Brightpoint Reports Fourth Quarter and Full Year 2003 Financial Results.Business Editors 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. .--(BUSINESS WIRE)--Feb. 5, 2004 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): For the fourth quarter of 2003: -- Revenue of $547 million, an increase of 60% from the fourth quarter of 2002 -- 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 of $6.4 million, or $0.33 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, an increase of 81% from the fourth quarter of 2002 -- Net income of $5.4 million, or $0.28 per diluted share, an increase of 330% from the fourth quarter of 2002 -- Cash provided by operating activities of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $26 million For the year ended December December: see month. 31, 2003: -- Revenue of $1.8 billion, an increase of 41% from 2002 -- Income from continuing operations of $13.0 million, or $0.68 per diluted share, a decrease of 6% from 2002 -- Net income of $11.7 million, or $0.62 per diluted share, as compared to a net loss of $42.4 million in 2002 -- Cash provided by operating activities of approximately $56 million Brightpoint, Inc. (NASDAQ:CELL) reported its financial results for the fourth quarter and year ended December 31, 2003. Unless otherwise noted, amounts 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 fourth quarter of 2003. Per share amounts for all periods presented have been adjusted for both three-for-two stock splits accomplished in the form of 50% stock dividends that were paid in 2003.
SUMMARY FINANCIAL RESULTS
(Amounts in thousands, except per share data)
Three Months Ended Year Ended
------------------------- -------------------------
December 31, December 31, December 31, December 31,
2003 2002 2003 2002
------------ ------------ ------------ ------------
(Unaudited)
Revenue $547,072 $341,678 $1,800,374 $1,276,067
Facility
consolidation
charge $1,000 $- $5,461 $-
Operating income
from continuing
operations $8,731 $4,961 $20,895 $747
(Gain) loss on debt
extinguishment $- $(749) $365 $(44,378)
Income from
continuing
operations (1) $ 6,415 $ 3,543 $ 12,955 $ 13,805
Loss from
discontinued
operations $(999) $(2,282) $(1,226) $(15,478)
Cumulative effect
of a change in
accounting
principle, net
of tax $- $- $- $(40,748)
Net income (loss) $5,416 $1,261 $11,729 $(42,421)
Diluted per share:
Income from
continuing
operations (1) $0.33 $0.20 $0.68 $0.77
Loss from
discontinued
operations $(0.05) $(0.13) $(0.06) $(0.86)
Cumulative effect
of a change in
accounting
principle,
net of tax $- $- $- $(2.26)
Net income (loss) $0.28 $0.07 $0.62 $(2.35)
(1) The full year 2002 includes a gain on debt extinguishment of $44.4
million; the fourth quarter of 2002 includes a gain on debt
extinguishment of $749 thousand. The full year 2002 includes an
$8.3 million impairment loss on long-term investment. The full
year 2003 includes a loss on debt extinguishment of $365 thousand.
Fourth Quarter 2003 comparison to Fourth Quarter 2002 Revenue was $547 million, an increase of 60% from $342 million in the fourth quarter of 2002. The increase from the fourth quarter of 2002 was attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to a 67% increase in product distribution revenue and a 21% increase in integrated 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 revenue. The increase in product distribution revenue was due to a 72% increase in the number of wireless devices sold. The increase in the number of wireless devices sold was driven by strong demand for 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. and GSM (Global System for Mobile Communications) A digital cellular phone technology based on TDMA that is the predominant system in Europe, but also used worldwide. Developed in the 1980s, GSM was first deployed in seven European countries in 1992. wireless devices and increased demand for devices with enhanced features and capabilities such as color screens and embedded Inserted into. See embedded system. cameras, partially offset by a decline in TDMA (Time Division Multiple Access) A satellite and cellular phone technology that interleaves multiple digital signals onto a single high-speed channel. For cellular, TDMA triples the capacity of the original analog method (FDMA). wireless devices. The increase in integrated logistics services revenue was primarily due to increased sales of 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. and an increase in the number of subscriber subscriber, n the person, usually the employee, who represents the family unit in relation to the prepayment plan. Other family members are dependents. Also called certificate holders or enrollees. activations. Strengthening of foreign currencies relative to the U.S. dollar accounted for 9 percentage points of the Company's 60% revenue growth from the fourth quarter of 2002. All of our divisions experienced revenue growth in the fourth quarter of 2003. 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's revenue grew by 95% to $302 million from $155 million in the fourth quarter of 2002. The revenue increase in our Asia-Pacific division was primarily due to a 144% increase in the number of wireless devices sold in response to strong market demand throughout the region and our entry into 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. in the second quarter of 2003. Offsetting these increases was a 17% decline in the average selling prices The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. of wireless devices in the Asia-Pacific division due to increased sales of low-end low-end adj. 1. Cheapest in a line of merchandise: low-end subcompact cars. 2. Informal Of, relating to, or intended for low-income consumers; downscale: CDMA wireless devices for India. 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's revenues increased by 37% to $104
million from $76 million in the fourth quarter of 2002. 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 accounted for 20 percentage points of the Europe division's increase in revenue. In local currency terms, the Europe division benefited from a 21% increase in integrated logistics revenue primarily due to increased sales of prepaid wireless airtime and a 47% increase in the number of subscriber activations, partially offset by a decrease in revenue per 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. . In addition, the Europe division's product distribution revenue increased by 14% in local currency terms primarily due to a 12% increase in the number of wireless devices sold in response to strong demand for wireless devices with enhanced features and capabilities and a 38% increase in sales of wireless accessories. Revenue in the Americas A·mer·i·cas , the See America. division grew by 27% to $141 million from $111 million in the fourth quarter of 2002 primarily due to a 32% increase in product distribution revenue. The Americas division's increase in product distribution revenue was primarily due to a 13% increase in the number of wireless devices sold coupled with a 24% increase in the average selling prices of wireless devices. The increase in the Americas division's average selling price is primarily due to increased demand for wireless devices with enhanced features and capabilities. Gross margin was 5.8% as compared to 6.2% in the fourth quarter of 2002. Gross profit was $32 million, which represented an increase of 50% from $21 million in the fourth quarter of 2002. The decrease in gross margin from the fourth quarter of 2002 is primarily due to higher growth in our lower gross margin product distribution business. Partially offsetting this decrease was improved gross margins in the Americas division due to improved gross margins from wireless device sales, operating efficiencies and benefits from the facility consolidation discussed below. Selling, general and administrative ("SG&A") expenses were $22 million, which represented an increase of 36% from $16 million in the fourth quarter of 2002. As a percentage of revenue, SG&A expenses decreased to 4.1%, compared to 4.8% in the fourth quarter of 2002, with the improvement primarily attributable to the 60% increase in revenue. The increase in SG&A expenses is primarily due to employee incentive compensation, the effect of the strengthening of foreign currencies relative to the U.S. dollar, our entry into India in the second quarter of 2003, and an increase in variable costs associated with the increased volume in our Brightpoint Asia Limited business. The facility consolidation charge of $1 million relates to the consolidation of the Company's Richmond Richmond, cities, United States Richmond. 1 City (1990 pop. 87,425), Contra Costa co., W Calif., on San Pablo Bay, an inlet of San Francisco Bay; inc. 1905. , California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). , call center operation into our Plainfield, Indiana Plainfield is a town in Hendricks County, Indiana, United States. The population was 18,396 at the 2000 census. Its 2005 population, according to the Indiana demographic annual update, was 23,532. Plainfield is home to Metropolis, the largest mall on the west side of Indianapolis. , location which was initiated in the first quarter of 2003. This action was taken in order to reduce costs and increase productivity in our Americas division. In establishing the original facility consolidation charge in the first quarter of 2003, certain estimates were made with respect to the timing and terms associated with finding a sub-lessee for this property. The marketing of this property has been more difficult than we originally anticipated. As a result, in order to reflect our current estimate of the costs associated with the facility consolidation, the Company recorded the additional $1 million facility consolidation charge in the fourth quarter of 2003. If the Company continues to experience delays in sub-leasing the Richmond facility or if the terms of any sub-lease are less favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. than anticipated, the Company 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 costs associated with this facility consolidation. 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. from continuing operations, which includes the facility consolidation charge, was $8.7 million, an improvement of $3.7 million, or 76%, from $5.0 million in the fourth quarter of 2002. This increase was due to the 60% increase in revenue, partially offset by lower gross margins and increased SG&A expenses. Strengthening of foreign currencies relative to the U.S. dollar accounted for 24 percentage points of the Company's 76% growth in operating income from continuing operations from the fourth quarter of 2002. Net interest expense was $207 thousand, a reduction of $318 thousand from the fourth quarter of 2002. The decrease was primarily due to reduced borrowings in comparison to the fourth quarter of 2002. Net other expenses were $587 thousand, an increase of $147 thousand from the fourth quarter of 2002. The effective tax rate was 19%, a decrease from 25% in the fourth quarter of 2002. The decrease in the effective tax rate was primarily attributable to an increased proportion of our taxable income Under the federal tax law, gross income reduced by adjustments and allowable deductions. It is the income against which tax rates are applied to compute an individual or entity's tax liability. The essence of taxable income is the accrual of some gain, profit, or benefit to a taxpayer. having been earned in jurisdictions which have lower tax rates, an adjustment to a deferred tax liability in one of our European operations, and other adjustments made to reflect the annual effective tax rate. Income from continuing operations was $6.4 million, an increase of $2.9 million, or 81%, from $3.5 million in the fourth quarter of 2002. Income from continuing operations was $0.33 per diluted share, an increase of 65% from $0.20 per diluted share in the fourth quarter of 2002. On a diluted per share basis, the increase in income from continuing operations was offset by an 8% increase in diluted weighted average shares outstanding from the fourth quarter of 2002. Income from continuing operations in the fourth quarter of 2002 included a $749 thousand gain on 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 debt ($452 thousand, net of tax), which was previously reported as an extraordinary gain and subsequently reclassified to continuing operations in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with 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 145. Loss 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. was $1.0 million, or $0.05 per diluted share, compared to $2.3 million in the fourth quarter of 2002. The loss from discontinued operations of $1.0 million was primarily due to unrealized foreign currency translation losses caused by the strengthening of foreign currencies relative to the U.S. dollar and costs incurred in connection with the liquidation The collection of assets belonging to a debtor to be applied to the discharge of his or her outstanding debts. A type of proceeding pursuant to federal Bankruptcy of discontinued operations. In the fourth quarter of 2002, the Company's $2.3 million loss from discontinued operations was primarily a result of the sale of the Company's operations in Mexico Mexico, city, Mexico Mexico or Mexico City, Span. Ciudad de México (Méjico), city (1990 pop. 8,236,960; 1991 met. area est. 20,899,000), central Mexico, capital and largest city of Mexico. . Net income was $5.4 million, an increase of $4.1 million, or 330%, from $1.3 million in the fourth quarter of 2002. Net income was $0.28 per diluted share, an increase of 300% from $0.07 per diluted share in the fourth quarter of 2002. On a diluted per share basis, the increase in net income was offset by an 8% increase in diluted weighted average shares outstanding from the fourth quarter of 2002. Net income in the fourth quarter of 2002 included a $749 thousand gain on extinguishment of debt ($452 thousand, net of tax), which was previously reported as an extraordinary gain and subsequently reclassified to continuing operations in accordance with SFAS 145. Cash and cash equivalents (unrestricted) were $99 million, an increase of 126% from $44 million at December 31, 2002. The increase in cash and cash equivalents (unrestricted) was primarily due to net cash provided by operating activities of $26 million for the fourth quarter of 2003 and $56 million for the full year 2003. Net cash provided by operating activities included earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
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. cash was $22 million, an increase of 50% from $15 million at December 31, 2002. The increase in pledged cash for the fourth quarter of 2003 was primarily due to the establishment of a 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. credit facility for funding working capital in our India operations. Capital expenditures were $2.8 million. Proceeds from common stock issuances under employee stock option and purchase plans were $11 million. At December 31, 2003, total debt was $16 million resulting in a gross-debt-to-total-capitalization ratio of 10%. The debt was primarily drawn to earn early-pay discounts from suppliers which yielded higher implicit interest rates than our borrowing rates and to fund working capital in India. This compares to gross-debt-to-total-capitalization ratio of 16% at December 31, 2002. The Company's liquidity (unrestricted cash and unused borrowing availability) was approximately $147 million as of December 31, 2003, compared to approximately $86 million as of December 31, 2002. EBITDA is a non-GAAP financial measure. Please refer to the reconciliation of EBITDA to net income and the rationale rationale (rash´  nal´),n the fundamental reasons used as the basis for a decision or action. for presenting this non-GAAP financial measure at the end of this release. 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. quarterly return on invested capital from operations ("ROIC ROIC Return On Invested Capital ROIC Return On Investment Capital ROIC Readout Integrated Circuit ROIC Resident Officer In Charge ROIC Regional Office Implementation Committee ") was 21% as compared to 11% in the fourth quarter of 2002. Calculations of ROIC can be found at the end of this release. Full Year 2003 comparison to Full Year 2002 Revenue was $1.8 billion for the full year 2003, an increase of 41% from $1.3 billion in 2002. The increase in revenue was primarily due to a 52% increase in the number of wireless devices sold through our distribution business. The increase in wireless devices sold was due to strong market demand in the Asia-Pacific division and our entry into India. Strengthening of foreign currencies relative to the U.S. dollar accounted for 7 percentage points of the Company's 41% revenue growth from 2002. Gross profit in 2003 grew by 39% as a result of the 41% growth in revenue from 2002. Gross margins were 5.6% in both 2003 and 2002. SG&A expenses for the full year 2003 were $74 million, an increase of 4% from $71 million in 2002. As a percentage of revenue, SG&A expenses were 4.1% in 2003 as compared to 5.6% in 2002. The improvement in SG&A expenses as a percentage of revenue is attributable to cost reduction measures taken in 2002 and a continued focus on reducing or containing SG&A expenses in 2003. The facility consolidation charge of $5.5 million relates to the Americas division consolidation of its Richmond, California, call center with its Plainfield, Indiana, call center. Operating income from continuing operations for the full year 2003, which includes the facility consolidation charge, was $21 million, an improvement of $20 million from $747 thousand in 2002. The effect of the strengthening of foreign currencies relative to the U.S. dollar contributed approximately $2.0 million to our operating income growth as compared to 2002. Net interest expense for 2003 was $1.1 million, an improvement of $4.8 million from $5.9 million in 2002. This decrease was due to significantly lower debt levels on average throughout 2003 in comparison to 2002. Income from continuing operations was $13 million, a decrease of $1 million, or 6%, from $14 million in 2002. Income from continuing operations was $0.68 per diluted share, a decrease of 12% from $0.77 per diluted share in 2002. Income from continuing operations in 2002 included a $44.4 million gain on extinguishment of debt ($26.6 million, net of tax), which was previously reported as an extraordinary gain and subsequently reclassified to continuing operations in accordance with SFAS 145, and an $8.3 million 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. loss on a 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. investment in Chinatron Group Holdings Limited. Loss from discontinued operations in 2003 was $1.2 million, or $0.06 per diluted share, compared to $15 million, or $0.86 per diluted share, in 2002. The loss from discontinued operations in 2003 was primarily due to unrealized foreign currency translation losses caused by the strengthening of foreign currencies relative to the U.S. dollar and costs incurred in connection with the liquidation of discontinued operations, offset by the receipt of contingent Fortuitous; dependent upon the possible occurrence of a future event, the existence of which is not assured. The word contingent denotes that there is no present interest or right but only a conditional one which will become effective upon the happening of the consideration relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). of the Company's Middle East operations. The loss from discontinued operations in 2002 was primarily due to operating losses 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. incurred in our former China, Middle East and Mexico operations. Net income was $12 million for 2003, or $0.62 per diluted share, as compared to a net loss of $42 million, or $2.35 per diluted share, in 2002. The net loss for 2002 includes a goodwill impairment charge of $41 million, net of tax, pursuant to the adoption of SFAS 142. Cash and cash equivalents (unrestricted) were $99 million, an increase of 126% from $44 million at December 31, 2002. The increase in cash and cash equivalents (unrestricted) was primarily due to net cash provided by operating activities of $56 million in 2003. Net cash provided by operating activities included EBITDA of $30 million for 2003. Improvements in the balance sheet as measured by the cash conversion cycle also contributed to net cash provided by operating activities. The cash conversion cycle improved to 3 days in 2003 from 12 days in 2002. Pledged cash was $22 million, an increase of 50% from $15 million at December 31, 2002. The increase in pledged cash for 2003 was primarily due to the establishment of a short-term credit facility for funding working capital in our India operations and an increase in the amount of a cash-secured letter of credit supporting our Brightpoint Asia Limited operations. Capital expenditures were $6.1 million in 2003. Proceeds from common stock issuances under employee stock option and purchase plans were $12 million in 2003. Please refer to the reconciliation of EBITDA to net income and the rationale for presenting this non-GAAP financial measure at the end of this release. For 2003, ROIC was 15% as compared to less than 1% for 2002. Calculations of ROIC can be found at the end of this release. "I am pleased with our financial and operational performance in 2003. The results reflect the performance of our employees worldwide and their ability to execute To run a program, which causes the computer to carry out its instructions. See executable code, instruction and EXE file. execute - execution our strategy," 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. "In 2004 we will continue to concentrate our efforts on enhancing shareholder value and being the preferred choice for our suppliers and customers in providing wireless distribution solutions and customized services." "Our focus on operating income growth and the balance sheet, particularly cash, is visible in our cash flow and ROIC metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. for 2003," said Frank Terence Terence (Publius Terentius Afer) (tĕr`əns), b. c.185 or c.195 B.C., d. c.159 B.C., Roman writer of comedies, b. Carthage. As a boy he was a slave of Terentius Lucanus, a Roman senator, who brought him to Rome, educated him, and gave him his , Brightpoint's Chief Financial Officer. "Our performance in 2003 has strengthened our position to pursue growth opportunities in 2004." Brightpoint is one of the world's largest distributors of mobile phones. Brightpoint supports the global wireless telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. 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 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 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 the future performance of the Company. 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, the Company's Form 10-Q Form 10-Q See 10-Q. for the period ending September September: see month. 30, 2003 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 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 relating to customer plans and commitments, including, without limitation, prospective or new customers in India; lack of an adequate supply of products; the potential adverse effect on margins due to pricing pressures; our ability to effectively manage our credit granting procedures and difficulties in 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 ; loss of significant customers; our ability to effectively manage inventories to avoid obsolete OBSOLETE. This term is applied to those laws which have lost their efficacy, without being repealed, 2. A positive statute, unrepealed, can never be repealed by non-user alone. 4 Yeates, Rep. 181; Id. 215; 1 Browne's Rep. Appx. 28; 13 Serg. & Rawle, 447. or excess inventories; 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; the possible adverse impact on demand for our products and services resulting from industry consolidation; our ability to absorb absorb To offset sell orders or a new security offering with buy orders. costs associated with expansion into new markets; our ability to successfully acquire and integrate businesses or product lines; success of relationships with wireless equipment manufacturers, network operators and other participants in the wireless telecommunications and data industry; continued tendency of wireless equipment manufacturers and network operators to outsource outsource verb To assign specific work to a 3rd party for a specific length of time at an set price and service level Managed care To use outside labor to perform functions–billing and collections, accounting, janitorial services, ER aspects of their business; the ability to attract and retain qualified management and other personnel; our ability to protect our proprietary information; the impact on our business of increased 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. and acts of terrorism terrorism, the threat or use of violence, often against the civilian population, to achieve political or social ends, to intimidate opponents, or to publicize grievances. ; adverse implications of local laws and regulations, including local statutory tax laws in foreign operations; and our ability to implement software systems or related modules without incurring in·cur tr.v. in·curred, in·cur·ring, in·curs 1. To acquire or come into (something usually undesirable); sustain: incurred substantial losses during the stock market crash. 2. significant additional costs or business interruptions. 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 Company 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)
Three Months Ended Year ended
December 31, December 31,
----------------------- -----------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
(Unaudited)
Revenue:
Product distribution $484,198 $289,505 $1,573,500 $1,087,794
Integrated logistics
services 62,874 52,173 226,874 188,273
----------- ----------- ----------- -----------
547,072 341,678 1,800,374 1,276,067
Cost of revenue:
Product distribution 465,526 279,269 1,519,128 1,058,478
Integrated logistics
services 49,553 41,066 181,023 145,595
----------- ----------- ----------- -----------
515,079 320,335 1,700,151 1,204,073
----------- ----------- ----------- -----------
Gross profit 31,993 21,343 100,223 71,994
Selling, general and
administrative
expenses 22,262 16,382 73,867 71,247
Facility consolidation
charge 1,000 - 5,461 -
----------- ----------- ----------- -----------
Operating income from
continuing operations 8,731 4,961 20,895 747
Net interest expense 207 525 1,146 5,899
Impairment loss on
long-term investment - - - 8,305
(Gain) loss on debt
extinguishment - (749) 365 (44,378)
Net other expenses 587 440 2,488 1,936
----------- ----------- ----------- -----------
Income from continuing
operations before
income taxes and
minority interest 7,937 4,745 16,896 28,985
Income taxes 1,546 1,202 3,965 15,180
----------- ----------- ----------- -----------
Income from continuing
operations before
minority interest 6,391 3,543 12,931 13,805
Minority interest (24) - (24) -
----------- ----------- ----------- -----------
Income from continuing
operations 6,415 3,543 12,955 13,805
Discontinued
operations:
Gain (loss) from
discontinued
operations (319) 357 (698) (12,861)
Loss on disposal of
discontinued
operations (680) (2,639) (528) (2,617)
----------- ----------- ----------- -----------
Total discontinued
operations (999) (2,282) (1,226) (15,478)
Total income (loss)
before cumulative
effect of an
accounting change 5,416 1,261 11,729 (1,673)
Cumulative effect of a
change in accounting
principle, net of tax - - - (40,748)
----------- ----------- ----------- -----------
Net income (loss) $5,416 $1,261 $11,729 $(42,421)
=========== =========== =========== ===========
Basic per share:
Income from
continuing
operations $0.35 $0.20 $0.71 $0.77
Discontinued
operations (0.06) (0.13) (0.07) (0.86)
Cumulative effect
of a change in
accounting
principle, net of
tax - - - (2.26)
----------- ----------- ----------- -----------
Net income (loss) $0.29 $0.07 $0.64 $(2.35)
=========== =========== =========== ===========
Diluted per share:
Income from
continuing
operations $0.33 $0.20 $0.68 $0.77
Discontinued
operations (0.05) (0.13) (0.06) (0.86)
Cumulative effect
of a change in
accounting
principle, net of
tax - - - (2.26)
----------- ----------- ----------- -----------
Net income (loss) $0.28 $0.07 $0.62 $(2.35)
=========== =========== =========== ===========
Weighted average common
shares outstanding:
Basic 18,498 18,038 18,170 17,996
=========== =========== =========== ===========
Diluted 19,488 18,083 19,002 18,019
=========== =========== =========== ===========
BRIGHTPOINT, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
December 31, December 31,
2003 2002
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $98,879 $43,798
Pledged cash 22,042 14,734
Accounts receivable (less allowance for
doubtful accounts of $7,683 and $13,917) 132,944 111,771
Inventories 108,665 73,472
Contract financing receivable 10,838 16,960
Other current assets 13,083 12,867
------------ ------------
Total current assets 386,451 273,602
Property and equipment 29,566 35,696
Goodwill and other intangibles 19,340 14,153
Other assets 9,333 12,851
------------ ------------
Total assets $444,690 $336,302
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $204,242 $129,621
Accrued expenses 60,960 48,816
Unfunded portion of contract financing
receivable 15,697 22,102
Convertible notes, short-term - 12,017
Lines of credit, short-term 16,207 10,103
------------ ------------
Total current liabilities 297,106 222,659
Stockholders' 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; 19,262 and 18,048
issued and outstanding in 2003 and 2002,
respectively 193 180
Additional paid-in capital 227,338 214,524
Retained earnings (deficit) (77,738) (89,466)
Accumulated other comprehensive loss (2,209) (11,595)
------------ ------------
Total stockholders' equity 147,584 113,643
------------ ------------
Total liabilities and stockholders' equity $444,690 $336,302
============ ============
BRIGHTPOINT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
Three Months Ended Year ended
December 31, December 31,
------------------- -------------------
2003 2002 2003 2002
--------- --------- --------- ---------
(Unaudited)
Operating activities
Net income (loss) $5,416 $1,261 $11,729 $(42,421)
Adjustments to reconcile net
income (loss) to net cash
provided by operating
activities:
Depreciation and
amortization 3,041 2,514 12,733 12,431
Amortization of debt
discount - 141 33 3,709
Facility consolidation
charge 1,000 - 5,461 -
Restricted cash
requirements (118) (3,021) (2,308) 1,923
Deferred taxes 2,010 12,852 2,010 12,852
Discontinued operations 999 2,282 1,226 15,478
Net cash used by
discontinued operations (822) (843) (793) (8,517)
Income tax benefits of
exercise of stock
options 334 - 445 -
(Gain) loss on debt
extinguishment - (749) 365 (44,378)
Minority interest 24 - 24 -
Cumulative effect of a
change in accounting
principle, net of tax - - - 40,748
Impairment loss on long-
term investment - - - 8,305
Changes in operating
assets and liabilities,
net of effects from
acquisitions and
divestitures:
Accounts receivable 37,341 12,864 (4,306) 70,068
Inventories 1,710 (6,311) (27,575) 53,888
Other operating assets 5,149 17,950 806 17,450
Accounts payable and
accrued expenses (29,750) (11,439) 55,677 (71,415)
--------- --------- --------- ---------
Net cash provided by operating
activities 26,334 27,501 55,527 70,121
Investing activities
Capital expenditures (2,774) (1,353) (6,057) (8,671)
Cash effect of divestiture - - 1,328 (6,307)
Proceeds from Mexico sale - 3,091 - 2,758
Purchase acquisitions, net of
cash acquired (908) - (2,880) -
Decrease (increase) in funded
contract financing
receivables, net (681) 2,662 5,887 20,750
Decrease (increase) in other
assets (408) (264) 154 169
--------- --------- --------- ---------
Net cash provided (used) by
investing activities (4,771) 4,136 (1,568) 8,699
Financing activities
Net proceed (payments) on
credit facilities 9,235 (10,508) 2,761 (18,436)
Pledged cash requirements (5,000) - (5,000) -
Repurchase of convertible
notes - (5,845) (11,980) (75,015)
Proceeds from common stock
issuances under employee
stock option and purchase
plans 11,179 16 12,383 173
--------- --------- --------- ---------
Net cash provided (used) by
financing activities 15,414 (16,337) (1,836) (93,278)
Effect of exchange rate
changes on cash and cash
equivalents 281 682 2,958 (39)
--------- --------- --------- ---------
Net increase (decrease) in
cash and cash equivalents 37,258 15,982 55,081 (14,497)
Cash and cash equivalents at
beginning of period 61,621 27,816 43,798 58,295
--------- --------- --------- ---------
Cash and cash equivalents at
end of period $98,879 $43,798 $98,879 $43,798
========= ========= ========= =========
Supplemental Information
(Amounts in thousands)
Revenue By Division
Three Months Ended Change
--------------------------------------- from
December 31, % of December 31, % of Q4 2002 to
2003 Total 2002 Total Q4 2003
-------------------------------------------------
Asia-Pacific $301,778 55% $154,545 45% 95%
Americas 141,319 26% 111,476 33% 27%
Europe 103,975 19% 75,657 22% 37%
------------------------------------------------
Total $547,072 100% $341,678 100% 60%
=================================================
Year Ended Change
---------------------------------------- from
December 31, % of December 31, % of 2002 to
2003 Total 2002 Total 2003
-------------------------------------------------
Asia-Pacific $995,798 55% $527,499 41% 89%
Americas 469,618 26% 493,203 39% (5%)
Europe 334,958 19% 255,365 20% 31%
-------------------------------------------------
Total $1,800,374 100% $1,276,067 100% 41%
=================================================
Revenue By Service Line
Three Months Ended Change
---------------------------------------- from
December 31, % of December 31, % of Q4 2002 to
2003 Total 2002 Total Q4 2003
-------------------------------------------------
Product distribution
(1) $484,198 89% $289,505 85% 67%
Integrated logistics
services 62,874 11% 52,173 15% 21%
-------------------------------------------------
Total $547,072 100% $341,678 100% 60%
=================================================
Year Ended Change
---------------------------------------- from
December 31, % of December 31, % of 2002 to
2003 Total 2002 Total 2003
-------------------------------------------------
Product distribution
(1) $1,573,500 87% $1,087,794 85% 45%
Integrated logistics
services 226,874 13% 188,273 15% 21%
-------------------------------------------------
Total $1,800,374 100% $1,276,067 100% 41%
=================================================
(1) Product distribution referred to in this press release includes
wireless devices and related accessories.
Wireless Devices Handled
Three Months Ended Change
---------------------------------------- from
Q4 2002
December 31, % of December 31, % of to
2003 Total 2002 Total Q4 2003
-------------------------------------------------
Product distribution 3,314 53% 1,924 46% 72%
Integrated logistics
services 2,914 47% 2,272 54% 28%
-------------------------------------------------
Total 6,228 100% 4,196 100% 48%
=================================================
Year Ended Change
---------------------------------------- from
December 31, % of December 31, % of 2002 to
2003 Total 2002 Total 2003
-------------------------------------------------
Product distribution 10,837 53% 7,150 47% 52%
Integrated logistics
services 9,502 47% 8,001 53% 19%
-------------------------------------------------
Total 20,339 100% 15,151 100% 34%
=================================================
Supplemental Information (continued)
(Amounts in thousands)
Earnings Before Interest, Taxes, Depreciation and Amortization
("EBITDA")
Three Months
Ended Year Ended
December 31, December 31,
2003 2003
------------- -------------
Net income $5,416 $11,729
Net interest expense 207 1,146
Income taxes (includes income taxes
included
in Discontinued Operations) 1,581 4,129
Depreciation and amortization 3,041 12,733
------------- -------------
EBITDA $10,245 $29,737
============= =============
EBITDA is a non-GAAP financial measure. EBITDA provides management
with an indicator of how much cash the Company generates, excluding
any changes in working capital. Since the Company had experienced
negative cash flow and high debt in prior periods, this has become an
important measurement for management. Management also reviews and
utilizes the entire statement of cash flows to evaluate cash flow
performance.
Cash Conversion Cycle Days
Management utilizes the cash conversion cycle days metric and its
components to evaluate the Company's ability to manage its working
capital and its cash flow performance. Cash conversion cycle days and
its components for the for the quarters and years ending December 31,
2003 and 2002 were as follows:
Three Months Ended Year Ended
December 31, December 31,
------------------- -------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Days sales outstanding in
accounts receivable 20 28 25 30
Days inventory on-hand 20 22 24 24
Days payable outstanding (37) (39) (46) (42)
--------- --------- --------- ---------
Cash Conversion Cycle Days 3 11 3 12
========= ========= ========= =========
Return on Invested Capital ("ROIC")
The Company uses ROIC to measure the effectiveness of its use of
invested capital to generate profits. ROIC for the quarters and years
ending December 31, 2003 and 2002 was as follows:
Three Months Ended Year Ended
December 31, December 31,
------------------- -------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Operating income after taxes:
Operating income from
continuing operations $8,731 $4,961 $20,895 $747
Plus: Facility consolidation
charge 1,000 - 5,461 -
Less: Estimated income taxes
(1) (1,849) (1,240) (6,062) (391)
--------- --------- --------- ---------
Operating income after taxes $7,882 $3,721 $20,294 356
========= ========= ========= =========
Invested capital:
Debt $16,207 $22,120 $16,207 $22,120
Stockholders' equity 147,584 113,643 147,584 113,643
--------- --------- --------- ---------
Invested capital $163,791 $135,763 $163,791 $135,763
========= ========= ========= =========
Average invested capital (2) $148,324 $140,585 $137,463 $215,432
========= ========= ========= =========
ROIC (3) 21% 11% 15% (a)
========= ========= ========= =========
(a) Less than 1%
(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
annual periods represents the simple average of the invested
capital amounts for the prior year end and at each quarter end in
the respective annual period.
(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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