Brightpoint Reports First Quarter 2010 Financial Results


INDIANAPOLIS, May 5, 2010 (GLOBE NEWSWIRE) -- Brightpoint, Inc. (Nasdaq:CELL) reported its financial results for the first quarter ended March 31, 2010. Unless otherwise noted, amounts pertain to the first quarter of 2010.

FOR THE FIRST QUARTER OF 2010:

Revenue was $795.3 million for the first quarter of 2010, an increase of 15% compared to the first quarter of 2009 and a decrease of 12% compared to the fourth quarter of 2009. Brightpoint revenue typically declines 13% to 18% in the first quarter from the preceding fourth quarter due to the impact of seasonality on our distribution business.

Units handled were 22.5 million for the first quarter of 2010, an increase of 21% compared to the first quarter of 2009 and a decrease of 7% compared to the fourth quarter of 2009. Brightpoint units handled typically decline 10% to 15% in the first quarter as compared to the preceding fourth quarter due to the impact of seasonality on our distribution business. Industry estimates are that global sell-in for the first quarter of 2010 declined approximately 9% to 12% from the fourth quarter of 2009.

Income from continuing operations was $4.7 million or $0.07 per diluted share for the first quarter of 2010 compared to loss from continuing operations of $2.1 million or $0.03 diluted share for the first quarter of 2009 and income from continuing operations of $21.4 million or $0.27 per diluted share for the fourth quarter of 2009. Income from continuing operations for the fourth quarter of 2009 included a $7.7 million non-cash, non-taxable gain on the settlement of an indemnification claim with NC Telecom Holding A/S.

Adjusted income from continuing operations (non-GAAP) was $11.3 million or $0.15 per diluted share for the first quarter of 2010 compared to adjusted income from continuing operations (non-GAAP) of $5.2 million or $0.06 per diluted share for the first quarter of 2009 and $17.8 million or $0.22 per diluted share for the fourth quarter of 2009.

Please see the disclosure below regarding adjusted income from continuing operations (non-GAAP). Adjusted income from continuing operations (non-GAAP) of $0.15 per diluted share for the first quarter of 2010 excludes the following items:

  • $3.8 million (pre-tax) of non-cash amortization expense related to acquired intangible assets.
  • $3.2 million (pre-tax) of non-cash stock based compensation expense.
  • $1.1 million (pre-tax) restructuring charge.
  • $2.4 million tax benefit related to the excluded expenses described above.
  • $0.8 million tax expense related to valuation allowances on deferred tax assets that are no longer expected to be utilized.

Total debt was $124.5 million at March 31, 2010, compared to $97.0 million at December 31, 2009 and $138.3 million at March 31, 2009. Total liquidity (unrestricted cash and unused borrowing availability) was $338.9 million at March 31, 2010 compared to $426.2 million at December 31, 2009 and $398.1 million at March 31, 2009. Total debt and liquidity at March 31, 2010 includes the impact of the repurchase of 9.2 million shares of Brightpoint common shares in January 2010 for $57.3 million, or approximately $6.20 per share.

Gross margin was 9.1% for the first quarter of 2010 compared to 8.8% for the first quarter of 2009 and 9.0% for the fourth quarter of 2009.

SG&A expenses were $56.7 million for the first quarter of 2010 compared to $50.3 million for the first quarter of 2009 and $55.1 million for the fourth quarter of 2009. Fluctuations in foreign currency negatively impacted SG&A expenses by approximately $4.4 million for the first quarter of 2010 as compared to the first quarter of 2009 and favorably impacted SG&A expenses by approximately $1.2 million as compared to the fourth quarter of 2009. SG&A expenses for the first quarter of 2010 included an incremental $1.5 million of additional stock based compensation expense as a result of discretionary awards of restricted stock units granted by our Board of Directors in February 2010. Approximately one-third of these awards vested on the grant date.

Interest expense, net, was $1.8 million for the first quarter of 2010 compared to $2.3 million for the first quarter of 2009 and $1.9 million for the fourth quarter of 2009.

Cash used in operating activities was $23.2 million for the three months ended March 31, 2010 compared to cash provided by operating activities of $35.8 million for the three months ended March 31, 2009 and cash provided by operating activities of $51.1 million for the three months ended December 31, 2009.

EBITDA was $17.0 million for the first quarter of 2010 compared to $6.7 million for the first quarter of 2009 and $31.9 million for the fourth quarter of 2009.

"I am pleased with our financial performance in the first quarter of 2010," said Robert J. Laikin, Chairman of the Board and Chief Executive officer of Brightpoint, Inc. "Our results reflect the execution of our debt and spending reduction initiatives in 2009 as well as the ramp up of recently announced distribution wins. I believe Brightpoint remains well positioned to take advantage of wireless industry trends and we still anticipate our unit growth rate to exceed the top end of analyst expectations for the wireless industry for 2010."

"I am very pleased we were able to deliver strong financial results for the first quarter of 2010," said Tony Boor, Brightpoint's Chief Financial Officer and Treasurer. "All of our regions exceeded our internal expectations for the first quarter, which resulted in as-adjusted operating margin of 2.3%. I am also pleased with our return on invested capital and return on tangible capital metrics. Return on invested capital was 10% for the trailing twelve months, and return on tangible capital for the trailing twelve months was 37%, which is now within our targeted range of 35% to 40%. Both of these improved ratios reflect our disciplined approach to managing our balance sheet and the success of renegotiating or eliminating programs that did not provide an adequate return to our shareholders."

Please see the attached Schedules and the Brightpoint website at www.Brightpoint.com for an explanation and reconciled presentation of the results for the quarter ended March 31, 2010 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.

In the fourth quarter of 2009 we began reporting the revenue from certain prepaid airtime logistic services agreements on a net basis. The revenue under these agreements was previously reported on a gross basis within logistic services revenue. Had the revenue from these agreements been reported on a net basis for the first quarter 2009, logistic services revenue and cost of revenue would have been approximately $16.7 million lower and gross margin for the first quarter of 2009 would have been approximately 0.2% higher.

The consolidated statements of operations for all periods presented reflect the reclassification of the results of operations of our Italy business to discontinued operations in accordance with U.S. GAAP based on our decision to exit that business in the first quarter of 2010. Please see Brightpoint Inc.'s website at www.Brightpoint.com for quarterly statements of operations for all periods that have been reclassified.

CURRENT FISCAL YEAR 2010 EXPECTATIONS

  • Wireless devices handled by the Company of between 101 million and 103 million. This represents an increase of 21% to 22% compared to wireless devices handled by the Company in 2009. Global sell-in for the wireless device industry is currently expected to grow by approximately 10% to 12% compared to 2009.
     
  • We currently anticipate our mix of wireless devices handled through logistic services to end the year between 77% and 80% of total wireless devices handled.
     
  • Annual combined gross margin of between 8.6% and 8.8% for 2010, which is an increase from the previously announced range of 8.4% to 8.6%. This gross margin range reflects our anticipated shift in mix resulting from an expected rebound in distribution revenues over the next three quarters. Our mix of distribution business will continue to be impacted by product availability and any change in the ramp-up of newer distribution agreements. We also still anticipate some future pricing pressure related to the renegotiation and renewal of contracts with a key logistic services customer in our Asia-Pacific region and two key logistic services customers in our Americas region during the remainder of 2010. Combined gross margin is expected to vary from quarter to quarter as we anticipate for seasonality to have a more pronounced impact on demand than in 2009.
(Amounts in thousands, except per share data)  
  Three Months Ended
  March 31,
2010
March 31,
2009
December 31,
2009
  (Unaudited) (Unaudited) (Unaudited)
Wireless devices handled  22,504  18,578  24,080
Revenue  $ 795,287  $ 688,733  $ 904,518
Gross profit  $ 72,179  $ 60,365  $ 81,029
Gross margin 9.1% 8.8% 9.0%
Selling, general and administrative expenses  $ 56,656  $ 50,313  $  55,058
Operating income from continuing operations  $ 10,499  $ 1,218  $ 19,149
Income (loss) from continuing operations  $ 4,726  $ (2,126)  $ 21,385
Net income (loss) attributable to common stockholders  $ 1,449  $ (3,073)  $ 18,292
       
Diluted per share:      
Income (loss) from continuing operations attributable
  to common stockholders
 $ 0.07  $ (0.03)  $  0.27
Net income (loss) attributable to common stockholders  $ 0.02  $ (0.04)  $ 0.23

Brightpoint, Inc. (Nasdaq:CELL) is a global leader in providing supply chain solutions to leading stakeholders in the wireless industry. In 2009, Brightpoint handled approximately 84 million wireless devices globally. Brightpoint's innovative services include distribution channel management, procurement, inventory management, software loading, kitting and customized packaging, 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 2,700 employees in more than 25 countries. In 2009, Brightpoint generated revenue of $3.2 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 presentation 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 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; (ii) 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; (iii) our business could be harmed by consolidation of mobile operators; (iv) the current economic downturn could cause a severe disruption in our operations; (v) fluctuations in regional demand patterns and economic factors could harm our operations; (vi) our debt facilities could prevent us from borrowing additional funds, if needed; (vii) collections of our accounts receivable; (viii) our reliance on suppliers to provide trade credit facilities to adequately fund our on-going operations and product purchases; (ix) a significant percentage of our revenues are generated outside of the United States in countries that may have volatile currencies or other risks; (x) the impact that seasonality may have on our business and results; (xi) we make significant investments in the technology used in our business and rely on that technology to function effectively without interruptions; (xii) our future operating results will depend on our ability to maintain volumes and margins; (xiii) our ability to expand and implement our future growth strategy, including acquisitions; (xiv) uncertainty regarding whether wireless equipment manufacturers and wireless network operators will continue to outsource aspects of their business to us; (xv) our reliance upon third parties to manufacture products which we distribute and reliance upon their quality control procedures; our ability to retain existing logistic services customers at acceptable returns upon expiration of existing agreements; (xvi) rapid technological changes in the wireless industry could render our services or the products we handle obsolete or less marketable; (xvii) effect of natural disasters, epidemics, hostilities or terrorist attacks on our operations; (xviii) intense industry competition; (xix) our ability to manage and sustain future growth at our historical or current rates; (xx) our ability to continue to enter into relationships and financing that may provide us with minimal returns or losses on our investments; (xxi) our implementation of European Centers of Excellence may not be successful; (xxii) our ability to attract and retain qualified management and other personnel, the cost of complying with labor agreements and high rate of personnel turnover; (xxiii) protecting our proprietary information; (xxiv) 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) the existence of anti-takeover measures. 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,
  2010 2009
Revenue    
Distribution revenue  $  714,369  $ 601,945
Logistic services revenue  80,918  86,788
Total revenue  795,287  688,733
     
Cost of revenue    
Cost of distribution revenue   680,739  576,479
Cost of logistic services revenue  42,369  51,889
Total cost of revenue  723,108  628,368
     
Gross profit  72,179   60,365
     
Selling, general and administrative expenses  56,656  50,313
Amortization expense  3,894  3,748
Restructuring charge  1,130   5,086
Operating income from continuing operations  10,499  1,218
     
Interest, net  1,790  2,306
Other (income) expense  (239)  2,316
Income (loss) from continuing operations before income taxes  8,948  (3,404)
     
Income tax expense (benefit)  4,222  (1,278)
     
Income (loss) from continuing operations   4,726  (2,126)
     
Discontinued operations, net of income taxes:    
Loss from discontinued operations  (3,342)  (2,045)
Gain (loss) on disposal of discontinued operations   65  1,098
Total discontinued operations, net of income taxes  (3,277)  (947)
     
Net income (loss) attributable to common shareholders  $ 1,449  $ (3,073)
     
     
Earnings per share attributable to common shareholders - basic:    
Income (loss) from continuing operations  $ 0.07  $ (0.03)
Discontinued operations, net of income taxes  (0.05)  (0.01)
Net income (loss)  $ 0.02  $ (0.04)
     
Earnings per share attributable to common shareholders - diluted:    
Income (loss) from continuing operations  $ 0.07  $  (0.03)
Discontinued operations, net of income taxes  (0.05)  (0.01)
Net income (loss)  $ 0.02  $ (0.04)
     
Weighted average common shares outstanding:    
Basic   70,680  79,064
Diluted  71,641  79,064

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 income from continuing operations 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. The specific items excluded with respect to our first quarter non-GAAP income from continuing operations per share are stock-based compensation expense, amortization expense, restructuring charge and certain discrete tax items. The Company considers these items unrelated to its core operating performance, and believes that use of this non-GAAP measure allows comparison of operating results that are consistent over time. Non-GAAP income from continuing operations 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 income from continuing operations 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,
  2010 2009
  Income from
continuing operations (1)

Impact per diluted share
Income (loss) from continuing
operations (2)

Impact per diluted share
         
GAAP income (loss) from continuing operations  $ 4,726  $ 0.07  $ (2,126)  $ (0.03)
         
Non-GAAP adjustments:        
Stock based compensation  3,210  0.04  1,685  0.02
Amortization  3,808  0.05  3,648  0.04
Restructuring charge  1,130  0.02   5,086  0.06
Income tax impact of the above  (2,350)  (0.04)  (3,104)  (0.04)
Discrete income tax items  809  0.01   --  --
         
As-adjusted (non-GAAP) income from
continuing operations
 $ 11,333  $ 0.15  $ 5,189  $ 0.06
         
As-adjusted (non-GAAP) weighted average common shares outstanding - diluted (3)    73,497    81,950

(1)  Adjusted income from continuing operations (non-GAAP) for the first quarter of 2010 excludes the following items:

  • $3.8 million (pre-tax) of non-cash amortization expense related to acquired intangible assets.
  • $3.2 million (pre-tax) of non-cash stock based compensation expense.
  • $1.1 million (pre-tax) of restructuring charges which primarily consists of severance charges in connection with continued global workforce reductions as part of our previously announced 2009 Spending and Debt Reduction Plan.
  • $2.4 million tax benefit of the excluded expenses described above.
  • $0.8 million of tax expense related to valuation allowances on deferred tax assets resulting from previous net operating losses in Colombia and Denmark that are no longer expected to be utilized.

(2)  Adjusted income from continuing operations (non-GAAP) for the first quarter of 2009 excludes the following items:

  • $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.
  • $5.1 million restructuring charges (pre-tax) in connection with our previously announced 2009 spending and debt reduction plan.
  • $3.1 million tax benefit of the excluded expenses described above.

(3)  Weighted average common shares outstanding – diluted for the three months ended March 31, 2010 and 2009 includes the effect of 1.9 million (2010) and 0.5 million (2009) common shares outstanding that are presumed to be repurchased under the U.S. GAAP treasury stock method related to stock based compensation expense. Weighted average common shares outstanding – diluted for the three months March 31, 2009 includes the effect of 2.3 million common shares outstanding that are excluded from the earnings per share calculation under ASC 260 (formerly SFAS No. 128 Earnings Per Share) as they are anti-dilutive to earnings per share.

BRIGHTPOINT, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except per share data)
     
  March 31, December 31,
  2010 2009
  (Unaudited)  
ASSETS    
Current Assets:    
Cash and cash equivalents  $ 24,081  $ 81,050
Accounts receivable (less allowance for doubtful
  accounts of $9,905 in 2010 and $12,205 in 2009)
 327,835  382,973
Inventories  186,177  212,909
Other current assets  71,439  76,656
Total current assets  609,532  753,588
     
Property and equipment, net  80,403  82,328
Goodwill  51,916  51,877
Other intangibles, net  89,413  98,136
Other assets  19,883  28,062
     
Total assets  $ 851,147  $ 1,013,991
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
Current liabilities:    
Accounts payable  $ 379,909  $ 486,584
Accrued expenses  98,256  118,552
Lines of credit and other short-term borrowings  2,948  --
Total current liabilities  481,113  605,136
     
Long-term liabilities:    
Lines of credit, long-term  27,332  --
Long-term debt  94,242   97,017
Other long-term liabilities  30,742  34,911
Total long-term liabilities  152,316  131,928
Total liabilities  633,429   737,064
     
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; 90,358 issued in 2010
  and 89,293 issued in 2009
 904  893
Additional paid-in-capital  635,027   631,027
Treasury stock, at cost, 20,141 shares in 2010 and
  10,309 shares in 2009
 (145,971)  (84,639)
Retained deficit  (284,643)  (286,092)
Accumulated other comprehensive income (loss)  12,401  15,738
Total shareholders' equity  217,718  276,927
     
Total liabilities and shareholders' equity  $ 851,147  $  1,013,991
     
BRIGHTPOINT, INC.    
CONSOLIDATED STATEMENTS OF CASH FLOWS    
(Amounts in thousands)    
(Unaudited)    
     
  Three Months Ended
March 31,
  2010 2009
Operating activities    
Net income (loss)  $ 1,449  $ (3,073)
Adjustments to reconcile net income to net cash
  provided by operating activities:
   
Depreciation and amortization  9,565  8,322
Non-cash compensation  3,210  1,685
Restructuring charge   1,130  5,086
Change in deferred taxes  2,815  (40)
Other non-cash  1,741  31
     
Changes in operating assets and liabilities,
  net of effects from acquisitions and divestitures:
   
Accounts receivable  47,476   130,397
Inventories  20,676   69,199
Other operating assets  4,853   (2,698)
Accounts payable and accrued expenses  (116,081)    (173,097)
Net cash provided by (used in) operating activities  (23,166)    35,812
     
Investing activities    
Capital expenditures  (4,442)   (4,292)
Decrease (increase) in other assets  1,391    (745)
Net cash used in investing activities  (3,051)   (5,037)
     
Financing Activities    
Net proceeds from lines of credit  30,190   1,997
Repayments on Global Term Loans   --   (33,751)
Deferred financing costs paid  --    (394)
Purchase of treasury stock  (61,331)    (308)
Deficient tax benefit from equity based compensation  (523)   (920)
Proceeds from common stock issuances under employee stock
  option plans
 1,254  --
Net cash used in financing activities  (30,410)  (33,376)
     
Effect of exchange rate changes on cash and cash equivalents  (342)  (744)
Net decrease in cash and cash equivalents  (56,969)  
 (3,345)
Cash and cash equivalents at beginning of period  81,050  57,226
Cash and cash equivalents at end of period  $ 24,081  $ 53,881

Supplemental Information
(Amounts in thousands)

Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA")

  Three Months Ended
  March 31,
2010
March 31,
2009
December 31,
2009
Net income (loss) (1) $1,449 $(3,073) $18,292
Net interest expense (1) 1,804 2,751 1,965
Income tax expense (benefit) (1) 4,222 (1,372) 3,023
Depreciation and amortization (1)                                                          9,565 8,408 8,632
EBITDA (Non-GAAP) $17,040 $6,714 $31,912
(1) Includes discontinued operations      
         
  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, 2010 and 2009, and December 31, 2009 were as follows:
  Three Months Ended
  March 31,
2010
March 31,
2009
December 31,
2009
Days sales outstanding in accounts receivable                                      25  33  25
Days inventory on-hand  23  30  22
Days payable outstanding  (37)  (48)  (41)
Cash Conversion Cycle Days  11  15  6
  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, 2010. 

Supplemental Information (continued)
(Amounts in thousands)

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, 2010 and 2009, and December 31, 2009, was as follows:

  Three Months Ended
  March 31,
2010
March 31,
2009
December 31,
2009
Operating income after taxes (non-GAAP):      
Operating income from continuing operations  $ 10,499  $ 1,218  $ 19,149
Plus: restructuring charge  1,130  5,086  2,706
Less: estimated income taxes (1)  (4,070)  (2,206)  (7,649)
Operating income after taxes (non-GAAP)  $ 7,559  $ 4,098  $ 14,206
       
Invested Capital:      
Debt  $ 124,522  $ 138,298  $ 97,017
Shareholders' equity  217,718  238,757  276,927
Invested capital  $ 342,240  $ 377,055  $ 373,944
Average invested capital (2)  $ 358,093  $ 402,013  $ 376,721
ROIC (3) 8% 4% 15%
       
  Trailing Four Quarters Ended
  March 31,
2010
March 31,
2009
December 31,
2009
Operating income after taxes (non-GAAP):      
Operating income (loss) from continuing operations                                       $ 45,915  $ (290,060)  $  36,633
Plus: restructuring charge  9,457  14,909  13,413
Plus: goodwill impairment charge  --    325,947  -- 
Less: estimated income taxes (1)  (19,380)  (17,779)  (17,516)
Operating income after taxes (non-GAAP)  $ 35,992  $ 33,017  $ 32,530
       
Invested Capital:      
Debt  $ 124,522  $ 138,298  $ 97,017
Shareholders' equity  217,718  238,757  276,927
Invested capital  $ 342,240  $ 377,055  $ 373,944 
Average invested capital (2)  $ 365,521  $ 710,063  $ 382,467
ROIC (3) 10% 5% 9%
(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 non-GAAP 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 (non-GAAP)" 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. 

Supplemental Information (continued)
(Amounts in thousands)

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 use of tangible capital. ROTC eliminates the influence of intangible assets balances (and related amortization expense), cash transfer capabilities and income tax rates which vary amongst Brightpoint operating entities and are not controllable by operating entity management. We exclude unusual items such as restructuring charge from our calculation of "Operating income before amortization and restructuring charges (non-GAAP)" because we do not believe such items are controllable by operating entity management or representative of expected future returns. Therefore, we believe decisions to allocate resources should not be influenced by such items. 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 non-GAAP 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,
2010
March 31,
2009
December 31,
2009
Operating income before amortization
  and restructuring charges (non-GAAP):
     
Operating income from continuing operations  $ 10,499  $ 1,218  $ 19,149
Plus: amortization expense  3,894  3,748  4,116
Plus: restructuring charge  1,130   5,086  2,706
Operating income before amortization
  and restructuring charges (non-GAAP):
 $ 15,523  $ 10,052  $ 25,971
       
Tangible capital:      
Total assets  $ 851,147  $ 898,154  $ 1,013,991
Less: cash and cash equivalents  23,519  53,200  80,536
Less: goodwill  51,916  51,413  51,877
Less: other intangibles, net  89,413  100,309  98,136
Net tangible assets  $ 686,299  $ 693,232  $ 783,442
       
Total current liabilities  481,113  481,495  605,136
Less: lines of credit and other short term borrowings  2,948  3,525  -- 
Net current liabilities  $ 478,165  $ 477,970  $ 605,136
       
Net tangible capital  $ 208,134  $ 215,262  $ 178,306
Average tangible capital (1)  $ 193,220  $ 236,702  $ 183,785
ROTC (2) 32% 17% 57%
       
  Trailing Four Quarters
  March 31,
2010
March 31,
2009
December 31,
2009
Operating income before amortization
  and restructuring charges (non-GAAP):
   
Operating income (loss) from continuing operations $45,915 $(290,060) $36,633
Plus: amortization expense 16,007 17,271 15,862
Plus: goodwill impairment charge  --  325,947  -- 
Plus: restructuring charge 9,457 14,909 13,413
Operating income before amortization
  and restructuring charges (non-GAAP):
$71,379 $68,067 $65,908
       
Tangible capital:      
Total assets $851,147 $898,154 $1,013,991
Less: cash and cash equivalents 23,519 53,200 80,536
Less: goodwill 51,916 51,413 51,877
Less: other intangibles, net 89,413 100,309 98,136
Net tangible assets $686,299 $693,232 $783,442
       
Total current liabilities 481,113 481,495 605,136
Less: lines of credit and other short term borrowings 2,948 3,525  -- 
Net current liabilities $478,165 $477,970 $605,136
       
Net tangible capital $208,134 $215,262 $178,306
Average tangible capital (1) $191,014 $302,858 $201,016
ROTC (2) 37% 22% 33%
(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 non-GAAP 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 non-GAAP operating income before amortization and restructuring charges by average tangible
capital and multiplying the results by four.


            

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