Black Box Corporation (NASDAQ:BBOX), a leading communications
system integrator dedicated to designing, sourcing, implementing
and maintaining today's complex communications solutions, today
reported results for the fourth quarter of Fiscal 2012 and the
fiscal year ended March 31, 2012.
Fourth quarter of Fiscal 2012 diluted earnings per share was 64¢
on net income of $11.2 million or 4.4% of revenues compared to
diluted earnings per share of 68¢ on net income of $12.3 million or
4.8% of revenues for the same quarter last year. Included in our
results for the fourth quarter of Fiscal 2012 is a $2.1 million
reduction in our provision (benefit) for income taxes primarily
related to the settlement of a state tax audit for Fiscal 2005
through Fiscal 2011 that increased fourth quarter of Fiscal 2012
diluted earnings per share by 12¢. On a sequential quarter
comparison basis, third quarter of Fiscal 2012 diluted loss per
share was $16.12 on net loss of $283.4 million or (102.7)% of
revenues. Excluding provision (benefit) for income taxes and
reconciling items (which are identified below) and utilizing an
operational effective tax rate (as described below), operating
earnings per share (which is a non-GAAP term and is defined below)
for the fourth quarter of Fiscal 2012 were 65¢ on operating net
income (which is a non-GAAP term and is defined below) of $11.4
million or 4.4% of revenues compared to operating earnings per
share of 75¢ on operating net income of $13.5 million or 5.3% of
revenues for the same quarter last year. Fourth quarter of Fiscal
2012 pre-tax reconciling items were $3.8 million compared to $2.0
million for the same quarter last year. 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.
Fourth quarter of Fiscal 2012 total revenues were $256 million,
relatively equivalent to $255 million for the same quarter last
year. On a sequential quarter comparison basis, third quarter of
Fiscal 2012 total revenues were $276 million.
Fourth quarter of Fiscal 2012 cash provided by operating
activities was $22 million or 195% of net income, compared to cash
provided by operating activities of $19 million or 153% of net
income for the same quarter last year. Fourth quarter of Fiscal
2012 free cash flow (which is a non-GAAP term and is defined below)
was $20 million compared to $22 million for the same quarter last
year. On a sequential quarter comparison basis, third quarter of
Fiscal 2012 cash provided by operating activities was $31 million
or (11)% of net loss and free cash flow was $27 million. During the
fourth quarter of Fiscal 2012, Black Box invested $26 million in
acquisition activity and $1 million to pay dividends.
Fiscal 2012 diluted loss per share was $13.98 on a net loss of
$247.7 million or (22.8)% of revenues compared to diluted earnings
per share of $2.97 on net income of $52.9 million or 4.9% of
revenues for the same period last year. Included in our results for
Fiscal 2012 is a $3.7 million reduction in our provision (benefit)
for income taxes of which $1.6 million (recorded during the second
quarter) primarily related to the settlement of an Internal Revenue
Service audit for Fiscal 2007 through Fiscal 2010 and $2.1 million
(recorded during the fourth quarter) primarily related to the
settlement of a state tax audit for Fiscal 2005 through Fiscal 2011
that increased Fiscal 2012 diluted earnings per share by 21¢. As
previously disclosed, the Company recorded a goodwill impairment
charge in the third quarter of Fiscal 2012 ($317.8 million, pre-tax
and $296.0 million, after-tax). Excluding provision (benefit) for
income taxes and reconciling items and utilizing an operational
effective tax rate, operating earnings per share for Fiscal 2012
were $3.03 on operating net income of $54.0 million or 5.0% of
revenues compared to operating earnings per share of $3.29 on
operating net income of $58.5 million or 5.5% of revenues for the
same period last year. Fiscal 2012 pre-tax reconciling items
including the goodwill impairment charge were $330.2 million
compared to $9.1 million for the same period last year.
Fiscal 2012 total revenues were $1,088 million, an increase of
2% from $1,068 million for the same period last year.
Fiscal 2012 cash provided by operating activities was $66
million or (27)% of net loss, compared to $55 million or 104% of
net income for the same period last year. Fiscal 2012 free cash
flow was $56 million compared to $61 million for the same period
last year. During Fiscal 2012, Black Box invested $41 million in
acquisition activity, $15 million to repurchase its common stock
and $5 million to pay dividends.
The Company's six-month order backlog was $199 million at
March 31, 2012, compared to $223 million for the same quarter
last year. On a sequential quarter-end comparison basis, the
Company's six-month order backlog was $208 million at
December 31, 2011.
For Fiscal 2013, the Company is targeting reported revenues of
approximately $1.05 billion to $1.09 billion and corresponding
operating earnings per share in the range of $2.70 to $3.10.
Included in these projections is an effective tax rate of 38.0%.
For the first quarter of Fiscal 2013, the Company is targeting
reported revenues of approximately $250 million to $260 million and
corresponding operating earnings per share in the range of 58¢ to
65¢. These targets exclude acquisition-related expense and the
impact of changes in the fair market value of the Company's
interest-rate swaps, and are before any new mergers and acquisition
activity that has not been announced.
Commenting on the fourth quarter of Fiscal 2012 results and the
first quarter of Fiscal 2013 outlook, Terry Blakemore, President
and Chief Executive Officer said, "As discussed last quarter, Black
Box has experienced softening demand in our commercial markets
along with the decreased spending from our federal clients.
Throughout the fourth quarter, we continued to see delays in
project awards which has resulted in unsatisfactory financial
performance for the quarter."
"In the near term, we are committed to adjust our cost structure
to align with our revenue outlook. In addition, we will continue to
provide new technology offerings to our clients that leverage the
strength of our existing platform."
"Our profitability and consistent positive cash flow continue to
provide us with the flexibility to pursue growth initiatives and
return value to our stockholders. With confidence in the future of
the business, we announced today that our Board has increased our
quarterly dividend by 14% to 8¢ per share and increased our stock
buyback authorization by one million shares."
The Company will conduct a conference call beginning at 5:00
p.m. Eastern Daylight Time today, May 10, 2012. Terry
Blakemore, President and Chief Executive Officer, will host the
call. To participate in the call, please dial 612-288-0337
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
245853. A live, listen-only audio webcast of the call will be
available through a link on the Investor Relations page of the
Company's Web site at http://www.blackbox.com. A webcast replay of the
call will also be archived on Black Box's Web site for a limited
period of time following the conference call.
Black Box is a leading communications system integrator
dedicated to designing, sourcing, implementing and maintaining
today's complex communications solutions. Black Box services more
than 175,000 clients in approximately 150 countries with
approximately 200 offices throughout the world. To learn more,
visit the Black Box Web site at http://www.blackbox.com.
Black Box® and the Double Diamond logo 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 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 the Company's
product and services offerings, successful implementation of the
Company's 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, government budgetary constraints 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, 2011 and the
Company's Quarterly Report on Form 10-Q for the period ended July
2, 2011. 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 CORPORATION CONDENSED
CONSOLIDATED BALANCE SHEETS In thousands, except par
value March 31, 2012 March 31, 2011
Assets Cash and cash equivalents $ 22,444 $ 31,212 Accounts
receivable, net 163,888 156,682 Inventories, net 56,956 52,014
Costs/estimated earnings in excess of billings on uncompleted
contracts 87,634 103,853 Other assets 22,678 27,483
Total current assets 353,600 371,244
Property, plant and equipment, net 27,109 23,427 Goodwill, net
346,438 650,024 Intangibles, net 126,541 120,133 Other assets
34,335 7,155
Total assets $
888,023 $ 1,171,983
Liabilities Accounts payable $ 71,095 $ 71,463 Accrued
compensation and benefits 31,151 35,329 Deferred revenue 35,601
36,043 Billings in excess of costs/estimated earnings on
uncompleted contracts 14,315 17,462 Income taxes 2,574 11,957 Other
liabilities 32,697 34,395
Total current
liabilities 187,433 206,649 Long-term debt
179,621 181,127 Other liabilities 26,585 17,948
Total liabilities $ 393,639 $
405,724 Stockholders' equity Common stock $ 26 $ 26
Additional paid-in capital 478,726 470,367 Retained earnings
347,242 599,923 Accumulated other comprehensive income 7,262 19,523
Treasury stock, at cost (338,872 ) (323,580 )
Total
stockholders' equity $ 494,384
$ 766,259 Total liabilities and
stockholders' equity $ 888,023
$ 1,171,983 BLACK BOX
CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS Three (3) months ended Fiscal Year
ended March 31 March 31 In thousands,
except per share amounts 2012 2011
2012 2011 Revenues
Products $ 49,213 $ 46,989 $ 198,640 $ 188,998 On-Site services
206,779 208,041 888,888
879,231 Total 255,992 255,030 1,087,528 1,068,229
Cost of
sales Products 27,440 24,910 110,455 101,733 On-Site services
145,816 143,396 630,577
609,386 Total 173,256 168,306 741,032 711,119
Gross profit
82,736 86,724 346,496 357,110 Selling,
general & administrative expenses 62,803 62,446 255,347 253,896
Goodwill impairment loss — — 317,797 — Intangibles amortization
3,541 3,095 13,025 12,156
Operating income (loss) 16,392 21,183
(239,673 ) 91,058 Interest expense (income),
net 1,458 970 5,148 5,430 Other expenses (income), net 369
424 1,245 348 Income (loss)
before provision (benefit) for income taxes 14,565 19,789 (246,066
) 85,280 Provision (benefit) for income taxes 3,323
7,531 1,668 32,418
Net income
(loss) $ 11,242 $
12,258 $ (247,734 )
$ 52,862 Earnings (loss) per common share
Basic $ 0.64 $
0.69 $ (13.98 )
$ 2.99 Diluted $ 0.64
$ 0.68 $ (13.98
) $ 2.97 Weighted-average common shares
outstanding Basic 17,480 17,855 17,725
17,680 Diluted 17,591 18,124
17,725 17,795 Dividends per share $
0.07 $ 0.06 $ 0.28 $ 0.24
BLACK BOX CORPORATION CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS Three (3)
months ended Fiscal Year ended March 31
March 31 In thousands 2012
2011 2012 2011 Operating
Activities Net income (loss) $ 11,242 $ 12,258 $
(247,734 ) $ 52,862 Adjustments to reconcile net income (loss) to
net cash provided by (used for) operating activities Intangibles
amortization and depreciation 4,878 4,550 18,459 18,222 Loss (gain)
on sale of property (87 ) (4 ) (253 ) (71 ) Deferred taxes (731 )
2,152 (23,328 ) 8,726 Stock compensation expense 1,791 2,271 9,296
10,270 Change in fair value of interest-rate swaps 271 (1,048 )
(530 ) (2,968 ) Goodwill impairment loss — — 317,797 — Changes in
operating assets and liabilities (net of acquisitions) Accounts
receivable, net 11,308 (1,232 ) 135 (10,393 ) Inventories, net
6,308 2,779 (3,540 ) 459 Costs/estimated earnings in excess of
billings on uncompleted contracts 17,598 7,475 19,133 (17,537 ) All
other assets (296 ) (766 ) 2,108 (1,738 ) Billings in excess of
costs/estimated earnings on uncompleted contracts (5,854 ) (2,577 )
(6,603 ) 2,146 All other liabilities (24,481 ) (7,065 )
(19,119 ) (5,113 )
Net cash provided by (used for)
operating activities $ 21,947 $
18,793 $ 65,821 $ 54,865
Investing Activities Capital expenditures $ (2,660 ) $
(2,243 ) $ (7,633 ) $ (5,149 ) Capital disposals 93 21 280 119
Acquisition of businesses (payments)/recoveries (25,816 ) — (39,770
) (12,811 ) Prior merger-related (payments)/recoveries (121 )
— (1,295 ) (1,829 )
Net cash
provided by (used for) investing activities $
(28,504 ) $ (2,222 ) $
(48,418 ) $ (19,670 )
Financing Activities Proceeds from borrowings $ 70,370 $
64,135 $ 253,613 $ 238,950 Repayment of borrowings (64,615 )
(81,598 ) (255,524 ) (269,234 ) Deferred financing costs (1,743 ) —
(1,743 ) (700 ) Purchase of treasury stock — (2 ) (15,292 ) (485 )
Proceeds from the exercise of stock options — 4,527 — 9,239 Payment
of dividends (1,224 ) (1,066 ) (4,798 ) (4,232
)
Net cash provided by (used for) financing activities
$ 2,788 $ (14,004 ) $
(23,744 ) $ (26,462 ) Foreign
currency exchange impact on cash $ 754
$ 685 $ (2,427
) $ 1,594 Increase/(decrease)
in cash and cash equivalents $ (3,015 )
$ 3,252 $ (8,768 ) $
10,327 Cash and cash equivalents at beginning of period
25,459 27,960 31,212
20,885 Cash and cash equivalents at end of period $ 22,444
$ 31,212 $ 22,444 $
31,212
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, operating income before provision
for income taxes ("EBIT"), operating net income, operating earnings
per share (“EPS”), Earnings Before Interest, Taxes, Depreciation
and Amortization (“EBITDA”) (as adjusted), Adjusted EBITDA (as
adjusted), 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 explanations of the Company's management ("Management")
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 these 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 and (d) to measure operational
profitability. Management uses similar non-GAAP measures 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 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, (iii) the non-GAAP
financial measures exclude the non-cash change in fair value of the
Company's interest-rate swaps which will continue to impact the
Company's earnings until the interest-rate swaps are settled, (iv)
the non-GAAP financial measures exclude non-cash goodwill
impairment and (v) 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
Management believes that free cash flow, defined by the Company
as cash provided by (used for) 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. 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 (used for) operating activities
to more properly reflect the actual cash available to the Company.
Net capital expenditures directly impact the availability of the
Company's operating cash. Net capital expenditures are comprised of
capital expenditures and capital disposals.
Foreign currency exchange impact on
cash
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 or negative impact of such adjustments 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.
Proceeds from stock option
exercises
The Company believes that proceeds from stock option exercises
should be added to cash provided by (used for) 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.
A reconciliation of cash provided by (used for) operating
activities to free cash flow is presented below:
4Q12 3Q12 4Q11
FY12 FY11 Cash provided by (used
for) operating activities $ 21,947
$ 30,618 $ 18,793
$ 65,821 $ 54,865 Net capital
expenditures (2,567 ) (896 ) (2,222 ) (7,353 ) (5,030 ) Foreign
currency exchange impact on cash 754 (3,037 )
685 (2,427 ) 1,594
Free cash flow
before stock option exercises $ 20,134 $
26,685 $ 17,256 $ 56,041
$ 51,429 Proceeds from stock option exercises —
— 4,527 —
9,239
Free cash flow $ 20,134
$ 26,685 $
21,783 $ 56,041
$ 60,668
Operating net income and operating earnings per share
Management believes that operating net income, defined by the
Company as net income (loss) plus provision (benefit) for income
taxes and reconciling items less taxes, 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. Beginning with this
earnings release, operating net income and operating EPS exclude
provision (benefit) for income taxes and the reconciling items
identified below and utilize an operational effective tax rate (as
described below), as Management believes that it provides a better
operational view of the Company. Reconciling items include
amortization of intangible assets on acquisitions, the change in
fair value of the interest-rate swaps and goodwill impairment, each
of which are non-cash charges. Management's reason for exclusion of
each item is explained in further detail below.
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.
Change in fair value of the interest-rate
swaps
To mitigate the risk of interest-rate fluctuations associated
with the Company's variable rate debt, the Company enters into
interest-rate swaps (“interest-rate swaps”) that do not qualify as
a cash flow hedge. Thus, the Company records the change in fair
value of the interest-rate swaps 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.
Goodwill impairment
The Company incurred a loss due to goodwill impairment in its
North America and Europe reporting segments. 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.
A reconciliation of net income (loss) to operating net income is
presented below:
4Q12 3Q12 4Q11
FY12 FY11 Net income (loss)
$ 11,242 $ (283,443
) $ 12,258 $
(247,734 ) $ 52,862 Provision
(benefit) for income taxes 3,323 (14,101 )
7,531 1,668 32,418
Income
(loss) before provision (benefit) for income taxes $
14,565 $ (297,544 ) $
19,789 $ (246,066 ) $
85,280 Reconciling Items Amortization of
intangible assets on acquisitions $ 3,530 $ 3,238 $ 3,083 $ 12,980
$ 12,111 Change in fair value of the interest-rate swaps 271 715
(1,048 ) (530 ) (2,968 ) Goodwill impairment —
317,797 — 317,797 —
Total pre-tax reconciling items $ 3,801
$ 321,750 $ 2,035 $
330,247 $ 9,143 Operating EBIT
$ 18,366 $ 24,206 $
21,824 $ 84,181 $ 94,423
Effective tax rate 38.0 % 38.0 % 38.1 % 35.9 % 38.0 %
Operational income taxes1
$ 6,979 $ 9,198 $ 8,306 $
30,207 $ 35,894
Operating net income
$ 11,387 $ 15,008 $
13,518 $ 53,974 $ 58,529
Diluted shares outstanding2
17,591 17,581 18,124 17,795
17,795
Operating EPS
$ 0.65 $ 0.85 $ 0.75
$ 3.03 $ 3.29
EPS impact3
(0.01
)
(16.97
)
(0.07
)
(17.01
)
(0.32
)
Diluted EPS
$
0.64
$
(16.12
)
$
0.68
$
(13.98
)
$
2.97
1 From 1Q11 through 2Q12, the effective tax rate utilized
to determine Operational income taxes was the effective tax rate
utilized to determine Net income. In 3Q12, the effective tax rate
of 38% utilized to determine Operational income taxes was the
Company's operational effective tax rate which excluded the tax
impacts of the goodwill impairment loss. Beginning with 4Q12, the
effective tax rate utilized to determine Operational income taxes
will be the Company's operational effective tax rate that will
exclude discreet tax items. The FY12 effective tax rate of 35.9% is
the result of methodologies noted above.
2 Dilutive shares outstanding for 3Q12 and FY12 in the
above table differ from dilutive shares outstanding for similar
periods in the Company's Condensed Consolidated Statement of
Operations because dilutive securities do not impact shares
outstanding in the period of loss.
3 EPS impact is the result of excluding the provision
(benefit) for income taxes and the reconciling items and utilizing
an operational effective tax rate.
EBITDA and Adjusted EBITDA
Management believes that EBITDA (as adjusted), defined as Net
income (loss) plus provision (benefit) for income taxes, interest,
depreciation, amortization and goodwill impairment, is a
widely-accepted measure of profitability that may be used to
measure the Company's ability to service its debt. Adjusted EBITDA
(as adjusted), defined as EBITDA (as adjusted) plus stock-based
compensation expense, may also be used to measure the Company's
ability to service its debt. 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 compensation
expense.
A reconciliation of net income to EBITDA (as adjusted) and
Adjusted EBITDA (as adjusted) is presented below:
4Q12 3Q12 4Q11
FY12 FY11 Net income (loss)
$ 11,242 $ (283,443
) $ 12,258 $
(247,734 ) $ 52,862 Provision
(benefit) for income taxes 3,323 (14,101 ) 7,531 1,668 32,418
Interest expense (income), net 1,458 1,856 970 5,148 5,430
Intangibles amortization and depreciation 4,878 4,547 4,550 18,459
18,222 Goodwill impairment loss — 317,797
— 317,797 —
EBITDA (as
adjusted) $ 20,901 $ 26,656
$ 25,309 $ 95,338 $
108,932 Stock compensation expense 1,791 2,087
2,271 9,296 10,270
Adjusted EBITDA (as adjusted) $ 22,692
$ 28,743 $
27,580 $ 104,634
$ 119,202
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 2012, third quarter of Fiscal
2012, fourth quarter of Fiscal 2011 and Fiscal 2012 and 2011. All
dollar amounts are in thousands unless noted otherwise.
Geographical Segment Results
Management is presented with and reviews revenues, operating
income (loss) and adjusted operating income by geographical
segment. Adjusted operating income is defined by the Company as
operating income (loss) plus reconciling items. Reconciling items
include amortization of intangible assets on acquisitions and
goodwill impairment. See above for additional details provided by
Management regarding non-GAAP financial measures. Revenues,
operating income (loss) and adjusted operating income for North
America, Europe and All Other are presented below:
4Q12
3Q12 4Q11 FY12
FY11 Revenues North America $ 219,867 $ 239,056 $
220,702 $ 943,717 $ 931,181 Europe 25,476 27,179 25,035 105,492
100,221 All Other 10,649 9,704 9,293
38,319 36,827
Total
$ 255,992 $ 275,939 $
255,030 $ 1,087,528 $ 1,068,229
Operating income (loss) North America $ 12,744 $ (259,494 )
$ 18,189 $ (214,448 ) $ 76,789 % of North America revenues 5.8 %
(108.5 )% 8.2 % (22.7 )% 8.2 % Europe $ 1,834 $ (37,298 ) $ 1,692 $
(30,347 ) $ 8,032 % of Europe revenues 7.2 % (137.2 )% 6.8 % (28.8
)% 8.0 % All Other $ 1,814 $ 1,415 $ 1,302 $ 5,122 $ 6,237 % of All
Other revenues 17.0 % 14.6 % 14.0 % 13.4 %
16.9 %
Total $ 16,392 $
(295,377 ) $ 21,183 $
(239,673 ) $ 91,058 % of Total revenues
6.4 % (107.0 )% 8.3 % (22.0 )% 8.5 %
Reconciling items
(pre-tax) North America $ 3,530 $ 280,370 $ 3,083 $ 290,112 $
12,111 Europe — 40,665 — 40,665 — All Other — —
— — —
Total
$ 3,530 $ 321,035 $ 3,083
$ 330,777 $ 12,111 Adjusted
operating income North America $ 16,274 $ 20,876 $ 21,272 $
75,664 $ 88,900 % of North America revenues 7.4 % 8.7 % 9.6 % 8.0 %
9.5 % Europe $ 1,834 $ 3,367 $ 1,692 $ 10,318 $ 8,032 % of Europe
revenues 7.2 % 12.4 % 6.8 % 9.8 % 8.0 % All Other $ 1,814 $ 1,415 $
1,302 $ 5,122 $ 6,237 % of All Other revenues 17.0 % 14.6 %
14.0 % 13.4 % 16.9 %
Total $
19,922 $ 25,658 $ 24,266
$ 91,104 $ 103,169 % of Total revenues
7.8 % 9.3 % 9.5 % 8.4 % 9.7 %
Service Type Results
Management is presented with and reviews revenues and gross
profit for Data Infrastructure, Voice Communications and Technology
Products which are presented below:
4Q12
3Q12 4Q11 FY12
FY11 Revenues Data Infrastructure $ 60,159 $ 58,326 $
59,883 $ 247,157 $ 230,719 Voice Communications 146,620 166,234
148,158 641,731 648,512 Technology Products 49,213
51,379 46,989 198,640
188,998
Total $ 255,992 $
275,939 $ 255,030 $ 1,087,528
$ 1,068,229 Gross profit Data Infrastructure $
15,922 $ 14,550 $ 15,434 $ 62,032 $ 59,287 % of Data Infrastructure
revenues 26.5 % 24.9 % 25.8 % 25.1 % 25.7 % Voice Communications $
45,041 $ 51,472 $ 49,211 $ 196,279 $ 210,558 % of Voice
Communications revenues 30.7 % 31.0 % 33.2 % 30.6 % 32.5 %
Technology Products $ 21,773 $ 22,291 $ 22,079 $ 88,185 $ 87,265 %
of Technology Products revenues 44.2 % 43.4 % 47.0 %
44.4 % 46.2 %
Total $ 82,736
$ 88,313 $ 86,724 $
346,496 $ 357,110 % of Total revenues
32.3 % 32.0 % 34.0 % 31.9 % 33.4 %
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 as shown below
relates to North America Voice Communications and North America
Data Infrastructure. Same-office revenue for the Company's North
America Voice Communications and North America Data Infrastructure
segments can be determined by excluding the revenues from offices
added since April 1, 2010 (for comparison of 4Q12 to 4Q11 and
Fiscal 2012 to Fiscal 2011) or October 2, 2011 (for comparison of
4Q12 to 3Q12) as shown below.
Information on quarterly revenues on a same-office basis
compared to the same period last year is presented below:
4Q12 4Q11
% Change Reported revenues $
255,992 $ 255,030 — % Less
revenue from Data Infrastructure offices added since 4/1/10 (1Q11)
(6,025 ) — Less revenue from Voice Communications offices added
since 4/1/10 (1Q11) (13,127 ) (4,650 )
Reported revenues
on same-office basis $ 236,840 $
250,380 (5 )% Foreign currency impact 693
—
Revenues on same-office basis (excluding
foreign currency impact) $ 237,533
$ 250,380 (5 )%
Information on quarterly revenues on a same-office basis
compared to the sequential quarter is presented below:
4Q12 3Q12
% Change Reported revenues $
255,992 $ 275,939 (7 )% Less
revenue from Data Infrastructure offices added since 10/2/11 (3Q12)
(6,025 ) — Less revenue from Voice Communications offices added
since 10/2/11 (3Q12) — —
Reported revenues
on same-office basis $ 249,967 $
275,939 (9 )% Foreign currency impact 144
—
Revenues on same-office basis (excluding
foreign currency impact) $ 250,111
$ 275,939 (9 )%
Information on year-to-date revenues on a same-office basis
compared to the same period last year is presented below:
FY12 FY11
% Change Reported revenues $
1,087,528 $ 1,068,229 2 % Less
revenue from Data Infrastructure offices added since 4/1/10 (1Q11)
(6,025 ) — Less revenue from Voice Communications offices added
since 4/1/10 (1Q11) (71,311 ) (8,973 )
Reported revenues
on same-office basis $ 1,010,192 $
1,059,256 (5 )% Foreign currency impact (6,725
) —
Revenues on same-office basis (excluding
foreign currency impact) $ 1,003,467
$ 1,059,256 (5
)%
Significant Balance Sheet ratios and Other
Information
Information on certain balance sheet ratios, backlog and
headcount is presented below:
4Q12 3Q12
4Q11 Accounts receivable
Gross accounts receivable
$ 170,161 $ 176,093 $ 163,803 Reserve $ / % 6,273 3.7% 6,170
3.5% 7,121 4.3% Net accounts receivable $ 163,888 $
169,923 $ 156,682 Days sales outstanding 52 days 52 days 49 days
Aggregate days sales outstanding 80 days 81 days 81 days
Inventory Gross inventory $ 75,856 $ 80,960 $ 71,873 Reserve
$ / % 18,900 24.9% 19,491 24.1% 19,859 27.6%
Net inventory $ 56,956 $ 61,469 $ 52,014 Net inventory turns 8.9x
9.5x 9.2x
Six-month order backlog 1 $ 198,751 $
207,779 $ 223,055
Team members 4,302
4,288 4,413
1 3Q12 six-month order backlog includes $11,500 from the
acquisition of InnerWireless, Inc. purchased subsequent to December
31, 2011.
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