Black Box (BBOX) 8-K Black Box Corporation Reports Third Quarter and Year-to-date Fiscal 2008 Results

Exhibit 99.1

Investor Relations
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 YEAR-TO-DATE FISCAL 2008 RESULTS

PITTSBURGH, PENNSYLVANIA, January 29, 2008 -- Black Box Corporation (NASDAQ:BBOX) today reported results for the third quarter of Fiscal 2008 ended December 29, 2007.

For the third quarter of Fiscal 2008, diluted earnings per share were 47¢ on net income of $8.3 million or 3.2% of revenues compared to diluted earnings per share of 59¢ on net income of $10.5 million or 4.0% of revenues for the same quarter last year. On a sequential quarter comparison basis, second quarter of Fiscal 2008 diluted earnings per share were 64¢ on net income of $11.3 million or 4.3% of revenues. Excluding reconciling items, operating earnings per share (which is a non-GAAP term and is defined below) for the third quarter of Fiscal 2008 were 84¢ on operating net income (which is a non-GAAP term and is defined below) of $14.8 million or 5.7% of revenues compared to operating earnings per share of 78¢ on operating net income of $13.8 million or 5.2% of revenues for the same quarter last year. Management believes that presenting operating earnings per share and operating net income is useful to investors because it provides a more meaningful comparison of the ongoing operations of the Company.

For the third quarter of Fiscal 2008, the Company’s pre-tax reconciling items were $10.9 million with an after tax impact on net income and EPS of $6.6 million and 37¢, respectively. During the third quarter of Fiscal 2007, as previously disclosed, the Company’s pre-tax reconciling items were $5.1 million with an after tax impact on net income and EPS of $3.3 million and 19¢, respectively. See below for further discussion regarding Management’s use of non-GAAP accounting measurements and a detailed presentation of the Company’s pre-tax reconciling items for the periods presented above.

Third quarter of Fiscal 2008 total revenues were $258 million, a decrease of $7 million or 2% from $265 million for the same quarter last year. On a sequential quarter comparison basis, second quarter of Fiscal 2008 total revenues were $261 million.

Third quarter of Fiscal 2008 cash provided by operating activities was $25 million or 296% of net income, compared to $3 million or 27% of net income for the same quarter last year. Third quarter of Fiscal 2008 free cash flow (which is a non-GAAP term and is defined below) was $23 million compared to $7 million for the same quarter last year. On a sequential quarter comparison basis, second quarter of Fiscal 2008 cash provided by operating activities was $5 million or 40% of net income and free cash flow was $8 million. Black Box utilized its third quarter of Fiscal 2008 free cash flow to fund current period acquisitions of $11 million, to fund debt reduction of $11 million and to pay dividends 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 stock 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.

For the nine-month period ended December 29, 2007, diluted earnings per share were $1.57 on net income of $27.8 million or 3.6% of revenues compared to diluted earnings per share of $1.63 on net income of $29.0 million or 3.8% of revenues for the same period last year. Excluding reconciling items, operating earnings per share for the nine-month period ended December 29, 2007 were $2.44 on operating net income of $43.1 million or 5.6% of revenues compared to operating earnings per share of $2.28 on operating net income of $40.6 million or 5.3% of revenues for the same period last year.

For the nine-month period ended December 29, 2007, the Company’s pre-tax reconciling items were $24.8 million with an after tax impact on net income and EPS of $15.3 million and 87¢, respectively. For the nine-month period ended December 30, 2006, as previously disclosed, the Company’s pre-tax reconciling items were $17.8 million with an after tax impact on net income and EPS of $11.6 million and 65¢, respectively. See below for further discussion regarding Management’s use of non-GAAP accounting measurements and a detailed presentation of the Company’s pre-tax reconciling items for the periods presented above.

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For the nine-month period ended December 29, 2007, total revenues were $771 million, an increase of $4 million or 1% from $767 million for the same period last year.

Cash provided by operating activities for the nine-month period ended December 29, 2007 was $37 million or 132% of net income compared to $25 million or 85% of net income for the same period last year. Free cash flow was $38 million compared to $33 million for the same period last year. Black Box utilized its nine-month period free cash flow to fund debt reduction of $19 million, to fund current period acquisitions of $11 million, to pay dividends of $3 million, to increase its cash position by $3 million and to fund payments due on prior period acquisition activity of $2 million.

The Company’s six-month order backlog was $165 million at December 29, 2007 compared to $162 million for the same quarter ended last year. On a sequential quarter end comparison basis, the Company’s six-month order backlog was $166 million at September 29, 2007.

As a result of an increase in the Company’s current effective tax rate to 38.0%, the Company’s current targets for Fiscal 2008 are reported revenues of approximately $1.0 billion; corresponding operating earnings per share in the range of $3.25 to $3.35; and cash provided by operating activities in the range of 80% to 90% of operating net income.

All of the above ranges exclude acquisition-related expense, stock-based compensation expense, any restructuring / severance / other costs related to the NextiraOne, LLC (“NextiraOne”) integration plan, historical stock option granting practices investigation costs, expenses incurred as a result of measures taken by the Company to address the application of Section 409A of the Internal Revenue Code of 1986 and the impact of changes in the fair market value of the Company’s interest rate swap, and are before any new mergers and acquisition activity that has not been announced.

Commenting on the third quarter results, Terry Blakemore, President and Chief Executive Officer said, “The Black Box team has delivered revenues, operating income and operating cash flow over the first nine months of our fiscal year which are consistent with achieving our targeted ranges for FY08. We are particularly pleased with another quarter of year over year organic same store growth. Operating cash flow of approximately $25 million for the quarter and $37 million year-to-date reflects our ability to translate our diversified revenue growth into cash while making strategic investments for the future.”

Mr. Blakemore went on to say, “We continue to execute our strategy, with well-defined priorities as we remain focused on leveraging our financial strength to add high-quality service providers via mergers and acquisitions while continuing to implement programs to deliver strong profitable organic growth.”

“As we, along with the rest of the global community, enter into an uncertain economic environment, our expectations for Black Box remain high. We will continue to focus on the strengths of our business and remain committed to delivering the highest quality technical DVH services to our worldwide client base.”

The Company will conduct a conference call beginning at 5:00 p.m. Eastern Standard Time today, January 29, 2008. Terry Blakemore, President and 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 904687.

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 175,000 clients in 141 countries with 187 offices throughout the world. To learn more, visit the Black Box Web site atwww.blackbox.com.

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

1000 Park Drive, Lawrence, PA 15055-1018 * (724) 746-5500 * Fax (724) 746-0746

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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 and speak only as of the date of this release. 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 may include the timing and final outcome of the ongoing review of the Company’s stock option practices, including the related Securities and Exchange Commission (“SEC”) investigation, shareholder derivative lawsuit and tax matters, and the impact of any actions that may be required or taken as a result of such review, SEC investigation, shareholder derivative lawsuit or tax matters, levels of business activity and operating expenses, expenses relating to corporate compliance requirements, cash flows, global economic and business conditions, successful integration of acquisitions, including the NextiraOne business, the timing and costs of restructuring programs, successful marketing of DVH (Data, Voice, Hotline) services, successful implementation of our M&A program, including identifying appropriate targets, consummating transactions and successfully integrating the businesses, competition, changes in foreign, political and economic conditions, fluctuating foreign currencies compared to the U.S. dollar, rapid changes in technologies, client preferences, the ability of the Company to identify, acquire and operate additional technical services companies, the Company’s arrangements with suppliers of voice equipment and technology and various other matters, many of which are beyond the Company’s control. Additional risk factors are included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2007. 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.

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BLACK BOX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME

	Three-months Ended				Nine-months Ended
	December 29 and 30,				December 29 and 30,
In thousands, except per share amounts	2007		2006		2007		2006
Revenues:
Hotline products	$	59,269	$	57,770	$	175,027	$	165,058
On-Site services		199,055		207,036		596,218		601,468
Total		258,324		264,806		771,245		766,526
Cost of Sales:
Hotline products		30,891		29,887		91,710		83,195
On-Site services		133,312		138,234		401,895		401,766
Total		164,203		168,121		493,605		484,961
Gross profit		94,121		96,685		277,640		281,565
Selling, general & administrative expenses		73,209		73,940		212,736		217,741
Intangibles amortization		1,382		2,677		5,044		6,114
Operating income		19,530		20,068		59,860		57,710
Interest expense (income), net		5,780		4,061		15,203		13,222
Other expenses (income), net		(16)		(122)		(156)		65
Income before provision for income taxes		13,766		16,129		44,813		44,423
Provision for income taxes		5,480		5,636		17,029		15,442
Net income	$	8,286	$	10,493	$	27,784	$	28,981
Earnings per common share:
Basic	$	0.47	$	0.60	$	1.58	$	1.66
Diluted	$	0.47	$	0.59	$	1.57	$	1.63
Weighted average common shares outstanding
Basic		17,683		17,398		17,601		17,451
Diluted		17,742		17,780		17,689		17,809
Dividends per share	$	0.06	$	0.06	$	0.18	$	0.18

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BLACK BOX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS

In thousands, except par value		December 29, 2007		March 31, 2007
Assets
Cash and cash equivalents	$	20,109	$	17,157
Accounts receivable, net		179,537		161,733
Inventories, net		74,224		72,807
Costs/estimated earnings in excess of billings on uncompleted contracts		59,693		61,001
Prepaid and other current assets		23,246		31,057
Total current assets		356,809		343,755
Property, plant and equipment, net		34,413		39,051
Goodwill, net		580,211		568,647
Intangibles:
Customer relationships, net		68,909		68,016
Other intangibles, net		31,855		33,258
Other assets		21,002		37,364
Total assets	$	1,093,199	$	1,090,091
Liabilities
Accounts payable	$	79,664	$	74,727
Accrued compensation and benefits		23,321		21,811
Deferred revenue		34,611		35,630
Billings in excess of costs/estimated earnings on uncompleted contracts		22,012		19,027
Income taxes		9,169		13,430
Other liabilities		49,558		62,071
Total current liabilities		218,335		226,696
Long-term debt		219,830		238,194
Other liabilities		21,024		25,505
Total liabilities		459,189		490,395
Stockholders’ equity
Common stock		25		25
Additional paid-in capital		447,164		441,283
Retained earnings		469,522		450,022
Accumulated other comprehensive income		34,335		25,399
Treasury stock		(317,036)		(317,033)
Total stockholders’ equity		634,010		599,696
Total liabilities and stockholders’ equity	$	1,093,199	$	1,090,091

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BLACK BOX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three-months Ended				Nine-months Ended
	December 29 and 30,				December 29 and 30,
In thousands	2007		2006		2007		2006
Operating Activities
Net income	$	8,286	$	10,493	$	27,784	$	28,981
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Intangibles amortization and depreciation		4,119		5,880		13,464		15,333
Loss (gain) on sale of property		(31)		--		441		--
Deferred taxes		10,030		(1,048)		292		(730)
Stock compensation expense		4,535		1,840		7,406		7,476
Tax impact from stock options		2,105		335		6,491		662
Change in fair value of interest rate swap		1,583		(87)		2,021		1,308
Changes in operating assets and liabilities:
Accounts receivable, net		10,496		2,874		(13,493)		(644)
Inventories, net		(3,093)		(1,895)		705		(6,629)
All other current assets excluding deferred tax asset		12,662		2,087		9,759		707
Liabilities exclusive of long-term debt		(26,188)		(17,606)		(18,134)		(21,868)
Net cash provided by (used for) operating activities	$	24,504	$	2,873	$	36,736	$	24,596
Investing Activities
Capital expenditures	$	(486)	$	(1,363)	$	(2,412)	$	(3,475)
Capital disposals		35		140		86		543
Acquisition of businesses (payments)/recoveries		(10,657)		(5,476)		(10,657)		(132,878)
Prior merger-related (payments)/recoveries		1,019		(42)		(2,196)		(1,431)
Net cash provided by (used for) investing activities	$	(10,089)	$	(6,741)	$	(15,179)	$	(137,241)
Financing Activities
Proceeds from borrowings	$	53,825	$	55,502	$	153,275	$	314,021
Repayment of borrowings		(64,691)		(53,710)		(172,378)		(184,946)
Repayment on discounted lease rentals		--		(3)		--		(27)
Proceeds from exercise of options		2		5,530		5,172		12,141
Payment of dividends		(1,061)		(1,041)		(3,165)		(3,157)
Purchase of Treasury Stock		(2)		(2,619)		(3)		(20,206)
Net cash provided by (used for) financing activities	$	(11,927)	$	3,659	$	(17,099)	$	117,826
Foreign currency exchange impact on cash	$	(599)	$	(187)	$	(1,506)	$	(1,026)
Increase / (decrease) in cash and cash equivalents	$	1,889	$	(396)	$	2,952	$	4,155
Cash and cash equivalents at beginning of period	$	18,220	$	15,758	$	17,157	$	11,207
Cash and cash equivalents at end of period	$	20,109	$	15,362	$	20,109	$	15,362

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Non-GAAP Financial Measures
As a supplement to United States Generally Accepted Accounting Principles (“GAAP”), the Company provides non-GAAP financial measures such as free cash flow, cash provided by operating activities excluding restructuring payments, operating net income, operating earnings per share (EPS), Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), Adjusted EBITDA, Adjusted Operating income and Same-office revenue comparisons to illustrate the Company’s operational performance. These non-GAAP financial measures exclude the impact of certain items and, therefore, have not been calculated in accordance with GAAP. Pursuant to the requirements of Regulation G, the Company has provided Management explanations regarding their use and the usefulness of non-GAAP financial measures, definitions of the non-GAAP financial measures and reconciliations to the most directly comparable GAAP financial measures, which are provided below.

Management uses non-GAAP financial measures (a) to evaluate the Company’s historical and prospective financial performance as well as its performance relative to its competitors, (b) to set internal sales targets and associated operating budgets, (c) to allocate resources, (d) to measure operational profitability and (e) as an important factor in determining variable compensation for Management and its team members. Moreover, the Company has historically reported these non-GAAP financial measures as a means of providing consistent and comparable information with past reports of financial results.

While Management believes these non-GAAP financial measures provide useful supplemental information to investors, there are limitations associated with the use of non-GAAP financial measures. The limitations include (i) the non-GAAP financial measures are not prepared in accordance with GAAP, are not reported by all of the Company’s competitors and may not be directly comparable to similarly-titled measures of the Company’s competitors due to potential differences in the exact method of calculation, (ii) the non-GAAP financial measures exclude restructuring, severance and other acquisition integration costs (collectively referred to as “restructuring charges” or “restructuring payments”) incurred during the periods reported that will impact future operating results, (iii) the non-GAAP financial measures exclude certain non-cash amortization of intangible assets on acquisitions, however, do not specifically exclude the added benefits of these costs, such as revenue and contributing operating margin, (iv) the non-GAAP financial measures exclude non-cash stock-based compensation charges, which are similar to cash compensation paid to employees and are an integral part of achieving our operating results, (v) the non-GAAP financial measures exclude non-cash asset write-up depreciation expense on acquisitions related to acquisitions made during recent years which is derived from the book value to fair market value write-up on acquired assets, (vi) the non-GAAP financial measures exclude historical stock option granting practices investigation costs, (vii) the non-GAAP financial measures exclude the non-cash change in fair value of the interest rate swap which will continue to impact the Company’s earnings until the interest rate swap is settled, (viii) the non-GAAP financial measures exclude expenses incurred as a result of measures taken by the Company to address the application of Section 409A of the Internal Revenue Code of 1986, as amended (hereinafter referred to as “409A expenses”) and (ix) there is no assurance the excluded items in the non-GAAP financial measures will not occur in the future. The Company compensates for these limitations by using these non-GAAP financial measures as supplements to GAAP financial measures and by reviewing the reconciliations of the non-GAAP financial measures to their most comparable GAAP financial measures.

Non-GAAP financial measures are not in accordance with, or an alternative for, GAAP. The Company’s non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP financial measurements, and should be read only in conjunction with the Company’s consolidated financial statements prepared in accordance with GAAP.

Free cash flow
Free cash flow is defined by the Company as cash provided by operating activities less net capital expenditures, plus proceeds from stock option exercises, plus or minus foreign currency translation adjustments. Management’s reasons for exclusion of each item are explained in further detail below.

Net capital expenditures
The Company believes net capital expenditures must be taken into account along with cash provided by operating activities to more properly reflect the actual cash available to the Company. Net capital expenditures are typically material and directly impact the availability of the Company’s operating cash. Net capital expenditures are comprised of capital expenditures and capital disposals.

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Proceeds from stock option exercises
The Company believes that proceeds from stock option exercises should be added to cash provided by operating activities to more accurately reflect the actual cash available to the Company. The Company has demonstrated a recurring inflow of cash related to its stock-based compensation plans and since this cash is immediately available to the Company, it directly impacts the availability of the Company’s operating cash. The amount of proceeds from stock option exercises is dependent upon a number of variables, including the number and exercise price of outstanding options and the trading price of the Company’s common stock. In addition, the timing of stock option exercises is under the control of the individual option holder and is not in the control of the Company. As a result, there can be no assurance as to the timing or amount of any proceeds from stock option exercises.

Foreign currency translation adjustment
Due to the size of the Company’s international operations, and the ability of the Company to utilize cash generated from foreign operations locally without the need to convert such currencies to U.S. dollars on a regular basis, the Company believes that it is appropriate to adjust its operating cash flows to take into account the positive and / or negative impact of such charges as such adjustment provides an appropriate measure of the availability of the Company’s operating cash on a world-wide basis. A limitation of adjusting cash flows to account for the foreign currency impact is that it may not provide an accurate measure of cash available in U.S. dollars.

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

	3Q08		2Q08		3Q07		3QYTD08		3QYTD07
Cash provided by operating activities	$	24,504	$	4,528	$	2,873	$	36,736	$	24,596
Capital expenditures		(486)		(942)		(1,363)		(2,412)		(3,475)
Capital disposals		35		51		140		86		543
Foreign currency exchange impact on cash		(599)		(1,000)		(187)		(1,506)		(1,026)
Free cash flow before stock option exercises	$	23,454	$	2,637	$	1,463	$	32,904	$	20,638
Proceeds from stock option exercises		2		5,170		5,530		5,172		12,141
Free cash flow	$	23,456	$	7,807	$	6,993	$	38,076	$	32,779

Cash provided by operating activities excluding restructuring payments
Cash provided by operating activities excluding restructuring payments is defined by the Company as cash provided by operating activities plus restructuring payments. Restructuring payments are the cash payments made during the period for restructuring charges. The Company believes that restructuring payments should be added to cash provided by operating activities to more accurately reflect the cash flow from operations.

A reconciliation of cash provided by operating activities to cash provided by operating activities excluding restructuring payments is presented below:

	3Q08		2Q08		3Q07		3QYTD08		3QYTD07
Cash provided by operating activities	$	24,504	$	4,528	$	2,873	$	36,736	$	24,596
Restructuring payments		2,990		3,508		5,297		10,515		14,467
Cash provided by operating activities excluding restructuring payments	$	27,494	$	8,036	$	8,170	$	47,251	$	39,063

Operating net income and operating earnings per share (EPS)
Management believes that operating net income, defined by the Company as net income plus reconciling items, and operating EPS, defined as operating net income divided by weighted average common shares outstanding (diluted), provide investors additional important information to enable them to assess, in a way Management assesses, the Company’s current and future operations. Reconciling items include restructuring charges, amortization of intangible assets on acquisitions, stock-based compensation expense, asset write-up depreciation expense on acquisitions, historical stock option granting practices investigation costs, the change in fair value of the interest rate swap and 409A expenses. Management’s reason for exclusion of each item is explained in further detail below.

Restructuring charges
The Company believes that incurring costs in the current period(s) as part of a restructuring plan or as a result of economies of scale from acquisitions will result in a long-term positive impact on financial performance in the future. Restructuring charges are presented in accordance with GAAP in the Company’s Condensed Consolidated Statements of Income. However, due to the material amount of additional costs incurred during a single or possibly successive periods, Management believes that exclusion of these costs and their related tax impact provides a more accurate reflection of the Company’s ongoing financial performance.

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Amortization of intangible assets on acquisitions
The Company incurs non-cash amortization expense from intangible assets related to various acquisitions it has made in recent years. Management excludes these expenses and their related tax impact for the purpose of calculating non-GAAP financial measures when it evaluates the continuing operational performance of the Company because these costs are fixed at the time of an acquisition, are then amortized over a period of several years after the acquisition and generally cannot be changed or influenced by Management after the acquisition.

Stock-based compensation expense
The Company records non-cash stock-based compensation expense equal to the fair value of share-based payment awards to its directors, executives and employees. Non-cash stock-based compensation is an integral part of ongoing operations since it is considered similar to other types of compensation to employees. However, Management believes that varying levels of stock-based compensation expense could result in misleading period-over-period comparisons and is providing an adjusted disclosure, which excludes stock-based compensation and its related tax impact.

Asset write-up depreciation expense on acquisitions
The Company incurs non-cash asset write-up depreciation expense on acquisitions related to acquisitions made during recent years. Specifically, this non-cash expenditure is derived from the book value to fair market value write-up on acquired assets. Asset write-ups are depreciated over their remaining useful life which generally falls between one to five years. Management excludes these expenses and their related tax impact for the purpose of calculating non-GAAP financial measures when it evaluates the continuing operational performance of the Company because these costs are fixed from acquisition to the end of the asset’s useful life, and generally cannot be changed or influenced by Management after the acquisition.

Historical stock option granting practices investigation costs
The Company incurred significant costs in connection with its investigation of historical stock option granting practices during the current year. Management excludes these expenses and their related tax impact for the purpose of calculating non-GAAP financial measures when it evaluates the continuing operational performance of the Company because these costs are generally non-recurring and cannot be changed or influenced by Management.

Change in fair value of the interest rate swap
To mitigate the risk of interest-rate fluctuations associated with the Company’s variable rate debt, the Company entered into a five-year interest rate swap (“interest rate swap”) that does not qualify as a cash flow hedge. Thus, the Company records the change in fair value of the interest rate swap as an asset/liability within the Company’s Condensed Consolidated Balance Sheets with the offset to Interest expense (income) within the Company’s Condensed Consolidated Statements of Income. Management excludes this non-cash expense (income) and the related tax impact for the purpose of calculating non-GAAP financial measures when it evaluates the continuing operational performance of the Company because these costs generally cannot be changed or influenced by Management.

409A expenses
The Company incurred significant costs as a result of measures taken to address the application of Section 409A of the Internal Revenue Code of 1986, as amended, related to its stock options. Management excludes these expenses and their related tax impact for the purpose of calculating non-GAAP financial measures when it evaluates the continuing operational performance of the Company because these costs are generally non-recurring and cannot be changed or influenced by Management.

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The following table represents the Company’s pre-tax reconciling items:

	3Q08		2Q08		3Q07		3QYTD08		3QYTD07
Non-cash charges:
Amortization of intangible assets on acquisitions	$	1,335	$	1,298	$	2,621	$	4,902	$	5,948
Stock-based compensation expense		(152)		1,155		1,840		2,719		7,476
Asset write-up depreciation expense on acquisitions		457		448		713		1,564		1,904
Change in fair value of interest rate swap		1,583		1,746		(87)		2,021		1,308
409A expenses		4,687		--		--		4,687		--
Total Non-cash charges	$	7,910	$	4,647	$	5,087	$	15,893	$	16,636
Cash charges:
Restructuring charges	$	1,513	$	873	$	--	$	6,416	$	1,115
Historical stock option granting practices investigation costs		134		1,018		--		1,152		--
409A expenses		1,341		--		--		1,341		--
Total Cash charges	$	2,988	$	1,891	$	--	$	8,909	$	1,115
Total pre-tax reconciling items	$	10,898	$	6,538	$	5,087	$	24,802	$	17,751

A reconciliation of net income to operating net income is presented below:

	3Q08		2Q08		3Q07		3QYTD08		3QYTD07
Net income	$	8,286	$	11,310	$	10,493	$	27,784	$	28,981
% of revenues		3.2%		4.3%		4.0%		3.6%		3.8%
Reconciling items, after tax		6,560		4,087		3,309		15,302		11,590
Operating Net Income	$	14,846	$	15,397	$	13,802	$	43,086	$	40,571
% of revenues		5.7%		5.9%		5.2%		5.6%		5.3%

A reconciliation of diluted earnings per common share (EPS) to operating EPS (may not sum due to rounding) is presented below:

	3Q08		2Q08		3Q07		3QYTD08		3QYTD07
Diluted EPS	$	0.47	$	0.64	$	0.59	$	1.57	$	1.63
EPS impact of reconciling items		0.37		0.23		0.19		0.87		0.65
Operating EPS	$	0.84	$	0.87	$	0.78	$	2.44	$	2.28

EBITDA and Adjusted EBITDA
Management believes that EBITDA, defined as income before provision for income taxes plus interest, depreciation and amortization, is a widely accepted measure of profitability that may be used to measure the Company’s ability to service its debt. Adjusted EBITDA, defined as EBITDA plus stock compensation expense, may also be used to measure the Company’s ability to service its debt.

A reconciliation of net income to EBITDA is presented below:

	3Q08		2Q08		3Q07		3QYTD08		3QYTD07
Income before provision for income taxes	$	13,766	$	18,091	$	16,129	$	44,813	$	44,423
Interest		5,780		6,143		4,061		15,203		13,222
Depreciation / Amortization		4,119		4,072		5,880		13,464		15,333
EBITDA	$	23,665	$	28,306	$	26,070	$	73,480	$	72,978
Stock compensation expense		4,535		1,155		1,840		7,406		7,476
Adjusted EBITDA	$	28,200	$	29,461	$	27,910	$	80,886	$	80,454

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Page 11

Supplemental Information:
The following supplemental information, including geographical segment results, service type results, same office revenue comparisons and significant balance sheet ratios and other information is being provided for comparisons of reported results for the third quarter of Fiscal 2008 and 2007, second quarter of Fiscal 2008 and/or third quarter year-to-date Fiscal 2008 and 2007. All dollar amounts are in thousands unless noted otherwise.

Geographical Segment Results:
Management is presented with and reviews revenues, operating income and adjusted operating income by geographical segment. Adjusted operating income is defined by the Company as operating income plus reconciling items. Reconciling items include restructuring charges, amortization of intangible assets on acquisitions, stock-based compensation expense, asset write-up depreciation expense on acquisitions, historical stock option granting practices investigation costs and 409A expenses. See above for additional details provided by Management regarding non-GAAP financial measures. Revenues, operating income and adjusted operating income for North America, Europe and All Other are presented below:

	3Q08		2Q08		3Q07		3QYTD08		3QYTD07
Revenues:
North America	$	210,635	$	217,002	$	220,391	$	637,639	$	644,260
Europe		37,303		33,706		34,610		103,808		94,799
All Other		10,386		9,922		9,805		29,798		27,467
Total	$	258,324	$	260,630	$	264,806	$	771,245	$	766,526
Operating income:
North America	$	11,593	$	18,104	$	13,685	$	40,279	$	41,204
% of North America revenues		5.5%		8.3%		6.2%		6.3%		6.4%
Europe	$	5,966	$	4,292	$	4,502	$	14,206	$	11,134
% of Europe revenues		16.0%		12.7%		13.0%		13.7%		11.74%
All Other	$	1,971	$	1,765	$	1,881	$	5,375	$	5,372
% of All Other revenues		19.0%		17.8%		19.2%		18.0%		19.6%
Total	$	19,530	$	24,161	$	20,068	$	59,860	$	57,710
% of Total revenues		7.6%		9.3%		7.6%		7.8%		7.5%
Reconciling items (pretax):
North America	$	9,315	$	4,792	$	5,174	$	22,781	$	16,443
Europe		--		--		--		--		--
All Other		--		--		--		--		--
Total	$	9,315	$	4,792	$	5,174	$	22,781	$	16,443
Adjusted Operating income:
North America	$	20,908	$	22,896	$	18,859	$	63,060	$	57,647
% of North America revenues		9.9%		10.6%		8.6%		9.9%		8.9%
Europe	$	5,966	$	4,292	$	4,502	$	14,206	$	11,134
% of Europe revenues		16.0%		12.7%		13.0%		13.7%		11.7%
All Other	$	1,971	$	1,765	$	1,881	$	5,375	$	5,372
% of All Other revenues		19.0%		17.8%		19.2%		18.0%		19.6%
Total	$	28,845	$	28,953	$	25,242	$	82,641	$	74,153
% of Total revenues		11.2%		11.1%		9.5%		10.7%		9.7%

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Page 12

Service Type Results:
Management is presented with and reviews revenues and gross profit for Data Services, Voice Services and Hotline Services which are presented below:

	3Q08		2Q08		3Q07		3QYTD08		3QYTD07
Revenues:
Data Services	$	50,474	$	50,200	$	46,350	$	146,839	$	137,328
Voice Services		148,581		150,811		160,686		449,379		464,140
Hotline Services		59,269		59,619		57,770		175,027		165,058
Total	$	258,324	$	260,630	$	264,806	$	771,245	$	766,526
Gross profit:
Data Services	$	15,911	$	14,374	$	14,236	$	44,462	$	41,460
% of Data Services revenues		31.5%		28.6%		30.7%		30.3%		30.2%
Voice Services	$	49,832	$	49,753	$	54,566	$	149,861	$	158,242
% of Voice Services revenues		33.5%		33.0%		34.0%		33.3%		34.1%
Hotline Services	$	28,378	$	28,162	$	27,883	$	83,317	$	81,863
% of Hotline Services revenues		47.9%		47.2%		48.3%		47.6%		49.6%
Total	$	94,121	$	92,289	$	96,685	$	277,640	$	281,565
% of Total revenues		36.4%		35.4%		36.5%		36.0%		36.7%

Same-office revenue comparisons:
Management is presented with and reviews revenues on a same-office basis which excludes the effects of revenues from acquisitions. While the information provided below is presented on a consolidated basis, the revenue from offices added below relates to North America Voice Services. Reported same-office comparisons for the Company’s North America and Voice Services segments can be determined by excluding the revenues from offices added since 1Q07 or 2Q08 as shown below.

Information on quarterly revenues on a same-office basis compared to the same period last year is presented below:

		3Q08		3Q07		% Change
	Reported revenues	$	258,324	$	264,806		(2%)
	Less revenues from offices added since 1Q07		(69,015)		(84,248)
	Reported revenues on same-office basis		189,309		180,558		5%
	Foreign currency impact		(5,130)		--
	Revenues on same-office basis (excluding foreign currency impact)	$	184,179	$	180,558		2%
Information on year-to-date revenues on a same-office basis compared to the same period last year is presented below:
		3QYTD08		3QYTD07		% Change
	Reported revenues	$	771,245	$	766,526		1%
	Less revenues from offices added since 1Q07		(209,277)		(232,681)
	Reported revenues on same-office basis		561,968		533,845		5%
	Foreign currency impact		(10,533)		--
	Revenues on same-office basis (excluding foreign currency impact)	$	551,435	$	533,845		3%
Information on revenues on a same-office basis compared to the sequential quarter is presented below:
			3Q08		2Q08	% Change
	Reported revenues	$	258,324	$	260,630		(1%)
	Less revenues from offices added since 2Q08		(3,293)		--
	Reported revenues on same-office basis		255,031		260,630		(2%)
	Foreign currency impact		(2,251)		--
	Revenues on same-office basis (excluding foreign currency impact)	$	252,780	$	260,630		(3%)

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Page 13

Significant Balance Sheet ratios and Other Information:
Information on certain balance sheet ratios, backlog and headcount is presented below. Dollar amounts are in millions.

	3Q08			2Q08			3Q07
Accounts receivable:
Gross accounts receivable	$	192.2		$	202.3		$	198.2
Reserve $ / %	$	12.7	6.6%	$	14.1	7.0%	$	13.8	7.0%
Net accounts receivable	$	179.5		$	188.2		$	184.4
Net days sales outstanding	58 days			58 days			58 days
Inventory:
Gross inventory	$	95.3		$	91.5		$	99.2
Reserve $ / %	$	21.1	22.2%	$	21.7	23.7%	$	25.1	25.3%
Net inventory	$	74.2		$	69.8		$	74.1
Net inventory turns		7.0x			7.9x			7.6x
Six-month order backlog	$	165		$	166		$	162
Team members		4,488			4,372			4,564

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