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Wednesday, May 07, 2003


Black Box Corporation Reports Fourth Quarter and Total Year Fiscal 2003 Results


Declares Cash Dividend, Increas in Existing Share Repurchase Program and Addition to Board of Directors


Black Box Corporation (NASDAQ:BBOX) today reported for the fourth quarter ended March 31, 2003, diluted earnings per share of 21¢ compared to 62¢ last year. Corresponding reported net income for the quarter was $4.2 million or 3.1% of revenues, compared to $12.9 million or 8.1% of revenues last year. Excluding special items in each period, diluted earnings per share were 55¢ for the quarter compared to 72¢ last year and net income was $10.8 million or 8.0% of revenues compared to $15.2 million or 9.5% last year. Management believes it is important to present both diluted earnings per share and net income excluding special items to provide a clearer understanding of the ongoing operations of the Company.

Included in the fourth quarter ended March 31, 2003 numbers is a negative 6¢ diluted earnings per share impact from certain offices, which are in the process of being consolidated with other nearby offices. As a result of these consolidations, this negative impact should go to zero for the first quarter of fiscal 2004.

As previously announced, the Company recorded a pre-tax charge for special items of $10.4 million during the fourth quarter related primarily to adjusting the cost structure of selected operating offices and reserving for specific accounts receivables. Relative to these cost reduction efforts, operating costs are expected to be reduced by $8 million annually. In accordance with SEC Regulation G, the attached financial charts include a reconciliation of all non-GAAP financial measures in this release to the most directly comparable GAAP measure.

Total revenues for the quarter were $135 million, down 16% from $160 million last year. Total revenues on a same-office basis were down 17% compared to last year. North American revenues were $87 million, down 21% from last year's $109 million. European revenues were $38 million, comparable to last year's $38 million. All Other revenues were $10 million, down 19% from last year's $13 million.

Fourth quarter cash provided by operating activities was $23 million, up 30% compared to $18 million last year. Free cash flow was $25 million, up 13% compared to $22 million last year. The fourth quarter's free cash flow of $25 million was used towards: Black Box stock repurchases of $21 million; debt reduction of $3 million; and dividend payments 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 for stock repurchases, mergers, dividend payments or debt reduction.

Total operating income for the fourth quarter was 5.4% compared to 13.4% last year. Excluding special items in each period, operating income for the quarter was 13.1% compared to 15.6% last year. Management believes it is important to present operating income excluding special items to provide a clearer understanding of the ongoing operations of the Company.

Backlog at the end of the fourth quarter was $51 million, down from $55 million at the end of the third quarter.

Diluted earnings per share for the year were $2.39 compared to $2.97 last year, down 20%. Corresponding net income was $48.7 million or 8.0% of revenues, compared to $62.0 million or 8.3% of revenues last year, down 22%. Excluding special items in each period, diluted earnings per share were $2.72 for the year compared to $3.23 last year, down 16% and net income was $55.3 million or 9.1% of revenues compared to $67.4 million or 9.1% last year, down 18%.

Total revenues for the year were $605 million compared to $744 million last year, down 19%. North American revenues were $410 million, down 23% from last year's $533 million. European revenues were $154 million, comparable to last year's $156 million. All Other revenues were $41 million, down 24% from last year's $55 million.

Cash provided by operating activities for the year was $85 million, up 26% compared to $68 million last year. Free cash flow for the year was $96 million, up 24% compared to $78 million for the same period last year. This free cash flow was used towards: Black Box stock repurchases of $59 million; debt reduction of $28 million; merger activity of $7 million; dividend payments of $1 million; and an increase in cash on hand of $1 million. As of March 31, 2003, Black Box had cash and cash equivalents of $14 million and current and long-term debt of $50 million, for a net debt position of $36 million. This compares to March 31, 2002 cash and cash equivalents of $13 million and current and long-term debt of $78 million, for a net debt position of $65 million.

The Company also announced today that its Board of Directors has declared a quarterly cash dividend of 5¢ per share of common stock. The dividend was declared on all outstanding shares of Black Box's common stock and will be payable on July 15, 2003 to stockholders of record at the close of business on June 30, 2003. Black Box will pay the dividend through its transfer agent, American Stock Transfer & Trust Company.

The Board of Directors also approved an increase of one million shares under the existing Black Box common share repurchase program. The one million shares of the Company's stock represent approximately 5% of the current outstanding shares. With this increase, Black Box now has authorization to repurchase approximately 1,680,000 shares. During the fourth quarter of Fiscal 2003, Black Box repurchased 755,000 shares of its common stock, and since April 1999 has repurchased in aggregate approximately 3.8 million shares for approximately $164 million. Additional repurchases of stock may occur from time to time depending upon factors such as the Company's cash flows and general market conditions. While the Company expects to continue to repurchase shares for the foreseeable future, there can be no assurance as to the timing or amount of such repurchases.

The Company also announced that Thomas W. Golonski was elected to its Board of Directors in February 2003, increasing its board membership to six directors. Mr. Golonski has been Chairman, President and Chief Executive Officer of National City Bank of Pennsylvania and Executive Vice President of National City Corporation since 1996. He has served most of his career in the banking industry. Mr. Golonski is also a director of several economic development organizations and active in other charitable and financial organizations.

Commenting on Mr. Golonski's election as a Director, Fred C. Young, Chief Executive Officer, said, "We are very fortunate to have Tom join the Black Box Board of Directors. He brings a wealth of executive management expertise, particularly in the services industry. Tom also works under a very high set of business standards."

Commenting on his election to the Black Box Board of Directors, Mr. Golonski said, "Black Box's outstanding commitment to customer service and achievement of core business objectives coupled with an outstanding management team sets it apart from the competition. I'm delighted for the opportunity to become a part of this professional team."

Commenting on the fourth quarter and total year Fiscal 2003 results, Mr. Young, said, "As stated in our March 11, 2003 press release, global over capacity in just about all vertical markets, leading to more associated job cuts, continues to have an impact on our business. We need to exercise prudent judgment to successfully navigate our business through these very uncertain economic times. This demands a focus on client service, remaining financially strong and continuing to make strategic investments for the future. We have built the best infrastructure services model in the industry. Once the economy settles down, Black Box is well positioned for long-term growth."

The Company will conduct a conference call beginning at 10:45 a.m. Eastern Time today, May 7, 2003. Fred Young, Chief Executive Officer, will host the call. To participate in the call, please dial (612) 326-1003 approximately 15 minutes prior to the starting time 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 680881.

This release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those projected, including levels of business activity and global economic conditions. Any information, which is not historical in nature, constitutes such forward-looking statements and speaks only as of the date of this release.

Black Box is the world's largest technical services company dedicated to designing, building and maintaining today's complicated network infrastructure systems. Black Box services 150,000 clients in 132 countries with 117 offices throughout the world.


BLACK BOX CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
Unaudited
(in thousands, except per share amounts)


(Unaudited)
Quarter Ended
March 31

Year Ended
March 31
---------------- ----------------
2003 2002 2003 2002
-------- -------- -------- --------
Revenues $134,812 $160,252 $605,017 $743,681
     Cost of sales 81,876 94,521 366,170 453,131
-------- -------- -------- --------
Gross profit 52,936 65,731 238,847 290,550
     Selling, general and
        administrative expenses
39,020 40,694 152,808 181,867
     Restructuring expense 6,536 3,500 6,536 3,500
     Intangibles amortization 72 63 377 170
  -------- -------- -------- --------
Operating income 7,308 21,474 79,126 105,013
     Interest expense, net 617 901 2,826 6,268
     Other (income)/
        expenses, net
115 20 229 275
------- -------- -------- --------
Income before income
   taxes
6,576 20,553 76,071 98,470
     Provision for
        income taxes
2,368 7,605 27,386 36,428
-------- -------- -------- --------
Net income $ 4,208 $ 12,948 $ 48,685 $ 62,042
======== ======== ======== ========
Basic earnings per
   common share
$ 0.22 $ 0.64 $ 2.46 $ 3.11
  ======== ======== ======== ========
Diluted earnings per
   common share
$ 0.21 $ 0.62 $ 2.39 $ 2.97
======== ======== ======== ========
Weighted average
   common shares
19,309 20,202 19,781 19,936
======== ======== ======== ========
Weighted average common
   and common equivalent
   shares outstanding
19,831 21,038 20,342 20,860
======== ======== ======== ========

 

BLACK BOX CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)


March 31, March 31,
2003 2002
ASSETS -------- -------
Current assets:    
     Cash and cash equivalents $14,043 $13,423
     Trade accounts receivable, net 100,263 115,969
     Inventories, net 40,047 46,081
     Costs and estimated earnings in    
        excess of billings on    
        uncompleted contracts 18,261 24,015
     Other current assets 10,627 19,959
--------- ---------
        Total current assets 183,241 219,447
Property, plant and equipment, net 34,737 41,063
Intangibles, net 399,299 387,286
Other assets 4,027 2,991
  ---------
        Total assets $621,304 $650,787
========= =========
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:    
     Current debt $926 $3,189
     Accounts payable 30,508 34,279
     Billings in excess of costs and    
        estimated earnings on uncompleted    
        contracts 3,295 4,235
     Accrued expenses 33,648 31,1254
     Accrued taxes 3,288 3,155
--------- ---------
        Total current liabilities 71,665 75,983
--------- ---------
Long-term debt 49,453 75,497
Other liabilities 5,764 9,209
Stockholders' equity:    
     Common stock 23 22
     Additional paid-in capital 295,271 287,714
     Retained earnings 359,037 312,288
     Treasury stock, at cost (163,547) (100,355)
--------- ---------
     Accumulated other comprehensive loss 3,638 (9,571)
--------- ---------
        Total stockholders' equity 494,422 490,098
--------- ---------
        Total liabilities and stockholders'    
           equity $621,304 $650,787
========= =========



BLACK BOX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)


(Unaudited)
Quarter Ended
March 31

Year Ended
March 31
---------------- ----------------
2003 2002 2003 2002
-------- -------- -------- --------
Cash flows from operating activities:        
     Net income $4,208 $12,948 $48,685 $62,042

     Adjustments to reconcile net income
        to cash provided by operating
        activities:

       
       Intangibles amortization 72 63 377 170
       Depreciation 1,892 1,983 7,639 8,123
     Changes in working capital items:        
       Account receivable, net 10,314 7,656 17,043 51,864
       Inventories, net 4,944 2,294 6,176 5,805
       Other current assets 7,861 6,114 13,951 5,867
       Accounts payable and
        accrued liabilities
(6,378) (13,494) (8,599) (65,973)
  -------- -------- -------- --------
     Cash provided by operating activities 22,913 17,564 85,272 67,898
-------- -------- -------- --------
Cash flows from investing activities:        
       Capital expenditures, net
        of disposals
402 945 (304) (992)
       Mergers, net of cash acquired (261) (462) (7,822) (19,372)
  -------- -------- -------- --------
     Cash (used in) investing activities 141 483 (8,126) (20,364)
-------- -------- -------- --------
Cash flows from financing activites:        
       Revolving credit borrowings, net (2,851) (24,240) (28,418) (51,170)
       Proceeds from exercise of options 520 4,093 4,886 11,591
       Payment of Dividend (975) -- (975) --
       Purchase of treasury stock (20,620) -- (58,473) --
-------- -------- -------- --------
     Cash provided by financing activities (23,926) (20,147) (82,980) (39,579)
  -------- -------- -------- --------
         
Foreign currency translation adjustment 1,468 (347) 6,454 (741)
  -------- -------- -------- --------
         
Increase/(decrease) in cash and
  cash equivalents
596 (2,450) 620 7,214
Cash and cash equivalents at beginning
  of period
13,447 15,873 13,423 6,209
         
Cash and cash equivalents at end
  of period
$14,043 $13,423 $14,043 $13,423
  ======== ======== ======== ========
Interest paid $615 $1,879 $2,827 $7,174
  -------- -------- -------- --------
Income taxes paid $4,648 $11,877 $28,120 $47,603
-------- -------- -------- --------
======== ======== ======== ========


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 results excluding special items and free cash flow (which are non-GAAP measures), to the most directly comparable GAAP measures. All dollar amounts are in thousands except per share amounts.


A reconciliation of diluted earnings per common share (EPS) to diluted EPS excluding special items is presented below:

Quarter Ended
March 31

Year Ended
March 31
---------------- ----------------
2003 2002 2003 2002
-------- -------- -------- --------
Diluted EPS $0.21 $0.62 $2.39 $2.97
EPS impact of restructuring charges 0.21 0.10 0.21 0.10

EPS impact of other special items

0.13 -- 0.13 0.16
  -------- -------- -------- --------
Diluted EPS excluding special items $0.55 $0.72 $2.72 $3.23
======== ======== ======== ========


A reconciliation of net income to net income excluding special items is presented below:

Quarter Ended
March 31

Year Ended
March 31
---------------- ----------------
2003 2002 2003 2002
-------- -------- -------- --------
Net income $4,208 $12,948 $48,685 $62,042
% of revenues 3.1% 8.1% 8.0% 8.3%

Restructuring charges, after tax impact

4,183 2,205 4,183 2,205
Expense for other special items,
  after tax impact
2,455 -- 2,455 3,167
-------- -------- -------- --------
Net income excluding special items $10,846 $15,153 $55,323 $67,414
% of revenues 8.0% 9.5% 9.1% 9.1%
======== ======== ======== ========

A reconciliation of operating income to operating income excluding special items is presented below:

Quarter Ended
March 31

Year Ended
March 31
---------------- ----------------
2003 2002 2003 2002
-------- -------- -------- --------
Operating income $7,308 $21,474 $79,126 $105,013
% of revenues 5.4% 13.4% 13.1% 14.1%

Restructuring charges

6,536 3,500 6,536 3,500
Expense for other special items 3,835 -- 3,835 5,027
-------- -------- -------- --------
Operating income excluding special items $17,679 $24,974 $89,497 $113,540
% of revenues 13.1% 15.6% 14.8% 15.3%
======== ======== ======== ========


A reconciliation of cash provided by operating activities to free cash flow is presented below:

Quarter Ended
March 31

Year Ended
March 31
---------------- ----------------
2003 2002 2003 2002
-------- -------- -------- --------
Cash provided by operating activities $22,913 $17,559 $85,272 $67,898
Plus or (minus):        

     Net capital disposals/expenditures

402 945 (304) (992)
     Foreign currency translation adjustment 1,468 (345) 6,454 (741)
     Proceeds from stock option exercises 520 4,093 4,886 11,591
-------- -------- -------- --------
Free cash flow $25,303 $22,252 $96,308 $77,756
======== ======== ======== ========


Information on revenues on a same-office basis is presented below:

Quarter Ended
March 31

----------------  
2003 2002 Change
-------- -------- --------
Revenues as reported $134,812 $160,252 (16)%
Less revenues from offices added before Fiscal 2002 (3,609) (2,417) n/a
-------- -------- --------
Revenues on same-office basis $131,203 $157,835 (17)%
  ======== ======== ========


SUPPLEMENTAL INFORMATION:

Additionally, the following supplemental information is being provided for comparisons of fourth quarter and fiscal year ended March 31, 2003 reported results to prior periods. A reconciliation of results excluding special items (which are non-GAAP measures) to the most directly comparable GAAP measures is presented where appropriate. All dollar amounts are in thousands.

 

During the fourth quarter ended March 31, 2003, management reevaluated its reportable business segments in accordance with SFAS No. 131 and determined that a geographical segmentation is appropriate. Information on revenues and operating income by geography is presented below:

Quarter Ended

Year Ended
March 31 December 29 March 31
-------------- -------------- --------------
2003 2002 2002 2003 2002
-------- -------- -------- -------- --------
Revenues:          
     North America $86,783 $109,384 $102,017 $410,271 $533,410
     Europe 37,630 38,019 41,457 153,477 155,715
     All Other 10,399 12,849 9,588 41,269 54,556
  -------- -------- -------- -------- --------
     Total $134,812 $160,252 $153,062 $605,017 $743,681
           
Operating Income          
     North America $5,621 $13,207 $14,737 $53,592 $65,500
     % of North America revenues 6.5% 12.1% 14.4% 13.1% 12.3%
     Europe $116 $5,287 $6,532 $17,729 $25,758
     % of Europe revenues 0.3% 13.9% 15.8% 11.6% 16.5%
     All Other $1,571 $2,980 $1,803 $7,805 $13,755
     % of All Other revenues 15.1% 23.2% 18.8% 18.9% 25.2%
  -------- -------- -------- -------- --------
     Total $7,308 $21,474 $23,072 $79,126 $105,013
     % of total revenues 5.4% 13.4% 15.1% 13.1% 14.1%
           
Special Items:          
     North America $5,625 $1,439 -- $5,625 $6,466
     Europe 4,592 1,830 -- 4,592 1,830
     All Other 154 231 -- 154 231
  -------- -------- -------- -------- --------
     Total $10,371 $3,500 -- $10,371 $8,527
           
Operating Income excluding
  special items:
         
     North America $11,246 $14,646 $14,737 $59,217 $71,966
     % of North America revenues 13.0% 13.4% 14.4% 14.4% 13.5%
     Europe $4,708 $7,117 $6,532 $22,321 $27,588
     % of Europe revenues 12.5% 18.7% 15.8% 14.5% 17.7%
     All Other $1,725 $3,211 $1,803 $7,959 $13,986
     % of All Other revenues 16.6% 25.0% 18.8% 19.3% 25.6%
  -------- -------- -------- -------- --------
     Total $17,679 $24,974 $23,072 $89,497 $113,540
     % of total revenues 13.1% 15.6% 15.1% 14.8% 15.3%
  ======== ======== ======== ======== ========



Information on revenues and gross profit for phone services, structured cabling services and telephony services is presented below:

Quarter Ended

Year Ended
March 31 December 29 March 31
---------------- ---------------- ----------------
2003 2002 2002 2003 2002
-------- -------- -------- -------- --------
Revenues:          
     Phone Services $61,330 $69,697 $62,897 $252,105 $309,744
     Structured Cabling
       Services
56,595 75,366 69,323 275,842 365,901
     Telephony Services 16,787 15,189 20,842 77,070 68,036
  -------- -------- -------- -------- --------
     Total $134,812 $160,252 $153,062 $605,017 $743,681
           
Gross Profit          
     Phone Services $31,729 $35,622 $32,308 $128,635 $150,681
     % of Phone Services
        revenues
51.7% 51.1% 51.4% 51.0% 48.6%
     Structured Cabling
        Services
$15,005 $24,661 $21,439 $85,122 $117,813
     % of Structured Cabling
        Services revenues
26.5% 32.7% 30.9% 30.9% 32.2%
     Telephony Services $6,202 $5,448 $6,892 $25,090 $22,056
     % of Telephony Services
        revenues
36.9% 35.9% 33.1% 32.6% 32.4%
  -------- -------- -------- -------- --------
     Total $52,936 $65,731 $60,639 $238,847 $290,550
     % of total revenues 39.3% 41% 39.6% 39.5% 39.1%
  ======== ======== ======== ======== ========


Information on various balance sheet ratios and headcount is presented below:

 

March 31 December 29
---------------- ----------------
2003 2002 2002
-------- -------- --------
Days Sales Outstanding of Accounts Receivable 63 60 63
       
Inventory Turns 8 8 9
       
Team Members 3,123 3,712 3,517
  ======== ======== ========

Investor Contact:
Black Box Corporation
Mike McAndrew
724-873-6788
Fax: 724-873-6799
E-mail: investors@blackbox.com

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