Brightpoint, Inc. is a distributor of wireless devices and provider of customized logistic services to the wireless industry.

Press Release

Indianapolis, Ind. -- Brightpoint, Inc. (Nasdaq:CELL) reported its financial results for the third quarter ended September 30, 2009. Unless otherwise noted, amounts pertain to the third quarter of 2009.

FOR THE THIRD QUARTER OF 2009:

Revenue was $867.9 million for the third quarter of 2009, a decrease of 26% compared to the third quarter of 2008 and an increase of 21% compared to the second quarter of 2009. The increase in revenue compared to the second quarter of 2009 was primarily due to an increase in distribution revenue from the Middle East and Singapore. The decrease in revenue compared to the third quarter of 2008 was primarily due to an 11% decrease in wireless devices handled through distribution as well as lower average selling price for wireless devices handled through distribution.

Units handled were 21.6 million for the third quarter of 2009 compared to 20.1 million for the third quarter of 2008 and 19.1 million for the second quarter of 2009.

Income from continuing operations was $14.7 million or $0.18 per diluted share for the third quarter of 2009 compared to income from continuing operations of $8.5 million or $0.10 per diluted share for the third quarter of 2008 and $3.8 million or $0.05 per diluted share for the second quarter of 2009.

Adjusted income from continuing operations (non-GAAP) was $10.8 million or $0.13 per diluted share for the third quarter of 2009 compared to $13.3 million or $0.16 per diluted share for the third quarter of 2008 and $10.0 million or $0.12 per diluted share for the second quarter of 2009. Please see the disclosure below regarding adjusted income from continuing operations (non-GAAP).

Adjusted income from continuing operations (non-GAAP) of $0.13 per diluted share for the third quarter of 2009 excludes the following expenses:

-- $4.0 million (pre-tax) of non-cash amortization expense related to acquired intangible assets.
-- $1.9 million (pre-tax) restructuring charge in connection with our previously announced 2009 spending and debt reduction plan.
-- A $1.5 million (pre-tax) impairment charge for our Americas division's Latin America operation's finite-lived intangible asset. That asset was recorded in connection with the acquisition of certain assets from CellStar in 2007.
-- $1.5 million (pre-tax) of non-cash stock based compensation
expense.

Adjusted income from continuing operations (non-GAAP) of $0.13 per diluted share for the third quarter of 2009 excludes the following tax benefits:

--$9.8 million of net discrete tax benefits. In the third quarter of 2009, we recorded a benefit of $13.1 million for the reversal of a valuation allowance on certain tax assets that are expected to be utilized in the U.S. and the reversal of a reserve on an uncertain tax position Germany that became more likely than not to be sustained. This benefit was partially offset by a $3.3 million charge related to a valuation allowance on deferred tax assets resulting from previous net operating losses in Denmark that is no longer expected to be utilized.
-- $3.0 million tax benefit of the excluded expenses described above.

Total debt was $98.8 million at September 30, 2009, compared to $96.3 million at June 30, 2009 and $176.4 million at December 31, 2008. Total liquidity (unrestricted cash and unused borrowing availability) was $423.0 million at September 30, 2009 compared to $420.6 million at June 30, 2009 and $401.2 million at December 31, 2008. Average daily debt outstanding for the third quarter of 2009 was $150.7 million compared to average daily debt outstanding of $165.9 million for the second quarter of 2009 and $333.0 million for the fourth quarter of 2008.

Gross margin was 8.3% for the third quarter of 2009 compared to 7.3% for the third quarter of 2008 and 8.5% for the second quarter of 2009. The increase in gross margin compared to the third quarter of 2008 was primarily due to a higher mix of logistic services revenue as well as an improved cost structure resulting from the impact of spending reductions in our North America operations. The decrease in gross margin compared to the second quarter of 2009 was primarily due to a shift in mix of revenue from logistic services to distribution.

SG&A expenses were $55.7 million for the third quarter of 2009 compared to $60.5 million for the third quarter of 2008 and $49.7 million for the second quarter of 2009. SG&A expenses were lower compared to the third quarter of 2008 primarily due to the impact of our 2008 realignment of our Europe operations as well as the impact of our 2009 Spending and Debt Reduction Plan. SG&A expenses were higher compared to the second quarter of 2009 primarily due to an increase in bad debt expense in Europe ($2.7 million), the impact of accruing non-executive bonuses in the third quarter of 2009 ($1.6 million) and fluctuations in foreign currency ($1.9 million).

Interest expense, net, was $2.1 million for the third quarter of 2009 compared to $3.7 million for the third quarter of 2008 and $2.5 million for the second quarter of 2009. Interest expense, net, decreased because of the positive impact of our debt reduction initiatives in 2008 and 2009 and overall lower interest rates.

Income tax benefit was $8.2 million for the third quarter of 2009 compared to income tax expense of $5.6 million for the third quarter of 2008. Income taxes for the three months ended September 30, 2009 included a benefit of $13.1 million for the reversal of a valuation allowance on certain tax assets that are expected to be utilized in the U.S. and the reversal of a reserve on an uncertain tax position in Germany that became more likely than not to be sustained. This benefit was partially offset by a $3.3 million charge related to a valuation allowance on deferred tax assets resulting from previous net operating losses in Denmark that is no longer expected to be utilized. The effective tax rate excluding these items was 24.3% for the third quarter of 2009. We expect our annual effective tax rate for the year ended December 31, 2009 excluding these items to be between approximately 28%-32%. The effective income rate excluding these items is lower than our expected annual effective tax rate due to other smaller discrete items such as income tax return true-ups.

Cash provided by operating activities was $112.8 million for the first nine months of 2009 compared to $312.9 million for the first nine months of 2008. Cash provided by operating activities was $10.9 million for the three months ended September 30, 2009 compared to $53.0 million for the three months ended September 30, 2008 and $66.1 million for the three months ended June 30, 2009.

EBITDA was $17.1 million for the third quarter of 2009 compared to $24.4 million for the third quarter of 2008 and $12.4 million for the second quarter of 2009.

"I am pleased with our third quarter results in what continues to be an extremely challenging economic environment," said Robert J. Laikin, Chairman of the Board and Chief Executive Officer of Brightpoint, Inc. "In addition to our focus on operating our business in the most disciplined financial manner, we also are focused on implementing our Europe strategy which revolves around two significant initiatives: Building 'centers of excellence' and creating a 'shared services center.' By executing the successful roll-out of these plans, we will be positioned as a leading provider of customized logistics in Europe with capabilities quite similar to what we have developed in the Americas and Asia-Pacific. Growing volumes of more predictable, higher margin and lower risk supply chain solutions business will help create an optimal balance between distribution and customized logistics business models in Europe."

"I am pleased with our sustained profitability and strong gross margin in the third quarter, despite some isolated charges in Europe," said Tony Boor, Brightpoint's Chief Financial Officer and interim President of Europe, Middle East and Africa (EMEA). "In October, we completed the repurchase of 3 million shares of Brightpoint common stock for approximately $15.5 million and the purchase of our primary North America distribution facility for $31 million. We financed these transactions using available borrowings under our Global Credit Facility, and as a result I am revising our fourth quarter debt reduction target. We now expect to have average daily debt of approximately $150.0 million to $175.0 million for the fourth quarter."

Please see the attached Schedules and the Brightpoint website at www.Brightpoint.com for an explanation and reconciled presentation of the results for the third quarter ended September 30, 2009 prepared in accordance with U.S. GAAP and on an as adjusted non-GAAP basis. The explanation includes the reasons why management believes such non-GAAP measures are useful both to management and investors. Any financial measure other than those prepared in accordance with U.S. GAAP should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. GAAP. In addition, please see the attached Supplemental Information for a reconciliation of EBITDA.

The consolidated statements of operations for all periods presented reflect the reclassification of the results of operations of the Company's France, Poland and Turkey businesses as well as the Company's locally branded PC notebook business in Slovakia to discontinued operations in accordance with U.S. generally accepted accounting principles. The Company exited its France business in the third quarter of 2009 and its Poland and Turkey businesses in the first quarter of 2009. The Company exited the locally branded PC notebook business in the third quarter of 2008. Please see Brightpoint Inc.'s website at www.Brightpoint.com for quarterly statements of operations for all periods that have been reclassified.

SUBSEQUENT EVENTS

On October 1, 2009 the Company entered into a settlement agreement with NC Telecom Holding A/S ("NC Holding"), which provides for Brightpoint to purchase 3 million shares of Brightpoint common stock from NC Holding for $15.5 million. These shares were purchased under the previously announced share repurchase program. Under the settlement agreement, the Company's indemnification claims previously made against NC Holding pursuant to the Dangaard acquisition agreement have been settled. In addition, the settlement agreement provides that NC Holding will no longer have the right to designate any candidate to be considered to serve on the Company's Board of Directors and that Thorleif Krarup has agreed to immediately resign from the Board of Directors. The Company expects to record a non-cash settlement gain of approximately $7.7 million in other income in the fourth quarter of 2009 as a result of the settlement agreement.

In October 2009, the Company entered into an agreement to purchase its primary North America distribution facility for $31.0 million plus closing costs and commissions. The Company was previously the tenant in an operating lease for the property. There were 10 years remaining on the initial lease term, with five year option renewal periods extending to 2044. The sum of the remaining minimum lease payments for the remaining 10 years of the initial lease term was $43.1 million. The purchase was financed using availability on the Company's Global Credit Facility, and the Company is not currently pursuing any other financing agreement for the property.

2009 SPENDING AND DEBT REDUCTION PLAN UPDATE

On February 9, 2009, we announced a plan to reduce forecasted spending for the year by approximately $40 to $45 million. This plan is comprised of $12 to $14 million of cost avoidance and $28 to $31 million of spending reductions. The spending reduction measures included, among other things, a substantial workforce reduction of at least 220 positions, or approximately 7% of the Company's workforce. The majority of the foregoing reductions in spending are reflected in the Company's 2009 second quarter results of operations as a reduction of selling, general, and administrative expenses (SG&A).

In the third quarter of 2009, we achieved our global workforce reduction goal. Through the first nine months of 2009, we have reduced our global workforce by approximately 220 positions.

Based on our progress through the nine months ended September 30, 2009, we believe that we are on track to realize the previously stated forecasted spending reduction and cost avoidance targets excluding certain isolated charges in the third quarter of 2009. For the third quarter of 2009 SG&A expenses were $55.7 million, which represents an increase of $6.0 million (12%) from the second quarter of 2009, and a decrease of $2.4 million (4%) from the fourth quarter of 2008. SG&A expense for the three months ended September 30, 2009 includes $2.7 million of incremental bad debt expense related to various issues in Europe including losses from uncollectible customer accounts and disputed accounts in excess of insured credit limits. Included in the $2.7 million of incremental bad debt for the three and nine months ended September 30, 2009 is a $0.7 million charge due to an isolated incident of transactional fraud in Italy. Total charges in the results of operations for the three and nine months ended September 30, 2009 related to this fraudulent activity in Italy were $1.2 million, comprised of $0.7 million in SG&A and $0.5 million in other (income) expense. We will continue to pursue collection on these receivables, however we can give no assurances that we will be successful in our efforts. Fluctuations in foreign currency negatively impacted SG&A by approximately $1.9 million compared to the second quarter of 2009. SG&A expense for the three months ended September 30, 2009 also includes $1.6 million of incremental expense for non-executive staff bonuses.

On May 7, 2009 we announced a revised debt reduction target of having less than $100 million of average daily debt outstanding during the fourth quarter of 2009. As discussed above, in October 2009 we repurchased 3 million shares of our common stock for $15.5 million and purchased our largest North America distribution facility for $31.0 million. Both of these transactions were financed using availability on our Global Credit Facility. Because of these transactions, we are revising our estimated debt reduction and now anticipate having approximately $150.0 million to $175.0 million of average daily debt outstanding during the fourth quarter of 2009.

Consistent with our previous communications, we continue to focus on optimizing our European operating and financial structure which will result in additional opportunities to improve our financial performance in the European region. A main strategic component of this plan will revolve around consolidating our current warehouse facilities and creating strategically located hubs or "Centers of Excellence" to streamline our operations with the goal of becoming the low cost service provider of these industry leading logistics services in the European region.

We are making good progress on our Shared Services model where we will centralize many business support (or back office) functions in the region. By the end of 2009, we expect to have migrated certain back office functions from six European operating entities to the Shared Services Center. The remaining European operating entities are planned to be migrated to the Shared Services Center by the end of the second quarter of 2010.

We continue to evaluate the "right size" of our on-going operations in relation to desired profitability targets. We may determine that additional reductions in spending, including further reductions in workforce, may be necessary. Additional reductions in workforce and other spending could result in additional restructuring charges.

In addition, we expect to exit certain programs, channels and/or countries that are not expected to meet our ROIC target of at least 15%. As a result of exiting underperforming programs, channels and/or countries in our European region, we would expect to incur some additional restructuring charges. We will provide updates on these activities and related estimated charges, which could be material, as appropriate throughout the year. The ultimate motivation for implementing all of the initiatives discussed above is to achieve our as adjusted operating margin goal of at least 2.5% and ROIC goal of at least 15% for the European region.

Brightpoint, Inc. (Nasdaq:CELL) is a global leader in the distribution of wireless devices and in providing customized logistic services to the wireless industry. In 2008, Brightpoint handled approximately 84 million wireless devices globally. Brightpoint's innovative services include distribution, channel development, fulfillment, product customization, eBusiness solutions, and other outsourced services that integrate seamlessly with its customers. Brightpoint's effective and efficient platform allows its customers to benefit from quickly deployed, flexible, and cost effective solutions. The company has approximately 2,700 employees in more than 25 countries. In 2008, Brightpoint generated revenue of $4.6 billion. Brightpoint provides distribution and customized services to over 25,000 B2B customers worldwide. Additional information about Brightpoint can be found on its website at www.brightpoint.com, or by calling its toll-free Information and Investor Relations line at 877-IIR-CELL (877-447-2355).

Source: Brightpoint, Inc.