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 (Registrant’s telephone number, including area code)

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):

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 2, 2009: 78,897,226

 

 

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								Nine Months Ended
		September 30,								September 30,
		2009				2008				2009				2008
Revenue
Distribution revenue		$	772,815			$	1,055,928			$	2,005,441			$	3,148,827
Logistic services revenue			95,100				110,982				274,232				318,571
Total revenue			867,915				1,166,910				2,279,673				3,467,398
Cost of revenue
Cost of distribution revenue			740,368				1,013,352				1,926,065				3,007,513
Cost of logistic services revenue			55,350				68,529				158,907				202,281
Total cost of revenue			795,718				1,081,881				2,084,972				3,209,794
Gross profit			72,197				85,029				194,701				257,604
Selling, general and administrative expenses			55,747				60,516				156,680				196,153
Impairment of long-lived assets			1,452				—				1,452				—
Amortization expense			4,092				4,647				11,746				14,189
Restructuring charge			1,886				795				10,707				7,378
Operating income from continuing operations			9,020				19,071				14,116				39,884
Interest, net			2,077				3,676				7,237				15,485
Other (income) expense			509				1,317				(1,057	)			1,840
Income from continuing operations before income taxes			6,434				14,078				7,936				22,559
Income tax expense (benefit)			(8,230	)			5,600				(7,804	)			5,591
Income from continuing operations			14,664				8,478				15,740				16,968
Discontinued operations, net of income taxes:
Loss from discontinued operations			(3,872	)			(2,956	)			(6,523	)			(12,674	)
Gain (loss) on disposal of discontinued operations			378				(9	)			(953	)			(5	)
Total discontinued operations, net of income taxes			(3,494	)			(2,965	)			(7,476	)			(12,679	)
Net income			11,170				5,513				8,264				4,289
Net income attributable to noncontrolling interest			—				(34	)			—				(366	)
Net income attributable to common shareholders		$	11,170			$	5,479			$	8,264			$	3,923
Earnings per share attributable to common shareholders — basic:
Income from continuing operations		$	0.18			$	0.11			$	0.19			$	0.22
Discontinued operations, net of income taxes			(0.04	)			(0.04	)			(0.09	)			(0.16	)
Net income		$	0.14			$	0.07			$	0.10			$	0.06
Earnings per share attributable to common shareholders — diluted:
Income from continuing operations		$	0.18			$	0.10			$	0.19			$	0.21
Discontinued operations, net of income taxes			(0.04	)			(0.04	)			(0.09	)			(0.16	)
Net income		$	0.14			$	0.06			$	0.10			$	0.05
Weighted average common shares outstanding:
Basic			81,215				78,549				81,172				77,968
Diluted			82,048				81,250				81,827				81,545

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

		September 30,				December 31,
		2009				2008
		(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents		$	80,259			$	57,226
Accounts receivable (less allowance for doubtful accounts of $12,420 in 2009 and $11,217 in 2008)			351,916				499,541
Inventories			183,272				290,243
Other current assets			71,521				61,392
Total current assets			686,968				908,402
Property and equipment, net			58,209				56,463
Goodwill			51,830				51,439
Other intangibles, net			102,506				107,286
Other assets			32,932				22,770
Total assets		$	932,445			$	1,146,360
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	405,303			$	534,906
Accrued expenses			103,679				137,957
Current portion of long-term debt			—				—
Lines of credit and other short-term borrowings			1,063				798
Total current liabilities			510,045				673,661
Long-term liabilities:
Lines of credit, long-term			—				1,501
Long-term debt			97,761				174,106
Other long-term liabilities			43,964				46,528
Total long-term liabilities			141,725				222,135
Total liabilities			651,770				895,796
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; 89,236 issued in 2009 and 88,730 issued in 2008			892				887
Additional paid-in-capital			629,479				625,415
Treasury stock, at cost, 7,294 shares in 2009 and 7,063 shares in 2008			(61,333	)			(59,983	)
Retained deficit			(304,383	)			(312,647	)
Accumulated other comprehensive income (loss)			16,020				(3,108	)
Total shareholders’ equity			280,675				250,564
Total liabilities and shareholders’ equity		$	932,445			$	1,146,360

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

		Nine Months Ended
		September 30,
		2009				2008
Operating activities
Net income		$	8,264			$	4,289
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			26,540				28,249
Impairment of long-lived assets			1,452				—
Non-cash compensation			4,865				4,991
Restructuring charge			11,353				7,483
Change in deferred taxes			(18,148	)			(13,910	)
Other non-cash			1,552				(910	)
Changes in operating assets and liabilities, net of effects from acquisitions and divestitures:
Accounts receivable			174,370				197,999
Inventories			117,523				160,193
Other operating assets			1,244				(7,935	)
Accounts payable and accrued expenses			(216,253	)			(67,563	)
Net cash provided by operating activities			112,762				312,886
Investing activities
Capital expenditures			(14,621	)			(16,064	)
Acquisitions, net of cash acquired			—				(5,878	)
Decrease (increase) in other assets			(1,094	)			768
Net cash used in investing activities			(15,715	)			(21,174	)
Financing Activities
Net repayments on lines of credit			(537	)			(213,843	)
Repayments on Global Term Loans			(75,752	)			(67,076	)
Deferred financing costs paid			(392	)			(212	)
Purchase of treasury stock			(1,349	)			(1,288	)
Excess (deficient) tax benefit from equity based compensation			(1,035	)			118
Proceeds from common stock issuances under employee stock option plans			216				39
Net cash used in financing activities			(78,849	)			(282,262	)
Effect of exchange rate changes on cash and cash equivalents			4,835				(10,410	)
Net (decrease) increase in cash and cash equivalents			23,033				(960	)
Cash and cash equivalents at beginning of period			57,226				102,160
Cash and cash equivalents at end of period		$	80,259			$	101,200

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, 2008 included in Exhibit 99.1 to the Company’s Current Report on Form 8-K filed on June 1, 2009. As used herein, the terms “Brightpoint”, “Company”, “we”, “our” and “us” mean Brightpoint, Inc. and its consolidated subsidiaries.

The Company has evaluated subsequent events through November 4, 2009, which is the date these financial statements were issued.

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,
		2009				2008				2009				2008
Income from continuing operations attributable to common shareholders		$	14,664			$	8,444			$	15,740			$	16,602
Discontinued operations, net of income taxes			(3,494	)			(2,965	)			(7,476	)			(12,679	)
Net income attributable to common shareholders		$	11,170			$	5,479			$	8,264			$	3,923
Earnings per share — basic:
Income from continuing operations attributable to common shareholders		$	0.18			$	0.11			$	0.19			$	0.22
Discontinued operations, net of income taxes			(0.04	)			(0.04	)			(0.09	)			(0.16	)
Net income attributable to common shareholders		$	0.14			$	0.07			$	0.10			$	0.06
Earnings per share — diluted:
Income from continuing operations attributable to common shareholders		$	0.18			$	0.10			$	0.19			$	0.21
Discontinued operations, net of income taxes			(0.04	)			(0.04	)			(0.09	)			(0.16	)
Net income attributable to common shareholders		$	0.14			$	0.06			$	0.10			$	0.05
Weighted average shares outstanding for basic earnings per share			81,215				78,549				81,172				77,968
Net effect of dilutive share options, restricted share units, shares held in escrow and restricted share based on the treasury share method using average market price			833				2,701				655				3,577
Weighted average shares outstanding for diluted earnings per share			82,048				81,250				81,827				81,545

Recently Issued Accounting Pronouncements

In May 2009, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard (SFAS) 165, Subsequent Events, codified in Accounting Standards Codification (ASC) 855, to provide authoritative accounting literature for subsequent events which was previously addressed only in auditing literature. SFAS 165 addresses events that occur after the balance sheet date but before the issuance of the financial statements. It distinguishes between subsequent events that should be recognized in the financial statements and those that should not. Also, it requires disclosure of the date through which subsequent events were evaluated and disclosures for certain non-recognized events. The provisions of SFAS 165 were effective for the Company on June 30, 2009. The adoption of SFAS 165 did not have a material effect on its financial statements.

In December 2007, the FASB issued SFAS 141 (R). This statement amends ASC 805, Business Combinations, and provides revised guidance for recognizing and measuring identifiable assets and goodwill acquired, liabilities assumed, and any noncontrolling interest in the acquiree. It also provides disclosure requirements to enable users of the financial statements to evaluate the nature and financial effects of the business combination. The provisions of SFAS 141(R) were effective for the Company on January 1, 2009. The adoption of SFAS 141(R) did not have a material impact on its financial statements since the provisions of SFAS 141 (R) are applied prospectively.

In December 2007, the FASB issued SFAS 160, Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB 51. SFAS 160 updates ASC 810, Consolidation, to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It also amends certain of ARB 51’s consolidation procedures for consistency with the requirements of SFAS 141(R). The provisions of SFAS 160 were effective for the Company on January 1, 2009. The adoption of SFAS 160 did not have a material impact on its financial statements.

Other Comprehensive Income (Loss)

The components of comprehensive income (loss) for the three and nine months ended September 30, 2009 and 2008 are as follows (in thousands, net of tax):

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2009				2008				2009				2008
Net income attributable to common shareholders		$	11,170			$	5,479			$	8,264			$	3,923
Unrealized gain on derivative instruments:
Net gain (loss) arising during period			(64	)			(124	)			604				397
Reclassification adjustment for gains (losses) included in net income			64				—				(65	)			—
Unrealized loss on marketable securities:
Net loss arising during period			—				—				—				(2,087	)
Reclassification adjustment for losses included in
net income			—				—				—				928
Pension benefit obligation:			—				—				(248	)			—
Foreign currency translation:
Net gain (loss) arising during period			9,906				(58,252	)			20,278				(17,915	)
Reclassification adjustment for gains included in net income			242				—				(1,441	)			—
Comprehensive income (loss)		$	21,318			$	(52,897	)		$	27,392			$	(14,754	)

Derivative Instruments and Hedging Activities

The Company is exposed to certain risks relating 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 volume and impact to the

Consolidated Balance Sheets and Statements of Operations of these contracts is immaterial. The Company holds the following types of derivatives at September 30, 2009 that have been designated as hedging instruments:

Derivative		Risk Being Hedged
Interest rate swap		Cash flows of interest payments on variable rate debt

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, 2009, a hedging relationship exists related to $54.0 million of the Company’s variable rate debt. The swap is accounted for as a cash flow hedge. This interest rate swap transaction effectively locks in a fixed interest rate for variable rate interest payments that are expected to be made from October 1, 2009 through January 31, 2012. Under the terms of the swap, 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. There was a $0.1 million (net of income taxes) gain due to the ineffective portion of the interest rate swaps included in the results of operations for the three months ended September 30, 2009 and an immaterial loss due to the ineffective portion of the interest rate swaps included in the results of operations for the nine months ended September 30, 2009. The ineffective portion of the interest rate swaps relates to prepayments on the Company’s variable rate debt in the second quarter of 2009. The unrealized gain associated with the effective portion of the interest rate swaps included in other comprehensive income was immaterial for the three months ended September 30, 2009.

The fair value of interest rate swaps in the Consolidated Balance Sheets is a liability of $3.9 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.

Fair Value of Financial Instruments

The carrying amounts at September 30, 2009 and December 31, 2008, 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, 2009 and December 31, 2008 of the Company’s borrowings approximate their fair value because these borrowings bear interest at a variable (market) rate.

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
		Balance at				in active				Significant other
		September				markets				observable
		30, 2009				(Level 1)				inputs (Level 2)
Financial instruments classified as assets
Forward foreign currency contracts		$	162			$	—			$	162
Financial instruments classified as liabilities
Interest rate swaps		$	3,940			$	—			$	3,940
Forward foreign currency contracts			252				—				252

2. Acquisitions

Effective December 31, 2008, the Company acquired the assets of Bradian Warehousing and Distribution (Pty), Ltd. for $1.4 million. In addition, the Company agreed to contingent cash earn out payments based upon certain operating performance measures which may be payable for each of the three fiscal years after the acquisition. The total earn out payments will in no event exceed 20.5 million South African Rand (approximately $2.8 million as of September 30, 2009).

On April 28, 2008, the Company acquired the assets of Hugh Symons Group Ltd.’s wireless distribution business for $0.6 million (0.3 million pounds sterling) and the value of inventory at the date of closing. 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 shall in no event exceed 3.6 million pounds sterling (approximately $5.7 million as of September 30, 2009).

3. Restructuring

In February 2009, the Company announced that it initiated its 2009 Spending and Debt Reduction Plan. Included in this plan is a global workforce reduction of 220 positions. Through the first nine months of 2009, the Company has reduced its global workforce by approximately 220 positions.

Europe Realignment

The balance of the restructuring reserve at December 31, 2008 relates to the plan to realign the Company’s European operations that was announced on June 30, 2008. Reserve activity for the realignment of the Company’s European operations and for the workforce reduction included in the 2009 Spending and Debt Reduction Plan for the nine months ended September 30, 2009 is as follows (in thousands):

						Lease
		Employee				Termination
		Terminations				Costs				Total
Balance at December 31, 2008		$	3,325			$	3,445			$	6,770
Restructuring charge			10,012				127				10,139
Foreign currency translation			919				(56	)			863
Total activity:			14,256				3,516				17,772
Less:
Cash usage			(8,070	)			(3,433	)			(11,503	)
Balance at September 30, 2009		$	6,186			$	83			$	6,269

Restructuring charge was $10.1 million for the nine months ended September 30, 2009. The restructuring charge consists of the following:

	•		$7.8 million of severance charges in connection with the global workforce reduction announced as part of the Company’s 2009 Spending and Debt Reduction Plan. The Company reduced its workforce by approximately 200 positions in its EMEA division through the nine months ended September 30, 2009.
	•		A $2.1 million severance charge in connection with the departure of the Company’s President of the Europe, Middle East and Africa region.
	•		A $0.4 million charge associated with the exit of our headquarters facility in Europe.
	•		A $0.8 million benefit associated with the favorable settlement of the operating lease of the Company’s redundant warehouse and office facility in Germany.
	•		$0.6 million of other charges associated with our 2009 Spending and Debt Reduction Plan.

Americas Realignment

In addition to the realignment of the Company’s European operations discussed above, the Company also began initiatives to better leverage its cost structure in the Americas region. The Americas realignment includes severance for employees in our Americas operations ($0.7 million) as well as a benefit related to the closure of the Company’s distribution facility in Reno, Nevada ($0.1 million). The Company reduced its workforce by approximately 20 positions in its Americas division in the first half of 2009.

Reserve activity for the realignment of the Company’s Americas operations for the nine months ended September 30, 2009 is as follows (in thousands):

						Lease
		Employee				Termination
		Terminations				Costs				Total
Balance at December 31, 2008		$	236			$	897			$	1,133
Restructuring charge			680				(112	)			568
Total activity:			916				785				1,701
Less:
Cash usage			(831	)			(437	)			(1,268	)
Balance at September 30, 2009		$	85			$	348			$	433

In addition, the Company expects to exit certain programs, channels and/or countries that are not expected to meet its profitability targets including return on the Company’s investment. As a result of exiting underperforming programs, channels and/or countries, the Company would expect to incur additional restructuring charges. The Company will provide updates on these activities and related estimated charges, which could be material, as appropriate throughout the year. As discussed in Note 6 below, the Company exited its operation in France during the third quarter of 2009.

The Company continues to evaluate the “right size” of its on-going operations in relation to desired profitability targets. The Company may determine that additional reductions in spending, including further reductions in workforce, are necessary. Additional reductions in workforce and other spending could result in additional restructuring charges.

4. Impairment of Long-Lived Assets

In the third quarter of 2009, the Company lost a significant product distribution business within its Latin America operation. As a result, the Company evaluated the long-lived assets of the Latin America operations for recoverability. The long-lived assets of the Latin America operations consisted primarily of the finite lived intangible asset acquired in conjunction with the acquisition of certain assets of CellStar. The Company estimated the sum of the undiscounted future cash flows attributable to the long-lived assets of the Latin America operation and determined that the carrying value of the long-lived assets was greater than the sum of the undiscounted future cash flows attributable to the long-lived assets. The finite lived intangible asset was adjusted to its fair value, which resulted in a $1.5 million impairment charge which represented 100% of the carrying value of the asset. The impairment will not result in any current or future cash expenditures.

5. Income Taxes

Income tax benefit for the three months ended September 30, 2009 was $8.2 million compared income tax expense of $5.6 million for the same period in the prior year. Income tax benefit for the three and nine months ended September 30, 2009 includes a $7.7 million benefit for the reversal of a valuation allowance on certain foreign tax credit carryforwards. In the fourth quarter of 2008, the Company recorded a valuation allowance on certain foreign tax credit carryforwards as the Company determined based on internal projections and industry forecasts that it was more likely than not that the Company would not be able to utilize these foreign tax credits prior to their expiration. The Company typically evaluates expected utilization of deferred tax assets in the fourth quarter in conjunction with the budgeting process for the following fiscal year. However, while completing the U.S. tax return for the 2008 fiscal year in the third quarter of 2009, management determined that based on improved earnings in the Company’s U.S. operations as a result of spending reductions in its North America operations it was more likely than not that the Company would be able to utilize these foreign tax credits prior to their expiration.

Income tax benefit for the three and nine months ended September 30, 2009 also includes a $5.4 million benefit from the reversal of a reserve on an uncertain tax position in Germany that became more likely than not to be sustained. Income tax benefit for the three and nine months ended September 30, 2009 is partially offset by a $3.3 million charge related to a valuation allowance on deferred tax assets resulting from previous net operating losses in Denmark.

Excluding the above benefits and charge, the effective income tax rate for the three and nine months ended September 30, 2009 was 24.3% and 25.1% respectively. The effective income rate excluding these items is lower than normal due to other smaller discrete items such as income tax return true-ups.

6. Discontinued Operations

The consolidated statements of operations reflect the reclassification of the results of operations of the Company’s operations in France, Poland and Turkey to discontinued operations for all periods presented in accordance with U.S. generally accepted accounting principles. The Company exited its France operation in the third quarter of 2009 and its Poland and Turkey operations in the first 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, 2009 and 2008 are as follows (in thousands):

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2009				2008				2009				2008
Revenue		$	3,864			$	54,125			$	26,315			$	163,645
Loss from discontinued operations before income taxes		$	(2,800	)		$	(3,028	)		$	(6,048	)		$	(14,922	)
Income tax expense (benefit)			1,072				(72	)			475				(2,248	)
Loss from discontinued operations		$	(3,872	)		$	(2,956	)		$	(6,523	)		$	(12,674	)
Gain (loss) on disposal from discontinued operations (1)			378				(9	)			(953	)			(5	)
Total discontinued operations, net of income taxes		$	(3,494	)		$	(2,965	)		$	(7,476	)		$	(12,679	)

7. Borrowings

At September 30, 2009, 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, 2009 (in thousands):

										Letters of Credit &				Net
		Gross Availability				Outstanding				Guarantees				Availability
Global Term Loans		$	97,761			$	97,761			$	—			$	—
Global Credit Facility			300,000				—				776				299,224
Other			45,000				1,039				20				43,941
Total		$	442,761			$	98,800			$	796			$	343,165

The Company had an immaterial amount of other borrowings outstanding at September 30, 2009 that were not under any of the Company’s credit agreements and $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.

The factoring agreement for the Company’s Germany operation terminated in July 2009. At June 30, 2009 the Company had sold $33.9 million of accounts receivable under this agreement. However, the Company successfully renegotiated shorter payment terms with the customer for which the accounts receivable were previously factored under this agreement. These shorter payment terms are currently set to expire after the end of 2009. These terms are as favorable to the Company’s liquidity as the factoring agreement. The Company is in negotiations with its customer to make these terms permanent, however the Company can give no assurances that it will be successful in its efforts.

Additional details on the above available borrowings are discussed in the Company’s Annual Report for the year ended December 31, 2008 included in Exhibit 99.1 to the Company’s Current Report on Form 8-K filed on June 1, 2009.

8. 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 with regard to lines of credit. The nature of these guarantees and the amounts outstanding are described in the Company’s Annual Report for the year ended December 31, 2008 included in Exhibit 99.1 to the Company’s Current Report on Form 8-K filed on June 1, 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 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.

9. Operating Segments

The Company has operation centers and/or sales offices in various countries including Australia, Austria, Belgium, Colombia, Denmark, Finland, Germany, Guatemala, India, Italy, 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 distribution of wireless devices and accessories and/or the provision of logistic services. 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, 2009 and 2008:

														Corporate and
Three Months Ended September 30, 2009:		Americas				Asia-Pacific				EMEA				Reconciling Items				Total
Distribution revenue		$	114,341			$	254,030			$	404,444			$	—			$	772,815
Logistic services revenue			47,794				8,016				39,290				—				95,100
Total revenue from external customers		$	162,135			$	262,046			$	443,734			$	—			$	867,915
Income (loss) from continuing operations before income taxes		$	12,929			$	8,543			$	(6,464	)		$	(8,574	)		$	6,434
Depreciation and amortization			3,857				319				5,336				442				9,954
Capital expenditures			1,946				984				2,489				320				5,739
Three Months Ended September 30, 2008:
Distribution revenue		$	169,345			$	320,807			$	565,776			$	—			$	1,055,928
Logistic services revenue			45,615				13,425				51,942				—				110,982
Total revenue from external customers		$	214,960			$	334,232			$	617,718			$	—			$	1,166,910
Income (loss) from continuing operations before income taxes		$	11,172			$	9,424			$	(806	)		$	(5,712	)		$	14,078
Depreciation and amortization			2,302				471				5,807				247				8,827
Capital expenditures			1,882				842				1,755				882				5,361
Nine Months Ended September 30, 2009:
Distribution revenue		$	328,180			$	617,665			$	1,059,596			$	—			$	2,005,441
Logistic services revenue			138,759				23,862				111,611				—				274,232
Total revenue from external customers		$	466,939			$	641,527			$	1,171,207			$	—			$	2,279,673
Income (loss) from continuing operations before income taxes		$	37,373			$	16,146			$	(18,203	)		$	(27,380	)		$	7,936
Depreciation and amortization			9,211				1,263				14,981				1,257				26,712
Capital expenditures			4,983				2,493				5,260				1,285				14,021
Nine Months Ended September 30, 2008:
Distribution revenue		$	542,007			$	941,477			$	1,665,343			$	—			$	3,148,827
Logistic services revenue			136,420				35,811				146,340				—				318,571
Total revenue from external customers		$	678,427			$	977,288			$	1,811,683			$	—			$	3,467,398
Income (loss) from continuing operations before income taxes		$	26,320			$	26,011			$	(9,240	)		$	(20,532	)		$	22,559
Depreciation and amortization			7,490				1,704				17,343				787				27,324
Capital expenditures			3,591				799				9,735				1,477				15,602

Additional segment information is as follows (in thousands):

		September 30,				December 31,
		2009				2008
		(Unaudited)
Total segment assets:
Americas		$	218,746			$	244,922
Asia-Pacific			164,722				198,779
EMEA			524,238				690,882
Corporate			24,739				11,777
		$	932,445			$	1,146,360

10. Legal Proceedings and Contingencies

LN Eurocom

On June 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 September 30, 2009). Smartphone disputes this claim and intends to defend this matter vigorously.

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 has claimed $1.4 million in damages. Dangaard Telecom continues to dispute this claim and intends to defend this matter vigorously.

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, 2009). Brightpoint Norway has filed its appeal of this determination by the initiation of court proceedings. 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.

NC Holding Indemnification Claims

In connection with the acquisition of Dangaaard Telecom, initially 3,000,000 shares of common stock issued in connection with the acquisition were placed in escrow with American Stock Transfer & Trust Company to secure NC Telecom Holding A/S’s (“NC Holding”) indemnification obligations under the acquisition agreement. The Company has previously made indemnification claims against NC Holding pursuant to the acquisition agreement which the Company believes are in excess of the value of these 3,000,000 shares. On October 1, 2009, the Company entered into an agreement of settlement with NC Holding which settled, subject to certain limited exceptions set forth therein, the indemnification claims the Company previously made against NC Holding pursuant to the Stock Purchase Agreement dated as of February 19, 2007, as amended.

Sofaer Global Hedge Fund

In September 2009, Sofaer Global Hedge Fund (“Sofaer GHF”) filed a complaint against Brightpoint, Inc. (“Brightpoint”) 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 a 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 defend this matter vigorously.

11. Subsequent Events

On October 1, 2009 the Company entered into a settlement agreement with NC Holding, which provided for Brightpoint to purchase 3 million shares of Brightpoint common stock from NC Holding for $15.5 million. These shares were purchased under the previously announced share repurchase program. Under the settlement agreement, the Company’s indemnification claims previously made against NC Holding pursuant to the Dangaard acquisition agreement have been settled. In addition, the settlement agreement provided that NC Holding will no longer have the right to designate any candidate to be considered to serve on the Company’s Board of Directors and that Thorleif Krarup agreed to immediately resign from the Board of Directors. The Company expects to record a non-cash settlement gain of approximately $7.7 million in other income in the fourth quarter of 2009 as a result of the settlement agreement.

On October 16, 2009, the Company entered into an agreement to purchase the Company’s primary North America distribution facility located in Plainfield, Indiana (the “Property”) for $31.0 million plus closing costs and commissions from KPJV 501 Airtech Parkway, LLC (the “Seller”). The Company has been the tenant and the Seller was previously the landlord in an operating lease for the Property. There were ten (10) years remaining on the initial lease term, with five (5) year option renewal periods extending to 2044. The sum of the remaining minimum lease payments for the remaining ten (10) years of the initial lease term was $43.1 million. The purchase was financed using availability on the Company’s Global Credit Facility, and the Company is not currently pursuing any other financing agreement for the Property.

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 for the year ended December 31, 2008 included in Exhibit 99.1 to the Company’s Current Report on Form 8-K filed on June 1, 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 for the year ended December 31, 2008 included in Exhibit 99.1 to the Company’s Current Report on Form 8-K filed on June 1, 2009.

Brightpoint, Inc. is a global leader in the distribution of wireless devices and accessories and provision of customized logistic services to the wireless industry. We have operations centers and/or sales offices in various countries including Australia, Austria, Belgium, Colombia, Denmark, Finland, Germany, Guatemala, India, Italy, the Netherlands, New Zealand, Norway, Portugal, Singapore, Slovakia, South Africa, Spain, Sweden, Switzerland, the United Arab Emirates, the United Kingdom and the United States. We provide customized integrated 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 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 distribute wireless communication devices and we provide value-added distribution and logistic services for wireless products manufactured by companies such as High Tech Computer Corp., Kyocera, LG Electronics, Motorola, Nokia, Samsung, Siemens, Sony Ericsson and UTStarcom.

On February 9, 2009, we announced a plan to reduce forecasted spending for the year by approximately $40 to $45 million. This plan is comprised of $12 to $14 million of cost avoidance and $28 to $31 million of spending reductions. The spending reduction measures included, among other things, a workforce reduction of at least 220 positions, or approximately 7% of our workforce.

In the third quarter of 2009, we achieved our global workforce reduction goal. Through the first nine months of 2009, we have reduced our global workforce by approximately 220 positions.

Based on our progress through the nine months ended September 30, 2009, we believe that we are on track to realize the previously stated forecasted spending reduction and cost avoidance targets. For the third quarter of 2009 SG&A expenses were $55.7 million, which represents an increase of $6.0 million (12%) from the second quarter of 2009. SG&A expense for the three months ended September 30, 2009 includes $2.7 million of incremental bad debt expense related to various issues in Europe including losses from uncollectible customer accounts and disputed accounts in excess of insured credit limits. Included in the $2.7 million of incremental bad debt expense for the three and nine months ended September 30, 2009 is a $0.7 million charge due to an isolated incident of transactional fraud in Italy. Total charges in the results of operations for the three and nine months ended September 30, 2009 related this fraudulent activity in Italy were $1.2 million, comprised of $0.7 million in SG&A and $0.5 million in other (income) expense. We will continue to pursue collection on these receivables, however we can give no assurances that we will be successful in our efforts. SG&A expense for the three months ended September 30, 2009 also includes $1.6 million of incremental expense for non-executive staff bonuses compared to the second quarter of

2009. Fluctuations in foreign currency negatively impacted SG&A by approximately $1.9 million compared to the second quarter of 2009.

On May 7, 2009 we announced a revised debt reduction target of having less than $100 million of average daily debt outstanding during the fourth quarter of 2009. Average daily debt outstanding for the third quarter of 2009 was $150.7 million compared to average compared to average daily debt outstanding of $165.9 million for the second quarter of 2009 and $333.0 million for the fourth quarter of 2008. However, in October 2009 we entered into a settlement agreement with NC Telecom Holding A/S (“NC Holding”), which provided for us to purchase 3 million Brightpoint shares from NC Holding for $15.5 million under a previously announced share repurchase program. In addition, we entered into an agreement to purchase our primary North America distribution facility for $31.0 million plus closing costs and commissions. These transactions were financed using availability on our Global Credit Facility and will result in an increase of our average daily debt outstanding in the fourth quarter of 2009. Accordingly, we are revising our debt reduction target for the fourth quarter of 2009. We now expect to have average daily debt of $150.0 million to $175.0 million for the fourth quarter of 2009.

We continue to focus on optimizing our European operating and financial structure. We expect to exit certain programs, channels and/or countries that are not expected to meet our profitability targets included return on investment. As a result of exiting underperforming programs, channels and/or countries in our European region, we would expect to incur additional restructuring charges. We continue to evaluate the “right size” of our on-going operations in relation to desired profitability targets. We may determine that additional reductions in spending, including further reductions in workforce, may be necessary. Additional reductions in workforce and other spending could result in additional restructuring charges.

In the third quarter of 2009, we abandoned our operation in France. The consolidated statements of operations reflect the reclassification of the results of operations for this business to discontinued operations for all periods presented in accordance with U.S. generally accounting principles. This business was previously reported in our EMEA reporting segment. The consolidated statements of operations also reflect the reclassification of the results of operations for our Poland and Turkey operations discontinued operations for all periods presented in accordance with U.S. generally accepted accounting principles. These businesses were previously reported in our EMEA reporting segment.

RESULTS OF OPERATIONS

Revenue and wireless devices handled by division and service line

		Three Months Ended September 30,
						% of								% of
		2009				Total				2008				Total				Change
		(Amounts in 000s)
Distribution revenue
Americas		$	114,341				15	%		$	169,345				16	%			(32	%)
Asia-Pacific			254,030				33	%			320,807				30	%			(21	%)
EMEA			404,444				52	%			565,776				54	%			(29	%)
Total		$	772,815				100	%		$	1,055,928				100	%			(27	%)
Logistic services revenue
Americas		$	47,794				50	%		$	45,615				41	%			5	%
Asia-Pacific			8,016				8	%			13,425				12	%			(40	%)
EMEA			39,290				42	%			51,942				47	%			(24	%)
Total		$	95,100				100	%		$	110,982				100	%			(14	%)
Total revenue
Americas		$	162,135				19	%		$	214,960				18	%			(25	%)
Asia-Pacific			262,046				30	%			334,232				29	%			(22	%)
EMEA			443,734				51	%			617,718				53	%			(28	%)
Total		$	867,915				100	%		$	1,166,910				100	%			(26	%)

		Three Months Ended September 30,
						% of								% of
		2009				Total				2008				Total				Change
		(Amounts in 000s)
Wireless devices sold through distribution
Americas			730				13	%			1,360				22	%			(46	%)
Asia-Pacific			2,021				36	%			2,810				45	%			(28	%)
EMEA			2,876				51	%			2,132				33	%			35	%
Total			5,627				100	%			6,302				100	%			(11	%)
Wireless devices handled through logistic services
Americas			14,059				88	%			12,051				87	%			17	%
Asia-Pacific			726				5	%			495				4	%			47	%
EMEA			1,225				7	%			1,230				9	%			0	%
Total			16,010				100	%			13,776				100	%			16	%
Total wireless devices handled
Americas			14,789				68	%			13,411				67	%			10	%
Asia-Pacific			2,747				13	%			3,305				16	%			(17	%)
EMEA			4,101				19	%			3,362				17	%			22	%
Total			21,637				100	%			20,078				100	%			8	%

		Nine Months Ended September 30,
						% of								% of
		2009				Total				2008				Total				Change
		(Amounts in 000s)
Distribution revenue
Americas		$	328,180				16	%		$	542,007				17	%			(39	%)
Asia-Pacific			617,665				31	%			941,477				30	%			(34	%)
EMEA			1,059,596				53	%			1,665,343				53	%			(36	%)
Total		$	2,005,441				100	%		$	3,148,827				100	%			(36	%)
Logistic services revenue
Americas		$	138,759				51	%		$	136,420				43	%			2	%
Asia-Pacific			23,862				9	%			35,811				11	%			(33	%)
EMEA			111,611				40	%			146,340				46	%			(24	%)
Total		$	274,232				100	%		$	318,571				100	%			(14	%)
Total revenue
Americas		$	466,939				20	%		$	678,427				20	%			(31	%)
Asia-Pacific			641,527				28	%			977,288				28	%			(34	%)
EMEA			1,171,207				52	%			1,811,683				52	%			(35	%)
Total		$	2,279,673				100	%		$	3,467,398				100	%			(34	%)

		Nine Months Ended September 30,
						% of								% of
		2009				Total				2008				Total				Change
		(Amounts in 000s)
Wireless devices sold through distribution
Americas			2,235				16	%			4,273				23	%			(48	%)
Asia-Pacific			5,050				36	%			8,295				45	%			(39	%)
EMEA			6,675				48	%			5,967				32	%			12	%
Total			13,960				100	%			18,535				100	%			(25	%)
Wireless devices handled through logistic services
Americas			39,933				88	%			37,840				89	%			6	%
Asia-Pacific			1,764				4	%			1,378				3	%			28	%
EMEA			3,741				8	%			3,265				8	%			15	%
Total			45,438				100	%			42,483				100	%			7	%
Total wireless devices handled
Americas			42,168				71	%			42,113				69	%			0	%
Asia-Pacific			6,814				11	%			9,673				16	%			(30	%)
EMEA			10,416				18	%			9,232				15	%			13	%
Total			59,398				100	%			61,018				100	%			(3	%)

The following table presents the percentage changes in revenue for the three and nine months ended September 30, 2009 by service line compared to the same period in the prior year, including the impact to revenue from changes in wireless devices handled, average selling price and foreign currency.

		2009 Percentage Change in Revenue vs. 2008
										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, 2009:
Distribution			(14	%)			(5	%)			(5	%)			(3	%)			(27	%)
Logistic services			6	%			(2	%)			(17	%)			(1	%)			(14	%)
Total			(12	%)			(5	%)			(7	%)			(2	%)			(26	%)
Nine months ended September 30, 2009:
Distribution			(19	%)			(6	%)			(6	%)			(5	%)			(36	%)
Logistic services			4	%			(3	%)			(14	%)			(2	%)			(14	%)
Total			(16	%)			(6	%)			(7	%)			(5	%)			(34	%)