<PAGE>
Registration No. 33-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
SCANSOURCE, INC.
(Exact Name of Registrant as Specified in Its Charter)
South Carolina 57-0965380
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
Jeffery A. Bryson
Chief Financial Officer
6 Logue Court, Suite G 6 Logue Court, Suite G
Greenville, South Carolina 29615 Greenville, South Carolina 29615
(864) 288-2432 (864) 288-2432
(Address, Including Zip Code, and (Name, Address, Including Zip Code, and
Telephone Number, Including Area Code, Telephone Number, Including Area Code,
of Registrant's Principal Executive of Agent for Service)
Offices)
Copy To:
William S. McMaster
Nexsen Pruet Jacobs & Pollard, LLP
1441 Main Street, Suite 1500
Columbia, South Carolina 29201
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ X ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of earlier effective
registration statement for the same offering. [ ] _____________________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ____________________________________________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.[ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------
Amount to Proposed Maximum Proposed Maximum Amount of
Title of Each Class of Securities be Offering Price Per Aggregate Offering Registration
to be Registered Registered Unit (1) Price (1) Fee
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 154,579 $ 20.57 $ 3,179,690 $ 939
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, based on the
average of the high and low prices of the Registrant's Common Stock
reported on the Nasdaq National Market on April 24, 1998.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
154,579 Shares
SCANSOURCE, INC.
Common Stock
This Prospectus relates to the public offering that may be made from time
to time of up to 154,579 shares (the "Shares") of common stock, no par value per
share (the "Common Stock"), of ScanSource, Inc., a South Carolina corporation
(the "Company"), by, or for the accounts of, the holders thereof (collectively,
the "Selling Shareholders"). See "Selling Shareholders."
The Shares were issued by the Company in transactions exempt from the
registration requirements of the Securities Act of 1933, as amended (the "!933
Act") and applicable state securities laws. Of the Shares, (i) an aggregate of
94,871 were issued by the Company in January 1998 to two individuals in
connection with the Company's acquisition of companies owned by such
individuals, and (ii) 59,708 were issued by the Company in February 1998 to two
individuals in connection with the Company's acquisition of a company owned by
such individuals.
The Selling Shareholders have advised the Company that they intend to sell
the Shares offered hereby from time to time in the over-the-counter market,
including ordinary broker's transactions, in privately negotiated transactions,
or through sales to one or more dealers for resale of such Shares as principals,
at prevailing market prices at the time of sale, prices related to such
prevailing market prices, or at negotiated prices satisfactory to the Selling
Shareholders, or in any combination thereof. Until such time as the Shares are
eligible for public sale by the Selling Shareholders under Rule 144 or Rule 145
under the 1933 Act, the Registration Statement of which this Prospectus forms a
part must be current at the time any Selling Shareholder makes any public sale
of Shares. See "Plan of Distribution."
The Common Stock is traded under the Nasdaq symbol "SCSC." On April 24,
1998, the last sale price of the Common Stock as reported on the Nasdaq National
Market was $ 20.75 per share.
The Company will not receive any of the proceeds from the sale of the
Shares by the Selling Shareholders. By agreement with the Selling Shareholders,
the Company has agreed to pay all of the expenses of registering the Shares
offered hereby (other than any underwriter or selling agent's discounts and
commissions and fees and costs of legal counsel or other advisors to the Selling
Shareholders). See "Selling Shareholders."
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" ON PAGES 3 THROUGH 6.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is April , 1998.
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (the "Registration Statement," which term
shall include all amendments thereto) under the 1933 Act with respect to the
securities offered hereby. This Prospectus, filed as part of that Registration
Statement, does not contain all of the information set forth in the Registration
Statement and the exhibits thereto, certain portions having been omitted from
this Prospectus in accordance with the rules and regulations of the Commission.
For further information with respect to the Company, the securities offered by
this Prospectus and such omitted information, reference is made to the
Registration Statement, including any and all exhibits and amendments thereto,
which Registration Statement may be inspected and copied in the manner and at
the sources described below. Statements contained in this Prospectus concerning
the provisions of any document filed as an exhibit are of necessity brief
descriptions thereof and are not necessarily complete, and in each instance
reference is made to the copy of the document filed as an exhibit to the
Registration Statement, each such statement being qualified in its entirety by
this reference.
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith the Company files reports, proxy statements and other information with
the Commission. Such reports, proxy statements and other information may be
inspected and copied at the public reference facilities maintained by the
Commission in Washington, D.C. and at its regional offices located in Chicago,
Illinois and New York, New York. Please call the Commission at 1-800-SEC-0330
for more information on these public reference rooms. Copies of such material,
including the Registration Statement, can be obtained from the Public Reference
Section of the Commission, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Commission also maintains an
Internet web site at "http://www.sec.gov" that contains reports, proxy and other
information statements and other information regarding companies, such as the
Company, that file electronically with the Commission The Company's Common Stock
is quoted on the Nasdaq National Market. Reports, proxy statements and other
information concerning the Company can be inspected at the National Association
of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed with the Commission by the Company under the
Exchange Act, are incorporated by reference into this Prospectus:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1997;
(b) The Company's Quarterly Reports on Form 10-Q for the quarters ended
September 30, 1997 and December 31, 1997;
(c) The Company's Current Reports on Form 8-K dated December 10, 1997,
January 9, 1998 and February 20, 1998; and
(d) The description of the Company's Common Stock contained in the
Company's Form 8-A filed with the Commission on February 24, 1995,
which Form 8-A incorporated by reference the description of the
Company's capital stock contained in the Company's Registration
Statement on Form SB-2 (File No. 33-75026A) initially filed with the
Commission on February 7, 1994.
All other reports and documents filed pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act prior to the termination of this Offering shall be
deemed to be incorporated by reference in this Prospectus and shall be deemed a
part hereof from the date of filing of such reports and documents. Any statement
contained herein or in a document incorporated or deemed to be incorporated
herein by reference shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any
subsequently filed document that also is, or is deemed to be, incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
Copies of the above documents (other than exhibits to such documents,
unless such exhibits are specifically incorporated by reference into such
documents) are available upon written or oral request, without charge, from the
Company, 6 Logue Court, Suite G, Greenville, South Carolina 29615, telephone:
(864) 288-2432, Attention: Jeffery A. Bryson.
2
<PAGE>
THE COMPANY
ScanSource, Inc. ("ScanSource" or the "Company") is a leading value-added
wholesale distributor of specialty technology products exclusively to resellers.
The Company primarily distributes automatic-identification ("Auto-lD") and
point-of-sale ("POS'') products which interface with computer systems used to
automate the collection, processing, and communication of information for
commercial and industrial applications, including retail sales, distribution,
shipping, inventory control, materials handling, and warehouse management. The
Company currently markets approximately 8,200 products from over 40 hardware and
software vendors from its central warehouse in Memphis, Tennessee to
approximately 6,700 reseller customers in the U.S. and Canada. From fiscal 1994
to fiscal 1997, the Company's net sales increased at an 80.1% compound annual
rate to $93.9 million, while operating income increased at a 91.9% compound
annual rate to $4.6 million.
The Company's vendors include most of the leading Auto-ID and POS
manufacturers, including Cherry Electrical, Cognitive Solutions, Datamax,
Eltron, Epson America, IBM, Intermec, Ithaca Peripherals, Metrologic, Micro-
Touch Systems, MMF Cash Drawer, Monarch Marking Systems, Percon, PSC, Spectra-
Physics, StrandWare, Symbol Technologies, and Zebra Technologies. In addition to
distributing Auto-lD and POS products, the Company entered into an agreement
with Lucent Technologies, Inc. in February 1997 for the distribution of
telephony products, including PBXs, key systems, telephone handsets, cabling,
and voice mail.
The Company's objective is to be a comprehensive source of specialty
technology products and value-added services for resellers. The Company's
business model features a sophisticated information system, streamlined
management, and centralized distribution enabling it to achieve the economies of
scale necessary for cost-effective order fulfillment. In addition, the Company
offers significant value-added services such as pre- and post-sale technical
support, bundling of separate product assortments into solution kits,
applications programming, systems integration, and project management services.
The Company believes that its value-added services and targeted marketing
programs provide it with significant competitive advantages and distinguish it
from conventional wholesale distributors engaged primarily in order fulfillment.
The Company's principal executive offices are located at 6 Logue Court,
Suite G, Greenville, South Carolina 29615. The Company's telephone number is
(864) 288-2432.
RISK FACTORS
The securities offered hereby involve a high degree of risk. Each
prospective investor should carefully consider the following risk factors
inherent in, and affecting the business of, the Company and this Offering before
making an investment decision.
Dependence on Vendors and Product Supply. The Company's future success is
highly dependent on its relationships with vendors. Sales of products from the
Company's ten largest vendors accounted for 75.4% and 73.2% of net sales for
fiscal 1997 and fiscal 1996, respectively. Sales of products from the Company's
two largest vendors, Symbol Technologies and IBM Corporation, accounted for
17.2% and 14.1%, respectively, of net sales for fiscal 1997, and 20.3% and 9.4%,
respectively, of net sales for fiscal 1996. From time to time, the Company
experiences shortages in availability of some products from vendors. The
Company's business is largely dependent upon the terms provided by its vendors.
The Company's vendor agreements generally contain provisions for periodic
renewals and for termination by the vendor without cause and typically upon
short notice. Some of the Company's vendor agreements require minimum purchase
amounts or the maintenance of a representative assortment of the vendor's full
line of products. Such contract provisions could increase the Company's working
capital requirements. Although the Company believes its vendor relationships are
good, there can be no assurance that the Company's vendor relationships will
continue as currently in effect. The loss or deterioration of the Company's
relationship with a major vendor, the authorization by vendors of additional
wholesale distributors, or the failure by the Company to establish good
relationships with major new vendors could have a material adverse effect on the
Company's business, financial condition, and results of operations.
As is typical in its industry, the Company receives volume discounts and
certain credits for market development from most of its vendors. These volume
discounts directly affect the Company's gross profits. In addition, credits for
market development are typically used to offset a portion of the Company's sales
and marketing expenses. The Company is also dependent, in part, upon vendor
financing for working capital requirements. No assurance can be given that
vendor financing will continue to be available to the Company on satisfactory
terms and conditions, if at all. Any change in the availability of these
discounts or credits or the failure of the Company to obtain vendor financing on
satisfactory terms and conditions could have a material adverse effect on the
Company's business, financial condition, and results of operations.
3
<PAGE>
Competition. The markets in which the Company operates are highly
competitive. Competition is based primarily on factors such as price, product
availability, speed and accuracy of delivery, effectiveness of sales and
marketing programs, credit availability, ability to tailor specific solutions to
customer needs, quality and breadth of product lines and services, and
availability of technical and product information. The Company's competitors
include regional and national wholesale distributors, as well as hardware
manufacturers (including most of the Company's vendors) that sell directly to
resellers and to end-users. In addition, the Company competes with master
resellers which sell to franchisees, third-party dealers, and end-users. Certain
of the Company's current and potential competitors have significantly greater
financial, technical, marketing, and other resources than the Company and may be
able to respond more quickly to new or emerging technologies and changes in
customer requirements. Additional competition could result in price reductions,
reduced margins, and loss of market share by the Company. There can be no
assurance that the Company will be able to compete successfully against current
and future competitors or that future competitive pressures will not materially
and adversely affect its business, financial condition, and results of
operations.
Managing Growth; Risk of Entering New Markets. The rapid growth of the
Company's business has required it to make significant additions in personnel
and has increased its working capital requirements. Such growth has resulted in
new and increased responsibilities for management and has placed significant
strain upon the Company's management, operating, financial, and technical
resources. There can be no assurance that this strain will not have a material
adverse effect on the Company's business, financial condition, and results of
operations, nor can there be any assurance that the Company will be able to
attract or retain competent personnel and improve its operational systems
sufficiently to support the expansion of its operations. The Company's business
requires significant levels of working capital to finance accounts receivable
and product inventory that is not financed by its vendors. The Company may in
the future require additional equity or debt financing to support its increased
working capital needs in connection with any expansion of its business. Such
financing may not be available on terms that are favorable to the Company, if at
all. Also crucial to the Company's success will be its ability to achieve
additional economies of scale in order to sustain its operating margins. There
can be no assurance that the Company will be able to obtain adequate working
capital or achieve such economies of scale, and the failure to do so could have
a material adverse effect on the Company's business, financial condition, and
results of operations.
The Company's growth strategy also anticipates the entry into new product
markets in which the Company has had little or no prior experience, such as its
recent entry into the telephony market. The Company's distribution agreement
with Lucent Technologies restricts its rights to sell certain telephony products
manufactured by Lucent's competitors, which could impair the Company's
competitive position in this market. Expansion of the Company's existing product
markets or entry into new product markets could divert the use of the Company's
resources and systems, require additional resources that might not be available,
result in new or more intense competition, require longer implementation times
or greater start-up expenditures than anticipated, or otherwise fail to achieve
the desired results in a timely fashion, if at all. There can be no assurance,
therefore, that the Company will be able to expand its existing markets or
compete successfully in any new product markets. The Company's ability to manage
successfully its growth will require continued enhancement of its operational,
management, and financial resources and controls. The Company's failure to
manage effectively its growth could have a material adverse effect on the
Company's business, financial condition, and results of operations.
Risks of Potential Acquisitions. The Company's growth strategy includes
expanding its business through strategic acquisitions and investments in
complementary businesses. In this regard, the Company recently completed the
acquisition of ProCom Supply Corporation, a wholesale distributor of telephony
products headquartered in San Diego, California (September 1997), Kingtron
Corporation d/b/a POS ProVisions (USA) and P.O.S. ProVisions, Ltd., two
wholesale distributors of point of sale products with offices in Washington,
Ontario and British Columbia (January 1998), and The CTI Authority , Inc., a
wholesale distributor of computer telephony integration products headquartered
in New Jersey (February 1998). Other than these acquisitions, the Company has
not had significant acquisition or investment experience, and there can be no
assurance that the Company will be able to successfully identify additional
suitable acquisition or investment candidates, complete acquisitions, or
integrate acquired businesses into its operations. Acquisitions and investments
involve numerous risks, including difficulties in the assimilation of the
operations, services, products, vendor agreements, and personnel of the acquired
company, the diversion of management's attention and other resources from other
business concerns, entry into markets in which the Company has little or no
prior experience, and the potential loss of key employees, customers, or
contracts of the acquired company. Acquisitions and investments could also
conflict with restrictions in the Company's distribution agreements with
existing vendors, such as Lucent Technologies. The Company is unable to predict
whether or when any prospective acquisition or investment candidate will become
available or the likelihood that any acquisition or investment will be completed
or successfully integrated. The Company's failure to successfully manage any
potential acquisitions or investments in complementary businesses could have a
material adverse effect on the Company's business, financial condition, and
results of operations.
Quarterly Fluctuations in Net Sales and Operating Results. Net sales and
operating results may fluctuate quarterly as a result of demand for the
Company's products and services, the introduction of new hardware and software
technologies,
4
<PAGE>
the introduction of new services by the Company and its competitors, changes in
manufacturers' prices or price protection policies, changes in freight rates,
disruption of warehousing or shipping channels, changes in the level of
operating expenses, the timing of major marketing or other service projects,
product supply shortages, inventory adjustments, changes in product mix, entry
into new product markets, the timing of acquisitions or investments, difficulty
in maintaining margins, and general competitive and economic conditions. In
addition, a substantial portion of the Company's net sales in each quarter
results from orders booked in such quarter. Accordingly. the Company believes
that period-to-period comparisons of its operating results should not be relied
upon as an indication of future performance. It is possible that in certain
future periods, the Company's operating results may be below the expectations of
public market analysts and investors. In such event, the market price of the
Common Stock would likely be materially and adversely affected.
Risks Associated with Inventory Management. The Company's business, like
that of other wholesale distributors, is subject to the risk that the value of
its inventory will be adversely affected by price reductions by manufacturers or
by technological changes affecting the usefulness or desirability of its
products inventory. It is the policy of most manufacturers of specialty
technology products to protect distributors such as the Company from the loss in
value of inventory due to technological change or reductions in the
manufacturers' prices. Under the terms of most of the Company's agreements,
vendors will generally credit the Company for inventory losses resulting from
the vendor's price reductions if the Company complies with certain conditions.
In addition, generally under such agreements, the Company has the right to
return for credit or exchange for other products a portion of its slow moving or
obsolete inventory items within designated periods of time. There can be no
assurance that, in every instance, the Company will be able to comply with all
necessary conditions or manage successfully such price protection or stock
rotation opportunities, if available. Also, a manufacturer which elects to
terminate a distribution agreement generally will repurchase its products
carried in inventory. These industry practices are sometimes not included in
written agreements and do not protect the Company in all cases from declines in
inventory value, excess inventory, or product obsolescence. There can be no
assurance that manufacturers will continue such practices or that the Company
will be able to manage successfully its existing and future inventories.
Historically, the Company has not experienced losses due to obsolete inventory
materially in excess of established inventory reserves. Significant declines in
inventory value in excess of established inventory reserves or dramatic changes
in prevailing technology could have a material adverse effect on the Company's
business, financial condition, and results of operations.
Dependence on Senior Management. The success of the Company is largely
dependent on the skills, experience and efforts of its senior management,
particularly Steven H. Owings, Chairman and Chief Executive Officer, Michael L.
Baur, President, and Jeffery A. Bryson, Chief Financial Officer. The Company has
entered into employment agreements with each of Messrs. Owings, Baur, and
Bryson, which expire on June 30, 1999. The Company also has obtained "key
person" insurance policies on the lives of Mr. Owings and Mr. Baur, each in the
amount of $1.0 million. The loss of services of any of these named individuals
could have a material adverse effect on the Company's business, financial
condition, and results of operations.
Dependence on Centralized Functions. The Company currently distributes
products from a single warehouse located in Memphis, Tennessee and manages its
operations through a single information system based in Greenville, South
Carolina. Repair, replacement, or relocation of such centralized functions could
be costly or untimely. Although the Company has business interruption insurance,
an uninsurable loss from electrical or telephone failure, fire or other
casualty, or other disruption could have a material adverse effect on the
Company's business, financial condition, and results of operations. The
Company's use of a single warehouse also makes the Company more vulnerable to
dramatic changes in freight rates than a competitor with multiple.
geographically dispersed warehouse sites. Losses in excess of insurance
coverage, an uninsurable loss, or changes in freight rates could have a material
adverse effect on the Company's business, financial condition, and results of
operations.
Dependence on Third-Party Shippers. The Company presently ships virtually
all products from Memphis, Tennessee by Federal Express or United Parcel
Service. Changes in shipping terms, or the inability of these third-party
shippers to perform effectively (whether as a result of mechanical failure,
casualty loss, labor stoppage, other disruption, or any other reason), could
have a material adverse effect on the Company's business, financial condition,
and results of operations. There can be no assurance that the Company can
maintain favorable shipping terms or replace such shipping services on a timely
or cost-effective basis.
Risks Associated with Extensions of Credit. As a marketing enhancement,
the Company offers unsecured and secured credit terms for qualified resellers.
Historically, the Company has not experienced losses from write-offs materially
in excess of established reserves. While the Company evaluates resellers'
qualifications for credit and monitors its extensions of credit, defaults by
resellers in timely repayment of these extensions of credit could have a
material adverse effect on the Company's business, financial condition, or
results of operations.
5
<PAGE>
Potential "Year 2000" Problems. It is possible that the Company's
currently installed computer systems, software products or other business
systems, or those of the Company's vendors or resellers, working either alone or
in conjunction with other software or systems, will not accept input of, store,
manipulate and output dates in the years 1999, 2000 or thereafter without error
or interruption (commonly known as the "Year 2000" problem). The Company has
conducted a review of its business systems, including its computer systems, and
is querying its vendors and resellers as to their progress in identifying and
addressing problems that their computer systems may face in correctly processing
date information as the year 2000 approaches and is reached. However, there can
be no assurance that the Company will identify all such Year 2000 problems in
its computer systems or those of its vendors or resellers in advance of their
occurrence or that the Company will be able to successfully remedy any problems
that are discovered. The expenses of the Company's efforts to identify and
address such problems, or the expenses or liabilities to which the Company may
become subject as a result of such problems, could have a material adverse
effect on the Company's business, financial condition, and results of
operations. In addition, the purchasing patterns of existing and potential
customers may be affected by Year 2000 problems, which could cause fluctuations
in the Company's sales volumes.
Possible Volatility of Stock Price. The market price of the Common Stock
may be subject to wide fluctuations in response to quarterly variations in
operating results, general market movements, and other events or factors. In
addition, in recent years the stock markets in general, and technology-related
stocks in particular, have experienced price and volume fluctuations that often
have been unrelated or disproportionate to the operating performance of
companies. These fluctuations, as well as general economic and market
conditions, may adversely affect the market price of the Common Stock.
Anti-Takeover Effects of Preferred Stock and Other Provisions. The Board
of Directors has the authority to issue up to 3,000,000 shares of Preferred
Stock and to determine the price, rights, preferences, and privileges of those
shares without any further vote or action by the shareholders. The rights of the
holders of Common Stock will be subject to, and may be adversely affected by,
the rights of the holders of any shares of Preferred Stock that may be issued in
the future. The issuance of Preferred Stock, while providing flexibility in
connection with possible acquisitions and other corporate purposes, could make
it more difficult for a third party to acquire a majority of the outstanding
voting stock of the Company. The Company has no present plans to issue shares of
Preferred Stock. Issuance of additional shares of Common Stock or Preferred
Stock could also result in the dilution of the voting power of the Common Stock
purchased in this offering. In addition, the Board of Directors is authorized by
the Articles of Incorporation to consider all relevant factors, including the
effect on employees, customers, vendors, and other constituencies, and the
future value of the Company as a going concern, in evaluating any proposed
tender offer, merger, sale of assets, or similar extraordinary transaction. Such
authority of the Board of Directors may tend to discourage attempts by third
parties to acquire the Company and may adversely affect the price that a
potential purchaser would be willing to pay for the Common Stock.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Shares by the Selling Shareholders.
SELLING SHAREHOLDERS
In connection with the transactions pursuant to which the Shares were
issued to the Selling Shareholders, the Company granted certain registration
rights to each of the Selling Shareholders whereby the Company is obligated to
file one or more registration statements with respect to the Shares set forth
opposite such Selling Shareholder's name under the column heading "Shares
Offered Hereby" in the table below. The Registration Statement of which this
Prospectus forms a part is filed by the Company pursuant to the exercise of such
registration rights by each of the Selling Shareholders. In the grant of such
registration rights, the Company has agreed to pay all of the expenses of
registering the Shares offered hereby (other than any underwriter or selling
agent's discounts and commissions and fees and costs of legal counsel or other
advisors to the Selling Shareholders).
The following information has been provided to the Company by the Selling
Shareholders, including the number of shares of Common Stock beneficially owned
by the Selling Shareholders and the number of Shares being offered for the
account of the Selling Shareholders pursuant to this Prospectus. Except as set
forth in the notes to the table below, none of the Selling Shareholders has held
a position or office, or otherwise had a control relationship, with the Company
within the past three years.
6
<PAGE>
<TABLE>
<CAPTION>
Beneficially Owned After the
Shares Beneficially Shares Offering
Owned Prior to the Offered
Name of Selling Shareholder Offering(1) Hereby Shares(2) Percentage(3)
- ---------------------------------- ----------------------- ---------- ------------- -----------------
<S> <C> <C> <C> <C>
Bruce E. Bean......................... 179,487 (4) 87,179 92,308 1.73%
Sandra Rivera......................... 119,415 (5) 29,854 89,561 1.68
Michael Stahl......................... 119,415 (5) 29,854 89,561 1.68
Greg S. Vance......................... 41,026 (6) 7,692 33,334 *
</TABLE>
- -----------------------
* Amount represents less than 1.0 percent.
(1) Beneficial ownership reflected in the table is determined in accordance
with the rules and regulations of the Commission and generally includes
voting or investment power with respect to securities. Except as otherwise
specified, each of the shareholders named in the table has indicated to the
Company that such shareholder has sole voting and investment power with
respect to all shares of Common Stock beneficially owned by that
shareholder.
(2) Assumes that all of the Shares offered hereby are sold.
(3) Percentage ownership is calculated on the basis of 5,347,760 outstanding
shares of Common Stock on April 20, 1998.
(4) The Shares were issued by the Company to Mr. Bean on January 9, 1988 as
consideration in a merger of Kingtron Corporation d/b/a POS ProVisions
(USA), wholly-owned by Mr. Bean, with and into a wholly-owned subsidiary of
the Company. Following the acquisition of Kingtron Corporation, Mr. Bean
joined the Company as Washington sales office manager.
(5) The Shares were issued by the Company to each of Ms. Rivera and Mr. Stahl
on February 28, 1998 as consideration in a merger of The CTI Authority,
Inc., wholly-owned by Ms. Rivera and Mr. Stahl, with and into a wholly-
owned subsidiary of the Company. Following the acquisition of The CTI
Authority, Inc., Ms. Rivera and Mr. Stahl joined the Company as Vice
President of Sales and Vice President of Merchandising, respectively, of
this subsidiary.
(6) The Shares were issued by the Company to Mr. Vance on January 9, 1998 as
the purchase price for all of the outstanding capital stock of P.O.S.
ProVisions, Ltd. (Canada) held by Mr. Vance. Following the acquisition of
P.O.S. ProVisions, Ltd. (Canada), Mr. Vance joined the Company as
President of its Canadian subsidiary.
PLAN OF DISTRIBUTION
The Selling Shareholders have advised the Company that they intend to sell
the Shares offered hereby from time to time in the over-the-counter market,
including ordinary broker's transactions, in privately negotiated transactions,
or through sales to one or more dealers for resale of such Shares as principals,
at prevailing market prices at the time of sale, prices related to such
prevailing market prices, or at negotiated prices satisfactory to the Selling
Shareholders, or in any combination thereof. In effecting any public sales,
brokers or dealers may arrange for other brokers or dealers to participate. Any
such transaction may involve the payment of broker or dealer fees, commissions
or other remuneration to be negotiated and paid by the Selling Shareholder at
the time of the transaction.
Until such time as the Shares are eligible for public sale by the Selling
Shareholders under Rule 144 or Rule 145 under the 1933 Act, the Registration
Statement of which this Prospectus forms a part must be current at the time any
Selling Shareholder makes any public sale of Shares.
The Company will not receive any proceeds from the sale of Common Stock by
the Selling Shareholders.
The Company has agreed to pay all of the expenses of registering the Shares
offered hereby (other than any underwriter or selling agent's discounts and
commissions and fees and costs of legal counsel or other advisors to the Selling
Shareholders). See "Selling Shareholders."
LEGAL MATTERS
Certain legal matters in connection with the securities to which this
Prospectus relates have been passed upon for the Company by Nexsen Pruet Jacobs
& Pollard, LLP, Columbia, South Carolina.
7
<PAGE>
EXPERTS
The financial statements of ScanSource as of June 30, 1997 and 1996, and
for each of the years in the three-year period ended June 30, 1997, incorporated
in this Prospectus by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1997, have been so included in reliance upon the
report of KPMG Peat Marwick LLP, independent certified public accountants, and
upon the authority of said firm as experts in accounting and auditing.
8
<PAGE>
================================================================================
No dealer, salesman or any other person has been authorized to give any
information or to make any representations in connection with this offering
other than those contained or incorporated by reference in this Prospectus. Any
information or representations not herein contained or incorporated by
reference, if given or made, must not be relied upon as having been authorized
by the Company or the Selling Shareholders. This Prospectus does not constitute
an offer to sell securities or a solicitation of an offer to buy any security
other than the securities offered by this Prospectus, nor does it constitute an
offer to sell or a solicitation of an offer to buy the securities by any person
in any jurisdiction where such offer or solicitation is not authorized, or in
which the person making such offer is not qualified to do so, or to any person
to whom it is unlawful to make such offer or solicitation. The delivery of this
Prospectus shall not, under any circumstances, create any implication that there
has been no change in the affairs of the Company since the date hereof.
------------------------
Table of Contents
Page
----
Available Information..................................................... 2
Incorporation of Certain Documents by Reference........................... 2
The Company............................................................... 3
Risk Factors.............................................................. 3
Use of Proceeds........................................................... 6
Selling Shareholders...................................................... 6
Plan of Distribution...................................................... 7
Legal Matters............................................................. 7
Experts................................................................... 8
SCANSOURCE, INC.
154,579 Shares
Common Stock
-------------
PROSPECTUS
-------------
April , 1998
================================================================================
9
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The expenses in connection with the issuance and distribution of the
securities being registered, all of which will be paid by the Company, are
estimated as follows:
SEC Registration Fee.................................................$ 939
Printing Expenses.................................................... 4,000
Legal Fees and Expenses.............................................. 7,000
Accounting Fees and Expenses......................................... 2,000
Miscellaneous Expenses............................................... 1,061
-------
Total........................................................$15,000
=======
Item 15. Indemnification of Directors and Officers
Except as hereinafter set forth, there is no statute, charter provision,
bylaw, contract or other arrangement under which any controlling person,
director or officer of the Registrant is insured or indemnified in any manner
against liability which such person may incur in such person's capacity as such.
Section 33-8-500 et seq. of the South Carolina Business Corporation Act of
1988, as amended (the "South Carolina Act"), provides the Registrant with broad
powers and authority to indemnify its directors and officers and to purchase and
maintain insurance for such purposes and mandates the indemnification of the
Registrant's directors under certain circumstances. The Registrant's Bylaws
also provide the Registrant with the power and authority to the fullest extent
legally permissible under the South Carolina Act to indemnify its directors and
officers, persons serving at the request of the Registrant or for its benefit as
directors or officers of another corporation and persons serving as the
Registrant's representatives or agents in certain circumstances. Pursuant to
such authority and Bylaws provisions, the Registrant may purchase insurance
against certain liabilities that may be incurred by it and its officers and
directors.
Item 16. Exhibits.
Exhibit
Number Description
------ -----------
5 -- Opinion of Nexsen Pruet Jacobs & Pollard, LLP.
23.1 -- Consent of KPMG Peat Marwick LLP.
23.2 -- Consent of Nexsen Pruet Jacobs & Pollard
(included in their opinion filed as Exhibit 5).
Item 17. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933 (the
"Securities Act");
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective
amendment hereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the Registration Statement.
II-1
<PAGE>
Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the
total dollar value of securities offered would not
exceed that which was registered) and any deviation
from the low or high end of the estimated maximum
offering range may be reflected in the form of
prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20 percent
change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table
in the effective Registration Statement.
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in
the Registration Statement or any material change to
such information set forth in the Registration
Statement;
provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the Registration
Statement is on Form S-3, Form S-8 or Form F-3, and
the information required to be included in a post-
effective amendment by those paragraphs is contained
in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13
or Section 15(d) of the Exchange Act that are
incorporated by reference in the Registration
Statement;
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of this Offering.
(b) Insofar as indemnification for liabilities under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification is against public policy as expressed in the Securities Act
and will be governed by the final adjudication of such issue.
II-2
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Greenville, State of South Carolina, on April 24,
1998.
SCANSOURCE, INC.
By: /s/ STEVEN H. OWINGS
--------------------------------------------------
Steven H. Owings
Chairman of the Board and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
Signature Title Date
--------- ----- ----
/s/ STEVEN H. OWINGS Chairman of the Board and Chief April 24, 1998
- --------------------------- Executive Officer
Steven H. Owings
/s/ JEFFERY A. BRYSON Chief Financial Officer and April 24, 1998
- --------------------------- Treasurer (principal financial and
Jeffery A. Bryson accounting officer)
/s/ MICHAEL L. BAUR President and Director April 24, 1998
- ---------------------------
Michael L. Baur
/s/ STEVEN R. FISCHER Director April 24, 1998
- ---------------------------
Steven R. Fischer
/s/ JAMES G. FOODY Director April 24, 1998
- ---------------------------
James G. Foody
II-3
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
- ------ -----------
5 -- Opinion of Nexsen Pruet Jacobs & Pollard, LLP.
23.1 -- Consent of KPMG Peat Marwick LLP.
23.2 -- Consent of Nexsen Pruet Jacobs & Pollard
(included in their opinion filed as Exhibit 5).
<PAGE>
EXHIBIT 5
[LETTERHEAD OF NEXSEN PRUET JACOBS & POLLARD, LLP]
April 24, 1998
ScanSource, Inc.
6 Logue Court, Suite G
Greenville, South Carolina 29615
RE: Form S-3 Registration Statement
Gentlemen:
We have acted as counsel to ScanSource, Inc., a South Carolina
corporation (the "Company"), in connection with the registration of 154,579
shares of the Company's no par value common stock (the "Common Stock"), pursuant
to a registration statement on Form S-3 to be filed with the Securities and
Exchange Commission (the "Registration Statement").
We have examined and are familiar with the Amended and Restated Articles
of Incorporation and the Bylaws of the Company, and have examined the originals,
or copies certified or otherwise identified to our satisfaction, of corporate
records, including minute books, of the Company. We have also examined the
Registration Statement and such statutes and other records, instruments and
documents pertaining thereto that we have deemed necessary to examine for the
purposes of this opinion. In our examination, we have assumed the completeness
and authenticity of any document submitted to us as an original, the
completeness and conformity to the originals of any document submitted to us as
a copy, the authenticity of the originals of such copies, the genuineness of all
signatures and the legal capacity and mental competence of natural persons.
On the basis of and in reliance upon the foregoing, we are of the opinion
that the shares of Common Stock registered under the Registration Statement (in
the form declared effective by the Commission) are legally issued, fully paid
and nonassessable.
This opinion is being rendered to be effective as of the effective date
of the Registration Statement. We hereby consent to the filing of this opinion,
or copies thereof, as an exhibit to the Registration Statement and to the
statement made regarding our firm under the caption "Legal Matters" in the
prospectus included in the Registration Statement, but we do not thereby admit
that we are within the category of persons whose consent is required under the
provisions of the Securities Act of 1933, as amended, or the rules and
regulations promulgated by the Securities and Exchange Commission thereunder.
Very truly yours,
NEXSEN PRUET JACOBS & POLLARD, LLP
By: /s/ WILLIAM S. MCMASTER
-----------------------------------------
William S. McMaster
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
-----------------------------
The Board of Directors
ScanSource, Inc.
We consent to the use of our reports incorporated herein by reference and to the
reference to our firm under the heading "Experts" in this prospectus.
/s/ KPMG Peat Marwick LLP
Greenville, South Carolina
April 24, 1998
