UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

~~FORM10-Q~~

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: ~~June 30, 2018~~March 31, 2019

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period fromto

Commission File Number:0-25092

INSIGHT ENTERPRISES, INC.

(Exact name of registrant as specified in its charter)

Delaware

~~Delaware~~

86-0766246

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

6820 South Harl Avenue, Tempe, Arizona 85283

(Address of principal executive offices) (Zip Code)

(480)333-3000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol		Name of each exchange on which registered
Common stock, par value $0.01		NSIT		The NASDAQ Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒

~~Yes ☒~~No ☐

~~Indicate by check mark whether~~Indicate by check mark whether the ~~registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Date File required~~registrant has submitted electronically every Interactive Data File required to be ~~submitted and posted pursuant~~submitted pursuant to ~~Rule~~Rule 405 of ~~RegulationS-T~~R (§ egulation S-T (§232.405 of this ~~chapter) during the preceding~~chapter) during the preceding 12 months ~~(or for such shorter period that~~(or for such shorter period that the ~~registrant was required~~ registrant was required to submit ~~and post such files)~~such files).

Yes ☒

No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule12b-2 of the Exchange Act.


Large accelerated filer	☒	☒	Accelerated filer	☐
Non-accelerated filer	☐
~~Non-accelerated~~ ~~filer~~		~~(Do not check if a smaller reporting company) ☐~~	Smaller reporting company	☐

			Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act).

Yes ☐

No ☒

The number of shares outstanding of the issuer’s common stock as of ~~July 27, 2018~~April 26, 2019 was ~~35,466,716.~~35,762,268.

INSIGHT ENTERPRISES, INC.

QUARTERLY REPORT ON FORM10-Q

Three Months Ended ~~June 30, 2018~~March 31, 2019

TABLE OF CONTENTS


		Page

PART I – -		Financial Information


Item 1 –		Financial Statements:

		Consolidated Balance Sheets (unaudited) - ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018			1

		Consolidated Statements of Operations (unaudited) - Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2019 and 2018 ~~and 2017~~			2

		Consolidated Statements of Comprehensive Income (unaudited) - Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2019 and 2018 ~~and 2017~~			3

		Consolidated Statements of Stockholders’ Equity (unaudited) – Three Months Ended March 31, 2019 and 2018		4

		Consolidated Statements of Cash Flows (unaudited) - ~~Six~~Three Months Ended ~~June 30,~~March 31, 2019 and 2018 ~~and 2017~~			4	5

		Notes to Consolidated Financial Statements (unaudited)			5
	6

Item 2 –		Management’s Discussion and Analysis of Financial Condition and Results of Operations			29
	21

Item 3 –		Quantitative and Qualitative Disclosures About Market Risk			45
	32

Item 4 –		Controls and Procedures			45
	32
~~PART II – Other Information~~

PART II -		Other Information

Item 1 –		Legal Proceedings			45
	33

Item 1A –		Risk Factors			45
	33

Item 2 –		Unregistered Sales of Equity Securities and Use of Proceeds			46
	33

Item 3 –		Defaults Upon Senior Securities			46
	33

Item 4 –		Mine Safety Disclosures			46
	33

Item 5 –		Other Information			46	33

Item 6 –		Exhibits		34

~~Item 6 – Exhibits~~Signatures					47

~~Signatures~~			48	35

INSIGHT ENTERPRISES, INC.

~~FORWARD-LOOKING INFORMATION~~

Forward-Looking Information

References to “the Company,” “Insight,” “we,” “us,” “our” and other similar words refer to Insight Enterprises, Inc. and its consolidated subsidiaries, unless the context suggests otherwise. Certain statements in this Quarterly Report on Form10-Q, including statements in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part I, Item 2 of this report, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may include: expectations regarding net sales, gross profit, gross margin, operating expenses, earnings from operations,non-operating income and expenses, net earnings ~~and~~or cash flows, cash ~~uses~~needs and ~~needs,~~ the payment of accrued expenses and ~~liabilities, the timing of the inventory shipments;~~liabilities; the expected effects of seasonality on our business; expectations of further consolidation in the Information Technology (“IT”) industry; our intentions concerning the payment of dividends; our acquisition strategy; projections of capital expenditures; the sufficiency of our capital resources, the availability of financing and our needs and plans relating thereto; the estimated effect of new accounting principles and expected dates of adoption; ~~expected tax changes;~~ the effect of indemnification obligations; projections about the outcome of ongoing tax audits; expectations regarding future employee termination benefits; estimates regarding future asset-retirement activities; adequate provisions for and our positions and strategies with respect to ongoing and threatened litigation; our expectations regarding the use of cash flow from operations for working capital, to pay down debt, repurchase shares of our common stock, make capital expenditures and fund acquisitions; our expectations regarding stock-based compensation and future income tax expense; our compliance with leverage ratio requirements; our exposure tooff-balance sheet arrangements; statements of belief; and statements of assumptions underlying any of the foregoing. Forward-looking statements are identified by such words as “believe,” “anticipate,” “expect,” “estimate,” “intend,” “plan,” “project,” “will,” “may” and variations of such words and similar expressions and are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. There can be no assurances that results described in forward-looking statements will be achieved, and actual results could differ materially from those suggested by the forward-looking statements. Some of the important factors that could cause our actual results to differ materially from those projected in any forward-looking statements include, but are not limited to, the following, which are discussed in “Risk Factors” in Part I, Item 1A of the Company’s Annual Report on Form10-K for the year ended December 31, ~~2017:~~2018:

actions of our competitors, including manufacturers and ~~publishers~~publishers of products we sell;

our reliance on our partners for product availability, competitive products to sell and marketing funds and purchasing incentives, which can change significantly in the amounts made available and the requirements year over year;

changes in the ~~information technology (“IT”)~~IT industry and/or rapid changes in technology;

risks associated with the integration and operation of acquired businesses;

possible significant fluctuations in our future operating results;

the risks associated with our international operations;

general economic conditions;

increased debt and interest expense and decreased availability of funds under our financing facilities;

the security of our electronic and other confidential ~~information;~~information;

disruptions in our IT systems and voice and data networks;

failure to comply with the terms and conditions of our commercial and public sector contracts;

legal proceedings ~~and the results of~~ client ~~and public sector~~ audits and failure to comply with laws and regulations;

accounts receivable risks, including increased credit loss experience or extended payment terms with our clients;

our reliance on independent shipping companies;

our dependence on certain key personnel;

INSIGHT ENTERPRISES, INC.

~~natural disasters or other adverse occurrences;~~

•

natural disasters or other adverse occurrences;

exposure to changes in, interpretations of, or enforcement trends related to tax rules and regulations; and

~~intellectual~~intellectual property infringement claims and challenges to our registered trademarks and trade names.

Additionally, there may be other risks that are otherwise described from time to time in the reports that we file with the Securities and Exchange Commission. Any forward-looking statements in this report should be considered in light of various important factors, including the risks and uncertainties listed above, as well as others. We assume no obligation to update, and, except as may be required by law, do not intend to update, any forward-looking statements. We do not endorse any projections regarding future performance that may be made by third parties.

PART ~~I—FINANCIAL~~I - FINANCIAL INFORMATION

Item 1. Financial Statements.

INSIGHT ENTERPRISES, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

(unaudited)


	June 30, 2018			December 31, 2017			March 31, 2019			December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	248,122		$	105,831		$	124,831		$	142,655
Accounts receivable, net of allowance for doubtful accounts of $9,740 and $10,158, respectively		2,161,077			1,814,560
Accounts receivable, net of allowance for doubtful accounts of $10,903 and $10,462, respectively								1,723,817			1,931,736
Inventories		174,099			194,529			187,146			148,503
Inventories not available for sale		4,528			36,956
Other current assets		122,397			152,467			117,199			115,683

Total current assets		2,710,223			2,304,343			2,152,993			2,338,577
Property and equipment, net of accumulated depreciation and amortization of $328,153 and $335,078, respectively		74,694			75,252
Property and equipment, net of accumulated depreciation and amortization of $273,379 and $331,700, respectively								74,038			72,954
Goodwill		130,841			131,431			166,073			166,841
Intangible assets, net of accumulated amortization of $44,485 and $37,357, respectively		93,300			100,778
Intangible assets, net of accumulated amortization of $56,255 and $52,942, respectively								108,856			112,179
Deferred income taxes		14,936			17,064			7,345			7,967
Other assets		68,736			56,783			247,162			77,429

	$	3,092,730		$	2,685,651
							$	2,756,467		$	2,775,947
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable—trade	$	1,395,934		$	899,075		$	897,609		$	978,104
Accounts payable—inventory financing facility		303,702			319,468			260,160			304,130
Accrued expenses and other current liabilities		199,069			175,860			183,678			190,733
Current portion of long-term debt		16,924			16,592			1,161			1,395
Deferred revenue		66,179			88,979			66,646			62,300

Total current liabilities		1,981,808			1,499,974			1,409,254			1,536,662
Long-term debt		144,888			296,576			113,227			195,525
Deferred income taxes		588			717			604			683
Other liabilities		58,955			44,915			207,164			56,088
								1,730,249			1,788,958
		2,186,239			1,842,182

Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value, 3,000 shares authorized; no shares issued		—			—			—			—
Common stock, $0.01 par value, 100,000 shares authorized; 35,459 shares at June 30, 2018 and 35,829 shares at December 31, 2017 issued and outstanding		355			358
Common stock, $0.01 par value, 100,000 shares authorized; 35,762 shares at March 31, 2019 and 35,482 shares at December 31, 2018 issued and outstanding								358			355
Additionalpaid-in capital		315,619			317,155			321,606			323,622
Retained earnings		625,212			550,220			743,992			704,665
Accumulated other comprehensive loss – foreign currency translation adjustments		(34,695	)		(24,264	)		(39,738	)		(41,653	)

Total stockholders’ equity		906,491			843,469			1,026,218			986,989
							$	2,756,467		$	2,775,947
	$	3,092,730		$	2,685,651

See accompanying notes to consolidated financial statements.

INSIGHT ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

   Three Months Ended
June 30, Six Months Ended
June 30,
   2018 2017 2018 2017
Net sales:

Products
   $ 1,619,774 $ 1,505,464 $ 3,201,929 $ 2,827,433
Services
   217,146 178,568 397,894 334,142


Total net sales
   1,836,920 1,684,032 3,599,823 3,161,575


Costs of goods sold:

Products
   1,488,921 1,372,015 2,927,655 2,573,072
Services
   83,622 60,638 167,786 128,897


Total costs of goods sold
   1,572,543 1,432,653 3,095,441 2,701,969


Gross profit
   264,377 251,379 504,382 459,606
Operating expenses:

Selling and administrative expenses
   189,464 180,752 377,644 358,384
Severance and restructuring expenses
   382 1,022 2,026 5,717
Acquisition-related expenses
   94 276 94 3,223


Earnings from operations
   74,437 69,329 124,618 92,282
Non-operating (income) expense:

Interest income
   (170 ) (205 ) (323 ) (636 )
Interest expense
   5,102 4,326 11,117 8,259
Net foreign currency exchange (gain) loss
   (275 ) 251 (520 ) 631
Other expense, net
   324 326 626 641


Earnings before income taxes
   69,456 64,631 113,718 83,387
Income tax expense
   17,977 24,376 29,494 29,284


Net earnings
   $ 51,479 $ 40,255 $ 84,224 $ 54,103


Net earnings per share:

Basic
   $ 1.45 $ 1.13 $ 2.36 $ 1.52


Diluted
   $ 1.44 $ 1.11 $ 2.34 $ 1.50


Shares used in per share calculations:

Basic
   35,483 35,765 35,698 35,684


Diluted
   35,815 36,169 36,039 36,177

~~See accompanying notes to consolidated financial statements.~~

	Three Months Ended March 31,
	2019			2018
Net sales:
Products	$	1,466,672		$	1,557,792
Services		218,794			184,702
Total net sales		1,685,466			1,742,494
Costs of goods sold:
Products		1,337,308			1,414,986
Services		99,686			87,245
Total costs of goods sold		1,436,994			1,502,231
Gross profit		248,472			240,263
Operating expenses:
Selling and administrative expenses		191,063			188,180
Severance and restructuring expenses		370			1,644
Earnings from operations		57,039			50,439
Non-operating (income) expense:
Interest income		(271	)		(153	)
Interest expense		4,823			6,015
Net foreign currency exchange loss (gain)		711			(245	)
Other expense, net		339			302
Earnings before income taxes		51,437			44,520
Income tax expense		12,110			11,517
Net earnings	$	39,327		$	33,003
Net earnings per share:
Basic	$	1.10		$	0.92
Diluted	$	1.09		$	0.91
Shares used in per share calculations:
Basic		35,609			35,913
Diluted		36,103			36,263

~~INSIGHT ENTERPRISES, INC.~~

~~CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME~~

~~(in thousands)~~

~~(unaudited)~~

   Three Months Ended
June 30,    Six Months Ended
June 30,
   2018 2017    2018 2017
Net earnings
   $ 51,479 $ 40,255    $ 84,224 $ 54,103
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments
   (15,022 ) 8,975    (10,431 ) 16,255




Total comprehensive income
   $ 36,457 $ 49,230    $ 73,793 $ 70,358

See accompanying notes to consolidated financial statements.

INSIGHT ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~COMPREHENSIVE INCOME

(in thousands)

(unaudited)

   Six Months Ended June 30,
   2018 2017
Cash flows from operating activities:

Net earnings
   $ 84,224 $ 54,103
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:

Depreciation and amortization of property and equipment
   10,712 12,729
Amortization of intangible assets
   7,214 8,433
Provision for losses on accounts receivable
   1,336 2,225
Write-downs of inventories
   1,396 1,077
Write-off of property and equipment
   309 —
Non-cash stock-based compensation
   7,047 6,749
Deferred income taxes
   2,020 (25 )
Changes in assets and liabilities, net of acquisitions:

Increase in accounts receivable
   (283,930 ) (230,762 )
Decrease (increase) in inventories
   18,281 (54,276 )
Decrease (increase) in other assets
   13,714 (64,875 )
Increase in accounts payable
   450,471 163,451
Increase in deferred revenue
   13,733 4,944
Increase (decrease) in accrued expenses and other liabilities
   24,428 (3,039 )


Net cash provided by (used in) operating activities
   350,955 (99,266 )


Cash flows from investing activities:

Purchases of property and equipment
   (10,644 ) (10,274 )
Acquisitions, net of cash and cash equivalents acquired
   —   (180,894 )


Net cash used in investing activities
   (10,644 ) (191,168 )


Cash flows from financing activities:

Borrowings on senior revolving credit facility
   280,184 386,609
Repayments on senior revolving credit facility
   (397,684 ) (386,609 )
Borrowings on accounts receivable securitization financing facility
   1,696,500 1,802,889
Repayments on accounts receivable securitization financing facility
   (1,721,500 ) (1,718,389 )
Borrowings under Term Loan A
   —   175,000
Repayments under Term Loan A
   (6,563 ) (4,375 )
Repayments under other financing agreements
   (1,835 ) (3,957 )
Payments on capital lease obligations
   (580 ) (255 )
Net (repayments) borrowings under inventory financing facility
   (15,766 ) 25,470
Payment of debt issuance costs
   (270 ) (1,123 )
Payment of payroll taxes on stock-based compensation through shares withheld
   (2,925 ) (4,548 )
Repurchases of common stock
   (22,069 ) —


Net cash (used in) provided by financing activities
   (192,508 ) 270,712


Foreign currency exchange effect on cash, cash equivalents and restricted cash balances
   (5,541 ) 11,739


Increase (decrease) in cash, cash equivalents and restricted cash
   142,262 (7,983 )
Cash, cash equivalents and restricted cash at beginning of period
   107,445 205,946


Cash, cash equivalents and restricted cash at end of period
   $ 249,707 $ 197,963

	Three Months Ended March 31,
	2019		2018
Net earnings	$	39,327	$	33,003
Other comprehensive income, net of tax:
Foreign currency translation adjustments		1,915		4,591
Total comprehensive income	$	41,242	$	37,594

See accompanying notes to consolidated financial statements.

INSIGHT ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(unaudited)

Common Stock

Treasury Stock

Additional
Paid-in

Accumulated
Other
Comprehensive

Retained

Total
Stockholders'

Shares

Par Value

Shares

Amount

Capital

Loss

Earnings

Equity

Balances at December 31, 2018

35,482

355

—

—

323,622

(41,653
)

704,665

986,989

Issuance of common stock under employee stock plans, net of shares withheld for payroll taxes

279

3

—

—

(6,131
)

—

—

(6,128
)
Stock-based compensation expense

—

—

—

—

4,115

—

—

4,115

Foreign currency translation adjustments, net of tax

—

—

—

—

—

1,915

—

1,915

Net earnings

—

—

—

—

—

—

39,327

39,327

Balances at March 31, 2019

35,761

$
358

—

$
—

$
321,606

$
(39,738
)

$
743,992

$
1,026,218

Balances at December 31, 2017

35,829

358

—

—

317,155

(24,264
)

550,220

843,469

Cumulative effect of accounting change

—

—

—

—

—

—

7,176

7,176

Issuance of common stock under employee stock plans, net of shares withheld for payroll taxes

240

2

—

—

(2,887
)

—

—

(2,885
)
Stock-based compensation expense

—

—

—

—

3,184

—

—

3,184

Repurchase of treasury stock

—

—

(221
)

(7,679
)

—

—

—

(7,679
)
Retirement of treasury stock

(221
)

(2
)

221

7,679

(1,959
)

—

(5,718
)

—

Foreign currency translation adjustments, net of tax

—

—

—

—

—

4,591

—

4,591

Net earnings

—

—

—

—

—

—

33,003

33,003

Balances at March 31, 2018

35,848

$
358

—

$
—

$
315,493

$
(19,673
)

$
584,681

$
880,859

See accompanying notes to consolidated financial statements.

INSIGHT ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

Three Months Ended
March 31,

2019

2018

Cash flows from operating activities:

Net earnings

$
39,327

$
33,003

Adjustments to reconcile net earnings to net cash provided by
   operating activities:

Depreciation and amortization of property and equipment

5,044

5,433

Amortization of intangible assets

3,823

3,611

Provision for losses on accounts receivable

1,413

346

Write-downs of inventories

1,408

629

Write-off of property and equipment

—

303

Non-cash stock-based compensation

4,115

3,184

Deferred income taxes

547

979

Changes in assets and liabilities:

Decrease in accounts receivable

210,691

184,877

(Increase) Decrease in inventories

(39,658
)

4,444

Increase in other assets

(107,314
)

(25,514
)
Decrease in accounts payable

(82,246
)

(97,104
)
Increase in deferred revenue

7,117

16,177

Increase in accrued expenses and other liabilities

77,646

20,377

Net cash provided by operating activities

121,913

150,745

Cash flows from investing activities:

Purchases of property and equipment

(5,352
)

(5,044
)
Acquisitions, net of cash and cash equivalents acquired

(762
)

—

Net cash used in investing activities

(6,114
)

(5,044
)
Cash flows from financing activities:

Borrowings on senior revolving credit facility

49,936

276,684

Repayments on senior revolving credit facility

(49,936
)

(392,184
)
Borrowings on accounts receivable securitization financing facility

1,010,500

1,024,000

Repayments on accounts receivable securitization financing facility

(1,092,500
)

(955,000
)
Repayments under Term Loan A

—

(3,281
)
Repayments under other financing agreements

—

(1,234
)
Payments on finance lease obligations

(542
)

(288
)
Net repayments under inventory financing facility

(43,970
)

(91,366
)
Payment of payroll taxes on stock-based compensation
   through shares withheld

(6,128
)

(2,884
)
Repurchases of common stock

—

(7,679
)
Net cash used in financing activities

(132,640
)

(153,232
)
Foreign currency exchange effect on cash, cash equivalents and
   restricted cash balances

(986
)

1,937

Decrease in cash, cash equivalents and restricted cash

(17,827
)

(5,594
)
Cash, cash equivalents and restricted cash at beginning of period

144,293

107,445

Cash, cash equivalents and restricted cash at end of period

$
126,466

$
101,851

See accompanying notes to consolidated financial statements.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

~~1. Basis of Presentation and Recently Issued Accounting Standards~~

1.	Basis of Presentation and Recently Issued Accounting Standards

~~Today, every business is a technology business.~~ We empower organizations of all sizes with Insight Intelligent Technology Solutions^TM ~~and services~~ to maximize the business value of ~~IT.~~IT in North America; Europe, the Middle East and Africa (“EMEA”); and Asia-Pacific (“APAC”). As a Fortune500-ranked global provider of digital innovation, cloud/data center transformation, connected workforce, and supply chain optimization solutions and services, we help clients innovate and optimize their operations to run smarter. Our company is organized in the following three operating segments, which are primarily defined by their related geographies:


Operating Segment		Geography
North America		United States and Canada
EMEA		Europe, Middle East and Africa
APAC		Asia-Pacific

Our offerings in North America and certain countries in EMEA and APAC include hardware, software and services. Our offerings in the remainder of our EMEA and APAC segments consist of largely software and certain software-related services.

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly our financial position as of ~~June 30, 2018~~March 31, 2019 and our results of operations for the three ~~and six~~ months ended ~~June 30,~~March 31, 2019 and 2018 ~~and 2017~~ and cash flows for the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019 and ~~2017.~~2018. The consolidated balance sheet as of December 31, ~~2017~~2018 was derived from the audited consolidated balance sheet at such date. The accompanying unaudited consolidated financial statements and notes have been prepared in accordance with the rules and regulations promulgated by the Securities and Exchange Commission and consequently do not include all of the disclosures normally required by United States generally accepted accounting principles (“GAAP”).

The results of operations for interim periods are not necessarily indicative of results for the full year, due in part to the seasonal nature of our business. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements, including the related notes thereto, in our Annual Report on Form10-K for the year ended December 31, ~~2017.~~2018. Our results of operations include the results of ~~Datalink Corporation~~Cardinal Solutions Group, Inc. (“~~Datalink”~~Cardinal”) from its acquisition date of ~~January 6, 2017 and Caase Group B.V. (referred to herein as, “Caase.com”) from its acquisition date of September 26, 2017.~~August 1, 2018.

The consolidated financial statements include the accounts of Insight Enterprises, Inc. and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Additionally, these estimates and assumptions affect the reported amounts of net sales and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, we evaluate our estimates, including those related to sales recognition, anticipated achievement levels under partner funding programs, assumptions related to stock-based compensation valuation, allowances for doubtful accounts, valuation of inventories, litigation-related obligations, valuation allowances for deferred tax assets and impairment of long-lived assets, including purchased intangibles and goodwill, if indicators of potential impairment exist.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Recently Issued Accounting Standards

Effective January 1, ~~2018,~~2019, we adopted the Financial Accounting Standards Board’s (“FASB”) Accounting Standard Update (“ASU”)No. ~~2016-18,~~2016-02—Leases (Topic 842) ~~“Restricted Cash,” ASUNo. 2016-15,~~ ~~“Classification~~, as of ~~Certain Cash Receipts and Cash Payments,” and ASUNo. 2016-01,~~ “Financial Instruments Overview: Recognition and Measurement of Financial Assets and Financial Liabilities.” The adoption of these new standards did not have a material effect on our consolidated financial statements. Additionally, we adopted ASU~~No. 2014-09,~~ ~~“Revenue from Contracts with Customers,” effective~~ January 1, ~~2018, as discussed in Note 2.~~

~~As a result of~~2019, using the ~~adoption of ASUNo. 2016-18,~~ ~~we began including amounts generally described as restricted cash or restricted cash equivalents with cash and cash equivalents when reconciling thebeginning-of-period~~ ~~andend-of-period~~ total amounts shown in the statement of cash flows for the six months ended June 30, 2018. Amounts shown in the consolidated statement of cash flows for the six months ended June 30, 2017 were reclassified to conform to the current period presentation. The following tableeffective date transition method. This approach provides a ~~reconciliation~~method for recording existing leases at adoption without restating comparative periods. We elected the package of ~~cash, cash equivalents and restricted cash reported~~practical expedients permitted under the transition guidance within ~~the balance sheets that sum to the total of the same such amounts shown in the statements of cash flows for the six months ended June 30, 2018 and 2017 (in thousands):~~

   June 30,
2018    December 31,
2017
Cash and cash equivalents
   $ 248,122    $ 105,831
Restricted cash included in other current assets
   9    46
Restricted cash included in othernon-current assets
   1,576    1,568




Total cash, cash equivalents and restricted cash shown in the statement of cash flows
   $ 249,707    $ 107,445

   June 30,
2017    December 31,
2016
Cash and cash equivalents
   $ 194,783    $ 202,882
Restricted cash included in other current assets
   78    51
Restricted cash included in othernon-current assets
   3,102    3,013




Total cash, cash equivalents and restricted cash shown in the statement of cash flows
   $ 197,963    $ 205,946

Amounts included in restricted cash represent those required to be set aside by a contractual agreement with a lessor related to certain leased office space in foreign jurisdictions. Restricted cash shown in the statement of cash flows for the six months ended June 30, 2017 also includes funds deposited with a financial institution in Australia to provide a guarantee on our behalf as security for any funds we might draw under our revolving loan facility in China. The deposited funds were restricted in that we could not withdraw them as long as the related loan facility was in place. These amounts were reported in other~~non-current~~ ~~assets.~~

~~In February 2016, the FASB issued ASUNo. 2016-02,~~ ~~“Leases,” (Topic 842) which supersedes the existing lease recognition requirements in the current accounting standard for leases. The core principal of~~ the new standard, ~~is that~~which among other things, allowed us to carry forward the historical lease classification. In addition, we made an ~~entity should recognizeright-of-use~~accounting policy election not to separate non-lease components from lease components for all existing classes of underlying assets with the exception of land and buildings. We also made an accounting policy election to not record right of use (“ROU”) assets and lease liabilities ~~arising from a lease~~ for ~~both financing and operating~~ leases ~~along~~ with additional qualitative and quantitative disclosures. The new standard will be effective for fiscal years beginning after December 15, 2018, including interim periods within such fiscal years. The new standard is to be applied using a modified retrospective transition method with the option to elect a numberan initial term of ~~practical expedients. We will adopt~~twelve months or less on our consolidated balance sheet.

Adoption of the new standard ~~as of January 1, 2019 and expect to elect certain available practical expedients. We have established a cross-functional implementation team and are~~resulted in the ~~process~~recording of ~~determining the scope of arrangements~~

~~INSIGHT ENTERPRISES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

that will be subject to this standard as well as assessing the impact to our systems, processes, and internal controls over financial reporting. While we are still evaluating the impact of adopting ASU~~No. 2016-02,~~ ~~we anticipate this standard will have a material impact on our property and equipment balance. The primary impact will be to record~~additional net operating lease ROU assets and lease liabilities ~~for current~~of $65,922,000 and $70,512,000, respectively, as of January 1, 2019. The difference between the additional lease assets and lease liabilities reflected existing accrued and prepaid rent balances that were reclassified to the operating ~~leases on~~lease ROU asset at January 1, 2019. The standard did not materially impact our consolidated ~~balance sheets. We do not expect the adoption to have a material~~net earnings and had no impact on ~~our consolidated statements of operations or our consolidated statements of~~ cash flows. Our analysis and evaluation of the new standard will continue through its effective date in the first quarter of 2019, including continuing to monitor any potential changes in the standard that have been proposed by the FASB.

There have been no other material changes in or additions to the recently issued accounting standards as previously reported in Note 1 to our Consolidated Financial Statements in Part II, Item 8 of our Annual Report onForm 10-K for the year ended December 31, ~~2017~~2018 that affect or may affect our current financial statements.

Leases

~~2. New Accounting Standard – Sales Recognition~~

We ~~adopted ASU~~lease office space, distribution centers, land, vehicles and equipment. Lease agreements with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term.

Certain lease agreements include one or more options to renew, with renewal terms that can extend the lease term from one to ~~No. 2014-09,~~five years ~~“Revenue from Contracts with Customers,” which created FASB Topic 606 (“Topic 606”) with~~or more. The exercise of lease renewal options is at our sole discretion. Some agreements also include options to purchase the leased property. The estimated life of assets and leasehold improvements are limited by the expected lease term, unless there is a ~~date~~transfer of ~~initial application~~title or purchase option reasonably certain of ~~January 1, 2018. Topic 606 also includes Subtopic340-40,~~ ~~“Other Assets and Deferred Costs – Contracts with Customers,” which requires the deferral~~exercise.

Certain of ~~incremental costs of obtaining~~our lease agreements include rental payments adjusted periodically for inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Significant Accounting Policy

We determine if a contract ~~with~~or arrangement is, or contains a ~~customer. As a result, we changed our accounting policy for sales recognition~~lease at inception. Balances related to operating leases are included in other assets, other current liabilities, and ~~incremental costs of obtaining a contract with a customer as detailed below.~~

We applied Topic 606 using the modified retrospective transition method. Upon initially applying the new standard, the net cumulative effect from prior periods of applying the guidance in Topic 606 was recognized as a cumulative effect adjustment to the opening balance of retained earningsother liabilities in our consolidated balance ~~sheet as of January 1, 2018. Additionally, we have elected the option~~sheet. Balances related to ~~only account for contracts that remained open as of the January 1, 2018 transition date~~financing leases are included in accordance with Topic 606. Revenue recognition for contracts for which substantially all of the revenue was recognized in accordance with the revenue guidance in effect before January 1, 2018 has not been changed. The comparative information as of December 31, 2017property and for the years ended December 31, 2017 and 2016 have not been adjusted and continue to be reported under the previously applicable accounting standards. The details of the significant changes and quantitative impact of the changes are set forth below.

In sales transactions for certain security software products that are sold with integral third-party delivered software maintenance, we changed our accounting to record both the software license and the accompanying software maintenance on a net basis, as the agent in the arrangement, given the predominant nature of the goods and services provided to the customer. Under previous guidance, we bifurcated the sale of the software license from the sale of the maintenance contract, recorded the sale of the software product on a gross sales recognition basis and recorded the sale of the software maintenance on a net sales recognition basis. This change has no effect on reported gross profit dollars associated with these transactions.

~~The accounting for inventories not available for sale, otherwise known as bill and hold arrangements, changed such that a~~equipment, current portion of ~~revenue under the contracts is recognized earlier than we were recognizing under previous accounting standards. Bill~~long-term debt, and ~~hold arrangements are inventory balances owned by our clients that we are warehousing and will be deploying to the clients’ locations in a future period.~~

~~INSIGHT ENTERPRISES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

The accounting for renewals of certain software term/usage licenses changed to delay or accelerate revenue recognition to the renewal period. Under previous guidance, we recognized revenue as the renewal order was completed.

The accounting for certain contracts with our clients that include payment terms that exceed one year changed such that we recognize revenue at the point in time when control of the product is transferred to the client or over the period of time that the service is provided to the client. To the extent that a significant financing component exists in these arrangements, we will record interest income associated with the financing component of the arrangement over the payment terms of the arrangement. Under previous guidance, we deferred revenue recognition under these contracts until payments became due as a result of the extended payment terms.

The timing of revenue recognition for certain services contracts also changed to align with an appropriate input or output method. For example, the timing of revenue recognition for certain services contracts with stated milestone terms changed to an earlier point in time when control transfers to the customer. Under previous guidance, we recognized revenue based on the milestones stated in the contract with our customer.

The accounting for recording sales returns allowance changed from being recorded against accounts receivable to being recorded as a refund liability. As a result, we reclassified our sales returns allowance balance from accounts receivable, net to accrued expenses and other current liabilities. Under previous guidance, we recorded the sales returns allowance in accounts receivable, net and not as a separately stated liability.

The accounting for sales commissions on contracts with performance periods that exceed one year changed such that we record such sales commissions as an asset and amortize them to expense over the related contract performance period. Under previous guidance, sales commissions were expensed in the period the transaction was generated.

~~The total cumulative effect adjustment from prior periods that we recognized~~long-term debt in our consolidated balance ~~sheet as~~sheet. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of ~~January 1, 2018 as~~lease payments over the lease term. As most of our leases do not provide an ~~adjustment to retained earnings was $7,176,000, including tax effects~~implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of ~~these adjustments.~~

lease payments. We use the implicit rate

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

when readily determinable. The operating lease ROU asset includes any prepaid lease payments and additional direct costs and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

The following ~~tables summarize~~table provides information about the ~~effects~~financial statement classification of ~~adopting Topic 606 on~~our lease balances reported within the ~~Company’s~~ consolidated ~~financial statements~~balances sheets as of ~~June 30, 2018~~March 31, 2019 and January 1, 2019 (in thousands):

Leases	Classification	March 31, 2019		January 1, 2019
Assets
Operating lease assets	Other assets	$	63,336	$	65,922
Finance lease assets	Property and equipment^(a)		1,522		1,693
Total lease assets		$	64,858	$	67,615
Liabilities
Current
Operating lease liabilities	Accrued expenses and other current liabilities	$	15,711	$	15,788
Finance lease liabilities	Current portion of long-term debt		1,161		1,399
Non-current
Operating lease liabilities	Other liabilities		52,692		54,724
Finance lease liabilities	Long-term debt		1,227		1,521
Total lease liabilities		$	70,791	$	73,432

(a)	Recorded net of accumulated amortization of $171,000 as of March 31, 2019 and there is no accumulated amortization as of January 1, 2019.

The following table provides information about the financial statement classification of our lease expenses reported within the consolidated statement of operations for the three ~~and six~~ months ~~then~~ ended March 31, 2019 (in ~~thousands, except for per share data)~~thousands):

~~BALANCE SHEET AT JUNE 30, 2018~~

Lease cost	Classification	Three months ended March 31, 2019
Operating lease cost ^{(a) (b)}	Selling and administrative expenses	$	4,918
Finance lease cost
Amortization of leased assets	Selling and administrative expenses		171
Interest on lease liabilities	Interest expense, net		27
Total lease cost		$	5,116

(a)	Includes immaterial amounts recorded to cost of goods sold.

(b)	Excludes short-term and variable lease costs, which are immaterial.

   As Reported    Adjustments    Pre-Topic
606
Adoption
Cash and cash equivalents
   $ 248,122    $ —      $ 248,122
Accounts receivable, net
   2,161,077    (111,728 )    2,049,349
Inventories
   174,099    —      174,099
Inventories not available for sale
   4,528    78,607    83,135
Other current assets
   122,397    35,618    158,015






Total current assets
   2,710,223    2,497    2,712,720
Property and equipment, net
   74,694    —      74,694
Goodwill
   130,841    —      130,841
Intangible assets, net
   93,300    —      93,300
Deferred income taxes
   14,936    —      14,936
Other assets
   68,736    (16,134 )    52,602






   $ 3,092,730    $ (13,637 )    $ 3,079,093






Accounts payable – trade
   $ 1,395,934    $ (55,105 )    $ 1,340,829
Accounts payable – inventory financing facility
   303,702    —      303,702
Accrued expenses and other current liabilities
   199,069    (14,191 )    184,878
Current portion of long-term debt
   16,924    —      16,924
Deferred revenue
   66,179    78,966    145,145



��



Total current liabilities
   1,981,808    9,670    1,991,478
Long-term debt
   144,888    —      144,888
Deferred income taxes
   588    —      588
Other liabilities
   58,955    (14,328 )    44,627






   2,186,239    (4,658 )    2,181,581






Stockholders’ equity:

Preferred stock
   —      —      —
Common stock
   355    —      355
Additionalpaid-in capital
   315,619    —      315,619
Retained earnings
   625,212    (8,916 )    616,296
Accumulated other comprehensive loss – foreign currency translation adjustments
   (34,695 )    (63 )    (34,758 )






Total stockholders’ equity
   906,491    (8,979 )    897,512






   $ 3,092,730    $ (13,637 )    $ 3,079,093

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

~~STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2018~~Future minimum lease payments under non-cancelable leases as of March 31, 2019 are as follows (in thousands):

   As Reported    Adjustments    Pre-Topic
606
Adoption
Net sales:

Products
   $ 1,619,774    $ 12,822    $ 1,632,596
Services
   217,146    (4,519 )    212,627






Total net sales
   1,836,920    8,303    1,845,223






Costs of goods sold:

Products
   1,488,921    11,433    1,500,354
Services
   83,622    (2,122 )    81,500






Total costs of goods sold
   1,572,543    9,311    1,581,854






Gross profit
   264,377    (1,008 )    263,369
Operating expenses:

Selling and administrative expenses
   189,464    171    189,635
Severance and restructuring expenses
   382    —      382
Acquisition-related expenses
   94    —      94






Earnings from operations
   74,437    (1,179 )    73,258
Non-operating expense, net
   4,981    —      4,981






Earnings before income taxes
   69,456    (1,179 )    68,277
Income tax expense
   17,977    (254 )    17,723






Net earnings
   $ 51,479    $ (925 )    $ 50,554






Net earnings per share:

Basic
   $ 1.45    $ (0.03 )    $ 1.42






Diluted
   $ 1.44    $ (0.03 )    $ 1.41






Shares used in per share calculations:

Basic
   35,483    —      35,483






Diluted
   35,815    —      35,815

	Operating leases			Finance leases			Total
Remainder of 2019	$	14,118		$	930		$	15,048
2020		14,758			1,150			15,908
2021		12,225			432			12,657
2022		9,466			—			9,466
2023		6,460			—			6,460
After 2023		20,913			—			20,913
Total lease payments		77,940			2,512			80,452
Less: Interest		(9,537	)		(124	)		(9,661	)
Present value of lease liabilities	$	68,403		$	2,388		$	70,791

Operating lease payments include $13.4 million related to options to extend lease terms that are reasonably certain of being exercised.

The following table provides information about the remaining lease terms and discount rates applied as of March 31, 2019:

	March 31, 2019
Weighted average remaining lease term (years)
Operating leases		6.58
Finance leases		2.19
Weighted average discount rate (%)
Operating leases		3.86
Finance leases		4.84

The following table provides other information related to leases for the three months ended March 31, 2019 (in thousands):

	Three months ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	4,457
Leased assets obtained in exchange for new finance lease liabilities		—
Leased assets obtained in exchange for new operating lease liabilities		1,768

Operating Leases pre-Topic 842 adoption:

We have non-cancelable operating leases with third parties, primarily for administrative and distribution center space and computer equipment. Our facilities leases generally provide for periodic rent increases and many contain escalation clauses and renewal options. We recognize rent expense on a straight-line basis over the lease term. Rental expense for these third-party operating leases was $20,114,000, $19,126,000 and $14,444,000 in 2018, 2017 and 2016, respectively, and is included in selling and administrative expenses in the accompanying consolidated statements of operations.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

~~STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30,~~Future minimum lease payments under non-cancelable operating leases (with initial or remaining lease terms in excess of one year) as of December 31, 2018 are as follows (in thousands):

Pre-Topic
606

   As Reported    Adjustments    Adoption
Net sales:

Products
   $ 3,201,929    $ 3,325    $ 3,205,254
Services
   397,894    (6,515 )    391,379






Total net sales
   3,599,823    (3,190 )    3,596,633






Costs of goods sold:

Products
   2,927,655    364    2,928,019
Services
   167,786    (1,606 )    166,180






Total costs of goods sold
   3,095,441    (1,242 )    3,094,199






Gross profit
   504,382    (1,948 )    502,434
Operating expenses:

Selling and administrative expenses
   377,644    249    377,893
Severance and restructuring expenses
   2,026    —      2,026
Acquisition-related expenses
   94    —      94






Earnings from operations
   124,618    (2,197 )    122,421
Non-operating expense, net
   10,900    —      10,900






Earnings before income taxes
   113,718    (2,197 )    111,521
Income tax expense
   29,494    (457 )    29,037






Net earnings
   $ 84,224    $ (1,740 )    $ 82,484






Net earnings per share:

Basic
   $ 2.36    $ (0.05 )    $ 2.31






Diluted
   $ 2.34    $ (0.05 )    $ 2.29






Shares used in per share calculations:

Basic
   35,698    —      35,698






Diluted
   36,039    —      36,039

~~STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2018~~

The adoption of Topic 606 had no effect on net cash provided by operating activities, net cash used in investing activities or net cash used in financing activities for the six months ended June 30, 2018. The adjustment to net earnings noted above in reconciling our reported results of operations for the six months ended June 30, 2018 under Topic 606 to~~pre-Topic~~ ~~606 adoption was fully offset by adjustments to the reported changes in asset and liability balances, resulting in no effect on operating cash flows.~~

~~Significant Accounting Policy~~

Revenue is measured based on the consideration specified in a contract with a client, and excludes any sales incentives and amounts collected on behalf of third parties. The Company recognizes revenue when it satisfies a performance obligation by transferring control of a product or service to a client.

Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a client, are excluded from revenue. This is consistent with our accounting treatment prior to the adoption of Topic 606, whereby we reported sales net of any sales-based taxes assessed by governmental authorities that are imposed on and concurrent with sales transactions.

Years Ending December 31,
2019	$	21,499
2020		15,580
2021		12,121
2022		9,150
2023		6,296
Thereafter		7,238
Total minimum lease payments	$	71,884

~~INSIGHT ENTERPRISES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

We record the freight we bill to our clients as net sales and the related freight costs we pay as costs of goods sold. This is consistent with our accounting treatment prior to the adoption of Topic 606.

~~Nature of Goods and Services~~

~~We sell hardware and software products on both a stand-alone basis without any services and as solutions bundled with services.~~

When we provide a combination of hardware and software products with the provision of services, we separately identify our performance obligations under our contract with the client as the distinct goods (hardware and/or software products) or services that will be provided. The total transaction price for an arrangement with multiple performance obligations is allocated at contract inception to each distinct performance obligation in proportion to its stand-alone selling price. The stand-alone selling price is the price at which we would sell a promised good or service separately to a client. Observable stand-alone prices are used when they are available. If not available, we estimate the price based on observable inputs, including direct labor hours and allocable costs.

~~Hardware Offerings~~

We recognize hardware product revenue at the point in time when a client takes control of the hardware, which typically occurs when title and risk of loss have passed to the client at its destination. Our selling terms and conditions were modified during the fourth quarter of 2017 to specify F.O.B. destination contractual terms such that control is transferred from the Company at the point in time when the product is received by the client. Prior to the adoption of Topic 606, because we either (i) had a general practice of covering client losses while products were in transit despite title and risk of loss contractually transferring at the point of shipment or (ii) had specifically stated F.O.B. destination contractual terms with the client, delivery was not deemed to have occurred until the point in time when the product was received by the client. The transaction price for hardware sales is adjusted for estimated product returns that we expect to occur under our return policy based upon historical return rates.

We leverage drop-shipment arrangements with many of our partners and suppliers to deliver products to our clients without having to physically hold the inventory at our warehouses, thereby increasing efficiency and reducing costs. We recognize revenue for drop-shipment arrangements on a gross basis as the principalAmounts in the ~~transaction when the product is received by the client because we control the product prior to transfer to the client. We also assume primary responsibility for fulfillment~~table above exclude approximately $1.6 million in the arrangement, we assume inventory risk if the product is returned by the client, we set the price of the product charged to the client and we work closely with our clients to determine their hardware and software specifications. This is consistent with our accounting treatment prior to the adoption of Topic 606.

~~Bill and Hold Transactions~~

~~We offer a service to our customers whereby clients may purchase product that we procure on their behalf and, at our clients’ direction, store the product~~2019 in our warehouse for a designated period of time, with the intention of deploying the product to the clients’ designated locations at a later date. These warehousing services are designed to help our clients with inventory management challenges associated with technology roll-outs, product that is moving to end of life, and/or clients needing integrated stock available for immediate deployment. In some circumstances, we may also perform lab integration services on a portion of the product prior to shipment to our clients for anon-cancellable rental income.

3.	Sales Recognition

~~INSIGHT ENTERPRISES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

~~separate fee. The client is invoiced and title transfers to the client upon receipt of the product at our warehouse. These product contracts arenon-cancelable~~ with customary credit terms beginning the date the product is received in our warehouse and the warranty periods begin on the date of invoice. Revenue is recognized for the sale of the product to the client upon receipt of the product at our warehouse.

The warehousing services and lab integration fees are considered separate performance obligations. Under previous accounting guidance, prior to the adoption of Topic 606, it was determined that these product sales transactions did not meet the revenue recognition criteria under GAAP. Therefore, we did not record product net sales, and the inventories were classified as inventories not available for sale on our consolidated balance sheet, until the product was delivered to the clients’ designated location. If clients remitted payment before we delivered the product to them, we recorded the payments received as deferred revenue on our consolidated balance sheet until such time as the product was delivered.

~~Software Offerings~~

We recognize revenue from software sales at the point in time when the client acquires the right to use or copy software under license and control transfers to the client. Revenue is recognized upon the commencement of the term of the software license agreement or when the renewal term begins, as applicable. This is a change from our accounting treatment prior to the adoption of Topic 606, whereby revenue from renewals of software licenses was recognized when the parties agreed to the renewal or extension, provided that all other revenue recognition criteria had been met.

Although the revenue recognition treatment for term software license renewals has changed as described above, a substantial portion of the software licenses we sell are perpetual software licenses and do not require renewal or extension after their initial purchase by the client. Such perpetual licenses are periodically subject to~~true-up,~~ ~~whereby additional perpetual licenses are sold under the client’spre-existing~~ ~~master agreement. Suchtrue-ups~~ ~~are generally sold in arrears, and clients are invoiced for the additional licenses they had already been utilizing. Since the client controlled these additional perpetual licenses prior to thetrue-up,~~ ~~software revenue related to the underlying additional licenses is recognized when we agree to thetrue-up~~ ~~with our client and the partner. This is consistent with our accounting treatment prior to the adoption of Topic 606.~~

~~Software Maintenance~~

Software maintenance agreements provide our clients with the right to obtain any software upgrades, bug fixes and help desk and other support services directly from the software publisher at no additional charge during the term of the software maintenance agreements. We act as the software publisher’s agent in selling these software maintenance agreements and do not assume any performance obligation to the client under the agreements. As a result, we are the agent in these transactions and these sales are recorded on a net sales recognition basis. Under net sales recognition, the cost of the software maintenance agreement is recorded as a reduction to sales, resulting in net sales equal to the gross profit on the transaction, and there are no costs of goods sold. Because we are acting as the software publisher’s agent, revenue is recognized when the parties agree to the initial purchase, renewal or extension as our agency services are then complete. This is consistent with our accounting treatment prior to the adoption of Topic 606. As discussed in Note 10, we report all fees earned from activities reported net within our services net sales category in our statements of operations.

~~INSIGHT ENTERPRISES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

~~Cloud /Software-as-a-Service~~ ~~Offerings~~

~~Cloud orsoftware-as-a-service~~ subscription products provide our clients with access to software products hosted in the public cloud without the client taking possession of the software. We act as the software publisher’s agent in selling these~~software-as-a~~ service subscription products and do not host the software products on our servers. We do not take control of the software products or assume any performance obligation to the clients related to the provisioning of the offerings in the cloud. As a result, these sales are recorded on a net sales recognition basis. This is consistent with our accounting treatment prior to the adoption of Topic 606. As discussed in Note 10, we report all fees earned from activities reported net within our services net sales category in our statements of operations.

~~Services Sales~~

~~We design, procure, deploy, implement and manage solutions that combine hardware, software and services to help businesses run smarter. Such services are provided by us or third-partysub-contract~~ vendors as part of bundled arrangements, or are provided separately on a stand-alone basis as technical, consulting or managed services engagements. If the services are provided as part of a bundled arrangement with hardware and software, the hardware, software and services are generally distinct performance obligations. In general, we recognize revenue from services engagements as we perform the underlying services and satisfy our performance obligations.

We recognize revenue for sales of services by measuring progress toward complete satisfaction of the related service performance obligation. Billings for such services that are made in advance of the related revenue recognized are recorded as a contract liability.

~~Specific revenue recognition practices for certain of our services offerings are described in further detail below.~~

~~Time and Materials Services Contracts.~~We recognize revenue for professional services engagements that are on a time and materials basis based upon hours incurred for the performance completed to date for which we have the right to consideration, even if such amounts have not yet been invoiced as of period end. This is consistent with our accounting treatment prior to the adoption of Topic 606, whereby we recognized revenue for professional services engagements that are on a time and materials basis based upon hours incurred as the services were performed and amounts were earned.

~~Fixed Fee Services Contracts.~~We recognize revenue on fixed fee professional services contracts using a proportional performance method of revenue recognition based on the ratio of direct labor and other allocated costs incurred to total estimated direct labor and other allocated costs. This is consistent with our accounting treatment prior to the adoption of Topic 606.

~~OneCall Support Services Contracts.~~When we sell certain hardware and/or software products to our clients, we also enter into service contracts with them. These contracts are support service agreements for the hardware and/or software products that were purchased. Under certain support services contracts, although we purchase third-party support contracts for maintenance on the specific hardware or software products we have sold, our internal support desk assists the client first by performing an initial technical triage to determine the source of the problem and whether we can direct the client on how to fix the problem. We refer to these services as “OneCall.” We act as the principal in the transaction because we perform the OneCall services over the term of the support service contract and we set the price of the service charged to the client. As a result, we recognize revenue from OneCall extended service contracts on a gross sales recognition basis ratably over the contract term of the stand ready obligation, generally one to three years.

~~INSIGHT ENTERPRISES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

On our balance sheet, a significant portion of our contract liabilities balance relates to OneCall support services agreements for which clients have paid or have been invoiced but for which we have not yet recognized the applicable services revenue. We also defer incremental direct costs to fulfill our service contracts that we prepay to third parties for direct support of our fulfillment of the service contract to our clients under our contract terms and amortize them into operations over the term of the contracts.

The recognition of revenue and related costs for our stand ready obligation under our OneCall service contracts on a straight-line basis over the term of the contract is consistent with our accounting treatment prior to the adoption of Topic 606.

~~Vendor Direct Support Services Contracts.~~When we do not provide OneCall services to the client on hardware and/or software products that were purchased, the client purchases a vendor direct support services contract through us. Under these contracts, our clients call the manufacturer/publisher or its designated service organization directly for both the initial technical triage and any~~follow-up~~ assistance. We act as the manufacturer/publisher’s agent in selling these support service contracts and do not assume any performance obligation to the client under the arrangements. As a result, these sales are recorded on a net sales recognition basis similar to software maintenance agreements, as discussed above. Because we are acting as the manufacturer/publisher’s agent, revenue is recognized when the parties agree to the purchase of the support services contract as our agency services are then complete. This is consistent with our accounting treatment prior to the adoption of Topic 606.

~~Third-party Provided Services.~~~~A majority of our third-partysub-contractor~~ services contracts are entered into in conjunction with other services contracts under which the services are performed by Insight teammates. We have concluded that we control all services under the contract and can direct the third-party~~sub-contractor~~ to provide the requested services. As such, we act as the principal in the transaction and record the services under a gross sales recognition basis, with the selling price being recorded in sales and our cost to the third-party service provider being recorded in costs of goods sold. For certain third-party service contracts in which we are not responsible for fulfillment of the services, we have concluded that we are an agent in the transaction and record revenue on a net sales recognition basis. This is consistent with our accounting treatment prior to the adoption of Topic 606.

~~INSIGHT ENTERPRISES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

~~Disaggregation of Revenue~~

In the following table, revenue is disaggregated by our reportable operating segments, which are primarily defined ~~bytheir~~by their related geographies, as well as by major product offering, by major client group and by recognition on either a gross basis as a principal in the arrangement, or on a net basis as an agent, for the three ~~and six~~ months ended ~~June 30,~~March 31, 2019 and 2018 (in thousands):

									Three Months Ended March 31, 2019
	Three Months Ended June 30, 2018								North America		EMEA		APAC		Consolidated
	North America		EMEA		APAC		Consolidated
Major Product Offering
Major Offerings
Hardware	$	898,144	$	171,337	$	9,317	$	1,078,798	$	748,337	$	171,525	$	6,518	$	926,380
Software		308,269		193,116		39,591		540,976		322,079		183,148		35,065		540,292
Services		163,037		41,827		12,282		217,146		172,025		35,502		11,267		218,794

	$	1,369,450	$	406,280	$	61,190	$	1,836,920
									$	1,242,441	$	390,175	$	52,850	$	1,685,466
Major Client Groups
Large Enterprise / Corporate	$	1,007,090	$	295,539	$	13,776	$	1,316,405	$	976,841	$	260,607	$	13,307	$	1,250,755
Public Sector		135,709		94,487		28,862		259,058		97,117		109,066		26,154		232,337
Small andMedium-Sized Businesses		226,651		16,254		18,552		261,457		168,483		20,502		13,389		202,374
									$	1,242,441	$	390,175	$	52,850	$	1,685,466
	$	1,369,450	$	406,280	$	61,190	$	1,836,920

Revenue Recognition based on acting as Principal or Agent in the Transaction
Gross revenue recognition (Principal)	$	1,304,208	$	378,079	$	56,460	$	1,738,747	$	1,182,078	$	367,165	$	47,866	$	1,597,109
Net revenue recognition (Agent)		65,242		28,201		4,730		98,173		60,363		23,010		4,984		88,357
									$	1,242,441	$	390,175	$	52,850	$	1,685,466
	$	1,369,450	$	406,280	$	61,190	$	1,836,920


	Six Months Ended June 30, 2018
	North America		EMEA		APAC		Consolidated
Major Product Offering
Hardware	$	1,771,485	$	358,347	$	16,477	$	2,146,309
Software		598,745		378,034		78,841		1,055,620
Services		306,618		70,314		20,962		397,894

	$	2,676,848	$	806,695	$	116,280	$	3,599,823

Major Client Groups
Large Enterprise / Corporate	$	1,986,984	$	561,460	$	26,810	$	2,575,254
Public Sector		247,313		211,101		58,793		517,207
Small andMedium-Sized Businesses		442,551		34,134		30,677		507,362

	$	2,676,848	$	806,695	$	116,280	$	3,599,823

Revenue Recognition based on acting as Principal or Agent in the Transaction
Gross revenue recognition (Principal)	$	2,563,697	$	761,156	$	109,380	$	3,434,233
Net revenue recognition (Agent)		113,151		45,539		6,900		165,590

	$	2,676,848	$	806,695	$	116,280	$	3,599,823

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

	Three Months Ended March 31, 2018
	North America		EMEA		APAC		Consolidated
Major Offerings
Hardware	$	873,341	$	187,010	$	7,160	$	1,067,511
Software		261,060		190,202		39,019		490,281
Services		143,979		29,922		10,801		184,702
	$	1,278,380	$	407,134	$	56,980	$	1,742,494
Major Client Groups
Large Enterprise / Corporate	$	952,810	$	272,640	$	12,966	$	1,238,416
Public Sector		110,504		116,614		31,376		258,494
Small and Medium-Sized Businesses		215,066		17,880		12,638		245,584
	$	1,278,380	$	407,134	$	56,980	$	1,742,494
Revenue Recognition based on acting as Principal or Agent in the Transaction
Gross revenue recognition (Principal)	$	1,230,412	$	388,337	$	51,825	$	1,670,574
Net revenue recognition (Agent)		47,968		18,797		5,155		71,920
	$	1,278,380	$	407,134	$	56,980	$	1,742,494

~~Contract Balances~~

The following table provides information about receivables, contract assets and contract liabilities as of ~~June 30, 2018~~March 31, 2019 and ~~January 1,~~December 31, 2018 (in thousands):

					March 31,		December 31,
	June 30, 2018		January 1, 2018		2019		2018
Current receivables, which are included in “Accounts receivable, net”	$	2,161,077	$	1,909,074	$	1,723,817	$	1,931,736
Non-current receivables, which are included in “Other assets”		27,703		32,227		142,792		38,157
Contract assets, which are included in “Other current assets”		959		595		1,207		892
Contract liabilities, which are included in “Deferred revenue” and “Other liabilities”		85,489		86,743		88,801		82,117

Significant changes in the contract assets and the contract liabilities balances during the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019 are as follows (in thousands):

   Increase (Decrease)
   Contract
Assets    Contract
Liabilities
Balances at January 1, 2018
   $ 595    $ 86,743
Reclassification of the beginning contract liabilities to revenue, as the result of performance obligations satisfied
   —      (44,644 )
Cash received in advance and not recognized as revenue
   —      43,865
Reclassification of the beginning contract assets to receivables, as the result of rights to consideration becoming unconditional
   (590 )    —
Contract assets recognized, net of reclassification to receivables
   954    —
Cumulativecatch-up adjustment arising from changes in estimates of transaction price
   —      (475 )




Balances at June 30, 2018
   $ 959    $ 85,489

	Increase (Decrease)
	Contract			Contract
	Assets			Liabilities
Balances at December 31, 2018	$	892		$	82,117
Reclassification of the beginning contract liabilities to revenue, as the result of performance obligations satisfied		—			(17,651	)
Cash received in advance and not recognized as revenue		—			24,335
Reclassification of the beginning contract assets to receivables, as the result of rights to consideration becoming unconditional		(117	)		—
Contract assets recognized, net of reclassification to receivables		432			—
Balances at March 31, 2019	$	1,207		$	88,801

~~Transaction price allocated to the remaining performance obligations~~

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

The following table includes estimated net sales related to performance obligations that are unsatisfied (or partially unsatisfied) as of ~~June 30, 2018~~March 31, 2019 that are expected to be recognized in the future (in thousands):

							Products		Services		Total
	Products		Services		Total
Remaining six months of 2018	$	6	$	66,087	$	66,093
2019		13		54,389		54,402
Remaining nine months of 2019							$	9	$	74,784	$	74,793
2020		6		23,201		23,207		6		33,293		33,299
2021		—		8,154		8,154				13,936		13,936
2022		—		3,715		3,715				5,191		5,191
2023		—		1,350		1,350
2024 and thereafter		—		138		138

2023 and thereafter										2,667		2,667
Total remaining performance obligations	$	25	$	157,034	$	157,059	$	15	$	129,871	$	129,886

~~Topic 606 allows for certain practical expedients~~

With the exception of remaining performance obligations associated with our OneCall Support Services contracts which ~~we have elected to apply. As a result, we do not disclose information about remaining~~are included in the table above regardless of original duration, remaining performance obligations that have original expected durations of one year or less are not included in the table above. Amounts not included in the table above have an average original expected duration of ~~eight~~nine months. Additionally, for our time and material services contracts, whereby we have the right to consideration from a client in an amount that corresponds directly with the value to the client of our performance completed to date, we recognized revenue in

~~INSIGHT ENTERPRISES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

the amount to which we have a right to invoice as of ~~June 30, 2018~~March 31, 2019 and do not disclose information about related remaining performance obligations in the table above. Our time and material contracts have an average expected duration of 1314 months.

The majority of our backlog historically has been and continues to be open cancelable purchase orders. We do not believe that backlog as of any particular date is predictive of future results, therefore we do not include performance obligations under open cancelable purchase orders, which do not qualify for revenue recognition, in ~~accordance with Topic 606 as of June 30, 2018, in~~ the table above.

~~Assets recognized for costs of obtaining a contract with a customer~~

We believe that the only significant incremental costs incurred to obtain contracts with our clients within the scope of Topic 606 are sales commissions. The majority of our contracts are completed within a~~one-year~~ performance period, and for contracts with a specified term of one year or less, we have exercised a practical expedient, which allows us to recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that we otherwise would have recognized is one year or less. Under Topic 606, we record sales commissions on contracts with performance periods that exceed one year as an asset and amortize the asset to expense over the related contract performance period. As of June 30, 2018, the related asset balance was $2,639,000, which we expect to recognize as expense over the next 36 months. Under previous accounting standards, we recognized sales commissions as earned and recorded such amounts within selling and administrative expenses in our statements of operations.

3. Net Earnings Per Share (“EPS”)

Basic EPS is computed by dividing net earnings available to common stockholders by the weighted average number of common shares outstanding during each period. Diluted EPS is computed on the basis of the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding restricted stock units (“RSUs”). A reconciliation of the denominators of the basic and diluted EPS calculations follows (in thousands, except per share data):


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
	2018		2017		2018		2017		2019		2018
Numerator:
Net earnings	$	51,479	$	40,255	$	84,224	$	54,103	$	39,327	$	33,003

Denominator:
Weighted average shares used to compute basic EPS		35,483		35,765		35,698		35,684		35,609		35,913
Dilutive potential common shares due to dilutive RSUs, net of tax effect		332		404		341		493		494		350

Weighted average shares used to compute diluted EPS		35,815		36,169		36,039		36,177		36,103		36,263

Net earnings per share:
Basic	$	1.45	$	1.13	$	2.36	$	1.52	$	1.10	$	0.92

Diluted	$	1.44	$	1.11	$	2.34	$	1.50	$	1.09	$	0.91

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

For the three ~~and six~~ months ended ~~June 30,~~March 31, 2019 and 2018, ~~13,000~~164,000 and ~~17,000,~~20,000, respectively, of our RSUs were not included in the diluted EPS calculations because their inclusion would have been anti-dilutive. These share-based awards could be dilutive in the future. ~~There were 12,000 and 54,000 anti-dilutive RSUs for the three and six months ended June 30, 2017, respectively.~~

5.	Debt, Inventory Financing Facility, Finance Leases and Other Financing Obligations

~~INSIGHT ENTERPRISES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

4. Debt ~~Inventory Financing Facility, Capital Leases and Other Financing Obligations~~

~~Debt~~

Our long-term debt consists of the following (in thousands):


	June 30, 2018			December 31, 2017			March 31, 2019			December 31, 2018
Senior revolving credit facility	$	—		$	117,500		$	—		$	—
Term Loan A (less unamortized debt issuance costs of $749 and $873, respectively)		158,939			165,377
Accounts receivable securitization financing facility		—			25,000			112,000			194,000
Capital leases and other financing obligations		2,873			5,291

Finance leases and other financing obligations								2,388			2,920
Total		161,812			313,168			114,388			196,920
Less: current portion of long-term debt		(16,924	)		(16,592	)		(1,161	)		(1,395	)

Long-term debt	$	144,888		$	296,576		$	113,227		$	195,525

Our senior revolving credit facility (“revolving facility”) has an aggregate U.S. dollar equivalent maximum borrowing amount of $350,000,000, including a maximum borrowing capacity that may be used for borrowing in certain foreign currencies of $50,000,000, and matures on June 23, 2021. In January 2017, we amended our revolving facility to expand the facility by $175,000,000 in the form of an incremental Term Loan A (“TLA”). The TLA requires amortization payments of 5%, 7.5%, 10%, 12.5% and 15% of the original principal balance in years one through five, respectively, to be paid quarterly through March 31, 2021, with the remaining balance of $107,187,500 due at maturity on June 23, 2021.

Our accounts receivable securitization financing facility (the “ABS facility”) ~~was amended on June 27, 2018 to, among other things, renew the borrowing program for a three-year term expiring June 23, 2021. The ABS facility~~ has a maximum aggregate borrowing availability of ~~$250,000,000.~~$250,000,000, and matures on June 23, 2021. While the ABS facility has a stated maximum amount, the actual availability under the ABS facility is limited by the quantity and quality of the underlying accounts receivable. As of ~~June 30, 2018,~~March 31, 2019, qualified receivables were sufficient to permit access to the full $250,000,000 facility amount, of which ~~no amounts were~~$112,000,000 was outstanding.

Our consolidated debt balance that can be outstanding at the end of any fiscal quarter under our revolving facility ~~our TLA~~ and our ABS facility is limited by certain financial covenants, particularly a maximum leverage ratio. The maximum leverage ratio is calculated as aggregate debt outstanding divided by the sum of our trailing twelve month net earnings (loss) plus (i) interest expense, excludingnon-cash imputed interest on our inventory financing facility, (ii) income tax expense (benefit), (iii) depreciation and amortization,(iv) non-cash stock-based compensation, (v) extraordinary or~~non-recurringnon-cash~~ non-recurring non-cash losses or expenses and (vi) certain cash restructuring and acquisition-related charges and synergies, not to exceed a specified cap (“adjusted earnings”). The maximum leverage ratio permitted under the facilities is currently ~~3.25~~3.0 times our trailing twelve-month adjusted earnings. A significant drop in our adjusted earnings would limit the amount of indebtedness that could be outstanding at the end of any fiscal quarter to a level that would be below our consolidated maximum facility amount. Based on our maximum leverage ratio as of ~~June 30, 2018,~~March 31, 2019, our aggregate debt balance that could have been outstanding under our revolving facility ~~our TLA~~ and our ABS facility was the full amount of the maximum borrowing capacity of ~~$759,688,000. We had no amounts outstanding under our revolving and ABS facilities and $159,688,000 was outstanding under our TLA at June 30, 2018.~~

$600,000,000.

~~INSIGHT ENTERPRISES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

Inventory Financing Facility

Our inventory financing facility ~~was amended on March 23, 2018 to increase the aggregate availability for vendor purchases under the facility from $325,000,000 to~~has a maximum borrowing capacity of $400,000,000, of which ~~$303,702,000~~$260,160,000 was outstanding at ~~June 30, 2018.~~March 31, 2019. The inventory financing facility matures on June 23, 2021. In conjunction with the increase in the aggregate availability under the facility, we no longer have the option to request additional increases in the aggregate amount available under the inventory financing facility without amending the facility. If balances are not paid within stated vendor terms, they will accrue interest at prime plus 1.25%. Amounts outstanding under this facility are classified separately as accounts payable – inventory financing facility in the accompanying consolidated balance sheets.

~~Capital~~13

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Finance Lease and Other Financing Obligations

Our ~~capital~~finance lease obligations totaled ~~$1,275,000~~$2,388,000 and ~~$2,802,000~~$2,920,000 as of ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, respectively.

In conjunction with our acquisition of Datalink effective January 6, 2017, we acquired certain obligations associated with Datalink’s financing of the equipment that it leased to its clients. These financing obligations totaled $1,598,000 and $2,489,000 as of June 30, 2018 and December 31, 2017, respectively.

The current and long-term portions of our ~~capital lease and other financing obligations~~finance leases are included in the current and long-term portions of long-term debt in the table above and in our consolidated balance sheets as of ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017.~~2018. Further, see Note 2 for additional information.

6.	Restricted Cash

~~5. Severance and Restructuring Activities~~

~~During the six months ended June 30, 2018, we recorded severance expense~~Amounts included in ~~each of our operating segments. The charges in all three operating segments primarily~~restricted cash represent those required to be set aside by a contractual agreement with a lessor related to ~~severance actions taken to realign~~ certain ~~roles and responsibilities.~~leased office space in foreign jurisdictions. The following table ~~details~~provides a reconciliation of cash, cash equivalents and restricted cash reported within the ~~activity related~~balance sheets that sum to ~~these resource actions~~the total of the same such amounts shown in the statements of cash flows for the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019 and ~~the outstanding obligations as of June 30,~~ 2018 (in thousands):

   North America    EMEA    APAC    Consolidated
Balances at December 31, 2017
   $ 1,631    $ 2,994    $ 15    $ 4,640
Severance costs, net of adjustments
   781    1,115    130    2,026
Cash payments
   (1,268 )    (2,779 )    (145 )    (4,192 )
Foreign currency translation adjustments
   (30 )    (16 )    —      (46 )








Balances at June 30, 2018
   $ 1,114    $ 1,314    $ —      $ 2,428

	March 31, 2019		December 31, 2018
Cash and cash equivalents	$	124,831	$	142,655
Restricted cash included in other current assets		8		8
Restricted cash included in other non-current assets		1,627		1,630
Total cash, cash equivalents and restricted cash shown in the statement of cash flows	$	126,466	$	144,293

The remaining outstanding obligations are expected to be paid during the next 12 months and, therefore, are included in accrued expenses and other current liabilities in the accompanying consolidated balance sheets.

	March 31, 2018		December 31, 2017
Cash and cash equivalents	$	100,237	$	105,831
Restricted cash included in other current assets		10		46
Restricted cash included in other non-current assets		1,604		1,568
Total cash, cash equivalents and restricted cash shown in the statement of cash flows	$	101,851	$	107,445

~~INSIGHT ENTERPRISES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

6. 7.Stock-Based Compensation

We recorded the followingpre-tax amounts in selling and administrative expenses for stock-based compensation, by operating segment, in the accompanying consolidated financial statements (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
	2018		2017		2018		2017		2019		2018
North America	$	2,945	$	2,589	$	5,335	$	5,127	$	3,123	$	2,390
EMEA		790		691		1,480		1,436		870		690
APAC		128		57		232		186		122		104

Total Consolidated	$	3,863	$	3,337	$	7,047	$	6,749	$	4,115	$	3,184

As of ~~June 30, 2018,~~March 31, 2019, total compensation cost related to nonvested RSUs not yet recognized is ~~$26,352,000,~~$36,742,000, which is expected to be recognized over the next ~~1.38~~1.84 years on a weighted-average basis.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

The following table summarizes our RSU activity during the ~~six~~three months ended ~~June 30, 2018:~~March 31, 2019:

									Number			Weighted Average Grant Date Fair Value		Fair Value
	Number			Weighted Average Grant Date Fair Value		Fair Value
Nonvested at January 1, 2018		892,113		$	32.86
Nonvested at January 1, 2019										1,020,930		$	36.10
Granted^(a)		405,022			35.91					326,868			57.52
Vested, including shares withheld to cover taxes		(353,764	)		29.89	$	12,794,661	^(b)		(387,406	)		33.90	$	13,133,063	��	^(b)

Forfeited		(33,439	)		33.60					(7,888	)		40.94

Nonvested at June 30, 2018^(a)		909,932			35.34	$	44,522,973	^(c)

Nonvested at March 31, 2019^(a)										952,504			44.30	$	52,444,870		^(c)

^(a)

Includes ~~113,993~~88,509 RSUs subject to remaining performance conditions. The number of RSUs subject to performance conditions are based on the Company achieving 97% of its ~~2018~~2019 targeted financial results. The number of RSUs ultimately awarded under the performance-based RSUs varies based on actual achieved financial results for ~~2018.~~2019.

^(b)(^b⁾

The aggregate fair value of vested RSUs represents the totalpre-tax fair value, based on the closing stock price on the day of vesting, which would have been received by holders of RSUs had all such holders sold their underlying shares on that date.

^(c)

⁽^c⁾

The aggregate fair value of the nonvested RSUs and the RSUs expected to vest represents the totalpre-tax fair value, based on our closing stock price of ~~$48.93~~$55.06 as of ~~June~~March 29, ~~2018~~2019 (the last trading day of the quarter), which would have been received by holders of RSUs had all such holders sold their underlying shares on that date.

8.	7. Income Taxes

Our effective tax rate for ~~both~~ the three ~~and six~~ months ended ~~June 30,~~March 31, 2019 and 2018 was 23.5% and 25.9%., respectively. For the three ~~and six~~ months ended ~~June 30,~~March 31, 2019, our effective tax rate was higher than the United States federal statutory rate of 21.0% due primarily to state income taxes, net of federal benefit, and higher taxes on earnings in foreign jurisdictions partially offset by tax benefits on the settlement of employee share-based awards and the recognition of tax benefits related to research and development activities. For the three months ended March 31, 2018, our effective tax rate was higher than the United States federal statutory rate of 21.0% due primarily to state income taxes net of federal benefit.

Our effective tax rate for the three and six months ended June 30, 2017 was 37.7% and 35.1%, respectively. For the three months ended June 30, 2017, our effective tax rate was higher than the United States federal statutory rate of 35.0% due primarily to state income taxes, net of federal benefit. Additionally, the effect of lower taxes on earnings in foreign jurisdictions was offset partially by losses in certain foreign jurisdictions, resulting in an increase in the valuation allowance of deferred tax assets related to these foreign operating losses. For the six months ended June 30, 2017,

~~INSIGHT ENTERPRISES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

our effective tax rate approximated the United States federal statutory rate of 35.0% due primarily to increases in the rate caused by state income taxes, net of federal benefit, offset by the decreases in the rate cause by the recognition of $2,189,000 of tax benefits on the settlement of employee share-based awards during the first half of 2017 in accordance with a new accounting standard, which was adopted effective January 1, 2017. Additionally, the effect of lower taxes on earnings in foreign jurisdictions was offset partially by losses in certain foreign jurisdictions, resulting in an increase in the valuation allowance for deferred tax assets related to these foreign operating losses.

In December 2017, U.S. federal tax reform was enacted as part of the U.S. Tax Cuts and Jobs Act. Although we recorded a tax charge in 2017 in connection with the enactment of the U.S. Tax Cuts and Jobs Act, we have not completed our accounting related to all of its provisions. U.S. income taxes attributable to the remeasurement of U.S. deferred income taxes, the mandatory deemed repatriation provision and the state tax effects of these items are provisional amounts. For the quarter ended June 30, 2018, we have not made any changes to these provisional estimates, and we are continuing to analyze and model the impacts of the U.S. federal tax reform and will record said impacts as they become more certain.

As of ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, we had approximately ~~$4,004,000~~$7,423,000 and ~~$4,273,000,~~$6,849,000, respectively, of unrecognized tax benefits. Of these amounts, approximately ~~$307,000~~$373,000 and ~~$287,000,~~$313,000, respectively, related to accrued interest. In the future, if recognized, the liability associated with uncertain tax positions would affect our effective tax rate. We do not believe there will be any changes over the next 12 months that would have a material effect on our effective tax rate.

Several of our subsidiaries are currently under audit for tax years 2012 through ~~2015.~~2017. Although the timing of the resolutions and/or closures of audits is highly uncertain, it is reasonably possible that the examination phase of these audits may be concluded within the next 12 months, which could ~~significantly~~ increase or decrease the balance of our gross unrecognized tax benefits. However, based on the status of the various examinations in multiple jurisdictions, an estimate of the range of reasonably possible outcomes cannot be made at this time, but the estimated effect on our income tax expense and net earnings is not expected to be significant.

~~8. Share Repurchase Program~~15

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

9.	Share Repurchase Program

On February 13, 2018, our Board of Directors authorized the repurchase of up to $50,000,000 of our common stock. Our share repurchases will be made on the open market, subject to Rule10b-18 or in privately negotiated transactions, through block trades, through10b5-1 plans or otherwise, at management’s discretion. The amount of shares purchased and the timing of the purchases will be based on market conditions, working capital requirements, general business conditions and other factors. We intend to retire the repurchased shares.

During the ~~six~~three months ended ~~June 30,~~March 31, 2019, we did not repurchase any shares of our common stock. During the comparative three months ended March 31, 2018, we repurchased ~~641,211~~221,256 shares of our common stock on the open market at a total cost of approximately ~~$22,069,000~~$7,679,000 (an average price of ~~$34.42~~$34.71 per share). All shares repurchased were retired. ~~During the comparative six months ended June 30, 2017, we did not repurchase any shares of our common stock.~~

10.	Commitments and Contingencies

~~9. Commitments and Contingencies~~

Contractual

In the ordinary course of business, we issue performance bonds to secure our performance under certain contracts or state tax requirements. As of ~~June 30, 2018,~~March 31, 2019, we had approximately ~~$2,075,000~~$3,939,000 of performance bonds outstanding. These bonds are issued on our behalf by a surety company on an unsecured basis; however, if the surety company is ever required to pay out under the bonds, we have contractually agreed to reimburse the surety company.

~~INSIGHT ENTERPRISES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

Management believes that payments, if any, related to these performance bonds are not probable at ~~June 30, 2018.~~March 31, 2019. Accordingly, we have not accrued any liabilities related to such performance bonds in our consolidated financial statements.

Employment Contracts and Severance Plans

We have employment contracts with, and severance plans covering, certain officers and management teammates under which severance payments would become payable in the event of specified terminations without cause or terminations under certain circumstances after a change in control. In addition, vesting of outstanding nonvested RSUs would accelerate following a change in control. If severance payments under the current employment agreements or plan payments were to become payable, the severance payments would generally range from three to twenty-four months of salary.

Indemnifications

From time to time, in the ordinary course of business, we enter into contractual arrangements under which we agree to indemnify either our clients or third-party service providers from certain losses incurred relating to services performed on our behalf or for losses arising from defined events, which may include litigation or claims relating to past performance. These arrangements include, but are not limited to, the indemnification of our clients for certain claims arising out of our performance under our sales contracts, the indemnification of our landlords for certain claims arising from our use of leased facilities and the indemnification of the lenders that provide our credit facilities for certain claims arising from their extension of credit to us. Such indemnification obligations may not be subject to maximum loss clauses.

Management believes that payments, if any, related to these indemnifications are not probable at ~~June 30, 2018.~~March 31, 2019. Accordingly, we have not accrued any liabilities related to such indemnifications in our consolidated financial statements.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

We have entered into separate indemnification agreements with certain of our executive officers and with each of our directors. These agreements require us, among other requirements, to indemnify such officers and directors against expenses (including attorneys’ fees), judgments and settlements incurred by such individual in connection with any action arising out of such individual’s status or service as our executive officer or director (subject to exceptions such as where the individual failed to act in good faith or in a manner the individual reasonably believed to be in, or not opposed to, the best interests of the Company) and to advance expenses incurred by such individual with respect to which such individual may be entitled to indemnification by us. There are no pending legal proceedings that involve the indemnification of any of the Company’s directors or officers.

Contingencies Related to Third-Party Review

From time to time, we are subject to potential claims and assessments from third parties. We are also subject to various governmental, client and partner audits. We continually assess whether or not such claims have merit and warrant accrual. Where appropriate, we accrue estimates of anticipated liabilities in the consolidated financial statements. Such estimates are subject to change and may affect our results of operations and our cash flows.

~~INSIGHT ENTERPRISES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

Legal Proceedings

From time to time, we are party to various legal proceedings arising in the ordinary course of business, including preference payment claims asserted in client bankruptcy proceedings, indemnification claims, claims of alleged infringement of patents, trademarks, copyrights and other intellectual property rights, claims of allegednon-compliance with contract provisions and claims related to alleged violations of laws and regulations. We regularly evaluate the status of the legal proceedings in which we are involved to assess whether a loss is probable or there is a reasonable possibility that a loss, or an additional loss, may have been incurred and determine if accruals are appropriate. If accruals are not appropriate, we further evaluate each legal proceeding to assess whether an estimate of possible loss or range of possible loss can be made for disclosure. Although litigation is inherently unpredictable, we believe that we have adequate provisions for any probable and estimable losses. It is possible, nevertheless, that our consolidated financial position, results of operations or liquidity could be materially and adversely affected in any particular period by the resolution of a legal proceeding. Legal expenses related to defense, negotiations, settlements, rulings and advice of outside legal counsel are expensed as incurred.

The Company is not involved in any pending or threatened legal proceedings that it believes would reasonably be expected to have a material adverse effect on its business, financial condition or results of operations.

~~10.~~

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

11.Segment Information

We operate in three reportable geographic operating segments: North America; EMEA; and APAC. Our offerings in North America and certain countries in EMEA and APAC include IT hardware, software and services. Our offerings in the remainder of our EMEA and APAC segments are largely software and certain software-related services.

During the year ended December 31, 2017, subsequent to our acquisition of Datalink, our consolidated net sales from the provision of services approximated 10%. As such, beginning with our results of operations for the year ended December 31, 2017, we began reporting net sales from the provision of services and the related costs of goods sold separately from net sales of products and the related costs of goods sold on the face of our consolidated statement of operations. We continued this presentation in the three and six months ended June 30, 2018, and expect to continue this presentation in future periods. For comparability purposes, net sales and costs of goods sold for the three and six months ended June 30, 2017 have been expanded to conform to the current year presentation. These changes in presentation had no effect on previously reported total net sales, total costs of goods sold or gross profit amounts.

In conjunction with these changes in presentation, because fees earned from activities reported net are considered services revenues, we reclassified certain revenue streams for which we act as the agent in the transaction to net sales from services. Previously, we included these net revenue streams within our software and, to a lesser extent, hardware sales mix categories based on the type of product being sold (e.g., fees earned for the sale of software maintenance and certain software licenses were included in software sales and fees earned for the sale of certain third-party provided training and warranty services were included in hardware sales when we historically disclosed and analyzed our sales mix). For comparability purposes, our sales mix among our hardware, software and services categories for the three and six months ended June 30, 2017 have been reclassified to conform to the current year presentation. These reclassifications had no effect on previously reported total net sales amounts. The following table summarizes net sales by offering for North America, EMEA and APAC including the effect of the

~~INSIGHT ENTERPRISES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

reclassifications on the previously reported net sales by sales mix amounts for the three ~~and six~~ months ended ~~June 30, 2017~~March 31, 2019 and 2018 (in thousands):

   North America
Three Months Ended
June 30,    EMEA
Three Months Ended
June 30,    APAC
Three Months Ended
June 30,
   2018    2017    2018    2017    2018    2017
Sales Mix       (As Reclassified)       (As Reclassified)       (As Reclassified)
Hardware
   $ 898,144    $ 803,389    $ 171,337    $ 123,992    $ 9,317    $ 6,916
Software
   308,269    341,643    193,116    190,116    39,591    39,409
Services
   163,037    136,280    41,827    31,952    12,282    10,335












   $ 1,369,450    $ 1,281,312    $ 406,280    $ 346,060    $ 61,190    $ 56,660

   North America
Six Months Ended
June 30,    EMEA
Six Months Ended June 30,    APAC
Six Months Ended June 30,
   2018    2017    2018    2017    2018    2017
Sales Mix       (As Reclassified)       (As Reclassified)       (As Reclassified)
Hardware
   $ 1,771,485    $ 1,514,253    $ 358,347    $ 262,869    $ 16,477    $ 10,996
Software
   598,745    615,626    378,034    359,434    78,841    64,256
Services
   306,618    262,385    70,314    54,112    20,962    17,644












   $ 2,676,848    $ 2,392,264    $ 806,695    $ 676,415    $ 116,280    $ 92,896

Fees earned from activities reported on a net basis in North America, EMEA and APAC, totaling $32,695,000, $19,230,000 and $4,855,000, respectively, in the three months ended June 30, 2017, were reclassified from our software or hardware product categories to our services category to conform to the current year presentation. For the six months ended June 30, 2017, fees earned from activities reported on a net basis in North America, EMEA and APAC, totaling $54,676,000, $30,106,000 and $7,027,000, respectively, were reclassified from our software or hardware product categories to our services category to conform to the current year presentation.

	North America				EMEA				APAC
	Three Months Ended March 31,				Three Months Ended March 31,				Three Months Ended March 31,
Sales Mix	2019		2018		2019		2018		2019		2018

Hardware	$	748,337	$	873,341	$	171,525	$	187,010	$	6,518	$	7,160
Software		322,079		261,060		183,148		190,202		35,065		39,019
Services		172,025		143,979		35,502		29,922		11,267		10,801
	$	1,242,441	$	1,278,380	$	390,175	$	407,134	$	52,850	$	56,980

All significant intercompany transactions are eliminated upon consolidation, and there are no differences between the accounting policies used to measure profit and loss for our segments or on a consolidated basis. Net sales are defined as net sales to external clients. None of our clients exceeded ten percent of consolidated net sales for the three ~~or six~~ months ended ~~June 30, 2018~~March 31, 2019 or ~~2017.~~2018.

A portion of our operating segments’ selling and administrative expenses arise from shared services and infrastructure that we have historically provided to them in order to realize economies of scale and to use resources efficiently. These expenses, collectively identified as corporate charges, include senior management expenses, internal audit, legal, tax, insurance services, treasury and other corporate infrastructure expenses. Charges are allocated to our operating segments, and the allocations have been determined on a basis that we considered to be a reasonable reflection of the utilization of services provided to or benefits received by the operating segments.

~~INSIGHT ENTERPRISES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

The following tables present our results of operations by reportable operating segment for the periods indicated (in thousands):


	Three Months Ended June 30, 2018								Three Months Ended March 31, 2019
	North America		EMEA		APAC		Consolidated		North America		EMEA			APAC		Consolidated
Net sales:
Products	$	1,206,413	$	364,453	$	48,908	$	1,619,774	$	1,070,416	$	354,673		$	41,583	$	1,466,672
Services		163,037		41,827		12,282		217,146		172,025		35,502			11,267		218,794

Total net sales		1,369,450		406,280		61,190		1,836,920		1,242,441		390,175			52,850		1,685,466

Costs of goods sold:
Products		1,105,959		338,142		44,820		1,488,921		974,701		324,038			38,569		1,337,308
Services		72,974		6,174		4,474		83,622		85,133		9,154			5,399		99,686

Total costs of goods sold		1,178,933		344,316		49,294		1,572,543		1,059,834		333,192			43,968		1,436,994

Gross profit		190,517		61,964		11,896		264,377		182,607		56,983			8,882		248,472
Operating expenses:
Selling and administrative expenses		135,206		46,894		7,364		189,464		136,950		47,145			6,968		191,063
Severance and restructuring expenses		338		41		3		382		331		(85	)		124		370
Acquisition-related expenses		94		—		—		94

Earnings from operations	$	54,879	$	15,029	$	4,529	$	74,437	$	45,326	$	9,923		$	1,790	$	57,039


	Three Months Ended June 30, 2017
	North America		EMEA		APAC		Consolidated
Net sales:
Products	$	1,145,031	$	314,108	$	46,325	$	1,505,464
Services		136,281		31,952		10,335		178,568

Total net sales		1,281,312		346,060		56,660		1,684,032

Costs of goods sold:
Products		1,041,842		287,246		42,927		1,372,015
Services		56,684		3,081		873		60,638

Total costs of goods sold		1,098,526		290,327		43,800		1,432,653

Gross profit		182,786		55,733		12,860		251,379
Operating expenses:
Selling and administrative expenses		131,560		41,772		7,420		180,752
Severance and restructuring expenses		543		479		—		1,022
Acquisition-related expenses		276		—		—		276

Earnings (loss) from operations	$	50,407	$	13,482	$	5,440	$	69,329


	Six Months Ended June 30, 2018
	North America		EMEA		APAC		Consolidated
Net sales:
Products	$	2,370,230	$	736,381	$	95,318	$	3,201,929
Services		306,618		70,314		20,962		397,894

Total net sales		2,676,848		806,695		116,280		3,599,823

Costs of goods sold:
Products		2,163,948		676,049		87,658		2,927,655
Services		147,012		12,890		7,884		167,786

Total costs of goods sold		2,310,960		688,939		95,542		3,095,441

Gross profit		365,888		117,756		20,738		504,382
Operating expenses:
Selling and administrative expenses		267,846		95,177		14,621		377,644
Severance and restructuring expenses		781		1,115		130		2,026
Acquisition-related expenses		94		—		—		94

Earnings from operations	$	97,167	$	21,464	$	5,987	$	124,618

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

   Six Months Ended June 30, 2017
   North America    EMEA    APAC    Consolidated
Net sales:

Products
   $ 2,129,878    $ 622,303    $ 75,252    $ 2,827,433
Services
   262,386    54,112    17,644    334,142








Total net sales
   2,392,264    676,415    92,896    3,161,575








Costs of goods sold:

Products
   1,933,429    569,755    69,888    2,573,072
Services
   117,748    8,381    2,768    128,897








Total costs of goods sold
   2,051,177    578,136    72,656    2,701,969








Gross profit
   341,087    98,279    20,240    459,606
Operating expenses:

Selling and administrative expenses
   262,570    81,915    13,899    358,384
Severance and restructuring expenses
   1,647    4,009    61    5,717
Acquisition-related expenses
   3,223    —      —      3,223








Earnings (loss) from operations
   $ 73,647    $ 12,355    $ 6,280    $ 92,282

	Three Months Ended March 31, 2018
	North America		EMEA		APAC		Consolidated
Net sales:
Products	$	1,134,401	$	377,212	$	46,179	$	1,557,792
Services		143,979		29,922		10,801		184,702
Total net sales		1,278,380		407,134		56,980		1,742,494
Costs of goods sold:
Products		1,028,970		343,019		42,997		1,414,986
Services		74,039		8,065		5,141		87,245
Total costs of goods sold		1,103,009		351,084		48,138		1,502,231
Gross profit		175,371		56,050		8,842		240,263
Operating expenses:
Selling and administrative expenses		132,640		48,283		7,257		188,180
Severance and restructuring expenses		443		1,074		127		1,644
Earnings from operations	$	42,288	$	6,693	$	1,458	$	50,439

The following is a summary of our total assets by reportable operating segment (in thousands):


	June 30, 2018			December 31, 2017			March 31, 2019			December 31, 2018
North America	$	2,662,062		$	2,337,573		$	2,640,942		$	2,660,886
EMEA		753,387			530,242			614,556			611,338
APAC		177,278			101,169			114,156			98,959
Corporate assets and intercompany eliminations, net		(499,997	)		(283,333	)		(613,187	)		(595,236	)

Total assets	$	3,092,730		$	2,685,651		$	2,756,467		$	2,775,947

We recorded the followingpre-tax amounts, by reportable operating segment, for depreciation and amortization in the accompanying consolidated financial statements (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
	2018		2017		2018		2017		2019		2018
Depreciation and amortization of property and equipment:
North America	$	4,158	$	4,551	$	8,456	$	10,104	$	3,957	$	4,298
EMEA		998		1,225		2,001		2,375		955		1,003
APAC		123		123		255		250		132		132
										5,044		5,433
		5,279		5,899		10,712		12,729

Amortization of intangible assets:
North America		3,361		4,012		6,721		8,024		3,636		3,360
EMEA		71		—		145		12		69		74
APAC		171		198		348		397		118		177
										3,823		3,611
		3,603		4,210		7,214		8,433

Total	$	8,882	$	10,109	$	17,926	$	21,162	$	8,867	$	9,044

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

~~11. Subsequent Event~~

12.	Acquisition

Effective August 1, 2018, we acquired 100 percent of the issued and outstanding shares of Cardinal, ~~Solutions Group, Inc. (“Cardinal”),~~ a digital solutions provider based in Cincinnati, Ohio, with offices across the Midwest and Southeast United States, for a cash purchase price, net of cash acquired, of approximately ~~$79,000,000, subject to a~~$78,400,000, including final working capital ~~adjustment.~~and tax gross up adjustments. Cardinal provides technology solutions to digitally transform organizations through their expertise in mobile applications development, Internet of Things and cloud enabled business intelligence. We believe that this acquisition strengthens our services capabilities and will bring value to our clients within our digital innovation services solution offering.

~~We are in the process of determining the~~The fair value of net assets acquired was approximately $42,360,000, including $27,540,000 of identifiable intangible assets, ~~which~~consisting primarily of customer relationships that will be amortized using the straight line method over the estimated economic life of ten years. The preliminary purchase price was allocated using the information currently available. We finalized the fair value assumptions for identifiable intangible assets acquired in the fourth quarter of 2018. Goodwill acquired approximated $36,040,000 which was recorded in our North America operating segment. The goodwill is tax deductible. The working capital adjustment in the amount of $762,000 was finalized in the fourth quarter of 2018 and paid in January 2019. Additionally, we finalized the purchase price allocation when the tax gross up adjustment of $2,600,000 was agreed upon in April 2019. This resulted in a reduction of the previously recorded purchase price of $400,000.

We ~~will consolidate~~consolidated the results of operations for Cardinal within our North America operating segment beginning on August 1, 2018, the effective date of the acquisition. ~~We do not believe that our~~Our historical results would not have been materially affected by the acquisition of ~~Cardinal.~~

Cardinal and, accordingly, we have not presented pro forma information as if the acquisition had been completed at the beginning of each period presented in our statement of operations.

INSIGHT ENTERPRISES, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with the consolidated financial statements and the related notes that appear elsewhere in this Quarterly Report on Form10-Q. We refer to our customers as “clients,” our suppliers as “partners” and our employees as “teammates.”

Quarterly Overview

Today, every business is a technology business. We empower organizations of all sizes with Intelligent Technology Solutions^TM and services to maximize the business value of IT in North America; Europe, the Middle East and Africa (“EMEA”); and Asia-Pacific (“APAC”) ~~with Insight Intelligent Technology Solutions~~^TM ~~and services to maximize the business value of IT.~~. As a Fortune500-ranked global provider of digital innovation, cloud/data center transformation, connected workforce, and supply chain optimization solutions, ~~and services,~~ we help clients innovate and optimize their operations to run smarter. Our offerings in North America and certain countries in EMEA and APAC include hardware, software and services. Our offerings in the remainder of our EMEA and APAC segments ~~consist of~~are largely software and certain software-related services.

~~Consolidated net sales of $1.84 billion in~~

On a consolidated basis, for the three months ended ~~June 30, 2018 increased 9%~~March 31, 2019:

Net sales of $1.69 billion decreased 3% compared to the three months ended ~~June 30, 2017, reflecting strong~~March 31, 2018. This change reflects a decrease in hardware net sales to large enterprise clients offset by growth in ~~the hardware category due to the ongoing device refresh cycle as well as a 22% increase in~~our software and services ~~sales year over year.~~net sales. Excluding the effects of fluctuating foreign currency exchange ~~rates, consolidated~~rate net sales ~~increased 7% in the second quarter of 2018~~decreased 1% compared to the ~~second~~first quarter of ~~2017.~~2018.

~~Consolidated gross~~Gross profit of ~~$264.4~~$248.5 million ~~in the three months ended June 30, 2018~~ increased 5%3% compared to the three months ended ~~June 30, 2017. Excluding the effects of fluctuating foreign currency exchange rates, consolidated gross profit increased 3% in the three months ended June 30,~~March 31, 2018, compared to the three months ended June 30, 2017. Gross margin declined approximately 50 basis points year to year to 14.4%, reflecting a higher mix of sales to large enterprise and public sector clients, partially offset by an increase in gross profit from services net sales, including professional services and higher agency fees earned on enterprise agreements.

~~Consolidated selling and administrative expenses for the second quarter of 2018 increased $8.7 million, or 5%~~up 6% year over year ~~(up 3%~~ excluding the effects of fluctuating foreign currency exchange ~~rates). Our consolidated results~~rates.

Gross margin improved approximately 90 basis points to 14.7% of ~~operations for~~net sales in the ~~second quarter of 2018 also include severance expense,~~three months ended March 31, 2019. This increase reflects a change in sales mix towards higher margin net ~~of adjustments, totaling $382,000~~sales categories, including Insight delivered services and cloud solutions compared to ~~$1.0 million during~~ the ~~second quarter of 2017, as well as, $94,000~~same period in ~~transaction expenses related to~~ the ~~Cardinal acquisition compared to $276,000 in transaction expenses related to the Datalink acquisition during the second quarter of 2017.~~prior year.

~~Growth in net sales and gross profit, combined with effective cost control, led to a 7%~~Earnings from operations increased 13% year over year ~~improvement in consolidated earnings from operations from $69.3~~to $57.0 million in the ~~second~~first quarter of ~~2017~~2019 compared to ~~$74.4~~$50.4 million in the ~~second~~first quarter of ~~2018, with each of our operating segments contributing positively to our net sales results.~~2018. Excluding the effects of fluctuating foreign currency exchange rates, consolidated earnings from operations increased 6%14% year over year. ~~On a consolidated basis, we reported~~

Net earnings and diluted earnings per share were $39.3 million and $1.09, respectively, for the first quarter of 2019. This compares to net earnings of ~~$51.5~~$33.0 million and diluted earnings per share of ~~$1.44~~$0.91 for the ~~second~~first quarter of 2018, which includes a benefit from the lower tax rate due to the 2017 U.S. federal tax reform. This compares to net earnings of $40.3 million and diluted earnings per share of $1.11 for the second quarter of 2017.2018.

INSIGHT ENTERPRISES, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (continued)

Throughout the “Quarterly Overview” and “Results of Operations” sections of this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” we refer to changes in net sales, gross profit, selling and administrative expenses and earnings from operations on a consolidated basis and in North America, EMEA and APAC excluding the effects of fluctuating foreign currency exchange rates. In computing the changes in amounts and percentages, we compare the current period amount as translated into U.S. dollars under the applicable accounting standards to the prior period amount in local currency translated into U.S. dollars utilizing the weighted average translation rate for the current period.

Details about segment results of operations can be found in Note 1011 to the Consolidated Financial Statements in Part I, Item 1 of this report.

Our discussion and analysis of financial condition and results of operations is intended to assist in the understanding of our consolidated financial statements, including the changes in certain key items in those consolidated financial statements from period to period and the primary factors that contributed to those changes, as well as how certain critical accounting estimates affect our consolidated financial statements.

Critical Accounting Estimates

Our consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”). For a summary of significant accounting policies, see Note 1 to the Consolidated Financial Statements in Part II, Item 8 of our Annual Report on Form10-K for the year ended December 31, ~~2017.~~2018. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, net sales and expenses. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results, however, may differ from estimates we have made. Members of our senior management have discussed the critical accounting estimates and related disclosures with the Audit Committee of our Board of Directors.

There have been no changes to the items disclosed as critical accounting estimates in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report onForm 10-K for the year ended December 31, ~~2017, other than the adoption of ASUNo. 2014-09,~~ ~~“Revenue from Contracts with Customers,” effective January 1, 2018, as discussed in Note 2 to the Consolidated Financial Statements in Part I, Item 1 of this report.~~

2018.

INSIGHT ENTERPRISES, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (continued)

Results of Operations

The following table sets forth certain financial data as a percentage of net sales for the three ~~and six~~ months ended ~~June 30, 2018~~March 31, 2019 and ~~2017:~~2018:


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
	2018			2017			2018			2017			2019			2018
Net sales		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Costs of goods sold		85.6			85.1			86.0			85.5			85.3			86.2

Gross profit		14.4			14.9			14.0			14.5			14.7			13.8
Selling and administrative expenses		10.2			10.7			10.4			11.3			11.3			10.8
Severance and restructuring and acquisition-related expenses		0.1			0.1			0.1			0.3

Severance and restructuring expenses														—			0.1
Earnings from operations		4.1			4.1			3.5			2.9			3.4			2.9
Non-operating expense, net		0.3			0.3			0.4			0.3			0.3			0.3

Earnings before income taxes		3.8			3.8			3.1			2.6			3.1			2.6
Income tax expense		1.0			1.4			0.8			0.9			0.8			0.7

Net earnings		2.8	%		2.4	%		2.3	%		1.7	%		2.3	%		1.9	%

We experience some seasonal trends in our sales of IT hardware, software and services. Software sales are typically seasonally higher in our second quarter. Business clients, particularly larger enterprise businesses in the United States, tend to spend more in our fourth quarter and less in our first quarter. Sales to the federal government in the United States are often stronger in our third quarter, while sales in the state and local government and education markets are stronger in our second quarter. Sales to public sector clients in the United Kingdom are often stronger in our first quarter. These trends create overall seasonality in our consolidated results such that net sales and profitability are expected to be higher in the second and fourth quarters of the year.

~~During the year ended December 31, 2017, our consolidated net sales from the provision of services was approximately 10% of net sales. Accordingly, in our Annual Report on Form10-K~~ for the year ended December 31, 2017, we began reporting net sales from the provision of services and the related costs of goods sold separately from net sales of products and the related costs of goods sold on the face of our consolidated statements of operations. We continued this reporting on the face of our consolidated statement of operations for the three and six months ended June 30, 2018 included in the Consolidated Financial Statements in Part I, Item 1 of this report. For comparability purposes, the presentation of net sales and costs of goods sold for the three and six months ended June 30, 2017 have been revised to conform to the current period presentation. These changes in presentation had no effect on previously reported total net sales, total costs of goods sold or gross profit amounts.

In conjunction with this change in presentation, because fees earned from activities reported net are considered services revenues, we reclassified certain revenue streams for which we act as the agent in the transaction to net sales from services. Previously, we included these net revenue streams within our software and, to a lesser extent, hardware sales mix categories based on the type of product being sold (e.g., fees earned for the sale of software maintenance and certain software licenses were included in software sales and fees earned for the sale of certain third-party provided training and warranty services were included in hardware sales when we historically disclosed and analyzed our sales mix). For comparability purposes, the sales mix among our hardware, software and services categories for the three and six months ended June 30, 2017 have been reclassified to conform to the current period presentation. Such reclassifications had no effect on previously reported net sales amounts.

~~INSIGHT ENTERPRISES, INC.~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION~~

~~AND RESULTS OF OPERATIONS (continued)~~

Our gross profit across the business is, and will continue to be, impacted by partner incentives, which can change significantly in the amounts made available and the related product or services sales being incentivized by the partner. ~~These~~Incentives from our largest partners are significant and changes in the incentives could impact our results of operations to the extent we are unable to ~~remediate and otherwise respond~~adapt our sales strategies to ~~them.~~optimize performance under the revised programs.

Net Sales. Net sales ~~for the three months ended June 30, 2018 increased 9%~~decreased 3% year to year to $1.69 billion compared to the three months ended June 30, 2017 to $1.84 billion. Excluding the effects of fluctuating foreign currency exchange rates, consolidated net sales increased 7% in the second quarter of 2018 compared to the second quarter of 2017. Net sales for the six months ended June 30, 2018 increased 14% compared to the six months ended June 30, 2017 to $3.60 billion. Excluding the effects of fluctuating foreign currency exchange rates, consolidated net sales increased 11% in the first six months of 2018 compared to the first six months of 2017.March 31, 2018. Our net sales by operating segment were as follows for the three ~~and six~~ months ended ~~June 30,~~March 31, 2019 and 2018 ~~and 2017~~ (dollars in thousands):


	Three Months Ended June 30,				%			Six Months Ended June 30,				%			Three Months Ended March 31,				%
	2018		2017		Change			2018		2017		Change			2019		2018		Change
North America	$	1,369,450	$	1,281,312		7	%	$	2,676,848	$	2,392,264		12	%	$	1,242,441	$	1,278,380		(3	%)
EMEA		406,280		346,060		17	%		806,695		676,415		19	%		390,175		407,134		(4	%)
APAC		61,190		56,660		8	%		116,280		92,896		25	%		52,850		56,980		(7	%)

Consolidated	$	1,836,920	$	1,684,032		9	%	$	3,599,823	$	3,161,575		14	%	$	1,685,466	$	1,742,494		(3	%)

Net sales in North America ~~increased 7%~~decreased 3%, or ~~$88.1~~$35.9 million, for the three months ended ~~June 30, 2018~~March 31, 2019 compared to the three months ended June 30, 2017. Net sales of hardware and services increased 12% and 20%, respectively, year over year, while net sales of software decreased 10% year to year. By client group, our top line results included double digit growth with large enterprise and small and medium businesses while sales to public sector clients declined during the second quarter of 2018. The growthMarch 31, 2018, primarily driven by declines in hardware net sales ~~reflects the device refresh cycle discussed in previous quarters. Services net sales improved year over year due~~ to higher sales of hardware warranty and cloud subscription offerings that are reported net, and the effect of the adoption of the new revenue recognition standard effective January 1, 2018, that resulted in sales of security software now also being reported net.

large enterprise clients. Net sales in ~~North America increased 12%~~EMEA decreased 4%, or ~~$284.6~~$17.0 million, ~~for~~in the ~~six months ended June 30, 2018~~first quarter of 2019 compared to the ~~six months ended June 30, 2017.~~first quarter of 2018. Excluding the effects of fluctuating foreign currency exchange rates net sales in EMEA increased 2%, year over year. Net sales in APAC decreased 7%, or $4.1 million, in the first quarter of ~~hardware and services~~2019 compared to the first quarter of 2018. Excluding the effects of fluctuating foreign currency exchange rates net sales in APAC increased ~~17% each,~~1%, year over ~~year, while net sales of software decreased 3% year to~~ year. By client group, our top line results included double digit growth with large enterprise and small and medium businesses while public sector clients declined during the six months ended June 30, 2018. The growth in hardware net sales reflects the device refresh cycle discussed in previous quarters. Services net sales improved year over year due to higher sales of hardware warranty and cloud subscription offerings that are reported net, while the decline in software net sales is primarily attributable to clients migrating software applications to cloud solutions which are now recorded in services and the effect of the adoption of the new revenue recognition standard effective January 1, 2018, that resulted in sales of security software now also being reported net and in services.

INSIGHT ENTERPRISES, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (continued)

Our net sales by offering category for North America for the three ~~and six~~ months ended ~~June 30, 2018~~March 31, 2019 and the three ~~and six~~ months ended ~~June 30, 2017 (as reclassified),~~March 31, 2018 were as follows (dollars in thousands):


	Three Months Ended June 30,							Three Months Ended March 31,				%
Sales Mix	2018		2017		% Change			2019		2018		Change
			(As Reclassified)
Hardware	$	898,144	$	803,389		12	%	$	748,337	$	873,341		(14	%)
Software		308,269		341,643		(10	%)		322,079		261,060		23	%
Services		163,037		136,280		20	%		172,025		143,979		19	%
								$	1,242,441	$	1,278,380		(3	%)
	$	1,369,450	$	1,281,312		7	%


	Six Months Ended June 30,
Sales Mix	2018		2017		% Change
			(As Reclassified)
Hardware	$	1,771,485	$	1,514,253		17	%
Software		598,745		615,626		(3	%)
Services		306,618		262,385		17	%

	$	2,676,848	$	2,392,264		12	%

In North America, fees earned from activities reported on a net basis of $109,000 and $32.6 million that were previously reported as part of our hardware and software product categories, respectively, in the three months ended June 30, 2017, were reclassified to services to conform to the current period presentation. Fees earned from activities reported on a net basis of $178,000 and $54.5 million that were previously reported as part of our hardware and software product categories, respectively, in the six months ended June 30, 2017, were reclassified to services to conform to the current period presentation.

Net sales in EMEA increased 17%, or $60.2 million, for the three months ended June 30, 2018 compared to the three months ended June 30, 2017. Excluding the effects of fluctuating foreign currency exchange rates, net sales ~~increased 10% compared to the second quarter~~ of ~~last year. Net~~software and services were up 23% and 19%, respectively, year over year, while net sales of hardware ~~software and services increased 38%, 2% and 31%, respectively, compared~~declined 14% year to year. The net changes year to year were the ~~second quarter~~result of ~~2017.~~ the following:

The ~~increase~~decrease in hardware net sales was due primarily to ~~a higher volume of~~lower sales of client devices, storage and networking solutions to large enterprise clients.

The increase in the software category was primarily the result of a significant transaction during the current quarter with a large enterprise client with no comparable transaction in the same quarter in prior year.

The increase in services net sales was due to higher sales of cloud solutions and an increase in Insight delivered services, attributable to our acquisition of Cardinal.

Our net sales by offering category for EMEA for the three months ended March 31, 2019 and the three months ended March 31, 2018 were as follows (dollars in thousands):

	Three Months Ended March 31,				%
Sales Mix	2019		2018		Change

Hardware	$	171,525	$	187,010		(8	%)
Software		183,148		190,202		(4	%)
Services		35,502		29,922		19	%
	$	390,175	$	407,134		(4	%)

In EMEA, net sales of hardware and software declined 8% and 4%, respectively, year to year, while net sales of services increased 19% year over year. The net changes year to year were the result of the following:

The decrease in hardware net sales was due primarily to lower volume sales of networking solutions to public sector ~~business.~~ clients.

The decrease in software net sales was due to continued client migration of software applications to cloud solutions which are recorded net in services net sales.

The increase in services net sales was due primarily to a higher volume of ~~sales of~~ software maintenance and cloud ~~subscription offerings that are reported net, as well as the addition of Dutch cloud service provider, Caase.com, to our business effective September 26, 2017.~~

Net sales in EMEA increased 19%, or $130.3 million, for the six months ended June 30, 2018 compared to the six months ended June 30, 2017. Excluding the effects of fluctuating foreign currency exchange rates, net sales increased 9% compared to the first six months of last year. Net sales of hardware, softwaresolutions, and ~~services increased 36%, 5% and 30%, respectively, compared to the first six months of 2017. The increase in hardware net sales was due primarily to~~ a higher volume of sales of client devices and networking solutions to large enterprise and public sector business. The increase in services net sales was due primarily to a higher volume of sales of software maintenance and cloud subscription offerings that are reported net, as well as the addition of Dutch cloud service provider, Caase.com, to our business effective September 26, 2017.Insight delivered services.

INSIGHT ENTERPRISES, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (continued)

Our net sales by offering category for EMEA for the three and six months ended June 30, 2018 and the three and six months ended June 30, 2017 (as reclassified), were as follows (dollars in thousands):

   Three Months Ended June 30,
   2018    2017    % Change
Sales Mix       (As Reclassified)
Hardware
   $ 171,337    $ 123,992    38 %
Software
   193,116    190,116    2 %
Services
   41,827    31,952    31 %





   $ 406,280    $ 346,060    17 %





   Six Months Ended June 30,
   2018    2017    % Change
Sales Mix       (As Reclassified)
Hardware
   $ 358,347    $ 262,869    36 %
Software
   378,034    359,434    5 %
Services
   70,314    54,112    30 %





   $ 806,695    $ 676,415    19 %

In EMEA, fees earned from activities reported on a net basis of $19.2 million that were previously reported as part of our software product category in the three months ended June 30, 2017 were reclassified to services to conform to the current period presentation. Fees earned from activities reported on a net basis of $30.1 million that were previously reported as part of our software product category in the six months ended June 30, 2017 were reclassified to services to conform to the current period presentation.

Net sales in APAC increased 8%, or $4.5 million, for the three months ended June 30, 2018 compared to the three months ended June 30, 2017. Excluding the effects of fluctuating foreign currency exchange rates, net sales increased 7% compared to the second quarter of last year. The increase was driven by a 35% increase in hardware net sales, primarily in Australia, our largest APAC market, and an increase in consulting services engagements in the services category.

Net sales in APAC increased 25%, or $23.4 million, for the six months ended June 30, 2018 compared to the six months ended June 30, 2017. Excluding the effects of fluctuating foreign currency exchange rates, net sales increased 22% compared to the first six months of last year. The increase was driven by growth of 50%, 23% and 19% in the hardware, software and services categories, respectively. The growth in hardware is due to higher volume with clients in Australia, our largest market in APAC. Software net sales are up primarily due to a single large public sector license renewal recorded in the first quarter of 2018 that historically transacted in the fourth quarter and services net sales increased due to higher professional services engagements around cloud and digital solutions.

Our net sales by offering category for APAC for the three ~~and six~~ months ended ~~June 30, 2018~~March 31, 2019 and the three ~~and six~~ months ended ~~June 30, 2017 (as reclassified),~~March 31, 2018 were as follows (dollars in thousands):


	Three Months Ended June 30,
	2018		2017		% Change			Three Months Ended March 31,				%
Sales Mix			(As Reclassified)					2019		2018		Change

Hardware	$	9,317	$	6,916		35	%	$	6,518	$	7,160		(9	%)
Software		39,591		39,409		—			35,065		39,019		(10	%)
Services		12,282		10,335		19	%		11,267		10,801		4	%
								$	52,850	$	56,980		(7	%)
	$	61,190	$	56,660		8	%

~~INSIGHT ENTERPRISES, INC.~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION~~

~~AND RESULTS OF OPERATIONS (continued)~~

   Six Months Ended June 30,
Sales Mix
   2018    2017    % Change
      (As Reclassified)
Hardware
   $ 16,477    $ 10,996    50 %
Software
   78,841    64,256    23 %
Services
   20,962    17,644    19 %





   $ 116,280    $ 92,896    25 %

In APAC, ~~fees earned from activities reported on a~~ net ~~basis~~sales of ~~$4,000 and $4.8 million that were previously reported as part of our~~ hardware and software ~~product categories,~~declined 9% and 10%, respectively, year to year, partially offset by an increase in services net sales of 4%, year over year. The net changes year to year were the ~~three months ended June 30, 2017, were reclassified to services to conform to~~result of the ~~current period presentation. Fees earned from activities reported on a net basis of $6,000 and $7.0 million that were previously reported as part of our~~following:

The decrease in hardware and software ~~product categories, respectively,~~net sales was due primarily to lower volume with enterprise and public sector clients.

The increase in ~~the six months ended June 30, 2017, were reclassified~~services net sales was due to ~~services to conform to the current period presentation.~~higher sales of cloud solutions and an increase in Insight delivered services.

The percentage of net sales by category for North America, EMEA and APAC were as follows for the three ~~and six~~ months ended ~~June 30, 2018~~March 31, 2019 and ~~the three and six months ended June 30, 2017 (as reclassified):~~

   North America EMEA APAC
   Three Months Ended
June 30, Three Months Ended
June 30, Three Months Ended
June 30,
Sales Mix
   2018 2017 2018 2017 2018 2017
Hardware
   66 % 63 % 42 % 36 % 15 % 12 %
Software
   22 % 26 % 48 % 55 % 65 % 70 %
Services
   12 % 11 % 10 % 9 % 20 % 18 %


   100 % 100 % 100 % 100 % 100 % 100 %


   North America EMEA APAC
   Six Months Ended
June 30, Six Months Ended
June 30, Six Months Ended
June 30,
Sales Mix
   2018 2017 2018 2017 2018 2017
Hardware
   66 % 63 % 44 % 39 % 14 % 12 %
Software
   22 % 26 % 47 % 53 % 68 % 69 %
Services
   12 % 11 % 9 % 8 % 18 % 19 %


   100 % 100 % 100 % 100 % 100 % 100 %

~~Gross Profit~~. ~~Gross profit for~~ the three months ended ~~June 30, 2018~~March 31, 2018:

	North America						EMEA						APAC
	Three Months Ended March 31,						Three Months Ended March 31,						Three Months Ended March 31,
Sales Mix	2019			2018			2019			2018			2019			2018
Hardware		60	%		68	%		44	%		46	%		12	%		13	%
Software		26	%		21	%		47	%		47	%		67	%		68	%
Services		14	%		11	%		9	%		7	%		21	%		19	%
		100	%		100	%		100	%		100	%		100	%		100	%

Gross Profit. Gross profit increased 5%3%, or ~~$13.0~~$8.2 million, in the three months ended March 31, 2019, compared to the three months ended ~~June 30, 2017,~~March 31, 2018, with gross margin ~~decreasing~~increasing approximately 5090 basis points to ~~14.4%~~14.7% for the three months ended March 31, 2019 compared to 13.8% for the three months ended ~~June 30, 2018 compared to 14.9%~~ March 31, 2018. Our gross profit and gross profit as a percentage of net sales by operating segment were as follows for the three months ended ~~June 30, 2017. Excluding~~ March 31, 2019 and 2018 (dollars in thousands):

	Three Months Ended March 31,
	2019		% of Net Sales			2018		% of Net Sales
North America	$	182,607		14.7	%	$	175,371		13.7	%
EMEA		56,983		14.6	%		56,050		13.8	%
APAC		8,882		16.8	%		8,842		15.5	%
Consolidated	$	248,472		14.7	%	$	240,263		13.8	%

North America’s gross profit for the ~~effects of fluctuating foreign currency exchange rates, consolidated gross profit~~three months ended March 31, 2019 increased ~~3% year over year in the second quarter of 2018~~$7.2 million, or 4%, compared to the ~~second quarter of 2017. Gross profit for the six~~three months ended ~~June 30, 2018 increased 10%, or $44.8 million, compared to the six months ended June 30, 2017, with~~March 31, 2018. As a percentage of net sales, gross margin ~~decreasing~~increased approximately 50100 basis points to ~~14.0%~~ 14.7% for the ~~six months ended June 30, 2018 compared to 14.5% for the six months ended June 30, 2017. Excluding the effects~~first quarter of ~~fluctuating foreign currency exchange rates, consolidated gross profit increased 7% year over year in the first half of 2018 compared to the first half of 2017.~~

2019.

INSIGHT ENTERPRISES, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (continued)

~~Our gross profit and gross profit as a percentage of net sales by operating segment were as follows for the three and six months ended June 30, 2018 and 2017 (dollars in thousands):~~

   Three Months Ended June 30, Six Months Ended June 30,
   2018    % of
Net
Sales 2017    % of
Net
Sales 2018    % of
Net
Sales 2017    % of
Net
Sales
North America
   $ 190,517    13.9 % $ 182,786    14.3 % $ 365,888    13.7 % $ 341,087    14.3 %
EMEA
   61,964    15.3 % 55,733    16.1 % 117,756    14.6 % 98,279    14.5 %
APAC
   11,896    19.4 % 12,860    22.7 % 20,738    17.8 % 20,240    21.8 %









Consolidated
   $ 264,377    14.4 % $ 251,379    14.9 % $ 504,382    14.0 % $ 459,606    14.5 %

North America’s gross profit for the three months ended June 30, 2018 increased 4% compared to the three months ended June 30, 2017. As a percentage of net sales, gross margin decreased approximately 40 basis points to 13.9% for the second quarter of 2018 from 14.3% in the second quarter of 2017. The year toover year ~~decline~~improvement in gross margin was primarily attributable to ~~a 70~~the following:

An increase in higher margin services net sales, which contributed 152 basis ~~point decrease in product~~points of the margin ~~which includes partner funding and freight,~~expansion, partially offset by a net 36 basis point increase generated by services net sales. The increase in margin generated by services net sales reflects a 64 basis point increase from hardware warranty and cloud subscription offerings that are recorded on a net basis, partially offset by a decline from software maintenance net sales, also recorded net, of 29 basis points, during the second quarter of 2018. The net decrease in product margin was due primarily to higher hardware sales to large enterprise clients, which generally transact at lower margins, and lower software license sales as clients are migrating to cloud solutions, during the quarter ended June 30, 2018 compared to the quarter ended June 30, 2017.

North America’s gross profit for the six months ended June 30, 2018 increased 7% compared to the six months ended June 30, 2017. As a percentage of net sales, gross margin decreased approximately 60 basis points to 13.7% for the first half of 2018 from 14.3% in the first half of 2017. The year to year decline in gross margin was primarily attributable to a 49 basis point decrease in product margin, which includes partner funding and freight, and a 9 basis point decrease from services net sales. The net decrease in product margin was due primarily to higher hardware sales to large enterprise clients, which generally transact at lower margins, and lower software license sales as clients are migrating to cloud solutions, during the six months ended June 30, 2018 compared to the six months ended June 30, 2017.

EMEA’s gross profit increased 11% for the three months ended June 30, 2018 compared to the three months ended June 30, 2017. Excluding the effects of fluctuating foreign currency exchange rates, gross profit increased 4% compared to the second quarter of last year. As a percentage of net sales, gross margin decreased approximately 80 basis points to 15.3% for the second quarter of 2018 from 16.1% in the second quarter of 2017. The year to year decline in gross margin was primarily attributable to a net decrease in product margin, which includes partner funding and freight, of ~~130~~54 basis points , partially offset by an increase in margin from higher margin services net sales of 44 basis points during the three months ended June 30, 2018 compared to the three months ended June 30, 2017. The decrease in product margin primarily resulted from a decrease in partner funding in software and a decrease in the software category margin during the quarter ended June 30, 2018 compared to the quarter ended June 30, 2017. The decrease in partner funding was primarily due to changes to certain partner programs. The decrease in product margin was primarily due a higher proportion of sales to large enterprise and public sector clients, which generally transact at lower margins. points.

The increase in margin from services net sales during the current quarter ~~ended June 30, 2018 compared to the quarter ended June 30, 2017~~ resulted from a higher volume of ~~software maintenance~~Insight delivered services and a higher volume of cloud ~~subscription offerings~~solutions that are recorded onnet.

The decrease in product margin is primarily the result of a ~~net basis, as well as~~reduction in partner funding due to lower hardware sales in the ~~addition of Dutch cloud service provider, Caase.com,~~current quarter compared to ~~our business effective September 26, 2017.~~the same period in the prior year.

~~INSIGHT ENTERPRISES, INC.~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION~~

~~AND RESULTS OF OPERATIONS (continued)~~

EMEA’s gross profit ~~increased 20%~~ for the ~~six~~three months ended ~~June 30,~~March 31, 2018 ~~compared to the six months ended June 30, 2017. Excluding~~increased $933,000, or 2% (9% excluding the effects of fluctuating foreign currency exchange ~~rates, gross profit increased 9%~~rates), compared to the ~~first half of last year.~~three months ended March 31, 2018. As a percentage of net sales, gross margin increased approximately 1080 basis points, ~~to 14.6% for the first half of 2018 from 14.5% in the first half of 2017.~~ year over year. The year over year improvement in gross margin was primarily attributable to an increase in higher margin services net sales, which contributed 36138 basis points of the margin expansion, partially offset by a net decrease in product margin, which includes partner funding and freight, of 3055 basis points during the six months ended June 30, 2018 compared to the six months ended June 30, 2017. The increase in margin from services net sales during the six months ended June 30, 2018 compared to the six months ended June 30, 2017 resulted from a higher volume of software maintenance and cloud subscription offerings that are recorded on a net basis, as well as the addition of Dutch cloud service provider, Caase.com, to our business effective September 26, 2017. The net decrease in product margin was due primarily higher software sales to large enterprise and public sector clients, which generally transact at lower margins, during the six months ended June 30, 2018 compared to the six months ended June 30, 2017.points.

APAC’s gross profit ~~decreased 7%~~ for the three months ~~ended June 30, 2018~~March 31, 2019 remained flat compared to the three months ended ~~June 30, 2017, with~~March 31, 2018. As a percentage of net sales, gross margin ~~decreasing~~increased approximately 130 basis points, year over year. The increase in gross margin in the first quarter of 2019 compared to ~~19.4%~~the first quarter of 2018 was primarily due to an increase in mix of sales of software maintenance and cloud solutions recorded net and higher gross profits from Insight delivered services.

Operating Expenses.

Selling and Administrative Expenses. Selling and administrative expenses increased $2.9 million, or 2%, for the three months ended June 30, 2018 compared to 22.7% for the three months ended June 30, 2017. Excluding the effects of fluctuating foreign currency exchange rates, gross profit decreased 8% compared to the second quarter of last year. The decrease in gross margin in the second quarter of 2018 compared to the second quarter of 2017 was due primarily to decreased software referral fees and services that are reported net during the three months ended June 30, 2018March 31, 2019 compared to the three months ended ~~June 30, 2017.~~

~~APAC’s gross profit increased 2%~~March 31, 2018. Our selling and administrative expenses by major expense type for the ~~six~~three months ended ~~June 30,~~March 31, 2019 and 2018 compared to the six months ended June 30, 2017, with gross margin decreasing to 17.8% for the six months ended June 30, 2018 compared to 21.8% for the six months ended June 30, 2017. Excluding the effects of fluctuating foreign currency exchange rates, gross profit was flat, increasing less than 1%, compared to the first half of last year. The decreasewere as follows (dollars in gross margin in the first half of 2018 compared to the first half of 2017 was due primarily to decreased software referral fees and services that are reported net during the six months ended June 30, 2018 compared to the six months ended June 30, 2017.thousands):

~~Operating Expenses.~~

	Three Months Ended March 31,
	2019		2018
Personnel costs, including teammate benefits	$	150,491	$	147,836
Depreciation and amortization		8,867		9,044
Facility expenses		6,663		6,591
Travel and entertainment		6,246		6,128
Legal and professional fees		3,942		4,033
Marketing		2,322		2,644
Other		12,532		11,904
Total	$	191,063	$	188,180

~~Selling and Administrative Expenses.~~Selling and administrative expenses increased ~~$8.7 million, or 5%, for~~approximately 50 basis points as a percentage of net sales in the ~~three months ended June 30, 2018~~first quarter of 2019 compared to the ~~three months ended June 30, 2017. Excluding the effects~~first quarter of ~~fluctuating foreign currency exchange rates, consolidated~~2018. The overall net increase in selling and administrative expenses reflects a $2.7 million increase in personnel costs, including teammate benefits expenses primarily due to increased ~~3% year over year in~~headcount, including the ~~second quarter~~acquisition of ~~2018 compared to the second quarter of 2017. Selling~~Cardinal, and ~~administrative expenses~~ increased $19.3 million, or 5%, for the six months ended June 30, 2018 compared to the six months ended June 30, 2017. Excluding the effects of fluctuating foreign currency exchange rates, consolidated selling and administrative expensesvariable compensation resulting from increased ~~2% year over year~~gross profit in the first ~~half~~quarter of ~~2018~~2019 compared to the first ~~half~~quarter of ~~2017.~~

2018.

INSIGHT ENTERPRISES, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (continued)

~~Our selling and administrative expenses as a percent of net sales by operating segment were as follows for the three and six months ended June 30, 2018 and 2017 (dollars in thousands):~~

   Three Months Ended June 30, Six Months Ended June 30,
   2018    % of
Net
Sales 2017    % of
Net
Sales 2018    % of
Net
Sales 2017    % of
Net
Sales
North America
   $ 135,206    9.9 % $ 131,560    10.3 % $ 267,846    10.0 % $ 262,570    11.0 %
EMEA
   46,894    11.5 % 41,772    12.1 % 95,177    11.8 % 81,915    12.1 %
APAC
   7,364    12.0 % 7,420    13.1 % 14,621    12.6 % 13,899    15.0 %









Consolidated
   $ 189,464    10.3 % $ 180,752    10.7 % $ 377,644    10.5 % $ 358,384    11.3 %

North America’s selling and administrative expenses increased 3%, or $3.6 million, for the three months ended June 30, 2018 compared to the three months ended June 30, 2017 and decreased approximately 40 basis points year to year as a percentage of net sales to 9.9%. The increase in expenses was primarily driven by a $2.6 million increase in salaries and wages, contract labor and teammate benefits expenses primarily due to increases in headcount and a $4.1 million increase in variable compensation resulting from increased sales for the three months ended June 30, 2018 compared to the three months ended June 30, 2017. Partially offsetting these increases in teammate expenses were decreases in teammate benefits of $2.3 million due to decreased healthcare costs and lower depreciation and amortization expense of $1.0 million for the three months ended June 30, 2018 compared to the three months ended June 30, 2017.

North America’s selling and administrative expenses increased 2%, or $5.3 million, for the six months ended June 30, 2018 compared to the six months ended June 30, 2017 and decreased approximately 100 basis points year to year as a percentage of net sales to 10.0%. The increase in expenses was primarily driven by a $5.6 million increase in salaries and wages and compensation expenses primarily due to increases in headcount and a $6.5 million increase in variable compensation resulting from increased sales for the six months ended June 30, 2018 compared to the six months ended June 30, 2017. Partially offsetting these increases in teammate expenses were decreases in teammate benefits of $2.4 million due to decreased healthcare costs, depreciation and amortization expense of $2.9 million and other general and administrative expenses of $5.9 million for the six months ended June 30, 2018 compared to the six months ended June 30, 2017.

EMEA’s selling and administrative expenses increased 12%, or $5.1 million, for the three months ended June 30, 2018 compared to the three months ended June 30, 2017 and decreased approximately 60 basis points year to year as a percentage of net sales to 11.5%. Excluding the effects of fluctuating foreign currency exchange rates, selling and administrative expenses increased 5% compared to the second quarter of last year. The increase in expenses was primarily driven by an increase in salaries and wages and teammate benefits expenses due to increased headcount and an increase in variable compensation resulting from increased sales and gross profit for the three months ended June 30, 2018 compared to the three months ended June 30, 2017.

EMEA’s selling and administrative expenses increased 16%, or $13.3 million, for the six months ended June 30, 2018 compared to the six months ended June 30, 2017 and decreased approximately 30 basis points year to year as a percentage of net sales to 11.8%. Excluding the effects of fluctuating foreign currency exchange rates, selling and administrative expenses increased 6% compared to the first half of last year. The increase in expenses was primarily driven by an increase in salaries and wages and teammate benefits expenses due to increased headcount and an increase in variable compensation resulting from increased sales and gross profit for the six months ended June 30, 2018 compared to the six months ended June 30, 2017.

~~INSIGHT ENTERPRISES, INC.~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION~~

~~AND RESULTS OF OPERATIONS (continued)~~

APAC’s selling and administrative expenses decreased 1%, or $56,000, for the three months ended June 30, 2018 compared to the three months ended June 30, 2017, and decreased approximately 110 basis points year to year as a percentage of net sales to 12.0%. Excluding the effects of fluctuating foreign currency exchange rates, selling and administrative expenses decreased 2% compared to the second quarter of last year. The year to year decrease was primarily driven by a decrease in headcount and related expenses and variable compensation.

APAC’s selling and administrative expenses increased 5%, or $722,000, for the six months ended June 30, 2018 compared to the six months ended June 30, 2017, and decreased approximately 240 basis points year to year as a percentage of net sales to 12.6%. Excluding the effects of fluctuating foreign currency exchange rates, selling and administrative expenses increased 3% compared to the first half of last year. The year over year increase was primarily driven by investments in headcount in the service delivery organization.

Severance and Restructuring Expenses. During the three months ended ~~June 30, 2018, North America, EMEA and APAC~~March 31, 2019, we recorded severance expense, net of adjustments, of approximately $338,000, $41,000 and $3,000, respectively. During the six months ended June 30, 2018, North America, EMEA and APAC recorded severance expense, net of adjustments, of approximately $781,000, $1.1 million and $130,000, respectively.$370,000. The charges in all three operating segments primarily related to a realignment of certain roles and responsibilities. Current period charges were partially offset by adjustments for changes in estimates of previous accruals as cash payments were made. Comparatively, during the three months ended ~~June 30, 2017, North America and EMEA recorded severance expense, net of adjustments, of approximately $543,000 and $479,000, respectively. For the six months ended June 30, 2017,~~March 31, 2018, North America, EMEA and APAC recorded severance expense, net of adjustments, of approximately ~~$1.6 million, $4.0~~$443,000, $1.1 million and ~~$61,000,~~$127,000, respectively.

~~Acquisition-related Expenses~~. During the three and six months ended June 30, 2018, we incurred $94,000 in direct third-party transaction costs related to the acquisition of Cardinal, effective August 1, 2018. Comparatively, during the three and six months ended June 30, 2017, we incurred $276,000 and $3.2 million, respectively, in direct third-party transaction costs related to the acquisition of Datalink in January 2017.

Non-Operating (Income) Expense.

Interest Income. Interest income for the three ~~and six~~ months ended ~~June 30,~~March 31, 2019 and 2018 ~~and 2017~~ was generated from interest earned on cash and cash equivalent bank balances. The ~~decrease~~increase in interest income ~~for the six months ended June 30, 2018 compared to the six months ended June 30, 2017~~year over year was primarily due to ~~lower~~higher average interest-bearing cash and cash equivalent balances and to higher interest rates during the ~~six~~three months ended ~~June 30,~~March 31, 2019 compared to the three months ended March 31, 2018.

Interest Expense. Interest expense primarily relates to borrowings under our financing facilities and imputed interest under our inventory financing facility. Interest expense for the three months ended ~~June 30, 2018 increased 18%~~March 31, 2019 decreased 20%, or ~~$776,000,~~$1.2 million, compared to the three months ended ~~June 30, 2017. Interest expense for the six months ended June 30, 2018 increased 35%, or $2.9 million, compared to the six months ended June 30, 2017. These increases were~~March 31, 2018. The decrease was due primarily to lower average daily balances on our debt facilities in the first quarter of 2019 partially offset by higher interest rates. Imputed interest under our inventory financing facility was ~~$2.4 million and $4.9~~$3.0 million for the three ~~and six~~ months ended ~~June 30, 2018, respectively,~~March 31, 2019 compared to ~~$1.4 million and $2.8~~$2.5 million for the three ~~and six~~ months ended ~~June 30, 2017, respectively.~~March 31, 2018. The ~~increases were~~increase was a result of ~~expanded use of the facility and~~ a higher average incremental borrowing rate used to compute the imputed interest amounts during the ~~2018 periods.~~first quarter of 2019. For a description of our various financing facilities, see Note 45 to our Consolidated Financial Statements in Part I, Item 1 of this report.

~~INSIGHT ENTERPRISES, INC.~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION~~

~~AND RESULTS OF OPERATIONS (continued)~~

Net Foreign Currency Exchange Gains/Losses. These gains/losses result from foreign currency transactions, including foreign currency derivative contracts and intercompany balances that are not considered long-term in nature. The change in net foreign currency exchange gains/losses is due primarily to the underlying changes in the applicable exchange rates, partially mitigated by our use of foreign exchange forward contracts to offset the effects of fluctuations in foreign currencies on certain of ournon-functional currency assets and liabilities.

Other Expense, Net. Other expense, net, consists primarily of bank fees associated with our cash management activities.

Income Tax Expense. Our effective tax rate of 23.5% for the three months ended March 31, 2019 was lower than our effective tax rate of 25.9% for the three months ended ~~June 30,~~March 31, 2018 ~~was lower than our effective~~due primarily to an increase in tax ~~rate~~benefits on the settlement of ~~37.7%~~employee share-based awards and the recognition of tax benefits related to research and development activities for the three months ended June 30, 2017. Our effective tax rate of 25.9% for the six months ended June 30, 2018 was lower than our effective tax rate of 35.1% for the six months ended June 30, 2017. The decrease in our effective tax rate for the first half of 2018March 31, 2019 compared to the ~~first half of 2017 was due primarily to the reduction in the United States federal statutory rate to 21.0%.~~three months ended March 31, 2018.

INSIGHT ENTERPRISES, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (continued)

Liquidity and Capital Resources

The following table sets forth certain consolidated cash flow information for the ~~six~~three months ended ~~June 30,~~March 31, 2019 and 2018 ~~and 2017~~ (in thousands):

   Six Months Ended
June 30,
   2018    2017
Net cash provided by (used in) operating activities
   $ 350,955    $ (99,266 )
Net cash used in investing activities
   (10,644 )    (191,168 )
Net cash (used in) provided by financing activities
   (192,508 )    270,712
Foreign currency exchange effect on cash, cash equivalent and restricted cash balances
   (5,541 )    11,739




Increase (decrease) in cash, cash equivalents and restricted cash
   142,262    (7,938 )
Cash, cash equivalents and restricted cash at beginning of period
   107,445    205,946




Cash, cash equivalents and restricted cash at end of period
   $ 249,707    $ 197,963

	Three Months Ended March 31,
	2019			2018
Net cash provided by operating activities	$	121,913		$	150,745
Net cash used in investing activities		(6,114	)		(5,044	)
Net cash used in financing activities		(132,640	)		(153,232	)
Foreign currency exchange effect on cash, cash equivalent and restricted cash balances		(986	)		1,937
Increase in cash, cash equivalents and restricted cash		(17,827	)		(5,594	)
Cash, cash equivalents and restricted cash at beginning of period		144,293			107,445
Cash, cash equivalents and restricted cash at end of period	$	126,466		$	101,851

Cash and Cash Flow

Our primary uses of cash during the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019 were to pay down our debt balances ~~to repurchase shares of our common stock~~ and for capital expenditures, as well as funding our working capital requirements.

Operating activities provided ~~$351.0~~$121.9 million in cash during the ~~six~~three months ended ~~June 30, 2018,~~March 31, 2019, compared to ~~$99.3~~$150.7 million ~~of cash used in operating activities~~ during the ~~six~~three months ended June 30, 2017. The 2017 results were affected by a significant transaction at the beginning of the prior year period, whereby a single significant payment to a supplier was due and paid in January 2017, but the related receivable was collected from a client in the fourth quarter of 2016, as discussed in more detail below. During the six months ended June 30, 2018, weMarch 31, 2018.

We had net repayments under our inventory financing facility of ~~$15.8~~$44.0 million during the three months ended March 31, 2019, compared to net ~~borrowings under the facility~~repayments of ~~$25.5~~$91.4 million during the ~~six~~three months ended ~~June 30, 2017.~~ March 31, 2018.

We ~~also~~ had combined net repayments under our revolving facility and ABS facility that decreased our outstanding long-term debt by ~~$149.1 million, including scheduled amortization payments under our Term Loan A (“TLA”).~~ $82.0 million.

Capital expenditures were ~~$10.6~~$5.4 million in the ~~six~~three months ended ~~June 30, 2018, an increase of 4% compared to the total capital expenditures made in the prior year period.~~ March 31, 2019.

Cash, cash equivalents and restricted cash balances in the ~~six~~

~~INSIGHT ENTERPRISES, INC.~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION~~

~~AND RESULTS OF OPERATIONS (continued)~~

three months ended ~~June 30, 2018~~March 31, 2019 were negatively affected by ~~$5.5~~$1.0 million, while the balances in the ~~six~~three months ended ~~June, 30 2017~~March, 31 2018 were positively affected by ~~$11.7~~$1.9 million, as a result of foreign currency exchange rates.

We expect that cash flows from operations, together with the funds available under our financing facilities, will be adequate to support our presently anticipated cash and working capital requirements for operations ~~as well as other strategic investments~~ over the next 12 months.

Net cash provided by ~~(used in)~~ operating ~~activities.~~activities

Cash ~~flows~~flow from operating activities ~~for~~in the ~~six~~first three months ~~ended June 30, 2018 and 2017 reflect our net earnings, adjusted fornon-cash~~ ~~items such as depreciation, amortization, stock-based compensation expense and write-offs and write-downs~~ of ~~assets, as well as changes~~2019 was $121.9 million compared to $150.7 million in ~~asset and liability balances. In both periods, exclusive~~the first three months of ~~the acquisition of Datalink’s accounts receivable balances and the assumption of Datalink’s accounts payable balances during the 2017 period, we anticipated the increases~~2018.

The decrease in accounts receivable and accounts payable due to the seasonal increase in net sales from the fourth quarter to the second quarter, which results in higher accounts receivable and accounts payable balances as of June 30, compared to December 31. Cash flow from operating activities in 2018 was $351.0 million, a significant increase in cash generation related toreflects our continued enhanced focus on ~~optimizing working capital, reducing aged accounts~~collection of receivables and ~~reducing our investments~~optimization of working capital.

The significant increases in inventory in the second quarter of 2018. However, the 2017 results were also affected by a single significant payment to a supplier of approximately $160 million that was due and paid in January 2017 for which the related receivable was collected from the client in the fourth quarter of 2016, as noted previously.

The decrease in inventories for the first half of 2018 is primarily attributable to completing large shipments to clients related to work on various systems projects. For the prior year period, the increase in inventories was primarily attributable to an increase in inventory levels at June 30, 2017 to support specific client engagements. The increase inboth other assets for the six months ended June 30, 2018 was a result of the change in accounting under the new revenue recognition standard, which resulted in accelerated revenue recognition for certain contracts with payment terms that exceed one year. As a result, we recorded a related long-term receivable within other assets in the accompanying consolidated balance sheet as of June 30, 2018. See Note 2 to the Consolidated Financial Statements in Part I, Item 1 of this report. The increase in accounts payable for the six months ended June 30, 2018 was primarily due to business mix and ~~timing of sales generated in the last weeks of the quarter. The increase in~~ accrued expenses and other liabilities ~~was due to increased value added tax on increased foreign net sales during~~for the ~~six~~three months ended ~~June 30, 2018 compared to 2017.~~March 31, 2019 resulted from a single significant transaction in 2019 with no comparable activity in the prior year.

INSIGHT ENTERPRISES, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (continued)

Our consolidated cash flow operating metrics were as follows:

   Six Months Ended
June 30,
   2018    2017
Days sales outstanding in ending accounts receivable (“DSOs”)^(a)
   107    98
Days inventory outstanding (“DIOs”)^(b)
   11    12
Days purchases outstanding in ending accounts payable (“DPOs”)^(c)
   (98 )    (95 )




Cash conversion cycle (days)^(d)
   20    15

	Three Months Ended March 31,
	2019			2018
Days sales outstanding in ending accounts receivable (“DSOs”) ^(a)		92			91
Days inventory outstanding (“DIOs”) ^(b)		11			12
Days purchases outstanding in ending accounts payable (“DPOs”) ^(c)		(73	)		(67	)
Cash conversion cycle (days) ^(d)		30			36

(a)

Calculated as the balance of current accounts receivable, net at the end of the quarter divided by daily net sales. Daily net sales is calculated as net sales for the quarter divided by 9190 days.

(b)

Calculated as average inventories (excluding inventories not available for sale) divided by daily costs of goods sold. Average inventories is calculated as the sum of the balances of inventories at the beginning of the quarter plus inventories at the end of the quarter divided by two. Daily costs of goods sold is calculated as costs of goods sold for the quarter divided by 9190 days.

(c)	Calculated as the sum of the balances of accounts payable – trade and accounts payable – inventory financing facility at the end of the quarter divided by daily costs of goods sold. Daily costs of goods sold is calculated as costs of goods sold for the quarter divided by 9190 days.

(d)	Calculated as DSOs plus DIOs, less DPOs.

Our cash conversion cycle was 2030 days in the first ~~half~~quarter of ~~2018, up five~~2019, down six days from the first ~~half~~quarter of ~~2017.~~ 2018.

The ~~increase~~decrease resulted from the net effect of a ~~nine~~one day increase in DSOs and a six day increase in DPOs due to the relative timing of client receipts and supplier payments during the respective quarters.

This was partially offset by a one day decrease in ~~DIOs~~DIO due to ~~deploying~~delivering inventory against client specific engagements and an overall focus on minimizing inventory on hand and a three day increase in DPOs due to the timing of client receipts and supplier payments during the respective quarters. These operating metrics include the effects of the adoption of the new revenue recognition standard effective January 1, 2018, resulting in a higher current accounts receivable balance at June 30, 2018 compared to June 30, 2017. These accounting adjustments did not have a comparable increase in net sales due to the high volume of sales reported on a net basis, thus negatively affecting the DSO metric for the six months ended June 30, 2018.hand.

We expect that cash flow from operations will be used, at least partially, to fund working capital as we typically pay our partners on average terms that are shorter than the average terms we grant to our clients ~~in order~~ to take advantage of supplier discounts. We intend to use cash generated in the remainder of ~~2018~~2019 in excess of working capital needs to pay down our debt balances, to repurchase shares of our common stock and to support our capital expenditures for the year. We also may use cash to fund potential acquisitions to add select capabilities within our current geographic operating segments.

Net cash used in investing activities.

Capital expenditures were ~~$10.6~~$5.4 million and ~~$10.3~~$5.0 million for the ~~six~~three months ended ~~June 30,~~March 31, 2019 and 2018, ~~and 2017,~~ respectively.

We expect capital expenditures for the full year ~~2018~~2019 to be between ~~$15.0~~$20.0 million and ~~$20.0~~$25.0 million, primarily for technology-related upgrade projects.

Net cash used in financing activities

During the ~~six~~three months ended ~~June 30, 2017, we acquired Datalink in North America for approximately $180.9 million, net of cash and cash equivalents acquired.~~

~~Net cash (used in) provided by financing activities~~~~. During the six months ended June 30, 2018,~~March 31, 2019, we had net combined repayments under our revolving facility and our ABS facility that decreased our outstanding long-term debt balance by ~~$149.1~~$82.0 million. Comparatively, during the three months ended March 31, 2018, we had net combined repayments under our revolving credit facility and our ABS facility that decreased our outstanding long-term debt balance by $49.8 million, including scheduled amortization payments under our TLA. We also had net repayments under our inventory financing facility of $15.8 million during the six months ended June 30, 2018. During the six months ended June 30, 2018, we also repurchased an aggregate of $22.1 million of our common stock under a previously announced repurchase program. Comparatively, during the six months ended June 30, 2017, we had net combined borrowings on our long-term debt under our revolving facility and our ABS facility that increased our outstanding debt balance by $255.1 million, including the expansion

INSIGHT ENTERPRISES, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (continued)

•

We had net repayments under our inventory financing facility of $44.0 million during the three months ended March 31, 2019 compared to $91.4 million during the three months ended March 31, 2018.

of our revolving facility by $175.0 million in the form of an incremental TLA to fund, in part, the acquisition of Datalink, and had net borrowings under our inventory financing facility of $25.5 million. During the ~~six~~three months ended ~~June 30, 2017,~~March 31, 2019 we did not repurchase any shares of our common stock. We repurchased an aggregate of $7.7 million of our common stock under a previously announced repurchase program during the three months ended March 31, 2018.

Financing Facilities

The maximum leverage ratio is calculated as aggregate debt outstanding divided by the sum of the Company’s trailing twelve month net earnings (loss) plus (i) interest expense, excludingnon-cash imputed interest on our inventory financing facility, (ii) income tax expense (benefit), (iii) depreciation and amortization,(iv) non-cash stock-based compensation, (v) extraordinary or~~non-recurringnon-cash~~ non-recurring non-cash losses or expenses and (vi) certain cash restructuring and acquisition-related charges and synergies, not to exceed a specified cap (“adjusted earnings”).

The maximum leverage ratio permitted under the facilities is currently ~~3.25~~3.0 times our trailing twelve-month adjusted earnings. ~~We anticipate that we will be in compliance with our maximum leverage ratio requirements over the next four quarters. However, a~~

A significant drop in the Company’s adjusted earnings would limit the amount of indebtedness that could be outstanding at the end of any fiscal quarter to a level that would be below the Company’s consolidated maximum facility amount. We anticipate that we will be in compliance with our maximum leverage ratio requirements over the next four quarters.

Based on the maximum permitted leverage ratio as of ~~June 30, 2018,~~March 31, 2019, the Company’s debt balance that could have been outstanding under our revolving facility ~~TLA~~ and ABS facility was the full amount of the maximum borrowing capacity of ~~$759.7~~$600.0 million, of which ~~$159.7~~$112.0 million was outstanding under ~~our TLA~~the ABS facility and no ~~amounts were~~amount was outstanding under our revolving ~~or ABS facilities~~facility at ~~June 30, 2018. Additionally, the ABS facility was amended on June 27, 2018 to, among other things, renew the borrowing program for a three-year term expiring June 23, 2021.~~ March 31, 2019.

While our ABS facility has a stated maximum amount, the actual availability under the ABS facility is limited by the quantity and quality of the underlying accounts receivable. As of ~~June 30, 2018,~~March 31, 2019, qualified receivables were sufficient to permit access to the full $250.0 million under the ABS facility.

Our debt balance as of ~~June 30, 2018~~March 31, 2019 was ~~$161.8~~$114.4 million, including our ~~capital~~finance lease obligations for certain IT equipment and other financing obligations. As of June 30, 2018, the current portion of our long-term debt includes $15.3 million in amortization payments due through June 30, 2019 under our TLA. The remaining $1.6 million of current debt relates to our capital leases and our other financing obligations acquired from Datalink.

Our objective is to pay our debt balances down while retaining adequate cash balances to meet overall business objectives.

Our revolving facility ~~our TLA~~ and our ABS facility contain various covenants customary for transactions of this type, including limitations on the payment of dividends and the requirement that we comply with maximum leverage and minimum fixed charge ratio requirements, comply with a minimum receivable requirement and meet monthly, quarterly and annual reporting requirements.

If we fail to comply with these covenants, the lenders would be able to demand payment within a specified time period. At ~~June 30, 2018,~~March 31, 2019, we were in compliance with all such covenants. ~~Further, the terms of the ABS facility identify various circumstances that would result in an “amortization event” under the facility. At June~~

30 ~~2018,~~

INSIGHT ENTERPRISES, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (continued)

•

The terms of the ABS facility identify various circumstances that would result in an “amortization event” under the facility. At March 31, 2019, no such “amortization event” had occurred.

We also have an agreement with a financial intermediary to facilitate the purchase of inventory from various suppliers under certain terms and conditions.

These amounts are classified separately as accounts payable – inventory financing facility in our consolidated balance sheets.

Our inventory financing facility ~~was amended on March 23, 2018 to increase the~~has an aggregate availability for vendor purchases ~~under our inventory financing facility from $325.0 million to~~of $400.0 million, of which ~~$303.7~~$260.2 million was outstanding at ~~June 30, 2018. In conjunction with the~~March 31, 2019.

~~INSIGHT ENTERPRISES, INC.~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION~~

~~AND RESULTS OF OPERATIONS (continued)~~

increase in the aggregate availability under the facility, we no longer have the option to request additional increases in the aggregate amount available under the inventory financing facility without amending the facility. The inventory financing facility matures on June 23, 2021 and may be renewed under certain circumstances described in the agreement for successive12-month periods.

Undistributed Foreign Earnings

Cash and cash equivalents held by foreign subsidiaries are generally subject to U.S. income taxation upon repatriation to the United States. As a result of the U.S. federal tax reform enacted in December 2017, all undistributed foreign earnings are deemed distributed. As of ~~June 30, 2018,~~March 31, 2019, we had approximately ~~$145.8~~$106.9 million in cash and cash equivalents in certain of our foreign subsidiaries. As of ~~June 30, 2018,~~March 31, 2019, the majority of our foreign cash resides in the Netherlands and ~~Australia.~~Canada. Certain of these cash balances will be remitted to the United States by paying down intercompany payables generated in the ordinary course of business or through actual dividend distributions.

Off-Balance Sheet Arrangements

We have entered intooff-balance sheet arrangements, which include indemnifications. The indemnifications are discussed in Note 910 to the Consolidated Financial Statements in Part I, Item 1 of this report and such discussion is incorporated by reference herein. We believe that none of ouroff-balance sheet arrangements have, or are reasonably likely to have, a material current or future effect on our business, financial condition or results of operations.

Recently Issued Accounting Standards

The information contained in Notes 1 and 2 to the Consolidated Financial Statements in Part I, Item 1 of this report concerning a description of recently issued accounting standards which affect or may affect our financial statements, including our expected dates of adoption and the estimated effects on our results of operations and financial condition, is incorporated by reference herein.

Contractual Obligations

There have been no material changes in our reported contractual obligations, as described under “Contractual Obligations” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” in Part II, Item 7 of our Annual Report on Form10-K for the year ended December 31, ~~2017.~~

2018.

INSIGHT ENTERPRISES, INC.

Item 3. Quantitative and ~~Qualitative~~Qualitative Disclosures About Market Risk.

There have been no material changes in our reported market risks, as described in “Quantitative and Qualitative Disclosures About Market Risk” in Part II, Item 7A of our Annual Report on Form10-K for the year ended December 31, ~~2017.~~2018.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer, as of the end of the period covered by this report, evaluated the effectiveness of our disclosure controls and procedures (as such term is defined underRules 13a-15(e) ~~and15d-15(e)~~and 15d-15(e) of the Securities Exchange ~~Act)~~Act of 1934, as amended (the “Exchange Act”)) and determined that as of ~~June 30, 2018~~March 31, 2019 our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Change in Internal Control over Financial Reporting

There was no change in ~~our~~the Company’s internal control over financial reporting (as such term is defined inRules 13a-15(f) ~~and15d-15(f)~~and 15d-15(f) under the Exchange Act) ~~during~~in the most recent fiscal quarter ~~ended June 30, 2018~~ that has materially affected, or is reasonably likely to materially affect, ~~our~~the Company’s internal control over financial reporting.

During the quarter ended March 31, 2018, we changed existing controls or developed new controls to ensure we adequately implemented the new accounting standard related to revenue recognition effective January 1, 2018. The modified and new controls were designed to address risks associated with recognizing revenue based on the five-step model provided in the new standard and to ensure completeness and accuracy of the expanded disclosures required by the new standard.

Inherent Limitations of Internal Control Over Financial Reporting

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

INSIGHT ENTERPRISES, INC.

Part II – ~~OTHER~~OTHER INFORMATION

Item 1. Legal Proceedings.

For a discussion of legal proceedings, see “– Legal Proceedings” in Note 910 to the Consolidated Financial Statements in Part I, Item 1 of this report, which section is incorporated by reference herein.

Item 1A. Risk Factors.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors”, in our Annual Report on Form10-K for the year ended December 31, ~~2017,~~2018, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition or operating results.

~~INSIGHT ENTERPRISES, INC.~~

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

There were no unregistered sales of equity securities during the three months ended ~~June 30, 2018.~~March 31, 2019.

We have never paid a cash dividend on our common stock, and we currently do not intend to pay any cash dividends in the foreseeable future. Our revolving facility, our ABS facility ~~our TLA~~ and our inventory financing facility contain restrictions on the payment of cash dividends.

Issuer Purchases of Equity Securities

Period
   (a)
Total Number
of Shares
Purchased    (b)
Average Price
Paid per Share    (c)
Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs    (d)
Approximate Dollar Value
of Shares that May
Yet Be Purchased Under
the Plans or Programs
April 1, 2018 through
      April 30, 2018
   415,775    $ 34.26    415,775    $ 28,077,000
May 1, 2018 through
      May 31, 2018
   4,180    35.02    4,180    27,931,000
June 1, 2018 through
      June 30, 2018
   —      —      —      27,931,000





Total
   419,955    $ 34.27    419,955

~~On February 14, 2018, we announced that our Board of Directors had authorized the~~We did not repurchase ~~of up to $50 million~~shares of our common ~~stock. Repurchases~~stock during the quarter ended June 30, 2018 are reflected in the table above. There is no stated expiration date for our current share repurchase plan. Any share repurchases may be made on the open market, through block trades, through~~10b5-1~~ plans or otherwise. The amount of shares purchased and the timing of the purchases will be based on market conditions, working capital requirements, general business conditions and other factors. We intend to retire the repurchased shares. All shares repurchased during the three months ended June 30, 2018 were retired.March 31, 2019.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Not applicable.

INSIGHT ENTERPRISES, INC.

Item 6. ~~Exhibits.~~Exhibits.

Incorporated by Reference

Exhibit

Number

Exhibit Description

Form

File No.

Exhibit

Number

Filing

Date

Filed

Herewith

Exhibit Description

Form

File No.

Exhibit

Number

Filing

Date

Filed

Herewith

3.1

Amended and Restated Certificate of Incorporation of Insight Enterprises, Inc.

10-K

000-25092

3.1

February 17, 2006

Amended and Restated Certificate of Incorporation of Insight Enterprises, Inc.

10-K

000-25092

3.1

February 17, 2006

3.2

Certificate of Amendment of Amended and Restated Certificate of Incorporation of Insight Enterprises, Inc.

8-K

000-25092

3.1

May 21, 2015

Certificate of Amendment of Amended and Restated Certificate of Incorporation of Insight Enterprises, Inc.

8-K

000-25092

3.1

May 21, 2015

3.3

Amended and Restated Bylaws of Insight Enterprises, Inc.

8-K

000-25092

3.2

May 21, 2015

Amended and Restated Bylaws of Insight Enterprises, Inc.

8-K

000-25092

3.2

May 21, 2015

4.1

Specimen Common Stock Certificate (P)

S-1

33-86142

4.1

January 20, 1995

Specimen Common Stock Certificate (P)

S-1

33-86142

4.1

January 20, 1995

10.1

Omnibus Amendment, dated as of June 27, 2018, among Insight Receivables, LLC, Insight Direct USA, Inc., Insight Public Sector, Inc., Insight Enterprises, Inc., the purchasers and managing agents party thereto and Wells Fargo Bank, National Association, as Agent, relating to the Receivables Purchase Agreement, dated as of December 31, 2002, as amended, and the Amended and Restated Receivables Sale Agreement, dated as of September 3, 2003, as amended

8-K

000-25092

10.1

June 29, 2018

31.1

Certification of Chief Executive Officer Pursuant to Securities Exchange Act Rule13a-14

Certification of Chief Executive Officer Pursuant to Securities Exchange Act Rule 13a-14

31.2

Certification of Chief Financial Officer Pursuant to Securities Exchange Act Rule13a-14

Certification of Chief Financial Officer Pursuant to Securities Exchange Act Rule 13a-14

32.1

Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101

Interactive data files pursuant to Rule 405 ofRegulation S-T

Interactive data files pursuant to Rule 405 of Regulation S-T

(P) Paper exhibit.

INSIGHT ENTERPRISES, INC.

~~SIGNATURES~~

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date:	May 1, 2019
~~Date: August 13, 2018~~		INSIGHT ENTERPRISES, INC.


~~By:~~
	By:	/s/ Kenneth T. Lamneck
		Kenneth T. Lamneck
		President and Chief Executive Officer
		(Duly Authorized Officer)


~~By:~~	By:	/s/ Glynis A. Bryan
			Glynis A. Bryan
			Chief Financial Officer
			(Principal Financial ~~Officer and~~ Officer)

		By:	/s/ Rachael A. Bertrandt
			Rachael A. Bertrandt
			Global Corporate Controller
			(Principal Accounting Officer)

4835

	Common Stock						Treasury Stock						Additional Paid-in			Accumulated Other Comprehensive			Retained			Total Stockholders'
	Shares			Par Value			Shares			Amount			Capital			Loss			Earnings			Equity
Balances at December 31, 2018		35,482			355			—			—			323,622			(41,653	)		704,665			986,989
Issuance of common stock under employee stock plans, net of shares withheld for payroll taxes		279			3			—			—			(6,131	)		—			—			(6,128	)
Stock-based compensation expense		—			—			—			—			4,115			—			—			4,115
Foreign currency translation adjustments, net of tax		—			—			—			—			—			1,915			—			1,915
Net earnings		—			—			—			—			—			—			39,327			39,327
Balances at March 31, 2019		35,761		$	358			—		$	—		$	321,606		$	(39,738	)	$	743,992		$	1,026,218


Balances at December 31, 2017		35,829			358			—			—			317,155			(24,264	)		550,220			843,469
Cumulative effect of accounting change		—			—			—			—			—			—			7,176			7,176
Issuance of common stock under employee stock plans, net of shares withheld for payroll taxes		240			2			—			—			(2,887	)		—			—			(2,885	)
Stock-based compensation expense		—			—			—			—			3,184			—			—			3,184
Repurchase of treasury stock		—			—			(221	)		(7,679	)		—			—			—			(7,679	)
Retirement of treasury stock		(221	)		(2	)		221			7,679			(1,959	)		—			(5,718	)		—
Foreign currency translation adjustments, net of tax		—			—			—			—			—			4,591			—			4,591
Net earnings		—			—			—			—			—			—			33,003			33,003
Balances at March 31, 2018		35,848		$	358			—		$	—		$	315,493		$	(19,673	)	$	584,681		$	880,859


	June 30, 2017		December 31, 2016
Cash and cash equivalents	$	194,783	$	202,882
Restricted cash included in other current assets		78		51
Restricted cash included in othernon-current assets		3,102		3,013

Total cash, cash equivalents and restricted cash shown in the statement of cash flows	$	197,963	$	205,946


	As Reported			Adjustments			Pre-Topic 606 Adoption
Cash and cash equivalents	$	248,122		$	—		$	248,122
Accounts receivable, net		2,161,077			(111,728	)		2,049,349
Inventories		174,099			—			174,099
Inventories not available for sale		4,528			78,607			83,135
Other current assets		122,397			35,618			158,015

Total current assets		2,710,223			2,497			2,712,720
Property and equipment, net		74,694			—			74,694
Goodwill		130,841			—			130,841
Intangible assets, net		93,300			—			93,300
Deferred income taxes		14,936			—			14,936
Other assets		68,736			(16,134	)		52,602

	$	3,092,730		$	(13,637	)	$	3,079,093

Accounts payable – trade	$	1,395,934		$	(55,105	)	$	1,340,829
Accounts payable – inventory financing facility		303,702			—			303,702
Accrued expenses and other current liabilities		199,069			(14,191	)		184,878
Current portion of long-term debt		16,924			—			16,924
Deferred revenue		66,179			78,966			145,145
				��
Total current liabilities		1,981,808			9,670			1,991,478
Long-term debt		144,888			—			144,888
Deferred income taxes		588			—			588
Other liabilities		58,955			(14,328	)		44,627

		2,186,239			(4,658	)		2,181,581

Stockholders’ equity:
Preferred stock		—			—			—
Common stock		355			—			355
Additionalpaid-in capital		315,619			—			315,619
Retained earnings		625,212			(8,916	)		616,296
Accumulated other comprehensive loss – foreign currency translation adjustments		(34,695	)		(63	)		(34,758	)

Total stockholders’ equity		906,491			(8,979	)		897,512

	$	3,092,730		$	(13,637	)	$	3,079,093


	As Reported		Adjustments			Pre-Topic 606 Adoption
Net sales:
Products	$	1,619,774	$	12,822		$	1,632,596
Services		217,146		(4,519	)		212,627

Total net sales		1,836,920		8,303			1,845,223

Costs of goods sold:
Products		1,488,921		11,433			1,500,354
Services		83,622		(2,122	)		81,500

Total costs of goods sold		1,572,543		9,311			1,581,854

Gross profit		264,377		(1,008	)		263,369
Operating expenses:
Selling and administrative expenses		189,464		171			189,635
Severance and restructuring expenses		382		—			382
Acquisition-related expenses		94		—			94

Earnings from operations		74,437		(1,179	)		73,258
Non-operating expense, net		4,981		—			4,981

Earnings before income taxes		69,456		(1,179	)		68,277
Income tax expense		17,977		(254	)		17,723

Net earnings	$	51,479	$	(925	)	$	50,554

Net earnings per share:
Basic	$	1.45	$	(0.03	)	$	1.42

Diluted	$	1.44	$	(0.03	)	$	1.41

Shares used in per share calculations:
Basic		35,483		—			35,483

Diluted		35,815		—			35,815


						Pre-Topic 606
	As Reported		Adjustments			Adoption
Net sales:
Products	$	3,201,929	$	3,325		$	3,205,254
Services		397,894		(6,515	)		391,379

Total net sales		3,599,823		(3,190	)		3,596,633

Costs of goods sold:
Products		2,927,655		364			2,928,019
Services		167,786		(1,606	)		166,180

Total costs of goods sold		3,095,441		(1,242	)		3,094,199

Gross profit		504,382		(1,948	)		502,434
Operating expenses:
Selling and administrative expenses		377,644		249			377,893
Severance and restructuring expenses		2,026		—			2,026
Acquisition-related expenses		94		—			94

Earnings from operations		124,618		(2,197	)		122,421
Non-operating expense, net		10,900		—			10,900

Earnings before income taxes		113,718		(2,197	)		111,521
Income tax expense		29,494		(457	)		29,037

Net earnings	$	84,224	$	(1,740	)	$	82,484

Net earnings per share:
Basic	$	2.36	$	(0.05	)	$	2.31

Diluted	$	2.34	$	(0.05	)	$	2.29

Shares used in per share calculations:
Basic		35,698		—			35,698

Diluted		36,039		—			36,039


	Increase (Decrease)
	Contract Assets			Contract Liabilities
Balances at January 1, 2018	$	595		$	86,743
Reclassification of the beginning contract liabilities to revenue, as the result of performance obligations satisfied		—			(44,644	)
Cash received in advance and not recognized as revenue		—			43,865
Reclassification of the beginning contract assets to receivables, as the result of rights to consideration becoming unconditional		(590	)		—
Contract assets recognized, net of reclassification to receivables		954			—
Cumulativecatch-up adjustment arising from changes in estimates of transaction price		—			(475	)

Balances at June 30, 2018	$	959		$	85,489


	North America Three Months Ended June 30,				EMEA Three Months Ended June 30,				APAC Three Months Ended June 30,
	2018		2017		2018		2017		2018		2017
Sales Mix			(As Reclassified)				(As Reclassified)				(As Reclassified)
Hardware	$	898,144	$	803,389	$	171,337	$	123,992	$	9,317	$	6,916
Software		308,269		341,643		193,116		190,116		39,591		39,409
Services		163,037		136,280		41,827		31,952		12,282		10,335

	$	1,369,450	$	1,281,312	$	406,280	$	346,060	$	61,190	$	56,660


	North America Six Months Ended June 30,				EMEA Six Months Ended June 30,				APAC Six Months Ended June 30,
	2018		2017		2018		2017		2018		2017
Sales Mix			(As Reclassified)				(As Reclassified)				(As Reclassified)
Hardware	$	1,771,485	$	1,514,253	$	358,347	$	262,869	$	16,477	$	10,996
Software		598,745		615,626		378,034		359,434		78,841		64,256
Services		306,618		262,385		70,314		54,112		20,962		17,644

	$	2,676,848	$	2,392,264	$	806,695	$	676,415	$	116,280	$	92,896


	Six Months Ended June 30, 2017
	North America		EMEA		APAC		Consolidated
Net sales:
Products	$	2,129,878	$	622,303	$	75,252	$	2,827,433
Services		262,386		54,112		17,644		334,142

Total net sales		2,392,264		676,415		92,896		3,161,575

Costs of goods sold:
Products		1,933,429		569,755		69,888		2,573,072
Services		117,748		8,381		2,768		128,897

Total costs of goods sold		2,051,177		578,136		72,656		2,701,969

Gross profit		341,087		98,279		20,240		459,606
Operating expenses:
Selling and administrative expenses		262,570		81,915		13,899		358,384
Severance and restructuring expenses		1,647		4,009		61		5,717
Acquisition-related expenses		3,223		—		—		3,223

Earnings (loss) from operations	$	73,647	$	12,355	$	6,280	$	92,282