Brightpoint Reports First Quarter 2005 Financial Results.PLAINFIELD Plainfield, city (1990 pop. 46,567), Union co., NE N.J.; settled 1684 by Friends, inc. as a city 1869. Formerly a residential city in the New York metropolitan area, it has become the urban center of 10 closely allied municipalities, with diversified industries, , Ind IND Investigational new drug Therapeutics A status assigned by the FDA to a drug before allowing its use in humans, exempting it from premarketing approval requirements so that experimental clinical trials may be conducted. See Phase 1.2, 3 studies, Sponsorship. . -- 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)
A[micro] -- Wireless devices handled of 7.6 million, an increase of 34%
from the first quarter of 2004
A[micro] -- Revenue of $486 million, an increase of 10% from the first
quarter of 2004
A[micro] -- Income from continuing operations of $2.6 million, or $0.14
per diluted share, which includes the following items:
A[micro] -- $3.6 million operating loss in our France operations
A[micro] -- Previously announced $1.2 million facility consolidation
charge in Australia
A[micro] -- Approximately $500 thousand of expenses relating to
potential geographic expansion opportunities that will not
be consummated
A[micro] -- Net income of $2.9 million, or $0.16 per diluted share
A[micro] -- Cash provided by operating activities of $4.9 million
A[micro] -- Received preliminary indications of selection to provide
distribution and logistics services to two well-known
companies that will launch MVNOs in late 2005 or early 2006
A[micro] -- Launched Advanced Wireless Services business within
Brightpoint North America to deliver bundled wireless products
and solutions to customers focused on providing wireless data
services; initial relationships in this effort are with
Microsoft, Intel and Sprint
A[micro] -- Exploring various strategic alternatives with respect to
France operations
Brightpoint, Inc. (NASDAQ:CELL) reported its financial results for the first quarter ended March 31, 2005. Unless otherwise noted, amounts are in thousands (except per share data) and pertain to pertain to verb relate to, concern, refer to, regard, be part of, belong to, apply to, bear on, befit, be relevant to, be appropriate to, appertain to the first quarter of 2005. Earlier today we filed an amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. annual report on Form 10-K/A for the year ended December December: see month. 31, 2004 ("Form 10-K/A"). As described in the Form 10-K/A, we have restated our consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge as of and for the year ended December 31, 2004, and for all of the quarterly periods in 2004. The quarterly financial results for the first quarter and fourth quarter of 2004 included herein are as restated. Please refer to Note 19 to the consolidated financial statements included in the Form 10-K/A for additional information with respect the Restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. .
SUMMARY FINANCIAL RESULTS
Three Months Ended
-----------------------------------
March 31, March 31, Dec. 31,
2005 2004 2004
----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited)
Wireless devices handled 7,624 5,678 8,749
Revenue $485,614 $440,210 $503,025
Gross profit $28,297 $24,068 $34,854
Gross margin 5.8% 5.5% 6.9%
Facility consolidation charge $1,203 $- $-
Operating income from continuing
operations $4,240 $4,193 $12,148
Income from continuing operations $2,565 $2,354 $8,087
Net income (loss) $2,874 $(2,221) $7,480
Diluted per share:
Income from continuing operations $0.14 $0.12 $0.44
Net income (loss) $0.16 $(0.11) $0.40
Key highlights and developments in the first quarter of 2005 include: --34% increase in wireless devices handled from the first quarter of 2004 with a notable sales mix sales mix See product mix. shift towards our fee-based logistics logistics In military science, all the activities of armed-force units in support of combat units, including transport, supply, communications, and medical aid. The term, first used by Henri Jomini, Alfred Thayer Mahan, and others, was adopted by the U.S. services business --99% increase in operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. in our Americas A·mer·i·cas , the See America. division from the first quarter of 2004 driven by strong market demand and continued promotional activities by mobile operators and mobile virtual network operators A Mobile Virtual Network Operator (MVNO) is a company that provides mobile (sometimes called wireless or cellular) telephone service but does not have its own allocation of the radio frequency spectrum nor all of the infrastructure required to provide mobile telephone service. ("MVNOs") --Brightpoint North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. continues to add to its roster of MVNO (Mobile Virtual Network Operator) A reseller of wireless services. MVNOs do not own licensed spectrum and typically do not have any of their own wireless network infrastructure. customers with recently announced relationships with Primus Telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. , Inc. and Movida Communications, Inc. --39% decrease in operating income in our 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 from the first quarter of 2004 caused by a previously announced $1.2 million facility consolidation charge in our Australia Australia (ôstrāl`yə), smallest continent, between the Indian and Pacific oceans. With the island state of Tasmania to the south, the continent makes up the Commonwealth of Australia, a federal parliamentary state (2005 est. pop. operations --Improved operating results in our India India, officially Republic of India, republic (2005 est pop. 1,080,264,000), 1,261,810 sq mi (3,268,090 sq km), S Asia. The second most populous country in the world, it is also sometimes called Bharat, its ancient name. India's land frontier (c. operations as we continue to work with mobile operators and suppliers in transitioning to an open distribution model and expanding our product offering for independent dealers --Strong balance sheet: unrestricted cash of $71 million, 3% gross-debt-to-total-capitalization ratio and $143 million of liquidity We experienced a 34% increase in wireless devices handled from the first quarter of 2004 due to growth in both logistics services and distribution volumes. The increase in logistics services volumes was primarily due to strong demand in Colombia Colombia (kəlŭm`bēə, Span. kōlōm`byä), officially Republic of Colombia, republic (2005 est. pop. 42,954,000), 439,735 sq mi (1,138,914 sq km), NW South America. Bogotá is the capital and largest city. and 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. driven by continued promotional activities by mobile operators and MVNOs, which benefited our logistics customers such as COMCEL COMCEL Comunicaciones Celulares (Guatemala) in Colombia and Boost Mobile, Nextel (Nextel Communications, Inc., Reston, VA, www.nextel.com) A wireless communications carrier founded in New Jersey in 1987 as Fleet Call, a two-way radio service. Throughout the late 1980s and 1990s, the company acquired a large number of SMR (Specialized Mobile Radio) operators and turned , Virgin Mobile and TracFone in the United States. The addition of Cricket Communications Cricket Communications, Inc. is a subsidiary of Leap Wireless International, Inc. It offers wireless service without credit checks or long-term commitments. Customers can purchase plans giving them access to unlimited local calls; unlimited U.S. to our customer base in the United States late in the first quarter of 2004 also contributed to the increase in logistics services volumes. The increase in distribution volumes was principally due to strong demand for wireless devices in Australia and in markets served by our Brightpoint Asia operations, offset by a decline in the Philippines Philippines officially Republic of the Philippines Island country, western Pacific Ocean, on an archipelago off the southeast coast of Asia. Area: 122,121 sq mi (316,294 sq km). Population (2005 est.): 84,191,000. . While the number of wireless devices handled in logistics services and distribution increased from the first quarter of 2004, the growth in logistics services volumes outpaced the growth experienced in our distribution business. We experienced a 10% year-over-year increase in revenue. This increase was less than the growth rate in wireless devices handled due to a sales mix shift from units handled through distribution to logistics services, which typically generate significantly less revenue per transaction than distribution sales. In addition, as logistics services generally yield a higher gross margin than distribution, the mix shift resulted in a 0.3 percentage point increase in gross margin and an increase in gross profit of $4.2 million, or 18%, on a year-over-year basis. Operating income 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 ("Operating Income") was $4.2 million, an increase of 1% from the first quarter of 2004. The year-over-year increase in Operating Income was primarily due to Operating Income growth of 99% in our Americas division offset by a $2.4 million 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. in our 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). division and a 39% decline
in Operating Income in our Asia-Pacific division. The increase in
Operating Income in our Americas division was principally due to a 43%
increase in wireless devices handled, operating leverage Operating LeverageA measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. associated with the increased unit volumes and a reduction in bad debt expense. The operating loss in the Europe division was primarily due to a $3.6 million operating loss in our France operations partially offset by a $2.0 million increase in operating profitability in our operations in Germany Germany (jûr`mənē), Ger. Deutschland, officially Federal Republic of Germany, republic (2005 est. pop. 82,431,000), 137,699 sq mi (356,733 sq km). due to the addition of HTC's Qtek branded smartphones to our product portfolio in the second half of 2004. The operating loss in France was primarily attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to a reduction in gross profit from activation activation /ac·ti·va·tion/ (ak?ti-va´shun) 1. the act or process of rendering active. 2. the transformation of a proenzyme into an active enzyme by the action of a kinase or another enzyme. 3. commissions and $1.2 million of bad debt expense. The decrease in Operating Income in our Asia-Pacific division was primarily due to a $1.2 million facility consolidation charge in Australia, which was partially offset by a 14% increase in wireless devices handled driven by strong demand in Australia and in markets served by our Brightpoint Asia operations. As previously announced, our Australian Australian pertaining to or originating in Australia. Australian bat lyssavirus disease see Australian bat lyssavirus disease. Australian cattle dog a medium-sized, compact working dog used for control of cattle. operation has moved to a larger facility in anticipation of growth opportunities. During the first quarter of 2005, the Company recorded a pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta charge of $1.2 million relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the anticipated lease costs, net of sublease sublease n. the lease of all or a portion of premises by a tenant who has leased the premises from the owner. A sublease may be prohibited by the original lease, or require written permission from the owner. income, for the remaining term of the previous location and other items. If we are unsuccessful in terminating the lease of the previous location, finding a sub-lessee or if the terms of any sublease are less than this estimate, we may incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. additional expenses. Operating Income in the first quarter of 2005 was also negatively effected by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $500 thousand of professional fees, travel expenses and other items pertaining per·tain intr.v. per·tained, per·tain·ing, per·tains 1. To have reference; relate: evidence that pertains to the accident. 2. to the evaluation and negotiation of potential geographic expansion opportunities in the Europe and Asia-Pacific divisions which we believe will not be consummated con·sum·mate tr.v. con·sum·mat·ed, con·sum·mat·ing, con·sum·mates 1. a. To bring to completion or fruition; conclude: consummate a business transaction. b. . In the United States, we continue to see a variety of companies announcing their intention to create MVNOs in order to leverage their strong brand names and large customer bases in the wireless space. Consequently, we believe that the MVNO business model may be a key growth driver for the wireless industry in the United States. Through our relationships with companies such as TracFone and Virgin Mobile in the United States, we have been able to contribute to and benefit from the success of our MVNO customers. With our experience, scale, and track record of success in providing distribution and logistic lo·gis·tic also lo·gis·ti·cal adj. 1. Of or relating to symbolic logic. 2. Of or relating to logistics. [Medieval Latin logisticus, of calculation services to MVNOs, we have recently been able to add Primus Telecommunications, Inc. and Movida Communications, Inc. to our growing roster of MVNO customers. In addition, we have received preliminary indications that Brightpoint North America has been selected to provide distribution and logistics services to two well-known well-known adj. 1. Widely known; familiar or famous: a well-known performer. 2. Fully known: well-known facts. companies that will launch MVNOs in late 2005 or early 2006. The provision of services and identification of these two well-known companies is subject to the completion and execution of definitive agreements and we provide no assurances as to the timing and probability of the completion and execution of the definitive agreements. Another exciting development in our Brightpoint North America business was the launch of our new line of business called Advanced Wireless Services Advanced Wireless Services, also known as AWS-1, is a wireless telecommunications technology, used for mobile data services, video, and messaging. AWS-1 is used in the United States and replaces the spectrum formerly allocated to Multipoint Multichannel Distribution Service, ("AWS AWS Amazon Web Services AWS American Welding Society AWS Advanced Warning System AWS Advanced Wireless Services AWS Automatic Weather Station AWS Alien Workshop (skateboard company) AWS Austria Wirtschaftsservice GmbH "). AWS' first relationships in this effort are with Microsoft (Microsoft Corporation, Redmond, WA, www.microsoft.com) The most successful and influential software company. Microsoft's software and Intel's hardware pioneered the PC and revolutionized the computer industry. , Intel and Sprint. AWS will deliver bundled bun·dle n. 1. A group of objects held together, as by tying or wrapping. 2. Something wrapped or tied up for carrying; a package. 3. Biology A cluster or strand of closely bound muscle or nerve fibers. wireless products and solutions to effectively and efficiently meet the wireless data needs of customers throughout the United States. AWS will focus on delivering the bundled wireless products and solutions to our existing sales channels including mobile operators and their dealers as well as new channels such as Value Added Resellers See VAR. (company) value added reseller - (VAR, or "value added retailer") A company which sells something (e.g. computers) made by another company (an OEM) with extra components added (e.g. specialist software). ("VARs"), system integrators See systems integrator. and other customers who are focused on providing wireless data services. AWS will leverage our strong industry relationships and extensive logistics capabilities to provide these channels with an extensive range of products and solutions including Windows Mobile-based Smartphones and Pocket PCs, activation services, bundled software (1) Applications that are included with new hardware. For example, a new PC often comes with several applications, many of which may be light versions or full versions with no limit on usage. Others may be only 60- or 90-day trial packages. See bundle. applications, wireless LAN A local area network that transmits over the air typically in the 2.4 GHz or 5 GHz unlicensed frequency band. It does not require line of sight between sender and receiver. Wireless base stations (access points) are wired to an Ethernet network and transmit a radio frequency over an area infrastructure and services, VoIP solutions and wireless content. In conjunction with the formation of AWS, Brightpoint plans to launch a VAR Mobile Activation Service (MAS) that will enable VARs to deliver a wide range of Windows Mobile-based devices to their small/medium business customers, provide wireless activation services, and receive commissions from mobile operators. The MAS will also give VARs the ability to minimize inventory levels by relying on just-in-time just-in-time - dynamic translation delivery of bundled wireless solutions. During the first quarter of 2005, we saw improved operating results in our India. While we have made progress with the transition of our India business model to an open distribution model focused on selling Nokia Nokia (nō`kēä), town (1996 pop. 26,326), Western Finland prov., SW Finland, on Lake Näsijärvi. It is an industrial community where wood and rubber products are manufactured. CDMA (Code Division Multiple Access) A method for transmitting simultaneous signals over a shared portion of the spectrum. The foremost application of CDMA is the digital cellular phone technology from QUALCOMM that operates in the 800 MHz band and 1.9 GHz PCS band. handsets into independent dealer channels, we continue to work with mobile operators and suppliers to expand and improve our warranty and non-warranty repair service offerings and to bring new products, such as memory cards and blank digital media, to our product portfolio. We remain excited about our 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. prospects in India and with the continued support of our mobile operator and supplier partners driving increases in wireless devices handled, we anticipate our India operations reaching operating break-even sometime in the second half of 2005. Our business in France primarily involves the provision of channel services to mobile operators providing them with incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. mobile subscribers, selling prepaid pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. wireless airtime air·time n. 1. The time during which a radio or television station is broadcasting. Also called airspace. 2. The time at which a radio or television program is broadcast. through a network of approximately 2,000 points of sale and owning and operating 16 retail stores focused on selling wireless telecommunications products and services. As described in the Form 10-K/A filed earlier today, the financial reporting control procedures for certain account receivable account receivable Any amount owed to a business as the result of a purchase of goods or services from it on a credit basis. Although the firm making the sale receives no written promise of payment, it enters the amount due as a current asset in its books. reconciliations and revenue recognition control procedures for proper pricing and invoicing in·voice n. 1. A detailed list of goods shipped or services rendered, with an account of all costs; an itemized bill. 2. The goods or services itemized in an invoice. tr.v. in our operations in France failed to operate effectively and in a timely fashion as of December 31, 2004, resulting in the restatement of our consolidated financial statements for the year ended December 31, 2004. Please refer to the Form 10-K/A filed earlier today for a complete description of the foregoing. Additionally, during the first quarter of 2005, our operations in France incurred an operating loss of $3.6 million primarily due to reduced gross margins on activation commissions and increased bad debt expense. Based upon these and other factors, the Company is conducting a review of our operations in France. We are committed to completing our evaluation of our France operations and exploring various strategic alternatives to enhance long-term shareholder value including, but not limited to, the sale, 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). , closure or other corporate action relating to all or a portion of these operations. We do not expect to disclose developments with respect to the exploration of strategic alternatives for our operations in France unless and until we have entered into a definitive transaction or other action. We ended the quarter with cash and cash equivalents (unrestricted) of $71 million, a 1% decrease from $72 million at December 31, 2004, and a 17% decrease from $85 million at March 31, 2004. Net cash provided by operating activities was $4.9 million. The cash conversion cycle was 7 days, an increase of 1 day from the fourth quarter of 2004 and 3 days from the first quarter of 2004. The sequential One after the other in some consecutive order such as by name or number. change in the cash conversion cycle was the result of a 4-day decrease in days payable outstanding, partially offset by a 2-day decrease in days of sales outstanding and a 1-day decrease in days of inventory outstanding. The decrease in days of payable outstanding was substantially due to the timing of inventory receipts and the related payment terms from suppliers. In addition, from time to time, we may pay our suppliers prior to the invoice An itemized statement or written account of goods sent to a purchaser or consignee by a vendor that indicates the quantity and price of each piece of merchandise shipped. A consular invoice is one used in foreign trade. due date to take advantage of certain early payment discounts. This may consume our cash or may cause us to borrow from lenders. The decrease in the days of sales outstanding was mostly due to improved collections. 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. return on invested capital from operations was 10% for the first quarter of 2005 and 16% on a trailing four-quarter basis. During the first quarter of 2005, we repurchased 227,400 of our common shares at an average price of $19.35 per share for a total of $4.4 million. The share repurchases Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. were made pursuant to a $20 million share repurchase plan share repurchase plan A corporation's plan for buying back a predetermined number of its own shares in the open market. Institution of a share repurchase plan derives from management's view that the company has limited outside investment opportunities and announced on November November: see month. 30, 2004 ("Share Repurchase Plan"), and as of March 31, 2005, an additional $11.6 million of share repurchases may be made prior to the expiration EXPIRATION. Cessation; end. As, the expiration of, a lease, of a contract, or statute. 2. In general, the expiration of a contract puts an end to all the engagements of the parties, except to those which arise from the non- fulfillment of obligations created of the Share Repurchase Plan on December 31, 2005. Our liquidity (unrestricted cash and unused borrowing availability) was approximately $143 million as of March 31, 2005, compared to approximately $149 million as of December 31, 2004, and approximately $144 million as of March 31, 2004. Our preliminary estimates indicate that the wireless device industry experienced a year-over-year growth rate of approximately 20% in the first quarter of 2005. Globally, new product introductions, compelling pricing by manufacturers, enhanced functionality, availability of feature-rich devices, the deployment of wireless data services and aggressive promotional activities by mobile operators caused subscribers to upgrade their wireless devices. With consumer demand for feature-rich devices, rollouts of advanced 2.5G and 3G networks and continued mobile operator promotional activities, we currently estimate that worldwide sales of wireless devices will be in a range of 750 million to 760 million units in 2005, representing year-over-year growth in a range of 12% to 15%. "We are pleased with the overall results of the Company during the first quarter of 2005. However, our results in France are unacceptable and we are committed to completing our evaluation of these operations and taking the appropriate actions needed in order to maximize long-term shareholder value," said Robert Robert, Henry Martyn 1837-1923. American army engineer and parliamentary authority. He designed the defenses for Washington, D.C., during the Civil War and later wrote Robert's Rules of Order (1876). Noun 1. J. Laikin, Brightpoint's Chairman of the Board and Chief Executive Officer. "We are excited about the continuing activity in the MVNO space and believe that Brightpoint is well-positioned to benefit from the continued proliferation proliferation /pro·lif·er·a·tion/ (pro-lif?er-a´shun) the reproduction or multiplication of similar forms, especially of cells.prolif´erativeprolif´erous pro·lif·er·a·tion n. of these new entrants to the wireless space," said J. Mark Howell How´ell n. 1. The upper stage of a porcelian furnace. , President of Brightpoint, Inc. and Brightpoint North America. "Additionally, the launch of the Advanced Wireless Services line of business in the first quarter is a natural extension of our existing capabilities, is in-line In-line Used in the context of general equities. (1) An order or market in a specific security within the inside market; 2) any announcement (earnings) that adheres closely to Wall Street analysts' expectations. with our global strategic initiatives and provides an opportunity for growth." "Enhancing our internal controls and maintaining focus on our balance sheet will position us to execute our strategy for growth in 2005," said Lisa M. Kelley Kelley may refer to any of the following: People
Brightpoint is one of the world's largest distributors of mobile phones. Brightpoint supports the global wireless telecommunications and data industry, providing quickly deployed, flexible and cost effective solutions. Brightpoint's innovative services include distribution, channel management, fulfillment ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. , eBusiness See e-business. solutions and other outsourced services that integrate seamlessly with its customers. Additional information about Brightpoint can be found on its website at www.brightpoint.com or by calling its toll-free Information and Investor Relations Investor relations The process by which the corporation communicates with its investors. 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 our future performance. These statements are only predictions and actual events or results may differ materially. Please refer to the documents we file, from time to time, with the Securities and Exchange Commission; including, our most recent Form 10-K/A and the cautionary statements contained in Exhibit 99.1 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 by these forward-looking statements. These risk factors include, without limitation, uncertainties relating to customer plans and commitments, including, without limitation, (i) loss of significant customers or a reduction in prices we charge these customers; (ii) possible adverse effect on demand for our products resulting from consolidation of mobile operator customers; (iii) dependence upon principal suppliers and availability and price of wireless products; (iv) factors that could affect forward-looking statements relating to the resolution of the material weakness with respect to internal controls discussed in Item 9A of the Company's Annual Report on 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. , as amended, including, among other things, the Company's ability to design and maintain policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental which enable the Company to avoid any recurrence recurrence /re·cur·rence/ (-ker´ens) the return of symptoms after a remission.recur´rent re·cur·rence n. 1. of the matters which gave rise to the material weakness; (v) possible adverse effects of future medical claims regarding the use of wireless handsets; (vi) possible difficulties collecting our 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 ; (vi) our ability to absorb absorb To offset sell orders or a new security offering with buy orders. , through revenue growth, the increasing operating costs operating costs npl → gastos mpl operacionales that we have incurred and continue to incur in connection with our activities; (viii) lack of demand for our products and services in certain markets and our inability to maintain margins; (ix) our ability to expand geographically on a satisfactory basis, through acquisition or otherwise; (x) potential future losses and capital required in connection with our India business; (xi) uncertainty whether wireless equipment manufacturers and wireless network operators will continue to outsource aspects of their business to us; (xii) our reliance upon third parties to manufacture products which we distribute and reliance upon their quality control procedures; (xiii) our operations may be materially affected by fluctuations in regional demand and economic factors; (xiv) ability to respond to rapid technological changes in the wireless communications wireless communications System using radio-frequency, infrared, microwave, or other types of electromagnetic or acoustic waves in place of wires, cables, or fibre optics to transmit signals or data. and data industry; (xv) access to or the cost of increasing amounts of capital, trade credit or other financing; (xvi) reliance on a third party to manage significant operations in our Asia-Pacific division; (xvii) investment in sophisticated information systems technologies and our reliance upon the proper functioning of such systems (xviii) ability to manage and sustain future growth at our historical or industry rates and our ability to meet intense industry competition; (xix) effect of hostilities hos·til·i·ty n. pl. hos·til·i·ties 1. The state of being hostile; antagonism or enmity. See Synonyms at enmity. 2. a. A hostile act. b. hostilities Acts of war; overt warfare. or terrorist attacks on our operations; (xx) our history of significant losses in previous periods; (xxi) the impact that seasonality may have on our business and results; (xxii) risks of foreign operations, including currency, trade restrictions A trade restriction is an artificial restriction on the trade of goods between two countries. It is the result of protectionism. However, the term is not uncontroversial since what one part may see as a trade restriction another may see as a way to protect consumers from inferior, and political risks in our foreign markets; (xxiii) ability to attract and retain qualified management and other personnel and cost of complying with labor agreements; (xxiv) ability to protect our proprietary information; (xxv) high rate of personnel turnover; (xxvi) our significant payment obligations under certain lease and other contractual arrangements; (xxvii) the potential issuance of additional equity, including our common shares, which could result in dilution Dilution A reduction in earnings per share of common stock that occurs through the issuance of additional shares or the conversion of convertible securities. Notes: Adding to the number of shares outstanding reduces the value of holdings of existing shareholders. of existing shareholders and may have an adverse impact on the price of our common shares; (xxviii) uncertainties regarding the outcome of pending litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. ; (xxix) ability to maintain adequate insurance at a reasonable cost and (xxx) existence of anti-takeover measures Anti-Takeover Measure Measures taken on a continual or sporadic basis by a firm's management in order to prevent or deter unwanted takeovers. Notes: Companies have many different options for preventing takeovers. . Because of the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. uncertainties affecting our future operating results, past performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate future results or trends. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date these statements were made. The words "believe," "expect," "anticipate," "intend," and "plan" and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on any of these forward-looking statements, which speak only as of the date that such statement was made. We undertake no obligation to update any forward-looking statement.
BRIGHTPOINT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
-------------------
2005 2004
--------- ---------
Revenue:
Distribution revenue $406,725 $377,942
Logistics services revenue 78,889 62,268
--------- ---------
Total revenue 485,614 440,210
Cost of revenue
Cost of product distribution revenue 390,585 364,660
Cost of integrated logistics services revenue 66,732 51,482
--------- ---------
Total cost of revenue 457,317 416,142
--------- ---------
Gross profit 28,297 24,068
Selling, general and administrative expenses 22,854 19,874
Facility consolidation charge 1,203 -
--------- ---------
Operating income from continuing operations 4,240 4,193
Interest expense 585 469
Interest income (212) (201)
Net other expenses 202 568
--------- ---------
Income from continuing operations before income
taxes 3,665 3,357
Income tax expense 1,100 1,003
--------- ---------
Income from continuing operations 2,565 2,354
Discontinued operations:
Loss from discontinued operations (29) (341)
Gain (loss) on disposal of discontinued
operations 338 (4,234)
--------- ---------
Total discontinued operations 309 (4,575)
--------- ---------
Net income (loss) $2,874 $(2,221)
========= =========
Basic per share:
Income from continuing operations $0.14 $0.12
Discontinued operations 0.02 (0.24)
--------- ---------
Net income (loss) $0.16 $(0.12)
========= =========
Diluted per share:
Income from continuing operations $0.14 $0.12
Discontinued operations 0.02 (0.23)
--------- ---------
Net income (loss) $0.16 $(0.11)
========= =========
Weighted average common shares outstanding:
Basic 17,707 19,270
========= =========
Diluted 18,373 19,940
========= =========
BRIGHTPOINT, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
March 31, Dec. 31, March 31,
2005 2004 2004
----------- ---------- -----------
(Unaudited) (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $71,246 $72,120 $85,454
Pledged cash 12,786 13,830 16,504
Accounts receivable (less
allowance for doubtful accounts
of $6,219, $6,215 and $7,825
respectively) 123,624 148,321 111,099
Inventories 105,535 110,089 98,892
Contract financing receivable 13,317 14,022 11,274
Other current assets 25,569 23,132 11,344
----------- ---------- -----------
Total current assets 352,029 381,514 334,567
Property and equipment, net 26,598 27,503 28,646
Goodwill and other intangibles, net 21,276 21,981 19,015
Other assets 7,796 6,586 9,493
----------- ---------- -----------
Total assets $407,699 $437,584 $391,721
=========== ========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $173,940 $201,621 $174,535
Accrued expenses 60,408 61,851 50,571
Unfunded portion of contract
financing receivable 20,876 23,375 19,060
Lines of credit 4,563 - -
----------- ---------- -----------
Total current liabilities 259,787 286,847 244,166
COMMITMENTS AND CONTINGENCIES
Minority interest - - -
Shareholders' equity:
Preferred stock, $0.01 par value;
1,000 shares authorized; no
shares issued or outstanding - - -
Common stock, $0.01 par value;
100,000 shares authorized;
19,585, 19,499 and 19,299 issued
and outstanding, respectively 196 195 193
Treasury stock, at cost, 1,833 and
1,606 shares, respectively (28,409) (24,010) -
Additional paid-in capital 234,291 233,768 227,647
Retained earnings (deficit) (61,094) (63,968) (79,959)
Accumulated other comprehensive
income (loss) 2,928 4,752 (326)
----------- ---------- -----------
Total shareholders' equity 147,912 150,737 147,555
----------- ---------- -----------
Total liabilities and shareholders'
equity $407,699 $437,584 $391,721
=========== ======================
BRIGHTPOINT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
Three months ended
March 31,
-------------------
2005 2004
--------- ---------
Operating activities
Net income (loss) $2,874 $(2,221)
Adjustments to reconcile net income (loss) to net
cash provided (used) by operating activities:
Depreciation and amortization 3,016 2,661
Discontinued operations (309) 4,575
Net cash used by discontinued operations (3) (1,401)
Facility consolidation charge 1,203 -
Pledged cash requirements 1,044 538
Income tax benefits from exercise of stock
options 208 -
Changes in deferred taxes (1,803) -
Changes in operating assets and liabilities, net
of effects from acquisitions and divestitures:
Accounts receivable, net 22,781 12,288
Inventories, net 2,722 9,731
Other operating assets (3,370) 1,142
Accounts payable (24,665) (22,464)
Accrued expenses 1,222 (8,634)
--------- ---------
Net cash provided (used) by operating activities 4,920 (3,785)
Investing activities
Decrease (increase) in funded contract financing
receivables (1,754) 2,868
Capital expenditures (2,155) (2,169)
Proceeds from Ireland sale - 1,714
Increase in other assets (56) (374)
Purchase acquisitions, net of cash acquired (308) (213)
--------- ---------
Net cash provided (used) by investing activities (4,273) 1,826
Financing activities
Net borrowing (payments) on credit facilities 4,667 (16,484)
Pledged cash requirements - 5,000
Proceeds from common stock issuances under employee
stock option and purchase plans 316 308
Purchase of treasury stock (4,399) -
--------- ---------
Net cash provide (used) by financing activities 584 (11,176)
Effect of exchange rate changes on cash and cash
equivalents (2,153) (290)
--------- ---------
Net decrease in cash and cash equivalents (922) (13,425)
Cash and cash equivalents at beginning of period 72,120 98,879
--------- ---------
Cash and cash equivalents at end of period $71,198 $85,454
========= =========
Supplemental Information
(Amounts in thousands)
Revenue and Wireless Devices Handled
Three Months Ended
-----------------------------------------------------
Percent Percent Percent
March 31, of March 31, of Dec. 31, of
2005 Total 2004 Total 2004 Total
--------- ------- --------- ------- --------- -------
Wireless Devices
Handled by
Division:
The Americas 5,614 74% 3,930 69% 6,521 75%
Asia-Pacific 1,756 23% 1,544 27% 1,776 20%
Europe 254 3% 204 4% 452 5%
--------- ------- --------- ------- --------- -------
Total 7,624 100% 5,678 100% 8,749 100%
========= ======= ========= ======= ========= =======
Wireless Devices
Handled:
Distribution 2,599 34% 2,370 42% 2,663 30%
Logistics
services 5,025 66% 3,308 58% 6,086 70%
--------- ------- --------- ------- --------- -------
Total 7,624 100% 5,678 100% 8,749 100%
========= ======= ========= ======= ========= =======
Revenue by
Division:
The Americas $133,027 27% $118,296 27% $138,373 28%
Asia-Pacific 252,919 52% 240,713 55% 243,347 48%
Europe 99,668 21% 81,201 18% 121,305 24%
--------- ------- --------- ------- --------- -------
Total $485,614 100% $440,210 100% $503,025 100%
========= ======= ========= ======= ========= =======
Revenue by
Service Line:
Product
distribution $406,725 84% $377,942 86% $413,696 82%
Logistics
services 78,889 16% 62,268 14% 89,329 18%
--------- ------- --------- ------- --------- -------
Total $485,614 100% $440,210 100% $503,025 100%
========= ======= ========= ======= ========= =======
Y-o-Y Sequential
change change
Q1 2004 to Q4 2004 to
Q1 2005 Q1 2005
---------- ----------
Wireless Devices
Handled by
Division:
The Americas 43% (14%)
Asia-Pacific 14% (1%)
Europe 24% (44%)
---------- ----------
Total 34% (13%)
========== ==========
Wireless Devices
Handled:
Distribution 10% (2%)
Logistics
services 52% (17%)
---------- ----------
Total 34% (13%)
========== ==========
Revenue by
Division:
The Americas 12% (4%)
Asia-Pacific 5% 4%
Europe 23% (18%)
---------- ----------
Total 10% (3%)
========== ==========
Revenue by
Service Line:
Product
distribution 8% (2%)
Logistics
services 27% (12%)
---------- ----------
Total 10% (3%)
========== ==========
Revenue Change Analysis
Q1 2004 to Q1 2005 Q4 2004 to Q1 2005
------------------ ------------------
Units Revenue Units Revenue
--------- -------- --------- --------
Effect of change in wireless
devices handled on revenue
(volume) 34% 29% (13%) (10%)
Mix shift from product
distribution to fee-based
logistics services (20%) 8%
Change in prices (4%) 1%
Effect of foreign currency 2% 1%
Other 3% (3%)
-------- --------
Overall percentage change in
revenue from prior periods 10% (3%)
======== ========
Operating Income by Division:
Three Months Ended
-----------------------------------------------------
March 31, OI March 31, OI Dec. 31, OI
2005 Margin 2004 Margin 2004 Margin
--------- -------- --------- ------- -------- -------
The Americas $5,535 4.2% $2,775 2.3% $8,241 6.0%
Asia-Pacific 1,135 0.4% 1,872 0.8% 4,965 2.0%
Europe (2,430) (2.4%) (454) (0.6%) (1,058) (0.9%)
--------- -------- --------- ------- -------- -------
Total $4,240 0.9% $4,193 1.0% $12,148 2.4%
========= ======== ========= ======= ======== =======
Y-o-Y Sequential
change change
Q1 2004 to Q4 2004 to
Q1 2005 Q1 2005
---------- ----------
The Americas 99% (33%)
Asia-Pacific (39%) (77%)
Europe (435%) (130%)
---------- ----------
Total 1% (65%)
========== ==========
Supplemental Information (continued)
(Amounts in thousands)
Cash Conversion Cycle Days
Management utilizes the cash conversion cycle days metric and its
components to evaluate our ability to manage our working capital and
its cash flow performance. Cash conversion cycle days and its
components for the quarters ending March 31, 2005 and 2004, and
December 31, 2004, were as follows:
Three Months Ended
------------------------------
March 31, March 31, Dec. 31,
2005 2004 2004
--------- --------- ----------
Days sales outstanding in accounts
receivable 22 21 24
Days inventory on-hand 22 23 23
Days payable outstanding (37) (40) (41)
--------- --------- ----------
Cash Conversion Cycle Days 7 4 6
========= ========= ==========
Return on Invested Capital ("ROIC")
We use ROIC to measure the effectiveness of our use of invested
capital to generate profits. ROIC for the quarters and trailing four
quarters ending March 31, 2005 and 2004, and December 31, 2004, was as
follows:
Three Months Ended Trailing Twelve Months Ended
----------------------------- -----------------------------
March 31, March 31, Dec. 31, March 31, March 31, Dec. 31,
2005 2004 2004 2005 2004 2004
--------- --------- --------- --------- --------- ---------
Operating
income
after
taxes:
Operating
income
from
continuing
operations $4,240 $4,193 $12,148 $30,978 $29,088 $30,931
Plus:
Facility
consoli-
dation
charge 1,203 - (21) 967 1,181 (236)
Less:
Estimated
income
taxes(1) (1,634) (1,253) (3,595) (9,350) (7,634) (8,969)
--------- --------- --------- --------- --------- ---------
Operating
income
after
taxes $3,809 $2,940 $8,532 $22,595 $22,635 $21,726
========= ========= ========= ========= ========= =========
Invested
capital:
Debt $4,563 $- $- $4,563 $- $-
Share-
holders'
equity 147,912 147,555 150,737 147,912 147,555 150,737
--------- --------- --------- --------- --------- ---------
Invested
capital $152,475 $147,555 $150,737 $152,475 $147,555 $150,737
========= ========= ========= ========= ========= =========
Average
invested
capital(2)$151,606 $155,673 $144,363 $143,714 $139,821 $145,977
========= ========= ========= ========= ========= =========
ROIC(3) 10% 8% 24% 16% 16% 15%
========= ========= ========= ========= ========= =========
(1) Estimated income taxes were calculated by multiplying the sum of
operating income from continuing operations and the facility
consolidation charge by the respective periods' effective tax
rate.
(2) Average invested capital for quarterly periods represents the
simple average of the beginning and ending invested capital
amounts for the respective quarter. Average invested capital for
the trailing four quarter periods represents the average of the
ending invested capital amounts for the current and four prior
quarter period ends.
(3) ROIC is calculated by dividing operating income after taxes by
average invested capital. ROIC for quarterly periods is stated on
an annualized basis and is calculated by dividing operating income
after taxes by average invested capital and multiplying the result
by four (4) to state ROIC on an annualized basis.
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