Black Box (BBOX) 8-K Black Box Corporation Reports Third Quarter and Ytd Fiscal 2006 Results

Exhibit 99.1

Michael McAndrew, Chief Financial Officer
Black Box Corporation
(724) 873-6788
(724) 873-6799 (fax)
Email: investors@blackbox.com

FOR IMMEDIATE RELEASE

BLACK BOX CORPORATION REPORTS THIRD QUARTER
AND YTD FISCAL 2006 RESULTS

PITTSBURGH, PENNSYLVANIA, January 31, 2006 — Black Box Corporation (NASDAQ:BBOX) today reported for the third quarter ended December 31, 2005 diluted earnings per share of 70¢ compared to 52¢ last year, an increase of 35%. Net income for the third quarter was $12.5 million or 6.9% of revenues, compared to $9.2 million or 7.3% of revenues last year. On a sequential comparison basis, second quarter diluted earnings per share were 74¢ with corresponding net income of $12.8 million or 6.9% of revenues. Excluding acquisition related expenses in the third quarter of Fiscal 2006 described below, diluted earnings per share were 75¢ and net income was $13.3 million or 7.3% of revenues.

During the third quarter of Fiscal 2006, the Company incurred non-cash charges of $1.2 million pre-tax in connection with acquisition related expenses from the January 25, 2005 purchase of Norstan, Inc. (“Norstan”). Management believes that presenting diluted earnings per share and net income excluding acquisition related expenses is useful to investors because it provides a more meaningful comparison of the ongoing operations of the Company.

Total revenues for the third quarter were $182 million, an increase of 44% from $127 million for the same period last year. On a sequential comparison basis, second quarter revenues were $185 million.

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Third quarter cash provided by operating activities was approximately $16 million or 131% of net income, compared to $14 million or 148% of net income for the same period last year. Third quarter free cash flow was $24 million compared to $14 million last year. On a sequential comparison basis, second quarter cash provided by operating activities was $12 million and free cash flow was $18 million. Black Box utilized its third quarter free cash flow of $24 million to fund $14 million of merger-related activity; debt reduction of $8 million; a dividend payment of $1 million; and net capital expenditures of $1 million. Management believes that free cash flow, defined by the Company as cash provided by operating activities less net capital expenditures, plus proceeds from option exercises, plus or minus foreign currency translation adjustments, is an important measurement of liquidity as it represents the total cash available to the Company.

In accordance with SEC Regulation G, the attached financial charts include a reconciliation of the non-GAAP financial measures in this release to the most directly comparable GAAP measures.

For the nine months ended December 31, 2005, diluted earnings per share were $1.88 compared to $1.66 for the same period last year, an increase of 13%. Corresponding net income for the nine-month period was $32.7 million or 6.0% of revenues, compared to $29.9 million or 7.9% of revenues for the same period last year. Excluding restructuring charges and acquisition related expenses for the nine months ended December 31, 2005 described below, diluted earnings per share were $2.28 and net income was $39.7 million or 7.3% of revenues.

Total non-cash charges incurred for the nine months ended December 31, 2005 associated with acquisition related expenses of Norstan was $5.4 million pre-tax. For the nine-month period ended December 31, 2005, the Company incurred a pre-tax restructuring charge of $5.3 million related to staffing level adjustments and real estate consolidations in Europe and North America.

Total nine-month revenues were $546 million, an increase of 45% from $378 million for the same period last year.

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Cash provided by operating activities for the nine-month period was $39 million or 119% of net income, compared to $34 million or 115% of net income last year. Free cash flow was $53 million compared to $39 million last year. Black Box utilized the nine-month free cash flow of $53 million to fund $41 million of merger-related activity; debt reduction of $7 million; dividend payments of $3 million; and net capital expenditures of $2 million.

The Company’s 6-month order backlog was $94 million at December 31, 2005 compared to $54 million at the same period last year. On a sequential comparison basis, second quarter 6-month order backlog was $101 million.

Commenting on the third quarter results, Fred C. Young, Chief Executive Officer, said, “We are pleased with our overall results for the quarter and nine-months to date. We attribute this success to our worldwide operating excellence, effective marketing of our DVH^TM technical services and relatively stable end-markets.”

Continuing on, Mr. Young said, “Our goals moving forward will be to finish FY06 strong and carry this momentum into our FY07.”

The Company will conduct a conference call beginning at 5:00 p.m. Eastern Standard Time today, January 31, 2006. Fred C. Young, Chief Executive Officer, will host the call. To participate in the call, please dial 612-332-1025 approximately 15 minutes prior to the starting time and ask to be connected to the Black Box Earnings Call. A replay of the conference call will be available for one week after the teleconference by dialing 320-365-3844 and using access code 804811.

Any forward-looking statements contained in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by the fact they use words such as “should,” “anticipate,” “estimate,” “approximate,” “expect,” “target,” “may,” “will,” “project,” “intend,” “plan,” “believe,” and other words of similar meaning and expression in connection with any discussion of future operating or financial performance. One can also identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. Forward-looking statements are inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those projected. Although it is not possible to predict or identify all risk factors, they

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may include levels of business activity and operating expenses, expenses relating to corporate compliance requirements, cash flows, global economic conditions, successful integration of the Norstan business, the timing and costs of restructuring programs, successful marketing of DVH (Data, Voice, Hotline) services and successful implementation of our M&A program, including identifying appropriate targets, consummating transactions and successfully integrating the businesses. Additional risk factors are included in the Company’s Annual Report on Form 10-K. We can give no assurance that any goal, plan or target set forth in forward-looking statements can be achieved and readers are cautioned not to place undue reliance on such statements, which speak only as of the date made. We undertake no obligation to release publicly any revisions to forward-looking statements as a result of future events or developments.

Black Box is the world’s largest technical services company dedicated to designing, building and maintaining today’s complicated data and voice infrastructure systems. Black Box services 152,000 clients in 141 countries with 143 offices throughout the world. To learn more, visit the Black Box website atwww.blackbox.com.

Black Box and the Double Diamond logo are registered trademarks and DVH is a trademark of BB Technologies, Inc.

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BLACK BOX CORPORATION
CONSOLIDATED STATEMENTS OF INCOME

	Three months ended				Nine months ended
	December 31,		January 1,		December 31,		January 1,
In thousands, except per share	2005		2005		2005		2005
Revenues	$	182,135	$	126,896	$	546,467	$	377,846
Cost of sales		108,733		75,878		328,243		222,633
Gross profit		73,402		51,018		218,224		155,213
Selling, general & administrative exp		50,441		36,762		152,008		107,886
Restructuring charges		0		0		5,290		0
Intangibles amortization		1,349		59		4,235		187
Operating income		21,612		14,197		56,691		47,140
Interest expense, net		2,397		519		6,686		1,436
Other expenses, net		114		46		79		93
Income before income taxes		19,101		13,632		49,926		45,611
Provision for income taxes		6,590		4,383		17,224		15,736
Net income	$	12,511	$	9,249	$	32,702	$	29,875
Basic earnings per common share	$	0.72	$	0.54	$	1.92	$	1.71
Diluted earnings per common share	$	0.70	$	0.52	$	1.88	$	1.66
Weighted average common shares		17,286		17,293		17,050		17,499
Weighted average common & common equivalent shares outstanding		17,786		17,694		17,362		17,949

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BLACK BOX CORPORATION
CONSOLIDATED BALANCE SHEETS

	December 31,			March 31,
In thousands	2005			2005
Assets
Cash and cash equivalents	$	12,143		$	11,592
Accounts receivable, net		125,632			116,865
Lease receivables		465			1,697
Inventories, net		53,448			57,176
Costs and estimated earnings in excess of billings on uncompleted contracts		28,093			25,695
Deferred tax asset		11,084			9,236
Net current assets of discontinued operations		376			549
Other current assets		17,642			14,724
Total current assets		248,883			237,534
Property, plant and equipment, net		36,117			38,268
Goodwill, net		468,871			444,567
Intangibles, net		55,573			44,157
Lease receivables, net of current portion		—			473
Deferred tax asset		3,979			3,793
Discontinued operations, net of current portion		153			373
Other assets		4,327			3,725
Total assets	$	817,903		$	772,890
Liabilities
Current maturities of long-term debt	$	716		$	692
Current maturities of discounted lease rentals		70			890
Accounts payable		39,487			36,032
Billings in excess of costs and estimated earnings on uncompleted contracts		11,604			8,947
Deferred revenue		21,473			21,456
Accrued liabilities:
Compensation and benefits		12,650			13,073
Restructuring		4,589			6,709
Other liabilities		40,274			33,905
Income taxes		9,013			3,295
Total current liabilities		139,876			124,999
Long-term debt		141,304			147,196
Discounted lease rentals		3			30
Other liabilities		169			75
Restructuring reserve		7,970			9,889
Stockholders’ Equity
Common stock		24			24
Additional paid-in capital		355,981			336,290
Retained earnings		458,252			428,632
Treasury stock, at cost		(296,811	)		(296,797	)
Accumulated other comprehensive gain		11,135			22,552
Total stockholders’ equity		528,581			490,701
Total liabilities and stockholders’ equity	$	817,903		$	772,890

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BLACK BOX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended						Nine Months Ended
	December 31,			January 1,			December 31,			January 1,
In thousands	2005			2005			2005			2005
Operating Activities
Net income	$	12,511		$	9,249		$	32,702		$	29,875
Adjustments to reconcile net income to cash provided by operating activities:
Intangibles amortization		1,349			59			4,235			187
Depreciation		2,284			1,658			6,778			4,370
Deferred tax provision		(30	)		1,237			(2,083	)		1,775
Stock compensation expense		—			—			—			680
Tax impact from exercised options		(1,376	)		(231	)		(3,347	)		(3,389	)
Changes in operating assets and liabilities:
Accounts receivable, net		8,986			(6,951	)		73			1,153
Inventories, net		(31	)		(314	)		5,673			(2,412	)
Other current assets		966			4,413			1,270			888
Proceeds from lease contracts		464			—			1,746			—
Accounts payable and accrued liabilities		(8,685	)		4,567			(8,135	)		1,278
Net cash provided by operating activities	$	16,438		$	13,687		$	38,912		$	34,405
Investing Activities
Capital expenditures, net	$	(1,320	)	$	(908	)	$	(1,919	)	$	(1,849	)
Acquisition of businesses, net of cash acquired		(13,828	)		(151	)		(40,682	)		(498	)
Prior merger-related payments		(213	)		—			(378	)		—
Net cash used in investing activities	$	(15,361	)	$	(1,059	)	$	(42,979	)	$	(2,347	)
Financing Activities
(Repayments) / proceeds on borrowings, net	$	(8,131	)	$	(11,940	)	$	(7,418	)	$	4,036
Repayments on discounted lease rentals		(180	)		—			(847	)		—
Proceeds from exercise of options		8,892			1,625			16,344			7,310
Payment of dividends		(1,028	)		(1,035	)		(3,049	)		(2,809	)
Deferred financing costs		—			—			—			(235	)
Purchase of treasury stock		(4	)		(11	)		(14	)		(37,585	)
Net cash (used) / provided in financing activities	$	(451	)	$	(11,361	)	$	5,016		$	(29,283	)
Foreign currency exchange impact on cash	$	(408	)	$	(33	)	$	(398	)	$	(1,134	)
Increase in cash & cash equivalents	$	218		$	1,234		$	551		$	1,641
Cash & cash equivalents at beginning of period		11,925			9,713			11,592			9,306
Cash & cash equivalents at end of period	$	12,143		$	10,947		$	12,143		$	10,947

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RECONCILIATIONS:

In addition to reported results under U.S. GAAP for the fiscal periods, the following financial highlights tables also include, where appropriate, a reconciliation of free cash flow, cash provided by operating activities excluding restructuring payments and satisfaction of a litigation judgment, net income excluding restructuring charges and acquisition related expenses and diluted EPS excluding restructuring charges and acquisition related expenses (which are non-GAAP measures), to the most directly comparable GAAP measure. All dollar amounts are in thousands.

A reconciliation of cash provided by operating activities to free cash flow is presented below:

	3Q06			2Q06			3Q05			3Q06YTD			3Q05YTD
Cash provided by operating activities	$	16,438		$	11,671		$	13,687		$	38,912		$	34,405
Capital expenditures		(1,551	)		(1,108	)		(938	)		(3,151	)		(2,579	)
Capital disposals		231			188			30			1,232			730
Proceeds from stock option exercises		8,892			7,316			1,625			16,344			7,310
Foreign currency exchange impact on cash		(408	)		44			(33	)		(398	)		(1,134	)
Free cash flow	$	23,602		$	18,111		$	14,371		$	52,939		$	38,732

A reconciliation of cash provided by operating activities to cash provided by operating activities excluding restructuring payments and satisfaction of a litigation judgment is presented below:

	3Q06		2Q06		3Q05		3Q06YTD		3Q05YTD
Cash provided by operating activities	$	16,438	$	11,671	$	13,687	$	38,912	$	34,405
Restructuring payments		1,537		2,786		—		9,165		—
Satisfaction of a litigation judgment		—		—		—		1,778		—
Cash provided by operating activities excluding restructuring payments and satisfaction of a litigation judgment	$	17,975	$	14,457	$	13,687	$	49,855	$	34,405

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A reconciliation of net income to net income excluding restructuring charges and acquisition related expenses is presented below:

	3Q06			3Q05			3Q06YTD			3Q05YTD
Net income	$	12,511		$	9,249		$	32,702		$	29,875
% of revenues		6.9	%		7.3	%		6.0	%		7.9	%
Restructuring charges, after tax impact		—			—			3,465			—
Acquisition related expenses, after tax impact		815			—			3,500			—
Net income excluding restructuring charges and acquisition related expenses	$	13,326		$	9,249		$	39,667		$	29,875
% of revenues		7.3	%		7.3	%		7.3	%		7.9	%

A reconciliation of diluted earnings per common share (EPS) to diluted EPS excluding restructuring charges and acquisition related expenses is presented below:

	3Q06		3Q05		3Q06YTD		3Q05YTD
Diluted EPS	$	0.70	$	0.52	$	1.88	$	1.66
EPS impact of restructuring charges		—		—		0.20		—
EPS impact of acquisition related expenses		0.05		—		0.20		—
Diluted EPS excluding restructuring charges and acquisition related expenses	$	0.75	$	0.52	$	2.28	$	1.66

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SUPPLEMENTAL INFORMATION:

Additionally, the following supplemental information is being provided for comparisons of third quarter ended December 31, 2005 reported results to this year’s second quarter and prior year’s third quarter. All dollar amounts are in thousands unless noted otherwise.

Information on revenues and operating income by geography is presented below. Management believes it is important to separately present the Fiscal 2006 restructuring charges and acquisition related expenses (hereafter referred to as “special charges”). Management believes this enables a clearer understanding of the ongoing operations of the Company.

	3Q06			2Q06			3Q05			3Q06YTD			3Q05YTD
Revenues:
North America	$	143,173		$	146,754		$	78,642		$	426,788		$	242,966
Europe		29,950			29,199			38,947			92,899			107,337
All Other		9,012			9,097			9,307			26,780			27,543
Total	$	182,135		$	185,050		$	126,896		$	546,467		$	377,846
Operating Income:
North America	$	15,740		$	16,537		$	8,345		$	44,136		$	27,090
% of North America revenues		11.0	%		11.3	%		10.6	%		10.3	%		11.1	%
Europe	$	4,101		$	3,427		$	4,016		$	7,161		$	13,365
% of Europe revenues		13.7	%		11.7	%		10.3	%		7.7	%		12.5	%
All Other	$	1,771		$	1,943		$	1,836		$	5,394		$	6,685
% of All Other revenues		19.7	%		21.4	%		19.7	%		20.1	%		24.3	%
Total	$	21,612		$	21,907		$	14,197		$	56,691		$	47,140
% of Total revenues		11.9	%		11.8	%		11.2	%		10.4	%		12.5	%
Special Charges:
North America	$	1,245		$	1,274			—		$	6,898			—
Europe		—			—			—			3,742			—
All Other		—			—			—			—			—
Total	$	1,245		$	1,274			—		$	10,640			—
Operating Income Excluding Special Charges:
North America	$	16,985		$	17,811		$	8,345		$	51,034		$	27,090
% of North America revenues		11.9	%		12.1	%		10.6	%		12.0	%		11.1	%
Europe	$	4,101		$	3,427		$	4,016		$	10,903		$	13,365
% of Europe revenues		13.7	%		11.7	%		10.3	%		11.7	%		12.5	%
All Other	$	1,771		$	1,943		$	1,836		$	5,394		$	6,685
% of All Other revenues		19.7	%		21.4	%		19.7	%		20.1	%		24.3	%
Total	$	22,857		$	23,181		$	14,197		$	67,331		$	47,140
% of Total revenues		12.5	%		12.5	%		11.2	%		12.3	%		12.5	%

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Information on revenues and gross profit for data services, voice services and hotline services is presented below:

	3Q06			2Q06			3Q05			3Q06YTD			3Q05YTD
Revenues:
Data Services	$	47,083		$	52,584		$	53,410		$	152,568		$	152,136
Voice Services		82,281			78,410			16,219			233,620			53,619
Hotline Services		52,771			54,056			57,267			160,279			172,091
Total	$	182,135		$	185,050		$	126,896		$	546,467		$	377,846
Gross Profit:
Data Services	$	14,794		$	15,482		$	16,149		$	45,800		$	46,011
% of Data Services revenues		31.4	%		29.4	%		30.2	%		30.0	%		30.2	%
Voice Services	$	32,145		$	31,173		$	5,469		$	91,156		$	18,607
% of Voice Services revenues		39.1	%		39.8	%		33.7	%		39.0	%		34.7	%
Hotline Services	$	26,463		$	27,227		$	29,400		$	81,268		$	90,595
% of Hotline Services revenues		50.1	%		50.4	%		51.3	%		50.7	%		52.6	%
Total	$	73,402		$	73,882		$	51,018		$	218,224		$	155,213
% of Total revenues		40.3	%		39.9	%		40.2	%		39.9	%		41.1	%

Information on revenues on a same-office basis as compared to prior year is presented below:

	3Q06			3Q05		Change
Revenues as reported	$	182,135		$	126,896		44	%
Less revenues from offices added since 3Q05		(60,371	)		—
Revenues on same-office basis	$	121,764		$	126,896		(4	%)

Information on revenues on a same-office basis as compared to prior quarter is presented below:

	3Q06			2Q06			Change
Revenues as reported	$	182,135		$	185,050			(2	%)
Less revenues from offices added since 3Q05		(60,371	)		(54,920	)
Revenues on same-office basis	$	121,764		$	130,130			(6	%)

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     Information on various balance sheet ratios, backlog and headcount is presented below. Dollar amounts are in millions.

	3Q06			2Q06			3Q05
Accounts Receivable:
Gross Accounts Receivable $	$	133.9		$	139.5		$	108.8
Reserve $ / %	$	8.3	/ 6.2%	$	7.7	/ 5.5%	$	10.2	/ 9.4%
Net Accounts Receivable $	$	125.6		$	131.8		$	98.6
Net Days Sales Outstanding	57 days			57 days			64 days
Inventory:
Gross Inventory $	$	66.9		$	66.6		$	48.2
Reserve $ / %	$	13.5	/ 20.2%	$	13.4	/ 20.1%	$	5.0	/10.4%
Net Inventory $	$	53.4		$	53.2		$	43.2
Net Inventory Turns		6.8	x		6.9	x		7.9	x
Six-Month Order Backlog	$	94		$	101		$	54
Team Members		3,273			3,282			2,538

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