EX-99.1 2 c07635exv99w1.htm EXHIBIT 99.1 Exhibit 99.1
Exhibit 99.1
(INSIGHT LOGO)
     
FOR IMMEDIATE RELEASE   Nasdaq: NSIT
INSIGHT ENTERPRISES, INC. REPORTS THIRD QUARTER
2010 RESULTS
TEMPE, Ariz. — November 3, 2010 — Insight Enterprises, Inc. (Nasdaq: NSIT) (the “Company”) today reported results of operations for the quarter ended September 30, 2010.
Third Quarter Highlights
For the third quarter of 2010 compared to the third quarter of 2009:
    Net sales increased 21% to $1.2 billion.
    Gross profit increased 16% to $154.6 million.
    Earnings from operations increased 109% to $24.8 million, or 2.1% of net sales.
    Net earnings from continuing operations increased 98% to $14.4 million.
    Diluted earnings per share from continuing operations increased 94% to $0.31.
“Today, we reported another quarter of healthy year over year growth driven by continued strong demand for IT products and improved execution,” stated Ken Lamneck, President and Chief Executive Officer. “We are executing better and maintaining our general cost disciplines while we invest strategically in our sales force, which should serve us well as we close out 2010 and head into 2011,” added Lamneck.
SEGMENT OVERVIEW
In North America, net sales were $871.2 million for the third quarter of 2010, up 27% from the third quarter of 2009. Net sales of hardware and software increased 34% and 25%, respectively, year over year, while net sales in the services category declined 14% year to year. Gross profit was up 18% year over year at $110.5 million with gross margin declining 90 basis points to 12.7% from 13.6% in the prior year quarter. Selling and administrative expenses in North America were $89.0 million during the third quarter of 2010, compared to $79.4 million in the third quarter of 2009. Selling and administrative expenses in the third quarter of 2010 did not include any significant professional fees and costs associated with the restatement remediation and related litigation. Comparatively, selling and administrative expenses in the third quarter of 2009 included $560,000 of such professional fees and costs. The North America segment recorded $199,000 of severance and restructuring expenses during the third quarter of 2010. Comparatively, during the third quarter of last year, North America recorded severance expense of $4.5 million, primarily related to the departure of the Company’s former President and Chief Executive Officer. As a result, earnings from operations in North America were $21.3 million, or 2.4% of net sales, in the third quarter of 2010, an increase of 125% from $9.5 million, or 1.4% of net sales, in the third quarter of 2009.
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Insight Enterprises, Inc.     6820 South Harl Avenue     Tempe, Arizona 85283     480-902-1001     FAX 480-760-8958

 

 


 

     
Insight Q3 2010 Results, Page 2   November 3, 2010
The Company’s EMEA operating segment reported net sales of $267.8 million for the third quarter of 2010, up 8% in U.S. dollars compared to the third quarter of 2009. Excluding the effects of foreign currency movements, net sales were up 16%. Net sales of hardware grew 1% year over year, software sales increased 12% and services sales grew by 33% compared to the third quarter of last year, all in U.S. dollars. Excluding the effects of foreign currency movements, hardware net sales increased 7%, software net sales increased 22% and services net sales increased 44% year over year. Gross profit was also up 8% in U.S. dollars, 16% excluding the effects of foreign currency movements, while gross margin remained relatively flat at 14.2% for the third quarter of 2010 compared to 14.3% in the prior year quarter. Selling and administrative expenses in EMEA in the third quarter of 2010 were up 4%, or $1.4 million, compared to the third quarter of 2009 in U.S. dollars and, excluding the effects of foreign currency movements, were up 13% year over year. EMEA also recorded $99,000 in severance and restructuring expenses, net of adjustments, in the quarter ended September 30, 2010, compared to a reduction of severance and restructuring expenses of $463,000 recorded during the third quarter of 2009. As a result, earnings from operations in EMEA were $2.2 million, or 0.8% of net sales, in the third quarter of 2010, an increase of 51% from $1.5 million, or 0.6% of net sales, in the third quarter of 2009.
The Company’s APAC operating segment reported net sales of $33.2 million for the third quarter of 2010, down 6% from the third quarter of 2009 in U.S. dollars, 13% excluding the effects of foreign currency movements. Gross profit was $6.0 million, an increase of 25% year over year in U.S. dollars, 18% excluding the effects of foreign currency movements, while gross margin increased to 18.0% for the third quarter of 2010 from 13.4% in the prior year quarter. Selling and administrative expenses in APAC increased 21% year over year in U.S. dollars, 13% excluding the effects of foreign currency movements. The APAC segment recorded no severance and restructuring charges during the quarter ended September 30, 2010, compared to a reduction of severance and restructuring expenses of $11,000 recorded during the third quarter of 2009. As a result, earnings from operations in APAC were $1.3 million, or 3.9% of net sales, in the third quarter of 2010, compared to $912,000, or 2.6% of net sales, in the third quarter of 2009.
UPDATED GUIDANCE
Given continued strong demand for hardware and software products, partially offset by a decline in services sales, the Company expects that diluted earnings per share will be between $0.38 and $0.43 in the fourth quarter.
CONFERENCE CALL AND WEBCAST
The Company will host a conference call and live web cast today at 5:00 p.m. ET to discuss third quarter 2010 results of operations. A live web cast of the conference call (in listen-only mode) will be available on the Company’s web site at www.insight.com, and a replay of the web cast will be available on the Company’s web site for a limited time following the call. To listen to the live web cast by telephone, call 1-800-706-7745 if located in the U.S., 617-614-3472 for international callers, and enter the access code 68365529.
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Insight Enterprises, Inc.     6820 South Harl Avenue     Tempe, Arizona 85283     480-902-1001     FAX 480-760-8958

 

 


 

     
Insight Q3 2010 Results, Page 3   November 3, 2010
Financial Summary Table
(dollars in thousands, except per share data)
                                                 
    Three Months Ended September 30,     Nine Months Ended September 30,  
Insight Enterprises, Inc.   2010     2009     % change     2010     2009     % change  
Net sales
  $ 1,172,227     $ 969,935       21 %   $ 3,499,225     $ 2,958,257       18 %
Gross profit
  $ 154,645     $ 133,486       16 %   $ 473,495     $ 413,102       15 %
Earnings from operations
  $ 24,836     $ 11,869       109 %   $ 86,756     $ 25,800       236 %
Net earnings from continuing operations
  $ 14,432     $ 7,272       98 %   $ 50,511     $ 13,368       278 %
Diluted EPS from continuing operations
  $ 0.31     $ 0.16       94 %   $ 1.08     $ 0.29       272 %
 
                                               
North America
                                               
Net sales
  $ 871,204     $ 685,996       27 %   $ 2,424,999     $ 2,059,628       18 %
Gross profit
  $ 110,536     $ 93,301       18 %   $ 329,107     $ 286,092       15 %
Earnings from operations
  $ 21,325     $ 9,479       125 %   $ 67,724     $ 15,324       342 %
 
                                               
EMEA
                                               
Net sales
  $ 267,813     $ 248,437       8 %   $ 944,316     $ 800,403       18 %
Gross profit
  $ 38,132     $ 35,417       8 %   $ 125,876     $ 113,094       11 %
Earnings from operations
  $ 2,225     $ 1,478       51 %   $ 14,633     $ 8,118       80 %
 
                                               
APAC
                                               
Net sales
  $ 33,210     $ 35,502       (6 %)   $ 129,910     $ 98,226       32 %
Gross profit
  $ 5,977     $ 4,768       25 %   $ 18,512     $ 13,916       33 %
Earnings from operations
  $ 1,286     $ 912       41 %   $ 4,399     $ 2,358       87 %
                                                                         
    North America     EMEA     APAC  
    Three Months Ended     Three Months Ended     Three Months Ended  
    September 30,     September 30,     September 30,  
Sales Mix   2010     2009     % change*     2010     2009     % change*     2010     2009     % change*  
Hardware
    66 %     62 %     34 %     38 %     41 %     1 %     1 %     < 1 %     157 %
Software
    28 %     29 %     25 %     60 %     58 %     12 %     97 %     98 %     (7 %)
Services
    6 %     9 %     (14 %)     2 %     1 %     33 %     2 %     2 %     (11 %)
 
                                                           
 
    100 %     100 %     27 %     100 %     100 %     8 %     100 %     100 %     (6 %)
 
                                                           
     
*   Represents growth/decline in category net sales on a dollar basis.
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Insight Enterprises, Inc.     6820 South Harl Avenue     Tempe, Arizona 85283     480-902-1001     FAX 480-760-8958

 

 


 

     
Insight Q3 2010 Results, Page 4   November 3, 2010
FORWARD-LOOKING INFORMATION
Certain statements in this release and the related conference call and web cast are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements, including the Company’s estimated diluted earnings per share for the fourth quarter of 2010, the Company’s effective tax rate for 2010 and assumptions related to demand for hardware and software products and expectations of a decline in services sales for the full year 2010, 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 statement. Some of the important factors that could cause the Company’s 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 Form 10-K for the year ended December 31, 2009:
    the Company’s 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 the Company’s ability to collect its accounts receivable and credit constraints;
    disruptions in the Company’s information technology systems and voice and data networks, including its system upgrade and the migration of acquired businesses to its information technology systems and voice and data networks;
    actions of the Company’s competitors, including manufacturers and publishers of products it sells;
    stockholder litigation and regulatory proceedings related to the restatement of the Company’s consolidated financial statements;
    the integration and operation of acquired businesses, including the Company’s ability to achieve expected benefits of the acquisitions;
    the variability and seasonality of the Company’s 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 the Company’s borrowing costs or reduce future availability of financing;
    failure to comply with the terms and conditions of the Company’s public sector contracts;
    the Company’s dependence on key personnel; and
    intellectual property infringement claims and challenges to the Company’s registered trademarks and trade names.
Additionally, there may be other risks that are otherwise described from time to time in the reports that the Company files with the SEC. Any forward-looking statements in this release should be considered in light of various important factors, including the risks and uncertainties listed above, as well as others. The Company assumes no obligation to update, and does not intend to update, any forward-looking statements. The Company does not endorse any projections regarding future performance made by third parties.
         
Contacts:
  Glynis Bryan   Helen Johnson
 
  Chief Financial Officer   Senior VP, Treasurer
 
  Tel. 480-333-3390   Tel. 480-333-3234
 
  Email glynis.bryan@insight.com   Email helen.johnson@insight.com
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Insight Enterprises, Inc.     6820 South Harl Avenue     Tempe, Arizona 85283     480-902-1001     FAX 480-760-8958

 

 


 

     
Insight Q3 2010 Results, Page 5   November 3, 2010
INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2010     2009     2010     2009  
Net sales
  $ 1,172,227     $ 969,935     $ 3,499,225     $ 2,958,257  
Costs of goods sold
    1,017,582       836,449       3,025,730       2,545,155  
 
                       
Gross profit
    154,645       133,486       473,495       413,102  
Operating expenses:
                               
Selling and administrative expenses
    129,511       117,623       385,052       374,831  
Severance and restructuring expenses
    298       3,994       1,687       12,471  
 
                       
Earnings from operations
    24,836       11,869       86,756       25,800  
Non-operating (income) expense:
                               
Interest income
    (161 )     (45 )     (467 )     (333 )
Interest expense
    1,899       2,333       5,957       6,421  
Net foreign currency exchange loss (gain)
    130       93       743       (119 )
Other expense, net
    348       217       1,097       697  
 
                       
Earnings from continuing operations before income taxes
    22,620       9,271       79,426       19,134  
Income tax expense
    8,188       1,999       28,915       5,766  
 
                       
Net earnings from continuing operations
    14,432       7,272       50,511       13,368  
Net earnings from a discontinued operation
                      2,801  
 
                       
Net earnings
  $ 14,432     $ 7,272     $ 50,511     $ 16,169  
 
                       
 
                               
Net earnings per share — Basic:
                               
Net earnings from continuing operations
  $ 0.31     $ 0.16     $ 1.09     $ 0.29  
Net earnings from a discontinued operation
                      0.06  
 
                       
Net earnings per share
  $ 0.31     $ 0.16     $ 1.09     $ 0.35  
 
                       
 
                               
Net earnings per share — Diluted:
                               
Net earnings from continuing operations
  $ 0.31     $ 0.16     $ 1.08     $ 0.29  
Net earnings from a discontinued operation
                      0.06  
 
                       
Net earnings per share
  $ 0.31     $ 0.16     $ 1.08     $ 0.35  
 
                       
 
                               
Shares used in per share calculations:
                               
Basic
    46,268       45,875       46,193       45,812  
 
                       
Diluted
    46,865       46,445       46,749       46,164  
 
                       
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Insight Enterprises, Inc.     6820 South Harl Avenue     Tempe, Arizona 85283     480-902-1001     FAX 480-760-8958

 

 


 

     
Insight Q3 2010 Results, Page 6   November 3, 2010
INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)
(Unaudited)
                 
    September 30,     December 31,  
    2010     2009  
ASSETS
               
Current assets:
               
Cash and cash equivalents
  $ 93,764     $ 68,066  
Accounts receivable, net
    839,645       998,770  
Inventories
    122,685       77,694  
Inventories not available for sale
    30,296       47,722  
Deferred income taxes
    27,220       35,750  
Other current assets
    39,580       32,318  
 
           
Total current assets
    1,153,190       1,260,320  
 
               
Property and equipment, net
    142,973       150,103  
Goodwill
    16,474       15,829  
Intangible assets, net
    72,449       82,483  
Deferred income taxes
    73,950       78,489  
Other assets
    18,163       16,097  
 
           
 
  $ 1,477,199     $ 1,603,321  
 
           
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Current liabilities:
               
Accounts payable
  $ 563,327     $ 695,549  
Accrued expenses and other current liabilities
    158,667       212,276  
Current portion of long-term debt
    992       875  
Deferred revenue
    39,874       54,135  
 
           
Total current liabilities
    762,860       962,835  
 
               
Long-term debt
    166,370       149,349  
Deferred income taxes
    2,729       3,054  
Other liabilities
    25,319       20,509  
 
           
 
    957,278       1,135,747  
 
           
 
               
Stockholders’ equity:
               
Preferred stock
           
Common stock
    463       460  
Additional paid-in capital
    375,920       372,021  
Retained earnings
    124,375       73,864  
Accumulated other comprehensive income — foreign currency translation adjustments
    19,163       21,229  
 
           
Total stockholders’ equity
    519,921       467,574  
 
           
 
  $ 1,477,199     $ 1,603,321  
 
           
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Insight Enterprises, Inc.     6820 South Harl Avenue     Tempe, Arizona 85283     480-902-1001     FAX 480-760-8958

 

 


 

     
Insight Q3 2010 Results, Page 7   November 3, 2010
INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
                 
    Nine Months Ended September 30,  
    2010     2009*  
Cash flows from operating activities:
               
Net earnings
  $ 50,511     $ 16,169  
Adjustments to reconcile net earnings to net cash provided by operating activities:
               
Depreciation and amortization
    28,515       29,074  
Provision for losses on accounts receivable
    546       2,795  
Write-downs of inventories
    4,875       5,623  
Non-cash stock-based compensation
    5,139       7,974  
Non-cash gain from arbitrated claim, net of tax
          (2,801 )
Excess tax benefit from employee gains on stock-based compensation
    (912 )      
Deferred income taxes
    11,762       1,706  
Changes in assets and liabilities:
               
Decrease in accounts receivable
    143,709       281,677  
(Increase) decrease in inventories
    (32,676 )     12,836  
(Increase) decrease in other current assets
    (6,558 )     615  
(Increase) decrease in other assets
    (1,557 )     3,935  
Decrease in accounts payable
    (110,705 )     (215,022 )
(Decrease) increase in deferred revenue
    (11,414 )     9,409  
Decrease in accrued expenses and other liabilities
    (43,727 )     (34,410 )
 
           
Net cash provided by operating activities
    37,508       119,580  
 
           
Cash flows from investing activities:
               
Acquisition of Calence, net of cash acquired
    (5,123 )     (12,834 )
Purchases of property and equipment
    (12,631 )     (11,739 )
 
           
Net cash used in investing activities
    (17,754 )     (24,573 )
 
           
Cash flows from financing activities:
               
Borrowings on senior revolving credit facility
    910,136       833,373  
Repayments on senior revolving credit facility
    (892,636 )     (905,873 )
Borrowings on accounts receivable securitization financing facility
    45,000       165,000  
Repayments on accounts receivable securitization financing facility
    (45,000 )     (165,000 )
Payments on capital lease obligation
    (681 )     (113 )
Net repayments under inventory financing facility
    (9,952 )     (4,446 )
Payment of deferred financing fees
    (490 )     (1,565 )
Proceeds from sales of common stock under employee stock plans
    49        
Excess tax benefit from employee gains on stock-based compensation
    912        
Payment of payroll taxes on stock-based compensation through shares withheld
    (1,260 )     (463 )
 
           
Net cash provided by (used in) financing activities
    6,078       (79,087 )
 
           
Foreign currency exchange effect on cash flows
    (134 )     3,873  
 
           
Increase in cash and cash equivalents
    25,698       19,793  
Cash and cash equivalents at beginning of period
    68,066       49,175  
 
           
Cash and cash equivalents at end of period
  $ 93,764     $ 68,968  
 
           
     
*  
Certain amounts in the consolidated statement of cash flows for the nine months ended September 30, 2009 have been reclassified to conform to the presentation for the nine months ended September 30, 2010.
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Insight Enterprises, Inc.     6820 South Harl Avenue     Tempe, Arizona 85283     480-902-1001     FAX 480-760-8958