BBOX Black Box Corp.

Black Box Corporation (NASDAQ:BBOX) today reported results for the fourth quarter of Fiscal 2009 ended March 31, 2009.

For the fourth quarter of Fiscal 2009, diluted earnings per share were 48� on net income of $8.4 million or 3.5% of revenues compared to diluted earnings per share of 48� on net income of $8.4 million or 3.4% of revenues for the same quarter last year. On a sequential quarter comparison basis, third quarter of Fiscal 2009 diluted earnings per share were 56� on net income of $9.8 million or 3.8% of revenues. Excluding reconciling items, operating earnings per share (which is a non-GAAP term and is defined below) for the fourth quarter of Fiscal 2009 were 96� on operating net income (which is a non-GAAP term and is defined below) of $16.8 million or 6.9% of revenues compared to operating earnings per share of 74� on operating net income of $13.1 million or 5.3% of revenues for the same quarter last year. Management believes that presenting operating earnings per share and operating net income is useful to investors because it provides a more meaningful comparison of the ongoing operations of the Company.

For the fourth quarter of Fiscal 2009, the Company�s pre-tax reconciling items were $12.4 million with an after-tax impact on net income and EPS of $8.4 million and 48�, respectively. During the fourth quarter of Fiscal 2008, as previously disclosed, the Company�s pre-tax reconciling items were $7.8 million with an after-tax impact on net income and EPS of $4.7 million and 26�, respectively. See below for further discussion regarding Management�s use of non-GAAP accounting measurements and a detailed presentation of the Company�s pre-tax reconciling items for the periods presented above. Included in our fourth quarter and Fiscal 2009 results is the impact of a decrease in our annual effective tax rate from our previous estimate of 36.5% to the actual effective tax rate of 34.5%, resulting in an effective tax rate of 23.8% for the fourth quarter of Fiscal 2009. This tax rate reduction is primarily the result of a favorable resolution of a previously-reserved Internal Revenue Service audit item. The effective tax rate reduction increased fourth quarter and Fiscal 2009 operating earnings per share by 11�.

Fourth quarter of Fiscal 2009 total revenues were $241 million, a decrease of $4 million or 2% from $245 million for the same quarter last year. On a sequential quarter comparison basis, third quarter of Fiscal 2009 total revenues were $262 million.

Fourth quarter of Fiscal 2009 cash provided by operating activities was $20 million or 237% of net income, compared to $44 million or 529% of net income for the same quarter last year. Fourth quarter of Fiscal 2009 free cash flow (which is a non-GAAP term and is defined below) was $19 million compared to $43 million for the same quarter last year. On a sequential quarter comparison basis, third quarter of Fiscal 2009 cash provided by operating activities was $13 million or 136% of net income and free cash flow was $11 million. Black Box utilized its fourth quarter of Fiscal 2009 free cash flow primarily to fund acquisition activity of $18 million and to pay dividends 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 stock 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.

Fiscal 2009 diluted earnings per share were $2.59 on net income of $45.3 million or 4.5% of revenues compared to diluted earnings per share of $2.22 on net income of $39.2 million or 3.9% of revenues for the same period last year. Excluding reconciling items, operating earnings per share for Fiscal 2009 were $3.51 on operating net income of $61.4 million or 6.1% of revenues compared to operating earnings per share of $3.20 on operating net income of $56.5 million or 5.6% of revenues for the same period last year.

For Fiscal 2009, the Company�s pre-tax reconciling items were $24.6 million with an after-tax impact on net income and EPS of $16.1 million and 92�, respectively. For Fiscal 2008, as previously disclosed, the Company�s pre-tax reconciling items were $27.9 million with an after-tax impact on net income and EPS of $17.2 million and 98�, respectively.

Fiscal 2009 total revenues were $1.0 billion, a decrease of $17 million or 2% from $1.02 billion for the same period last year.

Fiscal 2009 cash provided by operating activities was $72 million or 158% of net income compared to $81 million or 207% of net income for the same period last year. Free cash flow was $68 million compared to $81 million for the same period last year. Black Box utilized its Fiscal 2009 free cash flow primarily to fund current and prior period acquisition activity of $64 million and to pay dividends of $4 million.

The Company�s six-month order backlog was $194 million at March 31, 2009 compared to $159 million for the same quarter last year. On a sequential quarter end comparison basis, the Company�s six-month order backlog was $195 million at December 27, 2008.

For the first quarter of Fiscal 2010, the Company is targeting reported revenues of approximately $220 million to $225 million and corresponding operating earnings per share in the range of 63� to 68�. Included in these projections is an effective tax rate of 37.5%.

All of the above exclude acquisition-related expense, employee severance costs, historical stock option granting practices investigation and related matters costs and the impact of changes in the fair market value of the Company�s interest-rate swap, and all of the above are before any new mergers and acquisition activity that has not been announced. The Company has traditionally excluded stock-based compensation expense from its projections but will include such expenses prospectively.

Commenting on Fiscal 2009 results and the first quarter of Fiscal 2010 outlook, Terry Blakemore, President and Chief Executive Officer said, "I am pleased with Black Box's achievements for both the fourth quarter and Fiscal 2009. Our experienced management team has been proactive in implementing financial and operational programs in this challenging economic environment. We worked with our customers to introduce our DVH� solution suite into new markets and drive revenue with our innovative product offerings and world-class technical service. In addition to our top-line goals, we have and will continue to maintain our disciplined approach towards cost and expense management. While implementing headcount reductions, we have used the opportunity to create efficiencies in our organization including the consolidation of back office functions as well as real estate cost savings.

�Our focus on balance sheet management and strong positive cash flow continues to provide the resources to implement our previously-stated strategy of expanding through selective strategic acquisitions. I am confident that Black Box is well positioned to leverage its financial and operating strengths and will emerge from the current economic environment as a stronger force in the industry.�

The Company will conduct a conference call beginning at 5:00 p.m. Eastern Daylight Time today, May 21, 2009. Terry Blakemore, President and 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 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 978968. A live audio webcast of the conference call will be available. To access the webcast, please visit the Investor Relations section of the Black Box website at www.blackbox.com. Please login approximately 10 minutes prior to the start of the conference call.

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 192 offices throughout the world. To learn more, visit the Black Box Web site at http://www.blackbox.com.

Black Box�, the Double Diamond logo and DVH� are registered trademarks of BB Technologies, Inc.

Any forward-looking statements contained in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and speak only as of the date of this release. You can identify these forward-looking statements by the fact they use words such as "should," "anticipate," "estimate," "approximate," "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 the timing and final outcome of the ongoing review of the Company�s stock option practices, including the related Securities and Exchange Commission (�SEC�) investigation, shareholder derivative lawsuit and tax matters, and the impact of any actions that may be required or taken as a result of such review, SEC investigation, shareholder derivative lawsuit or tax matters, levels of business activity and operating expenses, expenses relating to corporate compliance requirements, cash flows, global economic and business conditions, successful integration of acquisitions, the timing and costs of restructuring programs, successful marketing of DVH (Data, Voice, Hotline) services, successful implementation of our M&A program, including identifying appropriate targets, consummating transactions and successfully integrating the businesses, successful implementation of our government contracting programs, competition, changes in foreign, political and economic conditions, fluctuating foreign currencies compared to the U.S. dollar, rapid changes in technologies, client preferences, the Company�s arrangements with suppliers of voice equipment and technology and various other matters, many of which are beyond the Company's control. Additional risk factors are included in the Company�s Annual Report on Form 10-K for the fiscal year ended March 31, 2008. 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 to forward-looking statements as a result of future events or developments.

BLACK BOX CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF INCOME

� � Three-months ended

March 31,

Fiscal Year ended

March 31,

In thousands, except per share amounts � � 2009 � � 2008 � � 2009 � � 2008 � � Revenues Hotline products $ 45,785 $ 60,287 $ 209,793 $ 235,314 On-Site services � 195,547 � 185,210 � � 789,755

�

781,428 � Total 241,332 245,497 999,548 1,016,742 � Cost of sales Hotline products 24,282 30,301 108,561 122,011 On-Site services � 131,987 � 126,216 � � 533,807 � 528,111 � Total 156,269 156,517 642,368 650,122 � Gross profit 85,063 88,980 357,180 366,620 � Selling, general & administrative expenses 68,105 67,260 266,387 275,309 Intangibles amortization � 3,803 � 1,635 � � 10,790 � 6,679 � � Operating income 13,155 20,085 80,003 84,632 � Interest expense (income), net 2,174 6,095 10,279 21,298 Other expenses (income), net � 18 � (41 ) � 561 � (197 ) � Income before provision for income taxes 10,963 14,031 69,163 63,531 � Provision for income taxes � 2,613 � 5,637 � � 23,854 � 24,298 � � Net income $ 8,350 $ 8,394 � $ 45,309 $ 39,233 � � Earnings per common share Basic $ 0.48 $ 0.48 � $ 2.59 $ 2.23 � Diluted $ 0.48 $ 0.48 � $ 2.59 $ 2.22 � � Weighted average common shares outstanding Basic � 17,533 � 17,614 � � 17,527 � 17,605 � Diluted � 17,533 � 17,616 � � 17,527 � 17,653 � � Dividends per share � $ 0.06 � $ 0.06 � � $ 0.24 � $ 0.24 � �

BLACK BOX CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS

� � In thousands, except par value � � March 31, 2009 � � March 31, 2008 � Assets Cash and cash equivalents $ 23,720 $ 26,652 Accounts receivable, net 163,975 162,289 Inventories, net 55,898 67,537 Costs/estimated earnings in excess of billings on uncompleted contracts 66,066 58,611 Prepaid and other current assets � 30,809 � � 31,529 � Total current assets 340,468 346,618 � Property, plant and equipment, net 28,419 32,822 Goodwill 621,948 586,856 Intangibles Customer relationships, net 105,111 67,331 Other intangibles, net 37,684 32,524 Other assets � 2,858 � � 7,700 � Total assets $ 1,136,488 � $ 1,073,851 � � Liabilities Accounts payable $ 79,021 $ 71,670 Accrued compensation and benefits 30,446 22,654 Deferred revenue 35,520 37,467 Billings in excess of costs/estimated earnings on uncompleted contracts 18,217 19,946 Income taxes 5,164 13,810 Other liabilities � 41,891 � � 47,040 � Total current liabilities 210,259 212,587 � Long-term debt 249,260 195,904 Other liabilities � 29,670 � � 25,086 � Total liabilities 489,189 433,577 � Stockholders' equity Common stock 25 25 Additional paid-in capital 445,774 443,380 Retained earnings 521,023 479,921 Accumulated other comprehensive income 3,572 40,043 Treasury stock � (323,095 ) � (323,095 ) Total stockholders' equity �

647,299

� � 640,274 � � Total liabilities and stockholders' equity $ 1,136,488 � $ 1,073,851 � �

BLACK BOX CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

� � Three-months ended

March 31,

Fiscal Year ended

March 31,

In thousands � � 2009 � 2008 � � 2009 � 2008 � Operating Activities Net income $ 8,350 $ 8,394 $ 45,309 $ 39,233 Adjustments to reconcile net income to net cash provided by (used for) operating activities Intangibles amortization and depreciation 6,289 4,273 20,722 17,737 Loss (gain) on sale of property 19 21 (65 ) 462 Deferred taxes 4,602 791 4,512 4,901 Tax impact from stock options 58 2,472 1,193 6,792 Stock compensation expense 805 498 3,042 3,217 Change in fair value of interest-rate swap (533 ) 2,555 (974 ) 4,576 Changes in operating assets and liabilities (net of acquisitions) Accounts receivable, net 11,795 18,345 26,279 4,852 Inventories, net 6,270 7,124 11,455 7,829 All other current assets excluding deferred tax asset (307 ) 2,569 (11,933 ) 12,328 Liabilities exclusive of long-term debt � (17,545 ) � (2,657 ) � (27,974 ) � (20,806 ) Net cash provided by (used for) operating activities $ 19,803 $ 44,385 $ 71,566 $ 81,121 � Investing Activities Capital expenditures $ (325 ) $ (829 ) $ (2,178 ) $ (3,241 ) Capital disposals 120 19 288 105 Acquisition of businesses (payments)/recoveries (20,650 ) (3,056 ) (117,184 ) (13,713 ) Prior merger-related (payments)/recoveries � (159 ) � (1,236 ) � (421 ) � (3,432 ) Net cash provided by (used for) investing activities $ (21,014 ) $ (5,102 ) $ (119,495 ) $ (20,281 ) � Financing Activities Proceeds from borrowings $ 70,905 $ 43,475 $ 308,567 $ 196,750 Repayment of borrowings (67,091 ) (67,652 ) (257,470 ) (240,030 ) Proceeds from the exercise of stock options -- 706 545 5,878 Deferred financing costs -- (471 ) (125 ) (471 ) Payment of dividends (1,052 ) (1,060 ) (4,206 ) (4,225 ) Purchase of treasury stock � -- � � (6,059 ) � -- � � (6,062 ) Net cash provided by (used for) financing activities $ 2,762 $ 31,061 $ 47,311 $ (48,160 ) � Foreign currency exchange impact on cash $ (388 ) $ (1,679 ) $ (2,314 ) $ (3,185 ) � Increase / (decrease) in cash and cash equivalents $ 1,163 $ 6,543 $ (2,932 ) $ 9,495 Cash and cash equivalents at beginning of period $ 22,557 � $ 20,109 � $ 26,652 � $ 17,157 � Cash and cash equivalents at end of period $ 23,720 � $ 26,652 � $ 23,720 � $ 26,652 �

Non-GAAP Financial Measures

As a supplement to United States Generally Accepted Accounting Principles (�GAAP�), the Company provides non-GAAP financial measures such as free cash flow, cash provided by operating activities excluding restructuring payments (see below for reference), operating net income, operating earnings per share, Earnings Before Interest, Taxes, Depreciation and Amortization (�EBITDA�), Adjusted EBITDA, adjusted operating income and same-office revenue comparisons to illustrate the Company's operational performance. These non-GAAP financial measures exclude the impact of certain items and, therefore, have not been calculated in accordance with GAAP. Pursuant to the requirements of Regulation G, the Company has provided Management explanations regarding their use and the usefulness of non-GAAP financial measures, definitions of the non-GAAP financial measures and reconciliations to the most directly comparable GAAP financial measures, which are provided below.

Management uses non-GAAP financial measures (a) to evaluate the Company's historical and prospective financial performance as well as its performance relative to its competitors, (b) to set internal sales targets and associated operating budgets, (c) to allocate resources, (d) to measure operational profitability and (e) as an important factor in determining variable compensation for Management and its team members. Moreover, the Company has historically reported these non-GAAP financial measures as a means of providing consistent and comparable information with past reports of financial results.

While Management believes these non-GAAP financial measures provide useful supplemental information to investors, there are limitations associated with the use of non-GAAP financial measures. The limitations include (i) the non-GAAP financial measures are not prepared in accordance with GAAP, are not reported by all of the Company's competitors and may not be directly comparable to similarly-titled measures of the Company's competitors due to potential differences in the exact method of calculation, (ii) the non-GAAP financial measures exclude costs for employee severance and facility consolidations (�employee severance and facility consolidations costs�) incurred during the periods reported in an attempt to right-size the organization and more appropriately align the expense structure with anticipated revenues and changing market demand for its solutions and services that will impact future operating results, (iii) the non-GAAP financial measures exclude certain costs, incurred during the periods reported as a result of past acquisitions, including restructuring, severance and other integration costs (collectively referred to as �acquisition integration costs�) that will impact future operating results, (iv) the non-GAAP financial measures exclude certain non-cash amortization of intangible assets on acquisitions, however, they do not specifically exclude the added benefits of these costs, such as revenue and contributing operating margin, (v) the non-GAAP financial measures exclude non-cash stock-based compensation charges, which are similar to cash compensation paid to employees and are an integral part of achieving our operating results, (vi) the non-GAAP financial measures exclude non-cash asset write-up depreciation expense on acquisitions related to acquisitions made during recent years which is derived from the book value to fair market value write-up on acquired assets, (vii) the non-GAAP financial measures exclude historical stock option granting practices investigation costs, including costs associated with the related SEC investigation, shareholder derivative lawsuit and tax matters, (viii) the non-GAAP financial measures exclude the non-cash change in fair value of the interest-rate swap which will continue to impact the Company�s earnings until the interest-rate swap is settled, (ix) the non-GAAP financial measures exclude expenses incurred as a result of measures taken by the Company to address the application of Section 409A of the Internal Revenue Code of 1986, as amended (hereinafter referred to as �409A expenses�) and (x) there is no assurance the excluded items in the non-GAAP financial measures will not occur in the future. The Company compensates for these limitations by using these non-GAAP financial measures as supplements to GAAP financial measures and by reviewing the reconciliations of the non-GAAP financial measures to their most comparable GAAP financial measures.

Non-GAAP financial measures are not in accordance with, or an alternative for, GAAP. The Company's non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP financial measurements, and should be read only in conjunction with the Company's consolidated financial statements prepared in accordance with GAAP.

Free cash flow

Free cash flow is defined by the Company as cash provided by operating activities less net capital expenditures, plus proceeds from stock option exercises, plus or minus foreign currency translation adjustments. Management�s reasons for exclusion of each item are explained in further detail below.

Net capital expenditures

The Company believes net capital expenditures must be taken into account along with cash provided by operating activities to more properly reflect the actual cash available to the Company. Net capital expenditures are typically material and directly impact the availability of the Company�s operating cash. Net capital expenditures are comprised of capital expenditures and capital disposals.

Proceeds from stock option exercises

The Company believes that proceeds from stock option exercises should be added to cash provided by operating activities to more accurately reflect the actual cash available to the Company. The Company has demonstrated a recurring inflow of cash related to its stock-based compensation plans and, since this cash is immediately available to the Company, it directly impacts the availability of the Company�s operating cash. The amount of proceeds from stock option exercises is dependent upon a number of variables, including the number and exercise price of outstanding options and the trading price of the Company's common stock. In addition, the timing of stock option exercises is under the control of the individual option holder and is not in the control of the Company. As a result, there can be no assurance as to the timing or amount of any proceeds from stock option exercises.

Foreign currency translation adjustment

Due to the size of the Company�s international operations, and the ability of the Company to utilize cash generated from foreign operations locally without the need to convert such currencies to U.S. dollars on a regular basis, the Company believes that it is appropriate to adjust its operating cash flows to take into account the positive and/or negative impact of such charges as such adjustment provides an appropriate measure of the availability of the Company�s operating cash on a world-wide basis. A limitation of adjusting cash flows to account for the foreign currency impact is that it may not provide an accurate measure of cash available in U.S. dollars.

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

� � � 4Q09 � � 3Q09 � � 4Q08 � � FY09 � � FY08 Cash provided by operating activities � $ 19,803 � $ 13,378 � $ 44,385 � $ 71,566 � $ 81,121 Capital expenditures (325 ) (329 ) (829 ) (2,178 ) (3,241 ) Capital disposals 120 64 19 288 105 Foreign currency exchange impact on cash � (388 ) � � (1,999 ) � � (1,679 ) � (2,314 ) � � (3,185 ) Free cash flow before stock option exercises $ 19,210 $ 11,114 $ 41,896 $ 67,362 $ 74,800 Proceeds from stock option exercises � -- � � � -- � � � 706 � � 545 � � � 5,878 � Free cash flow � $ 19,210 � � $ 11,114 � � $ 42,602 � � $ 67,907 � � $ 80,678 �

Cash provided by operating activities excluding restructuring payments

Cash provided by operating activities excluding restructuring payments is defined by the Company as cash provided by operating activities plus restructuring payments. Restructuring payments are the cash payments made during the period for employee severance costs and/or acquisition integration costs. The Company believes that restructuring payments should be added to cash provided by operating activities to more accurately reflect the cash flow from operations.

A reconciliation of cash provided by operating activities to cash provided by operating activities excluding restructuring payments is presented below:

� � � 4Q09 � � 3Q09 � � 4Q08 � � FY09 � � FY08 Cash provided by operating activities � $ 19,803 � $ 13,378 � $ 44,385 � $ 71,566 � $ 81,121 Restructuring payments � 4,339 � � 2,314 � � 2,758 � 11,941 � � 13,273 Cash provided by operating activities excluding restructuring payments � $ 24,142 � $ 15,692 � $ 47,143 � $ 83,507 � $ 94,394

Operating net income and operating earnings per share (�EPS�)

Management believes that operating net income, defined by the Company as net income plus reconciling items, and operating EPS, defined as operating net income divided by weighted average common shares outstanding (diluted), provide investors additional important information to enable them to assess, in a way Management assesses, the Company�s current and future operations. Reconciling items include employee severance and facility consolidation costs, acquisition integration costs, amortization of intangible assets on acquisitions, stock-based compensation expense, asset write-up depreciation expense on acquisitions, historical stock option granting practices investigation and related matters costs, the change in fair value of the interest-rate swap and 409A expenses. Management�s reason for exclusion of each item is explained in further detail below.

Employee severance and facility consolidation costs

The Company believes that incurring costs in the current period(s) in an attempt to right-size the organization and more appropriately align the expense structure with anticipated revenues and changing market demand for its solutions and services will result in a long-term positive impact on financial performance in the future. Employee severance and facility consolidation costs are presented in accordance with GAAP in the Company�s Condensed Consolidated Statements of Income. However, due to the material amount of additional costs incurred during a single or possibly successive periods, Management believes that exclusion of these costs and their related tax impact provides a more accurate reflection of the Company�s ongoing financial performance.

Acquisition integration costs

The Company believes that incurring costs in the current period(s) as part of a restructuring plan or as a result of economies of scale from acquisitions will result in a long-term positive impact on financial performance in the future. Acquisition integration costs are presented in accordance with GAAP in the Company�s Condensed Consolidated Statements of Income. However, due to the material amount of additional costs incurred during a single or possibly successive periods, Management believes that exclusion of these costs and their related tax impact provides a more accurate reflection of the Company�s ongoing financial performance.

Amortization of intangible assets on acquisitions

The Company incurs non-cash amortization expense from intangible assets related to various acquisitions it has made in recent years. Management excludes these expenses and their related tax impact for the purpose of calculating non-GAAP financial measures when it evaluates the continuing operational performance of the Company because these costs are fixed at the time of an acquisition, are then amortized over a period of several years after the acquisition and generally cannot be changed or influenced by Management after the acquisition.

Stock-based compensation expense

The Company records non-cash stock-based compensation expense equal to the fair value of share-based payment awards to its directors, executives and employees. Non-cash stock-based compensation is an integral part of ongoing operations since it is considered similar to other types of compensation to employees. However, Management believes that varying levels of stock-based compensation expense could result in misleading period-over-period comparisons and is providing an adjusted disclosure which excludes stock-based compensation and its related tax impact.

Asset write-up depreciation expense on acquisitions

The Company incurs non-cash asset write-up depreciation expense on acquisitions related to acquisitions made during recent years. Specifically, this non-cash expenditure is derived from the book value to fair market value write-up on acquired assets. Asset write-ups are depreciated over their remaining useful life which generally falls between one to five years. Management excludes these expenses and their related tax impact for the purpose of calculating non-GAAP financial measures when it evaluates the continuing operational performance of the Company because these costs are fixed from acquisition to the end of the asset�s useful life, and generally cannot be changed or influenced by Management after the acquisition.

Historical stock option granting practices investigation and related matters costs

The Company incurs costs in connection with its investigation of historical stock option granting practices, including the related SEC investigation, shareholder derivative lawsuit and tax matters. Management excludes these expenses and their related tax impact for the purpose of calculating non-GAAP financial measures when it evaluates the continuing operational performance of the Company because these costs are generally non-recurring and cannot be changed or influenced by Management.

Change in fair value of the interest-rate swap

To mitigate the risk of interest-rate fluctuations associated with the Company�s variable rate debt, the Company entered into a five-year interest-rate swap (�interest-rate swap�) that does not qualify as a cash flow hedge. Thus, the Company records the change in fair value of the interest-rate swap as an asset/liability within the Company�s Condensed Consolidated Balance Sheets with the offset to Interest expense (income) within the Company�s Condensed Consolidated Statements of Income. Management excludes this non-cash expense and the related tax impact for the purpose of calculating non-GAAP financial measures when it evaluates the continuing operational performance of the Company because these costs generally cannot be changed or influenced by Management.

409A expenses

The Company incurred significant costs as a result of measures taken to address the application of Section 409A of the Internal Revenue Code of 1986, as amended, related to its stock options. Management excludes these expenses and their related tax impact for the purpose of calculating non-GAAP financial measures when it evaluates the continuing operational performance of the Company because these costs are generally non-recurring and cannot be changed or influenced by Management.

The following table represents the Company�s pre-tax reconciling items:

� � � 4Q09 � � 3Q09 � � 4Q08 � � FY09 � �

FY08

Non-cash charges � � � � � Amortization of intangible assets on acquisitions $ 3,785 $ 3,231 $ 1,599 $ 10,671 $ 6,501 Stock-based compensation expense 805 855 498 3,042 3,217 Asset write-up depreciation expense on acquisitions 507 485 614 1,888 2,178 Change in fair value of interest-rate swap � (533 ) � � 2,436 � � 2,555 � (974 ) � � 4,576 Total Non-cash charges $ 4,564 $ 7,007 $ 5,266 $ 14,627 $ 16,472 � Cash charges Employee severance and facility consolidations costs $ 6,946 $ 1,697 $ -- $ 8,643 $ -- Acquisition integration costs -- -- 2,255 -- 8,671 Historical stock option granting practices investigation and related matters costs 939 88 69 1,359 1,221 409A expenses � -- � � � -- � � 183 � -- � � � 1,524 Total Cash charges $ 7,885 � � $ 1,785 � $ 2,507 $ 10,002 � � $ 11,416 � Total pre-tax reconciling items � $ 12,449 � � $ 8,792 � $ 7,773 � $ 24,629 � � $ 27,888

A reconciliation of net income to operating net income is presented below:

� � � 4Q09 � � 3Q09 � � 4Q08 � � FY09 � �

FY08

Net income � $ 8,350 � $ 9,827 � $ 8,394 � $ 45,309 � $ 39,233 % of Revenue 3.5 % 3.8 % 3.4 % 4.5 % 3.9 % Reconciling items, after tax � 8,400 � � � 5,583 � � � 4,662 � � 16,135 � � � 17,222 � Operating net income $ 16,750 $ 15,410 $ 13,056 $ 61,444 $ 56,455 % of Revenue � � 6.9 % � � 5.9 % � � 5.3 % � � 6.1 % � � 5.6 %

A reconciliation of diluted EPS to operating EPS is presented below:

� � � 4Q09 � � 3Q09 � � 4Q08 � � FY09 � �

FY08

Diluted EPS � $ 0.48 � $ 0.56 � $ 0.48 � $ 2.59 � $ 2.22 EPS impact of reconciling items � 0.48 � � 0.32 � � 0.26 � 0.92

�

� 0.98 Operating EPS � $ 0.96 � $ 0.88 � $ 0.74 � $ 3.51 � $ 3.20

EBITDA and Adjusted EBITDA

Management believes that EBITDA, defined as income before provision for income taxes plus interest, depreciation and amortization, is a widely accepted measure of profitability that may be used to measure the Company�s ability to service its debt. Adjusted EBITDA, defined as EBITDA plus stock-based compensation expense, may also be used to measure the Company�s ability to service its debt.

A reconciliation of net income to EBITDA is presented below:

� � � 4Q09 � � 3Q09 � � 4Q08 � � FY09 � �

FY08

Income before provision for income taxes � $ 10,963 � $ 15,474 � $ 14,031 � $ 69,163 � $ 63,531 Interest 2,174 5,722 6,095 10,279 21,298 Depreciation/Amortization � 6,289 � � 5,834 � � 4,273 � 20,722 � � 17,737 EBITDA $ 19,426 $ 27,030 $ 24,399 $ 100,164 $ 102,566 Stock-based compensation expense � 805 � � 855 � � 498 � 3,042 � � 3,217 Adjusted EBITDA � $ 20,231 � $ 27,885 � $ 24,897 � $ 103,206 � $ 105,783

Supplemental Information

The following supplemental information, including geographical segment results, service type results, same-office revenue comparisons and significant balance sheet ratios and other information is being provided for comparisons of reported results for the fourth quarter of Fiscal 2009 and 2008, third quarter of Fiscal 2009 and/or Fiscal 2009 and 2008. All dollar amounts are in thousands unless noted otherwise.

Geographical Segment Results

Management is presented with and reviews revenues, operating income and adjusted operating income by geographical segment. Adjusted operating income is defined by the Company as operating income plus reconciling items. Reconciling items include employee severance and facility consolidation costs, acquisition integration costs, amortization of intangible assets on acquisitions, stock-based compensation expense, asset write-up depreciation expense on acquisitions, historical stock option granting practices investigation and related matters costs and 409A expenses. See above for additional details provided by Management regarding non-GAAP financial measures. Revenues, operating income and adjusted operating income for North America, Europe and All Other are presented below:

� � � 4Q09 � � 3Q09 � � 4Q08 � � FY09 � �

FY08

Revenues � � � � � North America $ 207,248 $ 223,820 $ 199,763 $ 838,871 $ 837,402 Europe 25,727 28,591 35,119 121,839 138,927 All Other � 8,357 � � � 9,442 � � � 10,615 � � 38,838 � � � 40,413 � Total $ 241,332 $ 261,853 $ 245,497 $ 999,548 $ 1,016,742 � Operating income North America $ 9,737 $ 17,267 $ 12,998 $ 61,651 $ 57,964 % of North America revenues 4.7 % 7.7 % 6.5 % 7.3 % 6.9 % Europe $ 2,397 $ 2,882 $ 5,072 $ 12,548 $ 19,278 % of Europe revenues 9.3 % 10.1 % 14.4 % 10.3 % 13.9 % All Other $ 1,021 $ 1,423 $ 2,015 $ 5,804 $ 7,390 % of All Other revenues � 12.2 % � � 15.1 % � � 19.0 % � 14.9 % � � 18.3 % Total $ 13,155 $ 21,572 $ 20,085 $ 80,003 $ 84,632 % of Total revenues 5.5 % 8.2 % 8.2 % 8.0 % 8.3 % � Reconciling items (pretax) North America $ 11,657 $ 5,878 $ 5,218 $ 23,800 $ 23,312 Europe 1,112 465 -- 1,577 -- All Other � 213 � � � 13 � � � -- � � 226 � � � -- � Total $ 12,982 $ 6,356 $ 5,218 $ 25,603 $ 23,312 � Adjusted Operating income

�

North America $ 21,394 $ 23,145 $ 18,216 $ 85,451 $ 81,276 % of North America revenues 10.3 % 10.3 % 9.1 % 10.2 % 9.7 % Europe $ 3,509 $ 3,347 $ 5,072 $ 14,125 $ 19,278 % of Europe revenues 13.6 % 11.7 % 14.4 % 11.6 % 13.9 % All Other $ 1,234 $ 1,436 $ 2,015 $ 6,030 $ 7,390 % of All Other revenues � 14.8 % � � 15.2 % � � 19.0 % � 15.5 % � � 18.3 % Total $ 26,137 $ 27,928 $ 25,303 $ 105,606 $ 107,944 % of Total revenues � � 10.8 % � � 10.7 % � � 10.3 % � � 10.6 % � � 10.6 %

Service Type Results

Management is presented with and reviews revenues and gross profit for Data Services, Voice Services and Hotline Services which are presented below:

� � � 4Q09 � � 3Q09 � � 4Q08 � � FY09 � �

FY08

Revenues � � � � � Data Services $ 49,600 $ 52,238 $ 47,615 $ 191,436 $ 194,454 Voice Services 145,947 158,065 137,595 598,319 586,974 Hotline Services � 45,785 � � � 51,550 � � � 60,287 � � 209,793 � � � 235,314 � Total $ 241,332 $ 261,853 $ 245,497 $ 999,548 $ 1,016,742 � Gross profit Data Services $ 13,994 $ 15,247 $ 13,285 $ 55,407 $ 57,747 % of Data Services revenues 28.2 % 29.2 % 27.9 % 28.9 % 29.7 % Voice Services $ 49,566 $ 51,501 $ 45,709 $ 200,541 $ 195,570 % of Voice Services revenues 34.0 % 32.6 % 33.2 % 33.5 % 33.3 % Hotline Services $ 21,503 $ 24,170 $ 29,986 $ 101,232 $ 113,303 % of Hotline Services revenues � 47.0 % � � 46.9 % � � 49.7 % � 48.3 % � � 48.1 % Total $ 85,063 $ 90,918 $ 88,980 $ 357,180 $ 366,620 % of Total revenues � � 35.2 % � � 34.7 % � � 36.2 % � � 35.7 % � � 36.1 %

Same-office revenue comparisons

Management is presented with and reviews revenues on a same-office basis which excludes the effects of revenues from acquisitions. While the information provided below is presented on a consolidated basis, the revenue from offices added below relates to the North American Data Services and North American Voice Services. Reported same-office comparisons for the Company�s North America, Data Services and Voice Services segments can be determined by excluding the revenues from offices added since 4/1/07 or 9/28/08 as shown below.

Information on quarterly revenues on a same-office basis compared to the same period last year is presented below:

� � 4Q09 � 4Q08 � % Change Reported revenues � $ 241,332 � $ 245,497 � (2 %) Less revenue from Data Services offices added since 4/1/07 (1Q08) (14,977 ) -- Less revenue from Voice Services offices added since 4/1/07 (1Q08) � (17,123 ) � (176 ) Reported revenues on same-office basis 209,232 245,321 (15 %) Foreign currency impact � 7,342 � � -- � Revenues on same-office basis (excluding foreign currency impact) � $ 216,574 � � $ 245,321 � � (12 %)

Information on year-to-date revenues on a same-office basis compared to the same period last year is presented below:

� � FY09 � FY08 � % Change Reported revenues � $ 999,548 � $ 1,016,742 � (2 %) Less revenue from Data Services offices added since 4/1/07 (1Q08) (27,603 ) -- Less revenue from Voice Services offices added since 4/1/07 (1Q08) � (66,103 ) � (7,176 ) Reported revenues on same-office basis 905,842 1,009,566 (10 %) Foreign currency impact � 6,526 � � -- � Revenues on same-office basis (excluding foreign currency impact) � $ 912,368 � � $ 1,009,566 � � (10 %)

Information on revenues on a same-office basis compared to the sequential quarter is presented below:

� � 4Q09 � 3Q09 � % Change Reported revenues � $ 241,332 � $ 261,853 � (8 %) Less revenue from Data Services offices added since 9/28/08 (3Q09) (14,977 ) (12,626 ) Less revenue from Voice Services offices added since 9/28/08 (3Q09) � -- � � -- � Reported revenues on same-office basis 226,355 249,227 (9 %) Foreign currency impact � 1,244 � � -- � Revenues on same-office basis (excluding foreign currency impact) � $ 227,599 � � $ 249,227 � � (9 %)

Significant Balance Sheet ratios and Other Information

Information on certain balance sheet ratios, backlog and headcount is presented below. Dollar amounts are in millions.

� � 4Q09 � 3Q09 � 4Q08 Accounts receivable � � � � � � Gross accounts receivable $ 173.9 $ 172.4 $ 174.9 Reserve $ / % $ 9.9 5.7 % $ 11.0 6.4 % $ 12.6 7.2 % Net accounts receivable $ 164.0 $ 161.4 $ 162.3 � Net days sales outstanding 53 days 54 days 55 days � Inventory Gross inventory $ 76.2 $ 82.5 $ 87.9 Reserve $ / % $ 20.3 26.6 % $ 20.7 25.1 % $ 20.4 23.2 % Net inventory $ 55.9 $ 61.8 $ 67.5 � Net inventory turns 8.5x 8.6x 7.1x � Six-month order backlog $ 194 $ 195 $ 159 � Team members � � 4,542 � � � � 4,745 � � � � 4,313 � �