What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-08-21 compared with 2024-08-27 · 422 added, 311 removed, 1055 unchanged (41% of the section changed)

17 unchanged sentences

We have audited the accompanying consolidated balance sheets of ScanSource Inc.

(a South Carolina corporation) and subsidiaries (the “Company”) as of June 30, 2024 and 2023, 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, 2024, 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, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2024, in conformity with accounting principles generally accepted in the United States of America.

(a South Carolina corporation) and subsidiaries (the “Company”) as of June 30, 2025 and 2024, the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the three years in the period ended June 30, 2025, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2025, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of June 30, 2025, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated August 21, 2025 expressed an unqualified opinion.

Basis for opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

7 unchanged sentences

Critical audit matters

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

Critical audit matters are matters arising from the current period audit of financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

56 unchanged sentences

Accrued expenses and other current liabilities 71,263 65,616

Current portion of contingent consideration 1,318 —

Income taxes payable 3,927 7,895

1 unchanged sentence

Total current liabilities 682,964 669,352

Deferred income taxes — 3,816

Long-term debt, net of current portion 128,288 136,149

Borrowings under revolving credit facility — 50

Long-term portion of contingent consideration 17,782 —

Other long-term liabilities 50,163 49,226

6 unchanged sentences

45,000,000 shares authorized, 22,217,421 and 24,243,848 shares issued and outstanding at June 30, 2025 and June 30, 2024, respectively

26,370 58,241

Retained earnings 1,020,833 1,013,738

17 unchanged sentences

Restructuring and other charges 5,381 4,358 —

Change in fair value of contingent consideration 1,900 — —

Operating income 85,200 90,324 135,886

2 unchanged sentences

Gain on sale of business — ( 14,155 ) —

Other expense, net 988 1,664 1,354

Other (income) expense, net ( 5,962 ) 988 1,664

Income before income taxes 94,396 99,841 121,850

41 unchanged sentences

Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes 180,960 ( 1,553 ) — — ( 1,553 )

Common stock repurchased ( 550,194 ) ( 18,203 ) — — ( 18,203 )

Common stock repurchased, including excise tax ( 524,108 ) ( 15,753 ) — — ( 15,753 )

Share-based compensation — 11,250 — — 11,250

1 unchanged sentence

Net income — — 77,060 — 77,060

Unrealized gain on hedged transaction, net of tax — — — 2,254 2,254

Unrealized loss on hedged transaction, net of tax — — — ( 1,482 ) ( 1,482 )

Foreign currency translation adjustment — — — ( 20,945 ) ( 20,945 )

Realized foreign currency loss from sale of a business — — — ( 3,805 ) ( 3,805 )

Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes 380,184 1,937 — — 1,937

Common stock repurchased ( 524,108 ) ( 15,753 ) — — ( 15,753 )

Common stock repurchased, including excise tax ( 980,539 ) ( 43,337 ) — — ( 43,337 )

Share-based compensation — 9,529 — — 9,529

3 unchanged sentences

Foreign currency translation adjustment — — — 2,952 2,952

Realized foreign currency translation from sale of a business — — — ( 3,805 ) ( 3,805 )

Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes 456,872 4,616 — — 4,616

Common stock repurchased ( 980,539 ) ( 43,337 ) — — ( 43,337 )

Common stock repurchased, including excise tax ( 2,483,299 ) ( 42,048 ) ( 64,453 ) — ( 106,501 )

Share-based compensation — 11,062 — — 11,062

19 unchanged sentences

Deferred income taxes 1,128 ( 2,472 ) ( 1,496 )

Change in fair value of contingent consideration 1,900 — —

Finance lease interest 86 101 44

7 unchanged sentences

Income taxes payable ( 3,966 ) ( 2,025 ) 9,857

Net cash (used in) provided by operating activities of continuing operations 371,647 ( 35,769 ) ( 124,354 )

Net cash provided by (used in) operating activities of continuing operations 112,349 371,647 ( 35,769 )

Cash flows from investing activities of continuing operations:

Capital expenditures ( 8,286 ) ( 8,555 ) ( 9,979 )

Cash paid for business acquisitions, net of cash acquired ( 56,673 ) — —

Cash received for business disposal 2,569 17,600 1,717

4 unchanged sentences

Debt issuance costs — — ( 1,407 )

Borrowings (repayments) on long-term debt ( 6,915 ) 15,590 ( 7,843 )

(Repayments) borrowings on long-term debt ( 7,857 ) ( 6,915 ) 15,590

Repayments of finance lease obligations ( 1,090 ) ( 964 ) ( 589 )

2 unchanged sentences

Repurchase of common stock ( 106,524 ) ( 42,895 ) ( 15,651 )

Net cash provided by (used in) financing activities of continuing operations ( 227,767 ) 39,531 108,106

Net cash flows used in by discontinued operations — — —

Net cash (used in) provided by financing activities of continuing operations ( 110,905 ) ( 227,767 ) 39,531

Index to Financial Statements

Net cash flows used in by discontinued operations — — —

Effect of exchange rate changes on cash and cash equivalents 1,643 ( 3,643 ) 2,691

16 unchanged sentences

ScanSource, Inc.

(together with its subsidiaries referred to as “the Company” or “ScanSource”) is a leading hybrid distributor connecting devices to the cloud and accelerating growth for partners across hardware, Software as a Service ("SaaS"), connectivity and cloud.

The Company brings technology solutions and services from the world's leading suppliers of mobility and barcode, point-of-sale ("POS"), payments, networking, physical security, unified communications and collaboration, telecom and cloud services to market.

The Company primarily operates in the United States, Canada and Brazil.

The Company's two operating segments, Specialty Technology Solutions and Modern Communications & Cloud, are based on technology type and are generally related to technology devices and communication, connectivity and cloud services, respectively.

(together with its subsidiaries referred to as “the Company” or “ScanSource”) is a leading technology distributor connecting devices to the cloud and accelerating growth for channel sales partners across hardware, software as a service ("SaaS"), connectivity and cloud services.

ScanSource uses multiple sales models to offer technology distribution solutions from leading suppliers of specialty technologies and connectivity and cloud services.

The Company operates in the United States, Canada and Brazil.

The Company's two operating segments, Specialty Technology Solutions and Intelisys & Advisory, represent the different sales models the Company uses in executing its technology distribution growth strategy.

Cybersecurity Incident

4 unchanged sentences

The Company has taken actions to strengthen its existing IT security infrastructure and continues to implement additional measures to prevent unauthorized access to, or manipulation of, its systems and data.

During the fiscal year ended June 30, 2025, the Company received $ 5.9 million of insurance proceeds from claims filed related to the cybersecurity attack.

This amount has been recorded in other (income) expense on the Consolidated Income Statement.

Basis of Presentation

2 unchanged sentences

Unless otherwise indicated, amounts provided in these Notes pertain to continuing operations only.

Segment Changes

Effective July 1, 2024, the Company realigned its operating segments to represent the different sales models it uses in executing its technology distribution growth strategy.

The two realigned segments are Specialty Technology Solutions and Intelisys & Advisory .

The Specialty Technology Solutions segment combines the Company's former segments, with the exception of the Company's Intelisys business.

The Intelisys & Advisory segment includes the Intelisys and technology advisors businesses, including Channel Exchange (formerly known as intY USA), RPM Software and Resourcive.

Both segments include recurring revenue.

The Company has reclassified certain prior year amounts in the segment results to conform with the current year presentation.

These reclassifications had no effect on the condensed consolidated financial results.

See Note 16 - Segment Information for descriptions of the Company's segments.

Related Party Transactions

3 unchanged sentences

Use of Estimates

Index to Financial Statements

SCANSOURCE, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

June 30, 2025

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.

4 unchanged sentences

The following accounting policies relate to the more significant judgments and estimates used in the preparation of the Consolidated Financial Statements:

Index to Financial Statements

SCANSOURCE, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

June 30, 2024

(a) Allowances for Trade and Notes Receivable

The Company maintains an allowance for uncollectible accounts receivable for estimated losses resulting from customers’ failure to make payments on accounts receivable due to the Company.

The Company maintains an allowance for uncollectible accounts receivable for estimated losses resulting from channel sales partners’ failure to make payments on accounts receivable due to the Company.

Management determines the estimate of the allowance for uncollectible accounts receivable by considering a number of factors, including:

(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.

Likewise, should the financial condition of the Company’s customers improve and result in payments or settlements of previously reserved amounts, the Company may be required to record a reduction in bad debt expense to reverse the recorded allowance.

(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 channel sales partners, (iv) the current economic and country-specific environment and (v) reasonable and supportable forecasts about collectability.

If the financial condition of the Company’s channel sales partners were to deteriorate and reduce the ability of the Company’s channel sales partners to make payments on their accounts, the Company may be required to increase its allowance by recording additional bad debt expense.

Likewise, should the financial condition of the Company’s channel sales partners improve and result in payments or settlements of previously reserved amounts, the Company may be required to record a reduction in bad debt expense to reverse the recorded allowance.

(b) Inventory Reserves

13 unchanged sentences

(d) Goodwill and Intangible Asset Fair Value

Index to Financial Statements

SCANSOURCE, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

June 30, 2025

The Company estimates the fair value of its goodwill reporting units, as well as its finite lived intangible assets primarily based on the income approach utilizing the discounted cash flow method.

4 unchanged sentences

Achievement-based supplier rebates are earned by achieving certain sales or purchase targets on a periodic basis.

The Company determines whether, among other

Index to Financial Statements

SCANSOURCE, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

June 30, 2024

items, all qualifying sales and purchases are considered in calculating the rebates and cash receipts or credit memos received are appropriately applied.

The Company determines whether, among other items, all qualifying sales and purchases are considered in calculating the rebates and cash receipts or credit memos received are appropriately applied.

The determination of achievement-based rebates requires management to make assumptions about future purchases and sales.

8 unchanged sentences

Concentration of Credit Risk

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.

In certain cases, the Company will accept tangible assets as collateral to increase the trade credit of its customers.

Sales to any one customer were less than 10% of the Company’s net sales for fiscal years 2024, 2023 and 2022.

In the event that the Company does not collect payment on accounts receivable within the established trade terms for certain customers, the Company may establish arrangements for longer-term financing.

The Company sells to a large base of channel sales partners throughout the United States, Canada, Brazil and the UK.

The Company performs ongoing credit evaluations of its channel sales partners’ financial condition.

In certain cases, the Company will accept tangible assets as collateral to increase the trade credit of its channel sales partners.

Sales to any one channel sales partner were less than 10% of the Company’s net sales for fiscal years 2025, 2024 and 2023.

In the event that the Company does not collect payment on accounts receivable within the established trade terms for certain channel sales partners, the Company may establish arrangements for longer-term financing.

The Company accounts for these arrangements by recording them at their historical cost less specific allowances at balance sheet dates.

4 unchanged sentences

The Company does not use derivative financial instruments for trading or speculative purposes.

The Company’s exposure to changes in foreign currency exchange rates results from foreign currency denominated assets and liabilities, purchasing and selling internationally in several foreign currencies and from intercompany loans with foreign subsidiaries.

Index to Financial Statements

SCANSOURCE, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

June 30, 2025

subsidiaries.

The Company’s objective is to preserve the economic value of non-functional currency denominated cash flows.

8 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.

To the extent the derivative instrument was effective

Index to Financial Statements

SCANSOURCE, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

June 30, 2024

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).

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).

There was no ineffective portion recorded as an adjustment to earnings for the years ended June 30, 2025, 2024 and 2023.

6 unchanged sentences

The deferred compensation obligation is classified either within accrued expenses and other current liabilities or other long-term liabilities as well.

The amounts of these investments classified as current assets with corresponding current liabilities were $ 3.4 million and $ 3.5 million at June 30, 2024 and June 30, 2023, respectively.

The amounts of these investments classified as current assets with corresponding current liabilities was $ 3.4 million at June 30, 2025 and 2024.

Inventories (consisting entirely of finished goods) are stated at the lower of cost (first-in, first-out method) or net realizable value.

Supplier Programs

The Company receives incentives from suppliers related to cooperative advertising allowances, volume rebates and other incentive programs.

The Company receives incentives from suppliers related to market development funds, volume rebates and other incentive programs.

These incentives are generally under quarterly, semi-annual or annual agreements with the suppliers.

Some of these incentives are negotiated on an ad hoc basis to support specific programs mutually developed between the Company and the supplier.

Suppliers generally require that the Company use the suppliers' cooperative advertising allowances for advertising or other marketing programs.

Incentives received from suppliers for specifically identified incremental cooperative advertising programs are recorded as adjustments to net sales.

Suppliers generally require that the Company use the suppliers' market development funds for advertising or other marketing programs.

Incentives received from suppliers for specifically identified incremental market development funds are recorded as adjustments to net sales.

ASC 606, Revenue from Contracts with Customers addresses accounting for consideration payable to a customer, which the Company interprets and applies as the customer (i.e., the Company) receiving advertising funds from a supplier.

5 unchanged sentences

In addition, the Company may receive early payment discounts from certain suppliers.

The Company records early payment discounts received as a reduction of inventory, thereby resulting in a reduction of cost of goods sold when the related inventory is sold.

The Company records early payment discounts received as a reduction of inventory, thereby resulting in a reduction of cost of goods sold when the related

Index to Financial Statements

SCANSOURCE, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

June 30, 2025

inventory is sold.

Management makes certain estimates of the amounts of supplier consideration that will be received.

5 unchanged sentences

Product Warranty

The Company’s suppliers generally provide a warranty on the products provided by the Company and allow the Company to return defective products, including those that have been returned to the Company by its customers.

In three of its product lines,

Index to Financial Statements

SCANSOURCE, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

June 30, 2024

the Company offers a self-branded warranty program, in which management has determined that the Company is the primary obligor.

The Company purchases contracts from unrelated third parties, generally the original equipment manufacturers, to fulfill any obligation to service or replace defective product claimed on these warranty programs.

In two of its product lines, the Company offers a self-branded warranty program, in which management has determined that the Company is the primary obligor.

The Company purchases contracts from unrelated third parties, generally the original equipment manufacturers, to fulfill any obligation t o service or replace defective product claimed on these warranty programs.

As a result, the Company has not recorded a provision for estimated service warranty costs.

To maintain customer relations, the Company facilitates returns of defective products from the Company's customers by accepting for exchange, with the Company's prior approval, most defective products within 30 days of invoicing.

To maintain channel sales partner relations, the Company facilitates returns of defective products from the Company's channel sales partners by accepting for exchange, with the Company's prior approval, most defective products within 30 days of invoicing.

Property and Equipment

Property and equipment are recorded at cost.

Depreciation is computed using the straight-line method over estimated useful lives of 3 to 10 years for furniture, equipment and computer software, 25 to 40 years for buildings and 15 years for building improvements.

Depreciation is computed using the straight-line method over estimated useful lives of 3 to 10 years for furniture, equipment and computer software, 40 years for buildings and 15 years for building improvements.

Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life.

10 unchanged sentences

Goodwill testing utilizes an impairment analysis, whereby the Company compares the carrying value of each identified reporting unit to its fair value.

The Company's goodwill reporting units align directly with its operating segments, Specialty Technology Solutions and Modern Communications & Cloud.

The Company's goodwill reporting units align directly with its operating segments, Specialty Technology Solutions and Intelisys & Advisory.

The fair values of the reporting units are estimated using the net present value of discounted cash flows generated by each reporting unit.

2 unchanged sentences

Under Accounting Standards Update ("ASU") 2017-04, if fair value of goodwill is determined to be less than carrying value, an impairment loss is recognized for the amount of the carrying value that exceeds the amount of the reporting units' fair value, not to exceed the total amount of goodwill allocated to the reporting unit.

Additionally, the Company would consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable.

Additionally, the Company would consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment

Index to Financial Statements

SCANSOURCE, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

June 30, 2025

loss, if applicable.

The Company also assesses the recoverability of goodwill if facts and circumstances indicate goodwill may be impaired.

5 unchanged sentences

The Company utilized a WACC relative to each reporting unit's respective geography and industry as the discount rate for estimated future cash flows.

The WACC is intended to represent a rate of return that would be expected by a market participant in each respective geography.

The WACC is intended to represent a rate of return that would be expected by a marketplace participant in each respective geography.

• Operating income:

The Company utilized historical and expected revenue growth rates, gross margins and operating expense percentages, which varied based on the projections of each reporting unit being evaluated.

Index to Financial Statements

SCANSOURCE, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

June 30, 2024

• Cash flows from working capital changes:

3 unchanged sentences

Intangible Assets

Intangible assets consist of customer relationships, trade names, distributor agreements, supplier partner programs, developed technology, non-compete agreements and an encryption key library.

Customer relationships, trade names, supplier partner programs, developed technology and the encryption key library are amortized using the straight-line method over their estimated useful lives, which range from 3 to 19 years.

Intangible assets consist of channel sales partner relationships, trade names, distributor agreements, supplier partner programs, developed technology, non-compete agreements and an encryption key library.

Channel sales partner relationships, trade names, supplier partner programs, developed technology and the encryption key library are amortized using the straight-line method over their estimated useful lives, which range from 1 to 12 years.

Non-compete agreements are amortized over their contract life.

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The Company accrues for contingent obligations, including estimated legal costs, when it is probable that a liability is incurred and the amount is reasonably estimable.

As facts concerning contingencies become known, management reassesses its position and makes appropriate adjustments to the financial statements.

As facts concerning contingencies become known, management reassesses its position

Index to Financial Statements

SCANSOURCE, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

June 30, 2025

and makes appropriate adjustments to the financial statements.

Estimates that are particularly sensitive to future changes include tax, legal and other regulatory matters, which are subject to change as events evolve and as additional information becomes available during the administrative and litigation process.

7 unchanged sentences

and (v) recognize revenue when (or as) the Company satisfies a performance obligation.

The Company recognizes revenue as control of products and services are transferred to customers, which is generally at the point of shipment.

The Company delivers products to customers in several ways, including:

The Company recognizes revenue as control of products and services are transferred to channel sales partners, which is generally at the point of shipment.

The Company delivers products to channel sales partners in several ways, including:

(i) shipment from a Company warehouse, (ii) drop-shipment directly from the supplier, or (iii) electronic delivery for software licenses.

For more detailed disclosures on the Company's revenue recognition policies, see Note 3 - Revenue Recognition .

Index to Financial Statements

SCANSOURCE, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

June 30, 2024

Advertising Costs

The Company defers advertising-related costs until the advertising is first run in trade or other publications or, in the case of brochures, until the brochures are printed and available for distribution or posted online.

Advertising costs, net of supplier reimbursement, are included in selling, general and administrative expenses and were not significant in any of the three fiscal years ended June 30, 2024, 2023 and 2022.

Deferred advertising costs for each of these three fiscal years were also not significant.

Marketing Costs

The Company defers marketing-related costs until the marketing is first run in trade or other publications or, in the case of brochures, until the brochures are printed and available for distribution or posted online.

Marketing costs, net of supplier reimbursement, are included in selling, general and administrative expenses and were not significant in any of the three fiscal years ended June 30, 2025, 2024 and 2023.

Deferred marketing costs for each of these three fiscal years were also not significant.

Foreign Currency

20 unchanged sentences

The Company has elected to expense grants of awards with graded vesting on a straight-line basis over the requisite service period for each separately vesting portion of the award.

Index to Financial Statements

SCANSOURCE, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

June 30, 2025

Common stock repurchases

4 unchanged sentences

Recent Accounting Pronouncements

Index to Financial Statements

SCANSOURCE, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

June 30, 2024

In July 2023, the Securities and Exchange Commission issued final rules that require new and enhanced disclosures on cybersecurity risk management, strategy, governance, and incident reporting.

Under the final rules, companies must report a material cybersecurity incident on Form 8-K within four business days of determining that such cybersecurity incident is material.

To the extent the nature, scope, timing or the impact of the incident is not determinable at the time such Form 8-K is required to be filed, additional information about the material aspects of the cybersecurity incident must be filed on a Form 8-K/A within four business days after such additional information becomes available.

These disclosure requirements on Form 8-K were effective beginning December 18, 2023.

For fiscal years ending on or after December 15, 2023, companies must disclose their cybersecurity processes, management's role in cybersecurity governance, and cybersecurity oversight by the Board of Directors on Form 10-K.

In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No.

3 unchanged sentences

This ASU is applicable to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025, and subsequent interim periods, with early application permitted.

The Company is currently evaluating the impact of the application of this ASU on its consolidated financial statements and disclosures.

The Company adopted the new guidance in fiscal year 2025 with no material impact on its financial position, results of operations or cash flows, but the adoption did result in new and expanded segment disclosures which are included in Note 16 - Segment Information.

In December 2023, the FASB issued ASU No.

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The Company is currently evaluating the impact of the application of this ASU on its consolidated financial statements and disclosures.

In November 2024, the FASB issued ASU 2024-03 "Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses." This ASU requires public entities to disclose specified information about certain costs and expenses.

The ASU is effective for annual periods beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2028.

This ASU is applicable to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2027, and subsequent interim periods, with early application permitted.

The Company is currently evaluating the impact of the application of this ASU on its consolidated financial statements and disclosures.

The Company has reviewed 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.

(2) Trade Accounts and Notes Receivable, Net

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.

The Company has notes receivable with certain customers, which are included in “Accounts receivable, less allowance” in the Condensed Consolidated Balance Sheets.

The Company maintains an allowance for doubtful accounts receivable for estimated future expected credit losses resulting from channel sales partners’ failure to make payments on accounts receivable due to the Company.

The Company has notes receivable with certain channel sales partners, which are included in “Accounts receivable, less allowance” in the Condensed Consolidated Balance Sheets.

Management determines the estimate of the allowance for doubtful accounts receivable by considering a number of factors, including:

Expected credit losses are estimated on a pool basis when similar risk characteristics exist using an age-based reserve model.

Receivables that do not share risk characteristics are evaluated on an individual basis.

Estimates of expected credit losses on trade receivables are recorded at inception and adjusted over the contractual life.

The changes in the allowance for doubtful accounts for the fiscal years ended June 30, 2024, 2023 and 2022 are set forth in the tables below.

(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 channel sales partners, (iv) the current economic and country-

Index to Financial Statements

3 unchanged sentences

June 30, 2025

specific environment and (v) reasonable and supportable forecasts about collectability.

Expected credit losses are estimated on a pool basis when similar risk characteristics exist using an age-based reserve model.

Receivables that do not share risk characteristics are evaluated on an individual basis.

Estimates of expected credit losses on trade receivables are recorded at inception and adjusted over the contractual life.

The changes in the allowance for doubtful accounts for the fiscal years ended June 30, 2025, 2024 and 2023 are set forth in the tables below.

Description Balance at

of Period Amounts

Expense Write-offs Other (1)

Expense Write-offs Other (a)

(in thousands)

6 unchanged sentences

$ 20,684 8,351 ( 1,406 ) 192 $ 27,821

(1) "Other" amounts include recoveries and the effect of foreign currency fluctuations for the fiscal years ended June 30, 2024, 2023 and 2022, respectively.

(a) "Other" amounts include recoveries and the effect of foreign currency fluctuations for the fiscal years ended June 30, 2025, 2024 and 2023, respectively.

(3) Revenue Recognition

16 unchanged sentences

The Company estimates returns allowance based on historical experience and reduces revenue accordingly.

Contract Balances

The Company records contract assets and liabilities for payments received from customers in advance of services performed.

These assets and liabilities are the result of the sales of the Company's self-branded warranty programs and other transactions where control has not yet passed to the customer.

These amounts are immaterial to the consolidated financial statements for the periods presented.

Index to Financial Statements

3 unchanged sentences

June 30, 2025

Contract Balances

The Company records contract assets and liabilities for payments received from customers in advance of services performed.

These assets and liabilities are the result of the sales of the Company's self-branded warranty programs and other transactions where control has not yet passed to the customer.

These amounts are immaterial to the consolidated financial statements for the periods presented.

Practical Expedients & Accounting Policy Elections

7 unchanged sentences

Fiscal Year Ended June 30, 2025

Specialty Technology Solutions Modern Communications & Cloud Total

Specialty Technology Solutions Intelisys & Advisory Total

Revenue by product/service type:

(in thousands)

Hardware, software and cloud (excluding Intelisys) $ 1,998,636 $ 1,176,428 $ 3,175,064

Intelisys connectivity and cloud — 84,745 84,745

Products and non-recurring services $ 2,892,043 $ 3,067 $ 2,895,110

Recurring revenue (a)

50,674 95,026 145,700

Fiscal year ended June 30, 2023

Specialty Technology Solutions Modern Communications & Cloud Total

Revenue by product/service type:

(in thousands)

Hardware, software and cloud (excluding Intelisys) $ 2,331,030 $ 1,377,185 $ 3,708,215

Intelisys connectivity and cloud — 79,506 79,506

$ 2,942,717 $ 98,093 $ 3,040,810

(a) Recurring revenue represents revenue primarily from agency commissions, managed connectivity, SaaS, subscriptions, and hardware rentals.

Fiscal year ended June 30, 2024

Specialty Technology Solutions Modern Communications & Cloud Total

Specialty Technology Solutions Intelisys & Advisory Total

Revenue by product/service type:

(in thousands)

Hardware, software and cloud (excluding Intelisys) $ 2,082,321 $ 1,373,342 $ 3,455,663

Intelisys connectivity and cloud — 74,272 74,272

Products and non-recurring services $ 3,144,768 $ 4,466 $ 3,149,234

Recurring revenue (a)

22,781 87,794 110,575

(4) Earnings per Share

$ 3,167,549 $ 92,260 $ 3,259,809

(a) Recurring revenue represents revenue primarily from agency commissions, SaaS, subscriptions, and hardware rentals.

Index to Financial Statements

3 unchanged sentences

June 30, 2025

Fiscal year ended June 30, 2023

Specialty Technology Solutions Intelisys & Advisory Total

Revenue by product/service type:

(in thousands)

Products and non-recurring services $ 3,635,829 $ 4,793 $ 3,640,622

Recurring revenue (a)

65,838 81,261 147,099

$ 3,701,667 $ 86,054 $ 3,787,721

(a) Recurring revenue represents revenue primarily from agency commissions, SaaS, subscriptions, and hardware rentals.

(4) Earnings per Share

Basic earnings per share are computed by dividing net income by the weighted-average number of common shares outstanding.

18 unchanged sentences

Property and equipment is comprised of the following:

Index to Financial Statements

SCANSOURCE, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

June 30, 2025

(in thousands)

8 unchanged sentences

$ 31,169 $ 33,501

Index to Financial Statements

SCANSOURCE, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

June 30, 2024

Depreciation expense recorded as selling, general and administrative costs in the accompanying Consolidated Income Statements was $ 10.0 million, $ 11.2 million and $ 10.9 million for the fiscal years ended June 30, 2025, 2024 and 2023, respectively.

7 unchanged sentences

Other current assets 12,020 12,283

$ 125,082 $ 110,087

Prepaid expenses and other current assets $ 124,959 $ 125,082

The table below details accrued expenses and other current liabilities.

7 unchanged sentences

Other accrued liabilities 20,341 18,786

$ 65,616 $ 78,892

Accrued expenses and other current liabilities $ 71,263 $ 65,616

Index to Financial Statements

SCANSOURCE, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

June 30, 2025

The table below details other long-term liabilities.

5 unchanged sentences

Other long-term liabilities 11,890 9,795

$ 49,226 $ 49,268

Other long-term liabilities $ 50,163 $ 49,226

(7) Goodwill and Other Identifiable Intangible Assets

In accordance with ASC 350, Intangibles - Goodwill and Other Intangible Assets , the Company performs its annual goodwill impairment test during the fourth quarter of each fiscal year, or whenever indicators of impairment are present.

The reporting

Index to Financial Statements

SCANSOURCE, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

June 30, 2024

units utilized for goodwill impairment tests align directly with our operating segments, Specialty Technology Solutions and Modern Communications & Cloud.

The reporting units utilized for goodwill impairment tests align directly with our operating segments, Specialty Technology Solutions and Intelisys & Advisory.

The testing includes the determination of each reporting unit's fair value using a discounted cash flows model compared to each reporting unit's carrying value.

1 unchanged sentence

During fiscal years ended June 30, 2025, 2024 and 2023, no impairment charges related to goodwill were recorded .

The fair value of the Specialty Technology Solutions and Modern Communications & Cloud reporting units exceeded its carrying value by 11 % and 33 % , re spectively, as of the annual goodwill impairment testing date.

The fair value of the Specialty Technology Solutions and Intelisys & Advisory reporting units exceeded its carrying value by 2 % and 100 % , re spectively, as of the annual goodwill impairment testing date.

Changes in the carrying amount of goodwill for the years ended June 30, 2025 and 2024, by reportable segment, are set forth in the table below.

Specialty Technology Solutions Modern Communications & Cloud Total

Specialty Technology Solutions Intelisys & Advisory Total

(in thousands)

Balance at June 30, 2023 $ 156,486 $ 60,220 $ 216,706

Disposals ( 8,585 ) — ( 8,585 )

Unrealized loss on foreign currency translation ( 1,793 ) ( 27 ) ( 1,820 )

Balance at June 30, 2024 $ 146,108 $ 60,193 $ 206,301

Additions 13,447 10,693 24,140

Unrealized gain on foreign currency translation 224 155 379

1 unchanged sentence

The following table shows the Company’s identifiable intangible assets as of June 30, 2025 and 2024, respectively.

Index to Financial Statements

SCANSOURCE, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

June 30, 2025

June 30, 2025 June 30, 2024

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Trade names 14,036 11,442 2,594 13,036 10,021 3,015

Non-compete agreements — — — 2,410 2,410 —

Supplier partner program 4,085 3,341 744 4,085 2,911 1,174

2 unchanged sentences

Total intangibles $ 194,061 $ 131,152 $ 62,909 $ 149,508 $ 111,873 $ 37,635

The weighted-average amortization period for all intangible assets was approximately 10 years for the fiscal years ended June 30, 2024, 2023 and 2022.

The weighted-average amortization period for all intangible assets was approximately 9 years for the fiscal year ended June 30, 2025 and approximately 10 years for the fiscal years ended 2024 and 2023.

Amortization expense for continuing operations for the years ended June 30, 2025, 2024 and 2023 was $ 19.2 million, $ 15.7 million and $ 16.7 million, respectively, all of which relates to selling, general and administrative costs, not the cost of selling goods, and has been presented as such in the accompanying Consolidated Income Statements.

1 unchanged sentence

Estimated future amortization expense is as follows:

Index to Financial Statements

SCANSOURCE, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

June 30, 2024

(in thousands)

11 unchanged sentences

Total debt $ 136,149 $ 144,056

Index to Financial Statements

SCANSOURCE, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

June 30, 2025

Credit Facility

14 unchanged sentences

The adjusted term SOFR and adjusted daily simple SOFR include a fixed credit adjustment of 0.10 % over the applicable SOFR reference rate.

Loans denominated in foreign

Index to Financial Statements

SCANSOURCE, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

June 30, 2024

currencies bear interest at a rate per annum equal to the applicable benchmark rate set forth in the Amended Credit Agreement plus an additional margin ranging from 1.00 % to 1.75 %, depending upon the Company’s leverage ratio plus, if applicable, certain mandatory costs.

Loans denominated in foreign currencies bear interest at a rate per annum equal to the applicable benchmark rate set forth in the Amended Credit Agreement plus an additional margin ranging from 1.00 % to 1.75 %, depending upon the Company’s leverage ratio plus, if applicable, certain mandatory costs.

During the fiscal year ended June 30, 2025, the Company's borrowings under the credit facility were U.S.

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The terms of the bond allow for payment of interest only for the first 10 years of the agreement and then, starting on September 1, 2018 through 2032, principal and interest payments are due until the maturity date or the redemption of the bond.

The agreement also provides the bondholder with a put option, exercisable only within 180 days of each 5 th anniversary of the agreement, requiring the Company to pay back the bonds at 100 % of the principal amount outstanding.

The agreement also provides the bondholder with a put

Index to Financial Statements

SCANSOURCE, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

June 30, 2025

option, exercisable only within 180 days of each 5 th anniversary of the agreement, requiring the Company to pay back the bonds at 100 % of the principal amount outstanding.

As of June 30, 2025, the Company was in compliance with all covenants under this bond.

6 unchanged sentences

2028 — 115,312 371

2028 50 115,312 371

Thereafter — — 1,171

2 unchanged sentences

As of June 30, 2025, net debt issuance costs associated with the credit facility and bonds totaled $ 0.9 million and are being amortized on a straight-line basis through the maturity date of each respective debt instrument.

Index to Financial Statements

SCANSOURCE, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

June 30, 2024

(9) Derivatives and Hedging Activities

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Summarized financial information related to these derivative contracts and changes in the underlying value of the foreign currency exposures are as follows:

Index to Financial Statements

SCANSOURCE, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

June 30, 2025

Fiscal year ended June 30,

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There was no ineffective portion to be recorded as an adjustment to earnings for fiscal years ended June 30, 2025, 2024 and 2023.

Index to Financial Statements

SCANSOURCE, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

June 30, 2024

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:

3 unchanged sentences

Net interest (income) expense recognized as a result of interest rate swap $ ( 1,531 ) $ ( 3,305 ) $ ( 1,553 )

Unrealized gain in fair value of interest swap rates 1,316 4,554 5,748

Net increase (decrease) in accumulated other comprehensive income (loss) ( 1,989 ) 3,001 7,836

Unrealized (loss) gain in fair value of interest swap rates ( 487 ) 1,316 4,554

Net (decrease) increase in accumulated other comprehensive (loss) income ( 2,018 ) ( 1,989 ) 3,001

Income tax effect ( 495 ) ( 507 ) 747

Net increase (decrease) in accumulated other comprehensive income, net of tax $ ( 1,482 ) $ 2,254 $ 5,833

Net increase (decrease) in accumulated other comprehensive (loss) income, net of tax $ ( 1,523 ) $ ( 1,482 ) $ 2,254

The Company has the following derivative instruments for continuing operations located on the Consolidated Balance Sheets as of June 30, 2025, utilized for the risk management purposes detailed above:

Index to Financial Statements

SCANSOURCE, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

June 30, 2025

Balance Sheet Location Fair Value of Derivatives

4 unchanged sentences

Derivative assets:

Foreign currency hedge Other current assets $ 345 $ —

Foreign exchange contracts Prepaid expenses and other current assets $ — $ 15

Interest rate swap agreement Other current assets $ 680 $ —

Derivative liabilities:

Foreign exchange contracts Accrued expenses and other current liabilities $ — $ 12

Foreign currency hedge Other current liabilities $ 290 $ —

The Company has the following derivative instruments located on the Consolidated Balance Sheets as of June 30, 2024, utilized for the risk management purposes detailed above:

7 unchanged sentences

Foreign currency hedge Other current assets $ 345 $ —

Foreign exchange contracts Prepaid expenses and other current assets $ — $ 1

Interest rate swap agreement Other current assets $ 2,698 $ —

Derivative liabilities:

Foreign exchange contracts Accrued expenses and other current liabilities $ — $ 12

(10) Fair Value of Financial Instruments

Accounting guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Under this guidance, the Company is required to

Index to Financial Statements

SCANSOURCE, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

June 30, 2024

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:

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:

• Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

2 unchanged sentences

supported by little or no market activity).

The assets and liabilities maintained by the Company that are required to be measured at fair value on a recurring basis include deferred compensation plan investments, forward foreign currency exchange contracts, foreign currency hedge agreements, interest rate swap agreements and contingent consideration owed to the previous owners of Intelisys.

The carrying value of debt listed in Note 8 - Short-Term Borrowings and Long Term Debt is considered to approximate fair value, as the Company's debt instruments are indexed to a variable rate using the market approach (Level 2 criteria).

Index to Financial Statements

SCANSOURCE, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

June 30, 2025

The following table summarizes the valuation of the Company's remaining assets and liabilities measured at fair value on a recurring basis as of June 30, 2025:

(Level 1) Significant

(Level 2) Significant

(in thousands)

Deferred compensation plan investments, current and non-current portion $ 31,887 $ 31,887 $ — $ —

Forward foreign currency exchange contracts 15 — 15 —

Interest rate swap agreement 680 — 680 —

Foreign currency hedge 345 — 345

Total assets at fair value $ 32,582 $ 31,887 $ 695 $ —

Deferred compensation plan investments, current and non-current portion $ 31,887 $ 31,887 $ — $ —

Forward foreign currency exchange contracts 12 — 12

Foreign currency hedge 290 — 290 —

Liability for contingent consideration, current and non-current 19,100 — — 19,100

Total liabilities at fair value $ 51,277 $ 31,887 $ 290 $ 19,100

The following table presents assets and liabilities measured at fair value on a recurring basis as of June 30, 2024:

Index to Financial Statements

SCANSOURCE, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

June 30, 2024

(Level 1) Significant

(Level 2) Significant

(in thousands)

Deferred compensation plan investments, current and non-current portion $ 31,014 $ 31,014 $ — $ —

Forward currency exchange contracts 1 — $ 1

Interest rate swap agreement 2,698 — 2,698 —

2 unchanged sentences

Deferred compensation plan investments, current and non-current portion $ 31,014 $ 31,014 $ — $ —

Forward foreign currency exchange contracts 12 — 12 —

Total liabilities at fair value $ 31,026 $ 31,014 $ 12 $ —

1 unchanged sentence

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).

Index to Financial Statements

SCANSOURCE, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

June 30, 2025

quoted by banks (Level 2).

Fair values of interest rate swaps are measured using standard valuation models with inputs that can be derived from observable market transactions, including LIBOR spot and forward rates (Level 2).

1 unchanged sentence

See Note 9 - Derivatives and Hedging Activities .

The Company recorded a contingent consideration liability at the acquisition date of both Advantix and Resourcive.

These liabilities represent the amounts payable to sellers, as outlined under the terms of the asset purchase agreements, based upon the achievement of a projected earnings before interest expense, taxes, depreciation and amortization, net of specific pro forma adjustments.

The following tables represent the Company's contingent consideration liabilities at fair value at June 30, 2025:

Fiscal Year Ended June 30, 2025

Specialty Technology Solutions Intelisys & Advisory Total

(in thousands)

Fair value at beginning of period $ — $ — $ —

Issuance of contingent consideration 7,500 9,700 17,200

Change in valuation ( 840 ) 2,740 1,900

Fair value at end of period $ 6,660 $ 12,440 $ 19,100

The fair values of amounts owed are recorded in current portion of contingent consideration and long-term portion of contingent consideration in the Company’s Condensed Consolidated Balance Sheets.

In accordance with ASC 805, the Company will revalue the contingent consideration liability at each reporting date through the last payment, with changes in the fair value of the contingent consideration reflected in the change in fair value of contingent consideration line item on the Company’s Condensed Consolidated Income Statements that is included in the calculation of operating income.

The fair value of the contingent consideration liability associated with future earnout payments is based on several factors, including but not limited to:

• estimated future results, net of pro forma adjustments set forth in the purchase agreements;

• a risk premium reflective of the Company’s creditworthiness and market risk premium associated with the United States markets.

Advantix is part of the Specialty Technology Solutions segment.

The fair value of the contingent consideration is determined using a static discounted cash flow model.

The fair value of the liability for the contingent consideration related to Advantix recognized at June 30, 2025 was $ 6.7 million, of which $ 1.3 million is classified as current.

The change in fair value for the fiscal year ended June 30, 2025 is primarily due to a reduction in current year results and future forecasts.

Earnout payments to the sellers of Advantix are payable based on results from fiscal year 2025 to fiscal year 2028.

Resourcive is part of the Intelisys & Advisory segment.

The fair value of the contingent consideration for Resourcive is determined using a Monte Carlo simulation.

The fair value of the liability for the contingent consideration related to Resourcive recognized at June 30, 2025 was $ 12.4 million, all of which is classified as non-current and is due to the sellers of Resourcive during fiscal year 2027.

The change in fair value for fiscal year ended June 30, 2025 is primarily due to the recurring amortization of the unrecognized fair value discount.

Valuation techniques and significant observable inputs used in recurring Level 3 fair value measurements for the Company's contingent consideration liabilities related to Advantix and Resourcive at June 30, 2025 were as follows.

Index to Financial Statements

SCANSOURCE, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

June 30, 2025

Acquisition Reporting Period Valuation Technique Significant Unobservable Inputs Average Rates

Advantix June 30, 2025 Discounted cash flow Adjusted EBITDA risk premium 15.3 %

Adjusted EBITDA growth rate 31.8 %

Resourcive June 30, 2025 Monte Carlo Adjusted EBITDA risk premium 12.7 %

Simulated commission growth percentage 24.2 %

(11) Share-Based Compensation

1 unchanged sentence

The Company has awards outstanding from two share-based compensation plans (the 2013 Long-Term Incentive Plan and the 2021 Long-Term Incentive Plan ).

The 2021 Long-Term Incentive Plan was approved at the annual meeting of the shareholders on January 27, 2022.

The 2024 Omnibus Incentive Compensation Plan was approved at the annual meeting of the shareholders on December 10, 2024.

The 2024 Plan permits the grant of any or all of the following types of awards to grantees:

5 unchanged sentences

and other stock-based awards.

Remaining available shares of the 2021 Long-Term Incentive Plan were rolled into the 2024 Plan.

Eligible grantees include employees, officers, non-employee consultants and non-employee directors of the Company and its affiliates.

7 unchanged sentences

Total share-based compensation included as a component of selling, general and administrative expenses in our Consolidated Income Statements was as follows:

Index to Financial Statements

SCANSOURCE, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

June 30, 2024

Fiscal Year Ended June 30,

11 unchanged sentences

Use of this option pricing model requires the input of subjective assumptions.

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").

These assumptions include estimating the length of time employees

Index to Financial Statements

SCANSOURCE, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

June 30, 2025

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").

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.

13 unchanged sentences

Outstanding, end of year 435,663 32.71 2.87 $ 3,965,747

Vested and expected to vest at June 30, 2024 711,952 33.38 3.47 $ 7,784,250

Vested at June 30, 2025 435,663 32.71 2.87 $ 3,965,747

Exercisable, end of year 435,663 $ 32.71 2.87 $ 3,965,747

2 unchanged sentences

The aggregate intrinsic value of options exercised during the fiscal years ended June 30, 2025, 2024 and 2023 was $ 3.0 million, $ 2.1 million and $ 0.2 million, respectively.

Index to Financial Statements

SCANSOURCE, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

June 30, 2024

As of June 30, 2024 there were no unvested options as presented below:

Fiscal Year Ended June 30, 2024

Options Weighted Average Exercise Price Weighted Average

Unvested, beginning of year 170,837 $ 25.12 $ 9.06

Granted — — —

Vested ( 51,191 ) 25.14 9.08

Canceled or forfeited ( 119,646 ) 42.15 11.85

Unvested, end of year — $ — $ —

The total fair value of options vested during the fiscal years ended June 30, 2024, 2023 and 2022 is $ 1.5 million , $ 1.6 million and $ 1.9 million, respectively.

As of June 30, 2025 there were no unvested options, nor did any options vest during the fiscal year ended June 30, 2025.

The total fair value of options vested during the fiscal years ended June 30, 2024 and 2023 was $ 1.5 million and $ 1.6 million, respectively.

The following table summarizes information about stock options outstanding and exercisable as of June 30, 2025:

13 unchanged sentences

435,663 2.87 $ 32.71 435,663 $ 32.71

164,093 0.43 41.13 164,093 41.13

711,952 3.47 $ 33.38 711,952 $ 33.38

The Company issues shares to satisfy the exercise of options.

Restricted Stock

Grants of Restricted Shares

During the fiscal year ended June 30, 2024, the Company granted 488,208 shares of restricted stock to employees and non-employee directors, all of which were issued in the form of RSUs:

Index to Financial Statements

3 unchanged sentences

June 30, 2025

Restricted Stock

Grants of Restricted Shares

During the fiscal year ended June 30, 2025, the Company granted 316,433 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, 2025

3 unchanged sentences

Certain employees based on performance 80,391 August 30, 2024 $ 55.78 Annually over 3 years

Certain employees based on performance 64,527 August 25, 2023 $ 31.52 Annually over 3 years

Certain employees based on performance 1,507 September 1, 2023 $ 33.20 Annually over 4 years

Certain employees based on hire 2,276 March 31, 2024 $ 43.94 Annually over 4 years

Certain employees based on hire 1,563 June 3, 2024 $ 48.01 Annually over 4 years

Certain employees based on hire 14,723 September 1, 2024 $ 50.94 Annually over 4 years

Certain employees based on performance 2,976 December 1, 2024 $ 50.41 Annually over 4 years

Non-Employee Directors

21 unchanged sentences

Employer contributions are vested over a five-year period.

(13) Income Taxes

Index to Financial Statements

3 unchanged sentences

June 30, 2025

(13) Income Taxes

As of the fiscal year ended June 30, 2025, the Company maintains the ability to access the earnings of foreign subsidiaries.

28 unchanged sentences

Stock compensation ( 1,258 ) ( 76 ) 37

Disallowed interest — — —

Reduction in prior year transition tax ( 2,065 ) — —

Earnings from foreign subsidiaries 778 776 957

3 unchanged sentences

Nontaxable income ( 136 ) ( 927 ) ( 3,189 )

Nondeductible compensation (a)

1,412 1,240 1,166

Nondeductible compensation 2,144 1,412 1,240

Notional interest deduction on net equity ( 928 ) — ( 733 )

Other 863 892 819

Provision for income taxes $ 22,848 $ 22,781 $ 33,758

(a) Certain amounts in the prior year have been reclassified to the current year presentation in presented table.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below:

Index to Financial Statements

3 unchanged sentences

June 30, 2025

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below:

(in thousands)

9 unchanged sentences

Timing of amortization deduction from intangible assets 7,675 6,680

Timing of depreciation and other deductions from building and equipment 437 —

Total deferred tax assets 58,824 58,448

23 unchanged sentences

The Company recognizes excess tax benefits and tax deficiencies as income tax expense or benefit for stock award settlements in accordance with ASU 2016-09.

The Company recognized net tax expense of less than $ 0.1 million for the fiscal year ended June 30, 2024, net tax benefit of less than $ 0.1 million and $ 0.3 million for the fiscal years ended June 30, 2023 and 2022, respectively.

As of June 30, 2024, the Company had gross unrecognized tax benefits of $ 1.1 million, $ 0.9 million of which, if recognized, would affect the effective tax rate.

This reflects a decrease of less than $ 0.1 million on a gross basis over the prior fiscal year.

The Company recognized net tax benefit of $ 1.2 million for the fiscal year ended June 30, 2025, net tax expense of less than $ 0.1 million for the fiscal year ended June 30, 2024 and net tax benefit of less than $ 0.1 million for the fiscal year ended June 30, 2023.

Index to Financial Statements

3 unchanged sentences

June 30, 2025

As of June 30, 2025, the Company had gross unrecognized tax benefits of $ 0.7 million, $ 0.6 million of which, if recognized, would affect the effective tax rate.

This reflects a decrease of $ 0.4 million on a gross basis over the prior fiscal year.

The Company does not expect that the total amount of unrecognized tax benefits will significantly increase or decrease within the next twelve months.

The Company recognizes interest and penalties related to unrecognized tax benefits within the income tax expense line in the accompanying Consolidated Income Statement.

Accrued interest and penalties are included within the related tax liability line in the Consolidated Balance Sheet.

The Company recognizes interest and penalties related to unrecognized tax benefits within the income tax expense line in the accompanying Consolidated Income Statements.

Accrued interest and penalties are included within the related tax liability line in the Consolidated Balance Sheets.

The total amount of interest and penalties accrued, but excluded from the table below, were $ 1.0 million, $ 1.3 million and $ 1.2 million for the fiscal years ended June 30, 2025, 2024 and 2023, respectively.

6 unchanged sentences

Ending Balance $ 698 $ 1,141 $ 1,172

On August 26, 2024, the U.S.

Tax Court issued an opinion in Varian Medical Systems, Inc.

Commissioner .

The opinion related to the U.S.

taxation of deemed foreign dividends in the transition year of the Tax Cuts and Jobs Act (the company’s fiscal year 2018).

While the company was not a party to the case, the opinion resulted in a change to its tax position, and as such recorded a tax benefit of $ 2.1 million as a reduction to the provision for income taxes in the June 30, 2025 fiscal year.

During the June 30, 2024 fiscal year, the Company received a favorable ruling in Brazil regarding an exclusion from taxable income and as a result recognized a $ 1.5 million income tax recovery for prior years.

2 unchanged sentences

As a result, the company recognized a tax benefit of $ 1.5 million during the 2024 fiscal year for creditable foreign taxes for the 2023 fiscal year.

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.

The Company conducts business internationally 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.

With certain exceptions, the Company is no longer subject to state and local, or non-United States income tax examinations by tax authorities for tax years before June 30, 2020.

On July 4, 2025, the One Big Beautiful Bill Act (“the Act”) was signed into law.

The Act permanently extends key provisions of the Tax Cuts and Jobs Act, including 100% bonus depreciation, and introduces changes to the international tax framework.

We are currently assessing the impact of the Act on our future effective tax rate, tax liabilities, and cash taxes.

In accordance with ASC 842, Leases , at contract inception the Company determines if a contract contains a lease by assessing whether the contract contains an identified asset and whether the Company has the ability to control the asset.

4 unchanged sentences

The Company has finance leases for information technology equipment expiring through fiscal year 2028.

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.

Finance leases are

Index to Financial Statements

SCANSOURCE, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

June 30, 2025

recorded as property and equipment, net , accrued expenses and other current liabilities and other long-term liabilities on the Condensed Consolidated Balance Sheets.

The gross amount of the balances recorded related to finance leases is immaterial to the financial statements at June 30, 2025 and 2024.

4 unchanged sentences

Operating lease expense is recognized on a straight-line basis over the lease term.

Variable lease payments not based on a rate or index, such as costs for common area maintenance, are

Index to Financial Statements

SCANSOURCE, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

June 30, 2024

expensed as incurred.

Variable lease payments not based on a rate or index, such as costs for common area maintenance, are 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.

20 unchanged sentences

The weighted-average remaining lease term and discount rate at June 30, 2025 and 2024 are presented in the table below:

June 30, 2024 June 30, 2023

Weighted-average remaining lease term 3.03 3.62

Weighted-average discount rate 4.84 % 4.30 %

The following table presents the maturities of the Company's operating lease liabilities at June 30, 2024:

Index to Financial Statements

3 unchanged sentences

June 30, 2025

June 30, 2025 June 30, 2024

Weighted-average remaining lease term 3.03 3.03

Weighted-average discount rate 5.35 % 4.84 %

The following table presents the maturities of the Company's operating lease liabilities at June 30, 2025:

Operating leases

(in thousands)

Thereafter 300

Total future payments 12,554

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Capital Projects

The Company expects total capital expenditures to range from $ 10.0 million to $ 15.0 million during fiscal year 2025 primarily for IT investments.

The Company expects total capital expenditures to range from $ 10.0 million to $ 15.0 million during fiscal year 2026 primarily for IT and warehouse investments.

Pre-Acquisition Contingencies

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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.

There were no deposits into, or releases from the escrow account during the fiscal year ended June 30, 2024.

There were no deposits into the escrow account and $ 1.2 million wa s released from the escrow account during the fiscal year ended June 30, 2023.

There were no deposits into the escrow account;

however $ 0.2 million was released from the escrow account during the fiscal year ended June 30, 2025.

There were no deposits, or releases from the escrow account during the fiscal year ended June 30, 2024.

The amount available after the impact of foreign currency translation, as of June 30, 2025 and 2024, for future pre-acquisition contingency settlements or to be released to the sellers was $ 3.4 million and $ 3.2 million, respectively.

The table below summarizes the balances and line item presentation of Network1's pre-acquisition contingencies and corresponding indemnification receivables in the Company's consolidated balance sheet:

The Company has recorded pre-acquisition contingencies and corresponding indemnification receivables related to Network1 of $ 3.7 million and $ 3.6 million for the fiscal years ended June 30, 2025 and 2024, respectively.

These balances are presented as other non-current liabilities and other non-current assets in the Consolidated Balance Sheets.

The amount of reasonably possible

Index to Financial Statements

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June 30, 2025

June 30, 2024 June 30, 2023

(in thousands)

Prepaid expenses and other assets (current) $ 14 $ 16

Other assets (noncurrent) $ 3,598 $ 4,150

Other current liabilities $ 14 $ 16

Other long-term liabilities $ 3,598 $ 4,150

The amount of reasonably possible undiscounted pre-acquisition contingencies as of June 30, 2024 is estimated to range from $ 3.6 million to $ 14.6 million at this time, of which all exposures are indemnifiable under the share purchase agreement.

undiscounted pre-acquisition contingencies as of June 30, 2025 is estimated to range from $ 3.7 million to $ 14.9 million at this time, of which all exposures are indemnifiable under the share purchase agreement.

Index to Financial Statements

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(16) Segment Information

The Company is a leading provider of technology solutions and services to customers in specialty technology markets.

The Company has two reportable segments, based on technology type.

The Company is a leading distributor of technology solutions and services to customers in specialty technology markets.

The Company's Chief Executive Officer is our Chief Operating Decision Maker ("CODM") who evaluates how we allocate resources, assess performance and make strategic and operational decisions.

The CODM reviews key financial measures for each reportable segment based on various financial results including net sales, gross profit and operating income.

In connection with that assessment, our CODM may exclude matters, such as charges for impairments, restructuring costs, acquisition and divestiture costs, gains and losses from business acquisitions or dispositions and litigation or tax settlements or recoveries.

The CODM also reviews certain other measures including total assets and property and equipment by segment and geography.

Based on such evaluation, the Company has two reportable segments based on sales model.

Specialty Technology Solutions Segment

The Specialty Technology Solutions segment includes the Company’s business in mobility and barcode, POS, payments, security and networking technologies.

Mobility and barcode solutions include mobile computing, barcode scanners and imagers, radio frequency identification devices, barcode printing and related services.

POS and payments solutions include POS systems, integrated POS software platforms, self-service kiosks including self-checkout, payment terminals and mobile payment devices.

Security solutions include video surveillance and analytics, video management software and access control.

Networking solutions include switching, routing and wireless products and software.

The Company has business operations within this segment in the United States, Canada and Brazil.

Modern Communications & Cloud Segment

The Modern Communications & Cloud segment includes the Company’s business in communications and collaboration, connectivity and cloud services.

Communications and collaboration solutions, delivered in the cloud, on-premise or hybrid, include voice, video, integration of communication platforms and contact center solutions.

The Intelisys connectivity and cloud marketplace offers telecom, cable, UCaaS, CCaaS, infrastructure as a service, software-defined wide-area network and other cloud services.

This segment includes SaaS and subscription services, which the Company offers using digital tools and platforms.

The Company has business operations within this segment in the United States, Canada and Brazil.

The Specialty Technology Solutions segment operates in the United States, Canada and Brazil and includes specialty technology solutions distributed through a wholesale/resale sales model.

This segment includes hardware, SAAS and subscription services.

The specialty technology solutions include the following:

• Mobility and barcode - mobile computing, barcode scanners and imagers, radio frequency identification devices, barcode printing and related services;

• POS - Point of Sale systems, integrated POS software platforms;

• Payment terminals - Self-service kiosks including self-checkout, payment terminals and mobile payment devices;

• Physical security - video surveillance and analytics, video management software and access control;

• Networking - switching, routing and wireless products and software;

• Communications - voice, video, communication platform integration and contact center solutions;

• Connectivity - managed connectivity and wireless enablement solutions.

Intelisys & Advisory Segment

The Intelisys & Advisory segment operates in the United States and consists of sales and services to both channel sales partners (Intelisys) and end users (Advisory).

As a technology services distributor, or TSD, Intelisys distributes connectivity, cloud and next-generation technologies through an agency sales model.

Channel sales partners also have access to SaaS and subscription-based services through the company’s proprietary tools, platforms and flexible routes to market.

In addition to traditional telecom services, key technology areas include:

• Connectivity & SDN (Software-Defined Networking)

• CX (Unified Communications as a Service and Contact Center as a Service)

• Cloud/Data Center

• Wireless & IoT

By offering flexible routes to market and a robust solutions portfolio, this segment helps advisors service a wide range of end users including businesses of all sizes from VSB (“Very Small Business”) to Enterprise size businesses.

Index to Financial Statements

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June 30, 2025

Selected financial information for each business segment is presented below:

Selected financial information about the Company's segments for the fiscal years ended June 30, 2025, 2024, and 2023 are presented below:

Specialty Technology Solutions Intelisys & Advisory Corporate (a)

Fiscal year ended June 30, 2025:

Net Sales $ 2,942,717 $ 98,093 $ — $ 3,040,810

Cost of sales 2,631,315 849 — 2,632,164

Gross profit 311,402 97,244 — 408,646

Other operating expenses (b)

245,353 70,030 8,063 323,446

(in thousands)

Specialty Technology Solutions $ 1,998,636 $ 2,331,030 $ 2,082,321

Modern Communications & Cloud 1,261,173 1,456,691 1,447,614

Operating income (loss) $ 66,049 $ 27,214 $ ( 8,063 ) $ 85,200

Other Segment Information

Depreciation and amortization (c)

$ 19,627 $ 8,878 $ 1,690 $ 30,195

Depreciation and amortization:

Specialty Technology Solutions $ 11,197 $ 10,838 $ 11,754

Modern Communications & Cloud 13,875 14,901 15,110

Corporate 2,937 2,875 3,020

Change in fair value of contingent consideration (d)

$ ( 840 ) $ 2,740 $ — $ 1,900

Operating income:

Specialty Technology Solutions $ 44,726 $ 75,688 $ 66,686

Modern Communications & Cloud 52,547 61,658 55,511

Corporate (1)

Capital expenditures $ ( 7,776 ) $ ( 510 ) $ — $ ( 8,286 )

Fiscal year ended June 30, 2024:

Net Sales $ 3,167,549 $ 92,260 $ — $ 3,259,809

Cost of sales 2,860,292 465 — 2,860,757

Gross profit 307,257 91,795 — 399,052

Other operating expenses (b)

240,579 61,200 6,949 308,728

Operating income (loss) $ 66,678 $ 30,595 $ ( 6,949 ) $ 90,324

Other Segment Information

Depreciation and amortization (c)

$ 17,133 $ 7,939 $ 2,937 $ 28,009

Change in fair value of contingent consideration (d)

$ — $ — $ — $ —

Capital expenditures $ ( 8,414 ) $ ( 141 ) $ — $ ( 8,555 )

Specialty Technology Solutions $ ( 2,374 ) $ ( 3,966 ) $ ( 1,667 )

Modern Communications & Cloud ( 6,181 ) ( 6,013 ) ( 5,182 )

Fiscal year ended June 30, 2023:

Net Sales $ 3,701,667 $ 86,054 $ — $ 3,787,721

Cost of sales 3,338,088 394 — 3,338,482

Gross profit 363,579 85,660 — 449,239

Other operating expenses (b)

250,750 61,143 1,460 313,353

Operating income (loss) $ 112,829 $ 24,517 $ ( 1,460 ) $ 135,886

Other Segment Information

Depreciation and amortization (c)

$ 17,943 $ 7,796 $ 2,875 $ 28,614

Change in fair value of contingent consideration (d)

$ — $ — $ — $ —

Capital expenditures $ ( 9,827 ) $ ( 152 ) $ — $ ( 9,979 )

(a) For the year ended June 30, 2025, the amounts in Other operating expenses shown above include restructuring expenses, legal settlement expenses, acquisition expenses, as well as cyberattack restoration costs.

For the year ended June 30, 2024, the amounts in Other operating expenses shown above include restructuring expenses, acquisition and divestiture expenses as well as cyberattack restoration costs.

For the year ended June 30, 2023, the amounts in Other operating expenses shown above include cyberattack restoration costs

(b) Primarily includes payroll and other employee expenses and other selling and general administrative expenses

(d) Change in fair value of contingent consideration is included within Other operating expenses

Index to Financial Statements

SCANSOURCE, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

June 30, 2025

Fiscal Year Ended June 30,

2025 2024 2023

(in thousands)

Sales by Geography Category:

United States $ 2,928,606 $ 3,443,561 $ 3,178,829

International 338,637 355,647 356,241

United States and Canada $ 2,809,447 $ 2,928,606 $ 3,443,562

Brazil 240,071 338,637 355,646

Less intercompany sales ( 8,708 ) ( 7,434 ) ( 11,487 )

$ 3,040,810 $ 3,259,809 $ 3,787,721

(1) For the year ended June 30, 2024, the amounts shown above include restructuring expenses, acquisition and divestiture expenses as well as cyberattack restoration costs.

For the year ended June 30, 2023, the amounts shown above include cyberattack restoration costs.

For the year ended June 30, 2022, the amounts shown above include divestiture costs.

June 30, 2025 June 30, 2024

1 unchanged sentence

Specialty Technology Solutions $ 1,564,119 $ 1,499,146

Modern Communications & Cloud 901,007 964,066

Intelisys & Advisory 221,487 279,886

$ 1,785,606 $ 1,779,032

Property and equipment, net by Geography Category:

United States $ 21,613 $ 27,323

International 11,888 10,056

United States and Canada $ 15,047 $ 21,613

Brazil 16,122 11,888

$ 31,169 $ 33,501

(17) Accumulated Other Comprehensive Income

Index to Financial Statements

SCANSOURCE, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

June 30, 2024

The components of accumulated other comprehensive loss, net of tax, are as follows:

10 unchanged sentences

Tax (benefit) expense $ ( 456 ) $ ( 484 ) $ 737

Index to Financial Statements

SCANSOURCE, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

June 30, 2025

(18) Business Acquisitions

On August 8, 2024 , ScanSource acquired substantially all of the assets of Resourcive, a leading technology advisor, through its subsidiary ScanSource Agency, Inc.

Resourcive delivers strategic IT sourcing solutions to mid-market and enterprise businesses.

On August 15, 2024 , ScanSource acquired, through its subsidiary Advantix ScanSource, LLC, substantially all of the assets of Advantix, a managed connectivity experience provider specializing in wireless enablement solutions.

The combined initial purchase price of these acquisitions, net of cash acquired, was approximately $ 56.7 million .

The Advantix acquisition is included in the Specialty Technology Solutions segment, and the Resourcive acquisition is included in the Intelisys & Advisory segment.

Both acquisitions included future earnout payments, and the Company recorded contingent consideration liabilities at the acquisition dates representing the fair value of estimated amounts payable to sellers.

See Note 10 - Fair Value of Financial Instruments for the related disclosures regarding the contingent consideration liabilities recognized in connection with these acquisitions.

The purchase prices were allocated to the assets acquired and liabilities assumed based on their estimated fair values on the transaction dates.

Intangible assets acquired include trade names, customer relationships, and developed technology.

See Note 7 - Goodwill and Other Identifiable Intangible Assets for the amounts of goodwill and intangible assets recognized in connection with these acquisitions.

All of the goodwill recognized is expected to be deductible for tax purposes.

The impact of these acquisitions was not material to the consolidated financial statements.

The Company recognized $ 1.0 million and $ 0.4 million for the fiscal years ended June 30, 2025 and 2024 , respectively, in acquisition-related costs included in selling, general and administrative expenses on the Condensed Consolidated Income Statements.

(19) Business Sale

On December 19, 2023, the Company completed the sale of its UK-based intY business, which was part of the Modern Communications & Cloud segment.

The Company retained its CASCADE cloud services distribution platform which has been used to grow the Cisco and Microsoft subscription businesses in the United States and Brazil.

On December 19, 2023, the Company completed the sale of its UK-based intY business.

Under the stock purchase agreement, the Company received proceeds of $ 17.6 million in cash for the sale, net of cash transferred.

1 unchanged sentence

The impact of this sale was not material to the consolidated financial statements.

The Company received an additional $ 2.6 million related to the sale for cash released from escrow in fiscal year 2025.

During the fiscal year ended June 30, 2023, the Company received a payment related to a tax settlement of $ 1.7 million for its divested businesses in Latin America, outside of Brazil.

During the fiscal year ended June 30, 2022, the Company received a payment of $ 3.1 million for its divested businesses in Latin America related to working capital adjustments and in accordance with the Share Purchase Agreement between Intcomex and the Company.The receipt of these payments resulted in a gain on disposal group .

The gain on disposal group has been recorded in net income from discontinued operations in the Consolidated Income Statements.

(20) Restructuring

During fiscal 2024, as part of a strategic review of organizational structure and operations, the Company executed a cost reduction and restructuring program to align our cost structure with demand expectations in our hardware business.

These actions are expected to result in approximately $ 10.0 million in annualized savings in selling, general and administrative expenses.

The following table presents the restructuring and employee separation costs incurred for the fiscal year ended ended June 30, 2024:

Fiscal Year Ended June 30, 2024

In January 2024 and September 2024, as part of a strategic review of organizational structure and operations, the Company executed cost reduction and restructuring programs to align our cost structure with demand expectations in our business.

The actions taken in January 2024 and September 2024 are expected to result in approximately $ 10.0 million and $ 10.5 million, in annualized savings in selling, general and administrative expenses, most of which was realized during this fiscal year.

The following table presents the restructuring and employee separation costs incurred for the fiscal years ended June 30, 2025 and 2024:

Fiscal years ended June 30,

(in thousands)

Employee separation and benefit costs $ 5,381 $ 4,358

For the fiscal year ended June 30, 2024, all restructuring costs are recognized in the Corporate reporting unit and have not been allocated to the Specialty Technology Solutions or Modern Communications & Cloud segments.

For the fiscal years ended June 30, 2025 and 2024, all restructuring costs are recognized in the Corporate reporting unit and have not been allocated to the Specialty Technology Solutions or Intelisys & Advisory segments.

Index to Financial Statements

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Balance at June 30, 2024

Charged to expense 5,381

Cash payments ( 6,455 )

Balance at June 30, 2025

The remaining balance as of June 30, 2025 of $ 0.6 million is expected to be paid through the third quarter of fiscal year 2026.

(20) Subsequent Events

On August 8, 2024, ScanSource acquired Resourcive, a leading technology advisor.

Resourcive delivers strategic IT sourcing solutions to mid-market and enterprise businesses, advising clients on value creation strategies that are enabled by technology.

On August 15, 2024 , ScanSource acquired Advantix, a VAR-focused, managed connectivity experience provider specializing in wireless enablement solutions.

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.

What changed 10-K

Item 8. Financial Statements and Supplementary Data