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PLAINFIELD, Ind.--Nov. 8, 2007--Brightpoint, Inc. (NASDAQ:CELL):
For Third Quarter of 2007:
(Including the results of the Dangaard Telecom operations for only August and September as the Dangaard Telecom acquisition closed on July 31, 2007)
-- Revenue of $1.2 billion, an increase of 86% from the third quarter
of 2006.
-- Income from continuing operations of $13.0 million or $0.18 per
diluted share compared to $8.9 million or $0.18 per diluted share
in the third quarter of 2006 which included:
-- $3.8 million (pre-tax) of non-cash amortization expense related
to finite-lived intangible assets acquired in connection with
the CellStar and Dangaard Telecom transactions.
-- $1.6 million (pre-tax) of non-cash stock based compensation
expense in the third quarter of 2007 compared to $1.2 million
(pre-tax) in the third quarter of 2006.
-- $0.9 million loss on the sale of slow-moving inventory within
Asia.
-- $2.1 million tax benefit resulting from a reduction in the
statutory tax rate in Germany.
-- $1.6 million (pre-tax) of incremental costs related to
integrating the Dangaard Telecom and CellStar acquisitions and
other initial charges taken in connection with longer-term cost
saving initiatives.
Please see the attached Schedules for a reconciled presentation of the results for the third quarter of 2007 and the differences in the calculation of the Company's results prepared in accordance with U.S. GAAP and on an adjusted pro forma basis. Any financial measure other than U.S. GAAP results should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. GAAP.
-- Net income of $13.0 million or $0.18 per diluted share
compared to $8.8 million or $0.17 per diluted share in the
third quarter of 2006.
-- Gross margin of 6.6%, an increase of 0.8 percentage points
from the third quarter of 2006.
-- Effective tax rate of 18.5% for the third quarter of 2007.
Excluding the effect of the $2.1 million benefit discussed
above, effective income tax rate of 31.8% compared to 25.3%
for the third quarter of 2006 primarily due to a shift in mix
of income between jurisdictions.
-- A record 22.0 million wireless devices handled, an increase of
approximately 75% from the third quarter of 2006.
-- EBITDA of $29.2 million in the third quarter of 2007 as
compared to $15.1 million in the third quarter of 2006.
-- We expect to recognize amortization expense during the fourth
quarter of 2007 of approximately $5.0 million to $6.0 million;
and for the 2008 fiscal year, we expect to recognize
approximately $17.0 million to $20.0 million of amortization
expense.
-- Cash flow from operating activities of $96.5 million for the
nine months ended September 30, 2007.
Brightpoint, Inc. (NASDAQ:CELL) reported its financial results for the third quarter ended September 30, 2007. Unless otherwise noted, amounts pertain to the third quarter of 2007.
"In the third quarter of 2007, we continued to focus on the execution of our growth strategy including the integration of the Dangaard and CellStar businesses," stated Robert J. Laikin, Brightpoint's Chairman of the Board and Chief Executive Officer. "I am excited about Brightpoint's long term opportunities for growth in the global wireless industry. In the third quarter, we handled an all-time company record of 22 million wireless devices. We feel that with the completion of the Dangaard transaction along with our current positive momentum in many of our markets, we are on pace to grow faster than the global wireless device industry. I currently expect Brightpoint to handle between 100 million to 115 million wireless devices in 2008 giving Brightpoint an estimated market share of 8 to 9% on a global basis. Based on the continued strong momentum and robust demand in Q4, I am estimating the wireless industry's 2008 global unit sell-in to be in the range of 1.25 billion to 1.35 billion units. I also believe that this demand will continue for the next several years with my new updated 2011 global sell-in estimate of greater than 1.65 billion units."
"During the third quarter of 2007, we made very good progress in the integration of the Dangaard acquisition," said Tony Boor, Brightpoint's Chief Financial Officer. "I am very pleased with the efforts of our Global Finance Team on this initiative over the past several months. We have successfully converted Dangaard from International Financial Reporting Standards to US GAAP, and Brightpoint accounting policies are now being applied on a consistent basis. I am also very pleased with our strong operating results and the cash generated from selling through inventory within our Asia-Pacific division, which contributed to our positive operating cash flow of $96.5 million year to date."
SUMMARY FINANCIAL RESULTS
(Amounts in thousands, except per share data)
(Unaudited)
The Company completed its acquisition of Dangaard Telecom A/S on July
31, 2007. Accordingly, results of operations for Dangaard Telecom are
included in our consolidated results of operations beginning August
1, 2007.
Three Months Ended
---------------------
September 30,
2007 2006
----------- ---------
Wireless devices handled 22,028 12,616
Revenue $1,177,986 $633,739
Gross profit $ 78,041 $ 37,002
Gross margin 6.6% 5.8%
Selling, general and administrative expenses $ 51,368 $ 24,421
Operating income from continuing operations $ 22,615 $ 12,474
Income from continuing operations $ 12,984 $ 8,944
Net income $ 12,962 $ 8,764
Diluted per share:
Income from continuing operations $ 0.18 $ 0.18
Net income $ 0.18 $ 0.17
Revenue was $1.2 billion for the third quarter of 2007, an increase of 86% from the third quarter of 2006. Excluding the impact of the Dangaard Telecom acquisition, revenue increased 34%, which was primarily driven by the acquisition of CellStar as well as growth in our distribution business in Singapore. In order to conform to Brightpoint accounting policies and US GAAP, Dangaard Telecom changed its revenue recognition for arrangements where Dangaard Telecom serves as the "agent" in the transaction. As a result, revenue from the Dangaard Telecom operations for the two months ended September 30, 2007 was approximately $58.0 million lower under US GAAP than it would have under International Financial Reporting Standards (IFRS).
Gross margin was 6.6% for the third quarter of 2007, an increase of 0.8 percentage points from the third quarter of 2006. The 0.8 percentage point increase in gross margin was largely driven by a 12.8 percentage point increase in gross margin from our logistic services business. The increase in gross margin from logistic services was primarily driven by our Americas division as a result of improved operating efficiency and increased leverage of our cost infrastructure over higher volumes. In addition, our overall distribution gross margin was favorably impacted by approximately 0.3 percentage points during the third quarter of 2007 as a result of higher than normal gross margin in our Singapore business as a result of a strong product line-up from our largest supplier as well as favorable product allocation. There can be no assurances that we will continue to experience similar margins in our Singapore business in the future. As discussed above, revenue from the Dangaard Telecom operations was approximately $58.0 million lower under US GAAP than it would have been under IFRS. Although this accounting change favorably impacted our overall gross margin, it was offset by other changes made to conform to Brightpoint accounting policies. Previously, Dangaard Telecom did not allocate any facilities cost or direct labor to cost of revenue. These costs have been reclassified to conform to Brightpoint's presentation.
SG&A expenses increased $26.9 million or 110% for the three months ended September 30, 2007 compared to the same period in the prior year. SG&A expenses associated with the Dangaard Telecom operations represented $20.1 million of the overall increase in SG&A expenses for the three months ended 2007. Excluding the impact of the Dangaard Telecom operations, SG&A expenses increased $6.8 million for the three months ended September 30, 2007 primarily due to a $2.8 million increase within our Americas division related to the CellStar operations and the launch of the T-Mobile logistic business, a $1.8 million increase in personnel costs in our corporate headquarters primarily due to an increase in incentive compensation, a $1.0 million increase in personnel costs within our Asia-Pacific division primarily in support of overall growth in unit volumes, and $0.7 million of incremental costs associated with integrating the Dangaard Telecom acquisition. The increase in incentive compensation was a result of timing related to the achievement of bonus targets in the third quarter of 2006 and will normalize on an annual basis in the fourth quarter 2007.
Amortization expense was $3.9 million for the third quarter of 2007, which primarily relates to finite-lived intangible assets acquired in connection with the CellStar and Dangaard Telecom transactions. We allocated the purchase price of the Dangaard Telecom acquisition based on preliminary estimates of the fair value of assets acquired and liabilities assumed. The assets acquired included $123.1 million of intangible assets assigned to the customer relationships included in the acquisition. The acquired intangible assets have a useful life of approximately fifteen years and are being amortized over the period that the assets are expected to contribute to our future cash flows. The assets are being amortized on an accelerated method based on the projected cash flows used for valuation purposes. We believe that these cash flows are most reflective of the pattern in which the economic benefit of the intangible assets will be consumed. Based on the preliminary estimates of the fair value of assets acquired we expect to recognize amortization expense during the fourth quarter of 2007 of approximately $5.0 million to $6.0 million; and for the 2008 fiscal year, we expect to recognize approximately $17.0 million to $20.0 million of amortization expense related to the intangible assets acquired in the Dangaard Telecom and CellStar acquisitions.
Brightpoint, Inc (NASDAQ:CELL) is a global leader in the distribution of wireless devices and the provision of customized logistic services to the wireless industry. In 2006, Brightpoint (including Dangaard on a pro forma basis) handled 64 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 3,300 employees in 25 countries. Including Dangaard operations on a pro forma basis, unaudited revenue in 2006 was $4.6 billion and unaudited net income was $55 million on a pro forma basis. 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 contained in Exhibit 99.1 thereto. These documents contain and identify important risk factors that could cause the actual results to differ materially from those contained in or implied by these forward-looking statements. These risk factors include, without limitation, uncertainties relating to customer plans and commitments, including, without limitation, (i) loss of significant customers or a reduction in prices we charge these customers; Dobson Communications Corporation, Rural Cellular Corporation (RCC), and Suncom have recently announced plans to be acquired. Should any or all of these acquisitions be completed, our operating results may be negatively impacted. (ii) our significant payment obligations under certain debt, lease and other contractual arrangements; (iii) significant future payment obligations for wireless devices; (iv) possible adverse effect on demand for our products resulting from consolidation of mobile operators; (v) dependence upon principal suppliers and availability and price of wireless products; (vi) our ability to borrow additional funds; (vii) possible difficulties collecting our accounts receivable; (viii) our ability to increase volumes and maintain our margins; (ix) our ability to expand and implement our future growth strategy, including acquisitions; (x) uncertainty regarding future volatility in our Common Stock price; (xi) uncertainty whether wireless equipment manufacturers and wireless network operators will continue to outsource aspects of their business to us; (xii) our reliance upon third parties to manufacture products which we distribute and reliance upon their quality control procedures; (xiii) our operations may be materially affected by fluctuations in regional demand and economic factors; (xiv) our ability to respond to rapid technological changes in the wireless communications and data industry; (xv) access to or the cost of increasing amounts of capital, trade credit or other financing; (xvi) risks of foreign operations, including currency, trade restrictions and political risks in our foreign markets; (xvii) effect of natural disasters, epidemics, hostilities or terrorist attacks on our operations; (xviii) investment in sophisticated information systems technologies and our reliance upon the proper functioning of such systems; (xix) possible adverse effects of future medical claims regarding the use of wireless devices; (xx) our ability to meet intense industry competition; (xxi) our ability to manage and sustain future growth at our historical or current rates; (xxii) certain relationships and financings, which may provide us with minimal returns or losses on our investments; (xxiii) the impact that seasonality may have on our business and results; (xxiv) our ability to attract and retain qualified management and other personnel, cost of complying with labor agreements and high rate of personnel turnover; (xxv) our ability to protect our proprietary information; (xxvi) our ability to maintain adequate insurance at a reasonable cost; (xxvii) the potential issuance of additional equity, including our Common Stock, which could result in dilution of existing shareholders and may have an adverse impact on the price of our Common Stock; (xxviii) existence of anti-takeover measures; (xxxix) a substantial number of shares will be eligible for future sale by Dangaard Holding and the sale of those shares could adversely affect our stock price; (xxx) if we are not able to integrate Dangaard Telecom's operations in a timely manner, we may not realize anticipated benefits of the transaction in a timely fashion, or at all, and our business could be harmed; (xxxi) we incurred significant financial obligations as a result of the acquisition of Dangaard Telecom, and our inability to satisfy these could materially and adversely affect our operating results and financial condition and harm our business; (xxxii) acquisition related accounting impairment and amortization charges may delay and reduce our post-acquisition profitability; (xxxiii) exposure to unknown pre-existing liabilities of Dangaard Telecom could cause us to incur substantial financial obligations and harm our business; and (xxxiv) Dangaard Holding could potentially have significant influence over the management and direction of our company. 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," "intend," and "plan" and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on any of these forward-looking statements, which speak only as of the date that such statement was made. We undertake no obligation to update any forward-looking statement.
BRIGHTPOINT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
(Unaudited)
Three Months Ended Three Months Ended
September 30, 2007 (1) September 30, 2006 (1)
US GAAP
US GAAP Adjust- As As Adjust- As
As Reportedments (2) Adjusted Reported ments Adjusted
Revenue
Distribution
revenue $1,085,095 $1,085,095 $552,402 $552,402
Logistic
services
revenue 92,891 92,891 81,337 81,337
------------------------------ ------------------------
Total revenue 1,177,986 1,177,986 633,739 633,739
Cost of revenue
Cost of
distribution
revenue 1,035,410 1,035,410 529,784 529,784
Cost of
logistic
services
revenue 64,535 64,535 66,953 66,953
------------------------------ ------------------------
Total cost of
revenue 1,099,945 1,099,945 596,737 596,737
------------------------------ ------------------------
Gross profit 78,041 78,041 37,002 37,002
Selling,
general and
administrative
expenses 51,368 $(1,190) 50,178 24,421 24,421
Amortization 3,892 (3,831) 61 107 107
Facility
consolidation
charge 166 (166) - - -
------------------------------ ------------------------
Operating
income from
continuing
operations 22,615 5,187 27,802 12,474 12,474
Interest, net 5,877 5,877 226 226
Other expenses 551 (256) 295 275 275
------------------------------ ------------------------
Income from
continuing
operations
before income
taxes 16,187 5,443 21,630 11,973 11,973
Income tax
expense 2,996 3,919 6,915 3,029 3,029
------------------------------ ------------------------
Income from
continuing
operations
before
minority
interest 13,191 1,524 14,715 8,944 8,944
Minority
interest 207 207 - -
------------------------------ ------------------------
Income from
continuing
operations 12,984 1,524 $14,508 8,944 $8,944
========== ========
Discontinued
operations,
net of income
taxes:
Loss from
discontinued
operations (22) (183)
Gain on
disposal of
discontinued
operations - 3
----------- ---------
Total
discontinued
operations,
net of income
taxes (22) (180)
----------- ---------
Net income $12,962 $8,764
=========== =========
Earnings per
share - basic:
Income from
continuing
operations $0.18 $0.21 $0.18 $0.18
========== ========
Discontinued
operations,
net of
income taxes - -
----------- ---------
Net income $0.18 $0.18
=========== =========
Earnings per
share -
diluted:
Income from
continuing
operations $0.18 $0.20 $0.18 $0.18
========== ========
Discontinued
operations,
net of
income taxes - (0.01)
----------- ---------
Net income $0.18 $0.17
=========== =========
Weighted
average common
shares
outstanding:
Basic 70,076 70,076 49,243 49,243
=========== ========== ========= ========
Diluted 71,125 71,125 50,403 50,403
=========== ========== ========= ========
See accompanying "Notes to Consolidated Statements of Operations"
BRIGHTPOINT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
(Unaudited)
Nine Months Ended
September 30, 2007 (1)
US GAAP Adjust- As
As Reported ments(3) Adjusted
Revenue
Distribution revenue $2,419,114 $2,419,114
Logistic services revenue 251,496 251,496
------------------------------------
Total revenue 2,670,610 2,670,610
Cost of revenue
Cost of distribution revenue 2,329,690 2,329,690
Cost of logistic services revenue 188,581 188,581
------------------------------------
Total cost of revenue 2,518,271 2,518,271
------------------------------------
Gross profit 152,339 152,339
Selling, general and
administrative expenses 112,349 $(3,226) 109,123
Amortization 4,636 (4,451) 185
Facility consolidation charge 166 (166) -
------------------------------------
Operating income from continuing
operations 35,188 7,843 43,031
Interest, net 9,317 9,317
Other (income) expenses 838 (256) 582
------------------------------------
Income from continuing operations
before income taxes 25,033 8,099 33,132
Income tax expense (7,721) 19,073 11,352
------------------------------------
Income from continuing operations
before minority interest 32,754 (10,974) 21,780
Minority interest 207 207
------------------------------------
Income from continuing operations 32,547 (10,974) $21,573
===========
Discontinued operations, net of
income taxes:
Loss from discontinued
operations (59)
Gain on disposal of
discontinued operations 12
-----------
Total discontinued operations, net
of income taxes (47)
-----------
Net income $32,500
===========
Earnings per share - basic:
Income from continuing
operations $0.58 $0.38
===========
Discontinued operations, net of
income taxes -
-----------
Net income $0.58
===========
Earnings per share - diluted:
Income from continuing
operations $0.57 $0.37
===========
Discontinued operations, net of
income taxes -
-----------
Net income $0.57
===========
Weighted average common shares
outstanding:
Basic 56,488 56,488
=========== ===========
Diluted 57,551 57,551
=========== ===========
BRIGHTPOINT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
(Unaudited)
Nine Months Ended
September 30, 2006 (1)
US GAAP Adjust- As
As Reported ments Adjusted
Revenue
Distribution revenue $1,502,888 $1,502,888
Logistic services revenue 245,264 245,264
----------------------------------
Total revenue 1,748,152 1,748,152
Cost of revenue
Cost of distribution revenue 1,441,026 1,441,026
Cost of logistic services revenue 198,068 198,068
----------------------------------
Total cost of revenue 1,639,094 1,639,094
----------------------------------
Gross profit 109,058 109,058
Selling, general and administrative
expenses 72,415 72,415
Amortization 283 283
Facility consolidation charge (9) (9)
----------------------------------
Operating income from continuing
operations 36,369 36,369
Interest, net 423 423
Other (income) expenses 213 213
----------------------------------
Income from continuing operations
before income taxes 35,733 35,733
Income tax expense 9,576 9,576
----------------------------------
Income from continuing operations
before minority interest 26,157 26,157
Minority interest - -
----------------------------------
Income from continuing operations 26,157 $26,157
==========
Discontinued operations, net of
income taxes:
Loss from discontinued operations (358)
Gain on disposal of discontinued
operations 74
------------
Total discontinued operations, net
of income taxes (284)
------------
Net income $25,873
============
Earnings per share - basic:
Income from continuing operations $0.53 $0.53
==========
Discontinued operations, net of
income taxes -
------------
Net income $0.53
============
Earnings per share - diluted:
Income from continuing operations $0.52 $0.52
==========
Discontinued operations, net of
income taxes (0.01)
------------
Net income $0.51
============
Weighted average common shares
outstanding:
Basic 49,026 49,026
============ ==========
Diluted 50,581 50,581
============ ==========
See accompanying "Notes to Consolidated Statements of Operations"
Notes to Consolidated Statements of Operations:
(1) The Company has provided earnings per share on an adjusted basis
from continuing operations because the Company's management
believes it provides meaningful information to investors primarily
as a result of the Dangaard Telecom acquisition on July 31, 2007.
Among other things, it may assist investors in evaluating the
Company's operations period over period. 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 US GAAP. Adjustments do not include items such as
non-cash stock based compensation. As a result, both US GAAP and
As Adjusted results include pre-tax non-cash stock based
compensation expense of $1.6 million and $1.2 million for the
three months ended September 30, 2007 and 2006 and $4.5 million
and $4.1 million for the nine months ended September 30, 2007 and
2006, respectively.
(2) Adjustments for the three months ended September 30, 2007
primarily include:
-- $3.8 million of non-cash amortization expense related to
intangible assets acquired in connection with the CellStar and
Dangaard Telecom transactions.
-- $1.6 million of incremental costs related to integrating the
Dangaard Telecom and CellStar acquisitions and other initial
charges taken in connection with longer-term cost saving
initiatives.
-- $3.9 million tax impact of items described above, including
$2.1 million tax benefit resulting from a reduction in the
statutory tax rate in Germany.
(3) Adjustments for the nine months ended September 30, 2007 primarily
include:
-- $4.5 million of non-cash amortization expense related to
intangible assets acquired in connection with the CellStar and
Dangaard Telecom transactions.
-- $3.6 million of incremental costs related to integrating the
Dangaard Telecom and CellStar acquisitions and initial charges
taken in connection with longer-term other cost saving
initiatives.
-- $19.1 million tax impact of items described above, including
$14.1 million tax benefit related to the reversal of valuation
allowances on certain foreign tax credit carryforwards and $2.1
million tax benefit resulting from a reduction in the statutory
tax rate in Germany.
Supplemental Information
(Amounts in thousands)
Earnings Before Interest, Taxes, Depreciation and Amortization
("EBITDA")
Three Months Ended
-------------------------------------
September 30, September 30, June 30,
2007 2006 2007
------------- ------------- ---------
Net income (1) $12,962 $ 8,764 $ 17,688
Net interest expense (1) 5,877 218 2,290
Income taxes (1) 2,997 3,035 (12,063)
Depreciation and amortization (1) 7,412 3,081 4,185
------------- ------------- ---------
EBITDA $29,248 $15,098 $ 12,100
============= ============= =========
(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 September 30, 2007 and 2006,
and June 30, 2006 were as follows:
Three Months Ended
------------------------------------
September 30, September 30, June 30,
2007 2006 2007
------------- ------------- --------
Days sales outstanding in accounts
receivable 40 24 27
Days inventory on-hand 34 47 30
Days payable outstanding (42) (60) (34)
------------- ------------- --------
Cash Conversion Cycle Days 32 11 23
============= ============= ========
Accounts receivable included $58.8 million of accounts receivable that had been sold to third party financial institutions at September 30, 2007. However, these sales did not qualify for off balance sheet presentation under US GAAP. We anticipate that these arrangements will meet the criteria for off balance sheet presentation at December 31, 2007. As a result, we expect our cash conversion cycle to improve by approximately 5 days for the fourth quarter of 2007 due to the related reduction in accounts receivable.
Supplemental Information (continued)
(Amounts in thousands)
Return on Invested Capital ("ROIC")
The Company uses ROIC to measure the effectiveness of its use of
invested capital to generate profits. ROIC for the quarters and
trailing four quarters ended September 30, 2007 and 2006, and June
30, 2007, was as follows:
Three Months Ended
-------------------------------------
September 30, September 30, June 30,
2007 2006 2007
------------- ------------- ---------
Operating income after taxes:
Operating income from continuing
operations $ 22,615 $ 12,474 $ 8,191
Plus: Facility consolidation
charge 166 - -
Less: estimated income taxes (1) (4,216) (3,157) 17,463
------------- ------------- ---------
Operating income after taxes $ 18,565 $ 9,317 $ 25,654
============= ============= =========
Invested Capital:
Debt $377,289 $ - $ 95,069
Shareholders' equity 599,880 176,819 228,791
------------- ------------- ---------
Invested capital $977,169 $176,819 $323,860
============= ============= =========
Average invested capital (2) $650,515 $170,971 $309,164
ROIC (3) 11% 22% 33%
Trailing Four Quarters Ended
-------------------------------------
September 30, September 30, June 30,
2007 2006 2007
------------- ------------- ---------
Operating income after taxes:
Operating income from continuing
operations $ 47,190 $ 52,583 $ 37,049
Plus: Facility consolidation
charge (benefit) 166 (9) -
Less: estimated income taxes (1) 8,882 (13,594) 9,940
------------- ------------- ---------
Operating income after taxes $ 56,238 $ 38,980 $ 46,989
============= ============= =========
Invested Capital:
Debt $377,289 $ - $ 95,069
Shareholders' equity 599,880 176,819 228,791
------------- ------------- ---------
Invested capital $977,169 $176,819 $323,860
============= ============= =========
Average invested capital (2) $396,954 $156,548 $234,545
ROIC (3) 14% 25% 20%
(1) Estimated income taxes were calculated by multiplying the sum of
operating income from continuing operations and the facility
consolidation charge by the respective periods' effective tax rate.
(2) Average invested capital for quarterly periods represents the
simple average of the beginning and ending invested capital amounts
for the respective quarter. Average invested capital for the trailing
four 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.
The decline in ROIC for the three months and trailing four quarters ended was primarily due to the increase in average invested capital compared to the same periods in the prior year. Average invested capital was negatively impacted for the three months and trailing four quarters ended September 30, 2007 by an increase in invested capital to fund the acquisitions of Dangaard Telecom and CellStar including $335.0 million of acquired goodwill. In addition, operating income after taxes was negatively impacted for the three months ended September 30, 2007 by $2.7 million (after tax) of non-cash amortization expense related to intangible assets acquired in connection the Dangaard Telecom and CellStar transactions.
ROIC was positively impacted for the three months and trailing four quarters ended September 30, 2007 compared to the same periods in the prior year by the $2.1 million tax benefit resulting from a reduction in the statutory tax rate in Germany discussed above. In addition, operating income after taxes was positively impacted for the trailing four quarters ended September 30, 2007 by the $14.1 million tax benefit related to the reversal of valuation allowances on certain foreign tax credits during the second quarter of 2007.
CONTACT: Brightpoint, Inc.
Anthony Boor, 317-707-2355
SOURCE: Brightpoint, Inc.