INDIANAPOLIS, May 7, 2009 (GLOBE NEWSWIRE) -- Brightpoint, Inc. (Nasdaq:CELL) reported its financial results for the first quarter ended March 31, 2009. Unless otherwise noted, amounts pertain to the first quarter of 2009.
FOR THE FIRST QUARTER OF 2009:
Revenue was $709 million for the first quarter of 2009, a decrease of 40% compared to the first quarter of 2008 and a decrease of 30% compared to the fourth quarter of 2008, due to a decrease in both wireless devices handled and average selling price brought on by the global economic downturn.
Loss from continuing operations was $3.1 million or $0.04 per diluted share for the first quarter of 2009 compared to income from continuing operations of $3.2 million or $0.04 per diluted share for the first quarter of 2008.
Adjusted income from continuing operations (non-GAAP) was $4.2 million or $0.05 per diluted share for the first quarter of 2009 compared to $9.7 million or $0.12 per diluted share for the first quarter of 2008. Please see the disclosure below regarding adjusted income from continuing operations (non-GAAP). Adjustments to income from continuing operations for the first quarter of 2009 include:
* $5.1 million (pre-tax) of restructuring charges in connection
with our previously announced 2009 spending and debt reduction
plan.
* $3.6 million (pre-tax) of non-cash amortization expense related
to acquired intangible assets.
* $1.7 million (pre-tax) of non-cash stock based compensation
expense.
* $3.1 million tax impact of the items described above.
Total debt was $138.3 million at March 31, 2009, compared to $176.4 million at December 31, 2008 and $378.4 million at March 31, 2008. Total liquidity (unrestricted cash and unused borrowing availability) was $398.1 million at March 31, 2009 compared to $401.2 million at December 31, 2008 and $313.1 million at March 31, 2008. Average daily debt outstanding for the first quarter of 2009 was $216.0 million compared to average daily debt outstanding of $333.0 million for the fourth quarter of 2008 and $513.0 million for the first quarter of 2008.
Gross margin was 8.8% for the first quarter of 2009 compared to 7.5% for the first quarter of 2008 and 8.0% for the fourth quarter of 2008. The increase in gross margin was primarily due to a higher mix of logistic services revenue as well as an improved cost structure resulting from the impact of spending reductions in our North America operations.
SG&A expenses were $52.5 million for the first quarter of 2009 compared to $69.8 million for the first quarter of 2008 and $59.3 million for the fourth quarter of 2008. SG&A expenses as a percent of revenue were 7.4% for the first quarter of 2009 compared to 5.9% for the first quarter of 2008 and 5.8% for the fourth quarter of 2008 due to lower revenue in the first quarter of 2009. SG&A expenses were lower compared to the first quarter of 2008 primarily due to the impact of our 2008 realignment of our Europe operations as well as the impact of our 2009 Spending and Debt Reduction Plan. Please refer to the separate press release dated May 7, 2009 for an update on the Company's previously announced 2009 Spending and Debt Reduction Plan.
Interest expense, net was $2.8 million for the first quarter of 2009 compared to $6.7 million for the first quarter of 2008 and $4.0 million for the fourth quarter of 2008. Interest expense, net decreased because of the positive impact of our debt reduction initiatives in 2008 and 2009.
Income tax benefit was $1.4 million for the first quarter of 2009 compared to income tax expense of $1.5 million for the first quarter of 2008. The effective tax rate was 30.8% for the first quarter of 2009 compared to 31.9% for the first quarter of 2008.
Cash provided by operating activities was $35.8 million for the first quarter of 2009 compared to $98.4 million for the first quarter of 2008 and cash used in operating activities of $40.1 million for the fourth quarter of 2008.
EBITDA was $6.7 million for the first quarter of 2009 compared to $18.9 million for the first quarter of 2008.
Units handled were 18.7 million for the first quarter of 2009 compared to 21.6 million for the first quarter of 2008 and 21.9 million for the fourth quarter of 2008.
"Given the tough global economic environment over the last 12 months, I am proud of our first quarter 2009 performance specifically in the areas of overall debt and spending reduction," said Robert J. Laikin, Brightpoint's Chairman of the Board and Chief Executive officer. "In 2009, we will continue to focus on the fundamentals of our business, which include reducing debt and spending, focusing on building cost-efficient customized logistics capabilities in Europe, exiting programs and/or countries that do not meet our ROIC and ROTC criteria and focusing on smartphones. I firmly believe that the successful performance in these focus areas will reduce our overall risk profile, enhance our balance sheet and build long term shareholder value."
"I am very pleased to say that we were able to reduce our daily average debt by another $117 million to a daily average of $216 million during the first quarter of 2009," said Tony Boor, Brightpoint's Chief Financial Officer. "We continued to make very good progress toward this initiative in the beginning of the second quarter with an average daily debt of $170 million for the month of April. We had previously announced a targeted reduction in average daily debt for 2009 of $100 to $150 million. Our success in the first quarter already puts us squarely within that targeted reduction range for the year. Therefore, I am revising our estimated debt reduction, and now anticipate having an average daily debt of less than $100 million during the fourth quarter of 2009. This represents an additional $116 million reduction in average daily debt compared to the first quarter of this year including the anticipated impact of normal seasonal increases in working capital and debt."
Please see the attached Schedules and the Brightpoint website at www.Brightpoint.com for an explanation and reconciled presentation of the results for the first quarter ended March 31, 2009 prepared in accordance with U.S. GAAP and on an as adjusted non-GAAP basis. The explanation includes the reasons why management believes such non-GAAP measures are useful both to management and investors. Any financial measure other than those prepared in accordance with U.S. GAAP should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. GAAP. In addition, please see the attached Supplemental Information for a reconciliation of EBITDA.
The consolidated statements of operations for all periods presented reflect the reclassification of the results of operations of the Company's Poland and Turkey businesses as well as the Company's locally branded PC notebook business in Slovakia to discontinued operations in accordance with U.S. generally accepted accounting principles. The Company abandoned its Poland and Turkey businesses in the first quarter of 2009 and abandoned the locally branded PC notebook business in the third quarter of 2008. Please see Brightpoint Inc.'s website at www.Brightpoint.com for quarterly statements of operations for all periods that have been reclassified.
SUMMARY FINANCIAL RESULTS
(Amounts in thousands, except per share data)
Three Months Ended
-----------------------------------------
March 31, March 31, December 31,
2009 2008 2008
------------ ------------ ------------
(Unaudited) (Unaudited) (Unaudited)
Wireless devices handled 18,742 21,623 21,938
Revenue $ 709,077 $1,174,803 $1,016,502
Gross profit $ 62,462 $ 88,647 $ 80,862
Gross margin 8.8% 7.5% 8.0%
Selling, general and
administrative expenses $ 52,473 $ 69,754 $ 59,292
Operating income from
continuing operations $ 1,155 $ 10,557 $ (314,571)
Income (loss) from
continuing operations $ (3,075) $ 3,180 $ (341,935)
Net income (loss)
attributable to common
stockholders $ (3,073) $ 775 $ (346,037)
Diluted per share
attributable to common
stockholders:
Income (loss) from
continuing operations $ (0.04) $ 0.04 $ (4.33)
Net income (loss) $ (0.04) $ 0.01 $ (4.38)
Brightpoint, Inc. (Nasdaq:CELL) is a global leader in the distribution of wireless devices and in providing customized logistic services to the wireless industry. In 2008, Brightpoint handled approximately 84 million wireless devices globally. Brightpoint's innovative services include distribution, channel development, fulfillment, product customization, eBusiness solutions, and other outsourced services that integrate seamlessly with its customers. Brightpoint's effective and efficient platform allows its customers to benefit from quickly deployed, flexible, and cost effective solutions. The company has approximately 2,800 employees in more than 25 countries. In 2008 Brightpoint generated revenue of $4.6 billion. Brightpoint provides distribution and customized services to over 25,000 B2B customers worldwide. Additional information about Brightpoint can be found on its website at www.brightpoint.com, or by calling its toll-free Information and Investor Relations line at 877-IIR-CELL (877-447-2355).
Certain information in this press release may contain forward-looking statements 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 most recent Form 10-K and Form 10-Q and the cautionary statements and risk factors contained therein. 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) the current economic downturn could cause a severe disruption in our operations; (ii) fluctuations in regional demand patterns and economic factors could harm our operations; (iii) our debt facilities could prevent us from borrowing additional funds, if needed; (iv) collections of our accounts receivable; (v) our reliance on suppliers to provide trade credit facilities to adequately fund our on-going operations and product purchases; (vi) a significant percentage of our revenues are generated outside of the United States in countries that may have volatile currencies or other risks; (vii) the loss or reduction in orders from principal customers or a reduction in the prices we are able to charge these customers could cause our revenues to decline and impair our cash flows; (viii) the impact that seasonality may have on our business and results; (ix) we buy a significant amount of our products from a limited number of suppliers, and they may not provide us with competitive products at reasonable prices when we need them in the future; (x) our business could be harmed by consolidation of mobile operators; (xi) we make significant investments in the technology used in our business and rely on that technology to function effectively without interruptions; (xii) the fact that a substantial number of shares are eligible for future sale by Dangaard Holding and the sale of those shares could adversely affect our stock price; (xiii) our future operating results will depend on our ability to continue to increase volumes and maintain margins; (xiv) our ability to expand and implement our future growth strategy, including acquisitions; (xv) uncertainty regarding whether wireless equipment manufacturers and wireless network operators will continue to outsource aspects of their business to us; (xvi) our reliance upon third parties to manufacture products which we distribute and reliance upon their quality control procedures; (xvii) rapid technological changes in the wireless communications and data industry; (xviii) effect of natural disasters, epidemics, hostilities or terrorist attacks on our operations; (xix) intense industry competition; (xx) our ability to manage and sustain future growth at our historical or current rates; (xxi) our ability to continue to enter into relationships and financing that may provide us with minimal returns or losses on our investments; (xxii) our ability to attract and retain qualified management and other personnel, cost of complying with labor agreements and high rate of personnel turnover; (xxiii) protecting our proprietary information; (xxiv) our obligations under certain debt, lease and other contractual arrangements; (xxv) our dependence on our computer and communications systems; (xxvi) uncertainty regarding future volatility in our Common Stock price; (xxvii) potential dilution to existing shareholders from the issuance of securities under our long-term incentive plans; (xxviii) existence of anti-takeover measures; (xxix) acquisition related accounting impairment and amortization. Because of the aforementioned 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. The words "believe," "expect," "anticipate," "estimate" "intend," "likely", "will", "should" 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,
------------------------------
2009 2008
------------------------------
Revenue
Distribution revenue $ 620,561 $1,069,677
Logistic services revenue 88,516 105,126
------------------------------
Total revenue 709,077 1,174,803
Cost of revenue
Cost of distribution revenue 594,634 1,017,764
Cost of logistic services revenue 51,981 68,392
------------------------------
Total cost of revenue 646,615 1,086,156
------------------------------
Gross profit 62,462 88,647
Selling, general and administrative
expenses 52,473 69,754
Amortization expense 3,748 4,722
Restructuring charge 5,086 3,614
------------------------------
Operating income from continuing
operations 1,155 10,557
Interest, net 2,765 6,662
Other (income) expense 2,837 (775)
------------------------------
Income (loss) from continuing
operations before income taxes (4,447) 4,670
Income tax expense (benefit) (1,372) 1,490
------------------------------
Income (loss) from continuing
operations (3,075) 3,180
Discontinued operations, net of
income taxes:
Loss from discontinued operations (1,096) (2,266)
Gain on disposal of discontinued
operations 1,098 --
------------------------------
Total discontinued operations, net
of income taxes 2 (2,266)
Net income (loss) (3,073) 914
Net loss attributable to
noncontrolling interest -- (139)
------------------------------
Net income (loss) attributable to
common stockholders $ (3,073) $ 775
==============================
Earnings per share attributable to
common stockholders - basic:
Income (loss) from continuing
operations $ (0.04) $ 0.04
Discontinued operations, net of
income taxes -- (0.03)
------------------------------
Net income (loss) $ (0.04) $ 0.01
==============================
Earnings per share attributable to
common stockholders - diluted:
Income (loss) from continuing
operations $ (0.04) $ 0.04
Discontinued operations, net of
income taxes -- (0.03)
------------------------------
Net income (loss) $ (0.04) $ 0.01
==============================
Weighted average common shares
outstanding:
Basic 79,064 77,523
==============================
Diluted 79,064 81,519
==============================
BRIGHTPOINT, INC.
NON-GAAP RECONCILIATION OF INCOME FROM CONTINUING OPERATIONS
(Amounts in thousands, except per share data)
(Unaudited)
We have provided income from continuing operations and earnings per
share on both a U.S. GAAP basis and on an as adjusted non-GAAP basis
because the Company's management believes it provides meaningful
information to investors. Among other things, it may assist investors
in evaluating the Company's on-going operations. Adjustments to
earnings per share from continuing operations generally include
certain non-cash charges such as stock based compensation and
amortization of acquired finite lived intangible assets as well as
other items that are considered to be unusual or infrequent in nature
such as goodwill impairment charges and restructuring charges.
Non-GAAP earnings per share is calculated by dividing non-GAAP income
from continuing operations by non-GAAP weighted average common shares
outstanding (diluted). For purposes of calculating non-GAAP earnings
per share, we add back certain shares presumed to be repurchased
under the U.S. GAAP treasury stock method related to stock based
compensation expense. We believe these non-GAAP disclosures provide
important supplemental information to management and investors
regarding financial and business trends relating to the Company's
financial condition and results of operations. Management uses these
non-GAAP measures internally to evaluate the performance of the
business and to evaluate results relative to incentive compensation
targets for certain employees. Investors should consider non-GAAP
measures in addition to, not as a substitute for, or as superior to
measures of financial performance prepared in accordance with U.S.
GAAP.
Three months ended March 31,
-------------------------------------------------------
2009 2008
--------------------------- ---------------------------
Income (loss) Impact Income Impact
from per from per
continuing diluted continuing diluted
operations(1) share operations(2) share
------------- ------------- ------------- -------------
GAAP Income
(loss) from
continuing
operations: $ (3,075) $ (0.04) $ 3,180 $ 0.04
Non-GAAP
adjustments:
Stock-based
compensation 1,685 0.02 1,645 0.02
Amortization 3,648 0.04 4,509 0.06
Restructuring
charge 5,086 0.06 3,614 0.04
Income tax
impact of
the above (3,104) (0.03) (3,273) (0.04)
------------- ------------- ------------- -------------
As-adjusted
(non-GAAP)
income from
continuing
operations: $ 4,240 $ 0.05 $ 9,675 $ 0.12
As - adjusted
weighted
average
common shares
outstanding -
diluted (3): 81,950 82,780
(1) Adjustments for the three months ended March 31, 2009 include:
-- $5.1 million of restructuring charges in connection with
our previously announced 2009 spending and debt reduction
plan.
-- $3.6 million of non-cash amortization expense related to
acquired intangible assets.
-- $1.7 million of non-cash stock based compensation
expense.
Partially offset by:
-- $3.1 million tax impact of items described above.
(2) Adjustments for the three months ended March 31, 2008 include:
-- $3.6 million of restructuring charges in connection with
consolidating the Brightpoint and Dangaard operations in
Germany.
-- $4.5 million of non-cash amortization expense related to
acquired intangible assets.
-- $1.6 million of non-cash stock based compensation
expense.
Partially offset by:
-- $3.3 million tax impact of items described above.
(3) Weighted average common shares outstanding - diluted for the
three months ended March 31, 2009 includes the effect of 2.3
million common shares outstanding that are excluded from the
earnings per share calculation under SFAS No. 128 Earnings Per
Share as they are anti-dilutive to earnings per share. Weighted
average common shares outstanding - diluted for the three
months ended March 31, 2009 and 2008 includes the effect of 0.5
million (2009) and 1.3 million (2008) common shares outstanding
that are presumed to be repurchased under the U.S. GAAP
treasury stock method related to stock based compensation
expense.
BRIGHTPOINT, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except per share data)
March 31, December 31,
------------ ------------
2009 2008
------------ ------------
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 53,881 $ 57,226
Accounts receivable (less allowance
for doubtful accounts of $11,433
in 2009 and $11,217 in 2008) 346,735 499,541
Inventories 207,783 290,243
Other current assets 62,764 61,392
------------ ------------
Total current assets 671,163 908,402
Property and equipment, net 55,216 56,463
Goodwill 51,413 51,439
Other intangibles, net 100,309 107,286
Other assets 20,053 22,770
------------ ------------
Total assets $ 898,154 $1,146,360
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 364,424 $ 534,906
Accrued expenses 113,546 137,957
Current portion of long-term debt -- --
Lines of credit and other short-
term borrowings 3,525 798
------------ ------------
Total current liabilities 481,495 673,661
Long-term liabilities:
Lines of credit, long-term 28 1,501
Long-term debt 134,745 174,106
Other long-term liabilities 43,129 46,528
------------ ------------
Total long-term liabilities 177,902 222,135
------------ ------------
Total liabilities 659,397 895,796
Commitments and contingencies
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; 89,053
issued in 2009 and 88,730 issued
in 2008 891 887
Additional paid-in-capital 626,166 625,415
Treasury stock, at cost, 7,128
shares in 2009 and 7,063 shares in
2008 (60,291) (59,983)
Retained deficit (315,721) (312,647)
Accumulated other comprehensive loss (12,288) (3,108)
------------ ------------
Total shareholders' equity 238,757 250,564
------------ ------------
Total liabilities and shareholders'
equity $ 898,154 $1,146,360
============ ============
BRIGHTPOINT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
Three months ended
March 31,
--------------------------
2009 2008
---------- ----------
Operating activities
Net income (loss) $ (3,073) $ 914
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 8,322 9,507
Non-cash compensation 1,685 1,645
Restructuring charge 5,086 3,614
Change in deferred taxes (40) (4,262)
Other non-cash 31 3,330
Changes in operating assets and
liabilities, net of effects from
acquisitions and divestitures:
Accounts receivable 130,397 211,058
Inventories 69,199 29,298
Other operating assets (2,698) (3,154)
Accounts payable and accrued expenses (173,097) (153,541)
---------- ----------
Net cash provided by operating
activities 35,812 98,409
Investing activities
Capital expenditures (4,292) (6,377)
Acquisitions, net of cash acquired -- (1,252)
Decrease (increase) in other assets (745) 1,002
---------- ----------
Net cash used in investing activities (5,037) (6,627)
Financing activities
Net proceeds from (repayments on) lines
of credit 1,997 (79,134)
Repayments on Global Term Loans (33,751) (23,130)
Deferred financing costs paid (394) --
Purchase of treasury stock (308) (257)
Deficient tax benefit from equity based
compensation (920) (82)
Proceeds from common stock issuances
under employee stock option plans -- 22
---------- ----------
Net cash used in financing activities (33,376) (102,581)
Effect of exchange rate changes on cash
and cash equivalents (744) (608)
---------- ----------
Net decrease in cash and cash
equivalents (3,345) (11,407)
Cash and cash equivalents at beginning
of period 57,226 102,160
---------- ----------
Cash and cash equivalents at end of
period $ 53,881 $ 90,753
========== ==========
Supplemental Information
(Amounts in thousands)
Earnings Before Interest, Taxes, Depreciation and Amortization
("EBITDA")
Three Months Ended
-----------------------------------------
March 31, March 31, December 31,
2009 2008 2008
------------ ------------ ------------
Net income (loss) (1) $ (3,073) $ 775 $(346,037)
Net interest expense (1) 2,751 7,544 4,256
Income taxes (1) (1,372) 1,109 21,114
Depreciation and
amortization (1) (2) 8,408 9,507 334,431
------------ ------------ ------------
EBITDA $ 6,714 $ 18,935 $ 13,764
============ ============ ============
(1) Includes discontinued operations
(2) Depreciation and amortization for the three months ended
December 31, 2008 includes a $325.9 million goodwill impairment
charge related to the goodwill allocated to the EMEA reporting
unit. The goodwill related primarily to the 2007 acquisition of
Dangaard Telecom.
EBITDA is a non-GAAP financial measure. Management believes
EBITDA provides it with an indicator of how much cash the
Company generates, excluding non-cash charges and any changes in
working capital. 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 quarters ending March 31,
2009 and 2008, and December 31, 2008 were as follows:
Three Months Ended
-----------------------------------------
March 31, March 31, December 31,
2009 2008 2008
------------ ------------ ------------
Days sales outstanding in
accounts receivable 32 33 32
Days inventory on-hand 29 38 26
Days payable outstanding (46) (42) (41)
------------ ------------ ------------
Cash Conversion Cycle Days 15 29 17
============ ============ ============
Please see the Brightpoint website at www.Brightpoint.com for a
detailed calculation of cash conversion cycle days for the three
months ended March 31, 2009.
Return on Invested Capital ("ROIC")
Management uses ROIC to measure the effectiveness of its use of
invested capital to generate profits. ROIC for the quarters and
trailing four quarters ended March 31, 2009 and 2008, and
December 31, 2008, was as follows:
Three Months Ended
-----------------------------------------
March 31, March 31, December 31,
2009 2008 2008
------------ ------------ ------------
Operating income after
taxes (non-GAAP):
Operating income (loss)
from continuing operations $ 1,155 $ 10,557 $ (314,571)
Restructuring charge 5,086 3,614 6,137
Goodwill impairment charge -- -- 325,947
Less: estimated income
taxes (1) (2,184) (4,960) (6,130)
------------ ------------ ------------
Operating income after
taxes (non-GAAP) $ 4,057 $ 9,211 $ 11,383
============ ============ ============
Invested Capital:
Debt $ 138,298 $ 378,407 $ 176,405
Shareholders' equity 238,757 639,359 250,564
------------ ------------ ------------
Invested capital $ 377,055 $ 1,017,766 $ 426,969
============ ============ ============
Average invested
capital (2) $ 402,013 $ 1,040,100 $ 618,210
ROIC (3) 4% 4% 7%
Trailing Four Quarters Ended
-----------------------------------------
March 31, March 31, December 31,
2009 2008 2008
------------ ------------ ------------
Operating income after
taxes (non-GAAP):
Operating income (loss)
from continuing operations $ (283,578) $ 69,735 $ (274,176)
Restructuring charge 15,084 12,275 13,612
Goodwill impairment charge 325,947 -- 325,947
Less: estimated income
taxes (1) (20,109) (28,704) (22,884)
------------ ------------ ------------
Operating income after
taxes (non-GAAP) $ 37,344 $ 53,306 $ 42,499
============ ============ ============
Invested Capital:
Debt $ 138,298 $ 378,407 $ 176,405
Shareholders' equity 238,757 639,359 250,564
------------ ------------ ------------
Invested capital $ 377,055 $ 1,017,766 $ 426,969
============ ============ ============
Average invested
capital (2) $ 710,063 $ 735,274 $ 847,139
ROIC (3) 5% 7% 5%
(1) Estimated income taxes were calculated by multiplying the sum of
operating income from continuing operations, the restructuring
charge and the goodwill impairment charge by an effective tax
rate of 35%, which represents an estimated, blended statutory
tax rate for the markets in which we operate.
(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 quarters represents the simple average of the
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 results by four.
We exclude unusual items such as restructuring charges from our
calculation of "Operating income after taxes" because we do not
believe such items are representative of expected future returns.
Therefore, we believe decisions to allocate resources should not be
influenced by such items.
Return on Tangible Capital ("ROTC")
Management uses Return on Tangible Capital, or ROTC, to provide a
measurement which can be consistently and fairly applied
internally to all operating entities to determine the
effectiveness of each entity's usage of tangible capital. ROTC
eliminates the influence of intangible assets balances, cash
transfer capabilities and income tax rates which vary amongst
Brightpoint operating entities and are not controllable by
operating entity management. ROTC indicates the return which can
be expected on the tangible capital consumed and replaced through
the normal business cycle. To calculate ROTC, operating income
from continuing operations is adjusted for restructuring charges,
goodwill impairment charge and amortization of intangible assets,
and this adjusted operating income is applied to average tangible
capital. Average tangible capital is calculated as total assets
less cash, investments, goodwill, and intangible assets, net of
current liabilities excluding short term borrowings. The details
of this measurement are outlined below.
Three Months Ended
-----------------------------------------
March 31, March 31, December 31,
2009 2008 2008
------------ ------------ ------------
Operating income before
amortization and
restructuring charges
(non-GAAP):
Operating income from
continuing operations $ 1,155 $ 10,557 $ (314,571)
Plus: amortization expense 3,748 4,722 4,057
Plus: goodwill impairment
charge -- -- 325,947
Plus: restructuring charge 5,086 3,614 6,137
Operating income before
amortization and ------------ ------------ ------------
restructuring charges
(non-GAAP): $ 9,989 $ 18,893 $ 21,570
============ ============ ============
Tangible capital:
Total assets $ 898,154 $ 1,814,713 $ 1,146,360
Less: cash and cash
equivalents 53,881 90,753 56,632
Less: short term
investments -- 7,050 --
Less: goodwill 51,413 371,166 51,439
Less: other intangibles,
net 100,309 139,198 107,286
------------ ------------ ------------
Net tangible assets $ 692,551 $ 1,206,546 $ 931,003
Total current liabilities 481,495 737,434 672,862
Less: current portion of
long-term debt -- 12,382 --
Less: lines of credit and
other short term
borrowings 3,525 9,703 798
------------ ------------ ------------
Net current liabilities $ 477,970 $ 715,349 $ 672,064
------------ ------------ ------------
Net tangible capital $ 214,581 $ 491,197 $ 258,939
============ ============ ============
Average tangible
capital (1) $ 238,864 $ 516,410 $ 257,589
ROTC (2) 17% 15% 34%
Trailing Four Quarters
-----------------------------------------
March 31, March 31, December 31,
2009 2008 2008
------------ ------------ ------------
Operating income before
amortization and
restructuring charges
(non-GAAP):
Operating income from
continuing operations $ (283,578) $ 69,735 $ (274,176)
Plus: amortization expense 17,271 15,170 18,246
Plus: goodwill impairment
charge 325,947 -- 325,947
Plus: restructuring charge 15,084 12,275 13,612
Operating income before
amortization and ------------ ------------ ------------
restructuring charges
(non-GAAP): $ 74,724 $ 97,180 $ 83,629
============ ============ ============
Tangible capital:
Total assets $ 898,154 $ 1,814,713 $ 1,146,360
Less: cash and cash
equivalents 53,881 90,753 56,632
Less: short term
investments -- 7,050 --
Less: goodwill 51,413 371,166 51,439
Less: other intangibles,
net 100,309 139,198 107,286
------------ ------------ ------------
Net tangible assets $ 692,551 $ 1,206,546 $ 931,003
Total current liabilities 481,495 737,434 672,862
Less: current portion of
long-term debt -- 12,382 --
Less: lines of credit and
other short term borrowings 3,525 9,703 798
------------ ------------ ------------
Net current liabilities $ 477,970 $ 715,349 $ 672,064
------------ ------------ ------------
Net tangible capital $ 214,581 $ 491,197 $ 258,939
============ ============ ============
Average tangible
capital (1) $ 311,561 $ 406,804 $ 376,010
ROTC (2) 24% 24% 22%
(1) Average tangible capital for quarterly periods represents the
simple average of the beginning and ending tangible capital
amounts for the respective quarter.
(2) ROTC is calculated by dividing operating income before
amortization and restructuring charges by average tangible
capital. ROTC for quarterly periods is stated on an annualized
basis and is calculated by dividing operating income before
amortization and restructuring charges by average tangible
capital and multiplying the results by four.
We anticipate improving our trailing four quarter ROTC to a range of
35%-40% as we increase operating income and better employ tangible
capital.