-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NF6AcwKcl/h8yX6L7oIx2fgTH/mII5/b2DcyT2TDqSOJNssBFfG334v42FRcAgEf K3LisVRuYrD6zIu0YMb7IA== /in/edgar/work/0000950128-00-001336/0000950128-00-001336.txt : 20001115 0000950128-00-001336.hdr.sgml : 20001115 ACCESSION NUMBER: 0000950128-00-001336 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BLACK BOX CORP CENTRAL INDEX KEY: 0000849547 STANDARD INDUSTRIAL CLASSIFICATION: [3576 ] IRS NUMBER: 953086563 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-18706 FILM NUMBER: 766233 BUSINESS ADDRESS: STREET 1: 1000 PARK DR CITY: LAWRENCE STATE: PA ZIP: 15055 BUSINESS PHONE: 4128736788 FORMER COMPANY: FORMER CONFORMED NAME: BLACK BOX INCORPORATED DATE OF NAME CHANGE: 19910825 10-Q 1 j8493801e10-q.txt BLACK BOX CORPORATION FORM 10-Q 1 Fiscal 2001 Second Quarter SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000 COMMISSION FILE NO. 0-18706 BLACK BOX CORPORATION (Exact name of registrant as specified in its charter) Delaware 95-3086563 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 1000 Park Drive Lawrence, Pennsylvania 15055 (Address of principal executive offices) 724-746-5500 Registrant's telephone number, including area code Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES _X_ NO ___ The number of shares outstanding of the Registrant's common stock, $.001 par value, as of October 27, 2000 was 18,889,880 shares. 2 PART I FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS BLACK BOX CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands, except share amounts)
(Unaudited) September 30, March 31, ASSETS 2000 2000 ------------ ------------ Current assets: Cash and cash equivalents $ 9,027 $ 8,643 Accounts receivable, net of allowance for doubtful accounts of $7,644 and $6,304, respectively 141,269 115,958 Inventories, net 48,071 44,582 Costs and estimated earnings in excess of billings on uncompleted contracts 21,308 7,953 Other current assets 21,132 17,398 --------- --------- Total current assets 240,807 194,534 Property, plant and equipment, net of accumulated depreciation of $28,816 and $25,671, respectively 42,665 40,445 Intangibles, net of accumulated amortization of $41,405 and $35,629, respectively 291,235 215,366 Other assets 3,995 1,944 --------- --------- Total assets $ 578,702 $ 452,289 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current debt $ 863 $ 969 Accounts payable 53,650 38,374 Billings in excess of costs and estimated earnings on uncompleted contracts 9,254 3,655 Other accrued expenses 31,932 27,087 Accrued income taxes 7,528 8,468 --------- --------- Total current liabilities 103,227 78,553 Long-term debt 146,996 105,374 Other liabilities 10,554 10,035 Stockholders' equity: Preferred stock authorized 5,000,000; par value $1.00; none issued and outstanding Common stock authorized 100,000,000; par value $.001; issued 20,728,986 and 19,940,217, respectively 21 20 Additional paid-in capital 201,783 144,828 Retained earnings 216,366 186,056 Treasury stock, at cost, 1,950,000 and 1,500,000 shares, respectively (92,432) (67,253) Cumulative foreign currency translation adjustments (7,813) (5,324) --------- --------- Total stockholders' equity 317,925 258,327 --------- --------- Total liabilities and stockholders' equity $ 578,702 $ 452,289 ========= =========
See Notes to Consolidated Financial Statements 2 3 BLACK BOX CORPORATION CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (In thousands, except per share amounts)
Three month period ended Six month period ended September 30, September 30, 2000 1999 2000 1999 --------- --------- --------- --------- Revenues $ 207,900 $ 117,889 $ 376,936 $ 215,409 Cost of sales 123,681 66,775 222,257 118,876 --------- --------- --------- --------- Gross profit 84,219 51,114 154,679 96,533 Selling, general and administrative expenses 51,346 30,065 93,784 56,558 Intangibles amortization 3,170 1,366 5,818 2,655 --------- --------- --------- --------- Operating income 29,703 19,683 55,077 37,320 Interest expense, net 3,041 624 5,254 674 Other expense/(income), net 134 (77) 134 (77) --------- --------- --------- --------- Income before income taxes 26,528 19,136 49,689 36,723 Provision for income taxes 10,346 7,559 19,379 14,506 --------- --------- --------- --------- Net income $ 16,182 $ 11,577 $ 30,310 $ 22,217 ========= ========= ========= ========= Basic earnings per common share $ 0.86 $ 0.66 $ 1.62 $ 1.26 ========= ========= ========= ========= Diluted earnings per common share $ 0.82 $ 0.62 $ 1.54 $ 1.18 ========= ========= ========= ========= Weighted average common shares 18,785 17,657 18,704 17,688 ========= ========= ========= ========= Weighted average common and common equivalent shares 19,681 18,811 19,735 18,801 ========= ========= ========= =========
See Notes to Consolidated Financial Statements 3 4 BLACK BOX CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) (Dollars in thousands)
Cumulative Common Stock Additional Foreign --------------------- Treasury Paid-in Retained Currency Shares Amount Stock Capital Earnings Translation Total ---------- ------ -------- ---------- -------- ----------- ----- Balance at March 31, 1999 18,147,358 18 -- 59,272 137,204 (3,842) 192,652 Net income -- -- -- -- 48,852 -- 48,852 Purchase of treasury stock -- -- (67,253) -- -- -- (67,253) Issuance of common stock 1,148,570 1 -- 64,676 -- -- 64,677 Exercise of options 644,289 1 -- 12,987 -- -- 12,988 Tax benefit from exercised options -- -- -- 7,893 -- -- 7,893 Foreign currency translation adjustment -- -- -- -- -- (1,482) (1,482) ---------- ------ ------- --------- ------- ------ ------- Balance at March 31, 2000 19,940,217 20 (67,253) 144,828 186,056 (5,324) 258,327 Net income -- -- -- -- 30,310 -- 30,310 Purchase of treasury stock -- -- (25,179) -- -- -- (25,179) Issuance of common stock 738,822 1 -- 55,564 -- -- 55,565 Exercise of options 49,947 -- -- 904 -- -- 904 Tax benefit from exercised options -- -- -- 487 -- -- 487 Foreign currency translation adjustment -- -- -- -- -- (2,489) (2,489) ---------- ------ ------- --------- ------- ------ ------- Balance at September 30, 2000 20,728,986 21 (92,432) 201,783 216,366 (7,813) 317,925 ========== ====== ======= ========= ======= ====== =======
See Notes to Consolidated Financial Statements 4 5 BLACK BOX CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Dollars in thousands)
Six month period ended September 30, 2000 1999 --------- --------- Cash flows from operating activities: Net income $ 30,310 $ 22,217 Adjustments to reconcile net income to cash provided by operating activities: Intangibles amortization 5,818 2,655 Depreciation 3,775 2,173 Other -- 11 Changes in working capital items: Accounts receivable, net (8,679) (8,999) Inventories, net (1,716) (1,982) Other current assets (8,564) (4,679) Accounts payable and accrued liabilities 6,886 1,094 --------- --------- Cash provided by operating activities 27,830 12,490 --------- --------- Cash flows from investing activities: Capital expenditures (net of dispositions of $1,400 and $0, respectively) (2,945) (4,735) Mergers, net of cash acquired (38,180) (5,794) --------- --------- Cash (used) in investing activities (41,125) (10,529) --------- --------- Cash flows from financing activities: Repayment of borrowings (93,550) (4,897) Proceeds from borrowings 134,524 51,839 Proceeds from exercise of options 1,391 7,974 Purchase of Treasury Stock (25,179) (58,765) --------- --------- Cash provided by/(used in) financing activities 17,186 (3,849) --------- --------- Effect of foreign currency adjustments on cash (3,507) (5) --------- --------- Increase/(decrease) in cash and cash equivalents 384 (1,893) Cash and cash equivalents at beginning of period 8,643 5,946 --------- --------- Cash and cash equivalents at end of period $ 9,027 $ 4,053 ========= ========= Interest paid $ 4,629 $ 667 --------- --------- Income taxes paid $ 19,842 $ 6,296 --------- ---------
See Notes to Consolidated Financial Statements 5 6 BLACK BOX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Dollars in thousands, except per share amounts) NOTE 1 - BASIS OF PRESENTATION The Financial Statements presented herein and these notes are unaudited. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Although Black Box Corporation (the "Company") believes that all adjustments necessary for a fair presentation have been made, interim periods are not necessarily indicative of the results of operations for a full year. As such, these financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's most recent Form 10-K which was filed with the SEC for the fiscal year ended March 31, 2000. Certain prior year amounts have been reclassified to conform to the current year financial statement presentation. NOTE 2 - INVENTORIES Inventories are stated at the lower of cost (first-in, first-out method) or market. The net inventory balances are as follows: September 30, March 31, 2000 2000 ---- ---- Raw materials $ 2,686 $ 2,485 Work-in-process 56 23 Finished goods 49,248 45,858 Inventory reserve (3,919) (3,784) -------- -------- Inventory, net $ 48,071 $ 44,582 ======== ======== NOTE 3 - FINANCIAL DERIVATIVES The Company has entered and will continue in the future, on a selective basis, to enter into forward exchange contracts to reduce the foreign currency exposure related to certain intercompany transactions. On a monthly basis, the open contracts are revalued to fair market value, and the resulting gains and losses are recorded in cost of sales. These gains and losses offset the revaluation of the related foreign currency denominated receivables, which are also included in cost of sales. At September 30, 2000, the open foreign exchange contracts were in Yen, Euro, Sterling pound, Canadian dollars, Swiss francs and Australian dollars. These open contracts, valued at approximately $18,288, will expire over the next six months, with the exception of the contract related to the Company's acquisition of Data Specialties Europe Ltd., which expires on April 30, 2002. The open contracts have contract rates of 102.73 to 103.93 Yen, 0.9023 to 0.9578 Euro, 1.5041 to 1.5318 Sterling pound, 1.4782 to 1.5028 Canadian dollar, 1.6110 to 1.6297 Swiss franc and 0.5875 to 0.5912 Australian dollar, all per U.S. dollar. The effect of these contracts on net income for the three and six month periods ended September 30, 2000 was approximately $1,200 6 7 BLACK BOX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Dollars in thousands, except per share amounts) and $1,800, respectively, which is offset by the revaluation of the related foreign currency denominated receivables. NOTE 4 - COMPREHENSIVE INCOME In the first quarter of Fiscal 1999, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income," which established standards for reporting and displaying comprehensive income and its components in financial statements. Comprehensive income is defined as net income and all nonowner changes in stockholders' equity. Accumulated other comprehensive income consists entirely of foreign currency translation adjustments. Total comprehensive income for the three and six month periods ended September 30, 2000 and the three and six month periods ended September 30, 1999 were $14,489, $27,821, $12,736 and $22,424, respectively. NOTE 5 - EARNINGS PER SHARE Basic earnings per common share were computed based on the weighted average number of common shares issued and outstanding during the relevant periods. Diluted earnings per common share were computed under the treasury stock method based on the weighted average number of common shares issued and outstanding, plus additional shares assumed to be outstanding to reflect the dilutive effect of common stock equivalents. The following table details this calculation:
Three month period ended Six month period ended September 30, September 30, 2000 1999 2000 1999 ---- ---- ---- ---- Net income for earnings per share Computation $16,182 $11,577 $30,310 $22,217 Basic earnings per common share: Weighted average common shares 18,785 17,657 18,704 17,688 ------- ------- ------- ------- Basic earnings per common share $ 0.86 $ 0.66 $ 1.62 $ 1.26 ======= ======= ======= ======= Diluted earnings per common share: Weighted average common shares 18,785 17,657 18,704 17,688 Shares issuable from assumed conversion of common stock equivalents 896 1,154 1,031 1,113 ------- ------- ------- ------- Weighted average common and common equivalent shares 19,681 18,811 19,735 18,801 ------- ------- ------- ------- Diluted earnings per common share $ 0.82 $ 0.62 $ 1.54 $ 1.18 ======= ======= ======= =======
7 8 BLACK BOX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Dollars in thousands, except per share amounts) NOTE 6 - ADOPTION OF NEW ACCOUNTING STANDARDS In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," amended by SFAS No. 137, which establishes accounting and reporting standards for derivative instruments and requires that an entity recognize all derivatives as either assets or liabilities and measure those instruments at fair value. The Company is currently evaluating the effects of SFAS No. 133 and does not expect its adoption to have a material effect on the Company's financial statements or results of operations. The Company will adopt the new standard in the first quarter of Fiscal 2002. In June 2000, the SEC staff issued SAB 101, which further establishes accounting and reporting standards for revenue recognition. The Company is currently evaluating the effects of SAB 101 and does not expect its adoption to have a material effect on the Company's financial statements or results of operations. The Company will adopt the new literature in the fourth quarter of Fiscal 2001. NOTE 7 - CHANGES IN BUSINESS During the six months ended September 30, 2000, the Company successfully completed fifteen business combinations which have been accounted for using the purchase method of accounting: April 2000 - Cabling Concepts, Inc. and Teldata Corporation; June 2000 - ST Communications & Cabling, Inc., GMCI Netcomm, Inc., Allcom Electric, Inc., Vista Information Technologies, Inc. and Schoeller Connectivity Gmbh; July 2000 - Ascor bvba, Carey Systems Company, Datel Communications, Inc., Data Specialties Europe Ltd., and Midwest Electronics and Communications, Inc.; August 2000 - Duracom, Inc. and Sterling Technology Systems, Inc.; September 2000 - Da/Com Limited. In connection with the above fifteen business combinations, the Company issued an aggregate of 729 thousand shares of its common stock in exchange for all of the outstanding shares of the above fifteen companies. In addition, an aggregate of approximately $39,900 in cash was used to acquire the above fifteen companies. This includes $3,133 of cash currently being held in a collateral account for the purchase of Data Specialties Europe Ltd. This amount is included in the Company's other assets balance as of September 30, 2000, as it is considered long-term restricted cash. In accordance with the acquisition agreement, the Company will pay Data Specialties Europe Ltd. the total balance held in escrow on April 30, 2003. The aggregate purchase price of the above fifteen companies was approximately $94,300 and resulted in goodwill after assumed liabilities of approximately $81,500, which is being amortized over twenty-five years. As of September 30, 2000, certain merger agreements provide for contingent payments, depending on future performance, of up to $19,550, of which $1,312 have been satisfied and paid. Upon meeting the future performance goals, goodwill will be adjusted for the amount of the contingent payments. 8 9 BLACK BOX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Dollars in thousands, except per share amounts) The Company has consolidated the results of operations for each of the acquired companies as of the respective merger date. The following table reports pro forma information as if the acquired entities had been purchased at the beginning of the stated periods:
Three month period Six month period ended September 30, ended September 30, ---------------- ----------------- ---------------- ----------------- 2000 1999 2000 1999 (unaudited) (unaudited) (unaudited) (unaudited) - ---------------------------- ----------------- ---------------- ----------------- ---------------- ----------------- Revenue As reported $207,900 $117,889 $376,936 $215,409 Pro forma 210,309 204,197 402,833 385,592 - ---------------------------- ----------------- ---------------- ----------------- ---------------- ----------------- Net income As reported $ 16,182 $ 11,577 $ 30,310 $ 22,217 Pro forma 16,230 15,322 31,818 29,595 - ---------------------------- ----------------- ---------------- ----------------- ---------------- ----------------- Earnings per share As reported $ 0.82 $ 0.62 $ 1.54 $ 1.18 Pro forma $ 0.82 $ 0.75 $ 1.59 $ 1.44 - ---------------------------- ----------------- ---------------- ----------------- ---------------- -----------------
NOTE 8 - TREASURY STOCK On March 31, 1999, the Company announced its intention to repurchase up to one million shares of its Common Stock. As of June 1999, the Company had repurchased all one million shares at prevailing market prices for an aggregate purchase price of $41,981. On July 15, 1999, the Company announced its intention to repurchase an additional 500 thousand shares of its Common Stock. As of November 1999, the Company had repurchased all 500 thousand shares under this plan at prevailing market prices for an aggregate purchase price of $25,272. On July 13, 2000, the Company announced its intention to repurchase an additional 500 thousand shares of its Common Stock. As of September 2000, the Company had repurchased 450 thousand shares under this plan at prevailing market prices for an aggregate purchase price of $25,179. On July 21, 2000, the Company announced its intention to repurchase an additional 500 thousand shares of its Common Stock. As of September 2000, none of the shares under this plan have been repurchased. Funding for these stock repurchases came from existing cash flow and borrowings under credit facilities maintained with Mellon Bank, N.A. NOTE 9 - INDEBTEDNESS On April 4, 2000, the Company simultaneously entered into a $120,000 Revolving Credit Agreement ("Long Term Revolver") and a $60,000 Short Term Credit Agreement ("Short Term Revolver") (together the "Syndicated Debt") with Mellon Bank, N.A. and a group of lenders. The terms of the Syndicated Debt are substantially similar to the terms of the previous Mellon Facility. The Long Term Revolver is scheduled to expire on April 4, 2003 and the Short Term Revolver is scheduled to expire on April 4, 2001. Upon its expiration, the Company has the option to convert the Short Term Revolver into a two-year note with substantially similar terms. The interest on the borrowings is variable based on the Company's option of selecting the banks 9 10 BLACK BOX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Dollars in thousands, except per share amounts) prime rate plus an applicable margin as defined in the agreement or the Euro-dollar rate plus an applicable margin as defined in the agreement. The Company's total debt at September 30, 2000 was comprised of $110,700 under the Mellon Long Term Revolver, $33,000 under the Mellon Short Term Revolver, and $4,159 of various other loans. The weighted average interest rate on all indebtedness of the Company as of September 30, 2000 was approximately 7.7% compared to 6.1% as of September 30, 1999. NOTE 10 - SEGMENT REPORTING The Company manages the business primarily on a product and service line basis. Its reportable segments are comprised of On-Site Services and Phone Services. The Other operating segment includes expenses related primarily to tradename and trademark protection and costs directly related to its mergers and acquisitions program. The Company reports its segments separately because of differences in the ways the product and service lines are managed and operated. Consistent with SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," the Company aggregates similar operating segments into reportable segments. The Company evaluates the performance of each segment based on "Worldwide EBITA." A segment's Worldwide EBITA is its earnings before interest, taxes and amortization. Revenues and the related profits on intercompany transactions are reported by the segment providing the third-party revenues. Intersegment sales are not reviewed by management and are not presented below. Certain costs incurred in Phone Services are directly related to the Company's business development through mergers and acquisitions and therefore are reclassified to the Other operating segment in the information presented below. Interest income, interest expense and expenditures for segment assets are not presented to or reviewed by management, and therefore are not presented in the information below. 10 11 BLACK BOX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Dollars in thousands, except per share amounts) Summary information by reportable segment is as follows:
Three month period ended Six month period ended September 30, September 30, - -------------------------------------------------------------------------------------------------- 2000 1999 2000 1999 - -------------------------------------------------------------------------------------------------- On-Site Services Revenues $ 111,122 $ 29,906 $ 191,163 $ 47,708 Worldwide EBITA 14,863 3,938 25,437 6,144 Phone Services Revenues $ 96,778 $ 87,983 $ 185,773 $ 167,701 Worldwide EBITA 18,622 17,676 36,782 35,007 Other Revenues $ -- $ -- $ -- $ -- Worldwide EBITA (612) (565) (1,324) (1,176) - --------------------------------------------------------------------------------------------------
The following is a reconciliation between the reportable segment data and the corresponding consolidated amount for EBITA: EBITA
Three month period ended Six month period ended September 30, September 30, - --------------------------------------------------------------------------------------------------- 2000 1999 2000 1999 - --------------------------------------------------------------------------------------------------- Total Worldwide EBITA for reportable segments $ 33,485 $ 21,614 $ 62,219 $ 41,151 Other EBITA (612) (565) (1,324) (1,176) Total Consolidated EBITA $ 32,873 $ 21,049 $ 60,895 $ 39,975 - ---------------------------------------------------------------------------------------------------
11 12 BLACK BOX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Dollars in thousands, except per share amounts) The following is summary information of assets by reportable segment and a reconciliation to the consolidated assets: ASSETS
- ----------------------------------------------------------------------------------------- September 30, March 31, 2000 2000 - ----------------------------------------------------------------------------------------- On-Site Services $ 345,630 $ 221,377 Phone Services 501,496 312,496 --------- --------- Total assets for reportable segments 847,126 533,873 Other assets 533,272 340,532 Corporate eliminations (801,696) (422,116) --------- --------- Total consolidated assets $ 578,702 $ 452,289 - -----------------------------------------------------------------------------------------
Information about geographic areas is as follows: REVENUES
Three month period ended Six month period ended September 30, September 30, - -------------------------------------------------------------------------------------------------------------- 2000 1999 2000 1999 - -------------------------------------------------------------------------------------------------------------- North America $157,464 $ 77,898 $280,950 $139,965 Europe 32,364 24,103 62,843 46,714 Pacific Rim 12,657 10,936 22,806 19,864 Latin America 5,415 4,952 10,337 8,866 -------- -------- -------- -------- Total revenues $207,900 $117,889 $376,936 $215,409 - --------------------------------------------------------------------------------------------------------------
ASSETS
- ----------------------------------------------------------------------------------- September 30, March 31, 2000 2000 - ----------------------------------------------------------------------------------- North America $473,669 $364,303 Europe 75,762 60,311 Pacific Rim 16,813 16,200 Latin America 12,458 11,475 -------- -------- Total consolidated assets $578,702 $452,289 - -----------------------------------------------------------------------------------
NOTE 11 - SUBSEQUENT EVENTS In October 2000, the Company effected a merger with Clear Communications, Inc. ("Clear Communications"). Established in 1989 in Seattle, Washington, privately held Clear Communications provides technical design, installation and maintenance services for telecommunication, premise cabling and related products to customers primarily in the greater 12 13 BLACK BOX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Dollars in thousands, except per share amounts) Seattle area. The results of operations and financial position of Clear Communications are not material to the Company's consolidated results of operations or financial position. In October 2000, the Company effected a merger with Person-to-Person Communications, Inc. ("Person-to-Person"). Established in 1986 in Alexandria, Virginia, privately held Person-to-Person provides technical design, installation and maintenance services for telecommunication, premise cabling and related products to customers primarily in the Mid-Atlantic region. The results of operations and financial position of Person-to-Person are not material to the Company's consolidated results of operations or financial position. In October 2000, the Company effected a merger with Smiles Communication Systems, Inc. ("Smiles Communication"). Established in 1986 in Johnson City, Tennessee, privately held Smiles Communication provides technical design, installation and maintenance services for telecommunication, premise cabling and related products to customers primarily in the southeast United States. The results of operations and financial position of Smiles Communication are not material to the Company's consolidated results of operations or financial position. 13 14 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (dollars in thousands) GENERAL FORWARD-LOOKING STATEMENTS When included in this Quarterly Report on Form 10-Q 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, customer preferences 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 Quarterly Report on Form 10-Q. 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. RESULTS OF OPERATIONS The table below should be read in conjunction with the following discussion (percentages are based on total revenues).
Three month period ended Six month period ended September 30, September 30, ------------------------------------------------------------- 2000 1999 2000 1999 ---- ---- ---- ---- Revenues $ 207,900 $117,889 $376,936 $215,409 ========== ======== ======== ======== Revenues: On-Site Support North America 50.9% 25.1% 48.5% 21.9% International 2.5 0.3 2.2 0.2 ----- ----- ----- ----- Total On-Site Support 53.4 25.4 50.7 22.1 ----- ----- ----- ----- Phone Support: North America 24.8 41.0 26.0 43.1 International 21.8 33.6 23.3 34.8 ----- ----- ----- ----- Total Phone Support 46.6 74.6 49.3 77.9 ----- ----- ----- ----- Total Revenues 100.0% 100.0% 100.0% 100.0%
Revenues for the three and six month periods ended September 30, 2000 were $207,900 and $376,936, respectively, an increase of $90,011, or 76%, and $161,527, or 75%, respectively, over the same period in the prior year. Revenues from on-site services for the three months ended September 30, 2000 (Second Quarter 2001) were $111,122, an increase of $81,216, or 272%, over revenues for 14 15 the three months ended September 30, 1999 (Second Quarter 2000). For the six months ended September 30, 2000, revenues from on-site services were $191,163, an increase of $143,454, or 301%, over revenues for the six months ended September 30, 1999. On-site services revenue growth for the quarter and year-to-date was primarily due to the Company's continued geographic expansion of its technical services capabilities through merger as well as strong demand for on-site services from existing on-site customers. Reported revenues from the Company's phone services business for Second Quarter 2001 were $96,778, an increase of $8,795, or 10%, over revenues for Second Quarter 2000. For the six months ended September 30, 2000, revenues from the phone support business were $185,773, an increase of $18,073, or 11%, over revenues for the six months ended September 30, 1999. If exchange rates had remained constant from the corresponding periods in the prior year, phone services revenues for the three and six month periods ended September 30, 2000 would have increased 13% and 14%, respectively. Phone services revenue growth was driven primarily by strong sales in Europe and Japan. Phone services revenues from North America for Second Quarter 2001 were $51,587, an increase of $3,267, or 7%, over revenues for Second Quarter 2000. For the six months ended September 30, 2000, phone services revenues from North America were $97,958, an increase of $5,139, or 6%, over revenues for the six months ended September 30, 1999. North American phone services revenue growth was driven by strong demand for infrastructure products and switch products, including ServSwitch(TM), from customers of all sizes. International phone services revenues for Second Quarter 2001 were $45,191, an increase of $5,528, or 14%, over revenues for Second Quarter 2000. For the six months ended September 30, 2000, International phone services revenues were $87,815, an increase of $12,934, or 17%, over revenues for the six months ended September 30, 1999. International phone services revenue growth for the Second Quarter 2001 and the six months ended September 30, 2000 was driven by increased demand in nearly all product lines, especially infrastructure products, switches, and LAN products. If exchange rates had remained constant from the corresponding periods in the prior year, International phone services revenues for the three and six month periods ended September 30, 2000 would have increased 21% and 24%, respectively. Reported revenue dollar and percentage changes by geographic region were as follows: Europe revenues increased $8,269, or 34%, in Second Quarter 2001, and $16,136, or 35%, year-to-date; Pacific Rim revenue increased $1,721, or 16%, in Second Quarter 2001, and $2,942, or 15%, year-to-date; and Latin American revenue increased $463, or 9%, in Second Quarter 2001, and $1,471, or 17%, year-to-date. If the exchange rate relative to the U.S. dollar had remained unchanged from the corresponding periods in the prior year, Europe revenues would have increased 50% in Second Quarter 2001, and 48% year-to-date; Pacific Rim revenues would have increased 13% in Second Quarter 2001, and 10% year-to-date; and Latin America revenues would have increased 10% in Second Quarter 2001, and 18% year-to-date. Gross profit in Second Quarter 2001 increased to $84,219, or 40.5% of revenues, from $51,114, or 43.4% of revenues, in Second Quarter 2000. Gross profit for the six month period ended September 30, 2000 increased to $154,679, or 41.0% of revenues, from $96,533, or 44.8% of revenues over the same period in the prior year. The decline in gross profit margin was due primarily to the increase in percentage of revenues from the Company's on-site services which provides lower gross margins. Excluding the impact of revaluing the intercompany receivables, the gross profit margin was 15 16 41.3% for Second Quarter 2001 compared to 43.2% for Second Quarter 2000 and 41.5% for the six months ended September 30, 2000 compared to 44.8% for the six months ended September 30, 1999. Selling, general and administrative ("SG&A") expenses in Second Quarter 2001 were $51,346, or 24.7% of revenues, an increase of $21,281 over SG&A expenses of $30,065, or 25.5% of revenues, in Second Quarter 2000. SG&A expenses for the six month period ended September 30, 2000 were $93,784, or 24.9% of revenues, an increase of $37,226 over SG&A expenses of $56,558, or 26.3% of revenues over the same period in the prior year. SG&A expense as a percentage of revenues decreased from last year primarily due to the increase in percentage of revenue from the Company's on-site services which incurs lower operating expenses relative to revenues. The dollar increase over the prior year related primarily to additional marketing and personnel costs worldwide and additional costs from newly-merged operations which are included in Second Quarter 2001 but not in Second Quarter 2000. Operating income before amortization in Second Quarter 2001 was $32,873, or 15.8% of revenues, compared to $21,049, or 17.9% of revenues, in Second Quarter 2000. Operating income before amortization for the six month period ended September 30, 2000 was $60,895, or 16.2% of revenues, compared to $39,975, or 18.6% of revenues over the same period in the prior year. The decline in margin was due primarily to the increase in percentage of revenues from the Company's on-site services which operate at slightly lower margins. Intangible amortization for the three and six month periods ended September 30, 2000 was $3,170, an increase of $1,804, or 132%, and $5,818, an increase of $3,163, or 119%, respectively. The increase in amortization is due to additional goodwill related to the Company's continued expansion of its technical services by merger. Net interest expense for the three and six month periods ended September 30, 2000 was $3,041 and $5,254, respectively, an increase from the same periods last year of $2,417 and $4,580, respectively, due to an increase in borrowings for the repurchase of the Company's Common Stock and several mergers which were completed with cash. The tax provision in Second Quarter 2001 was $10,346, or an effective tax rate of 39.0%, which is comparable to $7,559, or an effective tax rate of 39.5%, in Second Quarter 2000. The tax provision for the six month period ended September 30, 2000 was $19,379, or an effective tax rate of 39%, which is comparable to $14,506, or an effective tax rate of 39.5%, for the six month period ended September 30, 1999. Net income for Second Quarter 2001 was $16,182 compared to $11,577 in Second Quarter 2000, an increase of 40%. Net income for the six month period ended September 30, 2000 was $30,310 compared to $22,217 for the six month period ended September 30, 1999, an increase of 36%. This growth was primarily due to strong revenue growth and the successful expansion of the Company's on-site services by merger. LIQUIDITY AND CAPITAL RESOURCES The Company's net proceeds from borrowings increased by $18,197 and $41,516 for the three and six month periods ended September 30, 2000, respectively, as a result of borrowings used to finance the repurchase of its Common Stock and to continue expansion of its on-site services by 16 17 merger. As of September 30, 2000, the Company had cash and cash equivalents of $9,027, working capital of $137,580, and total debt of $147,859. On April 4, 2000, Black Box PA simultaneously entered into a $120,000 Revolving Credit Agreement ("Long Term Revolver") and a $60,000 Short Term Credit Agreement ("Short Term Revolver") (together the "Syndicated Debt") with Mellon Bank, N.A. and a group of lenders. The terms of the Syndicated Debt are substantially similar to the terms of the previous Mellon Facility. The Long Term Revolver is scheduled to expire on April 4, 2003 and the Short Term Revolver is scheduled to expire on April 4, 2001. Upon its expiration, the Company has the option to convert the Short Term Revolver into a two-year note with substantially similar terms. The interest on the borrowings is variable based on the Company's option of selecting the banks prime rate plus an applicable margin as defined in the agreement or the Euro-dollar rate plus an applicable margin as defined in the agreement. The Company's total debt at September 30, 2000 was comprised of $110,700 under the Mellon Long Term Revolver, $33,000 under the Mellon Short Term Revolver, and $4,159 of various other loans. The weighted average interest rate on all indebtedness of the Company as of September 30, 2000 was approximately 7.7% compared to 6.1% as of September 30, 1999. In addition, at September 30, 2000, the Company had $996 of letters of credit outstanding and $35,304 of additional funds available under the Syndicated Debt. On March 31, 1999, the Company announced its intention to repurchase up to one million shares of its Common Stock. As of September 1999, the Company had repurchased all one million shares at prevailing market prices for an aggregate purchase price of $41,981. On July 15, 1999, the Company announced its intention to repurchase an additional 500 thousand shares of its Common Stock. As of November 1999, the Company had repurchased all 500 thousand shares under this plan at prevailing market rates for an aggregate purchase price of $25,272. On July 13, 2000, the Company announced its intention to repurchase an additional 500 thousand shares of its Common Stock. As of September 2000, the Company had repurchased 450 thousand shares under this plan at prevailing market prices for an aggregate purchase price of $25,179. On July 21, 2000, the Company announced its intention to repurchase an additional 500 thousand shares of its Common Stock. As of September 2000, none of the shares under this plan have been repurchased. Funding for these stock repurchases came from existing cash flow and borrowings under credit facilities maintained with Mellon Bank, N.A. The Company has operations, customers 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 and Mexico are denominated in U.S. dollars. The gains and losses resulting from the revaluation of the intercompany balances denominated in foreign currencies are recorded to gross profit to the extent the intercompany transaction resulted from an intercompany sale of inventory. The Company has entered and will continue in the future, on a selective basis, to enter into forward exchange contracts to reduce the foreign currency exposure related to certain intercompany transactions. On a monthly basis, the open contracts are revalued to fair market value, and the resulting gains and losses are recorded in cost of sales. These gains and losses offset the revaluation of 17 18 the related foreign currency denominated receivables, which are also included in cost of sales. At September 30, 2000, the open foreign exchange contracts were in Yen, Euro, Sterling pound, Canadian dollars, Swiss francs and Australian dollars. These open contracts, valued at approximately $18,288, will expire over the next six months, with the exception of the contract related to the Company's acquisition of Data Specialties Europe Ltd., which expires on April 30, 2002. The open contracts have contract rates of 102.73 to 103.93 Yen, 0.9023 to 0.9578 Euro, 1.5041 to 1.5318 Sterling pound, 1.4782 to 1.5028 Canadian dollar, 1.6110 to 1.6297 Swiss franc and 0.5875 to 0.5912 Australian dollar, all per U.S. dollar. The effect of these contracts on net income for the three and six month periods ended September 30, 2000 was approximately $1,200 and $1,800, respectively, which is offset by the revaluation of the related foreign currency denominated receivables. The Company believes that its cash flow from operations and existing credit facilities will be sufficient to satisfy its liquidity needs for the foreseeable future. CONVERSION TO THE EURO CURRENCY On January 1, 1999, certain members of the European Union established fixed conversion rates between their existing currencies and the European Union's common currency, the Euro. The Company conducts business in member countries. The transition period for the introduction of the Euro will be between January 1, 1999 and June 30, 2002. The Company is assessing the issues involved with the introduction of the Euro, and it does not expect Euro conversion to have a material impact on its operations or financial results. 18 19 ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company is exposed to market risks in the ordinary course of business that include foreign currency exchange rates. In an effort to mitigate the risk, the Company, on a selective basis, will enter into forward exchange contracts. At September 30, 2000, the Company had open contracts valued at approximately $18,288 with a fair value of approximately $17,351. 19 20 PART II OTHER INFORMATION ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On August 8, 2000, the Company held its annual meeting of stockholders. The five matters voted upon at the annual meeting were: (i) the election of directors; (ii) the amendment to the Second Restated Certificate of Incorporation to increase the number of authorized shares of Common Stock; (iii) the amendment to the 1992 Stock Option Plan to increase the number of shares authorized; (iv) the amendment to the 1992 Stock Option Plan to allow participation by key hourly employees; and (v) the ratification of the appointment of Arthur Andersen LLP as independent public accountants for the fiscal year ending March 31, 2001. Each of the Company's nominees for director was re-elected at the annual meeting by the following vote: SHARES SHARES SHARES BROKER VOTED FOR WITHHELD ABSTAINING NON-VOTES ---------- -------- ---------- --------- William F. Andrews 16,551,380 362,295 0 0 Thomas G. Greig 16,550,926 362,749 0 0 William R. Newlin 16,320,968 592,707 0 0 Brian D. Young 16,323,052 590,623 0 0 Fred C. Young 16,499,365 414,310 0 0 The amendment to the Second Restated Certificate of Incorporation to increase the number of authorized shares of Common Stock was approved by the following vote: SHARES SHARES VOTED SHARES BROKER VOTED FOR AGAINST ABSTAINING NON-VOTES --------- ------------ ---------- --------- 11,637,305 5,212,629 63,741 0 The amendment to the 1992 Stock Option Plan to increase the number of shares authorized under the plan was approved by the following vote: SHARES SHARES VOTED SHARES BROKER VOTED FOR AGAINST ABSTAINING NON-VOTES --------- ------------ ---------- --------- 9,488,099 7,357,650 67,926 0 20 21 The amendment to the 1992 Stock Option Plan to allow participation by key hourly employees was approved by the following vote: SHARES SHARES VOTED SHARES BROKER VOTED FOR AGAINST ABSTAINING NON-VOTES ---------- ------------ ---------- --------- 12,745,423 4,101,822 66,430 0 The appointment of Arthur Andersen LLP as independent public accountants for the fiscal year ending March 31, 2001 was approved by the following vote: SHARES SHARES VOTED SHARES BROKER VOTED FOR AGAINST ABSTAINING NON-VOTES ---------- ------------ ---------- --------- 16,889,681 6,305 17,689 0 21 22 ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits. 3(i) Second Restated Certificate of Incorporation of the Company, as amended 10.1 1992 Stock Option Plan, as amended 21.1 Subsidiaries of the Company 27.1 Financial Data Schedule - September 30, 2000 (b) Reports on Form 8-K. None. 22 23 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BLACK BOX CORPORATION November 14, 2000 By: /s/ Anna M. Baird --------------------- Anna M. Baird, Vice President, Chief Financial Officer, Treasurer, and Principal Accounting Officer 23 24 EXHIBIT INDEX Exhibit No. - ------- 3(i) Second Restated Certificate of Incorporation of the Company, as amended 10.1 1992 Stock Option Plan, as amended 21.1 Subsidiaries of the Company 27.1 Financial Data Schedule - September 30, 2000 EX-3.I 2 j8493801ex3-i.txt CERTIFICATE OF INCORPORATION 1 Exhibit 3(i) SECOND RESTATED CERTIFICATE OF INCORPORATION OF BLACK BOX CORPORATION AS AMENDED (THROUGH AUGUST 8, 2000) FIRST: The name of the Corporation is: BLACK BOX CORPORATION. SECOND: The address of the registered office of the Corporation in the State of Delaware is 1209 Orange Street, City of Wilmington, County of New Castle, State of Delaware. The name of the registered agent of the Corporation in the State of Delaware at such address is The Corporation Trust Company. THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the DGCL, as from time to time amended. FOURTH: (a) The total number of shares of all classes of stock which the Corporation shall have authority to issue is 105,000,000 shares, consisting of (a) 5,000,000 shares of Preferred Stock, par value $1.00 per share, and (b) 100,000,000 shares of Common Stock, having a par value of $.001 per share. (b) Except as otherwise provided by law, the shares of stock of the Corporation, regardless of class, may be issued by the Corporation from time to time in such amounts, for such consideration and for such corporate purposes as the Board of Directors may from time to time determine. (c) Shares of Preferred Stock may be issued from time to time in one or more series of any number of shares as may be determined from time to time by the Board of Directors, provided that the aggregate number of shares issued and not cancelled of any and all such series shall not exceed the total number of shares of Preferred Stock authorized by this Certificate of Incorporation. Each series of Preferred Stock shall be distinctly designated. Except in respect of the particulars fixed for series by the Board of Directors as permitted hereby, all shares shall be alike in every particular, except that shares of any one series issued at different times may differ as to the dates from which dividends thereon shall be cumulative. The voting powers, if any, of each such series and the preferences and relative, participating, optional and other special rights of each such series and the qualifications, limitations and restrictions thereof, if any, may differ from those of any and all other series at any time outstanding; and the Board of Directors is hereby expressly granted authority to fix, in the resolution or resolutions providing for the issue of a particular series of Preferred Stock, the voting powers, if any, of each such series and the designations, preferences and relative, participating, optional and other special rights of each such series and the qualifications, limitations and restrictions thereof to the full 2 extent now or hereafter permitted by this Certificate of Incorporation and the laws of the State of Delaware. (d) Subject to the provisions of applicable law or of the by-laws with respect to the closing of the transfer books or the fixing of a record date for the determination of stockholders entitled to vote, and except as otherwise provided by law or by the resolution or resolutions providing for the issue of any series of Preferred Stock, the holders of outstanding shares of Common Stock shall exclusively possess the voting power for the election of directors and for all other purposes, each holder of record of shares of Common Stock being entitled to one vote for each share of Common Stock standing in his name on the books of the Corporation. FIFTH: In furtherance and not in limitation of the powers conferred by law, subject to any limitations contained elsewhere in this Restated Certificate of Incorporation, the by-laws of the Corporation may be adopted, amended or repealed by a majority of the board of directors of the Corporation, but any by-laws adopted by the board of directors may be amended or repealed by the stockholders entitled to vote thereon. Election of directors need not be by written ballot. SIXTH: (a) A director of the Corporation shall not be personally liable either to the Corporation or to any stockholder for monetary damages for breach of fiduciary duty as a director, except (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, or (ii) for acts or omissions which are not in good faith or which involve intentional misconduct or knowing violation of the law, or (iii) for any matter in respect of which such director shall be liable under Section 174 of Title 8 of the General Corporation Law of the State of Delaware or any amendment thereto or successor provision thereto, or (iv) for any transaction from which the director shall have derived an improper personal benefit. Neither amendment nor repeal of this paragraph (a) nor the adoption of any provision of the Restated Certificate of Incorporation inconsistent with this paragraph (a) shall eliminate or reduce the effect of this paragraph (a) in respect of any matter occurring, or any cause of action, suit or claim that, but for this paragraph (a) of this Article, would accrue or arise, prior to such amendment, repeal or adoption of an inconsistent provision. (b) The Corporation shall indemnify and advance expenses to any person who was or is a party or is threatened to be made a party to, or testifies in, any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative in nature, by reason of the fact that such person is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, employee benefit plan, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding to the full extent permitted by law, and the Corporation may adopt by-laws or enter into agreements with any such person for the purpose of providing for such indemnification. 3 SEVENTH: Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and/or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this Corporation under the provisions of Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this Corporation under the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this Corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of stockholders, of this Corporation, as the case may be, and also on this Corporation. EX-10.1 3 j8493801ex10-1.txt 1992 STOCK OPTION PLAN 1 Exhibit 10.1 BLACK BOX CORPORATION 1992 STOCK OPTION PLAN (AS AMENDED THROUGH AUGUST 8, 2000) I. PURPOSES ------------ BLACK BOX CORPORATION (the "Company") desires to afford certain of its key employees and the key employees of any subsidiary corporation or parent corporation of the Company now existing or hereafter formed or acquired who are responsible for the continued growth of the Company an opportunity to acquire a proprietary interest in the Company, and thus to create in such key employees an increased interest in and a greater concern for the welfare of the Company and its subsidiaries. The Company, by means of this 1992 Stock Option Plan as originally approved on November 11, 1992, and as further amended on May 10,1994, August 9, 1994, August 7, 1995, August 12, 1996, August 13, 1997, February 3, 1998, August 10, 1998, August 10, 1999, and August 8, 2000 (the "Plan"), seeks to retain the services of persons now holding key positions and to secure the services of persons capable of filling such positions. The stock options ("Options") and stock appreciation rights ("Rights") offered pursuant to the Plan are a matter of separate inducement and are not in lieu of any salary or other compensation for the services of any key employee. The Options granted under the Plan are intended to be either incentive stock options ("Incentive Options") within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), or options that do not meet the requirements for Incentive Options ("Non-Qualified Options"), but the Company makes no warranty as to the qualification of any Option as an Incentive Option. II. AMOUNT OF STOCK SUBJECT TO THE PLAN ---------------------------------------- The total number of shares of common stock of the Company which may be purchased or acquired pursuant to the exercise of Options or Rights granted under the Plan shall not exceed, in the aggregate, 5,450,000 shares of the authorized common stock, $.001 par value per share, of the Company (the "Shares"), such number subject to adjustment as provided in Article XII hereof. Shares that are the subject of Rights and related Options shall be counted only once in determining whether the maximum number of Shares that may be purchased or awarded under the Plan has been exceeded. Shares acquired under the Plan may be either authorized but unissued Shares or Shares of issued stock held in the Company's treasury, or both, at the discretion of the Company. If and to the extent that Options or Rights granted under the Plan expire or terminate without having been exercised, the Shares covered by such expired or terminated Options or Rights shall again become available for award under the Plan. Except as provided in Article XIX and subject to Article II, the Company may, from time to time during the period beginning on the date on which the Company consummates an underwritten initial public offering of Shares (the "Effective Date") and ending on November 30, 2002 (the "Termination Date"), grant to certain key employees of the Company, or of any subsidiary corporation or parent corporation of the Company now existing or hereafter formed or acquired, Incentive Options and/or Non-Qualified Options and/or Rights under the terms hereinafter set forth. Provisions of the Plan that pertain to Options or Rights granted to an employee shall apply to Options, Rights or a combination thereof. As used in the Plan, the term "subsidiary corporation" and "parent corporation" shall mean, respectively, a corporation coming within the definition of such terms contained in Sections 424(f) and 424(e) of the Code. 1 2 III. ADMINISTRATION -------------------- The board of directors of the Company (the "Board of Directors") shall designate from among its members an option committee, which may be the Compensation Committee of the Board of Directors (the "Committee"), to administer the Plan. The Committee shall consist of no fewer than two members of the Board of Directors, each of whom shall be a "disinterested person" within the meaning of Rule 16b-3 (or any successor rule or regulation) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). A majority of the members of the Committee shall constitute a quorum, and the act of a majority of the members of the Committee shall be the act of the Committee. Any member of the Committee may be removed at any time either with or without cause by resolution adopted by the Board of Directors, and any vacancy on the Committee at any time may be filled by resolution adopted by the Board of Directors. Subject to the express provisions of the Plan the Committee shall have authority, in its discretion, to determine the employees to whom Options or Rights shall be granted, the time when such Options or Rights shall be granted, the number of Shares which shall be subject to each Option or Right, the purchase price or exercise price of each Option or Right, the period(s) during which such Options or Rights shall become exercisable (whether in whole or in part) and the other terms and provisions thereof (which need not be identical). Subject to the express provisions of the Plan, the Committee also shall have authority to construe the Plan and the Options and Rights granted thereunder, to amend the Plan and the Options and Rights granted thereunder, to prescribe, amend and rescind rules and regulations relating to the Plan, to determine the terms and provisions of the Options (which need not be identical) and Rights (which need not be identical) granted thereunder and to make all other determinations necessary or advisable for administering the Plan. The Committee also shall have the authority to require, in its discretion, as a condition of the granting of any such Option or Right, that the employee agree (i) not to sell or otherwise dispose of Shares acquired pursuant to the exercise of such Option or Right for a period of six (6) months following the date of the acquisition of such Option or Right and (ii) that in the event of termination of employment of such employee, other than as a result of dismissal without cause, such employee will not, for a period to be fixed at the time of the grant of the Option or Right, enter into any other employment or participate directly or indirectly in any other business or enterprise which is competitive with the business of the Company or any subsidiary corporation or parent corporation of the Company, or enter into any employment in which such employee will be called upon to utilize special knowledge obtained through employment with the Company or any subsidiary corporation or parent corporation thereof. In no event will an employee who is subject to the reporting requirements of Section 16(a) of the Exchange Act be entitled to sell or otherwise dispose of any Shares acquired pursuant to exercise of any such Options or Rights for a period of six (6) months from the date of the acquisition of such Options or Rights. The determination of the Committee on matters referred to in this Article III shall be conclusive. The Committee may employ such legal counsel, consultants and agents as it may deem desirable for the administration of the Plan and may rely upon any opinion or computation received from any such legal counsel, consultant or agent. Expenses incurred by the Committee in the engagement of such counsel, consultant or agent shall be paid by the Company. No member or former member of the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any award of Options or Rights granted hereunder. IV. ELIGIBILITY ---------------- Options and Rights may be granted only to key employees of the Company or of any subsidiary corporation or parent corporation of the Company, except as hereinafter provided, and shall not be granted to any officer or director who is not also a key employee or to any member of the Committee. Any person who shall have retired from active employment by the Company or a subsidiary corporation or parent corporation thereof, although such person shall have entered into a consulting contract with the Company or a subsidiary corporation or parent corporation thereof, shall not be eligible to receive an Option or a Right. The Plan does not create a right in any employee to participate in the Plan, nor does it create a right in any employee to have any Options or Rights granted to him or her. 2 3 V. OPTION PRICE AND PAYMENT ---------------------------- The price for each Share purchasable under any Option granted hereunder shall be such amount as the Committee shall, in its best judgment, determine to be not less than one hundred percent (100%) of the fair market value per Share at the date the Option is granted; provided, however, that in the case of an Incentive Option granted to a person who, at the time such Option is granted, owns shares of the Company or any subsidiary corporation or parent corporation of the Company which possesses more than ten percent (10%) of the total combined voting power of all classes of shares of the Company or of any subsidiary corporation or parent corporation of the Company, the purchase price for each Share shall be such amount as the Committee in its best judgment shall determine to be not less than one hundred ten percent (110%) of the fair market value per Share at the date the Option is granted. In determining stock ownership of an employee for any purposes under the Plan, the rules of Section 424(d) of the Code shall be applied, and the Committee may rely on representations of fact made to it by the employee and believed by it to be true. If the Shares are listed on a national securities exchange in the United States (which, for purposes of this Article V, shall be deemed to include any last sale reported over-the-counter market), on any date on which the fair market value per Share is to be determined, the fair market value per Share shall be deemed to be the average of the high and low quotations at which such Shares are sold on such national securities exchange on the date such Option is granted. If the Shares are listed on a national securities exchange in the United States on such date, but the Shares are not traded on such date, or such national securities exchange is not open for business on such date, the fair market value per Share shall be determined as of the closest preceding date on which such exchange shall have been open for business and the Shares shall have been traded. If the Shares are listed on more than one national securities exchange in the United States on the date on which the fair market value per Share is to be determined, the Committee shall determine which national securities exchange shall be used for the purpose of determining the fair market value per Share. If a public market exists for the Shares on any date on which the fair market value per Share is to be determined but the Shares are not listed on a national securities exchange in the United States, the fair market value per Share shall be deemed to be the mean between the closing bid and asked quotations in the over-the-counter market for the Shares on such date. If there are no bid and asked quotations for the Shares on such date, the fair market value per Share shall be deemed to be the mean between the closing bid and asked quotations in the over-the-counter market for the Shares on the closest date preceding such date for which such quotations are available. If no public market exists for the Shares on any date on which the fair market value per Share is to be determined, the Committee shall, in its sole discretion and best judgment, determine the fair market value of a Share. For purposes of this Plan, the determination by the Committee of the fair market value of a Share shall be conclusive. Upon the exercise of an Option granted hereunder, the Company shall cause the purchased Shares to be issued only when it shall have received the full purchase price for the Shares in cash or by certified check; provided, however, that in lieu of cash, the holder of an Option may, if and to the extent the terms of such Option so provide and to the extent permitted by applicable law, exercise an Option (i) in whole or in part, by delivering to the Company shares of common stock of the Company (in proper form for transfer and accompanied by all requisite stock transfer tax stamps or cash in lieu thereof) owned by such holder having a fair market value equal to the exercise price applicable to that portion of the Option being exercised by the delivery of such Shares or (ii) in part, by delivering to the Company an executed promissory note on such terms and conditions as the Committee shall determine, at the time of grant, in its sole discretion; provided, however, that the principal amount of such note shall not exceed eighty percent (80%) (or such lesser percentage as would be permitted by applicable margin regulations) of the aggregate purchase price of the Shares then being purchased pursuant to the exercise of such Option. The fair market value of the stock so delivered shall be determined as of the date immediately preceding the date on which the Option is exercised, or as may be required in order to comply with or to conform to the requirements of any applicable laws or regulations. 3 4 VI. USE OF PROCEEDS -------------------- The cash proceeds of the sale of Shares pursuant to the Plan are to be added to the general funds of the Company and used for its general corporate purposes as the Board of Directors shall determine. VII. TERM OF OPTIONS AND LIMITATIONS ON THE RIGHT OF EXERCISE -------------------------------------------------------------- Any Option shall be exercisable at such times, in such amounts and during such period or periods as the Committee shall determine at the date of the grant of such Option; provided, however, that an Incentive Option shall not be exercisable after the expiration of ten (10) years from the date such Option is granted; and provided further that, in the case of an Incentive Option granted to a person who, at the time such Option is granted, owns stock of the Company or any subsidiary corporation or parent corporation of the Company possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any subsidiary corporation or parent corporation of the Company, such Option shall not be exercisable after the expiration of five (5) years from the date such Option is granted. Except to the extent otherwise provided under the Code, to the extent that the aggregate fair market value of stock for which Incentive Options are exercisable for the first time by an employee during any calendar year (under all stock option plans of the Company and of any parent corporation or subsidiary corporation of the Company) exceeds one hundred thousand dollars ($100,000), such Options shall be treated as Non-Qualified Options. For purposes of this limitation, (i) the fair market value of stock is determined as of the time the Option is granted, and (ii) the limitation will be applied by taking into account Options in the order in which they were granted. Subject to the provisions of Article XVIII, the Committee shall have the right to accelerate, in whole or in part, from time to time, conditionally or unconditionally, rights to exercise any Option granted hereunder. To the extent that an Option is not exercised within the period of exercisability specified therein, it shall expire as to the then unexercised part. In no event shall an Option granted hereunder be exercised for a fraction of a Share. VIII. EXERCISE OF OPTIONS -------------------------- Options granted under the Plan shall be exercised by the optionee as to all or part of the Shares covered thereby by the giving of written notice of the exercise thereof to the Corporate Secretary of the Company at the principal business office of the Company, specifying the number of Shares to be purchased and specifying a business day not more than fifteen (15) days from the date such notice is given for the payment of the purchase price against delivery of the Shares being purchased. Subject to the terms of Articles XIV, XVI, and XVII, the Company shall cause certificates for the Shares so purchased to be delivered to the optionee at the principal business office of the Company, against payment of the full purchase price, on the date specified in the notice of exercise. IX. STOCK APPRECIATION RIGHTS ------------------------------ In the discretion of the Committee, a Right may be granted (i) alone, (ii) simultaneously with the grant of an Option (either Incentive or Non-Qualified) and in conjunction therewith or in the alternative thereto or (iii) subsequent to the grant of a Non-Qualified Option and in conjunction therewith or in the alternative thereto. The exercise price of a Right granted alone shall be determined by the Committee but shall not be less than one hundred percent (100%) of the fair market value of one Share on the date of grant of such Right. A Right granted simultaneously with or subsequent to the grant of an Option and in conjunction therewith or in the alternative thereto shall have the same exercise price as the related Option, shall be transferable only upon the same terms and conditions as the related Option, and shall be exercisable only to the same extent as the related Option; provided, however, that a Right, by its terms, shall be exercisable only when the fair market value of the Shares subject to the Right and related Option exceeds the exercise price thereof. 4 5 Upon exercise of a Right granted simultaneously with or subsequent to an Option and in the alternative thereto, the number of Shares for which the related Option shall be exercisable shall be reduced by the number of Shares for which the Right shall have been exercised. The number of Shares for which a Right shall be exercisable shall be reduced upon any exercise of a related Option by the number of Shares for which such Option shall have been exercised. Any Right shall be exercisable upon such additional terms and conditions as may from time to time be prescribed by the Committee. A Right shall entitle the holder upon exercise thereof to receive from the Company, upon a written request filed with the Secretary of the Company at its principal offices (the "Request"), a number of Shares (with or without restrictions as to substantial risk of forfeiture and transferability, as determined by the Committee in its sole discretion), an amount of cash, or any combination of Shares and cash, as specified in the Request (but subject to the approval of the Committee in its sole discretion, at any time up to and including the time of payment, as to the making of any cash payment), having an aggregate fair market value equal to the product of (i) the excess of the fair market value, on the day of such Request, of one Share over the exercise price per share specified in such Right or its related Option, multiplied by (ii) the number of Shares for which such Right shall be exercised. Any election by a holder of a Right to receive cash in full or partial settlement of such Right, and any exercise of such Right for cash, may be made only by a Request filed with the Corporate Secretary of the Company during the period beginning on the third business day following the date of release for publication by the Company of quarterly or annual summary statements of sales and earnings and ending on the twelfth business day following such date. Within thirty (30) days of the receipt by the Company of a Request to receive cash in full or partial settlement of a Right or to exercise such Right for cash, the Committee shall, in its sole discretion, either consent to or disapprove, in whole or in part, such Request. A Request to receive cash in full or partial settlement of a Right or to exercise a Right for cash may provide that, in the event the Committee shall disapprove such Request, such Request shall be deemed to be an exercise of such Right for Shares. If the Committee disapproves in whole or in part any election by a holder to receive cash in full or partial settlement of a Right or to exercise such Right for cash, such disapproval shall not affect such holder's right to exercise such Right at a later date, to the extent that such Right shall be otherwise exercisable, or to elect the form of payment at a later date, provided that an election to receive cash upon such later exercise shall be subject to the approval of the Committee. Additionally, such disapproval shall not affect such holder's right to exercise any related Option or Options granted to such holder under the Plan. A holder of a Right shall not be entitled to request or receive cash in full or partial payment of such Right unless such Right shall have been held for six (6) months from the date of acquisition to the date of cash settlement thereof; provided, however, that such prohibition shall not apply if the holder of such Right is not subject to the reporting requirements of Section 16(a) of the Exchange Act. In no event will a holder of a Right who is subject to the reporting requirements of Section 16(a) of the Exchange Act be entitled to make such a request or receive cash in full or partial payment of such Right until the Company shall have satisfied the informational requirements of Rule 16b-3(e)(1) promulgated under the Exchange Act for the specified one year period. A Right shall be deemed exercised on the last day of its term, if not otherwise exercised by the holder thereof, provided that the fair market value of the Shares subject to the Right exceeds the exercise price thereof on such date. For all purposes of this Article IX, the fair market value of Shares shall be determined in accordance with the principles set forth in the Article V. X. NON-TRANSFERABILITY OF OPTIONS AND STOCK APPRECIATION RIGHTS ---------------------------------------------------------------- Neither an Option nor a Right granted hereunder shall be transferable, whether by operation of law or otherwise, other than by will or the laws of descent and distribution, and any Option or Right granted hereunder shall be exercisable during the lifetime of the holder only by such holder. Except to the extent provided above, 5 6 Options and Rights may not be assigned, transferred, pledged, hypothecated or disposed of in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process. XI. TERMINATION OF EMPLOYMENT ------------------------------ Upon termination of employment of any employee with the Company and all subsidiary corporations and parent corporations of the Company, an Option or Right previously granted to the employee, unless otherwise specified by the Committee in the Option or Right, shall, to the extent not theretofore exercised, terminate and become null and void, provided that: (a) if the employee shall die while in the employ of such corporation or during either the three (3) month or one (1) year period, whichever is applicable, specified in clause (b) below and at a time when such employee was entitled to exercise an Option or Right as herein provided, the legal representative of such employee, or such person who acquired such Option or Right by bequest or inheritance or by reason of the death of the employee, may, not later than one (1) year from the date of death, exercise such Option or Right, to the extent not theretofore exercised, in respect of any or all of such number of Shares as specified by the Committee in such Option or Right; and (b) if the employment of an employee to whom such Option or Right shall have been granted shall terminate by reason of the employee's retirement (at such age or upon such conditions as shall be specified by the Board of Directors), disability (as described in Section 22(e)(3) of the Code) or dismissal by the employer other than for cause (as defined below), and while such employee is entitled to exercise such Option or Right as herein provided, such employee shall have the right to exercise such Option or Right so granted, to the extent not theretofore exercised, in respect of any or all of such number of Shares as specified by the Committee in such Option or Right, at any time up to and including (i) three (3) months after the date of such termination of employment in the case of termination by reason of retirement or dismissal other than for cause and (ii) one (1) year after the date of termination of employment in the case of termination by reason of disability. If an employee voluntarily terminates his or her employment, or is discharged for cause, any Option or Right granted hereunder shall, unless otherwise specified by the Committee in the Option or Right, forthwith terminate with respect to any unexercised portion thereof. If an Option or Right granted hereunder shall be exercised by the legal representative of a deceased or disabled employee or former employee, or by a person who acquired an Option or Right granted hereunder by bequest or inheritance or by reason of death of any employee or former employee, written notice of such exercise shall be accompanied by a certified copy of letters testamentary or equivalent proof of the right of such legal representative or other person to exercise such Option or Right. For the purposes of the Plan, the term "for cause" shall mean (i) with respect to an employee who is party to a written agreement with, or, alternatively, participates in a compensation or benefit plan of the Company or a subsidiary corporation or parent corporation of the Company, which agreement or plan contains a definition of "for cause" or "cause" (or words of like import) for purposes of termination of employment thereunder by the Company or such subsidiary corporation or parent corporation of the Company, "for cause" or "cause" as defined in the most recent of such agreements or plans, or (ii) in all other cases, (a) the willful commission by an employee of a criminal or other act that causes substantial economic damage to the Company or a subsidiary corporation or parent corporation of the Company or substantial injury to the business reputation of the Company or a subsidiary corporation or parent corporation of the Company; (b) the commission by an employee of an act of fraud in the performance of such employee's duties on behalf of the Company or a subsidiary corporation or parent corporation of the Company; or (c) the continuing willful failure of an employee to perform the duties of such employee to the Company or a subsidiary corporation or parent corporation of the Company (other than such failure resulting from the employee's incapacity due to physical or mental illness) after written notice thereof (specifying the particulars thereof in reasonable detail) and a reasonable opportunity to be heard and cure such failure are given to the employee by the Board of Directors or the Committee. For purposes of the Plan, no act, or failure to act, on the employee's part shall be considered "willful" unless done or omitted to be done by the employee not in good faith and without reasonable belief that the employee's action or omission was in the best interest of the Company or a subsidiary corporation or parent corporation of the Company. 6 7 For the purposes of the Plan, an employment relationship shall be deemed to exist between an individual and a corporation if, at the time of the determination, the individual was an "employee" of such corporation for purposes of Section 422(a) of the Code. If an individual is on military, sick leave or other bona fide leave of absence, such individual shall be considered an "employee" for purposes of the exercise of an Option or Right and shall be entitled to exercise such Option or Right during such leave if the period of such leave does not exceed 90 days, or, if longer, so long as the individual's right to reemployment with the corporation granting the option (or a related corporation) is guaranteed either by statute or by contract. If the period of leave exceeds ninety (90) days, the employment relationship shall be deemed to have terminated on the ninety-first (91st) day of such leave, unless the individual's right to reemployment is guaranteed by statute or contract. A termination of employment shall not be deemed to occur by reason of (i) the transfer of an employee from employment by the Company to employment by a subsidiary corporation or a parent corporation of the Company or (ii) the transfer of an employee from employment by a subsidiary corporation or a parent corporation of the Company to employment by the Company or by another subsidiary corporation or parent corporation of the Company. Furthermore, solely for purposes of determining the rights and obligations under any outstanding Options or Rights theretofore granted, in the event that the Company ceases to own, directly or indirectly, stock possessing 50% or more of the total combined voting power of all classes of stock of a subsidiary company by virtue of a recapitalization, stock dividend, stock split, split-up, spin-off, combination of shares or other like change in capital structure of the Company, the Committee may determine that employment by such former subsidiary (or any parent or subsidiary company of such subsidiary) shall continue to be deemed to be employment by the Company for purposes of the Plan. In the event of the complete liquidation or dissolution of a subsidiary corporation, or in the event that the Company ceases to own, directly or indirectly, stock possessing 50% or more of the total combined voting power of all classes of stock of such corporation, any unexercised Options or Rights theretofore granted to any person employed by such subsidiary corporation will be deemed canceled unless such person is employed by the Company or by any parent corporation or another subsidiary corporation after the occurrence of such event. In the event an Option or Right is to be canceled pursuant to the provisions of the previous sentence, notice of such cancellation will be given to each employee holding unexercised Options or Rights and such holder will have the right to exercise such Options or Rights in full (without regard to any limitation set forth or imposed pursuant to Article VII) during the 30 day period following notice of such cancellation. Notwithstanding anything to the contrary contained in this Article XI, in no event, however, shall any person be entitled to exercise any Option or Right after the expiration of the period of exercisability of such Option or Right as specified therein. XII. ADJUSTMENT OF SHARES; EFFECT OF CERTAIN TRANSACTIONS ---------------------------------------------------------- In the event of any change in the outstanding Shares through merger, consolidation, reorganization, recapitalization, stock dividend, stock split, split-up, split-off, spin-off, combination of shares, exchange of shares, issuance of rights to subscribe for Shares, or other like change in capital structure of the Company, the Committee shall make such adjustment to each outstanding Option and Right that it, in its sole discretion, deems appropriate. The term "Shares" after any such change shall refer to the securities, cash and/or property then receivable upon exercise of an Option or Right. In addition, in the event of any such change, the Committee shall make any further adjustments as may be appropriate to the maximum number of Shares which may be acquired under the Plan pursuant to the exercise of Options and Rights, the maximum number of Shares which may be so acquired by one employee and the number of Shares and prices per Share subject to outstanding Options and Rights as shall be equitable to prevent dilution or enlargement of rights under such Options or Rights, and the determination of the Committee as to these matters shall be conclusive. Notwithstanding the foregoing, (i) each such adjustment with respect to an Incentive Option and any related Right shall comply with the rules of Section 424(a) of the Code and (ii) in no event shall any adjustment be made which would render any Incentive Option granted hereunder to be other than an "incentive stock option" for purposes of Section 422 of the Code. In the event of a "change in control" of the Company, all then outstanding Options and Rights shall immediately become exercisable. For purposes of the Plan, a "change in control" of the Company occurs if: (a) any "Person" (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act), other than Odyssey 7 8 Partners, L.P. and its affiliates (which, for purposes of this Article XII only, is deemed to include E.R. Yost) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly of securities of the Company representing (i) 50% or more of the combined voting power of the Company's then-outstanding securities; or (ii) 25% or more but less than 50% of the combined voting power of the Company's then-outstanding securities if such transaction(s) giving rise to such beneficial ownership are not approved by the Company's Board of Directors; or (b) at any time a majority of the members of the Board of Directors has been elected or designated by any Person, other than Odyssey Partners, L.P. and its affiliates (which, for purposes of this Article XII only, is deemed to include E.R. Yost); or (c) the Board of Directors shall approve a sale of all or substantially all of the assets of the Company or any merger, consolidation, issuance of securities or purchase of assets, in all cases other than to or with Odyssey Partners, L.P. or its affiliates (which, for purposes of this Article XII only, is deemed to include E.R. Yost), the result of which would be the occurrence of any event described in clause (a) or (b) above. The Committee, in its discretion, may determine that, upon the occurrence of a transaction described in the preceding paragraph, each Option or Right outstanding hereunder shall terminate within a specified number of days after notice to the holder, and such holder shall receive, with respect to each Share subject to such Option or Right, cash in an amount equal to the excess of the fair market value of such Shares immediately prior to the occurrence of such transaction over the exercise price per share of such Option or Right. The provisions contained in the preceding sentence shall be inapplicable to an Option or Right granted within six (6) months before the occurrence of a transaction described above if the holder of such Option or Right is subject to the reporting requirements of Section 16(a) of the Exchange Act. XIII. RIGHT TO TERMINATE EMPLOYMENT ------------------------------------ The Plan shall not impose any obligation on the Company or on any subsidiary corporation or parent corporation thereof to continue the employment of any holder of Options or Rights and it shall not impose any obligation on the part of any holder of Options or Rights to remain in the employ of the Company or of any subsidiary corporation or parent corporation thereof. XIV. PURCHASE FOR INVESTMENT ----------------------------- Except for hereinafter provided, the Committee may require an employee, as a condition upon exercise of any Option or Right granted hereunder, to execute and deliver to the Company (a) stock powers with respect to Shares underlying a particular Option or Right and required to be held by a custodian, and (b) a written statement, in form satisfactory to the Committee in which the employee represents and warrants that Shares are being acquired for such person's own account for investment only and not with a view to the resale or distribution thereof. The employee shall, at the request of the Committee, be required to represent and warrant in writing that any subsequent resale or distribution of Shares by the Employee shall be made only pursuant to either (i) a Registration Statement on an appropriate form under the Securities Act of 1933, as amended (the "Securities Act"), which Registration Statement has become effective and is current with regard to the Shares being sold, or (ii) a specific exemption from the registration requirements of the Securities Act, but in claiming such exemption the employee shall, prior to any offer of sale or sale of such Shares, obtain a prior favorable written opinion of counsel, in form and substance satisfactory to counsel for the Company, as to the application of such exemption thereto. The foregoing restriction shall not apply to (i) issuances by the Company so long as the Shares being issued are registered under the Securities Act and a prospectus in respect thereof is current or (ii) re-offerings of Shares by affiliates of the Company (as defined in Rule 405 or any successor rule or regulation promulgated under the Securities Act) if the Shares being re-offered are registered under the Securities Act and a prospectus in respect thereof is current. XV. ISSUE OF CERTIFICATES, LEGENDS, PAYMENT OF EXPENSES -------------------------------------------------------- Upon any exercise of an Option or Right which may be granted hereunder and, in the case of an Option, payment of the purchase price, a certificate or certificates for the Shares shall be issued by the Company in the name of the person exercising the Option or Right and shall be delivered to or upon the order of such person. The Company may endorse such legend or legends upon the certificates for Shares issued pursuant to the Plan and may issue such "stop transfer" instructions to its transfer agent in respect of such Shares as, in its discretion, it determines to be necessary or appropriate to (i) prevent a violation of, or to perfect an exemption from, the registration requirements of the Securities Act, (ii) implement the provisions of the Plan and any 8 9 agreement between the Company and the optionee or grantee with respect to such Shares, or (iii) permit the Company to determine the occurrence of a disqualifying disposition, as described in Section 421(b) of the Code, of Shares transferred upon exercise of an Incentive Option granted under the Plan. The Company shall pay all issue or transfer taxes with respect to the issuance of transfer of Shares, as well as all fees and expenses necessarily incurred by the Company in connection with such issuance or transfer, except fees and expenses which may be necessitated by the filing or amending of a Registration Statement under the Securities Act, which fees and expenses shall be borne by the recipient of the Shares unless such Registration Statement has been filed by the Company for its own corporate purposes (and the Company so states) in which event the recipient of the Shares shall bear only fees and expenses as are attributable solely to the inclusion of the Shares he or she received in the Registration Statement. All Shares issued as provided herein shall be fully paid and non-assessable to the extent permitted by law. XVI. WITHHOLDING TAXES ----------------------- The Company may require an employee exercising a Right or Non-Qualified Option granted hereunder, or disposing of Shares acquired pursuant to the exercise of an Incentive Option in a disqualifying disposition (within the meaning of Section 421(b) of the Code), to reimburse the corporation that employs such employee for any taxes required by any government to be withheld or otherwise deducted and paid by such corporation in respect of the issuance or disposition of such Shares. In lieu thereof, the corporation that employs such employee shall have the right to withhold the amount of such taxes from any other sums due or to become due from such corporation to the employee upon such terms and conditions as the Committee shall prescribe. The corporation that employs such employee may, in its discretion, hold the stock certificate to which such employee is entitled upon the exercise of an Option as security for the payment of such withholding tax liability, until cash sufficient to pay that liability has been accumulated. In addition, at any time that the Company becomes subject to a withholding obligation under applicable law with respect to the exercise of a Right or Non-Qualified Option (the "Tax Date"), except as set forth below, a holder of a Right or Non-Qualified Option may elect to satisfy, in whole or in part, the holder's related personal tax liabilities (an "Election") by (i) directing the Company to withhold from Shares issuable in the related exercise either a specified number of Shares or Shares having a specified value (in each case not in excess of the related personal tax liabilities), (ii) tendering Shares previously issued pursuant to the exercise of an Option or Right or other Shares of the Company's common stock owned by the holder or (iii) combining any or all of the foregoing options in any fashion. An Election shall be irrevocable. The withheld Shares and other Shares tendered in payment shall be valued at their fair market value (determined in accordance with the principles set forth in Article V of the Plan) on the Tax Date. The Committee may disapprove of any Election, suspend or terminate the right to make Elections or provide that the right to make Elections shall not apply to particular Shares or exercises. The Committee may prescribe additional rules, in its discretion, to permit a holder of an Option or Right who is subject to the reporting requirements of Section 16(a) of the Exchange Act to effect such tax withholding in compliance with the Rules promulgated under Section 16 of the Exchange Act and the positions of the staff of the Securities and Exchange Commission expressed in no-action or interpretative letters exempting such tax withholding transactions from liability under Section 16(b) of the Exchange Act. The Committee may also impose any additional conditions or restrictions on the right to make an Election as it shall deem appropriate. XVII. LISTING OF SHARES AND RELATED MATTERS -------------------------------------------- The Committee may delay any award, issuance or delivery of Shares if it determines that listing, registration or qualification of Shares or the consent or approval of any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the sale or purchase of Shares under the Plan, until such listing, registration, qualification, consent or approval shall have been effected or obtained, or otherwise provided for, free of any conditions not acceptable to the Committee. XVIII. AMENDMENT OF THE PLAN ----------------------------- The Board of Directors or the Committee, as the case may be, may, from time to time, amend the Plan, provided that no amendment shall be made, without the approval of the stockholders of the Company, that will (i) increase the total number of Shares reserved for Options under the Plan (other than an increase resulting 9 10 from an adjustment provided for in Article XII), (ii) reduce the exercise price of any Incentive Option granted hereunder below the price required by Article V, (iii) modify the provisions of the Plan relating to eligibility, or (iv) materially increase the benefits accruing to participants under the Plan. The Board of Directors or the Committee, as the case may be, shall be authorized to amend the Plan and the Options granted thereunder to permit the Incentive Options granted thereunder to qualify as incentive stock options within the meaning of Section 422 of the Code. The rights and obligations under any Option or Right granted before amendment of the Plan or any unexercised portion of such Option or Right shall not be adversely affected by amendment of the Plan, Option or Right without the consent of the holder of such Option or Right. XIX. TERMINATION OR SUSPENSION OF THE PLAN ------------------------------------------- The Board of Directors may at any time suspend or terminate the Plan. The Plan, unless sooner terminated by action of the Board of Directors, shall terminate at the close of business on the Termination Date. Options and Rights may not be granted while the Plan is suspended or after it is terminated. Rights and obligations under any Option or Right granted while the Plan is in effect shall not be altered or impaired by suspension or termination of the Plan, except upon the consent of the person to whom the Option or Right was granted. The power of the Committee to construe and administer any Options or Rights granted prior to the termination or suspension of the Plan under Article III nevertheless shall continue after such termination or during such suspension. XX. GOVERNING LAW ------------------ The Plan, such Options and Rights as may be granted thereunder and all related matters shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware from time to time obtaining. XXI. PARTIAL INVALIDITY ------------------------ The invalidity or illegibility of any provision hereof shall not be deemed to affect the validity of any other provision. XXII. EFFECTIVE DATE --------------------- This Plan became effective at 5:30 P.M., New York City Time, on the Effective Date. 10 EX-21.1 4 j8493801ex21-1.txt SUBSIDIARIES OF THE COMPANY 1 Exhibit 21.1 SUBSIDIARIES OF THE COMPANY
STATE OF NAME DBA INCORPORATION ---- --- ------------- Black Box Corporation Bbox Holding Company Delaware ATIMCO Network Services, Inc. Black Box Network Services - Western Pennsylvania Pennsylvania American Telephone Wiring Company Black Box Network Services - West Virginia West Virginia Midwest Communications Technologies, Inc. Black Box Network Services Ohio Associated Network Solutions, Inc. Black Box Network Services - Central Florida Florida Advanced Communications Corporation Black Box Network Services - South Carolina South Carolina Ohmega Installations Limited Cable Consultants, Incorporated Black Box Network Services - Atlanta Georgia Todd Communications, Inc. Black Box Network Services - North Carolina North Carolina Comm Line, Inc. Black Box Network Services Ohio Business Communication Concepts, Inc. Virginia Koncepts Communications of L.I., Corp. Black Box Network Services - Tri-State New York Communication Contractors, Inc. Black Box Network Services - Chicago Illinois DataCom-Link, Inc. Black Box Network Services - Indiana Indiana U.S. Premise Networking Services, Inc. Black Box Network Services - Minnesota Minnesota Datech Holdings Limited Black Box Network Services, Inc. - Government Solutions Tennessee Parrish Communication Cabling, Inc. Black Box Network Services - Seattle Washington R&D Services, Inc. Black Box Network Services Massachusetts Delaney Telecom, Inc. Black Box Network Services - Philadelphia Pennsylvania Delaney Electrical Services, Inc. Black Box Network Services - Philadelphia Pennsylvania K&A Communications, Inc. Missouri Jet Line Communications, Inc. Black Box Network Services - Dallas Texas A.T.S., Inc. Black Box Network Services - Huntington West Virginia Advanced Network Technologies, Inc. Black Box Network Services - California California Teldata Corporation Black Box Network Services - Tennessee Tennessee ST Communications & Cabling, Inc. Black Box Network Services - Kansas City Missouri Allcom Electric, Inc. New York Black Box Network Services Baltimore, Inc. Delaware Black Box Network Services Greater Pittsburgh, Inc. Delaware Datel Communications, Inc. Black Box Network Services - Arizona Arizona Data Specialties Europe Ltd. Midwest Electronics and Communications, Inc. Black Box Network Services - Denver Colorado Duracom, Inc. Washington Sterling Technology Systems, Inc. Minnesota Clear Communications, Inc. Washington
2 Person-to-Person Communications, Inc. Virginia Smiles Communication Systems, Inc. Tennessee Da/Com Limited Massachusetts Black Box Corporation of Pennsylvania Delaware Black Box Catalogue, Ltd. Black Box Canada Corporation Black Box Foreign Sales Corporation Black Box France, S.A. Black Box Datacom, B.V. Black Box Communication SANV Indacom N.V. Blue Box, B.V. Ascor bvba BB Technologies, Inc. Delaware Datacom Black Box Services AG Black Box Deutschland GmbH Black Box Italia, SpA Black Box Japan Kabushiki Kaisha Black Box Catalog Australia Pty. Ltd. Black Box Catalog New Zealand Limited Black Box do Brazil Industria e Comercio Ltda. Black Box de Mexico, S.A. de C.V. Alpeco Puerto Rico, Inc. South Hills Datacomm Chile, S.A. Black Box Comunicaciones, SA Schoeller Connectivity Gmbh
EX-27.1 5 j8493801ex27-1.txt FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BLACK BOX CORPORATION'S FORM 10Q FOR THE FISCAL QUARTER END SEPTEMBER 30, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS MAR-31-2001 APR-01-2000 SEP-30-2000 9,027 0 148,913 7,644 48,071 240,807 71,481 28,816 578,702 103,227 146,996 0 0 21 317,904 578,702 376,936 376,936 222,257 222,257 134 1,224 5,254 49,689 19,379 30,310 0 0 0 30,310 1.62 1.54
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