SecProbe.io

March 18, 2011
 Via E-mail

Michael L. Baur Chief Executive Officer Scan Source , Inc.
6 Logue Court Greenville, SC 29615
Re: Scan Source , Inc.
 Form 10-K for the Fiscal Year Ended June 30, 2010
Filed August 26, 2010 Form 10-Q for the Fiscal Qu arter Ended September 30, 2010
Filed November 3, 2010 File No. 000-26926

Dear Mr. Baur:
 We have reviewed your filings and have the following comments.  In some of our
comments, we may ask you to provide us with  information so we may better understand your
disclosure.
 Please respond to this letter within ten business days by amending your filing, by
providing the requested information, or by advi sing us when you will provide the requested
response.  If you do not believe our comments apply to your fact s and circumstances or do not
believe an amendment is appropriate, pl ease tell us why in your response.
 After reviewing any amendment to your filing and the information you provide in
response to these comments, we ma y have additional comments.
            Form 10-K for the Fiscal Year Ended June 30, 2010

 Item 1.  Business

 Vendors, page 3

1. We refer to prior staff comment letters rela ting to the review of your Form 10-K for the
fiscal year ended June 30, 2008 and  note th at Motorola and Avaya each continue to
constitute more than 10% of your net sales.  While you have provided some disclosure in
your Form 10-K for the fiscal year ended J une 30, 2010 of some of the provisions of your
agreements with Motorola and Avaya, we w ould expect to see a more robust description,
perhaps focusing on the scope, term and te rmination provisions.  Please advise.

 Michael L. Baur Scan Source , Inc.
March 18, 2011 Page 2
 Item 7.  Management’s Discussion and Analys is of Financial Condition and Results of
Operations
 Overview, page 19

2. In future filings, please consider enhancing your  overview to provide insight into material
opportunities, challenges and risk s that your executiv es are most focused. For example, in
your fourth quarter earnings call, you discussed the challenges presented by continuing
product shortages and longer lead times.  We also note that in your attempt to grow your
markets you have invested in new initiativ es including investments in new geographic
markets of Europe and Latin America, increas ed marketing efforts to recruit resellers,
enhancements of employee benefit plans to retain employees, and strategic acquisitions in both the North American and International distribution segments.  For guidance, see
Section III.A of SEC Release No. 33-8350.

Results of Operations

 Comparison of Fiscal Years Ended June 30, 2010 and 2009

 Net Sales

Internal Distribution, page 22
3. We note your disclosure here and on page 26 of changes on a constant exchange rate
basis.  Please tell us how you considered presenting the amounts in  constant currency,
describing the process for calculating the c onstant currency amounts and the basis of
presentation.  See Question 104.06 of the Comp liance & Disclosure Interpretations for
Non-GAAP Financial Measures.
Liquidity and Capital Resources, page 31
4. We note that your cash and cash equivalents ba lance has materially decreased at June 30,
2010 compared with the prior year.  While  we note that accounts receivable and
inventories have both signifi cantly increased, it is not r eadily apparent what other
significant factors contributed to the decrea se.  Please tell us the reasons and factors
causing the increases in account s receivable and inventory.  Explain how the increase in
inventory is attributable, in  part, “to managing product cons traints with certain vendors
throughout the year.” Further, please tell us th e reasons for the significa nt decline in cash.
Where there are any material trends, events or  uncertainties related to these changes, tell
us how you considered both disclosure of the causes for the changes and disclosure of the
reasonably likely impact on future financia l results and financia l position.  See Item
303(a)(1) of Regulation S-K and Commi ssion Release No. 33-8350, Section IV.
“Liquidity and Capital Resources.”

 Michael L. Baur Scan Source , Inc.
March 18, 2011 Page 3
 5. Tell us the amount of investments held by foreig n subsidiaries that are considered to be
retained indefinitely for reinvestment as  of June 30, 2010, subject to potential U.S.
income tax on repatriation. Tell us how you c onsidered disclosure of the amount and
impact of foreign investment  on future liquidity noting th at these investments are not
presently available to fund domestic ope rations or acquisitions without paying a
significant amount of taxe s upon their repatriation.

Item 8.  Financial Statements and Supplementary Data

 Consolidated Income Statements, page 39

6. In view of your service offerings, please tell us why your statement of operations does
not separately disclose service revenues and cost of service revenue s pursuant to Rules
5-03.1 and 2 of Regulation S-X, respectively.  Support their inapplic ability to us in
quantified detail for the fiscal year ende d June 30, 2010 and quarterly periods ended
September 30, 2010 and December 31, 2010.

Note (2) Summary of Significant Accounting Poli cies and Accounting Standards Recently Issued
 Use of Estimates

(b) Inventory Reserves, page 43
7. We note your disclosure regarding management ’s determination of an inventory reserve
to reduce inventories to the lo wer of cost or market.  Pl ease clarify how your accounting
method establishes a new cost basis for your  inventory and how it complies with ASC
330-10-35-1 and 35-2.  Additionally, please desc ribe, in further detail, your accounting
for sales of specifically reserved inventor y, including your accounting for the inventory
reserve as these sales occur and whether any changes in facts and circumstances previously resulted in the restoration of  inventory value.  See ASC 330-10-S99-2.

Cash and cash equivalents, page 43

8. Explain the accounting, financial statement pr esentation and the authoritative support for
checks released but not yet cleared included in accounts payable in  the amounts of $62.7
million and $45.6 million as of June 30, 2010 and 2009.

Revenue Recognition, page 47
9. We note that in connection with your se lf branded warranty program, you purchase
fulfillment contracts from a third party fo r most of your obligations.  Based on your
disclosures, it appears you repor t the revenue and related cost s on a gross basis.  Please
confirm whether our understanding is correct.  Additionally, please clarify which party is

 Michael L. Baur Scan Source , Inc.
March 18, 2011 Page 4
 the primary obligor in such arrangements and provide us with an analysis pursuant to
ASC 605-45-45 in support of your conclusion.

Note (12) Income Taxes, page 62

10. We note your disclosure on page 64 regard ing undistributed earnings of foreign
subsidiaries.  Please tell us the amount of undi stributed earnings of foreign subsidiaries
that are considered to be retained indefin itely for reinvestment as of June 30, 2010 and
how you considered providing this quantitative  disclosure in your filing.  Refer to ASC
740-30-50-2b.

Part III
 Item 11.  Executive Compensation (Incorporated by Reference from Definitive Proxy Statement
filed October 19, 2010)
 Compensation Discussion and Analysis

 Elements of Compensation

Base Salary, page 14
11. Please tell us the factors your compensation committee considered in deciding to increase
Mr. Baur’s salary by $50,000 beginning July  1, 2010.  See Item 402(b)(2)(ix) of
Regulation S-K.  In this rega rd, we note your statement that  the increase was due to Mr.
Baur’s job performance during the prior year .  Where an executive officer’s individual
performance is taken into account in determ ining an element of executive compensation,
you should describe how that element of comp ensation is structured and implemented to
reflect the named executive officer's indi vidual performance and/or individual
contribution to your company’s performance.  You should also describe the elements of
individual performance and/or contributi on that are taken into account.  See Item
402(b)(2)(vii) of Regulation S-K.
 Cash Incentives, page 15

12. You report that the 2010 target annual cash incentive award for Mr. Cley was based on
Mr. Cley’s attainment of certain indivi dual performance and management goals in
addition to one or more company financial performance goals.  Please describe how Mr.
Cley’s cash incentive award was structured and implemented to reflect his individual
performance and/or individual contribution to the company pe rformance goals.  See Item
402(b)(2)(vii) of Regulation S-K.  You should also specifically identify which of the
company performance goals that were cons idered in determining Mr. Cley’s cash
incentive award.  See Item 402(b)(2)(v) of Re gulation S-K.  To the extent a formula was

 Michael L. Baur Scan Source , Inc.
March 18, 2011 Page 5
 used to determine the award, you should descri be such formula.  See Item 402(b)(1)(v) of
Regulation S-K.
 Long-term Equity Incentives, page 17

13. You state that the number of shares subj ect to stock-based awards granted by the
Compensation Committee on December 4, 2009 was based primarily on the market value
of the annual stock option gran t in fiscal 2008 and the relate d analysis of peer company
equity grant practices provide d to the Compensation Committee by Watson Wyatt, one of
the compensation consultants you retained in fiscal 2010.  Please describe for us more
specifically how your analysis of  the peer company equity gr ant practices determined the
number of shares awarded to your executiv e officers.  See Item 402(b)(1)(v) of
Regulation S-K.  In addition, please explain to us why you ha ve not identified the peer
companies that were analyzed by your compensation consultants.

Form 10-Q for the Fiscal Qu arter Ended September 30, 2010
 Item 1.  Financial Statements

 Note (2) Summary of Significant Accounting Policies

Recent Accounting Pronouncements
 Multiple-element Revenue Arrangements, page 8

14. We note you adopted the amendments within  ASC 605-25 regarding the accounting for
multiple-deliverable arrangements beginning on July 1, 2010 which you disclose did not have an impact on your consolidated financial st atements.  We also note the wide array of
services you provide as a valu e-added distributor such as su ch as custom configuration,
professional services, technica l support, partner marketi ng, web storefronts, custom
packaging, and other specialized services.  Your revenue recognition policy disclosures
do not appear to address required disclosure s related both to thos e services, and when
they are included in multiple-element arrangements.  Please tell us how you believe you have addressed the disclosures require d by FASB ASC 605-25-50-2 for your multiple-
element arrangements and SAB Topic 13.B. “Dis closures, Question 1.” To the extent you
have not complied with those disclosure  requirements, provide us your proposed
disclosures.

We urge all persons who are responsible for th e accuracy and adequacy of the disclosure
in the filing to be certain that the filing include s the information the Securities Exchange Act of
1934 and all applicable Exchange Act rules requir e.  Since the company and its management are
in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy
and adequacy of the disclosures they have made.

 Michael L. Baur Scan Source , Inc.
March 18, 2011 Page 6
  In responding to our comments, please provi de a written statement from the company
acknowledging that:
• the company is responsible for the adequacy an d accuracy of the disclo sure in the filing;

• staff comments or changes to disclosure in response to staff comments do not foreclose
the Commission from taking any action with respect to the filing; and

• the company may not assert staff comments as  a defense in any proceeding initiated by
the Commission or any person under the federa l securities laws of  the United States.

You may contact Jennifer F ugario, Staff Accountant, at  (202) 551-3482 if you have
questions regarding comments on th e financial statements and related matters.  If you have any
other questions, please contact Ry an Houseal, Staff Attorney, at  (202) 551-3105 or Barbara C.
Jacobs, Assistant Director, at (202) 551-3735.  If you require further assistance, do not hesitate to
contact me at (202) 551-3226.
Sincerely,
   /s/ Craig Wilson
Craig Wilson Senior Assistant Chief Accountant