6 unchanged sentences
Consolidated Income Statements
−Removed: Consolidated Statements of Comprehensive (Loss) Income
+Added: Consolidated Statements of Comprehensive Income (Loss)
Consolidated Statements of Shareholders’ Equity
8 unchanged sentences
We have audited the accompanying consolidated balance sheets of ScanSource, Inc.
−Removed: (a South Carolina corporation) and subsidiaries (the “Company”) as of June 30, 2020 and 2019, the related consolidated statements of income, comprehensive (loss) income, shareholders’ equity, and cash flows for each of the three years in the period ended June 30, 2020, and the related notes and financial statement schedule included under Item 15(a)(2) (collectively referred to as the “financial statements”).
+Added: (a South Carolina corporation) and subsidiaries (the “Company”) as of June 30, 2021 and 2020, the related consolidated statements of income, comprehensive income (loss), shareholders’ equity, and cash flows for each of the three years in the period ended June 30, 2021, and the related notes (collectively referred to as the “financial statements”).
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2021, in conformity with accounting principles generally accepted in the United States of America.
11 unchanged sentences
We believe that our audits provide a reasonable basis for our opinion.
−Removed: Critical Audit Matters
−Removed: The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:
−Removed: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.
−Removed: The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
+Added: Critical audit matter
+Added: The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:
+Added: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
+Added: The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Supplier incentives
16 unchanged sentences
We also tested the design and operating effectiveness of controls relating to supplier incentives including, among others, the Company’s controls over processing new incentive agreements, specifically related to the appropriate recognition of reductions to cost of goods sold for instant rebates and the appropriate amortization of inventory valuation adjustments to cost of goods sold for achievement-based rebates.
−Removed: Europe Held for Sale and Discontinued Operations Classification in the Absence of an Executed Sales Agreement
−Removed: As described in Note 18 to the consolidated financial statements, during the fourth quarter of fiscal 2020, the Company classified the product distribution businesses in Europe, the UK (collectively,“Europe”), Mexico, Colombia, Chile, Peru, and the Miami-based export operations (collectively, “Latin America”) as assets held for sale and discontinued operations.
−Removed: As of June 30, 2020, the Company measured these businesses at the lower of carrying value or fair value less costs to sell, resulting in a pre-tax loss of $88.9 million, recorded within loss from discontinued operations for the year ended June 30, 2020.
−Removed: We identified the Europe held for sale treatment as a critical audit matter due to the complexities and judgments involved in making the accounting treatment determination.
−Removed: There are subjective and complex judgments in the following areas:
−Removed: determination of whether the sale of Europe is probable, that the transfer of assets are a completed sale within one year from June 30, 2020, and the determination of an estimated sales price since there is no signed purchase agreement in place as of the date the 10-K was filed.
−Removed: There were also complexities in determining the proper treatment of deferred taxes related to currency translation adjustments previously recorded.
−Removed: Our audit procedures related to held for sale and discontinued operations classification of Europe included the following, among others.
−Removed: We audited management's held for sale evaluation for Europe by comparing the relevant guidance against management’s conclusions.
−Removed: We tested the Company’s judgments in determining the estimated sales price of Europe based on review of correspondence with potential buyers.
−Removed: We audited management’s calculation of the loss on held for sale classification, and the applicable deferred tax impact associated with currency translation adjustments.
−Removed: We evaluated the adequacy of the Company’s disclosures on held for sale treatment and discontinued operations against the requirements of the accounting framework and tested the completeness and accuracy of the prior year financial presentation.
−Removed: We tested the design and operating effectiveness of controls established to identify, authorize and approve, account for and disclose the discontinued operations in the consolidated financial statements.
−Removed: Goodwill Valuation
−Removed: As described in Note 7 to the consolidated financial statements, as of June 30, 2020, goodwill recorded in the Worldwide Barcode, Networking and Security reporting unit (“Barcode”) was $16.4 million and goodwill recorded in the Worldwide Communications and Services (“Communications”) reporting unit was $197.9 million.
−Removed: Goodwill is tested by the Company’s management for impairment at least annually at the reporting unit level and more frequently when indicators of potential impairment are identified.
−Removed: During the fourth quarter of fiscal 2020, management performed a quantitative impairment test of goodwill.
−Removed: This test resulted in impairment charges of $119.0 million for the Barcode reporting unit.
−Removed: No impairment was recorded in the Communications reporting unit.
−Removed: We identified goodwill valuation as a critical audit matter because of the significant judgments made by management to estimate the fair value of goodwill in each reporting unit.
−Removed: Estimates of future performance and market conditions used to arrive at the net present value of future cash flows, which is used within the goodwill impairment analysis, are subjective in nature.
−Removed: In particular, the Company’s fair value estimate was sensitive to assumptions including the discount rate and revenue growth rates, which are affected by expectations about future market or economic conditions.
−Removed: There were also complexities in determining the allocation of the identified goodwill impairment charges to legal jurisdictions for tax purposes.
−Removed: Our audit procedures related to goodwill valuation include the following, among other procedures.
−Removed: We compared the significant assumptions used by management to current industry and economic trends.
−Removed: We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the Barcode and Communications reporting units which would result from changes in assumptions.
−Removed: With the assistance of our valuation specialists, we assessed the Company’s methodologies and tested the significant assumptions and underlying data used by the Company in its valuation analysis.
−Removed: With the assistance of our tax specialists, we evaluated whether the allocation of the goodwill impairment for income taxes purposes was appropriate.
−Removed: We evaluated the adequacy of the Company’s disclosures on goodwill valuation against the requirements of the accounting framework.
−Removed: We obtained an understanding, evaluated the
−Removed: Index to Financial Statements
−Removed: design, and tested the operating effectiveness of controls over the Company’s goodwill impairment review process.
−Removed: This includes controls over management’s review of the significant assumptions described above .
/s/ Grant Thornton LLP
20 unchanged sentences
We believe that our audit provides a reasonable basis for our opinion.
−Removed: Our audit of, and opinion on, the Company’s internal control over financial reporting does not include the internal control over financial reporting of intY Holdings ("intY"), a wholly-owned subsidiary, whose financial statements reflect total assets and revenues from continuing operations constituting 3.5 percent and less than 1 percent, respectively, of the related consolidated financial statement amounts as of and for the year ended June 30, 2020.
−Removed: As indicated in Management’s Report, intY was acquired during the year ended June 30, 2020.
−Removed: Management’s assertion on the effectiveness of the Company’s internal control over financial reporting excluded internal control over financial reporting of intY.
Definition and limitations of internal control over financial reporting
28 unchanged sentences
Other non-current assets 63,615 72,521
−Removed: Non-current assets held for sale — 29,079
Total assets $ 1,671,684 $ 1,692,094
11 unchanged sentences
Borrowings under revolving credit facility — 67,714
−Removed: Long-term portion of contingent consideration — 39,532
Other long-term liabilities 68,269 80,068
−Removed: Long-term liabilities held for sale — 32,157
Total liabilities 940,493 1,013,848
24 unchanged sentences
Intangible amortization expense 19,488 19,953 17,893
+Added: Restructuring and other charges 9,258 604 8,654
Impairment charges — 120,470 —
Change in fair value of contingent consideration 516 6,941 15,200
−Removed: Operating (loss) income ( 64,967 ) 94,734 69,006
+Added: Operating income (loss) 61,483 ( 64,967 ) 94,734
Interest expense 6,929 12,224 13,162
1 unchanged sentence
Other expense (income), net 116 411 ( 247 )
−Removed: (Loss) income before income taxes ( 71,776 ) 83,637 63,049
+Added: Income (loss) before income taxes 57,535 ( 71,776 ) 83,637
Provision for income taxes 12,146 7,451 18,778
−Removed: Net (loss) income from continuing operations ( 79,227 ) 64,859 35,456
+Added: Net income (loss) from continuing operations 45,389 ( 79,227 ) 64,859
Net loss from discontinued operations ( 34,594 ) ( 113,427 ) ( 7,262 )
−Removed: Net (loss) income $ ( 192,654 ) $ 57,597 $ 33,153
+Added: Net income (loss) $ 10,795 $ ( 192,654 ) $ 57,597
Per share data:
−Removed: Net (loss) income from continuing operations per common share, basic $ ( 3.12 ) $ 2.53 $ 1.39
+Added: Net income (loss) from continuing operations per common share, basic $ 1.79 $ ( 3.12 ) $ 2.53
Net loss from discontinued operations per common share, basic ( 1.36 ) ( 4.47 ) ( 0.28 )
−Removed: Net (loss) income per common share, basic $ ( 7.59 ) $ 2.25 $ 1.30
+Added: Net income (loss) per common share, basic $ 0.42 $ ( 7.59 ) $ 2.25
Weighted-average shares outstanding, basic 25,423 25,378 25,642
−Removed: Net (loss) income from continuing operations per common share, diluted $ ( 3.12 ) $ 2.52 $ 1.38
+Added: Net income (loss) from continuing operations per common share, diluted $ 1.78 $ ( 3.12 ) $ 2.52
Net loss from discontinued operations per common share, diluted ( 1.36 ) ( 4.47 ) ( 0.28 )
−Removed: Net (loss) income per common share, diluted $ ( 7.59 ) $ 2.24 $ 1.29
+Added: Net income (loss) per common share, diluted $ 0.42 $ ( 7.59 ) $ 2.24
Weighted-average shares outstanding, diluted 25,518 25,378 25,734
3 unchanged sentences
and Subsidiaries
−Removed: Consolidated Statements of Comprehensive (Loss) Income
+Added: Consolidated Statements of Comprehensive Income (Loss)
Years Ended June 30, 2021, 2020 and 2019
1 unchanged sentence
2021 2020 2019
−Removed: Net (loss) income $ ( 192,654 ) $ 57,597 $ 33,153
−Removed: Unrealized (loss) gain on hedged transaction, net of tax ( 4,646 ) ( 3,277 ) 1,089
+Added: Net income (loss) $ 10,795 $ ( 192,654 ) $ 57,597
+Added: Unrealized gain (loss) on hedged transaction, net of tax 2,249 ( 4,646 ) ( 3,277 )
Foreign currency translation adjustment 20,778 ( 38,061 ) ( 2,634 )
−Removed: Comprehensive (loss) income $ ( 235,361 ) $ 51,686 $ 22,180
+Added: Realized foreign currency loss from discontinued operations 11,635 — —
+Added: Comprehensive income (loss) $ 45,457 $ ( 235,361 ) $ 51,686
See accompanying notes to these consolidated financial statements.
11 unchanged sentences
Net income — — 57,597 — 57,597
−Removed: Unrealized gain on hedged transaction, net of tax — — — 1,089 1,089
+Added: 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
+Added: 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
−Removed: Net income — — 57,597 — 57,597
+Added: Net loss — — ( 192,654 ) — ( 192,654 )
Unrealized loss on hedged transaction, net of tax — — — ( 4,646 ) ( 4,646 )
4 unchanged sentences
Balance at June 30, 2020 25,361,298 63,765 747,276 ( 132,795 ) 678,246
−Removed: Net loss — — ( 192,654 ) — ( 192,654 )
−Removed: Unrealized loss on hedged transaction, net of tax — — — ( 4,646 ) ( 4,646 )
+Added: Net income — — 10,795 — 10,795
+Added: Unrealized gain on hedged transaction, net of tax — — — 2,249 2,249
Foreign currency translation adjustment — — — 20,778 20,778
+Added: Realized foreign currency loss from discontinued operations — — — 11,635 11,635
Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes 138,167 ( 585 ) — — ( 585 )
−Removed: Common stock repurchased ( 168,068 ) ( 5,432 ) — — ( 5,432 )
Share-based compensation — 8,073 — — 8,073
9 unchanged sentences
Cash flows from operating activities:
−Removed: Net (loss) income $ ( 192,654 ) $ 57,597 $ 33,153
+Added: Net income (loss) $ 10,795 $ ( 192,654 ) $ 57,597
Net loss from discontinued operations ( 34,594 ) ( 113,427 ) ( 7,262 )
−Removed: Net (loss) income from continuing operations ( 79,227 ) 64,859 35,456
+Added: Net income (loss) from continuing operations 45,389 ( 79,227 ) 64,859
Adjustments to reconcile net income to net cash provided by operating activities of continuing operations:
20 unchanged sentences
Cash paid for business acquisitions, net of cash acquired — ( 48,921 ) ( 32,161 )
−Removed: Net cash used in investing activities of continuing operations ( 55,308 ) ( 37,958 ) ( 150,766 )
+Added: Cash received for business disposal 34,356 — —
+Added: Net cash provided by (used in) investing activities of continuing operations 31,993 ( 55,308 ) ( 37,958 )
Cash flows from financing activities of continuing operations:
13 unchanged sentences
Net cash flows provided by (used in) operating activities of discontinued operations 24,173 44,238 ( 43,159 )
−Removed: Net cash flows used in by investing activities of discontinued operations ( 77 ) ( 1,416 ) ( 1,161 )
+Added: Net cash flows used in investing activities of discontinued operations ( 58 ) ( 77 ) ( 1,416 )
Net cash flows (used in) provided by financing activities of discontinued operations ( 29,494 ) ( 3,921 ) 32,917
−Removed: Net cash flows provided by (used in) discontinued operations 40,240 ( 11,658 ) ( 8,149 )
+Added: Net cash flows (used in) provided by discontinued operations ( 5,379 ) 40,240 ( 11,658 )
Effect of exchange rate changes on cash and cash equivalents 3,706 ( 3,642 ) 558
18 unchanged sentences
The Company brings technology solutions and services from leading suppliers of mobility and barcode, point-of-sale (POS), payments, physical security, unified communications and collaboration, and telecom and cloud services to market.
−Removed: The Company operates in the United States, Canada, Brazil, additional Latin American countries, the UK and Europe.
−Removed: However, the Company is in the process of divesting its products distribution business in the UK, Europe and Latin America, outside of Brazil.
−Removed: See Note 18 - Discontinued Operations for more information regarding the Company's divestitures.
+Added: The Company operates in the United States, Canada, Brazil, and the UK.
+Added: During the quarter ended December 31, 2020, the Company completed the divestitures of its products distribution business in the UK, Europe, and Latin America, outside of Brazil (the "Divestitures").
+Added: See Note 19 - Discontinued Operations for more information regarding the Divestitures.
The Company's two operating segments, Worldwide Barcode, Networking & Security and Worldwide Communications & Services, are based on product, customer, and service type.
−Removed: In early March 2020, the World Health Organization characterized COVID-19 as a pandemic.
−Removed: The rapid spread of COVID-19 since December 2019 has resulted in the implementation of numerous measures to contain the virus worldwide, such as travel bans and restrictions, quarantines, shelter-in-place orders and business shutdowns.
+Added: The spread of COVID-19 since December 2019 has resulted in the implementation of numerous measures to contain the virus worldwide, such as travel bans and restrictions, quarantines, shelter-in-place orders, business shutdowns, and limitations of in-person gatherings.
The Company moved quickly to transition our employees, where possible, to a fully remote working environment.
−Removed: The Company took steps to deploy teams to monitor the rapidly evolving situation and recommend risk mitigation actions;
−Removed: implement travel restrictions;
−Removed: and employees are following social distancing practices.
−Removed: The Company is following guidance from authorities and health officials including, but not limited to, checking the temperature of associates when entering our facilities, requiring associates to wear masks and other protective clothing as appropriate, and implementing additional cleaning and sanitation routines.
−Removed: The pa ndemic and these containment measures have had, and are expected to continue to have, a substantial impact on businesses around the world, including our own, and on global, regional and national economies.
−Removed: The Company is unable to predict the ultimate impact that COVID-19 will have on our business due to the inability to predict the duration or magnitude of the virus' impacts.
−Removed: However, we have experienced decreased revenue and increased employee-related healthcare and prevention costs.
−Removed: Overall, the Company expects COVID-19 to adversely impact our results of operations for at least the next two quarters if not longer, while the Company has made adjustments, including implementing an annualized expense reduction plan for fiscal year 2021, and will likely continue to make adjustments, to our operating practices as appropriate, it is unlikely that these measures will be sufficient to fully offset the adverse impacts.
+Added: The Company also deployed teams to monitor the evolving situation and recommend risk mitigation actions;
+Added: The Company is following guidance from authorities and health officials, including implementing travel restrictions and requiring employees to adhere physical distancing protocols.
+Added: All of the Company's distribution facilities have remained open and operational throughout the pandemic.
+Added: The pandemic and these containment measures have had an impact on our business, suppliers' businesses and sales partners' businesses.
+Added: The negative impacts to net sales from the pandemic, including declines in customer demand and supply chain disruptions, were most pronounced during the fourth quarter of fiscal year 2020, and have since recovered throughout fiscal year 2021.
+Added: While we are unable to predict the ultimate impact that COVID-19 will have on our business, certain technologies have benefited from the widespread adoption of work-from-home, as well as the accelerated shift to digitize and automate processes.
+Added: We are also incurring higher employee related healthcare and prevention costs as a result of the pandemic.
+Added: The Company has made adjustments, including implementing an annualized expense reduction plan in fiscal year 2021.
+Added: For further discussion on the potential future impacts of COVID-19, see the Risk Factors presented in Part I, Item 1A.
Basis of Presentation
14 unchanged sentences
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
−Removed: On an ongoing basis, management evaluates its estimates, including those related to the allowance for uncollectible accounts receivable, contingent consideration, asset impairments, inventory reserves and supplier incentives.
+Added: On an ongoing basis, management evaluates its estimates, including those related to the allowance for uncollectible accounts receivable, contingent consideration, asset impairments, inventory reserves, purchase price allocations, goodwill and intangibles, and supplier incentives.
Management bases its estimates on assumptions that management believes to be reasonable under the circumstances, the results of which form a basis for making judgments about the carrying value of assets and liabilities that are not readily available from other sources.
5 unchanged sentences
Management determines the estimate of the allowance for uncollectible accounts receivable by considering a number of factors, including:
−Removed: (1) historical experience, (2) aging of the accounts receivable, (3) specific information obtained by the Company on the financial condition and the current creditworthiness of its customers and (4) the current economic and country-specific environment.
+Added: (i) historical experience, (ii) aging of the accounts receivable, (iii) specific information obtained by the Company on the financial condition and the current creditworthiness of its customers, (iv) the current economic and country-specific environment and (v) reasonable and supportable forecasts about collectability.
If the financial condition of the Company’s customers were to deteriorate and reduce the ability of the Company’s customers to make payments on their accounts, the Company may be required to increase its allowance by recording additional bad debt expense.
13 unchanged sentences
The Company recognizes assets and liabilities acquired at their estimated fair values.
−Removed: Management uses judgment to (1) identify the acquired assets and liabilities assumed, (2) estimate the fair value of these assets, (3) estimate the useful life of the assets and (4) assess the appropriate method for recognizing depreciation or amortization expense over the assets' useful life.
+Added: Management uses judgment to (i) identify the acquired assets and liabilities assumed, (ii) estimate the fair value of these assets, (iii) estimate the useful life of the assets and (iv) assess the appropriate method for recognizing depreciation or amortization expense over the assets' useful life.
See Note 7 - Acquisitions for further discussion of the Company's business combinations.
20 unchanged sentences
The Company maintains its cash with various financial institutions globally that are monitored regularly for credit quality, although it may hold amounts in excess of Federal Deposit Insurance Corporation ("FDIC") or other insured limits.
−Removed: Cash and cash equivalents held outside of the United States for our continuing operations totaled $ 23.6 million and $ 14.1 million as of June 30, 2020 and 2019, respectively.
+Added: Cash and cash equivalents held outside of the United States for continuing operations totaled $ 52.1 million and $ 23.6 million as of June 30, 2021 and 2020, respectively.
Concentration of Credit Risk
−Removed: The Company sells to a large base of customers throughout the United States, Canada, Brazil, the UK and Europe.
+Added: The Company sells to a large base of customers throughout the United States, Canada, Brazil and the UK.
The Company performs ongoing credit evaluations of its customers’ financial condition.
15 unchanged sentences
The Company’s objective is to preserve the economic value of non-functional currency denominated cash flows.
−Removed: The Company's foreign currencies are denominated primarily in Brazilian reais, euros, British pounds and Canadian dollars.
+Added: The Company's foreign currencies are denominated primarily in Brazilian reais, British pounds and Canadian dollars.
The Company may reduce its exposure to fluctuations in foreign exchange rates by creating offsetting positions through the use of derivative financial instruments.
6 unchanged sentences
To manage the exposure, the Company has an interest rate swap agreement and has designated this instrument as a hedge of the cash flows on certain variable rate debt.
−Removed: To the extent the derivative instrument was effective in offsetting the variability of the hedged cash flows, changes in the fair value of the derivative instrument were not included in current earnings, but were reported as other comprehensive (loss) income.
−Removed: There was no ineffective portion recorded as an adjustment to earnings for the year ended June 30, 2020.
+Added: To the extent the derivative instrument was effective in offsetting the variability of the hedged cash flows, changes in the fair value of the derivative instrument were not included in current earnings, but were reported as other comprehensive income (loss).
+Added: There was no ineffective portion recorded as an adjustment to earnings for the years ended June 30, 2021 and 2020.
The Company has investments that are held in a grantor trust formed by the Company related to the ScanSource, Inc.
32 unchanged sentences
however, sales of products supplied by Cisco and Zebra each constituted more than 10 % of the Company's net sales for the year ended June 30, 2021, 2020, and 2019.
−Removed: Avaya, Cisco, and Zebra each constituted more than 10 % of the Company's net sales for the year ended June 30, 2018.
Product Warranty
43 unchanged sentences
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.
+Added: No goodwill impairment charges were recognized for the fiscal years ended June 30, 2021 and 2019.
Goodwill impairment charges totaled $ 119.0 million for the Worldwide Barcode, Networking and Security segment reporting units for the fiscal year ended June 30, 2020 and are included in the impairment charges line item in the Consolidated Income Statements .
−Removed: No goodwill impairment charges were recognized for the years ended June 30, 2019 and 2018.
See Note 8 - Goodwill and Other Identifiable Intangible Assets for more information regarding goodwill and the results of our testing.
9 unchanged sentences
If it is determined that a long-lived asset is not recoverable, an impairment loss would be calculated equal to the excess of the carrying amount of the long-lived asset over its fair value .
−Removed: Intangible asset impairment charges totaled $ 1.4 million for our continuing operations for the fiscal year ended June 30, 2020 and are included in the impairment charges line item in the Consolidated Income Statements .
No intangible asset or other long-lived asset impairment charges were recognized for the fiscal years ended June 30, 2021 and 2019.
+Added: Intangible asset impairment charges totaled $ 1.4 million for our continuing operations for the fiscal year ended June 30, 2020 and are included in the impairment charges line item in the Consolidated Income Statements .
See Note 8 - Goodwill and Other Identifiable Intangible Assets for more information regarding intangible asset impairment charges.
9 unchanged sentences
Liability for Contingent Consideration
−Removed: In addition to the initial cash consideration paid to former shareholders of Intelisys, Network1, and POS Portal, the Company agreed to make additional earnout payments based on future results through a specified date based on a multiple of the subsidiary’s pro forma earnings as defined in the respective purchase agreements.
+Added: In addition to the initial cash consideration paid to former shareholders of Intelisys and Network1, the Company agreed to make additional earnout payments based on future results through a specified date based on a multiple of the subsidiary’s pro forma earnings as defined in the respective purchase agreements.
Future payments are to be paid in the functional currency of the acquired entity.
−Removed: The Company paid the final earnout payment to the former shareholders of Network1 during fiscal year 2019.
−Removed: The Company also made a single earnout payment to the former shareholders of POS Portal during fiscal year 2018 in accordance with the share purchase agreement.
−Removed: Intelisys has one remaining earnout payment to be paid during fiscal year 2021.
−Removed: In accordance with ASC Topic 805, Business Combinations , the Company determines the fair value of this liability for contingent consideration at each reporting date throughout the term of the earnout using a form of a probability weighted discounted cash flow model.
−Removed: Each period the Company will reflect the contingent consideration liability at fair value with changes recorded in the change in fair value of contingent consideration line item on the Consolidated Income Statement.
−Removed: Current and non-current portions of the liability are presented in the current portion of contingent consideration and long-term portion of contingent consideration line items on the Consolidated Balance Sheets.
+Added: The Company paid the final earnout payment to the former shareholders of Intelisys during fiscal year 2021.
+Added: The Company also paid the final earnout payment to the former shareholders of Network1 during fiscal year 2019.
Contingencies
21 unchanged sentences
The Company's continuing operations functional currencies include U.S.
−Removed: dollars, Brazilian reais, euros, British pounds, and
−Removed: Index to Financial Statements
−Removed: SCANSOURCE, INC.
−Removed: AND SUBSIDIARIES
−Removed: Notes to Consolidated Financial Statements—(Continued)
−Removed: June 30, 2020
−Removed: Canadian dollars.
+Added: dollars, Brazilian reais, British pounds, and Canadian dollars.
The assets and liabilities of these foreign entities are translated into U.S.
5 unchanged sentences
Deferred income taxes reflect tax consequences on future years of differences between the tax bases of assets and liabilities and their financial reporting amounts.
−Removed: In accordance with ASC 740, Accounting for Income Taxes, valuation allowances are provided against deferred tax assets when it is more likely than not that an asset will not be realized .
+Added: In accordance with
+Added: Index to Financial Statements
+Added: SCANSOURCE, INC.
+Added: AND SUBSIDIARIES
+Added: Notes to Consolidated Financial Statements—(Continued)
+Added: June 30, 2021
+Added: ASC 740, Accounting for Income Taxes, valuation allowances are provided against deferred tax assets when it is more likely than not that an asset will not be realized .
Additionally, the Company maintains reserves for uncertain tax provisions.
11 unchanged sentences
Repurchases of common stock are accounted for at cost, which includes brokerage fees, and are included as a component of shareholder's equity on the Consolidated Balance Sheets.
−Removed: The Company's share repurchase authorization expired in August 2019, as such all repurchases were completed in the first quarter of fiscal year 2020.
Comprehensive Income
1 unchanged sentence
The components of comprehensive income for the Company include net income, unrealized gains or losses on hedged transactions, net of tax and foreign currency translation adjustments arising from the consolidation of the Company’s foreign subsidiaries.
−Removed: Reclassifications
−Removed: Reclassifications have been made on the Consolidated Balance Sheets, Consolidated Income Statements and Consolidated Statements of Cash Flows in the prior years in connection with reporting discontinued operations.
−Removed: These reclassifications had no effect on consolidated financial results.
Recent Accounting Pronouncements
1 unchanged sentence
Under the new guidance, lessees are required to recognize a lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis, and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term.
−Removed: The asset is measured at the lease liability amount, adjusted for lease prepayments,
−Removed: Index to Financial Statements
−Removed: SCANSOURCE, INC.
−Removed: AND SUBSIDIARIES
−Removed: Notes to Consolidated Financial Statements—(Continued)
−Removed: June 30, 2020
−Removed: lease incentives received and the lessee's initial direct costs.
+Added: The asset is measured at the lease liability amount, adjusted for lease prepayments, lease incentives received and the lessee's initial direct costs.
For leases with a lease term of 12 months or less, as long as the lease does not include options to purchase the underlying assets, lessees can elect not to recognize a lease liability and right-of-use asset.
8 unchanged sentences
See Note 14 - Leases for additional lease disclosures.
−Removed: In June 2016, the FASB issues ASU 2016-13, Financial Instruments - Credit Losses (Topic 326).
+Added: In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326).
In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326:
−Removed: Financial Instruments - Credit Losses, which provides supplemental guidance and clarification to ASU 2016-13 and must be adopted concurrently .
+Added: Financial Instruments - Credit Losses, which provides
+Added: Index to Financial Statements
+Added: SCANSOURCE, INC.
+Added: AND SUBSIDIARIES
+Added: Notes to Consolidated Financial Statements—(Continued)
+Added: June 30, 2021
+Added: supplemental guidance and clarification to ASU 2016-13 and must be adopted concurrently .
The pronouncement revises the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded.
−Removed: The guidance is effective for the Company beginning in the first quarter of fiscal year 2021 with early adoption permitted.
−Removed: The Company has evaluated the need for a change in our methodology for calculating allowance for trade and notes receivable in accordance with the guidance and has determined no change is necessary.
−Removed: The adoption of this standard is not expected to be material to the Company's consolidated financial statements.
+Added: The Company adopted this standard effective July 1, 2020, and it did not have a material impact on the Company's consolidated financial statements.
+Added: See Note 2 - Trade Accounts and Notes Receivable for disclosures related to the adoption of ASU 2016-13.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (ASC Topic 820) Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.
1 unchanged sentence
This guidance is effective for fiscal years beginning after December 15, 2019, and for interim periods within those fiscal years, with early adoption permitted.
−Removed: This guidance is applicable to the Company’s fiscal year beginning July 1, 2020 .
−Removed: The Company is currently evaluating the potential impact of this guidance on its consolidated financial statements.
−Removed: In March 2020, the FASB issued ASU No.
−Removed: 2020-04, Reference Rate Reform (Topic 848):
−Removed: Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU No.
−Removed: 2020-04”), which provides optional guidance to ease the potential burden in accounting for reference rate reform on financial reporting.
−Removed: The new guidance provides optional expedients and exceptions for applying generally accepted accounting principles to transactions affected by reference rate reform if certain criteria are met.
−Removed: The company is currently evaluating the potential impact of this guidance on its consolidated financial statements.
+Added: The Company adopted this standard effective July 1, 2020, and it had no impact on the Company's consolidated financial statements.
The Company has reviewed other newly issued accounting pronouncements and concluded that they are either not applicable to its business or that no material effect is expected on its consolidated financial statements as a result of future adoption.
+Added: Index to Financial Statements
+Added: SCANSOURCE, INC.
+Added: AND SUBSIDIARIES
+Added: Notes to Consolidated Financial Statements—(Continued)
+Added: June 30, 2021
+Added: (2) Trade Accounts and Notes Receivable, Net
+Added: The Company maintains an allowance for doubtful accounts receivable for estimated future expected credit losses resulting from customers’ failure to make payments on accounts receivable due to the Company.
+Added: The Company has notes receivable with certain customers, which are included in “Accounts receivable, less allowance” in the Condensed Consolidated Balance Sheets.
+Added: Management determines the estimate of the allowance for doubtful accounts receivable by considering a number of factors, including:
+Added: (i) historical experience, (ii) aging of the accounts receivable, (iii) specific information obtained by the Company on the financial condition and the current creditworthiness of its customers, (iv) the current economic and country-specific environment and (v) reasonable and supportable forecasts about collectability.
+Added: Expected credit losses are estimated on a pool basis when similar risk characteristics exist using an age-based reserve model.
+Added: Receivables that do not share risk characteristics are evaluated on an individual basis.
+Added: Estimates of expected credit losses on trade receivables are recorded at inception and adjusted over the contractual life.
+Added: The changes in the allowance for doubtful accounts for the fiscal years ended June 30, 2021, June 30, 2020 and June 30, 2019 are set forth in the tables below.
+Added: Description Balance at
+Added: of Period Amounts
+Added: Expense Write-offs Other (1)
+Added: Allowance for bad debt:
+Added: Year ended June 30, 2019 $ 33,843 1,712 ( 9,005 ) 971 $ 27,521
+Added: Trade and current note receivable allowance $ 27,521
+Added: Year ended June 30, 2020 $ 27,521 1,621 ( 5,176 ) ( 2,060 ) $ 21,906
+Added: Trade and current note receivable allowance $ 21,906
+Added: Year ended June 30, 2021 $ 21,906 338 ( 4,556 ) 1,653 $ 19,341
+Added: Trade and current note receivable allowance $ 19,341
+Added: (1) "Other" amounts include recoveries and the effect of foreign currency fluctuations for the fiscal years ended June 30, 2021, 2020, and 2019, respectively.
+Added: Index to Financial Statements
+Added: SCANSOURCE, INC.
+Added: AND SUBSIDIARIES
+Added: Notes to Consolidated Financial Statements—(Continued)
+Added: June 30, 2021
(3) Revenue Recognition
5 unchanged sentences
The Company considers itself the principal in these transactions as it has control of the product or service before it is transferred to the customer.
−Removed: When the Company provides self-branded warranty programs, it engages a third party, generally the original equipment manufacturer, to cover the fulfillment of any obligations arising from
−Removed: Index to Financial Statements
−Removed: SCANSOURCE, INC.
−Removed: AND SUBSIDIARIES
−Removed: Notes to Consolidated Financial Statements—(Continued)
−Removed: June 30, 2020
−Removed: these contracts.
+Added: When the Company provides self-branded warranty programs, it engages a third party, generally the original equipment manufacturer, to cover the fulfillment of any obligations arising from these contracts.
These revenues and associated third-party costs are amortized over the life of the contract on a straight-line basis.
11 unchanged sentences
The Company estimates returns allowance based on historical experience and reduces revenue accordingly.
−Removed: The Company estimates the amount of variable consideration for rebates and incentives by using the expected value or the most likely amount to be given to the customer and reduces the revenue by those estimated amounts.
+Added: The Company estimates the amount of variable consideration for rebates and incentives by using the expected value to be given to the customer and reduces the revenue by those estimated amounts.
These estimates are reviewed and updated as necessary at the end of each reporting period.
7 unchanged sentences
• Shipping costs - The Company accounts for certain shipping and handling activities as fulfillment costs and expenses them as incurred.
−Removed: • 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.
−Removed: • Sales tax and other related taxes - Sales and other tax amounts collected from customers for remittance to governmental authorities are excluded from revenue.
−Removed: Disaggregation of Revenue
−Removed: The following tables represent the Company's disaggregation of revenue:
+Added: • 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
Index to Financial Statements
3 unchanged sentences
June 30, 2021
+Added: 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.
+Added: • Sales tax and other related taxes - Sales and other tax amounts collected from customers for remittance to governmental authorities are excluded from revenue.
+Added: Disaggregation of Revenue
+Added: The following tables represent the Company's disaggregation of revenue:
Fiscal year ended June 30, 2021
3 unchanged sentences
Technology solutions $ 2,175,141 $ 910,722 $ 3,085,863
−Removed: Master agency and professional services (a)
−Removed: — 61,703 61,703
+Added: Intelisys — 64,943 64,943
$ 2,175,141 $ 975,665 $ 3,150,806
4 unchanged sentences
Technology solutions $ 2,093,217 $ 897,096 $ 2,990,313
−Removed: Master agency and professional services (a)
−Removed: — 55,049 55,049
+Added: Intelisys — 57,421 57,421
$ 2,093,217 $ 954,517 $ 3,047,734
4 unchanged sentences
Technology solutions $ 2,141,896 $ 1,058,176 $ 3,200,072
−Removed: Master agency and professional services (a)
−Removed: — 42,312 42,312
+Added: Intelisys — 49,727 49,727
$ 2,141,896 $ 1,107,903 $ 3,249,799
−Removed: (a) Includes Intelisys Communications, Inc., Canpango, and Intelisys Global Ltd.
Index to Financial Statements
9 unchanged sentences
(in thousands, except per share data)
−Removed: Net (loss) income from continuing operations $ ( 79,227 ) $ 64,859 $ 35,456
+Added: Net income (loss) from continuing operations $ 45,389 $ ( 79,227 ) $ 64,859
Net loss from discontinued operations ( 34,594 ) ( 113,427 ) ( 7,262 )
−Removed: Net (loss) income $ ( 192,654 ) $ 57,597 $ 33,153
+Added: Net income (loss) $ 10,795 $ ( 192,654 ) $ 57,597
Weighted-average shares, basic 25,423 25,378 25,642
2 unchanged sentences
25,518 25,378 25,734
−Removed: Net (loss) income from continuing operations per common share, basic ( 3.12 ) 2.53 1.39
+Added: Net income (loss) from continuing operations per common share, basic $ 1.79 $ ( 3.12 ) $ 2.53
Net loss from discontinued operations per common share, basic ( 1.36 ) ( 4.47 ) ( 0.28 )
−Removed: Net (loss) income per common share, basic $ ( 7.59 ) $ 2.25 $ 1.30
−Removed: Net (loss) income from continuing operations per common share, diluted ( 3.12 ) 2.52 1.38
+Added: Net income (loss) per common share, basic $ 0.42 $ ( 7.59 ) $ 2.25
+Added: Net income (loss) from continuing operations per common share, diluted $ 1.78 $ ( 3.12 ) $ 2.52
Net loss from discontinued operations per common share, diluted ( 1.36 ) ( 4.47 ) ( 0.28 )
−Removed: Net (loss) income per common share, diluted $ ( 7.59 ) $ 2.24 $ 1.29
+Added: Net income (loss) per common share, diluted $ 0.42 $ ( 7.59 ) $ 2.24
(1) The Company calculates weighted average shares of common stock in accordance with ASC 260, Earnings per Share .
19 unchanged sentences
Depreciation expense recorded as selling, general and administrative costs in the accompanying Consolidated Income Statements was $ 12.5 million, $ 13.0 million and $ 12.0 million for the fiscal years ended June 30, 2021, 2020 and 2019, respectively.
−Removed: Depreciation expense recorded as cost of goods sold in the accompanying Consolidated Income Statements was $ 2.3 million, $ 3.7 million and $ 3.5 million for the fiscal year ended June 30, 2020, 2019 and 2018, respectively.
−Removed: (5) Other assets and liabilities, current and non-current
+Added: Depreciation expense recorded as cost of goods sold in the accompanying Consolidated Income Statements was $ 1.5 million, $ 2.3 million and $ 3.7 million for the fiscal years ended June 30, 2021, 2020 and 2019, respectively.
+Added: (6) Other Assets and Liabilities, Current
The table below details prepaid expenses and other current assets.
39 unchanged sentences
This acquisition is included in the Worldwide Communications & Services segment.
−Removed: RPM, Canpango and Intelisys Global
−Removed: During the quarter ended December 31, 2018, the Company acquired the assets of RPM Software ("RPM"), a business process software developer with focus in the telecom channel business for calculating and paying agency commissions in an automated cloud-based system.
−Removed: During the quarter ended September 30, 2018, the Company completed the acquisition of Canpango, a global Salesforce implementation and consulting business with deep knowledge of customer relationship management and integration with telecom systems.
−Removed: Intelisys Global was also acquired during the quarter ended September 30, 2018.
−Removed: The total combined purchase price for all companies, net of cash acquired, was approximately $ 32.2 million.
−Removed: The purchase price of these collective acquisitions was allocated to the assets acquired and liabilities assumed based on their estimated fair values on the transaction date.
−Removed: Intangible assets acquired include trade names, customer relationships, non-compete agreements and developed technology.
−Removed: Goodwill recognized on these acquisitions is expected to be deductible for tax purposes.
−Removed: See Note 7 - Goodwill and Other Identifiable Intangible Assets for the amount of goodwill and intangible assets recognized in connection with these acquisitions.
−Removed: The impact of these acquisitions was not material to the consolidated financial statements.
−Removed: In connection with these acquisitions during fiscal 2019, the Company recognized $ 0.9 million in acquisition-related costs included in selling, general and administrative expenses on the Consolidated Income Statements.
−Removed: The Company has initiated plans to close Canpango, its Salesforce implementation and consulting business.
−Removed: See Note 19 - Subsequent Events for more information.
Index to Financial Statements
8 unchanged sentences
Key assumptions used in determining fair value include projected growth and operating margin, working capital requirements and discount rates.
−Removed: The Company's projected growth and operating margins have been impacted by the worldwide economic hardships created by COVID-19 and as such recognized a goodwill impairment charge of $ 119.0 million for our Worldwide, Barcode, Networking and Security reporting unit for the fiscal year ended June 30, 2020 which is recorded to the impairment charges line item in the Consolidated Income Statements.
−Removed: The fair value of our Worldwide Communications & Services reporting unit exceeds its carrying value of assets by approximately 12 %.
During fiscal years ended June 30, 2021 and 2019, no impairment charges related to goodwill were recorded.
+Added: For the fiscal year ended June 30, 2020, the Company's projected growth and operating margins were impacted by the worldwide economic hardships created by COVID-19 and as such recognized a goodwill impairment charge of $ 119.0 million for our Worldwide, Barcode, Networking and Security reporting unit, which is recorded to the impairment charges line item in the Consolidated Income Statements.
Changes in the carrying amount of goodwill for the years ended June 30, 2021 and 2020, by reportable segment, are set forth in the table below.
−Removed: Additions to goodwill for fiscal years 2020 and 2019 are due to the recent acquisitions.
+Added: Additions to goodwill for fiscal year 2020 are due to the recent acquisitions.
Worldwide Barcode, Networking & Security Segment Worldwide Communications & Services Segment Total
2 unchanged sentences
Additions — 30,445 30,445
−Removed: Unrealized loss on foreign currency translation 11 127 138
−Removed: Balance at June 30, 2019 $ 135,965 $ 174,750 $ 310,715
−Removed: Additions — 30,445 30,445
Goodwill impairment charges ( 119,037 ) — ( 119,037 )
1 unchanged sentence
Balance at June 30, 2020 $ 16,370 $ 197,918 $ 214,288
+Added: Unrealized gain on foreign currency translation — 4,589 4,589
+Added: Balance at June 30, 2021 $ 16,370 $ 202,507 $ 218,877
The following table shows the Company’s identifiable intangible assets as of June 30, 2021 and 2020, respectively.
14 unchanged sentences
During fiscal year 2020, the Company acquired customer relationships, trade names and developed technology related to the acquisition of intY.
−Removed: During fiscal year 2019, the Company acquired customer relationships, trade names and developed technology related to the acquisition of RPM.
−Removed: In addition, during fiscal year 2019, the Company acquired customer relationships, trade names and non-compete agreements related to the acquisition of Canpango, which were subsequently
+Added: Also during fiscal year 2020, the Company recorded $ 1.4 million in impairment charges in customer relationships, trade names and non-compete agreements related to the acquisition of Canpango.
+Added: This charge is included in the impairment charges line item in the Consolidated Income Statements.
+Added: The Company also disposed of fully amortized trade names and non-compete agreements from prior acquisitions.
+Added: No impairment charges were recognized in fiscal years ended June 30, 2021 and June 30, 2019.
Index to Financial Statements
3 unchanged sentences
June 30, 2021
−Removed: impaired in fiscal year 2020, totaling $ 1.4 million in impairment charges.
−Removed: This charge is included in the impairment charges line item in the Consolidated Income Statements.
−Removed: The Company also disposed of fully amortized trade names and non-compete agreements from prior acquisitions.
−Removed: No impairment charges were recognized in fiscal years ended June 30, 2019 and 2018.
The weighted-average amortization period for all intangible assets was approximately 10 years for the year ended June 30, 2021, compared to 10 years for the year ended June 30, 2020 and 9 years for the year ended June 30, 2019.
13 unchanged sentences
Borrowings under revolving credit facility (a)
−Removed: 67,714 172,390
Total debt $ 143,174 $ 218,728
−Removed: (a) Borrowing under the revolving credit facility classified as held for sale in the Consolidated Balance Sheets for our discontinued operations totaled $ 24.7 million and $ 28.4 million for the fiscal years ended June 30, 2020 and 2019, respectively.
+Added: (a) Borrowing under the revolving credit facility classified as held for sale in the Consolidated Balance Sheets for our discontinued operations totaled $ 24.7 million for the fiscal year ended June 30, 2020.
Credit Facility
6 unchanged sentences
These costs were capitalized to other non-current assets on the Consolidated Balance Sheets and added to the unamortized debt issuance costs from the previous credit facility.
+Added: At the Company's option, loans denominated in U.S.
+Added: dollars under the Amended Credit Agreement, other than swingline loans, bear interest at a rate equal to a spread over the LIBOR or alternate base rate depending upon the Company's net leverage ratio, calculated as total debt less up to $ 15 million of unrestricted domestic cash ("Credit Facility Net Debt") to trailing four -quarter adjusted earnings before interest expense, taxes, depreciation and amortization ("Credit Facility EBITDA") (the "Leverage
Index to Financial Statements
3 unchanged sentences
June 30, 2021
−Removed: At the Company's option, loans denominated in U.S.
−Removed: dollars under the Amended Credit Agreement, other than swingline loans, bear interest at a rate equal to a spread over the LIBOR or alternate base rate depending upon the Company's net leverage ratio, calculated as total debt less up to $ 15 million of unrestricted domestic cash ("Credit Facility Net Debt") to trailing four -quarter adjusted earnings before interest expense, taxes, depreciation and amortization ("Credit Facility EBITDA") (the "Leverage Ratio").
This spread ranges from 1.00 % to 1.75 % for LIBOR-based loans and 0.00 % to 0.75 % for alternate base rate loans.
13 unchanged sentences
At June 30, 2021, based upon the Leverage Ratio calculations, there was $ 281.6 million available for additional borrowings.
−Removed: There were letters of credit issued under the multi-currency revolving credit facility for the discontinued operations of $ 0.3 million as of June 30, 2020.
−Removed: There were no letters of credit issued as of June 30, 2019.
+Added: There were no letters of credit issued under the multi-currency revolving credit facility as of June 30, 2021.
+Added: There were letters of credit issued of $ 0.3 million as of June 30, 2020.
Mississippi Revenue Bond
6 unchanged sentences
Scheduled maturities of the Company’s short-term borrowings, revolving credit facility from continuing operations and long-term debt at June 30, 2021 are as follows:
−Removed: Index to Financial Statements
−Removed: SCANSOURCE, INC.
−Removed: AND SUBSIDIARIES
−Removed: Notes to Consolidated Financial Statements—(Continued)
−Removed: June 30, 2020
Revolving Credit Facility Term Loan Facility Mississippi Bond
3 unchanged sentences
2024 — 120,000 352
−Removed: 2024 67,714 120,000 352
Thereafter — — 2,663
1 unchanged sentence
Debt Issuance Costs
+Added: Index to Financial Statements
+Added: SCANSOURCE, INC.
+Added: AND SUBSIDIARIES
+Added: Notes to Consolidated Financial Statements—(Continued)
+Added: June 30, 2021
As of June 30, 2021, net debt issuance costs associated with the credit facility and bonds totaled $ 1.2 million and are being amortized on a straight-line basis through the maturity date of each respective debt instrument.
8 unchanged sentences
These contracts will periodically hedge the exchange of various currencies, including the U.S.
−Removed: dollar, Brazilian real, euro, British pound and Canadian dollar for continuing operations.
+Added: dollar, Brazilian real, British pound and Canadian dollar for continuing operations.
S ee Note 1- Business and Summary of Significant Accounting Policies for more information regarding the Company's policy on derivative financial instruments.
5 unchanged sentences
(in thousands)
−Removed: Net foreign exchange derivative contract (gain) loss $ ( 3,975 ) $ 235 $ ( 436 )
−Removed: Net foreign currency transactional and re-measurement loss 4,500 400 1,614
−Removed: Net foreign currency loss $ 525 $ 635 $ 1,178
+Added: Net foreign exchange derivative contract losses (gains) $ 3,462 $ ( 3,975 ) $ 235
+Added: Net foreign currency transactional and re-measurement (gains) losses ( 2,617 ) 4,500 400
+Added: Net foreign currency losses $ 845 $ 525 $ 635
Net foreign exchange gains and losses consist of foreign currency transactional and functional currency re-measurements, offset by net foreign currency exchange contract gains and losses and are included in other income and expense.
Foreign exchange gains and losses are generated as the result of fluctuations in the value of the U.S.
−Removed: dollar versus the Brazilian real, the U.S.
−Removed: dollar versus the euro, British pound versus the euro and other currencies versus the U.S.
−Removed: Index to Financial Statements
−Removed: SCANSOURCE, INC.
−Removed: AND SUBSIDIARIES
−Removed: Notes to Consolidated Financial Statements—(Continued)
−Removed: June 30, 2020
+Added: dollar versus the Brazilian real, and other currencies versus the U.S.
Interest Rates – The Company’s earnings are also affected by changes in interest rates due to the impact those changes have on interest expense from floating rate debt instruments.
7 unchanged sentences
The components of the cash flow hedge included in accumulated other comprehensive (loss) income, net of income taxes, in the Consolidated Statements of Shareholders’ Equity, are as follows:
+Added: Index to Financial Statements
+Added: SCANSOURCE, INC.
+Added: AND SUBSIDIARIES
+Added: Notes to Consolidated Financial Statements—(Continued)
+Added: June 30, 2021
Fiscal Year Ended June 30,
2 unchanged sentences
Net interest expense (income) recognized as a result of interest rate swap $ 2,250 $ 799 $ ( 233 )
−Removed: Unrealized (loss) gain in fair value of interest swap rates ( 6,900 ) ( 4,159 ) 1,422
−Removed: Net increase in accumulated other comprehensive (loss) income ( 6,101 ) ( 4,392 ) 1,583
+Added: Unrealized gain (loss) in fair value of interest swap rates 731 ( 6,900 ) ( 4,159 )
+Added: Net increase in accumulated other comprehensive income (loss) 2,981 ( 6,101 ) ( 4,392 )
Income tax effect ( 732 ) 1,455 1,115
−Removed: Net increase in accumulated other comprehensive (loss) income, net of tax $ ( 4,646 ) $ ( 3,277 ) $ 1,089
+Added: Net increase (decrease) in accumulated other comprehensive income, net of tax $ 2,249 $ ( 4,646 ) $ ( 3,277 )
The Company has the following derivative instruments for continuing operations located on the Consolidated Balance Sheets as of June 30, 2021, utilized for the risk management purposes detailed above:
5 unchanged sentences
(in thousands)
+Added: Derivative assets:
+Added: Foreign currency hedge Other current assets $ 187 $ —
Derivative liabilities:
2 unchanged sentences
The Company has the following derivative instruments located on the Consolidated Balance Sheets as of June 30, 2020, utilized for the risk management purposes detailed above:
−Removed: Index to Financial Statements
−Removed: SCANSOURCE, INC.
−Removed: AND SUBSIDIARIES
−Removed: Notes to Consolidated Financial Statements—(Continued)
June 30, 2020
−Removed: June 30, 2019
Balance Sheet Location Fair Value of Derivatives
9 unchanged sentences
Under this guidance, the Company is required to classify certain assets and liabilities based on the fair value hierarchy, which groups fair value-measured assets and liabilities based upon the following levels of inputs:
+Added: Index to Financial Statements
+Added: SCANSOURCE, INC.
+Added: AND SUBSIDIARIES
+Added: Notes to Consolidated Financial Statements—(Continued)
+Added: June 30, 2021
• Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
9 unchanged sentences
Deferred compensation plan investments, current and non-current portion $ 31,168 $ 31,168 $ — $ —
+Added: Foreign currency hedge 187 — 187 —
Total assets at fair value $ 31,355 $ 31,168 $ 187 $ —
2 unchanged sentences
Interest rate swap agreement 6,280 — 6,280 —
−Removed: Liability for contingent consideration 46,334 — — 46,334
Total liabilities at fair value $ 37,453 $ 31,168 $ 6,285 $ —
+Added: The following table presents assets and liabilities measured at fair value on a recurring basis as of June 30, 2020:
Index to Financial Statements
3 unchanged sentences
June 30, 2021
−Removed: The following table presents assets and liabilities measured at fair value on a recurring basis as of June 30, 2019:
(Level 1) Significant
9 unchanged sentences
The investments in the deferred compensation plan are held in a "rabbi trust" and include mutual funds and cash equivalents for payment of non-qualified benefits for certain retired, terminated or active employees.
−Removed: These investments are recorded to prepaid and other current assets or other non-current assets depending on their corresponding, anticipated distributions to recipients, which are reported in accrued expenses and other current liabilities or other long-term non-current liabilities, respectively.
+Added: These investments are recorded to prepaid and other current assets or other non-current assets depending on their corresponding, anticipated distributions to recipients, which are reported in accrued expenses and other current liabilities or other long-term liabilities, respectively.
Derivative instruments, such as foreign currency forward contracts, are measured using the market approach on a recurring basis considering foreign currency spot rates and forward rates quoted by banks or foreign currency dealers and interest rates quoted by banks (Level 2).
3 unchanged sentences
The Company recorded contingent consideration liabilities at the acquisition date of Network1 and Intelisys representing the amounts payable to former shareholders, as outlined under the terms of the applicable purchase agreements, based upon the achievement of a projected earnings measure, net of specific pro forma adjustments.
+Added: Network1 and Intelisys are part of the Company's Worldwide Communications & Services segment.
The current and non-current portions of these obligations are reported separately on the Consolidated Balance Sheets.
2 unchanged sentences
Fluctuations due to foreign currency translation are captured in other comprehensive income through the changes in foreign currency translation adjustments line item as seen in Note 18 - Accumulated Other Comprehensive (Loss) Income .
−Removed: Network1 and Intelisys are part of the Company's Worldwide Communications & Services segment.
−Removed: The final earnout payment due to former shareholders of Network1 was paid during the fiscal year ended June 30, 2019.
The table below provides a summary of the changes in fair value of the Company's contingent considerations for the Intelisys earnout, which is measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the fiscal year ended June 30, 2021.
+Added: The final earnout payment due to former shareholders of Intelisys was paid during the fiscal year ended June 30, 2021.
Index to Financial Statements
11 unchanged sentences
The table below provides a summary of the changes in fair value of the Company's contingent consideration for the Network1 and Intelisys earnouts for the fiscal year ended June 30, 2020.
−Removed: The final earnout payment due to former shareholders of Network1 was paid during the fiscal year ended June 30, 2019.
June 30, 2020
4 unchanged sentences
Change in fair value 6,941
−Removed: Fluctuation due to foreign currency exchange 288
Fair value at end of period $ 46,334
7 unchanged sentences
Valuation techniques and significant observable inputs used in recurring Level 3 fair value measurements for our contingent consideration liabilities as of June 30, 2021 and 2020 were as follows.
+Added: The measurement period for the Intelisys earnout ended on June 30, 2020.
Reporting Period Valuation Technique Significant Unobservable Inputs Weighted Average Rates (a)
June 30, 2020 Discounted cash flow Weighted average cost of capital 3.0 %
−Removed: June 30, 2019 Discounted cash flow Weighted average cost of capital 14.2 %
−Removed: Adjusted EBITDA growth rate 21.5 %
(a) Weighted average rates identified for each significant unobservable input relate to the valuation of the Intelisys contingent consideration.
1 unchanged sentence
There is no EBITDA growth to report in the current year.
+Added: The final earnout payment was paid to the former shareholders of Intelisys during the fiscal year ended June 30, 2021.
+Added: The expense from the change in fair value of the contingent consideration recognized in the Condensed Consolidated Income Statement totaled $ 0.5 million for the fiscal year ended June 30, 2021.
+Added: The change in fair value for the fiscal year is due to the recurring amortization of the unrecognized fair value discount.
Index to Financial Statements
4 unchanged sentences
The fair value of the liability for the contingent consideration related to Intelisys recognized at June 30, 2020 was $ 46.3 million, all of which is classified as current.
−Removed: The expense from the change in fair value of the contingent consideration recognized in the Condensed Consolidated Income Statement totaled $ 6.9 million for the fiscal year ended June 30, 2020.
−Removed: The change in fair value for the fiscal year is primarily driven by the recurring amortization of the unrecognized fair value discount and a reduction in the discount rate.
−Removed: Although there is no contractual limit, total future undiscounted contingent consideration payments are anticipated to range up to $ 46.9 million, based on the Company’s best estimate of the earnout calculated on a multiple of adjusted earnings.
−Removed: The fair value of the liability for the contingent consideration related to Intelisys recognized at June 30, 2019 was $ 77.9 million, of which $ 38.4 million is classified as current.
−Removed: The expense from the change in fair value of the contingent consideration recognized in the Condensed Consolidated Income Statements totaled $ 12.7 million for the fiscal year ended June 30, 2019, which was primarily due to the recurring amortization of the unrecognized fair value discount and improved projected results.
+Added: The expense from the change in fair value of the contingent consideration recognized in the Condensed Consolidated Income Statements totaled $ 6.9 million for the fiscal year ended June 30, 2020.
+Added: The change in fair value for the fiscal year was primarily driven by the recurring amortization of the unrecognized fair value discount and a reduction in the discount rate.
The final earnout payment was paid to the former shareholders of Network1 during the fiscal year ended June 30, 2019.
20 unchanged sentences
Stock Options
−Removed: During the fiscal year ended June 30, 2020, the Company did not grant stock options.
−Removed: Stock options granted in fiscal years ended June 30, 2019 and 2018 vest annually over 3 years and have a 10 -year contractual life.
+Added: During the fiscal year ended June 30, 2021, the Company granted stock options for 640,782 shares.
+Added: The Company did no t grant stock options during the fiscal year ended June 30, 2020.
+Added: Stock options granted in fiscal year ended June 30, 2021 and 2019 vest annually over 3 years and have a 10 -year contractual life.
These options were granted with an exercise price that is no less than 100 % of the fair market value of the underlying shares on the date of the grant.
+Added: The fair value of each option (for purposes of calculation of share-based compensation) was estimated on the date of grant using the Black-Scholes-Merton option pricing formula that uses assumptions determined at the date of grant.
+Added: Use of this option pricing model requires the input of subjective assumptions.
+Added: These assumptions include estimating the length of time employees will retain their vested stock options before exercising them ("expected term"), the estimated volatility of the Company's common stock price over the expected term ("expected volatility") and the number of options that will ultimately not complete
Index to Financial Statements
3 unchanged sentences
June 30, 2021
−Removed: The fair value of each option (for purposes of calculation of share-based compensation) was estimated on the date of grant using the Black-Scholes-Merton option pricing formula that uses assumptions determined at the date of grant.
−Removed: Use of this option pricing model requires the input of subjective assumptions.
−Removed: These assumptions include estimating the length of time employees will retain their vested stock options before exercising them ("expected term"), the estimated volatility of the Company's common stock price over the expected term ("expected volatility") and the number of options that will ultimately not complete their vesting requirements ("forfeitures").
+Added: their vesting requirements ("forfeitures").
Changes in the subjective assumptions can materially affect the estimate of the fair value of share-based compensation and, consequently, the related amount recognized in the Consolidated Income Statements.
24 unchanged sentences
This amount will change as the market price per share changes.
−Removed: The aggregate intrinsic value of options exercised during the fiscal years ended June 30, 2020, 2019 and 2018 was $ 0.2 million, $ 0.4 million and $ 0.5 million, respectively.
+Added: The aggregate intrinsic value of options exercised during the fiscal years ended June 30, 2021, 2020 and 2019 was less than $ 0.1 million, $ 0.2 million and $ 0.4 million, respectively.
A summary of the status of the Company’s shares subject to unvested options is presented below:
29 unchanged sentences
$ 38.71 - $ 42.82
+Added: 279,449 3.02 41.82 279,449 41.83
+Added: 1,235,569 6.74 $ 31.84 601,987 $ 38.94
The Company issues shares to satisfy the exercise of options.
1 unchanged sentence
Grants of Restricted Shares
−Removed: During the fiscal year ended June 30, 2020, the Company granted 287,948 shares of restricted stock to employees and non-employee directors, all of which were issued in the form of RSUs or PUs:
+Added: During the fiscal year ended June 30, 2021, the Company granted 419,227 shares of restricted stock to employees and non-employee directors, all of which were issued in the form of RSUs:
Fiscal Year Ended June 30, 2021
2 unchanged sentences
Certain employees based on performance 224,409 November 12, 2020 $ 24.26 Annually over 3 years
−Removed: Certain employees based upon hire 14,225 December 2, 2019 $ 35.15 Annually over 3 years
−Removed: Named executive officers based on performance 42,199 January 30, 2020 $ 35.19 January 1, 2020 through December 31, 2022
+Added: Certain employees based on performance 123,636 November 19, 2020 $ 24.68 Annually over 3 years
+Added: Certain employee based upon hire 27,482 March 1, 2021 $ 29.11 Annually over 3 years
Non-Employee Directors
Certain Directors 43,700 November 19, 2020 $ 24.68 6 months
−Removed: Certain Director based upon appointment 700 November 15, 2019 $ 35.25 6 months
−Removed: Certain Director based upon appointment 4,100 May 14, 2020 $ 21.58 6 months
+Added: A summary of the status of the Company’s outstanding restricted stock is presented below:
Index to Financial Statements
3 unchanged sentences
June 30, 2021
−Removed: A summary of the status of the Company’s outstanding restricted stock is presented below:
Fiscal Year Ended June 30, 2021
21 unchanged sentences
(14) Income Taxes
−Removed: On December 22, 2017, the U.S.
−Removed: government enacted the Tax Cuts and Jobs Act.
−Removed: The Tax Act reduced the corporate federal tax rate from 35% to 21% effective January 1, 2018 and implemented a modified territorial tax system.
−Removed: As part of the Tax Act, U.S.
−Removed: companies are required to pay a one-time transition tax on the deemed repatriation of undistributed foreign earnings and to remeasure deferred tax assets and liabilities.
−Removed: The Tax Act includes a mandatory deemed repatriation of all undistributed foreign earnings that are subject to a U.S.
−Removed: income tax as part of the transition.
−Removed: For the fiscal year ended June 30, 2018, the Company recognized provisional income tax expense of $ 9.6 million for a one-time transition tax liability on total post-1986 foreign subsidiaries’ earnings and profits (“E&P”) that were previously deferred from U.S.
−Removed: income taxes.
−Removed: The Company completed its analysis for this item within the permitted measurement period under the guidance of Staff Accounting Bulletin No.
−Removed: 118 (“SAB 118”) and determined an adjustment was necessary.
−Removed: As a result, a discrete tax benefit for $ 0.2 million was recorded during the quarter ended December 31, 2018.
−Removed: The Company will continue to distribute the earnings of its Canadian subsidiary, but earnings from all other continuing operations foreign geographies will continue to be considered retained indefinitely for reinvestment.
−Removed: For Latin America and Europe, where the Company has discontinued operations, when these entities are sold, the Company intends to repatriate the earnings to the United States.
−Removed: It has been the practice of the Company to reinvest those earnings in the businesses outside the United States.
+Added: In the fourth quarter of the fiscal year ended June 30, 2021, following a review of its operations, liquidity and funding, tax implications of cash repatriation and investment opportunities, the Company determined that the ability to access the earnings of foreign earnings that were previously indefinitely reinvested could provide greater investment returns and meet other working capital needs if available to repatriate to the U.S.
+Added: Accordingly, in the quarter ended June 30, 2021, the Company withdrew the permanent reinvestment assertion only with respect to all earnings generated by foreign operations.
+Added: As a result of this change in the permanent reinvestment assertion, the Company considered recording a deferred tax liability related to federal, state and withholding tax and determined that no liability should be recorded.
+Added: There is no certainty as to the timing of the distribution of such earnings to the U.S.
+Added: in whole or in part.
+Added: Income tax expense (benefit) consists of:
Index to Financial Statements
3 unchanged sentences
June 30, 2021
−Removed: Apart from the one-time transition tax, any incremental deferred income taxes on the unremitted foreign earnings are not expected to be material.
−Removed: As part of accounting for the Tax Act, the Company remeasured certain deferred tax assets and liabilities based on the rates at which such deferred taxes are expected to reverse in the future, which is generally 21%.
−Removed: For the fiscal year ended June 30, 2018 the Company recognized provisional discrete income tax benefit of $ 1.6 million for the remeasurement of the Company’s deferred tax asset and liability balances.
−Removed: The Company completed its analysis for this item within the permitted measurement period under the guidance of SAB 118 and determined that the provisional amount should not be adjusted.
−Removed: The Tax Act created a provision known as global intangible low-tax income ("GILTI") that imposes a tax on certain earnings of foreign subsidiaries.
−Removed: The GILTI tax became effective for the Company during fiscal year 2019 and an accounting policy election was made to treat the tax as a current period expense.
−Removed: The Company recognized GILTI tax of approximately $ 0.1 million and $ 0.4 million for the fiscals years ended June 30, 2020 and 2019, respectively.
−Removed: Income tax expense (benefit) consists of:
Fiscal Year Ended June 30,
11 unchanged sentences
A reconciliation is provided below of the U.S.
−Removed: Federal income tax expense at a statutory rate of 21% for the fiscal years ended June 30, 2020 and 2019 and a blended statutory rate of 28 % for the fiscal year ended June 30, 2018 to actual income tax expense.
−Removed: Since the Company has a June 30th fiscal year-end, the lower tax rate resulted in a blended U.S.
−Removed: statutory federal rate of approximately 28 % for the fiscal year ended June 30, 2018.
−Removed: Index to Financial Statements
−Removed: SCANSOURCE, INC.
−Removed: AND SUBSIDIARIES
−Removed: Notes to Consolidated Financial Statements—(Continued)
−Removed: June 30, 2020
+Added: Federal income tax expense for the fiscal years ended June 30, 2021, June 30, 2020 and June 30, 2019 with the applicable statutory rate of 21%.
Fiscal Year Ended June 30,
13 unchanged sentences
Net favorable recovery — ( 6,517 ) ( 3,112 )
+Added: Losses on dispositions ( 2,897 ) — —
Global intangible low taxed income (GILTI) tax
3 unchanged sentences
Tax Reform transition tax — — ( 827 )
−Removed: Tax Reform impact of rate change on deferred taxes — — ( 2,701 )
+Added: Notional interest deduction on net equity ( 568 ) — —
Other jurisdictions impact of rate change on deferred taxes — — ( 20 )
17 unchanged sentences
Stock compensation 2,977 3,034
+Added: Capital loss carryforwards 7,633 —
Timing of amortization deduction from intangible assets 4,880 4,145
19 unchanged sentences
(iii) foreign gross net operating loss carryforwards of approximately $ 1.6 million;
−Removed: (iv) state income tax credit carryforwards of approximately $ 2.6 million that will began to expire in the 2020 tax year;
+Added: (iv) state income tax credit carryforwards of approximately $ 2.1 million that began to expire in the 2020 tax year;
(v) withholding tax credits of approximately $ 4.9 million;
−Removed: and (vi) foreign tax credits of $ 0.1 million.
+Added: (vi) foreign tax credits of $ 0.2 million, and (vii) gross capital loss carryovers of $ 30.5 million.
The Company maintains a valuation allowance of $ 0.6 million for U.S.
−Removed: federal income tax purposes, $ 2.7 million for foreign currency translation adjustments on impairment charges, $ 0.3 million for foreign net operating losses, a less than $ 0.1 million valuation allowance for state net operating losses, a $ 4.5 million valuation allowance for withholding tax credits, a $ 0.1 million valuation allowance for foreign tax credits, and $ 0.3 million valuation allowance for state income tax credits, where it was determined that, in accordance with ASC 740, it is more likely than not that they cannot be utilized.
+Added: federal income tax purposes, $ 7.6 million for capital loss carryforwards, $ 0.3 million for foreign net operating losses, a less than $ 0.2 million valuation allowance for state net operating losses, a $ 4.9 million valuation allowance for withholding tax credits, a $ 0.1 million valuation allowance for foreign tax credits, and $ 0.3 million valuation allowance for state income tax credits, where it was determined that, in accordance with ASC 740, it is more likely than not that they cannot be utilized.
The Company adopted ASU 2016-09 during fiscal year 2018 which required the Company to recognize excess tax benefits and tax deficiencies as income tax expense or benefit for stock award settlements that were previously recognized as additional paid-in-capital.
−Removed: As a result of these changes, the Company recognized net tax expense of less than $ 0.1 million for the fiscal years ended June 30, 2020 and 2019 and $ 1.0 million for fiscal year ended 2018, respectively.
−Removed: As of June 30, 2020, the Company had gross unrecognized tax benefits of $ 1.2 million, $ 0.9 million of which, if recognized, would affect the effective tax rate.
−Removed: This reflects a decrease of less than $ 0.1 million on a gross basis over the prior fiscal year.
+Added: As a result of these changes, the Company recognized net tax expense of $ 1.1 million for the fiscal year ended June 30, 2021, and less than $ 0.1 million for the fiscal years ended June 30, 2020 and 2019.
Index to Financial Statements
3 unchanged sentences
June 30, 2021
+Added: As of June 30, 2021, the Company had gross unrecognized tax benefits of $ 1.1 million, $ 0.9 million of which, if recognized, would affect the effective tax rate.
+Added: This reflects a decrease of less than $ 0.1 million on a gross basis over the prior fiscal year.
The Company does not expect that the total amounts of unrecognized tax benefits will significantly increase or decrease within the next twelve months.
7 unchanged sentences
Additions based on tax positions related to the current year 68 137 69
−Removed: Additions for tax positions of prior years — — —
Reduction for tax positions of prior years ( 103 ) ( 215 ) ( 538 )
Ending Balance $ 1,121 $ 1,156 $ 1,234
−Removed: A Supplemental Law was issued in Brazil during the Company's fiscal year 2019 which affirmed that Brazilian state-provided benefits are not subject to income tax.
+Added: A Supplemental Law in Brazil affirms that Brazilian state-provided benefits are not subject to income tax.
The Company recorded, discrete to the June 30, 2021 quarter, an income tax benefit of $ 2.8 million related to the confirmation of the recovery of state-provided tax benefits.
−Removed: During the fiscal year ended June 30, 2020, the Company determined that the Supplemental Law was applicable to prior periods.
−Removed: As a result, the Company recorded, discrete to the June 30, 2020 quarter, an income tax benefit of $ 2.8 million related to the recovery of prior period state-provided tax benefits.
−Removed: Discrete to the June 30, 2020 quarter, the Company recorded a tax ben efit of $ 3.7 million for the reversal of a contingency related to certain tax credits with respect to the calculation of PIS/COFINS gross receipts tax related to its Brazilian operations.
−Removed: This tax benefit is a result of several favorable court decisions issued regarding these credits.
−Removed: The Company conducts business globally and, as a result, one or more of its subsidi aries files income tax returns in the United States federal, various state, local and foreign jurisdictions.
+Added: Discrete to the June 30, 2021 quarter, the Company recorded a tax ben efit of $ 2.1 million for tax exempt income related to nonrecurring cancellation of indebtedness in a subsidiary.
+Added: The Company conducts business globally and, as a result, one or more of its subsidiaries files income tax returns in the United States federal, various state, local and foreign jurisdictions.
In the normal course of business, the Company is subject to examination by taxing authorities in countries in which it operates.
5 unchanged sentences
Operating leases are recorded as other non-current assets, accrued expenses and other current liabilities and other long-term liabilities on the Condensed Consolidated Balance Sheets.
−Removed: The Company has finance leases for information technology equipment expiring in fiscal year 2022.
+Added: The Company has finance leases for information technology equipment expiring through fiscal year 2024.
Finance leases are recorded as property and equipment, net , accrued expenses and other current liabilities and other long-term liabilities on the Condensed Consolidated Balance Sheets.
4 unchanged sentences
The lease term used is adjusted for these options when the Company is reasonably certain it will exercise the option.
−Removed: Operating lease expense is recognized on a straight-line
+Added: Operating lease expense is recognized on a straight-line basis over the lease term.
+Added: Variable lease payments not based on a rate or index, such as costs for common area maintenance, are
Index to Financial Statements
3 unchanged sentences
June 30, 2021
−Removed: basis over the lease term.
−Removed: Variable lease payments not based on a rate or index, such as costs for common area maintenance, are expensed as incurred.
+Added: expensed as incurred.
Further, the Company has elected the practical expedient to recognize all lease and non-lease components as a single lease component, where applicable.
−Removed: The following table presents amounts recorded on the Condensed Consolidated Balance Sheet related to operating leases at June 30, 2020:
−Removed: Operating leases Balance Sheet location June 30, 2020
+Added: The following table presents amounts recorded on the Condensed Consolidated Balance Sheet related to operating leases at June 30, 2021 and 2020:
+Added: Operating leases Balance Sheet location June 30, 2021 June 30, 2020
(in thousands)
2 unchanged sentences
Long-term operating lease liabilities Other long-term liabilities 16,550 20,760
−Removed: The following table presents amounts recorded in operating lease expense as part of selling general and administrative expenses on the Condensed Consolidated Income Statements during the fiscal year ended June 30, 2020.
+Added: The following table presents amounts recorded in operating lease expense as part of selling general and administrative expenses on the Condensed Consolidated Income Statements during the fiscal years ended June 30, 2021 and 2020.
Operating lease costs contain immaterial amounts of short-term lease costs for leases with an initial term of 12 months or less.
−Removed: Fiscal year ended
−Removed: June 30, 2020
+Added: Fiscal year ended June 30,
(in thousands)
1 unchanged sentence
Variable lease cost 1,068 1,485
+Added: $ 6,324 $ 7,620
Supplemental cash flow information related to the Company's operating leases for the fiscal year ended June 30, 2021 are presented in the table below:
−Removed: Fiscal year ended
−Removed: June 30, 2020
+Added: Fiscal year ended June 30,
(in thousands)
28 unchanged sentences
The Company recorded indemnification receivables that are reported gross of the pre-acquisition contingency liabilities as the funds were escrowed as part of the acquisition.
−Removed: The sellers deposited $ 6.4 million into the escrow account for the year ended June 30, 2019.
−Removed: In addition, $ 25.3 million was released from the escrow account during the fiscal year ended June 30, 2019.
+Added: There were no deposits into the escrow account and $ 1.1 million was released from the escrow account during the fiscal year ended June 30, 2021.
There were no deposits into, or releases from the escrow account for the fiscal year ended June 30, 2020.
29 unchanged sentences
Worldwide Communications & Services Segment
−Removed: The Worldwide Communications & Services segment includes a portfolio of solutions primarily for communications technologies and services and includes our recent acquisition of intY.
+Added: The Worldwide Communications & Services segment includes a portfolio of solutions primarily for communications technologies and services and includes our Intelisys and intY businesses.
We have business operations within this segment in the United States, Canada, Brazil and the UK.
36 unchanged sentences
International 310,075 292,600 332,019
−Removed: 292,600 332,019 317,513
Less intercompany sales ( 13,447 ) ( 32,341 ) ( 31,945 )
$ 3,150,806 $ 3,047,734 $ 3,249,799
−Removed: (1) For the years ended June 30, 2020 the amounts shown above include acquisition and divestiture costs.
−Removed: For the years ended June 30, 2019 and 2018, the amounts shown above include acquisition costs.
−Removed: (2) For the years ended June 30, 2020 and 2018, there were no sales in excess of 10% of consolidated net sales to any single international country.
−Removed: Net sales to Brazil represented 10 % of consolidated net sales for the year ended June 30, 2019.
+Added: (1) For the year ended June 30, 2021, the amounts shown above include acquisition, divestiture, and restructuring costs.
+Added: For the year ended June 30, 2020, the amounts shown above include acquisition and divestiture costs.
+Added: For the year ended June 30, 2019, the amounts shown above include acquisition costs.
Index to Financial Statements
13 unchanged sentences
$ 42,836 $ 55,641
−Removed: (17) Accumulated Other Comprehensive Loss
+Added: (18) Accumulated Other Comprehensive Income
The components of accumulated other comprehensive loss, net of tax, are as follows:
3 unchanged sentences
Currency translation adjustment $ ( 93,561 ) $ ( 125,974 ) $ ( 87,913 )
−Removed: Unrealized (loss) gain on fair value of interest rate swap, net of tax ( 6,821 ) ( 2,175 ) 1,102
+Added: Unrealized loss on fair value of interest rate swap, net of tax ( 4,572 ) ( 6,821 ) ( 2,175 )
Accumulated other comprehensive loss $ ( 98,133 ) $ ( 132,795 ) $ ( 90,088 )
10 unchanged sentences
Worldwide Barcode, Networking & Security segment and Worldwide Communications & Services segment.
−Removed: The Company actively marketed the sale these businesses during fiscal year 2020.
−Removed: An agreement was signed July 23, 2020, subsequent to our fiscal year end, with Intcomex for our divestitures located in Latin America, outside of Brazil.
−Removed: The Company expects to finalize the sale of the Latin America divestitures on or around September 30, 2020.
−Removed: The Company is actively working on sales opportunities for our divestitures in Europe and the UK and expects to finalize a sale within twelve months from the current reporting period.
−Removed: Major components of net loss from discontinued operations for the years ended June 30, 2020, 2019 and 2018 were as follows:
+Added: During the quarter ended June 30, 2020, the Company recorded a pre-tax loss on sale classification of $ 88.9 million to reduce the carrying value of the Divestitures to its estimate of fair value (the net proceeds received at closing), less estimated costs to sell.
+Added: As this loss was determined not to be attributable to any individual components in the Divestitures' net assets, it was reflected as a valuation allowance against the total assets of the Divestitures.
+Added: During the fiscal year ended June 30, 2021, the Company recorded an additional pre-tax loss on disposal group of $ 34.6 million.
+Added: This loss includes the realization of cumulative translation adjustments of $ 11.6 million for the fiscal year ended June 30, 2021.
+Added: Additional losses for the fiscal year ended June 30, 2021 are primarily attributable to a reduction in the net proceeds received for the Divestitures.
Index to Financial Statements
3 unchanged sentences
June 30, 2021
+Added: The Company finalized the sale of the Latin America businesses, outside of Brazil, on October 30, 2020.
+Added: The Company also finalized the sale of the Europe and the UK business on November 12, 2020.
+Added: Total cash received for the sale of divestitures was $ 34.4 million.
+Added: Major components of net loss from discontinued operations for the years ended June 30, 2021, 2020 and 2019 were as follows:
Fiscal Year Ended June 30,
13 unchanged sentences
Loss from discontinued operations before taxes ( 37,731 ) ( 113,024 ) ( 5,729 )
−Removed: Income tax expense 403 1,533 180
+Added: Income tax (benefit) expense ( 3,137 ) 403 1,533
Net loss from discontinued operations $ ( 34,594 ) $ ( 113,427 ) $ ( 7,262 )
−Removed: For fiscal year ended June 30, 2020, the Company allocated goodwill to our discontinued operations based on relative fair value of the discontinued operations compared to the consolidated reporting units and impaired such goodwill totaling $ 1.0 million for the Worldwide Barcode, Networking & Security segment and $ 7.5 million for the Worldwide Communications & Services segment.
+Added: For fiscal year ended June 30, 2020, the Company allocated goodwill to discontinued operations based on relative fair value of the discontinued operations compared to the consolidated reporting units and impaired such goodwill totaling $ 1.0 million for the Worldwide Barcode, Networking & Security segment and $ 7.5 million for the Worldwide Communications & Services segment.
Identifiable intangible assets, including customer relationships and distributor agreements, were impaired for discontinued operations totaling $ 5.2 million for fiscal year ended June 30, 2020.
15 unchanged sentences
Property and equipment, net — 1,833
−Removed: Goodwill — 8,823
Identifiable intangible assets, net — —
16 unchanged sentences
$ — $ 128,022
−Removed: (1) Total assets and liabilities of discontinued operations are classified in current assets and liabilities, respectively, in the Company's consolidated balance sheet as of June 30, 2020, as the discontinued operations are expected to be disposed of within twelve months of the balance sheet date.
−Removed: The assets and liabilities of discontinued operations are classified in their respective current and long-term classifications, respectively, in the Company's consolidated balance sheet as of June 30, 2019 in accordance with the nature and underlying classification of such assets and liabilities.
−Removed: The Company has a bank overdraft facility with Bank of America used by its European subsidiaries recognized as Short-term borrowings.
−Removed: The facility allows the Company to disburse checks in excess of bank balances up to $ 14.0 million U.S.
−Removed: dollar equivalent for up to seven days .
−Removed: Borrowings under the overdraft facility bear interest at a rate equal to a spread of 1.0 % over the applicable currency's London Interbank Offered Rate ("LIBOR") with a zero percent floor.
−Removed: Since borrowings outstanding under the overdraft facility at June 30, 2020 were denominated in euros, which bore a negative LIBOR rate, the interest applicable to the Company was 1.0 %.
+Added: (1) Total assets and liabilities of discontinued operations are classified in current assets and liabilities, respectively, in the Company's consolidated balance sheet as of June 30, 2020.
+Added: The discontinued operations were disposed of during the quarter ended December 31, 2020.
Significant non-cash operating items and capital expenditures reflected in the cash flows from discontinued operations for the fiscal years ended June 30, 2021, 2020 and 2019 were as follows:
−Removed: Index to Financial Statements
−Removed: SCANSOURCE, INC.
−Removed: AND SUBSIDIARIES
−Removed: Notes to Consolidated Financial Statements—(Continued)
−Removed: June 30, 2020
Fiscal Year Ended June 30,
5 unchanged sentences
Capital expenditures ( 58 ) ( 77 ) ( 1,416 )
+Added: (20) Restructuring
+Added: Index to Financial Statements
+Added: SCANSOURCE, INC.
+Added: AND SUBSIDIARIES
+Added: Notes to Consolidated Financial Statements—(Continued)
+Added: June 30, 2021
+Added: In July 2020, as part of a strategic review of organizational structure and operations, the Company announced a global cost reduction and restructuring program.
+Added: These actions were designed to better align the cost structure for the wholesale distribution business with lower sales volumes as a result of the COVID-19 pandemic.
+Added: The Company also initiated the closure of its Canpango business, its salesforce implementation and consulting business.
+Added: There has been limited adoption by the Company's partner community of the services Canpango offers.
+Added: These actions include entering into severance and termination agreements with employees, legal fees to execute the reduction in force and costs associated with lease terminations.
+Added: The following table presents the restructuring and severance costs incurred for the fiscal year ended June 30, 2021:
+Added: Fiscal year ended June 30, 2021
+Added: (in thousands)
+Added: Severance and benefit costs $ 8,824
+Added: Total restructuring and other charges $ 9,258
+Added: For the fiscal year ended June 30, 2021, all restructuring costs are recognized in the Corporate reporting unit and have not been allocated to the Worldwide Communications & Services or Worldwide Barcode, Networking & Security segment.
+Added: The Company incurred restructuring charges in the prior year that were immaterial to the condensed consolidated financial statements and unrelated to the program described above.
+Added: Accrued restructuring and severance costs are included in accrued expenses and other current liabilities on the Condensed Consolidated Balance Sheets.
+Added: The following table represents activity for the fiscal year ended June 30, 2021:
+Added: Accrued Expenses
+Added: (in thousands)
+Added: Balance at July 1, 2020 —
+Added: Charged to expense $ 9,258
+Added: Cash payments ( 8,059 )
+Added: Balance at June 30, 2021 $ 1,199
+Added: The remaining balance as of June 30, 2021 of $ 1.2 million , primarily related to Corporate, is expected to be paid through the first quarter of fiscal year 2022.
(21) Subsequent Events
−Removed: In July 2020, the Company announced actions to address the business impacts of the COVID-19 pandemic and prepare for the next phase of growth.
−Removed: These actions include an approximate $ 30 million annualized expense reduction plan, partially offset by approximately $ 8 to $ 9 million in severance and employee benefits for those employees who left the Company.
−Removed: These actions are designed to better align the cost structure for the wholesale distribution business with lower sales volumes as a result of the COVID-19 pandemic.
−Removed: As part of the plan, the Company will continue to invest in its higher growth agency business, Intelisys.
−Removed: In July 2020, the Company also initiated actions to close Canpango, its salesforce implementation and consulting business.
−Removed: In August 2018, the Company acquired Canpango to help partners build out their customer relationship management capabilities as part of a CCaaS solution.
−Removed: There has been limited adoption by the Company’s partner community.
−Removed: As a result of the closure of the Canpango business, the Company recorded a pre-tax non-cash charge of approximately $ 2 million for the fiscal year ended June 30, 2020 which is recorded to the selling, general and administrative expenses and impairment charges line item in the Consolidated Income Statements .
−Removed: The Company expects to complete existing contracts over the next few months.
+Added: Share Repurchases
+Added: In August 2021, our Board of Directors authorized a $ 100 million share repurchase program.
+Added: The authorization does not have any time limit.
Index to Financial Statements
2 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.