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Previous: RAMTRON INTERNATIONAL CORP, 10-Q, 1996-08-09 |
Next: VALLICORP HOLDINGS INC, 10-Q, 1996-08-09 |
<PAGE> 1
1997 First Quarter
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
COMMISSION FILE NO. 0-18706
BLACK BOX CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 95-3086563
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1000 Park Drive
Lawrence, Pennsylvania 15055
(Address of principal executive offices)
412-746-5500
Registrant's telephone number, including area code
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.
YES X NO
---- ----
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
YES X NO
---- ----
The number of shares outstanding of the Registrant's common stock, $.001 par
value, as of August 1, 1996 was 16,361,820 shares.
<PAGE> 2
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BLACK BOX CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In thousands, except share amounts)
<TABLE>
<CAPTION>
June 30, March 31,
1996 1996
--------------- --------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,171 $ 1,924
Accounts receivable, net of allowance for doubtful
accounts of $2,460 and $2,407, respectively 34,508 34,804
Inventories, net 20,522 18,781
Other current assets 6,298 7,333
--------- ---------
Total current assets 63,499 62,842
Property, plant and equipment, net of accumulated depreciation
of $9,939 and $9,623, respectively 12,283 12,299
Intangibles, net of accumulated amortization of $18,339
and $17,396, respectively 78,015 78,958
Other assets 1,448 1,445
--------- --------
Total assets $155,245 $155,544
========= ========
LIABILITY AND STOCKHOLDERS' EQUITY
Current liabilities:
Current debt $ 8,733 $ 8,184
Accounts payable 10,400 12,580
Accrued expenses 11,883 12,029
-------- --------
Total current liabilities 31,016 32,793
Long-term debt 37,541 41,142
Other liabilities 13,973 14,468
Stockholders' equity:
Preferred stock authorized 5,000,000; par value $1.00;
none issued and outstanding
Common stock authorized 20,000,000; par value $.001; issued
and outstanding 16,358,154 and 16,302,254, respectively 16 16
Additional paid-in capital 26,577 25,904
Retained earnings 47,414 42,209
Cumulative foreign currency translation adjustments (1,292) (988)
-------- --------
Total stockholders' equity 72,715 67,141
-------- --------
Total liabilities and stockholders' equity $155,245 $155,544
======== ========
</TABLE>
See Notes to Consolidated Financial Statements
2
<PAGE> 3
BLACK BOX CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three month period ended
June 30,
1996 1995
---------- ---------
<S> <C> <C>
Revenues $52,855 $44,481
Cost of sales 24,418 19,397
------- -------
Gross profit 28,437 25,084
Selling, general and administrative expenses 17,195 15,552
Intangibles amortization 945 941
------- -------
Operating income 10,297 8,591
Interest expense, net 1,131 1,586
Other (income)/expenses, net (128) 11
------- -------
Income before income taxes 9,294 6,994
Provision for income taxes 4,089 3,077
------- -------
Net income $ 5,205 $ 3,077
======= =======
Earnings per share $ 0.31 $ 0.24
======= =======
Weighted average common and common equivalent shares 17,016 16,653
======= =======
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE> 4
BLACK BOX CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES
IN STOCKHOLDERS' EQUITY
(UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
Common Stock Additional
-------------------- Paid-in Retained Translation
Shares Amount Capital Earnings Adjustment Total
------ ------ -------- -------- --------- -----
<S> <C> <C> <C> <C> <C> <C>
Balance at March 31, 1995 16,061,557 $16 $23,169 $23,931 $ (1) $47,115
Net income for the year
ended March 31, 1996 -- -- 18,278 -- 18,278
Exercise of options 240,697 -- 2,057 -- -- 2,057
Tax benefit from exercised
options -- -- 678 -- -- 678
Foreign currency translation
adjustments -- -- -- -- (987) (987)
---------- --- --------- ------ ------ -------
Balance at March 31, 1996 16,302,254 16 25,904 42,209 (988) 67,141
Net income for the three
month period ended
June 30, 1996 -- -- -- 5,205 -- 5,205
Exercise of options 55,900 -- 488 -- -- 488
Tax benefit from exercised
options -- -- 185 -- -- 185
Foreign currency translation
adjustments -- -- -- -- (304) (304)
---------- --- ------- ------- ------- -------
Balance at June 30, 1996 16,358,154 $16 $26,577 $47,414 $(1,292) $72,715
========== === ======= ======= ======= =======
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE> 5
BLACK BOX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
Three month period ended
June 30,
1996 1995
--------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 5,205 $3,917
Adjustments to reconcile net income to cash provided
by operating activities:
Intangibles amortization 945 941
Depreciation 557 539
Joint venture income (21) (45)
Changes in working capital items:
Account receivable, net 296 1,054
Inventories, net (1,722) (941)
Other current assets 1,032 (2,313)
Accounts payable (2,180) 394
Accrued expenses (446) (3,340)
-------- -------
Cash provided by operating activities 3,666 206
-------- -------
Cash flows from investing activities:
Capital expenditures (541) (649)
-------- -------
Cash used in investing activities (541) (649)
-------- -------
Cash flows from financing activities:
Repayment of borrowings (21,400) (8,996)
Proceeds from borrowings 18,348 9,500
Proceeds from exercise of options 478 459
-------- -------
Cash (used in)/provided by financing activities (2,574) 963
-------- -------
Foreign currency translation adjustment (304) (66)
-------- -------
Increase in cash and cash equivalents 247 454
Cash and cash equivalents at beginning of period 1,924 2,546
-------- -------
Cash and cash equivalents at end of period $ 2,171 $3,000
======== ======
</TABLE>
See Notes to Consolidated Financial Statements
5
<PAGE> 6
BLACK BOX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Dollars in thousands, except per-share amounts)
NOTE 1 - BASIS OF PRESENTATION
The Financial Statements presented herein and these notes are
unaudited. Certain information and footnote disclosures normally included in
the financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission. Although the Company
believes that all adjustments necessary for a fair presentation have been made,
interim periods are not necessarily indicative of the results of operations for
a full year. As such, these financial statements should be read in conjunction
with the financial statements and notes thereto included in the Company's most
recent Form 10-K which was filed for the fiscal year ended March 31, 1996.
NOTE 2 - FISCAL YEARS AND INTERIM PERIODS
The Company has a 52 or 53 week fiscal year that ends on the Sunday
nearest March 31. Each fiscal quarter consists of 13 weeks. The last quarter is
adjusted for those years which have 53 weeks. The ending dates for the periods
ended June 30, 1996, March 31, 1996 and June 30, 1995 were actually June 30,
1996, March 31, 1996 and July 2, 1995, respectively.
NOTE 3 - INVENTORIES
Inventories are stated at the lower of cost or market (first-in,
first-out method) or market. The net inventory balances are as follows:
<TABLE>
<CAPTION>
June 30, March 31
1996 1996
-------- --------
<S> <C> <C>
Raw materials $ 1,451 $ 1,440
Work-in-process 47 8
Finished goods 20,772 18,981
Inventory reserve (1,748) (1,648)
------- -------
Inventory, net $20,522 $18,781
------- -------
</TABLE>
NOTE 4 - ACCOUNTING FOR STOCK-BASED COMPENSATION
In the first quarter of Fiscal 1997, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based
Compensation". As allowable under SFAS No. 123, the Company has elected to
disclose in the notes to the financial statements the impact on net income and
net income per share as if the fair value based compensation cost had been
recognized. The Company will reflect this disclosure in the notes to the March
31, 1997 fiscal year end consolidated financial statements.
6
<PAGE> 7
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (dollars in thousands)
GENERAL
The table below should be read in conjunction with the following
discussion (percentages are based on total revenues).
<TABLE>
<CAPTION>
Three month period ended June 30
1996 1995
<S> <C> <C>
Revenues $52,855 $44,481
======= =======
Revenues:
North America 56.4% 60.5%
International 43.6 39.5
------- -------
Total 100.0 100.0
Cost of sales 46.2 43.6
------- -------
Gross profit 53.8 56.4
Selling, general and
administrative expenses 32.5 35.0
------- -------
Operating income
before amortization 21.3 21.4
Intangibles amortization 1.8 2.1
------- -------
Operating income 19.5% 19.3%
------- -------
</TABLE>
RESULTS OF OPERATIONS
Revenues for the three months ended June 30, 1996 ("First Quarter
1997") were $52,855, an increase of $8,374, or 18.8%, over the three months
ended June 30, 1995, ("First Quarter 1996") revenues of $44,481. Revenues from
International operations were $23,032, an increase of $5,450, or 31.0%, over
First Quarter 1996 International revenues of $17,582. If exchange rates
had remained constant from First Quarter 1996, International revenues would have
increased $7,833 or 45.1%. International revenues accounted for 43.6% of First
Quarter 1997 total revenues, up from 39.5% of total revenues in First Quarter
1996. On a percentage basis and at constant exchange rates, all international
subsidiaries experienced double digit revenue growth over the comparable period
from last year. Revenues from North America were $29,823, an increase of
$2,924, or 10.9%, over First Quarter 1996 revenues of $26,899. North American
revenue growth was principally the result of new product introductions over the
last 15 months.
Gross profit in First Quarter 1997 increased to $28,437, or 53.8% of
revenues, from $25,084, or 56.4% of revenues, in First Quarter 1996. The dollar
increase was primarily due to increased volumes. The change in gross profit
margin is due to the revaluing of intercompany receivable amounts denominated
in currencies other
7
<PAGE> 8
than the U.S. dollar. The decrease in margin is primarily due
to the strengthening of the U.S. dollar against the Japanese Yen in First
Quarter 1997 compared to First Quarter 1996.
Selling, general and administrative ("SG&A") expenses in First Quarter
1997 were $17,195, or 32.5% of revenues, an increase of $1,643 over SG&A
expenses of $15,552, or 35.0% of revenues, in First Quarter 1996. SG&A
decreased as a percentage of revenues as the Company was able to leverage
its existing support structure. The dollar increase relates to additional
marketing and personnel costs at international locations.
Operating income before amortization in First Quarter 1997 increased
to $11,242, or 21.3% of revenues, from $9,532, or 21.4% of revenues, in First
Quarter 1996, as a result of higher revenues and gross profit partially offset
by higher SG&A expenses. Operating income in First Quarter 1997 increased to
$10,297, or 19.5% of revenues, from $8,591, or 19.3% of revenues, in First
Quarter 1996.
Net interest expense in First Quarter 1997 declined to $1,131 from
$1,586 in First Quarter 1996 as a result of lower average borrowings and lower
average interest rates.
The estimated annual effective income tax rate of 44.0% for Fiscal
1997 is higher than the U.S. statutory rate of 35.0% primarily due to state
income taxes and the unfavorable impact of non-deductible intangibles
amortization.
LIQUIDITY AND CAPITAL RESOURCES
The Company continues to meet all of its cash requirements through
cash flow from operations. During First Quarter 1997, cash flow from operations
after investing activities of $3,125 enabled the Company to reduce debt by
$3,052. As of June 30, 1996, the Company had $2,171 in cash and cash
equivalents, working capital of $32,483 and long-term debt of $37,541.
The Company's long-term debt at June 30, 1996 was comprised of $21,400
under the Mellon Credit Agreement, $16,000 of Senior Notes, and $141 of various
other loans. The weighted average interest rate on all indebtedness of the
Company as of June 30, 1996 was approximately 8.2% compared to 8.6% as of June
30, 1995. In addition, at June 30, 1996, the Company had $17,298 of additional
funds available under the Mellon Credit Agreement.
The Company has entered into, on a selective basis, forward exchange
contracts to reduce foreign currency exposure related to certain intercompany
inventory transactions. At June 30, 1996, the open foreign exchange contracts
were exclusively in Yen. The value of such open contracts was approximately
$5,642. The effect of these contracts on net income for the three month period
ended June 30, 1996 was not material.
8
<PAGE> 9
The Company believes that its cash flow from operations and existing
credit facilities will be sufficient to satisfy its liquidity needs for the
foreseeable future. This statement is made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995, as there
are important factors that could cause the actual results to differ materially
from those in the forward-looking statement. Such factors include significant
changes in worldwide competition or the occurrence of significant downward
economic conditions in several of the large countries in which the company
operates.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS.
Exhibit 27 Financial Data Schedule
(b) REPORTS ON FORM 8-K.
None.
9
<PAGE> 10
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
By: /s/ FREDERICK C. YOUNG
------------------------
Frederick C. Young
Vice President and Chief
Financial Officer
August 1, 1996
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND INCOME STATEMENT OF THE FIRST QUARTER OF FISCAL 1997 FORM 10-Q AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000849547
<NAME> BLACK BOX CORP.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,171
<SECURITIES> 0
<RECEIVABLES> 36,968
<ALLOWANCES> 2,460
<INVENTORY> 20,522
<CURRENT-ASSETS> 63,499
<PP&E> 22,222
<DEPRECIATION> 9,939
<TOTAL-ASSETS> 155,245
<CURRENT-LIABILITIES> 31,016
<BONDS> 37,541
16
0
<COMMON> 0
<OTHER-SE> 72,699
<TOTAL-LIABILITY-AND-EQUITY> 155,245
<SALES> 52,855
<TOTAL-REVENUES> 52,855
<CGS> 24,418
<TOTAL-COSTS> 42,558
<OTHER-EXPENSES> (128)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,131
<INCOME-PRETAX> 9,294
<INCOME-TAX> 4,089
<INCOME-CONTINUING> 5,205
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,205
<EPS-PRIMARY> 0.31
<EPS-DILUTED> 0.31
</TABLE>
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