UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) May 6, 2005
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BRIGHTPOINT, INC.
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(Exact Name of Registrant as Specified in Its Charter)
Indiana
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(State or Other Jurisdiction of Incorporation)
0-23494 35-1778566
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(Commission File Number) (IRS Employer Identification No.)
501 Airtech Parkway, Plainfield, Indiana 46168
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(Address of Principal Executive Offices) (Zip Code)
(317) 707-2355
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On May 6, 2005, in connection with the restatement of Brightpoint,
Inc.'s financial statements for the year ended and as of December 31, 2004, as
more fully described in Item 4.02 below, the Company's named executive officers,
on their own initiative, have decided to return to the Company a portion of the
bonuses previously paid to them with respect to fiscal 2004, in the aggregate
amount of approximately $1.0 million, as a result of financial targets relating
to the 2004 bonus plan no longer having been met based upon the restated
financial results. With respect to the returned bonuses, the named executive
officers will return to the Company amounts equal to the amounts which they
received net of withholding and other payroll taxes. The Company will recover
the amount of the withholding and other payroll taxes through adjustments in
subsequent reporting periods.
ITEM 4.02(a) NON-RELIANCE ON PREVIOUSLY ISSUED FINANCIAL STATEMENTS OR A
RELATED AUDIT REPORT OR COMPLETED INTERIM REVIEW.
On May 6, 2005, the management of the Company, the Company's Board of
Directors and the Audit Committee of the Company's Board of Directors concluded,
after a review of the pertinent facts, that the previously issued financial
statements contained in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2004 should not be relied upon because of errors in
those financial statements that relate to the Company's operations in France and
Australia. The Company has determined that it is necessary to restate its
financial statements included in its annual report on Form 10-K for the fiscal
year ended December 31, 2004 and expects to file an amended report on Form
10-K/A on or about May 9, 2005.
The Company's operations in France receive mobile operator commission,
subsidy, bonus and residual airtime revenues as a result of subscriber
activations or subscriber upgrades generated by the Company's network of
independent authorized retailers and the Company's directly owned retail stores.
Due to errors made in recording these transactions, the Company's operations in
France overstated revenue resulting in a related overstatement of accounts
receivable. In addition, certain other related adjustments were made in error,
which did not have an impact on net income, but resulted in an overall
understatement of accounts receivable and accounts payable during the year ended
December 31, 2004.
The Company's operations in Australia failed to identify and record
certain vendor rebates related to a 2004 vendor program. This error resulted in
an overstatement of cost of revenue and the understatement of vendor
receivables, that would have reduced accounts payable, resulting in an
overstatement of accounts payable in the 2004 financial statements.
The Company intends to correct the above accounting errors by
decreasing revenue $6.2 million and increasing costs of revenue $200 thousand
related to its operations in France and decreasing costs of revenue $1.7 million
related to its operations in Australia. These corrections relate to the year
ended December 31, 2004, with the exception of $968 thousand ($629 thousand, net
of tax) which relate to the year ended December 31, 2003, but will be included
in the restated results for December 31, 2004, based on materiality.
Additionally, bonuses previously paid to the named executive officers will be
returned to the Company by the named
executives on their own initiative. These bonuses, originally recorded in the
amount of $1.0 million, have been reflected as a reduction to selling, general
and administrative expenses in the restated results, as a result of bonus
targets relating to the 2004 bonus plan no longer having been met based upon the
restated financial results.
In addition, management of the Company intends to revise its assessment
of the effectiveness of the Company's internal control over financial reporting
as of December 31, 2004, originally included in Management's Report on Internal
Control Over Financial Reporting in the Company's annual report on Form 10-K
filed on February 3, 2005. In that report, management concluded that the
Company's internal control over financial reporting was effective as of December
31, 2004, notwithstanding the existence of significant deficiencies that were
deemed by the Company's management to not be material weaknesses. Subsequent to
filing its annual report on Form 10-K on February 3, 2005, the Company
identified the above-referenced errors in its 2004 financial statements.
Management has concluded that these errors resulted from material weaknesses in
internal control in the Company's operations in France and Australia.
The Company has implemented changes in procedures for the reporting of
mobile operator commissions, subsidies and bonuses in its France operations and
rebates earned on non-financial key performance metrics in its Australia
operations and believes that these changes will assure proper recognition of
these items. As part of the assessment of its internal controls over financial
reporting, the Company has initiated immediate changes in processes in our
France and Australia operations to correct the errors that occurred and to
reduce the likelihood that similar errors could occur in the future. In
addition, management of the Company, with the assistance of certain members of
the Board of Directors, is reviewing the regional financial organizational
structure, instituting new financial reporting and revenue recognition controls
at all Brightpoint locations, performing supplementary detailed monthly review
of accounts by regional and corporate management and executing more frequent
internal audits.
The Audit Committee, Company management and the Board of Directors of
the Company have discussed the decision to restate the Company's financial
statements with Ernst & Young LLP, the Company's independent registered public
accounting firm. The Company's management has also discussed with Ernst & Young
LLP its decision to restate management's report on internal control over
financial reporting.
The Company has issued a press release announcing the restatement of
its financial statements for the year ended December 31, 2004 and management's
decision to restate management's report on internal control over financial
reporting, which is annexed hereto as Exhibit 99.1 and is incorporated into this
report on Form 8-K by reference.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
99.1 Press Release dated May 6, 2005 announcing the Company's
Restatement of 2004 Financial Statements
99.2 Cautionary Statements
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)
By: /s/ Steven E. Fivel
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Steven E. Fivel
Executive Vice President and General Counsel
Date: May 6, 2005
INDEX TO EXHIBITS
Exhibit Description
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99.1 Press Release dated May 6, 2005 announcing
the Company's filing of an amended Form 10-K,
that its previously filed financial
statements for the year ended December 31,
2004 will be restated and that management has
concluded material weaknesses existed in the
Company's internal controls over financial
reporting.
99.2 Cautionary Statements