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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
 FORM 10-K (Mark One)  þ
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 31, 2005 OR  o
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission File Number: 0-18706 Black Box Corporation  Delaware
    
    95-3086563(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)1000 Park DriveLawrence, Pennsylvania
    
    15055(Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number, including area code: 724-746-5500 Securities registered pursuant to Section 12(b) of the Act:None Securities registered pursuant to Section 12(g) of the Act:Common Stock, $.001 par value Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. YES
þ NO o Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K
(§ 229.405 of this chapter) is not contained herein and will not be contained, to the best of
registrants knowledge, in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. þ Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule
12b-2 of the Act). YES þ NO o The aggregate market value of the voting stock held by non-affiliates of the registrant as of
October 2, 2004 (based on closing price of such stock as reported by NASDAQ on such date) was
$655,113,908. For purposes of this calculation only, directors and executive officers of the
registrant and their affiliates are deemed to be affiliates of the registrant. As of June 10, 2005,
there were 16,846,117 shares of Common Stock, par value $.001, outstanding. DOCUMENTS INCORPORATED BY REFERENCE Proxy Statement for 2005 Annual Meeting of Stockholders  Part III




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BLACK BOX CORPORATION INDEX PagePART IItem 1.
    
    Business
    
    
    3Item 2.
    
    Properties
    
    
    8Item 3.
    
    Legal Proceedings
    
    
    8Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    9PART IIItem 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    11Item 6.
    
    Selected Financial Data
    
    
    13Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 7A.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    31Item 8.
    
    Financial Statements and Supplementary Data
    
    
    33Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    64Item 9A.
    
    Controls and Procedures
    
    
    64Item 9B.
    
    Other Information
    
    
    67PART IIIItem 10.
    
    Directors and Executive Officers of the Registrant
    
    
    67Item 11.
    
    Executive Compensation
    
    
    67Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    67Item 13.
    
    Certain Relationships and Related Transactions
    
    
    67Item 14.
    
    Principal Accounting Fees and Services
    
    
    67PART IVItem 15.
    
    Exhibits, Financial Statement Schedules
    
    
    68Signatures
    
    
    72Exhibit 10.17Exhibit 21.1Exhibit 23.1Exhibit 23.2Exhibit 31.1Exhibit 31.2Exhibit 32.1
  2




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PART I 
 Item1. Business. Overview.Black Box Corporation (Black Box or the Company) is the worlds largest
dedicated network infrastructure services provider. Black Box offers one-source network
infrastructure services for: data networks, including structured cabling for wired and wireless
systems; voice systems, including new and upgraded telephony systems; and 24/7/365 hotline
technical support for more than 118,000 network infrastructure products that it sells through its
catalog, Internet Web site and on-site services offices. With more than 2,300 technical experts and
122 offices, Black Box serves more than 152,000 clients in 141 countries throughout the world.
Founded in 1976, Black Box, a Delaware corporation, operates subsidiaries on five continents and is
headquartered near Pittsburgh in Lawrence, Pennsylvania. Black Box differentiates itself from its competitors through comprehensive levels of superior
technical services, its capability to provide these services globally and its private-labeled BLACK
BOX®brand network infrastructure products which carry some of the most comprehensive
warranties in the industry. In January 2005, the Company acquired 100% of the outstanding shares of Norstan, Inc. (Norstan)
common stock for a purchase price of $102,553,000, net of cash acquired of $4,856,000. Norstan is
a full-service communications solutions and services company delivering voice and data technology
solutions and remanufactured equipment to corporate end-users and public sector companies.
Norstan has offices throughout the U.S. and Canada. The Norstan solution is complementary to Black
Boxs existing service solutions and will allow the Company to immediately expand its operational
footprint, provide additional marketing opportunities via cross-selling and, most importantly,
provide its collective customers a stronger worldwide technical services partner. The results of
operations of Norstan are included in the Companys Consolidated
Statements of Income beginning on
the acquisition date, January 25, 2005. As the largest and highest quality network infrastructure services company 100% dedicated to this
market in the world, Black Box is in a unique position to capitalize on its service advantages,
current leadership position, diverse and loyal client base and strong financial performance. References herein to
Fiscal Year or Fiscal mean the Companys
Fiscal Year ended March 31 for the year referenced. Industry Background.Black Box participates in the worldwide network infrastructure market
estimated at $20 billion. The data services market is estimated at $8 billion and the voice
services market is estimated at $12 billion. Business Strategy.Black Boxs business strategy is to provide its clients with one source for
products and services to meet all their networking infrastructure needs  whether at a single
location or multiple locations worldwide. The Company believes that its combination of worldwide
data and voice services performed at client locations  integrated with hotline technical services
 provides a unique advantage over its competitors in the network infrastructure market. The
Company believes its record of consistent operating profitability and its high rate of repeat
clients is evidence of the strength of its strategy. Keys to the Companys success include the
following: 3




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Expert Technical Support Deployed Three Ways. 24/7/365 Technical Support: Black Box provides its clients with around-the-clock,
seven days per week technical support, available to clients in 141 countries worldwide. In Fiscal
2005, the Companys technical experts responded to approximately 400,000 client calls with 99.3%
answered in less than 20 seconds. Black Box specialists receive continuous training to stay
up-to-date on the latest technologies. Locally at Client Sites: Black Box provides complete data and voice solutions 
including design, installation and routine and emergency maintenance  with consistent high quality
and uniformity. The Company maintains what it believes is the industrys largest staff of
Registered Communications Distribution Designers (RCDDs) who assure that all designs meet or exceed
ANSI, TIA/EIA and National Electric Code® (NEC®) standards. Black Box
technicians also stay up-to-date with BICSI® standards and regularly attend the
Companys industry-recognized BLACK BOX Master Technician Courses. www.blackbox.com Internet Web Site: Black Box offers its 24/7/365 technical support
on-line at www.blackbox.com. With one click by an existing or a potential client on Talk to a
Tech, a technical expert makes contact with that person immediately. Technical information,
including Black Box Explains and Technology Overviews, is available as is the ability to design
custom products on-line. Worldwide Coverage. With 122 offices serving 141 countries, Black Box has the largest
footprint in the industry, serving every major industry sector. This worldwide coverage and more
than 29 years of experience makes one-source project management a reality for Black Box clients.
Black Box ensures that clients with these needs receive consistent high-quality design, workmanship and
technology from a single service provider. The Company is exposed to certain risks because of its
global operations discussed under the caption The Company is subject to the risks of doing
business internationally, Part II, Item 7, Risk Factors which is incorporated herein by reference. Quality Networking Solutions and Comprehensive Warranties. Black Box products and services
are covered by an umbrella of protection that goes beyond standard warranties. Black Box was the
first in the industry to introduce a No Questions Asked product warranty program offering full
protection regardless of cause of failure, including accidental, surge or water damage for the life
of the warranty  and many products are guaranteed for life. Exclusive to Black Box are its
Guaranteed-for-Life Structured Cabling System and Certification Plus® guarantees that
provide assurance that a clients network will operate within the application it was designed to
support for life. Brand Name. BLACK BOX is a widely recognized brand name associated with high quality
products and services. The Company believes that the BLACK BOX tradename is important to its
business. ISO 9001:2000 Certified. Black Box has received ISO 9001:2000 certification in Australia,
Belgium, Brazil, Canada, Chile, France, Germany, Ireland, Italy, Japan, Mexico, Netherlands, Puerto
Rico, Spain, Switzerland, the United Kingdom and the United States. Rigorous quality control
processes must be documented and practiced to earn and maintain ISO 9001:2000 certification. 4




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Proprietary Client List. For 29 years, the Company has built a proprietary mailing list of
approximately 1.3 million names representing approximately one million clients. This database
includes information on the past purchases of its clients. The Company routinely analyzes this data
in an effort to enhance client purchasing and ensure that targeted marketing programs reach their
targeted audiences. The Company believes that its proprietary list is a valuable asset that
represents a significant competitive advantage. The Company does not rent its client list. Rapid Order Fulfillment. The Company has developed efficient inventory management and order
fulfillment systems that allow more than 95% of orders for standard product received before
midnight Eastern Time to be shipped that same day. Requests for same day counter-to-counter
delivery and special labeling, kitting and packaging are also available from Black Box. Growth Strategy.The principle components of Black Boxs growth strategy include: (i) expanded
global technical support services primarily through mergers and acquisitions, (ii) cross-selling
marketing activities around its one-source solution of DVH (Data, Voice, Hotline) Services and
(iii) expanded product offerings. Clients.Black Box clients range from small organizations to many of the worlds largest
corporations and institutions covering a diversity of industries, including manufacturing, retail,
finance, education and government. Revenues from the Companys clients are segmented as 42% from
large companies, 17% from medium-sized companies and 41% from small companies. Marketing.Black Boxs services are primarily marketed through its direct marketing materials,
direct sales and online through the Companys Internet Web site. Black Box was the first company to
engage exclusively in the sale of a broad range of networking products through direct marketing
techniques. Black Box targets its catalogs and marketing materials directly to its clients who make
systems design and purchasing decisions. Black Box marketing materials present a wide choice of
items using a combination of product features and benefits, photographs, product descriptions,
product specifications, compatibility charts, potential applications and other helpful technical
information. The Company has achieved the top honors of Catalog of the Year from Multichannel
Merchant, formerly Catalog Age magazine, for two consecutive years for its 2003-2004 and 2004-2005
Black Box catalogs. The Company has also been recognized by Multichannel Merchant for a
tenth year in a row as the best catalog in the Computer Equipment and Software category. Technical Services.Black Box believes that its technical services are the foundation of its
success enabling the Company to provide services ranging from quick-turn hotline consultation to
site surveys, design and engineering, project management, single-site and multi-site installations,
remote monitoring, certification and maintenance. Worldwide Headquarters.The Companys worldwide headquarters and certain U.S. operations are
located in Lawrence, Pennsylvania (a suburb 20 miles south of Pittsburgh). This Company-owned
352,000 square foot facility is on an 84-acre site. Products.Black Box believes that its ability to offer a broad, innovative product line, supported
by readily available technical services, has been an important competitive factor. Black Box
currently offers more than 118,000 products through its catalogs, on-site offices and Internet Web
site. New products are introduced regularly. 5




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Manufacturers and Suppliers.Black Box utilizes a network of original equipment manufacturers and
suppliers throughout the world. Each supplier is monitored for quality, delivery performance
and cost through a well-established certification program. This network has manufacturing
and engineering capabilities to customize products for specialized applications. Black Box believes
that the loss of any single source of supply would not adversely
affect its business in any material respect. Black Box operates its own manufacturing and assembly operation at its Lawrence, Pennsylvania
location. The Company chooses to manufacture certain products in-house when outside OEMs are not
economical. Sourcing decisions of in-house versus out-of-house are based upon a balance of quality,
delivery, performance and cost. Information Systems.The Company has committed significant resources to the development
of information systems that are used to manage all aspects of its business. The Companys systems
support and integrate technical support, client services, inventory management, purchasing,
distribution activities, accounting and project cost management. The Company continues to develop
and implement exclusive worldwide web applications. These applications allow clients to view order
status and product availability, view up-to-date information on their projects that are being
managed across the country or around the world and provide a project management and forecasting
tool for the Companys offices. A technical knowledge base application is also used to access
problem resolution information to help solve client issues more quickly. Information systems are
focused on delivering high quality business applications that are geared to improve internal
efficiencies as well as client interactions. The Companys new product introductions, multiple language requirements and design enhancements
require efficient modification of product presentations for its various catalogs. Black Box also
supports a publishing system that provides the flexibility and speed for both text and graphic
layout. This enables the timely and efficient creation of marketing materials. Backlog.The worldwide backlog of unfilled orders believed to be firm (i.e., to be completed within
six months) was approximately $97 million at March 31, 2005 compared to $56 million at March 31,
2004. Team Members.As of March 31, 2005, the Company had approximately 3,400 team members worldwide of
which approximately 382 are subject to collective bargaining agreements. The Company believes that
its relationship with its team members is good. Financial Information.Financial information regarding the Company, including segment data, is set
forth in Item 8 of this Form 10-K and is incorporated herein by reference. International Revenues.Revenues from countries outside North America were $180 million, or 34% of
total revenues, for Fiscal 2005 comparable to $179 million, or 34% of total revenues, for Fiscal
2004. Competition.The Company competes with other value added resellers, manufacturers and large project
management companies. The Company believes its primary competitive advantage is its high quality
and rapidly deployed worldwide technical services. The Company believes there are no dominant
competitors in the industry. 6




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Other Information.The Company maintains an investor relations page on its Internet Web site at
http://www.blackbox.com. The Companys annual, quarterly and current reports and amendments to such
reports filed with or furnished to the Securities and Exchange Commission (the SEC) are made
available, as soon as reasonably practical after such filing, and may be viewed or downloaded free
of charge in the About Us section of the Web site. The Companys Standards of Business Conduct
and Code of Ethics are furnished on its Web site, and may be viewed or downloaded free of charge in
the About Us section of the Web site. 7




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Item2. Properties. The Companys worldwide headquarters and certain U.S. operations are located in Lawrence,
Pennsylvania (located 20 miles south of Pittsburgh) in a 352,000 square foot owned facility on 84
acres. The Company owns or leases 121 additional offices or facilities throughout the world, none of which
are material in nature to Black Box. The Company believes that its properties are adequate for its present and foreseeable needs. 
 Item 3.Legal Proceedings. The Company is involved in, or has pending, various legal proceedings, claims, suits and
complaints arising out of the normal course of business. As previously disclosed, the Company had appealed an adverse arbitration award. By opinion filed
March 9, 2005, the Court of Appeals affirmed the decision of the District Court. On May 6, 2005,
the Company paid approximately $1.8 million (including interest, fees and costs) in satisfaction of
this judgment in full. As previously disclosed, the Company received a subpoena, dated December 8, 2004, from the United
States General Services Administration (GSA), Office of Inspector General. The subpoena requires
production of documents and information. The Company understands that the materials are being
sought in connection with an investigation regarding potential violations of the terms of a GSA
Multiple Award Schedule contract. The Company is reviewing this matter and is complying with the
requirements of the subpoena. As previously disclosed, on January 25, 2005, the Company completed the acquisition of Norstan (see
Note 18 of the Notes to Consolidated Financial Statements). Prior to the Companys acquisition of Norstan, Norstan had disclosed that, in April 2004,
it had received a Commitment Adjustment Letter from the Universal Services Administrative Company
(USAC), which oversees the Federal Communications Commissions School and Libraries Program of
the Universal Service Fund, also called the E-rate program. Funding commitments under the E-rate
program provide for discounts on eligible services such as telecommunications services, internet
access, network equipment and wiring of instructional buildings and classrooms to connect to the
Internet. Norstans previous disclosure stated that USAC had informed Norstan that USAC had
undertaken an audit of the Navajo Preparatory School (Navajo Prep) project for funding year 2001,
in which Norstan had installed specific equipment and services for which it had received
approximately $2.2 million, and that the audit report concluded that Navajo Prep had not complied
with key requirements of the E-rate program and, consistent with E-rate policies, USAC was seeking
recovery of the full amount disbursed to Norstan on behalf of Navajo Prep. Norstan noted that, in
June 2004, it had filed an appeal with USAC, had begun an internal investigation of the Navajo Prep
project and had established a reserve of $2.2 million during the fourth quarter of its Fiscal 2004.
Norstan further reported that, as a result of the internal investigation, Norstan has decided not
to pursue the appeal and that, on its own initiative, Norstan would review its other E-rate
projects for compliance with E-rate program requirements. On March 31, 2005, Norstan refunded approximately
$2.1 million related to the Navajo Prep project and its appeal was cancelled.  Pursuant to
USACs request following a review of its records, the Company intends to refund an additional
$100,000 related to this project. 8




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As previously disclosed, the Company continued to
work with Norstan on completion of the investigation and resolution of this matter
following the Norstan acquisition and such investigation is now substantially complete.
Based on the results of that investigation, the Company has advised USAC that its intends
to refund amounts that Norstan had received from USAC in relation to one additional E-rate
program project.  Norstan had previously reserved approximately $1.7 million with respect to
that project. Based on the facts currently available to the Company, management believes its legal matters are
adequately provided for, covered by insurance, without merit or not probable that an unfavorable
outcome will result. As previously disclosed, in October 2003, the Company received a formal order of investigation
issued by the SEC. In connection therewith, during the quarter ended December 28, 2003, the Company
and several of its officers, directors, team members and predecessor independent auditors provided
information to the Staff of the SEC. In late January 2004, the SEC requested information relating
to Fiscal 2002 from the Companys predecessor independent auditors pursuant to an additional
subpoena. The Company intends to continue to cooperate fully with the inquiry. 
 Item 4.Submission of Matters to a Vote of Security Holders. No matter was submitted during the fourth quarter of the fiscal year covered by this report to
a vote of security holders, through the solicitation of proxies or otherwise. 9




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Executive Officers of the Registrant The executive officers of the Company and their respective ages and positions are as follows: Name
    
    Age
    
    Position with the CompanyFred C. Young
    
    
    49
    
    
    Chief Executive OfficerMichael McAndrew
    
    
    45
    
    
    Vice President, Chief Financial
Officer, Treasurer, Secretary and
Principal Accounting OfficerRoger E. M. Croft
    
    
    56
    
    
    Senior Vice President  Europe and
Latin AmericaFrancis W. Wertheimber
    
    
    52
    
    
    Senior Vice President  Pacific
Rim/Far East
 The following is a biographical summary of the experience of the executive officers of the Company: FRED C. YOUNG, 49, was elected Chairman of the Board and Chief Executive Officer of the
Company on June 24, 1998. The role of non-executive Chairman was assumed by an independent
director of the Company in May 2004. Mr. Young was first elected a director of the Company
on December 18, 1995. He served as Vice President and Chief Financial Officer, Treasurer and
Secretary of Black Box Corporation since joining the Company in 1991 and was promoted to
Senior Vice President and Chief Operating Officer in May 1996 and President in May 1997.
Mr. Young has been with the Company for 13 years. MICHAEL MCANDREW, 45, was promoted to Vice President and Chief Financial Officer on December
13, 2002. He became Secretary and Treasurer on January 31, 2003. He was Manager of
Corporate Planning and Analysis prior to December 13, 2002. Mr. McAndrew has been with the
Company for 15 years. ROGER E. M. CROFT, 56, was promoted to Senior Vice President  Europe and Latin America in
May 2004. He was promoted to Vice President  Europe and Latin America in May 1998, having
served as Vice President of European Operations since May 9, 1997 and was Managing Director
of Black Box U.K. prior to May 9, 1997. Mr. Croft has been with Black Box for 20 years. FRANCIS W. WERTHEIMBER, 52, was promoted to Senior Vice President  Pacific Rim/Far East in
May 2004. He was promoted to Vice President  Pacific Rim/Far East on May 9, 1997. He was
Managing Director of Black Box Japan prior to May 9, 1997. Mr. Wertheimber has been with
Black Box for 12 years. 10




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PART II 
 Item 5. Market for Registrants Common Equity,
Related Stockholder Matters and Issuer Purchases of Equity Securities. The Companys common stock, par value $.001 per share (the Common Stock), is traded on the
Nasdaq National Market (trading symbol BBOX). As of March 31, 2005, 23,774,950 shares of the
Common Stock were issued, of which 6,934,834 are held in treasury. On
June 10, 2005, the last
reported sale price of the Common Stock was $34.69 per share. As of March 31, 2005, there were
approximately 2,265 holders of record of the Common Stock. The following table sets forth the quarterly high and low sale prices of the Common Stock as
reported by the Nasdaq National Market during each of the Companys fiscal quarters indicated. High
    
    
    LowFiscal 20041st Quarter
    
    $
    43.68
    
    
    $
    29.382nd Quarter
    
    
    49.20
    
    
    
    35.333rd Quarter
    
    
    45.50
    
    
    
    39.254th Quarter
    
    
    58.61
    
    
    
    43.85Fiscal 20051st Quarter
    
    $
    58.18
    
    
    $
    40.202nd Quarter
    
    
    44.88
    
    
    
    33.133rd Quarter
    
    
    48.67
    
    
    
    35.074th Quarter
    
    
    48.00
    
    
    
    33.70
 Cash dividends of $0.05 per share of Common Stock were paid during each quarter of Fiscal 2004 on
April 15, 2003, July 15, 2003, October 15, 2003 and January 15, 2004 and the first two quarters of
Fiscal 2005 on April 15, 2004 and July 15, 2004. During the second quarter of Fiscal 2005, the
Board of Directors voted to raise the Companys cash dividend to an annual rate of twenty-four
cents per share. Cash dividends of $0.06 per share of Common Stock were paid during the last two
quarters of Fiscal 2005 on October 15, 2004 and January 14, 2005. A cash dividend of $0.06 per
share of Common Stock also was paid during Fiscal 2006 on April 15, 2005. While the Company expects
to continue to declare quarterly dividends, the payment of future dividends is at the discretion of
the Board and the timing and amount of any future dividends will depend upon earnings, cash
requirements and financial condition of the Company. See Equity Plan Compensation Information, in the Proxy Statement (as defined herein) which is
incorporated herein by reference. 11




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Issuer Purchases of Equity Securities (d) Maximum Number(c) Total Number of
    
    
    (or Approximate(a) Total
    
    
    
    
    
    
    Shares (or Units)
    
    
    Dollar Value) of SharesNumber of
    
    
    (b) Average
    
    
    Purchased as Part
    
    
    (or Units) that MayShares (or
    
    
    Price Paid
    
    
    of Publicly
    
    
    Yet Be PurchasedUnits)
    
    
    per Share
    
    
    Announced Plans or
    
    
    Under the Plans orPeriod
    
    Purchased
    
    
    (or Unit)
    
    
    Programs
    
    
    Programs(1)January 2, 2005 to
January 30, 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,059,222January 31, 2005 to
February 27, 2005
    
    
    250,056
    
    
    $
    38.47
    
    
    
    250,056
    
    
    
    809,166February 28,
2005
to March 31, 2005
    
    
    244,000
    
    
    $
    39.79
    
    
    
    244,000
    
    
    
    565,166Total
    
    
    494,056
    
    
    $
    39.12
    
    
    
    494,056
    
    
    
    565,166
    (2)
   (1)
    As of January 1, 2005, 1,059,222 shares were available for repurchase under
repurchase programs approved by the Board of Directors and announced on November 20, 2003 and
August 12, 2004.  (2)
    The repurchase programs have no expiration date and no programs were terminated
prior to the full repurchase of the authorized amount. Additional repurchases of stock may occur from time to time depending upon factors such as the
Companys cash flows and general market conditions. While the Company expects to continue to
repurchase shares of the Common Stock for the foreseeable future, there can be no assurance as to the
timing or amount of such repurchases. The Second Amended and Restated Credit Facility, as amended
(the Credit Agreement) (see Note 6 of the Notes to Consolidated Financial Statements), provides that the
Company is not permitted to repurchase the Common
Stock if the Company is in default under the Credit Agreement or would be in default under the
Credit Agreement as a result of such repurchase. Additionally, without the consent of the lenders
holding a majority of the commitments, which consent may not be unreasonably withheld, the Company
is not permitted to repurchase more than $20,000,000 of the Common Stock from January 24, 2005
through and including July 24, 2005 and may not repurchase stock if it is not in compliance with a
leverage ratio. 12




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Item 6.Selected Financial Data. The following table sets forth certain selected historical consolidated financial data for the
Company for the periods indicated. Information should be read in conjunction with the Companys
Consolidated Financial Statements and Notes thereto included elsewhere in this report. The
historical data presented below for Fiscal Years 2001 through 2005 were derived from the
Consolidated Financial Statements of the Company. Fiscal Year Ended March 31,In thousands, except pershare amounts
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Income Statement Data:Revenues
    
    $
    535,076
    
    
    $
    520,412
    
    
    $
    605,017
    
    
    $
    743,681
    
    
    $
    826,993Cost of sales
    
    
    320,147
    
    
    
    304,161
    
    
    
    366,170
    
    
    
    453,131
    
    
    
    493,861Gross profit
    
    
    214,929
    
    
    
    216,251
    
    
    
    238,847
    
    
    
    290,550
    
    
    
    333,132Selling, general & administrative
expenses
    
    
    160,002
    
    
    
    140,805
    
    
    
    152,808
    
    
    
    181,867
    
    
    
    203,377Restructuring and other charges(1)
    
    
    5,059
    
    
    
    
    
    
    
    6,536
    
    
    
    3,500
    
    
    
    Intangibles amortization (2)
    
    
    1,332
    
    
    
    246
    
    
    
    377
    
    
    
    170
    
    
    
    12,821Operating income
    
    
    48,536
    
    
    
    75,200
    
    
    
    79,126
    
    
    
    105,013
    
    
    
    116,934Interest expense, net
    
    
    2,755
    
    
    
    1,808
    
    
    
    2,826
    
    
    
    6,268
    
    
    
    11,312Income tax expense
    
    
    15,754
    
    
    
    26,002
    
    
    
    27,386
    
    
    
    36,428
    
    
    
    41,040Net income
    
    $
    29,912
    
    
    $
    47,243
    
    
    $
    48,685
    
    
    $
    62,042
    
    
    $
    64,190Basic earnings per share
    
    $
    1.72
    
    
    $
    2.60
    
    
    $
    2.46
    
    
    $
    3.11
    
    
    $
    3.40Diluted earnings per share
    
    $
    1.68
    
    
    $
    2.52
    
    
    $
    2.39
    
    
    $
    2.97
    
    
    $
    3.22Dividends declared per common share
    
    $
    0.23
    
    
    $
    0.20
    
    
    $
    0.10
    
    
    $
    
    
    
    $
    Balance Sheet Data (at end of period):Working capital (3)
    
    $
    112,535
    
    
    $
    109,431
    
    
    $
    118,592
    
    
    $
    143,464
    
    
    $
    138,922Total assets
    
    
    772,890
    
    
    
    617,302
    
    
    
    626,729
    
    
    
    650,787
    
    
    
    652,930Long-term debt
    
    
    147,196
    
    
    
    35,177
    
    
    
    49,453
    
    
    
    75,497
    
    
    
    124,066Total debt
    
    
    147,888
    
    
    
    36,238
    
    
    
    50,379
    
    
    
    78,676
    
    
    
    129,437Stockholders equity
    
    
    490,701
    
    
    
    504,904
    
    
    
    494,422
    
    
    
    490,098
    
    
    
    388,951
   (1)
    
    See Note 17 of the Notes to Consolidated Financial Statements.(2)
    
    See Note 5 of the Notes to Consolidated Financial Statements.(3)
    
    Represents Current Assets minus Current Liabilities. 13




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##### Table of Contents



Item 7. Managements Discussion and Analysis of Financial Condition and Results of
Operations The Company offers one-source network infrastructure services for: data networks (Data Services),
including structured cabling for wired and wireless systems; voice systems (Voice Services),
including new and upgraded telephony systems; and 24/7/365 hotline technical support (Hotline
Services) for more than 118,000 network infrastructure products that it sells through its catalog,
Internet Web site and on-site services offices. References herein to
Fiscal Year or Fiscal mean the Companys
Fiscal Year ended March 31 for the year referenced. The Company manages its business based on geographic segments: North America, Europe and All
Other. In addition, certain revenue and gross profit information by service type is also provided
herein for purposes of further analysis. During the fiscal years ended 2005 and 2003, the Company
recorded a pre-tax charge for restructuring and other charges of approximately $5.1 million and
$6.5 million, respectively. In addition, the Company incurred charges during Fiscal 2005 of $7.1
million pre-tax, comprised of acquisition related expenses from the purchase of Norstan of $2.7
million and $4.4 million of costs associated with the compliance requirements of Section 404 of the
Sarbanes-Oxley Act of 2002 (Section 404) (hereafter referred to as reconciling items). On January 25, 2005, the Company completed the acquisition of Norstan. Norstan is a full-service
communications solutions and services company delivering voice and data technology solutions, and
remanufactured equipment to corporate end-users and public sector companies. Norstan has offices
located throughout the U.S. and Canada. The Norstan solution is complementary to Black Boxs
existing service solutions and will allow the Company to immediately expand its operational
footprint; provide additional marketing opportunities via cross-selling; and, most importantly,
provide its collective customers a stronger worldwide technical services partner. Norstans
results of operations are included in the Companys financial statements from the completion date
of the acquisition. Norstans revenues are included in North America and Voice Services revenues. 14




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##### Table of Contents



Dollars in Thousands, unless Otherwise Indicated The tables below should be read in conjunction with the following discussion. Year Ended March 31,2005
    
    
    
    2004
    
    
    
    2003% of total
    
    
    
    
    
    
    
    % of total
    
    
    
    
    
    
    
    % of total$
    
    
    revenues
    
    
    
    $
    
    
    revenues
    
    
    
    $
    
    
    revenuesBy GeographyRevenues:North America
    
    $
    355,013
    
    
    
    66
    %
    
    
    $
    341,299
    
    
    
    66
    %
    
    
    $
    412,247
    
    
    
    68
    %Europe
    
    
    142,838
    
    
    
    27
    %
    
    
    
    142,158
    
    
    
    27
    %
    
    
    
    153,477
    
    
    
    25
    %All Other
    
    
    37,225
    
    
    
    7
    %
    
    
    
    36,955
    
    
    
    7
    %
    
    
    
    39,293
    
    
    
    7
    %Total
    
    $
    535,076
    
    
    
    100
    %
    
    
    $
    520,412
    
    
    
    100
    %
    
    
    $
    605,017
    
    
    
    100
    %Operating Income:North America
    
    $
    26,798
    
    
    
    
    
    
    
    $
    44,281
    
    
    
    
    
    
    
    $
    53,079% of North America revenues
    
    
    7.5
    %
    
    
    
    
    
    
    
    13.0
    %
    
    
    
    
    
    
    
    12.9
    %Europe
    
    
    13,639
    
    
    
    
    
    
    
    
    21,812
    
    
    
    
    
    
    
    
    17,729% of Europe revenues
    
    
    9.5
    %
    
    
    
    
    
    
    
    15.3
    %
    
    
    
    
    
    
    
    11.6
    %All Other
    
    
    8,099
    
    
    
    
    
    
    
    
    9,107
    
    
    
    
    
    
    
    
    8,318% of All Other revenues
    
    
    21.8
    %
    
    
    
    
    
    
    
    24.6
    %
    
    
    
    
    
    
    
    21.2
    %Total
    
    $
    48,536
    
    
    
    
    
    
    
    $
    75,200
    
    
    
    
    
    
    
    $
    79,126% of Total revenues
    
    
    9.1
    %
    
    
    
    
    
    
    
    14.5
    %
    
    
    
    
    
    
    
    13.1
    %Restructuring and other charges
and reconciling items:North America
    
    $
    11,156
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    $
    1,790Europe
    
    

    1,003
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,592All Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    154Total
    
    $
    12,159
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    $
    6,536% of Total revenues
    
    
    2.3
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.1
    %
 15




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##### Table of Contents



Information on revenues and gross profit for data services, voice services and hotline
services is presented below: Year Ended March 31,2005
    
    
    
    2004
    
    
    
    2003% of total
    
    
    
    
    
    
    
    % of total
    
    
    
    
    
    
    
    % of total$
    
    
    revenues
    
    
    
    $
    
    
    revenues
    
    
    
    $
    
    
    revenuesBy Service TypeRevenues:Data Services (1)
    
    $
    200,935
    
    
    
    38
    %
    
    
    $
    214,299
    
    
    
    41
    %
    
    
    $
    275,842
    
    
    
    45
    %Voice Services (2)
    
    
    106,540
    
    
    
    20
    %
    
    
    
    68,241
    
    
    
    13
    %
    
    
    
    77,070
    
    
    
    13
    %Hotline Services
    
    
    227,601
    
    
    
    42
    %
    
    
    
    237,872
    
    
    
    46
    %
    
    
    
    252,105
    
    
    
    42
    %Total
    
    $
    535,076
    
    
    
    100
    %
    
    
    $
    520,412
    
    
    
    100
    %
    
    
    $
    605,017
    
    
    
    100
    %Gross Profit:Data Services
    
    $
    59,354
    
    
    
    
    
    
    
    $
    67,329
    
    
    
    
    
    

    
    $
    85,122% of Data Services revenues
    
    
    29.5
    %
    
    
    
    
    
    
    
    31.4
    %
    
    
    
    
    
    
    
    30.9
    %Voice Services
    
    
    36,255
    
    
    
    
    
    
    
    
    23,999
    
    
    
    
    
    
    
    
    25,090% of Voice Services revenues
    
    
    34.0
    %
    
    
    
    
    
    
    
    35.2
    %
    
    
    
    
    
    
    
    32.6
    %Hotline Services
    
    
    119,320
    
    
    
    
    
    
    
    
    124,923
    
    
    
    
    
    
    
    
    128,635% of Hotline Services revenues
    
    
    52.4
    %
    
    
    
    
    
    
    
    52.5
    %
    
    
    
    
    
    
    
    51.0
    %Total
    
    $
    214,929
    
    
    
    
    
    
    
    $
    216,251
    
    
    
    
    
    
    
    $
    238,847% of Total revenues
    
    
    40.2
    %
    
    
    
    
    
    
    
    41.6
    %
    
    
    
    
    
    
    
    39.5
    %
   (1)
    
    Previously designated as Structured Cabling Services(2)
    
    Previously designated as Telephony Services Fiscal 2005 Compared To Fiscal 2004 Total Revenues Total revenues for Fiscal 2005 were $535,076, an increase of 3% compared to Fiscal 2004 total
revenues of $520,412. The increase was due to the acquisition of Norstan during the fourth quarter,
which added $35,208 of revenues to total Fiscal 2005 results. Excluding the Norstan acquisition,
revenues would have decreased 4%. The overall decrease was generally due to weak general economic
conditions that affected client demand, offset in part by $11,860 positive impact of exchange rates
relative to the U.S. dollar. If exchange rates relative to the U.S. dollar had remained unchanged
from Fiscal 2004, and excluding the impact of the Norstan acquisition, total Fiscal 2005 revenues
would have decreased a total of 6% compared to Fiscal 2004. Revenues by Geography North America Revenues Revenues in North America were $355,013 for Fiscal 2005, an increase of 4% compared to $341,299 for
Fiscal 2004. The North America revenue increase was due to the acquisition of Norstan, which added
$35,208 of revenues to total Fiscal 2005 results. Excluding the Norstan acquisition, revenues
would have decreased 6%. The overall decrease was generally due to weak general economic
conditions that affected client demand, offset in part by $235 positive impact of exchange rates 16




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##### Table of Contents



relative to the U.S. dollar. If exchange rates relative to the U.S. dollar had remained unchanged from
Fiscal 2004, and excluding the impact of the Norstan acquisition, total Fiscal 2005 revenues would
have decreased a total of $21,729, with no change to the percentage decrease. Europe Revenues Revenues in Europe were $142,838 for Fiscal 2005, comparable to Fiscal 2004 revenues of $142,158.
If exchange rates relative to the U.S. dollar had remained unchanged from Fiscal 2004, Europe
revenues would have decreased by $10,253 to $132,585 for a decrease of 7%. The Company believes
the overall decline in Europe revenues was due to weak general economic conditions that affected
client demand. All Other Revenues Revenues for All Other were $37,225 for Fiscal 2005, an increase of 1% compared to $36,955 for
Fiscal 2004. If exchange rates relative to the U.S. dollar had remained unchanged from Fiscal 2004,
All Other revenues would have decreased by $1,372 to $35,853 for a decrease of 3%. The Company
believes the overall revenue decline in these regions was due to weak general economic conditions
that affected client demand. Revenue by Service Type Data Services Revenues from Data Services were $200,935 for Fiscal 2005, a decrease of 6% compared to $214,299
for Fiscal 2004. The Company believes the overall decline in Data Services revenue was driven by
weak general economic conditions, offset in part by $4,444 positive impact of exchange rates
relative to the U.S. dollar for its International Data Services. If exchange rates relative to the
U.S. dollar had remained unchanged from Fiscal 2004, Data Services revenues would have decreased
8%. Voice Services Revenues from Voice Services were $106,540 for Fiscal 2005, an increase of 56% compared to $68,241
for Fiscal 2004. The increase is primarily due to the acquisition of Norstan during the fourth
quarter, which added $35,208 of revenues to total Fiscal 2005 results. Excluding the effects of
the Norstan acquisition, Voice Services revenues increased 5% over Fiscal 2004. There was no
exchange rate impact on Voice Service revenues as all of the Companys Voice Services revenue is
denominated in U.S. dollars. Hotline Services Revenues from Hotline Services were $227,601 for Fiscal 2005, a decrease of 4% compared to $237,872
for Fiscal 2004. The Company believes the overall decline in Hotline Services revenues was driven
by weak general economic conditions, offset in part by $7,417 positive impact of exchange rates
relative to the U.S. dollar for its International Hotline Services. If exchange rates relative to
the U.S. dollar had remained unchanged from Fiscal 2004, Hotline Services revenues would have
decreased 7%. Gross Profit Gross profit dollars for Fiscal 2005 decreased to $214,929 from $216,251 for Fiscal 2004. The
decrease in gross profit dollars over the prior year was due to the decline in revenues. Gross
profit as a percent of revenues for Fiscal 2005 decreased to 40.2% of revenues from 41.6% of
revenues for Fiscal 2004. The decrease in gross profit percentage was due primarily to service mix
and $1,028 of negative impact related to the amortization of the step-up to fair value of Norstan
inventory recorded 17




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##### Table of Contents



through purchase accounting (see Notes to Consolidated Financial Statements). The Company expects to
record the remaining $1,543 of amortization during the first quarter of Fiscal 2006. Gross profit dollars for Data Services were $59,354, or 29.5% of revenues, for Fiscal 2005 compared
to $67,329, or 31.4% of revenues, for Fiscal 2004. Gross profit dollars for Voice Services were
$36,255, or 34.0% of revenues, for Fiscal 2005 compared to $23,999, or 35.2% of revenues, for
Fiscal 2004. Gross profit dollars for Hotline Services were $119,320, or 52.4% of revenues, for
Fiscal 2005 compared to $124,923, or 52.5% of revenues, for Fiscal 2004. SG&A Expenses Selling, general and administrative (SG&A) expenses for Fiscal 2005 were $160,002, an increase of
$19,197 over SG&A expenses of $140,805 for Fiscal 2004. SG&A expenses as a percent of revenue for
Fiscal 2005 were 29.9% of revenues compared to 27.1% of revenues for Fiscal 2004. The dollar
increase is primarily due to: the acquisition of Norstan which added $11,550 of SG&A expenses,
$4,400 of costs incurred in relation to the Companys compliance with the requirements of Section
404 and a $2,100 increase in worldwide marketing costs. Restructuring and Other Charges In the fourth quarter of Fiscal 2005, the Company recorded a restructuring and other charge of
$5,059. This charge was comprised of $3,019 for staffing level adjustments and real
estate consolidations in Europe and North America, and $2,040 for the final
settlement of a previously disclosed litigation matter. Of this charge, $4,056 and $1,003 related
to North America and Europe, respectively. See Notes to Consolidated Financial Statements for
further details related to the restructuring and other charges. In addition, the Company expects
to record in the first quarter of Fiscal 2006 a $4,000 to $5,000 pre-tax restructuring charge to
complete its staffing level adjustments in Europe and North America and for real estate
consolidations. Intangibles Amortization Intangibles amortization for Fiscal 2005 increased to $1,332 from $246 for Fiscal 2004. The
increase was primarily attributable to the addition of $15,971 of intangible assets acquired
through the Norstan acquisition. These intangibles consisted of non-compete agreements, backlog and
customer relationships and will be amortized from one to twenty years (see Notes to Consolidated
Financial Statements). The Company recorded an additional $759 of amortization expense in the
fourth quarter due to these intangibles. The Company expects to incur additional amortization
expense relative to these newly acquired intangibles of $3,808 in Fiscal 2006 and approximately
$600 thereafter until Fiscal 2025. In addition, the Company paid $1,352 of deferred financing costs
related to the Credit Agreement, for which $92 of amortization was
recognized during Fiscal 2005. These costs will be amortized through Fiscal 2009. Operating Income Operating income for Fiscal 2005 was $48,536, or 9.1% of revenues, compared to $75,200, or 14.5% of
revenues, for Fiscal 2004. 18




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##### Table of Contents



Interest Expense, Net Net interest expense for Fiscal 2005 increased to $2,755 from $1,808 for Fiscal 2004 due to an
increase in the weighted average outstanding debt of approximately $74,977 for Fiscal 2005 compared
to approximately $52,000 for Fiscal 2004. The increase in debt relates primarily to the Norstan
acquisition. In addition, the weighted average interest rate outstanding for Fiscal 2005 was
2.98%, an increase of 1.01% compared to the Fiscal 2004 rate of 1.97% Provision for Income Taxes The tax provision for Fiscal 2005 was $15,754, an effective tax rate of 34.5%. This compares to
the tax provision for Fiscal 2004 of $26,002, an effective tax rate of 35.5%. The tax rate for
Fiscal 2005 was lower than Fiscal 2004 due to the effect of implementing various international tax
planning strategies. The annual effective tax rate is lower than the U.S. statutory rate of 35.0% primarily due to
foreign income taxes at rates lower than 35.0%. The Company anticipates that its deferred tax
asset is realizable in the foreseeable future. Net Income Net income for Fiscal 2005 was $29,912, or 5.6% of revenues, compared to $47,243, or 9.1% of
revenues, for Fiscal 2004. The decrease in net income dollars is primarily due to the restructuring
and other charges and reconciling items incurred during Fiscal 2005. Fiscal 2004 Compared To Fiscal 2003 Total Revenues Total revenues for Fiscal 2004 were $520,412, a decrease of 14% compared to Fiscal 2003 total
revenues of $605,017. If exchange rates relative to the U.S. dollar had remained unchanged from
Fiscal 2004, Fiscal 2004 total revenues would have been lower by an additional $21,154, for a total
decrease of 17%. Revenues by Geography North America Revenues Revenues in North America were $341,299 for Fiscal 2004, a decrease of 17% compared to $412,247 for
Fiscal 2003. The North America revenue decline was generally due to weak general economic
conditions that affected client demand. If exchange rates relative to the U.S. dollar had remained
unchanged from Fiscal 2003, revenues would have decreased by an additional $559, for a total
decrease of 17%. Europe Revenues Revenues in Europe were $142,158 for Fiscal 2004, a decrease of 7% compared to $153,477 for Fiscal
2003. The Europe revenue decline was due to weak general economic conditions that affected client
demand, offset in part by $18,118 of positive impact of exchange rates relative to the U.S. dollar.
If exchange rates relative to the U.S. dollar had remained unchanged from Fiscal 2003, Europe
revenues would have decreased 19%. 19




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##### Table of Contents



All Other Revenues Revenues for All Other were $36,955 for Fiscal 2004, a decrease of 6% compared to $39,293 for
Fiscal 2003. The revenue decline in these regions was due to weak general economic conditions that
affected client demand, offset by $2,477 of positive impact of exchange rates relative to the U.S.
dollar. If exchange rates relative to the U.S. dollar had remained unchanged from Fiscal 2003, All
Other revenues would have decreased 12%. Revenue by Service Type Data Services Revenues from Data Services were $214,299 for Fiscal 2004, a decrease of 22% compared to $275,842
for Fiscal 2003. The Company believes the overall decline in Data Services revenues was driven by
weak general economic conditions, offset in part by $7,248 of positive impact of exchange rates
relative to the U.S. dollar for its International Data Services. If exchange rates relative to the
U.S. dollar had remained unchanged from Fiscal 2003, Data Services revenues would have decreased
25%. Voice Services
Revenues from Voice Services were $68,241 for Fiscal 2004, a decrease of 11% compared to $77,070
for Fiscal 2003. The Company believes the overall decline in Voice Services revenues was driven by
weak general economic conditions. There was no exchange rate impact on Voice Services revenues as
all of the Companys Voice Services revenue is denominated in U.S. dollars. Hotline Services Revenues from Hotline Services were $237,872 for Fiscal 2004, a decrease of 6% compared to $252,105
for Fiscal 2003. The Company believes the overall decline in Hotline Services revenues was driven
by weak general economic conditions, offset in part by $13,906 of positive impact of exchange rates
relative to the U.S. dollar for its International Hotline Services. If exchange rates relative to
the U.S. dollar had remained unchanged from Fiscal 2003, Hotline Services revenues would have
decreased 11%. Gross Profit Gross profit dollars for Fiscal 2004 decreased to $216,251 from $238,847 for Fiscal 2003. The
decrease in gross profit dollars over the prior year was due to the decline in revenues. Gross
profit as a percent of revenues for Fiscal 2004 increased to 41.6% of revenues from 39.5% of
revenues for Fiscal 2003. The increase in gross profit percentage was due primarily to the positive
impact of cost reduction programs. Gross profit dollars for Hotline Services were $124,923, or 52.5% of revenues, for Fiscal 2004
compared to $128,635, or 51.0% of revenues, for Fiscal 2003. Gross profit dollars for Data Services
were $67,329, or 31.4% of revenues, for Fiscal 2004 compared to $85,122, or 30.9% of revenues, for
Fiscal 2003. Gross profit dollars for Voice Services were $23,999, or 35.2% of revenues, for Fiscal
2004 compared to $25,090, or 32.6% of revenues, for Fiscal 2003. 20




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##### Table of Contents



SG&A Expenses Selling, general and administrative (SG&A) expenses for Fiscal 2004 were $140,805, a decrease of
$12,003 over SG&A expenses of $152,808 for Fiscal 2003. The dollar decrease from Fiscal 2003 to
Fiscal 2004 was the result of the Companys cost reduction efforts worldwide. SG&A expenses as a
percent of revenue for Fiscal 2004 were 27.1% of revenues compared to 25.3% of revenues for Fiscal
2003. The percentage increase is due to the percentage change in revenues being greater than the
percentage change in the overall cost structure. Restructuring and Other Expense There were no restructuring and other charges in Fiscal 2004. In the fourth quarter of Fiscal 2003, the Company recorded a restructuring charge of $6,536 related
to staffing level adjustments and real estate consolidations in North America, Europe and Latin
America. Of this charge, $1,790, $4,592 and $154 related to North America, Europe and Latin
America, respectively. See Notes to Consolidated Financial Statements for further details related
to the restructuring charges. Intangibles Amortization Intangibles amortization for Fiscal 2004 decreased to $246 from $377 for Fiscal 2003 due to
acquired backlog becoming fully amortized in first quarter Fiscal 2004. Operating Income Operating income for Fiscal 2004 was $75,200, or 14.5% of revenues, compared to $79,126, or 13.1%
of revenues, for Fiscal 2003. The decrease in operating income dollars is primarily due to the decrease in revenues. The increase
in operating income as a percent of revenues was due primarily to the gross profit percentage
improvement and restructuring expenses, offset in part by the increase in SG&A as a percent of
revenues. Interest Expense, Net Net interest expense for Fiscal 2004 decreased to $1,808 from $2,826 for Fiscal 2003 due to
reduction in the weighted average outstanding debt of approximately $52,000 for Fiscal 2004
compared to approximately $63,000 for Fiscal 2003, and a weighted average interest rate reduction
of approximately 0.4% during Fiscal 2004. Provision for Income Taxes The tax provision for Fiscal 2004 was $26,002, an effective tax rate of 35.5%. This compares to the
tax provision for Fiscal 2003 of $27,386, an effective tax rate of 36.0%. The tax rate for Fiscal
2004 was lower than Fiscal 2003 due to the change in the overall mix of taxable income among
worldwide offices with differing tax rates. The annual effective tax rates were higher than the
U.S. statutory rate of 35.0% primarily due to state income taxes, offset by foreign income tax
credits. The Company anticipates that its deferred tax asset benefit is realizable. 21




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##### Table of Contents



Net Income Net income for Fiscal 2004 was $47,243, or 9.1% of revenues, compared to $48,685, or 8.0% of
revenues, for Fiscal 2003. The decrease in net income dollars is primarily due to the year over year
decline in revenues. The increase in net income percentage was due primarily to the gross profit
percentage improvement, the decrease in the tax rate and the avoidance of restructuring expenses in
Fiscal 2004, offset in part by the increase in SG&A as a percent of revenues. Liquidity and Capital Resources Cash Flows from Operating Activities Net cash provided by operating
activities for Fiscal 2005, 2004 and 2003 was $52,206, $74,955 and
$92,577, respectively. Reflected as a source of cash in Fiscal 2005 are decreases in accounts
receivable and other current assets, and increases in accounts payable and accrued liabilities.
In both Fiscal 2004 and 2003, the decreases in accounts receivable, inventories and other current
assets were a source of cash, while decreases in accounts payable and accrued liabilities were a
use of cash. At March 31, 2005, the Company had cash and cash equivalents of $11,592, working capital of
$112,535 and long-term debt of $147,196. The Company anticipates that approximately $1,500 to $2,500 will be incurred during Fiscal 2006
for the ongoing monitoring and testing requirements of Section 404. The Company believes that its cash provided by operating activities and availability under its
credit facility will be sufficient to fund the Companys working capital requirements, capital
expenditures, dividend program, potential stock repurchases, potential future acquisitions or
strategic investments and other cash needs for the next 12 months. Investing Activities Net cash used in investing
activities during Fiscal 2005, 2004 and 2003 was $104,765, $2,832 and
$8,126, respectively. Cash used by investing activities for all periods primarily represented
capital expenditures and acquisition of businesses. During Fiscal 2005, gross capital expenditures were $3,506, while capital disposals were $1,187.
Gross capital expenditures were $1,673, while capital disposals were $1,851 in Fiscal 2004.
Gross capital expenditures were $1,557, while capital disposals were $1,253 in Fiscal 2003.
Gross capital expenditures for Fiscal 2006 are projected to be $5,000 to $7,000 and will be spent
primarily on information systems, general equipment and facility improvements. The net cash impact of acquisitions during Fiscal 2005, 2004 and 2003 was $102,553, $0 and $4,639,
respectively. See Note 18 of the Notes to Consolidated Financial Statements for additional detail
on acquisitions made during Fiscal 2005 and 2003. The cash impact of prior merger-related
(recoveries)/payments, such as earn-outs, made during Fiscal 2005, 2004 and 2003 was $(107),
$3,010 and $3,183, respectively. 22




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##### Table of Contents



Financing Activities Net cash provided by/(used) in financing activities during Fiscal 2005, 2004 and 2003 was $55,800,
$(76,875) and $(83,396), respectively. Cash provided by financing activities in Fiscal 2005
primarily represents the net increase in debt obligations and cash received from the exercise of
stock options, offset by cash used for dividends and purchase of treasury stock. Cash provided by
financing activities in Fiscal 2004 and 2003 primarily represents the net reduction of debt
obligations, dividends and purchase of treasury stock, offset by cash received from the exercise
of stock options. Total Debt In June 2004, the Company entered into
a $120,000 amended and restated credit facility with Citizens Bank of Pennsylvania, as agent, and
a group of lenders (the Amended and Restated Credit Facility). Under the Amended and Restated
Credit Facility, up to $5,000 was available for use under a swing line facility (at a LIBOR rate
plus a margin) and up to $15,000 was available for use in connection with letters of credit. Interest under the Amended and Restated Credit Facility was variable based on the Companys option
of selecting the banks LIBOR rate plus an applicable margin or the base rate plus an applicable
margin. The majority of the Companys borrowings were under the LIBOR option. The applicable
margin was adjusted each quarter based on the consolidated leverage ratio (as defined in the
Amended and Restated Credit Facility). The applicable margin varied from 0.75% to 1.75% on the
LIBOR rate option and from 0.00% to 0.75% on the base rate option. The Amended and Restated
Credit Facility provided for the payment of quarterly commitment fees on unborrowed funds, also
based on the consolidated leverage ratio. The commitment fee percentage ranged from 0.15% to
0.375%. On January 24, 2005, in connection with the acquisition of Norstan (see Note 18 of the Notes to
Consolidated Financial Statements), the Company amended and restated the Amended and Restated
Credit Facility (the Second Amended and Restated Credit Facility), also with Citizens Bank of
Pennsylvania, as agent, and a group of lenders. Borrowings under the Second Amended and Restated
Credit Facility are permitted up to a maximum amount of $240,000, including up to $15,000 of
swingline loans and $25,000 of letters of credit. The Second Amended and Restated Credit Facility
may be increased by the Company up to an additional $60,000 with the approval of the lenders and
may be unilaterally and permanently reduced by the Company to not less than the then outstanding
amount of all borrowings. Interest on outstanding indebtedness under the Second Amended and
Restated Credit Facility accrues, at the Companys option, at a rate based on either: (a) the
greater of (i) the prime rate per annum of the agent then in effect and (ii) 0.50% plus the rate
per annum announced by the Federal Reserve Bank of New York as being the weighted average of the
rates on overnight Federal funds transactions arranged by Federal funds brokers on the previous
trading day or (b) a rate per annum equal to the LIBOR rate plus 0.75% to 1.50% (determined by a
leverage ratio based on the Companys EBITDA). 23




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##### Table of Contents



The other terms and conditions of the Second Amended and Restated
Credit Facility are substantially the same as the Amended and Restated Credit Facility. The
Second Amended and Restated Credit Facility expires on August 31, 2008. As previously discussed,
the Second Amended and Restated Credit Facility was amended and is referred to herein as the
Credit Agreement. The Companys total debt as of March 31, 2005 of $147,888 was comprised of $146,560 under the
Credit Agreement, $772 of obligations under capital leases and $556 of various other third-party,
non-employee loans. The weighted average interest rate on all indebtedness of the Company during
the fourth quarter ending March 31, 2005 and March 31, 2004 was approximately 3.61% and 1.84%,
respectively, and the weighted average interest rate on all indebtedness of the Company during the
year ended March 31, 2005 and March 31, 2004 was 2.98% and 1.97%, respectively. In addition, as
of March 31, 2005, the Company had $7,909 of letters of credit outstanding and $85,531 available
under the Credit Agreement. Dividends Beginning in the third quarter of Fiscal 2003 and in all subsequent quarters through the first
quarter of Fiscal 2005, the Companys Board of Directors declared quarterly cash dividends of
$0.05 per share on all outstanding shares of Common Stock. In August 2004, the Company declared
an increase to its current annual dividend payment rate from $0.20 to $0.24 so as to provide an
additional return on investment to its stockholders. In the second quarter of Fiscal 2005 and in
all subsequent quarters through the fourth quarter of Fiscal 2005, the Companys Board of
Directors declared quarterly cash dividends of $0.06 per share on all outstanding shares of Common
Stock. The dividend declared in the fourth quarter of Fiscal 2005 totaled $1,010 and was paid on April
15, 2005 to stockholders of record at the close of business on March 31, 2005. The dividend
declared in the first quarter of Fiscal 2006 will be paid on July 15, 2005 to stockholders of
record at the close of business on June 30, 2005. While the Company expects to continue to
declare dividends for the foreseeable future, there can be no assurance as to the timing or amount
of such dividends. Repurchase of Common Stock During the fourth quarter of Fiscal 2005, the Company repurchased approximately 494,000 shares of
the Common Stock for an aggregate purchase price of approximately $19,327. Repurchases for the
year ended March 31, 2005 totaled approximately 1,400,000 shares of the Common Stock for $56,912.
Since inception of the repurchase program in April 1999 through March 31, 2005, the Company has
repurchased in aggregate approximately 6,900,000 shares of the Common Stock for approximately
$297,000. Funding for the stock repurchases came primarily from existing cash flow from
operations. Additional repurchases of stock may occur from time to time depending upon factors
such as the Companys cash flows and general market conditions. While the Company expects to
continue to repurchase shares of the Common Stock for the foreseeable future, there can be no
assurance as to the timing or amount of such repurchases. The Credit Agreement (see Note 6 of the Notes to Consolidated Financial
Statements), provides that the Company is not permitted to repurchase the Common
Stock if the Company is in default under the Credit Agreement or would be in default under the
Credit Agreement as a result of such repurchase. Additionally, without the consent of the lenders
holding a majority of the commitments, which consent may not be unreasonably withheld, the
Company is not permitted to repurchase more than $20,000 of the Common Stock from January 24, 2005 through
and including July 24, 2005 and may not repurchase stock if it is not in compliance with a leverage
ratio. 24




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##### Table of Contents



Foreign Currency Exchange Impact The Company has operations, clients and suppliers worldwide, thereby exposing the Companys
financial results to foreign currency fluctuations. In an effort to reduce this risk, the Company
generally sells and purchases inventory based on prices denominated in U.S. dollars. Intercompany
sales to subsidiaries are generally denominated in the subsidiaries local currency, although
intercompany sales to the Companys subsidiaries in Brazil,
Chile, Mexico and Singapore are denominated
in U.S. dollars. The Company has entered and will continue in the future, on a selective basis, to enter into
foreign currency forward contracts to reduce the foreign currency exposure related to certain
intercompany transactions, primarily trade receivables and loans. All of the contracts have been
designated and qualify as cash flow hedges. The effective portion of any changes in the fair value
of the derivative instruments is recorded in other comprehensive income (loss) (OCI) until the
hedged forecasted transaction occurs or the recognized currency transaction affects earnings. Once
the forecasted transaction occurs or the recognized currency transaction affects earnings, the
effective portion of any related gains or losses on the cash flow hedge is reclassified from OCI to
earnings. In the event the hedged forecasted transaction does not occur, or it becomes probable
that it will not occur, the ineffective portion of any gain or loss on the related cash flow hedge
would be reclassified from OCI to earnings at that time. At March 31, 2005, the open foreign exchange contracts were in Euro, Pound sterling, Canadian
dollar, Swiss franc, Japanese yen, Swedish krona, Danish krone, Norwegian kroner and Australian
dollar. The open contracts have contract rates of 0.7462 to 0.7748 Euro, 0.5202 to 0.5398 Pound
sterling, 1.1834 to 1.2403 Canadian dollar, 1.1270 to 1.1701 Swiss franc, 101.20 to 102.34
Japanese yen, 6.7407 to 6.9755 Swedish krona, 5.5175 to 5.7605 Danish krone, 6.0928 to 6.3252
Norwegian kroner and 1.2784 to 1.3053 Australian dollar, all per U.S. dollar. The total open contracts, with a notional amount of approximately $30,413, have a fair value of
$29,777 and will expire within six months. Contractual Obligations The Company has various contractual obligations and commitments to make future payments including
debt agreements, operating and capital lease obligations and discounted lease rental commitments.
See Notes 6, 7 and 9 of the Notes to Consolidated Financial Statements for additional information
about these obligations and commitments. 25




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##### Table of Contents



The following table summarizes significant contractual obligations and commitments of the Company
as of March 31, 2005. Except as set forth in the following table, the Company does not have any material long-term
purchase obligations (as defined in SEC Regulation S-K 303(a)(5)) nor other long-term liabilities
that are reflected on its balance sheet as of March 31, 2005: Payments Due by PeriodLess than 1
    
    
    
    
    
    
    
    
    
    
    More than 5Total
    
    
    year
    
    
    1-3 years
    
    
    3-5 years
    
    
    yearsLong-term debt
obligations
    
    $
    147,116
    
    
    $
    556
    
    
    $
    
    
    
    $
    146,560
    
    
    $
    Interest expense on
long-term debt
    
    
    14,930
    
    
    
    4,375
    
    
    
    8,735
    
    
    
    1,820
    
    
    
    Capital lease
obligations
    
    
    772
    
    
    
    136
    
    
    
    452
    
    
    
    184
    
    
    
    Operating lease
obligations
    
    
    60,534
    
    
    
    16,069
    
    
    
    21,151
    
    
    
    13,126
    
    
    
    10,188Discounted lease
rentals
    
    
    920
    
    
    
    890
    
    
    
    30
    
    
    
    
    
    
    
    Total contractual
obligations
    
    $
    224,272
    
    
    $
    22,026
    
    
    $
    30,368
    
    
    $
    161,690
    
    
    $
    10,188
 The following table summarizes significant commercial commitments of the Company as of March
31, 2005 and the related expiration per period: Amount of Commitment Expiration Per PeriodLess than 1
    
    
    
    
    
    
    
    
    
    
    More than 5Total
    
    
    year
    
    
    1-3 years
    
    
    3-5 years
    
    
    yearsLetters of credit
    
    $
    7,909
    
    
    $
    7,909
    
    
    
    
    
    
    
    
    
    
    
    Total commercial
commitments
    
    $
    7,909
    
    
    $
    7,909
    
    
    
    
    
    
    
    
    
    
    
    
 Off-Balance Sheet
Arrangements The Company has no off-balance sheet arrangements that have or are reasonably likely to have a
current or future effect on its financial condition, changes in its financial condition, revenues
or expenses, results of operations, liquidity, capital expenditures or capital resources, other
than those disclosed above, that are material to investors. Recent Accounting Pronouncements FIN No. 46, Consolidation of Variable Interest Entities In January 2003, the Financial Accounting Standards Board (FASB) issued Interpretation No. 46,
Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51 (FIN No. 46). The
guidance expanded upon and clarified existing accounting guidance that addresses when a company
should include in its financial statements the assets, liabilities and activities of variable
interest entities, including special-purpose entities or off-balance sheet structures. In December
2003, the FASB issued a revision to FIN No. 46 (FIN No. 46R) that modified some of the provisions
and effective dates of FIN No. 46, and provided exemptions to certain entities from the original
guidance. 26




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FIN No. 46R sets forth criteria to be used in determining whether an investment in a variable interest entity should
be consolidated, and is based on the general premise that companies that control another entity
through interests other than voting interests should consolidate the controlled entity. The
consolidation requirements of FIN No. 46 apply immediately to variable interest entities created
after January 31, 2003. As amended, the consolidation requirements apply to older entities in the
first fiscal year or interim period ending after March 15, 2004. Certain of the disclosure
requirements apply in all financial statements issued after January 31, 2003, regardless of when
the variable interest entity was established. There was no impact to the Company upon the adoption
of FIN No. 46 and FIN No. 46R. SFAS No. 123 (revised 2004), Share-Based Payment In December 2004, the FASB issued Statement No. 123 (revised 2004), Share-Based Payment (SFAS
No. 123(R)). SFAS No. 123(R) is a revision of FASB Statement No. 123, Accounting for Stock-Based
Compensation (FASB No. 123), supersedes APB No. 25, Accounting for Stock Issued to Employees
and amends FASB Statement No. 95, Statement of Cash Flows. SFAS No. 123(R) requires that
companies recognize all share-based payments to employees, including grants of employee stock
options, in the financial statements. The recognized cost will be based on the fair value of the
equity or liability instruments issued. Pro forma disclosure of this cost will no longer be an
alternative under SFAS No. 123(R). The Statement is effective for public companies at the
beginning of the first annual reporting period that begins after June 15, 2005. As permitted by FASB No. 123, the Company currently accounts for its stock-based compensation plans
under APB No. 25s intrinsic value method and, as such, generally recognizes no compensation cost
for employee stock options. Accordingly, the adoption of SFAS No. 123(R)s fair value method will
have a significant impact on the Companys results of operations, although it will have no impact
on the Companys overall financial position or cash flows. The impact of adopting SFAS No. 123(R)
cannot be predicted at this time because it will depend on levels of share-based payments granted
in the future. However, had the Company adopted SFAS No. 123(R) in prior periods, the impact would
have approximated the amounts in its pro forma disclosure as described in the disclosure of pro
forma net income and earnings per share in Note 1 of the Notes to Consolidated Financial
Statements. Based on SFAS No. 123(R), the Company will transition to the new requirements by using
the modified prospective transition method. This transition method requires compensation cost to
be recognized for all share-based payments granted after the date of adoption and for all unvested
awards existing on the date of adoption. SFAS No. 123(R) also requires the benefits of tax deductions in excess of recognized compensation
cost be reported as a financing cash flow, rather than as an operating cash flow as required under
current standards. This requirement will reduce net operating cash flows and increase net financing
cash flows in periods after adoption. The Company cannot estimate what those amounts will be in the
future because they are dependant on, among other things, when employees exercise stock options.
The amount of operating cash flows recognized for such excess tax deductions was $3,472, $6,789 and
$1,822 during Fiscal 2005, 2004 and 2003, respectively. The Company plans to adopt SFAS No. 123(R) as of the first day of the first quarter of Fiscal 2007,
or April 1, 2006, as required. 27




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FSP No. FAS 109-2, Accounting and Disclosure Guidance for the Foreign Earnings Repatriation
Provision within the American Jobs Creation Act of 2004 In October 2004, the American Jobs Creation Act of 2004 was signed into law. The law creates a
temporary incentive for U.S. multinational companies to repatriate a portion of accumulated income
earned outside of the U.S. at an effective tax rate of 5.25%. The law also includes a tax
deduction of up to 9 percent of the lesser of (a) qualified production activities income or (b)
taxable income. An issue arose as to whether that deduction should be accounted for as a special
deduction or a tax rate reduction under FASB Statement No. 109. In December 2004, the FASB issued Staff Position No. FAS 109-1, Application of FASB Statement No.
109, Accounting for Income Taxes, to the Tax Deduction on Qualified Production Activities Provided
by the American Jobs Creation Act of 2004. The FASB staff believes that the deduction should be
accounted for as a special deduction in accordance with SFAS 109. The Company is currently
assessing the impact of this special deduction on its deferred taxes. In December 2004, the FASB issued Staff Position No. FAS 109-2, Accounting and Disclosure Guidance
for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004.
FSP 109-2 allows additional time to assess the effect of repatriating international earnings under
the law, and requires explanatory disclosures from those who need the additional time. The Company is evaluating the effects of the law, and recent regulations, on its plan for
reinvestment or repatriation of international earnings. The possible amounts of unremitted
earnings available for repatriation under the law, and the potential range of income tax effects of
such repatriation, cannot be reasonably estimated as of the time of this filing. Critical Accounting Policies The Companys Consolidated Financial Statements are prepared in accordance with accounting
principles generally accepted in the United States, which require the Company to make estimates and
assumptions that may affect the reported financial condition and results of operations should
actual results differ. The Company bases its estimates and assumptions on the best available
information and believes them to be reasonable for the circumstances. The Company believes that of
its significant accounting policies, the following may involve a higher degree of judgment and
complexity. See also Note 1 of the Notes to Consolidated Financial Statements for a summary of the
Companys significant accounting policies. Revenue Recognition Within the Companys hotline services, revenues are recognized when title to products sold passes
to the customer, which generally occurs upon shipment from the Companys location. Within the Companys data and voice services, revenues are recognized from maintenance service
contracts, moves, adds and changes and network integration services, when the services are provided
and revenues generally are recognized from the sale of IP application software upon delivery.
Service contracts are generally pre-billed and are reflected on the balance sheet as deferred
revenue and are generally recognized as revenue over the service period on a straight-line basis.
Revenues from the sale and installation of products and systems are recognized using the
percentage-of-completion method based upon the proportion of actual costs incurred to estimated
total costs. At the time a loss on a contract becomes known, the entire amount of the estimated
loss is recognized immediately in the financial statements. 28




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The Company has historically made reasonably accurate estimates of the extent of progress towards
completion, contract revenues and contract costs on its long-term contracts. However, due to
uncertainties inherent in the estimation process, actual results could differ materially from those
estimates. Allowance for Doubtful Accounts The Company maintains allowances for doubtful accounts for estimated losses resulting from the
inability of its clients to make required payments. These allowances are based on both recent
trends of certain clients estimated to be a greater credit risk as well as general trends of the
entire client pool. If the financial condition of the Companys clients were to deteriorate,
resulting in an impairment of their ability to make payments, additional allowances may be
required. In order to calculate the appropriate provision, the Company reviews its accounts
receivable aging and calculates an allowance through application of historic reserve factors to
specifically identified at risk receivables. In addition to specific reserves, a general reserve
is provided based upon the age of the receivables. The Companys policy is to fully reserve for
accounts receivable when an account is determined to be uncollectible. Inventories and Related Inventory Reserves The Companys inventory is valued at the lower of cost or market value and has been reduced by an
allowance for excess and obsolete inventories. The Company records an estimate for slow moving and
obsolete inventory based upon product knowledge, physical inventory observation, future demand and
market conditions and an aging analysis of the inventory on hand. If actual market conditions are
less favorable than those projected by management, additional reductions to inventory may be
required. Upon a subsequent sale or disposal of the impaired inventory, the corresponding reserve
for impaired value is relieved to ensure that the cost basis of the inventory reflects any
reductions. Loss Contingencies The Company incurs contingencies as a normal part of its business operations, such as future
warranty obligations and potential liabilities relating to legal or regulatory matters. The
Company accrues for contingent obligations when a loss is probable and the amount can be reasonably
estimated. Deferred Tax Valuation Allowances Should the Company determine that it would not be able to realize all or part of its net deferred
tax assets in the future, an adjustment to the deferred tax assets would be expensed in the period
such determination was made. Long-Lived Assets The Company evaluates the recoverability of property, plant and equipment and intangible assets
other than goodwill and indefinite life intangibles whenever events or changes in circumstances
indicate the carrying amount of any such assets may not be fully recoverable. Changes in
circumstances include technological advances, changes in the Companys business model, capital
strategy, economic conditions or operating performance. The Companys evaluation is based upon,
among other things, assumptions about the estimated future undiscounted cash flows these assets are
expected to generate. When the sum of the undiscounted cash flows is less than the carrying value,
the Company would recognize an impairment loss. The Company continually applies its best judgment
when performing these evaluations to determine the timing of the testing, the undiscounted cash
flows used to assess recoverability and the fair value of the asset. 29




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In accordance with SFAS No. 142, Goodwill and Other Intangible Assets, the Company is required
to test goodwill and indefinite life intangibles for impairment at least annually. Changes in
managements judgments and estimates could significantly affect the Companys analysis of the
impairment of goodwill. To test goodwill for impairment, the Company is required to estimate the
fair value of each of its reporting units. Estimated fair values of reporting units are estimated
using an earnings model and a discounted cash flow valuation model. The discounted cash flow model
incorporates the Companys estimates of future cash flows, allocations of certain assets and cash
flows among reporting units, future growth rates and managements judgment regarding the applicable
discount rates to use to discount those estimated cash flows. Significant changes to the judgments
and estimates used in the models could result in a significantly different estimate of the fair
value of the reporting units, which could result in an impairment of goodwill. Restructuring The Company accrues the cost of restructuring activities in accordance with the appropriate
accounting guidance depending upon the facts and circumstances surrounding the situation. The
Company exercises its judgment in estimating the total costs of each of these activities. As these
activities are implemented, the actual costs may differ from the estimated costs due to changes in
the facts and circumstances that were not foreseen at the time of the initial cost accrual. Inflation The overall effects of inflation on the Company have been nominal. Although long-term
inflation rates are difficult to predict, the Company continues to strive to minimize the effect of
inflation through improved productivity and cost reduction programs as well as price adjustments
within the constraints of market competition. Risk Factors The Company operates in a highly competitive industry:  
    The Company has a variety of competitors. There can be no assurance that the Company
will be able to continue to compete effectively against existing competitors or new
competitors that may enter the market in the future. The Company is subject to the risks of doing business internationally:  
    The Companys operations in foreign countries are subject to the risks normally
associated with foreign operations, including, but not limited to, possible changes in
export or import restrictions, the inability to effect currency exchanges, the impact of
inflation and the modification or introduction of other governmental policies with
potentially adverse effects.
    In addition, the Company may be exposed to gains or losses attributable to fluctuations
in currency value. In an effort to reduce the Companys exposure, the Company has in the
past, and may in the future, enter into forward exchange contracts to reduce the impact of
currency fluctuations in intercompany transactions denominated in foreign currencies. 30




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Business is dependent upon the Companys key personnel:  
    The Companys success depends to a significant degree upon the continued contributions
of key personnel around the world. Most key personnel have executed non-competition agreements.
If certain key personnel were to leave Black Box, the Companys business could be adversely
affected. Forward Looking Statements When included in this Annual Report or in documents incorporated herein by
reference, the words expects, intends, anticipates, believes, estimates, and analogous
expressions are intended to identify forward-looking statements. Such statements are inherently
subject to a variety of risks and uncertainties that could cause actual results to differ
materially from those projected. Such risks and uncertainties include, among others, general
economic and business conditions, 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 service companies and various other matters, many of which are beyond the
Companys control. 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
Annual Report. 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 7A.Quantitative and Qualitative Disclosures About Market Risk. The Company is exposed to market risks in the ordinary course of business that include
interest rates and foreign currency exchange rates. Market risk is measured as the potential
negative impact on earnings, cash flows or fair values resulting from a hypothetical change in
interest rates or foreign currency exchange rates over the next year. Interest Rate Risk The Companys primary interest rate risk relates to its long-term debt obligations. At March 31,
2005, the Company had total long-term obligations, including the current portion of those
obligations, of $147,888. Of that amount, $1,328 was in fixed rate obligations and $146,560 was
in variable rate obligations. For the amounts in variable rate debt at March 31, 2005, an
instantaneous 100 basis point increase in the interest rate would reduce the Companys expected net
income in the subsequent year by $1,017, assuming the Company employed no intervention strategies.
The Company has no interest rate hedging agreements. Foreign Exchange Rate Risk The Company has operations, clients and suppliers worldwide, thereby exposing the Companys
financial results to foreign currency fluctuations. In an effort to reduce this risk, the Company
generally sells and purchases inventory based on prices denominated in U.S. dollars. Intercompany
sales to subsidiaries are generally denominated in the subsidiaries local currency. To mitigate
this risk, the Company has entered and will continue in the future, on a selective basis, to enter
into foreign currency forward contracts to reduce the foreign currency exposure related to certain
intercompany transactions. See Note 1 of the Notes to Consolidated Financial Statements for
additional information about the Companys foreign currency hedging activities. 31




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At March 31,
2005, the Company had total open contracts valued at approximately $30,413 with a fair value of
approximately $29,777. The Company does not hold or issue any other financial derivative instruments nor does it engage in
speculative trading of financial derivatives. 32




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Item8. Financial Statements and Supplementary Data. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS PageReports of Independent Registered Public Accounting Firms
    
    34Consolidated Statements of Income for the years ended March 31, 2005, 2004 and 2003
    
    36Consolidated Balance Sheets as of March 31, 2005 and 2004
    
    37Consolidated Statements of Changes in Stockholders Equity for the years ended March 31, 2005, 2004 and 2003
    
    38Consolidated Statements of Cash Flows for the years ended March 31, 2005, 2004 and 2003
    
    39Notes to Consolidated Financial Statements
    
    40
 33




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Stockholders
Black Box Corporation
Lawrence, Pennsylvania We have audited the accompanying consolidated balance sheet of Black Box Corporation as of March
31, 2005 and the related consolidated statements of income and comprehensive income, stockholders
equity, and cash flows for the year then ended. We have also audited the schedule listed in the
accompanying index. These financial statements and schedule are the responsibility of the
Companys management. Our responsibility is to express an opinion on these financial statements
and schedule based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and schedule are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements and schedule, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the
financial statements and schedule. We believe that our audit provides a reasonable basis for our
opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Black Box Corporation at March 31, 2005 and the
results of its operations and its cash flows for the year then ended, in conformity with accounting
principles generally accepted in the United States of America. Also, in our opinion, the 2005 schedule presents fairly, in all material respects, the information
set forth therein. We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the effectiveness of Black Box Corporations internal control over financial
reporting as of March 31, 2005, based on criteria established in Internal Control  Integrated
Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and
our report dated May 25, 2005 expressed an unqualified opinion thereon. /s/ BDO Seidman, LLP Chicago, Illinois
May 25, 2005 34




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders of Black Box Corporation: We have audited the accompanying consolidated balance sheet
of Black Box Corporation and subsidiaries as of March 31, 2004, and the related consolidated
statements of income, shareholders equity and cash flows in
each of the two years in the period ended
March 31, 2004. Our audit also included the financial statement schedule listed in the index at
Item 15(a)2 for the years ended March 31, 2004 and 2003. These financial statements and
supplemental schedule are the responsibility of the Companys management. Our responsibility
is to express an opinion on these financial statements and supplemental schedule based on our
audits. We conducted
our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and schedule are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements and schedule, assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the financial statements and schedule.
We believe that our audits provide a reasonable basis for our opinion. In
our opinion, the financial statements referred to above present fairly, in all material respects,
the consolidated financial position of Black Box Corporation and subsidiaries as of
March 31, 2004, and the consolidated results of their operations and
their cash flows in each of
the two years in the period ended March 31, 2004 in conformity with U.S. generally accepted
accounting principles. Also, in our opinion, the financial statement schedule for the years
ended March 31, 2004 and 2003 referred to above, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material respects the information
set forth therein. /s/ ERNST & YOUNG LLP Pittsburgh, Pennsylvania
June 10, 2004 35




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BLACK BOX CORPORATION 
 CONSOLIDATED STATEMENTS OF INCOME
 Year Ended March 31,In thousands, except per share amounts
    
    2005
    
    
    2004
    
    
    2003Revenues
    
    $
    535,076
    
    
    $
    520,412
    
    
    $
    605,017Cost of sales
    
    
    320,147
    
    
    
    304,161
    
    
    
    366,170Gross profit
    
    
    214,929
    
    
    
    216,251
    
    
    
    238,847Selling, general and administrative expenses
    
    
    160,002
    
    
    
    140,805
    
    
    
    152,808Restructuring and other charges
    
    
    5,059
    
    
    
    
    
    
    
    6,536Intangibles amortization
    
    
    1,332
    
    
    
    246
    
    
    
    377Operating income
    
    
    48,536
    
    
    
    75,200
    
    
    
    79,126Interest expense, net
    
    
    2,755
    
    
    
    1,808
    
    
    
    2,826Other expense, net
    
    
    115
    
    
    
    147
    
    
    
    229Income before provision for income taxes
    
    
    45,666
    
    
    
    73,245
    
    
    
    76,071Provision for income taxes
    
    
    15,754
    
    
    
    26,002
    
    
    
    27,386Net income
    
    $
    29,912
    
    
    $
    47,243
    
    
    $
    48,685Earnings per common shareBasic
    
    $
    1.72
    
    
    $
    2.60
    
    
    $
    2.46Diluted
    
    $
    1.68
    
    
    $
    2.52
    
    
    $
    2.39Weighted average common shares outstandingBasic
    
    
    17,411
    
    
    
    18,173
    
    
    
    19,781Diluted
    
    
    17,845
    
    
    
    18,766
    
    
    
    20,342Dividends per share
    
    $
    0.23
    
    
    $
    0.20
    
    
    $
    0.10
 See Notes To Consolidated Financial Statements 36




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BLACK BOX CORPORATION 
 CONSOLIDATED BALANCE SHEETS
 March 31,In thousands, except par value
    
    2005
    
    
    2004AssetsCash and cash equivalents
    
    $
    11,592
    
    
    $
    9,306Accounts receivable, net of allowance for doubtful accounts of
$7,342 and $10,426
    
    
    116,865
    
    
    
    97,203Lease receivables
    
    
    1,697
    
    
    
    Inventories, net
    
    
    57,176
    
    
    
    40,162Costs and estimated earnings in excess of billings on uncompleted
contracts
    
    
    25,695
    
    
    
    13,763Deferred tax asset
    
    
    9,236
    
    
    
    4,131Net current assets of discontinued operations
    
    
    549
    
    
    
    Other current assets
    
    
    14,724
    
    
    
    10,623Total current assets
    
    
    237,534
    
    
    
    175,188Property, plant and equipment, net
    
    
    38,268
    
    
    
    29,269Goodwill, net
    
    
    444,567
    
    
    
    380,769Other intangibles, net
    
    
    44,157
    
    
    
    29,546Lease receivables, net of current portion
    
    
    473
    
    
    
    Deferred tax asset
    
    
    3,793
    
    
    
    Discontinued operations, net of current portion
    
    
    373
    
    
    
    Other assets
    
    
    3,725
    
    
    
    2,530Total assets
    
    $
    772,890
    
    
    $
    617,302LiabilitiesCurrent maturities of long-term debt
    
    $
    692
    
    
    $
    1,061Current maturities of discounted lease rentals
    
    
    890
    
    
    
    Accounts payable
    
    
    36,032
    
    
    
    30,709Billings in excess of costs and estimated earnings on uncompleted
contracts
    
    
    8,947
    
    
    
    5,665Deferred revenue
    
    
    21,456
    
    
    
    Accrued liabilities:Compensation and benefits
    
    
    13,073
    
    
    
    7,849Restructuring
    
    
    6,709
    
    
    
    593Other liabilities
    
    
    33,905
    
    
    
    16,185Income taxes
    
    
    3,295
    
    
    
    3,695Total current liabilities
    
    
    124,999
    
    
    
    65,757Long-term debt
    
    
    147,196
    
    
    
    35,177Discounted lease rentals
    
    
    30
    
    
    
    Deferred taxes
    
    
    
    
    
    
    11,050Other liabilities
    
    
    75
    
    
    
    414Restructuring reserve
    
    
    9,889
    
    
    
    Stockholders EquityPreferred stock authorized 5,000, par value $1.00, none issued
    
    
    
    
    
    
    Common stock authorized 100,000, par value $.001, 16,840 and
17,859 shares outstanding
    
    
    24
    
    
    
    23Additional paid-in capital
    
    
    336,290
    
    
    
    324,219Retained earnings
    
    
    428,632
    
    
    
    402,675Treasury stock, at cost, 6,935 and 5,534 shares
    
    
    (296,797
    )
    
    
    (239,885
    )Accumulated other comprehensive income
    
    
    22,552
    
    
    
    17,872Total stockholders equity
    
    
    490,701
    
    
    
    504,904Total liabilities and stockholders equity
    
    $
    772,890
    
    
    $
    617,302
 See Notes To Consolidated Financial Statements 37




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BLACK BOX CORPORATION 
 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
 AccumulatedAdditional
    
    
    
    
    
    
    
    
    
    
    OtherPreferred Stock
    
    
    Common Stock
    
    
    Paid-in
    
    
    Retained
    
    
    Treasury
    
    
    ComprehensiveIn thousands, except share amounts
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Stock
    
    
    Income
    
    
    TotalBalance at March 31, 2002
    
    
    0
    
    
    $
    0
    
    
    
    22,351,049
    
    
    $
    22
    
    
    $
    287,714
    
    
    $
    312,288
    
    
    $
    (100,355
    )
    
    $
    (9,571
    )
    
    $
    490,098Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48,685
    
    
    
    
    
    
    
    
    
    
    
    48,685Foreign currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,808
    
    
    
    12,808Unrealized gains on
derivatives designated and
qualified as cash flow hedges,
net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    233
    
    
    
    233Reclassification of unrealized
losses on expired derivatives
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    168
    
    
    
    168Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    61,894Dividends declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,936
    )
    
    
    
    
    
    
    
    
    
    
    (1,936
    )Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (63,192
    )
    
    
    
    
    
    
    (63,192
    )Issuance of common stock
    
    
    
    
    
    
    
    
    
    
    23,836
    
    
    
    1
    
    
    
    968
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    969Exercise of options, net of tax
    
    
    
    
    
    
    
    
    
    
    219,149
    
    
    
    
    
    
    
    4,767
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,767Tax benefit from exercised options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,822
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,822Balance at March 31, 2003
    
    
    0
    
    
    
    0
    
    
    
    22,594,034
    
    
    
    23
    
    
    
    295,271
    
    
    
    359,037
    
    
    
    (163,547
    )
    
    
    3,638
    
    
    
    494,422Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47,243
    
    
    
    
    
    
    
    
    
    
    
    47,243Foreign currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,013
    
    
    
    14,013Unrealized gains on
derivatives designated and
qualified as cash flow hedges,
net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    454
    
    
    
    454Reclassification of unrealized
gains on expired derivatives
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (233
    )
    
    
    (233
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    61,477Dividends declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,605
    )
    
    
    
    
    
    
    
    
    
    
    (3,605
    )Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (76,338
    )
    
    
    
    
    
    
    (76,338
    )Exercise of options, net of tax
    
    
    
    
    
    
    
    
    
    
    799,644
    
    
    
    
    
    
    
    22,159
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,159Tax benefit from exercised options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,789
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,789Balance at March 31, 2004
    
    
    0
    
    
    
    0
    
    
    
    23,393,678
    
    
    
    23
    
    
    
    324,219
    
    
    
    402,675
    
    
    
    (239,885
    )
    
    
    17,872
    
    
    
    504,904Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,912
    
    
    
    
    
    
    
    
    
    
    
    29,912Foreign currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,281
    
    
    
    5,281Unrealized losses on
derivatives designated and
qualified as cash flow hedges,
net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (147
    )
    
    
    (147
    )Reclassification of unrealized
gains on expired
derivatives
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (454
    )
    
    
    (454
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34,592Stock compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    680
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    680Dividends declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,955
    )
    
    
    
    
    
    
    
    
    
    
    (3,955
    )Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (56,912
    )
    
    
    
    
    
    
    (56,912
    )Exercise of options, net of tax
    
    
    
    
    
    
    
    
    
    
    381,272
    
    
    
    1
    
    
    
    7,919
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,920Tax benefit from exercised options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,472
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,472Balance at March 31, 2005
    
    
    0
    
    
    $
    0
    
    
    
    23,774,950
    
    
    $
    24
    
    
    $
    336,290
    
    
    $
    428,632
    
    
    $
    (296,797
    )
    
    $
    22,552
    
    
    $
    490,701
 See Notes To Consolidated Financial Statements 38




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##### Table of Contents



BLACK BOX CORPORATION 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Year Ended March 31,In thousands
    
    2005
    
    
    2004
    
    
    2003Operating ActivitiesNet income
    
    $
    29,912
    
    
    $
    47,243
    
    
    $
    48,685Adjustments to reconcile net income to cash provided
by operating activities:Depreciation and amortization
    
    
    7,955
    
    
    
    6,765
    
    
    
    8,016Gain on disposal of assets
    
    
    
    
    
    
    (531
    )
    
    
    Deferred tax (benefit)/provision
    
    
    (77
    )
    
    
    2,386
    
    
    
    (7,811
    )Stock compensation expense
    
    
    680
    
    
    
    
    
    
    
    Tax benefit from exercised options
    
    
    (3,472
    )
    
    
    (6,789
    )
    
    
    (1,822
    )Changes in operating assets and liabilities (net of
acquisitions):Accounts receivable, net
    
    
    8,878
    
    
    
    7,486
    
    
    
    23,111Inventories, net
    
    
    (76
    )
    
    
    1,144
    
    
    
    7,994Other current assets
    
    
    3,307
    
    
    
    16,455
    
    
    
    27,898Proceeds from lease contracts
    
    
    504
    
    
    
    
    
    
    
    Accounts payable and accrued liabilities
    
    
    4,595
    
    
    
    796
    
    
    
    (13,494
    )Net cash provided by operating activities
    
    
    52,206
    
    
    
    74,955
    
    
    
    92,577Investing ActivitiesCapital expenditures
    
    
    (3,506
    )
    
    
    (1,673
    )
    
    
    (1,557
    )Capital disposals
    
    
    1,187
    
    
    
    1,851
    
    
    
    1,253Acquisition of businesses, net of cash acquired
    
    
    (102,553
    )
    
    
    
    
    
    
    (4,639
    )Prior merger-related recovery/(payments)
    
    
    107
    
    
    
    (3,010
    )
    
    
    (3,183
    )Net cash used in investing activities
    
    
    (104,765
    )
    
    
    (2,832
    )
    
    
    (8,126
    )Financing ActivitiesRepayment of borrowings
    
    
    (127,959
    )
    
    
    (229,914
    )
    
    
    (132,465
    )Proceeds from borrowings
    
    
    238,409
    
    
    
    215,600
    
    
    
    103,750Repayments on discounted lease rentals
    
    
    (458
    )
    
    
    
    
    
    
    Proceeds from the exercise of options
    
    
    7,919
    
    
    
    22,159
    
    
    
    4,767Payment of dividends
    
    
    (3,847
    )
    
    
    (3,663
    )
    
    
    (975
    )Deferred financing costs
    
    
    (1,352
    )
    
    
    
    
    
    
    Purchase of treasury stock
    
    
    (56,912
    )
    
    
    (81,057
    )
    
    
    (58,473
    )Net cash provided by/(used) in financing activities
    
    
    55,800
    
    
    
    (76,875
    )
    
    
    (83,396
    )Foreign currency exchange impact on cash
    
    
    (955
    )
    
    
    15
    
    
    
    (435
    )Increase/(decrease) in cash and cash equivalents
    
    
    2,286
    
    
    
    (4,737
    )
    
    
    620Cash and cash equivalents at beginning of year
    
    
    9,306
    
    
    
    14,043
    
    
    
    13,423Cash and cash equivalents at end of year
    
    $
    11,592
    
    
    $
    9,306
    
    
    $
    14,043Supplemental Cash Flow:Cash paid for interest
    
    $
    3,045
    
    
    $
    1,808
    
    
    $
    2,826Cash paid for income taxes
    
    
    17,064
    
    
    
    25,176
    
    
    
    28,120Non-cash financing activities:Dividends payable
    
    
    1,011
    
    
    
    903
    
    
    
    961Capital leases
    
    
    714
    
    
    
    
    
    
    
    Treasury stock repurchases payable
    
    
    
    
    
    
    
    
    
    
    4,719
 See Notes To Consolidated Financial Statements 39




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##### Table of Contents



BLACK BOX CORPORATION 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands, except per share amounts)
 Note 1: Significant Accounting Policies Principles of Consolidation The consolidated financial statements include the accounts of the parent company and its
subsidiaries. All significant intercompany accounts and transactions have been eliminated in
consolidation. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted
in the United States of America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses during
the reporting period. Significant estimates in these financial statements include allowances for
doubtful accounts receivable, sales returns, net realizable value of inventories, loss
contingencies, warranty reserves and intangible assets. Actual results could differ from those
estimates. Allowance for doubtful accounts receivable:Allowances for doubtful accounts are maintained for
estimated losses resulting from the inability of clients to make required payments. These
allowances are based on both recent trends of clients estimated to be a greater credit risk as well
as general trends of the entire client pool. Specific accounts are evaluated on a case-by-case
basis before they are written off. Sales returns:At the time of sale, an estimate for sales returns is recorded based on historical
experience. Inventory valuation:The Company records an estimate for slow moving and obsolete inventory based
upon product knowledge, physical inventory observation and an aging analysis of the inventory on
hand. Loss Contingencies:The Company accrues for contingent obligations when a loss is probable and the
amount can be reasonably estimated. Warranties: Estimated future warranty costs related to certain products are charged to operations
in the period the related revenue is recognized based on historical experience. Intangible Assets:The Company has purchased intangible assets, such as customer relationships,
non-compete agreements and backlog, which have finite lives. These intangible assets are amortized
over the estimated economic lives. 40




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##### Table of Contents



Cash and Cash Equivalents The Company considers all highly liquid investments purchased with maturity of three months or less
to be cash equivalents. Cash and cash equivalents are stated at cost, which approximates market. Inventories Inventories are valued at the lower of cost or market. The first-in, first-out average cost method
is used to value the majority of the inventory. However, some locations of the Company use other
methods, including first-in first-out and actual current costs. Property, Plant and Equipment Property, plant and equipment are stated at cost. Maintenance, repairs and minor renewals are
charged to operations as incurred. Major renewals and betterments, which substantially extend the
useful life of the property, are capitalized at cost. Upon sale or other disposition of assets,
the costs and related accumulated depreciation are removed from the accounts and the resulting gain
or loss, if any, is reflected in income. Depreciation is computed using the straight-line method based on the estimated useful lives of 30
years for buildings and improvements and 3 to 5 years for machinery and equipment. Leasehold
improvements are depreciated over their lease terms, or useful lives if shorter. The Company
reviews long-lived assets for impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. Goodwill and Other Intangible Assets Goodwill is the excess of purchase price over the value of the net assets acquired. The Company
adopted Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other
Intangible Assets (SFAS No. 142), on April 1, 2001. Under SFAS No. 142, goodwill and intangible
assets with indefinite useful lives are no longer amortized but will be subject to, at a minimum,
an annual impairment assessment of their carrying value. Under SFAS No. 142, goodwill impairment
is deemed to exist if the net book value of a reporting unit exceeds its estimated fair value.
Estimated fair values of the reporting units were estimated using an earnings model and a
discounted cash flow valuation model. The discounted cash flow model incorporates the Companys
estimates of future cash flows, allocations of certain assets and cash flows among reporting units,
future growth rates and managements judgment regarding the applicable discount rates used to
discount those estimated cash flows. See Note 5 for further discussion regarding goodwill and
intangibles. The cost of other acquired intangibles is amortized on a straight-line basis over their estimated
useful lives of 3-10 years for non-compete agreements, 1 year for backlog and 20 years for customer
relationships. The Company assesses the carrying value of its long-lived assets, including land, building,
equipment and leasehold improvement and amortizable intangible assets, whenever economic events or
changes in circumstances indicate that the carrying values of the assets may not be recoverable.
Long-lived assets are considered to be impaired when the sum of the undiscounted expected future
net operating cash flows is less than the carrying values of the related assets. 41




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##### Table of Contents



Income Taxes Deferred income taxes are recognized for all temporary differences between the tax and financial
bases of the Companys assets and liabilities, using the enacted tax laws and statutory tax rates
applicable to the periods in which the differences are expected to affect taxable income. Risk Management and Financial Derivatives The Company has operations, clients and suppliers worldwide, thereby exposing the Companys
financial results to foreign currency fluctuations. In an effort to reduce this risk, the Company
generally sells and purchases inventory based on prices denominated in U.S. dollars. Intercompany
sales to subsidiaries are generally denominated in the subsidiaries local currency, although
intercompany sales to the Companys subsidiaries in Brazil, Mexico and Singapore are denominated in
U.S. dollars. The Company has entered and will continue in the future, on a selective basis, to enter into
foreign currency forward contracts to reduce the foreign currency exposure related to certain
intercompany transactions, primarily trade receivables and loans. All of the contracts have been
designated and qualify as cash flow hedges. The effective portion of any changes in the fair value
of the derivative instruments is recorded in other comprehensive income (loss) (OCI) until the
hedged forecasted transaction occurs or the recognized currency transaction affects earnings. Once
the forecasted transaction occurs or the recognized currency transaction affects earnings, the
effective portion of any related gains or losses on the cash flow hedge is reclassified from OCI to
earnings. In the event the hedged forecasted transaction does not occur, or it becomes probable
that it will not occur, the ineffective portion of any gain or loss on the related cash flow hedge
would be reclassified from OCI to earnings at that time. The Company does not hold or issue any other financial derivative instruments nor does it engage in
speculative trading of financial derivatives. Foreign Currency Translation The financial statements of the Companys foreign subsidiaries, except for the subsidiaries located
in Brazil and Mexico, are recorded in the local currency, which is the functional currency. Foreign
currency assets and liabilities are translated into U.S. dollars at the rate of exchange existing
at the statement date. Income and expense amounts are translated at the average of the monthly
exchange rates. Adjustments resulting from these translations are credited or charged directly to
accumulated comprehensive income (loss) and will be included in income upon sale or liquidation of
the foreign investment. Gains and losses from foreign currency transactions, denominated in a
currency other than the functional currency, are credited or charged directly to income. For the
subsidiaries located in Brazil and Mexico, the U.S. dollar is the functional currency. Revenue Recognition Within hotline services, revenues are recognized when title to products sold passes to the
customer, which generally occurs upon shipment from the Companys location. Within data and voice services, revenues are recognized from maintenance service contracts, moves,
adds and changes and network integration services, when the services are provided. Service
contracts are generally pre-billed and are reflected on the balance sheet as deferred revenue and
are generally recognized over the service period on a straight-line basis. Revenues from the sale
and installation of products and systems are recognized using the percentage-of-completion method
based upon the proportion of actual costs incurred to estimated total costs. At the time a loss on
a contract becomes 42




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known, the entire amount of the estimated loss is recognized immediately in the financial
statements. The Company has historically made reasonably accurate estimates of the extent of
progress towards completion, contract revenues and contract costs on its long-term contracts.
However, due to uncertainties inherent in the estimation process, actual results could differ
materially from those estimates. Billings in excess of costs and estimated earnings are classified as current liabilities and any
costs and estimated earnings in excess of billings are classified as current assets. Shipping and Handling Fees and Costs
All fees billed to clients for shipping and handling are classified as a component of net revenues.
All costs associated with shipping and handling are classified as a component of cost of sales. Advertising
Costs
Catalogs and other direct mail costs are expensed over their useful life.  All other advertising costs are expensed as incurred.  The Company recognized $11,649, $9,550 and $11,779 in advertising expenses during Fiscal 2005, 2004 and 2003, respectively. Stock-Based
Compensation
Stock options are granted to certain employees and members of the Companys Board of Directors at
the fair market value of the Companys stock on the date of the grant. The Company accounts for
its stock-based compensation plans under the provisions of Accounting Principles Board Opinion No.
25, Accounting for Stock Issued to Employees (APB No. 25), as amended and related guidance.
Under this guidance there are no charges or credits to income with respect to stock options. The
pro forma information below is based on provisions of SFAS No. 123, Accounting for Stock-Based
Compensation (SFAS No. 123), as amended by SFAS No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure, issued in December 2002 (SFAS No. 148). SFAS No. 148
requires that the pro forma information regarding net income and earnings per share are determined
as if the Company had accounted for its employee stock options under the fair value method as
prescribed by SFAS No. 123. The following table shows the effects on net income and earnings per share if the Company had
applied the fair value recognition provisions of SFAS No. 123, as amended, to the stock-based
awards: 2005
    
    
    2004
    
    
    2003Net income
    
    
    
    As reported
    
    $
    29,912
    
    
    $
    47,243
    
    
    $
    48,685Plus:
    
    Stock-basedcompensation expenseincluded in reportednet income, net ofrelated tax
    
    
    445
    
    
    
    
    
    
    
    Less:
    
    Stock-basedcompensation expensedetermined by thefair value methodfor all awards, netof related tax
    
    
    (9,492
    )
    
    
    (9,881
    )
    
    
    (8,811
    )Pro forma
    
    $
    20,865
    
    
    $
    37,362
    
    
    $
    39,874Earnings per share:
    
    
    
    Basic - as reported
    
    $
    1.72
    
    
    $
    2.60
    
    
    $
    2.46Basic - pro forma
    
    $
    1.20
    
    
    $
    2.06
    
    
    $
    2.02Diluted - as reported
    
    $
    1.68
    
    
    $
    2.52
    
    
    $
    2.39Diluted - pro forma
    
    $
    1.17
    
    
    $
    1.99
    
    
    $
    1.96
 43




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The incremental fair value of each option grant is estimated on the date of grant using the
Black-Scholes options pricing model. The model requires the use of various assumptions. The
following assumptions were used in Fiscal 2005, 2004 and 2003: 2005
    
    
    2004
    
    
    2003Expected life (in years)
    
    
    5.1
    
    
    
    5.1
    
    
    
    5.3Risk free interest rate
    
    
    3.5
    %
    
    
    3.0
    %
    
    
    2.7
    %Volatility
    
    
    60
    %
    
    
    61
    %
    
    
    49
    %Dividend yield
    
    
    0.6
    %
    
    
    0.5
    %
    
    
    
    %
 During the second quarter of Fiscal 2005, the Company recorded compensation expense, as a
result of a modification to a retiring directors stock option agreements. Based on the guidance
under FIN 44, Accounting for Certain Transactions Involving Stock Compensation, the Company
recorded compensation expense in the amount of $680. The expense was recorded as a component of
Selling, General and Administrative expense. Earnings Per Share Basic earnings per share are calculated by dividing net income (loss) by the weighted average of
common shares outstanding during the year. Diluted earnings per share is calculated by using the
weighted average of common shares outstanding adjusted to include the potentially dilutive effect
of outstanding stock options utilizing the treasury stock method. Reclassification Certain reclassifications have been made to the Consolidated Financial Statements for prior periods
in order to conform to the Fiscal 2005 presentation. Recent Accounting Pronouncements Variable Interest Entities In January 2003, the FASB issued Interpretation No. 46, Consolidation of Variable Interest
Entities, an Interpretation of ARB No. 51 (FIN No. 46). The guidance expanded upon and
clarified existing accounting guidance that addresses when a company should include in its
financial statements the assets, liabilities and activities of variable interest entities,
including special-purpose entities or off-balance sheet structures. In December 2003, the FASB
issued a revision to FIN No. 46 (FIN No. 46R) that modified some of the provisions and effective
dates of FIN No. 46, and provided exemptions to certain entities from the original guidance. FIN
No. 46R set forth criteria to be used in determining whether an investment in a variable interest
entity should be consolidated, and is based on the general premise that companies that control
another entity through interests other than voting interests should consolidate the controlled
entity. The consolidation requirements of FIN No. 46 apply immediately to variable interest
entities created after January 31, 2003. As amended, the consolidation requirements apply to older
entities in the first fiscal year or interim period ending after March 15, 2004. Certain of the
disclosure requirements apply in all financial statements issued after January 31, 2003, regardless
of when the variable interest entity was established. There was no impact to the Company upon the
adoption of FIN No. 46 and FIN No. 46R . 44




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Stock-Based Compensation In December 2004, the FASB issued Statement No. 123 (revised 2004), Share-Based Payment (SFAS
No. 123(R)). SFAS No. 123(R) is a revision of SFAS No. 123, supersedes APB No. 25 and amends FASB
Statement No. 95, Statement of Cash Flows. SFAS No. 123(R) requires that companies recognize all
share-based payments to employees, including grants of employee stock options, in the financial
statements. The recognized cost will be based on the fair value of the equity or liability
instruments issued. Pro forma disclosure of this cost will no longer be an alternative under SFAS
No. 123(R). SFAS No. 123(R) is effective for public companies at the beginning of the first
annual reporting period that begins after June 15, 2005. As permitted by SFAS No. 123, the Company currently accounts for its stock-based compensation plans
under APB No. 25s intrinsic value method and, as such, generally recognizes no compensation cost
for employee stock options. Accordingly, the adoption of SFAS No. 123(R)s fair value method will
have a significant impact on the Companys results of operations, although it will have no impact
on the Companys overall financial position or cash flows. The impact of adopting SFAS No. 123(R)
cannot be predicted at this time because it will depend on levels of share-based payments granted
in the future. However, had the Company adopted SFAS No. 123(R) in prior periods, the impact would
have approximated the amounts in its pro forma disclosure as described in the disclosure of pro
forma net income and earnings per share in Note 1 of the Consolidated Financial Statements. Based
on SFAS No. 123(R), the Company will transition to the new requirements by using the modified
prospective transition method. This transition method requires compensation cost to be recognized
for all share-based payments granted after the date of adoption and for all unvested awards
existing on the date of adoption. SFAS No. 123(R) also requires the benefits of tax deductions in excess of recognized compensation
cost be reported as a financing cash flow, rather than as an operating cash flow as required under
current standards. This requirement will reduce net operating cash flows and increase net financing
cash flows in periods after adoption. The Company cannot estimate what those amounts will be in the
future because they are dependant on, among other things, when employees exercise stock options.
The amount of operating cash flows recognized for such excess tax deductions was $3,472, $6,789 and
$1,822 during Fiscal 2005, 2004 and 2003, respectively. The Company plans to adopt SFAS No. 123(R) as of the first day of the first quarter of Fiscal 2007,
or April 1, 2006, as required. Foreign Earnings Repatriation In October 2004, the American Jobs Creation Act of 2004 was signed into law. The law creates a
temporary incentive for U.S. multinational companies to repatriate a portion of accumulated income
earned outside of the U.S. at an effective tax rate of 5.25%. The law also includes a tax
deduction of up to 9 percent of the lesser of (a) qualified production activities income or (b)
taxable income. An issue arose as to whether that deduction should be accounted for as a special
deduction or a tax rate reduction under FASB Statement No. 109. In December 2004, the FASB issued Staff Position No. FAS 109-1, Application of FASB Statement No.
109, Accounting for Income Taxes, to the Tax Deduction on Qualified Production Activities Provided
by the American Jobs Creation Act of 2004. The FASB staff believes that the deduction should be
accounted for as a special deduction in accordance with SFAS 109. The Company is currently
assessing the impact of this special deduction on its deferred taxes. 45




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##### Table of Contents



In December 2004, the FASB issued Staff Position No. FAS 109-2, Accounting and Disclosure Guidance
for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004.
FSP 109-2 allows additional time to assess the effect of repatriating international earnings under
the law, and requires explanatory disclosures from those who need the additional time. The Company is evaluating the effects of the law, and recent regulations, on its plan for
reinvestment or repatriation of international earnings. The possible amounts of unremitted
earnings available for repatriation under the law, and the potential range of income tax effects of
such repatriation, cannot be reasonably estimated as of the time of this filing. Note 2: Lease Receivables The acquisition of Norstan (see Note 18) included outstanding lease receivables, which were
primarily accounted for as sales-type leases for financial reporting purposes. Prior to the
Companys acquisition, Norstan had made a strategic decision to discontinue offering financing
directly to their customers. The Company concurs with this decision and will continue to not offer
financing to customers in the future. The components of lease receivables outstanding are as follows: March2005Gross lease receivables
    
    $
    2,697Residual values
    
    
    219Less:Unearned income
    
    
    (553
    )Allowance for financing losses
    
    
    (193
    )Total lease receivables, net
    
    
    2,170Less  current maturities
    
    
    1,697Long-term lease receivables
    
    $
    473
 The aggregate amounts of gross lease receivables maturing in each of the two years following
March 31, 2005 are as follows: Years Ending March 31,2006
    
    $
    2,1312007
    
    
    566$
    2,697
 46




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##### Table of Contents



Note 3: Inventories Inventory balances, net of reserves for excess and obsolete inventories: March 312005
    
    
    2004Raw materials
    
    $
    1,447
    
    
    $
    1,446Finished goods
    
    
    68,275
    
    
    
    43,556Subtotal
    
    
    69,722
    
    
    
    45,002Excess and obsolete inventory reserves
    
    
    (12,546
    )
    
    
    (4,840
    )Inventory, net
    
    $
    57,176
    
    
    $
    40,162
 Note 4: Property, Plant And Equipment Property, plant and equipment balances, net of accumulated depreciation: March 312005
    
    
    2004Land
    
    $
    2,554
    
    
    $
    2,369Building and improvements
    
    
    26,019
    
    
    
    25,443Machinery
    
    
    58,238
    
    
    
    52,622Subtotal
    
    
    86,811
    
    
    
    80,434Accumulated depreciation
    
    
    (48,543
    )
    
    
    (51,165
    )Property, plant and equipment, net
    
    
    38,268
    
    
    $
    29,269
 Depreciation expense for Fiscal 2005, 2004 and 2003 was $6,623, $6,519 and $7,639,
respectively. Note 5: Goodwill and Other Intangible Assets On April 1, 2001, the Company adopted SFAS No. 142, Goodwill and Other Intangible Assets. Under
this Statement, goodwill and intangible assets with indefinite useful lives are not amortized. The
Company was required to perform an impairment test upon adoption. In addition, the Company is
required to perform an impairment test annually, or as often as impairment indicators are present. At the time of adoption, the Company performed the required impairment test by comparing the fair
value of each reporting unit to its carrying value. The Company concluded that no impairment
existed. The Company performed the annual test for Fiscal 2002 and 2003 and concluded that no
impairment existed. During the fourth quarter of Fiscal 2003, the reportable segments were changed
and, as such, the Company was required by the Statement to reevaluate the outstanding goodwill and
intangibles for impairment. The Company performed the required impairment testing and concluded
that no impairment existed. Based on the policy, the Company has performed the annual test for
Fiscal 2004 and Fiscal 2005, with the most recent test having been conducted during the third
quarter of Fiscal 2005, and concluded that no impairment existed. During the third quarter of
each future fiscal year, the Company will evaluate its non-amortizable intangible assets for
impairment with any resulting impairment reflected as an operating expense. The Companys only
intangibles, as identified in SFAS No. 141, other than goodwill, are its trademarks, non-compete
agreements, customer relationships and acquired backlog. 47




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Changes
in the carrying amount of goodwill, net of accumulated amortization
of $40,424 in Fiscal 2005 and 2004, by
reporting segment: North America
    
    
    Europe
    
    
    All Other
    
    
    TotalBalance as of March 31, 2003
    
    $
    309,214
    
    
    $
    58,973
    
    
    $
    1,603
    
    
    $
    369,790Currency translation
    
    
    (144
    )
    
    
    8,033
    
    
    
    246
    
    
    
    8,135Actual earnout payments
    
    
    2,470
    
    
    
    168
    
    
    
    22
    
    
    
    2,660Other
    
    
    
    
    
    
    184
    
    
    
    
    
    
    
    184Balance as of March 31, 2004
    
    
    311,540
    
    
    
    67,358
    
    
    
    1,871
    
    
    
    380,769Currency translation
    
    
    45
    
    
    
    3,099
    
    
    
    15
    
    
    
    3,159Goodwill on businesses acquired
    
    
    60,416
    
    
    
    
    
    
    
    
    
    
    
    60,416Actual earnout payments
    
    
    
    
    
    
    277
    
    
    
    82
    
    
    
    359Other
    
    
    (136
    )
    
    
    
    
    
    
    
    
    
    
    (136
    )Balance as of March 31, 2005
    
    $
    371,865
    
    
    $
    70,734
    
    
    $
    1,968
    
    
    $
    444,567
 At March 31, 2005, certain merger agreements provided for contingent payments of up to $475.
If future operating performance goals are met, goodwill will be adjusted for the amount of the
contingent payments. The Companys intangible assets are comprised of the appraised fair market values of employee
non-compete contracts, backlog and customer relationships obtained through business acquisitions.
The Company has the following definite-lived intangibles: March 31, 2005
    
    
    March 31, 2004Gross
    
    
    
    
    
    
    Net
    
    
    Gross
    
    
    
    
    
    
    NetCarrying
    
    
    Accum.
    
    
    Carrying
    
    
    Carrying
    
    
    Accum.
    
    
    CarryingAmount
    
    
    Amort.
    
    
    Amount
    
    
    Amount
    
    
    Amort.
    
    
    AmountNon-compete agreements
    
    $
    2,676
    
    
    $
    1,105
    
    
    $
    1,571
    
    
    $
    2,246
    
    
    $
    439
    
    
    $
    1,807Customer relationships
    
    
    11,699
    
    
    
    114
    
    
    
    11,585
    
    
    
    
    
    
    
    
    
    
    
    Acquired backlog
    
    
    3,930
    
    
    
    668
    
    
    
    3,262
    
    
    
    331
    
    
    
    331
    
    
    
    Total
    
    $
    18,305
    
    
    $
    1,887
    
    
    $
    16,418
    
    
    $
    2,577
    
    
    $
    770
    
    
    $
    1,807
 Intangible asset amortization is computed using the straight-line method based upon the
estimated useful lives of the respective assets, which range from one to twenty years. Intangible asset amortization expense for Fiscal 2005, 2004 and 2003 was $1,332, $246 and $377,
respectively. The estimated intangible amortization expenses for the next five years are as
follows: Years Ending March 31,2006
    
    $
    5,0562007
    
    
    8702008
    
    
    6712009
    
    
    5882010
    
    
    588Thereafter
    
    
    8,645$
    16,418
 Intangible assets not subject to amortization consist solely of the Companys trademark
portfolio. The net carrying amount was $27,739 at March 31, 2005 and 2004. 48




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The changes in the carrying amount of goodwill and intangible assets, net of accumulated
amortization: Non-Year ended
    
    
    
    
    
    Competes
    
    
    CustomerMarch 31, 2005
    
    Trademarks
    
    
    and Backlog
    
    
    Relationships
    
    
    Goodwill
    
    
    TotalBalance as of March 31, 2004
    
    $
    27,739
    
    
    $
    1,807
    
    
    $
    0
    
    
    $
    380,769
    
    
    $
    410,315Change in net intangible assets
during the period related to:Amortization expense
    
    
    
    
    
    
    (1,218
    )
    
    
    (114
    )
    
    
    
    
    
    
    (1,332
    )Currency translation
    
    
    
    
    
    
    76
    
    
    
    
    
    
    
    3,159
    
    
    
    3,235Acquisitions
    
    
    
    
    
    
    4,272
    
    
    
    11,699
    
    
    
    60,416
    
    
    
    76,387Actual earnout payments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    359
    
    
    
    359Other
    
    
    
    
    
    
    (104
    )
    
    
    
    
    
    
    (136
    )
    
    
    (240
    )Balance as of March 31, 2005
    
    $
    27,739
    
    
    $
    4,833
    
    
    $
    11,585
    
    
    $
    444,567
    
    
    $
    488,724
 Note 6: Indebtedness Long-term debt consisted of the following: March 31,2005
    
    
    2004Revolving credit agreement
    
    $
    146,560
    
    
    $
    35,000Capital lease obligations
    
    
    772
    
    
    
    Other
    
    
    556
    
    
    
    1,238Total debt
    
    
    147,888
    
    
    
    36,238Less: current portion
    
    
    (692
    )
    
    
    (1,061
    )Long-term debt
    
    $
    147,196
    
    
    $
    35,177
 In June 2004, the Company entered into a $120,000 amended and restated credit facility with
Citizens Bank of Pennsylvania, as agent, and a group of lenders (the Amended and Restated Credit
Facility). Under the Amended and Restated Credit Facility, up to $5,000 was available for use
under a swing line facility (at a LIBOR rate plus a margin) and up to $15,000 was available for use
in connection with letters of credit. Other borrowings under the Amended and Restated Credit
Facility bore interest, at the Companys option, at either the banks base rate or the LIBOR rate,
in each case plus a margin. The applicable margins were adjusted each quarter based on the
consolidated leverage ratio and ranged from 0.00% to 0.75% for the base rate and 0.75% to 1.75% for
the LIBOR rate. The Company was also subject, under the Amended and Restated Credit Facility, to
various financial and non-financial covenants. The Amended and Restated Credit Facility was
scheduled to expire on August 31, 2008. On January 24, 2005, in connection with the acquisition of Norstan (see Note 18), the Company
amended and restated the Amended and Restated Credit Facility (the Second Amended and Restated
Credit Facility), also with Citizens Bank of Pennsylvania, as agent, and a group of lenders.
Borrowings under the Second Amended and Restated Credit Facility are permitted up to a maximum
amount of $240,000, including up to $15,000 of swingline loans and $25,000 of letters of credit.
The Second Amended and Restated Credit Facility may be increased by the Company up to an additional
$60,000 with the approval of the lenders and may be unilaterally and permanently reduced by the
Company to not less than the then outstanding amount of all borrowings. Interest on outstanding
indebtedness under the Second Amended and Restated Credit Facility accrues, at the Companys 49




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option, at a rate based on either: (a) the greater of (i) the prime rate per annum of the
agent then in effect and (ii) 0.50% plus the rate per annum announced by the Federal Reserve Bank
of New York as being the weighted average of the rates on overnight Federal funds transactions
arranged by Federal funds brokers on the previous trading day or (b) a rate per annum equal to the
LIBOR rate plus 0.75% to 1.50% (determined by a leverage ratio based on the Companys EBITDA). The
other terms and conditions of the Second Amended and Restated Credit Facility are substantially the
same as the Amended and Restated Credit Facility. The Second Amended and Restated Credit Facility
expires on August 31, 2008. The Second Amended and Restated Credit Facility was amended on
February 17, 2005 to modify certain restrictive covenants and is referred to hereafter as the
Credit Agreement. During the year ended March 31, 2005, the maximum amount and weighted average balance
outstanding under the Credit Agreement was $160,345 and $74,977, respectively. As of March 31,
2005, the Company had $7,909 outstanding in letters of credit and $85,531 available under the
Credit Agreement. The weighted average interest rate on all outstanding debt during the year
ended March 31, 2005 was approximately 2.98%. At March 31, 2005, the Company is in compliance with
all required covenants under the Credit Agreement. During the year ended March 31, 2005, the Company has incurred an aggregate of $1,352 in financing
costs associated with the execution of the Amended and Restated Credit Facility and the Second
Amended and Restated Credit Facility. These costs are being amortized over the life of the Credit
Agreement and are recognized as a component of interest expense. For the year ended March 31,
2005, the Company recognized $92 in interest expense related to these costs. The capital lease obligations are primarily for facilities and equipment. The lease agreements
have remaining terms ranging from two to five years with interest rates ranging from 7.60% to
9.25%. Other debt is composed of various bank and third party loans secured by specific pieces of
equipment and real property. The loans have remaining terms of one year with interest rates
ranging from 1.23% to 1.38%. Aggregate maturities of long-term debt for the next five years are as follows: Years Ending March 31,2006
    
    $
    6922007
    
    
    2362008
    
    
    2162009
    
    
    146,7322010
    
    
    12Thereafter
    
    
    $
    147,888
 50




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Note 7: Discounted Lease Rentals Through the acquisition of Norstan (see Note 18), the Company has recorded discounted lease
rentals. Norstan historically utilized the lease receivables (see Note 2) and corresponding
underlying equipment to borrow funds from financial institutions at fixed rates on a nonrecourse
basis by discounting the stream of future lease payments. Proceeds from discounting are recorded
on the Consolidated Balance Sheet as discounted lease rentals. Interest rates on these credit
agreements range from 6.0% to 8.0% and payments are generally due in varying monthly installments
through March 2007. Discounted lease rentals consisted of the following: March2005Total discounted lease rentals
    
    $
    920Less  current maturities
    
    
    (890
    )Long-term discounted lease rentals
    
    $
    30
 The aggregate amounts of discounted lease rentals maturing in each of the two years following
March 31, 2005 are as follows: Years Ending March 31,2006
    
    $
    8902007
    
    
    30$
    920
 Note 8: Derivative Instruments and Hedging Activities The Company enters into derivative instruments to hedge exposure to variability in expected
fluctuations in foreign currencies. All of the Companys derivatives have been designated and
qualify as cash flow hedges. There was no hedge ineffectiveness during the year ended March 31,
2005. At March 31, 2005, the Company had open contracts in Australian and Canadian dollar, Danish krone,
Euro, Japanese yen, Norwegian kroner, Pound sterling, Swedish krona and Swiss franc. These
contracts had a notional amount of approximately $30,413 and a fair value of $29,777 and mature
within the next six months. For the year ended March 31, 2005, the Company recognized in earnings approximately $1,244 in net
gains on matured contracts. As of March 31, 2005, a loss of $147 was included in OCI. This loss
is expected to be charged to earnings during the year ended March 31, 2006 as the hedged
transactions occur and it is expected that the loss will be offset by currency gains on the items
being hedged. 51




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Note 9: Operating Leases The Company is obligated under various operating lease agreements for certain office facilities and
equipment. Certain of these leases contain renewal options and rent escalation clauses. Future minimum lease payments under noncancelable operating leases with initial or remaining terms
of one year or more as of March 31, 2005 are as follows: Years Ending March 31,2006
    
    $
    16,0692007
    
    
    11,8322008
    
    
    9,3192009
    
    
    7,3842010
    
    
    5,742Thereafter
    
    
    10,188$
    60,534
 For the years ended March 31, 2005, 2004 and 2003, rent expense was $12,484, $9,395 and
$10,779, respectively. Included in the above amounts is approximately $13,809 related to restructuring and other charges
(see Note 17). Note 10: Discontinued Operations The Company has recorded net assets and liabilities of discontinued operations from the acquisition
of Norstan (see Note 18). These discontinued operations were related to the divestiture of Norstans
IT consulting business in 2001 and the sale of their Network Services business in 2002. Net assets (liabilities) of discontinued operations included the following: March2005Assets:Cash, accounts receivable and inventories
    
    $
    125Notes receivable and property
    
    
    826Liabilities:Other liabilities
    
    
    29Net assets of discontinued operations
    
    
    922Less: current portion liabilities (assets)
    
    
    (549
    )Net non-current assets (liabilities) of discontinued operations
    
    $
    373
 52




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##### Table of Contents



Note 11: Income Taxes The domestic and foreign components of pretax income from continuing operations for the years ended
March 31 are as follows: 2005
    
    
    2004
    
    
    2003Domestic
    
    $
    35,773
    
    
    $
    59,516
    
    
    $
    63,572Foreign
    
    
    9,893
    
    
    
    13,729
    
    
    
    12,499Consolidated
    
    $
    45,666
    
    
    $
    73,245
    
    
    $
    76,071
 The provision/(benefit) for income tax charged to continuing operations for the years ended
March 31 are as follows: 2005
    
    
    2004
    
    
    2003Current:Federal
    
    $
    12,784
    
    
    $
    20,356
    
    
    $
    17,560State
    
    
    1,118
    
    
    
    1,151
    
    
    
    1,948Foreign
    
    
    3,449
    
    
    
    4,629
    
    
    
    4,555Total current
    
    
    17,351
    
    
    
    26,136
    
    
    
    24,063Deferred
    
    
    (1,597
    )
    
    
    (134
    )
    
    
    3,323Total provision for income taxes
    
    $
    15,754
    
    
    $
    26,002
    
    
    $
    27,386
 Reconciliations between income taxes from continuing operations computed using the federal
statutory income tax rate and the Companys effective tax rate for the years ended March 31 are as
follows: 2005
    
    
    2004
    
    
    2003Federal statutory tax rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %Foreign taxes, net of foreign tax credits
    
    
    (0.5
    )
    
    
    
    
    
    
    (0.2
    )Amortization of nondeductible intangibles
    
    
    0.6
    
    
    
    
    
    
    
    State income taxes, net of federal benefit
    
    
    (0.2
    )
    
    
    0.6
    
    
    
    1.8Other, net
    
    
    (0.4
    )
    
    
    (0.1
    )
    
    
    (0.6
    )Effective tax rate
    
    
    34.5
    %
    
    
    35.5
    %
    
    
    36.0
    %
 The components of current and long-term deferred tax liabilities/assets at March 31 are as
follows: 2005
    
    
    2004Deferred Tax Liabilities:Tradename and trademarks
    
    $
    9,692
    
    
    $
    9,689Amortization of intangibles
    
    
    5,733
    
    
    
    4,235Unrequited earnings of Japanese subsidiary
    
    
    1,283
    
    
    
    888Basis of fixed assets
    
    
    4,128
    
    
    
    888Gross deferred tax liabilities
    
    
    20,836
    
    
    
    15,700Deferred Tax Assets:Net operating losses
    
    
    7,247
    
    
    
    4,512Foreign tax credit carryforwards
    
    
    1,283
    
    
    
    888Allowance for doubtful accounts
    
    
    649
    
    
    
    1,254Basis of finished goods inventory
    
    
    1,065
    
    
    
    658Other
    
    
    25,988
    
    
    
    2,627Gross deferred tax assets
    
    
    36,232
    
    
    
    9,939Valuation allowance
    
    
    (2,367
    )
    
    
    (1,158
    )Net deferred tax assets
    
    
    33,865
    
    
    
    8,781Net deferred tax assets/(liabilities)
    
    $
    13,029
    
    
    $
    (6,919
    )
 53




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##### Table of Contents



At
March 31, 2005, the Company had $14,139, $49,387 and $19,098 of federal, state and foreign
net operating loss carryforwards, respectively. As a result of the Companys reorganization in 1992
and concurrent ownership change and the Companys acquisition of Norstan, Section 382 of the
Internal Revenue Code limits the amount of net operating losses available to the Company to
approximately $3,902 per year. The federal net operating loss carryforwards expire in Fiscal 2021.
The state net operating loss carryforwards expire at various times through Fiscal 2025 and the
foreign net operating loss carryforwards expire at various times
through Fiscal 2015, with the
exception of $413 for Belgium, $2,419 for Brazil and $22 for
Australia, which have no expirations. A valuation allowance is provided when it is more likely than not that some portion or all of the
deferred tax assets will not be realized. The Company has recorded a
valuation allowance of $2,367
for certain foreign net operation loss carryforwards anticipated to produce no tax benefit. The
valuation allowance was increased in Fiscal 2005 by $1,209 to be applied against certain foreign
net operating loss carryforwards. In general, except for certain earnings in Japan, it is managements intention to reinvest
undistributed earnings of foreign subsidiaries, which aggregate
approximately $25,718 based on
exchange rates at March 31, 2005. However, from time to time, the foreign subsidiaries declare
dividends to the U.S. parent, at which time the appropriate amount of tax is determined. Also,
additional taxes could be necessary if foreign earnings were loaned to the parent or if the Company
should sell its stock in the subsidiaries. It is not practicable to estimate the amount of
additional tax that might be payable on undistributed foreign earnings. Note 12: Incentive Compensation Plans Performance Bonus The Company has a variable compensation plan covering certain team members. This plan provides for
the payment of a bonus based on the attainment of certain annual or quarterly performance targets.
The amount expensed under this variable compensation plan for the years ended March 31, 2005, 2004
and 2003 was $1,123, $2,523 and $0, respectively. Profit Sharing And Savings Plan The Company has various Profit Sharing and Savings Plans (Plans) which qualify as deferred salary
arrangements under Section 401(k) of the Internal Revenue Code. Under the Plans, participants are
permitted to contribute various percentages of their compensation, as defined, and the Company
matches a percentage of the participants contributions. The total Company contribution for the
years ended March 31, 2005, 2004 and 2003 was $2,243, $2,992 and $2,896, respectively. Stock Option Plans The Company has two stock option plans, the 1992 Stock Option Plan, as amended (the Employee
Plan), and the 1992 Directors Stock Option Plan, as amended (the Directors Plan). As of March
31, 2005, the Employee Plan authorized the issuance of options and stock appreciation rights
(SARs) for up to 8,300,000 shares of the Companys common stock, par value $.001 per share (the
Common Stock). In May 2005, the Companys stockholders approved an amendment to the Employee
Plan, increasing the shares available for stock compensation awards to 8,600,000 shares of the
Common Stock. Options are issued by the Board of Directors or a Board committee to key employees
of the Company and generally become exercisable in equal amounts over a three-year 54




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##### Table of Contents



period. Option prices are equal to the fair market value of the stock on the date of the grant. No
SARs have been issued. The Directors Plan authorizes the issuance of options and SARs for up to 250,000 shares of the
Common Stock. Options are issued by the Board of Directors or a Board committee and generally
become exercisable in equal amounts over a three-year period. Option prices are equal to the fair
market value of the Common Stock on the date of the grant. No SARs have been issued. The following is a summary of the Companys stock option plans for the years ended March 31: 2005
    
    
    2004
    
    
    2003Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    Exercise
    
    
    
    
    
    
    ExerciseShares in thousands
    
    Shares
    
    
    Price
    
    
    Shares
    
    
    Price
    
    
    Shares
    
    
    PriceOutstanding at
beginning of year
    
    
    4,414
    
    
    $
    36.40
    
    
    
    4,487
    
    
    $
    34.30
    
    
    
    4,089
    
    
    $
    33.69Granted
    
    
    924
    
    
    
    34.86
    
    
    
    911
    
    
    
    39.68
    
    
    
    711
    
    
    
    35.09Exercised
    
    
    (381
    )
    
    
    20.78
    
    
    
    (799
    )
    
    
    27.71
    
    
    
    (219
    )
    
    
    22.06Forfeited
    
    
    (177
    )
    
    
    42.01
    
    
    
    (185
    )
    
    
    39.01
    
    
    
    (94
    )
    
    
    42.26Outstanding at end of year
    
    
    4,780
    
    
    $
    37.14
    
    
    
    4,414
    
    
    $
    36.40
    
    
    
    4,487
    
    
    $
    34.30Exercisable at end of year
    
    
    3,143
    
    
    $
    37.33
    
    
    
    2,935
    
    
    $
    34.93
    
    
    
    3,035
    
    
    $
    32.25Weighted average
incremental fair value of
options granted during
the year using
Black-Scholes option
pricing model
    
    
    
    
    
    $
    18.19
    
    
    
    
    
    
    $
    20.00
    
    
    
    
    
    
    $
    15.67
 The following table summarizes information about the stock options outstanding at March 31,
2005: Options Outstanding
    
    
    Options ExercisableWeightedAverage
    
    
    Weighted
    
    
    
    
    
    
    WeightedRemaining
    
    
    Average
    
    
    
    
    
    
    AverageRange of
    
    Shares
    
    
    Contractual
    
    
    Exercise
    
    
    Shares
    
    
    ExerciseExercise Prices
    
    Outstanding
    
    
    Life
    
    
    Price
    
    
    Exercisable
    
    
    Price$15.7500 - $19.95
    
    
    76,000
    
    
    0.4 year
    
    $
    15.75
    
    
    
    76,000
    
    
    $
    15.75$19.9501 - $26.60
    
    
    428,004
    
    
    2.9 years
    
    
    22.32
    
    
    
    428,004
    
    
    
    22.32$26.6001 - $33.25
    
    
    653,577
    
    
    4.7 years
    
    
    29.76
    
    
    
    538,334
    
    
    
    30.01$33.2501 - $39.90
    
    
    887,184
    
    
    9.3 years
    
    
    34.42
    
    
    
    15,932
    
    
    
    34.87$39.9001 - $46.55
    
    
    2,570,602
    
    
    6.8 years
    
    
    42.25
    
    
    
    1,920,201
    
    
    
    42.54$46.5501 - $53.20
    
    
    160,637
    
    
    4.5 years
    
    
    49.40
    
    
    
    160,637
    
    
    
    49.40$53.2001 - $59.85
    
    
    1,668
    
    
    4.8 years
    
    
    55.88
    
    
    
    1,668
    
    
    
    55.88$59.8501 - $66.50
    
    
    2,500
    
    
    3.8 years
    
    
    63.88
    
    
    
    2,500
    
    
    
    63.88$15.75 - $66.50
    
    
    4,780,172
    
    
    6.4 years
    
    $
    37.14
    
    
    
    3,143,276
    
    
    $
    37.33
 55




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Note 13: Earnings Per Share The following table details this calculation for the years ended March 31: 2005
    
    
    2004
    
    
    2003Net income, as reported
    
    $
    29,912
    
    
    $
    47,243
    
    
    $
    48,685Weighted average shares outstanding
    
    
    17,411
    
    
    
    18,173
    
    
    
    19,781Effect of dilutive securities from
employee stock options, net of tax savings
    
    
    434
    
    
    
    593
    
    
    
    561Weighted average diluted shares outstanding
    
    
    17,845
    
    
    
    18,766
    
    
    
    20,342Basic earnings per share
    
    $
    1.72
    
    
    $
    2.60
    
    
    $
    2.46Dilutive earnings per share
    
    $
    1.68
    
    
    $
    2.52
    
    
    $
    2.39
 There is no impact to the weighted average share calculations during any period where the
exercise price of a stock option is greater than the average market price during the same period.
There were 875,060, 941,749 and 1,648,000 non-dilutive options outstanding during the years ended
March 31, 2005, 2004 and 2003, respectively, that are not included in the above calculation. Note 14: Repurchase of Common Stock In April 1999, the Board of Directors of the Company initiated a plan to repurchase shares of the
Common Stock. During Fiscal 2005, the Company repurchased approximately 1,400,000 shares for an
aggregate purchase price of $56,912. During Fiscal 2004, the Company repurchased approximately
1,700,000 shares for an aggregate purchase price of $76,338 and paid $4,719 for treasury share
repurchases payable in relation to Fiscal 2003 repurchases. During Fiscal 2003, repurchases also
totaled approximately 1,700,000 shares for an aggregate purchase price of $63,192. Since inception
of the repurchase program, approximately 6,935,000 shares have been repurchased at a total cost of
approximately $297,000. Funding for the stock repurchases came primarily from cash flow from
operations. The Company expects to continue to repurchase shares of the Common Stock; however, no assurance can
be given as to the timing or amount of future repurchases. The Credit Agreement (see Note 6)
provides that the Company is not permitted to repurchase Common Stock if the Company is in default
under the Credit Agreement or would be in default under the Credit Agreement as a result of such
repurchase. Additionally, without the consent of the lenders holding a majority of the
commitments, which consent may not be unreasonably withheld, the Company is not permitted to
repurchase more than $20,000 of the Common Stock from January 24, 2005 through and including July
24, 2005 and may not repurchase stock if it is not in compliance with a leverage ratio. 56




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##### Table of Contents



Note 15: Comprehensive Income The components of accumulated other comprehensive income as of March 31: 2005
    
    
    2004Foreign currency translation adjustment
    
    $
    22,699
    
    
    $
    17,418Unrealized (losses)/gains on derivatives
designated and qualified as cash flow
hedges, net of reclassification of
unrealized gains on expired derivatives,
net of tax
    
    
    (147
    )
    
    
    454Total accumulated other comprehensive income
    
    $
    22,552
    
    
    $
    17,872
 Note 16: Commitments and Contingencies Litigation The Company is, as a normal part of its business operations, a party to legal proceedings in
addition to those described in current and previous filings. Based on the facts currently
available, management believes legal matters are adequately provided for, covered by insurance,
without merit or not probable that an unfavorable outcome will result. As previously disclosed, the Company had appealed an adverse arbitration award. By opinion filed
March 9, 2005, the Court of Appeals affirmed the decision of the District Court. On May 6, 2005,
the Company paid approximately $1,800 (including interest, fees and costs) in satisfaction of this
judgment in full. See Note 17 for further discussion. As previously disclosed, the Company received a subpoena, dated December 8, 2004, from the United
States General Services Administration (GSA), Office of Inspector General. The subpoena requires
production of documents and information. The Company understands that the materials are being
sought in connection with an investigation regarding potential violations of the terms of a GSA
Multiple Award Schedule contract. The Company is reviewing this matter and is complying with the
requirements of the subpoena. As previously disclosed, on January 25, 2005, the Company completed the acquisition of Norstan (see
Note 18). Prior to the Companys acquisition of Norstan, Norstan had disclosed that, in April 2004,
it had received a Commitment Adjustment Letter from the Universal Services Administrative Company
(USAC), which oversees the Federal Communications Commissions School and Libraries Program of
the Universal Service Fund, also called the E-rate program. Funding commitments under the E-rate
program provide for discounts on eligible services such as telecommunications services, internet
access, network equipment and wiring of instructional buildings and classrooms to connect to the
Internet. Norstans previous disclosure stated that USAC had informed Norstan that USAC had
undertaken an audit of the Navajo Preparatory School (Navajo Prep) project for funding year 2001,
in which Norstan had installed specific equipment and services for which it had received
approximately $2,200, and that the audit report concluded that Navajo Prep had not complied with
key requirements of the E-rate program and, consistent with E-rate policies, USAC was seeking
recovery of the full amount disbursed to Norstan on behalf of Navajo Prep. Norstan noted that, in
June 2004, it had filed an appeal with USAC, had begun an internal investigation of the Navajo Prep
project and had established a reserve of $2,200 during the fourth quarter of its Fiscal 2004.
Norstan further reported that, as a result of the internal investigation, Norstan has decided not
to pursue the appeal and that, on its own initiative, Norstan would review its other E-rate
projects for compliance with E-rate program requirements. 57




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##### Table of Contents



On March 31, 2005,
Norstan refunded approximately $2,100 related to the Navajo Prep project
and its appeal was cancelled. Pursuant to USACs request following a review of its records, the
Company intends to refund an additional $100 related to this project. As previously disclosed, the Company continued to work with Norstan on completion of the
investigation and resolution of this matter following the Norstan acquisition and such
investigation is now substantially complete. Based on the results of that investigation, the
Company has advised USAC that its intends to refund amounts that Norstan had received from USAC in
relation to one additional E-rate program project. Norstan had previously reserved approximately
$1,700 with respect to that project. As previously disclosed, in October 2003, the Company received a formal order of investigation
issued by the SEC. In connection therewith, during the quarter ended December 28, 2003, the Company
and several of its officers, directors, team members and independent auditors provided information
to the Staff of the SEC. In late January 2004, the SEC requested information relating to Fiscal
2002 from the Companys independent auditors pursuant to an additional subpoena. The Company
intends to continue to cooperate fully with the inquiry. Product Warranties Changes in the liability for product warranties are as follows: March 31,2005
    
    
    2004
    
    
    2003Beginning balance
    
    $
    422
    
    
    $
    184
    
    
    $
    185Increases to warranty reserve
    
    
    233
    
    
    
    360
    
    
    
    119Increases to reserve from acquisitions
    
    
    1,683
    
    
    
    
    
    
    
    Decreases for service costs
    
    
    (443
    )
    
    
    (122
    )
    
    
    (120
    )Ending balance
    
    $
    1,895
    
    
    $
    422
    
    
    $
    184
 The accrual for product warranties is classified with other accrued expenses in the
Consolidated Balance Sheets. The expense for product warranties is classified with cost of sales
in the Consolidated Income Statements. Note 17: Restructuring and Other Charges During the fourth quarter of Fiscal 2005, the Company recorded restructuring and other charges of
$5,059. This amount was comprised of restructuring expense of $3,019 related to staffing level
adjustments and real estate consolidations, as well as other charges of $2,040 related to the
settlement of a previously disclosed litigation matter. These charges are discussed in further
detail below. In the fourth quarter of Fiscal 2005, the Company recorded a restructuring charge of $3,019
primarily related to staffing level adjustments and real estate consolidations in its Europe and
North America segments. The restructuring was initiated as the Company continues to right-size the
organization and bring its expense structure in-line with anticipated revenues and changing market
demand for its solutions and services. As a result of the restructuring actions, approximately 28
employees were involuntarily terminated in its Europe segment resulting in a restructuring charge
of $613. The Company also recorded a charge of $2,406 related to idle facility rent obligations
and the write-off of leasehold improvements related to these facilities. $2,016 and $390 related
to real estate consolidations in North America and Europe, respectively. As of March 31, 2005,
$1,653 have been paid related to the restructuring obligations. The Company anticipates a majority
of the remaining costs to be paid by the end of Fiscal 2006 with the exception of certain facility
costs, which will extend through Fiscal 2012. 58




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Upon completion of the acquisition of Norstan, Black Box management committed to a plan of
reorganization of the Norstan operations. Restructuring accruals under SFAS No. 141 of
approximately $14,761 have been recorded in both short and long term liabilities. See Note 18 for additional information on the restructuring charges
related to the acquisition of Norstan. In the fourth quarter of Fiscal 2003, the Company recorded a restructuring charge of $6,536
primarily related to staffing level adjustments and real estate consolidations. Of this charge,
$5,034 related to severance for 245 total team members ($4,299 related to severance for 130 team
members in Europe; $581 related to severance for 94 team members in North America; and $154 related
to severance for 21 individuals in Latin America) and $1,502 related to real estate consolidations.
All restructuring obligations have been paid as of March 31, 2005. In the fourth quarter of Fiscal 2002, the Company recorded a restructuring charge of $3,500
primarily related to adjusting staffing levels and real estate consolidations. Of this charge,
$2,168 related to severance for 105 total team members ($1,830 related to severance for 60 team
members in Europe; $230 related to severance for 19 team members in Latin America; and $108 related
to severance for 26 team members in North America) and $1,332 related to real estate
consolidations. All restructuring obligations have been paid as of March 31, 2005. The following table summarizes the restructuring and other charges and the remaining reserves
reflected on the Consolidated Balance Sheet: Employee Severance
    
    Facility Closures
    
    TotalAccrued March 31, 2002
    
    $
    1,443
    
    
    $
    1,439
    
    
    $
    2,882Restructuring charge
    
    
    5,034
    
    
    
    1,502
    
    
    
    6,536Cash expenditures
    
    
    (2,102
    )
    
    
    (556
    )
    
    
    (2,658
    )Asset write-downs
    
    
    
    
    
    
    (579
    )
    
    
    (579
    )Accrued March 31, 2003
    
    
    4,375
    
    
    
    1,806
    
    
    
    6,181Cash expenditures
    
    
    (4,023
    )
    
    
    (1,565
    )
    
    
    (5,588
    )Accrued March 31, 2004
    
    
    352
    
    
    
    241
    
    
    
    593Restructuring charge
    
    
    613
    
    
    
    2,406
    
    
    
    3,019Acquisition restructuring
    
    
    2,887
    
    
    
    11,874
    
    
    
    14,761Asset write-downs
    
    
    
    
    
    
    (122
    )
    
    
    (122
    )Cash expenditures
    
    
    (1,063
    )
    
    
    (590
    )
    
    
    (1,653
    )Accrued at March 31, 2005
    
    $
    2,789
    
    
    $
    13,809
    
    
    $
    16,598
 As previously disclosed, the Company had appealed an adverse arbitration award. By opinion
filed March 9, 2005, the Court of Appeals affirmed the decision of the District Court (see Note
16). The Company recorded a charge of $2,040 that is classified with restructuring and other
charges on the Consolidated Income Statements. This charge was
comprised of $1,778 awarded to the
plaintiff, which included interest, fees and costs, as well as $262 of legal fees incurred by the
Company previously capitalized in Goodwill. The Company accrued the award of $1,800 within accrued
liabilities on the Consolidated Balance Sheet. On May 6, 2005, the Company paid the award of
$1,800 in satisfaction of this judgment in full. Note 18: Acquisitions Fiscal 2005 On December 20, 2004, the Company signed a definitive agreement to acquire all of the outstanding
shares of Norstan common stock for $5.60 per share in cash via a tender offer and merger. On
January 25, 2005, the Company completed its cash tender offer
and purchased approximately 86% of the outstanding shares of Norstan common stock. 59




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Also, on January 25, 2005, the Company
acquired 6,000,000 Norstan shares through the exercise of a stock option granted by Norstan. The
Companys exercise of the option resulted in the Company owning in excess of 90% of the
outstanding shares of Norstan and qualified the Company to complete a short-form merger under
Minnesota law. The remaining Norstan shares not acquired in the tender offer were then acquired
through the short-form merger, also effected on January 25, 2005. In the merger, each share of
Norstan common stock was converted into the right to receive $5.60 per share in cash, the same
consideration paid for shares in the tender offer. As a result of the tender offer and merger,
Norstan is now a wholly-owned subsidiary of the Company. The Company paid a total of $77,717 for all outstanding shares through the cash tender offer and
subsequent merger. The Company also paid $5,764 for all vested and unvested options and warrants
outstanding at the date of the merger. In addition, the Company repaid Norstans credit
facility outstanding at the date of the merger of $17,500 and incurred transaction costs of
$6,428 directly related to the acquisition (consisting primarily of banking, key-employee change
of control payments and other professional fees), bringing the total acquisition cost to
approximately $102,553, net of cash acquired of $4,856. The cost of the Norstan acquisition was
funded with borrowings under the Credit Agreement described in Note 6. The following table summarizes the fair value of the assets acquired and liabilities assumed at
the date of acquisition. The allocation of the purchase price was final as of March 31, 2005. At January 25,2005Current assets, primarily consisting of accounts receivable and inventories
    
    $
    70,446Property, plant and equipment
    
    
    12,488Other non-current assets, primarily consisting of deferred taxes
    
    
    18,724Intangible assets
    
    
    15,971Goodwill
    
    
    60,416Total assets acquired
    
    $
    178,045Current liabilities, primarily consisting of deferred revenue and accrued
expenses
    
    $
    61,892Other non-current liabilities, primarily consisting of restructuring accrual
    
    $
    8,744Net assets acquired
    
    $
    107,409
 The amounts assigned to intangible assets are shown below: Non-compete agreements
    
    $
    342Backlog
    
    
    3,930Customer relationships
    
    
    11,699Total intangible assets
    
    $
    15,971
 The amortization period is 3 years for non-compete agreements, 1 year for backlog and 20 years
for customer relationships. The transaction resulted in
$60,416 of goodwill, none of which is deductible for tax purposes.
The Company paid a premium for the net assets of Norstan in order to
further expand its operations footprint in the voice and data
technology markets. In addition, the purchase increased the
Companys solutions offerings and customer market, providing for
a stronger worldwide technical services partner for its collective
clients. After consummation of the acquisition, the Company began to integrate Norstans products, employees
and facilities with its own. In connection with these integration actions, the Company incurred
severance costs of $2,887 for the separation of approximately 150 employees. 60




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##### Table of Contents



In addition, the Company incurred integration costs for facility consolidations of $11,874. These costs were
properly included in the purchase price allocation for Norstan, in accordance with the SFAS No. 141. The
Company anticipates a majority of the severance costs to be paid by the end of
Fiscal 2006 with certain facility costs extending through Fiscal 2012. The following is a summary of the restructuring liabilities related to the Norstan acquisition that
were recorded as of March 31, 2005, the payments made against the obligations and the remaining
obligations as of March 31, 2005. Severance Costs
    
    
    Facility CostsRestructuring recorded in purchase accounting
    
    $
    2,887
    
    
    $
    11,874Cash payments
    
    
    (567
    )
    
    
    (305
    )Balance at March 31, 2005
    
    $
    2,320
    
    
    $
    11,569
 The following unaudited pro forma summary presents the Companys results of operations as if
the acquisition had occurred at the beginning of the period indicated and does not purport to
represent what the Companys results of operations would have been had the acquisition occurred on
such date or at the beginning of the period indicated, or to project the Companys results of
operations for any future date or period. The pro forma results of operations include adjustments
to give effect to amortization of intangibles and other adjustments, together with related income
tax effects. These pro forma results of operations do not include the effects of cost synergies
and one-time nonrecurring transactions associated with the acquisition. Year EndedMarch 31, 2005
    
    
    March 31, 2004Pro forma revenue
    
    $
    716,853
    
    
    $
    746,261Pro forma net income from continuing operations
    
    
    22,451
    
    
    
    32,732Pro forma earnings per share:Basic
    
    $
    1.29
    
    
    $
    1.80Diluted
    
    $
    1.26
    
    
    $
    1.74
 Norstan had an April fiscal year-end, which differed from the Companys March year-end.
However, as the difference was less than 93 days, the pro forma information compiled for the fiscal
year ended March 31, 2004 was not required to be adjusted to account for the different year-ends.
For the fiscal year ended 2005 pro forma information, the Companys audited income statement for
the year ended March 31, 2005 (which included Norstans results of operations effective January 25,
2005) was combined with Norstans unaudited income statement for the period April 1, 2004 through
January 25, 2005. Fiscal 2003 The Company successfully completed three business combinations that have been accounted for using
the purchase method of accounting: June 2002  Societe dInstallation de Reseaux Informatiques et
Electriques; July 2002  EDC Communications Limited and EDC Communications (Ireland) Limited; and
January 2003  Rowe Structured Cabling Ltd. The aggregate purchase price of these three business
combinations was approximately $4,600 and resulted in goodwill of $3,317 and other intangibles of
$348 in accordance with SFAS No. 141, Business Combinations. The other intangibles balance
consisted of non-compete agreements and backlog. 61




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##### Table of Contents



The Company has consolidated the results of operations for the companies acquired during Fiscal
2003 as of the respective merger date. The following table reports pro forma information as if the
acquisitions had occurred at the beginning of Fiscal 2003: Year EndedMarch 31, 2003Pro forma revenue
    
    $
    607,948Pro forma net income
    
    
    48,901Pro forma earnings per share:Basic
    
    $
    2.47Diluted
    
    $
    2.40
 Note 19: Segment Reporting As required by SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information, the Company reports the results of its operating segments. During the fourth quarter
of Fiscal 2003, the Company changed its primary segments to be on a geographic basis. This is
consistent with how the Company is organized and how the business is managed on a day-to-day basis.
The primary reportable segments are comprised of North America, Europe and All Other. Consistent
with SFAS No. 131, the Company aggregates similar operating
segments into reportable segments. The accounting policies of the various segments are the same as those described in Summary of
Significant Accounting Principles in Note 1. The Company evaluates the performance of each segment
based on operating income. Inter-segment sales and segment interest income or expense and
expenditures for segment assets are not presented to or reviewed by management, and, therefore, are
not presented below. Summary information by reportable segment is as follows for the years ended March 31: 2005
    
    
    2004
    
    
    2003North AmericaRevenues
    
    $
    355,013
    
    
    $
    341,299
    
    
    $
    412,247Operating income
    
    
    26,798
    
    
    
    44,281
    
    
    
    53,079Depreciation
    
    
    5,144
    
    
    
    4,515
    
    
    
    5,363Amortization
    
    
    878
    
    
    
    46
    
    
    
    131Segment assets
    
    
    705,762
    
    
    
    557,239
    
    
    
    586,339EuropeRevenues
    
    $
    142,838
    
    
    $
    142,158
    
    
    $
    153,477Operating income
    
    
    13,639
    
    
    
    21,812
    
    
    
    17,729Depreciation
    
    
    1,213
    
    
    
    1,670
    
    
    
    1,825Amortization
    
    
    398
    
    
    
    177
    
    
    
    224Segment assets
    
    
    134,982
    
    
    
    131,302
    
    
    
    123,090All OtherRevenues
    
    $
    37,225
    
    
    $
    36,955
    
    
    $
    39,293Operating income
    
    
    8,099
    
    
    
    9,107
    
    
    
    8,318Depreciation
    
    
    266
    
    
    
    334
    
    
    
    451Amortization
    
    
    56
    
    
    
    23
    
    
    
    22Segment assets
    
    
    15,357
    
    
    
    15,981
    
    
    
    17,920
 62




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Operating income for Fiscal 2005 for North America and Europe was reduced by $4,056, $1,003,
respectively, for restructuring and other charges incurred during that year. Operating income for Fiscal 2003 for North America, Europe and All Other was reduced by $1,790,
$4,592 and $154, respectively, for restructuring expenses in the fourth quarter of that year. The sum of the segment revenues, operating income, depreciation and amortization equals the
consolidated revenues, operating income, depreciation and amortization. The following reconciles
segment assets to total consolidated assets for the years ending March 31: 2005
    
    
    2004
    
    
    2003Assets for North America, Europe and
All Other segments
    
    $
    856,101
    
    
    $
    704,522
    
    
    $
    727,349Corporate eliminations
    
    
    (83,211
    )
    
    
    (88,233
    )
    
    
    (100,620
    )Total consolidated assets
    
    $
    772,890
    
    
    $
    616,289
    
    
    $
    626,729
 Management is also presented with and reviews revenues by service type. The following
information is presented: Revenues
    
    2005
    
    
    2004
    
    
    2003Data Services
    
    $
    200,935
    
    
    $
    214,299
    
    
    $
    275,842Voice Services
    
    
    106,540
    
    
    
    68,241
    
    
    
    77,070Hotline Services
    
    
    227,601
    
    
    
    237,872
    
    
    
    252,105Total revenues
    
    $
    535,076
    
    
    $
    520,412
    
    
    $
    605,017
 Note 20: Quarterly Data (Unaudited) First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    YearFiscal 2005Revenues
    
    $
    124,355
    
    
    $
    126,595
    
    
    $
    126,896
    
    
    $
    157,230
    
    
    $
    535,076Gross profit
    
    
    51,880
    
    
    
    52,315
    
    
    
    51,018
    
    
    
    59,716
    
    
    
    214,929Net income
    
    
    10,003
    
    
    
    10,623
    
    
    
    9,249
    
    
    
    37
    
    
    
    29,912Basic earnings per
common share
    
    
    0.56
    
    
    
    0.61
    
    
    
    0.54
    
    
    
    0.00
    
    
    
    1.72
    (1)Diluted earnings
per common share
    
    
    0.54
    
    
    
    0.60
    
    
    
    0.52
    
    
    
    0.00
    
    
    
    1.68
    (1)Fiscal 2004Revenues
    
    $
    128,347
    
    
    $
    129,268
    
    
    $
    133,067
    
    
    $
    129,730
    
    
    $
    520,412Gross profit
    
    
    53,447
    
    
    
    53,875
    
    
    
    54,641
    
    
    
    54,288
    
    
    
    216,251Net income
    
    
    11,496
    
    
    
    12,051
    
    
    
    12,193
    
    
    
    11,503
    
    
    
    47,243Basic earnings per
common share
    
    
    0.62
    
    
    
    0.66
    
    
    
    0.68
    
    
    
    0.63
    
    
    
    2.60
    (1)Diluted earnings
per common share
    
    
    0.60
    
    
    
    0.64
    
    
    
    0.66
    
    
    
    0.61
    
    
    
    2.52
    (1)
   (1) Earnings per share for the year is different than the sum of the quarterly
earnings per share due to rounding and average share prices. 63




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##### Table of Contents



Item 9.Changes in and Disagreements with Accountants on accounting and Financial
Disclosure. None. 
 Item 9A. Controls and Procedures. Evaluation of Disclosure Controls and Procedures An evaluation was performed, under the supervision and with the participation of Company
management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of
the effectiveness of the design and operation of the Companys disclosure controls and procedures
(as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the Act)).
There are inherent limitations to the effectiveness of any system of disclosure controls and
procedures, including cost limitations, judgments used in decision making, assumptions regarding
the likelihood of future events, soundness of internal controls, fraud, the possibility of human
error and the circumvention or overriding of the controls and procedures. Accordingly, even
effective disclosure controls and procedures can provide only reasonable, and not absolute,
assurance of achieving their control objectives. Based on that evaluation, management, including
the CEO and CFO, has concluded that, as of March 31, 2005, the Companys disclosure controls and
procedures were effective in all material respects at the reasonable assurance level to ensure that
information required to be disclosed in reports that the Company files or submits under the Act is
recorded, processed, summarized and timely reported in accordance with the rules and forms of the
SEC. Managements Report on Internal Control Over Financial Reporting Company management is responsible for establishing and maintaining adequate internal control over
financial reporting, as such term is defined in Rule 13a-15(f) under the Act. Under the
supervision and with the participation of Company management, including the CEO and CFO, an
evaluation was performed of the effectiveness of the Companys internal control over financial
reporting. The evaluation was based on the framework in
Internal Control  Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). There are
inherent limitations in the effectiveness of any internal control, including the possibility of
human error and the circumvention or overriding of controls. Accordingly, even effective internal
controls over financial reporting can provide only reasonable assurance with respect to financial
statement preparation. Further, because of changes in conditions, the effectiveness of internal
control may vary over time. Based on the evaluation under the framework in Internal Control 
Integrated Framework issued by COSO, Company management concluded that the Companys internal
control over financial reporting was effective at the reasonable assurance level as of March 31,
2005. The scope of managements assessment of the effectiveness of internal control over financial
reporting includes all of the Companys businesses except for Norstan, a material business acquired
on January 25, 2005 representing approximately 21% of total assets at March 31, 2005. 64




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Attestation Report of the Registered Public Accounting Firm The Companys managements assessment of the effectiveness of its internal control over financial
reporting as of March 31, 2005 has been audited by BDO Seidman, LLP, an independent registered
public accounting firm, as stated in its report which appears below. Changes in Internal Control Over Financial Reporting In the fourth fiscal quarter ended March 31, 2005, there had been no change in the Companys
internal control over financial reporting that has materially affected, or is reasonably likely to
materially affect, the Companys internal control over financial reporting. 65




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##### Table of Contents



Report of Independent Registered Public Accounting Firm on
Internal Control over Financial Reporting Board of DirectorsBlack Box Corporation
Lawrence, Pennsylvania We have audited managements assessment, included in the accompanying Managements Report that
Black Box Corporation maintained effective internal control over financial reporting as of March
31, 2005, based on criteria established in Internal Control-Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). The
Companys management is responsible for maintaining effective internal control over financial
reporting and for its assessment of the effectiveness of internal control over financial reporting.
Our responsibility is to express an opinion on managements assessment and an opinion on the
effectiveness of the Companys internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, evaluating managements assessment, testing and evaluating the
design and operating effectiveness of internal control, and performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis
for our opinion. A companys internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles. A
companys internal control over financial reporting includes those policies and procedures that (1)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of management and directors of the company;
and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the companys assets that could have a material effect on the
financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate. In our opinion, managements assessment that the Company maintained effective internal control over
financial reporting as of March 31, 2005, is fairly stated, in all material respects, based on the
COSO criteria. Also in our opinion, the Company maintained, in all material respects, effective
internal control over financial reporting as of March 31, 2005, based on the COSO criteria. We have also audited, in accordance with the standards of the Public Company Accounting Standards
Board (United States), the consolidated balance sheet of Black Box
Corporation as of March 31, 2005, and the related consolidated statements of income, shareholders equity and cash flows for
the year then ended and our report dated May 25, 2005 expressed an unqualified opinion on those
consolidated financial statements. Chicago, Illinois
    
    /s/ BDO Seidman, LLPMay 25, 2005
 66




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##### Table of Contents



Item 9B. Other Information. None. 
 PART III 
 Item 10. Directors and Executive Officers of the Registrant. Certain of the information required by this item is incorporated herein by reference to the
information set forth under the caption Executive Officers of the Registrant included under Part
I of this Form 10-K. The other information required by this item is incorporated herein by reference to the information
set forth under the captions Annual Meeting Matters, Proposal 1  Election of Directors and
Board of Directors and Certain Board Committees in the Companys definitive proxy statement for
the 2005 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A of the Securities
Exchange Act of 1934, as amended (the Proxy Statement). 
 Item 11. Executive Compensation. The information required by this item is incorporated herein by reference to the information
set forth under the captions Executive Compensation and Other Information and Report of the
Compensation Committee in the Proxy Statement. 
 Item 12.Security Ownership of Certain Beneficial Owners And Management And Related
Stockholder Matters. The information required by this item is incorporated herein by reference to the information
set forth under the captions Equity Plan Compensation Information, Security Ownership of Certain
Beneficial Owners and Security Ownership of Management in the Proxy Statement. 
 Item 13.Certain Relationships and Related Transactions. None. 
 Item 14. Principal Accounting Fees and Services. The information required by this item is incorporated herein by reference to the information
set forth under the caption BDO Seidman and Ernst & Young as Independent Accountants in the Proxy
Statement. 67




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##### Table of Contents



PART IV 
 Item 15. Exhibits, Financial Statement Schedules. Financial statements, financial statement schedules and exhibits not listed below have been
omitted where the required information is included in the consolidated financial statements or
notes thereto, or is not applicable or required. (a) Documents filed as part of this report  (1)
    Financial Statements  no financial statements have been filed in
this Form 10-K other than those in Item 8(2)
    Financial Statement ScheduleSchedule II  Valuation and Qualifying Accounts(3)
    Exhibits ExhibitNumber
    
    Description2.1
    
    Agreement and Plan of Merger, dated as of
December 20, 2004, by and among the Company, SF Acquisition Co. and
Norstan, Inc. (1)2.2
    
    Tender and Voting Agreement, dated as of December
20, 2004, by and among the Company, SF Acquisition Co. and Norstan, Inc.
(1)2.3
    
    Stock Option Agreement, dated as of December 20,
2004, by and among the Company, SF Acquisition Co. and Norstan, Inc.
(1)3(i)
    
    Second Restated Certificate of Incorporation of
the Company, as amended (2)3(ii)
    
    Amended and Restated Bylaws, as amended (3)10.1
    
    Amended and Restated Credit Agreement, dated as
of June 30, 2004, by and among Black Box Corporation of Pennsylvania,
the Guarantors party thereto, the Lenders party thereto and Citizens
Bank of Pennsylvania (4)10.2
    
    Guaranty and Suretyship Agreement, dated as of
June 30, 2004, by and among the Company, the Lenders and Citizens Bank
of Pennsylvania (4)10.3
    
    Guaranty and Suretyship Agreement, dated as of
June 30, 2004, by and among the Guarantors, the Lenders and Citizens
Bank of Pennsylvania (4)10.4
    
    Second Amended and Restated Credit Agreement,
dated as of January
 68




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##### Table of Contents



24, 2005, by and among Black Box Corporation of Pennsylvania and SF
Acquisition Co., as Borrowers, the Guarantors parties thereto, the
Lenders parties thereto and Citizens Bank of Pennsylvania.
(5)10.5
    
    Guaranty and Surety Agreement, dated as of
January 24, 2005, by the Company to the Lenders and Citizens Bank of
Pennsylvania (6)10.6
    
    Guaranty and Surety Agreement, dated as of
January 24, 2005, by the Guarantors to the Lenders and Citizens Bank of
Pennsylvania (6)10.7
    
    First Amendment to the Second Amended and
Restated Credit Agreement, dated as of February 17, 2005, by and among
Black Box Corporation of Pennsylvania and Norstan, Inc., as Borrowers,
the Guarantors parties thereto, the Lenders parties thereto and Citizens
Bank of Pennsylvania (7)10.8
    
    Agreement between Black Box Corporation and Fred C. Young (8)10.9
    
    Agreement between Black Box Corporation and Kathleen Bullions (9)10.10
    
    Agreement between Black Box Corporation and Roger E. M. Croft (9)10.11
    
    Agreement between Black Box Corporation and
Francis W. Wertheimber (9)10.12
    
    1992 Stock Option Plan, as amended
through May 4, 2005 (10)10.13
    
    1992 Director Stock Option Plan, as amended
through March 15, 2005 (11)10.14
    
    Form of Black Box Corporation Non-Qualified
Stock Option Agreement (pursuant to the 1992 Director Stock Option Plan;
form of agreement in effect prior to August 10, 2004) (9)10.15
    
    Form of Black Box Corporation Non-Qualified
Stock Option Agreement (pursuant to the 1992 Director Stock Option Plan;
form of agreement in effect as of August 10, 2004) (9)10.16
    
    Form of Black Box Corporation Non-Qualified
Stock Option Agreement (pursuant to the 1992 Stock Option Plan)
(9)10.17
    
    Summary of Director Compensation (12)21.1
    
    Subsidiaries of the Registrant (12)23.1
    
    Consent of Independent Registered Accounting Firm (12)
 69




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##### Table of Contents



23.2
    
    Consent of Independent Registered Accounting Firm (12)31.1
    
    Certification of the Chief Executive Officer
pursuant to Rule 13a-14(a) of the Securities and Exchange Act of 1934,
as amended, and Section 302 of the Sarbanes-Oxley Act of 2002
(12)31.2
    
    Certification of the Chief Financial Officer
pursuant to Rule 13a-14(a) of the Securities and Exchange Act of 1934,
as amended, and Section 302 of the Sarbanes-Oxley Act of 2002
(12)32.1
    
    Certification of the Chief Executive Officer and
Chief Financial Officer pursuant to Rule 13a-14(b) of the Securities and
Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350 as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(12)
   (1)
    
    Filed as an exhibit to the Current Report on Form 8-K of the Company,
file number 0-18706, filed with the SEC on December 23, 2004, and incorporated
herein by reference.(2)
    
    Filed as Exhibit 3(i) to the Quarterly Report on Form 10-Q of the
Company, file number 0-18706, filed with the SEC on November 14, 2000, and
incorporated herein by reference.(3)
    
    Filed as Exhibit 3(ii) to the Annual Report on Form
10-K of the Company, file number 0-18706, filed with the SEC on June 14, 2004,
and incorporated herein by reference.(4)
    
    Filed as an exhibit to the Quarterly Report on Form 10-Q of the
Company, file number 0-18706, filed with the SEC on August 12, 2004, and
incorporated herein by reference.(5)
    
    Filed as Exhibit (b)(2) to Amendment No. 4 to the Schedule TO filed
by the Company and SF Acquisition Co. on January 26, 2005, and incorporated
herein by reference.(6)
    
    Filed as an exhibit to the Quarterly Report on Form 10-Q of the
Company, file number 0-18706, filed with the SEC on February 10, 2005, and
incorporated herein by reference.(7)
    
    Filed as Exhibit 10.1 to the Current Report on Form 8-K of the
Company, file number 0-18706, filed with the SEC on February 23, 2005, and
incorporated herein by reference.(8)
    
    Filed as Exhibit 10.6 to the Annual Report on Form 10-K of the
Company, file number 0-18706, filed with the SEC on June 14, 2004, and
incorporated herein by reference.(9)
    
    Filed as an exhibit to the Quarterly Report on Form 10-Q of the
Company, file number 0-18706, filed with the SEC on November 12, 2004, and incorporated herein
by reference. 70




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##### Table of Contents



(10)
    
    Filed as Exhibit 10.1 to the Current Report on Form 8-K of the
Company, file number 0-18706, filed with the SEC on May 10, 2005, and
incorporated herein by reference.(11)
    
    Filed as Exhibit 10.2 to the Current Report on Form 8-K of the
Company, file number 0-18706, filed with the SEC on March 18, 2005, and
incorporated herein by reference.(12)
    
    Filed herewith.  (b)
    The Company hereby files as exhibits to the Form 10-K the exhibits set forth in
Item 15 (a)(3) hereof which are not incorporated by reference.(c)
    The Company hereby files as a financial statement schedule to this Form 10-K
the financial statement schedule which is set forth in Item 15 (a)(2) hereof. 71




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##### Table of Contents



SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.  BLACK BOX CORPORATION
 Dated: June 14, 2005 /s/ Michael McAndrewMichael McAndrew, Vice President, ChiefFinancial Officer, Treasurer, Secretary, andPrincipal Accounting Officer
 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the registrant and in the capacities and on the dates
indicated. Signatures
    
    Capacity
    
    Date/s/ WILLIAM F. ANDREWS
    
    Director
    
    June 14, 2005William F. Andrews/s/ THOMAS W. GOLONSKI
    
    Director
    
    June 14, 2005Thomas W. Golonski/s/ THOMAS G. GREIG
Thomas G. Greig
    
    Director and Chairman
of the Board
    
    June 14, 2005/s/ RICHARD L. CROUCH
    
    Director
    
    June 14, 2005Richard L. Crouch/s/ EDWARD A. NICHOLSON
    
    Director
    
    June 14, 2005Edward A. Nicholson/s/ FRED C. YOUNG
Fred C. Young
    
    Director and
Chief Executive Officer
    
    June 14, 2005/s/ MICHAEL MCANDREW
Michael McAndrew
    
    Vice President,
Chief Financial Officer,
Secretary, Treasurer and
Principal Accounting Officer
    
    June 14, 2005
 72




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##### Table of Contents



SCHEDULE II BLACK BOX CORPORATION Valuation and Qualifying Accounts
(Dollars In thousands) Additions
    
    
    AdditionsBalance at
    
    
    Charged to
    
    
    Resulting
    
    
    Reductions
    
    
    BalanceBeginning of
    
    
    Costs and
    
    
    from
    
    
    from
    
    
    at End ofDescription
    
    Period
    
    
    Expenses
    
    
    Acquisitions
    
    
    Reserves
    
    
    PeriodYear Ended March 31, 2005Inventory reserves
    
    $
    4,840
    
    
    $
    2,106
    
    
    $
    9,335
    
    
    $
    3,735
    
    
    $
    12,546Allowance for unrealizable
accounts/sales returns
    
    
    10,426
    
    
    
    7,097
    
    
    
    1,042
    
    
    
    11,223
    
    
    
    7,342Restructuring reserve
    

    
    593
    
    
    
    3,019
    
    
    
    14,761
    
    
    
    1,775
    
    
    
    16,598Year Ended March 31, 2004Inventory reserves
    
    $
    3,981
    
    
    $
    3,697
    
    
    $
    
    
    

    $
    2,838
    
    
    $
    4,840Allowance for unrealizable
accounts/sales returns
    
    
    11,710
    
    
    
    2,502
    
    
    
    
    
    
    
    3,786
    
    
    
    10,426Restructuring reserve
    
    
    6,181
    
    
    
    
    
    
    
    
    
    
    
    5,588
    
    
    
    593Year Ended March 31, 2003Inventory reserves
    
    $
    3,358
    
    
    $
    2,229
    
    
    $
    56
    
    
    $
    1,662
    
    
    $
    3,981Allowance for unrealizable
accounts/sales returns
    
    
    8,207
    
    
    
    5,231
    
    
    
    218
    
    
    
    1,946
    
    
    
    11,710Restructuring reserve
    
    
    2,882
    
    
    
    6,536
    
    
    
    
    
    
    
    3,237
    
    
    
    6,181
 73