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<SEC-DOCUMENT>0001193125-09-105396.txt : 20090821
<SEC-HEADER>0001193125-09-105396.hdr.sgml : 20090821
<ACCEPTANCE-DATETIME>20090508161611
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001193125-09-105396
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20090508

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			SCANSOURCE INC
		CENTRAL INDEX KEY:			0000918965
		STANDARD INDUSTRIAL CLASSIFICATION:	WHOLESALE-COMPUTER & PERIPHERAL EQUIPMENT & SOFTWARE [5045]
		IRS NUMBER:				570965380
		STATE OF INCORPORATION:			SC
		FISCAL YEAR END:			0630

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		6 LOGUE COURT STE G
		CITY:			GREENVILLE
		STATE:			SC
		ZIP:			29615
		BUSINESS PHONE:		8032882432

	MAIL ADDRESS:	
		STREET 1:		6 LOGUE COURT STE G
		CITY:			GREENVILLE
		STATE:			SC
		ZIP:			29615
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<TYPE>CORRESP
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<TITLE>CORRESPONDENCE</TITLE>
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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">May&nbsp;8, 2009 </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P
STYLE="margin-top:6px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B><U>Via EDGAR Submission </U></B></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">United States Securities and Exchange
Commission </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Division of Corporation Finance </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">100 F Street, N.E.
</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Mail Stop 4561 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Washington D.C. 20549 </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><U>Attention</U>: Ryan Houseal </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><B>Re:</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B>ScanSource, Inc. </B></FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>Form 10-K for Fiscal Year
Ended June&nbsp;30, 2008 </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>Filed August&nbsp;28, 2008 </B></FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>File No. 000-26926 </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Ladies and Gentlemen: </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">This letter is submitted in response to comments contained in the letter dated May&nbsp;4, 2009 (the &#147;Staff&#146;s Letter&#148;) from Barbara C.
Jacobs of the staff of the Securities and Exchange Commission (the &#147;Staff&#148;) to Michael L. Baur, the Chief Executive Officer of ScanSource, Inc. (the &#147;Company&#148;), relating to the above-referenced Form 10-K filed on August&nbsp;28,
2008 (the &#147;Annual Report&#148;). </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The comments and responses set forth below are keyed to the numbering of the comments and the
headings used in the Staff&#146;s Letter. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B><U>Annual Report on Form 10-K for fiscal year ended June&nbsp;30, 2008 </U></B></FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B><U>Part I </U></B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B><U>Item&nbsp;1. Business, page 1
</U></B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B><U>General </U></B></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>1. We note
your response to comment 1 of our letter regarding the consideration you gave to providing the names of, and a description of the material terms of your relationships with, your ten largest vendors and clarifying whether you are substantially
dependent on any of these relationships. We specifically note your statement that as a distribution company, your relationships with your vendors, including the agreements with such vendors to constitute &#147;significant confidential
information.&#148; We have considered your response and we continue to believe that since your success is &#147;highly dependent&#148; on these vendor relationships (i.e., products for your ten largest vendors accounted for approximately 85% of net
sales for fiscal 2008), information regarding these relationships is material to an investor. As such, we reiterate our position that you should provide the names of, and a description of any material vendor relationships that you might have. Your
stated concern that the names of vendors may become outdated over time can be addressed by identifying the vendors as of a certain point in time such as December&nbsp;31, 2008. With </B></FONT>
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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">U.S. Securities and Exchange Commission </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"
ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">May 8, 2009 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">Page 2 of 3 </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
FACE="Times New Roman" SIZE="2"><B>respect to your statement that you are &#147;currently not dependent on any one of these relationships,&#148; please help us to understand your position. For example, does each vendor constitute less than 10% of
net sales? As you know, to the extent that you need to file any vendor agreement pursuant to Item&nbsp;601(b)(10), you may seek confidential treatment of specific pricing or other confidential information pursuant to Rule 24b-2 of the Exchange Act.
</B></FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><U>Response</U>: </B> </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT
FACE="Times New Roman" SIZE="2">We acknowledge the staff&#146;s comment and will include in our Form 10-K and future filing containing our Business section the following additional disclosure regarding our vendors and our agreements with our
vendors. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>&#147;Vendors </B></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><I>Our key
vendors for our POS and barcoding sales unit are Cisco, Datalogic, Datamax, Elo, Epson America, Honeywell, IBM, Intermec, Motorola, NCR, and Zebra Technologies. Our key vendors in our Catalyst Telecom Sales Unit are Avaya, Extreme Networks, Juniper
Networks, Plantronics and Polycom. Our key vendors for our ScanSource Communications Sales Unit are Audiocodes, Dialogic, Plantronics, Polycom. </I></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman"
SIZE="2"><I>We have over 175 vendors that currently supply our products. Our products are typically purchased directly from the manufacturer on a non-exclusive basis. Our agreements with our vendors generally do not restrict us from selling similar
or comparable products manufactured by competitors. We have the flexibility to terminate or curtail sales of one product line in favor of another due to technological change, pricing considerations, product availability, customer demand, or vendor
distribution policies. </I></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><I>We have written distribution agreements with our key vendors and with almost all of our vendors. Our written
distribution agreements are in the form that we believe are customarily used by manufacturers and distributors. Our agreements generally provide us with non-exclusive distribution rights and often include territorial restrictions that limit the
countries in which we can distribute our products. These agreements typically provide us with stock rotation and price protection provisions. Stock rotation rights give us the ability, subject to certain limitations, to return for credit or exchange
a portion of those inventory items purchased from the vendor. Price protection situations occur when a vendor credits us for declines in inventory value resulting from the vendor&#146;s price reductions. Along with our inventory management policies
and practices, these provisions are designed to reduce our risk of loss due to slow-moving inventory, vendor price reductions, product updates or obsolescence. </I></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2"><I>Some of our distribution agreements contain minimum purchase requirements that we must meet in order to receive preferential prices. We participate in various rebate, cash discount and cooperative marketing
programs offered by our vendors to support expenses </I></FONT>
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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">U.S. Securities and Exchange Commission </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"
ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">May 8, 2009 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">Page 3 of 3 </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
FACE="Times New Roman" SIZE="2"><I>associated with distributing and marketing our vendor&#146;s products. The rebates and purchase discounts are generally influenced by sales volumes and are subject to change. </I></FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><I>Our distribution agreements are generally short term, subject to periodic renewal, and provide for termination by either party without cause upon 30
to 120 days notice. Our vendors generally warrant the products we distribute and allow returns of defective products, including those returned to us by our customers. We generally do not independently warrant the products we distribute; however,
local laws may in some cases impose warranty obligations on us in the case of a vendor liquidation. </I></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><I>Our merchandising department
recruits vendors and manages important aspects of our vendor relationships, such as purchasing arrangements, cooperative marketing initiatives, vendor sales force relationships, product training and the monitoring of rebate programs and various
contract terms and conditions.&#148; </I></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">We considered filing our distribution agreements with our vendors pursuant to
Item&nbsp;601(b)(10)(ii)(B) but determined that our agreements are in the ordinary course and that our business is not substantially dependent on any of our distribution agreements. These agreements with our key vendors are non-exclusive, short term
and provide for termination by either party without cause upon 30 to 120 days notice. Our agreements with our key vendors generally do not restrict us from selling similar or comparable products manufactured by competitors of the vendors. We also
have the flexibility to terminate or curtail sales of one product line in favor of another due to technological change, pricing considerations, product availability, customer demand, or vendor distribution policies. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">We hope that the above response will be acceptable to the Staff. If you have any questions regarding the foregoing, kindly contact the undersigned at
(864)&nbsp;286-4319. Thank you for your time and attention. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px; margin-left:54%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2">Sincerely, </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; margin-left:54%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2">ScanSource, Inc. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P
STYLE="margin-top:12px;margin-bottom:0px; margin-left:54%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2"><U>/s/ Michael L.
Baur&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:54%; text-indent:-2%"><FONT FACE="Times New Roman"
SIZE="2">Michael L. Baur </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:54%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2">Chief Executive Officer </FONT></P> <P
STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">c:</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Rich Cleys </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:2%"><FONT FACE="Times New Roman" SIZE="2">John Ellsworth </FONT></P>
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