Brightpoint Reports 2002 Second Quarter Financial Results.Business Editors INDIANAPOLIS--(BUSINESS WIRE)--Aug. 1, 2002 Brightpoint Brightpoint, Inc. (NASDAQ: CELL) is a leading global communications technology firm that specializes in the distribution of wireless devices and in providing customized logistics services to the wireless industry. , Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :CELL) -- Revenue in the second quarter of 2002 of $339 million -- Loss from continuing operations in the second quarter of 2002 of $8.9 million, or $1.11 per diluted share -- Net loss in the second quarter of 2002 of $5.2 million, or $0.65 per diluted share -- Net cash provided by operating activities of approximately $59 million for the second quarter of 2002 Brightpoint, Inc. (NASDAQ: CELL) reported its financial results for the quarter ended June June: see month. 30, 2002. All per share amounts reported reflect the Company's 1:7 reverse stock split which was effective on June 27, 2002. In the second quarter of 2002, the Company experienced a loss from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the of $8.9 million, or $1.11 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, on revenue of $339 million compared to a loss from continuing operations of $5.3 million, or $0.66 per diluted share, on revenue of $355 million in the second quarter of 2001 and a loss from continuing operations of $6.0 million, or $0.76 per diluted share, on revenue of $338 million in the first quarter of 2002. The Company's net loss for the second quarter of 2002 was $5.2 million, or $0.65 per diluted share, compared to a net loss of $6.9 million or $0.86 per diluted share for the second quarter of 2001 and a net loss of $48.0 million, or $6.01 per diluted share, for the first quarter of 2002. The Company's net loss for the second quarter of 2002 includes an extraordinary gain on debt extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. of $7.5 million or $0.94 per diluted share. The net loss for the first quarter of 2002 includes a cumulative effect adjustment for a change in accounting principle of $40.7 million or $5.10 per diluted share due to the adoption of Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. " (SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System No. 142). The net loss for all periods includes losses from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. . Revenue. Revenue in the quarter ended June 30, 2002, decreased 4% compared to the second quarter of 2001 and was relatively unchanged from the first quarter of 2002. Revenue in the Americas A·mer·i·cas , the See America. division during the second quarter of 2002 declined compared to both the second quarter of 2001 and the first quarter of 2002 as the Company experienced lower demand for its products and services due primarily to lower demand in the dealer/agent and retail channels, as well as, the exit from the wireless business by a predominantly pre·dom·i·nant adj. 1. Having greatest ascendancy, importance, influence, authority, or force. See Synonyms at dominant. 2. fixed line network operator. The revenue declines in the Americas and Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). divisions, in the second
quarter of 2002 as compared to the second quarter of 2001, were
partially offset by an increase in revenue in the Company's
Asia-Pacific The term Asia-Pacific generally applies to littoral East Asia, Southeast Asia and Australasia near the Pacific Ocean, plus the states in the ocean itself (Oceania). division. The increase in revenues during the second
quarter of 2002 for the Europe division when compared to the first
quarter of 2002 was primarily the result of increased revenue in local
currency in Sweden Sweden, Swed. Sverige, officially Kingdom of Sweden, constitutional monarchy (2005 est. pop. 9,002,000), 173,648 sq mi (449,750 sq km), N Europe, occupying the eastern part of the Scandinavian peninsula. and France and by the effects of the strengthening of
European Europeanemanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. currencies against the U.S. Dollar.
Revenue By Division
(U.S. Dollars, in thousands)
Quarter Ended
----------------------------------------------
Change Change
from from
Q2 Q1
Percent Percent Percent 2001 2002
June 30, of June 30, of March 31, of to Q2 to Q2
2002 Total 2001 Total 2002 Total 2002 2002
-----------------------------------------------------------
The
Americas $133,865 39% $187,742 53% $146,593 44% (29%) (9%)
Asia-
Pacific 145,599 43% 104,347 29% 139,626 41% 40% 4%
Europe 59,975 18% 63,043 18% 51,773 15% (5%) 16%
-----------------------------------------------------------
Total $339,439 100% $355,132 100% $337,992 100% (4%) (a)
===========================================================
(a) - Less than one percent
Revenue By Service Line
(U.S. Dollars, in thousands)
Quarter Ended
------------------------------------------------
Change Change
from from
Q2 Q1
Percent Percent Percent 2001 2002
June 30, of June 30, of March 31, of to Q2 to Q2
2002 Total 2001 Total 2002 Total 2002 2002
------------------------------------------------------------
Sales of
wireless
handsets $275,427 81% $281,671 79% $268,526 80% (2%) 3%
Accessory
programs 24,679 7% 36,543 10% 31,225 9% (32%) (21%)
Integrated
logistics
services 39,333 12% 36,918 11% 38,241 11% 7% 3%
------------------------------------------------------------
Total $339,439 100% $355,132 100% $337,992 100% (4%) (a)
============================================================
(a) - Less than one percent
Gross Margin. The gross margin for the quarter ended June 30, 2002 was 4.1%, compared to 2.9% in the second quarter of 2001 and 5.0% in the first quarter of 2002. The increase in gross margin during the second quarter of 2002 when compared to the second quarter of 2001 is primarily due to material inventory write-downs in the second quarter of 2001. The decrease in gross margin during the second quarter of 2002 when compared to the first quarter of 2002 was primarily attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to reduced gross margins in the Americas region. This division's gross margin was negatively impacted by: i) the recognition of a loss related to a purchase obligation to an accessory accessory, in criminal law, a person who, though not present at the commission of a crime, becomes a participator in the crime either before or after the fact of commission. vendor that the Company now expects it will not meet, ii) a higher mix of lower margin handset The part of the telephone that contains the speaker and the microphone. On a desktop phone, the part you hold in your hand is the handset. On a cellphone, the entire phone is the handset. See multihandset cordless and headset. sales, iii) general pricing pressure and iv) inventory write-downs. Selling, General and Administrative Expenses. When compared to the second quarter of 2001, selling, general and administrative expenses in the second quarter of 2002 increased approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $6.9 million and also increased as a percent of revenue (6.7% versus 4.5%). When compared to the first quarter of 2002, selling, general and administrative expenses in the second quarter of 2002 increased approximately $1.5 million and also increased as a percent of revenue (6.7% versus 6.3%). The increases in selling, general and administrative expenses include severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when costs totaling approximately $1.0 million related to the departure of the Company's former Chief Financial Officer and approximately $0.5 million related to reductions in force for certain continuing operations. Operating Loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. from Continuing Operations. For the second quarter of 2002, the Company experienced an operating loss from continuing operations of $8.9 million compared to operating losses from continuing operations of $5.8 million in the second quarter of 2001 and $4.4 million in the first quarter of 2002, respectively. The higher operating loss from continuing operations in the second quarter of 2002 when compared to the first quarter of 2002 was due to the reduction in revenue and corresponding reduction in both gross profit and gross margin in the Americas division and the overall increase in selling, general and administrative expenses discussed above. When compared to the second quarter of 2001, the higher operating loss from continuing operations in the second quarter of 2002 was the result of higher selling, general and administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. . Loss from Continuing Operations. The loss from continuing operations for the second quarter of 2002 was $8.9 million compared to losses of $5.3 million in the second quarter of 2001 and $6.0 million in the first quarter of 2002, respectively. In both instances, the increased loss was due primarily to the factors discussed above in the analyses of revenue, gross margin and selling, general and administrative expenses. Loss per diluted share from continuing operations was $1.11 for the second quarter of 2002 compared to a loss per diluted share from continuing operations of $0.66 in the second quarter of 2001 and loss per diluted share from continuing operations of $0.76 in the first quarter of 2002. Discontinued Operations. During the second quarter of 2002, aggregate losses in discontinued operations were approximately $3.8 million compared to $1.6 million in the second quarter of 2001 and $1.2 million in the first quarter of 2002. The increase in the losses for both periods is primarily the result of further asset write-downs and closure costs pursuant to the Company's 2001 restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). plan. Additionally, to reduce costs further, the Company closed its Miami sales office. This event is reflected in discontinued operations and prior periods have been reclassified accordingly. Extraordinary Gain on Debt Extinguishment. As announced on June 12, 2002 and July July: see month. 1, 2002, the Company repurchased 52,967 of its 250,000 outstanding zero-coupon ze·ro-cou·pon adj. Paying no interest to the holder until maturity or sale: a zero-coupon bond. , subordinated Subordinated A claim ranked lower in priority than other claims. Common stock claims are always subordinated to debt. convertible notes due in the year 2018 ("Convertible Notes") during the second quarter of 2002. The repurchases were made under a previously announced (November November: see month. 1, 2001) plan approved by its board of directors which allows the Company to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. the remaining outstanding Convertible Notes. The aggregate purchase price for the Convertible Notes was approximately $15.2 million (at an average cost of $287 per Convertible Note) and was funded by working capital. These transactions resulted in an extraordinary gain, net of tax, of approximately $7.5 million ($0.94 per diluted share). After these repurchases, the Company had 197,033 Convertible Notes outstanding with an accreted value accreted value The current value of an original-issue discount bond, taking into account imputed interest that has accumulated. of $106 million ($537 per Convertible Note) as of June 30, 2002. The timing and amount of any additional repurchases, if any, will depend on many factors, including but not limited to, the availability of capital, the prevailing market price of the Convertible Notes and overall market conditions. No assurance can be given that the Company will repurchase any additional Convertible Notes. Additional information concerning the Convertible Notes can be found in the Company's filings with the Securities and Exchange Commission. The Company has engaged a financial advisor to assist in the restructuring of the Convertible Notes. Cumulative Effect of Accounting Change. During the second quarter of 2002, the Company completed the goodwill and other intangible asset impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. testing required by the adoption of SFAS 142. Consequently, the Company has recorded in the first quarter of 2002 an impairment charge totaling $40.7 million relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc this change in accounting principle. Approximately $8.5 million of this charge related to the sale of Brightpoint China Limited to Chinatron Group Holdings Limited which was previously classified in discontinued operations in the Company's March 31, 2002 financial statements and has now been reclassified to the cumulative effect of an accounting change as a part of the adoption of SFAS 142. Net Loss. As a result of the factors, charges and gains discussed above, the Company's net loss for the second quarter of 2002 was $5.2 million, or $0.65 per diluted share, compared to net losses of $6.9 million, or $0.86 per diluted share, in the second quarter of 2001 and $48.0 million, or $6.01 per diluted share, for the first quarter of 2002. Balance Sheet. For the second quarter of 2002, days revenue outstanding in accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying was approximately 34 days, compared to approximately 42 days for the first quarter of 2002. During the second quarter of 2002, annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. inventory turns were 15 times as compared to 11 times in the first quarter of 2002. Average days costs in accounts payable were 35 days for the second quarter of 2002 compared to 43 days for the first quarter of 2002. These changes combined to cause a decrease in cash conversion cycle days to 23 days in the second quarter of 2002 from 31 days in the first quarter of 2002. This reduction was the result of the Company's efforts to reduce accounts receivable and inventory levels during the quarter. As the fourth quarter, which can be subject to seasonal increases in demand, approaches, the Company may experience increased levels in accounts receivable and inventory and therefore a cash conversion cycle of 23 days may not be sustainable. The Company's net investment in contract receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed and contract payables Payables Related: Accounts payable decreased by $14.2 million from the fourth quarter of 2001 to $1.2 million at June 30, 2002. The Company's total cash at June 30, 2002 was approximately $81 million, $17 million of which was pledged pledge n. 1. A solemn binding promise to do, give, or refrain from doing something: signed a pledge never to reveal the secret; a pledge of money to a charity. 2. a. as collateral collateral (kəlăt`ərəl), something of value given or pledged as security for payment of a loan. Collateral consists usually of financial instruments, such as stocks, bonds, and negotiable paper, rather than physical goods, although for certain trade or other credit arrangements. A significant portion of the Company's cash is held by its primary subsidiary operating as its European Treasury Center, Brightpoint Holdings B.V., and if brought back to the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. could have certain tax implications. During the second quarter of 2002, the Company reduced amounts drawn from lines of credit, both short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. and long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. , from approximately $34 million at December December: see month. 31, 2001 and March 31, 2002 to approximately $7 million at June 30, 2002. The Convertible Notes, of which 197,033 remain outstanding, had an accreted book value of $106 million ($537 per Convertible Note) as of June 30, 2002. Net cash provided by operating activities during the second quarter of approximately $59 million was driven by the reduction in the cash conversion cycle and the release of $10 million in cash-secured letters of credit pursuant to the sale of Brightpoint China Limited to Chinatron Group Holdings Limited. There are no assurances that the Company can generate this level of cash flow in future periods. Brightpoint, Inc. is a leading provider of outsourced Outsourced is a modern day comedy of cross-cultural conflict and romance, directed by John Jeffcoat, released in 2007. Synopsis Todd Anderson (Josh Hamilton) spends his days managing a customer call center for American Novelty Products in Seattle, until his job, services in the global wireless telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. and data industry. Brightpoint's innovative services include customized packaging, prepaid pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. and e-commerce e-commerce, commerce conducted over the Internet, most often via the World Wide Web. E-commerce can apply to purchases made through the Web or to business-to-business activities such as inventory transfers. solutions, inventory management, distribution and
other outsourced services. Brightpoint's customers include leading
network operators, retailers and wireless equipment manufacturers.
Additional information about Brightpoint can be found on its website at
www.brightpoint.com or by calling its toll-free Investor Relations Investor relationsThe process by which the corporation communicates with its investors. Information line at 877-IIR-CELL (877-447-2355). Certain information in this press release may contain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. regarding future events or the future performance of Brightpoint. These statements are only predictions and actual events or results may differ materially. Please refer to the documents the Company files, from time to time, with the Securities and Exchange Commission; specifically, Brightpoint's most recent Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. , Form 10Q and Exhibits 99, thereto there·to adv. 1. To that, this, or it. 2. Archaic In addition to that; furthermore. thereto Adverb Formal 1. to that or it 2. . These documents contain and identify important risk factors that could cause the actual results to differ materially from those contained in or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by these forward-looking statements. These risk factors include, without limitation, uncertainties related to customer plans and commitments; the possible adverse effect on demand for the Company's products and services resulting from the consolidation of the Company's wireless network operator customers; lack of demand for the Company's products and services in certain markets; business conditions and growth in the Company's markets, including currency, economic and political risks; availability and prices of wireless products and financial risk management. Readers are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date these statements were made. Brightpoint undertakes no obligation to update any forward-looking statements contained in this press release.
BRIGHTPOINT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
2002 2001 2002 2001
---------- ---------- ---------- ----------
Revenue $ 339,439 $ 355,132 $ 677,431 $ 701,429
Cost of revenue 325,482 344,942 646,431 666,719
---------- ---------- ---------- ----------
Gross profit 13,957 10,190 31,000 34,710
Selling, general and
administrative expenses 22,866 16,010 44,264 35,389
---------- ---------- ---------- ----------
Operating loss from
continuing operations (8,909) (5,820) (13,264) (679)
Interest expense 1,659 2,051 4,141 4,114
Other (income) expenses 480 (163) 1,278 (87)
---------- ---------- ---------- ----------
Loss from continuing
operations before
income taxes and
minority interest (11,048) (7,708) (18,683) (4,706)
Income taxes (2,023) (2,427) (3,644) (1,309)
---------- ---------- ---------- ----------
Loss from continuing
operations before
minority interest (9,025) (5,281) (15,039) (3,397)
Minority interest (100) (28) (67) 20
---------- ---------- ---------- ----------
Loss from continuing
operations (8,925) (5,253) (14,972) (3,417)
Discontinued operations (3,812) (1,613) (4,969) (1,048)
---------- ---------- ---------- ----------
Total loss before
cumulative effect and
extraordinary gain (12,737) (6,866) (19,941) (4,465)
Cumulative effect of a
change in accounting
principle, net of tax - - (40,748) -
Extraordinary gain on debt
extinguishment, net of tax 7,513 - 7,513 -
---------- ---------- ---------- ----------
Net loss $ (5,224) $ (6,866) $ (53,176) $ (4,465)
========== ========== ========== ==========
BRIGHTPOINT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
(Amounts in thousands, except per share data)
(Unaudited)
Three Months Six Months
Ended Ended
June 30 June 30
2002 2001 2002 2001
-------- -------- -------- --------
Basic per share:
Loss from continuing operations $ (1.11) $ (0.66) $ (1.88) $ (0.43)
Discontinued operations (0.48) (0.20) (0.62) (0.13)
Cumulative effect of a change in
accounting principle, net of tax - - (5.10) -
Extraordinary gain on debt
extinguishment, net of tax 0.94 - 0.94 -
-------- -------- -------- --------
Net loss $ (0.65) $ (0.86) $ (6.66) $ (0.56)
======== ======== ======== ========
Diluted per share:
Loss from continuing operations $ (1.11) $ (0.66) $ (1.88) $ (0.43)
Discontinued operations (0.48) (0.20) (0.62) (0.13)
Cumulative effect of a change in
accounting principle, net of tax - - (5.10) -
Extraordinary gain on debt
extinguishment, net of tax 0.94 - 0.94 -
-------- -------- -------- --------
Net loss $ (0.65) $ (0.86) $ (6.66) $ (0.56)
======== ======== ======== ========
Weighted average common shares
outstanding:
Basic 7,990 7,972 7,986 7,970
======== ======== ======== ========
Diluted 7,990 7,972 7,986 7,970
======== ======== ======== ========
BRIGHTPOINT, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
June 30 December 31
2002 2001
---------- ----------
ASSETS
Current assets:
Cash and cash equivalents $ 64,274 $ 58,295
Pledged cash 16,803 16,657
Accounts receivable (less allowance for
doubtful accounts of $6,540 in 2002 and
$6,272 in 2001) 136,276 181,755
Inventories 77,137 137,549
Contract financing receivable 28,709 60,404
Other current assets 34,518 33,115
---------- ----------
Total current assets 357,717 487,775
Property and equipment 43,019 45,047
Goodwill and other intangibles 13,996 61,258
Other assets 23,858 15,340
---------- ----------
Total assets $ 438,590 $ 609,420
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 134,926 $ 194,776
Accrued expenses 65,052 52,743
Unfunded portion of contract financing
receivable 27,534 45,499
Lines of credit, short-term 7,144 10,323
Convertible notes, short-term 105,830 -
---------- ----------
Total current liabilities 340,486 303,341
---------- ----------
Long-term liabilities:
Line of credit - 24,419
Convertible notes - 131,647
---------- ----------
Total long-term liabilities - 156,066
---------- ----------
Stockholders' equity 98,104 150,013
---------- ----------
Total liabilities and stockholders' equity $ 438,590 $ 609,420
========== ==========
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