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As filed with the Securities and Exchange Commission on November 6, 1996
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
BRIGHTPOINT, INC.
(Name of registrant as specified in its charter)
Delaware 6402 Corporate Drive 35-1778566
(State or other jurisdiction Indianapolis, Indiana 46278 (I.R.S. employer
of incorporation or (317) 297-6100 identification
organization) (Address, including zip code, and telephone number, number)
including area code, of registrant's principal executive offices)
Robert J. Laikin, Chairman
Brightpoint, Inc.
6402 Corporate Drive
Indianapolis, Indiana 46278
(317) 297-6100
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Robert J. Mittman, Esq.
Tenzer Greenblatt LLP
405 Lexington Avenue
New York, New York 10174
Telephone: (212) 885-5000
Telecopier: (212) 885-5001
Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date
of this Registration Statement.
If the only securities being registered on this Form are being offered pursuant to dividend or interest
reinvestment plans, please check the following box |_|
If any of the securities being registered on this form are to be offered on a delayed or continuous basis
pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box |X|
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the
Securities Act, please check the following box and list the Securities Act registration statement number
of the earlier registration statement for the same offering. |_| ____
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the
following box and list the Securities Act registration statement number of the earlier effective registration
statement for the same offering. |_| ____
If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. |_|
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CALCULATION OF REGISTRATION FEE
====================================================================================================================================
Title of Shares Proposed Maximum Offering Proposed Maximum Aggregate Amount of
to be Registered Amount to be Registered(1) Price Per Share(2) Offering Price(2) Registration Fee
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Common Stock, $.01 par value 750,000 Shares $25.00 $18,750,000 $5,681.82
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(1) For the account of selling stockholders.
(2) Estimated solely for the purpose of calculating the registration fee.
Pursuant to Rule 457(c) of the Securities Act of 1933, as amended, (the
"Act") the registration fee has been calculated based upon the average
of the high and low sale prices as reported by NASDAQ for the
registrant's Common Stock on October 31, 1996.
--------------
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until the Registration Statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
<PAGE>
Preliminary Prospectus Dated November 6, 1996
Subject to Completion
PROSPECTUS
750,000 Shares of Common Stock
Brightpoint, Inc.
This Prospectus relates to an offering by certain persons (the "Selling
Stockholders") of an aggregate of up to 750,000 shares of Common Stock of
Brightpoint, Inc. (the "Company"). The Company will not receive any of the
proceeds from the sale of Common Stock by the Selling Stockholders.
The Common Stock is traded on the NASDAQ National Market under the
symbol "CELL." On November 4, 1996, the closing sale price of the Common Stock
as reported by NASDAQ was $27.00.
----------------------
THE SECURITIES OFFERED HEREBY INVOLVE CERTAIN RISKS.
SEE "RISK FACTORS" COMMENCING ON PAGE 7.
-------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus is ______, 1996
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company can be inspected and
copied at the public reference facilities of the Commission located at 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices
at 500 West Madison Street, Suite 1400 Chicago, Illinois 60661 and 7 World Trade
Center, New York, New York 10048. Copies of such material can also be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Commission maintains a Website
that contained reports, proxy and information statements and other information
regarding registrants, such as the Company, that file electronically with the
Commission. The Commission's Website address is http://www.sec.gov.
INFORMATION INCORPORATED BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference:
(a) Annual Report on Form 10-K for the fiscal year ended December 31, 1995;
(b) Quarterly Report on Form 10-Q for the three month period ended March
31, 1996;
(c) Quarterly Report on Form 10-Q for the three month period ended June 30,
1996;
(d) Quarterly Report on Form 10-Q for the three month period ended
September 30, 1996;
(e) Current Report on Form 8-K dated June 12, 1996; and
(f) The description of the Company's Common Stock contained in its
Registration Statement on Form 8-A.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Common Stock offered hereby shall be deemed
to be incorporated by reference herein and to be a part hereof on the date of
filing of such documents.
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The Company will furnish without charge to each person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the documents incorporated herein by reference, except for the
exhibits to such documents. Requests should be directed to Ms. Wendi Craven,
Brightpoint, Inc., 6402 Corporate Drive, Indianapolis, Indiana 46278, telephone:
(317) 297-6100.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus and contained in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1995 and the Company's Current
Report on Form 8-K dated June 12, 1996, incorporated by reference in this
Prospectus. Prospective investors are urged to read this Prospectus in its
entirety. All information in this Prospectus reflects the Company's acquisition
of the Allied Companies (as hereinafter defined) in June 1996. See "Recent
Developments."
The Company
Brightpoint, Inc. (the "Company") is a leading worldwide distributor of
cellular telephones and accessories. The Company offers products from prominent
manufacturers under brand names such as Nokia, Ericsson, Motorola, Audiovox, NEC
and AT&T, and has developed a global customer base of more than 10,000 cellular
carriers, agents, resellers, dealers and retailers. The Company has grown
rapidly, with net sales increasing from approximately $309.2 million for the
year ended December 31, 1994 to approximately $419.1 million for the year ended
December 31, 1995, and with pro forma net income increasing from approximately
$4.6 million to approximately $7.3 million during the same period.
The market for cellular products and services, a major segment of the
wireless communications industry, has grown substantially and continues to
expand. The number of cellular subscribers in the United States has increased
from approximately 300,000 in 1985 to more than 32 million in 1995, growing by
more than eight million, or approximately 33.3%, in 1995 alone. In addition, the
Company expects that rapid growth in international markets will continue as a
result of low market penetration, economic growth and high population density.
The Company has been successful in expanding its international presence, with
international sales as a percentage of net sales increasing significantly from
approximately 18.4% to 27.9% from the year ended December 31, 1994 to the year
ended December 31, 1995.
The emergence of new wireless communications technologies and services,
such as enhanced specialized mobile radio ("ESMR"), personal communications
services ("PCS") and satellite communications systems, is expected to increase
the wireless communications subscriber base upon widespread commercial
introduction of these services. The Company currently provides cellular
distribution services for many of the leading manufacturers and carriers which
are expected to participate in these new and emerging wireless communications
markets.
The Company focuses on serving as an effective link between manufacturers
and service providers in the wireless
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communications industry. The Company's goals include (i) building upon its base
of customers by providing a reliable, timely and cost-effective means of
obtaining a broad range of brand name products and accessories, (ii) meeting the
increasing outsourcing demands of manufacturers and service providers by
offering inventory management and value-added services, (iii) offering an
attractive channel of distribution for its suppliers by providing an efficient,
low-cost method of accessing a large and diverse base of customers worldwide and
(iv) expanding sales of accessory products.
The Company was incorporated under the laws of the State of Indiana in
August 1989 under the name Wholesale Cellular USA, Inc. and reincorporated under
the laws of the State of Delaware in March 1994. In September 1995, the Company
changed its name to Brightpoint, Inc. The Company's principal executive offices
are located at 6402 Corporate Drive, Indianapolis, Indiana 46278, and its
telephone number is (317) 297-6100.
Recent Developments
In July 1996, the Company entered into an agreement with Technology
Resources International Ltd. ("TRI"), an international distributor of wireless
communications equipment based in the United Kingdom, pursuant to which the
parties formed Brightpoint International Ltd. ("Brightpoint International"), a
company owned equally by the Company and TRI. Brightpoint International conducts
all of the Company's sales and marketing activities outside of North and South
America.
In June 1996, the Company consummated a merger pursuant to an Agreement and
Plan of Merger dated March 14, 1996 and as amended on April 29, 1996 (the
"Merger Agreement"), by and among the Company, Brightpoint Acquisition, Inc.
(the "Subsidiary"), a wholly-owned subsidiary of the Company, Allied
Communications, Inc., Allied Communications of Florida, Inc., Allied
Communications of Georgia, Inc., Allied Communications of Illinois, Inc., Allied
Communications of Puerto Rico, Inc. (collectively, the "Allied Companies"),
Robert Picow and Joseph Forer (together, the "Allied Stockholders"), pursuant to
which, upon the terms and conditions of the Merger Agreement, the Allied
Companies were merged with and into the Subsidiary and all of the outstanding
shares of common stock of each of the Allied Companies were converted into an
aggregate of 2,025,000 shares of Common Stock of the Company (the "Merger").
Upon the consummation of the Merger, Messrs. Picow and Forer owned 1,741,500
shares and 283,500 shares, respectively, of the Company's Common Stock, which
currently represents approximately 15.8% and 2.6%, respectively, of the shares
outstanding. The Allied Companies distribute wireless communications products
throughout the United States and Latin America.
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Pursuant to the terms of the Merger Agreement, the Company, simultaneously
with the Merger, appointed Robert Picow as a director of the Company to serve
for a term of three years in the same Class as Robert J. Laikin, Chairman of the
Board and Chief Executive Officer of the Company, and appointed Joseph Forer as
a director of the Company to serve for a term of two years in the same Class as
J. Mark Howell, President and Chief Operating Officer of the Company. The
Company also entered into employment agreements with the Allied Stockholders. In
October 1996, Mr. Picow terminated his employment agreement with the Company and
entered into a three year consulting agreement with the Company pursuant to
which Mr. Picow will receive $10,000 per month. The Company has agreed to
include up to 750,000 of the shares of Common Stock held by the Allied
Stockholders in the Registration Statement of which this Prospectus forms a
part. See "Selling Stockholders and Plan of Distribution."
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<PAGE>
RISK FACTORS
Prospective investors should consider carefully the following risk factors
in evaluating an investment in the Company and its business before purchasing
any shares of the Common Stock offered hereby.
Future Operating Results. The Company's business operates on a high-volume,
low-margin basis. The Company's operating expenses have increased significantly
and can be expected to continue to increase significantly in connection with the
Company's expansion activities and, accordingly, the Company's future
profitability will depend upon corresponding increases in revenues from
operations. Future events, including unanticipated expenses, increased price
competition, unfavorable general economic conditions, product returns and
recalls and uncollectible accounts, could have an adverse effect on the
Company's operating results. There can be no assurance that the Company's rate
of revenue growth will continue in the future or that the Company's future
operations will be profitable.
Risks Associated with Rapid Expansion. The Company has achieved rapid and
substantial growth which has placed and is expected to continue to place a
significant strain on its management, administrative, operational, financial and
other resources. The Company's success will be largely dependent upon its
ability to hire additional qualified management, marketing and other personnel
to augment the Company's efforts in successfully managing such growth (including
monitoring operations, controlling costs and maintaining effective management,
inventory and credit controls). The Company has limited experience in
effectuating rapid expansion and in managing a broader range of new services and
operations which are geographically dispersed. There can be no assurance that
the Company will be able to continue to successfully manage its operations (both
in the United States and internationally) or that any inability to do so will
not adversely affect its business, financial condition or results of operations.
Risks Associated with Future Growth and Acquisitions. The Company's
continued expansion will be largely dependent upon, among other things, the
Company's ability to secure an adequate supply of competitive products on a
timely basis and on commercially reasonable terms; continually turn its
inventories and collect its accounts receivable; and continue to successfully
develop and maintain key relationships with carriers and leading manufacturers
and dealers of cellular products. The Company's growth prospects could be
adversely affected by a decline in the wireless communications industry
generally or in particular geographic markets or market segments, which could
result in reduction or deferral of expenditures by prospective customers. The
Company has and will continue to seek to expand its operations in both the
United States and international markets through acquisitions of businesses or
the establishment of strategic alliances which the
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Company believes are compatible with its business. The Company recently
commenced operations of Brightpoint International and consummated the Merger
with the Allied Companies. There can be no assurance that the Company will be
able to make additional acquisitions or that it will be able to successfully
integrate into its operations any business which it may acquire (including the
operations of Brightpoint International and the Allied Companies). Any inability
to do so, particularly in instances in which the Company has made significant
capital investments, could have a material adverse effect on the Company.
Foreign Trade Risks. Sales of cellular products to customers in foreign
markets, primarily in Latin America and the Middle East, have accounted for an
increasing portion of the Company's net sales. For the years ended December 31,
1994 and 1995 and the nine months ended September 30, 1996, sales of cellular
products to customers in foreign markets accounted for approximately 18.4%,
32.0% and 41.0%, respectively, of the Company's net sales. The Company is
seeking to continue to increase product sales in foreign markets and believes
that such markets present significant opportunities. There can be no assurance,
however, that the Company will be able to do so or that any such markets will
ultimately prove to be viable. To the extent that the Company is able to
continue to successfully increase its foreign sales, it will become increasingly
subject to risks inherent in foreign trade, including increased credit risk,
customs duties and import quotas and other trade restrictions, fluctuations in
foreign currency exchange rates, shipping delays, failure or material
interruption of cellular systems and services and international political,
regulatory and economic developments, all of which, particularly in light of the
historical and political instability of many countries in Latin America and the
Middle East, could have a material adverse effect on the Company. In addition,
to the extent that the Company establishes operations in foreign countries,
there can be no assurance that political, regulatory, economic or military
developments, over which the Company will have no control, will not subject the
Company to increased risk of loss of revenues and property due to, among other
things, expropriation, nationalization, inflation, currency devaluation,
international hostilities, confiscatory taxation, limitations on repatriation
and currency controls. Although a majority of foreign sales are currently made
in U.S. dollars the percentage of the Company's foreign sales made in currencies
other than the U.S. dollar has increased in recent periods. Therefore, an
increase in the value of the dollar in relation to foreign currencies may have
an adverse effect on potential demand for the Company's products. The Company
may also experience losses as a result of future fluctuations in foreign
currencies compared to the dollar.
Dependence on Third-Party Suppliers. The Company is dependent on
third-party equipment manufacturers, distributors and dealers for all of its
supply of cellular telephones and accessories. For the years ended December 31,
1994 and 1995 and the nine months
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ended September 30, 1996, the Company's four largest suppliers in the aggregate
accounted for approximately 57.8%, 43.9% and 33.8%, respectively, of product
purchases. For the year ended December 31, 1995, the Company's four largest
suppliers, Nokia Mobile Phones, Inc. ("Nokia"), BellSouth Cellular Corp.,
Ericsson and Comcast, accounted for approximately 19.7%, 9.9%, 8.6% and 5.7%,
respectively, of product purchases, with Nokia, Motorola, Ericsson, and Comcast
accounting for approximately 17.2%, 7.1%, 5.5% and 4.09%, respectively, of
product purchases for the nine months ended September 30, 1996. The Company is
dependent on the ability of its suppliers to provide adequate inventories of
currently popular brand name products on a timely basis and on favorable pricing
terms. As is typical in the industry, the Company does not have exclusive or
long-term agreements with any of its suppliers and generally purchases products
pursuant to purchase orders placed from time to time in the ordinary course of
business. Although the Company believes that its relationships with its
suppliers are satisfactory, the loss of certain of the Company's principal
suppliers or substantial price increases imposed by any such suppliers, in the
absence of readily available alternative sources of supply, would have a
material adverse effect on the Company. There can be no assurance that suppliers
will continue to offer competitive products to the Company, that the Company
will be able to obtain accessory products on favorable terms or that the Company
will not be subject to the risk of price fluctuations and periodic delays.
Failure or delay by principal suppliers in supplying competitive products to the
Company on favorable terms would materially adversely affect the Company's
operating margins and the Company's ability to obtain and deliver products on a
timely and competitive basis.
Intense Industry Competition. The markets for cellular telephones and
accessories are characterized by intense price competition and significant price
erosion over the life of a product. The Company competes with numerous
well-established wholesale distributors and manufacturers of cellular equipment,
including the Company's suppliers, as well as with providers of cellular
services, certain of which possess greater financial and other resources than
the Company. Certain of these competitors may also market the same or similar
products directly to the Company's customers and have the financial resources
necessary to enable them to withstand substantial price competition and
implement extensive advertising and promotional programs, both generally and in
response to efforts by additional competitors to enter into new markets or
introduce new products. The cellular distribution industry is also characterized
by low barriers to entry and frequent introduction of new products. The
Company's ability to continue to compete successfully will be largely dependent
on its ability to maintain its current vendor relationships and anticipate and
respond to various competitive factors affecting the industry, including new
products which may be introduced, changes in consumer preferences, demographic
trends, international, national, regional and local economic conditions and
discount pricing and promotion
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strategies by competitors. There can be no assurance that the Company will be
able to continue to compete successfully, particularly as domestic cellular
markets mature and the Company seeks to enter into new markets and market new
products.
Inventory Obsolescence and Technological Change. The markets for wireless
communications products are characterized by rapidly changing technology and
evolving industry standards, often resulting in product obsolescence or short
product life cycles. Accordingly, the Company's success is dependent upon its
ability to anticipate technological changes in the industry and to continually
identify, obtain and successfully market new products that satisfy evolving
industry and customer requirements. The Company has made increased commitments
of capital to purchase product inventories. Additional concentrations of capital
in inventory increase the risk of loss from possible inventory obsolescence.
There can be no assurance that competitors or manufacturers of cellular products
will not market products which have perceived advantages over the Company's
products or which render the products currently sold by the Company obsolete or
less marketable. In addition, the use of alternative wireless communications
technologies, including ESMR, PCS and satellite communications systems, with the
potential to compete with cellular systems, may reduce demand for existing
cellular products. The Company expects that companies which have developed or
are developing new technologies or products in related market segments will
commercialize technologies which would compete with existing cellular
technology. Certain of such technologies, upon widespread commercial
introduction, could materially change the types of products sold by the Company
and its suppliers and result in significant price competition. There can be no
assurance that the Company's existing customers or consumers will be willing,
for financial or other reasons, to purchase new equipment necessary to utilize
these new technologies or that product obsolescence will not result in
significantly increased inventories of unsold products. Moreover, complex
hardware and software contained in new cellular phones could contain defects
which become apparent subsequent to widespread commercial use, resulting in
product recalls and returns.
Increasing Sales Concentration and Accounts Receivable; Collection and
Credit Risks. An increasing portion of the Company's net sales has been derived
from a concentrated customer base. For the years ended December 31, 1994 and
1995 and the nine months ended September 30, 1996, sales of cellular products to
the Company's five largest customers accounted for approximately 17.7%, 17.2%
and 15.2%, respectively, of the Company's net sales. For the year ended December
31, 1995, sales of cellular products to CellCom Israel Ltd. ("CellCom")
accounted for approximately 7.9% of the Company's net sales. The loss of this
customer or other principal customers could have a material adverse effect on
the Company's financial condition and results of operations. The Company's
accounts receivable, less allowance for doubtful accounts, at September 30, 1996
were approximately $78.1 million, as compared to
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approximately $55.2 million, at December 31, 1995. At September 30, 1996, the
Company's allowance for doubtful accounts was approximately $1.0 million, which
the Company believes is currently adequate for the size and nature of its
receivables. Nevertheless, delays in collection or uncollectibility of accounts
receivable could have a material adverse effect on the Company's liquidity and
working capital position. In connection with the Company's continued expansion,
the Company intends to offer open account terms to additional customers, which
will subject the Company to increased credit risk, particularly in the event
that any such receivables represent sales to a limited number of customers or
are concentrated in foreign markets, and could require the Company to
continually increase its allowance for doubtful accounts.
Possible Fluctuations in Operating Results; Seasonality. The Company's
operating results may vary from period to period as a result of purchasing
patterns of potential customers, the timing of introduction of new products by
the Company's suppliers and competitors, variations in sales by distribution
channels, product availability and pricing and the seasonal nature of the
Company's business. Sales of the Company's products are seasonal, with peak
product shipments, primarily in the United States occurring in the third and
fourth quarters. Unanticipated events, including delays in securing adequate
inventories of competitive products at the time of peak sales, or significant
decreases in sales during such periods, could have a material adverse effect on
the Company. There can be no assurance that the foregoing factors will not
result in significant fluctuations in operating results in the future.
Significant Outstanding Indebtedness; Loan Covenants and Security
Interests. In order to finance the Company's expanded operations, in June 1996
and October 1996, the Company amended its loan agreement with Bank One,
Indianapolis, N.A., acting as agent for a group of banks (the "Bank"), providing
for borrowings under a line of credit of up to $75 million and allowing the
Company to guarantee up to $25 million of bank debt of Brightpoint
International. At September 30, 1996, the Company had approximately $27.2
million outstanding under its agreement with the Bank. All of the Company's
inventory and receivables are pledged to the Bank as collateral, and the Company
is prohibited from incurring additional indebtedness, which could, under certain
circumstances, limit the Company's ability to implement its expansion. In
addition to certain net worth and other financial covenants, the Company's loan
agreement with the Bank limits or prohibits the Company, subject to certain
exceptions, from declaring or paying cash dividends, making capital
distributions or other payments to stockholders, merging or consolidating with
another corporation or selling all or substantially all of its assets. In the
event of a violation by the Company of any of its loan covenants or other
default by the Company on its obligations, the Bank could declare the Company's
indebtedness to be immediately due and payable and foreclose on the Company's
assets. At
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September 30, 1996, the Company was in compliance with the terms of its line of
credit with the Bank. There can be no assurance that the Company will be able to
comply with the terms of its loan agreement with the Bank in the future.
Dependence on Key Personnel. The success of the Company is largely
dependent on the personal efforts of certain key personnel. Although the Company
has entered into employment agreements with its key personnel, the loss or
interruption of the services of such individuals or other key employees could
have a material adverse effect on the Company's business and prospects.
Classified Board of Directors; Authorization and Discretionary Issuance of
Preferred Stock. The Company's By-laws divide the Board of Directors into three
classes serving staggered three-year terms. The staggered Board of Directors may
make it more difficult for a third party to acquire, or may discourage
acquisition bids for, the Company. In addition, the Company's Certificate of
Incorporation authorizes the issuance of "blank check" preferred stock with such
designations, rights and preferences as may be determined from time to time by
the Board of Directors. Accordingly, the Board of Directors is empowered,
without stockholder approval, to issue preferred stock with dividend,
liquidation, conversion, voting or other rights which could adversely affect the
voting power or other rights of the holders of the Company's Common Stock. In
the event of issuance, the preferred stock could be utilized, under certain
circumstances, as a method of discouraging, delaying or preventing a change in
control of the Company.
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<TABLE>
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Selected Financial Data
(Amounts in thousands, except per share data)
Year ended December 31
1991 1992 1993 1994 1995
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Net sales $ 64,400 $ 96,403 $ 151,315 $ 309,227 $ 419,149
Cost of sales 60,166 89,580 140,617 290,463 390,950
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Gross profit 4,234 6,823 10,698 18,764 28,199
Selling, general and
administrative expenses 2,867 4,944 7,418 11,095 14,813
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Income from operations 1,367 1,879 3,280 7,669 13,386
Interest income (expense), net 8 (38) (103) (164) (1,383)
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Income before income taxes 1,375 1,841 3,177 7,505 12,003
Income taxes (1) 116 -- -- 1,623 3,838
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Net income $ 1,259 $ 1,841 $ 3,177 $ 5,882 $ 8,165
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Pro forma net income (1) $ 830 $ 1,114 $ 1,928 $ 4,555 $ 7,307
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Fully diluted net income per share:
Pro forma $ 0.16 $ 0.21 $ 0.37 $ 0.60 $ 0.80
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Weighted average common
shares outstanding 5,275 5,275 5,275 7,614 9,187
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<CAPTION>
December 31
1991 1992 1993 1994 1995
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Working capital $ 1,560 $ 3,072 $ 7,039 $ 20,960 $ 62,219
Total assets 8,425 18,365 31,283 82,845 119,787
Total long-term debt,
including current portion 1,563 1,560 6,086 6,361 6,217
Total liabilities 7,173 16,029 27,799 62,562 54,930
Stockholders' equity 1,252 2,336 3,484 20,283 64,857
</TABLE>
(1) See Note 1 of Notes to Consolidated Financial Statements.
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Management's Discussion And
Analysis Of Financial Condition And
Results of Operations
On June 7, 1996, the Company completed a merger with Allied Communications,
Inc., Allied Communications of Florida, Inc., Allied Communications of Georgia,
Inc., Allied Communications of Illinois, Inc. and Allied Communications of
Puerto Rico, Inc. ("the Allied Companies"), which are engaged in substantially
the same business as the Company. The transaction was accounted for using the
pooling-of-interests method and accordingly, the Company's consolidated
financial statements have been restated to reflect the consolidated balance
sheets and consolidated results of operations of both companies as if the merger
had been in effect for all periods presented. In connection with the merger, the
Company recorded a nonrecurring charge of $2,750,000 ($2,061,000 net of tax) in
the quarter ended June 30, 1996 for transaction costs, including investment
banking, legal, and accounting fees, and for estimated costs associated with the
merger.
Results of Operations
The following table sets forth for the periods indicated the percentage of
net sales represented by certain items reflected in the Company's statements of
income. The statements of income contained in the Company's financial statements
and the following table for each of the years presented include pro forma
adjustments for income taxes as such periods preceded the termination of the
Company's or the Allied Companies' S corporation election. See Note 1 of Notes
to Consolidated Financial Statements.
<TABLE>
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Year to Year
Percentage
Percentage of Net Sales Changes
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Year ended December 31, 1993 1994
1993 1994 1995 to 1994 to 1995
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<S> <C> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 104.4% 35.5%
Cost of sales 92.9 93.9 93.3 106.6 34.6
Gross profit 7.1 6.1 6.7 75.4 50.3
Selling, general and
administrative expenses 4.9 3.6 3.5 49.6 33.5
Income from operations 2.2 2.5 3.2 133.8 74.5
Net income 2.1 1.9 1.9 85.1 38.8
Pro forma net income 1.3 1.5 1.7 136.3 60.4
</TABLE>
Net Sales
Net sales increased by approximately $109.9 million, or 35.5%, from 1994 to
1995 and by $157.9 million, or 104.4%, from 1993 to 1994. The increases in net
sales are primarily attributable to increased sales in foreign markets and
increased domestic unit
-14-
<PAGE>
volume, offsetting a decrease in per unit prices. Foreign sales were
approximately 18.4% and 27.9% of the Company's net sales for 1994 and 1995,
respectively. The Company anticipates that sales of its products in foreign
markets will continue to account for a significant portion of net sales in the
future.
Cost of Sales And Gross Profit
Cost of sales increased by approximately $100.5 million, or 34.6%, from
1994 to 1995 and by $149.8 million, or 106.6%, from 1993 to 1994. Gross profit
increased by approximately $9.4 million, or 50.3%, from 1994 to 1995 and by $8.0
million, or 75.4%, from 1993 to 1994. Gross profit as a percentage of net sales
increased from 6.1% to 6.7% from 1994 to 1995 and decreased from 7.1% to 6.1%
from 1993 to 1994. The increases in absolute dollars are primarily attributable
to the increased number of units sold. The increase in gross profit as a
percentage of net sales from 1994 to 1995 is due to an increase in international
sales and the Company's ability to maintain its per unit dollar profit as per
unit phone prices have declined. In addition, a one-time promotional program was
run during 1994 whereby the Allied Companies sold products to a customer and its
agents at significantly reduced margins in order to increase sales volume. This
reduced gross profit as a percentage of net sales in 1994. The decrease in gross
profit as a percentage of net sales from 1993 to 1994 is primarily attributable
to the one-time promotional program discussed above. In future periods, gross
profit may be affected by product, freight and other costs, price competition
and by changes in the mix of products and related services offered by the
Company.
Selling, General And Administrative Expenses
Selling, general and administrative expenses increased by approximately
$3.7 million, or 33.5%, from 1994 to 1995 but decreased as a percentage of net
sales from 3.6% to 3.5% in 1995. The increase in absolute dollars is
attributable to the Company's expanded level of operations and reflects
increases in compensation expense, rent expense, travel costs associated with
the increased international sales and marketing efforts and an increase in the
allowance for doubtful accounts. Selling, general and administrative expenses
increased by approximately $3.7 million, or 49.6%, from 1993 to 1994 and
decreased as a percentage of net sales from 4.9% in 1993 to 3.6% in 1994. These
increase in absolute dollars is attributable to the Company's higher level of
business activities, including significantly increased marketing efforts and
compensation to additional executive and other personnel. The decrease in
selling, general and administrative expenses as a percentage of net sales from
1993 to 1994 can be attributed to the increased sales volume in 1994 which was
primarily generated through reduced margins as opposed to significant marketing
efforts. While the Company expects these expenses will continue to increase in
absolute dollars in connection with higher levels of
-15-
<PAGE>
sales, it is anticipated that selling, general and administrative expenses as a
percentage of net sales will remain relatively constant.
Income From Operations
Income from operations increased by approximately $5.7 million, or 74.5%,
from 1994 to 1995 and by $4.4 million, or 133.8%, from 1993 to 1994. Income from
operations as a percentage of net sales increased from 2.5% to 3.2% from 1994 to
1995 and increased from 2.2% to 2.5% from 1993 to 1994. From 1994 to 1995, this
increase is primarily attributable to the increase in gross profit discussed
above, partially offset by the increase in selling, general and administrative
expenses. From 1993 to 1994, the increase is due to a decrease in selling,
general and administrative expense percentage, which was partially offset by the
decrease in gross profit percentage discussed above.
Net Income And Pro Forma Net Income
Prior to April 14, 1994, the stockholders of the Company and prior to June
7, 1996 the stockholders of the Allied Companies had elected under Subchapter S
of the Internal Revenue Code to include the income of their companies in their
own income for tax purposes. Accordingly, no corresponding provision for income
taxes was made in the historical financial statements until those dates. Net
income increased by approximately $2.3 million, or 38.8%, from 1994 to 1995 and
remained constant as a percentage of net sales at 1.9% from 1994 to 1995. The
increase in net income resulted from an increase in income from operations,
partially offset by an increase in interest expense and income taxes. Net income
increased by approximately $2.7 million, or 85.1%, from 1993 to 1994 but
decreased as a percentage of net sales from 2.1% to 1.9%. This decrease was
primarily attributable to a provision for income taxes in 1994 as a result of
the termination of the Company's S corporation status while there was no such
provision in 1993. Pro forma net income increased by approximately $2.8 million
or 60.4%, from 1994 to 1995 and increased as a percentage of net sales from 1.5%
to 1.7% from 1994 to 1995. Pro forma net income increased by approximately $2.6
million, or 136.3%, from 1993 to 1994 and increased as a percentage of net
sales, from 1.3% to 1.5%, from 1993 to 1994. These increases result from
increases in income from operations discussed above partially offset by
increases in interest expense.
Liquidity And Capital Resources
The Company's primary cash requirements have been to fund increased levels
of accounts receivable and inventories. The Company has historically satisfied
its working capital requirements principally through cash flow from operations,
bank borrowings and the issuance of equity securities.
-16-
<PAGE>
At December 31, 1995, the Company had working capital of approximately
$62.2 million compared to working capital of approximately $21.0 million at
December 31, 1994. The increase in working capital was primarily attributable to
increased levels of accounts receivable and inventories, proceeds from a public
offering of Common Stock in October 1995 and the issuance of Common Stock
through the exercise of options and warrants, partially offset by an increase in
accrued payroll and other liabilities.
Net cash used by operating activities was approximately $33.2 million in
1995, as compared to approximately $11.0 million in 1994 and $3.9 million in
1993. The increases in cash used by operating activities were primarily
attributable to increases in accounts receivable (including related party
receivables) and inventories. Net cash used by investing activities was
approximately $2.8 million in 1995, as compared to approximately $468,000 in
1994 and $113,000 in 1993. The increases in cash used by investing activities
were primarily attributable to capital expenditures relating to the purchases of
information systems equipment and software and furniture and fixtures. Net cash
provided by financing activities was approximately $36.3 million in 1995, as
compared to approximately $11.3 million in 1994 and $2.4 million in 1993. The
increases in net cash provided by financing activities were primarily
attributable to proceeds from the Company's initial public offering of Common
Stock in April 1994, exercises of options and warrants, a public offering of
Common Stock in October 1995 and advances under the Company's line of credit
offset by S corporation distributions and debt repayments. At December 31, 1995,
the Company had cash and cash equivalents of approximately $726,000.
In June 1995, the Company entered into a credit agreement (line of credit)
with Bank One, Indianapolis, NA, as agent for a group of banks (the "Bank"),
which provided for borrowings under a line of credit of up to $30.0 million at
December 31, 1995. Advances under the line of credit were based on a borrowing
formula equal to 80% of the Company's eligible accounts receivable (33% of
foreign receivables), 85% of confirmed accounts receivable and 50% of the
Company's qualified inventories (subject to a limit on inventories of the lesser
of 50% of the borrowing base or $13.5 million). Interest accrued on such
advances, at the option of the Company, either at the Bank's prime rate or the
30-day LIBOR rate plus 175 basis points, and is payable monthly. At December 31,
1995, there were no advances outstanding on the line of credit.
In January 1996, the Company amended its credit agreement with the Bank to
increase available borrowings on the line of credit to $50.0 million. In June
1996, the Company further amended its credit agreement to increase available
borrowings on the line of credit to $75 million. The amendment also eliminated
all borrowing base limitations previously included in the agreement. Borrowings
on the amended line of credit bear interest at the bank's prime rate less up to
100 basis points or at LIBOR plus 75 to 175 basis points dependent upon the
ratio of the Company's funded debt to
-17-
<PAGE>
capital. Finally, in October 1996, the Company amended its credit agreement to
restate various covenants, including a provision to allow the Company to
guarantee bank debt of Brightpoint International Ltd. in an amount not to exceed
$25 million.
Substantially all of the Company's assets, including its inventories and
receivables, are pledged to the Bank as collateral. In addition to covenants
requiring the maintenance of certain financial ratios, the Company's agreement
with the Bank limits or prohibits the Company, subject to certain exceptions,
from among other things, incurring additional indebtedness, declaring or paying
cash dividends, making capital distributions or other payments to stockholders,
merging or consolidating with another corporation, forming subsidiaries, selling
all or substantially all of its assets, creating liens or security interests on
the Company's assets and entering into transactions with affiliates. The
Company's inability to incur additional indebtedness could, under certain
circumstances, limit the Company's ability to expand its operations.
The Allied Companies had a credit agreement with a separate bank which
provided for additional borrowings up to $15,000,000, due on demand with
interest on the outstanding principal at the bank's prime rate (8.5% at December
31, 1995). During 1995, the total borrowings available under this line of credit
were increased by $5,000,000. The line was collateralized by substantially all
the assets of the Allied Companies. The Allied Companies were allowed to borrow
up to $2,000,000 over the line of credit limit, with the first $1,000,000
personally guaranteed by the former President of the Allied Companies. This
credit agreement was terminated as of June 7, 1996, effective with the merger of
the Allied Companies.
At December 31, 1995 the Company was in compliance with the covenants of
both credit agreements.
The Company has increasingly emphasized the sale of products on open
account terms and has purchased increased levels of inventories to support an
expanding customer base, which has resulted in increased accounts receivable
days outstanding and a decrease in inventory turns. During 1995, approximately
20.7% of the Company's sales were made on a cash-on-delivery basis and
approximately 79.3% were made on open account terms. Trade accounts receivable
averaged 47 days of sales in 1993, as compared to 36 days in 1994 and 42 days in
1995, while inventory turns decreased from 15 days in 1993 to 12 in 1994 and to
9 in 1995.
The Company seeks to maintain an average of approximately 30 days of
inventory on hand in addition to making opportunistic spot buys. The Company
takes a physical inventory on a monthly basis. On an annual basis, cumulative
inventory adjustments have accounted for less than 1.0% of total purchases
during the years ended December 31, 1993, 1994 and 1995.
-18-
<PAGE>
At December 31, 1995, the Company's allowance for doubtful accounts was $691,000
which the Company believes is adequate for the size and nature of its
receivables. At December 31, 1994 and 1995, accounts 90 or more days past due
were approximately 4.2% and 5.9%, respectively, of aggregate trade accounts
receivable. Bad debt expense accounted for less than 1.0% of the Company's net
sales for 1993, 1994 and 1995. Nevertheless, delays in collection or the
uncollectibility of accounts receivable could have an adverse effect on the
Company's liquidity and working capital position. In connection with the
Company's expanded operations, the Company has offered open account terms to
additional customers, which subjects the Company to increased credit risk,
particularly in foreign markets. The Company seeks to minimize losses on credit
sales by closely monitoring its customers' credit worthiness and by seeking to
obtain letters of credit or similar security in connection with certain open
account sales to customers located in foreign markets. Through 1995, all foreign
sales were made in U.S. dollars.
Other than in connection with implementing the Company's management
information system, the Company had no material commitments for capital
expenditures at December 31, 1995.
Inflation
Inflation historically has not had a material effect on the Company's
operations.
SELLING STOCKHOLDERS AND PLAN OF DISTRIBUTION
An aggregate of up to 750,000 shares of Common Stock may be sold pursuant
to this Prospectus by the Selling Stockholders. The Company has agreed to
register the public offering of such shares under the Securities Act of 1933, as
amended, (the "Act") and to pay all expenses in connection therewith. The shares
have been included in the Registration Statement of which this Prospectus forms
a part. Mr. Picow has been a director of the Company since June 1996 and is Vice
Chairman of the Company. Prior thereto, Mr. Picow served as President of Allied
Communications, Inc. and certain affiliated companies. Mr. Forer has been a
director of the Company since June 1996 and is President of Brightpoint Latin
America, a division of the Company. Prior thereto, Mr. Forer served as President
of Allied Communications of Florida, Inc. In June 1996, Allied Communications,
Inc., Allied Communications of Florida, Inc. and certain affiliated companies
were merged with and into a wholly-owned subsidiary of the Company. The Company
will not receive any of the proceeds from the sale of shares of Common Stock by
the Selling Stockholders. The following table sets forth certain information
with respect to the Selling Stockholders:
<TABLE>
<CAPTION>
Beneficial Ownership of
Shares of Common Stock Shares to be Sold Shares Owned After Percentage of Shares
Selling Stockholder Prior to Sale in the Offering the Offering Owned After the Offering
- ------------------- ------------- --------------- ------------ ------------------------
<S> <C> <C> <C> <C>
Robert Picow 1,741,500 645,000 1,096,500 9.9%
Joseph Forer 283,500 105,000 178,500 1.6%
</TABLE>
The Common Stock will be offered and sold from time to time as market
conditions permit in the over-the-counter market, or
-19-
<PAGE>
otherwise, at prices and terms then prevailing or at prices related to the
then-current market price, or in negotiated transactions. The shares offered
hereby may be sold by one or more of the following methods, without limitation:
(a) a block trade in which a broker or dealer so engaged will attempt to sell
the shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction; (b) purchases by a broker or dealer as
principal and resale by such broker or dealer for its account pursuant to this
Prospectus; (c) ordinary brokerage transactions and transactions in which the
broker solicits purchasers; and (d) face-to-face transactions between sellers
and purchasers without a broker-dealer. In effecting sales, brokers or dealers
engaged by the Selling Stockholders may arrange for other brokers or dealers to
participate. Such broker or dealers may receive commissions or discounts from
Selling Stockholders in amounts to be negotiated. Such brokers and dealers and
any other participating brokers or dealers may be deemed to be "underwriters"
within the meaning of the Act, in connection with such sales. Notwithstanding
the inclusion in this Prospectus of the 750,000 shares of Common Stock being
offered by the Selling Stockholders, Mr. Picow and Mr. Forer have agreed with
the Company that as to such 750,000 shares they will not sell, transfer, assign,
hypothecate, pledge or otherwise dispose of, in the aggregate, more than the
number of shares which would be permitted to be sold pursuant to the volume
limitations of Rule 144(e) promulgated under the Act (calculated as if such
persons were acting in concert as described in Rule 144(e)).
INDEMNIFICATION
Section 145 of the General Corporation Law of the State of Delaware
provides for the indemnification of officers and directors under certain
circumstances against expenses incurred in successfully defending against a
claim and authorized Delaware corporations to indemnify their officers and
directors under certain circumstances against expenses and liabilities incurred
in legal proceedings involving such persons because of their being or having
been an officer or director.
Section 102(b) of the Delaware Corporation Law permits a corporation, by so
providing in its certificate of incorporation, to eliminate or limit director's
liability to the corporation and its stockholders for monetary damages arising
out of certain alleged breaches of their fiduciary duty. Section 102(b)(7)
provides that no such limitation of liability may affect a director's liability
with respect to any of the following: (i) breaches of the director's duty of
loyalty to the corporation or its stockholders; (ii) acts or omissions not made
in good faith or which involve intentional misconduct of knowing violations of
law; (iii) liability for dividends paid or stock repurchased or redeemed in
violation of the Delaware General Corporation Law; or (iv) any transaction from
which the director derived an improper personal benefit. Section 102(b)(7) does
not authorize any limitation on the ability of the corporation or its
stockholders to obtain injunctive relief, specific performance or other
equitable relief against directors.
-20-
<PAGE>
Article Nine of the Company's Certificate of Incorporation and the
Company's By-Laws provide that all persons who the Company is empowered to
indemnify pursuant to the provisions of Section 145 of the General Corporation
Law of the State of Delaware (or any similar provision or provisions of
applicable law at the time in effect), shall be indemnified by the Company to
the full extent permitted thereby. The foregoing right of indemnification shall
not be deemed to be exclusive of any other rights to which those seeking
indemnification may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors, or otherwise.
Article Ten of the Company's Certificate of Incorporation provides that no
director of the Company shall be personally liable to the Company or its
stockholders for any monetary damages for breaches of fiduciary duty of loyalty
to the Company or its stockholders (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law; (iii)
under Section 174 of the General Corporation Law of the State of Delaware; or
(iv) for any transaction from which the director derived an improper personal
benefit.
Insofar as indemnification for liabilities under the Act may be permitted
to directors, officers or persons controlling the Company pursuant to the
foregoing provisions, the Company has been informed that in the opinion of the
Commission, such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
LEGAL MATTERS
The legality of the Common Stock offered hereby will be passed upon for the
Company by Tenzer Greenblatt LLP, New York, New York.
EXPERTS
The consolidated financial statements (including schedule) of Brightpoint,
Inc. at December 31, 1995 and 1994, and for the years then ended appearing in
this Prospectus and Registration Statement have been audited by Ernst & Young
LLP, independent auditors, as set forth in their report thereon appearing
elsewhere herein which, as to the years 1995 and 1994, is based in part on the
reports of Coopers & Lybrand L.L.P., independent auditors. The consolidated
financial statements (including schedule) of Brightpoint, Inc. for the year
ended December 31, 1993 appearing in this Prospectus and Registration Statement
have been audited,as to combination only, by Ernst & Young LLP, independent
auditors, as set forth in their
-21-
<PAGE>
report thereon appearing elsewhere herein. These 1993 financial statements
(including schedule) have been combined from the financial statements of
Brightpoint, Inc. and the Allied Companies, which were audited by BDO Seidman
LLP and Weiss, Freedman & Strouss PC, independent auditors, respectively. The
financial statements (including schedule) referred to above are included in
reliance upon such reports given upon the authority of such firms as experts in
accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission
("Commission") a Registration Statement with respect to the Securities offered
by this Prospectus. This Prospectus omits certain information contained in the
Registration Statement as permitted by the Rules and Regulations of the
Securities and Exchange Commission. For further information, reference is made
to the Registration Statement and to the Exhibits filed therewith, which may be
examined without charge at the Commission's principal office in Washington, D.C.
or its regional office in New York City, and copies of all or any part thereof
may be obtained from the Commission upon payment of certain fees prescribed by
the Commission. Statements contained in this Prospectus as to the contents of
any contract or other document referred to are not complete and where such
contract or other document is an exhibit to the Registration Statement, each
such statement is deemed to be qualified in all respects by the provisions of
the exhibit.
-22-
<PAGE>
Index to Financial Statements
Page
----
Reports of Independent Auditors ...................................... F-2
Consolidated Statements of Income for the three years ended
December 31, 1993, 1994 and 1995 ................................. F-6
Consolidated Balance Sheets as of December 31, 1994 and 1995 ......... F-7
Consolidated Statements of Stockholders' Equity for the three
years ended December 31, 1993, 1994 and 1995 ..................... F-8
Consolidated Statements of Cash Flows for the three years ended
December 31, 1993, 1994 and 1995 ................................. F-9
Notes to Consolidated Financial Statements ........................... F-10
Schedule II Valuation and Qualifying Accounts ....................... F-21
F-1
<PAGE>
Report of Independent Auditors
Board of Directors and Stockholders
Brightpoint, Inc.
We have audited the accompanying consolidated balance sheets of Brightpoint,
Inc. as of December 31, 1995 and 1994, and the related consolidated statements
of income, stockholders' equity and cash flows for the years then ended. Our
audits also included the accompanying financial statement schedule. These
financial statements and schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audits. We did not audit the financial
statements of the Allied Companies, which are included in the consolidated
financial statements, which statements reflect total assets constituting 33% in
1995 and 58% in 1994, and net sales constituting 36% in 1995 and 45% in 1994 of
the related consolidated totals. Those statements were audited by other auditors
whose report appears elsewhere herein, and our opinion, insofar as it relates to
data included for the Allied Companies, is based solely on the report of the
other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the report of other auditors provide a reasonable
basis for our opinion.
In our opinion, based on our audits and the report of other auditors, the
financial statements and schedule referred to above present fairly, in all
material respects, the consolidated financial position of Brightpoint, Inc. at
December 31, 1995 and 1994, and the consolidated results of its operations and
its cash flows for the years ended, in conformity with generally accepted
accounting principles. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements taken as
a whole, presents fairly in all material respects the information set forth
therein as it relates to 1995 and 1994.
We also have audited, as to combination only, the accompanying consolidated
statements of income, stockholders' equity, and cash flows for the year ended
December 31, 1993. As described in Note 1 to such statements, these statements
have been combined from the consolidated statements of the Allied Companies and
Brightpoint, Inc. (which statements are not presented separately herein). The
reports of the other auditors who have audited these statements appear elsewhere
herein. In our opinion, the accompanying consolidated statements of income,
stockholders' equity, and cash flows for the year ended December 31, 1993 have
been properly combined on the basis described in Note 1.
Indianapolis, Indiana
January 25, 1996, except for Notes 1, 2, 3 and 9,
as to which the date is October 11, 1996 /s/ Ernst & Young LLP
F-2
<PAGE>
Coopers Coopers & Lybrand L.L.P.
& Lybrand
A professional services firm
Report of Independent Accountants
To the Shareholders
Allied Communications, Inc. and Affiliates
We have audited the combined balance sheets of Allied Communications, Inc. and
Affiliates as of December 31, 1994 and 1995, and the related combined statements
of income, stockholders' equity and cash flows for the years then ended (not
presented herein). These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted accounting
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects the combined financial position of Allied
Communications, Inc. and Affiliates as of December 31, 1994 and 1995 and the
combined results of their operations and their cash flows for the years then
ended in conformity with generally accepted accounting principles.
As described in Note 12, the 1995 combined financial statements were restated to
reflect an increase in cost of sales and accounts payable.
/s/ Coopers & Lybrand L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
February 23, 1996
Coopers & Lybrand L.L.P. is a member of Coopers & Lybrand International, a
limited liability association incorporated in Switzerland.
F-3
<PAGE>
Report of BDO Seidman, LLP, Independent Certified Public Accountants
Board of Directors
Brightpoint, Inc.
Indianapolis, Indiana
We have audited the statements of income, stockholders' equity and cash flows
for Brightpoint, Inc. (before restatement to reflect the accounts of the Allied
Companies pursuant to a business combination accounted for using the pooling of
interests method) for the year ended December 31, 1993 (not presented herein).
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit incudes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial
statements. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows of Brightpoint,
Inc. for the year ended December 31, 1993, in conformity with generally accepted
account principles.
/s/BDO Seidman, LLP
BDO Seidman, LLP
Chicago, Illinois
March 15, 1994, except for
the second paragraph of
Note 6, as to which the
date is August 31, 1995
F-4
<PAGE>
WEISS, FREEEDMAN & STROUSS, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Allied Communications, Inc. and Affiliates
Bensalem, Pennsylvania
We have audited the combined balance sheet of Allied Communications, Inc. and
Affiliates (S corporations) (the Company) as of December 31, 1993, and the
related combined statements of operations and retained earnings and cash flows
for the year then ended (not presented herein). These combined financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these combined financial statements
based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the combined financial statements are free of material
misstatement. An audit incudes examining, on a test basis, evidence supporting
the amounts and disclosures in the combined financial statements. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of the Company as of
December 31, 1993, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted account principles.
/s/Weiss, Freedman & Strouss, P.C.
April 20, 1994, except for Note 12, as to which
the date is April 3, 1995
F-5
<PAGE>
Brightpoint, Inc.
Consolidated Statements
Of Income
(Amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Year ended December 31
1993 1994 1995
-------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $ 151,315 $ 309,227 $ 419,149
Cost of sales 140,617 290,463 390,950
-------------------------------------------------------------------
Gross profit 10,698 18,764 28,199
Selling, general and
administrative expenses 7,418 11,095 14,813
-------------------------------------------------------------------
Income from operations 3,280 7,669 13,386
Interest expense, net (103) (164) (1,383)
-------------------------------------------------------------------
Income before income taxes 3,177 7,505 12,003
Income taxes (Note 5) -- 1,623 3,838
-------------------------------------------------------------------
Net income $ 3,177 $ 5,882 $ 8,165
===================================================================
Pro forma data (Unaudited):
Historical income before
income taxes $ 3,177 $ 7,505 $ 12,003
Pro forma income taxes 1,249 2,950 4,696
-------------------------------------------------------------------
Pro forma net income $ 1,928 $ 4,555 $ 7,307
===================================================================
Net income per share:
Primary:
Pro forma $ 0.37 $ 0.61 $ 0.80
===================================================================
Weighted average common
shares outstanding 5,275 7,426 9,122
===================================================================
Fully diluted:
Pro forma $ 0.37 $ 0.60 $ 0.80
===================================================================
Weighted average common
shares outstanding 5,275 7,614 9,187
===================================================================
</TABLE>
See accompanying notes.
F-6
<PAGE>
Brightpoint, Inc.
Consolidated
Balance Sheets
(Amounts in thousands)
<TABLE>
<CAPTION>
December 31
1994 1995
-----------------------------------------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 441 726
Accounts receivable (less allowance for doubtful
accounts of $450 in 1994 and $691 in 1995) 41,512 55,153
Accounts receivable, related parties (Note 8) -- 2,135
Inventories 39,219 56,313
Other current assets 1,004 2,220
-----------------------------------------------
Total current assets 82,176 116,547
Property and equipment:
Equipment 329 744
Information systems equipment and software 320 1,985
Furniture and fixtures 112 220
Leasehold improvements 161 240
Construction in progress -- 255
-----------------------------------------------
922 3,444
Less accumulated depreciation 292 510
-----------------------------------------------
630 2,934
Other assets 39 306
-----------------------------------------------
Total assets $ 82,845 $119,787
===============================================
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued expenses $ 56,201 $ 48,665
Notes payable 5,015 5,663
-----------------------------------------------
Total current liabilities 61,216 54,328
Deferred taxes (Note 5) -- 48
Stockholder loans (Note 8) 1,346 554
Stockholders' equity (Note 4):
Preferred stock, $.01 par value:
Authorized shares - 1,000 -- --
No shares issued or outstanding
Common stock, $.01 par value:
Authorized shares - 12,025
Issued and outstanding shares - 8,150 in 1994
and 10,610 in 1995 82 106
Additional paid-in capital 13,073 50,823
Retained earnings 7,128 13,928
-----------------------------------------------
Total stockholders' equity 20,283 64,857
-----------------------------------------------
Total liabilities and stockholders'
equity $ 82,845 $119,787
===============================================
</TABLE>
See accompanying notes.
F-7
<PAGE>
Brightpoint, Inc.
Consolidated
Statements Of
Stockholders' Equity
(Amounts in thousands)
<TABLE>
<CAPTION>
Common Stock Additional
---------------------------------- Paid-in Retained
Shares Amount Capital Earnings Total
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1993 5,275 $ 52 $ 20 $ 2,266 $ 2,338
S corporation dividends -- -- -- (2,030) (2,030)
Net income -- -- -- 3,177 3,177
-----------------------------------------------------------------------------------
Balance at December 31, 1993 5,275 52 20 3,413 3,485
S corporation dividends -- -- -- (1,161) (1,161)
Transfer of Brightpoint, Inc.
undistributed S corporat-
ion earnings -- -- 1,006 (1,006) --
Issuance of common stock 2,875 30 12,047 -- 12,077
Net income -- -- -- 5,882 5,882
-----------------------------------------------------------------------------------
Balance at December 31, 1994 8,150 82 13,073 7,128 20,283
S corporation dividends -- -- -- (1,365) (1,365)
Issuance of common stock 1,928 19 33,527 -- 33,546
Exercise of stock
options and warrants 532 5 2,947 -- 2,952
Tax benefit of exercise
of stock options -- -- 1,276 -- 1,276
Net income -- -- -- 8,165 8,165
-----------------------------------------------------------------------------------
Balance at December 31, 1995 10,610 $ 106 $ 50,823 $ 13,928 $ 64,857
===================================================================================
</TABLE>
See accompanying notes.
F-8
<PAGE>
Brightpoint, Inc.
Consolidated Statements
Of Cash Flows
(Amounts in thousands)
<TABLE>
<CAPTION>
Year ended December 31
1993 1994 1995
----------------------------------------------------------
<S> <C> <C> <C>
Operating activities
Net income $ 3,177 $ 5,882 $ 8,165
Adjustments to reconcile net income
to net cash used by operating
activities:
Depreciation 104 151 217
Changes in operating assets
and liabilities:
Accounts receivable (9,541) (22,214) (13,641)
Accounts receivable,
related parties (429) 566 (2,135)
Inventories (4,423) (28,993) (17,094)
Other current assets (66) (867) (1,176)
Accounts payable and
accrued expenses 7,237 34,497 (7,536)
----------------------------------------------------------
Net cash used by operating activities (3,941) (10,978) (33,200)
Investing activities
Capital expenditures (113) (468) (2,521)
Other assets -- -- (259)
----------------------------------------------------------
Net cash used by investing activities (113) (468) (2,780)
Financing activities
Proceeds from stock offerings -- 12,189 33,546
Proceeds from exercise of
stock options and warrants -- -- 2,952
Tax benefit of exercise of stock options -- -- 1,276
Proceeds from notes payable 1,567 3,448 648
Net payments on notes payable (500) -- --
Proceeds from long-term debt 4,009 -- --
Payments on long-term debt (5) (4,015) --
Proceeds from (payments on)
stockholder loans (586) 842 (792)
Increase in other assets (112) -- --
S corporation distributions (2,022) (1,169) (1,365)
----------------------------------------------------------
Net cash provided by financing activities 2,351 11,295 36,265
----------------------------------------------------------
Net increase (decrease) in cash and
cash equivalents (1,703) (151) 285
Cash and cash equivalents at
beginning of year 2,295 592 441
----------------------------------------------------------
Cash and cash equivalents at end of year $ 592 $ 441 $ 726
==========================================================
</TABLE>
See accompanying notes.
F-9
<PAGE>
Notes to Consolidated Financial Statements
1. Significant Accounting Policies
Basis of Presentation
Brightpoint, Inc. (the Company) is a leading worldwide distributor of wireless
communication equipment and accessories. The Company distributes its products
through a global customer network of cellular carriers, agents, resellers,
dealers and retailers throughout the world. The Company's operations are
conducted within one business segment.
Principles of Consolidation
On June 7, 1996, the Company completed a merger with Allied Communications,
Inc., Allied Communications of Florida, Inc., Allied Communications of Georgia,
Inc., Allied Communications of Illinois, Inc. and Allied Communications of
Puerto Rico, Inc. (the "Allied Companies"), which are engaged in substantially
the same business as the Company. The transaction was accounted for using the
pooling-of-interests method and accordingly, the Company's financial statements
have been restated to reflect the consolidated balance sheets and consolidated
results of operations of both companies as if the merger had been in effect for
all periods presented.
Pro forma net income per share for all periods presented is computed after
taking into consideration the 2,025,000 shares of the Company's common stock
that was exchanged for all of the outstanding common stock of the Allied
Companies. Further information pertaining to the merger is presented in the Note
2 - Merger with the Allied Companies.
There are no material differences between the accounting policies of the Company
and the Allied Companies. Certain amounts in the Allied Companies' historical
combined financial statements were reclassified to conform with the presentation
used by the Company.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
Cash Equivalents
All highly liquid investments with maturities of three months or less when
purchased are considered to be cash equivalents.
F-10
<PAGE>
Notes to Consolidated Financial Statements (continued)
1. Significant Accounting Policies (continued)
Accounts Receivable
The Company extends credit to a substantial number of its customers and performs
ongoing credit evaluations of those customers' financial condition while,
generally, requiring no collateral. Customers that have not been extended credit
by the Company are on a cash-on-delivery basis only.
The Company's trade accounts receivables are exposed to concentrations of credit
risk. The trade receivables balances, reflecting the Company's sources of
revenue from wireless service providers, national retailers and agent dealers,
are dispersed throughout the United States, Latin America and the Middle East.
The Company provides credit, in the normal course of business to a large number
of customers. The Company performs ongoing credit evaluations of its customers
and maintains allowances for potential credit losses. Such losses have been
within management's expectations.
Inventories
Inventories consist of cellular telephones and accessories and are stated at the
lower of cost (first-in, first-out method) or market. Certain of the Company's
vendors have subordinated security interests in the Company's inventories.
Property and Equipment
Property and equipment are stated at cost and depreciation is computed by the
straight-line method using the estimated useful lives of the assets, generally
five to twelve years. Maintenance and repairs are charged to expense as
incurred.
Income Taxes
Prior to April 14, 1994, the stockholders of the Company had elected under
Subchapter S of the Internal Revenue Code to include the income of the Company
in their own income for tax purposes. Accordingly, the Company was not subject
to federal and state income taxes until that date.
Effective April 14, 1994, the Company's election under Subchapter S terminated.
Concurrent with the termination, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes", which requires
recognition of deferred tax assets and liabilities based on the difference
between the financial statement and tax bases of assets and liabilities. These
deferred taxes are measured by applying current tax laws. The effect on 1994 net
income of adopting the Statement was not material.
F-11
<PAGE>
Notes to Consolidated Financial Statements (continued)
1. Significant Accounting Policies (continued)
The Allied Companies had also elected under Subchapter S of the Internal Revenue
Code to include the income of the Companies in their own income for income tax
purposes and had provided for current income taxes in its combined financial
statements only for jurisdictions which do not recognize Subchapter S
corporations.
Pro Forma Disclosures
The pro forma income tax amounts presented in the statements of income represent
an estimate of the income taxes that the Company and the Allied Companies would
have incurred had they been tax paying entities for all periods presented. These
income tax amounts do not represent the amounts that would have resulted had the
Company and the Allied Companies filed consolidated income tax returns during
the periods presented. Net income per share amounts are based on the weighted
average number of common stock and dilutive common stock equivalent shares
outstanding during each year. Common stock equivalents include outstanding stock
options and stock warrants.
Historical net income per share amounts are not presented because such
information is not meaningful.
Stock Options
In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation". Companies are required to adopt the provisions of this Statement
for fiscal years beginning after December 15, 1995. The Company has not yet
adopted the new rules and, upon adoption next year, presently intends to
continue to measure compensation cost using Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees", as permitted by the new
statement.
Reclassifications
Certain amounts in the 1993 and 1994 financial statements have been reclassified
to conform to the 1995 presentation.
F-12
<PAGE>
Notes to Consolidated Financial Statements (continued)
2. Merger with the Allied Companies
On June 7, 1996, the Company completed a merger with the Allied Companies
through the exchange of 2,025,000 shares of newly-issued Company common stock in
exchange for all of the outstanding shares of the Allied Companies common stock.
The merger was structured as a tax-free reorganization and was accounted for
using the pooling-of-interests method of accounting. In connection with the
merger, the Company recorded a nonrecurring charge of $2,750,000 ($2,061,000 net
of tax) in the quarter ended June 30, 1996 for transaction costs, including
investment banking, legal, and accounting fees, and for estimated costs
associated with the merger. Net sales and net income for the Company and the
Allied Companies prior to the combination, are as follows (in thousands):
<TABLE>
<CAPTION>
Year ended December 31,
1993 1994 1995
---------------- ---------------- ---------------
<S> <C> <C> <C>
Net sales
Brightpoint, Inc. $ 76,750 $169,268 $269,359
Allied Companies 74,565 139,959 149,790
---------------- ---------------- ---------------
Combined $151,315 $309,227 $419,149
================ ================ ===============
Net income
Brightpoint, Inc. (pro forma,
except 1995) $ 1,214 $ 2,843 $ 5,706
Allied Companies (pro forma) 714 1,712 1,601
---------------- ---------------- ---------------
Combined $ 1,928 $ 4,555 $ 7,307
================ ================ ===============
</TABLE>
3. Credit Arrangements
At December 31, 1995, the Company had a $30 million credit agreement (line of
credit) with Bank One, Indianapolis, NA, as agent for a group of banks. Advances
on this line of credit were based on a borrowing base determined by eligible
accounts receivable and inventories. Borrowings on the line of credit bore
interest at the bank's prime rate (8.5% at December 31, 1995) or at LIBOR
(5.875% at December 31, 1995) plus 175 basis points.
F-13
<PAGE>
Notes to Consolidated Financial Statements (continued)
3. Credit Arrangements (continued)
On January 19, 1996, the Company amended its credit agreement to increase
available borrowings on the line of credit to $50 million. On June 7, 1996, the
Company further amended its credit agreement to increase available borrowings on
the line of credit to $75 million. The latter amendment also eliminated all
borrowing base limitations previously included in the agreement. Borrowings on
the amended line of credit bear interest at the bank's prime rate less up to 100
basis points or at LIBOR plus 75 to 175 basis points dependent upon the ratio of
the Company's funded debt to capital. Finally, on October 11, 1996, the Company
amended its credit agreement to restate various covenants, including a provision
to allow the Company to guarantee bank debt of Brightpoint International Ltd.
(see Note 9) in an amount not to exceed $25 million.
Substantially all of the Company's assets, including its inventories and
receivables, are pledged to the Bank as collateral. In addition to covenants
requiring the maintenance of certain financial ratios, the Company's agreement
with the Bank limits or prohibits the Company, subject to certain exceptions,
from among other things, incurring additional indebtedness, declaring or paying
cash dividends, making capital distributions or other payments to stockholders,
merging or consolidating with another corporation, forming subsidiaries, selling
all or substantially all of its assets, creating liens or security interests on
the Company's assets and entering into transactions with affiliates.
The Allied Companies had a credit agreement with a separate bank which provided
for additional borrowings up to $15,000,000, due on demand with interest on the
outstanding principal at the bank's prime rate (8.5% at December 31, 1995).
During 1995, the total borrowings available under this line of credit were
increased by $5,000,000. The line was collateralized by substantially all the
assets of the Allied Companies. The Allied Companies were allowed to borrow up
to $2,000,000 over the line of credit limit, with the first $1,000,000
personally guaranteed by the former President of the Allied Companies. This
credit agreement was terminated as of June 7, 1996, effective with the merger of
the Allied Companies.
At December 31, 1995 the Company was in compliance with the covenants on both
credit agreements. Interest payments for 1993, 1994 and 1995 were approximately
$70,000, $277,000 and $1,525,000, respectively.
F-14
<PAGE>
Notes to Consolidated Financial Statements (continued)
4. Stockholders' Equity
On April 14, 1994 the Company consummated the sale of 2,500,000 shares of common
stock for $5.00 per share in an initial public offering. On April 29 and May 2,
1994, the Company sold an aggregate of 375,000 additional shares of common stock
pursuant to the exercise of the underwriter's over-allotment option. In
connection with the initial public offering and the conversion of the Company
from an S corporation to a C corporation, the undistributed retained earnings
generated while an S corporation were transferred to additional paid-in capital
effective April 14, 1994.
On August 31, 1995 the Company declared a five-for-four stock split effected in
the form of a dividend payable upon September 20, 1995 to stockholders of record
on September 11, 1995. Accordingly, all references in the financial statements
related to per share amounts, average shares outstanding and information
concerning Stock Option Plans have been adjusted retroactively to reflect the
stock split.
On October 31, 1995 the Company consummated the sale of 1,927,500 shares of
common stock (including the sale of 277,500 shares pursuant to the underwriters'
over-allotment option) at a price of $19.00 per share in a public offering. The
Company received net proceeds, after deducting underwriting discounts and
commissions and expenses of the offering, of $33,546,000. The net proceeds were
used to repay all amounts outstanding under its line of credit ($10,315,000) and
for working capital and general corporate purposes.
On June 7, 1996, the Company issued 2,025,000 shares of common stock that were
exchanged for all of the outstanding common stock of the Allied Companies (see
Note 2).
The Company has authorized 1,000,000 shares of preferred stock which remain
unissued. The Board of Directors has not yet determined the preferences,
qualifications, relative voting or other rights of the authorized shares of
preferred stock.
1994 Stock Option Plan
In March 1994, the Company adopted the 1994 Stock Option Plan whereby employees
of the Company and others are eligible to be granted incentive stock options or
non-qualified stock options. A total of 500,000 common shares were reserved for
grant under the plan. During 1995, an amendment was approved which authorized an
increase in shares reserved for issuance under the plan from 500,000 shares to
1,125,000 shares. A committee of the Board of Directors determines the time or
times at which the options will be granted, selects the employees or others to
whom options will be granted and determines the number of shares covered by each
option, purchase price, time of exercise.
F-15
<PAGE>
Notes to Consolidated Financial Statements (continued)
4. Stockholders' Equity (continued)
(not to exceed five years from the date of the grant) and other terms. The
exercise price of the options granted may not be less than the fair market value
of a share of common stock on the date of the grant. Options become exercisable
in periods ranging from one to three years.
Information with respect to options granted under the 1994 Stock Option Plan is
as follows:
<TABLE>
<CAPTION>
1994 1995
------------------------------------------
<S> <C> <C>
Outstanding at beginning of year -- 489,375
Granted 493,750 409,375
Exercised -- 285,671
Canceled 4,375 4,167
-------------------- --------------------
Outstanding at end of year 489,375 608,912
==================== ====================
Price range of grants $5.00 - $9.90 $11.30 - $16.70
==================== ====================
Price range of options exercised $ 5.00 - $ 9.90
====================
Exercisable at end of year 248,834
====================
Available for grant at December 31, 1995 230,417
====================
</TABLE>
Non-employee Directors' Stock Option Plan
In March 1994, the Company adopted the Non-employee Directors' Stock Option Plan
whereby non-employee directors are eligible to be granted non-qualified stock
options. A total of 125,000 shares were reserved for grant under the plan.
During 1995, an amendment was approved which authorized an increase in shares
reserved for issuance under the plan from 125,000 shares to 250,000 shares.
Options to purchase 12,500 shares of common stock were granted to each newly
elected non-employee director and, on the first day of each year, each
individual elected and continuing as a non-employee director receives an option
to purchase 4,000 shares of common stock. The exercise price of the options
granted is the fair market value of a share of common stock on the date of the
grant. The options are exercisable one year after the date of grant and expire
five years after the date of the grant.
F-16
<PAGE>
Notes to Consolidated Financial Statements (continued)
4. Stockholders' Equity (continued)
Information with respect to options granted under the Non-employee Directors'
Stock Option Plan is as follows:
<TABLE>
<CAPTION>
1994 1995
------------------------------------------
<S> <C> <C>
Outstanding at beginning of year -- 62,500
Granted 62,500 25,000
Exercised -- 31,250
Canceled -- --
-------------------- --------------------
Outstanding at end of year 62,500 56,250
==================== ====================
Price range of grants $5.00 - $5.20 $13.05 - $14.60
==================== ====================
Price of options exercised $5.00
====================
Exercisable at end of year 31,250
====================
Available for grant at December 31, 1995 162,500
====================
</TABLE>
Stock Warrants
In connection with the initial public offering, the Company issued warrants to
purchase up to 250,000 shares of common stock initially exercisable at $6.20 per
share. The exercise price may be adjusted downward if future sales by the
Company of its common stock are at a price per share less than the original
exercise price of $6.20 per share. In 1995, 216,000 of these warrants were
exercised at an average per share price of $6.20. At December 31, 1995, 34,000
of these warrants were outstanding and are exercisable by the holders at any
time until April 7, 1999.
In January 1995, the Company issued warrants to purchase up to 318,096 shares of
common stock at $13.05 per share in connection with an agreement with HSN Direct
Joint Venture. At December 31, 1995, all of these warrants were outstanding.
During 1996, 280,346 of the warrants were exercised at market prices ranging
from $21.50 to $23.50 per share. The remaining outstanding warrants are
exercisable by the holders at any time until January 16, 2000.
F-17
<PAGE>
Notes to Consolidated Financial Statements (continued)
5. Income Taxes
Significant components of the historical and pro forma provision for income
taxes are as follows (in thousands):
Pro forma (Unaudited) Historical
----------------------------- -------------------
1993 1994 1995 1994 1995
----------------------------- -------------------
Current:
Federal $ 1,052 $ 2,590 $ 3,763 $ 1,357 $ 3,028
State 286 642 1,017 410 978
------- ------- ------- ------- -------
1,338 3,232 4,780 1,767 4,006
Deferred:
Federal (72) (227) (73) (116) (146)
State (17) (55) (11) (28) (22)
------- ------- ------- ------- -------
(89) (282) (84) (144) (168)
------- ------- ------- ------- -------
$ 1,249 $ 2,950 $ 4,696 $ 1,623 $ 3,838
======= ======= ======= ======= =======
The pro forma provision for income taxes represents the estimated income taxes
that would have been reported had the Company been subject to income taxes for
each of the years presented.
The pro forma income tax expense is comprised of a provision for federal income
taxes at the statutory rate plus a state income tax provision, net of federal
income tax benefit. No other items materially impact the pro forma income tax
expense. Due to the significance of the Subchapter S earnings (of both the
Company and the Allied Companies) within the years presented, a reconciliation
of historical income tax expense is not presented as it would not be meaningful.
Components of the Company's deferred taxes are as follows (in thousands):
December 31
1994 1995
------------------------------
Deferred tax assets:
Capitalization of inventory costs $ 88 $ 204
Allowance for doubtful accounts 56 156
-------------- --------------
144 360
Deferred tax liabilities:
Depreciation - (48)
-------------- --------------
$ 144 $ 312
============== ==============
Income tax payments were $1,976,000 and $1,931,000 for 1994 and 1995,
respectively.
F-18
<PAGE>
Notes to Consolidated Financial Statements (continued)
6. Lease Arrangements
The Company has operating leases for its office and warehouse/distribution space
through 2006. Rent expense incurred by the Company amounted to $351,000,
$446,000 and $540,000 for 1993, 1994 and 1995, respectively.
The aggregate future minimum payments on the above leases are as follows (in
thousands):
Year ending December 31
1996 $1,017
1997 837
1998 736
1999 639
2000 604
Thereafter 2,534
-------------------
$6,367
===================
7. Export Sales
Sales to unaffiliated foreign customers, principally in Latin America and the
Middle East, aggregated approximately 18% and 28% of net sales for 1994 and
1995, respectively.
8. Related Party Transactions
During 1993, 1994 and 1995, the Company sold merchandise of $1,282,000,
$2,445,000 and $5,987,000, respectively, to an affiliate. Sales to this
affiliate were made at the Company's approximate cost in 1993 and at prevailing
market prices in 1994 and 1995. The net amounts receivable from the affiliate
are personally guaranteed by an officer of the Company.
In March 1994, the Company assigned a note, without recourse, evidencing a trade
receivable due from a customer located in Brazil to two officers for an
aggregate consideration of approximately $493,000, representing the principal
amount outstanding under the note.
Stockholder loans outstanding at December 31, 1994 and 1995 total $1,346,000 and
$554,000, respectively, and bear interest at 6%. Subsequent to December 31,
1995, the loans were retired.
F-19
<PAGE>
Notes to Consolidated Financial Statements (continued)
9. Subsequent Event - Formation of Joint Venture with Technology Resources
International Ltd.
On August 1, 1996, the Company completed the formation of a joint venture with
Technology Resources International Ltd. (TRI). The newly formed Brightpoint
International Ltd. is owned 50 percent by the Company and 50 percent by TRI.
10. Unaudited Quarterly Results of Operations
The unaudited quarterly results of operations are as follows (in thousands,
except per share data):
<TABLE>
<CAPTION>
1995 First Second Third Fourth
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 97,181 $ 91,921 $ 100,915 $ 129,132
Gross profit 6,205 6,036 6,822 9,136
Pro forma net income 1,631 1,724 1,583 2,369
Pro forma net income per share 0.19 0.19 0.18 0.23
1994 First Second Third Fourth
- ----------------------------------------------------------------------------------------------------
Net sales $ 50,519 $ 62,002 $ 81,929 $ 114,777
Gross profit 3,249 3,928 4,595 6,992
Pro forma net income 681 812 1,157 1,905
Pro forma net income per share 0.13 0.11 0.14 0.23
</TABLE>
F-20
<PAGE>
BRIGHTPOINT, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E
- ------------------------------------------------------------------------------------------------------------------------------------
ADDITIONS
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at Charged to Charged to Balance
Beginning Costs and Other at End
DESCRIPTION of Period Expenses Accounts Deductions of Period
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1995:
Deducted from asset accounts:
Allowance for doubtful accounts ................................. $450,000 $927,000 $ -- $686,000(1) $691,000
----------------------------------------------------------
Total ......................................................... $450,000 $927,000 $ -- $686,000 $691,000
==========================================================
Year ended December 31, 1994:
Deducted from asset accounts:
Allowance for doubtful accounts ................................. $328,000 $905,000 $ -- $783,000(1) $450,000
----------------------------------------------------------
Total ......................................................... $328,000 $905,000 $ -- $783,000 $450,000
==========================================================
Year ended December 31, 1993:
Deducted from asset accounts:
Allowance for doubtful accounts ................................. $ -- $328,000 $ -- $ -- $328,000
----------------------------------------------------------
Total ......................................................... $ -- $328,000 $ -- $ -- $328,000
==========================================================
</TABLE>
(1) Uncollectible accounts written off.
F-21
<PAGE>
================================================================================
No dealer, salesperson or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus, and if given or made, such information or representations must not
be relied upon as having been authorized by the Company, any Selling Stockholder
or any other person. This Prospectus does not constitute an offer to sell or the
solicitation of an offer to buy any security other than the shares offered by
this Prospectus, or an offer to sell or a solicitation of an offer to buy any
security by any person in any jurisdiction in which such offer or solicitation
would be unlawful. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, imply that the information in this
Prospectus is correct as of any time subsequent to the date of this Prospectus.
-----------------
TABLE OF CONTENTS
Page
----
Available Information ..................................................... 2
Information Incorporated by Reference ..................................... 2
Prospectus Summary ........................................................ 4
Risk Factors .............................................................. 7
Selected Financial Data ................................................... 13
Management's Discussion and Analysis of
Financial Condition and Results
of Operations .......................................................... 14
Selling Stockholders and Plan of
Distribution ........................................................... 19
Indemnification ........................................................... 20
Legal Matters ............................................................. 21
Experts ................................................................... 21
Additional Information .................................................... 22
Index to Financial Statements ............................................. F-1
================================================================================
================================================================================
750,000 Shares of
Common Stock
-----------------------
BRIGHTPOINT, INC.
-----------------------
PROSPECTUS
-----------------------
______, 1996
================================================================================
<PAGE>
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Expenses payable in connection with the issuance and distribution of the
securities being registered (estimated except in the case of the registration
fee) are as follows:
Amount
------
Registration Fee $ 5,681.82
Printing 1,000.00
Accounting Fees and Expenses 20,000.00
Legal Fees and Expenses 25,000.00
Transfer Agents and Registrars Fees 1,000.00
Miscellaneous 7,318.18
-------------
TOTAL $ 60,000.00
=============
The above fees will be paid by the Company.
Item 15. Indemnification of Directors and Officers
Section 145 of the General Corporation Law of the State of Delaware
provides for the indemnification of officers and directors under certain
circumstances against expenses incurred in successfully defending against a
claim and authorized Delaware corporations to indemnify their officers and
directors under certain circumstances against expenses and liabilities incurred
in legal proceedings involving such persons because of their being or having
been an officer or director.
Section 102(b) of the Delaware Corporation Law permits a corporation, by so
providing in its certificate of incorporation, to eliminate or limit director's
liability to the corporation and its stockholders for monetary damages arising
out of certain alleged breaches of their fiduciary duty. Section 102(b)(7)
provides that no such limitation of liability may affect a director's liability
with respect to any of the following: (i) breaches of the director's duty of
loyalty to the corporation or its stockholders; (ii) acts or omissions not made
in good faith or which involve intentional misconduct of knowing violations of
law; (iii) liability for dividends paid or stock repurchased or redeemed in
violation of the Delaware General Corporation Law; or (iv) any
II-1
<PAGE>
transaction from which the director derived an improper personal benefit.
Section 102(b)(7) does not authorize any limitation on the ability of the
corporation or its stockholders to obtain injunctive relief, specific
performance or other equitable relief against directors.
Article Nine of the Company's Certificate of Incorporation and the
Company's By-Laws provide that all persons who the Company is empowered to
indemnify pursuant to the provisions of Section 145 of the General Corporation
Law of the State of Delaware (or any similar provision or provisions of
applicable law at the time in effect), shall be indemnified by the Company to
the full extent permitted thereby. The foregoing right of indemnification shall
not be deemed to be exclusive of any other rights to which those seeking
indemnification may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors, or otherwise.
Article Ten of the Company's Certificate of Incorporation provides that no
director of the Company shall be personally liable to the Company or its
stockholders for any monetary damages for breaches of fiduciary duty of loyalty
to the Company or its stockholders (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law; (iii)
under Section 174 of the General Corporation Law of the State of Delaware; or
(iv) for any transaction from which the director derived an improper personal
benefit.
Insofar as indemnification for liabilities under the Act may be permitted
to directors, officers or persons controlling the Company pursuant to the
foregoing provisions, the Company has been informed that in the opinion of the
Commission, such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
Item 16. Exhibits
(a) Exhibits
Exhibit No.
4 Form of certificate evidencing Common Stock, $.01 par value, of the
Company, incorporated by reference to the Company's Registration
Statement on Form S-1 as declared effective by the Securities and
Exchange Commission on April 7, 1994.
5 Opinion of Tenzer Greenblatt LLP regarding legality of securities being
registered.
11.1 Statement Re: Computation of Per Share Earnings
23.1 Consent of Ernst & Young LLP.
II-2
<PAGE>
23.2 Consent of Coopers & Lybrand LLP.
23.3 Consent of BDO Seidman LLP
23.4 Consent of Weiss, Freedman & Strouss, PC
23.5 Consent of Tenzer Greenblatt LLP (included in Exhibit 5).
24 Power of Attorney (included in the signature page).
27 Financial Data Schedule
II-3
<PAGE>
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which it offers or
sells securities, a post-effective amendment to this
registration statement;
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the Prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement.
(2) For the purpose of determining any liability under the
Securities Act, each post-effective amendment shall be deemed a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed the initial
bona fide offering thereof.
(3) To remove by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of
the offering.
(4) For the purpose of determining any liability under the
Securities Act, each filing of an annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d)) that is incorporated by reference in the
registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of the
small business issuer pursuant to the foregoing provisions, or otherwise, the
small business issuer has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable.
II-4
<PAGE>
In the event that a claim for indemnification against such liabilities
(other than the payment by the small business issuer of expenses incurred or
paid by a director, officer, or controlling person of the small business issuer
in the successful defense of any action, suit, or proceeding) is asserted by
such director, officer, or controlling person in connection with the securities
being registered, the small business issuer will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, in the City of
Indianapolis, State of Indiana, on the 4th day of November, 1996.
BRIGHTPOINT, INC.
By: /s/ Robert J. Laikin
-----------------------
Robert J. Laikin,
Chief Executive Officer
KNOWN ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Robert J. Laikin and J. Mark Howell,
jointly and severally, as his true and lawful attorney-in-fact and agent, each
will full power of substitution and resubstitution for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each said attorney-in-fact or agent or substitute lawfully
does or causes to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement on Form S-3 has been signed below by the following
persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert J. Laikin Chairman of the November 4, 1996
- ---------------------- Board, Chief Executive
Robert J. Laikin Officer (Principal
Executive Officer) and
Director
/s/ J. Mark Howell President, Chief November 4, 1996
- ---------------------- Operating Officer
J. Mark Howell and Director
/s/ Phillip A. Bounsall Executive Vice President November 4, 1996
- ---------------------- Chief Financial Officer
Phillip A. Bounsall (Principal Financial Officer)
/s/ T. Scott Housefield Executive Vice President, November 4, 1996
- ---------------------- Marketing, Sales and
T. Scott Housefield Development and Director
/s/ John P. Delaney Vice President, Corporate November 4, 1996
- ---------------------- Controller (Principal
John P. Delaney Accounting Officer)
Director
- ---------------------
Robert Picow
/s/ Joseph Forer Director November 4, 1996
- ----------------------
Joseph Forer
/s/ John W. Adams Director November 4, 1996
- ----------------------
John W. Adams
/s/ Robert F. Wagner Director November 4, 1996
- ----------------------
Robert F. Wagner
/s/ Stephen H. Simon Director November 4, 1996
- ----------------------
Stephen H. Simon
/s/ Rollin M. Dick Director November 4, 1996
- ----------------------
Rollin M. Dick
/s/ Steven B. Sands Director November 4, 1996
- ----------------------
Steven B. Sands
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
4 Form of certificate evidencing Common Stock, $.01 par
value, of the Company, incorporated by reference to
the Company's Registration Statement on Form S-1 as
declared effective by the Securities and Exchange
Commission on April 7, 1994.
5 Opinion of Tenzer Greenblatt LLP regarding legality of
securities being registered.
11.1 Statement Re: Computation of Per Share Earnings
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Coopers & Lybrand LLP.
23.3 Consent of BDO Seidman LLP.
23.4 Consent of Weiss, Freedman & Strouss, PC
23.5 Consent of Tenzer Greenblatt LLP (included in Exhibit 5).
24 Power of Attorney (included in Signature Page).
27 Financial Data Schedule
November 4, 1996
Brightpoint, Inc.
6402 Corporate Drive
Indianapolis, Indiana 46278
Gentlemen:
You have requested our opinion with respect to the offer and sale by the
Selling Stockholders of Brightpoint, Inc., a Delaware corporation (the
"Company"), pursuant to a Registration Statement (the "Registration Statement")
on Form S-3 under the Securities Act of 1933, as amended (the "Act"), of up to
750,000 shares (the "Shares") of Common Stock, par value $.01 per share, of the
Company.
We have examined originals, or copies certified or otherwise identified to
our satisfaction, of such documents and corporate and public records as we deem
necessary as a basis for the opinion hereinafter expressed. With respect to such
examination, we have assumed the genuineness of all signatures appearing on all
documents presented to us as originals, and the conformity to the originals of
all documents presented to us as conformed or reproduced copies. Where factual
matters relevant to such opinion were not independently established, we have
relied upon certificates of executive officers and responsible employees and
agents of the Company.
Based upon the foregoing, it is our opinion that the Shares are duly
authorized, validly issued and fully paid and non-assessable. We hereby consent
to the use of this opinion as Exhibit 5 to the Registration Statement, and to
the use of our name as your counsel in connection with the Registration
Statement and in the Prospectus forming a part thereof. In giving this consent,
we do not thereby concede that we come within the categories of persons whose
consent is required by the Act or the General Rules and Regulations promulgated
thereunder.
Very truly yours,
/s/ TENZER GREENBLATT LLP
TENZER GREENBLATT LLP
EXHIBIT 11.1
BRIGHTPOINT, INC.
Statement Re: Computation Of Per Share Earnings
<TABLE>
<CAPTION>
Year Ended December 31
---------------------------------
1993 1994 1995
------- ------- -------
(in thousands, except per share data)
<S> <C> <C> <C>
Primary:
Average shares outstanding 5,275 7,321 8,767
Net effect of dilutive stock options and
warrants issued after April 7, 1994 --
based on the treasury stock method
using average market price -- 105 355
------- ------- -------
Total 5,275 7,426 9,122
======= ======= =======
Historical income before income taxes $ 3,177 $ 7,505 $12,003
Deduct pro forma income taxes 1,249 2,950 4,696
------- ------- -------
Pro forma net income $ 1,928 $ 4,555 $ 7,307
======= ======= =======
Per share amount $ 0.37 $ 0.61 $ 0.80
======= ======= =======
Fully diluted:
Average shares outstanding 5,275 7,321 8,767
Net effect of dilutive stock options and
warrants issued after April 7, 1994 --
based on the treasury stock method
using the greater of the year end market
price or the average market price -- 293 420
------- ------- -------
Total 5,275 7,614 9,187
======= ======= =======
Historical income before income taxes $ 3,177 $ 7,505 $12,003
Deduct pro forma income taxes 1,249 2,950 4,696
------- ------- -------
Pro forma net income $ 1,928 $ 4,555 $ 7,307
======= ======= =======
Per share amount $ 0.37 $ 0.60 $ 0.80
======= ======= =======
</TABLE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated January 25, 1996 (except for Notes 1, 2, 3 and 9, as to
which the date is October 11, 1996) in the Registration Statement (Form S-3) and
related Prospectus for the registration of 750,000 shares of common stock of
Brightpoint, Inc.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Indianapolis, Indiana
November 4, 1996
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this Registration on Statement on Form S-3 of
Brightpoint, Inc. of our report on Allied Communications, Inc. and Affiliates
dated February 23, 1996 on our audits of the financial statements of Allied
Communications, Inc. and Affiliates. We also consent to the reference to our
Firm under the caption "Experts."
/s/ Coopers & Lybrand L.L.P.
Philadelphia, Pennsylvania
November 4, 1996
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Brightpoint, Inc.
Indianapolis, Indiana
We hereby consent to the use in the Prospectus constituting a part of this
Registration Statement of our report dated March 15, 1994, except for the second
paragraph of Note 6, as to which the date is August 31, 1995, relating to the
financial statements of Brightpoint, Inc. (before restatement to reflect the
accounts of the Allied Companies pursuant to a business combination accounted
for using the pooling of interests method), which is contained in that
Prospectus, and to the incorporation in the Prospectus by reference of our
report dated March 15, 1994, except for the second paragraph of Note 3, as to
which the date is August 31, 1995, relating to the financial statements and
schedule of Brightpoint, Inc. appearing in the Company's Annual Report on Form
10-K for the year ended December 31, 1995.
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
/s/ BDO Seidman LLP
BDO SEIDMAN, LLP
Chicago, Illinois
November 4, 1996
Consent of Independent Accountants
We consent to the incorporation by reference in the registration statement on
Form S-3 of Brightpoint, Inc. of our report dated April 20, 1994, except for
Note 12, as to which the date is April 3, 1995, of our audits of the combined
financial statements of Allied Communications, Inc. and Affiliates as of
December 31, 1993 and for the year then ended which report is incorporated by
reference herein. We also consent to the references to us under the heading
"Experts" in such Prospectus.
/s/ WEISS, FREEDMAN & STROUSS, PC
Philadelphia, Pennsylvania
November 4, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information
extracted from the consolidated financial statements included
in the registrant's Registration Statement on Form S-3 of which
this schedule is an exhibit thereto and is qualified in its
entirety by reference to such financial statements <F1>
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1993 DEC-31-1994 DEC-31-1995
<PERIOD-END> DEC-31-1993 DEC-31-1994 DEC-31-1995
<CASH> 0<F1> 441 726
<SECURITIES> 0<F1> 0 0
<RECEIVABLES> 0<F1> 41,962 55,844
<ALLOWANCES> 0<F1> 450 691
<INVENTORY> 0<F1> 39,219 56,313
<CURRENT-ASSETS> 0<F1> 1,004 2,220
<PP&E> 0<F1> 922 3,444
<DEPRECIATION> 0<F1> 292 510
<TOTAL-ASSETS> 0<F1> 82,845 119,787
<CURRENT-LIABILITIES> 0<F1> 61,216 54,328
<BONDS> 0<F1> 0 0
0<F1> 82 106
0<F1> 0 0
<COMMON> 0<F1> 0 0
<OTHER-SE> 0<F1> 20,201 64,751
<TOTAL-LIABILITY-AND-EQUITY> 0<F1> 82,845 82,845
<SALES> 151,315 309,227 419,149
<TOTAL-REVENUES> 151,315 309,277 419,149
<CGS> 140,617 290,463 390,950
<TOTAL-COSTS> 140,617 290,463 390,950
<OTHER-EXPENSES> 7,418 11,095 14,813
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 103 164 1,383
<INCOME-PRETAX> 3,177 7,505 12,003
<INCOME-TAX> 0 1,623 3,838
<INCOME-CONTINUING> 3,177 5,882 8,165
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 3,177 5,882 8,165
<EPS-PRIMARY> 0<F2> 0<F2> 0<F2>
<EPS-DILUTED> 0<F2> 0<F2> 0<F2>
<FN>
<F1> The data included in this Schedule includes information derived from the
Consolidated Balance Sheets and the Consolidated Statements of Income for all
financial statement periods presented in the accompanying Registration
Statement. The financial statements included in the Registration Statement have
been restated to reflect the acquisition by the registrant of the Allied
Companies in June 1996 pursuant to a business combination accounted for using
the pooling of interests method. Historical balance sheet information as of
December 31, 1993 is not included in this Schedule since a balance sheet as of
such date is not presented in the accompanying Registration Statement.
<F2> Historical net income per share amounts are not presented because such
information is not meaningful as the Company was not a tax paying entity for all
periods presented. Pro forma primary earnings per share amounts that include
estimates of income tax amounts that the Company would have incurred had they
been a tax paying entity are $0.37, $0.61 and $0.80 for the three years ended
December 31, 1993, 1994 and 1995, respectively. Fully diluted earnings per share
amounts are $0.37, $0.60 and $0.80 for the three years ended December 31, 1993,
1994 and 1995, respectively.
</FN>
</TABLE>
