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EX-32.1 - EXHIBIT 32.1 - BLACK BOX CORPexhibit321_masterx1q16.htm
EX-21.1 - EXHIBIT 21.1 - BLACK BOX CORPexhibit211_masterx1q16.htm
EX-31.1 - EXHIBIT 31.1 - BLACK BOX CORPexhibit311_masterx1q16.htm
EX-31.2 - EXHIBIT 31.2 - BLACK BOX CORPexhibit312_masterx1q16.htm

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 June 27, 2015
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). þ 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 the 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
(Do not check if a smaller reporting company)
Smaller reporting company o
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 July 10, 2015, there were 15,374,752 shares of common stock, par value $.001 (the "common stock"), outstanding.

1


BLACK BOX CORPORATION
FOR THE QUARTER ENDED JUNE 27, 2015
INDEX




2


PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

BLACK BOX CORPORATION
CONSOLIDATED BALANCE SHEETS

 
(Unaudited)

 
In thousands, except par value
June 27, 2015

March 31, 2015

Assets
 
 
Cash and cash equivalents
$
20,508

$
23,534

Accounts receivable, net of allowance for doubtful accounts of $5,097 and $5,109
153,056

150,562

Inventories, net
53,415

54,437

Costs/estimated earnings in excess of billings on uncompleted contracts
81,514

79,329

Other assets
31,052

35,475

Total current assets
339,545

343,337

Property, plant and equipment, net
32,336

32,247

Goodwill, net
191,877

191,178

Intangibles, net
85,485

88,098

Other assets
27,792

31,399

Total assets
$
677,035

$
686,259

Liabilities
 
 
Accounts payable
$
66,593

$
64,509

Accrued compensation and benefits
19,263

24,817

Deferred revenue
31,946

34,913

Billings in excess of costs/estimated earnings on uncompleted contracts
16,053

16,380

Other liabilities
36,482

47,100

Total current liabilities
170,337

187,719

Long-term debt
144,469

137,267

Other liabilities
23,116

24,162

Total liabilities
$
337,922

$
349,148

Stockholders’ equity
 
 
Preferred stock authorized 5,000, par value $1.00, none issued
$

$

Common stock authorized 100,000, par value $.001, 15,375 and 15,365 shares outstanding, 26,456 and 26,305 issued
26

26

Additional paid-in capital
500,302

498,052

Retained earnings
257,451

258,388

Accumulated other comprehensive income (loss)
(9,914
)
(13,399
)
Treasury stock, at cost 11,081 and 10,940 shares
(408,752
)
(405,956
)
Total stockholders’ equity
$
339,113

$
337,111

Total liabilities and stockholders’ equity
$
677,035

$
686,259

 
 
 
See Notes to the Consolidated Financial Statements

3


BLACK BOX CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

 
Three-months ended
 
June 27 and June 28
In thousands, except per share amounts
2015

2014

Revenues
 
 
Products
$
40,496

$
43,219

Services
188,718

202,007

Total
229,214

245,226

Cost of sales *
 
 
Products
23,672

25,271

Services
135,891

144,726

Total
159,563

169,997

Gross profit
69,651

75,229

Selling, general & administrative expenses
62,886

64,015

Intangibles amortization
2,613

2,650

Operating income (loss)
4,152

8,564

Interest expense, net
1,382

1,131

Other expenses (income), net
(58
)
(41
)
Income (loss) before provision for income taxes
2,828

7,474

Provision (benefit) for income taxes
2,074

3,531

Net income (loss)
$
754

$
3,943

Earnings (loss) per common share
 
 
Basic
$
0.05

$
0.25

Diluted
$
0.05

$
0.25

Weighted-average common shares outstanding
 
 
Basic
15,356

15,528

Diluted
15,459

15,629

Dividends per share
$
0.11

$
0.10

* Exclusive of depreciation and intangibles amortization.
See Notes to the Consolidated Financial Statements

4


BLACK BOX CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)

 
Three-months ended
 
June 27 and June 28
In thousands
2015

2014

Net income (loss)
$
754

$
3,943

Other comprehensive income (loss)
 
 
Foreign currency translation adjustment
3,288

120

Pension
 
 
Actuarial gain (loss), net of taxes of $3 and ($3)
5

(4
)
Amounts reclassified into results of operations, net of taxes of $56 and $28
85

43

Derivative instruments
 
 
Net change in fair value of cash flow hedges, net of taxes of ($61) and ($50)
(99
)
(81
)
Amounts reclassified into results of operations, net of taxes of $127 and $65
206

106

Other comprehensive income (loss)
$
3,485

$
184

Comprehensive income (loss)
$
4,239

$
4,127

 
 
 

See Notes to the Consolidated Financial Statements




5


BLACK BOX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
Three-months ended
 
June 27 and June 28
In thousands
2015

2014

Operating Activities
 
 
Net income (loss)
$
754

$
3,943

Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities
 
 
Intangibles amortization
2,613

2,650

Depreciation
2,002

1,718

Loss (gain) on sale of property
(1
)
(3
)
Deferred taxes
2,687

2,415

Stock compensation expense
2,279

2,312

Change in fair value of interest-rate swaps
(294
)
(249
)
Changes in operating assets and liabilities (net of acquisitions)
 
 
Accounts receivable, net
(1,749
)
(14,492
)
Inventories, net
1,268

(1,401
)
Costs/estimated earnings in excess of billings on uncompleted contracts
(2,079
)
1,740

All other assets
6,961

2,812

Accounts payable
595

5,214

Billings in excess of costs/estimated earnings on uncompleted contracts
(364
)
886

All other liabilities
(22,043
)
(13,427
)
Net cash provided by (used for) operating activities
$
(7,371
)
$
(5,882
)
Investing Activities
 
 
Capital expenditures
(1,917
)
(1,909
)
Capital disposals
19

3

Prior merger-related (payments)/recoveries

(8
)
Net cash provided by (used for) investing activities
$
(1,898
)
$
(1,914
)
Financing Activities
 
 
Proceeds (repayments) from long-term debt
$
6,957

$
10,076

Proceeds (repayments) from short-term debt
2,324

759

Purchase of treasury stock
(2,796
)
(3,936
)
Payment of dividends
(1,537
)
(1,400
)
Increase (decrease) in cash overdrafts
1,193

(195
)
Net cash provided by (used for) financing activities
6,141

5,304

Foreign currency exchange impact on cash
$
102

$
(550
)
Increase/(decrease) in cash and cash equivalents
$
(3,026
)
$
(3,042
)
Cash and cash equivalents at beginning of period
$
23,534

$
30,810

Cash and cash equivalents at end of period
$
20,508

$
27,768

Supplemental cash flow
 
 
Cash paid for interest
$
1,740

$
1,366

Cash paid for income taxes
568

3,026

Non-cash financing activities
 
 
Dividends payable
1,691

1,554

Capital leases
143

87

See Notes to the Consolidated Financial Statements

6


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 technology solutions provider dedicated to helping customers design, build, manage and secure their IT infrastructure. The Company offers Products and Services that it distributes through two platforms it has built over its 39-year history. The Products platform provides networking solutions through the sale of products including: (i) IT infrastructure, (ii) specialty networking, (iii) multimedia and (iv) keyboard/video/mouse ("KVM") switching. The Services platform is comprised of engineering and design, network operations centers, technical certifications, national and international sales teams, remote monitoring, on-site service teams and technology partner centers of excellence which includes dedicated sales and engineering resources. The primary services offered through this platform include: (i) communications lifecycle services, (ii) unified communications, (iii) structured cabling, (iv) video/AV services, (v) in-building wireless and (vi) data center services. Founded in 1976, Black Box, a Delaware corporation, 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 presented 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, 2015 (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, 2015 and 2014 were June 27, 2015 and June 28, 2014, respectively. 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 Black Box Corporation, the ultimate parent company, and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain items in the consolidated financial statements of prior years have been reclassified to conform to the current year's presentation.
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 these estimates are reasonable.
Note 2: Significant Accounting Policies
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 2016.

7


Recent Accounting Pronouncements
There have been no accounting pronouncements adopted during Fiscal 2016 that have had a material impact on the Company's consolidated financial statements.
In April 2015, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Codification ("ASC") Update 2015-03, "Simplifying the Presentation of Debt Issuance Costs" ("ASC 2015-03") which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. ASC 2015-03 requires retrospective adoption and is effective for annual reporting periods (including interim periods therein) beginning after December 15, 2015 with early adoption permitted. The Company does not expect the adoption of ASC 2015-03 to have a material impact on our financial statements.
In April 2015, the FASB issued ASC Update 2015-05, "Customer's Accounting for Fees Paid in a Cloud Computing Arrangement" ("ASC 2015-05") which provides additional guidance to customers about whether a cloud computing arrangement includes a software license. Under ASC 2015-05, if a software cloud computing arrangement contains a software license, customers should account for the license element of the arrangement in a manner consistent with the acquisition of other software licenses. If the arrangement does not contain a software license, customers should account for the arrangement as a service contract. Entities can use either of two methods: (i) prospectively to all arrangements entered into or materially modified after the effective date; or (ii) retrospectively providing certain additional disclosures as defined per ASC 2015-05. ASC 2015-05 is effective for annual reporting periods (including interim periods therein) beginning after December 15, 2015 with early adoption permitted. The Company does not expect the adoption of ASC 2015-05 to have a material impact on our financial statements.
In May 2014, the FASB issued ASC Update No. 2014-09, "Revenue from Contracts with Customers" ("ASC 2014-09"), which was amended in July 2015, that outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. The core principle of ASC 2014-09 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expected to be entitled in exchange for those goods or services. Entities can use either of two methods: (i) retrospective to each prior period presented with the option to elect certain practical expedients as defined within ASC 2014-09; or (ii) retrospective with the cumulative effect of initially applying ASC 2014-09 recognized at the date of initial application and providing certain additional disclosures as defined per ASC 2014-09. ASC 2014-09 is effective for annual reporting periods (including interim periods therein) beginning after December 15, 2017 for public companies with early adoption permitted for annual reporting periods (including interim periods therein) beginning after December 15, 2016. The Company is evaluating the method of adoption and the impact of the adoption of ASU 2014-09 on its consolidated financial statements.
Note 3: Inventories
The Company’s Inventories consist of the following:
 
June 30, 2015

March 31, 2015

Raw materials
$
1,826

$
1,674

Finished goods
68,012

69,387

Inventory, gross
69,838

71,061

Excess and obsolete inventory reserves
(16,423
)
(16,624
)
Inventories, net
$
53,415

$
54,437


8


Note 4: Goodwill
The following table summarizes Goodwill at the Company’s reporting segments:
 
North America Products

North America Services

International Products

International Services

Total

Goodwill (gross) at March 31, 2015
$
79,745

$
506,271

$
39,217

$
38,171

$
663,404

Accumulated impairment losses at March 31, 2015
(42,845
)
(364,036
)
(33,883
)
(31,462
)
(472,226
)
Goodwill (net) at March 31, 2015
$
36,900

$
142,235

$
5,334

$
6,709

$
191,178

 
 
 
 
 
 
Foreign currency translation adjustment
(1
)
1

19

680

699

 
 
 
 
 
 
Goodwill (gross) at June 30, 2015
$
79,744

$
506,272

$
39,236

$
38,851

$
664,103

Accumulated impairment losses at June 30, 2015
(42,845
)
(364,036
)
(33,883
)
(31,462
)
(472,226
)
Goodwill (net) at June 30, 2015
$
36,899

$
142,236

$
5,353

$
7,389

$
191,877

As previously disclosed, the Company conducted its annual goodwill impairment assessment during the third quarter of Fiscal 2015 using data as of September 27, 2014. The first step of the goodwill impairment assessment, used to identify potential impairment, resulted in a surplus of fair value over carrying amount for each of our reporting units thus the reporting units are considered not impaired and the second step of the impairment test is not necessary. The excess of the fair value over this adjusted carrying amount was $23,061, $68,364, $14,839 and $1,411 for North America Products, North America Services, International Products and International Services, respectively. A 100 basis point increase in the weighted-average cost of capital, which, holding all other assumptions constant, would have a significant impact on the fair value of a reporting unit and would decrease the fair value of the reporting units by $8,629, $41,488, $2,998 and $1,265 for North America Products, North America Services, International Products and International Services, respectively.
During the fourth quarter of Fiscal 2015 in connection with planning for the fiscal year ending March 31, 2016, and based on the results of Fiscal 2015, the Company reduced its longer-term revenue and profitability outlook for North America Services from the longer-term revenue and profitability outlook used in the annual goodwill impairment assessment completed in the third quarter of Fiscal 2015. The Company evaluated the impact of this reduced longer-term revenue and profitability outlook and determined that it was not more likely than not a reduction in the fair value of this reporting unit below its carrying amount; thus, no interim test was warranted. Such determination was based on the following considerations: (i) the Company continues to expect longer-term revenue and profit growth, but at lower rates (ii) the carrying amount for North America Services did not materially change from the annual goodwill impairment assessment completed in the third quarter of Fiscal 2015 (iii) the Company had $68,364 (31%) of excess of fair value over the carrying amount for North America Services from the annual goodwill impairment assessment completed in the third quarter of Fiscal 2015 and (iv) there were no material negative industry or macro-economic trends in the fourth quarter of Fiscal 2015. To illustrate the impact of the reduced longer-term revenue and profitability outlook, assuming all other assumptions held constant from the annual goodwill impairment assessment completed in the third quarter of Fiscal 2015, the excess of the fair value for North America Services would be reduced from $68,364 (31%) to $14,963 (7%). If the Company were to fail to meet forecasted results or further reduce its longer-term revenue and profitability outlook in the future, it could result in goodwill impairment loss that could have a material adverse effect on the results of operations.
During the second quarter of Fiscal 2016, the Company will determine whether the recent downward adjustment in its revenue and profitability outlook for the remainder of Fiscal 2016 will impact the valuation of goodwill.
Future events that could result in an interim assessment of goodwill impairment and/or a potential impairment loss include, but are not limited to, (i) significant underperformance relative to historical or projected future operating results, (ii) significant changes in the manner of or use of the assets or the strategy for the Company's overall business or (iii) significant negative industry or economic trends.

9


Note 5: Intangible Assets
The following table summarizes the gross carrying amount, accumulated amortization and net carrying amount by intangible asset class:
 
June 30, 2015
March 31, 2015
 
Gross Carrying Amount

Accum. Amort.

Net Carrying Amount

Gross Carrying Amount

Accum. Amort.

Net Carrying Amount

Definite-lived
 
 
 
 
 
 
Non-compete agreements
$
11,971

$
11,689

$
282

$
11,901

$
11,548

$
353

Customer relationships
137,267

80,312

56,955

137,267

77,988

59,279

Acquired backlog
20,838

20,329

509

20,838

20,111

727

Total
$
170,076

$
112,330

$
57,746

$
170,006

$
109,647

$
60,359

Indefinite-lived
 
 
 
 
 
 
Trademarks
35,992

8,253

27,739

35,992

8,253

27,739

Total
$
206,068

$
120,583

$
85,485

$
205,998

$
117,900

$
88,098

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 recent downward adjustment in its revenue and profitability outlook for the remainder of Fiscal 2016 will not impact the valuation of definite-lived or indefinite-lived intangible assets.
The following table summarizes the changes to the net carrying amounts by intangible asset class:
 
Trademarks

Non-Competes and Backlog

Customer relationships

Total

March 31, 2015
$
27,739

$
1,080

$
59,279

$
88,098

Intangibles Amortization

(289
)
(2,324
)
(2,613
)
Foreign currency translation adjustment




June 30, 2015
$
27,739

$
791

$
56,955

$
85,485

The following table details the estimated intangibles amortization expense for the remainder of Fiscal 2016, each of the succeeding four fiscal years and the periods thereafter.
Fiscal
 
2016
$
7,664

2017
8,883

2018
7,427

2019
6,446

2020
5,951

Thereafter
21,375

Total
$
57,746


10


Note 6: Indebtedness
The Company’s Long-term debt consists of the following:
 
June 30, 2015

March 31, 2015

Revolving credit agreement
$
143,145

$
136,000

Other
2,096

2,132

Total debt
$
145,241

$
138,132

Less: current portion (included in Other liabilities)
(772
)
(865
)
Long-term debt
$
144,469

$
137,267

On March 23, 2012, the Company entered into a Credit Agreement (the "Credit Agreement") with Citizens Bank of Pennsylvania, as administrative agent, and certain other lender parties. The Credit Agreement expires on March 23, 2017. Borrowings under the Credit Agreement were permitted up to a maximum amount of $400,000, which the Company voluntarily reduced to $300,000 effective as of April 16, 2015, and includes up to $25,000 of swing-line loans and $25,000 of letters of credit. The Company voluntarily reduced the unused commitment of our Credit Agreement by $100,000 in order to reduce our commitment fee costs associated with the unused portion of the line. 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, in each case plus 0% to 0.75% (determined by a leverage ratio based on the Company’s consolidated Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA")) or (b) a rate per annum equal to the LIBOR rate plus 0.875% to 1.750% (determined by a leverage ratio based on the Company’s consolidated 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, 2015, the Company was in compliance with all 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-months ended June 30, 2015 was $173,900, $160,762 and 2.0%, respectively, compared to $189,605, $176,163 and 1.5%, respectively, for the three-months ended June 30, 2014.
As of June 30, 2015, the Company had $4,450 outstanding in letters of credit and $152,405 in unused commitments, which are limited by a financial covenant, 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.
Foreign currency contracts
The Company enters into foreign currency contracts to hedge exposure to variability in expected fluctuations in foreign currencies. 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 Operations.

11


As of June 30, 2015, 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, all of which have been designated as cash flow hedges. These contracts had a notional amount of $48,510 and will expire within eight months. There was no hedge ineffectiveness during Fiscal 2016 or Fiscal 2015.
Interest-rate Swaps
On November 15, 2011, the Company entered into a three-year floating-to-fixed interest-rate swap, with an effective start date of July 26, 2012, which is based on a three-month LIBOR rate versus a 1.25% fixed rate and has a notional value of $125,000. This interest-rate swap does not qualify for hedge accounting and is hereinafter referred to as the "interest-rate swap."
The following tables summarize the carrying amounts of derivative asset/liability and the impact on the Company's Consolidated Statements of Operations:
 
 
Asset Derivatives
Liability Derivatives
 
Classification
June 30,
2015

March 31,
2015

June 30,
2015

March 31,
2015

Derivatives designated as hedging instruments
 

 

 

 

Foreign currency contracts
Other liabilities (current)




$
856

$
4,959

Foreign currency contracts
Other assets (current)
$
521

$
402

 
 
Derivatives not designated as hedging instruments
 

 

 

 

Interest-rate swaps
Other liabilities (non-current)
 
 
$
106

$
400

 
 
Three-months ended
 
 
June 30
 
Classification
2015

2014

Derivatives designated as hedging instruments
 

 

Gain (loss) recognized in other comprehensive income (effective portion), net of taxes
Other comprehensive income
$
(99
)
$
(81
)
Amounts reclassified from AOCI into results of operations (effective portion), net of taxes
Selling, general &
administrative expenses
$
206

$
106

Derivatives not designated as hedging instruments
 
 
Gain (loss) recognized in results of operations
Interest expense (income), net
$
294

$
249

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, 2015, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value:
 
Level 1

Level 2

Level 3

Total

Assets at Fair Value
 
 
 
 
Defined benefit pension plan assets(1)
$
12,950

$
22,721

$

$
35,671

Foreign currency contracts
$

$
521

$

$
521

Total Assets at Fair Value
$
12,950

$
23,242

$

$
36,192

Liabilities at Fair Value
 
 
 
 
Foreign currency contracts
$

$
856

$

$
856

Interest-rate swap
$

$
106

$

$
106

Total Liabilities at Fair Value
$

$
962

$

$
962

 
 
 
 
 
(1) The fair value of pension plan assets is measured annually, thus this value is as of March 31, 2015.

12


Non-recurring fair value measurements
The Company's assets and liabilities that are measured at fair value on a non-recurring basis include non-financial assets and liabilities initially measured at fair value in a business combination and Goodwill.
Note 9: Stockholder's Equity
Accumulated Other Comprehensive Income
The components of AOCI consisted of the following for the periods presented:
 
June 30, 2015

March 31, 2015

Foreign currency translation adjustment
$
2,430

$
(858
)
Derivative instruments, net of tax
(96
)
(203
)
Defined benefit pension, net of tax
(12,248
)
(12,338
)
Accumulated other comprehensive income
$
(9,914
)
$
(13,399
)
Dividends
The following table presents information about the Company's dividend program:
Period
Record Date
Payment Date
Rate

Aggregate Value

1Q16
June 26, 2015
July 10, 2015
$
0.11

$
1,691

4Q15
March 31, 2015
April 15, 2015
$
0.10

$
1,537

3Q15
December 26, 2014
January 9, 2015
$
0.10

$
1,536

2Q15
September 26, 2014
October 10, 2014
$
0.10

$
1,544

1Q15
June 27, 2014
July 11, 2014
$
0.10

$
1,554

While the Company expects to continue to declare quarterly dividends, the payment of future dividends is at the discretion of the Company's Board of Directors (the "Board") and the timing and amount of any future dividends will depend upon earnings, cash requirements and the financial condition of the Company. Under the Credit Agreement, the Company is permitted to make distributions or dividends as long as no Event of Default or Potential Default (as defined in the Credit Agreement) shall have occurred and is continuing or shall occur as a result thereof. In addition, no distribution or dividend is permitted under the Credit Agreement if such event would violate a consolidated leverage ratio required to be maintained under the Credit Agreement other than regular quarterly dividends not exceeding $15,000 per year.
Common Stock Repurchases
The following table presents information about the Company's common stock repurchases:
 
Three-months ended
 
June 30
 
2015

2014

Shares of common stock purchased
141,524

171,304

Aggregate purchase price
$
2,796

$
3,936

Average purchase price
$
19.75

$
22.98

During the three-month period ended June 30, 2015, the Company made tax payments of $796 and withheld 40,176 shares of common stock, which were designated as treasury shares, at an average price per share of $19.80, in order to satisfy employee income taxes due as a result of the vesting of certain restricted stock units. During the three-month period ended June 30, 2014, the Company made tax payments of $949 and withheld 41,404 shares of common stock, which were designated as treasury shares, at an average price per share of $22.92, in order to satisfy employee income taxes due as a result of the vesting of certain restricted stock units.

13


Since the inception of its repurchase programs beginning in April 1999 and through June 30, 2015, the Company has repurchased 10,828,575 shares of common stock for an aggregate purchase price of $402,360, or an average purchase price per share of $37.16. These shares do not include the treasury shares withheld for tax payments due upon the vesting of certain restricted stock units and performance shares. As of June 30, 2015, 671,425 shares were available under the most recent repurchase programs. 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. 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 (as defined in the Credit Agreement) shall have occurred and is continuing or shall occur as a result thereof. In addition, no repurchase of common stock is permitted under the Credit Agreement if the Company's consolidated leverage ratio (based on EBITDA) exceeds 3.0. At June 30, 2015, the Company's leverage ratio was 3.0 which restricts the Company from repurchasing its stock on the open market during the second quarter of Fiscal 2016.
Note 10: Income Taxes
The Company's provision for income taxes for the three-months ended June 30, 2015 was $2,074, an effective tax rate of 73.3% on income before provision for income taxes of $2,828, compared to a provision for income taxes for the three-months ended June 30, 2014 of $3,531, an effective tax rate of 47.2% on income before provision for income taxes of $7,474. The effective tax rate increase from 47.2% to 73.3% was primarily due to a decrease in Income before provision for income taxes. The effective tax rate for the three-months ended June 30, 2015 of 73.3% differs from the federal statutory rate primarily due to state income taxes and the write-off of certain deferred tax assets related to equity awards partially offset by foreign earnings taxed at lower statutory rates.
The Company provides for income taxes at the end of each interim period based on the estimated effective tax rate adjusted for certain discrete items 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 2013 through Fiscal 2015 remain open to examination by the Internal Revenue Service ("IRS") and Fiscal 2010 through Fiscal 2015 remain open to examination by certain state and foreign taxing jurisdictions.
Note 11: Stock-based Compensation
In August 2008, the Company’s stockholders approved the 2008 Long-Term Incentive Plan (the "Incentive Plan"), which replaced the 1992 Stock Option Plan, as amended, and the 1992 Director Stock Option Plan, as amended. As of June 30, 2015, the Incentive Plan is authorized to issue stock options, restricted stock units and performance shares, among other types of awards, for up to 5,199,210 shares of common stock, par value $0.001 per share (the "common stock").
The Company recognized stock-based compensation expense of $2,279 and $2,312 for the three-months ended June 30, 2015 and 2014, respectively. The Company recognized total income tax benefit for stock-based compensation arrangements of $870 and $843 for the three-months ended June 30, 2015 and 2014, respectively. Stock-based compensation expense is recorded in Selling, general & administrative expense within the Company’s Consolidated Statements of Operations.
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-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-months ended
 
June 30
 
2015

2014

Expected life (in years)
7.5

7.7

Risk free interest rate
2.0
%
2.3
%
Annual forfeiture rate
1.5
%
1.5
%
Expected Volatility
43.9
%
45.1
%
Dividend yield
1.8
%
1.3
%

14


The following table summarizes the Company’s stock option activity:
 
Shares (in 000’s)

Weighted-Average Exercise Price

Weighted-Average Remaining Contractual Life (Years)
Intrinsic Value (000’s)

Outstanding at March 31, 2015
1,844

$
31.65

 
 
Granted
160

19.51

 
 
Exercised


 
 
Forfeited or cancelled
(85
)
34.19

 
 
Outstanding at June 30, 2015
1,919

$
30.52

3.8
$
231

Exercisable at June 30, 2015
1,613

$
32.28

2.7
$

The weighted-average grant-date fair value of options granted during the three-months ended June 30, 2015 and 2014 was $7.79 and $9.59, respectively. The intrinsic value of options exercised during the three-months ended June 30, 2015 and 2014 was $0 and $0, respectively. The aggregate intrinsic value in the preceding table is based on the closing stock price of the common stock on June 26, 2015, which was $20.96.
The following table summarizes certain information regarding the Company’s non-vested stock options:
 
Shares (in 000’s)

Weighted-Average Grant-Date Fair Value

March 31, 2015
290

$
9.68

Granted
160

7.79

Vested
(135
)
9.62

Forfeited
(9
)
9.74

June 30, 2015
306

$
8.72

As of June 30, 2015, there was $2,400 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 2.2 years.
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:
 
Shares (in 000’s)

Weighted-Average Grant-Date Fair Value

March 31, 2015
262

$
23.34

Granted
170

19.53

Vested
(151
)
22.41

Forfeited
(12
)
22.99

June 30, 2015
269

$
21.47

The total fair value of shares that vested during the three-months ended June 30, 2015 and 2014 was $2,979 and $3,401, respectively.
As of June 30, 2015, there was $4,135 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 2.2 years.

15


Performance share awards
Performance share awards are subject to one of the performance goals - the Company's Relative Total Shareholder Return ("TSR") Ranking or cumulative Adjusted EBITDA - each over a three-year period. The Company’s Relative TSR Ranking metric is based on the three-year cumulative return to stockholders 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 valuation method which includes the following weighted-average assumptions.
 
Three-months ended
 
June 30
 
2015

2014

Risk free interest rate
0.9
%
0.8
%
Expected Volatility
39.9
%
44.7
%
Dividend yield
2.0
%
1.3
%
The following table summarizes the Company’s performance share award activity:
 
Shares (in 000’s)

Weighted-Average Grant-Date Fair Value

March 31, 2015
275

$
24.69

Granted
106

19.56

Vested


Forfeited
(90
)
22.79

June 30, 2015
291

$
23.41

The total fair value of shares that vested during the three-months ended June 30, 2015 and 2014 was $0 and $0, respectively.
As of June 30, 2015, there was $2,334 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 2.3 years.
Note 12: Earnings (loss) Per Share
The following table details the computation of basic and diluted earnings (loss) per common share from continuing operations for the periods presented (share numbers in thousands):
 
Three-months ended
 
June 30
 
2015

2014

Net income (loss)
$
754

$
3,943

Weighted-average common shares outstanding (basic)
15,356

15,528

Effect of dilutive securities from equity awards
103

101

Weighted-average common shares outstanding (diluted)
15,459

15,629

Basic earnings (loss) per common share
$
0.05

$
0.25

Dilutive earnings (loss) per common share
$
0.05

$
0.25

 
 
 
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 1,918,615 and 2,143,781 non-dilutive equity awards outstanding for the three-months ended June 30, 2015 and 2014, respectively, that are not included in the corresponding period Weighted-average common shares outstanding (diluted) computation.

16


Note 13: Segment Information
The Company conducts business globally and is managed on a geographic-service type basis consisting of four operating segments which are (i) North America Products, (ii) North America Services, (iii) International Products and (iv) International Services. These operating segments are also the Company's reporting units for purposes of testing goodwill for impairment and its reporting segments for financial reporting purposes. Revenues within our North America segments are primarily attributed to the United States while revenues within our International segments are attributed to countries in Europe, the Pacific Rim and Latin America.
The accounting policies of the operating segments are the same as those of the Company. The Company allocates resources to its operating segments and evaluates the performance of the operating segments based upon operating income.
The financial results for the Company's reporting segments are as follows:
 
North America Products

North America Services

International Products

 International Services

Total

1Q16
 
 
 
 
 
Revenues
$
20,825

$
182,018

$
19,671

$
6,700

$
229,214

Gross profit
8,879

51,116

7,945

1,711

69,651

Operating income (loss)
988

2,354

319

491

4,152

Depreciation expense
354

1,442

160

46

2,002

Intangibles amortization

2,613



2,613

Capital Expenditures
400

1,377

112

28

1,917

Assets (as of June 30)
104,121

505,599

42,568

24,747

677,035

 
 
 
 
 
 
1Q15
 
 
 
 
 
Revenues
19,727

194,265

23,492

7,742

245,226

Gross profit
7,959

55,217

9,989

2,064

75,229

Operating income (loss)(1)
229

7,453

303

579

8,564

Depreciation expense
550

947

180

41

1,718

Intangibles amortization

2,647


3

2,650

Capital Expenditures
360

1,417

132


1,909

Assets (as of June 30)
94,480

535,908

54,301

31,651

716,340

(1) These results reflect a reclassification of expense that reduced Operating income (loss) in North America Products by $1,218 in 1Q15, with a corresponding increase of the same amounts for Operating income (loss) in North America Services. This reclassification had no effect on our consolidated financial results.
Note 14: Commitments and Contingencies
The Company is subject to unclaimed or abandoned property (escheat) laws which require it to turn over to state governmental authorities the property of others held by the Company that has been unclaimed for specified periods of time. Property held by the Company subject to escheat laws primarily includes accounts payable, payroll checks and trade accounts receivable credits. The Company participated in voluntary disclosure programs in all 50 states within the United States and the District of Columbia in an effort to voluntarily comply with state abandoned property laws and settle past due unclaimed property obligations. The Company completed the programs and settled with 49 states and the District of Columbia which resulted in an immaterial charge to the consolidated financial statements during the fiscal year ended March 31, 2014. On May 22, 2013, the Company entered into Delaware’s Voluntary Disclosure Agreement Program in order to voluntarily comply with Delaware’s abandoned property law in exchange for certain protections and benefits. Since that time, the Company has worked in good faith to complete a review of its books and records related to unclaimed or abandoned property during the periods required under the program. The Voluntary Disclosure Agreement had an original expiration date of June 30, 2015 which was subsequently extended for six months to December 30, 2015. The Company will continue to examine its options regarding the escheat laws of Delaware including completing Delaware’s Voluntary Disclosure Agreement Program or proceeding to audit, as well as to pursue any indemnification claims the Company may have from a third party with respect to such liability. Amounts incurred and paid to resolve past due unclaimed property obligations in Delaware could have a material adverse effect on the Company’s results of operations and cash flows.

17


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 material outcome will result.
There has been no other significant or unusual activity during Fiscal 2016.

18


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations("MD&A").
The discussion and analysis for the three-months ended June 30, 2015 and 2014 as set forth below in this Part I, Item 2 should be read in conjunction with the response to Part I, 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, 2015 (the "Form 10-K"). References to “1Q16” mean the three-month period ended June 30, 2015 while references to “1Q15” mean the three-month period ended June 30, 2014. 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, 2015 and 2014 were June 27, 2015 and June 28, 2014, 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 except for per share amounts or unless otherwise noted.
The Company
Black Box is a leading technology solutions provider dedicated to helping customers design, build, manage and secure their IT infrastructure. The Company offers Products and Services that it distributes through two platforms that it has built over its 39-year history.
Under our Products platform ("Products"), we provide networking solutions through the sale of products for IT infrastructure, specialty networking, multimedia and KVM switching.
Our Products' revenues are generated from sales to end-users, collaboration with key channel partners and system integrators and through a global distribution network. Products sells through a direct sales team as well as through its internet site and catalogs. These products are sold in a highly fragmented and competitive market. The Company has been in this business for over 39 years and has developed a reputation for being a reliable provider of high-quality communications and infrastructure products. With an average order size of less than one thousand dollars, product revenues are less impacted by capital spending and more so by general information technology spending.
Our Services platform ("Services") is comprised of engineering and design, network operations centers, technical certifications, national and international sales teams, remote monitoring, on-site service teams and technology partner centers of excellence which include dedicated sales and engineering resources. The primary services offered through this platform include communications lifecycle services, unified communications, structured cabling, video/AV services, in-building wireless and data center services.
The Company generates revenues in its Services business from the design, sale and/or installation of new communications and data infrastructure systems, the support of existing systems and MAC (moves, adds and changes) work. The Company's diverse portfolio of offerings allows it to service the needs of its clients independent of the technology that they choose, which it believes is a unique competitive advantage. For the sale and implementation of new communications systems, or other major projects, 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 maintain and grow service revenues. Projects account for the majority of Services revenues and are primarily driven by the overall economic environment and information technology capital spending. The Company also serves government clients whose revenues are not as dependent on the overall economic environment as commercial clients but are subject to governmental budgetary constraints.
New communications systems orders often generate post-implementation maintenance via a fixed fee model where revenues are earned ratably over the term of the agreement (generally 1-3 years for commercial clients and 3-5 years for government clients) or a variable fee model that is based on time and materials per occurrence, similar to MAC work. Maintenance revenues generally are not dependent on the economy as clients contract for maintenance to extend the life of their existing equipment and delay capital spending on new communications systems. Maintenance and MAC work revenues are also dependent upon the Company's relationship with its clients and its long track record of providing high-quality service.
The Company's Services business generates backlog which is defined by the Company as orders and contracts considered to be firm. At June 30, 2015, the Company's total backlog, which relates primarily to Services, was $377,803, of which $240,447 is expected to be completed within the next twelve months.

19


Our platforms introduce scale, flexibility and leverage to the business, and provide the following competitive advantages:

A diversified client base: We have built a diversified client base that ranges from small organizations to many of the world's largest corporations and institutions. Black Box clients participate in many industries, including government, technology, business services, healthcare, manufacturing, banking and retail, among others. Revenues from our clients are segmented with approximately 60% from large companies (i.e., revenues greater than $1 billion, including federal governments), approximately 20% from medium-sized companies (i.e., revenues between $50 million and $1 billion, including state governments) and approximately 20% from small companies (i.e., revenues less than $50 million, including local governments). We strive to develop extensive and long-term relationships with high-quality clients as we believe that satisfied clients will demand quality services and product offerings even in economic downturns. Also, we believe that our distinctive portfolio of products and services will allow us to leverage the relationships and introduce additional offerings to satisfied clients.

Key relationships with leading technology partners: We have built long-term relationships with all major communications equipment manufacturers and we are a top partner with the market leaders.

Broad geographic footprint: We have built a global footprint with offices throughout the world.

Deep organic resources: We have approximately 4,000 team members world-wide, with the experience and certifications to serve our clients with on-site and remote capabilities.

Dedicated sales force: We have a team of direct sales people world-wide.

Strong financial position: We have a stable balance sheet and have generated positive cash flow for 39 consecutive years.

The Company services a variety of clients within most major industries, with the highest concentration in the government, technology, business services, healthcare, manufacturing, banking and retail industry verticals. 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, such that factors that impact European markets could impact the Company.

20


1Q16 vs 1Q15 Summary
 
1Q16

1Q15

% Change

Revenues
$
229,214

$
245,226

(7
)%
Gross profit margin
30.4
%
30.7
%
(1
)%
Operating income margin
1.8
%
3.5
%
(48
)%
Diluted EPS
$
0.05

$
0.25

(81
)%
Net cash provided by (used for) operating activities
$
(7,371
)
$
(5,882
)
n/m

n/m = not meaningful
Diluted EPS was $0.05, a decrease of 81% compared to Diluted EPS of $0.25 in the same period last year as a result of:
a $16,012 decrease in Revenues as a result of a decrease in Service Revenues primarily due to a decrease in our core commercial revenues and government revenues within North America Services and a negative exchange rate impact of $3,616 relative to the U.S. Dollar in International Products partially offset by an increase in our solutions practices, which includes the Cisco solutions practice and the Wireless solutions practice in North America Services and North America Products,
a $5,578 decrease in Gross profit as a result of the decrease in Revenues in North America Services noted above and the decrease in Gross profit margin in North America Services resulting from project mix,
a $1,129 decrease in Selling, general and administrative expenses which were primarily the result of cost savings from restructuring activity in the prior year in both International Products and North America Services partially offset by current period investments for the operations transformation and infrastructure in North America Services,
a $251 increase in Interest expense (income), net resulting from $242 of deferred financing costs that were written off in connection with the Company's voluntary reduction in the unused commitment of our Credit Agreement (as defined below) partially offset by a change in the fair value of the interest-rate swap of $45 (from a gain of $249 in 1Q15 to a gain of $294 in 1Q16),
a $1,457 decrease in Provision for income taxes and an increase in the effective rate from 47.2% to 73.3% due to a decrease in Income before provision for income taxes, and
a 170 reduction in Diluted weighted-average common shares outstanding resulting from the Company's common stock repurchases partially offset by the vesting of certain restricted stock in 1Q16.
Net cash used for operating activities was $7,371, which included Net income of $754 and an increase in working capital of $13,590, a decrease of 25% compared to net cash used for operating activities of $5,882, which included Net income of $3,943 and an increase in working capital of $15,564, in the same period last year.


21


Results of Operations
Segments
We conduct our business globally and manage our business by geographic-service type under the following four operating segments: North America Products, North America Services, International Products and International Services. The Revenues, Gross profit and Operating income amounts in the table below are presented on a basis consistent with GAAP.
 
1Q16

1Q15

% Change

Revenues
 
 
 
North America Products
$
20,825

$
19,727

6
 %
International Products
$
19,671

$
23,492

(16
)%
Products
$
40,496

$
43,219

(6
)%
North America Services
$
182,018

$
194,265

(6
)%
International Services
$
6,700

$
7,742

(14
)%
Services
$
188,718

$
202,007

(7
)%
Total Revenues
$
229,214

$
245,226

(7
)%
Gross profit
 
 
 
North America Products
$
8,879

$
7,959

12
 %
% of Revenues
42.6
%
40.3
%
6
 %
International Products
$
7,945

$
9,989

(21
)%
% of Revenues
40.4
%
42.5
%
(5
)%
Products
$
16,824

$
17,948

(6
)%
% of Revenues
41.5
%
41.5
%
 %
North America Services
$
51,116

$
55,217

(7
)%
% of Revenues
28.1
%
28.4
%
(1
)%
International Services
$
1,711

$
2,064

(17
)%
% of Revenues
25.5
%
26.7
%
(4
)%
Services
$
52,827

$
57,281

(8
)%
% of Revenues
28.0
%
28.4
%
(1
)%
Total Gross Profit
69,651

75,229

(7
)%
% of Revenues
30.4
%
30.7
%
(1
)%
Operating income (loss)(1)
 
 
 
North America Products
$
988

$
229

331
 %
% of Revenues
4.7
%
1.2
%
309
 %
International Products
$
319

$
303

5
 %
% of Revenues
1.6
%
1.3
%
26
 %
Products
$
1,307

$
532

146
 %
% of Revenues
3.2
%
1.2
%
162
 %
North America Services
$
2,354

$
7,453

(68
)%
% of Revenues
1.3
%
3.8
%
(66
)%
International Services
$
491

$
579

(15
)%
% of Revenues
7.3
%
7.5
%
(2
)%
Services
$
2,845

$
8,032

(65
)%
% of Revenues
1.5
%
4.0
%
(62
)%
Total Operating Income (loss)
4,152

8,564

(52
)%
% of Revenues
1.8
%
3.5
%
(48
)%
(1) These results reflect a reclassification of expense that reduced Operating income (loss) in North America Products by $1,218 in 1Q15, with a corresponding increase of the same amounts for Operating income (loss) in North America Services. This reclassification had no effect on our consolidated financial results. 

22


1Q16 vs 1Q15
Total Revenues were $229,214, a decrease of 7% when compared to Total Revenues of $245,226 in the same period last year. Product Revenues were $40,496, a decrease of 6% compared to Product Revenues of $43,219 in the same period last year primarily due to a negative exchange rate impact of $3,616 relative to the U.S. Dollar in International Products partially offset by an increase in North America Products as a result of direct selling efforts in focused markets. Service Revenues were $188,718, a decrease of 7% compared to Service Revenues of $202,007 in the same period last year primarily due to a decrease in core commercial revenues, primarily in the business services industry, and a decrease in government revenues as a result of unexpected project delays and award delays within North America Services partially offset by increases in a large managed services contract and our solutions practices, which includes the Cisco solutions practice and the Wireless solutions practice in North America Services.
Total Gross profit margin was 30.4%, a decrease of 1% compared to Total Gross profit margin of 30.7% in the same period last year. Product Gross profit margin was 41.5%, consistent with Product Gross profit margin of 41.5% in the same period last year primarily due to an increase in North America Products as a result of cost efficiency programs offset by a decrease in International Products as a result of product mix. Service Gross profit margin was 28.0%, a decrease of 1% compared to Service Gross profit margin of 28.4% in the same period last year primarily due to project mix.
Total Operating income margin was 1.8%, a decrease of 48% compared to Total Operating income margin of 3.5% in the same period last year. Product Operating income margin was 3.2%, an increase of 162% compared to Product Operating income margin of 1.2% in the same period last year, primarily due to an increase in Gross profit in North America Products and a decrease in Selling, general and administrative expenses as a result of cost savings from restructuring activity in the prior year in International Products partially offset by a decrease in Gross profit margin in International Products. Service Operating income margin was 1.5%, a decrease of 62% compared to Service Operating income margin of 4.0% in the same period last year, primarily due to a decrease in Gross profit and current period investments for the operations transformation and infrastructure partially offset by a decrease in Selling, general and administrative expenses as a result of cost savings from restructuring activity in the prior year in North America Services.
Interest expense, Other expense and Income Taxes
 
1Q16

1Q15

% Change

Interest expense
$
1,382

$
1,131

22
 %
% of Revenues
0.6
%
0.5
%
20
 %
Income taxes
$
2,074

$
3,531

(41
)%
Effective income tax rate
73.3
%
47.2
%
55
 %
1Q16 vs 1Q15
Interest expense was $1,382, an increase of 22% compared to Interest expense of $1,131 in the same period last year primarily as a result of $242 of deferred financing costs that were written off in connection with the Company's voluntary reduction in the unused commitment of our Credit Agreement (as defined below) partially offset by a change in the fair value of the interest-rate swap of $45 (from a gain of $249 in 1Q15 to a gain of $294 in 1Q16). Interest expense as a percent of Revenues was 0.6%, an increase of 20% compared to Interest expense as a percent of Revenues of 0.5% in the same period last year. The weighted-average outstanding debt and weighted-average interest rate was $160,762 and 2.0%, respectively, compared to $176,163 and 1.5% in the same period last year.
Income taxes were $2,074, a decrease of 41% compared to Income taxes of $3,531 in the same period last year. The effective income tax rate was 73.3%, an increase of 55% compared to the effective income tax rate of 47.2% in the same period last year. The effective income tax rate increase from 47.2% to 73.3% was primarily due to a decrease in Income before provision for income taxes.

23


Liquidity and Capital Resources
Overview
A majority of our revenue is generated through individual sales of products and services. Less than 20% of our revenue is generated from long-term support contracts. We depend on repeat client business, as well as our ability to develop new client business, to sustain and grow our revenue. Most significant orders are subject to a competitive bidding process and, generally, competition can be significant for such new orders. Our business model provides us with flexibility in terms of capital expenditures and other required operating expenses. For the foreseeable future, we expect to continue to generate net cash provided by operating activities that exceeds our capital expenditures and other required operating expenses and will be available for discretionary investments.
We seek to allocate company resources in a manner that will enhance per share results. Our discretionary investments include: investments in growth programs and infrastructure, strategic acquisitions of high quality growth-oriented companies, a return to our stockholders through dividends and common stock repurchases and repaying our debt.
Liquidity Position
The following is a summary of our capitalization and liquidity position.
 
1Q16

4Q15

1Q15

Cash and cash equivalents
$
20,508

$
23,534

$
27,768

Working capital
$
169,208

$
155,618

$
191,256

Long-term debt
$
144,469

$
137,267

$
170,536

Stockholders’ equity
$
339,113

$
337,111

$
352,035

Unused commitments of the Credit Agreement(1)
$
152,405

$
259,950

$
225,480

(1) On April 16, 2015, the Company voluntarily reduced the unused commitments of the Credit Agreement by $100,000.
We expect that our cash, the available unused commitments of the Credit Agreement (hereinafter defined), which are lower than the unused commitments due to a financial covenant, and net cash provided by operating activities should be sufficient to cover the Company's working capital requirements, capital expenditures, dividend program, potential stock repurchases, potential future acquisitions or strategic investments and other cash needs for at least the next 12 months.
Sources and Uses of Cash
The following is a summary of our sources and uses of cash.
 
1Q16

1Q15

Net cash provided by (used for) operating activities
$
(7,371
)
$
(5,882
)
Net cash provided by (used for) investing activities
$
(1,898
)
$
(1,914
)
Net cash provided by (used for) financing activities
$
6,141

$
5,304

Net cash provided by (used for) operating activities
Net cash provided by operating activities was $7,371, due primarily to Net income of $754, inclusive of non-cash charges, a decrease in All other assets, net of $6,961 and a decrease in All other liabilities of $22,043, compared to net cash used for operating activities of $5,882 in the same period last year, due primarily to Net income of $3,943, inclusive of non-cash charges, an increase in Accounts receivable, net of $14,492 and a decrease in All other liabilities of $13,427. Changes in the above accounts are based on average Fiscal 2016 and Fiscal 2015 exchange rates, as applicable.
Changes in working capital, and particularly changes in accounts receivable, costs in excess of billings and billings in excess of cost, can have a significant impact on net cash provided by operating activities, largely due to the timing of payments and receipts.

24


Net cash provided by (used for) investing activities
Capital expenditures
The Company made investments of $1,917 compared to $1,909 in the same period last year which primarily related to information technology infrastructure, computer hardware and software and vehicles.
Net cash provided by (used for) financing activities
Long-term debt
Proceeds from long-term debt was $6,957 compared to $10,076 in the same period last year, which was used to fund common stock repurchases and operations.
Common stock repurchases
The Company made discretionary investments in the form of common stock repurchases of $2,000 compared to $2,987 in the same period last year. The Company also made tax payments of $796 compared to $949 in the prior year related to share withholding to satisfy employee income taxes due as a result of the vesting of certain restricted stock units.
Since the inception of the repurchase program beginning in April 1999 through June 30, 2015, the Company has repurchased 10,828,575 shares of common stock for an aggregate purchase price of $402,360, or an average purchase price per share of $37.16. These shares do not include the treasury shares withheld for tax payments due upon the vesting of certain restricted stock units and performance shares. As of June 30, 2015, 671,425 shares were available under the most recent repurchase programs. 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. 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 (as defined in the Credit Agreement) shall have occurred and is continuing or shall occur as a result thereof. In addition, no repurchase of common stock is permitted under the Credit Agreement if the Company's consolidated leverage ratio (based on EBITDA) exceeds 3.0. At June 30, 2015, the Company's leverage ratio was 3.0 which restricts the Company from repurchasing its stock on the open market during the second quarter of Fiscal 2016.
Dividends
The Company made discretionary investments in the form of dividends to its stockholders of $1,537 compared to $1,400 in the prior year. While the Company expects to continue to declare quarterly dividends, the payment of future dividends is at the discretion of the Company's Board of Directors (the "Board") and the timing and amount of any future dividends will depend upon earnings, cash requirements and the financial condition of the Company. Under the Credit Agreement, the Company is permitted to make distributions or dividends as long as no Event of Default or Potential Default (as defined in the Credit Agreement) shall have occurred and is continuing or shall occur as a result thereof. In addition, no distribution or dividend is permitted under the Credit Agreement if such event would violate a consolidated leverage ratio required to be maintained under the Credit Agreement other than regular quarterly dividends not exceeding $15,000 per year.

25


Credit Agreement
On March 23, 2012, the Company entered into a Credit Agreement (the "Credit Agreement") with Citizens Bank of Pennsylvania, as administrative agent, and certain other lender parties. The Credit Agreement expires on March 23, 2017. Borrowings under the Credit Agreement were permitted up to a maximum amount of $400,000, which the Company voluntarily reduced to $300,000 effective as of April 16, 2015, and includes up to $25,000 of swing-line loans and $25,000 of letters of credit. The Company voluntarily reduced the unused commitment of our Credit Agreement by $100,000 in order to reduce our commitment fee costs associated with the unused portion of the line. 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, in each case plus 0% to 0.75% (determined by a leverage ratio based on the Company’s consolidated Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA")) or (b) a rate per annum equal to the LIBOR rate plus 0.875% to 1.750% (determined by a leverage ratio based on the Company’s consolidated 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, 2015, the Company was in compliance with all covenants under the Credit Agreement.
Legal Proceedings
See Note 14 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
The Company conducted its annual goodwill impairment assessment during the third quarter of Fiscal 2015 using data as of September 27, 2014. The first step of the goodwill impairment assessment, used to identify potential impairment, resulted in a surplus of fair value over carrying amount for each of our reporting units thus the reporting units are considered not impaired and the second step of the impairment test is not necessary. The excess of the fair value over this adjusted carrying amount was $23,061, $68,364, $14,839 and $1,411 for North America Products, North America Services, International Products and International Services, respectively. A 100 basis point increase in the weighted-average cost of capital, which, holding all other assumptions constant, would have a significant impact on the fair value of a reporting unit and would decrease the fair value of the reporting units by $8,629, $41,488, $2,998 and $1,265 for North America Products, North America Services, International Products and International Services, respectively.
During the fourth quarter of Fiscal 2015 in connection with planning for the fiscal year ending March 31, 2016, and based on the results of Fiscal 2015, the Company reduced its longer-term revenue and profitability outlook for North America Services from the longer-term revenue and profitability outlook used in the annual goodwill impairment assessment completed in the third quarter of Fiscal 2015. The Company evaluated the impact of this reduced longer-term revenue and profitability outlook and determined that it was not more likely than not a reduction in the fair value of this reporting unit below its carrying amount; thus, no interim test was warranted. Such determination was based on the following considerations: (i) the Company continues to expect longer-term revenue and profit growth, but at lower rates (ii) the carrying amount for North America Services did not materially change from the annual goodwill impairment assessment completed in the third quarter of Fiscal 2015 (iii) the Company had $68,364 (31%) of excess of fair value over the carrying amount for North America Services from the annual goodwill impairment assessment completed in the third quarter of Fiscal 2015 and (iv) there were no material negative industry or macro-economic trends in the fourth quarter of Fiscal 2015. To illustrate the impact of the reduced longer-term revenue and profitability outlook, assuming all other assumptions held constant from the annual goodwill impairment assessment completed in the third quarter of Fiscal 2015, the excess of the fair value for North America Services would be reduced from $68,364 (31%) to $14,963 (7%). If the Company were to fail to meet forecasted results or further reduce its longer-term revenue and profitability outlook in the future, it could result in goodwill impairment loss that could have a material adverse effect on the results of operations.
During the second quarter of Fiscal 2016, the Company will determine whether the recent downward adjustment in its revenue and profitability outlook for the remainder of Fiscal 2016 will impact the valuation of goodwill.

26


Future events that could result in an interim assessment of goodwill impairment and/or a potential impairment loss include, but are not limited to, (i) significant underperformance relative to historical or projected future operating results, (ii) significant changes in the manner of or use of the assets or the strategy for the Company's overall business or (iii) significant negative industry or economic trends.
Contingencies
The Company is subject to unclaimed or abandoned property (escheat) laws which require it to turn over to state governmental authorities the property of others held by the Company that has been unclaimed for specified periods of time. Property held by the Company subject to escheat laws primarily includes accounts payable, payroll checks and trade accounts receivable credits. The Company participated in voluntary disclosure programs in all 50 states within the United States and the District of Columbia in an effort to voluntarily comply with state abandoned property laws and settle past due unclaimed property obligations. The Company completed the programs and settled with 49 states and the District of Columbia which resulted in an immaterial charge to the consolidated financial statements during the fiscal year ended March 31, 2014. On May 22, 2013, the Company entered into Delaware’s Voluntary Disclosure Agreement Program in order to voluntarily comply with Delaware’s abandoned property law in exchange for certain protections and benefits. Since that time, the Company has worked in good faith to complete a review of its books and records related to unclaimed or abandoned property during the periods required under the program. The Voluntary Disclosure Agreement had an original expiration date of June 30, 2015 which was subsequently extended for six months to December 30, 2015. The Company will continue to examine its options regarding the escheat laws of Delaware including completing Delaware’s Voluntary Disclosure Agreement Program or proceeding to audit, as well as to pursue any indemnification claims the Company may have from a third party with respect to such liability. Amounts incurred and paid to resolve past due unclaimed property obligations in Delaware could have a material adverse effect on the Company’s results of operations and cash flows.
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. 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 2016.
Impact of Recently Issued Accounting Pronouncements
There have been no accounting pronouncements adopted during Fiscal 2016 that have had a material impact on the Company's consolidated financial statements.
In April 2015, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Codification ("ASC") Update 2015-03, "Simplifying the Presentation of Debt Issuance Costs" ("ASC 2015-03") which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. ASC 2015-03 requires retrospective adoption and is effective for annual reporting periods (including interim periods therein) beginning after December 15, 2015 with early adoption permitted. The Company does not expect the adoption of ASC 2015-03 to have a material impact on our financial statements.
In April 2015, the FASB issued ASC Update 2015-05, "Customer's Accounting for Fees Paid in a Cloud Computing Arrangement" ("ASC 2015-05") which provides additional guidance to customers about whether a cloud computing arrangement includes a software license. Under ASC 2015-05, if a software cloud computing arrangement contains a software license, customers should account for the license element of the arrangement in a manner consistent with the acquisition of other software licenses. If the arrangement does not contain a software license, customers should account for the arrangement as a service contract. Entities can use either of two methods: (i) prospectively to all arrangements entered into or materially modified after the effective date; or (ii) retrospectively providing certain additional disclosures as defined per ASC 2015-05. ASC 2015-05 is effective for annual reporting periods (including interim periods therein) beginning after December 15, 2015 with early adoption permitted. The Company does not expect the adoption of ASC 2015-05 to have a material impact on our financial statements.

27


In May 2014, the FASB issued ASC Update No. 2014-09, "Revenue from Contracts with Customers" ("ASC 2014-09"), which was amended in July 2015, that outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. The core principle of ASC 2014-09 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expected to be entitled in exchange for those goods or services. Entities can use either of two methods: (i) retrospective to each prior period presented with the option to elect certain practical expedients as defined within ASC 2014-09; or (ii) retrospective with the cumulative effect of initially applying ASC 2014-09 recognized at the date of initial application and providing certain additional disclosures as defined per ASC 2014-09. ASC 2014-09 is effective for annual reporting periods (including interim periods therein) beginning after December 15, 2017 for public companies with early adoption permitted for annual reporting periods (including interim periods therein) beginning after December 15, 2016. The Company is evaluating the method of adoption and the impact of the adoption of ASU 2014-09 on its consolidated financial statements.
Cautionary Forward Looking Statements
When included in this Quarterly Report on 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 and other initiatives, successful marketing of the Company's product and services offerings, successful implementation of the Company’s integration initiatives, 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, government budgetary constraints 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. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to be correct. 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 such statement is based.
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, 2015, the Company had total long-term obligations of $143,145 under the Credit Agreement. Of the outstanding debt, $125,000 was in variable rate debt that was effectively converted to fixed rate debt through an interest-rate swap agreement (discussed in more detail below) and $18,145 was in variable rate obligations. As of June 30, 2015, an instantaneous 100 basis point increase in the interest rate of the variable rate debt would reduce the Company’s earnings in the subsequent fiscal quarter by $45 ($27 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.

28


On November 15, 2011, the Company entered into a three-year floating-to-fixed interest-rate swap, with an effective start date of July 26, 2012, that is based on a three-month LIBOR rate versus a 1.25% fixed rate and has a notional value of $125,000. 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 Operations.
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 Operations. 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 Operations.
As of June 30, 2015, 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 1.22 to 1.33 Australian dollar, 1.13 to 1.26 Canadian dollar, 5.95 to 6.84 Danish krone, 0.80 to 0.94 Euro, 15.19 to 15.57 Mexican peso, 6.77 to 8.01 Norwegian kroner, 0.64 to 0.66 British pound sterling, 7.37 to 8.67 Swedish krona, 0.95 to 0.96 Swiss franc and 119.78 to 125.04 Japanese yen, all per U.S. dollar. The total open contracts had a notional amount of $48,510 and will expire within eight months.
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 27, 2015. Based upon this assessment, Management has concluded that the Company’s disclosure controls and procedures were effective as of June 27, 2015 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.
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.

29


PART II. OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Issuer Purchases of Equity Securities
Period
Total Number of Shares Purchased

Average Price
Paid per Share

Total Number of Shares Purchased
 as Part of Publicly Announced Plans
or Programs

Maximum Number of Shares that May Yet Be Purchased Under the Plans
or Programs

March 31, 2015 to April 26, 2015

$


772,773

April 27, 2015 to May 24, 2015
101,348

$
19.73

101,348

671,425

May 25, 2015 to June 27, 2015

$


671,425

Total
101,348

$
19.73

101,348

671,425

As of June 27, 2015, 671,425 shares were available for the Company's repurchase under a repurchase program for 1,000,000 shares approved by the Board and announced on October 2, 2012. This repurchase program has no expiration date and none of the Company's prior repurchase programs were terminated prior to the full repurchase of the authorized amount.
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. 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 (as defined in the Credit Agreement) shall have occurred and is continuing or shall occur as a result thereof. In addition, no repurchase of common stock is permitted under the Credit Agreement if the Company's consolidated leverage ratio (based on EBITDA) exceeds 3.0. At June 30, 2015, the Company's leverage ratio was 3.0 which restricts the Company from repurchasing its stock on the open market during the second quarter of Fiscal 2016.
Item 6. Exhibits.
Exhibit Number
Description
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)
101
Interactive Data File


(1)
Filed herewith.

30


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.
BLACK BOX CORPORATION
Date: August 3, 2015                 
/s/ TIMOTHY C. HUFFMYER                                 
Timothy C. Huffmyer
Vice President, Chief Financial Officer,
Treasurer and Principal Accounting Officer
EXHIBIT INDEX

Exhibit Number
Description
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)
101
Interactive Data File
 
 
(1)
Filed herewith.


31