Tuesday, January 14, 2003

Black Box Corporation Reports Third Quarter Fiscal 2003 Results

GAAP Profit and Cash Flow Remain Strong; Sequential Revenue Seasonally Down

Black Box Corporation (NASDAQ: BBOX) today announced for the third quarter ended December 29, 2002, reported earnings per share of 73 cents compared to 81 cents last year and 74 cents in 2Q03. Corresponding reported net income for the quarter was $14.8 million or 9.7% of revenues, compared to $16.9 million or 9.4% of revenues last year and $15.0 million or 9.2% of revenues in 2Q03.

Total revenues for the quarter were $153 million, down 15% from $179 million last year and down 6% sequentially from 2Q03’s $163 million. Total revenues on a same-office basis were down 17% compared to last year and down 6% sequentially. Phone Service revenues were $63 million, comparable to 2Q03’s $64 million. On-Site Service revenues were $90 million, down 8% from 2Q03’s $98 million.

Third quarter free cash flow was $28 million compared to $29 million last year and $19 million in 2Q03. Free cash flow is calculated as cash provided by operating activities less capital expenditures, plus proceeds from option exercises, plus or minus foreign currency translation adjustments. The third quarter’s free cash flow of $28 million was used towards: Black Box stock repurchases of $17 million; debt reduction of $10 million; and an increase in cash on hand of $1 million.

Total operating margin for the third quarter was 15.1%, compared to 15.8% last year and 15.2% in 2Q03. Operating margin for Phone Services was 20.1% compared to 19.4% last year and 20.9% in 2Q03. Operating margin for On-Site Services was 12.0% compared to 13.6% last year and 11.8% in 2Q03.

Earnings per share reported for the nine months ended December 29, 2002 were $2.17 compared to $2.36 for the same period last year, down 8%. Corresponding reported net income was $44.5 million or 9.5% of revenues, compared to $49.1 million or 8.4% of revenues for the same period last year, down 9%.

Total revenues for the nine months were $470 million compared to $583 million for the same period last year, down 19%.

Free cash flow for the nine months was $71 million, up 28% compared to $56 million for the same period last year. This free cash flow was used towards: Black Box stock repurchases of $38 million; debt reduction of $26 million; and M&A activity of $7 million.

Commenting on the third quarter Fiscal 2003 results, Fred C. Young, Chief Executive Officer, said, “As expected, sequential revenues were down primarily due to traditional seasonality. However, with Black Box-like cost management, we produced strong profits and free cash flow from both an absolute dollar and ratio basis.

“Armed with our continued operational and financial strengths, we remain focused on selective markets to drive significant long-term growth. The trick here is not to forget to play good defense along the way.”

Mr. Young went on to say, “Tomorrow, January 15, Black Box will pay its first quarterly cash dividend. We are proud to be able to deliver this new program targeted at enhancing strategic shareholder value.”

The Company will conduct a conference call beginning at 10:45 a.m. Eastern Time today, January 14, 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 655265.

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 clients through 117 offices in 132 countries throughout the world.

(Dollars in thousands)
December 29,
March 31,
Current assets:
Cash and cash equivalents
Trade accounts receivable, net
110,577 115,969
Inventories, net
44,991 46,081
Costs and estimated earnings in excess
of billings on uncompleted contracts
20,431 24,015
Other current assets
17,875 19,959
Total current assets
207,321 219,447
Property, plant and equipment, net 36,994 41,063
Intangibles, net 397,675 387,286
Other assets 3,113
Total assets
$645,103 $650,787
Current liabilities:
Current debt
Accounts payable
31,122 34,279
Billings in excess of costs and estimated
earnings on uncompleted contracts
4,097 4,235
Accrued expenses
32,625 31,125
Accrued taxes
3,967 3,155
Total current liabilities
73,572 75,983
Long-term debt 51,469 75,497
Other liabilities 7,365 9,209
Stockholders' equity:
Common stock
23 22
Additional paid-in capital
294,357 287,714
Retained earnings
355,790 312,288
Treasury stock, at cost
(138,208) (100,355)
Accumulated other comprehensive loss
735 (9,571)
Total stockholders' equity
512,697 490,098
Total liabilities and stockholders' equity
$645,103 $650,787


(In thousands, except per share amounts)

Quarter Ended
December 29
Cost of sales 92,423 108,397
Gross profit 60,639 70,844
Selling, general, and admin. expenses 37,471 42,604
Operating income before amortization 23,168 28,240
Intangibles amortization 96 82
Operating income 23,072 28,158
Interest expense, net 671 1,382
Other expenses (income), net 44 2
Income before income taxes 22,357 26,774
Provision for income taxes 7,580 9,905
Net income $14,777 $16,869
Basic earnings per common share $0.75
Diluted earnings per common share $0.73 $0.81
Weighted average common shares 19,596 20,007
Weighted average common and common
equivalent shares outstanding 20,225 20,955

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

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