☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Title of Each Class
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Trading Symbol
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Name of Each Exchange on Which Registered
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Common Stock, no par value
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SCSC
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NASDAQ Global Select Market
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Large accelerated filer
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☒
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Accelerated filer
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☐
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Non-accelerated filer
(Do not check if a smaller reporting company)
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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Class
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Outstanding at August 16, 2019
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Common Stock, no par value per share
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25,241,115 shares
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Page
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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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Item 16.
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Form 10-K Summary
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|
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•
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Understand end-customer needs
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•
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Provide more complete technology solutions
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•
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Offer market and technology solutions expertise
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•
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Offer training, education and marketing services
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•
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Provide custom configuration, services, platforms and digital tools
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•
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Deliver technical support
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•
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Enable opportunities in emerging technologies
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•
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Reduce working capital requirements
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•
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Offer flexible financing solutions
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•
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Increased ability to navigate supplier programs
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•
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Provide access to emerging, diverse and established customer channels and routes to market
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•
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Create scale and efficiency
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•
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Serve small- and medium-sized businesses more efficiently
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•
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Deliver more complete technology solutions
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•
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Provide market insights
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•
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Offer expertise and technical support
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•
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Manage channel credit
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•
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Create demand
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•
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Worldwide Barcode, Networking & Security; and
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•
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Worldwide Communications & Services.
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•
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We have two non-exclusive agreements with Cisco. One agreement covers the distribution of Cisco products in the United States and has a two year term; and one agreement covers distribution of products in Brazil and has a two year term. Each of these agreements must be renewed by written agreement. Either party may terminate the agreement upon 30 days' notice to the other party.
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•
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We have two non-exclusive agreements with Zebra. One agreement covers sales of Zebra products in North and South America, and the other agreement covers sales of Zebra 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.
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•
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Non-exclusive distribution rights to resell products and related services in geographical areas (vendor agreements often include territorial restrictions that limit the countries in which we can sell their products and services).
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•
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Short-term periods, subject to periodic renewal, and provide for termination by either party without cause upon 30 to 120 days' notice.
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•
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Stock rotation rights, which give us the ability, subject to limitations, to return for credit or exchange a portion of the items purchased.
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•
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Price protection provisions, which enables us to take a credit for declines in inventory value resulting from the vendor's price reductions.
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•
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POS: We provide POS solutions for retail, grocery and hospitality environments to efficiently manage in-store sales and operations. POS solutions include computer-based terminals, tablets, monitors, payment processing solutions, receipt printers, pole displays, cash drawers, keyboards, peripheral equipment and fully integrated processing units. These solutions may include self-service checkout, kiosks and products that attach to the POS network in the store, including network access points, routers and digital signage.
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•
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Payments: We offer payment terminals, comprehensive key injection services, reseller partner branding, extensive key libraries, ability to provide point-to-point encryption (“P2PE”), and redundant key injection facilities. We have the resources to deliver secure payment devices that are preconfigured and ready for use. In addition, we partner with ISVs to deliver to merchants integrated tablet POS solution hardware that a merchant may purchase outright or “as a service,” and which includes merchant hardware support and next-day replacement of tablets, terminals and peripherals.
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•
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Barcode: We offer automatic identification and data capture (“AIDC”) technology that incorporates the capabilities for electronic identification and data processing without the need for manual input. These solutions 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.
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•
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Physical Security: We provide electronic physical security solutions that include identification, access control, video surveillance and intrusion-related products and networking infrastructure. Physical security products are used every day across every vertical market to protect lives, property and information. These technology solutions require specialized knowledge to deploy effectively, and we offer in-depth training and education to our sales partners to enable them to maintain the appropriate skill levels.
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•
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Unified Communications and Collaboration: We provide unified communications and collaboration capabilities, such as voice, video, audio conferencing, web conferencing and messaging. These offerings combine voice, data, fax and speech technologies with computers, telecommunications and the internet to deliver communications solutions on-premise, from the cloud and as a hybrid. Software and hardware products include IP-based telephony platforms, Voice over Internet Protocol ("VoIP") systems, private branch exchanges (“PBXs”), call center applications, video conferencing, desk phones and other endpoints. Cloud-delivered services, such as unified communications, contact center and video conferencing, enable end-customers to consume and pay for communications services typically on a monthly subscription basis.
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•
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Cloud and Telecom Services: We offer business communications services, including voice, data, access, cable collaboration, wireless and cloud. We focus on empowering and educating sales partners so they can advise end-customers in making informed choices about services, technology and cost savings. With the CASCADE cloud services platform, we offer sales partners another way to grow their recurring revenue practices. CASCADE takes the friction out of acquiring, provisioning and managing XaaS offerings. We have contracts with more than 150 of the world’s leading telecom carriers and cloud services providers.
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ITEM 1A.
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Risk Factors.
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•
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Fluctuations of foreign currency and exchange rates, which can impact sales, costs of the goods we sell and the reporting of our results and assets on our financial statements;
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•
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Changes in international trade laws, trade agreements, or trading relationships affecting our import and export activities, including export license requirements, restrictions on the export of certain technology and tariff changes, or the imposition of new or increased trade sanctions;
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•
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Difficulties in collecting accounts receivable and longer collection periods;
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•
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Changes in, or expiration of, various foreign incentives that provide economic benefits to us;
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•
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Labor laws or practices that impact our ability and costs to hire, retain and discharge employees;
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•
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Difficulties in staffing and managing operations in foreign countries;
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•
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Changes in the interpretation and enforcement of laws (in particular related to items such as duty and taxation), and laws related to data privacy such as GDPR and other similar privacy laws that impact our IT systems and processes;
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•
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Global economic and financial market instability related to the U.K.’s referendum withdrawal from the E.U., as well as instability from the possibility of withdrawal of other E.U. member states:
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•
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Potential political and economic instability and changes in governments;
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•
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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, U.K. Bribery Act, and similar laws of other jurisdictions, governing 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
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•
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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, suppliers or service providers.
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ITEM 2.
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Properties.
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Location
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Approximate Square Footage
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Type of Interest
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Description of Use
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United States
|
|
|
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Greenville, SC
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180,000
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Owned
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Headquarters - Principal Executive and Sales Offices
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Southaven, MS
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741,000
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Leased
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Warehouse
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Miami, FL
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29,000
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Leased
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Sales Office and Warehouse
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Sacramento, CA
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41,000
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Leased
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Sales and Administration Offices and Warehouse
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Louisville, KY
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22,000
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Leased
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Warehouse
|
|
|
|
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International
|
|
|
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Mexico City, Mexico
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25,000
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Leased
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Warehouse
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Brussels, Belgium
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28,000
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Leased
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Sales and Administration Offices
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Sao Jose does Pinhais, Brazil
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24,000
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Leased
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Sales Office and Warehouse
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Serra, Espírito Santo, Brazil
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31,000
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Leased
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Sales Office and Warehouse
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Itajai, Santa Catarina, Brazil
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164,000
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Leased
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Sales Office and Warehouse
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ITEM 5.
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
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2014
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2015
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2016
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2017
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2018
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|
2019
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||||||||||||
ScanSource, Inc.
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$
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100
|
|
|
$
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100
|
|
|
$
|
97
|
|
|
$
|
106
|
|
|
$
|
106
|
|
|
$
|
86
|
|
NASDAQ Composite
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$
|
100
|
|
|
$
|
114
|
|
|
$
|
113
|
|
|
$
|
144
|
|
|
$
|
178
|
|
|
$
|
192
|
|
SIC Code 5045 – Computers & Peripheral Equipment
|
$
|
100
|
|
|
$
|
95
|
|
|
$
|
114
|
|
|
$
|
152
|
|
|
$
|
133
|
|
|
$
|
139
|
|
Period
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Total number of shares purchased
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Average price paid per share
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Total number of shares purchased as part of the publicly announced plan or program
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Approximate dollar value of shares that may yet be purchased under the plan or program
|
||||||
April 1, 2019 through April 30, 2019
|
—
|
|
$
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—
|
|
—
|
|
$
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99,356,839
|
|
May 1, 2019 through May 31, 2019
|
117,472
|
|
30.97
|
|
—
|
|
95,718,282
|
|
||
June 1, 2019 through June 30, 2019
|
196,973
|
|
31.39
|
|
—
|
|
89,535,486
|
|
||
Total
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314,445
|
|
$
|
31.23
|
|
—
|
|
$
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89,535,486
|
|
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Fiscal Year Ended June 30,
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||||||||||||||||||
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2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
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(in thousands, except per share data)
|
||||||||||||||||||
Statement of income data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
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$
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3,873,111
|
|
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$
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3,846,260
|
|
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$
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3,568,186
|
|
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$
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3,540,226
|
|
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$
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3,218,626
|
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Cost of goods sold
|
3,420,539
|
|
|
3,410,135
|
|
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3,184,590
|
|
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3,184,786
|
|
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2,891,536
|
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|||||
Gross profit
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452,572
|
|
|
436,125
|
|
|
383,596
|
|
|
355,440
|
|
|
327,090
|
|
|||||
Selling, general and administrative expenses
|
314,521
|
|
|
297,475
|
|
|
265,178
|
|
|
240,115
|
|
|
210,985
|
|
|||||
Depreciation expense
|
13,155
|
|
|
13,311
|
|
|
9,444
|
|
|
7,326
|
|
|
5,356
|
|
|||||
Intangible amortization expense
|
19,732
|
|
|
20,657
|
|
|
15,524
|
|
|
9,828
|
|
|
6,641
|
|
|||||
Change in fair value of contingent consideration
|
15,200
|
|
|
37,043
|
|
|
5,211
|
|
|
1,294
|
|
|
2,667
|
|
|||||
Operating income
|
89,964
|
|
|
67,639
|
|
|
88,239
|
|
|
96,877
|
|
|
101,441
|
|
|||||
Interest expense
|
13,382
|
|
|
9,149
|
|
|
3,215
|
|
|
2,124
|
|
|
1,797
|
|
|||||
Interest income
|
(1,843
|
)
|
|
(3,713
|
)
|
|
(5,329
|
)
|
|
(3,448
|
)
|
|
(2,638
|
)
|
|||||
Other (income) expense, net
|
517
|
|
|
1,278
|
|
|
(11,142
|
)
|
|
2,191
|
|
|
2,376
|
|
|||||
Income before income taxes
|
77,908
|
|
|
60,925
|
|
|
101,495
|
|
|
96,010
|
|
|
99,906
|
|
|||||
Provision for income taxes
|
20,311
|
|
|
27,772
|
|
|
32,249
|
|
|
32,391
|
|
|
34,487
|
|
|||||
Net income
|
$
|
57,597
|
|
|
$
|
33,153
|
|
|
$
|
69,246
|
|
|
$
|
63,619
|
|
|
$
|
65,419
|
|
Net income per common share, basic
|
$
|
2.25
|
|
|
$
|
1.30
|
|
|
$
|
2.74
|
|
|
$
|
2.40
|
|
|
$
|
2.29
|
|
Weighted-average shares outstanding, basic
|
25,642
|
|
|
25,522
|
|
|
25,318
|
|
|
26,472
|
|
|
28,558
|
|
|||||
Net income per common share, diluted
|
$
|
2.24
|
|
|
$
|
1.29
|
|
|
$
|
2.71
|
|
|
$
|
2.38
|
|
|
$
|
2.27
|
|
Weighted-average shares outstanding, diluted
|
25,734
|
|
|
25,624
|
|
|
25,515
|
|
|
26,687
|
|
|
28,799
|
|
|
As of June 30,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Balance sheet data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Working capital
|
$
|
776,429
|
|
|
$
|
651,851
|
|
|
$
|
624,748
|
|
|
$
|
643,793
|
|
|
$
|
645,398
|
|
Total assets
|
2,067,261
|
|
|
1,945,295
|
|
|
1,718,303
|
|
|
1,491,185
|
|
|
1,476,941
|
|
|||||
Total debt (including current debt)
|
360,506
|
|
|
249,429
|
|
|
97,300
|
|
|
76,856
|
|
|
8,826
|
|
|||||
Total shareholders’ equity
|
$
|
914,129
|
|
|
$
|
866,376
|
|
|
$
|
837,145
|
|
|
$
|
774,496
|
|
|
$
|
808,985
|
|
ITEM 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
•
|
Worldwide Barcode, Networking & Security
|
•
|
Worldwide Communications & Services
|
|
Fiscal Year Ended June 30,
|
||||
|
2019
|
|
2018
|
||
Statement of income data:
|
|
|
|
||
Net sales
|
100.0
|
%
|
|
100.0
|
%
|
Cost of goods sold
|
88.3
|
|
|
88.7
|
|
Gross profit
|
11.7
|
|
|
11.3
|
|
Selling, general and administrative expenses
|
8.1
|
|
|
7.7
|
|
Depreciation expense
|
0.3
|
|
|
0.3
|
|
Intangible amortization expense
|
0.5
|
|
|
0.5
|
|
Change in fair value of contingent consideration
|
0.4
|
|
|
1.0
|
|
Operating income
|
2.3
|
|
|
1.8
|
|
Interest (income) expense, net
|
0.3
|
|
|
0.1
|
|
Other (income) expense, net
|
0.0
|
|
|
0.0
|
|
Income before income taxes
|
2.0
|
|
|
1.6
|
|
Provision for income taxes
|
0.5
|
|
|
0.7
|
|
Net income
|
1.5
|
%
|
|
0.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of Sales
June 30,
|
|||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|
2019
|
|
2018
|
|||||||||
|
(in thousands)
|
|
|
|
|
|
|
|||||||||||||
Worldwide Barcode, Networking & Security
|
$
|
244,746
|
|
|
$
|
238,318
|
|
|
$
|
6,428
|
|
|
2.7
|
%
|
|
9.5
|
%
|
|
9.1
|
%
|
Worldwide Communications & Services
|
207,826
|
|
|
197,807
|
|
|
10,019
|
|
|
5.1
|
%
|
|
16.2
|
%
|
|
16.3
|
%
|
|||
Total gross profit
|
$
|
452,572
|
|
|
$
|
436,125
|
|
|
$
|
16,447
|
|
|
3.8
|
%
|
|
11.7
|
%
|
|
11.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of Sales
June 30,
|
|||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|
2019
|
|
2018
|
|||||||||
|
(in thousands)
|
|
|
|
|
|
|
|
||||||||||||
Selling, general and administrative expenses
|
$
|
314,521
|
|
|
$
|
297,475
|
|
|
$
|
17,046
|
|
|
5.7
|
%
|
|
8.1
|
%
|
|
7.7
|
%
|
Depreciation expense
|
13,155
|
|
|
13,311
|
|
|
(156
|
)
|
|
(1.2
|
)%
|
|
0.3
|
%
|
|
0.3
|
%
|
|||
Intangible amortization expense
|
19,732
|
|
|
20,657
|
|
|
(925
|
)
|
|
(4.5
|
)%
|
|
0.5
|
%
|
|
0.5
|
%
|
|||
Change in fair value of contingent consideration
|
15,200
|
|
|
37,043
|
|
|
(21,843
|
)
|
|
(59.0
|
)%
|
|
0.4
|
%
|
|
1.0
|
%
|
|||
Operating expenses
|
362,608
|
|
|
368,486
|
|
|
(5,878
|
)
|
|
(1.6
|
)%
|
|
9.4
|
%
|
|
9.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of Sales
June 30,
|
|||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|
2019
|
|
2018
|
|||||||||
|
(in thousands)
|
|
|
|
|
|
|
|
||||||||||||
Worldwide Barcode, Networking & Security
|
$
|
59,875
|
|
|
$
|
56,911
|
|
|
$
|
2,964
|
|
|
5.2
|
%
|
|
2.3
|
%
|
|
2.2
|
%
|
Worldwide Communications & Services
|
31,307
|
|
|
10,900
|
|
|
20,407
|
|
|
187.2
|
%
|
|
2.4
|
%
|
|
0.9
|
%
|
|||
Corporate
|
(1,218
|
)
|
|
(172
|
)
|
|
(1,046
|
)
|
|
608.1
|
%
|
|
—
|
%
|
|
—
|
%
|
|||
Total operating income
|
$
|
89,964
|
|
|
$
|
67,639
|
|
|
$
|
22,325
|
|
|
33.0
|
%
|
|
2.3
|
%
|
|
1.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of Sales
June 30,
|
|||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|
2019
|
|
2018
|
|||||||||
|
(in thousands)
|
|
|
|
|
|
|
|||||||||||||
Interest expense
|
$
|
13,382
|
|
|
$
|
9,149
|
|
|
$
|
4,233
|
|
|
46.3
|
%
|
|
0.3
|
%
|
|
0.2
|
%
|
Interest income
|
(1,843
|
)
|
|
(3,713
|
)
|
|
1,870
|
|
|
(50.4
|
)%
|
|
—
|
%
|
|
(0.1
|
)%
|
|||
Net foreign exchange losses (gains)
|
1,156
|
|
|
2,096
|
|
|
(940
|
)
|
|
(44.8
|
)%
|
|
—
|
%
|
|
0.1
|
%
|
|||
Other, net
|
(639
|
)
|
|
(818
|
)
|
|
179
|
|
|
(21.9
|
)%
|
|
—
|
%
|
|
—
|
%
|
|||
Total other (income) expense
|
$
|
12,056
|
|
|
$
|
6,714
|
|
|
$
|
5,342
|
|
|
79.6
|
%
|
|
0.3
|
%
|
|
0.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
||||||||||||||||||||||||||||||
|
Fiscal 2019
|
|
Fiscal 2018
|
||||||||||||||||||||||||||||
|
Jun. 30
2019
|
|
Mar. 31
2019
|
|
Dec. 31
2018
|
|
Sept. 30
2018
|
|
Jun. 30
2018
|
|
Mar. 31
2018
|
|
Dec. 31
2017
|
|
Sept. 30
2017
|
||||||||||||||||
|
(in thousands, except per share data)
|
||||||||||||||||||||||||||||||
Net sales
|
$
|
960,833
|
|
|
$
|
893,357
|
|
|
$
|
1,046,021
|
|
|
$
|
972,900
|
|
|
$
|
993,852
|
|
|
$
|
895,637
|
|
|
$
|
1,032,212
|
|
|
$
|
924,559
|
|
Cost of goods sold
|
850,969
|
|
|
783,342
|
|
|
925,543
|
|
|
860,685
|
|
|
880,503
|
|
|
791,749
|
|
|
919,241
|
|
|
818,642
|
|
||||||||
Gross profit
|
$
|
109,864
|
|
|
$
|
110,015
|
|
|
$
|
120,478
|
|
|
$
|
112,215
|
|
|
$
|
113,349
|
|
|
$
|
103,888
|
|
|
$
|
112,971
|
|
|
$
|
105,917
|
|
Change in fair value of contingent consideration
|
$
|
3,665
|
|
|
$
|
5,101
|
|
|
$
|
1,850
|
|
|
$
|
4,584
|
|
|
$
|
8,448
|
|
|
$
|
4,801
|
|
|
$
|
6,913
|
|
|
$
|
16,881
|
|
Net income
|
$
|
11,578
|
|
|
$
|
11,715
|
|
|
$
|
19,982
|
|
|
$
|
14,322
|
|
|
$
|
10,388
|
|
|
$
|
10,649
|
|
|
$
|
7,969
|
|
|
$
|
4,147
|
|
Net income per common share, basic
|
$
|
0.45
|
|
|
$
|
0.46
|
|
|
$
|
0.78
|
|
|
$
|
0.56
|
|
|
$
|
0.41
|
|
|
$
|
0.42
|
|
|
$
|
0.31
|
|
|
$
|
0.16
|
|
Weighted-average shares outstanding, basic
|
25,627
|
|
|
25,704
|
|
|
25,640
|
|
|
25,599
|
|
|
25,577
|
|
|
25,572
|
|
|
25,506
|
|
|
25,434
|
|
||||||||
Net income per common share, diluted
|
$
|
0.45
|
|
|
$
|
0.45
|
|
|
$
|
0.78
|
|
|
$
|
0.56
|
|
|
$
|
0.40
|
|
|
$
|
0.42
|
|
|
$
|
0.31
|
|
|
$
|
0.16
|
|
Weighted-average shares outstanding, diluted
|
25,691
|
|
|
25,762
|
|
|
25,750
|
|
|
25,755
|
|
|
25,675
|
|
|
25,606
|
|
|
25,648
|
|
|
25,579
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended June 30, 2019
|
|
Year ended June 30, 2018
|
||||||||||||||||||||||||||||
|
Operating Income
|
|
Pre-Tax Income
|
|
Net Income
|
|
Diluted EPS
|
|
Operating Income
|
|
Pre-Tax Income
|
|
Net Income
|
|
Diluted EPS
|
||||||||||||||||
|
(in thousands, except per share data)
|
||||||||||||||||||||||||||||||
GAAP Measures
|
$
|
89,964
|
|
|
$
|
77,908
|
|
|
$
|
57,597
|
|
|
$
|
2.24
|
|
|
$
|
67,639
|
|
|
$
|
60,925
|
|
|
$
|
33,153
|
|
|
$
|
1.29
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Amortization of intangible assets
|
19,732
|
|
|
19,732
|
|
|
14,956
|
|
|
0.58
|
|
|
20,657
|
|
|
20,657
|
|
|
14,021
|
|
|
0.55
|
|
||||||||
Change in fair value of contingent consideration
|
15,200
|
|
|
15,200
|
|
|
11,294
|
|
|
0.44
|
|
|
37,043
|
|
|
37,043
|
|
|
24,697
|
|
|
0.96
|
|
||||||||
Acquisition costs
|
1,218
|
|
|
1,218
|
|
|
1,218
|
|
|
0.05
|
|
|
172
|
|
|
172
|
|
|
172
|
|
|
0.01
|
|
||||||||
Restructuring costs
|
2,402
|
|
|
2,402
|
|
|
1,740
|
|
|
0.07
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Tax recovery, net and related interest income
|
—
|
|
|
—
|
|
|
(387
|
)
|
|
(0.02
|
)
|
|
(2,466
|
)
|
|
(3,119
|
)
|
|
(2,058
|
)
|
|
(0.08
|
)
|
||||||||
Legal settlement, net of attorney fees
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
952
|
|
|
952
|
|
|
771
|
|
|
0.03
|
|
||||||||
Tax reform changes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,034
|
|
|
0.35
|
|
||||||||
Non-GAAP measures
|
$
|
128,516
|
|
|
$
|
116,460
|
|
|
$
|
86,418
|
|
|
$
|
3.36
|
|
|
$
|
123,997
|
|
|
$
|
116,630
|
|
|
$
|
79,790
|
|
|
$
|
3.11
|
|
Operating Income by Segment:
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Fiscal year ended June 30,
|
|
|
|
|
|
% of Net Sales
June 30,
|
|||||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|
2019
|
|
2018
|
|||||||||
Worldwide Barcode, Networking & Security:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
GAAP operating income
|
$
|
59,875
|
|
|
$
|
56,911
|
|
|
$
|
2,964
|
|
|
5.2
|
%
|
|
2.3
|
%
|
|
2.2
|
%
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Amortization of intangible assets
|
8,098
|
|
|
8,703
|
|
|
(605
|
)
|
|
|
|
|
|
|
||||||
Restructuring costs
|
793
|
|
|
—
|
|
|
793
|
|
|
|
|
|
|
|
||||||
Change in fair value of contingent consideration
|
—
|
|
|
69
|
|
|
(69
|
)
|
|
|
|
|
|
|
||||||
Tax recovery
|
—
|
|
|
(1,512
|
)
|
|
1,512
|
|
|
|
|
|
|
|
||||||
Non-GAAP operating income
|
$
|
68,766
|
|
|
$
|
64,171
|
|
|
$
|
4,595
|
|
|
7.2
|
%
|
|
2.7
|
%
|
|
2.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Worldwide Communications & Services:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
GAAP operating income
|
$
|
31,307
|
|
|
$
|
10,900
|
|
|
$
|
20,407
|
|
|
187.2
|
%
|
|
2.4
|
%
|
|
0.9
|
%
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Amortization of intangible assets
|
11,634
|
|
|
11,954
|
|
|
(320
|
)
|
|
|
|
|
|
|
||||||
Change in fair value of contingent consideration
|
15,200
|
|
|
36,974
|
|
|
(21,774
|
)
|
|
|
|
|
|
|
||||||
Restructuring costs
|
1,609
|
|
|
—
|
|
|
1,609
|
|
|
|
|
|
|
|
||||||
Legal settlement
|
—
|
|
|
952
|
|
|
(952
|
)
|
|
|
|
|
|
|
||||||
Tax recovery
|
—
|
|
|
(954
|
)
|
|
954
|
|
|
|
|
|
|
|
||||||
Non-GAAP operating income
|
$
|
59,750
|
|
|
$
|
59,826
|
|
|
$
|
(76
|
)
|
|
(0.1
|
)%
|
|
4.7
|
%
|
|
4.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Corporate:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
GAAP operating income
|
$
|
(1,218
|
)
|
|
$
|
(172
|
)
|
|
$
|
(1,046
|
)
|
|
nm*
|
|
|
nm*
|
|
|
nm*
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Acquisition costs
|
1,218
|
|
|
172
|
|
|
1,046
|
|
|
|
|
|
|
|
||||||
Non-GAAP operating income
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
nm*
|
|
|
nm*
|
|
|
nm*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Consolidated:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
GAAP operating income
|
$
|
89,964
|
|
|
$
|
67,639
|
|
|
$
|
22,325
|
|
|
33.0
|
%
|
|
2.3
|
%
|
|
1.8
|
%
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Amortization of intangible assets
|
19,732
|
|
|
20,657
|
|
|
(925
|
)
|
|
|
|
|
|
|
||||||
Change in fair value of contingent consideration
|
15,200
|
|
|
37,043
|
|
|
(21,843
|
)
|
|
|
|
|
|
|
||||||
Acquisition costs
|
1,218
|
|
|
172
|
|
|
1,046
|
|
|
|
|
|
|
|
||||||
Restructuring costs
|
2,402
|
|
|
—
|
|
|
2,402
|
|
|
|
|
|
|
|
||||||
Legal settlement
|
—
|
|
|
952
|
|
|
(952
|
)
|
|
|
|
|
|
|
||||||
Tax recovery
|
—
|
|
|
(2,466
|
)
|
|
2,466
|
|
|
|
|
|
|
|
||||||
Non-GAAP operating income
|
$
|
128,516
|
|
|
$
|
123,997
|
|
|
$
|
4,519
|
|
|
3.6
|
%
|
|
3.3
|
%
|
|
3.2
|
%
|
|
2019
|
|
2018
|
||
Return on invested capital ratio
|
12.0
|
%
|
|
12.5
|
%
|
Reconciliation of EBITDA to Net Income
|
Fiscal Year Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Net income (GAAP)
|
$
|
57,597
|
|
|
$
|
33,153
|
|
Plus: income taxes
|
20,311
|
|
|
27,772
|
|
||
Plus: interest expense
|
13,382
|
|
|
9,149
|
|
||
Plus: depreciation & amortization(a)
|
36,619
|
|
|
37,495
|
|
||
EBITDA
|
127,909
|
|
|
107,569
|
|
||
Change in fair value of contingent consideration
|
15,200
|
|
|
37,043
|
|
||
Acquisition costs(b)
|
1,218
|
|
|
172
|
|
||
Restructuring costs(a)
|
2,267
|
|
|
—
|
|
||
Legal settlement (recovery), net of attorney fees
|
—
|
|
|
952
|
|
||
Tax recovery and related interest income
|
—
|
|
|
(3,119
|
)
|
||
Adjusted EBITDA (numerator for ROIC) (non-GAAP)
|
$
|
146,594
|
|
|
$
|
142,617
|
|
Invested capital calculations
|
Fiscal Year Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Equity – beginning of the year
|
$
|
866,376
|
|
|
$
|
837,145
|
|
Equity – end of the year
|
914,129
|
|
|
866,376
|
|
||
Change in fair value of contingent consideration, net of tax
|
11,294
|
|
|
24,697
|
|
||
Acquisition costs(b)
|
1,218
|
|
|
172
|
|
||
Restructuring costs(a)
|
1,631
|
|
|
—
|
|
||
Legal settlement (recovery), net of attorney fees, net of tax
|
—
|
|
|
771
|
|
||
Tax recovery, net and related interest income, net of tax
|
(387
|
)
|
|
(2,058
|
)
|
||
Tax reform charges
|
—
|
|
|
9,034
|
|
||
Average equity, adjusted
|
897,131
|
|
|
868,069
|
|
||
Average funded debt(c)
|
329,473
|
|
|
276,233
|
|
||
Invested capital (denominator)
|
$
|
1,226,604
|
|
|
$
|
1,144,302
|
|
|
|
|
|
•
|
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, 2019
|
|
June 30, 2018
|
||||
|
(in thousands)
|
||||||
Operating activities
|
$
|
(27,127
|
)
|
|
$
|
24,805
|
|
Investing activities
|
(39,376
|
)
|
|
(151,927
|
)
|
||
Financing activities
|
64,233
|
|
|
100,574
|
|
||
Effect of exchange rate change on cash and cash equivalents
|
558
|
|
|
(4,016
|
)
|
||
Decrease in cash and cash equivalents
|
$
|
(1,712
|
)
|
|
$
|
(30,564
|
)
|
|
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)
|
$
|
41,257
|
|
|
$
|
8,043
|
|
|
$
|
13,137
|
|
|
$
|
9,297
|
|
|
$
|
10,780
|
|
Capital lease
|
675
|
|
|
675
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Overdraft facility
|
4,590
|
|
|
4,590
|
|
|
|
|
|
|
|
||||||||
Principal debt payments
|
155,099
|
|
|
4,085
|
|
|
15,681
|
|
|
131,950
|
|
|
3,383
|
|
|||||
Revolving credit facility
|
200,817
|
|
|
—
|
|
|
—
|
|
|
200,817
|
|
|
—
|
|
|||||
Contingent consideration(2)
|
77,925
|
|
|
37,933
|
|
|
39,534
|
|
|
—
|
|
|
—
|
|
|||||
Other(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total obligations
|
$
|
480,363
|
|
|
$
|
55,326
|
|
|
$
|
68,352
|
|
|
$
|
342,064
|
|
|
$
|
14,163
|
|
(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 Intelisys earnout payments are presented at their discounted fair value. Estimated future, undiscounted earnout payments for Intelisys could range as high as $85.1 million as of June 30, 2019.
|
(3)
|
Amounts totaling $25.8 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, 2019, 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
|
|
/s/ Grant Thornton
|
|
June 30,
2019 |
|
June 30,
2018 |
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
23,818
|
|
|
$
|
25,530
|
|
Accounts receivable, less allowance of $38,849 at June 30, 2019
and $45,561 at June 30, 2018
|
654,983
|
|
|
646,086
|
|
||
Inventories
|
697,343
|
|
|
595,948
|
|
||
Prepaid expenses and other current assets
|
101,171
|
|
|
94,598
|
|
||
Total current assets
|
1,477,315
|
|
|
1,362,162
|
|
||
Property and equipment, net
|
63,363
|
|
|
73,042
|
|
||
Goodwill
|
319,538
|
|
|
298,174
|
|
||
Identifiable intangible assets, net
|
127,939
|
|
|
136,806
|
|
||
Deferred income taxes
|
24,724
|
|
|
22,199
|
|
||
Other non-current assets
|
54,382
|
|
|
52,912
|
|
||
Total assets
|
$
|
2,067,261
|
|
|
$
|
1,945,295
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
558,101
|
|
|
$
|
562,564
|
|
Accrued expenses and other current liabilities
|
91,407
|
|
|
90,873
|
|
||
Current portion of contingent consideration
|
38,393
|
|
|
42,975
|
|
||
Income taxes payable
|
4,310
|
|
|
13,348
|
|
||
Short-term borrowings
|
4,590
|
|
|
—
|
|
||
Current portion of long-term debt
|
4,085
|
|
|
551
|
|
||
Total current liabilities
|
700,886
|
|
|
710,311
|
|
||
Deferred income taxes
|
1,395
|
|
|
1,769
|
|
||
Long-term debt, net of current portion
|
151,014
|
|
|
4,878
|
|
||
Borrowings under revolving credit facility
|
200,817
|
|
|
244,000
|
|
||
Long-term portion of contingent consideration
|
39,532
|
|
|
65,258
|
|
||
Other long-term liabilities
|
59,488
|
|
|
52,703
|
|
||
Total liabilities
|
1,153,132
|
|
|
1,078,919
|
|
||
Commitments and contingencies
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
||||
Preferred stock, no par value; 3,000,000 shares authorized, none issued
|
—
|
|
|
—
|
|
||
Common stock, no par value; 45,000,000 shares authorized, 25,408,397 and 25,593,122 shares issued and outstanding at June 30, 2019 and June 30, 2018, respectively
|
64,287
|
|
|
68,220
|
|
||
Retained earnings
|
939,930
|
|
|
882,333
|
|
||
Accumulated other comprehensive loss
|
(90,088
|
)
|
|
(84,177
|
)
|
||
Total shareholders’ equity
|
914,129
|
|
|
866,376
|
|
||
Total liabilities and shareholders’ equity
|
$
|
2,067,261
|
|
|
$
|
1,945,295
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Net sales
|
$
|
3,873,111
|
|
|
$
|
3,846,260
|
|
|
$
|
3,568,186
|
|
Cost of goods sold
|
3,420,539
|
|
|
3,410,135
|
|
|
3,184,590
|
|
|||
Gross profit
|
452,572
|
|
|
436,125
|
|
|
383,596
|
|
|||
Selling, general and administrative expenses
|
314,521
|
|
|
297,475
|
|
|
265,178
|
|
|||
Depreciation expense
|
13,155
|
|
|
13,311
|
|
|
9,444
|
|
|||
Intangible amortization expense
|
19,732
|
|
|
20,657
|
|
|
15,524
|
|
|||
Change in fair value of contingent consideration
|
15,200
|
|
|
37,043
|
|
|
5,211
|
|
|||
Operating income
|
89,964
|
|
|
67,639
|
|
|
88,239
|
|
|||
Interest expense
|
13,382
|
|
|
9,149
|
|
|
3,215
|
|
|||
Interest income
|
(1,843
|
)
|
|
(3,713
|
)
|
|
(5,329
|
)
|
|||
Other (income) expense, net
|
517
|
|
|
1,278
|
|
|
(11,142
|
)
|
|||
Income before income taxes
|
77,908
|
|
|
60,925
|
|
|
101,495
|
|
|||
Provision for income taxes
|
20,311
|
|
|
27,772
|
|
|
32,249
|
|
|||
Net income
|
$
|
57,597
|
|
|
$
|
33,153
|
|
|
$
|
69,246
|
|
Per share data:
|
|
|
|
|
|
||||||
Net income per common share, basic
|
$
|
2.25
|
|
|
$
|
1.30
|
|
|
$
|
2.74
|
|
Weighted-average shares outstanding, basic
|
25,642
|
|
|
25,522
|
|
|
25,318
|
|
|||
Net income per common share, diluted
|
$
|
2.24
|
|
|
$
|
1.29
|
|
|
$
|
2.71
|
|
Weighted-average shares outstanding, diluted
|
25,734
|
|
|
25,624
|
|
|
25,515
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Net income
|
$
|
57,597
|
|
|
$
|
33,153
|
|
|
$
|
69,246
|
|
Unrealized (loss) gain on hedged transaction, net of tax
|
(3,277
|
)
|
|
1,089
|
|
|
13
|
|
|||
Foreign currency translation adjustment
|
(2,634
|
)
|
|
(12,062
|
)
|
|
(530
|
)
|
|||
Comprehensive income
|
$
|
51,686
|
|
|
$
|
22,180
|
|
|
$
|
68,729
|
|
|
|
|
|
|
|
||||||
See accompanying notes to these consolidated financial statements.
|
|
|
|||||||||
|
|
|
|
|
|
|
Common
Stock
(Shares)
|
|
Common
Stock
(Amount)
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Total
|
|||||||||
Balance at June 30, 2016
|
25,614,673
|
|
|
$
|
67,249
|
|
|
$
|
779,934
|
|
|
$
|
(72,687
|
)
|
|
$
|
774,496
|
|
Net income
|
—
|
|
|
—
|
|
|
69,246
|
|
|
—
|
|
|
69,246
|
|
||||
Unrealized gain on hedged transaction, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
13
|
|
||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
(530
|
)
|
|
(530
|
)
|
||||
Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes
|
394,815
|
|
|
8,208
|
|
|
—
|
|
|
—
|
|
|
8,208
|
|
||||
Common stock repurchased
|
(577,643)
|
|
|
(20,335
|
)
|
|
|
|
|
|
(20,335
|
)
|
||||||
Share based compensation
|
—
|
|
|
6,578
|
|
|
—
|
|
|
—
|
|
|
6,578
|
|
||||
Tax shortfall from exercise or vesting of share-based payment arrangements
|
—
|
|
|
(531
|
)
|
|
—
|
|
|
—
|
|
|
(531
|
)
|
||||
Balance at June 30, 2017
|
25,431,845
|
|
|
61,169
|
|
|
849,180
|
|
|
(73,204
|
)
|
|
837,145
|
|
||||
Net income
|
—
|
|
|
—
|
|
|
33,153
|
|
|
—
|
|
|
33,153
|
|
||||
Unrealized gain on hedged transaction, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
1,089
|
|
|
1,089
|
|
||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,062
|
)
|
|
(12,062
|
)
|
||||
Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes
|
161,277
|
|
|
636
|
|
|
—
|
|
|
—
|
|
|
636
|
|
||||
Common stock repurchased
|
—
|
|
|
—
|
|
|
|
|
|
|
—
|
|
||||||
Share based compensation
|
—
|
|
|
6,415
|
|
|
—
|
|
|
—
|
|
|
6,415
|
|
||||
Balance at June 30, 2018
|
25,593,122
|
|
|
68,220
|
|
|
882,333
|
|
|
(84,177
|
)
|
|
866,376
|
|
||||
Net income
|
—
|
|
|
—
|
|
|
57,597
|
|
|
—
|
|
|
57,597
|
|
||||
Unrealized loss on hedged transaction, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,277
|
)
|
|
(3,277
|
)
|
||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,634
|
)
|
|
(2,634
|
)
|
||||
Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes
|
139,107
|
|
|
103
|
|
|
—
|
|
|
—
|
|
|
103
|
|
||||
Common stock repurchased
|
(323,832)
|
|
|
(10,129
|
)
|
|
—
|
|
|
—
|
|
|
(10,129
|
)
|
||||
Share based compensation
|
—
|
|
|
6,093
|
|
|
—
|
|
|
—
|
|
|
6,093
|
|
||||
Balance at June 30, 2019
|
25,408,397
|
|
|
$
|
64,287
|
|
|
$
|
939,930
|
|
|
$
|
(90,088
|
)
|
|
$
|
914,129
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
57,597
|
|
|
$
|
33,153
|
|
|
$
|
69,246
|
|
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
36,618
|
|
|
37,495
|
|
|
24,968
|
|
|||
Amortization of debt issue costs
|
350
|
|
|
326
|
|
|
290
|
|
|||
Provision for doubtful accounts
|
2,282
|
|
|
7,075
|
|
|
8,901
|
|
|||
Share-based compensation
|
6,122
|
|
|
6,459
|
|
|
6,602
|
|
|||
Deferred income taxes
|
(2,900
|
)
|
|
(22,286
|
)
|
|
(1,861
|
)
|
|||
Excess tax benefits from share-based payment arrangements
|
—
|
|
|
—
|
|
|
(89
|
)
|
|||
Change in fair value of contingent consideration
|
15,200
|
|
|
37,043
|
|
|
5,211
|
|
|||
Contingent consideration payments excess
|
(10,190
|
)
|
|
(3,066
|
)
|
|
—
|
|
|||
Changes in operating assets and liabilities, net of acquisitions:
|
|
|
|
|
|
||||||
Accounts receivable
|
(12,598
|
)
|
|
(38,268
|
)
|
|
(62,731
|
)
|
|||
Inventories
|
(104,594
|
)
|
|
(59,498
|
)
|
|
28,449
|
|
|||
Prepaid expenses and other assets
|
(5,203
|
)
|
|
(14,864
|
)
|
|
(7,698
|
)
|
|||
Other noncurrent assets
|
(678
|
)
|
|
(6,361
|
)
|
|
(9,540
|
)
|
|||
Accounts payable
|
(2,730
|
)
|
|
44,464
|
|
|
19,861
|
|
|||
Accrued expenses and other liabilities
|
2,703
|
|
|
(11,540
|
)
|
|
8,491
|
|
|||
Income taxes payable
|
(9,106
|
)
|
|
14,673
|
|
|
4,776
|
|
|||
Net cash (used in) provided by operating activities
|
(27,127
|
)
|
|
24,805
|
|
|
94,876
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Capital expenditures
|
(7,215
|
)
|
|
(8,159
|
)
|
|
(8,849
|
)
|
|||
Cash paid for business acquisitions, net of cash acquired
|
(32,161
|
)
|
|
(143,768
|
)
|
|
(83,804
|
)
|
|||
Payments for acquisition of intangible assets
|
—
|
|
|
—
|
|
|
(3,583
|
)
|
|||
Net cash used in investing activities
|
(39,376
|
)
|
|
(151,927
|
)
|
|
(96,236
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Short-term borrowings, net
|
4,558
|
|
|
—
|
|
|
—
|
|
|||
Borrowings on revolving credit, net of expenses
|
2,072,279
|
|
|
2,301,443
|
|
|
1,813,062
|
|
|||
Repayments on revolving credit, net of expenses
|
(2,115,530
|
)
|
|
(2,149,659
|
)
|
|
(1,792,620
|
)
|
|||
Borrowings on long-term debt, net
|
149,670
|
|
|
—
|
|
|
—
|
|
|||
Repayments of capital lease obligations
|
(662
|
)
|
|
(591
|
)
|
|
(246
|
)
|
|||
Debt issuance costs
|
(1,096
|
)
|
|
(296
|
)
|
|
(876
|
)
|
|||
Contingent consideration payments
|
(35,606
|
)
|
|
(50,959
|
)
|
|
(10,241
|
)
|
|||
Exercise of stock options
|
1,509
|
|
|
2,273
|
|
|
9,969
|
|
|||
Taxes paid on settlement of equity awards
|
(1,406
|
)
|
|
(1,637
|
)
|
|
(1,761
|
)
|
|||
Repurchase of common stock
|
(9,483
|
)
|
|
—
|
|
|
(20,882
|
)
|
|||
Excess tax benefits from share-based payment arrangements
|
—
|
|
|
—
|
|
|
89
|
|
|||
Net cash provided by (used in) financing activities
|
64,233
|
|
|
100,574
|
|
|
(3,506
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
558
|
|
|
(4,016
|
)
|
|
(440
|
)
|
|||
Decrease in cash and cash equivalents
|
(1,712
|
)
|
|
(30,564
|
)
|
|
(5,306
|
)
|
|||
Cash and cash equivalents at beginning of period
|
25,530
|
|
|
56,094
|
|
|
61,400
|
|
|||
Cash and cash equivalents at end of period
|
$
|
23,818
|
|
|
$
|
25,530
|
|
|
$
|
56,094
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
(continued)
|
||||||||||
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
||||||
Interest paid during the year
|
$
|
13,078
|
|
|
$
|
8,544
|
|
|
$
|
2,831
|
|
Income taxes paid during the year
|
$
|
33,061
|
|
|
$
|
38,330
|
|
|
$
|
31,126
|
|
(1)
|
Business and Summary of Significant Accounting Policies
|
•
|
Industry weighted-average cost of capital ("WACC"): The Company 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 participant in each respective geography.
|
•
|
Operating income: The Company 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.
|
•
|
Other cash flow adjustments: The Company utilized a projected cash flow impact pertaining to depreciation, capital expenditures and expected changes in working capital as each of its goodwill reporting units grow.
|
•
|
Incremental costs of obtaining a contract - These costs are included in selling, general and administrative expenses as the amortization period is generally one year or less. The Company expenses costs associated with obtaining and fulfilling contracts as incurred.
|
•
|
Shipping costs - The Company accounts for certain shipping and handling activities as fulfillment costs and expenses them as incurred.
|
•
|
Significant financing components - The Company has elected not to adjust the promised amount of consideration for the effects of a significant financing component as the Company expects, at contract inception, that the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service will generally be one year or less.
|
•
|
Sales tax and other related taxes - Sales and other tax amounts collected from customers for remittance to governmental authorities are excluded from revenue.
|
|
|
Fiscal year ended June 30, 2019
|
||||||||||
|
|
|
|
(in thousands)
|
|
|
||||||
|
|
Worldwide Barcode, Networking & Security Segment
|
|
Worldwide Communications & Services Segment
|
|
Total
|
||||||
Revenue by product/service:
|
|
|
|
|
|
|
||||||
Technology solutions
|
|
$
|
2,589,837
|
|
|
$
|
1,228,017
|
|
|
$
|
3,817,854
|
|
Master agency and professional services
|
|
—
|
|
|
55,257
|
|
|
55,257
|
|
|||
|
|
$
|
2,589,837
|
|
|
$
|
1,283,274
|
|
|
$
|
3,873,111
|
|
|
|
Fiscal year ended June 30, 2018
|
||||||||||
|
|
|
|
(in thousands)
|
|
|
||||||
|
|
Worldwide Barcode, Networking & Security Segment
|
|
Worldwide Communications & Services Segment
|
|
Total
|
||||||
Revenue by product/service:
|
|
|
|
|
|
|
||||||
Technology solutions
|
|
$
|
2,628,988
|
|
|
$
|
1,174,960
|
|
|
$
|
3,803,948
|
|
Master agency and professional services
|
|
—
|
|
|
42,312
|
|
|
42,312
|
|
|||
|
|
$
|
2,628,988
|
|
|
$
|
1,217,272
|
|
|
$
|
3,846,260
|
|
|
|
Fiscal year ended June 30, 2017
|
||||||||||
|
|
|
|
(in thousands)
|
|
|
||||||
|
|
Worldwide Barcode, Networking & Security Segment
|
|
Worldwide Communications & Services Segment
|
|
Total
|
||||||
Revenue by product/service:
|
|
|
|
|
|
|
||||||
Technology solutions
|
|
$
|
2,389,256
|
|
|
$
|
1,149,508
|
|
|
$
|
3,538,764
|
|
Master agency and professional services
|
|
—
|
|
|
29,422
|
|
|
29,422
|
|
|||
|
|
$
|
2,389,256
|
|
|
$
|
1,178,930
|
|
|
$
|
3,568,186
|
|
|
Fiscal year ended June 30,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands, except per share data)
|
||||||||||
Numerator:
|
|
|
|
|
|
||||||
Net income
|
$
|
57,597
|
|
|
$
|
33,153
|
|
|
$
|
69,246
|
|
|
|
|
|
|
|
||||||
Denominator:
|
|
|
|
|
|
|
|
||||
Weighted-average shares, basic
|
25,642
|
|
25,522
|
|
|
25,318
|
|
||||
Dilutive effect of share-based payments
|
92
|
|
|
102
|
|
|
197
|
|
|||
Weighted-average shares, diluted
|
25,734
|
|
25,624
|
|
|
25,515
|
|
||||
|
|
|
|
|
|
|
|
||||
Net income per common share, basic
|
$
|
2.25
|
|
|
$
|
1.30
|
|
|
$
|
2.74
|
|
Net income per common share, diluted
|
$
|
2.24
|
|
|
$
|
1.29
|
|
|
$
|
2.71
|
|
|
June 30,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Land
|
$
|
3,331
|
|
|
$
|
3,331
|
|
Buildings and leasehold improvements
|
21,603
|
|
|
21,384
|
|
||
Computer software and equipment
|
70,357
|
|
|
74,220
|
|
||
Furniture, fixtures and equipment
|
26,676
|
|
|
27,077
|
|
||
Construction in progress
|
2,751
|
|
|
1,584
|
|
||
Rental equipment
|
12,056
|
|
|
13,817
|
|
||
|
136,774
|
|
|
141,413
|
|
||
Less accumulated depreciation
|
(73,411
|
)
|
|
(68,371
|
)
|
||
|
$
|
63,363
|
|
|
$
|
73,042
|
|
|
June 30,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Other receivables
|
$
|
63,699
|
|
|
$
|
60,802
|
|
Foreign currency receivable
|
165
|
|
|
157
|
|
||
Prepaid expense
|
12,845
|
|
|
6,004
|
|
||
Other taxes receivable
|
10,005
|
|
|
6,333
|
|
||
Other current assets
|
14,457
|
|
|
21,302
|
|
||
|
$
|
101,171
|
|
|
$
|
94,598
|
|
|
June 30,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Deferred warranty revenue
|
$
|
16,835
|
|
|
$
|
20,483
|
|
Accrued compensation
|
17,703
|
|
|
21,762
|
|
||
Other taxes payable
|
23,719
|
|
|
18,573
|
|
||
Accrued marketing expense
|
4,247
|
|
|
4,457
|
|
||
Brazilian pre-acquisition contingencies
|
761
|
|
|
1,385
|
|
||
Accrued freight
|
4,071
|
|
|
3,848
|
|
||
Other accrued liabilities
|
24,071
|
|
|
20,365
|
|
||
|
$
|
91,407
|
|
|
$
|
90,873
|
|
|
June 30,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Long-term deferred warranty revenue
|
$
|
7,034
|
|
|
$
|
7,235
|
|
Long-term deferred compensation liability
|
24,224
|
|
|
21,757
|
|
||
Interest rate swap
|
3,504
|
|
|
—
|
|
||
Long-term income taxes payable
|
7,376
|
|
|
8,264
|
|
||
Other long-term liabilities
|
17,350
|
|
|
15,447
|
|
||
|
$
|
59,488
|
|
|
$
|
52,703
|
|
|
POS Portal
|
||
|
(in thousands)
|
||
Receivables
|
$
|
8,914
|
|
Inventory
|
8,352
|
|
|
Other current assets
|
917
|
|
|
Property and equipment, net
|
24,963
|
|
|
Goodwill
|
101,198
|
|
|
Identifiable intangible assets
|
57,000
|
|
|
Other non-current assets
|
100
|
|
|
|
$
|
201,444
|
|
|
|
||
Accounts payable
|
$
|
10,897
|
|
Accrued expenses and other current liabilities
|
5,130
|
|
|
Contingent consideration
|
13,098
|
|
|
Other long-term liabilities
|
102
|
|
|
Long-term deferred taxes payable
|
28,449
|
|
|
Consideration transferred, net of cash acquired
|
143,768
|
|
|
|
$
|
201,444
|
|
(7)
|
Goodwill and Other Identifiable Intangible Assets
|
|
Worldwide Barcode, Networking & Security Segment
|
|
Worldwide Communications & Services Segment
|
|
Total
|
||||||
|
(in thousands)
|
||||||||||
Balance at June 30, 2017
|
$
|
36,260
|
|
|
$
|
164,621
|
|
|
$
|
200,881
|
|
Additions
|
101,198
|
|
|
—
|
|
|
101,198
|
|
|||
Unrealized loss on foreign currency translation
|
(244
|
)
|
|
(3,661
|
)
|
|
(3,905
|
)
|
|||
Balance at June 30, 2018
|
$
|
137,214
|
|
|
$
|
160,960
|
|
|
$
|
298,174
|
|
Additions
|
—
|
|
|
21,854
|
|
|
21,854
|
|
|||
Unrealized loss on foreign currency translation
|
(137
|
)
|
|
(353
|
)
|
|
(490
|
)
|
|||
Balance at June 30, 2019
|
$
|
137,077
|
|
|
$
|
182,461
|
|
|
$
|
319,538
|
|
|
June 30, 2019
|
|
June 30, 2018
|
||||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Book
Value
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Book
Value
|
||||||||||||
|
(in thousands)
|
||||||||||||||||||||||
Amortized intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Customer relationships
|
$
|
143,541
|
|
|
$
|
51,823
|
|
|
$
|
91,718
|
|
|
$
|
139,479
|
|
|
$
|
40,337
|
|
|
$
|
99,142
|
|
Trade names
|
23,831
|
|
|
11,320
|
|
|
12,511
|
|
|
27,123
|
|
|
12,224
|
|
|
14,899
|
|
||||||
Non-compete agreements
|
3,094
|
|
|
1,714
|
|
|
1,380
|
|
|
3,064
|
|
|
1,221
|
|
|
1,843
|
|
||||||
Distributor agreements
|
354
|
|
|
210
|
|
|
144
|
|
|
363
|
|
|
188
|
|
|
175
|
|
||||||
Supplier partner program
|
3,583
|
|
|
815
|
|
|
2,768
|
|
|
3,583
|
|
|
456
|
|
|
3,127
|
|
||||||
Encryption key library
|
19,900
|
|
|
4,768
|
|
|
15,132
|
|
|
19,900
|
|
|
2,280
|
|
|
17,620
|
|
||||||
Developed technology
|
4,512
|
|
|
226
|
|
|
4,286
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total intangibles
|
$
|
198,815
|
|
|
$
|
70,876
|
|
|
$
|
127,939
|
|
|
$
|
193,512
|
|
|
$
|
56,706
|
|
|
$
|
136,806
|
|
|
Amortization
Expense
|
||
|
(in thousands)
|
||
Year Ended June 30,
|
|
||
2020
|
$
|
19,075
|
|
2021
|
19,489
|
|
|
2022
|
17,698
|
|
|
2023
|
16,588
|
|
|
2024
|
16,443
|
|
|
Thereafter
|
38,646
|
|
|
Total
|
$
|
127,939
|
|
(8)
|
Short-Term Borrowings and Long-Term Debt
|
|
June 30,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Short-term borrowings
|
$
|
4,590
|
|
|
$
|
—
|
|
Current portion of long-term debt
|
4,085
|
|
|
551
|
|
||
Mississippi revenue bond, net of current portion
|
4,764
|
|
|
4,878
|
|
||
Senior secured term loan facility, net of current portion
|
146,250
|
|
|
—
|
|
||
Borrowings under revolving credit facility
|
200,817
|
|
|
244,000
|
|
||
Total debt
|
$
|
360,506
|
|
|
$
|
249,429
|
|
|
Revolving Credit Facility
|
|
Term Loan Facility
|
|
Mississippi Bond
|
|
Bank Overdraft Facility
|
||||||||
|
(in thousands)
|
|
|
||||||||||||
Fiscal year:
|
|
|
|
|
|
|
|
||||||||
2020
|
$
|
—
|
|
|
$
|
3,750
|
|
|
$
|
335
|
|
|
$
|
4,590
|
|
2021
|
—
|
|
|
7,500
|
|
|
338
|
|
|
—
|
|
||||
2022
|
—
|
|
|
7,500
|
|
|
343
|
|
|
—
|
|
||||
2023
|
—
|
|
|
11,250
|
|
|
348
|
|
|
—
|
|
||||
2024
|
200,817
|
|
|
120,000
|
|
|
352
|
|
|
—
|
|
||||
Thereafter
|
—
|
|
|
—
|
|
|
3,383
|
|
|
—
|
|
||||
Total principal payments
|
$
|
200,817
|
|
|
$
|
150,000
|
|
|
$
|
5,099
|
|
|
$
|
4,590
|
|
|
Fiscal year ended June 30,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Net foreign exchange derivative contract loss (gain)
|
$
|
(558
|
)
|
|
$
|
386
|
|
|
$
|
146
|
|
Net foreign currency transactional and re-measurement loss
|
1,714
|
|
|
1,710
|
|
|
1,773
|
|
|||
Net foreign currency loss
|
$
|
1,156
|
|
|
$
|
2,096
|
|
|
$
|
1,919
|
|
|
Fiscal Year Ended June 30,
|
||||||||
|
2019
|
2018
|
2017
|
||||||
|
(in thousands)
|
||||||||
Net interest (income) expense recognized as a result of interest rate swap
|
$
|
(233
|
)
|
$
|
161
|
|
$
|
7
|
|
Unrealized (loss) gain in fair value of interest swap rates
|
(4,159
|
)
|
1,422
|
|
14
|
|
|||
Net increase in accumulated other comprehensive (loss) income
|
(4,392
|
)
|
1,583
|
|
21
|
|
|||
Income tax effect
|
(1,115
|
)
|
494
|
|
8
|
|
|||
Net increase in accumulated other comprehensive (loss) income, net of tax
|
$
|
(3,277
|
)
|
$
|
1,089
|
|
$
|
13
|
|
|
June 30, 2018
|
||||||||
|
Balance Sheet Location
|
|
Fair Value of Derivatives
Designated as Hedge
Instruments
|
|
Fair Value of Derivatives
Not Designated as Hedge
Instruments
|
||||
|
|
|
(in thousands)
|
||||||
Derivative assets:
|
|
|
|
|
|
||||
Foreign exchange contracts
|
Prepaid expenses and other current assets
|
|
$
|
—
|
|
|
$
|
157
|
|
Interest rate swap agreement
|
Other current assets
|
|
$
|
1,604
|
|
|
$
|
—
|
|
Derivative liabilities:
|
|
|
|
|
|
||||
Foreign exchange contracts
|
Accrued expenses and other current liabilities
|
|
$
|
—
|
|
|
$
|
156
|
|
•
|
Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
|
•
|
Level 2 – Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability;
|
•
|
Level 3 – Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported by little or no market activity).
|
|
Total
|
|
Quoted
prices in
active
markets
(Level 1)
|
|
Significant
other
observable
inputs
(Level 2)
|
|
Significant
unobservable
inputs
(Level 3)
|
||||||||
|
(in thousands)
|
||||||||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Deferred compensation plan investments, current and non-current portion
|
$
|
25,787
|
|
|
$
|
25,787
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Forward foreign currency exchange contracts
|
168
|
|
|
—
|
|
|
168
|
|
|
—
|
|
||||
Total assets at fair value
|
$
|
25,955
|
|
|
$
|
25,787
|
|
|
$
|
168
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Deferred compensation plan investments, current and non-current portion
|
$
|
25,787
|
|
|
$
|
25,787
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Forward foreign currency exchange contracts
|
165
|
|
|
—
|
|
|
165
|
|
|
—
|
|
||||
Interest rate swap agreement
|
3,504
|
|
|
—
|
|
|
3,504
|
|
|
—
|
|
||||
Liability for contingent consideration, current and non-current
|
77,925
|
|
|
—
|
|
|
—
|
|
|
77,925
|
|
||||
Total liabilities at fair value
|
$
|
107,381
|
|
|
$
|
25,787
|
|
|
$
|
3,669
|
|
|
$
|
77,925
|
|
|
Total
|
|
Quoted
prices in
active
markets
(Level 1)
|
|
Significant
other
observable
inputs
(Level 2)
|
|
Significant
unobservable
inputs
(Level 3)
|
||||||||
|
(in thousands)
|
||||||||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Deferred compensation plan investments, current and non-current portion
|
$
|
23,352
|
|
|
$
|
23,352
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Forward foreign currency exchange contracts
|
157
|
|
|
—
|
|
|
157
|
|
|
—
|
|
||||
Interest rate swap agreement
|
1,604
|
|
|
—
|
|
|
1,604
|
|
|
—
|
|
||||
Total assets at fair value
|
$
|
25,113
|
|
|
$
|
23,352
|
|
|
$
|
1,761
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Deferred compensation plan investments, current and non-current portion
|
$
|
23,352
|
|
|
$
|
23,352
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Forward foreign currency exchange contracts
|
156
|
|
|
—
|
|
|
156
|
|
|
—
|
|
||||
Liability for contingent consideration, current and non-current
|
108,233
|
|
|
—
|
|
|
—
|
|
|
108,233
|
|
||||
Total liabilities at fair value
|
$
|
131,741
|
|
|
$
|
23,352
|
|
|
$
|
156
|
|
|
$
|
108,233
|
|
|
Contingent Consideration for the Fiscal Year Ended
|
||||||||||
|
June 30, 2019
|
||||||||||
|
Worldwide Barcode, Networking & Security Segment
|
|
Worldwide Communications & Services Segment
|
|
Total
|
||||||
|
(in thousands)
|
||||||||||
Fair value at beginning of period
|
$
|
—
|
|
|
$
|
108,233
|
|
|
$
|
108,233
|
|
Payments
|
—
|
|
|
(45,796
|
)
|
|
(45,796
|
)
|
|||
Change in fair value
|
—
|
|
|
15,200
|
|
|
15,200
|
|
|||
Fluctuation due to foreign currency exchange
|
—
|
|
|
288
|
|
|
288
|
|
|||
Fair value at end of period
|
$
|
—
|
|
|
$
|
77,925
|
|
|
$
|
77,925
|
|
|
Contingent Consideration for the Fiscal Year Ended
|
||||||||||
|
June 30, 2018
|
||||||||||
|
Worldwide Barcode, Networking & Security Segment
|
|
Worldwide Communications & Services Segment
|
|
Total
|
||||||
|
(in thousands)
|
||||||||||
Fair value at beginning of period
|
$
|
—
|
|
|
$
|
114,036
|
|
|
$
|
114,036
|
|
Issuance of contingent consideration
|
13,098
|
|
|
—
|
|
|
13,098
|
|
|||
Payments
|
(13,167
|
)
|
|
(40,858
|
)
|
|
(54,025
|
)
|
|||
Adjustments to contingent consideration (1)
|
—
|
|
|
(779
|
)
|
|
(779
|
)
|
|||
Change in fair value
|
69
|
|
|
36,974
|
|
|
37,043
|
|
|||
Fluctuation due to foreign currency exchange
|
—
|
|
|
(1,140
|
)
|
|
(1,140
|
)
|
|||
Fair value at end of period
|
$
|
—
|
|
|
$
|
108,233
|
|
|
$
|
108,233
|
|
•
|
estimated future results, net of pro forma adjustments set forth in the purchase agreements;
|
•
|
the probability of achieving these results; and
|
•
|
a discount rate reflective of the Company's creditworthiness and market risk premium associated with the United States market.
|
Reporting Period
|
|
Valuation Technique
|
|
Significant Unobservable Inputs
|
|
Weighted Average Rates
|
|
June 30, 2019
|
|
Discounted cash flow
|
|
Weighted average cost of capital
|
|
14.2
|
%
|
|
|
|
|
Adjusted EBITDA growth rate
|
|
21.5
|
%
|
|
|
|
|
|
|
|
|
June 30, 2018
|
|
Discounted cash flow
|
|
Weighted average cost of capital
|
|
14.8
|
%
|
|
|
|
|
Adjusted EBITDA growth rate
|
|
18.2
|
%
|
|
Contingent Consideration
|
||
|
(in thousands)
|
||
Fiscal year:
|
|
||
2020
|
$
|
38,393
|
|
2021
|
39,532
|
|
|
Total contingent consideration payments
|
$
|
77,925
|
|
|
Fiscal Year Ended June 30,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Share-based compensation related to:
|
|
|
|
|
|
||||||
Equity classified stock options
|
$
|
868
|
|
|
$
|
1,184
|
|
|
$
|
1,356
|
|
Equity classified restricted stock
|
5,254
|
|
|
5,275
|
|
|
5,246
|
|
|||
Total share-based compensation
|
$
|
6,122
|
|
|
$
|
6,459
|
|
|
$
|
6,602
|
|
|
Fiscal Year Ended June 30,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Expected term
|
4 years
|
|
|
5 years
|
|
|
5 years
|
|
|||
Expected volatility
|
32.93
|
%
|
|
30.70
|
%
|
|
30.88
|
%
|
|||
Risk-free interest rate
|
2.84
|
%
|
|
2.17
|
%
|
|
1.84
|
%
|
|||
Dividend yield
|
0.00
|
%
|
|
0.00
|
%
|
|
0.00
|
%
|
|||
Weighted-average fair value per option
|
$
|
11.86
|
|
|
$
|
10.60
|
|
|
$
|
11.26
|
|
|
Fiscal Year Ended June 30, 2019
|
|||||||||||
|
Options
|
|
Weighted-
Average
Exercise
Price
|
|
Weighted-
Average
Remaining
Contractual
Life
|
|
Aggregate
Intrinsic
Value
|
|||||
Outstanding, beginning of year
|
897,120
|
|
|
$
|
37.33
|
|
|
|
|
|
||
Granted during the period
|
2,110
|
|
|
39.35
|
|
|
|
|
|
|||
Exercised during the period
|
(43,975
|
)
|
|
33.21
|
|
|
|
|
|
|||
Canceled, forfeited, or expired during the period
|
(4,560
|
)
|
|
34.35
|
|
|
|
|
|
|||
Outstanding, end of year
|
850,695
|
|
|
37.57
|
|
|
5.05
|
|
$
|
259,658
|
|
|
Vested and expected to vest at June 30, 2019
|
850,220
|
|
|
37.57
|
|
|
5.05
|
|
$
|
259,467
|
|
|
Exercisable, end of year
|
748,263
|
|
|
$
|
37.91
|
|
|
4.61
|
|
$
|
257,612
|
|
|
Fiscal Year Ended June 30, 2019
|
|||||||||
|
Options
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Grant
Date Fair-
Value
|
|||||
Unvested, beginning of year
|
211,566
|
|
|
$
|
35.69
|
|
|
$
|
10.54
|
|
Granted
|
2,110
|
|
|
39.35
|
|
|
11.86
|
|
||
Vested
|
(106,684
|
)
|
|
36.45
|
|
|
10.33
|
|
||
Canceled or forfeited
|
(4,560
|
)
|
|
34.35
|
|
|
10.62
|
|
||
Unvested, end of year
|
102,432
|
|
|
$
|
35.03
|
|
|
$
|
10.78
|
|
|
|
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
|
||||||
$22.27 - $26.38
|
|
25,000
|
|
|
0.43
|
|
24.57
|
|
|
25,000
|
|
|
24.57
|
|
||
$26.38 - $30.49
|
|
19,731
|
|
|
3.44
|
|
29.80
|
|
|
19,731
|
|
|
29.80
|
|
||
$30.49 - $34.60
|
|
153,236
|
|
|
6.90
|
|
34.17
|
|
|
80,251
|
|
|
34.18
|
|
||
$34.60 - $38.71
|
|
371,169
|
|
|
4.67
|
|
37.04
|
|
|
343,832
|
|
|
37.04
|
|
||
$38.71 - $42.82
|
|
281,559
|
|
|
5.06
|
|
41.81
|
|
|
279,449
|
|
|
41.83
|
|
||
|
|
850,695
|
|
|
5.05
|
|
$
|
37.57
|
|
|
748,263
|
|
|
$
|
37.91
|
|
|
Fiscal Year Ended June 30, 2019
|
|||||||||
|
Shares
granted
|
|
Date granted
|
|
Grant date
fair value
|
|
Vesting period
|
|||
Employees
|
|
|
|
|
|
|
|
|||
Certain employees based on performance
|
127,506
|
|
|
December 3, 2018
|
|
$
|
39.35
|
|
|
Annually over 3 years
|
Certain employees based on performance(1)
|
27,192
|
|
|
January 29, 2019
|
|
$
|
37.27
|
|
|
January 1, 2019 through December 31, 2020
|
Certain employees based on performance(2)
|
35,261
|
|
|
January 29, 2019
|
|
$
|
37.27
|
|
|
January 1, 2019 through December 31, 2021
|
|
|
|
|
|
|
|
|
|||
Non-Employee Directors(3)
|
|
|
|
|
|
|
|
|||
Certain Directors
|
20,400
|
|
|
December 3, 2018
|
|
$
|
39.35
|
|
|
6 months
|
|
Fiscal Year Ended June 30, 2019
|
|||||
|
Shares
|
|
Weighted-Average
Grant Date Fair
Value
|
|||
Outstanding, beginning of year
|
253,519
|
|
|
$
|
35.93
|
|
Granted during the period
|
210,359
|
|
|
38.73
|
|
|
Vested during the period
|
(133,196
|
)
|
|
37.01
|
|
|
Cancelled, forfeited, or expired during the period
|
(9,797
|
)
|
|
37.23
|
|
|
Outstanding, end of year
|
320,885
|
|
|
$
|
37.28
|
|
|
Fiscal Year Ended June 30,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Matching contributions
|
$
|
1,283
|
|
|
$
|
1,163
|
|
|
$
|
875
|
|
Discretionary contributions
|
1,555
|
|
|
4,700
|
|
|
3,413
|
|
|||
Total contributions
|
$
|
2,838
|
|
|
$
|
5,863
|
|
|
$
|
4,288
|
|
|
Fiscal Year Ended June 30,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
17,742
|
|
|
$
|
38,263
|
|
|
$
|
31,149
|
|
State
|
4,404
|
|
|
3,503
|
|
|
2,615
|
|
|||
Foreign
|
(157
|
)
|
|
9,203
|
|
|
269
|
|
|||
Total current
|
21,989
|
|
|
50,969
|
|
|
34,033
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
(4,328
|
)
|
|
(9,987
|
)
|
|
(3,832
|
)
|
|||
State
|
(806
|
)
|
|
(1,962
|
)
|
|
(397
|
)
|
|||
Foreign
|
3,456
|
|
|
(11,248
|
)
|
|
2,445
|
|
|||
Total deferred
|
(1,678
|
)
|
|
(23,197
|
)
|
|
(1,784
|
)
|
|||
Provision for income taxes
|
$
|
20,311
|
|
|
$
|
27,772
|
|
|
$
|
32,249
|
|
|
Fiscal Year Ended June 30,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
U.S. statutory rate
|
21.0
|
%
|
|
28.0
|
%
|
|
35.0
|
%
|
|||
U.S. Federal income tax at statutory rate
|
$
|
16,361
|
|
|
$
|
17,094
|
|
|
$
|
35,524
|
|
Increase (decrease) in income taxes due to:
|
|
|
|
|
|
||||||
State and local income taxes, net of Federal benefit
|
2,727
|
|
|
1,883
|
|
|
1,729
|
|
|||
Tax credits
|
(1,808
|
)
|
|
(1,825
|
)
|
|
(1,430
|
)
|
|||
Valuation allowance
|
2,142
|
|
|
1,530
|
|
|
444
|
|
|||
Effect of foreign operations, net
|
2,103
|
|
|
(1,396
|
)
|
|
(1,477
|
)
|
|||
Stock compensation
|
35
|
|
|
1,049
|
|
|
(61
|
)
|
|||
Capitalized acquisition costs
|
69
|
|
|
48
|
|
|
231
|
|
|||
Nontaxable income
|
(828
|
)
|
|
(9
|
)
|
|
(4,437
|
)
|
|||
Disallowed interest
|
1,600
|
|
|
1,888
|
|
|
2,011
|
|
|||
Net favorable recovery
|
(2,670
|
)
|
|
—
|
|
|
—
|
|
|||
Other
|
1,085
|
|
|
(1,438
|
)
|
|
(285
|
)
|
|||
U.S. Tax Reform transition tax
|
(827
|
)
|
|
9,609
|
|
|
—
|
|
|||
U.S. Tax Reform impact of rate change on deferred taxes
|
—
|
|
|
(1,615
|
)
|
|
—
|
|
|||
Belgium Tax Reform impact of rate change on deferred taxes
|
—
|
|
|
1,040
|
|
|
—
|
|
|||
Other jurisdictions impact of rate change on deferred taxes
|
(43
|
)
|
|
(86
|
)
|
|
—
|
|
|||
Global intangible low taxed income (GILTI) tax
|
365
|
|
|
—
|
|
|
—
|
|
|||
Provision for income taxes
|
$
|
20,311
|
|
|
$
|
27,772
|
|
|
$
|
32,249
|
|
|
June 30,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Deferred tax assets derived from:
|
|
|
|
||||
Allowance for accounts receivable
|
$
|
10,681
|
|
|
$
|
12,874
|
|
Inventories
|
4,561
|
|
|
4,060
|
|
||
Nondeductible accrued expenses
|
9,848
|
|
|
7,426
|
|
||
Net operating loss carryforwards
|
6,241
|
|
|
5,350
|
|
||
Tax credits
|
6,530
|
|
|
5,795
|
|
||
Timing of amortization deduction from goodwill
|
6,406
|
|
|
5,756
|
|
||
Deferred compensation
|
6,396
|
|
|
5,696
|
|
||
Stock compensation
|
3,034
|
|
|
2,809
|
|
||
Timing of amortization deduction from intangible assets
|
3,110
|
|
|
2,510
|
|
||
Total deferred tax assets
|
56,807
|
|
|
52,276
|
|
||
Valuation allowance
|
(7,238
|
)
|
|
(5,098
|
)
|
||
Total deferred tax assets, net of allowance
|
49,569
|
|
|
47,178
|
|
||
Deferred tax liabilities derived from:
|
|
|
|
||||
Timing of depreciation and other deductions from building and equipment
|
(6,719
|
)
|
|
(7,468
|
)
|
||
Timing of amortization deduction from goodwill
|
(3,742
|
)
|
|
(1,782
|
)
|
||
Timing of amortization deduction from intangible assets
|
(15,779
|
)
|
|
(17,498
|
)
|
||
Total deferred tax liabilities
|
(26,240
|
)
|
|
(26,748
|
)
|
||
Net deferred tax assets
|
$
|
23,329
|
|
|
$
|
20,430
|
|
|
Fiscal Year Ended June 30,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Domestic
|
$
|
67,426
|
|
|
$
|
66,416
|
|
|
$
|
79,871
|
|
Foreign
|
10,482
|
|
|
(5,491
|
)
|
|
21,624
|
|
|||
Worldwide pretax earnings
|
$
|
77,908
|
|
|
$
|
60,925
|
|
|
$
|
101,495
|
|
|
June 30,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Beginning Balance
|
$
|
2,053
|
|
|
$
|
2,176
|
|
|
$
|
2,148
|
|
Additions based on tax positions related to the current year
|
69
|
|
|
157
|
|
|
174
|
|
|||
Additions for tax positions of prior years
|
—
|
|
|
—
|
|
|
—
|
|
|||
Reduction for tax positions of prior years
|
(888
|
)
|
|
(280
|
)
|
|
(146
|
)
|
|||
Ending Balance
|
$
|
1,234
|
|
|
$
|
2,053
|
|
|
$
|
2,176
|
|
|
Fiscal Year Ended June 30,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Lease expense
|
$
|
9,519
|
|
|
$
|
9,824
|
|
|
$
|
8,703
|
|
|
Operating Lease Payments
|
|
Capital Lease Payments
|
|
Total Payments
|
||||||
|
(in thousands)
|
||||||||||
Fiscal Year Ended June 30,
|
|
|
|
|
|
||||||
2020
|
$
|
8,043
|
|
|
$
|
675
|
|
|
$
|
8,718
|
|
2021
|
7,197
|
|
|
—
|
|
|
7,197
|
|
|||
2022
|
5,940
|
|
|
—
|
|
|
5,940
|
|
|||
2023
|
5,092
|
|
|
—
|
|
|
5,092
|
|
|||
2024
|
4,205
|
|
|
—
|
|
|
4,205
|
|
|||
Thereafter
|
10,780
|
|
|
—
|
|
|
10,780
|
|
|||
Total future minimum lease payments
|
41,257
|
|
|
675
|
|
|
41,932
|
|
|||
Less: amounts representing interest on capital lease
|
—
|
|
|
8
|
|
|
8
|
|
|||
Total future minimum principal lease payments
|
$
|
41,257
|
|
|
$
|
667
|
|
|
$
|
41,924
|
|
|
|
|
|
|
|
|
Capital Lease Obligations
|
||||||||||||||||
|
Property & Equipment
|
|
Accumulated Depreciation
|
|
Net Book Value
|
|
Short-Term
|
|
Long-Term
|
|
Total
|
||||||||||||
|
(in thousands)
|
||||||||||||||||||||||
IT Infrastructure
|
$
|
1,583
|
|
|
$
|
(914
|
)
|
|
$
|
669
|
|
|
$
|
667
|
|
|
$
|
—
|
|
|
$
|
667
|
|
|
June 30, 2019
|
|
June 30, 2018
|
||||
|
(in thousands)
|
||||||
Assets
|
|
|
|
||||
Prepaid expenses and other assets (current)
|
$
|
761
|
|
|
$
|
1,385
|
|
Other assets (noncurrent)
|
$
|
5,219
|
|
|
$
|
5,700
|
|
Liabilities
|
|
|
|
||||
Other current liabilities
|
$
|
761
|
|
|
$
|
1,385
|
|
Other long-term liabilities
|
$
|
5,219
|
|
|
$
|
5,700
|
|
|
Fiscal Year Ended June 30,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Sales:
|
|
|
|
|
|
||||||
Worldwide Barcode, Networking & Security
|
$
|
2,589,837
|
|
|
$
|
2,628,988
|
|
|
$
|
2,389,256
|
|
Worldwide Communications & Services
|
1,283,274
|
|
|
1,217,272
|
|
|
1,178,930
|
|
|||
|
$
|
3,873,111
|
|
|
$
|
3,846,260
|
|
|
$
|
3,568,186
|
|
Depreciation and amortization:
|
|
|
|
|
|
||||||
Worldwide Barcode, Networking & Security
|
$
|
17,623
|
|
|
$
|
18,233
|
|
|
$
|
6,496
|
|
Worldwide Communications & Services
|
15,507
|
|
|
15,769
|
|
|
15,099
|
|
|||
Corporate
|
3,488
|
|
|
3,493
|
|
|
3,373
|
|
|||
|
$
|
36,618
|
|
|
$
|
37,495
|
|
|
$
|
24,968
|
|
Change in fair value of contingent consideration:
|
|
|
|
|
|
||||||
Worldwide Barcode, Networking & Security
|
$
|
—
|
|
|
$
|
69
|
|
|
$
|
—
|
|
Worldwide Communications & Services
|
15,200
|
|
|
36,974
|
|
|
5,211
|
|
|||
|
$
|
15,200
|
|
|
$
|
37,043
|
|
|
$
|
5,211
|
|
Operating income:
|
|
|
|
|
|
||||||
Worldwide Barcode, Networking & Security
|
$
|
59,875
|
|
|
$
|
56,911
|
|
|
$
|
49,727
|
|
Worldwide Communications & Services
|
31,307
|
|
|
10,900
|
|
|
39,768
|
|
|||
Corporate(1)
|
(1,218
|
)
|
|
(172
|
)
|
|
(1,256
|
)
|
|||
|
$
|
89,964
|
|
|
$
|
67,639
|
|
|
$
|
88,239
|
|
Capital expenditures:
|
|
|
|
|
|
||||||
Worldwide Barcode, Networking & Security
|
$
|
3,876
|
|
|
$
|
4,841
|
|
|
$
|
3,796
|
|
Worldwide Communications & Services
|
3,335
|
|
|
1,964
|
|
|
3,163
|
|
|||
Corporate
|
4
|
|
|
1,354
|
|
|
1,890
|
|
|||
|
$
|
7,215
|
|
|
$
|
8,159
|
|
|
$
|
8,849
|
|
Sales by Geography Category:
|
|
|
|
|
|
||||||
United States
|
$
|
2,946,644
|
|
|
$
|
2,877,225
|
|
|
$
|
2,719,413
|
|
International(2)
|
955,322
|
|
|
999,245
|
|
|
882,446
|
|
|||
Less intercompany sales
|
(28,855
|
)
|
|
(30,210
|
)
|
|
(33,673
|
)
|
|||
|
$
|
3,873,111
|
|
|
$
|
3,846,260
|
|
|
$
|
3,568,186
|
|
|
|
|
|
|
|
|
June 30, 2019
|
|
June 30, 2018
|
||||
|
(in thousands)
|
||||||
Assets:
|
|
|
|
||||
Worldwide Barcode, Networking & Security
|
$
|
1,097,207
|
|
|
$
|
1,062,143
|
|
Worldwide Communications & Services
|
905,439
|
|
|
841,490
|
|
||
Corporate
|
64,615
|
|
|
41,662
|
|
||
|
$
|
2,067,261
|
|
|
$
|
1,945,295
|
|
Property and equipment, net by Geography Category:
|
|
|
|
||||
United States
|
$
|
58,961
|
|
|
$
|
69,032
|
|
International
|
4,402
|
|
|
4,010
|
|
||
|
$
|
63,363
|
|
|
$
|
73,042
|
|
(16)
|
Accumulated Other Comprehensive (Loss) Income
|
|
Fiscal Years Ended June 30,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Currency translation adjustment
|
$
|
(87,913
|
)
|
|
$
|
(85,279
|
)
|
|
$
|
(73,217
|
)
|
Unrealized (loss) gain on fair value of interest rate swap, net of tax
|
(2,175
|
)
|
|
1,102
|
|
|
13
|
|
|||
Accumulated other comprehensive loss
|
$
|
(90,088
|
)
|
|
$
|
(84,177
|
)
|
|
$
|
(73,204
|
)
|
|
Fiscal years ended June 30,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Tax expense (benefit)
|
$
|
73
|
|
|
$
|
1,993
|
|
|
$
|
(396
|
)
|
|
|
|
|
|
|
(17)
|
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, 2017
|
$
|
39,032
|
|
|
8,901
|
|
|
(3,860
|
)
|
|
361
|
|
|
$
|
44,434
|
|
Trade and current note receivable allowance
|
|
|
|
|
|
|
|
|
$
|
44,434
|
|
|||||
Year ended June 30, 2018
|
$
|
44,434
|
|
|
7,075
|
|
|
(5,610
|
)
|
|
(338
|
)
|
|
$
|
45,561
|
|
Trade and current note receivable allowance
|
|
|
|
|
|
|
|
|
$
|
45,561
|
|
|||||
Year ended June 30, 2019
|
$
|
45,561
|
|
|
2,282
|
|
|
(9,421
|
)
|
|
427
|
|
|
$
|
38,849
|
|
Trade and current note receivable allowance
|
|
|
|
|
|
|
|
|
$
|
38,849
|
|
(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, 2019, 2018 and 2017. The amount in 2019 includes $0.1 million in accounts receivable reserves acquired with the Canpango acquisition on August 20, 2018.The amount in 2018 includes $0.1 million in accounts receivable reserves acquired with the POS Portal acquisition on July 31, 2017. The amount in 2017 includes $0.6 million of recoveries and $0.3 million of accounts receivable reserves acquired with the Intelisys acquisition on August 29, 2017.
|
ITEM 16.
|
FORM 10-K SUMMARY
|
|
|
SCANSOURCE , INC.
|
|
|
|
|
|
Date:
|
August 22, 2019
|
By:
|
/s/ MICHAEL L. BAUR
|
|
|
|
Michael L. Baur
|
|
|
|
Chairman, Chief Executive Officer and President
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ MICHAEL L. BAUR
|
|
Chairman, Chief Executive Officer and President
|
|
August 22, 2019
|
Michael L. Baur
|
|
(principal executive officer)
|
|
|
|
|
|
|
|
/s/ GERALD LYONS
|
|
Senior Executive Vice President and Chief Financial Officer
|
|
August 22, 2019
|
Gerald Lyons
|
|
(principal financial officer and principal accounting officer)
|
|
|
|
|
|
|
|
/s/ PETER C. BROWNING
|
|
Director
|
|
August 22, 2019
|
Peter C. Browning
|
|
|
|
|
|
|
|
|
|
/s/ MICHAEL J. GRAINGER
|
|
Director
|
|
August 22, 2019
|
Michael J. Grainger
|
|
|
|
|
|
|
|
|
|
/s/ JOHN P. REILLY
|
|
Director
|
|
August 22, 2019
|
John P. Reilly
|
|
|
|
|
|
|
|
|
|
/s/ ELIZABETH O. TEMPLE
|
|
Director
|
|
August 22, 2019
|
Elizabeth O. Temple
|
|
|
|
|
|
|
|
|
|
/s/ CHARLES R. WHITCHURCH
|
|
Director
|
|
August 22, 2019
|
Charles R. Whitchurch
|
|
|
|
|
|
|
|
|
|
Exhibit Index
|
|
|
|
|
|
|
|
|
|
|
Exhibit
Number
|
|
Description
|
|
Filed
herewith
|
|
Form
|
|
Exhibit
|
|
Filing
Date
|
2.1
|
|
|
|
|
8-K
|
|
10.1
|
|
8/15/2014
|
|
2.2
|
|
|
|
|
10-Q
|
|
2.1
|
|
2/3/2015
|
|
2.3+
|
|
|
|
|
10-Q
|
|
10.1
|
|
11/7/2016
|
|
2.4+
|
|
|
|
|
10-K
|
|
2.5
|
|
8/29/2017
|
|
3.1
|
|
|
|
|
10-Q
|
|
3.1
|
|
2/3/2005
|
|
3.2
|
|
|
|
|
8-K
|
|
3.1
|
|
11/30/2018
|
|
4.1
|
|
Form of Common Stock Certificate
|
|
|
|
SB-2
|
|
4.1
|
|
2/7/1994
|
4.2
|
|
|
X
|
|
|
|
|
|
|
|
|
|
Executive Compensation Plans and Arrangements
|
|
|
|
|
|
|
|
|
10.1
|
|
|
|
|
10-Q
|
|
10.4
|
|
11/2/2012
|
|
10.2
|
|
|
|
|
10-Q
|
|
10.3
|
|
5/6/2011
|
|
10.3
|
|
|
|
|
10-Q
|
|
10.1
|
|
2/3/2015
|
|
10.4
|
|
|
|
|
8-K
|
|
10.1
|
|
12/7/2009
|
|
10.5
|
|
|
|
|
S-8
|
|
99
|
|
12/5/2013
|
|
10.6
|
|
|
|
|
S-8
|
|
99
|
|
12/5/2013
|
|
10.7
|
|
|
|
|
10-Q
|
|
10.2
|
|
5/6/2011
|
|
10.8
|
|
|
|
|
8-K
|
|
10.3
|
|
6/21/2017
|
|
10.9
|
|
|
|
|
8-K
|
|
10.3
|
|
12/7/2009
|
|
10.10
|
|
|
|
|
10-Q
|
|
10.2
|
|
2/4/2011
|
|
10.11
|
|
|
|
|
8-K
|
|
10.4
|
|
12/7/2009
|
|
10.12
|
|
|
|
|
10-Q
|
|
10.3
|
|
2/4/2011
|
10.13
|
|
|
|
|
10-Q
|
|
10.1
|
|
2/6/2014
|
|
10.14
|
|
|
|
|
10-Q
|
|
10.2
|
|
2/6/2014
|
|
10.15
|
|
|
|
|
10-Q
|
|
10.3
|
|
2/6/2014
|
|
10.16
|
|
|
|
|
10-Q
|
|
10.4
|
|
2/6/2014
|
|
10.17
|
|
|
|
|
10-K
|
|
10.33
|
|
8/28/2014
|
|
10.18
|
|
|
|
|
10-K
|
|
10.34
|
|
8/28/2014
|
|
10.19
|
|
|
|
|
8-K
|
|
10.1
|
|
12/8/2017
|
|
10.20
|
|
|
|
|
8-K
|
|
10.2
|
|
12/8/2017
|
|
10.21
|
|
|
|
|
8-K
|
|
10.3
|
|
12/8/2017
|
|
10.22
|
|
|
|
|
8-K
|
|
10.4
|
|
12/8/2017
|
|
10.23
|
|
|
|
|
8-K
|
|
10.1
|
|
6/21/2017
|
|
10.24
|
|
|
|
|
10-K
|
|
10.24
|
|
8/28/2014
|
|
10.25
|
|
|
|
|
8-K
|
|
10.2
|
|
6/21/2017
|
|
10.26
|
|
|
|
|
8-K
|
|
10.1
|
|
8/24/2017
|
|
10.27
|
|
|
X
|
|
|
|
|
|
|
|
10.28
|
|
|
|
|
10-K
|
|
10.32
|
|
8/28/2018
|
|
10.29
|
|
|
|
|
8-K
|
|
10.1
|
|
11/30/2018
|
|
10.30
|
|
|
|
|
8-K
|
|
10.2
|
|
11/30/2018
|
|
10.31
|
|
|
|
|
8-K
|
|
10.3
|
|
11/30/2018
|
|
10.32
|
|
|
|
|
8-K
|
|
10.4
|
|
11/30/2018
|
|
10.33
|
|
|
|
|
8-K
|
|
10.5
|
|
11/30/2018
|
|
|
|
Bank Agreements
|
|
|
|
|
|
|
|
|
10.34
|
|
|
|
|
8-K
|
|
10.1
|
|
5/1/2019
|
|
|
|
Other Agreements
|
|
|
|
|
|
|
|
|
10.35+
|
|
|
|
|
10-K
|
|
10.26
|
|
8/29/2007
|
|
10.36+
|
|
|
|
|
10-K
|
|
10.54
|
|
8/29/2016
|
|
10.37+
|
|
|
|
|
10-Q
|
|
10.1
|
|
5/9/2019
|
|
10.38++
|
|
|
X
|
|
|
|
|
|
|
|
10.39++
|
|
|
X
|
|
|
|
|
|
|
|
10.40++
|
|
|
X
|
|
|
|
|
|
|
|
10.41++
|
|
|
X
|
|
|
|
|
|
|
|
10.42++
|
|
|
X
|
|
|
|
|
|
|
|
10.43
|
|
|
X
|
|
|
|
|
|
|
|
10.44++
|
|
|
X
|
|
|
|
|
|
|
|
10.45
|
|
|
X
|
|
|
|
|
|
|
|
10.46
|
|
|
X
|
|
|
|
|
|
|
|
10.47
|
|
|
X
|
|
|
|
|
|
|
|
10.48++
|
|
|
X
|
|
|
|
|
|
|
|
10.49++
|
|
|
X
|
|
|
|
|
|
|
|
10.50++
|
|
|
X
|
|
|
|
|
|
|
|
10.51+
|
|
|
|
|
10-Q/A
|
|
10.1
|
|
10/24/2014
|
|
10.52+
|
|
|
|
|
10-K
|
|
10.50
|
|
8/29/2016
|
|
10.53+
|
|
|
|
|
10-K
|
|
10.51
|
|
8/29/2016
|
|
10.54+
|
|
|
|
|
10-K
|
|
10.51
|
|
8/29/2017
|
|
10.55++
|
|
|
|
|
10-Q
|
|
10.2
|
|
5/9/2019
|
|
|
|
Accepted:
|
/s/ Matthew S. Dean
|
|
|
Matthew S. Dean
|
|
Date:
|
January 12, 2018
|
|
1.
|
Nonexclusive Value Added Distributor Agreement Terms and Conditions
|
2.
|
EXHIBIT A: Territory
|
3.
|
EXHIBIT B: Value Added Distributor Support Exhibit
|
4.
|
EXHIBIT C: Software License Agreement
|
5.
|
EXHIBIT D: Distributor Freight Policy
|
6.
|
EXHIBIT E: Affiliate List
|
7.
|
EXHIBIT F: Software Transfer and Relicensing Policy
|
8.
|
EXHIBIT G: End of Life Policy
|
ScanSource,Inc. (“Distributor”)
|
|
Cisco Systems, Inc. (“Cisco”)
|
|
By: /s/ Jeffrey E. Yelton
|
|
By: /s/ Frank A. Calderon
|
|
Name: Jeffrey E. Yelton
|
|
Name: Frank A . Calderon
|
|
Title: VP Merchandising
|
|
Title: VP, WW Sales Finance
|
|
Date: 1/19/07
|
|
Date: January 22, 2007
|
|
(i)
|
transfer, assign or sublicense its license rights to any other person or entity, or use the Software on unauthorized or secondhand Cisco equipment, and Customer acknowledges that any attempted transfer, assignment, sublicense or use shall be void;
|
(ii)
|
make error corrections to or otherwise modify or adapt the Software or create derivative works based upon the Software, or permit third parties to do the same;
|
(iii)
|
decompile, decrypt, reverse engineer, disassemble or otherwise reduce the Software to human- readable form; or
|
(iv)
|
use or permit the Software to be used to perform services for third parties without the express written authorization of Cisco.
|
a)
|
A listing of products and quantities shipped
|
b)
|
Purchase order number (this must also show on the bill of lading)
|
c)
|
Date shipped
|
d)
|
Name of carrier
|
e)
|
Tracking or pro number
|
1.
|
All freight charges assigned to ScanSource must be shipped "freight collect". For UPS shipments ship "bill recipient".
|
2.
|
Do not insure shipments or declare value for carriage.
|
3.
|
Each bill of lading must display the total number of cartons in the shipment,
|
4.
|
Indicate our purchase order number and number of boxes on all containers and shipping documents.
|
5.
|
All pallets must be standard 40" wide X 48" long four way pallets. Primary fork entry from the 40" end.
|
6.
|
Banding must be plastic, no metal.
|
7.
|
Stack height on pallets is 48" maximum.
|
I.
|
Shipments, not individual cartons, weighing less than 250 lbs. and meeting the weight and size restrictions, must be shipped by United Parcel Service.
|
II.
|
Approved motor carriers for all LTL shipments from the States shown below are listed.
|
1.
|
ScanSource, Inc.
|
2.
|
ScanSource, Inc. d/b/a Catalyst Telecom
|
3.
|
ScanSource, Inc. d/b/a Paracon
|
4.
|
ScanSource Security Distribution, Inc.
|
5.
|
T2 Supply, Inc.
|
◦
|
The parties involved in the transfer are not in breach of the agreement governing the use of the Software or any other agreement with Cisco;
|
◦
|
Any additional services or charges incurred by Cisco as the result of any transfer shall be borne by the transferor and transferee; and
|
◦
|
The parties involved in the transfer shall provide written prior notice of a permitted transfer to Cisco and the transferee shall, in a writing to Cisco, (i) assume all of the obligations of the transferor, and (ii) agree that transferee's use of the Software shall be governed by the terms of the then-current license agreement between Cisco and transferor or, at Cisco's sole discretion, by the terms of Cisco's then-current standard license agreement.
|
1.
|
As a general rule, Cisco will provide 6 months' notice of the affected product's end-of-sale date and/or the last day when the affected product can be ordered. This notice will appear on Cisco.com site (http://www.cisco.com/en/US/products/prod_end_of_life.html) and we encourage you to visit this site regularly as it contains useful information regarding Cisco's end-of-life program. Sign up to receive notification here: http://www.cisco.com/pcgi-bin/Support/FieldNoticeTool/field-notice
|
2.
|
Access to Cisco's Technical Assistance Center (TAC) will be available 24 hours a day, seven days a week for a period of 5 years from the end-of-sale date for hardware and operating system software issues and for a period of 3 years from the end-of-sale date for application software issues.
|
3.
|
Spares or replacement parts for hardware will be available for a period of 5 years from the end-of sale date. We will provide spares and replacement parts in accordance with our Return Materials Authorization (RMA) process.
|
4.
|
Software support will be as follows
|
a.
|
For the first year following the end-of-sale date, we will provide bug fixes, maintenance releases, workarounds, or patches for critical bugs reported via the TAC or Cisco.com Web site.
|
b.
|
After the first year and for Operating System SW -where available- we will provide bug fixes, maintenance releases, workarounds or patches for a period of 4 years for operating system software. Bear in mind that it may be necessary to use software upgrade release to correct a reported problem.
|
c.
|
After the first year and for Application SW -where available - we will provide bug fixes, maintenance releases, workarounds or patches for a period of 2 years for application software. Bear in mind that it may be necessary to use software upgrade release to correct a reported problem.
|
5.
|
You will need to ensure that you have a current and fully paid support contract with Cisco. Please contact your Support Account Manager regarding fees payable during the end-of-life period so that we can support you right through the end-of-life transition period.
|
6.
|
Below are guidelines that should be followed to ensure that you receive effective support for the affected products within your network:
|
a.
|
For hardware or software that is not covered under a service contract, customers may add the product(s) to a current contract or purchase a new contract until 12 months after the end-of-sale date.
|
b.
|
Service contracts that have not been renewed or have lapsed after 12 months of end-of sale date are not re-newable.
|
c.
|
Renewal of your service contract will generally be available until the last year of support, but will not extend
|
Table 1. Standard Guideline for End-of-Life Milestones
|
|||||||
Milestone
|
- 6 mos
|
Day 0
|
1 Year
|
2 Year
|
3 Year
|
4 year
|
5 Year
|
|
|
End-of-sale date
|
|
|
|
|
|
End-of-Sale Notice Period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating System Software Maintenance Support
|
|
See 4(a)
|
See 4(b)
|
above
|
|
|
|
|
|
|
|
|
|
|
|
Add or attach new service contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Renew service contracts - for HW & Operating System SW
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hardware Repair or Replacement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer Service and Support of HW & Operating System SW (TAC access & support)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Application Software maintenance support
|
|
See 4(a)
|
See 4(c)
|
above
|
|
|
|
|
|
|
|
|
|
|
|
Renew service contracts - for Application SW
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Government officials (including any person holding an executive, legislative, judicial or administrative office, whether elected or appointed, or of any public international organization, such as the United Nations or World Bank, or any person acting in any official capacity for or on behalf of such government, public enterprise or state-owned business);
|
(ii)
|
Political parties or party officials;
|
(iii)
|
Candidates for political office; or
|
(iii)
|
Any person, while knowing that all or a portion of such money or thing of value will be offered, given or promised, directly or indirectly to any of the above identified persons or organizations.
|
U.S.
|
Federal Government End Users;
|
1.
|
The following definition is added to Section 1.0 (Definitions):
|
2.
|
Section 9.4 (Restricted Rights) is added:
|
9.4
|
Restricted Rights. Software is provided to all agencies, departments, and other units of the United States Government except for the Department of Defense and its constituent agencies with LIMITED RIGHTS. Related documentation is provided with RESTRICTED RIGHTS. Use, duplication, or disclosure by the US Government, except for the Department of Defense and its constituent agencies, is subject to the restrictions set forth in subparagraph (c) of the "Commercial Computer Software-Restricted Rights" clause at FAR 52.227-19. In the event of a sale to the Department of Defense or its constituent agencies, the US Governments rights in Software, supporting documentation, and technical data are subject to the restrictions in the 'Commercial Computer Software and Commercial Computer Software Documentation" clause at DFARS 227.7202.
|
3.
|
Section 20.1 (Government/Military Sales) is added:
|
20.1
|
Government/Military Sales. Distributor hereby certifies that none of the Products, Services, or technical data supplied by Cisco under this Agreement will be knowingly sold or otherwise transferred to, or made available for use by or for, any government or military end-user or in any government or military end-use located in or operating under the authority of any country not identified in Supplement No. 1, Country Group Al to Part 740 of the EAR without US or other country's export authorizations.
|
4.
|
Section 20.2 is added:
|
20.2
|
If Distributor’s customers elect to sell Cisco’s Products (including supplies, software, documentations or services) to the U.S. Government or to a prime contractor selling to the U.S. Government, the Products are “commercial items” as that term is defined at 48 C.F.R. 2.101. Cisco will comply with provisions of FAR 52.244-6, Subcontracts for Commercial Items and Commercial Components. Should U.S. Government End Users acquire Products that consist of “commercial computer software” and “commercial computer software document” as such terms are used in 48 C.F.R. 12.212, which generally limits their rights to the licenses customarily provided by Cisco to the public, as provided in FAR 52.227-19.
|
6.
|
Exhibit H (Distribution to Federal Government Terms) is hereby added.
|
7.
|
The Term of the Agreement is hereby renewed for one year from the Effective Date, unless sooner terminated as provided for in the Agreement. If the Agreement expired prior to the Amendment Effective Date, any orders received and Products and Services purchased between the date of expiration and the Amendment Effective Date shall be in all respects deemed made under the Agreement as in effect prior to this Amendment. The parties further agree that if Distributor places Purchase Orders after the expiration of the Agreement, and Cisco accepts such Purchase Orders, then any such Purchase Orders shall be governed by the terms and conditions of the Agreement; provided however that acceptance by Cisco of any Purchase Order placed after the Agreement has expired will not be considered as an extension of the term of the Agreement nor a renewal thereof. Notwithstanding Cisco’s right to extend the term of the Agreement, each party acknowledges that the Agreement shall always be interpreted as being limited in duration to a definite term and that the other party has made no commitments whatsoever regarding the renewal of the Agreement beyond those expressly agreed in writing.
|
8.
|
This Amendment may be executed in one or more counterparts, each of which when so executed and delivered will be an original and all of which together will constitute one and the same instrument. Facsimile signatures and electronic signatures will be deemed to be equivalent to original signatures for the purpose of this Amendment.
|
1.0
|
Distributor shall have sales specialists with an understanding of Government regulations and Government terms and conditions to support Resellers in the federal government marketplace.
|
2.0
|
Distributor shall maintain a configuration facility for systems integration and testing in support of federal government specific contracts and opportunities for Resellers.
|
3.0
|
Distributor will not distribute Products under this Agreement through a General Services Administration ("GSA") schedule contract, California Multiple Award Schedule ("CMAS"), or other schedule contracts. This Agreement shall not be construed by Distributor as a representation that Cisco will furnish supplies needed by Distributor to fulfill any of Distributor's GSA, CMAS, or similar contract obligations under any schedule contract.
|
4.0
|
The federal government contract flowdown provisions set forth in Section 6.0 of this Exhibit are applicable to Purchase Orders for U.S. Federal Government End Users. Cisco does not accept any additional or modified flowdown provisions, including but not limited to Federal Acquisition Regulation ("FAR"), Department of Defense ("DoD") FAR Supplement ("DFARS"), or NASA FAR Supplement ("NSF") provisions, notwithstanding existence of such provisions on Distributor's Purchase Orders or supplementary documentation or Cisco's acceptance of such Purchase Orders or documentation.
|
5.0
|
[*****]
|
6.0
|
This Agreement pertains to the sale of "commercial items' as that term is defined under FAR 2.101 and FAR Part 12. Notwithstanding any other clause in the prime contract, only those clauses identified in 52.212-5(e) and 52.244-6 are required to be in subcontract agreements for commercial items or commercial components (see further, FAR 12.502(b), 44.402(b)). The following FAR clauses, identified in 52.212-5(e) and 52.244-6 are hereby incorporated by reference, with the same force and effect as if they were given in full.
|
52.203-15
|
Whistleblower Protections Under the American Recovery and Reinvestment Act of 2009 (Jun 2010)
|
52.219-8
|
Utilization of Small Business Concerns (May 2004) Equal Opportunity (Mar 2007) (E.O. 11246)
|
52.222-26
|
Equal Opportunity (Mar 2007) (E.O. 11246)
|
52.222-35
|
Equal Opportunity for Special Disabled Veterans, Veterans of the Vietnam Era, and Other Eligible Veterans (Sept 2006)
|
52.222-40
|
Notification of Employee Rights under the National Labor Relations Act (Dec 2010) (E.O. 13496)
|
52.222-51
|
Exemption from Application of the Service Contract Act to Contracts for Maintenance, Calibration, or Repair of Certain Equipment-Requirements (Nov 2007)
|
52.222-53
|
Exemption from Application of the Service Contract Act to Contracts for Certain Services-Requirements (Feb 2009)
|
1.
|
The Term of the Agreement is hereby renewed for one year from the Effective Date, unless sooner terminated as provided for in the Agreement. If the Agreement expired prior to the Amendment Effective Date, any orders received and Products and Services purchased between the date of expiration and the Amendment Effective Date shall be in all respects deemed made under the Agreement as in effect prior to this Amendment. The parties further agree that if Distributor places Purchase Orders after the expiration of the Agreement, and Cisco accepts such Purchase Orders, then any such Purchase Orders shall be governed by the terms and conditions of the Agreement; provided, however that acceptance by Cisco of any Purchase Order placed after the Agreement has expired will not be considered as an extension of the term of the Agreement nor a renewal thereof. Notwithstanding Cisco's right to extend the term of the Agreement, each party acknowledges that the Agreement shall always be interpreted as being limited in duration to a definite term and that the other party has made no commitments whatsoever regarding the renewal of the Agreement beyond those expressly agreed in writing.
|
2.
|
The following Section 12.7 is hereby added to the Agreement:
|
3.
|
The following Section 28 is hereby added to the Agreement:
|
28.
|
Rebate Claims. In order for a claim to be valid under any current and/or future offer or program, it must be submitted in strict accordance with this Section 28. Any claim not adhering to this section will be deemed invalid and will be rejected. In such case, no rebate will be issued by Cisco.
|
4.
|
This Amendment may be executed in one or more counterparts, each of which when so executed and delivered will be an original and all of which together will constitute one and the same instrument. Facsimile signatures and electronic signatures will be deemed to be equivalent to original signatures for purposes of this Amendment.
|
1.
|
The attached Exhibit I (Direct Value Add Distributor Program Terms and Conditions) is hereby added to the Agreement. For the avoidance of doubt, this program is sometimes also referred to as Channels Booking Neutrality or “CBN”.
|
2.
|
This Amendment may be executed in one or more counterparts, each of which when so executed and delivered will be an original and all of which together will constitute one and the same instrument. Facsimile signatures and electronic signatures will be deemed to be equivalent to original signatures for purposes of this Amendment.
|
3.
|
All other terms of the Agreement remain the same. Capitalized terms in the Amendment shall have the same meaning as those terms have in the Agreement.
|
1.
|
The Program is focused on establishing new business practices between Cisco and its distribution base for high-value project based business, as defined herein. The parties agree that Distributor may participate in the Program in the Territory, subject to the terms and conditions of these Terms and Conditions. Distributor agrees to comply at all times with the then-current DVAD Program (also referred to as the "CBN" or Channels Booking Neutrality program) guidelines and policies published by Cisco from time to time at https://www.ciscodistributioncentral.com/strategy-and-planning/channel-book-neutrality ("Guidelines"). The parties agree these Guidelines apply specifically to this program and do not alter any of the terms and conditions contained in the Agreement. In case of any conflict between the Agreement and the Guidelines, the Agreement shall control. Cisco will make commercially reasonable efforts to notify Distributor of any change in the Guidelines.
|
2.
|
[*****].
|
3.
|
Order Qualification Requirements: [*****]
|
4.
|
[*****] All sales made by Cisco under the Program are final. In addition, Distributor shall not fulfill Program Orders from Distributor's inventory. [*****] Cisco reserves the right to request, and Distributor agrees to promptly furnish, any supporting documentation related to Orders placed under the Program, including, without limitation, the purchase orders or purchase contracts between the Distributor and Reseller for the relevant Product contained in an Order. If Cisco reasonably believes that Distributor has used the Program to procure inventory, or has otherwise abused the Program, Cisco may immediately terminate Distributor’s participation in the Program.
|
5.
|
[*****].
|
6.
|
For each Order submitted under the Program, Distributor shall, upon request from Cisco, submit to Cisco copies of the relevant shipping documents showing Distributor's shipment of the Product to either the applicable reseller or End User. Cisco acknowledges that, where Distributor is the importer of record, Distributor may need to perform staging activities as it relates to Product purchased under the Program.
|
7.
|
Participation in the Program does not entitle Distributor to any of the benefits provided under Cisco's Channel Programs to Cisco Direct Value Add Resellers ("DVARs") or any other Cisco-authorized resellers.
|
8.
|
Term: These Terms and Conditions are coterminous with the Agreement. Cisco is under no obligation to develop any kind of program, or modify any ordering processes, as a result of the Program. Participation in the Program is at Distributor's expense. Cisco will not be responsible for any costs incurred by Distributor as a result of the Program. Distributor further acknowledges and agrees that Cisco may modify or terminate the DVAD Program at any time, with no less than [*****] days advance notice to Distributor.
|
1.
|
Section 6.7 (“Prompt Pay Discount”) which was added in Amendment 3 of the Agreement [*****].
|
2.
|
All of the terms and conditions of the Agreement shall continue in full force and effect except as modified by the terms of this Amendment. In the event of any inconsistency between the terms and conditions of this Amendment and the terms and conditions of the Agreement, the terms and conditions of this Amendment shall control and govern.
|
3.
|
Binding Effect. All of the covenants and agreements contained herein shall be binding upon and shall inure to the benefit of the parties hereto and their respective representatives, successors, and assigns.
|
4.
|
Severability. Any dispute in the meaning, effect, or validity of this Amendment will be resolved in accordance with the terms of the Agreement. If any provision of this Amendment is held to be illegal or unenforceable, that provision will be limited or eliminated to the minimum extent necessary so that this Amendment will otherwise remain in full force and effect and enforceable so as to give effect to the intent of the parties hereunder.
|
5.
|
Entire Agreement; Amendment. This Amendment constitutes the entire agreement among the parties concerning the subject matter of this Amendment and replaces any prior oral or written communications between the parties, all of which are excluded. There are no conditions, understandings, agreements, representations or warranties, expressed or implied, that are not specified herein. This Amendment may be modified only by a written document executed by the parties hereto.
|
6.
|
Counterparts. This Amendment may be executed in one or more counterparts, each of which when so executed and delivered will be an original and all of which together will constitute one and the same instrument. Facsimile signatures and electronic signatures will be deemed to be equivalent to original signatures for purposes of this Amendment.
|
1.
|
The Term of the Agreement is hereby renewed for two (2) years from the Effective Date, unless sooner terminated as provided for in the Agreement. If the Agreement expired prior to the Amendment Effective Date, any orders received and Products and Services purchased between the date of expiration and the Amendment Effective Date shall be in all respects deemed made under the Agreement as in effect prior to this Amendment. The parties further agree that if Distributor places Purchase Orders after the expiration of the Agreement, and Cisco accepts such Purchase Orders, then any such Purchase Orders shall be governed by the terms and conditions of the Agreement; provided, however that acceptance by Cisco of any Purchase Order placed after the Agreement has expired will not be considered as an extension of the term of the Agreement nor a renewal thereof. Notwithstanding Cisco's right to extend the term of the Agreement, each party acknowledges that the Agreement shall always be interpreted as being limited in duration to a definite term and that the other party has made no commitments whatsoever regarding the renewal of the Agreement beyond those expressly agreed in writing."
|
2.
|
This Amendment may be executed in one or more counterparts, each of which when so executed and delivered will be an original and all of which together will constitute one and the same instrument. Facsimile signatures and electronic signatures will be deemed to be equivalent to original signatures for purposes of this Amendment.
|
3.
|
All other terms of the Agreement remain the same. Capitalized terms in the Amendment shall have the same meaning as those terms have in the Agreement.
|
1.
|
As of the Merger Effective Date and subject to the Articles of Merger, all rights, privileges, powers and franchises of ScanSourceGov, and all real and/or personal property, including, without limitations, all tax attributes of ScanSourceGov, and all debts due to ScanSourceGov on whatever account, shall be vested in the Distributor and subject to the Agreement, as applicable.
|
2.
|
This Amendment may be executed in one or more counterparts, each of which when so executed and delivered will be an original and all of which together will constitute one and the same instrument. Facsimile signatures and electronic signatures will be deemed to be equivalent to original signatures for purposes of this Amendment.
|
3.
|
All other terms of the Agreement remain the same. Capitalized terms in the Amendment shall have the same meaning as those terms have in the Agreement.
|
1.
|
As of the Effective Date, BroadSoft agrees to be bound by this Addendum and all other terms of the Agreement, including any amendments thereto, related to the attached Exhibit A.
|
2.
|
For purposes of this Addendum, (a) PacketSmart Products shall be considered a "Product" or "Cisco Product" (even though PacketSmart Products are not listed on the Global Price List); and
|
3.
|
For the purposes of this Addendum, BroadSoft and Distributor shall be bound by any and all of the provisions of the Agreement as they relate to the provision of the PacketSmart Products and PacketSmart Services. Notwithstanding the preceding sentence, the applicable corresponding sections of the PacketSmart Distribution Terms and Conditions set forth in Exhibit A shall take precedence over the following sections of the Agreement which shall not apply to the provision of the PacketSmart Products and PacketSmart Services: 4 (Orders), 6 (Payment), 7 (Price Protection), 10 (Warranty), 12 (Inventory Balance), 13 (Return of Obsolete Product), 16 (Support), 17.2, 17.3, and 17.5 (Reports and Records), 26 (Requirements for Resellers), 27.8 (Notices), Exhibit A (Territory), Exhibit B (Value Added Distributor Support Exhibit), Exhibit D (ScanSource Freight Policy), and Exhibit G (Cisco End of Life Policy).
|
4.
|
For purposes of this Addendum, Proprietary Information as defined in Section 19 (Confidentiality) of the Agreement shall also include all information on the BroadSoft Xchange (i.e., the BroadSoft Customer/Partner portal). A non-disclosure agreement with terms no less restrictive than those set forth in the Agreement must be in place before access to the BroadSoft Xchange may be granted.
|
5.
|
To the extent that there is conflict between the Agreement and this Addendum, the terms of this Addendum shall take precedence over the terms and conditions of the Agreement with regards to the subject matter described herein.
|
6.
|
Any terms not defined in this Addendum shall have the meaning stated in the Agreement. All other terms and conditions of the Agreement remain unchanged and in full force and effect. This Addendum and the Agreement comprise the complete agreement between Distributor and Broadsoft regarding subject matter described therein.
|
1.
|
DEFINITIONS
|
(a)
|
"Customer(s)" of Distributor shall include dealers, resellers, value added resellers, direct resellers and other entities that acquire the PacketSmart Products and/or PacketSmart Services from Distributor.
|
(b)
|
"DOA" shall mean a PacketSmart Product, or any portion thereof, which fails to operate properly on initial installation, or use.
|
(c)
|
"Documentation" means written materials prepared by BroadSoft that contain information intended for an End User for the purpose of explaining the operation of the PacketSmart Products and PacketSmart Services, including installation requirements, user manuals product and service descriptions, guidelines and/or other items of concern to such user, whether in print, electronic or web-based format.
|
(d)
|
"End User" means the final purchasers or licensees that have acquired the PacketSmart Product(s) and/or a PacketSmart Service(s) for their own use and not for resale, remarketing or redistribution.
|
(e)
|
"Non-Saleable Products" shall mean any PacketSmart Product that has been returned to Distributor by Customers or End Users for which any components of the original package are missing or damaged or is otherwise not fit for resale and such condition was not caused by such Customer or End User.
|
(f)
|
"PacketSmart Products" means the hardware listed on BroadSoft's then current published PacketSmart Distributor Price Book. This includes the software installed on or bundled with such PacketSmart Products.
|
(g)
|
"PacketSmart Services" means the monitoring services and assessment services offered by BroadSoft that are listed on BroadSoft's then current published PacketSmart Distributor Price Book.
|
(h)
|
"PacketSmart Territory" shall mean the countries listed in Attachment A, which is attached hereto and incorporated herein.
|
(i)
|
"Return Credit" shall mean a credit to Distributor in an amount equal to the price paid by Distributor for a PacketSmart Product that is returned to BroadSoft pursuant to the terms of this Addendum.
|
(j)
|
"Routing Guide" shall mean Distributor's inbound transportation routing instructions and guidelines which includes, among things, carrier, mode of transport, and product marketing requirements.
|
2.
|
APPOINTMENT OF DISTRIBUTOR
|
2.1
|
Appointment. BroadSoft hereby appoints Distributor as a nonexclusive distributor for the sale of the PacketSmart Products, and the PacketSmart Services in the PacketSmart Territory. Distributor will purchase from BroadSoft the PacketSmart Products for resale in accordance with the terms and conditions of this Addendum. The sale of the PacketSmart Products and the PacketSmart Services may be made to Customers and End Users in the PacketSmart Territory. The sale of the PacketSmart Services shall be done in conjunction with either the sale of the PacketSmart Products or a third party product on which PacketSmart software has been embedded. Distributor has the right to order, possess and distribute the PacketSmart Products to Customers and to provide the PacketSmart Products to Customers for use as demonstration units. BroadSoft and Distributor acknowledge and agree that any license to use the PacketSmart Product is solely between BroadSoft and the End User and is governed by the terms of BroadSoft's standard use license available at BroadSoft's PacketSmart web portal. An Affiliate of Distributor may also distribute the PacketSmart Products and the PacketSmart Services, provided that such Affiliate enters into an Amendment to the Agreement prior to distributing the PacketSmart Products and the PacketSmart Services.
|
2.2
|
Non-Exclusive. This Addendum does not prevent BroadSoft from appointing other distributors and resellers of the PacketSmart Products and the PacketSmart Services and does not prevent BroadSoft from marketing and selling the PacketSmart Products and the PacketSmart Services.
|
3.
|
DISTRIBUTOR'S OBLIGATIONS
|
3.1
|
Promotion of PacketSmart Products and PacketSmart Services. Distributor will use commercially reasonable efforts to promote the distribution and sale of the PacketSmart Products and PacketSmart Services in the PacketSmart Territory, including advertising and participation at appropriate trade shows. All promotional and advertising material for the PacketSmart Products and PacketSmart Services, unless supplied by BroadSoft, must be approved in writing by BroadSoft prior to its use, which approval shall not be unreasonably withheld. Distributor shall assign all right, title and interest in the copyrights to such advertising material to BroadSoft.
|
3.2
|
Facilities. Distributor will maintain adequate facilities and personnel to perform its obligation under this Addendum.
|
3.3
|
Compliance. Distributor shall comply with all applicable laws, rules and regulations governing Distributor's resale of the PacketSmart Products and the PacketSmart Services, including the U.S. Export Administration Regulations, as well as end user and destination restrictions issued by the U.S. and other governments. In particular, Distributor agrees not to distribute or supply the PacketSmart Products or PacketSmart Services to any person or entity if Distributor has reason to believe that such person or entity intends to (a) export, re-export or otherwise transfer the same to, or use the same in any country for which an export license has not yet been obtained or (b) transfer the PacketSmart Products to any person or entity that is on the U.S. Department of Commerce's Denied Persons List. Upon BroadSoft's reasonable request, Distributor agrees to provide BroadSoft with written assurance certifying its compliance with the United States Department of Commerce's "Table of Denial Orders" regulations.
|
3.4
|
Sales Force. Distributor shall maintain a trained sales organization to sell the PacketSmart Products and PacketSmart Services.
|
3.5
|
Activation of PacketSmart Services. Distributor is responsible for activating the PacketSmart Services for the Customers and End Users to whom Distributor sells such PacketSmart Services. Such activation will be done through the following website: https://packetsmart.broadsoft.com. BroadSoft will provide Distributor with written instructions concerning the activation of End Users.
|
3.6
|
Modification of PacketSmart Products and PacketSmart Services. Distributor has no right hereunder to modify, reverse engineer, reverse compile or reverse assemble any PacketSmart Product or PacketSmart Service except as expressly permitted by applicable law or this Addendum.
|
4.
|
BROADSOFT'S OBLIGATIONS
|
4.1
|
Support. BroadSoft is responsible for providing support and maintenance for the PacketSmart Products and PacketSmart Services to End Users
|
4.2
|
PacketSmart Product and PacketSmart Service Changes. BroadSoft shall give Distributor [*****] days-notice, or at least as much notice as is given to any other similar purchaser, of any changes in packaging, documentation or major version changes with the PacketSmart Products and PacketSmart Services, as applicable.
|
4.3
|
PacketSmart Product Set Up, Descriptions and Technical Support Requirements. BroadSoft shall provide Distributor with the materials set forth on Attachment B hereto. Distributor may, from time to time, change the requirements set forth in Attachment B, and BroadSoft in its discretion may continue to provide such new materials. BroadSoft shall be solely responsible for the factual accuracy and completeness of any information or materials provided to Distributor. Distributor reserves the right to delay set up in Distributor's systems of any PacketSmart Product for which this information is not provided.
|
4.4
|
New PacketSmart Products. BroadSoft agrees to provide Distributor with the material described in Section 4.3 and Attachment B hereof for all updates and revisions of each PacketSmart Product and for each new PacketSmart Product made available for distribution by BroadSoft during the term of this Addendum, and shall provide Distributor with [*****] days prior notice or at least as much notice given to any other similar purchaser of any such update, revision or new PacketSmart Product.
|
4.5
|
Product Changes. BroadSoft shall give Distributor [*****] days-notice or at least as much notice as is given to any other similar purchaser for any changes in PacketSmart Product packaging, documentation or major version changes.
|
5.
|
FORECASTS AND PURCHASE ORDERS
|
5.1
|
[*****]
|
5.2
|
Issuance and Acceptance of Purchase Order.
|
(a)
|
This Addendum shall not obligate Distributor to purchase any PacketSmart Products or PacketSmart Services except as specifically set forth in a written purchase order.
|
(b)
|
Distributor shall issue to BroadSoft purchase orders identifying the PacketSmart Products and PacketSmart Services that Distributor desires to purchase from BroadSoft. The terms and conditions of this Addendum shall govern all purchase orders. The preprinted terms on Distributor's purchase order, BroadSoft's acknowledgement form, and any other ordering document or communication from either party shall be inapplicable to any order submitted by Distributor, unless such terms and conditions are mutually agreed to in writing by Distributor and BroadSoft. Purchase orders will be placed by Distributor electronically to orders@broadsoft.com or via fax to 1-240-404-7299 or 1-240-404-0498; (the second number should only be used if there is an issue with the first listed number.) Distributor shall electronically attach the then current Routing Guide to any purchase order transmission. BroadSoft agrees to comply with the stated instructions set forth in the Routing Guide.
|
(c)
|
All purchase orders are subject to acceptance by BroadSoft. A purchase order shall be deemed accepted by BroadSoft unless BroadSoft notifies Distributor in writing within [*****] days of the date of BroadSoft's receipt of the purchase order that BroadSoft does not accept the purchase order.
|
5.3
|
Purchase Order Alterations or Cancellations. At any time prior to the shipment date of the PacketSmart Products, BroadSoft shall accept alterations to a purchase order in order to: (i) change a location for delivery of a PacketSmart Product, (ii) modify the quantity or type of PacketSmart Products to be delivered, provided that the revised purchase order is provided to BroadSoft at least [*****] days prior to the originally scheduled delivery date for such PacketSmart Products, or (iii) correct typographical or clerical errors. Up to [*****] days prior to the shipment date of the PacketSmart Products, Distributor may cancel a purchase order for PacketSmart Products without charge or penalty by providing written notice of such cancellation to BroadSoft.
|
5.4
|
Evaluation or Demonstration Products. BroadSoft shall provide to Distributor an agreed upon number of demonstration or evaluation PacketSmart Products [*****] for use by Distributor in the PacketSmart Territory.
|
5.5
|
Purchase Order for PacketSmart Services. Prior to Distributor ordering PacketSmart Services, Distributor shall submit a purchase order to BroadSoft in the amount of [*****] against which BroadSoft shall submit invoices for PacketSmart Services. Whenever the balance remaining on this purchase order falls below [*****], Distributor shall reissue the purchase order in the amount of [*****].
|
6.
|
DELIVERY AND ACCEPTANCE OF PACKETSMART PRODUCTS
|
6.1
|
Acceptance of PacketSmart Products. Distributor shall have [*****] days to inspect each shipment of PacketSmart Products to determine if such PacketSmart Products and all necessary documentation delivered to Distributor are in accordance with the purchase order ("Acceptance Date"). Any PacketSmart Products not ordered may be returned to BroadSoft at BroadSoft's expense (including without limitation reasonable costs of shipment or storage). BroadSoft shall refund to Distributor within [*****] following notice thereof all monies paid in respect to such rejected PacketSmart Products. Distributor shall not be required to accept partial shipment unless Distributor agrees prior to shipment.
|
6.2
|
Title and Risk of Loss. The PacketSmart Products shall be delivered [*****]. BroadSoft and Distributor agree that no title or ownership of the proprietary rights to any software is transferred by virtue of this Agreement notwithstanding the use of terms such as "purchase", "sale" or the like within this Agreement. BroadSoft retains all ownership rights and title to any software within the PacketSmart Products.
|
6.3
|
Delivery of PacketSmart Products. Unless otherwise agreed, BroadSoft shall deliver the PacketSmart Products listed in a purchase order to Distributor's carrier set forth in the Routing Guide within [*****] after BroadSoft's receipt of such purchase order, provided that (i) the purchase order is in compliance with the terms and conditions of this Agreement, and (ii) the number of PacketSmart Products being ordered is covered by the forecast submitted by Distributor. BroadSoft shall deliver the PacketSmart Products to Distributor's carrier with serial number, product description and machine readable bar code (employing UPC or other industry standard bar code) clearly marked on the PacketSmart Product package. Distributor shall designate the common carrier set forth in the Routing Guide and all charges for transportation of the PacketSmart Products shall be paid by Distributor. BroadSoft shall deliver the PacketSmart Products to Distributor's carrier with serial number, product description and machine-readable bar code (employing UPC or other industry standard bar code) clearly marked on the PacketSmart Product package. BroadSoft shall use commercially reasonable efforts to deliver PacketSmart Products by the delivery date set forth in the applicable purchase order or as otherwise agreed upon by the Parties.
|
7.
|
PACKETSMART PRODUCT RETURNS
|
7.1
|
[*****]
|
7.2
|
Dead on Arrival (DOA) PacketSmart Products. Distributor shall have the right to return to BroadSoft for Return Credit any DOA PacketSmart Product that is returned to Distributor within [*****] after the initial delivery date to the End User. BroadSoft shall bear all costs of shipping and risk of loss of DOA PacketSmart Products to BroadSoft's location and back to Distributor or the End User as may be specified by Distributor.
|
7.3
|
Discontinued PacketSmart Products. Distributor shall have the right to return for credit all PacketSmart Products that BroadSoft discontinues; provided Distributor returns such PacketSmart Products within [*****] after Distributor receives written notice from BroadSoft that such PacketSmart Products are discontinued. BroadSoft shall bear all costs of shipping and risk of loss of discontinued PacketSmart Products to BroadSoft's location.
|
7.4
|
Non-Saleable PacketSmart Products. Distributor shall have the right to return to BroadSoft for Return Credit Non-Saleable PacketSmart Products. Distributor shall bear all costs of shipping and risk of loss of Non-Saleable PacketSmart Products to BroadSoft's location. Distributor shall return such Non Saleable PacketSmart Products to BroadSoft within [*****] of the return of such Non-Saleable PacketSmart Products to Distributor by a Customer or End User.
|
7.5
|
Condition Precedent to Returns. As a condition precedent to returning PacketSmart Products, Distributor shall request and BroadSoft shall issue a Return Material Authorization Number (RMA), provided, however, that in the event such RMA is not issued by BroadSoft [*****] of the request, Distributor shall have the right to return any units of the PacketSmart Products to BroadSoft without an RMA, and BroadSoft shall be obligated to accept such return.
|
8.
|
INVOICING AND PAYMENT
|
8.1
|
Invoices for PacketSmart Products. BroadSoft shall invoice Distributor for the PacketSmart Products ordered, following the delivery of the PacketSmart Products. Each invoice shall contain (i) BroadSoft's name and invoice date, (ii) a reference to the purchase order or other authorizing document, (iii) separate descriptions, unit prices and quantities of the PacketSmart Products being invoiced, (iv) credits (if applicable), (v) shipping charges (if applicable) (vi) name (where applicable), title, phone number and complete mailing address as to where payment is to be sent, and (vii) other substantiating documentation or information as may reasonably be required by Distributor from time to time. Notwithstanding any pre-printed terms or conditions on BroadSoft's invoices, the terms and conditions of this Addendum shall apply to and govern all invoices issued by BroadSoft hereunder, except that invoices may include other terms and conditions which are consistent with the terms and conditions of this Addendum or which are mutually agreed to in writing by Distributor and BroadSoft.
|
8.2
|
Invoices for PacketSmart Services. BroadSoft shall within [*****] after the end of each month submit a report to Distributor indicating the PacketSmart Services sold to Customers and End Users in the prior month, which PacketSmart Services were activated by Distributor. Such report shall be submitted to Distributor via email. Distributor shall have [*****] after receipt of the report to dispute any item set forth on the report. Such dispute shall be submitted in writing via email by Distributor to BroadSoft. Failure by Distributor to dispute any item set forth on a report shall be deemed acceptance of the information set forth. If Distributor disputes an item on a report, the Parties shall work together to resolve such dispute. BroadSoft shall submit an invoice for all undisputed PacketSmart Services at the end of the [*****] period. Any disputed PacketSmart Services shall be invoiced after such dispute is resolved.
|
8.3
|
Charges, Prices and Fees for PacketSmart Products and PacketSmart Services. Charges, prices, quantities and discounts, if any, for PacketSmart Products and PacketSmart Services shall be determined as set forth in the then current PacketSmart Distribution Price Book, or as otherwise mutually agreed upon by the Parties in writing, and may be confirmed at the time of order. Distributor shall not be bound by any of BroadSoft's suggested resale prices.
|
8.4
|
Reports from BroadSoft. BroadSoft shall, if requested, render monthly reports to Distributor setting forth for PacketSmart Products and PacketSmart Services, the dollars invoiced for each, and total dollars invoiced to Distributor for the month, and such other information as Distributor may reasonably request.
|
8.5
|
Payment. Except as otherwise set forth in this Addendum, any undisputed sum due to BroadSoft pursuant to this Addendum shall be payable as follows: net [*****] date. BroadSoft shall invoice Distributor no earlier than the applicable shipping or delivery date of the PacketSmart Products. BroadSoft may submit each invoice to Distributor electronically and Distributor shall provide BroadSoft with an email address to which the invoice may be sent. PacketSmart Products, which are shipped from outside the United States, shall not be invoiced to Distributor prior to the PacketSmart Products being placed on a common carrier within the United States for final delivery to Distributor. The due date for payment shall be extended during any time the Parties have a bona fide dispute concerning such payment.
|
8.6
|
No Conflicting Terms. Notwithstanding any pre-printed terms or conditions on BroadSoft's invoices, the terms and conditions of this Addendum shall apply to and govern all invoices issued by BroadSoft hereunder, except that invoices may include other terms and conditions which are consistent with the terms and conditions of this Addendum, or which are mutually agreed to in writing by Distributor and BroadSoft.
|
8.7
|
Interest. BroadSoft may charge Distributor interest on any invoice that is not timely paid and which is not in good faith dispute at the rate of [*****]. BroadSoft may not charge interest to Distributor until after providing Distributor with [*****] days' written notice that the invoice is past due. BroadSoft must notify Distributor in writing of its intent to collect such interest within [*****] days of the receipt of the late payment. Such notice shall include sufficient information for Distributor to validate a payment was late and confirm the amount of interest due. If such notice is not given to Distributor, BroadSoft waives the right to collect any interest due on such late payment.
|
8.8
|
Taxes The purchase price does not include any federal state or local taxes, or sales, use excise, ad valorem, value-add, withholding or other taxes or duties that may be applicable to the purchase of the PacketSmart Products and PacketSmart Services. When BroadSoft has the legal obligation to collect such taxes, the appropriate amount shall be added to Distributor's invoice and paid by Distributor, unless Distributor provides BroadSoft with a valid tax exemption certificate prior to issuance of a purchase order. Such certificate must be in a form authorized by the appropriate taxing authority.
|
8.9
|
Price Increases. BroadSoft shall have the right to increase prices from time to time upon written notice to Distributor not less than [*****] prior to the effective date of such increase. All orders placed prior to the effective date of
|
9.
|
WARRANTIES AND INDEMNITIES OTHER OBLIGATIONS
|
9.1
|
Warranty. BroadSoft hereby represents and warrants that BroadSoft has all right, title, ownership interest and marketing rights necessary to provide the PacketSmart Products and PacketSmart Services to Distributor. BroadSoft further represents and warrants that it has not entered into any agreements or commitments which are inconsistent with or in conflict with the rights granted to Distributor in this Agreement; the PacketSmart Products are new and when provided to Distributor and are free and clear of all liens and encumbrances; the PacketSmart Products have been listed with Underwriters' Laboratories or other nationally recognized testing laboratory whenever such listing is required; if applicable, the PacketSmart Products meet all FCC requirements; the PacketSmart Products do and will conform to all codes, laws or regulations; and the PacketSmart Products conform in all respects to the PacketSmart Product warranties. BroadSoft agrees that Distributor shall be entitled to pass through to End Users all PacketSmart Product warranties granted by BroadSoft. Distributor shall have no authority to alter or extend any of the warranties of BroadSoft expressly contained or referred to in this Agreement without prior approval of BroadSoft. EXCEPT AS SET FORTH HEREIN OR IN THE END USER WARRANTIES ENCLOSED IN THE PACKETSMART PRODUCT PACKAGING, BROADSOFT DISCLAIMS ALL WARRANTIES WITH REGARD TO THE PACKETSMART PRODUCTS, INCLUDING WITHOUT LIMITATION, NON-INFRINGEMENT, AND THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. THIS SECTION SHALL SURVIVE TERMINATION OR EXPIRATION OF THIS AGREEMENT.
|
9.2
|
Intellectual Property Representations and Warranties. BroadSoft hereby represents and warrants to Distributor that BroadSoft is the sole and exclusive owner or valid licensee, and/or authorized user of all right, title and interest in and to the PacketSmart Products and PacketSmart Services provided by BroadSoft hereunder.
|
10.
|
OTHER OBLIGATIONS OF THE PARTIES
|
11.
|
TERMINATION OR EXPIRATION
|
11.1
|
Term of Addendum. The term of this Addendum shall commence on the Effective Date and, unless terminated by either Party as set forth in this Addendum, shall remain in full force and effect for a term that is coterminous with the Agreement. The Addendum may be renewed under the terms of Section
|
11.2
|
Termination. In addition to the termination provisions set forth in the Agreement, this Addendum shall immediately terminate should the Agreement be terminated or expire and not renewed.
|
11.3
|
Survival of Terms. Termination or expiration of this Agreement for any reason shall not release either Party from any liabilities or obligations set forth in this Agreement which (i) the Parties have expressly agreed shall survive any such termination or expiration, or (ii) remain to be performed or by their nature would be intended to be applicable following any such termination or expiration. The termination or expiration of this Agreement shall not affect any of BroadSoft's warranties, indemnification or obligations relating to returns, or any other matters set forth in this Agreement that should survive termination or expiration in order to carry out their intended purpose, all of which shall survive the termination or expiration of this Agreement.
|
12.
|
MISCELLANEOUS
|
12.1
|
Binding Nature. This Addendum shall be binding on the Parties and their respective successors and assigns.
|
12.2
|
Media Releases. Except for any announcement intended solely for internal distribution, any disclosure required by legal, accounting or regulatory requirements beyond the reasonable control of either Party, and except for catalogs, advertising and marketing materials customarily used by Distributor in the normal course of business, all media releases, public announcements or public disclosures relating to this Addendum or its subject matter, or including the name of either Party, must be approved in writing (within 48 hours of submission) by the other Party prior to the release thereof, which approval shall not be unreasonably withheld.
|
12.3
|
Dispute Resolution. In the event of any disagreement regarding performance under or interpretation of this Addendum, prior to the commencement of any formal proceedings, the Parties shall continue performance as set forth in this Addendum and shall attempt in good faith to reach a negotiated resolution by designating an officer or authorized representative of the Party to resolve the dispute.
|
12.4
|
Notices. Wherever one Party is required or permitted to give notice to the other pursuant to this Addendum, such notice shall be deemed given when delivered in hand, or when delivered by FedEx, UPS or similar overnight service, or five (5) days after mailing by registered or certified mail, return receipt requested, postage prepaid, and addressed as follows:
|
12.5
|
Remedies. All remedies set forth in this Addendum shall be cumulative and in addition to and not in lieu of any other remedies available to either Party at law, in equity or otherwise, and may be enforced concurrently or from time to time.
|
3.
|
For each PacketSmart Product and PacketSmart Service distributed by Distributor, BroadSoft is required to provide the following:
|
3.1
|
Spec and Data Sheets:
|
(a)
|
Three (3) original Spec or Data Sheets for the PacketSmart Product or PacketSmart Service
|
(b)
|
If BroadSoft is new to Distributor, BroadSoft must send five (5) PacketSmart Product family, or company product offering, brochures
|
(c)
|
If a Spec Sheet refers to multiple PacketSmart Products or PacketSmart Services, all relevant Distributor part numbers must be listed on such Spec or Data Sheet.
|
3.2
|
Logos and Photos:
|
(a)
|
Two BroadSoft logos scanned at 2400 dpi resolution into EPS or TIFF files. One of the EPS or TIFF files must contain a black-and-white logo and one of the EPS or TIFF files must contain a color logo.
|
(b)
|
One (1) approximately 2" x 3" digitized color image of each product in high resolution CMYK TIFF format ready for output up to 2400 dpi. (Other formats such as native PhotoShop, EPS, etc. are also acceptable.) Digitized images are preferred, but if they are not available please send: One (1) color photograph of each product (in 35-mm slide, 2 1/4-inch or 4 X 5-inch transparency format). All photos must be marked with Distributor SKU number. Distributor SKU number must also be affixed to the back side of product photos.
|
1.
|
Cisco Distributor Value Created Services Program – Terms and Conditions
|
1.1
|
Additional Program Documentation means the Performance Management Appendix, Eligibility Guide, Eligible Bookings Guide, and incorporated by reference within the Program Guide.
|
1.2
|
Deliverable(s) means, with respect to each Service Description, the items to be delivered by Cisco to Distributor as specified in the Service Description, including, without limitation, any Reports.
|
1.3
|
End User Network Information [*****].
|
1.4
|
Previous Service Program means the Cisco Partner Core-Bridge Program as defined in the Cisco Partner Core-Bridge Distributor Consumption Model Program Guide. Under which Distributor may have been previously participating and receiving services from Cisco prior to the Program defined under this Addendum becoming available.
|
1.5
|
Program means the Cisco Distributor Value Created Services Program.
|
1.6
|
Program Guide means the governing document for Cisco Distributor Value Created Services Program, defining program elements, including, but not limited to, eligibility, performance management, and any applicable rebates.
|
1.7
|
Report(s) means a report or reports generated by Cisco based on End User Network Information. The information contained in Reports may include part or all of the collected End User Network Information, product alert information, and such other information as Cisco deems appropriate.
|
1.8
|
Service(s) means those services made available under the Program.
|
1.9
|
Services Description means the description of the Services, as of the purchase date of such Services, to be made available by Cisco and the applicable terms and conditions under which those Services are provided.
|
1.10
|
Territory means the country or countries in which Distributor has been granted authorization by Cisco to participate in the Program.
|
1.11
|
Tool(s) means the software or hardware appliance, commonly referred to as "Data Collector Tools" or ''Collectors", [*****].
|
2.1
|
SCOPE OF THE PROGRAM.
|
2.2
|
The Cisco Distributor Value Created Services Program is a Cisco services program that grants participants accelerated access to purchase and provide support services for certain products as defined by the Program Guide. This Addendum sets forth the terms and conditions for Distributor's participation, purchase and/or license of Services solely from Cisco in the context of a Distributor-Led service offering as described further below and in the terms of the Services purchased under the Program. Subject to meeting eligibility criteria, Distributor is authorized to participate in the Program within the authorized Territory.
|
2.3
|
Upon execution of this Addendum, the Previous Service Program shall be automatically terminated and Distributor will no longer have rights under the Pervious Service Program.
|
3.0
|
QUALIFICATIONS OF DISTRIBUTOR. [*****] Additionally, Distributor understands and acknowledges that Cisco may from time to time require Cisco's Advanced Technology Provider certification or other specializations as a pre-requisite to the Distributor being certificated as meeting the requirements to support certain technologies or Products. These qualifications ("Eligibility Criteria") vary depending on Territory, and are more fully described in the Program Guide and/or Additional Program Documentation. Distributor will only be eligible to purchase Services if they have met the eligibility requirements of the specific Service offering. Eligibility Criteria includes, but is not limited to the following:
|
i)
|
Meeting the Distributor eligibility requirements, including training, testing, certification, demonstrating capabilities, and services delivery as described more fully in the Program Guide and/or Additional Program Documentation; and
|
ii)
|
Meeting or exceeding minimum program service metrics during the term of the Agreement in order to remain in the Program as outlined in the Program Guide and/or Additional Program Documentation. In the event Distributor does not meet qualifications, enrollment in the Program shall be revoked until such time as the Distributor has been reinstated in the Program, subject to meeting metrics or taking other actions as defined in the Program Guide and/or Additional Program Documentation.
|
5.0
|
CISCO RIGHTS AND OBLIGATIONS.
|
5.0
|
Cisco will make available the Services listed at http://www.ciscodistributioncentral.com/cisco-distributor-value-created-services-program for purchase by Distributor and resale to Reseller with service delivery to End User in a Distributor-Led support model under the Program. Services are subject to Distributor eligibility and any availability limitations specified in the applicable Service Description.
|
5.2
|
Inspection Fee. In order to be eligible to receive support services as set out herein for Product that has not been previously supported, for Product where support has lapsed and/or for Other Product. the following shall apply:
|
5.2.1
|
Cisco may charge an inspection fee for Product and/or Other Product in accordance with Cisco's standard fee schedule on the Price List in effect at the time of inspection (any related upgrades, replacements, repairs, or troubleshooting are excluded) ; and
|
5.2.2
|
Cisco will validate a Software license exists for Software to be supported. Where a valid Software license does not exist, a Software license fee shall be payable by Distributor to Cisco.
|
6.0
|
DISTRIBUTOR RIGHTS AND OBLIGATIONS.
|
6.1
|
Distributor has read, understood, and agrees to comply with Program Guide, and Additional Program Documentation contained therein, located at http://www.ciscodistributioncentral.com/cisco-distributor-value-created-services-program which is incorporated herein by reference and may be updated from time to time by Cisco in its sole discretion under Section 4.0 (Change of Scope). Distributor must comply at all times with requirements of particular Services, Program Guide, and Additional Program Documentation in order to achieve and retain the benefits of the Program, including any associated rebate.
|
6.2
|
Distributor-Led. Distributor has been granted the right by Cisco to provide support to End Users for Services that have been made available for purchase by any Reseller from Distributor. Such support would be considered as Distributor-Led support provided to End User on behalf of Reseller. Under this type of support model, Distributor will be providing support, depending on Service indicated in the Program Guide and Additional Program Documentation, to the End User and Cisco will be providing back line escalation support to Distributor as defined in the Service Description for the applicable Service purchased by Distributor. Under a Distributor-Led support model, Distributor acknowledges that Cisco will not be providing support to Distributor, Reseller or End User. The responsibility to provide support directly to End User will fall on the Distributor as described in the applicable Service Description.
|
7.0
|
REPRESENTATION OF CISCO BRAND. Distributor agrees to comply with the guidelines located at http://www.cisco.com/web/partners/market/partner-marks.html, is incorporated herein by reference.
|
8.0
|
PRICE AND PAYMENT.
|
8.1
|
The price for support of Products is (a) calculated by applying Cisco's then-current service list price less Distributor's discount under the Program.
|
8.2
|
All stated prices are exclusive of taxes, fees, duties or other applicable amounts. Any taxes related to Services purchased pursuant to this Agreement shall be paid by Distributor or Distributor shall present an exemption certificate acceptable to the taxing authorities. Applicable taxes, if any, shall be billed as a separate item on the invoice, to the extent possible. Cisco reserves the right to increase any Service fee in the event a withholding prevents Cisco from receiving the price specified above.
|
8.3
|
Distributor is free to determine its resale prices unilaterally. Distributor understands that neither Cisco, nor any employee or representative of Cisco, may give any special treatment (favorable or unfavorable) to Distributor as a result of Distributor’s selection of resale prices. No employee or representative of Cisco or anyone else has any authority to specify what Distributor's resale prices for the Services must be, or to inhibit in any way, Distributor's pricing discretion with respect to the Services.
|
9.0
|
LICENSE.
|
9.1
|
Subject to the terms and conditions herein, Cisco grants to Distributor a limited. revocable, non-exclusive, non-transferable license to (a) use, display, reproduce, modify, and distribute Deliverables; (b) create, use, reproduce, and distribute derivative works of the Deliverables; and c) distribute Software that Distributor may receive as a result of Services provided under the Program, only on Product covered under the Program. The license herein is granted solely for Distributor's support of End Users during its participation in the Program and solely for use with Cisco products. Distributor may not sublicense to any persons or entity any rights to reproduce or distribute the Deliverables. Cisco also may terminate this license upon written or oral notice to Distributor, with or without prior notice.
|
9.2
|
Access to and use of Tool(s) by Distributor is subject to acceptance of the Cisco End User License Agreement located at www.cisco.com/go/warranty incorporated by reference and made a part hereof. Distributor agrees to return Tool(s) upon termination of the license or upon Cisco's request that the Tool(s) be returned to Cisco.
|
10.0
|
OWNERSHIP. As between Distributor and Cisco, Cisco shall at all times retain all right, title, and interest in and to all pre-existing Intellectual Property owned by Cisco as of the Effective Date and all Intellectual Property in and to the Services and Deliverables or other Intellectual Property provided or developed by Cisco or a third party on Cisco's behalf thereafter. As between Distributor and Cisco, Distributor shall at all times retain all right, title, and interest in and to all pre-existing Intellectual Property owned by Distributor as of the Effective Date and all Intellectual Property that is developed by Distributor or by a third party on Distributor's behalf thereafter without the benefit of any of Cisco's Intellectual Property. Third party hardware and software shall at all times be owned by the applicable third party.
|
11.0
|
WARRANTY. ALL SERVICES PROVIDED HEREUNDER SHALL BE PERFORMED IN A WORKMANLIKE MANNER. EXCEPT AS SPECIFIED IN THIS SECTION, CISCO HEREBY DISCLAIMS AND DISTRIBUTOR WAIVES ALL REPRESENTATIONS, CONDITIONS, ANO WARRANTIES (WHETHER EXPRESS, IMPLIED, OR STATUTORY), INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OR CONDITION (A) OF MERCHANTABLIITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMEN,TTITLE, SATISFACTORYQUALITY, QUIET ENJOYMENT, ACCURACY, (B) ARISING FROM ANY COURSE OF DEALING , COURSE OF PERFORMANCE, OR USAGE IN THE INDUSTRY. TO THE EXTENT AN IMPLIED WARRANTY CANNOT BE DISCLAIMED, SUCH WARRANTY IS LIMITED IN DURATION TO THE APPLICABLE EXPRESS WARRANTY PERIOD. DISTRIBUTOR'S SOLE AND EXCLUSIVE REMEDY FOR BREACH OF WARRANTY SHALL BE, AT CISCO'S OPTION, RE PERFORMANCE OF THE SERVICES; OR CANCELLATION OF THE APPLICABLE SERVICE ORDERED AND RETURN OF THE PORTION OF THE SERVICE FEES PAID TO CISCO BY DISTRIBUTOR FOR SUCH NON-CONFORMING SERVICES.
|
12.0
|
LIMITATION OF LIABILITY AND CONSEQUENTIAL DAMAGES WAIVER.
|
12.1
|
DISTRIBUTOR EXPRESSLY ACKNOWLEDGES AND AGREES THAT IT IS SOLELY RESPONSIBLE FOR THE DETERMINATION ANO IMPLEMENTATION OF THEIR END USER'S NETWORK, DESIGN, BUSINESS, OR OTHER REQUIREMENTS AND THAT CISCO SHALL NOT BE RESPONSIBLE FOR THE FAILURE OF DELIVERABLES AND/OR RELATED SOFTWARE TO MEET END USER'S NETWORK, DESIGN, BUSINESS, OR OTHER REQUIREMENTS.
|
12.2
|
ALL LIABILITY OF CISCO, ITS AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, AND SUPPLIERS (COLLECTIVELY) FOR CLAIMS ARISING UNDER THIS ADDENDUM OR OTHERWISE HOWSOEVER ARISING SHALL BE LIMITED TO THE AMOUNT PAID BY DISTRIBUTOR TO CISCO PURSUANT TO THE RELEVANT SERVICE DURING THE [*****] PERIOD PRECEDING THE EVENT OR CIRCUMSTANCES FIRST GIVING RISE TO SUCH LIABILITY. THIS LIMITATION OF LIABILITY IS CUMULATIVE AND NOT PER-INCIDENT (I.E., THE EXISTENCE OF TWO OR MORE CLAIMS WILL NOT ENLARGE THIS LIMIT).
|
12.3
|
EXCEPT FOR DISTRIBUTOR'S BREACH OF SECTION 9 (LICENSE), IN NO EVENT SHALL EITHER PARTY, ITS RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, OR SUPPLIERS BE LIABLE FOR ANY SPECIAL, INCIDENTAL, INDIRECT, OR CONSEQUENTIAL DAMAGES, OR LOST REVENUE, LOST PROFITS, OR LOST OR DAMAGED DATA, WHETHER ARISING IN CONTRACT, TORT (INCLUDING NEGLIGENCE), OR OTHERWISE, EVEN IF SUCH PARTY HAS BEEN INFORMED OF THE POSSIBILITY THEREOF.
|
13.0
|
DATA USAGE AND PROTECTION.
|
13.1
|
For the purposes of this Section, "personal data", "processing of personal data'', (''processing"), "controller", "processor”, “data subjects", and "third party", shall have the same meanings as in Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data and of the free movement of such data. If the applicable laws implementing the Directive in a particular country apply a broader definition of "personal data" (e.g. so as also to include information about legal entities), then the definition of "personal data" under that country's implementing laws shall apply.
|
13.2
|
Cisco shall, during the term of this Agreement, comply with all applicable laws, regulations, regulatory requirements, and codes of practice in connection with any processing of personal data which they undertake in the performance of or in connection with this Agreement or which may otherwise apply, including, without limitation, privacy or data protection laws applicable in the country or countries where personal data is collected or held or otherwise processed including, but not limited to laws and regulations implementing Directive 95/46/EC (such as the UK Data Protection Act 1998), Directive 2002/58/EC on Privacy and Electronic Communications, and any data privacy laws enacted thereunder (together, the "Data Protection Laws").
|
13.3
|
Cisco shall not transfer End User personal data across any country border unless it is strictly unavoidable for the proper performance of the Services.
|
13.4
|
Cisco shall treat all personal data in a manner consistent with its Privacy Policy statement (available at Cisco.com).
|
14.0
|
ASSIGNMENT AND SUBCONTRACTING.
|
14.1
|
Without prejudice to the Assignment provision of the Agreement, Distributor may not delegate, assign, or subcontract any obligation which it has to an End User to provide support services for Products under the Program incorporating any of the Services, except where;
|
(a)
|
otherwise permitted in writing by Cisco with its prior written consent; or
|
(b)
|
Distributor subcontracts to a company that meets the qualification criteria for participation under the Program but is acting as a subcontractor to Distributor ("Services Only Partner"); or
|
(c)
|
Distributor subcontracts to a service provider in respect of which Distributor demonstrates to Cisco's reasonable satisfaction , such approval not to be unreasonably withheld or delayed, that the service provider provides support services of an equivalent level of quality to an Distributor qualified under the Program.
|
14.2
|
In the event that the Territory includes a country within the European Economic Area ("EEA" ), Distributor is authorized to provide support services incorporating the Services under the Program in an EEA country (''Destination Country" ) where it is not qualified to participate in the Program, provided it has either: (f) subcontracted the Services to a Services Only Partner qualified in the Destination Country as set forth above; or (li) made other arrangements to Cisco's reasonable satisfaction, such approval not to be unreasonably withheld or delayed, to provide support services in the Destination Country of a quality equivalent to a Services Only Partner qualified in that country.
|
14.3
|
In all permitted exceptions identified above, the Distributor subcontracting the Services shall remain entirely responsible and any actions taken by the Distributor or the Services Only Partner will count in the measurement of Distributor’s performance metrics under the Program.
|
15.0
|
TERM AND TERMINATlON.
|
15.1
|
In addition to all rights and remedies which it may have under the Agreement, Cisco may terminate or suspend its performance with respect to some or all Products covered under this Program, whether or not Products were purchased prior to or subsequent to the Effective Date, immediately upon notice if (i) Distributor fails to maintain the eligibility under the Program; (ii) Distributor fails to pay for the Services when due and fails to make such payment within [*****] days after notice from Cisco of such past due payment; (iii) if Distributor breaches the provisions of Sections 9, 17.2, 17.3, and/or any of the material provisions of this Addendum and fails to remedy such breach within [*****] days after written notification by Cisco to Distributor of such breach; (iv) in the event that Cisco discontinues Service for one or more Product for whatever reason or (v) the Agreement terminates.
|
15.2
|
Either party may at any time terminate the Addendum for convenience, for any reason or no reason, by providing the other party with [*****] prior written notice of termination.
|
15.3
|
This Addendum shall terminate when the Agreement terminates.
|
15.4
|
In the event that Cisco's obligations to Distributor under this Program with respect to support of Product for which payment was made prior to the expiration of the term as set forth in this Section extend beyond the term as applicable, and provided that Distributor complies with the terms of the Agreement and its obligations in this Addendum, Cisco will provide support to Distributor for the term of support specified in the purchase order issue to Cisco by Distributor provided that the maximum period of support shall not exceed [*****] years from the date of such purchase order.
|
16.0
|
INDEMNIFICATION. Distributor hereby indemnifies and holds Cisco harmless from any claim, loss, damage, or expense, including, but not limited to, reasonable court costs and attorneys' fees, resulting from any claim made by End User against Cisco that: (a) Distributor has failed to provide End User with support services in accordance w1th an agreement between Distributor and End User; or (b) Distributor has failed to
|
17.0
|
GENERAL.
|
17.1
|
Third Party Services. Cisco reserves the right to subcontract the provision of all or part of the Services to a third party.
|
17.2
|
Disclosure of Contract Information. Distributor acknowledges and agrees that in no event shall any of the information contained in this Agreement or Distributor's service contract number(s) or Cisco.com access information be disclosed to any third party. Such information shall be considered Confidential Information under the Agreement.
|
17.3
|
Service Marks. Distributor will not use Cisco's service marks in any manner except as set out in this Agreement or as mutually agreed upon in writing.
|
17.4
|
Entitlement. Distributor acknowledges that Cisco has the right to verify an End User's entitlement to receipt of Services, and that End User is entitled to receive support services only on Product for which Distributor has paid the applicable license and support fees to Cisco. Distributor agrees to assist Cisco with enforcement of End User entitlement as necessary, including, without limitation, providing serial number(s) to Cisco and enabling Cisco to undertake inventory review(s).
|
17.5
|
Notices. All notices required or permitted under this Addendum wilt be in writing and will be deemed given one (1) day after deposit with a commercial express courier specifying next day delivery (or two (2) days for international courier packages specifying 2-day delivery), with written verification of receipt. All communications will be sent to the addresses set forth on the cover sheet of this Agreement or such other address as may be designated by a party by giving written notice to the other party pursuant to this paragraph. Notwithstanding the above, notices regarding changes to the Program may also be by posting on Cisco.com or by e-mail or fax.
|
17.6
|
Assignment. Neither this Addendum nor any rights under this Addendum may be assigned by Distributor without the express prior written consent of Cisco. Any attempted assignment in violation of the preceding sentence shall immediately terminate the Addendum. Cisco may assign this Addendum and any right or obligation under it without Distributor's approval, to any affiliate, meaning any corporation, firm, partnership or other entity that directly or directly controls, or is controlled by, or is under common control with Cisco.
|
17.7
|
Survival. Sections 9 (License), 10 (Ownership), 11 (Warranty), 12 (Limitation of Liability and Consequential Damages Waiver), 13 (Data Usage and Protection), 15 (Term and Termination), 16 (Indemnification), and 18 (General) shall survive the termination or expiration of this Addendum.
|
1.
|
The Certified Territory for Approved Affiliate is: Brazil.
|
2.
|
Notice to Approved Affiliate pursuant to the Agreement shall be addressed as follows, unless Approved Affiliate indicates otherwise in writing to Cisco:
|
3.
|
Notwithstanding anything to the contrary herein, Cisco or Approved Affiliate may terminate this Affiliate Agreement at any time on the terms set forth in Section 18 (Term and Termination) in the Agreement. Cisco may terminate this Affiliate Agreement immediately in the event that Approved Affiliate is no longer an "Affiliate" (as defined herein) of Distributor.
|
4.
|
Approved Affiliate acknowledges that upon full execution of this Affiliate Agreement and subject to the terms of the Agreement, the terms and conditions of any current distribution or resale agreement for Cisco Products and Services with Cisco will terminate and will be superseded by the terms and conditions of this Affiliate Agreement; thereafter, the terms and conditions of any such distribution or resale agreement will have no further force and effect.
|
5.
|
Approved Affiliate acknowledges that upon full execution of this Affiliate Agreement and subject to the terms of the Agreement, the terms and conditions of any current distribution or resale agreement for Cisco Products and Services with Cisco will terminate and will be superseded by the terms and conditions of this Affiliate Agreement; thereafter, the terms and conditions of any such distribution or resale agreement will have no further force and effect.
|
6.
|
The Parties agree that the following provisions will apply to all business between the Affiliate and Cisco Brazil:
|
A.
|
Cisco Brazil as Party to the Agreement. Beginning on the Affiliate Agreement Effective Date, Approved Affiliate shall place all orders for Products and Services from Cisco Brazil from the Brazil Price List (BPL).
|
B.
|
Prices and Quotes. The Products and Services in the BPL and all quotes related to those BPL Products and Services shall be presented in Brazilian Reais.
|
a.
|
All prices in the BPL are exclusive of any freight, handling, and shipping insurance charges, taxes, fees, and duties or other similar amounts, however designated, including without limitation value added, sales, and withholding taxes which are levied or based upon prices or charges, or upon this Agreement.
|
b.
|
Distributor shall pay any taxes related to Products and Services pursuant to this Affiliate Agreement (except for taxes based on Cisco Brazil's revenue/Income) or shall present an exemption certificate acceptable to all relevant local tax authorities. Applicable taxes shall, to the extent practical, be billed as a separate Item on the Invoice.
|
C.
|
Payment. All payments pursuant to this Affiliate Agreement shall be made in Brazilian Reals to Cisco Brazil, via wire transfer to the bank account indicated by Cisco Brazil or via boleto, as instructed by Cisco Brazil.
|
D.
|
Shipping and Delivery.
|
a.
|
Scheduled shipping dates will be assigned by Cisco Brazil as close as practicable to Distributor's requested date based on Cisco Brazil's then-current lead times for the Products. Cisco Brazil will communicate scheduled shipping dates in the order acknowledgment or on Cisco.com.
|
b.
|
Applicable shipment terms (per lncoterms 2010) are set forth in Exhibit E-1 (Shipping Terms) hereto. Title and risk of loss shall transfer from Cisco Brazil to Distributor and delivery shall be deemed to occur in accordance with Exhibit E-1.
|
c.
|
All sales are final. Except as mutually agreed in writing by the parties, and except as provided In Cisco’s warranty statements, Cisco Brazil does not accept returns unless (i) Cisco Brazil shipped a Product other than as specified in the Purchase Order, (ii) such Product is unopened, and (iii) the Product is returned in accordance with Cisco's then current RMA policy and procedures.
|
d.
|
Distributor or Its authorized representative must accept ordered Products on the shipping date in accordance with this Section (d).
|
e.
|
For any Purchase Order ("PO"), Distributor must submit a requested shipping date for each line of the PO. Cisco Brazil will use standard lead-time based scheduling (based on the order fulfillment lead-time that has been established to the Product). Cisco Brazil will generate a Factory Commit Dale (FCD} for each line Item on the PO. Cisco Brazil will not support partial order-line shipments. Shipments will be made as soon as all Products with the same requested shipping date are ready for shipment. If, for any reason, the requested shipping dale is changed, then the shipping date for all of the Products with the same requested shipping date will be changed accordingly so that all the Products with the same requested shipping date are ready on the same day.
|
E.
|
Services. Distributor may order Services from Cisco Brazil as detailed in this Section
|
F.
|
Choice of Law. The validity, interpretation, and performance of this Affiliate Agreement with respect to the business between Cisco Brazil and Affiliate shall be controlled by and construed under the laws of Brazil, as if performed wholly within Brazil and without giving effect to the principles of conflicts of law, and the courts of the state of Sao Paulo in Brazil shall have exclusive jurisdiction over any claim arising under this Agreement. The parties specifically disclaim the application of the UN Convention on Contracts tor the International Sale of Goods. Notwithstanding the foregoing, either party may seek interim injunctive relief in any court of appropriate jurisdiction with respect to any alleged breach of such party's intellectual property or proprietary rights
|
7.
|
All capitalized terms in this Affiliate Agreement not otherwise defined herein shall have the meaning set forth in the Agreement. Except as expressly modified in this Affiliate Agreement, all terms and conditions of the Agreement remain unchanged and in full force and effect. This Affiliate Agreement and the Agreement comprise the complete agreement between the Parties hereto regarding this subject matter. There are no conditions, understandings, agreements, representations, or warranties, expressed or implied, which are not specified herein. This Affiliate Agreement may be modified only by a written document executed by the parties hereto. In the event of a conflict between the Agreement and this Affiliate Agreement, this Affiliate Agreement will prevail with regard to the subject matter herein, i.e., transactions involving Cisco Brazil. For the avoidance of doubt the provisions of this Affiliate
|
8.
|
Effective Date. This Affiliate Agreement Is effective as of the date of last signature below (the "Affiliate Agreement Effective Date"). If both Parties agree to modify the Affiliate Agreement Effective Date, they may do so by mutual written consent via email, letter or internal electronic communication from Cisco to the Distributor.
|
Bill-To Location
|
Ship-to Location
|
Orders Placed On
|
Ship-from Region
|
Routing
|
Shipping Term (lncoterms 2010)
|
Title Transfer
|
Risk of Loss
Transfer
|
Delivery Point
|
Brazil*
|
Brazil
|
Cisco Coemercio e Serviços de Hardware e Software do Brasil Ltda.
|
Brazil
|
Customer routed**
|
[*****]
|
[*****]
|
[*****]
|
[*****]
|
1.
|
Cisco Designated Shipping Point means any predefined point that Cisco deems appropriate for collection.
|
2.
|
Customer Routed (opt-out) means, where available, a shipping program, as selected by Integrator on the Purchase Order at the time of Purchase Order submission, by which Products are delivered in accordance with the Shipping term (lncoterms 2010) defined in the table above. If applicable, Integrator's carrier must be part of Cisco's Approved Vendor List (AVL).
|
Name of Subsidiary
|
|
State/Country
of Incorporation
|
4100 Quest, LLC
|
|
South Carolina
|
ScanSource Properties, LLC
|
|
South Carolina
|
Logue Court Properties, LLC
|
|
South Carolina
|
8650 Commerce Drive, LLC
|
|
Mississippi
|
ScanSource Canada, Inc.
|
|
Canada
|
Canpango, Inc.
|
|
South Carolina
|
Intelisys, Inc.
|
|
South Carolina
|
ScanSource Payments, Inc.
|
|
South Carolina
|
POS Portal, Inc.
|
|
California
|
Outsourcing Unlimited, Inc.
|
|
Georgia
|
RPM Software, LLC
|
|
South Carolina
|
intY USA, Inc.
|
|
Florida
|
ScanSource Latin America, Inc.
|
|
Florida
|
ScanSource de Mexico S. de R.L. de C.V.
|
|
Mexico
|
Canpango, S.A.
|
|
South Africa
|
intY Holdings Ltd.
|
|
United Kingdom
|
intY Cascade, Ltd.
|
|
Ireland
|
IntY Ltd.
|
|
United Kingdom
|
ScanSource France SARL
|
|
France
|
ScanSource Europe Ltd.
|
|
United Kingdom
|
ScanSource G.B. and N.I. Ltd.
|
|
United Kingdom
|
ScanSource Ltd.
|
|
United Kingdom
|
ScanSource Europe SPRL
|
|
Belgium1
|
ScanSource Germany GmbH
|
|
Germany
|
ScanSource Communications Ltd.
|
|
United Kingdom
|
ScanSource Europe CV
|
|
Rotterdam,NL
|
ScanSource Europe BV
|
|
Amsterdam,NL
|
ScanSource Communications GmbH
|
|
Germany
|
ScanSource UK Ltd.
|
|
United Kingdom
|
ScanSource Video Communications Europe Ltd.
|
|
United Kingdom
|
Video Corporation Ltd.
|
|
United Kingdom
|
ScanSource Video Communications SARL
|
|
France
|
ScanSource Brasil Distribuidora de Tecnologias Ltda.
|
|
Brazil
|
Network 1 International Colombia S.A.S
|
|
Colombia
|
Importadora y Comercializadora Network 1 International (Chile) SPA
|
|
Chile
|
Network 1 International Peru SAC
|
|
Peru
|
Intersmart S. de R.L. de C.V.
|
|
Mexico
|
Intersmart Technologies LLC
|
|
Florida
|
1
|
|
ScanSource Europe SPRL has branch offices that operate under the names ScanSource Europe Italia, ScanSource Netherlands, ScanSource Poland and ScanSource Spain.
|
|
/s/ Grant Thornton LLP
|
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, Chairmen, Chief Executive Officer and President (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;
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4.
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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:
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(a)
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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;
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(b)
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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;
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(c)
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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
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(d)
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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
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5.
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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):
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(a)
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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
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(b)
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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.
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/s/ Gerald Lyons
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Gerald Lyons, Senior Executive Vice President and Chief Financial Officer (Principal Financial Officer)
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1)
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The Report fully complies with the requirements of §13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”); and
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2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date:
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August 22, 2019
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/s/ Michael L. Baur
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Michael L. Baur,
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|
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Chairmen, Chief Executive Officer and President
(Principal Executive Officer)
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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
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2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date:
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August 22, 2019
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/s/ Gerald Lyons
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Gerald Lyons
|
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Senior Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
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