UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

1-12845
(Commission File no.)

 

Brightpoint, Inc.

(Exact name of registrant as specified in its charter)

Indiana		35-1778566
State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization
7635 Interactive Way, Suite 200, Indianapolis, Indiana		46278
(Address of principal executive offices)		(Zip Code)

(317) 707-2355

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). o Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer, or a smaller reporting company. See definition of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o		Accelerated filer þ		Non-accelerated filer o		Smaller reporting company o
				(Do not check if a smaller reporting company)

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes o No þ

The number of shares of Common Stock outstanding as of November 1, 2010: 67,437,303

 

 

Brightpoint, Inc.
Consolidated Statements of Operations
(Amounts in thousands, except per share data)
(Unaudited)

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2010				2009				2010				2009
Revenue
Distribution revenue		$	808,937			$	770,617			$	2,236,385			$	1,989,262
Logistic services revenue			80,092				95,050				236,550				272,799
Total revenue			889,029				865,667				2,472,935				2,262,061
Cost of revenue
Cost of distribution revenue			773,676				737,240				2,133,649				1,909,796
Cost of logistic services revenue			38,867				55,349				119,622				158,767
Total cost of revenue			812,543				792,589				2,253,271				2,068,563
Gross profit			76,486				73,078				219,664				193,498
Selling, general and administrative expenses			57,407				53,057				167,760				152,108
Impairment of long-lived assets			—				1,452				—				1,452
Amortization expense			3,666				4,092				11,190				11,746
Restructuring charge			940				1,886				2,774				10,707
Operating income from continuing operations			14,473				12,591				37,940				17,485
Interest, net			1,667				2,043				5,363				6,765
Loss on legal settlement			852				—				852				—
Other income			(1,081	)			(94	)			(1,457	)			(1,401	)
Income from continuing operations before income taxes			13,035				10,642				33,182				12,121
Income tax expense (benefit)			1,598				(7,777	)			9,750				(7,318	)
Income from continuing operations			11,437				18,419				23,432				19,439
Discontinued operations, net of income taxes:
Loss from discontinued operations			(609	)			(7,627	)			(9,064	)			(10,222	)
Gain (loss) on disposal of discontinued operations			(1,023	)			378				(123	)			(953	)
Total discontinued operations, net of income taxes			(1,632	)			(7,249	)			(9,187	)			(11,175	)
Net income attributable to common shareholders		$	9,805			$	11,170			$	14,245			$	8,264
Earnings per share attributable to common shareholders — basic:
Income from continuing operations		$	0.16			$	0.23			$	0.33			$	0.24
Discontinued operations, net of income taxes			(0.02	)			(0.09	)			(0.13	)			(0.14	)
Net income		$	0.14			$	0.14			$	0.20			$	0.10
Earnings per share attributable to common shareholders - diluted:
Income from continuing operations		$	0.16			$	0.22			$	0.33			$	0.24
Discontinued operations, net of income taxes			(0.02	)			(0.09	)			(0.13	)			(0.14	)
Net income		$	0.14			$	0.13			$	0.20			$	0.10
Weighted average common shares outstanding:
Basic			68,724				81,215				69,674				81,172
Diluted			69,425				82,048				70,716				81,827

See accompanying notes

Brightpoint, Inc.
Consolidated Balance Sheets
(Amounts in thousands, except per share data)

		September 30,				December 31,
		2010				2009
		(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents		$	27,721			$	81,050
Accounts receivable (less allowance for doubtful accounts of $10,954 in 2010 and $12,205 in 2009)			413,728				382,973
Inventories			195,743				212,909
Other current assets			56,458				76,656
Total current assets			693,650				753,588
Property and equipment, net			83,903				82,328
Goodwill			54,092				51,877
Other intangibles, net			83,367				98,136
Other assets			17,019				28,062
Total assets		$	932,031			$	1,013,991
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	454,017			$	486,584
Accrued expenses			113,661				118,552
Current portion of long-term debt			7,125				—
Lines of credit and other short-term borrowings			3,059				—
Total current liabilities			577,862				605,136
Long-term liabilities:
Lines of credit, long-term			14,340				—
Long-term debt			87,777				97,017
Other long-term liabilities			26,608				34,911
Total long-term liabilities			128,725				131,928
Total liabilities			706,587				737,064
Commitments and contingencies
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; 90,351 issued in 2010 and 89,293 issued in 2009			904				893
Additional paid-in-capital			639,461				631,027
Treasury stock, at cost, 22,915 shares in 2010 and 10,309 shares in 2009			(164,233	)			(84,639	)
Retained deficit			(271,847	)			(286,092	)
Accumulated other comprehensive income			21,159				15,738
Total shareholders’ equity			225,444				276,927
Total liabilities and shareholders’ equity		$	932,031			$	1,013,991

Brightpoint, Inc.
Consolidated Statements of Cash Flows
(Amounts in thousands)
(Unaudited)

		Nine Months Ended
		September 30,
		2010				2009
Operating activities
Net income		$	14,245			$	8,264
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			25,700				26,540
Impairment of long-lived assets			—				1,452
Non-cash compensation			7,916				4,865
Restructuring charge			2,774				11,353
Change in deferred taxes			5,464				(18,148	)
Other non-cash			2,709				1,552
Changes in operating assets and liabilities, net of effects from acquisitions and divestitures:
Accounts receivable			(27,012	)			174,370
Inventories			14,068				117,523
Other operating assets			18,803				1,244
Accounts payable and accrued expenses			(41,297	)			(216,253	)
Net cash provided by operating activities			23,370				112,762
Investing activities
Capital expenditures			(16,148	)			(14,621	)
Acquisitions, net of cash acquired			(2,065	)			—
Decrease (increase) in other assets			576				(1,094	)
Net cash used in investing activities			(17,637	)			(15,715	)
Financing Activities
Net proceeds from (repayments on) lines of credit			16,476				(537	)
Repayments on Global Term Loans			—				(75,752	)
Proceeds from short-term financing			815				—
Deferred financing costs paid			(16	)			(392	)
Purchase of treasury stock			(79,594	)			(1,349	)
Deficient tax benefit from equity based compensation			(848	)			(1,035	)
Proceeds from common stock issuances under employee stock option plans			1,291				216
Net cash used in financing activities			(61,876	)			(78,849	)
Effect of exchange rate changes on cash and cash equivalents			2,814				4,835
Net increase (decrease) in cash and cash equivalents			(53,329	)			23,033
Cash and cash equivalents at beginning of period			81,050				57,226
Cash and cash equivalents at end of period		$	27,721			$	80,259

See accompanying notes

Brightpoint, Inc.
Notes to Consolidated Financial Statements
(Unaudited)

1. Basis of Presentation

General

The accompanying unaudited Consolidated Financial Statements have been prepared in conformity with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Act of 1934. Accordingly, they do not include all of the information and footnotes necessary for fair presentation of financial position, results of operations and cash flows in conformity with U.S. generally accepted accounting principles. Operating results from interim periods are not necessarily indicative of results that may be expected for the fiscal year as a whole. The Company is subject to seasonal patterns that generally affect the wireless device industry. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates, but management does not believe such differences will materially affect Brightpoint, Inc.’s financial position or results of operations. The Consolidated Financial Statements reflect all adjustments considered, in the opinion of management, necessary to fairly present the results for the periods. Such adjustments are of a normal recurring nature.

For further information, including the Company’s significant accounting policies, refer to the audited Consolidated Financial Statements and the notes thereto for the year ended December 31, 2009. As used herein, the terms “Brightpoint”, “Company”, “we”, “our” and “us” mean Brightpoint, Inc. and its consolidated subsidiaries.

Earnings Per Share

Basic earnings per share is based on the weighted average number of common shares outstanding during each period, and diluted earnings per share is based on the weighted average number of common shares and dilutive common share equivalents outstanding during each period. The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations (in thousands, except per share data):

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2010				2009				2010				2009
Income from continuing operations attributable to common shareholders		$	11,437			$	18,419			$	23,432			$	19,439
Discontinued operations, net of income taxes			(1,632	)			(7,249	)			(9,187	)			(11,175	)
Net income attributable to common shareholders		$	9,805			$	11,170			$	14,245			$	8,264
Earnings per share — basic:
Income from continuing operations attributable to common shareholders		$	0.16			$	0.23			$	0.33			$	0.24
Discontinued operations, net of income taxes			(0.02	)			(0.09	)			(0.13	)			(0.14	)
Net income attributable to common shareholders		$	0.14			$	0.14			$	0.20			$	0.10
Earnings per share — diluted:
Income from continuing operations attributable to common shareholders		$	0.16			$	0.22			$	0.33			$	0.24
Discontinued operations, net of income taxes			(0.02	)			(0.09	)			(0.13	)			(0.14	)
Net income attributable to common shareholders		$	0.14			$	0.13			$	0.20			$	0.10
Weighted average shares outstanding for basic earnings per share			68,724				81,215				69,674				81,172
Net effect of dilutive share options, restricted share units, and restricted shares based on the treasury share method using average market price			701				833				1,042				655
Weighted average shares outstanding for diluted earnings per share			69,425				82,048				70,716				81,827

Recently Issued Accounting Pronouncements

In October 2009, the FASB issued ASC update No. 2009-13, Revenue Recognition, (“ASC Update No. 2009-13”), which addresses the accounting for multiple-deliverable arrangements to enable vendors to account for products or services (deliverables) separately rather than as a combined unit. Specifically, the guidance amends the criteria in FASB ASC Subtopic 605-25, Revenue Recognition-Multiple-Element Arrangements, for separating consideration in multiple-deliverable arrangements. The guidance establishes a selling price hierarchy for determining the selling price of a deliverable, which is based on: (a) vendor-specific objective evidence; (b) third-party evidence; or (c) estimates. The guidance also eliminates the residual method of allocation and requires that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method. In addition, the guidance significantly expands required disclosures related to a vendor’s multiple-deliverable revenue arrangements. ASC Update No. 2009-13 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. The adoption of ASC Update No. 2009-13 is not expected to have a material impact on the Company’s consolidated financial statements.

In June 2009, the FASB issued SFAS No. 166, Accounting for Transfers of Financial Assets, which was codified under ASC update No. 2009-16, Transfers and Servicing, (“ASC Update No. 2009-16”). The update amended ASC Topic 860 to improve the disclosures that a reporting entity provides in its financial reports about a transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferor’s continuing involvement in transferred financial assets. This update is effective January 1, 2010 and must be applied to transfers occurring on or after the effective date. The pronouncement had no effect on the Company’s consolidated financial statements.

Other Comprehensive Income (Loss)

The components of comprehensive income (loss) for the three and nine months ended September 30, 2010 and 2009 are as follows (in thousands, net of tax):

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2010				2009				2010				2009
Net income attributable to common shareholders		$	9,805			$	11,170			$	14,245			$	8,264
Unrealized gain on derivative instruments:
Net gain (loss) arising during period			2,084				(64	)			1,977				604
Reclassification adjustment for losses included in net income			—				64				—				(65	)
Pension benefit obligation			—				—				—				(248	)
Foreign currency translation:
Net gain arising during period			21,787				9,906				2,450				20,278
Reclassification adjustment for gains included in net income			(1,022	)			242				994				(1,441	)
Comprehensive income		$	32,654			$	21,318			$	19,666			$	27,392

Derivative Instruments and Hedging Activities

The Company is exposed to certain risks related to its ongoing business activities. The primary risks managed by the use of derivative instruments are interest rate risk and foreign currency fluctuation risk. Interest rate swaps are entered into in order to manage interest rate risk associated with the Company’s variable rate borrowings. Forward contracts are entered into to manage the foreign currency risk associated with various commitments arising from trade accounts receivable, trade accounts payable and fixed purchase obligations. The Company holds the following types of derivatives at September 30, 2010 that have been designated as hedging instruments:

Derivative		Risk Being Hedged
Interest rate swaps		Cash flows of interest payments on variable rate debt
Forward foreign currency contracts		Cash flows of forecasted inventory purchases denominated in foreign currency

Derivatives are held only for the purpose of hedging such risks, not for speculation. Generally, the Company enters into hedging relationships such that the cash flows of items and transactions being hedged are expected to be offset by corresponding changes in the values of the derivatives. At September 30, 2010, a hedging relationship exists related to $50.0 million of the Company’s variable rate debt. These swaps are accounted for as cash flow hedges. These interest rate swap transactions effectively lock in a fixed interest rate for variable rate interest payments that are expected to be made from October 1, 2010 through January 31, 2012. Under the terms of the swaps, the Company will pay a fixed rate and will receive a variable rate based on the three month USD LIBOR rate plus a credit spread. The unrealized gain associated with the effective portion of the interest rate swaps included in other comprehensive income was $0.2 million and $0.5 million for the three and nine months ended September 30, 2010.

The Company enters into foreign currency forward contracts with the objective of reducing exposure to cash flow volatility from foreign currency fluctuations associated with anticipated purchases of inventory. Certain of these contracts are accounted for as cash flow hedges. The unrealized gain associated with the effective portion of these contracts included in other comprehensive income was approximately $1.9 million and $1.5 million for the three and nine months ended September 30, 2010, all of which is expected to be reclassified into earnings within the next 12 months.

The fair value of interest rate swaps in the Consolidated Balance Sheets is a liability of $2.6 million. The fair value of the interest rate swap maturing within one year is included in “Accrued expenses” in the Consolidated Balance Sheets. The fair value of the interest rate swap maturing after one year is included in “Other long-term liabilities” in the Consolidated Balance Sheets. The fair value of forward foreign currency contracts for forecasted inventory purchases denominated in foreign currency is an asset of $2.6 million included in “Other current assets” in the Consolidated Balance Sheets as well as a liability of $1.1 million included in “Accrued expenses” in the Consolidated Balance Sheets.

Fair Value of Financial Instruments

The carrying amounts at September 30, 2010 and December 31, 2009, of cash and cash equivalents, accounts receivable, other current assets, accounts payable, and accrued expenses approximate their fair values because of the short maturity of those instruments. The carrying amount at September 30, 2010 and December 31, 2009 of the Company’s borrowings approximate their fair value because these borrowings bear interest at a variable (market) rate.

The Company utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value of certain financial assets and financial liabilities into three broad levels. As of September 30, 2010 and December 31, 2009, the Company classified its financial assets and financial liabilities as Level 2. The financial assets and liabilities were measured using quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

The following table summarizes the bases used to measure certain financial assets and financial liabilities at fair value on a recurring basis in the balance sheet (in thousands):

		Balance at				Quoted prices in				Significant other
		September 30,				active markets				observable inputs
		2010				(Level 1)				(Level 2)
Financial instruments classified as assets
Forward foreign currency contracts		$	2,565			$	—			$	2,565
Financial instruments classified as liabilities
Interest rate swaps		$	2,563			$	—			$	2,563
Forward foreign currency contracts			1,115				—				1,115

		Balance at				Quoted prices in				Significant other
		December 31,				active markets				observable inputs
		2009				(Level 1)				(Level 2)
Financial instruments classified as assets
Forward foreign currency contracts		$	499			$	—			$	499
Financial instruments classified as liabilities
Interest rate swaps		$	3,417			$	—			$	3,417
Forward foreign currency contracts			469				—				469

2. Restructuring

The restructuring reserve balance as of December 31, 2009 was $6.0 million, which related to severance payments to be made as part of the global workforce reduction initiative included in the 2009 Spending and Debt Reduction Plan. The most significant reductions in the reserve were made in the Europe, Middle East and Africa (EMEA) division due to payments made related to the Company’s centralization and consolidation of services for the entities in that region. Reserve activity for the nine months ended September 30, 2010 for continuing operations is as follows (in thousands):

						Lease				Asset
		Employee				Termination				Impairment
		Terminations				Costs				Charges				Total
Balance at December 31, 2009		$	5,634			$	—			$	—			$	5,634
Restructuring charge			2,019				508				247				2,774
Cash usage			(4,041	)			(98	)			(247	)			(4,386	)
Foreign currency translation			(249	)			20				—				(229	)
Balance at September 30, 2010		$	3,363			$	430			$	—			$	3,793

Restructuring charge was $2.8 million for the nine months ended September 30, 2010. The restructuring charge consists of the following:

•

$2.0 million of severance charges in connection with additional workforce reduction that was included as part of the Company’s previously announced 2009 Spending and Debt Reduction Plan.

•

$0.8 million of charges related to the termination of operating leases and the impairment of equipment related to the consolidation of warehouse facilities in the EMEA division.

The Company continues to focus on optimizing the operating and financial structure of its EMEA division, which will result in additional opportunities to improve financial performance in this region. A main strategic component of this plan revolves around consolidating our current warehouse facilities and creating strategically located hubs or “Centers of Excellence” (supply chain delivery centers) to streamline operations. Additionally, the Company continues to centralize and migrate many business support (or back office) functions in the EMEA region into a Shared Services Center. Both of these initiatives could result in future reductions in workforce and early lease terminations that would result in additional restructuring charges.

3. Income Taxes

Income tax expense was $1.6 million and $9.8 million for the three and nine months ended September 30, 2010 compared to income tax benefit of $7.8 million and $7.3 million for the same periods in the prior year.

Income tax expense for the three months ended September 30, 2010 included $0.9 million of income tax benefit related to income tax return to provision adjustments and $0.6 million of tax benefit related to the reversal of a valuation allowance on deferred tax assets that are now expected to be utilized.

Income tax expense for the nine months ended September 30, 2010 included $0.8 million of income tax expense related to valuation allowances on deferred tax assets resulting from previous net operating losses in certain countries that are no longer expected to be utilized, $0.2 million of other income tax expense related to income tax return to provision adjustments and other discrete income tax expenses, and $0.6 million of tax benefit related to the reversal of a valuation allowance on deferred tax assets that are now expected to be utilized.

Excluding these benefits, the effective income tax rate for the three and nine months ended September 30, 2010 was 23.4% and 27.9%. The decrease in the effective income tax rate for the three months as compared to the nine months ended September 30, 2010 was caused by an adjustment to the expected tax rate for the full year. Our expected annual effective tax rate for 2010 is lower than previously estimated due to a higher mix of business in lower tax jurisdictions. Weighted average income tax rates for 2010 are approximately 20% for the EMEA region and approximately 21% for the Asia-Pacific region. Additionally, taxable income generated in the United States is reduced by deductible expenses from our Corporate headquarters.

4. Discontinued Operations

The consolidated statements of operations reflect the reclassification of the results of operations of the Company’s operations in Italy and France to discontinued operations for all periods presented in accordance with U.S. generally accepted accounting principles. The Company abandoned its Italy operation in the first quarter of 2010 and its France operation in the third quarter of 2009. There were no material impairments of tangible or intangible assets related to these discontinued operations. Discontinued operations for the three and nine months ended September 30, 2010 and 2009 are as follows (in thousands):

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2010				2009				2010				2009
Revenue		$	243			$	6,113			$	1,041			$	43,927
Loss from discontinued operations before income taxes		$	(609	)		$	(7,008	)		$	(9,029	)		$	(10,232	)
Income tax expense (benefit)			—				619				35				(10	)
Loss from discontinued operations		$	(609	)		$	(7,627	)		$	(9,064	)		$	(10,222	)
Gain (loss) on disposal from discontinued operations (1)			(1,023	)			378				(123	)			(953	)
Total discontinued operations, net of income taxes		$	(1,632	)		$	(7,249	)		$	(9,187	)		$	(11,175	)

5. Borrowings

At September 30, 2010, the Company and its subsidiaries were in compliance with the covenants in each of their credit agreements. Interest expense includes interest on outstanding debt, charges for accounts receivable factoring programs, fees paid for unused capacity on credit lines and amortization of deferred financing fees.

The table below summarizes the borrowing capacity that was available to the Company as of September 30, 2010 (in thousands):

										Letters of Credit &				Net
		Gross Availability				Outstanding				Guarantees				Availability
Global Term Loans		$	94,902			$	94,902			$	—			$	—
Global Credit Facility			300,000				13,816				862				285,322
Other			46,500				3,583				—				42,917
Total		$	441,402			$	112,301			$	862			$	328,239

The Company had $2.3 million of guarantees that do not impact the Company’s net availability.

The Company has no required principal payments on its Global Term Loans until September 2011.

Additional details on the above available borrowings are discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009.

6. Guarantees

Guarantees are recorded at fair value and disclosed, even when the likelihood of making any payments under such guarantees is remote.

The Company has issued certain guarantees on behalf of its subsidiaries and affiliates with regard to lines of credit. The nature of these guarantees and the amounts outstanding are described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009.

The Company has entered into indemnification agreements with its officers and directors, to the extent permitted by law, pursuant to which the Company has agreed to reimburse its officers and directors for legal expenses in the event of certain litigation and regulatory matters. The terms of these indemnification agreements provide for no limitation to the maximum potential future payments. The Company has a directors and officers insurance policy that may, in certain instances, mitigate the potential liability and payments.

7. Operating Segments

The Company has operation centers and/or sales offices in various countries including Australia, Austria, Belgium, Colombia, Denmark, El Salvador, Finland, Germany, Guatemala, Hong Kong, India, the Netherlands, New Zealand, Norway, Portugal, Singapore, Slovakia, South Africa, Spain, Sweden, Switzerland, the United Arab Emirates, the United Kingdom and the United States. All of the Company’s operating entities generate revenue from the provision of logistic services and/or the distribution of wireless devices and accessories. The Company identifies its reportable segments based on management responsibility of its three geographic divisions: the Americas, Asia-Pacific, and EMEA. The Company’s operating components have been aggregated into these three geographic reporting segments.

The Company evaluates the performance of and allocates resources to these segments based on income from continuing operations before income taxes (excluding corporate selling, general and administrative expenses and other unallocated expenses). A summary of the Company’s continuing operations by segment is presented below (in thousands) for the three and nine months ended September 30, 2010 and 2009:

														Corporate and
Three Months Ended September 30, 2010:		Americas				Asia-Pacific				EMEA				Reconciling Items				Total
Distribution revenue		$	102,816			$	257,456			$	448,665			$	—			$	808,937
Logistic services revenue			52,137				11,418				16,537				—				80,092
Total revenue from external customers		$	154,953			$	268,874			$	465,202			$	—			$	889,029
Income (loss) from continuing operations before income taxes		$	11,893			$	8,420			$	4,371			$	(11,649	)		$	13,035
Depreciation and amortization			2,584				296				4,863				464				8,207
Capital expenditures			2,915				129				2,300				1,116				6,460
Three Months Ended September 30, 2009:
Distribution revenue		$	114,341			$	254,030			$	402,246			$	—			$	770,617
Logistic services revenue			47,794				8,016				39,240				—				95,050
Total revenue from external customers		$	162,135			$	262,046			$	441,486			$	—			$	865,667
Income (loss) from continuing operations before income taxes		$	12,929			$	8,543			$	(2,256	)		$	(8,574	)		$	10,642
Depreciation and amortization			3,857				319				5,326				443				9,945
Capital expenditures			1,946				984				2,476				334				5,740
Nine Months Ended September, 30 2010:
Distribution revenue		$	299,545			$	682,482			$	1,254,358			$	—			$	2,236,385
Logistic services revenue			159,252				26,621				50,677				—				236,550
Total revenue from external customers		$	458,797			$	709,103			$	1,305,035			$	—			$	2,472,935
Income (loss) from continuing operations before income taxes		$	36,138			$	18,836			$	10,124			$	(31,916	)		$	33,182
Depreciation and amortization			7,936				1,319				14,860				1,384				25,499
Capital expenditures			5,888				544				6,721				2,995				16,148
Nine Months Ended September 30, 2009:
Distribution revenue		$	328,180			$	617,665			$	1,043,417			$	—			$	1,989,262
Logistic services revenue			138,759				23,862				110,178				—				272,799
Total revenue from external customers		$	466,939			$	641,527			$	1,153,595			$	—			$	2,262,061
Income (loss) from continuing operations before income taxes		$	37,373			$	16,146			$	(14,019	)		$	(27,379	)		$	12,121
Depreciation and amortization			9,211				1,263				14,954				1,257				26,685
Capital expenditures			4,983				2,493				5,216				1,929				14,621

Additional segment information is as follows (in thousands):

		September 30,
Total segment assets:		2010				December 31, 2009
		(Unaudited)
Americas		$	222,761			$	244,103
Asia-Pacific			170,116				199,357
EMEA			523,852				550,258
Corporate			15,302				20,273
		$	932,031			$	1,013,991

8. Legal Proceedings and Contingencies

LN Eurocom

On September 11, 2008 LN Eurocom (“LNE”) filed a lawsuit in the City Court of Frederiksberg, Denmark against Brightpoint Smartphone A/S and Brightpoint International A/S, each a wholly-owned subsidiary of the Company (collectively, “Smartphone”). The lawsuit alleges that Smartphone breached a contract relating to call center services performed or to be performed by LNE. The total amount now claimed is approximately 13 million DKK (approximately $2.4 million as of September 30, 2010). Smartphone disputes this claim and intends to vigorously defend this matter.

Fleggaard group of companies

The former headquarters of Dangaard Telecom was located in premises rented from a member of the Fleggaard group of companies, which was a former shareholder of Dangaard Telecom. A fire in March 2006 caused by another tenant in the building destroyed the headquarters and Dangaard Telecom had to leave the building while awaiting renovation of its space. Because of Fleggaard’s failure to renovate the space, Dangaard Telecom terminated the lease. Fleggaard has disputed the lease termination and claimed $1.4 million in damages. On August 20, 2010, the trial court ruled that Fleggaard took measures to renovate the building within a reasonable time period, that Fleggaard was not in material breach of the lease and that Dangaard Telecom’s termination of the lease was not valid. Following the trial court’s ruling, the parties agreed to settle the lawsuit for the payment of approximately $0.9 million to Fleggaard.

Norwegian tax authorities

Dangaard Telecom’s subsidiary, Dangaard Telecom Norway AS Group, received notice from the Norwegian tax authorities regarding tax claims in connection with certain capital gains. The Norwegian tax authorities have claimed $2.7 million. Dangaard Telecom Norway AS Group has disputed this claim; however, the Norwegian Tax Authorities ruled against Dangaard Telecom Norway AS in April 2008. On February 3, 2009, the Norwegian Tax Authorities determined that the capital gains were within Brightpoint Norway’s core business and, therefore, that Brightpoint Norway was responsible for tax on the gain in the amount of 8.1 million NOK (approximately $1.4 million as of September 30, 2010). On February 19, 2010 the magistrate hearing the appeal ruled in favor of the Norwegian Tax Authorities. Brightpoint Norway has filed its appeal of this determination by the initiation of court proceedings to a higher authority. The former shareholders of Dangaard Telecom agreed to indemnify Dangaard Holding with respect to 80% of this claim when Dangaard Holding acquired Dangaard Telecom, and Dangaard Holding agreed in the purchase agreement with the Company to transfer and assign these indemnification rights to the Company (or enforce them on our behalf if such transfer or assignment is not permitted).

German tax authorities

Dangaard Telecom’s subsidiary, Dangaard Telecom Germany Holding GmbH, received notice from the German tax authorities regarding tax claims in connection with the deductibility of certain stock adjustments and various fees during the period 1998 to 2002. Dangaard Telecom Germany Holding GmbH agreed to pay part of the claim, and the current amount in dispute is $1.8 million. Dangaard Telecom Germany Holding GmbH continues to dispute this claim and intends to defend this matter vigorously. The former shareholders of Dangaard Telecom are obliged to indemnify Dangaard Holding with respect to any such tax claims. Due to the claim’s limited size, however, it will be below an agreed upon threshold, therefore the indemnification would not be activated by this claim if no other claims for indemnification have been or are asserted.

Sofaer Global Hedge Fund

In September 2009, Sofaer Global Hedge Fund (“Sofaer GHF”) filed a complaint against Brightpoint, Inc. and Brightpoint’s CEO Robert Laikin (“Laikin”) in the U.S. District Court in Indiana alleging that Laikin made materially false and misleading statements to Michael Sofaer (“Sofaer”), the head of Sofaer GHF. The central allegation is that Sofaer GHF reasonably and detrimentally relied upon Laikin’s statements in making a $10 million loan to Chinatron Group Holdings Ltd., a company that owed money to Brightpoint and in which John Maclean Arnott is the Managing Director. Sofaer GHF brought the action for damages resulting from Brightpoint’s alleged fraudulent misrepresentations and based upon their alleged detrimental reliance (promissory estoppel) upon these statements, from which Brightpoint is claimed to have benefited. The Company disputes these claims and intends to vigorously defend this matter.

Drillisch

On January 29, 2010, Drillisch AG (“Drillisch”) commenced litigation against Brightpoint Germany GmbH (“Brightpoint Germany”) with the Krefeld District Court seeking approximately EUR 1.8 million (approximately $2.5 million as of September 30, 2010) in damages. Drillisch claims Brightpoint Germany failed to provide Drillisch credits for Brightpoint Germany’s alleged failure to achieve certain outbound shipping service levels it claims Brightpoint Germany owed to it and several of its affiliates in connection with Brightpoint Germany’s performance of logistic services.

DiBardi/Bardi/Fortis

In July 2009, Fortis Commercial Finance, SPA (“Fortis”) commenced proceedings against Brightpoint Italy, Srl (“Brightpoint Italy”) in the Courts of Milan, Italy. Fortis sought a declaration of debt and an injunction decree requiring precautionary payment by Brightpoint Italy Srl in the amount of EUR 840,000 (approximately $1.1 million as of September 30, 2010). Fortis claims that Brightpoint Italy failed to pay amounts owed under a supply agreement with Di Bardi, Srl (“DiBardi”) and that this debt claim was then assigned by DeBardi to Fortis. In April 2010 the Courts of Milan ruled in favor of Fortis on its claim for precautionary payment ahead of a hearing on the merits. At the current time, Fortis’ claim for precautionary payment is fully enforceable against Brightpoint Italy but has not been paid. A hearing on the merits of the claim is scheduled for December 2010 and Brightpoint Italy intends to vigorously defend this matter.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

OVERVIEW AND RECENT DEVELOPMENTS

This discussion and analysis should be read in conjunction with the accompanying Consolidated Financial Statements and related notes. Our discussion and analysis of the financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in conformity with U.S. generally accepted accounting principles. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of any contingent assets and liabilities at the financial statement date and reported amounts of revenue and expenses during the reporting period. On an on-going basis we review our estimates and assumptions. Our estimates were based on our historical experience and various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ from those estimates but we do not believe such differences will materially affect our financial position or results of operations. Our critical accounting estimates, the estimates we believe are most important to the presentation of our financial statements and require the most difficult, subjective and complex judgments are outlined in our Annual Report on Form 10-K for the year ended December 31, 2009, and have not changed significantly. Certain statements made in this report may contain forward-looking statements. For a description of risks and uncertainties relating to such forward-looking statements, see the cautionary statements contained in Exhibit 99.1 to this report and our Annual Report on Form 10-K for the year ended December 31, 2009.

Brightpoint, Inc. is a global leader in providing supply chain solutions to leading stakeholders in the wireless industry. We provide customized logistic services including procurement, inventory management, software loading, kitting and customized packaging, fulfillment, credit services and receivables management, call center and activation services, website hosting, e-fulfillment solutions, reverse logistics, transportation management and other services within the global wireless industry. Our customers include mobile network operators, mobile virtual network operators (MVNOs), resellers, retailers and wireless equipment manufacturers. We provide value-added distribution channel management and other supply chain solutions for wireless products manufactured by companies such as Apple, High Tech Computer Corp., Kyocera, LG Electronics, Motorola, Nokia, Research in Motion, Samsung and Sony Ericsson. We have operations centers and/or sales offices in various countries including Australia, Austria, Belgium, Colombia, Denmark, El Salvador, Finland, Germany, Guatemala, Hong Kong, India, the Netherlands, New Zealand, Norway, Portugal, Singapore, Slovakia, South Africa, Spain, Sweden, Switzerland, the United Arab Emirates, the United Kingdom, and the United States.

Consolidated revenue for the three and nine months ended September 30, 2010 increased 3% and 9% compared to the same periods in the prior year. Consolidated revenue was $889.0 million and $2.5 billion for the three and nine months ended September 30, 2010. The increase was primarily driven by a 14% and 18% increase in wireless devices handled. Revenue also increased as a result of expanded distribution relationships with wireless device manufacturers in our EMEA and Asia-Pacific divisions. Foreign currency fluctuations had an unfavorable impact on revenue of $23.4 million for the three months ended September 30, 2010 and a favorable impact of $4.9 million for the nine months ended September 30, 2010 compared to the same periods in the prior year.

During the third quarter of 2010, we incurred $0.9 million of restructuring costs of which $0.6 were related to lease termination and asset impairment charges incurred due to the consolidation of warehouses in the EMEA division. The remaining $0.3 million of restructuring costs were related to the global workforce reduction plan that was included as part of the 2009 Spending and Debt Reduction Plan.

SG&A expenses totaled $57.4 million and $167.8 million for the three and nine months ended September 30, 2010, which is an increase of $4.4 million and $15.7 million from the same periods in the prior year. The primary reason for the increase in SG&A expenses is due to the reinstatement of previously avoided expenses that had been temporarily suspended as part of our 2009 Spending and Debt Reduction Plan. 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. SG&A expenses for accrued cash bonuses were $6.8 million and $14.4 million for the three and nine months ended September 30, 2010 compared to $2.4 million and $2.8 million in the same periods in the prior year. The increase in SG&A expenses is offset by $1.6 million of one-time bad debt charges in Europe recorded in the third quarter of 2009 that did not recur. SG&A expenses were reduced by $0.8 million and

increased by $4.2 million for the three and nine months ended September 30, 2010 compared to the same periods in the prior year due to fluctuations in foreign currencies.

		Three Months Ended September 30,
						% of								% of
		2010				Total				2009				Total				Change
		(Amounts in 000s)
Distribution revenue
Americas		$	102,816				13	%		$	114,341				15	%			(10	%)
Asia-Pacific			257,456				32	%			254,030				33	%			1	%
EMEA			448,665				55	%			402,246				52	%			12	%
Total		$	808,937				100	%		$	770,617				100	%			5	%
Logistic services revenue
Americas		$	52,137				65	%		$	47,794				50	%			9	%
Asia-Pacific			11,418				14	%			8,016				8	%			42	%
EMEA			16,537				21	%			39,240				42	%			(58	%)
Total		$	80,092				100	%		$	95,050				100	%			(16	%)
Total revenue
Americas		$	154,953				17	%		$	162,135				19	%			(4	%)
Asia-Pacific			268,874				30	%			262,046				30	%			3	%
EMEA			465,202				53	%			441,486				51	%			5	%
Total		$	889,029				100	%		$	865,667				100	%			3	%

		Three Months Ended September 30,
						% of								% of
		2010				Total				2009				Total				Change
		(Amounts in 000s)
Wireless devices sold through distribution
Americas			682				13	%			724				13	%			(6	%)
Asia-Pacific			1,468				29	%			2,021				36	%			(27	%)
EMEA			2,919				58	%			2,855				51	%			2	%
Total			5,069				100	%			5,600				100	%			(9	%)
Wireless devices handled through logistic services
Americas			16,647				84	%			14,060				87	%			18	%
Asia-Pacific			1,007				5	%			726				4	%			39	%
EMEA			2,184				11	%			1,406				9	%			55	%
Total			19,838				100	%			16,192				100	%			23	%
Total wireless devices handled
Americas			17,329				70	%			14,784				68	%			17	%
Asia-Pacific			2,475				10	%			2,747				13	%			(10	%)
EMEA			5,103				20	%			4,261				19	%			20	%
Total			24,907				100	%			21,792				100	%			14	%

		Nine Months Ended September 30,
						% of								% of
		2010				Total				2009				Total				Change
		(Amounts in 000s)
Distribution revenue
Americas		$	299,545				13	%		$	328,180				16	%			(9	%)
Asia-Pacific			682,482				31	%			617,665				31	%			10	%
EMEA			1,254,358				56	%			1,043,417				53	%			20	%
Total		$	2,236,385				100	%		$	1,989,262				100	%			12	%
Logistic services revenue
Americas		$	159,252				67	%		$	138,759				51	%			15	%
Asia-Pacific			26,621				11	%			23,862				9	%			12	%
EMEA			50,677				22	%			110,178				40	%			(54	%)
Total		$	236,550				100	%		$	272,799				100	%			(13	%)
Total revenue
Americas		$	458,797				19	%		$	466,939				21	%			(2	%)
Asia-Pacific			709,103				28	%			641,527				28	%			11	%
EMEA			1,305,035				53	%			1,153,595				51	%			13	%
Total		$	2,472,935				100	%		$	2,262,061				100	%			9	%

		Nine Months Ended September 30,
						% of								% of
		2010				Total				2009				Total				Change
		(Amounts in 000s)
Wireless devices sold through distribution
Americas			1,952				14	%			2,229				16	%			(12	%)
Asia-Pacific			4,264				30	%			5,050				36	%			(16	%)
EMEA			7,879				56	%			6,572				48	%			20	%
Total			14,095				100	%			13,851				100	%			2	%
Wireless devices handled through logistic services
Americas			47,883				86	%			39,933				88	%			20	%
Asia-Pacific			2,302				4	%			1,764				4	%			30	%
EMEA			5,425				10	%			3,648				8	%			49	%
Total			55,610				100	%			45,345				100	%			23	%
Total wireless devices handled
Americas			49,835				71	%			42,162				71	%			18	%
Asia-Pacific			6,566				9	%			6,814				12	%			(4	%)
EMEA			13,304				20	%			10,220				17	%			30	%
Total			69,705				100	%			59,196				100	%			18	%

The following table presents the percentage changes in revenue for the three and nine months ended September 30, 2010 by service line compared to the same periods in the prior year, including the impact to revenue from changes in wireless devices handled, average selling price, non-handset based revenue and foreign currency.

		2010 Percentage Change in Revenue vs. 2009
										Non-								Total
		Wireless				Average				handset								Percentage
		devices				Selling				based				Foreign				Change in
		handled (1)				Price (2)				revenue (3)				Currency				Revenue
Three months ended September 30, 2010:
Distribution			(7	%)			18	%			(3	%)			(3	%)			5	%
Logistic services			7	%			(4	%)			(19	%)			0	%			(16	%)
Total			(6	%)			16	%			(4	%)			(3	%)			3	%
Nine months ended September 30, 2010:
Distribution			3	%			12	%			(3	%)			0	%			12	%
Logistic services			6	%			(4	%)			(16	%)			1	%			(13	%)
Total			4	%			10	%			(5	%)			0	%			9	%

Revenue and wireless devices handled by division:

Americas		Three Months Ended September 30,																				Nine Months Ended September 30,
						% of								% of												% of								% of
(Amounts in 000’s)		2010				Total				2009				Total				Change				2010				Total				2009				Total				Change
REVENUE:
Distribution		$	102,816				66	%		$	114,341				71	%			(10	%)		$	299,545				65	%		$	328,180				70	%			(9	%)
Logistic services			52,137				34	%			47,794				29	%			9	%			159,252				35	%			138,759				30	%			15	%
Total		$	154,953				100	%		$	162,135				100	%			(4	%)		$	458,797				100	%		$	466,939				100	%			(2	%)
WIRELESS DEVICES HANDLED:
Distribution			682				4	%			724				5	%			(6	%)			1,952				4	%			2,229				5	%			(12	%)
Logistic services			16,647				96	%			14,060				95	%			18	%			47,883				96	%			39,933				95	%			20	%
Total			17,329				100	%			14,784				100	%			17	%			49,835				100	%			42,162				100	%			18	%