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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2005
 0-23494
(Commission File no.)
 
 Brightpoint, Inc.
 (Exact name of registrant as specified in its charter)
 Indiana
    
    35-1778566(State or other jurisdiction of
    
    (I.R.S. Employerincorporation)
    
    Identification No.)
 501 AIRTECH PARKWAY, PLAINFIELD, INDIANA 46168  (Address of principal executive offices including zip code)
 Registrants telephone number, including area code: (317) 707-2355
 Securities registered pursuant to Section 12(b) of the Act: NONE
 Securities registered pursuant to Section 12(g) of the Act:
 
 o þ
 o þ
 þ o
 o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE:




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TABLE OF CONTENTS  PART IItem 1. BusinessItem 1A. Risk FactorsItem 1B. Unresolved Staff CommentsItem 2. PropertiesItem 3. Legal Proceedings.Item 4. Submission of Matters to a Vote of Security HoldersPART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesItem 6. Selected Financial DataItem 7. Managements Discussion and Analysis of Financial Condition and Results of OperationItem 7A. Quantitative and Qualitative Disclosures about Market RiskItem 8. Financial Statements and Supplementary DataItem 9. Changes in and disagreements with Accountants on Accounting and Financial DisclosureItem 9A. Controls and ProceduresItem 9B. Other InformationPART IIIItem 10. Directors and Executive Officers of the RegistrantItem 11. Executive CompensationItem 12. Security Ownership of certain Beneficial Owners and Management and Related Shareholder MattersItem 13. Certain Relationships and Related TransactionsItem 14. Principal Accountant Fees and ServicesPART IVItem 15. Exhibits and Financial Statement SchedulesSIGNATURESSale and Purchase AgreementAmendment No. 3 dated January 16, 2006 to Distributor AgreementAmendment dated December 23, 2005 to Credit AgreementSubsidiariesConsent of Independent Registered Public Accounting FirmCertification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906Cautionary Statements    Table of Contents  
 PART I
 
 Item 1. Business.
 General
      Financial Overview and Recent Developments
 Financial Overview.
   Launch of Advanced Wireless Services (AWS).
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Share repurchase plan.
 Sale of Brightpoint France SARL.
 Purchase of Persequor Limited (Persequor)
 Global Wireless Industry
  
    
    Mobile operators:build and operate wireless networks and provide voice and data access
services to subscribers. Certain mobile operators resell voice and data access services, or
airtime, from other mobile operators and do not directly build and operate their own
wireless networks. These mobile operators are referred to as MVNOs.
    
    Infrastructure designers, manufacturers, builders, and operators:companies who operate
in this segment provide mobile operators with technology, equipment, and cell sites to host
and operate the networks.
    
    Components designers and manufacturers:design technology and components that are
embedded within a wireless device. Components include semiconductor chip sets, displays,
antennae and others.
    
    Content providers: develop mobile content for use with wireless devices and provide
consumers with content such as ring tones, messaging, music, streaming video and television,
games and other applications.
    
    Wireless device manufacturers:design, manufacture, and market the wireless devices, such
as cellular phones, wireless personal digital assistants, smart-phones and pagers, which
connect subscribers to a wireless network.
    
    Distributors, retailers and resellers:distributors provide logistic and distribution
services to physically move wireless devices and related products from manufacturers or
mobile operators closer to, or directly into, the hands of mobile subscribers; retailers,
value-added resellers and system integrators provide subscribers and potential subscribers
with an access point, either physical or on-line, to purchase a subscription and/or a
wireless device.
  Generation
    
    Technology Standards1G Analog
    
    AMPS2G Digital
    
    TDMA, CDMA, GSM, iDEN2.5G Digital
    
    GPRS, EDGE, CDMA 1xRTT3G Digital
    
    W-CDMA/UMTS, CDMA 1xEV-DO, HSDPA
 3




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Replacement Devices.
 Increasing Subscribers.
 Next Generation Systems.
 New or Expanding Industry Participants.
 4




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Pricing Factors and Average Selling Prices.
 Our Business
  Product Distribution.
   Logistic Services.
 5




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Activation Services.
 Prepaid Airtime.
 Our Strategy
    Expand into New Geographic Markets.
 6




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Add New Products and Services in Current Markets.
 Expand Existing Product and Service Offerings in Current Markets.
 Continue to Build and Promote the Brightpoint Brand within the Global Wireless Industry.
 Customers
  Mobile Operators and MVNOs:
 Dealers and Agents:
 Mass Retailers:
 Other Distributors:
   7




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Purchasing and Suppliers
    Sales and Marketing
   8




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Seasonality
  
    
    promotions and subsidies by mobile operators;
    
    the timing of local holidays and other events affecting consumer demand;
    
    the timing of the introduction of new products by our suppliers and competitors;
    
    purchasing patterns of customers in different markets;
    
    general economic conditions; and
    
    product availability and pricing.
  Competition
    9




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Product Distribution.
  Logistic Services.
  Activation Services.
  Prepaid Airtime.
  Information Systems
  10




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Employees
  Segment and Geographic Financial Information
  
 Item 1A. Risk Factors.
  The loss or reduction in orders from principal customers or a reduction in prices we are able to
charge these customers could materially adversely affect our business.
 Our business may be adversely impacted by consolidation of mobile operators.
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We buy a significant amount of our products from a limited number of suppliers, who may not provide
us with competitive products at reasonable prices when we need them in the future.
 We may become subject to suits alleging medical risks associated with our wireless devices.
 We may have difficulty collecting our accounts receivable.
 Our future operating results will depend on our ability to continue to increase volumes and
maintain margins.
 Our business growth strategy includes acquisitions.
 The market price of our Common Stock may continue to be volatile.
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Our business depends on the continued tendency of wireless equipment manufacturers and network
operators to outsource aspects of their business to us in the future.
 We depend on third parties to manufacture products that we distribute and, accordingly, rely on
their quality control procedures.
 Our operations may be materially affected by fluctuations in regional demand patterns and economic
factors.
 Rapid technological changes in the global wireless industry could have a material adverse effect on
our business.
 We rely on our suppliers to provide trade credit facilities to adequately fund our on-going
operations and product purchases.
 A significant percentage of our revenues are generated outside of the United States in countries
that may have volatile currencies or other risks.
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Natural disasters, epidemics, hostilities and terrorist acts could disrupt our operations.
 We make significant investments in the technology used in our business and rely on that technology
to function effectively without interruptions.
 We have debt facilities, which are secured by a portion of our assets and which could prevent us
from borrowing additional funds, if needed.
 The global wireless industry is intensely competitive and we may not be able to continue to compete
successfully in this industry.
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We may not be able to manage and sustain future growth at our historical or current rates.
 Our business strategy includes entering into relationships and financings, which may provide us
with minimal returns or losses on our investments.
 Our operating results frequently vary significantly and respond to seasonal fluctuations in
purchasing patterns.
  We are
subject to certain personnel related issues. 
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We rely to a great extent on trade secret and copyright laws and agreements with our key employees
and other third parties to protect our proprietary rights.
  We have significant future payment obligations pursuant to certain leases and other long-term
contracts.
 We may be unable to obtain and maintain adequate business insurance at a reasonable cost.
 There are amounts of our securities, which are issuable pursuant to our 2004 Long-Term Incentive
Plan, our Amended and Restated Independent Director Stock Compensation Plan and our 1996 Stock
Option Plan, which, if issued, could result in dilution to existing
shareholders, reduce earnings in future periods and adversely
affect the market price of our Common Stock. Share-Based Payment
 16




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We have instituted measures to protect us against a takeover.
 
 Item 1B. Unresolved Staff Comments.
  
 Item 2. Properties.
  Number of
    
    
    AggregateLocations(1)
    
    
    Square FootageThe Americas
    
    
    4
    
    
    
    891,362Asia-Pacific
    
    
    5
    
    
    
    149,580Europe
    
    
    5
    
    
    
    160,60114
    
    
    
    1,201,543
 
 (1)
    
    Refers to facilities operated by the Company, which are greater than 1,000 square feet.  
 Item 3.
Legal Proceedings.
     17




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Item 4. Submission of Matters to a Vote of Security Holders.
  
 PART II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
  Dividend Payment orDeclaration Date
    
    Stock Split Effective Date
    
    Split RatioAugust 31, 1995
    
    September 20, 1995
    
    5 for 4November 12, 1996
    
    December 17, 1996
    
    3 for 2January 28, 1997
    
    March 3, 1997
    
    5 for 4October 22, 1997
    
    November 21, 1997
    
    2 for 1June 26, 2002
    
    June 27, 2002
    
    1 for 7July 29, 2003
    
    August 25, 2003
    
    3 for 2September 15, 2003
    
    October 15, 2003
    
    3 for 2August 12, 2005
    
    September 15, 2005
    
    3 for 2December 5, 2005
    
    December 30, 2005
    
    3 for 2
   2005
    
    High
    
    LowFirst Quarter
    
    $
    9.17
    
    
    $
    7.07Second Quarter
    
    
    10.49
    
    
    
    8.20Third Quarter
    
    
    13.28
    
    
    
    10.11Fourth Quarter
    
    
    20.05
    
    
    
    12.15
 2004
    
    High
    
    LowFirst Quarter
    
    $
    10.18
    
    
    $
    6.11Second Quarter
    
    
    7.28
    
    
    
    4.28Third Quarter
    
    
    7.64
    
    
    
    5.12Fourth Quarter
    
    
    9.12
    
    
    
    6.75
   18




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Total numberof shares
    
    Total amountpurchased as
    
    purchased as
    
    Maximum dollarpart of the
    
    part of
    
    value of sharesTotal number
    
    Average
    
    publicly
    
    the publicly
    
    that may yet beof shares
    
    price paid
    
    announced
    
    announced
    
    purchased underMonth of purchase
    
    purchased
    
    per share
    
    program
    
    program
    
    the programOctober 1  October 31, 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    7,042,559November 1  November 30, 2005
    
    
    421,500
    
    
    $
    16.54
    
    
    
    421,500
    
    
    $
    6,970,270
    
    
    $
    18,072,289December 1  December 31, 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    18,072,289Total
    
    
    421,500
    
    
    $
    16.54
    
    
    
    421,500
    
    
    $
    6,970,270
    
    
    $
    18,072,289
  19




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Item 6. Selected Financial Data.
   Year Ended December 31,2005(1)
    
    
    2004
    
    
    2003(1)
    
    
    2002(1)
    
    
    2001(1)Revenue (2)
    
    $
    2,140,177
    
    
    $
    1,772,424
    
    
    $
    1,692,580
    
    
    $
    1,162,825
    
    
    $
    1,108,294Gross profit (2)
    
    
    132,012
    
    
    
    104,764
    
    
    
    86,324
    
    
    
    59,609
    
    
    
    60,566Operating income (loss) from continuing operations
(2)
    
    
    44,353
    
    
    
    35,567
    
    
    
    20,355
    
    
    
    (1,150
    )
    
    
    1,194Income from continuing operations (2)
    
    
    31,918
    
    
    
    23,826
    
    
    
    13,861
    
    
    
    13,922
    
    
    
    1,930Total loss from discontinued operations, net of
income taxes (2)
    
    
    (21,478
    )
    
    
    (10,056
    )
    
    
    (2,132
    )
    
    
    (15,595
    )
    
    
    (55,231
    )Income (loss) before cumulative effect
    
    
    10,440
    
    
    
    13,770
    
    
    
    11,729
    
    
    
    (1,673
    )
    
    
    (53,301
    )Net income (loss)
    
    
    10,440
    
    
    
    13,770
    
    
    
    11,729
    
    
    
    (42,421
    )
    
    
    (53,301
    )Earnings (loss) per share  basic:Income from continuing operations (3)
    
    $
    0.80
    
    
    $
    0.57
    
    
    $
    0.34
    
    
    $
    0.34
    
    
    $
    0.05Discontinued operations (3)
    
    
    (0.54
    )
    
    
    (0.24
    )
    
    
    (0.05
    )
    
    
    (0.38
    )
    
    
    (1.37
    )Cumulative effect of accounting change,
net of tax (3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1.01
    )
    
    
    Net income (loss) (3)
    
    $
    0.26
    
    
    $
    0.33
    
    
    $
    0.29
    
    
    $
    (1.05
    )
    
    $
    (1.32
    )Earnings (loss) per share  diluted:Income from continuing operations (3)
    
    $
    0.77
    
    
    $
    0.55
    
    
    $
    0.32
    
    
    $
    0.34
    
    
    $
    0.05Discontinued operations (3)
    
    
    (0.52
    )
    
    
    (0.23
    )
    
    
    (0.05
    )
    
    
    (0.38
    )
    
    
    (1.37
    )Cumulative effect of accounting change,
net of tax (3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1.01
    )
    
    
    Net income (loss) (3)
    
    $
    0.25
    
    
    $
    0.32
    
    
    $
    0.27
    
    
    $
    (1.05
    )
    
    $
    (1.32
    )2005
    
    
    
    2004
    
    
    
    2003
    
    
    
    2002
    
    
    
    2001Working capital
    
    $
    121,336
    
    
    $
    103,525
    
    
    $
    96,839
    
    
    $
    58,981
    
    
    $
    165,566Total assets
    
    
    487,824
    
    
    
    437,584
    
    
    
    444,690
    
    
    
    336,302
    
    
    
    609,420Total liabilities
    
    
    338,782
    
    
    
    286,847
    
    
    
    297,106
    
    
    
    222,659
    
    
    
    459,407Shareholders equity
    
    
    149,042
    
    
    
    150,737
    
    
    
    147,584
    
    
    
    113,643
    
    
    
    150,013
 
 (1)
    
    Operating data includes certain items that were recorded in the years presented as
follows: facility consolidation charges in 2005, 2003 and 2001;and the cumulative effect of an
accounting change in 2002. See Managements Discussion and Analysis of Financial Condition and
Results of Operations and Notes to Consolidated Financial Statements.(2)
    
    We have reclassified certain prior year amounts to conform to the 2005 presentation, including
the effects of divestitures and the related reclassification of discontinued operations as more
fully described in Note 6 to the Notes to Consolidated Financial Statements. The amounts
reclassified had no effect on net income or earnings per share.(3)
    
    Per share amounts for all periods have been adjusted to reflect the 3 for 2 common stock splits
(paid in the form of stock dividends) effected on December 30, 2005, September 15, 2005, October
15, 2003, and August 15, 2004, and the 1 for 7 reverse split effected on June 27, 2002. 20




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Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operation.
 OVERVIEW
     
    
    Increase and extension of our Common Stock repurchase plan.In 2005, we repurchased 1.5
million shares of Common Stock at a total cost of $15.9 million and are authorized to
repurchase an additional $18.1 million under a repurchase plan approved by the Board of
Directors and extended to December 31, 2007.
    
    Two three-for-two stock splits.In August 2005 and December 2005, the Board of
Directors approved a three-for-two split of the outstanding Common Stock. The August 2005
split was payable on September 15, 2005 to holders of record on August 31, 2005 and the
December 2005 split was payable on December 30, 2005 to holders of record on December 16,
2005.
    
    Sale of Brightpoint France SARL (Brightpoint France).In December 2005, we sold all the equity securities of
Brightpoint France to an entity formed by the former managing
director of Brightpoint France for an aggregate purchase price of approximately $1.6
million, of which approximately $0.1 million has been received and approximately $1.5
million is payable in annual installments on each of the first, second, and third
anniversaries following the date of closing.
    
    Purchase of Persequor Limited (Persequor). In February 2006, we purchased Persequor for
approximately $1.0 million. Previously, Persequor had provided management services to
Brightpoint India Limited (Brightpoint India) and Brightpoint Asia Limited pursuant to an
October 31, 2003 agreement under which we sold 15% of our interest in Brightpoint India to
Persequor in exchange for Persequor providing management services to Brightpoint India.
The $1.0 million purchase of Persequor includes the 15% interest in Brightpoint India
valued at approximately $0.2 million.
    
    Launch of Advanced Wireless Services (AWS). AWS was created in the first quarter of
2005 to deliver bundled wireless products and services (such as Windows Mobile-based smart
phones and pocket PCs, activation services, bundled software applications, VoIP
products/services, wireless LAN infrastructure and services and mobile media and
applications) to our existing sales channels (mobile operators and their dealers), as well as to new channels such as value-added
resellers and system integrators targeting the enterprise and small/medium business
markets. To date, our AWS business has already announced agreements with Belkin, ECCB,
Intel, Microsoft, Motorola, RTX, Skype and Vonage.
    
    Nokia Distribution Agreement.In January 2006, Brightpoint North America L.P. extended
its distribution agreement with Nokia in the United States to December 31, 2007. During
the term of this agreement, we will continue to be the exclusive authorized distributor
for Nokia brand wireless devices in the United States. In instances when Nokia does
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not sell directly to selected large accounts, Nokia utilizes Brightpoint to market, sell and
deliver wireless devices and accessories to network operators, independent agents and
other retailers throughout the United States.
    
    MVNO Agreements.In 2005, Brightpoint North America L.P. entered into distribution and
logistic services agreements with several MVNOs including: ESPN Mobile, Ampd Mobile, IDT
Telecom, Primus Wireless and Movida Communications, Inc. Pursuant to the agreements,
Brightpoint will provide a number of services including inventory management, product
fulfillment and distribution, returns management, credit management and other logistic
services solutions.
 2005 RESULTS OF OPERATIONS
 Revenue and Wireless Devices Handled
 Year EndedDecember 31,
    
    % of
    
    December 31,
    
    % of2005
    
    Total
    
    2004
    
    Total
    
    Change(Amounts in 000s)REVENUE BY DIVISION:The Americas
    
    $
    675,074
    
    
    
    32
    %
    
    $
    505,135
    
    
    
    28
    %
    
    
    34
    %Asia-Pacific
    
    
    1,081,529
    
    
    
    50
    %
    
    
    968,150
    
    
    
    55
    %
    
    
    12
    %Europe
    
    
    383,574
    
    
    
    18
    %
    
    
    299,139
    
    
    
    17
    %
    
    
    28
    %Total
    
    $
    2,140,177
    
    
    
    100
    %
    
    $
    1,772,424
    
    
    
    100
    %
    
    
    21
    %REVENUE BY SERVICE LINE:Distribution
    
    $
    1,845,983
    
    
    
    86
    %
    
    $
    1,523,717
    
    
    
    86
    %
    
    
    21
    %Logistic services
    
    
    294,194
    
    
    
    14
    %
    
    
    248,707
    
    
    
    14
    %
    
    
    18
    %Total
    
    $
    2,140,177
    
    
    
    100
    %
    
    $
    1,772,424
    
    
    
    100
    %
    
    
    21
    %WIRELESS DEVICES HANDLED BY DIVISION:The Americas
    
    
    33,002
    
    
    
    78
    %
    
    
    18,886
    
    
    
    70
    %
    
    
    75
    %Asia-Pacific
    
    
    7,762
    
    
    
    19
    %
    
    
    6,956
    
    
    
    26
    %
    
    
    12
    %Europe
    
    
    1,317
    
    
    
    3
    %
    
    
    985
    
    
    
    4
    %
    
    
    34
    %Total
    
    
    42,081
    
    
    
    100
    %
    
    
    26,827
    
    
    
    100
    %
    
    
    57
    %WIRELESS DEVICES HANDLED BY SERVICE
LINE:Distribution
    
    
    11,769
    
    
    
    28
    %
    
    
    10,074
    
    
    
    38
    %
    
    
    17
    %Logistic services
    
    
    30,312
    
    
    
    72
    %
    
    
    16,753
    
    
    
    62
    %
    
    
    81
    %Total
    
    
    42,081
    
    
    
    100
    %
    
    
    26,827
    
    
    
    100
    %
    
    
    57
    %
   22




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Revenue and wireless devices handled by division
 Americas
 Year EndedDecember 31,
    
    % of
    
    December 31,
    
    % of2005
    
    Total
    
    2004
    
    Total
    
    Change(Amounts in 000s)REVENUE:Distribution
    
    $
    507,508
    
    
    
    75
    %
    
    $
    393,883
    
    
    
    78
    %
    
    
    29
    %Logistic services
    
    
    167,566
    
    
    
    25
    %
    
    
    111,252
    
    
    
    22
    %
    
    
    51
    %Total
    
    $
    675,074
    
    
    
    100
    %
    
    $
    505,135
    
    
    
    100
    %
    
    
    34
    %WIRELESS DEVICES:Distribution
    
    
    3,566
    
    
    
    11
    %
    
    
    2,845
    
    
    
    15
    %
    
    
    25
    %Logistic services
    
    
    29,436
    
    
    
    89
    %
    
    
    16,041
    
    
    
    85
    %
    
    
    84
    %Total
    
    
    33,002
    
    
    
    100
    %
    
    
    18,886
    
    
    
    100
    %
    
    
    75
    %
   23




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##### Table of Contents



Asia-Pacific
 Year EndedDecember 31,
    
    % of
    
    December 31,
    
    % of2005
    
    Total
    
    2004
    
    Total
    
    Change(Amounts in 000s)REVENUE:Distribution
    
    $
    1,054,051
    
    
    
    97
    %
    
    $
    924,024
    
    
    
    95
    %
    
    
    14
    %Logistic services
    
    
    27,478
    
    
    
    3
    %
    
    
    44,126
    
    
    
    5
    %
    
    
    (38
    )%Total
    
    $
    1,081,529
    
    
    
    100
    %
    
    $
    968,150
    
    
    
    100
    %
    
    
    12
    %WIRELESS DEVICES:Distribution
    
    
    7,329
    
    
    
    94
    %
    
    
    6,545
    
    
    
    94
    %
    
    
    12
    %Logistic services
    
    
    433
    
    
    
    6
    %
    
    
    411
    
    
    
    6
    %
    
    
    5
    %Total
    
    
    7,762
    
    
    
    100
    %
    
    
    6,956
    
    
    
    100
    %
    
    
    12
    %
   Europe
 Year EndedDecember 31,
    
    % of
    
    December 31,
    
    % of2005
    
    Total
    
    2004
    
    Total
    
    Change(Amounts in 000s)REVENUE:Distribution
    
    $
    284,424
    
    
    
    74
    %
    
    $
    205,810
    
    
    
    69
    %
    
    
    38
    %Logistic services
    
    
    99,150
    
    
    
    26
    %
    
    
    93,329
    
    
    
    31
    %
    
    
    6
    %Total
    
    $
    383,574
    
    
    
    100
    %
    
    $
    299,139
    
    
    
    100
    %
    
    
    28
    %WIRELESS DEVICES:Distribution
    
    
    875
    
    
    
    66
    %
    
    
    684
    
    
    
    69
    %
    
    
    28
    %Logistic services
    
    
    442
    
    
    
    34
    %
    
    
    301
    
    
    
    31
    %
    
    
    47
    %Total
    
    
    1,317
    
    
    
    100
    %
    
    
    985
    
    
    
    100
    %
    
    
    34
    %
   24




---



##### Table of Contents



Gross Profit and Gross Margin
 Year EndedDecember 31,
    
    % of
    
    December 31,
    
    % of2005
    
    Total
    
    2004
    
    Total
    
    Change(Amounts in 000s)Distribution
    
    $
    71,371
    
    
    
    54
    %
    
    $
    59,598
    
    
    
    57
    %
    
    
    20
    %Logistic services
    
    
    60,641
    
    
    
    46
    %
    
    
    45,166
    
    
    
    43
    %
    
    
    34
    %Gross profit
    
    $
    132,012
    
    
    
    100
    %
    
    $
    104,764
    
    
    
    100
    %
    
    
    26
    %Distribution
    
    
    3.9
    %
    
    
    54
    %
    
    
    3.9
    %
    
    
    57
    %
    
    0.0 % pointsLogistic services
    
    
    20.6
    %
    
    
    46
    %
    
    
    18.2
    %
    
    
    43
    %
    
    2.4 % pointsGross margin
    
    
    6.2
    %
    
    
    100
    %
    
    
    5.9
    %
    
    
    100
    %
    
    0.3 % points
    Selling, General and Administrative (SG&A) Expenses
 Year EndedDecember 31,
    
    December 31,2005
    
    2004
    
    Change(Amounts in 000s)SG&A expenses
    
    $
    86,726
    
    
    $
    69,433
    
    
    
    25
    %Percentage of revenue
    
    
    4.1
    %
    
    
    3.9
    %
    
    0.2 % points
  Facility Consolidation Charge
  25




---



##### Table of Contents



Operating Income from Continuing Operations
  Year EndedDecember 31,
    
    % of
    
    December 31,
    
    % of2005
    
    Total
    
    2004
    
    Total
    
    Change(Amounts in 000s)The Americas
    
    $
    33,901
    
    
    
    76
    %
    
    $
    21,731
    
    
    
    61
    %
    
    
    56
    %Asia-Pacific
    
    
    9,573
    
    
    
    22
    %
    
    
    11,614
    
    
    
    33
    %
    
    
    (18
    )%Europe
    
    
    879
    
    
    
    2
    %
    
    
    2,222
    
    
    
    6
    %
    
    
    (60
    )%Total
    
    $
    44,353
    
    
    
    100
    %
    
    $
    35,567
    
    
    
    100
    %
    
    
    25
    %
  Year EndedDecember 31,
    
    December 31,2005
    
    2004
    
    Change(Amounts in 000s)The Americas
    
    
    5.0
    %
    
    
    4.3
    %
    
    0.7% pointsAsia-Pacific
    
    
    0.9
    %
    
    
    1.2
    %
    
    (0.3)% pointsEurope
    
    
    0.2
    %
    
    
    0.7
    %
    
    (0.5)% pointsTotal
    
    
    2.1
    %
    
    
    2.0
    %
    
    0.1% points
     26




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##### Table of Contents



Interest
  Year EndedDecember 31,
    
    December 31,2005
    
    2004
    
    Change(Amounts in 000s)Interest expense
    
    $
    1,163
    
    
    $
    949
    
    
    
    23
    %Interest income
    
    
    (1,309
    )
    
    
    (986
    )
    
    
    33
    %Interest, net
    
    $
    (146
    )
    
    $
    (37
    )
    
    
    295
    %
  Other Expenses
 Year EndedDecember 31,
    
    December 31,2005
    
    2004
    
    Change(Amounts in 000s)Other expense
    
    $
    1,523
    
    
    $
    1,526
    
    
    
    0
    %Percentage of revenue
    
    
    0.1
    %
    
    
    0.1
    %
  Income Tax Expense
 Year EndedDecember 31,
    
    December 31,2005
    
    2004
    
    Change(Amounts in 000s)Income tax expense
    
    $
    11,058
    
    
    $
    10,252
    
    
    
    7.9
    %Effective tax rate
    
    
    25.7
    %
    
    
    30.1
    %
    
    (4.4)% points
  27




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##### Table of Contents



Discontinued Operations
 Year EndedDecember 31,
    
    December 31,2005
    
    2004
    
    Change(Amounts in 000s)Loss from discontinued operations
    
    $
    (20,600
    )
    
    $
    (4,343
    )
    
    
    374
    %Loss on disposal of discontinued operations
    
    
    (878
    )
    
    
    (5,713
    )
    
    
    (85
    )%Total discontinued operations
    
    $
    (21,478
    )
    
    $
    (10,056
    )
    
    
    114
    %Percentage of Revenue
    
    
    (1.0
    )%
    
    
    (0.6
    )%
    
    0.4% pointsDiluted loss per share
    
    $
    (0.52
    )
    
    $
    (0.23
    )
    
    
    126
    %
   2004 RESULTS OF OPERATIONS
 Revenue and Wireless Devices Handled
  Year EndedDecember 31,
    
    % of
    
    December 31,
    
    % of2004
    
    Total
    
    2003
    
    Total
    
    Change(Amounts in 000s)The Americas
    
    
    18,886
    
    
    
    70
    %
    
    
    12,403
    
    
    
    62
    %
    
    
    52
    %Asia-Pacific
    
    
    6,956
    
    
    
    26
    %
    
    
    6,940
    
    
    
    35
    %
    
    
    Europe
    
    
    985
    
    
    
    4
    %
    
    
    587
    
    
    
    3
    %
    
    
    68
    %Total
    
    
    26,827
    
    
    
    100
    %
    
    
    19,930
    
    
    
    100
    %
    
    
    35
    %
   28




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##### Table of Contents



Year EndedDecember 31,
    
    % of
    
    December 31,
    
    % of2004
    
    Total
    
    2003
    
    Total
    
    Change(Amounts in 000s)Distribution
    
    
    10,074
    
    
    
    38
    %
    
    
    10,428
    
    
    
    52
    %
    
    
    (3
    )%Logistic services
    
    
    16,753
    
    
    
    62
    %
    
    
    9,502
    
    
    
    48
    %
    
    
    76
    %Total
    
    
    26,827
    
    
    
    100
    %
    
    
    19,930
    
    
    
    100
    %
    
    
    35
    %
     Year EndedDecember 31,
    
    % of
    
    December 31,
    
    % of2004
    
    Total
    
    2003
    
    Total
    
    Change(Amounts in 000s)Distribution
    
    $
    1,523,717
    
    
    
    86
    %
    
    $
    1,506,772
    
    
    
    89
    %
    
    
    1
    %Logistic services
    
    
    248,707
    
    
    
    14
    %
    
    
    185,808
    
    
    
    11
    %
    
    
    34
    %Total
    
    $
    1,772,424
    
    
    
    100
    %
    
    $
    1,692,580
    
    
    
    100
    %
    
    
    5
    %
 29




---



##### Table of Contents



Year EndedDecember 31,
    
    % of
    
    December 31,
    
    % of2004
    
    Total
    
    2003
    
    Total
    
    Change(Amounts in 000s)The Americas
    
    $
    505,135
    
    
    
    28
    %
    
    $
    469,618
    
    
    
    28
    %
    
    
    8
    %Asia-Pacific
    
    
    968,150
    
    
    
    55
    %
    
    
    995,797
    
    
    
    59
    %
    
    
    (3
    )%Europe
    
    
    299,139
    
    
    
    17
    %
    
    
    227,165
    
    
    
    13
    %
    
    
    32
    %Total
    
    $
    1,772,424
    
    
    
    100
    %
    
    $
    1,692,580
    
    
    
    100
    %
    
    
    5
    %
    30




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##### Table of Contents



Gross Profit and Gross Margin
  Year EndedDecember 31,
    
    % of
    
    December 31,
    
    % of2004
    
    Total
    
    2003
    
    Total
    
    Change(Amounts in 000s)Distribution
    
    $
    59,598
    
    
    
    57
    %
    
    $
    53,528
    
    
    
    62
    %
    
    
    11
    %Logistic services
    
    
    45,166
    
    
    
    43
    %
    
    
    32,796
    
    
    
    38
    %
    
    
    38
    %Gross profit
    
    $
    104,764
    
    
    
    100
    %
    
    $
    86,324
    
    
    
    100
    %
    
    
    21
    %
      Year EndedDecember 31,
    
    December 31,2004
    
    2003
    
    ChangeDistribution
    
    
    3.9
    %
    
    
    3.6
    %
    
    0.3% pointsLogistic services
    
    
    18.2
    %
    
    
    17.7
    %
    
    0.5% pointsGross margin
    
    
    5.9
    %
    
    
    5.1
    %
    
    0.8% points
  31




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##### Table of Contents



Selling, General and Administrative (SG&A) Expenses
 Year EndedDecember 31,
    
    December 31,2004
    
    2003
    
    Change(Amounts in 000s)SG&A expenses
    
    $
    69,433
    
    
    $
    60,508
    
    
    
    15
    %Percentage of revenue
    
    
    3.9
    %
    
    
    3.6
    %
    
    0.3% points
  
    
    $2.4 million unfavorable effect of the strengthening of foreign currencies relative to the U.S. dollar,
    
    our entry into Finland and the Slovak Republic,
    
    increases in variable costs to support our growth and expansion in current markets,
including our continued business development in India,
    
    a $2.1 million increase in expenses related to being a publicly traded company, which
included $1.6 million related to compliance efforts with Section 404 of the Sarbanes-Oxley
Act of 2002, and
    
    the effect of the benefit of a $0.9 million legal expense recovery in 2003, which did
not recur in 2004.
  Operating Income from Continuing Operations
  Year EndedDecember 31,
    
    % of
    
    December 31,
    
    % of2004
    
    Total
    
    2003
    
    Total
    
    Change(Amounts in 000s)The Americas (1)
    
    $
    21,731
    
    
    
    61
    %
    
    $
    3,620
    
    
    
    18
    %
    
    
    500
    %Asia-Pacific
    
    
    11,614
    
    
    
    33
    %
    
    
    14,088
    
    
    
    69
    %
    
    
    (18
    )%Europe
    
    
    2,222
    
    
    
    6
    %
    
    
    2,647
    
    
    
    13
    %
    
    
    (16
    )%Total
    
    $
    35,567
    
    
    
    100
    %
    
    $
    20,355
    
    
    
    100
    %
    
    
    75
    %
 32




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##### Table of Contents



Year EndedDecember 31,
    
    December 31,2004
    
    2003
    
    ChangeThe Americas (1)
    
    
    4.3
    %
    
    
    0.8
    %
    
    3.5% pointsAsia-Pacific
    
    
    1.2
    %
    
    
    1.4
    %
    
    (0.2)% pointsEurope
    
    
    0.7
    %
    
    
    1.2
    %
    
    (0.5)% pointsTotal
    
    
    2.0
    %
    
    
    1.2
    %
    
    0.8 % points
 
 (1)
    
    Includes a facility consolidation charge of $5.5 million in 2003.       33




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##### Table of Contents



Interest
 Year EndedDecember 31,
    
    December 31,2004
    
    2003
    
    Change(Amounts in 000s)Interest expense
    
    $
    949
    
    
    $
    1,147
    
    
    
    (17
    )%Interest income
    
    
    (986
    )
    
    
    (652
    )
    
    
    51
    %Interest, net
    
    $
    (37
    )
    
    $
    495
    
    
    
    (107
    )%
  Other Expenses
 Year EndedDecember 31,
    
    December 31,2004
    
    2003
    
    Change(Amounts in 000s)Other expense
    
    $
    1,526
    
    
    $
    1,927
    
    
    
    (21
    )%Percentage of revenue
    
    
    0.1
    %
    
    
    0.1
    %
  Income Tax Expense
 Year EndedDecember 31,
    
    December 31,2004
    
    2003
    
    Change(Amounts in 000s)Income tax expense
    
    $
    10,252
    
    
    $
    3,731
    
    
    
    175
    %Effective tax rate
    
    
    30.1
    %
    
    
    21.2
    %
    
    8.9% points
  34




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##### Table of Contents



Income from Continuing Operations
 Year EndedDecember 31,
    
    December 31,2004
    
    2003
    
    Change(Amounts in 000s)Operating income
    
    $
    35,567
    
    
    $
    20,355
    
    
    
    75
    %Interest expense, net
    
    
    (37
    )
    
    
    495
    
    
    
    (107
    )%Loss on extinguishment of debt
    
    
    
    
    
    
    365
    
    
    
    N/AOther expenses
    
    
    1,526
    
    
    
    1,927
    
    
    
    (21
    )%Income from continuing operations before taxes
    
    
    34,078
    
    
    
    17,568
    
    
    
    94
    %Income tax expense
    
    
    10,252
    
    
    
    3,731
    
    
    
    175
    %Income from continuing operations before minority interest
    
    
    23,826
    
    
    
    13,837
    
    
    
    72
    %Income from continuing operations
    
    
    23,826
    
    
    
    13,861
    
    
    
    72
    %Diluted earnings per share
    
    $
    0.55
    
    
    $
    0.32
    
    
    
    72
    %
   Discontinued Operations
 Year EndedDecember 31,
    
    December 31,2004
    
    2003
    
    Change(Amounts in 000s)Loss from discontinued operations
    
    $
    (4,343
    )
    
    $
    (1,604
    )
    
    
    171
    %Loss on disposal of discontinued operations
    
    
    (5,713
    )
    
    
    (528
    )
    
    
    982
    %Total discontinued operations
    
    $
    (10,056
    )
    
    $
    (2,132
    )
    
    
    372
    %Percentage of Revenue
    
    
    (0.6
    )%
    
    
    (0.1
    )%
    
    0.5% pointsDiluted loss per share
    
    $
    (0.23
    )
    
    $
    (0.05
    )
    
    
    360
    %
    35




---



##### Table of Contents



Net Income
 Year EndedDecember 31,
    
    December 31,2004
    
    2003
    
    Change(Amounts in 000s)Net income
    
    $
    13,770
    
    
    $
    11,729
    
    
    
    17
    %Percentage of Revenue
    
    
    0.8
    %
    
    
    0.7
    %
    
    0.1% pointsDiluted earnings per share
    
    $
    0.32
    
    
    $
    0.27
    
    
    
    19
    %
   RETURN ON INVESTED CAPITAL FROM OPERATIONS, LIQUIDITY AND CAPITAL RESOURCES
 Return on Invested Capital from Operations (ROIC)
  Year Ended December 31,2005
    
    2004
    
    2003(Amounts in 000s)Operating income after taxes:Operating income from continuing operations
    
    $
    44,353
    
    
    $
    35,567
    
    
    $
    20,355Plus: facility consolidation charge (benefit)
    
    
    933
    
    
    
    (236
    )
    
    
    5,461Less: estimated income taxes(1)
    
    
    (11,728
    )
    
    
    (10,633
    )
    
    
    (5,715
    )Operating income after taxes
    
    $
    33,556
    
    
    $
    24,698
    
    
    $
    20,101Invested capital:Debt
    
    $
    
    
    
    $
    
    
    
    $
    16,207Shareholders equity
    
    
    149,042
    
    
    
    150,737
    
    
    
    147,584Invested capital
    
    $
    149,042
    
    
    $
    150,737
    
    
    $
    163,791Average invested capital(2)
    
    $
    149,567
    
    
    $
    145,977
    
    
    $
    137,463ROIC(3)
    
    
    22
    %
    
    
    17
    %
    
    
    15
    %
 
 (1)
    
    Estimated income taxes were calculated by multiplying the sum of operating income from
continuing operations and the facility consolidation charge by the respective periods
effective tax rate. 36




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##### Table of Contents



(2)
    
    Average invested capital for annual periods represents the simple average of the invested
capital amounts for the prior year end and at each quarter end in the respective annual
period.(3)
    
    ROIC is calculated by dividing operating income after taxes by average invested capital.  Cash Conversion Cycle
 Year EndedDecember 31,2005
    
    2004
    
    2003Days sales outstanding in accounts receivable
    
    
    27
    
    
    
    24
    
    
    
    21Days inventory on-hand
    
    
    24
    
    
    
    24
    
    
    
    25Days payable outstanding
    
    
    (44
    )
    
    
    (42
    )
    
    
    (43
    )Cash conversion cycle days
    
    
    7
    
    
    
    6
    
    
    
    3
        37




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##### Table of Contents



Year Ended December 31,2005
    
    2004
    
    2003(Amounts in 000s)Days sales outstanding in accounts receivable:Continuing operations revenue
    
    $
    2,140,177
    
    
    $
    1,772,424
    
    
    $
    1,692,580Value-added taxes invoiced for continuing operations
    
    
    110,707
    
    
    
    110,733
    
    
    
    86,944Total continuing operations revenue and value-added taxes
    
    
    2,250,884
    
    
    
    1,883,157
    
    
    
    1,779,524Daily sales including value-added taxes
    
    
    6,252
    
    
    
    5,231
    
    
    
    4,943Continuing operations ending accounts receivable
    
    $
    168,004
    
    
    $
    126,274
    
    
    $
    105,137Days sales outstanding in Accounts Receivable(A)
    
    
    27
    
    
    
    24
    
    
    
    21Days inventory on-handContinuing operations cost of revenue
    
    $
    2,008,165
    
    
    $
    1,667,660
    
    
    $
    1,606,256Indirect product and service costs
    
    
    (126,700
    )
    
    
    (99,053
    )
    
    
    (88,154
    )Total continuing operations cost of products sold
    
    
    1,881,465
    
    
    
    1,568,607
    
    
    
    1,518,102Daily cost of products sold
    
    
    5,226
    
    
    
    4,357
    
    
    
    4,217Continuing operations ending inventory
    
    $
    124,864
    
    
    $
    105,469
    
    
    $
    103,362Days inventory on-hand(B)
    
    
    24
    
    
    
    24
    
    
    
    25Days payables outstanding in accounts payableDaily cost of products sold
    
    $
    5,226
    
    
    $
    4,357
    
    
    $
    4,217Continuing operations ending accounts payable
    
    $
    232,258
    
    
    $
    181,634
    
    
    $
    182,857Days payable outstanding(C)
    
    
    44
    
    
    
    42
    
    
    
    43Cash conversion cycle days (A+B-C)
    
    
    7
    
    
    
    6
    
    
    
    3
 Consolidated Statement of Cash Flows
  Year Ended December 31,2005
    
    2004
    
    Change(Amounts in 000s)Net cash provided by (used in):Operating activities
    
    $
    68,960
    
    
    $
    7,742
    
    
    $
    61,218Investing activities
    
    
    (15,499
    )
    
    
    (5,923
    )
    
    
    (9,576
    )Financing activities
    
    
    (11,168
    )
    
    
    (34,497
    )
    
    
    23,329Effect of exchange rate changes on cash and cash equivalents
    
    
    (8,360
    )
    
    
    5,919
    
    
    
    (14,279
    )Net increase (decrease) in cash and cash equivalents
    
    $
    33,933
    
    
    $
    (26,759
    )
    
    $
    60,692
  
    
    $39.9 million more cash provided by changes in working capital in 2005 compared to 2004
    
    $10.9 million more cash from income adjusted for non-cash expenses in 2005 compared to
2004 as a result of $39.6 million of non-cash expense during 2005 compared to only $25.4
million non-cash expense during 2004, partially offset by $3.3 million of lower net income
in 2005 compared to 2004
    
    $10.5 million additional cash provided by reductions in cash collateral requirements
during 2005 compared to 2004
  
    
    $9.7 million more cash used in contract financing arrangements in 2005 compared to 2004,
due to changes in contractual terms of certain contract financing arrangements
    
    $4.6 million more capital expenditures in 2005 compared to 2004
    
    partially offset by $4.8 million more cash provided from collections on notes receivable
and other long-term assets in 2005 compared to 2004
  
    
    $16.4 million more net payments on borrowings in 2004 compared to 2005
 38




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
    
    $8.1 million fewer repurchases of treasury stock in 2005 compared to 2004
  Lines of Credit
  Letters of Credit &
    
    NetCommitment
    
    Gross Availability
    
    Outstanding
    
    Guarantees
    
    Availability(Amounts in 000s)North America
    
    $
    70,000
    
    
    $
    63,000
    
    
    $
    
    
    
    $
    22,500
    
    
    $
    40,500Australia
    
    
    36,640
    
    
    
    36,255
    
    
    
    
    
    
    
    9,209
    
    
    
    27,046New Zealand
    
    
    8,204
    
    
    
    8,204
    
    
    
    
    
    
    
    21
    
    
    
    8,183Sweden
    
    
    1,889
    
    
    
    1,889
    
    
    
    
    
    
    
    
    
    
    
    1,889Slovakia
    
    
    1,876
    
    
    
    1,876
    
    
    
    
    
    
    
    
    
    
    
    1,876Philippines
    
    
    1,884
    
    
    
    1,884
    
    
    
    
    
    
    
    1,884
    
    
    
    Total
    
    $
    120,493
    
    
    $
    113,108
    
    
    $
    
    
    
    $
    33,614
    
    
    $
    79,494
     Off-balance
Sheet Arrangements  Accounts Receivable Transfers
   39




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##### Table of Contents



Capital Resources
   Liquidity Analysis
  December 31,2005
    
    2004
    
    % Change(Amounts in 000s)Unrestricted cash
    
    $
    106,053
    
    
    $
    72,120
    
    
    
    47
    %Unused borrowing availability
    
    
    79,494
    
    
    
    77,146
    
    
    
    3
    %Liquidity
    
    $
    185,547
    
    
    $
    149,266
    
    
    
    24
    %
  40




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##### Table of Contents



CREDIT RATING
  SEASONALITY
  Year
    
    1st Quarter
    
    2nd Quarter
    
    3rd Quarter
    
    4th Quarter2005
    
    
    21
    %
    
    
    23
    %
    
    
    26
    %
    
    
    30
    %2004
    
    
    23
    %
    
    
    23
    %
    
    
    25
    %
    
    
    29
    %2003
    
    
    22
    %
    
    
    22
    %
    
    
    26
    %
    
    
    30
    %
  Year
    
    1st Quarter
    
    2nd Quarter
    
    3rd Quarter
    
    4th Quarter2005
    
    
    18
    %
    
    
    22
    %
    
    
    26
    %
    
    
    34
    %2004
    
    
    21
    %
    
    
    22
    %
    
    
    25
    %
    
    
    32
    %2003
    
    
    19
    %
    
    
    20
    %
    
    
    30
    %
    
    
    31
    %
  41




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##### Table of Contents



CONTRACTUAL OBLIGATIONS AND COMMITMENTS
  Payments due by PeriodLess than
    
    1 to 3
    
    3 to 5Total
    
    1 Year
    
    Years
    
    Years
    
    Thereafter(Amounts in 000s)Operating leases(1)
    
    $
    70,825
    
    
    $
    7,756
    
    
    $
    13,281
    
    
    $
    11,015
    
    
    $
    38,773Third-party debt and lines of credit(2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Purchase obligations(3)
    
    
    14,665
    
    
    
    14,665
    
    
    
    
    
    
    
    
    
    
    
    Letters of credit
    
    
    33,614
    
    
    
    33,614
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    119,104
    
    
    $
    56,035
    
    
    $
    13,281
    
    
    $
    11,015
    
    
    $
    38,773
 
 (1)
    
    Amounts do not include payments for a lease entered into during February 2006, for which
annualized lease payments are approximately $1.3 million expiring in 2010(2)
    
    Reflects amounts included on the Consolidated Balance Sheet(3)
    
    Purchase obligations exclude agreements that are cancelable without penalty
 RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
 Share based Payment Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees
 42




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##### Table of Contents



Accounting Changes and Error Corrections Accounting Changes Reporting Accounting Changes in Interim
Financial Statements
 OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION
   ProductDistribution
    
    Logistic
    
    
    
    
    
    OperatingRevenue
    
    Services
    
    Total
    
    Income
    
    
    
    
    
    Allocated
    
    Allocatedfrom
    
    Revenue from
    
    Revenue from
    
    from
    
    Total
    
    Net Interest
    
    Income TaxExternal
    
    External
    
    External
    
    Continuing
    
    Segment
    
    Expense
    
    ExpenseCustomers
    
    Customers
    
    Customers
    
    Operations(1)
    
    Assets(2)
    
    (Income)(3)
    
    (Benefit)(3)2005:The Americas
    
    $
    507,508
    
    
    $
    167,566
    
    
    $
    675,074
    
    
    $
    33,901
    
    
    $
    211,608
    
    
    $
    160
    
    
    $
    8,902Asia-Pacific
    
    
    1,054,051
    
    
    
    27,478
    
    
    
    1,081,529
    
    
    
    9,573
    
    
    
    103,802
    
    
    
    253
    
    
    
    2,339Europe
    
    
    284,424
    
    
    
    99,150
    
    
    
    383,574
    
    
    
    879
    
    
    
    172,414
    
    
    
    (559
    )
    
    
    (183
    )$
    1,845,983
    
    
    $
    294,194
    
    
    $
    2,140,177
    
    
    $
    44,353
    
    
    $
    487,824
    
    
    $
    (146
    )
    
    $
    11,0582004:The Americas
    
    $
    393,883
    
    
    $
    111,252
    
    
    $
    505,135
    
    
    $
    21,731
    
    
    $
    152,401
    
    
    $
    312
    
    
    $
    6,286Asia-Pacific
    
    
    924,024
    
    
    
    44,126
    
    
    
    968,150
    
    
    
    11,614
    
    
    
    160,578
    
    
    
    273
    
    
    
    3,154Europe
    
    
    205,810
    
    
    
    93,329
    
    
    
    299,139
    
    
    
    2,222
    
    
    
    124,605
    
    
    
    (622
    )
    
    
    812$
    1,523,717
    
    
    $
    248,707
    
    
    $
    1,772,424
    
    
    $
    35,567
    
    
    $
    437,584
    
    
    $
    (37
    )
    
    $
    10,2522003:The Americas
    
    $
    394,044
    
    
    $
    75,574
    
    
    $
    469,618
    
    
    $
    3,620
    
    
    $
    190,077
    
    
    $
    594
    
    
    $
    610Asia-Pacific
    
    
    962,681
    
    
    
    33,116
    
    
    
    995,797
    
    
    
    14,088
    
    
    
    159,005
    
    
    
    217
    
    
    
    3,117Europe
    
    
    150,047
    
    
    
    77,118
    
    
    
    227,165
    
    
    
    2,647
    
    
    
    95,608
    
    
    
    (316
    )
    
    
    4$
    1,506,772
    
    
    $
    185,808
    
    
    $
    1,692,580
    
    
    $
    20,355
    
    
    $
    444,690
    
    
    $
    495
    
    
    $
    3,731
 
 (1)
    
    Certain corporate expenses are allocated to the segments based on total revenue.(2)
    
    Corporate assets are included in the Americas segment.(3)
    
    These items are allocated using various methods and are not necessarily indicative of the
actual interest expense and income taxes for the applicable divisions. 43




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##### Table of Contents



December 31,2005
    
    2004
    
    2003Long-lived assets:The Americas(1)
    
    $
    23,052
    
    
    $
    21,952
    
    
    $
    27,121Asia-Pacific
    
    
    8,522
    
    
    
    10,608
    
    
    
    9,636Europe
    
    
    5,789
    
    
    
    23,510
    
    
    
    21,482$
    37,363
    
    
    $
    56,070
    
    
    $
    58,239
 
 (1)
    
    Includes corporate assets. CRITICAL ACCOUNTING POLICIES AND ESTIMATES
 Revenue Recognition
  Product Costs
  Non-Product Cost of Revenue
  44




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##### Table of Contents



Allowances for Uncollectible Accounts and Related Provisions
  Deferred Taxes and Effective Tax Rates
   Goodwill and Long-lived Asset Impairment
   45




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##### Table of Contents



FUTURE OPERATING RESULTS
  46




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##### Table of Contents



Item 7A.
Quantitative and Qualitative Disclosures about Market Risk.
 Concentration of Credit Risk
  Exchange Rate Risk Management
   Interest Rate Risk Management
   47




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##### Table of Contents



Item 8. Financial Statements and Supplementary Data.
 Index to Consolidated Financial Statements
 Consolidated Financial Statement of Brightpoint, Inc.
    
    PageConsolidated Statements of Operations
    
    
    49Consolidated Balance Sheets
    
    
    50Consolidated Statements of Cash Flows
    
    
    51Consolidated Statements of Shareholders Equity
    
    
    52Notes to Consolidated Financial Statements
    
    
    53Reports of Independent Registered Public Accounting Firm
    
    
    74
 48




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##### Table of Contents



Brightpoint, Inc.  Consolidated Statements of Operations
  Year ended December 31,2005
    
    2004
    
    2003RevenueDistribution revenue
    
    $
    1,845,983
    
    
    $
    1,523,717
    
    
    $
    1,506,772Logistic services revenue
    
    
    294,194
    
    
    
    248,707
    
    
    
    185,808Total revenue
    
    
    2,140,177
    
    
    
    1,772,424
    
    
    
    1,692,580Cost of revenueCost of distribution revenue
    
    
    1,774,612
    
    
    
    1,464,119
    
    
    
    1,453,244Cost of logistic services revenue
    
    
    233,553
    
    
    
    203,541
    
    
    
    153,012Total cost of revenue
    
    
    2,008,165
    
    
    
    1,667,660
    
    
    
    1,606,256Gross profit
    
    
    132,012
    
    
    
    104,764
    
    
    
    86,324Selling, general and administrative expenses
    
    
    86,726
    
    
    
    69,433
    
    
    
    60,508Facility consolidation charge (benefit)
    
    
    933
    
    
    
    (236
    )
    
    
    5,461Operating income from continuing operations
    
    
    44,353
    
    
    
    35,567
    
    
    
    20,355Interest, net
    
    
    (146
    )
    
    
    (37
    )
    
    
    495Loss on debt extinguishment
    
    
    
    
    
    
    
    
    
    
    365Other expenses
    
    
    1,523
    
    
    
    1,526
    
    
    
    1,927Income from continuing operations before income taxes
    
    
    42,976
    
    
    
    34,078
    
    
    
    17,568Income tax expense
    
    
    11,058
    
    
    
    10,252
    
    
    
    3,731Income from continuing operations before minority interest
    
    
    31,918
    
    
    
    23,826
    
    
    
    13,837Minority interest
    
    
    
    
    
    
    
    
    
    
    (24
    )Income from continuing operations
    
    
    31,918
    
    
    
    23,826
    
    
    
    13,861Discontinued operations, net of income taxes:Loss from discontinued operations
    
    
    (20,600
    )
    
    
    (4,343
    )
    
    
    (1,604
    )Loss on disposal of discontinued operations
    
    
    (878
    )
    
    
    (5,713
    )
    
    
    (528
    )Total discontinued operations, net of income taxes
    
    
    (21,478
    )
    
    
    (10,056
    )
    
    
    (2,132
    )Net income
    
    $
    10,440
    
    
    $
    13,770
    
    
    $
    11,729Earnings per share  basic:Income from continuing operations
    
    $
    0.80
    
    
    $
    0.57
    
    
    $
    0.34Discontinued operations, net of income taxes
    
    
    (0.54
    )
    
    
    (0.24
    )
    
    
    (0.05
    )Net income
    
    $
    0.26
    
    
    $
    0.33
    
    
    $
    0.29Earnings per share  diluted:Income from continuing operations
    
    $
    0.77
    
    
    $
    0.55
    
    
    $
    0.32Discontinued operations, net of income taxes
    
    
    (0.52
    )
    
    
    (0.23
    )
    
    
    (0.05
    )Net income
    
    $
    0.25
    
    
    $
    0.32
    
    
    $
    0.27Weighted average common shares outstanding:Basic
    
    
    39,962
    
    
    
    41,742
    
    
    
    40,883Diluted
    
    
    41,381
    
    
    
    43,131
    
    
    
    42,755
  49




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##### Table of Contents



Brightpoint, Inc.
Consolidated Balance Sheets
  December 31,2005
    
    2004ASSETSCurrent assets:Cash and cash equivalents
    
    $
    106,053
    
    
    $
    72,120Pledged cash
    
    
    168
    
    
    
    13,830Accounts receivable (less allowance for doubtful
accounts of $3,621 in 2005 and $6,215 in 2004)
    
    
    168,004
    
    
    
    148,321Inventories
    
    
    124,864
    
    
    
    110,089Contract financing receivable
    
    
    28,749
    
    
    
    14,022Other current assets
    
    
    22,623
    
    
    
    23,132Total current assets
    
    
    450,461
    
    
    
    381,514Property and equipment, net
    
    
    27,989
    
    
    
    27,503Goodwill and other intangibles, net
    
    
    6,707
    
    
    
    21,981Other assets
    
    
    2,667
    
    
    
    6,586Total assets
    
    $
    487,824
    
    
    $
    437,584LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    232,258
    
    
    $
    201,621Accrued expenses
    
    
    64,494
    
    
    
    52,995Unfunded portion of contract financing receivable
    
    
    32,373
    
    
    
    23,373Total current liabilities
    
    
    329,125
    
    
    
    277,989Total long-term liabilities
    
    
    9,657
    
    
    
    8,858Total liabilities
    
    
    338,782
    
    
    
    286,847COMMITMENTS AND CONTINGENCIESShareholders 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; 46,563 issued in 2005
and 43,873 issued in 2004
    
    
    466
    
    
    
    439Additional paid-in capital
    
    
    258,536
    
    
    
    233,524Treasury stock, at cost, 5,094 shares in 2005 and
3,613 shares in 2004
    
    
    (39,928
    )
    
    
    (24,010
    )Unearned compensation
    
    
    (12,125
    )
    
    
    Retained deficit
    
    
    (53,528
    )
    
    
    (63,968
    )Accumulated other comprehensive income (loss)
    
    
    (4,379
    )
    
    
    4,752Total shareholders equity
    
    
    149,042
    
    
    
    150,737Total liabilities and shareholders equity
    
    $
    487,824
    
    
    $
    437,584
  50




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##### Table of Contents



Brightpoint, Inc.  Consolidated Statements of Cash Flows
  (Amounts in thousands)Year ended December 31,2005
    
    2004
    
    2003Operating activitiesNet income
    
    $
    10,440
    
    
    $
    13,770
    
    
    $
    11,729Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation and amortization
    
    
    11,101
    
    
    
    10,070
    
    
    
    12,246Amortization of debt discount
    
    
    
    
    
    
    
    
    
    
    33Discontinued operations
    
    
    21,478
    
    
    
    10,056
    
    
    
    2,132Net operating cash flows used in discontinued operations
    
    
    (2,085
    )
    
    
    (1,674
    )
    
    
    (216
    )Pledged cash requirements
    
    
    13,662
    
    
    
    3,212
    
    
    
    (2,308
    )Non-cash compensation
    
    
    2,837
    
    
    
    
    
    
    
    Facility consolidation charge (benefit)
    
    
    933
    
    
    
    (236
    )
    
    
    5,461Change in deferred taxes
    
    
    (390
    )
    
    
    1,792
    
    
    
    2,445Income tax benefits from exercise of stock options
    
    
    5,377
    
    
    
    5,418
    
    
    
    445Other non-cash
    
    
    401
    
    
    
    
    
    
    
    389Changes in operating assets and
liabilities, net of effects from acquisitions and divestitures:Accounts receivable
    
    
    (47,778
    )
    
    
    (16,265
    )
    
    
    (6,040
    )Inventories
    
    
    (23,656
    )
    
    
    1,476
    
    
    
    (26,117
    )Other operating assets
    
    
    (6,183
    )
    
    
    (590
    )
    
    
    701Accounts payable and accrued expenses
    
    
    82,823
    
    
    
    (19,287
    )
    
    
    54,627Net cash provided by operating activities
    
    
    68,960
    
    
    
    7,742
    
    
    
    55,527Investing activitiesCapital expenditures
    
    
    (12,649
    )
    
    
    (8,029
    )
    
    
    (5,892
    )Acquisitions, net of cash acquired
    
    
    (413
    )
    
    
    (1,447
    )
    
    
    (850
    )Proceeds from sale of Ireland and Brazil operations
    
    
    
    
    
    
    576
    
    
    
    1,328Net investing cash flow from discontinued operations
    
    
    (1,097
    )
    
    
    (543
    )
    
    
    (2,328
    )Decrease (increase) in funded contract financing receivables, net
    
    
    (5,285
    )
    
    
    4,398
    
    
    
    5,887Decrease (increase) in other assets
    
    
    3,945
    
    
    
    (878
    )
    
    
    287Net cash used by investing activities
    
    
    (15,499
    )
    
    
    (5,923
    )
    
    
    (1,568
    )Financing activitiesNet proceeds (payments) on credit facilities
    
    
    
    
    
    
    (16,462
    )
    
    
    2,785Pledged cash requirements
    
    
    
    
    
    
    5,000
    
    
    
    (5,000
    )Purchase of treasury stock
    
    
    (15,918
    )
    
    
    (24,010
    )
    
    
    Net financing cash flow from discontinued operations
    
    
    
    
    
    
    (38
    )
    
    
    (24
    )Repurchase of convertible notes
    
    
    
    
    
    
    
    
    
    
    (11,980
    )Proceeds from common stock issuances under employee stock
option and purchase plans
    
    
    4,750
    
    
    
    1,013
    
    
    
    12,383Net cash used by financing activities
    
    
    (11,168
    )
    
    
    (34,497
    )
    
    
    (1,836
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    (8,360
    )
    
    
    5,919
    
    
    
    2,958Net increase (decrease) in cash and cash equivalents
    
    
    33,933
    
    
    
    (26,759
    )
    
    
    55,081Cash and cash equivalents at beginning of year
    
    
    72,120
    
    
    
    98,879
    
    
    
    43,798Cash and cash equivalents at end of year
    
    $
    106,053
    
    
    $
    72,120
    
    
    $
    98,879
  51




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##### Table of Contents



Brightpoint, Inc.  Consolidated Statements of Shareholders Equity
  (Amounts in thousands)Additional
    
    
    
    
    
    
    Retained
    
    
    Accumulated Other
    
    
    TotalCommon
    
    
    Treasury
    
    
    Paid-in
    
    
    Unearned
    
    
    Earnings
    
    
    Comprehensive
    
    
    Shareholders
    
    
    ComprehensiveStock
    
    
    Stock
    
    
    Capital
    
    
    Compensation
    
    
    (Deficit)
    
    
    Income (Loss)
    
    
    Equity
    
    
    Income (Loss)Balance at December 31, 2002
    
    $
    406
    
    
    $
    
    
    
    $
    214,298
    
    
    $
    
    
    
    $
    (89,467
    )
    
    $
    (11,594
    )
    
    $
    113,6432003 Activity:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,729
    
    
    
    
    
    
    
    11,729
    
    
    $
    11,729Other comprehensive income (loss):Currency translation of foreign investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,385
    
    
    
    9,385
    
    
    
    9,385Common stock issued in connection with
employee stock plans and related income
tax benefit
    
    
    27
    
    
    
    
    
    
    
    12,800
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,827
    
    
    
    Balance at December 31, 2003
    
    $
    433
    
    
    $
    
    
    
    $
    227,098
    
    
    $
    
    
    
    $
    (77,738
    )
    
    $
    (2,209
    )
    
    $
    147,584
    
    
    $
    21,1142004 Activity:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,770
    
    
    
    
    
    
    
    13,770
    
    
    $
    13,770Other comprehensive income (loss):Currency translation of foreign investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,961
    
    
    
    6,961
    
    
    
    6,961Purchase of treasury stock
    
    
    
    
    
    
    (24,010
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24,010
    )
    
    
    Common stock issued in connection with
employee stock plans and related income
tax benefit
    
    
    6
    
    
    
    
    
    
    
    6,426
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,432
    
    
    
    Balance at December 31, 2004
    
    $
    439
    
    
    $
    (24,010
    )
    
    $
    233,524
    
    
    $
    
    
    
    $
    (63,968
    )
    
    $
    4,752
    
    
    $
    150,737
    
    
    $
    20,7312005 Activity:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,440
    
    
    
    
    
    
    
    10,440
    
    
    $
    10,440Other comprehensive income (loss):Currency translation of foreign investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,131
    )
    
    
    (9,131
    )
    
    
    (9,131
    )Purchase of treasury stock
    
    
    
    
    
    
    (15,918
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,918
    )
    
    
    Unearned compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,125
    )
    
    
    
    
    
    
    
    
    
    
    (12,125
    )
    
    
    Common stock issued in connection with
employee stock plans and related income
tax benefit
    
    
    27
    
    
    
    
    
    
    
    25,012
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,039
    
    
    
    Balance at December 31, 2005
    
    $
    466
    
    
    $
    (39,928
    )
    
    $
    258,536
    
    
    $
    12,125
    
    
    $
    (53,528
    )
    
    $
    (4,379
    )
    
    $
    149,042
    
    
    $
    1,309
  52




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##### Table of Contents



Brightpoint, Inc.  Notes to Consolidated Financial Statements
 1. Significant Accounting Policies
 Nature of Business
   Principles of Consolidation
  Use of Estimates
  Revenue Recognition
 Revenue
Recognition
  53




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##### Table of Contents



Brightpoint, Inc.  Notes to Consolidated Financial Statements
 Reporting Revenue Gross as a
Principal versus Net as an Agent,
  Gross Profit
  Vendor Programs
 Accounting by a Customer (Including a Reseller) for Certain Consideration
Received from a Vendor Application of Issue No. 02-16 by Resellers to Sales
Incentives Offered to Consumers by Manufacturers,
 
    
    Price protection: consideration is received from certain, but not
all, suppliers in the form of a credit memo based on market
conditions as determined by the supplier. The amount is determined
based on the difference between original purchase price from the
supplier and revised list price from the supplier. The term of the
price protection varies by supplier and product, but is typically
less than one month from original date of purchase. This amount is
accrued as a reduction of trade accounts payable until a credit
memo is received and applied as a debit to the outstanding
accounts payable. This same amount is either a reduction of
inventory cost or is a reduction of cost of sales for those
wireless devices already sold.
 
    
    Volume incentive rebates: consideration is received from certain
suppliers when purchase or sell-through targets are attained or
exceeded within a specified time period. The amount of rebate
earned in any financial reporting period is accrued as a vendor
receivable, which is classified as a reduction of trade accounts
payable. This same amount is either a reduction of inventory cost
or is a reduction of cost of sales for those devices already sold.
In certain markets, the amount of the rebate is determined based
on actual volumes purchased for the incentive period to date at
the established rebate
 54




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##### Table of Contents



Brightpoint, Inc.  Notes to Consolidated Financial Statements
  
    
    Marketing, training and promotional funds:
consideration is received from certain suppliers for
cooperative arrangements related to market
development, training and special promotions agreed
upon in advance. The amount received is generally in
the form of a credit memo, which is applied to trade
accounts payable. The same amount is recorded as a
current liability. Expenditures made pursuant to the
agreed upon activity reduces this liability. To the
extent that the Company incurs costs in excess of the
established supplier fund, the Company recognizes the
amount as a selling expense.
 Cash and Cash Equivalents
  Concentrations of Risk
    55




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##### Table of Contents



Brightpoint, Inc.  Notes to Consolidated Financial Statements
 Allowance for Doubtful Accounts
  Accounts Receivable Transfers
 Accounting for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities
 Contract Finance Receivables
    Inventories
  56




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##### Table of Contents



Brightpoint, Inc.  Notes to Consolidated Financial Statements
  Fair Value of Financial Instruments
  Accounting for Derivative
Instruments and Hedging Activities
 Property and Equipment
  Impairment of Long-Lived Tangible and Finite-Lived Intangible Assets
  Goodwill
 Goodwill and Other Intangible Assets Disclosures about Segments of an
Enterprise and Related Information
 57




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##### Table of Contents



Brightpoint, Inc.
Notes to Consolidated Financial Statements
   Europe
    
    Asia-Pacific
    
    TotalBalance at December 31, 2004
    
    $
    17,509
    
    
    $
    1,495
    
    
    $
    19,004France impairment charge
    
    
    (11,545
    )
    
    
    
    
    
    
    (11,545
    )Goodwill from acquisitions
    
    
    
    
    
    
    275
    
    
    
    275Effects of foreign currency fluctuation
    
    
    (1,988
    )
    
    
    (99
    )
    
    
    (2,087
    )Balance at December 31, 2005
    
    $
    3,976
    
    
    $
    1,671
    
    
    $
    5,647
 Foreign Currency Translation
  Income Taxes
  Discontinued Operations
 Accounting for the Impairment or Disposal of Long-Lived Assets
 Earnings Per Share
    58




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##### Table of Contents



Brightpoint, Inc.
Notes to Consolidated Financial Statements
 Year ended December 31,2005
    
    2004
    
    2003Income from continuing operations
    
    $
    31,918
    
    
    $
    23,826
    
    
    $
    13,861Discontinued operations, net of income taxes
    
    
    (21,478
    )
    
    
    (10,056
    )
    
    
    (2,132
    )Net income
    
    $
    10,440
    
    
    $
    13,770
    
    
    $
    11,729Earnings per share  basic:Income from continuing operations
    
    $
    0.80
    
    
    $
    0.57
    
    
    $
    0.34Discontinued operations, net of income taxes
    
    
    (0.54
    )
    
    
    (0.24
    )
    
    
    (0.05
    )Net income
    
    $
    0.26
    
    
    $
    0.33
    
    
    $
    0.29Earnings per share  diluted:Income from continuing operations
    
    $
    0.77
    
    
    $
    0.55
    
    
    $
    0.32Discontinued operations, net of income taxes
    
    
    (0.52
    )
    
    
    (0.23
    )
    
    
    (0.05
    )Net income
    
    $
    0.25
    
    
    $
    0.32
    
    
    $
    0.27Weighted average shares outstanding for basic earnings per share
    
    
    39,962
    
    
    
    41,742
    
    
    
    40,883Net effect of dilutive stock options and restricted stockbased on the
treasury stock method using average market price
    
    
    1,419
    
    
    
    1,389
    
    
    
    1,872Weighted average shares outstanding for diluted earnings per share
    
    
    41,381
    
    
    
    43,131
    
    
    
    42,755
  Stock Options
  Year ended December 31,2005
    
    2004
    
    2003Net income as reported
    
    $
    10,440
    
    
    $
    13,770
    
    
    $
    11,729Add back; stock compensation included in net income
    
    
    1,746
    
    
    
    
    
    
    
    Stock-based employee compensation cost, net of related tax effects,
that would have been included in the determination of net income
if the fair value method had been applied
    
    
    (3,298
    )
    
    
    (2,197
    )
    
    
    (658
    )Pro forma net income
    
    $
    8,888
    
    
    $
    11,573
    
    
    $
    11,071Earnings per share  basic:Net income, as reported
    
    $
    0.26
    
    
    $
    0.33
    
    
    $
    0.29Add back; stock compensation included in net income
    
    
    0.04
    
    
    
    
    
    
    
    Stock-based employee compensation cost, net of related tax effects,
that would have been included in the determination of net income
if the fair value method had been applied
    
    
    (0.08
    )
    
    
    (0.05
    )
    
    
    (0.02
    )Pro forma net income
    
    $
    0.22
    
    
    $
    0.28
    
    
    $
    0.27Earnings per share  diluted:Net income, as reported
    
    $
    0.25
    
    
    $
    0.32
    
    
    $
    0.27Add back; stock compensation included in net income
    
    
    0.04
    
    
    
    
    
    
    
    Stock-based employee compensation cost, net of related tax effects,
that would have been included in the determination of net income
if the fair value method had been applied
    
    
    (0.08
    )
    
    
    (0.05
    )
    
    
    (0.02
    )Pro forma net income
    
    $
    0.21
    
    
    $
    0.27
    
    
    $
    0.25
 59




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##### Table of Contents



Brightpoint, Inc.
Notes to Consolidated Financial Statements
 Recently Issued Accounting Pronouncements
 Share based
Payment Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees
 Accounting Changes and Error Corrections Accounting Changes Reporting Accounting Changes in Interim
Financial Statements
 Operating Segments
   60




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##### Table of Contents



Brightpoint, Inc.
Notes to Consolidated Financial Statements
 ProductDistribution
    
    Logistic
    
    
    
    
    
    OperatingRevenue
    
    Services
    
    Total
    
    Income
    
    
    
    
    
    Allocated
    
    Allocatedfrom
    
    Revenue from
    
    Revenue from
    
    from
    
    Total
    
    Net Interest
    
    Income TaxExternal
    
    External
    
    External
    
    Continuing
    
    Segment
    
    Expense
    
    ExpenseCustomers
    
    Customers
    
    Customers
    
    Operations(1)
    
    Assets(2)
    
    (Income)(3)
    
    (Benefit)(3)2005:The Americas
    
    $
    507,508
    
    
    $
    167,566
    
    
    $
    675,074
    
    
    $
    33,901
    
    
    $
    211,608
    
    
    $
    160
    
    
    $
    8,902Asia-Pacific
    
    
    1,054,051
    
    
    
    27,478
    
    
    
    1,081,529
    
    
    
    9,573
    
    
    
    103,802
    
    
    
    253
    
    
    
    2,339Europe
    
    
    284,424
    
    
    
    99,150
    
    
    
    383,574
    
    
    
    879
    
    
    
    172,414
    
    
    
    (559
    )
    
    
    (183
    )$
    1,845,983
    
    
    $
    294,194
    
    
    $
    2,140,177
    
    
    $
    44,353
    
    
    $
    487,824
    
    
    $
    (146
    )
    
    $
    11,0582004:The Americas
    
    $
    393,883
    
    
    $
    111,252
    
    
    $
    505,135
    
    
    $
    21,731
    
    
    $
    152,401
    
    
    $
    312
    
    
    $
    6,286Asia-Pacific
    
    
    924,024
    
    
    
    44,126
    
    
    
    968,150
    
    
    
    11,614
    
    
    
    160,578
    
    
    
    273
    
    
    
    3,154Europe
    
    
    205,810
    
    
    
    93,329
    
    
    
    299,139
    
    
    
    2,222
    
    
    
    124,605
    
    
    
    (622
    )
    
    
    812$
    1,523,717
    
    
    $
    248,707
    
    
    $
    1,772,424
    
    
    $
    35,567
    
    
    $
    437,584
    
    
    $
    (37
    )
    
    $
    10,2522003:The Americas
    
    $
    394,044
    
    
    $
    75,574
    
    
    $
    469,618
    
    
    $
    3,620
    
    
    $
    190,077
    
    
    $
    594
    
    
    $
    610Asia-Pacific
    
    
    962,681
    
    
    
    33,116
    
    
    
    995,797
    
    
    
    14,088
    
    
    
    159,005
    
    
    
    217
    
    
    
    3,117Europe
    
    
    150,047
    
    
    
    77,118
    
    
    
    227,165
    
    
    
    2,647
    
    
    
    95,608
    
    
    
    (316
    )
    
    
    4$
    1,506,772
    
    
    $
    185,808
    
    
    $
    1,692,580
    
    
    $
    20,355
    
    
    $
    444,690
    
    
    $
    495
    
    
    $
    3,731
 
 (1)
    
    Certain corporate expenses are allocated to the segments based on total revenue.(2)
    
    Corporate assets are included in the Americas segment.(3)
    
    These items are allocated using various methods and are not necessarily indicative of the
actual interest expense and income taxes for the applicable divisions.
  December 31,2005
    
    2004
    
    2003Long-lived assets:The Americas(1)
    
    $
    23,052
    
    
    $
    21,952
    
    
    $
    27,121Asia-Pacific
    
    
    8,522
    
    
    
    10,608
    
    
    
    9,636Europe
    
    
    5,789
    
    
    
    23,510
    
    
    
    21,482$
    37,363
    
    
    $
    56,070
    
    
    $
    58,239
 
 (1)
    
    Includes corporate assets.
 2. Facility Consolidation Charge
  61




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##### Table of Contents



Brightpoint, Inc.
Notes to Consolidated Financial Statements
 3. Impairment Loss on Long-Term Investment
 Accounting for Certain Investments in Debt and Equity Securities
 4. Income Tax Expense (Benefit)
  Year ended December 31,2005
    
    2004
    
    2003United States
    
    $
    17,234
    
    
    $
    8,249
    
    
    $
    (6,118
    )Foreign
    
    
    25,742
    
    
    
    25,829
    
    
    
    23,686$
    42,976
    
    
    $
    34,078
    
    
    $
    17,568
  2005
    
    2004
    
    2003Tax at U.S. Federal statutory rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %State and local income taxes, net of U.S. Federal benefit
    
    
    1.6
    
    
    
    1.2
    
    
    
    (0.8
    )Net benefit of tax on foreign operations
    
    
    (6.6
    )
    
    
    (9.6
    )
    
    
    (12.7
    )Other
    
    
    (4.3
    )
    
    
    3.5
    
    
    
    (0.3
    )Effective income tax rate
    
    
    25.7
    %
    
    
    30.1
    %
    
    
    21.2
    %
  Year ended December 31,2005
    
    2004
    
    2003Current:Federal
    
    $
    4,549
    
    
    $
    1,979
    
    
    $
    (3,011
    )State
    
    
    1,206
    
    
    
    647
    
    
    
    (491
    )Foreign
    
    
    6,008
    
    
    
    6,932
    
    
    
    5,689$
    11,763
    
    
    $
    9,558
    
    
    $
    2,187Deferred:Federal
    
    $
    (751
    )
    
    $
    710
    
    
    $
    1,323State
    
    
    (160
    )
    
    
    86
    
    
    
    289Foreign
    
    
    206
    
    
    
    (102
    )
    
    
    (68
    )(705
    )
    
    
    694
    
    
    
    1,544$
    11,058
    
    
    $
    10,252
    
    
    $
    3,731
  62




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##### Table of Contents



Brightpoint, Inc.
Notes to Consolidated Financial Statements
   December 31,2005
    
    2004Deferred tax assets:Current:Capitalization of inventory costs
    
    $
    899
    
    
    $
    918Allowance for doubtful accounts
    
    
    922
    
    
    
    846Accrued liabilities and other
    
    
    5,823
    
    
    
    4,908Noncurrent:Depreciation
    
    
    39
    
    
    
    475Other long-term investments
    
    
    
    
    
    
    134Net operating losses and other carryforwards
    
    
    19,152
    
    
    
    27,96826,835
    
    
    
    35,249Valuation allowance
    
    
    (18,218
    )
    
    
    (23,773
    )Total deferred tax assets
    
    
    8,617
    
    
    
    11,476Deferred tax liabilities:Current:Other current liabilities
    
    
    (2,539
    )
    
    
    (2,441
    )Noncurrent:Depreciation
    
    
    (3,346
    )
    
    
    (4,931
    )Other assets
    
    
    (330
    )
    
    
    (1,380
    )Total deferred tax liabilities
    
    
    (6,215
    )
    
    
    (8,752
    )Net deferred assets
    
    $
    2,402
    
    
    $
    2,724
   5. Minority Interest
 Classification and Measurement of Redeemable
 63




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##### Table of Contents



Brightpoint, Inc.
Notes to Consolidated Financial Statements
 Securities
 6. Divestitures and Discontinued Operations
 Accounting for the
Impairment or Disposal of Long-Lived Assets
  Year ended December 31,2005
    
    2004
    
    2003Revenue
    
    $
    103,562
    
    
    $
    90,968
    
    
    $
    107,794Loss from discontinued operations before income taxes
    
    $
    (21,208
    )
    
    $
    (6,819
    )
    
    $
    (378
    )Income tax expense (benefit)
    
    
    (608
    )
    
    
    (2,476
    )
    
    
    1,226Loss from discontinued operations (1)
    
    $
    (20,600
    )
    
    $
    (4,343
    )
    
    $
    (1,604
    )Loss on disposal of discontinued operations (2)
    
    
    (878
    )
    
    
    (5,713
    )
    
    
    (528
    )Total discontinued operations
    
    $
    (21,478
    )
    
    $
    10,056
    
    
    $
    (2,132
    )
 
 (1)
    
    Includes $13.8 million of goodwill and intangible asset impairment charges for the year
ended December 31, 2005 related to the Companys operations in France.(2)
    
    Loss on disposal of discontinued operations for the year ended December 31, 2005
includes $2.2 million loss on sale of France operations (net of approximately $3.5 million
gains related to cumulative currency translation adjustments), which is partially offset by
approximately $1.0 million of tax benefits from previous disposals. Loss on disposal of
discontinued operations for the year ended December 31, 2004 includes $3.8 million loss on
sale of Ireland operations 2004.
  December 31,2005
    
    2004Total current assets
    
    $
    547
    
    
    $
    36,435Other non-current assets
    
    
    
    
    
    
    16,619Total assets
    
    $
    547
    
    
    $
    53,054Accounts payable
    
    $
    
    
    
    $
    19,987Accrued expenses and other liabilities
    
    
    657
    
    
    
    5,922Total liabilities
    
    $
    657
    
    
    $
    25,909
 France Operations
 Brazil Operations
 64




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##### Table of Contents



Brightpoint, Inc.
Notes to Consolidated Financial Statements
 Ireland Operations
 Middle East Operations
 7. Acquisitions
    8. Accounts Receivable Transfers
    65




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##### Table of Contents



Brightpoint, Inc.
Notes to Consolidated Financial Statements
  9.
    
    Property and Equipment
  December 31,2005
    
    
    2004Furniture and equipment
    
    $
    18,535
    
    
    $
    14,941Information systems equipment and software
    
    
    74,295
    
    
    
    69,246Leasehold improvements
    
    
    5,382
    
    
    
    6,20298,212
    
    
    
    90,389Less accumulated depreciation
    
    
    (70,223
    )
    
    
    (62,886
    )$
    27,989
    
    
    $
    27,503
  10.
    
    Lease Arrangements
   Year ending December 31,2006
    
    $
    7,7562007
    
    
    6,8202008
    
    
    6,4612009
    
    
    6,0722010
    
    
    4,943Thereafter*
    
    
    38,773$
    70,825
 
 *
    
    Includes approximately $36.6 million related to the Companys 495,000 square foot facility
located in Plainfield, Indiana, for which the initial lease term expires in 2019. The minimum
lease payments increase every three years on this lease agreement. The Company recognizes rent
expense on a straight-line basis, which results in deferred rent during the portion of the
lease term in which payments are less than the expense recognized. As
a result, the Company has
a deferred rent liability of $4.7 million and $4.1 million at December 31, 2005 and 2004,
which is included as a component of Total long-term liabilities in the Consolidated Balance
Sheets.**
    
    The amounts above do not include payments for a lease entered into during February 2006 for a
322,000 square foot facility located in Plainfield, Indiana, for which annualized lease
payments are approximately $1.3 million expiring in 2010. 11.
    
    Lines of Credit
  66




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##### Table of Contents



Brightpoint, Inc.
Notes to Consolidated Financial Statements
   Letters of Credit &
    
    
    NetCommitment
    
    
    Gross Availability
    
    
    Outstanding
    
    
    Guarantees
    
    
    AvailabilityNorth America
    
    $
    70,000
    
    
    $
    63,000
    
    
    $
    
    
    
    $
    22,500
    
    
    $
    40,500Australia
    
    
    36,640
    
    
    
    36,255
    
    
    
    
    
    
    
    9,209
    
    
    
    27,046New Zealand
    
    
    8,204
    
    
    
    8,204
    
    
    
    
    
    
    
    21
    
    
    
    8,183Sweden
    
    
    1,889
    
    
    
    1,889
    
    
    
    
    
    
    
    
    
    
    
    1,889Slovakia
    
    
    1,876
    
    
    
    1,876
    
    
    
    
    
    
    
    
    
    
    
    1,876Philippines
    
    
    1,884
    
    
    
    1,884
    
    
    
    
    
    
    
    1,884
    
    
    
    Total
    
    $
    120,493
    
    
    $
    113,108
    
    
    $
    
    
    
    $
    33,614
    
    
    $
    79,494
 Lines of Credit -Americas Division
  Lines of Credit  Asia-Pacific
  67




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##### Table of Contents



Brightpoint, Inc.
Notes to Consolidated Financial Statements
     Lines of Credit  Europe
   12.
    
    Guarantees
 Guarantors Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others
 68




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##### Table of Contents



Brightpoint, Inc.
Notes to Consolidated Financial Statements
      2005
    
    
    2004January 1
    
    $
    369
    
    
    $
    Provision for product warranties
    
    
    3,323
    
    
    
    369Settlements during the period
    
    
    (1,582
    )
    
    
    December 31
    
    $
    2,110
    
    
    $
    369
 13.
    
    Shareholders Equity
   Treasury Stock
  69




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##### Table of Contents



Brightpoint, Inc.
Notes to Consolidated Financial Statements
  Equity Compensation Plans
  1996 Stock Option Plan
  2004 Long-Term Incentive Plan
   Amended and Restated Independent Director Stock Compensation Plan
  Stock Options
  70




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##### Table of Contents



Brightpoint, Inc.
Notes to Consolidated Financial Statements
 2005
    
    
    2004
    
    
    
    2003Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    Exercise
    
    
    
    
    
    
    ExerciseOptions
    
    
    Price
    
    
    Options
    
    
    Price
    
    
    Options
    
    
    PriceOutstanding at January 1
    
    
    3,668,674
    
    
    $
    4.20
    
    
    
    3,399,522
    
    
    $
    3.11
    
    
    
    6,911,017
    
    
    $
    4.46Granted
    
    
    740,064
    
    
    
    8.78
    
    
    
    1,044,000
    
    
    
    8.08
    
    
    
    234,281
    
    
    
    3.72Exercised
    
    
    (1,862,766
    )
    
    
    2.50
    
    
    
    (454,078
    )
    
    
    1.69
    
    
    
    (2,697,833
    )
    
    
    4.56Cancelled
    
    
    (296,596
    )
    
    
    10.06
    
    
    
    (320,800
    )
    
    
    8.82
    
    
    
    (1,047,913
    )
    
    
    8.39Outstanding at December 31
    
    
    2,249,376
    
    
    $
    6.34
    
    
    
    3,668,674
    
    
    $
    4.20
    
    
    
    3,399,552
    
    
    $
    3.11Exercisable at December 31
    
    
    829,608
    
    
    $
    3.09
    
    
    
    1,353,029
    
    
    $
    3.60
    
    
    
    735,490
    
    
    $
    8.21
  Weighted
    
    
    
    
    
    
    ExercisableNumber
    
    
    Average
    
    
    
    
    
    
    NumberOutstanding at
    
    
    Remaining
    
    
    Weighted
    
    
    Outstanding at
    
    
    WeightedRange of
    
    December 31,
    
    
    Contractual
    
    
    Average
    
    
    December 31,
    
    
    AverageExercise Prices
    
    2005
    
    
    Life
    
    
    Exercise Price
    
    
    2005
    
    
    Exercise Price$0.42  $1.72
    
    
    613,098
    
    
    1.8 years
    
    $
    1.44
    
    
    
    610,087
    
    
    $
    1.44$1.73  $7.65
    
    
    88,172
    
    
    2.7 years
    
    
    3.86
    
    
    
    15,146
    
    
    
    3.09$7.66
 $8.13
    
    
    701,250
    
    
    3.1 years
    
    
    7.81
    
    
    
    183,750
    
    
    
    7.81$8.14  $9.63
    
    
    675,489
    
    
    4.1 years
    
    
    8.63
    
    
    
    
    
    
    
    $9.64  $12.31
    
    
    171,367
    
    
    3.5 years
    
    
    10.15
    
    
    
    20,625
    
    
    
    9.642,249,376
    
    
    
    
    
    
    $
    6.34
    
    
    
    829,608
    
    
    $
    3.09
  2005
    
    2004
    
    2003Risk-free interest rate
    
    
    3.86
    %
    
    
    3.36
    %
    
    
    2.47
    %Dividend yield
    
    
    0.00
    %
    
    
    0.00
    %
    
    
    0.00
    %Expected volatility
    
    
    .84
    
    
    
    .85
    
    
    
    .85Expected life of the options (years)
    
    
    3.24
    
    
    
    3.24
    
    
    
    3.20
  Employee Stock Purchase Plan
   Preferred Share Purchase Rights
  71




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##### Table of Contents



Brightpoint, Inc.
Notes to Consolidated Financial Statements
  14.
    
    Employee Benefit Plans
  Employers
Accounting for Pensions
 2005Accrued benefit liability
    
    $
    1,054Intangible asset
    
    
    626Net periodic benefit cost
    
    
    428
 15.
    
    Legal Proceedings and Contingencies
    72




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##### Table of Contents



Brightpoint, Inc.
Notes to Consolidated Financial Statements
  16.
    
    Related Party Transactions
  17.
    
    Quarterly Results of Operations (Unaudited)
  2005
    
    First
    
    Second
    
    Third
    
    FourthRevenue
    
    $
    465,074
    
    
    $
    499,494
    
    
    $
    544,975
    
    
    $
    630,634Gross profit
    
    
    27,205
    
    
    
    29,514
    
    
    
    31,678
    
    
    
    43,615Income from continuing operations
    
    
    5,141
    
    
    
    6,672
    
    
    
    8,273
    
    
    
    11,832Net income (loss)
    
    
    2,873
    
    
    
    4,899
    
    
    
    (6,182
    )
    
    
    8,850Earnings (loss) per share-basic:Income from continuing operations
    
    $
    0.13
    
    
    $
    0.17
    
    
    $
    0.21
    
    
    $
    0.29Net income (loss)
    
    $
    0.07
    
    
    $
    0.12
    
    
    $
    (0.15
    )
    
    $
    0.22Earnings (loss) per share-diluted:Income from continuing operations
    
    $
    0.12
    
    
    $
    0.16
    
    
    $
    0.20
    
    
    $
    0.28Net income (loss)
    
    $
    0.07
    
    
    $
    0.12
    
    
    $
    (0.15
    )
    
    $
    0.21
 2004
    
    First
    
    Second
    
    Third
    
    FourthRevenue
    
    $
    421,420
    
    
    $
    444,850
    
    
    $
    432,059
    
    
    $
    474,095Gross profit
    
    
    21,504
    
    
    
    23,791
    
    
    
    25,867
    
    
    
    33,602Income from continuing operations
    
    
    3,141
    
    
    
    4,801
    
    
    
    5,622
    
    
    
    10,262Net income (loss)
    
    
    (2,221
    )
    
    
    3,964
    
    
    
    4,547
    
    
    
    7,480Earnings (loss) per share-basic:Income from continuing operations
    
    $
    0.07
    
    
    $
    0.11
    
    
    $
    0.14
    
    
    $
    0.25Net income (loss)
    
    $
    (0.05
    )
    
    $
    0.09
    
    
    $
    0.11
    
    
    $
    0.18Earnings (loss) per share-diluted:Income from continuing operations
    
    $
    0.07
    
    
    $
    0.11
    
    
    $
    0.13
    
    
    $
    0.25Net income (loss)
    
    $
    (0.05
    )
    
    $
    0.09
    
    
    $
    0.11
    
    
    $
    0.18
  
    
    the effects of the 3 for 2 common stock splits on December 30, 2005, September 15, 2005,
October 15, 2003, and August 15, 2003;
    
    and the effects of divestitures and the related change in classification of discontinued
operations as more fully described in Note 6 to the Consolidated Financial Statements.
 73




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     Ernst oung
 
 74




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
       rnst oung
 
 75




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##### Table of Contents



Item 9.
Changes in and disagreements with Accountants on Accounting and Financial Disclosure.
  
 Item 9A.
Controls and Procedures.
 Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
  Managements Report on Internal Control Over Financial Reporting
     76




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##### Table of Contents



Audit Committee Oversight
  
 Item 9B.
Other Information.
  
 PART III
 
 Item 10.
Directors and Executive Officers of the Registrant.
  Code of Business Conduct
 www.brightpoint.com www.brightpoint.com
 
 Item 11.
Executive Compensation.
  
 Item 12. Security Ownership of certain Beneficial Owners and Management and Related Shareholder
Matters.
  
 Item 13. Certain Relationships and Related Transactions.
  77




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##### Table of Contents



Item 14. Principal Accountant Fees and Services.
  
 PART IV
 
 Item 15.
Exhibits and Financial Statement Schedules.
       ExhibitNumber
    
    Description2.1
    
    Sale and Purchase Agreement between Brightpoint International (Asia Pacific) PTE Ltd and Chinatron Group
Holdings Limited Dated October 2, 2001(12)2.1.1
    
    Amendment dated January 18, 2002 to Sale and Purchase Agreement between Brightpoint International (Asia Pacific)
PTE Ltd. and Chinatron Group Holding Limited dated October 2, 2001(12)2.2
    
    Shareholders agreement between Brightpoint India Private Limited, Brightpoint Holdings B.V., and Persequor
Limited dated November 1, 2003(19)2.3
    
    Agreement for the Sale and Purchase of the entire issued share capital of Brightpoint (Ireland) Limited dated
February 19, 2004(19)2.4
    
    Plan and Agreement of Merger between Brightpoint, Inc. and Brightpoint Indiana Corp. dated April 23, 2004(21)2.5
    
    Agreement for the Sale and Purchase of 100% of the Securities of Brightpoint France and Transfer of Shareholder
Loan(40)3.1
    
    Restated Articles of Incorporation of Brightpoint, Inc. (formerly Brightpoint Indiana Corp.)(26)3.2
    
    Amended and Restated By-Laws of Brightpoint, Inc. (formerly Brightpoint Indiana Corp.)(26)4.1
    
    Indenture between the Company and the Chase Manhattan Bank, as Trustee(2)10.1
    
    Rights Agreement, dated as of February 20, 1997, between the Company and Continental Stock Transfer and Trust
Company, as Rights Agent(1)10.1.1
    
    Amendment Number 1 to the Rights Agreement (the Agreement) by and between Brightpoint, Inc. (the Company)
and Continental Stock Transfer & Trust Company, as Rights Agent, appointing American Stock Transfer & Trust
Company dated as of January 4, 1999(4)10.1.2
    
    Amendment Number 2 to the Rights Agreement (the Agreement) by and between Brightpoint, Inc. (the Company)
and American Stock Transfer & Trust Company, as Rights Agent, dated as of April 12, 2004(24)10.2
    
    1994 Stock Option Plan, as amended(7)*10.3
    
    1996 Stock Option Plan, as amended(9)*10.4
    
    Employee Stock Purchase Plan(5)10.5
    
    Brightpoint, Inc. 401(k) Plan (2001 Restatement)(11)10.6
    
    Amendment to the Brightpoint, Inc. 401(k) Plan effective January 1, 2002(11)10.7
    
    Brightpoint, Inc. 401(k) Plan, effective October 1, 2002(15)10.8
    
    2004 Long-Term Incentive Plan(22)*10.8.1
    
    Form of Stock Option Agreement pursuant to 2004 Long-Term Incentive Plan between the Company and Executive
Grantee(20)*10.8.2
    
    Form of Stock Option Agreement pursuant to 2004 Long-Term Incentive Plan between the Company and Non-executive
Grantee(20)*10.8.3
    
    Form of Restricted Stock Unit Award Agreement between the Company and Grantee(20)*
 78




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##### Table of Contents



ExhibitNumber
    
    Description10.8.4
    
    Form of Executive Option Agreement with Forfeiture Provision(31)*10.8.5
    
    Form of Executive Restricted Stock Unit Agreement with Forfeiture Provision(31)*10.9
    
    Amended and Restated Independent Director Stock Compensation Plan(23)*10.9.1
    
    Summary Sheet of 2005 Director and Executive Officer Compensation(32)*10.10
    
    Form of Indemnification Agreement between the Company and Officers(20)10.10.1
    
    Indemnification Agreement between Brightpoint and Mr. Frank Terence dated July 29, 2003(18)10.10.2
    
    Indemnification Agreement between Brightpoint and Mr. V. William Hunt dated February 11, 2004(19)10.11
    
    Amended and Restated Employment Agreement between the Company and Robert J. Laikin dated July 1, 1999(6)*10.11.1
    
    Amendment dated January 1, 2001 to the Amended and Restated Agreement between the Company and Robert J. Laikin
dated July 1, 1999(8)*10.11.2
    
    Amendment dated January 1, 2003 to Amended and Restated Employment Agreement between the Company and Robert J.
Laikin dated July 1, 1999(15)*10.11.3
    
    Amendment dated January 1, 2004 to Amended and Restated Employment Agreement between the Company and Robert J.
Laikin dated July 1, 1999(19)*10.11.4
    
    Amendment dated April 7, 2005 to Amended and restated Employment Agreement between the Company and Robert J.
Laikin dated July 1, 1999(33)*10.12
    
    Amended and Restated Employment Agreement between the Company and J. Mark Howell dated July 1, 1999(6)*10.12.1
    
    Amendment dated January 1, 2001 to the Amended and Restated Employment Agreement between the Company and J. Mark
Howell dated July 1, 1999(8)*10.12.2
    
    Amendment dated January 1, 2003 to Amended and Restated Employment Agreement between the Company and J. Mark
Howell dated July 1, 1999 (15)*10.12.3
    
    Amendment dated January 1, 2004 to Amended and Restated Employment Agreement between the Company and J. Mark
Howell dated July 1, 1999 (19)*10.12.4
    
    Amendment dated April 7, 2005 to Amended and restated Employment Agreement between the Company and J. Mark
Howell dated July 1, 1999(33)*10.13
    
    Amended and Restated Employment Agreement between the Company and Steven E. Fivel dated July 1, 1999(6)*10.13.1
    
    Amendment dated January 1, 2001 to the Amended and Restated Employment Agreement between the Company and Steven
E. Fivel dated July 1, 1999(8)*10.13.2
    
    Amendment dated January 1, 2002 to the Amended and Restated Employment Agreement between the Company and Steven
E. Fivel dated July 1, 1999(11)*10.13.3
    
    Amendment dated January 1, 2003 to Amended and Restated Employment Agreement between the Company and Steven E.
Fivel dated July 1, 1999(15)*10.13.4
    
    Amendment dated January 1, 2004 to Amended and Restated Employment Agreement between the Company and Steven E.
Fivel dated July 1, 1999(19)*10.13.5
    
    Amendment dated April 7, 2005 to Amended and restated Employment Agreement between the Company and Steven E.
Fivel dated July 1, 1999(33)*10.14
    
    Lease Agreement between the Company and Airtech Parkway Associates, LLC, dated September 18, 1998(3)10.15
    
    Lease Agreement between the Company and Harbour Properties, LLC, dated April 25, 2000(8)10.16
    
    Lease Agreement between Brightpoint North America, L.P. and DP Industrial, LLC, dated as of October 1, 2004(28)10.17
    
    Lease Agreement between the Company and Perpetual Trustee Company Limited, dated November 10, 2004(30)10.18
    
    Distributor Agreement dated
October 29, 2001 between Nokia Inc. and Brightpoint North America, L.P.(11)**10.18.1
    
    Amendment dated December 19, 2002 to distribution agreement dated October 29, 2001 between Brightpoint North
America, L.P. and Nokia Inc.(15)**10.18.2
    
    Amendment No. 2 dated December 31, 2003 to Distributor Agreement between Brightpoint North America, L.P. and
Nokia, Inc.(19) **10.18.3
    
    Amendment No. 3 dated January 16, 2006 to Distributor Agreement between Brightpoint North America, L.P. and Nokia
Inc.(40)**10.19
    
    Credit Agreement dated as of October 31, 2001 (as amended) among Brightpoint North America, L.P., Wireless
Fulfillment Services LLC, the other credit parties signatory thereto, the lenders signatory thereto from time to
time and General Electric Capital Corporation(10)**10.19.1
    
    Amendment No. 2 dated September 27, 2002 to Credit Agreement among Brightpoint North America, L.P., Wireless
Fulfillment Services, LLC, the other credit parties signatory thereto, the lenders signatory thereto and General
Electric Capital Corporation(13)10.19.2
    
    Amendment No. 3 dated December 13, 2002 to Credit Agreement among Brightpoint North America, L.P., Wireless
Fulfillment Services, LLC, the other credit parties signatory thereto, the lenders signatory thereto and General
Electric Capital Corporation(14)10.19.3
    
    Amendment No. 4 dated December 13, 2002 to Credit Agreement among Brightpoint North America, L.P., Wireless
Fulfillment Services, LLC, the other credit parties signatory thereto, the lenders signatory thereto and General
Electric Capital Corporation(16)
 79




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##### Table of Contents



ExhibitNumber
    
    Description10.19.4
    
    Amendment No. 5 dated July 7, 2003 to Credit Agreement among Brightpoint North America, L.P., Wireless
Fulfillment Services, LLC, the other credit parties signatory thereto, the lenders signatory thereto and General
Electric Capital Corporation(17)10.19.5
    
    Amendment No. 6 dated November 3, 2003 to Credit Agreement among Brightpoint North America, L.P., Wireless
Fulfillment Services, LLC, the other credit parties signatory thereto, the lenders signatory thereto and General
Electric Capital Corporation(19)10.19.6
    
    Amended and Restated Credit Agreement dated as of March 18, 2004 among Brightpoint North America, L.P., Wireless
Fulfillment Services, LLC, the other credit parties signatory thereto, the lenders signatory thereto and General
Electric Capital Corporation(25)**10.19.7
    
    Amendment dated September 20, 2004 to Credit Agreement among Brightpoint North America, L.P., Wireless
Fulfillment Services, LLC, the other credit parties signatory thereto, the lenders signatory thereto and General
Electric Capital Corporation(27)10.19.7
    
    Amendment No. 2 and Limited waiver to Amended and Restated Credit Agreement dated September 14, 2005 between
Brightpoint North America L.P., Wireless Fulfillment Services LLC and the other lenders and the other Credit
Parties Signatory to the Amended and Restated Credit Agreement(35)10.20
    
    Credit Agreement dated December 24, 2002 between Brightpoint Australia Pty Limited, Advanced Portable
Technologies Limited and GE Capital Finance Pty Limited(15)10.20.1
    
    Amendment dated December 23, 2005 to Credit Agreement between Brightpoint Australia Pty Limited, Advanced
Portable Technologies Limited and GE Capital Finance Pty Limited(40)10.21
    
    Credit Agreement dated as of November 28, 2003 between Brightpoint New Zealand Limited and GE Capital (NZ)
Limited(19)10.22
    
    Management Services Agreement between the Company and Persequor Limited, dated as of October 3, 2004(29)10.23
    
    Agreement for Supplemental Executive Retirement Benefit dated as of April 7, 2005 by and between Robert J.
Laikin and Brightpoint, Inc.(33)*10.23.1
    
    Amended and Restated Agreement for Supplemental Executive Retirement Benefit dated as of January 19, 2006 by and
between Robert J. Laikin and Brightpoint, Inc.(38)*10.24
    
    Agreement for Supplemental Executive Retirement Benefit dated as of April 7, 2005 by and between J. Mark Howell
and Brightpoint, Inc.(33)*10.24.1
    
    Amended and Restated Agreement for Supplemental Executive Retirement Benefit dated as of January 19, 2006 by and
between J. Mark Howell and Brightpoint, Inc.(38)*10.25
    
    Agreement for Supplemental Executive Retirement Benefit dated as of April 7, 2005 by and between Steven E. Fivel
and Brightpoint, Inc.(33)*10.25.1
    
    Amended and Restated Agreement for Supplemental Executive Retirement Benefit dated as of January 19, 2006 by and
between Steven E. Fivel and Brightpoint, Inc.(38)*10.26
    
    Restricted Stock Award Agreement Pursuant to the 2004 Long-Term Incentive Plan of Brightpoint, Inc. dated as of
April 7, 2005 between Brightpoint, Inc. and Robert J. Laikin(33)*10.27
    
    Restricted Stock Award Agreement Pursuant to the 2004 Long-Term Incentive Plan of Brightpoint, Inc. dated as of
April 7, 2005 between Brightpoint, Inc. and J. Mark Howell(33)*10.28
    
    Restricted Stock Award Agreement Pursuant to the 2004 Long-Term Incentive Plan of Brightpoint, Inc. dated as of
April 7, 2005 between Brightpoint, Inc. and Steven E. Fivel(33)*10.29
    
    Separation Agreement and General Release dated as of June 30, 2005 by and between Brightpoint, Inc. and Frank
Terence(34)*10.30
    
    Employment Term Sheet between Brightpoint, Inc. and Vincent Donargo dated as of August 25, 2005(36)*10.31
    
    Employment Agreement between Brightpoint, Inc. and Anthony W. Boor dated October 17, 2005(37)*10.32
    
    Lease Agreement between the Brightpoint North America L.P. and Opus North Corporation, dated February 9, 2006(39)21
    
    Subsidiaries(40)23
    
    Consent of Independent Registered Public Accounting Firm(40)31.1
    
    Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934,
implementing Section 302 of the Sarbanes-Oxley Act of 2002(40)31.2
    
    Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934,
implementing Section 302 of the Sarbanes-Oxley Act of 2002(40)32.1
    
    Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant Section 906 of
the Sarbanes-Oxley Act of 2002(40)32.2
    
    Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002(40)99.1
    
    Cautionary Statements(40)
 80




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##### Table of Contents



Footnotes (1)
    
    Incorporated by reference to the applicable exhibit filed with the Companys Current
Report on Form 8-K, filed March 28, 1997 for the event dated February 20, 1997.(2)
    
    Incorporated by reference to the applicable exhibit filed with Companys Current Report
on Form 8-K filed April 1, 1998 for the event dated March 5, 1998.(3)
    
    Incorporated by reference to the applicable exhibit filed with the Companys Quarterly
Report on Form 10-Q for the quarter ended September 30, 1998.(4)
    
    Incorporated by reference to the applicable exhibit filed with the Companys Form 10-K
for the fiscal year ended December 31, 1998.(5)
    
    Incorporated by reference to Appendix B filed with the Companys Proxy Statement dated
April 15, 1999 relating to its Annual Shareholders meeting held May 18, 1999.(6)
    
    Incorporated by reference to the applicable exhibit filed with the Companys Quarterly
report on Form 10-Q for the quarter ended June 30, 1999.(7)
    
    Incorporated by reference to the applicable exhibit filed with the Companys Registration
Statement on Form S-8 (333-87863) dated September 27, 1999.(8)
    
    Incorporated by reference to the applicable exhibit filed with Form 10-K/A, Amendment No.
1 to the Companys Form 10-K for the year ended December 31, 2000.(9)
    
    Incorporated by reference to the applicable exhibit filed with the Companys Tender Offer
Statement on Schedule TO dated August 31, 2001.(10)
    
    Incorporated by reference to the applicable exhibit filed with the Companys Current Report
on Form 8-K filed February 26, 2002 for the event dated November 1, 2001.(11)
    
    Incorporated by reference to the applicable exhibit filed with the Companys Annual Report on
Form 10-K for the year ended December 31, 2001.(12)
    
    Incorporated by reference to the applicable exhibit filed with the Companys Quarterly Report
on Form 10-Q for the quarter ended June 30, 2002.(13)
    
    Incorporated by reference to the applicable exhibit filed with the Companys Current Report
on Form 8-K filed October 2, 2002 for the event dated September 27, 2002.(14)
    
    Incorporated by reference to the applicable exhibit filed with the Companys Current Report
on Form 8-K filed December 16, 2002 for the event dated December 13, 2002.(15)
    
    Incorporated by reference to the applicable exhibit filed with the Companys Annual Report on
Form 10-K for the year ended December 31, 2002(16)
    
    Incorporated by reference to the applicable exhibit filed with the Companys Quarterly Report
on Form 10-Q for the quarter ended March 31, 2003(17)
    
    Incorporated by reference to the applicable exhibit filed with the Companys Quarterly Report
on Form 10-Q for the quarter ended June 30, 2003(18)
    
    Incorporated by reference to the applicable exhibit filed with the Companys Quarterly Report
on Form 10-Q for the quarter ended September 30, 2003(19)
    
    Incorporated by reference to the applicable exhibit filed with the Companys Annual Report on
Form 10-K for the year ended December 31, 2003(20)
    
    Incorporated by reference to the applicable exhibit filed with the Companys Quarterly Report
on Form 10-Q for the quarter ended September 30, 2004(21)
    
    Incorporated by reference to Appendix E to Brightpoint, Inc.s Proxy Statement dated April
26, 2004 relating to its Annual Stockholders meeting held June 3, 2004(22)
    
    Incorporated by reference to Appendix D to Brightpoint, Inc.s Proxy Statement dated April
26, 2004 relating to its Annual Stockholders meeting held June 3, 2004
 81




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(23)
    
    Incorporated by reference to Appendix C to Brightpoint, Inc.s Proxy Statement dated April
26, 2004 relating to its Annual Stockholders meeting held June 3, 2004(24)
    
    Incorporated by reference to the applicable exhibit filed with the Companys Current Report
on Form 8-K filed April 16, 2004 for the event dated April 12, 2004(25)
    
    Incorporated by reference to the applicable exhibit filed with the Companys Current Report
on Form 8-K filed March 25, 2004 for the event dated March 18, 2004(26)
    
    Incorporated by reference to the applicable exhibit filed with the Companys Current Report
of Form 8-K filed June 3, 2004 for the event dated June 3, 2004(27)
    
    Incorporated by reference to the applicable exhibit filed with the Companys Current Report
on Form 8-K filed September 23, 2004 for the event dated September 20, 2004(28)
    
    Incorporated by reference to the applicable exhibit filed with the Companys Current Report
on Form 8-K filed October 5, 2004 for the event dated October 1, 2004(29)
    
    Incorporated by reference to the applicable exhibit filed with the Companys Current Report
on Form 8-K filed October 6, 2004 for the event dated October 3, 2004(30)
    
    Incorporated by reference to the applicable exhibit filed with the Companys Annual Report on
Form 10-K for the year ended December 31, 2004(31)
    
    Incorporated by reference to the applicable exhibit filed with the Companys Current Report
on Form 8-K filed February 25, 2005(32)
    
    Incorporated by reference to the applicable exhibit filed with the Companys Quarterly
Report on Form 10-Q for the quarter ended March 31, 2005(33)
    
    Incorporated by reference to the applicable exhibit filed with the Companys Current Report
on Form 8-K filed on April 12, 2005(34)
    
    Incorporated by reference to the applicable exhibit filed with the Companys Current Report
on Form 8-K filed on June 30, 2005(35)
    
    Incorporated by reference to the applicable exhibit filed with the Companys Current Report
on Form 8-K filed on September 16, 2005(36)
    
    Incorporated by reference to the applicable exhibit filed with the Companys Quarterly Report
on Form 10-Q for the quarter ended September 30, 2005(37)
    
    Incorporated by reference to the applicable exhibit filed with the Companys Current Report
on Form 8-K filed on October 18, 2005(38)
    
    Incorporated by reference to the applicable exhibit filed with the Companys Report on Form
8-K filed on January 20, 2006(39)
    
    Incorporated by reference to the applicable exhibit filed with the Companys Report on Form
8-K filed on February 15, 2006(40)
    
    Filed herewith
 
 *
    
    Denotes management compensation plan or arrangement.**
    
    Portions of this document have been omitted and filed separately with the Securities
and Exchange Commission pursuant to a request for confidential treatment, which was granted
under Rule 24b-2 of the Securities Exchange Act of 1934.***
    
    Portions of this document have been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment under Rule 24b-2 of the
Securities Exchange Act of 1934. 82




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SIGNATURES
  Brightpoint, Inc.By:
    /s/ Robert J. LaikinRobert J. LaikinDate: March 1, 2006
    
    Chairman of the Board and
Chief Executive Officer  Signature
    
    Title
    
    Date/s/ Robert J. Laikin
    
    Chairman of the Board
    
    March 1, 2006Robert J. Laikin
    
    Chief Executive Officer and Director (Principal
Executive Officer)/s/ Anthony W. Boor
    
    Executive Vice President, Chief Financial
    
    March 1, 2006Anthony W. Boor
    
    Officer and Treasurer
(Principal Financial Officer)/s/ Vincent Donargo
    
    Vice President, Corporate
    
    March 1, 2006Vincent Donargo
    
    Controller, Chief Accounting Officer
(Principal Accounting Officer)/s/ Eliza Hermann
    
    Director
    
    March 1, 2006Eliza Hermann/s/ V. William Hunt
    
    Director
    
    March 1, 2006V. William Hunt/s/ Marisa E. Pratt
    
    Director
    
    March 1, 2006Marisa E. Pratt/s/ Richard W. Roedel
    
    Director
    
    March 1, 2006Richard W. Roedel/s/ Stephen H. Simon
    
    Director
    
    March 1, 2006Stephen H. Simon/s/ Jerre L. Stead
    
    Director
    
    March 1, 2006Jerre L. Stead/s/ Robert F. Wagner
    
    Director
    
    March 1, 2006Robert F. Wagner/s/ K.P. WILSKA
    
    Director
    
    March 1, 2006K.P. Wilska
 83




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BRIGHTPOINT, INC.
 SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS
 Col. A
    
    Col. B
    
    Col. C
    
    Col. D
    
    Col. EBalance at
    
    Charged to
    
    Charged to
    
    
    
    
    
    Balance atBeginning
    
    Costs and
    
    Other
    
    
    
    
    
    EndDescription
    
    of Period
    
    Expenses
    
    Accounts
    
    Deductions
    
    of Period(Amounts in thousands)Year ended December 31, 2005:Deducted from asset accounts:Allowance for doubtful accounts
    
    $
    6,215
    
    
    $
    3,280
    
    
    $
    
    
    
    $
    (5,874
    )
    
    $
    3,621Inventory valuation reserve
    
    
    5,198
    
    
    
    4,272
    
    
    
    
    
    
    
    (4,612
    )
    
    
    4,858Total
    
    $
    11,413
    
    
    $
    7,552
    
    
    $
    
    
    
    $
    (10,486
    )
    
    $
    8,479Year ended December 31, 2004:Deducted from asset accounts:Allowance for doubtful accounts
    
    $
    7,683
    
    
    $
    4,420
    
    
    $
    
    
    
    $
    (5,888
    )
    
    $
    6,215Inventory valuation reserve
    
    
    5,043
    
    
    
    5,205
    
    
    
    
    
    
    
    (5,050
    )
    
    
    5,198Total
    
    $
    12,726
    
    
    $
    9,625
    
    
    $
    
    
    
    $
    (10,938
    )
    
    $
    11,413Year ended December 31, 2003:Deducted from asset accounts:Allowance for doubtful accounts
    
    $
    13,948
    
    
    $
    3,861
    
    
    $
    
    
    
    $
    (10,126
    )
    
    $
    7,683Inventory valuation reserve
    
    
    3,962
    
    
    
    4,663
    
    
    
    
    
    
    
    (3,582
    )
    
    
    5,043Total
    
    $
    17,910
    
    
    $
    8,524
    
    
    $
    
    
    
    $
    (13,708
    )
    
    $
    12,726
 Note:
 84