Black Box Corporation Reports Fourth Quarter and Total Year Fiscal 2006 Results; Total Year Revenues Up 35% and GAAP EPS Up 27%.PITTSBURGH Pittsburgh (pĭts`bərg), city (1990 pop. 369,879), seat of Allegheny co., SW Pa., at the confluence of the Allegheny and the Monongahela rivers, which there form the Ohio River; inc. 1816. -- Black Box Corporation (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :BBOX) today reported for the fourth quarter ended March 31, 2006 diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of of 26 cents on net income of $4.7 million or 2.7% of revenues compared to break-even last year. On a sequential One after the other in some consecutive order such as by name or number. quarter comparison basis, third quarter diluted earnings per share were 70 cents with corresponding net income of $12.5 million or 6.9% of revenues. Excluding restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. and reconciling items described below, diluted earnings per share for the fourth quarter 2006 were 53 cents and net income was $9.6 million or 5.5% of revenues compared to diluted earnings per share of 39 cents and net income of $6.8 million or 4.3% of revenues for the fourth quarter 2005. Management believes that presenting diluted earnings per share and net income excluding restructuring charges and reconciling items is useful to investors because it provides a more meaningful comparison of the ongoing operations of the Company. During the fourth quarter of fiscal 2006, the Company incurred a pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta charge of $7.5 million related to reconciling items. Of this charge, $7.1 million relates to an adjustment of earnings over multiple years, from FY03 through FY06, from the Company's Italian Operations ("Italian Operations Adjustment"). The Italian Operations Adjustment resulted from intentional in·ten·tion·al adj. 1. Done deliberately; intended: an intentional slight. See Synonyms at voluntary. 2. Having to do with intention. misconduct MISCONDUCT. Unlawful behaviour by a person entrusted in any degree: with the administration of justice, by which the rights of the parties and the justice of the, case may have been affected. 2. by certain local operational and financial management of the Company's Italian Operations acting in collusion An agreement between two or more people to defraud a person of his or her rights or to obtain something that is prohibited by law. A secret arrangement wherein two or more people whose legal interests seemingly conflict conspire to commit Fraud with one another for the purpose of overstating local financial results. All involved team members have been terminated ter·mi·nate v. ter·mi·nat·ed, ter·mi·nat·ing, ter·mi·nates v.tr. 1. To bring to an end or halt: and the Company intends to pursue all available legal remedies A legal remedy is the means by which a court of law, usually in the exercise of civil law jurisdiction, enforces a right, imposes a penalty, or makes some other court order to impose its will. In Commonwealth common law jurisdictions and related jurisdictions (e.g. against these individuals. The misconduct was recently brought to the Company management's attention by a team member of the Italian Operations pursuant to the Company's "Open Door" Policy. Company management responded by immediately suspending the management team of the Italian Operations and conducting a full investigation of the matter. The Company believes that all accounting irregularities have been identified, corrective action A corrective action is a change implemented to address a weakness identified in a management system. Normally corrective actions are instigated in response to a customer complaint, abnormal levels if internal nonconformity, nonconformities identified during an internal audit or taken, and that the Italian Operations Adjustment captures all necessary corrections. These corrections were not material to any prior reporting period. Total revenues for the fourth quarter were $175 million, an increase of 11% from $157 million for the same period last year. On a sequential comparison basis, third quarter revenues were $182 million. Fourth quarter cash provided by operating activities was approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $13 million or 276% of net income, compared to $18 million for the same period last year. Fourth quarter free cash flow (defined below) was $19 million compared to $18 million last year. On a sequential comparison basis, third quarter cash provided by operating activities was $16 million or 131% of net income and free cash flow was $24 million. Black Box utilized its fourth quarter free cash flow of $19 million to fund debt reduction of $18 million and a dividend payment of $1 million. Management believes that free cash flow, defined by the Company as cash provided by operating activities less net capital expenditures, plus proceeds from option exercises, plus or minus foreign currency translation adjustments, is an important measurement of liquidity as it represents the total cash available to the Company. For total fiscal 2006, diluted earnings per share were $2.13 compared to $1.68 for the same period last year, an increase of 27%. Corresponding net income for the year was $37.4 million or 5.2% of revenues, compared to $29.9 million or 5.6% of revenues for the same period last year. Excluding restructuring charges and reconciling items for fiscal years 2006 and 2005, diluted earnings per share were $2.81 and net income was $49.3 million or 6.8% of revenues in 2006 compared to diluted earnings per share of $2.13 and net income of $37.9 million or 7.1% of revenues in 2005. Total pre-tax charges incurred for the fiscal year 2006 were: $5.4 million associated with acquisition-related expenses of Norstan; a restructuring charge of $5.3 million related to staffing level adjustments and real estate consolidations in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). and North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. ;
and a charge of $7.1 million related to the Italian Operations
Adjustment.Revenues for fiscal year 2006 were $721 million, an increase of 35% from $535 million for fiscal year 2005. Cash provided by operating activities for the year was $52 million or 139% of net income, compared to $52 million or 175% of net income last year. Free cash flow was $72 million compared to $57 million last year. Black Box utilized the twelve-month free cash flow of $72 million to fund $41 million of acquisition-related activity; debt reduction of $27 million; and dividend payments of $4 million. The Company's 6-month order backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. was $96 million at March 31, 2006 compared to $97 million at the same period last year. On a sequential comparison basis, third quarter 6-month order backlog was $94 million. For FY07, the Company expects total year reported revenues of approximately $1 billion. By 2Q07, the Company currently expects quarterly revenues in the range of $265 to $275 million; gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. in the range of 37% to 38%; SG&A expenses in the range of 26% to 27%; corresponding EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. in the range of 90 cents to 95 cents; and quarterly cash provided by operating activities in the range of $20 to $22 million. All of the above ranges exclude acquisition-related expense and stock option-based expense (including the impact of FAS 123R), and are before any new mergers and acquisition activity that has not been announced. Commenting on FY06 and the future outlook, Fred (Friendly Rollabout Engineered for Doctors) A mobile medical conferencing unit. See videoconferencing. 1. FRED - Robert Carr. Language used by Framework, Ashton-Tate. 2. C. Young, Chief Executive Officer, said, "Black Box had many significant accomplishments in FY06. We are particularly pleased that strategically, we have successfully positioned Black Box to reach the $1 billion revenue milestone “Milemarker” redirects here. For the American indie rock band, see Milemarker (band). A milestone or kilometre sign is one of a series of numbered markers placed along a road at regular intervals, typically at the side of the road or in a median. in FY07, effectively doubling our business from 15 months ago. Achieving this $1 billion milestone 12 months ahead of our previously established timeframe is a significant event. On the other hand, as we conclude FY06 we are very disappointed by the situation in Italy Italy (ĭt`əlē), Ital. Italia, officially Italian Republic, republic (2005 est. pop. 58,103,000), 116,303 sq mi (301,225 sq km), S Europe. . By no means do we believe this misconduct is representative of the overall integrity of the Black Box Team at large. Mr. Young went on to say, "FY07 should be a record year for Black Box. We believe the 2Q07 timetable “Schedule” redirects here. For other uses, see Schedule (disambiguation). A timetable or schedule is an organized list or schedule, usually set out in tabular form, providing information about a series of arranged events: in particular, the time at which we have established to achieve our financial targets is reasonable given our historical track record, particularly with the experience and associated results of the Norstan acquisition. "There was a tremendous amount of planning and execution required to ensure the NextiraOne transaction was completed in a manner which we felt would meet both our operational and financial objectives. We believe we have accomplished this. From an industry positioning perspective, this combination significantly strengthens Black Box's leadership position for data, voice and hotline 1. (company) Hotline - Hotline Communications Ltd.. 2. (messaging) Hotline - Hotline Connect. technical services. "Our FY07 plan is to fully integrate NextiraOne into Black Box. We believe this will allow us to take full advantage of combined synergies in all functional areas. This applies particularly to marketing and operations, where we now have a significant increase in resources available to our clients, and the overall implementation of a much more efficient cost management philosophy. The Black Box technical services model is very unique in the industry and we believe provides the best value proposition to our clients. "For FY07 we expect our revenue mix by technical service to be approximately 16% data services, 65% voice services and 19% hotline services. Geographically ge·o·graph·ic also ge·o·graph·i·cal adj. 1. Of or relating to geography. 2. Concerning the topography of a specific region. ge we expect our revenue mix to be approximately 85% North America and 15% International. Over time we will look to increase our International revenue mix. "In closing, we have high expectations for the future of Black Box and will stay focused on the tasks at hand. Achieving these expectations will require us to successfully complete the integration of all of our FY06 acquisitions, aggressively sell our DVH DVH Dose-Volume Histogram DVH De Vliegende Hollander DVH Department for the Visually Handicapped DVH Division for Visually Handicapped services everyday throughout the world and continue to leverage our financial strength into significant growth by consummating high quality M&A opportunities." The historical information in this press release and the attached tables does not include the acquisitions of NextiraOne and NuVision which closed on April 30, 2006, and May 1, 2006, respectively. The Company will conduct a conference call beginning at 5:00 p.m. Eastern Daylight For other uses, see Daylight (disambiguation). Daylight or the light of day is the combination of all direct and indirect sunlight outdoors during the daytime (and perhaps twilight). Time today, June June: see month. 1, 2006. Fred C. Young, Chief Executive Officer, will host the call. To participate in the call, please dial 612-332-1025 approximately 15 minutes prior to the starting time Noun 1. starting time - the time at which something is supposed to begin; "they got an early start"; "she knew from the get-go that he was the man for her" commencement, get-go, offset, outset, showtime, start, kickoff, beginning, first and ask to be connected to the Black Box Earnings Call. A replay of the conference call will be available for one week after the teleconference by dialing 320-365-3844 and using access code 828910. Any forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. contained in this release are made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. You can identify these forward-looking statements by the fact they use words such as "should," "anticipate," "estimate," "approximate ap·prox·i·mate v. To bring together, as cut edges of tissue. adj. 1. Relating to the contact surfaces, either proximal or distal, of two adjacent teeth; proximate. 2. Close together. ," "expect," "target," "may," "will," "project," "intend," "plan," "believe," and other words of similar meaning and expression in connection with any discussion of future operating or financial performance. One can also identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. Forward-looking statements are inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those projected. Although it is not possible to predict or identify all risk factors, they may include levels of business activity and operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. , expenses relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc corporate compliance requirements Compliance requirements are a series of directives established by United States Federal government agencies that summarize hundreds of Federal laws and regulations applicable to Federal assistance (also known as Federal aid or Federal funds). , cash flows, global economic conditions, successful integration of acquisitions, including the Norstan and NextiraOne businesses, the timing and costs of restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). programs, successful marketing of DVH (Data, Voice, Hotline) services and successful implementation of our M&A program, including identifying appropriate targets, consummating transactions and successfully integrating the businesses. Additional risk factors are included in the Company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. . We can give no assurance that any goal, plan or target set forth in forward-looking statements can be achieved and readers are cautioned not to place undue reliance on such statements, which speak only as of the date made. We undertake no obligation to release publicly any revisions ReVisions is a 2004 anthology of alternate history short-stories. It is edited by Julie E. Czerneda and Isaac Szpindel. Contents Title Author The Resonance of Light James Alan Gardner Out of China Julie E. to forward-looking statements as a result of future events or developments. Black Box is the world's largest technical services company dedicated to designing, building and maintaining today's complicated data and voice infrastructure systems. Black Box services 175,000 clients in 141 countries with 168 offices throughout the world. To learn more, visit the Black Box website at www.blackbox
In Unix computing, Blackbox is a window manager for the X Window System. .com. Black Box and the Double Diamond logo are registered trademarks and DVH is a trademark of BB Technologies, Inc.
BLACK BOX CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
Three months ended Year ended
------------------- -------------------
March 31, March 31, March 31, March 31,
In thousands, except per share 2006 2005 2006 2005
----------------------------------------------------------------------
Revenue:
Hotline products $ 53,667 $ 55,510 $213,946 $227,601
On-Site services 121,201 101,720 507,389 307,475
-------- -------- -------- --------
Total 174,868 157,230 721,335 535,076
Cost of sales
Hotline products 29,209 26,785 108,220 108,281
On-Site services 81,533 70,729 330,765 211,866
-------- -------- -------- --------
Total 110,742 97,514 438,985 320,147
-------- -------- -------- --------
Gross profit 64,126 59,716 282,350 214,929
Selling, general &
administrative expense 53,858 52,119 205,866 160,002
Restructuring and other charges - 5,059 5,290 5,059
Intangibles amortization 764 1,145 4,999 1,332
-------- -------- -------- --------
Operating income 9,504 1,393 66,195 48,536
Interest expense, net 2,437 1,319 9,123 2,755
Other expenses, net (43) 22 36 115
-------- -------- -------- --------
Income before income taxes 7,110 52 57,036 45,666
Provision for income taxes 2,454 18 19,678 15,754
-------- -------- -------- --------
Net income $ 4,656 $ 34 $ 37,358 $ 29,912
======== ======== ======== ========
Basic earnings per common share$ 0.26 $ 0.00 $ 2.18 $ 1.72
======== ======== ======== ========
Diluted earnings per common
share $ 0.26 $ 0.00 $ 2.13 $ 1.68
======== ======== ======== ========
Weighted average common shares 17,617 17,148 17,164 17,411
======== ======== ======== ========
Weighted average common &
common equivalent shares
outstanding 18,247 17,524 17,544 17,845
======== ======== ======== ========
BLACK BOX CORPORATION
CONSOLIDATED BALANCE SHEETS
March 31, March 31,
In thousands 2006 2005
----------------------------------------------------------------------
Assets
Cash and cash equivalents $ 11,207 $ 11,592
Accounts receivable, net 116,713 116,865
Lease receivables 512 1,697
Inventories, net 53,926 57,176
Costs and estimated earnings in excess
of billings on uncompleted contracts 23,803 25,695
Deferred tax asset 8,973 9,236
Net current assets of discontinued operations 467 549
Other current assets 15,523 14,724
--------- ---------
Total current assets 231,124 237,534
--------- ---------
Property, plant and equipment, net 35,124 38,268
Goodwill, net 468,724 444,567
Intangibles, net 55,440 44,157
Lease receivables, net of current portion - 473
Deferred tax asset 4,231 3,793
Discontinued operations, net of current portion - 373
Other assets 5,091 3,725
--------- ---------
Total assets $ 799,734 $ 772,890
--------- ---------
Liabilities
Current maturities of long-term debt $ 1,049 $ 692
Current maturities of discounted lease rentals 30 890
Accounts payable 44,943 36,032
Billings in excess of costs and estimated
earnings on uncompleted contracts 8,648 8,947
Deferred revenue 22,211 21,456
Accrued liabilities:
Compensation and benefits 13,954 14,270
Restructuring 3,292 6,709
Other liabilities 27,817 32,708
Income taxes 5,924 3,295
--------- ---------
Total current liabilities 127,868 124,999
--------- ---------
Long-term debt 122,673 147,196
Discounted lease rentals - 30
Deferred taxes - -
Other liabilities 887 75
Restructuring reserve 7,406 9,889
Stockholders' Equity
Common stock 25 24
Additional paid-in capital 362,810 336,290
Retained earnings 461,853 428,632
Treasury stock, at cost (296,824) (296,797)
Accumulated other comprehensive gain 13,036 22,552
--------- ---------
Total stockholders' equity 540,900 490,701
--------- ---------
Total liabilities and stockholders' equity $ 799,734 $ 772,890
--------- ---------
BLACK BOX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended Year Ended
-------------------- --------------------
March 31, March 31, March 31, March 31,
In thousands 2006 2005 2006 2005
----------------------------------------------------------------------
Operating Activities
Net income $ 4,656 $ 34 $ 37,358 $ 29,912
Adjustments to reconcile net
income to cash
Provided by operating
activities:
Intangibles amortization 764 1,145 4,999 1,332
Depreciation 2,153 2,253 8,931 6,623
Deferred tax provision /
(benefit) 1,871 (1,852) (212) (77)
Stock compensation
expense -- -- -- 680
Tax benefit from
exercised stock options 147 (83) (3,200) (3,472)
Changes in operating assets
and liabilities:
Accounts receivable, net 9,296 7,725 9,369 8,878
Inventories, net (673) 2,336 5,000 (76)
Other current assets 6,271 2,419 7,541 3,307
Proceeds from lease
contracts (88) 504 1,658 504
Accounts payable and
accrued liabilities (11,512) 3,317 (19,647) 4,595
--------- ---------- --------- ---------
Net cash provided by
operating activities $ 12,885 $ 17,798 $ 51,797 $ 52,206
--------- ---------- --------- ---------
Investing Activities
Capital expenditures, net$ (751) $ (470) $ (2,670) $ (2,319)
Acquisition of
businesses, net of cash
acquired -- (102,553) (40,682) (102,553)
Prior merger-related
payments -- 605 (378) 107
--------- ---------- --------- ---------
Net cash used in investing
activities $ (751) $(102,418) $(43,730) $(104,765)
--------- ---------- --------- ---------
Financing Activities
Proceeds/(repayments) on
borrowings, net $(18,689) $ 106,414 $(26,107) $ 110,450
Repayments on discounted
lease rentals (43) (458) (890) (458)
Proceeds from exercise of
options 6,976 609 23,320 7,919
Payment of dividends (1,045) (1,038) (4,094) (3,847)
Deferred financing costs (180) (1,117) (180) (1,352)
Purchase of treasury
stock (13) (19,327) (27) (56,912)
--------- ---------- --------- ---------
Net cash provided/(used) in
financing activities $(12,994) $ 85,083 $ (7,978) $ 55,800
Foreign currency exchange
impact on cash $ (76) $ 182 $ (474) $ (955)
--------- ---------- --------- ---------
Increase/(decrease) in cash &
cash equivalents $ (936) $ 645 $ (385) $ 2,286
Cash & cash equivalents at
beginning of period 12,143 10,947 11,592 9,306
--------- ---------- --------- ---------
Cash & cash equivalents at
end of period $ 11,207 $ 11,592 $ 11,207 $ 11,592
--------- ---------- --------- ---------
Non-GAAP Measurements The financial information presented in this release contains certain non-GAAP financial measures. Management uses the non-GAAP measures to improve the comparisons between fiscal periods. Management believes the use of non-GAAP measures improves the investor's ability to make comparisons between fiscal periods and provides useful information to investors regarding the Company's financial condition and its results of operations. In accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with SEC Regulation G, the following financial highlights tables reconcile (1) free cash flow; (2) cash provided by operating activities excluding restructuring payments and satisfaction of a litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. judgment; (3) net income excluding restructuring charges and reconciling items; and (4) diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. EPS excluding restructuring charges and reconciling items; to the most directly comparable U.S. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). measures. The additional non-GAAP financial information presented should be considered in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with, and not as a substitute for, or superior to, the financial information presented in accordance with GAAP. All dollar amounts are in thousands. Management believes that free cash flow, defined by the Company as cash provided by operating activities less net capital expenditures, plus proceeds from option exercises, plus or minus foreign currency translation adjustments, is an important measurement of liquidity as it represents the total cash available to the Company. A reconciliation of cash provided by operating activities to free cash flow is presented below:
4Q06 3Q06 4Q05 FY06 FY05
----------------------------------------------------------------------
Cash provided by operating
activities $12,885 $16,438 $17,798 $51,797 $52,206
Capital expenditures (964) (1,551) (927) (4,115) (3,506)
Capital disposals 213 231 457 1,445 1,187
Proceeds from stock option
exercises 6,976 8,892 609 23,320 7,919
Foreign currency exchange
impact on cash (76) (408) 182 (474) (955)
----------------------------------------------------------------------
Free cash flow $19,034 $23,602 $18,119 $71,973 $56,851
----------------------------------------------------------------------
Management believes that presenting cash provided by operating activities exclusive of the cash flow impact from items that rarely occur or only occur once is a more meaningful measurement of cash provided by operating activities on an ongoing basis and allows the reader to more accurately compare other fiscal periods where the events did not occur. A reconciliation of cash provided by operating activities to cash provided by operating activities excluding restructuring payments and satisfaction of a litigation judgment is presented below:
4Q06 3Q06 4Q05 FY06 FY05
----------------------------------------------------------------------
Cash provided by operating
activities $12,885 $16,438 $17,798 $51,797 $52,206
Restructuring payments 1,753 1,537 1,266 10,918 1,653
Satisfaction of a
litigation judgment -- -- -- 1,778 --
----------------------------------------------------------------------
Cash provided by operating
activities excluding
restructuring payments and
satisfaction of a litigation
judgment $14,638 $17,975 $19,064 $64,493 $53,859
----------------------------------------------------------------------
Management believes that presenting net income and diluted earnings per share excluding restructuring charges and reconciling items is useful to investors because it provides a more meaningful comparison of the ongoing operations of the Company. Included in reconciling items are acquisition-related expenses from the purchase of Norstan and the Italian Operations Adjustment in FY06 and acquisition-related expenses from the purchase of Norstan, settlement of a litigation matter and costs associated with the establishment and review of procedures to comply with the requirements of Section 404 of the Sarbanes-Oxley Act See SOX. of 2002 in FY05. A reconciliation of net income to net income excluding restructuring charges and reconciling items is presented below: 4Q06 4Q05 FY06 FY07 ---------------------------------------------------------------------- Net income $4,656 $34 $37,358 $29,912 % of revenues 2.7% 0.0% 5.2% 5.6% Restructuring charges, after tax impact -- 3,314 3,465 3,314 Reconciling items, after tax impact 4,931 3,471 8,431 4,650 ---------------------------------------------------------------------- Net income excluding restructuring charges and reconciling items $9,587 $6,819 $49,254 $37,876 % of revenues 5.5% 4.3% 6.8% 7.1% ---------------------------------------------------------------------- A reconciliation of diluted earnings per common share (EPS) to diluted EPS excluding restructuring charges and reconciling items is presented below: 4Q06 4Q05 FY06 FY05 ---------------------------------------------------------------------- Diluted EPS $0.26 $0.00 $2.13 $1.68 EPS impact of restructuring charges -- 0.19 0.20 0.19 EPS impact of reconciling items 0.27 0.20 0.48 0.26 ---------------------------------------------------------------------- Diluted EPS excluding restructuring charges and reconciling items $0.53 $0.39 $2.81 $2.13 ---------------------------------------------------------------------- SUPPLEMENTAL INFORMATION: Additionally, the following supplemental information is being provided for comparisons of fourth quarter ended March 31, 2006 reported results to this year's third quarter and prior year's fourth quarter. All dollar amounts are in thousands unless noted otherwise. Information on revenues and operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. by geography geography, the science of place, i.e., the study of the surface of the earth, the location and distribution of its physical and cultural features, the areal patterns or places that they form, and the interrelation of these features as they affect humans. is presented below. Management believes it is important to separately present the restructuring charges and reconciling items. Reconciling items consist of acquisition-related expenses from the purchase of Norstan and the Italian Operations Adjustment in the 2006 periods and acquisition-related expenses from the purchase of Norstan, settlement of a litigation matter and costs associated with the establishment and review of procedures to comply with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 in the 2005 periods. Management believes this enables a clearer understanding of the ongoing operations of the Company and allows the reader to more accurately compare other fiscal periods where the events did not occur. Information on revenues and operating income for geographical ge·o·graph·ic also ge·o·graph·i·cal adj. 1. Of or relating to geography. 2. Concerning the topography of a specific region. ge segments is presented below:
4Q06 3Q06 4Q05 FY06 FY05
----------------------------------------------------------------------
Revenues:
North America $137,912 $143,173 $112,047 $564,700 $355,013
Europe 27,152 29,950 35,501 120,051 142,838
All Other 9,804 9,012 9,682 36,584 37,225
-------- -------- -------- -------- --------
Total $174,868 $182,135 $157,230 $721,335 $535,076
Operating income:
North America $ 9,414 $ 15,740 $ (295)$ 53,550 $ 26,798
% of North America
revenues 6.8% 11.0% (0.3)% 9.5% 7.5%
Europe (1,643) 4,101 274 5,518 13,639
% of Europe revenues (6.1)% 13.7% 0.8% 4.6% 9.5%
All Other 1,733 1,771 1,414 7,127 8,099
% of All Other revenues 17.7% 19.7% 14.6% 19.5% 21.8%
-------- -------- -------- -------- --------
Total $ 9,504 $ 21,612 $ 1,393 $ 66,195 $ 48,536
% of Total revenues 5.4% 11.9% 0.9% 9.2% 9.1%
Restructuring charges and
reconciling items
North America $ 464 $ 1,245 $ 9,356 $ 7,358 $ 11,156
Europe 7,065 -- 1,003 10,807 1,003
All Other -- -- -- -- --
-------- -------- -------- -------- --------
Total $ 7,529 $ 1,245 $ 10,359 $ 18,165 $ 12,159
Operating income excluding
restructuring charges and
reconciling items
North America $ 9,878 $ 16,985 $ 9,061 $ 60,908 $ 37,954
% of North America
revenues 7.2% 11.9% 8.1% 10.8% 10.7%
Europe 5,422 4,101 1,277 16,325 14,642
% of Europe revenues 20.0% 13.7% 3.6% 13.6% 10.3%
All Other 1,733 1,771 1,414 7,127 8,099
% of All Other revenues 17.7% 19.7% 14.6% 19.5% 21.8%
-------- -------- -------- -------- --------
Total $ 17,033 $ 22,857 $ 11,752 $ 84,360 $ 60,695
% of Total revenues 9.7% 12.5% 7.5% 11.7% 11.3%
------------------------- -------- -------- -------- -------- --------
Information on revenues and gross profit for data services, voice
services and hotline services is presented below:
4Q06 3Q06 4Q05 FY06 FY05
----------------------------------------------------------------------
Revenues:
Data Services $ 44,017 $ 47,083 $ 48,799 $196,585 $200,935
Voice Services 77,184 82,281 52,921 310,804 106,540
Hotline Services 53,667 52,771 55,510 213,946 227,601
-------- -------- -------- -------- --------
Total $174,868 $182,135 $157,230 $721,335 $535,076
Gross Profit:
Data Services $ 11,268 $ 14,794 $ 13,343 $ 57,068 $ 59,354
% of Data Services
revenues 25.6% 31.4% 27.3% 29.0% 29.5%
Voice Services 28,400 32,145 17,648 119,556 36,255
% of Voice Services
revenues 36.8% 39.1% 33.3% 38.5% 34.0%
Hotline Services 24,458 26,463 28,725 105,726 119,320
% of Hotline Services
revenues 45.6% 50.1% 51.7% 49.4% 52.4%
-------- -------- -------- -------- --------
Total $ 64,126 $ 73,402 $ 59,716 $282,350 $214,929
% of Total revenues 36.7% 40.3% 38.0% 39.1% 40.2%
Reconciling items:
Data Services $ 2,071 -- -- $ 2,071 --
Voice Services -- -- -- -- --
Hotline Services 1,517 -- -- 1,517 --
-------- -------- -------- -------- --------
Total $ 3,588 -- -- $ 3,588 --
Gross Profit including:
Data Services $ 13,339 $ 14,794 $ 13,343 $ 59,139 $ 59,354
% of Data Services
revenues 30.3% 31.4% 27.3% 30.1% 29.5%
Voice Services 28,400 32,145 17,648 119,556 36,255
% of Voice Services
revenues 36.8% 39.1% 33.3% 38.5% 34.0%
Hotline Services 25,975 26,463 28,725 107,243 119,320
% of Hotline Services
revenues 48.4% 50.1% 51.7% 50.1% 52.4%
-------- -------- -------- -------- --------
Total $ 67,714 $ 73,402 $ 59,716 $285,938 $214,929
% of Total revenues 38.7% 40.3% 38.0% 39.6% 40.2%
Information on revenues on a same-office basis is presented below:
4Q06 4Q05 Change
----------------------------------------------------------------------
Revenues as reported $174,868 $157,230 11%
Less revenues from offices added since Fiscal
2005 (58,440) (35,208)
-------------------------
Revenues on same-office basis $116,428 $122,022 (5)%
----------------------------------------------------------------------
Information on various balance sheet ratios, backlog and headcount
is presented below. Dollar amounts are in millions.
4Q06 3Q06 4Q05
----------------------------------------------------------------------
Accounts Receivable:
Gross Accounts Receivable $ $126.2 $133.9 $124.2
Reserve $ / % $9.5/7.5% $8.3/6.2% $7.3/5.9%
------ ------ ------
Net Accounts Receivable $ $116.7 $125.6 $116.9
Net Days Sales Outstanding 54 days 57 days 57 days
Inventory:
Gross Inventory $ $68.2 $66.9 $69.7
Reserve $ / % $14.3/21.0% $13.5/20.2% $12.5/17.9%
------ ------ ------
Net Inventory $ $53.9 $53.4 $57.2
Net Inventory Turns 7.3x 6.8x 6.4x
Six-Month Order Backlog $96 $94 $97
Team Members 3,295 3,273 3,371
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