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 June 30, 2007

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

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. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o       Accelerated filer þ       Non-accelerated filer o

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

The number of shares of Common Stock outstanding as of August 3, 2007: 81,124,092

 

 

PART 1 – FINANCIAL INFORMATION

Item 1. Financial Statements

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

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2007				2006				2007				2006
Revenue
Distribution revenue		$	766,980			$	467,014			$	1,334,020			$	950,486
Logistic services revenue			84,015				82,844				158,604				163,927
Total revenue			850,995				549,858				1,492,624				1,114,413
Cost of revenue
Cost of distribution revenue			743,866				447,342				1,294,280				911,242
Cost of logistic services revenue			65,546				66,772				124,046				131,115
Total cost of revenue			809,412				514,114				1,418,326				1,042,357
Gross profit			41,583				35,744				74,298				72,056
Selling, general and administrative expenses			33,392				24,418				61,725				48,170
Facility consolidation benefit			—				—				—				(9	)
Operating income from continuing operations			8,191				11,326				12,573				23,895
Interest, net			2,290				120				3,440				197
Other (income) expenses			243				(52	)			287				(62	)
Income from continuing operations before income taxes			5,658				11,258				8,846				23,760
Income tax (benefit) expense			(12,063	)			3,046				(10,717	)			6,547
Income from continuing operations			17,721				8,212				19,563				17,213
Discontinued operations, net of income taxes:
Loss from discontinued operations			(41	)			(36	)			(37	)			(175	)
Gain on disposal of discontinued operations			8				65				12				71
Total discontinued operations, net of income taxes			(33	)			29				(25	)			(104	)
Net income		$	17,688			$	8,241			$	19,538			$	17,109
Earnings per share — basic:
Income from continuing operations		$	0.36			$	0.17			$	0.39			$	0.35
Discontinued operations, net of income taxes			—				—				—				—
Net income		$	0.36			$	0.17			$	0.39			$	0.35
Earnings per share — diluted:
Income from continuing operations		$	0.35			$	0.16			$	0.39			$	0.34
Discontinued operations, net of income taxes			—				—				—				—
Net income		$	0.35			$	0.16			$	0.39			$	0.34
Weighted average common shares outstanding:
Basic			49,671				49,023				49,580				48,916
Diluted			50,739				50,550				50,615				50,640

See accompanying notes

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

		June 30,				December 31,
		2007				2006
		(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents		$	43,756			$	54,130
Pledged cash			420				201
Accounts receivable (less allowance for doubtful accounts of $6,748 in 2007 and $4,926 in 2006)			303,491				228,186
Inventories			257,777				391,657
Contract financing receivable			10,985				20,161
Contract financing inventory			8,824				7,293
Other current assets			24,053				25,870
Total current assets			649,306				727,498
Property and equipment, net			42,393				37,904
Goodwill and other intangibles, net			71,963				8,219
Other assets			23,678				4,732
Total assets		$	787,340			$	778,353
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	340,727			$	454,552
Accrued expenses			83,722				68,320
Contract financing payable			25,415				30,991
Lines of credit, short-term			11,139				13,875
Total current liabilities			461,003				567,738
Long-term liabilities:
Lines of credit			83,930				3,750
Other long-term liabilities			13,616				12,037
Total long-term liabilities			97,546				15,787
Total liabilities			558,549				583,525
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; 58,043 issued in 2007 and 57,536 issued in 2006			580				575
Additional paid-in-capital			274,887				266,756
Treasury stock, at cost, 6,925 shares in 2007 and 6,891 shares in 2006			(58,650	)			(58,295	)
Retained earnings (deficit)			1,611				(17,918	)
Accumulated other comprehensive income			10,363				3,710
Total shareholders’ equity			228,791				194,828
Total liabilities and shareholders’ equity		$	787,340			$	778,353

See accompanying notes

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

		Six Months Ended
		June 30,
		2007				2006
Operating activities
Net income		$	19,538			$	17,109
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization			7,244				6,057
Discontinued operations			25				104
Pledged cash requirements			(212	)			(11	)
Non-cash compensation			2,872				2,950
Facility consolidation charge benefit			—				(9	)
Change in deferred taxes			(13,202	)			172
Other non-cash			980				962
			17,245				27,334
Changes in operating assets and liabilities, net of effects from acquisitions and divestitures:
Accounts receivable			(1,896	)			(3,844	)
Inventories			172,792				(10,871	)
Other operating assets			100				(4,046	)
Accounts payable and accrued expenses			(200,108	)			(20,148	)
Net cash used in operating activities			(11,867	)			(11,575	)
Investing activities
Capital expenditures			(9,316	)			(9,645	)
Acquisitions, net of cash acquired			(68,864	)			(741	)
Net cash provided by contract financing arrangements			2,135				3,822
Increase in other assets			(1,916	)			(38	)
Net cash used in investing activities			(77,961	)			(6,602	)
Financing activities
Net proceeds from credit facilities			76,334				—
Deferred financing costs paid			(1,758	)			—
Purchase of treasury stock			(355	)			(18,360	)
Excess tax benefit from equity based compensation			513				7,884
Proceeds from common stock issuances under employee stock option plans			1,884				5,263
Net cash provided by (used in) financing activities			76,618				(5,213	)
Effect of exchange rate changes on cash and cash equivalents			2,836				(131	)
Net decrease in cash and cash equivalents			(10,374	)			(23,521	)
Cash and cash equivalents at beginning of period			54,130				106,053
Cash and cash equivalents at end of period		$	43,756			$	82,532

See accompanying notes

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

1. Basis of Presentation

General

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

For further information, including the Company’s significant accounting policies, refer to the audited Consolidated Financial Statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006. As used herein, the terms “Brightpoint”, “Company”, “we”, “our” and “us” mean Brightpoint, Inc. and its consolidated subsidiaries.

Earnings Per Share

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

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2007				2006				2007				2006
Income from continuing operations		$	17,721			$	8,212			$	19,563			$	17,213
Discontinued operations, net of income taxes			(33	)			29				(25	)			(104	)
Net Income		$	17,688			$	8,241			$	19,538			$	17,109
Earnings per share — basic:
Income from continuing operations		$	0.36			$	0.17			$	0.39			$	0.35
Discontinued operations, net of income taxes			—				—				—				—
Net income		$	0.36			$	0.17			$	0.39			$	0.35
Earnings per share — diluted:
Income from continuing operations		$	0.35			$	0.16			$	0.39			$	0.34
Discontinued operations, net of income taxes			—				—				—				—
Net income		$	0.35			$	0.16			$	0.39			$	0.34
Weighted average shares outstanding for basic earnings per share			49,671				49,023				49,580				48,916
Net effect of dilutive stock options, restricted stock units and restricted stock based on the treasury stock method using average market price			1,068				1,527				1,035				1,724
Weighted average shares outstanding for diulted earnings per share			50,739				50,550				50,615				50,640

Brightpoint, Inc.
Notes to Consolidated Financial Statements

Other Comprehensive Income

Comprehensive income is comprised of net income and gains or losses resulting from currency translations of foreign investments. The details of comprehensive income for the three and six months ended June 30, 2007 and 2006 are as follows (in thousands):

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2007				2006				2007				2006
Net Income		$	17,688			$	8,241			$	19,538			$	17,109
Foreign Currency Translation			4,818				1,681				6,653				1,235
Comprehensive Income		$	22,506			$	9,922			$	26,191			$	18,344

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 $68.9 million (including direct acquisition costs) based upon a preliminary estimate of net asset adjustments (CellStar acquisition). The purchase price is subject to further adjustments as net asset adjustments and other matters set forth in the purchase agreement are finalized. The purchase price includes approximately $2.0 million exit costs that have been accrued in connection with consolidating the CellStar operations previously performed in the Coppell, Texas facility into our other North America operations. Results of operations related to this acquisition have been included in the Company’s Consolidated Statement of Operations beginning in the second quarter of 2007.

The following sets forth unaudited pro forma financial information assuming the acquisition took place at the beginning of each period presented based on the financial statements of the Company for the three and six months ended June 30, 2007 and 2006 and the financial statements of CellStar for the three months ended February 28, 2007, and the three months and six months ended May 31, 2006. The unaudited pro forma results include adjustments such as amortization of acquired intangible assets and interest expense on borrowings used to finance this acquisition (in thousands, except per share data):

		Three Months Ended
		June 30,
		2007				2006
Revenue		$	850,995			$	705,920
Income from continuing operations			17,721				9,448
Net income			17,688				9,477
Earnings per share – diluted		$	0.35			$	0.19

		Six Months Ended
		June 30,
		2007				2006
Revenue		$	1,619,615			$	1,419,330
Income from continuing operations			18,644				18,952
Net income			18,619				18,848
Earnings per share – diluted		$	0.37			$	0.37

Subsequent Event:

On July 31, 2007, the Company completed its acquisition of all of the issued and outstanding capital stock of Dangaard Telecom A/S, a Danish company (Dangaard Telecom) from Dangaard Holding A/S, a Danish company for a purchase price of (i) $100,000 in cash and (ii) 30,000,000 shares of the Company’s unregistered Common Stock, $0.01 par value. In addition, the Company assumed approximately $350.0 million of Dangaard Telecom’s indebtedness.

Brightpoint, Inc.
Notes to Consolidated Financial Statements

The estimated purchase price for this acquisition is approximately $344.6 million (including direct acquisition costs). 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 Brightpoint stock price of $11.25 per share, which represents the average Brightpoint 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. As of June 30, 2007, the Company had deferred $3.3 million of direct acquisition costs.

3. Income Tax

In July 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretations No. (FIN) 48, Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109, which clarifies the accounting for uncertainty in tax positions. The provisions of FIN 48 became effective for the Company on January 1, 2007. This Interpretation requires the recognition of a tax position when it is more likely than not that the tax position will be sustained upon examination by relevant taxing authorities, based on the technical merits of the position. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. The adoption of FIN 48 was not material to the Company. As of the date of adoption, the Company’s unrecognized tax benefits totaled $2.2 million ($0.1 in interest and $2.1 million of tax positions), which if recognized, would affect the effective tax rate. Interest costs and penalties related to income taxes are classified as tax expense.

The Company and its subsidiaries file income tax returns in the U.S. Federal, various state and various foreign jurisdictions. The Company remains subject to examination by U.S. Federal and major state jurisdictions for years 2003-2006 and by major foreign tax jurisdictions for years 2001-2006.

The Company does not anticipate that total unrecognized tax benefits will significantly change due to the settlement of audits or the expiration of statute of limitations prior to June 30, 2008.

Income tax benefit for the second quarter of 2007 was $12.1 million, which included a $14.1 million benefit related to the reversal of valuation allowances on certain foreign tax credit carryforwards. Based on actual and projected taxable income and projected foreign-sourced income, it became more likely than not during the second quarter of 2007 that the Company will be able to utilize these foreign tax credits prior to their expiration. Excluding the effect of this $14.1 million benefit, income tax expense for the second quarter of 2007 was $2.0 million resulting in an effective tax rate of 36.0% compared to an effective tax rate of 27.1% for the second quarter of 2006. The increase in the effective income tax rate was the result of a shift in mix of income between jurisdictions and non-deductible stock based compensation expenses.

4. Lines of Credit

At June 30, 2007, the Company had $95.1 million of borrowings outstanding on its lines of credit. The timing of payments to suppliers and collections from customers causes the Company’s cash balances and borrowings to fluctuate throughout the year. During the three-month and six-month periods ended June 30, 2007, the largest outstanding borrowings on a given day were approximately $153.9 million, and average outstanding borrowings were approximately $120.0 million and $86.4 million for the same respective periods. The Company had $17.6 million of borrowings outstanding on lines of credit at December 31, 2006. During the three-month and six-month periods ended June 30, 2006, the largest outstanding borrowings on a given day were approximately $32.0 and 35.7 million, with average outstanding borrowings of approximately $15.1 million and $18.5 million for the same respective periods.

At June 30, 2007, 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.

The table below summarizes lines of credit that were available to the Company as of June 30, 2007 (in thousands):

Brightpoint, Inc.
Notes to Consolidated Financial Statements

														Letters of Credit &				Net
		Commitment				Gross Availability				Outstanding				Guarantees				Availability
Global Facility		$	240,000			$	240,000			$	83,930			$	32,208			$	123,862
Norway			2,545				2,545				—				—				2,545
India			15,000				15,000				1,474				3,440				10,086
Sweden			4,390				4,390				—				—				4,390
Slovakia			21,000				21,000				9,665				—				11,335
Total		$	282,935			$	282,935			$	95,069			$	35,648			$	152,218

On February 16, 2007, the Company entered into a global credit agreement (Global Facility), referred to as the Credit Agreement, by and among the Company (and certain of its subsidiaries identified therein), Banc of America Securities LLC, as sole lead arranger and book manager, General Electric Capital Corporation, as syndication agent, ABN AMRO Bank N.V., as documentation agent, Wells Fargo Bank, N.A., as documentation agent, Bank of America, N.A., as administration agent and the other lenders party thereto. The Credit Agreement established a five year senior secured revolving credit facility with a line of credit in the initial amount of $165.0 million. The line of credit contained an uncommitted accordion facility pursuant to which the Company was able to increase the total commitment under the revolving credit facility up to $240.0 million. On March 30, 2007, the Company and certain of its subsidiaries entered into a Commitment Increase Agreement with the Guarantors, the Administrative Agent and the Lenders to increase the total commitment under the revolving credit facility to $240.0 million. The Credit Agreement is subject to certain financial covenants and is secured by a lien on certain of the Company’s property and a pledge of the voting stock issued by certain of its subsidiaries. The Credit Agreement replaced the Company’s $70.0 million North American asset based credit facility under the Amended and Restated Credit Agreement dated as of March 18, 2004, as amended, and the $50.0 million Australian Dollar (approximately $39.0 million U.S. Dollars) asset based credit facility in Australia under the Credit Agreement dated December 24, 2002, as amended. The Company incurred a $0.3 million non-cash charge to write-off unamortized deferred financing costs related to the replacement of these credit facilities. This charge is included as a component of “Interest, net” in the Company’s Consolidated Statement of Operations for the six month period ended June 30, 2007.

On July 31, 2007, the parties to the Credit Agreement entered into the First Amendment to the Credit Agreement (the First Amendment), which, among other things, resulted in: (i) an increase in the amount available under the secured revolving credit facility from $240.0 million to $300.0 million, (ii) the extension to the domestic borrowers of a term loan in an original principal amount equivalent to $125.0 million, (iii) the extension to the foreign borrowers, including two of the Dangaard companies, of a term loan in an original principal amount equivalent to $125.0 million, (iv) the addition to the Credit Agreement of two Dangaard companies as foreign borrowers and five other Dangaard companies as foreign guarantors, and (v) increased commitments, in certain cases, from existing members of the bank group, and new commitments from other lenders who will become new members of the bank group upon the closing of the First Amendment. The amendment was co-arranged by Banc of America Securities LLC, and ABN Amro N.V. with participation in the facility by Nordea Bank Danmark A/S, Citibank, N.A., The Royal Bank of Scotland PLC, Bank DnB NORD AS, Fifth Third Bank, Inc., General Electric Capital Corporation, Wells Fargo Bank, N.A., Deutsche Bank AG, National City Bank, Bank of Tokyo-Mitsubishi Trust Company, Nykredit Bank A/S, HSH Nordbank AG, and BMO Capital Markets Financing, Inc. Nordea Bank Danmark A/S, which was previously the largest lender to Dangaard Telecom, joined as the largest credit provider under the amended credit facility.

On April 27, 2007, the Company entered into a Foreign Currency Working Capital Loan Facility Agreement (Loan Facility), with ABN AMRO Bank N.V., which established an unsecured, $15.0 million credit facility repayable on demand. The Loan Facility provides for working capital requirements for the Company’s operations in India. The Loan Facility bears interest at the LIBOR rate two days immediately preceding the date of any drawdowns.

Additional details on the above lines of credit are disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006, and Current Reports on Form 8-K filed on February 21, 2007, April 5, 2007 and August 2, 2007.

Brightpoint, Inc.
Notes to Consolidated Financial Statements

5. 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, 2006.

In some circumstances, the Company purchases inventory with payment terms requiring letters of credit. As of June 30, 2007, the Company has issued $35.6 million in standby letters of credit. These standby letters of credit are generally issued for a one-year term and are supported by availability under the Company’s credit facilities. The underlying obligations for which these letters of credit have been issued are recorded in the financial statements at their full value. Should the Company fail to pay its obligation to one or all of these suppliers, the suppliers may draw on the standby letter of credit issued for them. As of June 30, 2007, the maximum future payments under these letters of credit are $35.6 million.

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. The Company does not provide warranty repair services on the re-branded devices except for devices sold by one of the Company’s locations to a specific customer. Sales of devices for which the Company provides warranty repair services have decreased significantly since this supplier re-branded its devices. Warranty accruals are adjusted from time to time when the Company’s actual warranty claim experience differs from its estimates. The change in estimate for the six months ended June 30, 2007 was a result of higher failure rates and higher cost of repairs than previously estimated. A summary of the changes in the product warranty accrual is as follows (in thousands):

		Six Months Ended
		June 30,
		2007				2006
January 1		$	3,063			$	2,117
Provision for product warranties			1,800				2,865
Change in estimate			1,221				(370	)
Settlements during the period			(3,721	)			(1,425	)
June 30		$	2,363			$	3,187

6. Operating Segments

The Company has operations centers and/or sales offices in various countries including Australia, Colombia, Finland, Germany, India, New Zealand, Norway, the Philippines, Portugal, Russia, Singapore, Slovakia, Sweden, United Arab Emirates, United Kingdom and the United States. All of the Company’s operating segments 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:

Brightpoint, Inc.
Notes to Consolidated Financial Statements

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). As further discussed in Note 1 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2006, the Company changed its measure of segment profit to exclude allocated corporate selling, general and administrative expenses. Segment information as of and for three and six months ended June 30, 2006 has been reclassified to conform to the 2007 presentation.

A summary of the Company’s operations by segment is presented below (in thousands) for the three-month and six-month periods ended June 30, 2007 and 2006:

														Corporate and
		Americas				Asia-Pacific				Europe				Reconciling Items				Total
Three Months Ended June 30, 2007:
Distribution revenue		$	266,918			$	379,166			$	120,896			$	—			$	766,980
Logistic services revenue			49,327				8,360				26,328				—				84,015
Total revenue from external customers		$	316,245			$	387,526			$	147,224			$	—			$	850,995
Operating income from continuing operations		$	8,463			$	4,994			$	1,039			$	(6,305	)		$	8,191
Depreciation and amortization			3,072				752				239				123				4,186
Capital expenditures			3,133				721				532				82				4,468
Three Months Ended June 30, 2006:
Distribution revenue		$	138,167			$	235,495			$	93,352			$	—			$	467,014
Logistic services revenue			53,193				5,888				23,763				—				82,844
Total revenue from external customers		$	191,360			$	241,383			$	117,115			$	—			$	549,858
Operating income from continuing operations		$	9,870			$	2,575			$	3,923			$	(5,042	)		$	11,326
Depreciation and amortization			2,145				620				214				67				3,046
Capital expenditures			3,795				686				150				268				4,899
Six Months Ended June 30, 2007:
Distribution revenue		$	406,869			$	697,443			$	229,708			$	—			$	1,334,020
Logistic services revenue			91,553				15,619				51,432				—				158,604
Total revenue from external customers		$	498,422			$	713,062			$	281,140			$	—			$	1,492,624
Operating income from continuing operations		$	13,945			$	8,533			$	1,764			$	(11,669	)		$	12,573
Depreciation and amortization			5,132				1,376				501				235				7,244
Capital expenditures			6,660				1,672				726				258				9,316
Six Months Ended June 30, 2006:
Distribution revenue		$	286,824			$	495,442			$	168,220			$	—			$	950,486
Logistic services revenue			106,260				13,205				44,462				—				163,927
Total revenue from external customers		$	393,084			$	508,647			$	212,682			$	—			$	1,114,413
Operating income from continuing operations		$	21,713			$	7,587			$	5,271			$	(10,676	)		$	23,895
Depreciation and amortization			4,309				1,219				409				120				6,057
Capital expenditures			7,685				1,515				221				224				9,645

Brightpoint, Inc.
Notes to Consolidated Financial Statements

Additional segment information is as follows (in thousands):

		June 30,				December 31,
		2007				2006
Total segment assets:
Americas		$	350,681			$	226,634
Asia-Pacific			248,205				379,129
Europe			164,438				162,598
Corporate			24,016				9,992
		$	787,340			$	778,353

7. Contingencies

The Company is from time to time involved in certain legal proceedings in the ordinary course of conducting its business. While the ultimate liability pursuant to these actions cannot currently be determined, the Company believes these legal proceedings will not have a material adverse effect on its financial position or results of operations.

Subsequent Event:

On July 31, 2007, we acquired Dangaard Telecom which had the following claims and/or disputes in excess of $500,000:

German value-added tax authorities

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

In the first dispute, 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 $2.86 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).

In the second dispute, 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 $8.05 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).

Fleggaard group of companies

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 Fleggard’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.

Brightpoint, Inc.
Notes to Consolidated Financial Statements

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 $2.71 million. Dangaard Telecom Norway AS Group 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).

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.

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 accordance with accounting principles generally accepted in the United States. The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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, 2006, 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, 2006.

Brightpoint, Inc. is a global leader in the distribution of wireless devices and accessories and the provision of customized logistic services to the wireless industry including wireless network operators (also referred to as “mobile operators”), Mobile Virtual Network Operators (MVNOs) and manufacturers with operations centers and/or sales offices in various countries including Australia, Colombia, Finland, Germany, India, New Zealand, Norway, the Philippines, Portugal, Russia, Singapore, Slovakia, Sweden, the United Arab Emirates, the United Kingdom and the United States. We provide 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 operators, MVNOs, resellers, retailers and wireless equipment manufacturers. We provide 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, the Company completed its acquisition of all of the issued and outstanding capital stock of the Dangaard Telecom A/S, a Danish company (Dangaard Telecom) from Dangaard Holding A/S, a Danish company for a purchase price of (i) $100,000 in cash and (ii) 30,000,000 shares of the Company’s unregistered Common Stock, $0.01 par value. In addition, the Company assumed approximately $350.0 million of Dangaard Telecom’s indebtedness.

On July 31, 2007, we entered into the First Amendment to the Credit Agreement (the First Amendment), which, among other things, resulted in: (i) an increase in the amount available under the secured revolving credit facility from $240.0 million to $300.0 million, (ii) the extension to the domestic borrowers of a term loan in an original principal amount equivalent to $125.0 million, (iii) the extension to the foreign borrowers, including two of the Dangaard companies, of a term loan in an original principal amount equivalent to $125.0 million, (iv) the addition to the Credit Agreement of two Dangaard companies as foreign borrowers and five other Dangaard companies as foreign guarantors, and (v) increased commitments, in certain cases, from existing members of the bank group, and new commitments from other lenders who will became new members of the bank group upon the closing of the First Amendment.

On June 29, 2007 AT&T Inc. announced that it will acquire Dobson Communications Corporation (Dobson). Dobson is a significant product distribution and logistic services customer of our North America operations. This acquisition is expected to be completed by the end of 2007 or in early 2008. On July 30, 2007, Verizon Wireless announced that it will acquire Rural Cellular Corporation (RCC). RCC is a distribution customer of our North America operations. This acquisition is expected to be completed in the first half of 2008. These customers are also customers of the operations acquired from CellStar. Should either or both of these acquisitions be completed, our operating results

may be negatively impacted. Brightpoint North America is undertaking significant cost cutting efforts including consolidating the CellStar operations previously performed in the Coppell, Texas facility into our other North America operations. Savings associated with this facility consolidation and other cost cutting efforts are expected to lower our overall spending. While these cost cutting efforts may help mitigate some of the negative impact from AT&T’s acquisition of Dobson and Verizon’s acquisition of RCC, there can be no assurances that we will be successful in these efforts.

RESULTS OF OPERATIONS

Revenue and Wireless Devices Handled

		Three Months Ended
		June 30,
						% of								% of
		2007				Total				2006				Total				Change
						(Amounts in 000s)
REVENUE BY DIVISION:
Americas		$	316,245				37	%		$	191,360				35	%			65	%
Asia-Pacific			387,526				46	%			241,383				44	%			61	%
Europe			147,224				17	%			117,115				21	%			26	%
Total		$	850,995				100	%		$	549,858				100	%			55	%
REVENUE BY SERVICE LINE:
Distribution		$	766,980				90	%		$	467,014				85	%			64	%
Logistic services			84,015				10	%			82,844				15	%			1	%
Total		$	850,995				100	%		$	549,858				100	%			55	%
WIRELESS DEVICES HANDLED BY DIVISION:
Americas			15,368				79	%			10,911				82	%			41	%
Asia-Pacific			3,467				18	%			1,951				15	%			78	%
Europe			591				3	%			385				3	%			54	%
Total			19,426				100	%			13,247				100	%			47	%
WIRELESS DEVICES HANDLED BY SERVICE LINE:
Distribution			5,502				28	%			2,817				21	%			95	%
Logistic services			13,924				72	%			10,430				79	%			33	%
Total			19,426				100	%			13,247				100	%			47	%

Total worldwide revenue was $851.0 million for the three months ended June 30, 2007, which represents growth of 55% compared to the same period in the prior year. Worldwide distribution revenue increased 64% to $767.0 million for the three months ended June 30, 2007 compared to $467.0 million for the same period in the prior year. The CellStar acquisition positively impacted distribution revenue by 25%. Excluding the impact of the CellStar acquisition, distribution revenue increased 39%. Growth in wireless devices sold through distribution positively impacted distribution revenue by 55%, which was partially offset by lower average selling price that negatively impacted distribution revenue by approximately 22%. An increase in revenue from the sale of accessories contributed to approximately 2% of the increase in distribution revenue. Fluctuations in foreign currencies positively impacted worldwide distribution revenue by approximately 4% for the three months ended June 30, 2007. Excluding the impact of the CellStar acquisition, the increase in wireless devices sold was driven by increased volume of devices sold to customers served by our Asia-Pacific business. The decrease in average selling price was primarily due to a shift in mix to lower priced handsets in our Asia-Pacific and Europe divisions.

Worldwide logistic services revenue increased 1% to $84.0 million for the three months ended June 30, 2007 compared to $82.8 million for the same period in the prior year. The CellStar acquisition positively impacted logistic services revenue by 7%. Excluding the impact of the CellStar acquisition, logistic services revenue decreased 6%. Logistic services revenue decreased as a result of a decrease in revenue from non-handset based services, a lower

average fulfillment fee per unit and a decline in freight revenue, which negatively impacted logistic services revenue by 6%, 5%, and 2%, respectively. These decreases were partially offset by an increase in wireless devices handled, which positively impacted logistic services revenue by 6%. Fluctuations in foreign currencies positively impacted worldwide logistic services revenue by approximately 1%. The decrease in non-handset based revenue was primarily due to a shift in mix to fee based prepaid airtime fulfillment (net method) from prepaid airtime transactions recorded using the gross method in our Americas division. The decrease in average fulfillment fee per unit was primarily due to a reduced fee structure associated with the modification and extension of a logistic services agreement with a significant customer in our North America business. The increase in wireless devices handled was primarily driven by our successful launch of the T-Mobile logistics business during the second quarter of 2007.

		Six Months Ended
		June 30,
						% of								% of
		2007				Total				2006				Total				Change
REVENUE BY DIVISION:		(Amounts in 000s)
Americas		$	498,422				33	%		$	393,084				35	%			27	%
Asia-Pacific			713,062				48	%			508,647				46	%			40	%
Europe			281,140				19	%			212,682				19	%			32	%
Total		$	1,492,624				100	%		$	1,114,413				100	%			34	%
REVENUE BY SERVICE LINE:
Distribution		$	1,334,020				89	%		$	950,486				85	%			40	%
Logistic services			158,604				11	%			163,927				15	%			(3	)%
Total		$	1,492,624				100	%		$	1,114,413				100	%			34	%
WIRELESS DEVICES HANDLED BY DIVISION:
Americas			26,476				78	%			21,129				82	%			25	%
Asia-Pacific			6,395				19	%			3,949				15	%			62	%
Europe			1,085				3	%			696				3	%			56	%
Total			33,956				100	%			25,774				100	%			32	%
WIRELESS DEVICES HANDLED BY SERVICE LINE:
Distribution			9,400				28	%			5,740				22	%			64	%
Logistic services			24,556				72	%			20,034				78	%			23	%
Total			33,956				100	%			25,774				100	%			32	%

Revenue for the six months ended June 30, 2007 was $1.5 billion, representing 34% growth compared to the six months ended June 30, 2006. Worldwide distribution revenue increased 40% to $1.3 billion for the six months ended June 30, 2007 compared to $950.5 million for the same period in the prior year. The CellStar acquisition positively impacted distribution revenue by 12%. Excluding the impact of the CellStar acquisition, distribution revenue increased 28% compared to the six months ended June 30, 2006. Growth in wireless devices sold through distribution positively impacted distribution revenue by 43%, which was offset partially by a decrease in the average selling price which negatively impacted distribution revenue by 20%. Growth in revenue from the sale of accessories and fluctuations in foreign currencies positively impacted distribution revenue by 2% and 3% respectively.

Worldwide logistic services revenue decreased 3% to $158.6 million for the six months ended June 30, 2007 compared to $163.9 million for the same period in the prior year. The CellStar acquisition positively impacted logistic services revenue by 4%. Excluding the impact of the CellStar acquisition, logistic services revenue decreased 7% compared to the six months ended June 30, 2006. Logistic services revenue decreased as a result of a decrease in revenue from non-handset based services, a lower average fulfillment fee per unit and a decline in freight revenue, which negatively impacted logistic services revenue by 6%, 4%, and 2%, respectively. These decreases in logistic services revenue were partially offset by an increase in wireless devices handled, which positively impacted logistic services revenue by 5%.

Revenue and wireless devices handled by division:

		Three Months Ended																				Six Months Ended
Americas		June 30,																				June 30,
(Amounts in 000s)						% of								% of												% of								% of
		2007				Total				2006				Total				Change				2007				Total				2006				Total				Change
REVENUE:
Distribution		$	266,918				84	%		$	138,167				72	%			93	%		$	406,869				82	%		$	286,824				73	%			42	%
Logistic services			49,327				16	%			53,193				28	%			(7	)%			91,553				18	%			106,260				27	%			(14	)%
Total		$	316,245				100	%		$	191,360				100	%			65	%		$	498,422				100	%		$	393,084				100	%			27	%
WIRELESS DEVICES HANDLED:
Distribution			2,005				13	%			1,014				9	%			98	%			2,992				11	%			1,966				9	%			52	%
Logistic services			13,363				87	%			9,897				91	%			35	%			23,484				89	%			19,163				91	%			23	%
Total			15,368				100	%			10,911				100	%			41	%			26,476				100	%			21,129				100	%			25	%

Revenue in our Americas division increased 65% to $316.2 million for the three months ended June 30, 2007 compared to $191.4 million for the same period in the prior year. Distribution revenue increased 93% in our Americas division to $266.9 million for the second quarter of 2007 compared to $138.2 million for the second quarter of 2006. The CellStar acquisition positively impacted distribution revenue by 84%. Excluding the impact of the CellStar acquisition, distribution revenue in our Americas division increased 9%. A higher average selling price positively impacted distribution revenue by 17%. The increase in distribution revenue due to a higher average selling price was partially offset by a decline in wireless devices sold through distribution and a decline in accessory revenue, which negatively impacted distribution revenue by 7% and 2%, respectively. Fluctuations in foreign currencies positively impacted distribution revenue by 1%. The increase in average selling price was driven by strong demand for certain higher priced products during the second quarter of 2007; however, the decreased availability of other popular, lower-priced products resulted in a decline in wireless devices sold in our Americas division (excluding the impact of the CellStar acquisition).

Logistic services revenue decreased 7% to $49.3 million for the second quarter of 2007 compared to $53.2 million for the second quarter of 2006. The CellStar acquisition positively impacted logistic services revenue by 10%. Excluding the impact of the CellStar acquisition, logistic services revenue decreased in our Americas division by 18%. The decrease in logistic services revenue in our Americas division was largely driven by a decrease in revenue from non-handset based services, which negatively impacted logistic services revenue in our Americas division by 17%. In addition, a decrease in freight revenue and a lower average fulfillment fee per unit negatively impacted logistic services revenue in our Americas division by approximately 4% and 7%, respectively. Growth in wireless devices handled positively impacted logistic services revenue by 10%. The decrease in revenue from non-handset based services was due to a shift in mix to fee based prepaid airtime fulfillment (net method) from prepaid airtime transactions recorded using the gross method. The increase in wireless devices handled through logistic services in our Americas division was primarily driven by our successful launch of the T-Mobile logistics business during the second quarter of 2007. The growth in wireless devices handled through logistic services in our Americas division was slowed by a 63% decline in volume in Colombia resulting from a decision by our primary network operator customer in Colombia to reduce promotional activities significantly in response to market saturation in Colombia. As a result of this operator’s decision to focus on profitability and asset management, we do not expect volume to return to levels we experienced in previous quarters. In addition, during the first quarter of 2007 this operator appointed an additional logistic services provider. Average fulfillment fee per unit decreased due to a reduced fee structure associated with the modification and extension of a logistic services agreement with a significant customer in our North America business. Freight revenue also decreased as a result of the modification of this agreement.

For the six months ended June 30, 2007, revenue in our Americas division increased 27% to $498.4 million compared to $393.1 million for the same period in the prior year. Distribution revenue increased 42% to $406.9 for the six months ended June 30, 2007 compared to $286.8 million for the same period in the prior year. The CellStar acquisition favorably impacted distribution revenue by 40%. A higher average selling price positively impacted distribution revenue by 4%, while a decline in wireless devices sold negatively impacted distribution revenue by 2%. Logistic services revenue in our Americas division decreased 14% to $91.6 million for the six months ended

June 30, 2007 compared to $106.3 million for the same period in the prior year. The CellStar acquisition favorably impacted logistic services revenue by 5%. Logistic services revenue in our Americas division was negatively impacted by 16% as a result of a decrease in revenue from non-handset based services due to a shift in mix to fee based prepaid airtime fulfillment (net method) from prepaid airtime transactions recorded using the gross method. In addition, a decrease in freight revenue and a lower average fulfillment fee per unit negatively impacted logistic services revenue in our Americas division by approximately 4% and 5%, respectively. These decreases were partially offset by growth in wireless devices handled, which positively impacted logistic services revenue by 6%.

		Three Months Ended																				Six Months Ended
		June 30,																				June 30,
Asia-Pacific						% of								% of												% of								% of
(Amounts in 000s)		2007				Total				2006				Total				Change				2007				Total				2006				Total				Change
REVENUE:
Distribution		$	379,166				98	%		$	235,495				98	%			61	%		$	697,443				98	%		$	495,442				97	%			41	%
Logistic services			8,360				2	%			5,888				2	%			42	%			15,619				2	%			13,205				3	%			18	%
Total		$	387,526				100	%		$	241,383				100	%			61	%		$	713,062				100	%		$	508,647				100	%			40	%
WIRELESS DEVICES HANDLED:
Distribution			3,098				89	%			1,526				78	%			103	%			5,662				89	%			3,267				83	%			73	%
Logistic services			369				11	%			425				22	%			(13	)%			733				11	%			682				17	%			7	%
Total			3,467				100	%			1,951				100	%			78	%			6,395				100	%			3,949				100	%			62	%

Revenue in our Asia-Pacific division increased 61% to $387.5 million for the three months ended June 30, 2007 compared to $241.4 million for the same period in the prior year. Distribution revenue increased 61% to $379.2 million for the second quarter of 2007 from $235.5 million for the second quarter of 2006. Growth in wireless devices sold through distribution positively impacted distribution revenue in our Asia-Pacific division by approximately 97%. The increase in wireless devices sold was partially offset by a lower average selling price, which negatively impacted distribution revenue in our Asia-Pacific division by approximately 42%. Growth in revenue from the sale of accessories and other non-handset devices and fluctuations in foreign currencies positively impacted distribution revenue by approximately 2% and 4%, respectively, in our Asia-Pacific division for the second quarter of 2007. The increases in distribution revenue and wireless devices sold in our Asia-Pacific division were driven by increased volume of devices sold to customers served by our Singapore business (previously served by our Brightpoint Asia Limited business) as a result of improved product availability at competitive prices as well as new products launched by our suppliers. In addition, we believe we sold more devices to these customers as a result of improved visibility into these channels by serving these customers through our business in Singapore rather than our Brightpoint Asia Limited business. The decrease in average selling price in our Asia-Pacific division was also driven by our Singapore business as a result of a significant increase in sales of lower priced handsets. Revenue and wireless devices in our Asia-Pacific division also increased as a result of an expanded global relationship with a major original equipment manufacturer. Sales of these wireless devices positively contributed to the growth in distribution revenue in our Asia-Pacific division.

Logistic services revenue increased 42% to $8.4 million for the second quarter of 2007 from $5.9 million for the second quarter of 2006. Growth in revenue from non-handset based services positively impacted logistic services revenue in our Asia-Pacific division by approximately 38%. In addition, an increase in freight revenue positively impacted logistic services revenue by approximately 4%. These increases in revenue were partially offset by a decrease in wireless devices handled, which negatively impacted logistics revenue by approximately 3%. Fluctuations in foreign currencies positively impacted logistic services revenue by approximately 3% in our Asia-Pacific division for the second quarter of 2007. The increase in non-handset based services was primarily due to an increase in revenue from repair services in India.

For the six months ended June 30, 2007, revenue in our Asia-Pacific division increased 40% to $713.1 million compared to $508.6 million for the same period in the prior year. Distribution revenue increased 41% to $697.4 million for the six months ended June 30, 2007 compared to $495.4 million for the same period in the prior year. An increase in wireless devices sold favorably impacted distribution revenue by 69%, which was partially offset by a lower average selling price, which negatively impacted distribution revenue by 33%. An increase in revenue from the sale of accessories and fluctuations in foreign currencies positively impacted distribution revenue by 2% and 3%

respectively. Logistic services revenue increased 18% to $15.6 million for the six months ended June 30, 2007 compared to $13.2 million for the same period in the prior year. Growth in non-handset based services positively impacted logistic services revenue by approximately 11%. Logistic services revenue also increased as a result of an increase in wireless devices handled, an increase in freight revenue, and fluctuations in foreign currencies, which positively impacted logistic services revenue by 2%, 4%, and 2%, respectively. These increases in revenue were partially offset by a lower average fulfillment fee per unit, which negatively impacted logistics revenue by approximately 1%.

		Three Months Ended																				Six Months Ended
		June 30,																				June 30,
Europe						% of								% of												% of								% of
(Amounts in 000s)		2007				Total				2006				Total				Change				2007				Total				2006				Total				Change
REVENUE:
Distribution		$	120,896				82	%		$	93,352				80	%			30	%		$	229,708				82	%		$	168,220				79	%			37	%
Logistic services			26,328				18	%			23,763				20	%			11	%			51,432				18	%			44,462				21	%			16	%
Total		$	147,224				100	%		$	117,115				100	%			26	%		$	281,140				100	%		$	212,682				100	%			32	%
WIRELESS DEVICES HANDLED:
Distribution			399				68	%			277				72	%			44	%			746				69	%			507				73	%			47	%
Logistic services			192				32	%			108				28	%			78	%			339				31	%			189				27	%			79	%
Total			591				100	%			385				100	%			54	%			1,085				100	%			696				100	%			56	%

Revenue in our Europe division increased 26% to $147.2 million for the three months ended June 30, 2007 compared to $117.1 million for the same period in the prior year. Distribution revenue increased 30% to $120.9 million for the second quarter of 2007 compared to $93.4 million for the second quarter of 2006. Growth in wireless devices sold contributed to approximately 41% of the increase in distribution revenue, which was partially offset by a lower average selling price that negatively impacted distribution revenue by 27% in our Europe division. In addition, an increase in revenue from the sale of accessories and other non-handset devices positively impacted distribution revenue in our Europe division by approximately 7%. Fluctuations in foreign currencies positively impacted distribution revenue by approximately 9% in our Europe division for the second quarter of 2007. The increase in wireless devices sold was primarily due to adding products to our portfolio through the diversification of our supplier base. The growth in wireless devices sold resulting from diversifying our supplier base was also the primary driver for the decrease in average selling price due to the fact that the most successful models we added to our portfolio were lower priced devices.

Logistic services revenue increased 11% to $26.3 million for the second quarter of 2007 compared to $23.8 million for the second quarter of 2006. The increase in logistic services revenue in our Europe division was primarily due to an increase in revenue from non-handset based services, which positively impacted logistic services revenue by 8% for the second quarter of 2007. The increase in revenue from non-handset based services was primarily due to growth in our repair services business in Germany as well as an increase in revenue from the sale of prepaid airtime in Sweden.

For the six months ended June 30, 2007, revenue in our Europe division increased 32% to $281.1 million compared to $212.7 million for the same period in the prior year. Distribution revenue increased 37% to $229.7 million for the six months ended June 30, 2007 compared to $168.2 million for the same period in the prior year. An increase in wireless devices sold favorably impacted distribution revenue by 42% for the six months ended June 30, 2007. An increase in revenue from the sale of accessories and other non-handset based devices and fluctuations in foreign currencies positively impacted distribution revenue by 6% and 10% respectively for the six months ended June 30, 2007. These increases were partially offset by a lower average selling price, which negatively impacted distribution revenue by 23%. Logistic services revenue increased 16% to $51.4 million for the six months ended June 30, 2007 compared to $44.5 year for the same period in the prior year. Revenue from non-handset based services favorably impacted logistic services revenue by 12%. Logistic services revenue also increased as a result of an increase in wireless devices handled, an increase in freight revenue, and fluctuations in foreign currencies, which positively impacted logistic services revenue by 1%, 1%, and 2%, respectively.

Gross Profit and Gross Margin

		Three Months Ended																				Six Months Ended
		June 30,																				June 30,
						% of								% of												% of								% of
		2007				Total				2006				Total				Change				2007				Total				2006				Total				Change
		(Amounts in 000s)																				(Amounts in 000s)
Distribution		$	23,114				56	%		$	19,672				55	%			17	%		$	39,740				53	%		$	39,244				54	%			1	%
Logistic services			18,469				44	%			16,072				45	%			15	%			34,558				47	%			32,812				46	%			5	%
Gross profit		$	41,583				100	%		$	35,744				100	%			16	%		$	74,298				100	%		$	72,056				100	%			3	%
Distribution			3.0	%							4.2	%						(1.2) points					3.0	%							4.1	%						(1.1) points
Logistic services			22.0	%							19.4	%						2.6 points					21.8	%							20.0	%						1.8 points
Gross margin			4.9	%							6.5	%						(1.6) points					5.0	%							6.5	%						(1.5) points