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Form 8-K BLACK BOX CORP For: May 10

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May 10, 2016 4:13 PM EDT
                                                        

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): May 10, 2016


Black Box Corporation
(Exact Name of Registrant as Specified in its Charter)


Delaware
0-18706
95-3086563
(State or Other Jurisdiction
of Incorporation)
(Commission File Number)
(IRS 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

N/A
(Former Name or Former Address, if Changed Since Last Report)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


1
                                                        

Item 2.02
Results of Operations and Financial Condition.
On May 10, 2016, Black Box Corporation (the “Company”) issued a press release announcing financial results for the fiscal quarter ended March 31, 2016. A copy of the press release is furnished as Exhibit 99.1 to this report.
Item 2.06
Material Impairments.
During the fourth quarter of the fiscal year ended March 31, 2016 (“Fiscal 2016”) and in connection with its planning for the fiscal year ended March 31, 2017, the Company conducted an interim goodwill assessment to determine whether such assets were recoverable as of December 26, 2015. Such assessment revealed that the carrying value of its North America Products and North America Services reporting units exceeded the fair value of its North America Products and North America Services reporting units thus the Company proceeded to the second step of the goodwill impairment assessment.
The Company, after consultation by Management with the Audit Committee of the Company's Board of Directors, recorded a non-cash, pre-tax goodwill impairment loss of $34.9 million, (consisting of $11.7 million and $23.2 million in its North America Products and North America Services reporting units, respectively) during the fourth quarter of Fiscal 2016 as a result of its interim goodwill assessment conducted as of December 26, 2015. In determining the impairment loss, the implied fair value of the reporting unit goodwill was compared to the carrying amount of the goodwill. The implied fair value of reporting unit goodwill was determined as the residual between the fair value of the reporting unit and the fair value of its assets (including any unrecognized intangible assets) and liabilities as of the interim goodwill assessment date. The impairment charge did not impact the Company's business operations, compliance with debt covenants or future cash flows nor did it result in any cash expenditures.
The primary factors contributing to the goodwill impairment loss in both North America Products and North America Services were lower projected revenue and profit in Fiscal 2016 and the corresponding impact in periods beyond Fiscal 2016. North America Services revenues are lower relative to recent expectations due to a decrease in core commercial revenues, primarily in the business services industry and a decrease in government revenues as a result of project and task order funding delays partially offset by increases in a large managed services contract and our solutions practices. North America Services profits continue to be challenged by competitive pricing pressures and current period investments for the operations initiative and infrastructure which the Company believes will enable it to grow revenue and profits more efficiently beyond Fiscal 2016. North America Products revenues and profits are comparable year-over-year but less than expected due to lower than expected revenues from its core offerings.
Cautionary Forward-Looking Statements
When included in this Form 8-K, the words "expects," "believes" and "anticipates" 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 Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2015. 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 8-K. The Company expressly disclaims any obligation or undertaking to release publicly any updates or any changes in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based.
Item 9.01
Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No.     Description
99.1        Press Release dated May 10, 2016

2
                                                        

SIGNATURES
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 hereunto duly authorized.
BLACK BOX CORPORATION
Date: May 10, 2016
/s/ TIMOTHY C. HUFFMYER                                 
Timothy C. Huffmyer
Vice President, Chief Financial Officer
and Treasurer (Principal Accounting Officer)

Exhibit Index
Exhibit No.     Description
99.1        Press Release dated May 10, 2016


3
                                    Exhibit 99.1

 
                    
Contact
Black Box Corporation
Timothy C. Huffmyer
Vice President, Chief Financial Officer and Treasurer
Phone: (724) 873-6788

FOR IMMEDIATE RELEASE
BLACK BOX CORPORATION REPORTS FOURTH QUARTER OF FISCAL 2016 RESULTS;
DECLARES AN INCREASE TO ITS DIVIDEND FOR THE SIXTH CONSECUTIVE YEAR
PITTSBURGH, PENNSYLVANIA, May 10, 2016 - Black Box Corporation (NASDAQ: BBOX), a leading technology solutions provider dedicated to helping customers design, build, manage and secure their IT infrastructure, today reported results for the fourth quarter of Fiscal 2016 and twelve-month period ended March 31, 2016.
4Q16 Results
•
Revenues were $224.1 million, down 9% from $245.1 million for the same period last year and up 1% from $222.5 million in the sequential period.
•
Benefit for income taxes was $2.6 million, compared to $0.4 million for the same period last year and compared to a provision for income taxes of $0.1 million in the sequential period.
•
Operating net income* was $2.1 million, down 71% from $7.1 million for the same period last year and down 64% from $5.7 million in the sequential period.
•
Operating EPS* was $0.14, down 70% from $0.46 for the same period last year and down 63% from $0.37 in the sequential period.
•
Net loss was $47.7 million, which included $34.9 million ($34.8 million net of tax) of goodwill and intangible asset impairment loss, compared to net income of $2.9 million for the same period last year and compared to a net income of $5.7 million in the sequential period.
•
Diluted loss per share was $3.13, compared to Diluted earnings per share of $0.19 for the same period last year and compared to Diluted earnings per share of $0.37 in the sequential period.
•
Cash flow provided by operations was $22.3 million, down 40% from $37.0 million for the same period last year and down 23% from $28.8 million in the sequential period.
•
We provided $6.0 million to our shareholders by repurchasing $4.3 million of common stock and paying $1.7 million in dividends.


1
                                    Exhibit 99.1

FY16 Results
•
Revenues were $912.7 million, down 8% from $992.4 million for the same period last year.
•
Benefit from income taxes was $22.0 million, compared to provision for income taxes of $8.2 million for the same period last year.
•
Operating net income* was $17.0 million, down 34% from $25.9 million for the same period last year.
•
Operating EPS* was $1.11, down 34% from $1.67 for the same period last year.
•
Net loss was $171.1 million, which included $192.2 million ($167.6 million net of tax) of goodwill and intangible asset impairment loss, compared to net income of $15.3 million for the same period last year.
•
Diluted loss per share was $11.18, compared to diluted earnings per share of $0.99 for the same period last year.
•
Cash flow provided by operations was $37.2 million, down 20% from $46.5 million for the same period last year.
•
We provided $13.9 million to our shareholders by repurchasing $7.2 million of common stock and paying $6.6 million in dividends.
* See the information under the caption "Non-GAAP Financial Measures" below for a discussion regarding the usefulness of the non-GAAP financial measures contained in this release, definitions of those non-GAAP financial measures and reconciliations to their most directly comparable GAAP financial measures.
Dividend Increase
The Company also announced that its Board of Directors has declared a 9% increase to its quarterly cash dividend resulting in a payout of $0.12 per share of its Common Stock.  The $0.12 per share dividend was declared on all outstanding shares of Black Box’s Common Stock and will be payable on July 16, 2016 to stockholders of record at the close of business on July 1, 2016. Black Box will pay the dividend through its transfer agent, American Stock Transfer & Trust Company, LLC, 6201 15th Avenue, Brooklyn, NY 11219. This is the sixth consecutive year that the Company has increased its dividend.
New Credit Facility
The Company also announced that it has refinanced its senior credit facility with a new, five year, $200,000,000 senior secured credit facility with a group of lenders led by PNC Bank, National Association, as Administrative Agent, and Bank of America, N.A., as Syndication Agent.  This credit facility includes a provision to increase the commitments to $250,000,000. 
Commenting on the fourth quarter of Fiscal 2016 results, E.C. Sykes, President and Chief Executive Officer, said, "I am pleased to join Black Box and look forward to working with the team to improve the Company’s position in the market and its financial results. As can be seen from our 4Q16 results, our profitability and predictability remain challenged and this is getting immediate attention. While profitability was lower than target, the team was able to exceed our revenue target and produce strong cash flows. Our dividend and new credit facility are positive events. Our quarterly dividend is being raised 9% to $0.12. And our new credit facility will provide us the flexibility to address our cost structure over the coming quarters as we first look to stabilize the business and then to build a pattern of sustainable profitable revenue growth."
Mr. Sykes continued, "Over the past 2 ½ months, I have been listening to our customers, partners, and team members. I am personally excited by the opportunities that lie before us. This Company has the talent and market position to consistently deliver valuable, high quality network solutions. As we complete the transformational efforts that are in process, we will be in position to capitalize on those capabilities."
Earnings Conference Call
The Company will conduct a conference call beginning at 5:00 p.m. Eastern Time today, May 10, 2016. E.C. Sykes, President and Chief Executive Officer, will host the call. To listen only to the live webcast, access the event at http://investor.blackbox.com/events.cfm. To participate in the teleconference, dial 877-303-3145 (USA) or 253-237-1194 (International) approximately 15 minutes prior to the starting time and ask to be connected to conference 93159574. A replay of the audio webcast will be available at http://investor.blackbox.com/events.cfm for a limited period of time.

2
                                    Exhibit 99.1

About Black Box
Black Box is a leading technology solutions provider dedicated to helping customers design, build, manage and secure their IT infrastructure. Black Box delivers high-value products and services through its global presence and 3,631 team members. To learn more, visit the Black Box Web site at http://www.blackbox.com.
Black Box® and the Double Diamond logo are registered trademarks of BB Technologies, Inc.
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 that 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 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 Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2015. We can give no assurance that any goal, plan or target set forth in forward-looking statements will 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 and caution you not to unduly rely on any such forward-looking statements.

3
                                    Exhibit 99.1

BLACK BOX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
In millions and may not foot due to rounding
March 31, 2016

March 31, 2015

Assets
 
 
Cash and cash equivalents
$
23.5

$
23.5

Accounts receivable, net
139.2

150.6

Inventories, net
42.7

54.4

Costs/estimated earnings in excess of billings on uncompleted contracts
66.7

79.3

Other assets
27.3

31.3

Total current assets
299.4

339.2

Property, plant and equipment, net
34.5

32.2

Goodwill, net
—

191.2

Intangibles, net
78.2

88.1

Deferred tax asset
57.1

31.1

Other assets
6.7

4.4

Total assets
$
475.8

$
686.3

Liabilities
 
 
Accounts payable
$
56.8

$
64.5

Accrued compensation and benefits
21.5

24.8

Deferred revenue
29.4

34.9

Billings in excess of costs/estimated earnings on uncompleted contracts
20.4

16.4

Other liabilities
42.2

47.1

Total current liabilities
170.4

187.7

Long-term debt
119.7

137.3

Other liabilities
29.5

24.2

Total liabilities
$
319.6

$
349.1

Stockholders’ equity
 
 
Common stock
$
—

$
—

Additional paid-in capital
501.8

498.1

Retained earnings
80.6

258.4

Accumulated other comprehensive income (loss)
(13.1
)
(13.4
)
Treasury stock, at cost
(413.1
)
(406.0
)
Total stockholders’ equity
$
156.2

$
337.1

Total liabilities and stockholders’ equity
$
475.8

$
686.3

 
 
 


4
                                    Exhibit 99.1

BLACK BOX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
In millions, except per share amounts and may not foot due to rounding
4Q16

3Q16

4Q15

FY16

FY15

Revenues
 
 
 
 
 
Products
$
39.8

$
41.9

$
42.4

$
166.5

$
176.8

Services
184.3

180.5

202.6

746.1

815.6

Total
224.1

222.5

245.1

912.7

992.4

Cost of sales
 
 
 
 
 
Products
24.7

23.7

23.9

97.5

103.1

Services
139.8

129.2

144.6

544.8

587.1

Total
164.5

152.9

168.5

642.3

690.2

Gross profit
59.7

69.6

76.5

270.3

302.3

Selling, general & administrative expenses
71.4

60.0

70.0

255.7

263.1

Asset impairment loss
34.9

—

—

192.2

—

Intangibles amortization
2.5

2.6

2.6

10.3

10.5

Operating income (loss)
(49.2
)
7.1

4.0

(187.8
)
28.6

Interest expense, net
1.1

1.2

1.1

4.7

4.4

Other expenses (income), net
0.1

0.1

0.3

0.5

0.6

Income (loss) before provision for income taxes
(50.4
)
5.8

2.6

(193.1
)
23.6

Provision (benefit) for income taxes
(2.6
)
0.1

(0.4
)
(22.0
)
8.2

Net income (loss)
$
(47.7
)
$
5.7

$
2.9

$
(171.1
)
$
15.3

Earnings (loss) per common share
 
 
 
 
 
Basic
$
(3.13
)
$
0.37

0.19

$
(11.18
)
$
1.00

Diluted
$
(3.13
)
$
0.37

$
0.19

$
(11.18
)
$
0.99

Weighted-average common shares outstanding
 
 
 
 
 
Basic
15.2

15.4

15.4

15.3

15.4

Diluted
15.2

15.4

15.5

15.3

15.5

Dividends per share
$
0.11

$
0.11

$
0.10

$
0.44

$
0.40



5
                                    Exhibit 99.1

BLACK BOX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
In millions and may not foot due to rounding
4Q16

3Q16

4Q15

FY16

FY15

Operating Activities
 
 
 
 
 
Net income (loss)
$
(47.7
)
$
5.7

$
2.9

$
(171.1
)
$
15.3

Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities
 
 
 
 
 
Intangibles amortization
2.5

2.6

2.6

10.3

10.5

Depreciation
2.3

2.2

1.8

8.6

7.0

Loss (gain) on sale of property
—

—

(0.1
)
—

(0.1
)
Deferred taxes
(1.9
)
(1.1
)
4.8

(26.1
)
4.7

Stock compensation expense
0.8

1.1

1.1

5.1

6.0

Change in fair value of interest-rate swaps
—

—

(0.3
)
(0.4
)
(1.1
)
Asset impairment loss
34.9

—

—

192.2

—

Changes in operating assets and liabilities (net of acquisitions)
 
 
 
 
 
Accounts receivable, net
22.0

3.9

25.6

11.6

1.5

Inventories, net
6.0

1.5

(0.1
)
11.8

(3.5
)
Costs/estimated earnings in excess of billings on uncompleted contracts
(0.3
)
12.6

4.1

12.7

9.9

All other assets
(4.0
)
(7.7
)
(16.2
)
(0.3
)
(14.2
)
Accounts payable
(0.3
)
(1.0
)
0.6

(7.6
)
1.8

Billings in excess of costs/estimated earnings on uncompleted contracts
(4.0
)
5.8

(5.2
)
4.0

0.6

All other liabilities
12.1

3.1

15.2

(13.6
)
8.1

Net cash provided by (used for) operating activities
$
22.3

$
28.8

$
37.0

$
37.2

$
46.5

Investing Activities
 
 
 
 
 
Capital expenditures
$
(2.4
)
$
(3.6
)
$
(2.1
)
$
(10.5
)
$
(8.5
)
Capital disposals
—

—

—

0.2

0.2

Acquisition of businesses (payments)/recoveries
(0.8
)
—

—

(0.8
)
—

Prior merger-related (payments)/recoveries
—

—

—

—

(0.8
)
Net cash provided by (used for) investing activities
$
(3.1
)
$
(3.6
)
$
(2.1
)
$
(11.1
)
$
(9.1
)
Financing Activities
 
 
 
 
 
Proceeds (repayments) from long-term debt
$
(9.0
)
$
(22.7
)
$
(40.0
)
$
(17.8
)
$
(24.5
)
Proceeds (repayments) from short-term debt
0.9

(3.2
)
(0.6
)
4.1

(2.3
)
Purchase of treasury stock
(4.3
)
—

—

(7.2
)
(8.1
)
Payment of dividends
(1.7
)
(1.7
)
(1.5
)
(6.6
)
(6.0
)
Increase (decrease) in cash overdrafts
(0.2
)
0.1

(0.4
)
(0.2
)
(0.3
)
Net cash provided by (used for) financing activities
$
(14.4
)
$
(27.6
)
$
(42.7
)
$
(27.7
)
$
(41.2
)
Foreign currency exchange impact on cash
$
0.7

$
0.1

$
(1.9
)
$
1.5

$
(3.5
)
Increase/(decrease) in cash and cash equivalents
$
5.5

$
(2.3
)
$
(9.8
)
$
—

$
(7.3
)
Cash and cash equivalents at beginning of period
18.0

20.3

33.3

23.5

30.8

Cash and cash equivalents at end of period
$
23.5

$
18.0

$
23.5

$
23.5

$
23.5

 
 
 
 
 
 


6
                                    Exhibit 99.1

Non-GAAP Financial Measures
As a supplement to United States Generally Accepted Accounting Principles ("GAAP"), the Company provides non-GAAP financial measures such as operating income before provision for income taxes ("EBIT"), operating net income, operating earnings per share ("EPS"), revenues excluding foreign currency, adjusted operating income, Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"), Operating EBITDA and free cash flow to illustrate the Company's operational performance. These 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. However, each of the amounts included in the calculation of non-GAAP financial measures are computed in accordance with GAAP. See below for reconciliations to the most directly comparable GAAP financial measures.
Management uses these 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 and (d) to measure operational profitability. Management uses similar non-GAAP measures as an important factor in determining variable compensation for Management and its team members.
Non-GAAP financial measures are not in accordance with, or an alternative for, GAAP financial measures. The Company's non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures, and should be read only in conjunction with the Company's consolidated financial statements prepared in accordance with GAAP.
Operating EBIT, operating net income and operating EPS
Management believes that operating EBIT, defined by the Company as net income (loss) plus provision (benefit) for income taxes and adjustments, operating net income, defined by the Company as operating EBIT less operational income taxes, 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 the way Management assesses, the Company's current and future operations. Adjustments include intangibles amortization, the change in fair value of the interest-rate swaps, goodwill and intangible asset impairment loss, Accounts receivable impairment loss (primarily due to a non-recurring write-down of Accounts receivable for one large project)), Inventory impairment loss (due to a non-recurring write-down to the lower of cost or market as a result of a product line discontinuation and excess inventory given current revenue levels), each of which are non-cash charges, and restructuring expense and CEO transition costs (non-recurring costs related to the transition of the Chief Executive Officer ("CEO") position), each of which is a cash charge.
A reconciliation of Net income (loss) to operating EBIT and Operating net income is presented below:
In millions and may not foot due to rounding
4Q16

3Q16

4Q15

FY16

FY15

Net income (loss)
$
(47.7
)
$
5.7

$
2.9

$
(171.1
)
$
15.3

Provision (benefit) for income taxes
(2.6
)
0.1

(0.4
)
(22.0
)
8.2

Effective tax rate
5.2
%
1.1
%
(14.6
)%
11.4
%
35.0
%
Income (loss) before provision for income taxes
$
(50.4
)
$
5.8

$
2.6

$
(193.1
)
$
23.6

 
 
 
 
 
 
Adjustments
 
 
 
 
 
Intangibles amortization
$
2.5

$
2.6

$
2.6

$
10.3

$
10.5

Interest rate swap
—

—

(0.3
)
(0.4
)
(1.1
)
Restructuring expense
6.5

0.9

4.1

8.8

6.9

CEO transition costs
1.5

—

—

1.5

—

Accounts receivable impairment loss
2.4

—

—

2.4

—

Inventory impairment loss
6.0

—

—

6.0

—

Asset impairment loss
34.9

—

—

192.2

—

Total pre-tax adjustments
$
53.7

$
3.5

$
6.4

$
220.7

$
16.3

 
 
 
 
 
 
Operating EBIT
$
3.4

$
9.3

$
9.0

$
27.6

$
39.8

Operational effective tax rate
38.5
%
38.5
%
21.4
 %
38.5
%
35.0
%
Operational income taxes (1)
1.3

3.6

1.9

10.6

14.0

Operating net income
$
2.1

$
5.7

$
7.1

$
17.0

$
25.9


7
                                    Exhibit 99.1

(1) The effective tax rate used to determine operational income taxes is based on the Company's projected full-year ordinary income tax expense and the projected full-year impact of certain discreet tax items.

A reconciliation of Diluted earnings (loss) per share to operating EPS is presented below:
 
4Q16

3Q16

4Q15

FY16

FY15

Diluted EPS
$
(3.13
)
$
0.37

$
0.19

$
(11.18
)
$
0.99

EPS impact *
3.27

—

0.27

12.29

0.68

Operating EPS
$
0.14

$
0.37

$
0.46

$
1.11

$
1.67

* EPS impact is the result of excluding the provision for income taxes and the adjustments and utilizing an operational effective tax rate.
Revenues excluding foreign currency
Management is presented with and reviews revenues which exclude foreign currency and enable an investor to assess, in the way Management assesses, revenues from its core operations.
Information on quarterly revenues excluding foreign currency compared to the same period last year is presented below:
In millions and may not foot due to rounding
4Q16

4Q15

% Change

Revenues
$
224.1

$
245.1

(9
)%
Foreign currency impact - North America Products
0.1

—

 
Foreign currency impact - North America Services
0.3

—

 
Foreign currency impact - International Products
0.7

—

 
Foreign currency impact - International Services
0.4

—

 
Revenues (excluding foreign currency)
$
225.6

$
245.1

(8
)%
Information on quarterly revenues excluding foreign currency compared to the sequential quarter is presented below:
In millions and may not foot due to rounding
4Q16

3Q16

% Change

Revenues
$
224.1

$
222.5

1
%
Foreign currency impact - North America Products
—

—

 
Foreign currency impact - North America Services
0.1

—

 
Foreign currency impact - International Products
—

—

 
Foreign currency impact - International Services
0.3

—

 
Revenues (excluding foreign currency)
$
224.5

$
222.5

1
%
Information on year-to-date revenues excluding foreign currency compared to the same period last year is presented below:
In millions and may not foot due to rounding
FY16

FY15

% Change

Revenues
$
912.7

$
992.4

(8
)%
Foreign currency impact - North America Products
0.5

—

 
Foreign currency impact - North America Services
1.9

—

 
Foreign currency impact - International Products
10.2

—

 
Foreign currency impact - International Services
2.9

—

 
Revenues (excluding foreign currency)
$
928.2

$
992.4

(6
)%


8
                                    Exhibit 99.1

Segment Information
Management is presented with and reviews Revenues, Gross profit, Operating income (loss) and Adjusted operating income by segment. Management believes that Adjusted operating income, defined by the Company as Operating income (loss) plus adjustments, provides investors additional important information to enable them to assess, in the way Management assesses, the Company's current and future operations. Adjustments include intangibles amortization, asset impairment loss, Accounts receivable impairment loss, Inventory impairment loss, CEO transition costs and restructuring expense.
A reconciliation of Operating income (loss) to Adjusted operating income (by segment) is presented below:
 
4Q16
3Q16
4Q15
FY16
FY15
In millions and may not foot due to rounding
$
% of Rev
$
% of Rev
$
% of Rev
$
% of Rev
$
% of Rev
Revenues
 
 
 
 
 
 
 
 
 
 
North America Products
$19.4
 
$20.1
 
$20.5
 
$84.7
 
$85.2
 
International Products
20.5
 
21.8
 
22.0
 
81.9
 
91.6
 
Products
$39.8

$41.9

$42.4

$166.5

$176.8
 
North America Services
$175.7
 
$172.6
 
$195.5
 
$715.8
 
$785.7
 
International Services
8.6
 
7.9
 
7.1
 
30.3
 
29.9
 
Services
$184.3

$180.5

$202.6

$746.1

$815.6
 
Total
$224.1

$222.5

$245.1

$912.7

$992.4
 
Gross profit
 
 
 
 
 
 
 
 
 
 
North America Products
$6.8
35.0%
$9.1
45.2%
$9.7
47.6%
$35.6
42.1%
$36.1
42.3%
International Products
8.4
40.8%
9.2
42.0%
8.8
39.9%
33.4
40.7%
37.7
41.1%
Products
$15.1
38.0%
$18.2
43.5%
$18.5
43.6%
$69.0
41.4%
$73.7
41.7%
North America Services
$42.7
24.3%
$49.6
28.7%
$56.0
28.6%
$194.4
27.2%
$220.5
28.1%
International Services
1.9
21.7%
1.8
22.4%
2.1
29.0%
6.9
22.9%
8.1
26.9%
Services
$44.5
24.2%
$51.4
28.5%
$58.0
28.6%
$201.3
27.0%
$228.5
28.0%
Total
$59.7
26.6%
$69.6
31.3%
$76.5
31.2%
$270.3
29.6%
$302.3
30.5%
Operating income (loss)
 
 
 
 
 
 
 
 
 
 
North America Products
$(13.5)
(69.5)%
$0.7
3.6%
$1.8
8.7%
$(34.7)
(40.9)%
$4.6
5.4%
International Products
(1.0)
(4.7)%
2.0
9.0%
(0.9)
(4.1)%
(3.8)
(4.6)%
(0.3)
(0.3)%
Products
$(14.4)
(36.2)%
$2.7
6.4%
$0.9
2.0%
$(38.4)
(23.1)%
$4.3
2.4%
North America Services
$(35.3)
(20.1)%
$3.9
2.3%
$2.4
1.2%
$(144.0)
(20.1)%
$22.2
2.8%
International Services
0.5
5.9%
0.5
6.2%
0.7
9.5%
(5.4)
(17.9)%
2.1
7.0%
Services
$(34.8)
(18.9)%
$4.4
2.4%
$3.1
1.5%
$(149.4)
(20.0)%
$24.3
3.0%
Total
$(49.2)
(21.9)%
$7.1
3.2%
$4.0
1.6%
$(187.8)
(20.6)%
$28.6
2.9%
Adjustments
 
 
 
 
 
 
 
 
 
 
North America Products
$14.4
 
$0.1
 
$0.2
 
$39.8
 
$0.2
 
International Products
2.5
 
—
 
1.3
 
8.3
 
2.3
 
Products
$16.9
 
$0.1
 
$1.4
 
$48.1
 
$2.5
 
North America Services
$36.7
 
$3.3
 
$5.0
 
$165.6
 
$14.4
 
International Services
0.1
 
—
 
0.3
 
7.4
 
0.5
 
Services
$36.8
 
$3.3
 
$5.3
 
$173.0
 
$14.9
 
Total
$53.7
 
$3.5
 
$6.7
 
$221.1
 
$17.4
 
Adjusted operating income
 
 
 
 
 
 
 
 
 
North America Products
$1.0
5.1%
$0.8
4.1%
$1.9
9.4%
$5.1
6.0%
$4.8
5.6%
International Products
1.5
7.3%
2.0
9.1%
0.3
1.6%
4.6
5.6%
2.0
2.2%
Products
$2.5
6.2%
$2.8
6.7%
$2.3
5.4%
$9.7
5.8%
$6.8
3.8%
North America Services
$1.4
0.8%
$7.2
4.2%
$7.5
3.8%
$21.6
3.0%
$36.6
4.7%
International Services
0.6
7.2%
0.5
6.5%
1.0
13.6%
2.0
6.6%
2.6
8.6%
Services
$2.1
1.1%
$7.7
4.3%
$8.4
4.2%
$23.6
3.2%
$39.2
4.8%
Total
$4.5
2.0%
$10.5
4.7%
$10.7
4.4%
$33.3
3.6%
$46.0
4.6%

9
                                    Exhibit 99.1

EBITDA and Operating EBITDA
Management believes that EBITDA, defined as Net income (loss) plus provision (benefit) for income taxes, 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. Operating EBITDA, defined as EBITDA plus stock compensation expense, Accounts Receivable impairment loss, Inventory impairment loss and Goodwill impairment loss may also be used to measure the Company's ability to service its debt.
A reconciliation of Net income (loss) to EBITDA and Operating EBITDA is presented below:
In millions and may not foot due to rounding
4Q16

3Q16

4Q15

FY16

FY15

Net income (loss)
$
(47.7
)
$
5.7

$
2.9

$
(171.1
)
$
15.3

Provision (benefit) for income taxes
(2.6
)
0.1

(0.4
)
(22.0
)
8.2

Interest expense, net
1.1

1.2

1.1

4.7

4.4

Intangibles amortization
2.5

2.6

2.6

10.3

10.5

Depreciation
2.3

2.2

1.8

8.6

7.0

EBITDA
$
(44.5
)
$
11.8

$
8.1

$
(169.5
)
$
45.5

Stock compensation expense
0.8

1.1

1.1

5.1

6.0

Accounts receivable impairment loss
2.4

—

—

2.4

—

Inventory impairment loss
6.0

—

—

6.0

—

Asset impairment loss
34.9

—

—

192.2

—

Operating EBITDA
$
(0.5
)
$
12.9

$
9.2

$
36.1

$
51.5

Free cash flow
Management believes that free cash flow, defined by the Company as Net cash provided by (used for) operating activities less net capital expenditures, plus or minus Foreign currency exchange impact on cash, plus Proceeds from stock option exercises, is an important measurement of liquidity as it represents the total cash available to the Company.
A reconciliation of Net cash provided by (used for) operating activities to free cash flow is presented below:
In millions and may not foot due to rounding
4Q16

3Q16

4Q15

FY16

FY15

Net cash provided by (used for) operating activities
$
22.3

$
28.8

$
37.0

$
37.2

$
46.5

Net capital expenditures
(2.4
)
(3.6
)
(2.1
)
(10.3
)
(8.3
)
Foreign currency exchange impact on cash
0.7

0.1

(1.9
)
1.5

(3.5
)
Free cash flow before stock option exercises
$
20.6

$
25.3

$
32.9

$
28.4

$
34.7

Proceeds from the exercise of stock options
—

—

—

—

—

Free cash flow
$
20.6

$
25.3

$
32.9

$
28.4

$
34.7

Significant Balance Sheet ratios and Other Information
Information on certain balance sheet ratios, backlog and headcount is presented below:
Dollars In millions
4Q16

3Q16

4Q15

Days sales outstanding
53 days

62 days

52 days

Aggregate days sales outstanding
74 days

80 days

77 days

Inventory turns
15.1x

11.7x

11.9x

Six-month order backlog
$
164.2

$
172.7

$
168.7

Headcount
3,631

3,637

3,803

Net Debt
$
96.2

$
110.7

$
113.7

Leverage ratio*
3.0

2.8

2.7

* Leverage ratio is based on Adjusted EBITDA as defined under the applicable credit facility.

10

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