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

For the quarterly period ended March 31, 2008

Brightpoint, Inc.

Indiana		35-1778566
State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization

2601 Metropolis Parkway, Suite 210, Plainfield, Indiana		46168
(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 is a large accelerated filer, an accelerated filer or a non-accelerated filer, or a smaller reporting company. See definition of “accelerated filer,” large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o            Accelerated filer þ                      Non-accelerated filer o                      Smaller reporting company o

                          (Do not check if a smaller reporting company)

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

The number of shares of Common Stock outstanding as of May 1, 2008: 81,593,200

 

 

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
		March 31,
		2008				2007
Revenue
Distribution revenue		$	1,089,010			$	567,040
Logistic services revenue			105,771				74,589
Total revenue			1,194,781				641,629
Cost of revenue
Cost of distribution revenue			1,039,145				550,414
Cost of logistic services revenue			68,367				58,500
Total cost of revenue			1,107,512				608,914
Gross profit			87,269				32,715
Selling, general and administrative expenses			71,751				28,253
Amortization expense			4,722				80
Restructuring charge			3,614				—
Operating income from continuing operations			7,182				4,382
Interest, net			7,544				1,150
Other (income) expenses			(1,965	)			44
Income from continuing operations before income taxes			1,603				3,188
Income tax expense			705				1,346
Income from continuing operations before minority interest			898				1,842
Minority interest, net of taxes			139				—
Income from continuing operations			759				1,842
Discontinued operations, net of income taxes:
Gain from discontinued operations			16				4
Gain on disposal of discontinued operations			—				4
Total discontinued operations, net of income taxes			16				8
Net income		$	775			$	1,850
Earnings per share — basic:
Income from continuing operations		$	0.01			$	0.04
Discontinued operations, net of income taxes			—				—
Net income		$	0.01			$	0.04
Earnings per share — diluted:
Income from continuing operations		$	0.01			$	0.04
Discontinued operations, net of income taxes			—				—
Net income		$	0.01			$	0.04
Weighted average common shares outstanding:
Basic			77,523				49,488
Diluted			81,519				50,424

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

		March 31,				December 31,
		2008				2007
		(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents		$	90,753			$	102,160
Accounts receivable (less allowance for doubtful accounts of $18,034 in 2008 and $17,157 in 2007)			578,811				754,238
Inventories			471,107				474,951
Other current assets			70,505				69,261
Total current assets			1,211,176				1,400,610
Property and equipment, net			58,663				55,732
Goodwill			371,166				349,646
Other intangibles, net			139,198				135,431
Other assets			34,510				30,942
Total assets		$	1,814,713			$	1,972,361
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	571,560			$	666,085
Accrued expenses			165,875				189,415
Current portion of long-term debt			12,382				19,332
Lines of credit and other short-term borrowings			9,703				—
Total current liabilities			759,520				874,832
Long-term liabilities:
Lines of credit, long-term			126,989				208,399
Long-term debt			229,333				233,122
Other long-term liabilities			59,513				54,425
Total long-term liabilities			415,835				495,946
Total liabilities			1,175,355				1,370,778
COMMITMENTS AND CONTINGENCIES
Minority interest			1,014				818
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; 88,647 issued in 2008 and 88,418 issued in 2007			886				884
Additional paid-in-capital			586,389				584,806
Treasury stock, at cost, 6,951 shares in 2008 and 6,930 shares in 2007			(58,952	)			(58,695	)
Retained earnings			30,242				29,467
Accumulated other comprehensive income			79,779				44,303
Total shareholders’ equity			638,344				600,765
Total liabilities and shareholders’ equity		$	1,814,713			$	1,972,361

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

		Three Months Ended
		March 31,
		2008				2007
Operating activities
Net income		$	775			$	1,850
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization			9,507				3,059
Discontinued operations			16				(8	)
Pledged cash requirements			—				(1,342	)
Non-cash compensation			1,645				1,552
Restructuring charge			3,614				—
Change in deferred taxes			(4,262	)			1,348
Minority interest			139				—
Other non-cash			3,330				1,091
			14,764				7,550
Changes in operating assets and liabilities, net of effects from acquisitions and divestitures:
Accounts receivable			211,058				35,764
Inventories			29,298				71,593
Other operating assets			(3,154	)			(3,224	)
Accounts payable and accrued expenses			(153,557	)			(121,512	)
Net cash provided by (used in) operating activities			98,409				(9,829	)
Investing activities
Capital expenditures			(6,377	)			(4,847	)
Acquisitions, net of cash acquired			(1,252	)			(67,018	)
Decrease (increase) in other assets			1,002				(1,472	)
Net cash used in investing activities			(6,627	)			(73,337	)
Financing Activities
Net proceeds from (repayments) on lines of credit			(79,134	)			76,434
Repayments on Global Term Loans			(23,130	)			—
Deferred financing costs paid			—				(1,627	)
Purchase of treasury stock			(257	)			(353	)
Excess tax (deficit) benefit from equity based compensation			(82	)			104
Proceeds from common stock issuances under employee stock option plans			22				255
Net cash provided by (used in) financing activities			(102,581	)			74,813
Effect of exchange rate changes on cash and cash equivalents			(608	)			943
Net decrease in cash and cash equivalents			(11,407	)			(7,410	)
Cash and cash equivalents at beginning of period			102,160				54,130
Cash and cash equivalents at end of period		$	90,753			$	46,720

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 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007. 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
		March 31,
		2008				2007
Income from continuing operations		$	759			$	1,842
Discontinued operations, net of income taxes			16				8
Net Income		$	775			$	1,850
Earnings per share — basic:
Income from continuing operations		$	0.01			$	0.04
Discontinued operations, net of income taxes			—				—
Net income		$	0.01			$	0.04
Earnings per share — diluted:
Income from continuing operations		$	0.01			$	0.04
Discontinued operations, net of income taxes			—				—
Net income		$	0.01			$	0.04
Weighted average shares outstanding for basic earnings per share			77,523				49,488
Net effect of dilutive stock options, restricted stock units, shares held in escrow and restricted stock based on the treasury stock method using average market price			3,996				936
Weighted average shares outstanding for diluted earnings per share			81,519				50,424

Brightpoint, Inc.
Notes to Consolidated Financial Statements

Recently Issued Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) 157, Fair Value Measurements. The provisions of SFAS 157 were effective for the Company on January 1, 2008 for financial assets and liabilities and are effective for the Company on January 1, 2009 for non-financial assets and liabilities. The adoption of SFAS 157 did not have a material impact on the Company’s financial statements. SFAS 157 defines fair value, provides guidance for measuring fair value and requires certain disclosures. SFAS No. 157 discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The statement utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

	•		Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
	•		Level 2: Inputs, other than quoted prices, that are observable for the asset or liability, either directly or indirectly. These include 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.
	•		Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.

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				Significant
		Balance at				in active				other
		March 31,				markets				observable
		2008				(Level 1)				inputs (Level 2)
Financial instruments classified as assets
Marketable securities		$	7,050			$	7,050			$	—
Financial instruments classified as liabilities
Interest rate swaps		$	3,833			$	—			$	3,833
Forward foreign currency contracts			1,692				—				1,692

In December 2007, FASB issued SFAS 141 (R). This statement amends SFAS 141, 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) are effective for the Company on January 1, 2009. The Company does not currently expect the adoption of SFAS 141(R) to 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 amends ARB 51 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 are effective for the Company on January 1, 2009. The Company does not expect the adoption of SFAS 160 to have a material impact on its financial statements.

In March 2008, the FASB issued SFAS 161, Disclosures about Derivative Instruments and Hedging Activities. This Statement enhances disclosures about derivative and hedging activities. The provisions of SFAS 161 are effective

Brightpoint, Inc.
Notes to Consolidated Financial Statements

for the Company on January 1, 2009. The Company does not expect the adoption of SFAS 161 to have a material impact on its financial statements.

Other Comprehensive Income

Comprehensive income is comprised of net income, unrealized losses on marketable securities, unrealized losses on derivative instruments, and gains or losses resulting from currency translations of foreign investments. The details of comprehensive income for the three months ended March 31, 2008 and 2007 are as follows (in thousands):

		Three Months Ended
		March 31,
		2008				2007
Net income		$	775			$	1,850
Unrealized loss on derivative instruments			(721	)			—
Unrealized loss on marketable securities			(1,334	)			—
Foreign currency translation			37,531				1,835
Comprehensive income		$	36,251			$	3,685

2. Acquisitions

On March 30, 2007, the Company completed its acquisition of certain assets and the assumption of certain liabilities related to the U.S. operations and the Miami-based Latin America business of CellStar Corporation for $67.5 million (including direct acquisition costs). Results of operations related to this acquisition have been included in the Company’s Consolidated Statements of Operations beginning in the second quarter of 2007.

On July 31, 2007 the Company completed its acquisition of Dangaard Telecom A/S (Dangaard Telecom). The purchase price for the Dangaard Telecom acquisition was $311.1 million (including direct acquisition costs). The fair value of the Company’s common stock was measured in accordance with EITF 99-12, Determination of the Measurement Date for the Market Price of Acquirer Securities Issued in a Purchase Business Combination. Total equity consideration was estimated using a stock price of $11.25 per share, which represents the average closing stock price beginning two trading days before and ending two trading days after February 20, 2007, the date of the public announcement of the definitive purchase agreement. The allocation of the purchase price is based upon preliminary estimates of the fair value of assets acquired and liabilities assumed. Results of operations related to this acquisition are included in the Company’s Consolidated Statements of Operations beginning on August 1, 2007.

The following sets forth unaudited pro forma financial information in accordance with accounting principles generally accepted in the United States assuming the Dangaard Telecom acquisition took place at the beginning of the 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:
(amounts in 000s)

		Dangaard
March 31, 2007		Telecom				Brightpoint				Adjustments				Note				Consolidated
Revenue		$	507,719			$	641,629			$	(49,911	)			(1	)		$	1,099,437
Income from continuing operations			2,675				1,842				(3,101	)			(2	)			1,416
Net income			2,675				1,850				(3,101	)							1,424
Weighted average shares outstanding — diluted							50,424				30,000				(3	)			80,424
Income from continuing operations per share — diluted						$	0.04											$	0.02

Brightpoint, Inc.
Notes to Consolidated Financial Statements

Pro forma adjustments:

	(1)		To reclassify the cost of revenue that was historically presented on a gross basis to a net basis to conform with EITF 99-19, Reporting Revenue Gross as a Principal versus Net as an Agent and Brightpoint accounting policy.
	(2)		To record the following:

	•		amortization of the intangible assets recorded as a result of the acquisition Dangaard Telecom, and
	•		income tax provision for the effect of the pro forma adjustments above based on statutory tax rates.

(3)

To adjust the weighted average number of shares outstanding used to determine diluted pro forma earnings per share assuming the 30,000,000 shares of the Company’s unregistered Common Stock used to acquire Dangaard Telecom were issued at the beginning of the period presented.

Prior to the completion of the acquisition of Dangaard Telecom, Company management began formulating a plan to exit certain activities of the combined company. Components of this plan included terminating Dangaard Telecom’s implementation of SAP enterprise resource planning (ERP) and related software and consolidating certain facilities. These additional liabilities were recognized as liabilities assumed in the business combination and included in the allocation of the acquisition costs in accordance with EITF 95-3, Recognition of Liabilities in Connection with a Purchased Business Combination. Adjustments to the purchase price allocation under the preliminary plan resulted in reductions of assets acquired of $16.7 million and additional liabilities assumed of $2.7 million in 2007.

3. Borrowings

At March 31, 2008, the Company and its subsidiaries were in compliance with the covenants in each of its credit agreements. Interest expense includes interest on outstanding debt, fees paid for unused capacity on credit lines and amortization of deferred financing fees. Average daily debt outstanding was approximately $513.0 million in the first quarter of 2008.

The table below summarizes the borrowings that were available to the Company as of March 31, 2008 (in thousands):

										Letters of Credit &				Net
		Gross Availability				Outstanding				Guarantees				Availability
Global Term Loans		$	241,715			$	241,715			$	—			$	—
Global Credit Facility			300,000				126,989				1,027				171,984
Other			60,624				9,703				—				50,921
Total		$	602,339			$	378,407			$	1,027			$	222,905

Additional details on the above borrowings are discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007.

4. Guarantees

In accordance with FIN 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, 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. Although the guarantees relating to lines of credit are excluded from the scope of FIN 45, 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, 2007.

Brightpoint, Inc.
Notes to Consolidated Financial Statements

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.

Late in 2004, the Company entered into a non-exclusive agreement to distribute wireless devices in Europe for a certain supplier. Subject to this agreement, the Company provides warranty repair services on certain devices it distributes for this supplier. The warranty period for these devices ranges from 12 to 24 months, and the Company is liable for providing warranty repair services unless failure rates exceed a certain threshold. The Company records estimated expenses related to future warranty repair at the time the devices are sold. Estimates for warranty costs are calculated primarily based on management’s assumptions related to cost of repairs and anticipated failure rates. During 2006, this supplier re-branded its devices and provides aftermarket support services including warranty repairs. The Company does not provide warranty repair services on the re-branded devices on behalf of the supplier; however, the Company does provide aftermarket support services including warranty repairs for wireless devices sold by one of the Company’s European operations to one customer. Sales of devices for which the Company provides warranty repair services have decreased significantly since this supplier re-branded its devices. The Company assumed an obligation through the acquisition of Dangaard Telecom that is related to a similar program. Warranty accruals are adjusted from time to time when the Company’s actual warranty claim experience differs from its estimates. A summary of the changes in the product warranty accrual is as follows (in thousands):

		Three Months Ended
		March 31,
		2008				2007
January 1		$	3,944			$	3,063
Provision for product warranties			478				1,227
Settlements during the period			(1,760	)			(1,893	)
March 31		$	2,662			$	2,397

5. Restructuring

Prior to the completion of the acquisition of Dangaard Telecom, Company management began formulating a plan to exit certain activities of the combined company. As Company management finalizes the plan, additional liabilities may result primarily related to involuntary employee termination costs and costs to exit certain facilities in our Europe operations. These additional liabilities will be recognized as liabilities assumed in the business combination and included in the allocation of the acquisition costs in accordance with EITF 95-3, Recognition of Liabilities in Connection with a Purchased Business Combination.

Reserve activity for the restructuring for the three months ended March 31, 2008 is as follows (in thousands):

						Lease
		Employee				Termination
		Terminations				Costs				Total
Balance at December 31, 2007		$	3,336			$	728			$	4,064
Restructuring charge			426				3,188				3,614
Foreign currency translation			138				123				261
Total activity:			3,900				4,039				7,939
Less:
Cash usage			(886	)			—				(886	)
Non-cash usage			—				—				—
Balance at March 31, 2008		$	3,014			$	4,039			$	7,053

Brightpoint, Inc.
Notes to Consolidated Financial Statements

Restructuring charge was $3.6 million for the three months ended March 31, 2008. The restructuring charge consists of $3.2 million associated with the exit of our redundant warehouse and office facility in Germany as well as $0.4 million of severance costs to terminate employees of the Company’s redundant operations in Germany and Norway.

6. Operating Segments

The Company has operations centers and/or sales offices in various countries including Australia, Austria, Belgium, Colombia, Denmark, Finland, France, Germany, India, Italy, the Netherlands, New Zealand, Norway, Poland, Portugal, Russia, Singapore, Slovakia, South Africa, Spain, Sweden, Switzerland, Turkey, 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 Europe. The Company’s operating segments have been aggregated into these three geographic reporting segments.

The Company evaluates the performance of and allocates resources to these segments based on operating income from continuing operations (excluding corporate selling, general and administrative expenses and other unallocated expenses). In the first quarter of 2008, the Company reclassified the financial information related to the global IT support cost center from the Asia-Pacific region to the Corporate and Reconciling section of the segment information presented below. Segment information as of and for the three months ended March 31, 2007 has been reclassified to conform to the 2008 presentation. A summary of the Company’s operations by segment is presented below (in thousands) for the three months ended March 31, 2008 and 2007:

														Corporate and
		Americas				Asia-Pacific				Europe				Reconciling Items				Total
Three Months Ended March 31, 2008:
Distribution revenue		$	200,853			$	330,448			$	557,709			$	—			$	1,089,010
Logistic services revenue			46,750				10,640				48,381				—				105,771
Total revenue from external customers		$	247,603			$	341,088			$	606,090			$	—			$	1,194,781
Operating income from continuing operations		$	8,256			$	6,085			$	945			$	(8,104	)		$	7,182
Depreciation and amortization			2,683				744				5,816				264				9,507
Capital expenditures			1,077				93				4,952				255				6,377
Three Months Ended March 31, 2007:
Distribution revenue		$	139,951			$	318,277			$	108,812			$	—			$	567,040
Logistic services revenue			42,226				7,235				25,104				24				74,589
Total revenue from external customers		$	182,177			$	325,512			$	133,916			$	24			$	641,629
Operating income from continuing operations		$	5,482			$	4,313			$	725			$	(6,138	)		$	4,382
Depreciation and amortization			2,059				512				262				226				3,059
Capital expenditures			3,526				841				194				286				4,847

Additional segment information is as follows (in thousands):

		March 31,				December 31,
		2008				2007
Total segment assets:
Americas		$	289,092			$	354,910
Asia-Pacific			202,142				243,084
Europe			1,294,611				1,343,621
Corporate			28,868				30,746
		$	1,814,713			$	1,972,361

7. Legal Proceedings and Contingencies

On July 31, 2007, we acquired Dangaard Telecom which had the following material claims and/or disputes:

Brightpoint, Inc.
Notes to Consolidated Financial Statements

There are two disputes pending with Finanzamt Flensburg, the German value-added tax, or VAT, authorities (the Finanzamt):

	1.		Dangaard Telecom’s subsidiary, Dangaard Telecom Denmark A/S, received an assessment from the Finanzamt claiming that local German VAT should be applied on sales made by Dangaard Telecom Denmark A/S to two specific German customers in 1997 and 1998. Finanzamt claimed approximately $2.9 million. The case is currently in abeyance waiting for a principal decision or settlement involving similar cases pending in Germany. Dangaard Telecom Denmark A/S continues to dispute this claim and intends to defend this matter vigorously. The former shareholders of Dangaard Telecom agreed to indemnify Dangaard Holding with respect to this dispute when Dangaard Holding acquired Dangaard Telecom, and Dangaard Holding has agreed in the purchase agreement to transfer and assign these indemnification rights to us (or enforce them on our behalf if such transfer or assignment is not permitted).
	2.		Dangaard Telecom’s subsidiary, Dangaard Telecom Denmark A/S, received a notice from the Finanzamt claiming that local German VAT should be applied on all sales made by Dangaard Telecom Denmark A/S to German customers during the years 1999 to 2004. Finanzamt claimed approximately $8.1 million. The case is currently in abeyance waiting for a principal decision or settlement involving similar cases pending in Germany. Dangaard Telecom Denmark A/S continues to dispute this claim and intends to defend this matter vigorously. 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 has agreed in the purchase agreement to transfer and assign these indemnification rights to us (or enforce them on our behalf if such transfer or assignment is not permitted).

The former headquarters of Dangaard Telecom was 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, and a law firm has been asked to give an assessment of whether or not to appeal the case. 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). The Company is currently evaluating the actions to be taken towards former shareholders of the Dangaard group of companies in relation to the indemnification agreement.

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.

Brightpoint, Inc.
Notes to Consolidated Financial Statements

8. Subsequent events

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 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 $7.2 million (3.6 million pounds sterling).

In April 2008, the Company reached an agreement with the former managing director of the Company’s Colombia operations to sell certain assets used primarily in connection with fulfillment services performed in that market. The agreement will result in a pre-tax loss in connection with this sale of approximately $1.7 million to $2.0 million in the second quarter of 2008 of which approximately $1.1 million to $1.4 million will be non-cash.

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 policies and estimates, the policies 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, 2007, 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, 2007.

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, France, Germany, India, Italy, the Netherlands, New Zealand, Norway, Poland, Portugal, Russia, Singapore, Slovakia, South Africa, Spain, Sweden, Switzerland, Turkey, 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 July 31, 2007 we completed our acquisition of Dangaard Telecom A/S (Dangaard Telecom). Results of operations related to this acquisition are included in our Consolidated Statements of Operations beginning on August 1, 2007.

On March 30, 2007, we completed our acquisition of certain assets and the assumption of certain liabilities related to the U.S. operations and the Miami-based Latin America business of CellStar Corporation. Results of operations related to this acquisition have been included in our Consolidated Statements of Operations beginning in the second quarter of 2007.

RESULTS OF OPERATIONS

Revenue and wireless devices handled by division and service line

		Three Months Ended March 31,
						% of								% of
		2008				Total				2007				Total				Change
		(Amounts in 000s)
Distribution revenue
Americas		$	200,853				19	%		$	139,951				25	%			44	%
Asia-Pacific			330,448				30	%			318,277				56	%			4	%
Europe			557,709				51	%			108,812				19	%			413	%
Total		$	1,089,010				100	%		$	567,040				100	%			92	%
Logistic services revenue
Americas		$	46,750				44	%		$	42,226				56	%			11	%
Asia-Pacific			10,640				10	%			7,235				10	%			47	%
Europe			48,381				46	%			25,104				34	%			93	%
Total		$	105,771				100	%		$	74,565				100	%			42	%
Total revenue
Americas		$	247,603				21	%		$	182,177				28	%			36	%
Asia-Pacific			341,088				28	%			325,512				51	%			5	%
Europe			606,090				51	%			133,916				21	%			353	%
Total		$	1,194,781				100	%		$	641,605				100	%			86	%

		Three months ended
		March 31,
						% of								% of
		2008				Total				2007				Total				Change
		(Amounts in 000s)
Wireless devices sold through distribution
Americas			1,593				25	%			987				25	%			61	%
Asia-Pacific			2,740				43	%			2,564				66	%			7	%
Europe			2,025				32	%			347				9	%			484	%
Total			6,358				100	%			3,898				100	%			63	%
Wireless devices handled through logistic services
Americas			14,030				91	%			10,121				96	%			39	%
Asia-Pacific			376				2	%			364				3	%			3	%
Europe			1,020				7	%			147				1	%			594	%
Total			15,426				100	%			10,632				100	%			45	%
Total wireless devices handled
Americas			15,623				72	%			11,108				77	%			41	%
Asia-Pacific			3,116				14	%			2,928				20	%			6	%
Europe			3,045				14	%			494				3	%			516	%
Total			21,784				100	%			14,530				100	%			50	%

The following table presents the percentage changes in revenue for the first quarter of 2008 by service line compared to the same period in the prior year, including the effect of handset volume, average selling price, foreign currency, and acquisitions on these percentage changes.

		2008 Percentage Change in Revenue vs. 2007
										Non-
		Handset-				Average				handset
		based				Selling				based				Foreign
		volume (1)				Price				revenue (2)				Currency				Subtotal (3)				Acquisitions				Total
Distribution			(3	%)			(1	%)			1	%			2	%			(1	%)			93	%			92	%
Logistic services			9	%			(5	%)			8	%			2	%			14	%			28	%			42	%
Total			(2	%)			(1	%)			2	%			2	%			1	%			85	%			86	%

Revenue and wireless devices handled by division:

		Three Months Ended
		March 31,
Americas						% of								% of
(Amounts in 000s)		2008				Total				2007				Total				Change
REVENUE:
Distribution		$	200,853				81	%		$	139,951				77	%			44	%
Logistic services			46,750				19	%			42,226				23	%			11	%
Total		$	247,603				100	%		$	182,177				100	%			36	%
WIRELESS DEVICES HANDLED :
Distribution			1,593				10	%			987				9	%			61	%
Logistic services			14,030				90	%			10,121				91	%			39	%
Total			15,623				100	%			11,108				100	%			41	%

The following table presents the percentage changes in revenue for our Americas division by service line for the first quarter of 2008 compared to the same period in the prior year, including the effect of handset volume, average selling price, foreign currency, and the CellStar acquisition on these percentage changes.

		2008 Percentage Change in Revenue vs. 2007
										Non-
		Handset-				Average				handset
		based				Selling				based				Foreign								CellStar
		volume				Price				revenue				Currency				Subtotal				Acquisition				Total
Distribution			(19	%)			14	%			0	%			1	%			(4	%)			48	%			44	%
Logistic services			17	%			(9	%)			2	%			1	%			11	%			0	%			11	%
Total			(11	%)			9	%			0	%			1	%			(1	%)			37	%			36	%

The decrease in handset based volume was primarily due to higher sales of lower priced handsets in 2007 that did not recur in the first quarter of 2008. The increase in average selling price was primarily due to a higher mix of converged devices sold compared to the same period in the prior year. Converged devices are feature-rich and typically carry a higher average selling price. While we believe the market for converged devices will continue to expand, there can be no assurances that our average selling price will continue to remain at current levels and the mix of devices sold will continue to yield favorable variances in average selling price.

The increase in devices handled through logistic services and decrease in average fulfillment fee per unit in our Americas division was primarily driven by the successful launch of the T-Mobile logistic services business during the second quarter of 2007.

		Three Months Ended
		March 31,
Asia-Pacific						% of								% of
(Amounts in 000s)		2008				Total				2007				Total				Change
REVENUE:
Distribution		$	330,448				97	%		$	318,277				98	%			4	%
Logistic services			10,640				3	%			7,235				2	%			47	%
Total		$	341,088				100	%		$	325,512				100	%			5	%
WIRELESS DEVICES HANDLED :
Distribution			2,740				88	%			2,564				88	%			7	%
Logistic services			376				12	%			364				12	%			3	%
Total			3,116				100	%			2,928				100	%			6	%

The following table presents the percentage changes in revenue for our Asia-Pacific division by service line for the first quarter of 2008 compared to the same period in the prior year, including the effect of handset volume, average selling price, and foreign currency on these percentage changes.

		2008 Percentage Change in Revenue vs. 2007
										Non-
		Handset-				Average				handset
		based				Selling				based				Foreign
		volume				Price				revenue				Currency				Total
Distribution			6	%			(7	%)			2	%			3	%			4	%
Logistic services			1	%			2	%			39	%			5	%			47	%
Total			6	%			(6	%)			2	%			3	%			5	%

The increase in wireless devices sold in our Asia-Pacific division was driven by increased volume of devices sold to customers served by our Singapore business. However, supply constraints caused by snow storms in China slowed the growth in devices sold by our Singapore business. The decrease in average selling price in our Asia-Pacific division was also driven by our Singapore business as a result of an increase in sales of lower priced handsets due to market demand as well as lower availability of higher priced devices. This decrease in average selling price in Singapore was partially offset by an increase in average selling price in our Australia business due to a higher mix of converged devices sold compared to the same period in the prior year.

The increase in non-handset based logistic services revenue was primarily due to an increase in repair services in India compared to the same period in the prior year as well as an increase in revenue from non-handset based logistic services contracts in New Zealand.

						Three Months Ended
		March 31,
Europe						% of								% of
(Amounts in 000s)		2008				Total				2007				Total				Change
REVENUE:
Distribution		$	557,709				92	%		$	108,812				81	%			413	%
Logistic services			48,381				8	%			25,104				19	%			93	%
Total		$	606,090				100	%		$	133,916				100	%			353	%
WIRELESS DEVICES HANDLED :
Distribution			2,025				67	%			347				70	%			484	%
Logistic services			1,020				33	%			147				30	%			594	%
Total			3,045				100	%			494				100	%			516	%

The following table presents the percentage changes in revenue for the first quarter of 2008 by service line for our Europe division compared to the same period in the prior year, including the effect of handset volume, average selling price, foreign currency, and the Dangaard Telecom acquisition on these percentage changes.

		2008 Percentage Change in Revenue vs. 2007
										Non-
		Handset-				Average				handset
		based				Selling				based				Foreign								Dangaard
		volume				Price				revenue				Currency				Subtotal				Acquisition				Total
Distribution			(12	%)			1	%			(1	%)			3	%			(9	%)			422	%			413	%
Logistic services			0	%			(1	%)			8	%			2	%			9	%			84	%			93	%
Total			(10	%)			1	%			1	%			2	%			(6	%)			359	%			353	%

The increase in distribution revenue was primarily due to the acquisition of Dangaard Telecom. The acquisition of Dangaard Telecom expanded our Europe division to include nine countries in which we historically did not have a significant operating presence. In countries in which both companies had a significant operating presence, the acquisition of Dangaard Telecom allowed us to increase our market share. Excluding the Dangaard Telecom operations, distribution revenue in our Europe division was estimated to have decreased 9% when assuming that revenue from legacy Brightpoint operations in overlapping countries (Germany, Norway, and Sweden) remained constant from the first quarter of 2007. The decrease in handset-based volume excluding the Dangaard Telecom operations was primarily due to a decrease in wireless devices sold by our Finland operations as a result of lower sales to a wireless device retailer. The decrease in non-handset based revenue was primarily due to a decrease in revenue from the sale of locally branded PC notebooks in Europe. This business is currently under evaluation, and revenue from the sale of locally branded PC notebooks is not expected to return to historical levels.

The increase in logistic services revenue was primarily due to the acquisition of Dangaard Telecom, which was included in our results of operations beginning on August 1, 2007. In order to conform to Brightpoint accounting policies and US GAAP, Dangaard Telecom changed its revenue recognition for arrangements where Dangaard Telecom serves as the “agent” in the transaction. The revenue from these arrangements is included in logistic services revenue. Excluding the Dangaard Telecom operations, logistic services revenue in our Europe division increased 9% due to an increase in revenue from the sale of prepaid airtime in Sweden.

Gross Profit and Gross Margin

		Three Months Ended
		March 31,
						% of								% of
		2008				Total				2007				Total				Change
		(Amounts in 000s)
Distribution		$	49,865				57	%		$	16,626				51	%			200	%
Logistic services			37,404				43	%			16,089				49	%			132	%
Gross profit		$	87,269				100	%		$	32,715				100	%			167	%
Distribution			4.6	%							2.9	%						1.7		points
Logistic services			35.4	%							21.6	%						13.8		points
Gross margin			7.3	%							5.1	%						2.2		points

The 2.2 percentage point increase in gross margin was driven by both a 1.7 percentage point increase in gross margin from our distribution business and a 13.8 percentage point increase in gross margin from our logistic services business. The increases in gross profit and gross margin from logistic services were driven by incremental logistic services gross profit and gross margin from the Dangaard Telecom operations as well the impact of conforming Dangaard Telecom to Brightpoint accounting policies. The increases in distribution gross profit and gross margin were primarily driven by a shift in mix toward higher margin distribution business in Europe resulting from the acquisition of Dangaard Telecom. Distribution gross margin was negatively impacted by approximately 0.3 percentage points due to a loss from the sale of locally branded PC notebooks in Europe. This business is currently under evaluation, and revenue and profit from the sale of locally branded PC notebooks is not expected to return to historical levels.

Selling General and Administrative (SG&A) Expenses

		Three Months Ended
		March 31,
		2008				2007				Change
		(Amounts in 000s)
SG&A expenses		$	71,751			$	28,253				154	%
Percent of revenue			6.0	%			4.4	%		1.6		points

The increase in SG&A expenses for the first quarter of 2008 compared to the same period in the prior year was primarily driven by the impact of the Dangaard Telecom and CellStar acquisitions.

As a percent of revenue, SG&A expenses increased 1.6 percentage points. The increase in SG&A as a percent of revenue was largely driven by the impact of the Dangaard Telecom operations including the impact of conforming Dangaard Telecom to Brightpoint accounting policies. In addition, SG&A as a percent of revenue was negatively impacted by the lower than expected revenue resulting from overall weakness in Europe during mid to late March as well as the supply constraints caused by snow storms in China. SG&A expenses included $1.6 million of non-cash stock based compensation expense for the three months ended March 31, 2008 and 2007.

Compared to the fourth quarter of 2007, which was the first full quarter including the Dangaard Telecom operations, SG&A expenses decreased $1.4 million from $73.1 million for the three months ended December 31, 2007.

Amortization expense

Amortization expense was $4.7 million for the three months ended March 31, 2008 compared to $0.1 million for the same period in the prior year. The increase in amortization expense relates to finite-lived intangible assets acquired in connection with the CellStar and Dangaard Telecom transactions. We allocated the purchase price of the Dangaard Telecom and CellStar acquisitions based on the fair value of assets acquired and liabilities assumed. The assets acquired in connection with the Dangaard Telecom transaction included $123.1 million of finite-lived intangible assets assigned to the customer relationships as of July 31, 2007. The acquired finite-lived intangible

assets have a useful life of approximately fifteen years and are being amortized over the period that the assets are expected to contribute to our future cash flows. The assets are being amortized on an accelerated method based on the projected cash flows used for valuation purposes. We believe that these cash flows are most reflective of the pattern in which the economic benefit of the finite-lived intangible assets will be consumed.

Restructuring charge

Restructuring charge was $3.6 million for the three months ended March 31, 2008. The restructuring charge consists of $3.2 million associated with the exit of our redundant warehouse and office facility in Germany as well as $0.4 million of severance costs to terminate employees of our redundant operations in Germany and Norway.

In the second quarter of 2008, we will record a pre-tax restructuring charge of approximately $1.7 million to $2.0 million in connection with the sale of certain assets in Colombia to the former managing director. Approximately $1.1 million to $1.4 million of this charge will be non-cash.

Operating Income from Continuing Operations

		Three Months Ended
		March 31,
						% of								% of
		2008				Total				2007				Total				Change
		(Amounts in 000s)
Americas		$	8,256				115	%		$	5,482				125	%			51	%
Asia-Pacific			6,085				85	%			4,313				98	%			41	%
Europe			945				13	%			725				17	%			30	%
Corporate			(8,104	)			(113	%)			(6,138	)			(140	%)			32	%
Total		$	7,182				100	%		$	4,382				100	%			64	%

Operating Income as a Percent of Revenue by Division:

		Three Months Ended
		March 31,
		2008				2007				Change
Americas			3.3	%			3.0	%		0.3 points
Asia-Pacific			1.8	%			1.3	%		0.5 points
Europe			0.2	%			0.5	%		(0.3) points
Total			0.6	%			0.7	%		(0.1) points

The increase in operating income in our Americas division was primarily as a result of the acquisition of CellStar and the launch of logistic services for T-Mobile in the second quarter of 2007.

The increase in operating income in our Asia-Pacific division was primarily as a result of an increase in volume of devices sold to customers served by our Singapore business as well as a better allocation of products compared to the first quarter of 2007. However, supply constraints caused by snow storms in China slowed the growth in devices sold by our Singapore business.

Operating income in our Europe division increased $0.2 million despite the acquisition of Dangaard Telecom primarily due to overall weakness in Western Europe during mid to late March as well as a loss in connection with locally branded PC notebook distribution business in Europe. This business is currently under evaluation, and profit from the sale of locally branded PC notebooks is not expected to return to historical levels.

The increase in operating loss from our corporate function was due to an increase in personnel costs primarily due to an increase in headcount in support of managing our expanded global operations.

Interest, net

The components of interest, net are as follows:

		Three Months Ended
		March 31,
		2008				2007				Change
		(Amounts in 000s)
Interest expense		$	8,770			$	1,478				493	%
Interest income			(1,226	)			(328	)			274	%
Interest, net		$	7,544			$	1,150				556	%

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 increase in interest expense for the three months ended March 31, 2008 compared to the same period in the prior year was primarily due to the debt assumed in the Dangaard Telecom acquisition as well as borrowings for the CellStar acquisition. We have made $102.3 million of repayments of borrowings during the first quarter of 2008, primarily near the end of the quarter. Average daily debt outstanding was approximately $513.0 million in the first quarter of 2008.

Other income

Other income was $2.0 million for the three months ended March 31, 2008. The increase in other income was primarily due to foreign currency transaction gains.

Income Tax Expense

		Three Months Ended
		March 31,
		2008				2007				Change
		(Amounts in 000s)
Income tax expense		$	705			$	1,346				(48	)%
Effective tax rate			44.0	%			42.2	%		1.8		points