Form 10-Q

0000950123-11-044834.txt : 20110505 0000950123-11-044834.hdr.sgml : 20110505 20110504174842 ACCESSION NUMBER: 0000950123-11-044834 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20110331 FILED AS OF DATE: 20110505 DATE AS OF CHANGE: 20110504 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INSIGHT ENTERPRISES INC CENTRAL INDEX KEY: 0000932696 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-CATALOG & MAIL-ORDER HOUSES [5961] IRS NUMBER: 860766246 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-25092 FILM NUMBER: 11811681 BUSINESS ADDRESS: STREET 1: 1305 WEST AUTO DRIVE CITY: TEMPE STATE: AZ ZIP: 85284 BUSINESS PHONE: 480-902-1001 MAIL ADDRESS: STREET 1: 1305 WEST AUTO DRIVE CITY: TEMPE STATE: AZ ZIP: 85284 10-Q 1 c16434e10vq.htm FORM 10-Q Form 10-Q

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

For the quarterly period ended: March 31, 2011


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)

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

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 checkmark 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 April 29, 2011 was 46,715,171.

INSIGHT ENTERPRISES, INC.
QUARTERLY REPORT ON FORM 10-Q
Three Months Ended March 31, 2011

TABLE OF CONTENTS


	Page
PART I — Financial Information

Item 1 — Financial Statements:

Consolidated Balance Sheets (unaudited) — March 31, 2011 and December 31, 2010		1

Consolidated Statements of Operations (unaudited) — Three Months Ended March 31, 2011 and 2010		2

Consolidated Statements of Cash Flows (unaudited) — Three Months Ended March 31, 2011 and 2010		3

Notes to Consolidated Financial Statements (unaudited)		4

Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations		15

Item 3 — Quantitative and Qualitative Disclosures About Market Risk		23

Item 4 — Controls and Procedures		23

PART II — Other Information

Item 1 — Legal Proceedings		23

Item 1A — Risk Factors		24

Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds		24

Item 3 — Defaults Upon Senior Securities		24

Item 4 — Removed and Reserved		24

Item 5 — Other Information		24

Item 6 — Exhibits		24

Signatures		25

Exhibit 10.1
Exhibit 10.2
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, working capital needs and uses, cash needs and the sufficiency of our capital resources and the payment of accrued expenses and liabilities; details of our business strategy and our strategic initiatives; projections of capital expenditures; our intentions not to pay dividends; 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 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 and competitive products to sell as well as our competition with our partners;

•

our reliance on partners for marketing funds and purchasing incentives;

•

disruptions in our information technology systems and voice and data networks, including risks and costs associated with the integration and upgrade of our IT systems;

•

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

•

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

•

changes in the IT industry and/or rapid changes in product standards;

•

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

•

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

•

the availability of future financing and our ability to access and/or refinance our credit facilities;

•

the security of our electronic and other confidential information;

•

the variability of our net sales and gross profit;

•

the risks associated with our international operations;

•

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

•

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.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

(unaudited)


	March 31,		December 31,
	2011		2010
ASSETS
Current assets:
Cash and cash equivalents	$	140,587	$	123,763
Accounts receivable, net of allowances for doubtful accounts of $18,265 and $17,540, respectively		1,009,732		1,135,951
Inventories		123,819		106,734
Inventories not available for sale		61,403		50,677
Deferred income taxes		22,424		23,283
Other current assets		31,706		49,289

Total current assets		1,389,671		1,489,697

Property and equipment, net of accumulated depreciation of $191,381 and $183,809, respectively		139,935		141,399
Goodwill		16,474		16,474
Intangible assets, net of accumulated amortization of $57,087 and $50,755, respectively		67,182		69,081
Deferred income taxes		72,399		73,796
Other assets		15,278		12,836

	$	1,700,939	$	1,803,283

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	829,046	$	881,688
Accrued expenses and other current liabilities		156,955		187,457
Current portion of long-term debt		1,002		997
Deferred revenue		47,770		67,373

Total current liabilities		1,034,773		1,137,515

Long-term debt		71,366		91,619
Deferred income taxes		5,032		5,011
Other liabilities		22,960		24,167

		1,134,131		1,258,312


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; 46,712 shares at March 31, 2011 and 46,325 shares at December 31, 2010 issued and outstanding		467		463
Additional paid-in capital		378,020		377,277
Retained earnings		162,416		149,349
Accumulated other comprehensive income — foreign currency translation adjustments		25,905		17,882

Total stockholders’ equity		566,808		544,971

	$	1,700,939	$	1,803,283

See accompanying notes to consolidated financial statements.

INSIGHT ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)


	Three Months Ended
	March 31,
	2011			2010

Net sales	$	1,219,896		$	1,034,621
Costs of goods sold		1,057,416			889,576

Gross profit		162,480			145,045
Operating expenses:
Selling and administrative expenses		139,101			127,711
Severance and restructuring expenses		524			71

Earnings from operations		22,855			17,263
Non-operating (income) expense:
Interest income		(358	)		(127	)
Interest expense		1,812			2,367
Net foreign currency exchange (gain) loss		(478	)		209
Other expense, net		406			346

Earnings before income taxes		21,473			14,468
Income tax expense		8,406			5,303

Net earnings	$	13,067		$	9,165


Net earnings per share:
Basic	$	0.28		$	0.20

Diluted	$	0.28		$	0.20


Shares used in per share calculations:
Basic		46,508			46,073

Diluted		47,182			46,643

See accompanying notes to consolidated financial statements.

INSIGHT ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	Three Months Ended March 31,
	2011			2010

Cash flows from operating activities:
Net earnings	$	13,067		$	9,165
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		9,618			9,743
Provision for losses on accounts receivable		973			1,365
Write-downs of inventories		2,274			1,276
Write-off of computer software development costs		1,390			—
Non-cash stock-based compensation		1,895			1,214
Excess tax benefit from employee gains on stock-based compensation		(1,566	)		(844	)
Deferred income taxes		1,822			2,435
Changes in assets and liabilities:
Decrease in accounts receivable		144,054			150,052
(Increase) decrease in inventories		(29,607	)		1,500
Decrease (increase) in other current assets		17,995			(57,251	)
Increase in other assets		(2,239	)		(3,473	)
(Decrease) increase in accounts payable		(21,901	)		26,004
Decrease in deferred revenue		(20,501	)		(1,353	)
Decrease in accrued expenses and other liabilities		(33,648	)		(29,796	)

Net cash provided by operating activities		83,626			110,037

Cash flows from investing activities:
Purchases of property and equipment		(5,044	)		(2,794	)

Net cash used in investing activities		(5,044	)		(2,794	)

Cash flows from financing activities:
Borrowings on senior revolving credit facility		283,000			206,500
Repayments on senior revolving credit facility		(303,000	)		(273,500	)
Borrowings on accounts receivable securitization financing facility		—			25,000
Repayments on accounts receivable securitization financing facility		—			(25,000	)
Payments on capital lease obligation		(248	)		(217	)
Net repayments under inventory financing facility		(46,906	)		(19,836	)
Proceeds from sales of common stock under employee stock plans		16			—
Excess tax benefit from employee gains on stock-based compensation		1,566			844
Payment of payroll taxes on stock-based compensation through shares withheld		(2,448	)		(1,151	)

Net cash used in financing activities		(68,020	)		(87,360	)

Foreign currency exchange effect on cash flows		6,262			(2,625	)

Increase in cash and cash equivalents		16,824			17,258
Cash and cash equivalents at beginning of period		123,763			68,066

Cash and cash equivalents at end of period	$	140,587		$	85,324

See accompanying notes to consolidated financial statements.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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 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 March 31, 2011, our results of operations and cash flows for the three months ended March 31, 2011 and 2010. The consolidated balance sheet as of December 31, 2010 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, 2010.

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, 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.

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, 2010 which affect or may affect our financial statements.

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

2. 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 stock options 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
	March 31,
	2011		2010
Numerator:
Net earnings	$	13,067	$	9,165


Denominator:
Weighted average shares used to compute basic EPS		46,508		46,073
Dilutive potential common shares due to dilutive options and restricted stock units, net of tax effect		674		570

Weighted average shares used to compute diluted EPS		47,182		46,643


Net earnings:
Basic	$	0.28	$	0.20

Diluted	$	0.28	$	0.20

During the three months ended March 31, 2011 and 2010, 224,000 and 543,000, respectively, weighted average outstanding stock options were not included in the diluted EPS calculation because the exercise prices of these options were greater than the average market price of our common stock during the period.

3. Debt, Capital Lease Obligation and Inventory Financing Facility

Debt

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


	March 31,			December 31,
	2011			2010
Senior revolving credit facility	$	70,000		$	90,000
Accounts receivable securitization financing facility		—			—
Capital lease obligation		2,368			2,616

Total		72,368			92,616
Less: current portion of obligation under capital lease		(1,002	)		(997	)
Less: current portion of revolving credit facilities		—			—

Long-term debt	$	71,366		$	91,619

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 and matures on April 1, 2013. 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 March 31, 2011, availability under the ABS facility was $150,000,000.

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 (loss) plus (i) interest expense, less non-cash imputed interest on our inventory financing facility, (ii) income tax expense (benefit), (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 2.50 times trailing twelve-month adjusted earnings. 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 debt capacity. 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 March 31, 2011 was limited to $431,355,000 based on 2.50 times the Company’s trailing twelve-month adjusted earnings.

Our financing facilities contain various covenants, including the requirement that we comply with maximum leverage, minimum fixed charge and minimum asset coverage ratio requirements and meet weekly, 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 period of time. At March 31, 2011, we were in compliance with all such covenants.

Capital Lease Obligation

The present value of minimum lease payments under our capital lease, and the current portion thereof, are included in our debt balances as summarized in the table above. The value of the IT equipment held under the capital lease of $3,867,000 is included in property and equipment, with accumulated amortization on the capital lease assets of $1,534,000 and $1,283,000 as of March 31, 2011 and December 31, 2010, respectively.

Inventory Financing Facility

As of March 31, 2011 and December 31, 2010, $88,206,000 and $135,112,000, respectively, was included in accounts payable within the consolidated balance sheet related to our inventory financing facility.

4. Income Taxes

Our effective tax rate for the three months ended March 31, 2011 was 39.1%. For the three months ended March 31, 2011, 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 and other non-deductible expenses, partially offset by lower taxes on earnings in foreign jurisdictions.

Our effective tax rate for the three months ended March 31, 2010 was 36.7%. For the three months ended March 31, 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 benefit and other non-deductible expenses, partially offset by lower taxes on earnings in foreign jurisdictions.

As of March 31, 2011 and December 31, 2010, we had approximately $6,254,000 and $6,013,000, respectively, of unrecognized tax benefits. Of these amounts, approximately $512,000 and $425,000 relate to accrued interest as of March 31, 2011 and December 31, 2010, respectively.

Several of our subsidiaries are currently under audit for the 2002 through 2009 tax years. 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.

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

5. Severance and Restructuring Activities

Severance Costs Expensed for 2011 Resource Actions

During the three months ended March 31, 2011, North America and EMEA recorded severance expense totaling $321,000 and $239,000, respectively, related to 2011 resource actions. The charges were associated with the severance for the elimination of certain positions based on a re-alignment of roles and responsibilities. Cash payments totaling $144,000 were made in North America associated with these resource actions during the three months ended March 31, 2011. The remaining outstanding obligations are expected to be paid during the year ending December 31, 2011 and are therefore included in accrued expenses and other current liabilities.

Severance Costs Expensed for 2010 Resource Actions

During the year ended December 31, 2010, North America and EMEA recorded severance expense totaling $2,003,000 and $1,476,000, respectively, relating to 2010 resource actions. 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 the elimination of certain positions based on a re-alignment of roles and responsibilities. The following table details the 2011 activity and the outstanding obligation related to the 2010 resource actions as of March 31, 2011 (in thousands):


	North America			EMEA			Consolidated
Balance at December 31, 2010	$	1,166		$	575		$	1,741
Foreign currency translation adjustments		—			23			23
Adjustments		—			(36	)		(36	)
Cash payments		(270	)		(112	)		(382	)

Balance at March 31, 2011	$	896		$	450		$	1,346

In EMEA, adjustments totaling $36,000 were recorded as a reduction to severance and restructuring expense during the three months ended March 31, 2011 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 2011 and are therefore included in accrued expenses and other current liabilities.

Prior Resource Actions

In prior years, as a result of ongoing restructuring efforts to reduce operating expenses, certain severance costs were recorded in each of our operating segments. The only remaining outstanding obligations related to these prior resource actions as of December 31, 2010 were in our EMEA segment. As of March 31, 2011 and December 31, 2010, the total liability remaining for unpaid severance costs associated with resource actions prior to 2010 in our EMEA segment was approximately $1,164,000 and $1,113,000, respectively. The increase in this total liability during the three months ended March 31, 2011 was attributable to foreign currency translation adjustments. All remaining outstanding obligations are expected to be paid during 2011 and are therefore included in accrued expenses and other current liabilities.

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

6. 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
	March 31,
	2011		2010
North America	$	1,422	$	942
EMEA		424		238
APAC		49		34

Total	$	1,895	$	1,214

Stock Options

The following table summarizes our stock option activity during the three months ended March 31, 2011:


								Weighted
						Aggregate		Average
				Weighted		Intrinsic Value		Remaining
	Number			Average		(in-the-money		Contractual
	Outstanding			Exercise Price		options)		Life (in years)
Outstanding at January 1, 2011		243,452		$	17.99
Granted		—			—
Exercised		(1,100	)		14.13	$	4,213

Forfeited or expired		(15,604	)		17.25

Outstanding at March 31, 2011		226,748			18.06	$	12,164		1.53

Exercisable at March 31, 2011		226,748			18.06	$	12,164		1.53

Vested and expected to vest		226,748			18.06	$	12,164		1.53

The aggregate intrinsic value in the preceding table represents the total pre-tax intrinsic value, based on our closing stock price of $17.03 as of March 31, 2011, which would have been received by the option holders had all option holders exercised options and sold the underlying shares on that date.

As of March 31, 2011, all outstanding options are exercisable, including 200,000 options with an exercise price of $17.77 and a remaining contractual life of 1.72 years. The remaining 26,748 outstanding options have exercise prices ranging from $14.00 to $26.70 and a weighted average remaining contractual life of 0.15 years.

As of December 31, 2010, all stock options had vested and total compensation cost related to all previously granted stock options had been recognized. For the three months ended March 31, 2010, we recorded stock-based compensation expense related to stock options, net of an estimate of forfeitures, of $91,000.

Restricted Stock

For the three months ended March 31, 2011 and 2010, we recorded stock-based compensation expense, net of estimated forfeitures, related to restricted stock units (“RSUs”) of $1,895,000 and $1,123,000, respectively. As of March 31, 2011, total compensation cost not yet recognized related to nonvested RSUs is $16,474,000, which is expected to be recognized over the next 1.32 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 three months ended March 31, 2011:


				Weighted Average
	Number			Grant Date Fair Value		Fair Value
Nonvested at January 1, 2011		1,599,376		$	9.99
Granted		477,103			18.30
Vested, including shares withheld to cover taxes		(524,266	)		8.96	$	9,325,424	^(a)

Forfeited		(36,646	)		7.58

Nonvested at March 31, 2011		1,515,567			13.03	$	25,810,106	^(b)

Expected to vest		1,383,429				$	23,559,796	^(b)


^(a)		The fair value of vested RSUs represents the total pre-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.

^(b)		The aggregate fair value represents the total pre-tax fair value, based on our closing stock price of $17.03 as of March 31, 2011, which would have been received by holders of RSUs had all such holders sold their underlying shares on that date.

During the three months ended March 31, 2011 and 2010, 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 three months ended March 31, 2011 and 2010 of 138,284 and 87,040, 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 three months ended March 31, 2011 and 2010, total payments for the employees’ tax obligations to the taxing authorities were $2,448,000 and $1,151,000, 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.

7. 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 foreign currency derivatives as hedges for hedge accounting.

The following table summarizes our derivative financial instruments as of March 31, 2011 and December 31, 2010 (in thousands):


		March 31, 2011				December 31, 2010
		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	$	69	$	—	$	28	$	—
Foreign exchange forward contracts	Accrued expenses and other current liabilities		—		—		—		91

Total derivatives not designated as hedging instruments		$	69	$	—	$	28	$	91

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

The following table summarizes the effect of our derivative financial instruments on our results of operations during the three months ended March 31, 2011 and 2010 (in thousands):


Derivatives Not Designated as	Location of Loss Recognized	Amount of Loss Recognized in
Hedging Instruments	in Earnings on Derivatives	Earnings on Derivatives
		Three Months Ended			Three Months Ended
		March 31, 2011			March 31, 2010

Foreign exchange forward contracts	Net foreign currency exchange (gain) loss	$	(344	)	$	(398	)

Total		$	(344	)	$	(398	)

8. Fair Value Measurements

The following table summarizes the valuation of our financial instruments by the following three categories as of March 31, 2011 and December 31, 2010 (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.


		March 31, 2011				December 31, 2010
				Non-qualified				Non-qualified
				Deferred				Deferred
		Foreign		Compensation		Foreign		Compensation
		Exchange		Plan		Exchange		Plan
Balance Sheet Classification		Derivatives		Investments		Derivatives		Investments
Other current assets	Level 1	$	—	$	1,249	$	—	$	1,245
	Level 2		69		—		28		—
	Level 3		—		—		—		—

		$	69	$	1,249	$	28	$	1,245


Accrued expenses and other current liabilities	Level 1	$	—	$	—	$	—	$	—
	Level 2		—		—		91		—
	Level 3		—		—		—		—

		$	—	$	—	$	91	$	—

9. Comprehensive Income

Comprehensive income for the three months ended March 31, 2011 and 2010 includes the following component (in thousands):


	Three Months Ended
	March 31,
	2011		2010
Net earnings	$	13,067	$	9,165
Other comprehensive gain (loss), net of tax:
Foreign currency translation adjustments		8,023		(7,119	)

Total comprehensive income	$	21,090	$	2,046

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

10. 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 March 31, 2011 and December 31, 2010, we had approximately $12,215,000 and $14,285,000, 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.

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.

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 March 31, 2011. 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 Federal derivative action discussed under the caption “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 or proceeding. 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.

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. The second amended complaint (the only remaining complaint then on file) of the lead plaintiff was dismissed with prejudice in November 2010, and another purported class member plaintiff has appealed the order of dismissal with prejudice to the U.S. Court of Appeals for the Ninth Circuit. In June 2009, three shareholder derivative lawsuits were 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. The Federal derivative action was dismissed with prejudice in July 2010, and the plaintiff in that action has appealed the order of dismissal to the U.S. Court of Appeals for the Ninth Circuit. The two State derivative actions were consolidated into a single action, and in October 2010, the State derivative actions were dismissed with prejudice. The plaintiff in the State derivative actions did not appeal the order of dismissal. 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. Based on the information available at this time, the Company is not able to estimate the possible loss or range of loss for the purported class action or the Federal derivative action at this time.

In August 2010, in connection with an investigation being conducted by the United States Department of Justice (the “DOJ”), Calence received a subpoena from the Office of the Inspector General of the Federal Communications Commission (the “FCC OIG”) requesting documents and information related to the expenditure, by the Universal Service Administration Company, of funds under the E-Rate program. The E-Rate program provides schools and libraries with discounts to obtain affordable telecommunications and internet access and related hardware and software. We are cooperating with the DOJ and FCC OIG and are in the process of responding to the subpoena, and, based on the information available at this time, the Company is not able to estimate what the possible loss or range of loss might be, if any, at this time. The Company is pursuing its rights under the Calence acquisition agreements to indemnification for losses that may arise out of or result from this matter, including our fees and expenses for responding to the subpoena.

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)

11. 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 months ended March 31, 2011 and 2010 (in thousands):


	North America				EMEA				APAC
	Three Months Ended				Three Months Ended				Three Months Ended
	March 31,				March 31,				March 31,
Sales Mix	2011		2010		2011		2010		2011		2010
Hardware	$	541,648	$	454,451	$	121,116	$	121,232	$	179	$	58
Software		245,570		184,991		210,140		191,510		34,113		28,520
Services		59,821		48,852		5,721		4,551		1,588		456

	$	847,039	$	688,294	$	336,977	$	317,293	$	35,880	$	29,034

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 months ended March 31, 2011.

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.

The tables below present information about our reportable operating segments as of and for the three months ended March 31, 2011 and 2010 (in thousands):


	Three Months Ended March 31, 2011
	North America		EMEA		APAC		Consolidated
Net sales	$	847,039	$	336,977	$	35,880	$	1,219,896
Costs of goods sold		737,579		289,762		30,075		1,057,416

Gross profit		109,460		47,215		5,805		162,480
Operating expenses:
Selling and administrative expenses		92,581		41,052		5,468		139,101
Severance and restructuring expenses		321		203		—		524

Earnings from operations	$	16,558	$	5,960	$	337		22,855

Non-operating expense, net								1,382

Earnings before income taxes								21,473
Income tax expense								8,406

Net earnings							$	13,067


Total assets at period end	$	1,469,794	$	519,069	$	63,508	$	2,052,371	*


*		Consolidated total assets do not reflect the net effect of corporate assets and intercompany eliminations of $351,432,000.

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


	Three Months Ended March 31, 2010
	North America		EMEA		APAC		Consolidated
Net sales	$	688,294	$	317,293	$	29,034	$	1,034,621
Costs of goods sold		589,347		276,032		24,197		889,576

Gross profit		98,947		41,261		4,837		145,045
Operating expenses:
Selling and administrative expenses		84,863		38,399		4,449		127,711
Severance and restructuring expenses		—		71		—		71

Earnings from operations	$	14,084	$	2,791	$	388		17,263

Non-operating expense, net								2,795

Earnings before income taxes								14,468
Income tax expense								5,303

Net earnings							$	9,165


Total assets at period end	$	1,382,584	$	403,544	$	60,349	$	1,846,477	*


**		Consolidated total assets do not reflect the net effect of corporate assets and intercompany eliminations of $351,739,000.

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 March 31,
	2011		2010

North America	$	7,685	$	7,881
EMEA		1,721		1,693
APAC		212		169

Total	$	9,618	$	9,743

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 Form 10-Q

Quarterly Overview

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. 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 software-related services.

Strong momentum in IT spending continued in the first quarter of 2011, resulting in double digit sales growth for the fourth consecutive quarter. Consolidated net sales were $1.22 billion in the first quarter of 2011, an increase of 18% from $1.03 billion in the first quarter of 2010. Gross profit for the three months ended March 31, 2011 increased 12% to $162.5 million, and gross margin declined 70 basis points to 13.3%. On a consolidated basis, we reported earnings from operations of $22.9 million, net earnings of $13.1 million and diluted earnings per share of $0.28 for the first quarter of 2011. This compares to earnings from operations of $17.3 million, net earnings of $9.2 million and diluted earnings per share of $0.20 for the first quarter of 2010.

Details about segment results of operations can be found in Note 11 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, 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

General

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 Form 10-K for the year ended December 31, 2010. 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 on Form 10-K for the year ended December 31, 2010.

INSIGHT ENTERPRISES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)

Results of Operations

The following table sets forth for the periods presented certain financial data as a percentage of net sales for the three months ended March 31, 2011 and 2010:


	Three Months Ended
	March 31,
	2011			2010
Net sales		100.0	%		100.0	%
Costs of goods sold		86.7			86.0

Gross profit		13.3			14.0
Selling and administrative expenses		11.4			12.3
Severance and restructuring expenses		0.0			0.0

Earnings from operations		1.9			1.7
Non-operating expense, net		0.1			0.3

Earnings before income taxes		1.8			1.4
Income tax expense		0.7			0.5

Net earnings		1.1	%		0.9	%

Throughout this “Results of Operations” section of “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” we refer to changes in net sales, gross profit and selling and administrative expenses in EMEA and APAC excluding the effects of foreign currency movements. In computing these change amounts and percentages, we compare the current year amount as translated into U.S. dollars under the applicable accounting standards to the prior year amount in local currency translated into U.S. dollars utilizing the average translation rate for the current quarter.

Net Sales. Net sales for the three months ended March 31, 2011 increased 18% compared to the three months ended March 31, 2010. Our net sales by operating segment were as follows (dollars in thousands):


	Three Months Ended
	March 31,				%
	2011		2010		Change
North America	$	847,039	$	688,294		23	%
EMEA		336,977		317,293		6	%
APAC		35,880		29,034		24	%

Consolidated	$	1,219,896	$	1,034,621		18	%

Net sales in North America increased 23%, or $158.7 million, for the three months ended March 31, 2011 compared to the three months ended March 31, 2010. Net sales of hardware, software and services increased 19%, 33% and 22%, respectively, year over year. The software results were driven by strong demand for data protection, security and business productivity products in both the commercial and public sector client groups. We also continued to see strong demand in hardware for notebooks, desktops and accessories, particularly in the large enterprise and corporate client groups. Overall, the increases in all categories resulted from higher volume with the year over year improvement in the demand environment for IT products.

Net sales in EMEA increased 6%, or $19.7 million, in U.S. dollars, for the three months ended March 31, 2011 compared to the three months ended March 31, 2010. Excluding the effects of foreign currency movements, net sales were up 4% compared to the first quarter of last year. EMEA’s growth rate lags our growth rate in North America and APAC as the European economy has recovered more slowly post- recession than in our other markets. Net sales of hardware were flat year over year in U.S. dollars, down 3% excluding the effects of foreign currency movements, as growth rates have moderated somewhat due to a decrease in spending in the public sector market. Software net sales increased 10% year over year in U.S. dollars, 8% excluding the effects of foreign currency movements, due primarily to higher volume and new client engagements. Net sales of services increased 26% year over year in U.S. dollars, 23% excluding the effects of foreign currency movements, due primarily to higher volume.

INSIGHT ENTERPRISES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)

Our APAC segment recognized net sales of $35.9 million for the three months ended March 31, 2011, a year over year increase of 24% from the three months ended March 31, 2010 in U.S. dollars, 13% excluding the effects of foreign currency movements. The increase primarily resulted from an increase in sales to public sector clients in the 2011 quarter.

The percentage of net sales by category for North America, EMEA and APAC were as follows for the three months ended March 31, 2011 and 2010:


	North America						EMEA						APAC
	Three Months Ended						Three Months Ended						Three Months Ended
	March 31,						March 31,						March 31,
Sales Mix	2011			2010			2011			2010			2011			2010
Hardware		64	%		66	%		36	%		38	%		1	%		—
Software		29	%		27	%		62	%		60	%		95	%		98	%
Services		7	%		7	%		2	%		2	%		4	%		2	%

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

Gross Profit. Gross profit for the three months ended March 31, 2011 increased 12% compared to the three months ended March 31, 2010, with a 70 basis point decrease in gross margin. Our gross profit and gross profit as a percentage of net sales by operating segment were as follows (dollars in thousands):


	Three Months Ended March 31,
			% of					% of
	2011		Net Sales			2010		Net Sales
North America	$	109,460		12.9	%	$	98,947		14.4	%
EMEA		47,215		14.0	%		41,261		13.0	%
APAC		5,805		16.2	%		4,837		16.7	%

Consolidated	$	162,480		13.3	%	$	145,045		14.0	%

North America’s gross profit for the three months ended March 31, 2011 increased 11% compared to the three months ended March 31, 2010, but, as a percentage of net sales, gross margin decreased 150 basis points year to year, due primarily to a decrease in margin contributed by services sales of 58 basis points, a decrease in margin related to a lower mix of agency fees for enterprise software agreements of 50 basis points, a 27 basis point decrease in product margin, which includes vendor funding and freight, and an increase in the write-downs of inventories as a percentage of sales which decreased margin by 10 basis points. The decrease in product margin year to year was primarily related to unrecoverable freight expenses. Included in the decrease in product margin year to year is a 22 basis point decline in margin attributable to the extinguishment of certain restatement-related trade credits during the prior year quarter that did not recur in the first quarter of 2011.

EMEA’s gross profit increased 14% in U.S. dollars for the three months ended March 31, 2011 compared to the three months ended March 31, 2010. Excluding the effects of foreign currency movements, gross profit was up 12% compared to the first quarter of last year. As a percentage of net sales, gross margin increased 100 basis points due primarily to an increase in product margin, which includes vendor funding, of 52 basis points, an increase in agency fees for enterprise software agreement renewals contributing an increase in margin of 36 basis points and an increase in margin contributed by services sales of 9 basis points. These increases in margin were primarily the result of a change in the mix of business year over year to a higher mix of commercial business in the three months ended March 31, 2011 compared to more lower margin public sector business in the three months ended March 31, 2010.

INSIGHT ENTERPRISES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)

APAC’s gross profit increased 20% for the three months ended March 31, 2011 compared to the three months ended March 31, 2010. Excluding the effects of foreign currency movements, gross profit increased 10% compared to the first quarter of last year. As a percentage of net sales, gross margin declined by 50 basis points, primarily due to the effect of an increase in the mix of public sector business, which is typically transacted at lower margins, as well as the effects of the prior year release of a sales tax reserve of approximately $480,000 upon settlement with the local taxing authorities in the first quarter of 2010.

Operating Expenses.

Selling and Administrative Expenses. Selling and administrative expenses increased $11.4 million, or 9%, for the three months ended March 31, 2011 compared to the three months ended March 31, 2010. Selling and administrative expenses as a percent of net sales by operating segment for the three months ended March 31, 2011 and 2010 were as follows (dollars in thousands):


	Three Months Ended March 31,
			% of					% of
	2011		Net Sales			2010		Net Sales
North America	$	92,581		10.9	%	$	84,863		12.3	%
EMEA		41,052		12.2	%		38,399		12.1	%
APAC		5,468		15.2	%		4,449		15.3	%

Consolidated	$	139,101		11.4	%	$	127,711		12.3	%

North America’s selling and administrative expenses increased 9%, or $7.7 million, for the three months ended March 31, 2011 compared to the three months ended March 31, 2010. Salaries and benefits, including stock-based compensation, associated with investments in headcount and related benefits accounted for approximately $3.2 million of the increase, and higher variable compensation linked with increasing net sales accounted for approximately $2.7 million of the increase. During the three months ended March 31, 2011, as expected, we incurred incremental selling and administrative expenses associated with the North America IT systems integration project. In addition, we incurred a non-cash charge of approximately $1.4 million during the quarter to write-off certain computer software development costs that will not be placed into service as a result of the North America IT systems integration project. Although selling and administrative expenses increased year over year, selling and administrative expenses as a percentage of net sales declined 140 basis points to 10.9% of net sales for the three months ended March 31, 2011 compared to the three months ended March 31, 2010. The decline is primarily attributable to the benefits of ongoing expense management efforts.

EMEA’s selling and administrative expenses increased 7%, or $2.7 million in U.S. dollars, for the three months ended March 31, 2011 compared to the three months ended March 31, 2010, increasing slightly by 10 basis points year over year as a percent of net sales to 12.2%. Excluding the effects of foreign currency movements, selling and administrative expenses increased 5% compared to the first quarter of last year. This increase year over year was primarily driven by higher variable compensation on increased net sales as well as increases in salaries and benefits due to investments in headcount and related benefits in the first quarter of 2011.

APAC’s selling and administrative expenses increased 23% or $1.0 million in U.S. dollars, for the three months ended March 31, 2011 compared to the three months ended March 31, 2010, decreasing slightly by 10 basis points year over year as a percent of net sales to 15.2%. Excluding the effects of foreign currency movements, selling and administrative expenses increased 12% compared to the first quarter of last year. The increase year over year was primarily driven by increases in salaries and benefits due to investments in headcount in the first quarter of 2011.

INSIGHT ENTERPRISES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)

Severance and Restructuring Expenses. During the three months ended March 31, 2011, North America and EMEA recorded net severance expense of $321,000 and $203,000 related to ongoing restructuring efforts. During the quarter, $239,000 in new severance costs in EMEA were offset partially by $36,000 of adjustments to prior severance accruals due to current period changes in estimates. Comparatively, during the three months ended March 31, 2010, EMEA recorded net severance expense of $71,000, representing $306,000 in new severance costs offset in large part by $235,000 of adjustments to prior severance accruals dues to changes in estimates during the period.

Non-Operating (Income) Expense.

Interest Income. Interest income for the three months ended March 31, 2011 and 2010 was generated through cash equivalent short-term investments. The increase in interest income year over year is primarily due to increases in cash balances.

Interest Expense. Interest expense for the three months ended March 31, 2011 and 2010 primarily relates to borrowings under our financing facilities and capital lease obligation and imputed interest under our inventory financing facility. The decrease in interest expense for the three months ended March 31, 2011 compared to the three months ended March 31, 2010 is due primarily to the effect of decreases in the weighted average borrowings outstanding as we have used excess cash to pay down debt. These decreases were offset slightly by imputed interest under our inventory financing facility, which increased to $617,000 for the three months ended March 31, 2011 from $534,000 for the three months ended March 31, 2010 due to increased weighted average borrowings under the facility.

Net Foreign Currency Exchange Gains/Losses. These gains/losses result from foreign currency transactions, including gains/losses on 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, as mitigated by our use of foreign exchange forward contracts to hedge certain non-functional currency assets and liabilities against changes in exchange rate movements.

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

Income Tax Expense. Our effective tax rate for the three months ended March 31, 2011 was 39.1% compared to 36.7% for the three months ended March 31, 2010. The increase in our effective tax rate for the three months ended March 31, 2011 was primarily due to a revaluation of our deferred tax assets to reflect changes to statutory tax rates as a result of new legislation passed in certain states during the first quarter of 2011.

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 three months ended March 31, 2011 and 2010 (in thousands):


	Three Months Ended
	March 31,
	2011			2010
Net cash provided by operating activities	$	83,626		$	110,037
Net cash used in investing activities		(5,044	)		(2,794	)
Net cash used in financing activities		(68,020	)		(87,360	)
Foreign currency exchange effect on cash flow		6,262			(2,625	)

Increase in cash and cash equivalents		16,824			17,258
Cash and cash equivalents at beginning of period		123,763			68,066

Cash and cash equivalents at end of period	$	140,587		$	85,324

Cash and Cash Flow

Our primary uses of cash during the three months ended March 31, 2011 were to fund working capital requirements, including repayments under our inventory financing facility, and to pay down debt. Operating activities in the three months ended March 31, 2011 provided $83.6 million in cash, a 24% decrease from the three months ended March 31, 2010. Our operating cash flows enabled us to make net repayments under our inventory financing facility of $46.9 million, to reduce our long-term debt under our revolving credit facilities by $20.0 million and to increase our cash balance by $16.8 million since December 31, 2010. Capital expenditures were $5.0 million for the three months ended March 31, 2011, an 81% increase over the three months ended March 31, 2010, primarily related to investments in our IT systems. Cash flows for the three months ended March 31, 2011 benefited $6.3 million from the foreign currency exchange effect on cash flows while cash flows for the three months ended March 31, 2010 were negatively affected by $2.6 million as a result of foreign currency exchange rates.

Net cash provided by operating activities. Cash flows from operations for the three months ended March 31, 2011 and 2010 reflect our net earnings, adjusted for non-cash items such as depreciation, amortization and stock-based compensation expense, as well as changes in accounts receivable, inventories, other current assets, accounts payable, deferred revenue and accrued expenses and other liabilities. For the 2011 period, the decreases in accounts receivable and accounts payable are due to the seasonal decrease in net sales from the fourth quarter to the first quarter. We increased inventory levels during the three months ended March 31, 2011 to support specific client engagements and a general increase in volume. The increase in accounts payable associated with the inventory purchases partially offset the seasonal decrease in accounts payable during the quarter discussed above. For the 2010 period, the decrease in accounts receivable reflects the effect of a large software transaction at the end of the 2009 first quarter that was not included in accounts receivable as of March 31, 2010. We received the invoice from the software license provider for the annual renewal of this same transaction in March 2010 and recorded the related payable as of March 31, 2010; however, under contractual terms, the sale to the client could not be invoiced until April 1, 2010. This transaction resulted in an approximate $52 million increase in other current assets. The increase in accounts payable in the 2010 period resulted primarily from the effect of the timing of certain scheduled payments to our largest supplier and continued enhanced management of working capital during the 2010 quarter.

INSIGHT ENTERPRISES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)

Our consolidated cash flow operating metrics for the quarter ended March 31, 2011 and 2010 are as follows:


	2011			2010
Days sales outstanding in ending accounts receivable (“DSOs”) ^(a)		75			72
Days inventory outstanding (“DIOs”)^(b)		10			8
Days purchases outstanding in ending accounts payable (“DPOs”)^(c)		(71	)		(69	)

Cash conversion cycle (days) ^(d)		14			11


(a)		Calculated as the balance of accounts receivable, net at the end of the period divided by daily net sales. Daily net sales is calculated as net sales for the quarter divided by 90 days.

(b)		Calculated as average inventories 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 90 days.

(c)		Calculated as the balances of accounts payable, which includes the inventory financing facility, at the end of the period divided by daily costs of goods sold. Daily costs of goods sold is calculated as costs of goods sold for the quarter divided by 90 days.

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

Our cash conversion cycle was 14 days in the quarter ended March 31, 2011 compared to 11 days in the quarter ended March 31, 2010. These results were primarily due to investments in inventory to support specific client engagements and a general increase in volume.

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 granted to our clients in order to take advantage of supplier discounts. We intend to use cash generated in 2011 in excess of working capital needs to pay down our outstanding debt balances and support our capital expenditures for the year.

Net cash used in investing activities. Capital expenditures of $5.0 million and $2.8 million for the three months ended March 31, 2011 and 2010, respectively, primarily related to investments in our IT systems. We expect capital expenditures for the full year 2011 between $20.0 million and $25.0 million, primarily for the integration of our IT systems in North America onto a single platform over the next two years, the IT systems upgrade in our EMEA operations and other facility and technology related maintenance and upgrade projects.

Net cash used in financing activities. During the three months ended March 31, 2011, we made net repayments on our debt facilities that reduced our outstanding debt balances under our revolving credit facilities by $20.0 million, and we used $46.9 million to pay down our inventory financing facility in accordance with its payment terms. As of March 31, 2011, the current portion of our long-term debt relates to our capital lease obligation for certain IT equipment. During the three months ended March 31, 2010, we made net repayments on our debt facilities that reduced our outstanding debt balances by $67.0 million and made net repayments under our inventory financing facility of $19.8 million.

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 (loss) plus (i) interest expense, less non-cash imputed interest on our inventory financing facility, (ii) income tax expense (benefit), (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 2.50 times 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 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 debt capacity. As a result of this limitation, of the $450.0 million 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 March 31, 2011 was limited to $431.4 million based on 2.50 times the Company’s trailing twelve-month adjusted earnings. Our debt balance as of March 31, 2011 was $72.4 million, including our capital lease obligation.

INSIGHT ENTERPRISES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)

We anticipate 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 over the next 12 months.

Cash and cash equivalents held by foreign subsidiaries are generally subject to U.S. income taxation upon repatriation to the U.S. For foreign entities not treated as branches for U.S. tax purposes, we do not provide for U.S. income taxes on the undistributed earnings of these subsidiaries as earnings are reinvested and, in the opinion of management, will continue to be reinvested indefinitely outside of the U.S. As of March 31, 2011, we had approximately $119.0 million in cash and cash equivalents in certain of our foreign subsidiaries where we consider undistributed earnings for these foreign subsidiaries to be permanently reinvested. We used our excess cash balances in the U.S. to pay down debt as of March 31, 2011. As of March 31, 2011, the majority of our foreign cash resides in the Netherlands, the United Kingdom and Australia. Certain of these cash balances could and will be remitted to the U.S. by paying down intercompany payables generated in the ordinary course of business. This repayment would not change our policy to indefinitely reinvest earnings of its foreign subsidiaries. Our intention is that undistributed earnings will be used for general business purposes in the foreign jurisdictions as well as to fund our EMEA IT systems, various facility upgrades and the expansion of our sales of hardware and services, in addition to software, to clients in EMEA countries.

Off Balance Sheet Arrangements

We have entered into off-balance sheet arrangements, which include guaranties and indemnifications. The guaranties and indemnifications are discussed in Note 10 to our Consolidated Financial Statements in Part I, Item 1 of this report. We believe that none of our off-balance sheet arrangements has, or is reasonably likely to have, a material current or future effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.

Recently Issued Accounting Pronouncements

See Note 1 to our Consolidated Financial Statements in Part I, Item 1 of this report for a discussion of recently issued accounting pronouncements which affect or may affect our financial statements.

Contractual Obligations

There have been no material changes in our reported contractual obligations, as described under “Contractual Obligations” in “Liquidity and Capital Resources” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2010.

INSIGHT ENTERPRISES, INC.


Item 3.		Quantitative and Qualitative Disclosures About Market Risk.

Other than the change in our open foreign currency forward contracts reflected below, 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 Form 10-K for the year ended December 31, 2010.

The following table summarizes our open foreign currency forward contracts held at March 31, 2011. All U.S. dollar and foreign currency amounts (British Pounds and Swiss Francs) are presented in thousands.


	Buy		Sell
Foreign Currency	GBP		CHF
Foreign Amount		6,262		1,000
Exchange Rate		1.5970		1.2900
USD Equivalent	$	10,000	$	1,095
Weighted Average Maturity	Less than 1 month		Less than 1 month


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 under Rules 13a-15(e) and 15d-15(e) of the Exchange Act) and determined that as of March 31, 2011, 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.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2011 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations of Disclosure Controls and 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.

Part II — OTHER INFORMATION


Item 1.		Legal Proceedings.

For a discussion of legal proceedings, see Note 10 to the Consolidated Financial Statements in Part I, Item 1 of this report. For an additional discussion of certain risks associated with legal proceedings, see “Risk Factors — We are subject to stockholder litigation and regulatory proceedings related to the restatement of our consolidated financial statements,” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2010.

INSIGHT ENTERPRISES, INC.


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 Form 10-K for the year ended December 31, 2010, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing our 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.


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

There were no unregistered sales of equity securities during the three months ended March 31, 2011.

We have never paid a cash dividend on our common stock, and our senior revolving credit facility contains restrictions on the payment of cash dividends. We currently intend to reinvest all of our earnings into our business and do not intend to pay any cash dividends in the foreseeable future.

Issuer Purchases of Equity Securities

We did not repurchase any shares of our common stock during the three months ended March 31, 2011.


Item 3.		Defaults Upon Senior Securities.

None.


Item 4.		(Removed and Reserved).


Item 5.		Other Information.

None.


Item 6.		Exhibits.

(a) Exhibits (unless otherwise noted, exhibits are filed herewith).


Exhibit No.			Description

	3.1		Composite Certificate of Incorporation of Insight Enterprises, Inc. (incorporated by reference to Exhibit 3.1 of our Annual Report on Form 10-K for the year ended December 31, 2005).
	3.2		Amended and Restated Bylaws of the Insight Enterprises, Inc. (incorporated by reference to Exhibit 3.1 of our current report on Form 8-K filed on January 14, 2008).
	4.1		Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 of our Registration Statement on Form S-1 (No. 33-86142) declared effective January 24, 1995).
	10.1	(1)	Employment Agreement between Insight Enterprises, Inc. and Mary E. Sculley, dated as of April 11, 2011.
	10.2	(1)	Offer of employment letter to Mary E. Sculley, dated March 28, 2011.
	31.1		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 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.


(1)		Management contract or compensatory plan or arrangement.

INSIGHT ENTERPRISES, INC.

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 4, 2011	INSIGHT ENTERPRISES, INC.

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

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

	By:	/s/ David C. Olsen David C. Olsen
		Corporate Controller
		(Principal Accounting Officer)

EX-10.1 2 c16434exv10w1.htm EXHIBIT 10.1 Exhibit 10.1

Exhibit 10.1

EMPLOYMENT AGREEMENT

This Employment Agreement (the “Agreement”), entered into as of April 11, 2011, is between Insight Enterprises, Inc., a Delaware corporation (the “Company”), and Mary E. Sculley (the “Executive”).

Company and Executive have decided to enter into this Agreement in order to satisfy the documentation requirements of Section 409A of the Code and to comply with the final regulations issued pursuant to Section 409A.

In exchange for valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

1. TERMS OF AGREEMENT.

(a) Initial Term. Executive shall be employed by Company for the duties set forth in Section 2 for a one-year term commencing as of April 11, 2011 and ending on the first anniversary of such date (the “Initial Term”), unless sooner terminated in accordance with the provisions of this Agreement.

(b) Renewal Term; Employment Period Defined. This Agreement is intended to provide for a constantly renewing (or “evergreen”) one-year term. As a result, on each day after the commencement of the Initial Term, without further action on the part of Company or Executive, this Agreement shall be automatically renewed for a new one-year term from that day forward (a “Renewal Term”). Nevertheless, Company may notify Executive, or Executive may notify Company, at any time, that there shall be no renewal of this Agreement. If this notice of non-renewal is given, the Agreement shall immediately cease to renew and shall terminate naturally at the end of the then current Renewal Term. No severance or other post-termination compensation will be due or payable in the event of a termination resulting from non-renewal. The period of time commencing as of the date of this Agreement and ending on the effective date of the termination of employment of Executive under this or any successor Agreement shall be referred to as the “Employment Period.”

2. POSITION AND DUTIES.

(a) Job Duties. Company employs, engages and hires Executive as its Senior Vice President/Human Resources, and Executive accepts and agrees to such employment, engagement and hiring. Executive’s duties and authority during the Employment Period shall be such executive and managerial duties as the Chief Executive Officer of Company, or the Chief Executive Officer’s designee, shall reasonably determine. Executive will devote full time on behalf of Company, or such lesser amount of time as the Chief Executive Officer, or the Chief Executive Officer’s designee, may determine, reasonable absences because of illness, personal and family exigencies excepted.

(b) Best Efforts. Executive agrees that at all times during the Employment Period Executive will faithfully, and to the best of Executive’s ability, experience and talents, perform the duties that may be required of and from Executive and fulfill Executive’s responsibilities under this Agreement pursuant to its express terms. Executive’s participation as an officer, director, consultant or employee of any entity (other than Company) must be disclosed to Company and the Board of Directors of Company. Additionally, Executive shall disclose to Company and the Board of Directors of Company any interest in a company that is engaged in a Competing Business as defined in Section 11, unless such interest constitutes less than one percent (1%) of the issued and outstanding equity of such company.

(c) Section 16. If, at the time Executive’s employment is terminated for any reason, Executive is a person designated to file pursuant to Section 16 under the Securities Exchange Act of 1934 (the “1934 Act”), Executive will provide to Company a written representation in a form acceptable to Company that all reportable pre-termination securities transactions relating to Executive have been reported.

3. COMPENSATION.

(a) Base Salary. Company shall pay Executive a “Base Salary” in consideration for Executive’s services to Company, payable as nearly as possible in equal semi-monthly installments or in such other installments as are customary from time to time for Company’s executives at the rate of $250,000 per annum. The Base Salary may be adjusted from time to time in accordance with the procedures established by Company for salary adjustments for executives, provided that the Base Salary shall not be reduced.

(b) Incentive Compensation. Executive shall be eligible for incentive compensation pursuant to one or more incentive compensation plans established by Company from time to time (each, an “Incentive Compensation Plan”). The amount of the incentive compensation, if any, shall be based on the extent to which Executive or Company, or any combination of Executive, Company and Company’s direct and indirect subsidiaries, achieve objectives set forth in or pursuant to the Incentive Compensation Plan, or Incentive Compensation Plans, for the relevant time period. For purposes of this Agreement, the terms “Incentive Compensation Plan” and “Incentive Compensation Plans” do not include any employee benefit, stock option, restricted stock or other equity-based plan.

(c) Benefit Plans. Executive will be entitled to participate in those benefit plans generally provided for Company’s executives in the same or a similar tier of management, in accordance with the terms of the applicable benefit plans. Additionally, Executive shall be entitled to participate in any other benefit plans made available generally to employees of Company from time to time, including but not limited to, any savings plan, life insurance plan and health insurance plan, all subject to any restrictions specified in, or amendments made to, such plans.

(d) Clawback. To the extent required by law or Company policy, Company may require Executive to repay to Company any bonus or other incentive-based or equity-based compensation paid to Executive.

4. BUSINESS EXPENSES.

Company will reimburse Executive for any and all necessary, customary and usual expenses which are incurred by Executive on behalf of Company, provided Executive provides Company with receipts to substantiate the business expense in accordance with Company’s policies or otherwise reasonably justifies the expense to Company.

5. DEATH OR DISABILITY.

(a) Compensation. If Executive’s employment is terminated as a result of Executive’s death, or if Executive becomes Disabled, Executive, or Executive’s estate, as the case may be, shall be entitled to receive the Base Salary due to Executive through the date of Executive’s death or Disability. Executive or Executive’s estate, as the case may be, also shall be entitled to receive the following:

(1) A single lump sum payment equal to ninety (90) days of Executive’s Base Salary as in effect on the date of Executive’s death or Disability;

(2) With respect to any Incentive Compensation Plan with quarterly objectives, a single lump sum cash payment in an amount equal to a prorated portion (based on the number of calendar days that have elapsed during the quarter) of the payment to which Executive would be entitled under the Incentive Compensation Plan (had Executive’s death or Disability not occurred) for the quarter in which Executive died or became Disabled; and

(3) With respect to any Incentive Compensation Plan with annual objectives, a single lump sum cash payment in an amount equal to a prorated portion (based on the number of calendar days that have elapsed during the year) of the payment to which Executive would have been entitled (had Executive’s death or Disability not occurred) under the Incentive Compensation Plan for the calendar year in which Executive dies or becomes Disabled.

The payment to which Executive or Executive’s estate is entitled pursuant to paragraph (1) will be paid within thirty (30) days of Executive’s death or the effective date of Executive’s Disability, as the case may be. The payments to which Executive is entitled pursuant to paragraphs (2) and (3) shall be made within the time period described in the applicable Incentive Compensation Plan. In no event will the payments due pursuant to paragraphs (1), (2) or (3) be made later than March 15 of the year following the year in which Executive dies or the effective date of Executive’s Disability occurs.

(b) Disability. The term “Disability” or “Disabled” means that Executive with or without any accommodation required by law, is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of Company. The effective date of Executive’s Disability is the last day of the third month for which Executive receives the income replacement benefits.

(c) Termination of Employment. Unless otherwise prohibited by law, Executive’s employment shall terminate on the first business day following the effective date of Executive’s Disability. Executive’s employment also shall terminate on the date of Executive’s death.

6. TERMINATION BY COMPANY.

(a) Termination for Cause. Company may terminate this Agreement and Executive’s employment at any time during the Initial Term or any Renewal Term for “Cause” upon written notice to Executive specifying the basis for the termination. If Company terminates this Agreement for “Cause,” Executive’s Base Salary shall immediately cease, and Executive shall not be entitled to severance payments, Incentive Compensation Plan payments or any other payments or benefits pursuant to this Agreement, except for any vested rights pursuant to any benefit plans in which Executive participates and any accrued compensation, accrued and unused vacation pay and similar items. For purposes of this Agreement, the term “Cause” shall mean the termination of Executive’s employment by Company for one or more of the following reasons:

(1) the misappropriation (or attempted misappropriation) of any of Company’s funds or property;

(2) the conviction of, or the entering of a guilty plea or plea of no contest with respect to, a felony or misdemeanor which involves moral turpitude or a fraudulent act;

(3) repeated willful and significant neglect of duties;

(4) acts of material dishonesty or disloyalty toward Company;

(5) repeated material violation of any material written policy with respect to Company’s business or operations;

(6) repeated significant deficiencies with respect to performance objectives assigned by the Chief Executive Officer of Company; or

(7) Executive’s material breach of this Agreement (after notice and an opportunity to cure).

If Executive is terminated for Cause, Company shall be obligated to pay Executive only the Base Salary (from Section 3(a)) and benefits (from Section 3(c)) due to Executive through the termination date, and Executive will not be entitled to, nor will Executive receive, any type of severance payment. For purposes of clauses (3), (5) and (6) an action or omission will not be considered to be “repeated” unless Executive violates that same clause after receiving written notice of an earlier violation and after being provided with an opportunity to cure the violation or deficiency.

(b) Termination Without Cause. Company also may terminate this Agreement and Executive’s employment at any time during the Initial Term or any Renewal Term without Cause. Company may, in its discretion, place Executive on a paid administrative leave prior to the actual date of termination set by Company. During the administrative leave, Company may bar Executive’s access to Company’s offices or facilities if reasonably necessary to the smooth operation of Company, or may provide Executive with access subject to such reasonable terms and conditions as Company chooses to impose.

(c) Base Salary. In the event Executive’s employment is terminated by Company without Cause, Executive shall receive a single lump sum cash payment in an amount equal to one hundred percent (100%) of Executive’s Base Salary as in effect on the date Executive’s employment is terminated to be paid within three (3) days (or sooner if required by law) following the termination of Executive’s employment. Executive shall have no duty to mitigate damages in order to receive the compensation described by this Section 6(c), and the compensation shall not be reduced or offset by other income, payments or profits received by Executive from any source.

(d) Incentive Compensation. If Executive is terminated for Cause, Executive shall not be entitled to receive any Incentive Compensation Plan payments for the quarter or year in which Executive’s employment is terminated or for any other periods. If Executive is terminated without Cause, Executive shall receive a single lump sum cash payment in an amount equal to the sum of the following:

(1) An amount equal to one hundred percent (100%) of the annual compensation paid to Executive in the preceding year under all Incentive Compensation Plans (annual and quarterly) in which Executive participates as of the date her employment is terminated or, if an Incentive Compensation Plan was not in existence in the preceding year, one hundred percent (100%) of the annual compensation paid to Executive in the preceding year under a predecessor Incentive Compensation Plan; plus

(2) With respect to any Incentive Compensation Plan with quarterly objectives, a prorated portion (based on the number of calendar days that have elapsed during the quarter) of the payment to which Executive would be entitled under the Incentive Compensation Plan (had Executive’s employment not been terminated) for the quarter in which Executive’s employment is terminated; plus

(3) With respect to any Incentive Compensation Plan with annual objectives, a prorated portion (based on the number of calendar days that have elapsed during the year) of the payment to which Executive would be entitled under the Incentive Compensation Plan (had Executive’s employment not been terminated) for the year in which Executive’s employment is terminated.

The payments described in this Section 6(d) will be made at the time described in the applicable Incentive Compensation Plan, but in no event later than March 15 of the year following the year in which Executive’s termination without Cause occurs. Executive shall have no duty to mitigate damages in order to receive the compensation described by this Section 6(d), and the compensation shall not be reduced or offset by other income, payments or profits received by Executive from any source.

(e) Welfare Benefit Continuation. If Executive’s employment is terminated by Company without Cause, and such employment termination qualifies as a Separation from Service, Executive shall be entitled to continue to receive life, disability, accident and group health and dental insurance benefits, at substantially the levels Executive was receiving immediately prior to Executive’s Separation from Service, for a period of time expiring upon the earlier of: (1) the end of the period of twelve (12) months following Executive’s Separation from Service, or (2) the day on which Executive becomes eligible to receive any substantially similar benefits under any plan or program of any other employer or source without being required to pay any premium with respect thereto. Company will satisfy the obligation to provide the health and dental insurance benefits pursuant to this Section 6(e) by either paying for or reimbursing Executive for the actual cost of COBRA coverage (and Executive shall cooperate with Company in all respects in securing and maintaining such benefits, including exercising all appropriate COBRA elections and complying with all terms and conditions of such coverage in a manner to minimize the cost). Similarly, Company will reimburse Executive for the cost of comparable coverage for all other insurance benefits that are not subject to the COBRA continuation rules. It will be Executive’s responsibility to procure such benefits and Company will promptly reimburse Executive for the premiums for such benefits in the specified amount upon Executive’s submission of an invoice or other acceptable proof of payment. Company’s obligation under this paragraph will cease with respect to a particular type of coverage when and if Executive becomes eligible to receive substantially similar coverage with a successor employer.

(f) Other Plans. Except to the extent specified in this Section 6 and as provided in this Section 6(f), termination of Executive’s employment shall not affect Executive’s participation in, distributions from, and vested rights under, any employee benefit, stock option, restricted stock or other equity-based plan of, or maintained by or for, Company, which benefits will be governed by the terms of those respective plans. Executive shall have no duty to mitigate damages in order to receive the compensation described by this Section 6(f), and the compensation shall not be reduced or offset by other income, payments or profits received by Executive from any source.

7. TERMINATION BY EXECUTIVE.

(a) General. Executive may terminate this Agreement and her employment at any time, with or without “Good Reason.” Company may, in its discretion, place Executive on a paid administrative leave prior to the actual date of termination of Executive’s employment. During the administrative leave, Company may bar Executive’s access to Company’s offices or facilities if reasonably necessary to the smooth operation of Company, or may provide Executive with access subject to such reasonable terms and conditions as Company chooses to impose.

(b) Good Reason Defined. Executive may terminate this Agreement and her employment for Good Reason if Executive provides Company with written notice of the breach or action giving rise to Good Reason within ninety (90) days of the initial existence of such breach or action. For purposes of this Agreement, “Good Reason” shall mean and include each of the following (unless Executive has expressly agreed to such event in a signed writing):

(1) a material diminution in Executive’s authority, duties, or responsibilities;

(2) any material act or acts of dishonesty by Company directed toward or affecting Executive;

(3) any illegal act or instruction directly affecting Executive by Company, which is not withdrawn after Company is notified of the illegality by Executive; or

(4) Company’s material breach of this Agreement.

Notwithstanding any provisions of this Agreement to the contrary, none of the events described in this Section 7(b) will constitute Good Reason if, within thirty (30) days after Executive provides Company written notice specifying the occurrence or existence of the breach or action that Executive believes constitutes Good Reason, Company has fully corrected (or reversed) such breach or action. Executive’s employment will terminate on the day following the expiration of this thirty (30) day “cure period,” unless Executive and Company agree to a later date not later than two (2) years following the initial existence of such breach or action. Executive shall be deemed to have waived Executive’s right to terminate for Good Reason with respect to any such breach or action if Executive does not notify Company in writing of such breach or action within ninety (90) days of the event that gives rise to such breach or action.

(c) Effect of Termination by Executive for Good Reason. If Executive terminates this Agreement and her employment for Good Reason, it shall for all purposes be treated as a termination by Company without Cause and Executive shall be entitled to compensation in accordance with Section 6.

(d) Effect of Termination by Executive Without Good Reason. If Executive terminates this Agreement and her employment without Good Reason, while the termination shall not be characterized as a termination for Cause, it shall for all purposes, result in the same compensation as a termination for Cause in accordance with Section 6.

8. CHANGE IN CONTROL OF COMPANY.

(a) Continued Eligibility to Receive Benefits. Company considers the maintenance of a sound and vital management to be essential to protecting and enhancing the best interests of Company and its shareholders. In furtherance of such goal and in further consideration of Executive’s continued employment with Company, if a Change in Control (as defined in Section 8(c)) occurs, Executive shall be entitled to the lump-sum severance benefit provided in Section 8(b) if, prior to the expiration of twelve (12) months after the Change in Control, (1) Executive terminates her employment with Company for Good Reason in accordance with the requirements of Section 7(b), or (2) Company terminates Executive’s employment without Cause pursuant to Section 6(b). The full severance benefits provided by this Section 8 shall be payable regardless of the period remaining until the expiration of the Initial Term or any Renewal Term.

(b) Receipt of Benefits. If Executive is entitled to receive a severance benefit pursuant to Section 8(a) hereof:

(1) Within ten (10) days following the date of termination of Executive’s employment, Company will provide Executive with a single lump sum cash payment in an amount equal to: (1) one hundred percent (100%) of Executive’s highest annualized Base Salary in effect on any date during the Initial Term or any Renewal Term; plus (2) one hundred percent (100%) of the annual compensation paid to Executive in the preceding year under all Incentive Compensation Plans (annual and quarterly) in which Executive participates as of the date her employment is terminated or, if an Incentive Compensation Plan was not in existence in the preceding year, one hundred percent (100%) of the annual compensation paid to Executive in the preceding year under a predecessor Incentive Compensation Plan; plus (3) with respect to any Incentive Compensation Plan with quarterly objectives, a prorated portion (based on the number of calendar days that have elapsed during the quarter) of the payment to which Executive would be entitled under the Incentive Compensation Plan (had Executive’s employment not been terminated) for the quarter in which Executive’s employment is terminated; plus (4) with respect to any Incentive Compensation Plan with annual objectives, a prorated portion (based on the number of calendar days that have elapsed during the year) of the payment to which Executive would be entitled under the Incentive Compensation Plan (had Executive’s employment not been terminated) for the calendar year in which Executive’s employment is terminated.

(2) Executive shall be vested in any and all equity-based plans and agreements of Company in which Executive had an interest, vested or contingent. If applicable law prohibits such vesting, then Company shall pay to Executive a single lump sum cash payment in an amount equal to the value of benefits and rights that would have, but for such prohibition, been vested in Executive. Any payment made pursuant to this Section 8(b)(2) will be made within sixty (60) days following the date of termination of Executive’s employment.

(3) If Executive’s employment termination constitutes a Separation from Service, Executive shall be entitled to continue to receive life, disability, accident and group health and dental insurance benefits, at substantially the levels Executive was receiving immediately prior to Executive’s Separation from Service, for a period of time expiring upon the earlier of: (1) the end of the period of twelve (12) months following Executive’s Separation from Service, or (2) the day on which Executive becomes eligible to receive any substantially similar benefits under any plan or program of any other employer or source without being required to pay any premium with respect thereto. Company will satisfy the obligation to provide the health and dental insurance benefits pursuant to this Section 8(b)(3) by either paying for or reimbursing Executive for the actual cost of COBRA coverage (and Executive shall cooperate with Company in all respects in securing and maintaining such benefits, including exercising all appropriate COBRA elections and complying with all terms and conditions of such coverage in a manner to minimize the cost). Similarly, Company will reimburse Executive for the cost of comparable coverage for all other insurance benefits that are not subject to the COBRA continuation rules. It will be Executive’s responsibility to procure such benefits and Company will promptly reimburse Executive for the premiums for such benefits in the specified amount upon Executive’s submission of an invoice or other acceptable proof of payment. Company’s obligation under this Section 8(b)(3) will cease with respect to a particular type of coverage when and if Executive becomes eligible to receive substantially similar coverage with a successor employer.

Executive shall have no duty to mitigate damages in order to receive the compensation described by this Section 8(b); provided, however, that Company’s obligation to provide continued life, disability, accident and group health and dental insurance benefits will cease with respect to a particular type of coverage when and if Executive becomes eligible to receive substantially similar coverage with a successor employer. If Executive is entitled to receive the payments called for by this Section 8(b), Executive shall not be entitled to receive the compensation provided under Section 6 or 7.

(c) Change in Control Defined. For purposes of this Agreement, “Change in Control” shall mean each occurrence of any of the following:

(1) a change in control of Company through a transaction or series of transactions, such that any person (as that term is used in Section 13 and 14(d)(2) of the 1934 Act), excluding affiliates of Company as of the Effective Date, is or becomes the beneficial owner (as that term is used in Section 13(d) of the 1934 Act) directly or indirectly, of securities of Company representing thirty percent (30%) or more of the combined voting power of Company’s then outstanding securities;

(2) any merger, consolidation or liquidation of Company in which Company is not the continuing or surviving company or pursuant to which stock would be converted into cash, securities or other property, other than a merger of Company in which the holders of the shares of stock immediately before the merger have the same proportionate ownership of common stock of the surviving company immediately after the merger;

(3) the shareholders of Company approve any plan or proposal for the liquidation or dissolution of Company; or

(4) substantially all of the assets of Company are sold or otherwise transferred to parties that are not within a “controlled group of corporations” (as defined in Section 1563 of the Code) in which Company is a member at the relevant date.

(d) Cap on Payments.

(1) General Rules. The Code imposes significant tax consequences on Executive and Company if the total payments made to Executive due, or deemed due, to a “change in control” (as such term is defined in Section 280G(b)(2)(A)(i) of the Code and the regulations adopted thereunder) exceed prescribed limits. For example, if Executive’s “Base Period Income” is $100,000 and Executive’s “Total Payments” exceed 299% of such Base Period Income (the “Cap”), Executive will be subject to an excise tax under Section 4999 of the Code of 20% of all amounts paid to her in excess of $100,000. In other words, if Executive’s Cap is $299,999, she will not be subject to an excise tax if she receives exactly $299,999. If Executive receives $300,000, she will be subject to an excise tax of $40,000 (20% of $200,000).

(2) Reduction of Payments. Subject to the exception described in Section 8(d)(3), in order to avoid the excise tax imposed by Section 4999 of the Code, one or more of the payments or benefits to which Executive is entitled that is not subject to Section 409A of the Code shall be reduced until the Total Payments equal the Cap. For purposes of this limitation:

(1) No portion of the Total Payments shall be taken into account which, in the opinion of the Consultant retained pursuant to Section 8(d)(4), does not constitute a “parachute payment” within the meaning of Section 280G(b)(2) of the Code;

(2) A payment shall be reduced only to the extent necessary so that the Total Payments constitute reasonable compensation for services actually rendered within the meaning of Section 280G(b)(4) of the Code or are otherwise not subject to disallowance as deductions, in the opinion of the Consultant; and

(3) The value of any non-cash benefit or any deferred payment of benefit included in the Total Payments shall be determined in accordance with Section 280G of the Code and the regulations issued thereunder.

If after the reductions called for by the preceding provisions of this Section 8(d)(3), the Total Payments continue to exceed the Cap, the payments or benefits to which Executive is entitled and which are subject to Section 409A shall be reduced proportionally until the Total Payments equal the Cap.

(3) Exception. The payment limitation called for by Section 8(d)(2) shall not apply if Executive’s “Uncapped Benefit” exceeds Executive’s “Capped Benefit” by more than 25%. The Consultant selected pursuant to Section 8(d)(4) will calculate Executive’s Uncapped Benefit and Executive’s Capped Benefit. For this purpose, the “Uncapped Benefit” is equal to the Total Payments to which Executive is entitled prior to the application of Section 8(d)(2). Executive’s “Capped Benefit” is the amount to which Executive will be entitled after application of the limitations of Section 8(d)(2).

(4) Consultant. Company will retain a “Consultant” to advise Company with respect to the applicability of any Section 4999 excise tax with respect to Executive’s Total Payments. The Consultant shall be a law firm, a certified public accounting firm, and/or a firm nationally recognized as providing executive compensation consulting services. All determinations concerning Executive’s Capped Benefit and Executive’s Uncapped Benefit (as well as any assumptions to be used in making such determinations) shall be made by the Consultant selected pursuant to this Section 8(d)(4). The Consultant shall provide Executive and Company with a written explanation of its conclusions. All fees and expenses of the Consultant shall be borne by Company. The Consultant’s determination shall be binding on Executive and Company.

(5) Special Definitions. For purposes of this Section 8(d), the following specialized terms will have the following meanings:

(i) “Base Period Income.” “Base Period Income” is an amount equal to Executive’s “annualized includable compensation” for the “base period” as defined in Sections 280G(d)(1) and (2) of the Code and the regulations adopted thereunder. Generally, Executive’s “annualized includable compensation” is the average of her annual taxable income from Company for the “base period,” which is the five (5) calendar years prior to the year in which the change in control occurs.

(ii) “Cap” or “280G Cap.” “Cap” or “280G Cap” shall mean an amount equal to 2.99 times Executive’s Base Period Income. This is the maximum amount which Executive may receive without becoming subject to the excise tax imposed by Section 4999 of the Code or which Company may pay without loss of deduction under Section 280G of the Code.

(iii) “Total Payments.” The “Total Payments” include any “payments in the nature of compensation” (as defined in Section 280G of the Code and the regulations adopted thereunder), made pursuant to this Agreement or otherwise, to or for Executive’s benefit, the receipt of which is contingent or deemed contingent on a change in control and to which Section 280G of the Code applies.

(e) Effect of Repeal. In the event that the provisions of Sections 280G and 4999 of the Code are repealed without succession, Section 8(d) shall be of no further force or effect.

(f) Employment by Successor. For purposes of this Agreement, employment by a successor of Company or a successor of any subsidiary of Company that has assumed this Agreement shall be considered to be employment by Company or one of its subsidiaries. As a result, if Executive is employed by such a successor following a Change in Control, Executive will not be entitled to receive the benefits provided by Section 8 unless Executive’s employment with the successor is subsequently terminated without Cause or for Good Reason within twelve (12) months following the Change in Control.

9. SECTION 409A COMPLIANCE.

(a) Compliance Strategy. Section 409A of the Code imposes an additional twenty percent (20%) tax, plus interest, on payments from “non-qualified deferred compensation plans.” Certain payments under this Agreement could be considered to be payments under a “non-qualified deferred compensation plan.” The additional twenty percent (20%) tax, and interest, does not apply if the payment qualifies for an exception to the requirements of Section 409A or complies with the requirements of Section 409A. Company currently believes that the cash payments and benefits due pursuant to this Agreement either comply with the requirements of Section 409A or qualify for an exception to the requirements of Section 409A.

Company intends that the payments to which Executive is entitled upon Executive’s death or Disability under Sections 5(a)(1), (2) and (3) qualify for the short-term deferral exception to Section 409A of the Code. In addition, Company intends that the payments made due to Executive’s termination without Cause under Sections 6(c) and (d) and 8(b)(1) and (2), or for Good Reason under Sections 7(c) and 8(b)(1) and (2), qualify for the short-term deferral exception to Section 409A of the Code as described in Treas. Reg. § 1.409A-1(b)(4)).

Company further intends that the group health and dental insurance benefits payable under Sections 6(e) and 8(b)(3) during the period of time during which Executive is entitled to continuation coverage under Section 4980B of the Code (COBRA) if Executive elected such coverage and paid the applicable premium qualify for the separation pay plan exception to Section 409A of the Code. Company has concluded that the life, disability and accident insurance benefits payable under Sections 6(e) and 8(b)(3) may be subject to the requirements of Section 409A of the Code. To ensure that such payments comply with Section 409A of the Code, the payments are payable at a specified time or pursuant to a fixed schedule within the meaning of Treas. Reg. § 1.409A-3(i)(1)(iv) and the amounts reimbursed in one taxable year will not affect the amounts eligible for reimbursement by Company in a different taxable year. All reimbursements must be made no later than December 31 of the calendar year following the calendar year in which the expense was incurred. Executive may not elect to receive cash or any other benefit in lieu of the benefits provided by Sections 6(e) and 8(b)(3).

(b) Delay in Payments. Prior to making any payments due under this Agreement, Company will determine, on the basis of any regulations, rulings or other available guidance and the advice of counsel, whether the short-term deferral exception, the separation pay exception or any other exception to the requirements of Section 409A of the Code is available. If Company concludes that no exception is available, no payments will be made prior to Executive’s Separation from Service, despite any provision in Section 6, 7 or 8 to the contrary. In addition, if Executive is a “Specified Employee” (as defined in Treas. Reg. § 1.409A-1(i)), and Company concludes that no exception to the requirements of Section 409A of the Code is available, no payments shall be made to Executive prior to the first business day following the date which is six (6) months after Executive’s Separation from Service. Any amounts that would have been paid during the six (6) months following Executive’s Separation from Service will be paid on the first business day following the expiration of the six-month period without interest thereon. The provisions of this paragraph apply to all amounts due pursuant to this Agreement, other than amounts that do not constitute a deferral of compensation within the meaning of Treas. Reg. §1.409A-1(b) or other amounts or benefits that are not subject to the requirements of Section 409A of the Code.

(c) Separation from Service. For purposes of this Agreement, the term “Separation from Service” means, either (1) termination of Executive’s employment with Company and all Affiliates, or (2) a permanent reduction in the level of bona fide services Executive provides to Company and all Affiliates to an amount that is twenty percent (20%) or less of the average level of bona fide services Executive provided to Company in the immediately preceding thirty-six (36) months, with the level of bona fide service calculated in accordance with Treas. Reg. § 1.409A-1(h)(1)(ii).

For purposes of determining whether a Separation from Service has occurred, the term “Affiliate” shall have the meaning assigned in Treas. Reg. § 1.409A-1(h)(3) (which generally requires fifty percent (50%) common ownership).

Executive’s employment relationship is treated as continuing while Executive is on military leave, sick leave, or other bona fide leave of absence (if the period of such leave does not exceed six (6) months, or if longer, so long as Executive’s right to reemployment with Company or an Affiliate is provided either by statute or contract). If Executive’s period of leave exceeds six (6) months and Executive’s right to reemployment is not provided either by statute or by contract, the employment relationship is deemed to terminate on the first day immediately following the expiration of such six-month period. Whether a termination of employment has occurred will be determined based on all of the facts and circumstances and in accordance with regulations issued by the United States Treasury Department pursuant to Section 409A of the Code.

(d) Distributions Treated as Made upon a Designated Event. If Company fails to make any payment, either intentionally or unintentionally, within the time period specified in this Agreement, but the payment is made within the same calendar year, such payment will be treated as made within the time period specified in this Agreement pursuant to Treas. Reg. § 1.409A-3(d). In addition, if a payment is not made due to a dispute with respect to such payment, the payment may be delayed in accordance with Treas. Reg. § 1.409A-3(g).

(e) Reimbursements. In order to ensure compliance with the applicable regulations, the amounts reimbursed in one taxable year will not affect the amounts eligible for reimbursement by Company in a different taxable year. All reimbursements must be made no later than December 31 of the calendar year following the calendar year in which the expense was incurred. Executive may not elect to receive cash or any other benefit in lieu of the benefits provided by Sections 6(e) and 8(b)(3).

(f) Miscellaneous Payment Provisions. Under no circumstances may the time or schedule of any payment made or benefit provided pursuant to this Agreement be accelerated or subject to a further deferral except as otherwise permitted or required pursuant to regulations and other guidance issued pursuant to Section 409A of the Code. Executive does not have any right to make any election regarding the time or form of any payment due under this Agreement. This Agreement shall be operated in compliance with Section 409A of the Code and each provision of this Agreement shall be interpreted, to the extent possible, to comply with Section 409A of the Code.

10. INTELLECTUAL PROPERTY.

(a) Proprietary Information. Executive and Company hereby acknowledge and agree that in connection with the performance of Executive’s services, Executive shall be provided with or shall otherwise be exposed to or receive certain proprietary information of Company. Such proprietary information may include, but shall not be limited to, information concerning Company’s customers and products, information concerning certain marketing, selling, and pricing strategies of Company, and information concerning methods, manufacturing techniques, and processes used by Company in its operations (all of the foregoing shall be deemed “Proprietary Information” for purposes of this Agreement). Executive hereby agrees that, without the prior written consent of Company, any and all Proprietary Information shall be and shall forever remain the property of Company, and that during the Initial Term or any Renewal Term, and at all times thereafter, Executive shall not in any way disclose or reveal the Proprietary Information other than to Company’s executives, officers and other employees and agents in the normal course of Executive’s provision of services hereunder. The term “Proprietary Information” does not include information which (1) becomes generally available to the public other than as a result of a disclosure by Executive contrary to the terms of this Agreement, (2) was available on a non-confidential basis prior to its disclosure, or (3) becomes available on a non-confidential basis from a source other than Executive, provided that such source is not contractually obligated to keep such information confidential.

(b) Trade Secrets. Executive, prior to and during this Agreement, has had and will have access to and become acquainted with various trade secrets which are owned by Company or by its affiliates and are regularly used in the operation of their respective businesses and which may give Company or an affiliate an opportunity to obtain an advantage over competitors who do not know or use such trade secrets. Executive agrees and acknowledges that Executive has been granted access to these valuable trade secrets only by virtue of the confidential relationship created by Executive’s employment and Executive’s prior relationship to, interest in, and fiduciary relationships to Company. Executive shall not disclose any of the aforesaid trade secrets, directly or indirectly or use them in any way, either during the Initial or any Renewal Term of this Agreement or at any time thereafter, except as required in the course of employment by Company and for its benefit.

(c) Intellectual Property. Executive acknowledges and agrees that all products, services, methods, know-how, procedures, processes, specifications, and anything of a similar nature that relate to the services to be provided by Executive to Company, whether the same are derived from the use of Proprietary Information or otherwise developed or conceived of by Executive, shall be and shall remain the exclusive property of Company. Executive further agrees that for a period of one (1) year after the termination of this Agreement for any reason, there shall be an irrebuttable presumption that all products, services, methods, know-how, procedures, formulae, processes, specifications, and anything of a similar nature which relate to such services rendered hereunder developed, formulated, created, or conceived of by Executive were derived from the use of Proprietary Information or were otherwise developed, formulated, created, or conceived of by Executive during the Initial Term or any Renewal Term, and, as such, the same shall be and shall remain the exclusive property of Company. Executive shall promptly disclose to Company all written and graphic materials, computer software, inventions, discoveries and improvements authored, prepared, conceived or made by, for or at the direction of Executive during her employment hereunder and which are related to the business of Company, and shall execute all such documents and instruments, including but not limited to any assignments and invention disclosure documents, as Company may reasonably determine are necessary or desirable in order to give effect to the preceding sentence or to preserve, protect or enforce Company’s rights with respect to any such work and any intellectual property therein.

(d) Ownership of Documents. Company shall own all papers, records, books, drawings, documents, manuals, and anything of a similar nature (collectively, the “Documents”) prepared by Executive in connection with her employment. The Documents shall be the property of Company and are not to be used on other projects except upon Company’s prior written consent. At the end of the Initial Term or any Renewal Term, Executive shall surrender to Company any and all Documents or other property of whatsoever kind now or hereafter in Executive’s possession, custody, or control which contain or reflect in any manner whatsoever Proprietary Information or information which in any way relates to Company’s business.

(e) Company Defined. For purposes of this Section 10, “Company” shall be interpreted to include Company and all of its direct and indirect subsidiaries.

11. RESTRICTIVE COVENANTS.

(a) Covenant Not To Compete. In consideration of Company’s agreements contained herein and the payments to be made by it to Executive pursuant hereto, Executive agrees that during the “Restricted Period” following the termination of Executive’s employment for any reason and so long as Company is continuously not in material default of its obligations to provide payments or employment-type benefits to Executive hereunder or under any other agreement, covenant, or obligation, Executive will not, without prior written consent of Company, consult with or act as an advisor to another company about activity which is a “Competing Business” of such company in the Restricted Territory, as defined below. For purposes of this Agreement, Executive shall be deemed to be engaged in a “Competing Business” if, in any capacity, including proprietor, shareholder, partner, officer, director or employee, Executive engages or participates, directly or indirectly, in the operation, ownership or management of the activity of any proprietorship, partnership, company or other business entity which activity is competitive with the then actual business in which Company and its operating subsidiaries and affiliates are engaged on the date of, or any business contemplated by such entities’ business plans in effect on the date of notice of, Executive’s termination of employment. (As of the date of execution of this Agreement, Company’s actual business is the direct marketing of information technology products and services to businesses and consumers.) Nothing in this Section 11(a) is intended to limit Executive’s ability to own equity in a public company constituting less than one percent (1%) of the outstanding equity of such company, when Executive is not actively engaged in the management thereof.

(b) Non-Solicitation. Executive recognizes that Company’s clients are valuable and proprietary resources of Company. Accordingly, Executive agrees that during the Restricted Period Executive will not directly or indirectly, through Executive’s own efforts or through the efforts of another person or entity, solicit business in the Restricted Territory for or in connection with any Competing Business from any individual or entity which obtained products or services from Company at any time during Executive’s employment with Company. In addition, during the Restricted Period Executive will not solicit business for or in connection with a Competing Business from any individual or entity which may have been solicited by Executive on behalf of Company. Further, during the Restricted Period Executive will not solicit, hire or engage employees of Company who would have the skills and knowledge necessary to enable or assist efforts by Executive to engage in a Competing Business. Company agrees that the restrictions described in this paragraph apply only so long as Company is continuously not in material default of its obligations to provide payments or employment-type benefits to Executive hereunder or under any other agreement, covenant, or obligation.

(c) Restricted Period. For purposes of this Section 11, the “Restricted Period” shall include the Employment Period and a period of twelve (12) months (or in the event any reviewing court finds this period to be over-broad or unenforceable, for a period of nine (9) months; or in the event any reviewing court finds this period to be over-broad or unenforceable, for a period of six (6) months) following the termination of Executive’s employment with Company for any reason.

(d) Restricted Territory. Executive and Company understand and agree that Company’s business is not geographically restricted and is unrelated to the physical location of Company facilities or the physical location of any Competing Business, due to extensive use of the Internet, telephones, facsimile transmissions and other means of electronic information and product distribution. Executive and Company further understand and agree that Executive will, in part, work toward expanding Company’s markets and geographic business territories and will be compensated for performing this work on behalf of Company.

Accordingly, Company has a protectable business interest in, and the parties intend the Restricted Territory to encompass, each and every location from which Executive could engage in a Competing Business in any country, state, province, county or other political subdivision in which Company has clients, employees, suppliers, distributors or other business partners or operations. If, but only if, this Restricted Territory is held to be invalid on the ground that it is unreasonably broad, the Restricted Territory shall include each location from which Executive can conduct business in any of the following locations: each state in the United States in which Company conducts sales or operations, each province within Canada in which Company conducts sales or operations, and each political subdivision of the United Kingdom in which Company conducts sales or operations. If, but only if, this Restricted Territory is held to be invalid on the grounds that it is unreasonably broad, then the Restricted Territory shall be any location within a fifty (50) mile radius of any Company office.

(e) Remedies; Reasonableness. Executive acknowledges and agrees that a breach by Executive of the provisions of this Section 11 will constitute such damage as will be irreparable and the exact amount of which will be impossible to ascertain and, for that reason, agrees that Company will be entitled to an injunction to be issued by any court of competent jurisdiction restraining and enjoining Executive from violating the provisions of this Section 11. The right to an injunction shall be in addition to and not in lieu of any other remedy available to Company for such breach or threatened breach, including the recovery of damages from Executive.

Executive expressly acknowledges and agrees that: (1) the Restrictive Covenants contained herein are reasonable as to time and geographical area and do not place any unreasonable burden upon Executive, (2) the general public will not be harmed as a result of enforcement of these Restrictive Covenants, and (3) Executive understands and hereby agrees to each and every term and condition of the Restrictive Covenants set forth in this Agreement.

Executive also expressly acknowledges and agrees that Executive’s covenants and agreements in this Section 11 shall survive this Agreement and continue to be binding upon Executive after the expiration or termination of this Agreement, whether by passage of time or otherwise.

12. BENEFIT AND BINDING EFFECT.

This Agreement shall inure to the benefit of and be binding upon Company, its successors and assigns, including, but not limited to, any company, person, or other entity which may acquire all or substantially all of the assets and business of Company or any company with or into which Company may be consolidated or merged, and Executive, Executive’s heirs, executors, administrators, and legal representatives, provided that the obligations of Executive may not be delegated.

13. FREEDOM FROM RESTRICTIONS.

Executive represents and warrants that Executive has not entered into any agreement, whether express, implied, oral, or written, that poses an impediment to Executive’s employment by Company including Executive’s compliance with the terms of this Agreement. In particular, Executive is not subject to a valid, pre-existing non-competition agreement which prohibits Executive from fulfilling Executive’s job duties as set out in Section 2(a), and no restrictions or limitations exist respecting Executive’s ability to perform fully Executive’s obligations to Company, including Executive’s compliance with the terms of this Agreement.

14. THIRD-PARTY TRADE SECRETS.

During the term of this Agreement, Executive agrees not to copy, refer to, or in any way use, information that is proprietary to any third party (including any previous employer). Executive represents and warrants that Executive has not improperly taken any documents, listings, hardware, software, discs, or any other tangible medium that embodies proprietary information from any third party, and that Executive does not intend to copy, refer to, or in any way use, information that is proprietary to any third party in performing duties for Company.

15. NOTICES.

All notices hereunder shall be in writing and delivered personally or sent by United States registered or certified mail, postage prepaid and return receipt requested:


If to Company, to:		Insight Enterprises, Inc.
		Attn: Chief Executive Officer
		6820 S. Harl Ave.
		Tempe, Arizona 85283

With a copy to:		Insight Enterprises, Inc.
		Attn: Legal Department
		6820 S. Harl Ave.
		Tempe, Arizona 85283

If to Executive, to:		Mary E. Sculley
		10742 N. Ventura Court
		Fountain Hills, AZ 85268

Either party may change the address to which notices are to be sent to it by giving ten (10) days written notice of such change of address to the other party in the manner above provided for giving notice.

Notices will be considered delivered on personal delivery or on the date of deposit in the United States mail in the manner provided for giving notice by mail.

16. NONDELEGABILITY OF EXECUTIVE’S RIGHTS AND COMPANY ASSIGNMENT RIGHTS.

The obligations, rights and benefits of Executive hereunder are personal and may not be delegated, assigned or transferred in any manner whatsoever, nor are such obligations, rights or benefits subject to involuntary alienation, assignment or transfer. Upon reasonable notice to Executive, Company may transfer Executive to an affiliate of Company, which affiliate shall assume the obligations of Company under this Agreement. This Agreement shall be assigned automatically to any entity merging with or acquiring Company or its business.

17. SEVERABILITY.

If any term or provision of this Agreement is declared by a court or tribunal of competent jurisdiction to be invalid or unenforceable for any reason, this Agreement shall remain in full force and effect, and either (1) the invalid or unenforceable provision shall be modified to the minimum extent necessary to make it valid and enforceable or (2) if such a modification is not possible, this Agreement shall be interpreted as if such invalid or unenforceable provision were not a part hereof.

18. ARBITRATION.

The parties agree that any controversy, dispute or claim arising out of or relating to the Agreement or breach thereof, including without limitation Executive’s employment with or separation of employment from Company, and all claims, to the extent allowable by law, that Company or any of its representatives engaged in conduct prohibited on any basis under any federal, state, or local statute, including federal or state discrimination statutes or public policy, shall be resolved by final, binding and conclusive arbitration with a sole arbitrator to be mutually agreed upon in Maricopa County, Arizona. The parties shall bear equally the cost of the arbitrator. The arbitration shall occur within thirty (30) days of selection of the arbitrator and shall be administered by the American Arbitration Association under its National Rules for the Resolution of Employment Disputes and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.

Any arbitration award may, in the discretion of the arbitrator, include reasonable attorneys’ fees and costs of the prevailing party. “Attorneys’ fees and costs” mean all reasonable pre-award expenses, administrative fees, travel expenses, out-of-pocket expenses such as copying and telephone costs, witness fees and attorneys’ fees. Any award of attorney’s fees and costs to which Executive may be entitled shall be paid by Company, on or before December 31 of the calendar year following the year of the conclusion of the arbitration.

Either party may apply to the arbitrator seeking injunctive relief until the arbitration award is rendered or the matter is otherwise resolved. Either party also may, without waiving any remedy under the Agreement, seek from any court having jurisdiction any interim or provisional relief, including a temporary restraining order, an injunction both preliminary and final, and any other appropriate equitable relief, that is necessary to protect the rights or property of that party, pending the retention of the arbitrator.

19. COUNTERPARTS.

This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but which together shall constitute one and the same instrument.

20. ENTIRE AGREEMENT.

The entire understanding and agreement between the parties has been incorporated into this Agreement, and this Agreement supersedes all other agreements and understandings between Executive and Company with respect to the relationship of Executive with Company, except with respect to other continuing or future stock option, health, benefit and similar plans or agreements.

21. GOVERNING LAW.

Executive’s employment shall be governed in all respects by the laws of the State of Arizona, including the conflicts of law principles, as governs transactions occurring entirely within Arizona among Arizona residents, except as preempted by Federal law.

22. DEFINITIONS.

Throughout this Agreement, certain defined terms will be identified by the capitalization of the first letter of the defined word or the first letter of each substantive word in a defined phrase. Whenever used, these terms will be given the indicated meaning.

23. TERMINATION OF EMPLOYMENT.

The termination of this Agreement by either party also shall result in the termination of Executive’s employment relationship with Company in the absence of an express written agreement providing to the contrary. Neither party intends that any oral employment relationship continue after the termination of this Agreement.

24. TIME IS OF THE ESSENCE.

Company and Executive agree that time is of the essence with respect to the duties and performance of the covenants and promises of this Agreement.

25. CONSTRUCTION.

This Agreement is the result of negotiation between Company and Executive and both have had the opportunity to have this Agreement reviewed by their legal counsel and other advisors. Accordingly, this Agreement shall not be construed for or against Company or Executive, regardless of which party drafted the provision at issue. The language in all parts of this Agreement shall in all cases be construed as a whole according to its fair meaning and not strictly for or against either party. The Section headings contained in this Agreement are for reference purposes only and will not affect the meaning or interpretation of this Agreement in any way. Whenever the words “include,” “includes,” or “including” are used in the Agreement, they shall be deemed to be followed by the words “without limitation.”

Dated this 11 day of April, 2011.


Company:

INSIGHT ENTERPRISES, INC.,
a Delaware corporation

By:	/s/ Steven R. Andrews

	Name:	Steven R. Andrews
	Title:	General Counsel

Executive:

/s/ Mary E. Sculley

Mary E. Sculley

EX-10.2 3 c16434exv10w2.htm EXHIBIT 10.2 Exhibit 10.2

Exhibit 10.2

March 28, 2011

Ms. Mary E. Sculley
10742 N. Ventura Court
Fountain Hills, AZ 85268

Dear Mary:

On behalf of Insight, it is my pleasure to extend an offer to you for the position of Senior Vice President/Human Resources of Insight Enterprises, Inc. (“Insight”), a Section 16 Reporting Officer, reporting to Kenneth T. Lamneck, President and CEO, with a start date of April 11, 2011.

BASE COMPENSATION

The annual base salary for your position is $250,000.00, paid bi-weekly.

VARIABLE INCENTIVE

You will be eligible to participate in the 2011 Cash Incentive Compensation Plan (“CICP”), earning a pro-rata share of the 2011 bonus based on the portion of 2011 in which you are employed. Your annual variable target will be 45% of base salary, at 100% attainment of objectives. Further details will be provided upon commencement of your assignment. Insight reserves the right to change the Terms and Conditions of the compensation plan.

STOCK PLANS

The Compensation Committee of the Board of Directors has approved an award of $251,068.00 in restricted stock units (RSUs), to be issued to you on the 10^th day of the month following your start date, based on the closing stock price of NSIT on that date, with 60% performance-based and 40% service based. This represents a pro-rated amount of the grant you would have received on February 20, 2011. Although the design and awards under any such future plan are at the discretion of the Compensation Committee, for 2011, your award as a Section 16 Officer would have been $290,000.00 on February 20, 2011. The performance-based RSUs will vest in three equal annual installments on the first three anniversaries of the date of grant subject to the final attainment of the performance conditions, and the service-based RSUs will vest in four equal annual installments on the first four anniversaries of the date of grant. All of the RSU awards and are subject to the terms and conditions of the 2007 Omnibus Plan, as amended. You will also participate in future stock incentive plans approved by the Compensation Committee for the Company’s Section 16 officers.

Ms. Mary E. Sculley
March 28, 2011
Page 2

BENEFITS

As a new Insight teammate, you will be eligible to participate in our benefit plans. Please refer to the 2011 Benefit Enrollment Guide and Enrollment Instructions included in this package. You can enroll once you have started work and have access to Insight’s intranet, but you must enroll by the 31^st day after your start date. Benefits are effective on the first of the month after completing 30 days with Insight.

VACATION

You will be provided with four weeks of vacation in the first full year of employment. In addition to vacation, you will also receive floating holidays, and seven and a half paid holidays per year. Please see details in the Benefit Enrollment Guide.

EMPLOYMENT AGREEMENT

We also enclose a form of Employment Agreement approved by our Compensation Committee, along with a standard Indemnification Agreement.

CONTINGENCIES

By signing and returning this letter, you are representing to us that you have not entered into any agreement with any other company that prohibits you from working for Insight or limits your ability to carry out the duties of the position we are offering you at Insight. In the event you are a party to such an agreement, you acknowledge that your obligations under such agreement are personal to you and are not the responsibility of Insight. In addition, Insight may make its offer of employment contingent upon successful resolution of any restrictions arising out of your work for a previous employer.

You also agree that you have not taken and are not in possession of any information from any other company that is marked as confidential and/or proprietary or which you have reason to believe is confidential and/or proprietary (“Prior Employer Proprietary Information”). Insight prohibits the use of Prior Employer Proprietary Information unless the owner of such Prior Employer Proprietary Information expressly authorizes Insight to use it, or it is otherwise proper for Insight to use such information. We require that you do not use Prior Employer Proprietary Information in carrying out your duties at Insight and do not disclose Prior Employer Proprietary Information to Insight. By signing and returning this letter, you are agreeing to abide by these restrictions.

This offer is also contingent upon you signing the enclosed Confidentiality, Intellectual Property, Non-Solicitation and Non-Competition Agreement, Arbitration Agreement, and other policies and agreements included in this package. This offer is also contingent upon you passing a pre-employment drug screen and criminal background check. Please complete, sign and return the enclosed authorization form so that we may proceed with your background check.

Ms. Mary E. Sculley
March 28, 2011
Page 3

Federal law requires Insight to obtain identification and employment eligibility documentation within three business days of your hire date. Please bring original documents to verify both your identity and eligibility to work. Please refer to the back of the enclosed I-9 form for a list of permissible documents. You must bring with you either: (a) one document from List A; or (b) one document from list B and one document from List C. Failure to provide these documents within three business days of your hire date will result in the suspension and/or termination of employment. If you are working remotely (not in an Insight office), please review the instructions with the I-9 form for your options in having your original documents viewed.

EMPLOYMENT RELATIONSHIP

During your employment, you will be required to adhere to the company’s policies and procedures located on the Policy Center of the company’s intranet. These policies may be modified periodically at the discretion of company management. Employment with the company is at-will, which means that either you or Insight may terminate the employment relationship at any time, with or without advance notice, and with or without cause. If you elect to resign your employment, Insight requests, as a courtesy, that you provide us two weeks notice of the intended separation from employment. This letter is not an express or implied contract for employment for any period of time.

Mary, we look forward to having you join the Insight team. If you have any questions, please feel free to contact me at 480-316-9914.

Sincerely,


/s/ Steven R. Andrews Steven R. Andrews
General Counsel

OFFER ACCEPTANCE

This letter is an offer of employment and not an employment contract. Your signature below indicates your acceptance of our offer of at-will employment pursuant to the terms and conditions set forth in this letter and Insight’s policies.


/s/ Mary E. Sculley Name		3/28/2011 Date

Please return your acceptance of our offer of employment to Barbara Ross in the enclosed overnight package.

EX-31.1 4 c16434exv31w1.htm EXHIBIT 31.1 Exhibit 31.1

Exhibit 31.1

INSIGHT ENTERPRISES, INC.

CERTIFICATION

I, Kenneth T. Lamneck, certify that:

I have reviewed this Quarterly Report on Form 10-Q of Insight Enterprises, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 4, 2011


By:		/s/ Kenneth T. Lamneck Kenneth T. Lamneck
		Chief Executive Officer

EX-31.2 5 c16434exv31w2.htm EXHIBIT 31.2 Exhibit 31.2

Exhibit 31.2

INSIGHT ENTERPRISES, INC.

CERTIFICATION

I, Glynis A. Bryan, certify that:

I have reviewed this Quarterly Report on Form 10-Q of Insight Enterprises, Inc.;

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 4, 2011


By:		/s/ Glynis A. Bryan Glynis A. Bryan
		Chief Financial Officer

EX-32.1 6 c16434exv32w1.htm EXHIBIT 32.1 Exhibit 32.1

Exhibit 32.1

INSIGHT ENTERPRISES, INC.

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Insight Enterprises, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Kenneth T. Lamneck, Chief Executive Officer of the Company, and Glynis A. Bryan, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to the best of our knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


By:		/s/ Kenneth T. Lamneck Kenneth T. Lamneck
		Chief Executive Officer
		May 4, 2011

By:		/s/ Glynis A. Bryan Glynis A. Bryan
		Chief Financial Officer
		May 4, 2011

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