Black Box Corporation Reports Third Quarter and YTD Fiscal 2006 Results.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 third quarter ended December December: see month. 31, 2005 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 70 cents compared to 52 cents last year, an increase of 35%. Net income for the third quarter was $12.5 million or 6.9% of revenues, compared to $9.2 million or 7.3% of revenues last year. On a sequential One after the other in some consecutive order such as by name or number. comparison basis, second quarter diluted earnings per share were 74 cents with corresponding net income of $12.8 million or 6.9% of revenues. Excluding acquisition related expenses in the third quarter of Fiscal 2006 described below, diluted earnings per share were 75 cents and net income was $13.3 million or 7.3% of revenues. During the third quarter of Fiscal 2006, the Company incurred non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. of $1.2 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta in connection with acquisition related expenses from the January January: see month. 25, 2005 purchase of Norstan, Inc. ("Norstan"). Management believes that presenting diluted earnings per share and net income excluding acquisition related expenses is useful to investors because it provides a more meaningful comparison of the ongoing operations of the Company. Total revenues for the third quarter were $182 million, an increase of 44% from $127 million for the same period last year. On a sequential comparison basis, second quarter revenues were $185 million. Third 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. $16 million or 131% of net income, compared to $14 million or 148% of net income for the same period last year. Third quarter free cash flow was $24 million compared to $14 million last year. On a sequential comparison basis, second quarter cash provided by operating activities was $12 million and free cash flow was $18 million. Black Box utilized its third quarter free cash flow of $24 million to fund $14 million of merger-related activity; debt reduction of $8 million; a dividend payment of $1 million; and net capital expenditures 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. 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 attached financial charts include a reconciliation of the non-GAAP financial measures in this release to the most directly comparable GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). measures. For the nine months ended December 31, 2005, diluted earnings per share were $1.88 compared to $1.66 for the same period last year, an increase of 13%. Corresponding net income for the nine-month period was $32.7 million or 6.0% of revenues, compared to $29.9 million or 7.9% of revenues for the same period last year. 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 acquisition related expenses for the nine months ended December 31, 2005 described below, diluted earnings per share were $2.28 and net income was $39.7 million or 7.3% of revenues. Total non-cash charges incurred for the nine months ended December 31, 2005 associated with acquisition related expenses of Norstan was $5.4 million pre-tax. For the nine-month period ended December 31, 2005, the Company incurred a pre-tax 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. .Total nine-month revenues were $546 million, an increase of 45% from $378 million for the same period last year. Cash provided by operating activities for the nine-month period was $39 million or 119% of net income, compared to $34 million or 115% of net income last year. Free cash flow was $53 million compared to $39 million last year. Black Box utilized the nine-month free cash flow of $53 million to fund $41 million of merger-related activity; debt reduction of $7 million; dividend payments of $3 million; and net capital expenditures of $2 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 $94 million at December 31, 2005 compared to $54 million at the same period last year. On a sequential comparison basis, second quarter 6-month order backlog was $101 million. Commenting on the third quarter results, 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, "We are pleased with our overall results for the quarter and nine-months to date. We attribute (1) In relational database management, a field within a record. (2) In object technology, a single element of data. See instance attribute and static attribute. this success to our worldwide operating excellence, effective marketing of our DVH DVH Dose-Volume Histogram DVH De Vliegende Hollander DVH Department for the Visually Handicapped DVH Division for Visually Handicapped (TM) technical services and relatively stable end-markets." Continuing on, Mr. Young said, "Our goals moving forward will be to finish FY06 strong and carry this momentum into our FY07." The Company will conduct a conference call beginning at 5:00 p.m. Eastern Standard Time today, January 31, 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 804811. 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 the Norstan business, 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 1. (company) Hotline - Hotline Communications Ltd.. 2. (messaging) Hotline - Hotline Connect. ) 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 152,000 clients in 141 countries with 143 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 Nine months ended
----------------------- -----------------------
In thousands, except December 31, January 1, December 31, January 1,
per share 2005 2005 2005 2005
----------------------------------------------------------------------
Revenues $182,135 $126,896 $546,467 $377,846
Cost of sales 108,733 75,878 328,243 222,633
--------- --------- --------- ---------
Gross profit 73,402 51,018 218,224 155,213
Selling, general &
administrative exp 50,441 36,762 152,008 107,886
Restructuring charges 0 0 5,290 0
Intangibles
amortization 1,349 59 4,235 187
--------- --------- --------- ---------
Operating income 21,612 14,197 56,691 47,140
Interest expense, net 2,397 519 6,686 1,436
Other expenses, net 114 46 79 93
--------- --------- --------- ---------
Income before income
taxes 19,101 13,632 49,926 45,611
Provision for income
taxes 6,590 4,383 17,224 15,736
--------- --------- --------- ---------
Net income $12,511 $9,249 $32,702 $29,875
========= ========= ========= =========
Basic earnings per
common share $0.72 $0.54 $1.92 $1.71
========= ========= ========= =========
Diluted earnings per
common share $0.70 $0.52 $1.88 $1.66
========= ========= ========= =========
Weighted average common
shares 17,286 17,293 17,050 17,499
========= ========= ========= =========
Weighted average common
& common equivalent
shares outstanding 17,786 17,694 17,362 17,949
========= ========= ========= =========
BLACK BOX CORPORATION
CONSOLIDATED BALANCE SHEETS
December 31, March 31,
In thousands 2005 2005
----------------------------------------------------------------------
Assets
Cash and cash equivalents $12,143 $11,592
Accounts receivable, net 125,632 116,865
Lease receivables 465 1,697
Inventories, net 53,448 57,176
Costs and estimated earnings in excess
of billings on uncompleted contracts 28,093 25,695
Deferred tax asset 11,084 9,236
Net current assets of discontinued operations 376 549
Other current assets 17,642 14,724
---------- ---------
Total current assets 248,883 237,534
---------- ---------
Property, plant and equipment, net 36,117 38,268
Goodwill, net 468,871 444,567
Intangibles, net 55,573 44,157
Lease receivables, net of current portion - 473
Deferred tax asset 3,979 3,793
Discontinued operations, net of current
portion 153 373
Other assets 4,327 3,725
---------- ---------
Total assets $817,903 $772,890
========== =========
Liabilities
Current maturities of long-term debt $716 $692
Current maturities of discounted lease rentals 70 890
Accounts payable 39,487 36,032
Billings in excess of costs and estimated
earnings on uncompleted contracts 11,604 8,947
Deferred revenue 21,473 21,456
Accrued liabilities:
Compensation and benefits 12,650 13,073
Restructuring 4,589 6,709
Other liabilities 40,274 33,905
Income taxes 9,013 3,295
---------- ---------
Total current liabilities 139,876 124,999
---------- ---------
Long-term debt 141,304 147,196
Discounted lease rentals 3 30
Other liabilities 169 75
Restructuring reserve 7,970 9,889
Stockholders' Equity
Common stock 24 24
Additional paid-in capital 355,981 336,290
Retained earnings 458,252 428,632
Treasury stock, at cost (296,811) (296,797)
Accumulated other comprehensive gain 11,135 22,552
---------- ---------
Total stockholders' equity 528,581 490,701
---------- ---------
Total liabilities and stockholders' equity $817,903 $772,890
========== =========
BLACK BOX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended Nine Months Ended
------------------------------------------------
December 31, January 1, December 31, January 1,
In thousands 2005 2005 2005 2005
----------------------------------------------------------------------
Operating Activities
Net income $12,511 $9,249 $32,702 $29,875
Adjustments to
reconcile net income
to cash provided by
operating
activities:
Intangibles
amortization 1,349 59 4,235 187
Depreciation 2,284 1,658 6,778 4,370
Deferred tax
provision (30) 1,237 (2,083) 1,775
Stock compensation
expense -- -- -- 680
Tax impact from
exercised options (1,376) (231) (3,347) (3,389)
Changes in operating
assets and
liabilities:
Accounts
receivable, net 8,986 (6,951) 73 1,153
Inventories, net (31) (314) 5,673 (2,412)
Other current
assets 966 4,413 1,270 888
Proceeds from
lease contracts 464 -- 1,746 --
Accounts payable
and accrued
liabilities (8,685) 4,567 (8,135) 1,278
------------------------------------------------
Net cash provided by
operating activities $16,438 $13,687 $38,912 $34,405
------------------------------------------------
Investing Activities
Capital
expenditures, net $(1,320) $(908) $(1,919) $(1,849)
Acquisition of
businesses, net
of cash acquired (13,828) (151) (40,682) (498)
Prior merger-
related payments (213) -- (378) --
------------------------------------------------
Net cash used in
investing activities $(15,361) $(1,059) $(42,979) $(2,347)
------------------------------------------------
Financing Activities
(Repayments) /
proceeds on
borrowings, net $(8,131) $(11,940) $(7,418) $4,036
Repayments on
discounted lease
rentals (180) -- (847) --
Proceeds from
exercise of
options 8,892 1,625 16,344 7,310
Payment of
dividends (1,028) (1,035) (3,049) (2,809)
Deferred financing
costs -- -- -- (235)
Purchase of
treasury stock (4) (11) (14) (37,585)
------------------------------------------------
Net cash (used) /
provided in
financing activities $(451) $(11,361) $5,016 $(29,283)
Foreign currency
exchange impact on
cash $(408) $(33) $(398) $(1,134)
------------------------------------------------
Increase in cash &
cash equivalents $218 $1,234 $551 $1,641
Cash & cash
equivalents at
beginning of period 11,925 9,713 11,592 9,306
------------------------------------------------
Cash & cash
equivalents at end of
period $12,143 $10,947 $12,143 $10,947
================================================
RECONCILIATIONS:
In addition to reported results under U.S. GAAP for the fiscal
periods, the following financial highlights tables also include, where
appropriate, a reconciliation of free cash flow, cash provided by
operating activities excluding restructuring payments and satisfaction
of a litigation judgment, net income excluding restructuring charges
and acquisition related expenses and diluted EPS excluding
restructuring charges and acquisition related expenses (which are
non-GAAP measures), to the most directly comparable GAAP measure. All
dollar amounts are in thousands.
A reconciliation of cash provided by operating activities to free cash
flow is presented below:
3Q06 2Q06 3Q05 3Q06YTD 3Q05YTD
----------------------------------------------------------------------
Cash provided by operating
activities $16,438 $11,671 $13,687 $38,912 $34,405
Capital expenditures (1,551) (1,108) (938) (3,151) (2,579)
Capital disposals 231 188 30 1,232 730
Proceeds from stock option
exercises 8,892 7,316 1,625 16,344 7,310
Foreign currency exchange
impact on cash (408) 44 (33) (398) (1,134)
----------------------------------------------------------------------
Free cash flow $23,602 $18,111 $14,371 $52,939 $38,732
----------------------------------------------------------------------
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:
3Q06 2Q06 3Q05 3Q06YTD 3Q05YTD
----------------------------------------------------------------------
Cash provided by
operating activities $16,438 $11,671 $13,687 $38,912 $34,405
Restructuring payments 1,537 2,786 -- 9,165 --
Satisfaction of a
litigation judgment -- -- -- 1,778 --
----------------------------------------------------------------------
Cash provided by
operating activities
excluding restructuring
payments and
satisfaction of a
litigation judgment $17,975 $14,457 $13,687 $49,855 $34,405
----------------------------------------------------------------------
A reconciliation of net income to net income excluding restructuring
charges and acquisition related expenses is presented below:
3Q06 3Q05 3Q06YTD 3Q05YTD
----------------------------------------------------------------------
Net income $12,511 $9,249 $32,702 $29,875
% of revenues 6.9% 7.3% 6.0% 7.9%
Restructuring charges, after tax
impact -- -- 3,465 --
Acquisition related expenses, after
tax impact 815 -- 3,500 --
----------------------------------------------------------------------
Net income excluding restructuring
charges and acquisition related
expenses $13,326 $9,249 $39,667 $29,875
% of revenues 7.3% 7.3% 7.3% 7.9%
----------------------------------------------------------------------
A reconciliation of diluted earnings per common share (EPS) to diluted
EPS excluding restructuring charges and acquisition related expenses
is presented below:
3Q06 3Q05 3Q06YTD 3Q05YTD
----------------------------------------------------------------------
Diluted EPS $0.70 $0.52 $1.88 $1.66
EPS impact of restructuring charges -- -- 0.20 --
EPS impact of acquisition related
expenses 0.05 -- 0.20 --
----------------------------------------------------------------------
Diluted EPS excluding restructuring
charges and acquisition related
expenses $0.75 $0.52 $2.28 $1.66
----------------------------------------------------------------------
SUPPLEMENTAL INFORMATION:
Additionally, the following supplemental information is being provided
for comparisons of third quarter ended December 31, 2005 reported
results to this year's second quarter and prior year's third quarter.
All dollar amounts are in thousands unless noted otherwise.
Information on revenues and operating income by geography is presented
below. Management believes it is important to separately present the
Fiscal 2006 restructuring charges and acquisition related expenses
(hereafter referred to as "special charges"). Management believes this
enables a clearer understanding of the ongoing operations of the
Company.
3Q06 2Q06 3Q05 3Q06YTD 3Q05YTD
----------------------------------------------------------------------
Revenues:
North America $143,173 $146,754 $78,642 $426,788 $242,966
Europe 29,950 29,199 38,947 92,899 107,337
All Other 9,012 9,097 9,307 26,780 27,543
---------------------------------------------
Total $182,135 $185,050 $126,896 $546,467 $377,846
Operating Income:
North America $15,740 $16,537 $8,345 $44,136 $27,090
% of North America
revenues 11.0% 11.3% 10.6% 10.3% 11.1%
Europe $4,101 $3,427 $4,016 $7,161 $13,365
% of Europe revenues 13.7% 11.7% 10.3% 7.7% 12.5%
All Other $1,771 $1,943 $1,836 $5,394 $6,685
% of All Other revenues 19.7% 21.4% 19.7% 20.1% 24.3%
---------------------------------------------
Total $21,612 $21,907 $14,197 $56,691 $47,140
% of Total revenues 11.9% 11.8% 11.2% 10.4% 12.5%
Special Charges:
North America $1,245 $1,274 -- $6,898 --
Europe -- -- -- 3,742 --
All Other -- -- -- -- --
---------------------------------------------
Total $1,245 $1,274 -- $10,640 --
Operating Income
Excluding Special
Charges:
North America $16,985 $17,811 $8,345 $51,034 $27,090
% of North America
revenues 11.9% 12.1% 10.6% 12.0% 11.1%
Europe $4,101 $3,427 $4,016 $10,903 $13,365
% of Europe revenues 13.7% 11.7% 10.3% 11.7% 12.5%
All Other $1,771 $1,943 $1,836 $5,394 $6,685
% of All Other revenues 19.7% 21.4% 19.7% 20.1% 24.3%
---------------------------------------------
Total $22,857 $23,181 $14,197 $67,331 $47,140
% of Total revenues 12.5% 12.5% 11.2% 12.3% 12.5%
----------------------------------------------------------------------
Information on revenues and gross profit for data services, voice
services and hotline services is presented below:
3Q06 2Q06 3Q05 3Q06YTD 3Q05YTD
----------------------------------------------------------------------
Revenues:
Data Services $47,083 $52,584 $53,410 $152,568 $152,136
Voice Services 82,281 78,410 16,219 233,620 53,619
Hotline Services 52,771 54,056 57,267 160,279 172,091
---------------------------------------------
Total $182,135 $185,050 $126,896 $546,467 $377,846
Gross Profit:
Data Services $14,794 $15,482 $16,149 $45,800 $46,011
% of Data Services
revenues 31.4% 29.4% 30.2% 30.0% 30.2%
Voice Services $32,145 $31,173 $5,469 $91,156 $18,607
% of Voice Services
revenues 39.1% 39.8% 33.7% 39.0% 34.7%
Hotline Services $26,463 $27,227 $29,400 $81,268 $90,595
% of Hotline Services
revenues 50.1% 50.4% 51.3% 50.7% 52.6%
---------------------------------------------
Total $73,402 $73,882 $51,018 $218,224 $155,213
% of Total revenues 40.3% 39.9% 40.2% 39.9% 41.1%
----------------------------------------------------------------------
Information on revenues on a same-office basis as compared to
prior year is presented below:
3Q06 3Q05 Change
----------------------------------------------------------------------
Revenues as reported $182,135 $126,896 44%
Less revenues from offices added
since 3Q05 (60,371) --
------------ ------------------------
Revenues on same-office basis $121,764 $126,896 (4%)
-------------------------------- ------------ ------------------------
Information on revenues on a same-office basis as compared to
prior quarter is presented below:
3Q06 2Q06 Change
----------------------------------------------------------------------
Revenues as reported $182,135 $185,050 (2%)
Less revenues from offices added
since 3Q05 (60,371) (54,920)
------------ ------------------------
Revenues on same-office basis $121,764 $130,130 (6%)
-------------------------------- ------------ ------------------------
Information on various balance sheet ratios, backlog and headcount
is presented below. Dollar amounts are in millions.
3Q06 2Q06 3Q05
----------------------------------------------------------------------
Accounts Receivable:
Gross Accounts Receivable $ $133.9 $139.5 $108.8
Reserve $ / % $8.3/6.2% $7.7/5.5% $10.2/9.4%
------ ------ -----
Net Accounts Receivable $ $125.6 $131.8 $98.6
Net Days Sales Outstanding 57 days 57 days 64 days
Inventory:
Gross Inventory $ $66.9 $66.6 $48.2
Reserve $ / % $13.5/20.2% $13.4/20.1% $5.0/10.4%
----- ----- -----
Net Inventory $ $53.4 $53.2 $43.2
Net Inventory Turns 6.8x 6.9x 7.9x
Six-Month Order Backlog $94 $101 $54
Team Members 3,273 3,282 2,538
----------------------------------------------------------------------
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