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 incorporation or organization		(I.R.S. Employer Identification No.)

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). þ 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 (Do not check if a smaller reporting company)		Smaller reporting company o

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 July 25, 2011: 68,194,235

 

 

PART 1 — FINANCIAL INFORMATION

Item 1. Financial Statements

Brightpoint, Inc.

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

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2011				2010				2011				2010
Revenue
Distribution revenue		$	1,091,985			$	713,079			$	2,076,638			$	1,427,448
Logistic services revenue			142,929				75,541				273,156				156,458
Total revenue			1,234,914				788,620				2,349,794				1,583,906
Cost of revenue
Cost of distribution revenue			1,050,405				679,235				2,001,034				1,359,974
Cost of logistic services revenue			91,382				38,385				169,104				80,754
Total cost of revenue			1,141,787				717,620				2,170,138				1,440,728
Gross profit
Distribution gross profit			41,580				33,844				75,604				67,474
Logistic services gross profit			51,547				37,156				104,052				75,704
Total gross profit			93,127				71,000				179,656				143,178
Selling, general and administrative expenses			69,462				53,697				135,109				110,353
Amortization expense			6,040				3,631				11,832				7,524
Restructuring charge			3,784				704				4,169				1,834
Operating income from continuing operations			13,841				12,968				28,546				23,467
Interest, net			4,360				1,906				7,325				3,696
Gain on investment in Intcomex, Inc.			(3,038	)			—				(3,038	)			—
Other expense (income)			220				(137	)			1,394				(376	)
Income from continuing operations before income taxes			12,299				11,199				22,865				20,147
Income tax expense			533				3,930				3,092				8,152
Income from continuing operations			11,766				7,269				19,773				11,995
Discontinued operations, net of income taxes:
Gain (loss) from discontinued operations			(860	)			(5,112	)			970				(8,455	)
Gain (loss) on disposal of discontinued operations			(232	)			835				(773	)			900
Total discontinued operations, net of income taxes			(1,092	)			(4,277	)			197				(7,555	)
Net income attributable to common shareholders		$	10,674			$	2,992			$	19,970			$	4,440
Earnings per share attributable to common shareholders — basic:
Income from continuing operations		$	0.18			$	0.10			$	0.30			$	0.17
Discontinued operations, net of income taxes			(0.02	)			(0.06	)			—				(0.11	)
Net income		$	0.16			$	0.04			$	0.30			$	0.06
Earnings per share attributable to common shareholders - diluted:
Income from continuing operations		$	0.18			$	0.10			$	0.29			$	0.17
Discontinued operations, net of income taxes			(0.02	)			(0.06	)			—				(0.11	)
Net income		$	0.16			$	0.04			$	0.29			$	0.06
Weighted average common shares outstanding:
Basic			67,833				69,662				67,644				70,168
Diluted			68,682				70,432				68,952				71,159

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

		June 30,				December 31,
		2011				2010
		(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents		$	23,816			$	41,658
Accounts receivable (less allowance for doubtful accounts of $9,460 in 2011 and $9,892 in 2010)			457,299				487,376
Inventories			344,958				311,804
Other current assets			58,378				75,068
Total current assets			884,451				915,906
Property and equipment, net			138,508				111,107
Goodwill			77,546				78,821
Other intangibles, net			117,252				122,122
Other assets			40,688				19,885
Total assets		$	1,258,445			$	1,247,841
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	655,656			$	744,995
Accrued expenses			149,283				140,191
Lines of credit and other short-term borrowings			3,747				408
Total current liabilities			808,686				885,594
Long-term liabilities:
Lines of credit, long-term			141,460				90,000
Other long-term liabilities			25,549				27,894
Total long-term liabilities			167,009				117,894
Total liabilities			975,695				1,003,488
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; 91,459 issued in 2011 and 90,354 issued in 2010			915				904
Additional paid-in-capital			650,687				641,895
Treasury stock, at cost, 23,222 shares in 2011 and 22,917 shares in 2010			(168,020	)			(164,242	)
Retained deficit			(236,004	)			(255,974	)
Accumulated other comprehensive income			35,172				21,770
Total shareholders’ equity			282,750				244,353
Total liabilities and shareholders’ equity		$	1,258,445			$	1,247,841

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

		Six Months Ended
		June 30,
		2011				2010
Operating activities
Net income		$	19,970			$	4,440
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization			22,789				17,491
Non-cash compensation			6,416				5,577
Restructuring charge			4,169				1,834
Change in deferred taxes			3,410				2,670
Gain on investment in Intcomex, Inc.			(3,038	)			—
Other non-cash			616				1,114
Changes in operating assets and liabilities, net of effects from acquisitions and divestitures:
Accounts receivable			47,874				45,778
Inventories			(25,414	)			18,313
Other operating assets			15,411				1,590
Accounts payable and accrued expenses			(111,249	)			(117,487	)
Net cash used in operating activities			(19,046	)			(18,680	)
Investing activities
Capital expenditures			(37,725	)			(9,686	)
Acquisitions, net of cash acquired			(16,420	)			—
Decrease (increase) in other assets			(518	)			292
Net cash used in investing activities			(54,663	)			(9,394	)
Financing Activities
Net proceeds from lines of credit			55,019				32,535
Repayments on short-term financing			(407	)			—
Deferred financing costs paid			(297	)			—
Purchase of treasury stock			(3,778	)			(63,487	)
Excess (deficient) tax benefit from equity based compensation			1,992				(518	)
Proceeds from common stock issuances under employee stock option plans			394				1,291
Net cash provided by (used in) financing activities			52,923				(30,179	)
Effect of exchange rate changes on cash and cash equivalents			2,944				(4,912	)
Net decrease in cash and cash equivalents			(17,842	)			(63,165	)
Cash and cash equivalents at beginning of period			41,658				81,050
Cash and cash equivalents at end of period		$	23,816			$	17,885

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, 2010. 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								Six Months Ended
		June 30,								June 30,
		2011				2010				2011				2010
Income from continuing operations attributable to common shareholders		$	11,766			$	7,269			$	19,773			$	11,995
Discontinued operations, net of income taxes			(1,092	)			(4,277	)			197				(7,555	)
Net income attributable to common shareholders		$	10,674			$	2,992			$	19,970			$	4,440
Earnings per share — basic:
Income from continuing operations attributable to common shareholders		$	0.18			$	0.10			$	0.30			$	0.17
Discontinued operations, net of income taxes			(0.02	)			(0.06	)			—				(0.11	)
Net income attributable to common shareholders		$	0.16			$	0.04			$	0.30			$	0.06
Earnings per share — diluted:
Income from continuing operations attributable to common shareholders		$	0.18			$	0.10			$	0.29			$	0.17
Discontinued operations, net of income taxes			(0.02	)			(0.06	)			—				(0.11	)
Net income attributable to common shareholders		$	0.16			$	0.04			$	0.29			$	0.06
Weighted average shares outstanding for basic earnings per share			67,833				69,662				67,644				70,168
Net effect of dilutive share options, restricted share units, and restricted shares based on the treasury share method using average market price			849				770				1,308				991
Weighted average shares outstanding for diluted earnings per share			68,682				70,432				68,952				71,159

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 (January 1, 2011 for the Company). The adoption of ASC Update No. 2009-13 did not have a material impact on the Company’s consolidated financial statements.

Other Comprehensive Income (Loss)

The components of comprehensive income (loss) for the three and six months ended June 30, 2011 and 2010 are as follows (in thousands, net of tax):

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2011				2010				2011				2010
Net income attributable to common shareholders		$	10,674			$	2,992			$	19,970			$	4,440
Unrealized gain on derivative instruments:
Net gain (loss) arising during period			(55	)			(700	)			797				(107	)
Pension benefit obligation:
Net gain arising during period			53				—				53				—
Reclassification adjustment for gains included in net income			204				—				204				—
Foreign currency translation:
Net gain (loss) arising during period			5,776				(14,214	)			15,216				(19,335	)
Reclassification adjustment for gains included in net income			(2,931	)			824				(2,868	)			2,016
Comprehensive income (loss)		$	13,721			$	(11,098	)		$	33,372			$	(12,986	)

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 held the following types of derivatives at June 30, 2011 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 June 30, 2011, a hedging relationship existed related to

$40.0 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 July 1, 2011 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 six months ended June 30, 2011.

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 loss associated with the effective portion of these contracts included in other comprehensive income was approximately $0.3 million for the three months ended June 30, 2011 and the unrealized gain was $0.3 million for the six months ended June 30, 2011, 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 Sheet as of June 30, 2011 is a liability of $1.2 million. The fair value of the interest rate swap maturing within one year is included in “Accrued expenses” in the Consolidated Balance Sheet. The fair value of forward foreign currency contracts for forecasted inventory purchases denominated in foreign currency as of June 30, 2011 is an asset of $1.1 million included in “Other current assets” in the Consolidated Balance Sheet as well as a liability of $0.4 million included in “Accrued expenses” in the Consolidated Balance Sheet.

Fair Value of Financial Instruments

The carrying amounts at June 30, 2011 and December 31, 2010, 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 June 30, 2011 and December 31, 2010 of the Company’s borrowings approximate their fair value because these borrowings bear interest at a variable (market) rate.

The Company uses 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 June 30, 2011 and December 31, 2010, 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):

						Quoted prices in				Significant other
		Balance at				active markets				observable inputs
		June 30, 2011				(Level 1)				(Level 2)
Financial instruments classified as assets
Forward foreign currency contracts		$	1,080			$	—			$	1,080
Financial instruments classified as liabilities
Interest rate swaps		$	1,204			$	—			$	1,204
Forward foreign currency contracts			402				—				402

						Quoted prices in				Significant other
		Balance at				active markets				observable inputs
		December 31, 2010				(Level 1)				(Level 2)
Financial instruments classified as assets
Forward foreign currency contracts		$	2,893			$	—			$	2,893
Financial instruments classified as liabilities
Interest rate swaps		$	2,046			$	—			$	2,046
Forward foreign currency contracts			1,702				—				1,702

2. Restructuring

The restructuring reserve balance for continuing operations as of December 31, 2010 was $6.1 million, primarily made up of lease termination and severance charges related to the Company’s centralization and consolidation of services in its Europe, Middle East and Africa (EMEA) division. During the second quarter of 2011, the Company announced a restructuring plan that included the relocation of the former Touchstone Wireless operations in Bristol, Tennessee to its existing facilities in Forth Worth, Texas and Plainfield, Indiana.

EMEA Activity

The Company continues its efforts to optimize the operating and financial structure of its EMEA division. A main strategic component of this plan revolves around consolidating current warehouse facilities and creating strategically located hubs or “Centers of Excellence” (supply chain delivery centers) to streamline operations. The first Center of Excellence, located in the Nordic region, began operations during the first quarter of 2011. A second facility has been selected in Slovakia and the existing facility will be retrofitted. Additionally, the Company continues to centralize and migrate many business support (or back office) functions in the EMEA division into a Shared Services Center. Reserve activity in the EMEA division for the six months ended June 30, 2011 for continuing operations is as follows (in thousands):

		Employee				Lease Termination				Asset Impairment
		Terminations				Costs				Charges				Total
Balance at December 31, 2010		$	3,494			$	2,590			$	—			$	6,084
Restructuring charge			976				581				236				1,793
Cash usage			(3,511	)			(3,282	)			—				(6,793	)
Non-cash usage			—				—				(236	)			(236	)
Foreign currency translation			290				142				—				432
Balance at June 30, 2011		$	1,249			$	31			$	—			$	1,280

Restructuring charge for the EMEA division was $1.8 million for the six months ended June 30, 2011. The restructuring charge consists of the following:

	•		$1.2 million of severance charges for workforce reduction in connection with continued global entity consolidation and rationalization.
	•		$0.8 million of charges for the termination of operating leases and the impairment of equipment related to the consolidation of warehouse facilities in the EMEA division.
	•		$0.2 million reversal of severance charges for the settlement of a dispute with a former employee in EMEA.

Total restructuring costs for the Company’s centralization and consolidation of services in its EMEA division that began in 2009 were $4.6 million as of June 30, 2011. The Company will continue to incur restructuring charges in the future for these activities in EMEA.

Americas Activity

On May 17, 2011 the Company announced its plan to relocate its Touchstone Wireless Repair and Logistics, L.P. (Touchstone Wireless) operations from Bristol, Tennessee and consolidate the operations into its existing facilities in Forth Worth, Texas and Plainfield, Indiana. The relocation of operations should be substantially complete by July 31, 2011, with any remaining tasks and transition activities expected to be completed by September 30, 2011. This relocation will eliminate approximately 350 full-time and approximately 250 part-time positions at the Bristol location and the Company expects to add more than 200 jobs in Fort Worth and more than 100 jobs in Plainfield.

During the second quarter of 2011, the Company completed an investment in Intcomex, Inc. (Intcomex), to which certain of the Company’s Latin American operations were contributed and $13.0 million, subject to working capital adjustments, in return for an approximate 23% share of the outstanding common stock of Intcomex. The Company incurred restructuring costs for the impairment of assets and severance charges to optimize the Latin America operations that remain part of the Company.

Reserve activity for the Americas division for the six months ended June 30, 2011 is as follows (in thousands):

		Employee				Lease Termination				Asset Impairment
		Terminations				Costs				Charges				Total
Balance at December 31, 2010		$	—			$	—			$	—			$	—
Restructuring charge			1,987				69				72				2,128
Cash usage			(383	)			(69	)			—				(452	)
Non-cash usage			—				—				(72	)			(72	)
Balance at June 30, 2011		$	1,604			$	—			$	—			$	1,604

Restructuring charge for the Americas division was $2.1 million for the six months ended June 30, 2011. The restructuring charge consists of the following:

•

$1.9 million of severance charges for the elimination of employee positions upon the relocation of the Touchstone Wireless operations in Bristol, Tennessee.

•

$0.1 million of lease termination and asset impairment related to the relocation of the Touchstone Wireless operations in Bristol, Tennessee.

•

$0.1 million of severance and asset impairment charges for the optimization of the remaining Latin America operations subsequent to the contribution of certain Latin America operations for the investment in Intcomex.

The Company expects to incur approximately $1.5 million to $2.0 million in lease termination, asset impairment and relocation charges in the third quarter of 2011 to complete the shut-down and the relocation of the Touchstone Wireless operations in Bristol, Tennessee.

Asia-Pacific Activity

The Asia-Pacific division incurred $0.2 million of restructuring charge during the second quarter of 2011 in relation to a headcount reduction.

Corporate Activity

The Corporate division incurred $0.1 million of restructuring charge during the second quarter of 2011 related to the elimination of a position.

Continued global initiatives to centralize and consolidate operations could result in future reductions in workforce and early lease terminations that would result in additional restructuring charges.

3. Acquisitions

On December 23, 2010 the Company completed the acquisition of the U.S. based company Touchstone Wireless for $75.7 million, net of cash acquired, funded from the Global Credit Facility. Results of operations related to the acquisition are included in the consolidated results of operations, within the Company’s Americas operating segment, beginning on December 24, 2010. The allocation of the purchase price was initially based upon preliminary estimates of the fair value of assets acquired and liabilities assumed.

During the first quarter of 2011 the Company made adjustments that decreased the purchase price by $0.7 million, due to net working capital adjustments of $1.6 million offset by a $0.5 million reduction in the valuation of the finite-lived intangibles that were assigned to customer relationships, original equipment manufacturer (OEM) certifications, and internally developed software, and a $0.4 million reduction in the valuation of fixed assets. During the second quarter of 2011 the Company made adjustments that increased the purchase price by $0.1 million for net working capital adjustments. The Company has finalized its purchase price allocation and does not anticipate additional significant adjustments to the purchase price allocation.

The following sets forth unaudited pro forma financial information in accordance with accounting principles generally accepted in the United States assuming the acquisition discussed above took place at the beginning of each period presented. The unaudited pro forma results include certain adjustments as described in the notes below (in thousands, except per share data):

		Three months ended								Six months ended
		June 30,								June 30,
		2011				2010				2011				2010
Revenue		$	1,234,914			$	808,416			$	2,349,794			$	1,628,362
Income from continuing operations			11,766				4,701				19,773				8,150
Net income attributable to common shareholders			10,674				424				19,970				595
Income from continuing operations per share — diluted		$	0.18			$	0.07			$	0.29			$	0.11

Three months ended:

June 30, 2010		Touchstone				Brightpoint				Adjustments				Note				Consolidated
Revenue		$	21,291			$	788,620			$	(1,495	)			(1	)		$	808,416
Income (loss) from continuing operations			(1,027	)			7,269				(1,541	)			(2	)			4,701
Net income (loss)			(1,027	)			2,992				(1,541	)			(2	)			424
Weighted average shares outstanding-diluted							70,432												70,432
Income from continuing operations per share — diluted						$	0.10											$	0.07

Six months ended:

June 30, 2010		Touchstone				Brightpoint				Adjustments				Note				Consolidated
Revenue		$	47,483			$	1,583,906			$	(3,027	)			(1	)		$	1,628,362
Income (loss) from continuing operations			(751	)			11,995				(3,094	)			(2	)			8,150
Net income (loss)			(751	)			4,440				(3,094	)			(2	)			595
Weighted average shares outstanding — diluted							71,159												71,159
Income from continuing operations per share — diluted						$	0.17											$	0.11

Pro-forma adjustments

	(1)		To reclassify the cost of revenue that was historically presented by Touchstone Wireless on a gross basis to a net basis to conform to Accounting Standards Codification 605-45, Revenue Recognition Principal Agent Consideration and Brightpoint accounting policy.
	(2)		To record the following:

	•		amortization of the finite-lived intangible assets recorded as a result of the acquisition of Touchstone Wireless,
	•		interest expense on borrowings used to finance the Touchstone Wireless acquisition, and
	•		income tax provision for the effect of the pro forma adjustments above based on statutory tax rates.

On March 20, 2011, AT&T announced that it intends to acquire T-Mobile USA, Inc. (T-Mobile). T-Mobile is a significant reverse logistics and repair services customer of Touchstone Wireless. This proposed acquisition is subject to regulatory approval, which could take 12 months or longer to complete. Should this acquisition be completed, the finite-lived intangible asset assigned to the remaining $25.6 million of customer relationships obtained and the remaining $23.5 million of goodwill acquired with the purchase of Touchstone Wireless might be subject to accelerated amortization (intangible assets) and evaluation for impairment (intangible asset and goodwill), which could negatively impact the Company’s operating results.

On March 23, 2011, the Company completed the acquisition of C2O Mobile Pte. Ltd. and C2O Corporation Pte. Ltd. (C2O) for $0.5 million plus the value of inventory and certain fixed assets as of the closing date. In addition, the Company agreed to contingent cash earn-out payments based upon certain operating performance measures which may be payable on the first, second, and third anniversary of closing. The total earn out payments, including the $0.5 million initial payment, should not exceed $1.7 million and an appropriate amount has been included in the purchase price allocation.

On April 19, 2011, the Company completed an investment in the U.S. based company Intcomex, Inc. Intcomex is a leading IT distributor focused solely on the Latin America and the Caribbean markets. Under this agreement, the Company invested $13.0 million, subject to working capital adjustments, and contributed its Colombia and Guatemala operations and certain of its other Latin America operations, excluding certain legacy business in Puerto Rico, for an approximate 23% share of the outstanding common stock of Intcomex. The Company also holds a seat on the Intcomex Board of Directors. The investment is an equity method investment, and the Company’s share of earnings (losses) in Intcomex will be recorded below operating income in the consolidated statement of operations three months in arrears in order to meet the Company’s reporting deadlines. The Company recorded a $3.0 million non-cash, non-taxable gain on investment for the difference between the fair value of the investment received in Intcomex and the carrying value of the assets contributed.

4. Income Taxes

Income tax expense was $0.5 million and $3.1 million for the three and six months ended June 30, 2011 compared to $3.9 million and $8.2 million for the same periods in the prior year.

Income tax expense for the three months ended June 30, 2011 included $2.0 million of income tax benefit related to the reversal of valuation allowances on foreign tax credits that are expected to be utilized as a result of restructuring the legal ownership of certain European subsidiaries and $0.8 million of income tax benefit related to the reversal of valuation allowances on certain foreign net operating loss tax assets that are expected to be utilized.

Income tax expense for the six months ended June 30, 2011 included $2.0 million of income tax benefit related to the reversal of valuation allowances on foreign tax credits that are expected to be utilized as a result of restructuring the legal ownership of certain European subsidiaries and $1.2 million of income tax benefit related to the reversal of valuation allowances on certain foreign net operating loss tax assets that are expected to be utilized.

Excluding these benefits, the effective income tax rate for the three and six months ended June 30, 2011 was 26.8% and 27.4%.

5. Discontinued Operations

The consolidated statements of operations reflect the reclassification of the results of operations of the Company’s operations in Italy 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. There were no material impairments of tangible or intangible assets related to this discontinued operation. Discontinued operations for the three and six months ended June 30, 2011 and 2010 are as follows (in thousands):

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2011				2010				2011				2010
Gain (loss) from discontinued operations before income taxes		$	(860	)		$	(5,147	)		$	970			$	(8,490	)
Income tax benefit			—				35				—				35
Gain (loss) from discontinued operations		$	(860	)		$	(5,112	)		$	970			$	(8,455	)
Gain (loss) on disposal from discontinued operations			(232	)			835				(773	)			900
Total discontinued operations, net of income taxes		$	(1,092	)		$	(4,277	)		$	197			$	(7,555	)

6. Borrowings

At June 30, 2011, 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 June 30, 2011 (in thousands):

										Letters of Credit &				Net
		Gross Availability				Outstanding				Guarantees				Availability
Global Credit Facility			450,000				133,087				1,285				315,628
Other			46,500				12,120				—				34,380
Total		$	496,500			$	145,207			$	1,285			$	350,008

The Company granted $2.9 million of guarantees that do not impact the Company’s net availability.

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, 2010.

7. 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, 2010.

8. Operating Segments

The Company has operation centers and/or sales offices in various countries including Australia, Austria, Belgium, Denmark, Finland, Germany, Hong Kong, India, the Netherlands, New Zealand, Norway, Poland, Portugal, Puerto Rico, 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 six months ended June 30, 2011 and 2010:

														Corporate and
		Americas				Asia-Pacific				EMEA				Reconciling Items				Total
Three Months Ended June 30, 2011:
Distribution revenue		$	159,824			$	427,089			$	505,072			$	—			$	1,091,985
Logistic services revenue			101,117				10,672				31,140				—				142,929
Total revenue from external customers		$	260,941			$	437,761			$	536,212			$	—			$	1,234,914
Income (loss) from continuing operations before income taxes		$	17,141			$	8,938			$	3,115			$	(16,895	)		$	12,299
Depreciation and amortization			5,119				670				5,274				447				11,510
Capital expenditures			8,412				668				5,129				686				14,895
Three Months Ended June 30, 2010:
Distribution revenue		$	96,824			$	193,246			$	423,009			$	—			$	713,079
Logistic services revenue			51,326				7,402				16,813				—				75,541
Total revenue from external customers		$	148,150			$	200,648			$	439,822			$	—			$	788,620
Income (loss) from continuing operations before income taxes		$	11,638			$	5,310			$	4,977			$	(10,726	)		$	11,199
Depreciation and amortization			2,599				467				4,990				479				8,535
Capital expenditures			1,581				326				2,655				682				5,244
Six Months Ended June, 30 2011:
Distribution revenue		$	288,290			$	797,994			$	990,354			$	—			$	2,076,638
Logistic services revenue			196,732				22,034				54,390				—				273,156
Total revenue from external customers		$	485,022			$	820,028			$	1,044,744			$	—			$	2,349,794
Income (loss) from continuing operations before income taxes		$	33,712			$	13,593			$	2,236			$	(26,676	)		$	22,865
Depreciation and amortization			10,497				1,277				10,112				903				22,789
Capital expenditures			24,190				952				9,457				3,126				37,725
Six Months Ended June 30, 2010:
Distribution revenue		$	196,730			$	425,026			$	805,692			$	—			$	1,427,448
Logistic services revenue			107,114				15,203				34,141				—				156,458
Total revenue from external customers		$	303,844			$	440,229			$	839,833			$	—			$	1,583,906
Income (loss) from continuing operations before income taxes		$	24,245			$	10,416			$	5,754			$	(20,268	)		$	20,147
Depreciation and amortization			5,352				1,023				9,997				920				17,292
Capital expenditures			2,973				416				4,422				1,875				9,686

Additional segment information is as follows (in thousands):

Total segment assets:		June 30, 2011				December 31, 2010
		(Unaudited)
Americas		$	389,999			$	369,345
Asia-Pacific			237,533				239,454
EMEA			615,572				623,309
Corporate			15,341				15,733
		$	1,258,445			$	1,247,841

9. Accounts Receivable Factoring

The Company has agreements with unrelated third-parties for the factoring of specific accounts receivable in Germany and Spain to reduce the amount of working capital required to fund such receivables. The Company’s Credit Agreement permits the factoring of up to $150 million of receivables in operations outside of the U.S. The factoring of accounts receivable under these agreements are accounted for as a sale in accordance with ASC 860, Transfers and Servicing, and accordingly, are accounted for as an off-balance sheet arrangement. Proceeds on the transfer reflect the face value of the account less a discount. The discount is recorded as a charge in “Interest, net” in the Consolidated Statement of Operations in the period of the sale.

Net funds received reduced accounts receivable outstanding while increasing cash. The Company is the collection agent on behalf of the third party for the arrangement in Spain but not in Germany. However, the Company has no significant retained interests or servicing liabilities related to the accounts receivable that have been sold in either Germany or Spain. The Company has obtained credit insurance from a third party on the majority of the factored accounts receivable to mitigate credit risk. The risk of loss is limited to factored accounts receivable not covered by credit insurance, which is immaterial.

A new factoring agreement in Germany was signed in December 2010 allowing up to approximately $30.0 million in factored receivables, which is subject to the $150 million factoring allowance in the Company’s Credit Agreement. During the second quarter of 2011 this factoring agreement was modified to allow up to approximately $75.0 million in factored receivables.

At June 30, 2011, the Company had sold $45.6 million of accounts receivable pursuant to these agreements, which represents the face amount of total outstanding receivables at those dates. At June 30, 2010, the Company had sold $9.9 million of accounts receivable under the factoring agreement in Spain. Fees paid pursuant to these agreements were $0.3 million and $0.5 million for the three and six months ended June 30, 2011 and were $0.1 million for both the three and six months ended June 30, 2010.

10. 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 $2.5 million as of June 30, 2011). Smartphone disputes this claim and intends to vigorously defend this matter.

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 claimed $2.7 million, which was paid by Dangaard Telecom Norway AS Group. Dangaard Telecom Norway AS Group 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 $1.5 million as of June 30, 2011). On February 19, 2010 the magistrate hearing the appeal ruled in favor of the Norwegian Tax Authorities. Brightpoint Norway appealed the decision and on March 4, 2011, the appeal court ruled in favor of the Norwegian Tax Authorities. On April 4, 2011 Brightpoint Norway filed a request with the appeal court for the case to be heard by the Norway Supreme Court. On May 11, 2011 the request was denied and therefore, the decision by the appeal court on March 4, 2011 is final. 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 the Company’s behalf if such transfer or assignment is not permitted). The Company intends to seek recovery for any amounts it may be entitled under indemnity rights with respect to this claim.

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 for the Southern District of Indiana. The central allegation was that Sofaer GHF reasonably and detrimentally relied upon statements by Laikin regarding Brightpoint’s probable purchase of a subsidiary of Chinatron Group Holdings Ltd. (“Chinatron”) in making a $10 million loan to Chinatron, 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 misrepresentations and based upon its alleged detrimental reliance (promissory estoppel) upon these statements, from which Brightpoint was claimed to have benefited. Brightpoint filed for and was granted summary judgment in this matter, and judgment was entered in its favor. The parties agreed to waive any rights of appeal and to collect legal fees from the other party.

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, 2010, 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, 2010.

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, receivables management, call center services, activation services, website hosting, e-fulfillment solutions, reverse logistics and repair services, 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, HTC, 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, Denmark, Finland, Germany, Hong Kong, India, the Netherlands, New Zealand, Norway, Poland, Portugal, Puerto Rico, Singapore, Slovakia, South Africa, Spain, Sweden, Switzerland, the United Arab Emirates, the United Kingdom and the United States.

Consolidated revenue was $1.2 billion and $2.3 billion for the three and six months ended June 30, 2011, an increase of 57% and 48% compared to the same periods in prior year. The increase was primarily driven by growth in our distribution business due to the increased demand for smartphones, which have higher average selling prices, a general increased product supply compared to what was experienced in the prior year, and the launch of tablet distribution programs during the second quarter. Foreign currency fluctuations had a favorable impact on revenue of $59.3 million and $75.6 million for the three and six months ended June 30, 2011 compared to the same periods in prior year. Total revenue increased 4% for both the three and six months ended June 30, 2011 compared to the same periods in prior year as a result of the revenue generated by Touchstone Wireless Repair and Logistics, L.P. (Touchstone Wireless).

On April 19, 2011, we completed our investment in the U.S. based company Intcomex, Inc. (Intcomex). Intcomex is a leading IT distributor focused solely on the Latin America and the Caribbean markets. Under this agreement, we invested $13.0 million, subject to working capital adjustments, and contributed our Colombia and Guatemala operations and certain of our other Latin America operations, excluding certain legacy business in Puerto Rico, for an approximate 23% share of the outstanding common stock of Intcomex. We also hold a seat on the Intcomex Board of Directors. The investment is an equity method investment and our share of earnings (losses) in Intcomex will be recorded below operating income in the consolidated statement of operations three months in arrears in order to meet our reporting deadlines. We recorded a $3.0 million non-cash, non-taxable gain on investment for the difference between the fair value of the investment received in Intcomex and the carrying value of the assets contributed.

On May 17, 2011 we announced our plan to relocate the Touchstone Wireless operations from Bristol, Tennessee and consolidate the operations into our existing facilities in Forth Worth, Texas and Plainfield, Indiana. The

relocation of operations is scheduled for substantial completion by July 31, 2011, with any remaining tasks and transition activities expected to be completed by September 30, 2011. This relocation will eliminate approximately 350 full-time and approximately 250 part-time positions at the Bristol location and we expect to add more than 200 jobs in Fort Worth and more than 100 jobs in Plainfield. During the second quarter of 2011, we recorded $2.0 million of restructuring charges related to the relocation of the Bristol facility for severance, lease termination, and asset impairment.

RESULTS OF OPERATIONS

Revenue and wireless devices handled by division and service line

		Three Months Ended June 30,
						% of								% of
		2011				Total				2010				Total				Change
						(Amounts in 000s)
Distribution revenue
Americas		$	159,824				15	%		$	96,824				14	%			65	%
Asia-Pacific			427,089				39	%			193,246				27	%			121	%
EMEA			505,072				46	%			423,009				59	%			19	%
Total		$	1,091,985				100	%		$	713,079				100	%			53	%
Logistic services revenue
Americas		$	101,117				71	%		$	51,326				68	%			97	%
Asia-Pacific			10,672				7	%			7,402				10	%			44	%
EMEA			31,140				22	%			16,813				22	%			85	%
Total		$	142,929				100	%		$	75,541				100	%			89	%
Total revenue
Americas		$	260,941				21	%		$	148,150				19	%			76	%
Asia-Pacific			437,761				35	%			200,648				25	%			118	%
EMEA			536,212				44	%			439,822				56	%			22	%
Total		$	1,234,914				100	%		$	788,620				100	%			57	%

		Three Months Ended June 30,
						% of								% of
		2011				Total				2010				Total				Change
						(Amounts in 000s)
Wireless devices sold through distribution
Americas			741				14	%			635				14	%			17	%
Asia-Pacific			1,616				31	%			1,322				29	%			22	%
EMEA			2,873				55	%			2,565				57	%			12	%
Total			5,230				100	%			4,522				100	%			16	%
Wireless devices handled through logistic services
Americas			18,071				83	%			15,597				88	%			16	%
Asia-Pacific			899				4	%			609				3	%			48	%
EMEA			2,730				13	%			1,566				9	%			74	%
Total			21,700				100	%			17,772				100	%			22	%
Total wireless devices handled
Americas			18,812				70	%			16,232				73	%			16	%
Asia-Pacific			2,515				9	%			1,931				9	%			30	%
EMEA			5,603				21	%			4,131				18	%			36	%
Total			26,930				100	%			22,294				100	%			21	%

		Six Months Ended June 30,
						% of								% of
		2011				Total				2010				Total				Change
						(Amounts in 000s)
Distribution revenue
Americas		$	288,290				14	%		$	196,730				14	%			47	%
Asia-Pacific			797,994				38	%			425,026				30	%			88	%
EMEA			990,354				48	%			805,692				56	%			23	%
Total		$	2,076,638				100	%		$	1,427,448				100	%			45	%
Logistic services revenue
Americas		$	196,732				72	%		$	107,114				68	%			84	%
Asia-Pacific			22,034				8	%			15,203				10	%			45	%
EMEA			54,390				20	%			34,141				22	%			59	%
Total		$	273,156				100	%		$	156,458				100	%			75	%
Total revenue
Americas		$	485,022				21	%		$	303,844				19	%			60	%
Asia-Pacific			820,028				35	%			440,229				28	%			86	%
EMEA			1,044,744				44	%			839,833				53	%			24	%
Total		$	2,349,794				100	%		$	1,583,906				100	%			48	%

		Six Months Ended June 30,
						% of								% of
		2011				Total				2010				Total				Change
						(Amounts in 000s)
Wireless devices sold through distribution
Americas			1,450				14	%			1,271				14	%			14	%
Asia-Pacific			2,976				30	%			2,796				31	%			6	%
EMEA			5,614				56	%			4,961				55	%			13	%
Total			10,040				100	%			9,028				100	%			11	%
Wireless devices handled through logistic services
Americas			36,849				83	%			31,236				87	%			18	%
Asia-Pacific			2,064				5	%			1,295				4	%			59	%
EMEA			5,218				12	%			3,240				9	%			61	%
Total			44,131				100	%			35,771				100	%			23	%
Total wireless devices handled
Americas			38,299				71	%			32,507				73	%			18	%
Asia-Pacific			5,040				9	%			4,091				9	%			23	%
EMEA			10,832				20	%			8,201				18	%			32	%
Total			54,171				100	%			44,799				100	%			21	%