Brightpoint Reports First Quarter 2005 Financial Results

Brightpoint Reports First Quarter 2005 Financial Results

    Business Editors

    PLAINFIELD, Ind.--(BUSINESS WIRE)--May 9, 2005--Brightpoint, Inc. (NASDAQ:CELL)

-- Wireless devices handled of 7.6 million, an increase of 34% from the first quarter of 2004

-- Revenue of $486 million, an increase of 10% from the first quarter of 2004

-- Income from continuing operations of $2.6 million, or $0.14 per diluted share, which includes the following items:

-- $3.6 million operating loss in our France operations

-- Previously announced $1.2 million facility consolidation charge in Australia

-- Approximately $500 thousand of expenses relating to potential geographic expansion opportunities that will not be consummated

-- Net income of $2.9 million, or $0.16 per diluted share

-- Cash provided by operating activities of $4.9 million

-- Received preliminary indications of selection to provide distribution and logistics services to two well-known companies that will launch MVNOs in late 2005 or early 2006

-- Launched Advanced Wireless Services business within Brightpoint North America to deliver bundled wireless products and solutions to customers focused on providing wireless data services; initial relationships in this effort are with Microsoft, Intel and Sprint

-- Exploring various strategic alternatives with respect to France operations

    Brightpoint, Inc. (NASDAQ:CELL) reported its financial results for the first quarter ended March 31, 2005. Unless otherwise noted, amounts are in thousands (except per share data) and pertain to the first quarter of 2005. Earlier today we filed an amended annual report on Form 10-K/A for the year ended December 31, 2004 ("Form 10-K/A"). As described in the Form 10-K/A, we have restated our consolidated financial statements as of and for the year ended December 31, 2004, and for all of the quarterly periods in 2004. The quarterly financial results for the first quarter and fourth quarter of 2004 included herein are as restated. Please refer to Note 19 to the consolidated financial statements included in the Form 10-K/A for additional information with respect the Restatement.

SUMMARY FINANCIAL RESULTS

Three Months Ended ----------------------------------- March 31, March 31, Dec. 31, 2005 2004 2004 ----------- ----------- ----------- (Unaudited) (Unaudited) (Unaudited) Wireless devices handled 7,624 5,678 8,749 Revenue $485,614 $440,210 $503,025 Gross profit $28,297 $24,068 $34,854 Gross margin 5.8% 5.5% 6.9% Facility consolidation charge $1,203 $- $- Operating income from continuing operations $4,240 $4,193 $12,148 Income from continuing operations $2,565 $2,354 $8,087 Net income (loss) $2,874 $(2,221) $7,480 Diluted per share: Income from continuing operations $0.14 $0.12 $0.44 Net income (loss) $0.16 $(0.11) $0.40

    Key highlights and developments in the first quarter of 2005 include:

--	34% increase in wireless devices handled from the first quarter of 2004 with a notable sales mix shift towards our fee-based logistics services business
--	99% increase in operating income in our Americas division from the first quarter of 2004 driven by strong market demand and continued promotional activities by mobile operators and mobile virtual network operators ("MVNOs")
--	Brightpoint North America continues to add to its roster of MVNO customers with recently announced relationships with Primus Telecommunications, Inc. and Movida Communications, Inc.
--	39% decrease in operating income in our Asia-Pacific division from the first quarter of 2004 caused by a previously announced $1.2 million facility consolidation charge in our Australia operations
--	Improved operating results in our India operations as we continue to work with mobile operators and suppliers in transitioning to an open distribution model and expanding our product offering for independent dealers
--	Strong balance sheet: unrestricted cash of $71 million, 3% gross-debt-to-total-capitalization ratio and $143 million of liquidity

    We experienced a 34% increase in wireless devices handled from the first quarter of 2004 due to growth in both logistics services and distribution volumes. The increase in logistics services volumes was primarily due to strong demand in Colombia and the United States driven by continued promotional activities by mobile operators and MVNOs, which benefited our logistics customers such as COMCEL in Colombia and Boost Mobile, Nextel, Virgin Mobile and TracFone in the United States. The addition of Cricket Communications to our customer base in the United States late in the first quarter of 2004 also contributed to the increase in logistics services volumes. The increase in distribution volumes was principally due to strong demand for wireless devices in Australia and in markets served by our Brightpoint Asia operations, offset by a decline in the Philippines. While the number of wireless devices handled in logistics services and distribution increased from the first quarter of 2004, the growth in logistics services volumes outpaced the growth experienced in our distribution business. We experienced a 10% year-over-year increase in revenue. This increase was less than the growth rate in wireless devices handled due to a sales mix shift from units handled through distribution to logistics services, which typically generate significantly less revenue per transaction than distribution sales. In addition, as logistics services generally yield a higher gross margin than distribution, the mix shift resulted in a 0.3 percentage point increase in gross margin and an increase in gross profit of $4.2 million, or 18%, on a year-over-year basis.
    Operating income from continuing operations ("Operating Income") was $4.2 million, an increase of 1% from the first quarter of 2004. The year-over-year increase in Operating Income was primarily due to Operating Income growth of 99% in our Americas division offset by a $2.4 million operating loss in our Europe division and a 39% decline in Operating Income in our Asia-Pacific division. The increase in Operating Income in our Americas division was principally due to a 43% increase in wireless devices handled, operating leverage associated with the increased unit volumes and a reduction in bad debt expense. The operating loss in the Europe division was primarily due to a $3.6 million operating loss in our France operations partially offset by a $2.0 million increase in operating profitability in our operations in Germany due to the addition of HTC's Qtek branded smartphones to our product portfolio in the second half of 2004. The operating loss in France was primarily attributable to a reduction in gross profit from activation commissions and $1.2 million of bad debt expense. The decrease in Operating Income in our Asia-Pacific division was primarily due to a $1.2 million facility consolidation charge in Australia, which was partially offset by a 14% increase in wireless devices handled driven by strong demand in Australia and in markets served by our Brightpoint Asia operations. As previously announced, our Australian operation has moved to a larger facility in anticipation of growth opportunities. During the first quarter of 2005, the Company recorded a pre-tax charge of $1.2 million relating to the anticipated lease costs, net of sublease income, for the remaining term of the previous location and other items. If we are unsuccessful in terminating the lease of the previous location, finding a sub-lessee or if the terms of any sublease are less than this estimate, we may incur additional expenses. Operating Income in the first quarter of 2005 was also negatively effected by approximately $500 thousand of professional fees, travel expenses and other items pertaining to the evaluation and negotiation of potential geographic expansion opportunities in the Europe and Asia-Pacific divisions which we believe will not be consummated.
    In the United States, we continue to see a variety of companies announcing their intention to create MVNOs in order to leverage their strong brand names and large customer bases in the wireless space. Consequently, we believe that the MVNO business model may be a key growth driver for the wireless industry in the United States. Through our relationships with companies such as TracFone and Virgin Mobile in the United States, we have been able to contribute to and benefit from the success of our MVNO customers. With our experience, scale, and track record of success in providing distribution and logistic services to MVNOs, we have recently been able to add Primus Telecommunications, Inc. and Movida Communications, Inc. to our growing roster of MVNO customers. In addition, we have received preliminary indications that Brightpoint North America has been selected to provide distribution and logistics services to two well-known companies that will launch MVNOs in late 2005 or early 2006. The provision of services and identification of these two well-known companies is subject to the completion and execution of definitive agreements and we provide no assurances as to the timing and probability of the completion and execution of the definitive agreements.
    Another exciting development in our Brightpoint North America business was the launch of our new line of business called Advanced Wireless Services ("AWS"). AWS' first relationships in this effort are with Microsoft, Intel and Sprint. AWS will deliver bundled wireless products and solutions to effectively and efficiently meet the wireless data needs of customers throughout the United States. AWS will focus on delivering the bundled wireless products and solutions to our existing sales channels including mobile operators and their dealers as well as new channels such as Value Added Resellers ("VARs"), system integrators and other customers who are focused on providing wireless data services. AWS will leverage our strong industry relationships and extensive logistics capabilities to provide these channels with an extensive range of products and solutions including Windows Mobile-based Smartphones and Pocket PCs, activation services, bundled software applications, wireless LAN infrastructure and services, VoIP solutions and wireless content. In conjunction with the formation of AWS, Brightpoint plans to launch a VAR Mobile Activation Service (MAS) that will enable VARs to deliver a wide range of Windows Mobile-based devices to their small/medium business customers, provide wireless activation services, and receive commissions from mobile operators. The MAS will also give VARs the ability to minimize inventory levels by relying on just-in-time delivery of bundled wireless solutions.
    During the first quarter of 2005, we saw improved operating results in our India. While we have made progress with the transition of our India business model to an open distribution model focused on selling Nokia CDMA handsets into independent dealer channels, we continue to work with mobile operators and suppliers to expand and improve our warranty and non-warranty repair service offerings and to bring new products, such as memory cards and blank digital media, to our product portfolio. We remain excited about our long-term prospects in India and with the continued support of our mobile operator and supplier partners driving increases in wireless devices handled, we anticipate our India operations reaching operating break-even sometime in the second half of 2005.
    Our business in France primarily involves the provision of channel services to mobile operators providing them with incremental mobile subscribers, selling prepaid wireless airtime through a network of approximately 2,000 points of sale and owning and operating 16 retail stores focused on selling wireless telecommunications products and services. As described in the Form 10-K/A filed earlier today, the financial reporting control procedures for certain account receivable reconciliations and revenue recognition control procedures for proper pricing and invoicing in our operations in France failed to operate effectively and in a timely fashion as of December 31, 2004, resulting in the restatement of our consolidated financial statements for the year ended December 31, 2004. Please refer to the Form 10-K/A filed earlier today for a complete description of the foregoing. Additionally, during the first quarter of 2005, our operations in France incurred an operating loss of $3.6 million primarily due to reduced gross margins on activation commissions and increased bad debt expense. Based upon these and other factors, the Company is conducting a review of our operations in France. We are committed to completing our evaluation of our France operations and exploring various strategic alternatives to enhance long-term shareholder value including, but not limited to, the sale, restructuring, closure or other corporate action relating to all or a portion of these operations. We do not expect to disclose developments with respect to the exploration of strategic alternatives for our operations in France unless and until we have entered into a definitive transaction or other action.
    We ended the quarter with cash and cash equivalents (unrestricted) of $71 million, a 1% decrease from $72 million at December 31, 2004, and a 17% decrease from $85 million at March 31, 2004. Net cash provided by operating activities was $4.9 million. The cash conversion cycle was 7 days, an increase of 1 day from the fourth quarter of 2004 and 3 days from the first quarter of 2004. The sequential change in the cash conversion cycle was the result of a 4-day decrease in days payable outstanding, partially offset by a 2-day decrease in days of sales outstanding and a 1-day decrease in days of inventory outstanding. The decrease in days of payable outstanding was substantially due to the timing of inventory receipts and the related payment terms from suppliers. In addition, from time to time, we may pay our suppliers prior to the invoice due date to take advantage of certain early payment discounts. This may consume our cash or may cause us to borrow from lenders. The decrease in the days of sales outstanding was mostly due to improved collections. Annualized return on invested capital from operations was 10% for the first quarter of 2005 and 16% on a trailing four-quarter basis. During the first quarter of 2005, we repurchased 227,400 of our common shares at an average price of $19.35 per share for a total of $4.4 million. The share repurchases were made pursuant to a $20 million share repurchase plan announced on November 30, 2004 ("Share Repurchase Plan"), and as of March 31, 2005, an additional $11.6 million of share repurchases may be made prior to the expiration of the Share Repurchase Plan on December 31, 2005. Our liquidity (unrestricted cash and unused borrowing availability) was approximately $143 million as of March 31, 2005, compared to approximately $149 million as of December 31, 2004, and approximately $144 million as of March 31, 2004.
    Our preliminary estimates indicate that the wireless device industry experienced a year-over-year growth rate of approximately 20% in the first quarter of 2005. Globally, new product introductions, compelling pricing by manufacturers, enhanced functionality, availability of feature-rich devices, the deployment of wireless data services and aggressive promotional activities by mobile operators caused subscribers to upgrade their wireless devices. With consumer demand for feature-rich devices, rollouts of advanced 2.5G and 3G networks and continued mobile operator promotional activities, we currently estimate that worldwide sales of wireless devices will be in a range of 750 million to 760 million units in 2005, representing year-over-year growth in a range of 12% to 15%.
    "We are pleased with the overall results of the Company during the first quarter of 2005. However, our results in France are unacceptable and we are committed to completing our evaluation of these operations and taking the appropriate actions needed in order to maximize long-term shareholder value," said Robert J. Laikin, Brightpoint's Chairman of the Board and Chief Executive Officer.
    "We are excited about the continuing activity in the MVNO space and believe that Brightpoint is well-positioned to benefit from the continued proliferation of these new entrants to the wireless space," said J. Mark Howell, President of Brightpoint, Inc. and Brightpoint North America. "Additionally, the launch of the Advanced Wireless Services line of business in the first quarter is a natural extension of our existing capabilities, is in-line with our global strategic initiatives and provides an opportunity for growth."
    "Enhancing our internal controls and maintaining focus on our balance sheet will position us to execute our strategy for growth in 2005," said Lisa M. Kelley, Brightpoint's Senior Vice President, Corporate Controller and Chief Accounting Officer and acting Chief Financial Officer.

    Brightpoint is one of the world's largest distributors of mobile phones. Brightpoint supports the global wireless telecommunications and data industry, providing quickly deployed, flexible and cost effective solutions. Brightpoint's innovative services include distribution, channel management, fulfillment, eBusiness solutions and other outsourced services that integrate seamlessly with its customers. 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).

    Certain information in this press release may contain forward-looking statements regarding future events or our future performance. These statements are only predictions and actual events or results may differ materially. Please refer to the documents we file, from time to time, with the Securities and Exchange Commission; including, our most recent Form 10-K/A and the cautionary statements contained in Exhibit 99.1 thereto. These documents contain and identify important risk factors that could cause the actual results to differ materially from those contained in or implied by these forward-looking statements. These risk factors include, without limitation, uncertainties relating to customer plans and commitments, including, without limitation, (i) loss of significant customers or a reduction in prices we charge these customers; (ii) possible adverse effect on demand for our products resulting from consolidation of mobile operator customers; (iii) dependence upon principal suppliers and availability and price of wireless products; (iv) factors that could affect forward-looking statements relating to the resolution of the material weakness with respect to internal controls discussed in Item 9A of the Company's Annual Report on Form 10-K, as amended, including, among other things, the Company's ability to design and maintain policies and procedures which enable the Company to avoid any recurrence of the matters which gave rise to the material weakness; (v) possible adverse effects of future medical claims regarding the use of wireless handsets; (vi) possible difficulties collecting our accounts receivable; (vi) our ability to absorb, through revenue growth, the increasing operating costs that we have incurred and continue to incur in connection with our activities; (viii) lack of demand for our products and services in certain markets and our inability to maintain margins; (ix) our ability to expand geographically on a satisfactory basis, through acquisition or otherwise; (x) potential future losses and capital required in connection with our India business; (xi) uncertainty whether wireless equipment manufacturers and wireless network operators will continue to outsource aspects of their business to us; (xii) our reliance upon third parties to manufacture products which we distribute and reliance upon their quality control procedures; (xiii) our operations may be materially affected by fluctuations in regional demand and economic factors; (xiv) ability to respond to rapid technological changes in the wireless communications and data industry; (xv) access to or the cost of increasing amounts of capital, trade credit or other financing; (xvi) reliance on a third party to manage significant operations in our Asia-Pacific division; (xvii) investment in sophisticated information systems technologies and our reliance upon the proper functioning of such systems (xviii) ability to manage and sustain future growth at our historical or industry rates and our ability to meet intense industry competition; (xix) effect of hostilities or terrorist attacks on our operations; (xx) our history of significant losses in previous periods; (xxi) the impact that seasonality may have on our business and results; (xxii) risks of foreign operations, including currency, trade restrictions and political risks in our foreign markets; (xxiii) ability to attract and retain qualified management and other personnel and cost of complying with labor agreements; (xxiv) ability to protect our proprietary information; (xxv) high rate of personnel turnover; (xxvi) our significant payment obligations under certain lease and other contractual arrangements; (xxvii) the potential issuance of additional equity, including our common shares, which could result in dilution of existing shareholders and may have an adverse impact on the price of our common shares; (xxviii) uncertainties regarding the outcome of pending litigation; (xxix) ability to maintain adequate insurance at a reasonable cost and (xxx) existence of anti-takeover measures. Because of the aforementioned uncertainties affecting our future operating results, past performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate future results or trends. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date these statements were made. The words "believe," "expect," "anticipate," "intend," and "plan" and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on any of these forward-looking statements, which speak only as of the date that such statement was made. We undertake no obligation to update any forward-looking statement.

BRIGHTPOINT, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except per share data) (Unaudited)

Three Months Ended March 31, ------------------- 2005 2004 --------- ---------

Revenue: Distribution revenue $406,725 $377,942 Logistics services revenue 78,889 62,268 --------- --------- Total revenue 485,614 440,210

Cost of revenue Cost of product distribution revenue 390,585 364,660 Cost of integrated logistics services revenue 66,732 51,482 --------- --------- Total cost of revenue 457,317 416,142 --------- ---------

Gross profit 28,297 24,068

Selling, general and administrative expenses 22,854 19,874 Facility consolidation charge 1,203 - --------- --------- Operating income from continuing operations 4,240 4,193

Interest expense 585 469 Interest income (212) (201) Net other expenses 202 568 --------- --------- Income from continuing operations before income taxes 3,665 3,357

Income tax expense 1,100 1,003 --------- --------- Income from continuing operations 2,565 2,354

Discontinued operations: Loss from discontinued operations (29) (341) Gain (loss) on disposal of discontinued operations 338 (4,234) --------- --------- Total discontinued operations 309 (4,575)

--------- --------- Net income (loss) $2,874 $(2,221) ========= =========

Basic per share: Income from continuing operations $0.14 $0.12 Discontinued operations 0.02 (0.24) --------- --------- Net income (loss) $0.16 $(0.12) ========= =========

Diluted per share: Income from continuing operations $0.14 $0.12 Discontinued operations 0.02 (0.23) --------- --------- Net income (loss) $0.16 $(0.11) ========= =========

Weighted average common shares outstanding: Basic 17,707 19,270 ========= ========= Diluted 18,373 19,940 ========= =========

BRIGHTPOINT, INC. CONSOLIDATED BALANCE SHEETS (Amounts in thousands)

March 31, Dec. 31, March 31, 2005 2004 2004 ----------- ---------- ----------- (Unaudited) (Unaudited)

ASSETS Current assets: Cash and cash equivalents $71,246 $72,120 $85,454 Pledged cash 12,786 13,830 16,504 Accounts receivable (less allowance for doubtful accounts of $6,219, $6,215 and $7,825 respectively) 123,624 148,321 111,099 Inventories 105,535 110,089 98,892 Contract financing receivable 13,317 14,022 11,274 Other current assets 25,569 23,132 11,344 ----------- ---------- ----------- Total current assets 352,029 381,514 334,567

Property and equipment, net 26,598 27,503 28,646 Goodwill and other intangibles, net 21,276 21,981 19,015 Other assets 7,796 6,586 9,493 ----------- ---------- ----------- Total assets $407,699 $437,584 $391,721 =========== ========== ===========

LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $173,940 $201,621 $174,535 Accrued expenses 60,408 61,851 50,571 Unfunded portion of contract financing receivable 20,876 23,375 19,060 Lines of credit 4,563 - - ----------- ---------- ----------- Total current liabilities 259,787 286,847 244,166

COMMITMENTS AND CONTINGENCIES

Minority interest - - -

Shareholders' 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; 19,585, 19,499 and 19,299 issued and outstanding, respectively 196 195 193 Treasury stock, at cost, 1,833 and 1,606 shares, respectively (28,409) (24,010) - Additional paid-in capital 234,291 233,768 227,647 Retained earnings (deficit) (61,094) (63,968) (79,959) Accumulated other comprehensive income (loss) 2,928 4,752 (326) ----------- ---------- ----------- Total shareholders' equity 147,912 150,737 147,555 ----------- ---------- -----------

Total liabilities and shareholders' equity $407,699 $437,584 $391,721 =========== ======================

BRIGHTPOINT, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) (Unaudited)

Three months ended March 31, ------------------- 2005 2004 --------- ---------

Operating activities Net income (loss) $2,874 $(2,221) Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: Depreciation and amortization 3,016 2,661 Discontinued operations (309) 4,575 Net cash used by discontinued operations (3) (1,401) Facility consolidation charge 1,203 - Pledged cash requirements 1,044 538 Income tax benefits from exercise of stock options 208 - Changes in deferred taxes (1,803) - Changes in operating assets and liabilities, net of effects from acquisitions and divestitures: Accounts receivable, net 22,781 12,288 Inventories, net 2,722 9,731 Other operating assets (3,370) 1,142 Accounts payable (24,665) (22,464) Accrued expenses 1,222 (8,634) --------- --------- Net cash provided (used) by operating activities 4,920 (3,785)

Investing activities Decrease (increase) in funded contract financing receivables (1,754) 2,868 Capital expenditures (2,155) (2,169) Proceeds from Ireland sale - 1,714 Increase in other assets (56) (374) Purchase acquisitions, net of cash acquired (308) (213) --------- --------- Net cash provided (used) by investing activities (4,273) 1,826

Financing activities Net borrowing (payments) on credit facilities 4,667 (16,484) Pledged cash requirements - 5,000 Proceeds from common stock issuances under employee stock option and purchase plans 316 308 Purchase of treasury stock (4,399) - --------- --------- Net cash provide (used) by financing activities 584 (11,176)

Effect of exchange rate changes on cash and cash equivalents (2,153) (290) --------- ---------

Net decrease in cash and cash equivalents (922) (13,425) Cash and cash equivalents at beginning of period 72,120 98,879 --------- --------- Cash and cash equivalents at end of period $71,198 $85,454 ========= =========

Supplemental Information (Amounts in thousands)

Revenue and Wireless Devices Handled

Three Months Ended ----------------------------------------------------- Percent Percent Percent March 31, of March 31, of Dec. 31, of 2005 Total 2004 Total 2004 Total --------- ------- --------- ------- --------- -------

Wireless Devices Handled by Division: The Americas 5,614 74% 3,930 69% 6,521 75% Asia-Pacific 1,756 23% 1,544 27% 1,776 20% Europe 254 3% 204 4% 452 5% --------- ------- --------- ------- --------- ------- Total 7,624 100% 5,678 100% 8,749 100% ========= ======= ========= ======= ========= =======

Wireless Devices Handled: Distribution 2,599 34% 2,370 42% 2,663 30% Logistics services 5,025 66% 3,308 58% 6,086 70% --------- ------- --------- ------- --------- ------- Total 7,624 100% 5,678 100% 8,749 100% ========= ======= ========= ======= ========= =======

Revenue by Division: The Americas $133,027 27% $118,296 27% $138,373 28% Asia-Pacific 252,919 52% 240,713 55% 243,347 48% Europe 99,668 21% 81,201 18% 121,305 24% --------- ------- --------- ------- --------- ------- Total $485,614 100% $440,210 100% $503,025 100% ========= ======= ========= ======= ========= =======

Revenue by Service Line: Product distribution $406,725 84% $377,942 86% $413,696 82% Logistics services 78,889 16% 62,268 14% 89,329 18% --------- ------- --------- ------- --------- ------- Total $485,614 100% $440,210 100% $503,025 100% ========= ======= ========= ======= ========= =======

Y-o-Y Sequential change change Q1 2004 to Q4 2004 to Q1 2005 Q1 2005 ---------- ----------

Wireless Devices Handled by Division: The Americas 43% (14%) Asia-Pacific 14% (1%) Europe 24% (44%) ---------- ---------- Total 34% (13%) ========== ==========

Wireless Devices Handled: Distribution 10% (2%) Logistics services 52% (17%) ---------- ---------- Total 34% (13%) ========== ==========

Revenue by Division: The Americas 12% (4%) Asia-Pacific 5% 4% Europe 23% (18%) ---------- ---------- Total 10% (3%) ========== ==========

Revenue by Service Line: Product distribution 8% (2%) Logistics services 27% (12%) ---------- ---------- Total 10% (3%) ========== ==========

Revenue Change Analysis

Q1 2004 to Q1 2005 Q4 2004 to Q1 2005 ------------------ ------------------ Units Revenue Units Revenue --------- -------- --------- --------

Effect of change in wireless devices handled on revenue (volume) 34% 29% (13%) (10%) Mix shift from product distribution to fee-based logistics services (20%) 8% Change in prices (4%) 1% Effect of foreign currency 2% 1% Other 3% (3%) -------- -------- Overall percentage change in revenue from prior periods 10% (3%) ======== ========

Operating Income by Division:

Three Months Ended ----------------------------------------------------- March 31, OI March 31, OI Dec. 31, OI 2005 Margin 2004 Margin 2004 Margin --------- -------- --------- ------- -------- -------

The Americas $5,535 4.2% $2,775 2.3% $8,241 6.0% Asia-Pacific 1,135 0.4% 1,872 0.8% 4,965 2.0% Europe (2,430) (2.4%) (454) (0.6%) (1,058) (0.9%) --------- -------- --------- ------- -------- ------- Total $4,240 0.9% $4,193 1.0% $12,148 2.4% ========= ======== ========= ======= ======== =======

Y-o-Y Sequential change change Q1 2004 to Q4 2004 to Q1 2005 Q1 2005 ---------- ----------

The Americas 99% (33%) Asia-Pacific (39%) (77%) Europe (435%) (130%) ---------- ---------- Total 1% (65%) ========== ==========

Supplemental Information (continued) (Amounts in thousands)

Cash Conversion Cycle Days

Management utilizes the cash conversion cycle days metric and its components to evaluate our ability to manage our working capital and its cash flow performance. Cash conversion cycle days and its components for the quarters ending March 31, 2005 and 2004, and December 31, 2004, were as follows:

Three Months Ended ------------------------------ March 31, March 31, Dec. 31, 2005 2004 2004 --------- --------- ----------

Days sales outstanding in accounts receivable 22 21 24 Days inventory on-hand 22 23 23 Days payable outstanding (37) (40) (41) --------- --------- ---------- Cash Conversion Cycle Days 7 4 6 ========= ========= ==========

Return on Invested Capital ("ROIC")

We use ROIC to measure the effectiveness of our use of invested capital to generate profits. ROIC for the quarters and trailing four quarters ending March 31, 2005 and 2004, and December 31, 2004, was as follows:

Three Months Ended Trailing Twelve Months Ended ----------------------------- ----------------------------- March 31, March 31, Dec. 31, March 31, March 31, Dec. 31, 2005 2004 2004 2005 2004 2004 --------- --------- --------- --------- --------- ---------

Operating income after taxes: Operating income from continuing operations $4,240 $4,193 $12,148 $30,978 $29,088 $30,931 Plus: Facility consoli- dation charge 1,203 - (21) 967 1,181 (236) Less: Estimated income taxes(1) (1,634) (1,253) (3,595) (9,350) (7,634) (8,969) --------- --------- --------- --------- --------- --------- Operating income after taxes $3,809 $2,940 $8,532 $22,595 $22,635 $21,726 ========= ========= ========= ========= ========= =========

Invested capital: Debt $4,563 $- $- $4,563 $- $- Share- holders' equity 147,912 147,555 150,737 147,912 147,555 150,737 --------- --------- --------- --------- --------- --------- Invested capital $152,475 $147,555 $150,737 $152,475 $147,555 $150,737 ========= ========= ========= ========= ========= =========

Average invested capital(2)$151,606 $155,673 $144,363 $143,714 $139,821 $145,977 ========= ========= ========= ========= ========= =========

ROIC(3) 10% 8% 24% 16% 16% 15% ========= ========= ========= ========= ========= =========

(1) Estimated income taxes were calculated by multiplying the sum of operating income from continuing operations and the facility consolidation charge by the respective periods' effective tax rate.

(2) Average invested capital for quarterly periods represents the simple average of the beginning and ending invested capital amounts for the respective quarter. Average invested capital for the trailing four quarter periods represents the average of the ending invested capital amounts for the current and four prior quarter period ends.

(3) ROIC is calculated by dividing operating income after taxes by average invested capital. ROIC for quarterly periods is stated on an annualized basis and is calculated by dividing operating income after taxes by average invested capital and multiplying the result by four (4) to state ROIC on an annualized basis.

--30--AHM/sf*

CONTACT: Brightpoint, Inc., Plainfield, Indiana Lisa M. Kelley, (317) 707-2355

KEYWORD: INDIANA INDUSTRY KEYWORD: HARDWARE TELECOMMUNICATIONS SOFTWARE EARNINGS SOURCE: Brightpoint, Inc.

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