What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-05-06 compared with 2020-11-03 · 152 added, 276 removed, 134 unchanged (76% of the section changed)

4 unchanged sentences

Today, every business is a technology business.

We empower organizations of all sizes with Intelligent Technology Solutions TM and services to maximize the business value of information technology (“IT”) in North America;

We empower organizations of all sizes with Insight Intelligent Technology Solutions TM and services to maximize the business value of information technology (“IT”) in North America;

Europe, the Middle East and Africa (“EMEA”);

and Asia-Pacific (“APAC”).

As a Fortune 500-ranked global provider of digital innovation, cloud/data center transformation, connected workforce, and supply chain optimization solutions, we help clients innovate and optimize their operations to run smarter.

Our offerings in North America and certain countries in EMEA and APAC include hardware, software and services.

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

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 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 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.

As a Fortune 500-ranked global provider of digital innovation, cloud/data center transformation, and connected workforce solutions, together with our supply chain optimization expertise, we help clients innovate and optimize their operations to run smarter.

Our offerings in North America and certain countries in EMEA and APAC include hardware, software and services, including cloud solutions.

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

O n a consolidated basis, for the three months ended March 31, 2021:

Net sales of $2.2 billion increased 2% compared to the three months ended March 31, 2020.

The overall increase in net sales reflects an increase in software and services net sales.

Excluding the effects of fluctuating foreign currency exchange rates, net sales remained flat compared to the first quarter of 2020.

Gross profit of $331.5 million increased 2% compared to the three months ended March 31, 2020.

Excluding the effects of fluctuating foreign currency exchange rates, gross profit was flat compared to the first quarter of 2020.

Compared to the three months ended March 31, 2020, gross margin contracted approximately 10 basis points to 15.1% of net sales in the three months ended March 31, 2021.

This decline reflects a decrease in margins on hardware and software net sales, partially offset by an increase in the mix of higher margin services net sales compared to the same period in the prior year.

Earnings from operations increased 27%, year over year, to $67.0 million in the first quarter of 2021 compared to $52.9 million in the first quarter of 2020.

The increase was primarily due to increased gross profit and reductions in both severance and restructuring and acquisition and integration related expenses, which were incurred in connection with the PCM acquisition.

Excluding the effects of fluctuating foreign currency exchange rates, earnings from operations increased 22% year over year.

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.

Net earnings and diluted earnings per share were $43.2 million and $1.18, respectively, for the first quarter of 2021.

This compares to net earnings of $34.0 million and diluted earnings per share of $0.95 for the first quarter of 2020.

INSIGHT ENTERPRISES, INC.

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AND RESULTS OF OPERATIONS (continued)

Recent Developments – Impact of COVID - 19 to our Business

In late 2019, there was an outbreak of a new strain of coronavirus (“COVID-19”), which has since spread globally.

Recent Developments – I mpact of COVID - 19 and S upply C onstraints on O ur Business

On March 11, 2020, the World Health Organization declared COVID-19 a pandemic.

In an effort to protect the health and safety of our teammates, we took proactive action to adopt social distancing policies at our locations globally, including working from home where possible, limiting the number of teammates attending in-person meetings, reducing the number of people in our locations at any one time, and suspending teammate travel.

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 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 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 pandemic has negatively impacted the global economy, disrupted global supply chains and reduced workforce participation.

While we did not see a significant impact of COVID-19 on our first quarter 2021 financial results, continued supply constraints stemming from shortages of chips and displays resulted in elevated bookings as we exited the first quarter.

We currently expect these supply constraints and extended lead times for certain products will begin to ease by the end of 2021.

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.

This includes, but is not limited to, the duration and spread of the COVID-19 pandemic, its severity, the actions taken to contain the virus or treat its impact, such as restrictions on travel and transportation, and how quickly and to what extent normal economic and operating conditions can resume.

This includes, but is not limited to, the duration and spread of the COVID-19 pandemic, its severity, the emergence and severity of its variants, the availability of vaccines and potential hesitancy to utilize them, other protective actions taken to contain the virus or treat its impact, such as restrictions on travel and transportation, and how quickly and to what extent normal economic and operating conditions can resume.

We will continue to actively monitor the situation and anticipate taking further actions as may be required by government authorities or that we determine are in the best interests of our teammates, clients and partners.

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Accordingly, our current results and financial condition discussed herein may not be indicative of future operating results and trends.

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

INSIGHT ENTERPRISES, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (continued)

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

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

INSIGHT ENTERPRISES, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (continued)

Critical Accounting Estimates

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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, 2020.

INSIGHT ENTERPRISES, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (continued)

Results of Operations

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

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:

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

While we did not observe significant impacts on our first quarter financial results we 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 March 31, 2021 and 2020:

Three 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 also stronger in our second quarter.

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

These trends create overall seasonality in our consolidated results such that net sales and profitability are expected to be higher in the second and fourth quarters of the year.

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, 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.

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

INSIGHT ENTERPRISES, INC.

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AND RESULTS OF OPERATIONS (continued)

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):

markets are also stronger in our second quarter .

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

These trends create overall seasonality in our consolidated results such that net sales and profitability are expected to be higher in the second and fourth quarters of the year.

Incentives from our largest partners are significant and changes in the incentive requirements, 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.

Net sales for the three months ended March 31, 2021 increased 2%, year over year, to $2.2 billion compared to the three months ended March 31, 2020.

This net increase primarily reflects increases in our EMEA and APAC segments, while our North America segment was negatively impacted by supply constraints and extended lead times for certain products.

We believe this trend in net sales may continue into the second and third quarters of 2021, when compared to the prior year.

Our net sales by operating segment were as follows for the three months ended March 31, 2021 and 2020 (dollars in thousands):

Three Months Ended

September 30,

Nine Months Ended

September 30,

North America

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):

Our net sales by offering category for North America for the three months ended March 31, 2021 and 2020 were as follows (dollars in thousands):

Three Months Ended

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 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 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.

Net sales in North America decreased 1%, or $19.6 million, for the three months ended March 31, 2021 compared to the three months ended March 31, 2020, primarily driven by the continued impact of supply constraints and extended product lead times.

Net sales of hardware and services both decreased 2%, year to year, partially offset by an increase in software net sales of 1%, year over year.

The changes for the three months ended March 31, 2021 were the result of the following:

The decrease in hardware net sales was due to lower volume of sales to large enterprise and corporate clients.

The decrease in volume of sales was largely due to impacts of supply constraints and extended product lead times resulting in our inability to clear backlog.

The decrease in services net sales was primarily due to decreases in demand for certain services due to the impact of COVID-19 partially offset by an increase in net sales associated with cloud solution offerings and higher sales of Insight delivered services.

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 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, 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 nine months ended September 30, 2020 and 2019 were as follows (dollars in thousands):

The in crease in sof tware net sales was primarily due to a single significant transaction with a large enterprise client in the current period , partially offset by the continued migration of on-premise software to cloud solutions , reported net in services net sales .

Our net sales by offering category for EMEA for the three months ended March 31, 2021 and 2020 were as follows (dollars in thousands):

Three Months Ended

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 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 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 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.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (continued)

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 nine months ended September 30, 2020 and 2019 were as follows (dollars in thousands):

Net sales in EMEA increased 14%, or $60.0 million, for the three months ended March 31, 2021 compared to the three months ended March 31, 2020.

Excluding the effects of fluctuating foreign currency exchange rates, net sales in EMEA increased 5%, year over year.

Net sales of hardware, software and services increased 12%, 17% and 13%, respectively, year over year.

The changes for the three months ended March 31, 2021 were the result of the following:

The increase in software net sales was due to higher volume of sales to public sector and corporate clients, partially offset by the continued migration of on-premise software to cloud solutions.

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

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

Our net sales by offering category for APAC for the three months ended March 31, 2021 and 2020 were as follows (dollars in thousands):

Three Months Ended

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 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 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.

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.

Net sales in APAC increased 17%, or $8.7 million, for the three months ended March 31, 2021 compared to the three months ended March 31, 2020.

Excluding the effects of fluctuating foreign currency exchange rates, net sales in APAC increased 2%, year over year.

Net sales of hardware, software and services increased by 23%, 13% and 24%, respectively, year over year.

The changes for the three months ended March 31, 2021 were the result of the following:

The increase in software net sales was primarily due to the positive effects of exchange rates.

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

The increase in hardware net sales was primarily the result of large transactions with corporate clients.

INSIGHT ENTERPRISES, INC.

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AND RESULTS OF OPERATIONS (continued)

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 :

T he percentage of net sales by category for North America, EMEA and APAC were as follows for the three months ended March 31, 2021 and 20 20 :

North America

Three Months Ended

September 30,

Three Months Ended

September 30,

Three Months Ended

September 30,

North America

Nine Months Ended

September 30,

Nine Months Ended

September 30,

Nine Months Ended

September 30,

Gross Profit .

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,

Gross profit increased 2%, or $6.1 million, for the three months ended March 31, 2021 , compared to the three months ended March 31, 2020 , with gross margin contracting approximately 10 basis points to 15.1% for the three months ended March 31, 2021 compared to 15.2% for the three months ended March 31, 2020.

Our gross profit and gross profit as a percentage of net sales by operating segment were as follows for the three months ended March 31, 2021 and 2020 (dollars in thousands):

Three Months Ended March 31,

North America

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:

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 .

North America’s gross profit for the three months ended March 31, 2021 decreased 1%, or $3.4 million, compared to the three months ended March 31, 2020.

As a percentage of net sales, gross margin was flat at 15.3% for the first quarter of 2021 .

The year to year changes in gross margin were primarily attributable to the following:

There was a decrease in product margin, which includes partner funding and freight, of 55 basis points offset by an increase in margin from services net sales of 53 basis points compared to the same period in the prior year.

The decrease in product margin is primarily the result of sales of hardware and software at lower 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.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (continued)

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:

A net increase in product margin, which includes partner funding and freight, of 68 basis points and an increase in margin from services net sales, which contributed 60 basis points of the margin expansion.

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 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 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 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 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).

EMEA’s gross profit for the three months ended March 31, 2021 increased $7.3 million, or 12%, year over year (increasing 3% when excluding the effects of fluctuating foreign currency exchange rates), compared to the three months ended March 31, 2020.

As a percentage of net sales, gross margin contracted approximately 20 basis points, year to year.

The year to year net decline in gross margin was primarily attributable to a decrease in higher margin services net sales, which represented 15 basis points of the margin compression, together with a net decrease in product margin, which includes partner funding and freight, of 9 basis points.

APAC’s gross profit for the three months ended March 31, 2021 increased $2.3 million, or 24%, compared to the three months ended March 31, 2020 (increasing 10% when excluding fluctuating foreign currency exchange rates).

As a percentage of net sales, gross margin increased approximately 110 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.

The increase in gross margin in the first quarter of

INSIGHT ENTERPRISES, INC.

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AND RESULTS OF OPERATIONS (continued)

20 2 1 compared to the first quarter of 20 20 was due to an increase in gross margin on product net sales , which includes partner funding and freight, of 81 basis points and an increase in gross margin on services net sales , including cloud solutions , of 32 basis points .

Operating Expenses.

Selling and Administrative Expenses.

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,

Selling and administrative expenses increased $2.3 million, or 1%, (decreasing 2% when excluding fluctuating foreign currency exchange rates) for the three months ended March 31, 2021 compared to the three months ended March 31, 2020 .

Our selling and administrative expenses by major expense type for the three months ended March 31, 2021 and 2020 were as follows (dollars in thousands):

Three Months Ended March 31,

Personnel costs, including teammate benefits

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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, 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 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 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 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 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.

Selling and administrative expenses decreased approximately 10 basis points as a percentage of net sales in the first quarter of 2021 compared to the first quarter of 2020.

The overall net increase in selling and administrative expenses reflects an $18.2 million net increase in personnel costs, including teammate benefits expenses primarily related to one-time benefits received in the prior year and increased variable compensation in the current year.

This increase was partially offset by a decrease in travel and entertainment and marketing costs of $5.8 million and $1.3 million, respectively, reflecting cost control measures taken in response to COVID-19.

There were also decreases in depreciation and amortization, other expenses, facility expenses, and legal and professional fees of $4.0 million, $2.0 million, $1.4 million and $1.3 million, respectively, year to year.

Severance and Restructuring Expenses, Net.

During the three months ended March 31, 2021, we recorded severance expense, net of adjustments, of approximately $1.3 million.

The charges primarily related to a realignment of certain roles and responsibilities.

Current period severance charges were offset by gains on sale of properties of $8.0 million.

Comparatively, during the three months ended March 31, 2020, we recorded severance expense, net of adjustments, of approximately $2.1 million.

INSIGHT ENTERPRISES, INC.

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Earnings from Operations .

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,

Earnings from operation s increased 27 %, or $ 1 4 .

2 million , for the three months ended March 31, 2021 , compared to the three months ended March 31, 2020 .

Our earnings from operations and earnings from operations as a percentage of net sales by operating segment were as follows for the three months ended March 31, 2021 and 20 20 (dollars in thousands):

Three Months Ended March 31,

North America

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 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 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 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.

North America’s earnings from operations for the three months ended March 31, 2021 increased $11.6 million, or 27%, compared to the three months ended March 31, 2020.

As a percentage of net sales, earnings from operations increased by approximately 80 basis points to 3.3%.

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.

The increase in earnings from operations was primarily driven by gains realized on the sale of properties, a net decrease in selling and administrative expenses and no acquisition and integration related expenses in the current period when compared to the three months ended March 31, 2020.

EMEA’s earnings from operations for the three months ended March 31, 2021 increased $1.8 million, or 21% (increasing 9% when excluding the effects of fluctuating foreign currency exchange rates), compared to the three months ended March 31, 2020.

As a percentage of net sales, earnings from operations increased by approximately 10 basis points to 2.1%.

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.

The increase in earnings from operations was primarily driven by an increase in gross profit, partially offset by an increase in selling and administrative expenses compared to the three months ended March 31, 2020.

APAC’s earnings from operations for the three months ended March 31, 2021 increased $811,000, or 37% (increasing 23% when excluding the effects of fluctuating foreign currency exchange rates) , compared to the three months ended March 31, 2020.

As a percentage of net sales, earnings from operations increased by approximately 80 basis points to 5.1%.

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

INSIGHT ENTERPRISES, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (continued)

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.

Interest Expense, Net.

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, 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 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 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.

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

Interest expense, net for the three months ended March 31, 2021 decreased 16%, or $1.9 million, compared to the three months ended March 31, 2020.

The decrease was due primarily to lower average daily balances and lower borrowing rates under our ABL facility, which was partially offset by increased imputed interest under our inventory financing facilities and the Notes.

Imputed interest under the Notes was $2.6 million for the three months ended March 31, 2021, compared to $2.5 million for the three months ended March 31, 2020.

Imputed interest under our inventory financing facilities was $3.6 million for the three months ended March 31, 2021 compared to $2.8 million for the three months ended March 31, 2020.

The increase in imputed interest under our inventory financing facilities was a result of expanded use of the facilities, in part as a result of expanded payment terms during the current period.

INSIGHT ENTERPRISES, INC.

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AND RESULTS OF OPERATIONS (continued)

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

Income Tax Expense.

Our effective tax rate of 23.8% for the three months ended March 31, 2021 was higher than our effective tax rate of 20.3% for the three months ended March 31, 2020.

The increase in our effective tax rate for the three months ended March 31, 2021 compared to the three months ended March 31, 2020 was partially due to the rate impact of tax benefits associated with the CARES Act which did not recur in 2021.

Liquidity and Capital Resources

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,

The following table sets forth certain consolidated cash flow information for the three months ended March 31, 2021 and 2020 (in thousands):

Three Months Ended

Net cash provided by operating activities

Net cash used in investing activities

Net cash (used in) provided by financing activities

Net cash provided by investing activities

Net cash used in financing activities

Foreign currency exchange effect on cash, cash equivalent

and restricted cash balances

Decrease in cash, cash equivalents and restricted cash

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

Cash, cash equivalents and restricted cash at beginning of period

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Cash and Cash Flow

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

Our primary uses of cash during the three months ended March 31, 2021 were to pay down our debt balances and to fund our working capital requirements.

Operating activities provided $42.7 million in cash during the three months ended March 31, 2021, compared to $93.1 million during the three months ended March 31, 2020.

We had net repayments under our inventory financing facilities of $17.8 million during the three months ended March 31, 2021, compared to net repayments of $764,000 during the three months ended March 31, 2020.

Net repayments under our ABL facility during the three months ended March 31, 2021 and 2020 were $24.0 million and $110.2 million, respectively.

Capital expenditures were $7.8 million and $7.4 million for the three months ended March 31, 2021 and 2020, respectively.

We received proceeds from the sale of our properties held for sale of $27.2 million in the three months ended March 31, 2021 compared to proceeds of $14.2 million in the three months ended March 31, 2020.

During the three months ended March 31, 2020, we repurchased an aggregate of $25.0 million of our common stock, pursuant to a repurchase program approved in February 2020.

There were no share repurchases in the three months ended March 31, 2021.

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.

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.

The Company had capacity of up to $1.2 billion under our ABL facility as of March 31, 2021.

For the remainder of 2021, we plan to be prudent in our use of cash, using available cash to fund business operations and to pay down our ABL facility and inventory financing facilities.

INSIGHT ENTERPRISES, INC.

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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.

Cash flow from operating activities in the first three months of 2021 was $42.7 million compared to $93.1 million in the first three months of 2020.

The decrease in cash flow from operating activities was primarily driven by an increase in working capital needs, including investments in inventory to support specific client programs and additional short-term demand in the first three months of 2021 compared to the first three months of 2020.

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 the balance of current accounts receivable, net at the end of the quarter divided by daily net sales.

Daily net sales is calculated as net sales for the quarter divided by 92 days.

Daily net sales is calculated as net sales for the quarter divided by 90 and 91 days in 2021 and 2020, respectively.

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 92 days.

Daily costs of goods sold is calculated as costs of goods sold for the quarter divided by 90 and 91 days in 2021 and 2020, respectively.

Calculated as the sum of the balances of accounts payable – trade and accounts payable – inventory financing facilities at the end of the quarter divided by daily costs of goods sold.

Daily costs of goods sold is calculated as costs of goods sold for the quarter divided by 92 days.

Daily costs of goods sold is calculated as costs of goods sold for the quarter divided by 90 and 91 days in 2021 and 2020, respectively.

Calculated as DSOs plus DIOs, less DPOs.

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.

Our cash conversion cycle was 31 days in the first quarter of 2021, down 7 days from the first quarter of 2020.

The net changes were a result of a 2 day increase in DSOs and a 9 day increase in DPOs.

Excluding the impacts of software netting, DSOs decreased due to improvements in aging of receivables.

The increase in DPOs was primarily due to increases in balances in the current period in part due to the extension of terms on our inventory financing facilities.

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 pay down our inventory financing facilities.

We intend to use cash generated in the remainder of 2021 in excess of working capital needs, to pay down our ABL facility and inventory financing facilities.

Net cash provided by investing activities

We received proceeds from the sale of properties held for sale of $27.2 million in the first three months of 2021 compared to proceeds of $14.2 million in the first three months of 2020.

Capital expenditures were $7.8 million and $7.4 million for the three months ended March 31, 2021 and 2020, respectively.

We acquired vNext in February 2020 for $6.4 million.

INSIGHT ENTERPRISES, INC.

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AND RESULTS OF OPERATIONS (continued)

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.

We expect capital expenditures for the full year 2021 to be in a range of $75.0 million to $85.0 million, the majority of which will be used to ready our global corporate headquarters and to fund technology-related projects.

Net cash used in financing activities

During the three months ended March 31, 2021, we had net repayments under our ABL facility that decreased our outstanding long-term debt balance by $24.0 million.

During the three months ended March 31, 2020, we had net repayments under our ABL facility that decreased our outstanding long-term debt balance by $110.2 million.

We had net repayments under our inventory financing facilities of $17.8 million during the three months ended March 31, 2021 compared to net repayments of $764,000 during the three months ended March 31, 2020.

During the three months ended March 31, 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 three months ended March 31, 2021.

Financing Facilities

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 debt balance as of March 31, 2021 was $417.2 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 September 30, 2020, no such events have occurred.

The Notes are subject to certain events of default and certain acceleration clauses.

As of March 31, 2021, 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 September 30, 2020, we were in compliance with all such covenants.

At March 31, 2021, 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 $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)

Our inventory financing facilities have an aggregate availability for vendor purchases of $540.0 million, of which $309.1 million was outstanding at March 31, 2021.

Undistributed Foreign Earnings

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income taxation upon repatriation to the United States.

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.

As of March 31, 2021, we had approximately $118.8 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.

INSIGHT ENTERPRISES, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (continued)

Off-Balance Sheet Arrangements

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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