<PAGE> 1
As filed with the Securities and Exchange Commission on September 30, 1997.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
BRIGHTPOINT, INC.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 35-1778566
- --------------------------------- ------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
6402 CORPORATE DRIVE, INDIANAPOLIS, INDIANA 46278
- ------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
1996 STOCK OPTION PLAN
- --------------------------------------------------------------------------------
(Full title of the plan)
ROBERT J. LAIKIN, CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER,
BRIGHTPOINT, INC.
6402 CORPORATE DRIVE, INDIANAPOLIS, INDIANA 46278
- --------------------------------------------------------------------------------
(Name and address of agent for service)
(317) 297-6100
--------------
(Telephone number, including area code, of agent for service)
Copy to:
Robert J. Mittman, Esq.
Tenzer Greenblatt LLP
405 Lexington Avenue
New York, New York 10174
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<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Maximum Maximum
Aggregate Aggregate Amount of
Title of Securities to be Amount to be Price Per Offering Registration
Registered Registered Share (1) Price(1) Fee
- ------------------------- ------------ --------- -------- -----------
<S> <C> <C> <C> <C>
Common Stock, par value 1,875,000 $15.34 $28,762,500 $8,715.91
$.01 per share(2) shares
</TABLE>
- ----------------------
(1) Estimated solely for the purpose of calculating the
registration fee. Calculated pursuant to Rule 457(h)(1)
under the Securities Act of 1933, as amended, based upon, as
to the outstanding options to purchase 1,820,625 shares of
common stock of the registrant being registered herein, the
exercise prices thereof. As to the 54,375 shares being
registered herein issuable upon exercise of options reserved
for future issuance, assumes an exercise price of $41.12,
the average of the high and low prices of the common stock
of the registrant reported on the Nasdaq National Market on
September 24, 1997.
(2) Pursuant to Rule 416 under the Securities Act of 1933, as amended, this
registration statement also covers an indeterminate number of shares of
the registrant's common stock that may be issued pursuant to the
anti-dilution provisions of the registrant's 1996 Stock Option Plan.
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<PAGE> 3
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information.*
Item 2. Registrant Information and Employee Plan Annual
Information*
*Information required by Part I to be contained in the Section
10(a) prospectus is omitted from this Registration Statement in accordance with
Rule 428 under the Securities Act of 1933, as amended, and the Note to Part I of
Form S-8.
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<PAGE> 4
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents previously filed by the registrant
with the Securities and Exchange Commission (the "Commission") are incorporated
by reference in this Registration Statement:
(1) The registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1996;
(2) Amendment No. 1 to the registrant's Annual Report
on Form 10-K for the fiscal year ended December 31, 1996;
(3) The registrant's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1997;
(4) The registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1997;
(5) The registrant's Current Report on Form 8-K dated
August 6, 1997;
(6) The description of the registrant's common stock, par
value $.01 per share, contained in the registrant's Registration Statement on
Form 8-A declared effective April 7, 1994 and any amendments thereto; and
(7) All documents subsequently filed by the registrant
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act
of 1934, prior to the filing of a post-effective amendment which indicates that
all securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference in this
Registration Statement and to be a part hereof from the respective date of
filing of such documents. Any statement contained in a document incorporated by
reference herein is modified or superseded for all purposes to the extent that a
statement contained in this Registration Statement or in any other subsequently
filed document which is incorporated by reference modifies or replaces such
statement.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
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<PAGE> 5
A partner of Tenzer Greenblatt LLP holds options to purchase
9,375 shares of the registrant's common stock at an exercise price of $19.40 per
share.
Item 6. Indemnification of Directors and Officers.
Sections 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 authorizes 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 General 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.
Article TENTH of the registrant's Certificate of Incorporation
provides that no director shall be personally liable to the registrant or any of
its stockholders for monetary damages for breach of fiduciary duty as a director
except to the extent such elimination or limitation is prohibited by the
Delaware General Corporation Law. In addition, Article NINTH of the registrant's
Certificate of Incorporation and Article XX of the By-Laws of the registrant
provide in substance that, to the fullest extent permitted by Delaware law, each
director and officer shall be indemnified by the registrant against reasonable
costs and expenses, including attorneys fees, and any liabilities which may be
incurred in connection with any action to which he may be made a party by reason
of having been a director or officer of the registrant. The indemnification
provided by the registrant's By-Laws is not deemed exclusive of or in any way to
limit any other rights which any person seeking indemnification may be entitled.
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<PAGE> 6
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
Exhibit No. Description
- ----------- -----------
4.1 Common Stock Certificate (1)
5 Opinion of Tenzer Greenblatt LLP
10.1 1996 Stock Option Plan (2)
23.1 Consent of Ernst & Young LLP
23.2 Consent of Coopers & Lybrand L.L.P.
23.3 Consent of Tenzer Greenblatt LLP (included in
Exhibit 5)
24.1 Powers of Attorney (included on Signature Page of
this Registration Statement)
- -----------------------------
(1) Filed as an exhibit to the registrant's registration statement on Form S-1
(33-75148) and incorporated by reference thereto.
(2) Filed as an exhibit to the registrant's Annual Report on Form 10-K, as
amended, for the fiscal year ended December 31, 1996 and incorporated by
reference thereto.
Item 9. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
Registration Statement:
(i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) to reflect in the Prospectus any facts or events arising
after the effective date of the prospectus (or the most recent
post-effective amendments thereto) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
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<PAGE> 7
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Securities and Exchange Commission (the "Commission") pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and prices
represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table
in the effective 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.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be filed with a post-effective
amendment by those paragraphs is contained in periodic reports filed
with or furnished to the Commission by the registrant pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) that, for the purpose of determining any
liability under the Securities Act of 1933, each such post-effective amendment
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.
(3) to remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to Section 13(a) or Section
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) of the
Securities Exchange Act of 1934) 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.
(c) Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the Securities
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<PAGE> 8
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant 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 registrant 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 Act and will
be governed by the final adjudication of such issue.
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<PAGE> 9
1,315,625 Shares of Common Stock
BRIGHTPOINT, INC.
This Prospectus relates to an offering by certain selling stockholders
(the "Selling Stockholders") of an aggregate of up to 1,315,625 shares of
Common Stock issuable upon the exercise of options granted under the Company's
1996 Stock Option Plan (the "Plan Options").
The Common Stock may be offered from time to time by the Selling
Stockholders through ordinary brokerage transactions in the over-the-counter
market, in negotiated transactions or otherwise, at market prices prevailing at
the time of sale or at negotiated prices. The Company will not receive any of
the proceeds from the sale of Common Stock by the Selling Stockholders. See
"Selling Stockholders and Plan of Distribution."
The Common Stock is traded in the over-the-counter market and is
quoted on the NASDAQ National Market under the symbol CELL. On September 29,
1997, the closing sale price of the Common Stock as reported by NASDAQ was
$43.75.
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS."
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 SEPTEMBER 30, 1997
<PAGE> 10
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on
Form S-3 (the "Registration Statement") under the Securities Act with respect
to the Common Stock registered hereunder. As used herein, the term
"Registration Statement" means the initial Registration Statement and any and
all amendments thereto. This Prospectus omits certain information contained in
said Registration Statement as permitted by the rules and regulations of the
Commission. For further information with respect to the Company and the Common
Stock registered hereunder, reference is made to the Registration Statement,
including the exhibits thereto. Statements herein concerning the contents of
any contract or other document are not necessarily complete and in each
instance reference is made to such contract or other documents filed with the
Commission as an exhibit to the Registration Statement, or otherwise, each such
statement being qualified by and subject to such reference in all respects.
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 and other information with the Commission.
Reports, registration statements, proxy statements, and other information filed
by the Company with the Commission can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W. Room 1024, Washington, D.C. 20549, and at the Commission's
Regional Offices: 500 West Madison Street, Suite 1400, Chicago, Illinois 60661
and 7 World Trade Center, New York, New York 10048. Copies of such materials
can be obtained at prescribed rates from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549. Such
reports and other information, including the Registration Statement and the
exhibits and schedules thereto, are also available on the Commission's Web Site
at http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS 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, 1996;
(b) Amendment No. 1 to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1996;
(c) Quarterly Report on Form 10-Q for the three-month period ended
March 31, 1997;
(d) Quarterly Report on Form 10-Q for the three-month period ended
June 30, 1997;
(e) Current Report on Form 8-K dated August 6, 1997; and
(f) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A declared effective April 7, 1994
and any amendments thereto.
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 Offerings 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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<PAGE> 11
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 Mr. Phillip A.
Bounsall, Brightpoint, Inc., 6402 Corporate Drive, Indianapolis, Indiana 46278,
telephone: (317) 297-6100.
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<PAGE> 12
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and
should be read in conjunction with, the more detailed information and the
Consolidated Financial Statements, including the notes thereto, incorporated by
reference herein. Unless the context suggests otherwise, references in this
Prospectus to the "Company" or "Brightpoint" mean Brightpoint, Inc., its
predecessors, and its subsidiaries. All dollar amounts set forth in this
Prospectus are expressed in United States dollars.
THE COMPANY
Brightpoint is a leading provider of distribution and
value-added logistics services to the wireless communications industry. The
Company facilitates the effective and efficient distribution of wireless
handsets and related accessories from leading manufacturers, under brand names
such as Nokia, Ericsson, Philips, Siemens and Motorola, to network operators,
agents, resellers, dealers and retailers in the wireless communications market.
The Company's distribution services include purchasing, marketing, selling,
warehousing, picking, packing, shipping and "just-in-time" delivery of wireless
handsets and accessories. Its value-added logistics services include, among
others, inventory management, product fulfillment, kitting and customized
packaging, light assembly and end-user support services. The Company is one of
the largest dedicated distributors of wireless handsets and accessories in the
world, with operations centers and/or sales offices in Australia, China, Hong
Kong, the Philippines, South Africa, Sweden, the United Arab Emirates, the
United Kingdom and the United States, and provides its services to a customer
base of more than 10,000 network operators, manufacturers, agents, resellers,
dealers and retailers in over 75 countries and on six continents. The Company's
four regional divisions, Asia-Pacific; North America; Europe, Middle East and
Africa; and Latin America, accounted for 44%, 31%, 20% and 5%, respectively, of
the Company's net sales for the six months ended June 30, 1997.
The Company's net sales and pro forma net income have each
grown at a compounded annual growth rate of over 50% from 1992 to 1996. For the
six months ended June 30, 1997, the Company's net sales and net income were
$419.2 million and $10.3 million, respectively, representing increases of 80%
and 111%, respectively, when compared to net sales and pro forma net income for
the same period in 1996. The Company's growth in net sales has been driven
primarily by increases in worldwide demand for wireless handsets and
accessories, the Company's expansion into new geographic markets, and its
increased market share resulting from strengthening relationships with wireless
manufacturers and network operators. The Company's operating margin has also
increased, due primarily to its introduction of higher-margin value-added
logistics services.
In recent years, the markets for wireless communications
equipment and services have expanded significantly. From 1995 to 1996, the
worldwide number of wireless communications subscribers increased by 52
million, or 60%, to approximately 140 million by the end of 1996. Nonetheless,
at the end of 1996, wireless penetration was estimated at a mere 16% of the
population within the United States and was still, on average less than 2% of
the population outside of the United States, providing both the wireless
communications industry and the Company with significant opportunities for
growth. According to a leading independent industry research group, the global
wireless communications subscriber base is expected to grow by more than 250
million subscribers, to approximately 400 million subscribers, by the end of
2000.
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<PAGE> 13
In addition to the dramatic increase in subscribers, there are
several major trends affecting the wireless communications industry. The number
of wireless network operators has increased and is expected to continue to
increase as a result of further deregulation within the wireless communications
industry, the allocation of additional spectrum frequencies and the
introduction of new technological applications such as personal communications
services ("PCS"). These new wireless networks are increasingly incorporating
digital technologies, which provide greater network capacity, more
functionality, improved voice quality and better security/privacy than analog
technologies. In addition, incumbent analog cellular network operators are
gradually transitioning their networks toward digital systems. With the
opportunities presented by a rapidly expanding market for wireless
communications equipment, the transition from analog to digital technology, and
the further penetration of the mass consumer market, many additional
manufacturers are beginning to produce wireless handsets and related
accessories. The increased complexity of, and competition, in the wireless
communications industry have caused manufacturers, network operators and
resellers to focus available internal resources on their core competencies and
to outsource more of their product management functions, from distribution to
sophisticated wireless logistics services, to specialists such as the Company
in an effort to reduce costs, increase productivity and improve quality.
The Company's primary strategies for building on its position
as a global leader in providing services to the growing wireless communications
industry include: (i) capitalizing on the rapidly growing outsourcing demands
of wireless equipment manufacturers and network operators by offering them a
wide variety of distribution and value-added logistics services; (ii) expanding
the Company's worldwide presence through internal growth at existing locations,
mergers and acquisitions, joint ventures, other strategic alliances, and
start-ups in new locations; (iii) leveraging the Company's experience and
expertise with new wireless communications technologies and applications to
assist its customers in introducing new products to the market in a timely and
effective manner; and (iv) continuously improving and streamlining its systems
and processes in terms of quality, time and cost in order to establish itself
as the most effective and efficient market channel for wireless communications
equipment.
RECENT DEVELOPMENTS
In August 1997, the Company consummated a public offering of
2,700,000 shares of Common Stock by the Company and an additional 2,100,000
and 200,000 shares of Common Stock on behalf of Robert Picow and Josepeh Forer,
respectively. Upon consummation of the offering, Messrs. Picow and Forer,
former stockholders of Allied Communications, resigned as members of the
Company's Board of Directors pursuant to an agreement with the Company. The
Company's proceeds of approximately $76,000,000 (net of estimated expenses)
were used to reduce the borrowing outstanding on its line of credit.
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<PAGE> 14
THE OFFERING
<TABLE>
<S> <C>
Securities offered. . . . . . . 1,315,625 shares
Common Stock outstanding
prior to the offering (1) 25,055,448 shares
Common Stock to be outstanding
after the offering(2) 26,371,073 shares
Use of Proceeds . . . . . . . . Any proceeds received by the Company from time to time upon exercise of the Plan Options
will be used for working capital and general corporate purposes. The Company will not
receive any proceeds from any sales of Common Stock by the Selling Stockholders.
Risk Factors . . . . . . . . . The securities offered hereby involve a high degree of risk. See "Risk Factors."
NASDAQ Symbol . . . . . . . . . CELL
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</TABLE>
(1) Does not include (i) an aggregate of 2,797,270 shares of Common Stock
reserved, as of August 31, 1997, for issuance upon exercise of
outstanding stock options (of which stock options to purchase 390,389
shares were immediately exercisable) and an aggregate of 2,248,277
shares of Common Stock reserved, as of August 31, 1997, for issuance
upon exercise of stock options available for future grant, in each
case under the Company's 1994 Stock Option Plan, 1996 Stock Option
Plan and Non-employee Director Stock Option Plan (collectively, the
"Stock Option Plans"), and (ii) 24,140 shares of Common Stock
reserved, as of August 31, 1997, for issuance upon exercise of
outstanding and immediately exercisable warrants.
(2) Assumes exercise of all of the Plan Options to purchase an aggregate
of 1,315,625 shares.
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.
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<PAGE> 15
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
CONSOLIDATED STATEMENT OF INCOME DATA(1):
<TABLE>
<CAPTION>
Six Months
Year Ended December 31, Ended June 30,
1992 1993 1994 1995 1996 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales . . . . . . . . . $96,403 $151,315 $309,227 $419,149 $589,718 $232,856 $419,196
Cost of sales 89,580 140,617 290,463 390,950 543,878 216,446 385,180
------ ------- ------- ------- ------- ------- -------
Gross profit . . . . . . . 6,823 10,698 18,764 28,199 45,840 16,410 34,016
Selling, general and
administrative expenses . 4,944 7,418 11,095 14,813 20,849 7,767 17,136
------ ------- ------- ------- ------- ------- -------
Income from operations . . 1,879 3,280 7,669 13,386 24,991 8,643 16,880
Merger expenses . . . . . . -- -- -- -- 2,750 2,750 --
Net investment gain(2) . . -- -- -- -- -- -- 1,432
Interest expense, net . . . 38 103 164 1,383 2,118 623 3,106
------ ------- ------- ------- ------- ------- -------
Income before income taxes
and minority interest . . 1,841 3,177 7,505 12,003 20,123 5,270 15,206
Income taxes(3) . . . . . . -- -- 1,623 3,838 7,328 1,971 4,540
------ ------- ------- ------- ------- ------- -------
Income before minority
interest . . . . . . . . 1,841 3,177 5,882 8,165 12,795 3,299 10,666
Minority interest in
subsidiaries' earnings. . -- -- -- -- 1,758 -- 383
------ ------- ------- ------- ------- ------- -------
Net income(2) . . . . . . . $1,841 $3,177 $5,882 $8,165 $11,037 $3,299 $10,283
====== ====== ====== ======= ======= ====== =======
Pro forma net
income(2)(3)(4) . . . . . $1,114 $1,928 $4,555 $7,307 $12,622 $4,884 $10,283
====== ====== ====== ====== ======= ====== =======
Pro forma net income per
share(2) . . . . . . . . $0.11 $0.19 $0.32 $0.42 $0.58 $0.23 $0.44
===== ===== ===== ===== ===== ===== =====
Weighted average common
shares outstanding . . . 9,891 9,891 14,276 17,226 21,594 20,809 23,159
</TABLE>
CONSOLIDATED BALANCE SHEET DATA(1)
<TABLE>
<CAPTION>
June 30, 1997
<S> <C>
Working capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 167,564
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 286,157
Long-term obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97,831
Stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110,235
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</TABLE>
(1) On June 7, 1996, the Company completed a merger (the "Allied 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.
(collectively, "Allied Communications"), which were 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 the Company and Allied Communications as if the
Allied Merger had been in effect for all periods presented.
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<PAGE> 16
(2) During the first quarter of 1997, the Company realized a gain, net of
transaction costs, including related bonuses to certain key employees,
of approximately $8.3 million on the sale of an equity investment. In
addition, the Company recorded $6.9 million of losses relating to
other debt and equity investments. Excluding the impact of the
resulting net investment gain of $1.4 million and related income
taxes, net income and net income per share for the six months ended
June 30, 1997 would have been $9.4 million and $0.41, respectively.
(3) Prior to consummation of the Company's initial public offering in
April 1994, the stockholders of the Company had elected for the
Company to be treated as an S corporation. Accordingly, the income of
the Company was included in the stockholders' own income for tax
purposes, and the Company was subject to neither federal nor state
income taxes, until the Company's election under Subchapter S was
terminated on April 14, 1994. Prior to the Allied Merger, the
stockholders of Allied Communications had also elected treatment under
Subchapter S. Concurrent with the Allied Merger, on June 7, 1996,
Allied Communications' election under Subchapter S was also
terminated. Pro forma net income amounts assume that each of the
Company and Allied Communications was subject to federal and state
income taxes, and taxed at the rates then in effect, for all periods
presented.
(4) Excluding the after-tax effect ($2.1 million) of one-time merger
expenses incurred in connection with the Allied Merger.
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<PAGE> 17
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
CERTAIN STATEMENTS IN THIS PROSPECTUS AND IN THE DOCUMENTS
INCORPORATED BY REFERENCE HEREIN CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN
THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH
FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND
OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS
OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE
OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. SUCH
FACTORS INCLUDE, AMONG OTHERS, THE FOLLOWING: THE ABILITY TO HIRE AND RETAIN
KEY PERSONNEL; SUCCESSFUL COMPLETION AND INTEGRATION OF FUTURE ACQUISITIONS;
RELATIONSHIPS WITH AND DEPENDENCE ON THIRD-PARTY WIRELESS COMMUNICATIONS
EQUIPMENT SUPPLIERS; UNCERTAINTIES RELATING TO ECONOMIC CONDITIONS IN MARKETS
IN WHICH THE COMPANY OPERATES; UNCERTAINTIES RELATING TO GOVERNMENT AND
REGULATORY POLICIES; UNCERTAINTIES RELATING TO CUSTOMER PLANS AND COMMITMENTS;
DEPENDENCE ON THE WIRELESS COMMUNICATIONS INDUSTRY; PRICING AND AVAILABILITY OF
WIRELESS COMMUNICATIONS EQUIPMENT MATERIALS AND INVENTORIES; RAPID
TECHNOLOGICAL DEVELOPMENTS AND OBSOLESCENCE IN THE WIRELESS COMMUNICATIONS
INDUSTRY; POTENTIAL PERFORMANCE ISSUES WITH SUPPLIERS AND CUSTOMERS;
GOVERNMENTAL EXPORT AND IMPORT POLICIES; GLOBAL TRADE POLICIES; WORLDWIDE
POLITICAL STABILITY AND ECONOMIC GROWTH; THE HIGHLY COMPETITIVE ENVIRONMENT IN
WHICH THE COMPANY OPERATES; POTENTIAL ENTRY OF NEW, WELL-CAPITALIZED
COMPETITORS INTO THE COMPANY'S MARKETS; CHANGES IN THE COMPANY'S CAPITAL
STRUCTURE AND COST OF CAPITAL; AND UNCERTAINTIES INHERENT IN INTERNATIONAL
OPERATIONS AND FOREIGN CURRENCY FLUCTUATIONS. THE WORDS "BELIEVE," "EXPECT,"
"ANTICIPATE," "INTEND" AND "PLAN" AND SIMILAR EXPRESSIONS IDENTIFY
FORWARD-LOOKING STATEMENTS. READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE
ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE THE
STATEMENT WAS MADE. SEE "RISK FACTORS."
RISK FACTORS
Prospective purchasers of the shares of Common Stock offered hereby
should consider carefully the specific factors set forth below as well as the
other information contained in, or incorporated by reference into, this
Prospectus in evaluating an investment in the Common Stock.
FUTURE OPERATING RESULTS
For the year ended December 31, 1996 and the six months ended June 30,
1997, 88% and 89%, respectively, of the Company's net sales consisted of
wireless handset sales, a segment of its business which operates on a
high-volume, low-margin basis. In addition, 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, including
the increasing provision of value-added logistics services. Accordingly, the
Company's future profitability will depend upon corresponding increases in
sales. The Company also believes that, as the number of wireless networks
increases as a result of deregulation, increased competition and the emergence
of new technologies, a growing industry emphasis on containing costs could
further reduce the gross margins realized by the Company on sales of wireless
handsets. Future events, including unanticipated expenses, increased price
competition, unfavorable general economic conditions, product returns and
recalls and uncollectible accounts receivable, could have an adverse effect on
the Company's operating results. There can be no assurance that the Company's
rate of sales growth will continue in the future or that the Company's future
operations will continue to be profitable.
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RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS
Sales in markets outside of North America have accounted for an
increasing portion of the Company's net sales. For the years ended December 31,
1995 and 1996 and the six months ended June 30, 1997, net sales in markets
outside of North America represented approximately 36%, 51% and 69%,
respectively, of the Company's total net sales. The global aspect of the
Company's business subjects it to a number of additional risks, including
increased credit risk, customs duties, import quotas and other trade
restrictions, potentially greater inflationary pressures, fluctuations in
foreign currency exchange rates, shipping delays, failure or material
interruption of wireless systems and services, and international political,
regulatory and economic developments, all of which could have a material
adverse effect on the Company. In addition to its facilities in the United
States, the Company maintains operations centers and/or sales offices in
numerous territories and countries, including Australia, China, Hong Kong, the
Philippines, South Africa, Sweden, the United Arab Emirates and the United
Kingdom. The Company is therefore subject to the risks associated with changes
in the social, political, regulatory and economic conditions inherent in
foreign operations, including changes in the laws and policies that govern
foreign investment and international trade in territories and countries where
the Company currently has operations, as well as, to a lesser extent, changes
in United States laws and relations relating to foreign investment and trade.
Any such social, political, regulatory or economic changes could expose the
Company to, among other things, the risk of wireless product supply
interruption or significant increases in wireless product prices. Accordingly,
there can be no assurance that any such changes in financial, political,
regulatory or economic conditions will not have a material adverse effect on
the Company.
In addition, a significant portion of the Company's sales outside the
United States are denominated in foreign currencies. Accordingly, a decrease in
the value of foreign currencies relative to the United States dollar could
result in a significant decrease in United States dollar revenues received by
the Company. Due to the number of currencies involved in the Company's
international sales and the volatility of currency exchange rates, the Company
cannot predict the effect of exchange rate fluctuations on future operating
results. On occasion, the Company enters into forward exchange, futures or
options contracts as a means of hedging its currency translation exposure;
however, the Company's management has had limited prior experience in engaging
in such transactions. Moreover, there can be no assurance that any hedging will
effectively limit the Company's exposure to a decline in operating results due
to foreign currency translation adjustments.
RISKS RELATING TO OPERATIONS IN HONG KONG
The Company maintains an operations center and sales office in Hong
Kong, and, for the six months ended June 30, 1997, sales through the Company's
Hong Kong operations represented approximately 33% of the Company's net sales.
On July 1, 1997, sovereignty over Hong Kong was transferred from the United
Kingdom to the People's Republic of China ("China") and Hong Kong became a
Special Administrative Region ("SAR") of China. As provided in the Sino-British
Joint Declaration on the Question of Hong Kong and the Basic Law of the Hong
Kong SAR of China (the "Basic Law"), the Hong Kong SAR will have a high degree
of autonomy except in foreign affairs and defense. Under the Basic Law, the
Hong Kong SAR is to have its own legislature, legal and judicial systems and
economic autonomy for 50 years. There can be no assurance that there will not
be an adverse change in existing political, economic or commercial conditions
in Hong Kong or that any such change would not have a material adverse effect
on the Company's results of Operations or
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<PAGE> 19
financial condition. Furthermore, the Company cannot predict the effect that
changes in the social, economic, regulatory and political conditions in China
could have on its operations in Hong Kong. For instance, the Company's
operations in Hong Kong could be affected if the "most-favored nation" status
granted to China by the United States government for trade and tariff purposes
was terminated. Such status is currently reviewed annually by the United States
government, and the Company cannot predict whether China will continue to
receive such status in the future. The loss by China of its "most-favored
nation" status or other changes in social, economic, regulatory or political
conditions in China could have a material adverse effect on the Company.
DEPENDENCE ON TREND TOWARD OUTSOURCING
The Company's growth depends in large part on the growing trend among
wireless equipment manufacturers, network operators and resellers to outsource
some or all of their product management functions, such as marketing,
programming, packaging, end-user fulfillment and returns management, to
specialists such as the Company. Although the Company believes that increasing
competition, deregulation and technological developments within the wireless
communications industry will continue to support this trend, there can be no
assurance that wireless equipment manufacturers and network operators will not
elect to maintain such services internally. A significant change in this trend,
or the onset of a trend in the wireless communications industry not to use, or
to reduce the use of, outsourced value-added logistics services such as those
provided by the Company, could have a material adverse effect on the Company.
DEPENDENCE ON THIRD-PARTY SUPPLIERS
The Company purchases all of the wireless handsets and accessories it
sells from third-party wireless communications equipment manufacturers, dealers
and network operators. For the years ended December 31, 1995 and 1996 and the
six months ended June 30, 1997, the Company's three largest sources of wireless
handsets and accessories, in the aggregate, accounted for approximately 38%,
51% and 65%, respectively, of the Company's product purchases. For the year
ended December 31, 1995, the Company's three largest suppliers (Nokia,
BellSouth Cellular Corp. and Ericsson) accounted for approximately 20%, 10% and
8%, respectively, of the Company's product purchases. For the year ended
December 31, 1996, the Company's three largest suppliers (Nokia, Ericsson and
Lucent Technologies Inc.) accounted for approximately 33%, 12% and 6%,
respectively, of the Company's product purchases. For the six months ended June
30, 1997, the Company's three largest suppliers (Nokia, Ericsson and Siemens)
accounted for approximately 37%, 18% and 10%, respectively, of the Company's
product purchases. 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. Other than with some of its
primary suppliers, the Company does not typically maintain agreements with its
suppliers. Moreover, as is typical in the industry, the agreements which the
Company does maintain are generally non-exclusive, require the Company to
satisfy minimum purchase requirements, can be terminated on short notice and
provide for certain territorial restrictions. The Company 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 supplier, 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 products on favorable terms or that the Company
will not be
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<PAGE> 20
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 or at all.
INTENSE INDUSTRY COMPETITION
The markets for wireless handsets and accessories are characterized by
intense price competition and significant price erosion over the life of a
product. In addition, the wireless communications equipment distribution
industry has, in the past, been characterized by low barriers to entry.
Although entry barriers are expected to rise as the market requirement shifts
from pure distribution services to a mix of distribution services and
value-added logistics services (due to the increased infrastructure costs,
expanded human resource requirements and advanced management and information
systems capabilities that the value-added logistics services segment of the
business mandates), the Company competes and expects that it will continue to
compete with numerous well-established distributors and manufacturers of
wireless communications equipment, including the Company's suppliers, and
wireless network operators, 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 to withstand substantial price competition and to 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. As a provider of value-added logistics services, the Company also
competes with other distributors and with logistics services companies. The
Company's ability to continue to compete successfully will be largely dependent
on its ability to maintain its current industry relationships and anticipate
and respond to various competitive factors affecting the industry, including
new or changing outsourcing requirements, new well-capitalized competitors, new
products which may be introduced, changes in consumer preferences, demographic
trends, international, national, regional and local economic conditions and
discount pricing and promotion strategies by competitors. There can be no
assurance that the Company will be able to continue to compete successfully,
particularly as cellular markets mature and the Company seeks to enter into new
markets and market new products.
ABILITY TO MANAGE AND SUSTAIN GROWTH; RISKS ASSOCIATED WITH FUTURE ACQUISITIONS
The Company has experienced rapid international growth recently
through, among other things, a series of strategic acquisitions and anticipates
that continued growth will be driven in large part by the Company's continuing
ability to successfully acquire additional businesses or establish strategic
alliances with companies which the Company believes are compatible with its
business; secure adequate supplies of competitive products on a timely basis
and on commercially reasonable terms; continually turn its inventories and
collect its accounts receivable; and successfully develop additional, and
maintain its existing, key relationships with leading network operators and
manufacturers and dealers of wireless handsets and accessories. The Company's
success in sustaining growth will also be dependent upon its ability to hire
and retain the additional qualified management, marketing and other personnel
that will be needed to successfully manage continuing growth (including
monitoring operations, controlling costs and maintaining effective management,
inventory and credit controls). The Company's growth prospects could be
adversely affected by a decline in the wireless communications industry
generally or in one of its regional divisions in particular, either of which
could result in reduction or deferral of expenditures by prospective customers.
There can be no assurance that the Company will continue to be able to manage
its expanding operations effectively or
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<PAGE> 21
that it will be able to maintain or accelerate its growth. In addition, there
can be no assurance that the Company will be able to make additional
acquisitions or that the Company will be able to successfully integrate into
its operations any new businesses which it may acquire. 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.
INVENTORY OBSOLESCENCE AND TECHNOLOGICAL CHANGE
The markets for wireless communications equipment 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 wireless equipment will not market products
which have perceived or actual advantages over the Company's products or which
render them obsolete or less marketable. In addition, the use of emerging
wireless communications technologies, including wireless local loop and
satellite-based communications systems, may reduce demand for existing cellular
and PCS products. The Company also expects that companies which have developed
or are developing new technologies or products in related market segments will
commercialize technologies which compete with existing cellular and PCS
technology. Certain of such technologies, upon widespread commercial
introduction, will 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 wireless handsets could contain defects
which become apparent subsequent to widespread commercial use, resulting in
product recalls and returns.
RISKS RELATING TO STRATEGIC RELATIONSHIPS AND STRATEGIC FINANCING
As part of its expansion strategy, the Company has entered into, and
intends to continue to enter into, strategic relationships and joint ventures
with wireless equipment manufacturers, network operators and other providers of
wireless communications logistics services. In connection with such strategic
relationships, the Company may enter into distribution and/or value-added
logistics services agreements with, and provide equity or debt financing to,
its strategic partners. The Company's ability to achieve profitability through
such strategic relationships will be dependent in part upon its strategic
partners' economic viability, success and motivation, and the amount of time
and resources they devote to such alliances. There can be no assurance that the
Company will receive any business from future alliances, that any business
received will be significant or at the level anticipated, or that profits, if
any, received as a result of future alliances will offset any possible losses
on investments made or financing extended by the Company to enter into its
strategic relationships. A loan to, or an investment in, a strategic partner
will be subject to many of the same risks to which the strategic partner is
subject in seeking to operate and grow its businesses, and there can be no
assurance that the Company will be repaid or achieve an acceptable return on
its investment within an acceptable period, if at all. In December 1996, the
Company entered into a distribution agreement with Pocket Communications, Inc.
("Pocket"), a PCS network operator, pursuant to which the Company was to
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<PAGE> 22
distribute custom wireless handsets provided by Pocket. Simultaneous with its
execution of such agreement, the Company purchased $5 million in convertible
debentures of Pocket. In March 1997, Pocket filed for protection under Chapter
11 of the United States Bankruptcy Code. Accordingly, the Company recorded $5
million of unrealized losses in connection with its investment in Pocket during
the quarter ended March 31, 1997. A decline in the financial prospects of
strategic partners could have a material adverse effect on the Company.
SIGNIFICANT OUTSTANDING INDEBTEDNESS; LOAN COVENANTS AND SECURITY INTERESTS
As of June 30, 1997, the Company had approximately $97.5 million in
outstanding borrowings and an aggregate of $15.6 million in letters of credit
outstanding under its senior secured revolving line of credit facility with The
First National Bank of Chicago and Bank One, Indiana, N.A., as co-agents for a
group of banks (collectively, the "Banks"), which facility provides
availability to the Company and its subsidiaries of up to $200 million of
credit in the aggregate. All of the Company's assets located in the United
States and 65% of the capital stock of the Company's foreign subsidiaries are
pledged to the Banks as collateral, and the Company is substantially prohibited
from incurring additional indebtedness, either of which terms could, under
certain circumstances, limit the Company's ability to implement its expansion
plans. In addition to certain net worth and other financial covenants, the
Company's loan agreement with the Banks 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 Company's
indebtedness could become immediately due and payable and the Banks could
foreclose on the Company's assets. Although the Company intends to use the
proceeds of the Offerings received by it to repay a portion of its outstanding
borrowings, the Company expects to utilize the resulting increased borrowing
availability under its line of credit to fund its operations. There can be no
assurance that the Company will be able to comply with the terms of its loan
agreement with the Banks.
ACCOUNTS RECEIVABLE, COLLECTION AND CREDIT RISKS; SALES CONCENTRATION
The Company's accounts receivable, less allowance for doubtful
accounts, at December 31, 1996 and June 30. 1997 was approximately $113 million
and $119 million, respectively. At June 30, 1997, accounts receivable from
Success World Limited, an exporter in Hong Kong, was approximately $12.5
million and, during the six months ended June 30, 1997, product sales to
Success World Limited accounted for approximately 12% of the Company's net
sales. No other customer accounted for more than 5% of the Company's net sales
during the six months ended June 30, 1997. At June 30, 1997, the Company's
allowance for doubtful accounts was approximately $2 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. For the year ended December 31, 1996 and the six months ended
June 30, 1997, approximately 55% and 52%, respectively, of the Company's net
sales were made on open account terms. 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
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<PAGE> 23
represent sales to a limited number of customers or are concentrated in
particular geographic 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 are influenced by a number of seasonal
factors in the different countries and markets in which it operates. Such
results may vary from period to period as a result of purchasing patterns of
customers in different markets, 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 other seasonal factors such as
those associated with consumer electronics and retail sales which tend to
result in increased volume in the latter part of the calendar year. While the
overall growth of the Company's business has reduced the impact of such factors
on the Company's operating results, seasonality contributes to the increase in
the Company's sales in the fourth quarter of its fiscal years. 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.
DEPENDENCE ON KEY PERSONNEL
The success of the Company depends in large part on the abilities and
continued services of its executive officers and other key employees. Although
the Company has entered into employment agreements with several of such
officers and employees, there can be no assurance that the Company will be able
to retain their services. The loss of executive officers or other key personnel
could have a material adverse effect on the Company. The Company also has
non-compete agreements with its executive officers and certain of its existing
key personnel; however, courts are at times reluctant to enforce such
agreements. In addition, in order to support its continued growth, the Company
will be required to effectively recruit, develop and retain additional
qualified management. The inability of the Company to attract and retain such
necessary personnel could also have a material adverse effect on the Company.
UNCERTAINTY OF PROTECTION OF PROPRIETARY SOFTWARE
The Company's success is substantially dependent upon its proprietary
software applications relating to its information systems. The Company does not
currently hold any patents relating to its software and relies on trade secret
and copyright laws to protect its proprietary software. In addition, the
Company regularly enters into non-disclosure agreements with its key employees
and limits access to and distribution of its trade secrets and other
proprietary information. There can be no assurance that these measures will be
adequate to prevent misappropriation of its technology or that the Company's
competitors will not independently develop technologies that are substantially
equivalent or superior to the Company's technology, thereby eliminating one of
the Company's perceived competitive advantages. In addition, the laws of some
countries do not protect the Company's proprietary rights to the same extent as
do the laws of the United States. Finally, although the Company believes that
its proprietary software has been developed independently and does not infringe
upon the proprietary rights of others, there can be no assurance that the
software does not
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<PAGE> 24
and will not so infringe or that third parties will not assert infringement
claims against the Company in the future.
RELIANCE ON TECHNOLOGY; RISK OF BUSINESS INTERRUPTION
The Company has invested significantly in sophisticated and
specialized information systems technology and has focused on the application
of this technology to provide customized distribution and value-added logistics
services to wireless communications equipment manufacturers and network
operators. The Company anticipates that it will be necessary to continue to
develop new logistics services and enhance its information systems in order to
maintain its competitiveness. In addition, the Company's sales and marketing
efforts (a large part of which are telemarketing based) are highly dependent on
its computer and telephone equipment, and the temporary or permanent loss of
such equipment or systems through casualty or operating malfunction, or a
significant increase in the cost of telephone services that is not recoverable
through an increase in the price of the Company's services, could have a
material adverse effect on the Company. The Company's property and business
interruption insurance may not adequately compensate the Company for all losses
that it may incur in any such event.
DEPENDENCE ON LABOR FORCE
The Company's distribution and value-added logistics services are
labor intensive and the Company experiences high personnel turnover. A
significant number of the Company's employees are employed on a part-time
basis. A higher turnover rate among the Company's employees would increase the
Company's recruiting and training costs and decrease operating efficiencies and
productivity. Growth in the Company's business, together with seasonal
increases in net sales, require the Company to recruit and train personnel at
an accelerated rate from time to time. There can be no assurance that the
Company will be able to continue to hire, train and retain a significant labor
force of qualified employees when needed, or at all. In addition, a significant
portion of the Company's costs consist of wages to hourly workers. An increase
in hourly wages, costs of employee benefits, employment taxes or commission
rates could have a material adverse effect on the Company.
POTENTIAL VOLATILITY OF PRICE OF THE COMMON STOCK
The market price of the Common Stock has risen substantially and, from
time to time, experienced significant fluctuations since the Company's initial
public offering in April 1994. The Common Stock is quoted on the Nasdaq
National Market, which market has experienced, and is likely to experience in
the future, significant price and volume fluctuations which could adversely
affect the market price of the Common Stock without regard to the operating
performance of the Company. In addition, the trading price of the Common Stock
could be subject to significant fluctuations in response to actual or
anticipated variations in the Company's quarterly operating results and other
factors, such as the introduction of new services or technologies by the
Company, its competitors or its suppliers, changes in other conditions or
trends in the wireless communications industry, changes in governmental
regulation, changes in securities analysts' estimates for the Company's, or its
competitors' or industry's, future performance or general market conditions.
General market price declines or market volatility in the future, or future
declines or volatility in the prices of stocks for companies in the wireless
communications industry or the distribution or value-added logistics services
sectors of the wireless communications industry, could also affect the market
price of the Common Stock.
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<PAGE> 25
ANTI-TAKEOVER EFFECT OF CERTAIN CHARTER, BY-LAW AND STOCKHOLDERS RIGHTS PLAN
PROVISIONS
The Company's Certificate of Incorporation, as amended, 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 addition, the Company's Amended
and Restated By-laws divide the Board of Directors into three classes serving
staggered three-year terms. The Company also has a Stockholders Rights Plan
that may make certain proposed acquisitions of the Company prohibitively
expensive. These charter and by-law provisions and the Stockholders Rights Plan
could make it more difficult for a stockholder to effect certain transactions
and make it more difficult for a third party to acquire, or discourage a third
party from attempting to acquire, control of the Company. As a result, such
provisions could limit the price that certain investors might be willing to pay
in the future for shares of the Company's Common Stock.
POSSIBLE MEDICAL RISKS ASSOCIATED WITH WIRELESS HANDSETS
Recent lawsuits have been filed against manufacturers of wireless
handsets alleging possible medical risks, including brain cancer, associated
with electromagnetic fields emitted by wireless hand-held cellular telephones.
To date, there has been only limited research in this area, and such research
has not been conclusive as to what effects, if any, exposure to electromagnetic
fields emitted by wireless handsets has on human cells. The Company recognizes,
however, that the perception that health risks may exist could adversely affect
the Company's ability to market wireless handsets. Inasmuch as substantially
all of the Company's revenues are derived, either directly or indirectly, from
sales of wireless handsets, future studies finding possible health risks
associated with the use of such products could have a material adverse effect
on the wireless communications industry and the Company. As a distributor of
wireless handsets, the Company may be subject to lawsuits filed by plaintiffs
alleging health risks. A successful claim against the Company could have a
material adverse effect on the Company.
SHARES ELIGIBLE FOR FUTURE SALE
As of August 31, 1997, the Company had stock options and warrants
outstanding for the purchase of an aggregate of 2,821,410 shares of Common
Stock, of which options and warrants outstanding for the purchase of an
aggregate of 414,529 shares of Common Stock were immediately exercisable, and
had registered an aggregate of 1,209,922 shares of Common Stock underlying
outstanding options and warrants, and options available for future grant under
the Company's Stock Option Plans, under the Securities Act of 1933, as amended
(the "Securities Act"). A stockholder, who is also an executive officer, of
the Company may require the Company to file a registration statement relating
to 375,000 shares of Common Stock owned by such stockholder and to take such
reasonable steps necessary to cause the registration statement to be declared
effective. Such stockholder has agreed that he will not sell, offer to sell,
grant any option for the sale of, or otherwise dispose of 187,500 of such
shares until December 5, 1997; provided, however, that if, subsequent to
exercise of the demand registration right by the stockholder, the registration
statement relating to the stockholder's 375,000 shares of Common Stock is not
declared effective by five days prior to the
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<PAGE> 26
public announcement of the Company's financial results for the three months
ended September 30, 1997, he may, subject to applicable securities laws, sell
up to 187,500 shares of Common Stock commencing the day following the public
announcement of the Company's financial results for the three months ended
September 30, 1997. No prediction can be made as to the effect, if any, that
future sales of shares or the registration and/or availability of shares for
sale will have on the market price of the Common Stock prevailing from time to
time. Nonetheless, sales of substantial amounts of Common Stock upon the
exercise of stock options or warrants or otherwise, or the perception that such
sales might occur, could adversely affect prevailing market prices of the
Common Stock.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of Common
Stock by the Selling Stockholders. In the event that the shares of Common
Stock offered hereby are issued pursuant to the terms of the Plan Options, of
which there can be no assurance, the Company would realize up to approximately
$17,200,000 in net proceeds. The net proceeds of such issuances will be used by
the Company for working capital and general corporate purposes. The Company
has agreed to pay certain expenses in connection with this offering, which are
not expected to be significant.
SELLING STOCKHOLDERS AND PLAN OF DISTRIBUTION
An aggregate of up to 1,315,625 shares issuable upon exercise of the
Plan Options may be sold pursuant to this Prospectus by the Selling
Stockholders. The Plan Options were granted by the Company to the Selling
Stockholders in October 1996 and January 1997. Of such Plan Options, 1,218,750
options are exercisable at various times until October 4, 2001 at a price of
$12.46 per share, 50,000 options are exercisable at any time until January 14,
2002 at a price of $22.40 per share and 46,875 options are exercisable until
January 20, 2002 at a price of $19.40 per share. Except as described below,
none of the Selling Stockholders has ever held any position or office with the
Company or had any other material relationship with the Company. The Company
will not receive any of the proceeds from the sale of shares of Common Stock by
the Selling Stockholders. The Selling Stockholders have agreed that they will
not offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant for the sale of, or otherwise dispose of or transfer any shares of the
Company's Common Stock or any securities convertible into or exchangeable or
exercisable for Common Stock prior to December 5, 1997 without the written
consent of Merrill Lynch & Co.
-18-
<PAGE> 27
The following table sets forth certain information with respect to the
Selling Stockholders:
<TABLE>
<CAPTION>
Percentage of
Beneficial Ownership of Shares Shares Owned
of Common Stock Shares to be Sold Shares Owned After After the
Selling Stockholder Prior to Sale(1) in the Offering the Offering(1)(2) Offering
------------------- ---------------- --------------- ------------------ -------------
<S> <C> <C> <C> <C>
Robert J. Laikin(3) 875,469 (4) 375,000 500,469 1.9%
J. Mark Howell(5) 453,125 (6) 375,000 78,125 *
T. Scott Housefield(7) 433,594 375,000 58,594 *
Phillip A. Bounsall(8) 93,750 93,750 -- --
Steven E. Fivel(9) 46,875 46,875 -- --
Dana Marlin(10) 440,625(11) 50,000 390,625 1.5%
</TABLE>
______________________
* Less than 1%.
(1) Assumes all of the Plan Options are exercised.
(2) Assumes all of the shares offered hereby are sold by the Selling
Stockholders.
(3) Mr. Laikin is Chairman of the Board and Chief Executive Officer of the
Company.
(4) Includes (i) 849,426 shares owned by Mr. Laikin and (ii) 26,043 shares
underlying options exercisable as of the date hereof. Does not
include options to purchase 39,063 shares.
(5) Mr. Howell is President, Chief Operating Officer and a director of the
Company.
(6) Includes (i) 375,000 shares owned by Mr. Howell and (ii) 78,125 shares
underlying options exercisable as of the date hereof. Does not
include options to purchase 39,063 shares.
(7) Mr. Housefield is Executive Vice President and a director of the
Company.
(8) Mr. Bounsall is an Executive Vice President and the Chief Financial
Officer of the Company.
(9) Mr. Fivel is an Executive Vice President and the General Counsel of
the Company.
(10) Mr. Marlin is an Executive Vice President of the Company.
(11) Includes (i) 425,000 shares owned by Mr. Marlin and (ii) 15,625 shares
underlying options exercisable as of the date hereof. Does not include
options to purchase 6,550 shares.
The Common Stock issuable to the Selling Stockholders upon exercise of
the Plan Options will be offered and sold from time to time as market
conditions permit in the over-the-counter market, or 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
-19-
<PAGE> 28
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 Securities
Act, in connection with such sales.
-20-
<PAGE> 29
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 authorizes 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 General 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 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
injunction relief, specific performance or other equitable relief against
directors.
Article Ninth 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 Tenth 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 as a
director, provided that such provision does not eliminate or limit the
liability of a director (i) 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 of 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.
-21-
<PAGE> 30
LEGAL MATTERS
Certain legal matters with respect to the validity of the shares of
Common Stock offered hereby are being passed upon for the Company by Tenzer
Greenblatt LLP, New York, New York. A partner of Tenzer Greenblatt LLP holds
options to purchase 9,375 shares of Common Stock at an exercise price of $19.40
per share.
EXPERTS
The Consolidated Financial Statements and schedule of the Company as
of December 31, 1996 and 1995 and for each of the three years in the period
ended December 31, 1996 incorporated by reference in this Prospectus and
Registration Statement (as defined herein), have been audited by Ernst & Young
LLP, independent auditors, as set forth in their reports thereon incorporated
by reference 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 financial
statements and schedule referred to above are incorporated herein by reference
in reliance upon such reports given upon the authority of said firms as experts
in accounting and auditing.
-22-
<PAGE> 31
================================================================================
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. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY AND SECURITY OTHER THAN THE
1,315,625 SHARES OF UNITS 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>
<CAPTION>
TABLE OF CONTENTS
PAGE
----
<S> <C>
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . 2
INFORMATION INCORPORATED BY REFERENCE . . . . . . . . 2
PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . 4
RISK FACTORS . . . . . . . . . . . . . . . . . . . . 9
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . 18
SELLING STOCKHOLDERS AND PLAN OF
DISTRIBUTION . . . . . . . . . . . . . . . . . . . 18
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . 21
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . 22
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
1,315,625 SHARES OF COMMON STOCK
_________________
BRIGHTPOINT, INC.
_________________
PROSPECTUS
September 30, 1997
<PAGE> 32
SIGNATURES AND POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Indianapolis, State of Indiana, on the day of
September 30, 1997.
BRIGHTPOINT, INC.
By:/s/ Robert J. Laikin
-------------------------
Robert J. Laikin,
Chairman of the Board
and Chief Executive
Officer
KNOW 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
with 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 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-8 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 Director, Chairman September 30, 1997
- ------------------------- of the Board and Chief
Robert J. Laikin Executive Officer
(Principal Executive
Officer)
/s/ J. Mark Howell Director, President and September 30, 1997
- ----------------------- Chief Operating Officer
J. Mark Howell
/s/ Phillip A. Bounsall Executive Vice President, September 30, 1997
- ----------------------- Chief Financial Officer
Phillip A. Bounsall (Principal Financial
Officer)
/s/ T. Scott Housefield Director, Executive Vice September 30, 1997
- ----------------------- President
T. Scott Housefield
/s/ John P. Delaney Vice President, Corporate September 30, 1997
- ----------------------- Controller (Principal
John P. Delaney Accounting Officer)
</TABLE>
<PAGE> 33
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ John W. Adams Director September 30, 1997
- -----------------------
John W. Adams
/s/ Robert F. Wagner Director September 30, 1997
- -----------------------
Robert F. Wagner
/s/ Stephen H. Simon Director September 30, 1997
- -----------------------
Stephen H. Simon
Director September , 1997
- -----------------------
Rollin M. Dick
Director September , 1997
- -----------------------
Steven B. Sands
</TABLE>
<PAGE> 34
INDEX TO EXHIBITS
Exhibit No. Description
- ----------- -----------
4.1 Common Stock Certificate (1)
5 Opinion of Tenzer Greenblatt LLP
10.1 1996 Stock Option Plan (2)
23.1 Consent of Ernst & Young LLP
23.2 Consent of Coopers & Lybrand L.L.P.
23.3 Consent of Tenzer Greenblatt LLP (included in Exhibit
5)
24.1 Powers of Attorney (included on Signature Page of this
Registration Statement)
- ----------
(1) Filed as an exhibit to the registrant's registration statement on Form S-1
(33-75148) and incorporated by reference thereto.
(2) Filed as an exhibit to the registrant's Annual Report on Form 10-K, as
amended, for the fiscal year ended December 31, 1996 and incorporated by
reference thereto.
<PAGE> 1
EXHIBIT 5
<PAGE> 2
September 30, 1997
Brightpoint, Inc.
6402 Corporate Drive
Indianapolis, Indiana 46278
Gentlemen:
You have requested our opinion with respect to the offer and
sale by you, Brightpoint, Inc., a Delaware corporation (the "Company"), pursuant
to a Registration Statement (the "Registration Statement") on Form S-8 under the
Securities Act of 1933, as amended (the "Act"), of up to 1,875,000 shares (the
"Shares") of Common Stock, par value $.01 per share, of the Company, issuable
upon exercise of stock options granted and eligible for future grant under the
Company's 1996 Stock Option Plan (the "Plan").
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
have been duly and validly authorized and when sold, paid for and issued as
contemplated by the Registration Statement and the Plan, will be duly and
validly issued and fully paid and nonassessable.
We hereby consent to the use of this opinion as Exhibit 5 to
the Registration Statement. 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
<PAGE> 1
EXHIBIT 23.1
<PAGE> 2
CONSENT OF ERNST & YOUNG LLP
We consent to the reference to our firm under the caption "Experts" in this
Registration Statement (Form S-8) and related prospectus for the registration
of 1,875,000 shares of common stock upon exercise of stock options granted
under the 1996 Stock Option Plan of Brightpoint, Inc. and to the incorporation
by reference herein of our report dated January 28, 1997, with respect to the
consolidated financial statements of Brightpoint, Inc. incorporated by
reference in its Annual Report (Form 10-K) for the year ended December 31, 1996
and the related schedule included therein, filed with the Securities and
Exchange Commission.
Indianapolis, Indiana
September 24, 1997
<PAGE> 1
EXHIBIT 23.2
<PAGE> 2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference into this Registration Statement
on Form S-8 for the 1996 Stock Option Plan of Brightpoint Inc., and the
related prospectus, of our report dated February 23, 1996, relating to the
combined balance sheets of Allied Communications, Inc. and its affiliates for
the year ended December 31, 1995 and the related combined statements of income,
stockholders' equity and cash flows for the years ended December 31, 1994 and
1995 incorporated by reference into the Annual Report on Form 10-K of
Brightpoint, Inc. for the year ended December 31, 1996. We also consent to the
reference of our Firm under the caption "Experts."
COOPERS & LYBRAND L.L.P.
Philadelphia, Pennsylvania
September 24, 1997
