Brightpoint, Inc. (NASDAQ: CELL) is a leading global communications technology firm that specializes in the distribution of wireless devices and in providing customized logistics services to the wireless industry.
Brightpoint had a 2009 revenue of $3.2 billion. With 3,269 employees and 25,000 customers in more than 25 countries, Brightpoint handled 84 million wireless devices globally[2] in 2009.
Brightpoint's services include distribution, channel development, product customization, E-Business solutions, and other outsourced services that integrate with its customers.
In both 2007 and 2009, Brightpoint was selected as one of America's Most Admired Companies by FORTUNE Magazine, ranking in the top 5 of the "Wholesalers: Electronics" category each year.
* Income from continuing operations on a GAAP basis of
approximately $0.22 to $0.26 per diluted share. Income from
continuing operations on a GAAP basis includes a gain of
approximately $7.7 million, or approximately $0.10 per diluted
share, related to the settlement of an indemnification claim
with NC Telecom Holding A/S in October 2009.
* Adjusted (non-GAAP) income from continuing operations, excluding
stock based compensation expense, amortization, restructuring
charge and gain on indemnification of approximately $0.13 to
$0.18 per diluted share.
* Average daily debt of approximately $168 million for the fourth
quarter of 2009, which is within the Company's previously
disclosed range of $150 to $175 million. Average daily debt for
the fourth quarter of 2009 includes the impact of the purchase
of the Company's primary North America distribution facility for
approximately $31 million in October and the repurchase of 3
million shares of Brightpoint common stock for $15.5 million in
October.
* The Company estimates wireless devices handled to be
approximately 22 to 24 million units for the fourth quarter of
2009 and approximately 81 to 83 million units for fiscal year
2009, which is a reduction of approximately 5% from 2008. Global
sell-in for the wireless device industry in 2009 is estimated to
have declined by 7% to 10% from 2008. Therefore, the Company
believes it gained market share during 2009.
Please see the attached explanation and reconciled presentation of the preliminary estimates of certain results for the fourth quarter ended December 31, 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.
FOR FISCAL YEAR 2010, THE COMPANY PRELIMINARILY PLANS:
UNITS HANDLED:
For 2010, global sell-in for the wireless device industry is currently expected to grow by approximately 8% to 10%. The Company expects to outpace the global wireless device industry in terms of unit growth rate and plans for its year over year growth in wireless devices handled for 2010 to be higher than the top end of this range. Therefore, the Company plans to continue to gain market share in 2010.
GROSS MARGIN:
The Company currently plans annual combined gross margin to be between 8.4% and 8.6% for 2010. Combined gross margin is anticipated to vary from quarter to quarter as the Company plans for seasonality to have a more pronounced impact on demand than in 2009.
(1) All expected amounts assume current levels of foreign currency
exchange rates.
(2) Planned other SG&A expense in 2010 includes approximately $2
million to $4 million of redundant costs as the Company
continues to implement its strategy for developing Centers of
Excellence and a Shared Service Center in Europe throughout
2010. The Company expects to open one or two tier 1 Centers of
Excellence (supply chain delivery centers) during 2010. The
Company will incur redundant costs while operations are
transitioned from current locations to these new fully
operational sites. Additionally, the Company continues to
centralize many business support (or back office) functions in
Europe to a Shared Services Center. The Company will incur
certain redundant costs during the period that processes are
transitioned from the local entities to the Shared Services
Center. The Company will also continue to restructure its
Europe operations through the first half of 2010. The Company
expects its continued investment in Europe should result in
achieving its previously stated operating margin goal of at
least 2.5% and a return on invested capital of 12% to 15% for
its European, Middle East and Africa region in 2011.
(3) Planned stock based compensation expense for 2010 includes the
impact of a recently approved key employee retention program.
(4) Planned interest expense assumes current interest rates on our
outstanding debt remain stable.
(5) Planned effective income tax rate does not contemplate any
unexpected material changes in valuation allowances.
(6) Planned other SG&A expense for 2010 will include approximately
$14 million of incremental impact of certain costs that were
avoided in 2009. In 2009, the Company suspended first half
staff bonuses, full year merit increases, executive cash
bonuses, and temporarily held down spending on other expenses
such as travel and marketing. The majority of the reductions
in spending due to cost avoidance were reflected in the
Company's 2009 results of operations as a decrease in selling,
general, and administrative expenses. The remaining cost
avoidance reductions in spending were reflected in cost of
sales.
Retention
1. Term of Employment . Subject to the provisions of Section 7 of this Agreement, Executive shall be employed by the Company, International Transmission Company and any of their subsidiaries and/or affiliates that the Board of Directors of the Company (the “ Board ”) shall designate (collectively, the “ Employer ”) for an initial period commencing on the Effective Date and ending on May 10, 2009 on the terms and subject to the conditions set forth in this Agreement; provided , however , that such period of employment shall automatically be extended for successive one-year periods unless the Employer or Executive, at least thirty (30) days prior to the end of any such period, provides written notice to the other party of the intent not to extend such period of employment for any additional one-year period. For purposes of this Agreement, the term “ Employment Term ” shall mean the period of time during which Executive is employed by Employer under this Agreement.
2. Position .
a. During the Employment Term, Executive shall serve as the Employer’s . In such position, Executive shall have such duties and authority as the Chief Executive Officer of the Employer (the “ Chief Executive Officer ”) determines from time to time. If requested, Executive shall also serve as a member of the Board without additional compensation.
b. During the Employment Term, Executive will devote Executive’s full business time and best efforts to the performance of Executive’s duties hereunder and will not engage in any other business, profession or occupation for compensation or otherwise which would conflict or interfere with the rendition of such services either directly or indirectly, without the prior written consent of the Chief Executive Officer; provided that nothing herein shall preclude Executive, subject to the prior approval of the Chief Executive Officer, from
accepting appointment to or continue to serve on any board of directors or trustees of any business corporation or any charitable organization; provided in each case, and in the aggregate, that such activities do not conflict or interfere with the performance of Executive’s duties hereunder or conflict with Section 8 of this Agreement.
3. Base Salary . During the Employment Term, the Employer shall pay Executive a base salary at the annual rate of $___, payable in regular installments in accordance with the Employer’s normal payroll practices. Executive’s base salary shall be reviewed annually by the Board and Executive shall be entitled to such increases in Executive’s base salary, if any, as may be determined from time to time in the sole discretion of the Board. Executive’s annual base salary, as in effect from time to time, is hereinafter referred to as the “ Base Salary ”.
4. Annual Bonus . During the Employment Term, Executive shall be eligible to earn an annual bonus award in respect of each fiscal year of Employer (an “ Annual Bonus ”), payable upon the Employer’s achievement of certain performance targets established by the Board pursuant to the terms of an incentive compensation plan established by the Board (the “ Incentive Plan ”). Executive’s target Annual Bonus for each fiscal year of Employer shall be that percentage of the Executive’s Base Salary as the Board may establish from time to time (the “ Target Bonus ”), but shall generally be one hundred percent (100%) of Executive’s Base Salary. The foregoing notwithstanding, any Annual Bonus to which Executive is entitled shall be paid no later than two and a half (2-1/2) months after the later of the end of the fiscal or calendar year in which such Annual Bonus is no longer subject to a substantial risk of forfeiture (as defined under Code Section 409A and the regulations promulgated thereunder).
5. Employee Benefits and Perquisites; Business Expenses .
a. Employee Benefits . During the Employment Term, Executive shall be entitled to participate in the Employer’s employee benefit and retirement plans (the “ ITC Plans ”) as in effect from time to time as determined by the Board, which provide certain benefits (collectively the “ Employee Benefits ”) to Executive, including the following plans: (a) welfare benefit plans (including active medical, life, disability, flexible spending accounts and other related welfare plans); (b) fringe benefit plans (including education assistance and adoption assistance); (c) retiree welfare benefit plans (medical and life insurance); (d) qualified and non-qualified defined benefit and defined contribution plans; and (e) vacation plans (except that there shall be limitations set on the amount of vacation that Executive may carry forward from any given calendar year to the next), but excluding absence bank plans.
b. Perquisites . During the Employment Term, Executive shall also be entitled to receive such perquisites as are generally provided to executives of the Employer from time to time, as determined by the Board (or a compensation committee thereof).
c. Business Expenses . During the Employment Term, reasonable business expenses incurred by Executive in the performance of Executive’s duties hereunder shall be reimbursed by the Employer in accordance with the Employer’s policies; provided that such reimbursement shall in any event occur no later than ninety (90) days after the date on which an eligible business expense is incurred.
6. Equity Participation . Executive’s equity participation in the Company has been documented pursuant to some or all of the 2003 Stock Purchase and Option Plan for Key Employees of the Company and its Subsidiaries and the associated Management Stockholder’s Agreement, the Amended and Restated ITC Holdings Corp. 2006 Long Term Incentive Plan and the associated Amendment to Management Stockholder’s Agreement, and in one or more Stock Option, Restricted Stock Award and Sale Participation Agreements associated therewith, each as executed by the Executive, the Company, and its shareholders, as applicable (such documents, collectively, the “ Equity Documents ”). The Company and Executive each acknowledges that the terms and conditions of the aforementioned documents govern Executive’s acquisition, holding, sale or other disposition of Executive’s equity in the Company, and Executive’s and the Company’s rights with respect thereto.
7. Termination . Executive’s employment hereunder may be terminated by either party at any time and for any reason, subject to the applicable provisions of this Section 7; provided that Executive will be required to give the Employer at least 30 days advance written notice of any resignation of Executive’s employment; and provided , further , that the Employer will be required to give Executive at least ten (10) business days advance notice of a termination of Executive’s employment by the Employer without Cause (other than in the event of Executive’s Disability) (the “Company Notice Period”), unless the Employer provides Executive with a payment equal to the Base Salary that would otherwise be payable in respect of any portion of the Company Notice Period which the Employer elects to waive. Notwithstanding any other provision of this Agreement (and except as may otherwise be provided in the Equity Documents), the provisions of this Section 7 shall exclusively govern Executive’s rights upon termination of employment with the Employer.
Brightpoint had a 2009 revenue of $3.2 billion. With 3,269 employees and 25,000 customers in more than 25 countries, Brightpoint handled 84 million wireless devices globally[2] in 2009.
Brightpoint's services include distribution, channel development, product customization, E-Business solutions, and other outsourced services that integrate with its customers.
In both 2007 and 2009, Brightpoint was selected as one of America's Most Admired Companies by FORTUNE Magazine, ranking in the top 5 of the "Wholesalers: Electronics" category each year.
* Income from continuing operations on a GAAP basis of
approximately $0.22 to $0.26 per diluted share. Income from
continuing operations on a GAAP basis includes a gain of
approximately $7.7 million, or approximately $0.10 per diluted
share, related to the settlement of an indemnification claim
with NC Telecom Holding A/S in October 2009.
* Adjusted (non-GAAP) income from continuing operations, excluding
stock based compensation expense, amortization, restructuring
charge and gain on indemnification of approximately $0.13 to
$0.18 per diluted share.
* Average daily debt of approximately $168 million for the fourth
quarter of 2009, which is within the Company's previously
disclosed range of $150 to $175 million. Average daily debt for
the fourth quarter of 2009 includes the impact of the purchase
of the Company's primary North America distribution facility for
approximately $31 million in October and the repurchase of 3
million shares of Brightpoint common stock for $15.5 million in
October.
* The Company estimates wireless devices handled to be
approximately 22 to 24 million units for the fourth quarter of
2009 and approximately 81 to 83 million units for fiscal year
2009, which is a reduction of approximately 5% from 2008. Global
sell-in for the wireless device industry in 2009 is estimated to
have declined by 7% to 10% from 2008. Therefore, the Company
believes it gained market share during 2009.
Please see the attached explanation and reconciled presentation of the preliminary estimates of certain results for the fourth quarter ended December 31, 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.
FOR FISCAL YEAR 2010, THE COMPANY PRELIMINARILY PLANS:
UNITS HANDLED:
For 2010, global sell-in for the wireless device industry is currently expected to grow by approximately 8% to 10%. The Company expects to outpace the global wireless device industry in terms of unit growth rate and plans for its year over year growth in wireless devices handled for 2010 to be higher than the top end of this range. Therefore, the Company plans to continue to gain market share in 2010.
GROSS MARGIN:
The Company currently plans annual combined gross margin to be between 8.4% and 8.6% for 2010. Combined gross margin is anticipated to vary from quarter to quarter as the Company plans for seasonality to have a more pronounced impact on demand than in 2009.
(1) All expected amounts assume current levels of foreign currency
exchange rates.
(2) Planned other SG&A expense in 2010 includes approximately $2
million to $4 million of redundant costs as the Company
continues to implement its strategy for developing Centers of
Excellence and a Shared Service Center in Europe throughout
2010. The Company expects to open one or two tier 1 Centers of
Excellence (supply chain delivery centers) during 2010. The
Company will incur redundant costs while operations are
transitioned from current locations to these new fully
operational sites. Additionally, the Company continues to
centralize many business support (or back office) functions in
Europe to a Shared Services Center. The Company will incur
certain redundant costs during the period that processes are
transitioned from the local entities to the Shared Services
Center. The Company will also continue to restructure its
Europe operations through the first half of 2010. The Company
expects its continued investment in Europe should result in
achieving its previously stated operating margin goal of at
least 2.5% and a return on invested capital of 12% to 15% for
its European, Middle East and Africa region in 2011.
(3) Planned stock based compensation expense for 2010 includes the
impact of a recently approved key employee retention program.
(4) Planned interest expense assumes current interest rates on our
outstanding debt remain stable.
(5) Planned effective income tax rate does not contemplate any
unexpected material changes in valuation allowances.
(6) Planned other SG&A expense for 2010 will include approximately
$14 million of incremental impact of certain costs that were
avoided in 2009. In 2009, the Company suspended first half
staff bonuses, full year merit increases, executive cash
bonuses, and temporarily held down spending on other expenses
such as travel and marketing. The majority of the reductions
in spending due to cost avoidance were reflected in the
Company's 2009 results of operations as a decrease in selling,
general, and administrative expenses. The remaining cost
avoidance reductions in spending were reflected in cost of
sales.
Retention
1. Term of Employment . Subject to the provisions of Section 7 of this Agreement, Executive shall be employed by the Company, International Transmission Company and any of their subsidiaries and/or affiliates that the Board of Directors of the Company (the “ Board ”) shall designate (collectively, the “ Employer ”) for an initial period commencing on the Effective Date and ending on May 10, 2009 on the terms and subject to the conditions set forth in this Agreement; provided , however , that such period of employment shall automatically be extended for successive one-year periods unless the Employer or Executive, at least thirty (30) days prior to the end of any such period, provides written notice to the other party of the intent not to extend such period of employment for any additional one-year period. For purposes of this Agreement, the term “ Employment Term ” shall mean the period of time during which Executive is employed by Employer under this Agreement.
2. Position .
a. During the Employment Term, Executive shall serve as the Employer’s . In such position, Executive shall have such duties and authority as the Chief Executive Officer of the Employer (the “ Chief Executive Officer ”) determines from time to time. If requested, Executive shall also serve as a member of the Board without additional compensation.
b. During the Employment Term, Executive will devote Executive’s full business time and best efforts to the performance of Executive’s duties hereunder and will not engage in any other business, profession or occupation for compensation or otherwise which would conflict or interfere with the rendition of such services either directly or indirectly, without the prior written consent of the Chief Executive Officer; provided that nothing herein shall preclude Executive, subject to the prior approval of the Chief Executive Officer, from
accepting appointment to or continue to serve on any board of directors or trustees of any business corporation or any charitable organization; provided in each case, and in the aggregate, that such activities do not conflict or interfere with the performance of Executive’s duties hereunder or conflict with Section 8 of this Agreement.
3. Base Salary . During the Employment Term, the Employer shall pay Executive a base salary at the annual rate of $___, payable in regular installments in accordance with the Employer’s normal payroll practices. Executive’s base salary shall be reviewed annually by the Board and Executive shall be entitled to such increases in Executive’s base salary, if any, as may be determined from time to time in the sole discretion of the Board. Executive’s annual base salary, as in effect from time to time, is hereinafter referred to as the “ Base Salary ”.
4. Annual Bonus . During the Employment Term, Executive shall be eligible to earn an annual bonus award in respect of each fiscal year of Employer (an “ Annual Bonus ”), payable upon the Employer’s achievement of certain performance targets established by the Board pursuant to the terms of an incentive compensation plan established by the Board (the “ Incentive Plan ”). Executive’s target Annual Bonus for each fiscal year of Employer shall be that percentage of the Executive’s Base Salary as the Board may establish from time to time (the “ Target Bonus ”), but shall generally be one hundred percent (100%) of Executive’s Base Salary. The foregoing notwithstanding, any Annual Bonus to which Executive is entitled shall be paid no later than two and a half (2-1/2) months after the later of the end of the fiscal or calendar year in which such Annual Bonus is no longer subject to a substantial risk of forfeiture (as defined under Code Section 409A and the regulations promulgated thereunder).
5. Employee Benefits and Perquisites; Business Expenses .
a. Employee Benefits . During the Employment Term, Executive shall be entitled to participate in the Employer’s employee benefit and retirement plans (the “ ITC Plans ”) as in effect from time to time as determined by the Board, which provide certain benefits (collectively the “ Employee Benefits ”) to Executive, including the following plans: (a) welfare benefit plans (including active medical, life, disability, flexible spending accounts and other related welfare plans); (b) fringe benefit plans (including education assistance and adoption assistance); (c) retiree welfare benefit plans (medical and life insurance); (d) qualified and non-qualified defined benefit and defined contribution plans; and (e) vacation plans (except that there shall be limitations set on the amount of vacation that Executive may carry forward from any given calendar year to the next), but excluding absence bank plans.
b. Perquisites . During the Employment Term, Executive shall also be entitled to receive such perquisites as are generally provided to executives of the Employer from time to time, as determined by the Board (or a compensation committee thereof).
c. Business Expenses . During the Employment Term, reasonable business expenses incurred by Executive in the performance of Executive’s duties hereunder shall be reimbursed by the Employer in accordance with the Employer’s policies; provided that such reimbursement shall in any event occur no later than ninety (90) days after the date on which an eligible business expense is incurred.
6. Equity Participation . Executive’s equity participation in the Company has been documented pursuant to some or all of the 2003 Stock Purchase and Option Plan for Key Employees of the Company and its Subsidiaries and the associated Management Stockholder’s Agreement, the Amended and Restated ITC Holdings Corp. 2006 Long Term Incentive Plan and the associated Amendment to Management Stockholder’s Agreement, and in one or more Stock Option, Restricted Stock Award and Sale Participation Agreements associated therewith, each as executed by the Executive, the Company, and its shareholders, as applicable (such documents, collectively, the “ Equity Documents ”). The Company and Executive each acknowledges that the terms and conditions of the aforementioned documents govern Executive’s acquisition, holding, sale or other disposition of Executive’s equity in the Company, and Executive’s and the Company’s rights with respect thereto.
7. Termination . Executive’s employment hereunder may be terminated by either party at any time and for any reason, subject to the applicable provisions of this Section 7; provided that Executive will be required to give the Employer at least 30 days advance written notice of any resignation of Executive’s employment; and provided , further , that the Employer will be required to give Executive at least ten (10) business days advance notice of a termination of Executive’s employment by the Employer without Cause (other than in the event of Executive’s Disability) (the “Company Notice Period”), unless the Employer provides Executive with a payment equal to the Base Salary that would otherwise be payable in respect of any portion of the Company Notice Period which the Employer elects to waive. Notwithstanding any other provision of this Agreement (and except as may otherwise be provided in the Equity Documents), the provisions of this Section 7 shall exclusively govern Executive’s rights upon termination of employment with the Employer.