<PAGE> 1
UNITED STATES
SECURITIES & EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended: March 31, 2000
-----------------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from: to
--------------------- ---------------------
Commission file number: 0-23494
------------------------------------------------------
BRIGHTPOINT, INC.
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 35-1778566
- ------------------------------------------------------------------------------
State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization
6402 Corporate Drive, Indianapolis, Indiana 46278
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(317) 297-6100
- ------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] Yes [ ] No
Number of shares of common stock outstanding at May 10, 2000: 55,595,694 shares
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BRIGHTPOINT, INC.
INDEX
Page No.
--------
PART I. FINANCIAL INFORMATION
ITEM 1
Consolidated Statements of Operations
Three Months Ended March 31, 1999 and 2000.......................3
Consolidated Balance Sheets
December 31, 1999 and March 31, 2000.............................4
Consolidated Statements of Cash Flows
Three Months Ended March 31, 1999 and 2000.......................5
Notes to Consolidated Financial Statements..........................6
ITEM 2
Management's Discussion and Analysis of
Financial Condition and Results of Operations...................12
ITEM 3
Quantitative and Qualitative Disclosures
About Market Risk...............................................18
PART II. OTHER INFORMATION
ITEM 1
Legal Proceedings..................................................19
ITEM 2
Changes in Securities..............................................19
ITEM 6
Exhibits...........................................................19
Signatures..................................................................20
<PAGE> 3
BRIGHTPOINT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months Ended March 31
----------------------------------------
1999 2000
--------------- ---------------
Revenue $ 363,932 $ 470,532
Cost of revenue 335,545 429,098
--------------- ---------------
Gross profit 28,387 41,434
Selling, general and
administrative expenses 26,987 23,424
Unusual charges - 4,814
--------------- ---------------
Income from operations 1,400 13,196
Interest expense 3,288 3,287
--------------- --------------
Income (loss) before income taxes,
minority interest and
accounting change (1,888) 9,909
Income taxes (643) 3,375
--------------- ---------------
Income (loss) before minority
interest and accounting change (1,245) 6,534
Minority interest (33) 36
--------------- ---------------
Income (loss) before
accounting change (1,212) 6,498
Cumulative effect of accounting
change, net of tax (14,065) -
--------------- ---------------
Net income (loss) $ (15,277) $ 6,498
=============== ===============
Basic per share:
Income (loss) before
accounting change $ (0.02) $ 0.12
Cumulative effect of accounting
change, net of tax (0.27) -
--------------- ---------------
Net income (loss) $ (0.29) $ 0.12
=============== ===============
Diluted per share:
Income (loss) before
accounting change $ (0.02) $ 0.12
Cumulative effect of accounting
change, net of tax (0.27) -
--------------- ---------------
Net income (loss) $ (0.29) $ 0.12
=============== ===============
Weighted average common
shares outstanding:
Basic 53,047 54,926
=============== ===============
Diluted 53,047 56,232
=============== ===============
See accompanying notes.
3
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BRIGHTPOINT, INC.
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
December 31, 1999 March 31, 2000
----------------- ---------------
ASSETS
Current assets:
Cash and cash equivalents $ 85,261 $ 111,600
Accounts receivable (less
allowance for doubtful
accounts of $6,220 in 1999
and $6,232 in 2000) 230,792 209,291
Inventories 140,673 215,997
Other current assets 48,193 51,094
--------------- ---------------
Total current assets 504,919 587,982
Property and equipment 36,273 35,179
Goodwill and other intangibles 71,456 70,184
Other assets 11,210 8,762
--------------- ---------------
Total assets $ 623,858 $ 702,107
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and
accrued expenses $ 236,781 $ 302,420
--------------- ---------------
Total current liabilities 236,781 302,420
--------------- ---------------
Long-term debt:
Line of credit 46,022 44,882
Convertible notes 184,864 186,699
--------------- ---------------
Total long-term debt 230,886 231,581
--------------- ---------------
Stockholders' equity:
Preferred stock, $0.01 par value:
1,000 shares authorized; no
shares issued or outstanding - -
Common stock, $0.01 par value:
100,000 shares authorized;
54,654 and 55,382 issued and
outstanding in 1999 and 2000,
respectively 547 554
Additional paid-in capital 204,283 210,565
Retained earnings (deficit) (30,013) (23,515)
Accumulated other comprehensive loss (18,626) (19,498)
--------------- ---------------
Total stockholders' equity 156,191 168,106
--------------- ---------------
Total liabilities and
stockholders' equity $ 623,858 $ 702,107
=============== ===============
See accompanying notes.
4
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BRIGHTPOINT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
Three Months Ended March 31
----------------------------------------
1999 2000
--------------- ---------------
OPERATING ACTIVITIES
Net income (loss) $ (15,277) $ 6,498
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 3,913 3,762
Amortization of debt discount 1,763 1,834
Cumulative effect of accounting
change, net of tax 14,065 -
Unusual charges - 4,814
Minority interest (33) 36
Changes in operating assets and
liabilities, net of effects
from acquisitions:
Accounts receivable 56,630 19,418
Inventories (4,615) (75,774)
Other operating assets (1,130) 1,056
Accounts payable and
accrued expenses (18,211) 63,912
--------------- ---------------
Net cash provided by
operating activities 37,105 25,556
INVESTING ACTIVITIES
Capital expenditures (2,644) (3,258)
Purchase acquisitions, net of
cash acquired (5,001) -
Increase in other assets (170) (421)
--------------- ---------------
Net cash used by investing activities (7,815) (3,679)
FINANCING ACTIVITIES
Net payments on revolving
credit facility (36,483) (1,112)
Proceeds and tax benefits from
exercise of stock options and
warrants 4,875 6,291
--------------- ---------------
Net cash provided (used) by
financing activities (31,608) 5,179
Effect of exchange rate changes on
cash and cash equivalents (991) (717)
--------------- ---------------
Net increase (decrease) in cash
and cash equivalents (3,309) 26,339
Cash and cash equivalents at
beginning of period 49,528 85,261
--------------- ---------------
Cash and cash equivalents at
end of period $ 46,219 $ 111,600
=============== ===============
See accompanying notes.
5
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BRIGHTPOINT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Basis of Presentation
---------------------
GENERAL
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X of the Securities Exchange Act of 1934. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. The preparation of
financial statements requires management to make estimates and assumptions that
affect amounts reported in the financial statements and accompanying notes.
Actual results are likely to differ from those estimates, but management does
not believe such differences will materially affect the Company's financial
position or results of operations. In the opinion of the Company, all
adjustments considered necessary to present fairly the consolidated financial
statements have been included.
The consolidated financial statements include the accounts of the Company and
its majority-owned or controlled subsidiaries. Significant intercompany accounts
and transactions have been eliminated in consolidation. Certain amounts in the
1999 consolidated financial statements have been reclassified to conform to the
2000 presentation.
The consolidated balance sheet at December 31, 1999 has been derived from the
audited consolidated financial statements at that date, but does not include all
of the information and footnotes required by generally accepted accounting
principles for complete financial statements. The unaudited consolidated
statements of operations and cash flows for the three months ended March 31,
2000 are not necessarily indicative of the operating results or cash flows that
may be expected for the entire year.
For further information, reference is made to the audited consolidated financial
statements and the footnotes thereto included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1999.
NET INCOME (LOSS) PER SHARE
Basic net income (loss) per share is based on the weighted average number of
common shares outstanding during each period, and diluted net income (loss) per
share is based on the weighted average number of common shares and dilutive
common share equivalents outstanding during each period. The Company's common
share equivalents consist of stock options, stock warrants and Convertible Notes
(see Note 5 to the Consolidated Financial Statements). For the three-months
ended March 31, 2000, the Company's dilutive common share equivalents
consist of stock options and stock warrants. For the three months ended March
31, 1999, none of the Company's stock options and stock warrants were dilutive
due to the Company's net loss. The Convertible Notes were not dilutive for the
three months ended March 31, 1999 and 2000.
6
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BRIGHTPOINT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
1. Basis of Presentation (continued)
---------------------------------
COMPREHENSIVE INCOME (LOSS)
In accordance with Statement of Financial Accounting Standards No. 130,
Reporting Comprehensive Income (SFAS No. 130), the Company is required to report
Comprehensive Income which is comprised of net income and other comprehensive
income. The statement requires unrealized gains or losses on the Company's
available-for-sale securities, unrealized gains or losses on derivative
financial instruments and currency translations of foreign investments, which
prior to adoption were reported separately in stockholders' equity, to be
included as components of "other comprehensive income (loss)." During the first
quarter of 1999 and 2000, comprehensive income (loss) totaled ($25,685,000) and
$5,626,000, respectively.
2. Unusual Charges
---------------
During the first quarter of 2000, the Company began the process of consolidating
four Indianapolis, Indiana locations and a location in Bensalem, Pennsylvania
into a single, new facility located near the Indianapolis International Airport
and designed specifically for the Company and its processes. The Company
recorded an unusual charge of $4.8 million ($2.9 million or $0.05 per share net
of related tax benefits) in the first quarter of 2000 related to the
consolidation for losses on the disposal of assets that will not be used in the
new facility and the estimated impact of vacating the unused facilities, net of
potential subleases.
Beginning in the second quarter of 1999 the Company implemented a broad
restructuring plan in an effort to improve its position for long-term success by
eliminating or restructuring identified non-performing business activities and
reducing costs. As of March of 2000, the Company's execution of the
restructuring plan was substantially complete. As a result of actions taken in
accordance with the restructuring plan the Company recorded in 1999
restructuring and other unusual charges of approximately $84.9 million. During
the first quarter of 2000 adjustments to this charge were insignificant and are
included in the Consolidated Statements of Operations under the caption "Unusual
charges."
As a result of the actions discussed above, the Company had approximately $2.6
million in facility consolidation reserves and $0.8 million in restructuring
reserves at March 31, 2000. Assets held for disposal at March 31, 2000 totaled
$0.9 million and are classified in the Consolidated Balance Sheets under the
caption "Other current assets."
3. Cumulative Effect of Accounting Change
--------------------------------------
The Company recorded in the first quarter of 1999 a cumulative effect adjustment
of $14.1 million net of applicable taxes ($0.27 per diluted share) for a change
in accounting principle. The change in accounting principle resulted from the
required adoption of American Institute of Certified Public Accountants
Statement of Position 98-5, Reporting the Costs of Start-up Activities, which,
upon adoption, required the write-off of the unamortized portion of certain
capitalized costs. These costs were previously capitalized in accordance with
generally accepted accounting principles then in effect.
7
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BRIGHTPOINT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
4. Acquisitions and Divestitures
-----------------------------
During the first quarter of 1999, the Company acquired Cellular Services S.A., a
provider of integrated logistics services to the wireless communications
industry in Brazil. This transaction was accounted for as a purchase and
accordingly the consolidated financial statements include the operating results
of this business from the effective date of acquisition. The purchase price
consisted of $3.8 million in cash, the assumption of certain liabilities and
remaining contingent consideration of up to $20.5 million based upon the future
operating results of the Company's Brazilian operations over the five years
following the acquisition. Goodwill of approximately $4.9 million resulted from
this acquisition. In addition, during the last nine months of 1999, the Company
sold WAVETech Network Services Limited, a subsidiary of WAVETech Limited in the
United Kingdom, and pursuant to its restructuring plan, terminated or disposed
of certain operations in Argentina, China, Poland, Taiwan and the United
Kingdom.
The impact of the 1999 acquisition was not material in relation to the Company's
consolidated results of operations. Consequently, pro forma information is not
presented.
5. Long-term Debt
--------------
On July 27, 1999, the Company amended and restated its five-year senior secured
revolving line of credit facility (the Facility) with Bank One, Indiana,
National Association, as agent for a group of banks (collectively, the Banks).
The Facility, which, subject to various restrictions, allows for borrowings of
up to $175 million, matures in June 2002 and generally bears interest, at the
Company's option, at: (i) the greater of the agent bank's corporate base rate
plus a spread of 0 to 100 basis points and the Federal Funds effective rate plus
0.50%; or (ii) the rate at which deposits in United States Dollars or
Eurocurrencies are offered by the agent bank to first-class banks in the London
interbank market plus a spread ranging from 140 to 250 basis points (based on
the Company's leverage ratio) plus a spread reserve, if any. Borrowings by the
Company's non-United States subsidiaries bear interest at various rates based on
the type and term of advance selected and the prevailing interest rates of the
country in which the subsidiary is domiciled.
At March 31, 2000, there was approximately $40.1 million outstanding under the
Facility, all of which was denominated in foreign currencies, at interest rates
ranging from 6.1% to 8.9% (a weighted average rate of 7.0%). In addition, there
was an aggregate of $26.4 million in letters of credit issued.
All of the Company's assets located in the United States and between 65% and
100% of the capital stock of certain of the Company's subsidiaries are pledged
to the Banks as collateral for the Facility, and the Company is substantially
prohibited from incurring additional indebtedness. Funding under the Facility is
limited by an asset coverage test, which is measured monthly. As of March 31,
2000, unused available funding under the Facility was approximately $55.9
million. In addition to certain net worth and other financial covenants, the
Company's Facility 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 portions of its assets.
8
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BRIGHTPOINT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
5. Long-term Debt (continued)
--------------------------
In December 1999, Brightpoint International Trading (Guangzhou) Co., Ltd. (an
indirect subsidiary of Brightpoint, Inc.) entered into a $4.8 million one-year
secured loan with China Construction Bank Guangzhou Economic Technological
Development District Branch. The loan matures in December 2000, bears interest
of 6.1% and is denominated in China's local currency, the Renminbi. The loan is
supported by a stand-by letter of credit of $5.1 million which was issued under
the Facility. In addition, upon maturity the Company intends to renew this loan
with the lender or replace it with funding from its Facility. The loan prohibits
the borrower from making various changes in its ownership structure.
On March 11, 1998, the Company completed the issuance of zero-coupon,
subordinated, convertible notes due in the year 2018 (the Convertible Notes)
with an aggregate face value of $380 million ($1,000 per Convertible Note) and a
yield to maturity of 4.00%. The Convertible Notes are subordinated to all
existing and future senior indebtedness (as defined in the indenture pursuant to
which the Convertible Notes were issued) of the Company and all other
liabilities, including trade payables, of the Company's subsidiaries. The
Convertible Notes resulted in gross proceeds to the Company of approximately
$172 million (issue price of $452.89 per Convertible Note) and require no
periodic cash payments of interest. The proceeds were used to reduce borrowings
under the Company's revolving credit facility and to invest in highly-liquid,
short-term investments pending use in operations. At March 31, 2000, the
Convertible Notes had an accreted value of $187 million.
Each Convertible Note is convertible at the option of the holder any time prior
to maturity. Upon conversion, the Company, at its option, will deliver to the
holder 19.109 shares of common stock per Convertible Note or cash equal to the
market value of such shares. On or after March 11, 2003, the Convertible Notes
may be redeemed at any time by the Company for cash equal to the issue price
plus accrued original discount through the date of redemption. In addition, each
Convertible Note may be redeemed at the option of the holder on March 11, 2003,
2008 or 2013. The purchase price for each Convertible Note at these redemption
dates is approximately $552, $673 and $820, respectively, which is equal to the
issue price plus accrued original discount through the date of redemption. The
Company may elect at its option to pay for such redemption in cash or common
stock, or any combination thereof equaling the purchase price.
9
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BRIGHTPOINT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
6. Operating Segments
------------------
The Company operates in markets worldwide and has four reportable segments as
defined by Statement of Financial Accounting Standards No. 131, Disclosures
about Segments of an Enterprise and Related Information (SFAS No. 131). These
reportable segments represent the Company's four divisions: North America;
Asia-Pacific; Europe, Middle East and Africa; and Latin America. These divisions
all generate revenues from sales of wireless handsets and related accessories
and from fees generated from the provision of integrated logistics services.
However, the divisions are managed separately because they operate in different
regions of the world.
The Company evaluates the performance of, and allocates resources to, these
segments based on income (loss) from operations including allocated corporate
selling, general and administrative expenses. As discussed in Note 2 to the
Consolidated Financial Statements, the Company incurred unusual charges in the
first quarter of 2000, which materially affected certain operating segments. A
summary of the Company's operations by segment with and without the unusual
charges is presented below (in thousands):
<TABLE>
<CAPTION>
1999 2000
---------------------------- ---------------------------------------
REVENUES REVENUES
FROM INCOME (LOSS) FROM
EXTERNAL FROM EXTERNAL
CUSTOMERS OPERATIONS CUSTOMERS INCOME FROM OPERATIONS
---------------------------- ---------------------------------------
<S> <C> <C> <C> <C> <C>
(including (excluding
unusual unusual
charges) charges)
THREE MONTHS ENDED
MARCH 31:
North America $ 157,019 $ 4,991 $ 160,817 $ 4,838 $ 9,638
Asia-Pacific 99,015 (2,038) 135,240 4,453 4,060
Europe, Middle East
and Africa 65,934 (2,184) 99,290 2,725 3,132
Latin America 41,964 631 75,185 1,180 1,180
------------ ------------ ------------ ----------- ---------
$ 363,932 $ 1,400 $ 470,532 $ 13,196 $ 18,010
============ ============ ============ =========== =========
</TABLE>
DECEMBER 31, MARCH 31,
TOTAL SEGMENT ASSETS: 1999 2000
---------------------------
North America $ 334,912 $ 372,985
Asia-Pacific 104,311 119,792
Europe, Middle East and Africa 103,705 98,001
Latin America 80,930 111,329
------------ ------------
$ 623,858 $ 702,107
============ ============
10
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BRIGHTPOINT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
7. Contingencies
-------------
Various lawsuits, claims and proceedings have been or may be asserted against
the Company in the normal course of business. While the ultimate liability
pursuant to these actions cannot currently be determined, the Company believes
the legal proceedings in which it is currently involved will not have a material
adverse effect on its financial position.
The Company and certain of its executive officers, two of whom are also
directors, were named as defendants in four actions filed in June and July 1999,
in the United States District Court for the Southern District of Indiana. These
actions were subsequently consolidated by the court into a single action. The
action asserts claims under sections 10(b) and 20(a) of the Securities Exchange
Act of 1934, and Rule 10b-5 of the Exchange Act, based on allegations that false
and misleading statements were rendered and/or statements were omitted
concerning the Company's then current and future financial condition and
business prospects. The action involves a purported class of purchasers of the
Company's stock during the period October 2, 1998 through March 10, 1999. The
Company and the individual defendants intend to vigorously defend the action.
The outcome of any litigation is uncertain and it is possible that an
unfavorable decision could have a material adverse effect on the Company's
financial position, results of operations or cash flows.
11
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
OVERVIEW AND RECENT DEVELOPMENTS
- --------------------------------
This discussion and analysis should be read in conjunction with the accompanying
Consolidated Financial Statements and related notes. Certain statements made in
this report may contain forward-looking statements. For a description of risks
and uncertainties relating to such forward-looking statements, see Exhibit 99
and the Company's Annual Report on Form 10-K for the year ended December 31,
1999.
Effective in the first quarter of 2000, and applied retroactively to all
periods, the Company has reclassified certain amounts related to its services
supporting prepaid wireless programs. The reclassification, which reduces
revenue and costs of revenue by the same amount, has no impact on gross profit,
selling, general and administrative expenses, operating income, net income or
earnings per share. The amount of this reclassification was $8.8 million for the
first quarter of 1999.
During the first quarter of 2000, the Company began the process of consolidating
four Indianapolis, Indiana locations and a location in Bensalem, Pennsylvania
into a single, new facility located near the Indianapolis International Airport
and designed specifically for the Company and its processes. The Company
recorded an unusual charge related to the consolidation for moving costs, the
disposal of assets that will not be used in the new facility and the estimated
impact of vacating the unused facilities, net of potential subleases. The total
amount of the charge recorded in the first quarter of 2000 was $4.8 million
($2.9 million after applicable taxes) or $0.05 per diluted share.
Beginning in the second quarter of 1999 the Company implemented a broad
restructuring plan ("the Plan") in an effort to improve its position for
long-term success by eliminating or restructuring identified non-performing
business activities and reducing costs. As of March of 2000, the Company's
execution of the Plan was substantially complete. As a result of actions taken
in accordance with the Plan the Company recorded in 1999, restructuring and
other unusual charges of approximately $84.9 million. During the first quarter
of 2000 adjustments to this charge were insignificant and are included in the
Consolidated Statements of Operations under the caption "Unusual charges."
The Company recorded in the first quarter of 1999 a cumulative effect adjustment
of $14.1 million net of applicable taxes ($0.27 per diluted share) for a change
in accounting principle. The change in accounting principle resulted from the
required adoption of American Institute of Certified Public Accountants
Statement of Position 98-5, Reporting the Costs of Start-up Activities, which,
upon adoption, required the write-off of the unamortized portion of certain
capitalized costs. These costs were previously capitalized in accordance with
generally accepted accounting principles then in effect.
RESULTS OF OPERATIONS
- ---------------------
Due to the significance of the Plan announced by the Company on June 30, 1999,
the results of operations have been delineated between results from recurring
operations and results from non-recurring operations. Results of recurring
operations for the first quarter of 1999 exclude certain operations in
Argentina, Poland, Hong Kong, Taiwan, the United Kingdom and two former joint
operations in China (these joint operations were replaced by new joint
operations beginning in the third quarter of 1999) that were terminated or
eliminated pursuant to the Plan. Because the Company's execution of the Plan has
been
12
<PAGE> 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
RESULTS OF OPERATIONS (CONTINUED)
- ---------------------------------
substantially completed, there are no non-recurring operations for the first
quarter of 2000. Recurring operations also exclude the impacts of the
non-recurring charges related to the facility consolidation in 2000 and the
cumulative effect of a change in accounting principle recorded in the first
quarter of 1999, which have been shown separately.
RECURRING OPERATIONS
Revenue
- -------
Three Months Ended March 31
-----------------------------------------
1999 2000 Change
- -----------------------------------------------------------------------------
Revenue $ 305,091 $ 470,532 54%
- -----------------------------------------------------------------------------
Revenue from recurring operations for the quarter ended March 31, 2000 increased
54%, compared to revenue generated by the same operations in the first quarter
of 1999. This growth is due to the increased worldwide demand for wireless
products and for the Company's distribution and logistics services. Revenue
growth in the first quarter of 2000 is also due in part, to unfilled orders from
the end of the fourth quarter of 1999.
Revenue from Recurring Operations by Division:
Three Months Ended March 31
------------------------------------------------
1999 2000
------------------------------------------------
North America $ 157,019 51% $ 160,817 34%
Asia-Pacific 53,968 18% 135,240 29%
Europe, Middle
East and Africa 52,140 17% 99,290 21%
Latin America 41,964 14% 75,185 16%
------------------------------------------------
Total $ 305,091 100% $ 470,532 100%
================================================
Revenue increased 2% in the North America division when comparing the first
quarter of 2000 to the same period in 1999 and units handled by this division
grew by 34% compared to the first quarter of 1999. These increases resulted
primarily from the continued execution of the Company's strategy of focusing on
integrated logistics services, which generated lower revenue dollars per
handset, but contributed higher gross and operating margins.
Revenue in the first quarter of 2000 increased by 151% in the Asia-Pacific
division when compared to the first quarter of 1999, demonstrating the
successful implementation of the Plan. Revenue was suppressed
13
<PAGE> 14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
RECURRING OPERATIONS (CONTINUED)
in the first quarter of 1999 due to inadequate supply of product caused, in
part, by our former joint operations in China, which were terminated as part of
the Plan. The Company's new joint operations in China have generated higher
levels of revenue. In addition, there was substantial revenue growth in our
Asia-Pacific operations outside of China due to continued strong demand for
wireless handsets and accessories.
The Europe, Middle East and Africa and Latin America divisions experienced
revenue growth in the first quarter of 2000 of 90% and 79%, respectively, when
compared to the first quarter of 1999, which is indicative of the demand for
wireless handsets and accessories in those markets, as well as the execution of
our strategies designed for those markets.
Revenue from Recurring Operations by Service Line:
Three Months Ended March 31
-----------------------------------------
1999 2000
-----------------------------------------
Wireless handset sales $ 229,448 75% $ 361,213 77%
Wireless accessory sales 49,561 16% 60,971 13%
Integrated logistics
services 26,082 9% 48,348 10%
-----------------------------------------
$ 305,091 100% $ 470,532 100%
-----------------------------------------
Revenue from recurring operations for the first quarter of 2000 as compared to
the same period in 1999 increased 54% due primarily to a 57% increase in revenue
from wireless handset sales. Revenue generated from the sale of wireless
accessories increased 23% in the first quarter of 2000 when compared to the same
period for 1999 and revenue from integrated logistics services increased 85% in
the first quarter of 2000 when compared to the same quarter in 1999, resulting
from the continued successful execution of the Company's strategy of focusing on
higher-margin service lines.
Gross Profit
- ------------
Three Months Ended March 31
--------------------------------------
1999 2000 Change
- --------------------------------------------------------------------------
Gross profit $ 26,429 $ 41,434 57%
Gross margin 8.7% 8.8%
- --------------------------------------------------------------------------
Gross profit from recurring operations for the quarter ended March 31, 2000
increased 57% over the same period in 1999 resulting in gross margin of 8.8%,
compared to gross margin of 8.7% in the first quarter of 1999. The slight
increase in gross margin was due to better pricing on handsets sold during most
of the first quarter of 2000, which was driven by product shortages and strong
demand in all markets in which the Company operates.
14
<PAGE> 15
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
RECURRING OPERATIONS (CONTINUED)
Selling, General and Administrative Expenses
Three Months Ended March 31
------------------------------------------
1999 2000 Change
- ------------------------------------------------------------------------------
Selling, general and
administrative expenses $ 21,227 $ 23,424 10%
As a percent of revenue 7.0% 5.0%
- ------------------------------------------------------------------------------
Selling, general and administrative expenses incurred in recurring operations
for the three months ended March 31, 2000 increased 10% in absolute terms as
compared to the same period in the prior year reflecting the increased levels of
business activity. However, selling, general and administrative expenses
decreased as a percentage of revenue, due primarily to cost reduction measures
implemented by the Company.
Income from Operations
Three Months Ended March 31
------------------------------------------
1999 2000 Change
- ------------------------------------------------------------------------------
Income from operations $ 5,202 $ 18,010 246%
As a percent of revenue 1.7% 3.8%
- ------------------------------------------------------------------------------
The increases in income from operations and operating margin (income from
operations, as a percent of revenue) from recurring operations for the first
quarter of 2000 compared to the same period in 1999 resulted primarily from the
growth in revenues, the slight increase in gross margins and the decrease in
selling, general and administrative expenses as a percent of revenue.
Net Income from Recurring Operations
Three Months Ended March 31
------------------------------------------
1999 2000 Change
- ------------------------------------------------------------------------------
Net income $ 1,478 $ 9,392 535%
Net income per share (diluted) (1) $ 0.03 $ 0.17 467%
Weighted average shares outstanding
(diluted) (1) 54,252 63,493
- ------------------------------------------------------------------------------
(1) Reflects an after tax add-back of interest expense of approximately $1.2
million to net income and an increase of approximately 7.3 million in weighted
average shares outstanding for the first quarter of 2000 to properly reflect the
dilutive effect of the Company's Convertible Notes on net income from recurring
operations.
The increase in net income from recurring operations for the first quarter of
2000 as compared to the same period in 1999 resulted primarily from the factors
discussed above in the analyses of revenue, gross profit and selling, general
and administrative expenses.
15
<PAGE> 16
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
RESULTS OF OPERATIONS (CONTINUED)
- ---------------------------------
NON-RECURRING OPERATIONS
Non-recurring operations in the first quarter of 1999 included certain
operations in Argentina, Poland, Taiwan and the United Kingdom and two joint
operations in China, all of which have been terminated or eliminated. In the
first quarter of 1999, no non-recurring operations existed as the Plan had been
substantially completed. For the first quarter of 1999, non-recurring operations
generated revenue of approximately $58.8 million, operating and net losses of
$3.8 million and $2.7 million, respectively, and a net loss per diluted share of
$0.05. These results of operations reflect the poor performance of the Company's
non-recurring operations prior to implementation of the Plan.
NON-RECURRING CHARGES AND OTHER ITEMS
As discussed above, the Company recorded in the first quarter of 1999 a
cumulative effect adjustment for a change in accounting principle. The
adjustment of $14.1 million ($0.27 per share) is shown net of applicable taxes.
As also discussed above, the Company recorded a non-recurring charge related to
its consolidation of four Indianapolis, Indiana locations and a location in
Bensalem, Pennsylvania into a single, new facility located near the Indianapolis
International Airport and designed specifically for the Company and its
processes. The total amount of the unusual charge (see Note 2 to the
Consolidated Financial Statements) recorded in the first quarter of 2000 was
$4.8 million ($2.9 million after applicable taxes) or $0.05 per diluted share.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
December 31, 1999 March 31, 2000
- ------------------------------------------------------------------------------
Cash and cash equivalents $ 85,261 $ 111,600
Working capital $ 268,138 $ 285,562
Current ratio 2.13:1 1.94:1
- ------------------------------------------------------------------------------
Historically, the Company's primary cash requirements have been to fund
increased levels of accounts receivable and inventories. The Company has
satisfied its working capital requirements principally through income from
operations, vendor financing, bank borrowings and the issuance of equity and
debt securities. The increase in working capital of $17.4 million during the
quarter ended March 31, 2000 reflects an increase in cash of $26.3 million,
partially offset by the net impact of a decrease in accounts receivable, an
increase in inventories and an increase in accounts payable. The Company
believes its capital resources are sufficient to continue funding its short-term
capital requirements, however, significant expansion of operations in the future
may require the Company to raise additional capital.
16
<PAGE> 17
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
- -------------------------------------------
Net cash provided by operating activities was $25.6 million for the quarter
ended March 31, 2000 as compared to $37.1 million in the comparable prior
period. The decrease in net cash provided by operating activities was primarily
attributable to a larger increase in inventories and a smaller decrease in
accounts receivable than experienced during the first quarter of 1999, partially
offset by an increase in accounts payable and an increase in the Company's
earnings for the period. However, the Company has continued to improve its cash
conversion cycle. As of March 31, 2000, days sales outstanding in accounts
receivable was approximately 37 days, compared to days sales outstanding of
approximately 46 days at March 31, 1999. During the first quarter of 2000,
annualized inventory turns were 10 times, compared to 9 times during the first
quarter of 1999. Average days costs in accounts payable were 44 days for the
first quarter of 2000, compared to 31 days for the first quarter of 1999. These
improvements combined to create a decrease in cash conversion cycle days to 31
days in the first quarter of 2000 from 57 days in the same period of 1999.
Net cash used by investing activities for the three months ended March 31, 2000
was $3.7 million as compared to $7.8 million in the first quarter of 1999. The
change between periods is primarily comprised of a reduction in the amounts of
cash expended for acquisition activities. The net cash provided by financing
activities for the three months ended March 31, 2000 was comprised primarily of
proceeds from the exercise of stock options. The net cash used by financing
activities for the three months ended March 31, 1999 was primarily the result of
payments on the Company's line of credit partially offset by proceeds from the
exercise of stock options.
The Company's long-term debt at March 31, 2000 includes the Company's
zero-coupon, subordinated, convertible notes (the Convertible Notes), which have
an aggregate principal amount at maturity of $380 million ($1,000 face value per
Convertible Note). The Convertible Notes are due in the year 2018, have a yield
to maturity of 4.00% and are convertible into the Company's common stock at a
rate of 19.109 shares per Convertible Note. The accreted value of the
Convertible Notes was approximately $187 million at March 31, 2000. The
remainder of the Company's long-term debt is comprised of borrowings or
permitted indebtedness under its senior secured revolving line of credit
facility which has been periodically modified. The Facility provides the
Company, based upon a borrowing base calculation, with a maximum borrowing
capacity of up to $175 million. Interest rates on U.S. Dollar borrowings under
the Facility, excluding fees, range from 140 basis points to 250 basis points
above LIBOR, depending on certain leverage ratios. See Note 5 to the
Consolidated Financial Statements.
Many of the Company's assets are pledged as collateral for borrowings under the
Facility and the Company is substantially prohibited from incurring additional
indebtedness, either of which terms could limit the Company's ability to
implement its expansion plans. The Company is also subject to certain covenants
as more fully described in Note 5 to the Consolidated Financial Statements.
17
<PAGE> 18
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
FINANCIAL MARKET RISK MANAGEMENT
- --------------------------------
The Company is exposed to financial market risks, including changes in interest
rates and foreign currency exchange rates. To mitigate interest rate risks, the
Company has utilized interest rate swaps to convert certain portions of its
variable rate debt to fixed rate debt. To mitigate foreign currency exchange
rate risks, the Company utilizes derivative financial instruments under a risk
management program approved by the Company's Board of Directors. The Company
does not use derivative instruments for speculative or trading purposes.
The Company is exposed to changes in interest rates on its variable interest
rate revolving line of credit. A 10% increase in short-term borrowing rates
during the quarter ended March 31, 2000 would have resulted in only a nominal
increase in interest expense as well as a nominal increase in the fair value of
the Company's interest rate swaps at March 31, 2000.
A substantial portion of the Company's revenue and expenses are transacted in
markets worldwide and are denominated in currencies other than the U.S. Dollar.
Accordingly, the Company's future results could be adversely affected by a
variety of factors, including changes in a specific country's political,
economic or regulatory conditions and trade protection measures.
The Company's foreign currency risk management program is designed to reduce but
not eliminate unanticipated fluctuations in earnings, cash flows and the value
of foreign investments caused by volatility in currency exchange rates by
hedging, where believed to be cost-effective, significant exposures with foreign
currency exchange contracts, options and foreign currency borrowings. An adverse
change (defined as a 10% strengthening of the U.S. Dollar) in all exchange rates
would have resulted in a decrease of approximately $0.6 million in the Company's
results of operations for the three months ended March 31, 2000. The same
adverse change in exchange rates would have resulted in a $3.7 million increase
in the fair value of the Company's cash flow and net investment hedges open at
March 31, 2000. The majority of this fair value increase would offset currency
devaluations from translating the Company's foreign investments from functional
currencies to the U.S. Dollar. The Company's sensitivity analysis of foreign
exchange rate movements does not factor in a potential change in volumes or
local currency prices of its products sold or services provided. Actual results
may differ materially from those discussed above.
18
<PAGE> 19
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is from time to time, involved in certain legal proceedings in the
ordinary course of conducting its business. While the ultimate liability
pursuant to these actions cannot currently be determined, the Company believes
the legal proceedings in which it is currently involved will not have a material
adverse effect on its financial position.
The Company and certain of its executive officers, two of whom are also
directors, were named as defendants in four actions filed in June and July 1999,
in the United States District Court for the Southern District of Indiana. These
actions were subsequently consolidated by the Court into a single action. The
action asserts claims under sections 10 (b) and 20 (a) of the Securities
Exchange Act of 1934, and Rule 10b-5 of the Exchange Act, based on allegations
that false and misleading statements were rendered and/or statements were
omitted concerning the Company's then current and future financial condition and
business prospects. The action involves a purported class of purchasers of the
Company's stock during the period October 2, 1998 through March 10, 1999. The
Company and the individual defendants intend to vigorously defend these actions.
The outcome of any litigation is uncertain and it is possible that an
unfavorable decision could have a material adverse effect on the Company's
financial position, results of operations or cash flows.
Item 2. Changes in Securities
During the quarter ended March 31, 2000, the Company issued to the respective
sellers, 1,029,434 unregistered shares of the Company's common stock for payment
of contingent consideration in connection with the March 31, 1998 acquisition of
Wireless Fulfillment Services, LLC. The value of this share issuance of
$12,610,567 was reflected in the Company's consolidated balance sheet as of
December 31, 1999.
The foregoing securities issuances were made in reliance on the exemptions from
registration provided by Section 4(2) (issuances not involving a public
offering) of the Securities Act of 1933, as amended. No underwriter fees or
commissions were paid by the Company in connection with such issuances.
Item 6. Exhibits
(a) Exhibits
--------
The list of exhibits is hereby incorporated by reference to the Exhibit
Index on page 21 of this report.
(b) Reports on Form 8-K
-------------------
None
19
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Brightpoint, Inc.
-----------------
(Registrant)
Date May 12, 2000 /s/ Phillip A. Bounsall
----------------------- -----------------------------------------
Phillip A. Bounsall
Executive Vice President,
Chief Financial Officer
(Principal Financial Officer)
Date May 12, 2000 /s/ John P. Delaney
----------------------- -----------------------------------------
John P. Delaney
Vice President, Chief Accounting Officer
(Principal Accounting Officer)
20
<PAGE> 21
EXHIBIT INDEX
-------------
Exhibit No. Description
- ---------- -----------
10.1 Amendment No. 1 to Second Amended and Restated Multicurrency Credit
Agreement made as of March 30, 2000
11 Statement Re: Computation of Earnings Per Share
27 Financial Data Schedule for the Three Months Ended March 31, 2000
99 Cautionary Statements
21
<PAGE> 1
Exhibit 10.1
AMENDMENT NO. 1
TO
SECOND AMENDED AND RESTATED
MULTICURRENCY CREDIT AGREEMENT
DATED AS OF JULY 27, 1999
THIS AMENDMENT NO. 1 TO SECOND AMENDED AND RESTATED
MULTICURRENCY CREDIT AGREEMENT ("Amendment") is made as of March 30, 2000 by and
among BRIGHTPOINT, INC., BRIGHTPOINT INTERNATIONAL LTD. (collectively, the
"Borrowers"), the guarantors from time to time party thereto (the "Guarantors"),
the financial institutions listed on the signature pages hereof as lenders (the
"Lenders"), BANK ONE, INDIANA, NATIONAL ASSOCIATION, in its individual capacity
as a Lender and as administrative agent (the "Administrative Agent") on behalf
of the Lenders under that certain Second Amended and Restated Multicurrency
Credit Agreement dated as of July 27, 1999 by and among the Borrowers, the
Guarantors, the Lenders and the Administrative Agent (as amended, modified or
restated, the "Credit Agreement"). Defined terms used herein and not otherwise
defined herein shall have the meaning given to them in the Credit Agreement.
WITNESSETH
WHEREAS, the Borrowers, the Guarantors, the Lenders and the
Administrative Agent are parties to the Credit Agreement;
WHEREAS, the Borrowers have requested that the Lenders amend
the Credit Agreement in certain respects; and
WHEREAS, the Lenders and the Administrative Agent are willing
to amend the Credit Agreement on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises set forth
above, the terms and conditions contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Borrowers, the Guarantors, the Lenders and the Administrative Agent have agreed
to the following amendment to the Credit Agreement.
1. Amendment to Credit Agreement. Effective as of the date hereof and
subject to the satisfaction of the conditions precedent set forth in Section 2
below, the Credit Agreement is hereby amended as follows:
1.1. Section 1.1 of the Credit Agreement is amended to delete the word
"and" at the end of clause (xvi) of the definition of "Eligible Receivable", to
delete the period at the end of clause (xvii) of such definition, and to
substitute the words ";and", and to add the following new clause (xviii) to such
definition after clause (xvii):
<PAGE> 2
(xviii) any Foreign Receivable that is the subject of a
Permitted Receivables Financing.
1.2. Section 1.1 of the Credit Agreement is further amended to add the
following sentence at the end of the definition of "Indebtedness":
Notwithstanding anything herein to the contrary, any Permitted
Receivables Financing with respect to which Brightpoint or any of its
Subsidiaries (i) is obligated to make any payment to another Person or
repurchase or exchange any Foreign Receivable which is subject to such
Permitted Receivables Financing as a result of the failure of any such
Foreign Receivable to be paid in full, (ii) is obligated to make any
payment to another Person or repurchase or exchange any such Foreign
Receivable as a result of an actual breach of representation or
warranty with respect thereto (the intention being not to pick up any
contingent liability for breaches but only those where the contingency
has occurred and there is a current obligation) or (iii) otherwise has
recourse liability, shall be considered Indebtedness.
1.3. Section 1.1 of the Credit Agreement is further amended to add the
following definitions in the applicable alphabetical location:
"FOREIGN RECEIVABLE" means (a) a presently existing or
hereafter arising or acquired Receivable of Brightpoint Latin American
Holdings, Inc., an Indiana corporation which Receivables are not
included as Eligible Receivables in the Borrowing Base and (b) a
presently existing or hereafter arising or acquired Receivable of
Brightpoint do Brasil Ltda., a Brazilian corporation, Brightpoint de
Venezuela C.A., a Venezuelan corporation, Brightpoint de Mexico S.A. de
C.V., a Mexican corporation, Servicios Brightpoint de Mexico S.A. de
C.V., a Mexican corporation, Brightpoint Solutions de Mexico S.A. de
C.V., a Mexican corporation, Brightpoint (France) SARL, a French
corporation, Eurocom Systems, a French corporation, Brightpoint Sweden
Aktiebolag, a Swedish corporation, Brightpoint Germany GmbH, a German
corporation, Brightpoint (Ireland) Limited, an Irish corporation,
Brightpoint New Zealand Limited, a New Zealand corporation, Brightpoint
China Limited, a Hong Kong corporation, Brightpoint Philippines, Inc.,
a Philippines corporation, Brightpoint (South Africa) (Proprietary)
Limited, a South African corporation, or Brightpoint Australia Pty
Ltd., an Australian corporation.
"PERMITTED RECEIVABLES FINANCING" means the sale, financing or
factoring of Foreign Receivables in an aggregate amount (based on the
face amount of such Foreign Receivables) not to exceed $35,000,000 at
any one time or from time to time (after deduction of the amount of
such Foreign Receivables which from time to time have either been
collected or written off in accordance with the applicable Subsidiary's
credit and collection policy).
1.4. Section 6.3(A) of the Credit Agreement is amended to delete the
word "and" at the end of clause (i) thereof, to replace the period at the end of
clause (j) thereof with the words "; and" and to add the following new clause
(k) thereto after clause (j) thereof:
2
<PAGE> 3
(k) any Permitted Receivables Financing.
1.5. Section 6.3(B) of the Credit Agreement is amended to delete the
word "and" at the end of clause (iii) thereof, to add the words "not covered by
clause (v) below" in the second line of clause (iv) thereof after the words
"other assets", and to add the following new clause (v) thereto after clause
(iv) thereof:
(v) any Permitted Receivables Financing that would
constitute a sale, assignment, transfer, conveyance or other
disposition of property.
1.6. Section 6.3(C) of the Credit Agreement is amended to delete the
word "and" at the end of clause (iii) thereof, to replace the period at the end
of clause (iv) thereof with the words ";and", and to add the following new
clause (v) thereto after clause (iv) thereof:
(v) any Liens on any Foreign Receivables that are
subject to a Permitted Receivables Financing.
1.7. Section 11.12 of the Credit Agreement is amended to add the
following at the end thereof:
Upon any sale or transfer of Collateral or of a Subsidiary which is
expressly permitted pursuant to the terms of any Loan Document, or
consented to in writing by the Required Lenders or all of the Lenders,
as applicable, and upon at least five Business Days' prior written
request by Brightpoint, the Administrative Agent shall (and is hereby
irrevocably authorized by the Lenders to) execute such documents as may
be necessary to evidence the release of the Liens granted to the
Administrative Agent for the benefit of the Lenders herein or pursuant
hereto upon the Collateral that was sold or transferred and release the
applicable Guarantor from its obligation hereunder; provided, however,
that (i) the Administrative Agent shall not be required to execute any
such document on terms which, in the Administrative Agent's opinion,
would expose the Administrative Agent to liability or create any
obligation or entail any consequence other than the release of such
Liens without recourse or warranty, and (ii) such release shall not in
any manner discharge, affect or impair the Obligations or any Liens
upon (or obligations of the Borrowers or any Subsidiary in respect of)
all interests retained by the Borrowers or any Subsidiary, including
(without limitation) the proceeds of the sale, all of which shall
continue to constitute part of the Collateral.
2. Conditions of Effectiveness. This Amendment shall become effective
and be deemed effective as of March 30, 2000, if, and only if, the
Administrative Agent shall have received each of the following:
(a) duly executed originals of this Amendment from the
Borrowers, the Guarantors and the Required Lenders; and
(b) such other documents, instruments and agreements as the
Administrative Agent may reasonably request.
3
<PAGE> 4
3. Representations and Warranties of the Borrowers. The Borrowers
hereby represent and warrant as follows:
(a) This Amendment and the Credit Agreement as previously
executed and as amended hereby, constitute legal, valid and binding
obligations of the Borrowers and are enforceable against the Borrowers
in accordance with their terms.
(b) Upon the effectiveness of this Amendment, (i) no Default
or Unmatured Default has occurred and is continuing and (ii) the
Borrowers hereby reaffirm all covenants, representations and warranties
made in the Credit Agreement and other Loan Documents, to the extent
the same are not amended hereby, and agree that all such covenants,
representations and warranties shall be deemed to have been remade as
of the effective date of this Amendment.
4. Reference to the Effect on the Credit Agreement.
(a) Upon the effectiveness of Section 1 hereof, on and after
the date hereof, each reference in the Credit Agreement to "this
Agreement," "hereunder," "hereof," "herein" or words of like import
shall mean and be a reference to the Credit Agreement, as amended
previously and as amended hereby.
(b) Except as specifically amended and waived above, the
Credit Agreement and all other documents, instruments and agreements
executed and/or delivered in connection therewith shall remain in full
force and effect, and are hereby ratified and confirmed.
(c) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a
waiver of any right, power or remedy of the Administrative Agent or any
of the Lenders, nor constitute a waiver of any provision of the Credit
Agreement or any other documents, instruments and agreements executed
and/or delivered in connection therewith.
5. Costs and Expenses. The Borrowers agree to pay all reasonable costs,
fees and out-of-pocket expenses (including attorneys' fees and expenses charged
to the Administrative Agent) incurred by the Administrative Agent in connection
with the preparation, arrangement, execution and enforcement of this Amendment.
6. Governing Law. This Amendment shall be governed by and construed in
accordance with the internal laws (as opposed to the conflict of law provisions)
of the State of Illinois.
7. Headings. Section headings in this Amendment are included herein
for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.
8. Counterparts. This Amendment may be executed by one or more of the
parties to the Amendment on any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. A facsimile signature page hereto sent to the Administrative Agent
or the Administrative Agent's counsel shall be effective as a
4
<PAGE> 5
counterpart signature provided each party executing such a facsimile counterpart
agrees to deliver originals to the Administrative Agent thereof.
9. No Strict Construction. The parties hereto have participated jointly
in the negotiation and drafting of this Amendment, the Credit Agreement and the
other Loan Documents. In the event an ambiguity or question of intent or
interpretation arises, this Amendment, the Credit Agreement and the other Loan
Documents shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Amendment, the Credit
Agreement or any of the other Loan Documents.
10. Reaffirmation of Guaranties and other Loan Documents. Each of the
Guarantors, without in any way establishing a course of dealing, as evidenced by
its signature below, hereby consents to the execution and delivery of this
Amendment by the parties hereto, (ii) agrees that this Amendment shall not limit
or diminish the obligations of such Guarantor under the Credit Agreement or any
other Loan Documents, (iii) reaffirms its obligations under the Credit Agreement
and other Loan Documents, and (iv) agrees that such obligations remain in full
force and effect and is hereby ratified and confirmed.
5
<PAGE> 6
IN WITNESS WHEREOF, this Amendment has been duly executed as
of the day and year first above written.
BRIGHTPOINT, INC.,
as a Borrower and Guarantor
By: /s/ Steven E. Fivel
-------------------
Name: Steven E. Fivel
Title: Executive Vice President, General
Counsel and Secretary
BRIGHTPOINT INTERNATIONAL LTD.,
as a Borrower and Guarantor
By: /s/ Steven E. Fivel
-------------------
Name: Steven E. Fivel
Title: Executive Vice President, General
Counsel and Secretary
BRIGHTPOINT LATIN AMERICA, INC.,
as a Guarantor
By: /s/ Steven E. Fivel
-------------------
Name: Steven E. Fivel
Title: Executive Vice President, General
Counsel and Secretary
WIRELESS FULFILLMENT SERVICES LLC,
as a Guarantor
By: BRIGHTPOINT, INC., its Managing Member
By: /s/ Steven E. Fivel
-------------------
Name: Steven E. Fivel
Title: Executive Vice President, General
Counsel and Secretary
BRIGHTPOINT AUSTRALIA PTY LIMITED,
as a Subsidiary Borrower and a Guarantor
By: /s/ Steven E. Fivel
-------------------
Name: Steven E. Fivel
Title: Director
BRIGHTPOINT CHINA LIMITED,
as a Subsidiary Borrower and a Guarantor
By: /s/ Steven E. Fivel
-------------------
Name: Steven E. Fivel
Title: Director
6
<PAGE> 7
WINNING LAND COMPANY, LIMITED,
as a Subsidiary Borrower and a Guarantor
By: /s/ Steven E. Fivel
-------------------
Name: Steven E. Fivel
Title: Director
BANK ONE, INDIANA, NATIONAL
ASSOCIATION, as the Administrative Agent,
the Swing Lender, an Issuing Lender
and as a Lender
By: /s/ Scott A. Dvornik
--------------------
Name: Scott A. Dvornik
Title: Vice President
ABN AMRO BANK N.V.,
as the Alternate Currency Lender
By: /s/ Bernard J. McGuigan
-----------------------
Name: Bernard J. McGuigan
Title: Group Vice President and Director
By: /s/ Thomas Comfort
-------------------------
Name: Thomas Comfort
Title: Group Vice President
FLEET NATIONAL BANK
as a Lender
By: /s/ Janet R. Twomey
-------------------------
Name: Janet R. Twomey
Title: Vice President
7
<PAGE> 8
FIRST UNION NATIONAL BANK,
as a Lender
By: /s/ Thomas M. Harper
-----------------------
Name: Thomas M. Harper
Title: Vice President
SUNTRUST BANK OF CENTRAL FLORIDA,
NATIONAL ASSOCIATION,
as a Lender
By: /s/ Christopher A. Black
-------------------------
Name: Christopher A. Black
Title: V.P. and Director
THE BANK OF NOVA SCOTIA,
as a Lender
By: /s/ F.C.H. Ashby
-----------------------------
Name: F.C.H. Ashby
Title: Senior Manager Loan Operations
THE PROVIDENT BANK,
as a Lender
By: /s/ Christopher M. Caniff
-------------------------
Name: Christopher M. Caniff
Title: Vice President
THE BANK OF TOKYO-MITSUBISHI, LTD.
CHICAGO BRANCH,
as a Lender
By: /s/ Hisashi Miyashiro
---------------------
Name: Hisashi Miyashiro
Title: Deputy General Manager
THE FUJI BANK, LIMITED,
as a Lender
By:
---------------------
Name:
Title:
8
<PAGE> 9
NATIONAL CITY BANK OF INDIANA,
as a Lender
By: /s/ Thomas R. Groh
----------------------
Name: Thomas R. Groh
Title: Corporate Banking Officer
NATIONAL BANK OF CANADA,
as a Lender
By: /s/ Thomas E. Roberts
---------------------
Name: Thomas E. Roberts
Title: Vice President
9
<PAGE> 1
Exhibit (11) Statement Re: Computation of Earnings Per Share
-----------------------------------------------
(Amounts in thousands, except per share data)
Three Months Ended
March 31
1999 2000
---------- ----------
Basic:
Weighted average shares outstanding 53,047 54,926
========== ==========
Income (loss) before income taxes, minority
interest and accounting change $ (1,888) $ 9,909
Deduct income taxes (643) 3,375
Deduct minority interest (33) 36
Deduct cumulative effect of accounting change,
net of tax 14,065 -
---------- ----------
Net income (loss) $ (15,277) $ 6,498
========== ==========
Per share amount $ (0.29) $ 0.12
========== ==========
Diluted:
Weighted average shares outstanding 53,047 54,926
Net effect of dilutive stock options and warrants-
based on the treasury stock method using
average market price - 1,306
---------- ----------
Total weighted average shares outstanding 53,047 56,232
========== ==========
Income (loss) before income taxes, minority
interest and accounting change $ (1,888) $ 9,909
Deduct income taxes (643) 3,375
Deduct minority interest (33) 36
Deduct cumulative effect of accounting change,
net of tax 14,065 -
---------- ----------
Net income (loss) $ (15,277) $ 6,498
========== ==========
Per share amount $ (0.29) $ 0.12
========== ==========
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FORM
10-Q FOR THE QUARTER ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 111,600
<SECURITIES> 0
<RECEIVABLES> 215,523
<ALLOWANCES> 6,232
<INVENTORY> 215,997
<CURRENT-ASSETS> 587,982
<PP&E> 35,179
<DEPRECIATION> 0
<TOTAL-ASSETS> 702,107
<CURRENT-LIABILITIES> 302,420
<BONDS> 231,581
554
0
<COMMON> 0
<OTHER-SE> 167,552
<TOTAL-LIABILITY-AND-EQUITY> 702,107
<SALES> 470,532
<TOTAL-REVENUES> 470,532
<CGS> 429,098
<TOTAL-COSTS> 429,098
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,287
<INCOME-PRETAX> 9,909
<INCOME-TAX> 3,375
<INCOME-CONTINUING> 6,498
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,498
<EPS-BASIC> 0.12
<EPS-DILUTED> 0.12
</TABLE>
<PAGE> 1
EXHIBIT 99
CAUTIONARY STATEMENTS
Certain statements in this Form 10-Q 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 manufacturers
and suppliers, network operators and other providers of wireless communications
logistics services; uncertainties relating to business and economic conditions
in markets in which the Company operates; uncertainties relating to government
and regulatory policies and other political risks; uncertainties relating to
customer plans and commitments; dependence on the wireless communications
industry; pricing and availability of wireless communications equipment
materials and inventories demanded by our customers; 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; the Company's
continued ability, through revenue growth, to absorb the increasing costs
incurred and to be incurred in connection with its expansion activities and
provision of integrated logistics services; 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 of
the statement was made.
