)
|
|
$
|
(64,502
|
)
|
|
$
|
(16,700
|
)
|
|
Fiscal years ended June 30,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(in thousands)
|
||||||||||
Tax expense (benefit)
|
$
|
327
|
|
|
$
|
2,382
|
|
|
$
|
(279
|
)
|
|
|
|
|
|
|
(16)
|
Subsequent Events
|
ITEM 9.
|
Changes In and Disagreements with Accountants on Accounting and Financial Disclosure.
|
ITEM 9A.
|
Controls and Procedures.
|
ITEM 9B.
|
Other Information.
|
ITEM 10.
|
Directors, Executive Officers and Corporate Governance.
|
ITEM 11.
|
Executive Compensation.
|
ITEM 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
|
ITEM 13.
|
Certain Relationships and Related Transactions, and Director Independence.
|
ITEM 14.
|
Principal Accountant Fees and Services.
|
ITEM 15.
|
Exhibits and Financial Statement Schedules.
|
Description
|
Balance at
Beginning
of Period
|
|
Amounts
Charged to
Expense
|
|
Reductions
(1)
|
|
Other
(2)
|
|
Balance at
End of
Period
|
|||||||
Allowance for bad debt:
|
|
|
|
|
|
|
|
|
|
|||||||
Year ended June 30, 2014
|
$
|
25,479
|
|
|
6,573
|
|
|
(8,100
|
)
|
|
2,305
|
|
|
$
|
26,257
|
|
Trade and current note receivable allowance
|
|
|
|
|
|
|
|
|
$
|
26,257
|
|
|||||
Year ended June 30, 2015
|
$
|
26,257
|
|
|
993
|
|
|
(8,288
|
)
|
|
13,627
|
|
|
$
|
32,589
|
|
Trade and current note receivable allowance
|
|
|
|
|
|
|
|
|
$
|
32,589
|
|
|||||
Year ended June 30, 2016
|
$
|
32,589
|
|
|
7,571
|
|
|
(3,829
|
)
|
|
2,701
|
|
|
$
|
39,032
|
|
Trade and current note receivable allowance
|
|
|
|
|
|
|
|
|
$
|
39,032
|
|
(1)
|
"Reductions" amounts represent write-offs for the years indicated.
|
(2)
|
"Other" amounts include recoveries and the effect of foreign currency fluctuations for years ended
June 30, 2016
,
2015
, and
2014
. In addition, the amount in 2016 includes
$1.5 million
of recoveries and
$1.2 million
of accounts receivable acquired with KBZ on September 4, 2016. The amount in 2015 includes
$3.9 million
of recoveries,
$1.1 million
of accounts receivable reserves acquired with Imago Group plc on September 19, 2014, and
$12.8 million
of accounts receivable reserves acquired with Network 1 on January 13, 2015.
|
|
SCAN
SOURCE
, INC.
|
|
|
|
|
|
By:
|
/s/ MICHAEL L. BAUR
|
|
|
Michael L. Baur
|
|
|
Chief Executive Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ STEVEN R. FISCHER
|
|
Chairman of the Board
|
|
August 29, 2016
|
Steven R. Fischer
|
|
|
|
|
|
|
|
|
|
/s/ MICHAEL L. BAUR
|
|
Chief Executive Officer and Director
|
|
August 29, 2016
|
Michael L. Baur
|
|
(principal executive officer)
|
|
|
|
|
|
|
|
/s/ CHARLES A. MATHIS
|
|
Executive Vice President and Chief Financial Officer
|
|
August 29, 2016
|
Charles A. Mathis
|
|
(principal financial officer)
|
|
|
|
|
|
|
|
/s/ GERALD LYONS
|
|
Senior Vice President of Finance and Principal Accounting Officer
|
|
August 29, 2016
|
Gerald Lyons
|
|
(principal accounting officer)
|
|
|
|
|
|
|
|
/s/ PETER C. BROWNING
|
|
Director
|
|
August 29, 2016
|
Peter C. Browning
|
|
|
|
|
|
|
|
|
|
/s/ MICHAEL J. GRAINGER
|
|
Director
|
|
August 29, 2016
|
Michael J. Grainger
|
|
|
|
|
|
|
|
|
|
/s/ JOHN P. REILLY
|
|
Director
|
|
August 29, 2016
|
John P. Reilly
|
|
|
|
|
|
|
|
|
|
/s/ CHARLES R. WHITCHURCH
|
|
Director
|
|
August 29, 2016
|
Charles R. Whitchurch
|
|
|
|
|
|
|
|
|
|
Exhibit Index
|
|
|
|
|
|
|
|
|
|
|
Exhibit
Number
|
|
Description
|
|
Filed
herewith
|
|
Form
|
|
Exhibit
|
|
Filing
Date
|
2.1
|
|
Share Purchase and Sale Agreement for CDC Brasil S.A dated April 7, 2011
|
|
|
|
8-K
|
|
2.1
|
|
4/15/2011
|
2.2
|
|
Letter Agreement between Registrant and Intersmart Comércio Importação
Exportação de Equipamentos Eletrônicos, S.A., dated August 14, 2014
|
|
|
|
8-K
|
|
10.1
|
|
8/15/2014
|
2.3
|
|
Share Purchase and Sale Agreement for Global Data Network LLP dated January 8, 2015
|
|
|
|
10-Q
|
|
2.1
|
|
2/3/2015
|
3.1
|
|
Amended and Restated Articles of Incorporation of the Registrant and Articles of Amendment
|
|
|
|
10-Q
|
|
3.1
|
|
2/3/2005
|
3.2
|
|
Bylaws
|
|
|
|
10-Q
|
|
3.2
|
|
5/7/2014
|
4.1
|
|
Form of Common Stock Certificate
|
|
|
|
SB-2
|
|
4.1
|
|
2/7/1994
|
|
|
Executive Compensation Plans and Arrangements
|
|
|
|
|
|
|
|
|
10.1
|
|
1997 Stock Incentive Plan, as amended, and Form of Stock Option Agreement
|
|
|
|
10-K
|
|
10.13
|
|
9/28/1999
|
10.2
|
|
Amended and Restated Directors Equity Compensation Plan, as amended and restated
|
|
|
|
10-Q
|
|
10.4
|
|
11/2/2012
|
10.3
|
|
Form of Restricted Stock Award (for Amended and Restated Directors Equity Compensation Plan as amended and restated)
|
|
|
|
10-Q
|
|
10.3
|
|
5/6/2011
|
10.4
|
|
Nonqualified Deferred Compensation Plan, as amended and restated
|
|
|
|
10-Q
|
|
10.5
|
|
11/2/2012
|
10.5
|
|
Amended and Restated 2002 Long-Term Incentive Plan
|
|
|
|
8-K
|
|
10.1
|
|
12/7/2009
|
10.6
|
|
2013 Long-Term Incentive Plan
|
|
|
|
S-8
|
|
99
|
|
12/5/2013
|
10.7
|
|
Employee Stock Purchase Plan
|
|
|
|
S-8
|
|
99
|
|
12/5/2013
|
10.8
|
|
Form of Incentive Stock Option Award Certificate under the Amended and Restated 2002 Long-Term Incentive Plan for grants on or after December 3, 2010
|
|
|
|
10-Q
|
|
10.2
|
|
2/4/2011
|
10.9
|
|
Form of Non-Qualified Stock Option Award Certificate under the Amended and Restated 2002 Long-Term Incentive Plan for grants on or after December 3, 2010
|
|
|
|
10-Q
|
|
10.3
|
|
2/4/2011
|
10.10
|
|
Form of Restricted Stock Unit Award Certificate under the Amended and Restated 2002 Long-Term Incentive Plan for grants on or after December 3, 2010
|
|
|
|
10-Q
|
|
10.4
|
|
2/4/2011
|
10.11
|
|
Form of Restricted Stock Award Certificate under the Amended and Restated 2002 Long-Term Incentive Plan for grants on or after December 3, 2010
|
|
|
|
10-Q
|
|
10.5
|
|
2/4/2011
|
10.12
|
|
Form of Restricted Stock Award Certificate (US) under the 2002 Amended and Restated Long-Term Incentive Plan
|
|
|
|
10-Q
|
|
10.1
|
|
2/4/2009
|
10.13
|
|
Form of Restricted Stock Award Certificate (UK) under the 2002 Amended and Restated Long-Term Incentive Plan
|
|
|
|
10-Q
|
|
10.2
|
|
2/4/2009
|
10.14
|
|
Form of Restricted Stock Award Certificate (Europe, not UK) under the 2002 Amended and Restated Long-Term Incentive Plan
|
|
|
|
10-Q
|
|
10.3
|
|
2/4/2009
|
10.15
|
|
Form of Restricted Stock Award Certificate under the Amended and Restated 2002 Long-Term Incentive Plan for grants on or after December 3, 2009
|
|
|
|
8-K
|
|
10.2
|
|
12/7/2009
|
10.16
|
|
Form of Incentive Stock Option Award Certificate under the Amended and Restated 2002 Long-Term Incentive Plan for grants on or after December 3, 2009
|
|
|
|
8-K
|
|
10.3
|
|
12/7/2009
|
10.17
|
|
Form of Non-Qualified Stock Option Award Certificate under the Amended and Restated 2002 Long-Term Incentive Plan for grants on or after December 3, 2009
|
|
|
|
8-K
|
|
10.4
|
|
12/7/2009
|
10.18
|
|
Founder's Supplemental Executive Retirement Plan Agreement
|
|
|
|
10-Q
|
|
10.2
|
|
5/6/2011
|
10.19
|
|
Amended and Restated Employment Agreement, effective as of June 25, 2014, of Michael L. Baur
|
|
|
|
10-K
|
|
10.19
|
|
8/28/2014
|
10.20
|
|
Amended and Restated Employment Agreement, effective as of June 6, 2011, of Andrea D. Meade
|
|
|
|
10-K
|
|
10.21
|
|
8/29/2011
|
10.21
|
|
First Amendment to Amended and Restated Employment Agreement effective July 1, 2013, of Andrea D. Meade
|
|
|
|
10-K
|
|
10.25
|
|
8/26/2013
|
10.22
|
|
Amended and Restated Employment Agreement, dated June 25, 2014, of John J. Ellsworth
|
|
|
|
10-K
|
|
10.22
|
|
8/28/2014
|
10.23
|
|
Amended and Restated Employment Agreement, dated June 25, 2014, of Charles A. Mathis
|
|
|
|
10-K
|
|
10.23
|
|
8/28/2014
|
10.24
|
|
Amended and Restated Employment Agreement, dated June 25, 2014, of Gerald Lyons
|
|
|
|
10-K
|
|
10.24
|
|
8/28/2014
|
10.25
|
|
Form of Performance and Service-Based Restricted Stock Unit Award Agreement for John J. Ellsworth dated May 14, 2012
|
|
|
|
10-K
|
|
10.31
|
|
8/24/2012
|
10.26
|
|
Form of Restricted Stock Award Agreement for Andrea D. Meade, dated June 6, 2011
|
|
|
|
10-K
|
|
10.27
|
|
8/29/2011
|
10.27
|
|
Form of Restricted Stock Unit Award Certificate under ScanSource, Inc. 2013 Long-Term Incentive Plan for grants on or after December 5, 2013
|
|
|
|
10-Q
|
|
10.1
|
|
2/6/2014
|
10.28
|
|
Form of Director Stock Unit Award Certificate under ScanSource, Inc. 2013 Long-Term Incentive Plan for grants on or after December 5, 2013
|
|
|
|
10-Q
|
|
10.2
|
|
2/6/2014
|
10.29
|
|
Form of Incentive Stock Option Award Certificate under ScanSource, Inc. 2013 Long-Term Incentive Plan for grants on or after December 5, 2013
|
|
|
|
10-Q
|
|
10.3
|
|
2/6/2014
|
10.30
|
|
Form of Non-Qualified Stock Option Award Certificate under ScanSource, Inc. 2013 Long-Term Incentive Plan for grants on or after December 5, 2013
|
|
|
|
10-Q
|
|
10.4
|
|
2/6/2014
|
10.31
|
|
Independent Contractor Agreement entered into on December 2, 2013 between ScanSource, Inc. and Andrea Meade on behalf of Brentwood Road Ventures, LLC
|
|
|
|
10-Q
|
|
10.5
|
|
2/6/2014
|
10.32
|
|
Other Stock Based Award Agreement for John J. Ellsworth dated August 26, 2014
|
|
|
|
10-K
|
|
10.32
|
|
8/28/2014
|
10.33
|
|
Form of Other Stock Based Award Certificate under ScanSource, Inc. 2013 Long-Term Incentive Plan
|
|
|
|
10-K
|
|
10.33
|
|
8/28/2014
|
10.34
|
|
Form of Performance and Service -
Based Restricted Stock Unit Award Certificate under ScanSource, Inc. 2013 Long-Term Incentive Plan
|
|
|
|
10-K
|
|
10.34
|
|
8/28/2014
|
10.35
|
|
Nonqualified Deferred Compensation Plan, as amended and restated
effective January 1, 2015
|
|
|
|
10-Q
|
|
10.1
|
|
2/3/2015
|
|
|
Bank Agreements
|
|
|
|
|
|
|
|
|
10.36
|
|
Amended and Restated Credit Agreement
|
|
|
|
10-Q
|
|
10.1
|
|
11/4/2011
|
10.37
|
|
Amendment No. 1 to the Amended and Restated Credit Agreement
|
|
|
|
8-K
|
|
10.1
|
|
11/8/2013
|
10.38
|
|
Amendment No. 2 to the Amended and Restated Credit Agreement
|
|
|
|
8-K
|
|
10.1
|
|
12/14/2015
|
|
|
Other Agreements
|
|
|
|
|
|
|
|
|
10.39+
|
|
Industrial Lease Agreement dated April 27, 2007 between Registrant and Industrial Developments International, Inc.
|
|
|
|
10-K
|
|
10.26
|
|
8/29/2007
|
10.40+
|
|
US Avaya Contract with ScanSource, Inc.
|
|
|
|
10-K
|
|
10.39
|
|
8/26/2010
|
10.41+
|
|
Amendment to Distribution Agreement with Avaya.
|
|
|
|
10-K
|
|
10.37
|
|
8/26/2013
|
10.42+
|
|
Addendum to Distributor Agreement with Avaya.
|
|
|
|
10-K/A
|
|
10.38
|
|
1/31/2014
|
10.43+
|
|
US Motorola (f/k/a Symbol Technologies) Contract with ScanSource, Inc.
|
|
|
|
10-K
|
|
10.40
|
|
8/26/2010
|
10.44+
|
|
Letter Agreement with US Motorola
|
|
|
|
10-K
|
|
10.41
|
|
8/26/2010
|
10.45+
|
|
Distribution Agreement with US Motorola
|
|
|
|
10-Q
|
|
10.1
|
|
5/7/2014
|
10.46+
|
|
Distribution Agreement with Symbol Technologies, Inc.
|
|
|
|
10-Q/A
|
|
10.1
|
|
10/24/2014
|
10.47+
|
|
Distributor Agreement Addendum with Avaya Inc.
|
|
|
|
10-Q
|
|
10.1
|
|
5/5/2015
|
10.48+
|
|
Payment Terms Offer to Distributor Agreement with Avaya Inc.
|
|
|
|
10-Q
|
|
10.2
|
|
5/5/2015
|
10.49
|
|
Expiration of Payment Terms Offer to Distributor Agreement with Avaya, effective November 16, 2015.
|
|
|
|
10-Q
|
|
10.1
|
|
11/4/2015
|
10.50**
|
|
Amendment to PartnerEmployer Distribution Agreement with Zebra.
|
|
X
|
|
|
|
|
|
|
10.51
|
|
Participation Agreement Relating to Distribution Agreement with Zebra.
|
|
X
|
|
|
|
|
|
|
10.52**
|
|
Google Services Amendment to Distributor Agreement with Avaya.
|
|
X
|
|
|
|
|
|
|
10.53**
|
|
Hosted Service Amendment to Distributor Agreement with Avaya.
|
|
X
|
|
|
|
|
|
|
10.54**
|
|
Third Amendment to Industrial Lease Agreement between Registrant and Industrial Developments International, Inc.
|
|
X
|
|
|
|
|
|
|
16.1
|
|
Letter from Ernst & Young LLP, dated January 6, 2014
|
|
|
|
8-K
|
|
16.1
|
|
1/7/2014
|
18.1
|
|
Preferability letter re change in accounting policy related to goodwill
|
|
|
|
10-Q
|
|
18.1
|
|
5/7/2014
|
(A)
|
Symbol and ScanSource have entered on February 12, 2014 into a distribution agreement (as amended) which relates to Zebra Technologies Enterprise Visibility and Mobility (“
EVM
”) products and services, and which as acknowledged by the Parties by entering into this Amendment, is in full force and effect and valid as when this Amendment is executed (the "
Distribution Agreement
");
|
(B)
|
Motorola Solutions Ltda. was a party to Schedule 4A (Participation Agreement) of the Distribution Agreement, which covers the sale of Products and Services in Brazil (the “
Participation Agreement
”);
|
(C)
|
The Participation Agreement was assigned from Motorola Solutions Ltda. to Zebra Brazil with an effective date of October 27, 2014 following the acquisition of Motorola Solutions’ Enterprise business by a Zebra Technologies Affiliate;
|
(D)
|
Following the integration of Zebra’s existing channel programs, the PartnerEmpower™ channel program is being discontinued and replaced by a new integrated channel program Zebra® PartnerConnect, which Zebra is going to launch on April 11, 2016 or at a later date to be solely determined and publicly announced by Zebra as the Program go-live date (the “
Effective Date
”);
|
(E)
|
Distributor desires to be transitioned to the Program (as defined in section 1.1 below) with effect from the Effective Date, and Zebra has agreed to include Distributor in the Program.
|
(F)
|
The Parties wish to adapt the terms of the Distribution Agreement to create a suitable contractual framework within which to continue trading under the Program as related to Zebra EVM products and services only.
|
1.1
|
Definitions.
|
1.2
|
Warranty.
In Section 13 (“Warranty”) the reference to the Standard Warranty Statement posted at: www.motorolasolutions.com/partnerempoweradditionaltermsandconditions
(the “Site”), will be replaced with the new Zebra Consolidated Global Limited warranty posted at
www.zebra.com/partnerconnect-tc
or any equivalent website thereof.
|
1.3
|
End User License Agreement
. Since Zebra Technologies has revised its End User Software License Agreements, any reference to Motorola Solutions’ End-User Software License Agreement is replaced with the reference to the End User License Agreements posted at
www.zebra.com/partnerconnect-tc
or any equivalent website thereof.
|
1.4
|
Purchase and Sale of Services
.
The “Motorola Services Contract” governing the purchase and sale of services by Distributor shall be referred to as the “Zebra Services Contract” and will consist of the documents posted at
www.zebra.com/partnerconnect-tc
(or any equivalent website thereof) under Sale of Services (break/fix services and Other services/Professional Services Terms)
|
1.5
|
Trademarks
.
The provision entitled MOTOROLA SOLUTIONS TRADEMARKS AND SERVICE MARKS will be deleted in its entirety and replaced with the following:
|
1.7
|
Term and Termination
. This Amendment may be terminated at any time by either Party in accordance with the termination provisions contained in the Agreement. The Amendment shall not have an Initial Period.
|
1.8
|
Governing Law and Dispute Resolutions
.
The terms of the Governing Law and Dispute Resolution provisions of the Agreement will apply to this Amendment.
|
1.9
|
Flow Down Provisions
.
The Flow Down Requirements posted on Distributor website in accordance
|
2.0
|
Notices
.
The paragraphs included in section 8.1 of the Participation Agreement to indicate Zebra Brazil’s addresses to receive notices under the Participation Agreement are hereby replaced with the following paragraphs:
|
2.2
|
Signature Counterparts
.
This Amendment and any further amendments or addenda to the Agreement, may be executed in two or more of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. A facsimile copy or computer image, such as a PDF or tiff image, of a signature shall be treated as and shall have the same effect as an original signature. In addition, a true and correct facsimile copy or computer image of this Amendment
|
2.3
|
The Named End-User Accounts Excluded from Distributor in Latin America and the Caribbean
|
2.4
|
PartnerConnect Channel Program Changes
. Nothing contained in Zebra’s PartnerConnect Channel Program shall modify, without Distributor’s prior written consent, the following terms of the Agreement as may have been amended in relevant part: Section 8 – Terms and Conditions of Sale.
|
ZEBRA TECHNOLOGIES DO BRASIL
|
CDC BRASIL DISTRIBUIDORA DE
|
– COMÉRCIO DE PRODUTOS DE
|
TECNOLOGIAS ESPECIAIS LTDA.
|
•
|
Warranty Flow-Down Requirements and Zebra Standard Product Warranty
|
•
|
Zebra Sell-Through Terms and Conditions including
Break/Fix and Professional Services Terms
|
•
|
Software Redistribution Requirements
|
•
|
a.
|
Those Zebra’s terms and conditions posted at
www.zebra.com/partnerconnect-tc
,
or any equivalnet website thereof, under the title Break/Fix Services, and when Other Services are purchased under the title Professional Services Terms ( the urrent versions provided herein) ; and
|
2.2.2
|
(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 Zebra 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 Zebra Services Contract and Zebra will be an intended third party beneficiary to such agreement(s); and
|
(i)
|
End User’s assertion that the Zebra Services Contract does not regulate the supply of the Sell Through Services from Zebra to End User; or
|
(ii)
|
End User’s exertion of its contractual rights against Zebra where End User has not entered into the Zebra Services Contract with you and instead is relying upon different contractual terms (the “
Services Claim
”),
|
2.2.3
|
Subcontracted Services
. You agree that in the event Zebra provides Subcontracted Services the terms of the Zebra Services Contract will apply.
|
A.
|
On February 12, 2014 Symbol, Zebra Brazil predecessor and Distributor entered into the MPE Distributor Agreement as further amended by the parties, including the Amendment of even date hereof (the “Agreement”).
|
B.
|
Participant stated to Zebra that Participant is a Distributor’s Affiliate incorporated in Mexico and that Participant wishes to enter into this PA to purchase Products pursuant to the Agreement for further resale in Mexico.
|
1.
|
Participant will be entitled to purchase Products from Zebra pursuant to the Agreement and resell them in Mexico only. Participant will honor and be bound by the Agreement (as amended) as a party thereto. Participant’s purchases of Products from Zebra will be conducted exclusively in accordance with and be subject to the terms and conditions of the Agreement and this PA.
|
2.
|
This PA adopts and incorporates by reference all of the terms and conditions of the Agreement. Participant confirms that Participant has reviewed, understands, and agrees with the terms and conditions of the Agreement.
|
3.
|
This PA automatically incorporates any future amendments to the Agreement and such amendments will be part of this PA to the extent that the amendments do not conflict with this PA.
|
4.
|
Participant hereby represents and warrants to Zebra that Participant is an Affiliate of Distributor and that it is 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.
|
5.
|
Except for the express modifications contained herein, the Agreement shall remain in full force and effect in accordance with its terms.
|
6.
|
All capitalized terms used in this PA shall have the meanings given to them in the Agreement and its future amendments, unless otherwise expressly indicated in the PA. Notices or other communications required to be given to Participant in regard to this PA shall be sent to ScanSource, Inc.’s address stated herein.
|
7.
|
This PA will become effective on the date on which it is signed by Zebra.
|
SYMBOL TECHNOLOGIES, INC.
|
SCANSOURCE, INC.
|
ZEBRA TECHNOLOGIES DO BRASIL
|
CDC BRASIL DISTRIBUIDORA DE
|
– COMÉRCIO DE PRODUTOS DE
|
TECNOLOGIAS ESPECIAIS LTDA.
|
(A)
|
Avaya and Distributor are parties to a certain Distributor Agreement, contract number AVDIST1-021002, as amended (the
“Agreement”).
|
(B)
|
Avaya and Distributor desire to implement or modify the terms and conditions of the Agreement pursuant to which Distributor may market and resell the Google Services solely as part of the Bundle to Resellers for resale to End Users in the Territory.
|
1.
|
Definitions
.
Capitalized terms used in this Amendment, but not defined will have the meanings given them in the Agreement. Any definitions included in this Amendment apply solely for purposes of this Amendment.
|
1.1
|
“Anti-Bribery Laws”
means all applicable commercial and public anti-bribery laws, including, without limitation, the U.S. Foreign Corrupt Practices Act of 1977 and the UK Bribery Act of 2010.
|
1.2
|
“Bundle”
means the package of Avaya’s proprietary
IP
Office Contact Center or Elite Agent for Chrome products, or such other Software that have been pre-approved by Avaya in writing to be resold as part of a bundle with the Google Services, packaged or bundled together with the Google Services.
|
1.3
|
“End Users”
means a third party to which Resellers resell Google Services solely as part of the Bundle for the internal use by such third party and not for resale or sublicense.
|
1.4
|
“Export Control Laws”
means all applicable export and re-export control laws and regulations, and specifically includes the Export Administration Regulations maintained by the U.S. Department of Commerce, the trade and economic sanctions maintained by the Treasury’s Department Office of Foreign Assets Control, and the International traffic in Arms Regulations maintained by the U.S. Department of State.
|
1.5
|
"Google Brand Features”
mean the trade names, trademarks, service marks, logos, domain names, and other distinctive brand features of Google, as secured by Google from time to time.
|
1.6
|
“Google Services”
means the Chrome Management Console for Business and Education Services provided by Google to an End User or as described at the
following URL:
https://support.aooale.eom/chrome/a/answer/1289314?hl=en
. or such
other URL as Google may provide, and provided by Avaya as part of the Bundle.
|
1.7
|
“Google TOS”
means the online terms of service applicable as between Google and each End User for the Google Services.
|
1.8
|
“Offer Definition”
means the Avaya-provided offer definition applicable to the Bundle
|
1.9
|
“Territory”
will have the meaning set forth in the Agreement, provided that in no event may the Territory include any country other than
[*****]
, unless otherwise expressly stated in the Offer Definition.
|
2.
|
Limited Authorization and Territory
. Subject to the terms and conditions of this Amendment and the Agreement, Avaya hereby authorizes Distributor to order and purchase directly from Avaya the Google Services solely as part of the Bundle, and only for the purposes of marketing and reselling such Google Services to Resellers for sale to End Users within the Territory only and solely as part of the Bundle in accordance with this Amendment, any Offer Definition, and the Agreement. Distributor is not authorized in any way to market or resell the Google Services as a standalone service. Notwithstanding anything to the contrary, with respect to certain Bundles, Avaya may limit where the Bundle can be ordered and resold as set forth in the Offer Definition. Distributor will not solicit business from, or resell or supply the Google Services, to any Reseller that is not authorized to do business within the Territory. Distributor will promptly refer to Avaya inquiries from entities that are not authorized to do business in the Territory. Avaya may at any time reduce the Territory in which the Google Services may be resold upon 15 days advance written or electronic notice to Distributor, if Google reasonably determines
|
[*****]
|
CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
|
3.
|
Orders and Prices
.
Unless the Offer Definition expressly states otherwise, orders for the Bundle are non-cancellable and non-refundable. Distributor may not order the Google Services separately from the Software that is part of the Bundle. In accordance with the payment terms in the Agreement, Distributor will pay Avaya the prices for the Bundle set forth in the price list applicable to the Territory, less any discounts provided in the Agreement (if applicable) or subsequent notifications to Distributor. The Offer Definition (if any) may contain further information about how Avaya will charge and invoice Distributor for the Bundle
(e.g.,
subscription billing or upfront payment, etc.).
|
4.
|
Support for the Google Services
.
|
a.
|
Customer Support for the Google Services
. Resellers will provide first level customer support to End Users, including enrollment, order management, billing, and administration policies. Notwithstanding the foregoing, Distributor will not provision the Google Services to End Users. Distributor may not escalate End User customer support issues to Google directly, but Reseller will escalate them only to Avaya.
|
b.
|
Technical Support for the Google Services
.
|
i.
|
For technical issues related to Google Services interoperability with the Software that is part of the Bundle, Reseller will act as first level technical support to the End User and Reseller will raise second level technical support to Avaya.
|
ii.
|
For other Google Services technical support issues, Distributor acknowledges and agrees that Google will provide direct technical support to End Users pursuant to the Google TSS Guidelines located at
http://suPDort.aooale.com/enterprise/terms
(or another
URL links as specified by Google) and the Google TOS.
|
5.
|
No Refunds
.
|
a.
|
Distributor acknowledges and agrees that Avaya may, without Avaya or Google incurring any liability, discontinue, in whole or in part, the Google Services or support thereof for new End Users, if Google has discontinued provision of Google Services in whole or in part. Provided Google gives Avaya reasonable advance notice of such discontinuation, Avaya will endeavor to give Distributor reasonable advance written or electronic notice thereof. For clarity, Section 5a applies to the Google Services only; discontinuation of the Software in the Bundle is governed by the Agreement (including, if applicable, the Hosted Service Amendment to the Agreement). In addition, Distributor acknowledges and agrees that, without Avaya or Google incurring any liability, Avaya may, without notice, change the features of the Google Services so long as the change does not materially degrade the Google Services, following implementation of such change by Google.
|
b.
|
Notwithstanding anything to the contrary, in the event of such discontinuation or change by Avaya following discontinuation or change by Google, neither Distributor nor any third party may claim any refunds from Avaya (including its affiliates) or Google for the Bundle or any portion thereof.
|
6.
|
Google Brand Features License
.
|
a.
|
Subject to the terms and conditions of this Amendment, Avaya grants to Distributor, only for the term of this Amendment, a limited, personal, non-exclusive, non-sublicenseable, non-transferable, revocable license to use, reproduce and display the Google Brand Features solely for the purpose of marketing and reselling the Google Services solely as part of the Bundle in the Territory and for no other purpose and solely in accordance with the terms of this Amendment. Except as expressly set forth herein, Avaya grants no other license under this Amendment. Distributor will comply with Google’s trademark and branding guidelines in the Google device partner toolkit located at the following URL
: https://sites.google.eom/a/google.com/device-partner-toolkit (or such other URL as may be updated by Google) and Google’s Guidelines for Third Party Use of Google Brand Features located at http://www.google.com/permissions/guidelines.html (or such other URL as may be updated by Google). The aforementioned URL links are incorporated herein by reference and
may be modified by Google at any time without notice. Any such modified URL links will then automatically replace the older versions following the date of posting. Notwithstanding anything to the contrary, Avaya may revoke such license to Google’s Brand Features under this Amendment at any time upon written or electronic notice to Distributor, in which case Distributor will immediately cease using Google's Brand Features. If Avaya or Google has any concerns regarding Distributor’s use of Google Brand Features in connection with this Amendment, Distributor will cooperate fully with Avaya and/or Google to promptly remedy any such concerns.
|
b.
|
All goodwill arising from the use of Google Brand Features and the Google device partner toolkit described in Section 6a above will belong to Google. All ownership rights, title, and intellectual property rights in and to the Google Brand Features and the Google device partner toolkit described in Section 6a above will remain with Google.
|
7.
|
Disclaimer and Inconsistent Representation or Warranty
. Distributor will not enter into any agreement with Reseller or otherwise purport to act on behalf of Google (as an agent, partner or otherwise) in assuming any liability on behalf of Google, or make any representations or warranties on behalf of Google related to the Google Services or the Google Brand Features. Distributor may refer to itself in accordance with Google’s aforementioned trademark and branding guidelines, but will not refer to itself as an agent or representative of Google for any purpose. Distributor will not make any representation or warranty which are, or enter into any agreement with Reseller which is, in conflict with Google’s materials regarding the Google Services. AVAYA PROVIDES NO EXPRESS, IMPLIED OR STATUTORY WARRANTIES WITH RESPECT TO THE GOOGLE SERVICES. ANY APPLICABLE GOOGLE SERVICES WARRANTIES WILL SOLELY BE AS COMMUNICATED BY GOOGLE TO END USER UNDER THE GOOGLE TOS.
|
8.
|
Deceptive Trade Practices and Compliance with Laws
. Distributor will not: (a) engage in illegal or deceptive trade practices or any other behavior prohibited by this Amendment or by law; (b) solicit, accept, or maintain any Reseller who engages in any activities described in Section 8 (a) above; or (c) make any unauthorized, false, misleading, or illegal statements in connection with this Amendment or regarding the Google Services. In addition to Distributor’s obligations to comply with applicable law as set out in the Agreement, Distributor will comply with, and will not attempt to cause a violation of, any or all applicable laws, rules and regulations, specifically including but not limited to Export Control Laws, Anti-Bribery laws, prohibitions against deceptive trade practices, and all laws and regulations applicable to End User data and applicable to its role and obligations as a Distributor. Furthermore, Distributor will not make any facilitation payments, which are payments to induce governmental officials to perform routine functions they are otherwise obligated to perform. If Distributor has knowledge, or based on the circumstances has a firm belief, that it, or any Reseller, in conducting business relating to this Amendment, has violated any Anti-Bribery Laws or caused Avaya or Google to violate any Anti-Bribery Laws, then Distributor will promptly notify Avaya in writing. The prohibitions of this Section 8 are material terms of this Amendment, and as set forth in Section 13.3 below, breach thereof may be grounds for termination of this Amendment by Avaya on written or electronic notice and with immediate effect.
|
9.
|
Google TOS
. Distributor acknowledges and agrees that End Users will be presented with the Google TOS, and that each End User must accept the Google TOS prior to using the Google Services. Distributor will not accept the Google TOS on behalf of any Reseller or End User.
|
10.
|
Copies
.
[*****]
|
11.
|
Enforcing Agreements relating to this Amendment
.
|
a.
|
[*****]
|
b.
|
To the extent Distributor fails to fulfill an order relating to this Amendment where End User provides proof of payment, Avaya will notify Distributor and, if such order is not fulfilled within a reasonable period of time, but in no event longer than 10 calendar days, Distributor hereby expressly agrees that such order may, at Avaya’s discretion, be fulfilled by Avaya, its Affiliates, its authorized Channel Partner or Google. In this case Distributor will remit payment to the entity fulfilling such order, as directed by Avaya.
|
12.
|
Indemnification
.
[*****]
|
13.
|
Term, Termination, and Effects of Termination of Amendment
|
13.1
|
Term.
This Amendment enters into force on the Google Services Amendment Effective Date (as defined above) and remains in force for as long as the Agreement is in effect, unless otherwise terminated in accordance with this Amendment.
|
13.2
|
Termination for cause.
Either party may terminate this Amendment and/or any underlying order relating to this Amendment for cause by written or electronic notice to the other party effective immediately upon receipt, if the other party fails to cure any material breach of this Amendment within a 30 day period after having received a written or electronic notice from the non-breaching party detailing the breach and requesting the breach to be cured.
|
13.3
|
Termination for violation of law.
Avaya may terminate this Amendment and/or any underlying order relating to this Amendment with immediate effect upon written or electronic notice to Distributor in the event of Distributor's material breach of its obligations under Section 8 of this Amendment, provided such material breach cannot be cured. Notwithstanding the foregoing, Avaya may also terminate this Amendment and/or any underlying order relating to this Amendment with immediate effect upon written or electronic notice to Distributor if:
|
13.3.1
|
Avaya has reason to believe that Distributor has violated or caused Avaya or Google to violate any AntiBribery Laws; or
|
13.3.2
|
Avaya has reason to believe that such violation is reasonably likely to occur, provided that Avaya has provided Distributor with an advance warning in writing or by electronic email, requesting Distributor to immediately refrain from any attempts to violate Anti-Bribery Laws or other behaviors or activities that may cause Avaya or its Google to violate Anti-Bribery Laws and Distributor has not taken proper corrective action, including, but not limited to, immediately stopping such attempts, behaviors or activities and providing written confirmation thereof to Avaya.
|
13.4
|
Termination due to Reduction of Territory.
Avaya may terminate this Amendment and/or any underlying order relating to this Amendment in whole or in part upon 15 days prior written or electronic notice to Distributor in the event of Avaya’s de-authorization or termination to resell the Google Services in parts of the Territory or in the entire Territory due to a change in applicable laws.
|
13.5
|
Termination for convenience.
Unless the Offer Definition expressly states otherwise, either party may terminate this Amendment (but not individual orders), without cause, upon thirty (30) days advance written or electronic notice to the other party.
|
13.6
|
Effects of termination or expiry.
Upon termination or expiry of this Amendment, (a) each party will promptly use commercially reasonable efforts to return or destroy the other party’s Confidential Information as it relates to this Amendment, and (b) Distributor's rights under this Amendment will cease, and (c) Distributor may not market or resell the Google Services to any new End User, and may not place additional or renewal orders for existing End Users. Distributor will use commercially reasonable efforts to promptly transition, in accordance with Avaya's instructions, to Avaya, an Avaya Affiliate, Avaya Channel Partner or to Google directly, any existing End User who desires to continue to receive the Google Services or support for the Google Services. In the event that this Amendment expires or terminates during the term of any order related to this Amendment, the parties agree that, except as set forth in this Section, this Amendment will remain in effect solely for purposes of enabling the underlying order(s). Notwithstanding the foregoing, termination or expiry of the Agreement for an uncured material breach, or termination or expiry of this Amendment in accordance with Sections 13.2, 13.3, and/or 13.4 above, will be deemed to terminate all underlying orders related to this Amendment, unless the parties expressly agree otherwise in writing.
|
14
|
Publicity
.
Distributor is prohibited from making any public statement regarding Avaya’s Chrome for Work Distribution Agreement with Google without Avaya’s prior written approval.
|
15
|
Order of Precedence
.
Should there be an express conflict, as it relates to the subject matter of this Amendment, between the terms of the Agreement, this Amendment, and any applicable Offer Definition, the order of precedence is
as follows: (i) this Amendment prevails; then (ii) the Agreement; and finally (iii) the applicable section(s) in the Offer Definition (unless the Offer Definition expressly states otherwise).
|
16
|
Miscellaneous
.
|
16.1
|
Notices
. Any notice under this Amendment will be in writing in English and addressed to the other party at its address set forth below (or to any other address that the receiving party may designate from time to time in accordance with this Section). Notices will be delivered by: (i) personal delivery; (ii) courier or first class mail (with all fees or postage prepaid); (iii) facsimile (with confirmation of transmission); or (iv) to the extent expressly permitted under this Amendment an e-mail of a duly signed PDF document (with receipt confirmed). Notices will be deemed to have been given, as applicable, on the earlier of: (a) the date of receipt; (b) two working days after sending by courier; (iii) five working days after first class posting; (c) next working day after sending by facsimile or email.
|
FOR DISTRIBUTOR:
|
|
FOR AVAYA:
|
|
|
|
ScanSource, Inc. dba ScanSource Catalyst
|
|
Attention: Corporate Secretary
|
6 Logue Court
|
|
Avaya World Services Inc.
|
Greenville, SC 29615
|
|
211 Mt. Airy Road
|
United States
|
|
Basking Ridge, New Jersey 07920
|
Facsimile:
|
|
United States
|
Email: chris.marlar@scansource.com
|
|
Facsimile: 908-953-8006
|
|
|
Email: lqlnoticescomm@avaya.com
|
|
|
|
|
|
If to Avaya for Distributor’s written notice of cancellation or intent not to renew:
|
|
|
Avaya World Services Inc.
|
|
|
Customer Care Center
|
|
|
14400 Hertz Quail Spring Pkwy
|
|
|
Oklahoma City, OK 73134
|
|
|
E-mail: mycontract@avaya.com
|
|
|
Facsimile: 800-441-6371
|
|
|
Attn: Services Termination
|
16.2
|
All terms and conditions of this Amendment, which by their nature are intended to survive, will survive termination or expiry of this Amendment, including, but not limited to, Sections 1, 5b, 6b, 7, 10 (for the term of this Amendment and for a period of five years after its termination or expiry, unless a long period is mandated by law), 11a, 12, 13.6, 14,15, and 16. Except as explicitly modified herein, all the terms and conditions of the Agreement will continue in full force and effect.
|
Avaya Inc.:
|
ScanSource, Inc. dba ScanSource Catalyst
|
Signature: /s/ Ryan McDowell
|
Signature: /s/ David Hertwig
|
Printed Name: Ryan McDowell
|
Printed Name: David Hertwig
|
Title: DCAM
|
Title: President, ScanSource Catalyst
|
Date: April 27, 2016
|
Date: 4/26/16
|
[*****]
|
CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
|
[*****]
|
CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
|
FOR DISTRIBUTOR:
|
|
FOR AVAYA:
|
|
|
|
ScanSource, Inc. dba ScanSource Catalyst
|
|
Attention: Corporate Secretary
|
6 Logue Court
|
|
Avaya World Services Inc.
|
Greenville, SC 29615
|
|
211 Mt. Airy Road
|
United States
|
|
Basking Ridge, New Jersey 07920
|
Facsimile:
|
|
United States
|
Email:
chris.marlar@scansource.com
|
|
Facsimile: 908-953-8006
|
|
|
Email:
lqlnoticescomm@avaya.com
|
|
|
|
|
|
If to Avaya for Distributor’s written notice of cancellation or intent not to renew:
|
|
|
Avaya World Services Inc.
|
|
|
Customer Care Center
|
|
|
14400 Hertz Quail Spring Pkwy
|
|
|
Oklahoma City, OK 73134
|
|
|
E-mail:
mycontract@avaya.com
|
|
|
Facsimile: 800-441-6371
|
|
|
Attn: Services Termination
|
[*****]
|
CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
|
Avaya Inc.
:
|
ScanSource, Inc. dba ScanSource Catalyst
|
Signature: /s/ Ryan McDowell
|
Signature: /s/ David Hertwig
|
Printed Name: Ryan McDowell
|
Printed Name: David Hertwig
|
Title: DCAM
|
Title: President, ScanSource Catalyst
|
Date: April 27, 2016
|
Date: 4/26/16
|
[*****]
|
CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
|
1.
|
Extension of Term
.
The Term of the Lease is hereby extended for a period of one hundred twenty (120) months commencing on October 1, 2017 and expiring September 30, 2027 (the “
Extended Term
”).
|
2.
|
Expansion of Demised Premises
. Effective as of the Expansion Premises Commencement Date, the Expansion Premises shall constitute a portion of the Demised Premises. From and after the Expansion Premises Commencement Date, the Demised Premises shall consist of and all references to the Demised Premises in the Lease shall be deemed to refer to the Existing Premises and the Expansion Premises as depicted on
Exhibit “A”
attached hereto. As used herein, “
Expansion Premises Commencement Date
” shall mean the date that Landlord delivers possession of the Expansion Premises to Tenant, free and clear of personal property and occupants; provided that Landlord shall not be required to deliver free and clear of Existing Tenant’s occupancy if Tenant gives Landlord notice not less than ten (10) days prior to the Expansion Premises Date that Tenant and Existing Tenant have entered into a sublease agreement as more particularly described below in Section 8 of this Third Amendment. Landlord and Tenant acknowledge and agree that the Expansion Premises Commencement Date is currently anticipated to occur on October 1, 2017, however since the Expansion Premises is currently occupied by Crate Services, Inc., a Georgia corporation (“
Existing Tenant
”), delivery of the Expansion Premises may be delayed by Existing Tenant’s unauthorized holdover in the Expansion Premises. Landlord covenants and agrees to use commercially reasonable efforts to deliver the Expansion Premises to Tenant as soon as is reasonably practicable.
|
3.
|
Base Rent
. Commencing as of July 1, 2016, the Annual Base Rent and the Monthly Base Rent applicable under the Lease shall be as follows:
|
Dates
|
Annual Base Rent
|
Monthly Base Rent
|
7/1/2016 –
[*****]
*
|
$
[*****]
|
$
[*****]
|
[*****]
– the later of 9/30/2017 and the day prior to the Expansion Premises Commencement Date
|
$
[*****]
|
$
[*****]
|
From the later of the Expansion Premises Commencement Date and 10/1/2017 – 9/30/2018
|
$
[*****]
|
$
[*****]
|
10/1/2018 – 9/30/2019
|
$
[*****]
|
$
[*****]
|
10/1/2019 – 9/30/2020
|
$
[*****]
|
$
[*****]
|
10/1/2020 – 9/30/2021
|
$
[*****]
|
$
[*****]
|
10/1/2021 – 9/30/2022
|
$
[*****]
|
$
[*****]
|
10/1/2022 – 9/30/2023
|
$
[*****]
|
$
[*****]
|
10/1/2023 – 9/30/2024
|
$
[*****]
|
$
[*****]
|
10/1/2024 – 9/30/2025
|
$
[*****]
|
$
[*****]
|
10/1/2025 – 9/30/2026
|
$
[*****]
|
$
[*****]
|
10/1/2026 – 9/30/2027
|
$
[*****]
|
$
[*****]
|
4.
|
Tenant’s Operating Expense Percentage
. From and after the Expansion Premises Commencement Date, Tenant’s Operating Expense Percentage shall be one hundred percent (100%).
|
5.
|
Right of First Refusal; Right of First Offer
. Sections 8, 9 and 10 of
Exhibit C
of the Lease are hereby deleted in their entirety.
|
6.
|
No Options
. Landlord and Tenant acknowledge and agree that Landlord has not granted Tenant (i) any rights of first refusal; (ii) any expansion rights, or (ii) any rights of first offer.
|
7.
|
Option to Extend
. Tenant's option to extend the Term of the Lease set forth in Section 7 of
Exhibit C
of the Lease shall remain in full force and effect, and each Option Period described therein shall apply to the Term of the Lease, as extended hereby.
|
8.
|
Assignment and Subletting
. Notwithstanding anything to the contrary in Section 29 of the Lease, Landlord agrees not to unreasonably withhold its consent to a sublease by Tenant of the Expansion Premises to the Existing Tenant, and Landlord agrees that no amount of rent paid by Existing Tenant under any such sublease which is in excess of the Base Rent payable by Tenant shall be required to be paid over to Landlord. In the event Tenant subleases any space to Existing Tenant, Tenant shall provide a copy of the sublease to Tenant following the execution of such a sublease and Landlord, Tenant and Existing Tenant shall enter into a consent to sublease on Landlord’s standard form.
|
9.
|
Landlord’s Work; Condition of the Premises
. Promptly following the Expansion Premises Commencement Date, Landlord, at Landlord’s sole cost and expense, shall remove the demising wall between the Existing Premises and the Expansion Premises (“
Landlord’s Work
”); provided that Landlord shall not be required to perform Landlord’s Work (with respect to the applicable portion of the demising wall adjacent to the subleased portion of the Demised Premises) if Tenant subleases the Expansion Premises to the Existing Tenant as of the Expansion Premises Commencement Date. With the exception of Landlord’s Work, Landlord and Tenant agree that Landlord has no obligation to construct any improvements to the Existing Premises or the Expansion Premises. With the exception of Landlord’s Work and the Tenant Work described in
Exhibit B-1
(attached hereto and subject to the express terms of the Lease and this Amendment), TENANT CURRENTLY OCCUPIES AND ACCEPTS THE EXISTING PREMISES IN ITS “
AS IS
”, “
WHERE IS
” CONDITION AND UPON THE EXPANSION PREMISES COMMENCEMENT DATE, SUBJECT TO COMPLETION OF THE LANDLORD WORK AND THE TENANT WORK, SHALL ACCEPT THE EXPANSION PREMISES IN ITS
“AS IS”, “WHERE IS” CONDITION.
In addition to the Landlord’s Work specified herein, Tenant shall have the right, to construct improvements within the Existing Premises and following the Expansion Premises Commencement Date, the Expansion Premises, including (but not limited to) the improvements described on
Exhibit B-2
attached hereto (collectively “
Tenant’s Work
”) in accordance with
Exhibit B-1
attached hereto.
|
10.
|
Counterclaims
. The Lease, as modified hereby, is hereby reaffirmed and ratified and the provisions thereof, as so modified, shall remain in full force and effect. Without limiting the generality of the foregoing, Tenant hereby certifies that, as of Tenant's execution and delivery hereof, and to the best of Tenant's knowledge, Landlord is not in default under the Lease and Tenant has no claim, defense or offset with respect to the Lease.
|
11.
|
Continued Effect
. Except as expressly modified by the terms of this Amendment, the Lease shall remain in full force and effect, and will be fully binding on, and is hereby ratified by, Landlord and Tenant. In the event of any conflict between the terms of the Lease and the terms of this Amendment, the terms of this Amendment shall govern. All terms not defined in this Third Amendment shall be as defined pursuant to the terms of the Lease.
|
12.
|
Multiple Counterparts
. This Third Amendment may be executed in one or more counterparts, each of which shall constitute an original and all of which shall be one and the same agreement.
|
13.
|
Brokerage
. Except for Cushman & Wakefield (“
Broker
”), Tenant and Landlord each agree to indemnify and hold the other harmless of and from any and all loss, costs, damages, or expenses (including, without limitation, all attorneys’
fees
and disbursements) by reason of any claim of or liability to any broker or person claiming through the indemnifying party and arising out of or in connection with the negotiation, execution and delivery of this Amendment. Broker will be compensated by Landlord pursuant to the terms of a separate agreement between Landlord and Broker.
|
14.
|
Authorization
. Each party hereto warrants that the person signing below on such party's behalf is authorized to do so and to bind such party to the terms of this Amendment.
|
15.
|
Entire Agreement; Amendments
. The Lease, as amended by this Amendment, constitutes the entire agreement of the parties relating to the subject matter of the Lease, and it supersedes all other oral or written agreements relating thereto. No term of the Lease, as amended by this Amendment, may be modified, amended, waived, or discharged, in whole or in part, except by written agreement between the parties.
|
16.
|
Contingency
. The effectiveness of this Amendment is subject to Tenant obtaining the approval of its Board of Directors to its terms. For a period of seven (7) business days following the Effective Date, Tenant shall have the right to terminate and rescind this Amendment by providing Landlord with written notice of Tenant’s inability to obtain board approval of this Amendment and therein expressly electing to terminate and rescind this Amendment. If Tenant timely delivers such notice, this Amendment shall be deemed rescinded, Tenant’s election to exercise its right of first refusal with respect to the Expansion Premises shall be deemed withdrawn and the Lease shall otherwise be reinstated without giving effect to this Amendment. If Tenant obtains board
|
Name of Subsidiary
|
|
State/Country
of Incorporation
|
4100 Quest, LLC
|
|
South Carolina
|
Scan
Source
Properties, LLC
|
|
South Carolina
|
Logue Court Properties, LLC
|
|
South Carolina
|
8650 Commerce Drive, LLC
|
|
Mississippi
|
Partner Services, Inc.
|
|
South Carolina
|
Scan
Source
Security Distribution, Inc.
|
|
South Carolina
|
Scan
Source
Communications, Inc.
|
|
South Carolina
|
ScanSourceGov, Inc.
|
|
South Carolina
|
Scan
Source
Canada, Inc.
|
|
Canada
|
Intelisys, Inc.
|
|
South Carolina
|
Scan
Source
de Mexico S, de R.L. de C.V.
|
|
Mexico
|
Outsourcing Unlimited, Inc.
|
|
Georgia
|
Scan
Source
Latin America, Inc.
|
|
Florida
|
Scan
Source
France SARL
|
|
France
|
Scan
Source
Europe Limited
|
|
United Kingdom
|
Scan
Source
UK Limited
|
|
United Kingdom
|
Scan
Source
Limited
|
|
United Kingdom
|
Scan
Source
Europe SPRL
|
|
Belgium
1, 2
|
Scan
Source
Germany GmbH
|
|
Germany
|
Scan
Source
Communications Limited
|
|
United Kingdom
|
Scan
Source
Europe CV
|
|
Amsterdam/NL
|
Scan
Source
Europe BV
|
|
Amsterdam/NL
|
Scan
Source
Communications GmbH
|
|
Germany
|
Scan
Source
Brasil Distribuidora de Tecnologias Ltda.
|
|
Brazil
|
Scan
Source
Video Communications Limited
|
|
United Kingdom
|
Scan
Source
Video Communications Europe Limited
|
|
United Kingdom
|
Video Corporation Limited
|
|
United Kingdom
|
Scan
Source
Video Communications SARL
|
|
France
|
Video Corporation SARL
|
|
France
|
Scan
Source
Video Communications GmbH
|
|
Germany
|
Network 1 International Colombia S.A.S
|
|
Colombia
|
Importadora y Comercializadora Network 1 International (Chile) Limitada
|
|
Chile
|
Network 1 International Peru SAC
|
|
Peru
|
Intersmart S. de R.L. de C.V.
|
|
Mexico
|
Intersmart Technologies LLC
|
|
Florida
|
1
|
|
Scan
Source
Europe SPRL has branch offices that operate under the names Scan
Source
Italia, Scan
Source
Netherlands and Scan
Source
Poland.
|
2
|
|
Mr. Baur, the CEO of Scan
Source,
Inc., owns one share, representing .10%.
|
1.
|
I have reviewed this annual report on Form 10-K 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 annual report on Form 10-K 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, Executive 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:
|
August 29, 2016
|
/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:
|
August 29, 2016
|
/s/ Charles A. Mathis
|
|
|
Charles A. Mathis
|
|
|
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|