Black Box Corporation
BLACK BOX CORP (Form: 10-Q, Received: 08/12/2010 16:25:29)
Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
     
þ   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 3, 2010
OR
     
o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number: 0-18706
Black Box Corporation
(Exact name of registrant as specified in its charter)
     
Delaware   95-3086563
(State or other jurisdiction of incorporation or organization)   (I.R.S. Employer Identification No.)
     
1000 Park Drive, Lawrence, Pennsylvania   15055
(Address of principal executive offices)   (Zip Code)
Registrant’s telephone number, including area code: 724-746-5500
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ Yes   o No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). o Yes   o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
             
Large accelerated filer o   Accelerated filer þ   Non-accelerated filer o   Smaller reporting company o
        (Do not check if a smaller reporting company)    
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   o Yes þ No
As of August 6, 2010, there were 17,602,276 shares of common stock, par value $.001 (the “common stock”), outstanding.
     
 

 


 

BLACK BOX CORPORATION
FOR THE QUARTER ENDED JULY 3, 2010
INDEX
             
        Page
 
         
PART I. FINANCIAL INFORMATION        
   
 
       
Item 1.          
   
 
       
        3  
   
 
       
        4  
   
 
       
        5  
   
 
       
        6  
   
 
       
Item 2.       17  
   
 
       
Item 3.       25  
   
 
       
Item 4.       26  
   
 
       
PART II. OTHER INFORMATION        
   
 
       
Item 6.       27  
   
 
       
SIGNATURE     28  
   
 
       
EXHIBIT INDEX     29  
  EX-10.1
  EX-21.1
  EX-31.1
  EX-31.2
  EX-32.1

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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
BLACK BOX CORPORATION
CONSOLIDATED BALANCE SHEETS
                 
    July 3, 2010        
In thousands, except par value
  (Unaudited)     March 31, 2010*  
 
 
Assets
               
Cash and cash equivalents
    $   16,955       $   20,885  
Accounts receivable, net of allowance for doubtful accounts of $8,571 and $9,505
    147,026       141,211  
Inventories, net
    53,350       51,507  
Costs/estimated earnings in excess of billings on uncompleted contracts
    100,092       86,086  
Prepaid and other current assets
    29,147       28,090  
 
       
Total current assets
    346,570       327,779  
 
               
Property, plant and equipment, net
    22,847       23,568  
Goodwill
    638,937       641,965  
Intangibles
               
Customer relationships, net
    91,027       93,619  
Other intangibles, net
    29,862       30,374  
Other assets
    6,198       8,059  
 
       
Total assets
    $   1,135,441       $   1,125,364  
 
       
 
               
Liabilities
               
Accounts payable
    $   78,417       $   66,934  
Accrued compensation and benefits
    23,719       33,260  
Deferred revenue
    36,053       34,876  
Billings in excess of costs/estimated earnings on uncompleted contracts
    19,190       14,839  
Income taxes
    10,693       9,487  
Other liabilities
    38,715       41,798  
 
       
Total current liabilities
    206,787       201,194  
 
               
Long-term debt
    210,091       210,873  
Other liabilities
    20,415       23,303  
 
       
Total liabilities
    $   437,293       $   435,370  
 
               
Stockholders’ equity
               
Preferred stock authorized 5,000, par value $1.00, none issued
    $   --       $   --  
Common stock authorized 100,000, par value $.001, 17,602 and 17,548 shares outstanding
    25       25  
Additional paid-in capital
    454,849       451,778  
Retained earnings
    563,403       551,315  
Accumulated other comprehensive income
    3,448       9,971  
Treasury stock, at cost 7,643 and 7,626 shares
    (323,577)       (323,095)  
 
       
Total stockholders’ equity
    $   698,148       $   689,994  
 
       
 
               
Total liabilities and stockholders’ equity
    $   1,135,441       $   1,125,364  
 
       
 
               
 
* Derived from audited financial statements
See Notes to the Consolidated Financial Statements

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BLACK BOX CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
                    
    Three (3) months ended  
    July 3 and June 27,
In thousands, except per share amounts
  2010     2009  
 
 
               
Revenues
               
Hotline products
    $   46,049       $   42,282  
On-Site services
    217,547       192,930  
     
Total
    263,596       235,212  
 
               
Cost of sales
               
Hotline products
    24,818       22,195  
On-Site services
    149,164       130,604  
     
Total
    173,982       152,799  
 
               
Gross profit
    89,614       82,413  
 
               
Selling, general & administrative expenses
    63,620       63,883  
Intangibles amortization
    3,102       4,045  
     
 
               
Operating income
    22,892       14,485  
 
               
Interest expense (income), net
    1,690       2,144  
Other expenses (income), net
    1       (142)  
     
 
               
Income before provision for income taxes
    21,201       12,483  
 
               
Provision for income taxes
    8,057       4,681  
     
 
               
Net income
    $   13,144       $   7,802  
     
 
               
Earnings per common share
               
Basic
    $   0.75       $   0.45  
     
Diluted
    $   0.75       $   0.44  
     
 
               
Weighted-average common shares outstanding
               
Basic
    17,564       17,539  
     
Diluted
    17,597       17,539  
     
 
               
Dividends per share
    $   0.06       $   0.06  
 
See Notes to the Consolidated Financial Statements

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BLACK BOX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
                 
    Three (3) months ended  
    July 3 and June 27,
In thousands
  2010     2009  
 
 
               
Operating Activities
               
Net income
    $   13,144       $   7,802  
Adjustments to reconcile net income to net cash provided by (used for) operating activities
               
Intangibles amortization and depreciation
    4,686       6,078  
Loss (gain) on sale of property
    (17)       76  
Deferred taxes
    2,254       548  
Tax impact from equity awards
    9       123  
Stock compensation expense
    3,002       1,643  
Change in fair value of interest-rate swaps
    (532)       (203)  
Changes in operating assets and liabilities (net of acquisitions):
               
Accounts receivable, net
    (6,774)       11,690  
Inventories, net
    (2,103)       2,555  
All other current assets excluding deferred tax asset
    (16,779)       (2,549)  
Liabilities exclusive of long-term debt
    4,358       (11,676)  
 
       
Net cash provided by (used for) operating activities
    $   1,248       $   16,087  
 
               
Investing Activities
               
Capital expenditures
    $   (940)       $   (567)  
Capital disposals
    44       29  
Acquisition of businesses (payments)/recoveries
    --       --  
Prior merger-related (payments)/recoveries
    (1,683)       (916)  
 
       
Net cash provided by (used for) investing activities
    $   (2,579)       $   (1,454)  
 
               
Financing Activities
               
Proceeds from borrowings
    $   48,465       $   38,385  
Repayment of borrowings
    (49,367)       (50,433)  
Purchase of treasury stock
    (482)       --  
Proceeds from the exercise of stock options
    78       --  
Payment of dividends
    (1,053)       (1,052)  
 
       
Net cash provided by (used for) financing activities
    $   (2,359)       $   (13,100)  
 
               
Foreign currency exchange impact on cash
    $   (240)       $   521  
 
       
 
               
Increase / (decrease) in cash and cash equivalents
    $   (3,930)       $   2,054  
Cash and cash equivalents at beginning of period
    $   20,885       $   23,720  
 
       
Cash and cash equivalents at end of period
    $   16,955       $   25,774  
 
       
 
               
Supplemental Cash Flow:
               
Cash paid for interest
    $   2,236       $   2,726  
Cash paid for income taxes
    4,621       1,606  
Non-cash financing activities:
               
Dividends payable
    1,056       1,052  
Capital leases
    56       4  
 
See Notes to the Consolidated Financial Statements

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BLACK BOX CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1: Business and Basis of Presentation
Business
Black Box Corporation (“Black Box” or the “Company”) is a leading 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 July 3, 2010, the Company had more than 3,000 professional technical experts in 194 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.
Basis of Presentation
The accompanying unaudited interim consolidated financial statements of Black Box have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The Company believes that these consolidated financial statements reflect all normal, recurring adjustments needed to present fairly the Company’s results for the interim periods presented. The results as of and for interim periods may not be indicative of the results of operations for any other interim period or for the full year. These financial statements should be read in conjunction with the financial statements and notes thereto 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, 2010 (the “Form 10-K”).
The Company’s fiscal year ends on March 31. The fiscal quarters consist of 13 weeks and end on the Saturday generally nearest each calendar quarter end, adjusted to provide relatively equivalent business days for each fiscal quarter. The actual ending dates for the periods presented in these Notes to the Consolidated Financial Statements as of June 30, 2010 and 2009 were July 3, 2010 and June 27, 2009. References herein to “Fiscal Year” or “Fiscal” mean the Company’s fiscal year ended March 31 for the year referenced. All references to dollar amounts herein are presented in thousands, except per share amounts, unless otherwise noted.
The consolidated financial statements include the accounts of the Company, which is the parent company, and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.
The preparation of financial statements in conformity with GAAP requires Company management (“Management”) to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates in these financial statements include project progress towards completion to estimated budget allowances for doubtful accounts receivable, sales returns, net realizable value of inventories, loss contingencies, warranty reserves, intangible assets and goodwill. Actual results could differ from those estimates. Management believes the estimates made are reasonable. The Company assessed events subsequent to June 30, 2010 for potential recognition and disclosure in the consolidated financial statements. No events have occurred that would require adjustment to or disclosure in the consolidated financial statements.

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Note 2: Significant Accounting Policies / Recent Accounting Pronouncements
Significant Accounting Policies
The significant accounting policies used in the preparation of the Company’s consolidated financial statements are disclosed in Note 2 of the Notes to the Consolidated Financial Statements within the Form 10-K. No additional significant accounting policies have been adopted during Fiscal 2011.
Recent Accounting Pronouncements
There have been no accounting pronouncements adopted during the three month period ended June 30, 2010 that had a material impact on the Company’s consolidated financial statements. There have been no new accounting pronouncements issued during the three month period ended June 30, 2010 but not yet adopted that are expected to have a material impact on the Company’s consolidated financial statements. See the Company’s consolidated financial statements in the Form 10-K for a discussion of other new accounting pronouncements issued but not yet adopted.
Note 3: Inventories
The Company’s inventories consist of the following:
                 
    June 30, 2010     March 31, 2010  
 
Raw materials
    $   1,567       $   1,545  
Finished goods
    71,526       69,952  
 
       
Subtotal
    $   73,093       $   71,497  
Excess and obsolete inventory reserves
    (19,743)       (19,990)  
 
       
Inventory, net
    $   53,350       $   51,507  
 
Note 4: Goodwill
The following table summarizes changes to Goodwill at the Company’s reportable segments for the periods presented:
                                 
    North                    
    America     Europe     All Other     Total  
 
Balance as of March 31, 2010
    $   571,867       $   67,913       $   2,185       $   641,965  
Currency translation
    2       (2,978)       (52)       (3,028)  
 
               
Balance as of June 30, 2010
    $   571,869       $   64,935       $   2,133       $   638,937  
 
At and since September 26, 2009 (the date of the Company’s most recent annual goodwill impairment assessment), the Company’s stock market capitalization has been lower than its net book value. However, each of the Company’s reporting units continues to operate profitably and generate significant cash flow from operations, and the Company expects that each will continue to do so throughout the remainder of Fiscal 2011 and beyond. In addition, the Company believes that a reasonable potential buyer would offer a control premium for the business that would adequately cover the difference between the recent stock trading prices and the net book value.

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Note 5: Intangible Assets
The following table summarizes the gross carrying amount, accumulated amortization and net carrying amount by intangible asset class for the periods presented:
                                                 
    June 30, 2010   March 31, 2010
    Gross             Net     Gross             Net  
    Carrying     Accum.     Carrying     Carrying     Accum.     Carrying  
    Amount     Amort.     Amount     Amount     Amort.     Amount  
 
Definite-lived
                                               
Non-compete agreements
    $   10,318       $   8,414       $   1,904       $   10,391       $   8,193       $   2,198  
Customer relationships
    118,209       27,182       91,027       118,209       24,590       93,619  
Acquired backlog
    17,349       17,130       219       17,349       16,912       437  
         
Total
    $   145,876       $   52,726       $   93,150       $   145,949       $   49,695       $   96,254  
 
                                               
Indefinite-lived
                                               
Trademarks
    35,992       8,253       27,739       35,992       8,253       27,739  
         
 
                                               
Total
    $   181,868       $   60,979       $   120,889       $   181,941       $   57,948       $   123,993  
 
The Company’s indefinite-lived intangible assets consist solely of the Company’s trademark portfolio. The Company’s definite-lived intangible assets are comprised of employee non-compete agreements, customer relationships and backlog obtained through business acquisitions.
The following table summarizes the changes to carrying amounts of intangible assets for the periods presented:
                                 
            Non-Competes     Customer        
    Trademarks     and Backlog     Relationships     Total  
 
Balance at March 31, 2010
    $   27,739       $   2,635       $   93,619       $   123,993  
Amortization expense
    --       (510)       (2,592)       (3,102)  
Currency translation
    --       (2)       --       (2)  
 
               
Balance at June 30, 2010
    $   27,739       $   2,123       $   91,027       $   120,889  
 
Intangibles amortization was $3,102 and $4,045 for the three (3) months ended June 30, 2010 and 2009, respectively. The Company acquired definite-lived intangibles from the completion of several acquisitions during Fiscal 2010.
The following table details the estimated intangibles amortization expense for the remainder of Fiscal 2011, each of the succeeding four fiscal years and the periods thereafter. These estimates are based on the carrying amounts of intangible assets as of June 30, 2010 that are provisional measurements of fair value and are subject to change pending the outcome of purchase accounting related to certain acquisitions:
         
Fiscal
       
 
2011
    $   8,702  
2012
    11,009  
2013
    10,028  
2014
    8,848  
2015
    7,713  
Thereafter
    46,850  
 
     
Total
    $   93,150  
 

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Note 6: Indebtedness
The Company’s long-term debt consists of the following:
                 
    June 30, 2010     March 31, 2010  
 
Revolving credit agreement
    $   209,235       $   209,860  
Capital lease obligations
    1,751       1,967  
Other
    2       7  
 
       
Total debt
    $   210,988       $   211,834  
Less: current portion (included in Other liabilities)
    (897)       (961)  
 
       
Long-term debt
    $   210,091       $   210,873  
 
Revolving Credit Agreement
On January 30, 2008, the Company entered into a Third Amended and Restated Credit Agreement dated as of January 30, 2008 (the “Credit Agreement”) with Citizens Bank of Pennsylvania, as agent, and a group of lenders. The Credit Agreement expires on January 30, 2013. Borrowings under the Credit Agreement are permitted up to a maximum amount of $350,000, which includes up to $20,000 of swing-line loans and $25,000 of letters of credit. The Credit Agreement may be increased by the Company up to an additional $100,000 with the approval of the lenders and may be unilaterally and permanently reduced by the Company to not less than the then outstanding amount of all borrowings. Interest on outstanding indebtedness under the Credit Agreement accrues, at the Company’s option, at a rate based on either: (a) the greater of (i) the prime rate per annum of the agent then in effect and (ii) 0.50% plus the rate per annum announced by the Federal Reserve Bank of New York as being the weighted-average of the rates on overnight Federal funds transactions arranged by Federal funds brokers on the previous trading day or (b) a rate per annum equal to the LIBOR rate plus 0.50% to 1.125% (determined by a leverage ratio based on the Company’s consolidated Earnings Before Interest Taxes Depreciation and Amortization (“EBITDA”)). The Credit Agreement requires the Company to maintain compliance with certain non-financial and financial covenants such as leverage and fixed-charge coverage ratios. As of June 30, 2010, the Company was in compliance with all financial covenants under the Credit Agreement.
The maximum amount of debt outstanding under the Credit Agreement, the weighted-average balance outstanding under the Credit Agreement and the weighted-average interest rate on all outstanding debt for the three (3) months ended June 30, 2010 was $233,660, $219,773 and 1.3%, respectively, compared to $261,750, $255,027 and 1.6%, respectively, for the three (3) months ended June 30, 2009.
Capital lease obligations
The capital lease obligations are primarily for equipment. The lease agreements have remaining terms ranging from less than one year to five years with interest rates ranging from 6.5% to 12.3%.
Other
Other debt is comprised of other third-party, non-employee loans.
Unused available borrowings
As of June 30, 2010, the Company had $4,636 outstanding in letters of credit and $136,129 in unused commitments under the Credit Agreement.
Note 7: Derivative Instruments and Hedging Activities
The Company is exposed to certain market risks, including the effect of changes in foreign currency exchange rates and interest rates. The Company uses derivative instruments to manage financial exposures that occur in the normal course of business. It does not hold or issue derivatives for speculative trading purposes. The Company is exposed to non-performance risk from the counterparties in its derivative instruments. This risk would be limited to any unrealized gains on current positions. To help mitigate this risk, the Company transacts only with counterparties that are rated as investment grade or higher and all counterparties are monitored on a continuous basis. The fair value of the Company’s derivatives reflects this credit risk.

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Foreign Currency Contracts:
The Company enters into foreign currency contracts to hedge exposure to variability in expected fluctuations in foreign currencies. As of June 30, 2010, the Company had open contracts in Australian and Canadian dollars, Danish krone, Euros, Mexican pesos, Norwegian kroner, British pounds sterling, Swedish krona, Swiss francs and Japanese yen which have been designated as cash flow hedges. These contracts had a notional amount of $98,223 and will expire within eleven (11) months. There was no hedge ineffectiveness for the three (3) months ended June 30, 2010 and 2009, respectively.
Interest-rate Swaps:
On July 26, 2006, the Company entered into a five-year floating-to-fixed interest-rate swap that is based on a 3-month LIBOR rate versus a 5.44% fixed rate, has a notional value of $100,000 (which reduced to $50,000 as of June 26, 2009) and does not qualify for hedge accounting. On June 15, 2009, the Company entered into a three-year floating-to-fixed interest-rate swap that is based on a 3-month LIBOR rate versus a 2.28% fixed rate, has a notional value of $100,000 reducing to $50,000 after two years and does not qualify for hedge accounting. Each interest-rate swap discussed above is collectively hereinafter referred to as the “interest-rate swaps.”
The following tables detail the effect of derivative instruments on the Company’s Consolidated Balance Sheets and Consolidated Statements of Income for the periods presented:
                                     
        Asset Derivatives   Liability Derivatives
        Fair Value     Fair Value     Fair Value     Fair Value  
        at     at     at     at  
        June 30,     March 31,     June 30,     March 31,  
    Classification   2010     2010     2010     2010  
 
Derivatives designated as hedging instruments
                                   
Foreign currency contracts
  Other liabilities (short-term)     $   --       $   --       $   4,415       $   3,130  
Foreign currency contracts
  Prepaid and other current assets     $   991       $   514       $   --       $   --  
 
                                   
Derivatives not designated as hedging instruments
                                   
Interest-rate swaps
  Other liabilities (short-term)     $   --       $   --       $   4,739       $   5,271  
 
                     
        Three (3) months ended June 30,
    Classification   2010     2009  
 
Derivatives designated as hedging instruments
                   
Gain (loss) recognized in Comprehensive income on
(effective portion) – net of taxes
  Other comprehensive
income
    $   (345)       $   (145)  
(Gain) loss reclassified from Accumulated Other
Comprehensive Income (“AOCI”) into income
(effective portion) – net of taxes
  Selling, general &
administrative expenses
    $   128       $   71  
 
 
        Three (3) months ended June 30,
    Classification   2010     2009  
 
Derivatives not designated as hedging instruments
                   
Gain (loss) recognized in income
  Interest expense
(income), net
    $   532       $   203  
 

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Note 8: Fair Value Disclosures
Recurring fair value measurements: The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis as of June 30, 2010, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value:
                                 
    Assets at Fair Value as of June 30, 2010
    Level 1   Level 2   Level 3   Total
Foreign currency contracts
    $   --       $   991       $   --       $   991  
                                 
    Liabilities at Fair Value as of June 30, 2010
    Level 1   Level 2   Level 3   Total
Foreign currency contracts
    $   --       $   4,415       $   --       $   4,415  
Interest-rate swaps
    --       4,739       --       4,739  
 
               
Total
    $   --       $   9,154       $   --       $   9,154  
 
 
Note 9: Acquisitions
Fiscal 2011 acquisitions:
There have been no acquisitions during the three (3) month period ended June 30, 2010.
Fiscal 2010 acquisitions:
During the third quarter of Fiscal 2010, the Company acquired Quanta Systems, LLC (“Quanta”), a privately-held company headquartered in Gaithersburg, MD. Quanta has an active customer base which includes various United States Department of Defense and government agency accounts.
Also, during the third quarter of Fiscal 2010, the Company acquired CBS Technologies Corp. (“CBS”), a privately-held company headquartered in Islandia, NY. CBS has an active customer base which includes commercial, education and various government agency accounts.
The acquisitions of Quanta and CBS, both individually and in the aggregate, did not have a material impact on the Company’s consolidated financial statements.
The fair values of assets acquired and liabilities assumed for Quanta and CBS are provisional and are based on the information that was available as of their respective acquisition dates to estimate the fair value of assets acquired and liabilities assumed. The Company believes that the information available provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed but additional information not yet available is necessary to finalize those fair values. Thus, the provisional measurements of fair value are subject to change. The Company expects to finalize the valuation and complete the purchase price allocation as soon as practicable but no later than one-year from their respective acquisition dates.
The results of operations of Quanta and CBS are included within the Company’s Consolidated Statements of Income beginning on their respective acquisition dates.
Note 10: Income Taxes
The Company recorded income tax expense of $8,057, an effective tax rate of 38.0%, and $4,681, an effective tax rate of 37.5%, for the three (3) months ended June 30, 2010 and 2009, respectively. The effective rate for the three (3) months ended June 30, 2010 of 38.0% differs from the federal statutory rate primarily due to state income taxes, uncertain income tax positions (including interest and penalties), partially offset by foreign currency exchange effects on previously-taxed income and foreign earnings taxed at a lower statutory rate.
The Company provides for income taxes at the end of each interim period based on the estimated effective tax rate for the full fiscal year. Cumulative adjustments to the Company’s estimate are recorded in the interim period in which a change in the estimated annual effective rate is determined.
Fiscal 2007 through Fiscal 2009 remain open to examination by the IRS. Fiscal 2004 through Fiscal 2009 remain open to examination by state and foreign taxing jurisdictions.

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Note 11: Stock-based Compensation
In August 2008, the Company’s stockholders approved the 2008 Long-Term Incentive Plan (the “Incentive Plan”) which replaces the 1992 Stock Option Plan, as amended, and the 1992 Director Stock Option Plan, as amended. As of June 30, 2010, the Incentive Plan is authorized to issue stock options, restricted stock units and performance shares, among other types of awards, for up to 2,391,708 shares of common stock, par value $.001 (the “common stock”).
The Company recognized stock-based compensation expense of $3,002 ($1,861 net of tax), or $0.11 per diluted share, and $1,643 ($1,027 net of tax), or $0.06 per diluted share, for the three (3) months ended June 30, 2010 and 2009. Stock-based compensation expense is recorded in Selling, general & administrative expense within the Company’s Consolidated Statements of Income.
Stock options
Stock option awards are granted with an exercise price equal to the closing market price of the common stock on the date of grant; such stock options generally become exercisable in equal amounts over a three-year period and have a contractual life of ten (10) years from the grant date. The fair value of stock options is estimated on the grant date using the Black-Scholes option pricing model which includes the following weighted-average assumptions.
                 
  Three (3) months ended June 30,     
    2010     2009  
 
Expected life (in years)
    4.9       5.0  
Risk free interest rate
    2.3%       2.7%  
Annual forfeiture rate
    2.1%       2.5%  
Volatility
    41.4%       45.5%  
Dividend yield
    0.8%       0.9%  
 
The following table summarizes the Company’s stock option activity for the period presented and as of June 30, 2010:
                                    
                    Weighted-        
                    Average        
            Weighted-     Remaining        
            Average     Contractual     Intrinsic  
    Shares     Exercise     Life     Value  
    (in 000’s)     Price     (Years)     (000’s)  
 
Outstanding at March 31, 2010
    3,187       $   35.66                  
Granted
    234       32.21                  
Exercised
    (3)       28.93                  
Forfeited or expired
    (7)       34.66                  
         
Outstanding at June 30, 2010
    3,411       $   35.43       5.7       $   --  
Exercisable at June 30, 2010
    2,714       $   36.65       4.9       $   --  
 
The weighted-average grant-date fair value of options granted during the three (3) months ended June 30, 2010 and 2009 was $11.69 and $13.16, respectively. The total intrinsic value of options exercised during the three (3) months ended June 30, 2010 and 2009 was $4 and $0, respectively, based on the closing stock price of the common stock on July 2, 2010 of $27.29.
The following table summarizes certain information regarding the Company’s non-vested stock options for the period presented:
                 
            Weighted-  
    Shares     Average Grant-  
    (in 000’s)     Date Fair Value  
 
Non-vested as of March 31, 2010
    866       $   9.42  
Granted
    234       11.69  
Forfeited
    (1)       8.56  
Vested
    (402)       9.19  
 
         
Non-vested as of June 30, 2010
    697       $   10.32  
 
As of June 30, 2010, there was $6,374 of total unrecognized pre-tax stock-based compensation expense related to non-vested stock options which is expected to be recognized over a weighted-average period of 1.7 years.

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Restricted stock units
Restricted stock unit awards are subject to a service condition and typically vest in equal amounts over a three-year period from the grant date. The fair value of restricted stock units is determined based on the number of restricted stock units granted and the closing market price of the common stock on the date of grant.
The following table summarizes the Company’s restricted stock unit activity for the period presented:
                  
            Weighted-  
    Shares        Average Grant-  
    (in 000’s)     Date Fair Value  
 
Outstanding at March 31, 2010
    149     $ 28.75  
Granted
    175       30.72  
Vested
    (67)       29.28  
Forfeited
    (1)       27.78  
     
Outstanding at June 30, 2010
    256     $ 29.96  
 
The total fair value of shares that vested during the three (3) months ended June 30, 2010 and 2009 was $1,985 and $497, respectively.
As of June 30, 2010, there was $6,979 of total unrecognized pre-tax stock-based compensation expense related to non-vested restricted stock units which is expected to be recognized over a weighted-average period of 2.4 years.
Performance share awards
Performance share awards are subject to certain performance goals including the Company’s Relative Total Shareholder Return (“TSR”) Ranking and cumulative Adjusted EBITDA over a two or three year period. The Company’s Relative TSR Ranking metric is based on the two or three year cumulative return to shareholders from the change in stock price and dividends paid between the starting and ending dates. The fair value of performance share awards (subject to cumulative Adjusted EBITDA) is determined based on the number of performance shares granted and the closing market price of the common stock on the date of grant. The fair value of performance share awards (subject to the Company’s Relative TSR Ranking) is estimated on the grant date using the Monte-Carlo simulation which includes the following weighted-average assumptions.
                 
  Three (3) months ended June 30,  
    2010     2009  
 
Expected Volatility
    52.3%       58.8%  
Risk free interest rate
    1.4%       1.0%  
Dividend yield
    0.8%       0.7%  
 
The following table summarizes the Company’s performance share award activity for the period presented:
                  
            Weighted-  
    Shares     Average Grant-  
    (in 000’s)     Date Fair Value  
 
Outstanding at March 31, 2010
    100     $ 33.05  
Granted
    79       33.24  
Vested
    --       --  
Forfeited
    --       --  
 
     
Outstanding at June 30, 2010
    179     $ 33.13  
 
No shares vested during the three (3) months ended June 30, 2010.
As of June 30, 2010, there was $4,635 of total unrecognized pre-tax stock-based compensation expense related to non-vested performance share awards which is expected to be recognized over a weighted-average period of 1.8 years.

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Note 12: Earnings Per Share
The following table details the computation of basic and diluted earnings per common share from continuing operations for the periods presented (share numbers in thousands):
                 
    Three (3) months ended June 30,
    2010   2009  
 
Net income
    $   13,144       $   7,802  
     
 
               
Weighted-average common shares outstanding (basic)
    17,564       17,539  
Effect of dilutive securities from equity awards
    33       --  
     
Weighted-average common shares outstanding (diluted)
    17,597       17,539  
 
               
Basic earnings per common share
    $   0.75       $   0.45  
     
Dilutive earnings per common share
    $   0.75       $   0.44  
     
 
               
 
The Weighted-average common shares outstanding (diluted) computation is not impacted during any period where the exercise price of a stock option is greater than the average market price. There were 3,714,947 and 3,433,649 non-dilutive equity awards outstanding for the three (3) months ended June 30, 2010 and 2009, respectively, that are not included in the corresponding period Weighted-average common shares outstanding (diluted) computation.
Note 13: Comprehensive income and AOCI
The following table details the computation of comprehensive income for the periods presented:
                 
    Three (3) months ended June 30,
    2010     2009  
Net income
    $   13,144       $   7,802  
     
 
               
Foreign currency translation adjustment
    (6,346)       11,503  
Derivative Instruments (net of tax):
               
Net change in fair value of cash flow hedging instruments (net of tax)
    (345)       (145)  
Amounts reclassified into results of operations
    128       71  
Pension (net of tax):
               
Unrealized gain (loss)
    5       (130)  
Amounts reclassified into results of operations
    35       35  
     
 
               
Other comprehensive income (loss)
    $   (6,523)       $   11,334  
     
 
               
Comprehensive income (loss)
    $   6,621       $   19,136  
     
 
               
 
The components of AOCI consisted of the following for the periods presented:
                 
    June 30, 2010     March 31, 2010  
 
Foreign currency translation adjustment
    $   6,952       $   13,298  
Unrealized gains (losses) on derivatives designated and qualified as
cash flow hedges
    (537)       (320)  
Unrecognized gain (losses) on defined benefit pension
    (2,967)       (3,007)  
 
       
Accumulated other comprehensive income
    $   3,448       $   9,971  
 

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Note 14: Segment Reporting
Management reviews financial information for the consolidated Company accompanied by disaggregated information on revenues, operating income and assets by geographic region for the purpose of making operational decisions and assessing financial performance. Additionally, Management is presented with and reviews revenues and gross profit by service type. The accounting policies of the individual operating segments are the same as those of the Company.
The following table presents financial information about the Company’s reportable segments by geographic region for the periods presented:
                 
    Three (3) months ended June 30,
    2010   2009  
 
North America
               
Revenues
    $   230,484       $   204,583  
Operating income
    19,167       11,575  
Depreciation
    1,470       1,921  
Intangibles amortization
    3,093       4,034  
Assets (as of June 30)
    1,045,825       1,047,304  
 
               
Europe
               
Revenues
    $   24,942       $   23,886  
Operating income
    2,336       2,089  
Depreciation
    78       84  
Intangibles amortization
    8       10  
Assets (as of June 30)
    121,576       134,666  
 
               
All Other
               
Revenues
    $   8,170       $   6,743  
Operating income
    1,389       821  
Depreciation
    36       28  
Intangibles amortization
    1       1  
Assets (as of June 30)
    22,781       18,974  
 
The sum of the segment revenues, operating income, depreciation and intangibles amortization equals the consolidated revenues, operating income, depreciation and intangibles amortization. The following reconciles segment assets to total consolidated assets as of June 30, 2010 and 2009:
                 
    As of June 30,
    2010     2009  
 
Segment assets for North America, Europe and All Other
    $   1,190,182       $   1,200,944  
Corporate eliminations
    (54,741)       (65,244)  
 
       
Total consolidated assets
    $   1,135,441       $   1,135,700  
 
The following table presents financial information about the Company by service type for the periods presented:
                 
    Three (3) months ended June 30,
    2010     2009  
 
Data Services
               
Revenues
    $   53,957       $   51,410  
Gross profit
    14,350       13,947  
 
               
Voice Services
               
Revenues
    $   163,590       $   141,520  
Gross profit
    54,033       48,379  
 
               
Hotline Services
               
Revenues
    $   46,049       $   42,282  
Gross profit
    21,231       20,087  
 
The sum of service type revenues and gross profit equals consolidated revenues and gross profit.

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Note 15: Commitments and Contingencies
Regulatory Matters
As previously disclosed, the Company received a subpoena, dated December 8, 2004, from the United States General Services Administration (“GSA”), Office of Inspector General. The subpoena requires production of documents and information. The Company understands that the materials are being sought in connection with an investigation regarding potential violations of the terms of a GSA Multiple Award Schedule contract. On October 2, 2007, the Company was contacted by the United States Department of Justice which informed the Company that it was reviewing allegations by the GSA that certain of the Company’s pricing practices under a GSA Multiple Award Schedule contract violated the Civil False Claims Act. The Company has executed an agreement with the United States tolling the statute of limitations on any action by the United States through July 1, 2010 in order for the parties to discuss the merits of these allegations prior to the possible commencement of any litigation by the United States. During Fiscal 2010, the Company recorded expense of $2,850 in connection with this investigation. The Company continues to work with the GSA related to this matter. At the conclusion of this matter, the Company could be subject to damages, fines, penalties or other costs, either through settlement or judgment, which could be material.
Litigation Matters
The Company is involved in, or has pending, various legal proceedings, claims, suits and complaints arising out of the normal course of business. Based on the facts currently available to the Company, Management believes these matters are adequately provided for, covered by insurance, without merit or not probable that an unfavorable outcome will result.
There has been no other significant or unusual activity during Fiscal 2011.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The discussion and analysis for the three (3) months ended June 30, 2010 and 2009 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, 2010 (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 June 30, 2010 and 2009 were July 3, 2010 and June 27, 2009, respectively. 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 a leading 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 June 30, 2010, the Company had more than 3,000 professional technical experts in 194 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.
With respect to Voice Services, the Company’s revenues are primarily generated from the sale and/or installation of new voice communication systems, the maintenance of voice communication systems and moves, adds and changes (“MAC work”) as customers’ employees change locations or as customers move or remodel their physical space. The Company’s diverse portfolio of product offerings allows it to service the needs of its customers which it believes is a unique competitive advantage. With respect to the sale of new voice communication systems, most significant orders are subject to competitive bidding processes and, generally, competition can be significant for such new orders. The Company is continually bidding on new projects to replace projects that are completed. New voice communication system orders often generate a maintenance agreement to maintain the voice communication system which generally ranges from 1-3 years for commercial clients and 3-5 years for government clients. Sales of new voice communication systems and, to a lesser extent, MAC work, is dependent upon general economic growth and the Company’s customers’ capital spending. On the other hand, revenues from maintenance contracts generally are not dependent on the economy as customers seek to extend the life of their existing equipment and delay capital spending on new voice communication systems. The Company also has government contracts which generate significant revenues and are not as dependent on the overall economic environment as commercial customers. Maintenance and MAC work revenues also are dependent upon the Company’s history and relationship with its customers and its long track record of providing high-quality service.
Similarly, the Company’s revenues for Data Services are generated from the installation or upgrade of data networks and MAC work. The installation of new data networks is largely dependent upon commercial employment and building occupancy rates. Installed data networks, however, may need to be upgraded in order to provide for larger, faster networks to accommodate the growing use of network technology. Additionally, Data Services projects can include MAC work, similar to Voice Services projects, which is dependent on economic factors that are the same as those factors discussed above in relation to the Voice Services business.
There is and has been a trend toward convergence of voice and data networks. Since the Company has technical expertise in both of these areas, the Company believes that this is a competitive advantage. Both the Voice Services and Data Services businesses generate backlog. At June 30, 2010, the Company’s backlog, defined as expected revenue related to executed client purchase orders or contracts that are estimated to be complete within 180 days, was approximately $229,000 and relates primarily to Voice Services and Data Services.

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The Company generates Hotline Services revenues from the sale of more than 118,000 products through its catalog, Internet Web site and the Company’s On-Site services offices. The sale of these products is a highly fragmented and competitive business. The Company has been in this business for over 30 years and has developed a reputation for providing high quality products, free 24/7/365 technical support, comprehensive warranties and rapid order fulfillment. With an average order size of less than one thousand dollars, the Company’s Hotline Services is less impacted by capital spending and more so on general IT spending. The Company’s Hotline Services business provides additional distribution and support capabilities along with access to Black Box branded products to both the Data Services and Voice Services businesses which provides cost benefits.
The Company services a variety of customers within most major industries, with the highest concentration in government, business services, technology, retail, healthcare and manufacturing. Factors that impact those verticals, therefore, could have an impact on the Company. While the Company generates most of its revenues in North America, the Company also generates revenues from around the world, primarily Europe, so that factors that impact the European market could impact the Company.
Company management (“Management”) strives to develop extensive and long-term relationships with high-quality customers as Management believes that satisfied customers will demand quality services and product offerings even in economic downturns.
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, 2009 through June 30, 2010 that have had an impact on the Company’s consolidated financial statements and, more specifically, North America Voice Services for the periods under review. Fiscal 2010 acquisitions were (i) Quanta Systems, LLC (“Quanta”) and (ii) CBS Technologies Corp. (“CBS”). 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 these current expenses and an estimate of these future expenses for Fiscal 2011 (by quarter) based on information available to the Company as of June 30, 2010:
                                         
    1Q11     2Q11     3Q11     4Q11     Fiscal 2011  
 
Selling, general & administrative expenses
                                       
Asset write-up depreciation expense on acquisitions
    $   --       $   --       $   --       $   --       $   --  
 
                                       
Intangibles amortization
                                       
Amortization of intangible assets on
acquisitions
    $   3,093       $   3,051       $   2,808       $   2,808       $   11,760  
 
                             
 
                                       
Total
    $   3,093       $   3,051       $   2,808       $   2,808       $   11,760  
 
The following table is included to provide a schedule of these expenses during Fiscal 2010 (by quarter):
                                         
    1Q10     2Q10     3Q10     4Q10     Fiscal 2010  
 
Selling, general & administrative expenses
                                       
Asset write-up depreciation expense on acquisitions
    $   --       $   --       $   128       $   348       $   476  
 
                                       
Intangibles amortization
                                       
Amortization of intangible assets on
acquisitions
    $   4,031       $   2,134       $   3,099       $   5,886       $   15,150  
 
                             
 
                                       
Total
    $   4,031       $   2,134       $   3,227       $   6,234       $   15,626  
 

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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 June 30,  
    2010     2009  
            % of total             % of total  
    $     revenue     $     revenue  
 
Revenues
                               
North America
    $   230,484       87.4%       $   204,583       87.0%  
Europe
    24,942       9.5%       23,886       10.1%  
All Other
    8,170       3.1%       6,743       2.9%  
           
Total
    $   263,596       100%       $   235,212       100%  
 
                               
Operating income
                               
North America
    $   19,167               $   11,575          
% of North America revenues
    8.3%               5.7%          
 
                               
Europe
    $   2,336               $   2,089          
% of Europe revenues
    9.4%               8.7%          
 
                               
All Other
    $   1,389               $   821          
% of All Other revenues
    17.0%               12.2%          
 
                           
 
                               
Total
    $   22,892       8.7%       $   14,485       6.2%  
 
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 June 30,  
    2010     2009  
            % of total             % of total  
    $     revenue     $     revenue  
 
Revenues
                               
Data Services
    $   53,957       20.4%       $   51,410       21.9%  
Voice Services
    163,590       62.1%       141,520       60.1%  
Hotline Services
    46,049       17.5%       42,282       18.0%  
           
Total
    $   263,596       100%       $   235,212       100%  
 
                               
Gross profit
                               
Data Services
    $   14,350               $   13,947          
% of Data Services revenues
    26.6%               27.1%          
 
                               
Voice Services
    $   54,033               $   48,379          
% of Voice Services revenues
    33.0%               34.2%          
 
                               
Hotline Services
    $   21,231               $   20,087          
% of Hotline Services revenues
    46.1%               47.5%          
 
                           
 
                               
Total
    $   89,614       34.0%       $   82,413       35.0%  
 
First quarter of Fiscal 2011 (“1Q11”) compared to first quarter of Fiscal 2010 (“1Q10”):
Total Revenues
Total revenues for 1Q11 were $263,596, an increase of 12% compared to total revenues for 1Q10 of $235,212. The Acquired Companies contributed incremental revenue of $8,012 and $0 for 1Q11 and 1Q10, respectively. Excluding the effects of the acquisitions and the positive exchange rate impact of $151 in 1Q11 relative to the U.S. dollar, total revenues would have increased 9% from $235,212 to $255,433 for the reasons discussed below. There were a total of 66 selling days in 1Q11 compared to 62 selling days in 1Q10 which represents a 6% increase in the number of selling days in 1Q11 over 1Q10.

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Revenues by Geography
North America
Revenues in North America for 1Q11 were $230,484, an increase of 13% compared to revenues for 1Q10 of $204,583. The Acquired Companies contributed incremental revenue of $8,012 and $0 for 1Q11 and 1Q10, respectively. Excluding the effects of the acquisitions and the positive exchange rate impact of $681 in 1Q11 relative to the U.S. dollar, North American revenues would have increased 8% from $204,583 to $221,791. The Company believes that this increase is primarily due to a four (4) selling day increase over the prior year, increased activity for both end-user and indirect sales of its Voice Services within the government (primarily federal), retail and business services revenue verticals, increased activity for both end-user and indirect sales of its Data Services within the business services revenue vertical and a general increase in activity for its Hotline Services, partially offset by a decrease related to a nonrecurring Data Services project completed during Fiscal 2010.
Europe
Revenues in Europe for 1Q11 were $24,942, an increase of 4% compared to revenues for 1Q10 of $23,886. Excluding the negative exchange rate impact of $954 in 1Q11 relative to the U.S. dollar, Europe revenues would have increased 8% from $23,886 to $25,896. The Company believes that this increase is primarily due to a four (4) selling day increase over the prior year and increased activity for indirect sales of its Hotline Services within the government revenue vertical, partially offset by continuing weak general economic conditions that affected client demand for its Data Services.
All Other
Revenues for All Other for 1Q11 were $8,170, an increase of 21% compared to revenues for 1Q10 of $6,743. Excluding the positive exchange rate impact of $424 in 1Q11 relative to the U.S. dollar, All Other revenues would have increased 15% from $6,743 to $7,746.
Revenue by Service Type
Data Services
Revenues from Data Services for 1Q11 were $53,957, an increase of 5% compared to revenues for 1Q10 of $51,410. Excluding the positive exchange rate impact of $357 in 1Q11 relative to the U.S. dollar for its international Data Services, Data Services revenues would have increased 4% from $51,410 to $53,600. The Company believes that this increase is primarily due to a four (4) selling day increase over the prior year and increased activity for both end-user and indirect sales in North America within the business services revenue vertical, partially offset by a decrease related to a nonrecurring project in North America completed during Fiscal 2010 and continuing weak general economic conditions that affected client demand for these services in Europe.
Voice Services
Revenues from Voice Services for 1Q11 were $163,590, an increase of 16% compared to revenues for 1Q10 of $141,520. The Acquired Companies contributed incremental revenue of $8,012 and $0 for 1Q11 and 1Q10, respectively. Excluding the effects of the acquisitions, Voice Services revenues would have increased 10% from $141,520 to $155,578. The Company believes that this increase is primarily due to a four (4) selling day increase over the prior year and increased activity for both end-user and indirect sales within the government (primarily federal), retail and business services revenue verticals. 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 1Q11 were $46,049, an increase of 9% compared to revenues for 1Q10 of $42,282. Excluding the negative exchange rate impact of $206 in 1Q11 relative to the U.S. dollar for its international Hotline Services, Hotline Services revenues would have increased 9% from $42,282 to $46,255. The Company believes that this increase is primarily due to a four (4) selling day increase over the prior year, increased activity for indirect sales in Europe within the government revenue vertical and a general increase in activity in North America.

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Gross profit
Gross profit dollars for 1Q11 were $89,614, an increase of 9% compared to gross profit dollars for 1Q10 of $82,413. Gross profit as a percent of revenues for 1Q11 was 34.0%, a decrease of 1.0% compared to gross profit as a percentage of revenues for 1Q10 of 35.0%. The Company believes the percent decrease was due primarily to an increase in project-related work, which carries a lower margin than MAC work and maintenance work, in its Voice Services, lower margin projects primarily due to continued pricing pressures for its Data Services and product and client mix for its Hotline Services. The dollar increase is primarily due to the increase in revenues partially offset by the decrease in gross profit as a percentage of revenues.
Gross profit dollars for Data Services for 1Q11 were $14,350, or 26.6% of revenues, compared to gross profit dollars for 1Q10 of $13,947, or 27.1% of revenues. Gross profit dollars for Voice Services for 1Q11 were $54,033, or 33.0% of revenues, compared to gross profit dollars for 1Q10 of $48,379, or 34.2% of revenues. Gross profit dollars for Hotline Services for 1Q11 were $21,231, or 46.1% of revenues, compared to gross profit dollars for 1Q10 of $20,087, or 47.5% 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 1Q11 were $63,620, nearly equivalent to Selling, general & administrative expenses for 1Q10 of $63,883. Selling, general & administrative expenses as a percent of revenues for 1Q11 were 24.1% compared to 27.2% for 1Q10. The decrease in Selling, general & administrative expenses as a percent of revenue over the prior year was primarily due to increased revenues and the Company’s efforts during Fiscal 2010 to right-size the organization and more properly align the expense structure with anticipated revenues and changing market demand for its solutions and services.
Intangibles amortization
Intangibles amortization for 1Q11 was $3,102, a decrease of $943 compared to Intangibles amortization for 1Q10 of $4,045. The decrease was primarily attributable to the amortization run-out for certain intangible assets partially offset by addition of intangible assets from acquisitions completed subsequent to the first quarter of Fiscal 2010.
Operating income
As a result of the foregoing, Operating income for 1Q11 was $22,892, or 8.7% of revenues, an increase of $8,407 compared to Operating income for 1Q10 of $14,485, or 6.2% of revenues.
Interest expense (income), net
Net interest expense for 1Q11 was $1,690, or 0.6% of revenues, compared to net interest expense for 1Q10 of $2,144, or 0.9% of revenues. The Company’s interest-rate swaps contributed gains of $532 and $203 for 1Q11 and 1Q10, respectively, due to the change in fair value. Excluding the effect of the interest-rate swaps, net interest expense would have decreased $125 from $2,347, or 1.0% of revenues, to $2,222, or 0.8% of revenues. This decrease in net interest expense is due to decreases in the weighted-average interest rate from 1.6% for 1Q10 to 1.3% for 1Q11 and in the weighted-average outstanding debt from $255,027 for 1Q10 to $219,773 for 1Q11. The decrease in the weighted-average interest rate is due primarily to the overall decline in short-term interest rates.
Provision for income taxes
The tax provision for 1Q11 was $8,057, an effective tax rate of 38.0%. This compares to the tax provision for 1Q10 of $4,681, an effective tax rate of 37.5%. The tax rate for 1Q11 was higher than 1Q10 due to changes in the overall mix of taxable income among worldwide offices and additional uncertain income tax positions (including interest and penalties). 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 1Q11 was $13,144, or 5.0% of revenues, compared to Net income for 1Q10 of $7,802, or 3.3% of revenues.

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Liquidity and Capital Resources
Operating Activities
Net cash provided by operating activities during 1Q11 was $1,248. Significant factors contributing to the source of cash were: net income of $13,144 inclusive of non-cash charges of $4,686 and $3,002 for amortization / depreciation expense and stock compensation expense, respectively, as well as increases in trade accounts payable of $11,890 and billings in excess of costs of $4,372. Significant factors contributing to a use of cash include increases in trade accounts receivable, net inventory and costs in excess of billings of $6,774, $2,103 and $14,111, respectively, primarily due to increased business activity during 1Q11 as well as decreases in accrued compensation and benefits of $9,289 (primarily due to the payment of Fiscal 2010 year-end bonuses and incentive compensation during 1Q11), other liabilities of $3,071 and restructuring reserves of $1,618. Changes in the above accounts are based on average Fiscal 2011 exchange rates.
Net cash provided by operating activities during 1Q10 was $16,087. Significant factors contributing to the source of cash were: net income of $7,802 inclusive of non-cash charges of $6,078 and $1,643 for amortization / depreciation expense and stock compensation expense, respectively, as well as decreases in net inventory of $2,555 and net trade accounts receivable of $11,690 and an increase in accrued taxes of $2,442. Significant factors contributing to a use of cash include decreases in billings in excess of costs, restructuring reserves, accrued compensation and benefits and deferred revenue of $2,488, $3,041, $5,688 and $1,290, respectively, and an increase in costs in excess of billings of $4,464. Changes in the above accounts are based on average Fiscal 2010 exchange rates.
As of June 30, 2010 and 2009, the Company had cash and cash equivalents of $16,955 and $25,774, respectively, working capital of $139,783 and $136,276, respectively, and a current ratio of 1.7 and 1.7, respectively.
The Company believes that its cash provided by operating activities and availability under its credit facility will be sufficient to fund the Company’s working capital requirements, capital expenditures, dividend program, potential stock repurchases, potential future acquisitions or strategic investments and other cash needs for the next 12 months.
Investing Activities
Net cash used by investing activities during 1Q11 was $2,579. Significant factors contributing to the cash outflow were: $1,683 for holdbacks and contingent fee payments related to prior period acquisitions and $940 for gross capital expenditures.
Net cash used by investing activities during 1Q10 was $1,454. Significant factors contributing to the cash outflow were: $916 for holdbacks and contingent fee payments related to prior period acquisitions and $567 for gross capital expenditures.
Financing Activities
Net cash used by financing activities during 1Q11 was $2,359. Significant factors contributing to the cash outflow were $1,053 for the payment of dividends and $902 of net payments on long-term debt.
Net cash used by financing activities during 1Q10 was $13,100. Significant factors contributing to the cash outflow were $12,048 of net payments on long-term debt and $1,052 for the payment of dividends.
Total Debt
Revolving Credit Agreement – On January 30, 2008, the Company entered into a Third Amended and Restated Credit Agreement dated as of January 30, 2008 (the “Credit Agreement”) with Citizens Bank of Pennsylvania, as agent, and a group of lenders. The Credit Agreement expires on January 30, 2013. Borrowings under the Credit Agreement are permitted up to a maximum amount of $350,000, which includes up to $20,000 of swing-line loans and $25,000 of letters of credit. The Credit Agreement may be increased by the Company up to an additional $100,000 with the approval of the lenders and may be unilaterally and permanently reduced by the Company to not less than the then outstanding amount of all borrowings. Interest on outstanding indebtedness under the Credit Agreement accrues, at the Company’s option, at a rate based on either: (a) the greater of (i) the prime rate per annum of the agent then in effect and (ii) 0.50% plus the rate per annum announced by the Federal Reserve Bank of New York as being the weighted-average of the rates on overnight Federal funds transactions arranged by Federal funds brokers on the previous trading day or (b) a rate per annum equal to the LIBOR rate plus 0.50% to 1.125% (determined by a leverage ratio based on the Company’s consolidated Earnings Before Interest Taxes Depreciation and Amortization (“EBITDA”)). The Credit Agreement requires the Company to maintain compliance with certain non-financial and financial covenants such as leverage and fixed-charge coverage ratios. As of June 30, 2010, the Company was in compliance with all financial covenants under the Credit Agreement.
As of June 30, 2010, the Company had total debt outstanding of $210,091. Total debt was comprised of $209,235 outstanding under the Credit Agreement, $1,751 of obligations under capital leases and $2 of various other third-party, non-employee loans. The maximum amount of debt outstanding under the Credit Agreement, the weighted-average balance outstanding under the Credit Agreement and the weighted-average interest rate on all outstanding debt for the three (3) months ended June 30, 2010 was $233,660, $219,773 and 1.3%, respectively, compared to $261,750, $255,027 and 1.6%, respectively, for the three (3) months ended June 30, 2009.
As of June 30, 2010, the Company had $4,636 outstanding in letters of credit and $136,129 in unused commitments under the Credit Agreement.

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Dividends
Fiscal 2011
1Q11 - The Company’s Board of Directors (the “Board”) declared a cash dividend of $0.06 per share on all outstanding shares of the common stock. The dividend totaled $1,056 and was paid on July 19, 2010 to stockholders of record at the close of business on July 2, 2010.
Fiscal 2010
1Q10 - The Board declared a cash dividend of $0.06 per share on all outstanding shares of the common stock. The dividend totaled $1,052 and was paid on July 10, 2009 to stockholders of record at the close of business on June 26, 2009.
While the Company expects to continue to declare quarterly dividends, the payment of future dividends is at the discretion of the Board and the timing and amount of any future dividends will depend upon earnings, cash requirements and financial condition of the Company. Under the Credit Agreement, the Company is permitted to make any distribution or dividend as long as no Event of Default or Potential Default (each as defined in the Credit Agreement) occurs or is continuing.
Repurchase of Common Stock
Fiscal 2011
There were no purchases of common stock during the three month period ended June 30, 2010. During such period, the Company made tax payments of $482 and withheld 16,488 shares of common stock, which were designated as treasury shares, for an average price per share of $29.26, related to share withholding to satisfy income taxes due as a result of the vesting in May 2010 of certain restricted stock units.
Fiscal 2010
There were no purchases of common stock during Fiscal 2010.
Since the inception of the repurchase program in April 1999 through June 30, 2010, the Company has repurchased 7,626,195 shares of common stock for an aggregate purchase price of $323,095, or an average purchase price per share of $42.37. These shares do not include the treasury shares withheld for tax payments resulting from the vesting in May 2010 of certain restricted stock units. As of June 30, 2010, 873,805 shares were available under repurchase programs approved by the Board. Additional repurchases of common stock may occur from time to time depending upon factors such as the Company’s cash flows and general market conditions. While the Company expects to continue to repurchase shares of common stock for the foreseeable future, there can be no assurance as to the timing or amount of such repurchases. Under the Credit Agreement, the Company is permitted to repurchase its common stock as long as no Event of Default or Potential Default (each as defined in the Credit Agreement) occurs or is continuing, the leverage ratio (after taking into consideration the payment made to repurchase such common stock) would not exceed 2.75 to 1.0 and the availability to borrow under the Credit Facility would not be less than $20,000.
Legal Proceedings
See the matter discussed in Note 15 of the Notes to the Consolidated Financial Statements of this Quarterly Report on Form 10-Q (this “Form 10-Q”), which information is incorporated herein by reference.
Inflation
The overall effects of inflation on the Company have been nominal. Although long-term inflation rates are difficult to predict, the Company continues to strive to minimize the effect of inflation through improved productivity and cost reduction programs as well as price adjustments within the constraints of market competition.
Valuation of Goodwill
Since September 26, 2009 (the date of the Company’s most recent annual goodwill impairment assessment), the Company’s stock market capitalization has been lower than its net book value. However, each of the Company’s reporting units continues to operate profitably and generate significant cash flow from operations, and the Company expects that each will continue to do so throughout the remainder of Fiscal 2011 and beyond. In addition, the Company believes that a reasonable potential buyer would offer a control premium for the business that would adequately cover the difference between the recent stock trading prices and the book value.

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Critical Accounting Policies/ Impact of Recently Issued Accounting Pronouncements
Critical Accounting Policies
The Company’s critical accounting policies require the most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and are the most important to the portrayal of the Company’s consolidated financial statements. The Company’s critical accounting policies are disclosed in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Form 10-K. There have been no changes to the Company’s critical accounting policies during the three (3) months ended June 30, 2010.
Impact of Recently Issued Accounting Pronouncements
See Note 2 of the Notes to the Consolidated Financial Statements for further discussion of recently-issued accounting standards and the related impact on the Company’s consolidated financial statements.
Cautionary Forward Looking Statements
When included in this Form 10-Q or in documents incorporated herein by reference, the words “should,” “expects,” “intends,” “anticipates,” “believes,” “estimates,” “approximates,” “targets,” “plans” and analogous expressions are intended to identify forward-looking statements. One can also identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. Such 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, such risks and uncertainties may include, among others, 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 services, successful implementation of the Company’s M&A program, including identifying appropriate targets, consummating transactions and successfully integrating the businesses, successful implementation of the Company’s 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 Form 10-K. These forward-looking statements 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 Form 10-Q. The Company expressly disclaims any obligation or undertaking to release publicly any updates or any changes in the Company’s expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The Company is exposed to market risks in the ordinary course of business that include interest-rate volatility and foreign currency exchange rates volatility. Market risk is measured as the potential negative impact on earnings, cash flows or fair values resulting from a hypothetical change in interest rates or foreign currency exchange rates over the next year. The Company does not hold or issue any other financial derivative instruments (other than those specifically noted below) nor does it engage in speculative trading of financial derivatives.
Interest-rate Risk
The Company’s primary interest-rate risk relates to its long-term debt obligations. As of June 30, 2010, the Company had total long-term obligations of $209,235 under the Credit Agreement. Of the outstanding debt, $150,000 was in variable rate debt that was effectively converted to a fixed rate through multiple interest-rate swap agreements (discussed in more detail below) and $59,235 was in variable rate obligations. As of June 30, 2010, an instantaneous 100 basis point increase in the interest rate of the variable rate debt would reduce the Company’s net income in the subsequent fiscal quarter by $146 ($91 net of tax) assuming the Company employed no intervention strategies.
To mitigate the risk of interest-rate fluctuations associated with the Company’s variable rate long-term debt, the Company has implemented an interest-rate risk management strategy that incorporates the use of derivative instruments to minimize significant unplanned fluctuations in earnings caused by interest-rate volatility. The Company’s goal is to manage interest-rate sensitivity by modifying the re-pricing characteristics of certain balance sheet liabilities so that the net-interest margin is not, on a material basis, adversely affected by the movements in interest rates.
On July 26, 2006, the Company entered into a five-year floating-to-fixed interest-rate swap that is based on a 3-month LIBOR rate versus a 5.44% fixed rate, has a notional value of $100,000 (which reduced to $50,000 as of June 26, 2009) and does not qualify for hedge accounting. On June 15, 2009, the Company entered into a three-year floating-to-fixed interest-rate swap that is based on a 3-month LIBOR rate versus a 2.28% fixed rate, has a notional value of $100,000 reducing to $50,000 after two years and does not qualify for hedge accounting. Changes in the fair market value of the interest-rate swap are recorded as an asset or liability within the Company’s Consolidated Balance Sheets and Interest expense (income) within the Company’s Consolidated Statements of Income.
Foreign Exchange Rate Risk
The Company has operations, clients and suppliers worldwide, thereby exposing the Company’s financial results to foreign currency fluctuations. In an effort to reduce this risk of foreign currency fluctuations, the Company generally sells and purchases inventory based on prices denominated in U.S. dollars. Intercompany sales to subsidiaries are generally denominated in the subsidiaries’ local currency. The Company has entered and will continue in the future, on a selective basis, to enter into foreign currency contracts to reduce the foreign currency exposure related to certain intercompany transactions, primarily trade receivables and loans. All of the foreign currency contracts have been designated and qualify as cash flow hedges. The effective portion of any changes in the fair value of the derivative instruments is recorded in Accumulated Other Comprehensive Income (“AOCI”) until the hedged forecasted transaction occurs or the recognized currency transaction affects earnings. Once the forecasted transaction occurs or the recognized currency transaction affects earnings, the effective portion of any related gains or losses on the cash flow hedge is reclassified from AOCI to the Company’s Consolidated Statements of Income. In the event it becomes probable that the hedged forecasted transaction will not occur, the ineffective portion of any gain or loss on the related cash flow hedge would be reclassified from AOCI to the Company’s Consolidated Statements of Income.
As of June 30, 2010, the Company had open foreign currency contracts in Australian and Canadian dollars, Danish krone, Euros, Mexican pesos, Norwegian kroner, British pounds sterling, Swedish krona, Swiss francs and Japanese yen. The open contracts have contract rates ranging from 1.12 to 1.23 Australian dollar, 1.01 to 1.07 Canadian dollar, 5.08 to 6.21 Danish krone, 0.68 to 0.83 Euro, 12.66 to 12.66 Mexican peso, 5.68 to 6.74 Norwegian kroner, 0.59 to 0.69 British pound sterling, 6.97 to 7.97 Swedish krona, 1.01 to 1.18 Swiss franc and 91.83 to 93.10 Japanese yen, all per U.S. dollar. The total open contracts had a notional amount of $98,223 and will expire within eleven (11) months.

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Item 4. Controls and Procedures.
Conclusions Regarding the Effectiveness of Disclosure Controls and Procedures
Management, including the Company’s Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) for the Company. Management assessed the effectiveness of the Company’s disclosure controls and procedures as of June 30, 2010. Based upon this assessment, Management has concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2010 to provide reasonable assurance that information required to be disclosed by the Company in the reports filed or submitted by it under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and to provide reasonable assurance that information required to be disclosed by the Company in such reports is accumulated and communicated to Management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
The SEC’s general guidance permits the exclusion of an assessment of the effectiveness of a registrant’s disclosure controls and procedures as they relate to its internal control over financial reporting for an acquired business during the first year following such acquisition if, among other circumstances and factors, there is not adequate time between the acquisition date and the date of assessment. As previously noted in this Form 10-Q, Black Box completed the acquisition of Quanta during Fiscal 2010. Quanta represents approximately 0.8% of the Company’s total assets as of June 30, 2010. Management’s assessment and conclusion on the effectiveness of the Company’s disclosure controls and procedures as of June 30, 2010 excludes an assessment of the internal control over financial reporting of Quanta.
Changes in Internal Control Over Financial Reporting
There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.
Limitations on the Effectiveness of Controls
All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of its inherent limitations, the Company’s internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

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Item 6. Exhibits.
     
Exhibit    
Number   Description
10.1
 
Description of Annual Incentive Plan (1)
 
   
21.1
 
Subsidiaries of the Registrant (1)
 
   
31.1
 
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, and Section 302 of the Sarbanes-Oxley Act of 2002 (1)
 
   
31.2
 
Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, and Section 302 of the Sarbanes-Oxley Act of 2002 (1)
 
   
32.1
 
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (1)
(1)   Filed herewith.

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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
         


Dated: August 12, 2010

BLACK BOX CORPORATION

 
 
  /s/ Michael McAndrew    
  Michael McAndrew, Executive Vice President, 
  Chief Financial Officer, Treasurer,
Secretary and Principal Accounting Officer 

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EXHIBIT INDEX
     
Exhibit    
Number   Description
10.1
 
Description of Annual Incentive Plan (1)
 
   
21.1
 
Subsidiaries of the Registrant (1)
 
   
31.1
 
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, and Section 302 of the Sarbanes-Oxley Act of 2002 (1)
 
   
31.2
 
Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, and Section 302 of the Sarbanes-Oxley Act of 2002 (1)
 
   
32.1
 
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (1)
(1)   Filed herewith.

29

Exhibit 10.1
Description of Annual Incentive Plan
          On May 11, 2010, the Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) of Black Box Corporation (the “Company”) recommended that the Board approve, and the Board approved, an annual incentive bonus plan (the “FY11 Annual Incentive Plan”) under the Black Box Corporation 2008 Long-Term Incentive Plan (the “2008 Plan”) for the fiscal year ending March 31, 2011 (“Fiscal 2011”). The performance goals for the FY11 Annual Incentive Plan are, as defined below, “operating earnings per share,” “adjusted operating margin percentage,” “adjusted EBITDA” and “DSOs.” “Operating earnings per share” means “operating net income” divided by weighted average common shares outstanding (diluted) with “operating net income” meaning net income plus “Reconciling Items” (as defined below); “adjusted operating margin percentage” means operating income plus Reconciling Items divided by total revenues; “adjusted EBITDA” means EBITDA (net income plus provision for income taxes, interest, depreciation and amortization) plus Reconciling Items; and “DSOs” is an internal management calculation based on the balances in net accounts receivable, costs in excess of billings and billings in excess of costs at the end of the measurement period. “Reconciling Items” means amortization of intangible assets on acquisitions, stock-based compensation expense, asset write-up expense on acquisitions, expenses, settlements, judgments and fines associated with material litigation ($500,000 or greater per matter), changes in fair value of any interest-rate swaps, certain pension plan funding expenses, the effect of changes in tax laws or accounting principles affecting reported results and the impact of any goodwill impairment.
          The performance goals for the FY11 Annual Incentive Plan will be equally weighted. Under the FY11 Annual Incentive Plan, the achievement of the performance goals at 80% of target (90% of target for the DSOs performance goal) will result in a payout of 50% of targeted annual bonus, the achievement of the performance goals at 100% of target will result in a payout of 100% of targeted annual bonus and the achievement of the performance goals at 120% of target (110% of target for the DSOs performance goal) will result in a payout of 150% of targeted annual bonus. Following Board review and approval, the Committee made targeted annual bonus awards under the FY11 Annual Incentive Plan to the Company’s executive officers as follows: R. Terry Blakemore, President and Chief Executive Officer — 100% of base salary or $600,000; Michael McAndrew, Executive Vice President, Chief Financial Officer, Treasurer and Secretary — 100% of base salary or $350,000; and Francis W. Wertheimber, Senior Vice President — 50% of base salary or $133,000.
          The Company, in the future, may adopt an annual incentive plan similar to the FY11 Annual Incentive Plan with the performance goals set forth in the FY11 Annual Incentive Plan or with other performance goals as permitted under the 2008 Plan.

 

Exhibit 21.1
SUBSIDIARIES OF THE REGISTRANT
         
        State or Other
        Jurisdiction of
        Incorporation or
Legal Name   Doing Business As   Organization
 
       
Black Box Corporation
  Black Box Corporation   Delaware
 
       
ACS Communications, Inc.
  ACS Communications, Inc.   Texas
 
       
ACS Dataline of the Northwest, Inc.
  Black Box Network Services
Black Box Network Services — West
  Oregon
 
       
ACS Investors, LLC
  ACS Investors, LLC   Delaware
 
       
ACS Dataline, LP
  Black Box Network Services
Black Box Network Services — West
  Texas
 
       
ACS Partners, LLC
  ACS Partners, LLC   Texas
 
       
ADS Telecom, Inc.
  Black Box Network Services   Florida
 
       
B & C Telephone, Inc.
  Black Box Network Services   Washington
 
  Black Box Network Services — Spokane    
 
       
BBox Holding Company
  BBox Holding Company   Delaware
 
       
Advanced Communications Corporation
  Black Box Network Services — South Carolina   South Carolina
 
       
Advanced Network Technologies, Inc.
  Black Box Network Services — California   California
 
       
American Telephone Wiring Company
  Black Box Network Services — West Virginia Operations   West Virginia
 
       
Atimco Network Services, Inc.
  Black Box Network Services — Western Pennsylvania   Pennsylvania
 
     Operations    
 
       
Black Box Corporation of Pennsylvania
  Black Box Network Services   Delaware
 
       
BB Technologies, Inc.
  BB Technologies, Inc.   Delaware
 
       
Black Box A/S
  Black Box A/S   Denmark
 
       
Black Box Canada Corporation
  Black Box Canada Corporation   Canada
 
       
Black Box Comunicaciones, S.A.
  Black Box Comunicaciones, S.A.   Spain
 
       
Black Box Datacom B.V.
  Black Box Datacom B.V.   Netherlands

 


 

         
        State or Other
        Jurisdiction of
        Incorporation or
Legal Name   Doing Business As   Organization
 
       
Black Box Deutschland GmbH
  Black Box Deutschland GmbH   Germany
 
       
Black Box Netzwerk Service GmbH
  Black Box Netzwerk Service GmbH   Germany
 
       
Black Box do Brasil Industria e Comercio Ltda.
  Black Box do Brasil Industria e Comercio Ltda.   Brazil
 
       
Black Box France
  Black Box France   France
 
       
Black Box GmbH
  Black Box GmbH   Austria
 
Black Box Holdings Australia Pty. Ltd.
  Black Box Holdings Australia Pty. Ltd.   Australia
 
       
Black Box Italia S.r.l.
  Black Box Italia S.r.l.   Italy
 
       
Black Box Network Products NV
  Black Box Network Products NV   Belgium
 
       
Black Box Network Cabling NV
  Black Box Network Cabling NV   Belgium
 
       
Black Box Network Design NV
  Black Box Network Design NV   Belgium
 
       
Black Box Network Services AG
  Black Box Network Services AG   Switzerland
 
       
Black Box Network Services Australia Pty Ltd
  Black Box Network Services Australia Pty Ltd   Australia
 
       
Black Box Network Services New Zealand Limited
  Black Box Network Services New Zealand Limited   New Zealand
 
       
Black Box Network Services Kabushiki Kaisha
  Black Box Network Services Kabushiki Kaisha   Japan
 
       
Black Box Network Services (UK) Limited
  Black Box Network Services (UK) Limited   England
 
  Black Box Network Services (UK) Limited —    
 
      Northern Ireland    
 
       
Black Box P.R. Corp.
  Black Box P.R. Corp.   Puerto Rico
 
       
Black Box Network and Electrical Services, Inc.
  Black Box Network and Electrical Services, Inc.   New York
 
  Allcom Electric    
 
       
Black Box Network Services, Inc. — Government
  Black Box Network Services, Inc. — Government   Tennessee
Solutions
     Solutions    

2


 

         
        State or Other
        Jurisdiction of
        Incorporation or
Legal Name   Doing Business As   Organization
 
       
Cable Consultants, Incorporated
  Black Box Network Services — Atlanta   Georgia
 
       
Comm Line, Inc.
  Black Box Network Services   Ohio
 
       
Communication Contractors, Inc.
  Black Box Network Services — Chicago   Illinois
 
       
Datel Communications, Inc.
  Black Box Network Services — Arizona   Arizona
 
       
Delaney Telecom, Inc.
  Black Box Network Services   Pennsylvania
 
       
DESIGNet, Inc.
  Black Box Network Services — San Jose   California
 
       
Integrated Cabling Systems, Inc.
  Black Box Network Services — Nebraska   Nebraska
 
       
Jet Line Communications, Inc.
  Black Box Network Services — Dallas   Texas
 
       
BBC Acquisition, LLC
  BBC Acquisition, LLC   Texas
 
       
FBS Communications, L.P.
  Black Box Network Services — San Antonio   Texas
 
K & A Communications, Inc.
  Black Box Network Services   Missouri
 
       
Koncepts Communications of L.I., Corp.
  Black Box Network Services — Tristate Operations   New York
 
       
Michael Electric, Inc.
  Black Box Network Services — New Jersey   New Jersey
 
       
Midwest Communications Technologies, Inc.
  Black Box Network Services   Ohio
 
       
Midwest Electronics and Communications, Inc.
  Black Box Network Services — Denver Operations   Colorado
 
       
R & D Services, Inc.
  Black Box Network Services   Massachusetts
 
  Black Box Network Services — New England    
 
       
Teldata Corporation
  Black Box Network Services — Tennessee   Tennessee
 
       
Telefuture Communications Ltd.
  Black Box Network Services — New Rochelle Office   New York
 
       
Todd Communications, Inc.
  Black Box Network Services — North Carolina   North Carolina
 
       
U.S. Premise Networking Services, Inc.
  Black Box Network Services — MN   Minnesota
 
       
Black Box AB
  Black Box AB   Sweden
 
       
Black Box Chile S.A.
  Black Box Chile S.A.   Chile

3


 

         
        State or Other
        Jurisdiction of
        Incorporation or
Legal Name   Doing Business As   Organization
 
       
Black Box de Mexico, S.A. de C.V.
  Black Box de Mexico, S.A. de C.V.   Mexico
 
       
Black Box Finland OY
  Black Box Finland OY   Finland
 
       
Black Box Network Services AB
  Black Box Network Services AB   Sweden
 
       
Black Box Network Services Corporation
  Black Box Network Services Corporation   Taiwan
 
       
Black Box Network Services (Dublin) Limited
  Black Box Network Services (Dublin) Limited   Ireland
 
       
Black Box Network Services Puebla S.A. de C.V.
  Black Box Network Services Puebla S.A. de C.V.   Mexico
 
       
Black Box Network Services S.r.l.
  Black Box Network Services S.r.l.   Italy
 
       
Black Box Network Services SDN. BHD.
  Black Box Network Services SDN. BHD.   Malaysia
 
       
Black Box Network Services Singapore Pte Ltd.
  Black Box Network Services Singapore Pte Ltd.   Singapore
 
Black Box Norge AS
  Black Box Norge AS   Norway
 
       
Black Box Services Reseaux Mediterranee
  Black Box Services Reseaux Mediterranee   France
 
       
CBS Technologies Corp.
  Black Box Network Services   New York
 
       
Consultoria en Redes, S.A. de C.V.
  Consultoria en Redes, S.A. de C.V.   Mexico
 
       
J.C. Informatica Integral, S.A. de C.V.
  J.C. Informatica Integral, S.A. de C.V.   Mexico
 
       
Lanetwork Sales Ltd.
  Lanetwork Sales Ltd.   Canada
 
       
Mutual Telecom Services Inc.
  Black Box Network Services   Delaware
 
       
Network Communications Technologies, Inc.
  Black Box Network Services
Black Box Network Services — Charlotte
  North Carolina
 
       
Norstan, Inc.
  Black Box Network Services   Minnesota
 
       
Norstan Canada Inc.
  Norstan Canada Inc.   Minnesota
 
       
Norstan Canada, Ltd./Norstan Canada, Ltee
  Black Box Network Services   Canada
 
       
Norstan Communications, Inc.
  Black Box Network Services   Minnesota

4


 

         
        State or Other
        Jurisdiction of
        Incorporation or
Legal Name   Doing Business As   Organization
 
       
NextiraOne, LLC
  Black Box Network Services   Delaware
 
  Black Box Network Services — Illinois    
 
  Black Box Network Services — Midwest    
 
  Black Box Network Services — Northeast    
 
  Black Box Network Services — Northwest    
 
  Black Box Network Services — South    
 
       
Data Communications 2000, Inc.
  Data Communications 2000, Inc.   California
 
       
Milgo Holdings Canada, LLC
  Milgo Holdings Canada, LLC   Delaware
 
       
NextiraOne Canada ULC
  NextiraOne Canada ULC   Canada
 
       
NextiraOne California L.P.
  NextiraOne California L.P.   California
 
       
NXO Installation, LLC
  NXO Installation, LLC   Delaware
 
       
NextiraOne Federal, LLC
 
  Black Box Network Services
Black Box Network Services — Federal
  Delaware
 
       
Quanta Systems, LLC
  Quanta Systems, LLC   Delaware
 
       
NextiraOne New York, LLC
  Black Box Network Services   Delaware
 
       
Vibes Technologies, Inc.
  Black Box Resale Services   Minnesota
 
       
Norstan Financial Services, Inc.
  Norstan Financial Services, Inc.   Minnesota
 
       
Norstan International, Inc.
  Norstan International, Inc.   Minnesota
 
       
Nortech Telecommunications Inc.
  Black Box Network Services — Elk Grove   Illinois
 
Nu-Vision Technologies, Inc.
  Black Box Network Services   New York
 
       
Nu-Vision Technologies, LLC
  Black Box Network Services   New York
 
       
BCS II, LLC
  BCS II, LLC   Delaware
 
       
Scottel Voice & Data, Inc.
  Black Box Network Services
Black Box Network Services — Pacific
  California
 
       
UCI Communications LLC
  Black Box Network Services   South Carolina

5

Exhibit 31.1
CERTIFICATION
I, R. Terry Blakemore, certify that:
  1.  
I have reviewed this Quarterly Report on Form 10-Q of Black Box Corporation;
 
  2.  
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
  3.  
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
  4.  
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
  a.  
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
  b.  
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
  c.  
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
  d.  
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
  5.  
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
  a.  
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
  b.  
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 12, 2010
     
/s/ R. Terry Blakemore
   
 

R. Terry Blakemore
President and Chief Executive Officer
   

 

Exhibit 31.2
CERTIFICATION
I, Michael McAndrew, certify that:
  1.  
I have reviewed this Quarterly Report on Form 10-Q of Black Box Corporation;
 
  2.  
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
  3.  
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
  4.  
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
  a.  
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
  b.  
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
  c.  
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
  d.  
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
  5.  
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
  a.  
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
  b.  
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 12, 2010
     
/s/ Michael McAndrew
   
 
   
 
Michael McAndrew    
Chief Financial Officer
   

 

Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Black Box Corporation (the “Company”) on Form 10-Q for the period ended July 3, 2010 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, certifies that to his knowledge:
          (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
          (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
     
/s/ R. Terry Blakemore
   
 
   
 
R. Terry Blakemore    
President and Chief Executive Officer
   
August 12, 2010
   
 
   
/s/ Michael McAndrew
   
 
   
 
Michael McAndrew    
Chief Financial Officer
   
August 12, 2010
   
This certification is made solely for purposes of 18 U.S.C. Section 1350, subject to the knowledge standard contained therein, and not for any other purpose.