Brightpoint Reports Second Quarter Loss

August 8, 2012

News Release

Indianapolis, Ind. -- Brightpoint, Inc. ("BrightPoint") (Nasdaq:CELL), a global leader in providing device lifecycle services to the wireless and high-tech industries, today announced its financial results for the second quarter ended June 30, 2012.

Revenue was $1.27 billion for the second quarter of 2012, an increase of 3% compared to the second quarter of 2011 and a decrease of 8% compared to the first quarter of 2012. The decrease in revenue from the first quarter of 2012 is due primarily to a decrease in the average selling price of smartphones sold in Southeast Asia and a decline in wireless devices sold by our North America operation due to increased competition.

Loss from continuing operations attributable to common shareholders was $4.2 million, or $0.06 per diluted share, for the second quarter of 2012 compared to income from continuing operations attributable to common shareholders of $11.8 million, or $0.18 per diluted share, for the second quarter of 2011 and $3.2 million, or $0.05 per diluted share, for the first quarter of 2012.

Adjusted income from continuing operations attributable to common shareholders (non-GAAP) was $9.2 million, or $0.13 per diluted share, for the second quarter of 2012 compared to $16.3 million, or $0.23 per diluted share, for the second quarter of 2011 and $11.4 million, or $0.16 per diluted share, for the first quarter of 2012.

Adjusted income from continuing operations attributable to common shareholders (non-GAAP) of $0.13 per diluted share for the second quarter of 2012 excludes the following items:

• $6.3 million (pre-tax) of non-cash amortization expense related to acquired intangible assets.

• $5.0 million (pre-tax) of contract amendment expense incurred to eliminate the non-competition covenants applicable to BrightPoint in the Purchase Agreement with Intcomex, Inc. (Intcomex) dated March 16, 2011, and the Amended and Restated Shareholders Agreement of Intcomex, dated April 19, 2011. These agreements were amended in conjunction with the previously announced pending merger with Ingram Micro Inc. (Ingram Micro).

• $1.8 million (pre-tax) of legal and professional expenses related to the pending merger with Ingram Micro.

• $2.4 million (pre-tax) of non-cash stock based compensation expense.

• $2.2 million (pre-tax) restructuring charge consisting primarily of severance and accelerated non-cash stock based compensation expense for our former Chief Information Officer ($1.3 million), continued global consolidation and rationalization in our Europe, Middle East, and Africa (EMEA) region ($0.7 million) and additional charges related to the anticipated sale of our facility in Reno, Nevada which we expect to sell in the third quarter of 2012 ($0.2 million).

• $6.5 million of tax benefit related to the excluded items described above.

• $2.4 million of discrete tax expense related to a $1.9 million valuation allowance on foreign tax credits that are no longer expected to be utilized in the U.S. and a $0.5 million valuation allowance in Denmark as a result of a change in tax law that limits the amount of net operating loss carryforward that can be utilized to offset taxable income.

Gross profit was $78.8 million for the second quarter of 2012 compared to $93.1 million for the second quarter of 2011 and $85.7 million for the first quarter of 2012. The reduction in gross profit from the second quarter of 2011 and the first quarter of 2012 was due primarily to a reduction in distribution gross profit resulting from the current competitive and economic environment in EMEA, selling inventory at lower margins in an effort to reduce inventory levels, a decrease in the average selling price of smartphones sold in Southeast Asia, and a decline in wireless devices sold by our North America operation due to increased competition. The reduction in gross profit from the second quarter of 2011 was also impacted by a decrease in logistic services gross profit due to a decrease in volume for a non-handset fulfillment program for a wireless device manufacturer in EMEA and a decrease in wireless devices handled through forward logistics services in our North America operation.

Gross margin was 6.2% for the second quarter of 2012 compared to 7.5% for the second quarter of 2011 and 6.3% for the first quarter of 2012. The reduction in gross margin from the second quarter of 2011 and the first quarter of 2012 was primarily due to a reduction in distribution gross margin and a higher mix of revenue generated by our distribution business. The decrease in distribution gross margin was primarily due to the current competitive and economic environment in EMEA and selling inventory at lower margins in an effort to reduce inventory levels.

SG&A expense was $62.6 million for the second quarter of 2012 compared to $69.0 million for the second quarter of 2011 and $66.9 million for the first quarter of 2012. SG&A expense in the second quarter of 2011 included $3.1 million of separation expense for our former Chief Financial Officer which contributed to the decrease in SG&A expense in the second quarter of 2012. Fluctuations in foreign currencies reduced SG&A expense for the second quarter of 2012 by $2.9 million compared to the second quarter of 2011 and by $0.8 million compared to the first quarter of 2012. The decrease in SG&A expense compared to the first quarter of 2012 was due to a decrease in non-cash stock based compensation by $0.8 million, a decrease in branding expense of $0.6 million and a decrease in other expenses to support global initiatives.

Income tax expense was $2.7 million for the second quarter of 2012, which included $2.4 million of discrete tax expense consisting of a $1.9 million valuation allowance on foreign tax credits that are no longer expected to be utilized in the U.S. and a $0.5 million valuation allowance in Denmark as a result of a change in tax laws that limit the amount of net operating loss carryforward that can be utilized to offset taxable income. Excluding the items mentioned above, the effective income tax rate was (14.5%) for the three months ended June 30, 2012 due to losses in certain entities for which BrightPoint is not recording an income tax benefit.

Total debt was $195.0 million at June 30, 2012, compared to $296.7 million at March 31, 2012 and $145.2 million at June 30, 2011. Total liquidity (unrestricted cash and unused borrowing availability) was $390.3 million at June 30, 2012 compared to $282.1 million at March 31, 2012 and $371.7 million at June 30, 2011.

Cash provided by operating activities was $68.8 million for the six months ended June 30, 2012 compared to cash used in operating activities of $19.0 million for the six months ended June 30, 2011. Cash provided by operating activities was $114.2 million for the three months ended June 30, 2012 compared to $78.3 million for the three months ended June 30, 2011 and cash used in operating activities of $45.4 million for the three months ended March 31, 2012. The increase in cash provided by operating activities for the three months ended June 30, 2012 compared to the same period in the prior year was primarily due to an effort to reduce inventory levels.

The cash conversion cycle was 10 days for the second quarter of 2012 compared to 5 days for the second quarter of 2011 and 17 days for the first quarter of 2012. The increase in the cash conversion cycle from the second quarter of 2011 was primarily due to an increase in days inventory on-hand. Days inventory on-hand increased compared to the second quarter of 2011 due to an increase in inventory levels in our Southeast Asia and North America operations. The decrease in the cash conversion cycle from the first quarter of 2012 was primarily due to a decrease in days inventory on-hand and an increase in days payable outstanding. The decrease in days inventory on-hand was caused by an effort to reduce inventory levels and the increase in accounts payable was caused by the timing of payments.

EBITDA (non-GAAP) was $15.5 million for the second quarter of 2012 compared to $27.2 million for the second quarter of 2011 and $22.3 million for the first quarter of 2012.

Please see the attached Schedules and the Investors section at the BrightPoint website at www.BrightPoint.com for an explanation and reconciled presentation of the results for the quarter ended June 30, 2012 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.

Pending Merger

On June 29, 2012, BrightPoint, Ingram Micro Inc., (Ingram Micro) and Beacon Sub, Inc., (Merger Sub), entered into an Agreement and Plan of Merger (the Merger Agreement) providing for the merger of Merger Sub with and into BrightPoint (the Merger), with BrightPoint surviving the Merger as a wholly-owned subsidiary of Ingram Micro. Under the terms of the Merger Agreement, at the effective time of the Merger, each share of common stock, par value $0.01 per share, of Brightpoint, Inc. issued and outstanding immediately prior to the effective time, will be converted into the right to receive $9.00 in cash, excluding treasury shares and shares held by any direct or indirect subsidiary of Ingram Micro (other than Merger Sub). The Merger Agreement also provides that at the effective time, each outstanding restricted stock unit, restricted stock award and restricted share of common stock granted under any company stock plan will be converted into the right to receive $9.00 in cash. The total amount expected to be paid in the Merger with respect to BrightPoint's common stock and outstanding equity awards, including outstanding debt (net of cash) as of June 30, 2012 of approximately $165 million, is approximately $820 million.
BrightPoint, Ingram Micro and Merger Sub have made customary representations and warranties in the Merger Agreement, and each has agreed to use its reasonable best efforts to consummate the Merger.

BrightPoint has also agreed to various covenants in the Merger Agreement, including, among others, (i) to conduct its business in all material respects in the ordinary course consistent with past practice during the period between the execution of the Merger Agreement and the effective time and (ii) to cause a special meeting of BrightPoint's shareholders to be held to consider the approval of the Merger Agreement.

Consummation of the Merger is subject to various conditions, including, (i) the affirmative vote by the holders of a majority of the outstanding shares of common stock of Brightpoint, Inc., (ii) the absence of any law, injunction, judgment, ruling, court order, decree or other governmental or court action restraining, enjoining or prohibiting the Merger, (iii) the accuracy of the representations and warranties made by the parties, (iv) the performance by the parties in all material respects of their covenants, obligations and agreements under the Merger Agreement and (v) the expiration or early termination of the waiting period applicable to the Merger under the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended, and the receipt of other required federal, state and foreign government approvals. The transaction is expected to close before the end of 2012.

The Merger Agreement contains certain termination rights for Brightpoint and Ingram Micro including the receipt by BrightPoint of a superior proposal. In connection with the termination of the Merger Agreement under specified circumstances, including BrightPoint's entry into an agreement under an alternative acquisition proposal, BrightPoint is required to pay Ingram Micro a termination fee equal to $26.0 million. In addition, subject to certain limitations, either party may terminate the Merger Agreement if the Merger is not consummated by March 31, 2013.

Concurrent with the execution of the Merger Agreement, BrightPoint amended the Purchase Agreement with Intcomex, dated March 16, 2011, and the Shareholders Agreement of Intcomex, dated April 19, 2011, to eliminate the non-competition covenants applicable to BrightPoint. In conjunction with these amendments, BrightPoint paid Intcomex $5.0 million and caused its director nominee to resign from Intcomex's board of directors. BrightPoint also entered into an option agreement that grants Intcomex a five-year option, effective upon closing of the Merger, to purchase Intcomex common stock held by BrightPoint for a purchase price of $3.0 million less any dividends paid on such shares to BrightPoint prior to the exercise of the option.