Summary of BLACK BOX CORP - Yahoo! Finance

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The discussion and analysis for the three (3) and six (6) months ended September 30, 2009 and 2008 as set forth below in this Item 2 should be read in conjunction with the response to Part 1, Item 1 of this report and the consolidated financial statements of Black Box Corporation ("Black Box," the "Company," "we" or "our"), including the related notes, and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in the Company's most recent Annual Report on Form 10-K as filed with the Securities and Exchange Commission ("SEC") for the fiscal year ended March 31, 2009 (the "Form 10-K"). The Company's fiscal year ends on March 31. The fiscal quarters consist of 13 weeks and generally end on the Saturday nearest each calendar quarter end, adjusted to provide relatively equivalent business days for each fiscal quarter. The actual ending dates for the periods presented as of September 30, 2009 and 2008 were September 26, 2009 and September 27, 2008. References to "Fiscal Year" or "Fiscal" mean the Company's fiscal year ended March 31 for the year referenced. All dollar amounts are presented in thousands unless otherwise noted. The Company
Black Box is the world's largest dedicated network infrastructure services provider. Black Box offers one-source network infrastructure services for communications systems. The Company's services offerings include design, installation, integration, monitoring and maintenance of voice, data and integrated communications systems. The Company's primary services offering is voice solutions ("Voice Services"); the Company also offers premise cabling and other data-related services ("Data Services") and products. The Company provides 24/7/365 technical support for all of its solutions which encompass all major voice and data product manufacturers as well as 118,000 network infrastructure products ("Hotline products") that it sells through its catalog and Internet Web site (such catalog and Internet Web site business, together with technical support for such business, being referred to as "Hotline Services") and its Voice Services and Data Services (collectively referred to as "On-Site services") offices. As of September 30, 2009, the Company had more than 3,000 professional technical experts in 192 offices serving more than 175,000 clients in 141 countries throughout the world. Founded in 1976, Black Box, a Delaware corporation, operates subsidiaries on five continents and is headquartered near Pittsburgh in Lawrence, Pennsylvania.
Company management ("Management") is presented with and reviews revenues and operating income by geographical segment. In addition, revenues and gross profit information by service type are provided herein for purposes of further analysis.
The Company has completed several acquisitions from April 1, 2008 through September 30, 2009 that have had an impact on the Company's consolidated financial statements and, more specifically, North America Voice Services and North America Data Services for the periods under review. Fiscal 2009 acquisitions include (i) Scottel Voice & Data, Inc. ("Scottel"), (ii) Network Communications Technologies, Inc. ("NCT"), (iii) ACS Communications, Inc. ("ACS"), (iv) Mutual Telecom Services Inc. ("MTS") and (v) UCI Communications LLC ("UCI"). The acquisitions noted above are collectively referred to as the "Acquired Companies." The results of operations of the Acquired Companies are included within the Company's Consolidated Statements of Income beginning on their respective acquisition dates.
The Company incurs certain expenses (i.e., expenses incurred as a result of certain acquisitions) that it excludes when evaluating the continuing operations of the Company. The following table is included to provide a schedule of the current and an estimate of these future expenses for Fiscal 2010 (by quarter) based on information available to the Company as of September 30, 2009.

                                         1Q10            2Q10            3Q10            4Q10          Fiscal 2010

Selling, general &
administrative expenses
Asset write-up depreciation
expense on acquisitions               $    --         $    --         $    --         $    --         $         --

Intangibles amortization
Amortization of intangible
assets on acquisitions                $ 4,031         $ 2,134         $ 2,817         $ 2,817         $     11,799

Total $ 4,031 $ 2,134 $ 2,817 $ 2,817 $ 11,799

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The following table is included to provide a schedule of these expenses during Fiscal 2009 (by quarter).

                                  1Q09            2Q09            3Q09            4Q09          Fiscal 2009

Selling, general &
administrative expenses
Asset write-up
depreciation expense on
acquisitions                   $   448         $   448         $   485         $   507         $      1,888

Intangibles amortization
Amortization of
intangible assets on
acquisitions                   $ 1,791         $ 1,864         $ 3,231         $ 3,785         $     10,671

Total                          $ 2,239         $ 2,312         $ 3,716         $ 4,292         $     12,559



The following table provides information on Revenues and Operating income by
reportable geographic segment (North America, Europe and All Other). The table
below should be read in conjunction with the following discussions.

                                      Three (3) months ended September 30,                                   Six (6) months ended September 30,
                                     2009                               2008                               2009                               2008
                                               % of                               % of                               % of                               % of
                                               total                              total                              total                              total
                                 $            revenue               $            revenue               $            revenue               $            revenue

Revenues
North America             $   199,928           86.2%        $   211,467           83.3%        $   404,511           86.6%        $   407,803           82.2%
Europe                         24,172           10.4%             31,753           12.5%             48,058           10.3%             67,521           13.6%
All Other                       7,813            3.4%             10,590            4.2%             14,556            3.1%             21,039            4.2%

Total                     $   231,913            100%        $   253,810            100%        $   467,125            100%        $   496,363            100%

Operating
income
North America             $    11,813                        $    20,163                        $    23,388                        $    34,647
% of North
America                          5.9%                               9.5%                               5.8%                               8.5%
revenues

Europe                    $     2,555                        $     3,456                        $     4,644                        $     7,269
% of Europe                     10.6%                              10.9%                               9.7%                              10.8%
revenues

All Other                 $     1,241                        $     1,809                        $     2,062                        $     3,360
% of All Other                  15.9%                              17.1%                              14.2%                              16.0%
revenues


Total                     $    15,609            6.7%        $    25,428           10.0%        $    30,094            6.4%        $    45,276            9.1%

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The following table provides information on Revenues and Gross profit by service type (Data Services, Voice Services and Hotline Services). The table below should be read in conjunction with the following discussions.

                                Three (3) months ended September 30,                           Six (6) months ended September 30,
                                2009                           2008                           2009                           2008
                                         % of                           % of                           % of                           % of
                                        total                          total                          total                          total
                           $           revenue            $           revenue            $           revenue            $           revenue

Revenues
Data Services          $   43,928         18.9%       $   42,714         16.8%       $   95,338         20.4%       $   89,598         18.0%
Voice Services            142,474         61.5%          154,277         60.8%          283,994         60.8%          294,307         59.3%
Hotline Services           45,511         19.6%           56,819         22.4%           87,793         18.8%          112,458         22.7%

Total                  $  231,913          100%       $  253,810          100%       $  467,125          100%       $  496,363          100%

Gross profit
Data Services          $   12,142                     $   12,879                     $   26,089                     $   26,166
% of Data Services
revenues                    27.6%                          30.2%                          27.4%                          29.2%

Voice Services         $   48,287                     $   52,276                     $   96,666                     $   99,474
% of Voice
Services revenues           33.9%                          33.9%                          34.0%                          33.8%
Hotline Services       $   21,845                     $   27,902                     $   41,932                     $   55,559

% of Hotline
Services revenues           48.0%                          49.1%                          47.8%                          49.4%

Total $ 82,274 35.5% $ 93,057 36.7% $ 164,687 35.3% $ 181,199 36.5%

Second quarter of Fiscal 2010 ("2Q10") compared to second quarter of Fiscal 2009 ("2Q09"):
Total Revenues
Total revenues for 2Q10 were $231,913, a decrease of 9% compared to total revenues for 2Q09 of $253,810. The Acquired Companies contributed incremental revenue of $34,753 and $10,510 for 2Q10 and 2Q09, respectively. Excluding the effects of the acquisitions and the negative exchange rate impact of $1,846 in 2Q10 relative to the U.S. dollar, total revenues would have decreased 18% from $243,300 to $199,006 for the reasons discussed below. Revenues by Geography
North America
Revenues in North America for 2Q10 were $199,928, a decrease of 5% compared to revenues for 2Q09 of $211,467. The Acquired Companies contributed incremental revenue of $34,753 and $10,510 for 2Q10 and 2Q09, respectively. Excluding the effects of the acquisitions and the negative exchange rate impact of $303 in 2Q10 relative to the U.S. dollar, North American revenues would have decreased 18% from $200,957 to $165,478. The Company believes that this decrease is primarily due to weaker general economic conditions that affected client demand across all services segments.

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Europe
Revenues in Europe for 2Q10 were $24,172, a decrease of 24% compared to revenues for 2Q09 of $31,753. Excluding the negative exchange rate impact of $1,948 in 2Q10 relative to the U.S. dollar, Europe revenues would have decreased 18% from $31,753 to $26,120. The Company believes the decrease is primarily due to weaker general economic conditions that affected client demand for its Data Services and Hotline Services.
All Other
Revenues for All Other for 2Q10 were $7,813, a decrease of 26% compared to revenues for 2Q09 of $10,590. Excluding the positive exchange rate impact of $405 in 2Q10 relative to the U.S. dollar, All Other revenues would have decreased 30% from $10,590 to $7,408.
Revenue by Service Type
Data Services
Revenues from Data Services for 2Q10 were $43,928, an increase of 3% compared to revenues for 2Q09 of $42,714. The Acquired Companies contributed incremental revenue of $12,700 and $0 for 2Q10 and 2Q09, respectively. Excluding the effects of the acquisitions and the negative exchange rate impact of $1,326 in 2Q10 relative to the U.S. dollar for its international Data Services, Data Services revenues would have decreased 24% from $42,714 to $32,554. The Company believes this decrease is primarily due to weaker general economic conditions that affected client demand for these services. Voice Services
Revenues from Voice Services for 2Q10 were $142,474, a decrease of 8% compared to revenues for 2Q09 of $154,277. The Acquired Companies contributed incremental revenue of $22,053 and $10,510 for 2Q10 and 2Q09, respectively. Excluding the effects of the acquisitions, Voice Services revenues would have decreased 16% from $143,767 to $120,421. The Company believes this decrease is primarily due to weaker general economic conditions that affected client demand for these services. There was no exchange rate impact on Voice Services revenues as all of the Company's Voice Services revenues are denominated in U.S. dollars. Hotline Services
Revenues from Hotline Services for 2Q10 were $45,511, a decrease of 20% compared to revenues for 2Q09 of $56,819. Excluding the negative exchange rate impact of $520 in 2Q10 relative to the U.S. dollar for its international Hotline Services, Hotline Services revenues would have decreased 19% from $56,819 to $46,031. The Company believes this decrease is primarily due to weaker general economic conditions that affected client demand for these products and services. Gross profit
Gross profit dollars for 2Q10 were $82,274, a decrease of 12% compared to gross profit dollars for 2Q09 of $93,057. Gross profit as a percent of revenues for 2Q10 was 35.5%, a decrease of 1.2% compared to gross profit as a percentage of revenues for 2Q09 of 36.7%. The Company believes the percent decrease was due primarily to the impact of a lower margin project in its Data Services segment and client mix in its Hotline Services segment.
Gross profit dollars for Data Services for 2Q10 were $12,142, or 27.6% of revenues, compared to gross profit dollars for 2Q09 of $12,879, or 30.2% of revenues. Gross profit dollars for Voice Services for 2Q10 were $48,287, or 33.9% of revenues, compared to gross profit dollars for 2Q09 of $52,276, or 33.9% of revenues. Gross profit dollars for Hotline Services for 2Q10 were $21,845, or 48.0% of revenues, compared to gross profit dollars for 2Q09 of $27,902, or 49.1% of revenues. Please see the preceding paragraph for the analysis of gross profit variances by segment. Selling, general & administrative expenses Selling, general & administrative expenses for 2Q10 were $64,515, a decrease of $1,214 compared to Selling, general & administrative expenses for 2Q09 of $65,729. Selling, general & administrative expenses as a percent of revenue for 2Q10 were 27.8% compared to 25.9% for 2Q09. The decrease in Selling, general & administrative expense dollars over the prior year was primarily due to the Company's continued effort to right-size the organization and more properly align the expense structure with anticipated revenues and changing market demand for its solutions and services partially offset by increases in historical stock option granting practices investigation and related matters costs of $3,660 (including $3,992 in 2Q10 in connection with an agreement in principle for settlement of the pending shareholder derivative lawsuit and matters related to the Company's review of its historical stock option practices) and non-cash stock-based compensation expense of $796.

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Intangibles amortization
Intangibles amortization for 2Q10 was $2,150, an increase of $250 compared to Intangibles amortization for 2Q09 of $1,900. The increase was primarily attributable to the addition of intangible assets from acquisitions completed subsequent to the second quarter of Fiscal 2009 partially offset by the amortization run-out for certain intangible assets. Operating income
As a result of the foregoing, Operating income for 2Q10 was $15,609, or 6.7% of revenues, a decrease of $9,819 compared to Operating income for 2Q09 of $25,428, or 10.0% of revenues.
Interest expense (income), net
Net interest expense for 2Q10 was $2,596, or 1.1% of revenues, compared to net interest expense for 2Q09 of $2,648, or 1.0% of revenues. The Company's interest-rate swaps contributed a loss of $380 and a gain of $169 for 2Q10 and 2Q09, respectively, due to the change in fair value. Excluding the effect of the interest-rate swaps, net interest expense would have decreased $601 from $2,817, or 1.1% of revenues, to $2,216 or 1.0% of revenues. This decrease in net interest expense is due to a decrease in the weighted-average interest rate from 3.5% for 2Q09 to 1.4% for 2Q10 partially offset by increases in the weighted-average outstanding debt from $221,457 for 2Q09 to $243,393 for 2Q10. Provision for income taxes
The tax provision for 2Q10 was $4,912, an effective tax rate of 37.5%. This compares to the tax provision for 2Q09 of $8,218, an effective tax rate of 36.5%. The tax rate for 2Q10 was higher than 2Q09 due to changes in the overall mix of taxable income among worldwide offices and foreign currency exchange effects on previously-taxed income. The Company anticipates that its deferred tax asset is realizable in the foreseeable future. Net income
As a result of the foregoing, Net income for 2Q10 was $8,186, or 3.5% of revenues, compared to Net income for 2Q09 of $14,299, or 5.6% of revenues. Six months Fiscal 2010 ("2QYTD10") compared to six months of Fiscal 2009 ("2QYTD09"):
Total Revenues
Total revenues for 2QYTD10 were $467,125, a decrease of 6% compared to total revenues for 2QYTD09 of $496,363. The Acquired Companies contributed incremental revenue of $76,478 and $17,170 for 2QYTD10 and 2QYTD09, respectively. Excluding the effects of the acquisitions and the negative exchange rate impact of $7,562 in 2QYTD10 relative to the U.S. dollar, total revenues would have decreased 17% from $479,193 to $398,209 for the reasons discussed below. Revenues by Geography
North America
Revenues in North America for 2QYTD10 were $404,511, a decrease of 1% compared to revenues for 2QYTD09 of $407,803. The Acquired Companies contributed incremental revenue of $76,478 and $17,170 for 2QYTD10 and 2QYTD09, respectively. Excluding the effects of the acquisitions and the negative exchange rate impact of $1,039 in 2QYTD10 relative to the U.S. dollar, North American revenues would have decreased 16% from $390,633 to $329,072. The Company believes that this decrease is primarily due to weaker general economic conditions that affected client demand across all services segments. Europe
Revenues in Europe for 2QYTD10 were $48,058, a decrease of 29% compared to revenues for 2QYTD09 of $67,521. Excluding the negative exchange rate impact of $6,720 in 2QYTD10 relative to the U.S. dollar, Europe revenues would have decreased 19% from $67,521 to $54,778. The Company believes the decrease is primarily due to weaker general economic conditions that affected client demand for its Data Services and Hotline Services. All Other
Revenues for All Other for 2QYTD10 were $14,556, a decrease of 31% compared to revenues for 2QYTD09 of $21,039. Excluding the positive exchange rate impact of $197 in 2QYTD10 relative to the U.S. dollar, All Other revenues would have decreased 32% from $21,039 to $14,359.

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Revenue by Service Type
Data Services
Revenues from Data Services for 2QYTD10 were $95,338, an increase of 6% compared to revenues for 2QYTD09 of $89,598. The Acquired Companies contributed incremental revenue of $26,008 and $0 for 2QYTD10 and 2QYTD09, respectively. Excluding the effects of the acquisitions and the negative exchange rate impact of $3,932 in 2QYTD10 relative to the U.S. dollar for its international Data Services, Data Services revenues would have decreased 18% from $89,598 to $73,262. The Company believes this decrease is primarily due to weaker general economic conditions that affected client demand for these services. Voice Services
Revenues from Voice Services for 2QYTD10 were $283,994, a decrease of 4% compared to revenues for 2QYTD09 of $294,307. The Acquired Companies contributed incremental revenue of $50,470 and $17,170 for 2QYTD10 and 2QYTD09, respectively. Excluding the effects of the acquisitions, Voice Services revenues would have decreased 16% from $277,137 to $233,524. The Company believes this decrease is primarily due to weaker general economic conditions that affected client demand for these services. There was no exchange rate impact on Voice Services revenues as all of the Company's Voice Services revenues are denominated in U.S. dollars.
Hotline Services
Revenues from Hotline Services for 2QYTD10 were $87,793, a decrease of 22% compared to revenues for 2QYTD09 of $112,458. Excluding the negative exchange rate impact of $3,630 in 2QYTD10 relative to the U.S. dollar for its international Hotline Services, Hotline Services revenues would have decreased 19% from $112,458 to $91,423. The Company believes this decrease is primarily due to weaker general economic conditions that affected client demand for these products and services.
Gross profit
Gross profit dollars for 2QYTD10 were $164,687, a decrease of 9% compared to gross profit dollars for 2QYTD09 of $181,199. Gross profit as a percent of revenues for 2QYTD10 was 35.3%, a decrease of 1.2% compared to gross profit as a percentage of revenues for 2QYTD09 of 36.5%. The Company believes the percent decrease was due primarily to the impact of a lower margin project in its Data Services segment and client mix in its Hotline Services segment. Gross profit dollars for Data Services for 2QYTD10 were $26,089, or 27.4% of revenues, compared to gross profit dollars for 2QYTD09 of $26,166, or 29.2% of revenues. Gross profit dollars for Voice Services for 2QYTD10 were $96,666, or 34.0% of revenues, compared to gross profit dollars for 2QYTD09 of $99,474, or 33.8% of revenues. Gross profit dollars for Hotline Services for 2QYTD10 were $41,932, or 47.8% of revenues, compared to gross profit dollars for 2QYTD09 of $55,559, or 49.4% of revenues. Please see the preceding paragraph for the analysis of gross profit variances by segment. Selling, general & administrative expenses Selling, general & administrative expenses for 2QYTD10 were $128,398, a decrease of $3,799 compared to Selling, general & administrative expenses for 2QYTD09 of $132,197. Selling, general & administrative expenses as a percent of revenue for 2QYTD10 were 27.5% compared to 26.6% for 2QYTD09. The decrease in Selling, general & administrative expense dollars over the prior year was primarily due to the Company's continued effort to right-size the organization and more properly align the expense structure with anticipated revenues and changing market demand for its solutions and services partially offset by increases in historical stock option review costs of $3,924 (including $3,992 in 2Q10 in connection with an agreement in principle for settlement of the pending shareholder derivative lawsuit and matters related to the Company's review of its historical stock option practices) and non-cash stock-based compensation expense of $1,897.
Intangibles amortization
Intangibles amortization for 2QYTD10 was $6,195, an increase of $2,469 compared to Intangibles amortization for 2QYTD09 of $3,726. The increase was primarily attributable to the addition of intangible assets from acquisitions completed subsequent to the second quarter of Fiscal 2009 partially offset by the amortization run-out for certain intangible assets.

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Operating income
As a result of the foregoing, Operating income for 2QYTD10 was $30,094, or 6.4% of revenues, a decrease of $15,182 compared to Operating income for 2QYTD09 of $45,276, or 9.1% of revenues.
Interest expense (income), net
Net interest expense for 2QYTD10 was $4,740, or 1.0% of revenues, compared to net interest expense for 2QYTD09 of $2,383, or 0.5% of revenues. The Company's interest-rate swaps contributed a loss of $177 and a gain of $2,877 for 2QYTD10 and 2QYTD09, respectively, due to the change in fair value. Excluding the effect of the interest-rate swaps, net interest expense would have decreased $697 from $5,260, or 1.1% of revenues, to $4,563 or 1.0% of revenues. This decrease in net interest expense is due to a decrease in the weighted-average interest rate from 3.6% for 2QYTD09 to 1.5% for 2QYTD10 partially offset by increases in the weighted-average outstanding debt from $216,384 for 2QYTD09 to $249,113 for 2QYTD10.
Provision for income taxes
The tax provision for 2QYTD10 was $9,593, an effective tax rate of 37.5%. This compares to the tax provision for 2QYTD09 of $15,594, an effective tax rate of 36.5%. The tax rate for 2QYTD10 was higher than 2QYTD09 due to changes in the overall mix of taxable income among worldwide offices and foreign currency exchange effects on previously-taxed income. The Company anticipates that its deferred tax asset is realizable in the foreseeable future. Net income
As a result of the foregoing, Net income for 2QYTD10 was $15,988, or 3.4% of revenues, compared to Net income for 2QYTD09 of $27,132, or 5.5% of revenues. Liquidity and Capital Resources
Operating Activities
Net cash provided by operating activities during 2QYTD10 was $30,549. Significant factors contributing to the source of cash were: net income of $15,988 inclusive of non-cash charges of $10,112 and $3,279 for amortization / depreciation expense and stock compensation expense, respectively, as well as decreases in net inventory of $3,624, net trade accounts receivable of $23,064 and an increase in accrued expenses of $3,457. Significant factors contributing to a use of cash include decreases in billings in excess of costs, restructuring reserves, accrued compensation and benefits and trade accounts payable of $7,220, $4,737, $5,162 and $3,821, respectively, and an increase in costs in excess of billings of $13,733. Changes in the above accounts are based on average Fiscal 2010 exchange rates.
Net cash provided by operating activities during 2QYTD09 was $38,385. Significant factors contributing to the source of cash were: net income of $27,132, inclusive of non-cash charges of $8,599 and $1,382 for amortization / depreciation expense and stock compensation expense, respectively, as well as decreases in net inventory of $5,321, net trade accounts receivable of $11,804 and the deferred tax provision of $1,903, and increases in accrued compensation and benefits of $1,451 and accrued taxes of $1,366. Significant factors contributing to a use of cash include a non-cash charge of $2,877 for change in . . .