UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

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

For the transition period from                      to                     

Commission File Number: 0-25092

INSIGHT ENTERPRISES, INC.

(Exact name of registrant as specified in its charter)

Delaware		86-0766246
(State or other jurisdiction of		(I.R.S. Employer Identification Number)
incorporation or organization)

6820 South Harl Avenue, Tempe, Arizona 85283
(Address of principal executive offices) (Zip Code)

(480) 902-1001
(Registrant’s telephone number, including area code)

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

Yes þ                No o

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

Yes o                No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o		Accelerated filer þ		Non-accelerated filer o		Smaller reporting company o
				(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o                No þ

The number of shares outstanding of the issuer’s common stock as of July 30, 2010 was 46,265,560.

 

 

INSIGHT ENTERPRISES, INC.
QUARTERLY REPORT ON FORM 10-Q
Three Months Ended June 30, 2010

TABLE OF CONTENTS

		Page
PART I — Financial Information
Item 1 — Financial Statements:
Consolidated Balance Sheets (unaudited) — June 30, 2010 and December 31, 2009			1
Consolidated Statements of Operations (unaudited) — Three and Six Months Ended June 30, 2010 and 2009			2
Consolidated Statements of Cash Flows (unaudited) — Six Months Ended June 30, 2010 and 2009			3
Notes to Consolidated Financial Statements (unaudited)			4
Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations			19
Item 3 — Quantitative and Qualitative Disclosures About Market Risk			29
Item 4 — Controls and Procedures			29
PART II — Other Information
Item 1 — Legal Proceedings			29
Item 1A — Risk Factors			30
Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds			31
Item 3 — Defaults Upon Senior Securities			31
Item 4 — [Removed and Reserved]			31
Item 5 — Other Information			31
Item 6 — Exhibits			31
Signatures			32
Exhibit 10.1
Exhibit 10.3
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1

INSIGHT ENTERPRISES, INC.

FORWARD-LOOKING INFORMATION

Certain statements in this Quarterly Report on Form 10-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: projections of matters that affect net sales, gross profit, operating expenses, earnings from continuing operations, non-operating income and expenses, net earnings or cash flows, cash needs and the sufficiency of our capital resources and the payment of debt balances and accrued expenses and liabilities; detail of our business strategy and our strategic initiatives; effects of acquisitions or dispositions; projections of capital expenditures and trade credit liability settlements and payments; our business outlook and earnings per share expectations in 2010; the availability of financing and our needs or plans relating thereto; plans relating to our products and services; the effect of new accounting principles or changes in accounting policies; the effect of and our exposure to guaranty and indemnification obligations and other off-balance sheet arrangements; projections about the outcome of ongoing tax audits; statements related to accounting estimates, including estimated stock-based compensation award forfeitures and the realization of deferred tax assets; the timing of amortization of stock-based compensation expense and accrued severance and restructuring costs; projections of compliance with debt covenants; our intentions to reinvest undistributed earnings of foreign subsidiaries; our positions and strategies with respect to ongoing and threatened litigation, including those matters identified in “Legal Proceedings” in Part II, Item 1 of this report; 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 the results discussed in the 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:

•

our reliance on partners for product availability, marketing funds, purchasing incentives and competitive products to sell;

•

changes in the information technology industry and/or rapid changes in product standards;

•

general economic conditions, including concerns regarding our ability to collect our accounts receivable and credit constraints;

•

disruptions in our information technology systems and voice and data networks, including our system upgrade and the migration of acquired businesses to our information technology systems and voice and data networks;

•

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

•

stockholder litigation and regulatory proceedings related to the restatement of our consolidated financial statements;

•

the integration and operation of acquired businesses, including our ability to achieve expected benefits of the acquisitions;

•

the variability and seasonality of our net sales and gross profit;

•

the risks associated with international operations;

•

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

•

exposure to foreign currency exchange risks;

•

changes in the overall capital markets that could increase our borrowing costs or reduce future availability of financing;

•

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

•

our dependence on key personnel; and

•

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 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 INFORMATION

Item 1. Financial Statements.

INSIGHT ENTERPRISES, INC.

		June 30,				December 31,
		2010				2009
ASSETS
Current assets:
Cash and cash equivalents		$	98,140			$	68,066
Accounts receivable, net of allowances for doubtful accounts of $17,765 and $22,364, respectively			1,003,807				998,770
Inventories			95,458				77,694
Inventories not available for sale			28,552				47,722
Deferred income taxes			30,489				35,750
Other current assets			36,509				32,318
Total current assets			1,292,955				1,260,320
Property and equipment, net of accumulated depreciation and amortization of $170,721 and $160,904, respectively			143,222				150,103
Goodwill			16,474				15,829
Intangible assets, net of accumulated amortization of $45,505 and $39,187, respectively			73,277				82,483
Deferred income taxes			76,140				78,489
Other assets			18,980				16,097
		$	1,621,048			$	1,603,321
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	802,409			$	695,549
Accrued expenses and other current liabilities			171,534				212,276
Current portion of long-term debt			885				875
Deferred revenue			47,038				54,135
Total current liabilities			1,021,866				962,835
Long-term debt			82,904				149,349
Deferred income taxes			2,554				3,054
Other liabilities			23,416				20,509
			1,130,740				1,135,747
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; 46,265 shares at June 30, 2010 and 45,956 shares at December 31, 2009 issued and outstanding			462				460
Additional paid-in capital			373,837				372,021
Retained earnings			109,943				73,864
Accumulated other comprehensive income — foreign currency translation adjustments			6,066				21,229
Total stockholders’ equity			490,308				467,574
		$	1,621,048			$	1,603,321

See accompanying notes to consolidated financial statements.

INSIGHT ENTERPRISES, INC.

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2010				2009				2010				2009
Net sales		$	1,277,618			$	1,037,162			$	2,326,998			$	1,988,322
Costs of goods sold			1,103,813				889,318				2,008,148				1,708,706
Gross profit			173,805				147,844				318,850				279,616
Operating expenses:
Selling and administrative expenses			127,830				123,865				255,541				257,208
Severance and restructuring expenses			1,318				2,130				1,389				8,477
Earnings from operations			44,657				21,849				61,920				13,931
Non-operating (income) expense:
Interest income			(179	)			(188	)			(306	)			(288	)
Interest expense			1,691				1,988				4,058				4,088
Net foreign currency exchange loss (gain)			404				(162	)			613				(213	)
Other expense, net			403				202				749				481
Earnings from continuing operations before income taxes			42,338				20,009				56,806				9,863
Income tax expense			15,424				7,116				20,727				3,767
Net earnings from continuing operations			26,914				12,893				36,079				6,096
Net earnings from a discontinued operation			—				2,801				—				2,801
Net earnings		$	26,914			$	15,694			$	36,079			$	8,897
Net earnings per share — Basic:
Net earnings from continuing operations		$	0.58			$	0.28			$	0.78			$	0.13
Net earnings from a discontinued operation			—				0.06				—				0.06
Net earnings per share		$	0.58			$	0.34			$	0.78			$	0.19
Net earnings per share — Diluted:
Net earnings from continuing operations		$	0.58			$	0.28			$	0.77			$	0.13
Net earnings from a discontinued operation			—				0.06				—				0.06
Net earnings per share		$	0.58			$	0.34			$	0.77			$	0.19
Shares used in per share calculations:
Basic			46,238				45,853				46,156				45,781
Diluted			46,739				46,336				46,691				46,023

See accompanying notes to consolidated financial statements.

INSIGHT ENTERPRISES, INC.

		Six Months Ended June 30,
		2010				2009*
Cash flows from operating activities:
Net earnings		$	36,079			$	8,897
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization			19,020				19,277
Provision for losses on accounts receivable			(423	)			1,328
Write-downs of inventories			2,764				3,882
Non-cash stock-based compensation			2,862				7,165
Non-cash gain from arbitrated claim, net of tax			—				(2,801	)
Excess tax benefit from employee gains on stock-based compensation			(908	)			—
Deferred income taxes			6,572				211
Changes in assets and liabilities:
(Increase) decrease in accounts receivable			(49,556	)			146,816
(Increase) decrease in inventories			(2,146	)			23,315
Increase in other current assets			(4,184	)			(8,292	)
Increase in other assets			(3,344	)			(1,022	)
Increase in accounts payable			153,368				4,544
Decrease in deferred revenue			(3,848	)			(3,763)
Decrease in accrued expenses and other liabilities			(27,218	)			(806	)
Net cash provided by operating activities			129,038				198,751
Cash flows from investing activities:
Acquisition of Calence, net of cash acquired			(5,123	)			(12,834	)
Purchases of property and equipment			(8,311	)			(8,345	)
Net cash used in investing activities			(13,434	)			(21,179	)
Cash flows from financing activities:
Borrowings on senior revolving credit facility			514,000				529,873
Repayments on senior revolving credit facility			(580,000	)			(638,373	)
Borrowings on accounts receivable securitization financing facility			25,000				145,000
Repayments on accounts receivable securitization financing facility			(25,000	)			(145,000	)
Payments on capital lease obligation			(435	)			—
Net (repayments) borrowings under inventory financing facility			(8,123	)			1,210
Payment of deferred financing fees			—				(531	)
Proceeds from sales of common stock under employee stock plans			35				—
Excess tax benefit from employee gains on stock-based compensation			908				—
Payment of payroll taxes on stock-based compensation through shares withheld			(1,246	)			(398	)
Net cash used in financing activities			(74,861	)			(108,219	)
Foreign currency exchange effect on cash flows			(10,669	)			1,292
Increase in cash and cash equivalents			30,074				70,645
Cash and cash equivalents at beginning of period			68,066				49,175
Cash and cash equivalents at end of period		$	98,140			$	119,820

See accompanying notes to consolidated financial statements.

INSIGHT ENTERPRISES, INC.

1. Basis of Presentation and Recently Issued Accounting Pronouncements

We are a leading provider of information technology (“IT”) hardware, software and services to small, medium and large businesses and public sector institutions in North America, Europe, the Middle East, Africa and Asia-Pacific. The 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

Currently, our offerings in North America and the United Kingdom include IT hardware, software and services. Our offerings in the remainder of our EMEA segment and in APAC are almost entirely software and select 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, 2010, our results of operations for the three and six months ended June 30, 2010 and 2009 and our cash flows for the six months ended June 30, 2010 and 2009. The consolidated balance sheet as of December 31, 2009 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 (“SEC”) and consequently do not include all of the disclosures normally required by United States generally accepted accounting principles (“GAAP”).

The results of operations for such interim periods are not necessarily indicative of results for the full year, due in part to the seasonal nature of the 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 Form 10-K for the year ended December 31, 2009.

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 reported 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, litigation-related obligations and contingencies, valuation allowances for deferred tax assets and impairment of long-lived assets, including purchased intangibles and goodwill, if indicators of potential impairment exist.

The consolidated financial statements include the accounts of Insight Enterprises, Inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. References to “the Company,” “we,” “us,” “our” and other similar words refer to Insight Enterprises, Inc. and its consolidated subsidiaries, unless the context suggests otherwise.

Reclassifications

We reclassified $4,686,000 of inventories in North America at December 31, 2009 to inventories not available for sale in the accompanying balance sheet as of December 31, 2009 to conform to the presentation at June 30, 2010.

INSIGHT ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

Consistent with our presentation as of December 31, 2009, included in our Consolidated Financial Statements in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2009, we reclassified certain current asset and current liability amounts as of June 30, 2009 which affected the accompanying consolidated statement of cash flows for the six months ended June 30, 2009 to conform to the presentation for the six months ended June 30, 2010. Such reclassifications were required to conform presentation among all of our subsidiaries. Such reclassifications had no effect on previously reported net earnings or operating cash flow amounts.

Consistent with our presentation for the year ended December 31, 2009, we revised the classification of the net increase in book overdrafts of $6,126,000 for the six months ended June 30, 2009, from a financing activity to an operating activity in our consolidated statements of cash flows. We concluded this classification is preferable as our book overdrafts, which are not directly linked to a credit facility or other bank overdraft arrangement, do not result in an actual bank financing, but rather constitute normal unpaid trade payables at the end of a reporting period. The revision in classification had no effect on our consolidated balance sheet or reported net earnings in any period.

Recently Issued Accounting Pronouncements

There have been no material changes or additions to the recently issued accounting pronouncements as previously reported in Note 1 to our Consolidated Financial Statements in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2009 which affect or may affect our financial statements.

2. Net Earnings from Continuing Operations Per Share (“EPS”)

Basic EPS is computed by dividing net earnings from continuing operations 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. Dilutive potential common shares include outstanding stock options (using the treasury stock method) and restricted stock units. A reconciliation of the denominators of the basic and diluted EPS calculations follows (in thousands, except per share data):

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2010				2009				2010				2009
Numerator:
Net earnings from continuing operations		$	26,914			$	12,893			$	36,079			$	6,096
Denominator:
Weighted average shares used to compute basic EPS			46,238				45,853				46,156				45,781
Dilutive potential common shares due to dilutive options and restricted stock units, net of tax effect			501				483				535				242
Weighted average shares used to compute diluted EPS			46,739				46,336				46,691				46,023
Net earnings from continuing operations per share:
Basic		$	0.58			$	0.28			$	0.78			$	0.13
Diluted		$	0.58			$	0.28			$	0.77			$	0.13

INSIGHT ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

The following weighted average outstanding stock options were not included in the diluted EPS calculations because the exercise prices of these options were greater than the average market price of our common stock during the respective periods (in thousands):

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2010				2009				2010				2009
Weighted-average outstanding stock options excluded from the diluted EPS calculation			354				1,759				446				2,028

3. Goodwill

During the six months ended June 30, 2010, we recorded $645,000 of additional purchase price consideration and the related accrued interest thereon as a result of Calence, LLC (“Calence”), acquired April 1, 2008, achieving certain performance targets during the first quarter of 2010. The additional goodwill was recorded as part of our North America reporting unit. The final payment of $5,123,000 for additional purchase price consideration and the related accrued interest thereon was paid to the former owners of Calence on April 1, 2010.

4. Debt, Capital Lease Obligation and Inventory Financing Facility

Debt

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

		June 30,				December 31,
		2010				2009
Senior revolving credit facility		$	81,000			$	147,000
Accounts receivable securitization financing facility			—				—
Capital lease obligation			2,789				3,224
Total			83,789				150,224
Less: current portion of obligation under capital lease			(885	)			(875	)
Less: current portion of revolving credit facilities			—				—
Long-term debt		$	82,904			$	149,349

Our senior revolving credit facility has a maximum borrowing capacity of $300,000,000 and matures April 1, 2013.

Our accounts receivable securitization financing facility (the “ABS facility”) has a maximum borrowing capacity of $150,000,000. 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, 2010, availability under the ABS facility was $117,000,000.

On July 1, 2010, we entered into an amendment to the ABS facility, which amends certain provisions of the ABS facility to improve availability in the Borrowing Base, as defined in the ABS facility, but did not change the $150,000,000 maximum borrowing capacity. Specifically, the amendment (i) excludes from the Borrowing Base receivables of a specified obligor that had a negative impact on availability under the facility, (ii) creates a basket to allow up to 10% of gross receivables with terms between 60 and 90 days to be eligible for borrowing, and (iii) increases to 35% from 25% the threshold above which the total amount of a particular obligor’s receivables are treated as ineligible if the percentage of such obligor’s receivables that are more than 60 days past due exceeds such threshold. In addition, the amendment extends the maturity date of the ABS facility, which was to have expired on July 23, 2010, to April 1, 2013, and decreases the variable interest rate by approximately 80 basis points for funds provided under the ABS facility, calculated as the specified Pooled Commercial Paper Rate, as defined in the ABS facility, plus a fixed 1.45% margin (the “CP Margin”). However, beginning on June 15, 2012 (the “Reset Date”), the CP Margin may increase (but in no event exceed 1.50%) based on percentage changes in high yield spreads comparing average index rates for the calendar month prior to the Reset Date against average index rates for the corresponding calendar month in the previous year. Finally, the amendment provides that, under certain circumstances, the Company may be required to obtain a public rating of the ABS facility from one or more credit rating agencies of at least “A” or its equivalent. Failure by the Company to obtain such rating would result in an Amortization Event under the ABS facility.

INSIGHT ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

Our consolidated debt balance that can be outstanding at the end of any fiscal quarter under our senior revolving credit facility 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 the Company’s trailing twelve month net earnings plus (i) interest expense, less non-cash imputed interest on our inventory financing facility, (ii) income tax expense, (iii) depreciation and amortization and (iv) non-cash stock-based compensation (referred to herein as “adjusted earnings”). The maximum leverage ratio permitted under the agreements is 2.75 times trailing twelve-month adjusted earnings. As a result of this limitation, of the $450,000,000 of aggregate maximum debt capacity available under our senior revolving credit facility and our ABS facility, the Company’s debt balance that could have been outstanding as of June 30, 2010 was limited to $389,500,000 based on 2.75 times the Company’s trailing twelve-month adjusted earnings. The maximum leverage, minimum fixed charge and asset coverage ratio financial covenant requirements under the ABS facility were not modified as part of the July 1, 2010 amendment to the ABS facility.

Our financing facilities contain various covenants. If we fail to comply with these covenants, the lenders would be able to demand payment within a specified period of time. At June 30, 2010, we were in compliance with all such covenants.

Capital Lease Obligation

In July 2009, we entered into a four-year lease for certain IT equipment. Subsequently, in November 2009, we amended this lease to include additional IT equipment to be used in the same manner as the equipment covered by the initial lease. The obligations under the capitalized lease are included in long-term debt in our consolidated balance sheet as of June 30, 2010. The current and long-term portions of the obligation are included in the table above.

The equipment held under the capitalized lease is included in property and equipment and is amortized on a straight-line basis over the lease term. The related amortization expense is included in selling and administrative expenses in our consolidated statements of operations for the three and six months ended June 30, 2010. As of June 30, 2010, accumulated amortization on the capital lease assets was $781,000.

Inventory Financing Facility

On April 26, 2010, we entered into an amendment to our inventory financing facility to increase the aggregate availability for vendor purchases under the facility from $90,000,000 to $100,000,000. As of June 30, 2010 and December 31, 2009, $86,159,000 and $94,282,000, respectively, was included in accounts payable within the consolidated balance sheets related to our inventory financing facility.

5. Income Taxes

Our effective tax rate for the three and six months ended June 30, 2010 was 36.4% and 36.5%, respectively. For the three and six months ended June 30, 2010, 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 tax, partially offset by lower taxes on earnings in foreign jurisdictions.

Our effective tax rate from continuing operations for the three and six months ended June 30, 2009 was 35.6% and 38.2%, respectively. For the three and six months ended June 30, 2009, 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 tax, partially offset by lower taxes on earnings in foreign jurisdictions.

INSIGHT ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

As of June 30, 2010 and December 31, 2009, we had $5,667,000 and $5,923,000, respectively, of unrecognized tax benefits. Of these amounts, approximately $456,000 and $330,000 relate to accrued interest as of June 30, 2010 and December 31, 2009, respectively.

Several of our subsidiaries are currently under audit for tax years 2002 through 2008. It is reasonably possible that the examination phase of these audits may conclude in the next 12 months and that the related unrecognized tax benefits for uncertain tax positions may change, potentially having a material effect on our effective tax rate. 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.

6. Severance, Restructuring and Acquisition Integration Activities

Severance Costs Expensed for 2010 Resource Actions

During the three months ended June 30, 2010, North America and EMEA recorded severance expense totaling $943,000 and $603,000, respectively, and during the six months ended June 30, 2010, North America and EMEA recorded severance expense totaling $943,000 and $909,000, respectively. The North America charge was part of the roll-out of our new sales engagement model and plans to add new leadership in key areas, and the EMEA charge was associated with the severance for six former teammates. The outstanding obligations as of June 30, 2010 of $739,000 and $691,000 for North America and EMEA, respectively, are expected to be paid during the year ending December 31, 2010 and are therefore included in accrued expenses and other current liabilities.

Severance Costs Expensed for 2009 Resource Actions

During the year ended December 31, 2009, North America, EMEA and APAC recorded severance expense related to the departure of our former President and Chief Executive Officer from the Company and ongoing restructuring efforts to reduce operating expenses. As of December 31, 2009, all severance costs recorded by APAC in connection with 2009 resource actions had been paid. The following table details the changes in these liabilities in North America and EMEA during the six months ended June 30, 2010 (in thousands):

		North America				EMEA				Consolidated
Balance at December 31, 2009		$	38			$	1,904			$	1,942
Foreign currency translation adjustments			—				(234	)			(234	)
Adjustments			—				(393	)			(393	)
Cash payments			(38	)			(516	)			(554	)
Balance at June 30, 2010		$	—			$	761			$	761

In EMEA, adjustments of $228,000 and $393,000 were recorded as a reduction to severance and restructuring expense during the three and six months ended June 30, 2010, respectively, and a reduction of the related severance accrual due to changes in estimates as cash payments were made. All remaining outstanding obligations are expected to be paid during the year ending December 31, 2010 and are therefore included in accrued expenses and other current liabilities.

INSIGHT ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

Severance Costs Expensed for 2008 Resource Actions

During the year ended December 31, 2008, North America, EMEA and APAC recorded severance expense related to ongoing restructuring efforts to reduce operating expenses related to support functions. As of December 31, 2009, all severance costs recorded by APAC in connection with the 2008 resource actions had been paid. During the first quarter of 2010, final cash payments totaling $19,000 were made on the remaining accrued severance costs in North America and an adjustment of $70,000 was recorded as a reduction to severance and restructuring expense and the related severance accrual in EMEA due to changes in estimates. As of June 30, 2010, there were no outstanding severance obligations associated with the 2008 resource actions.

Acquisition-Related Costs Capitalized in 2006 as a Cost of Acquisition of Software Spectrum

In 2006, we recorded $9,738,000 of employee termination benefits and $1,676,000 of facility based costs in connection with the integration of Software Spectrum. These costs were recognized as a liability assumed in the purchase business combination and included in the allocation of the cost to acquire Software Spectrum.

The employee termination benefits relate to severance payments for Software Spectrum teammates in North America and EMEA who have been or will be terminated in connection with integration plans. The facilities based costs relate to future lease payments or lease termination costs associated with vacating certain Software Spectrum facilities in EMEA.

As of December 31, 2009, all severance costs recorded by North America in connection with the integration of Software Spectrum had been paid.

The following table details the changes in the remaining EMEA liabilities during the six months ended June 30, 2010 (in thousands):

		EMEA
Balance at December 31, 2009		$	1,358
Foreign currency translation adjustments			(149	)
Cash payments			(272	)
Balance at June 30, 2010		$	937

All remaining outstanding obligations are expected to be paid within the next twelve months and are therefore included in accrued expenses and other current liabilities.

Restructuring Costs Expensed in 2005

During the year ended December 31, 2005, Insight UK moved into a new facility and recorded facilities-based restructuring costs of $7,458,000. The related leases expired in October 2009, and the remaining balance in the accrual as of June 30, 2010 of $72,000 (related to certain service charges) is expected to be paid during the year ending December 31, 2010 and therefore is included in accrued expenses and other current liabilities.

7. Stock-Based Compensation

We recorded the following pre-tax amounts for stock-based compensation, by operating segment, in our consolidated financial statements (in thousands):

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2010				2009				2010				2009
North America		$	1,247			$	865			$	2,189			$	5,125
EMEA			359				179				597				1,932
APAC			42				30				76				108
Total		$	1,648			$	1,074			$	2,862			$	7,165

INSIGHT ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

Stock Options

For the three months ended June 30, 2010 and 2009, we recorded stock-based compensation expense related to stock options, net of an estimate of forfeitures, of $92,000 and $70,000, respectively. For the six months ended June 30, 2010 and 2009, we recorded stock-based compensation expense related to stock options, net of an estimate of forfeitures, of $183,000 and $135,000, respectively. As of June 30, 2010, total compensation cost not yet recognized related to nonvested stock options is $172,000, which will be recognized through December 2010.

The following table summarizes our stock option activity during the six months ended June 30, 2010:

														Weighted
										Aggregate				Average
						Weighted				Intrinsic Value				Remaining
		Number				Average				(in-the-money				Contractual
		Outstanding				Exercise Price				options)				Life (in years)
Outstanding at January 1, 2010			589,424			$	18.82
Granted			—				—
Exercised			(2,500	)			13.94			$	3,906
Forfeited or expired			(297,393	)			18.96
Outstanding at June 30, 2010			289,531				18.72			$	—				1.86
Exercisable at June 30, 2010			222,865				19.01			$	—				1.67
Vested and expected to vest			289,531				18.72			$	—				1.86

There is no aggregate intrinsic value as of June 30, 2010 reflected in the preceding table because our closing stock price of $13.16 as of June 30, 2010 was less than the exercise price of all outstanding options as of June 30, 2010.

The following table summarizes the status of outstanding stock options as of June 30, 2010:

		Options Outstanding
						Weighted				Weighted				Options Exercisable
						Average				Average								Weighted
Range of		Number of				Remaining				Exercise				Number of				Average Exercise
Exercise		Options				Contractual				Price Per				Options				Price Per
Prices		Outstanding				Life (in years)				Share				Exercisable				Share
$13.94 – 17.06			27,909				0.66			$	15.10				27,909			$	15.10
17.77 – 17.77			200,000				2.47				17.77				133,334				17.77
18.36 – 31.67			57,961				0.44				22.55				57,961				22.55
31.94 – 40.25			3,586				0.04				37.69				3,586				37.69
40.29 – 40.29			75				0.03				40.29				75				40.29
			289,531				1.86				18.72				222,865				19.01

Restricted Stock

For the three months ended June 30, 2010 and 2009, we recorded stock-based compensation expense, net of an estimate of forfeitures, related to restricted stock units (“RSUs”) of $1,556,000 and $1,004,000, respectively. For the six months ended June 30, 2010 and 2009, we recorded stock-based compensation expense, net of an estimate of forfeitures, related to RSUs of $2,679,000 and $7,030,000, respectively. The expense for the six months ended June 30, 2009 includes a non-cash charge of $5,478,000 that was recognized as a result of the cancellation of certain long-term incentive awards and is discussed further in our Annual Report on Form 10-K for the year ended December 31, 2009. As of June 30, 2010, total compensation cost not yet recognized related to nonvested RSUs is $11,735,000, which is expected to be recognized over the next 1.31 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 months ended June 30, 2010:

						Weighted Average
		Number				Grant Date Fair Value				Fair Value
Nonvested at January 1, 2010			1,126,797			$	5.95
Granted			903,528				13.15
Vested, including shares withheld to cover taxes			(399,472	)			8.67			$	5,356,828	(a)
Forfeited			(95,022	)			7.55
Nonvested at June 30, 2010			1,535,831				9.38			$	20,211,536	(b)
Expected to vest			1,443,488							$	18,996,302	(b)

During the six months ended June 30, 2010 and 2009, the RSUs that vested for teammates in the United States were net-share settled such that we withheld shares with value equivalent to the teammates’ minimum statutory United States tax obligations for the applicable income and other employment taxes and remitted the corresponding cash amount to the appropriate taxing authorities. The total shares withheld during the six months ended June 30, 2010 and 2009 of 93,473 and 100,803, respectively, were based on the value of the RSUs on their vesting date as determined by our closing stock price on such vesting date. For the six months ended June 30, 2010 and 2009, total payments for the employees’ tax obligations to the taxing authorities were $1,246,000 and $398,000, respectively, and are reflected as a financing activity within the consolidated statements of cash flows. These net-share settlements had the economic effect of repurchases of common stock as they reduced the number of shares that would have otherwise been issued as a result of the vesting and did not represent a repurchase of shares or an expense to us.

8. Derivative Financial Instruments

We use derivatives to partially offset our exposure to fluctuations in certain foreign currencies. We do not enter into derivatives for speculative or trading purposes. Derivatives are recorded at fair value on the balance sheet and gains or losses resulting from changes in fair value of the derivative are recorded currently in income. The Company does not designate its hedges for hedge accounting.

Non-Designated Hedges

We use foreign exchange forward contracts to hedge certain non-functional currency assets and liabilities from changes in exchange rate movements. Our non-functional currency assets and liabilities are primarily related to foreign currency denominated payables, receivables, and cash balances. The foreign currency forward contracts, carried at fair value, typically have a maturity of one month or less. We currently enter into approximately three foreign exchange forward contracts per month with an average notional value of $8,000,000 and an average maturity of approximately two weeks. Additional information on our purpose for entering into derivatives is described in “Quantitative and Qualitative Disclosures About Market Risk” in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2009.

The counterparties associated with our foreign exchange forward contracts are large credit worthy commercial banks. The derivatives transacted with these institutions are short in duration, and therefore we do not consider counterparty concentration and non-performance to be material risks.

INSIGHT ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

The following table summarizes our derivative financial instruments as of June 30, 2010 and December 31, 2009 (in thousands):

				June 30, 2010								December 31, 2009
				Asset				Liability				Asset				Liability
				Derivatives				Derivatives				Derivatives				Derivatives
		Balance Sheet Location		Fair Value				Fair Value				Fair Value				Fair Value
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts		Other current assets		$	95			$	—			$	105			$	—
Foreign exchange forward contracts		Accrued expenses and other current liabilities			—				334				—				65
Total derivatives not designated as hedging instruments				$	95			$	334			$	105			$	65

The following table summarizes the effect of our derivative financial instruments on our results of operations during the three and six months ended June 30, 2010 and 2009 (in thousands):

				Amount of (Gain) Loss Recognized in
				Earnings on Derivatives
		Location of (Gain) Loss		Three Months Ended								Six Months Ended
Derivatives Not Designated as		Recognized in		June 30,								June 30,
Hedging Instruments		Earnings on Derivatives		2010				2009				2010				2009
Foreign exchange forward contracts		Net foreign currency exchange (gain) loss		$	(1,063	)		$	682			$	(1,461	)		$	1,817
Total				$	(1,063	)		$	682			$	(1,461	)		$	1,817

9. Fair Value Measurements

The following table summarizes the valuation of our financial instruments by the following three categories as of June 30, 2010 and December 31, 2009 (in thousands):

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

														December 31,
						June 30, 2010								2009
						Foreign				Long-lived				Foreign
						Exchange				Asset Held				Exchange
Balance Sheet Classification						Derivatives				for Sale				Derivatives
Other current assets		Level 1				$	—			$	—			$	—
		Level 2					95				1,500				105
		Level 3					—				—				—
						$	95			$	1,500			$	105
Accrued expenses and other current liabilities		Level 1				$	—			$	—			$	—
		Level 2					334				—				65
		Level 3					—				—				—
						$	334			$	—			$	65

INSIGHT ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

We have elected to use the income approach to value our foreign exchange derivatives, using observable Level 2 market expectations at the measurement date and standard valuation techniques to convert future amounts to a single present value amount assuming that participants are motivated, but not compelled, to transact. Level 2 inputs for the valuations are limited to quoted prices for similar assets or liabilities in active markets and inputs other than quoted prices that are observable for the asset or liability (specifically LIBOR rates, foreign exchange rates, and foreign exchange forward points). Mid-market pricing is used as a practical expedient for fair value measurements. The fair value measurement of an asset or liability must reflect the nonperformance risk of the entity and the counterparty. Therefore, the impact of the counterparty’s creditworthiness when in an asset position and the Company’s creditworthiness when in a liability position has also been factored into the fair value measurement of the derivative instruments and did not have a material impact on the fair value of these derivative instruments. Both the counterparty and the Company are expected to continue to perform under the contractual terms of the instruments. We did not have any assets or liabilities measured at Level 1 or Level 3 or implement any changes in our valuation techniques as of and for the three and six months ended June 30, 2010.

As of June 30, 2010, other than the asset held for sale discussed below, we have no nonfinancial assets or liabilities that are measured at fair value on a recurring basis, and our other financial assets or liabilities generally consist of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses and other current liabilities. The estimated fair values of our cash equivalents is determined based on quoted prices in active markets for identical assets. The fair value of the other financial assets and liabilities is based on the value that would be received or paid in an orderly transaction between market participants and approximates the carrying value due to their nature and short duration.

In accordance with the terms of our President and CEO’s employment agreement that was effective January 1, 2010, the Company acquired his former residence on the Gulf Coast of Florida for $2,100,000 in May 2010. The price paid was based on two independent real estate appraisals performed in late January/early February of 2010, immediately subsequent to the President and CEO’s employment. The long-lived asset held for sale is included in other current assets in the accompanying balance sheet as of June 30, 2010 based on the Company’s current disposal plans. As of June 30, 2010, the asset was written down to its fair value, less estimated costs to sell, of $1,500,000, resulting in a loss of $600,000, which was included in selling and administrative expenses during the three and six months ended June 30, 2010.

10. Comprehensive Income

Comprehensive income for the three and six months ended June 30, 2010 and 2009 includes the following component (in thousands):

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2010				2009				2010				2009
Net earnings		$	26,914			$	15,694			$	36,079			$	8,897
Other comprehensive income, net of tax:
Foreign currency translation adjustments			(8,044	)			14,172				(15,163	)			8,638
Total comprehensive income		$	18,870			$	29,866			$	20,916			$	17,535

11. 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, 2010 and December 31, 2009, we had approximately $16,235,000 and $14,116,000, respectively, 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 them.

INSIGHT ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

Employment Contracts and Severance Plans

We have employment contracts with, and 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 stock based compensation 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.

Guaranties

In the ordinary course of business, we may guarantee the indebtedness or performance obligations of our subsidiaries to vendors and clients. We have not recorded specific liabilities for these guaranties in our consolidated financial statements because, to the extent applicable, we have recorded the underlying liabilities associated with the guaranties. In the event we are required to perform under the related contracts, we believe the cost of such performance would not have a material adverse effect on our consolidated financial position, results of operations or liquidity. Our financing agreements generally limit the amount of guarantees that may be outstanding at a point in time related to client or vendor contracts where such guarantees are considered indebtedness, as defined in the financing agreements.

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, 2010. Accordingly, we have not accrued any liabilities related to such indemnifications in our consolidated financial statements.

We have entered into separate indemnification agreements with 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 paid 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. Other than the pending purported class action litigation and the State derivative actions discussed under “Legal Proceedings” below, 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 vendor 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

We are party to various legal proceedings arising in the ordinary course of business, including preference payment claims asserted in client bankruptcy proceedings, claims of alleged infringement of patents, trademarks, copyrights and other intellectual property rights, claims of alleged non-compliance with contract provisions and claims related to alleged violations of laws and regulations.

We make a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and are adjusted to reflect the effects of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular claim. Although litigation is inherently unpredictable, we believe that we have adequate provisions for any probable and reasonably 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.

Beginning in March 2009, three purported class action lawsuits were filed in the U.S. District Court for the District of Arizona against us and certain of our current and former directors and officers on behalf of purchasers of our securities during the period April 22, 2004 to February 6, 2009. Two plaintiffs voluntarily dismissed their complaints, and the District Court appointed a lead plaintiff and lead counsel. The plaintiff in the remaining action filed an amended complaint in September 2009, seeking unspecified damages, and the District Court dismissed the amended complaint on April 30, 2010. On June 1, 2010, the plaintiff filed a second amended complaint, which asserts claims under the federal securities laws relating to our February 9, 2009 announcement that we expected to restate our financial statements and also includes additional allegations regarding other purported accounting and revenue recognition issues during the class period. All defendants have filed motions to dismiss the second amended complaint, and briefing on the motions to dismiss will continue through August 2010. In June 2009, we were notified that three shareholder derivative lawsuits had been filed, two in the Superior Court in Maricopa County, Arizona (the “State derivative actions”) and one in the U.S. District Court for the District of Arizona (the “Federal derivative action”), by persons identifying themselves as Insight shareholders and purporting to act on behalf of Insight, naming Insight as a nominal defendant and current and former officers and directors as defendants. Initially, the three derivative action complaints, like the purported class action complaint, primarily arose out of our February 9, 2009 announcement. The Federal derivative action has been dismissed with prejudice. The two State derivative actions were consolidated into a single action, and the plaintiff filed an amended complaint in the consolidated action on October 30, 2009 that alleges breaches of fiduciary duties of loyalty and good faith, breach of fiduciary duties for insider selling and misappropriation of information, and unjust enrichment. The amount of damages sought by the plaintiffs is not specified in the consolidated complaint. We moved to dismiss the State derivative actions, and oral argument on the motion to dismiss will be heard in August 2010. In July and September 2009, we received, from the plaintiff in the Federal derivative action, separate demands to inspect our books and records pursuant to Section 220 of the Delaware General Corporation Law, and we objected to both demands as improper. In November 2009, that same plaintiff filed a lawsuit in the Court of Chancery of the State of Delaware seeking to compel the inspection of certain books and records. In January 2010, we filed a motion to dismiss that complaint, and the Court of Chancery heard oral argument on the motions to dismiss in March 2010. On June 3, 2010, the Court of Chancery granted our motion and dismissed the suit with prejudice. We have tendered a claim to our D&O liability insurance carriers, and our carriers have acknowledged their obligations under these policies subject to a reservation of rights.

Aside from the matters discussed above, the Company is not involved in any pending or threatened legal proceedings that it believes could reasonably be expected to have a material adverse effect on its financial condition, results of operations or liquidity.

INSIGHT ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

12. Segment Information

We operate in three reportable geographic operating segments: North America; EMEA; and APAC. Currently, our offerings in North America and the United Kingdom include IT hardware, software and services. Our offerings in the remainder of our EMEA segment and in APAC are almost entirely software and select software-related services. Net sales by product or service type for North America, EMEA and APAC were as follows for the three and six months ended June 30, 2010 and 2009 (in thousands):

		North America								EMEA								APAC
		Three Months Ended								Three Months Ended								Three Months Ended
		June 30,								June 30,								June 30,
Sales Mix		2010				2009				2010				2009				2010				2009
Hardware		$	528,295			$	415,667			$	98,330			$	86,795			$	352			$	597
Software			285,974				237,267				256,614				191,186				51,085				41,227
Services			51,232				60,597				4,266				3,260				1,470				566
		$	865,501			$	713,531			$	359,210			$	281,241			$	52,907			$	42,390

		North America								EMEA								APAC
		Six Months Ended								Six Months Ended								Six Months Ended
		June 30,								June 30,								June 30,
Sales Mix		2010				2009				2010				2009				2010				2009
Hardware		$	982,746			$	786,446			$	219,562			$	180,251			$	410			$	676
Software			470,965				475,872				448,124				364,793				94,364				61,054
Services			100,084				111,314				8,817				6,922				1,926				994
		$	1,553,795			$	1,373,632			$	676,503			$	551,966			$	96,700			$	62,724

All intercompany transactions are eliminated upon consolidation, and there are no differences between the accounting policies used to measure profit and loss for our segments and 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 and six months ended June 30, 2010.

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. 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 tables below present information about our reportable operating segments as of and for the three months ended June 30, 2010 and 2009 (in thousands):

		Three Months Ended June 30, 2010
		North America				EMEA				APAC				Consolidated
Net sales		$	865,501			$	359,210			$	52,907			$	1,277,618
Costs of goods sold			745,877				312,727				45,209				1,103,813
Gross profit			119,624				46,483				7,698				173,805
Operating expenses:
Selling and administrative expenses			86,366				36,491				4,973				127,830
Severance and restructuring expenses			943				375				—				1,318
Earnings from operations		$	32,315			$	9,617			$	2,725				44,657
Non-operating expense, net															2,319
Earnings before income taxes															42,338
Income tax expense															15,424
Net earnings														$	26,914
Total assets at period end		$	1,408,031			$	498,976			$	64,595			$	1,971,602	*

		Three Months Ended June 30, 2009
		North America				EMEA				APAC				Consolidated
Net sales		$	713,531			$	281,241			$	42,390			$	1,037,162
Costs of goods sold			613,783				239,468				36,067				889,318
Gross profit			99,748				41,773				6,323				147,844
Operating expenses:
Selling and administrative expenses			85,980				33,814				4,071				123,865
Severance and restructuring expenses			—				1,900				230				2,130
Earnings from operations		$	13,768			$	6,059			$	2,022				21,849
Non-operating expense, net															1,840
Earnings from continuing operations before income taxes															20,009
Income tax expense															7,116
Net earnings from continuing operations															12,893
Net earnings from a discontinued operation															2,801
Net earnings														$	15,694
Total assets at period end		$	1,324,413			$	433,766			$	55,496			$	1,813,675	**

INSIGHT ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

The tables below present information about our reportable operating segments as of and for the six months ended June 30, 2010 and 2009 (in thousands):

		Six Months Ended June 30, 2010
		North America				EMEA				APAC				Consolidated
Net sales		$	1,553,795			$	676,503			$	96,700			$	2,326,998
Costs of goods sold			1,335,224				588,759				84,165				2,008,148
Gross profit			218,571				87,744				12,535				318,850
Operating expenses:
Selling and administrative expenses			171,229				74,890				9,422				255,541
Severance and restructuring expenses			943				446				—				1,389
Earnings from operations		$	46,399			$	12,408			$	3,113				61,920
Non-operating expense, net															5,114
Earnings before income taxes															56,806
Income tax expense															20,727
Net earnings														$	36,079
Total assets at period end		$	1,408,031			$	498,976			$	64,595			$	1,971,602	*

		Six Months Ended June 30, 2009
		North America				EMEA				APAC				Consolidated
Net sales		$	1,373,632			$	551,966			$	62,724			$	1,988,322
Costs of goods sold			1,180,841				474,289				53,576				1,708,706
Gross profit			192,791				77,677				9,148				279,616
Operating expenses:
Selling and administrative expenses			181,087				68,720				7,401				257,208
Severance and restructuring expenses			5,859				2,317				301				8,477
Earnings from operations		$	5,845			$	6,640			$	1,446				13,931
Non-operating expense, net															4,068
Earnings from continuing operations before income taxes															9,863
Income tax expense															3,767
Net earnings from continuing operations															6,096
Net earnings from a discontinued operation															2,801
Net earnings														$	8,897
Total assets at period end		$	1,324,413			$	433,766			$	55,496			$	1,813,675	**

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

		Three Months Ended June 30,								Six Months Ended June 30,
		2010				2009				2010				2009
North America		$	7,602			$	7,782			$	15,483			$	15,963
EMEA			1,503				1,582				3,196				3,041
APAC			172				140				341				273
Total		$	9,277			$	9,504			$	19,020			$	19,277