What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-11-03 compared with 2020-08-06 · 213 added, 183 removed, 197 unchanged (67% of the section changed)

10 unchanged sentences

Our offerings in the remainder of our EMEA and APAC segments are largely software and certain software-related services.

O n a consolidated basis, for the three months ended June 30, 2020:

Net sales of $1.97 billion increased 7% compared to the three months ended June 30, 2019, primarily due to the addition of PCM.

O n a consolidated basis, for the three months ended September 30, 2020:

Net sales of $1.9 billion increased 1% compared to the three months ended September 30, 2019, primarily due to the addition of PCM.

Without the addition of PCM, net sales in the core business would have been down compared to the prior year quarter as a result of the negative impact of COVID-19.

The overall increase in net sales reflects an increase in hardware and services net sales, which was partially offset by a decrease in software net sales.

Excluding the effects of fluctuating foreign currency exchange rates, net sales increased 8% compared to the second quarter of 2019.

Gross profit of $324.4 million increased 18% compared to the three months ended June 30, 2019, up 19% year over year, excluding the effects of fluctuating foreign currency exchange rates.

Gross margin improved approximately 150 basis points to 16.5% of net sales in the three months ended June 30, 2020.

Excluding the effects of fluctuating foreign currency exchange rates, net sales remained flat compared to the third quarter of 2019.

Gross profit of $308 million increased 11% compared to the three months ended September 30, 2019.

Excluding the effects of fluctuating foreign currency exchange rates, gross profit increased 12% compared to the third quarter of 2019.

Gross margin improved approximately 150 basis points to 15.9% of net sales in the three months ended September 30, 2020.

This increase reflects an increase in the mix of higher margin services net sales and an increase in margins on hardware net sales compared to the same period in the prior year.

Earnings from operations increased 3% year over year to $74.2 million in the second quarter of 2020 compared to $72.1 million in the second quarter of 2019, primarily due to increased gross profit;

however, the increase was partially offset by increased personnel costs including teammate benefits and variable compensation due to increased headcount primarily as a result of PCM, increased amortization of intangible assets related to the PCM acquisition and increased severance and restructuring costs.

Earnings from operations increased 38%, year over year, to $61.5 million in the third quarter of 2020 compared to $44.4 million in the third quarter of 2019, primarily due to increased gross profit and reduction in acquisition and integration related expenses, incurred in connection with PCM.

The increase was partially offset by increased personnel costs, including teammate benefits and variable compensation, and increased amortization of intangible assets, both related to the PCM acquisition.

Excluding the effects of fluctuating foreign currency exchange rates, earnings from operations increased 42% year over year.

Net earnings and diluted earnings per share were $46.4 million and $1.32, respectively, for the second quarter of 2020.

This compares to net earnings of $50.0 million and diluted earnings per share of $1.38 for the second quarter of 2019.

Net earnings and diluted earnings per share were $38.9 million and $1.10, respectively, for the third quarter of 2020.

This compares to net earnings of $27.1 million and diluted earnings per share of $0.76 for the third quarter of 2019.

INSIGHT ENTERPRISES, INC.

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Governments around the world have also enacted various measures, including orders to close all businesses not deemed “essential,” isolate residents to their homes or places of residence, and practice social distancing when engaging in essential activities.

These measures taken by the Company continued to be in place for the duration of the second quarter of 2020 and remain in place to date.

These measures taken by the Company continued to be in effect for the duration of the third quarter of 2020 and remain in place to date.

The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains and workforce participation, and initially created significant volatility and disruption of financial markets.

We observed a pronounced impact of COVID-19 on our second quarter financial results when compared to internal budgets, and anticipate demand for our products and services will continue to be down in the third quarter as clients continue to evaluate the impact of COVID-19 on their businesses, their profitability and their liquidity.

We continued to experience a decline in booking trends year over year in July 2020 and expect this to continue into the third quarter of 2020.

In the short run, we have taken steps to accelerate our integration plans with PCM and to reduce discretionary operating expenditures, such as certain teammate benefits and variable compensation and travel related expenditures.

We have utilized various partner and government incentives available to us to help offset some of these business impacts.

We believe that we have a strong balance sheet and healthy liquidity position, including amounts available under our ABL facility with current capacity of up to $1.2 billion, of which approximately $144.0 million was outstanding at June 30, 2020.

We continued to observe a pronounced impact of COVID-19 on our third quarter financial results when compared to internal budgets, and anticipate demand for our products and services will continue to be impacted in the fourth quarter as clients continue to evaluate the impact of COVID-19 on their businesses, their profitability and their liquidity.

While we did not experience a decline in bookings in October 2020, we anticipate that the declining trend, which began in April 2020, may continue into the fourth quarter of 2020, when compared to the prior year.

In the short run, we took steps to accelerate and complete our integration with PCM and to reduce discretionary operating expenditures, such as certain teammate benefits and variable compensation and travel related expenditures.

We have also utilized various partner and government incentives available to us to help offset some of these business impacts.

In the third quarter of 2020, we invested in our sales force, adding key technical talent across our solution areas and additional sales coverage to our geographic footprint.

We will continue to invest in this area in the fourth quarter to ensure we are positioned well to compete in the marketplace in 2021, when we expect the IT market will start to recover.

We fully paid down all of our debt under our ABL facility during the quarter and believe we have a strong balance sheet and healthy liquidity position.

The Company had current capacity of up to $1.2 billion under our ABL facility available as of September 30, 2020.

The ultimate extent of the impact of the COVID-19 pandemic on our business operations, financial performance and results of operations, including our ability to execute our business strategies and initiatives in the expected time frame, is currently unknown and will depend on future developments, which are highly uncertain, continuously evolving and cannot be predicted.

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See “Risk Factors” in Part II, Item 1A of this report for additional risks we face due to the COVID-19 pandemic.

Throughout the “Quarterly Overview” and “Results of Operations” sections of this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” we refer to changes in net sales, gross profit, selling and administrative expenses and earnings from operations on a consolidated basis and in North America, EMEA and APAC excluding the effects of fluctuating foreign currency exchange rates.

In computing the changes in amounts and percentages, we compare the current period amount as translated into U.S.

dollars under the

INSIGHT ENTERPRISES, INC.

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AND RESULTS OF OPERATIONS (continued)

applicable accounting standards to the prior period amount in local currency translated into U.S.

In computing the changes in amounts and percentages, we compare the current period amount as translated into U.S.

dollars under the applicable accounting standards to the prior period amount in local currency translated into U.S.

dollars utilizing the weighted average translation rate for the current period.

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The COVID-19 pandemic has negatively impacted the global economy and has disrupted global supply chains and workforce participation.

We observed a pronounced impact on our second quarter financial results and believe the ultimate extent of the impact of the COVID-19 pandemic on our future business operations, financial performance and results of operations, including our ability to execute our business strategies and initiatives in the expected time frame, is currently unknown and will depend on future developments, which are highly uncertain, continuously evolving and cannot be predicted.

The following table sets forth certain financial data as a percentage of net sales for the three months ended June 30, 2020 and 2019:

We continued to observe impacts on our third quarter financial results and believe the ultimate extent of the impact of the COVID-19 pandemic on our future business operations, financial performance and results of operations, including our ability to execute our business strategies and initiatives in the expected time frame, is currently unknown and will depend on future developments, which are highly uncertain, continuously evolving and cannot be predicted.

The following table sets forth certain financial data as a percentage of net sales for the three and nine months ended September 30, 2020 and 2019:

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Costs of goods sold

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Business clients, particularly larger enterprise businesses in the United States, tend to spend more in our fourth quarter and less in our first quarter.

Sales to the federal government in the United States are often stronger in our third quarter, while sales in the state and local government and education markets are stronger in our second quarter.

Sales to the federal government in the United States are often stronger in our third quarter, while sales in the state and local government and education markets are also stronger in our second quarter.

Sales to public sector clients in the United Kingdom are often stronger in our first quarter.

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Our gross profit across the business is, and will continue to be, impacted by partner incentives, which can change significantly in the amounts made available and in the related product or services sales being incentivized by the partner.

Incentives from our largest partners are significant and changes in the incentives could impact our results of operations to the extent we are unable to adapt our sales strategies to optimize performance under the revised programs.

Incentives from our largest partners are significant and changes in the incentives, which occur regularly, could impact our results of operations to the extent we are unable to adapt our sales strategies to optimize performance under the revised programs.

INSIGHT ENTERPRISES, INC.

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AND RESULTS OF OPERATIONS (continued)

Net sales for the three months ended June 3 0 , 2020 increased 7 % year over year to $ 1.97 b illion compared to the three months ended June 3 0 , 2019 .

Without the addition of PCM to our core business , net sales for the second quarter of 2020 would have been down as a result of the negative impact of COVID-19.

We expect this negative trend in net sales will continue into the third quarter of 2020 , whe n compared to prior year.

Net sales for the six months ended June 30, 2020 increased 17 % year over year to $ 4.11 billion compared to the six months ended June 30, 2019.

Our net sales by operating segment were as follows for the three and six months ended June 3 0 , 2020 and 201 9 (dollar s in thousands):

Net sales for the three months ended September 30 , 2020 increased 1 % , year over year , to $ 1.9 b illion compared to the three months ended September 30 , 2019 .

Without the addition of PCM to our core business, net sales for the third quarter of 2020 would have been down as a result of the negative impact of COVID-19.

We believe t his negative trend in net sales may continue into the fourth quarter of 2020, when compared to the prior year.

Net sales for the nine months ended September 30 , 2020 increased 11 % , year over year , to $ 6.0 billion compared to the nine months ended September 30 , 2019.

Our net sales by operating segment were as follows for the three and nine months ended September 30 , 2020 and 201 9 (dollar s in thousands):

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

North America

Our net sales by offering category for North America for the three and six months ended June 30, 2020 and 2019 were as follows (dollars in thousands):

Our net sales by offering category for North America for the three and nine months ended September 30, 2020 and 2019 were as follows (dollars in thousands):

Three Months Ended

Six Months Ended

Net sales in North America increased 10%, or $133.6 million, for the three months ended June 30, 2020 compared to the three months ended June 30, 2019, primarily driven by the addition of PCM, partially offset by the negative impact of COVID-19 on demand for hardware and certain services.

Net sales of hardware and services increased 9% and 27%, respectively, year over year, partially offset by a decrease of 1% in software net sales, year to year.

The net changes for the three months ended June 30, 2020 were the result of the following:

September 30,

Nine Months Ended

September 30,

Net sales in North America increased 3%, or $43.0 million, for the three months ended September 30, 2020 compared to the three months ended September 30, 2019, primarily driven by the addition of PCM, partially offset by the negative impact of COVID-19 on demand for hardware and certain services.

Net sales of hardware, software and services increased 1%, 4% and 12%, respectively, year over year.

The changes for the three months ended September 30, 2020 were the result of the following:

The increase in hardware net sales was due to the addition of PCM, which was partially offset by lower volume of sales to large enterprise and corporate clients.

The decrease in volume of sales was largely due to decreased demand associated with client responses to COVID-19.

The decrease in software net sales was primarily due to continued migration of software to the cloud, reported net in services net sales, which was partially offset by the addition of PCM.

The increase in services net sales was primarily due to higher sales of Insight delivered services, the addition of PCM and an increase in net sales associated with cloud solution offerings.

The increase in software net sales was primarily due to the addition of PCM, partially offset by continued migration of software to the cloud, reported net in services net sales.

The increase in services net sales was primarily due to an increase in net sales associated with cloud solution offerings and higher sales of Insight delivered services, including the addition of PCM.

These increases were partially offset by decreases in demand for certain services due to the impact of COVID-19.

Net sales in North America increased 21%, or $565.6 million, for the six months ended June 30, 2020 compared to the six months ended June 30, 2019, primarily driven by the addition of PCM, partially offset by the negative impact of COVID-19 on demand for hardware and certain services.

Net sales of hardware and services increased 28% and 33%, respectively, year over year, partially offset by a decrease of 3% in software net sales, year to year.

The net changes for the first half of 2020 were the result of the following:

Net sales in North America increased 15%, or $608.6 million, for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019, primarily driven by the addition of PCM, partially offset by the negative impact of COVID-19 on demand for hardware and certain services.

Net sales of hardware and services increased 18% and 26%, respectively, year over year.

Net sales of software declined 1%, year to year.

INSIGHT ENTERPRISES, INC.

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AND RESULTS OF OPERATIONS (continued)

The net changes for the first nine months of 2020 were the result of the following:

The increase in hardware net sales was due to the addition of PCM and higher volume of sales to large enterprise and corporate clients.

The net increase in volume of sales was largely due to increases in the first quarter of 202 0 due to increased demand for work-from-home and collaboration solutions as companies responded to shelter in place mandates offset by decreases in volume of sales in the second quarter associated with client responses to COVID-19 .

The net increase in volume of sales was largely due to increases in the first quarter of 2020 due to increased demand for work-from-home and collaboration solutions as companies responded to shelter in place mandates, which was partially offset by decreases in volume of sales in the second and third quarters associated with client responses to COVID-19.

The decrease in software net sales was due to a significant transaction in the prior year with no comparable activity in the current year and continued migration of software to the cloud, which was partially offset by the addition of PCM.

The increase in services net sales was primarily due to higher sales of Insight delivered services, the addition of PCM and an increase in net sales associated with cloud solution offerings.

The increase in services net sales was primarily due to higher sales of Insight delivered services, including the addition of PCM and an increase in net sales associated with cloud solution offerings.

These increases were partially offset by decreases in demand for certain services due to the impact of COVID-19.

Our net sales by offering category for EMEA for the three and six months ended June 30, 2020 and 2019 were as follows (dollars in thousands):

Our net sales by offering category for EMEA for the three and nine months ended September 30, 2020 and 2019 were as follows (dollars in thousands):

Three Months Ended

Six Months Ended

Net sales in EMEA increased 3%, or $12.8 million, in the three months ended June 30, 2020 compared to the three months ended June 30, 2019.

Excluding the effects of fluctuating foreign currency exchange rates, net sales in EMEA increased 6%, year over year.

September 30,

Nine Months Ended

September 30,

Net sales in EMEA decreased 4%, or $14.4 million, for the three months ended September 30, 2020 compared to the three months ended September 30, 2019.

Excluding the effects of fluctuating foreign currency exchange rates, net sales in EMEA decreased 8%, year to year.

Net sales of hardware and services increased 1% and 19%, respectively, year over year.

Net sales of software declined 12% year to year.

The net changes for the three months ended June 30, 2020 were the result of the following:

The net changes for the three months ended September 30, 2020 were the result of the following:

The increase in hardware net sales was due primarily to higher volume sales of devices to public sector clients.

The decrease in software net sales was due to lower volume of sales to large enterprise clients and migration of software to the cloud.

The increase in services net sales was due primarily to higher sales of cloud solutions, increased software referral fees and higher volume sales of Insight delivered services.

Net sales in EMEA increased 5%, or $41.6 million, in the first half of 2020 compared to the first half of 2019.

Excluding the effects of fluctuating foreign currency exchange rates, net sales in EMEA increased 8%, year over year.

Net sales of hardware, software and services increased 4%, 4% and 16% year over year, respectively.

The net changes for the first half of 2020 were the result of the following:

The decrease in software net sales was due to lower volume of sales to large enterprise clients and continued migration of software to the cloud.

The increase in services net sales was due primarily to higher sales of cloud solutions and higher volume sales of Insight delivered services.

Net sales in EMEA increased 2%, or $27.1 million, for the first nine months of 2020 compared to the first nine months of 2019.

Excluding the effects of fluctuating foreign currency exchange rates, net sales in EMEA increased 3%, year to year.

Net sales of hardware and services increased 3% and 17% year over year, respectively.

Net sales of software declined 1%, year to year.

The net changes for the first nine months of 2020 were the result of the following:

The increase in hardware net sales was due primarily to higher volume sales of devices to corporate and public sector clients.

The increase in software net sales was due to higher volume of sales to large enterprise, corporate and public sector clients, partially offset by migration of software to the cloud.

The decrease in software net sales was due to lower volume of sales to large enterprise and continued migration of software to the cloud, partially offset by higher volume of sales to corporate and public sector clients.

INSIGHT ENTERPRISES, INC.

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The increase in services net sales was due primarily to higher sales of cloud solutions, increased software referral fees and higher volume sales of Insight delivered services.

Our net sales by offering category for APAC for the three and six months ended June 30, 2020 and 2019 were as follows (dollars in thousands):

Our net sales by offering category for APAC for the three and nine months ended September 30, 2020 and 2019 were as follows (dollars in thousands):

Three Months Ended

Six Months Ended

Net sales in APAC decreased 27%, or $13.8 million, in the three months ended June 30, 2020 compared to the three months ended June 30, 2019.

September 30,

Nine Months Ended

September 30,

Net sales in APAC decreased 11%, or $4.6 million, for the three months ended September 30, 2020 compared to the three months ended September 30, 2019.

Excluding the effects of fluctuating foreign currency exchange rates, net sales in APAC decreased 13%, year to year.

Net sales of hardware, software and services decreased by 32%, 38% and 5%, respectively, year to year.

The net changes for the three months ended June 30, 2020 were the result of the following:

Net sales of hardware and software decreased by 31% and 17%, respectively, year to year.

Net sales of services increased by 12%, year over year.

The net changes for the three months ended September 30, 2020 were the result of the following:

The decrease in hardware net sales was primarily the result of lower volume of sales due to decreased demand associated with client responses to COVID-19.

The decrease in software net sales was primarily due to the loss of a significant public sector client and lower volume sales to large enterprise clients.

The decrease in services net sales was primarily due to lower sales of Insight delivered services.

Net sales in APAC decreased 15%, or $15.8 million, in the first half of 2020 compared to the first half of 2019.

Excluding the effects of fluctuating foreign currency exchange rates, net sales in APAC decreased 10%, year over year.

The decrease in software net sales was primarily due to lower volume sales to large enterprise clients.

The increase in services net sales was primarily due to higher sales of Insight delivered services.

Net sales in APAC decreased 14%, or $20.5 million, for the first nine months of 2020 compared to the first nine months of 2019.

Excluding the effects of fluctuating foreign currency exchange rates, net sales in APAC decreased 11%, year to year.

Net sales of hardware and software decreased by 18% and 22%, respectively, year to year.

The net changes for the first half of 2020 were the result of the following:

Services net sales increased 4% year over year.

The net changes for the first nine months of 2020 were the result of the following:

The decrease in hardware net sales was primarily the result of lower volume of sales due to decreased demand associated with client responses to COVID-19.

The decrease in software net sales was primarily due to the loss of a significant public sector client and lower volume sales to large enterprise clients.

The increase in services net sales was primarily due to higher sales of Insight delivered services.

INSIGHT ENTERPRISES, INC.

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AND RESULTS OF OPERATIONS (continued)

The percentage of net sales by category for North America, EMEA and APAC were as follows for the three and six months ended June 3 0 , 2020 and 201 9 :

T he percentage of net sales by category for North America, EMEA and APAC were as follows for the three and nine months ended September 30 , 2020 and 201 9 :

North America

Three Months Ended

September 30,

Three Months Ended

September 30,

Three Months Ended

September 30,

North America

Six Months Ended

Nine Months Ended

September 30,

Nine Months Ended

September 30,

Nine Months Ended

September 30,

Gross Profit .

Gross profit increased 18%, or $48.9 million, in the three months ended June 30, 2020 , compared to the three months ended June 30, 2019 , with gross margin increasing approximately 150 basis points to 16.5% for the three months ended June 30, 2020 compared to 15.0% for the three months ended June 30, 2019.

Gross profit increased 24%, or $125.8 million, in the six months ended June 30, 2020 compared to the six months ended June 30, 2019 , with gross margin increasing approximately 90 basis points to 15.8% for the first half of 2020 compared to 14.9% for the first half of 2019.

Our gross profit and gross profit as a percentage of net sales by operating segment were as follows for the three and six months ended June 30, 2020 and 2019 (dollars in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Gross profit increased 11%, or $31.4 million, for the three months ended September 30, 2020 , compared to the three months ended September 30, 2019 , with gross margin increasing approximately 150 basis points to 15.9% for the three months ended September 30, 2020 compared to 14.4% for the three months ended September 30, 2019.

Gross profit increased 20%, or $157.2 million, in the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 , with gross margin increasing approximately 110 basis points to 15.8% for the first nine months of 2020 compared to 14.7% for the first nine months of 2019.

Our gross profit and gross profit as a percentage of net sales by operating segment were as follows for the three and nine months ended September 30, 2020 and 2019 (dollars in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

North America

North America’s gross profit for the three months ended June 30, 2020 increased $45.8 million, or 23%, compared to the three months ended June 30, 2019.

As a percentage of net sales, gross margin increased approximately 170 basis points to 15.9% for the second quarter of 2020 .

North America’s gross profit for the three months ended September 30, 2020 increased $28.5 million, or 13%, compared to the three months ended September 30, 2019.

As a percentage of net sales, gross margin increased approximately 150 basis points to 15.9% for the third quarter of 2020 .

The year over year improvement in gross margin was primarily attributable to the following:

A net increase in product margin, which includes partner funding and freight, of 53 basis points and an increase in margin from services net sales of 122 basis points compared to the same period in the prior year.

The increase in margin from services net sales during the current quarter reflects an expansion in margin from agency sales including cloud solutions that are recorded net and from a higher volume of Insight delivered services at higher margins .

The increase in product margin is primarily the result of a higher volume of hardware sales from the addition of PCM and sales of hardware for the core North America

An increase in product margin, which includes partner funding and freight, of 51 basis points and an increase in margin from services net sales of 92 basis points compared to the same period in the prior year.

The increase in product margin is primarily the result of higher volume of hardware sales from the addition of PCM and sales of hardware for the core North America business at higher margins than in the same period in the prior year .

The increase in margin from services net sales during the current quarter reflects an expansion in margin from cloud solutions and other services that are recorded net .

INSIGHT ENTERPRISES, INC.

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AND RESULTS OF OPERATIONS (continued)

business at higher margins than in the same period in the prior year .

This increase was partially offset by a contraction in margin on software net sales.

North America’s gross profit for the six months ended June 30, 2020 increased $120.2 million, or 31%, compared to the six months ended June 30, 2019.

As a percentage of net sales, gross margin increased approximately 120 basis points to 15.6% for the first half of 2020 .

North America’s gross profit for the nine months ended September 30 , 20 20 increased $ 148.7 million, or 25 %, compared to the nine months ended September 30 , 201 9 .

As a percentage of net sales, gross margin increased approximately 13 0 basis points to 15.7 % for the first nine months of 20 20 .

The year over year improvement in gross margin was primarily attributable to the following:

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This increase was partially offset by a contraction in margin on software net sales.

The increase in margin from services net sales during the first six months of 2020 resulted from a higher volume of Insight delivered services at higher margins and a higher volume of cloud solutions that are recorded net .

EMEA’s gross profit for the three months ended June 30, 2020 increased $3.7 million, or 6%, year over year (increasing 8% excluding the effects of fluctuating foreign currency exchange rates), compared to the three months ended June 30, 2019.

The increase in margin from services net sales during the first nine months of 2020 resulted from a higher volume of Insight delivered services at higher margins and a higher volume of cloud solutions that are recorded net .

EMEA’s gross profit for the three months ended September 30, 2020 increased $2.4 million, or 5%, year over year (remaining flat when excluding the effects of fluctuating foreign currency exchange rates), compared to the three months ended September 30, 2019.

As a percentage of net sales, gross margin increased approximately 120 basis points, year over year.

The year over year net improvement in gross margin was primarily attributable to an increase in higher margin services net sales, which contributed 82 basis points of the margin expansion, together with a net increase in product margin, which includes partner funding and freight, of 46 basis points.

EMEA’s gross profit for the six months ended June 30, 2020 increased $5.5 million, or 5% (7% excluding the effects of fluctuating foreign currency exchange rates), compared to the first half of 2019.

As a percentage of net sales, gross margin decreased approximately 10 basis points, year to year.

The year to year decline in gross margin was primarily attributable to a net decrease in product margin, which includes partner funding and freight, of 23 basis points, partially offset by a net increase in services margin of 11 basis points.

APAC’s gross profit for the three months ended June 30, 2020 decreased $0.6 million, or 5%, compared to the three months ended June 30, 2019 (remaining flat when excluding fluctuating foreign currency exchange rates).

EMEA’s gross profit for the nine months ended September 30, 2020 increased $7.9 million, or 5% (also 5% excluding the effects of fluctuating foreign currency exchange rates), compared to the first nine months of 2019.

As a percentage of net sales, gross margin increased approximately 30 basis points, year over year.

The increase in gross margin in the second quarter of 2020 compared to the second quarter of 2019 was due to an increase in gross margin on services net sales, including cloud solutions and Insight delivered services, of 564 basis points and an increase in product margin, which includes partner funding and freight, of 120 basis points.

APAC’s gross profit for the first half of 2020 increased less than 1% compared to the first half of 2019 (increasing 6% excluding fluctuating foreign currency exchange rates).

The year over year improvement in gross margin was primarily attributable to a net increase in services margin of 35 basis points.

APAC’s gross profit for the three months ended September 30, 2020 increased $435,000, or 5%, compared to the three months ended September 30, 2019 (increasing 2% when excluding fluctuating foreign currency exchange rates).

As a percentage of net sales, gross margin increased approximately 410 basis points, year over year.

The increase in gross margin in the first six months of 2020 compared to the first six months of 2019 was primarily due to an increase in mix of cloud solutions recorded net and higher gross profits from Insight delivered services, partially offset by lower margins on software net sales.

The increase in gross margin in the third quarter of 2020 compared to the third quarter of 2019 was due to an increase in gross margin on services net sales, including cloud solutions and Insight delivered services, of 421 basis points.

APAC’s gross profit for the first nine months of 2020 increased $560,000, or 2%, compared to the first half of 2019 (increasing 5% excluding fluctuating foreign currency exchange rates).

As a percentage of net sales, gross margin increased approximately 390 basis points, year over year.

The increase in gross margin in the first nine months of 2020 compared to the first nine months of 2019 was due to an increase in gross margin on services net sales, including cloud solutions and Insight delivered services, of 394 basis points.

INSIGHT ENTERPRISES, INC.

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Selling and Administrative Expenses.

Selling and administrative expenses increased $43.1 million, or 22%, for the three months ended June 30, 2020 compared to the three months ended June 30, 2019 .

Selling and administration expenses increased $120.9 million, or 31%, for the six months ended June 30, 2020 compared to the six months ended June 30, 2019.

Our selling and administrative expenses by major expense type for the three and six months ended June 30, 2020 and 2019 were as follows (dollars in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Selling and administrative expenses increased $21.9 million, or 10%, for the three months ended September 30, 2020 compared to the three months ended September 30, 2019 .

Selling and administration expenses increased $142.8 million, or 23%, for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019.

Our selling and administrative expenses by major expense type for the three and nine months ended September 30, 2020 and 2019 were as follows (dollars in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Personnel costs, including teammate benefits

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Facility expenses

Travel and entertainment

Legal and professional fees

Selling and administrative expenses increased approximately 140 basis points as a percentage of net sales in the second quarter of 2020 compared to the second quarter of 2019.

Travel and entertainment

Selling and administrative expenses increased approximately 100 basis points as a percentage of net sales in the third quarter of 2020 compared to the third quarter of 2019.

The overall net increase in selling and administrative expenses reflects a $15.9 million net increase in personnel costs, including teammate benefits expenses primarily due to increased headcount, reflecting the acquisition of PCM in August 2019.

There was also an increase in depreciation and amortization, facility and other expenses of $7.8 million, $2.9 million and $9.2 million, respectively, primarily as a result of PCM.

There was also an increase in depreciation and amortization, legal and professional fees, other and facility expenses of $5.0 million, $3.2 million, $2.9 million and $1.5 million, respectively, primarily as a result of PCM.

These increased costs were partially offset by decreases in travel and entertainment costs of $5.9 million reflecting cost control measures taken in response to COVID-19.

Selling and administrative expenses increased approximately 130 basis points as a percentage of net sales in the first half of 2020 compared to the first half of 2019.

Selling and administrative expenses increased approximately 120 basis points as a percentage of net sales in the first nine months of 2020 compared to the first nine months of 2019.

The overall net increase in selling and administrative expenses reflects a $93.9 million increase in personnel costs, including teammate benefits expenses primarily due to increased headcount, including the acquisition of PCM.

There was also an increase in depreciation and amortization, facility, legal and professional and other expenses of $16.3 million, $7.2 million, $4.0 million and $18.9 million, respectively, primarily as a result of PCM.

There was also an increase in other expenses, depreciation and amortization, facility expenses and legal and professional fees of $21.8 million, $21.3 million, $8.7 million and $7.2 million, respectively, primarily as a result of PCM.

These increased costs were partially offset by decreases in travel and entertainment costs of $10.3 million reflecting cost control measures taken in response to COVID-19.

Severance and Restructuring Expenses.

During the three months ended June 30, 2020, we recorded severance expense, net of adjustments, of approximately $7.0 million.

During the six months ended June 30, 2020, we recorded severance expense, net of adjustments, of approximately $9.2 million.

During the three months ended September 30, 2020, we recorded severance expense, net of adjustments, of approximately $808,000.

During the nine months ended September 30, 2020, we recorded severance expense, net of adjustments, of approximately $10.0 million.

The charges in all three operating segments primarily related to a realignment of certain roles and responsibilities and for North America and EMEA, the acquisition of PCM.

Current period charges were partially offset by adjustments for changes in estimates of previous accruals as cash payments were made.

Comparatively, during the three months ended June 30, 2019, we recorded severance expense, net of adjustments, of approximately $680,000.

For the six months ended June 30, 2019, we recorded severance expense, net of adjustments, of approximately $1.1 million.

Comparatively, during the three months ended September 30, 2019, we recorded severance expense, net of adjustments, of approximately $2.7 million.

For the nine months ended September 30, 2019, we recorded severance expense, net of adjustments, of approximately $3.7 million.

INSIGHT ENTERPRISES, INC.

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Earnings from Operations .

Earnings from operations increased 3%, or $ 2 .

1 million, in the three months ended June 30, 2020 , compared to the three months ended June 30, 2019 .

Earnings from operations decreased 2%, or $2.1 million, in the six months ended June 30, 2020 , compared to the six months ended June 30, 2019 .

Our earnings from operations and earnings from operations as a percentage of net sales by operating segment were as follows for the three and six months ended June 30, 2020 and 2019 (dollars in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Earnings from operations increased 38 %, or $ 17.1 million, for the three months ended September 30 , 2020 , compared to the three months ended September 30 , 2019 .

Earnings from operations in creased 9 %, or $ 15.0 million, for the nine months ended September 30 , 2020 , compared to the nine months ended September 30 , 2019 .

Our earnings from operations and earnings from operations as a percentage of net sales by operating segment were as follows for the three and nine months ended September 30 , 2020 and 2019 (dollars in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

North America

North America’s earnings from operations for the three months ended June 30, 2020 increased $1.2 million, or 2%, compared to the three months ended June 30, 2019.

As a percentage of net sales, earnings from operations decreased by approximately 20 basis points to 3.4%.

The increase in earnings from operations was primarily driven by an increase in gross profit and decrease in acquisition and integration related expenses partially offset by increases in selling and administrative expenses and severance and restructuring expenses when compared to the three months ended June 30, 2019.

North America’s earnings from operations for the six months ended June 30, 2020 decreased $1.8 million, or 2%, compared to the six months ended June 30, 2019.

As a percentage of net sales, earnings from operations decreased by approximately 70 basis points to 2.9%.

The decrease in earnings from operations was primarily driven by increases in selling and administrative expenses and severance and restructuring expenses in excess of the increase in gross profits when compared to the six months ended June 30, 2019.

EMEA’s earnings from operations for the three months ended June 30, 2020 increased $1.3 million, or 8%, compared to the three months ended June 30, 2019.

North America’s earnings from operations for the three months ended September 30, 2020 increased $14.9 million, or 38%, compared to the three months ended September 30, 2019.

As a percentage of net sales, earnings from operations increased by approximately 90 basis points to 3.5%.

The increase in earnings from operations was primarily driven by an increase in gross profit partially offset by the increase in severance and restructuring expenses compared to the three months ended June 30, 2019.

EMEA’s earnings from operations for the six months ended June 30, 2020 decreased $291,000, or 1%, compared to the six months ended June 30, 2019.

The increase in earnings from operations was primarily driven by an increase in gross profit and decrease in acquisition and integration related expenses, partially offset by increases in selling and administrative expenses when compared to the three months ended September 30, 2019.

North America’s earnings from operations for the nine months ended September 30, 2020 increased $13.1 million, or 10%, compared to the nine months ended September 30, 2019.

As a percentage of net sales, earnings from operations decreased by approximately 20 basis points to 3.1%.

The decrease in earnings from operations was primarily driven by increases in selling and administrative expenses and severance and restructuring expenses marginally in excess of the increase in gross profit compared to the six months ended June 30, 2019.

APAC’s earnings from operations for the three months ended June 30, 2020 decreased $391,000, or 8%, compared to the three months ended June 30, 2019.

The increase in earnings from operations was primarily driven by an increase in gross profit in excess of increases in selling and administrative expenses and severance and restructuring expenses when compared to the nine months ended September 30, 2019.

EMEA’s earnings from operations for the three months ended September 30, 2020 increased $1.7 million, or 56%, compared to the three months ended September 30, 2019.

As a percentage of net sales, earnings from operations increased by approximately 50 basis points to 1.4%.

The decrease in earnings from operations was primarily driven by a decrease in gross profit partially offset by a decrease in selling and administrative expenses when compared to the three months ended June 30, 2019

The increase in earnings from operations was primarily driven by an increase in gross profit, partially offset by the increase in selling and administrative expenses compared to the three months ended September 30, 2019.

EMEA’s earnings from operations for the nine months ended September 30, 2020 increased $1.4 million, or 5%, compared to the nine months ended September 30, 2019.

As a percentage of net sales, earnings from operations increased by approximately 10 basis points to 2.7%.

APAC’s earnings from operations for the three months ended September 30, 2020 increased $389,000, or 19%, compared to the three months ended September 30, 2019.

As a percentage of net sales, earnings from operations increased by approximately 170 basis points to 6.5%.

The increase in earnings from operations was primarily driven by an increase in gross profit when compared to the three months ended September 30, 2019.

APAC’s earnings from operations for the nine months ended September 30, 2020 increased $410,000, or 5%, compared to the nine months ended September 30, 2019.

As a percentage of net sales, earnings from operations increased by approximately 120 basis points to 7.0%.

The increase in earnings from operations reflects an increase in gross profit and reduction in severance and

INSIGHT ENTERPRISES, INC.

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AND RESULTS OF OPERATIONS (continued)

APAC’s earnings from operations for the six months ended June 30, 2020 remained flat compared to the six months ended June 30, 2019.

As a percentage of net sales, earnings from operations increased by approximately 120 basis points to 7.3%.

E arnings from operations reflects an increase in gross profit and reduction in severance and restructuring expenses offset by an increase in selling and administrative expenses when compared to the six months ended June 30, 2019.

restructuring expenses , partially offset by an increase in selling and administrative expenses when compared to the nine months ended September 30 , 2019.

Non-Operating (Income) Expense.

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Interest expense, net primarily relates to borrowings under our financing facilities and imputed interest under our inventory financing facilities and our convertible senior notes, partially offset by interest income generated from interest earned on cash and cash equivalent bank balances.

Interest expense for the three months ended June 30, 2020 increased more than 100%, or $5.9 million, compared to the three months ended June 30, 2019.

Interest expense for the six months ended June 30, 2020 increased more than 100%, or $13.2 million, compared to the six months ended June 30, 2019.

Interest expense, net for the three months ended September 30, 2020 increased 18%, or $1.4 million, compared to the three months ended September 30, 2019.

Interest expense, net for the nine months ended September 30, 2020 increased 88%, or $14.6 million, compared to the nine months ended September 30, 2019.

The increase was due primarily to higher average daily balances under our ABL facility in comparison to our facilities in the prior year and imputed interest under our convertible senior notes.

The higher average daily balances under our ABL are largely the result of the PCM acquisition.

Imputed interest under our convertible senior notes, which were issued in August 2019, was $2.5 million and $5.0 million for the three and six months ended June 30, 2020, respectively.

Imputed interest under our inventory financing facility was $2.8 million and $5.6 million for the three and six months ended June 30, 2020, respectively, compared to $2.9 million and $5.9 million for the three and six months ended June 30, 2019, respectively.

The decreases were a result of a lower average incremental borrowing rate used to compute the imputed interest amounts during the 2020 periods.

The higher average daily balances under our ABL facility are largely the result of the PCM acquisition.

Imputed interest under our convertible senior notes, which were issued in August 2019, was $2.6 million and $7.6 million for the three and nine months ended September 30, 2020, respectively.

Imputed interest under our convertible senior notes was $1.2 million for both the three and nine months ended September 30, 2019.

Imputed interest under our inventory financing facilities was $3.2 million and $8.8 million for the three and nine months ended September 30, 2020, respectively, compared to $2.7 million and $8.6 million for the three and nine months ended September 30, 2019, respectively.

The increases were a result of expanded use of the facilities, including the addition of PCM, in part as a result of extended payment terms during the 2020 periods.

For a description of our various financing facilities, see Note 5 to our Consolidated Financial Statements in Part I, Item 1 of this report.

Income Tax Expense.

Our effective tax rate of 26.2% for the three months ended June 30, 2020 was higher than our effective tax rate of 25.9% for the three months ended June 30, 2019.

Our effective tax rate of 23.8% for the six months ended June 30, 2020 was lower than our effective tax rate of 24.9% for the six months ended June 30, 2019.

The decrease in our effective tax rate for the first half of 2020 compared to the first half of 2019 was due primarily to the remeasurement of acquired net operating losses to be carried back to higher tax rate years under the CARES Act.

Our effective tax rate of 23.8% for the three months ended September 30, 2020 was lower than our effective tax rate of 27.2% for the three months ended September 30, 2019.

The decrease in our effective tax rate for the three months ended September 30, 2020 compared to the three months ended September 30, 2019 was due to the rate impact of acquisition-related costs which did not recur in 2020 and the beneficial impact of certain income tax regulations issued during the current quarter.

Our effective tax rate of 23.8% for the nine months ended September 30, 2020 was lower than our effective tax rate of 25.4% for the nine months ended September 30, 2019.

The decrease in our effective tax rate for the first nine months of 2020 compared to the first nine months of 2019 was due primarily to the remeasurement of acquired net operating losses to be carried back to higher tax rate years under the CARES Act and the rate impact of acquisition-related costs which did not recur in 2020.

INSIGHT ENTERPRISES, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (continued)

Liquidity and Capital Resources

The following table sets forth certain consolidated cash flow information for the six months ended June 30, 2020 and 2019 (in thousands):

Six Months Ended

The following table sets forth certain consolidated cash flow information for the nine months ended September 30, 2020 and 2019 (in thousands):

Nine Months Ended

September 30,

Net cash provided by operating activities

Net cash used in investing activities

Net cash used in financing activities

Net cash (used in) provided by financing activities

Foreign currency exchange effect on cash, cash equivalent

and restricted cash balances

Increase (decrease) in cash, cash equivalents and restricted cash

Decrease in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of period

Cash, cash equivalents and restricted cash at end of period

INSIGHT ENTERPRISES, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (continued)

Cash and Cash Flow

Our primary uses of cash during the six months ended June 30, 2020 were to pay down our debt balances and to fund our working capital requirements.

Operating activities provided $497.5 million in cash during the six months ended June 30, 2020, compared to $182.5 million during the six months ended June 30, 2019 driven by several non-recurring items in the second quarter of 2020.

We expect our cash flows from operating activities to normalize in the second half of 2020.

We had net borrowings under our inventory financing facilities of $7.5 million during the six months ended June 30, 2020, compared to net repayments of $43.2 million during the six months ended June 30, 2019.

Net repayments under our ABL revolving credit facility during the six months ended June 30, 2020 were $426.2 million.

Net repayments under our prior senior revolving credit facility and ABS facility combined during the six months ended June 30, 2019 were $149.0 million.

Capital expenditures were $14.5 million and $10.6 million in the six months ended June 30, 2020 and June 30, 2019, respectively.

We acquired vNext for $6.4 million and received proceeds from the sale of a property held for sale of $14.2 million in the first half of 2020.

During the six months ended June 30, 2020, we repurchased an aggregate of $25.0 million of our common stock, pursuant to a repurchase program approved in February 2020 with no comparable repurchases during the six months ended June 30, 2019.

Our primary uses of cash during the nine months ended September 30, 2020 were to pay down our debt balances and to fund our working capital requirements.

Operating activities provided $462.1 million in cash during the nine months ended September 30, 2020, compared to $168.6 million during the nine months ended September 30, 2019 partially driven by a non-recurring item in the third quarter of 2020.

In the fourth quarter of 2020, we expect that this non-recurring item will reverse, and we will use cash from operating activities for the quarter.

Our cash cycle is inverted which allows us to generate more cash flows from operating activities in sequential periods of declining sales, particularly of our hardware offerings.

We had net borrowings under our inventory financing facilities of $114.3 million during the nine months ended September 30, 2020, compared to net repayments of $96.5 million during the nine months ended September 30, 2019.

Net repayments under our ABL facility during the nine months ended September 30, 2020 were $570.9 million.

Net borrowings under our ABL facility and our prior senior revolving credit facility and ABS facility combined during the nine months ended September 30, 2019 were $338.2 million.

Capital expenditures were $20.7 million and $16.9 million for the nine months ended September 30, 2020 and 2019, respectively.

We acquired vNext in February 2020 for $6.4 million and received proceeds from the sale of a property held for sale of $14.2 million in the nine months ended September 30, 2020.

During the nine months ended September 30, 2020, we repurchased an aggregate of $25.0 million of our common stock, pursuant to a repurchase program approved in February 2020.

During the nine months ended September 30, 2019, we repurchased an aggregate of $27.9 million of our common stock

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

For the remainder of 2020, we plan to be prudent in our use of cash, deferring discretionary capital investments and using available cash to pay down debt as our priority.

Net cash provided by operating activities

Cash flow from operating activities in the first half of 2020 was $497.5 million compared to $182.5 million in the first half of 2019.

The increase in cash flow from operating activities was primarily driven by several non-recurring items in the second quarter of 2020.

Specifically, a public sector customer paid approximately $150.0 million in the second quarter of 2020, prior to the due date, with the associated payment to the vendor not being due, and which will not be paid, until the third quarter of 2020.

In addition, a payment of $96.0 million that was due to a partner in the second quarter of 2020 was deferred in response to COVID-19 and will not be paid until the third quarter of 2020.

The significant decreases in both other assets and accrued expenses and other liabilities for the three months ended June 30, 2020 resulted from a single significant transaction in 2019 with no comparable activity in the current year.

We believe that we have a strong balance sheet and healthy liquidity position.

The Company had capacity of up to $1.2 billion under our ABL facility as of September 30, 2020.

For the remainder of 2020, we plan to be prudent in our use of cash, deferring discretionary capital investments and using available cash to fund business operations and pay down our inventory financing facilities.

INSIGHT ENTERPRISES, INC.

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AND RESULTS OF OPERATIONS (continued)

Net cash provided by operating activities

Cash flow from operating activities in the first nine months of 2020 was $462.1 million compared to $168.6 million in the first nine months of 2019.

The increase in cash flow from operating activities was partially driven by a non-recurring item in the third quarter of 2020.

A payment of $107.0 million that was due to be paid to a partner in the third quarter of 2020 was deferred in response to COVID-19 and will be paid in the fourth quarter of 2020.

Our cash cycle is inverted which allows us to generate more cash flows from operating activities in sequential periods of declining sales, particularly of our hardware offerings.

The significant decreases in both other assets and accrued expenses and other liabilities for the three months ended September 30, 2020 resulted from a single significant transaction in 2019 with no comparable activity in the current year.

Our consolidated cash flow operating metrics were as follows:

Three Months Ended

September 30,

Days sales outstanding in ending accounts receivable (“DSOs”) (a)

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Calculated as DSOs plus DIOs, less DPOs.

Our cash conversion cycle was 22 days in the second quarter of 2020, down 4 days from the second quarter of 2019.

The net changes were a result of an 11 day increase in DSOs and a 1 day increase in DIOs offset by a 16 day increase in DPOs.

Excluding the impacts of software netting the increase in DSOs was due to an increase in amounts unbilled at June 30, 2020 compared to June 30, 2019, a deterioration in aged receivables associated with COVID-19 and also due to timing of transactions during the quarter.

Excluding the impacts of software netting the increase in DPOs was due to timing of transactions during the respective quarters, including deferral of payments to certain partners in response to COVID-19.

Our cash conversion cycle was 25 days in the third quarter of 2020, down 17 days from the third quarter of 2019.

The net changes were a result of a 3 day decrease in DSOs, a 1 day decrease in DIOs and a 13 day increase in DPOs.

Excluding the impacts of software netting, the decrease in DSOs was due to better collections experience on our accounts receivable.

Excluding the impacts of software netting, the increase in DPOs was primarily due to the extension of terms (certain of which are temporary) on our inventory financing facilities and timing of transactions during the respective quarters, including deferral of payments to certain partners in response to COVID-19.

We expect that cash flow from operations will be used, at least partially, to fund working capital as we typically pay our partners on average terms that are shorter than the average terms we grant to our clients to take advantage of supplier discounts.

We intend to use cash generated in the remainder of 2020 in excess of working capital needs, given current market conditions, to be focused on paying down our debt balances.

Net cash used in investing activities

Capital expenditures were $14.5 million and $10.6 million for the six months ended June 30, 2020 and 2019, respectively.

We acquired vNext for $6.4 million and received proceeds from the sale of a property held for sale of $14.2 million in the first quarter of 2020.

We expect capital expenditures for the full year 2020 to be between $20.0 million and $25.0 million, of which approximately $1.0 million will be used to ready our global corporate headquarters, and the remaining amount will be used for technology-related upgrade projects and the integration of prior acquisitions.

We have decided to defer the buildout of our new corporate headquarters until early 2021.

Net cash used in financing activities

We intend to use cash generated in the remainder of 2020 in excess of working capital needs, given current market conditions, to pay down our inventory financing facilities.

INSIGHT ENTERPRISES, INC.

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AND RESULTS OF OPERATIONS (continued)

During the six months ended June 30 , 2020 , we had net repayments under our ABL facility that de creased our outstanding long-term debt balance by $ 426.2 m illion .

During the six months ended June 30, 2019, we had net combined repayments under our prior senior revolving credit facility and our ABS facility that decreased our outstanding long-term debt balance by $149.0 million.

We had net borrowings under our inventory financing facilities of $7.5 million during the six months ended June 30, 2020 compared to net repayments of $43.2 million during the six months ended June 30, 2019.

During the six months ended June 30, 2020, we repurchased an aggregate of $25.0 million of our common stock, pursuant to a repurchase program approved in February 2020, with no comparable repurchases during the six months ended June 30, 2019.

Net cash used in investing activities

Capital expenditures were $20.7 million and $16.9 million for the nine months ended September 30, 2020 and 2019, respectively.

We acquired vNext in February 2020 for $6.4 million and received proceeds from the sale of a property held for sale of $14.2 million in the first nine months of 2020.

We expect capital expenditures for the full year 2020 to be in a range of up to $25.0 million, of which approximately $1.0 million will be used to ready our global corporate headquarters, and the remaining amount will be used primarily for technology-related upgrade projects.

We have decided to defer the buildout of our new global corporate headquarters until early 2021.

Net cash (used in) provided by financing activities

During the nine months ended September 30, 2020, we had net repayments under our ABL facility that decreased our outstanding long-term debt balance by $570.9 million.

During the nine months ended September 30, 2019, we had net combined borrowings under our ABL facility, our prior senior revolving credit facility and our ABS facility that increased our outstanding long-term debt balance by $338.2 million.

We had net borrowings under our inventory financing facilities of $114.3 million during the nine months ended September 30, 2020 compared to net repayments of $96.5 million during the nine months ended September 30, 2019.

During the nine months ended September 30, 2020, we repurchased an aggregate of $25.0 million of our common stock, pursuant to a repurchase program approved in February 2020.

In comparison, during the nine months ended September 30, 2019, we repurchased an aggregate of $27.9 million of our common stock.

Financing Facilities

Our debt balance as of June 30, 2020 was $437.5 million, including our finance lease obligations for certain IT equipment and other financing obligations.

Our debt balance as of September 30, 2020 was $296.1 million, including our finance lease obligations for certain IT equipment and other financing obligations.

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

Our convertible senior notes are subject to certain events of default and certain acceleration clauses.

As of June 30, 2020, no such events have occurred.

Our ABL revolving credit facility contains various covenants customary for transactions of this type, including complying with a minimum receivable and inventory requirement and meeting monthly, quarterly and annual reporting requirements.

As of September 30, 2020, no such events have occurred.

Our ABL facility contains various covenants customary for transactions of this type, including complying with a minimum receivable and inventory requirement and meeting monthly, quarterly and annual reporting requirements.

The credit agreement contains customary affirmative and negative covenants and events of default.

At June 30, 2020, we were in compliance with all such covenants.

At September 30, 2020, we were in compliance with all such covenants.

We also have agreements with financial intermediaries to facilitate the purchase of inventory from various suppliers under certain terms and conditions.

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

Our inventory financing facilities have an aggregate availability for vendor purchases of $490.0 million, of which $261.1 million was outstanding at June 30, 2020.

Our inventory financing facilities have an aggregate availability for vendor purchases of $500.0 million, of which $368.0 million was outstanding at September 30, 2020.

INSIGHT ENTERPRISES, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (continued)

Undistributed Foreign Earnings

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income taxation upon repatriation to the United States.

As of June 30, 2020, we had approximately $120.4 million in cash and cash equivalents in certain of our foreign subsidiaries, primarily residing in Canada and the Netherlands.

As of September 30, 2020, we had approximately $56.7 million in cash and cash equivalents in certain of our foreign subsidiaries, primarily residing in Australia, Canada and the Netherlands.

Certain of these cash balances will be remitted to the United States by paying down intercompany payables generated in the ordinary course of business or through actual dividend distributions.

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We believe that none of our off-balance sheet arrangements have, or are reasonably likely to have, a material current or future effect on our business, financial condition or results of operations.

INSIGHT ENTERPRISES, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (continued)

Recently Issued Accounting Standards

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis