updated 4/29/2011 12:46:23 AM ET 2011-04-29T04:46:23

INDIANAPOLIS, April 28, 2011 (GLOBE NEWSWIRE) -- Brightpoint, Inc. (Nasdaq:CELL), a global leader in providing supply chain solutions to the wireless industry, today announced its financial results for the first quarter ended March 31, 2011. Unless otherwise noted, amounts pertain to the first quarter of 2011.

FOR THE FIRST QUARTER OF 2011

Revenue was $1.1 billion for the first quarter of 2011, an increase of 40% compared to the first quarter of 2010 and slightly lower than the fourth quarter of 2010. The increase was primarily driven by growth in our distribution business due to the increased demand for smartphones and general increased availability of product compared to what was experienced in the prior year.

Wireless devices handled were 27.2 million for the first quarter of 2011. This represents an increase of 21% compared to the first quarter of 2010 and a decrease of 6% compared to the fourth quarter of 2010.

Income from continuing operations was $8.0 million or $0.11 per diluted share for the first quarter of 2011 compared to $4.7 million or $0.07 per diluted share for the first quarter of 2010 and $15.4 million or $0.22 per diluted share for the fourth quarter of 2010.

Adjusted income from continuing operations (non-GAAP) was $14.2 million or $0.20 per diluted share for the first quarter of 2011 compared to $11.3 million or $0.15 per diluted share for the first quarter of 2010 and $24.0 million or $0.34 per diluted share for the fourth quarter of 2010.

Adjusted income from continuing operations (non-GAAP) of $0.20 per diluted share for the first quarter of 2011 excludes the following items:

  • $5.8 million (pre-tax) of non-cash amortization expense related to acquired intangible assets.
  • $3.7 million (pre-tax) of non-cash stock based compensation expense.
  • $0.4 million (pre-tax) restructuring charge which primarily consists of lease termination charges and severance charges in connection with continued global entity consolidation and rationalization.
  • $3.2 million tax benefit related to the excluded expenses described above.
  • $0.4 million of tax benefit related to the reversal of valuation allowances on certain tax assets and foreign tax credits that are expected to be utilized in the U.S.

Gross margin was 7.8% for the first quarter of 2011 compared to 9.1% for the first quarter of 2010 and 8.5% for the fourth quarter of 2010. The reduction in gross margin from the first quarter of 2010 was primarily due to a decrease in distribution gross margin in the Europe, Middle East, and Africa (EMEA) region, a change in business model in our Southeast Asia operation as well as a higher mix of business from this Southeast Asia operation. The decrease in gross margin from the fourth quarter of 2010 was primarily due to a normal seasonal decline in volume in EMEA that is more pronounced than in our other regions, a lower distribution gross margin in EMEA, and a higher mix of business from our Southeast Asia operation.

SG&A expense was $65.6 million for the first quarter of 2011 compared to $56.7 million for the first quarter of 2010 and $62.3 million for the fourth quarter of 2010. SG&A expenses associated with the acquired Touchstone Wireless operation represented $3.0 million of total SG&A expenses for the first quarter of 2011. Additionally, foreign currency fluctuations increased SG&A expense by approximately $1.2 million compared to the first quarter of 2010 and $0.6 million compared to the fourth quarter of 2010.

Total debt was $196.4 million at March 31, 2011, compared to $90.4 million at December 31, 2010 and $124.5 million at March 31, 2010. Total liquidity (unrestricted cash and unused borrowing availability) was $325.1 million at March 31, 2011 compared to $446.7 million at December 31, 2010 and $338.9 million at March 31, 2010. Average daily debt outstanding for the first quarter of 2011 was $325.1 million compared to average daily debt outstanding of $192.8 million for the fourth quarter of 2010 and $218.6 million for the first quarter of 2010. Total debt and liquidity at March 31, 2011 and average daily debt for the first quarter of 2011 includes the impact of the purchase of Touchstone Wireless in December 2010 for $75.7 million, net of cash acquired, the purchase of a facility in Plainfield, Indiana for $18.4 million in December 2010, the purchase of a facility in Reno, Nevada for $11.7 million in February 2011, as well as increased working capital requirements for the increased volume in our distribution business.

Cash used in operating activities was $97.4 million for the three months ended March 31, 2011 compared to cash used in operating activities of $23.2 million for the three months ended March 31, 2010 and cash provided by operating activities of $137.1 million for the three months ended December 31, 2010.

The cash conversion cycle was 9 days for the first quarter of 2011 compared to 11 days for the first quarter of 2010 and negative 2 days for the fourth quarter of 2010.

EBITDA was $26.2 million for the first quarter of 2011 compared to $17.0 million for the first quarter of 2010 and $30.6 million for the fourth quarter of 2010.

"I am pleased with our first quarter 2011 operating results, which reflect our continued focus on execution and discipline in managing our business," said Robert J. Laikin, Chairman of the Board and Chief Executive Officer of Brightpoint, Inc. "Our comprehensive solutions offerings enabled us to handle approximately 27.2 million wireless devices in the first quarter of 2011 which clearly demonstrates our global leadership position. Our Nordics Center of Excellence went live in Sweden during the first quarter, and in the U.S. we made significant progress integrating our Touchstone Wireless acquisition. We continue to see strong interest from our manufacturing and operator partners for our new reverse logistics and repair services and believe this reflects the industry's demand for an end-to-end supply chain solution from Brightpoint. We expect the global wireless handset market to grow by approximately 10% in 2011."

"I am pleased we were able to deliver strong financial results for the first quarter of 2011," said Tony Boor, Brightpoint's Chief Financial Officer and Treasurer. "Distribution average selling price was over $200 for the first quarter of 2011, an increase of over 29% compared to the first quarter of 2010 and reflects our growing share of smartphones sold. The decrease in distribution gross margin in EMEA was due to a proactive decision to sell inventory at lower gross margins for a variety of reasons, including lowering inventory levels of particular handset models in anticipation of program launches in the second quarter, competing in an over-stocked marketplace, and anticipating new pricing in the second quarter from certain manufacturers. As a result of this decision, we were able to gain additional market share in EMEA as shown by the 29% unit growth compared to the first quarter of 2010 in the region. In the short term, we are focusing on proactively pursuing additional distribution market share in all of our regions. In some cases, that increased market share is coming at the expense of lower gross margins, while still obtaining acceptable levels of return on invested capital."

SUBSEQUENT EVENTS

On April 19, 2011, we completed our investment in the U.S.-based company Intcomex, Inc. ("Intcomex"). Intcomex is a leading IT distributor focused solely on Latin America and the Caribbean. Under this agreement, we invested $15.0 million, subject to working capital adjustments, and contributed our Colombia and Guatemala operations and certain of our other Latin America operations, excluding certain legacy business in Puerto Rico, for an approximate 23% share of the outstanding common stock of Intcomex. We also hold a seat on the Intcomex Board of Directors. The investment is an equity method investment and our future share of earnings (losses) in Intcomex will be recorded below operating income in the consolidated statement of operations.

On April 28, 2011, we filed an automatic shelf registration statement on Form S-3 with the Securities and Exchange Commission. The shelf registration statement will allow us to issue and sell an indeterminate amount of common stock and preferred stock or any combination of these securities, in one or more future offerings. The specific terms of any future offering will be established by us at the time of the offering, subject to market conditions, and will be described in detail in a prospectus supplement filed at the time of any such offering. At present, we have no specific plans to issue securities under the shelf registration statement.

This press release does not constitute an offer to sell, the solicitation or an offer to buy securities, nor shall there be any sale of the securities in any state in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of such state. Any offering of the securities covered by the shelf registration statement will be made only by means of a written prospectus and an accompanying prospectus supplement relating to that offering.

FISCAL YEAR 2011 EXPECTATIONS

We currently anticipate handling between 111 million and 114 million wireless devices in 2011, which is consistent with our previously disclosed range. This range represents an increase of 12% to 15% compared to wireless devices handled in 2010. Our expectations for wireless devices handled do not include devices handled by Touchstone, which primarily handles used devices for repair, remanufacture or responsible disposition. Our current estimate of the expected growth in global sell-in for the wireless device industry in 2011 is approximately 10% when compared to 2010.

We currently expect income from continuing operations (GAAP) of $0.58 to $0.73 per diluted share and adjusted income from continuing operations (non-GAAP) of $0.90 to $1.05 per diluted share, which is consistent with our previously disclosed range. Adjusted earnings per share (non-GAAP) excludes $0.32 per diluted share of stock based compensation, amortization of acquired intangible assets and restructuring charge (net of tax). Adjusted earnings per share (non-GAAP) assumes 72.7 million of diluted weighted average shares outstanding which includes 2.9 million shares of common stock related to stock based compensation that are presumed to be repurchased under the U.S. GAAP treasury stock method. Please see the supplemental information attached for the reconciliation of the range of estimated GAAP diluted earnings per share to estimated as-adjusted (non-GAAP) diluted earnings per share.

We currently anticipate capital expenditures between $59 million and $63 million in 2011, which represents a 40% to 50% increase from 2010. The increase includes the purchase of the Reno, Nevada facility and the build-out of our new Centers of Excellence facilities in the Americas and the EMEA regions, which account for over half of the estimate, as well as the expansion of our reverse logistics and repair services business and other strategic initiatives.

Please see the attached Schedules and the Investors section at the Brightpoint website at www.brightpoint.com for an explanation and reconciled presentation of the results for the quarter ended March 31, 2011 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 our Italy business to discontinued operations in accordance with U.S. GAAP based on our decision to exit the Italy business in the first quarter of 2010. Please see the Investors section at the Brightpoint website at www.brightpoint.com for quarterly statements of operations for all periods that have been reclassified.

(Amounts in thousands, except per share data)

  Three Months Ended
  March 31,

2011
  March 31,

2010
  December 31,

2010
  (Unaudited)   (Unaudited)   (Unaudited)
Wireless devices handled  27,243    22,504    29,096
Revenue  $ 1,114,880    $ 795,287    $ 1,120,305
Gross profit  $ 86,529    $ 72,179    $ 94,960
Gross margin  7.8%   9.1%    8.5%
Selling, general and administrative expenses  $ 65,646    $ 56,656    $ 62,273
Operating income from continuing operations  $ 14,706    $ 10,499    $ 22,471
Income from continuing operations  $   8,007    $ 4,726    $ 15,413
Net income attributable to common shareholders  $  9,296    $ 1,449    $ 15,873
Diluted per share:          
Income from continuing operations attributable to common shareholders  $ 0.11    $ 0.07    $ 0.22
Net income attributable to common shareholders  $ 0.13    $ 0.02    $ 0.23

Conference Call Information

On Friday, April 29, 2011, at approximately 8:00 a.m. EDT, Brightpoint will conduct a conference call to review the Company's operations and financial performance and will answer participants' questions. For those who prefer to join the conference call, use the following information and dial in several minutes prior to the start of the call:

U.S. toll-free dial-in number: 888-220-8449

International dial-in number: 913-312-1481

The presentation of slides can be accessed through the Investors section of the Company's website at www.brightpoint.com . Following the live presentation, an archive of the webcast will be available through the Investors section of the Company's website at www.brightpoint.com for approximately one year.

About Brightpoint, Inc.

Brightpoint, Inc. (Nasdaq:CELL) is a global leader in providing end-to-end supply chain solutions to leading stakeholders in the wireless industry. In 2010, Brightpoint handled approximately 99 million wireless devices globally. Brightpoint's innovative services include distribution channel management, procurement, inventory management, reverse logistics and repair services, 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. Brightpoint has approximately 4,000 employees, as well as a significant number of temporary staff, and a global footprint covering more than 35 countries, including 13 Latin American countries through its investment in Intcomex, Inc. In 2010, Brightpoint generated revenue of $3.6 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).

Forward Looking and Cautionary Statements

Certain information in this press release may contain forward-looking statements regarding future events or the future performance of the Company, including estimates for wireless devices handled, income from continuing operations (non-GAAP) per diluted share and capital expenditures for 2011 that are subject to change.  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.  Those 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. Those risk factors include, without limitation, uncertainties relating to customer plans and commitments, including, without limitation (i) fluctuations in regional demand patterns and economic factors could harm our operations; (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 dependence on our computer and communications systems; (iv) uncertainty regarding future volatility in our Common Stock price; (v) our ability to expand and implement our future growth strategy, including acquisitions; (vi) our ability to protect our proprietary information; (vii) rapid technological changes in the wireless industry could render our services or the products we handle obsolete or less marketable; (viii) intense industry competition; (ix) 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; (x) our ability to retain existing logistic services customers at acceptable returns upon expiration or termination of existing agreements; (xi) our business could be harmed by consolidation of mobile operators; (xii) we make significant investments in the technology used in our business and rely on that technology to function effectively without interruptions; (xiii) our future operating results will depend on our ability to maintain volumes and margins; (xiv) the effect of natural disasters, epidemics, hostilities or terrorist attacks on our operations; (xv) uncertainty regarding whether wireless equipment manufacturers and wireless network operators will continue to outsource aspects of their business to us; (xvi) the current economic downturn could cause a severe disruption in our operations; (xvii) our implementation of European Centers of Excellence may not be successful; (xviii) our ability to continue to enter into relationships and financing that may provide us with minimal returns or losses on our investments; (xix) collections of our accounts receivable; (xx) our ability to manage and sustain future growth at our historical or current rates; (xxi) our ability to attract and retain qualified management and other personnel and the cost of complying with labor agreements and high rate of personnel turnover; (xxii) our reliance upon third parties to manufacture products that we distribute and reliance upon their quality control procedures; (xxiii) our debt facilities could prevent us from borrowing additional funds, if needed; (xxiv) our reliance on suppliers to provide trade credit facilities to adequately fund our on-going operations and product purchases; (xxv) a significant percentage of our revenues are generated outside of the United States in countries that may have volatile currencies or other risks; (xxvi) the impact that seasonality may have on our business and results; (xxvii) potential dilution to existing shareholders from the issuance of securities under our long-term incentive plans; and (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,
  2011 2010
Revenue    
Distribution revenue  $  984,653 $714,369 
Logistic services revenue  130,227  80,918
Total revenue 1,114,880  795,287
     
Cost of revenue    
Cost of distribution revenue 950,629  680,739
Cost of logistic services revenue  77,722  42,369
Total cost of revenue 1,028,351  723,108
     
Gross profit    
 Distribution gross profit  34,024  33,630
 Logistic services gross profit  52,505  38,549
Total gross profit  86,529  72,179
     
Selling, general and administrative expenses  65,646  56,656
Amortization expense 5,792 3,894
Restructuring charge  385  1,130
Operating income from continuing operations  14,706 10,499
     
Interest, net  2,965 1,790
Other expense (income) 1,175  (239)
Income from continuing operations before income taxes 10,566 8,948
     
Income tax expense  2,559 4,222
     
Income from continuing operations  8,007 4,726
     
Discontinued operations, net of income taxes:    
Gain (loss) from discontinued operations 1,830 (3,342)
Gain (loss) on disposal of discontinued operations (541) 65
Total discontinued operations, net of income taxes 1,289 (3,277)
     
Net income attributable to common shareholders $ 9,296 $ 1,449
     
Earnings per share attributable to common shareholders - basic:    
Income from continuing operations $ 0.12 $ 0.07
Discontinued operations, net of income taxes 0.02 (0.05)
Net income $ 0.14 $ 0.02
     
Earnings per share attributable to common shareholders - diluted:    
Income from continuing operations  $ 0.11 $ 0.07
Discontinued operations, net of income taxes 0.02 (0.05)
Net income  $ 0.13 $ 0.02
     
Weighted average common shares outstanding:    
Basic  67,453  70,680
Diluted  68,917  71,641

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 such as restructuring charges. 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. 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. 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,
  2011 2010
  Income from

continuing operations
Impact per

diluted share
Income from

continuing operations
Impact per

diluted share
         
GAAP income from continuing operations  $   8,007  $ 0.11  $  4,726  $  0.07
         
Non-GAAP adjustments:        
Stock based compensation  3,702  0.05  3,210  0.04
Amortization  5,755  0.08  3,808  0.05
Restructuring charge   385  0.01  1,130  0.02
Income tax impact of the above  (3,196)   (0.04)  (2,350)  (0.04)
Discrete income tax items  (421)  (0.01)    809  0.01
         
As-adjusted (non-GAAP) income from continuing operations  $ 14,232  $ 0.20  $ 11,333  $ 0.15
         
As-adjusted (non-GAAP) weighted average common shares outstanding - diluted    70,487    73,497
 
BRIGHTPOINT, INC.

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except per share data)
  March 31, December 31,
  2011 2010
  (Unaudited)  
ASSETS    
Current Assets:    
Cash and cash equivalents  $ 26,996  $ 41,658
Accounts receivable (less allowance for doubtful accounts of $9,501 in 2011 and $9,892 in 2010)  420,407  487,376
Inventories  374,896  311,804
Other current assets  59,864  75,068
Total current assets  882,163  915,906
     
Property and equipment, net  129,633  111,107
Goodwill  78,146  78,821
Other intangibles, net  121,164  122,122
Other assets  21,235  19,885
     
Total assets  $  1,232,341  $ 1,247,841
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
Current liabilities:    
Accounts payable  $ 622,029  $ 744,995
Accrued expenses  121,943  140,191
Short-term borrowings  --  408
Total current liabilities  743,972  885,594
     
Long-term liabilities:    
Lines of credit, long-term  196,441  90,000
Other long-term liabilities  25,649  27,894
Total long-term liabilities  222,090  117,894
Total liabilities  966,062  1,003,488
     
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; 91,459 issued in 2011    
and 90,354 issued in 2010  915  904
Additional paid-in-capital  647,944  641,895
Treasury stock, at cost, 23,222 shares in 2011 and    
22,917 shares in 2010  (168,027)  (164,242)
Retained deficit  (246,678)  (255,974)
Accumulated other comprehensive income  32,125  21,770
Total shareholders' equity  266,279  244,353
     
Total liabilities and shareholders' equity  $  1,232,341  $ 1,247,841
 
BRIGHTPOINT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)
     
  Three Months Ended

March 31,
  2011 2010
Operating activities    
Net income  $   9,296  $ 1,449
Adjustments to reconcile net income to net cash provided by (used in) operating activities:    
Depreciation and amortization  11,280  9,565
Non-cash compensation  3,702  3,210
Restructuring charge   385  1,130
Change in deferred taxes  4,361   2,814
Other non-cash   752  1,741
     
Changes in operating assets and liabilities, net of effects from acquisitions and divestitures:    
Accounts receivable   77,537  47,476
Inventories  (53,655)  20,677
Other operating assets  11,016  4,853
Accounts payable and accrued expenses   (162,059)  (116,081)
Net cash used in operating activities  (97,385)   (23,166)
     
Investing activities    
Capital expenditures  (22,830)  (4,442)
Acquisitions, net of cash acquired  (111)  --
Decrease in other assets  590  1,391
Net cash used in investing activities  (22,351)  (3,051)
     
Financing Activities    
Net proceeds from lines of credit  105,369  30,190
Repayments on short-term financing  (407)  --
Deferred financing costs paid  (281)  --
Purchase of treasury stock    (3,778)  (61,331)
Excess (deficient) tax benefit from equity based compensation   1,983  (523)
Proceeds from common stock issuances under employee stock    
option plans   394  1,254
Net cash provided by (used in) financing activities  103,280  (30,410)
     
Effect of exchange rate changes on cash and cash equivalents   1,794  (342)
Net decrease in cash and cash equivalents  (14,662)  

 (56,969)
Cash and cash equivalents at beginning of period  41,658  81,050
Cash and cash equivalents at end of period  $ 26,996  $ 24,081

Supplemental Information
(Amounts in thousands)

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

  Three Months Ended
  March 31,

2011
March 31,

2010
December 31,

2010
Net income (1)  $  9,296  $ 1,449  $ 15,873
Net interest expense (1)  3,071  1,804  2,480
Income tax expense (1)  2,559   4,222  3,248
Depreciation and amortization (1)   11,280  9,565  8,975
EBITDA  $ 26,206  $ 17,040  $ 30,576

(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, 2011 and 2010, and December 31, 2010 were as follows:

  Three Months Ended
  March 31,

2011
March 31,

2010
December 31,

2010
Days sales outstanding in accounts receivable   25  25  29
Days inventory on-hand  32  23  26
Days payable outstanding  (48)  (37)  (57)
Cash Conversion Cycle Days  9   11  (2)
       

Please see the Investors section of the Brightpoint website at www.brightpoint.com for a detailed calculation of cash conversion cycle days for the three months ended March 31, 2011. 

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, 2011 and 2010, and December 31, 2010, was as follows:

  Three Months Ended
  March 31,

2011
March 31,

2010
December 31,

2010
Operating income after taxes (non-GAAP):      
Operating income from continuing operations  $ 14,706  $ 10,499  $ 22,471
Plus: restructuring charge*  385  1,130  3,451
Less: estimated income taxes (1)  (4,527)  (4,070)  (9,073)
Operating income after taxes (non-GAAP)  $ 10,564  $ 7,559  $ 16,849
       
Invested Capital:      
Debt  $  196,441  $ 124,522  $ 90,408
Shareholders' equity  266,279  217,718  244,353
Invested capital  $ 462,720  $ 342,240  $ 334,761
Average invested capital (2)  $ 398,740  $ 358,093  $  336,253
ROIC (3) 11% 8% 20%
       
  Trailing Four Quarters Ended
  March 31,

2011
March 31,

2010
December 31,

2010
Operating income after taxes (non-GAAP):      
Operating income from continuing operations  $ 64,618  $ 45,915  $ 60,409
Plus: restructuring charge*  5,480  9,457  6,225
Less: estimated income taxes (1)  (23,780)  (19,380)  (23,322)
Operating income after taxes (non-GAAP)  $   46,318  $ 35,992  $ 43,312
       
Invested Capital:      
Debt  $  196,441  $ 124,522  $ 90,408
Shareholders' equity  266,279  217,718   244,353
Invested capital  $ 462,720  $ 342,240  $ 334,761
Average invested capital (2)  $ 361,174  $ 365,521  $ 343,419
ROIC (3) 13% 10% 13%

(1) Estimated income taxes were calculated by multiplying the sum of operating income from continuing operations and the restructuring charge by an effective tax rate of 30%, which represents an estimated, blended statutory tax rate for the markets in which we operate. The effective tax rate was revised from 35% beginning with the first quarter of 2011 to better represent changes in the geographic mix of income.    

(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 non-GAAP operating income after taxes by average invested capital and multiplying the results by four.

*We exclude 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 charges 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,

2011
March 31,

2010
December 31,

2010
Operating income before amortization and restructuring charges (non-GAAP):      
Operating income from continuing operations $ 14,706  $ 10,499 $ 22,471
Plus: amortization expense 5,792  3,894 3,834
Plus: restructuring charge 385  1,130 3,451
Operating income before amortization and restructuring charges (non-GAAP): $ 20,883  $ 15,523 $ 29,756
       
Tangible capital:      
Total assets $ 1,232,341  $ 851,147 $ 1,247,841
Less: unrestricted cash 26,276  23,519 41,103
Less: goodwill 78,146  51,916 78,821
Less: other intangibles, net 121,164  89,413 122,122
Net tangible assets $ 1,006,755  $ 686,299 $ 1,005,795
       
Total current liabilities 743,972  481,113 885,594
Less: lines of credit and other short term borrowings --  2,948 408
Net current liabilities $ 743,972  $ 478,165 $ 885,186
       
Net tangible capital $ 262,783  $ 208,134 $ 120,609
Average tangible capital (1) $  191,696  $ 193,220 $ 160,105
ROTC (2) 44% 32% 74%
  Trailing Four Quarters
  March 31,

2011
March 31,

2010
December 31,

2010
Operating income before amortization and restructuring charges (non-GAAP):      
Operating income from continuing operations $64,618 $45,915 $60,409
Plus: amortization expense 16,923 16,007 15,024
Plus: restructuring charge 5,480 9,457 6,225
Operating income before amortization and restructuring charges (non-GAAP): $87,021 $71,379 $81,658
       
Tangible capital:      
Total assets $1,232,341 $851,147 $1,247,841
Less: unrestricted cash 26,276 23,519 41,103
Less: goodwill 78,146 51,916 78,821
Less: other intangibles, net 121,164 89,413 122,122
Net tangible assets $1,006,755 $686,299 $1,005,795
       
Total current liabilities 743,972 481,113 885,594
Less: lines of credit and other short term borrowings -- 2,948 408
Net current liabilities $743,972 $478,165 $885,186
       
Net tangible capital $262,783 $208,134 $120,609
Average tangible capital (1) $200,424 $191,014 $183,529
ROTC (2) 43% 37% 44%
       
(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. ROTC is a non-GAAP pre-tax measure, thereby eliminating the influence of income tax rates which vary amongst Brightpoint operating entities and are not controllable by operating entity management.

Supplemental Information (continued)

2011 Expectations

The reconciliation of the range of estimated GAAP diluted earnings per share to estimated as-adjusted (non-GAAP) diluted earnings per share is provided below:

   
  2011 Expectations
  Income from

continuing operations

per diluted share
Income from

continuing operations

per diluted share
     
GAAP income from continuing operations  $  0.58  $ 0.73
     
Non-GAAP adjustments (net of tax):    
Stock based compensation   0.12  0.12
Restructuring charge   0.06  0.06
Amortization  0.14  0.14
     
As-adjusted (non-GAAP) income from continuing operations  $  0.90  $ 1.05
     
As-adjusted (GAAP) weighted average common shares outstanding - diluted   69,720  69,720
     
Shares presumed to be repurchased under the U.S. GAAP treasury stock method related to stock based compensation expense   2,935  2,935
     
As-adjusted (non-GAAP) weighted average common shares outstanding - diluted  72,655  72,655
CONTACT: Brightpoint, Inc.
         877-IIR-CELL

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